Category Archives: Economics

Back from the Corn, Congress None the Wiser

7/27/2011 Portland, Oregon – Pop in your mints…

We are back from the corn fields and rest assured that despite the flooding on the Missouri, the corn and soy harvests look promising. 

Much to our surprise, the US Congress has not yet resolved its debt cieling standoff.  We have nothing to add other than this is either insanity in action or a blatant attempt to force money out of Treasuries and spark hyperinflation.  Given June’s negative CPI reading (which no thinking person should take seriously), we are beginning to think the latter is true.

We offer today’s Key Indicators for your perusal and enjoyment.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for July 27, 2011

Copper Price per Lb: $4.41
Oil Price per Barrel:  $97.23

Corn Price per Bushel:  $6.91  
10 Yr US Treasury Bond:  2.98%

FED Target Rate:  0.06%  JAPAN HERE WE COME!

Gold Price Per Ounce:  $1,614 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.2%
Inflation Rate (CPI):  -0.2%!!!  PULL OUT THE HELICOPTERS!!!
Dow Jones Industrial Average:  12,302  TO THE MOON!!!
M1 Monetary Base:  $1,944,400,000,000
RED ALERT!!!
M2 Monetary Base:  $9,092,700,000,000 YIKES!!!!!!!

 

*See the MINT Perceived target Rate Chart.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Waiting on Armageddon in the Bond Markets, A Freaky Chart form the BIS

7/18/2011 Portland, Oregon – Pop in your mints…

We are taking the week off here at The Mint.  As the world observes the pitched battle between default and inflation, we will be roaming the cornfields of Northeastern Nebraska waiting to attend a cousin’s wedding.

To default or not to default, that is the question.  The financial world is on the edge of its seats waiting for the answer.  What will congress do?

Regular Mint readers know that once QE started, the US essentially defaulted.  Everything that is happening now is a mere attempt to avoid openly admitting it.

There has been a startling graph from Bank of International Settlements that has been circling the internet and is worth a look.  You may want to ask the children to leave the room, it is downright scary.

"AAA" Government dominates the market and it is beginning to smell funny!

Do you now understand why what happens in Greece, Ireland, Portugal, Spain, Italy and the US in the coming weeks is of the utmost importance for the bond markets?  In a very short period of time, sovereign debt issues have become predominant.  The scary part of the chart is that any sane person can tell you that there simply ain’t that much AAA rated paper out there, no matter who issues it or who rates is.

With what is sure to be an action packed week as the financial world braces for the next of its many brushes with Armageddon.  Not matter what happens, the only clear winner promises to be the volatility index (which you can conveniently trade as VIX).  If there truly is the threat of a default, try TBT, the Ultrashort US Treasuries EFT.

Better yet, head down to your local coin shop, load up on physical Gold and Silver, and come roam the cornfields with us, worry free!

Stay Fresh,

David Mint

Email: davidminteconomics@gmail.com

P.S. If you enjoy or at least tolerate The Mint, please share us using the buttons at the top of this post. If you feel that you can’t go another day and risk missing The Mint, please register by clicking here. Thank you!

Key Indicators for July 18, 2011

Copper Price per Lb: $4.39
Oil Price per Barrel: $97.12
Corn Price per Bushel: $7.01
10 Yr US Treasury Bond: 2.91%
FED Target Rate: 0.06% JAPAN HERE WE COME!
Gold Price Per Ounce: $1,594 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.2%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,479 TO THE MOON!!!
M1 Monetary Base: $2,027,500,000,000 RED ALERT!!!
M2 Monetary Base: $9,265,600,000,000 YIKES!!!!!!!

*See the MINT Perceived target Rate Chart. This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy. This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

What is so Complex about a Default? The Greek Bailout Highlights The Shortcomings of Debt as Money

7/5/2011 Portland, Oregon – Pop in your mints…

Another day, another Euro.  It appears that it is still all systems go for the Greek bailout.  Athens will get another shot of hot money in mid July and the charade will keep going on.

In the old communist days, the joke went “we pretend to work and they pretend to pay us.”  In the current socialized monetary system, the joke goes “we pretend to cut back and they pretend we will pay them back.”

