Posted at 4:59 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

So Mr. Tsipras has sold out his countrymen.  He called for a referendum fully expecting a “yes” only to receive a resounding no vote.  No matter though, what was already “planned” has already gone forward to kick the can down the road.  As overwhelming as the referendum was and as in your face the following proposed agreement is, outright rioting, violence and even civil war has a high probability of resulting.  A “convenient coup” (remember Ukraine?) could even be in the works?

Looking at Greece from a grand standpoint, what’s the deal?  First, Greece is really not much worse off than Portugal, Spain (the West’s newest police state), Italy or even France.  Truth be told, Greece has less debt per capita than us “rich” Americans.  No doubt Greece is symptomatic of the West’s position of too much debt …not enough GDP but this is not really what I’d like to talk about today.

Greece initially was bailed out in 2010 and again in 2012, two can kicks if you will.  The current episode has been going on for well over six months, it is not a surprise to anyone by any means.  My point is this, we have seen lines outside of ATM’s for over two weeks but the situation has been known about and well publicized for quite some time.  Other than pensioners who are trying to retrieve their latest monthly or bi weekly payment, who else should be standing in these lines?

Certainly money has bled from their banking system over the last year, a number around 100 billion euros …but there is still over 100 billion euros left?  Who would have left any cash in Greek banks as wide spread and “early” as the bad news on the banks has been?  Were the Greek people sleeping?  Did they have the American “can’t happen here” syndrome?  Who would have been stupid enough to leave capital in the bankrupt banking system of a bankrupt nation?  Mindboggling isn’t it?

Let’s switch gears and now look in the mirror.  Have we not had enough information here in the U.S. to understand we face the same fate …only much bigger and far worse from a leverage standpoint?  Yes I know, mainstream media works overtime to keep the cattle penned in their “everything is fine” corral, but isn’t it obvious to anyone who bothers to wipe the fog from the window?

Think about it, the financial world almost ended in 2008.  Nothing was fixed, nothing even changed.  In fact, the only change has been the degree to which unsound monetary, fiscal and banking practices have been since then.  It is as if we hit a brick wall in 2008 yet pressed the accelerator harder ever since!

This article is not about groundbreaking thought, it is meant to ask “why”.  Why is there no panic or fear?  Why if the real global economy is slowing and shrinking do we not see any financial reaction?  Why if the financial markets are far more levered than they were in 2008 have the wheels remained in place and few questions are asked?

I think the answer to this is pretty simple and can be summed up with the old saying “nothing matters until it does”.  Over the last two or three months I have fielded so many questions like “why can’t this go on forever with the central banks just papering everything over”?  I believe your answer lies in this question!  “Papering” being the key word.  There is such a thing as “reality” or “truth”.  Yes this can be hidden for a time but always, water will seek it’s own level.

Let’s take a look at Greece again, a “deal” has been struck and the fear in the “reality community” is the can got kicked again and it will go on forever.  First, has a deal really been struck?  If so, what is it exactly?  Think about what has come out this week.  Their banks are still closed (and will most likely be bailed in), “safe” deposit boxes cannot be accessed, talk of a 30 year extension in debt has been tossed around and the IMF now says they may not be able to participate in any bailout because they cannot give aid to an insolvent entity.  Is anything fixed?  Has anything been done to make Greece an ongoing concern?  What sort of deal can be made that even looks doable?  The answer to the above of course is nothing can be done and no deal is really doable because Greece is broke and simply cannot pay.  You see, any deal that is done must at least appear feasible, there is no such thing!

Markets so far have been kept fairly well under control.  This has been done via the use of derivatives but these are what caused many of the problems in the first place.  How do you think Greece, a financial deadbeat, was allowed into the Eurozone to begin with?  Derivatives!  Derivatives were used to hide much of their debt.  (Now Goldman Sachs may be sued for their aid in the fraudulent entry of Greece via bogus derivatives).  Though it was hidden, did the debt go away?  No, the debt and the service on same has jumped up and brought forth the reality of bankruptcy.

