Archive

Posts Tagged ‘violence’

Large Cities All Over America Are Degenerating Into Gang-Infested War Zones

January 7th, 2013

detroit cityMichael Snyder: Large U.S. cities that the rest of the world used to look at in envy are now being transformed into gang-infested hellholes with skyrocketing crime rates.  Cities such as Chicago, Detroit, Camden, Read more…

Economy, Government

More Than 2000 Children Are Murdered In The U.S. Every Single Day

December 16th, 2012

Michael Snyder: Mass murderer Adam Lanza is yet another example of how society is collapsing right in front of our eyes.  When I was young, I never imagined that someone Read more…

Economy, World News

Detroit: One Of Our Greatest Cities Has Become A Desolate Wasteland Where The Lawless Reign

December 6th, 2012

Michael Snyder: Once upon a time, Detroit was one of the greatest cities in the entire world.  Today, it has become a desolate wasteland where the lawless reign.  Once upon a time, Detroit was a teeming metropolis of about 2 million people.  Today, it has become a rotting war zone with a population Read more…

Economy, Government

50 Crazy Things That Barack Obama Supporters Are Threatening To Do If Mitt Romney Wins

October 18th, 2012

Will cities all over America erupt in violence if Mitt Romney wins the election?  Right now we are probably witnessing the most divisive campaign in modern U.S. history, and both sides Read more…

Economy, Government

Darkening Storm Clouds on the US Civility Horizon

June 10th, 2011

Today, a new post on our friend Barry Ritholtz’s blog looks at Jack Cafferty’s new CNN Question of the Hour: What are the chances the US economy could eventually trigger violence in our country?

A few choice quotations help explain the perspective:

  • “A new CNN poll suggests 48 percent of Americans think the country is headed for another Great Depression in the next 12 months.”
  • “If our economy doesn’t turn around, and people don’t start feeling optimistic about their futures again, we could be headed for some ugly scenarios.”
  • James Carville remarked, “The current economy is so bad, there’s a heightened risk of civil unrest unless things begin changing for the better.”
  • “In the most recent jobs report, last Friday, more than half of the private sector jobs added were at McDonald’s.”

Some viewer reactions point out challenges with wealth disparity in the nation, as well as with increasing prices of gas, groceries, and other basic items as the ingredients of “a crumbling nation.” You can view more details in the video below which came to our attention via a Big Picture blog post on how the handling of the economic crisis may lead to civil unrest.

Darkening Storm Clouds on the US Civility Horizon originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
Darkening Storm Clouds on the US Civility Horizon




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

The Falling Bottom Line

May 12th, 2011

Children are taught it and adults repeat it. In the Western world, “religion” is the knee-jerk response as to why wars in the distant past were fought. It’s any easy way to explain away complex issues. By drawing God into conflicts that are entirely man made, initiators of the violence absolve themselves of all responsibility.

Though the uprisings in the Middle East were initially, and correctly, attributed to high unemployment, widespread poverty, lack of opportunity, rising prices and rampant corruption, it would not take long for the script to change from implicating politics and economics to implicating God.

Shortly following the downfall of Hosni Mubarak, western politicians, the media and analysts sounded the alarm: “Beware, here comes the Muslim Brotherhood.” Yet, two months later, polls showed only 10 percent of Egyptians would vote for the leader of the Brotherhood as president.

And if the Brotherhood wasn’t a frightening enough group to use as a pretext to blame religion for the troubles, there was always an endless supply of faceless, nameless, Islamic extremists lurking in the shadows, waiting for the opportunity to set up Sharia Law and threaten governments around the world.

But it was not religion that sparked the conflagrations. As “the good book” has it, “money is the root of all evil.” (1 Timothy 6:10)

It was neither God nor Allah that would take the world into “The 1st Great War of the 21st Century.”  It was the falling bottom line.

In 2011, all across Europe, the bottom continued to fall out of the bottom line. Like Greece and Ireland before it, the Portuguese government, after religiously vowing never to ask for a bailout, asked for a $118 billion bailout from the European Union.

Bailouts were not gifts, but debt traps – loans at interest rates lower than the private sector but still unmanageably high. Endlessly piling new un-repayable debt on top of old un-repayable debt would not solve the underlying problem, If fact, it would worsen it. By imposing forced austerity measures and draconian spending cuts in order to service the debt, the bailed-out nation would reduce its productive capacity and its ability to compete in the global market.

Moreover, the indebted nations would be required to privatize valuable resources and industries to service the debt, with the profits going to creditors, often in foreign countries.

In layman’s terms, “bailout” is a euphemism for state sponsored loan-sharking. Precious national assets are sold at bargain basement prices to political insiders, robbing the nation of its wealth.

How did the bailouts of Portugal, Ireland and Greece figure into the Great War? It was the same bottom line issue that brought on the “Arab Spring.” Apart from nationalities and languages, the provocations were the same: high unemployment, restless youth, rising prices, etc. – and, of course, corruption.

But it wasn’t the stereotypical Middle Eastern-style corruption of vulgar Arab sheiks doing dirty deals behind closed doors with shifty business moguls. In Europe, corruption was refined, honorable, prudent and openly practiced. It was called “banking.”

Legal, state-sanctioned European financial corruption that made more billions for billionaires and mega-millions for multi-millionaires had crashed or crippled many EU member countries.

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to get the full story in, learn more about, and subscribe to The Trends Journal.]

The Falling Bottom Line originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Bill Bonner, the founder of the the Daily Reckoning released his latest book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas in April 2011.

Read more here:
The Falling Bottom Line




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Regime Change, Hillary’s Head Fake

April 28th, 2011

It was just another day of duplicity in DC. If there was a Washington newspaper that honestly reported on American politics, it would have to be called The Daily Double Standard.

When the Tunisian and Egyptian rebellions began, President Obama and Secretary of State Hillary “The Determinator” Clinton vacillated for weeks while hundreds of protesters were being slaughtered. It was only after it became clear that the autocratic leaders (that the US had supported for decades) would be overthrown that the US would champion the need for a transition to “democracy.”

Yet similar uprisings, destabilizing other Middle East and North Africa nations, were met only with earnest diplomatic calls for restraint and dialogue, never with demands for regime change… except when it came to Muammar Qaddafi.

On February 26th, just days after the first uprisings in Libya, President Obama boldly declared, “When a leader’s only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now.”

Two days later Hillary Clinton threw her Secretarial weight into the fray, proclaiming, “It is time for Qaddafi to go, now, without further violence or delay. We want him to leave, we want him to end his regime.”

That these ludicrous ultimatums should have been uttered by people in responsible positions and then seriously reported by the world’s media (without editorial comment) was further proof of their arrogance and hubris. In the history of the world, what autocratic leader had ever packed up his bags, bowed down, bent over and gone into exile because a bunch of blowhards seven thousand miles away gave the order: “We want him to leave.”

