Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 06.26.2009
Exclusive Conversation With Ron Paul: The Future Of The Federal Reserve President Obama's financial regulatory plan has created controversy over the role of the Federal Reserve in our economy like rarely before. The person in Congress with perhaps the most unconventional point of view on these issues in American politics is Congressman and former presidential candidate Ron Paul (R-TX), a longtime critic of the very institution of the Fed and fractional reserve banking. He has recently sponsored a bill that would audit the Fed, which has attracted cosponsors such as Dennis Kucinich (D-OH).
Excellent look at the Federal Reserve - well worth watching:
Federal Reserve Fraud: Monopoly Men Part:1
Federal Reserve Fraud: Monopoly Men Part:2
Federal Reserve Fraud: Monopoly Men Part:3
Federal Reserve Fraud: Monopoly Men Part:4
Federal Reserve Fraud: Monopoly Men Part:5
Can we expect $1000 for gold in near future? Since I last suggested gold looked “toppy,” our projected government budget deficit ballooned to $1.75 billion. The Fed decided to print money non-stop to fund a $1.15 trillion asset purchase program. Economic upheaval continued, including several major bankruptcies. Political unrest erupted in Iran. And North Korea stepped up its nuclear defiance. All should have emboldened gold prices. And yet, the metal struggled to tread water. It’s actually down 2% since February. Of course, the roar from gold bugs remains uninterrupted. They consider it heresy to suggest commodities correct, especially their supreme yellow leader. But they do. And I’m here to warn you to expect a correction in the short term for gold.
Gold Gains on Speculation Low Interest Rates Will Spur Demand Gold prices rose on speculation that record-low U.S. interest rates will boost demand for the metal as an alternative investment. Silver also advanced. The Federal Reserve yesterday left its key bank-lending rate target at zero to 0.25 percent and said it is likely to remain at "exceptionally low levels" for an "extended period." The central bank also reiterated its plan to buy as much as $1.75 trillion in U.S. Treasury securities and bonds as a way to ease credit. Some investors buy gold to preserve value. "If interest rates remain low, it's encouraging for gold," Bernard Sin, the head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva.
China Should Buy Gold to Hedge Dollar Fall China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday. Li Lianzhong, who heads the economic department of the Party's policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets. Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities.
The Next Bubble Is Here. Have You Bought In? I have identified the next bubble. It has already begun. It is in full swing. Investors want to identify the next big bubble. Some investors want to buy in now, maybe using borrowed money (margin loans) to make a killing. They are confident that they will sell out near the top. They won't. Other investors just want to avoid getting trapped. They prefer to let the first group bear the uncertainty of profiting from a bubble sector.
Freedom Watch 6/24/2009 (1/6)
Dragon's Hoard In one fell swoop, China profoundly alters gold market synergy "We've got a situation where Geithner is smiling and has no choice but to stress the credibility and stability of the US financial and economic system, while the creditors [such as the Chinese] smile back and say they believe him, while at the same time giving hand signals to their reserve managers to get rid of these things [U.S. Treasuries]." - Neil Mellor, Bank of New York-Mellon When China recently expressed its interest in purchasing $80 billion in gold (about 2600 tonnes), it profoundly altered the gold market's long-standing synergy in three significant ways:
Currency, culture, Confucius: China's writ will run across the world The rise of the East will change more than just economics. It will shake up the whole way that we think and live our lives The world is being remade but the West is only very slowly waking up to this new reality. In 2027 Goldman Sachs estimates that the size of the Chinese economy will overtake America's and by 2050 will be twice as big. But we still think of the rise of the developing countries and the relative decline of the developed nations in almost exclusively economic terms. China's rise is seen as having momentous economic implications but being of little political and cultural consequence. This is a profound mistake.
When The Chinese Come For Our Real Estate How might you hedge your exposure to a weakening dollar? Well, you might by land and gold, to name a couple of popular assets. Well, a top Chinese Communist Party economist is urging his country to do the same thing. The gold part isn't all that exciting, really, since we know China is snapping up commodities left and right. But the land part is interesting, particularly because he's saying the government should buy land in the US.
