GiaNT SQuiD SiGHTING NoT a HOAX…


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BANZAI7 NEWS–For the second time in recent months, a giant sea creature has washed ashore in California. First it was a rare oarfish that had grown to a freakish 100-foot length. This time it was a giant squid measuring a whopping 160 feet from head to tentacle tip.

These giants look different but experts believe they share one important commonality: they both come from the waters near the Goldman Sachs Toxic Asset Plant in the Buttfuk District of Lower Manhattan.

Scientists believe that following the 2008 disaster at the Goldman Toxic Asset Plant an unknown number of trading creatures suffered genetic mutations that triggered uncontrolled growth – or “radioactive gigantism of the risk scrotum.”

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/s3FVxhf4oeg/story01.htm williambanzai7

BofAML On Silver’s Squeeze, The Lurching Loonie, & Treasury’s Turning Trend

US Treasury yields broke down sharply Friday, confirming a near-term, potentially medium-term, turn in trend; and, as BofAML's Macneil Curry notes, this Treasury turn should prove to be a headwind for select USD pairs, (although BofAML remains bigger picture USD bulls); particularly USDJPY. However, the weakness in the Canadian USD – which was the only currency not to rally against the greenback on Friday – suggests the downtrend in the Loonie has significant legs. Precious metals – most notably silver – could also benefit from the Treasury trend change.

Via BofAML's Macneil Curry,

US 5yr yields rollover

US Treasury yields have topped and turned trend, with 5yr yields doing so in particularly dramatic fashion. The bullish reversal from 4.5yr trendline support says 5yr yields should fall another 10bps/15bps in the In the sessions ahead, with worst case potential for a re-test of long term pivot resistance at 1.22%/1.25%.

$/¥ is topping out

With Treasury yields rolling over, $/¥ is set to do the same. A break of 103.74 would confirm the bearish turn in trend. While the Head & Shoulders Top targets the 102 area, CFTC positioning and the completing 5 wave advance from Feb’12 and Oct’13 says weakness can extend to the 200d (now 99.70) and below.

$/CAD: the exception to the rule

Friday saw the US $ fall against all major currencies EXCEPT THE CANADIAN $. Indeed, $/CAD has now reached levels not seen since 2009. While we could see a near term pause or correction, weekly charts say that this trend has significant room to run, with the multi-year Head and Shoulders base targeting 1.1666/1.1841

Silver squeeze

With the US Treasury market turning and the US $ near term vulnerable, precious metals should benefit. Silver is particularly worthy of note as a break of 20.51/20.62 resistance would complete a near term base and turn higher opening further gains towards the Oct-30 high at 23.09


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IpjiVxX11gI/story01.htm Tyler Durden

BofAML On Silver's Squeeze, The Lurching Loonie, & Treasury's Turning Trend

US Treasury yields broke down sharply Friday, confirming a near-term, potentially medium-term, turn in trend; and, as BofAML's Macneil Curry notes, this Treasury turn should prove to be a headwind for select USD pairs, (although BofAML remains bigger picture USD bulls); particularly USDJPY. However, the weakness in the Canadian USD – which was the only currency not to rally against the greenback on Friday – suggests the downtrend in the Loonie has significant legs. Precious metals – most notably silver – could also benefit from the Treasury trend change.

Via BofAML's Macneil Curry,

US 5yr yields rollover

US Treasury yields have topped and turned trend, with 5yr yields doing so in particularly dramatic fashion. The bullish reversal from 4.5yr trendline support says 5yr yields should fall another 10bps/15bps in the In the sessions ahead, with worst case potential for a re-test of long term pivot resistance at 1.22%/1.25%.

$/¥ is topping out

With Treasury yields rolling over, $/¥ is set to do the same. A break of 103.74 would confirm the bearish turn in trend. While the Head & Shoulders Top targets the 102 area, CFTC positioning and the completing 5 wave advance from Feb’12 and Oct’13 says weakness can extend to the 200d (now 99.70) and below.

$/CAD: the exception to the rule

Friday saw the US $ fall against all major currencies EXCEPT THE CANADIAN $. Indeed, $/CAD has now reached levels not seen since 2009. While we could see a near term pause or correction, weekly charts say that this trend has significant room to run, with the multi-year Head and Shoulders base targeting 1.1666/1.1841

Silver squeeze

With the US Treasury market turning and the US $ near term vulnerable, precious metals should benefit. Silver is particularly worthy of note as a break of 20.51/20.62 resistance would complete a near term base and turn higher opening further gains towards the Oct-30 high at 23.09


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IpjiVxX11gI/story01.htm Tyler Durden

HFT Scourge Exposed (Again): Options Quote Spam At The Open Has Quadrupled In 3 Years

In the last 3 years, the volume of options quotes (not trades) in the first few seconds of the US equity market’s open has exploded. From around 1 million quotes in the first second of the day in 2011, Nanex’ detailed animation shows that volumes are now reaching 4 million quotes. Does this quote spam look like it provides liquidity? Wondering why the opening price action in US equity markets has become incredulous in recent months – with vertical dump-and-pumps – wonder no more… ‘efficient’ markets indeed…

 

Via Nanex: (@NanexLLC)

Each line shows the number of option quotes each second over the first 20 seconds of trading for 1 day.

The animation adds 1 new day per frame to show the growth.

The range of dates is January 2011 through January 9, 2014. 

 


    



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

China Plans To Seize South China Sea Island From Philippines, Says “Battle Will Be Restricted”

Following Japan's proclamations that it will take over another 280 'disputed ownership' islands, it appears the increasingly dis-approved of Prime Minister Shinzo Abe's path of militarism and provocation is working. As China Daily Mail reports, according to experts, China intends to take back Zhongye Island – 'illegally' occupied by the Philippines, according to the Chinese. The Chinese navy has drawn a detailed combat plan to seize the island and the battle will be restricted within the South China Sea. Philippines military is building up on the island and the Chinese see as 'intolerable' the "arrogance" relying on US support. It seems the Obama administration may have to 'not take sides' in another fight soon.
 

 

Background on the build-up…

Eugenio Bito-onon Jr, mayor of the Kalayaan island group, part of the contested Spratly islands administered by the Philippines, recently confirmed that the Western Command of the Armed Forces of the Philippines has deployed new air force troops in rotation to the disputed island of Thitu, according to Jaime Laude in a report for the Manila-based Philippine Star on Jan. 5.

 

 

Known as Pag-asa in the Philippines and Zhongye island by both China and Taiwan, Thitu is the second largest in the Spratly island chain in the South China Sea and the largest of all Philippine-occupied Spratly islands.

 

Laude said that the air force troops were deployed to Thitu island by naval aircraft, which will give the residents of the island a chance to visit Kalayaan aboard the returning plane. He added that China's maritime expansion into the South China Sea continues to put pressure on the Philippines, and the Philippine Navy have also been stationed in the area to defend the islands.

