Re: Posts from Cliff Küle's Notes for 06/08/2015

Dear China,
THE INNOVATION ERA IS GOING TO CONSUME YOU INDUSTRY if you don't heal all your people

On Mon, Jun 8, 2015, 7:01 PM Cliff Küle <cliff.kule@cliffkule.com> wrote:

View this email in your browser Cliff Küle's Notes Recent posts below in case you missed them ... simply click and read - enjoy! LINK HERE to our website www.cliffkule.com Excerpts: A European Bond Crash Coming? "What is happening everywhere is that liquidity is drying up. It is this 'lack of liquidity' that makes such extraordinary price movement possible. Mario Draghi on Wednesday had told investors after the last interest rate decision: 'One lesson is that we must get used to periods of greater price fluctuations.' That was a clear statement that actually admitted his policy has failed. This is how Big Bang starts to unfold. This is the Bubble in Government and what we are seeing is the market place (free markets) will take interest rates higher even against the policies of the central banks. Government debt is uncontrollable from the central bank level. They do not create the debt, governments do that and there is no rational management concern within the political mechanism. Consequently, we have seen the peak in government both in markets as well as confidence. We may yet see the rush to the short-end in the classic flight to quality driving the short-term interest rates very negative as we move into October, but that should then be the final rally. What comes after will be interesting patterns that require the majority to be wrong for that is the fuel that propels the economy and markets. This may be the most difficult period to trade for many people." - Martin Armstrong link here to the commentary Read on » The Cost of China's Industrialization:  700 Million People with Diabetes /Cancer  /Lung Disease & 225 Million with  Mental Disorders Charles Hugh Smith* points out the consequences of China's massive industrialization with little attention paid to the environment & worker health conditions ..  "The human cost is staggering: at least half the population is suffering from chronic lifestyle/environmental-related illnesses and 225 million suffer from mental disorders. For context, the population of China is estimated to be 1.39 billion, roughly 4.4 times the U.S. population of 317 million, and about 20% of the total global population .. Ill health and chronic disease are undercutting the economic growth everyone is focusing on. Whatever the metric used--hours of labor lost to illness, years of labor lost to early retirement due to ill-health, etc.--the costs of China's environmental damage, disrupted social order and low investment in public health are weighing heavily on output .. The rise in health-related costs going forward will not be linear but geometric. Linear increases in pollution, diabesity, etc. can yield a ten-fold increase in diseases that require costly treatments. That the China Story is going to implode is already baked into the public health catastrophe that will unfold with a vengeance in the coming decade." LINK HERE to the essay Read on » Will India's Gold  Monetization Scheme Work? The challenge is that most gold held in India is in the form of jewellery, not in the form of bars or coins - that is the problem fro India's gold monetization scheme, designed to give interest rates to depositors of gold. LINK HERE to the article "The Gold Monetization Scheme aims to bring Indian private holdings of gold into circulation as also provide gold owners with a return as also do away with storage and security risks. WGC said the scheme can provide a fillip to the gem and jewellery sector by making gold available as loans from the banks .. The draft guidelines envisage using 350 hallmarking centres as a starting point for customers to deposit gold which may be inadequate to address demand. With more than 2,000 bank branches already accepting gold as collateral for loans, WGC has recommended that bank and NBFC branches be allowed to accept gold deposits directly. The proposed scheme is to replace the scheme in existence since 1999 but which has garnered a mere 40 tonnes of gold offering a 0.75-1 per cent rate of interest. Industry watchers expect a rate of 3-6 per cent to attract consumers." LINK HERE to the article Read on » Former CIA Director:  We're Not Doing Nearly Enough To Protect Against This Threat Monday Night Special Peak Prosperity interviews former CIA Director James Woolsey & other senior experts on electromagnetic pulse (EMP) risks to the economy .. It's a BIG risk. And we're doing little about it .. An EMP has very real potential for crippling much of our electrical grid instantaneously. Not only would that immediately throw the social order into chaos, but the timeline to repair & restart the grid in most estimated scenarios would take months to a year or more. Those curious on learning exactly how devastating an EMP can be should read our report on the topic from last summer .. What's frightening in this story is not just the carnage an EMP could wreak, but the apparent rabid intransigence with which the electrical power lobby is fighting any responsibility for defending against one .. 