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Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.

News Provided by the Free-Market News Network

Fri 10.31.2008

Monday's Radio show - ONE HOUR EARLIER
(8am PT; 9am MT; 10am CT; 11am ET)
"Fall Back" for Day Light Savings (except in Arizona) set clocks back on Saturday night, November 1

Call this a crisis? Just wait
Actually, don't wait, because we've got to stop a
bigger economic disaster in the making: 78 million
baby-boomers eligible for Social Security and Medicare.
By David M. Walker, former U.S. Comptroller General
Staring into the abyss always focuses the mind, which can help you avoid falling in. So let's take a look at the potential catastrophe that awaits us once we survive our current crisis. At the dawn of the 21st century the U.S. had $5.7 trillion in total debt. As we approach the end of George W. Bush's presidency only eight years later, that sum has nearly doubled, thanks to war costs, tax cuts, spending increases, expanded entitlement programs, and now a welter of government bailouts and rescues. This year was particularly bad. The federal budget deficit for fiscal 2008 hit $455 billion, up from $162 billion last year. That figure does not include the cost of the Emergency Economic Stabilization Act of 2008, which has an initial price tag in the hundreds of billions of dollars. In fairness, some of that money presumably will come back to the Treasury, since the new rescue-related sums will be used to acquire preferred stock, mortgages, and other assets that someday could be sold at a profit.

Staring into the deficit abyss (video)
David Walker, the former U.S. comptroller general, says the government has lost control of the national debt.

David Walker: Nobody is going to Bailout America

US Government Immorality Will Lead to Bankruptcy
(David Walker warned us - August 2007)

Fed interest rate cut may end up making matters worse
The Federal Open Market Committee’s half-point
cut in its Federal Funds target does not address
the leverage and credit issues in the banking system.
Indeed, by penalizing savers it worsens the economy’s supply/demand imbalance for funding. The cut doesn’t solve short-term problems and worsens long-term inflation worries. The banking crisis was not caused by over-high interest rates. Its two main causes were large and unknown housing-related and other credit losses and an urgent need for banks to reduce their leverage. Those problems are being addressed by huge Fed liquidity doses and plans to directly inject $250bn of new capital into banks via the Troubled Asset Relief Programme. Reducing already low interest rates will have no significant effect in alleviating the causes further.

House of Cards
You thought the housing crisis was bad? You ain’t seen nothing yet.
The Mess - Nationwide, two million homes sit vacant. Home sales are at a nine-year low. Former Treasury Secretary Larry Summers says that housing finance has not been this bad since the Depression. We still don't know the full extent of the colossal subprime rip-off, but a recent Bank of America study did some guesstimating on the scale of the consequences of the "credit crisis." The meltdown in the U.S. subprime real estate market, the bank said, had led to a global loss of $7.7 trillion dollars in stock market value since October.

Don't Look Now, There's a Huge Wave of Inflation Coming Toward Us
The time has come to review how back in 2005-2006 George W. Bush -- now increasingly perceived as another Herbert Hoover -- picked two top appointees who helped steer him towards his fateful 2008 rendezvous with a second Great Crash. One of them, a top level financier, insured that Washington's eventual rescue policies would concentrate on trying to bail-out Wall Street while ignoring the gnawing cancer of its warped ambitions and financial malpractices. The second, a professor, misapplied dogma about how to guard against severe downturns into a disastrous attempt to refight the onset of the 1930s depression -- his academic specialty. He did not understand the very different context of our own era of cyber-spatial financial recklessness and gathering global inflation.

Money for (Almost) Nothing $$
Though it often doesn't seem like it, the world is making progress against financial panic. Capital -- public and private -- is now flowing into the banking system, reducing the risk of runs or a crash. Though we're heading into a recession, how deep the downturn becomes will depend on the policy choices our leaders make. Many of those choices rest with the Federal Reserve, whose Open Market Committee cut its target federal funds rate by 50 basis points again yesterday to 1%. This was neither surprising nor all that meaningful, given that the actual fed funds rate has been trading well below the target rate for much of the last month. The Fed has been flooding the world with dollar liquidity, expanding its balance sheet in record fashion along the way. The nearby chart shows the magnitude of the Fed's monetary intervention.

Global Economic Crisis in Perspective -
USA - Inflation nation; Hyperinflation CAN happen here because we're printing money like it's going out of style!

Banks want credit card bailout next
Banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills. So they have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy. The proposal was pitched to federal regulators by the Financial Services Roundtable, which represents more than 100 big banks and other financial companies, and the Consumer Federation of America. The pilot program could involve as many as 50,000 people and would allow lenders to reduce by as much as 40 percent the amount of credit card debt those people owe.

Bank deals sought on unpaid credit-card debt
Big banks unite with consumer advocates
to seek OK to cut some consumers' liabilities
With defaults on credit-card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit-card bills. Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit-card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit-card debts in bankruptcy. The new pilot program, which the banks hope will become permanent, could involve as many as 50,000 people struggling with credit-card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent.

UPCOMING GOLD DEFAULT
The gold & silver futures markets are each hurtling down a dangerous path toward possible default. The artificial paper price has created enormous physical demand, and hampered supply production, if not delivery. The gap between the corrupted paper price and the legitimate physical price in actual trading markets has grown sharply, enough to force a breakdown like in any distorted market. When December contracts in gold & silver are demanded to be satisfied via delivery of the metal, we could easily see the COMEX fail in delivery. A default is highly likely. . .
. . . .The financial market crises, in numerous arenas, have come in large part because the banking authorities have intentionally provided rescues only for New York investment banks and other big financial firms. Up to a month ago, the USFed had sterilized most injections into the Wall Street centers of the banking system by denying the mainstream bank system via liquidity drains. Drain the national system where households work and live, and provide subsidies for the financial crime syndicate. This is a betrayal of government to the people. Elite gain came at mainstream expense. Attention has gained on the misuse, false promises, and other misdirection of USGovt funds even in the bailout packages. The big banks are ordered not to lend, but to acquire smaller banks.

Gold, Faith and Credit
Like many people, I have been looking at the price disparity between the market prices of gold and silver bullion (averaging about $1,000 an ounce for gold and $16.50 an ounce for silver) versus the prices of gold and silver futures (about $730 and $8.90 respectively), and I am thinking to myself that I would love to get a piece of that luscious arbitrage action where I buy the gold and/or silver futures at a low price while simultaneously selling the same gold and/or silver bullion at a higher price, telling the buyers that they must pay in advance and then wait up to a few months for me deliver their gold and silver, pocketing a hell of a lot of money on the buy-sell spread and the interest the money earns until the futures contract matures so that I can take delivery and settle up, and then spend the rest of my life on a wild, hedonistic spree of spending, spending, spending!

Reality Dawning... For Gold
Despite the fact that the governments of the G-7 nations have injected some $3.5 trillion into their financial systems to prevent a meltdown of the world's financial system, stock markets are still reeling. With some stocks down by over 60 percent, many investors already have been through a disastrous erosion of wealth. The declines have not occurred in just a few days as they did in 1929. Rather, Government interventions, regulatory changes and bailouts have drawn out the fall in prices over a long enough time period to make it feel like a slow water torture. Nonetheless, the reality is that there has been a dramatic fall in the price of stocks, precipitated by a massive sub-prime induced deleveraging and the opening salvos of a credit crunch that will likely be with us for some time. After years of misplaced optimism, market participants are now coming to grips with some rather unpleasant recessionary prospects. So, despite government rescue measures around the world, markets continue to sputter.

Mortgage Plan May Aid Many and Irk Others
As the Treasury Department prepares a $40 billion program to help delinquent homeowners avoid foreclosure, it confronts a difficult challenge: not making the plan too tempting to people like Todd Lawrence. An airline pilot who lives outside Norwich, Conn., Mr. Lawrence has a traditional 30-year mortgage that he has no trouble paying every month. But, thanks to the plunging real estate market, he owes more on his house than it is worth, like millions of other people. If the banks, which frequently lent irresponsibly, and many homeowners, who often borrowed irresponsibly, are getting government assistance, Mr. Lawrence says he believes sober souls like himself are also due a break.

