## GOLDEN NUGGETS
◄$$$ GOVERNMENT COMMUNICATIONS HEADQUARTERS (GCHQ) IN CHELTENHAM ENGLAND IS THE MAJOR WESTERN SPY CENTER… IT IS WELL CONNECTED TO USGOVT INTELLIGENCE AGENCIES. $$$
The UKGovt describes, “The Government Communications Headquarters (GCHQ) is a British intelligence and security organisation responsible for providing signals intelligence (SIGINT) and information assurance to the British government and armed forces.” The Deep State has monitors everywhere. Not even the President of the United States (POTUS) is immune to constant surveillance. It all begin in earnest after the 9/11 attacks, even if a false flag that involved British MI-6. The fascist state elevated its own status with a self-directed attack. The draconian imposition of the national security state (aka Big Brother) was just one of many reasons for that highly consequential false flag operation, which was overseen by rogue elements in the US Intelligence Community in conjunction with traitorous flag officers within in the US Armed Services and the Israeli Mossad. To be more accurate, as in historical fact, the Deep State has been conducting telecommunications monitoring of the American citizenry at least since World War II.
With the execution of the infamous Operation Paperclip, the Office of Strategic Services, which was the precursor of the CIA, numerous high-level Nazi intelligence leaders were incorporated into its ranks. They brought with them the same Gestapo tactics that were used in wartime Germany, especially with regard to monitoring the populace. The Pentagon is a Satanic symbol, based upon the pentagram. These Deep State Satanists are very busy with their symbols and their honored dates, like in mid-April for the Celebration of Fire, during which over a dozen major explosive events have occurred in just the last 25 years. The GCHQ is a ring, as in the ring of fire. The Deep State is predominantly Satanists, along with the fascist bankers and top corporate heads.
According to their the GCHQ website, this nazification of the Central Intelligence Agency began with the establishment of the Joint Intelligence Objectives Agency in September of 1945. This deliberate move by Deep State permitted the complete infiltration of the nation’s premier espionage apparatus by Nazi agents as explained further. “General Reinhard Gehlen, former head of Nazi intelligence operations against the Soviets, was hired by the USArmy and later by the CIA to operate 600 ex-Nazi agents in the Soviet zone of occupied Germany. In 1948, CIA Director Roscoe Hillenkoetter assumed control of the so-called Gehlen Organization.” The Langley crew used the nazis to begin the Cold War activity behind what would later be called the Iron Curtain. The quote refers to East Germany. They were perfect, since Germans operating inside former Third Reich Germany. Now Obama is revealed as having used the British GCHQ facilities to spy on a rival presidential candidate on behalf of the Deep State and their poodle Hillary.
With self-serving motives, the emerging Military Industrial Complex eliminated privacy for US citizens post World War II. As always, national security was presented as the false justification for continual spying on and surveillance of the public. The police state emerged, with full pretext of security, as in the fascist state. Big Brother protects the Deep State from the people, much more than from enemies. Besides, most foreign enemies are fabricated, or simple fables. Notice how Russia was fabricated into an enemy state in 2014. Many Americans, Germans, French, and British disagree in visceral terms. Now all contact with Russians and the Kremlin is considered treason. The true treason lies within, where the Clintons and Bushes work with racketeering and much more.
When Donald Trump launched his candidacy for POTUS in July 2015, he and his family came under immediate surveillance. Likewise, every candidate for POTUS came under similar scrutiny by the intelligence agencies. Despite this being the case, Trump was the first president ever to make the fact public. He is at war with the Deep State, which has determined that they will prevent President Trump from governing as the elected POTUS. They failed in rigging the election for Hillary Clinton. The agents of Deep State will not cease this unlawful conduct, nor will they ever admit to it. Their actions represent basic treason. President Trump blew up this entire story via Twitter, his favorite unconventional newswire. It was the perfect pre-emptive surgical strike against the Deep State agents. In this fashion he has removed their plausible deniability and put in place an insurance policy. Any additional leaks of strictly confidential material could only have been acquired by the CIA and their many co-conspirators, both domestic and foreign, as in British and Israelis. In fact, US Intelligence agencies have already identified Israel as a top security risk. In one more way, the US is a British colony, confirmed also with central bank head Alan Greenspan being dubbed a knight in Queen service. The ugliest confirmation is the long sequence of US Presidents murdered by the Deep State, including the various poisoning cases.
◄$$$ SPAIN, ITALY, GREECE & PORTUGAL OWE MASSIVE DEBT OF EUR 1 TRILLION TO THE EURO CENTRAL BANK… FOCUS HAS RETURNED TO THE GREEK GOVT DEBT SITUATION WHERE RELIEF IS AGAIN REQUESTED IN THE FORM OF DEBT REDUCTION… NON-EURO INVESTORS DUMPED EUR 192 BILLION OF BONDS, WITH FOCUS ON GERMAN AND ITALIAN BONDS… IT WAS THEIR FIRST ANNUAL OUTFLOW IN HISTORY… THE EURO-AREA INVESTORS ARE BUYING USD-BASED ASSETS INSTEAD… MUCH MORE WORK FOR PRINCE DRAGHI. $$$
The Southern European states owe the Euro Central Bank a staggering EUR 1 trillion, as the bankruptcy threat works toward climax. The sovereign debt bubble warnings lie near on the horizon. Greek Prime Minister Alexis Tsipras says a debt reduction is the clear starting point, in a boldly stated assumption as anger grows in Athens. The debtors have grown extremely defiant after six years of abuse, seizures, and seeming hegemony. Analysts have ratcheted up the criticism and rhetoric, as they condemn the flawed economics of the reckless European Union experiment. They tables are gradually being turned. The EuroCB faces a rude awakening as states crumble under the burden of debt. Default is next, the default of sovereign debt, with no longer any more asset seizures by big banks. That phase has largely ended. Market conditions in the EuroZone are showing signs of a return to those which sparked the 2011 European debt crisis among the weak insolvent southern nations. The EuroCB uses a system called Target2 to assess levels of debt in official mechanisms. The bank's data appears to show it is only a matter of time before the current system breaks. See UK Express (HERE).
In 2016, investors outside the EuroZone dumped EUR-denominated bonds for the first time in history. Only very small investments of EuroBonds were made by the same EuroZone clients. Next consider non-EUR debt, the bonds from non-European nations. Annual net purchases of non-EUR debt securities by EuroZone investors totaled EUR 364 billion in 2016, only slightly below the all-time record in the previous year. However, this masks the fact that the fourth quarter of 2016 saw non-EuroZone investors become net sellers of EUR debt securities, the first time this had happened since 2012. The primary losers were both German and Italian bonds, creditor and debtor in the recent banking nightmare. Non-EuroZone investors were net sellers of EuroBond debt securities in 2016, the first time that had happened since the introduction of the Euro currency. Their net sales of EuroBond debt securities totaled EUR 192 billion in 2016, compared with net purchases of EUR 30 billion in 2015. See MishTalk (HERE).
◄$$$ THE AIIBANK CARAVAN EXPANDS AND KEEPS ADDING NATIONS TO ITS LIST OF NATIONS IN TOW… SOME NATO MEMBERS ARE ON THE LIST… THE INCLUSION OF VENEZUELA WOULD INTRODUCE INTRIGUE AND POLITICAL RISK. $$$
The approved applicants to the Asian Infra-Structure Investment Bank (AIIB) are the five regional prospective members Afghanistan, Armenia, Fiji, Chinese Hong Kong, and Timor Leste. The other eight non-regional prospective members are named as Belgium, Canada, Ethiopia, Hungary, Ireland, Peru, Sudan, and Venezuela. It should be noted that the NATO members Canada, Belgium, and Ireland are already part of the new AAIB system. With Venezuela likely to be admitted soon, a political angle is intensified with higher risk. No default on their debt would be permitted, so as to cut off the cabal entities like World Bank and the Intl Monetary Fund. These agencies will soon be shown the door, and removed from the equation. No more big asset seizures would be permitted.
◄$$$ HUNDREDS OF 9/11 VICTIMS ARE FILING LAWSUITS AGAINST SAUDI ARABIA… WITNESS A LATENT SIGNAL THAT THE LAST REMNANTS OF THE PETRO-DOLLAR CONTRACTS ARE BEING SHREDDED… BIGGER CONCLUSION IS POSSIBLE TO MAKE, WHICH SEEMS ASSUREDLY VALID… THE LEGAL PROCESS MIGHT OPEN AVENUES TO EXPOSE THE INSIDE JOB OF THE 9/11 EVENT, IN DEFENSE MOTIONS. $$$
The class action lawsuit, which was filed on March 13th in federal court includes about 800 people injured in the 9/11 attack, including those of lost family members in the mass murder event. The legal avenue has been opened. The Saudi assets on US soil are at risk. But another risk exists, for exposing the true nature of the actual dynamics in executing the coordinated attack. It will be very interesting to observe the court proceedings, for whether rules of evidence will apply or whether all defense motions will be blocked for national security reasons. The Saudis might be in a position to produce ample evidence to create a prima facie case of Langley and Mossad culpability. It could turn out to be a backfire of the highest order in another miscalculation. But will the Saudis be permitted a defense? Will the judges be bribed and extorted by the Mossad? These key questions are joined by the main one on whether the Saudis have any evidence collected for use. They are not intelligence masters in any sense. The case against the Deep State would not be difficult at all to make. See PressTV (HERE).
EuroRaj made some quick but deep interpretations. It looks like the United States has double-crossed the Saudis and will attempt to steal all their assets. The Petro-Dollar is officially dead, and soon very likely the LBMA gold center in London. All these signals tell that relationships and contracts built since 1971 when US went off the Gold Standard are being torn up. The Petro-Dollar contractual framework is in the final stage of dismantlement and deconstruction. Right now there is a massive fight for Gold to defend the 1000 Pound level in London Centre. Furthermore, consider the events an Affirmative sign that RESET is coming, visible on the horizon, a point that the Voice confirms. For an interesting discussion of what comes after the death of the Petro-Dollar, see the Grant Williams article on Zero Hedge (HERE). He is a sharpie.
◄$$$ THE WAR MONGERS ARE THE TARGET FOR A NICE CITIZEN RANT… MONEY WAS WASTED FOR 50 YEARS ON WAR… THE MONEY COULD HAVE BEEN PUT TO GOOD USE IN BUILDING THE USECONOMY, CREATING JOBS, LETTING PEOPLE SAVE… WASHINGTON HAS TURNED INTO A FARCE ON STAGE… THE CITIZEN RANT ECHOS WHAT CEO JACK MA OF ALIBABA STATED AT THE DAVOS ECONOMIC FORUM. $$$
Don't be blaming Russia, China, or any other entity for the situation the United States finds itself in. Blame the billionaires who own 99% of the wealth in the country, and the US Government who took control after November 1963 when the Deep State killed Kennedy, who stood in their way. The start of our decades of economic rot, as we started to ship our industrial base overseas and we started the destruction of our middle class, by reducing our living standards lower and lower. Check the reduced or no real wage growth for the next 50 years, turning the once vibrant middle class, into a mass credit choked low priced consumer mob, who now struggle to live a paycheck to paycheck lifestyle. More and more are renting instead of buying shelter, buried in school loan debt, driving vehicles 10 years old or new vehicles with 6-7 or who knows how many year upside-down car loans, or the worst leasing a car. In any of those scenarios the ability to create any kind of equity is a long lost dream. The only entertainment he has is watched on his big screen, order a pizza, with the free big Coke, or the 6-pack of beer all paid on his credit card that he makes minimum monthly payments on. A night out is a run to McDonalds, KFC, or some other fast food special priced menu outlet. What a great American paycheck to paycheck existence! Oh, I forgot he has no health insurance or insurance on his meager income subsistence. Just cannot afford it!
In his younger days, the government shipped him off to fight for freedom in Vietnam, Panama, Afghanistan, Iraq, Libya, Syria, and God knows where else, places where we do not know about like maybe Djibouti or Africa. And when he gets back, he finds out the corporations have shipped the jobs to the damn place he just freed. No jobs for the freedom fighter, only a nice thank you for your service, and maybe a prosthetic device for his missing leg. All to serve the bankers, weapons makers, and narco barons.
Senators, and Congressmen, think about the lousy presidents we have had since that fateful day in Dallas. And the stupid military invasions we did, one dumb invasion after another. Lyndon Johnson 1963 to 1968 in Vietnam, where no Gulf of Tonkin incident really happened, a big fat lie. Nixon and Ford 1969 to 1975 in Vietnam. We heard Nixon had a secret plan to end the war, but really the Boyz captured the heroin business in the Cambodian Triangle, so victory declared and we got out of town with infamous scenes of escape from the USEmbassy rooftop in Saigon. Just all BS, end up 58,000 dead US soldiers, who knows how many wounded, and all the wasted money! Carter 1976 to 1980, Navy lieutenant, only president who did not invade a country in his four years, actually cut the military budget his four years. God Bless You, President Carter! But you helped Bin Laden against the Soviet Union only to create the next Taliban enemy.
