Everything Wrong in 2008 is Worse Today-James Rickards
By Greg Hunter’s USAWatchdog.com
James Rickards wrote the best-seller titled “Currency Wars-The Making of the Next Financial Crisis.” What’s going to cause the next crisis? Rickards says, “The problem in 2008 was too-big-to-fail banks. Well, those banks are now bigger. Their derivative books are bigger. In other words, everything that was wrong in 2008 is worse today.” Rickards goes on to warn, “The last time, in 2008 when the crisis started, the Fed’s balance sheet was $800 billion. Today, the Fed’s balance sheet is $3.3 trillion and increasing at $1 trillion a year.” Rickards contends, “You’re going to have a banking crisis worse than the last one because the banking system is bigger without the resources because the Fed is tapped out.” As far as the Fed ending the money printing, Rickards predicts, “My view is they won’t. The economy is fundamentally weak. We have 50 million on food stamps, 24 million unemployed and 11 million on disability, and all these numbers are going up.” When the subject of gold confiscation came up, Rickards said, “I just don’t think it will happen because the government will find it will be very hard to enforce.” Join Greg Hunter as he goes One-on-One with Jim Rickards, the best-selling author of “Currency Wars.”
Here’s the power points ‘transcript’: due to connection trouble;)!
#1 The yield on 10 year U.S. Treasuries has risen for 5 of the past 6 days, and it briefly touched the 2.90% level on Monday.
#2 Rapidly rising interest rates are spooking investors and causing them to pull money out of bonds at a very rapid pace…
Investors have yanked nearly $20 billion from bond mutual funds and exchange traded funds so far in August. That’s the fourth highest pullback ever, according to TrimTabs data. In June, investors took out $69.1 billion — the highest on record.
#3 The sell-off of U.S. Treasuries is being led by foreigners. In particular, China and Japan have been particularly aggressive in selling off bonds…
China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
#4 Thanks to rapidly rising bond yields, some of the largest exchange-traded bond funds are getting absolutely hammered right now…
• The $18 billion iShares iBoxx $ Investment Grade Corporate Bond fund (ticker: LQD) has fallen 7.94% since May 2, according to S&P Capital IQ. That’s including reinvested interest from the fund’s bond holdings.
• The 3.7 billion iShares Barclays 20+ Year Treasury Bond (TLT) has plunged 15.9% the same period. Longer-term bonds typically get hit harder when rates rise than shorter-term bonds. For example, the iShares Barclays 3-7 Year Treasury Bond fund (IEI) has fallen 3.2% since May 2.
• PowerShares Emerging Markets Sovereign Debt (PCY), which invests in government bonds issued in developing countries, has fallen 12.7%. The fund has $1.8 billion in assets.
#5 In recent weeks we have witnessed the largest cluster of Hindenburg Omens that we have seen since prior to the last financial crisis.
#6 George Soros has bet a tremendous amount of money that the S&P 500 is going to be heading down.
#7 At this point, the S&P 500 has fallen for 9 out of the last 11 trading days.
#8 Margin debt has spiked to extremely dangerous levels. This is a pattern that we also saw just before the last financial crash and just before the dotcom bubble burst…
The exuberant mood comes as margin debt on Wall Street hovers near $377bn, just below its all-time high and well above peaks before the dotcom crash and the Lehman crisis.
“Investors have rarely been more levered than today,” said Deutsche Bank, warning that the spike in margin debt is a “red flag” and should be watched closely.
#9 The growth rate of new commercial bank loans and leases is now the slowest that it has been since the end of the last financial crisis.
#10 According to a shocking new report, Fannie Mae and Freddie Mac are masking “billions of dollars” in losses. Will they need to be bailed out again just like they were during the last financial crisis?
#11 Wal-Mart reported very disappointing sales numbers for the second quarter. Sales at stores open at least a year were down 0.3%. This is a continuation of a trend that has been building for years.
#12 U.S. consumer bankruptcies just experienced their largest quarterly increase in three years.
#13 The velocity of money in the United States has hit another stunning new low.
#14 The massive civil unrest in Egypt threatens to disrupt the steady flow of oil out of the Middle East…
After last week’s bloody crackdown by the Egyptian army, fears of a disruption of oil supplies to the West have boosted the oil price. Brent crude prices were propelled to a four-month high of $111.23 on Thursday. If the turmoil gets worse – or unrest spreads to other countries – the risk premium currently factored into the price of crude is likely to increase further.