Barclays Says Dollar 'Paradise Lost' as U.S. Assets Lose Allure Barclays Capital Inc., the world's third-largest currency trader, lowered its one-year forecast for the dollar, saying foreign investors will reduce their purchase of U.S. assets. The dollar will weaken to $1.50 per euro in a year, from $1.3988 today, currency strategists Steven Englander and David Woo wrote in a research note to clients today. "Over the medium and long term, it is hard to identify U.S. assets whose performance will be attractive enough to motivate large capital inflows," New York-based Englander and London- based Woo wrote. They referred to the dollar's status as "safe- haven paradise lost" as the U.S. fiscal deficit balloons and the central bank prints money to buy government and private securities.
Fading of the Dollar's Dominance Other Nations See Opening to Boost Their Currencies The days of calling the dollar almighty may be numbered. Since World War II, when the dollar eclipsed the British pound as the king of world currencies, the United States has reaped the rewards of its monetary strength. The greenback's sense of indestructibility allowed the U.S. government to borrow cheaply and gave rise to an era of rich American globetrotters toting the world's most easily convertible form of cash. But the financial crisis that started in the United States is dramatically intensifying the debate over the future of the dollar, and whether it can, or should, remain at the top of the financial food chain. Although a meaningful shift away from the dollar is likely to take years or more, some analysts believe that the debate is now reaching a tipping point.
Freedom Watch 6/24/2009 (2/6)
What's the Purpose of a Correction? . . . . Well, what's the purpose of a correction? It's to destroy the illusions of the previous bubble period. How's this one doing? Progress is mixed. US consumers seem to have straightened up pretty fast. After the crash, they went into therapy and rediscovered their inner squirrel. Now, according to news and anecdotal reports, they're saving all the cash they can. Savings rates, which had been near zero, are now bouncing up towards 5%. When they aren't stashing nuts, they are becoming more independent. Reports tell us that they are planting backyard gardens…and putting in their own power plants. (Yesterday, we came across a website for people who wanted to generate their own power.) They're said to be cutting their own hair…and their own grass, driving less, cooking their own meals, and so forth.
How Much Money is There? There are several different monetary aggregates used to measure a nation's money supply. These monetary aggregates can be thought of as forming a continuum from most liquid (money as a means of exchange) to the least liquid (money as a store of value). The following figure indicates compiled data for the most commonly used measures (M0, M1, M2 and M3) from 102 currencies representing 138 countries.
The Sting Frankly, dear public, you are being robbed. This may be put crudely but at least it is clear. - Frederic Bastiat, Economic Sophisms Welcome to the world's greatest carnival, the American economy. Here you can take a chance at winning the American Dream. You can work hard, save your money, invest it wisely, and win that coveted prize - financial independence. All it takes is the three virtues: hard work, thrift, and investing in America. But wait. You say you tried it and came away disappointed? You worked hard, saved and all you have to show for your effort is a tiny savings account shrinking after taxes and inflation, a job that is threatened by recession and a few stocks that rise and fall like roller coaster cars?
Financial Overhaul Risks Deepening Recession: Bove New regulations for the financial sector risk deepening the recession, as they will amplify the shortage of capital, banking analyst Dick Bove told CNBC Thursday. "If you establish one set of rules, everybody has to adhere to this set of rules," Bove, financial analyst at Rochdale Securities, said. Higher capital requirements are likely to divert funds from being loaned to consumers and businesses, boosting unemployment, and the cost of compliance with new rules will increase fees and boost inflation, he explained.
Freedom Watch 6/24/2009 (3/6)
Bernanke Defends His Role In Bank Of America, Merrill Deal Federal Reserve Chairman Ben Bernanke told Congress Thursday he didn't pressure Bank of America into acquiring Merrill Lynch in a deal that ultimately cost taxpayers $20 billion. Bernanke told a House committee investigating the matter that he did not threaten action against Bank of America's CEO Kenneth Lewis or the bank's board members if they decided to abandon the takeover. "I did not tell Bank of America's management that the Federal Reserve would take action against the board or management" if they decided to invoke a clause in the acquisition contract in an attempt to stop the deal, Bernanke told the House Oversight and Government Reform Committee. "Moreover, I did not instruct anyone to indicate to Bank of America that the Federal Reserve would take any particular action under those circumstances."
