Pater Tenebrarum's Contributions

The discussion over the GOP's gold standard proposals continues in spite of the fact that everybody surely knows the idea is not even taken seriously by its proponents – as we noted yesterday, there is every reason to believe it is mainly designed to angle for the votes of disaffected Ron Paul and Tea Party supporters, many of whom happen to believe in sound money.

We have critically examined the question of whether the stock market 'discounts' anything on several previous occasions. The question was for instance raised in the context of what happened in the second half of 2007.

In a gold-based monetary system, every asset is ultimately backed by gold. This does not mean that every debtor (including banks) keeps the full amount of its liability in gold coin just lying around. Why would one bother to borrow if one did not need the money?

There are many books on the market today about the coming collapse of the global dollar-based monetary system. Many of them purport to help the reader “profit” from the collapse(!)

Traditional legal principles are seemingly pretty clear and straightforward on how a good faith acquisition of stolen goods is to be treated: the buyer, even though he is not criminally liable, can not acquire title to stolen property. Title remains with the original owner and the buyer who has acquired such property in good faith only has recourse to the party that sold the goods to him.

In order to avoid the appearance that its plan to buy bonds of peripheral governments does indeed amount to 'funding of governments by the printing press', the ECB has tied the plan to the condition that it has to happen in parallel with EFSF/ESM rescues.

The lunatics are running the asylum. This is the only conclusion one can come to when considering the nonchalance with which what was once considered an extraordinary policy with a firm 'exit' in mind is now propagated as a perfectly normal 'tool' to be employed at the drop of a hat.

Big businesses have little problem with these overbearing regulations. They help to keep down the competition from upstarts, to the detriment of society at large, but to the advantage of established big businesses. Big business is not against more regulations – it is all for them.

In recent days, numerous central bank bureaucrats have given us hints that another round of pump priming is more or less imminent. It started with John Williams, president of the San Francisco Fed who mused about 'QE without a limit'.

Moody's announced on Tuesday that it is putting Germany, Luxembourg and the Netherlands on 'negative watch'. This means that there is now a danger that the already severely shrunken club of AAA rated euro area member nations will decline from four to one – only Finland has been exempted from the warning.

We previously opined that it would be very difficult to impose losses on subordinate bank creditors in Spain, because many of the holders of subordinated securities in the capital structure of Spanish banks are their own retail customers.

The problem is not necessarily that the German course is 'too strict', the problem is the lack of unanimity regarding the way forward and the slowness and uncertainty attending the ratification and implementation of agreements.

Below are two videos showing the second session of Keith Weiner's presentation on irredeemable paper money versus gold.

Economic data releases from Spain have one thing in common lately: they are all 'worse than expected'. Even data that were in fact expected to be atrocious surprise by being more atrocious than previously imagined. The latest example is the reported decline in retail sales of 9.8% year-on-year, a new record.

The year 2007 changed real estate forever. For the first time in modern history, not only have real estate prices since then declined, but it is a prolonged decline and one of substantial magnitude.

Rumors have been making their way over the wires on Tuesday that the four largest Greek banks will receive € 18 billion in the form of 'EFSF bonds' on Friday in a first tranche of the recapitalization effort that is part of Greece's latest bailout deal.

On Monday, May 14, something happened that hasn’t happened since Dec of 2008. Two successive near-month precious metals futures contracts were in backwardation at the same time. To oversimplify, backwardation is when the price of a futures contract is lower than the price in the spot market.

The complexity of global economics has gone beyond comprehension. It can no longer be explained by any of the mostly western based and now obscure mainstream economic theories. Central bankers are in denial...

Argentina is one of the few countries where the oil industry was not yet fully nationalized, as if that were a bad thing. The reality of the situation is that the high share of government control all over the world over the oil industry has created a major supply problem, as governments can not possibly 'manage oil companies professionally'.

From 1933 until 1975, one could be imprisoned for the “crime” of possessing gold. To this day, it is not legal for a creditor to demand payment in gold. If you are so confident that you are right and all good men should be happy that you print dollars at your discretion, can we agree on an experiment?