Thursday, October 17, 2019

Trade Isn’t China’s Only Worry

by Charles Hugh Smith, Of Two Minds:

Trade is only one manifestation of much deeper economic insecurities and imbalances.

China’s enormous successes–raising hundreds of millions out of poverty, landing a rover on the dark side of the moon, etc.–are well known. Less appreciated is China’s increasing vulnerability to financial instability arising from asymmetries that cannot be resolved by tweaking trade policies.

As this article explains, The China Story That Is Far Bigger Than Apple, China’s trade balance–trade surpluses for decades– is close to slipping into trade deficits.

At the same time, China’s once-mighty pool of savings has diminished as consumption has risen. As a result, China now needs foreign investment more than it did in the previous era.

Nickel Prices Will Rise Even Without The Electrical Vehicle Revolution | Martin Turenne & Brian Leni

from Mining Stock Education:

At the 2018 Mines and Money Toronto conference, Martin Turenne (CEO, FPX Nickel) and Brian Leni (Junior Stock Review) shared why they are both very bullish on nickel as a commodity.  This interview is a must-listen for investors wanting to understand the fundamental case for a rising nickel price.  Martin and Brian also discuss the investment value proposition of FPX Nickel (TSX-V: FPX) giving investors an introduction to the company.

EU to Switch From Dollar to Euro in Payments for Iranian Oil Supplies – Source

from Sputnik News:

MOSCOW (Sputnik) – The European Union is planning to switch from US dollars to euros when paying for the oil supplies from Iran, a diplomatic source told Sputnik.

On Tuesday, EU foreign policy chief Federica Mogherini said that after talks with the foreign ministers of the United Kingdom, France, Germany, and Iran in Brussels that the sides had agreed to work out practical solutions in response to the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), known as the Iran nuclear deal, within the next few weeks. In particular, the European Union and Iran would maintain and deepen economic ties, including in the area of oil and gas supplies.

Gold Now Is Like Christmas Decorations in January – A Bargain

by Peter Schiff, Schiff Gold:

When I was a kid, my mom always went shopping on the day after Christmas. She wasn’t going out to spend her Christmas cash on some goody Santa failed to leave under the tree. She went out with the express purposes of buying Christmas cards, wrapping paper and decorations.

But why go out and buy Christmas items the day after Christmas? After all, you’re not going to need that stuff for about 11 months.

Well, if you’ve ever been out in the days after Christmas, you know why. Stores slash prices on everything relating to the holiday. It’s the perfect time to buy if you want to save a little money.

During the recent Precious Metals Summit in London,  Incrementum managing partner Ronald-Peter Stöferle said his wife is a devout after-Christmas sale shopper. And as Forbes contributor Frank Holmes tells it, we should look at gold today in the same way we look at Christmas items in January.

Here we are several days before Christmas, and demand for ornaments, lights and other decorations is red-hot, so be prepared to pay premium prices if you’re doing your shopping now. But mere hours after the Christmas presents have been unwrapped and Uncle Hank has fallen asleep on the couch with a glass of boozy eggnog, stores will begin slashing prices to get rid of inventory. Gold bullion and mining stocks are currently in the ‘January’ phase, so to speak, according to Stöferle.”

In other words, now is the time to buy gold!

You want to get into gold now – while most investors remain disinterested and prices are relatively flat. You don’t want to be out there trying to buy gold when the next crisis kicks off and everybody is bidding up the price. You want to be like my mom, who is sitting pretty right now wrapping presents in cheap paper she bought last January while everybody else is at the mall forking out full price for their wrapping supplies.

Peter Schiff made the same point during an interview Greg Hunter last month. He said the massive bubble the Fed has blown up is going to burst. We don’t know when that will happen, but we should prepare now.

How long can they keep the price of gold suppressed?  We will know when we get there.  At some point, the price is going to explode because there is real physical buying, and all that paper selling can’t camouflage that… People don’t trust fiat currencies – they don’t trust a dollar, euro, yen. They’re looking for an alternative, and believe me, the real alternative is gold. And more and more people are going to embrace it. And when they do, it’s going to overwhelm the central banks’ ability to suppress the price. In the meantime, enjoy the gift that they are giving. Because if you haven’t already bought your gold, whoever is selling it is doing you a favor. The fact that the price still doesn’t reflect the fundamentals means that it’s easier to accumulate gold now.”

Stöferle said he thinks a recession is on the horizon.

I think the odds are pretty high that a recession might be upon us sooner or later because we’re in this rate hike cycle, and as always the central banks are way behind the curve.”

Historically, 15 of the last 18 recessions happened right after a period of central bank tightening.

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Powell’s Legacy: Collapse, Civil War And Death

by Karl Denninger, Market Ticker:

Right along with him on the pedestal will be Donald J. Trump who has repeatedly “urged” The Fed to further pump asset bubbles and insane “monetary policy” that has not and cannot work.

The claim is that there has been “no — or very little — inflation.”  That’s only true if you exclude everything that has ramped in price, such as health insurance, car insurance, car prices, various assets and more.

But if you accept that “there has been no inflation” then the Fed policy has been an abject failure since it was supposed to produce inflation.

