John Williams audio interview

John Williams was interviewed again on King World News on 2-6-10. Very good, please listen twice.

Click here.

“Do not worry about the short-term swings in the market, but batten down the hatches for capital preservation.”

John Williams’ latest headlines (you pay for the detail):

-Plunge in Broad Liquidity Continues
- Intensified Business Downturn Looms
- Monetary Base Surges to Near-Record High
- U.S. Economic and Financial Woes Remain Worse Than Rest of World 
“No. 277: Liquidity Crisis Update, Money Supply “

John shows in this edition that M3 does not look good at all. He expects a downward jolt to the economy this year. This is an election year, so expect MAJOR spin from Big Media and gov. You will have to search out the truth.

Side musings: The shorts have $8 Billion dollars against the Euro. Trichet flew back to Europe from the “secret banking meeting” down under to address this crisis. It is anyone’s guess if they can advert a crisis in the euro. Groovygirl is watching this closely.

Misc. News

I decided to present several different stories from around the web. The connection….nothing is fixed, extreme volatility in all markets until a currency crisis.

Side musings: Possible $200 swings in gold as we approach the currency crisis apex. Do not panic. Do not trade gold or buy on margin under any circumstances. Buy the physical metal on dips for capital preservation. It is called a “currency crisis” for a reason.

Run on Greece.

Secret Bretton Woods?

Secret Summit.

Nothing is fixed.

Free Market?

Dramatic closing, take a look at this chart:

Click here from zerohedge.com.

Short term is one thing, long-term manipulation is another.

It looks like Martin Armstrong is right on about “The Club”. 

Click here for JP Morgan’s prop desk actions before the bell.

When they can’t manage it anymore or will not be able to make any money on it, they will stop the manipulation and let it fall in line with the true trend.

John Williams’ real unemployment numbers

The headlines from John Williams latest. You have to pay the good stuff, but here is the punch line:

-1.36 Million Jobs Knocked off December Payrolls; Depression’s Job Loss Increased by 19%
- January Unemployment: 16.5% (U-6), 21.2% (SGS)
- Serious Jobs and Unemployment Deterioration in Months Ahead

As a reminder to groovygirl’s readers, estimated unemployment during the Great Depression was 25-30%, which we are fast approaching. But, just relax, as gov and Big Media keep repeating everyday, “we are in a recovery” and their January unemployment stat is below 10%. This is ridiculous.

Feed the World

I found an interesting article about global food production from the point of view of large global corporations.

Before I talk about the article as a side note, I would like to warn groovygirl’s readers….as a global community we have never in the history of the world had corporations in charge of food production, processing, and distribution, (from seed to table) like we do today. This is uncharted territory. I would also like to remind everyone that the corporation’s whole responsibility is to its stockholders in the form of monetary dividends. We have NEVER had a system structure like this for food EVER.

Ok, now, on with the article entitled….Why Big Ag Won’t Feed the World, by Josh Viertel at The Atlantic.

Click here for the whole article.

A snippet:

Both Deutsche Bank and Monsanto made it clear that they are basing their business strategy on answering a simple question: How will we feed the world in 2050, when the population reaches over 9 billion and global warming puts massive strains on our resources? The answer for Deutsche Bank: increase yields by investing in industrial agriculture in the developing world, with an emphasis on technology; put lots of capital into rural land to shift subsistence and local market agricultures to commodity export agriculture. (groovygirl says: this is a horrible model with peak energy/oil certain to impact global food distribution going into 2030.) The answer for Monsanto: increase yields by decreasing resource dependence using genetically modified crops. (groovygirl says: it is her opinion that GMO crops do not (and will not in the long run) reduce resource dependence, but changes where that dependence comes from, i.e., products that Monsanto sells. It is her opinion that this will become clear as peak oil increases its effect on current ag farming techniques and the lack of diversity in GMO crops will be the downfall.)

At first glance, these answers make both Monsanto and Deutsche Bank look virtuous. But they rest on a false premise: “There will be over 9 billion people by 2050. We have less than 7 billion today, and people go hungry. We need to increase food production if we are going to feed them.” Indeed, there will be over 9 billion people by 2050, and indeed, with less than 7 billion today, people still go hungry. But we don’t need to increase crop yields to feed these people. In 2008, globally, we grew enough food to feed over 11 billion people. We grew 4,000 calories per day per person—roughly twice what people need to eat.

