Thursday, February 7, 2013

The Fiat World – How long will it last?

The macro-economic environment is now really heating up with all of the paper money printing by the world’s central banks. Fiat financial systems are based on superficial confidence rather than sound business principles – but right now that is working. Today saw new highs worldwide in many indexes and huge multinational stock prices.  HAPPY DAYS ARE HERE AGAIN!!
As long as the world perceives these paper currencies being perpetrated by banking cartels as holding of their value, the game will continue.  But how long can this last?  Many market commentators, myself included, discuss the pending doom of the current ”spend all you want we will just print more” central bank montra. History has shown that eventually all fiat currencies fail. But history only rhymes rather than perfectly repeating and the paper printing fiasco that we are entering the final chapter is far bigger than any fiat system ever conceived of. We are 70 years into this paper credit boom that has laden the world economy with about $200 trillion of debt. This is unsustainable – but it is naive to believe that anyone can time the demise of the bubble of all bubbles with any precision.
I want to share with you one of the mechanisms at the disposal of the banking cartels to keep the confidence of this paper wealth system we are currently in. This is a quote from a very reputable investment news company Stansberry and Associates and it is referencing one of our governmental  ”regulatory agencies” that the banks have in their back pocket,
- happy reading and don’t be shy to send this to your Congress people and anyone you know that thinks that market “regulation” by our government is the answer to anything…
The Securities and Exchange Commission (SEC) is once again doing something that should make you furious. It’s suing one of the few ratings firms in the country that actually publishes real, useful ratings on insurance companies, banks, and bonds. The firm is called Egan Jones and its founder, Sean Egan, is one of the most trustworthy, earnest, and honest folks I’ve met in finance.
Interestingly, his business model is like mine: The folks using his ratings pay for them, unlike Moody’s and Standard & Poor’s, where the bond-issuing banks (aka, the big banks) pay for the credit rating. SEC rules require every bond sold in the U.S. come with at least two ratings by its approved ratings agencies. These “approved” agencies are the same ones that rated every horrible subprime mortgage as triple-A during the credit bubble. Guess who didn’t? Sean Egan.
Like me and a few others, Egan warned loud and clear that the subprime mortgage market suffered from massive problems. He wouldn’t go along with the charade that was orchestrated by the big banks and their SEC lapdogs. You’ll never guess why the SEC is suing Sean Egan. It’s not because of his ratings – which have always been vastly more accurate than the SEC-sponsored firms. No, it’s because he applied to become SEC-approved. The agency is suing him for civil securities fraud because it alleges he filled out the form incorrectly. I’m not making that up.
Sean Egan is a pioneer in the credit-rating
agencies business. He fought the SEC for decades, simply to be allowed to
pursue a business model that wasn’t inherently corrupt. [Sean Egan's business
depends upon the buyers of bonds, who pay for his ratings, as opposed to the
major rating agencies who are paid by the sell side.] The lawsuit against Sean
Egan removes the last pillar of any credibility or honesty in our capital