Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
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.
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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Four Reasons for an Immediate Rise in Gold Gold hit $884 as this post was written early on Monday 29th December, the day that Indian astrologers have down for a stock market crash. That would seem unlikely given thin holiday trading. But a further rise in the gold price, even if short-term, looks probable for four reasons: 1. Geopolitics: Israel has attacked Gaza with considerable loss of life, a reminder of the chronic political problems of the Middle East with Iran and Pakistan other possible flash points. Arabs are big investors in gold and respond to disruptions in their own backyard. 2. Physical delivery requests are mounting at the Comex futures exchange which could well result in an immediate shortage of gold at the year-end. The futures market looks about to breakdown, giving control of the gold price back to the physical market where available stocks are low. 3. Gold preserved value through the storm of 2008, and 2009 looks no better, while investors are increasingly concerned about the bubble in the bond market. In the investment cycle the next step is a bond crash and a flight to precious metals. 4. The dollar rally looks to have already broken down, so look for a swift reversal to dollar devaluation and gold appreciation. That would also boost the oil price, usually a positive for gold, and also linked to geopolitical instability in the Middle East.
Ten Predictions for 2009 I don't have a crystal ball, but my forecasts have been fairly accurate and quite profitable over the past few years. While 2008 has been a tough year, all signs point to 2009 being much worse. Here is what I see on the horizon for the upcoming year. 1. The stock market decline will accelerate in 2009, with the Dow Jones Industrial Average dipping below 6,000. Extreme volatility will engulf the markets with plenty of counter-trend rallies that will be fueled by speculators "calling the bottom," only to find a new bottom the following month. 2. Unemployment will rise dramatically as "official" statistics reach towards 10% and true unemployment rises closer to 20%. 3. Real estate prices will continue to drop as rates reset and foreclosures increase across the country. Commercial real estate will finally follow residential, as price declines accelerate due to foreclosures on shopping malls, retail outlets, office buildings, etc. 4. Bailouts will continue, with more industries lining up for government rescue packages and both the financial and auto industries returning to the trough for more of their fix. This will lead to prediction #5. 5. Deflation will subdue and the first signs of hyperinflation will appear in the back half of 2009 as the trillions in bailout dollars begin to flow into the economy. The price declines that are a result of liquidation and de-leveraging, will give way to skyrocketing prices as politicians continue trying to print and borrow our way out of bad times. This will lead to prediction #6. 6. The dollar will resume its downtrend and make new lows during the first half of 2009. This will continue throughout the year with the dollar reaching into the low 60's as the world loses confidence in the U.S. currency and the U.S. government's ability to repay its debt. 7. Oil will rise from current lows and find a "fair price" somewhere in the $75 - $100 range, where it will float for much of the year. This will benefit alternative energy companies, although any gains will be muted by credit contraction and the overall market decline. 8. Agriculture prices will return to an uptrend as declining investment and unpredictable weather patterns lead to supply shortages amidst an ever-expanding population and increase in inflation. 9. Gold will make a new all-time (nominal) high reaching a price of $1,400 or more during 2009. A panicked flight to safety could push gold towards $2,000, although the central banks will dump gold on the market or make other attempts at suppressing the price advance. 10. All of the above will lead to increased crime and civil unrest with protests in the streets, bank runs and an increased police and military presence trying to bring stability to cities.
Jim Rogers: 2009 will be the year of Total decline for US
Year Stained by Insolvency An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.
Dollar Falls on Concern U.S. Recession Will Deepen; Pound Drops The dollar dropped for a fourth day against the euro before reports this week that may show the world's largest economy is slipping further into recession. The greenback also decline versus the yen on prospects the Federal Reserve will pump more cash into the economy in so- called quantitative easing, which can weaken a currency by increasing its supply in the financial system. The British pound fell to near a record low against the euro after a survey of U.K. estate agents and surveyors showed home prices dropped this year and are forecast to slide further in 2009.
Gold prices on revenge and retaliatory mood Revenge seems to be the key word for gold prices to rise. While India is seen taking revenge on Pakistan on its alleged role in Mumbai attacks, the Palestinians are keen on taking revenge on Israel after its attack post cease-fire in Gaza Strip. And these political tensions may just help gold prices as investors are relying more and more on Gold and the commodity has proved to be the sole bread earner and safe investment in the year 2008. Even the ever-dependable crude could not help the investors as it is faring badly even now.
Gold Poised to Move Higher Gold belongs in every investor's portfolio. It is totally unique among financial assets, a physical metal commanding timeless and universal intrinsic value. It is a rock of stability in a chaotic world, a stark contrast to the complex web of mere promises to pay that is our modern faith-based financial system. Without gold, true diversification and protection from systemic risk is impossible. Gold's fundamentals are dazzlingly bullish. Like everything else on the planet that is freely bought and sold, gold's price today and in the future is a direct function of its supply and demand. As long as its global demand exceeds its global supply on balance, gold's price will continue powering higher in its secular bull. While it has already come far from its humble beginnings in the $250s in April 2001, it has a long way to run yet.
The "Great Slump" of 2008 (PART 1/2) The outstanding contemporary relevance of Lord Keynes' short essay "The Great Slump of 1930" comes from the fact that Keynes faced very similar dire auspices as he grappled with the uncertain future of the 1930 global economic downturn. At the time he wrote the essay, Keynes was trying to explain both the origins of the crisis and its future length and severity. Needless to say, he missed the boat completely, although like a good medieval soothsayer he did manage to hedge his bet a little. Obviously, the "Great Slump" was not a temporary downturn but instead heralded the Great Depression, which would last until the wartime economy of WWII stimulated industry in the United States while utterly destroying Europe, the epitome example of lost wealth via Henry Hazlitt's "broken window" illustration. Based on recent FED manuevers and Obama's future taxation and government expansion plans, most likely the modern-day Keynesian-Friedmanite command-and-control corporate governments will respond in a similar hapless manner as Keynes' abject failure almost 80 years ago.
Bernanke's Great Lie - The "Gold Standard" and the Great Depression (PART 2/2) The purpose of the following is to argue that the "gold standard," as understood by most of the public, did not cause or worsen the Great Depression as current FED Chairman Ben Bernanke has based many of his papers, speeches, and, to a large extent, his entire career on. In our contemporary times, I do believe this blame must be firmly rejected and monetary policy should, at the very least, be debated in a national forum. Indeed many other economists, such as the Friedman family, Anna Schwartz, Alan Greenspan, and Jeffrey "Shock Doctor" Sachs, have all propagated this lie.
Financial Economic and Political - Part 1 of 4 Possible announcement of a new global government with foreign ownership of US companies; On Sept 30th the Russians & Chinese threatened nuclear war on US so global game plan has changed, waiting in the wings until Jan 20th
AMERICA ON THE BRINK - PREDICTIONS Political Correctness and Freedom of Speech The first thing that Socialists do when they gain power is try to silence free speech. Conservative Talk radio hosts such as Rush Limbaugh, Sean Hannity, Glen Beck, Laura Ingram, Lou Dobbs, etc. are already being criticized by "Progressives" in Congress. There is a serious effort underway right now to bring back a failed law, the oxymoronic "Fairness Doctrine," in a bold, open attempt to silence opposing political views. Internet news sites such as WorldNetDaily.com, NewsWithViews.com, DrudgeReport.com, InfoWars.com and many others will be silenced along with talk radio. In order for darkness (lies) to prevail, light (truth) has to be snuffed out. Public scrutiny and criticism of elected officials will be forbidden. Any person exposing political corruption will be labeled anti-government. If they persist in attempting to correct that political corruption, they will be called a terrorist! All police departments around the country will be required to have terrorist units.
[In a communist country of my birth I remember that one could criticize any capitalist country one wishes as long as it wasn't yours or another communist country. Criticism of any official brought police in black uniform to your door usually at night when everyone was asleep.]
Financial Economic and Political - Part 2 of 4
Bankrupted States = Con-Con & Newstate Consitiution The strategically planned and forthcoming Constitutional Convention, which will address "a balanced budget," is quite a cover story. Therefore, let us consider the truth behind this elaborate usurpation scheme. As the country is failing in every direction - from the former individual in America to each and every individual state in the country, the total economic crash of EVERYTHING - and all converging at the very same time and as we speak - is, let us say, extraordinarily convenient. Add this convenience to the fact that on March 27, 1969, President Richard Nixon divided the country into 10 regions via the Government Reorganization Act. Then with Nixon's Executive Order 11647, the nation was divided up into 10 administrative regions on February 14, 1972 (Federal Register February 12, 1972, Vol. 37, No. 30), which also established the Federal Regional Council for the newly designed 10 regions. Now, why did former President Richard Nixon redefine the United States? He did so because the United Nations passed a resolution that the United States must reorganize into 10 regions.
Financial Economic and Political - Part 3 of 4
Financial Economic and Political - Part 4 of 4
What happened to gold in 2008? In 2008, the gold market began the year with a normal bull market pullback from its highs of $1,035 to the very low $900 level. Jewelry had already begun to recover as the gold price dropped, but then the impact of the "investor meltdown", through forced selling by investors, selling what they could to cover losses in other markets, hit gold too. To make matters worse, in the U.S.A. so many investors had paid, from only a 10% deposit up to a 50% deposit, on the shares they owned. So when these share prices dropped more than 10% to 50% investors lost 100% of their capital. This type of selling sent prices lower, in the course of which more selling was triggered by the system of "stop losses", which automatically send out an order to close the position, without needing to contact the investor. Consequently, although the gold market fundamentals look excellent, the investor's struggle for survival, made them sell even their gold and silver positions. As a result the gold price was sent on a downward slope until it bottomed at $690.
Should We Risk Hyperinflation? Although the U.S. Government has thrown an estimated $8.5 trillion so far into bailout measures and credit stimulus, this huge sum has yet to produce even a mote of tangible success. The goal for nearly two years has been to stabilize home values, but instead they have continued to fall. Policymakers and economists must be perplexed by this, even if beleaguered homeowners are not. Maybe the latter have remained gimlet-eyed because they've received only bailout crumbs to date. Whatever the case, at a time when households have become properly obsessed with repairing their balance sheets, who could blame them for being suspicious of Big Government's so far fruitless collusion with the corrupt likes of J.P. Morgan and Goldman Sachs?
The Illusion of the Monetary System
The creation of interest
Inflation is Unavoidable What the rational investor has to understand is that the coming inflation is inevitable. It is a catch-22 situation for the US Government as money printing is the only thing the government can do to keep the system going, and this will only result in inflation. The longer we wait for inflation to start, the bigger the reward as it just means that more money entered the system. It's a conundrum that will make those properly positioned very wealthy, but it requires patience.
Do Deflationists Have It Wrong? Jim Willy is one of the few commentators on the economic scene who deserves our serious attention. In his latest report, he trashes the crackpot notion that we're in a mere recession, or that a recovery will occur in 2009. The economic paradigm is shifting tectonically, he says, and few things will be the same once we emerge from the current crisis. He also has this to say: "The year 2009 by year-end should be marred by very big inflation outbursts in price structures, enough to silence the wrong-footed deflation theory guys."
Jim Rogers: 'Lost decade' pt 1 We ran a short version of this interview in November; this is the full interview
Jim rogers: 'Lost decade' pt 2
Chaos on the Horizon? Invest in Real Assets We are to the point where we are about 14 feet from going over the edge of Niagara Falls. We haven't gone over the edge yet; we haven't gone to a total collapse. We don't have riots in the streets; we don't have a revolution. That's coming; that's about two to three months off. Here's what we've got: the Fed has committed to $8.5 trillion of taxpayers' money to bail out the worst run companies and banks. It hasn't worked. Now, they're at a 0% to .25% on the Fed Funds rate for funds for banks, which means if you go down and you pay $100,000 for a T-bill for 90 days, your return is zero, which is to imply that there is zero risk to investing with the government. Anybody who actually believes that is going to be in for a real shock in the first quarter of next year.
The End of America and its dollar
Legitimacy Dwindles Zounds! Public sentiment toward the accelerating economic fiasco has shifted, seemingly overnight, from a mood of nauseated amazement to one of panicked grievance as the United States moves closer to an apparent comprehensive collapse -- and so ill-timed, wouldn't you know it, to coincide with the annual rigors of Santa Claus. The tipping point seems to be the Bernie Madoff $50 billion Ponzi scandal, which represents the grossest failure of authority and hence legitimacy in finance to date in as much as Mr. Madoff was a former chairman of the NASDAQ, for godsake. It's like discovering that Ben Bernanke is running a meth lab inside the Federal Reserve. And out in the heartland, of course, there is the spectacle of Illinois governor Rod Blagojevich trying to desperately dodge a racketeering rap behind an implausible hairdo.
Waking from Lever-Lever Land The United States lived in Lever-Lever Land too long. Like Peter Pan, the country has refused to grow up. The object of the stimulus plans offered by the present and the next US administrations is to return to Lever-Lever Land, that is, to debt-financed consumption. It won't work. Leverage is for the young, who borrow to build homes and start businesses. The financial crisis forces Americans to act their age, that is, to save rather than borrow and spend. For a world economy geared to servicing the once-insatiable maw of American consumption, that is very bad news for 2009. Recovery cannot begin until Americans have restored their decimated wealth by saving - an effort that will take years - or until the youthful emerging markets start importing from the US, rather than exporting to it.
Communitarianism (see video below) here is an old social theory that in order to create a healthier planet, people everywhere must learn the value of collectivism. Its many proponents insist that individual rights and liberties pose a real threat to the health and safety of the "community at large. If we will just put the community before self-centered concerns, mankind can eliminate war and poverty. To many, it is our evolutionary destiny and our moral duty to comply with the spirit of community.
