Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wed 07.01.2009
The Mark of the Beast This idea of a non-bank currency issued directly by a government free of any interest burden is along the lines of what Presidents Lincoln and Kennedy did, and tried to do, respectively, for the US. Their boldness in promoting the welfare of US citizens cost them their lives. They did not want to become interest slaves to a private national bank, and chose to issue our own official currency directly from our Treasury Department free of the interest burden imposed by a privately owned, debt-based, European-style fractional reserve banking system, which is what our Founding Fathers fought a war to free themselves, and their posterity, from.
Chinese Government Wants To Purchase Another $80 Billion Of Gold! Nine weeks ago, the Chinese government admitted to the mainstream media that it had added 14.6 million ounces of gold reserves from 2003 through 2009. For years before that disclosure, several of us non-mainstream media members had reported this activity to smaller audiences. It wasn't until about June 9 that the mainstream media was told that the Chinese government was planning to purchase an additional huge quantity of gold. The information became public when U.S. Rep. Mark Kirk (R-Ill.) was interviewed on Fox News by Greta Van Susteren.
Don’t Be Fooled By Gold’s Tired Look Gold futures eased lower yesterday, apparently too tired for the time being to continue treading water. The Comex August contract settled at 927.40, down a little more than one percent on the day. If you’re a long-term investor looking to do some bargain-hunting, however, we’d advise waiting for even better prices, since it looks as though the futures could fall to as low as 899.00 over the next 6-8 days. That would be a back-up-the-truck buying opportunity as far as we’re concerned, since the downside in bullion seems limited for now. The 899.00 target is a “Hidden Pivot” support, and it appears capable of engendering a tradable bounce. Although that number is not yet a lead-pipe cinch to be reached over the near term, it would become an odds-on bet following a two-day close beneath a less important “hidden” support at 924.00. For the record, the absolute worst we could see over the next month or so would be a test of late April’s lows near 882.
Every Reason in the World to Believe Gold Will Go Higher It is striking how different the outlooks are in different parts of the world. In North America, most people are totally focused on the U.S. economy, which is not looking that promising in the near term. Therefore, investors are quite gloomy. Europe is also not very upbeat. But, in Europe, they are more pragmatic and they tend to look a little further into the future. As a result, many European investors see this down period as a buying opportunity. Parts of Asia were hit hard by the slowdown, but there is still a lot of growth in China and India. China reacted quickly with an effective stimulus plan that is focused on building infrastructure. Growth there is forecast at 8% for this year. With enhancements to rail, roads, ports and the like, China will become an even greater economic force.
Gold Slips as Deflation Bites, But "Unlikely to Persist" as Central Banks Stay Too Loose, Too Long THE PRICE OF GOLD eased back from a 3-session high of $945 an ounce early in London on Tuesday, dropping back as European stock markets dipped and government bond prices ticked lower worldwide. Only short-dated German Bunds rose, buoyed by bad economic news and pushing 1-year yields down to 0.81% ahead of Thursday's interest-rate decision from the European Central Bank (ECB). Crude oil also slipped back, down from Monday's new 8-month highs above $73 per barrel. "The recovery in commodity prices during the first half of this year has caught much of the market by surprise," writes Leon Westgate in today's Commodities Daily from Standard Bank. Since New Year's Day, Westgate notes, copper and lead gained 58% and 57% respectively, while US crude oil contracts added 53%.
Glenn Beck's Hot List: A.C.O.R.N. Protests, US Dollar, Indonesian Debt,Obama Cap And Tax Glenn does a summery of todays hot topics,Glenn Beck for president,he will protect us from the insanity and lack of common sense.
The Silver Indexed Bond Silver investors over the last seven years have been on a rollercoaster ride as silver has bucked like a bronco to move between various price extremes with a rapidity not often seen in other asset classes. They may be forgiven for wondering if it is worth the effort and not just move onto a less volatile investment like gold. After all, seeing silver move rapidly from $4 to $8 and $6 to $15 and then $11 to $21 is great for profits but if you snooze you lose big time as gains can be wiped out in weeks if not days.
Where is Royal Canadian Mint’s gold? Where has all the gold gone? That is the million dollar question haunting the Royal Canadian Mint. The mint has no clear answers to the missing gold from its Ottawa facility. For the past few months, the Mint has tried to get to the bottom of an unprecedented scandal in which some gold it was supposed to have in its inventory for the 2008 fiscal year has seemingly disappeared. It later revealed that $15.3-million (2008 prices) of precious metals is unaccounted for at its Ottawa facility.
