statement posted on its website today, Coca-Cola said that it is in fact not changing its world-famous formula. “The caramel color in all of our products has been, is and always will be safe, and The Coca-Cola Company is not changing the world-famous formula for our Coca-Cola beverages. Over the years, we have updated our manufacturing processes from time to time, but never altered our Secret Formula,” Coca-Cola said on its website. The No. 1 soft drink maker said they have asked its caramel suppliers to modify their production process to reduce the amount of 4-MI in the caramel, but that it will not have any effect on the formula or the flavor of its products. “These modifications will not affect the color or taste of Coca-Cola,” it said. The company added it is committed to the “highest quality and safety” of its products, and it will “continue to rely on sound, evidence-based science to ensure that our products are safe.” --------- A specific caramel coloring found in Pepsi, Coca-Cola, and other popular soft drinks that a consumer watchdog said contain high levels of a chemical linked to cancer in animals has now been deemed safe by US regulators. Despite this, PepsiCo and Coca-Cola both decided to adjust the formula of their caramel coloring across the US so they do not have to label their products with a cancer warning to comply with additional regulations enforced in California. The recipe has already been changed for drinks sold in the Golden State and the companies said the changes will be expanded nationwide to streamline their manufacturing processes. The Center for Science in the Public Interest (CSPI
reported earlier this week that it found the unsafe levels of the chemical 4-methylimidazole (4-MI -- used to make caramel color -- in cans of Coke, Pepsi, Dr. Pepper, and Whole Foods’ 365 Cola. Coca-Cola confirmed that changes were being made at its facilities to keep within the law but argued that the CSPI’s allegations on the dangers the ingredient posed on humans were false. “The company has made the decision to ask its caramel suppliers to make the necessary manufacturing process modification, to meet the specific Californian legislation,” A spokesperson for Coca-Cola told
Daily Mail Online. “Those modifications will not change our product.” California added 4-MI to its list of carcinogens, after studies showed high levels of the chemical led to tumors in lab animals. However, the studies were inconclusive on whether the chemical was dangerous to humans or not. “Caramel is a perfectly safe ingredient and this has been recognized by all European food safety authorities,” the spokesperson added. “The 4-MEI levels in our products pose no health or safety risks. Outside of California, no regulatory agency concerned with protecting the public’s health has stated that 4-MEI is a human carcinogen.” “The caramel color in all of our ingredients has been, is and always will be safe. That is a fact,” the spokesperson said. This had been the CSPI’s second go-around with the Food and Drug Administration (FDA over the dangers of 4-MI in soft drinks. It first petitioned the regulator last year, but the FDA has continually maintained that the claims were exaggerated. “It is important to understand that a consumer would have to consume well over a thousand cans of soda a day to reach the doses administered in the studies that have shown links to cancer in rodents,” said FDA spokesman, Doug Karas to the Daily Mail's Laura Pullman. CSPI maintains that the regulator is allowing soft drink companies to needlessly expose millions of Americans to a chemical that is known to cause cancer. “If companies can make brown food coloring that is carcinogen-free, the industry should use it,” CSPI’s executive director Michael Jacobson told
Reuters. The FDA said it will review the watchdog’s petition, but that the soft drinks in question were still safe. CSPI took cans from stores in the Washington DC area, where they found some had levels of 4-MI near 140 micrograms per 12-ounce can. California has a legal limit of 29 micrograms of 4-MI per 12 ounces, it noted. The FDA’s limit for 4-MI in caramel coloring is 250 parts per million (ppm . Once the caramel is mixed in with the soda it becomes diluted. According to calculations by Reuters, the highest levels of 4-MI found in the soft drinks were about 0.4 ppm, significantly within the safe zone. “This is nothing more than CSPI scare tactics,” the American Beverage Association (ABA told Reuters in a statement. “In fact, findings of regulatory agencies worldwide ... consider caramel coloring safe for use in foods and beverages.” ABA said its member companies will continue to caramel coloring in certain products but that adjustments were being made to meet California requirements. “Consumers will notice no difference in our products and have no reason at all for any health concerns,” the ABA said. Diana Garza-Ciarlante, a representative for Coca-Cola, said its suppliers would modify the manufacturing process used to reduce the levels of 4-MI, which is formed during the cooking process and as a result may be found in trace amounts in many foods. “While we believe that there is no public health risk that justifies any such change, we did ask our caramel suppliers to take this step so that our products would not be subject to the requirement of a scientifically unfounded warning,” she said in an email to
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Four days later, Bandit collapsed on the floor.