The founders of the Communitarian Network began "shoring up the moral, social and political environment" in the early 1990s. Today the communitarian theory is the basis for hundreds of new global rules and regulations eliminating individual rights, yet fewer than one percent of the affected population knows about it.
Communitarianism was embraced by leaders in every nation after it was financed by the international banking elite. Today the theory of community influences all aspects of life: news, science, money, law, land use, health, education, policing and employment, not to mention the arts, fashion, fundraising, causes and entertainment. Community is the buzzword on everybody's lips these days.
Crackdown on bailed out banks LAWMAKERS are turning up the heat on banks that have received money from the Treasury Department's $700 billion (S$1 trillion) rescue fund after the Associated Press reported that they wouldn't say how they are using the money. Sens Dianne Feinstein and Olympia Snowe said on Tuesday that they will propose legislation next month to force companies that receive money from the fund to report how they have spent it. The legislation would also prohibit them from spending the taxpayer dollars on lobbying or political contributions. It would also apply to some recipients of the Federal Reserve's emergency lending programs. The legislation was introduced earlier this year, but the Senate did not take it up. The sponsors have long said they plan to pursue it when the 111th Congress convenes Jan 6.
Wall St. closes out on 2008, year of record losses Investors head into final week of the year eyeing economic data, hoping for January rebound Investors are preparing to close out the last three trading days of 2008, a year in which Wall Street has logged its worst performance since Herbert Hoover was president. The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2 percent. That's the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6 percent. The Standard & Poor's 500 index is set to record the biggest drop since its creation in 1957. The index of America's biggest companies is down 40.9 percent for the year. With these statistics ready to play out this week, it is little wonder why investors are all too happy to close the books on 2008. Analysts are already looking toward January as a crucial period for the market as it tries to recover some of the $7.3 trillion wiped from the Dow Jones Wilshire 5000 index, the broadest measure of U.S. stocks.
Retailers facing bankruptcy in 2009 - Sears/K-Mart, Macy's included.
Bad debt triggers hospital closings around U.S. A rise in patients not paying their bills is partly to blame for financial ills Gainesville's first community hospital has been on life support since the Shands Healthcare system in northern Florida bought it a dozen years ago. Now, because of the recession, the plug is being pulled on 80-year-old, money-losing Shands AGH. Next fall, its eight-hospital not-for-profit parent company will shut the 220-bed hospital and shift staff and patients to a newer, bigger teaching hospital nearby as part of an effort to save $65 million over three years across the system.
Hospitals ill from more bad debt, credit troubles Hospitals ailing from fewer paying patients, investment losses, tight credit and other ills Gainesville's first community hospital has been on life support since the Shands Healthcare system in northern Florida bought it a dozen years ago. Now, because of the recession, the plug is being pulled on 80-year-old, money-losing Shands AGH. Next fall, its eight-hospital not-for-profit parent company will shut the 220-bed hospital and shift staff and patients to a newer, bigger teaching hospital nearby as part of an effort to save $65 million over three years across the system. Like many U.S. hospitals, Shands is being squeezed by tight credit, higher borrowing costs, investment losses and a jump in patients -- many recently unemployed or otherwise underinsured -- not paying their bills.
Dismal Outlook for Mall Owners - $$ If you thought shopping malls were a nightmare in the run-up to the holidays, just try owning one now that there is nothing left to do but take down the tinsel. As retailers count their takings, it is becoming clear that consumers took a holiday away from retail land. And broad trends, such as free-falling house prices and rising unemployment, point to a dismal 2009 for anyone in the business of flogging stuff on shelves.
Max Keiser : vw volkswagen short squeeze by porsche; shadow banking underpinning
Cash-strapped states look to sell roads, parks 44 states dealing with deficits consider privatization to raise money Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize. Valuables like these are in for a closer look as 44 states cope with deficits. Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.
Moorlach Sees Up to 10 Municipal Bankruptcies in Coming Year The accountant who predicted the nation's largest municipal bankruptcy says as many as 10 insolvencies will roil the $2.7 trillion U.S. market for state, county and city debt next year as public finances worsen amid calls for federal aid to state and local governments. John Moorlach said in 1994 that Orange County, California's leveraged investing strategy could wreck its finances. The county went bankrupt about six months later after losing $1.6 billion. As many as four cities in the Golden State and six others nationwide may seek court protection from creditors next year under Chapter 9 of the bankruptcy code, the section devoted to municipal governments, Moorlach said in an interview. "The total could be higher," said Moorlach, 53, now chairman of the Orange County Board of Supervisors. He didn't name any cities outside California, which has seen the cost of insuring state debt against default more than quadruple since September. He said his estimate was based on general economic conditions.
Munis in 2009
Manufacturing, Home Prices Probably Sank: U.S. Economy Preview Manufacturing in the U.S. probably shrank at the fastest pace since 1980 as the deepening global recession forced customers in North America, Europe and Asia to cut back, economists said before reports this week. The Institute for Supply Management's December factory index dropped to 35.4, the lowest reading in almost three decades, according to the median estimate of economists surveyed by Bloomberg News. A separate report may show the record drop in home prices accelerated in October.
Small Car Meltdown
Oil Outlook: Expect Close to $30 Oil Within Next Four to Six Weeks
Housing has its worst monthly price drop in 20 years The Massachusetts housing market experienced its worst monthly price drop in more than 20 years as concerns over the slumping US economy and the stock market worried consumers, the Warren Group reported today. "The November median home price slumped 16.7 percent to $275,000 from $330,000 during the same month in 2007," said the Warren Group, a Boston firm that tracks local real estate activity and that publishes Banker & Tradesman. "Novembers percentage decline exceeds the monthly price drops in September and October, when median home prices were down 15.3 percent and 13.9 percent, respectively."
GMAC to get TARP funding? Wants access to TARP and FDIC.
Recession Reopens U.S.-China Trade Rift Paulson's Talks Bridged The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over. Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.
Cracks in U.S.-China Relations Are Widening Again in Crisis The global recession is re-exposing fissures in United States-China relations that Treasury Secretary Henry M. Paulson Jr. spent more than two years smoothing over. Mr. Paulson, 62, who visited China 70 times during his career on Wall Street, made improving ties a priority. He advocated diplomacy instead of confrontation, establishing a twice-yearly "strategic economic dialogue" with officials in Beijing, aimed at cooling tensions and deterring Congress from taking up trade sanctions. The approach produced some results, including a pledge to share data on food safety and agreement to allow foreign mutual funds to invest in China's stock market.
Japan's Recession Deepens as Factory Output Plummets Japan's recession deepened in November as companies cut production at the fastest pace in 55 years and rising unemployment prompted households to pare spending. Factory output plunged 8.1 percent from October, the Trade Ministry said today in Tokyo, more than the 6.8 percent estimated by economists. The jobless rate climbed to 3.9 percent from 3.7 percent. Household spending slid 0.5 percent, a ninth drop.
Kuwait cancels $17 billion deal with Dow Chemical Kuwait decided on Sunday to scrap a deal to form a $17.4 billion petrochemical joint venture with U.S. company Dow Chemical. The cancellation of the deal, which had met opposition in Kuwait's parliament, was acknowledged Sunday by Dow and is a blow to the largest U.S. chemicals company. Dow had planned to use the proceeds to repay a large part of $13 billion in debt it will have to shoulder once its acquisition of rival Rohm & Haas closes, which is expected to be in early 2009.
Danny Gillerman on Israel's attacks in Gaza 12:28:08
Israeli troops mobilize as Gaza assault widens More than 290 Palestinians are dead as Israel pounds Gaza for second day Israel widened its deadliest-ever air offensive against Gaza's Hamas rulers Sunday, pounding smuggling tunnels and a central prison, sending more tanks and artillery toward the Gaza border and approving a reserves callup for a possible ground invasion. Israeli leaders said they would press ahead with the Gaza campaign, despite enraged protests across the Arab world and Syria's decision to break off indirect peace talks with the Jewish state. Israel's foreign minister said the goal was to halt Gaza rocket fire on Israel for good, but not to reoccupy the territory.
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Bailout could cost taxpayers $100 billion Restructuring delays will lead to bigger rescue tab The cost to taxpayers of the bailout for Detroit automakers could rise to more than $100 billion if the companies fail to radically restructure as the Bush administration is demanding in exchange for federal loans, financial analysts say. President Bush agreed to hand over more than $13 billion in loans to domestic carmakers Dec. 19 as a way to help them through lean times, but continuing delays in reorganizing the companies' finances and wage costs threaten to make that benefit little more than a down payment.
Ron Paul: Where's The Bailout Money Going?
Woes on Wall Street coincide with gold coin rush US Mint labors to meet demand as investors buy up assets they can hold in their hands Investors who have forsaken shaky financial markets for the safety of gold must feel a little bit like prospectors. As the worst recession in at least a generation spreads, so too does the clamor for gold bars and coins, assets less likely to go up on smoke like so many derivatives and asset-backed securities. "I've never seen a case where demand was so high and supply was so short," said Chicago coin dealer Harlan Berk, who has been in the business 44 years. Spikes in demand for gold coins this year appear to run parallel with the mounting woes on Wall Street. In August, as the Federal Reserve pumped $62 billion into the U.S. banking system and rejected requests for mortgage finance giants Fannie Mae and Freddie Mac to take on more debt, sales of the popular American Eagle coin were suspended for a week.
Gold was mostly steady on Friday, holding near $845 amid views that the dollar would remain under pressure given the grim outlook of the U.S. economy, but activity was slow due to the holiday season. New York futures markets were closed on Thursday for Christmas, and will reopen on Friday. All UK financial markets will remain closed on Friday for Boxing Day holiday.
Dollar Shift: Chinese Pockets Filled as Americans' Emptied "Usually it's the rich country lending to the poor. This time, it's the poor country lending to the rich." - Niall Ferguson In March 2005, a low-key Princeton economist who had become a Federal Reserve governor coined a novel theory to explain the growing tendency of Americans to borrow from foreigners, particularly the Chinese, to finance their heavy spending. The problem, he said, was not that Americans spend too much, but that foreigners save too much. The Chinese have piled up so much excess savings that they lend money to the United States at low rates, underwriting American consumption.
U.S. dollar rally may stall at the start of 2009 The reality of low interest rates and deep economic recession should finally start to catch up with the U.S. dollar in 2009, after risk aversion and de-leveraging helped push the currency to multi-year highs. The advance -- which has pushed the dollar up almost 20 percent against a basket of six currencies .DXY since July -- is "artificial" and may subside once extreme risk aversion eases and global markets stabilize, analysts said.
Max Keiser: Death of the dollar 2 - part 1 Analyst Max Keiser investigates the ill health and possible demise of the dollar.
Max Keiser: Death of the dollar 2 - part 1
Banks Told: Lend More, Save More $$ Can They Do Both? Regulators Want to See More Capital, Regardless Federal regulators are sending a mixed message to the nation's banks: Lend more to boost the economy, but at the same time, build up capital to protect against losses. Publicly, officials are pushing banks to make loans, tweaking them for taking government money while they tighten lending standards and turn away borrowers with less than perfect credit records. Privately though, some bankers say regulators are urging them to build capital cushions that are considerably thicker than what is officially required to be classified as a healthy institution.
SEC inaction that helped fuel scheme Stung by claims that it missed discovering a massive fraud, the Securities and Exchange Commission is now poring over Bernard Madoff's books, trying to unpick an alleged Ponzi-like operation that appears to have lost investors tens of billions of dollars. But it was the SEC's decision in the 1990s not to take a stand on the controversial issue of "payment for order flow" that helped fuel the rise of Bernard Madoff Investment Securities, the successful broker-dealer operation two floors above Mr Madoff's private fund operation in Manhattan. According to regulators and competitors, Bernard Madoff Investment Securities, enjoyed at least a decade of outsized growth in the 1990s because it paid brokers for business and exploited wide bid-offer spreads in the market.
Spotting the Next Madoff
Bogle Blasts Wall Street John C. Bogle, Vanguard founder and author of the new book "Enough," says greedy banks went overboard during the latest economic crisis, providing too much cost and not enough value.
GMAC gets Fed's OK to become bank holding company GMAC LLC won U.S. approval on Wednesday to become a bank holding company, giving it access to government lending programs and helping it stave off bankruptcy. The Federal Reserve's approval should allow GMAC to continue financing loans for General Motors Corp cars. GM Chief Executive Rick Wagoner said last week that GMAC's difficulties were "hammering" the car maker's ability to sell autos.
New unemployment claims reach 26-year high Unemployment insurance filings hit a 26-year high for the week ending Dec. 20, a sign more employers are shedding jobs as the nation's economic plight worsens. Initial claims for unemployment benefits rose 5.4 percent to 586,000, the largest number of new claims since November 1982, according to national figures released Wednesday by the U.S. Department of Labor. The number was higher than economists had predicted and up 30,000 from the Dec. 13 count.
Buying power increases, but most scared to use it Gloomy economic reports Wednesday showed consumers holding tight to their wallets with job losses expected to mount in the months ahead... Gloomy economic reports Wednesday showed consumers holding tight to their wallets with job losses expected to mount in the months ahead. There was one glimmer of good news, however. Lower gas prices and widespread holiday discounts are giving consumers greater buying power. Consumer spending, when adjusted for those price drops, rose last month after five months of declines, the Commerce Department said. Even though consumer spending, adjusted for inflation, rose in November, economists don't expect people to ramp up spending. In part, that's because companies in a wide range of sectors have been laying off workers.
