Monetary imbalance grows

Just as the FED is thinking of getting out of the QE business, the financial world is losing its moorings. Just as the world is falling apart, we would expect gold prices to skyrocket as investors seek the safety of gold. THAT IS NOT HAPPENING.

 What we see instead is that gold is heading to its low of 1180 since gold slipped back into this latest downturn. In fact Larry has turned a bear and is forecasting gold to hit $930.

Silver has already broken past its low for the cycle and is in free fall.

This time we dot claim that the PMs are being manipulated, but that the drop is promoted by the terminal rise of the US Dollar.

What we see is the terminal blow off for the USD as more and more international trade is being done in other currencies, but people are fleeing the Yen and the Euro. This process will end badly for us as the Reserve Currency status of the Dollar is being attacked.

When will sanity reassert itself? When the PMs resume their run. When will that be? Larry forecasts the turn to be in January with gold at $950/oz. I see it happening sooner.

How will you know? Gold is heading for a retest of 1180. If that holds, that may be the turning point. Or, if the insane blowoff in the US Dollar stops.

Bankers like river boat gamblers.

Bankers are supposed to be Conservative, cautious. The saying is that if you want a bank loan, you have to prove that you do not need it. The reason for this is that the bank must be careful to safeguard wealth, so it is increased and not destroyed.

Are today's bankers careful like that? Some are, but central banks have turned into river boat gamblers as they try to jumpstart economies by cheapening money. The problem is that as Ronald Reagan told us  a nation's economy is like an ocean liner. It takes a lot of space and time to turn it. So, if a national bank makes a mistake, by the time we see the problem created, it is already too late to prevent it. Let's look at some of the problems:

1. The interest rate dilemma.
In order to increase lending, the FED reduced interest rates to almost zero. In the meantime, the National Deficit reached $18T. An increase of 1% in the interest rate will swell the deficit by nearly $200B. Some in the FED tell us that it is no longer a question of IF but WHEN and HOW MUCH interest rates will rise. There are a couple of other wrinkles. Raising rates will negatively impact borrowing, but NOT Raising will stoke inflation.

2. Market anticipates rate rise.
We have two reactions to the anticipated rate rise. a) A drop in stocks and b) An influx of European money driving up the US Dollar.

3. Will the ending of QE drive up rates?
Almost certainly. If the FED will not buy the Treasuries, rates on them will rise so they can be sold.

Reading the economic tea leaves.

Spotlight on the banks.

The World's bankers are struggling to pump their economies by financial methods. On the one side we have the FED that is trying to end QE (promised to end it in October), but keep low interest rates into next year. The Bank of England has a benchmark interest rate of 0.5% and is thinking about raising rates. The European Central Bank lowered refi rates to 0.05% from 0.15% and depositors are CHARGED 0.2% on their deposits. Over in Asia, the Bank of Korea dropped its interest rate 0.25%, China has pumped in 100B Yuan into each of its five biggest banks. And the Bank of Japan has succeeded in reducing the value of the Japanese Yen by 27%.

Economic growth.
The US and the UK have managed to restore some growth but unemployment is still too high. Rumors of a hard landing in China have been exaggerated.

Gold.
The slide in gold price is continuing, albeit slower. The key here is the torrent of money pouring into the US Dollar. This makes gold less expensive;

Part of the reason for the inflo into the US Dollar has been the money printing in Europe(the ECB is buying up all kinds of bonds) and also the anticipation of American equities going higher.

The US Stock Market.
It has been the ultimate destination of funds coming into the US Market. The flow may be slowing now as the Stock Market might be getting ready to cool.

The Russell 2000 has been claimed by CNBC to put in a Death Cross (50DMA falling below the 200DMA).

 CNBC was a bit premature:

But, today's action if continues, may produce the Death Cross. Small cap stock are falling and seem to be topping out.

Remember that gold goes where economic power is growing. And it ain't us.

War cycles.
Ramping up. While the Ukraine may be quieting (or giving that impression), the Middle East is heating up. ISIS is now being attacked from the air in Syria as well. The effort is not heavy as yet. Was last night's bombing like a Shock and Awe? Hardly. More like a Sneak and Squeak.

Ukrainian cease fire holds - for now.

The Ukrainian govt and Rebels from Luhansk and Donetsk Provinces (Oblasts) have agreed on a cease fire and a potential peace plan. AS a part of this plan, artillery was to be withdrawn about 15 miles from a demarcation line. The potential peace plan sounds good: a very substantial autonomy and language rights for the Russians of the two Oblasts. In case you wonder what brought this turn of events about, there are two factors: 1. about 70% of Ukraine's military equipment was destroyed and 2.the more Ukrainian troops were put in, the more Russian fighters  came across.


Western powers have wisely refused to contribute to the slaughter by giving the Ukraine govt more weapons, so the Ukrainian govt decided to do what it should have done in the first place: negotiate.


