Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 12.31.2008
Happy New Year, 2009! News will be updated over the holiday weekend, so please check back on Friday. Next new Patriot Radio News Hour show will be on Monday, Jan 5, 2009.
Gold Heads for Record Eighth Annual Gain on Dollar, Recession old headed for a record eighth annual gain in London on expectations that the dollar and global economies will weaken, bolstering demand for the metal as a hedge against further declines in the currency and as a haven. Gold rose 3 percent this year, preserving investors’ money as $30 trillion was wiped off equities and the Reuters/Jefferies CRB Index of 19 raw materials headed for its worst year in a half-century. The dollar index, measuring the currency against six counterparts, fell this month after the Federal Reserve cut its benchmark interest rate to a range of zero to 0.25 percent.
New GCC Single Currency Agreed, Will It Include Gold? Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010. Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided. . . . . Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.
Don't Miss the Coming Gold Bull With the massive monetary expansion experienced in recent months and the promise for unprecedented levels of money and credit supply increase in coming months, the United States Federal Reserve looks on paper to be sending America straight into hyperinflation. Germany's post-World War I Weimar Republic, post-World War II Hungary, 2001 Argentina, and present day Zimbabwe are all analogous examples of massive debt monetization, which all led to hyperinflationary disaster. Never before has the entire world's economy been linked to one nation's, however, as is the case today with the United States.
Peter Schiff 12/29/08 - CNBC [Part 1] In this video Schiff predicts that the DOW will be worth 7-9 ounces of gold in 2009, and in the coming years will fall to 1 ounce of gold. Aside from giving his usual speech about getting into commodities, gold/silver and out of the dollar, he talks about what caused the Great Depression. Andy Busch (BMO Capital Markets) agrees with Peter that the stimulus programs are going to be inflationary and bad for currencies. However, he says regulation is coming so lets make it work because we need it. Vince Farrell (Soleil Securities CIO) says we don't have a choice and that the government has to increase debt and that they can't do nothing. Peter refutes by saying we don't need to substitute government debt for personal debt, we need to get rid of our debt. Vince and Peter then argue over how the Great Depression came about.
Peter Schiff 12/29/08 - CNBC [Part 2]
A $901 Trigger For Comex Gold The number 901 looks like nothing special in the chart below, but we’ve kept it prominently in mind as the trigger point for a potentially explosive move to at least 972. Both numbers are what we call Hidden Pivots, and we have come to regard a breach of these resistance points as a very reliable sign of more strength to come. In this case, to avoid a false signal, we’ll stipulate that February Gold close above 901.00 for two consecutive days before we infer the big surge is under way. Of course, if and when the futures get to 972.20 (the exact target), they undoubtedly will feel the magnetic pull of $1,000, which was last tested in mid-July.
Dollar Heads for Biggest Annual Drop Against Yen in Two Decades The dollar was set to complete its biggest annual decline against the yen in more than two decades on signs the U.S. economy is sinking deeper into recession. The euro was poised for its best year against the British pound since its 1999 debut on speculation the Bank of England will keep its main lending rate lower than that of the European Central Bank. The Australian and New Zealand dollars had record slides versus the U.S. currency and the yen as a global economic slump dragged down prices of commodities the nations export and curbed demand for higher-yielding assets.
Is There a Risk of a Run on the Dollar in 2009? With no US economic data on the calendar Tuesday, the dollar weakened against every major currency except for the British pound. Trading continues to be very thin with commodities being the only products that are really moving. The tensions in the Middle East have driven oil and gold prices higher. US stocks also gave back Friday’s gains and remained contained within its weeklong trading range.
Another Big Bank Failure: More Likely Than Not to Occur Countrywide was forced into a fire sale vs. bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets. Merrill Lynch was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets. Bank of America bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up? Bear Stearns was forced into a fire sale vs. bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets. Washington Mutual was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets. JP Morgan bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up? The government virtually nationalizes Citibank, one of (use to be, anyway) the world's largest banks. . .
FRED THOMPSON on How to Fix the Economy
Portfolio Advice for 2009: Stick to Gold, Stay Away from Stocks Records were broken in 2008 - money-losing records from an investor’s perspective. U.S. stocks will record their worst calendar year since 1931. As measured by the S&P 500 Index, the broader market tanked 40% this year while the Dow Jones Industrials fell 36%. U.S. stocks are already "dead money" since 1996. They’ve shown no net gain at all - including dividends. The ongoing market environment is eerily similar to another period of dismal returns - from 1966 to 1982. During those 16 years, the Dow and S&P 500 Index posted zero profits. Adjusted for soaring inflation, the markets actually recorded a loss.
