MY BOOK, “The Financial Jigsaw”, is published at my academic network. Scroll for full view: https://www.researchgate.net/publication/358117070_THE_FINANCIAL_JIGSAW_-_PART_1_-_4th_Edition_2020 Email for a free PDF at: [email protected]
THOUGHT FOR THE WEEK: Are we stupid? Or are we just being treated as if we’re stupid? Which is it? Neil Oliver asks: This 9 minute video clip from GBNews tells a vital story which I have reported on recently: https://www.youtube.com/watch?v=fmziW3E3k38
NOTE for understanding: ‘Dumb and stupid’ are two adjectives that are often used to refer to ignorance. Although these two words have similar meanings, there is a difference between them based on their usage. It is mainly in American English that dumb is used as a synonym for stupid whereas in Britain it refers to being unable to speak.
BREAKING NEWS: Boris had a bullish view of the number of asylum seekers entering Britain via unauthorised routes that could be sent to Kigali. “Rwanda will have the capacity to resettle tens of thousands of people in the years ahead,” he said. Although temporarily on hold pending a legal response next month, the government is determined to pursue this policy vigorously.
Knowing little about this tiny country in the middle of the Dark Continent, I thought some research was needed as it might even offer sanctuary for some Brits planning to escape these toxic isles – here is what I found: A quick summary per Google: What is the biggest problem in Rwanda?
Intense demographic pressure, the shortage of arable land, and lack of access to the Indian Ocean have been three critical problems in Rwanda’s economic development. What are current issues in Rwanda?
- Political Repression.
- Freedom of Expression.
- Sexual Orientation and Gender Identity.
- Arbitrary Detention, Ill-treatment, and Torture.
- Illegal Detention in Gikondo Transit Center.
- Rights of Refugees.
- Justice for the Genocide.
Umm, doesn’t sound too good does it? So I checked with the CIA World Fact book:
“Rwanda is a small presidential republic dominated by rugged hills and fertile volcanic soil. Its first post-genocide presidential and legislative elections in 2003 formalized President Paul KAGAME’s de facto role as head of government (since 2000). He won re-election in 2010, and again in 2017 (with 98.8%) after changing the constitution to allow him to run for a third term and more” -[So, a typical African dictatorship?]. Residency requirement for naturalization is 10 years.
Land area is slightly smaller than Maryland with mostly grassy uplands and hills. Climate is temperate with two rainy seasons (February to April, November to January) and mild in the mountains. Land use is agricultural: 74.5% (2018.). It is one of Africa’s most densely populated countries; large concentrations tend to be in the central regions and along the shore of Lake Kivu in the west and there are periodic droughts.
This landlocked, tiny country of 13 million is intensively cultivated and rugged with the population predominantly rural, the only significant urban area being Kigali with 1.2 million people. 40% of the population live below the poverty line. Despite Rwanda’s fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Energy shortages, instability in neighbouring states, and lack of adequate transportation linkages to other countries continue to handicap private sector growth.
Language is 93% French, [which won’t help most refugees], and people are mostly Christian with only 2% Muslim [another problem for ME refugees]. Because Rwanda is one of the most densely populated countries in Africa, its persistent high population growth and increasingly small agricultural landholdings will put additional strain on families’ ability to raise foodstuffs and access potable water. Rwanda itself hosts almost 160,000 refugees as of 2017; virtually all of them fleeing conflict in neighbouring Burundi and the Democratic Republic of the Congo both being endemically unstable.
Major infectious diseases have a high degree of risk with food or waterborne diseases: bacterial diarrhoea; hepatitis A, typhoid fever; malaria, dengue fever and rabies. Unemployment is 20% with deforestation resulting from uncontrolled cutting of trees for fuel; overgrazing; land degradation; soil erosion; a decline in soil fertility (soil exhaustion); wetland degradation and loss of biodiversity; widespread poaching.
GDP is $27.18 billion (2020 est.) with $2,100 per capita (2020 est.) which means it’s altogether a pretty poor area. The exchange rate is 1,021 Rwandan francs (RWF) per US dollar. Fuel is $1.3/Ltr. But car ownership remains low with just over 200,000 private cars. [Here are some typical costs of living (it’s not cheap) so not too good for refugees with little income]: https://www.numbeo.com/cost-of-living/country_result.jsp?country=Rwanda
All in all I think I’ll give it a miss and so should the refugees. Here is the full CIA data set: https://www.cia.gov/the-world-factbook/countries/rwanda/ Perhaps Boris should read this? Don’t believe everything you are told by the Rwandan Tourist Industry on BBC.
THE FINANCIAL MARKETS were very jumpy this week as they entered bear territory defined as falling more than 20% from recent highs. All sectors are affected and it’s global because everything these days is interconnected with instant messaging – there seems to be nowhere to hide. Some brave souls are committing their piggy banks to various crypto currencies in the belief that they offer a safe haven of lower risk and better returns.