 

 

Six countries – Taiwan, China, the Philippines, Vietnam, Malaysia and Brunei — claim in whole or part to the South China Sea and its island chains and shoals.

And the Latest Tensions…

Via China Daily Mail (translated from Chinese media),

Relying on US support, the Philippines is so arrogant as to announce in the New Year that it will increase its navy and air force deployment at Zhongye Island, a Chinese island that it has illegally occupied for years.

 

It will be an intolerable insult to China

 

According to experts, the Chinese navy has drawn a detailed combat plan to seize the island and the battle will be restricted within the South China Sea.

 

The battle is aimed at recovery of the island stolen by the Philippines from China.

 

There will be no invasion into Filipino territories.

 

A report in the Philippines Star confirmed the Philippines military buildup on the island.

Source: qianzhan.com “Sudden major move of Chinese troops this year to recover Zhongye Island by force”

 

Of course, claims that "battle will be restricted" are nothing but taunting and should China launch an offsensive here, we suspect the already dry and brittle tinder box in the South (and East) China Sea could rapidly escalate.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2WOEOYWnmM8/story01.htm Tyler Durden

China Plans To Seize South China Sea Island From Philippines, Says "Battle Will Be Restricted"

Following Japan's proclamations that it will take over another 280 'disputed ownership' islands, it appears the increasingly dis-approved of Prime Minister Shinzo Abe's path of militarism and provocation is working. As China Daily Mail reports, according to experts, China intends to take back Zhongye Island – 'illegally' occupied by the Philippines, according to the Chinese. The Chinese navy has drawn a detailed combat plan to seize the island and the battle will be restricted within the South China Sea. Philippines military is building up on the island and the Chinese see as 'intolerable' the "arrogance" relying on US support. It seems the Obama administration may have to 'not take sides' in another fight soon.
 

 

Background on the build-up…

Eugenio Bito-onon Jr, mayor of the Kalayaan island group, part of the contested Spratly islands administered by the Philippines, recently confirmed that the Western Command of the Armed Forces of the Philippines has deployed new air force troops in rotation to the disputed island of Thitu, according to Jaime Laude in a report for the Manila-based Philippine Star on Jan. 5.

 

 

Known as Pag-asa in the Philippines and Zhongye island by both China and Taiwan, Thitu is the second largest in the Spratly island chain in the South China Sea and the largest of all Philippine-occupied Spratly islands.

 

Laude said that the air force troops were deployed to Thitu island by naval aircraft, which will give the residents of the island a chance to visit Kalayaan aboard the returning plane. He added that China's maritime expansion into the South China Sea continues to put pressure on the Philippines, and the Philippine Navy have also been stationed in the area to defend the islands.

 

 

Six countries – Taiwan, China, the Philippines, Vietnam, Malaysia and Brunei — claim in whole or part to the South China Sea and its island chains and shoals.

And the Latest Tensions…

Via China Daily Mail (translated from Chinese media),

Relying on US support, the Philippines is so arrogant as to announce in the New Year that it will increase its navy and air force deployment at Zhongye Island, a Chinese island that it has illegally occupied for years.

 

It will be an intolerable insult to China

 

According to experts, the Chinese navy has drawn a detailed combat plan to seize the island and the battle will be restricted within the South China Sea.

 

The battle is aimed at recovery of the island stolen by the Philippines from China.

 

There will be no invasion into Filipino territories.

 

A report in the Philippines Star confirmed the Philippines military buildup on the island.

Source: qianzhan.com “Sudden major move of Chinese troops this year to recover Zhongye Island by force”

 

Of course, claims that "battle will be restricted" are nothing but taunting and should China launch an offsensive here, we suspect the already dry and brittle tinder box in the South (and East) China Sea could rapidly escalate.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2WOEOYWnmM8/story01.htm Tyler Durden

Hope In The Face Of Disaster – Creating A Sustainable, Viable, Future Path For Civilisation

By John Sharry, originally posted at The Foundation For The Economics Of Sustainability

Hope in the Face of Disaster – Creating a sustainable, viable, future path for civilisation

The Illusion of Progress

There was a small village located in the centre of a large rainforest. Over time, the people decided that they would like to voyage out of the forest and to make their way to the sea, which they knew was close by. To do this they consulted the wise people in the village, notably the engineer, the politician and the philosopher. The engineer and the politician quickly took the lead in the project. The engineer made cutting tools like machetes that could cut easily through the dense undergrowth, and the politician organised the villagers in small working teams. Over time an efficient system was evolved, the engineer made the best and sharpest tools and the politician streamlined their application. Soon the village was making steady progress through the forest and everyone in the village was employed and working hard together. The philosopher, who sat in the trees all day long, seemed to make little contribution and people wondered what his value was.

One day the group came upon a particularly high tree. It stood out as the highest tree in the forest. The workers quickly bypassed it as they efficiently made progress, but the philosopher stayed behind and climbed to the top of the tree. From the top he had a fantastic view of the whole jungle. He could see the villagers, cutting like a snake through the jungle and in the far off distance he could even see the sea. Then to his horror, he noticed that the villagers were not heading towards the sea, but in fact were moving in the opposite direction, towards a large hidden chasm. If they continued on the same course, all of the villagers would fall to their death. Alarmed, he climbed down the tree and he rushed over to the politician and engineer leading the group.

‘We are heading the wrong way, we are headed towards disaster’ he shouted.

‘Shut up’ the engineer and scientist replied in unison ‘we are making great progress’.

In many ways the plight of humanity represents that of the tribal village described in the story. We have created an apparently wonderful economic model that seems to provide us with so many benefits. When you consider the incredible feats of technology and the global consumerist lifestyle we enjoy it is easy to marvel at what has been achieved. Of course what may be less obvious is the dark side of the growth economic model which is deeply inequitable, restricting its benefits to the relative elite in the western world and trapping the rest of the world in poverty. Most dangerous of all is the unsustainability of the model and where it is taking us in the future. There is now a perfect storm gathering that includes economic indebtedness, resource shortages, population pressures, and climate change that is guaranteed to derail civilisation. Despite this the political and economic mainstream are largely in denial about what is happening– like the hapless engineer and politician in the story everyone agrees that we must restart the ‘growth economy’ and continue to progress down the business as usual pathway. Very few people are taking the long term view and watching the direction towards doom that this pathway leads us. Too invested in the benefits of our current lifestyle, no one wants to hear the counsel of the philosopher who sees the disaster that looms ahead.

Where is civilisation heading?