To finish, you can call dog crap whatever you would like.  Call it a rose, call it beautiful, call it whatever.  No matter the name, it is unpleasant to look at, smell or especially step in.  Greece is simply the first one to be realized, all the others up to and including the U.S. are in the same insolvent boat.  If you are sitting tight and believe “it can’t happen here”, you are making the same mistake the many Greeks who are standing in line made.  It can and will happen here, it mathematically has to as there is no other alternative.  Anyone with enough sense to step around a pile of dog pooh should have enough sense to get out of the system NOW to the best of their ability.  Ask any Greek if this is good advice!  They are no different from any other Western nation except they cannot print what they need to pay.

The final question then is this, does printing actually create “value”?  Can printing turn anything insolvent in to solvent?  The only thing printing (or borrowing more) can do is allow for current payment …which only makes future payments larger.  This is the state of the entire West and being previewed by Greece, only digging the 2008 hole deeper and deeper!  Greece is merely a symptom of bad policy, they are also the poster boy the world will see as not having any real solution.  If there is no real solution to Greece, how can there be a solution to any other bankrupt nation from that very same flawed policy?

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!  [email protected]

Posted at 4:57 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams at www.ShadowStats.com.

Last Time Industrial Production Activity Was This Weak, The U.S. Economy Was in Collapse
- Second-Quarter Production Contracted at a 1.4% (-1.4%) Annualized Pace, First-Quarter Revised to 0.1% Annualized Gain (Effectively Unchanged)
- Annual Production Growth at Recession Level
- Production Series Subject to Massive Benchmark Revisions Next Week
- Higher Gasoline Prices Dominated June PPI Headline Inflation of 0.36%

“No. 735: June Industrial Production, Producer Price Index (PPI)”
Web-page: http://www.shadowstats.com


Jim Sinclair’s Commentary

Greek laws to be passed by Wednesday:

· Ratifying eurozone summit statement

· VAT changes: Top rate of 23% to extend to processed food, restaurants etc… 13% to cover fresh food, energy bills, water and hotel stays, 6% for medicines and books

· VAT discount of 30% to be abolished on islands, but remotest islands to keep discount until next year

· Corporation tax raised from 26-29% for small companies

· Luxury tax for big cars, boats and swimming pools up from 10-13%; farmers’ tax up from 13-26%

· Early retirement to end (phased in by 2022); retirement age raised to 67

· Greek statistics authority Elstat to have full legal independence

More…

Reluctant Tsipras fights to pass reforms in Greek parliament
ATHENS | By Renee Maltezou and Angeliki Koutantou
Wed Jul 15, 2015 1:37pm EDT

Prime Minister Alexis Tsipras fought to contain a backlash from his own leftwing party on Wednesday as parliament prepared to vote on a sweeping austerity package European partners have demanded for a new bailout to keep Greece in the euro.

The ruling Syriza party, elected in January on an anti-austerity platform, has been deeply split by the bailout deal that a reluctant Tsipras was forced to accept after grueling negotiations in Brussels this week.

More than half of the party’s 201-member central committee, signed a statement rejecting the “humiliating” terms of the bailout, saying it was not compatible with the principles of the left. “This proposal cannot be accepted by the people of Syriza,” they said.

With pro-European opposition parties set to back the bailout, the measures are expected to pass some time after midnight. But around 30-40 Syriza lawmakers are likely either to abstain or vote against the government, raising a question mark over how long Tsipras can remain in office.

Former finance minister Yanis Varoufakis, who was sacked by Tsipras last week, denounced the bailout as “a new Versailles Treaty” – the agreement that demanded unaffordable reparations from Germany after World War One.

Deputy finance minister Nadia Valavani resigned and Energy Minister Panagiotis Lafazanis said he would not back the deal.

“The choice between a bailout or catastrophe is a choice made in the face of terror,” Lafazanis, who heads the far-left flank of Syriza, told reporters.

Even ministers supporting it could muster little enthusiasm for an accord which will impose a painful mix of tax hikes, public spending clamps and pension and labor reforms on the already severely weakened economy.

“It’s a difficult deal, a deal for which only time will show if it is economically viable,” Finance Minister Euclid Tsakalotos told lawmakers during a debate on reforms.