On the other hand, perhaps the position wasn’t as foolish as it looked, but a calculated exercise in political cunning. Knowing full well that Qaddafi would never leave willingly and that plans were already in place to attack, when they attacked, their nonsensical ultimatum would serve as an effective excuse. Qaddafi had been given fair warning.

Three weeks before President Obama launched “Operation Odyssey Dawn” (a grotesque name to apply to a military exercise that would consist of launching missiles and dropping bombs without any fear of reprisal!), Hillary Clinton told reporters that the movement of US military forces off the coast of Libya was meant to position them to help with humanitarian efforts. And although there was discussion of a no-fly zone, “There is not any pending military action involving US naval vessels,” she said.

“We’ve been reaching out to many different Libyans who are attempting to organize in the east and, as the revolution moves westward, there as well,” she said, “… but we’re going to be ready and prepared to offer any kind of assistance that anyone wishes to have from the United States.”

[Editor's Note: As discussed in the next portion of The Trends Journal, exactly who these "anyones" were, that Secretary of State Hillary Clinton was keen to “offer any kind of assistance,” was a matter left to be sorted out later...]

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to get the full story in, learn more about, and subscribe to The Trends Journal.]

Regime Change, Hillary’s Head Fake originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

Read more here:
Regime Change, Hillary’s Head Fake




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

New Protests, Riots and Revolutions: 5 Lessons for Investors

March 28th, 2011

Martin D. Weiss, Ph.D.

The disasters in Japan may be fading from the headline news, but not from the daily life of my family.

While Anthony is helping with a food drive in Tokyo, we spent Sunday at a Red Cross fund-raising drive organized by parents of our Weiss School in Palm Beach Gardens.

Nanako, a proud second grader, encouraged folks to donate and gave a stand-up interview to Channel 5 News. Her friends and their parents from other schools also pitched in. It was a busy day for us all.

So please forgive me if I’ve had less time today to talk to you about world events on my Facebook page this weekend — because a lot is happening and it’s not pretty. My key point:

Natural Disasters Are Often the Lesser of the Evils. It’s
The Man-Made Disasters That Can Cause More Harm!

The people of Japan will overcome their tragedy. They will rebuild. They will put their lives back together. And in the process, they will become even stronger.

Unfortunately, however, the same cannot be said about the man-made disasters now on the near horizon — in the Middle East, Europe and even the United States.

In the past, these man-made disasters were largely hidden from the naked eye — only trained observers were aware that they even existed: Corrupt government policies were ignored. Wild government spending was covered up. Debts, deficits, and excess risk-taking in nearly all realms of life were pooh-poohed or even cheered on.

But just in the last few months, all that has changed dramatically. Now …

The Egregious Blunders of Government Leaders
Are Exploding Onto the Streets of the World in the
Form of New Protests, Riots, and Revolutions.

London, Syria, Yemen

In London, more than 250,000 people poured onto the streets this past Saturday to protest government cutbacks. They then descended into a “ferocious melee” as smaller groups of “violent mobs” destroyed shops, attacked banks, and vandalized Trafalgar Square. At least 211 people were arrested and 66 were injured, including 31 police officers.

In Syria — a tightly controlled police state where State Department experts thought protests would be next to impossible — the violence is suddenly worse than in any Arab country outside of Libya.

On Friday, not only were dozens more anti-government protesters killed by police in the southern city of Dara’a (where the movement first began), but the violence also spread to other cities and even to the capital, Damascus, where thousands poured onto the streets demanding reforms.

In the capital of Yemen, one of the largest-ever crowds of anti-government protesters demanded the resignation of President Ali Abdullah Saleh on Sunday. Meanwhile, militants seized control of a weapons factory and a nearby town in Yemen’s south, as political turmoil caused security to unravel around the country.

Jordan, another key country thought to be among the “least vulnerable” to turmoil, has now also erupted into mass demonstrations. Just yesterday, mourners buried 55-year-old Khairi Saad, the first person to die in the protests, marking a critical new turn for the worse.

Map

Bahrain is virtually under martial law, and yet, this weekend protesters continue to brave the streets. Even in Saudi Arabia, protesters in one of its oil-rich eastern regions demanded the withdrawal of Saudi forces from Bahrain.

My view: As an investor and as a citizen, it’s not enough to simply sit back and watch these dramatic changes from afar. If you haven’t done so already, it’s time to wake up, smell the coffee, and take defensive action. I suggest you begin with:

The Five Important Lessons to Be
Learned From These Man-Made Disasters

The first lesson is the one I stressed here five weeks ago:

Upheavals, revolutions, and wars inevitably disrupt or destroy the normal flows of goods and resources.

They block shipping routes. They freeze or even gut production facilities. They create a domino-effect of supply shortages around the globe.

The second lesson, also in my earlier report, is about oil and energy:

More than 860 billion barrels, or about 63 percent of the world’s petroleum reserves, are held by countries that are suffering from — or vulnerable to — political upheaval.

For a sense of how far and wide the crisis has spread, see the map above. And to get a glimpse of the consequences, just check the price of gasoline in your area!

The danger — surging inflation in the United States.

The opportunity — major profits to be made in natural resources.

The third lesson should be self-evident:

The masses, if desperate or determined enough, can ultimately rise up to overthrow almost any regime, anywhere.

No despotic government on Earth — no matter how well financed or heavily armed — can forever avoid its own collapse or overthrow. We saw this with the fall of the Berlin Wall, the demise of the Soviet Union … and, earlier in the 20th century, with the end of the British Empire.

We’ve seen recent examples not only in the Middle East, but also in Ireland, and, just this past week, in Portugal as well.

Advertisement

Fortunately, in Western countries, most rebellions are channeled through democratic processes. But to blindly assume we are somehow invulnerable to political turmoil is to ingeniously ignore history.

The fourth lesson is also clear: Although social movements rarely exclude ideological or religious overtones, the underlying driver is almost invariably economic — and that is especially true of the most recent upheavals in Europe, the Middle East, and North Africa.

People are angry or anxious because they feel
— or fear — the utter desperation of poverty.

But it’s the fifth and last lesson that I believe merits the closest scrutiny right now:

  • The revolts on the streets of London, Dublin, Lisbon, and Athens have been a reaction to massive government deficits and cutbacks. They are common symptoms of a deflationary crisis.
  • In contrast, the revolts in the Middle East have been largely triggered by surges in the cost of living. Among other causes, they are consequences of an inflationary crisis.

