Markets

The Euro "will collapse" as it is a"house of cards" warned Otmar Issing, the founder and creator of the euro in an extraordinary interview on Monday.
euro_drachmaPaper currency - Euro paper notes and Greek drachma note
In the explosive interview with the journal Central Banking, Professor Issing, said "one day, the house of cards will collapse”  as the European Central Bank (ECB) is becoming dangerously over-extended and the whole euro project is unworkable in its current form.
The founding architect of the monetary union has warned that Brussels' dream of a European superstate will finally be buried amongst the rubble of the crumbling single currency he designed.
“Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly," he told the journal Central Banking in a remarkable deconstruction of the EU project.
The respected economist launched a withering attack on so called eurocrats and German Prime Minister Angela Merkel, accusing them of betraying the principles of the euro and demonstrating scandalous incompetence over its management.
And he savaged the whole idea of a federal "United States of Europe", saying the attempt to push through federalisation in a stealth manner "by the back door" has turned the very foundations that the currency was built on into a complete mess of patchwork legislation, into which it is sinking fast.
As is frequently the case when there is substantive damaging criticism about the EU and ECB from respected and authoritative sources, the interview was treated in quite an Orwellian manner. It completely ignored and not reported by most state run media in Ireland, the UK and EU.  Most state run media is overwhelmingly pro-EU and continues to ignore the serious problems and growing risks posed by the single currency and the undemocratic EU to the citizens of Europe. Nor was it reported in most corporate media in the EU which also tends to ignore all reasonable criticisms of the EU, ECB and especially the euro.
The explosive interview has been covered extensively in the more "right wing" euro "skeptic" media in the UK in papers such as The Telegraph and The Mail which means that most people in the EU will not even be aware of Otmar Issing's very real and reasonable concerns and the growing risks posed to the currency they use in their lives every day and their very way of life.
gold in euros_2016Gold in Euros - 5 Years
The coming collapse of the euro is seems inevitable. The question is when rather than if. It gives us no pleasure to say so as the collapse of the euro  will be financially painful for family, friends and people and companies in all EU nations.
The euro has even greater challenges than sterling which has collapsed more than 43% against gold this year. It is only a matter of time before market participants and foreign exchange traders' focus, moves from sterling to the 'not so single' euro. Then the euro will see a similar depreciation and devaluation in the coming months.
Gold will again fulfill its primary role which is as a hedge against currency devaluation. As it has done in the UK and many other nations in recent months and indeed has done throughout history.
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Gold Prices (LBMA AM)
18 Oct: USD 1,261.65, GBP 1,031.15 & EUR 1,145.33 per ounce
17 Oct: USD 1,252.70, GBP 1,029.59 & EUR 1,139.58 per ounce
14 Oct: USD 1,256.15, GBP 1,028.79 & EUR 1,140.08 per ounce
13 Oct: USD 1,258.00, GBP 1,029.93 & EUR 1,141.76 per ounce
12 Oct: USD 1,255.70, GBP 1,024.53 & EUR 1,139.05 per ounce
11 Oct: USD 1,256.40, GBP 1,021.58 & EUR 1,130.76 per ounce
10 Oct: USD 1,262.10, GBP 1,016.62 & EUR 1,129.71 per ounce
Silver Prices (LBMA)
18 Oct: USD 17.65, GBP 14.37 & EUR 16.03 per ounce
17 Oct: USD 17.40, GBP 14.30 & EUR 15.83 per ounce
14 Oct: USD 17.47, GBP 14.28 & EUR 15.86 per ounce
13 Oct: USD 17.59, GBP 14.40 & EUR 15.95 per ounce
12 Oct: USD 17.44, GBP 14.23 & EUR 15.83 per ounce
11 Oct: USD 17.48, GBP 14.26 & EUR 15.78 per ounce
10 Oct: USD 17.78, GBP 14.31 & EUR 15.92 per ounce

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I recently watched the recent Noam Chomsky documentary, Requiem for the American Dream, and it was excellent. I highly recommend everyone watch it since it provides a historical roadmap for how positive change happens. Lessons that we will all need to put into practice in the coming years if we want to take the world off its current collision course with disaster.
With Chomsky already on my mind, I was excited to see an article published yesterday at AlterNet titled, Noam Chomsky Unravels the Political Mechanics Behind His Gradual Expulsion From Mainstream Media.
Here’s what we learned:
Ralph Nader and leading linguist Noam Chomsky engaged in a much anticipated discussion in early October on Ralph Nader Radio Hour. The two raised questions about changing the media narrative in a totalitatian-like state, and how Chomsky got dismissed from the mainstream altogether.