However it seems that even the leader, Bitcoin, is fairing no better than the general markets and the multitude of ‘off-piste’ lesser vehicles are even worse. Why am I not surprised? Because, like all ‘Ponzi’ schemes, they do well and appear great investments on the way up just like our economies and global financial system but when the inevitable down-cycle hits, as predicted in my many posts, Warren Buffet’s wisdom reveals that “we only see those swimming naked when the tide goes out“. And my goodness there is a lot of naked swimmers out there in the stormy financial seas. Let’s take just one example this week in a lightly edited article from the Bitcoin Magazine:
“Celsius [one of those dodgy Cryptos] said in a blogpost this week that it was “pausing” all withdrawals and transfers between accounts for its 1.7 million customers. The company offers customers high interest rates – as much as 18% – on their cryptocurrency deposits and pays the interest in crypto assets, which includes its own token, called CEL – [classic Ponzi hype].
However, unlike a bank, Celsius’ loans charge a lower interest rate than it pays on deposits. The company makes up the difference through an ‘opaque investment’ strategy [aka Ponzi magic] that has in the past included investing $300m in bitcoin mining, offering more traditional loans to unnamed “institutional investors” at higher rates of interest, and taking large stakes in other cryptocurrency projects. Celsius also offers customers higher returns if they accept their interest payments in the project’s own crypto token, CEL, which was trading at $7 last year and has fallen to less than $0.20 this week
Recently, novel narratives have been employed to drive retail customers to believe in the power of “blockchain technology” and “cryptocurrency” as drivers for a ‘revamped’ financial system. However, as argued before, blockchain serves a very specific purpose – solve the double spending problem to port cash (peer-to-peer money) into the digital realm.
This was achieved by Satoshi Nakamoto [CIA?], who, after decades of research by many scientists and mathematicians, arrived at the design of Bitcoin – published in a proper white paper in 2008. From the point of view of users, three lessons can be learned:
- First, beware of self-reinforcing ecosystems. This was true for Terra’s UST project and is also true for Celsius. Terra and the Luna Guard Foundation have repeatedly said things along the lines of “generate enough demand” for the survival of UST, while Celsius’ white paper repeatedly makes the case that the more people join, the better it is for everyone [aka Ponzi Logic]. Notably, for Celsius, the case that a lending and borrowing platform needs its own token is a hard one to make. (Hodl Hodl, for instance, allows truly peer-to-peer bitcoin-backed loans without the usage of a token – it only leverages an escrow system.)
- Second, if something seems too good to be true, it probably is. Celsius ported itself as an impossible-to-fail system that was secure and cared for its users while offering one of the highest yields and lowest rates on the cryptocurrency lending market. Celsius CEO Alex Mashinsky made the case that users could always withdraw funds from his platform, except on Sunday announced nobody was able to withdraw funds. The platform cited this decision as having users’ best interests in mind, but that is hardly the case – talk about weasel-words – where have I heard this claptrap before? [The WEF and friends say this all the time and expect us ‘stupid ‘ people to believe them.]
- Third and this one is getting old – hold your own keys. If you don’t have full control over your bitcoin (or anything else like gold etc), meaning you can’t transact with whoever you want, whenever you want, you don’t own your bitcoin – someone else does. Depositing bitcoin into Celsius for some “risk-free” yields seemed like a good idea, until it wasn’t; if in doubt, always custody your own coins and assets. Withdraw your bitcoin from exchanges and walk yourself through a self-custody solution that only you know the key to. Moreover, be extra careful when keeping a significant amount of your net worth in credit of a newly-founded company such as Celsius (CEL token). They can go under – just like Terra. As always, do you own research, and keep control.”
This article is detailed and cryptic (forgive the pun) and probably interesting only to holders of Bitcoin or other Ponzi ‘coins’ and the imaginary Non-fungible Tokens (NFTs). Disclosure; I don’t own any ‘coins’ virtual or otherwise but I can’t help thinking that PMs might be a good way to go: https://bitcoinmagazine.com/markets/celsius-halts-bitcoin-withdrawals-what-went-wrong
AND SPEAKING OF PMs – In fact, this week’s macro warnings are more suggestive of a market shark rather than bear, and borrowing a line from Spielberg’s ‘Jaws’, we are “gonna need a bigger boat” as these dorsal-finned macro warnings begin circling in plain sight. As I tried to explain about the fundamentals of Repo last week, ‘Gold Switzerland’ has picked up the theme this week:
“As we’ve argued ever since the September 2019 implosion of the reverse repo market, this was a very big deal. Of course, the corporate media and politicized [Ponzi] Fed tried to downplay the repo crisis as Powell was losing control of the rates markets and banks were losing trust for each other (and each other’s collateral.)
The financial “leadership” were hoping an intentionally confusing and complex reverse repo market would be too difficult for the average citizen-investor to grasp. Thus, the 2019 Fed nervously whistled past that ticking time-bomb as it dumped trillions of mouse-click money into the repo morass. But to make better sense of these repo markets, let’s keep things clean and simple.
