Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 12.29.2008
Four Reasons for an Immediate Rise in Gold Gold hit $884 as this post was written early on Monday 29th December, the day that Indian astrologers have down for a stock market crash. That would seem unlikely given thin holiday trading. But a further rise in the gold price, even if short-term, looks probable for four reasons: 1. Geopolitics: Israel has attacked Gaza with considerable loss of life, a reminder of the chronic political problems of the Middle East with Iran and Pakistan other possible flash points. Arabs are big investors in gold and respond to disruptions in their own backyard. 2. Physical delivery requests are mounting at the Comex futures exchange which could well result in an immediate shortage of gold at the year-end. The futures market looks about to breakdown, giving control of the gold price back to the physical market where available stocks are low. 3. Gold preserved value through the storm of 2008, and 2009 looks no better, while investors are increasingly concerned about the bubble in the bond market. In the investment cycle the next step is a bond crash and a flight to precious metals. 4. The dollar rally looks to have already broken down, so look for a swift reversal to dollar devaluation and gold appreciation. That would also boost the oil price, usually a positive for gold, and also linked to geopolitical instability in the Middle East.
Ten Predictions for 2009 I don't have a crystal ball, but my forecasts have been fairly accurate and quite profitable over the past few years. While 2008 has been a tough year, all signs point to 2009 being much worse. Here is what I see on the horizon for the upcoming year. 1. The stock market decline will accelerate in 2009, with the Dow Jones Industrial Average dipping below 6,000. Extreme volatility will engulf the markets with plenty of counter-trend rallies that will be fueled by speculators "calling the bottom," only to find a new bottom the following month. 2. Unemployment will rise dramatically as "official" statistics reach towards 10% and true unemployment rises closer to 20%. 3. Real estate prices will continue to drop as rates reset and foreclosures increase across the country. Commercial real estate will finally follow residential, as price declines accelerate due to foreclosures on shopping malls, retail outlets, office buildings, etc. 4. Bailouts will continue, with more industries lining up for government rescue packages and both the financial and auto industries returning to the trough for more of their fix. This will lead to prediction #5. 5. Deflation will subdue and the first signs of hyperinflation will appear in the back half of 2009 as the trillions in bailout dollars begin to flow into the economy. The price declines that are a result of liquidation and de-leveraging, will give way to skyrocketing prices as politicians continue trying to print and borrow our way out of bad times. This will lead to prediction #6. 6. The dollar will resume its downtrend and make new lows during the first half of 2009. This will continue throughout the year with the dollar reaching into the low 60's as the world loses confidence in the U.S. currency and the U.S. government's ability to repay its debt. 7. Oil will rise from current lows and find a "fair price" somewhere in the $75 - $100 range, where it will float for much of the year. This will benefit alternative energy companies, although any gains will be muted by credit contraction and the overall market decline. 8. Agriculture prices will return to an uptrend as declining investment and unpredictable weather patterns lead to supply shortages amidst an ever-expanding population and increase in inflation. 9. Gold will make a new all-time (nominal) high reaching a price of $1,400 or more during 2009. A panicked flight to safety could push gold towards $2,000, although the central banks will dump gold on the market or make other attempts at suppressing the price advance. 10. All of the above will lead to increased crime and civil unrest with protests in the streets, bank runs and an increased police and military presence trying to bring stability to cities.
Jim Rogers: 2009 will be the year of Total decline for US
Year Stained by Insolvency An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
Dollar Falls on Concern U.S. Recession Will Deepen; Pound Drops The dollar dropped for a fourth day against the euro before reports this week that may show the world's largest economy is slipping further into recession. The greenback also decline versus the yen on prospects the Federal Reserve will pump more cash into the economy in so- called quantitative easing, which can weaken a currency by increasing its supply in the financial system. The British pound fell to near a record low against the euro after a survey of U.K. estate agents and surveyors showed home prices dropped this year and are forecast to slide further in 2009.
Gold prices on revenge and retaliatory mood Revenge seems to be the key word for gold prices to rise. While India is seen taking revenge on Pakistan on its alleged role in Mumbai attacks, the Palestinians are keen on taking revenge on Israel after its attack post cease-fire in Gaza Strip. And these political tensions may just help gold prices as investors are relying more and more on Gold and the commodity has proved to be the sole bread earner and safe investment in the year 2008. Even the ever-dependable crude could not help the investors as it is faring badly even now.
