THE LIBERTARIAN ENTERPRISE
Number 546, November 29, 2009
"How times change."
Special to the Libertarian Enterprise
In recent months, The Libertarian Enterprise has been kind enough to publish a number of my essays on the nude economy. Beginning in August 2009, I asked, "The emperor has no clothes, so why should the economy?"
So here we are approaching the end of the year, and no less an occasion than Black Friday when retailers are supposed to finally go into the black in their account books, and the economy continues to be denuded. Stripped, as it were, of everything not nailed down. Where the powers that be are able to pry things loose, they are making the fatuous case that what they can pry loose wasn't, properly speaking, nailed down.
It seemed to me, today, to give fair warning on one recent event, review the recent news about General Motors, take a peek at the banking industry's continuing woes, and inquire about who is being stripped, and who is getting what is being taken. If that isn't ambitious enough for one essay, it is also my plan to take a look at some of the hobgoblins being pressed into service to keep you distracted.
Let's get started with that warning. Warning! Gold you store with bullion banks, in bank safety deposit boxes, in gold exchange traded funds, as gold certificates (e.g., Perth Mint certificates), through your 401K, pension, or other third party arrangements is about to be seized. How do I know?
Well, quite a bit has already been seized. In April 2007, the e-gold system was effectively shut down, its assets encumbered by criminal charges, over three million dollars of gold seized outright, and the rest of the millions of gold sent to a sort of purgatory. Recently, I learned that the government has penalised e-gold for having provided accounts to Iranian nationals prior to being told to close those accounts (which they did, very promptly) in the amount of that three million dollars already seized. No one with an e-gold account that I know (and I know a few) has been able to get their gold converted to gold in physical form, or dollars in hand. I believe all that gold is gone. The government wrecked e-gold.
In September 2007 they did the same to the Liberty Dollar. They finally bothered, recently, to charge Bernard von NotHaus and three others with criminal charges. I gather these amount to "defrauding the United States" which seems to be a claim of counterfeitas laughable and as contrived as that claim is to anyone who has ever looked at a Liberty Dollar. All the gold, silver, copper, and platinum that Liberty Dollar had was seized. I don't expect any of it is ever going to be returned.
Today, though, came some really disturbing news. Hong Kong Shanghai Banking Corporation, a British imperial sort of bank, widely known as HSBC, has long been one of the most prominent bullion banks and vaulting services in the world. In the halcyon days of GoldMoney.com, I helped (as a volunteer) a bullion investor transfer a bar from HSBC London to the Via/Mat vault in the same city. Today they kicked all privately held gold out of their vaults in New York City.
Why? They wouldn't say. They claimed "security concerns." A rumor was circulated that they want to make room for "big institutional investors." But, why not simply build more vaults?
Indeed, business in vault storage of gold and silver has been booming as more and more people seek to diversify away from the USA dollar. People have been buying gold and silver, and the price has been creeping up.
Gold would have to reach about $3,000 per ounce to be close to the inflation-adjusted level in hit in January 1980. Silver hasn't even reached $19 an ounce, far below the $50 in 1980 dollars it reached back then. So current prices do not represent a secular high. But the dollar seems doomed for various reasons we'll consider below.
As far back as July 2009, HSBC has been telling retail storage customers, such as Texas-based GoldStar Trust Company, that it cannot accept any new storage. Now it has demanded the gold be removed from its vaults entirely.
How does this event make any sense? A business that is doing really well, with lots of repeat business and lots of new customers would seek to expand. But banks are favored by governments in many ways, and their behavior isn't always sensible on the surface. HSBC, with its strong ties to China, seems likely to have gotten early information that something is coming.
If the government were suddenly to declare private ownership of gold illegal, they would presumably exempt banks, very large bullion dealers with cozy ties to government, and perhaps large institutional investors (Harvard, Rice University, etc.). But all those retail customers would have their gold seized, and there would be a lot of warrants and lawsuits to process. HSBC is getting rid of the problem early.