Bush Administration Proposing Plan to Bail Out Delinquent Homeowners
The Bush Administration is considering a plan that could keep as many as 3 million homeowners who are behind on their mortgages from losing their houses, The New York Times reported today (Thursday). According to the newspaper report, this program would be the most sweeping and direct government initiative aimed at home-loan borrowers since the financial crisis started last year. As proposed, the federal government would incur half the loss on a home loan if the mortgage company that controls the loan agrees to lower the borrower’s monthly payment for at least five years. On any given loan, the mortgage company would reduce the payment borne by the homeowner by writing off part of the loan balance, reducing the loan’s interest rate or changing other loan terms, sources told The Times.

White House split internally on foreclosure aid
The White House on Thursday tried to tamp down a push from inside the administration for a program that would spend taxpayer money on helping homeowners avoid foreclosure. White House press secretary Dana Perino asserted that some within the government were trying to build support for the plan through leaks to the media. "I've seen this happen in Washington before where people float out ideas in the media," she said. "What I can tell you is that we're in the middle of analyzing several different proposals."

U.S. Commercial Paper Soars Most on Record as Fed Becomes Buyer
Corporate borrowing in the commercial paper market soared the most on record after the Federal Reserve began buying the debt directly from issuers. U.S. commercial paper outstanding rose by $100.5 billion, or 6.9 percent, to a seasonally adjusted $1.55 trillion for the week ended Oct. 29, the Fed said today in Washington. It was the first gain in seven weeks, reversing a 20 percent decline during the previous six weeks. Financial paper led this week's gain, rising $69.4 billion, or 12.4 percent, to $628.8 billion.

Goldman Sachs ready to hand out £7bn salary and bonus package... after its £6bn bail-out
U.S. investment bank Goldman Sachs HQ which has set aside £7bn for bonuses and salaries this year
Goldman Sachs is on course to pay its top City bankers multimillion-pound bonuses - despite asking the U.S. government for an emergency bail-out. The struggling Wall Street bank has set aside £7billion for salaries and 2008 year-end bonuses, it emerged yesterday. Each of the firm's 443 partners is on course to pocket an average Christmas bonus of more than £3million.
The size of the pay pool comfortably dwarfs the £6.1billion lifeline which the U.S. government is throwing to Goldman as part of its £430billion bail-out. As Washington pours money into the bank, the cash will immediately be channelled to Goldman's already well-heeled employees.

Marc Faber on Ben Bernanke and market interventions.
Predicts a 3-6 month rally with a bout of deflation, followed by global inflation.

Hey, Wall Street: Worst Yet to Come
With the Dow up another 190 points yesterday, investors are not exactly in capitulation mode. Far from it. So let us take a moment, amidst a veritable August ‘29 of complacency, to spell it out for Wall Street and the punditry: Get REAL, you blithering imbeciles! The bloody tide is about to be unleashed – so stop with the bullish hubris already, okay!? And what, you might ask, do we mean when we speak of “the bloody tide”? Just this: We are all going to wake up one day soon, the largest banks in the world will be history, and the stockmarket will be shutting down for a month. Think of it as Bear Stearns writ large, with taxpayers as the blitzed shareholder. Are you prepared?

Some Banks May Tell U.S. to Keep Bailout Cash
Talk about biting the hand that feeds you. The American Bankers Association complained on Thursday that bankers around the country were “extremely upset” about how the Treasury Department was trying to offer them billions of dollars in fresh capital. “These bankers believe they are being asked — in some cases pressured — to participate in a program they did not want and do not need,” wrote Edward L. Yingling, president of the American Bankers Association, in a blistering letter to the Treasury secretary, Henry M. Paulson Jr. Saying he had “deep concerns with the lack of clarity about the program,” Mr. Yingling said the confusion had grown sharply this week over what the government’s purpose was.

Fed's Yellen Says Recent Economic Data "Deeply Worrisome"
San Francisco Federal Reserve President Janet Yellen said that although inflation risks have diminished greatly, recent economic data is "deeply worrisome". Speaking at an event hosted by the University of California at Berkley and UCLA, Yellen said that loan rates would be substantially higher without the Federal Reserve's aggressive rate cuts.

U.S. Borrowing Needs to Reach $2 Trillion in 2009, Goldman Says
The U.S. government's borrowing needs will almost double to $2 trillion this fiscal year, prompting the Treasury to revive three-year notes and hold more frequent sales of 10- and 30-year debt, according to Goldman Sachs Group Inc. The Treasury should consider holding so-called reopenings of two-year note auctions on a monthly basis because demand for the maturity is strong enough to support sales of $50 billion to $60 billion a month, Goldman said in a note dated Oct. 29. The Treasury could, for example, hold an initial $40 billion sale and a $15 billion reopening two weeks later, it said. The Treasury sold $34 billion in two-year notes this month.

A New Bretton Woods
Economies of scale
To restore stability to the global financial system (and therefore to trade and the ecosystem) we need a "great transformation" to reverse the most pernicious elements of the failed "globalisation" experiment. Three pillars are vital to any new international architecture. . . . Since Nixon unilaterally dismantled Bretton Woods in 1971 and defaulted on the US government's commitment to meet its obligations in gold; and since the introduction of legislation to liberalise credit creation, financial markets have been liberated from social, political, and environmental constraints. As a result the world was turned upside down. The finance sector no longer acted as servant to the economy, but instead became its master. The tail wagged the dog.

Questions for nations left out of magic circle
Moves by the Federal Reserve and International Monetary Fund to make dollars available quickly and without conditions to a select group of emerging markets raise questions about the impact on those left out of the schemes. The initial response was very positive, with a broad-based rally across emerging market stocks and bonds, as investors took the view that more support for emerging markets in general was good for all of them. But there were some signs of differentiation in the currency market between those that now have access to Fed dollars – Brazil, Mexico, South Korea and Singapore – and those that do not.

Pivate Equity Is the Next Shoe to Drop
"I've been in a hurry all my life. I've been in a hurry to succeed, and in a hurry to prove myself." -- Henry Kravis
The casualty count in the world of finance is about to expand in scope. At the epicenter of the leveraged binge of the last decade were the private equity shops' "deals." These firms funded their "products" to individuals, endowments, hedge funds and to other institutions around the world with the promise of turning waste into gold.

Government and Banking, Who Rules?
The events of the last two weeks have presented enormous ‘moral’ hazards for governments and the banking industry. When we call them moral hazards we are not talking about biblical morality, but the principles behind government [Democracy] and banking [Profit and Prudence]. The effective takeover of the major banks, on both sides of the Atlantic, has brought the interests and politics of government into banking, a place ill suited to such governance. You may well say that the government shareholding does not represent such interference. If that is the case then there was no point to the purchase of such a shareholding, except the hope of an eventual profit.

Taming derivatives
Can the private sector clean up credit default swaps?
It's conventional wisdom that credit default swaps - the $55 trillion in derivatives contracts widely blamed for bringing down AIG - need oversight. But as Washington debates how to regulate what Senator Tom Harkin (D-Iowa) calls "casino capitalism," exchanges like the CME and NYSE are proposing their own free-market solution. Companies that run exchanges are proposing to set up clearinghouses for these contracts. Within a week of each other in October, both the CME Group, partnering with hedge-fund giant Citadel, and the Intercontinental Exchange announced systems for clearing and settling CDS. By the end of the month, three more exchanges laid out competing plans.

Get Ready For 'Stag-Deflation'
Back in January, I argued that four major forces would lead to a risk of deflation-- or "stag-deflation," where a recession would be associated with deflationary forces--rather than the inflation that mainstream analysts have worried about. They were: (1) a slack in goods markets, (2) a re-coupling of the rest of the world with the U.S. recession, (3) a slack in labor markets, and (4) a sharp fall in commodity prices following such U.S. and global contraction, which would reduce inflationary forces and lead to deflationary forces in the global economy. How has such argument fared over time? And will the U.S. and global economies soon face sharp deflationary pressures? The answer: Deflation and stag-deflation will, in six months, become the main concern of policy authorities.