These are very different kinds or revolts, mandating very different protection or profit strategies:

  • The deflationary crisis can lead to a fundamental resolution down the road, especially if the sacrifices are shared by the rich and powerful. In this scenario, the best place for investors to find protection is in long-term Treasury bonds.
  • The inflationary crisis merely prolongs the agony, destroys the middle class, polarizes society, and leads to far greater political upheavals. And unfortunately, right now, that’s the path our government is on. The best place to find protection is in gold, silver, the world’s strongest economies and short-term Treasuries for cash.

Fiscal Armageddon in the United States?

Senator Mark Warner (D-VA) says, “we’re approaching financial Armageddon.”

Representative Allen West (R-FL) says, “the economic situation here in the United States of America is a fiscal Armageddon.”

And Senator Joe Manchin (D-WV) declares, “we cannot ignore the fiscal Titanic of our national debt and deficit.”

These are timely warnings, especially given the fact that the Congressional Budget Office (CBO) just released a new report showing that President Obama’s budget will drive the budget deficit UP an additional $2.3 TRILLION over the next 10 years.

And never forget: The CBO is infamous for grossly UNDERestimating budget deficits. Just a couple of years ago, in fact, the CBO said this year’s deficit would be less than one-fourth as large as it actually is!

So what is Washington going to do about it? Ultimately, there are two choices …

  • Like Ireland or the UK, Washington could slash spending to the bone and risk the kind of political backlash we saw on the streets of London this past Saturday. That would set off a deflationary crisis. Or …
  • Reminiscent of some countries in the Middle East, which have allowed inflation and poverty to destroy the trust of their citizens, we could pursue the path Washington is now on — “austerity be damned,” no sacrifices by the rich, more money printing, and rising inflation.

Which one would you choose? Or is there a third choice?

If you’re my Facebook friend, let me know on my personal Facebook page by clicking here. If not, it’s easy to sign up and send me a friend request, which I’ll gladly accept right away.

Good luck and God bless!

Martin

Read more here:
New Protests, Riots and Revolutions: 5 Lessons for Investors

Commodities, ETF, Mutual Fund, Uncategorized

After Predicting Global Anti-Gov’t Protests: What’s Next?

February 25th, 2011

It is a matter of record! The spate of seething, youth-inspired Middle East uprisings that are toppling governments, reshaping the geopolitical landscape and roiling world markets blindsided the world’s intelligence community.

Not the CIA, Joint Chiefs of Staff or National Security Council saw it coming. Mossad and MI5 missed it! None of the mainstream media’s star-studded stable of scholars, experts and think-tank policy wonks were thinking ahead.

But what was breaking news to them was yesterday’s news for Trends Journal readers. In the summer 2010 issue, we wrote:

What’s happening in Greece will spread worldwide as economies decline. There are no organizations behind this response, it’s a public response. This is a 21st century rendition of ‘Workers of the World unite’ … Initially the strikes, riots and protests by unions, student groups, the unemployed, pensioners, and the outraged were sloughed off as predictable (but short-lived and ineffectual) responses that would either peter out on their own or be stomped down by the police … The unofficial reality was that, as Gerald Celente has repeatedly warned: “When people lose everything and have nothing left to lose, they lose it.”

By the Autumn of 2010, our Globanomic methodology pointed to socioeconomic conditions rapidly deteriorating to such an extent that we warned readers of an imminent explosion: “Off With Their Heads 2.0” read our headline, capturing the revolutionary impulse of people who could no longer ignore the toll financial hardship was taking on their lives.

We subsequently identified the role the social media (a megatrend-in-waiting) would play in tipping the balance of political power and breaking the grip of government control. In December 2011, just days before the world tuned into Tunisia, we released our “Top Trends of 2011.” Among them was “Journalism 2.0” which, we predicted, would put an arsenal of digital/Internet weapons into the hands of virtually every citizen via Facebook, Twitter, YouTube, etc. Deployed by youthful revolutionaries around the world, they would bypass corporate/government media, outwit intelligence agencies, outflank the military and police and rally the populace into the streets and onto the barricades.

As we wrote before Tunisia and Egypt erupted, the outbreaks would go global and the reasons behind the unrest would be more about bread and butter issues than politics. As economies decline, unemployment rises, taxes are raised and services cut – while those at the top get richer and most everyone else gets poorer – revolutions will continue to spread.

But that’s not the way it’s being represented by the same people who didn’t see it coming. The media, pundits and politicians have misrepresented the historic geopolitical events that have occupied the news since the onset of the New Year. Virtually overnight, the revolutions have been glorified as courageous fights for freedom and liberty by democracy-hungry-masses.

But it is not hunger for democracy that drives them. Democracy, autocracy, theocracy, monarchy – right, center, left – it is mostly a gut issue…an empty gut issue. When the money stops flowing down to the man in the street, the blood starts flowing in the streets. It’s a simple equation. A few at the top have too much, and too many others have too little.

What’s Next: In response to the current Middle East uprisings, gold has broken above $1400 an ounce and Brent Crude climbed to $111 a barrel. There is no end in sight to market volatility. As the violence escalates and expands, the fallout will be felt around the world.

From the onset of the financial crisis that began in August 2007, and through the ensuing Panic of ’08, Washington, the Federal Reserve and central banks have managed to forestall a Great Depression-grade meltdown by way of a variety of multi-trillion dollar rescue packages, bailouts and stimulus programs. For three years the programs were able to induce an illusory and superficial recovery that, barring a major external geopolitical jolt, might have continued to run its course until the inevitable denouement.

But now the jolt felt around the world is in the process of shattering the recovery illusion. Whether deliberately (as calculated policy) or as fallout from fear-based denial, the pieces are not being put together. The current unrest is not confined to the Middle East and North Africa, and as we had forecast, it will spread to Europe and other parts of the world. The more volatile and widespread the insurrections, the greater the probability that some combination of events (e.g., oil shock, terror attack, cyber wars and regional wars) will crash already fragile economies, and roil sound ones.

Be prepared conditions are spinning out of control.

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above Trend Alert is available as part of a subscription to The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.]

After Predicting Global Anti-Gov’t Protests: What’s Next? originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
After Predicting Global Anti-Gov’t Protests: What’s Next?




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Uncategorized

After Predicting Global Anti-Gov’t Protests: What’s Next?

February 25th, 2011

It is a matter of record! The spate of seething, youth-inspired Middle East uprisings that are toppling governments, reshaping the geopolitical landscape and roiling world markets blindsided the world’s intelligence community.

Not the CIA, Joint Chiefs of Staff or National Security Council saw it coming. Mossad and MI5 missed it! None of the mainstream media’s star-studded stable of scholars, experts and think-tank policy wonks were thinking ahead.

