Gold Price Breakout, the Ominous Silent Canary

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Alan Greenspan
had full knowledge of his betrayal to the principles of sound money.
He wrote early in his career about the only legitimate basis for
a monetary system, namely Gold. His published works from four decades
ago read like an indictment against his career for monetary crimes
against the nation. His accommodation, giving the financial sector
what they wanted, betrayed his mindset. He knew the nation courted
disaster with a long delayed fuse. His quote is being circulated
frequently and broadly lately, "Gold is the canary in the
financial coal mine." Exactly, precisely, perfectly. Greenspan
proved to be a great handler of the politicians, offering them obfuscation
of the most erudite variety. They were so confused by his drivel
to be immensely impressed.

The Jackass
was not impressed, not after the 2000 events unfolded to reveal
the US as a naked asset bubble blower. Not after the same events
revealed Greenspan to be an inflation engineer specializing in serial
asset bubbles blown to wreck the nation. My attitude years ago was
to listen to his topics of debate, to ignore the words, and to anticipate
a crisis event in the sector he mentioned. It worked every time.
What Greenspan brought to the nation was a nearly complete interruption
to the process of capital formation by virtue of the asset bubbles
he engineered. His policies undermined and destroyed capital itself.
He puffed up the finance sector at the expense of the tangible economy.
Industry was forfeited in the pathogenesis of managed inflation.

THE WAR
FACTOR

To be sure,
the war machine, immature during the Vietnam War, more mature for
the advanced Iraq and Afghan Wars, accelerated and completed the
process of saturating the nation with debt. The combination of domestic
asset bubble development and war machine maturity conspired to gut
the nation of industry and force it to depend upon a sequence of
asset bubbles. They all busted. Few analysts dare to point a finger
at the war costs, deemed sacred, rarely debated, always funded.
Half the national debt of $12 trillion is attributed to war spending,
hardly defensive anymore. The US Military expansion has become servant
to its own gargantuan appetite, no longer driven by security motives.
Expansion of war to secure supplies for the nation might be better
explained as the global stretch of the military complex in order
to secure supplies for itself. The complex is a vibrant independent
enterprise. It might require new wars to secure its own supply chain
in order to sustain its own operations, which increasingly depart
from the objective of the people, and increasingly conform to the
Syndicate objectives.

Deception of
war motives and war purposes is replete with the same sort of deception
inherent to US Economic statistics. In Iraq, supposedly masses of
troops are heading home. Those not heading home reveal a convenient
reclassification. The soldier title of HBCT (Heavy Brigade Combat
Team) was changed to AAB (Advise & Assist Brigade). Presto!
Far fewer combat troops, but same duties, same operations. It reminds
a person of economic statistic deception, relabeling what makes
for an unemployed worker. The soldiers are mere accounting ledger
items. The soldier death count is another statistical deception.
The actual death count is at least triple the official number posted
by the US Military. The official count is of soldiers who died on
Iraqi soil, not those who were moved to hospitals outside of Iraq,
like other Persian Gulf nations, a ship on the Gulf itself or the
Mediterranean Sea, or even Germany. The best statistical accounting
deception in the gold world is the US Treasury reporting. Gold on
the US Govt balance sheets is accounted for as Deep Storage Gold,
as per ore mined but not processed in a mountain. More tricks. For
those Americans who engage in reading novels, the book 1984
is relevant.

The Jackass
has a controversial forecast, initially made in autumn 2008. Expect
the pressures to build eventually until the US Military complex,
including the defense contractors and the military service contractors,
are led to splinter off into a private corporation. Its business
will be arms dealer and mercenary provider, with a core narcotics
business segment. Those who deny this inevitable path must be blind,
must be dumb, or prefer to wear underwear bearing the stars and
stripes. In their wake will be a nation they once served sliding
into the Third World. In their foreground will be vast wealth accumulated
by the Syndicate.

THE FINAL
BUBBLE

In the aftermath
of the tech telecom bubble bust ten years ago, Greenspan actively
pursued the next bubble. Historical precedence dictated that a housing
decline would come in 2001 and 2002. But such an event would have
spawned a powerful recession that would have killed the banks, whose
main diet had become credit derivatives. The lack of regulatory
oversight enabled this queer racket to expand into a mammoth hidden
business, a giant casino where the Wall Street banks actually placed
billion$ bets against their own clients, against the major corporations
of America. To say that constituted a conflict of interest is the
understatement of the decade. Its scummy effects are slowly coming
to fore in the United States and Europe, in the mortgage market
and sovereign debt market. The awakening has led to great anger,
harming the banker image irreparably, when combined with home foreclosure
disgust.

Greenspan encouraged
a housing revived bubble ten years ago. He actively lobbied the
financial markets to believe that full support for a US Treasury
rally and mortgage bond rally would ensue, given the full beneficial
power of monetary policy. He spoke at conferences. He gave press
conferences. He interviewed with the press. He leaned on Wall Street.
He preached to the US Congress. He finally swayed the financial
markets. The result was that a typical housing market correction
was averted. Instead, a powerful housing market rally took place,
a climax rally. It sucked in every conceivable vagrant buyer, including
a homeless bum in St Petersburg Florida who bought two homes without
income or assets, full exploit of the NINJA loans (no income, no
job or assets). What a travesty and blotch in American financial
history. Even Fannie Mae entered the act, advertising on television
with minority actors to encourage the last buyers to fall into the
bubble trap. They succeeded, and minorities became the first victims
of the wrecked, dispossessed, and bankrupted citizens.

The subprime
mortgage chapter was a planned event, not by Greenspan, but by Wall
Street firms. They went far beyond what Mr Magoo planned. They needed
fresh meat to feed upon. Unqualified buyers served as cannon fodder
to Wall Street bond merchants, offering hefty fees in bond securitization.
Foreign investors were lined up like toy soldiers on a table for
execution. The backfires are a plenty. The MERS database for title
registration, intended and designed to handle the rapid trading
of mortgage bonds, has been declared in several states to have no
legal standing. Thus MERS has turned into a crowbar that intelligent
enlightened emboldened homeowners can use to apply pressure on the
banks and mortgage firms to avoid foreclosure, and live rent free
in a home while still holding title. The strategic mortgage default
practice, simply not paying, has spread like a mild virus.

Greenspan built
the next asset bubble with full motive. It was a doubled chambered
asset bubble, which enabled him to retire before a deep intractable
crisis struck. The housing bubble grew leaps and bounds, doubling
prices in some regions, called the Sand Bubbles. Arizona, California,
Nevada, Florida, they all expanded, and now have contracted. The
city of Miami has hosted a national jamboree for the foreclosure
victims, another blight much like the tent cities. New home prices
in the Phoenix area have been cut in half. Talk about the wings
being burned off the rising bird, which fell hard to the ground!
Millions each year have been tossed onto the national dump of foreclosures,
left with no savings, no homestead, often with no job, and too often
with no pension, and clearly no hope. The other bubble was mortgage
finance. A great majority of the Wall Street business model transformed
into leveraging profits off mortgages, either from fees off bond
securitization or nasty gains from insuring against bond failures
as clients lost arms and legs. The parade of client lawsuits has
replaced the parade of clients seeking bond issuance. Talk about
wings being burned off the financially engineered bird!

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the rest of the article

September
17, 2010

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