Category Archives: Climate Change

We’d like our gold now, Chavez Calling JP Morgan’s bluff? Bank Stocks Tanking, as Palestine flares up on cue

8/18/2011 Portland, Oregon – Pop in your mints…

It is 66 degrees on a mid-August afternoon in Portland.  As a banker friend of ours put it, “we hope you are enjoying the mild winter.”  The truth is, were it not August, we would be quite enjoying the weather.  Unfortunately people have certain expectations about the weather, hence the widespread belief that man can control and reverse trends like global warming or cooling.  August in the Northern Hemisphere should be hot.

But its not.

If people are upset at the weather, then they must be seething at what is occurring in the financial markets.  The relative calm in the financial markets has vanished like free beer at a NASCAR event.  A 400+ drop in the Dow today and an even more significant drop in the price of oil and financial stocks, coupled with a rise in gold, silver, and Treasury Bills? (yes, you read it right) on the surface are evidence of a classic “flight to safety.”

But what is going on?  Why such a massive flight to safety on what would otherwise be a calm August day, so fit for reflection and the pondering of life as one knows it?  We don’t know exactly why all of this occurred today but suffice it to say, none of it should come as a surprise.

For instance, it should come as no surprise that banks are completely broke and at this point, worse than worthless, as they are destroying real wealth.  The modern bank is built on the assumption that the currency regime and the demand for debt denominated in that currency will increase infinitely.  Demand for debt in US Dollars began to wane about four years ago and as far as we can tell is not coming back anytime soon, at least not in the quantities (nor at the margins) necessary for the modern megabanks to exist on their current scale.

Hence, the banks are toast.  Short them if you can after the next round of short covering passes.

The FED unwittingly made matters worse for the banks a couple of weeks ago when they announced that short rates would be near 0% for at least two years.  The FED has given up, and they have done it in the worst possible way.  Rather than standing ready to bail water out of the waterlogged currency ship, they have turned the spigot on full blast and walked away.

The FED will probably not be around in two years.

In yet another twisted irony that is a by-product of the current insane “debt is money” currency system, these low short rates, which in theory should be a boon to banks, will drown the banks with large deposits that they cannot lend except at razor thin margins to sub-prime borrowers such as the US Government.

Yes, society’s aversion to debt has fundamentally changed the banking business from one which primarily benefits from usury to one that must redefine itself as a trusted custodian of assets.  This change seems to be happening overnight, and the banks are completely unprepared.

Case in point, it appears that Hugo Chavez, Venezuela’s democratically elected dictator has been moved to repatriate his country’s roughly 211 tons of gold held by foreign banks.  He has already issued a demand to the Bank of England and rumor has it He will soon issue a demand to JP Morgan, which reportedly holds 10.6 tons of Venezuela’s gold.

Show Me The People's Money!

The problem is, JP Morgan only has 10.6 tons of gold in custody on liabilities of roughly 100 times that amount.  This would not be a huge problem except for the fact that thanks to the internet the entire world now knows this.  Leave it to Chavez to strike at the heart of US imperialism.  Things should begin to get interesting.

JP Morgan’s short position in physical Silver is even more frightening.   If JP Morgan’s skills as a custodian is any indication, it appears that the modern banks are unable to provide this service.  Protect your assets accordingly.

And speaking of frightening, almost as if on cue, violence in Palestine began to escalate again after attacks on Israeli civilians, the deadliest in two years, led Israel to retaliate by launching an airstrike against Gaza earlier today.

Our instinct tells us that a major event is unfolding in Palestine ahead of the UN’s statehood vote and it just may coincide with the collapse of the Western Currencies.

Coincidence?  Most certainly.  And a very sad coincidence indeed.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 18, 2011

Copper Price per Lb: $3.95
Oil Price per Barrel:  $81.83

Corn Price per Bushel:  $6.99  
10 Yr US Treasury Bond:  2.08%

FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,825 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  10,991  TO THE MOON!!!

M1 Monetary Base:  $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,478,200,000,000 YIKES!!!!!!!

New Bans on Short selling in Europe, Margin Requirements for Gold, Money’s role in Climate Change

8/11/2011 Portland, Oregon – Pop in your mints…

Fresh injections of electronically printed cash from the US and Euro FEDs appear to have tranquilized a market in free fall.  That, along with a ban on short selling in Europe seems to be sufficient to continue the illusion that the financial system is operating normally.