As our astute fellow taxpayers are already aware, the Greeks have no intention of changing their ways.  Parliamentary promises and austerity measures are of little value when 90% of the population is against them.  It is doubtful that the money lenders in Germany and France will step out of their high rises to come repossess the Parthenon.

No, they will leave that to foreign militaries as they march on Palestine.

But we are getting ahead of ourselves.  Our topic of the day is why the Euro/IMF and now, reluctantly, the private sector are “thrashing” (which must be somewhat harsher than mere hashing) out an aid plan for Greece tomorrow in France.  From Reuters:

International banks and insurers will meet on Wednesday to thrash out a plan for the private sector to contribute to Greece’s bailout effort as fears grow that the proposal will be derailed.

The Institute of International Finance (IIF) lobby group said it will chair the meeting of private-sector creditors.

It needs to resolve how a deal can get past credit rating agencies without it being termed a default, and how accountants will deal with it.

A lot of work remains to be done and Wednesday’s meeting will not be decisive, several sources said.

“It’s a process. The new French finance minister said today it will take weeks, over the summer. It’s complex. It can’t be settled overnight,” a French private sector source involved in the talks said.

He said there was unlikely to be a single “one-size-fits-all solution” but rather several options, given the number of different bondholders and stakeholders involved.

“The issue is so complex that we need more time,” a German banking industry source added.

Of course, the issue is not complex.  The Greeks have promised more than they can deliver.  Anyone can do this for a time but if too much time passes, actions (overspending) speak louder than words (austerity measures).

Besides, for a socialist tax collecting entity such as the Greek government, austerity measures starve its customer base of revenue, lowering its own tax revenues, which in turn demand’s more austerity, etc.

For a generally unproductive country that has made the mistake of outsourcing its money printing operations like Greece, austerity is collective suicide.  Even credit ratings agencies and accountants can no longer ignore this dubious state of affairs.

Greece, Where the Euro pays tourist prices

Yet paradoxically, the international bankers seem intent on forcing the Greeks, against their collective will, to starve themselves.  Why?  Even in the parallel universe of our current monetary system this course of action makes absolutely no sense.

And that is precisely why it must be done.  Somehow, the banking cartel must put on the charade of solvency.  Most people, accountants and ratings agencies amongst them, have a vague understanding that saving money is equal to solvency.

How right they would be, if silver and gold were still money.  In the current insane “debt is money” socialist monetary system, savings remove the lifeblood of the currency regime.

Don’t be deceived by the Euro and IMF’s words, Greece is a lost cause.  It has problems that not even Christine Lagarde and her $550K pay package cannot solve.

But that won’t stop them from trying!  As the explanations become more and more ludicrous across the Atlantic and Mediterranean, keep your eye on The Mint’s Key Indicators, which are still pointing at raging inflation with no end in sight in dollar land.

The only protection for savings is anything real that is not a dollar (or a promise to pay a dollar in the future, such as dollar denominated bonds).  How is that for investing made simple?  So many options!

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at www.davidmint.com

Key Indicators for July 5, 2011

Copper Price per Lb: $4.30
Oil Price per Barrel:  $96.83 A FAILURE TO INFLATE, WILL TREND LOWER

Corn Price per Bushel:  $6.80 MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond:  3.14% WITH THE FED OUT, THE SKY’S THE LIMIT
FED Target Rate:  0.07% JAPAN HERE WE COME!

Gold Price Per Ounce:  $1,516 BENEFITING FROM PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.2%
Dow Jones Industrial Average:  12,570 WINDOW DRESSING FOR 401K PORTFOLIOS
M1 Monetary Base:  $1,954,300,000,000 RED ALERT!!!
M2 Monetary Base:  $9,098,400,000,000 YIKES!!!

*See the MINT Perceived target Rate Chart.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Inflation set to Bloom, Bernanke Resorts to Desperate Pleas to Raise the Debt Ceiling

6/14/2011 Portland, Oregon – Pop in your mints…

The Rose Festival has dominated the city’s waterfront park for the past two weeks.  Carnival rides have been up since Memorial Day weekend and an assortment of ships from the US and Canadian Navy (affectionately known as the “Canavy”) arrived late last week.  After no fewer than four parades, the annual Dragon Boat Races rounded out the festivities.

