Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 12.23.2008
Peter Schiff: Outlook for the Gold Market Gold has actually held up very well compared to other asset classes. If you look at the price of gold relative to its peak, it's only off about 25%, whereas if you look at stock markets around the world, most are off 50% or more, certainly if you price them in US dollars. If you look at how gold has held up relative to industrial metals, relative to energy, relative to agriculture, gold has done extremely well. I think the fact that it has gone down in dollars has caused a lot of people to assume that gold is not performing in this correction whereas, in fact, it has. Also if you look at gold in terms of other currencies, recently you've seen all-time record highs in the price of gold in South African rand, in Australian dollars, in Canadian dollars. So gold has actually had a very strong, stealth move when viewed from the prism of something other than the US dollar.
Marc Faber: 2009 to Be 'Catastrophic' for Global Economy P1
Marc Faber: 2009 to Be 'Catastrophic' for Global Economy P2
'Weak dollar will help gold break through $1200' The price of gold can reflect many macro variables at once. We believe three variables alone go a long way in explaining the fluctuations in the price of gold: risk, currency and commodity prices. Gold is sometimes a currency, sometimes a commodity and sometimes a store of value. With the outburst of the credit crisis last August, we entered into the first step where gold started to reflect the rising risk premium. While comparing the fall of commodity prices due to the credit crisis, we see that only gold held on so well, mainly due to the risk premium.
Will COMEX Default on Gold and Silver? With investment advisors like the former NASDAQ Chairman Bernard Madoff being prosecuted for fraud, it is natural for people to begin to seek stores of wealth that are not subject to counterparty risk. The precious metals have been relatively safe stores of wealth for the past 10,000 years. Many people are going back to basics, turning back to the precious metals, as places to put their money, in these uncertain times. Gold and silver were once the most stable of all goods. Extreme volatility, however, is now a part of their nature. It comes from being made a part of the commodities casino, known as the American futures market, where speculators are allowed to use margin to control 14 times as much metal as they actually have money to buy.
Is America Broke Part 2 - The Debt God Evidence that a dollar a bill (Federal Reserve Note) is not the dollar of the Constitution was provided. The first is a promise to pay. The second is an honest weight of silver: 371.25 grains of fine silver – the silver dollar. This distinction lies at the heart of why the financial system is falling apart. A system of paper fiat debt-money is destined to fail. It can be no other way. Paper money is created out of thin air. Excess credit creation fuels booms that eventually go bust.
A Most Desperate Move by the Fed - Suspending the normal functioning of private credit On December 16 (2008), the Bernanke Fed took the most unusual step of lowering the overnight inter-bank lending rate, the federal funds rate, to a level never reached before, i.e. zero percent with an upside limit of 0.25 percent. It also announced that it will buy "large quantities of" mortgage-backed securities and is considering doing the same thing with Treasury bonds of longer maturities, in order to lower the entire yield curve. What it did not say explicitly is that the Fed is ready to debase the U.S. dollar to artificially low levels in order to reflate the U.S. economy. What the Fed wants is to trigger monetary inflation and change deflation expectations at all costs through large-scale debt monetisation and thus floating excess debts in a sea of newly created money.
Deflation Hoax or Inflation Hoax? Our world is becoming ever more a dangerous place to live. Now, our own president cannot carry out his duty without having to swerve to avoid a thrown shoe. But, wow, did it leave his hair disheveled. Needs a haircut anyway. Too long and shaggy. George, look out for those thrown shoes! But what about that debate over who will take precedence…deflation or inflation? Jim Rogers' quarrel with CNBC 2008.10.22
Gold Rises, Halts 2-Session Drop as Dollar Falls; Silver Steady Gold rose, halting a two-session slide, as a decline in the dollar revived the appeal of the precious metal as an alternative investment. Silver was little changed. The dollar dropped as much as 1.2 percent against a weighted basket of six major currencies following a 3 percent gain in the previous two sessions. Gold's rebound from a 13- month low in October has left the metal up 1.1 percent for the year and heading for an eighth straight annual gain. "Gold's trading off the dollar," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "A weak economy and all-time low interest rates don't call for a strong dollar."
Dollar Devaluation To Fix The Great Recession A quick dollar devaluation would work wonders for submerged borrowers. Don't kid yourself: It could happen. What began as government social tinkering--with implied threats to banks and mortgage companies to extend home loans to even the most marginal of borrowers--led to a greed-blinded mortgage banking business and the meltdown we are experiencing today. Now we are asked by the same congressional leadership to go along with taxpayer-funded bailouts of the very banksters who, while making millions, created the mess.