Which is why we see the price of gold going up dramatically, interest in gold increasingly strongly, and HSBC, instead of expanding their profitable vaulting operation, demanding everybody out. They don't want to have all those FBI agents tromping through their vaults. They don't want all their customers suing to enforce their contracts.
If you have been relying on someone else to hold your gold, don't. Buy some gun safes, buy some PVC pipe with end caps, and get your gold into your physical possession. If that means you need more guns at home, or electronic security systems, or something else, get 'em. If you need advice, I'm always happy to be informative. Consider digging a hole in your yard, putting your gold into PVC pipe, sealing the ends (use lots of primer and glue 'em good) and bury your gold. Then move an old car on top so the satellites can't pick up the the metal with their ground penetrating radar. (You'll want the engine block over the gold, okay?)
Don't think you can slack off if someone else is storing your silver, either. Go get that, too. It is likely to be confiscated this time.
This time? Yes, don't you remember? Unless you took history at a public school, you should be aware that in March 1933, Franklin Roosevelt signed an executive order seizing all privately held gold. They only got about 22% of it, because most people didn't turn it in. But that was a huge amount of gold. If you look at the so-called annual reports of the assets of the government, you can find "coin melt bars" indicated. Valued at $42 an ounce, which is their silly "official" price. (I leave this part as an exercise for the reader.)
Why? Well, the government was out of money. The economy was collapsing. Things were very desperate. No, there isn't a power in the constitution to seize gold, but FDR did it anyway. And had his government thugs go through every safety deposit box in every bank. (You didn't think it was your safety being discussed when the bank told you they had safety deposit boxes, did you? Of course not.)
Now we learn that GM has lost $1.2 billion since exiting bankruptcy in July 2009. Results for Fourth Quarter aren't in yet. So, yes, that loss includes all those cars sold in August during "cash for clunkers." The government handed out $3 billion of cash for clunkers to motivate sales, and still GM lost $1.2B. Amazing how ineffective it can be to subsidise stupidity.
Also in the news, GM is pretending to pay back $6.7 billion in "loans from the taxpayers." But it really isn't. What it is doing is resolving an $18 billion escrow fund provided by the USA government. Of the $18 billion they are returning $6.7 billion, bailing out their parts supplier Delphi with $2.8 billion, pocketing about $5.6 billion, covering their third and fourth quarter losses, paying back loans from the Canadian government, maybe propping up their European operation. And when do the taxpayers get this minor kickback? In June of 2010. Whee!
Keep in mind that at least $52 billion in taxpayer funds were spent on bailing out GM, including cash infusions, loans, and the purchase of 61% of the company. Moreover, GMAC was given two hand outs totaling $13.4 billion and is demanding a third hand out for three to six billion (not yet clear how much they'll be handed). Plus that $3B in cash for clunkers. So, excuse me, $6.7 billion next June isn't paying back the taxpayers.
As you can see, incompetent management in Detroit is getting what is being stripped from everyone else.
Hit the play button on that screen to see the coasts go dark with unemployment. Personally, I think all those wage slaves have been liberated, and given the opportunity to start lives in the unregulated golden economy.
Moreover, the figures provided are government numbers. You know how they lie.
I prefer John Williams and Shadowstats.com. Check out their chart on unemployment:
See, if you use the 1980 methodology for figuring unemployment, you have to count the people who have given up looking for work. They count as "jobless." The Obama administration follows the lead of Reagan and others in not counting those people. So they conclude that unemployment is about 10.2% instead of 22%. But I disagree.
Check out the other charts at http://www.shadowstats.com/ for more bad news on inflation and monetary policy.
Reuters informs me that the FDIC fund is now $8.2 billion negative. That's a bunch of red ink for the agency that pretends to insure all the deposits at all the banks in the USA. That balance went negative for third quarter 2009, the first time since 1992.
If this fact makes you want to run to the bank and withdraw everything, go ahead. Then head to your local coin store to get gold and silver coins. And the ammo store. And maybe put a year of canned goods and bulk foods in your home. Doesn't hurt to be prepared.