He was soon experiencing bloody diarrhea, and by the time Higginbotham and her mother got him to his veterinarian, his organs were shutting down. His liver showed that he had eaten something toxic. Certain that Bandit's inexplicable illness had already become too severe, the veterinarian suggested putting him down, and Higginbotham's mother and son agreed.
But she refused, and after nearly $4,000 in medical bills and three weeks of intensive nursing that included in-home I.V. care, Bandit recovered. The vet could not conclusively link the chicken jerky to the illness, but Higginbotham said he thought it could be the cause.
Bandit's puppyish spark has come back, but Higginbotham remains anxious, feeling an overwhelming sense of helplessness over what she might be feeding her dog. At the opposite corner of the country, in Eastern Florida, Danielle Kinard-Friedman's story did not end as well. Two weeks ago, Millie, her 18-month-old yellow Labrador, began vomiting bile after weeks of growing progressively more lethargic.
When Millie wouldn't eat anything, Kinard-Friedman took her to a vet. Blood tests revealed that Millie was experiencing kidney failure, and so she spent a week in an emergency pet clinic receiving intensive treatment that eventually proved futile. She was put down this past Sunday.
It was Millie's vet who asked Kinard-Friedman if she had been feeding her dog chicken jerky treats. She had. In fact, she had just started buying the treats -- under a different brand-name from Bandit's -- two months prior.
The vet then asked a more alarming question: Was the chicken from China? She had no idea, but she checked the label as soon as she got home. It was. When Higginbotham checked her treats, she found the same thing. Their vets could not prove anything, but both suspected the treats had sickened the dogs.
Higginbotham and Kinard-Friedman have now joined thousands of pet owners speaking out on the Internet and asking the government to force a recall of chicken jerky dog treats made from Chinese chicken. Concerns over the issue first arose in 2007, when the U.S. Food and Drug Administration began receiving reports of sickened dogs, all with the apparent common denominator of chicken jerky treats from China.
Since then, the FDA has performed hundreds of tests on chicken jerky samples and has not yet found any contaminant to explain the illnesses.
Regardless, the movement has continued to gain significant momentum. In the past month, it even got the attention of Ohio's Sen. Sherrod Brown and Rep. Dennis Kucinich after Ohio resident Candace Thaxton contacted them about two of her dogs who fell ill.
Until a cause is uncovered, owners and lawmakers say they will continue requesting that the FDA make the issue a priority, while the 15 companies implicated by consumers see no empirical evidence to justify recalling their products.
Congressmen and FDA sink their teeth in
On February 7, Brown brought the issue to the Senate floor, saying he had urged the Food and Drug Administration to accelerate its investigation into these chicken jerky treats -- found under multiple brand names but all sourced from China -- that appeared to be sickening dogs across the country. Two weeks later, the senator held a press conference and issued a news release again urging the FDA to act swiftly.
Back on Nov. 18, 2011, the FDA cautioned consumers that chicken jerky dog treats from China may be associated with a rising number of dog illnesses. This followed earlier warnings of the same issue in September 2007 and December 2008. After a drop in 2009 and 2010, reports of dog illnesses have spiked once again.
The November 2011 FDA notice warned dog owners who purchased chicken jerky to monitor their pets for decreased appetite, decreased activity, vomiting, diarrhea (including bloody , increased urination or increased water consumption. If any of those symptoms worsen or last more than 24 hours, owners should bring their dog to a vet, the notice said. Blood tests could indicate kidney failure, while urine tests might indicate Fanconi Syndrome, a disorder that results in nutrients normally absorbed into the bloodstream instead being released through urine.
On Wednesday, an FDA spokesperson confirmed to Food Safety News that the agency has recently received more than 600 reports from dog owners who say their pets have fallen ill because of jerky products made from Chinese chicken.