Eric Holt Gimenez, of Food First (The Institute for Food and Development Policy) put it eloquently in a conversation earlier last year: “In 2008 more food was grown than ever before in history. In 2008 more people were obese than ever before in history. In 2008 more profit was made by food companies than ever before in history. And in 2008 more people went hungry than ever before in history.”

We clearly have a problem here. We don’t need to increase yields, we need to fix the flaw in the system of how food (and what kinds of food) get to people around the globe.

Side musing: Please, plant a garden, preferably a no-till garden. Over 60% of our top soil is gone since the beginning of Ag farming techniques in the 1920’s. No top soil means no food. Top soil is where all the nutrients that feed the food plant hang out. A backyard garden will yield fresh, unprocessed food that doesn’t travel very far. No-till also reduces water needs as the water stays in the soil near the plant.

The real deficit

 Greg Hunter has a great article out about the real deficit.

Click here.

Of particular interest is….it looks like the government might try to pay out to banks all the residential housing defaulted mortgages in the US. This is a huge amount of money. They want to prop up the housing market and that is exactly what they are doing.

They can not do this forever, it’s too much money. When this breaks, it will be incredible. If it doesn’t break soon, the taxpayer will be on the hook for a huge amount of money. This is pure insanity.

Do not listen to all this hype about a short-term deficit is necessary to save the country. This is NOT a short-term deficit. The only thing that can come from the US gov buying every bad mortgage is a devalued dollar, higher taxes, and an extended long-term crash in the housing market. These gov policies confirm that Martin Armstrong is 100% correct. We are in a 26-year decline in real estate that started in 2007.

The American middle class is doomed.

3% means hit the panic button

Groovygirl is a long-term investor, so she usually doesn’t pay attention to day-trading news items. However, the last 2 weeks of January have been very interesting  in the DOW.

There have been several days when the DOW has dropped 2-3% in a short period of time. On those days, there always occurs a “technical problem” with a server or software that causes a slowdown or shutdown in the selling process (never buying). Usually the reason is high volume….high volume? What high volume, Goldman Sachs is trading against its clients.

This same thing happened in late 2008 and early 2009, the “powers that be” would not let the DOW fall past 3% in one trading session to avoid investor panic.

So, in groovygirl’s mind 3% is now a new panic gauge for the market. Keep that in mind as you watch the markets. We may have hit a high in the DOW. The “powers that be” can alter the trading for a day, but they can not change a trend.

A 3% drop doesn’t mean that you should panic. It just means others are panicking.

Side musing: another item to keep an eye on….price of oil. The price of oil is expected to average $80 in 2010. $80 per barrel is the price where it starts affecting commerce, higher prices all round and/or cuts in profits. Below that price means a stable environment (in relation to oil) and above that price means instability.

Mantras

A mantra is something that people say all the time and they believe usually without really understanding if it still makes sense.

The mantra in the financial world is “A dollar borrowed is a dollar earned”.

Perhaps you have heard it. Following this advice worked in the Autumn K-wave economic cycle, but now we are in the winter cycle and the same mantra will collapse the whole system. Actually it already has, but most people don’t know it. Borrowed dollars on all levels, gov, state, business, and personal has put this country in the place it is.

 ”A dollar borrowed is a dollar earned” only works if the borrower’s profit exceeds the amount of debt service for the length of time of the debt. Once the merry-go-round stops (or even slows) and the money is not coming in or the debt service grows (higher interest rates, for example) or the asset value falls…game over.

 

And game over on every level of the economy as every level of the economy is now entrenched in this debt cycle. That’s why the banks were bailed out. To continue the doomed debt cycle.

 

In addition, borrowed money locks the investor into whatever investment he/she has borrowed for. But what if that investment outlook changes? Or the entire economy tanks? No new investments in other areas more profitable are possible because all profits are going to service the debt from the failing investment. That is why in the winter economic cycle, debt is a burden and cash is king.