The Festival usually marks the beginning of summer, which is defined as the absence of rain for four delightful months, here in Portland.  While the rain seems to have done its part, the weather remains colder than one would expect.

This year was the first year that anyone can remember the roses not being in full bloom during most of the festival.  An uncharacteristically cold spring has caused many of the plants to hold back here from showing off their blooms.  When they do finally bloom, it tends to happen quickly and spectacularly.

For some reason the plight of the roses has us worrying about inflation.  We have been certain that inflation is on the horizon for some time now, and while there has been an uncomfortable rise in food and gasoline prices, it is hardly the degree of inflation that we had been anticipating.

Are we early or just plain wrong about inflation?  The question is troubling.  What is certain is that many of the things that we have speculated would happen are coming to pass.  Most significantly, the US Government appears to be approaching a moment of truth regarding its dire finances.  The simple question of whether or not to raise the debt ceiling has opened a Pandora’s box of questions about the nation’s spending priorities.

Now the 2012 election cycle is beginning and US lawmakers have rushed out the door to the campaign trail and have left Pandora’s box wide open on the Capitol floor with its questions racing about the room:

Should we cut entitlements?

Enact more economic stimulus?

Will the Government really go bankrupt on August 2nd?

Is the activity on Twitter accounts really open to the public?

With the national political circus about to go into full swing, any hope of a serious discussion about a realistic budget or debt ceiling is gone.  What we are now left with are desperate pleas for action from none other than Ben Bernanke, the ace lobbyist for the nation’s largest banks.

Today’s plea was made by Bernanke at the Committee for a Responsible Federal Budget’s appropriately titled annual conference: “The Debt Ceiling, Fiscal Plans, and Market Jitters, Where Do We Go From Here?

Mr. Bernanke, in his classic, diplomatic style, told the Republican leadership in attendance that he appreciated what they were trying to do in trying to get the nation to live within its means, but that their use of the debt ceiling as a hostage was not an appropriate tool for the job.  Instead, he advocates deficit reduction goals which trigger automatic cuts if they are not met.

Leading Lobbyist for the Banking Sector

The United States is one of the few countries with a congressionally mandated debt ceiling.  Contrary to Mr. Bernanke’s belief (which we must say defies logic), the debt ceiling is the perfect tool to use if a lawmaker wants to put an end to out of control spending but doesn’t have the time to gain consensus for a reasonable budget plan.  It is the ultimate way to “trigger automatic cuts.”

Perceptive readers will note that what Mr. Bernanke’s proposes is the same fiscal spending control model that has worked spectacularly in Europe. Just ask the Greeks!

Still, the question remains, where is the inflation?  Our simple analysis led us to believe that under current circumstances the FED would print money to give both to its member banks and to the US Treasury until things either got better or the dollar was completely worthless in exchange for goods.  Our money is on the latter passing before the former.

It now appears that the US government has temporarily thrown a wrench in those plans.

But this should come as no surprise.  As Henry Hazlitt so eloquently explains in his book Economics in One Lesson, government intervention in the economy always fails to achieve its desired ends and almost uncannily brings about results contrary to those that the government intended.

Would it not make sense, then, that the current efforts to produce price inflation turn out to be dramatic failures as well?

Then, long after the government has abandoned its inflationary policies, a tidal wave of cash will appear quickly and spectacularly, not unlike the rose blooms in Portland this year.

This inflation will occur when the US Government, whether on its own or under compulsion from the bond markets, turns its clumsy machinations towards austerity.  In other words, when it least wants or expects it.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  If you enjoy or at least can stomach The Mint, please share us with your friends, family, and colleagues!

Key Indicators for Tuesday, June 14, 2011

Gold Price Per Ounce:  $1,524 MINT Perceived Target Rate*:  2.25%
M2 Monetary Base:  $9,005,800,000,000 STARTING TO DRY UP?  NOT!

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

The Seeds of Revolution: Those on the Far Left and Far Right have had Enough! Can they come Together to Change the World?

In the past two weeks we have had two well delivered speeches brought to our attention here at The Mint.  One speech was delivered in Spain at the IU de Extremadura in 1999 by Julio Anguita Gonzáles, the coordinador general de Izquierda Unida at the time of this speech.