Since the issue first arose in September 2007, the FDA has run numerous chemical and microbial tests on Chinese chicken jerky samples in search of a contaminant. Though the agency said it could not conclude anything from the test results, the details remained under wraps until March 1, when an FDA document describing tests dating back to 2007 was sent to Kucinich's office. According to a Kucinich aid, the congressman "took them to task" at a briefing in order to get the information.
The one-page document outlines 241 tests for potential contaminants and 130 tests with pending results, none of which conclusively link the jerky to contaminants at dangerous levels. The 2012 tests with results still pending, however, are searching for heavy metals.
The Kucinich aid and many pet owners said they hope those latest tests might finally link the treats to a toxic substance and resolve the mystery of their pets' problems. The FDA has stated repeatedly that it will continue to actively investigate the issue.
According to the FDA, at least one Australian chicken jerky manufacturer has issued a recall of its products made from Chinese chicken, calling the move a precautionary measure.
The manufacturer may be mindful of March 2007, when hundreds of pet illnesses linked to melamine-contaminated Chinese ingredients prompted the recall of thousands of pet food products in the U.S., Europe and South Africa. In the U.S., the FDA received thousands of reports of dogs and cats dying from kidney failure, but confirmed very few cases.
More consumers come forward, but pet food industry says they're not to blame
A month ago, the private Facebook group called "Animal Parents Against Pet Treats Made in China!" had roughly 100 members. Today, the number has exploded to more than 2,500. One petition demanding the ban of jerky treats from China has acquired more than 3,000 signatures.
Susan Rhodes created another petition on March 3. She has asked the FDA to recall the jerky treats after she found that her dog, Ginger, had suffered permanent kidney damage and was losing weight at an alarming rate. Rhodes said she had been feeding the treats to Ginger for the past two years. Days after creating the petition, she has racked up more than 300 signatures from dog owners reporting similar diagnoses. Media coverage and word of mouth have brought a tidal wave of attention to the manufacturers of these treats. Some of the snowballing coverage, however, might lead some pet owners to incorrectly blame other health problems on the treats, said Kurt Gallagher, spokesperson for the Pet Food Institute, an industry education and public relations resource.
"Pet food companies want to make safe, nutritious products. It's their top priority," Gallagher told Food Safety News. "When everyone's talking about something like this, I think there's heightened awareness and sensitivity for pet owners looking for it."
Gallagher recommended pet owners take any sick pets to a vet to get a clinical opinion before diagnosing any issues themselves. If the vet considers pointing a finger at a certain food, the owners should contact the food manufacturer. Food companies should be tracking their complaints and looking for patterns and problems within their food supply, he said.
Pet owners have been quick to amass lists of jerky manufacturers sourcing their chicken from China. Rhodes' petition, for example, names 15 such companies.
A spokesperson for a dog treat company at the center of the furor reiterated that the FDA's testing has not found any contaminants and so his company has no reason to believe their product has sickened dogs. The company has a comprehensive food safety system at their Chinese facilities, he said, including quality control inspectors who monitor for safety.
He added that his company appreciated hearing from concerned customers, and emphasized that anecdotal evidence, however pervasive, does not prove causation.
"Obviously, we take food safety very seriously," he said. "Millions of dogs enjoy our products without ever getting sick."
Multiple pet owners have told Food Safety News that the spokesperson's company has backed away from its original intention to offer customers small monetary settlements for harm their jerky might have caused pets. According to sources, once the complaints reached a certain volume, spokespeople for the company told customers that providing any settlements would be an admission of guilt.
Made in "America"?
Blogger Mollie Morrissette has been following the chicken jerky developments for more than a year on her website, Poisoned Pets. She said that the issue has reached a sort of tipping point in the last month, with more and more pet owners speaking up about sick dogs.
"I get letters every day from broken-hearted pet parents -- people who had to put down their beloved family dog or five month-old puppy," she said. "They all fed their dogs chicken jerky."
One issue frustrating pet owners, Morrissette said, is that many of these dog treat packages boast that they are made in the U.S., though the fine print on the package often reveals that the chicken actually comes from China, where a cultural preference for dark meat makes for cheap white meat.