But what was breaking news to them was yesterday’s news for Trends Journal readers. In the summer 2010 issue, we wrote:

What’s happening in Greece will spread worldwide as economies decline. There are no organizations behind this response, it’s a public response. This is a 21st century rendition of ‘Workers of the World unite’ … Initially the strikes, riots and protests by unions, student groups, the unemployed, pensioners, and the outraged were sloughed off as predictable (but short-lived and ineffectual) responses that would either peter out on their own or be stomped down by the police … The unofficial reality was that, as Gerald Celente has repeatedly warned: “When people lose everything and have nothing left to lose, they lose it.”

By the Autumn of 2010, our Globanomic methodology pointed to socioeconomic conditions rapidly deteriorating to such an extent that we warned readers of an imminent explosion: “Off With Their Heads 2.0” read our headline, capturing the revolutionary impulse of people who could no longer ignore the toll financial hardship was taking on their lives.

We subsequently identified the role the social media (a megatrend-in-waiting) would play in tipping the balance of political power and breaking the grip of government control. In December 2011, just days before the world tuned into Tunisia, we released our “Top Trends of 2011.” Among them was “Journalism 2.0” which, we predicted, would put an arsenal of digital/Internet weapons into the hands of virtually every citizen via Facebook, Twitter, YouTube, etc. Deployed by youthful revolutionaries around the world, they would bypass corporate/government media, outwit intelligence agencies, outflank the military and police and rally the populace into the streets and onto the barricades.

As we wrote before Tunisia and Egypt erupted, the outbreaks would go global and the reasons behind the unrest would be more about bread and butter issues than politics. As economies decline, unemployment rises, taxes are raised and services cut – while those at the top get richer and most everyone else gets poorer – revolutions will continue to spread.

But that’s not the way it’s being represented by the same people who didn’t see it coming. The media, pundits and politicians have misrepresented the historic geopolitical events that have occupied the news since the onset of the New Year. Virtually overnight, the revolutions have been glorified as courageous fights for freedom and liberty by democracy-hungry-masses.

But it is not hunger for democracy that drives them. Democracy, autocracy, theocracy, monarchy – right, center, left – it is mostly a gut issue…an empty gut issue. When the money stops flowing down to the man in the street, the blood starts flowing in the streets. It’s a simple equation. A few at the top have too much, and too many others have too little.

What’s Next: In response to the current Middle East uprisings, gold has broken above $1400 an ounce and Brent Crude climbed to $111 a barrel. There is no end in sight to market volatility. As the violence escalates and expands, the fallout will be felt around the world.

From the onset of the financial crisis that began in August 2007, and through the ensuing Panic of ’08, Washington, the Federal Reserve and central banks have managed to forestall a Great Depression-grade meltdown by way of a variety of multi-trillion dollar rescue packages, bailouts and stimulus programs. For three years the programs were able to induce an illusory and superficial recovery that, barring a major external geopolitical jolt, might have continued to run its course until the inevitable denouement.

But now the jolt felt around the world is in the process of shattering the recovery illusion. Whether deliberately (as calculated policy) or as fallout from fear-based denial, the pieces are not being put together. The current unrest is not confined to the Middle East and North Africa, and as we had forecast, it will spread to Europe and other parts of the world. The more volatile and widespread the insurrections, the greater the probability that some combination of events (e.g., oil shock, terror attack, cyber wars and regional wars) will crash already fragile economies, and roil sound ones.

Be prepared conditions are spinning out of control.

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above Trend Alert is available as part of a subscription to The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.]

After Predicting Global Anti-Gov’t Protests: What’s Next? originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
After Predicting Global Anti-Gov’t Protests: What’s Next?




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Uncategorized

Moody’s Downgrades Japan’s Debt. Yen Still Rallies.

February 22nd, 2011

On Saturday, I read quite a few stories that would have made a great Pfennig! Stories with headlines like: “IMF chief reiterates a need for EU to resolve debt crisis” and, “State, local and federal debt in US is highest since WWII” and, “Bernanke refutes criticism that Fed policy causes issues abroad”…

I found all these stories and more to read about… I don’t think there’s much explanation that needs to go along with the story titles, for the titles basically say it all! Yes! The European Union (EU) does need to resolve their debt crisis… If they don’t, they can say goodbye to the advantage the euro (EUR) has held over the dollar for over nine years! And the state and local and federal debt levels? Geez, I’ve beaten that horse to death over the years (no animals were hurt!)! But, I guess it’s important that we remain on top of these things just so we can sleep at night, knowing we did the right thing by diversifying a portion of our investment portfolio outside of the dollar! And Bernanke? Well… I wish I could tell you what I really think, but unless you want to hire me, and pay me at the same scale as now, I have to keep my thoughts to myself!

So… Here we are on a Terrific Tuesday, the G-20 met this weekend, and basically said nothing… G-20, Schmee 20! A few weeks ago, people were saying that gold’s run was over… And then looky here… Gold is within spittin’ distance of $1,400 once again, and actually traded over $1,400 yesterday, but has sold off by $10 overnight and this morning. And silver? It continues to outperform gold! WOW! The stories I’m tracking this morning, are: 1. The earthquake in New Zealand, and 2. The Moody’s downgrade of Japan’s debt rating outlook to negative, and 3. The Middle-East violence that has taken risk out of the markets…

Australia and New Zealand just can’t catch a break from mother nature! There was a very strong earthquake in New Zealand overnight, that has been the cause of death for at least 65 people. The earthquake was in Christchurch – New Zealand’s second largest city. My thoughts go out to the people of that region… I know how a tornado devastated an area close to my home recently; I don’t think I can imagine a city being brought to its knees, as has been reported…

As you can imagine, the New Zealand dollar/kiwi (NZD), is getting sold, and kiwi’s kissin’ cousin across the Tasman, Aussie dollar (AUD) is being sold, too. Historically, you see this between these two… One may outperform the other, but if something rocks one, the other gets rocked too… For the Aussie dollar, though, I would have to think it’s a knee-jerk reaction, and presents an opportunity to buy cheaper than yesterday.

The second story I was looking at was about Japan’s debt rating outlook being downgraded by Moody’s… Once again, where have these ratings guys been? It’s not like Japan just crossed some mythical debt number that brought about this downgrade for the outlook to negative… (An outlook downgrade usually means that the next actual rating will be lowered)… Nooooooooo! Japan’s debt has been a balloon being inflated for some time… In fact, just last month S&P lowered Japan’s debt rating to -AA from AA… But even S&P was late to the party.

The thing that makes me scratch my balding head is that the violence in the Middle East has taken risk out of the markets, and caused the old guard (the so-called “safe havens” – dollars, francs (CHF), and yen (JPY)) to rebound… So, even with another possible downgrade on the horizon for the yen, it rallies… Go figure.