Elsewhere, we see that margin requirement for Gold contracts were increased by the Chicago Mercantile Exchange in an attempt to arrest Gold’s parabolic rise over the past several days.  This must have been what Obama and Bernanke talked about last night at the White House.  They probably made a few revisions to the jobs numbers that were printed today while they were at it.

The ban of short selling in Europe is eerily similar to the ban placed on short selling large bank stocks in the US not so long ago.  The increase in the Gold margin requirement is eerily similar to the increase in Silver margin requirements by the CME last spring.

What is going on?  Nothing good, fellow taxpayers.  A tip, if you see the Government actively trying to stop something, it is good idea to be on the other side of the government’s trade.  In this case, sell European bank shares and buy gold.  Think of it as an indirect governmental subsidy to little old you.

The markets are desperately trying to correct nearly 40 years of errors that have been created since the US Dollar was officially de-pegged from gold.  The FED’s, who see currency that can be created on a whim without the inconvenience of having to either mine it from the earth or earn it in honest, fair trade as extremely convenient , are desperately trying to fight the correction. 

If the numbers just look normal, they think, people will continue to pacifically labor under the illusion that the Government has everything under control.

Nothing could be farther from the truth.

It occurred to us that we may need to clarify what the money problem is and why it, and not fossil fuels, are the cause of economic imbalance and may lead to what is popularly referred to as climate change.

Many deride the use of gold and silver as money because it must be mined from the ground, refined, minted, carried around, kept secure, etc.  It is inconvenient.  They see money created out of thin air as a simple net gain to society.

 Presto, you have, with a stroke of the pen, saved the miners from years of hard labor underground.  You have saved who knows how many trees, fossil fuels, and other elements required for the refining process.  And you have saved Jack and Jill consumer and shopkeeper from the inconvenience of carting around loads of heavy coins.

So what is the matter with instant money?  The problem, if you have not identified it, is precisely in the fact that it is easy to create.  When you remove the effort required to create money for trade, you free that effort to be spent in a lot of other ways.  That is great, except for the fact that no one considers that instant money would give people the time to scorch the earth in a thousand other ways which are much more harmful than mining.

By making money “free”, you throw the economy completely out of balance and perpetuate bad decisions for a much longer time than if the wrong speculations were limited by the need to back them with real money, acquired by difficult toil both under and above the earth.

The problem with “free” money is that it has no value, and it serves to devalue the production and lives of all who are forced to circulate it.  The longer it circulates, the more damage it does.

Worst of all, it concentrates power in the hands of those who create it out of thin air and enjoy it first.

The world has gone 40 years down this insane path.  How much more can it take?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 11, 2011

Copper Price per Lb: $4.03
Oil Price per Barrel:  $85.42

Corn Price per Bushel:  $7.02  
10 Yr US Treasury Bond:  2.34%

FED Target Rate:  0.10%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,768 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  -0.2%!!!  PULL OUT THE HELICOPTERS!!!
Dow Jones Industrial Average:  11,143  TO THE MOON!!!

M1 Monetary Base:  $2,140,300,000,000 RED ALERT!!!
M2 Monetary Base:  $9,404,000,000,000 YIKES!!!!!!!

Global Banking Collapse, Global Cooling, Opinions on Climate Change

8/10/2011 Portland, Oregon – Pop in your mints…

Gold hit $1,800 today.  That should tell you all you need to know about what is happening.

We are trying not to look at the markets today.  It gives us the morbid feeling that one gets as they are about to witness a train wreck or other catastrophe.  Our curiosity begs us to look but our morality forbids it.

What we are hesitant to watch as it gets underway is some form of global banking collapse.  From CNBC:

“Rochdale banking analyst Richard Bove said there is little chance of a French bank default.

“If a bank in Europe went under, it would cause huge counterparty risk. It wouldn’t be that bad for 99 percent of the banks in the country. It would be bad for the biggest banks…Why are all the banks falling in price? The deeper issue is what the Federal Reserve did yesterday,” said Bove.

The Fed, in an unusual move Tuesday, revealed that its “extended period” to hold rates at zero runs until the middle of 2013. The Fed also downgraded its view of the economy to a picture of slow growth.

“The Federal Reserve told me, number one, that the economy is weakening and my loan losses just went up,” Bove said. “The ability to make new loans is hampered by the weaker economy, and on top of that, the Federal Reserve said they were going to keep margins on my product down,” he said, explaining banks need higher rates to make profits on lending and deposits.”

