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5.21.15 - The 'Great Unraveling' Continues

Gold last traded at $1,204 an ounce. Silver at $17.13 an ounce.

NEWS SUMMARY: U.S. stocks eked out small gains Thursday despite missed economic data expectations, falling home sales and rising jobless claims. Why no stock market correction yet? "Because corporations keep buying their own stocks," equity trader Michael Antonelli tells Marketwatch. Investors now face titanic risks in today's 'Twilight Zone' stock market. Meanwhile, precious metal prices hovered near recent highs on a weaker U.S. dollar.

RECESSION: "For Many American States, It's Like the Recession Never Ended," reports Bloomberg. "Six years after the recession [officially] ended, many U.S. states are hard pressed to balance budgets because of a sluggish recovery and their own policy decisions. The fiscal fragility raises questions about how they will weather the next economic downturn. Thirty-two states faced budget gaps in fiscal 2015 or 2016 or both, according to an April 27 report by Standard & Poors." There are no big surprises in this latest news report, which was predicted last year in DON'T BANK ON IT!, page 107 ...

The economic devastation of the Great Recession has been immense. The shockwave of this bubble bursting circled the world in 2008 and 2009, wiping out $50 Trillion in investor equity – an amount approaching one year’s Gross Domestic Product for the entire planet. At least $10 Trillion of that loss was from American equities, as a stock market that had topped 14,000 plummeted to 6,600.

The average home price in America fell by 30 percent or more, a loss to homeowners of more than $5 Trillion in what for most was the biggest investment in their lives, the equity nest egg many had planned to use for retirement or their children’s college education.

This Great Unraveling cost more than five million people their homes, lost to foreclosure or fire sales. Millions more lost their life savings, typically spent to hang on in what then-Federal Reserve Chair Ben Bernanke called an “unusually uncertain” wild roller coaster economy.

Few believe this crisis is near its end. Many fear that worse, perhaps much worse, is soon to come. We continue to suffer in a fragile recovery that is taking longer than what followed the Great Depression.

HOUSING: "Existing home sales unexpectedly drop in April," reports CNBC. The National Association of Realtors said on Thursday existing home sales dropped 3.3%, giving a cautious signal on the strength of the housing market. Zero Hedge reports, "The most stunning data point from today's report: Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace...roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012." If you are hoping to sell real estate before the next financial crisis hits, this summer may offer your last great opportunity.

BANKS: Yesterday we reported that Too-Big-To-Jail bankers understand no matter how many felonies they commit, none of them will go to jail so long as they pay billions in fines to politicians. Today Bloomberg reports, "Investors yawned at the news Wednesday that five of the world's biggest banks, including JPMorgan Chase and Citigroup, agreed to plead guilty in a currency-rigging probe....Barely more than a year ago, criminal charges against major U.S. banks were considered unthinkable, with lawyers and analysts viewing felony convictions as a death sentence and a threat to the financial system. Now, by granting waivers allowing lenders to keep operating even after a felony plea, the government has managed to punish firms while protecting them from fatal consequences." Once again Progressive government leaders illustrate that crime does pay, if you are a big enough banker. Sad.

ATM: "Theft of Debit-Card Data From ATMs Soars, reports the Wall Street Journal. "Criminals are stealing card data from U.S. automated teller machines at the highest rate in two decades, preying on ATMs while merchants crack down on fraud at the checkout counter. Debit-card compromises at ATMs located on bank property jumped 174% from Jan. 1 to April 9, compared with the same period last year, while successful attacks at nonbank machines soared by 317%, according to FICO." Major banking risk #3 listed in DON'T BANK ON IT! on page 215 ...

3. In the dawning age of cyber warfare, banks and the individual accounts in banks will be prime targets for looting, disruption and erasure.

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5.20.15 - Not Too-Big-To-Jail Banksters

Gold last traded at $1,208 an ounce. Silver at $17.11 an ounce.

NEWS SUMMARY: U.S. stocks barely treaded water following dovish Fed minutes and ahead of Fed chair Janet Yellen's speech on Friday. Meanwhile, government regulators around the globe fined banks nearly $6 billion for rigging in the currency and interest rate markets. Precious metal prices inched higher despite a firmer dollar.

BANKS: "5 Banks to Pay Billions and Plead Guilty in Market Manipulation," reports New York Times. "Adding another entry to Wall Street's growing rap sheet, five big banks have agreed to pay more than $5 billion and plead guilty to multiple crimes related to manipulating foreign currencies and interest rates, federal and state authorities announced on Wednesday. The Justice Department forced four of the banks - Citigroup, JPMorgan Chase, Barclays and the Royal Bank of Scotland - to plead guilty to antitrust violations in the foreign exchange market as part of a scheme that padded the banks' profits and enriched the traders who carried out the plot."

banks DON'T BANK ON IT!, Chapter Eight: The Death of Banking, "Not Too-Big-To-Jail" page 183 explains why bankers who commit felonies never end up in jail ...

When fined, bankers understand that no matter what violations of law they are accused of committing, none of them will go to jail so long as they pay the millions or billions of dollars the politicians demand. This has become the tradeoff for banker acquiescence, compliance and submission.

When Attorney General Eric Holder in 2014 huffed and puffed and warned that executives at the largest banks were “not Too-Big-To-Jail,” he was just playing at populist politics for the cheers of the peanut gallery.