A snap election could follow if the prime minister’s majority collapses.

More…

Posted at 4:57 PM (CST) by & filed under Jim's Mailbox.

Jim,

The EU needs a few “Traders” on their committee. They need to learn how to cut their losses (and let their profits run).

Nowadays, what’s a few hundred billion here and there! Chicken feed.

Throw Greece out for misrepresenting themselves (by way of Goldman Sachs), not collecting taxes from its citizens and corporations, full retirement pensions at 53 years of age, etc.

Get it done and be over with it already. Anyone else wants to leave, let ‘em.

There’s always room for China and Russia to join.

CIGA Wolfgang Rech

Greek Bailout Debate Begins as Tear Gas Fired Outside Parliament
by Nikos Chrysoloras Eleni Chrepa Matthew Campbell
July 15, 2015 — 2:40 PM EDT

Greek police clashed with protesters in central Athens as lawmakers began to debate a new bailout of up to 86 billion euros ($94 billion) that imposes further austerity.

Riot police fired tear gas to disperse crowds gathered in Syntagma Square, across the road from the Greek parliament, around 9:15 p.m. local time. Lawmakers are due to vote on the bailout bill, which will endorse tax increases and spending cuts, by about midnight.

The protests illustrate the challenges Greek Prime Minister Alexis Tsipras will face convincing a country whose economy has shrunk by a quarter in the last five years to accept further austerity. In their July 5 referendum, 61 percent of Greeks voted “no” to a package of cuts less onerous than the one Tsipras accepted on Monday after capitulating to creditors’ demands.

Greek police estimate about 13,000 protestors were gathered in central Athens, spokesman Takis Papapetropoulos said.

More…

Posted at 2:08 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com.

- June Retail Sales Generated an Intensifying Recession Signal
- In the Context of Downside Revisions to April and May Retail Sales Activity, the "Unexpected" June Contraction of 0.3% (-0.3%) Should Rattle Expectations
- Rising Inflation Means an Even Greater Decline in Real June Retail Sales
- Mounting Global Financial and Economic Instabilities Suggest a Good Time to Batten Down the Hatches

"No. 734: Nominal June Retail Sales, Financial Turmoil and Gold"
Web-page: http://www.shadowstats.com

Jim Sinclair’s Commentary

Please consider Getting Out of the System (GOTS). It is the one sure thing you must do.

Greeks Can’t Tap Cash, Gold, Silver In Bank Safety Deposit Boxes
July 14th, 2015

GoldCore: Capital controls have been in place in Greece since the start of the month to protect the banks from mass withdrawals by nervous Greeks. They have rightly been concerned about their savings, the collapse of the banking system and the loss of their savings in deposit confiscations or bail-ins.

Many Greeks were also withdrawing their cash because they fear the country might be forced back onto the drachma. However a little known fact is that, Greeks who had prepared for bank runs by withdrawing cash and buying gold and silver bullion and then lodging that bullion and indeed cash into safety deposit boxes have also been caught up in the draconian capital controls.

We have warned about this for many years and warned as recently as April this year that people should avoid using safety deposit boxes in banks.

“Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place”, Nadia Valavani, a Deputy Finance Minister in Greece told local television station according to a Reuters report.

The report (Greeks cannot tap cash in safe deposit boxes under capital controls) was little noticed at it was published on the less trafficked ‘Bonds’ section of Reuters.com on Sunday July 5th at 1:58 pm EDT or 6:58 pm GMT. Sunday afternoon and evening is a time when traders, investors and even eagle eyed news junkies are likely to be taking a well earned break.

The notion that safe deposit boxes – facilities that are used by many precious metals investors and others seeking to safeguard their wealth and valuables – need to come under capital controls to protect against bank runs is a dubious one.

This cash is not in the banking system – its withdrawal would have no negative impact on the system. Its availability to its owner might bring cash into circulation which would benefit the wider community.

The only reason to put access to safe deposit boxes under capital controls – measures which were agreed between the government and the banks – is because the banks and governments wish to retain the option of confiscating the contents of those boxes should the crisis deepen.