Human decision-making is complex. On our own, our tendency to yield to short-term temptations, and even to addictions, may be too strong for our rational, long-term planning.
– Peter Singer

Like the philosopher in the story at the beginning it is useful to take a moment to climb the ‘tallest tree’ and to consider where civilisation is heading. Unfortunately the long term vista is not pleasant. Under the current business as usual economic model we are facing into a series of interrelated crises and global problems that are already beginning to have an impact.

Economic instability/ Financial System Weakness

The world banking crisis in 2008 and the resultant global recession revealed to the general public the inherent weaknesses in our world financial system. The economic growth model on which we depend has created a parallel system of finance that has built up extraordinary amounts of debt between countries and banks that has grown into an unsustainable bubble. In 2008 the world financial system was revealed as co-dependent, embedded and very fragile. Much like a house of cards, the collapse of Lehman’s brothers bank send ripples through the world bands that the nearly brought down the whole system. While some stability has been created due to massive intervention on the part of nation states and central banks, unfortunately this is largely temporary and the central weaknesses remain. Many countries have completely unsustainable levels of debt that simply cannot be paid back and when a future crisis happens central banks and nation states will have less capacity to intervene (having spent most of their reserves to stabilise the system since 2008). Despite these problems there is widespread denial about the scale of the financial problems we face. As the economist and founder of Feasta, Richard Douthwaite[1] notes:

Few of us think that anything radical has to be done. We assure each other that minor tinkering, like holding an inquiry, beefing up the regulatory system and limiting bankers’ bonuses, will be enough to allow us to carry on living pretty much as we do now for the foreseeable future.

Resource Shortage

We are heading into an era of resource shortage and constraint. The cheap fossil fuel energy that has powered our civilisation will become increasingly scarce and harder to access. Such a peaking of supply will have serious ramifications across our economies and not just in transport and energy. Our world agricultural system on which we all depend is highly fossil fuel dependent – collapses in the supply of oil lead to collapses in food production and thus food shortages. Our world economy is so dependent on the cheap availability of oil, that even a small restriction in supply has the potential to collapse the entire system or plunge the world economy into depression.

Current and future resource constraints are not just limited to oil and indeed almost all the vital resources on which we depend are being depleted at exponential rates. Every human person and community depends on the availability of large supplies of water. With increased consumption and droughts caused by climate change fresh water is becoming harder to access in many regions in the world. Many countries are depleting underground water aquifers at exponential rates that far exceed rainfall’s ability to replenish them. Many highly populated areas of the planet will become increasingly uninhabitable in the near future.

In his book, Peak Everything [2], Richard Heinberg describes how we are facing decline in just about every resource our complex economies depend on whether this is uranium production, grain yields, fish stocks, arable land in agriculture etc. Having been used to everything on demand and plenty in the past, our societies will have to deal with resource constraint and shortage in the future.

Ecological Destruction

Many natural biologists argue that we are currently precipitating the sixth great extinction on the planet. Some estimates put the current extinction rate at up to 10,000 the norm – we are systematically wiping out the earths species. Perhaps most devastatingly, this can be seen in the on-going collapse of life in the oceans. Overfishing and increased ocean acidity caused by CO2 emissions is leading to the collapse of ecosystems and larger dead zones. In a recent report, Alex Rogers, professor of biology at Oxford University, said:

The health of the ocean is spiralling downwards far more rapidly than we had thought. We are seeing greater change, happening faster, and the effects are more imminent than previously anticipated[3].

While the mass extinction of species might be seen as an environmental problem, it will also threaten our own survival as the human species as our well-being is determined by the life in the oceans. In the same report Rogers continues

People are just not aware of the massive roles that the oceans play in the Earth’s systems. Phytoplankton produce 40 per cent of the oxygen in the atmosphere, for example, and 90 per cent of all life is in the oceans… The situation should be of the gravest concern to everyone since everyone will be affected by changes in the ability of the ocean to support life on Earth.

Climate Change

As if the problems above weren’t bad enough, by far the most serious issue to come is global warming caused by human CO2 emissions leading to catastrophic climate change – this is biggest elephant in the room.

Already, we are beginning to see the early stages of this in increased rates of flooding, severe heat waves and sea level rises but worse is to come. For many years, 2 degrees was proposed as the safe limit that civilisation could tolerate but this looks likely to be breached on our current economic trajectory. As Prof Kevin Anderson[4] of the Tyndal Centre notes

There is now little to no chance of maintaining the rise in global mean surface temperature at below 2 ?C, despite repeated high-level statements to the contrary.

In exploring future trajectories, the recent IPCC report concluded that if we continue our ‘business as usual’ rate of CO2 emissions, this could lead to 3- 5 degrees of warming by end century. Such rates of warming could make most of the planet uninhabitable for human life and threaten our very survival as a species. When you consider that the IPCC projections are relatively conservative and avoid taking into account many potential accelerating factors (such as permafrost methane release, dark Arctic Ocean heating etc.), then these predictions are truly alarming. As Kevin Anderson (quoted by David Roberts) states elsewhere[5]

The thing is, if 2 degrees C is extremely dangerous, 4 degrees C is absolutely catastrophic. In fact, according to the latest science, says Anderson, “a 4 degrees C future is incompatible with an organized global community, is likely to be beyond ‘adaptation’, is devastating to the majority of ecosystems, and has a high probability of not being stable”.

What is the basic problem?

Because of his greed the foolish farmer opens the goose’s stomach in order to access more of the golden eggs she produced. In the end he is left with a dead goose and no more gold.

Like all species, humans have exploited the natural environment to provide food, shelter and warmth. Unlike other species however, we are the first to exploit irreplaceable and unrenewable natural resources in such excessive quantities that we are destabilising the planet on which we all depend. The most significant of these unrenewable resources are fossil fuels such as coal, oil and gas which we started using a few hundred years ago to kick start our industrial economy and on which we now depend on an increasingly huge scale to power our modern civilisation and consumerist lifestyle.

In the early days such natural resources were in such abundance that it might have seemed churlish to see them as finite or limited. In addition, we had little evidence that our burning of fossil fuels caused harm to the environment. As a result, our economies started to grow at exponential rates and our modern civilisation became increasingly complex and dependent on exploiting these finite natural resources. Over time our industrial economy has morphed into a complex global machine that requires increasing energy and natural resources at its disposal in order to sustain it. The modern economy and the financial system in particular require on- going economic growth for it to remain stable. Loans that banks make now require future economic growth so that they can be repaid with interest. Any sustained recession puts banks in particular and the financial system in general at risk of collapse.

As a result modern civilisation is collectively caught in the following terrible bind: In order to avoid collapse the modern economy requires continual growth and thus the increased exploitation of natural resources; however, economic growth depletes the earth’s resource base on which the economy depends and so will eventually collapse.

This means that whatever choice we make we are facing into some form of decline and collapse. However, the earlier we choose ecologically sensitive alternatives to our current economic growth model, the more manageable such collapse and decline might be.