“How often have you been on the Op-Ed pages of the New York Times,” Nader asked Chomsky.

For Chomsky, the last time was over a decade ago.

“[I was asked] to write about the Israeli separation wall, actually an annexation wall that runs through the West Bank and breaking apart the Palestinian communities… condemned as illegal by the World Court,” Chomsky told Nader.

Chomsky would later pen a similar piece for CNN on the 2013 Israeli-Palestinian peace talks. But Chomsky has never been interviewed on the network; Nor has he appeared on NBC, ABC or CBS.

“How about NPR and PBS, partially taxpayer-supported.. more free-thinking and more tolerant [outlets]?” Nader wanted to know.

“I’ve been on ‘Charlie Rose’ two or three times,” Chomsky told Nader, adding that he had a curious story about a particularly Boston outlet for NPR based in Boston University.

“They used to have a program in their prime time news programs all things considered some years ago at 5:25… maybe once a week or so, a five-minute discussion with someone who had written a new book and there’s a lot of pressure,” Chomsky began.

NPR was going to allow Chomsky to present his book, “Necessary Illusions: Thought Control in Democratic Societies” (1989).

“I  got a call from the publisher telling me when I should tune [in at 5pm] and I never listened [before], so I tuned in [and] there was five minutes of music… I started getting phone calls from around the country asking ‘What happened to the piece?'” Chomsky remembered.

He didn’t know.

“I then got a call from the station manager in Washington who told me that she’d been getting calls and she didn’t understand it because it was listed… she called back saying kind of embarrassed … that some bigwig in the system had heard the announcement at five o’clock and had ordered it cancelled,” Chomsky explained.
This is not what a free press looks like.
The irony of Chomsky’s media criticism being dismissed by the media is not lost on the former MIT professor, who remains constantly awed by America’s level of censorship.

“Any one of the former Bush-Cheney warmongers like Paul Wolfowitz and John Bolton and others have gotten far more press after they’ve left federal positions; in the New York Times The Wall Street Journal the Washington Post,” Nader said.

And unlike Chomsky, “They’ve been on television public television, NPR and they have a record of false statements; they have record of deception, they have record of pursuing policies are illegal under our Constitution under international law and under federal statutes such as criminal invasion of Iraq and other adventures around the world,” Nader pointed out.

But the media problem permeates thouroughly throughout other industries, like education and government.

“Now a society that operates in a way where propaganda is not only emanating from the major media but it gets into our schools, the kind of courses are taught, the content of the history, is a society that’s not going to be mobilized for its own survival, much less the survival of other countries whose dictators we have for decades supported to oppress their people,” explained Nader.
Below you can find Nader’s full interview of Chomsky as well as the trailer for the documentary, Requiem for the American Dream.