Of course, they have a $500 billion "line of credit" for FDIC at the treasury, which is also bankrupt. Depending on how you figure their obligations, the government of the USA owes between $12 trillion and $200 trillion. Much of that larger number is unfunded obligations for future payments of socialist insecurity and medi-fraud. (You do remember the poll a few years back that revealed that persons under age 45 are more likely to believe that they will personally be abducted by aliens (17%) than to believe that they will receive anything from Social Security (9%). I'd be surprised if the numbers weren't worse today.)
Apparently there were unexpected bank failures over the last year, and now there are more bank failures expected. At the end of September, the FDIC increased the number of problem banks to 552, a 16-year high. Meanwhile banks wrote off over $50 billion in bad loans, a 26-year high. More than a quarter of all USA banks are now losing money.
But it gets worse. Standard and Poor's rates the banks and every single bank in Japan, USA, Germany, Spain, and Italy on their list of 45 global lenders fails the eight percent safety level under the ratings agency's risk adjusted capital ratio.
Kinda makes you wonder where all the hand outs given to banks have gone, huh? Other than into huge salaries and massive bonuses for banking gangsters, and big campaign contributions for their buddies in government.
The Losers and the Takers
Who gets all this great stuff? Well, so far in eight years about three trillion has been handed over to the death merchants who build the bombs that are used to mutilate children in Iraq and Afghanistan. See divestfromdeath.wordpress.com for some details.
In the last two years (2008 and 2009) about five trillion has been handed over to the banking gangsters. Tens of billions have been handed out to incompetent managers of car companies. Global warming researchers have gotten about $90 billion for research. The government spends about $3 to $4 trillion a year and seizes in taxes and fees some trillion or two, while requiring about a trillion dollars of paperwork and regulatory compliance. Starting in 2011, I predict the government will have to provide for over a trillion a year in debt service interest, fees, re-financings, etc.
In this article we learn that a long time global warming fanatic has apologised. Gosh, it seems he should have done actual research to support his claims of journalistic integrity.
I go further than Monbiot. Not only should Phil Jones resign from the Intergovernmental Panel on Climate Change, he should be tried as a mass murderer in the world court. After all, tens of millions of jobs have been lost and trillions of dollars invested badly in the last twenty years as one country after another has gone off the deep end into global warming hysterics. Like William Ruckelshaus, who is by far the most vicious mass murderer in history for his work in killing malaria victims and others who would have benefited from DDT, Jones ought to be tried for crimes against humanity.
Shannara Johnson of CaseyResearch.com has released a fascinating report on another hobgoblin. It turns out that swine flu is not a pandemic. Shannara quotes Sharyl Attkisson of CBS News:
"In Florida, they had taken 8,800 specimensthose are presumed likely swine flu cases. 83% of them were negative for flu at all. 17% were regular flu or swine flu."
Shannara continues, "She found similar results in California, where health officials tested about 13,700 presumed swine flu casesof these, a mere 14% were any kind of flu, including 2% swine flu. In Alaska, the number of real swine flu cases was a meager 1%."
National emergency, Mr. Obama? In a pig's eye!
Based on this expectation, and assuming that gold ownership is not made illegal promptly (except for the cronies of those in power), the USA dollar price of an ounce of gold would reach $5,253. I am using a rule of thumb from Jeff Clark of CaseyResarch.com in figuring each percentage loss in the dollar index represents 4.7% rise in the price of gold. My calculation is based on $1,176 which is the spot price at the moment according to Kitco.com.
The government has crashed the economy. They are crashing the dollar. They have nationalised General Motors and part of Chrysler. They seek to nationalise health care. They are lying about global warming and they are lying about swine flu.
The wars continue, though they remain undeclared. Obama is likely to send more troops to Afghanistan, it seems. And continue the policies of illegal detention, torture, rape, and murder. The bases in Iraq continue to be occupied. So the death merchants should have a nice Christmas.
It appears that Canada is getting serious about war crimes. "...a parliamentary committee tries to get to the bottom of allegations Canada was complicit in the rape and torture of Afghan detainees."
Don't expect anything similar in the USA.
The denuded economy has a long way to go before it gets really sparse. Look for more looting and pillaging wherever things of value exist around you.