Remember, “Mr. Yen”? Long time readers (and I mean long time readers – from my days at Mark Twain Bank, where the Pfennig originated) will recall that Japan’s Top Currency Official, Sakakibara, A.K.A. “Mr. Yen”, was always in the news for his ability to “guide the direction of yen”… Well, that was a long, long time ago, in a galaxy far away… But, looky here! Mr. Yen, Sakakibara is back in the news, saying that he believes that with the “US facing a balance-sheet problem, and businesses still saddled with bad loans and households with excess debts, the sustainability of a recovery is still doubtful, that he dollar’s downward trend will continue over the medium to long term, and that yen will rise to its postwar higher 79.75.”

Hmmm… Well, most of what Mr. Yen just said I agree with. As you can guess, it’s the part about the US problems… But to think that yen is going to go to 80 or less, is a pipedream at this point, in my opinion… For… as I’ve said a couple of times already in the past couple of weeks… I think the carry trade is coming back, and yen will take its rightful place in line as the “funding currencies” of the carry trade.

Chris sent me a note about something he was tracking this past weekend regarding China, so let’s switch gears and see what Chris has to say…

A report last week showed that China’s leading economic indicators fell for the first time in almost three years. The index slid 0.5% in December from November according to the New York based Conference Board. China’s government has raised rates and increased reserve requirements for Chinese banks in an attempt to contain asset bubbles and growing inflation. The official numbers show that Chinese inflation is running at 4.9% during the month of January which is above the government’s 2011 target.

The renminbi (CNY) jumped as speculators moved back into the market thinking the government will have to let the currency appreciate in order to stay on top of rising prices. The Chinese currency traded at a 17-year high on Friday, just in time for the G20 meeting. This has become a familiar pattern, with China letting their currency appreciate just before a major economic summit. While the currency is trading at the highest level in recent memory, the Chinese government has not indicated it is ready to let the currency float. It sure looks to me like they will continue to take a “slow and steady” approach to the currency’s appreciation.

Thanks, Chris!

OK… Here’s something that you didn’t see on your cable news last week… First, let me set this up for you… When I took off for Miami last Thursday, the 10-year Treasury’s yield was 3.63%… While in Miami, I heard, from a very good source, that the Fed had bought $8 billion of 10-year Treasuries through the old “back door” once again… Which explains why the yield of the 10-year has fallen to 3.52%… In case you are new to class, you might not know what I’m talking about here with the “old back door.”

Well… The Treasury auctions Treasury bonds through their normal auctions to buyers… When there aren’t enough buyers, the Primary Dealers, (very large banks!) step in and buy what is not sold in the auction… But in a back door trade, the Primary Dealers hold the bonds for about 10 days or less, and then see the Fed/CABAL at the back door, and the Fed/CABAL buys the bonds from the Primary Dealer… Thus brining down the yield, and raising the price of the bond.

Now… You as a US citizen should be grabbing your pitchfork or rake, and heading to Washington DC, because this action costs you money! First of all, you don’t think for one minute that the CABAL gets a “discount” for buying those bonds, do you? No way! And second, just where did the CABAL get the money to pay the Primary Dealer for those bonds that they paid over the auction price for, so the Primary Dealer could make “a shekel or two” (more like cutting into a fat hog!)? That’s right, folks… YOU! Remember what I always tell you, the government doesn’t have any money that it hasn’t stolen/taken from you!

OK… I had better stop, I can feel my blood pressure rising, and… I don’t want to say something about this whole operation, and those running the operation, that will get me called on the carpet!

Well… The Middle-East violence has the price of oil on the rise again… I’ve watched it gain $1 to $93.50 just while I’ve been here banging away on the keyboard with my fat fingers… But, no worries, you don’t have to pay a higher price at the gas pump, because Big Ben Bernanke says there is no inflation! HAHAHAHAHAHA!

Did you see that Mexico’s economy expanded at the fastest pace in a decade last year at 5.5%? I have all kinds of thoughts about this news… But, again, those aren’t compliant… So, I’ll keep them to myself…

Looks like interest rates in Brazil aren’t at a top yet… Seems that Consumer Inflation (CPI) in Brazil, is still rising, even in the face of over two years of rate hikes. Brazilian economists raised their inflation forecasts this past weekend, thus fueling the rate hike talk… The real (BRL) is bound to pick up steam once the “risk aversion” has been taken out of the markets again…

Did you see the comments by ECB member Yves Mersch? In an interview in Luxembourg yesterday, Mersch said that the ECB may toughen its inflation language next week and that he would not be surprised if colleagues “conclude that we have upside risks to price stability.” This news caught the market short euros on Monday, and with the US out, the volume was muted, which caused a very strong 75-point move up in the euro yesterday, only to see it taken back out overnight with the removal of risk.

I was wondering when someone in the ECB was going to step forward and recognize the risks to price stability… So I was happy to see the comments from Mersch… But you have to keep in mind that Mersch has always been considered a strong hawk, so he might be “talking out of school” and then again he might not be! I guess we’ll have to wait-n-see when the ECB meets next to see what the rest of the “boys” say.

So… The currencies and metals don’t look too good this morning, except dollars, francs, and yen… But who wants to own them? They don’t have any yield, and their balance sheets (especially dollars and yen) are absolutely awful! Ask Moody’s and S&P about Japan’s balance sheet! Neither one of those agencies have the intestinal fortitude to downgrade the US…

We start the week with the S&P/CaseShiller Home Price Index for December this morning, and go right to Existing Home Sales tomorrow…

Then there was this… My friend and former colleague, David Galland, always has his way of telling his readers something, and so it is with this piece from his letter on Friday. Here’s David…

In order to be happy, you need energy. But you also need to have a job and a reliable source of income – otherwise finding the leisure time to pursue dreams and passions becomes very limited. And of course, without money it becomes more challenging to secure the basic foodstuffs and shelter needed to keep the tool of your body in reasonably good shape.

Viewing the collision between jobs and machines that now seems inevitable, much of the other nonsense now going on seems almost trivial. Just today, Bernanke blamed the world’s economic ills on the failure of emerging market economies (cough, cough, China) to let their currencies rise.

But this is just so much rearranging the deck chairs on a sinking ship. As the truth of persistent high levels of unemployment, here, there, and everywhere becomes apparent – and the realization that government’s many promises were nothing but debt disguised in a fog of hot air – the public will come to the correct conclusion: no magic solution is in the works. At that point the unemployed will begin to look for happiness in mobs demanding change.

To recap… The currencies and metals are getting sold this morning, in a reversal of their recent trading. Risk aversion is prevalent in the markets this morning, as the violence in the Middle-East continues to cause concern. New Zealand suffered an earthquake near its second largest city, causing many deaths. Kiwi is getting sold on the news, and the sympathy trading is going on in Australia, as the Aussie dollar sells too. And Moody’s is getting ready to downgrade Japan’s debt rating, as they put Japan on a negative outlook… But it hasn’t hurt the yen yet, as the flight to the so-called “safe havens” that happens when risk aversion sets in, is back on the table this morning.

