Teetering Governments

Teetering Governments

The Zimbabwean military overthrew the government of 93-year-old dictator Robert Mugabe and placed him under house arrest. Mugabe’s sacking of his vice president and subsequent attempt to set up his wife as successor triggered the action. The country’s chaotic economy and currency have resulted in Bitcoin becoming the currency of choice.

Venezuela reached its “event horizon” (the edge of a black hole) last week. Physically unable to repay its debt and on the edge of bankruptcy, President Nicolas Maduro and his henchmen had only fuzzy promises for bond holders—but “no offer, no terms, no strategy, nothing.”

German anger over another massive wave of refugees is being (properly) directed against Chancellor Angela Merkel, and preventing her from forming even a three-way coalition government, following her recent reelection. The country is now in political crisis and may have to hold another election.

Shh! Legislators finally at work. To much fanfare, the House passed its version of a tax bill. The Senate version appears headed for floor debate in a few weeks. If the two chambers are successful in actually producing legislation, its main feature promises to be a strong incentive for large corporations to bring money back home and create jobs; small businesses would see some help, but not so much for individuals. The House version is also structured to scrap Obama’s play-or-pay Obamacare mandate.


Here’s a much better proposal, from Charles Hugh Smith: “replace the entire 2700-page tax code with a 25-page code … and the entire convoluted mess of income tax with transaction taxes.” It’s a great idea and perhaps some of us will live long enough to see something like it in place.

Refreshing the swamp. Donald Trump announced Jay Powell as his choice to replace Janet Yellen as Fed chair. Very disappointing! Powell is a bank-friendly multi-millionaire lawyer, not an economist, and once a partner at the globalist-oriented Carlyle Group.

Big pharma strikes again? Annie Fairbanks became the 77th holistic practitioner since June of 2015 to die. Annie was murdered in her home, along with her husband, their 3-year-old daughter and 9-month-old son, in Arizona. The most logical explanation (to me) is the pharmaceutical complex saying “get out of our way.”

In another step for sound money, Texas officials announced the location of the Texas Bullion Depository, a 60,000 square-foot secure facility where Texans can store their gold and silver. Construction is scheduled to begin early in 2018 and take about a year. As it turns out, Leander is about 15-miles from my office.

MARKETS – for the week ending November 17

Real money rose: gold closed up $22 to $1296/ounce and silver jumped 50-cents to $17.37/oz.

US stocks eased lower: the Dow and S&P closed down 0.3% and 0.1% to 23358 and 2579. John Hussman commented that “substantial market declines are often preceded by a combination of internal dispersion… and leadership reversal,” which are now evident.

And for the first time since July 2007 we are seeing a confluence of the infamous “Hindenburg” omen with a “Titanic Syndrome.”

Mining stocks ((the XAU Index) inched 0.3% higher to 80.88.

Crude oil (the WTIC Index) gained a dollar to $56.71/barrel.

Commodities are tumbling in China along with its stock market. Back home the (GCC Index) fell 0.6% to 19.25.

Currencies. The Federal Reserve Note (= dollar, via USD Index) slid 0.8% lower to 93.57.

Cryptocurrencies. Bitcoin rose $300 last week to $7730/coin.

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US Treasury bonds climbed on disappointing retail sales and wage news: 10-year and 30-year yields fell 5 and 10 basis points, to 2.35% and 2.78%.

About the Author

Wayne Peterson is Manager of Wayne Framework 2, LLC, author of “But What If I’m Right?” and publisher of the Transformation Watch newsletter and weekly Crypto Analyst Newsletter. For free weekly receipt of these financial blogs, subscribe here.

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