The real big warmonger took power with Reagan 1981 to 1988. He started with Grenada as a warm-up, then invaded Central America with the Contras using cocaine as legal tender, left chaos behind and now the chickens are coming home to roost in the thousands of refugees streaming across the US border through Mexico from Central America for the past six years. Reagan wanted to invade the Middle East, but when 248 Marines were blown up in a barracks, Reagan changed his mind. He did spend a lot of money funding the ten years of Iran-Iraq War and our ship the USS Vincennes did shoot down an Iranian A-300 passenger aircraft, by mistake, but we did not pay reparations. Next GH Bush 1989 to 1992. He succeeded in blowing a lot of US treasure in the First Iraq invasion. My God, we waste a lot of money on weapons and killing, why not just buy the oil? Thank You April Glaspie for lying to Saddam to tell him, we did not care if he attacked Kuwait. The fool listened to you and we got to spend more on the military!
Then Clinton from 1993 to 2000, he got the chance to bomb the Yugoslavs after their nasty break-up. We got to practice in Bosnia in case we want to attack Russia in the future, with a nice capture of the Eastern European heroin business. Hard to play those rough and tough Chechens though (from Chechnya). Next GW Bush 2001 to 2008. This is where we really bankrupted ourselves on total lies. We invade Iraq and Afghanistan. This is the mother of all money burning and credit charging warfare. This is a weapon makers dream with 14 years of endless mayhem. All your military equipment will be damaged destroyed or stolen. But the Afghan heroin monopoly is the grand prize, if truth be told, which fills American streets at a nice big discount in price. So you get to spend gobs of money repairing what can be fixed. And after you end the carnage, you get to re-equip the whole damn lot in the military with brand new more expensive hardware with more really expensive technology! And Obama is just more of the same as GW Bush. To me the same administration has run the country from 1988 to 2016, which can be called the Bush-Clinton Dynasty. To me Hillary was just a continuation of the big violent thieving banker cabal and the same cast of characters.
That is why I voted for Trump. It is a desperate scream for change! The presidents have been a total disaster, but Congress has a role with their votes for this lost 50 years. The American people do not want all the warfare. The proof is out there. In the whole population only one or two percent volunteer for the military. Congress, we are nearing the end of the run for the USA and its useful life. We have 323 million people who are really upset and we are approaching a huge financial cliff with $20 trillion of debt, over 106% of yearly GDP. Someone else is controlling our future. A tripwire is right in front of us. All it takes is major countries refusing to accept the USD as money and to call the paper just what it is!
Think of the tens of $trillions we wasted on weapons and invasions. Imagine how many times the entire infra-structure all across the United States could have been replaced with all that money. And think of the extra economic growth and wealth we would have enjoyed.
The show in Washington DC continues like a farce on stage. This hearing last week with the FBI director was first class Kabuki Theater. Some clown Democrat actually asked if the FBI director knew that the sitting president tried to launch a Trump vodka brand. What about Hillary Clinton's connections with Russia on uranium sales with kickbacks to the Clinton Foundation, then all the vast amounts of money the the same foundation took from dozens of people in influence peddling. Shouldn't these people attend to really important issues? How does the United States expect to be taken seriously by any country any longer?
◄$$$ ORIGINAL FREEMASONS WERE SOME OF THE FOUNDING FATHERS OF THE UNITED STATES… TRAVEL DOWN THE HISTORICAL LANE, WITH THE BENEFIT OF A US-HISTORY AFICIONADO… THE FOUNDING FATHERS WERE NOT ALL THE PURE FREEDOM LOVING TYPES… THEY HATED ENGLAND FOR ITS CORRUPT TIME-HONORED ELEMENT, BUT THEY WERE DEVOTED TO THE BANKER ELITE IN CERTAIN WAYS FOR NEW WORLD CONTROL. $$$
From HowardG in California, to whom the Jackass is grateful. He is a student of US History. After a few exchanges, a petition was given and granted for a high level summary rendition of the FreeMason role in the United States at its inception. George Washington and others were FreeMasons. The following are his thoughts regarding the Founding Fathers of the US nation, with my minor edits. It began with Sir Francis Bacon’s proposal for a “New Atlantis” who at the time was the second Grand Master of the Rosicrucian order. The first grand master was the occultist, Dr John Dee, for whom Bacon was his protege. This encouraged the exploration of the New World to the West with the colonies. The order of “The Rosy Cross” merged with FreeMasons, whose influence led to a suborder within the masonry called the Jacobites. Most of our Founding Fathers were involved with the FreeMasons in the New World, with a common opposition to its old world counterparts. Many such members were good men, opposed to deep corruption in England which had roots to the European bankers.
A progressive struggle was ongoing for control throughout the banker elite, influenced by the interests of the international banking Rothschilds. The conflict led to the Civil War which was an attempt to divide this country. It was the northern industrialists and market makers versus the southern farmers and producers. US History books never mention the banker or economic angles in this very blood-stained war, only the slavery factor for its noble cause, in a gross misrepresentation since London bankers killed Lincoln. However, the FreeMason international influence was for world domination and the plans were laid, involving exploitation of the United States, its people, and its wealth to achieve the goal. The end result was made evident in the plan by Josip Maccini and Albert Pike for three world wars in 1871. Plans were also laid the same year to transfer authority from the United States to the central, Federal government through “The Act to Strengthen the Public Credit” signed into law in 1871 by Ulysses Grant. The act made the American citizens chattel for the Federal debt. The first two wars have been executed and the globe is at the cusp of the third with Russia, whereby the Arab immigrants will play a key part. The Jackass adds that both Grant and later Theodore Roosevelt were tainted and compromised, playing the roll as elite tools to fulfill their agenda. Even the US Great Depression was a European Elite scuttle plan, as they pulled credit, forced the financial market bust, then the banker ruin. The human tragedy was executed, all to obtain greater control of the US financial sphere.
◄$$$ THE ART BUBBLE HAS POPPED AS SALES CRASH TO THE LOWEST LEVEL SINCE GREAT RECESSION… COLLECTIBLES SERVE AS AN EXCELLENT RELIABLE INDICATOR OF ECONOMIC RECESSION. $$$
Signals mount on the dreadful condition of the USEconomy, as well as the Global Economy. In addition to the standard signals like crashing bank loan creation, surging auto loan delinquencies, fast deterioration of the retail sector, and the 23% jobless rate, add art collectible sales & prices to the list. It has been a reliable recession signal, since on the fringe of hobby. Antique cars and some very old coins also fit the same category of collectibles.
The mega-wealthy folks of the world are taking a breather from purchases of top tier items like famous art works. The top tier art sales volume has collapsed to levels not recorded since 2009. Sales of art and antiques dropped 11% to $56.6 billion, according to UBS Group AG and Art Basel. The decline, on top of a 7% slide in 2015, wipes out the sales gains seen in 2013 and 2014, when sales reached an all-time high of $68.2 billion. With lower sales volume goes lower prices. A case in point is truly ugly. The Russian billionaire Dmitry Rybolovlev recently took a very painful 74% bath on a Paul Gauguin art piece he purchased in 2008 for $85 million. The 1892 landscape “Te Fare (La Maison)” fetched GBP 20.3 million (=US$25 mn), including commission, at an impressionist art auction held at Christie’s in London. Rybolovlev will net about $22 million based on the hammer price. The buyer was a client of Rebecca Wei, president of Christie’s Asia. See Bloomberg (HERE) and Zero Hedge (HERE).
## OIL SECTOR RUIN & HAVOC
◄$$$ MEXICO’S STATE-OWNED OIL COMPANY IS ON THE VERGE OF BANKRUPTCY… ITS INCOME HAS TOTALLY VANISHED AND IT IS BLEEDING MONEY.. ITS LONG-TERM DEBT IS GROWING TO ALARMING LEVELS… PEMEX WILL SOON PUT DEFAULT PRESSURES ON THE MEXICAN GOVT SOVEREIGN DEBT… ITS INGRAINED PEMEX CORRUPTION FROM CARTEL PILFERAGE HAS GAINED BROAD PUBLICITY… BIGTIME TROUBLE ON THE SOUTHERN US-BORDER. $$$
Mexico’s state oil company PEMEX is a perfect example of the ongoing collapse in the global oil industry. Falling oil prices and declining production are putting severe pressure on the company’s financial balance sheet. It has been four long years since PEMEX posted a profit, and it was paltry. The nightmare has occurred over the last few years. The deeply corrupt PEMEX, object of state and cartel thefts, has suffered huge annual losses since 2012, while its long-term debt has exploded. PEMEX is technically bankrupt. The state-owned oil company is the Mexican Govt’s main source of revenue. It stands out as one of the world’s most heavily indebted oil firms. The company’s production has dropped for 11 straight years, while gross income plummeted more than 80% in just the last year. One of the biggest causes of the financial problems at PEMEX is the falling oil production in response to the falling oil price. Crude oil production has come down 35% since 2005, from 3.3 million barrels per day (mbd) to 2.1 mbd in 2016. The ravaged oil giant lost an incredible staggering $30.3 billion in 2015 and $14.3 billion in 2016. The only reason PEMEX cut its losses in 2016, even as oil prices fell lower, they made hefty budget cuts and the furloughed thousands of workers.
Despite the major efforts with output reduction, budget cuts, and worker layoffs, the financial situation as PEMEX continues to disintegrate. It is destined to die a horrible death, but then again, it is not a company in a real sense. It will become a national burden to the point of risking Mexican Govt debt default. The bond market will not rescue this corrupt wrecked gutted pig. The PEMEX long-term debt rose nearly $12 billion last year to massive $87.4 billion. Since 2005, its long-term debt has more than doubled from $36.6 billion to the current volume cited. No bond offering will go favorably, not with adequate disclosure.
Energy analysts have aptly stated that many of the PEMEX financial problems stem from mismanagement and ingrained cultural corruption issues. The stories abound of murdered workers, their uniforms stitched, blood wiped, used by cartels with stolen trucks and pilfered materials to build diverted pipelines into criminal storage facilities. To be sure, other public oil companies have also seen their long-term debt skyrocket over the past several years. For example, the Royal Dutch Shell long-term debt has shot up from $38 billion in 2014 to $83 billion in 2016. None of the majors are reacting quickly to severe crisis factors. The implosion is rapid across the entire energy sector. Another interesting negative side effect of lower oil prices on the Mexican Economy is the falling value of its Peso currency. The value of the Mexican Peso has been rather well correlated to the USDollar over the past 20 years. See SRS Rocco (HERE).
◄$$$ SAUDI ARAMCO IPO IS CAST AS ANOTHER GRAND UNICORN… THE ARAMCO IPO MIGHT BE OVERVALUED BY $1.6 TRILLION, AS IN 80% EXAGGERATED IN VALUE… PRINCE SALMAN WILL HAVE TO SELL A LARGER PORTION OF ARAMCO OR ELSE FLOAT MORE SAUDI GOVT BONDS, TO PAY FOR HIS SUPPOSED REFORMS (COVER FOR WAR)… NO REFORM IN SAUDI-LAND, JUST FASCIST IRON-FISTED REPRESSIVE RULE… SALMAN WANTS TO DEVELOP OTHER INDUSTRIES, BUT THE WAR OVERSHADOWS ALL… THE SAUDIS SUFFER FROM MASSIVE OIL RESERVE DEPLETION, ALONG WITH ITS EXPOSURE, WHOSE ENORMOUS FALSEHOODS LAY CLEAR ITS MOTIVE FOR THE YEMEN WAR… THEY WISH TO STEAL THEIR NEIGHBOR’S OIL & GAS DEPOSITS WITH US AND UK COMPLICITY. $$$
Determining the value will be tough because the ARAMCO price is based upon its national oil reserves, which are grotesquely exaggerated. The IPO stock sale might finally expose the grand lies, laying them bare for the community of nations to see finally. More precisely the true ARAMCO value is based upon the current volume of oil deposits held in reserve plus the future market for those oil reserves. The Saudi Royals are caught between a rock and hard place, trying to lift the oil price but also trying to gather in more revenues to pay for their insane vicious vile costly war to the west neighbor. The ugly reality is that Saudi oil reserves are a fraction of what they claim, and due diligence toward the ARAMCO IPO should reveal this massive lie and fraud. The corrupted figures belie the true motive for the Yemen War, which is to steal the large tracts of oil & gas deposits owned by their typically peaceful neighbor. Yemen shares the Arabian peninsula with the Saudis, as in same geology in the same region. The Yemeni energy deposits and reserves data is actively being suppressed by the Western press, in particular by the US press. It reveals motive for the predatory heinous war with thousands of civilian casualties. In no way is the war over sectarian differences. It is a pure regional asset grab.
Simple market comparisons show a much lower (lowball) estimate fo the ARAMCO proper valuation to be more realistic. Making the rounds is the recent Wood McKenzie study. They are a very competent group. The much lower WoodMac estimates sound valid when one takes a look at the revenues, incomes, and market capitalizations of just three major publicly traded oil companies. The method is standard among investment houses, the comparisons to reveal the bounds of true value. Those values have been reduced in the recent two years, with the drubbing of the oil price. The Jackass maintains that the lower oil price in part is explained by the broken Petro-Dollar. The manifestation of the effect is a higher USDollar value and a lower oil price, with a stroke of lost control.
Consider three examples. Exxon-Mobil (symbol: XOM) revenues fell by $185.85 billion between December 2014 and December 2016. Their revenues declined from $411.94 billion to $226.09 billion in that time span. During the same period, net income fell from $32.52 billion to $7.84 billion, a huge 76% decline. Its market capitalization suffered only a minor decline from $395 billion in December 2014 to $338 billion at end February 2017. It is due to go lower.