#15 European stocks just experienced their biggest decline in six weeks.
#16 The Japanese national debt recently crossed the quadrillion yen mark, and many are expecting the Japanese financial system to start melting down at any time.
#17 In Indonesia, the stock market is “cratering“.
#18 In India, the yield on their 10 year government bonds has skyrocketed from 7.1 percent in May to 9.25 percent now.
Can I add to the quintessential list ??
#19 The FED and the BOE have no physical GOLD…only promissory notes.
#20 The claims on physical at COMEX/LBMA/GLD are 50-100:1oz
#21 JPM vaults are empty….only a vacuum of air b/w FED’s vault.
#22 Buffet / Soros / Paulson quit/quitting stocks at alarming rates
#23 Paulson is out but JPM and GS are long….GOLD. Who doesn’t understand Gold ?
Death spiral indeed.
Currency Wars, Reinventing Collapse -Dmitry Orlov, and The Failure of Laissez Faire Capitalism -by Paul Craig Roberts, is your basic SURVIVAL KIT.
If you have other GEMS, let me know.
i recommend: exorbitant privelege
i’ve also heard great things about “when money dies”, only started reading it though.
I admire your courage for reading it. Just as important as the previously mentioned books but it is history, it really happened, and will change your outlook.
Thanks Greg… Short and sweet!
James is right at the very top of insiders / commentators and so I always listen very carefully. And yet I am puzzled as to why he maintains that “the US wants to devalue the USD” – even though every policy and action taken since Bretton Woods has been in support of the USD as the Global Reserve Currency. Think of all the wars and market manipulations that have taken place to maintain the “strong dollar policy” – which has enabled the US to continue money printing over all these years.
To me this is a fundamental question, because wrong assumptions can often lead to absurd conclusions. In fact, I REALLY want to know why James states very firmly (without evidence) every chance he gets (except here) that the US wants a weaker dollar, when all the evidence is to the contrary.
Strong dollar policy is not meant to last for ever, it is to serve a meaningful purpose for a stage in a big plan, what you say is true for that particular stage, same as the previous stage that made the British sterling a “strong Sterling policy” for the golden times of the British empire only to be knocked out of its thrown on its nose for its replacement with the Dollar, the Strong policy comes always with the designed weakening that will knock the dollar on its nose like the sterling was done when time comes for the new replacement!
Good way to start the week Greg. This was a really interesting interview. James is absolutely right about using disability as an extension of “extended unemployment”. I personally know people who filed for unemployment through their business, and when that ran out they filed for disability. The sad part is I can’t blame them when you look at what Obama’s policies have done to small business. In a Government State like we live in, I think they actually encourage it.
The real truth is, this is all going to come to a tragic end real soon.
Thanks Jerry. Good info.
Could be the reason for your video’s alert the march that is supposed to take place on 9/11/13
James G Rickards is probably the only known 6 hatter, (six skills in one skull) in the country, having a monster intellectual spectral density signature. He is a top heavy, and understands very well market forces. To bad he’s not an engineer proposing solutions, but for what he does, there is none better.
Great interview, James G Rickards reached the same conclusion as yours, that gold confiscation, if any, would be only large stock piles, and not the individual homes with respective front door break down by the federals, particularly DHS with armored cars and billions of rounds, with desperate people with guns defending their life long little treasures, in a 100,000,000 points of hot flashes, but that, totalitarianism is a possible political outcome, and with that, anything is possible.
I believe James hits the nail on the head. Also, concerning gold, distrust of the government is great & growing, and if the govt. gets serious about confiscation, I believe there’ll be a few casualties scattered here & there. Fiddlin
Another ‘inside/cia’ mouthpiece.
Well I agree with you Greg, Rickards is NOT CIA mouthpiece, because he would say something like ‘everything is fine’ and similar ‘blah-blah’ like you may heard in TV.
But I think, he is an optimist, because USA in a much more worse shape then anyone thinks and the reason is this USA was completely sold out. I mean the ideas upon which was US build on were sold out, then the gold was sold out, then the jobs and innovation were sold out, then every other asset were sold out and then the US citizens were sold to BIG-Money.
