Well, it appears the word is out, the markets collapse and the fingers point at an “electric trading anomaly” caused by a simple data entry error! Oh but not so fast, considering the sovereign debt crisis in Greece and Portugal along with other EU Nations showing the very same risks, IS this all just a one day ruse or is this just the beginning of what lies over the horizon, creeping its way to the U.S.? Over the past five years I’ve written several articles on the subject exceed only by the number of “live” presentations on money, influence and political-economics.
I refer to the process as the Cycle of Predation: In its simplest form it is nothing more than a profit and control cycle occurring through excessively leveraged (financing) investment made available by pervasive debt extension/creation. The abundance of debt triggers a “profit-run” on leveragabile assets which in turn triggers explosive price inflation. Price inflation creates the illusion of profit which triggers further and more reckless speculation. This euphoric fantasy of wealth intoxicates the system spawning more and ever creative means of speculation. The process ultimately peaks and collapses due to cyclical-exhaustion and smart-money moves in and acquires control, for pennies on the dollar, any asset of value the investor is dumping in an attempt to meet debt-load demands.
It is, then, fair to say that what we are witnessing isn’t unusual at all, in fact, you might even say that its expected.
How do I see it playing out? To answer the question, I’ve created a mock “Q & A” which I trust will help both answer this question and at the same time, explain several relevant and dynamic points.
- Will we continue to see “Stock market single greatest loss in history” headlines? Answer: Even after correction, the stock market (like other indexes), was off 6 % from its peak on April 26th and barely managed to limit its single day losses to 3.2%. No, there will be more, it is part of the Cycle.
- Considering that P&G is thought of a blue-chip American Company, is there a trace of evidence linking previous “cyber-tech” threats? Answer: I think we might want to recall the hacking of the Pentagon in 9/07 that was linked to China and, as recent as March 4th, 2010, FBI director Robert Mueller warned about the growing threat of cyber-crime. It is important to understand that the alleged trading error of $16 billion, vs. the suggestion that it was intended to be only $16million, was not for P&G stock, it was for “e-minis” which are futures contracts traded on the Chicago Mercantile Exchange and are based on the S&P 500 index. Citigroup, in which the U.S. Government has 36% equity stake, said it “had no evidence of an erroneous trade.”
- Considering the fragile nature of world markets, would you expect gold markets to be more responsive? Answer: Interesting to note that the gold markets response, though predictable, measured far more tepid response to the events of the day posting only a 1.8% gain. A very unusual response, historically.
- You don’t see gold as a particularly good economic indicator do you? Answer: Gold Bullion Market Makers such as JP Morgan Chase and HSBC – through the LBMA (London Bullion Market Association), largely control the gold commodity markets. They do this through a type of fractional reserve banking whereby they, in effect, lease a country’s gold bullion and then trade various derivative-like instruments which they alone create.
- So what you’re saying is that the gold markets, like the stock markets are heavily controlled? Answer: The point being is that the net-effect of doing this is to suppress gold prices by continuously creating instruments that are only “incidents” of ownership where as, due to the actual volume of gold being available to be traded, if physical-gold was actually being traded, the prices (law of supply and demand) would be exponential higher in comparison to present day trading ranges. Similar, in many ways, to oil – trading ranges have little to do with scarcity or abundance and more to do with the act of trading and control of the market.
- Does the crisis in Greece trouble you? Answer: The Euro, from a high in June 2008 of $1.58 (US) is plummeting to near parity stage with the U.S. Dollar. On Thursday 5/06/10 it closed at $1.26 (U.S) largely, in my opinion, due to the rush toward U.S. currency or equivalents in an attempt to (1) Monetize failing sovereign dept (that is, restructure it much like the U.S. does with Treasuries – issuing new to pay off old). And, (2) To try and stave off the implosion of various Bond Funds who own large amounts of EU Sovereign debt.
- But how does this work out for the U.S.? It can’t be good! Answer: Yes, if you have money in Sovereign Bond funds, you should worry. If you have money in International Bond funds, you should be terrified! S&P warned holders of Greek debt that they only had an “average chance” of between 30% and 50% of getting their money back in the event of a debt restructuring or default. The outcome will be little different for other EU partners with similar sovereign debt problems.
- Isn’t there a connection in all of this to how Banking and Financial Markets function? Answer: As national economies moved away from productive capacity-driven economic models, what evolved was the fiat-wealth-economy which generates economic activity through the cycling of transactions – the selling of things or items that look like things to people who think these look-like things have or will have value. The image is not at all unlike a blind dog chasing its tail not knowing it has been cropped but so long as the image of his tail remains in the dogs mind, he’ll continue to chase the illusion. To keep the cycle going, you have to both feed and water the dog and trick him in to thinking his tail is still there. The issue for the U.S. Economy is somewhat unique and not at all unlike the dog, the trick is going to be for the Banks (supported by the Fed being able to continue its control of the U.S. Government) to be able to feed and water the dog and trick it in to thinking its tail is still intact all the while doing absolutely nothing more than what it has always done – accumulating control and wealth by continuing and creating new and more creative ways of getting the dog to pay the Banks for being permitted to chase its imaginary tail. Peculiar metaphor I know – but it is actually, metaphorically speaking, exactly what happens in a Fiat Economic System whether domestically or globally.
This then, I hope, illustrates the Cycle of Predation and what it concealed by the horizon that is fast approaching the U.S.
Throughout the Blind Vision Series we illustrate many of these types of events and illusions which are used to assure profit & control for vested interests. I truly do hope obtain a copy of each of the three volumes, they represent a uniquely engaging discussion challenging many political, social and economic illusions which are subtly concealed just beyond your point of view.
As I am often heard to say:
“When we Change the Conversation by Refreshing the Imagination, One Discover a new Perspective on Things you Thought you Already Knew!”
Curtis C. Greco, Founder
