As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the markets, the economic war that is being waged on the middle class, precious metals, the Federal Reserve, energy, and how to go about surviving financially. In this weekly column I will attempt to condense the week's events and examine how the news might affect your pocketbook. JSB

Financial Markets

The consideration, by most Americans, that the turmoil growing in Europe could, in any way, affect their lives, has not yet occurred to many. But, the causes of the situations in Greece, Portugal, Spain and Italy are each a result of the same twisted paradigm that has been instigated in America as well.

In one instance, the predatory lenders of Wall Street spent millions to bribe corruptible politicians and commissioners in Jefferson County Alabama in order to lend the county millions more for a new sewer system and water treatment plant. The original cost for the sewer project was estimated to be about $250 million. By the time the penalties and hidden fees and interest swaps came due, the debt had ballooned to over $5 billion. Because of the sewer debacle, the county was not only left with an unpayable debt on its sewer project, it also saw a downgrade in its overall credit rating, which left it paralyzed in its attempts to borrow money to pay for general expenditures. The people's sewers bills exploded by 400%! The county had to lay off many of its employees. They had to close one of their jails. This is also why Jefferson County had to file for bankruptcy last fall.

The exact same thing happened in Greece, Portugal, Spain and Italy. The same predatory Wall Street lenders bribed corruptible European officials and left each country with an unpayable debt and in the same lurch. Tempting these folks to break the law is just as, if not more so, damning than the officials simply accepting a bribe. Accepting bribes has become "job one" for politicians, commissioners, and officials the world over. It's the "bribers", not the "bribees," that are the problem, although the world would be a better place without either. The insurrection in Greece, Spain and Italy is a result of "austerity measures" that the criminal banksters try to impose in order to continue to collect their "ill gotten gains"...

From Mark J. Grant

"Very few beings really seek knowledge in this world. Mortal or immortal, few really ask. On the contrary, they try to wring from the unknown the answers they have already shaped in their own minds -- justifications, confirmations, forms of consolation without which they can't go on. To really ask is to open the door to the whirlwind. The answer may annihilate the question and the questioner."-Anne Rice

One of the reasons mistakes are made, and often serious mistakes, are because the right questions are not asked. If you ask the wrong questions then the answers, even if answered correctly, will lead you to the wrong conclusions. What we are seeing in Italy this morning is a good example of asking and answering the small questions when the larger questions are vastly more important. If you read the news and analysis in the Press today you will find many opinions about the Italian elections and what they mean to Italy and this is the small question. The bigger question, and the correct focus, is what the Italian elections means for the European Union and its survival. That is what is really important now and that is what we should be trying to understand this morning. 

"The question is not what you look at but what you see." -Thoreau

Basically Berlusconi represents a return to Nationalism and a repudiation of the measures imposed upon Italy by Berlin/Brussels (The European Union). Grillo represents something stronger which is a total rejection of Berlin/Brussels (The European Union) and a demand that Italy return to self-governance.  Grillo's party won more votes than any other party and taken together, Berlusconi's coalition and the 5 Star Party won the vast majority of votes at just under sixty percent. Yes, there are other national issues such as corruption and nepotism and so forth that relate strictly to the political situation in Italy but again, these are the small questions and far less significant to the central question of what will happen to the European Union as a result of the vote of the Italian people.

On the Economic War Front

For those of us that often find ourselves wondering why the Federal Government is doing things like purchasing hundreds of million of rounds of ammunition, stock piling millions of coffins, and have created, at least, one FEMA containment facility in every state in the union (a total of over 800, nationwide) these, and other unexplained mysteries tend to give us great pause.

The fact that the Federal Government's Leviathan has become a corrupt, criminal, out-of-control rampaging menace goes without question:

 

It's not the number of bullets we need to worry about but the number of feds with guns it takes to use those bullets. There are currently more than 70 different federal law enforcement agencies employing over 120,000 officers with arrest and firearms authority . . . That's an increase of nearly 30 percent between 2004 and 2008. If the trends have continued upward at a relatively steady rate, that would put the total number of federal law enforcement officers at somewhere between 135,000 and 145,000. That's a pretty staggering number, especially when you consider that there are only an estimated 765,000 state and local law enforcement officers. That means that about one in seven law enforcement officers in the country works directly for the federal government, not a local jurisdiction.

From Catherine Austin-Fitts

Precious Metals

In an ongoing attempt to maintain a handle on the precious metals/dollar relationship as well as to try and grasp the inflation/deflation event, we must seek to understand the influences which are proffered by the elitists, trying to maintain control of an increasingly dysfunctional world economy.

From Martin Armstrong

It is vital to understand that what we face is by no means the plain vanilla version of governments just printing into hyperinflation. These people are fighting back as is ALWAYS the case with core and major economies. The German hyperinflation took place AFTER a revolution with a unstable government that lacked credit. When there is “credit” then government FIRST tries to keep the game afoot and that means the bankers threaten they will collapse unless debt is serviced. This is why the FIRST response is all out financial war against the people.