In simple terms we are reaching the limits of the natural world and things will not be the same in the future. Already, we are feeling the tremors of the future shocks to come. World agricultural output is declining, the availability of crucial natural resources such as fresh water, fish stocks, arable land are all declining. Fossil fuels are increasingly harder to access or cause increasing environmental damage as they are exploited. The mining of tars sands and the boom in worldwide fracking are examples of this, both of which are barely economically viable.

As children we all learnt the parable of the foolish farmer and golden goose who because of his greed kills the goose on which he and his family depends. We are making exactly the same mistake with the planet. Instead of accepting the natural limits of the resources at our disposal, we are living beyond the planets means and are perilously close to destroying the natural world on which we all depend.

Why is No One Listening?

There have been many warnings of the predicament in which humanity finds itself. In the early seventies the Club of Rome group published the famous book The Limits to Growth which outlined the unsustainability of the world economic model. As early as 1988 James Hansen explicitly warned the United States Congress about the dangers of human induced climate change. Some of these warnings were taken up by politicians of the day and indeed President Carter issued a passionate speech about the over- dependence of the USA on fossil fuels in 1977 and called for a switch to renewable and more environmentally friendly alternatives. With the Rio Earth summit in 1992, attended by 152 world leaders, there was perhaps a peak of world optimism that collectively we might now face reality and turn away from the unsustainable and disastrous path we were on.

Sadly, however none of this hope for change has been realised in the last 20 years and indeed if anything things have got much worse. Instead of reducing our dependence on fossil fuels we have rapidly increased our consumption at an exponential rate. Instead of reducing carbon emissions into the atmosphere these are now at the highest than at any time in human history. Further, what is particularly surprising is that people are now denying more than ever the reality of the problem. For example, research conducted by the University of Cardiff in 2013 found that the proportion of climate sceptics in Britain has risen to 19%, an increase of 15% since 2005[6].

Despite increasing and overwhelming scientific certainty about climate change, there is a parallel increase in denial of the facts by the public. Indeed, there are now active and well-funded denial lobbies intent on confusing the message. Even among those who accept the problems, there is an increasing avoidance of discussing these problems. As well as a growing number of ‘climate deniers’ we now have ‘climate ignorers’ who are people who despite a sense that all is not right in the world choose not to consider these issues and instead continue day to day on the same path.

So why would this be? Why would people choose to deny the serious problems of the future posed by not just by climate change, but also by resource depletion, and environmental destruction? Why would people deny such serious problems when they are becoming most apparent? Why would we turn away from corrective action at the hour of our direst need? While people have suggested the answer to this lies in the existence of well organised vested interests in the energy and fossil fuels industries and this is indeed true, I think there is also a collective failing in our human psychology that explains this rampant denial.

Denial, Fear and Loss

The only pain that we can avoid in life is the pain caused by trying to avoid pain.
– RD Laing

Denial is a common psychological response to deal with a serious threat or loss. Rather than experience the fear that we should normally feel when confronted by a major threat, we try to deny the reality of the threat in order to preserve our mental comfort. This is particularly when the evidence of the threat is indirect or far off. For example, many people who experience the early symptoms of a major illness will avoid thinking about it or seeking help for a considerable amount of time. They will reassure themselves that it is something minor and nothing to worry about, and avoid seeking help. Denial can be particularly strong when acceptance of the threat would mean we have to change or give up something we hold dear. For example, a person addicted to smoking or drinking will go to great lengths to deny the harm such behaviour might be causing their families and themselves, because they can’t imagine living without their preferred drug. In addition, because the damage of many addictions is far off and in the future, it is easier to deny its impact and to continue the habit unperturbed. For the smoker, the prospect of lung cancer in 20 years can be no deterrent to smoke the cigarette currently in their hand.

In many ways our collective behaviour in response to the prospect of climate change and environmental destruction is similar to the behaviour of a seriously addicted person. We in the West are addicted to availability of cheap oil and the consumerist economy that it provides us. Just like an alcoholic who will go to great lengths to deny the harm that alcohol causes in his life, so collectively our mainstream media and political system will go to great lengths to deny the harm that our economies dependent on fossil fuels are causing. When the denial is strong, people will cling to any belief (however unfounded) that seems to indicate there is nothing to worry about or that there is no threat to their livelihood. Picking perceived ‘holes’ in the evidence about climate, however tenuous, or clinging to ‘vague solutions’, however unrealistic are all powered by denial. When people read ‘denial’ articles, they can feel reassured momentarily and their fear of the future is abated. Of course such strategies only work temporarily as the evidence continues to grow and crises start to impact.

In addition, just as an alcoholic or drug addict will increasingly employ desperate measures to satisfy his addiction (despite the harm and moral depravity of such measures) so we employ increasingly desperate and ecological harmful strategies to secure an interrupted supply of oil to fuel our economy’s voracious appetite (whether this is fracking, exploiting tar sands or dangerous deep sea drilling).

Denial can also be particularly strong, the greater the threat and the more helpless a person might feel in the face of it. For example, many people on receipt of a fatal diagnosis may choose to actively deny or ignore these facts because they feel there is nothing they can do to reverse the diagnosis and the pain of contemplating its impact and their eventual death is too great for them. The recent growth of the number of ‘climate deniers’ and ‘climate ignorers’ can be explained by an increased awareness (on one level) of the problems and a resultant desperation to deny the facts and put them out of collective awareness. Though people have an increasing sense of unease about these problems they will avoid talking about them or engage in some form of wishful thinking that solutions will be found. They refuse to let the scale of the pending catastrophe sink in and do everything to keep it at bay.

As we shall see later, in helping people move from denial to a more constructive stance, they need to discover a purposeful goal of how they can respond to the current challenges which points to constructive action they can take.

Over Optimism and Collective Denial

One of the most striking things about the response to the current predicament is the lack of leadership and/ or collective denial that is endemic across our mainstream institutions. Our political masters, the mainstream media and most of our economists all agree that we must continue the economic growth or our ‘business as usual’ model, despite the patent unsustainability of this pathway and the harm it causes. In the face of the world economic crisis, there is an almost across the board consensus in the mainstream that we must return to economic growth to solve these problems. This consensus extends from the political left to the political right from business leaders to trade unionists and no one in the mainstream is proposing an alternative. There is almost no political will to question this consensus and to really consider the short term nature of such ‘solutions’ which even if possible will have such long term devastating consequences. Focused solely on re-election in a year or two, the last thing a politician wants to do is to talk about the reality of challenges for fear of making people despairing and fearful and vote not to re-elect them.

When denial is punctured

Crisis can be a time of opportunity and change, as well as trauma, and fracture.