Fed Making A Mistake? (video)
Discussing whether today's Fed decision continues a flawed strategy, with Bill Fleckenstein Capital and the Fast Money traders.

Gold Heads for Worst Monthly Slump in 25 Years on Dollar, Oil
Gold fell for the second day in Asia, extending a monthly drop that may become the worst in more than 25 years, as a stronger dollar and declines in crude oil reduced its appeal as an alternative asset. Gold tumbled by more than 15 percent this month, the largest plunge since February 1983, according to Bloomberg data. Oil has slumped 37 percent while the U.S. dollar index against six major currencies gained 7.3 percent this month.

Paulson's Swindle Revealed
The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

Fed Adds $21 Billion to Loans for A.I.G.
The American International Group said Thursday that it had been given access to the Federal Reserve’s new commercial paper program, allowing it to reduce its reliance on a costlier emergency loan from the Fed. The company said it would be able to borrow up to $20.9 billion under the new program, raising its maximum available credit from the Fed to $144 billion under three different programs. The credit includes an earlier emergency loan of $85 billion from the Fed that carries a much higher interest rate. A.I.G.’s big borrowings underscore the company’s bewilderingly rapid decline. When it suddenly faced a cash crisis in mid-September, the original estimate of the amount it needed was just $20 billion. A few days later, the Fed stepped forward with its $85 billion credit line. And now, the stunning size of that original bailout has grown by almost 70 percent.

Prudential's Books Hide $500 Million Loss
Prudential Financial shares were trading sharply down this afternoon after the insurer held its earnings call to explain the $166 million loss for the third quarter. Prudential's shares had opened at $35.25 in early trading on Thursday, and rose 7% in early trading. Shares then went as low as $26.11 before closing at $28.87, losing 18% for the day. It is not clear what drove the sudden drop, but clearly the market was unsettled by the lack of advice about future earnings, together with a reluctance of management to provide details about any excess capital reserves.

Ron Paul on Eddie Burke Show 10/30/2008

GMAC may become bank, eyes massive debt
GMAC LLC, the money-losing auto finance and mortgage provider, on Thursday confirmed it was seeking to become a bank holding company, and said it plans to overhaul and slash its debt load, barely four months after completing a $60 billion refinancing package. The Detroit-based lender said it was in talks with federal regulators about becoming a bank holding company, which would make it easier to participate in U.S. Treasury Secretary Henry Paulson's $250 billion bank recapitalization plan.

Bailout bill might pay billions in legal fees
Law firms could get $5.2 billion in legal fees from the U.S. government's bank-bailout bill, according to a survey by BTI Consulting Group. Lawyers would earn the fees over the next seven to 10 years by helping banks buy and sell assets under the Troubled Asset Relief Program, or TARP, as the $700 billion bailout bill is known.

A Real Election Choice On The United Nations
When Barack Obama said he'd like to "spread the wealth around," he was widely understood to be talking about redistributing income within the U.S. But there's another arena in which Obama fans are waiting impatiently for the promised wealth-spreading--the United Nations. Officially, under its 1945 charter, the U.N. is a neutral body that takes no sides in U.S. politics. But a recent story in the Washington Post, headlined "At the U.N., Many Hope for an Obama Win," reports the same drumbeat I've been hearing from the U.N.'s New York headquarters. There's little love lost there for John McCain, who replies to the U.N.'s chronic scandals and tyrant-friendly tilt by proposing some competition, via a League of Democracies. Obama, by contrast, promises to give the U.N. a bigger role in U.S. foreign policy and many more American tax dollars than the $5 billion or more per year that currently accounts for roughly one-quarter of the total U.N. budget--already the biggest share by far among the U.N.'s 192 member states.

Marching toward a dark river
Since the Obama phenomenon has no precedent in American politics, we must look to folk tales to understand it.
How could a man with no record, no experience, no known convictions and no known core beliefs so mesmerize the millions to turn themselves, their children and their country over to a man armed only with neatly pressed pants, a good shoeshine and a seductive voice? We don't even get the salesman's smile. he Pied Piper of Hyde Park is clearly the direct descendant of the Pied Piper of Hamelin. Both share the gift of what a fully credentialed psychology professor calls "a unique ability to identify with children." The early piper lured the children of Hamelin to their deaths in the river when the burghers refused to pay him for ridding their village of rats.

Yeah, sure . . . let the American taxpayers foot the bill for the whole world!
What about that old thing we defeated long ago - taxation without representation?. . .

America must lead a rescue of emerging economies
The global financial system as it is currently constituted is characterised by a pernicious asymmetry. The financial authorities of the developed countries are in charge and they will do whatever it takes to prevent the system from collapsing. They are, however, less concerned with the fate of countries at the periphery. As a result, the system provides less stability and protection for those countries than for the countries at the centre. This asymmetry – which is enshrined in the veto rights the US enjoys in the International Monetary Fund, explains why the US has been able to run up an ever-increasing current account deficit over the past quarter of a century. The so-called Washington consensus imposed strict market discipline on other countries but the US was exempt from it.

Venture capitalists not upbeat on economy
Silicon Valley is in for a long downturn, according to some of the area's top venture capitalists, and the depth of the tough times is still unknown. "There's been a real big change in the world, and I don't quite understand it," said John Doerr, a partner in Kleiner Perkins Caufield & Byers in Menlo Park, one of Silicon Valley's oldest and best-known venture capital firms. Doerr spoke in Palo Alto Wednesday on a panel sponsored by VentureBeat, a venture capital blog. "All the world's global financial assets ... have declined by 40 percent - that's absurd," he said. "There's something going on here other than subprime mortgages."

Intel chief sees growing potential for conflict
The risk of international conflict will increase in the next two decades as China, India and Russia become major powers and competition for resources grows, the top U.S. intelligence official said on Thursday. The next 20 years of transition to a new international system will be fraught with risks and challenges with the rise of emerging powers and a historic transfer of wealth and economic power from West to East, U.S. Director of National Intelligence Mike McConnell told an intelligence conference in Nashville, Tennessee. "Strategic rivalries are most likely to revolve around trade, demographics, access to natural resources, investments and technological innovation," McConnell said in a transcript of a speech provided by his office.

A $50 Billion Bailout in Russia Favors the Rich and Connected
Companies belonging to two of Russia’s richest men are among the first recipients of a $50 billion bailout program. The project, like so much else here, is opaque in its details but has resulted in some of the nation’s oil windfall being funneled to well-connected Kremlin insiders. Under the plan being put in motion this week, money is channeled through the state development bank Vneshekonombank, known as VEB, whose chairman is Russia’s prime minister, Vladimir V. Putin. The stated goal is to help Russian industrialists refinance loans to Western banks, with aid flowing quickest to those companies at risk of having assets seized as collateral by foreign owners.

Beaten down, American consumers burrow deeper
American consumers clobbered by housing, credit and financial fallout
Beaten down and watching their wealth shrink, Americans are burrowing ever deeper -- cutting back on spending and spelling more trouble for the sinking economy. One of the biggest problems saddling the country is damage from the housing market's collapse. Mounting foreclosures, falling home prices and soured mortgage investments are taking their toll on both individuals and businesses alike. Federal Reserve Chairman Ben Bernanke, who is scheduled to speak via satellite Friday at a Berkeley, Calif., conference on the mortgage meltdown, is likely to call on government officials and lawmakers to keep working on ways to provide more relief.

Economy Shrinks With Consumers Leading the Way
Less than a week before Americans go to the polls to select a president, the government reported on Thursday that the economy contracted from July through September. In a stark indication of widening national distress, consumer spending dipped for the first time in 17 years. Economists said the drop in economic activity — with the gross domestic product shrinking at a 0.3 percent annual rate — presages more bad news in the months ahead. The impacts of a now-global financial crisis are continuing to squeeze companies and impede investment, causing more layoffs and austerity, while prompting Congress to consider a fresh round of spending aimed at stimulating commerce.