    While markets wait for the election, getting closer by the day- one big question - in fact maybe the most important question - What is Trump's plans (if any) for Fed policy?  As we explain in Splitting Pennies - Understanding Forex - Fed Policy (Monetary Policy) TRUMPS any regulation, domestic political policy, corporate policy, or social movement.  In fact - the only thing more powerful than Fed policy is a nuclear arsenal (which is why - there is a correlation between the most powerful currencies and the most powerful militaries).
    The BIG Question
    Even TRUMP supporters don't know the answer to this question - because Trump never explicitly said it.  Maybe Trump doesn't understand Fed policy.  He is sure of himself that he understands debt.  Maybe he does know - but also knows that the people don't know so it's pointless to talk about it.  Whatever is the case - we don't know where Trump stands on the one issue that will determine America's economic fate one way or another - Fed policy.  Will the Fed continue Quantitative Easing?  Will radical Fed policies clean up a junk filled economy (for example, by raising rates to 10%) ?  Will Trump nationalize the Fed?  (Maybe - that's what the Elite are worried about!) - Let's make one thing perfectly clear.  He can do it!   99% of 'folks' don't understand what the President really does, what his powers are, for example the President is more of a 'ceremonial' and 'cultural' leader than anything else.. But Trump would have the power to do something like this if President.  Would he do it?  Something like this - just as an example - would transform Wall St. and the US economy completely.  Maybe, as we've covered in previous articles, this is THE REAL DEBATE going on right now at the Fed, and behind closed doors on Wall St.  
    Let's take a step back, and understand how far Presidential power stretches.  A great President, maybe one of only great Presidents-  Richard Nixon - Created the Forex market as we know it today.  In one swift move, Nixon defaulted on Bretton Woods and in the same moment, defaulted on his Gold obligations, and made the US Dollar the World's Reserve Currency.  For detailed info about Nixon checkout this book.  Practically, although Nixon stiffed the French and other potential Gold customers that wanted payment in Gold - the world didn't have many other choices.  For example, had France been stronger in that time, we'd all be using French Francs instead of USD.  Anyway, Nixon's actions were a pro-Fed, pro-USD move- whether this was calculated or not is irrelevant.  The fact is that, the USD is really the only "One World Currency" in operation today, and will be for the forseeable future.  
    In case you are not following the way the world really works, Read this book: Confessions of an Economic Hit Man.  This is a MUST READ for any trader, investor, economist, businessman, politician, lawyer, or anyone interested in the world.  The point here is that, yes - it's true.  The Fed Chairman is the most powerful person in the world, because they control the money supply, the amount of US Dollars in the world, and the interest rates.  But - Trump could oust-em!  What does Trump think about the current Fed?  Well, he's not happy with Fed policy, and says The Fed and in particular Chairman Yellen "Should be Ashamed"-
    Republican presidential nominee Donald Trump on Monday accused the Federal Reserve of keeping interest rates low for political reasons, the latest in a string of often contradictory critiques of the nation’s central bank.
    The Fed vehemently defends the setting of its influential interest rate as independent of political considerations — a principle that is considered fundamental not only to the Fed but for central banks around the world. Yet speaking on CNBC, Trump said Fed Chair Janet L. Yellen should be “ashamed” of keeping interest rates so low for so long.  “She’s obviously political and doing what Obama wants her to do, and I know that’s not supposed to be the way it is,” Trump said.
    The latest such comment came Monday, when Trump responded to a question from a reporter about the potential for a Federal Reserve interest rate hike this year. “They’re keeping the rates down so that everything else doesn’t go down,” Trump said, according to reports. “We have a very false economy.”  “At some point the rates are going to have to change,” Trump added. “The only thing that is strong is the artificial stock market.”
    There we go- we have our answer.  At least, we have a hint on the answer.  But the BIG QUESTION remains - will Trump simply put in his own chairman - or abolish the Fed altogether?  Wouldn't that be something.  Either way it seems Dollar Up for a Trump victory.  Put your limit orders in now - Open a Forex Account.