America’s “Debt Crisis Is Coming Soon”

by Mark O’Byrne, GoldCore:

– America’s “debt crisis is coming soon” warns economist Martin Feldstein
– To avoid economic distress, the government has to reduce future entitlement spending
– The most dangerous domestic problem facing America’s federal government is the rapid growth of its budget deficit and national debt

AMERICA: A Gigantic Clown Car Being Driven Into a Ditch – JH Kunstler

by James Howard Kunstler, Russia Insider:

“This homework assignment should be given to the Democratic members of congress, since they are otherwise preoccupied only with hunting for Russian gremlins and discovering new sexual abnormalities to protect and defend.”

Poor old Karl Marx, tortured by boils and phantoms, was right about one thing: History repeats itself, first as tragedy, second as farce. Thus, I give you the Roman Empire and now the United States of America. Rome surrendered to time and entropy. Our method is to drive a gigantic clown car into a ditch.

Is anyone out there interested in redemption? I have an idea for the political party out of power, the Democrats, sunk in its special Okefenokee Swamp of identity politics and Russia paranoia: make an effort to legislate the Citizens United calamity out of existence. Who knows, a handful of Republicans may be shamed into going along with it. For those of you who have been mentally vacationing on Mars with Elon Musk, Citizens United was a Supreme Court decision — Citizens United v. Federal Election Commission 558 U.S. 310 (2010) — which determined that corporations had the right, as hypothetical “persons,” to give as much money as they liked to political candidates.

 We've made important contributions to world culture
We’ve made important contributions to world culture

This “right” devolved from the First Amendment of the constitution, the 5-4 majority opinion said — giving money to political candidates and causes amounts to “freedom of speech.” The Citizens United ruling opened the door for unlimited election spending by corporations and enormous mischief in our national life. Then-President Obama — a constitutional law professor before his career in politics — complained bitterly about the opinion days later in his State of the Union address, saying that the court had “reversed a century of law to open the floodgates, including foreign corporations, to spend without limit in our elections.”

And for the next seven years he did absolutely nothing about it, nor did the Democratic Party majority in congress. Rather, they vacuumed in as much corporate campaign money as possible from every hokey political action committee (PAC) from sea to shining sea, especially in the 2016 presidential election starring Hillary “It’s My Turn” Clinton. It turned out to not be her turn in large part because the voters noticed the stench of corruption wafting off this toxic flow of corporate money, which Hillary was using to vastly outspend her billionaire opponent, troll that he was.

Of course, corporations have not always been what they are deemed to be today. They evolved with the increasingly complex activities of industrial economies. Along the way — in Great Britain first, actually — they were deemed to exist as the equivalent of legal persons, to establish that the liabilities of the company were separate and distinct from those of its owners. In the USA, forming a corporation usually required an act of legislation until the late 19th century. After that, they merely had to register with the states. Then congress had to sort out the additional problems of giant “trusts” and holding companies (hence, anti-trust laws, now generally ignored).

In short, the definition of what a corporation is and what it has a right to do is in a pretty constant state of change as economies evolve. And insofar as the current economy is sinking like the USS Titanic — and our republic as a mode of governance with it — surely the time has come to redefine in legislation the role and existential nature of a corporation in this polity. This homework assignment should be given to the Democratic members of congress, since they are otherwise preoccupied only with hunting for Russian gremlins and discovering new sexual abnormalities to protect and defend.

The crux of the argument is that corporations cannot be said to be entirely and altogether the equivalent of persons for all legal purposes. In law, corporations have duties, obligations, and responsibilities to their shareholders first, and only after that to the public interest or the common good, and only then by pretty strict legal prescription. It may be assumed that the interests of corporations and their shareholders are in opposition to, and in conflict with, the public interest. And insofar as elections are fundamentally matters of the public interest, corporations must be prohibited from efforts to influence the outcome of elections.

That’s your assignment Chuck Schumer, Nancy Pelosi, and the rest of the Democratic Party leadership. Get serious. Show a little initiative. Do something useful. Draw up some legislation.

Get behind something real that might make a difference in this decrepitating country.

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China’s new plans to back oil with gold emerged out of BRICS conference under Putin’s blueprint to end dollar hegemony

by Kenneth Schortgen, The Daily Economist:

Last weekend, officials from China’s Shanghai International Energy Exchange dropped a bombshell that the Asian power would soon be introducing a new oil contract that would be denominated in the Yuan currency, and convertible with gold should customers demand it.  However, new information out on Sept. 5 shows that this gambit was not unilaterally decided by China alone, but came out of a blueprint forged in part by Russia’s President Vladimir Putin during the recent BRICS conference.

And then, Putin delivers the clincher; “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.” 

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar. 

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold. 

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan. Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges. – Asia Times

So while President Trump and the Pentagon continue to play diplomatic ‘chicken’ over the potential threat of North Korea, they appear to be missing completely the covert destruction of dollar hegemony in almost the same exact fashion that the U.S. used 25 years ago to bring down the former Soviet Union…

Read More @

Peter Schiff: The World Will Drown in an Ocean of Inflation; Gold Is Going Ballistic

by Peter Schiff, Schiff Gold:

The gold market took a one-two punch on Tuesday as Trump made some concessions in the trade war and inflation numbers came in a bit higher than expected. Peter Schiff talked about it in his latest podcast, saying gold traders still don’t understand the gold rally.