These "country of origin" claims are made possible by laws that say that once an ingredient is "substantially" altered in a given country, the resulting food can be considered a product of that country. These alterations can include cooking, mixing or otherwise reprocessing the ingredients in some way.
Just as oranges from Brazil can be turned into Canadian orange juice, chicken jerky from China can be reprocessed and repackaged in the U.S. to become a U.S. product. This can trick consumers into a false sense of security about the safety of their pet's food, Morrissette said.
Higginbotham said that the brand of jerky she bought for Bandit claimed to be "Proudly manufactured by an American company." Kinard-Friedman believed the same thing about the jerky she fed to Millie.
Morrissette said that pet owners feel helpless as they wait for some sort of justice on behalf of their pet, and she criticized the FDA for what she saw as a lack of urgency in investigating the illnesses.
"A lot of these pet parents are just wringing their hands, hoping the FDA will find some sort of answer," she said. "If this was [potentially contaminated] baby formula, we would have had the answer when it started five years ago. It would all get pulled off the shelves out of caution as soon as anyone suspected it might be contaminated."
Owners say they won't back down until they have an answer
Candace Thaxton, the woman who spurred Senator Brown and Congressman Kucinich into action, has more than one dog motivating her to uncover that answer.
In November 2011, when her 10-year-old pug, Chansey, started urinating unusually often and refusing to eat, Thaxton assumed they were just signs that the dog was getting old.
Chansey's health quickly deteriorated. At a vet appointment, Thaxton learned that the dog's kidneys had shut down and she would need intensive medical treatment to recover, if it was possible at all. Thinking their dog had naturally reached end of her life, the Thaxtons chose to have her put down.
Within weeks, the family had adopted a mixed-breed "pixie" puppy named Penny, who earned a pristine bill of health at her first vet appointment.
Right around Christmas Day, Thaxton ran out of the treats that came with Penny when she was adopted, so she started feeding her Chansey's leftover treats: chicken jerky. Chansey had never eaten jerky until weeks before she grew sick. She died with her first bag half-finished.
In the weeks that followed, Penny started urinating more than usual. After New Year's Day, Thaxton saw a news story online about the FDA's warning for chicken jerky made from China. She checked her bag of treats, which said it was from South Carolina.
Then she noticed the text over the barcode: "Made In China."
Thaxton stopped feeding her the treats, but Penny started vomiting. When the vet saw her, she showed all the same symptoms as Chansey.
"Her kidneys were worse than Chansey's," Thaxton said. Penny went on 24-hour surveillance at an emergency pet clinic. She recovered a week later, but Thaxton was just getting started.
"Candace went to bat," Morrissette said. "She's the driving force behind all of this, all the publicity."
Thaxton filed two complaints with the treat manufacturer -- one for Chansey, one for Penny. It looked like she was going to at least get a settlement amount to cover part of her $3,000 vet bill, but the company eventually rescinded as more complaints began to pour in, Thaxton said.
Even before the settlement talks broke down, Thaxton's story had run on two local news channels. When she was ultimately refused payment, Thaxton promised the company she would take the issue national within the week.
"By Friday night, Congressman Kucinich had written a letter to the FDA. By Monday, I had a press conference with Senator Brown," she said. "We've had two more conferences since then. I talked to Inside Edition. I told them I was going to be the one who pushed. I'm not stopping now."
Like Thaxton, other pet owners seem determined to keep the pressure on FDA to find answers and hold any guilty party responsible. For many, a sense of uncertainty, frustration, and even guilt, lingers.
"Pets are part of your family. When they die, you lose a family member," Higginbotham said. "I'm dealing with a lot of guilt over this. I'm the one who feeds my dog and is supposed to make sure he's safe and healthy. How do I do that if I can't even trust his food?"
-------
Photo captions, from top to bottom:
- Bandit, Maria Higginbotham's dog
- Ginger, Susan Rhodes' dog
- Sarge, Ray Parker's dog. Sarge, a seven year-old chow-corgi mix, fell ill soon after eating a single chicken jerky dog treat, Parker said. After nearly two weeks of clinical treatment, including intensive critical care, Sarge was put down.