The low level war on cash and gold looks set to intensify, and governments look likely to wish to prevent savers and investors taking their cash out of the bank and putting them in safe deposit boxes.
This draconian move may be part of an endeavour to do that.

More…

Posted at 11:37 AM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

This is a grand old tradition there.

Romania prime minister indicted in corruption investigation
Jul 13, 8:58 AM (ET)
By ALISON MUTLER

BUCHAREST, Romania (AP) — Romanian prosecutors indicted Prime Minister Victor Ponta on Monday as part of a wide-ranging corruption investigation and seized his assets, putting further pressure on him to resign.

Prosecutors said Ponta has been indicted on charges including tax evasion, money laundering, conflict of interest and making false statements while he was working as a lawyer in 2007 and 2008. At the time, Ponta was a lawmaker. He denies wrongdoing.

Prosecutors also said in a statement Monday that they temporarily froze Ponta’s personal assets which include shares in a house, an apartment and several bank accounts. He sold two apartments in May for 150,000 euros ($170,000) and also sold a car.

Ponta, who took office in 2012, is the first sitting Romania prime minister to be indicted and have his assets seized.

The accusations against Ponta include forging expense claims worth at least 181,000 lei ($45,000) from the law firm of political ally Dan Sova. Prosecutors say he pretended he did work as a lawyer to justify getting money from the law firm. The funds were used to pay for two luxury apartments and the use of an SUV. Prosecutors say that after Ponta became prime minister in May 2012, he appointed Sova a minister three times.

Ponta, 42, who is recovering from a knee operation, was questioned at the offices of anti-corruption prosecutors on Monday morning. He walked up the steps on crutches into the building and he emerged about 30 minutes later, but declined to respond to questions, citing his right to remain silent.

Ponta has immunity for some of the charges, including the conflict of interest accusation. But he doesn’t have immunity for the tax evasion and money laundering charges. He can’t be arrested without Parliament’s approval, the prosecutors’ office said.

Parties in the ruling coalition met Monday afternoon after the indictment. Ponta said "I am the prime minister of this coalition and I am presenting myself in a disciplined way."

He declined to respond to questions over whether he would resign after opposition parties again called on him to quit Monday.

More…

Jim Sinclair’s Commentary

Seems fair. Oh what those OTC derivative can do for bankers and deep pockets.

Greek debt crisis: Goldman Sachs could be sued for helping hide debts when it joined euro
Saturday 11 July 2015

Goldman Sachs faces the prospect of potential legal action from Greece over the complex financial deals in 2001 that many blame for its subsequent debt crisis.

A leading adviser to debt-riven countries has offered to help Athens recover some of the vast profits made by the investment bank.

The Independent has learnt that a former Goldman banker, who has advised indebted governments on recovering losses made from complex transactions with banks, has written to the Greek government to advise that it has a chance of clawing back some of the hundreds of millions of dollars it paid Goldman to secure its position in the single currency.

The development came as Greece edged towards a last-minute deal with its creditors which will keep it from crashing out of the single currency.

The deal is based on fresh economic reform proposals submitted by Athens which bear a striking similarity to the creditors’ offer rejected by the Greek people in a referendum last Sunday – sparking claims that Prime Minister Alexis Tsipras has effectively executed a huge U-turn in order to avoid a catastrophic “Grexit”.

Greece managed to keep within the strict Maastricht rules for eurozone membership largely because of complex financial deals created by the investment bank which critics say disguised the extent of the country’s outstanding debts.

More…

Posted at 11:36 AM (CST) by & filed under Jim's Mailbox.

Jim,

This could possibly border on racism. Gold associated with “Black Money”, whereas Paper Gold associated with “white money”?

Seriously though, what I buy with the money I’ve earned, is my business. Gold or otherwise. There is no inherent harm in storing my earnings in gold in lieu of financial casinos. I don’t hear any protests about wealthy individuals storing their funds in high priced fine art, exotic real estate in NYC and Miami, or antiques. That’s OK. But Gold? A big no-no.