Cash-strapped Americans raiding their 401(k)s
Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement plan providers say. Many in the field expect more borrowing in 2008, as consumers struggle with tighter credit and potentially higher mortgage payments. “I don’t think it’s a groundswell but it’s enough to be noticed,” said RickMeigs, president of 401khelpcenter.com, which provides information on 401(k)plans. Increased borrowing on 401(k)s could be because of the credit crunch and slumping housing prices. To be sure, the indications are preliminary; it’s too early to say why it’s happening, according to the Hartford Financial ServicesGroup. Borrowing against your retirement nest egg may seem tempting but it presents a host of problems. It could significantly reduce your savings at retirement and create an expensive tax bill if you can’t repay the loan when it’s due.

Suddenly, Exxon Is Challenged
Exxon Mobil’s chief, Rex Tillerson, might want to encase the company’s third-quarter earnings release in Lucite — because it’s unlikely to be repeated. While the oil giant raked in a $14.8 billion profit, a new record for a United States corporation, it must now consider buying a rival at home to protect itself from a worsening environment toward Big Oil abroad. The days of $145 a barrel are over, at least for the foreseeable future. With oil now trading at around $65 a barrel, it will become harder to obscure the industry’s biggest challenge: declining reserves and increasingly inhospitable host nations.

Oil falls below $65 on US contraction
Oil falls below $65 in Asia on US economic contraction, fears of demand slump
Oil prices slipped below $65 a barrel in Asia Friday, extending declines after data showed the U.S. economy contracted in the latest quarter, reinforcing expectations of a prolonged slump in demand. Light, sweet crude for December delivery was down $1.44 to $64.52 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract overnight fell $1.54 to settle at $65.96. Oil prices have fallen about 55 percent since peaking above $147 a barrel in mid-July.

US motor industry: The great breakdown
Such is the severity of the downturn in the global car industry that US manufacturers are now pushing for their own state bailout. Why stop at the banks? Now governments around the world are pouring taxpayer money in to bail out loss-making financial institutions, it is getting harder to argue against subsidies, loans, guarantees and other forms of government assistance for other industries, too – particularly since the economic pain is now being felt far from Wall Street. Which is why Rick Wagoner, chief executive of General Motors, the largest US carmaker, packed his suitcase for Washington and headed to the capital again this week. He is leading a lobbying push aimed at tapping taxpayers and staving off the bankruptcy of the loss-making company. GM's coffers are being depleted at a rate of $1bn a month, and will run dry by the end of next summer. Little wonder its shares have touched levels not seen since it emerged from the Great Depression.

Arizona car sales: Bad to worse
Charting the rise and fall of car and truck sales is a simple way to gauge the health of the economy. When we feel good about our prospects, we buy. When fearful, we hold back. This year, a huge run-up in gas prices was followed by weeks of financial crises. Combined with uncertain job prospects and declining wealth, it created one of the toughest markets in decades. Vehicle sales have dropped so sharply that one analyst wonders how many people are just going to hold on to their vehicles until they fall apart. In September, taxable sales of new and used motor vehicles were down 29.8 percent from a year earlier, the Arizona Department of Revenue reported Thursday.

Auto aid pleas mount; Treasury says no GM talks
Six U.S. governors and a group of chief executives on Thursday urged the Bush administration in a letter to aid the embattled auto industry while the White House rebuffed a request for direct support of a merger between GM and Chrysler. An administration official said the focus instead would be on speeding of $25 billion of low-interest loans for factory retooling, a step the industry's allies say does not go far enough to reverse a deepening industry crisis. Meanwhile, auto parts makers worried that a merger would eliminate vehicles that they supply, and a prominent industry consultant said GM could up to 40,000 Chrysler jobs and 16 of its 26 models.

Hope and Fear in Motown
Fall in this city has always felt a bit like spring elsewhere. It is traditionally the season of fresh starts for the hometown industry, a time when the auto companies get a jump on the calendar and begin shipping next year’s models to dealers. There were some new bright spots this fall, too — or at least brighter ones. The once-grand Book Cadillac Hotel, long a dilapidated eyesore in the heart of downtown, reopened after a $200 million renovation.

Why Detroit is not Wall Street
There is a sense of déjà vu about Detroit. In the summer of 1979, Chrysler, having staked its business on gas-guzzling cars, was in deep trouble and angling for a government bail-out. Today, Chrysler finds itself in the same tough spot, but this time it has been joined by General Motors and Ford. Three decades ago, Chrysler received $1.5bn in loan guarantees. The conditions attached were harsh. Jobs were cut and creditors suffered. With hindsight, the bail-out may have been a mistake and bankruptcy a better option. Today, however, there should be no doubt that a second bail-out would be wrong. Politically, the issue now is even more sensitive because governments around the world have just bailed out the banks. Why should well-heeled bankers be saved when they caused the crisis while blue-collar workers are left to their fate?

Motorola to Cut Jobs and Delay Spinoff
Motorola said it would shed 3,000 jobs, or slightly less than 5 percent of its work force, and delay a planned spinoff of its mobile devices unit as it spends 2009 trying to develop smartphones that will excite the public. The slow economy and waning interest in its lineup of cellphones will make the job even harder. Sanjay K. Jha, who took over as chief executive of the mobile devices business in August, warned investors on Thursday that a turnaround was more than a year away.

Sun Microsystems Reports $1.7 Billion Loss and Falling Sales
With falling revenue, problematic acquisitions, product slips and a stock that has lost three-quarters of its value in the last year, Sun Microsystems is finding that Wall Street is losing patience. The company, which makes computer servers, reported dismal sales and a large write-off Thursday — but otherwise announced no changes in a strategy that has so far failed to restore the luster that Sun had during the dot-com era. "Sun is a problem child, and the problem child has to change," said Brent Bracelin, a hardware analyst for Pacific Crest Securities.

Who shrank the economy? Food prices dent U.S. growth
Inflation ate deeply into U.S. consumer spending in the third quarter, doing more harm to the economy than either slumping car sales or housing, but recent commodity price falls may support growth going forward. This does not mean that the U.S. economy is stronger than it looks. The gross domestic product shrank by 0.3 percent between July and September, according to annualized data released on Thursday, and many economists predict a recession lasting until mid-2009.

The Rothschilds control the gold market,
. . . and about everything else of monetary value in the world

Sarkozy pressures banks to increase credit
The mandate to increase credit to customers built into the French government's financial bailout plan could be problematic for banks, a noted economist said. Laurence Boone of Barclays Capital said the mandate to increase credit 3-4 percent a year "looks demanding" within the context of a declining economy, The Financial Times reported. "We expect the economy to fall in 2009 by 0.5 per cent. In that context, the 3-4 per cent lending target looks demanding as corporate and consumer demand is likely to fall sharply," he said.

U.S. economy contracts; Japan warns of "harsh storm"
The U.S. economy contracted in the third quarter as the financial crisis raged, while Japan and Germany said they would spend billions of dollars to provide a cushion against a deep global recession. The spending measures would complement a series of interest rates cuts, including those from China, Norway and the United States on Wednesday. Japan may cut rates on Friday and the European Central Bank, Britain and Australia are expected to follow next week, coming on the heels of data that showed a rapid deterioration in major economies.

The Great Obama Swindle of 2008
I have become 100% convinced, to a moral certainty, beyond a reasonable doubt, that Barack Obama is not only not a "natural born citizen" as required by the U.S. Constitution to be president, but that he was not even born in the USA, not born in Hawaii, probably in Kenya, never naturalized. If he is elected, he will be the UnConstitutional President from the moment he takes the oath of office, the first president who is not a citizen of the United States. Why I am so sure? . . .

Ruling to come on Obama birth case
A Warren County magistrate said he’ll decide tomorrow whether Ohio Secretary of State Jennifer Brunner has to get proof that Barack Obama was born in the United States. David M. Neal, a Turtlecreek Township resident who runs a political Web site, filed suit last week, saying state and federal government leaders have failed to verify that Obama was born in Hawaii, instead of Kenya. The U.S. Constitution requires presidents to be natural-born citizens who are at least 35 years old. Neal says he’s part of a nationwide grass-roots movement that has questioned Obama’s birthplace and qualification to run for president. Neal’s complaint asserts that Obama’s Internet site does not disclose the name of the hospital where Obama was born and that an original long version of the birth certificate should be made available before the election.

