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

I seem to spend an inordinate amount of time trying to wake up the slumbering minions. I, obviously, have my opinions, but those opinions are based on the opinions of superior thinkers, and as such are much smarter than me. In an attempt to substantiate these opinions, I continuously refer to their essays and articles that provide these ideas "straight from the horses mouth", so to speak. The economic pundits that are featured on this site are seasoned veterans when it comes to the intricacies and nuances of modern day commerce. It is, for instance, given the nature of the banking community today, very easy to understand the motives of the criminals that currently run the world. Although they continuously attempt to "change the rules" so that their transgressions appear legal, they are simply desperados, buggers and thieves that are out to steal all the wealth of the world.

From Jim Rogers:

It’s pretty scary what’s going on in Europe…when they start taking money out of people’s bank accounts. I, for one, am making sure I don’t have too much money in any single bank account anywhere in the world.

Now there is a precedent…The IMF has said loot the bank accounts. The EU has said loot the bank accounts.

So you can be sure that other countries, when the problems come, are going to say… let’s do it too.

…They’re going to go crazy the next time around.

It’s going to happen. Of course it’s going to happen…

It’s politicians who are telling you it’s a special case… oh, don’t worry, don’t worry, don’t worry.

What more do you need to know?

When politicians are saying ‘You don’t have to worry’…

Please, you better hurry, you better run for the hills. I’m doing it anyway.

I want to make sure that I don’t get trapped.

Think of all the poor souls that just thought they had a simple bank account. Now they find out that they are making a ‘contribution’ to the stability of Cyprus. The gall of these politicians.

Don’t trust any government. If you’re going to listen to government, you’re going to go bankrupt very quickly.

On the Economic War Front

There is a war being waged, by the power elite, against the middle classes everywhere. My understanding of the term "Middle Class" relates to a group of persons, who exist throughout the world, that has attained upward mobility. Upward mobility is attained through, by hook or by crook, the acquisition of capital. That capital can then be applied to production which will, in turn, result in more capital. Capital equals power and power in the hands of individuals, poses a threat to the powers that be. Rather than applying their power in an altruistic fashion, which would result in raising everybody up, they have chosen to stifle the natural evolutionary process and instead, attempt to rule the world. Consequently, not unlike that of Hitler, their vision is warped and, if allowed to prevail, will result in the ruination of the planet.

From Bruce Johnson:

For those who say, "It couldn't happen here" I ask, "Where have you been?"

The "dipping" has been more clandestine and complicated, but the trimming of 10% from the savers of this nation has happened none the less. It didn't happen in one day, but over the past 5 years. 

The Federal Reserve has kept interest rates, by most estimations, 2% below what historically would be expected in today's inflation environment. That percentage compounded over 5 years exceeds 10%.

The fair return on savings has been snatched from the savers in much the same way Cypriot authorities suggest value be snatched from Cypriot savers.  Quantitative easing and money printing are not tools Cypriot authorities have at hand.  Their robbery is more in broad daylight than hidden behind the central bank machinations that have occurred in the United States.

Resultant of this theft of value is the obvious ramification.  Savings rates are not sufficient in the United States, especially for those on the brink of retirement. 

The "emergency actions" by the Federal Reserve conducted at record high stock market levels must be, by all parameters, a crossroads of sorts.  Robert Johnson, the famous blues player from the 1920s, made a deal with the devil at a crossroads.  Has Bernanke struck such a deal with the 'soul' of the nation?

 

Precious Metals

I realized, long ago, that the most popular section of the Silver Bear Cafe was the Precious Metals section. It has become apparent that, although the Financial Markets provide noteworthy news on a daily basis, and news about the stranglehold that the Energy Markets have on the world economy are extremely pertinent to our day-to-day struggles, Precious Metals seem to transcend normalcy and appeal to a much wider audience than even my rants about the Federal Reserve or how we are, collectively, being ripped off on a daily basis as a result of the Economic War that is being waged against us.

Because Precious Metals pose the greatest threat to the illegal, unconstitutional fiat money regime, the suppression of their price has been, and continues to be a process that is ongoing and is supported by the government. This reprehensible situation will soon be righted by natural market forces in spite of the bankster bozos and their administration suck ups.

From Ted Butler:

Silver (and gold) investors seem to be confronted on a daily basis with the proposition that the US Government is working against the interests of silver investors. While every conceivable effort is undertaken by the USG to help push bond, equity and real estate markets higher, there appears to be an effort to depress silver prices that goes beyond ugly. It's not that silver investors are asking for or expecting any of the special favors and incentives doled out to investors in other markets; it's more a case of silver investors being discriminated against by the US Government. This discrimination gets old and I sense that is what many must feel. I know I do.