As we alluded to yesterday, the Federal Reserve essentially ended its storied career yesterday.  In an all out attempt to goose the markets it spent its last bit of credibility.  It is currently being carted off the field to cheer its losing team from the sidelines.  It may come back, but, like Brett Farve, it may find its former glory elusive.

With the FED injured and out of the game, the world’s largest banks are readying to show the world that there really is no entity on the planet which is “too big to fail,” starting with themselves.  There is no doubt that the ECB will pull out all the stops to save the large French banks, as Mr. Bove suggests above.

They will be carted off behind the FED.  But enough of the markets, it is just too ugly to gaze upon.

Let’s talk about the weather!

It is an unusually cold “summer” day here in Portland.  We loosely use the term summer because it now seems that summer has taken its own vacation and left the inhabitants of the Northwest with a straight shot from Spring to Fall.  Not so bad, provided we get the best of both seasons.

Still, the lack of sunshine at this time of year seems to be taking its toll on people.  When the sun comes out here, you suddenly become aware that the city has about triple the number of inhabitants than you once thought.  People literally hibernate here and when the sun brings them out it can be startling if you are not expecting it.

Logic would follow that, with the recent weather data taking a turn for the cooler, the global warming crowd would declare victory and let the planet move on to bigger and better things.   Now that the myth of global warming is apparently being disproved by nature herself, scientists are clinging onto the term “climate change” to justify the right to determine who needs how much energy.  The right to energy in recent times was determined by wars so perhaps this is an improvement. 

Many will quickly note that we have certain facts wrong about global warming/climate change and will want to correct us in our error.  To them we say, please do not waste your time.  We do not pretend to be an expert at anything here at The Mint, we are merely opinionated.  The most normal thing is for us to be wrong, it helps keep us humble.

Flooding on the Missouri River at Omaha, Nebraska - July 2011

That said, we base our “the globe is now cooling” opinion on two anecdotes that we heard while in Nebraska recently.  First, Lake McConaughy, which just five years ago was nearly bone dry is now full to overflowing.  The “experts” said that it would take 50 years to reach normal levels.

Second, we spoke with a guy from northern Wyoming who said they are seeing new GLACIATION taking place right before their eyes.  In a valley where last season there was merely a stream coming down from the mountains now stands a new glacier over 50 feet high.  Not just snowpack, a glacier.  He could not recall this ever happening there before.  Let alone so quickly.

Then there are the bears.  Rumor has it that they are moving to lower altitudes in the Northwestern US because snowpack in the mountains is not receding as it normally did and this is driving the bears closer to populated areas in search of a feast to fill their bellies for the winter.

More Flooding near airport on the Missouri River at Omaha, Nebraska - July 2011

And finally, everyone is aware of the flooding taking place along the Missouri and Mississippi rivers this season.

To us, here in the Northern Hemisphere, it appears that the globe is now cooling at an alarming rate.  Is the solution now to burn more fossil fuels?

Our point is that the weather is something that no man, no matter how many terms he has spent in Congress, can control.  Those who believe that mankind can somehow master the weather (the logical implication and end of most policies invoked in the name of stopping “climate change”) are innocently deluded at best and in the worst case may be power hungry control freaks.

As for allowing Wall Street first dibs at selling us the air we breathe (cleverly disguised as “carbon credits”), any thinking person should quickly identify this notion as just plain insanity.

On the other hand, we have great respect for people who are deeply committed to taking care of the environment.  We wish them well and whole heartedly support their dream of bringing peace to the earth and balance to what occurs on it.

Our disagreement with most mainstream climate policy is a question of methods.  While most see a problem with what mankind currently uses to create energy, we see as a problem with what mankind has chosen to use as money.

Once the monetary system is fixed (which may be occurring shortly), we suspect that the earth will be cleaner and greener than even the most ambitious environmentalist has ever imagined.

Best of all, the change will be a product of mankind’s collective free will, not of the hollow decrees of a governmental edict.

Imagine.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 10, 2011

Copper Price per Lb: $3.91
Oil Price per Barrel:  $82.89

Corn Price per Bushel:  $6.78  
10 Yr US Treasury Bond:  2.13%

FED Target Rate:  0.10%  TIGHTENING?  NOT!

Gold Price Per Ounce:  $1,795 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  -0.2%!!!  PULL OUT THE HELICOPTERS!!!
Dow Jones Industrial Average:  10,719  TO THE MOON!!!

M1 Monetary Base:  $2,012,200,000,000 RED ALERT!!!
M2 Monetary Base:  $9,226,100,000,000 YIKES!!!!!!!