Chevron (symbol: CVX) revenues fell by $97.50 billion from end 2014 to end 2016. Their revenues declined from $211.97 billion to $114.47 billion in those two years. During the same period, net income fell by a staggering $19.74 billion. The company reported $19.24 billion for net income in December 2014, but a net loss of $497 million in 2016. Its market capitalization suffered only a minor decline from $214 billion in December 2014 to $212 billion at end February 2017. It is due to go lower.
Petrobras (symbol: PBR) offers a more complex comparison. The situation at the Brazilian oil company should frighten the Saudis severely. In December 2014, Petrobras reported revenues of $145.30 billion, but two years later those revenues dropped to $82.15 billion, a decline of $63.15 billion. The result was Petrobras posted a net loss of $15.01 billion in December 2016, down from a net gain of $7.43 billion in December 2014. Petrobras has reported a negative net income for eight straight quarters. In a highly strange twist, its market cap has grown during that period rising from $48.2 billion from December 2014 to $66.72 billion at end February 2017. Its stock price has taken a drubbing.
Oil company market capitalizations are being driven by investor faith in oil, along with the jurisdiction of the company home and its deposits. If and when that faith disappears, the prices for several oil producers will fall to the Petrobras level. Such a likelihood forebodes serious political and national risk. For the ARAMCO offering to be cut drastically upon competent analysis with comparisons, especially the Saudi political risk internally combined with added risk on the war frontier, the Saudi Royals might find themselves suddenly bankrupt. If the kingdom runs out of money, it might spark civil war and royal princes fleeing with stolen money. Some heads might literally roll, as a possible revolution could occur. That is precisely the Jackass forecast, a revolt, and chaos taking root. The scenario might throw the entire Middle East into complete chaos, or else the Gulf Region. See Bloomberg (HERE).
Start on a bogus valuation path, assuming the ARAMCO pricing is accurate. By that errant logic, the Russian producer Rosneft’s market capitalization would be $272 billion instead of its current $64 billion. The valuation of Exxon Mobil Corp, the world’s largest publicly traded energy producer, would be 53% smaller than its current value. Therefore if Aramco is a unicorn, Rosneft is a steal and Exxon is a super leveraged unicorn. The equity markets have no connection to economic reality. The ARAMCO IPO might thrust the energy sector into the light of reality. It could turn out to be the death blow for Saudi Arabia. Any due diligence might reveal that the Saudis under ARAMCO own lands that have squat for reserves. The great Saudi lie on its oil reserves is on the verge of being exposed. The Jackass enjoys this development, since the Saudi Kingdom and its princes are criminals who has pilfered the nation’s riches, who enforce draconian stupid laws, who issue tiny payouts to the public to keep them sated and fed.
Let us enter reality. The ARAMCO initial public offering might be worth less than one quarter of the official valuation put forth by the Saudi Arabian offices. Saudi projections have placed Aramco’s potential value at $2 trillion, but analysts at Wood McKenzie Ltd came up with a very different estimate at $400 billion. Under the Wood McKenzie estimate, if correct, ARAMCO would not be the world’s most valuable company. Its value would actually be worth less than Amazon (AMZN), Berkshire Hathaway (BRK.B), Microsoft (MSFT), Alphabet aka Google (GOOG), and Apple (AAPL), even if some of these names are bloated in value. The publicly traded ARAMCO would be worth only a little more than Exxon Mobil which is valued $336 billion. The Saudi Royals are so full of bluster, arrogance, and hubris, in a total divorce from reality. Last year the Saudi Govt claimed that ARAMCO might be larger than Apple, Alphabet, and Amazon combined. Here we have WoodMac offering a cogent argument that it would actually be smaller than each of those cited companies. View the largest IPO deals in history. The ARAMCO deal might not make the list unless they increase the percentage equity offered.
Listen to the propaganda nonsense from Riyadh. They claim the Saudi Redevelopment Plans are threatened. Big problems could come for Saudi Arabia, because the kingdom might gather a fraction of the $100 billion it hopes to raise from a 10% partial IPO of its sprawling state petro-chemical complex in 2018. If a shortfall arrives, the Saudis will either have to sell a lot more ARAMCO stock, sell more government bonds, or find some other means of raising money. They might have to bring their vicious war to a halt. It also threatens Deputy Crown Prince Mohammed bin Salman’s ambitious plans to reform his Kingdom. The Jackass maintains firmly that Prince Salman is using a bait & switch method. He talks about industrial reform, but he will use the IPO proceeds to finance his vile war, almost a sick hobby.
The Western press actively ignores the extreme financial pressures on the Saudi Kingdom, for its costly Yemen War which is going very badly. Prince Mohammed had hoped to use funds raised from the IPO to build entirely new industries to replace the oil dependence within the economy. He might not be able to accomplish his goals, but rather might have to flee for his life under a palace coup. Besides, if the Saudis do not pay foreign contractors now, they might not pay them later during a wondrous industrial reform. Prince Salman also might become the victim of a Yemeni missile attack, a recent new twist. Salman’s plans would require massive investments in high technology, something obviously not to come cheap. He could consider a viable backup plan in the event of the IPO failure.
The Saudis could perhaps sell or lease oilfields directly to foreign companies, or develop some of Saudi Arabia’s other mineral resources, or begin to export natural gas. It should be known that the Saudis have not properly paid in a timely manner thousands of foreign contractors for work in the ARAMCO fields and other work sites. They and their families have been left stranded, the problem lingering in the Middle East for two years. This betrayal has been covered in the Hat Trick Letter in the past year. The kingdom has morphed into a deadbeat nation, broke on the balance sheet. The wretched bad reputation earned over the foreign contractor issue might creep into the IPO issuance. It should if justice is meted. See Empresa Journal (HERE).
◄$$$ LOW OIL PRICES CONTINUE TO DECIMATE THE SAUDI ARABIA CURRENCY RESERVES… THE FINANCIAL DISTRESS IS COMPOUNDED BY THEIR GRAND LIE ON OIL RESERVES AND SPARE CAPACITY… THEIR FOREX RESERVES DECLINED BY 10% IN YEAR 2016… IN MID-2014, THEIR FOREX RESERVES TOTALED ALMOST $800 BILLION, NOW DOWN TO $500BN…THE ARAMCO IPO DEAL WILL NOT RAKE IN ANYWHERE NEAR WHAT THE SAUDI FASCIST THIEVING FILTHY SCOUNDRELS ANTICIPATE. $$$
The low oil price continues to wreak financial havoc on the Saudi finances. The mainstream press chooses to emphasize a rebound in their outlook, based upon higher engineered oil prices later in the year. Such higher prices are by no means assured, as Iran output soon comes into the market. To compensate for falling oil revenues, Saudi Arabia has been liquidating its foreign currency reserves at a rapid clip over the past two and a half years. During this stressful decline, Saudi Arabia liquidated 27% of its foreign currency reserves. At its peak, Saudi Arabia held $797 billion in FOREX reserves. In a recent tally, their FOREX reserves were down to $536 billion, calculated in December 2016. The odd part, more the deadly aspect, was that this reserves decline occurred even as the oil price recovered from a low of $30.7 in January to a high of $53.3 in December last year. Furthermore, topping it off was the big hit two months ago in January, when their reserves fell by $12.5 billion in a single month. The graph shows the Saudi FOREX reserves expressed in SARiyal currency terms.
While it is true that Saudi Arabia has cut oil production somewhat, the change only accounts for a small portion of the $12.5 billion decline in foreign currency reserves. Evidence is seen in the reduction in Saudi oil tanker traffic, which is tracked. Exports fell from about 7.16 million barrels per day in January, according to Bloomberg calculations based on industry standard cargo sizes. Saudi Arabia exported about 7.64 million barrels per day in October, according to figures from the Joint Organizations Data Initiative. Riyadh-based JODI collates data including production and exports directly from countries. Shipments exceeded 8 million barrels per day in both November and December. The broader producer deal to cut supply took effect at the beginning of the year. Simple math for January 2017 gives 1 million barrel per day cut x 31 days = 31 million barrels, which times $54.58 per barrel (avg price in month) equals a drop by $1.7 billion. Their FOREX decline was $12.5bn though, a much greater figure. Over 85% of their FOREX reserves decline was from outright sales, as in large scale dumping.
To make matters even worse, Saudi Arabia plans to slash capital expenditures by 71% with home-grown austerity measures, thus making the IPO offer doubly unattractive. The kingdom will scrap projects worth more than $20 billion, as reality strikes with cheaper oil. According to the Saudi Govt bond prospectus, CAPEX is expected to fall to $20.6 billion (75.8bn Riyals) this year compared with $70.2 billion (263.7bn Riyals) in 2015. Two years ago, the kingdom’s capital spending was $98.6 billion (370bn Riyals). In plain terms, Saudi Arabia finds itself in serious trouble if forced to cut its capital expenditures by 71% this year. In addition, the Kingdom is placing far too much hope on the upcoming Saudi ARAMCO initial public stock offering. The CAPEX cutback is likely to be even greater. In Jackass terms, the IPO is a true mangy old weary dog with a missing leg. To make matters worse, Fitch just downgraded the Saudi Arabian Govt debt to A+ on a soaring fiscal deficit and deteriorating balance sheet, without even mentioning the filthy costly Yemen War. How genteel! The downgrade is bound to harm the bloated fraudulently priced IPO. See Zero Hedge (HERE).
Saudi Aramco values its assets at $2 trillion and its 10% initial offering could be worth $200 billion. However, Wood Mackenzie slammed the self-aggrandizing estimate. WoodMac believes the giant state-owned petro-chemical business has assets are worth much less, as in 80% less. Bloomberg wrote, “Now, analysts at Wood Mackenzie have conducted their own study of Saudi ARAMCO, and came up with a completely different (and much lower) figure. WoodMac puts ARAMCO’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi ARAMCO’s status as a state-run company.” Any rational person would choose the WoodMac estimate as more accurate, since more objective. Notice that WoodMac did not cite the highly questionable oil reserves and spare capacity, pure fictions. Expect the crude oil price to decline again, since levitated by Wall Street paper engineers in corrupt style. When the oil price continues to decline, Saudi Arabia will likely have to liquidate more of its cash reserves in order to fill in the gap from insufficient oil export revenues. See SRS Rocco (HERE) and Bloomberg (HERE). Steve St Angelo is my friend and a superb analyst in both the energy and precious metals mining sectors. The HTLetter is grateful to pass on his work, and to promote his business.
◄$$$ THE BLOODBATH CONTINUES IN THE US-BASED MAJOR OIL INDUSTRY… THEY HAVE NOT CUT COSTS ENOUGH, AND THUS ARE FALLING DEEPER INTO DEBT… THE BIG THREE HAVE ENDURED A 95% PROFIT DECLINE IN THE LAST FIVE YEARS… COUNTING CAPEX AND DIVIDEND PAYOUTS, THEY HAVE BEEN RUNNING IN THE RED FOR A FEW YEARS… THE US-BASED ENERGY SECTOR IS IN VERY DIRE TROUBLE. $$$
The carnage continues in the US major oil industry as they sink further and further in the RED. The top three US oil companies, whose profits were once the envy of the energy sector, have been forced to borrow money to pay dividends or capital expenditures. Their long-term debt has become an eyesore. The financial situation at ExxonMobil, Chevron, and Conoco-Phillips has become dreadful, as their total long-term debt surged 25% in just the past year. The major financial rag tunes ignore the red ink bath, while the US energy sector continues to disintegrate. According to the most recently released financial reports, the top three US oil companies combined net income was the worst ever.
In 2011, ExxonMobil, Chevron, and Conoco-Phillips gathered in a combined $80.4 billion in net income profits. The rapidly falling oil price since late 2014, totally gutted the profits at these top oil producers. In just five short years, the ExxonMobil net income declined to $7.8 billion, Chevron reported a $460 million loss (first ever), while ConocoPhillips logged a hefty $3.6 billion loss in 2016. Thus, the combined net income of these three oil companies in 2016 totaled $3.7 billion versus $80.4 billion in 2011, two showing losses. That is a 95% comedown. However, their reality is worse since net income does not include capital expenditures or dividend payouts.
Their combined free cash flow fell very hard from a healthy $46.3 billion in 2011 to a negative $8.7 billion in 2015, then a negative $7.3 billion in 2016. If not for completed CAPEX reductions, their free cash flow would have been much worse in 2016. Their combined CAPEX cutbacks totalled a whopping $20.6 billion. Annual total CAPEX spending was $87.2 billion in 2013, down steadily to $46.6 billion in 2016. That is a hefty 46% cutback. Bad news for either building or at least maintaining oil production in the future. Free Cash Flow is calculated by subtracting CAPEX spending from the company's operating cash or profits. If one looks at these oil companies on a Free Cash Flow basis, they have been losing money for the past two years. They are eating their nut. They have not made adequate cutbacks fast enough to avoid losses. In addition, they forked out an additional $21.4 billion in shareholder dividends. Dividend payouts must be taken from cash within regular operations. Evidence points to how these major oil companies have been operating seriously in the red (big losses) since 2013. For a shocker graph, remove the dividend payouts from Free Cash Flow, to see the picture turn dour and ugly. The group's free cash flow minus dividends was a negative $32.8 billion in 2015 and a negative $29 billion last year. Of course, these three companies may have sold some financial investments or assets to reduce these negative values. By selling critical assets, they further undermine their future profit potential. They cannot stay in business if this pattern persists for a few more years.