Supremes asked to halt Tuesday's vote
Constitutional crisis feared over Obama's 'qualifications'
The U.S. Supreme Court is being asked to help the nation avoid a constitutional crisis by halting Tuesday's election until Democratic presidential nominee Barack Obama documents his eligibility to run for the top office in the nation. Democratic attorney Philip Berg had filed a lawsuit alleging Obama is ineligible to be president because of possible birth in Kenya, but as WND reported, a federal judge dismissed the complaint claiming Berg lacks standing to bring the action. The 34-page memorandum that accompanied the court order from Judge R. Barclay Surrick concluded ordinary citizens can't sue to ensure that a presidential candidate actually meets the constitutional requirements of the office.

Yes, Barack Obama really is a Manchurian candidate
"If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide." – Abraham Lincoln
As Election Day rapidly approaches, many Americans are wondering why so many of their countrymen reject a genuine war hero with decades of experience, one whose pro-life, limited-government values pretty much reflect those of Middle America. Instead, these same countrymen are enthralled with a man who not only has no experience or qualifications for the job, but who is, in fact, the most radically left-wing major-party presidential candidate of our lifetime, having been mentored and supported for decades by terrorists (Ayers), communists (Davis), America-hating racists (Wright) and criminals (Rezko). Doesn't make much sense, does it?

OBAMA'S GAMBLE: POSSESSION NINE TENTHS OF THE LAW
While the disgraced mainstream media continues to ignore the constitutional crisis regarding Obama's birth certificate, we the people will not be deterred from getting the truth. . . . an individual applying for a hunting license in Virginia must provide a real birth certificate, but an applicant for president of these united States of America doesn't have to prove citizenship? Excellent point and it appears the states of the Union are willing to allow the DNC to defraud their citizens the right to vote for a legally eligible candidate because they fear riots by a certain race of voters. The idiom, possession is nine tenths of the law, is EXACTLY what Obama is gambling on right now. If he can stall until November 4th when vote fraud will "elect him" if he's the choice of the shadow government, Obama figures he's home free.

Jerome Corsi Interview about Obama Kenya Ties Part1

Jerome Corsi Interview about Obama Kenya Ties Part2

Jerome Corsi Interview about Obama Kenya Ties Part3

Obama Speaks Perfect Arabic??? WHO IS HE??

Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis. At a 2004 hearing see Democrat after Democrat covering up and attacking the regulations to protect Fannie Mae and Freddie Mac (their Cash Cows) that are now destroying our economy because the Democrats let them cheat.

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Archived Page Link
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Thurs 10.30.2008

Fed cuts interest rates to 1%
The US Federal Reserve cut interest rates by half a percentage point to 1 per cent on Wednesday and announced that it would lend $30bn each to central banks in Brazil, Mexico, South Korea and Singapore to lend on to local banks. The dollar loans, structured as currency swaps, are intended to help meet intense demand for dollars in these major emerging markets. The Fed’s rate cut takes US rates down to a level only once equalled before, amid the deflation scare of 2003 to 2004. It aims to offset the sharp recent tightening in credit conditions that threatens to plunge a weakening US economy into a recession.

U.S. Inflationary Interest Rate Cut Bullish for Gold
Gold rose nearly 2% yesterday as the Federal Reserve decreased the fed funds rate by 50 basis points to 1.00%. Other central banks internationally are also slashing interest rates and there is increasing speculation that the Bank of England and the ECB may cut interest rates aggressively as early as this week and possibly even today in an effort to prevent international financial contagion causing a sharp global recession. Silver surged 12% yesterday from extremely oversold levels – its largest jump since December 31st 1979. The dollar fell sharply yesterday and increasing speculation that the Federal Reserve may decrease interest rates to 0% will likely put much pressure on the overbought dollar in the coming weeks. Negative real interest rates and further cheap money policies and unprecedented digital money creation will likely be very inflationary in the coming months and have significant implications for the US dollar and the international monetary system.

Chinese Yuan the Worlds New Reserve Currency?
Things are getting worse. On Friday morning, futures trading was halted for the first time ever after futures plunged more than 5 percent. The sell-off came after another 500-plus down day on the Dow followed by steep declines in equities markets across Europe and Asia. Japan's benchmark index, the Nikkei, slipped more than 9.5 percent after Toyota and Samsung reported disappointing earnings. The news was equally bad in Europe where shares were battered across the continent on fears of a global recession.

GDP report is expected to show shrinking economy
Report due Thursday is expected to show gross domestic product shrank at rate of 0.5 percent
A day after the Federal Reserve slashed a key interest rate to a level seen only once before in the last half-century, the government is releasing its first look at how much the economy shrank in the July-September quarter. The report is expected to show that the country's gross domestic product declined by 0.5 percent. Many analysts believe the GDP -- the measure of the value of all the goods and services produced in the United States -- is falling further in the current quarter and will also fall in the first three months of next year. Two consecutive quarters of declining GDP fulfill the classic definition of a recession.

Peter Schiff BLOOMBERG 28 Oct 2008 Part 1
Consumer confidence - not pessimistic enough; unprecedented financing need on horizon for 2009; we're BROKE and printing money.

Peter Schiff BLOOMBERG 28 Oct 2008 Part 2
We've borrowed and spent ourselves into bankruptcy. . . dollar will not hold value

Economy shrinks in third quarter, sign of recession
The economy jolted into reverse during the third quarter as consumers cut back on their spending by the biggest amount in 28 years, the strongest signal yet the country has hurtled into recession. The broadest barometer of the nation's economic health, gross domestic product, shrank at a 0.3 percent annual rate in the July-September quarter, the Commerce Department reported Thursday. It marked the worst showing since the economy contracted at a 1.4 percent pace in the third quarter of 2001, when the nation was suffering through its last recession.

Fed's dilemma over zero rate looms closer
Yesterday's US interest rate cut, as well as the expectation of further reductions in December, puts the Federal Reserve within sight of the "zero bound" - a fed funds rate of zero. What happens then? If the Fed gets close to zero and believes it needs to ease monetary policy further, it will start to target the risk-free rate at periods of longer than one day - for instance, three-month or even two-year rates. But before doing so it will redouble its efforts to hammer down risk spreads in credit markets in conjunction with further fiscal stimulus. If these efforts are successful, the US central bank may not need to target longer term risk-free rates. The debate about next steps for policy is closely tied to the assessment of the risk of deflation - that falling asset prices and a deep recession could result in falling consumer prices.

T-bill demand rises, interbank lending rates slip
T-bill demand ticks higher as Fed lowers rates; interbank loan rates slip again
Investors again sought the security of Treasury bills Wednesday, uncertain that the Federal Reserve's interest rate cut will do much to boost the flagging economy anytime soon. The three-month T-bill, considered one of the safest assets around, saw its yield slip to 0.61 percent from 0.74 percent late Tuesday. A drop in yield indicates an uptick in demand. Longer-term Treasurys were mixed after the Fed said it was lowering the fed funds rate half a point to 1 percent, as expected.

Bailout Banks' Bonuses Questioned
CNBC's Dylan Ratigan, host of 'Fast Money' and 'Closing Bell,' gives Debra Borchardt the lowdown on banks that are receiving federal aid and how they'll handle bonuses this year.

Wall Street Won't Surrender Bonuses Amid Outcry, Veterans Say
Wall Street's chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say. Odds that Wall Street will forgo the payouts are "slim to none," said John Gutfreund, 79, president of New York-based Gutfreund & Co. and the former chief executive officer of Salomon Brothers Inc. "They're going to have to be a little bit sensitive because politicians, whether they like it or not, are part of their lives now."

Bailed out firms are doling out dividends
A large share of the U.S. federal bailout funds allocated to banks will end up in the hands of the banks' shareholders, much to Sen. Charles Schumer's dismay. "The whole purpose of the program is to increase lending and inject capital into Main Street. If the money is used for dividends, it defeats the purpose of the program," said Schumer, D-N.Y. Schumer is requesting the government suspend dividend payments for banks that participate in the bailout plan, The Washington Post reported Thursday. In the next three years, 52 percent of the bank's bailout allocations could wind up in the hands of shareholders, the Post said.