Car Market Total Collapse
Retailers' holiday sales drop at least 5.5 percent Storms, weak economy push holiday season retail sales down 5.5 to 8 percent from last year It's official: This was a rotten holiday season for retailers. A weak economy and strong winter storms brought total retail sales down between 5.5 percent and 8 percent from a year ago, according to preliminary data from SpendingPulse. Many economists have predicted this would be the worst holiday season in decades as home prices plunged, unemployment rose and nervous consumers cut costs. Compounding retailers' problems were unexpected winter storms that snowed-in would-be shoppers everywhere from Seattle to Las Vegas to Boston.
Bleak economic picture emerges from new data Reports on consumer spending, jobless claims, durable goods show more weakness is likely A series of gloomy economic reports Wednesday showed consumers holding tight to their wallets with job losses expected to mount in the months ahead. There was one glimmer of good news, however. Lower gas prices and widespread holiday discounts are giving consumers greater buying power. Consumer spending, when adjusted for those price drops, rose last month after five months of declines, the Commerce Department said. Late Wednesday, the Federal Reserve granted a request by the financing arm of General Motors to tap the government's $700 billion rescue fund, bolstering GM's ability to survive.
U.S. Recession Will Deepen, Says Fischer According to Bank of Israel's Stanley Fischer, Former Thesis Advisor to Ben Bernanke at MIT, Financial Crisis and Madoff Fraud are Going Hand and Hand
Peter Schiff: Why The U.S. Economy Will Collapse
Peter Schiff on Vanishing Jobs
Woes of U.S. auto industry cross border into Mexico The U.S. auto bailout lifts the threat of imminent collapse of plants that have been a steady source of jobs in Mexico. But the rescue, backed... The U.S. auto bailout lifts the threat of imminent collapse of plants that have been a steady source of jobs in Mexico. But the rescue, backed by American taxpayers, is likely to slow investment in Mexico's auto industry, one of the fastest growing in the world. Lured by low labor costs, with wages as low as $1.50 an hour, Detroit's automakers have been key to an industry that now makes up 3 percent of Mexico's gross domestic product and accounts for one-fifth of its exports. The 13 plants run by Ford, Chrysler and GM account for more than 50 percent of Mexico's auto production. While nothing in the $17.4 billion government loan package prohibits it, expansion outside of the United States using taxpayer money would most likely create a huge backlash.
When Will the Housing Market Bottom? I saw a chart in the European WSJ yesterday on my flight to Berlin that showed housing sales are now lower than they were 20 years ago and with the recession in full swing, it appears they will go even lower. That begs the question 'when does it end?' I've always liked to look at rent vs buy analysis to tell me when real estate is fairly valued. Rents can and will go up and down (likely down in this market) but it's been my experience that rents, particularly residential rents, are more stable than residential sale prices. People need to have a place to live. They can make the choice of rent vs buy, but they have to do one or the other (I know that in tough times there are other scenarios for some on the lower end of the economic spectrum).
U.S. Housing Market Forecast 2009, More Pain No Gain The U.S. housing market is already being pounded by the "perfect storm." And the outlook for the New Year is for the stormy weather to continue - and probably to get worse. As if a locked-up credit market and tidal waves of foreclosures weren't already enough, we're now watching unemployment climb and consumer confidence plunge. But even when the housing market is taking on water, there are ways to stay afloat. Indeed, investors nimble enough to maneuver can even make money. The watchword on this market, though, is caution . If an investor decides to test the waters, beware of the extraordinary financial undertow. Here's a look at what's happening now, and what the implications there are for investors in the New Year.
Gerald Celente December 23 - Part 1
Gerald Celente December 23 - Part 2
The Federal Reserve Bank is the Reason for America's Downfall The American Dream, An Obituary - The American Revolution was an extraordinary event. The idea that freedom was an inherent right, that tyranny could be successfully opposed, that government could serve the people, not the few, was truly revolutionary in 1776-as it is today. The American Revolution, however, has run its course; and unless resuscitated and given new life, the American dream and the dreams of America 's founding fathers will soon be only a memory. Dreams rarely come to pass and those that do rarely last. The American dream is no exception.
U.S. debt approaches insolvency; Chinese currency reserves at risk In the United States, the danger of debt insolvency is growing, putting at risk the currency reserves of foreign countries, China chief among them. According to new figures published by Bloomberg in recent days (Nov. 25, 2008 ), the American government has employed a total of 8.549 trillion dollars to stop the financial crisis. This means a total of about 24-25.4 trillion dollars of direct or indirect public debt weighing on American taxpayers. The complete tally must also include the debt - about 5-6 trillion dollars - of Fannie Mae and Freddie Mac, which are now quasi-public companies, because 79.9% of their capital is controlled by a public entity, the Federal Housing Finance Agency, which manages them as a public conservatorship.
US, China and the coming monetary storm After the crises in subprime lending, the banking sector and the stock market, the same tsunami is sending a new tidal wave that could crash against the dollar and the Euro but also against China and Asia, Eastern Europe as well other emerging nations. This view does not fit well with the agreement reached in Washington by G-20 heads of government and heads of state whose countries represent almost 90 per cent (1) of the world Gross Domestic Product (GDP). In the US capital the leaders of these countries pledged not to erect new trade barriers. In their view globalisation must not stop; we should not return to protectionism, making the same error made in the 1929 crisis. However, such a unanimous consensus seems more lips service to an idea than any actual meeting of the minds. In reality the development of globalisation has been based on an unbalanced economic model. Until now it has relied on controlling monetary emission and non tariff barrier protectionism. The coming monetary storm will thus be a violent and dangerous rebalancing act of the system of international exchange.
Financial System in Collapse, Credit Crisis Worst Yet to Come Mark Twain once said that "if you don't read the newspaper, you are uniformed. If you do read the newspaper, you are misinformed". It is no surprise then, even to people who don't follow the news, that a truly serious financial crisis is sweeping the world. The headlines of newspapers and internet portals speak for themselves. Readers are inundated with facts about what is taking place. At one moment, bank write-offs to the extent of trillions are being discussed. The next moment, notice is given of guardian-angel intervention by governments and interest rate cuts by central banks. Aid packages in the trillions exceed the calculation skills and comprehension capabilities of ordinary people by a factor of several times. The main message conveyed by all of this "information" is mostly emotional. While write-offs may lead the reader to pessimism - what will become of my life, the government creates a feeling of security with the aura of a paternal figure, adding trillions of dollars to banks and "guaranteeing" that bank deposits and security holdings won't simply vanish. Those geniuses are on the task and will never let the system collapse, the reader thinks, so he turns his attention to the next page of the paper.
Jim Rogers: Financial Crisis is going to get WORSE . . . the worst since WWII
Jim Rogers: buy commodities
Jim Rogers: The Dollar is Toilet Paper
California Crisis May Crunch $3.8 Billion of Jobs in Slowdown Just $5 million of work is needed to complete a new California Court of Appeals building in Santa Ana. The state may not have the money, and come July judges may be writing opinions in their living rooms. "I've been on the bench for 23 years, and I've never seen anything like this," said David G. Sills, the presiding justice for the Fourth District Court of Appeals, Division Three, in a telephone interview.
Max Keiser: solution for the economy A solution for the economy is to raise interest rates; not cut them, Americans have no savings, how banks work, banking underpinning, rollover movie, 401k pension funds nationalization, social security is a Ponzi scheme, recession depression, recorded on October 25th 2008
India sets Dec 26 deadline for Pakistan Stratfor, the publisher of geopolitical intelligence on Tuesday, in its report says after Mumbai attacks, India relayed a message to Pakistan via the US that they would be given "30 days to carry out significant actions in cracking down on militant groups operating on Pakistani soil". Islamabad has been denying that they were from Pakistan. The US made clear to Pakistan that Islamabad will have to deliver on India's demands or else Washington will not be able to stand in New Delhi's way, it said. The report said India using time to prepare its military forces, and waiting when the time comes to act.
Japan's Recession Deepens as Factory Output Plummets Japan's recession deepened in November as companies cut production at the fastest pace in 55 years and rising unemployment prompted households to pare spending. Factory output plunged 8.1 percent from October, the Trade Ministry said today in Tokyo, more than the 6.8 percent estimated by economists. The jobless rate climbed to 3.9 percent from 3.7 percent. Household spending slid 0.5 percent, a ninth drop.
Russia's Central Bank Devalues Ruble for Third Time in Week Russia devalued the ruble for the third time in a week, sending the currency to its lowest level against the dollar since January 2006, as oil's drop below $37 a barrel dimmed the outlook for growth. The ruble, down 18 percent against the dollar since the beginning of August, weakened 0.9 percent against the U.S. currency to 28.6905 and 1.4 percent versus the euro to 40.1773, near an all-time low.
Max Keiser: huge governmental gold sales behind the scenes Huge governmental gold sales behind the scenes, American soldiers working to supply oil to China, pick-pocketing because of red tide toxic algae, us treasury rigging the market in summer of 2008 to jack up the value of the dollar and lower the price of crude oil, recorded on September 20th 2008
Bailout Sparks Gold Bugs Anthony Rochte, senior managing director at State Street Global Advisors, says demand for gold exchange-traded funds is increasing as government rate cuts and bailouts stoke inflation fears.
We wish you a very MERRY CHRISTMAS! . . . more news will be posted, Friday, Dec 26th.
The amazing grace of Christmas morn The malls and the Main Streets will soon fall silent. The ringing cash registers and the happy cries of children will be but ghostly echoes across silent streets as hearths beckon, gathering friends and families. But in the clutter of Christmas morn, the Christ born in a manger 2,000 years ago still lives, liberating the hearts of sinners and transforming the lives of the wicked. The authentic story of the redeeming power of the Christmas message is nowhere more vividly illustrated than in the incredible life of an English slaver named John Newton. John Newton was born 300 years ago into a seafaring family in Liverpool. His mother was a godly woman whose faith gave her life meaning. She died when John was 7, and he recalled as the sweetest remembrance of childhood the soft and tender voice of his mother at prayer. . . . . (read the full story online) . . . .
On Christmas Eve in 1807, he died at the age of 82, leaving a dazzling testimony to the miracle born on Christmas.
"I commit my soul to my gracious God and Savior, who mercifully spared and preserved me, when I was an apostate, a blasphemer and an infidel, and delivered me from that state on the coast of Africa into which my obstinate wickedness had plunged me." His testimony, set to music, would become the favorite hymn of Christendom:
Amazing grace, how sweet the sound That saved a wretch like me. I once was lost, but now am found, Was blind, but now I see.
Bring Him Home Santa
Skip the Swans and Shower Your True Love Deep-pocketed romantics who want to give a partridge in a pear tree and the other whimsical gifts from “The 12 Days of Christmas” may be in luck this year. The topsy-turvy economy means that it will cost only 1.1 percent more than last year for the eclectic mix of performers, gold rings and birds. The tab will be $15,480.10. But that price is valid only if the costly flock of trumpeter swans — the song calls for seven swans a-swimming — are struck from the gift list, which is compiled every year by PNC Wealth Management in Pittsburgh as an amusing way to track the annual cost of living.
Straight No Chaser: The 12 Days Of Christmas
GoldDrivers 2009 Extraordinary bullish outlook for gold • Dollar topping out • Physical demand skyrocketing • Supply chain shutting down • COMEX Gold Manipulation exposed • Gold shares on the move again It sure has been a brutal year for gold and its shares and many may wonder if the $1030 top clocked in March 2008 marked the top for the gold bull market that started in April 2001. Despite the fact that many analysts want you to believe that gold has failed to act as a true safe haven this year and that gold will find itself in another bear market for years to come gold's critical drivers have never been stronger than as they are today.
Straight No Chaser - Carol of the Bells
Treasury adds to investments in U.S. banks The Treasury Department announced on Tuesday that it completed a $2.8 billion equity investment in 49 banks on Friday and invested in 43 more on Tuesday. The investments completed on December 19 include 14 privately held banks, the first time the Treasury has recapitalized private banks. Details of the investments made on Tuesday, including the names of the 43 banks, will not be released until Monday, December 29.
Bail-outs? Can we have some too? Wall Street may have been first in line but others could do with some extra cash too In the season of goodwill, Henry Paulson is proving to be an American Santa Claus, doling out sacks of money to aid ailing businesses across the US. The treasury secretary first bailed out Wall Street's struggling banks. Then the insurance company AIG needed a spot of help. Detroit's carmakers were next in line. This week, commercial property developers came in search of assistance in refinancing their mortgages.
PRICELESS! Santa Claus Bailout Plan!
Fed Destined To Become World's Largest Auto Dealership Not content with merely throwing money at the automakers, the Fed has new plans to become the world's largest auto dealership. Details of the plan were buried in this announcement: Fed Opens TALF Loans to All Borrowers, Extends Term.
Madoff Victims May Have to Return Profits, Principal Like some of Bernard Madoff’s clients, a Florida restaurant owner was lucky enough to withdraw part of his investment before the money manager allegedly confessed to a $50 billion Ponzi scheme. Now he’s worried he might be asked to give it back. The 53-year-old investor, who asked not to be identified to protect his stake, took out about $600,000 this year from his $1.5 million account, using some of it to pay down a mortgage. He and other Madoff clients who withdrew funds as long as six years ago may be sued on behalf of other victims to return profits and even principal, securities and bankruptcy lawyers say.
Ruling says Madoff investors must pay up Investors who have lost money in 'world's biggest financial fraud' may also be made to repay profits they made to US liquidators Investors act against golden couple tarnished by Madoff fund scandal Investors who have lost their money in what is alleged to be the world’s biggest financial fraud may also be made to repay any profits that they made to US liquidators. Under a new bankruptcy ruling, any investors who withdrew cash from the hedge fund run by Bernard Madoff before the $50 billion fraud was discovered could be forced to return their original investment and any profits.
