Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 02.23.2009
Soros sees no bottom for world financial "collapse" Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union. He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.
Volcker Speaks on Economic Crisis - Bloomberg
Gold’s Assault On the Clueless We’ve been monitoring gold’s vital signs closely, since any foray above $1000 is cause for nervousness. The yellow stuff has always been free to roam, and even to misbehave, below that price; but once above it, the bankers regard each rally with a glower of malice. While it is indisputable that debt deflation’s irresistible power has rendered the central banks incapable of exerting any meaningful control over the sovereign economies they represent, the bankers and the IMF still have the ability to crush any hint of rebellion by those gold bulls who would deign to challenge the monetary status quo. With their relatively large stocks of physical gold, and the complicity of institutional agents such as JP Morgan to help suppress “paper gold” in futures markets, the bankers still have enough influence over bullion’s price to temporarily suspend the laws of supply and demand.
Gold Little Changed After Gain Over $1,000, Highest Since March Gold was little changed after rallying above $1,000 an ounce last week for the first time in almost a year as investors sought a haven from slumping equities. Gold for immediate delivery traded at $987.03 an ounce after reaching $1,006.29 on Feb. 20, the highest since March. The metal has soared 45 percent from an October low of $682.41 as investor confidence in financial assets eroded and central banks pumped trillions of dollars into the banking system.
Oil Trades Near $40 a Barrel on Concern Recession Will Deepen Crude oil traded near $40 a barrel in New York as traders weighed the risk of a deepening global recession against government measures to revive economic growth. The Organization of Petroleum Exporting Countries may make another production cut should oil prices continue to fall, Chakib Khelil, the Algerian oil minister and former OPEC president, said yesterday. The dollar fell on speculation the U.S. government will take larger stakes in the nation’s banks. “Crude really has been seeking direction from other markets,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “In the near term, the rather dismal macro-economic backdrop will put a lid on oil prices.”
Santelli's Chicago Tea Party: The Quest for Our Nation's Soul CNBC’s Rick Santelli's calls for a Chicago Tea Party (here) are patriotic, American, and on point. A Chicago Tea Party is what our rabble-rousing founding fathers envisioned, and I will be there this July 4. Santelli’s diatribe of genius, fury and heart had one quick quote that you may have missed. “Don’t get scared, Joe. They’re already scaring you.” We are being scared into a submission. It’s not “their” intention, but you know that road to hell. We cannot submit. We have not so utterly gone down this road. Our government started this race to bottom in the dark days of November, 2008. This was about the time I decided that Paper Is Dead.
Saving America: Time to hit the streets? Jim DeMint's gentlemanly air and refined tone belie a power and an urgency in his words. The stately senator from South Carolina sees America's unique centuries-old system of freedom dying out. And he thinks we may have to take to the streets to save it. "I would think it's time to start thinking about peaceful demonstrations," he told us last week. Seriously? "Seriously. "The power of the people is there. Freedom is in the people's hands right now, and it's about to slip through." Of course, the recent "stimulus" debate is what's fresh on DeMint's mind. Despite DeMint's putting 15 aides on it overnight, no one in Washington was able to read the bill, which was the most expensive in American history -- as well as being perhaps the most irresponsible. The worst since the adoption of the income tax, DeMint figures.
Alan Keyes: Stop Obama or U.S. will cease to exist!!!!
Peter Schiff: How He Would Fix America Apparently there is a movement to get doomsayer investor/libertarian Peter Schiff to run for the U.S.. Senate in Connecticut. And a website has gone up to draft him. Here is the Schiff agenda as the website outlines it: 1. Increase savings and production. . . 2. Vote no on all bailouts. . . 3. Allow the recession to run its course. . . 4. Let the free market operate. . . 5. Drastically cut federal spending. . . 6. Cut corporate and personal income taxes. . . 7. Minimize corporate regulation. . . 8. Restore the value of the US dollar. . .
Predatory Legislators With millions of homeowners now struggling to repay money they clearly never should have borrowed, our leaders have been righteously wagging fingers at predatory lenders who allegedly enticed innocent borrowers, and the country, into a financial snake pit. While the mortgage industry clearly deserves a good share of the blame, unindicted co-conspirators abound. The ringleaders are still at-large and are, in fact, busy hatching a plan to dwarf the earlier mistakes.
Roubini says crisis end distant (see video) Nouriel Roubini, one of the few economists who foretold much of the current financial turmoil, on his view that the banking and credit crisis is still far from over.