Billions in Bank Rescue Funds are Fueling Buyout Deals, and not
the Increase in Loans That Would Help Ease the Financial Crisis
While the U.S. government’s plan to invest $250 billion into U.S. financial institutions has been billed as a strategy that will bolster the health of the banking system and also jump-start lending, the recapitalization plan is likely to have a secondary effect – one that whipsawed U.S. taxpayers likely won’t be very happy to learn about. Those billions are a virtual lock to set off a merger tsunami in which the biggest banks use taxpayer money to get bigger – admittedly removing the smaller, weaker banks from the market, but ultimately also reducing the competition that benefited consumers and kept the explosion in banking fees from being far worse than it already is.

Gold Insurance Against Continuing Financial Meltdown
Wow! Are you excited?
The entire world is going through a generational and even a once in a hundred year cyclical change right before our eyes and we are witness to these historical events. All of these gold and financial sites for over 10 years have been predicting that this financial meltdown was coming. And don't fool yourself here. The most important element for survival for those who survived the 1930s were those who were out of debt and had assets that were paid for free and clear. And what about those feet of clay?

Dollar: good as gold?
Until April 15, 1971, the United States dollar was as good as gold. While ordinary citizens couldn't own gold in 1971, foreign central banks could trade in their dollars and receive gold, at a fixed price of $35 an ounce. Then as the United States "printed" record amount of dollars to pay for the Vietnam War, those central banks redeemed $22 billion worth of gold in the first six months of 1971. President Nixon slammed the gold window shut. The world's currencies then went on a "floating exchange rate" -- with the dollar as the linchpin. And behind the dollar was the "full faith and credit" of the United States.

Gold Dips, Stocks Jump Despite US Recession Data;
Gold Mining Supply "in Crisis" as Government Debt Swells Worldwide
THE SPOT PRICE of physical gold slipped from a seven-session high for Dollar and Yen investors at the New York opening on Thursday, as world stock markets extended a four-day rally despite confirmation that the US economy has joined the UK in sliding towards recession. After the Federal Reserve slashed US interest rates to 1.0% as expected on Wednesday, Tokyo's Nikkei index today leapt another 10% as the Japanese currency retreated further from its strongest showing this decade.

Gold coins in short supply, command 50% premium
2Popular gold and silver coins such as the one-ounce gold and silver American Eagles produced by United states Mint is not available for sale in the market and those who sell do it at a premium of 50 percent or more on spot price, according to Michael Maroney, Vice President, Monex Deposit Company. "One-ounce and smaller gold and silver coins . . . ten-ounce and hundred-ounce silver bars . . . ten-ounce ingots and 32.15 ounce "kilobars" of gold have virtually disappeared from the marketplace," explains Maroney. "They're in private hands now, and people are holding onto them, unwilling to sell them back into the market."

Mints struggle to meet metals demand
Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any, that is. Demand for physical gold and silver is gobbling up product at nearly every mint around the globe and in Canada has the Royal Canadian Mint allocating its supply among its distributors, who in turn are limiting the number of coins they sell to dealers, who sell to consumers. "Virtually every mint in the world is sold out of product and as fast as we can produce it, all of us, there is more demand," said David Madge, director of bullion services at the Royal Canadian Mint.

A Bull in a Silver Shop
The most interesting news item recently was found on the cover of the Financial Times newspaper, where we learn that a guy named Lahde "made tens of millions of dollars from betting against the financial and property sectors during [the] past two years", and he now wanted to thank "the low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA" who made it all possible for him to find enough suckers. He noted that "These people who were often truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the aristocracy," he says, "only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America."

Question for A.I.G.: Where Did the Cash Go?
The American International Group is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October. Some analysts say at least part of the shortfall must have been there all along, hidden by irregular accounting. "You don’t just suddenly lose $120 billion overnight," said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz. Mr. Vickrey says he believes A.I.G. must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse and received an $85 billion emergency line of credit by the Fed. That loan was later supplemented by a $38 billion lending facility.

Greenspan Slept as Off-Balance-Sheet Toxic Debt Evaded Scrutiny
As George Miller welcomed 60 bankers to the chandeliered Charlotte City Club one evening in September, the focus was on more than the recent bankruptcy of Lehman Brothers Holdings Inc. From their 31st-floor perch, members of the American Securitization Forum, which Miller leads, fretted about the future of their $10.7 trillion industry.

Asian shares surge, South Korea soars record 12%
Global stock indexes soared Thursday, buoyed by new efforts the world's central banks are taking to battle the slumping global economy. In Asia, major markets posted double-digit percentage gains. Japan's Nikkei index climbed 10% while Hong Kong's Hang Seng index surged 12.8%. In Seoul, the KOSPI shot up a record 12%. U.S. futures, which give an indication of how markets may open when trading begins in New York, were sharply higher. European shares posted more modest gains. In midday trading, Britain's FTSE 100 was up 1.6%. The CAC-40 in France was up about 1.3% and Germany's DAX was 4.3% higher.

U.S. pulls the plug on the world
The U.S. administration has prompted a huge surge
in the U.S. dollar, which may help refinance its financial
sector. The cost is a currency whirlwind that threatens the
collapse not just of banks and companies but entire countries.
In the past week the financial crisis, which began in banking and spread to stocks, has careered into the currency markets. The U.S. actively decided back in September 2008 to shut down the investment banks that lend to the biggest professional investors. This has caused those investors to sell anything and everything and to settle their trades. The result was a whirlwind of liquidation. Korean won, Turkish lira, Brazilian real, British pounds and commodities from oil and metals, all were sucked into the downdraft. Like a speeding truck heading home, dollar investors left a vacuum in their wake, a vortex of dust, where there had been steadily growing emerging market economies.

Gov't prepares $500 billion loan help plan for 3 million troubled borrowers
The government is considering a plan that would help around 3 million homeowners avoid foreclosure, sources briefed on the matter said. A final deal had not been reached as of Wednesday afternoon and negotiations could still fall apart, but government agencies were contemplating using around $50 billion from the recently passed bailout of the financial industry to guarantee about $500 billion in mortgages. The plan could include loan modifications that would lower interest rates for a five-year period, according to two people briefed on the plan, who asked not to be identified because details were still being worked out and the plan was not yet public.

Precious Metals Paradox
Demand is up, but prices are...down? Don't be fooled:
The market dip is the result of forced liquidations.
Gold has legs. So does silver.
he best place to find a one-ounce Canadian Maple Leaf, U.S. Golden Eagle, or a 100-ounce gold or silver bar is on eBay, but buyers had better be prepared to pay premiums of $3 to $9 per ounce over the Comex spot market price. Traditional brick-and-mortar dealers are all but sold out. How tight is this investor market? Silver Recycling recently converted part of its Philadelphia refinery from recycling industrial scrap silver to producing 100-ounce silver bars that it retails over the internet. The company is negotiating for lucrative high-volume contracts to supply several leading dealers with silver bars. With this kind of investor demand for gold and silver coins and bars, why have metal prices been falling?

Is Gold Overvalued?
In this article, I will make a case that gold’s value is significantly less than its current market price of $735. Not being omniscient, I will not consider every factor that now or in the future may impact upon gold’s price. But I will examine a few factors that, by themselves, suggest that gold is overvalued. If gold is overvalued now, it could become even more overvalued. It could rise in price. I am not providing investment advice about whether or not you should buy or sell. I am merely providing some straightforward analysis that may or may not be of value to those of you who are players or potential players in the gold market.

Gold Shortage
As the following links show, there now exists a shortage of physical gold in the real world market place. This shortage is in contradistinction to the falling price of price of paper gold in the Comex world of digital traders. Once some of these paper gold traders start demanding the delivery of their contracts, the fact of the physical gold shortage will become apparent and there will be a rush to acquire gold as a hard asset that can be held in investor's hands. Paper gold may turn out to be fool's gold.

