The Three Ring Circus Begins

10/25/2011 Portland, Oregon - Pop in your mints…

What a difference a day makes.  Yesterday, it appeared that the authorities had most of the problems that ail the world’s economy resolved.  All they needed was a little more time, money and cooperation to implement their plans and the good times would be rolling once again!  Today, instead of coordinated, determined action, it appears that a three ring circus of sorts is beginning.

In Ring 1, we have the European Clown Car:  Yesterday, Europe looked ready to announce a plan to simultaneously solve the sovereign debt, banking, and resultant currency crises in one fell swoop.  Today, it appears that Italy is balking at implementing a growth plan on moment’s notice and Germany and France will need a miracle to announce a credible Pan-European rescue package by tomorrow, their self imposed deadline.  What a difference a day makes!

It should be clear by now to most sober persons that regardless of what is announced tomorrow, the Euro as a currency in its present form is not viable.  It should also be clear that the countries who have adopted the Euro will give away what is left of their sovereignty in a vain attempt to preserve it.

Step Right up!  The Economic 3 Ring Circus Begins

In Ring 2, we have the American Elephants:  The US is quietly completing three Bond auctions that will cause the national debt higher than the national GDP.  The official total should eclipse GDP by the end of October.  100% of GDP is when the debt of a mere mortal nation (Greece, for example) has traditionally harkened national bankruptcy.

The only exception to this rule is in Ring 3, the Japanese Tight Rope Walker: Japan, where national debt is north of 200% of GDP.  How do they avoid bankruptcy?  Simple, they print money to pay the debt.  As if to prove our point, today, the Bank of Japan decided that they have seen enough Yen appreciation and announced another five trillion Yen currency printing campaign.

When money doesn’t exist, the sky is the limit, which is why commodities and certain equities are set to explode to the upside.  Bonds, while they may not fall in nominal value, will fall in relative value as they are repaid in severely depreciated currencies.

As if on cue, commodities took off today.  How high and far they will fly this time is anyone’s guess.

As the circus gets underway, the sober amongst us are beginning to wonder, sometimes aloud, “if the Governments, banks, and monetary authorities cannot solve these problems, then who can?”

The answer, fellow taxpayer, is right under our fingertips.  We, the People of the earth can solve it.  The tool we have been given is our own wit and ingenuity.  The only requirement is that we embrace True Capitalism, for better or for worse, for richer or poorer, until death do us part.

What is True Capitalism?  It may be summed up as a deep, radical respect for life, liberty, and private property.  It is an understanding that mutual cooperation is more often than not in our rightly understood interests (to use a Mises term).  It is not simply a choice, it is the only choice.  More to come.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for October 25, 2011

Copper Price per Lb: $3.41
Oil Price per Barrel:  $93.17

Corn Price per Bushel:  $6.51  
10 Yr US Treasury Bond:  2.13%
FED Target Rate:  0.07%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,705 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.3%
Dow Jones Industrial Average:  11,707  

M1 Monetary Base:  $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

European Semi-Solution Extends the False Calm and indirect moratorium on Eurozone Investment

10/24/2011 Portland, Oregon - Pop in your mints…

Today after the western stock markets closed, the German lawmakers announced yet another plan in an attempt to stem the Eurozone’s tandem sovereign debt and banking crisis, which is rapidly accelerating.  The plan, according to AP, would boost the European Financial Stabilization Fund from its current 440 billion Euros approximately one trillion Euros.   

 

The one trillion Euro figure is an estimate due to the nature of the plan which involves enticing capital to invest in the Sovereign debt issues from Euro member states by creating an insurance fund to partially back sovereign debt issues that would otherwise attract little investor interest.

 

Think of it as a partial Fannie Mae guaranty for European Governments.  

 

There is a reason that foreign capital is hesitant to invest in Euro sovereign debt, and it is not for lack of enticement.  Greek, Spanish, Portuguese, and Italian bonds all offer fixed income investors a decent premium over other sovereigns for their perceived risk.  The problem from the point of view of the investors is that the premiums are not high enough if considered against the likely event that they will not get their principal returned.  The problem from the perspective of the Euro sovereign issuers is that they cannot realistically pay even these reduced premiums.

 

Once it is generally perceived that a nation state will default on its obligations, it is very difficult to attract capital, whether it be the purchase of sovereign bonds or investments in businesses located in the troubled country.

 

Default, while the most practical solution for any normal debtor, is apparently unacceptable for modern western nations.  For this reason, the Eurozone leadership is moving in slow, measured steps to appear to do just enough to preserve the credibility of the debt issued by the weaker, peripheral states such as Greece, Spain, and Portugal.

 

Will this latest Eurocrat concoction be enough?

