L'Argent Provocateur

Why get your haute couture knickers in a twist? Here, courtesy of Chris Duane is probably all you need to know to avoid financial meltdown. Alternatively put a pair on your head and buy two pencils.

Crash the system...buy silver

In a binary world sometimes you have no other choice than to reboot the operating system. If it had been designed correctly in the first place you could argue this shouldn't ever be necessary but alas in practice its 'a different gether altomatter'. Frequency of reset often depends on the underlying quality of the system itself and the same could be said of non-binary systems such as governments and our monetary system.

If we take a look at what's really happening with our system of paper money then its unsustainability is clear to anyone willing to open their eyes.  As Herbert Stein once remarked "Something that can't go on will stop" and stop it will. However just because something is inevitable doesn't make it imminent. When is the question, not whether.

So as of today the US national debt is just shy of $16.2 trillion. Sounds like a lot until you realise that this along with nearly everything else within the financial system is a manipulated fantasy. According to Laurence Kotlikoff, Prof of economics at Boston University, if you take all the unfunded liabilities into account (which is the honest way of looking at it) then the real debt figure is over $200 trillion - He's already declared the USA bankrupt...OUCH!

Let's remind ourselves of the Woody Allen quote employed at the front of the book, "Down one road lies disaster, down the other utter catastrophe. Let us hope we have the wisdom to choose wisely"

 

This somewhat neatly ties in with the Austrian school of thought or as Ludwig von Mises put it "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
 

So if you believe all this to be the case then kicking the can down the road only has one real effect - to make the collapse worse when it does happen. OK, but if it's going to be worse later on isn't there a do-gooder case for helping getting it underway a little earlier? Perhaps there is something wholly righteous about taking down a system that is so corrupt that it is even in danger of stealing your liberty? Threats to your freedom are a discussion for another day - let's just focus on monetary matters and what you can do about it.

Our monetary and banking system should be like a utility - moving money into productive activities and where it is needed. What it shouldn't be, but has morphed (further) into, is a parasitical model that is killing the host. Now I have postulated in the book using John Mauldin's fingers of instability concept that the whole shebang might not need any help in collapsing - it may just happen anyway. Or as Nassim Taleb and Mark Blyth state:

'Complex systems that have artificially suppressed volatility tend to become extremely fragile, whilst at the same time exhibiting no visible risks.'

So what's the problem? Mmm... that's a long list - but for today's post let's focus on the derivatives market. A derivative is a security (contract) between two or more parties whose value is derived from the price of the underlying asset. It is not itself a 'tangible' asset. The second aspect is that many of these derivative contracts are extremely difficult to undo as Warren Buffett found out after trying to unwind one - despite his best efforts he didn't manage it and just had to let it run its course. The derivatives market is larger than 1 quadrillion dollars per year (that's bigger than Bernard Manning's underpants). Much of it is also based on margins (you don't have to have all the money down - just a small %) - so not only is it ridiculously large in terms of $$$, but highly leveraged - or put another way, if it all goes wrong the SHTF in a spectacular fashion.

Many commodities are traded via these 'paper' derivative contracts. If we take gold and silver for example it is estimated that the volume of paper contracts exceeds the actually physical metal availability by 100:1. So in effect there is a lot of fresh air being traded. It's the emperor's new clothes scenario in that it is a construct that only requires a change of perception to negate. So in the case of paper contracts supposedly backed by the underlying asset - it may only take one of these contracts to be fictional to have everyone suddenly questioning, not only other contracts in that asset class, but every other derivative contract based on that system. Just like the Emperor's attire - it may not be there when everyone has a reality check. Being leveraged to the moon and not being able to extract yourself - now that's what I call a proper financial panic.

So what's special about silver? Well, it's not the only Achilles heel out there but it is the one that the general populous can most easily influence. The derivative fantasy game ends when no-one can get their hands on the physical. And whilst silver is similar to gold in that its partly a monetary metal its has some unique characteristics. Firstly a lot of the silver market is used for industrial purposes - so it has more 'intrinsic' value than gold. Its unique characteristics e.g anti-bacterial, high conductivity etc means its uses are expanding in many fields. Most smart phones use silver as do many solar panels etc but as its cost is relatively low it is rarely recovered for re-use and ends up in land fill. Its currently being depleted at an increasing  rate. The large stockpiles of silver that did exist have dwindled and there are now predictions (always dangerous!) that Ag will be depleted within the next 9 to 29 years.