Banking Regulator Played Advocate Over Enforcer Agency Let Lenders Grow Out of Control, Then Fail When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007. The benefits were clear: Countrywide's new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank's mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.
Americans are stone broke
Mexican Shoppers Go North, Seeking Bargains TUCSON — Mexican shoppers with fists full of cash and long Christmas lists are pouring across the border into hotels, restaurants and shopping malls here, providing an economic boost in a downward spiraling economy. The families, mostly middle- and upper-income, are traveling hundreds of miles to take advantage of a much wider selection of products at substantially lower prices than can be found in their hometowns in the Mexican states of Sonora and Sinaloa — even after the recent 30 percent devaluation of the Mexican peso against the dollar.
Holiday sales worst in 40 years Retailers risk bankruptcies Recession worries have put a monumental chill on holiday sales, which are on track to be the worst in at least four decades, raising the possibility of many retail bankruptcies next year. The slump comes as the nasty turn in the economy continued to eat away at consumer wealth and confidence, with home sales hitting a 17-year low last month and home prices falling at the fastest rate in at least 40 years. The rapid decline of home values - the largest source of wealth for most consumers - is contributing to the funk that is sinking holiday sales.
The Economy's Latest Hurdle for Retailers: Shoplifting Retailers have blamed the global financial crisis for a litany of ills over the past year: slumping sales, mass layoffs and bankruptcy filings. Now, they are looking to the economy to explain recent spikes in shoplifting from their stores. Though individual retailers do not publicly report crime data, a survey of 52 national chain stores released this month by the Retail Industry Leaders Association (RILA), a trade group, showed that 84 percent reported an increase in shoplifting since the recession began. About 80 percent said organized retail crime had also jumped, and more than half said robberies and burglaries have risen, as well.
Wal-Mart Settles 63 Lawsuits Over Wages Wal-Mart said on Tuesday that it would pay at least $352 million, and possibly far more, to settle lawsuits across the country claiming that it forced employees to work off the clock. Several lawyers described it as the largest settlement ever for lawsuits over wage violations. After years of being embarrassed by lawsuits over its wage practices, the company agreed to settle 63 cases pending in federal and state courts in 42 states. The workers and their lawyers will receive at least $352 million, and the payments could reach $640 million, depending on how many claims affected workers submit.
Dozens of Christmas Displays Vandalized, Pastor Assaulted, Reports Christian Group Nearly 30 acts of vandalism against Nativity scenes or Christmas displays and at least one case of physical assault against a Christian pastor have occurred over the last few weeks, according to the Catholic League for Religious and Civil Rights, which tracks many such incidents every holiday season. “When you see all these examples” of vandalism and assault, “it is shocking,” said Susan Fani, communications director for the Catholic League, a conservative civil rights organization. “And we’re saying, ‘Take a look at this – this shows an animus against Christianity.’”
Don't They Know It's Christmas? Store traffic is weak with just days left. Watch in January for some store chains to file for bankruptcy protection, for thousands and thousands of retail jobs to be eliminated, and for the kinds of deep-discounted sales that might lead you to think that other stores are going out of business. Why is such a bleak scenario a near certainty? Because the holiday shopping season is turning out to be one of the ugliest in years.
Straight No Chaser - Silent Night
Iceland gives Christmas frosty reception On the ground floor of one of Reykjavik’s gleaming office buildings, a well-dressed crowd shuffles and waits. Tinny Christmas songs blare from a small hi-fi by the door. As numbers are called out one by one, people file into the next room where rudimentary shelves are filled with free tins, fish, clothes, books and wrapping paper. Some 2,500 people have applied for Christmas relief packages from Iceland’s three main charities in recent weeks, a 30 per cent rise on last year, as growing numbers of the middle class lose their jobs in the wake of Iceland’s banking collapse.
Ron Paul: Government and Fraud Billions of dollars were recently lost in the collapse of Bernie Madoff’s self-described Ponzi scheme, in which too-good-to-be-true returns on investments were not really returns at all, but the funds of defrauded new investors. The pyramid scheme collapsed dramatically when too many clients called in their accounts, and not enough new victims could be found to support these withdrawals. Bernie Madoff was running a blatant fraud operation. Fraud is already illegal, and he will be facing criminal consequences, which is as it should be, and should act as an appropriate deterrent to potential future criminals. But it seems every time someone breaks the law, politicians and pundits decide we need more laws, even though lack of laws was not the problem.
Tainted political tradition resurfaces in Illinois When Barack Obama won the US presidential election last month, Chicago's political and business elites boasted the city had at last thrown off its reputation for crooked politics and underhand deals. But just as Rod Blagojevich, governor of Illinois, never received a ticket to Mr Obama's celebratory rally in Chicago on election night, the message about the city's change of image apparently failed to reach him as well. Mr Blagojevich is fighting to keep his job after his arrest by federal authorities earlier this month. He is accused of a raft of corrupt practices, including trying to sell Mr Obama's vacant Senate seat. On Friday he denied all wrongdoing and vowed to fight attempts to remove him from office. "It's been the best and worst of times," says Paul Green of Roosevelt University in Chicago. "We're a tale of two cities, except it's only one city."
Climate czar left no electronic trail Deposition shows Browning refused to use e-mail to keep public in dark Don't bother looking for any electronic records of Carol Browner's first stint as a federal government executive. The soon-to-be Obama administration climate czar intentionally didn't keep many. In sworn testimony obtained by The Washington Times, Ms. Browner disclosed that she refused to use e-mail when she served as President Clinton's Environmental Protection Agency chief in the 1990s for fear of leaving a digital trail. She also ordered her government computer hard drive wiped clean of records just before leaving office. "It was a conscious decision not to use a piece of equipment or to learn how to use a piece of equipment because I didn't want to be in a situation similar to what I had been in Florida," she testified about government computers. The testimony referred to her days as an environmental regulator in Florida, where an e-mail message sent to her surfaced in litigation. "This is why I made this decision not to use my computer," she said. "I was very careful."
Fold the TARP So much for checks and balances. It looks as if the Bush administration intends to spend billions of dollars bailing out the American automotive industry. That announcement came immediately after Congress -- the branch of government that’s constitutionally required to deal with spending measures -- declined to intervene. Treasury Secretary Henry Paulson wants to tap the Troubled Assets Relief Program, which Congress passed in October, and rescue car makers. But TARP was never intended to be a slush fund for the executive branch.
CNBC panel - Outlook for 2009 (Dec. 11 2008) P1
CNBC panel - Outlook for 2009 (Dec. 11 2008) P2 Gold, a hedge against deflation and inflation
SEC Moves to Bring Transparency To Market for Credit-Default Swaps The Securities and Exchange Commission took a step yesterday toward a new system of central clearinghouses for credit-default swaps, complex investments traded globally that have been partly blamed for the financial crisis. The SEC commissioners approved temporary exemptions from agency rules, a move that will allow British firm LCH.Clearnet to operate as a central clearinghouse for transactions involving credit-default swaps. Traded in a $60 trillion market that is unregulated and secretive, credit-default swaps have come under scrutiny by Congress and federal regulators in the wake of the financial and credit crises that have plunged economies around the world into recession. The idea behind a system of central clearinghouses -- promoted by a White House advisory group of regulators -- is to bring transparency to the market, possibly reducing risks to the financial system.
60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default(originally aired Dec 14th, 2008)
November Home Sales Fell Faster Than Expected Home sales plunged last month, and housing prices fell at their fastest rate in 40 years, the latest indication that America’s battered housing market will continue to struggle in a rapidly deteriorating economy. Sales of previously owned homes, which make up most of the market, declined 8.6 percent in November, to a seasonally adjusted rate of 4.49 million, according to the National Association of Realtors, a trade group. The median price of a home fell 13 percent in November, to $181,300 from $208,800 a year ago, its lowest point since February 2004.
US existing home sales plunge 8.6% The pace of US existing home sales plunged by 8.6 per cent in November, disappointing economists’ expectations, as buyers retreated from the housing market in spite of falling prices. Home re-sales fell to an annual rate of 4.49m in November, down 10.6 per cent from the same month a year ago, the National Association of Realtors said on Tuesday. The median price of an existing home plummeted 13.2 per cent to $181,000 on the year, the sharpest decline since record-keeping began in 1968.
Commercial Real Estate Industry Seeks U.S. Aid Some of the country's biggest commercial real estate players are asking the government for help, as their $6 trillion industry of hotels, office buildings and shopping malls faces a record amount of debt coming due in the next few years. Trade association executives said that in the past few weeks they have met with members of President-elect Barack Obama's transition team, congressional leaders, and officials at the Treasury Department and Federal Reserve to make their case for assistance. In the next three years, they pointed out, an estimated $530 billion of commercial mortgages will come due for refinancing -- with about $160 billion due next year, according to Foresight Analytics, based in Oakland, Calif. But with the credit markets virtually collapsed, thousands of those properties could go into foreclosure or bankruptcy if owners are unable to get new loans.
UAW Vows to Fight Salary Concessions Labor Leaders Seek to Renegotiate White House Terms on Auto Bailout The nation's automakers are preparing to ask for wage and benefits concessions from their workers in early January to meet the conditions of a $17.4 billion federal aid package, but labor officials say they will seek to renegotiate the terms of the bailout rather than make those sacrifices. The remarks by union leaders have set up yet another contentious battle in the auto industry.
It’s the End of the Line for S.U.V.’s Even a federal bailout could not save three of the last remaining plants in the United States still making sport utility vehicles. Reeling from its financial problems and a collapsing S.U.V. market, General Motors on Tuesday closed its factories in this city and in Moraine, Ohio, marking the passing of an era when big S.U.V.’s ruled the road. The moves followed the shutdown last Friday of Chrysler’s factory in Newark, Del., which produced full-size S.U.V.’s. The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big S.U.V.’s since the early 1990s.
Future of the U.S. Automakers
Blackstoned: How America Killed Itself Gambling, greed and debt: how leveraged-buyout firms like Cerberus, Apollo, Sun Capital and Blackstone changed America forever. America is now the land of the “junk”-rated company. An incremental but dramatic downgrade in the creditworthiness of corporate America has occurred. Can a nation filled with junk survive an economic crisis? America is about to find out. It may be time to lash yourself to the mast. If the Wall Street Journal is right, 2009 could change corporate America forever—and not for the better. In a very important article that went largely unnoticed, the Journal reported last month that 50 percent of all U.S. companies could be at risk of failure. That’s right: Half of corporate America may be on the verge of bankruptcy.
Not Your Garden Variety Depression It will be much worse, in many respects. The chart below, borrowed from Dr. Marc Faber's Market Commentary December 1, 2008, is devastating. The chart shows a stunning loss of $30 trillion stock market wealth around the world. By some estimates, combined losses in commodities, stocks, bonds, real estate are greater than $60 trillion. This is beyond rescue.
The Roaring Twenties & the Roaring Nineties . . . . Americans have been through hard times before and they will come through the present difficulties. Some industries that did not or would not change will pass from the scene or be reduced in size. Others will grow in response to the times. We may well see far less business travel as communications allow people to hold virtual meetings. Vacations may take place closer to home. In time, Americans may realize just how important their energy industries are to the nation’s economy and put aside childish notions of “clean” or “Green” energies like wind or solar. Talk of “global warming” will fade as a Little Ice Age sets in again, much as the last one did from 1300 to 1850. People will discover that electric cars are just too expensive to justify their purchase. Much disparaged family values may assert themselves.
Head of Fund Invested in Madoff Is Found Dead Rene-Thierry Magon de la Villehuchet, a founder of the hedge fund Access International Advisors, was found dead Tuesday in his office in Manhattan. His fund reportedly lost as much as $1.4 billion that had been invested with Bernard L. Madoff, the money manager accused of running a $50 billion Ponzi scheme. Mr. de la Villehuchet, 65, was pronounced dead Tuesday morning, and a New York City Police spokesman, Paul Browne, told DealBook that he had apparently committed suicide.
Protectionist dominoes are beginning to tumble across the world Greece has been in turmoil for 11 days. The mood seems to have turned "pre-insurrectionary" in parts of Athens - to borrow from the Marxist handbook. This is a foretaste of what the world may face as the "crisis of capitalism" - another Marxist phase making a comeback - starts to turn two hundred million lives upside down. We are advancing to the political stage of this global train wreck. Regimes are being tested. Those relying on perma-boom to mask a lack of democratic or ancestral legitimacy may try to gain time by the usual methods: trade barriers, sabre-rattling, and barbed wire.
Pakistan Secures Nuclear Sites after Tip Off Fighter jets sent to counter possible strike | Vigilance enhanced ISLAMABAD: After confirmation of a report that Indian and Israeli air forces have planned an attack on Pakistan's nuclear installations, Pakistan Air Force sprang into action by sending its fighter jets into the air to thwart a possible air strike on Monday, according to reliable sources. Pakistan's Nuclear Control and Command Authority was directed to take necessary measures to deal with any emergency situation. It has also been learnt that anti-aircraft guns and missiles are being installed at the country's nuclear installations. PAF has been directed to remain on high alert until further orders. After reports of a likely attack, passenger flights to Dubai, India and Lahore were stopped for some time.
Pakistan militants 'world threat' Militant groups in Pakistan are "the greatest danger to peace and security in the entire world", India's foreign minister has said. Pranab Mukherjee accused Islamabad of "denial" and "shifting the blame" for last month's deadly Mumbai attacks. He said the international community had not done enough to exert pressure on Pakistan, which denies any involvement. Mr Mukherjee was addressing Indian envoys from across the world who have gathered to discuss the Mumbai attacks.