David Walker: Who Will Bailout the Budget?
Our 2009 Predictions . . . . Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery. While some of his ideas are noble indeed the overall plan will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009. We think the worst of the worst hits in later September 2009. During the spring of next year we see: (1) A second larger wave of residential housing mortgage failures; (2) The first big wave of auto loan failures and repossessions; (3) Over $40 billion in credit card defaults, smashing the bank lenders; (4) The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; (5) And finally, the grand smashing finale of CDS Credit Default Swaps originated with No margin money or down payments! We heard today the total is 500 trillion!
Gold rises first day in three on safe-haven buying Gold futures rose Monday for the first time in three sessions as buying of the metal as a safe haven against the ailing economy returned. But trading could remain volatile and thin in advance of the holidays, analysts said. Gold for February delivery, the most active contract, closed up $9.80, or 1.2%, at $847.20 an ounce on the Comex division of the New York Mercantile Exchange. It rose 2.1% last week. "Although volatility could manifest itself amid thinning trading conditions, few expect significant new positions to be established or sharp trend changes in either direction to take place," wrote Jon Nadler, senior analyst at Kitco Bullion Dealers, in a note. Gold has risen 3.3% so far this month, and it is poised to see a yearly gain of 1.4%. After falling below $700 an ounce in October, the lowest level this year, the metal has gained nearly $150.
Marc Faber: World in a vicious downward cycle.
A recession the Fed can't easily fix This slowdown wasn't caused the usual way, so the usual remedy -- flooding the economy with cash -- isn't a quick solution. But that won't stop Washington from trying. . . . . Why this recession is different Most of the recessions in this country over the past 50 years were caused by the Federal Reserve raising interest rates to battle inflation. The two most recent recessions, though, were created not by Fed tightening but as a consequence of its reckless easy-money policies followed by the exhaustion of, first, the tech-stock bubble and, later, the housing bubble.
Whether Or Not We Like It "We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent." - James Paul Warburg, whose family co-founded the Federal Reserve - while speaking before the United States Senate, February 17, 1950 Today, I feel that I've finally got it "the right way around" with this important quote - where it should be - at the beginning of, and in fact the subject of, a treatise of its own. First, for the uninformed, in America the name "Warburg" is and always has been synonymous with Central Banking. The Warburg family name is inextricably linked to 'old world banking' in Europe as well as being one of the prime architects of the formulation and passage of the Federal Reserve Act in 1913;
Madoff had steady presence in Washington Among politicians, the embattled money manager was known as a generous donor and a 'guru of finance.' When money manager Bernard L. Madoff was arrested in New York recently for allegedly engineering a massive Ponzi scheme, Wall Street financiers were left slack-jawed at the unmasking of an establishment figure who seemed to be an unlikely fraud. The reaction was similar among many politicians in Washington. For years, Madoff was a generous donor to mostly Democratic causes and maintained a steady lobbying presence through the government relations firm of a former New York congressman.
Reeling South Carolina City Is a Snapshot of Economic Woes Even before the job fair opens, the line snakes into the parking lot of the state fairground, a muted parade of lives derailed by layoffs. "It kills me, it eats me up inside," said Raymond Vaughn, who has been out of work for seven months, since he lost his job as a window installer. His fiancée now pays the bills. "I go into this fantasy world where I'm like, I'm in the wrong life and I'm actually a millionaire. It really bothers me I can't do the things I'd like for her. Sometimes you get where you feel less than a man." As the American economy sinks deeper into one of the more punishing recessions since the Depression, frustration and fear color the national conversation.
California Will Have Empty Wallet in 2 Months Unless Budget Deal Made California's chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day. California's chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day. Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.
The World is addicted to US Treasury Bonds
Saving Capitalism No Sure Thing as Statism Undermines Economy What's good for General Motors may not ultimately be best for the global economy. The Bush administration's $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat. The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.
No End in Sight for New and Existing Home Sales Declines The ongoing turmoil in credit markets and record low builder confidence have economists forecasting a continued slide for both new and existing home sales in the U.S. Both new and existing home sales figures for November are scheduled for release at 10 a.m. EST. For new home sales, the consensus forecast calls for a 4.2% drop to 415k sales following the 5.3% plunge in October to a record low of 433k sales. Estimates from the 65 economists polled by Bloomberg range from 343k to 435k. Sales of new homes have fallen more than 70% from the high of 1,389k reached in July 2005.
