Abundant Michael: 2012

Spain banking issues today, capital control in your country later?

Here is an Update on Spain from someone on the ground visiting there. And a suggestion to park some funds abroad before capital controls come here too. Actually they have already started to move in that direction in the US too - with increased reporting requirements of FACTA causing individuals and banks to fear US accounts abroad. And I have noticed that banks in US are questioning foreign wire transfers (due to regulatory pressure I believe) - both incoming and outgoing ones. I think it will only get worse. If you have been thinking of diversifying some assets among different countries best act now...

It takes all of three seconds on the ground in Spain to realize that this country is hurting. Big time.

I was just here three months ago, eight or nine months before that. Each time it seems worse-- more strikes, more homeless, more unemployed, more unrest, more storefront vacancies. It's amazing what the combination of debt, deceit, and a bona fide banking collapse can do to a nation.

In a most intellectually disingenuous statement, European leaders recently announced that Spain is A-OK and would not require a bailout. I suppose it's true to a degree. Spain doesn't really need a bailout. More like an exorcism. Or at least last rites.
After all the debt, austerity, government collapse, riots, etc., there's a new crisis du jour here: the banking system. Individuals, businesses, and institutions are all predicting a breakup of the eurozone, and nobody wants to have cash in this country on the day they introduce a new currency (and then immediately proceed to devalue it.)

Consequently, depositors are moving money out of the country en masse, often to the tiny principality of Andorra next door-- a highly capitalized, low tax banking jurisdiction. This leaves the already thinly-capitalized Spanish banks in an even weaker position.

As you probably know, the way the banking system works in most of the world is a complete fraud. Most banks only hold a tiny percentage of their customers' deposits in cash. The rest is 'invested' (gambled) or loaned to a bankrupt government.

This is a high-risk model that only works well when people have tremendous confidence in the system. The moment there are more than a handful of depositors wanting their money back, the bank has a big problem.

This is happening nationwide in Spain, so the entire banking system has a problem. Nearly every bank here is technically insolvent... and yet they have droves of customers trying to withdraw funds that aren't there.

As such, the IMF is now recommending that Spain (and other nations in the eurozone periphery) take action "at the national level" to stem this flight of funds and prevent people from moving money abroad.

Of course, they won't come right out and say it, but there's a name for 'national level' action to stem the international flight of funds. It's called capital controls.  

This is when governments restrict the free-flow of funds across borders, often -requiring- that citizens hold a rapidly depreciating currency at sub-inflation rates.

It's one of the worst forms of theft imaginable-- robbing the purchasing power of people's savings and incomes, all to meet some unachievable objective, or for 'the greater good' as defined in the sole discretion of the ruling elite.

Over the summer while in Europe, I saw early signs of capital controls being rolled out.  In Italy, for example, the government imposed bank withdrawal limits... essentially holding people's savings captive. Then they initiated strict border controls with Switzerland in an attempt to thwart citizens trying to sneak cash out of the country.

It's going to happen here in Spain as well. And unfortunately, the people who didn't see the writing on the wall and take action early are going to find the door shut in their faces by the next wave of regulation.

Moving some savings abroad isn't the sort of thing where you want to run with the crowd. As with anything, the dynamics change quickly when the idea becomes mainstream. Smart, thinking people ought to recognize the signs early and be well ahead of the crowd.
From http://www.sovereignman.com/expat/is-the-imf-now-recommending-capital-controls-8975/

10 places to buy gold and why it is a good idea now

Gold has gone up about 15% in the past few months. I continue to see gold and silver as good insurance against inflation and financial crisis and would recommend putting 10- 70% of your savings in gold depending on your beliefs in how likely an inflation/crash scenario is. There definitively is some possibility of this event from reading many financial analysts and looking at the investments of some famous investors and foreign central banks moving into gold over the past year. With Fed QE3, ECB and BOJ new money printing programs just announced in the last few weeks, it is more likely. The author of the book "The Crash Course" by Chris Martensen says

It’s no secret that I’m a big fan of owning precious metals.  Why?  Because it provides you with the most direct way to protect your wealth from paper money devaluation with no counterparty risk.  Gold is the only financial asset I know of that is not simultaneously somebody else’s liability.  That makes it rather unique.  I think everyone who can should have at least some exposure in their portfolio to gold and silver.


There are many ways to invest in gold and silver, but for the individual who is just starting out, we highly recommend beginning by purchasing at least a few ounces of physical bullion.

More details at http://www.peakprosperity.com/blog/what-should-i-do-basics-resilience-part-7-protecting-wealth/43745

And he has said that he holds about 70% of his portfolio in precious metals right now.



If you are interested here are some easy ways to buy and hold gold:

  • GoldMoney http://www.goldmoney.com/
    • my view: easy way to get started in gold ownership with no minimums
    • holds allocated shares of gold bars in secure vaults in London, Switzerland, Hong Kong etc
    • easy to open an account online linked to your bank account(s)
    • you can buy any amount (no minimum) of gold "goldgrams"
    • monthly storage fee 0.015% is paid with goldgrams from your account, no minimum fee
    • easy to sell and transfer money to any bank account in the world
    • based in Jersey UK
  • Silver Bullion http://www.silverbullion.com.sg/
    • my view: reduced counter party risk for a second step in gold ownership and is outside your home country's control
    • hold allocated gold and silver coins and bars in Singapore secure Freeport vault
    • easy to open a STAR storage account online and buy gold or silver coins and bars
    • minimum purchase is one ounce of gold or silver ($1800 or $40 at current prices)
    • exempt from Singapore GST tax since October 1st 2012
    • pay annual storage fee from your account cash funds
    • easy to sell
    • based in Singapore, a secure and financially stable country
  • Gold coin dealer and you store yourself
    • my view: a good idea to hold some of your gold personally as there is no counter party risk, but not for large holdings
    • you hold it personally
    • easy to buy from dealers in London or across Europe and USA
    • can be bought through the mail eg http://www.ampex.com/ in USA
    • minimum purchase is 1/10th ounce of gold or one ounce silver ($200 or $40 at current prices)
    • premium over spot price is a bit higher than online vaults
    • no counter party risks from other parties such as storage firm or vault in case they go out of business or are subject to extreme government regulation in a crisis
    • you need to evaluate if the metal is genuine from either the reputation of the dealer or self-testing
    • you are responsible for safe storage. For a few coins not a big problem, but could be an issue for larger investments.
    • if you hide it well you need to document where it is for your will (and for yourself!)
    • easy to transport on your person in times of emergency (mix it in with other coins in a purse and airport scanners don't notice the difference)
    • I don't recommend putting in a bank storage box because 1) the very time you need it in a crisis banks may be closed for several months emergency "bank holiday" 2) governments have opened bank boxes and take the contents before. There are secure offshore non-bank private storage places that can be used for larger amounts eg Das Vault in Austria or various places in Hong Kong and Singapore
  • Other options (that I don't recommend for beginners)
    • Gold ETFs
      • eg GLD, IAU, SGOL, AGOL
      • you don't hold physical gold and it is not clear that the certificate is backed by 100% gold holding
      • easy to buy and sell from your stock broker
      • consider it a speculative investment that is great until a crisis happens and then might be worthless
    • Gold mining stocks
      • you don't hold a claim on gold at all, you own a share of a company with a hole in the ground that may contain some gold
      • easy to buy and sell from your stock broker
      • tends to go up and down more than the corresponding price of gold
      • might increase in price due to take over such as the recent Chinese purchases of gold mining companies in Australia
      • can also get gold mining ETFs such as such as GDXJ and GDX
      • consider it a speculative investment that is great until a crisis happens and then might be worthless
    • Perth Mint Certificates http://www.perthmint.com.au/
      • certificate issued by the government of Australia for gold
      • allocated
      • if the government decided in the future that it wants your gold it would be easy for them to take it
    • New Zealand Mint http://www.nzmint.com/bullion/storage
      • similar to Perth mint but also let you deliver your own coins to store
      • stable government with low debt ratio
      • high premium over spot price for purchases (7%)
    • BullionVault http://www.bullionvault.com/
      • Similar to GoldMoney but the $4 per month minimum gold storage fee means you would want at least $2k invested to make sense
      • only lets you link one bank account at a time to your gold, which might be a problem if you had to leave your original country in a hurry
      • otherwise a good place
    • Hard Asset Alliance http://www.hardassetsalliance.com/
      • this has approx $10k minimum purchase for storage
      • US based
      • otherwise a good place
    • Swiss Metal Assets http://www.swissmetalassets.com/
      • this has approx$8k-23k minimum purchase
      • is targeted at rare earth metals, doesn't sell gold and while they do sell and store silver is not designed for that
      • aimed at long term investment of 5 years or more
      • otherwise a good place

A no brainer investment?

This could be a no brainer investment. Actually you might already own stock in it, but with the quad-annual meeting coming up next month, this is your opportunity to really cash in before it is too late... or did I mean cash out...?

I want to tell you about a company I've recently come across that is shaping up to be one hell of an investment opportunity. Today is the first day of their new fiscal year, and it's obvious they're poised for massive growth and huge upside potential.

To start off, it's an absolutely giant company. The biggest in the world, in fact. Maybe the biggest in the history of the world. And year after year, it gets even bigger. They hire more employees and embark on larger, more ambitious investment projects.

Now, in all candor, most of those investment projects don't really work out very well for the company's bottom line. In fact, the company has actually lost money nearly every single year for the past five decades.

I should also point out, in fairness, that the company's balance sheet is pretty dismal. Its net book value is negative. Big time. The company's debt load is worth far more than all of its assets put together, and then some.

They also have a small problem with future pension liabilities (which could actually dwarf the existing debt burden). It's difficult to ascertain the true nature of this pension issue, though, because I believe management is using a few accounting tricks to cover up the problem.

Oh, and speaking of management team, the company has a real cracker jack squad running the show.

They've got an enormous board of directors to oversee things on behalf of shareholders. Most of the directors are trained attorneys, so they really know their stuff when it comes to managing finance.

Curiously, many have been on the board for decades, so as individuals they are not necessarily held accountable for corporate performance. It seems, however, that the shareholders really prefer this system and find it to be the best form of corporate governance in the world.

On that note, shareholders also directly choose the company CEO. This is typically a very charismatic fellow with great hair and a winning smile who excels at giving speeches. They even bought him an expensive jet to fly around the world and represent the company.

CEOs are changed out every few years. Before the transition, the new guy usually talks a lot about all the positive changes he wants to make... though over the next few years he usually comes up short. Shareholders don't seem to mind very much, though, because this cycle seems to repeat itself endlessly every few years.