The falling free cash flow and dividends has reeked havoc on ExxonMobil, Chevron, and Conoco-Phillips for their long-term debt. It has risen to alarming levels. When these three companies still enjoyed positive free cash flow in 2011 and 2012, after paying CAPEX and dividends, their long-term debt did not increase. But when their operating profits really started to decline, the debt on their balance sheets increased significantly. The combined long-term debt in these three companies balance sheets ballooned from $40.8 billion in 2012 to $95.7 billion in 2016. That is a 135% rise. The energy market continues to disintegrate, hand in hand with the USDollar foundation. The Petro-Dollar is broken and evidence abounds for the collateral damage in Saudi-land and Big Oil Corporate Land.
Both gasoline stocks and supply remains at extremely high levels. More loud alarm bells went off on the supply side. Refer to implied demand. The EIA in early March reported that the four-week average of gasoline supplied (called implied gasoline demand) in the United States was 8.2 million barrels per day. That is the lowest level since February 2012. US refiners now face the prospects of weakening gasoline demand for the first time in five years.
Steve St Angelo concluded a dire picture. “Furthermore, the situation at the top three US oil companies will only get worse going forward. As ExxonMobil, Chevron, and Conoco-Phillips continue to bleed to death, watch for US oil production to fall precipitously in the future. It is true that US oil production has increased over the past several months due to the drilling rig hamsters doing their thing, by taking good investment money and producing more crappy low quality oil. In no way is this something to cheer about. Rather, I call this turning gold into lead. Some readers send me information of the growing drilling rig count and oil production in the Permian field in Texas. It is where the activity has moved to, because it is one of the last fields that can produce oil similar to the Bakken and Eagle Ford. One should not make the conclusion that this bump up in US oil production will save the day, because it is being done on the back of a massively indebted energy sector which has been able to continue drilling by using rigs that have seen their rental rates cut in half, or more, due to the implosion of the drilling rig industry in 2015 and 2016. The evidence provided in this article showing the continued financial disintegration at these top three oil companies suggests that the US energy sector is in serious trouble. We must remember, how the top oil companies are supposed to be the most profitable. However, if we take a look at what is taking place in the top shale oil & gas producers, the situation is even more dire. The shale oil & gas industry has not really made a profit since 2009.” See Zero Hedge (HERE).
◄$$$ HUGE UKRAINE OIL DEPOSIT WILL BE LINED UP FOR CHEVRON DEVELOPMENT, UNLESS INTERRUPTED… CONSIDER ANOTHER MOTIVE FOR THE UKRAINE WAR… DO NOT EXPECT MUCH OUTPUT OR PROGRESS BY CHEVRON, AS RUSSIA WILL EVENTUALLY STEP IN. $$$
The Thom Hartmann program, a popular radio show, revealed that there is a huge oil reserve in the center of Ukraine. It seems that Chevron has the rights, and they plan to enter for drilling soon. The USGovt has been giving support to Chevron in Ukraine, using typical fascist methods and no publicity. No open bidding process was used or will be used. Other fracking projects litter the countryside in Western Ukraine, complete with water table contamination. Call it partial motive for all that effort to install a conservative government in Kiev. Of course, blocking the Russian Gazprom supply line connection to Western Europe is a primary motive.
Some digging reveals that former US VP Biden's son is heading this NeoCon loot and plunder adventure. No open bids, no environmental controls, just fraud and corruption in the usual US manner. The story before in 2015 was led by Ukraine natgas projects via fracking. The story will move toward oil production soon, if they can maneuver their way around the micro-nuke detonations in the battle zones to the east that the US and Israeli Militaries are sponsoring.
The Voice pitched in, his words but my edits. Yes, the Russians did discover those big oil deposits decades ago but they kept a lid on it. The Westerners going into the East to loot will find certain death there. The Russians have all the time in the world. They will crush Ukraine one more time. The Ukrainians are not as stupid as other elements in Eastern Europe, but they come very close. These Slavs need the Austro-Hungarian boot on their asses (or necks) to get their act together. They work hard but need proper leadership. Europe is as complicated as the Middle East. However, Europe is more civilized. The Jackass wonders if Russia will permit Chevron to make some significant CAPEX outlays, only to be forced to abandon them at a later date when the tide turns. As the Voice said, Russia can afford to be patient since the US usually over-commits its resources with clumsy aggression.
## GOLD IN HOLDING PATTERN
◄$$$ GOLD WAS SLAMMED WHEN TECHNICAL ANALYSIS SHOWED SOME STRONG RISK OF BIG UPWARD MOVES… SHORT COVERING RISK WAS AVERTED… MAJOR SLAM, SAME OLD SAME OLD, REPLETE WITH THE USUAL PROFOUND CORRUPTION, AND INDEFENSIBLE FUTURES CONTRACT ACTIVITY. $$$
Last month the Hat Trick Letter featured a section, called “Precious Metals on the Verge of Breakout” with numerous charts. The signals were not lost on the criminal banker cabal, a rugged shameless crime syndicate which has been managing the King Dollar court and the required suppression of Gold & Silver. The Silver breakout was noticed well. They did not wish to permit a confirmation in a short-term Gold breakout. Momentum might have gathered worldwide, leading to further big upward price moves. The slam was the usual treatment, with thousands of short futures contracts having no basis in delivery ever. The crime scene continues. The outcome is assured, however, of shutdown for the gold market in its current form. The first location of a breakdown, a shutdown, and a crime scene with lawsuits will be the London Bullion Market Assn. They are very close to a default situation, made more certain by the recent USFed rate hike. It was a sabotage event, with a betrayal of China in an unclear manner, the major USGovt creditor nation. The LBMA shutdown will be cause for celebration with champagne or just pistachio nuts. The scene should result in lawsuits for restitution. The Gold Standard will have a stake placed in the ground, most likely in the London carcass on the dead gold market site.
London trader Andrew Maguire offered his interpretation of the latest Gold & Silver smash in late February and March. He called it the final rinse. On the Silver table, he dissected the corrupted 150 million oz silver massacre. The amount is almost 20% of global mine output in silver, dumped in a brief period of time without a semblance of investigation or action by the CFTC regulatory authorities. Once more the ambush was significant and criminal, never to be prosecuted. It has become standard operating procedure. Maguire firmly believes this is the final slam of the precious metals, the last washout. The strong hands remain. See Silver Doctors (HERE & HERE).
◄$$$ RETURN OF GERMAN GOVT GOLD WAS ONLY PARTIAL… THE STORY HAS BEEN LOST OVER THE PASSAGE OF TIME AND REPEATED BYLINES, EVEN IN THE ALTERNATIVE MEDIA… THE NEW YORK FED STOLE MOST OF THE GERMAN GOVT GOLD BARS, LEFT IOU PAPER CHITS, STILL NOT RESOLVED… GERMANY HAS CHOSEN TO REMAIN SILENT UNDER CERTAIN PRESSURE… THE NEW YORK FED STILL HOLDS 80% OF THE ORIGINAL LOT OF GERMAN GOVT GOLD… RATHER, IT IS LONG GONE. $$$
The official story will not be repeated at length. Something on the order of 330 tons gold bullion was returned to the German Govt. It is said to be delivered early, meaning the theft was remedied sooner than the several years required to package gold bars and ship them securely, an absurdity on its face. The German delegation from their Parliament was insulted a few years back, sent home packing, when they simply wanted to inspect their gold on account. The USGovt has been busily stealing other gold bars to hand back to the Germans. But the US banker crime syndicate supposedly repaid the gold, so the story goes this month. Not at all. See the outline of the propaganda story on Zero Hedge (HERE), which is incomplete.
Much remains to be told on the story, harkening back several years. Thanks to PeterF in New York City for filling in the large blanks. The USGovt still has not returned the bulk of German Govt gold, but the Berlin crew have backed off under certain pressure from Washington, since so sensitive an issue. The USGovt stole gold from its principal ally. Let PeterF tell the more complete story. He referred to the interview host at SGT Report. The following was his note to the host in attempting to set the record straight.
“On your recent review with Andy Hoffman, you were discussing the return of the Bundesbank gold. You stated that they have gotten all their gold back which had been held by the Fed, and ahead of schedule. This is entirely untrue. I am going from memory here as to the exact numbers, but the Bundesbank had about 1650 metric tons of gold held by the Fed. When they requested that it be returned, after some negotiations, they reached an agreement that the Fed would return only 20% over a period of seven years. The remaining 1350 mt are probably in offshore accounts. Refer to Rubin, the Clintons, and Poppi Bush, or perhaps in China, but are supposedly still being held for security reasons by the New York Fed on Liberty Street. You are not alone in this misinformation. It is very widespread, almost universal, in the alternative media. It also requires some serious sleuthing to document it. I would appreciate it if you would check this out. If you find it to be accurate, spread it about the alternative media.
It turns out that the numbers from my memory were pretty accurate, but here are the real numbers from an article from February 9th of this year from ZH. With this article so recent, it is sort of strange that so many of the good guy economic bloggers are getting it wrong. Sort of like the Mandela effect. I think it says a lot that the NYFed only agreed to return 20% in seven years, and this should be widely known among the sentient. Of course, the returned bars are reported not to be the original German bars put on deposit. I heard they had Gadaffi’s thumb prints on them and Tony Blair’s DNA snot also.” The Jackass believes the bulk of German gold was sold into the market by the New York Fed many years ago, long gone, rehypothecated, in a genuine betrayal of a key ally.
◄$$$ BANK OF MEXICO JUST REVEALED THAT MOST OF ITS CENTRAL BANK GOLD IS BEING HELD IN UNALLOCATED ACCOUNTS IN ENGLAND… THE BARS ARE SUBJECT TO DOUBLE COUNTING WHILE ON LEASE… BANXICO HAS 930,000 OZ GOLD IN UNIDENTIFIED FORM. $$$
Guillermo Barba is a gold guerrero living in Mexico. It means warrior in English. Last December, a Request for Information by means of the Transparency Law resulted in the Banco de Mexico (Banxico) to inform that of the 3.881 million ounces of gold they claim in their possession, at end October 2016, almost 99% are held in the United Kingdom, with only 1% held in Mexico. Banxico disclosed that it had a total of 7265 gold bars in allocated accounts at the Bank of England. Hence conclude that only about 2.9 million ounces are well identified with serial number, brand code, gross weight, assay and fine weight at that location. The remaining 930,000 gold ounces at the BOE are still held on an unallocated basis. These unallocated accounts are those in which the owner has not been assigned specific gold bars, but rather simple rights to a certain amount of gold.
Therefore the controversy on proper gold bar accounting. The problem with unallocated accounts is multiple owners and claims made on the same gold for the unassigned bars. The same gold bars are sold multiple times, in the standard rehypothecated manner, and appear multiple times on central bank accounting statements. In the event of a crisis where owners demanded the delivery of the gold bars, inadequate inventory exists. Some owners would have to concede to cash settlements, or else opt to file lawsuits in court. Monetary authorities such as Banxico should never permit unallocated accounts to be used since gold reserves, in order to offset their risk in fiat currencies. They simply shifted to a different type of paper risk. In the process, the gold bars are double counted, and maybe more. See Silver Doctors (HERE) and the INFO website (HERE). The home mortgage income streams are doubled counted also in bonds. The property titles are double counted in the same mortgage bonds. JPMorgan also sold double the number of USTreasury Bonds versus the volume issued. So double counting and double selling is common with the banker cabal crime syndicate, all protected by major governments, legal teams, police forces, and armies.
◄$$$ IN THE RECORD YEAR 1935, THE UNITED STATES IMPORTED NEARLY A HALF BILLION OUNCES OF SILVER… THE USGOVT EMBARKED ON A PLAN TO EXECUTE A BIMETALLIC STANDARD OF 4-TO-1 GOLD… IT COULD HAPPEN AGAIN, BUT WITH A 25-TO-1 STANDARD… THE RENEWAL COULD RESULT IN A MASSIVE ACQUISITION AND GIANT LIFT IN THE SILVER PRICE. $$$
As preface, some current background data. The United States silver imports are estimated to have reached 6100 metric tons (mt) in 2016, or 196 million oz, up from 191 moz in 2015. Thus, the US silver imports from that year accounted for 22% of global mine supply, whose volume was 887 moz. The amount does not remotely compare to the massive 473 moz of silver imported by the United States in 1935.
Due to the US Silver Purchase Act of 1934, the USTreasury went on a massive buying spree by jacking up the price of silver to 77 cents in 1935 from 44 cents in 1934. Recall that pennies used to have significant purchase power a long time ago. The Jackass remembers well paying 5 cents for a 12-oz glass bottle of root beer when a kid in the 1960 decade. Coke is garbage acid. The little Jackass also attended Pittsburgh Pirate major league baseball games to see the legendary Roberto Clemente (aka the Great One), at a cost of $1 (one dollar) at the old Forbes Field. Coin collections were assembled, gathering in actual silver and copper US coins. Much has been written about the US 1934 Silver Purchase Act, but the motivation by the USGovt was to acquire more silver to back their outstanding currency base. The act had a profound effect on China, Mexico, and India, key producer nations. In order to increase the proportion of silver monetary stocks to gold, the USGovt was urged to acquire a huge volume of silver. In effect the USTreasury was forced to purchase 1.244 billion oz of silver to arrive at this 4:1 Gold-Silver monetary stock ratio. They succeeded.
