In Part I, I discussed the world’s largest and most obvious asset-bubble (excluding the derivatives market): the U.S. Treasuries market. While I pointed out that this market was an obvious target for “shorting”, I also explained to readers why there were simply too many risks associated with shorting this opaque, and highly-manipulated market.

I explained that investing in bullion (“long”) was a good “proxy” for shorting U.S. Treasuries, and concluded that this proxy was a safer, superior substitute for that short-position. In this installment, I will apply that analysis to other U.S. asset-classes: the financial sector, and the U.S. dollar, itself.

When Wall Street’s multi-trillion dollar Ponzi-schemes imploded (based upon the U.S. housing-bubble, which they also created), it was common knowledge that the entire U.S. financial sector was leveraged by an average of 30:1. It is a matter of simple arithmetic to observe that with such extreme leverage, it only takes a loss of a little over 3% on the underlying assets to take all “bets” at 30:1 leverage to zero.

Given that most of Wall Street’s leverage was based upon the U.S. housing market, and given that the U.S. housing market plunged by roughly 30% (in its first collapse), you don’t have to be a “mathematician” to figure out that this was ten times the decline necessary to take the entire, U.S. financial sector to zero.

Clearly, most U.S. banks (and all the Wall Street Oligarchs) are hopelessly insolvent. The “mark to fantasy” accounting rules, conveniently created just before the much-hyped “stress tests” of U.S. banks, can hide the bankrupt status of these corporate shells, but it certainly does nothing to change that reality.

Because these bankrupt entities (collectively) have market capitalizations in the trillions of dollars, once again we see a U.S. asset-class where shorting the market would seem like a “no-brainer”. However, as with the U.S. Treasuries market, as soon as we take a closer look at this sector, we see a saturation-level of corruption, and a total disconnect from all market fundamentals.

Not only does the U.S. financial sector benefit from the “24/7” market-pumping activities of the Plunge Protection Team, but it has been allowed to rig markets to a much, much greater degree through its “trading algorithms”. This “high-frequency trading” allows the Wall Street Oligarchs to lead around market-sheep by the nose, even more successfully than the legendary “Pied Piper” was able to lead astray children.

And when these trading-algorithms “blow up”, and cause all these manipulated equities to begin to revert to “fair market value”, the so-called regulators simply cancel any trades they don’t like – and give Wall Street a “do-over”. Given that level of market fraud, it’s easy to see how some of these fraud-factories could go an entire quarter where they “made money” in markets every day.

However, even this extreme level of market-rigging isn’t enough to satisfy (and protect) these financial Oligarchs. As the Crash of ’08 intensified, and these bankrupt-banks plunged closer and closer to their “fair market value” (i.e. zero), the Oligarchs ran crying to the SEC, hid under its skirt, and demanded “protection”.

The primary perpetrators of countless billions of dollars of “naked shorting” (i.e. counterfeiting shares) demanded that not only should they (and only the Oligarchs) be protected from naked shorting (which was/is already illegal), but that they should be “protected” from all shorting (i.e. a total ban on shorting the stocks of these bankrupt banks).

With a level of market-rigging which exceeds anything seen in the most-crooked casinos, clearly it is much more perilous to short U.S. financial stocks than to short U.S. Treasuries. Once again, we must ask ourselves “is there a good proxy” for this short-position?

We can answer this question by envisioning what would happen if these banks were successfully shorted, or just look at the simpler scenario of what would happen if/when investors desert this sector. As with U.S. Treasuries, it seems very obvious that those deserting U.S. bank stocks and those looking to capitalize on the exodus out of this sector would both be drawn to bullion.

Two months ago, I wrote a commentary reporting that “the second bubble had burst” in the U.S. housing market. Roughly three weeks later, I reported that the U.S. economy had resumed its “crash”. Contrary to the reports of the mainstream media, there was absolutely no “surprise” at all to any of these developments.

I had previously written (in April of 2009) that the U.S. housing market would suffer its next collapse beginning some time in the spring of 2010. As far back as July of last year, I wrote commentaries explaining why the U.S. economy could not “recover”, followed by a plethora of commentaries simply asserting that there was no “recovery”.

While regular readers may be bored by this chronology, there is a “method to my madness”, beyond mere self-indulgence. I possess no crystal-ball, nor do I have access to any data not freely available to the rest of the media. As I observed recently, there is a very simple reason why I have been able to “see” this devolution of the U.S. economy clearly – and thus not be “surprised” by any developments: I look at long-term charts.

Most market reporters, commentators, and politicians are so genuinely incompetent that they continue to rely upon nothing but the same short-term “snapshots” which have caused them to be “surprised” by everything. However, it is a safe conclusion that even such rampant incompetence (combined with a strong “herd mentality”), could not and does not mean that the entire U.S. government remains in an oblivious state of ignorance regarding this re-acceleration of the collapse of the U.S. economy.