The question now is: will the Rebels cooperate? A lot of damage was done to Luhansk ond Donetsk:


http://www.aljazeera.com/indepth/inpictures/2014/09/pictures-destruction-ukraine-lu-201492191355629570.html


A lot of wounds need to heal, a lot of destruction needs to be rebuilt. And the neighbors of Russia need to give up the idea of stripping the Russians left in their territories of language and cultural rights. President Putin's boast of being able to invade five neighbors in two weeks (or was it two days?) is a warning that should betaken seriously and responded to approprietly. No more saber rattling! How about a peace offensive?

The War on Men.

If you listen to the shrieks of the American Socialist Party (also known as Democrats), there is a war on young women by denying them 'free' birth control and using abortion as a birth control. If you look at statistics, you find that THERE IS A WAR ON MEN, especially white men.

First, the Socialists are least effective with their propaganda among white men, so Socialists (Democrats) have a deep seated hatred of white males. That is why Democrats pursue policies that will marginalize, reduce or even eliminate white men from positions of leadership and good jobs. Have you noticed the composition of actors in commercials lately?

But, it is not only white males, but men in general that are now under discrimination. This shows mostly in College admission, where the women to men ratio is 1.4 to 1.65, depending on what statistics you read. Schools have become a man averse environment.

Even places that are black man friendly feel the rage of the anti-American Left. I refer to the NFL and football. While, some NFL players have issues, the portrayal of players as wife beaters is just part of the Left's propaganda machine to destroy any activity that is not dominated by the Left. The NFL is conspicuous because it can not be dominated by the FemiNazis. So, the NFL is under threat of destruction.

Larry Edelson on the root of the War Cycles.

Pope Francis: World War III has begun …

Larry Edelson | Wednesday, September 17, 2014 at 7:30 am

19

It seems Pope Francis gets it. Perhaps he’s even following my work. And he’s right: World War III has begun.
Speaking Saturday at Italy’s largest war memorial, Pope Francis said the spate of conflicts around the globe today were effectively a “piecemeal” Third World War, condemning the arms trade and “plotters of terrorism” sowing death and destruction.
“Humanity needs to weep and this is the time to weep,” the Pope said.
                        
I couldn’t disagree more. I think the Pope is missing a big factor in the current state of affairs and the primary driving force that will make them all that much worse for the next several years as the war cycles ramp up ever higher.
                       
It’s not just the arms trade of plotters of terrorism who are to blame. It’s the governments of the biggest nations in the world, from Washington and Brussels to Beijing — all of whom are behind the rising tide of violence and geopolitical rifts we are seeing around the globe.
It’s their war on your wealth that is driving it, too.

Bankrupt Washington is out to tax every penny of wealth you have and even confiscate parts of it, all in an effort to replenish their empty coffers.

Bankrupt Washington and Brussels are on a war path to monitor everything you say and do, to tax every penny of wealth you have, to even confiscate portions of it — all in the name of trying to replenish their bankrupt coffers.
Europe is endorsing income tax rates of as high as 75 percent in France. It’s getting ready to implement a 10 percent wealth tax on all euro citizens.
Europe is also legislating that you lose every cent you have over 100,000 euros in a European bank, should it fail.
                        
Poland has nationalized 100 percent of all private retirement accounts.
Washington, meanwhile, is getting ready to do much of the same. It’s already spying on each and every one of us. It’s already implemented a form of capital controls, whereby you have to report every penny of money you have overseas, and overseas banks have to turn you in as well, or face severe penalties.
                        
The retirement age is going to go up. My sources tell me that Washington is also considering making it mandatory that a portion of your IRA or 401(k) hold a minimum amount of U.S. Treasury bonds — an indirect way for Washington to finance itself, with your money.
                       
Obamacare is really a tax in disguise, while President Obama’s MyRA initiative is nothing more than taxing the poor, under the ruse that anyone can now have a nice retirement account — provided you let the government hold your money and wait to get it back some day, with dollars worth substantially less than they are worth today.
Pope Francis did not address this war on your wealth. But it’s the root cause behind many of the conflicts we see around the world today.
If Europe weren’t so weak and so focused on attacking the wealth of its citizens, do you think Putin would be as aggressive as he is today, seeking to rebuild the former Soviet Union’s territories? Hardly.
                       