Gold Poised to Move Higher Gold belongs in every investor's portfolio. It is totally unique among financial assets, a physical metal commanding timeless and universal intrinsic value. It is a rock of stability in a chaotic world, a stark contrast to the complex web of mere promises to pay that is our modern faith-based financial system. Without gold, true diversification and protection from systemic risk is impossible. Gold's fundamentals are dazzlingly bullish. Like everything else on the planet that is freely bought and sold, gold's price today and in the future is a direct function of its supply and demand. As long as its global demand exceeds its global supply on balance, gold's price will continue powering higher in its secular bull. While it has already come far from its humble beginnings in the $250s in April 2001, it has a long way to run yet.
The "Great Slump" of 2008 (PART 1/2) The outstanding contemporary relevance of Lord Keynes' short essay "The Great Slump of 1930" comes from the fact that Keynes faced very similar dire auspices as he grappled with the uncertain future of the 1930 global economic downturn. At the time he wrote the essay, Keynes was trying to explain both the origins of the crisis and its future length and severity. Needless to say, he missed the boat completely, although like a good medieval soothsayer he did manage to hedge his bet a little. Obviously, the "Great Slump" was not a temporary downturn but instead heralded the Great Depression, which would last until the wartime economy of WWII stimulated industry in the United States while utterly destroying Europe, the epitome example of lost wealth via Henry Hazlitt's "broken window" illustration. Based on recent FED manuevers and Obama's future taxation and government expansion plans, most likely the modern-day Keynesian-Friedmanite command-and-control corporate governments will respond in a similar hapless manner as Keynes' abject failure almost 80 years ago.
Bernanke's Great Lie - The "Gold Standard" and the Great Depression (PART 2/2) The purpose of the following is to argue that the "gold standard," as understood by most of the public, did not cause or worsen the Great Depression as current FED Chairman Ben Bernanke has based many of his papers, speeches, and, to a large extent, his entire career on. In our contemporary times, I do believe this blame must be firmly rejected and monetary policy should, at the very least, be debated in a national forum. Indeed many other economists, such as the Friedman family, Anna Schwartz, Alan Greenspan, and Jeffrey "Shock Doctor" Sachs, have all propagated this lie.
Financial Economic and Political - Part 1 of 4 Possible announcement of a new global government with foreign ownership of US companies; On Sept 30th the Russians & Chinese threatened nuclear war on US so global game plan has changed, waiting in the wings until Jan 20th
AMERICA ON THE BRINK - PREDICTIONS Political Correctness and Freedom of Speech The first thing that Socialists do when they gain power is try to silence free speech. Conservative Talk radio hosts such as Rush Limbaugh, Sean Hannity, Glen Beck, Laura Ingram, Lou Dobbs, etc. are already being criticized by "Progressives" in Congress. There is a serious effort underway right now to bring back a failed law, the oxymoronic "Fairness Doctrine," in a bold, open attempt to silence opposing political views. Internet news sites such as WorldNetDaily.com, NewsWithViews.com, DrudgeReport.com, InfoWars.com and many others will be silenced along with talk radio. In order for darkness (lies) to prevail, light (truth) has to be snuffed out. Public scrutiny and criticism of elected officials will be forbidden. Any person exposing political corruption will be labeled anti-government. If they persist in attempting to correct that political corruption, they will be called a terrorist! All police departments around the country will be required to have terrorist units.
[In a communist country of my birth I remember that one could criticize any capitalist country one wishes as long as it wasn't yours or another communist country. Criticism of any official brought police in black uniform to your door usually at night when everyone was asleep.]
Financial Economic and Political - Part 2 of 4
Bankrupted States = Con-Con & Newstate Consitiution The strategically planned and forthcoming Constitutional Convention, which will address "a balanced budget," is quite a cover story. Therefore, let us consider the truth behind this elaborate usurpation scheme. As the country is failing in every direction - from the former individual in America to each and every individual state in the country, the total economic crash of EVERYTHING - and all converging at the very same time and as we speak - is, let us say, extraordinarily convenient. Add this convenience to the fact that on March 27, 1969, President Richard Nixon divided the country into 10 regions via the Government Reorganization Act. Then with Nixon's Executive Order 11647, the nation was divided up into 10 administrative regions on February 14, 1972 (Federal Register February 12, 1972, Vol. 37, No. 30), which also established the Federal Regional Council for the newly designed 10 regions. Now, why did former President Richard Nixon redefine the United States? He did so because the United Nations passed a resolution that the United States must reorganize into 10 regions.