Third time lucky for gold - the ultimate money? As this article was commenced, the gold price was at $997 and seemingly inexorably headed towards breaching the US$1,000 level once again. Indeed by the time you read this it may well already have done so. April futures had already marginally gone through the $1,000 level. The big question is, assuming spot gold does push through $1,000, will this be third time lucky for the gold bugs? Gold has breached $1,000 twice beforehand and on each occasion its climb into the four figure level was shortlived. This time it may well be a different situation with the likelihood that the price is poised to go higher still - and maintain its position above $1,000 for some little time to come.
The Citigroup/Gold Ratio In 2001, an investor who wanted to exchange his gold bullion for Citigroup (C) shares was able to acquire about six shares of stock for each ounce of gold. With Citigroup closing just under $2.00 yesterday and gold above the $1000.00 mark, that same swap now entitles the holder of gold to about 514 Citigroup shares. The change in fortunes says much less about gold, which is almost 300% above the 2001 lows, than it does about Citigroup, which has fallen about 96% from an early 2007 high.
Decoding What Gold Is Telling Us Well, gold bugs around the world have been having a good chuckle of late, as the market is re-affirming the often eccentric and practically religious views of gold bugs: gold is up over 11% for the year in US dollars, and up over 4% over just the past five trading days. Which begs the question: why? There are a few possible answers to this question:
Deflation. This crisis is global, and everyone is flying to safe stores of wealth. Over the big picture of human history, gold has served as the best store of wealth -- and thus gold is rising. In many ways this is the classic "gold is money" argument, one typically championed by Austrian economists. Robert Blumen has offered an excellent explanation of this argument.
Inflation. Gold is typically a hedge against inflation concerns, and as the US federal government continues to aggressively "stimulate" the economy, the rally in gold may be a reflection of increased concerns regarding inflation.
So which one is it?
Cramer: Staggering Losses of Capital If you want revelations, go over the largest-cap companies right now vs. the ones that were the largest-cap last year at this time. The stocks, the losses, the changes, they are staggering. First, the aggregate: The largest 100 companies a year ago were worth $8 trillion; they're now worth $5 trillion. That's a lot of missing trillions. In the day-to-day drudgery and decline, they seem largely unaccounted for until you look at each line item.
Wall Street awaits Treasury details Increasingly skeptical investors await Treasury plan details, signs gov't efforts are working This week, Washington will get another chance to prove to Wall Street it means business. Investors are expecting details on the Treasury Department's plans to fix the financial industry. The questions they want answered: How the government will decide which banks are healthy enough to be saved, how their toxic assets will be priced and how officials will convince private investors to buy them.
Ron Paul on Real Time w/ Bill Maher 02/20/2009
DeMint: Don't 'censor' talk radio President Obama's effort to clear the air last week has failed to ease conservative fears that the White House and congressional Democrats are conspiring to dominate the airwaves. At issue is the "Fairness Doctrine," a rule that, from 1949 to 1987, mandated that broadcasters present contrasting views on controversial issues. Despite Mr. Obama's denials, leading conservative talk-show hosts and their allies in Congress warn that a plan is afoot to revive the rule in camouflaged form with a simple goal in mind: silencing conservative talk radio.
As Doubts Grow, U.S. Will Judge Banks’ Stability The Obama administration will begin taking a hard look at the financial condition of the country’s 20 biggest banks this week to judge whether they could hold up even if the downturn worsens further than policy makers already expect. These reviews of the banks’ books, known as “stress tests,” are heightening a dilemma for Obama aides about how candid they should be about the health of banks like Citigroup and Bank of America. The tests are expected to take several weeks. Bank shares were pummeled last week, partly because of rumors that the government might nationalize some of the banks. Officials consider many of the top 20 banks “too big to fail.”
U.S. Rejects Nationalization of Citi and BAC Just as the US equity market was in the process of a major breakdown over the issue of possible government takeover of Bank of America and Citigroup, the White House made some comments that appeared to reject the notion of nationalization, and there was a sudden market turnabout. After Bank of America CEO Ken Lewis stated his bank was profitable and did not need government aid, BAC shares moved higher by about +20% in minutes. By the end of the session, however, the broad market rally ran out of steam.
Bank rescue details key to stave off bears Bears could have the upper hand again this week if Wall Street fails to get assurance that major banks can be rescued without being seized by the U.S. government. The Dow breached a six-year low in the holiday-shortened week amid mounting fears that the White House would nationalize banks, thus wiping out shareholders. Stocks pared losses in the final hours of trading on Friday after the White House said it strongly believed in a privately held bank system.