Anyhow, let me tell you about the three key assets that make this as worthwhile investment:

The first is goodwill. The company's brand and trademark are loved around the world, even more than Coca Cola. There's barely a soul alive that hasn't heard of the company. OK, in truth, popular opinion may be waning in recent years... but most people still seem to view the company as it was 50+ years ago. This is a major benefit and will obviously last forever.

The second is its vast debt facility. Despite already being in so much debt, the company has access to nearly infinite lines of credit... so it can continue to further indebt itself in order to finance operations. Clearly this will continue forever, unabated, so no reason to worry.

The last key asset is the company's share structure. While every shareholder has a single share, large consortiums often band together to influence management in their own favor at the expense of other shareholders.

Moreover, management has the authority to issue a mandatory rights offering... essentially compelling shareholders to pay up more money into the company. As a matter of fact, if the shareholders don't pay, they can go to jail and the company can seize their assets. It's a beautiful system.

(curiously, shareholders never actually signed up for this obligation... but somehow it's still enforceable...)

Anyhow, here's the investment I want to tell you about-- the company wants to borrow a bit more money, structured as a 10-year note. They're offering an interest rate of 1.62% for that ten-year period. I don't know about you, but this seems like a no brainer to me. Even the rating agencies agree, it's practically risk free!

If you want to do your own research, check out the company yourself. It's called the United States of America.

from http://www.sovereignman.com/expat/do-not-miss-out-on-this-no-brainer-investment-8919/

How a lost war ended the America Empire

Nice future story of how the American Empire ended

The narrative takes place at some unspecified point in the next two decades; it’s probably necessary to say outright that is not how I think the end of America’s empire will happen, simply one way that it could happen—and thus a model that may help expose some of the vulnerabilities of the self-proclaimed hyperpower currently tottering toward history’s compost bin.


“Dammit, we need that oil.”  The president turned and walked over to the window.



He was right, of course, and “we” didn’t just refer to the United States. Jameson Weed won the White House the previous November with a campaign focused with laser intensity on getting the US out of its long and worsening economic slump.  Winning the country a bigger share of imported oil was the key to making good on that promise, but that was easier said than done; behind what was left of the polite fiction of a free market in petroleum, most oil that crossed national borders did so according to political deals between producer countries and those consuming countries strong and wealthy enough to compete.  These days, more often than not, the US lost out—and the impact of that reality on Weed’s upcoming reelection campaign was very much on the minds of everyone in the room.



“There’s one option,” said the president’s national security adviser.  “Regime change.”


President Weed turned back from the window to face the others. The Secretary of Defense cleared his throat. “Sooner or later,” he said, “the Chinese are going to stand and fight.”

more at http://thearchdruidreport.blogspot.com/2012/10/how-it-could-happen-part-one-hubris.html

How the perfect derivative storm could cost you 90% of your retirement

Interesting article on when (not if) the stock market will crash, probably due to derivative and banking storm that will make 2008 look like a mild April shower by comparison.

In the financial world, the month of October is synonymous with stock market crashes.  So will a massive stock market crash happen this year?  You never know. The truth is that our financial system is even more vulnerable than it was back in 2008, and financial experts such as Doug Short, Peter Schiff, Robert Wiedemer and Harry Dent are all warning that the next crash is rapidly approaching.  We are living in the greatest debt bubble in the history of the world and Wall Street has been transformed into a giant casino that is based on a massive web of debt, risk and leverage.  When that web breaks we are going to see a stock market crash that is going to make 2008 look like a Sunday picnic.  Yes, the Federal Reserve has tried to prevent any problems from erupting in the financial markets by initiating another round of quantitative easing, but 40 billion dollars a month will not be nearly enough to stop the massive collapse that is coming.  This will be explained in detail toward the end of the article.  Hopefully we will get through October (and the rest of this year) without seeing a stock market collapse, but without a doubt one is coming at some point.  Those on the wrong end of the coming crash are going to be absolutely wiped out.


According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point.  In a recent article he offered the following evidence to support his position....

? The Crestmont Research P/E Ratio (more)

? The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)

? The Q Ratio, which is the total price of the market divided by its replacement cost (more)

? The relationship of the S&P Composite price to a regression trendline (more)

If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong. It just means that they were early.

[What about QE3 you ask?] The first two rounds of quantitative easing did indeed drive up stock prices.  The same thing will happen under QE3, unless the effects of QE3 are overwhelmed by a major crisis. For example, if we were to see a total collapse of the derivatives market it would render QE3 totally meaningless.

Estimates of the notional value of the worldwide derivatives market range from 600 trillion dollars all the way up to 1.5 quadrillion dollars.  Nobody knows for sure how large the market for derivatives is, but everyone agrees that it is absolutely massive. When we are talking about amounts that large, the $40 billion being pumped into the financial system each month by the Federal Reserve during QE3 would essentially be the equivalent of spitting into Niagara Falls.  It would make no difference at all.


Most Americans do not understand what "derivatives" are, so they kind of tune out when people start talking about them. But they are very important to understand. Essentially, derivatives are "side bets".  When you buy a derivative, you are not investing in anything.  You are just gambling that something will or will not happen. I explained this more completely in a previous article entitled "The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System"....

A derivative has no underlying value of its own.  A derivative is essentially a side bet.  Usually these side bets are highly leveraged. At this point, making side bets has totally gotten out of control in the financial world.  Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it.  This system is almost entirely unregulated and it is totally dominated by the big international banks. Over the past couple of decades, the derivatives market has multiplied in size.  Everything is going to be fine as long as the system stays in balance.  But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.