Financial Economic and Political - Part 3 of 4
Financial Economic and Political - Part 4 of 4
What happened to gold in 2008? In 2008, the gold market began the year with a normal bull market pullback from its highs of $1,035 to the very low $900 level. Jewelry had already begun to recover as the gold price dropped, but then the impact of the "investor meltdown", through forced selling by investors, selling what they could to cover losses in other markets, hit gold too. To make matters worse, in the U.S.A. so many investors had paid, from only a 10% deposit up to a 50% deposit, on the shares they owned. So when these share prices dropped more than 10% to 50% investors lost 100% of their capital. This type of selling sent prices lower, in the course of which more selling was triggered by the system of "stop losses", which automatically send out an order to close the position, without needing to contact the investor. Consequently, although the gold market fundamentals look excellent, the investor's struggle for survival, made them sell even their gold and silver positions. As a result the gold price was sent on a downward slope until it bottomed at $690.
Should We Risk Hyperinflation? Although the U.S. Government has thrown an estimated $8.5 trillion so far into bailout measures and credit stimulus, this huge sum has yet to produce even a mote of tangible success. The goal for nearly two years has been to stabilize home values, but instead they have continued to fall. Policymakers and economists must be perplexed by this, even if beleaguered homeowners are not. Maybe the latter have remained gimlet-eyed because they've received only bailout crumbs to date. Whatever the case, at a time when households have become properly obsessed with repairing their balance sheets, who could blame them for being suspicious of Big Government's so far fruitless collusion with the corrupt likes of J.P. Morgan and Goldman Sachs?
The Illusion of the Monetary System
The creation of interest
Money Supply
Inflation is Unavoidable What the rational investor has to understand is that the coming inflation is inevitable. It is a catch-22 situation for the US Government as money printing is the only thing the government can do to keep the system going, and this will only result in inflation. The longer we wait for inflation to start, the bigger the reward as it just means that more money entered the system. It's a conundrum that will make those properly positioned very wealthy, but it requires patience.
Do Deflationists Have It Wrong? Jim Willy is one of the few commentators on the economic scene who deserves our serious attention. In his latest report, he trashes the crackpot notion that we're in a mere recession, or that a recovery will occur in 2009. The economic paradigm is shifting tectonically, he says, and few things will be the same once we emerge from the current crisis. He also has this to say: "The year 2009 by year-end should be marred by very big inflation outbursts in price structures, enough to silence the wrong-footed deflation theory guys."
Jim Rogers: 'Lost decade' pt 1 We ran a short version of this interview in November; this is the full interview
Jim rogers: 'Lost decade' pt 2
Chaos on the Horizon? Invest in Real Assets We are to the point where we are about 14 feet from going over the edge of Niagara Falls. We haven't gone over the edge yet; we haven't gone to a total collapse. We don't have riots in the streets; we don't have a revolution. That's coming; that's about two to three months off. Here's what we've got: the Fed has committed to $8.5 trillion of taxpayers' money to bail out the worst run companies and banks. It hasn't worked. Now, they're at a 0% to .25% on the Fed Funds rate for funds for banks, which means if you go down and you pay $100,000 for a T-bill for 90 days, your return is zero, which is to imply that there is zero risk to investing with the government. Anybody who actually believes that is going to be in for a real shock in the first quarter of next year.
The End of America and its dollar
Legitimacy Dwindles Zounds! Public sentiment toward the accelerating economic fiasco has shifted, seemingly overnight, from a mood of nauseated amazement to one of panicked grievance as the United States moves closer to an apparent comprehensive collapse -- and so ill-timed, wouldn't you know it, to coincide with the annual rigors of Santa Claus. The tipping point seems to be the Bernie Madoff $50 billion Ponzi scandal, which represents the grossest failure of authority and hence legitimacy in finance to date in as much as Mr. Madoff was a former chairman of the NASDAQ, for godsake. It's like discovering that Ben Bernanke is running a meth lab inside the Federal Reserve. And out in the heartland, of course, there is the spectacle of Illinois governor Rod Blagojevich trying to desperately dodge a racketeering rap behind an implausible hairdo.
Waking from Lever-Lever Land The United States lived in Lever-Lever Land too long. Like Peter Pan, the country has refused to grow up. The object of the stimulus plans offered by the present and the next US administrations is to return to Lever-Lever Land, that is, to debt-financed consumption. It won't work. Leverage is for the young, who borrow to build homes and start businesses. The financial crisis forces Americans to act their age, that is, to save rather than borrow and spend. For a world economy geared to servicing the once-insatiable maw of American consumption, that is very bad news for 2009. Recovery cannot begin until Americans have restored their decimated wealth by saving - an effort that will take years - or until the youthful emerging markets start importing from the US, rather than exporting to it.
