Ever since the BoJ took the plunge into NIRP late last month analysts and commentators alike have begun to express a high degree of skepticism about the wisdom of adopting negative interest rates.

Once seen as a kind of peculiar policy experiment confined to Switzerland, Denmark, and Sweden, NIRP has escaped the lab so to speak and now that Kuroda is negative and Draghi is contemplating another depo rate cut in March, people are starting to realize that the entire developed world might be about to go Keynesian crazy. Even the US.

Indeed it was just yesterday that we brought you the latest from JP Morgan, where analysts made the following rather shocking predictions about how low rates could go under tiered implementation system:

As we’ve explained on a number of occasions, this is becoming a never-ending race to the bottom. It’s an all-out currency war and when one central bank eases, so too must the others or risk seeing their inflation targets jeopardized. That’s especially true for Sweden where governor Stefan Ingves is concerned about what the Riksbank sees as excessive krona strength and still sluggish inflation.

On Thursday, in an effort to get out ahead of the ECB, the Riksbank cut again, taking the repo rates by 15bps to -0.50% in a move that Nordea calls “a bit more than expected.” QE will continue as planned and the Riksbank “will reinvest maturities and coupons from the government bond portfolio until further notice.”

“Uncertainty regarding global developments is still high, with low inflation and several central banks pursuing more expansionary monetary policy,” the bank continued. “Swedish monetary policy must relate to this. Otherwise the krona exchange rate is at risk of strengthening at a faster rate than in the forecast, which would make it harder to push up inflation and stabilize it around 2 percent.” Here was the move in the krona:

The bank also reiterated that it’s prepared to intervene directly in the FX market to curb krona strength if necessary and contended that there’s still more room to cut rates further. “So far, at least in this economy, these things have worked actually pretty much the way one would expect,” Ingves said, addressing the effect deeply negative rates have on Swedish banks. “When it comes to Swedish banks, their profit level is very, very good so at this level that’s not an issue.”

Analysts are divided on how things play out from here. Here’s some commentary (via Bloomberg):

From Standard Bank: 

via Zero Hedge http://ift.tt/1oueOaR Tyler Durden

Just like two days ago, when for the first time since 2011 the BOJ intervened directly in the USDJPY market, moments ago Kuroda’s trading desk once again decided to sell a boatload of Yen, with the key carry pair trading at 111.25 and threatening to take out the 110 support, in the process sending the USDJPY higher by 175 pips in a matter of seconds to just above 113.

The move quickly filtered through to all other asset classes:

• QUICK JUMP IN YEN, DOLLAR; S&P FUTURES PARE LOSS TO 32PTS

However, just like last time the BOJ’s direct intervention – seen as a last ditch effort when all else fails – the impact is already fading and traders are already counting down how long until the BOJ’s attempt to pull a PBOC is fully faded.

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Here is this morning’s market update from JPM’s Adam Crisafulli

It’s hard to imagine an uglier morning. The two things markets hate most right now (neg. central bank rates and bad bank headlines) occurred overnight as the Riksbank dropped its rate further into neg. territory and SocGen put up bad earnings/guidance.

The combination of those two events, coupled w/very fragile sentiment, extreme risk aversion (a function of enormous P&L destruction YTD), Yellen’s testimony (which wasn’t sufficiently dovish or concerned about financial market volatility from the perspective of markets), and CSCO’s cautious macro commentary, are weighing very hard on equities so far Thurs morning.

The main Eurozone indices (SX5E and SXXP) are both down “3% today, “6% WTD, and —16% YTD. The SX7P Eurozone bank index is off >5% today, —10% WTD, and nearly 30% YTD.

Ironically, some of the worst carnage in months is occurring while China is shut and the Yuan has been rallying (the CNH has been creeping higher over the last few days, albeit on very thin volumes).

Trying to divine the end of the rout is difficult given the globe is in the midst of a series of tightly intertwined, self-reinforcing, and correlated trades and narratives (i.e. oil slumps and drags inflation down with it which prompts CBs to ratchet up accommodation which sinks banks which crushes general market sentiment and the overall price declines tighten financial market conditions and scares corporate execs and actual economic activity begins to deteriorate).