Whilst the natural ratio of silver to gold in the earth's crust is approx 15:1, current estimates mean that the ratio drops to 1:1 when it comes to above ground stocks. Industry accounts for over 50% of its usage so the size of the investment market for silver is much less than gold and is therefore subject to much higher volatility. The price of silver normally gets temporarily battered in a recession because of this industrial aspect. But let's return to the physical Vs paper market discussion and also possible price manipulation. The price of silver is based on the Comex (or Crimex as some wits prefer to name it). In fact rather than have me explain it all let's enlist the help and hilarity of the two bears. Its a couple of years old but the arguments are still applicable.

Alles klar? You can't fight the FED and JPMorgan right?  You can if you are the Chinese government or maybe if your name is 'Wynter Benton'. But in the case of silver you can even do it as an individual. Buy physical silver and help return a bit of honesty and freedom to the market. Industry needs physical not paper silver. Once there is none for delivery its game over. If the system crashes whose fault is that? Don't take it personally, it was going to happen anyway.






 

 

Make that a Maß

If you ever meet this guy buy him a beer for doing the right thing and winning...

"Fear is the psychological weapon of choice for totalitarian systems of power. Make the people afraid. Get them to surrender their rights in the name of national security. And then finish off the few who aren't afraid enough" - CH

Well that lasted all of a week - back to the totalitarian drawing board it is. Worth reading the detail on this.

No choice like the present

Spot the difference competition (U.S. leg) returns. Take a second to remind yourself of the P.I. blog from 18th May: Vote Delusion and then watch this and then let's throw in a soupçon of Carlin. just to spice things up a little.

Looney Tunes

The cult of the Looney is normally something to be avoided at all costs depending on which particular commonal variety of 'loon' you are dealing with.  There are some which prove to be entertaining such as The  Monster Raving Loonies, or the more ubiquitous Looney Tunes which many of us were happily brought up on.

Once you step beyond the fun side of things the descent is pretty rapid into crackpots and the 'here's some padded wallpaper and self-cuddling apparel to enjoy for an unlimited time period'. Of course not everyone who ends up in a psycho-ward is nuts eh Bradley? and vice versa, there are plenty of people out there roaming around who perhaps should be voluntarily checking themselves in to a secure establishment for the general benefit of the rest of the planet.

With the above in mind, and a dumper truck of other caveats thrown in you will want to have a listen to this rant from Ann Barnhardt. To say her general views sit in the more extreme category is possibly this months understatement of the decade but just because what you sometimes do or say is utterly bonkers doesn't mean everything always is.

So why bother featuring this particular stream, well...mainly because its a very necessary wake up call. Often an impassioned plea has more affect than just a matter of fact delivery and unlike much of the other stuff she bangs on about 99% of this is bang on the money - especially pertinent is her title quote of "If you are still in these markets you are either stupid or on drugs". This is of course a U.S. centric appeal but given the level of fraud and manipulation in the entire financial system it is without doubt a canary in the coal mine for all (well along with several other canaries - in fact, given how many are appearing it seems the mine is also producing viagra).

The suggestion that you should remove your money from the system shouldn't be news to regular readers as we picked up on this theme in the first P.I. blog dated 11th May and have just retweeted this from the Motley Fool. In really simple terms the risk of having your money vaporised into thin air with little recourse to recover it seems to have increased dramatically and this is the point Ann describes in some detail.

So lets stick with it a second because the wider implications are to be ignored at your peril. In the U.S. a savings plan is called a 401K. Its like a UK pension scheme which is often invested in equities or government bonds. The idea being you can't touch it until you retire. Under normal circumstances its not a problem but what happens when every market is rigged, excessive fraud prevails, there is absolute fragility inherent within it and the whole financial system is one massive Ponzi scheme? The most sensible approach is to disengage or as the computer Joshua concluded in the film War Games:  'The only winning move is not to play'  And this, as several others have pointed out, seems to be about the best advice there is at the moment but why?

