Category Archives: economy and money

Developments

Posted on by
Reply

The Western countries are continuing to stir up anti-Russian chaos in countries of the former Soviet Union – Armenia, Georgia, Kazakhstan, where they have installed corrupt, pro-western client regimes and NGOs that spread pro-western, anti-Russian propaganda to the detriment of the local populace. The goal of this is to strategically encircle Russia with hostile nations that will follow the example of Ukraine – basically, buy into the empty promises of Western wealth and “democracy”, and get destroyed fighting Russia, so that the West doesn’t have to sacrifice their own people and vital resources defeating their strategic enemy.

This, however, is just a distraction, since none of those client states can survive the inevitable collapse of the West; the West at this point has culturally nothing to offer, other than the LGBT degeneracy that nobody wants. Their “prosperity” is debt-based, the Western societies are deindustrialising, energy-deficient and the basis of prosperity is in the process of collapse. The only thing Russia has to do is not swallow the bait, take their time destroying the West in Ukraine, wait for the eurodollar system to collapse, and when the false promise of the prosperity of the West crumbles together with the West itself, things will gradually normalise.

Unfortunately, I don’t see any probability of this happening, because of the very narcissism of the West that makes them form great plans for total world domination at the very point of their socioeconomic collapse. Such narcissists will burn everything down before they suffer the humiliation that stares them in the face, which is why I see a nuclear war as the high-probability option.

As for the immediate collapse of the Western economy, what we see is the collapse of the banking system, but I see a more important underlying pattern of the collapse of the real-estate market and its derivatives, the mortgage-based securities that back the currency. The danger to the individuals is reduced liquidity due to the banks being formally rescued but de-facto defunct. What this means is that your account might be theoretically there, but you might be unable to use it to service your liabilities, and I actually expect this to be a way for the banks and other large entities to disown the owners of real estate that is financed with mortgage loans. You see, the simplest way to do this is to create a widespread technical default, meaning that you formally have the money in the bank but you can’t use it to pay your debts, in the same way the West is forcing Russia into a technical default or delinquency on its obligations by locking it out of the SWIFT system and simultaneously requiring payment that can only be done using the system that is blocked. Then, when the Russians can’t service their obligations, use this as an excuse to confiscate their assets. I expect this pattern to be extremely widely used against the populace in the West, in order to effectively confiscate their property and turn them into serfs in some sort of a technofascist neo-feudal system that they have planned for us. Even if you actually own real estate, meaning there’s no mortgage on it, you’re not safe, because I expect the governments to invent new taxes attacking property owners, which might be technically unserviceable and delinquency on those imaginary obligations will be dealt with by mass confiscations of property. Since they have already implemented a total surveillance society, they expect that nobody will be able to escape their total control even as they go bankrupt, and they will be able to implement absolute centralized control over life and property of individuals.

This is why I see a nuclear war as a lesser evil, because “peace” brings only enslavement, destitution and despair for all of us. The worst that could happen to us is along the function of the linear progression of “business as usual”. Fortunately, I think those people are in fact very stupid and have overplayed their hand, mostly because they work with faulty assumptions, the way they expected to collapse the Russian economy with sanctions, and they in fact collapsed their own economies and improved the Russian position, because in their narcissism they are unable to understand the actual facts, and instead they consume their own propaganda as inputs for simulations and predictions. Also, they vastly overestimated their ability to control things, also because they worked with faulty understanding of why things worked so far, and why they seemed to have things under control. In essence, I expect things to increasingly escape their control and fall apart, and I expect all their efforts in fixing the problems to accelerate the rate of collapse, contrary to what happened so far.

Banks circling the drain

Posted on by
Reply

The banks are performing according to my expectations:

Credit Suisse wasn’t doing well before, and now it’s basically fucked:

Credit Suisse Sparks Global De-Risking After Top Investor Bails (ZeroHedge)

On Wednesday, Credit Suisse Group AG’s shares reached their lowest point ever, dropping by as much as 10%. This is the eighth consecutive session of decline, which comes in the wake of restructuring issues, delays in submitting its annual report due to ‘material weakness’ flagged by the SEC last week, and a broader industry selloff following the collapse of Silicon Valley Bank. In addition to these challenges, the troubled Swiss bank now faces a new problem: its top shareholder has said they will not invest any further due to the sharp decline in valuations.

“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank Chairman Ammar Al Khudairy told Bloomberg TV in an interview on Wednesday.