A lot of the price action feels very forced and perfunctory but that doesn’t make it any less real or painful.

via Zero Hedge http://ift.tt/1oueOaO Tyler Durden

Yesterday morning, when musing on the day’s key event namely Yellen’s congressional testimony, we dismissed the most recent bout of European bank euphoria which we said “will be brief if not validated by concrete actions, because while central banks have the luxury of jawboning, commercial banks are actually burning through funds – rapidly at that – and don’t have the luxury of hoping for the best while doing nothing.” This morning DB has wiped out all of yesterday’s gain.

As for Yellen’s testimony, we said that “she can send stocks reeling with one word out of place” – the word in question being not what she said but what she didn’t say, in this case not supportive enough of risk assets. And the consequence is there for all to see as soon as their trading terminal boots up: everything is crashing (with the exception of China which is on holiday, and Japan which was mercifully closed yesterday). Here are the highlights:

• S&P 500 futures down 1.8% to 1814
• Stoxx 600 down 3.4% to 304
• FTSE 100 down 2.6% to 5525
• DAX down 2.9% to 8760
• German 10Yr yield down 7bps to 0.18%
• MSCI Asia Pacific up 0.1% to 117
• Hang Seng down 3.8% to 18546
• S&P/ASX 200 up 1% to 4821
• US 10-yr yield down 5bps to 1.62%
• Dollar Index down 0.42% to 95.49
• WTI Crude futures down 2.9% to $26.65
• Brent Futures down 1.7% to $30.31
• Gold spot up 1.9% to $1,220
• Silver spot up 1.5% to $15.50

It all started in Hong Kong where as we reported last night, the Hang Seng Index plunged 3.9%, catching up with the week’s selloff as the market reopened from a holiday, and capping its worst Lunar New Year start since 1994.

Japan’s Nikkei Stock Average and China’s Shanghai Composite Index were both closed, but investors continued to pile into the yen, as virtually every carry trade has fallen apart in the past month. As a result, the dollar was down 1.8% against the yen at ¥111.28 after sliding below 111 briefly, a massive gain of nearly 300 pips in the past 24 hours, sending the Yen to the lowest level since October 2014 when Kuroda expanded QE.

 

In the first 9 days of this month, the Yen has risen 985 pips: That is biggest advance, in pip terms, since Oct. 1998; that month, the currency rose 1,563 pips from 130.03 to 114.40 over nine trading days ended Oct. 19. Elsewhere, the euro was up 0.4% against the dollar at $1.1325, its highest since October.

It wasn’t just FX: European stocks slid toward their lowest since September 2013 and U.S. futures indicated equities will open nearly 2% and put the recent support level of 1812 in danger of being breached.

Among the key European movers was Societe Generale which tumbled 12% after reporting that quarterly profit missed estimates as earnings at the investment bank fell and it set aside provisions for potential legal costs.  Elsewhere, Rio Tinto Group slipped 4.1% as it scrapped its progressive dividend policy and set out new spending cuts.

“Financial markets are repricing for a global growth slowdown,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “Expectations that monetary policy would be able to do much have diminished considerably.”

Just as troubling is that Swedish shares slid and the OMX Stockholm 30 Index dropped 3.% despite Sweden’s central bank going even deeper into NIRP, cutting its interest rate from -0.35% to -0.5%, lower than the expected -0.45%. The yen leaped to its highest in more than a year. Major sovereign bond markets rallied, pushing U.K. gilt yields to a record low. Gold rose beyond $1,200 an ounce, while U.S. oil traded below $27 a barrel.

This is troubling, because as Bloomberg notes, “signals by central banks from Europe to Japan that additional stimulus is at the ready are failing to ease investor concern that global growth will keep slowing.” This means that it is no longer just a joke that central banks are losing credibility: judging by the markets’ reaction it is all too real. To this point, yesterday we wondered if Yellen will make bad news good news again. She has failed:

“Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London. “Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control over.”

Imagine that: investors investing without a central bank to hold their hand.

Among other things crashing: bond yields – the 10Year plunged to 1.62%, the lowest level since May 2013 as the entire treasury complex prepares for NIRP.

Not everything was crashing however: as central planners lost control, the dull, boring yellow metal known as gold was up about 4% overnight and was trading at $1240 moments ago, well above the level it hit when the Fed ended QE3, and outperforming every asset class in that time period.