Banks secretive about aid use Refuse to disclose how they are spending taxpayer dollars Think you could borrow money from a bank without saying what you were going to do with it? Well, apparently when banks borrow from you they don't feel the same need to say how the money is spent. After receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending it. Some won't even talk about it. "We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Commercial Real Estate Industry Seeks U.S. Aid Some of the country's biggest commercial real estate players are asking the government for help, as their $6 trillion industry of hotels, office buildings and shopping malls faces a record amount of debt coming due in the next few years. Trade association executives said that in the last few weeks they have met with members of President-elect Barack Obama's transition team, Congressional leaders, and officials at the Treasury Department and Federal Reserve to make their case for assistance.
More companies lining up for piece of bailout fund More dismal housing, economic data expected as companies line up for bailout funds A trio of reports due Tuesday are expected to paint a bleak picture of the nation's housing market and the broader economy, as the deepening recession sends more companies lining up for a piece of the government's $700 billion bailout fund. Wall Street expects the gross domestic product, the country's total output of goods and services, fell at an annual rate of 0.5 percent in the July-September quarter. That would match the estimate for GDP made a month ago, but economists believe that small drop will be followed by a much larger plunge in the current October-December quarter. The National Association of Realtors is expected to report that sales of existing homes in the U.S. for November fell 1.6 percent to a seasonally adjusted annual rate of 4.9 million units, according to the median forecast of economists surveyed by Thomson Reuters.
Goldman Sachs VS United States
US property developers join queue for government aid American property developers are pleading for assistance from the US government to help them through tough financial times, joining a lengthening queue for public support behind banks, financial services corporations and carmakers. Leading American property firms have told politicians in Washington of a looming crisis when $200bn (£135bn) to $400bn of commercial mortgages mature over the next few years. With banks loth to lend money, they may be unable to refinance these loans. Developers have stopped short of asking for a direct bail-out. But they have asked for the inclusion of commercial mortgages in a $200bn programme established by the US Federal Reserve under which the central bank eases liquidity for car, student and credit card loans.
How credit cards become asset-backed bonds
Deeper Cuts, Widespread Pain Few Industries Are Immune as Companies Shed Jobs in 'Serial' Downturn Recessions can be notoriously uneven. They can wreak havoc with the livelihood of factory workers but not that of bank tellers or nurses. Whole industries can see jobs washed away forever, while others hum along and even grow. This time, however, the pain is more widespread, economists say, affecting the investment banker, the auto worker, the warehouse manager and the toy store clerk.
Foreign automakers in the U.S. cut back Sales are off and production is down, so workers at the Toyota Tundra truck factory here are taking classes: how to handle tools safely, how to get along better with colleagues of varying backgrounds. Some have even cleaned local parks and fed the hungry while collecting Toyota paychecks. "We'd rather be building trucks," said Mike Goss, a Toyota spokesman. "I'm trying to imagine how many trucks we would be selling, with gas prices where they are now, if people were spending money."
Congressman Ron Paul on Bailing Out the Auto Industry
Germany is already collapsing The German economy is on the "brink of the abyss", says the IMK institute in Dusseldorf. The country's GDP could contract by 3.5pc next year. We are reaching depression levels here. The IFO confidence index published by its sister institute collapsed to a record low of 82.6. This is an industrial melt-down. It is becoming ever clearer that the surplus countries (angels) will suffer just as much - if not more - than the deficit countries (sinners), even if this offends moral justice. This was ultimately the story in the 1930s, though it did not look like that at the outset. Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.
The Real Read on the Economy - video A look at how long this deep downturn will last, with Jack Bouroudjian, Capital Market Technologies; CNBC's Rick Santelli & Steve Liesman
The Coming Oil Train Wreck Only a true contrarian can worry about high oil prices, shortages and global economic shockwaves when the price of oil has fallen from $147 to under $40 per barrel in less than six months and gasoline is now less than $2 a gallon! I should be singing "Happy (driving) days are here again," but I'm not. The facts speak otherwise, and the time for preparation and mitigation is growing short.
Evelyn De Rothschild Warning Masses - Too Late (Holding Bonds, Oil, Gold) E.D. Rothschild talks about the future of stocks and bailout of banks and corporations
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