The fact that climate change is a relatively slowly emerging phenomenon and that we are out of touch with the environmental destruction we cause means it is easy for most people to continue to deny these problems. This is likely to change once society is beset by an unending set of crises and catastrophes. Even though early change or adaptation is far more preferable to emergency change and forced adaptation, it is likely that until our addicted society experiences catastrophes, will the penny finally drop and our collective denial be punctured. Once this happens this will of course be a very perilous time. People, who have been hitherto in comfortable denial, will become fearful and desperate and may embark on desperate actions leading to social unrest, war and society breakdown. We need to be prepared to manage these social difficulties in the future which is likely to be as significant as managing the economy.

The famous psychologist Kubler Ross[7] proposed a model of the individual’s response to bereavement or pending loss as going through the stages of denial, anger, bargaining, depression and finally acceptance. Once denial is passed a person may experience great anger at their loss, which is often accompanied by seeking to apportion blame and even seek retribution. This can be followed by bargaining or engaging in wishful thinking or unhelpful strategies to mitigate the loss and then by depression and grief as the impact of the loss finally comes to bear. Kubler Ross argues that once this grief work is done, the person can reach some level of acceptance and integration. Interestingly, many writers in the environmental field describe their own personal journey of awareness in similar terms. They describe a period of denial, before having a ‘climate change moment’ when they realise that the world on which they depend is unsustainable. This if often followed by a period of despair and finally by some acceptance and a commitment to constructive action.

Such a grief model may also give us some indication as to the stages we will collectively go through as the denial about the un-sustainability of our current lifestyles is punctured and we are beset by crises and consequences. If the first half of the age of oil has been characterised by exuberance, ever- increasing expansion, and an almost manic consumption of the world’s resources, the second half will be characterised by contraction, scarcity and depression. Once the denial falls away and it becomes clear that the decline of our western industrial economies is chronic and long-term, collective anger in likely to be widespread. People will seek to blame someone for the situation they are in, and there will be many looking for easy answers or scapegoats. It is at these times that people can choose radical and extreme political views. Just as the economic turmoil and the great depression of the 30’s led to the rise of dictatorships and totalitarian states in Europe, when the Nazis seized power by galvanising the public’s anger around easy scapegoats and negative ideals so these times will be fraught by similar dangers. In addition to anger, there is also likely to be widespread depression and despair. This is just as dangerous and has the potential to cause people to feel helpless in the face of negative forces within society, disabled them from taking action and to miss the positive opportunities in their midst.

Responding Constructively

In collectively, preparing for the many challenges ahead it is important to take into account the associated psychological, community and societal problems that will emerge. Once the crises occur, community and society leaders will have a particular responsibility to manage the public anger and despair that will emerge in order to avoid the destructive paths of social disorder. The twin challenges will be to help people channel their anger into constructive rather than negative courses of action and to present a vision that inspires hope in the face of widespread difficult circumstances. Such plans will be as crucial as economic and technological ones in helping people navigate a new future.

As a mental health professional my work is all about helping people face serious life problems such as addiction, disability or relationship breakdown and then in the face of such problems to live with meaning and purpose. I find it useful to conceptualise four stages to help individuals change which may provide a helpful framework in considering how we might collectively face the serious problems of resource depletion, climate change and economic collapse that are ahead of us. These four stages are

1)  Honestly accepting the reality in which we find ourselves
2)  Creating a meaningful vision/purposeful goal of how to live in the face of such reality
3)  Focusing on constructive action
4)  Building a community of support

Honestly Accepting Reality

We must let go of the life we have planned, so as to accept the one that is waiting for us.
– Joseph Campbell

At heart of addiction is fear. The addict fears that he cannot live without the drug or addicted object and will do anything to hold on to it. The antidote to this fear and the first step to overcoming addiction is to honestly accept the reality of your addiction and to take responsibility for your actions. Such honesty requires great bravery as you have taken responsibility for the harm your actions have caused. Using a second metaphor, our response to our collective predicament is similar to person facing a life threatening and potentially fatal illness. It requires great bravery for a person to face this new challenging reality and to allow the difficult feelings of anger and depression that might follow. Adjusting to accept a new much changed reality often requires a period of mourning, whereby a person experiences grief at the ‘loss’ of the future they were expecting and as they learn to live with very different expectations.

For us to face the hard reality of our collective predicament won’t be easy. Most people avoid thinking about it and those that do maintain a theoretical understanding. Scientists will talk about how we are committed to 2-4 degrees of warming, but may be reluctant to describe in detail what these facts will mean (inundation of major cities, killer heat waves, collapse of agriculture, social disorder). Some economists will talk about coming shortages in oil and other resources but few will visualise the food shortages, and the potential economic and social collapse that this will bring. Further, while many people recognise there are serious environmental challenges, such problems are minimised and not seen as a personal threat to their own existence. The melting of the Arctic ice is seen as a problem for polar bears, and climate change as one only affecting the third world, rather than both being seen as heralding serious threats to their own personal and national security. There is a disconnect from the obvious fact that we are utterly dependent on nature and the environment – its demise spells out our own destruction.

For us to wake up to the sheer scale of the problems we face will indeed require great honesty and bravery. It will be particularly hard for us to accept our responsibility – that is it was our actions which caused all these problems in the first place through our refusal to abandon a harmful economic model. Hardest of all will be to accept that the problem is not fixable, that much of what we have done is irreversible. While there is a lot we can do to arrest some of the problems and to mitigate some elements of disaster it is very likely that we are gone beyond the point of no return in many arenas. At best, we are looking into a period of long term decline and managed collapse. There is no way to sugar coat these hard facts, though the psychological acceptance of this reality is the first step to health. After denial, the Kubler-Ross model proposes the hard steps of anger and despair before reaching a stage of acceptance when people can learn to live again in a meaningful way.

Creating a Positive Vision

Grant me courage the change the things I can change, the serenity to accept the things I can’t change and the wisdom to know the difference.
– Serenity Prayer

Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense regardless of how it turns out.

– Vaclav Havel

Once a realistic and grounded appreciation of reality is achieved the next step is to create a vision for living in the face of this reality. There are two parts to this new vision that are illustrated by the wisdom of the serenity prayer. On the one hand, our new awareness should motivate us to individual and collective action to create change. Anyone realising the facts of climate change and resource scarcity should indeed feel alarm about our current collective path and then throw themselves into action to change course. Like the philosopher in the story at the beginning, we need people to try to ‘shout stop’ and to work to get us to pull back from our course of ecological (and self) destruction. This is the work of the many groups that campaign for reductions of CO2 emissions and those that work to conserve and protect wildlife.

Setting realistic and specific goals is important in this area of work, whether this is achieving a definite limit on carbon emissions when tackling climate change or aiming for food and energy security when building nationals resilience.