We've already mentioned the vaporisation of client money from MFGlobal (and now Peregrine Financial Group) in a previous post and Ann highlights the legal ruling with respect to Sentinal Management Group:

However, what is most frightening is the recent ruling in the Sentinel Management Group case by the 7th Circuit Court of Appeals. The court ruled that the Bank of NY Mellon be placed first in line ahead of customers seeking return of their money.

 

“That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud’ its customers.”- U.S. Circuit Judge John D. Tinder

 

This ruling shows that not only does the Bank of NY Mellon move to the front of the line, but that using customer segregated funds as collateral is no longer considered a crime, and that co-mingling customer segregated funds with proprietary funds is no longer considered fraud. This ruling implies that customer assets held at a bank or trust are the legal property of any counterparty to loans the depository institution takes.

This might all be about the U.S. but don't think just because you are in the UK you are necessarily  immune. Did you know that when you put your money in a bank it is no longer your property only your asset. You have loaned your money to the bank. If the bank fails you may not be entitled to your money back. There is an £85,000 per account per separate institution deposit protection scheme in place but remember - its not forward funded and governments can and do change their positions especially if cornered. Nothing to worry about there then.

There is a lot more than just the above to consider as is covered in OUCH! and we will return to this in later posts but sceptics might want to have one eye on the £130 million bet Rothchild has placed on the break up of the Euro. I will be more shocked if we don't have the mother of all financial panics this side of Christmas than if we do. Have you arranged yourself accordingly? Of course you haven't - because there is nothing to worry about, right?

I printed you a miracle

I don't know which made me cry with laughter more, re-watching Jim Kerr's neck appendage take on a life of its own or reading in Thursdays's Evening Standard that the Bank of England is claiming QE ('printing money') has made each of us £10,000 better off.

Chuckle muscle worn flaccid? Here's why printing money as highlighted in OUCH! doesn't make you richer :

Imagine that you are a counterfeiter producing £5 notes. You are so good at your chosen profession that no-one can tell the difference between the fake £5 and the real £5. You print lots of £5 notes and start spending them. This has 2 effects:

1.      The total money supply of the country increases thus driving up prices because the purchasing power of the existing currency unit is decreased. This decrease is directly proportional to the amount of fake cash you put into circulation.

2.      You get richer whilst everyone else gets poorer. It changes the wealth distribution because whilst there is a general lowering of purchasing power per currency unit there is a disproportionate amount of money in your hands as the counterfeiter. If you are first in the chain you get the benefit.

The same reasoning is valid if the ‘counterfeiters’happen to be the government. By diluting the total by printing money it also acts as a wealth transfer mechanism to the state at the expense of the general populous.

Its really quite simple, if money printing made us richer then why not just print £10 million for every person in the country, dish it out and then we could all retire? Afterall what could possibly go wrong? Zimbabwe managed to get to 100 trillion dollar notes (worth about US$ 5.00) before their currency finally collapsed. Zimbabwe's annual rate of inflation in November 2008 was 516 Quintillion % that’s 516 followed by 18 noughts (516, 000, 000, 000, 000, 000, 000) - although they narrowly missed the world record inflation rate set by Hungary where prices doubled every 15.6 hours.

Why are various western central banks/governments resorting to money printing? 'Velocity' and a collapse in the money supply may be the raison d’être stated but peel back the layers of manipulation and the alternative is default - but why do it overtly when you can do it covertly? That way, you don't get the direct blame. However this game is not without consequence. As Tim Price points out in his latest newsletter, Bill Gross may have called it too early (exact timing is always tricky) but stated UK governnment debt was resting on a bed of nitroglycerine.

You may be being 'promised a miracle' but the reality you will be experiencing in the near future may not feel that miraculous when it arrives.

 

97% owned

The lastest offering from Positive Money. Popcorn time.