49 minutes Read on » Peter L. Bernstein on Risk The celebrated author of Against the Gods: The Remarkable Story of Risk explores the history of risk & how it works in real-world markets & in our lives .. introduction: "Risk doesn't mean danger—it just means not knowing what the future holds."..  That insight resides at the core of risk management for companies, whether in managing the potential downside of an investment or putting a value on the option of waiting when making irreversible decisions. In this video, Peter L. Bernstein also explains why in the real world the most sophisticated mathematical models can sometimes fail." .. 13 minutes CLICK on image above to video Read on » Precious Metal Stocks are  the Most Undervalued Sector Wall St for Main St interviews Jason Hamlin, editor of Gold Stock Bull on precious metals, precious metal mining stocks & where else he sees good investments in the markets right now .. thinks gold has bottomed or is very close to bottoming & discusses why he thinks gold stocks have bottomed .. 25 minutes Read on » click to enlarge Read on » Mark Thornton on Financial Repression Albert Lu interviews Mises Institute's Mark Thornton on financial repression .. 38 minutes link here to the interview or listen below Read on » The $60 Trillion Problem Ahead THAT NO ONE SEES COMING Michael Pento: "The bottom line is that Central Bankers both past and present have a vested interest in convincing investors that the strategies of zero percent interest rates and quantitative easing have been a success. But the sad truth is these policies have led to an additional $60 trillion of new debt piled onto the global economy since the end of the Great Recession, causing the re-emergence of colossal real estate, bond and equity bubbles worldwide. Mr. Bernanke may still be blind to these bubbles created by himself and current central bankers…but all investors need do to see them is open their eyes." [Cliff Note: Please think about this for a moment. Various of our Most Admired Advisers were advising that the bank's method to fix the debt disaster by adding new debt (at artificially low rates) was like trying to fix your marriage by finding more sex partners. There is a profound truth in that absurdity. The geniuses at the Federal Reserve (& other central banks) have tried to 'fix' the problem (metaphorically) by pouring gasoline down the carburetor of a flooded engine. It must be a coincidence that the central banks are controlled by the banks & the banks make profits by adding new debts into the economy ... RIGHT?] LINK HERE to the essay Read on » Why Is The EU Forcing  European Nations To Adopt  'Bail-In' Legislation  By The End Of The Summer? Michael Snyder highlights what is happening in the European Union - they are rushing legislation (financial repression) for all European Union countries & threatening that if a country does not enact "bailin" legislation within the next 2 months, it will face legal action .. what is a bailin? - it's when creditors like bank depositors or shareholders lose something to help bail out a bank, instead of the government bailing out the bank .. why 2 months? - because you have Greece ready to default & it could send contagion effects all across Europe .. "Greece will only be just the beginning. In the end, I expect major banks to fail all over Europe as we head into the greatest financial crisis that Europe has ever seen. Bank account holders all over the continent could end up having to take 'haircuts', and that would just make the coming deflationary cycle in Europe a lot worse. And I actually expect events in Europe to start accelerating greatly by the end of this calendar year. Apparently the top dogs in the European Union are also concerned about the immediate future, because they are rushing to get 'bail-in' legislation passed in every nation in the EU by the end of the summer." LINK HERE to the article Read on » Why Speculating Is  All About Private Placements Palisade Radio interviews Marin Katusa who has just left Casey Researc .. Speculating is all about private placements .. How $100,000 in this market is the equivalent of $2M, two years ago .. Oil is going to hit a ceiling real soon .. What he really thinks about Vladimir Putin .. 