Investigator to lead stimulus oversight Obama to name former Abramoff investigator to oversee $787B stimulus President Barack Obama plans to announce Monday a former Secret Service agent who helped expose lobbyists' corruption at the Interior Department as his pick to oversee the $787 billion economic stimulus plan. Obama is set to name Earl Devaney as chairman of the new Recovery Act Transparency and Accountability Board, an administration official said Sunday. Vice President Joe Biden also will be given a role coordinating oversight of stimulus spending. The official spoke on the condition of anonymity because the White House had not made public the announcement.
Conference in Financial Crisis - Bloomberg
Why Does Obama Think Stimulus Can Shock Economy Back to Life? It would be unfair to pounce all over Team Obama this early in their administration. After all, while the Democrats bear a lot of responsibility for the knee-deep toxic mess now covering the floor of the engine room, the bulk of the responsibility has to rest on the shrugging shoulders of Obama’s immediate predecessor and those that came before him. Early though it may be, however, it’s not too early to come right out and say what needs to be said: when it comes to the steps being taken to address the current crisis, Obama has no clothes.
The Great Depression has Arrived - Collapsing American Dreams “They're out there losing millions and it's up to me and you to come running to the rescue. Well pardon me if I don't shed a tear/they're selling make believe and we don't buy that here/cause in the real world they're shutting Detroit down, while the boss man takes his bonus pay and jets on out of town/DC's paying out the bankers as the farmers auction ground/while they're living it up on Wall Street in that New York City town, here in the real world they're shutting Detroit down.” My favorite line is – “the boss man takes his bonus pay and jets on out of town.” Wow! All these collapsed dreams! All the thousands of baby boomers with calloused hands looking at 50% reduced portfolios.
Jumbo Loan Defaults Rise at Fast Pace as Rich Suffer Luxury homeowners are falling behind on mortgage payments at the fastest pace in more than 15 years, a sign the U.S. financial crisis that began with the poorest Americans has reached the wealthiest. About 2.57 percent of prime borrowers who took out jumbo loans last year were at least 60 days delinquent, according to LPS Applied Analytics, a mortgage data service in Jacksonville, Florida. They got to that level within 10 months, almost twice as quickly as 2007 borrowers and the fastest rate since at least 1992, when LPS Applied Analytics began tracking the market.
Obama plan would cut deficit by two-thirds in first term After a string of costly bailout and stimulus measures, President Barack Obama will set a goal this week of cutting the annual deficit by nearly two-thirds by the end of his term, administration officials said. This reduction will come in large part through Iraq troop withdrawals and higher taxes on the wealthy. Obama's budget outline, which he will release Thursday, will also confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy.
Max Keiser UK is Doomed Feb 21 2009
Clinton Urges China to Keep Buying U.S. Treasury Securities Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama’s stimulus plan, saying “we are truly going to rise or fall together.” “Our economies are so intertwined,” Clinton said in an interview today in Beijing with Shanghai-based Dragon Television. “It would not be in China’s interest” if the U.S. were unable to finance deficit spending to stimulate its stalled economy. The U.S. is the single largest buyer of the exports that drive growth in China, the world’s third-largest economy. China in turn invests surplus earnings from shipments of goods such as toys, clothing and steel primarily in Treasury securities, making it the world’s largest holder of U.S. government debt at the end of last year with $696.2 billion.
Dubai to take up $10bn UAE loan The United Arab Emirates is to lend Dubai $10bn to ease the emirate’s debt repayment schedule in an effort to rescue the struggling economy, officials say. The UAE central bank subscribed to half of a $20bn five year bond programme launched by the Dubai government. The unsecured paper yields a 4 per cent dividend. “This program will secure the necessary funding for Dubai to meet its financial obligations and continue its development program,” the Dubai government said on Sunday. Federal backing is designed to help restore confidence in the Dubai economy, the foundations of which are based on real estate, tourism and trade, making it particularly exposed to the global credit crunch.
Asia Agrees on $120 Billion Currency Pool Amid Crisis Asian nations will form a $120 billion pool of foreign-exchange reserves that can be used by countries to defend their currencies in an expansion of efforts to battle fallout from the global financial crisis. Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations agreed to the fund at a summit yesterday in Phuket, Thailand. The amount is 50 percent more than was proposed last May, and a broadening of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. No date was set for completion of the new pool.
When Consumers Cut Back: A Lesson From Japan As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect. The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy. Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
Secret U.S. unit trains commandos in Pakistan BARA, Pakistan: More than 70 United States military advisers and technical specialists are secretly working in Pakistan to help its armed forces battle Al Qaeda and the Taliban in the country's lawless tribal areas, American military officials said. The Americans are mostly Army Special Forces soldiers who are training Pakistani Army and paramilitary troops, providing them with intelligence and advising on combat tactics, the officials said. They do not conduct combat operations, the officials added.
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