Oh Boy, this should be fun

Most of us have experienced PMT, either first hand if you belong to the fairer sex, or vicariously through a loved one if you don't, but when it comes to HFT, the majority of either sex are probably using that other 3 letter acronym WTF?

For those of you unfamiliar with HFT (high frequency trading) you might want to alter that state of ignorance 'tout suite' ( as our cheese fondling brethren across the Channel might say). Why? Well something has just happened that demonstrates just how fragile and exposed the stock market is to rogue algorithms, these are a bit like Rogue Trooper but far more destructive.

HFT virgin? No problem. Pop your own cherry by having a look at this. Kevin Slavin's brilliant TED lecture concludes that "We are now writing code that we can't understand, with implications we can't control". As I say in OUCH! Who could have seen that coming?

Well obviously Kevin is one, and the other 'one' is the 1 million plus viewers who have watched it. So when this all goes horribly wrong and some numpty appears declaring it to be a black swan event - the rest of us will know better.

Let's get into the nitty gritty and take Slavin's observation one step further. We might be writing code that we can't control but we are also writing code we can. The problem being the motivation behind it isn't necessarily benign as we have seen with the Stuxnet worm. The New York Times reported on 24th June 2012 that Stuxnet was deployed by the US and Israeli intelligence services to target the Iranian nuclear programme. Clearly a genius move as no-one will ever consider writing one that targets the instigators instead, right?

But let's move on from alleged politically driven cyber espionage to your personal savings. Got anything invested in the stock market? You might want to re-think that cunning plan given what's just happened to Knight Capital. As usual, Zerohedge coughs up the beans allowing us to see what happens in practice when there is 'trouble at t' algorithm mill'.

Many claim 'buy low and sell high' is the first, simplest and best mantra for investment. So when an algorithm goes rogue and does exactly the opposite you have what is often referred to as a 'minor inconvenience'. Except what happens when those trades are being enacted every millisecond and you are losing money on every one? Your minor inconvenience has just switched to an instrument of financial torture and in extreme cases potential company insolvency. So if all this is eminently possible, and with Knight Capital we have just seen the minus $440 Million practical play out of it, what is to stop anyone writing malicious code in order to manufacture these situations? Well no-one gets involved in that sort of behaviour do they?

The solution of course is to stop all the HFT nonsense either by applying a minimum time limit to all trades or applying a tax per trade so the frequency element is penalised. Will this happen in advance of any disaster? Unlikely. We generally need a cataclysmic event to shift the mindset. Are we human, or are we dancer? The puppeteers are in town - you might want to bear that in mind and check your pockets.

I need a dollar

Why worry about Aloe Blacc when you can be rubbed all over with Aloe Vera? Getting soothed is usually more appealing than reality checks but then sometimes ignorance isn't always bliss.

Meredith Whitney predicted in Dec 2010 that 50 to 100 Municipalities in the USA would become insolvent, saying "there is not a doubt in my mind you will see a spate of municipal bond defaults". So what? Well two points, firstly Judgment Day seems to have arrived, see here, here and here. Secondly that they are a microcosm of our whole financial system. So while you can sit back and think who cares, the fallout may be coming to a town near you sooner than you think.

The real reality check is that most Western countries are broke. This may not seem like an insurmountable problem when you can print your own currency but as you might of guessed that path is never without consequence. Zimbabwe being the most recent example of what can go wrong. As I say in OUCH! money printing isn't a cure, its another disease. 'Sore throat madam? Try two teaspoons of botulism and let me know how you get on'.

The other slight problem is that the official debt is massively understated. When you throw in all the unfunded liabilities its about 5 times the size. A recent claim for the USA was that its real debt stood at $75 Trillion. So what you have seen in some USA municipalities is replicated all the way up the chain. What stops everyone panicking about this? One word, belief. Belief because so far everything has worked out OK. Well all you need under these circumstances is a change in perception and then as Emperor Kenny might say "suddenly all my new clothes fell off". Welcome to planet Ponzi playmates.

You might therefore want to heed the following statement, In a depression 'the winner is the person who loses the least money' . How much are you personally going to lose. Well, you are about to find out. Of course you could just recognise the urgency and choose to do something about it. And that way you won't have to repeat the hookline on a street corner.