Communitarianism (see video below) here is an old social theory that in order to create a healthier planet, people everywhere must learn the value of collectivism. Its many proponents insist that individual rights and liberties pose a real threat to the health and safety of the "community at large. If we will just put the community before self-centered concerns, mankind can eliminate war and poverty. To many, it is our evolutionary destiny and our moral duty to comply with the spirit of community.
The founders of the Communitarian Network began "shoring up the moral, social and political environment" in the early 1990s. Today the communitarian theory is the basis for hundreds of new global rules and regulations eliminating individual rights, yet fewer than one percent of the affected population knows about it.
Communitarianism was embraced by leaders in every nation after it was financed by the international banking elite. Today the theory of community influences all aspects of life: news, science, money, law, land use, health, education, policing and employment, not to mention the arts, fashion, fundraising, causes and entertainment. Community is the buzzword on everybody's lips these days.
This is a VERY IMPORTANT VIDEO to watch, send to friends, and remember.
US braces for civil unrest
Ron Paul on the Martial Law
Crackdown on bailed out banks LAWMAKERS are turning up the heat on banks that have received money from the Treasury Department's $700 billion (S$1 trillion) rescue fund after the Associated Press reported that they wouldn't say how they are using the money. Sens Dianne Feinstein and Olympia Snowe said on Tuesday that they will propose legislation next month to force companies that receive money from the fund to report how they have spent it. The legislation would also prohibit them from spending the taxpayer dollars on lobbying or political contributions. It would also apply to some recipients of the Federal Reserve's emergency lending programs. The legislation was introduced earlier this year, but the Senate did not take it up. The sponsors have long said they plan to pursue it when the 111th Congress convenes Jan 6.
Wall St. closes out on 2008, year of record losses Investors head into final week of the year eyeing economic data, hoping for January rebound Investors are preparing to close out the last three trading days of 2008, a year in which Wall Street has logged its worst performance since Herbert Hoover was president. The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2 percent. That's the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6 percent. The Standard & Poor's 500 index is set to record the biggest drop since its creation in 1957. The index of America's biggest companies is down 40.9 percent for the year. With these statistics ready to play out this week, it is little wonder why investors are all too happy to close the books on 2008. Analysts are already looking toward January as a crucial period for the market as it tries to recover some of the $7.3 trillion wiped from the Dow Jones Wilshire 5000 index, the broadest measure of U.S. stocks.
Retailers facing bankruptcy in 2009 - Sears/K-Mart, Macy's included.
Bad debt triggers hospital closings around U.S. A rise in patients not paying their bills is partly to blame for financial ills Gainesville's first community hospital has been on life support since the Shands Healthcare system in northern Florida bought it a dozen years ago. Now, because of the recession, the plug is being pulled on 80-year-old, money-losing Shands AGH. Next fall, its eight-hospital not-for-profit parent company will shut the 220-bed hospital and shift staff and patients to a newer, bigger teaching hospital nearby as part of an effort to save $65 million over three years across the system.
Hospitals ill from more bad debt, credit troubles Hospitals ailing from fewer paying patients, investment losses, tight credit and other ills Gainesville's first community hospital has been on life support since the Shands Healthcare system in northern Florida bought it a dozen years ago. Now, because of the recession, the plug is being pulled on 80-year-old, money-losing Shands AGH. Next fall, its eight-hospital not-for-profit parent company will shut the 220-bed hospital and shift staff and patients to a newer, bigger teaching hospital nearby as part of an effort to save $65 million over three years across the system. Like many U.S. hospitals, Shands is being squeezed by tight credit, higher borrowing costs, investment losses and a jump in patients -- many recently unemployed or otherwise underinsured -- not paying their bills.
Dismal Outlook for Mall Owners - $$ If you thought shopping malls were a nightmare in the run-up to the holidays, just try owning one now that there is nothing left to do but take down the tinsel. As retailers count their takings, it is becoming clear that consumers took a holiday away from retail land. And broad trends, such as free-falling house prices and rising unemployment, point to a dismal 2009 for anyone in the business of flogging stuff on shelves.
Max Keiser : vw volkswagen short squeeze by porsche; shadow banking underpinning
Cash-strapped states look to sell roads, parks 44 states dealing with deficits consider privatization to raise money Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize. Valuables like these are in for a closer look as 44 states cope with deficits. Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.