Saudis seek nuclear weapons Saudi Arabia has sought Pakistan's help as part of its long-term plan to attain nuclear weapons for regional dominance, says a report. "Reports have circulated for years that the Saudis have pursued a secret nuclear program with help from Pakistan, though the Saudis deny this," said a Wall Street Journal article titled 'A Middle East Arms Race'. For years now, media outlets have alleged that Saudi officials are interested in nuclear proliferation, citing comments by former Saudi diplomat Mohammed Khilewi -- who defected to the US in 1994.
Max Keiser and David Walker (former US Comptroller) warned us in 2006, 2007 and this year. They are still sounding the alarm and it's about time Americans wake up. Everybody was a 'capitalist' on the way UP, but we'll be socialists on the way DOWN.
People & Power - Rigged Markets - 20 May 07 - Part 1
People & Power - Rigged Markets - 20 May 07 - Part 2
David Walker: Total liabilities exceed net worth of all American.
David Walker: Staring into the deficit abyss. Oct, 2008
Peter Schiff: Outlook for the Gold Market Gold has actually held up very well compared to other asset classes. If you look at the price of gold relative to its peak, it's only off about 25%, whereas if you look at stock markets around the world, most are off 50% or more, certainly if you price them in US dollars. If you look at how gold has held up relative to industrial metals, relative to energy, relative to agriculture, gold has done extremely well. I think the fact that it has gone down in dollars has caused a lot of people to assume that gold is not performing in this correction whereas, in fact, it has. Also if you look at gold in terms of other currencies, recently you've seen all-time record highs in the price of gold in South African rand, in Australian dollars, in Canadian dollars. So gold has actually had a very strong, stealth move when viewed from the prism of something other than the US dollar.
Marc Faber: 2009 to Be 'Catastrophic' for Global Economy P1
Marc Faber: 2009 to Be 'Catastrophic' for Global Economy P2
'Weak dollar will help gold break through $1200' The price of gold can reflect many macro variables at once. We believe three variables alone go a long way in explaining the fluctuations in the price of gold: risk, currency and commodity prices. Gold is sometimes a currency, sometimes a commodity and sometimes a store of value. With the outburst of the credit crisis last August, we entered into the first step where gold started to reflect the rising risk premium. While comparing the fall of commodity prices due to the credit crisis, we see that only gold held on so well, mainly due to the risk premium.
Will COMEX Default on Gold and Silver? With investment advisors like the former NASDAQ Chairman Bernard Madoff being prosecuted for fraud, it is natural for people to begin to seek stores of wealth that are not subject to counterparty risk. The precious metals have been relatively safe stores of wealth for the past 10,000 years. Many people are going back to basics, turning back to the precious metals, as places to put their money, in these uncertain times. Gold and silver were once the most stable of all goods. Extreme volatility, however, is now a part of their nature. It comes from being made a part of the commodities casino, known as the American futures market, where speculators are allowed to use margin to control 14 times as much metal as they actually have money to buy.
Is America Broke Part 2 - The Debt God Evidence that a dollar a bill (Federal Reserve Note) is not the dollar of the Constitution was provided. The first is a promise to pay. The second is an honest weight of silver: 371.25 grains of fine silver – the silver dollar. This distinction lies at the heart of why the financial system is falling apart. A system of paper fiat debt-money is destined to fail. It can be no other way. Paper money is created out of thin air. Excess credit creation fuels booms that eventually go bust.
A Most Desperate Move by the Fed - Suspending the normal functioning of private credit On December 16 (2008), the Bernanke Fed took the most unusual step of lowering the overnight inter-bank lending rate, the federal funds rate, to a level never reached before, i.e. zero percent with an upside limit of 0.25 percent. It also announced that it will buy "large quantities of" mortgage-backed securities and is considering doing the same thing with Treasury bonds of longer maturities, in order to lower the entire yield curve. What it did not say explicitly is that the Fed is ready to debase the U.S. dollar to artificially low levels in order to reflate the U.S. economy. What the Fed wants is to trigger monetary inflation and change deflation expectations at all costs through large-scale debt monetisation and thus floating excess debts in a sea of newly created money.
Deflation Hoax or Inflation Hoax? Our world is becoming ever more a dangerous place to live. Now, our own president cannot carry out his duty without having to swerve to avoid a thrown shoe. But, wow, did it leave his hair disheveled. Needs a haircut anyway. Too long and shaggy. George, look out for those thrown shoes! But what about that debate over who will take precedence…deflation or inflation? Jim Rogers' quarrel with CNBC 2008.10.22
Gold Rises, Halts 2-Session Drop as Dollar Falls; Silver Steady Gold rose, halting a two-session slide, as a decline in the dollar revived the appeal of the precious metal as an alternative investment. Silver was little changed. The dollar dropped as much as 1.2 percent against a weighted basket of six major currencies following a 3 percent gain in the previous two sessions. Gold's rebound from a 13- month low in October has left the metal up 1.1 percent for the year and heading for an eighth straight annual gain. "Gold's trading off the dollar," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "A weak economy and all-time low interest rates don't call for a strong dollar."
Dollar Devaluation To Fix The Great Recession A quick dollar devaluation would work wonders for submerged borrowers. Don't kid yourself: It could happen. What began as government social tinkering--with implied threats to banks and mortgage companies to extend home loans to even the most marginal of borrowers--led to a greed-blinded mortgage banking business and the meltdown we are experiencing today. Now we are asked by the same congressional leadership to go along with taxpayer-funded bailouts of the very banksters who, while making millions, created the mess.
David Walker: Who Will Bailout the Budget?
Our 2009 Predictions . . . . Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery. While some of his ideas are noble indeed the overall plan will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009. We think the worst of the worst hits in later September 2009. During the spring of next year we see: (1) A second larger wave of residential housing mortgage failures; (2) The first big wave of auto loan failures and repossessions; (3) Over $40 billion in credit card defaults, smashing the bank lenders; (4) The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; (5) And finally, the grand smashing finale of CDS Credit Default Swaps originated with No margin money or down payments! We heard today the total is 500 trillion!
Gold rises first day in three on safe-haven buying Gold futures rose Monday for the first time in three sessions as buying of the metal as a safe haven against the ailing economy returned. But trading could remain volatile and thin in advance of the holidays, analysts said. Gold for February delivery, the most active contract, closed up $9.80, or 1.2%, at $847.20 an ounce on the Comex division of the New York Mercantile Exchange. It rose 2.1% last week. "Although volatility could manifest itself amid thinning trading conditions, few expect significant new positions to be established or sharp trend changes in either direction to take place," wrote Jon Nadler, senior analyst at Kitco Bullion Dealers, in a note. Gold has risen 3.3% so far this month, and it is poised to see a yearly gain of 1.4%. After falling below $700 an ounce in October, the lowest level this year, the metal has gained nearly $150.
Marc Faber: World in a vicious downward cycle.
A recession the Fed can't easily fix This slowdown wasn't caused the usual way, so the usual remedy -- flooding the economy with cash -- isn't a quick solution. But that won't stop Washington from trying. . . . . Why this recession is different Most of the recessions in this country over the past 50 years were caused by the Federal Reserve raising interest rates to battle inflation. The two most recent recessions, though, were created not by Fed tightening but as a consequence of its reckless easy-money policies followed by the exhaustion of, first, the tech-stock bubble and, later, the housing bubble.
Whether Or Not We Like It "We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent." - James Paul Warburg, whose family co-founded the Federal Reserve - while speaking before the United States Senate, February 17, 1950 Today, I feel that I've finally got it "the right way around" with this important quote - where it should be - at the beginning of, and in fact the subject of, a treatise of its own. First, for the uninformed, in America the name "Warburg" is and always has been synonymous with Central Banking. The Warburg family name is inextricably linked to 'old world banking' in Europe as well as being one of the prime architects of the formulation and passage of the Federal Reserve Act in 1913;
Madoff had steady presence in Washington Among politicians, the embattled money manager was known as a generous donor and a 'guru of finance.' When money manager Bernard L. Madoff was arrested in New York recently for allegedly engineering a massive Ponzi scheme, Wall Street financiers were left slack-jawed at the unmasking of an establishment figure who seemed to be an unlikely fraud. The reaction was similar among many politicians in Washington. For years, Madoff was a generous donor to mostly Democratic causes and maintained a steady lobbying presence through the government relations firm of a former New York congressman.
Reeling South Carolina City Is a Snapshot of Economic Woes Even before the job fair opens, the line snakes into the parking lot of the state fairground, a muted parade of lives derailed by layoffs. "It kills me, it eats me up inside," said Raymond Vaughn, who has been out of work for seven months, since he lost his job as a window installer. His fiancée now pays the bills. "I go into this fantasy world where I'm like, I'm in the wrong life and I'm actually a millionaire. It really bothers me I can't do the things I'd like for her. Sometimes you get where you feel less than a man." As the American economy sinks deeper into one of the more punishing recessions since the Depression, frustration and fear color the national conversation.
California Will Have Empty Wallet in 2 Months Unless Budget Deal Made California's chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day. California's chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day. Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.
The World is addicted to US Treasury Bonds
Saving Capitalism No Sure Thing as Statism Undermines Economy What's good for General Motors may not ultimately be best for the global economy. The Bush administration's $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat. The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.
No End in Sight for New and Existing Home Sales Declines The ongoing turmoil in credit markets and record low builder confidence have economists forecasting a continued slide for both new and existing home sales in the U.S. Both new and existing home sales figures for November are scheduled for release at 10 a.m. EST. For new home sales, the consensus forecast calls for a 4.2% drop to 415k sales following the 5.3% plunge in October to a record low of 433k sales. Estimates from the 65 economists polled by Bloomberg range from 343k to 435k. Sales of new homes have fallen more than 70% from the high of 1,389k reached in July 2005.
Banks secretive about aid use Refuse to disclose how they are spending taxpayer dollars Think you could borrow money from a bank without saying what you were going to do with it? Well, apparently when banks borrow from you they don't feel the same need to say how the money is spent. After receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending it. Some won't even talk about it. "We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Commercial Real Estate Industry Seeks U.S. Aid Some of the country's biggest commercial real estate players are asking the government for help, as their $6 trillion industry of hotels, office buildings and shopping malls faces a record amount of debt coming due in the next few years. Trade association executives said that in the last few weeks they have met with members of President-elect Barack Obama's transition team, Congressional leaders, and officials at the Treasury Department and Federal Reserve to make their case for assistance.
More companies lining up for piece of bailout fund More dismal housing, economic data expected as companies line up for bailout funds A trio of reports due Tuesday are expected to paint a bleak picture of the nation's housing market and the broader economy, as the deepening recession sends more companies lining up for a piece of the government's $700 billion bailout fund. Wall Street expects the gross domestic product, the country's total output of goods and services, fell at an annual rate of 0.5 percent in the July-September quarter. That would match the estimate for GDP made a month ago, but economists believe that small drop will be followed by a much larger plunge in the current October-December quarter. The National Association of Realtors is expected to report that sales of existing homes in the U.S. for November fell 1.6 percent to a seasonally adjusted annual rate of 4.9 million units, according to the median forecast of economists surveyed by Thomson Reuters.
Goldman Sachs VS United States
US property developers join queue for government aid American property developers are pleading for assistance from the US government to help them through tough financial times, joining a lengthening queue for public support behind banks, financial services corporations and carmakers. Leading American property firms have told politicians in Washington of a looming crisis when $200bn (£135bn) to $400bn of commercial mortgages mature over the next few years. With banks loth to lend money, they may be unable to refinance these loans. Developers have stopped short of asking for a direct bail-out. But they have asked for the inclusion of commercial mortgages in a $200bn programme established by the US Federal Reserve under which the central bank eases liquidity for car, student and credit card loans.
How credit cards become asset-backed bonds
Deeper Cuts, Widespread Pain Few Industries Are Immune as Companies Shed Jobs in 'Serial' Downturn Recessions can be notoriously uneven. They can wreak havoc with the livelihood of factory workers but not that of bank tellers or nurses. Whole industries can see jobs washed away forever, while others hum along and even grow. This time, however, the pain is more widespread, economists say, affecting the investment banker, the auto worker, the warehouse manager and the toy store clerk.
Foreign automakers in the U.S. cut back Sales are off and production is down, so workers at the Toyota Tundra truck factory here are taking classes: how to handle tools safely, how to get along better with colleagues of varying backgrounds. Some have even cleaned local parks and fed the hungry while collecting Toyota paychecks. "We'd rather be building trucks," said Mike Goss, a Toyota spokesman. "I'm trying to imagine how many trucks we would be selling, with gas prices where they are now, if people were spending money."
Congressman Ron Paul on Bailing Out the Auto Industry
Germany is already collapsing The German economy is on the "brink of the abyss", says the IMK institute in Dusseldorf. The country's GDP could contract by 3.5pc next year. We are reaching depression levels here. The IFO confidence index published by its sister institute collapsed to a record low of 82.6. This is an industrial melt-down. It is becoming ever clearer that the surplus countries (angels) will suffer just as much - if not more - than the deficit countries (sinners), even if this offends moral justice. This was ultimately the story in the 1930s, though it did not look like that at the outset. Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.
The Real Read on the Economy - video A look at how long this deep downturn will last, with Jack Bouroudjian, Capital Market Technologies; CNBC's Rick Santelli & Steve Liesman
The Coming Oil Train Wreck Only a true contrarian can worry about high oil prices, shortages and global economic shockwaves when the price of oil has fallen from $147 to under $40 per barrel in less than six months and gasoline is now less than $2 a gallon! I should be singing "Happy (driving) days are here again," but I'm not. The facts speak otherwise, and the time for preparation and mitigation is growing short.