That was in response to a question about whether Credit Suisse would receive fresh injections if another liquidity crisis emerged.

Saudi National Bank, which is 37% owned by the kingdom’s sovereign wealth fund, is Credit Suisse’s largest shareholder as of late 2022 after acquiring a 9.9% stake. Al Khudairy said there are no plans at the moment to take the stake over the 10% threshold because of regulatory hurdles. In the last several months, since the bank’s equity has been on a waterfall lower, the Saudis have lost more than 500 million francs on their position.

The news the Saudis are perhaps done supporting the troubled Swiss bank sent shares down as much as 25% to a new record low in Zurich.

I have nothing new to add in terms of my recommendations; basically, the banks are going down, the fiat currency system is going down, everything based on America and the Dollar is going down, what follows is extreme turbulence and insecurity, the lemmings are going down the cliff.

You know what I think is a good idea. 🙂

More 1st world problems

Posted on by
Reply

Another Norfolk Southern train derails in Springfield, Ohio after toxic East Palestine spill.

A Norfolk Southern cargo train derailed in Ohio on Saturday evening, one month after the derailment of another company train carrying hazardous materials sparked concerns about the safety of those nearby.

The Saturday incident took place near the town of Springfield, Ohio, as the 212-car train traveled south, a company spokesperson said. About 20 cars from the train, which did not have passengers on board, derailed by State Route 41 near the Clark County Fairgrounds, leading officials to advise locals within 1,000 feet of the scene to shelter in place. The derailment also caused more than 1,500 residents to temporarily lose power.

This is, of course, anything but unexpected, if we remember what the train tracks look like over there, and they obviously aren’t repairing them, so if the trains somehow managed to limp along in the past, and the condition degraded further with time and use, it’s obvious that at some point derailment would become the default option.

That’s privatisation for you – it’s unprofitable for the company owning the tracks to invest in repairs, so they milk it for as long as possible, bribe the politicians to leave them alone because that’s cheaper than repairs, and then liquidate the business, split the money between the owners and have someone else deal with the unprofitable business of repairing infrastructure, someone like the state, and then bribe the politicians again to let you “privatise” the infrastructure, promising you’ll do a much better job, because businesses are so much more efficient at managing assets.

The problem is, the businesses are very efficient at milking assets for profit, but they are very inefficient when you need to make large investments in things that will provide long-term benefits to the people at very moderate returns over the decades and centuries. Businesses prefer to make lots of money fast, and in this case we can see what it looks like – neglect, corruption, harm.

Mining stock and why I don’t own any

Posted on by
Reply

There’s a constant theme in the gold/silver investment circles – gold is good, silver is better, and mining companies are the best, if you want to multiply your investment. Here’s why I disagree, and why I think it might actually be the opposite.

First of all, if shit really hits the fan, you want tangible assets. Shares of any kind, mining or otherwise, are not tangibles. They are a complicated contract which depends on many things that might prove to be unreliable; for instance, the existence of stock markets of any kind. If anything is nuked, you can kiss your shares goodbye.

Second, let’s assume nothing is nuked, but the economy collapses, and the fiat money system with it. Let’s assume those central banks buying all the gold last year knew what they were doing and they switch to gold-based currency. If you think every country won’t immediately nationalise gold mines, you’re incredibly naive. Shareholders won’t be compensated and will lose their investment. It’s unlikely that the countries will try to confiscate their citizens’ gold, because that would be unpopular in times when their popularity will be at all times low. Rather, people will rush to exchange gold for the gold-backed currency at those bitcoin-like rates. It’s a different matter with the mines, as the source of gold, and all the countries will do the best they can to establish control over those immediately.

As for silver, unlike gold it’s about 50% industrial metal, which is usually seen as a plus, until you realise that global industry is on a downward trajectory and the industrial use of silver might diminish. Also, the currency backing is very unlikely to be bimetal; it will be gold only. What will happen to the price of silver, I don’t know, but I’m betting primarily on gold. I’m uncertain enough about the outcome to have a decent amount of silver as well, but this is mostly insurance in case I’m wrong.