"I Don't Recall" How many times will he end up saying that today?
Bernanke Was Right To Threaten Ken Lewis, Here's Why Ben Bernanke's performance on Capitol Hill doesn't make him look so great. At issue is whether he overstepped his bounds by pushing Bank of America (BAC) to stick with its Merrill Lynch acquisition, while (possibly) threatening Ken Lewis with termination if he invoked a (legally dubious) MAC clause. Bernanke says he never threatened Lewis, but obviously Lewis felt such a threat was coming from somewhere, and there is that email about sacking the board and management if Lewis invoked the MAC and it ended up failing in court and Bank of America came back to the Fed asking for assistance to close the deal. Sorry, but this is totally reasonable.
Bernanke pushes back on BofA, Merrill deal charges Federal Reserve Chairman Ben Bernanke on Thursday pushed back hard against accusations the Fed threatened Bank of America executives if they halted a merger with Merrill Lynch or pressured them to withhold bad news about the troubled investment bank. "Neither I nor any member of the Federal Reserve ever directed, instructed, or advised Bank of America to withhold from public disclosure any information relating to Merrill Lynch," Bernanke told the House of Representatives Oversight and Government Reform Committee.
Financial Crisis: The Complete Timeline Wow, these would make for some totally awesome bedroom wall posters. The New York Fed (via Alea) has come out with two documents, showing the complete timeline of the financial crisis, with all the major market events, interventions and bank liability guarantees shown with a hyperlink to the original story. You could totally get lost in these for hours. The first document is international, while the second is just the domestic side of the story.
Government Pamphlet Taught Banks How To Finance A $70,000 Home With A $500 Downpayment A government publication offering banks guidance on "community development" urged banks to offering low-income borrowers loans with many of the features now deplored as irresponsible and lax lending. The two-volume set uncovered by Clusterstock was titled EFFECTIVE STRATEGIES FOR COMMUNITY DEVELOPMENT FINANCE/COMMUNITY DEVELOPMENT RESOURCE GUIDE. The publication provides information and examples for how banks could meet their obligations under the Community Reinvestment Act, including a recommendation for making a home loan where the borrower puts almost no money down while taking on multiple, piggy-back loans. To make this more enticing, it recommends selling the loan into the secondary market.
Freedom Watch 6/24/2009 (4/6)
The Home Appraisal Mess We've been talking this week about the NAR's war against what it claims are low-ball home appraisals, caused by new regulations, and outside appraisers using distressed and foreclosure sales. Real estate appraiser Jonathan Miller is weighing in on the question, and finds some merit to the idea that there are problems with current appraisal methods. But first, he thinks it's ridiculous to dismiss distressed and foreclosure sales as being somehow irrelevant, since the market is the market. If a home seller has to compete with other homes that are being foreclosed upon, then them's the breaks, and that does legitimately drag down the value of a home.
Banks rush to rescue of credit card trusts Record credit card losses are pushing big US banks to come to the rescue of off-balance sheet vehicles they use to transform hundreds of billions of dollars in consumer loans into securities sold to investors. The support provided by Citigroup, Bank of America, JPMorgan Chase and American Express underscores how the deteriorating health of the US consumer is opening new fronts in the financial crisis.
Fed Douses Purchases Talk, Urges Investors to 'Relax' Federal Reserve officials, encouraged by signs the recession is easing, doused speculation they will pump more money into the economy to hold down interest rates, while indicating they're not ready to begin a retreat. Fed policy makers voted yesterday to maintain the size and pace of their $1.75 trillion program to buy mortgage debt and Treasuries. The central bank said it sees a "gradual resumption of sustainable" growth even as "substantial" economic slack holds down inflation pressures.