- Chansey, Candace Thaxton's dog
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In case they didn’t cover it in your weekly programming, the biggest debt write-down in human history occured on 3.9.12.
SDA Announces a Credit Event Has Occurred
No need to worry, the ISDA, IMF, ECB, US Fed, Euro Zone Leaders and every other Frankenstein group have everything under control. Don’t worry that they changed their minds more times than your wife changes shoes before coming to this “solution.” This time they’re sure. Sure this is going to be a huge benefit to the Greek people. Sure the triggering of CDS’ in no threat to financial institutions and sure overall payouts will be around the $3.2B in net outstanding CDS contracts linked to Greece. And sure the exact level of payouts will be determined on March 19. I am sure not one of these sureties is accurate.
The biggest debt writedown in history, will be followed-up with additional bailout funds being given to the money masters, I mean the poor people of Greece. It’s for the children. IMF head, Christine Lagarde wants to contribute $36.4B from the IMF to the $169B upcoming bailout. Ms. Lagarde says this will be needed to avoid a disorderly default that could be destabilizing. I guess skyrocketing suicide rates and pleas from Greek parents to give their children up for adoption is considered stable. Their oppression reeks of their greed and disgrace.
The restructuring will shave $138B off Greece’s $487B debt. Non-elected Minister Lucas Papademos called the deal a “historic success”. He continued, “For the first time, Greece is not adding debt but taking debt off the backs of its citizens.” You’ll have to forgive Papademon, like his friends, he often confuses the words debt and money. I’m sure he meant that they would be taking money off the backs of its citizens. Forget about the upcoming madness with Spain, Portugal, France and finally the US. Do you really think the “net” 3.2B CDS Greek exposure is the true liability? I’ll help you with the answer. If they sold a couple hundred billion in fictitious insurance and immediately took the proceeds and levered them, say a 100x and dumped it on themselves, proclaiming, “It’s raining!”, do you think they will be able to cover the insurance claims now? I guess we’ll find out if chopping off the head of a zombie bank can really kill them.
Institutions Will Not Enter the Gold Market in Force
Worth their weight in paper – It is my belief that financial institutions will not play a large role in this gold bull market until it is too late. I want to clarify that I am not referring to central banks or Sovereign Wealth Funds that are already some of the biggest players in this bull market, especially those in the East, like China. Rather, I am referring to the investment banks, securities firms, mutual fund and insurance companies.
Comments like those made by Warren Buffet in this year’s annual letter to Berkshire Hathaway shareholders are indicative of the feelings of many money managers and executives in the financial sector. Warren stated gold is an asset that is “forever unproductive” and that “it [gold] will never produce anything.” The common belief is that gold is not an investment, but a speculation. This is because money managers don’t understand gold or how to value it. More on how to value gold later.
Gold doesn’t pay a dividend and doesn’t generate easy transaction or administrative costs. Many investment managers I work with don’t even consider gold an asset. The whole system is built so that each component works together – they facilitate deals, offer services and issue and sell paper for profit. It’s a symbiotic relationship between all groups that will not be broken. Gold is not part of their business model. It is for this reason that I believe institutions will not be large players in the gold market and will ultimately be severely impacted by the dollar collapse. The coming currency collapse will destroy the entire financial system. They are a ship of fools sailing off a cliff.
The Manipulation of Markets Will Only Increase Until They Don’t
We have reached the point where manipulation (aka policies by governments and government sponsored entities need to continuously increase to keep the debt-based monetary system from collapsing. Similar to the fictitious interest rates in the US Bond Markets, the gold and silver manipulations must continue until the last. No matter how you choose to store savings, you should understand the manipulations will continue until they cannot any longer. If you can understand how this will end, you will not only be able to handle the short-term volatility, but will see it as a gift.
Like a thief in the night, the financial system’s ship of fools will find their gold has been removed and they’ve thrown their silver away.