This line of thinking is full of variables, so take it for what it is – a personal estimate of probabilities.

ps. This is not my main reason, but if we assume that the spot price of the precious metals is controlled by the paper market and pressured downwards, the lower limit of the price will be the cost of extraction from the ground, and the upper limit won’t be much higher than that, which means that the miners will always be unprofitable, since they can’t do what everybody else does: calculate your cost, add a reasonable profit margin and then offer your stuff on the market. Since they don’t control the price, they are always kept on the bleeding edge of bankruptcy, with the goal of creating the impression that the precious metals aren’t all that precious if there’s no money there. If what they are mining ever becomes profitable, it will happen because the controllers lost control, and they will then likely try to regain it by outright nationalizing the mines.

Banks

Posted on by
1

I’ve been hearing bad news from the banking sector with increasing frequency and urgency, and basically, it goes like this:

  • an increasing number of banks in America have been delaying payments and showing symptoms of having insufficient funds available

  • there’s been increasing talk about bankruptcies and bail-ins

A bail-in is, essentially, when a bank says “sorry, but we either go bust and nobody gets anything because we have nowhere near the money required to cover the customer funds, or we take a big chunk of customer funds, restructure our finances with it, and continue doing business, pay our management bonuses for doing a good job, and the customers get a “haircut”.

I was talking to Božo about this just yesterday and told him that my guess is that they will just close the doors one day and say they are “investigating potentially illegal activities”, which means all funds frozen, and within a week they’ll give everybody an “allowance”, permitting $500 of pocket money per month per customer so that people can buy food, and then negotiate the terms of a bail-in with the state and the state will tell them to just disproportionally target the big accounts, and leave the small ones alone, because this will avoid voters to get angry and do something about it, and everybody will be glad because they fucked the rich people. Božo replied that the legal framework for this is already in place, they planned this years in advance. This will have dual function – the people will be so pissed at the banks they will be ready to accept the state-controlled CBDC without much opposition, and they will also be much poorer, and poor people don’t have choices so they are easy to control.

My recommendations are known for years already so there’s not much use in repeating them, but basically separate your funds in 3 basic categories:

  • cash, in amounts necessary to buy basic stuff in case of a banking system event; doesn’t have to be much, but don’t go below $200 per person; also, value of one ounce of gold in cash per person would be the upper limit I would not exceed;

  • bank account, in amounts necessary for monthly costs and immediate liquidity; see how much you spend per month on food and bills, and keep that much in the bank at the beginning of the monthly cycle;

  • put everything over this amount in physical gold (and some silver); this means all your savings and emergency response money.

Basically, you need liquidity, so drying up your bank account would be impractical and inefficient, but keep it at the necessary minimum. Cash reserves are also essential, for when the banks don’t work, but you don’t yet have the opportunity or desire to convert precious metals into operational cash. As for buying the precious metals, stick to physical only, because everything else will be too tempting for governments and banks to steal. What kind of physical? Stick to the stuff that’s of the most popular, recognizable and practical kind where you live. Don’t buy exotic, overpriced bullshit just to make it interesting. It’s money, it’s not supposed to be interesting. See what has the least amount of premium over spot, and what is the most popular kind where you live. Intersection of those two sets is what you want. I mentally divide bullion into stuff that’s for buying real estate, which means big bars with the least amount of premium and/or 1oz gold coins, and the stuff for possibly trading small amounts for survival; for this I have the 1oz silver coins. Also, I don’t buy questionable shit from questionable sources; I have a good relationship with a local bullion dealer and this reduces all kinds of unnecessary trouble to a minimum. Always try to connect with the actual physical person who is doing the trading because that’s something you might depend upon if there’s no Internet or telecommunications.

In case of a big economic event, you’ll have to prioritise spending, which means you won’t be able to pay rent in time, which means you’ll have to negotiate something with the landlord in order not to get evicted in the worst possible time. Also, you won’t be able to pay the bills in time, but since nobody will be paying the bills, the government will have to do something so that the utilities keep working. If you have loans or leases, you’ll have to suspend payment of those, too. You need to develop some kind of a plan so that you don’t find yourself in a situation where you don’t have food, heat, electricity and similar essentials, because you continued paying all the bills as if it were business as usual, and you ran out of liquid funds. Have in mind that everybody will have the same problem and short-term non-payment will have to be tolerated. Be very careful if you own real estate, because in that case it would be very dangerous to have any kind of unserviced debt, because the banks will jump on the opportunity to seize your real estate as compensation, and I’m sure the legal framework for this will be quite accommodating.

As you can see, I’m a ray of sunshine again, just bursting with optimism. 🙂 It’s not only the looming economic collapse, but also the looming nuclear war, combined with an already present totalitarian democratorship.