    Warning to investors - traditional markets are flawed.  In one of many hypothetical futures, not so far in the future, FX may be the only game in town.  As we explain in Splitting Pennies - Understanding Forex - it's FX that drives the world, not stocks, bonds, commodities, or real estate.  Let's take a quick look at some of the cracks in traditional markets.
    HFT Market to collapse, or drastically change
    During the credit crisis HFT snuck in a huge business for themselves in the stock market via Reg NMS by manipulating 'order types' and 'latency'.  Well, that's all starting to unwind.  Top HFT firms are fearful that the SEC is about to 'spill the beans' according to Bloomberg:
    Some of the biggest electronic traders are complaining that a new test in the U.S. stock market will compromise their top-secret strategies, one of their most valuable assets.  Citadel Securities and KCG Holdings Inc. are among a chorus of brokers questioning elements of a U.S. Securities and Exchange Commission experiment, which began Monday, designed to whip up more trading in small companies. Their complaint is that the test will force firms to publicly expose detailed trading data with only the thinnest veil of anonymity, allowing competitors to reverse engineer how their prized trading algorithms work.  For high-speed trading firms, complex computer code is the secret weapon for profiting from the market. Some brokers say they fear that in their test, regulators won’t sufficiently mask their publicly reported trading data.  “It’s going to take someone exactly three seconds to figure out who’s who,” said Jamil Nazarali, head of execution services at Citadel Securities, which is the market-making arm of billionaire Ken Griffin’s Citadel LLC. Trading firms will “likely change their behavior to protect their intellectual property,” making the test’s results less meaningful, he added.
    Big Banks collapsing - SOON
    Previously to the "DB Crisis" - Europe's biggest bank, Douche Bank, is now probably insolvent at best, and at worst - will form a black hole so big that it will suck half of the worlds banks and assets into it when it implodes.  DB isn't just a bank, it's a financial powerhouse - a superbank.  For example, if you've ever bought a currency ETF, it was probably offered by DB:
    Hmm.. only 35 ETFs in the USA.  Anyway, creating an ETF isn't easy.  DB is registered in almost every country in the world, yes even in Malta.  They are in thousands of businesses.  Unwinding this behemoth will take decades.  Unraveling all of their crimes, money laundering, scandals, and derivatives is practically impossible.  Just one example of a $10 Billion dollar liability, in this case, just money laundering:
    Almost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank’s Moscow headquarters. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Usually, the order was for about ten million dollars’ worth of the stock. In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself...Although the bank’s headquarters remained in Germany, power migrated from conservative Frankfurt to London, the investment-banking hub where the most lavish profits were generated. The assimilation of different banking cultures was not always successful. In the nineties, when hundreds of Americans went to work for Deutsche Bank in London, German managers had to place a sign in the entrance hall spelling out “Deutsche” phonetically, because many Americans called their employer “Douche Bank.”  
    On the other side of the pond, Wells Fargo - previously one of America's 'trusted' banks, "Main St. bank" - is collapsing after the market learned that their great sales figures were based on a house of cards that was, well, fraudulent.  If you're not aware or not following this crisis, checkout this article for a simple explanation.
    Real Estate Market Shaky, at best
    There are a lot more apartments available for purchase these days in Manhattan. And fewer people are buying. Sales of previously owned condominiums and co-ops fell 20 percent in the third quarter from a year earlier as potential buyers grew cautious amid more choices, according to a report Tuesday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. There were 5,290 resale apartments on the market at the end of September, 53 percent more than the number available in late 2013, the lowest point for listings.
    The swelling inventory is providing an opportunity to New Yorkers shut out of a market in which construction has been dominated by ultra-luxury condos aimed at the wealthiest buyers. Resales, particularly those priced at less than $1 million, were in chronically short supply in recent years, and those that made it to the market sparked bidding wars. Now, more owners are listing apartments to profit from climbing values, and they’re finding lots of company.  “Rapidly rising prices over the years have pulled more sellers into the market hoping to cash out,” Jonathan Miller, president of Miller Samuel, said in an interview. “But buyers are more wary. There isn’t the same intensity of activity to burn through the new supply.”
    What's next?  
    Hedge Funds, not capitalizing on the turmoil, and even losing
    In fact, this has been the year investors wanted to do anything but try to pick stocks. Active fund managers had their worst first half ever, with fewer than one in five beating a basic market benchmark, according to data from Bank of America Merrill Lynch that go back to 2003.Stock pickers were done in by two major factors: following the crowd and an uneven pattern of correlations among stocks. The 10 most-crowded stocks lagged the 10 least-owned by a whopping 18 percentage points, which BofAML called "an atypically high spread."
    So what's left?
    Forex Markets to dominate the next 20 years
    There's always Forex algorithms, which Wall St. simply afraid of, because they don't 'control' the FX markets.  Some FX strategies perform month in and month out like clockwork, a pension fund's dream - but why go with something that works when it's politically correct to lose with hedge funds (it's good for jobs, right?).
    The point is that, FX is a money market - and a super set of other markets.  If the stock market completely crashes like 50%, investors will still have trillions in cash.  It will even create a dollar shortage.  But that cash has to go somewhere.  Some, will go to Euros, Swiss Francs, and other 'money'.  Bitcoin isn't a percent of a percent of a percent, although certainly money will flow into Bitcoin.  Bitcoin isn't viable alterantive to major FX currencies simply because of acceptability.  It's not possible to pay for goods in foreign countries in Bitcoin - but many accept US Dollars.  Until that changes - or until the United States of America ceases to exist as a country (which is probably the only event that could really obliterate FX markets) - then, FX is going to be the only game left in town.  Why?  Because, the US Dollar is supported by bombs.  As long as the US Army has enough gas in their tanks, and munitions in their supply, you can bet dollar markets will function.  Other markets, like real estate, don't have such protection.  But there's a good reason for that.  Because all markets DEPEND on FX.  Without a dollar market, the stock market couldn't exist.  If you want to be Wall St.'s next HFT firm, you first need to fund an account WITH DOLLARS.  
    So, although many markets teetering on the brink of implosion, FX looking stronger than ever, and until there's a viable alternative (which considering alternatives, China, Russia, Bitcoin, etc... not a real solid candidate next 20 years) we can expect FX supremacy and US Dollar Hegemony for the long term.  So, if you're still naive to the realities of FX - now's a great time to start learning!

    http://www.zerohedge.com/news/2016-10-04/alert-markets-implode-only-fx-will-be-left

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