If Washington wasn’t bankrupt and also so focused on its war on your wealth, do you think Beijing would be so successful promoting its yuan to the international stage …
Or moving so aggressively to control the South China Sea, the Spratly and Senkaku Islands?
Much the same can be said about ISIS, or Boko Harem, or other terrorist groups. They are now more active than ever, more powerful than ever, why?
Because the West is so financially destitute, so inept in its leadership, that they too want to seize the moment and turn otherwise civil and religious discord into international conflict.
There are purely domestic issues to this Third World War as well. Scotland could secede from the United Kingdom this week, ending a 307-year-old union with England.
But if you think it’s just Scotland looking for independence, think again: The independence movements started exploding higher in 2012, right on cue with the upturn in the war cycles, and is growing steady around the world.
Spain is awash with independence movements. Catalonia, Basque, Andalusia, Canary Islands, Asturias and Balearic Islands.
In northern Italy, the province of South Tyrol is seeking to secede. In the south, Sicily has a strong and growing independence.
Flanders, the Dutch-speaking northern portion of Belgium, wants to secede. Should Flanders secede, Belgium would lose more than half of its population and economic power.
Corsica is seeking independence from France. Bavaria is seeing a rising tide of separatist voices wanting to secede from Germany.
In Canada, Alberta, Quebec and British Columbia are all seeking independence, and their movements are growing in popularity.
Lest you think it’s just other parts of the world that are seeing independence movements, think again. Vermont, New Hampshire, Texas and the state of California all have very strong, growing independence movements.
California is now leading the way, with an independence vote set for Sept. 16 of next year. Also being discussed: An option of breaking up California into six separate states.
Each and every one of these separatist movements, I can assure you, will become as real as Scotland’s vote this week.
And each and every one of them will have vast implications for the global economy and for the financial markets.
                       
So yes, I believe World War III has already started. It may not become a world war as we have come to know them, but one thing is for sure:
Until the war cycles crest in late 2020 — six years from now — the world is going to be awash in turmoil, domestic and international, financial and economic, culturally and socially.
And as I have been pointing out over and over, do not underestimate its impact on your wealth. Do not underestimate how it will change everything you thought you knew about investing.
Keep an open mind; don’t get stuck in old economic theories. And most importantly follow the money flows, whether you agree with them or not.
There is over $150 trillion of wealth in the world and when that money moves, you’re either part of it, or you’re run over by it.
And don’t forget, you can let me know what you think about this and other topics right here.
Best wishes and stay safe,
Larry

AJ adds: Larry has it right. People are beginning to revolt against the incompetence of the Elite. A lot of the people do not see clearly the relationship between cause and effect, but they do object to the outcomes. The Welfare State takes money from those who worked for it and distributes it for votes. In the process, the recipients are not required to perform work, so nations become poorer in relation to how much they dole out. At the bottom of our diseases are the institutions of higher learning which educate an elite trained in economic, moral and political Progressivism. Call it Liberalism, Leftism or Social Democracy, if allowed to proceed untreated, the disease will destroy whole nations. The big challenge then is to preserve the institutions we had and reform (or destroy) what ails us: THE UNIVERSITIES and their Leftist orientation. 

Scotland the sane.

Scottish independence was crushed in a 55-45 vote. There are many ways of putting it, but them's the facts.


Rupert Murdoch and many others claim that there is an anti-Establishment movement in Europe and they have a point. But, the Scottish Independence movement was not a revolt against the Establishment, it was an effort to enlarge the powers of the Establishment. Led by those demanding more welfare and govt payments and the Environmentalists whackoes that want to rid Scotland of nuclear power and misguided youth this was a movement of the Left.


In fact the Establishments of Europe and the United States are bent on destroying our civilization. Let's hope that Americans have the courage to vote the urban termites out of power while we can still vote.

ISIS operating at Mexican border.

Judicial Watch has unearthed the story of how an ISIS cell is planning to attack the US from Mexico.

http://www.judicialwatch.org/blog/2014/09/feds-el-paso-rep-orourke-called-ban-contact-jw/

Dem Congressman from El Paso tries to keep facts secret.

ISIS has a friend in Obama

http://www.washingtonpost.com/opinions/marc-thiessen-obama-overrules-his-generals-in-fight-against-islamic-state/2014/09/15/0cff59a0-3ce1-11e4-9587-5dafd96295f0_story.html

Obama vs. the generals
By Marc A. Thiessen
September 15

Pity poor Gen. Lloyd Austin, top commander of U.S. forces in the Middle East.

Rarely has a U.S. general given his commander in chief better military advice, only to see it repeatedly rejected.

In 2010, Gen. Austin advised President Obama against withdrawing all U.S. forces from Iraq, recommending that the president instead leave 24,000 U.S. troops (down from 45,000) to secure the military gains made in the surge and prevent a terrorist resurgence. Had Obama listened to Austin’s counsel, the rise of the Islamic State could have been stopped.

But Obama rejected Austin’s advice and enthusiastically withdrew all U.S. all forces from the country, boasting that he was finally bringing an end to “the long war in Iraq.”

Now the “long war in Iraq” is back. And because Obama has not learned from his past mistakes, it is likely to get even longer.

Last week, Obama announced a strategy to re-defeat the terrorists in Iraq. But instead of listening to his commanders this time around, Obama once again rejected the advice of . . . you guessed it . . . Gen. Lloyd Austin.

The Post reports that, when asked for his recommendation for the best way to defeat the Islamic State in Iraq and Syria, Austin told the president that “his best military advice was to send a modest contingent of American troops, principally Special Operations forces, to advise and assist Iraqi army units in fighting the militants.” Obama was having none of it. Austin’s recommendation, The Post reports, “was cast aside in favor of options that did not involve U.S. ground forces in a front-line role.”