British Royal Mint issues rare coins with no date Next time you're in Britain, check your change. The Royal Mint admits it's made a rare error, producing coins without a date on them for the first time in centuries. The mint said Monday that at least 100,000 of the year-less 20-pence coins, normally worth 33 U.S. cents at face value, slipped into circulation at the end of last year. If found, one coin would garner hundreds of times more on the collectors' market. Numismatists say the last time that the Royal Mint accidentally left out the year on a coin was in 1672.
Is The US Dollar Going Up Or Down, Hedge Your Bets? The opinion of currency analysts on the immediate outlook for the US dollar is almost evenly divided between two extremes: those who think the dollar will rise significantly in value by the end of the year; and those who conclude that the greenback will fall. It is a pretty fundamental disagreement among folk paid a great deal of money to get these things right. Why then is there no consensus on this vitally important matter?
HYPERINFLATION NATION MOVIE (1/3) W/ Ron Paul, Peter Schiff, Jim Rogers, Tom Woods, Marc Faber
Debasing the Currency is Leading to Financial Collapse . . . Just As It Has for Thousands of Years In a fascinating 22-page study of money and currency, Christopher Weber shows that every government - from Athens, to pre-collapse Rome, to the Islamic countries in the Middle Ages - which stuck to the Greek standard of coins has been stable and prosperous. Specifically, the Athenian Drachma contained 65.6 grains of silver. Even after Greece declined as a superpower, its currency remained stable. The Roman Denarius, Byzantine Bezant, and Islamic Dinar all copied the Drachma, using around 65.6 grains of gold or silver in their coins.
Russia to recapitalise its banks Russia will issue $14.7bn in bonds to recapitalise its banking system this year and next, said Alexei Kudrin, finance minister, a sum bankers said fell far short of the amount needed to reverse the country’s steep economic decline. In the first comments by a government official on recapitalisation plans to help the sector brace against a surge in bad loans, Mr Kudrin said the government would raise 250bn roubles ($8.05bn, €5.72bn, £4.87bn) this year by issuing OFZ treasury bills and an additional 210bn roubles in 2010. The bills would be exchanged for preferred shares in banks. Mr Kudrin said the government could also issue more subordinated loans.
Geithner's Zombie Program To Buy Toxic Assets Will Rise Again Tomorrow [Wednesday] Speaking of continuity with the Bush Administration, the Obama administration's plan to buy toxic assets from banks will be back in the headlines tomorrow. It seems that details of how the plan will be implemented and who will participate in it will be announced tomorrow. Charlie Gasparino at CNBC broke the news that the administration would have details on the plan tomorrow. Yesterday The Wall Street Journal reported how this much heralded "public private investment program" had lost steam, squeezed between the unwillingness of potential buyers to get into bed with a salary capping, cram-down happy administration and the hesitancy of the banks--freshly flush with new capital--to sell their assets at anywhere close to levels that would attract buyers.
A cancer in the Capitol is killing us There is a rapidly growing cancer in the nation's capitol, a disease called progressive socialism which comes from repeated exposure to Marxism and Communism, This disease will become fatal to the American Republic in just a few short years if not treated and defeated in the next two elections. It's not too late to save America, but it will be very soon if we don't act now.
Soros predicts "stop-go" economy and higher rates Billionaire investor George Soros on Tuesday predicted a "stop-go" economy for the United States, saying fears of inflation will drive up interest rates and choke off growth. Soros, one of the world's most successful hedge fund managers who was speaking at a breakfast hosted by the Wall Street Journal, said borrowing costs are the major headwinds for the economy. "As markets revive, fear of inflation will.
HYPERINFLATION NATION MOVIE (2/3) W/ Ron Paul, Peter Schiff, Jim Rogers, Tom Woods, Marc Faber
Inflation: What You See and What You Don't See In an attempt to fight the international credit market turmoil and its effects on economic activity and overall prices, the US Federal Reserve (Fed) keeps increasing the supply of base money — which is cash in circulation and commercial banks' money balances held with the Fed. From August 2008 to May 2009, the monetary base in the United States more than doubled. The bulk of the expansion reflects an unprecedented rise in banks' excess reserves — that is, banks' base money which is available for additional credit and money creation.