Terminal Absence of Leadership I like Barack Obama. I like his sincerity, his thoughtfulness, his compassion, and his humanitarian priority. I like his calm resolve, and his humility. But I don't think he's going to succeed in staunching the hemorrhaging of the global economy that is now approaching all published definitions of "depression". Its not because of any shortcoming in his intellect, or leadership skills. It's the fallible nature of the political system upon which the United States now runs, which shows a public democratic puppet government to the public, manipulated by a more powerful, malevolent, and loosely affiliated elite financial interest group of mixed national origin.
Biden's Snares And Delusions President Obama said at his press conference yesterday that no second stimulus package is being contemplated right now. Well, I sincerely hope that's the case, because the current package is a disaster. It spends far too much for far too little in return. All of this frenzied fiscal nymphomania is placing a tremendous burden on Treasury-bond rates and the U.S. dollar. It is undermining the confidence of key foreign investors like China, Brazil, Russia, and others who have to buy our bonds. But the worst thing I heard yesterday was the snare-and-delusion proposal announced by Vice President Biden. Apparently, Joe Biden wants to create a new government council to help laid-off autoworkers who are supposed to transition to solar, wind, and biotech industries. Huh? Are you kidding me?
Freedom Watch 6/24/2009 (5/6)
Unemployment, GDP Paint Picture of Sluggish Economy The economy tumbled at a 5.5 percent pace in the first quarter, but appears to be doing better now, even though heavy layoffs persist. The revised reading on gross domestic product, released Thursday by the Commerce Department, showed the economy from January through March didn't fall as deeply as the 5.7 percent annualized decline reported a month ago. Economists expected the government would stick with its previous estimate.
What's up with Oil The price of oil has climbed despite the lack of demand and a glut of surplus crude. Benchmark crude closed near its highest level in eight months on Friday June 19, 2009 reaching $69.50 on the New York Mercantile Exchange. Gasoline has risen with the price of oil reaching a national average of $2.63 per gallon. Higher oil prices are another factor affecting the economy's ability to recover. What is fueling this price increase and is it sustainable?
More Ford suppliers are in trouble Bankruptcy, distress follow lower volumes The number of Ford Motor Co. suppliers that are in bankruptcy, in financial distress or being watched for potential problems has doubled compared with last year, the company's top purchasing executive told journalists Wednesday. Falling production volumes are sinking revenue and making credit difficult to obtain, forcing suppliers to cut their costs and some to file for bankruptcy or go out of business. Ford has managed so far to keep the supply sector's distress from interrupting production, said Tony Brown, Ford's group vice president of global purchasing.
Economy shrinks at 5.5% rate Despite narrower revision, the broadest measure of the nation's economic activity posts second steepest decline in 27 years. The U.S. economy shrank at an annual pace of 5.5% in the first quarter, the government said Thursday, a slower pace of decline than previously reported but still the second largest quarterly drop in 27 years. Economists had expected a 5.7% drop, according to a consensus estimate from Briefing.com.
Freedom Watch 6/24/2009 (6/6)
Hurdles to resolving the foreclosure crisis Even with loan modifications and refinancing programs moving forward, the end of the foreclosure crisis is not around the corner, a panel of government officials and consumer advocates told real estate reporters and editors at a recent conference. Among the factors slowing progress are loan servicers still gearing up for the task, the recession and for-profit foreclosure prevention firms handing out misinformation. With about three-quarters of mortgage servicers onboard, Deputy Treasury Secretary Seth Wheeler said the administration's loan modification program "is not performing up to expectations yet." About 150,000 trial modifications have been completed and, as servicers work to beef up their staffing and training, tens of thousands are in the works. The goal is 9 million reworked mortgages over the next several months, Wheeler said.