Indeed, in his address to the nation, Obama insisted that “American forces will not have a combat mission — we will not get dragged into another ground war in Iraq.” He declared the effort against the Islamic State “different from the wars in Iraq and Afghanistan” and modeled instead on the air campaigns he has waged against al-Qaeda affiliates such as the one in Yemen.

There’s one problem with that: The air campaign in Yemen is not working. Just this weekend al-Qaeda infiltrated forces into Yemen’s capital, Sanaa, and Yemeni officials say that al-Qaeda’s strength in Yemen is growing. And as American Enterprise Institute counterterrorism expert Katherine Zimmerman points out, al-Qaeda’s Yemeni affiliate was behind a “terror threat that closed more than 20 U.S. diplomatic posts in North Africa and the Middle East in August 2013.” If, four years from now, the Islamic State is still strong enough to force the closure of 20 U.S. embassies and consulates, then Obama’s strategy to “degrade and destroy” the group will have failed.

The Islamic State cannot be defeated from the air alone. This does not mean a re-invasion of Iraq. But as Fred and Kimberly Kagan — two key thinkers behind the successful 2007 surge in Iraq — point out in a new paper, defeating the Islamic State “will require as many as 25,000 ground troops in Iraq and Syria.” The vast majority of those troops would play a supporting role for several thousand U.S. Special Forces troops and special mission units — who would be deployed in small groups embedded with Sunni tribes (like the Sons of Iraq, who fought alongside us during the surge) as well as Kurdish pesh merga forces and Iraqi military units.

An air-only counterterrorism effort will fail because the Islamic State is not, as Obama claimed in his address, “a terrorist organization, pure and simple.” The group governs a swath of territory the size of the United Kingdom. It rules cities. It collects taxes. It controls natural resources and is bringing in $3 million a day in oil revenue. It has a conventional army — one that has won battles against other conventional armies. As Obama’s own defense secretary, Chuck Hagel, has put it, “They’re beyond just a terrorist group. They marry ideology, sophistication of strategic and tactical military prowess, they are tremendously well-funded. This is beyond anything that we’ve seen. So we must prepare for everything.”

Everything, apparently, except ground combat.

Obama seems more concerned with distinguishing what he is doing in Iraq from what the George W. Bush administration did than he is with following a war strategy that will defeat the enemy. Until a few days ago, both Obama and Secretary of State John Kerry publicly denied that we were even at war with the Islamic State — as if calling this something other than war would make it any less of a war.

Yes, we are at war with the Islamic State. And if we are to “destroy” it (as Obama promised), then the president needs to start listening to his military commanders.

If he keeps ignoring their advice, he may be in for a long, hard slog — or something far worse.

Pelosi's latest idiocy.

Dem House minority  Leader is quoted as to have said that: "she would not vote for a return of troops on the ground in Iraq under any circumstances, because that would only exacerbate the violence."

MNeanwhile in Israel.

Israeli Reality Check for Liberal Critics

Jonathan S. Tobin | @tobincommentary 09.15.2014 - 3:40 PM

                         

 

    

Israel’s American critics viewed the latest conflict in Gaza as more evidence of how the Jewish state needs to be saved from itself. That is particularly true of Jewish groups like the left-wing lobby J Street whose attacks on the Netanyahu government and support for Obama administration pressure on Israel have continued even as anti-Zionist and pro-BDS (boycott, divest, and sanction) efforts have intensified. But the latest opinion poll from Israel illustrates yet again just how out of touch these liberal know-it-alls are with reality as seen by the majority of Israelis.

A new opinion poll from Israel’s Channel 10 provides sobering results for those who continue to hope that Israelis will listen to them and both push for a new prime minister and resolve to begin leaving the West Bank. While many, if not most Americans, actually believe the press when they call Netanyahu a “hard-liner,” the perception of his conduct at home is very different. Far from convincing Israel to start ceding more territory to the Palestinians, after their 50-day ordeal during the summer as thousands of rockets fell on their heads and a new threat of terror tunnels made them feel even less safe, more Israelis seem inclined to view Netanyahu as not tough enough.
Netanyahu’s personal approval ratings dropped once the fighting ended and many of his countrymen were disappointed with his failure to end the threat from Hamas-run Gaza once and for all. These latest numbers confirm that the big winner if elections were to be held today would be the prime minister’s most strident critic on the right. Even more discouraging for the “save it from itself” crowd is the fact that the right-wing parties as a whole are gaining strength while those on the left are dropping even lower in public esteem.

The Channel 10 poll shows that the public would give Netanyahu’s Likud Party 26 seats in a new Knesset. That’s less than the 31 it got when it ran on a joint ticket in 2013 with Avigdor Lieberman’s Yisrael Beytenu Party. But that right-wing rival would get 14, representing a gain of four for the two natural coalition partners. But the big winner would be Naftali Bennett’s Jewish Home Party which has been highly critical of what it considers to be Netanyahu’s timid approach to Gaza and negotiations with the Palestinians. It would get 16 in a new election, an increase of four over their current total.