 

For the moment, it may be.  The German Parliament must vote on their new obligations on Wednesday, just hours before the broader Eurozone working group is set to formally announce the plan, leaving no room for dissent, ala Slovenia earlier this month.  Once the political drama in Germany passes, it will be smooth sailing for the Euro and its sovereign debt markets…for about a week.  

The illusion of viability and solvency

At that point, it will again become clear that the banks and sovereigns will require additional funds (currently the estimate is north of 2 trillion Euros) in order to continue the illusion solvency.

 

The problem of Euro solvency is no secret.  This is why both banks and sovereign governments are having a great deal of difficulty getting credit from anyone other than other broke European governments, banks, the ECB, and the Federal Reserve.  This latter list of entities have two things in common.  First and foremost, they all have a vested interest in perpetuating the charade that the Euro is a viable currency.  Second, these entities, by virtue of their activities, can only destroy wealth and therefore must coerce the productive class into lending its resources.

 

To make matters worse, no one in their right mind can invest real capital in the Eurozone under these conditions.  With sovereign governments pushing austerity measures and increasing the confiscation of private assets via increased taxation, any further investment in the Eurozone must be properly seen as an act of charity.

 

Such is the paradox of solving debt problems by incurring more debt.  Once one believes that the debt cannot be repaid, this belief becomes a self fulfilling prophecy.  The Eurozone is becoming the world’s latest example of this inescapable truth.

 

Meanwhile, commodity prices, which reflect the fruits of productive activities, are on the verge of exploding to the upside, signaling a growing distaste for fiat currencies.   Will this be the final, violent blow off in commodities?

 

Stay tuned and Trust Jesus.

 

Stay Fresh!

 

David Mint

 

Email: davidminteconomics@gmail.com

 

P.S.  For more ideas and commentary please check out The Mint at www.davidmint.com

 

Key Indicators for October 24, 2011

 

Copper Price per Lb: $3.46
Oil Price per Barrel:  $91.60

Corn Price per Bushel:  $6.51  
10 Yr US Treasury Bond:  2.23%
FED Target Rate:  0.07%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,653 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.3%
Dow Jones Industrial Average:  11,914  

M1 Monetary Base:  $2,056,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,570,500,000,000 YIKES UP $1 Trillion in one year!!!!!!!

Dexia Nationalized, Occupy Wall Street Appears to misinterpret the Monetary Roots of Widespread Discontent

10/11/2011 Portland, Oregon - Pop in your mints…

The big news over the weekend was the partial nationalization of the Belian Bank, Dexia.  What?  You’ve never heard of Dexia?  Most people this side of the pond hadn’t up until a few weeks ago.  This tiny $707 Billion hedge fund disguised as a bank, which just months ago passed the European bank stress tests with flying colors, has become the first official victim of the dearth of interbank funding in the Eurozone.

In a world full of potential butterfly effects, Dexia’s staggering juggernaut could have a knock-off effect for the US Municipal bond market.



Following a familiar script into unfamiliar territory, the Governments of France, Belgium, and Luxembourg jumped in and provided guaranties (ala Fannie Mae and Freddie Mac, which ironically are currently regurgitating their guaranties back onto US Banks) to the tune of $122 Billion until things settle down.

Unfortunately for France, Belgium, and Luxembourg, things will not settle down in time for their governments to remain solvent.  Chalk another set of Eurozone governments up to the “effective loss of sovereignty club.”  Surrendering sovereignty to international banking interests seems to be working out well for Greece, Ireland, Portugal, and Italy, so why not join the fun?


Protestors would do well to focus on Monetary Reform



Slovakia appears to be the only nation willing to stand up against the wave of bailouts and subsequent loss of sovereignty as the bailouts costs crush already strained government balance sheets.  It appears that they may hold out a couple more days, enough time to find a compliant government (the current one was voted out in a confidence vote tied to the EFSF earlier today).

The situation in Europe is giving the world a frightening message:  When push comes to shove, the governments can be counted on to work in the interests of the banks.  How long this untenable situation can last is anybody’s guess, but if the Occupy Wall Street movement continues to gain traction, it is clear that the situation, if properly understood, could change very quickly.

Observant fellow taxpayers will note that we have qualified our previous statement with the words “if properly understood” because, at the moment, the Occupy Wall Street movement appears to misunderstand the roots of their many and varied forms of discontent.

Protesters apparently see nothing wrong with the government selectively fleecing the productive class as long as they receive their “fair share.”  If we have correctly identified the Socialist tendencies of these protests (as last check they had not adopted a manifesto), then the logical outcome is simply the ouster of one form of parasite, the banking interests, for another.