 

The debt that fueled the expansion of the economy in the 80’s and 90’s; that same debt will eat the value of the asset and implode the system. The reason is that debt can not expand forever. Period. There is a breaking point where the profit from the debt will exceed the debt service. I don’t think Wall Street and the gov understand this (or just don’t care). We have reached this breaking point. Now the cannibalism of the system begins.

 

The new mantra is “cash is king”.

 

Of course, groovygirl doesn’t mean “cash” as in USDollars; they will be devalued. She means “cash” as in a liquid, available savings that has preserved its purchasing power.

 

Fire sales of debt-ridden assets on all levels will be on the auction block for the next 10 years. If you understand the mantra “cash is king”, you will be able to pick up some great bargains. Hopefully, assets with a monthly cash flow.

 

Be careful about buying assets until the currency crisis of the US Dollar hits (estimate of 2015), it will impact price of assets. Groovygirl is not saying to pass up a bargain, just make sure you are looking at that “bargain” with the understanding of the coming currency crisis. It may not be a bargain with that in mind.

 

Side musing: John Williams’ headlines, you pay for the good stuff:

• 4th-Quarter GDP “Boom” Sets Stage for Double-Dip
• 2009 Downturn Worst Since Great Depression
• Watch-Out for 2010 Federal Deficit!
• Durable Goods Orders Keep Bottom-Bouncing

John is still calling for a double-dip depression with the next dip later this year. It will be interesting to watch the spin before mid-term elections. Nothing is fixed; expect what happened in 2008 to happen in 2010.

Gold and Silver as currency

Although, most people still think of gold as a “barbaric relic”, in reality, it has been the best performing currency in the last 10 years. We are in the middle of a 20-year bull market for precious metals.

James Turk has a wonderful chart illustrating these facts. Click here.

In addition, the DOW is near where it was in 2000, the lost decade for stocks, while gold averaged a 14.9% return in dollars and silver, a 14.4% return in the same period.

To further illustrate the DOW/Gold point, click here for a chart from chartoftheday.com, the DOW priced in gold. The DOW has been declining since 2000 in real purchasing power.

“Invest in stocks for the long-term” and “your home is an investment” are false statements now. (As we are in a 26-year decline in real estate value in real terms, per Martin Armstrong.) They worked in the K-wave Autumn cycle through 2000, but they will not work in the K-wave Winter cycle. The Winter cycle is about currency crisis and debt.

You still have time to reposition your investments for the long-term if you have not already done so. James’ charts also help show you the best currencies. But prepare for short-term ups and downs, long-term gain. Notice that the USDollar is in the lower half?

Understand these charts and you understand the impact of floating fiat currencies on your investments.

In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.
–Eric Hoffer – Longshoreman, Philosopher

Side musing: 6 more banks imploded.

The Crime of the Century

Groovygirl has been following the questioning of the AIG bailout. Several items have come to my attention that you will never see from the talking heads on TV. These facts prove that the bailout of AIG is criminal, and the entire bank bailout should be earnestly questioned in detail.

Zerohedge.com got the “Schedule A” from AIG (the one they have been trying not to release because it affects national security or something). This is a legal tax document required by law showing the list of beneficiaries of the AIG bailout of 100% on the dollar. You have no doubt heard that Timmy demanded 100%, when the investors on this list were willing to take less. Criminal. Timmy should be fired immediately. Click here. And here. Zerohedge.com has been on top of this story since day one. Excellent job!! Most of the investment and legal jargon will be alien to you, read it anyway. You will get the point.

Then there is an excellent ppt presentation of “follow the bailout money”. Apparently the gov committee assigned to do just what is in this presentation are not done yet. Not expected to be done until end of 2010. Here it is for your review by non-gov. “It takes a Pillage” is easy to follow. You will never see the truth from Big Media, but you can here.

We all know we got screwed as taxpayers. Now here is the proof. The very sad part is the Media did not question the bailouts at the time OR report now when the proof is all over the internet. Since there is no pressure from Big Media and Congress seems to be dysfunctional at best, justice for the crime of the century will never come.

In this environment you will have to hunt for and discern the truth for yourself. You will also be responsible for protecting your investments. Get the education and tools needed to do these two things for yourself and your family.