Therefore US silver imports, totaling 473 moz in 1935, were more than double the global mine output supply of 221 moz at the time. The USTreasury realized a great deal of time was required to source the silver. It motivated the rest of the world to release some significant silver supply. By pushing the price of silver up 75% to a ripe value of 77 cents, the USGovt was able to import nearly 40% of their 1.244 billion oz target in just one year. If the USGovt must again return to the Gold Standard to back its new currency, a massive acquisition will again occur. History could easily repeat itself. Silver will be included as a monetary metal. Industrial customers would have to adjust their business models.
Steve St Angelo concluded, “Lastly, many precious metals investors believe the Chinese have a massive hoard of silver. Honestly, I do not belong to that mindset. While the Chinese did have a lot of silver at one time, they sold quite a lot of it during the 1930s and also more in the 2000s. Very few central banks hold any silver. Most of the silver today is held in private hands or by large institutions, not central banks. In the future, the value of silver will not be based on how much is consumed by industry, jewelry, or investment demand, but rather how it functions as a high quality store of value compared to most other assets that will be disintegrating as the massive amount of debt and derivatives implodes.” He anticipates silver will become a monetary metal, and enjoy a massive leap in value. See SRSrocco Report (HERE). The Voice often reassures that silver will be included as a monetary metal along with gold, and possibly platinum will also. If Panama has its way, they will use both gold and copper as their monetary metals.
The Jackass adds that China used to possess a massive silver stockpile back in 2001 and 2002. However their industrial rebirth in the following decade depleted it. The rumor mill has that JPMorgan has been acting as purchase agent for the Chinese as they replenish their silver stockpile, evident in the bank’s accounting statements. JPM is just a bitch in the equation, after having forfeited their HQ building in South Manhattan in 2014.
◄$$$ THE ONLY WAY TO STOP INDIANS BUYING GOLD IS TO ATTEMPT TO TAKE AWAY THEIR CASH… BUT THE OFFICIAL POLICY HAS BEEN ALMOST REVERSED… PRIME MINISTER MODI HAS BEEN A FINE LONDON AGENT, WITH PUPPET STRINGS FULLY VISIBLE… THE EXPERIMENT HAS ENDED (OR SO IT SEEMS), PERHAPS AFTER MODI SENSED A RISK TO HIS LIFE… THE DAMAGE TO THE INDIAN ECONOMY MIGHT YET BEAR IMPACT ON MODI. $$$
The London bankers still control India, who work in collusion with the Basel bankers in Switzerland at the global fascist HQ for central bankers. The experiment to remove cash in India appears to be coming to an end. The hidden motives were to limit cash for Pakistani terror groups to purchase explosives, to halt the flow of smuggled gold, and to encourage temples to bring forward their gold. Of course the main motive was to reduce cash demand for gold across the entire population. India possesses huge amounts of gold, and the bankers wished to monetize it. They wanted to convert it to money and to have it enter the banking system in the form of deposits. Move on to the effects.
Coupled with a higher import tax, the abolition of 86% of the nation’s banknotes in an anti-corruption drive helped to bring about a decline in gold imports by 39% last year to 558 metric tons. Overall consumption in India tumbled to 676 tons, the lowest since 2009, according to the World Gold Council. The decline in India’s gold imports has removed a potential pillar of support from global prices. It has been easier to push the Gold price from $1300 to $1200 as a result. Bullion for immediate delivery is down about 12% in price from its high in July, and the Indian factor is high in importance for that decline. The banknote ban has been a failure to the economy, causing in some sectors horrendous damage, and slight success in squelching gold purchases. See Bloomberg (HERE).
The upshot of the cash ban story is that Prime Minister Modi is an agent of the banker cabal, taking orders, working to secure vast tracts of temple gold, and hindering gold demand. All this within a nation with a rich tradition for gold savings. It is estimated that the nation’s households possess between 15,000 and 20,000 tons gold. It is a traditional form of savings, and a typical form of wedding gift dowry worn by the bride. However, any disruption in the Indian gold market has to be viewed as temporary on an historical basis. The failure of the cashless policy is best seen in the fact that Modi has replaced the old 500 and 1000 Rupee notes with new 1000 and 2000 Rupee notes. The talk of a move towards a cashless society in India is patently incorrect. It was without a doubt a ridiculous project. Clearly it was a test to the system with focus on smuggling, temple gold, and effect to the economy. The damage to the Indian Economy was much greater than anticipated. Risk to Modi politically and personally has yet to be measured, as vengeance in the country has a tradition. See Gandhi and Nehru. It seems to the Jackass that Modi avoided the hit-men by his cashless policy reversal. He was a dead man walking. He exited the ultra high risk lane.
◄$$$ INDIAN GOLD IMPORTS TRIPLED IN FEBRUARY IN A QUICK RESPONSE TO THE REVERSED CASH BAN POLICY… SMUGGLING IS BACK IN HIGH GEAR, WITH A SIGNIFICANT AND SUDDEN REACTION… A STACK OF WEDDINGS IN INDIA IS PLANNED FOR APRIL. $$$
Legal Indian gold imports jumped up to 96.4 tons in February compared to the same month in 2016. The volume is triple from a year ago. These numbers come from the finance ministry, not the World Gold Council or bullion banks (which tend to be motivated in falsehoods). This number also does not include smuggled gold which, based on the increase in airport arrests so far in 2017, has ramped up considerably. Smuggling in India could be 10 times the standard estimates. The import data reinforces the observations by many objective analysts that the Basel-directed attempt to curtail Indian gold demand by removing cash from the financial system has failed. The London collusion with the Bank for Intl Settlements conducted an experiment, and witnessed the results. Their policy wrought broad economic damage, reduced gold demand, and yielded only very minor temple gold to the table. Gresham’s Law was seen in action, that bad money drives out good money during a crisis. By that is meant, the valid money forms with integrity are kept hidden and out of circulation, out of harm’s way during a crisis, which leaves the bad form of money to dominate in usage and view.
Amusingly, Citigroup is forecasting total 2017 demand in India to be 725 tons. Their estimate is laughable. Smuggling alone is expected to account for about 300 tons per year of gold entering India, and the figure is also low-ball. As a bullion bank, fully dependent on the corrupt fiat paper currency system, with an untenable paper gold short position, Citigroup can only dream that India’s gold importation will be that small in 2017. The Wall Street crew is corrupt to the core, still talking their book, producing absurd analysis, making silly low estimates. Indications are for a powerful snapback effect seen in the Indian gold demand, following this brief intervention by the Government in late 2016. They conducted their experiment, and it is done. Domestic gold demand and movements will make up for the past interruptions. Modi might not become a casualty, which remains to be seen. Gradually the Western central banks and bullion banks are losing control of the bullion market. See Investment Research Dynamics (HERE). EuroRaj knows this country very well. He reiterated, that Gold will flow as usual via smuggling routes in increasing volumes like before, and temples will in the main not give up their gold.
◄$$$ INDIAN CASH STORY OF A GAS STATION OWNER… THE COURSE HAS BEEN REVERSED, AS CONDITIONS ARE RETURNING TO NORMAL… THE CASH-BASED FLOW WAS CUT BY A FACTOR OF THREE, BUT NOW NORMAL…HE BELIEVES THE CASH BAN POLICY WAS AN ATTEMPT TO COLLECT SALES TAX FROM THE UNDERGROUND CASH MARKET… MUCH MORE CASH EXISTS IN THE INDIAN ECONOMY THAN ESTIMATED, WHICH HAS RESULTED IN NEW INVESTIGATIONS. $$$
Consider the story of MarkS in New York City. He recounts a conversation with a taxi driver, who provided some rather interesting and comprehensive details, with respect to one cash dependent business. The following are his words, my edits. I was chatting with my cabbie (taxi) today. He owns two gas stations in India. We discussed the recent currency changeover and reversed official policy regarding the cash ban nationally. His belief is that it was an attempt to convince the general population of India to start using electronic banking and checking accounts. At his gas stations, before last November, he typically saw gross revenues of 300,000 Rupee per month. About 10% of that, or 30,000 Rupee was electronic payments or personal checks. The rest was received in cash.
During the currency changeover, Modi urged people to go and get an electronic payment card and use that to pay their bills. It is like a sanctioned debit card, loaded then used. The short-term cash shortage crisis was created to support that campaign. My cabbie said during the height of the currency shortage, his gas stations were taking in about one third of their typical income, or about 100,000 Rupee per month in electronic and check payments. Thus less cash, more instruments, as the government wanted. Move forward in time. Today, three months after the crisis, his gas stations are almost back to where they were before the crisis. They are taking in about 10% of gross revenue in electronic payments and checks. The net effect of the whole exercise was nothing, with no net change in the society. The Jackass interjects a comment of enormous change to the society, with deep damage done to numerous sectors of the Indian Economy, tens of thousands of jobs lost, numerous businesses wrecked, large amounts of savings lost, even some suicides, and massive resentment toward the central government. In the taxi driver’s case, no net change or notable harm to his business, hardly typical to the entire society (as he stated). Damage was widespread.
MarkS continued. I asked about the counterfeit currency issue. He said he heard those rumors, but he strongly believes it was done to try to force more of the cash economy into the banking system, so that it could be taxed. He said it is very common for small shops and even small factories in India to do 80% of their business in cash, with no receipt given (thus no taxes paid). Therefore perhaps, it was just a grand attempt to capture more tax revenue in the end. He did say though that the value of cash turned in during the changeover was around 30% more than the government thought existed. He said there is an investigation going on now into how this excess currency was created, since it was not counterfeit currency. It was legitimate, just 30% more than was supposed to exist.
◄$$$ SILVER MARKET IS POISED FOR BIG REVERSAL WHEN INSTITUTIONAL INVESTORS MOVE IN… THEY CHASE THE HOT TRADE, AND ABANDON THE EXHAUSTED TRADE, WITH A RELIABLE HISTORY AND TRACK RECORD… THE VIABLE NEXT TARGET TO EXPLOIT IS THE SILVER SECTOR… JUST A MATTER OF TIME. $$$
The silver market is due to experience a big reversal when the hedge funds and institutional investors rotate out of highly inflated stocks and into beaten down precious metals investments. Steve St Angelo believes this is not a matter of if, rather it is a matter of when, and the Jackass agrees. It could all happen much sooner than expected, due to the huge problems with the USGovt debt ceiling deadline, the USFed rate hike, the recent upward move in price inflation, and the disgust for the rigged markets in general. At the beginning of 2016, the Dow Jones Index fell to a low at 15,600 level, while the Gold & Silver price surged higher. It did not last on the precious metals front, but the mainline stocks kept going, with the full illicit support of the USFed and Wall Street (not in their charter). The current DJIA stock index level is over 5000 points higher, even though the fundamentals both the Dow and S&P indexes are more rotten than ever. Wolf Richter wrote about this in his article, about how the Dow Companies reported their worst revenues since 2010, even though the DJIA rises to 20,000. See Wolf Street (HERE).
Furthermore, the Dow Jones Industrial Index is seriously overdue for a correction, with no 10% in several year. According to the economic contraction cycle that occurs about every six years, the Dow is severely overdue for a nasty decline that will scare the dickens out of folks, just like in early 2009. Solid arguments, easy arguments, logical arguments indicate the index is overvalued by at least 60%. When the Dow Jones Index and the broader stock markets finally crack, expect to finally see hedge funds and institutional investors rotate out of the majority of highly inflated stocks and into the precious metals and mining sector. They only need to rotate with a fraction of their funds. This will have a profound impact on the price of Gold & Silver as well as their mining companies share prices.
Compare the primary silver mining sector to the largest US oil company in the country, ExxonMobil. XOM is listed on the Dow Jones Index as one of 30 industrial stocks and has the highest market cap of all the energy companies in the United States. Examine the potential impact for a rotation. According to Michael Belkin of the Belkin Report, he put out a buy signal on his top primary silver mining companies during an interview on King World News last month. Recall that Belkin is a very sharp knife in the cupboard drawer. He was one of the few who made a call back at the end of 2015 advising his clients to enter with both hands to buy the gold mining sector stocks. At the beginning of the year, the price of gold and the gold mining shares shot up considerably. Then a month later, he made a call advising his clients to enter to buy into his special group of primary silver mining stocks. Over the next several months, the Dow Jones Index fell notably while the price of silver and the silver mining stocks surged higher. Belkin, who has large institutional clients, is now advising them to exit most of the broader market stocks and to enter into other assets such as the precious metals, especially the silver stocks. He is one of the few analysts who deserves respect for not being paid by the mining companies to promote their stocks. He suggests certain stocks through his own analysis and models. Belkin believes the broader markets are going to finally correct bigtime this year, and that one of the few sectors to respond favorably will be the precious metals.
Compare the market cap of ExxonMobil versus the ten top primary silver mining companies in the world, to see the potential for large gains is clear. ExxonMobil has had a recent market cap of $330 to $340 billion. The often shunned silver sector is an order of magnitude smaller, with a market cap of $27 billion for the top ten primary silver mining companies. These top ten firms include Fresnillo PLC, Pan American Silver, Tahoe Resources, Hecla, Coeur, First Majestic, Silver Standard, Fortuna, Endeavour Silver, and SilverCorp Metals. They are used to produce a reliable silver stock index. Actually, half of the total market cap of the group was from Fresnillo PLC alone, which is $13 billion. This means the ExxonMobil market cap is nearly 13 times greater than the total of the top primary silver mining companies in the world. St Angelo points out that other large silver producing companies operate in the world such as Hochschild out of Peru. He chose to focus on the largest in Fresnillo, in addition to those firms trading on the US exchanges.