While these three men are more or less continually at each other’s throats, it must be understood that the combination of the three—which represent the core of any center-right government—would stand at 56, almost enough for them to govern on their own and reminiscent of the old days of Labor Party dominance when the left ruled the country for its first three decades. That would give Netanyahu the option of putting together a right-wing government with the religious parties that would, however fractious its character, dominate the Knesset.

At the same time, the biggest losers would be the parties that Israel’s critics are counting on to form the core of a new “pro-peace” Cabinet. The centrist Yesh Atid Party led by current Finance Minister Yair Lapid is the big loser in the poll, going down to only 8 seats from its current 19. That leaves any potential center-left coalition led by Labor, which went down to 13 from its current 15 seats, hopelessly short of any sort of majority. Even if you added in the seats that may be won by a new party focused on economics led by former Likud minister Moshe Kahlon to the total of all the left-wing, centrist, and Arab parties, it adds up to only 49. And that is an inconceivable coalition since in all likelihood Kahlon and his supporters would join any Cabinet led by Netanyahu.
What does this mean?

The first conclusion is that although anything can happen in the two or three years between now and the next election, barring some sort of spectacular and currently unforeseen collapse, Netanyahu will almost certainly lead the next Israeli government.

Second, Lapid’s party appears fated to follow that of every other centrist party in Israeli political history. Voters are always hungry for alternatives to the old left and right choices but even though circumstances occasionally thrust a centrist to the fore, they are inevitably, as Lapid has been, marginalized by the continued centrality of war and peace issues on which they cannot compete. Lapid also made the same mistake of all his predecessors (including his father) of joining a government and thus became both tarnished and diminished by the hard choices any Cabinet must make on economics or peace. These poll numbers also lessen Lapid’s leverage in the current budget dispute he’s been waging with Netanyahu.

Third, and most importantly, these numbers reflect the fact that, unlike most liberal Jews–or most Americans for that matter–Israelis have been paying attention to events in the region. They know the continued rule of Hamas over Gaza and the Islamists’ increased popularity among Palestinians at the expense of the supposedly more moderate Fatah and Palestinian Authority leader Mahmoud Abbas renders any idea of withdrawing from the West Bank, as was done in Gaza, an impossibility. No sane Israeli leader would risk turning that far larger and more strategic territory into another Gaza.
This will, no doubt, heighten the frustrations of American left-wingers about Israel. But their anger tells us more about them and their refusal to think seriously about what Palestinians have done and believe than it does about what Israel should do. Israelis want peace as much if not more than American liberals. But they understand that dreams of peace are meaningless to Hamas and Palestinian rejectionists. Those who claim to be pro-Israel as well as pro-peace need to come to terms with the fact that the people who understand their country’s dilemmas far better than they could are still firmly rejecting their advice.

AJ adds: Jews love to engage in political factionalism. The rise of the Sephardic parties has diluted the influence of the European Socialists and so the Israeli populace has leadership that is free of the idiocy of the "Peace" parties. Though, come to think of it, even Labor had a healthy scorn for the Arabs. This tendency is strengthening, while American Jews steadfastly remain idiots.

Obama invites Ebola into the US.

Obama has taken several actions that almost guarantee that Ebola will be transplanted to the US:

1. He has ordered our Southern border to be left wide open. Any terrorist can walk in.
2. He has permitted people infected with Ebola to be brought to the US.
3. He is ordering almost 3,000 troops to be stationed in Africa's infected regions.
4. Homelend Security is ordering 150,000 hazmat suits.

Obama wants the US to solve the Ebola problem by forcing us to tackle an actual epidemic.

While I am totally sympathetic to the African countries that face this deadly disease, the problem could be approached in a much less hazardous fashion to the people of the United States.

How?

There are four US companies that are working on the problem. I am most familiar with the work of Inovio. This company has produced a vaccine that will do the trick. Inovio uses artificially made DNA circles that contain instructions for a specific antigen (protein) that the body's immune system can recognize and destroy. The serum has been tried in animals and was safe and provided 100% protection against Ebola.

I asked Inovio if they tried to offer this tech to help out the countries affected. Their answer is NO. Part of the problem is regulatory. Testing this technique would take years. Obama could use his authority to dispense with regular procedure. There is also the problem of cost and return. Inovio is a small company and they would need a grant to produce the vaccine. No one is offering them any help.

So the President is going to force the issue by infecting America.

Sweden: now what?

The jubilation of the Swedish Left about election results turned out to be premature. When the dust settled and the votes were counted, the Left scored 44% and the Right coalition 39%. The balance of power (13%) is in the hands of a nationalist and immigration hard-line Party called the Sweden Democrats.

Swedish TV reports that one out of three votes for the Sweden Democrats came from the Moderates (the name of the largest Conservative Party). The Moderates espoused a John McCain-like devotion to increased immigration and their vote share went from 30% to 22%. Self-delusion does not work even in Sweden.