The Nature of Money and our Monetary System As the editor of the Silver Bear Cafe, I try to focus on the ramifications of world events. I try to understand how what's going on now will affect your pocketbook next week, next month, next year. It is my sole intent to help you consider the possibilities which will, in turn, help you prepare for your financial future. One of the most important aspects of your financial survival concerns your understanding of the nature of money. If you believe that precious metals do not constitute "money", you may have been misled. If you have been misled, who misled you? Why? And "What's wrong with this picture"? What is money? The whole point of money is suppose to be the provision of a convenient and liquid medium that can be exchanged for less liquid value. It is a go between. One strives to accumulate money so it can be exchanged for something else.
2009: Expecting a Massive Rally As the world says goodbye to one of the worst years ever (for the markets), 2009 will be starting out with plenty of unknowns and fear. I recently wrote a post in which I said the probability of a huge decline is a lot less right after a huge decline. That is where the world is now. The world is wading through the aftermath of a huge decline, trying to sort it all out. The way markets work, by the time it is all sorted out the market will be much higher.
Who Controls the Money? "The largest frauds in our society are the frauds of government. The largest frauds in our society are the frauds of elected leaders. They constantly betray the public trust, a term that has largely disappeared from their lips." In their attempts to halt credit deflation, the government and the Fed are unleashing a torrent of corruption, inefficiency, misuse of funds, and fraud. If a bank is too big to fail and the government and/or the Fed make sure that it survives, despite the past mis-behaviors of its officers, then they invite those officers to misuse the funds that they infuse.
Muni Sales Dry Up as States Face $42 Billion Deficit The worst year for municipal bond investors since 1999 may further reduce demand for tax-exempt debt just as state governments face the biggest budget deficits in at least a quarter-century. State and local borrowers sold $385 billion of long-term bonds through yesterday, down 9 percent from 2007, according to data compiled by Thomson Reuters. Next year, sales will drop more than 6 percent to about $364 billion, the least since 2004, based on an average of estimates from London-based Barclays Plc, Merrill Lynch & Co. and Loop Capital Markets LLC.
How Many Government Workers Does it Take to Change a Light Bulb? While many ordinary Americans wondered last week what Santa Claus was going to leave for them under the Christmas tree, many American mayors were wondering how much money President-elect Barack Obama and a Democratic Congress will take from taxpayers to hand over to them. "We're not intending to spend money lightly," Obama said on Dec. 19, referring to the massive “stimulus” bill he is committed to signing in the first days of his presidency.
Americans Under 70 May Find 2008 Was Their Least Favorite Year This wasn’t just a bad year for the economy. By some measures, it was the worst year any American under age 70 has ever seen. The loss of jobs in the U.S. may be the biggest since the end of World War II. This year’s declines in stock and home prices haven’t been exceeded since the Great Depression. The slump in holiday spending may set a record; foreclosures already have. Credit markets seized, halting the longest expansion in consumer purchases.
2009 PREDICTIONS: Riots in US within two to three months? 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.
Boston Tea Party 08
Would They Be Planning to Use Troops Against Americans If They WEREN'T Stealing Our Money? Political science professor at the University of Texas at El Paso Charles Boehmer points out that "The military was not called out during the Great Depression...." So why is the military planning on how to crush civil protest in regards to the current economic crisis? Is it because the theft - via "bailouts" and other hanky-panky by Treasury, the Fed and others - of hard-earned taxpayer wealth is so obvious that the military expects Americans to revolt? The other potential explanation is that the military has been told that this financial crisis could be much, much worse than the Great Depression. So which is it? The obviousness of the theft or the severity of the crisis?
