From bill Holter at Le Metropole Cafe . . .
We are getting close
I believe the world's financial system is crossing a very important threshold as I write this. The world is now asking some very pertinent questions and questioning some very long held beliefs. For example, Germany has recently had more failed auctions, China is demanding "assurances" that the Dollar will be supported, several world leaders and organizations have identified the current world economy as in "depression", and here in the U.S. we look forward to more unfunded bailouts.
All of this revolves around one central flaw that has been obvious to anyone who has ever run, or been on a budget. I am not talking about the obvious fact that you cannot spend more than you make, nor borrow forever. As simple as it may seem, no one nor no entity [government] can borrow more money than there is in existence. This is exactly what the U.S. is proposing to do, it cannot be done mathematically but this is the plan. We used to hear about the possibility of the U.S. "crowding out" other borrowers from the credit markets, we are now far beyond this.
This past week Germany had its second failed auction of the year, with the proposed debt appetite in the U.S., it is now only a matter of time until we experience the same. When the U.S. has its first failed auction which I can already can smell, nothing will function, world finance will stop dead in its tracks. The current situation has been blamed on the "credit crunch", as I see it, by trying to borrow its way out of the credit crunch the U.S. is doubling down its bet and actually exposing its own bankruptcy.
Hilary Clinton is expected to go to China later this week to discuss funding and finance for the Treasury. Good luck! China wants assurances that the U.S. will support the Dollar? Again, lots of luck! Every trick in the book has already been thrown at supporting the Dollar to date, any assurances given will have no more value than the Dollar. The only question now is "when" does China pull the plug, they have to sooner or later because they simply don't have it to lend it. I believe it is now dawning on the rest of the world that the U.S. needs to borrow more than the sum total amount of the world's capital pool, impossible.
So the world is figuring out the math, global debt auctions have been touch and go, assets are continuing to deflate and the "D" word is now making the rounds, interesting to say the least. However, as reported by Chris Powell of Gata, and followed up on by Jim Sinclair, I think the most interesting chapter is about to open. "Where's the Gold" will be more riveting than anything we've seen so far, this chapter will in my opinion dwarf all other past frauds. Doing the simple math of how many ounces the Gold ETF's say they have, has some people scratching their heads. I would say "and rightly so" but it is not. The amount of Gold claimed to be held is certainly a fantasy because it had to come from somewhere and no exchange is saying that their inventories have depleted by even 1 ounce. Where did the supply come from? Yes, it had to come from somewhere or it is just fictitious accounting? In all likelihood all this "supposed bullion" is only paper and will burn with the rest of the system.
Common sense says the ETF's do not have the metal they claim to have, neither do the Central Banks. This little inconvenience will erupt into the scandal of all scandals. Once the ETF's are found out, next in line will be Central Banks and in particular the U.S. Treasury. I think that very soon pressure will rise for the U.S. to come clean about it's Gold reserves. I think we may never know for sure but when the stench of rotten fish begins to spread and the world starts asking for verification of reserves, the greatest scandal and Treasury looting in history will be front and center.
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The above was written over the weekend, this morning looks like a panic brewing. If Dow 7,500+-, and S+P 780+- breaks here, we will probably see a cascade downward. Make sure your pantry is stocked as the banks in Europe are imploding and one day soon we will wake to a closed market and banking system. I think we will see numerous gaps down when they are able to open markets, very similar to Russia over the past 6-8 months
Regards, Bill H.