The New Feminist Initiative Party took votes from the Left but failed to score 4% of the vote and thus is not eligible for any representation. The Environmentalist wackoes (the Green Party) actually lost votes.

This makes for an interesting situation. The Left can forget about going back to the "good old days" of the Welfare State as the Rigt and the Sweden Democrats can defeat it in a no confidence vote. The right can form a ruling coalition only if it gives up the idea of increased immigration. If I were a Swed, I'd be satisfied with that.

Obama goes to war with an uncertain trumpet.

It needs to be pointed out that the rise of ISIS is the culmination of the failure of Leftist Democrat policies. To the Left-wing Democrat the US is a destabilizing force in the world. Along comes Obama, apologizes for previous US conduct and promises in Cairo to cooperate with the Islamists. The overthrow of Mubarak follows and the rise of the Muslim Brotherhood. The same scenario is played out in Libya. Then comes the abandonment of Iraq. Obama could not get us out of Iraq fast enough to prove his point. In fact, the removal of the US from Iraq led to the rise of ISIS and the attempt to establish a world-wide Caliphate.

President O'Bungle now has no choice but to go to war with ISIS, but he is going to do so for the wrong reason. Maintaining that ISIS is not really Islam is brain dead. ISIS is in fact the re-creation of the original brutality of Islam as it spread by killing and rape. Expecting to lead a coalition, O'Bungle forgets that Saudi Arabia exports hate and so do the Qutaries. Untill the O'Bungle regime is gone and we get some sane people with sane ideas to run our foreign policy, we will have Jihad all over.

Meltdown of Weiss Research recs.

If you followed the recs of Weiss Research, you had a tuff time. Going back to the Million Dollar Portfolio, and recently the $159/bbl oil shock (which did not happen), the breakup of the EU and the BUY signal on Larry Edelson's gold chart, You wonder how an organization can get so many things wrong. Perhaps the reason lies in the skepticism expressed by Larry that the Gold Market is manipulated. The FED is printing money and part of the money they create is used to control the price of gold.

This bring us to the latest call from Larry: that the sky is falling. Larry now claims that his BUY signal on gold was not really strong and now declares that gold might hit $930 by January of next year. Let's look at the graph!

There is no doubt that this is as severe of a takedown as we have seen. Let's now look at gold prices in a more extended basis:

What we see is that gold is heading to a triple bottom and it is almost there. We would have a triple bottom if gold got to something like 1,150/oz. In any case, the chart signals a turnaround in gold price. While, Larry admits that, he now says that gold is back in the Bear Market and will continue to fall. Whatever is your reading from the charts, Larry's recs have turned uncertain.

A rational view from accross the Pond.

from the Telegraph

It’s time to back away from the Russian wolf

Russia's President Vladimir Putin won’t be thwarted by Nato or economic sanctions and his aim of a neutral Ukraine is acceptable

Ukraine is a uniquely sensitive case for Russia; the countries are bound by deep social, cultural, and historical ties. Kiev is known as the “mother of Russia cities”. And even in Ukraine the Russians want influence, not actual territory. 

By Tony Brenton

6:00AM BST 10 Sep 2014

1250 Comments

There is a Russian proverb: “If you can’t face the wolf, don’t go into the forest.” The West has blundered into the Ukrainian forest and enraged the Russian wolf, only to discover that we cannot face him. We should now be looking for the path out.
 

Western policy has been built on two false premises. The first is that we must stop a revanchist Russia. As this narrative runs: yesterday Russia took Crimea; today Eastern Ukraine; tomorrow – who knows – Estonia, Poland? This precisely mirrors the Russian nightmare of predatory Nato expansion; yesterday Poland and Estonia, today Georgia, tomorrow – who knows – parts of Russia itself? The mutual suspicions of 1914 spring worryingly to mind.
 

In fact, before what the Russians (with some justification) saw as a Western grab last February for control in Kiev, there was no evidence of Russian revanchism. Those who point to Georgia are wrong – it was the Georgians who started the 2008 war. Meanwhile, Ukraine is a uniquely sensitive case for Russia; the countries are bound by deep social, cultural, and historical ties. Kiev is known as the “mother of Russia cities”. And even in Ukraine the Russians want influence, not actual territory.

The “we must stand up to Putin as we did to Hitler” line is pure schoolboy politics. Putin, of whom I saw a fair amount as UK ambassador to Moscow, is not an ideologically driven fanatic, but much closer to Talleyrand – the calculating, pragmatic rebuilder of his country’s status in the world. Certainly the seizure of Crimea was illegal and destabilising. But it was a panicky response to a unique set of circumstances, not the start of an attempt to rebuild the USSR. Of course we are right to reassure those who feel most threatened – as Nato has done with its decision to create a “spearhead force”. We are right to condemn the destruction of MH17, which a report confirmed yesterday was almost certainly shot down. But the idea that sabre-rattling is necessary to convince Russia of Nato’s seriousness is ridiculous. If the Russians didn’t take the Nato security guarantee seriously, why would they be so worried about Ukraine joining?
 