Chuck Butler
for The Daily Reckoning

Moody’s Downgrades Japan’s Debt. Yen Still Rallies. originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
Moody’s Downgrades Japan’s Debt. Yen Still Rallies.




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Uncategorized

Moody’s Downgrades Japan’s Debt. Yen Still Rallies.

February 22nd, 2011

On Saturday, I read quite a few stories that would have made a great Pfennig! Stories with headlines like: “IMF chief reiterates a need for EU to resolve debt crisis” and, “State, local and federal debt in US is highest since WWII” and, “Bernanke refutes criticism that Fed policy causes issues abroad”…

I found all these stories and more to read about… I don’t think there’s much explanation that needs to go along with the story titles, for the titles basically say it all! Yes! The European Union (EU) does need to resolve their debt crisis… If they don’t, they can say goodbye to the advantage the euro (EUR) has held over the dollar for over nine years! And the state and local and federal debt levels? Geez, I’ve beaten that horse to death over the years (no animals were hurt!)! But, I guess it’s important that we remain on top of these things just so we can sleep at night, knowing we did the right thing by diversifying a portion of our investment portfolio outside of the dollar! And Bernanke? Well… I wish I could tell you what I really think, but unless you want to hire me, and pay me at the same scale as now, I have to keep my thoughts to myself!

So… Here we are on a Terrific Tuesday, the G-20 met this weekend, and basically said nothing… G-20, Schmee 20! A few weeks ago, people were saying that gold’s run was over… And then looky here… Gold is within spittin’ distance of $1,400 once again, and actually traded over $1,400 yesterday, but has sold off by $10 overnight and this morning. And silver? It continues to outperform gold! WOW! The stories I’m tracking this morning, are: 1. The earthquake in New Zealand, and 2. The Moody’s downgrade of Japan’s debt rating outlook to negative, and 3. The Middle-East violence that has taken risk out of the markets…

Australia and New Zealand just can’t catch a break from mother nature! There was a very strong earthquake in New Zealand overnight, that has been the cause of death for at least 65 people. The earthquake was in Christchurch – New Zealand’s second largest city. My thoughts go out to the people of that region… I know how a tornado devastated an area close to my home recently; I don’t think I can imagine a city being brought to its knees, as has been reported…

As you can imagine, the New Zealand dollar/kiwi (NZD), is getting sold, and kiwi’s kissin’ cousin across the Tasman, Aussie dollar (AUD) is being sold, too. Historically, you see this between these two… One may outperform the other, but if something rocks one, the other gets rocked too… For the Aussie dollar, though, I would have to think it’s a knee-jerk reaction, and presents an opportunity to buy cheaper than yesterday.

The second story I was looking at was about Japan’s debt rating outlook being downgraded by Moody’s… Once again, where have these ratings guys been? It’s not like Japan just crossed some mythical debt number that brought about this downgrade for the outlook to negative… (An outlook downgrade usually means that the next actual rating will be lowered)… Nooooooooo! Japan’s debt has been a balloon being inflated for some time… In fact, just last month S&P lowered Japan’s debt rating to -AA from AA… But even S&P was late to the party.

The thing that makes me scratch my balding head is that the violence in the Middle East has taken risk out of the markets, and caused the old guard (the so-called “safe havens” – dollars, francs (CHF), and yen (JPY)) to rebound… So, even with another possible downgrade on the horizon for the yen, it rallies… Go figure.

Remember, “Mr. Yen”? Long time readers (and I mean long time readers – from my days at Mark Twain Bank, where the Pfennig originated) will recall that Japan’s Top Currency Official, Sakakibara, A.K.A. “Mr. Yen”, was always in the news for his ability to “guide the direction of yen”… Well, that was a long, long time ago, in a galaxy far away… But, looky here! Mr. Yen, Sakakibara is back in the news, saying that he believes that with the “US facing a balance-sheet problem, and businesses still saddled with bad loans and households with excess debts, the sustainability of a recovery is still doubtful, that he dollar’s downward trend will continue over the medium to long term, and that yen will rise to its postwar higher 79.75.”

Hmmm… Well, most of what Mr. Yen just said I agree with. As you can guess, it’s the part about the US problems… But to think that yen is going to go to 80 or less, is a pipedream at this point, in my opinion… For… as I’ve said a couple of times already in the past couple of weeks… I think the carry trade is coming back, and yen will take its rightful place in line as the “funding currencies” of the carry trade.

Chris sent me a note about something he was tracking this past weekend regarding China, so let’s switch gears and see what Chris has to say…

A report last week showed that China’s leading economic indicators fell for the first time in almost three years. The index slid 0.5% in December from November according to the New York based Conference Board. China’s government has raised rates and increased reserve requirements for Chinese banks in an attempt to contain asset bubbles and growing inflation. The official numbers show that Chinese inflation is running at 4.9% during the month of January which is above the government’s 2011 target.

The renminbi (CNY) jumped as speculators moved back into the market thinking the government will have to let the currency appreciate in order to stay on top of rising prices. The Chinese currency traded at a 17-year high on Friday, just in time for the G20 meeting. This has become a familiar pattern, with China letting their currency appreciate just before a major economic summit. While the currency is trading at the highest level in recent memory, the Chinese government has not indicated it is ready to let the currency float. It sure looks to me like they will continue to take a “slow and steady” approach to the currency’s appreciation.

Thanks, Chris!

OK… Here’s something that you didn’t see on your cable news last week… First, let me set this up for you… When I took off for Miami last Thursday, the 10-year Treasury’s yield was 3.63%… While in Miami, I heard, from a very good source, that the Fed had bought $8 billion of 10-year Treasuries through the old “back door” once again… Which explains why the yield of the 10-year has fallen to 3.52%… In case you are new to class, you might not know what I’m talking about here with the “old back door.”

Well… The Treasury auctions Treasury bonds through their normal auctions to buyers… When there aren’t enough buyers, the Primary Dealers, (very large banks!) step in and buy what is not sold in the auction… But in a back door trade, the Primary Dealers hold the bonds for about 10 days or less, and then see the Fed/CABAL at the back door, and the Fed/CABAL buys the bonds from the Primary Dealer… Thus brining down the yield, and raising the price of the bond.

Now… You as a US citizen should be grabbing your pitchfork or rake, and heading to Washington DC, because this action costs you money! First of all, you don’t think for one minute that the CABAL gets a “discount” for buying those bonds, do you? No way! And second, just where did the CABAL get the money to pay the Primary Dealer for those bonds that they paid over the auction price for, so the Primary Dealer could make “a shekel or two” (more like cutting into a fat hog!)? That’s right, folks… YOU! Remember what I always tell you, the government doesn’t have any money that it hasn’t stolen/taken from you!