The truth is out there

TTIOT...well it might be but trying to track it down via the mainstream media seems to be getting harder and harder. Even Mulder and Scully would be struggling with this one although there is at least a plethora of conspiracy theories as a consolation prize.


We are forced to get more radical in our choices if we want to have a fuller picture. Radical...not as in, ‘let’s stuff my underpants full of semtex’ radical (who could ever have envisaged that getting your wedding tackle blown off could be turned into a negative?) but radical as in ‘can you please tell me what’s really going on?’ So in fact not radical at all.

Well as usual the truth ain't too pretty but what is sometimes bizarre is having to go through a strange series of hoops to find it. So, if we want to discover what's really happening it appears we have to go to RT (the 'Putin Dodgy Propaganda' tool). It’s a rum do when you have to rely on a Russian TV channel to find out what is actually going on in Wall St.


So Max Kaiser's financial war reports and Capital Account whilst being hardly unbiased do seem to occasionally churn out more truths than most of the other media outlets put together. This may not come as a great surpise to those in the know as the U.S. media has been consolidated down from 50 companies in 1983 to now only 6. The unplatable truth is that there is sometimes nearly as much media manipulation being served up in Democracies as there is in Totalitarian states. Noam Chomsky argues its more.

Its worth watching this Capital Account from April to understand what happened at MF Global. A one off you say....err no... try this for size. Makes you want to watch South Park. and then think long and hard about what comes next. OUCH! - Wake up or get wiped out people.

50 shades of deception

Two Diamond Jubilees in the space of one month? Anyone would think that the UK is getting got greedy. At least in the first one we celebrated, everyone was given an extra day off in return for the public donation, the 'Diamond Geezer' on the other hand has yet to cough up anything of note although his daughter seems to be a fan of the HMD cough and wobble technique -however it is yet to be seen exactly who's been pulling who's plonker. What we do know is that Bob didn't receive a happy ending, unless we include the leaving package which at current rates would entitle him to approximately 340,000 of them. Now that's what I call milking the system. As Bill Black once said "They loot it by destroying it but they walk away weathy"


Cue general public outrage at the LIE-BORE scandal (and it is) but what most people are missing is that this heroic level of deception should alas be expected. Why? Well hidden beneath the greed and self interest is a system that will potentially collapse if it isn't manipulated. Can you dig it?

So, its now time for the law of unforeseen consequences to come out to play and you are invited for a front row seat. Unlike in the Warriors classic the weapons of choice are alas likely to be slightly more sophisticated but as the blame game gets underway this afternoon at the Treasury Select Committee it will be interesting to see whether its just pop that is eating itself and who remains bulletproof. Popcorn in T minus 3 hours and counting

"Gizza job"

As 'austerity' is the new black perhaps we should take a minute to remind ourselves of how the job application process during tough times has morphed over the years into Great Expectations. Reality check coming to a town near you in 5..4..3..2..

ContagionEx

 A little STD humour to get you through the post Jubilee blues

The Robber's Dilemma

Next year sees the 30^th anniversary of the Brink's Mat robbery often touted as Britain’s ‘biggest and most notorious heist’ in which a rather large amount of gold succumbed to a ‘five finger discount’. Supposedly worth around £500 million at today’s prices it certainly gave the gang that stole it a headache, or was that just a hole in the head given the number of associated people who have been bumped off since (over 20 at the last count). Like all thieves, as well as being ‘thick as...’ (one of the perpetrators decided that buying a 'mansion' immediately after the event and calling their pet Rottweilers Brink’s and Mat was a good idea), they would have had the usual dilemma - where to stash the cash? Or as one criminal said at the time ‘the robbery was the simple bit’.