Also surging are peripheral European yields, most notably in Portugal and Greece both overf 30 bps wider, as suddenly 7 years of financial dirt kicked under the rug thanks to central bank jawboning and futile actions, re-emerges for all to see, and to be reminded that nothing was ever fixed!

In short, the market is threatening Yellen with a crash ahead of her 2nd testimony today this time before the Senate. We doubt she will comply, so the market will just have to try harder.

Here are the top news from overnight:

• Yellen Suggests Fed May Delay Rate Rises, Not Abandon Them: Fed chair non-committal on possible use of negative rates
• Assessing Yellen’s Warning That Markets Pose a Threat to Economy: Bear markets usually come ~9 months before recessions
• Mylan Slumps, Meda Soars on $7.2 Billion ‘Wealth Destroying’ Bid: Price represents a 92% premium to Meda’s close on Wednesday
• Sanders Raises $7.1 Million After New Hampshire Win: comes after Tuesday’s victory speech declaration that he was “going to hold a fundraiser right here, right now, across America”
• Clinton Reassesses Campaign With Thursday Debate Next Test: New Hampshire margin for Sanders puts Clinton on defensive
• Twitter Troubles Deepen as Lack of User Growth Threatens Sales: Dorsey says making product easier to use is top priority
• Amazon to Repurchase as Much as $5 Billion of Its Own Shares: co. commented in filing yday
• U.K. Bond Yield Drops to Record-Low as Investors Seek Safety: U.K. plans to auction 30-year securities later Thursday
• Swedish Central Bank Unleashes More Stimulus After Krona Warning: Sees scope to cut repo rate further
• ‘Brexit’ Vote Is Clouding U.K.’s Growth Outlook, CBI Says: Business lobby downgrades 2016 growth forecast to 2.3%
• Gold Soars Above $1,200 as Fed Chief Signals Go-Slow on Rates: set for 9th gain in 10 days on Fed chief’s remarks
• Oil Above $55 Is a Long-Term Inevitability, Maersk CEO Says: sees global demand pushing oil price higher over time
• Worst Still Ahead for Mining Industry After Losing $1.4 Trillion: This year looks even worse for an industry decimated by the commodities slump
• SocGen Slumps as Quarterly Profit Hurt by Securities Drop: Bank says ROE target for this year of 10% is ‘unconfirmed’
• As Zika Spreads, an Unexpected Winner in Brazil’s Mosquito War: Scandal-plagued leader Rousseff seeks unity to fight virus

In today’s closer look at regional markets, we start in Asia, where equities traded broadly in negative territory amid the soft lead on Wall Street, coupled with the persistent credit risk fears adding to the risk-off sentiment. As such, the iTraxx Asia index ex Japan, an index tracking the value of CDS’s in Asia, widened by 6bps to the highest level since Aug’13. The Hang Seng (-3.9%) returned from its elongated break to play catch up with the recent global equity and oil rout, consequently energy names were the notable laggard. While South Korea had also entered the fray as the Kospi (-2.5%) slipped amid the rising geopolitical tensions with North Korea after launching a satellite into space. ASX 200 (+1.0%) bucked the trend with stocks supported by a slew of strong earnings. As a reminder, Japanese markets were closed due to National Foundation Day.

Top Asian News

• Hong Kong Stocks Fall in Worst Start to Lunar New Year Since ’94: Global equity rout deepens during 3-day trading break
• Bass Says China Bank Losses May Top 400% of Subprime Crisis: Hedge fund manager says 10% asset loss would cut equity by $3.5t
• Rio Will Cut Dividend After Metals Rout Sees Profit Tumble: World’s 2nd-biggest mining co. to reduce spending by another $3b
• Billionaire’s Fund Sees India Extending Bear-Market Losses: Hedge fund awaits further 10% drop in values to turn bullish
• SBI’s Profit Growth Slows to Four-Year Low on Bad Loan Surge: Provisions for bad loans almost double in the December quarter
• North Korea to Shut Industrial Park, Freeze South Korean Assets: To expel South Korean personnel from Gaeseong complex

In Europe we have so far seen the most volatile day of what has been a very rocky 2016. Risk off sentiment is extremely apparent across asset class, with equities seeing a significant sell off so far today. Euro Stoxx 50 is lower by around 3.0% this morning, with financials and energy names the most significant underperformers as has been the case throughout the last 6 weeks. Financials have been weighed on by SocGen (-12.4%) who have suffered significantly in the wake of their earnings, while Deutsche Bank’s woes have not been forgotten (-5.7%), with the iTraxx Sub Financials index widening this morning by around 36bps, suggesting a rise in financials’ CDS. The heightened fear has also seen significant gains in fixed income, with Bunds higher by around 100 ticks so far today, while UK 10-year Gilt yields dropped to a record low this morning.