Bank Woes Deepening in Europe When the financial crisis struck the global economy last autumn, European governments moved swiftly to keep their biggest banks from falling into an abyss — never mind fears over nationalization. But now, as big banks on this side of the Atlantic show signs of recovery, a number of their counterparts overseas are sinking into a spiral of deepening losses that has prompted the European Union to consider a more aggressive approach to cleaning up its banking system. Few people outside Belgium have ever heard of KBC Bank. But the travails of this lender, based in Brussels, highlight the broader challenges Europe is facing by not having more fully confronted the deteriorating health of its financial institutions.
Markets out of step on timing of US rate rise When will the Federal Reserve start raising interest rates again from their current level of nearly zero? The range of estimates is astonishingly broad. The futures market – which only a few weeks ago was pricing in a Fed rate rise this year – has pushed back the date until next year, but is still pricing in some tightening by February. Most economists think that is too soon, and the debate is over whether the market is jumping the gun by a few months or by as much as a year or more.
Citi raises card rates on millions Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks. People close to the situation said that Citi, which is about to cede a 34 per cent stake to the US government as part of its latest rescue, had upped rates on between 13m and 15m credit cards it co-brands with retailers such as Sears.
It's True, People Lose 10 IQ Points When Talking About The Fed Ron Paul's Fed Transparency Act, which would require a fresh outside audit of the Fed, has passed the House, though it faces an uphill climb in the Senate.It's got a lot of internet-borne support (duh!) in part, probably, cause nobody knows what the hell the Fed is or does, but also because there are many people legitimately concerned about transparency and the bailouts (like us). Before everyone jumps on Ron Paul's bandwagon, Eddy Elfenbein has a good piece urging everyone to take a deep breath:
HYPERINFLATION NATION MOVIE (3/3) W/ Ron Paul, Peter Schiff, Jim Rogers, Tom Woods, Marc Faber
‘Green Shoots’ Take Over the Lexicon, If Not Economy The current recession has created at least one growth industry: use of the phrase “green shoots.” Since Federal Reserve Chairman Ben S. Bernanke first uttered the words almost four months ago to describe signs of a thaw in frozen credit markets, instances of the botanical metaphor in the press have climbed sevenfold. A Google search for “green shoots” returns 4.86 million hits.
Stocks down on dip in consumer confidence Stocks move sharply lower on last day of 2Q after unexpected dip in consumer confidence Investors are adding consumer confidence to their growing list of things to worry about. Stocks fell sharply in midday trading Tuesday after a private research group said consumer confidence unexpectedly fell in June. Investors had been expecting the Conference Board's measure of consumer sentiment to hold steady following big jumps in April and May. Consumer confidence is closely watched because spending from consumers accounts for more than two-thirds of U.S. economic activity.
Goldman Exits Money-Losing Bet on Loonie Versus Mexican Peso Goldman Sachs Group Inc. exited a bet that the Canadian dollar would strengthen versus the Mexican peso after the trade lost about 5 percent. “Recent data points have gone against our fundamental views of continued stabilization in Canada and a lagging recovery in Mexico, relative to the global cycle,” analysts at Goldman Sachs wrote today in a note, citing worse-than-expected Canadian retail sales and jobs numbers, and a less-than-forecast drop in Mexican industrial production.
Canadian Dollar Falls to Six-Week Low as Crude, Confidence Drop Canada’s dollar depreciated to the lowest level in six weeks as crude oil tumbled below $70 and U.S. consumer confidence unexpectedly fell, prompting investors to trim bets on higher-yielding assets. “When data like consumer confidence challenges the ‘green shoots’ notion, you have some big moves,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “We can argue that $70 oil has already been fully priced in.”
Oil prices tumble in volatile trading Oil caps volatile first half of 2009 by hitting 8-month high before falling sharply Oil prices tumbled in volatile trading Tuesday after rising to an eight-month high. Benchmark crude for August delivery fell $2.25, more than 3 percent, to $69.24 a barrel on the New York Mercantile Exchange after swinging between $69.03 and $73.38 in early trading. It has been an extraordinarily volatile year, which began with crude prices near $40 per barrel, less than a third of what a barrel cost in July, before going on an extended rally for the past two months as the second quarter comes to a close.