Before we focus on good places to hide your money - that’s your hard earned cash, not any ill gotten gains - I would like to remind you of that other infamous daylight robbery that has yet to be fully resolved, our monetary system. In fact it makes the Brink’s Mat escapade pale into insignificance because as we now know the largest heist in history occurred far more recently, namely the socialising of losses caused by our favourite 'pyramid scheme' otherwise known as a bank/our Fiat money system. As one commentator recently put it, 'the banks get the stimulus, the people get the austerity'. The bad news is, that so far, what we have had is 'austerity lite' and the more overt robbery is about to take place in the not too distant future. Providing you are not asleep, this should be giving you the same level of dilemma, if not greater than the original Brink's Mat lot. It's one thing to lose money that wasn't yours to begin with, it's another story altogether if it was. And as we have witnessed in Greece, in extreme cases of desperation the hole in the head may end up being a self-administered one. This is an example of the 'collateral damage' that the financial sociopaths manage to ignore rather than link back to their own actions.

In order to lower the future suicide rate finding a place to stash your cash, before the finance industry manages to permanently 'hide' it for you, is essential. In the midst of a crisis everyone tends to panic and freak out but as Tim Price points out 'if you are going to panic, panic early'. Well today looks like a good idea, if you haven't got around to it yet. You have probably got until the start of the autumn to get your arrangements in order and that's one reason why OUCH! will be available by 17th Aug. Telling people what they should have done in hindsight is not very helpful although at this rate you might have to be good at speed reading.

The dilemma however is clear, what has represented a safe haven in the past may no longer be the case. The likelihood of bank runs across Europe have increased dramatically which means even if you go to, or are already in, cash, your money may not be safe (especially if you are in the Euro). As I point out in more detail in the book, money deposited by you at a bank does not legally belong you, it's actually the bank's property.  It is still your asset and you can ask for it to be returned at any time but that doesn't bestow on you the same ownership rights as if it is under your mattress. This will come as a surprise to the vast majority of the population. So your starting point is to assume nothing is safe and then read the following. Now panic.

As already suggested in the first post on 11th May why anyone would want to be in the stock market currently is beyond me. It's an accident waiting to happen and 2012 is looking like Crash but without the paraphilia bonus. The number of real safe havens can be counted on one hand and that doesn't include your bank. So if you hold cash in one at least make sure it isn't over the £85,000 threshold and if you hold more than one account (the sensible option) make sure it doesn't belong to the same group or institution as you are only covered once. This doesn't guarantee you won't lose your money (government promises are not always fulfilled) but in theory it should give a greater level of protection. A better one is gold as it offers the ultimate insurance against financial mismanagement and feckless governments but we will return to that point in a later post.

Plan for the worst, hope for the best. But the worst involves not only your savings being wiped out, it might also mean your pension (if you have one). Have you asked yourself recently where they have that stashed? Oh yes, in bonds of insolvent governments - no need to worry then. It may prove to be a short term safe haven but would you lend money to a bankrupt with a gambling problem? Check your pockets, Victim Support is a great resource that if you are lucky, you'll never have to use. Happy stashing.

As for me. All I know is that I know nothing

Anonymously yours

Vote Delusion – You Know It Makes Sense.

You are unwittingly driving towards the edge of a cliff at 100mph.Would you like to be told that the cliff edge is approaching

1.      Before you reach it?

2.      After you go over it?

If we eliminate suicide girls, lemmings and the manically depressed from this hypothetical survey I am assuming that most people would prefer to be in the self-preservation society and choose life i.e. option number one. Wrong, well at least partially in that we don’t really want to hear that the cliff is approaching in advance but will complain bitterly afterwards that we weren’t warned. Ridiculous, illogical yet apparently true.

It may or may not have escaped your attention that most of The West is broke. We have spent decades borrowing from the future i.e. saddling the next generation with gargantuan debts to fund unsustainable lifestyles/wars/bubbles and other Ponzi charades. There is only one problem with this – just like a Viagra addict, you can’t keep it up forever.

Let’s take the recent strike over public pensions and the ‘68 is too late’ [to retire] campaign. People are annoyed that their benefits are being eroded (although technically speaking it’s hard to erode something that doesn’t exist). What actually exists is purely a promise to pay and those promises are not fulfillable. Unfortunately that’s mathematics for you. So many people are relying on something that will either not be there (work until you drop dead a.k.a. ‘is 108 too late?’) or is only there in nominal terms i.e. yes you can retire but your agreed pension now only buys you one loaf of bread. It is an illusion waiting not to happen. Fair? Absolutely not.