California, Vegas Home Prices Drop on Foreclosures Home prices throughout California and in the Las Vegas area fell from a year earlier in May as a glut of foreclosed property pushed down the value of single- family houses and condominiums. The median price for an existing, single-family detached house in California declined 30 percent to $267,570, the California Association of Realtors said today in a statement. In the Las Vegas area, the median price for houses and condominiums fell 44 percent to $135,000, San Diego-based MDA DataQuick said in a separate statement today.
Builders Will Keep Getting 'Squeezed' for Months Builders in the U.S., battling their lowest market share on record, will need to keep cutting prices and offering upgrades to attract buyers as competition from foreclosures mounts, economists said. The CHART OF THE DAY shows new-home sales represented 7.4 percent of all single-family purchases in May, the lowest level since data began in 1968. From 1990 through 2005, before sales started their descent, the share was about 16 percent.
Obama Suggests Health-care Reform Will Mean Rationing for Some, but Admits He Would Pay Out-of-Pocket for His Own Family During ABC's health-care forum Wednesday from the White House, "Prescription for America," President Obama cited his deceased grandmother's hip replacement surgery as an example of rationing care. During the 90-minute question-and-answer session, which hosts Diane Sawyer and Charlie Gibson said was attended by 164 people "on the front lines of health care in America," epilepsy specialist Dr. Orrin Devinsky asked the president one of a few challenging questions.
Obama gets billions for 'pandemic' Swine Flu Buried amid news stories about World Breastfeeding Week, World Suicide Prevention Day and World Rabies Day, the WHO has a small item giving the latest supposed count of 'laboratory confirmed H1N1 cases. It is something on the order of 55,000 persons worldwide since this April at a factory pig farm in Veracruz Mexico a small child got ill and the world was told of a deadly new 'Swine Flu' that was allegedly spreading from pig to person. Yet the US Government is gearing up as if it ere preparing for the new outbreak of the dreaded 1918 'Spanish Flu' pandemic. The reality does not support the government response. Is something else going on?
Manipulated Flu Designed to Resist Vaccine Hybrid A/H1N1 flu tied to genetic trigger for larger, mutated version WMR previously reported on the genetic manipulation of the 1918 flu from tissue extracted from an Inuit woman who died from the pandemic in Alaska. On May 6, WMR reported: WMR has obtained information from biological researchers that the 1918 Spanish flu genetic sequences were manipulated in order to effect transmission capability.
Obama Not Telling Truth on Gov't Health Care, Republicans Say Sen. Jim DeMint (R-S.C.) and Rep. Tom Price (R-Ga.) both said that President Barack Obama's description of how his proposed government-run health care plan would work was not true. DeMint added that Obama apparently thinks the American people are too dumb to realize that the government will never compete fairly with private insurance companies. "What Obama is talking about is not true," DeMint said Wednesday at a health care forum on Capitol Hill. "A government option will replace private health insurance. There's no question about that."
Obama Says It's 'Not Logical' to Fear Government-Run Health Care President Barack Obama said it is "not logical" to think that a government-run health care program competing with private health insurers would eventually drive the private firms out of business. The concern expressed by many Republicans and some private insurers has been one of the leading arguments against the president's plan to establish a "public option" health care program.
Health bill to be $1 trillion The chairman of the Senate Finance Committee said Thursday that he can write a bill that comes in under $1 trillion and fully paid for, a symbolic goal that may win him additional support. But the bill hasn't been written, said Sen. Max Baucus, Montana Democrat. The committee worked with the Congressional Budget Office, Congress' scorekeeper, to come up with options that would lead them to a $1 trillion bill. "We have ways to fully pay for this bill," Mr. Baucus said after a meeting of the finance committee.
Amendment to H.R. 2647 Alan Grayson Cracks Down on Gold-Plating of Defense Contracts There's a lot of wasted taxpayer money going to defense contractors, and Alan Grayson is working to crack down on it. This amendment to the Defense Authorization Bill forces contracting officials to save us money, or explain why they can't. Currently, contracting officials can choose to weight cost, track record, perceived quality, and other factors in evaluation schemes with no guidance from Congress in how they do this. My amendment would give them guidance, and weight cost as at least 50% of the weighting in the proposal evaluation scheme. Failure to meet this threshold would compel a contracting official to explain why downgrading price or cost as a factor in contracting serves the governments interest.