Peter Schiff - TIME Magazine Interview
Treasury Set to Unveil PPIP; Ross, GE Capital Participate The U.S. Treasury is planning to roll out its long-awaited Public-Private Investment Program (PPIP) plan, aiming to unveil it on Wednesday. The program is likely to include as many as nine participants. CNBC has confirmed that two firms will be Wilbur Ross's Distressed Real Estate/debt fund and a joint venture between GE Capital and private investor Angelo Gordon & Co. As many as seven other firms will likely participate. Other firms widely expect to be named include PIMCO and Blackrock.
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.
Lawmakers Face Pressure to Resolve U.S. Health Issues Lawmakers working to overhaul the U.S. health-care system face a pressure-filled July after leaving town this week without resolving the biggest questions dividing Democrats and Republicans. When lawmakers return on July 6 after a weeklong recess, the push will be on to overcome differences over issues ranging from whether to set up a new government entity to compete with private insurers to how much to tax the most generous employer- provided insurance plans to generate revenue.
Insured, but Driven Bankrupt by Health Crises Health insurance is supposed to offer protection — both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured. And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system. Too many other people already have coverage so meager that a medical crisis means financial calamity.
Wal-Mart Supports Health Plan That Will Destroy Small Businesses Matthew Yglesias proudly announces that his employer the liberal thinktank Center for American Progress has convinced Wal-Mart to support a law that would legally obligate employers to pay for their employees' health insurance. The Center for American Progress, the Service Employees International Union, and Wal-Mart joined forces today to release a letter (PDF) endorsing the dual ideas of an employer mandate to provide health insurance and “triggers” to automatically reduce costs if health care spending gets too high.
Jobless rates rise in all US metro areas in May Jobless rates rise in all US metro areas in May; 2 parts of Indiana post biggest gains Unemployment rates rose in all the largest U.S. metropolitan areas for the fifth straight month in May. The Labor Department said Tuesday that jobless rates in May rose from a year earlier in all 372 metropolitan area it tracks. The unemployment rate in Kokomo, Ind., jumped to 18.8 percent, up 11.7 percentage points from a year ago, the largest increase of all metro areas. The second-highest increase occurred in Indiana's Elkhart-Goshen, where the rate rose to 17.5 percent. That's up 11.4 percentage points from a year earlier.
Job Seekers Screwed As Businesses Refuse To Hire The Unemployed As if finding a job weren't difficult enough in this environment, the WSJ report on the trend of businesses who will only hire people currently employed, in part on the belief that anyone while still has a job must be "first string". The bias extends from front-line workers to senior managers. Charlie Wilgus, managing partner of executive search for Lucas Group, based in Atlanta, says a manufacturing client looking for a division president recently refused to consider a former divisional president at Newell Rubbermaid Inc. whose department had been eliminated. The client doesn’t want candidates who have been laid off, Mr. Wilgus says.
Frank Lucas R Oklahoma Is Against The Waxman Cap and Trade Bill
The Death to America Act Obama draws a bead on your family -- behold what he does (and even what he says) Grassroots Americans need to use the Fourth of July congressional recess to contact their senators and urge them not to take the Waxman-Markey tax-grabbing lemon handed them by their counterparts in the House. It is the biggest tax hike in American history. As TV newscasts heavily focused on the unfortunate passing of Michael Jackson, Barack Obama and Nancy Pelosi were taking full advantage of your distraction by picking your pocket while you were looking the other way.
This bill is a power grab. This crowd means business, as clearly shown in the fact that an objective and credible senior analyst with the EPA (38 years) has just been fired for writing a critique of the agency's current direction. Alan Carlin disputed the agency's position on "climate change" — the new euphemism for the discredited "global warming."
Fed Documents Fuel Concerns About Expanding Central Bank's Role Documents unearthed by congressional investigators reveal disagreements among senior Federal Reserve officials about how to handle Bank of America Corp.'s acquisition of Merrill Lynch, fueling concern on Capitol Hill over giving the central bank even more power to regulate the financial system. The glimpse inside the regulatory machinery provided by emails, memorandums and handwritten notes show a Fed that wrestled with how tough it should be on Bank of America, one of the biggest U.S. banks. It also shows Fed officials questioning more broadly their response to the financial crisis months earlier.
Ron Paul - Cap and Trade Will Lead to Capital Flight 6/29/09
Ponzi victims' anger now shifts from Madoff to SEC, SIPC After hailing Bernard Madoff's 150-year prison sentence, some of his former investment clients turned their attention to the government systems charged with stopping financial scam artists and reimbursing its victims. Rallying outside a Manhattan federal courthouse Monday, about 20 ex-clients who together lost millions to Madoff said they have been victimized by inadequate oversight before the fraud collapsed in December and questionable decisions and slowness in the ensuing repayment process.