OK… I had better stop, I can feel my blood pressure rising, and… I don’t want to say something about this whole operation, and those running the operation, that will get me called on the carpet!

Well… The Middle-East violence has the price of oil on the rise again… I’ve watched it gain $1 to $93.50 just while I’ve been here banging away on the keyboard with my fat fingers… But, no worries, you don’t have to pay a higher price at the gas pump, because Big Ben Bernanke says there is no inflation! HAHAHAHAHAHA!

Did you see that Mexico’s economy expanded at the fastest pace in a decade last year at 5.5%? I have all kinds of thoughts about this news… But, again, those aren’t compliant… So, I’ll keep them to myself…

Looks like interest rates in Brazil aren’t at a top yet… Seems that Consumer Inflation (CPI) in Brazil, is still rising, even in the face of over two years of rate hikes. Brazilian economists raised their inflation forecasts this past weekend, thus fueling the rate hike talk… The real (BRL) is bound to pick up steam once the “risk aversion” has been taken out of the markets again…

Did you see the comments by ECB member Yves Mersch? In an interview in Luxembourg yesterday, Mersch said that the ECB may toughen its inflation language next week and that he would not be surprised if colleagues “conclude that we have upside risks to price stability.” This news caught the market short euros on Monday, and with the US out, the volume was muted, which caused a very strong 75-point move up in the euro yesterday, only to see it taken back out overnight with the removal of risk.

I was wondering when someone in the ECB was going to step forward and recognize the risks to price stability… So I was happy to see the comments from Mersch… But you have to keep in mind that Mersch has always been considered a strong hawk, so he might be “talking out of school” and then again he might not be! I guess we’ll have to wait-n-see when the ECB meets next to see what the rest of the “boys” say.

So… The currencies and metals don’t look too good this morning, except dollars, francs, and yen… But who wants to own them? They don’t have any yield, and their balance sheets (especially dollars and yen) are absolutely awful! Ask Moody’s and S&P about Japan’s balance sheet! Neither one of those agencies have the intestinal fortitude to downgrade the US…

We start the week with the S&P/CaseShiller Home Price Index for December this morning, and go right to Existing Home Sales tomorrow…

Then there was this… My friend and former colleague, David Galland, always has his way of telling his readers something, and so it is with this piece from his letter on Friday. Here’s David…

In order to be happy, you need energy. But you also need to have a job and a reliable source of income – otherwise finding the leisure time to pursue dreams and passions becomes very limited. And of course, without money it becomes more challenging to secure the basic foodstuffs and shelter needed to keep the tool of your body in reasonably good shape.

Viewing the collision between jobs and machines that now seems inevitable, much of the other nonsense now going on seems almost trivial. Just today, Bernanke blamed the world’s economic ills on the failure of emerging market economies (cough, cough, China) to let their currencies rise.

But this is just so much rearranging the deck chairs on a sinking ship. As the truth of persistent high levels of unemployment, here, there, and everywhere becomes apparent – and the realization that government’s many promises were nothing but debt disguised in a fog of hot air – the public will come to the correct conclusion: no magic solution is in the works. At that point the unemployed will begin to look for happiness in mobs demanding change.

To recap… The currencies and metals are getting sold this morning, in a reversal of their recent trading. Risk aversion is prevalent in the markets this morning, as the violence in the Middle-East continues to cause concern. New Zealand suffered an earthquake near its second largest city, causing many deaths. Kiwi is getting sold on the news, and the sympathy trading is going on in Australia, as the Aussie dollar sells too. And Moody’s is getting ready to downgrade Japan’s debt rating, as they put Japan on a negative outlook… But it hasn’t hurt the yen yet, as the flight to the so-called “safe havens” that happens when risk aversion sets in, is back on the table this morning.

Chuck Butler
for The Daily Reckoning

Moody’s Downgrades Japan’s Debt. Yen Still Rallies. originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
Moody’s Downgrades Japan’s Debt. Yen Still Rallies.




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Uncategorized

How Food Inflation Translates Into Social Unrest

February 8th, 2011

The National Inflation Association, or the NIA, is anticipating hyperinflation in the US by 2015, with a healthy dose of social upheaval alongside it. In a recently posted video, the NIA draws a parallel between the current civil unrest in Egypt and how it imagines the near future in the US. Rather than view the violence as a political issue, it points the finger at soaring food inflation, and suggests that Egypt — the world’s biggest importer of wheat — has hit higher rates of inflation than other emerging economy.

It cites a Credit Suisse survey which indicates that Egyptians spend an unusually high portion of their income on food — about 40 percent of monthly income — versus about 20% for Chinese and Saudi Arabians, and 17 percent for Brazilians.

Although US families have so far been insulated from rising food prices, it points to loose monetary policy as fanning the flames of inflation. It quotes the People’s Bank of China, “Quantitative easing policy cannot fundamentally address economic problems, and it may cause excessive liquidity on a global scale as well as risks of competitive currency depreciation.”

At this time, the NIA indicates that on average only 13% of annual US household expenditures go to food. However, it projects that by 2015, 40 percent will be spent on food. It also believes the type violence seen in Egypt will spread into the US as the dollar becomes worth less, food shortages increase, and Americans can no longer take food for granted. See the video below, from the NIA’s post on how Americans will flock into $5,000 gold and $500 silver.

How Food Inflation Translates Into Social Unrest originally appeared in the Daily Reckoning. The Daily Reckoning recently published an article looking at the impact of quantitative easing.

Read more here:
How Food Inflation Translates Into Social Unrest




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Revolutionary Fervor to Spread Beyond Arab States; Europe Next

February 2nd, 2011

When the Tunisian government toppled, the mass media and their stable of experts – who were blindsided by these events – quickly stepped in to proclaim the obvious: that citizens of other Arab nations would be emboldened to challenge autocratic and corrupt governments.

Now Egypt is in the throes of insurrection, and Algeria, Jordan, Morocco and Yemen are already targeted for revolutionary change. The richer and more tightly controlled Kingdoms of the Middle East will not be immune to challenges from their citizenry to break the chains of royal rule.

But, as I had forecast in the Trends Journal, it is not solely the Middle East that is destined to experience episodes of violent upheaval. What is transpiring in the Arab world will spread throughout many European states. While the call to arms will be spoken in different tongues, the underlying causes will be the same.

In December 2010 (before Tunisia made the headlines) we issued a Trend Alert titled, “Off With Their Heads!” in which we predicted a “long war between the people and the ruling classes.” We noted that, “Anyone questioning the intensity of the people’s seething anger is either out of touch or in denial.”

It wasn’t Arab anger that led us to that forecast – it was the student and worker revolts spilling into the streets of Europe. The imposition of draconian austerity measures – higher taxes, tuition hikes, lost benefits, curtailed services, public sector job cuts – had young and old raging against a rigged system that paved the way for the privileged and punished the proles.