The prime discrimination is the failure of the federal regulator to address credible allegations of wrongdoing by JPMorgan in the COMEX silver market. No one has asked the CFTC for any special favors or that is outside their direct jurisdiction. Market concentration is not something I invented or suggested be included in COT and Bank Participation Report data; it is the main safeguard of the CFTC against manipulation. For anyone to raise legitimate questions about existing bedrock regulatory matters shouldn't result in silence behind a phony 4.5 year investigation. By the CFTC not speaking up or ending a continued silver price manipulation brought about by JPMorgan's controlling market share, the agency is discriminating against silver investors and undermining trust in the institution. It further undermines everything good that America used to stand for.

Certainly, I know I wouldn't be pounding on the table to buy silver if the manipulation didn't exist or if the regulators hadn't gone off the rails and into a ditch. I don't think I ever suggested buying silver for reasons unrelated to the manipulation or actual supply and demand. I'm not saying that all the other reasons, like currencies, economic conditions, other markets and money printing, etc, don't have a bearing on silver prices; but I am saying those reasons are not specific enough to silver for me to write about them. As debilitating and painful as the ongoing silver price manipulation has been, if the manipulation didn't exist, neither would the prime reason for buying silver. No pain, no gain and all that jazz.

Therefore, I can't rule out further silver price stabs to the downside before a dramatic and final resolution to the upside because both stem from the same cause – the manipulation. What I can say is that while those stabs at new price lows may occur, it is mandatory that silver prices will explode at some unknown point. Considering how far along we are in the silver manipulation in terms of time and considering the emerging signs of physical tightness and developing shortage, I think it's best to concentrate on the certainty of the coming price explosion and not the uncertainty of near term pricing. Don't let the crooks at JPMorgan or the negligent and discriminatory regulators convince you otherwise.

Energy

Since Japan's emergence as a formidable World power in the early twentieth century, the island nation has been plagued with a lack of natural resources. In the late 1930s Japan attempted an invasion of China in order to acquire access to the resource rich area of Manchuria. Their entry into WWll was a result of an oil embargo that was levied on them by FDR. Many believe that the embargo was intended to bait the Japanese Navy into attacking Pearl Harbor which would shift American sentiment towards a position of favoring a declaration of war against Japan.

In order to continue to survive, Japan must have access to outside sources of energy. The recent Fukushima catastrophe has left the country in worse shape than ever. As a result of this incident, and many other dominoes that have already fallen, the economic future of Japan is bleak. Consequently, the ramifications of an all out economic collapse in Japan will have a profoundly negative effect on the World's economic condition. A Japanese default will adversely affect your pocketbook...

From Gregor Macdonald:

Japan has entered the terminal phase of its long, reflationary road.

Culturally, the frustration and exhaustion at the country's lack of progress has unsurprisingly led to this important juncture. The Japan recoverists are correct that the latest round of monetary policy "is not like the others." However, the results are likely to provide a real-world test case of the limits of Keynesian policy at a time when the world faces scarce resources.

This final chapter will be spectacular. So in a lurid sort of way, we should be thankful that Japan has now crossed the threshold and is ready to proceed to its denouement.

Students of ecological economics should pay close attention. Japan is about to add itself as a test case.

Countries like Sweden, South Korea, and Japan during the 1945-2000 period essentially engaged in a kind of resource arbitrage: sourcing energy inputs from abroad and using them to manufacture high quality goods for export. If the resource-curse explains how countries rich in oil, copper, iron ore, and coal often wind up in a place of stagnation and corruption, bereft of innovation and diversity in their economies, then a country like post-war Japan received a kind of resource-poor blessing. Short of raw materials, Japan's only choice was to become expert in using raw materials to get rich. And rich, indeed, did Japan become.

But all things must pass. The greatest gains from Japan's industrial arbitrage were harvested from after the war up to 1990. It would be impossible to exaggerate how much capital the country extracted from the world economy during this time.