Brian said US gov. is at least 5 years under corporate control, I think he is wrong US is at least 100 year under the corporate control, because FED was created in 2013 and THIS IS the reason why USA was sold out. Footnote Fed is privately owned by big banks and banks are corporates.
When this will be realized by average US citizen (BRIC nations already realized the fact US cant offer anything valuable-except few hydrogen bombs on their head/sarc) and they cant buy anything for USD in groceries store, then riots, looting will began and innocent people will die on streets or in FEMA camp.
Well EU is not in better shape, when we look at the economics (especially in the part where I live my life), but we don`t have lot of guns on our streets and when the economic collapse became apparent (well the global economy is already collapsed and most of states are de facto bankrupt) there will be less innocent blood spilled on the streets.
Jim was on China team as far as i can remember from his book, that is why US did not do well, he is an ACE, I have a great deal of respect to the guy, please bring him over again in a better connection and press the pedal to the metal with him to squeeze as much info as you can from his ocean of knowledge.
Without proof, I probably side with with Simon here. The CIA use people with “feet in both camps” to guide the debate. And if not James, then someone almost exactly like him.
This bail out, too big to fail and QE bulls### has bought a ton of time for our multinational corporate controlled government (at least 5 years and counting by my estimates). So what is our “government” doing with the time that we Americans will pay so dearly for? I don’t see them setting up any safety nets do you? I don’t really see anything being done out in the open which is disturbing. My guess is that those with any power now are scrambling to put into place whatever they can to retain or expand that power in the future….my guess is that means our liberty, the rule of law and a our God given rights as outlined in the constitution are not really something our leaders are looking to preserve……I can’t predict the future, but I can see the present, and nothing is being done to check the rampant and epic levels of fraud and criminal behavior in our government now as it is, so what is reasonable to assume will happen later—will the crooks suddenly curb their own activities and decide they have stolen enough, or will they simply spread their influence and corruption as far as they can and take as much, if not a little bit more than they think they can get away with?
Thomas Jefferson said that people will live under the exact amount of tyranny that they are willing to put up with. Well it also holds true that people will live the the exact level of liberty and prosperity that they are willing to support. Liberty, justice and prosperity are not free, I think we will all soon be reminded of this the day we wake up and see the final pieces of these things slip away from us and try then to take them back…….what an uphill fight that will be!
It wont be the ‘next financial crisis’, it will be the total meltdown of global economy.
The ‘funny’ thing is BRICS resp. their core nations will be the winner despite their current bleak situation, the only reason is, they have human power, natural resources and production capacities.
What have the so called ‘advanced western’? Well nothing valuable.
Now this is a guy you should listen to….
All these gold bugs have been predicting financial doom and gloom for years and yet we keep trudging along. Of course we live in a Alice and Wonderland economy…it is the way of the world…if we experience a collapse…is gold really going to be the thing to save your soul? Maybe we should try treating our neighbor like a child of God instead of some type commodity. Be converted of heart because the flesh is diseased and dying. Gold bugs will perish like the foolish man in scripture. Let me play the prophet…already a cancer grows inside Gregs body. Be converted whilst one has time.
My preacher calls me the hypocrite in the church because I profess to be a sinner, Yet saved by the blood on the cross. Greg I refuse to call myself a Christian because Christ lived much, much closer to GOD then I will ever do. Yet it is none the less my love for GOD that I stay informed, and read your every post. Thank you man of GOD,s work.
You remind me of the man who climbed on top of his roof to escape the flood waters that were about to engulf his home. A boat came by and offered him help and he said… “the lord will provide” I don’t need your help. Then a man came by in rubber raft to offer help and he said …”the lord will provide” I don’t need your help. So the man left and soon a helicopter came by and lowered a ladder to him, and again the man said…”the lord will provide” I don’t need your help. And again the man left. The water rose higher and higher, and soon the man drowned. When he got to heaven, the man said to the lord, why did you forsake me, and let me drown? The lord said… I sent you a boat, a rubber raft, and a helicopter… what more do you want?
Bob take Greg’s posts for what they are: A WARNING!