How to Value Gold
I believe James Turk has the best way to value gold. Keep in mind using this formula assumes that 5,000 years of history is not wrong and in fact gold is still money. I tend to put more faith in 5,000 years of human behavior than digits on my computer. James determines “fair value” by dividing Central Bank Foreign Exchange Reserves by Central Bank Gold Reserves. Using this calculation, the “fair value” of gold is over $11,000/oz and rising. How high’s the water Mama? $1,700 and rising.
Gold Oil Ratio (GOR
Last week I mentioned that the price of oil was dropping versus gold, as I would expect in either a hyperinflationary or hyperdeflationary depression that coincides with a financial collapse. In 2005, the GOR was 6.6 barrels of oil/oz of gold. Today, the price of oil has dropped to about 16 barrels/oz. That means I can buy almost 2 ? times the amount of oil for the same amount of gold. The historical norm is between 15-20 barrels/oz – so we are around the historical average now. I know about peak oil and peak everything theories. Whether peak oil is true or not, it’s going to feel like peak oil if your savings is in USDs.
Rising Taxes
With budget deficits running completely out of control, new and existing taxes are going to be levied on the public. We have new taxes for ObamaCare and the potential for the Bush tax cuts to expire in 2013. All told, 41 separate tax provisions are set to expire this year, ranging from personal to estate taxes. In addition, there has been a 2013 proposal that could reduce the tax benefit of employee deferrals into a qualified retirement plan for certain high income individuals. We’re talking 401Ks and the like. The proposal would tax deferrals at a rate that is the difference between the employee’s tax rate for ordinary income and 28%. It is unclear whether this proposal will gain traction, but what is clear is the direction of future taxation to support ever growing debts.
No matter how high existing taxes go or how many new taxes are implemented; there is no way to cover the shortfalls. John Williams of SGS noted that even if the US were to tax 100% of all wages and corporate profits, they could still not cover the bill. Unfortunately, this won’t stop them from trying. The whole debate about who should pay what, is a perfect example of how the conversation is being directed. We are following their script without ever questioning why. How in the world are we ever going to pay them what they demand if they keep taking it out at a faster rate? Catherine Austin Fitts put it best by saying, “A negative economy is like having a hole in the milk bucket; it’s time we fixed the hole and filled up the bucket!” I’m not just talking about a little waste. I’m referring to the outright theft by those with access and power.
There’s a Hole in the Bucket
There are many holes in the bucket. A few examples include:
1 Federal housing programs like the FHA and HUD – Time Magazine exposed a scandal at the FHA where real estate speculators used the program to make huge profits at the expense of the poor. Builders pocket millions of profits from mortgage loans that far exceeded the cost of construction. These programs allow the government to write bank checks to those involved in the contracts. In the 1980’s it was disclosed that senior HUD staff used their positions for personal gain and when they left their positions they used inside contacts to win subsidies and new contracts. In 1981 Sam Pierce became Secretary of HUD under Ronald Reagan. After leaving his office, the US Office of the Independent Counsel and US Congress investigated mismanagement and abuse stemming from political favoritism. Through the 1990s many of Pierce’s closest aides were charged and convicted of felonies for inappropriate expenditures, but Pierce himself was not charged. HUD provides about $8B a year to public housing authorities (PHAs .
In 2006, The Miami Herald ran a series exposing the following examples of fraud and corruption:
• The PHA gave developers and nonprofit groups with political connections millions of dollars to build affordable housing, but they ended up building shoddy houses or no houses at all.
• HUD gave the PHA $35 million to tear down dilapidated public housing and replace it with new affordable housing. Six years later, half the money was gone and only three houses had been built.
• Instead of selling new houses to low-income buyers, the PHA allowed developers to make sales to wealthy investors who then “flipped” them for a profit.
2 Medicare and Medicaid – Theft in these two federal health programs range well into the 100’s of billions annually. Malcolm Sparrow of Harvard University, a top specialist in health care fraud thinks it’s likely that between $200-500B/year is lost to fraud (theft between these two programs.
3 Food Stamps – $1.7B/year lost to fraud
4 School Lunches – $1.4B/year lost to fraud
5 Supplemental Social Security – $4.6B/year lost to fraud
6 Unemployment Insurance – $4B/year lost to fraud
7 Temporary Assistance for Needy Families – $1.7B/year lost to fraud
And if we wanted to get belligerent, we could mention the Wachovia money laundering scam using funds from the Mexican (CIA drug cartel. To be fair to Wachovia, they were fined 1/3rd of a cent for each dollar laundered.