Five very large U.S. banks (including Goldman Sachs, JP Morgan and Bank of America) have combined exposure to derivatives in excess of 250 trillion dollars. Keep in mind that U.S. GDP for 2011 was only about 15 trillion dollars. So we are talking about an amount of money that is almost inconceivable. That is why I cannot talk about derivatives enough.  In fact, I apologize to my readers for not writing about them more. If you want to understand the coming financial collapse, one of the keys is to understand derivatives.  Our entire financial system has been transformed into a giant casino, and at some point all of this gambling is going to cause a horrible crash.


Do you remember the billions of dollars that JP Morgan announced that they lost a while back?  Well, that was caused by derivatives trades gone bad.  In fact, they are still not totally out of those trades and they are going to end up losing a whole lot more money than they originally anticipated. Sadly, that was just the tip of the iceberg.  Much, much worse is coming.  When you hear of a major "derivatives crisis" in the news, you better run for cover because it is likely that the entire house of cards is about to start falling.


And don't get too caught up in the exact timing of predictions. If a stock market crash does not happen this month, don't think that the storm has passed. A major financial crisis is coming.  It might not happen this week, this month or even this year, but without a doubt it is approaching. And when it arrives it is going to be immensely painful and it is going to change all of our lives. I hope you are ready for that.

More at http://theeconomiccollapseblog.com/archives/warnings-that-a-massive-stock-market-crash-is-imminent

How to create a self-directed IRA to protect your retired from a US crash

You have your retirement funds in a IRA or 401k but are concerned about the US market and want to diversify to foreign bank accounts, precious metals, stocks and real estate. Perhaps a villa by the sea in Costa Rica for vacations, rental income and retirement. But how do you keep these kind of investments in an IRA? It can be hard to get answer to this question from most US financial advisors I have gather together three articles/websites that include referrals to a book on the subject, a tax planner who can help and a Swiss precious metal storage facility that takes self-directed IRAs.


Caveat investor: When you control how and where you invest your own money you become responsible for all the gains, losses and due diliagence that you want. There is no Nanny State (or at least not your own Nanny) to prevent you from making enormous gains or lossing the lot. Also not every foreign market is the same as each other or the US market - you will need to do some research and in the case of real estate visit the country. By hey a deductible foreign trip is not such a bad thing!


Here are three articles that I have read about self-direct IRAs. I am working with Swiss Metal Assets and Sovereign Man. The last one references a book on the subject and the second one gives a tax planner who can help. And if you have a 401k you probably know how to transfer it to a regular IRA to get started.

FYI I cashed out my IRA a few years ago and paid the 10% penalty plus tax. That was the only way I knew how to get the funds for a business investment at the time. Now I know more.

1. Metals storage abroad

Investing in Physical Strategic or Precious Metals through a Self-Directed IRA is a practical, bona fide way of taking control of your future financial security. This is achieved by utilizing an offshore LLC vehicle which is fully compliant with IRS regulations. An offshore LLC also provides stringent liability protection, allowing an individual a greater level of comfort from fear of law suits and judgements.
from http://www.swissmetalassets.com/wealth-vistors#page--E-page-1

2. How to using your IRA to invest in foreign real estate


If you are looking for a way to safeguard your retirement and for a way to support health and health freedom, this letter is of enormous significance to you. Off shore investing is risky for novices. Off shore investing through a qualified investment vehicle and an experienced Custodian is simple, well-established and, at this time in fiscal history, a very, very good idea.

As the global economy prepares to spiral into hyperinflation and the collapse of the now-nearly-worthless dollar, the United States Government is going through a step by step process to steal your retirement. Their plan? To “protect” your hard-earned IRA and 401 money, leaving you with a “guaranteed” annuity paying you a whopping 3% – backed, you will be delighted and relieved to know, by the strength of the US dollar and the impeccable honesty of the US Department of Treasury.

Under current law, it is legal to move IRAs and, under some circumstances, 401 funds out of the United States (a process called “expatriation” while preserving the significant tax advantages of such funds. Using a “self directed” IRA and/or, if permitted by your 401 plan, a “self directed” 401 structure, you can direct where you would like to have your money invested. It is still, after all, YOUR money, although that will change shortly, according to the Federal Register of DATE [give citation] when your money is turned into a worthless annuity. Once that happens, the money itself will no longer be available to you, even if you are willing to pay a heavy tax penalty like the one you would incur if you took your money out of your IRA or, if allowed, your 401. You probably will not be able to access your annuity funds and you certainly could not put them into an off shore investment vehicle.

At this point, however, if you [wisely] want to get your money out of the reach of greedy, crazed and fiscally demented Uncle Sam, you can still do so by making sure that your funds are in a self-directed program and that the investment vehicle you want to put your money is has been closely examined and approved by an approved Custodian.

Once the investment vehicle is approved, the Custodian will complete the necessary paperwork to move your money into the offshore investment. Your money is now outside the United States, very difficult for the US Government to get its hands on and still within the tax deferred structure of your retirement program.

Why are the Trustees of the Natural Solutions Foundation telling you this? Our Valley of the Moon Eco Demonstration Project, www.NaturalSolutionsFoundation.org, in Volcan, Chiriquí, Panama, is an approved investment vehicle. Every Custodian who has examined it for a potential investment of a self directed IRA or 401 has concluded that it is a properly constructed corporation which meets all of the necessary requirements and has invested the money of their client as the client directed.