Don Julio is a communist.  In this speech, which is billed on youtube as “El Gran Discurso Antisistema” (The great anti-establishment speech), he makes compelling arguments against the establishment and the inequality which it creates and fights to maintain amongst its members.  You can see it below or by clicking here:

 

What is amazing about his speech is that he makes some of the same arguments that Tom Woods, who is perhaps the eloquent Libertarian thinker speaking today.  Mr. Woods’ recent speech on Nullification is quickly becoming an anti-establishment sensation.  You can see his speech below or by clicking here:

 

As Mr. Woods alludes to at the end of his speech, could it be that the anti-establishment thinkers of the far left and far right are closer together ideologically than they are to their mainstream liberal and conservative counterparts?

Economy to suffer Rolling Blackouts, A Flare up in Palestine, Does the FED have an Expiration Date?

6/7/2011 Portland, Oregon – Pop in your mints…

Summer has arrived in Portland.  We had hoped that it would arrive months ago but as with 41% of our predictions here at The Mint, we were early, which is a polite way to say that we were wrong.

In the financial markets, it continues to rain.  The authorities have done everything in their power to stop the effects of the rain, hoping to simply ride it out.  They are now exhausted and the ominous prospect of rising flood waters to accompany the constant drizzle adds to their misery.

The storm began innocently enough and that was the problem.  Despite the dark clouds forming on the horizon, most people thought that they simply needed to stay indoors for a while, maybe move the patio furniture inside, and wait it out.

As it turns out, loading up the wagon and moving to higher ground is the only thing that can save them.  In a practical sense, this means paying off debts and moving assets into precious metals or anything else real.  It means cutting ties with any and all counter-parties because the probability of default is increasing and can strike without warning.

This financial storm did not necessarily require the divine insight afforded Noah in his day but to adequately prepare for it one needed to at least have in mind the possibility that this storm was no ordinary storm.

Yes, fellow taxpayer, the world economy is not in a recession or a depression (unless you are trying to describe a certain level of misery and not an economic phenomenon).  The economy is in the process of being completely retooled.  Bill Bonner at the Daily Reckoning calls it the “Great Correction.”  We do not have a name for it here at The Mint but Mr. Bonner’s term seems a bit mild to us.

Now that the FED’s firepower and credibility are completely expended, the economy is set to experience something akin to random “rolling blackouts.”  As the cash and credit that flowed steadily downstream for the past 50 plus years begins to dry up, a wall of water in the form of stimulus and monetary accommodation is barreling down the canyon and is literally destroying everything in its path and is PERMANENTLY changing the river’s channel.

Beyond the wall of water is a dry riverbed.  This has been confirmed as the FED’s credibility is shot.  Even if they could continue sending what water is left down the canyon it wouldn’t even come close to filling the new channel or be capable of forming anything that resembles the river that once was.

It is difficult to imagine a more desperate state of affairs.  This is one of the miracles of central planning, that it always and in every sense is a failure for everyone.  In some rare cases the planners benefit but for the most part, in the long run, even they are poorer for their efforts.

So what awaits the economy are unpredictable rolling blackouts as the lack of water causes random and unexpected defaults and quasi-defaults to occur until all participants learn to not trust each other.  Oddly enough, only then will something resembling organic growth begin anew.

An interesting idea was brought to our attention yesterday.  The idea is that the FED’s charter as America’s Central Bank is set to end on December 21, 2012, which nicely coincides with the final date on the Mayan Calendar.  We then further investigated and saw that someone with the Youtube user name “Man of Truth” predicted that the FED would be bankrupt in December of 2012 back in 2009.

While back in 2009 the Man of Truth may have sounded like a lunatic, circa 2011 his prediction seems not only possible but highly likely.  While the December 2012 date is arbitrary, all of this taken together with the fact that many people believe the Mayan Prophecy may be enough to disrupt life as we know it for an extended period of time.

Courtesy of http://bizarrocomics.com/

While we at the Mint do not personally believe in the Mayan Prophecy or the FED for that matter, we have a feeling that enough people do believe to warrant being prepared for an extended period of random rolling economic blackouts which will probably begin early in 2012, making the best time to prepare for them, well, now.