European Top News

• Glencore Copper Production Falls as Franco to Buy Metals Stream: 4Q zinc production fell 18%, coal declined 17%
• Zurich Insurance Quarterly Loss Misses Estimates on Claims: Company expects to miss its return-on-equity target for year
• Total’s Earnings Beat Estimates on Oil Production, Refining: Co. maintains dividend, offers payout in new stock
• Adidas Sees Higher Profit After 2015 Earnings Beat Estimates: Raises sales, profit outlook for this year
• BG Group Trades Final Time Before Merger: To delist from exchanges on Feb. 15 as Shell takes over; BG’s value has grown ninefold since company’s creation in 1997
• Mediobanca Second-Quarter Profit Declines on One-Time Charges: Fiscal 2Q profit falls 24%
• Nokia Earnings Increase on Cost Focus as Sales Fall Short: Projects 2016 “headwinds” as demand slows
• Publicis Sales Rise on Digital, North American Business: CEO Maurice Levy forecasts ‘modest’ growth this year
• Rio Will Cut Dividend After Metals Rout Sees Profit Tumble: To reduce spending by another $3 billion
• Natixis Buys Stake in U.S. Boutique as CEO Seeks Advisory Growth: To acquire 51% of Peter J. Solomon

In FX, the dominant move as noted above was the USD/JPY sell off, which has impacted on all the major currency pairs. This has contributed to the risk off theme, with stock markets in Europe in the red again and US futures pointing to a 5th consecutive day of losses. From the mid 112.00’s, the spot JPY rate was slammed through the 111.00’s to print 110.99, with no sign of the MoF or BoJ. Cross/JPY rates were dragged lower, with EUR/JPY trading through the key 126.00 level, but with limited momentum through here as EUR/USD rallied to new recent highs just above 1.1350. No such tempering in GBP and AUD, though the former JPY rate held 160.00 despite a heavy turnaround in Cable. EUR/GBP posted new highs through .7850. AUD/USD losses through .7000 contributed to sub 80.00 (and 79.00) in AUD/JPY. USD/CAD has tested 1.4000, but holds off the figure as yet.

WTI and Brent crude futures have ticked lower in European trade with WTI Mar’16 futures notably breaking below the USD 27.00 level, near 12 year lows despite the headline figure released in yesterday’s DoE inventories showing a surprise drawdown . However, some analysts have noted that Cushing OK crude inventories showed a surprise build, and the market is ready to pounce on any signs that the glut is expanding.

Gold has benefited from safe haven bids in Asian and European trade and is over USD 25.00/oz higher on the session, at its highest level since May 2015. The World Gold Council have noted that the upward trend in gold looks set to continue as buying by central banks and Chinese investors will bolster prices. Analysts have noted that the following year could see a surge of M&A activity, as gold miners have plenty of liquidity with surging gold prices and diversified miners look to offload assets, due to softness in industrial metals.

Turning to the day ahead, we get the latest weekly initial jobless claims data due in the US. The focus will again be on Fed Chair Yellen when she is due to speak in front of the Senate at 10am. Her prepared remarks will mirror what she said yesterday so the focus will be on the Q&A: for the sake of the market she better be much more dovish.