The heads of the biggest banks trust that, in the long run, this is merely a politicized money-laundering operation. By retaining their legal status, large banks retain the privilege of staying in business and will soon be able to refill what politicians siphon from their coffers.

PRIVACY: "In privacy, Americans lack trust in government", reports AFP. "Americans are worried about the privacy of their online information, and have little confidence the government will keep that data secure, a poll showed Wednesday. Just six percent of adults surveyed say they were 'very confident' that government agencies can keep their records private and secure, with another 25 percent saying they were 'somewhat confident'". Maintaining private wealth today may require owning some private wealth from the past. Classic $20 Saint Gaudens Double Eagles and $20 Liberty Double Eagles are considered a collectible and as such, may be exempt from public reporting required on other forms of bullion gold. Read more...

IRAN: "Iran rejects access to military sites," reports Associated Press. "Iran's supreme leader vowed Wednesday he will not allow international inspection of Iran's military sites or access to Iranian scientists under any nuclear agreement with world powers. Ayatollah Ali Khamenei told military commanders that Iran will resist 'coercion and excessive demands' from America and other world powers." Is it any wonder why Americans distrust the proposed new agreement between the U.S. with Iran? As Craig Smith and Lowell Ponte explain in AMERICA ENGULFED ... "The apocalyptic Ayatollahs of Iran believe that they can bring about the global triumph of Islam through nuclear war, and their Shiite theology teaches that it is acceptable to lie in order to advance the cause of Islam. Our Israeli allies understand this. Perhaps President Obama does not."

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5.19.15 - Your Money Under Arrest?

Gold last traded at $1,206 an ounce. Silver at $17.07 an ounce.

NEWS SUMMARY: U.S. stocks struggled to maintain record high levels as upbeat housing data boosted the buck. Meanwhile, oil and precious metal prices fell back as traders mulled over the possible impact surging housing data may have upon Fed interest rate policy.

HOUSING: "U.S. housing starts jumped to their highest level in nearly 7-1/2 years in April and permits soared," reports CNBC. "The strength in housing is in stark contrast with weakness in consumption, business spending and manufacturing, which have prompted economists to lower their second-quarter growth estimates." What is interesting is that the U.S. home builders confidence index has been down four of the last five months. Is it possible they know something buyers only suspect? That the housing market is again getting ahead of economic growth? We shall see.

BANKS: Last week HSBC bank warned, "The World Economy Faces a 'Titanic' Problem" without any lifeboats. Today Financial Times reports, "HSBC has become one of the biggest global banks to say it will begin charging clients on deposits in a basket of European currencies....Central banks in Sweden, Denmark and Switzerland have also imposed negative policy rates of between minus 0.25 per cent and minus 0.75 per cent as they battle deflation and currency pressures....JPMorgan Chase said this year it would start charging some of its biggest institutional customers, such as hedge funds and foreign banks, to make 'excess' deposits, which have become too costly under new liquidity rules." Negative interest rates were predicted in DON'T BANK ON IT!, page 217, major bank threat #14 ...

14. European banks - with American banks soon to follow - have begun formally charging savers a fee for their account while paying them zero interest, a policy now formally called "negative interest." American savers could in the near future be charged a bank fee for the honor of putting their money at risk by being lent out for bank profit.

CASH: Money Under Arrest: Months ago Bloomberg reported that "cash in the mattress may be safer than bank deposits," but transporting cash also has increasing risks - such as seizure by law enforcement agents who may presume the cash is the result of committing a crime. CNBC reports one such example,"Joseph Rivers of Dearborn was on his way to California to start a career as a music video producer when he was stopped by DEA agents in New Mexico, who seized $16,000 in cash Rivers had in a bank envelope, the Albuquerque Journal reported. Rivers' story is one of many from U.S. citizens who say the government unfairly seized their assets under the Justice Department's Asset Forfeiture Program. In 2014, government agencies seized $4.6 billion in more than 10,000 forfeitures, 91 percent of the year's total. Critics say civil asset forfeiture is at best overused and targets innocent people and at worst is a cash cow for local law enforcement agencies." Last October NY Timesreported, "Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required - which is a topic also covered in DON'T BANK ON IT! as part of the Obama Administration's "Operation Choke Point."

GOLD: Precious metal prices were "steamrollered" by the surging U.S. dollar index today, offering yet another excellent buying opportunity. While bank depositors in Europe and the U.S. are struggling with zero and now negative interest rates, "Indian banks may offer interest on gold deposits," reports Reuters. Bankers in India are seeking a way to monetize the large gold holdings in Indian households.

"Banks could treat gold deposits as part of their cash reserve ratio (CRR) or statutory liquidity ratio (SLR), the finance ministry said in its guidelines released on Tuesday to seek opinions about its gold monetization scheme....The government is trying to convince households, who sometimes have little faith in financial institutions, to break the tradition and hand over gold passed down the generations."

This proposal is reminiscent of the U.S. origin of fractional banking when the town goldsmiths issued a receipt for gold held on deposit, then noticed people were happier trading receipts. These receipts later morphed into paper notes of currency, which under the Federal Reserve lost their redeemability to gold. Bottom line: The safest way to own gold is always physically in your own possession.

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