Compare the total outstanding shares between ExxonMobil and these top primary silver miners. Currently, ExxonMobil has 4.15 billion outstanding shares versus a total of 2.5 billion for the top ten primary silver miners. The largest energy company in the US and on the Dow Jones Index has two-thirds more outstanding shares then the top ten primary silver miners put together. See SRS Rocco (HERE).
◄$$$ A TIGHT CORRELATION USED TO EXIST BETWEEN THE GOLD PRICE AND THE USGOVT DEBT LEVEL… THE USFED INTERRUPTED THE LINKAGE WITH Q.E. AND URGED ON THE USTBOND RALLY… THEY BUILT A BOND BLACK HOLE WITH A PONZI VORTEX… EXPECT THE LINKAGE TO RETURN, WHEN THE USDOLLAR CRISIS HITS THE SCENE AND THE BOND MARKET CRACKS. $$$
Normally the gold price rises hand in hand with the expanded USDollar money supply and the USGovt debt volume. In recent years, the pattern was broken. The following excellent chart is amazing. Gold price suppression appears to be blatant in the face of the USFed and its Quantitative Easing program. The banker cabal encouraged the USTBond historic rally, created a black hole from which they cannot extract themselves, and kept Gold & Silver suppressed for the last six years. The end of the game is near, as global rejection of the USDollar is in progress. It begins with other non-USD methods in trade payment. It continues with USTBonds being dumped in massive volume, soon to be replaced by gold bullion in the bank reserves. It will hit climax with the introduction of gold-backed currencies, probably several of them. Think gold-backed Yuan, Ruble, and maybe Nordic Euro, Arab Dinar, Iranian Rial, Mexican Peso (using silver).
During this process, the Gold price will return to meet the USGovt debt level in a grand pendulum swing. A clear disconnect is evident between the credit expansion and the lagging gold price since 2011, precisely when the QE initiative began. The bond rally in gargantuan USGovt debt provided excellent cloud cover for continued paper slams using the COMEX to keep the precious metals prices down, using unbacked undeliverable futures contract selling (shorting). Imagine a bond rally in USTreasury Bonds, with annual $trillion deficits, no formal debt limit, fake demand from interest rate derivatives, illicit income by big banks from bond carry trade, an economy on a credit card that lacks industry, significant bank sector fraud, and war financed by a printing press. What utter insanity, which cannot and will continue. This divergence will soon be rectified. Investors will move from the corrupted sovereign US bond to the safe haven gold bullion. Expect gold will not only catch up with the debt expansion but will overtake it. Gold will soon be pulled upward with rising debt, like always.
In October 2015, the US debt ceiling was suspended until 15 March 2017. Consider it a sabotage maneuver by the Hope & Change Manchurian Candidate, Barack Obama, or whatever his real name is. The debt ceiling is of course not to be taken too seriously. It has been raised 95 times since 1940 and 14 times in this new young century since the turn of 2000. Every single administration has totally ignored the debt ceiling. Every time a potential problem arose, the USCongress raised it to accommodate their irresponsible budgeting and spending.
Lastly, Evon Von Greyerz calculated the 1980 peak prices for Gold & Silver, with inflation adjustments. The targets are $14,463 for Gold and $669 for Silver. He claims the Ides of March call for the price target to be achieved. He regards both as reasonable targets for when the USDollar currency crisis reaches full blossom. See Gold Broker (HERE). The Jackass adds that his estimates are very conservative for a matched peak, since all price inflation data is severely wrong low, like 5% to 6% lower than reality. An equivalent true inflation adjusted peak (to match 1980) would be around $25,000 gold and around $1000 silver, while still honoring a new 25-to-1 ratio. Even a partial move toward these aggressive heights would be most satisfactory.
◄$$$ THE IDAHO STATE HOUSE VOTED TO END TAXING GAINS ON PRECIOUS METALS, WITH SOLID REASONS CITED… IDAHO IS PREPARING THE WAY FOR ITS CITIZENS TO PROTECT THEMSELVES FROM FINANCIAL LOSSES RESULTING FROM THE IMPLOSION OF THE USDOLLAR AND RELATED ASSETS. $$$
By an overwhelming 56-13 margin, the Idaho House of Representatives on March 14th voted to end all taxation on precious metals in the state of Idaho. Any profit on sales of gold and silver coins and bars will no longer be subject to tax. If the Republican controlled state Senate follows suit and Governor Butch Otter (R) signs the bill, Idaho citizens will better be able to use gold and silver as a form of savings. They can adequately protect themselves against ongoing devaluation of the toxic debt-based USDollar currency which has provoked a Black Hole on a global scale. As footnote, let it be known that Idaho is in the center of Western US mining lands, with a prosperous history of gold and silver mining activity over a century ago.
Backed by the Sound Money Defense League, Idaho Freedom Foundation, Money Metals Exchange, and grassroots activists, HB 206 expands Idaho’s existing sales tax exemption to end Idaho income taxation of sales of precious metals bullion and monetized bullion. That means respectively both metal bars by collectors and metal coins that once served as currency, like the Morgan Silver Dollar. Bill supporter Rep Ron Nate (R) spoke from their House floor. “According to the US Constitution, Article I, Section 10, there is only one thing that a state can declare as currency if they think that our federal currency is going out of whack, and some might argue that they think our federal currency is going out of whack already. If we are not going to allow people to declare capital losses on their Federal Reserve Notes or their dollar holdings, it would also be unfair to tax people for their gold and silver holdings. Gold & Silver is an alternative to holding Federal Reserve Notes, and it is the ONLY alternative that the US Constitution says that the state can allow as another currency. It is unfair to tax it just as it is unfair to tax losses on Federal Reserve Notes.” See Zero Hedge (HERE). The USFed might view this as rebellion and treason, but wiser folks view this as sanity and as a way to preserve purchasing power. The entire list of USD-based assets is at great risk, led by stocks and bonds.
## STRONG GOLD & WEAK DOLLAR CHARTS
◄$$$ THE USDOLLAR INDEX HAS FALLEN AFTER THE USFED RATE HIKE… NORMALLY A RATE HIKE FORTIFIES A CURRENCY… THE FOREX MARKET MIGHT BE REPUDIATING THE CENTRAL BANK ACTION, WITH A BELIEF OF A GRAND ERROR AND TRIGGERED CRISIS… A BIG BATTLE IS SET FOR DEFENSE OF THE 100 LINE IN THE SAND… EXPECT IT TO GIVE WAY. $$$
EuroRaj believes the FOREX market reaction is exactly the opposite expectation by the USFed, and a repudiation by the markets for their rate hike. The Trump Admin wants a lower USDollar in order to boost the export trade and to aid the USEconomy. The bankers do not give any priority to the economy, since they are devoted to the financial sector even if predatory to the real economy. A major battle is in progress at the 100 level. The weekly moving averages usually provide support. The upward trendline from the last 12 months will offer strong support. The wedge pattern is often a pause pattern to resolve some indecision, in this case no different. The Jackass believes the support will break, but will not cause a serious decline. It might be orderly. The 100 line is a veritable line in the sand, which the Wall Street banks will try to defend, but which the Trump Admin might work to give way. See Zero Hedge (HERE).
◄$$$ GOLD & SILVER SURVIVED THE RECENT BEATING WITH A SUCCESSFUL RETEST… THEIR MOVING AVERAGES PROVIDED STRONG SUPPORT… ANOTHER TEST FLIGHT UPWARD WILL COME SOON… THE GOLD CHART IS EXTREMELY POSITIVE AND BULLISH, WITH AN UPWARD BIASED REVERSAL PATTERN IN PROGRESS. $$$
Notice the extremely auspicious bullish Head & Shoulders reversal pattern. It is not the garden variety H&S reversal, but one with a strong positive bias in the upward tilt. The big challenge is at the 1225 level, which will be defended by Wall Street banks. The opposition is from the Trump Admin, which is trying to pull down the USDollar index. If successful, Trump will (with hidden motive) lift the Gold price. Trump might regard gold as the weapon to use against the most vile and corrupt camp within the banking sector. The Gold price and chart has seen a very positive retest which stalled at 1200, another extremely promising signal. The weekly moving averages are giving strong support. If the 20-wk MA crosses above the 50-wk MA, a huge technical signal will be given. Despite the pain and anguish from the selloff, more like heavy suppression for the umpteenth time, the chart is very positive and bullish. In the springtime months, the gold price should make an assault on the 1300 level. Be sure to know that heavy upside resistance exists and is ready to obstruct the movement from 1250 to 1350. A battle royal cometh.
## MACRO ECONOMY AS DISASTER ZONE
◄$$$ US-GOVERNMENT REVENUES SUFFERED THEIR BIGGEST DROP SINCE THE FINANCIAL CRISIS… TAX RECEIPTS ARE WAY DOWN IN FEBRUARY, JUST LIKE LAST YEAR… THE TREND IS WORSE THIS YEAR, FOLLOWING THE $1.2 TRILLION USGOVT DEFICIT IN FISCAL 2016… SIMPLE BASIC EVIDENCE OF A WORSENING RECESSION, WHICH THE USFED IS BLIND TO SEE. $$$
The recent USGovt monthly budget statement was disappointing, with a steep decline in receipts. Contrast to the total rubbish exiting Fed Chair Yellen’s mouth. In February the USTreasury brought in total receipts of $172 billion, versus outlays (federal spending) of $364 billion, resulting in a deficit of $192 billion. The monthly deficit is in line with last year's $192.6 billion deficit for the same month. For the fiscal year through end February, the total US budget deficit was $349 billion, virtually identical to the $351 billion deficit over the same period in 2016 and set to keep rising this year and for the foreseeable future. Add the rest of the real items, removing the fantasy, eliminating the offsets, to arrive at the $1.2 trillion annual deficit. There is the stated deficit and then there is the real actual deficit. It is amazing how the USGovt spouts nonsense about sub-$500 billion deficits when they are over $1 trillion every year for the last seven years. Many security and military items are not counted in the budget deficit.
Something very troublesome emerges when looking at the annual change in the rolling 12 month total of USGovt receipts, which are dominated by tax revenue. Exactly like last month, in the LTM (last 12 months) period ended February 28th, total federal revenues fell again. They are tracked as government receipts on the official USTreasury statement, at the amount of $3.275 trillion. This amount was 1.1% lower than the $3.31 trillion reported one year ago, and is the third consecutive month of annual receipt declines. This was the biggest drop since the summer of 2008. At the same time, government spending rose 3.8% without interruption. The system is broken, yet the USFed cannot read this data effectively. It screams recession!
As the chart shows, every time since 1970 when government receipts have turned negative on an annual basis, the USEconomy moved into a officially recognized recession. Note the indication, as the last time government receipts turned negative was in July of 2008. In two months the Lehman failure occurred. History is very likely to repeat itself with a bigger financial upheaval and crisis.
One contributing factor to the big decline comes from collapse in receipts due to a double digit percentage plunge in corporate income tax. Corporate earnings are a wrecking zone, augmented by one-time beneficial charges to paint the pig. While the public is told that earnings per share are rising, at least for tax scheme purposes, corporate America is in a recession. The accounting practices are loaded with gimmicks. The more important indicator of overall US economic health, and biggest contributor to government revenue, is individual income taxes. As of February, the year to date figure was $611 billion. It is running fractionally higher than the same period a year ago, but still in decline. See Zero Hedge (HERE).
◄$$$ THS USECONOMY IS IN BAD SHAPE, WITH LOAN GROWTH COLLAPSING TO A FIVE-MONTH LOW… THE USECONOMY IS A MACHINE POWERED BY AMPLIFIED DEBT FLOW… THE RECESSION IS SOON TO INTENSIFY… COMMERCIAL & INDUSTRIAL LOAN GROWTH MIGHT TURN NEGATIVE, WHICH WOULD USHER IN A MUCH MORE VICIOUS RECESSION… THE USFED MIGHT SOON HAVE TO REVERSE COURSE ON RATE HIKES. $$$
Put aside the silly official economic data and the meaningless soft sentiment data and the doctored labor market data and the absurd price inflation data, all muttered by the clowns at the USFed and chief buffon Yellen. The overall USEconomy is not humming along. It will be smacked by the lunatic USFed rate hike. One area of pertinent concern has emerged in a sudden collapse in loan growth in general. The all important Commercial & Industrial (C&I) Loan segment has gone into steep decline over the last few months, but still positive (as in deceleration), attracting negative attention. Even the Wall Street Journal recently called it an ominous economic signal, but with a knucklehead propaganda statement. The WSJ actually blamed the newfound policy under Trump for the collapse in growth, citing uncertainty. It was more like fascist corruption and heretical monetary policy, bank policy, and war policy under the Obama Admin that was responsible in a carry-over effect. The ugly trend began four months ago. To be sure, some uncertainty lingers during a transition to remove unprecedented bank center corruption and destructive monetary policies. Fear of trade war is a real concern though.
Consider some hard data. Total loans and leases by US commercial banks are currently rising at an annual pace of about 4.6%, based on weekly Fed data. The level is down from a 6.4% pace for all last year, whereas peak rates were near 8% in mid-2016. This is the slowest pace of debt creation since the spring of 2014. Production of debt is essential to the USEconomy, since upside down. The deceleration has been broad-based across business, real estate, and consumer lending. The once prestigious WSJ noted, the downtrend is at odds with the idea of a stronger economy and rising sentiment. The damage is seen in the critical C&I loan category, which grew at a pace of 10% in the first half of 2016. It has suddenly and unexpectedly tumbled to just 4.0% as of the latest reported week, cut in half from the 7% growth notched at the start of the year this January. What is currently seen is the lowest pace of loan growth since July of 2011. Look to one source of debt slowdown in the big drop in C&I loans. It is the relentless grind lower in auto loans, which are likewise growing at a pace that is half what it was as recently as last September.