Evelyn De Rothschild Warning Masses - Too Late (Holding Bonds, Oil, Gold) E.D. Rothschild talks about the future of stocks and bailout of banks and corporations
2009 - Likely Vintage Year for Gold The Federal Reserve estimates that in the past year losses in real estate, stocks and mortgages have sucked out some $7.2 trillion of wealth from the U.S. economy. Some are now putting the figure at $20 trillion. A massive recession is starting and will likely spread throughout much of the world. These forces have exerted their classic strong downward pressure on the price of gold.
Gold Standard Time The country is not on a gold standard. Nevertheless, gold has played a leading role in the past 2 months in frustrating the plans of the paper aristocracy to triple the U.S. money supply and revive the housing bubble of 1997-2006. As my regular readers know, starting in mid-September, the nation’s media, led by the New York Times, conjured up an economic crisis of a “deflationary” nature. This had pretty much the same character as the Salem witchcraft crisis of 1693. For the benefit of new readers, let me reiterate 3 points: . . . In economics, these self-fulfilling phenomena have a fairly short life span. What really moves the economic world is rational self interest. People want stuff. The idea that people will suddenly sit on their money and stuff it in their mattresses is a crackpot idea. It has never happened, and as noted above it did not happen in the 1930s. As noted, what happened in the 1930s was that the Republicans reduced the money supply of the country by 30% in 3 years.
Fed Fights to Weaken Dollar Faced with the threat of deflation, the Federal Reserve (Fed) may be trying to drive the dollar lower to spur inflation. As policy makers don't want home prices to deteriorate further, an alternative is to inflate the prices of all other goods and services: as a result, the relative prices of homes would be less expensive. Weakening the dollar is an effective policy tool to drive up inflation as the cost of import goes up. Just be careful: the Fed may be getting more than it is bargaining for. Fed Chairman Bernanke believes that a weaker dollar will only drive up inflation modestly; in our humble opinion, we believe he may be mistaken. Foreigners have a limit on how much margin pressure they can absorb before they have to pass on the higher cost of doing business. We saw this phenomenon in the spring time, when higher commodity prices forced Asian exporters to drive up prices; import prices into the U.S. were up over 20% year over year (and still up substantially after factoring out what was soaring oil prices at the time). No country has ever depreciated itself into prosperity and the U.S. is unlikely to be the first.
Peter Schiff: The Dollar is Now Dropping Like a Stone, Gold Up 20% in Two Weeks, HYPERINFLATION
Jim Rogers is selling his dollars - Dec 15, 2008
Will Gold be Confiscated? I get this question from time to time, and I suspect that it is something many people worry about. After all, gold was confiscated back in the 1930s. Why couldn't it happen again? Well, even though I think there is much to worry about in the coming years, I don't think you should worry about this. To more fully explain this, we have to go back a few years in order to show how different things are from the confiscation era. To put it briefly, gold was money back then, and had been money for thousands of years. Governments had the idea that in order to get the economy out of the depression, there had to be massive inflation. However, under a gold standard this was not possible. If the government printed too much money, people would take their paper money to the banks and get gold. This fact put a crimp on the government's ability to inflate. People owned gold coins because that was the way they owned money.
In the US, that practice went back to the US Constitution. The Founders had lived through the ruinous paper money inflation of the American Revolution, and were resolved that the printing of paper money unbacked by gold or silver would never happen again. Well, they were wrong.
Gold: The Antidote To Our Problems After a prolonged bout of weakness, the US dollar rallied 20 percent as investors fled risky assets and hedge funds unwound bad bets to repatriate funds. A strong dollar also gave the Fed room to lower interest rates even more. However the Fed's reduction in rates undermined the dollar but in the short term actually prompted a further unwinding of the massive carry trade which temporarily boosted purchases of dollars. However, as the Fed spends more and more, it must print more and more dollars destroying the buying power of every other dollar in circulation.
Jim Rogers: We're going to have an inflationary nightmare Dec.13.2008
Gold: The Antidote To Our Problems After a prolonged bout of weakness, the US dollar rallied 20 percent as investors fled risky assets and hedge funds unwound bad bets to repatriate funds. A strong dollar also gave the Fed room to lower interest rates even more. However the Fed's reduction in rates undermined the dollar but in the short term actually prompted a further unwinding of the massive carry trade which temporarily boosted purchases of dollars. However, as the Fed spends more and more, it must print more and more dollars destroying the buying power of every other dollar in circulation.
How to stop Gold price manipulation Manipulation of price, a criminal, regulatory (if the regulator cares to regulate) and commercial crime of fraud subject to civil litigation and criminal law is today the major means of what funds consider trading. It is not trading but rather criminal activity with both criminal and civil law remedies. It takes the form today primarily of pool short selling or naked short selling as a civil and criminal conspiracy to defraud.
Bailout funds face major hurdles Paulson foes on left, right Under fire from the left and the right, Treasury Secretary Henry M. Paulson Jr. has a tough fight and few allies as he seeks congressional approval to top off the tank with the second $350 billion from the federal bailout fund. Key Democrats, including House Speaker Nancy Pelosi of California and House Financial Services Committee Chairman Barney Frank of Massachusetts, complained that the Treasury's $700 Troubled Asset Relief Program, or TARP, has done little to help struggling homeowners even as it has pumped out the first $350 billion to boost the balance sheets of banks and other financial firms.
New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis' LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.: • the length of the crisis • the explosion of unemployment worldwide • the risk of sudden collapse of all capital-based pension systems
Nazi Economics Nearly every day brings new reports of the collapse of a large financial institution or the impending bankruptcy of a major company. Plans for bailouts and government intervention are in the air. Even those who profess devotion to free enterprise have wavered. Are we not faced with an emergency that calls for immediate action to "save" capitalism? Faced with this situation, we need to be more resolute than ever in defense of the free market, with no government restrictions whatever. If we do not defeat these measures, we face grave danger. The record of National Socialist Germany during the 1930s shows how quickly government intervention leads to full-scale socialism. Ludwig von Mises warned of this many years ago.
Missing the Target With $700 Billion “First you say you do, and then you don’t. And then you say you will, and then you won’t. You’re undecided now, so what are you gonna do?” — “Undecided,” by Sid Robin and Charlie Shavers UNFORTUNATELY, Treasury Secretary Henry M. Paulson Jr. has turned this old song into the unofficial theme of the Troubled Assets Relief Program, the $700 billion bailout. His frequent changes of direction are not only embarrassing, they also upset the very markets this program was designed to calm. It pains me to say this, because I was among the first to call upon Congress to create two institutions to deal with the financial crisis: one to buy and refinance home mortgages, the other to buy what came to be called “troubled assets.” The legislation signed in October empowered the TARP to do both. Sadly and amazingly, it has done neither.
Max Keiser: America sold out as it sinks in the black hole of debt
The Greatest Wealth Transfer in the History of Mankind Starts Now! Right now, the Treasury, the Federal Reserve, and the banking system seem to be gearing up for an event the likes of which has never been seen. I believe the crisis that will unfold over the next few years will add up to the biggest economic event in history. The scale of what is happening will dwarf all other economic events combined. The Tulip mania of 1637, John Law's "Mississippi Scheme" of 1720, and the dot-com / tech bubble of 1999 will pale by comparison. Even the hyperinflation in Weimar Germany in 1923 and the Great Depression will seem like a walk in the park compared to what is coming.
Bailed-Out Banks Dole Out Bonuses Goldman Sachs, CitiGroup, Others Mum on How They Are Using TARP Cash When the nation's chief financial officers begged Congress for $700 billion of taxpayer money, they said it was about saving banks. They didn't say anything about saving bonuses. Despite monumental losses, some Wall Street firms will still be giving out big bonuses this year -- even firms that were bailed out by the government. Goldman Sachs, which accepted $10 billion in government money, and lost $2.1 billion last quarter, announced Tuesday that it handed out $10.93 billion in benefits, bonuses, and compensation for the year.
Peter Schiff: CNBC Kudlow panel of guests, Dec 16 2008 - pt 1/3
Peter Schiff: CNBC Kudlow panel of guests, Dec 16 2008 - pt 2/3
Peter Schiff: CNBC Kudlow panel of guests, Dec 16 2008 - pt 3/3
Big Three to Shutter 59 Plants – Chrysler Forces Dealers to Sell at a Loss Chrysler LLC stunned its employees and dealers early yesterday (Thursday), announcing it was suspending all manufacturing for at least a month, and tightening wholesale credit terms to dealers. By the end of the day, Chrysler was joined by its two other Big Three brethren – General Motors Corp. (GM) and Ford Motor Co. (F). – which also shuttered factories. All told, the Big Three will idle about 59 factories over the next month as each of the three American carmakers struggle to wait on a rescue that the White House says is still under study. The announcement comes in the wake of a stubborn credit crisis and debate over the government bailout for the Big Three automakers.
Peter Schiff & Sen Don Riegle - Money, Politics & auto bailout
Santa "All I want for Christmasmas is $350B" Paulson, TARP meant for Wall St buddies - Bush took TARP for Auto
Paulson Urges Release of Next $350 Billion From TARP Treasury Secretary Henry Paulson urged Congress to release the second half of the $700 billion financial rescue fund after the government exhausted the first $350 billion in less than three months. Congress, which passed the Troubled Asset Relief Program on Oct. 3, “will need to release the remainder of the TARP to support financial market stability,” Paulson said today in a statement released in Washington.
Ron Paul on the auto bailout
Ruination from gluttonous growth I was sitting outside, looking up at the stars, and wondering how many planets circle those billions of twinkling lights, and of that number, how many actually have sentient beings so stupid that they, like the beings here in the biggest economy on the planet Earth, would allow such unfettered expansions of money and credit by a central bank (like the Federal Reserve) so that somebody could borrow that money and use it to buy the new government debt so that the government could spend the money to satisfy the gluttonous growth itself and its friends, all of which guarantees Collapse And Ruination (CAR).
Peter Schiff on The Madoff Scandal Dec 17 2008
Max Keiser, Bernard Madoff & U.S.war Afshin Rattansi talks to Max Keiser about the symbolism in the Bernard Madoff case before talking to a senior official of the Pakistani ISI and friend of Osama bin Laden about U.S. attempts to foment a nuclear war between Pakistan and India.
2005 letter to the SEC about Madoff It’s just remarkable. Below is a pdf of a 2005 letter written by Harry Markopolos to the SEC warning that Bernie Madoff was operating the world’s largest ponzi scheme and that his biggest victims would be French and Swiss private banks. He also names several hedge funds in CT that will implode once the ponzi scheme blows up.
The Madoff Economy The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend. Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
Dollar's Stunning Drop, Ten-Year Treasuries' Huge Rally - What's Going on? Something is afoot. The ramifications of this "something" portend to be significant, although what they will be, indeed, what this "something" actually IS, remains unclear. In previous articles, I have suggested that there is a bubble of sorts in "bearish trades." I have cited spreads in the credit default market that appear elevated beyond fundamentals, and historic put/call spreads. I have cited abnormal volatility as measured by the VIX. As postulated, credit default spreads narrowed somewhat last week. Options spreads have declined, the TED spread is dropping, and as anticipated, the VIX has fallen off a cliff. Meanwhile, mortgage rates have plunged to some of the lowest levels in history, and LIBOR has dropped to its lowest level since June 2004. Taken as a whole, each of the foregoing developments would seem to suggest that the pile of liquidity that various central banks have doused the capital markets with has begun to flow towards borrowers and other end users, and that risk aversion has abated somewhat. This is not surprising because when money is cheap, using it to buy risky stuff is more palatable. This may perhaps explain why the price of equities has bounced up a little wee bit.
In Killer Deflation, Trust One Asset… Financial genius that you are, you sold the tech boom at the top in 2000, presciently moved the proceeds into real estate, and then rode the speeding freight train to a brilliantly timed exit in 2007. Never one to waste time gloating about your successes, you leaped fearlessly into commodities, doubling your money in energy stocks and crude oil before selling everything at the top last July. Good thing your timing was perfect, too, since that bull market turned overnight into the most precipitous and destructive bust since the tech-stock bubble. But your next move, into Treasury paper, was your most impressive yet, since it displayed not mere genius, but something even more rare in today’s investment world: humility. All but certain that U.S. bonds would drastically underperform the investments you’d made up to that point, you plunged 100% into Treasurys anyway, and with urgent haste. For this was no time to be greedy. The financial system looked ripe for collapse, and for the first time in three generations, you reasoned, it was time to put safety before profits.
Keynes And Friedman Were BOTH Wrong Liberals credit John Maynard Keynes with ending the Great Depression with his stimulus programs. Conservatives and "modern" economists credit Milton Friedman with figuring out the real cause of the Depression - too small a monetary base - and creating modern monetary policy. But a team of UCLA economists have determined that some of FDR's policies actually prolonged the depression by 7 years. And some very smart economists credit the manufacture of armaments in World War II (especially those sold to England before America even entered the war) as the thing which really got us out of the Depression. Indeed, as discussed below, proponents of the Austrian school of economics have been saying for decades that you can't stimulate your way out of a Depression with government programs.
As Outlook Dims, Obama Expands Recovery Plans Faced with worsening forecasts for the economy, President-elect Barack Obama is expanding his economic recovery plan and will seek to create or save 3 million jobs in the next two years, up from a goal of 2.5 million jobs set just last month, several advisers to Mr. Obama said Saturday. Even Mr. Obama’s more ambitious goal would not fully offset as many as 4 million jobs that some economists are projecting might be lost in the coming year, according to the information he received from advisers in the past week. That job loss would be double the total this year and could push the nation’s unemployment rate past 9 percent if nothing is done.