The reverse repo market is a place where loans keep markets and banks greased in short-term (typically over-night) liquidity, as liquidity (i.e., borrowed money) is the grease that makes our debt-soaked, over-levered and counter-party heavy markets go round. Given this important “grease,” when the counterparties in the reverse repo markets lose trust in each other, the wheels of the markets start to squeak; shake, rattle and roll…off.
In September of 2019, TBTF Bank One essentially stopped trusting TBTF Bank 2’s balance sheet, and thus wouldn’t lend each other money at normal rates. The distrusting banks chose instead to charge each other painful rates, skyrocketing from the sub 2% range to the 10% range in one trading day. That’s a counter-party crisis colliding with a liquidity crisis. Or, more simply: A trust crisis.
The net result was the Fed’s money printers came in as a repo lender of last resort, tossing trillions of “loaned” grease into this otherwise dysfunctional repo marriage among the big banks. Once again, and unbeknownst to just about everybody, those days of dysfunctional liquidity marriages (i.e., distrust) have returned. As of April 2021, the Fed has been making daily loans into the reverse repo market to the skyrocketing tune of $2T a day. Please re-read that last line again, $2 trillion with a ‘T’.
It seems that counter-party distrust and hence counter-party risk among Wall Street’s broken moving parts has arisen again. That is, fund managers who run Money Market accounts no longer want to park their money with the TBTF banks for the simple reason that they see trouble ahead and frankly don’t trust them. Jamie Dimon (of the TBTF JP Morgan mega-bank) is so scared of hurricanes when he is now predicting a “market hurricane” ahead which Peter Schiff has recently upgraded to a “Category 5.”
Stated otherwise: Distrust in the system is rising like a shark fin and the money markets are now swimming toward a “bigger boat”—namely the Fed. Such distrust among counterparties is a major macro warning. In fact, it was precisely this kind of counterparty distrust/risk (and bad collateral) which brought down Bear Sterns and Lehman in 2008.
For those who remember 2008, then you also remember all those crappy mortgages packaged into Mortgage-Backed Securities (MBS) which Wall Street then syndicated to your broker like candy and which the rating agencies equated to magical beans. Sadly, the MBS waste of the 2008 era is still lingering and festering in the deep and dark pits of the Fed’s toxic and bloated balance sheet. But now Powell wants to unload that MBS waste but who wants to buy toxic waste?
But given the increasing supply and tanking demand for these MBS, their prices will go nowhere but south, which means their yields and hence interest rates (i.e., tomorrow’s mortgages) will have nowhere to go but north.
After all, banks survive by lending at a risk premium. As the Fed slowly takes the Fed Funds Rate from zero to 150 bps or more, the mortgage rates must rise at a much greater pace and slope, already climbing from 3% to 6% to date. And that is how a housing bubble ends.” There’s a lot more in the article here which makes an excellent case to at least hold some PMs free and safe: https://goldswitzerland.com/fatal-macro-warnings-were-gonna-need-a-bigger-boat/
COLLAPSE MONITOR: From ‘Health Impact News’ – they are on my page: “The “coming financial apocalypse” is no longer “coming.” It has arrived. Of course it can be argued that it has been here for quite some time already, but only a few in the alternative media were publishing the truth.
The corporate media and those financial “experts” employed by corporate media properties instead used terms like “recession,” mainly because the manipulated stock markets were still ploughing ahead full-steam gambling away the future and seemingly keeping things afloat and not understanding, or if understanding certainly not admitting, that not only the American stock exchanges had become nothing more than huge Ponzi schemes.
But that all changed on Friday, when key inflation figures released to the public ended up being much higher than the corporate media had been reporting. I had a feeling that all hell would break loose when the markets opened on Monday morning, and sure enough that is exactly what happened.
THE NARRATIVE BATTLE: OffG has a short report on the new battle emerging in the media space. But, early days yet, watch this unfold: “From the beginning, it has been reported that Monkeypox is most prevalent in “men who have sex with men” (why they ubiquitously use this phrase and not just “gay men”, I have no idea).
The volume on this is increasing, with stories from UK sources saying “sex with anonymous partners” and “unsafe sex” is aiding the spread of Monkeypox and making contact tracing difficult.
The head of the Useless CDC has pointed out that Monkeypox patients tend to have sexually transmitted diseases as well. Considering this, the “outbreak” starting just before ‘Pride Month’ began becomes a suspicious piece of timing.” https://off-guardian.org/2022/06/11/update-monkeypox-narrative-keeps-on-rolling/
A PLEA FOR PEACE IN THE WORLD: “IF I DON’T KNOW – I CAN’T ACT” – Information and knowledge should be free to everyone. Those less fortunate, who are unable to pay, are often those most in need. MAKING A DONATION will spread knowledge and understanding far and wide and empower humanity to keep the peace: https://www.gofundme.com/f/fnahvp-free-book
UNTIL NEXT WEEK: Tell Your Truth to Power: PROTECT & SURVIVE: https://substack.com/profile/29503050-protect-and-survive?utm_source=user-menu ALSO SPREAD THE WORD: YOUR DAILY COVID NEWS (cmnnews.org)
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Author: Austrian Peter
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