How to prepare?  First and foremost, accept Jesus Christ as your personal savior.  Then, not matter what happens, you have absolutely nothing to fear, not even death.

Second, financially act as if a flash flood is coming down the canyon and get whatever you think you may need to ride out the blackout period close at hand because the probability of obtaining it later is diminishing with each passing day.

Third, help others to do likewise.  In the process of helping others, you will literally be laying the foundation for the bright future that awaits you.

Piece of cake, right?

Meanwhile, the security situation in Palestine the Middle East continue to deteriorate.  Will it be enough to distract the West from its own perilous situation?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Wednesday, June 7th, 2011

Copper Price per Lb: $4.15
Oil Price per Barrel:  $99.67
10 Yr US Treasury Bond:  3.01%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!
Gold Price Per Ounce:  $1,545
MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.1% ITS NOT WORKING
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,071
M1 Monetary Base:  $1,949,300,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $8,985,800,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

The FED to go Bankrupt in 2012?

We came across this video today posted by the “Man of Truth” who apparently makes these sort of predictions.  He made his in 2009 and we have to admit that every day that passes the financial world is careening towards this inescapable outcome.  Last week we read how it is technically possible, no, probable, that this will occur.  What do you think?  The “Man of Truth” has his opinion, enjoy!

The Bill for Club Med comes due (the concept of Central Bankruptcy eloquently explained), a Parable

5/31/2011 Portland, Oregon – Pop in your mints…

Today the focus of the financial world is on events around the Mediterranean where the Greek and increasingly the Spanish people again find themselves at odds with their respective governments and their IMF / ECB / German debt collectors. 

How did they get there?  The Greeks and arguably the Spanish have been living in the social equivalent of a Club Med ever since they joined the Euro.  The initial sting of higher prices was offset for most by lower borrowing costs.  Life was good.  The advent of the Euro along with a boom in tourism began to feed a property boom in Spain and a government spending boom in Greece.

Alas, as an economy slows, the government is usually the last to know. 

Like the father whose family takes a vacation to Club Med, he is content to let the family splurge with little worry as to how he will cover the bill.  “Just throw it on the credit card, we’ll take care of it later” becomes the mantra.

Unfortunately for the father (who represents the Greek, Spanish, and arguably the US governments in our parable), his bank decides to cut his credit line just before the vacation is over.  The bill comes due and the man frantically negotiates with his bank (the ECB, IMF, and arguably the US FED) to extend his credit line enough to cover the bill. 

Club Med – Paradise Lost!

To make matters worse, upon his return the man finds that the income from his job (the government’s tax receipts in our parable) has been cut due to “the economy*.”  He now has no realistic prospect of repaying his extended credit line and instead must now consider a painful reduction in the family’s standard of living.

Naturally the family, who has developed some expensive habits while away at Club Med, rebels.  The father is now in a no win situation.  On the surface, he appears to have a choice between satisfying his family at the expense of his creditors or vice versa.

In reality, with his reduced income, he cannot satisfy either of them.  This is where the Greek and Spanish governments currently find themselves, and this is where the US Government will soon find itself.

There is, of course, an easy way out.  The man who is in this hopeless situation can declare bankruptcy.  Problem solved, right?  Not so fast.  You see, because of “the economy*,” the bank cannot release the man from his debts and have enough money to make good on its own obligations.

At this point, the Central Banks of the world (which are represented by the bank in our parable) lack not only the credibility but also the practical tools to perform their make believe function as protectors of the value of their respective currencies.

Today we read a piece by Michael Pento of Euro Pacific Capital (run by Peter Schiff) which seems to give logical credence to what we have long suspected to be the case:

“In the end, any meaningful attempt to withdraw liquidity will not only bankrupt the institution (The FED) but also zero out their remaining credibility. That’s why they’ll never even make an honest attempt.”

 The FED is helpless to remove the liquidity it has injected and will soon have to decide which of its member banks to sacrifice if the dollar is to continue as a functioning currency.  Our money is on the dollar and all who rely on it as a store of value to be the sacrificial lambs.