If there is another financial crises within the next few years and my last name was Dimon ,Moynihan ,Corbat or Blankfein I would point my corporate jet toward the nearest uninhabited tropical island and pull the transponder fuse . Seriously if there is another crash or crises bigger than the last , Egypt and Syria will look like a vacation destination .
Excellent as usual my friend. I am a big fan of JR and anyone who is disappointed with him lately and this interview in particular are just not paying attention. I strongly believe that all of us, even the ones that are secretly hoping for a total collapse are partly in denial and scared of what can only be described as, unavoidable. Its like putting together a giant, easy puzzle and watching it come to life and not really liking the picture. Stack, and more importantly, get spiritually ready for a big change and have faith, we not only will survive, but, it will be a better world. I plan to help!!
your article http://webofdebt.wordpress.com/2013/08/19/not-too-big-to-jail-why-eliot-spitzer-is-wall-streets-worst-nightmare/
was funny. Elliot Spritzer as the white knight to clean up wall street…Please! This cockroach is just like the other cockroaches.
But I have to admit, it was funny to read and I needed a laugh. Maybe you posted it as humor 😉
KEEP UP THE GOOD WORK!
Today’s AM fix was USD 1,365.75, EUR 1,020.28 and GBP 871.29 per ounce.
Yesterday’s AM fix was USD 1,375.25, EUR 1,031.39 and GBP 878.47 per ounce.
Gold fell $6.40 or 0.47% yesterday, closing at $1,366.60/oz. Silver edged down $0.02 or nearly 0.09%, closing at $23.16. Platinum fell $14.52 or 1% to $1,504.49/oz, while palladium was down $10.75 or 1.4% to $749.75/oz.
Gold and silver both pulled back yesterday on profit taking and as stop loss limits triggered selling. There were jitters among some market participants as President Obama met the heads of the CFTC, SEC, CFPB, FHFA, NCUA, FDIC, the Comptroller of the Currency and the Federal Reserve.
U.S. Mint data showed a drop in sales of American Eagle gold bullion coins in August to 3,000 ounces as of yesterday. This is down from the record levels seen in recent months and below the monthly average of nearly 100,000 ounces for the 7 months of 2013.
Liquidated ETF gold holdings are being shipped from the U.K to Switzerland for refining into smaller one kilogramme gold bars, Australian bank Macquarie wrote in a note yesterday. These were then sent to Asia and bought by Asian investors. The note confirmed, what has been known anecdotally for some weeks.
This is contributing to the increased tightness in the physical market as large London Good Delivery bars (400 oz) are air freighted to Switzerland for refining into smaller kilo bars (32.15 ounces) for the voracious Asian market.
There is also an increasing preference for allocated storage in Switzerland by high net worths and family offices. Switzerland still has much of the world’s gold refining capacity and remains a favourite destination of investors and savers concerned about sovereign risk – including sovereign risk in the EU, U.K. and U.S.
Most of the gold ETFs holdings were held in London vaults, and U.K. gold ‘exports’ to Switzerland exploded from 92 tonnes in all of 2012 to a whopping 240 tonnes in May this year alone and a very large 797 tonnes in the first six months of 2013.
The 10yr UST has reached an inflection point.
Get ready for market disruption….as I’m very sure BO and his delegation are preparing an onslaught of unimaginable magnitude. This will be a watershed event.
I think FED will try to temper. As soon as they do that markets will react by spooking them. And then there will be QE4 on grand scale triggering commodities up. This will be next mega leg up for gold and gold equities. Patience.
Rickards is a very sharp cookie!!
Whilst the message in this interview is loud and clear, I will bet that if you posed questions to JR (who has one of the most acute business and investment minds on the planet)about the FED, its fractional gold reserve practices, the manipulation, suppression and oppression in global financial markets….you probably would not get the desired responses.
The difference between JR and other commentators is that JR knows some absolutes. He is privy to classified information. Therefore he can actually provide truths about what others merely provide conjecture about. I was eager to watch this interview, but somehow feel a little deflated and very much wanting to resolve unanswered questions. Whether JR would be forthcoming or not ….I would have liked you to push the boundaries nonetheless. He has a wealth of knowledge and smarts. He is literally the Diamond in a bed of rocks. His true value is only known to the Government. Get him back on ..soon ! Its been a long time between drinks…too long. This world is cracking up…quicker than most expected.