Two potential ideas have been put forth to explain the sharp slowdown. According to Barclays analyst Jason Goldberg, it is possible that companies have shifted from the commercial loan source to the bond market, and are selling more bonds to lock in cheap financing before rates rise. They thereby are not putting assets at risk with issuing unsecured debt. Any commercial loan requires posted collateral, put at risk. In moving to bigger bond exposure, the companies would be shifting risk to the bondholder. To be sure, corporate debt issuance in January soared by 43% from a year earlier. However the number might be misleading. It comes from a low base a year ago, when global markets were in turmoil.
The second troubling explanation is also possible. Either political uncertainty is causing companies and banks to postpone big decisions until the outlook for trade and tax policy is clearer, or else consumer demand for loans has plunged in the underlying economy, forcing a sharp slowing in loan demand. The lending slowdown began to appear before the election last year, at a time when the bond yields registered an increase. Any sharp pullback in credit would result in a big drag on the USEconomy. The blame is not Trump policy but rising bond yields, which began in the middle of 2016. Read bond market cracks. Any additional future USFed rate hikes will put further pressure on loan growth. In the current trend continues, C&I loan growth may turn negative on a year over year basis, like within a few months. Such would be a depression signal. The USFed might strangely and perversely be compelled to reverse course on its rate hikes. They appear more as sabotage than responsible policy. See Zero Hedge (HERE).
◄$$$ US TRADE DEFICIT WAS MASSIVE IN JANUARY AND GETTING WORSE, WHICH WILL SUBTRACT FROM GDP… THE RECORD $550BN TRADE DEFICIT LAST YEAR WILL EASILY BE SURPASSED… THE TRADE GAP WIDENED WITH CHINA BUT REDUCED SUBSTANTIALLY WITH THE EUROPEAN UNION. $$$
The goods & services deficit in the United States widened to $48.5 billion in January of 2017 from a $44.3 billion gap a month earlier. It is the highest monthly deficit since March of 2012. It was marked by imports jumping 2.3% due to consumer goods and crude oil, while exports rose at a 0.6% more slowly. Balance of Trade is a plague upon the USEconomy with no easy resolution. Its huge size makes an asset-backed currency very problematic.
Total January exports rose to USD 192.1 billion, the highest since December of 2014 and following a 2.7% jump in December. Industrial supplies & materials increased $2.1 billion; other petroleum products went up $0.7 billion; crude oil rose $0.5 billion; automotive vehicles, parts, and engines increased $1.3 billion; and passenger cars increased $0.9 billion. In contrast, capital goods decreased $1.9 billion and civilian aircraft declined $0.6 billion. Exports of services decreased to $64.1 billion in January. The hidden item repeats almost every month, a third thumb to the watchful eye. The US exports gold in various forms to creditor nations, and stuffs it in the industrial supplies category. They hope we analysts do not notice, and most do not. In previous years, the same category was 20 times smaller as a line item. The US has very little industrial supply capacity with which to export. The nation is gutted of its industrial capability. Raw sales fell for China by 13.4 percent, but fell to Japan by 11.2 percent, and fell to OPEC by 43.2 percent.
Total imports jumped to $240.6 billion, also the highest since December of 2014 and following a 1.6 percent rise in the previous month. Consumer goods increased $2.4 billion; cell phones and other household goods rose by $1 billion; crude oil rose by $1.7 billion. Imports of services rose slightly to $42.9 billion. Raw purchases rose from China by 5.1 percent, rose from Canada by 4.2 percent, but they fell from Japan by 13.9 percent, fell from Brazil by 9.5 percent, fell from the EU by 6.7 percent, and fell from OPEC by 2.2 percent.
The US trade deficit widened with China (-$31.3 billion from -$27.8 billion in December). It widened with Canada (-$3.6 billion from -$2.2 billion). In contrast, the trade deficit was reduced with Mexico (-$3.9 billion from -4.4 $billion), reduced with Japan (-$5.5 billion from -$6.5 billion), and reduced in a big way with the EU (-$1.5 billion from -$12.3 billion). See Trading Economics (HERE).
◄$$$ A WRINKLE IN THE USECONOMIC RECESSION APPEARS WITH THE CHALLENGER GRAY & CHRISTMAS LARGE EMPLOYER JOB CUT DATA… THE TREND HAS REDUCED ON JOB CUTS, DOWN IN THE ANNOUNCED CUTS. $$$
Perhaps in Corporate America, there is not much left to cut on the worker rolls. Perhaps the employees are already near bare bone, since so many recent cuts with urgency. After all, a skinny guy cannot shed much more weight. On a trend basis, smoothing over six months, the current cuts are running almost 30% below last year. Besides, the hidden ugly trend extending from the Obama Admin years is that workers are cut, only to be forced to train the new hires of the H-1B type from India. If they object, the exiting workers lose severance benefits. How cruel! Change we can believe in! Good riddance, Obama!
## MICRO ECONOMY AS DISASTER ZONE
◄$$$ THE USECONOMY FELL OFF A CLIFF AROUND TWO MONTHS AGO… EVIDENCE ABOUNDS ACROSS NUMEROUS SECTORS… THE USFED HAS ACTIVELY BEGUN ACTIVE SABOTAGE WITH A RATE HIKE IN THE FACE OF OBVIOUS ACCELERATION IN THE RECESSION… THE USFED IS SCUTTLING THE USECONOMY. $$$
Dave Kranzler is claiming that by every real measure, the USEconomy fell off a cliff a couple months ago. The Jackass is in full agreement. The evidence is overwhelming and broadbased. It is seen in retail, car sales, restaurants, loan creation, and every national measure of supply chain movement like truck and rail freight, even electricity usage. Then observe the USFed, which claims the economy is improving. So therefore a rate hike should be considered as pure SABOTAGE by the Deep State led by the central banker cabal. See YouTube video (HERE).
◄$$$ SEARS FACES BANKRUPTCY WITH EXTREME RISK OF DEBT DEFAULT… ONCE THE WORLD’S LARGEST RETAIL CHAIN CANNOT RESTRUCTURE ITS DEBT… THE COMPANY OFFICERS ADMITTED ITS FAILURE IS NEAR… ITS STOCK HAS SUFFERED A CALAMITOUS DECLINE IN THE LAST TWO MONTHS… TIME IS ITS ENEMY. $$$
Sears/KMart serves the anchor for hundreds of dying malls across the United States. The jig is up on extensions of its debt, during the credit crisis which has newly emerged since December. Developer bankruptcies are the new trend. REITs have been crashing as the smart money tries to escape the coming widespread wreckage. Sears stock shares have plummeted in recent weeks after the company admitted substantial doubt about its future viability. Their survival seems more doubtful than ever. The death event could happen in the next few months, or sooner. They seemed dead meat to the Jackass three years ago. Sears is an icon, the 131-year-old department store chain, and part of American history. Its acquisition by shark Eddy Lampert resulted in nothing but ruin, as he picked a rotten fruit indeed. His plan was to make usage of the huge list of properties, but each turned into a sinkhole. They just pledged a couple months back to reduce its debt burden and to cut annual expenses by at least $1 billion. The stock chart shows a whopping 60% decline just since early February.
The company deserves credit for honesty. The company admitted “Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern.” The rest of their statement lacked roots in reality with a more aggressive recovery plan. CEO Lampert, also the company’s biggest investor, aims to reduce debt and pension obligations by $1.5 billion. All new funds are being quickly burned up. The stock market heard the death cry, and investors ran for the hills.
The CEO has helped keep the ailing retailer afloat by offering more than $1 billion of assistance, including a $500 million loan facility announced in January. As part of its latest recovery plan, Sears has closed stores, sold real estate, and offloaded businesses. Earlier this month, the department store chain completed the sale of its Craftsman tool brand to Stanley Black & Decker Inc for about $900 million. Sears, which also operates the KMart chain, has reviewed its DieHard batteries and Kenmore appliance brands for potential sales. The dying company is selling its best assets, a classic case of assured death in the lethal pathway traveled before by many dead companies. The worst assets cannot be sold, and exist as the company’s rotten core. Their efforts to survive will not succeed, since all their desperate actions worsen their fundamentals during a fierce USEconomic recession, coupled with the e-commerce movement. Sears is flailing on stage. See Burning Platform (HERE).
◄$$$ US-BASED SUBPRIME CAR LOAN LOSSES HAVE CREATED A NEW CRISIS… THE DELINQUENCY RATE ON LOANS IS RISING… THE RECOVERY RATE FOR LENDERS UPON REPOSSESSION IS UNDER 35%, ALMOST AN HISTORIC LOW... THE CAR SUPPLY IS FLOODED, FROM GENEROUS LENDING PLUS LEASED CAR EXPIRATIONS… LOAN TERMS OF SEVEN YEARS IS A GUARANTEE FOR SECTOR IMPLOSION… THEY SUCCEEDED IN MOVING INVENTORY BUT KILLED THEIR SECTOR. $$$
The US-based subprime lenders are losing money on car loans at the highest rate since the aftermath of the 2008 financial crisis. More borrowers have fallen behind on payments, according to S&P Global Ratings. Losses for the loans were 9.1% on an annualized basis in January, a continued decline from 8.5% in December 2016 sequentially, and bigger damage from 7.9% in the January last year. The ratings agency based its findings on car loans bundled into bonds. The delinquency rate is the worst in seven years. The lender losses are rising in part because when lenders repossess cars from defaulted borrowers and sell them, they recover less money in sales. Also, a flood of used cars has hit the market after manufacturers offered generous lease terms. They have killed their own sector, mainly from insane lending just like with housing a decade ago. Recoveries on subprime loans fell to 34.8% in January, the worst since early 2010. With losses increasing, investors in bonds backed by car loans are demanding higher returns, as reflected by yields, on their securities. Hence bond losses in principal values. In turn, borrowing costs increase for finance companies, with those that depend on asset-backed securities the most getting hit hardest. The priority to keep the car volume moving contributed to the reckless lending terms, which has killed the sector. Witness a repeat of the housing sector destruction, with similarities galore on the credit side. The United States learns nothing, just repeats, rinses, and repeats again.
American Credit Acceptance, one of nearly two dozen subprime lenders to securitize their loans with bonds in recent years, had one of the highest cost of funds last year with yields on its securitized bonds as high as 4.6%, compared to the two-year swap rate benchmark near the 1.0% level, according to a report from Wells Fargo. The ACA firm relies heavily on asset-backed securities for funding. S&P raised its net loan loss forecasts for three lenders, including California Republic Bancorp, TCF Financial Corp, and First Investors Financial Services. The breakdown is occurring in real time across the entire sector.
The practice of granting longer-term loans to finance the purchase of new and used cars has deeply damaged the lender recoveries by putting borrowers underwater faster, and leaving lenders with an asset worth far less after repossession. Negative equity on car loans has been the norm in the first three months, utterly insane. The underwriting of car loans on its face seems suicidal, equally stupid as with subprime home loans with no verified income (aka Liar Loans) from 2002 to 2007. The car loans are often made with schedules of 84 months, whereas in the past the standard was four to five years. In fact, the past norm was formerly five years only on a new car, and three to four years on a used car. In January, 5.09% of subprime car loans were at least 60 days delinquent, up from 5.06% in December, not much of an increase. One year ago in January 2016, the figure was 4.66 percent. See Bloomberg (HERE).
Unfortunately, the massive amount of debt overhanging the USEconomy has put far too much leverage on the public's ability to continue purchasing consumer goods and services. While the market has become clever at selling cars, by offering lower interest rates and extended loan payouts, it is now resorting to leasing vehicles at ultra-low monthly payment plans, just to move them out of inventory. Leasing automobiles at monthly rates that are uneconomic for the auto industry in the long run, only buys time. Most car sector sales and lending simply allows the great financial Ponzi scheme to continue a little longer. When adding up all the data, the astute observer concludes that the USEconomy has already gone into an accelerated decline.
◄$$$ ALLY FINANCIAL SLASHED GUIDANCE AS USED CAR PRICES SUFFERED THE WORST DECLINE IN 20 YEARS… ALLY IS TYPICAL OF THE CAR LENDING SECTOR SHOWING DISTRESS. $$$
The entire North American car market is a massive debt fueled bubble on the verge of imminent collapse. The evidence is overwhelming, and hardly new. The FY2017 earnings warning from Ally Financial (restructured from GM Financial) offered a stinging wakeup call to investors in the car sector. CEO Chris Hanley tried to make the statement in line with 15% earnings growth, but it came out as perceived 5% growth. The investment community sold off the stock right away. The math-challenged stock market showed signs of intelligence by selling the Ally stock post haste, while no sign of USFed support was seen. The rest of the car industry must brace for more shocks, with their suspensions broken and shock absorbers worn. The road ends up in a deep chasm.
The reasoning behind the reduced guidance in Ally earnings was in no way company specific and was instead attributed to all the warning signs evident for months now. The harsh guidance includes sinking used car prices courtesy of a flood of lease returns, spiking consumer delinquencies, and rising supplier incentives. The results align perfectly with the data presented in the latest JDPower NADA used car price guide. It recently revealed that wholesale prices of used vehicles dropped 1.6% sequentially in February 2017, marking the biggest February decline in at least 20 years. That is a single month decline. See Burning Platform (HERE). Note in the graph, used car wholesale prices are down hard.