The second false premise is that economic sanctions can stop Russia. We have deployed sanctions six times against Russia since the Second World War; they have never worked, and won’t this time. There was an air of desperation around claims at last weekend’s Nato summit in Newport that sanctions pushed Russia into the current ceasefire. In reality the US, UK and Ukraine resisted a ceasefire that left Russia in command of the field in East Ukraine. Ukraine only moved to accept the ceasefire because it suddenly started losing the war. 
 

Sanctions are a potemkin policy, deployed in the absence of any effective alternative. They have probably done some economic damage, but their sole political effect has been to rally the Russian people behind their president, and reinforce Putin’s conviction that this is a struggle he cannot afford to lose, whatever the cost. Even the Russian opposition doesn’t support them.

  

It has become clear in the past two weeks that the Russians are ready to go to the brink to achieve their political objectives in Ukraine. Few believe we should go to the brink to stop them. So all we can do is prolong the agony and further immiserate Ukraine. Happily, the gap between the fiery rhetoric of the Newport summit and the moderation of its actual decisions implicitly acknowledged this. The spearhead force will, despite Polish demands, not be sat on Russia’s frontiers. There will also be Nato help for Ukraine’s armed forces, but no serious weaponry (as they would still lose).
Meanwhile, the summit did not refer at all to the most neuralgic point for Russia: Nato membership for Ukraine. And Nato members have rather belied their declared fears of a revanchist Russia by their reluctance to spend more on defence. When I went to such summits a commitment, as in the Nato communiqué, to “aim to” raise spending amounted to a decision to do nothing.

And as many commentators have noted, Russia’s objectives – a neutral Ukraine, and constitutional safeguards for the population in the East – are not impossible to meet. We do deals with China, with Iran, with North Korea. Uncomfortable as it may be, the time has come to do a deal with Putin. Part of this should be easy; Ukraine is in any case going to be in no condition to join Nato for the foreseeable future. Negotiating an acceptable level of autonomy for East Ukraine will be much harder. The Russians are in possession, and will not let go until their concerns are met.
Meanwhile Ukraine’s President Poroshenko has to deal with a nationalist Right whom every concession will enrage. Here, finally, sanctions could be of some use, with the offer to lift them helping to lubricate the way towards an agreement.

The whole affair raises serious questions about the competence of Western policymaking towards Russia. The one route out of this mess has been visible for months. But let us not recriminate. There are still big prizes to play for. A democratic, prosperous, Western-leaning (but not allied) Ukraine is bound to become an important exemplar for the Russians next door. And the reopening of Western economic ties with Russia is crucial to the process of pulling that country, however slowly and erratically, towards European normality, too.

AJ adds: A crucial negotiating card for the Ukraine is to offer Russia a way to supply Crimea over land. I know. This will be opposed by a lot of Ukrainians, but it may pave the way to an easier end to the hostilities. Are the Ukrainians capable of thinking strategically? I hope so.

Where the economy is now.

One of the greatest minds of the last century compared economics to plate tectonics. As the plates shift, small earthquakes allow the tension generated by the movement of the plates to be released. If earthquakes did not occur, the tension would be relieved by catastrophic moves. Thus it is with economics. The stress caused by inventions and the movement of capital are relieved by occasional recessions and bankruptcies. If these small (but traumatic) changes are not allowed to occur, the resultant imbalance will be relieved by  a catastrophe. And that is where we are heading.

The housing bubble created by the policies that began in the Carter years and continued unabated throughout 2007, were not allowed to fully unwind. The Bernanke response to the Great Recession that began in 2008 was to create another bubble, the US Stock Market bubble.

In addition to the Stock Market bubble, we have the Japanese Yen carry trade. Big Players can borrow Japanese Yen at virtually zero interest and buy something that earns income. In the US we had QE that allowed the FED to depress interest rates. As the US is trying to unwind QE, Europe is starting its own QE.

What is the result? We have a currency war as countries trying to cheapen their currencies to promote export. This reduces US exports and reduce the value of US companies' production overseas that are reported and sold in Euros or other currencies.

The sovereign bond markets are where governments are causing the greatest stress to build up. German, Swiss and Japanese bonds pay less than 1% in interest and even Italy and France can borrow money at 1.3 and 2.4%. Thus, there is no incentive to rein in govt spending. When interest rates will rise (and they will) deficits will skyrocket. And if money printing continues, inflation will take off.

The world is waiting for a Black Swan event to loosen the plates and set off a catastrophe. What will it be? A breakeup of Great Britain? Further bloodshed in the Ukraine? Or the Swiss gold initiative?  Switzerland wants its gold back and buy enough in the open market to cover 20% of its currency.

Putin: Was he right after all?

1. Syria. President Obama tried to interfere in Syria and promote the Islamists fighting Assad. The Russians and the American people objected, so Obama desisted. Actually, Obama confined American interference to smuggling weapons via Libya. ISIS then broke out of Syria and invaded Iraq and Lybian Islamists now do belly flops in the pool at the American Embassy in Tripoli. What the Leftists of the Obama regime fail to understand is that giving in to the Islamists will not stop them in their quest for a world-wide Caliphate. Assad, on the other hand, was content to rule Syria and had no ambitions to conquer Iraq or attack the United States. Putin was right in opposing American involvement in Syria.

