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That's Just What We Need Journalists in the US to do; 'Excuse Me Mr. President, is That a Joke?'

By: Gordon Long & Mike Shedlock | Friday, April 22, 2016

FRA Co-founder Gordon T. Long is joined by Mish Shedlock in discussing the rigging of gold and silver by Deutsche Bank and the reliability of so called "casino banks" and the state of global banking institutions.

Manufacturers Sales

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. He is also a contributing "professor" on Minyanville, a community site focused on economic and financial education.


Post G20 Meeting

Christine Lagarde is worried about public finance and declared the need to get public finance in order. At the same time, she wants countries to spend more.

IMF Chief worried over public finance

She said the "strong" countries need to spend more and used the US as an example, but the US deficit projections don't look very good. In fact, we can't find anybody anyplace that does look good.

"It is just a bunch of hooey attempting to show concern while giving countries another reason to go deeper in debt."

There's all these emergency meetings happening and causing a lot of rumors.

French President François Hollande had a public meeting recently. He said, "I think things are getting better", and was interrupted by a journalist who said "Excuse me, Mr. President, is that a joke?"

"That's just what we need journalists in the US to do; 'Excuse me Mr. President, is that a joke?'"

All the big Italian banks were gathered and told to chip in to bail out these other banks that were in trouble. What they came up with was a plan to increase the capital on these small banks by €5B Euros. Supposedly this would fix €360B in non-performing loans. There's also roughly another €180B in bad loans.

"They're supposed to fix this huge problem with the Italian banking system with €5B. That doesn't work."


Deutsche Bank Rigging Gold and Silver

Everyone suspected that they were cheating on gold trading, and they admitted manipulating the gold and silver market in a court of law. It's like someone commits $100B worth of fraud and get fined $50B and promises to never do it again. That's not even like paying the full price.

"My position all along was, yes, they've been cheating, but where isn't there cheating... I'm quite positive it's in both directions."

Has there been this overall price suppression on gold and silver? Gold got up to €1900/ounce, and silver got to €44-46/ounce, and is now sitting at €15-16. Was there pressure applied by all the banks? Is gold really down or was there manipulation because the banks were generally on the other side of the trade?

"Is gold about where it would be without this manipulation? I don't know, and nor does anyone else."


"Casino Banks"

What we saw was Deutsche Bank had €500B+ in derivative profits and roughly €480B in current losses, so roughly €20B ahead. On another page they outline all their derivatives positions and it amounted to €21T. That's a profit of €20B from €21T in notional values. These are values way out of the money and some of it is genuinely off.

"When you've got a €21T casino on your balance sheet, it just goes to show you how much banks aren't banks."

This has nothing to do with core bank policies and procedures and lending. It's a derivatives casino and it's rigged. They admitted rigging gold and silver, they admitted rigging LIBOR, they admitted rigging Euribor.

For all the rigging, they got caught on gold and silver. Their commodities portfolio of derivatives was only a tiny piece of that €21T, compared to €15T in interest rates derivatives or €5T in currency derivatives. Something is clearly wrong with all these casino banks.

The international swaps marketplace is approximately $600T, compared to the US economy of $25 GPD a year. Most of the magnitude is more than the entire global economy. The risk is way greater than everyone thinks, especially with these credit default swaps.


Atlanta vs New York Fed GDP Report

The Atlanta Fed projected 0.1% growth and revised it up to 0.3% but NY Fed says it's more like 1%. Originally it used to be 1.1% vs 0.1% and now it's 1% vs 0.3%, and we don't know which one is right. However, the New York Fed model has all kinds of nebulous things in it that can't be explained.

Central Banking

Inflation is probably a lot higher in a lot of places than the CPI admits.

When 24% of the CPI is Owner's Equivalent Rent, that doesn't make sense. Rents in Cleveland and Illinois have nothing to do with rents in Seattle, or places where the economy is doing a lot better. They average it out and supposedly this is some sort of aggregate number that tells you it only goes up by 1.7%. I don't believe these prices can aggregated because there is no basket that we can define as suitable for everyone, but this is what the Fed does and everyone hinges on these numbers.

"We've got too much inflation, too much wealth concentrated in the hands of all the people making the money, while the average guy is losing out."


Retail Charts and Auto Inventories

A lot of these charts peaked around November 2014, then there was a little rise back that didn't recover all of it, and another plunge. Factory sales are down 13 out of the last 16 months, and there's more things participating now. For instance, auto sales are down 3-4 months in a row. Inventories are at an all-time high. Everyone's traded in their car; used car inventories are at an all-time high.

Central Banking 2

35% of all autos sold are on lease, and the residual value of used cars are plummeting. Someone has to take a massive write down since they're all traded as ABS in the shadow banking system. The US government are the biggest owner of used car assets with $1.1T since they buy all the collateralized loan obligations etc. that go through the government.


Liklihood of a Recession

"I am still sticking with my forecast that says the recession started in December 2015. I see no reason to revise that."

We might not know for a year, especially if it's a small recession. The official harbinger is the NBER, and they get to call when we get it, but we've had a recession that ended before they called it. They're always late. Nothing is coming out of these reports that indicate the call was wrong.

Total Business Sales

"We're certainly not in a very strong economy, and there's no reason to believe it's going to get any stronger."

Abstract by: Annie Zhou Annie Zhou

Video Editor: Sarah Tung

 

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

Copyright © 2010-2017 Gordon T. Long

Author: Mike Shedlock

Mike Shedlock / Mish
Mish Talk

Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

Copyright © 2005-2017 Mike Shedlock