Just spent a happy hour ironing my shirts for the week. Not because I enjoyed ironing, but because I listened to this podcast:
The odd state of seeing reality through a different lens than the majority. How does one tell when the minority opinion is actually the more accurate one?
The unprecendented flood of global credit (which David calls “debt without borders”) that, when combined with the unfunded liabilities many countries are saddled with, presents the epitome of an unsustainable financial system. Sovereign insolvency is much more common in history than we believe, and we are likely to see much more of it in the next decade than we have in the several preceeding ones.
The inflation/deflation debate. Will things end in default (the “eat-and-dash” outcome) or massive money printing? David and Chris agree that it looks increasingly like the inflationists will win out.
How our financial system has stopped pricing risk, creating dangerous asset bubbles and bad incentives, and resulting in truly detrimental decision-making.
The systemic rot than needs to be purged before a more ‘healthy’ recovery can emerge. Today’s ills of rampant lying/fraud, magical accounting, Teflon bankers, and torpid citizenry must be dealth with. Too few (who often don’t comprehend the extent of their actions) are determining the fate of too many. The lack of checks and balances as well as real leadership add to the burdens we currently face in addressing these issues head on. We’re not yet taking the rational steps to correct the system.
What can I say. It’s rarely that I hear such a concise and well reasoned exposition of what I think. I could have saved myself much time if I’d signed up to Chris Martenson‘s weekly email notification years ago. I suggest you do.
Jesse’s Cafe has another great post on silver:
The comment and analysis below is from Harvey Organ‘s most recent commentary.
“The huge rise in silver price has caught the silver bankers totally offside on the silver banking. The BIS data released in November (www.goldexsextant.com) shows that the G 10 bankers have collectively sold forwards and swaps to the tune of 4 billion oz and short naked calls for another 3 billion oz. The total, 7 billion oz represents 10 years of production. If you just do the forwards, then it is 7 years of annual silver production.
Let us say the average cost of acquiring these derivatives and forwards equate to $15.00 for silver. Thus collectively the entire G10 bankers are feeling massive pain (losses) to the tune of:
7 billion oz of silver( 32.30-15.00) = 7 billion x $17.30 = 121.1 billion dollars of losses.
This is in a market of only 14 billion dollars. It begs the question to what economic need was this done.This is still off balance sheet.
If you include only the forwards or swaps (the lending of actual metal to which nothing has come back yet) then the losses are:
4 billion x 17.30 or 69 billion dollars.
Regardless how you look at it, the bankers are in serious trouble with this huge rise in silver prices. I hope you understand the severity of the situation.”
This situation merely highlights Obama’s failure as a reformer, and the general failure of both parties to act in positions of trust for the American people, rather than the special interests that provide them money and sincecures after they leave office.
If correct then when the market corrects it will not be a smooth transition to a “new normal” but a jump. It will also cause considerable collateral damage.