Though millions marched through the streets of Athens, Brussels, Dublin, Lisbon, London and Madrid, when the protests ended, the governments were barely shaken, let alone toppled. Unlike the autocratic Arab regimes, where the tight grip of repression could only be broken by violence, in the “democratic” West the illusion of representation and placating government promises mitigated the violence.

Both the press and politicians assumed the protests would run their course, people would accept their fate, and, like it or not, suffer the consequences. The protests, however, have not run their course. The economic toll of austerity and unemployment continues to ravage the lower and middle classes. As we wrote in the Winter 2011 Trends Journal, “It will only be a matter of time before a series of final straw events breaks the public’s back, setting off uncontrollable uprisings, coups (bloodless and/or military), riots and revolts throughout the financially battered world.”

Trend Forecast: The unintended consequences of the regime changes in North Africa and the Middle East, and the uprisings we forecast that will roil Europe will be as fully dramatic as their intended consequences: the overthrow of governments. The calls by Presidents, Prime Ministers, cabinet officials and foreign policy experts for “orderly transition of power” are nothing more than diplomatic doublespeak and pure windbaggery. There is no such thing as a clean and simple revolution.

As we will see in Egypt, military coups will be disguised as regime changes. Already the public is being conditioned to view the Egyptian military as beloved liberators. But in fact they are simply another arm of the autocratic government, no more familiar with democratic ideals than the dictator they replace … who had himself been drawn from the ranks of the military.

The world leaders and world media are not recognizing the Egyptian uprising for what it is: a prelude to a series of civil wars that will lead to regional wars, that will lead to the first “Great War” of the 21st century.

Regards,

Gerald Celente
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.]

Revolutionary Fervor to Spread Beyond Arab States; Europe Next originally appeared in the Daily Reckoning. Recent articles featured in The Daily Reckoning include the impact of quantitative easing and US debt.

Read more here:
Revolutionary Fervor to Spread Beyond Arab States; Europe Next




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Is Mexico a Country on Fire?

January 19th, 2011

Just a three-hour drive from our offices in San Antonio lies an entrance to Mexico, one of the most promising but precarious investment opportunities in global markets. Like stepping on an ant hill, President Felipe Calderon’s war against the drug cartels has created chaos but the country’s economy has proven much tougher than many thought.

San Antonio’s economy has been a direct benefactor of the turmoil as wealthy Mexican citizens have migrated to the area, invigorating the local economy with new entrepreneurial capital and stimulating the high-end real estate market, according to the San Antonio Express-News.

One reason they’ve moved their families here is the increased threat of kidnapping as the faltering cartels look to subsidize their businesses. This isn’t a new phenomenon.

Do you remember 2004’s Man on Fire? In this movie, an ex-CIA agent, played by Denzel Washington, reigns fury on the criminals and corrupt cops responsible for kidnapping a 9-year-old child he was hired to protect. The movie had a major impact on people like me, living so close to the border.

This past weekend, 60 Minutes featured the story of Edelmiro Cavazos, an up-and-coming star in Mexico’s political arena who was kidnapped and murdered by corrupt policeman linked to the drug cartels in August. (Watch the 60 Minutes Piece.)

Mexican markets have stood in the face of this turmoil and soldiered on. Over the past three months or so Mexico’s stock market, the BOLSA, has more than doubled the performance of the MSCI Emerging Markets Index, 19.19 percent versus 8.45 percent, respectively.

Sometimes things have to get worse before they can get better.

It’s true—2010 ranks as the deadliest year yet in Mexico’s war against the drug cartels, with 11,041 drug-related deaths as of mid-December, representing a 385 percent increase since 2007, according to global intelligence firm Stratfor.

But that doesn’t tell the whole story. The high number of deaths is likely a result from the capturing and killing of several kingpins which set off a power struggle among the remaining crooks. You might think this has created a modern-day Tombstone but the law enforcement captures have left many of the cartels significantly weaker.

When you look closely at Mexico’s economy, you see that it is well-positioned to benefit from improvement in the U.S.

For starters, Mexico offers some 1.5 times leverage to U.S. markets. This means that if the U.S. GDP is set to grow 3 percent, the Mexican economy can grow 4.5-5 percent.

The key to Mexico’s economy is the United States. Roughly 80 percent of Mexico’s exports are postmarked for the U.S. These are exports like cars, textiles and even electronics. No surprise then that 2010’s U.S. recovery had quite the ripple-effect to Mexico’s export sector.

This chart from Greg Weldon shows that Mexico’s total monthly exports have risen well off of their 2009 lows and are now at record high levels, exceeding those seen before the global recession.

Weldon reports that exports jumped 6.2 percent from October to November last year for a total of $28.2 billion—a 26 percent year-over-year rate of growth. In addition, the growth is broad-based, touching the agricultural, manufacturing, automobile and non-oil sectors.

Another key export for Mexico’s economy is people. The Mexico-U.S. border is the top cross-border migration corridor in the world with an annual flow of 11.6 million migrants. The Russia-Ukraine border ranks second with 3.7 million migrants, according to Scotia Capital.

Roughly 10 percent of Mexico’s population lives outside of Mexico, mostly in the United States. Remittances, or money sent home from a foreign country, from these immigrants represent 3 percent of Mexico’s total GDP. Scotia estimates that there is an 86 percent correlation between remittances and retail sales in Mexico.

This time last year, remittances were at a five-year low because of job destruction in the U.S. which hit the Hispanic population especially hard. The Latin labor force had an unemployment rate of 12.1 percent and 12.5 percent in 2009 and 2010, respectively, according to Scotia Capital. This is significantly higher than the U.S., which saw unemployment rates of 9.3 percent and 9.6 percent over the same time periods.

It’s no surprise then that the recovery in the U.S. job market has led to a recovery in remittances and trickled down into Mexico’s retail sales. This next chart from Weldon shows the year-over-year change in Mexico’s retail sales since 2001. After bottoming in mid-2009, the year-over-year change has remained positive since April 2010.

As of October, retail sales in Mexico posted a 4.4 percent year-over-year change—more than twice the level seen in July, according to Weldon. Weldon also reports that outstanding performing loans—meaning those that are up to date on payments—have just reached a new record high.

As investment managers, we don’t have the luxury of just reading the headlines. There’s always much more to the story. We’re aware of the violence and the threat that it poses. However, contrary to what many people think, it appears investors in Mexico can sit back, pop open a Corona and ride the wave of a U.S. economic recovery.

Regards,

Frank Holmes,
for The Daily Reckoning

P.S. John Derrick, Director of Research for U.S. Global Investors, contributed to this commentary. Also, for more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

Is Mexico a Country on Fire? originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

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Is Mexico a Country on Fire?




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