There are rules and restrictions to this way of investing your money, but they do not interfere with your participation in the Valley of the Moon Eco Demonstration Project as either a Beneficial Interest Certificate holder who can live in Panama as part of the project or as an investor whose money is “living in Panama”. In either case, your money is earning interest, safely tucked away offshore where the US Government would have a very difficult time reaching it and you are helping the work of the Natural Solutions Foundation.


How much time is left before you will no longer be allowed to expatriate your savings? We received this information from an Internet source:


Are There Any Government Documents To Prove It?

* In Chapter 3 of the Annual Report on the Middle Class released in February by Vice President Biden and the White House Task Force on the Middle Class, the Obama administration calls for enhancing the “retirement options” The plan, as sketched in the 43-page document, calls for the creation of something called “Guaranteed Retirement Accounts” (GRAs).
* U. S. Federal Register; -”annuitization” of Individual 401(k)s. set forth in a set of “Proposed Rules” published on February 2, 2010.

What Government Agencies Are Involved?

Department of Labor and Treasury… among others. The last meeting took place September 14th and 15th 2010, where they laid out the Course of Action. The agenda is now called “Lifetime Income Options for Retirement Plans”

Why Do They Want Our IRAs & 401(k)s AND What Will They Do With Them?

The Treasury Department has (worthless) Bonds to Sell… and Foreign demand is drying up. China no longer wants our Debt.. Do You?

This will be Done in an attempt to balance the U.S. Deficit and Once Again make the U.S. Credit Worthy to China and Other Buyers of our Debt.

The Federal Government will Manage and Control an estimated $3.613 Trillion Dollars in IRAs and $2.350 Trillion Dollars in 401(k)s.

The Equity will be placed in U.S. Treasury Bonds that will Pay out an estimated 3%. One major clause is that upon retirement, the value of the Individual’s Account will be placed into Annuities. Once the individual Dies, the Value of
the Account will automatically become property of the Government. The Program will be structured much like Social Security Accounts (the biggest Ponzi Scheme ever created).

What Financial Firm Will We Need To Trust, In The Handling Our Money?

The March 9 edition of Business Week, notes that new federal regulations designed to “promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams” would help drive cash into government-controlled entities such as American International Group (AIG).

Trust AIG?!

For an in-depth personal discussion on How To Protect Your Retirement Funds and Support Health Freedom at the same time, please contact Ralph Fucetola, JD, our Counsel and Trustee, at Ralph.Fucetola (at) usa.net or Skype him at “vitaminlawyer”.


from http://www.healthfreedomusa.org/?p=8481

3. How the US government will seize your retirement account


 on MAY 11, 2011


May 11, 2011

Santiago, Chile

Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its ‘fair share’ of private retirement funds.


Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year… a lot of money in a country of only 4.4 million people.


Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7%.  Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.


It reminds me of what I saw in Bolivia a couple of weeks ago– there’s a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll… obviously not for the maintenance of the road, but to pay the salary of the toll collector.


At the airport, you have to pay an airport tax before departure… obviously not for the upkeep and efficiency of the airport (it took 2-hours to make it to my gate), but to pay the salaries of the guys who collect the airport tax.


This is what politicians consider ‘job creation,’ yet these positions only serve to destroy value.  That they would stick up the retirement funds of hard working people is even more immoral.


Here’s the best part, though. If you are a government worker in Ireland, your pension is exempt. They’re only going after people in the private work force.  It’s truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.


Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.


Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.


Think it can’t happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to steal retirement funds from the public in order to pay off other debts.


In the US, public pensions have been raided for years, Congress routinely ‘borrows’ from Social Security to make up budget shortfalls.  This is what talking heads mean when they play down concerns of a $14 trillion debt “because we owe it to ourselves–”  $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.


Chances of this money being repaid to Social Security in full? Slim.  The trend is more debt, not paying off existing debt. In fact, I’m convinced that politicians have their eyes firmly fixed on the trillions of dollars in private, individual retirement accounts (IRAs) in the United States to fund new spending.


Here’s how it will go down:

First, there will be some event… some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.


Bear in mind that most IRAs are managed by boneheads at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management.  Your interests and their interests do not align.


As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.


When a big crash occurs, these unhedged broad market positions get hammered the most. Don’t worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.


This is when Congress will step in. Citing its desire to ‘protect’ the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the ‘safety and security’ of US Treasury bonds. And, just to be on the safe side, let’s park them in 30-year bonds that yield 4.35%.


Sound fair? Well who asked you anyways… just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.


This is how US taxpayers will end up being forced to loan their hard earned retirement savings to the government at rates far below any expected inflation.


Right now, there is a window of opportunity to take action; US taxpayers with retirement accounts can set up a special kind of IRA structure that allows you to take control of your retirement savings, and even ship it offshore if you want to, completely legitimately.


After taking control of your IRA, you can do any number of things– buy and store gold and silver coins overseas; hold foreign currencies in an offshore bank account; buy securities on international stock exchanges; purchase agricultural property overseas, or even a beautiful apartment on the beach in some sunny country.


The possibilities are incredible… but the most important thing is that you get this retirement money off the radar of the politicians before they pull an Ireland and announce some new measure, virtually overnight. These things can happen very, very quickly.


I’ve talked about this before a number of times, and every time I read the news of yet another country taking this approach, it serves as a reminder to take action.