Back to our parable.  Both the man and the bank will continue to pretend to negotiate with each other, giving the illusion that what is now their mutual problem will supernaturally disappear.  The family will continue to pretend to debate which expenditures to cut back on as if it will make a difference.

Unfortunately, the likelihood of the problem disappearing is equivalent to the likelihood of the family being able to go back in time to cancel their trip to Club Med prior to departure.  Such is the nature of debt.

So the bank, the father, and the family find themselves clinging to a myth as they helplessly hurtle towards the unknown.

Where will they end up?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

*Definition of “the economy”, circa 2011 – A term used to describe the large scale collapse of Central Banking and the Socialist / Communist economic model that it has created over the past 100 years.  Generally used by politicians and others in authority to “explain” why they cannot pay their obligations.  This explanation is presented to the masses as a failure of capitalism when quite the opposite is true.  Thus, this simple two word phrase is used as an excuse to further the Socialist / Communist agenda and that of the police state that is forming all around the world.

Key Indicators for Friday, May 31st, 2011

Copper Price per Lb: $4.17
Oil Price per Barrel:  $102.83

10 Yr US Treasury Bond:  3.05%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,534

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,579
M1 Monetary Base:  $1,892,800,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,036,600,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

 *See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Grants for Democracy? It’s Getting Ugly in Spain, US Housing Capitulates, Greek Government to Default on Austerity and then Simply Default

5/27/2011 Portland, Oregon – Pop in your mints…

We’ve said it before, things are beginning to happen at a rapid pace and the authorities are absolutely and completely helpless to do anything about it.  Not for lack of money, have you, for they are second in line behind the banks to pick at the money tree.  No, the authorities lack the one thing that is indispensable to getting things done.  Credibility.

Have things improved for you, fellow taxpayer?  Unless you are a banker, lobbyist, are a contractor who works for a banker or lobbyist, the answer is probably no.

And we haven’t even begun to talk “austerity” on US shores.

But first, we are obligated to take a peek at what the G-8 is doing.  We suspect we know but it is important to confirm ones suspicions.

From the Associated Press:

DEAUVILLE, France (AP) — Rich countries and international lenders are aiming to provide $40 billion in funding for Arab nations trying to establish true democracies, officials said at a Group of Eight summit Friday.

Officials didn’t fully detail the sources of the money, or how it would be used, but the thrust was clearly to underpin democracy in Egypt and Tunisia — where huge public uprisings ousted autocratic regimes this year — and put pressure on repressive rulers in Syria and Libya.

We suspected more aid to someone but this appears even more misguided than we thought.  The first line of the second paragraph is especially laughable but you can see where this is going.  We speculated Wednesday about the events in Palestine getting ready to take center stage, largely as a distraction to the “utter and complete collapse” of the world’s current financial system.

The G-8 is now throwing what is left of their credibility into extending their influence in the Middle East.  They have Iraq, Afghanistan, and now Egypt and Tunisia as footholds.  Will they be strong enough to hang on to this newfound influence?  Only time will tell if the new regimes can be bribed as easily as the old ones.

The credibility of the Western Governments and their worn out welfare state economic models is nearly spent.  In Greece, the IMF / Eurozone bailout participants are finding out that the Greek politicians don’t have the collective stomach to play the repo man on their countrymen’s future.

It appears that the government is refusing more austerity measures and is rethinking whether or not this whole Euro adventure is such a good idea.  Failure to agree now places the spotlight on the IMF / Eurozone plunge protection team.  Will they have the stomach to let Greece default?

The gauntlet has been thrown down, and what happens to Greece will set the tone for how the inevitable sovereign defaults of the Western Governments are likely to play out.  Are the Greeks the Lehman Brothers of Sovereigns?

On the other side of the world, Japan’s sovereign debt was officially downgraded as if to underscore the fact that the world monetary system is hurtling towards a catastrophic failure.

Back in Europe, a sequel to the Greek experience is now playing itself out across the Mediterranean Sea on the Iberian Peninsula.  The youth in Spain are finally arising as they clearly see that the politicians have shamelessly “handed their future” to the nation’s banks.