Russia, China call for trade in more currencies
Russian and Chinese leaders called on Tuesday for world finance to use a wider range of currencies, and Russian Prime Minister Vladimir Putin suggested bilateral trade in roubles and yuan rather than dollars. "At the moment the world which is based on the dollar is suffering serious problems ... The situation on the global financial markets remains difficult," Putin said at a Russo-Chinese forum in Moscow.

Mad Max Keiser (podcast)
.... talks about a $300 Trillion global problem with negative equity and the banks; and massive short squeeze on the dollar; globalism is falling apart; predicts Obama win [caution" European view of American Politics and very strange (unbeliever) views on religion! Interesting to hear what the rest of the world thinks of what's going on here, and there.].

Globalisation and the new nationalism collide
We are saved. Amid the rubble of the world’s financial markets, we can catch sight of the foundations of a new international order. The big lesson of the crisis has been learnt: we cannot escape our mutual dependence. Global markets require multilateral rules. Why am I so upbeat? Well, only this week that great internationalist President George W. Bush announced he was summoning world leaders to Washington to “advance common understanding” of the causes of the crash. In the words of the White House, these leaders will frame “a common set of principles for the reform of the regulatory and institutional regimes for the world’s financial sectors”. That is a bit of a mouthful, I know. But, hey, multilateralism is a long word too.

Taxpayers will fund another run on the casino
Fannie Mae and Freddie Mac were probably the world’s most heavily supervised financial institutions, subject to a specialist agency, the Office of Federal Housing Enterprise Oversight. The office employed 236 people at the time of its last annual report. OFHEO did not fail because it was understaffed or not well informed about Fannie Mae’s activities, but because it lacked authority. The entire staff earned less in aggregate than Franklin Raines, the aggressive chief executive who masterminded Fannie’s expansion.

Private Banks Vie for Slice of Rescue Pie $$
Treasury Department officials and the banking industry are mulling ways to expand the government's financial rescue plan to include non-publicly-traded banks, potentially opening up the program to thousands of new institutions. Department officials met with representatives from the banking industry Tuesday to discuss expanding the Troubled Asset Relief Program to make mutually held, family-owned and other private banks eligible for federal funds.

Governors Call for Rescue Package for States
Governors David A. Paterson of New York and Jon S. Corzine of New Jersey added their voices Wednesday to the growing support for a second federal economic stimulus package, saying state governments would face devastating cutbacks if they did not receive assistance soon. Appearing before separate congressional committees, they said that their states, like many others, had already moved to address budget deficits. Their actions alone would not be enough, they said.

The matter of post-election representation
World leaders are to gather in Washington 11 days after the presidential election to try to build a new global financial structure. This raises an interesting question of US representation at the meeting. Should it be confined to an outgoing president with no stake in the outcome beyond his legacy, or should his successor also have a seat at the table – if not in person, then through designated surrogates? It is hard to imagine any of the non-Americans present objecting if Barack Obama dispatched the likes of Paul Volcker, Robert Rubin, Larry Summers or Gene Sperling, all with impeccable credentials, who could end up in his government. John McCain’s economics bench is thinner in quality but, as long as Phil Gramm were not included, it would be equally welcome.

Surplus capital is not for wimps after all
Can a bank have too much capital? To the person in the street, the answer is obvious. The function of a bank is to seek out profitable investment and lending opportunities. The more capital it has to hand, the more successful it will be. To a professor of finance, the answer is also obvious. The professor will refer to the Modigliani-Miller theorem, which states that the value of a business is independent of its capital structure. It follows that a bank cannot add value for shareholders by altering the proportions of debt and equity in its balance sheet.

Maid-Turned-Realtor Ran Vegas Mortgage Scam, Prosecutors Say
Eve Mazzarella was a Las Vegas success story. The high-school dropout and former housemaid moved to the Nevada city in 2000 from Seattle, got a certificate from the ABC Real Estate School and started selling houses in what would become the hottest market in the country. In 2006, Mazzarella recorded sales of $13.8 million and made the National Association of Realtors' "30 Under 30" list, which names the best young agents in the nation. Mazzarella started her own company, Distinctive Real Estate & Investments Inc., in December 2003. She whipped around town in a Mercedes-Benz sport utility vehicle. She planned to build a three-story office building in Vegas's shabby downtown north of the Strip and preserve a historic house on the site by lifting it onto the roof.

Women Buying Health Policies Pay a Penalty
Striking new evidence has emerged of a widespread gap in the cost of health insurance, as women pay much more than men of the same age for individual insurance policies providing identical coverage, according to new data from insurance companies and online brokers. Some insurance executives expressed surprise at the size and prevalence of the disparities, which can make a woman’s insurance cost hundreds of dollars a year more than a man’s. Women’s advocacy groups have raised concerns about the differences, and members of Congress have begun to question the justification for them.

Preventing a global slump must be the priority
Give credit where credit is due: Nouriel Roubini of New York University’s Stern School of Business was right. On February 20 2008, I wrote a column entitled "America’s economy risks the mother of all meltdowns", based on his analysis of the 12 steps to disaster. Alas, not only has the US taken those steps, but it has also – with help from others, including the UK – dragged the world behind it. In a more recent note, Professor Roubini predicts a combination of stagnation and deflation*. In doing so he points, with some glee, to the most recent analysis of the global outlook from JPMorgan Chase, once among the most bullish of analysts. Now, under?the rubric "A bad week in hell", JPMorgan states that: "Once again, we have taken an axe to near-term growth forecasts for the developed world and will likely follow up with additional downward revisions for emerging economies in the coming weeks. Already, our forecasts suggest that global gross domestic product will contract at a near 1 per cent annual rate” in the fourth quarter of 2008 and the first quarter of 2009.

Beware the unwinding of the yen carry trade
We are used to the concept that when a butterfly flaps its wings in Brazil all manner of unspeakable things happen in New Jersey and Tunbridge Wells. But many have struggled to understand the link between Mrs Watanabe’s mood swings and the price level of exotic currencies, distant equity markets and sundry commodities. What, in short, does a Japanese housewife have to do with the price of tea in China?

An ethics lesson from an unlikely quarter
It is easy to imagine corporate social responsibility being the first fad that companies abandon during the downturn. With businesses struggling, how many companies will fret about organic cotton T-shirts or how much workers earn in faraway factories? How many consumers, short of cash and worried about losing their jobs, will bother to ask? The disappearance of corporate responsibility seems a plausible prediction – except that one company last week pledged to continue taking it seriously. And because that company is Wal-Mart, the world’s most powerful retailer, thousands of other companies will be forced to take it seriously, too. Lee Scott, Wal-Mart’s chief executive, told a meeting of 1,000 Chinese suppliers in Beijing: “I firmly believe that a company that cheats on overtime and on the age of its labour, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honour its contracts, will ultimately cheat on the quality of its products.”

U.S. Treasury Program Shuns Banks That Need Cash Most
The U.S. government's $160 billion handout to banks from Niagara Falls to Beverly Hills is going mostly to lenders that need it least, putting weaker rivals at risk of being shut down or taken over, analysts say. "This has the unintended effect of making the strong stronger and the weak weaker," said Gray Medlin, founder of Carson Medlin Co., a Raleigh, North Carolina, investment bank focused on banking deals. "Banks that are getting bad exams and are under intense pressure from regulators won't be successful in applying."

Could Napoleon have coped in a credit crunch?
....Our desire to see history through the lives of great men blinds us to the real complexity of politics, business and finance, and leads us to find intentionality and design where there are only chance and improvisation. The philosopher, Alasdair MacIntyre, put it acerbically: “When imputed organisational skill and power are deployed and the desired effect follows, all that we have witnessed is the same kind of sequence as that to be observed when a clergyman is fortunate enough to pray for rain just before the unpredicted end of a drought!” He also said: “One key reason why the presidents of large corporations do not, as some radical critics believe, control the US is that they do not even succeed controlling their own corporations.” That was the experience of Chuck Prince, former Citigroup chief, and Stan O’Neal, former head of Merrill Lynch.
By describing Napoleon’s Russian campaign through the eyes of individual participants, Tolstoy rejected the notion of history as the lives of great men. Of the battle of Borodino, he wrote: "It was not Napoleon who directed the course of the battle, for none of his orders was carried out and during the battle he did not know what was going on."