This begs an obvious question. Given that at least some elements of the U.S. government have known all along that the U.S. economy was not “recovering” and could not recover, why is it that only now are we hearing of tentative, new plans of more “life support” for the dying U.S. economy?

The answer is also obvious. As I pointed out when I originally denounced the Obama “stimulus package”, it was never anything more than a bad joke. The combination of the collapse of the U.S. housing sector, massive unemployment, and the largest credit-contraction in the history of the U.S. economy had combined to subtract approximately $2 trillion per year in consumer spending from this consumer economy.

The response of the Obama regime to this scenario was a one-time injection of $780 billion in “stimulus”, spread-out over more than a year. Obviously, you can’t replace $2 trillion with less than $800 billion and call it “stimulus”.

This brings us to the present dilemma of the U.S. government. The U.S. economy is much sicker than it was when Obama ascended the throne. Wall Street has continued to ruthlessly choke-off all credit to the U.S. economy, meaning that tens of millions of American households, and tens of thousands of businesses are much closer to the breaking-point than they were in January of 2009.

The entire U.S. retail sector is in a terminal death-spiral, and its only response is to eliminate vast numbers of retail outlets, and herd consumers into more on-line retailing. While this “cuts costs” for these companies, most of those cuts will be reduced employment – fueling the next leg lower for consumer demand, resulting in even more store-closures, etc, etc.

This means that the trivial “band-aids” being mused-about by government talking-heads are utterly meaningless. Simply, the Obama regime has to “go big, or go home”. It must either engage in massive (genuine) “stimulus” of the U.S. economy – meaning a multi-trillion dollar commitment, or simply allow the collapse to proceed (and feed upon itself). However, in even contemplating another, massive wave of spending, Obama faces two other problems (which he created for himself).

Throughout this “U.S. economic recovery”, the U.S. government has continued to pretend that it was “almost ready” to begin some actual, fiscal restraint – halting the exponential increase in federal government debt. That was the only thing propping-up the U.S. dollar (putting aside the constant Euro-bashing by the U.S. propaganda-machine). Allow another sickening plunge in the U.S. dollar, and that will drive away the last, few chumps still insane enough to buy grossly over-priced U.S. Treasuries. This is the road that leads to hyperinflation.

If this was not bad enough, the Obama regime has continued to be successful in duping both the vast majority of sheep in the U.S. electorate, as well as Republican knuckle-draggers that the U.S. economy was “strong enough” to begin to curtail runaway spending. This pool of chumps is looking for spending cuts, not a multi-trillion spending orgy.

Growth of Global Money Supply

This essay analyzes the growth of the money supply for 73 selected currencies from 90 countries. Nineteen of these countries belong to two monetary unions - the Eurozone and the East Caribbean Union.1 Together, these countries make up 96.7% of the world's Gross Domestic Product (GDP) and 84.1% of the world's population.2

There are several different monetary aggregates used to measure a nation's money supply. These monetary aggregates can be thought of as forming a continuum from most liquid (money as a means of exchange) to least liquid (money as a store of value).3

The measures, while not completely consistent across different countries, may be generalized as follows:

With the appearance on our blogs of another “attack” on anyone and everyone who wants to attempt to minimize the consequences of climate change, it appears to be necessary to confront the misinformed and/or malicious voices which have once again surfaced with respect to this issue.

In the particular rant which I just read, it was notable more for what was missing that what it contained. To begin with, there was no attempt to provide any facts (or even any cogent arguments) to attempt to dis-prove “global warming” - merely one naked assertion after another that nothing had been “proved”, along with personal attacks on the motives of various parties.

The even more glaring deficiency in this diatribe was the failure to even mention the words “rising sea levels”. While disappointing, it's not surprising that this “skeptic” refused to mention this issue – since this one topic, alone, provides an abundance of the “proof” which the “skeptics” claim does not exist.

Even more importantly, the moment we look at this issue, we encounter countless groups and governments embracing the doctrine of climate change – in circumstances where there could be no possible ulterior motive for doing so.

The examples are too numerous to possibly discuss (even partially) without writing an entire book. I invite all those who are curious to simply “Google” the phrase “rising sea levels”. What you will find are dozens of news items from every continent on Earth discussing the urgent (and costly) planning being undertaken by countless, local and national governments to deal with the problem of rising sea levels.

Much of this planning involves the building of dikes and other barriers to (attempt to) hold back rising water levels. This is not theory. This is not hype. It is an undeniable fact that sea (and water) levels have risen between 10 – 25 centimeters over the last century (4 – 10 inches), depending on location. Estimates are that sea levels could rise by 50 (20 inches) centimeters over the next century.

Global spending on flood-prevention infrastructure will almost certainly run into the trillions. Are we now to assume that all these governments are also “co-conspirators” in the “global warming hoax” - because they have the overwhelming urge to divert a huge portion of their (already-strained) budgets into building unnecessary dikes and barriers? What is the motive here? Perhaps it's the construction companies who have invented this entire “hoax” - just so they could reap all these big, infrastructure projects?