Conyers abandons plan to probe ACORN 'Powers that be decided against it,' he says House Judiciary Committee Chairman John Conyers Jr. has backed off his plan to investigate wrongdoing by the liberal activist group ACORN, saying "powers that be" put the kibosh on the idea. Mr. Conyers, Michigan Democrat, earlier bucked his party leaders by calling for hearings on accusations the Association of Community Organization for Reform Now (ACORN) has committed crimes ranging from voter fraud to a mob-style "protection" racket.
Obama's forgotten climate agenda Congress is set to consider an $846 billion climate bill. Supporters say it could save money and the environment, opponents say it's too expensive. Global warming is back. Over the last 12 months it seems lawmakers have been preoccupied with other pressing matters: bailing out the banks, saving the automakers, reforming health care. Global warming, a top-tier issue for much of the presidential campaign, kept a low profile. But that's about to change. The House is set to debate a bill as early as next week that could involve $846 billion over the next 10 years.
Gas prices strain struggling households The recent spike in gasoline prices comes at a particularly unfortunate time -- many Americans are still reeling from the economic downturn. Here is how some people have responded to the return of pain at the pump. Last year, when the price of gas hit its all-time high, I had to cut down to regular (grade) so I could get the total fill-up price under $85. As the price of everything else went up, I found myself using my credit cards all the time to get gas. I took out a loan, and that helped to pay off some bills. I also refinanced my car loan so that I could lower my monthly costs.
Lear prepared to file for bankruptcy next week Auto parts supplier Lear Corp is preparing to file for bankruptcy as soon as next week, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The news comes as Lear faces a June 30 window, through which its lenders have agreed to waive the existing defaults under its primary credit facility. Lear, which warned in March it might have to file for bankruptcy, has been exploring alternatives to restructure its debt outside of bankruptcy over the past months.
Developing World Seen as Engine for Recovery After bruising global downturns, the American economy has usually led the world back to growth, but developing countries could be the engine that powers the next recovery. Despite fears just months ago that they would be among the biggest victims of the financial crisis, emerging giants like China, India and Brazil are set to rebound strongly next year, the Organization for Economic Cooperation and Development predicted Wednesday - as Europe, the United States and Japan lag.
Obama says he's committed to immigration reform Obama says he's committed to working with Congress to overhaul immigration laws Launching a fresh effort toward a comprehensive immigration overhaul, President Barack Obama said Thursday that a bipartisan bill on the "sensitive and volatile political issue" will be difficult but must get under way this year. "It's going it require some heavy lifting," Obama said as he hosted a meeting of about 30 lawmakers whose views on immigration span the ideological spectrum. "It's going to require a victory of practicality and common sense and good policy making over short-term politics. That's what I'm committed to doing as president."
Russia considers bail-out for banks Russia is looking at a bail-out of its banks that would go further than the emergency action taken by the US, amid growing fears that bad loans could paralyse the country's economy. Igor Shuvalov, deputy prime minister, will consider taking stakes in troubled banks when a group of experts on the financial crisis meets on Friday to discuss ways to recapitalise Russia's banking system, according to a draft proposal seen by the Financial Times. The proposal, one of several under consideration, would see the government issue OFZ treasury bills, a type of bond, to boost the balance sheets of the biggest banks. In return, the state would receive preferred shares.
Ahmadinejad Asks Obama to 'Avoid Interfering' in Iran Affairs Mahmoud Ahmadinejad urged President Barack Obama against "interfering," as authorities widened a crackdown on protests over the disputed election that returned the Iranian leader to the presidency. Ahmadinejad accused Obama of being influenced by "a bunch of backward politicians" in the European Union, and said he risked repeating the "fiascos" of former President George W. Bush. "I ask Obama to improve himself before it's too late, and avoid interfering in Iran's affairs," the state-run Mehr news agency cited Ahmadinejad as saying yesterday.
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