Bulletin Headline Summary from Bloomberg and RanSquawk

• Today has seen the most volatile day of what has been a very rocky 2016, risk off sentiment is extremely apparent across asset class
• The FX markets have been dominated by the USD/JPY sell off, which has impacted on all the major currency pairs
• Looking ahead: highlights include: Fed’s Yellen appear before Senate, weekly jobs data and earnings from PepsiCo
• Treasuries higher in overnight trading as European equity markets plunge, WIT oil drops below $27 a barrel; Treasury to sell $15b U.S. 30Y notes, WI 2.465% vs 2.905% in January, lowest 30Y auction stop since 2.880% in August 2015.
• Financial markets are signaling that investors have lost faith in policy makers’ ability to support the global economy. European stocks slid toward their lowest since September 2013 and U.S. futures indicated equities will open lower
• Sweden’s central bank lowered its key interest rate even further below zero to -0.5% and said it’s prepared to use its full toolbox of measures as it battles to revive inflation and keep the krona from appreciating
• European banks and insurers’ subordinated credit risk rose to the highest since March 2013 after disappointing earnings at Societe Generale and Zurich Insurance Group renewed concerns about financial companies’ profits; Societe Generale, France’s second-largest bank by market value, posted fourth-quarter profit that missed analysts’ estimates as earnings at the investment bank dropped and it set aside provisions for potential legal costs. The shares plunged
• With populist and anti-EU forces surging across the region, should David Cameron leave next week’s European Union summit with a deal to overhaul the terms of Britain’s membership, many of his counterparts will dig out their own wishlists
• Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis
• The world is so awash with crude, the boss of BP Plc said people will be filling their “swimming pools” with it by the end of the year
• Sovereign 10Y bond yields mostly lower, Greece (+31bp), Portugal (+31bp) higher; European stocks plunge, Asian markets mostly closed for holiday, Hang Seng drops; U.S. equity-index futures fall. Crude oil drops, copper, gold rise

US Event Calendar

• 8:30am: Initial Jobless Claims, Feb. 6., est. 280k (prior 285k); Continuing Claims, Jan. 30, est. 2.245m (prior 2.255m)
• 8:45am: Bloomberg Feb. United States Economic Survey
• 9:45am: Bloomberg Consumer Comfort, Feb. 7 (prior 44.2)
• 1:00pm: U.S. to sell $15b 30Y bonds

• Central Banks
• 10:00am: Fed’s Yellen testifies to Senate committee
• 5:30pm: Reserve Bank of Australia’s Stevens testifies in Parliament

DB’s Jim Reid concludes the overnight wrap

Looking at the latest in Asia this morning, markets in Korea and Hong Kong are open for the first time this week, although are largely playing catch up with the big falls that we’ve seen for risk assets in that time. The Hang Seng is currently down a steep -4.03% while the Kospi has dropped -2.97%. Mainland China exchanges are still closed although the Hang Seng China Enterprises Index (HSCEI) is down nearly 5%. Markets in Japan are closed for a public holiday. There’s better news in Australia where the ASX is currently +0.95%, although the Aus iTraxx index is 4bps wider as we go to print. US equity market futures are weaker while Gold has surged above $1,200.

Moving on. As we highlighted at the top, yesterday saw the 2s10s Treasury yield curve go below 100bps for first time since December 2007. After spiking as high as 1.772% in early trading, the benchmark 10y yield tumbled into the close, eventually finishing over 5bps lower on the day at 1.668% and just off the 12-month lows. 2y yields finished unchanged at 0.686% meaning the spread of 98bps is the lowest since the 6th December 2007. This is one of our favourite lead indicators of the business and default cycle and the flattening that has occurred in recent years is one of the reasons we think credit conditions have been tightening for a few quarters now and why our default models have been showing a continued pick-up in defaults into 2017-2018. To be fair the last four recessions have not started until the yield curve (2s10s) has inverted. We’re still some way off that but the fact that we’re at the flattest for over 8 years is a warning sign.

There was finally some good news to report for European equity markets yesterday as the Stoxx 600 (+1.87%) benefited from a financials-led (Banks +4.42%) rebound to close up for the first time this month. Having been heavily hit in recent days the IBEX (+2.73%) and FTSE MIB (+5.03%) finally got some much needed relief. European credit indices also had a better day although did finish well off their tights. The iTraxx senior and sub-financials indices ended up 5bps and 13bps tighter respectively which helped Main in particular close nearly 2.5bps tighter, although the index had been closer to 8bps tighter pre-Yellen.

Staying with credit, our US credit strategists published their latest note earlier this week (Chickens Come Home to Roost, 8 Feb 2016) wherein they construct a proprietary dataset to forecast expected US default rates. The team uses index transition data to capture all forms of default – bankruptcies, out-of-court restructurings and distressed exchanges – to build a robust market-based dataset that is more detailed, precise and timely than that available from ratings agencies. The most striking revelation of the data is that DM HY commodity names appear to already be in a full cycle, with issuer-weighted default rates at 15.9% (14.9% par).