Ron Paul and Peter Schiff On The Economic Collapse
Remember when you learned those words? It was back when everything was simple. The Pledge of Allegiance was written in 1892 by Francis Bellamy, the circulation manager of the Boston based "The Youth's Companion" magazine. The end of the Nineteenth Century was a much simpler time. The world was a much simpler place. It not so simple anymore.
When we recite those seemingly patriotic words, what are we really pledging our allegiance to? To the flag? To the United States? To the Republic for which it stands?
If we are to pledge our allegiance, let it be to an ideal. That ideal should be the American way of life as prescribed by the Constitution. The Constitution was designed to provide the essential ingredient in the recipe for the American Dream. It provided the "roadmap" that gave our forefathers the opportunity to make this country great. That greatness was born out of the sweat and blood of a liberated citizenry.
...of the United States of America. . . .
California home prices dive 38% The median price drops to $258,000 in November from $414,000 a year earlier as foreclosures prop up sales but erode prices. The median home price in California dived 38% in November from a year earlier as foreclosures propped up sales but eroded prices, a real estate tracking firm said Thursday. The median home price dropped to $258,000 last month from $414,000 in November 2007, San Diego-based MDA DataQuick said. A total of 32,163 houses and condominiums were sold statewide, up 26% from a year earlier.
Ariz. police say they are prepared as War College warns military must prep for unrest; IMF warns of economic riots A new report by the U.S. Army War College talks about the possibility of Pentagon resources and troops being used should the economic crisis lead to civil unrest, such as protests against businesses and government or runs on beleaguered banks. "Widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security," said the War College report.
The study says economic collapse, terrorism and loss of legal order are among possible domestic shocks that might require military action within the U.S. International Monetary Fund Managing Director Dominique Strauss-Kahn warned Wednesday of economy-related riots and unrest in various global markets if the financial crisis is not addressed and lower-income households are hurt by credit constraints and rising unemployment.
With economy in shambles, Congress gets a raise A crumbling economy, more than 2 million constituents who have lost their jobs this year, and congressional demands of CEOs to work for free did not convince lawmakers to freeze their own pay. Instead, they will get a $4,700 pay increase, amounting to an additional $2.5 million that taxpayers will spend on congressional salaries, and watchdog groups are not happy about it. "As lawmakers make a big show of forcing auto executives to accept just $1 a year in salary, they are quietly raiding the vault for their own personal gain," said Daniel O’Connell, chairman of The Senior Citizens League (TSCL), a non-partisan group. "This money would be much better spent helping the millions of seniors who are living below the poverty line and struggling to keep their heat on this winter."
Ackerman compares Caroline Kennedy to Palin Democratic and Republican critics of Caroline Kennedy said Sunday that the privacy she has demanded for years leaves her unprepared for the rough world of politics. Kennedy has not publicly answered questions since she announced last week that she is seeking the New York Senate seat to be vacated by Democratic Sen. Hillary Rodham Clinton if she is confirmed to be secretary of state. "They’ve basically Sarah Palin-ized her, if I could coin a phrase," said Rep. Gary Ackerman (D-N.Y.), referring to the Alaska governor and former GOP vice presidential candidate criticized for being sheltered from the media. "They’re answering questions that you have to submit in writing. She’s not talking to reporters as she makes this grand tour. They’re, kind of, building a mystique and an industry around her, when we need somebody to fight."
Owners find themselves trapped underwater Nearly 1 in 7 Homeowners Owe More on Their Mortgages Than Their Homes are Worth . . . .It's a problem that's only expected to get worse for legions of homeowners across the USA. Nearly one in seven homeowners is underwater, owing more on their mortgages than their homes are worth. That's about 12 million homeowners, nearly double the number underwater at the end of 2007, according to Moody's Economy.com. Most are homeowners who bought between late 2003 and 2007.
For Conservative Radio, It’s a New Dawn, Too Amid all the pressures on the radio industry, news-talk stations see an opportunity — and his name is Barack Obama. After eight years of playing defense for President Bush, the conservatives who dominate talk radio are back on offense. Hours after Mr. Obama’s election, the country’s most popular radio host, Rush Limbaugh, was talking about the "rebirth of principled opposition." Sean Hannity, the second highest-rated host, quickly cast his afternoon show as the home of "conservatism in exile." It is a lively time to be behind the microphone. One television talker, Joe Scarborough, is starting a radio show. Another, Bill O’Reilly, is ending his. Several of the supporting actors in this year’s Republican primary are showing interest in the medium, too. Fred Thompson, the “Law & Order” star turned presidential candidate, will begin hosting a two-hour show in March, as the syndicator Westwood One is expected to announce this week. Mr. Thompson’s show would take the place of Mr. O’Reilly’s.
Billionaires’ Ski Club in Montana Stiffs Florists, Blacksmiths Builders, florists and blacksmiths are counting their losses along with financiers and hedge-fund managers in the bankruptcy of the Yellowstone Club, a private ski-and-golf enclave in the Montana Rockies. The club, where Persian rugs line the ski lodge and a trail is named “Learjet Glades,” sought protection from creditors on Nov. 10, brought down by the founders’ divorce, profligate spending, and a real estate slump. Members like investment banker Robert Greenhill, founder of Greenhill & Co., want to know where their $250,000 deposits went. A local wastewater company wants its $5,472.
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GM and Chrysler to Receive Up to $17.4 Billion in Loans General Motors and Chrysler will receive up to $17.4 billion in short-term loans from the US government as part of an aid package to the troubled auto industry. President Bush announced the agreement at the White House. According to details of the plan made availabl;e to CNBC.com, the package involves $13.4 billion in short-term financing from the $700 billion Wall Street bailout fund, known as TARP. An additional $4 billion will be made available in February, though that will be contingent on drawing down the remaining $350 billion of the TARP fund. The rescue package includes limits on excecutive pay and warrants for non-voting stock.
Hedge fund failures to hit record as investors flee A record number of almost 1,000 hedge funds will be forced into liquidation this year as torrid investment markets take their toll of the alternative investment industry and worried investors redeem funds. A total of 693 hedge funds crashed during the nine months to the end of September, according to Hedge Fund Research, the Chicago-based research firm. This represents an increase of 70 per cent on the 409 funds that closed their doors during the same period last year. If the trend continued, HFR said, a further 227 hedge funds would close in the remaining quarter, bringing the total for the year to slightly higher than 920. The closures, which far outpace the previous high level of 848 in 2005, comes as the sector heads for its first full-year loss in a decade.
With economy in shambles, Congress gets a raise A crumbling economy, more than 2 million constituents who have lost their jobs this year, and congressional demands of CEOs to work for free did not convince lawmakers to freeze their own pay. Instead, they will get a $4,700 pay increase, amounting to an additional $2.5 million that taxpayers will spend on congressional salaries, and watchdog groups are not happy about it. “As lawmakers make a big show of forcing auto executives to accept just $1 a year in salary, they are quietly raiding the vault for their own personal gain,” said Daniel O’Connell, chairman of The Senior Citizens League (TSCL), a non-partisan group. “This money would be much better spent helping the millions of seniors who are living below the poverty line and struggling to keep their heat on this winter.”
Paulson has no regrets as he readies to leave office With only weeks to go before he leaves office, Treasury Secretary Henry Paulson says he has no regrets about his handling of the financial crisis that helped push the nation into recession. Speaking Thursday night to a sold-out crowd of several hundred at the 92nd Street Y on Manhattan's Upper East Side, Paulson defended his actions and inactions, and pointed to what he views as public misperceptions. "We've had to move very quickly, but I've worked very hard not to make any mistakes," the former Goldman Sachs executive of his efforts to stem an outright collapse of the country's financial system. "I think we should get through the problem before we determine the causes and what we should do about it. These excesses had been building up for a long time, and there is a lack of understanding about the limited authority and how outdated the regulatory structures are," he said.
Failed banks for sale...who's buying? More banks will certainly fail in the months ahead, but at least regulators shouldn't have any trouble finding buyers.Last month, two of the nation's top banking regulators - the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency - widened the buyer pool for failed banks by opening up the bidding process to both investor groups and individuals.Traditionally, this process has been limited to chartered banks and savings institutions. But regulators changed their stance partly in response to strong demand from non-bank investors and expectations that the supply of failed banks will grow in 2009. So far this year, only 26 of the more than 8,400 FDIC-insured institutions have failed. But with 171 institutions on the FDIC's so-called 'problem bank' list as of the end of the third quarter, it's likely that the assets of many more failed banks will be up for grabs next year.
Mortgage bailouts: Who qualifies? Bob and Mary Keenan need a break on their mortgage. A series of reversals has left them strapped and incapable of paying all their bills, the largest of which is the loan on their newly built home. Mortgage workout programs are all over the news and sound like nirvana to financially troubled homeowners like the Keenans. But they're often not what they seem. We'll lead Bob and Mary through the home loan "modification" gantlet. In the process, we'll help illustrate who qualifies for mortgage help, what it consists of and how to boost your chance of qualifying.
Paulson:I will discuss remaining $350B funds with Congress Treasury Secretary Henry Paulson on Friday said he planned to discuss the release of the second half of a $700 billion bank bailout fund with key lawmakers in Congress. The first half of the bailout funds have been allocated, after the White House announced Monday Treasury was committing $17.4 billion in loans to Chrysler and General Motors Corp. "It is clear, however, that Congress will need to release the remainder of the TARP to support financial market stability. I will discuss that process with the congressional leadership and the President-elect's transition team in the near future," Paulson said in a statement. The vast majority of bailout funds, approved by Congress Oct. 3, have been allocated.
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Chrysler says to shut down all production for month Citing a credit crisis and dwindling sales, Chrysler LLC on Wednesday said it would shut down all of its manufacturing operations from the end of this week for at least a month. The blanket shutdown marked a deepening of the financial crisis for the embattled U.S. auto industry and came as Chrysler and its larger rival General Motors Corp both seek to shore up cash as they seek a federal bailout they say they need to survive. Chrysler, considered the weakest of the Detroit automakers, made the announcement on its plant shutdown in a letter sent on Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website.
Dollar No Longer Haven After Fed Moves Rate Near Zero The world’s biggest currency-trading firms say the dollar’s appeal as a haven amid the financial crisis all but evaporated. The U.S. currency slid to a 13-year low against the yen today and had its biggest one-day decline versus the euro after the Federal Reserve reduced its target interest rate yesterday to a range of zero to 0.25 percent, the lowest among the world’s biggest economies. CMC Markets said today the currency’s prospects appear “ominous.” State Street Global markets said the dollar’s outlook has been “undermined.” “The dollar has been under heavy downward pressure,” said Robert Minikin, a senior currency strategist in London at Standard Chartered Bank Plc. “This move is very well-justified and has a long way to run.” Standard Chartered is preparing to cut its dollar forecasts, Minikin said.
More California Towns Face Bankruptcy California may soon have more bankrupt towns on its hands.The city of Vallejo, Calif., gained national attention earlier this year by filing for Chapter 9 bankruptcy protection. Now, two neighbors are fighting to avoid the same fate, as the state's economic crisis spreads.Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. The towns' leaders say they hope to avoid bankruptcy, but concede the move may eventually be their only option. "We're strapped for cash and by the end of March or early April we may not have enough money to pay for payroll," says Hector De La Rosa, Rio Vista's city manager.
Motorola freezes pension plans Motorola, Inc. said on Wednesday that it is freezing employee pension plans and no longer matching 401(k) contributions as a result of the economic crisis. Motorola a maker of cell phones and other communications devices based in the Chicago-area town of Schaumburg, Ill., said it will "permanently freeze" all U.S. pension plans by March 1, 2009.Motorola said it will continue to invest cash into its pension plan, as required. But individual pensions will not reflect any employee salary increases after March 1, effectively capping Motorola's contributions. The company stopped admitting new members to its pension plan in January, 2005. "The plan is not going away - it is being frozen," said Motorola spokeswoman Jennifer Weyrauch-Erickson. In addition, the company said it will no longer match employees' 401(k) contributions, as of Jan. 1, 2009.
“The Biggest Bubble Of All . . . U.S. Government Debt” PhD economist Marc Faber said in a recent interview that the last bubble to crash will be in long-term U.S. treasury bonds. Indeed, Faber has suggested shorting long-term treasuries at just the right moment. (He also is confident that - sooner or later - the U.S will go bankrupt). Reuters correspondent and former Sempra economist John Kemp points out some irony regarding the fed's policy regarding long-term treasuries: The Fed's decision to cut interest rates to between zero and 0.25 percent, coupled with a promise to keep them there for an extended period, and the threat to conduct even more unconventional operations in the longer-dated Treasury market risks the biggest bubble of all, this time in the U.S. government debt.***
Fed Says Buy Gold: The Start of a Bullish Pattern On Tuesday we received direct confirmation from the Fed that the U.S. dollar will continue to be sacrificed to resuscitate ailing credit and asset markets. "Helicopter Ben" is finally living up to his advance billing, as dollars are set to rain down on the economy. Gold markets got a huge burst of upside energy immediately following this surprisingly forthright Fed statement, and the long-anticipated move up to $875 is well underway. This is of course great news for our long positions, and it looks now like $875 will only be a temporary waypoint on the way back up to the all-time highs.
When foreclosure limbo becomes a lifestyle She may live in an epicenter of the U.S. housing crisis, but Vickie Lewis is far from any stereotype conjured up in coverage of the record number of Americans whose homes are in foreclosure. She is not a real estate speculator, house flipper or rental-property investor. She did not lie about her income or buy more house than she could afford. She was not lured into an adjustable mortgage with a teaser rate that later went through the roof. She has never tapped her equity with a second mortgage or a refi. She even has about 20 percent equity left in her home. No, what happened to Vickie Lewis could happen to anyone: She got sick, lost her job and fell behind on her house payments.