It’s obvious that a shortage is about to be realized. Allowing holdings in paper gold, but not physical gold, let’s the world know what’s coming… a massive scramble to find the “barbaric relic.”

CIGA Wolfgang Rech

Wolfgang,

Nothing changes where government propaganda / Central Banks are concerned.

Jim

For Indians, paper gold can’t beat the real thing
July 13, 2015
By Rajendra Jadhav

MUMBAI (Reuters) – India is meeting stiff resistance in its drive to make the buying of gold jewellery more transparent and to channel demand into paper gold to stop the metal being used to hide billions of dollars of undeclared ‘black money’.

The jewellery trade says the Narendra Modi government’s plans to trace gold deals is unworkable and won’t deter holders of black money, or hundreds of millions of Indians outside the tax net, from buying gold to keep their wealth away from the prying eyes of the authorities.

If the proposals fail, gold inflows will continue unabated in a country that accounts for nearly a fifth of global demand and stymie Modi’s effort to create a new asset class that could lure savers and back investments.

To track larger gold deals, this year’s budget declared that, from June 1, customers would have to disclose their tax code, or Permanent Account Number (PAN), for purchases above 100,000 Indian rupees ($1,580). But jewellers – many of whom voted for Modi – have protested, delaying the new rule.

"No jeweller will refuse to sell just because the customer doesn’t have a PAN card. He will find a way to ensure the customer leaves the store with jewellery," said Bachhraj Bamalwa of the All India Gems and Jewellery Trade Federation.

A Reuters poll of a dozen jewellers and dealers found that black money generates nearly a quarter of annual gold demand that totalled some 900 tonnes that is worth nearly $34 billion at current prices.

Two-thirds of gold demand comes from rural areas where jewellery is a traditional store of wealth. Under Modi, Indiahas opened 160 million new bank accounts but half are idle, suggesting old habits die hard.

And, in a country of 1.25 billion people, only 140 million have PAN cards.

The finance ministry’s tax department has forwarded the so-called ‘notification’ that would put the PAN card rule into effect to higher authorities, but "no decision has been taken so far", a senior official said.

"The final decision probably needs political approval as it could have wider ramifications," added the official, who was not authorised to speak on the record.

BLACK MONEY FLOW

More…

 

Jim,

This is getting awfully confusing. Perhaps meant to be so by the mainstream media.

They’re not happy, in fact even worried, about a GREXIT. Then again, they’re not happy when a deal is finally reached.

What is it that the mainstream media wants?

I can only surmise that they want TOTAL FORGIVENESS of ALL debt, and continuation of the reckless policies that put Greece into the position it’s in now.

That would lend credence to America’s modus operandi of lending to the hilt, then bailing out, then allowing the lending to continue as it did in the past. Any change from this MO by another country(s) would put a bad light on us and upset the status quo.

Germany, in my eyes, has it right. Get your fiscal house in order or go it alone. Simply put, you can’t have a country that allows it citizens to pay no taxes, that allows its biggest corporation (shipping magnates mainly) to pay no taxes, that allows retirement with full benefits at the age of 53, etc. and then expect the world, or at least the European Community, to pay for it.

Germany is damned if they do, and damned if they don’t.

Just my thoughts,
CIGA Wolfgang Rech

Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms
Submitted by Tyler Durden on 07/13/2015 – 06:16

Just around 9am CET, after a 17-hour mammoth all-night session, Greece did manage to cobble together a "deal" if one may call this latest embarrassing can-kicking that, which was nothing short of total capitulation by Tsipras. As part of the deal, Greece "surrendered to European demands for immediate action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro" in the words of Bloomberg.

More…

"The Genie Is Out Of The Bottle" – The Moment The Euro Became Reversible
Submitted by Tyler Durden on 07/13/2015 – 07:16

… It was on the table. And that means that to some extent, the genie is now out of the bottle. Brussels is officially discussing how to engineer Greece’s departure. The euro is not irreversible. Clearly, they will not do “whatever it takes” to keep it together.