Assuming that commodity defaults rise to 20% for the year ahead and that ex-commodity defaults hold steady at 4% as they forecast, the overall default rate for DM USD HY (Commodity weight: ~20%) would hit 7.2% – magnitudes higher than the 1.85% default rate seen last year! Rising credit pressures across a spectrum of non-commodity industries and downward pressure on recovery rates in energy bonds should only serve to further compound already apparent risks.

Wrapping up, yesterday’s economic data was focused on what was a pretty soft set of industrial production reports in Europe. Data for France (-1.6% mom vs. +0.3% expected), Italy (-0.7% mom vs. +0.3% expected) and the UK (-1.1% mom vs. -0.1% expected) all missed relative to expectations, while manufacturing reports for France and the UK were also soft for the month of December.

Turning to the day ahead, there’s not alot for us to report with no economic data of note due out in Europe and just the latest weekly initial jobless claims data due in the US this afternoon. Instead the focus will again be on Fed Chair Yellen when she is due to speak in front of the Senate at 3pm GMT. Her prepared remarks could mirror what she said yesterday so the focus will be on the Q&A. Away from this we’ll also get the Riksbank’s latest monetary policy announcement where current economist expectations are for another cut in the main policy rate deeper into negative territory (10bps cut to -0.45%). Earnings wise today we have 20 S&P 500 companies set to report including AIG and PepsiCo.

via Zero Hedge http://ift.tt/1PnOojN Tyler Durden

 

 

 

 

Social Justice, Prosperity, and Precious Metals

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

 

 

A question may go through the minds of some readers as they read many of the articles written by this “precious metals commentator.” That question is one of relevance. Why should readers or investors who are interested in precious metals want to read about “politics,” geopolitical events, or even social justice issues?

 

We need to know about politics in order to be aware of the rapid and alarming deterioration of our personal and property security. As individuals, our “rights” have been gutted by new fascist laws. These laws attempt to supersede our constitutions and are thus null and void. The problem is that we are governed by corrupt regimes that no longer recognize the Rule of Law and or the supremacy of our constitutions.

In turn, this type of governance deprives us of our property security. A financial crime syndicate is now allowed to serially steal all wealth we have in paper form by deliberately manufacturing a double-digit rate of “inflation” while our governments deny this inflation exists. This rate of inflation is, literally, the rate at which this crime syndicate steals all our paper wealth via the corrupted power of the printing press.

Give me control of a nation’s money, and I care not who makes the laws.

– Mayer Amschel Rothschild (1744 – 1812)

In the absence of the gold standard, there is no way to prevent confiscation of savings through inflation.

– Alan Greenspan (1966)

Discontent with this serial rate of theft, some banksters have now gone well beyond this level of criminality. With “the bail-in,” some of these financial criminals now claim the right to steal any paper asset, of any type, from any kind of paper account . In turn, our puppet governments have meekly acknowledged their intent to rubber-stamp the lawless confiscation of private property by these so-called “banks.”

The “geopolitical events” occurring in the world, such as the shams and half-truths presented by corporate media, are the pretext used by our corrupt governments for devolving our societies and economies still further. Therefore, we need to learn about developments here in order to properly understand our level of economic peril and in turn our level of economic need for history’s ultimate safe havens.

But who cares about “social justice” or even economic justice? It’s the New Normal now and we can’t afford to become fixated on such concerns because we all have to focus on just taking care of ourselves.

No.

United we stand, divided we fall. These are much more than mere words. We are a communal species. Our own prosperity as individuals (and perhaps even our own survival) hinges upon the health of our communities. In our modern societies, this means the health of our nations, our provinces or states, and our municipalities.

For those who reject this mantra, try packing up, heading out into the wilderness, and “living off the land” for just one week. In Canada, there is no shortage of wilderness but you might want to wait until summer before asserting your “independence.” Except for a microscopic minority of hard-core survivalists, we need healthy societies and that means healthy governments as a framework for these societies.