While these goals are absolutely necessary to create a future for the next generation, some of these changes are inherently beneficial and can make sense as choices in their own right now. For example, setting goals for more community oriented sustainable living, where people rely on their own resources to live, can be a more healthy and happy choice than the choice to live in our isolated, individual consumer societies.

Such important actions require great courage in the face of powerful vested interests which seek to thwart them. There is indeed a lot at stake. Unless we inspire people to act immediately, even a chance of a sustainable future will be lost. Every day that is passed without changing course makes a survival future less likely. We also have to be realistic about what is achievable. While we cannot avoid two degrees of warming, (which though catastrophic might be survivable) we can do a lot now to avoid four degrees (which will result in wide-spread collapse for human society).

As well as a vision focused on change, once we understand the reality of our predicament there is also another vision for living that is focused on acceptance and serenity. Such a vision recognises that though we are facing into a difficult future of decline and collapse – we can still construct a purposeful and meaningful life in spite of this. This vision is not constructed out of optimism but one that is wrought out of hope. Such a vision might have many components. It can entail a refusal to go down the path of despair nor to give into misdirected outrage that can lead to enemy formation, scapegoating, totalitarianism. Central to this vision might be a commitment to hold onto values such as justice, fairness and compassion in order to preserve a future worth living for. Such a vision might also contain a commitment to appreciate and value the life we have, and a decision to reconnect to the wonder of nature as it is. In his work with people facing death, the great existential psychotherapist Irvin Yalom proposed a ‘golden’ stage of death awareness[8], whereby people move beyond a simple acceptance of death to a point where such awareness makes their current life all the more precious and vital – each moment that remains is to be savoured and lived well.

Taking Constructive Action

Taking constructive action is crucial to managing and overcoming problems. A person with an addiction may first accept the reality of his addiction and then envision a positive life without being dependent, but unless he takes action to create a new way of living he will never move beyond the addiction the long term. Even a person who has experienced an irreversible loss such as a bereavement can find a new purposeful way of living such as dedicating oneself to a cause that is important to the loved one they have lost.

Taking constructive action in the face of a difficult reality is crucial to psychological health. Positive action in itself is an antidote to fear, channels anger in positive directions and turns the person away from debilitating despair.

Facing the current economic and environmental crises, there never has been such an urgent need for constructive action. Such action is both about arresting our business as usual path to destruction and finding alternative pathways as well as trying to adapt and build resilience in the face coming crises. Despite this urgency, most current global effort is on continuing the business as usual path with CO2 emissions continuing to soar and the environment continuing to be depleted). Even those with some understanding of the issues propose action that is far too little to have any impact on the sheer scale of the problems. Alternatively, other people adopt a ‘wait and see’ attitude – we understand problems are coming but we will change only when we have to. However, if we wait until major crises hit and our economies are shattered then not only will our action be too late, it will also be impossible as we will have little economic infrastructure to put plans into action. You won’t be able to build flood walls or alternative energy sources if your economy is in chaos. Early preventative action, to build resilience or to reduce future problems, is always preferable and the sooner we act the better.

It can be useful to consider constructive action as taking place on four levels 1) personal, 2) community, 3) national and 4) international. Let’s look at what might be possible on each of those levels.

Personal resilience and preparedness

While it is easy to doubt what a single individual can achieve, one must not under estimate the power of individual leadership. Certainly, as they realise the unsustainability of our present world most people in the environmental movement go through a personal journey of alternating despair and fear as they reach a stage of acceptance of the facts. Such acceptance and psychological preparedness for what is to come is a very important stance going forward. Certainly, a lot of time is unnecessarily wasted by people holding on to out-dated worldviews that no longer fit reality and which cause further harm to the planet.

At the end of this journey is the challenge of personal action. What am I to do in the face of these challenges? What is my responsibility now that I know the facts?

There is a responsibility to communicate what you know and to campaign our leaders for the more sustainable use of the resources as well as to start emergency preparation for the coming crises. There is also the choice to build personal resilience and to learn how to help your family survive in a future world that may be devoid of the many comforts on which our survival depends. Simple things like prioritising one’s health, getting fit, learning useful skills and accumulating resources that will be of enduring value in challenging times all create personal resilience.

Building personal resilience is not just about building capacity to deal with future crises, the benefits also extend to how you live your life now. Take for example, the ‘Growing It Yourself’ movement, which has huge current popularity. Learning to grow your own vegetables not only teaches the useful future skill of self-sustainability, but it also provides you with physical exercise, a connection with nature (often lost nowadays) and the personal satisfaction of creating your own food. In addition, done as a family project, gardening can help improve your relationships with your family and has the potential to increase your connectedness with your local community if you share and exchange produce and ideas.

One of the most important benefits of a personal acceptance of the more challenging future we face is how it can alter a person’s appreciation of their current life. Realising the potential losses in the future, many people choose to live more deliberately and with great appreciation of what they have as they sense none of this may be available in the future.

Community resilience

 

If we wait for the governments, it’ll be too little, too late. If we act as individuals, it will be too little. But if we act as communities, it might just be enough, just in time.
– Rob Hopkins

While the current economy is global, the future one is most likely to be local. As economic problems and future shocks come to bear this is likely to unhinge the global industrial machine and people are more likely to depend on their local communities and towns. This is the basic premise of the Transition movement[9] pioneered by Rob Hopkins, which encourages people to come together in local groups to act now to build community resilience. These communities have initiated small-scale projects around energy, agriculture, transport, waste disposal, housing and education that all promote local supply and sustainability.

Whereas in the past villages and towns depended more on locally produced food and energy, currently now locally grown food makes up less and 2% of produce and local energy production amounts to even less. This means that towns are extremely vulnerable to any global disruption to energy or food supply. Everyone is completely dependent on international supermarkets and oil suppliers for the basic necessities of existence. The Transition projects that encourage project such as community farms, local cooperatives and community energy projects, all reduce the dependency on outside sources and have the potential to build the local economy. Instead of most of people’s money flowing out of the community to pay energy and food bills, the money can stay in the local community and build local jobs. Indeed, as future shocks rock the international economy such local economics will become much more important.

Grassroots movements such as Transition towns are about galvanising local people and communities into positive constructive action. Rather than sitting back, complaining about what is wrong or being fearful about the future, the Transition movement puts people in touch with like-minded people who can act together to make a difference. These projects connect people with their neighbours, provide meaningful community work and build social capital within communities. The personal psychological benefits of such constructive community action are enormous.

In addition, while these community projects are still small-scale and not yet on national agendas, in the future they have the potential to lead the way. Once economic and environmental shocks occur and the current system begins to break down people will increasingly look for guidance from on the ground communities that are better prepared for what is happening. In his most recent book The power of just doing stuff Rob Hopkins[10] describes a myriad of small scale projects that have the potential to provide signposts for future action and sustainability.