More…

Why NATO Fears ‘Grexit’

Submitted by Tyler Durden on 07/12/2015 – 22:35

As far as transatlantic security is concerned, the danger posed by the Grexit is not confined to the questions it raises over Greece’s NATO membership, or the security ripple effects caused by the Greek economy’s collapse.Grexit’s danger lies in the fact that it serves as a symbol of the reversal of transatlantic institutions’ fortunes in their attempts to build and maintain a hegemonic political, economic and military order in Europe.

More…

Agreement finally reached in Greek financial crisis
Jul 13th 2015 10:21AM

BRUSSELS (AP) — After months of acrimony, Greece clinched a preliminary bailout agreement with its European creditors on Monday that will, if implemented, secure the country’s place in the euro and help it avoid financial collapse.

The terms of the deal, however, will be painful both for Greeks and their radical left-led government, which since its election in January had vowed to stand up to the creditors and reject the budget cuts they have been demanding.

Greece needs another bailout, its third in five years, to dig itself from under a mountain of debt and to get its economy back on its feet after a six-year depression. Following months of inconclusive talks, its economy is now teetering on the edge of collapse – banks have been shut for two weeks and daily business has almost ground to a halt amid cash withdrawal limits.

Before it can receive 85 billion euros ($95.07 billion) in loans and support for its banks to reopen, the Greek government will have to pass a raft of austerity measures that include sales tax increases and reforms to pensions and the labor market.

More…

Posted at 2:59 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

In the last article "An indication of PPT failure", many readers wrote in and either asked what the various acronyms were or admonished me for using so many without explaining them.  I will try in the future to assume the reader does not know what we’re talking about and at least spell out any acronym used.  As for the last article;  "PPT" = plunge protection team,  "ROW" = rest of world

Today, let’s look at China and their recent efforts at preventing their equity markets from collapsing.  First, it should be understood they are "too late".  I can say this because their PE (price to earnings) ratio even after the collapse of

25%-40% (with some stocks not even trading Friday), the Shanghai Exchange still trades at over 60 times earnings.  In other words, at today’s rate of earnings it will take 60 years worth of earnings to equal what investors are willing to pay now.  They have allowed and even fostered a bubble of epic proportions to form, no amount of effort can stop this bubble from collapsing.

This past week, China took the crazy steps of making it "illegal" for institutional accounts to sell …for the next six months!  How will pension plans make promised payments?  Will they send out IOU’s until it’s "legal" to sell again?  There were also reports of brokers refusing to accept sell orders at all.  Let’s say this, the harder China works at closing the exit doors and not allow sales will only work to put more pressure on the world’s other equity markets.   This was one of the points I was trying to make when I wrote about the crisis "crossing borders" last week.

Think of it this way, what would you personally do if you were locked into the market here in the U.S.?  What if our markets were closed, yet the Canadian or other European bourses were open?  Would you consider selling something short elsewhere as a hedge because you are trapped long in the U.S.?  Even if it is not the same company exactly, would you sell let’s say Fiat or Mercedes short as a hedge against being long shares of Ford Motor?  Or forget even being industry specific, would you at least try to sell another bourse short and do it in dollars?

Do you see my point?  China closing her markets will put pressure on other markets because being trapped can make for some "desperate people" …and you know what they say desperate people do!  

Another reason the Chinese market will not recover is that speculation has run rampant and a cleansing is coming.  Forget about opening four million retail accounts per day or hairdressers quitting their jobs to "day trade", the amount of margin built up and being used is staggering.    

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If you look at the margin debt on the Shanghai Exchange, you will see it was a very similar percentage to that of the U.S. and double that of Japan just three years ago.  Since then, margin debt rose NINEFOLD to 18%!  Just in the last month during their crash, this number has dropped nearly 4 percentage points but is still as unsustainable as is a PE ratio of 60 times earnings.  The huge margin debt suggests that selling will "FORCE" more selling because of margin calls.  China’s equity market is a wildfire already burning!

Skipping backwards as mentioned above, selling pressure from China is going to bleed over and into foreign markets.  This is how the advent of plunge protection teams will fail as "borders" will be crossed.  Today’s world is one where everything financial is truly global.  We see this and know this simply by looking at balance sheets and counterparties.  We will see this and also feel it shortly as sovereign PPTs become pressured from outside bourses.  This is no different than in trade where one nation devalues its currency to steal market share in a "beggar thy neighbor" fashion.  By the way, our "glitch" of last week in my opinion was the first surge of selling across borders, with MUCH MORE to come.