Literally, you will PRAY for only hyperinflation. Society CAN survive that. It cannot and has NEVER survived an all out Sovereign Debt Crisis. I hope to have a book out this year on this subject covering NOT my OPINION, but uncovering every event and how do empires, nations, and city states die. There is just too much bullshit out there. There is a danger that unless we turn back, we could end up in World War III and a new Dark Age. One reader wrote:

Am following your reasoning about hyperinflation etc and very illuminating it is. I can appreciate deflation overwhelming printing and forcing the USD higher — in which case tangible asset protection becomes a chimera? As you also say the USD will be the last to plummet during a bond collapse ( inflationary?) so then tangibles rise? Separately you said earlier that any gold held had better be in coin form,I believe you were talking in the context of the underground economy. Ditto Silver coins? Am an avid daily reader of the blog and greatly indebted to you for throwing light over the darkening scene.

The USD will rise FIRST because the Sovereign Debt Crisis emerges on the peripheral of the core economy. Today that is Europe and Japan. I had a front row seat with the Euro since the commission came to us and attended our London conference taking the whole back row. As Europe and Japan implode, capital rushes from one currency to the next and that pushes the dollar higher. As the dollar soars, currency wars and trade wars always follows. The rise in the dollar will reverse the trend on the debt and it will appreciate in “real terms”. When I met with the US Treasury back during the Reagan Administration to argue against the rate hikes of Volcker, using that simple pocket calculator the debt would jump 800% by the end of the decade of the ’80s. I was told point-blank, it was ok because they would be paying back with cheaper dollars.

Greece cracked because the Euro rose from 80 cents to $1.60 so the past debt was NOT being paid back with cheaper currency, but DOUBLED in value. This is what a dollar rise will do to the US national debt and that will add even more pressure to raise taxes. It becomes a drunk trying to drink himself to sobriety. People are so bearish the dollar because of nonsense they CANNOT see that a rise in the dollar will be DEFLATIONARY and add to the pressure on government. Tax revenue will fall, unemployment will rise building the base for civil unrest, and protectionism will raise its head from the grave. This is NOT a good thing!!!!!

They are seeking to eliminate the underground economy. Gold and silver in storage, banks, and even bar form may fail to provide the purpose it will serve. Coin form is probably the safest bet. These people have gone nuts historically. If you are going to prepare, it better be for the worse case scenario – not the candy coated version of hyperinflation. Forget gold at $30,000 dividing the debt by the gold reserves. That all ASSUMES honest people at the top who will simply readjust everything fairly. Good one! And Santa Claus will help you sell your fortune tax free of course.

People who have known me for years, know when I research something, it is NEVER with a predetermined expectation. I go into everything with the purpose of following the bread crumbs for history is better than anything you can imagine. Let the facts lead you to the conclusion – you might actually learn something. The one thing I have learned is the business cycle cannot be altered. However, I would “like” to think we can mitigate the VOLATILITY and thereby survive. But you cannot even do that unless you know what you are dealing with. If you constantly listen to bullshit – then the old saying – bullshit in and crap comes out.

Energy

Using ethanol to supplement gasoline is one of the most moronic ideas ever to come down the pike. Under the ruse of "energy independence" Archer Daniels Midland bribed half of congress to pass these insane laws. Well yes, of course, it enriches giant corporate corn farmers and Archer Daniels Midland, to the great detriment of the rest of the world. Ethanol degrades the performance of gasoline as a fuel. It damages the engine in your car, results in a severe reduction in mileage, and pretty much causes irreparable harm to any motor or engine you put it in. I am constantly having to repair my chain saws, mowers, and any other gas powered tools that I use. The ethanol causes the gas to separate into lacquer, gas and water. The lacquer gums up the works and requires expensive solvents to clean out the carburetors. It also has a devastating effect on the poor. The prices of corn have, and will continue to skyrocket. Proponents of ethanol subsidies are either idiots, or criminals, or both.

From Don Stott:

One of the greatest frauds today, is that ethanol reduces carbon dioxide (C02) emissions, and in doing so, saves the earth from global climate change.  Responsible scientists say that CO2 plays no role in climate change, and shows up well after any increase or decrease of temperatures.  Ethanol is bad science.  It is bad for the engines of cars that must use such a gasoline blend.  It increases the cost of gasoline, and all other corn based products.  It actually increases the amount of CO2 in the atmosphere.  It reduces the fuel mileage a car would get with pure gasoline.  An authority on the U.S. oil industry, is Sei Graham, the author of "Why Your Gasoline Prices Are High."  He is a man with more than fifty years experience.  First, as a petroleum reservoir engineer, and later as an oil and gas attorney.  He is also a graduate of West Point.  Here is what he has to say about the current gas prices:

"Abolishing the ethanol mandate, requiring ethanol to be blended with gasoline at the pump, would: (1) Lower gasoline prices by millions of dollars. (2) Result in billions of miles of free travel annually, (3)  Prevent millions of tons of carbon dioxide from being admitted into the air, and (4) Improve national security and the energy picture, since it is impossible for ethanol to ever replace foreign oil imports."