National Resilience

While currently national politics is completely in denial about the unsustainability of the current economic system, this could change quickly in the face of serious crises. Such a change would be similar to complete transformation of the UK during World War 2. Politics became unified and focused on a single major goal of survival in the face of the Nazi threat. Out of necessity and within a short period the entire domestic economy was reorganised into a largely local one where communities returned to growing their own food and rationed their consumption of imported products. With the common enemy of the Nazis, political leadership was strong and communities were galvanised into action. The ‘Dig for Victory’ campaign to encourage locally produced food was extremely successful.

In the face of crisis, it is possible to conceive that current national politics could be transformed and reoriented in a similar way. Climate change and carbon emissions could become common enemies and national goals could be set for energy and food independence. Networks of cooperatives could be set up on regional and national levels that could support such projects. Having clear national goals such as growing 100% of our own food by a certain date, or building a renewable energy infrastructure, will be easier to explain to the public and to ensure national buy in.

While currently it may be difficult to persuade such a national reorientation, it will become more necessary as economic, resource and environmental shocks hit. As a result, early preparation is crucial. Even if most people do not fully accept the unsustainability of the current economic model, it still makes sense to create national plans now as to how we will deal with such potential shocks and emergencies. Some effort should be put into thinking how will we deal with a currency crisis? What will we do if oil/ gas supply is interrupted? How could we ensure food security for the population if world trade was interrupted? National ‘think tanks’ could be commissioned to plan a range of adaptive responses and emergency policies that can be enacted during crises. This can include plans for dealing with energy and food scarcity, mass unemployment, population migration, currency and financial collapse etc. Even in the face of large scale denial, there is a strong rationale for starting such preparation. Moving the discourse from an environmental one to one about national security is important in making progress. This is not about saving the environment, it is about saving ourselves.

International Cooperation and Resilience

One of the one most striking things about the global economic model is how interconnected it is. Most nations are bought into this co-dependent system and which our livelihoods depend. Whereas 30 years ago, countries like china and the soviet bloc seemed to possess some independence and to be following separate economic paths, this has all changed in the last few decades and these countries have fully joined the global economy thrown their hand into the consumerist lifestyle and the pursuit of economic growth. As a result, no nation is economically independent of another – shocks in one country quickly transmit across the system. The health of the European economy depends on that of US as well as on the economy of China and Russia and vice a versa. This co-dependence is particularly striking in the financial system – a collapse in one banking system has the potential to bring down every financial system.

As a result the problems associated with unsustainable growth such as climate change, environmental damage and resource destruction are all truly global problems. Any potential solutions or large scale mitigation strategies would only have a chance of working if they are international projects with buy in on a global level. Indeed, much effort has been put into broker international and global solutions such as the IPCC, in the large international meetings in Rio and Copenhagen.

Sadly, however, very little progress on the scale needed has been made. Nevertheless, while our global institutions exist we must continue to work hard to secure international agreements that might reduce CO2 emissions, limit environmental damage and share resources equally. When global crises start to hit hard in the future, it will be interesting to know how our global institutions will respond. While is possible that the stress of reduced resources and climate chaos could lead to fracture and conflict between nations, there is also the possibility that this could lead to more global awareness and force agreed global solutions as people work harder together to survive.

Building a Community of support

Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.
– Margaret Mead

In my work as a mental health professional rarely do people overcome big personal problems on their own. It is usually in the context of support from family, friends or even a professional that people turn their lives around.

While there is a myriad of future challenges facing humanity that are already beginning to impact, the future still is unpredictable and open to choice. While few people yet take the long term view and see the direction towards which we are heading, it is incumbent on those who are aware to prepare and act now. If we do survive and continue to live purposely it will be down to our personal and collective choices. While we don’t know what exact questions will be asked of us in the future, let alone begin to fully answer them, we can build resilience and a state of preparedness for whatever future challenges are to come. If we strive now to honestly face the reality of our predicament, set meaningful goals that bind us together and take constructive action, then we can build a future worth living for.

Endnotes

1. Richard Douthwaite and Gilian Fallon (2010) p2, Fleeing Vesuvius Overcoming the Risk from Economic and Environmental Collapse. Dublin: Feasta.
2. Richard Heinberg 2007. Peak Everything: Waking up to the century in decline in Earth’s resources. Clairview Books
3. http://www.theguardian.com/environment/2013/oct/03/ocean-acidification-carbon-dioxide-emissions-levels
4. Kevin Anderson, Alice Bows 2011, p 42, “Beyond ‘dangerous’ climate change: emission scenarios for a new world” Philosophical Transactions of the Royal Society. 369, 20–44 doi:10.1098/rsta.2010.0290
5. http://grist.org/climate-change/2011-12-05-the-brutal-logic-of-climate-change/
6.
http://www.theguardian.com/environment/2013/sep/19/numbers-climate-sceptics-rise-uk
7. Elizabeth Kubler-Ross, 2005 On Grief and Grieving London: Simon and Schuster
8. 6 Irivin Yalom 1999 Momma and the meaning of life William Morris Agency, Inc
9. Rob Hopkins (2008), The Transition Handbook: From oil dependency to local resilience, Devon: Green Books
10. Rob Hopkins 2013 The power of just doing stuff Devon: Green Books


    



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World War II From Space

With tensions raging in Asia (and the Middle East) and the anniversary of the start of World War I drawing closer, we thought it contextually useful to look at World War II from a different (and more broad) perspective. This History Channel documentary shows – using an all-seeing CGI eye – a satellite view of the conflicts, allowing you to experience it in a way that places key events and tipping points in a global perspective. By re-creating groundbreaking moments that could never have been captured on camera and by illustrating the importance of simultaneity and the hidden effects of crucial incidents, the war’s monumental moments in never- before-seen context. And with new information brought to the forefront, you’ll better understand how a nation ranked 19th in the world’s militaries in 1939 emerged six years later as the planet’s only atomic superpower.

 


    



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Bill Ryerson: The Challenges Presented By Global Population Growth

Submitted by Adam Taggart via Adam Taggart via Peak Prosperity,

As we embark on a new year, it's important to keep the really big elements of our global predicament squarely in mind. To that end, we're surfacing this excellent discussion on population growth that Chris recorded in 2012 with Bill Ryerson of the Population Institute

At the heart of the resource depletion story that we track here at PeakProsperity.com is the number of people on earth competing for those resources.

The global population is more than 7 billion now and headed to 9 billion by 2050. If world population continues its exponential growth, when we will hit planetary carrying capacity limits with our key resources (or are we already exceeding them)? What are the just, humane, and rights-respecting options that are on the table for balancing the world’s population with the ability of the earth to sustain it?

Population management is an inflammatory issue. It's nearly impossible to discuss without triggering heated emotions, and rare is the leader who's willing to raise it. And by going unaddressed globally, the risk of problems created by overpopluation grow unchecked. War, poverty, starvation, disease, inequality…the list goes on.