2009 PREDICTIONS: US unemployment to reach 30 - 40%? "We think we now have enough data from both the fundamentals and technicals to make some serious forecasts and predictions for 2009. While 2008 was a nasty year when lots of things imploded, they are far from being repaired. Treasury Secretary Paulson told us this week there are no more surprises, which tells me we haven't even discovered but a small portion of this monster derivative mess. His ripping-off of the taxpayers to the tune of $700 billion is only a warm-up. However, the larger question for traders and investors is what could happen next and when.. . . . . . Unemployment nationally in the USA is now touching 16%. The officially posted number is somewhere near half of that. By the fall of 2009, American REAL UNEMPLOYMENT WILL BE NEAR THE ALLTIME 1930'S DEPRESSION HIGH OF 25% UNEMPLOYED. SADLY, THAT IS NOT THE WORST AS IT GETS MORE DIRE. WE PREDICT REAL, USA UNEMPLOYMENT REACHES 30-40%. IN THE RUST BELT STATES OF MICHIGAN AND OHIO, WHILE 40% IS NOT UNREALISTIC.
In 2009, Economy Will Depend on Unlocking Credit "Credit, the disposition of one man to trust another, is singularly varying," Walter Bagehot, the financial journalist, wrote 135 years ago. "In England, after a great calamity, everybody is suspicious of everybody; as soon as that calamity is forgotten, everybody again confides in everybody." He might have been describing modern-day Wall Street, where trust — and credit — are in short supply. The financial crisis began in the credit markets, and eventually it will end there. But as the financial industry rounds out one of the most wrenching years in its history, bankers and policy makers are struggling to see the way out of this mess. Despite triage by Washington and trillions of dollars of taxpayers’ money, credit is not flowing nearly as much as many had hoped.
Dr Doom 2009 forecast: Short treasuries, buy gold, silver and oil You want to be in gold, silver, platinum, and also oil," Marc Faber told CNBC. "If you believe in a recovery of asset prices as a result of money printing, you should be in hard assets, particularly precious metals."
Relitigating 1998 at the end of 2008 Tyler Cowen argues that the "Committee to Save the World" made a mistake in 1998 by, well, saving the financial world. They thus missed an opportunity to teach the banks a lesson in sound risk-management. He specifically argues that the Fed (actually the New York Fed) shouldn’t have called the big banks together to recapitalize LTCM. The recapitalization didn’t require any Treasury funds or draw on the Fed as a lender of last resort, so calling it a bailout obscured the meaning of the term bailout – the fed catalyzed a private bailout of LTCM but it didn’t do a true government bailout. You might even say that the Fed catalyzed a bail-in of LTCM’s creditors. But by acting, Cowen argues that the Fed set a precedent that creditors of big financial institutions don’t take losses, and thus encouraged bad bets.
GRANDICH: 2008 Year Review and Outlook For 2009 The Big Picture- When it comes to the good old U.S.A., I believe there’s one overwhelming view one must take despite all the political rhetoric and “I’m okay, your okay” from the “Don’t worry, be happy” crowd on Wall Street; America is trying to operate on a failed business model. While doing so, Americans have truly mortgaged their futures on a far worse situation than the sub-prime fiasco. While there should be more bull markets to come (hopefully in our lifetime), I think one must understand that the crisis we’re currently in is going to be just a pimple to what our children and grandchildren are facing.
The Year Ahead: 2009 The tone and direction for the coming year seem clear enough: ominous, and downward. Down for living standards; down for levels of employment; down for world trade; down for investment portfolios and retirement funds; down for the prosperity and even the physical safety of the lower and middle classes in the United States and around the world. Levels of freedom are headed downward also, as the power elite worldwide use the time-honored method of responding to a crisis – any crisis – as a tool to increase their own power. From ancient Rome to Hitler's Germany , from the U.S. Civil War to modern Zimbabwe , from the Great Depression to the terrorist events of 9/11/2001 , crisis has worked so reliably as an excuse for power-grabs that one wonders why tyrants haven't thought of creating crises in order to increase and consolidate their power.
Forecast for 2009 James Howard Kunstler Much of what has been lost in 2008 will not be recovered: enterprises, personal fortunes, chattels, reputations. I expect a period of euphoria to mark the early weeks, perhaps months, of the Obama team. It will be a relief to have a president who speaks English correctly and has experienced something like real life prior to politics. Restoring credibility and legitimacy in leadership will be a big deal. If nothing else, we may recover a collective sense of consequence from a president who tells the truth, even the harsh truth. The age when it was enough to claim that "mistakes were made" might be over. A sign of this sort of change may be the commencement of prosecutions for misdeeds in banking and securities that are now destroying the entire system of deployable capital. A good place to start will be an investigation of Henry Paulson for insider trading stemming from Goldman Sachs's shorting of its own issued mortgage-backed securities when Mr. Paulson was the company's CEO. Beyond his case, there should be enough work at Attorney General Eric Holder's office to employ a line of law school graduates stretching from Brattle Street to the planet Mars. It will be salutary for the nation to see those who engineered the banking collapse come to greater grief than the mere surrender of their Gulfstream jets and Hamptons villas. By the way, being allergic to conspiracy theories, I don't believe for a minute that there is some kind of shadow elite of "Bilderburgers" standing in the background to protect these grifters -- and I also believe the reason these paranoid notions persist is because it is otherwise hard to account for the extravagant irresponsibility of the Bush circle and its servelings.