With protests in nearly every major city, their resolve grows with every passing day.  In Barcelona, one day before Barça plays for the Champions Cup against Manchester, the authorities attempted to clear Plaça Catalunya to clean it in anticipation of the celebrations that would surely take place there when Barça, led by the great Liionel Messi, wins the cup.

With over 100 persons injured between protestors and police officers, they will now have to clean up blood in the square.  The Spanish authorities, not unlike their western peers, just don’t get it.  The old way of doing things is over, fini.  The youth are taking matters into their own hands.  With 45% of the Spanish youth unemployed, their sheer numbers, if they stay at it, will simply overwhelm the authorities.

All the same, we are pulling for Barça tomorrow.

A final piece of news to share with you here at The Mint, the US Housing Market has finally capitulated. In other words, it is now safe to buy a house.  The hope that the US Government and Central Bank could somehow revive this market has left town on the same train as the US Government’s credibility.

The US Government lost its credibility most recently as it continues to bicker over meaningless spending cuts as the nation thunders towards an imminent default on its sovereign debt and by affirming the Unconstitutional Patriot Act, which essentially gave legislative authority for the US to become the wards of an international police state.

The brave souls who gave their lives to create and protect a free America must be rolling over in their graves this Memorial Day.

Will there be a generation brave enough to reclaim it?

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our latest 72 Hour Call at www.davidmint.com

Key Indicators for Friday, May 27th, 2011

Copper Price per Lb: $4.16
Oil Price per Barrel:  $100.74

10 Yr US Treasury Bond:  3.06%
FED Target Rate:  0.09% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,537

MINT Perceived Target Rate*:  2.25% INFLATION HERE WE COME!!!!
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,441
M1 Monetary Base:  $1,892,800,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,036,600,000,000 MORE FUEL FOR THE CRACK-UP BOOM!!!!

 *See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

Greece to exit Euro and Palestine to take Center Stage

5/25/2011 Portland, Oregon – Pop in your mints…

If the events of the past week have not convinced you that there has been a permanent, fundamental change in the financial markets, perhaps nothing will.  As much as the numbers seem to stay the same, one has the sense that something is very, irreparably, wrong.

Trust that sense.

If you are trying to put your finger on what is causing the uneasiness you are feeling, allow us to offer our humble opinion.  The world is coming to the realization that all of the financial rescue programs that have been floated as the “cure” to the financial crisis by various Central Banks and Governments have done nothing useful. 

To put it harshly, they have not only failed, they have made things worse.

What they have done is to buy time for the banks to sell out of their losing positions and be made whole at the taxpayers’ expense.  Now, the jig is up.

The taxpayers see that the fix is in and are calling for the heads of their elected officials.  For the most part, the heads have been handed over peacefully via democratic elections.  Those that still have their heads are quickly backpedaling and distancing themselves from any Government sponsored bailouts.

With the resolve of the Governments of the west to continue “bailing out” the financial sector clearly in doubt, the heavy lifting is left to the ultimate and most deserving scapegoats, the central banks.

But what can they do?  Their only solution involves further exposing themselves for the fraud they are.  “If the central bank can simply print the money to pay debts, why should I work?” is the cry from the Proletariat.

That cry is being heard steadily in Greece and now Spain.

Austerity Protests in Athens today courtesy of occupiedlondon.org

It has taken a different tone in the Arab world, where revolution has increasingly been the rule ever since the Gregorian calendar turned to 2011.  The media explains what is happening in the Middle East as a “cry for democracy,” as if all of these people would be appeased if they could simply have the pleasure of voting for their dictator, as we do in the west.

No, the Middle East is burning due to the confluence of 1,300 years of festering hatred which for the past 90 years has had the Israeli / Palestinian conflict as its flashpoint and rapidly rising prices for basic necessities, which have always been dear in the desert regions.

These rising prices, of course, are the direct result of the debauchery of the currencies by western central banks.

From our vantage point, it is clear that the central banks have no more room to maneuver and that they will soon throw in the towel as well.  Central banking as we know it is expiring.

So who will bail out the western governments and central banks?  The taxpayers who have grown to loathe them?  Don’t count on it.  The simple answer is that no one will.  What logically follows is that the world is about to embark upon an amazing journey called “price discovery.”  A journey that has been delayed for three long years by the meddling of the authorities will now begin without further delay.