Moorlach Sees Up to 10 Municipal Bankruptcies in Coming Year The accountant who predicted the nation's largest municipal bankruptcy says as many as 10 insolvencies will roil the $2.7 trillion U.S. market for state, county and city debt next year as public finances worsen amid calls for federal aid to state and local governments. John Moorlach said in 1994 that Orange County, California's leveraged investing strategy could wreck its finances. The county went bankrupt about six months later after losing $1.6 billion. As many as four cities in the Golden State and six others nationwide may seek court protection from creditors next year under Chapter 9 of the bankruptcy code, the section devoted to municipal governments, Moorlach said in an interview. "The total could be higher," said Moorlach, 53, now chairman of the Orange County Board of Supervisors. He didn't name any cities outside California, which has seen the cost of insuring state debt against default more than quadruple since September. He said his estimate was based on general economic conditions.
Munis in 2009
Manufacturing, Home Prices Probably Sank: U.S. Economy Preview Manufacturing in the U.S. probably shrank at the fastest pace since 1980 as the deepening global recession forced customers in North America, Europe and Asia to cut back, economists said before reports this week. The Institute for Supply Management's December factory index dropped to 35.4, the lowest reading in almost three decades, according to the median estimate of economists surveyed by Bloomberg News. A separate report may show the record drop in home prices accelerated in October.
Small Car Meltdown
Oil Outlook: Expect Close to $30 Oil Within Next Four to Six Weeks
Housing has its worst monthly price drop in 20 years The Massachusetts housing market experienced its worst monthly price drop in more than 20 years as concerns over the slumping US economy and the stock market worried consumers, the Warren Group reported today. "The November median home price slumped 16.7 percent to $275,000 from $330,000 during the same month in 2007," said the Warren Group, a Boston firm that tracks local real estate activity and that publishes Banker & Tradesman. "Novembers percentage decline exceeds the monthly price drops in September and October, when median home prices were down 15.3 percent and 13.9 percent, respectively."
GMAC to get TARP funding? Wants access to TARP and FDIC.
Recession Reopens U.S.-China Trade Rift Paulson's Talks Bridged The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over. Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.
Cracks in U.S.-China Relations Are Widening Again in Crisis The global recession is re-exposing fissures in United States-China relations that Treasury Secretary Henry M. Paulson Jr. spent more than two years smoothing over. Mr. Paulson, 62, who visited China 70 times during his career on Wall Street, made improving ties a priority. He advocated diplomacy instead of confrontation, establishing a twice-yearly "strategic economic dialogue" with officials in Beijing, aimed at cooling tensions and deterring Congress from taking up trade sanctions. The approach produced some results, including a pledge to share data on food safety and agreement to allow foreign mutual funds to invest in China's stock market.
Japan's Recession Deepens as Factory Output Plummets Japan's recession deepened in November as companies cut production at the fastest pace in 55 years and rising unemployment prompted households to pare spending. Factory output plunged 8.1 percent from October, the Trade Ministry said today in Tokyo, more than the 6.8 percent estimated by economists. The jobless rate climbed to 3.9 percent from 3.7 percent. Household spending slid 0.5 percent, a ninth drop.
Kuwait cancels $17 billion deal with Dow Chemical Kuwait decided on Sunday to scrap a deal to form a $17.4 billion petrochemical joint venture with U.S. company Dow Chemical. The cancellation of the deal, which had met opposition in Kuwait's parliament, was acknowledged Sunday by Dow and is a blow to the largest U.S. chemicals company. Dow had planned to use the proceeds to repay a large part of $13 billion in debt it will have to shoulder once its acquisition of rival Rohm & Haas closes, which is expected to be in early 2009.
Danny Gillerman on Israel's attacks in Gaza 12:28:08
Israeli troops mobilize as Gaza assault widens More than 290 Palestinians are dead as Israel pounds Gaza for second day Israel widened its deadliest-ever air offensive against Gaza's Hamas rulers Sunday, pounding smuggling tunnels and a central prison, sending more tanks and artillery toward the Gaza border and approving a reserves callup for a possible ground invasion. Israeli leaders said they would press ahead with the Gaza campaign, despite enraged protests across the Arab world and Syria's decision to break off indirect peace talks with the Jewish state. Israel's foreign minister said the goal was to halt Gaza rocket fire on Israel for good, but not to reoccupy the territory.
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