If what I’m saying makes sense to you, my recommendation is to check out Terry Coxon’s book on this subject, Unleash your IRA.  As one of the world’s foremost experts on this strategy, Terry walks you through the process of protecting your retirement savings quickly and legitimately. You can read more about it here.

from http://www.sovereignman.com/expat/how-the-us-government-will-seize-your-retirement-account-4311/

If you don't look you won't see the market cracks and collapse ahead

I have been following the stock market this year (via various economic newsletters and feeling the energy that is changing). And while the markets have not crashed yet in my opinion they are not being held up by much more than air at this point. The latest QE was mostly priced into the markets over the summer. And now that the Fed has committed everything with $40 billion per month of money printing and near to zero interest rates promised for years ahead of time there is not much else that they can do. (The European central bank and Bank of Japan are doing similar things). There are a lot of leading bad economic indicators right now - from the crash of the dry Baltic shipping index, to Chinese orders for raw materials down, even the German economy which was growing until the summer is now contracting. There is also the fiscal cliff in the US in January. I would say it is pretty likely the US and other major stock markets will collapse this year.

Here is some data on corporate earning and the slowdown. Fedex is a bellweather of the economy because so many sales are shipped by them...

FedEx Corporation (NYSE/FDX) has cuts its corporate earnings forecast for the upcoming year after announcing sluggish results from its previous quarter. The reason for the decrease in corporate earnings: weakness in the global economy and customers are moving towards cheaper alternatives. United Parcel Service, Inc. (NYSE/UPS) is in a similar business to FedEx and I will not be surprised if we see troubles in its corporate earnings as well.

As I have been writing in these pages, it’s not only corporate earnings that are declining, corporate revenue at the S&P 500 companies are declining as well. Historically, when there is negative revenue growth in S&P 500 companies, a recession usually follows.

Intel Corporation (NYSE/INTC) has slashed its forecast for third-quarter revenue—a decline that was eight percent more than expected. The fall in revenue is directly related to less demand for its chips—customers reduced their inventories and businesses bought fewer computers. Intel will also be scaling back its capital spending because of its weaker-than-expected business. (Source: Reuters, September 7, 2012.)

Similarly, HNI Corporation (NYSE/HNI), one of the largest office furniture makers in the world, has also cuts its sales growth forecast projection for 2012 by almost 50%. (Source: Business Week, September 18, 2012.)

As a group, the corporate earnings of the S&P 500 companies are expected to drop 2.2% in the third quarter of 2012 from the same period in 2011—the first quarterly drop in corporate earnings for the S&P 500 since the third quarter of 2009. In this third quarter, corporate earnings are expected to slide three percent from the second quarter of 2012. (Source: New York Times, September 16, 2012.)

While the rally in the stock market and the politicians will have the majority of Americans thinking the opposite, the evidence clearly points to the U.S., much of Europe, and now China all witnessing an economic slowdown. In an economic slowdown, corporate earnings and revenue decrease as demand for products and services declines.

Even if you don't believe this 100% but say 50% it would still be worth diversifying any investments that you have (401k, IRA, stocks, bonds, bank accounts etc). And I would include in that diversification cash, foreign bank accounts, gold and farm land. (All of these can be held in a self directed IRA if that is important to you for tax reasons)

More details and ideas at:

PS If you REALLY want to see what's coming -- and you can stomach it -- watch this mind-blowing trailer for a film project called "Gray State." WARNING: Extremely disturbing images, but probably quite accurate, too. Less of a wake up call and more like a bitch slap for the slumbering...

If the stock market up in real terms?

Even if the S&P goes up in dollar terms has it gone up in real terms? Have you noticed the price of gas and food recently...

It's now officially a 3-way race to the bottom between the dollar, the euro, and the yen.

It started on September 6th with the ECB announcing a new, UNLIMITED bond-buying program. A week later, the US Federal Reserve officially announced QE3, another open-ended (de facto limitless) bond buying program. One week after that, the Bank of Japan announced it was adding another 10 trillion yen ($128 billion) to its already massive bond buying program.

The mainstream financial media calls this a 'coordinated offensive', as if these central bankers are brigadier generals in combat. What a bunch of baloney. (though maybe this would make Ben Bernanke the COBRA Commander from GI Joe...) If they really want to use a military analogy, it's as if these central bankers are waging war on their own economies... and SAVERS.

For anyone who borrows money to spend or invest now (which includes governments and big financial institutions), the race to the bottom is a wonderful gravy train to be riding. But for anyone sitting on a pool of savings, it's highly destructive.

In the long-run, shares of best companies in the world will be solid hedges against such intense monetary inflation. But deep down, stocks are inherently risky.
Company fundamentals no longer matter very much; it's all about the debasement of the currencies in which those stocks are priced. The stock market isn't really rising, it's really the currency that's falling. In fact, as I am fond of reminding my friends, the Zimbabwe Stock Exchange did exceedingly well during that country's hyperinflationary meltdown.

Moreover, the system risks in the stock market are no longer trivial.

As a small investor, most people only have a claim to the shares that they buy. Brokage houses often use 'street name' registration, which means that if you buy Apple shares through your broker, your broker is actually listed as the shareholder on Apple's books.

This works fine and dandy as long as the system is functioning normally. But if your broker goes down in a sea of flames, what then? Government guarantees backed by insolvent agencies are hardly comforting.

Of course, you won't really hear about these issues in the mainstream financial press; I can just imagine getting laughed off the set of CNBC for suggesting that central banks are manipulating the stock market, or that most small investors don't actually own the shares in their brokerage account.