The pendulum swings towards regulation
Events as well as ideas shape policy choices in democracies. Who would have predicted a year ago that a Republican ad?ministration would demand that Congress make the largest set of investments in public companies in US peacetime history? Would anyone have supposed that President George W. Bush would convene a global effort to renew Bretton Woods through strengthened international financial regulation? It reminds us that in the economic sphere, as in the national security sphere, dramatic events can make the inconceivable become inevitable.

Sarkozy’s attempted EU coup fails – for now
Largely unnoticed, there was an attempted coup d’état of sorts in Europe last week. Nicolas Sarkozy, the French president, let it be known that he wants to remain in his role of “president of Europe” for another year. No, he will not prevent the Czechs and the Swedes from assuming the European Union’s rotating six-month presidency during 2009. But since the two countries are not members of the eurozone, Mr Sarkozy wants to remain the de facto president of the eurozone until the end of 2009 when Spain, a eurozone country, takes over from Sweden.

The Twilight of Free-Market Ideology
When I heard Alan Greenspan's testimony before Congress last Thursday, I had one immediate thought: This is the beginning of the end for the free-market ideologues. According to press reports of the testimony, Greenspan told Congress that he "had put too much faith in the self-correcting power of free markets." That's no small statement. In fact, it struck me that if 1989 was the year when no reasonable person could still believe in communism (or any of its government-intensive relatives), then 2008 will go down in history as the year in which the free-market zealots saw their "wall" come crumbling down.

Sleepless in Tehran
I've always been dubious about Barack Obama's offer to negotiate with Iran — not because I didn’t believe that it was the right strategy, but because I didn’t believe we had enough leverage to succeed. And negotiating in the Middle East without leverage is like playing baseball without a bat. Well, if Obama does win the presidency, my gut tells me that he's going to get a chance to negotiate with the Iranians — with a bat in his hand. Have you seen the reports that Iran's president, Mahmoud Ahmadinejad, is suffering from exhaustion? It's probably because he is not sleeping at night. I know why. Watching oil prices fall from $147 a barrel to $57 is not like counting sheep. It's the kind of thing that gives an Iranian autocrat bad dreams.

Japan Offers Stimulus Package to Spur Its Economy
Japan announced a $51 billion fiscal stimulus package on Thursday to help households and businesses, the boldest of several measures that officials took to try to stanch the fallout from the global credit crisis, and prompting shares throughout the region to surge. Hong Kong and Taiwan cut interest rates, after a cut of half a percentage point by in rates by the Federal Reserve a day earlier. And South Korea established a $30 billion currency swap line with the Federal Reserve, a measure expected to ease pressure on local banks needing to refinance foreign debt. President Lee Myung-bak of South Korea also said his government would bring forward budget spending and consider beefing up construction spending.

Emerging economies a priority for Fed funds
The Federal Reserve’s decision to lend Mexico, Brazil, South Korea and Singapore $30bn each marks both the spread of the financial crisis to the emerging world and the increased global significance and maturity of these economies. The move is a response to the intense demand for dollars on the part of banks and companies outside the US, which extends beyond the industrialised world to many emerging nations. The Fed is seeking to address these needs and promote global economic stability in partnership with the International Monetary Fund.

US closes Syria embassy for a day
The US on Thursday closed its embassy in Syria for a day, amid increased tensions between Washington and Damascus after a US military attack killed a Syrian who was allegedly sending foreign fighters into Iraq. An anti-US demonstration is due to be held in Damascus to protest against Sunday’s US night raid on Bou Kamal, a Syrian village that is a main transit point into Iraq. The attack killed eight people including Abu Ghadiyah, who was alleged to have been supporting the insurgency in Iraq. Damascus has denied that the man was involved in terrorism.

Lights are on, but nobody is home
Outside the Democratic party headquarters in Hannibal, Missouri, one of the party workers is leaning against the window having a smoking break. He points to the Republican HQ opposite. “You could aim a howitzer straight at them,” he says. Yes, but there wouldn’t be much point: you would be very unlikely to hit anything. One small mid-western town (population, 17,000) on the Mississippi, chosen at random, provides a vivid illustration of what is happening all over the country. Conventional political wisdom attests to the importance of work on the ground in winning votes. If there is any truth at all in that, then the 2008 election was over weeks ago.

Obama prepares for speedy transition
Washington’s best-kept secret is that Barack Obama has the largest and most disciplined presidential transition team anyone can recall. Headed by John Podesta, former chief of staff in Bill Clinton’s White House, it started work well before the financial meltdown hit in September but has been swamped by its implications ever since. Transition insiders, who are under strict orders from the Obama campaign not to talk to the media to avoid giving the impression Mr Obama thinks he has won already, contrast it particularly with Mr Clinton’s transition in 1992, which was based in Little Rock, Arkansas, and turned into an extended symposium on every subject under the sun.

McCain, Palin criticize L.A. Times over Obama video
The Times will not post video of a 2003 event attended by Obama and a Palestinian scholar, saying it made a promise to a source. On the campaign trail, the GOP nominees blast the newspaper's stance.
John McCain and Sarah Palin, the Republican nominees for president and vice president, sharply criticized the Los Angeles Times today for withholding a video of a 2003 event in which Barack Obama, their Democratic rival, praised a Palestinian scholar. "It must be nice for a candidate to have major news organizations looking after his best interests like that," Palin said in Bowling Green, Ohio. "Maybe some politicians would love to have a pet newspaper of their very own. In this case, we have a newspaper willing to throw aside even the public's right to know in order to protect a candidate that its own editorial board has endorsed."

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Wed 10.29.2008

Another rate cut expected from Fed
Fed expected to cut rates again as the central
bank battles worst financial crisis in decades
The worst financial crisis in 70 years has forced the Federal Reserve to employ all the weapons in its arsenal -- including cutting interest rates to near historic lows -- to try to keep the country from plunging into a deep recession. Fed policymakers are expected to slash a key interest rate by a half-point, pushing the federal funds rate down to 1 percent, as they wrap up a two-day meeting Wednesday.

Wall Street jumps again, but no one is exhaling
Wall Street's best day in two weeks _ and one of its best ever _ brought little real reason to celebrate. Even the manic, final-hour of buying that sent the Dow Jones industrials soaring almost 900 points Tuesday was overshadowed by the reality that it could turn on investors in an instant. The extraordinary, lurching volatility that has gripped Wall Street since the financial meltdown began in mid-September meant there were no guarantees the rally would hold, not even for a few days.

Roubini Sees 'Significant Downside Risk' for Equities
Nouriel Roubini, the New York University professor who predicted the financial crisis in 2006, talks with Bloomberg's Tom Keene and Ken Prewitt about the risk of "stagdeflation," the global credit crisis and the outlook for stocks. (Source: Bloomberg) Prospects for the U.S. and Global Economy in 2008... Risk of "stagdeflation" for global economies...Outlook for "long and protracted" recession ... Need for "massive" fiscal stimulus in U.S. ... Libor; credit crunch; banking crisis ... "Significant downside risk" for equities 10:50 Fed interest rates; Roubini's predictions ... U.S. consumers; oil prices; earnings ... "Dangerous" conditions in credit markets ... Outlook for "continued" fall in home prices.

'Significant Downside Risk' for Equities P1

'Significant Downside Risk' for Equities P2

White House to banks: Start lending now
An impatient White House prodded banks and other financial companies Tuesday to quit hoarding billions of dollars flowing into their vaults from Washington and start making more loans. Wall Street soared nearly 900 points on bargain-hunting and hopes of a hefty interest rate cut by the Federal Reserve. The stock market's amazing climb, with its second-largest point gain ever, was a welcome burst of good news for a nation suffering big job losses and seemingly tumbling into a painful recession.

$7 Trillion and Counting
The Bank of England reckons that governments have
extended more than $7 trillion in aid to bail out the global
financial system. One-third of that comes from the U.S.
Governments worldwide have pledged more than $7 trillion in loans, guarantees, capital injections, and other assistance in their coordinated effort to prop up the global financial system

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