2. The Ukraine. Ukraine's President was overthrown by a gang financed by NGOs including Soros. The new govt of Ukraine moved to deprive Russia of its warm water port (the base at Sevastopol leased by Russia) and deny the Russians living in Ukraine their language and cultural rights. Russia moved by eventually taking over the Crimea and helping the revolutions in the Easter provinces of Ukraine. The Ukrainian govt responded by a full-scale war against its Eastern provinces, driving thousands of the populace into exile in Russia. Predictably, Russia responded by a limited invasion.

The cease fire in the Ukraine. President Putin has devised a cease fire plan of 7 points. The plan halted the fighting and submits issues to negotiations. Russia wants the Crimea and asking for it to be returned to Ukraine is a non-starter. The Russians need to supply the Crimea by land. Either the Ukrainians figure out how to do that and make money from it or the Russians will carve off a chunk of land next to the Sea of Azov to establish a land corridor to connect by land to Crimea. If the Ukraine will respect Russian language and cultural rights in the Ukraine and establish a federated structure with their Eastern provinces they can restore Ukraine's territorial integrity. But, if they listen to Western powers and just say 'NET' then Russia will permanently occupy the Donbas and Luhansk. Should the Ukrainians listen to the loser in the White House and invite NATO into the Ukraine, all hell will break lose.

Someone please transmit the immortal lyrics of the Gambler to the Ukrainian leadership:
 "You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run"

The fact is that the Ukrainian leadership screwed up. Trying to crack down on the Russians in the Ukraine makes things worse. I remember walking the streets of  Budapest in 1956. Most of the buildings on major avenues were showing tank fire damage. Hungarians felt betrayed that the West did not come to their aid. But, if the West did come to Hungary's aid, not much would have been left of those streets. And eventually, the Russians left as Communism faded into the dust bin of history. Statesmanship now requires that the Ukraine limit the damage and figure out a way to live with the Russians in their country. It will be hard to restore trust, but what is the alternative?

Democrats are going off the rail over Ukraine.

Just as the Presidents of Ukraine and Russia begin to see eye to eye on how to resolve the crisis in Eastern Ukraine, US Democrats are trying to push the US into a war with Russia:

http://thehill.com/policy/international/216457-democrats-push-obama-to-send-arms-to-Ukraine

The proposals to arm the Ukraine with American weapons and the idea for US troops to be put into the Ukraine for "maneuvers" are the latest and predicted atrocious ideas Democrats are advancing.

This is so predictable. First, Democrats destroy our military abilities and adopt policies that project weakness abroad. Then, when adversaries respond by flexing their military muscles, Democrats push for war. Let's remember that Russia is a nuclear power and going to war with Russia would have very severe consequences.

The unpredictability of economics.

It was some time ago that I have given up on charting gold prices. And it isn't only PM prices but nearly everything else. The massive QE in the US has overwhelmed nearly everything else. Now that the US is trying to wind down QE and raise interest rates another dynamic is taking hold. The US Dollar is skyrocketing in anticipation of higher interest rates. The USD has gone from 79.5 to 82.5. This is moderating housing prices, commodities and acts negatively on Precious Metal (PM) prices. Across the water, Europe and Japan are printing money like crazy as Keynesian economics has invaded everywhere. The money-printing is reducing the value of currencies and causes weak economic growth and stagnating wages across the world.

One feels that springs are being compressed, just waiting for the release of all the energy. In monetary terms, it is inflation that is coming. How much and when? Hard to forecast. Meat prices have gone up over 50%, which puts a dampener on the average family's budget. Add to this the increase in taxes and medical costs and we can expect a blowup along the way.

Arsky, Lysky, Porsky the Pie

Shelled Donetsk and made them cry.
When the Ivans came out to play,
Arsky, Porsky ran away.

You know, it would be funny if people were not killed by the hundreds. The Russian stories that Russian soldiers in Ukraine are on vacation and that the photographs of tanks are from a video game are hilarious. Equally funny are Ukrainian protestations that Russia is invading the Ukraine and using artillery.

We can find it comforting that some Ukrainian units are refusing to fight, thus opposing the madmen who run their country. Fortunately (or unfortunately), Poroshenko and his group are incompetent, otherwise they would have worked out a deal with Russia that the Russians can accept.

Equally to blame are the Europeans, who bluster and egg on Ukraine, a failing state of corruption. If push came to shove what would the Europeans do? The British had mothballed their last carrier and their armed forces can only be described as pathetic. If Scotland votes to secede, the English won't even have a decent military band. France is now without a government and their President rules by decree, just like the President of the Ukraine. Subtract the US from NATO and the rest of them can't fight their way out of a paper bag. Fortunately, O'bungle is occupied on the golf course or he would start WWIII.