In turn, the three levels of government are entirely dependent upon our tax dollars in order to provide even a minimum of necessary services. But the increasingly impoverished masses produce fewer and fewer tax dollars, while corrupted regimes refuse to tax the growing hoards of stolen wealth accumulated by the Oligarch Trillionaires, via their “banks.” The result is capitalist economies that are literally starved of capital.

An imbalance between rich and poor is the oldest and most fatal ailment of all republics.

– Plutarch (46 – 120 CE)

Two thousand years ago, it was already “old news” that wealth inequality destroys not merely communities but also nations. Yet few of the “modern thinkers” in the 21 st century can manage to grasp one of history’s oldest lessons.

There is an obvious alternative to our fatten-the-Rich and starve-the-Poor insanity: Iceland. In the Corrupt West, puppet governments sacrificed the System in order to “save the banks,” which means paying thetrillions of dollars in extortion demanded by the oligarchs’ crime syndicate, in perpetuity. In Iceland, an honest government sacrificed the banks and saved the System.

The results speak for themselves. By preserving its social safety net, and purging most elements of this financial crime syndicate from its economy, Iceland has the most prosperous economy in the Western world. Even the IMF was forced to acknowledge this in its economic “report” on Iceland, while simultaneously this tool of the bankers was ramming more ludicrous Austerity down the throat of twice-bankrupted Greece.

We must now face the consequences of allowing our corrupt governments to erase our constitutions, shred our social safety net and destroy our economies. Over the immediate term, meaning the permanent “crisis” which we have allowed our Overlords to impose upon us, (physical) precious metals represent our best and surest means of personal financial salvation.

However, this is not the point. As sane and responsible citizens (at least we used to be citizens), there are better uses for our time than learning the million-and-one reasons why we need precious metals in order to protect ourselves from our own puppet governments and the oligarchs pulling their strings. What sane and responsible citizens should be devoting their energies toward is eliminating our grave need to squirrel away large quantities of gold and silver in anticipation of a financial cataclysm that should never have been allowed to occur.

It is for all these reasons that we need to become educated about social justice, economic justice, and how and why we can never again have genuine prosperity unless and until we restore these concepts to our own lives and societies. It’s too late to salvage our debauched monetary system or our bankrupted economies. Debt Jubilee is now mathematically inevitable – and in the near future.

But what about after that? How do we end up with anything other than a repeat of what we have just experienced, unless people learn how we must rebuild our economies and societies out of the rubble being created by our Overlords?

Those who do not remember the past are condemned to repeat it.

– George Santayana (1863 – 1952)

The only thing necessary for the triumph of Evil is for good men [and women] to do nothing.

– Edmund Burke (1729 – 1797)

Again, these are more than just words. But how can we “remember the past” if we do not correctly understand it? How can we prevent “the triumph of Evil” if we do not correctly understand how to do good?

Will our corrupt governments tell us how to correctly and properly rebuild our societies, so we can return to the prosperity that we took for granted for generations? Will the corporate media tell us? Will the bankers?

If the people reading these commentaries don’t take personal responsibility now for learning from the mistakes of the present and remembering our previous recipe for prosperity, the future is certain. We will be dooming our children, grandchildren, and great-grandchildren to repeating the same cycle of corruptionthat we are living today.

If the Citizens of our societies do not take responsibility – today – for shaping our future, then by default the Oligarchs will do this themselves, through the army of paid lackeys they can fund with the wealth they have stolen from us over the last several decades.

Serfs or citizens? There is no middle ground. Prosperity always comes at a price and that price is vigilance. But such vigilance isn’t possible with populations who now have absolutely no idea as to how we restore our societies and economies. It’s impossible to detect when our leaders our doing something wrong and we wouldn’t even recognize it if our governments were doing something right.

The recipe for prosperity (like most good recipes) is a relatively simple one. What must be re-learned, since it has been long forgotten, is that most of the “ingredients” of prosperity fall squarely under the categories of social justice and economic justice:

1) Minimize poverty;

2) Restore high wages for the workers and moderate wages for management;

 

3) Eliminate structural unemployment;

4) Eliminate corporate subsidies;

5) Break-up the monopolies/oligopolies, and restore competition; and finally

6) Tax the hoards of (stolen) wealth of the very wealthy, via wealth taxation.