Other ways to preserve your purchasing power include tangible, physical assets. We all know about gold and silver bullion... but rare coins, stamps, art, fine wine, and other collectibles are also excellent stores of value.

Productive real estate is also a great option, especially cash flow positive rental property or fertile agricultural land. As my partner Simon Black frequently points out, owning FOREIGN real estate is one of the best ways to legally move money out of your home country, and it always gives you a place to go in case of emergency.

The strategic consideration in all of these options is PRESERVING the purchasing power of your hard-earned capital, safeguarding your standard of living, and minimizing systemic risk. Sure, I might miss a 50% rise in the S&P or Hang Seng... but I'll sleep soundly knowing that my capital is safe and earning a solid return, no matter how bad the storm.

from http://www.sovereignman.com/finance/its-officially-a-3-way-race-to-the-bottom-8887/

ex-Sen. Frank Dodd (D-CT) effectively says that freedom is "dangerous"...

Just this morning, I got an email from C4L (Libertarian's Campaign For Liberty), where ex-Sen. Frank Dodd (D-CT) effectively says that freedom is "dangerous".

C4L... [Dodd: " "You can't just have a legal, free environment where there aren't any restrictions (on the Internet)."

... As 'The Hill' reported, the Obama Administration is busy circulating a five-page draft of an Executive Order, giving the President control over virtually all private communication systems in America under the guise of "national security."  Under the guise of improving broadband service, the FCC is launching an unprecedented assault on the American people, collecting all types of personal information from law-abiding citizens without their knowledge. Under this scheme, government bureaucrats will be able to gain access to our personal information - including your website history, your tweets, Facebook posts, and even the physical home address associated with your IP address.

Just imagine government bureaucrats armed with whatever they want to know about you right at their fingertips. What you read. What you watch. What you buy. What you say. Who you talk to.]] End of C4L text.

"Perpetual war for perpetual peace" from George Orwell's book "1984" comes to mind. So.... still think you live in The Land of The Free?

Details on how the Financial Collapse will go down

Lots of interesting detail here on upcoming Financial Chaos

  • Morgan Stanley collapse (and loss of associated broker/401k accounts a la MFGlobal
    • related collapses of Deutsche Bank in Germany and Credit Agricole in France
    • Expect another bank in London to fall, unsure which is most vulnerable.
  • The three failures will bring about other failures, like in London, as the entire Western banking system will be brought to its knees
  • Operation Twist is out of short-term USTBills with which to offset the long-term USTBond purchases. The self-styled Twister has exhausted its fuel. To keep the game going, the secretly desperate USFed must resort to unsterilized pure hyper monetary inflation of the nasty variety.
  • Gold from Allocated Accounts in Western banks was improperly used as collateral on leveraged trades gone bad. They face margin calls that are satisfied only by relinquishment of gold bullion. The scandal over Allocated Gold accounts will eclipse the MFGlobal case, and lead to the Gold price rising over $5000 per ounce. Over 40 thousand metric tons of gold have been improperly used, much in this manner, laced throughout the banking structures.
    • The big banks are ruined and realize finally they are lined up for a slaughterhouse. Since February 29th, they have forfeited over 6000 metric tons of gold.
  • The USDollar collapse will come from a foundation of trade settlement no longer conducted in US$ terms.
    • The Petro-Dollar is set to be abandoned, as the Saudi Royal family is deposed.
  • South African miners are on strike in scattered locations, such as across Latin America. From the global mine output factor alone, the physical precious metal prices will rise, while the mining stock share prices will fall. Output risk joins jurisdiction risk and dilution risk for the mining companies. For every mining stock winner, expect 20 to 30 losers.
  • The USEconomy is suffering from three powerful effects, none obvious, but all deadly. They continue to plague the nation, to drag it down, and to assure a systemic failure.
    • 1. The housing market remains in ruins, unaffected by the sub-4% mortgage rates and revived reckless federal home loan offerings (subprime again) with minimal down payments. No more home equity ATM machines to support the national consumerism mantras.
    • 2. the entire USEconomy corporate landscape is sinking from higher costs and shrinking profits.
      • The most frightening tidbits from the field point to a 50% gasoline demand decline by volume in the last five years, and a 40% decline in California sales tax collected in just the last 12 months.
    • 3. The attack on money market funds is moving apace, in a stealth capital control concept.
      • The new rule concept is called Minimum Balance at Risk (MBR) and is direct capital control applied domestically within the United States. The MBR would be a small fraction (like 5 percent) of each shareholder's recent balances that could be redeemed but with a delay.
  •  The recent acceleration in Chinese gold accumulation, either the basis core for a gold-backed Yuan alternative to the crippled toxic USDollar, or the basis core for a new global trade settlement system to be introduced very soon.
  • The Swiss Franc pegged to the Euro currency is a disaster waiting to happen.
    • Eventually the peg will break and the Swissy will suddenly be priced 20% to 30% higher, with the Swiss banks the losers.
  • Ordinary Germans are already using Deutsche Marks again.
    • They do not wish to anger the Euro Royalty in Brussels, so it is keep quiet. When the Euro came in 13.2 billion in DMarks, worth EUR 6.75 billion (=US$8.3bn) was kept as cash - it has recently begun to re-enter the circulation
  • Gold & Silver are awakening from a deep sleep after a year-long price consolidation. While the physical story leans toward growing demand and declining supply, all bullish for the precious metals prices, the paper story continues to reek of strongarms, naked shorting, propaganda, and other devious devices. Prepare for a grand divergence between the physical and paper Gold price