Which is why we feel we need to have the courage to address this very important topic directly. And to have an adult-sized conversation about these risks and what can done about them.

In this podcast, Chris talks with Bill Ryerson, founder and president of the Population Media Center as well as the president of the Population Institute. They explore the current forecasts for world population growth, the expected future demand on world resources, and the range of options available for bringing them into balance sustainably.

We are adding about 225,000 people to the dinner table every night who were not there last night. So that is net growth of the world’s population on an annual basis of a new Egypt every year. In other words, 83 million additional people net growth annually. And that, from a climate change perspective alone, is a huge increment. Most of this growth is occurring in poor countries, so on a per-capita level, the people being added to the population have much lower impact than, say, if Europe were growing at that rate. But nevertheless, just from a climate perspective, with most of that 83 million additional people in low per capita greenhouse-gas output countries – this is between now and 2050 – at this rate of growth, it is the climate equivalent of adding two United States to the planet.

 

Clearly resources like oil, coal, and gas are non-renewable and will eventually run out or become more and more expensive and therefore not reliable as a source of energy. But what is the renewable long-term sustainability or the carrying capacity of the environment in each geographic territory, and globally? What is the current and projected future human demand for those resources, and do we have sufficient natural resources to meet our needs?

 

Doing this kind of accounting is not difficult. There are very good robust scientific designs for measuring resource capacity and human demand, and projecting out what do we need to do in some time in the next few decades in order to get from what is clearly population overshoot to achieving something that is in balance. Because as long as we are in overshoot – and the global footprint network’s calculation is we are now at 50% overshoot –  that means we are digging into the savings account of our ecological systems, as you mentioned: the fisheries being one, forests being another. We are eating into the capital to sustain the growing population.

They also explore why population management is such a uniquely controversial topic. Not only are moral, civil, and religious beliefs in play, but the debate is also heavily influenced by large corporate and governmental organizations protecting their interests. So it's no wonder that a calm, respectful, and reasonable conversation on population remains so elusive.

But we're going to try to have one here.

Needless to say, our moderators are on high alert and will step in if they are needed. Thanks in advance for your conscientious, levelheaded, and respectful comments. We have the chance to do substantial thinking on some really meaty questions here. Let's make good use of it. 

Click the play button below to listen to Chris' interview with Bill Ryerson (46m:26s):

 


    



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Open Letter to Gold Investors: Will the Real Manipulator Please Stand Up

OPEN LETTER TO GOLD INVESTORS: WILL THE REAL MANIPULATOR PLEASE STAND UP

Courtesy of 

Monday’s flash crash in gold has predictably brought about commentary from the gold community. Nanex has the details of how fourteen 338 contract sells were carpet-bombed into the Comex gold pit for maximum effect.

Unfortunately, it appears that many of the folks who normally do their homework on gold activity seemed to regress into a pattern of blaming these dumps on the Fed and/or bullion bankers. Few, if any, commentators are looking at the actual reported data, such as the bankers participation report and commitment of traders, which points the smoking gun at speculators — or conceivably even a whale. I use the term “slinger” to describe the activity (work of a high frequency trading algorithm?).

The suspect for the indiscriminate attack behavior is again and again stated to be some powerful Oz-like central bank specifically the Fed. Subsequently, participants in the precious metals market have considerable pause, which contributes to a loss of confidence. After all, if one thinks the causa proxima of this is JP Morgan/the Fed, then the response is duck and cover or even to hit the sell button on that GLD ETF.

Rather, the real debate should center on who is really conducting this gold attack activity. Financial journalists should be looking at this as well. Proper journalism would recognize that whales in a thinly traded market, which the Comex has become, is not a new concept. There have been recurrent offside rogue traders and whales in various markets throughout the last two decades. With the poor oversight regulation today, I believe markets are full of them. Such markets become highly distorted. The regulators should be checking into the source and position sizes of these trades. 

If it was revealed to be a rogue trader or a cartel of leveraged funds, the reaction of gold investors would be entirely different from malaise, duck and cover and discouragement. Since this is an open letter to the public at large, let me state my case categorically and open it for intelligent discussion in the comments below. Please connect the dots with evidence as opposed to circular logic and opinion.

To that aim, here are my main points:

The Commodity Futures Trading Commission’s most recent banker participation report on positions as of Dec. 1 shows the U.S. banks as four participants. They are not identified by name, but historically and deductively, JP Morgan is the largest and most dominant participant. Over the last quarter this report has shown that the four big banks have continued to build a net-long position, now at 57,408 futures contracts, or 5.741 million ounces.

I have read comments that bullion banks don’t make directional bets; that they are effectively paper shufflers and trade skimmers. Oh? Still, there is a plausible second theory out there. Namely, it is that JPM is acting as an agent, or for agents, on behalf of the serious buyer of gold: the Chinese [see “China Successfully Hunts Where There is Gold“].

So is JP Morgan the short manipulator of gold as some suggest? At one time perhaps, but now I believe the answer is unequivocally “no” and, in fact, the complete opposite. JP Morgan and the three other U.S. banks have a large net-long position equal to nearly 15% of Comex open interest.

The next forensic report shows managed money’s short position in gold. Here, we see the off-the-chart short position of the managed-money complex. I suppose a true conspiracy commentator might offer up that the Fed has an secret agent conducting business in this complex. But what national interest is served by distorting the price of gold to such a degree that the Chinese can cheaply acquire thousands of tonnes, eventually announcing they have more gold than Fort Knox?

The managed-money cohort is extremely short with a directional bet, and to such a degree that it points to a single slinger or group of slingers who are willing to throw thousands of short contracts into thin markets, with the bullion bankers taking the other side of the trade. In its early phase several months ago, these attacks had good success in taking out long stops. Of late, this doesn’t seem to be working as well. Small speculators, who are traditionally long, are now flat.

The chart shows this short position at its peak in mid December. Since then, the most recent Commitment of Traders report for positions on Dec. 31 shows slingers are short 78,334 contracts, or 7.833 million ounces. Contrast that with the four U.S. banks and ask yourself: Who is naked shorting into this market?

Chart source: Gotgoldreport.com

Finally, if a whale or rogue trader was operating in the paper Comex market, we might expect to see price and supply distortions. Indeed, that is exactly what has happened. Currently, the Gold Offered Forward Rate, which is the rate at which dealers will lend gold against U.S. dollars, is in backwardation. That suggests tight physical supply and a measure of distrust in the so-called market.

One Month:  – 0.035%   (backwardation)

Two Months:  – 0.01667%  (backwardation)

Three Months:  – 0.00333% (backwardation)

I rest my case.

 

For more from Russ of Winter Actions, take a risk free trial to his premium service here. 


    



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