A recent article was penned comparing China to a "Field of Dreams" where

ghost cities were built in a huge miscalculation.  It was said they built these cities with the expectation of rural farmers moving in and buying up all of the overcapacity.  I highly disagree with this thought process.  For well over three years it has been my belief the Chinese knew exactly what they were doing by building roads to empty cities that had their own runways and airports, sewage, drainage and complete utility systems at the "ready". 

Why would they have done this?  It is such a waste of capital right?  Well yes, if it was "real capital" this would be correct.  It is my belief the Chinese already knew "how" this was all going to end.  They knew the financial system was a Ponzi scheme that could ONLY CONTINUE with new and more debt being added.  They also knew the credit system will ultimately collapse in a heap upon itself.  No, this is no Field of Dreams, "if we build it they will come", on the contrary … their thought process is "If we build it we will have it"!  They also have accumulated the world’s largest hoard of gold with this thought process.

Look at what China has done?  They have overcapacity everywhere.  They have unused plant, equipment, machining capability, housing and infrastructure …but guess what?  IT IS ALL NEW!!!  Now let’s make a comparison to the U.S., the only thing we have that’s new are a bunch of McMansions built all over the place.  We have little capacity to produce anything.  Our roads, bridges and mass transit systems are all old and in many cases in disrepair.  Our "grid" is a century old and at risk of being taken down by an EMP. 

Moving along to the "end game", if a financial collapse is coming and credit everywhere is defaulting, then what exactly is left?  Financial assets of all sorts will be rendered valueless, but physical "structures" will still remain.  They may (will) change ownership via default but they will still remain and be "usable".  China has played the game and used credit to build real things for the future.  We invented the game and used credit to "eat" for the here and now.  The global "game of credit" will mathematically end, and it will end badly.  The U.S. will be beaten badly in the very game we created!

China has known for many years where and how this would end. It is one of the reasons they have accumulated the largest hoard of gold in the world and are also the largest gold producer.  The credit bubble will pop and yes China will be hurt but they will be left with new infrastructure and more gold than anyone else in the world.  A pretty good position to be in if we all have to start over!

Standing Watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!  [email protected]

Posted at 7:03 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Next in line?

Spain Government Goes Full Police State; Enacts Law Forbidding Dissent, ‘Unauthorized’ Photography Of Law Enforcement

from the shut-up-citizen-or-we’ll-put-your-money-where-your-mouth-is dept

Well, Spain’s officially a police state now. On July 1st, its much-protested "gag" law went into effect, instantly making criminals of those protesting the new law. Among the many new repressive stipulations is a €30,000-€600,000 fine for "unauthorized protests," which can be combined for maximum effect with a €600-€300,000 fine for "disrupting public events."

This horrible set of statutes has arisen from Spain’s position as a flashpoint for anti-austerity protests, the European precursor to the Occupy Wall Street movement. Fines, fines and more fines await anyone who refuses to treat authority with the respect it’s forcibly requiring citizens to show it.

The law also extends its anti-protest punishments to social media, where users can face similar fines for doing nothing more than encouraging or organizing a protest. Failing to present ID when commanded is another fine. And then there’s this:

Showing a "lack of respect" to those in uniform or failing to assist security forces in the prevention of public disturbances could result in an individual fine of between €600 and €30,000.

Spain’s legislators thought of everything. To ensure these crackdowns on protests go off with a minimum of public backlash, "respected" police officers are being given a blank check to use as much force as they feel necessary when breaking up "unauthorized protests." The law doesn’t directly instruct police to behave badly, but it does provide a very helpful increase in opacity.

A clause in the wide-ranging legislation that critics have dubbed the "gag law" provides for fines of up to 30,000 euros ($33,000) for "unauthorized use" of images of working police that could identify them, endanger their security or hinder them from doing their jobs.

More…