Begin with a preface to a meaningful event that could change the entire US landscape, a redux of what happened four years ago.  Consider the next Wall Street financial firm failure. It is in progress. It is not avoidable. It will have numerous ramifications. It will open the door to account thefts, the burial of documents, the ransack of undesired leveraged positions, the concealment of wrecked derivatives, and a path toward the merger of surviving (selected core) firms. It will urge an extreme defensive posture. Back in 2008, both Bear Stearns and Lehman Brothers fell. The former because they had too much gold exposure with anti-US$ hedges. The latter because they led in mortgage exposure. Both failures were greatly exploited. My favorite item was the reload given to JPMorgan on a quiet Saturday morning (convened at 6am no less) at the Bankruptcy court of Manhattan. The shadowy syndicate titan was handed $138 billion to handle the private accounts from the fallen banks. Instead, the funds represented a reload for JPMorgan to continue their gold suppression game. Of course, they have been defending American freedom with vigor, preserving the integrity of the US banking system, and assuring the way of life in the nation, while leeching $billions from the public trough. Since their grant, the unassailable JPM has seen fit to gobble private accounts at both MFGlobal and PFG-Best, with regulatory blessing as the courts sprinkled fascist holy water.



In the background across the globe, numerous currency storm centers have arisen under the noses of every major central bank and their elaborate connected paper factories. The sovereign bond foundation is full of cracks and rotten planks, upon which the entire global currency system rests. The only people who could have imagined such a grand mess in 2006 and 2007 were the Sound Money crowd, the advocates of gold-backed money, the opponents to debt foundational systems. But then again, we are the nutballs, without a clue, who maintain a myopic view of the world, and see a conspiracy under every rock. Rather, we are the insightful, the alert, the rational clear thinking bunch, the guardians against hidden confiscation through inflation, the intrepid defenders of life savings. We identify the corruption and thus are discredited. Gold will return to its rightful place as the core of monetary systems and trade systems, all in time. The system is imploding at a more rapid pace with each passing month.




The insider conversation, often called chatter when it become deafening in tone, is that Morgan Stanley faces imminent failure and ruin. Almost two weeks ago, the Jackass provided a tip to Bill Murphy of GATA to post on his popular LeMetropole Cafe that Morgan Stanley fund managers and high ranking employees were preparing for the firm's implosion. A subscriber to the Hat Trick Letter has a good friend whose father works as a fund manager and provided the story. It was not detailed, and bore no follow-up after my request. The older employees are selling all of their stock, some legacy stock from one or two decades ago. Many workers are making contingency plans for their next positions in another firm. When Lehman Brothers was killed, thousands of employees had to find new jobs, some without success. In the last week, the shock waves are being heard from internal Wall Street sources in an unequivocal manner. The implosion is in progress, like the collapse of several platforms and structural cables. The inside is caving in, and the ranking members recognize it, even talk about it openly. Much discussion swirls about a transition to antiquated software that is greatly disturbing the trading desks, causing tremendous problems at precisely the wrong time. A redux of the Knight disaster could be in progress.



Some like Rick Wiles of TruNews report that MS is heading for the sacrificial altar. Such an event would imply an expected benefit hoped for and beseeched. My view is in parallel but more of a harmful implosion that cannot be prevented, one that the Wall Street titans will face grand challenges to control, one they will not be able to exploit in the hidden corners where they operate. MS is going to the slaughterhouse, not the altar. Its implosion will result from lost control, and the reversion to antiquated systems will only hasten their demise. Wall Street will wish to exploit the failure, like stealing funds, like destroying documents, like concealing derivative positions, like receiving government slush funds for slimy patch projects, their usual Modus Operandi. In criminal parlance, they will create a black hole into which things vanish. They will attempt to add to the confusion, which might itself backfire and deliver more lethal challenges to the entire USDollar & USTreasury complex. This time, the spotlights will shine more brightly to reveal the activity in the shadows and crevices.



The part that many analysts might miss is that Morgan Stanley has perhaps over 300 thousand private stock brokerage accounts, with over 17,500 brokers. In the past two decades, MS merged with Dean Witter and Smith Barney to become the premier stock house with the most private accounts of any US-based stock brokerage firm. The Morgan Stanley failure might feature the first theft of private stock accounts. The critical jump might occur in account thefts from futures brokerage to stock brokerage, which began in November 2011 with MFGlobal, then appeared in July with Peregrine Financial Group (PFG-Best). All private accounts from MFG and PFG have been pilfered, with a blessing of the theft by the courts, seen in the Sentinel Mgmt Group ruling. The federal Appellate court's August ruling (CLICK HERE) sets precedent for future private segregated account thefts, which were once considered sacred and untouchable. No more in the United States, not in the unfolding of criminality that stretches from USGovt offices to top corporate offices, with blessings sprinkled by the courts. The jump would be a major extension of the Fascist Business Model that nobody talks about. The major financial firms can rely upon this appellate court ruling as precedent, so as to protect their legal right to re-hypothecate client funds in their high risk leveraged positions and loans. It sure would be nice to use my neighbor's house and car to firm up my casino weekends. Stay tuned to the ongoing Morgan Stanley implosion, which could force the vanishing act of 50 to  100 thousand private stock accounts. The firm is the largest stock brokerage firm in the land. The dreadful impact will be nasty and might awaken the US masses. MFGlobal and PFG-Best surely did not.


Continues at http://news.goldseek.com/GoldenJackass/1346270400.php

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