It would also have been impossible, given the tidal wave of that capital, for Japan to have avoided the asset bubble, whose bursting, just a decade before the new millennium, would prove so crippling. By the time Japan had hobbled into the year 2000, new low-cost manufacturers like Mexico, China, and other Asian countries had appeared on the scene to essentially imitate Japan's post-war triumph

The Fed

It appears to me that the markets are rigged. All games that can be rigged will be rigged, sooner or later. The Fed, working in league with the U.S. Government, rigs the U.S. markets. But don't think for a second that the Fed has some kind of monopoly on a situation where rapacity pervades honest reason. All markets are rigged. Central bankers, the world over, are primarily involved in fleecing the people. The fact that the Fed is the most powerful of the Central Bankers, and that they are primarily responsible for perfecting the insidious contrivance called inflation, has not kept the rest of Central Bankers of the world from entering into a game of "catch up". As far as they are concerned, there is only one motive, and that motive is economic world domination. Which Central Bankers will dominate will depend on which ones end up with the most. That's just the nature of absolute corruption. That is the reason that whole world is currently strapped with a fiat system. The ability to create money, out of thin air, provides for absolute economic power. Absolute power equals absolute corruption. It's as simple as that. By rigging the markets, through various forms of intervention, the central bankers have set up a scheme whereby the wealth of the world could be siphoned off at will. The reason that this fiat system has become so all pervasive in the world is the lure of an uncapped, unending source of credit that is availed to all governments who are willing to play the Central Banker's game.

From Peter Souleles:

Imagine you found a bottle with a label proclaiming it to be the wonder cure for all ailments. Without questioning the claims on the bottle you start to take the recommended dosage religiously. For a while you start to feel stronger and happier but then something happens and you take a turn for the worse.

You start to suspect the contents of the bottle as being the culprit and when the lab sends back the results you are confronted with a disturbing truth. The potion was nothing more than snake oil mixed with steroids and the recommended dosage was in fact an overdose which took you over the edge.

A fiat monetary system when combined with fractional reserve banking, is the equivalent of mixing snake oil with steroids. Leverage, which is the equivalent of oversubscribing the dose, only makes matters worse.

Cyprus, in other words, is just a symptom rather than the cause of what has transpired in recent days.

Inevitably, the Euro experiment will end in an expensive and acrimonious divorce because while marriage between two people is a challenge, polygamy becomes hell when the husband on the one hand is an authoritarian and miserly German and the wives on the other hand are spendthrifts.

My dear readers, the world is bankrupt but more importantly, the system itself is ideologically and logistically bankrupt and unless it changes, all infusions of debt masquerading as capital will simply go to waste and make matters worse.

The further complicating factor is that men like Jeroen Dijsselbloem are incapable of leading the system out of the wilderness. When SNS Reaal which was the fourth largest bank and insurance group in Netherlands, was heading south, it was under his direction that it was bailed out. These are not the actions of an enlightened European but instead of a pedestrian politician. Brussels effectively wasted a crisis by dealing with Cyprus in the way it did.

And now that the Cypriot banks have lost their credibility, the vultures of Europe have descended on the tiny island state trying to coax the large depositors to transfer what is left to their banks.

Yes dear readers, we truly have a unified Europe with an umbilical cord made of paper which lacks any nutrients.

My advice to Europeans is to get the hell out of the Euro if they want to preserve capital. Instead, be a citizen of the world by holding gold and silver. No visa is required in any jurisdiction for these true currencies to be admitted and accepted.

Unless Europe comes up with a Marshall Plan for Cyprus, we will see a disaster of epic proportions unfolding in Cyprus and all this for the sake of a lousy 6 billion in paper confetti.

Will your country be next or the one after? It is now only a question of which order the same events will unfold everywhere.

Financial Survival

A wise man once told me "It is easier to gain forgiveness for being wrong than it is for being right". I took that to mean that there will be no solace when I am left with the single option of saying "I told you so". I think my motivation over the years has been just as much out of selfishness as altruism. I have always feared being unable to instigate change without the help of many others. We (those of us that have and exercise the ability to engage in critical thought) probably represent around 1% of the U.S. population now. Not enough. The world is beginning to wake up however. The travesties of the Darkside are becoming more and more apparent with events like Cyprus filling the airways.

From Michael Snyder:

Don't be surprised when the global elite confiscate money from your bank account one day. They are already very clearly telling you that they are going to do it. Dutch Finance Minister Jeroen Dijsselbloem is the president of the Eurogroup - an organization of eurozone finance ministers that was instrumental in putting together the Cyprus "deal" - and he has said publicly that what has just happened in Cyprus will serve as a blueprint for future bank bailouts.

What that means is that when the chips are down, they are going to come after YOUR money. So why should anyone put a large amount of money in the bank at this point? Perhaps you can make one or two percent on your money if you shop around for a really good deal, but there is also a chance that 40 percent (or more) of your money will be confiscated if the bank fails.

And considering the fact that there are vast numbers of banks all over the United States and Europe that are teetering on the verge of insolvency, why would anyone want to take such a risk? What the global elite have done is that they have messed around with the fundamental trust that people have in the banking system. In order for any financial system to work, people must have faith in the safety and security of that financial system. People put their money in the bank because they think that it will be safe there. If you take away that feeling of safety, you jeopardize the entire system.

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.