The so-called primary job of the EPA, is to protect our environment, but of course all it does is eat our dollars, hire tens of thousands of bureaucrats, and write thousands of regulations, which are unconstitutional.  Ethanol, actually creates more smog than using regular gas, and the EPA's own attorneys had to admit that fact in front of justices presiding over the Third Circuit Court Of Appeals in 1995 (API v. EPA).  Truly independent studies on ethanol, such as those written by Ted Patzek of Berkeley, and David Pimentel of Cornell, show that ethanol is a net energy loser.  All fuels laced with ethanol, reduce the vehicle's efficiency.  Ethanol laced gasoline is destroying engines across the country, in ever larger numbers.

The Fed

The Federal Reserve is a bought and paid for group of stooges that act as a tool of the most evil individuals to ever inhabit the Earth. The evil individuals are the illuminati. If you are not already aware of that fact, it is because you have not been paying attention. They already control the banking system and all facets of our government and, If not stopped, they will become the slave masters of your children and your children's children.

It has become apparent that Bernanke is delusional and clueless. You can take everything he says and extract the absolute opposite meaning. The opposite of what he says is what will occur. I don't think he's lying, I think he's a moron. He has never, to date, done anything that has helped the economy. All he has ever accomplished was to enrich the top 1% elitist banksters. The man represents an institution that is an unconstitutional abomination and a parasitic scourge on America. On his own, he is a a misguided menace. Now let me tell you what I really think...

From Simon Black:

By 1789, a lot of French people were starving. Their economy had long since deteriorated into a weak, pitiful shell. Decades of unsustainable spending had left the French treasury depleted. The currency was being rapidly debased. Food was scarce, and expensive.

Perhaps most famously, though, the French monarchy was dangerously out of touch with reality, historically enshrined with the quip, "Let them eat cake."

As French Assemblyman M. Matrineau put it in 1790, “Paper money under a despotism is dangerous. It favors corruption. But in a nation constitutionally governed, which itself takes care in the emission of its notes [and] determines their number and use, that danger no longer exists.” Translation: This time is different. We’re different. We’re smarter. We won’t suffer the same fate. TRUST US. Within a few years, hyperinflation had taken hold in France. A measure of flour that sold for two francs in 1790 was selling for 225 francs by 1795. Everything soared. Carriage hires. Butter. Sugar. Everything. Naturally, the French government decided to fix this problem by printing even more money, doubling the money supply from 7 to 14 billion units in a six-month period. When these measures also failed, the French government imposed every control in the book– price controls, capital controls, information controls, people controls. They confiscated lands, they filled the prisons, they waged genocide against their own people. History shows there are always consequences to entrusting a paper money supply to a tiny handful of men. The French experiment is but one example. Our modern fiat experiment will be another.

Like the French, our politicians think this time is different. Our central bankers think they’re smarter. And they want us to trust them. After all, what could go wrong?

Ben Bernanke, a man who has expanded the Federal Reserve balance sheet by nearly 300% during his tenure as central banker, just wrapped up Congressional testimony down playing the risks of his own money printing:

“We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery…”

It’s also quite interesting that the Federal Reserve Chairman is discussing the ‘stronger’ economy, especially when by the government’s own numbers, US GDP contracted in the 4th quarter of 2012. Meanwhile the price of everything from food to fuel keeps getting higher.

Simultaneously, politicians in the US are racing to avoid imminent ‘sequestration’ budget cuts. They’ve created a problem caused by excess spending, and their solution is to ensure they can keep spending.

The French were in the same boat in the 18th century. During the time of Louis XV, no one could imagine how French society could possibly function if they cut the welfare system or defense budget. So they kept spending… kept going into debt… and kept debasing the currency.

We know what happened next.

The US already must borrow money just to pay interest on the money they’ve already borrowed. The political elite is dangerously out of touch. This time is not different. Assuming otherwise is really dangerous.

Financial Survival

I would have normally posted this article in the "Precious Metals Forum" but I opted for "Financial Survival" instead. This web site was founded on the belief that the "Dark Side" would eventually screw everything up so bad that a global financial meltdown would ensue. At the time of this posting, the criminal banksters, at the behest of their demonic puppet masters, have feloniously mashed the price of silver to below $30.00. When silver was at $4.10 an ounce, Ted Butler called it one of the great buying opportunities of a lifetime. Mr. Butler is suggesting that this might be your last chance to acquire silver at such a depressed price. You may find that a 10% - 15% commission is tacked on (for years I bought and sold silver bullion for less than a 5% markup) but I wouldn't let that stand in my way. Presently silver might just offer the best investment value of any issue available anywhere. For your financial survival you would be remiss to let this opportunity pass you by. There is a very good chance that silver is about to liftoff.