45 minutes Read on » Radical Gold Underinvestment link here to the analysis Read on » Puru Saxena on Financial Repression Hong Kong-based fund manager Puru Saxena identifies quantitative easing & repressive interest rates as being financial repression, hurting retirees especially & representing a transfer of wealth from savers to the borrowers or debtors .. "This has managed to stabilize the system temporarily but is really not good for society!" .. financial repression has increased risk taking .. Saxena sees the international economy as being mired in low growth, with massive deflationary pressures in Europe & Japan .. "Historically we have seen, whenever an economy passes through an extremely slow growth, sluggish environment where there is a lack of aggregate demand and you have deflationary pressures, long term interest rates have always gone down. The tendency of long-term interest rates is to drift lower in this environment. Long-term interest rates are normally set by the rate of economic activity as well as the real rate of inflation. At the moment we don't really have much inflation or at least forces on inflation anywhere in the developed world and economic activity is zero or even negative!" .. 31 minutes Read on » click to enlarge Read on » OUTSIDE OUR BOX Dr. John Nash on his Life  before & after the Nobel Prize Dr. John Nash talks about the impact the Prize had on his life, his talent for mathematics as a child, the work that gave him the Prize, advice to young students, the important economic issues of the day (2004), shares his thoughts about the movie on his life, A Beautiful Mind .. 30 minutes Read on » MOST DREADFUL ADVISER LARRY SUMMERS Blames People Who Save Martin Armstrong* points to comments by former U.S. Treasury Secretary Larry Summers: "The world suffers from a savings surplus and therefore threatens to fall into a secular stagnation." .. Armstrong explains why this is a bone-headed view .. "He looks at the world through fogged glasses – not even a rose colored pair. He claims that now for decades to come we will have to adjust accordingly to slower economic growth and increasing economic and social problems. The reason he gives for this is that in some countries such as China and Germany, people saved too much, rather than consume or to invest. Therefore, they exported their savings abroad and thus led to an oversupply of savings, for there is no sufficient demand. Summers' solution – the cash-free economy. .. Nobody seems to be willing to look at the role of government .. they blame capitalism and their ultimate solution is total government control. Economists are typically paid by government directly or indirectly in academia and those who have real world experience are not interested in getting involved in the mud-wrestling sport of politics. Somehow it's never those in charge who ever screw things up. It's always We The People." [Cliff Note: Summers was instrumental in leading us into the financial crisis, yet the President who had promised 'real change' kept him around .. doesn't that tell you something about who is in charge? .. the politicians? or those running the money? Obama chooses the same monetary authorities as Bush!?!]  link here to the commentary Read on » Why Stocks are Not "Cheap Relative to Bonds" In his weekly market letter, John Hussman observes the bulls in the current market as having identical beliefs despite the fact that many of those beliefs are contradicted by historical evidence .. are stocks cheap relative to bonds? - "Unfortunately, the evidence suggests exactly the opposite. Indeed, despite a yield to maturity of hardly more than 2% annually, Treasury bonds are still likely to outperform the total return of the S&P 500 over the coming decade .. We estimate that from current valuations, the S&P 500 will underperform Treasury bonds by more than 2% annually over the coming decade. We've never observed a similar level of stock vs. bond valuations without stocks actually underperforming bonds over the subsequent 10-year period. Next, look at bear market lows such as 2009, 2002, 1990, 1987, 1982, 1978, and 1974, and recognize that the completion of every market cycle in history has provided better investment opportunities, both in absolute terms, and relative to bonds, than are presently available. Frankly, history suggests that a rather ordinary completion to the present market cycle would involve the S&P 500 losing more than half of its value." LINK HERE to the essay Read on » The Next 100 Years  Belong To Asia Wall St For Main St interviews James Corbett .. on Japan's economy, inflation in Japan & what is happening at the nuclear reactor at Fukushima .. discussion on whether China really wants to 100% back its currency with gold & put the Chinese currency on a gold standard or if China is merely content with accumulating more & more physical gold as insurance & savings to protect its other (paper) trade surplus investments .. 