One of the first discoveries will be to find out what are Greek Bonds are worth.  Nobody really knows, but unofficially the 10 year note is trading at 51 cents on the dollar.  And now the barbarians from the north are storming down demanding that the Greeks make good on their austerity measures or else lose their support which would mean an almost immediate default by the Greeks.

But with riots becoming a way of life, the Greeks are beginning to wonder aloud whether or not the pain is worth it.  Our guess is that the barbarians will relent in an attempt to save the Euro.  You see, the Greeks still hold the ultimate trump card, as do we all, of defaulting on their debt and doing business in another currency.  For the Greeks, it would mean a return to the drachma.

Will they play it?

With the utter and complete failure of the world financial system at hand, those who soberly decided not to heed Harold Camping’s rapture warning and are looking forward to a world that will exist post October 21.  We believe that the world will increasingly turn their collective attention to Palestine.

We recently read The Haj in an attempt to beef up our understanding of the conflict.  You can read our review of this book at https://davidmint.com/?p=361.

The summary is that Palestine needs a miracle for there to be peace between the Israelis and the Palestinians.  This conflict will move to center stage as a distraction to the aforementioned utter and complete failure of the world financial system.

What has become crystal clear to us over the past two months is that if there is not peace in Jerusalem, there cannot be peace in the world.  Those of us who believe in Jesus (if you do not, please accept this as an invitation to believe) will not be raptured until there is peace in Jerusalem.   We do not know exactly why, we simply know that this is true.

For if there is peace in Jerusalem, there will be peace in our hearts.

Once we are raptured, the tribulation will begin, which is why we urge you to accept Jesus now.  You have nothing to lose and eternity to gain.

Stay Fresh!

David Mint

Email:  davidminteconomics@gmail.com

P.S.  Please check out our Affiliates!

Key Indicators for Wednesday, May 25th, 2011

Copper Price per Lb: $4.10
Oil Price per Barrel:  $101.47

10 Yr US Treasury Bond:  3.13%
FED Target Rate:  0.10% FED IN DESPERATION MODE!!!!

Gold Price Per Ounce:  $1,526

MINT Perceived Target Rate*:  3.25%
Unemployment Rate:  9.0%
Inflation Rate (CPI):  0.4%
Dow Jones Industrial Average:  12,395
M1 Monetary Base:  $1,880,400,000,000 THE CRACK-UP BOOM BEGINS!!!!
M2 Monetary Base:  $9,011,900,000,000 DESPERATION!!!!

 *See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.

The Chinese Socialist Experiment Begins to Unravel

It appears that the Chinese Socialist / Communist Experiment is beginning to rapidly unravel. From AP:

Rising prices are a political threat to China’s communist leaders and they have declared taming inflation their priority. But they suffered a setback in March, when a double-digit jump in food costs pushed inflation to a 32-month high of 5.4 percent. That was despite four interest rate hikes since October, curbs on bank lending and government orders to producers to hold down price increases.

Logically, this means price controls…

Attempts at price controls, subsidies for the poor and orders to local leaders to guarantee adequate vegetable supplies have had mixed results.

But price controls have nasty side effects…

In the southeast, export regions are suffering power shortages that force factories to suspend production every other day. Power companies are squeezed between low state-set rates and high gas and coal prices, so they have avoided adding more generating capacity despite double-digit annual increases in demand.

Enough said, right? But My favorite part is where the government promises to “manage” vegetable prices…

“I think you should have confidence in the Chinese government’s capability in managing vegetable prices well,” said a deputy commerce minister, Fu Ziying, at a news conference this week. He gave no time frame for when inflation might subside.

Centrally managing an economy is a futile and destructive exercise. Price controls of any kind inevitably lead to shortages. The Chinese are now taking a step backwards on their road to a Capitalist economic model.

Unfortunately, when you take a step backwards out of a high speed train going 400km per hour (which is what the Chinese economy essentially is), you can imagine that the results are not pretty. Unfortunately, the Chinese authorities are about to push the Chinese People off of the train.

Check out the full story here.

or at this link:

http://finance.yahoo.com/news/Beijing-turns-to-currency-to-apf-973357724.html?x=0