Each one of those subjects is much too complex to be explained in the form of some easily digestible, one-paragraph summary. However, every one of these subjects has been addressed before in one or more previous commentaries. For those readers who don’t have a sophisticated understanding of these issues (and their solutions), it is your responsibility to acquire such an understanding.

We collectively bear the responsibility for having allowed the devolution and financial degradation of our once-prosperous economies. We bear the responsibility for having allowed the devolution of our once free and just societies. Therefore, we bear the responsibility for fixing what we have broken and this requires taking the personal responsibility to educate ourselves.

The good news here is that, in most respects, such “education” comes in the form of simply re-learning and remembering how our governments, societies, and economies previously functioned – back when we enjoyed an abundance of both prosperity and liberty.

Do you remember the days of “powerful unions” and the wages they were able to command for all workers, both union and non-union? Two-car garages, low unemployment and one wage-earners could provide comfortably for an entire family. Weren’t those horrible times?

The function of a responsible precious metals commentator is not to preach only doom-and-gloom and to act as a cheerleader for higher precious metals prices. Rather, what all such commentators should strive for is the elimination of our need to accumulate gold and silver.

 

The best possible outcome for this writer, or any other person in this sector, is if there were no more need for “precious metals commentators.” This is because eliminating this niche implies two things: it implies that we would once again be living in societies with plenty of other employment and economic opportunities around us; and it also implies that we would not be living in a time of grave political and economic peril.

 

 

 

For questions on this article or precious metals, please contact HERE

 

 

Social Justice, Prosperity, and Precious Metals

Written by Jeff Nielson (CLICK FOR ORIGINAL)

 

via Zero Hedge http://ift.tt/20NJ1CY Sprott Money

The canary in the coalmine of an increasingly desperate energy industry just croaked. With "unusual timing" and at "distressed prices," Reuters reports that Phillips 66 – the major US refiner owned by Warren Buffett – dumped crude oil for immediate delivery into Cushing storage tonight. This sparked heavy selling of the front-month WTI contract (to a $26 handle) and crashed the 1st-2nd month spread to 5 year lows.

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

 

 

And now with Reuters reporting on major US refiners dumping crude, sparking speculation that the move reflected advance warning of looming output cuts amid sluggish winter demand and record inventories…

Front-month WTI collapsed to a $26 handle…

 

 

The unusual sales of excess oil crashed the March/April WTI futures spread… One trader described the market as a "bloodbath."

 

 

It was unclear how many barrels one of the largest U.S. independent refiners sold, but three traders confirmed at least two deals traded at negative $2.50 and $2.75 a barrel. Two sources said a second refiner was also looking to offload barrels but transactions were not confirmed.

 

These deals drew notice among traders, who said the prices were distressed and the timing unusual… sending the cash-roll to 5 year lows…

 

 

The so-called cash roll, which allows traders to roll long positions forward, typically trades in the three days following the expiry of the prompt futures contract. The trading period for February-March contracts concluded almost three weeks ago.

 

Since then, however, oversupply has pressured refined products prices lower, and now some grades of crude are yielding negative cracking margins, traders say.

 

"Midwest margins turned negative after operating expenses last week and forward cracks suggest margins will remain in the doldrums for some time," said Dominic Haywood, an analyst for Energy Aspects in London.

If Phillips 66 does cut refinery runs, it would be the third refiner to capitulate amid record gasoline inventories and negative margins.

Earlier on Wednesday, sources said Delta Air Lines' Monroe Energy refinery near Philadelphia had decided to cut output by 10 percent at its 185,000 barrels per day (bpd) refinery due to economic reasons.

 

On Tuesday, sources said that Valero Energy Corp was planning to cut gasoline production at its 180,000 bpd Memphis, Tennessee, refinery by about 25 percent.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week – just 8 million barrels shy of its theoretical limit – stoking concerns that tanks may overflow in coming weeks.

 

And so, with the news that Phillips 66 is dumping in apparent size, it appears, as we detailed previously, that BP's warning that storage tanks will be completely full by the end of H1

"We are very bearish for the first half of the year," Dudley said at the IP Week conference in London Wednesday. "In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in," he added. "The market will start balancing in the second half of this year.”

May be coming true a lot sooner.

via Zero Hedge http://ift.tt/1WfxkhN Tyler Durden