◄$$$ THE RETAIL STORE SHUTDOWN LIST IS LONG… OVER 19 US-BASED RETAILERS ARE ON THE BRINK OF BANKRUPTCY WITH 13,216 STORES TO CLOSE, DRAGGED DOWN BY THE BURDEN OF $3.7 BILLION IN DEBT… EXPECT SUPPLY SHORTAGE IN THE USECONOMY TO ARRIVE VIA SHUTDOWNS MORE THAN FROM ANY CURRENCY CRISIS AS STORE LOCATION CAPACITY IS FALLING FAST… THE GREAT CONSUMER ECONOMY WAS ON THE WRONG PATH, SINCE IT AVOIDED BUSINESS INVESTMENT… THE ENGORGED FAT PIG IS CROAKING, BY EATING ITSELF TO DEATH. $$$
These 19 retailers above, plus Sears and J-Crew, have more than $3.7 billion of debt maturing in the next five years, with about 30% of that total due by the end of 2018. If all of the retailers listed were to shutter their doors, the result would be shutdowns of more than 14,450 stores. It would leave hundreds of thousands of employees without jobs. Bear in mind these are not productive jobs, but consumer agent posts in wrong-footed economic strategy to move imported goods. The sector is so bad off that Radio Shack announced its second bankruptcy in two years. These lists are not comprehensive, and must be revised on a weekly basis due to the fast collapse. The shutdowns in 2017 are impressive. They are announced to total 3500 stores, led by Payless with 1000 stores, Radio Shack with 552 stores, The Limited with 250 stores, and Family Christian with 240 stores. See Business Insider (HERE).
Add Staples to the list, the Jackass former employer in the late 1990 decade. Staples announced it will close 70 more stores amidst losses. They have closed over 350 stores in the last five years, including 48 last year. During the Jackass tenure from 1996 to 2000 during its heyday, the store count rose from around 300 to 1100. Move to today. The office supply store reported a $548 million loss in 4Q2016 and a 3% dip in sales in the fiscal fourth quarter ending January. It has 1600 stores remaining as open. See LA Tribune KTLA (HERE).
Aside from sponsored ownership (like with private equity firms), these apparel companies suffer from stressed liquidity, weak quantitative credit profiles, overly discounted merchandise, a decrease in traffic, challenged competitive positions, and erratic management structures. They are not competing well with e-commerce either, the fast moving trend. It is doubtful that these companies will be able to reverse the destruction that has occurred. Based on the growing trend of retail bankruptcy and mall abandonment, it seems highly unlikely for their recovery. The US retail industry is repeating the bust seen in housing & mortgage finance in 2007 in parallel fashion. See Before Its News (HERE).
◄$$$ COLLAPSING PENSIONS WILL CONTRIBUTE TOWARD THE NEXT US-BASED FINANCIAL CRISIS… THE EFFECT WILL BE MORE TO CREATE POVERTY MORE THAN TO CAUSE ECONOMIC FRACTURES, BUT WITH RIPPLE EFFECTS SINCE LESS SPENDING… CASH-STRAPPED PENSION FUNDS COULD LEAVE MILLIONS OF AMERICANS HIGH AND DRY IN THE VERY NEAR FUTURE… THE SOLUTIONS OFFERED WILL LOWER PAYOUTS, INCREASE PAYINS, AND RAISE ELIGIBLE AGES… THE OFFICIAL REACTIONS ARE ALL INADEQUATE AND SOMEWHAT COMICAL... BUT MOST FUNDS WILL FAIL IN A FEW YEARS ANYWAY, EVEN IF REFORMS ARE MADE. $$$
Apart from all the clapptrap on USEconomic sustainability and tepid growth projections, all of which are silly nonsensical and full of distortions, a dangerous outlook regarding the demise of Social Security has a twin facade. A pending pension crisis could leave millions of Americans high and dry in the very near future. The Hat Trick Letter has regularly featured the pension industry in the United States as both a disaster and a future time bomb. Another two examples are offered with the South Carolina and New Jersey pensions, both in dire straits. Most city and state pensions must cut payouts, increase contributions, and extend the qualification age, if they expect to avoid running completely dry in just a few years. Almost none are sustainable. If in deep distress now, they will likely fail anyway with an extension of the time granted before the reaper arrives.
The South Carolina pension fund is not alone in being in dire condition. At the nationwide level, a $6 trillion public pension hole must be rectified or else many millions of citizens will face deep poverty. The Michigan Public School Employees Retirement System pension fund is $26.7 billion underfunded. Typical to many states, one third of the school payroll expenses in Michigan go to retirees, not to classroom teachers. The Dallas pension fiasco continues to present a horror story in Texas. Their malinvestments and significant fraud have resulted in huge city property tax increases which are certain to reduce home values.
It is not just government employee pensions at risk, either. The USCongress is debating aid for roughly 100,000 coal miners who face serious cuts in pension payments and health coverage. Their pension fund has a nearly $6 billion shortfall for the United Mine Workers of America. Also, cited a few times in previous HTLetters, the Teamsters just got permission to slash benefits by as much as 30% for some 400,000 participants because its Central States plan is so deep in the hole. Its managers wanted a 50% benefit cut. It faces annihilation in just a few short years. The smaller payout cut is pleasing today but assures the fund failure more quickly.
Consider the South Carolina Govt pension plan, which covers roughly 550,000 people. One out of nine state residents has household net debt. The state has a staggering $24.1 billion in the red on its pension fund balance sheet. Workers have been forced to provide more support, with five hikes in their pension plan contributions since 2012. They are being exhausted. Most now contribute 8.66% of their paycheck, compared to 6.5% before the changes. At the same time, the pension fund has been chasing more stocks and alternative investments instead of relying on stable investments. In many cases back in 2007-2008, such methods resulted in big mortgage bond losses, called chasing risky yield.
No solution exists really, since the USEconomy continues to contract with inadequate industry, still with reliance upon consumption and not investment. Pension reform as with Social Security reform is most equitably approached as a combination of benefit cuts, increased contributions, and higher eligibility ages. But since those solutions tend to offend all stakeholders, they tend to be avoided by all legislators. See MarketWatch (HERE) and Shit Hit The Fan Plan (HERE). Insurance companies are desperate, as their bonds are collapsing. They tend to share the portfolio basis for pensions.
New Jersey pension fund will cut benefits by 50% to ensure its viability lasts a few years longer. The garden state has dug a $66 billion pension hole. It is actively pursuing patches that include diverting income from the state lottery. The tax on the poor (lottery) is no solution at all. They must rebuild the economy, a lost American art due to bad economics training and elite sabotage. Standard & Poors is on the scene to do a credit rating analysis for the state of New Jersey. The statewide pension underfunded liability would be much higher except for ridiculous rosy assumptions made in setting its return on assets at an artificially high at a 7.65% rate. Every year the hole grows bigger since the nut growth is nowhere near 7%. Like with the mortgage bond ratings in 2006, New Jersey still maintains an A- debt rating but with negative outlook, when it is pure junk, shit punk. S&P actually included a comment in its analysis, that NJ's pension problems will not bankrupt the state until sometime down the road, in their words. How absurd and laughable.
Review the state response to the pension nightmare. Governor Christie's budget proposal follows his multi-year plan to gradually ramp up to full funding of the state pension actuarially determined contributions (ADC) over 10 years. New Jersey would fund only 50% of the ADC in fiscal 2018, after funding 40% in fiscal 2017. It steadily falls behind since it also contains absurd nut growth. New Jersey comes closer to the day when it must confront its very significant retirement obligations. The governor's successor (bound by term limit) will face tough funding decisions as early as fiscal 2019. The planned 50% ADC contribution in fiscal 2018 in itself represents a record payment of $2.5 billion, boosted in part by the state's decision to lower the assumed rate of return to a somewhat less aggressive 7.65% from 7.90% rate. Try 1% or 2% in nut growth. Both ends show reluctance to deal with reality, worthy of derision. The hamstrung S&P was encouraged by the governor’s recommendation, even though it was not a part of his official budget and would likely face stiff opposition, to set aside revenues from the State lottery enterprise system to fund New Jersey's pension ponzi for a period of 30 years. Such is movement on furniture on the USS Titanic deck, using ocean water to clean the decks as it sinks in the cold watery depths. See Zero Hedge (HERE).
◄$$$ RESTAURANTS HAVE TUMBLED BADLY AND THREATEN TO DECLINE WORSE THAN IN 2015… THEY REPRESENT A DISCRETIONARY SPENDING TYPE, INDICATIVE OF ECONOMIC DISTRESS. $$$
Last month, the TDn2K report by BlackBox Intelligence on recent restaurant industry activity reported flat same store sales growth (comps) in January. It represented a welcome break from the ten consecutive months of negative sales growth experienced by the industry through the end of last year. That finding was refuted by a recent Reuters/Ipsos opinion poll where one third of the 4200 adult respondents said they were eating in restaurants less often than three months ago. The poll was conducted in the second half of January. Of them, 62% cited cost as the primary reason.
The modest recovery was also denied by the most recent Restaurant Performance Index report by the National Restaurant Assn, which commented on soft sales and poor traffic in January. Their Current Situation Index which tracks same store sales, traffic, labor, and capital expenditures stood at 98.6 in January, the fourth consecutive month of contraction. It was equal to the worst print in four years. More concerning was the disclosure by restaurant operators, 50% of whom said same store sales declined year-over-year, the second highest reading in recent history. The group in decline is growing fast.
The situation has rarely been more gloomy. It completely contradicts the favorable picture of consumer spending painted, using various other macroeconomic data points such as consumer spending. Most economic statistics are lies, forged from bogus adjustments, deliberate omissions, and incorrect assumptions. The restaurant data is not good. Same store sales fell 3.7% in February, with traffic in a 5.0% decline. Unfortunately, January’s improved results were not a turning point in declining sector performance. Trends are hard to discern with weather, holiday shifts, and winter breaks that offer some distortions. Therefore the better accuracy is achieved in looking at intermediate trends. A macro view leaves little room for optimism. Same store sales averaged down 2.7% for the last three months. February’s results were among the weakest in the last four years. The data by TDn2K through The Restaurant Industry Snapshot, is based on weekly sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue. See Zero Hedge (HERE).
◄$$$ MORE THAN ONE MILLION STUDENT LOAN BORROWERS WENT INTO DEFAULT LAST YEAR… THE DEFAULT RATE ROSE BY 17% IN YEAR 2016… DEBT VOLUME HAS ALSO RISEN 17% SINCE 2013 TO $1.3 TRILLION… THE AVERAGE LOAN BALANCE IS AROUND $30,000… THE ANGER GROWS WHILE THE ANGST FESTERS. $$$
There are 42.4 million Americans with sponsored student loans. In year 2016, around 1.1 million students entered default on their Direct Loans, a type of federal student loan, the same as the previous year. But several types of student loans exist in the academic universe. Rohit Chopra, a senior fellow at the Consumer Federal of America, conducted the analysis using a network of more than 250 nonprofit consumer groups. Overall, there were 4.2 million borrowers in default in 2016, up 17% from 3.6 million the year before. It means 3.1 million continued to run in default mode, a horrendous figure. Their job prospects are miserable generally. The USEconomy is not in sluggish recovery, but rather a vicious multi-year recession. Around 70% of new graduates do not find work in their first year out of school. Chopra let it be known that the CFA analysis under-estimates the number of federal student loan borrowers in default on federal student loans, since it only counts the Direct Loan type. Chopra mentioned that most of the new 1.1 million in default fell into their status from loan servicer failure, an immediate consequence. Their lending banks and financial firms failed.
Many student are struggling badly, on the edge of default. The total amount owed by federal student loan borrowers has grown 16.5% since 2013 from $26,300 to $30,650 per student. Many balances are building, if payments do not cover the interest on the accounts. One cited solution is for some employers to assist in making contributions toward employee student loans, in particular the burgeoning industry of tech companies.
The policy makers, higher education officials, and student loan borrowers wait to learn how the Trump Admin will approach the nation’s $1.3 trillion student loan challenge. The consequences of defaulting on a federal student loan are severe for borrowers. They can have their wages, Social Security checks, and tax refunds garnished. The government garnished more than $160 million in wages over unpaid student debt in last quarter alone. It sounds like a lot, but it is actually 0.0123 of 1% of the total $1.3T volume. Some colleges and universities are at risk for a crackdown for allegedly luring borrowing to take unsustainable debt loads, or to rack up debt for degrees of questionable outcomes, like philosophy, fine arts, paleontology (study of dinosaurs), basket weaving, and French.
Borrowers with federal student loans can enroll in programs that adjust the payments, like as a portion of income. Sadly the efforts rarely are seen as successful, for the time and effort devoted. That get all screwed up, as interest accumulates. The national student body is growing increasingly angry over bailouts to bankers, but not to the masses. The big remaining question is whether the Trump Admin will continue with a servicer contracting process launched by the Obama Admin last year. It is aimed at providing incentives to servicers for to place student borrowers in the plan best suited to their needs. Chopra said, “That is the trillion dollar question. What will the Education Department do to stop this title wave of defaults? Will they focus their energies on making the student loan industry richer? Or will they do what is the best interest of borrowers and the broader economy?” See MarketWatch (HERE) and Washington Post (HERE).
Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, UK Independent, Bloomberg, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and many more.