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Fed cuts rate to 'virtually zero' US interest rates were cut to a historic low of virtually zero as America resorted to drastic action in its battle to stave off a crippling recession and deflation. Wall Street shares soared after the Federal Reserve, the powerful US central bank, stunned markets by cutting interest rates from an already 50-year low of 1 per cent to between zero and 0.25 per cent. The unprecedented move to combat a slump that threatens to turn into a Thirties-style Depression far exceeded a more modest half-point rate cut to 0.5 per cent predicted by experts.
Swiss gold bullion in huge demand as trust in banks dives Swiss gold refiners are having great difficulty in keeping up with demand for gold bullion leading to long delivery times as investors wary of other stores of wealth. Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold. This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value. "I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
Our Ponzi Economy As the multi-billion dollar Ponzi scheme orchestrated by Wall Street insider Bernard Madoff unravels in the media spotlight, the nation is being presented with a rare opportunity to understand the true nature of many of our most cherished financial structures. Hopefully we have the wisdom to connect the dots. Although the $50 billion loss engineered by Madoff is truly a staggering accomplishment (and was done using old-fashioned fraud rather than the mathematical wizardry that has characterized Wall Street’s recent larcenies) the size of the scheme pales in comparison to the multi-trillion dollar Ponzi structures run by the United States government. In fact, rather than looking to jail Madoff, President-elect Obama should consider making him our new Treasury Secretary. If not that, at least make him the czar of something!
Morgan Stanley's loss is worse than expected Morgan Stanley on Wednesday posted its own quarterly deficit, dogged, as rival Goldman Sachs reported a day earlier, by frozen credit markets, falling asset prices and stagnant underwriting. Morgan said it lost $2.30 billion, or $2.34 a share, in the fiscal fourth quarter, compared to a loss of $3.59 billion, or $3.61 a share, in the year-earlier period. Net revenue was $1.8 billion, compared with negative $400 million in last year's fourth quarter. Analysts polled by Thomson Reuters expected the firm to lose $298 million, or 34 cents a share, on revenue of $3.78 billion. Analyst estimates had been falling for weeks as researchers figured out just how bad things had become in November as Wall Street continued to struggle with its exposure to residential and commercial real estate loans, other credit investments and plunging equity markets. Results in the current quarter included mortgage-related losses of $1.2 billion compared with about $9.4 billion in the fourth quarter of 2007, the company said.
Gov. David Paterson unveils dire New York State budget that includes new taxes, layoffs and cuts Gov. Paterson's proposed $121 billion budget hits New Yorkers in their iPods - and nickels-and-dimes them in lots of other places, too. Trying to close a $15.4 billion budget gap, Paterson called for 88 new fees and a host of other taxes, including an "iPod tax" that taxes the sale of downloaded music and other "digitally delivered entertainment services." "We're going to have to take some extreme measures," Paterson said Tuesday after unveiling the slash-and-burn budget.
The dead mall problem As the recession leaves more retail casualties in its wake, rising store bankruptcies and mall closures could have devastating economic consequences. As more stores exit malls, regional mall vacancies could rise past 7% by year-end, a level not hit since the first quarter of 2001, according to real estate research firm Reis. Major cities across America will be impacted, said David Birnbrey, Chairman and co-CEO of Atlanta-based The Shopping Center Group, a retail real estate services firm. Both Birnbrey and Susan Wachter, professor with University of Pennsylvania's Wharton Real Estate Department, warn the social and economic impact of empty stores can be devastating.
Kiss the dollar rally goodbye It wasn't that long ago that the dollar was strengthening against the once-mighty euro, leading anyone that could still afford a plane ticket to Paris to celebrate that they could suddenly get more baguettes for their buck. But what a difference a Fed rate cut and more bailouts make. Since the Fed lowered rates to 1% in late October, the euro has gained 10% against the greenback. During that time frame, the government has also been forced to essentially print more money to help pay for several new initiatives aimed at boosting the flagging economy. Well, guess what? The Fed cut interest rates again on Tuesday to a target of between 0% and 0.25%. And the government is likely to add more to the bailout tally before the end of the year with an emergency loan to keep General Motors (GM, Fortune 500) and Chrysler LLC from bankruptcy.
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Former Fed governor hints at big upward revaluation of gold Interviewed Monday this week on the "Trading Day" program of Business News Network in Canada, former Federal Reserve Governor Lyle Gramley hinted that a big upward revaluation of gold may figure heavily in the Fed's attempt to rescue the U.S. economy. The program's guest host, Niall Ferguson, an author and history professor at Harvard, asked Gramley, now senior adviser at Stanford Group in Houston, about the seemingly grotesque expansion of the Fed's balance sheet in recent months. Ferguson asked: "I've heard it said that the Fed has turned into a government-owned hedge fund, leveraged at 50 to 1. Do you feel nervous about what this might actually do to the Fed's reputation?" Gramley replied: "I think you have to reckon with the fact that one of the Fed's assets is gold certificates, which are priced, as I remember, at $42 an ounce, and if we were to price them at market prices, the Fed's leverage would look a lot less than it is now."
Gold is One of the Few Assets That's Up for the Year Don't look now, but the little yellow metal that pays no interest and provides no dividend is one of just a few assets that can make the claim of being in positive territory for the year. It's only eked out a gain of about one percent - a London PM fix of $833.75 last December 31st versus about $840 as this is written - but, most investors would be happy with any number that doesn't start with a minus sign this year. Interestingly, if you held the physical metal versus the paper variety, you'd be up somewhere around five percent at the moment. The next two weeks could also be kind to gold as the second half of December has produced an average gain of about two percent over the last seven years, since the price began rising at the rate of almost 20 percent per year.
Bankruptcy filings rise 30% this year Bankruptcy filings rose 30% during the government's 2008 fiscal year, which ended Sept. 30, according to figures released Monday by the Administrative Office of the U.S. Courts.Total bankruptcy filings increased by 241,724 cases, or 30%, to 1.04 million in the 12 months between Oct. 1, 2007, and Sept. 30, 2008. For the three months ended Sept. 30, total bankruptcies rose nearly 34% to 292,291, up from 218,909 in the same period last year. Fiscal fourth-quarter filings were up 60% from 182,973 in the previous quarter.
Goldman Sachs posts $2.1 billion loss Goldman Sachs suffered its first loss as a publicly traded company Tuesday, serving as yet another reminder that no corner of Wall Street has escaped the ongoing financial crisis.The once-revered investment bank said it lost $2.1 billion, or $4.97 a share during the fourth quarter, representing the company's first loss since it went public in 1999. A year ago, Goldman reported a profit of $3.2 billion, or $7.49 a share.Few analysts were expecting the company to maintain its impressive run given the recent market turmoil in the credit and stock markets and the upheaval in the nation's financial services sector.
Bank of America Stock Could Fall to $9 Bank of America was rated "underperform" by Friedman, Billings, Ramsey Group analyst Paul Miller in a note, citing the bank's "thin tangible common equity" as a chief concern. The stock could fall as low as $9, the analyst said. Bank of America's shares closed at $14.1 on Monday, down 5.5 percent. The stock has tumbled 66 percent so far this year. Bank of America's equity ratio is too low, Miller wrote, leading him to expect that the bank will have to raise a "substantial" amount of capital, diluting existing shareholders. "We recommend that investors stay away from the stock until this initial raise is complete," Miller wrote in the note.
AIG Sells $39.3 Billion in Assets to NY Fed's Fund American International Group, the insurer bailed out by the U.S. government in September, said on Monday it sold $39.3 billion of assets to a fund established by the Federal Reserve Bank of New York. The new fund, Maiden Lane II, was created to hold mortgage liabilities from an AIG securities lending portfolio that caused huge losses to the troubled insurer, the company said in a press release. The New York Fed extended the loan to Maiden Lane II to enable the purchase of the securities for $19.8 billion.
FEDERAL RESERVE SETS STAGE FOR WEIMAR-STYLE HYPERINFLATION The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010. On November 7 Bloomberg filed suit under the US Freedom of Information Act (FOIA) requesting details about the terms of eleven new Federal Reserve lending programs created during the deepening financial crisis.
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U.S. homes lose $2 trillion in value during 2008 American homeowners will collectively lose more than $2 trillion in home value by the end of 2008, according to a report released Monday. The real estate Web site Zillow.com calculated that home values have dropped 8.4% year-over-year during the first three quarters of 2008, compared with the same period of 2007. Some 11.7 million Americans are now "underwater," owing more on their mortgage balances than their homes are worth. Zillow collects home values and analyzes home price trends in 163 markets; all but 30 registered price drops over the nine months ended Sept. 30, compared with the same nine-month period of 2007.
Regional banks in Georgia, Texas fail State regulators closed local banks in Georgia and Texas Friday, bringing the total number of failed banks this year to 25.The Federal Deposit Insurance Corp. said that the sole branch of Sanderson, Texas-based Sanderson State Bank will reopen Monday as a branch of The Pecos County State Bank. Sanderson State Bank had total assets of $37 million and total deposits of $27.9 million. The FDIC estimates that the cost to the Deposit Insurance Fund will be $12.5 million. Meanwhile, Haven Trust Bank, which operates four branches in Georgia, will reopen as Branch Banking & Trust on Monday. It was the fifth bank in Georgia to fail this year.
Obama stimulus could reach $1 trillion President-elect Barack Obama's team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday. Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years "a very low-end estimate," the newspaper said, citing an unidentified person familiar with the matter. The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy.
Top banks admit huge losses in Wall Street 'pyramid' fraud Top world financial groups on Monday revealed massive potential losses from an alleged scam run by Wall Street trader Bernard Madoff, admitting they were fooled by a classic pyramid investment fraud. British, French, Japanese and Spanish banks and funds said investments totalling billions of dollars (euros) could be wiped off their balance sheets by a scandal that is set to affect some of the richest people in the world. Royal Bank of Scotland said it could lose about 400 million pounds (598 million dollars, 444 million euros), joining a growing list of banks and investors in Europe, Asia and the United States struck by the scandal. Shares in Santander, the biggest bank in Spain and the second largest in Europe after HSBC , plunged after the lender said it had an exposure of more than three billion dollars to Madoff Investment Securities in New York.
Capital One Delinquencies Rise in November Capital One Financial, one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded. In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent. Net charge-offs reflect loans that a lender does not expect to be repaid.
As Rates Race to Zero, Printing Presses Gear Up When the Federal Reserve policymakers decide on interest rates Tuesday, investors will probably look one step beyond their decision, to gauge how much money will the Fed be willing to print once it is out of rate ammunition. Rates won't likely hit zero Tuesday, but this could be unavoidable in the near future, according to strategists and market experts. Unemployment is likely to surge after more job cuts have been announced by banks and the U.S. auto industry teetering on the brink of collapse. The housing market is likely to take another hit as more people lose their jobs, and consumption will plummet further. "Rates will fall close to zero. Everywhere," Hugh Hendry, chief investment officer and partner, Eclectica, told CNBC.com. "The central banks will be forced to take them to zero because of the widespread disruption in society, for job losses."
Bush May Use TARP Fund To Rescue US Auto Makers The Bush administration, worried about a further blow to the US economy, said it was ready to step in and prevent the auto industry from collapsing, likely using the $700 billion Wall Street bailout fund.The White House warned of the severe impact on a weakened US economy if the auto makers collapsed, and in a reversal of its previous position, said it would consider dipping into a financial bailout fund, known as the Troubled Asset Relief Program, or TARP."Given the current weakened state of the U.S. economy, we will consider other options, if necessary including use of the TARP program, to prevent a collapse of troubled auto makers," White House spokeswoman Dana Perino said.
Madoff's Alleged $50 Billion Fraud Hits Other Investors Investors scrambled on Friday to assess potential losses from the $50 billion fraud allegedly perpetrated by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.Prosecutors and regulators accused the 70-year-old former chairman of the Nasdaq Stock Market of masterminding a Ponzi scheme of "epic" proportions through a hedge fund he ran. Investors entrusted Madoff with billions of dollars before federal agents arrested him at his apartment on Thursday, after prosecutors said he told senior employees that his money management operations were "all just one big lie" and "basically, a giant Ponzi scheme."Madoff is the founder of Bernard L. Madoff Investment Securities, a market-making firm he launched in 1960.Madoff's separate investment advisory business had about $17.1 billion of assets under management. Many investors may have had indirect exposure by investing through the firm's clients.
Fed Refuses to Disclose Recipients of $2 Trillion The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral. Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression. The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
Bank of America to cut up to 35,000 jobs Bank of America Corp said on Thursday it plans to eliminate 30,000 to 35,000 jobs over three years, reflecting its pending purchase of Merrill Lynch & Co and weaker business activity stemming from the economic recession.The cuts could affect as much as 11.4 percent of the combined companies' workforce of about 308,000 people, and are intended to help save $7 billion of annual costs.Bank of America said the cuts will come from both companies and affect all business lines, and in part reflect "the weak economic environment, which is affecting the level of business activity."The Charlotte, North Carolina-based bank said it won't determine the final number of cuts until early 2009, and that as many as possible will come through attrition.
Why home values may take decades to recover For every $100 spent on a house in 1950 the investment rose slightly through 2002, then soared to about $192 in 2006, adjusting for inflation. Then credit dried up, and the bust began.Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000. The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year. "We're so far underwater it's not funny," says Wallick, 57, who had to return to his original home in Oregon to care for a sick family member and tend to his own medical problems. Wallick, one of the hardest-hit victims in one of the states hit hardest by the housing crisis, lost 60% of his home's value in three years.
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Patriot Trading Group
P.O. Box 25711, Scottsdale, AZ 85255 1-800-951-0592