The problem, of course, lies in what we use as money.  Placing the power to create money in the hands of a Central Bank and then turning a blind eye as they shamelessly debauch the currency, giving an inordinate amount of purchasing power to those closest to the money printing operation (banks and government) and placing an inordinate amount of regulatory and tax burden to those farther away from the money printing operation (that would be you and I, fellow taxpayer), is perhaps the surest way to destroy man’s faith in the capitalistic system, and in the process lay the blame for every evil unleashed by the debauching of the currency on the capitalistic system.

Rothchild, Marx, and Keynes understood this.  They also understood that only one man in a million would be able to understand how debauching the currency serves to concentrate power in the hands of few at the expense of many.

Are you one of them?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for October 11, 2011

Copper Price per Lb: $3.30
Oil Price per Barrel:  $85.81

Corn Price per Bushel:  $6.45  
10 Yr US Treasury Bond:  2.16%
FED Target Rate:  0.07%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,663 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.4%!!!   UP UP UP!!!
Dow Jones Industrial Average:  11,416  

M1 Monetary Base:  $2,144,500,000,000 RED ALERT!!!
M2 Monetary Base:  $9,473,100,000,000 YIKES!!!!!!!

The Euro zone cobbles together a 2 trillion Euro rescue package – Is this the ultimate panacea?

Editor’s Note: Please welcome our guest contributor here at The Mint, Mr. Jason Holmes.  Mr. Holmes is a regular contributer at Debt Consolidaton Care and various other financial websites and has authored several e-books.  Without further adeiu, Mr. Holmes:

Euro zone cobbles together a 2 trillion Euro rescue package – Is this the ultimate panacea?

As international pressure swells on Europe to forestall the Greek debt crisis from undermining the banks and economies around the world, the European leaders are busy cobbling together a rescue package that would quickly hit the economy with 2 trillion Euros of firepower.  According to the International Monetary Fund (IMF), the plans for an ambitious rescue package are coming together in order to enable banks to write-off a large potion (probably 50%) of Greek bonds. The latest talks about the launch of this particular package calmed down the European markets on September 26^th, but there are still substantial doubts as to when this plan will be approved and in what form.

There is already doubt about the plan as without the support of the European Central Bank and the German parliament, which has already been hesitant in expanding its involvement, there is meager chance of the plans gaining approval. The larger bailout package has already run into opposition as the new President of the German central bank has suddenly emerged as a powerful critic of the entire rescue package. He has spoken against the expansion of the rescue mission by the ECB by purchasing the sovereign bonds of Greece, Italy and the remaining countries with spiraling sovereign debt crises.

Markets seize due to the Euro zone rescue package – Does this hold true?

As the rumors spread that the European leaders are planning a mammoth rescue package to avert the Euro zone debt crisis from wreaking havoc on the global economy, the US and the European markets have risen overnight.  The particular fund that is being provided for as part of the rescue package would be utilized when problem economies like Italy and Spain are in trouble. Though the European governments will take at least 5-6 weeks to put this entire plan in place, investors have collectively pinned their hopes on this impending rescue plan’s eventual passage.

Will the Euro zone rescue operation boost the FTSE?

The blue-chip shares of Britain were sharply higher across the board on Tuesday, 27th September and experts have also tracked gains on the Wall Street and in Asia. This was a result of the hope of the European leaders to take a purposeful action to assuage the debt problems within the region. While there were good recovery signs in commodity prices, energy stocks and miners spearheaded the entire rally. Though there was an alarm about the entire state of the global economy, this counteracted with the optimism of the euro zone debt situation. The US markets even felt a positive effect with the Standard & Poor’s 500 Index and the Dow Jones Industrial average ending at more than 2% higher on the 26th of September.

The effect of the EFSF – Is it going to fade out?

Though the officials in Brussels agreed to shore up the EFSF (European Financial Stability Facility) and provide Greece with some new and lucrative financing options, there are still too many questions that still remain unanswered. Will the rescue package, seen as a huge leap for the European politicians, be to small for the markets?  The Euro Stoxx 50 index, a yardstick of blue chips in almost 17 countries that share the Euro has been on a winning streak since the 18th of July, but it slipped to 0.11% on Tuesday. Both the Italian and the Spanish Treasury are paying more for funds and their debt auctions are meeting with weakened demand.

The Chairman of the Federal Reserve, Ben S. Bernanke is of the opinion that the Euro region’s $2 trillion rescue package is not the ultimate panacea as the measures are all “temporary”. According to Bernanke, without fundamental, long term changes in the economies of Greece, Spain, and Italy, it is unlikely that they will emerge from their grave financial situation.

Jason Holmes is a regular writer with http://www.debtconsolidationcare.com/debt-relief.html and is also a contributor to other financial sites. His expertise is woven around various aspects of the debt industry and through his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like 'Credit Score The Quintessential Therapy for a Happy Pocket', ‘Take Creditors and Collection Agencies to Small Claims Court' and, ‘My Story- From Depression To a Smile'.