There is a saying that goes,"if you can’t pay, you won’t pay". So regardless of how totally and utterly justified people are in their standpoint the reality is going to be different from what they expect – probably by a rather large margin. Who’s to blame? OK next questions:

1.      Do you vote for the party that promises you what you want/like to hear?

2.      Do you vote for the party that tells you the truth?

Well this one is easy to answer because option 2 does not currently exist. Why? Because for years telling lies has been an election winner. Whose fault is that – the liars’ or the voters? So instead of reality we 'choose' to vote for delusion but delusion eventually has consequences.

Let’s hop across the Channel for a moment. The French have just voted for a President who won on the back of promises of growth and lowering the retirement age. But why stop at this? Why not promise people eternal youth? This isn’t possible either but who cares when it gets you the most votes?

In America they voted for change in 2008, and got short changed instead. Unless you consider no change is ‘change you can believe in?’ 2012 now looks like a race between Barack O’ Romney and Mitt Bama. Both appear to be Wall St Manchurian Candidates promising to further assassinate the country’s finances. Of course there is Ron Paul but that isn’t going to happen and, on a personal note, maybe for him it’s best he doesn’t win – it’s not only finances that get assassinated.

Back to the UK – we have far more choice right? Err...if the full theoretical electoral spectrum was represented by a dartboard then all 3 main parties would be stuck in triple 13 - unlucky for everyone. Strip away the specific vested interests and you have a very tricky spot the difference competition. They all borrow from the future...because they can (for now)...and because there are only long term consequences, not short term ones. Except, the future is already here.

We see the growth Vs austerity arguments framed as a battle between ideologies: Left Vs Right or in the case of pensions pitching one half of society against another with the Public Sector Vs Private Sector debate or alternatively the generation game with the young Vs the old but all this does is serve as a distraction away from the most fundamental issue.


There is something far more insidious and all encompassing at work...the monetary system that we live under. Ever wondered why this is hardly ever discussed? Oh look, its Wile E.Coyote

Time To Press The Eject Button?

Convention would suggest as this is a first post it may be best to focus on an introduction but as we live in interesting times and I’m arguably a tad behind schedule in getting these online machinations underway it’s time to jump in at the deep end, sans budgie smugglers, and return to the pleasantries later.

There is one golden rule reference making predictions; don’t do it. Or more precisely if you are stupid enough to make one then never apply a timeline. So predicting I will die is a fairly sound call but not if I add in next Tuesday lunchtime (unless of course I have a pre-arranged tête-à-tête with a Bulgarian umbrella operator on Waterloo bridge). So ‘stand away from the prediction’ is generally sound advice.

But thinking about, as opposed to predicting, the future is perfectly reasonable behaviour. And whilst not doing so up until now has had few negative consequences this is no longer the case. To cut to the chase, we are still facing a possible systemic collapse of the financial system or at the very least a massive bout of uncertainty and disruption to it. Ignorance and inertia are now very high risk strategies as far as your personal finances are concerned. Risk mitigation should be a priority regardless of whether the worst does or doesn’t come to pass.

So what can you do? Well let’s be clear, I’m not offering you any formal financial advice – what you do with your money is your own responsibility. However, at the moment, most investments look about as appealing as a robber’s dog chewing a wasp. Personally speaking I have moved most of my 'spare' money to cash (the worst possible place to be in the mid to long term) and gold. Why? Well as Mark Twain once said “History never repeats itself but sometimes it rhymes”. We will be delving into the whys and wherefores in future posts but let’s just leave you with a recent quote from Hugh Hendry:

"We are single-digit years away from the most profound market clearing moment".

Well actually Hugh may I humbly suggest it may be months not years? My money is on (or rather isn’t) 2012. This isn’t a prediction, it’s just a precaution. And if you are going to take precautions now looks like a good time to start. If I am wrong, the down side should be minimal; if I am right the upside is substantial. That’s asymmetric risk for you. Eject? I already have.