From Bill Holter:

With factories cranking out guns and ammo at 110% of capacity, how could a shortage currently exist?
MASSIVE DEMAND.

Now, think about the Gold and Silver mining industry. Peak production took place over 10 years ago. What do you think will happen when investors, big BIG investors not just in the U.S. but ALL over the world vote with their trillion Dollar wallets? Do you really believe that you'll have any chance at all to purchase Silver or Gold?

No, you won't which is why you need to be pre-positioned because what "was" available yesterday will go into hiding over night. This is not even a bold prediction anymore. This is exactly what will happen and again illustrate the simple concept of supply and demand!

Shortages, we Americans don't really know what these are with the exception of the OPEC (maybe) induced gas shortages back in 1973 and again in '79. I said "maybe" because I had a client who at the time owned a dozen supertankers, several were filled with oil sitting in the harbor and weren't allowed to off load. Truly we don't know what it is to "want" and have never experienced "empty shelves" with the exception of the occasional hurricane or other natural event. Even so, goods started to reappear within a week or so and the "shortage" would go away nearly as fast as it came.

This past weekend I decided to go out and target practice with my family. I stopped at Walmart on the way because we were low on "practice shot" and didn't want to waste the more expensive hollow point ammo. Lo and behold, in the locked case where normally sits 1,000 or more boxes of ammo…there was NONE! Well almost none, I counted 7 boxes of odd caliber ammo that had not been hoarded. I knew that the local gun dealer was regularly selling out but I never dreamed that even Walmart would be empty. I figured that with their buying power they would still have stock left…I was wrong! The woman behind the counter told me that they get shipments each and every night but normally by 8:00 each morning everything is gone. So why is this happening? Well, a couple of reasons. First because people are scared. Scared that an out of control government will ban guns and ammo in direct conflict with this nation's Constitution. The political and media rhetoric after the Newtown Ct. shooting was turned up full volume.

I won't get into it here, but do yourself a favor and spend an hour or so researching what happened, what "really" happened. There are many contradictions and quite a few things don't add up just as they haven't for other "events" in the past. In any case, the population has voted. I don't mean "voted" as in where Diebold counts the votes, no, they voted with their wallets and decided to spend their money on ammunition and arms. As a side note, the local dealer here has not even seen a new in the box AR in over 2 months. What was retailing for about $800 3 months ago is now $1,800 for a used one. Ah, supply and demand! But I said that there were 2 reasons for the ammo shortage…there are.

The Dept. of Homeland Security has ordered another 21 million rounds bringing the total purchase to 1.6 BILLION rounds…this is enough to kill every living American 5 times over and then some! And this doesn't even account for those carrying the guns and doing the shooting! Now, if you will take your "adult" thinking cap off and put on the one from "3rd grade", please ask yourself "WHY?" Why would it be necessary for Homeland Security to have this many rounds of ammunition? Do they fear a mass mob crashing the Mexican or Canadian borders? OR…are they stocking up for something else? "Something else" that we don't know about? Well, seriously, we "know about it" but we just don't know what "it" will exactly look like or when it will start.

This is not humorous stuff at all, people are merely acting in their own self preservation modes and doing what they feel necessary to protect themselves. It never matters "why" supply or demand increase or decrease, price and availability are always affected one way or the other. My wife read the above and asked me "what does this have to do with investments"? First of all, your investments won't mean a single thing if you cannot protect yourselves. Secondly, it has to do with "supply and demand". With factories cranking out guns and ammo at 110% of capacity, how could a shortage exist? Now, think about the Gold and Silver mining industry. Peak production took place over 10 years ago. What do you think will happen when investors, big BIG investors not just in the U.S. but ALL over the world vote with their trillion Dollar wallets? Do you really believe that you'll have any chance at all to purchase Silver or Gold? No, you won't which is why you need to be pre positioned because what "was" available yesterday will go into hiding over night. This is not even a bold prediction anymore. This is exactly what will happen and again illustrate the simple concept of supply and demand!

You must first realize that there are, present in our lives, enemies. You must then know who those enemies are and act accordingly.

Eliminate as much debt as possible, especially “variable rate” debt, such as credit cards and lines of credit. Interest rates will be rising, so the elimination of debt offers a “real return” of escaping rising rates by creditors.

Get some control over some fresh water.

If you are depending on Social Security, stop.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you know that is wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe

Disclaimer

All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may buy or sell securities without notice.