Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 12.16.2008
Former Fed governor hints at big upward revaluation of gold Interviewed Monday this week on the "Trading Day" program of Business News Network in Canada, former Federal Reserve Governor Lyle Gramley hinted that a big upward revaluation of gold may figure heavily in the Fed's attempt to rescue the U.S. economy. The program's guest host, Niall Ferguson, an author and history professor at Harvard, asked Gramley, now senior adviser at Stanford Group in Houston, about the seemingly grotesque expansion of the Fed's balance sheet in recent months. Ferguson asked: "I've heard it said that the Fed has turned into a government-owned hedge fund, leveraged at 50 to 1. Do you feel nervous about what this might actually do to the Fed's reputation?" Gramley replied: "I think you have to reckon with the fact that one of the Fed's assets is gold certificates, which are priced, as I remember, at $42 an ounce, and if we were to price them at market prices, the Fed's leverage would look a lot less than it is now."
Gold is One of the Few Assets That's Up for the Year Don't look now, but the little yellow metal that pays no interest and provides no dividend is one of just a few assets that can make the claim of being in positive territory for the year. It's only eked out a gain of about one percent - a London PM fix of $833.75 last December 31st versus about $840 as this is written - but, most investors would be happy with any number that doesn't start with a minus sign this year. Interestingly, if you held the physical metal versus the paper variety, you'd be up somewhere around five percent at the moment. The next two weeks could also be kind to gold as the second half of December has produced an average gain of about two percent over the last seven years, since the price began rising at the rate of almost 20 percent per year.
Bankruptcy filings rise 30% this year Bankruptcy filings rose 30% during the government's 2008 fiscal year, which ended Sept. 30, according to figures released Monday by the Administrative Office of the U.S. Courts.Total bankruptcy filings increased by 241,724 cases, or 30%, to 1.04 million in the 12 months between Oct. 1, 2007, and Sept. 30, 2008. For the three months ended Sept. 30, total bankruptcies rose nearly 34% to 292,291, up from 218,909 in the same period last year. Fiscal fourth-quarter filings were up 60% from 182,973 in the previous quarter.
Goldman Sachs posts $2.1 billion loss Goldman Sachs suffered its first loss as a publicly traded company Tuesday, serving as yet another reminder that no corner of Wall Street has escaped the ongoing financial crisis.The once-revered investment bank said it lost $2.1 billion, or $4.97 a share during the fourth quarter, representing the company's first loss since it went public in 1999. A year ago, Goldman reported a profit of $3.2 billion, or $7.49 a share.Few analysts were expecting the company to maintain its impressive run given the recent market turmoil in the credit and stock markets and the upheaval in the nation's financial services sector.
Bank of America Stock Could Fall to $9 Bank of America was rated "underperform" by Friedman, Billings, Ramsey Group analyst Paul Miller in a note, citing the bank's "thin tangible common equity" as a chief concern. The stock could fall as low as $9, the analyst said. Bank of America's shares closed at $14.1 on Monday, down 5.5 percent. The stock has tumbled 66 percent so far this year. Bank of America's equity ratio is too low, Miller wrote, leading him to expect that the bank will have to raise a "substantial" amount of capital, diluting existing shareholders. "We recommend that investors stay away from the stock until this initial raise is complete," Miller wrote in the note.
AIG Sells $39.3 Billion in Assets to NY Fed's Fund American International Group, the insurer bailed out by the U.S. government in September, said on Monday it sold $39.3 billion of assets to a fund established by the Federal Reserve Bank of New York. The new fund, Maiden Lane II, was created to hold mortgage liabilities from an AIG securities lending portfolio that caused huge losses to the troubled insurer, the company said in a press release. The New York Fed extended the loan to Maiden Lane II to enable the purchase of the securities for $19.8 billion.
FEDERAL RESERVE SETS STAGE FOR WEIMAR-STYLE HYPERINFLATION The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010. On November 7 Bloomberg filed suit under the US Freedom of Information Act (FOIA) requesting details about the terms of eleven new Federal Reserve lending programs created during the deepening financial crisis.
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