The hole gets bigger yet. We’ve got to pay for their military. And I mean “their” military. The American people are not asking to drop more bombs, they are being told. It’s a complicated agenda that we wouldn’t understand, so they have to choose for us. It’s for our own good of course. If it wasn’t already clear, they like to give you a second serving. In June 2011, The White House told Congress and America why it didn’t need their approval for military action in Libya. It was because it wasn’t a war – they should just say it’s because “we say so”.
General Smedley Butler, two-time recipient of the Congressional Medal of Honor put it best: “War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.”
The US taxpayer is funding global military operations in a big way. We have over 700 military bases in 130 different countries. The reported military budget for the US is $700B/year. More than the top 14 countries (excluding the US combined. Including off-the-books war costs, the annual US military spending is estimated to be about $1.25T. To add insult to injury, Secretary of Defense Donald Rumsfeld publicly stated on September 10, 2001 that “According to some estimates we cannot track $2.3 trillion in transactions.”
There’s a hole in the bucket and it’s getting bigger. It’s a massive gaping hole of fraud and abuse, waste of hard-earned tax dollars, corporate exploitation, criminal-predatory lending and governmental tyranny. Deceit masked in thousand page bills. There’s a hole in the bucket and we need to fix it.
Market Thoughts
Walking a Tightrope
Think of the market as a man walking on a tightrope with each arm tied to a team of horses. On one arm are the natural forces of deflation, on the other are the unholy forces of central bank intervention. The horses pull harder with each passing day, making it ever more difficult for the man to balance himself. As he wobbles with volatility, the crowd wonders which team of horses will succumb. Some betting on hyperinflation, others on hyperdeflation. All seeming to understand the man must fall eventually. Given the collapse in inevitable, CBs will ensure it’s not a deflationary collapse. They’ve already stated this and back-stopping banking deposits alone will require full-speed printing (FDIC is broke too . Collapse due to a deflationary spiral is a certainty, while printing is more profitable for those in control and postpones the day of reckoning the longest, if they can just keep their team of horses in equilibrium with the
deflationary horses. In the meantime, holding a portion of your portfolio in cash is a prudent option. Of course the amount you hold in cash depends on your situation. I am extremely bearish on the U$D and still hold over 20% in cash. I accept the 10% annual hit from inflation – it is the cost of protecting my PMs and it may allow me to take advantage of buying opportunities should the man, I mean market, wobble violently.
Unlimited Dollar Swaps
On the interventionist team, the US Fed is supplying an unlimited amount of dollars to the world via the dollar swap agreements. On Nov. 30, 2011, the world’s G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank [ECB], the Swiss National Bank, and the Bank of Canada announced “coordinated actions to enhance their capacity to provide liquidity support to the global financial system”. Under this agreement, The US Fed will offer unlimited amounts of US dollars to other central banks at the US dollar overnight index swap rate (OIS plus 50 basis points (about 1% . These freshly printed dollars are being lent to the CBs respective banks, so that withdrawals and debt payments can be met. These swaps are, and will continue to be offered with no limitation until at least Feb 1, 2013.
Near-Term Market Movements
The US trade gap for December widened to a record $52.5B. More importantly, we have the Greek CDS’ and incredible debt financing to deal with this month. You know what we need to solve this nagging issue of insolvency? More credit! Or debt, or money, or whatever they call that digital and paper shit they are so good at creating. The “pushers” will probably make you
ask nicely, but not too worry, the doctor’s here and he’s got his syringe ready. The new injection will have its desired affect – junky affect. I’m expecting a continued downward movement in the world’s stock markets through the end of March and into early April. Any attempts at rallying will be met with new fears over the expanding debt tsunami. It’ll be plenty choppy – the risk is on the downside. I wouldn’t be caught shorting stocks, but I consider any allocation risky. PMs and commodities will move much higher beginning in April. $2000 gold and $50 silver by July.
God Bless,
~David Freedom
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