Requiescat In Pace, Uncle Sam 2008 will be known as the year the United States set aside any pretense of free enterprise. A nation that had flourished with the concept of limited government economic intervention turned to the seductive allure of massive federal intrusion. Washington will now more than ever redistribute wealth in the name of compassion, pick winners and losers, and decide how the fruits of your labor will be spent…
The collapse of financial globalization … By Brad Setser (CFR) The last six months — if not the last year — logged what felt like a decade’s worth of financial news. So perhaps it isn’t surprising that swings that normally would attract an enormous amount of attention have gone almost unnoticed. Like the near-total collapse of private capital flows. Both private capital inflows to the US and private capital outflows from the US have fallen sharply. They have gone from a peak of around 15% of US GDP to around zero in a remarkably short period of time …
1/3 of Banks Will Disappear Next Year Financial analyst Ralph Silva of TowerGroup told CNBC on Wednesday (24 Dec) that he expects no less than one third of banks to fail in 2009 and that anything up to a thousand could collapse if they don’t merge. Silva said that only five or six global banks have enough funds to survive comfortably throughout 2009.
Holiday Sales Drop to Force Bankruptcies, Closings U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years. Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp. are among chains shuttering underperforming locations.
GM uses bailout to lure car buyers General Motors Corp. and its finance arm Tuesday quickly deployed their $6 billion taxpayer infusion by offering zero-interest loans, passing on some of the benefits of the bailout to consumers while trying to clear lots full of unsold trucks and sport utility vehicles. Unlike the banks that have received the lion's share of Treasury's $350 billion of bailout funds, the automaker kept an eye on popular opinion and Congress -- both of which have been critical that much of the money doled out by the Treasury so far does not appear to have found its way into loans for average people.
Max Keiser about Food Price Inflation & bankers
Consumer confidence, home prices plunge Home prices plunged at a record rate in October, reaching their lowest levels in 4 1/2 years, a closely monitored housing report revealed Tuesday. With home foreclosures and layoffs continuing to rise and consumer confidence plummeting to a record low in December, housing prices are not likely to hit bottom anytime soon, analysts say.
China Central Bank Says Extra Crisis Tools Are Needed China’s central bank said the nation should prepare more tools to tackle the global financial crisis, a month after its biggest interest-rate cut in 11 years. Measures may be needed “to ensure the security and stability of China’s financial system,” the People’s Bank of China said in a statement on its Web site after a quarterly monetary-policy meeting. A slowdown in the world’s fourth-biggest economy is deepening because of waning export demand. Lower interest rates and a halt in gains by the yuan against the dollar have brought an additional risk: an exodus of cash from the financial system as investors seek better returns elsewhere.
Israel Rejects 48-Hour Cease-Fire Plan JERUSALEM — After five straight days of punishing air attacks, Israel rejected a proposal for a 48-hour cease-fire in its military onslaught in Gaza on Wednesday, saying it would maintain pressure on Hamas. But it did not rule out future diplomacy and was open to ways of increasing humanitarian aid. The decision was announced after a security cabinet meeting here. The Israeli air strikes on Gaza continued on Wednesday, and at least 20 more rockets were fired by Hamas militants in reprisal into southern Israel, including three that landed in the city of Beersheba. Mark Regev, the spokesman for Prime Minister Ehud Olmert, said earlier that the country’s leaders "view it as important to keep up the pressure on Hamas."
Alice in nuclear Pakistan In his 143-year-old "Wonderland" classic, Lewis Carroll has Alice saying, "I wonder if I've been changed in the night? Let me think. Was I the same when I got up this morning? I almost think I can remember feeling a little different. But if I'm not the same, the next question is 'Who in the world am I?' Ah, that's the great puzzle." Substitute Alice for Pakistan and one begins to understand Pakistan's alternating personality syndrome.
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