52 minutes Read on » What Would Happen If Mainstream Investors  Discovered Gold? John Rubino* ponders if/whether traditional money managers begin viewing gold as a viable investment & a substitute for cash .. presents a selection from his co-authored book The Money Bubble: What to Do Before it Pops: "The fact that the East stands ready to buy all their gold at late-2013 exchange rates presents developed-world central banks with a dilemma: They can continue their manipulation, in which case they will soon run out of metal. Or they can step back – like they did when the London Gold Pool collapsed in 1968 – and let market forces choose an exchange rate, which will almost certainly be far higher than at present. To understand how quickly and dramatically the latter scenario might play out, consider the current asset base of the money management industry. Most of the world's approximately $100 trillion of liquid wealth is overseen by mutual funds, hedge funds, insurance companies, sovereign wealth funds and pension funds. And they own virtually no gold. Shayne McGuire, head of global research at the Teacher Retirement System of Texas, estimates that pension funds, for instance, have allocated about 1/3 of one percent of their $30 trillion of assets to gold. If they were to up their exposure to just one percent (still extremely low) that would represent new demand for about $200 billion worth of gold, or about 4,700 tonnes at the metal's late-2013 exchange rate. That's more than 5-times the weight of gold that now resides in GLD, the biggest gold ETF, and about 125 percent of the late-2013 market capitalization of the entire gold mining sector. If pension funds allocate five percent of their assets to gold – which is still modest when viewed against historical records – the resulting $1.4 trillion increase in demand would overwhelm the market, virtually guaranteeing the kinds of defaults and shortages that almost took place in early 2013. And that's just pension funds. The other institutional investors mentioned above have $70 trillion under management and also own very little gold. A one-percent swing in their allocation would send another $700 billion into this small, thin, already-out-of-balance market, further destabilizing it. This shift in demand alone would be enough to change the industry's perspective on gold from 'ignore' to 'get some before the quarterly reporting deadline.' Toss in a default by a major metals exchange or an announcement by China that its reserves are actually 4,000 tonnes and it intends to back the yuan with gold and use it instead of the dollar for international trade, and the combination of renewed interest in gold and loss of faith in the dollar would send the gold/dollar exchange rate soaring." link here to the commentary Read on » No More Retail Gold  In Europe Dollar Vigilante's Jeff Berwick is in Europe observing the same observations as Martin Armstrong - there is a shortage of gold at the retail level in Europe .. "Shops are buying precious metals still, but no one is selling. Spanish banks that once sold gold to the public have shut down in Spain, and if people leave Spain wearing a lot of jewelry, authorities weigh and inspect the precious metals, as Armstrong reports. Europeans who understand these markets are in the know, and it has left them quite concerned as the Eurozone is on edge with the possibility of England leaving the EU and Greece receiving an ultimatum from the northern powers. Global distrust is leading to increasing tensions among nation-states, and its having an effect on worldwide gold storage, with Austria, Germany, the Netherlands, Russia and Venezuela moving some of the gold they've stored in New York, London and Paris back to their home countries." LINK HERE to the article Read on » Everyone Is Pregnant  With Debt Greg Hunter interviews analyst Warren Pollock .. warns the game is about over: "It's an absolute con game and right now, everyone is involved in the great con. . . . We can see now that the pension plans are going to be confiscated from the people. That's pretty much obvious to everyone with the Supreme Court ruling that is an advance indicator that your retirement money is going to be confiscated. Gold looks very unattractive in the markets, and that is one of the places that you should actually go to. You need a stack of $20 bills, but you also need gold. We're definitely going to have a currency crisis, but right now, everyone is pregnant with paper. Everyone is pregnant with U.S. debt. Everyone is pregnant with U.S. stocks, particularly in these sovereign funds. Right now, we are so pregnant with debt it is being sold out in crowd funding sites. You can buy people's credit card debt. This is how stupid this economy has become." .. 36 minutes Read on » click to enlarge Read on » Copyright © 2015 www.cliffkule.com All rights reserved. You subscribed to our free alert service. unsubscribe from this list    update subscription preferences