Retired From G.M. at 54. Pensionless at 74? General Motors is using its huge pension fund in a way it never intended. t had planned — and put money aside — for a steady march of retirees over time. But instead, tens of thousands of blue-collar workers, most in their 40s and 50s, are all becoming eligible for retirement benefits now, as the company rapidly downsizes. And even as its pension fund faces this giant bulge in payouts, G.M. is not putting any new money in — the company is not required to make any contributions to the fund until 2013. The longer this goes on, the weaker the fund will be and the more uncertain its long-term viability.
Obama Unveils Consumer Protection Agency Legislation The consumer protection agency envisioned by the Obama administration would have wide latitude to crack down on abusive financial products, assess fees against financial firms, and subpoena information in the name of protecting consumers, according to a legislative proposal released Tuesday. The U.S. Treasury Department, in unveiling the roughly 150-page document, put down an aggressive marker on a piece of legislation the financial services industry is already gearing up to oppose. If agreed to by Congress, the measure would for the first time create a single agency that would have broad authority to write and enforce rules against any firm that provides financial products to consumers, including mortgages and credit cards.
Banks Balk at Agency Meant to Aid Consumers Banks and mortgage lenders are placing top priority on killing President Obama’s proposal to create a new consumer protection agency that would regulate home loans, credit card fees, payday loans and other forms of consumer finance. The Obama administration fired an opening shot on Tuesday, sending Congress a detailed, 150-page proposal for an agency that would set new standards for ordinary mortgages, restrict or prohibit risky loans, investigate financial institutions and enforce new laws aimed at protecting credit card customers. “This agency will have only one mission — to protect consumers,” said Timothy F. Geithner, the Treasury secretary, in a written statement on Tuesday.
Battle lines over Obama consumer agency Plan to set up watchdog is first battle in long road to regulatory reform. Industry steps up efforts in opposition as administration releases legislation. In the debate over how to prevent the next financial crisis, the first fight has already erupted -- and it's over a proposal to create a new agency to protect consumers. On Tuesday, the Treasury Department sent to Congress a 150-page draft of a bill with new details about its plan for a regulator for mortgages, credit cards and other financial products. The Consumer Financial Protection Agency would be run by a presidentially-appointed, five-member board and wield subpoena power and wide-ranging investigative clout.
United-Continental Plan Opposed Justice Department Urges Narrowing of Dispensation to Cooperate on Routes The Justice Department belatedly objected to a plan by United Airlines parent UAL Corp. and Continental Airlines Inc. to cooperate on routes world-wide within the Star Alliance of air carriers, and recommended instead a more-limited trans-Atlantic deal. The Transportation Department gave UAL and Continental preliminary approval for the arrangement nearly three months ago. The DOT tentatively agreed to let Continental join the Star group and granted Continental and nine of Star's 21 current members provisional antitrust immunity to act as a single carrier on some international routes.
Home prices post 18.1 percent annual drop in April Widely watched index shows home prices down by 18.1 pct. in April, but trend is stabilizing There is a clear trend home prices declines are moderating -- another sign the beleaguered housing market is stabilizing, according to data released Tuesday. While the Standard & Poor's/Case-Shiller index of 20 major cities tumbled by 18.1 percent, it marked the third straight month the decline was not a record. And yearly losses in 13 metros improved compared to March. "The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market," said David M. Blitzer, chairman of the S&P index committee.
Next Segment of the Housing Market to Crash: $1+ Million McMansions The new hallucination for most strapped McMansion owners is that they'll "rent the house for a year and then sell when the market comes back." The happy theory here is that, yes, prices are temporarily depressed, but when the green shoots really take hold, we'll go roaring right back to 2006 levels again. Most real-estate agents will be eager to tell you that they agree with this theory. What they won't be able to tell you, as Mark Hanson of the Field Check Group points out, is why.
Obama supporters shut down Atlanta tea party Wait until days before event to object to 'political' nature President Obama may restrict his reaction to the nationwide tea party movement whereby tens of thousands of people are objecting to the spending spree on which the U.S. government has embarked under his leadership, but some of his supporters are taking more direct action: using an easement agreement to cancel a July 4th event scheduled on private property in Atlanta.
In China, New Limits on Virtual Currency The buying and selling of the make-believe currencies used in online gaming has become so widespread that Chinese authorities fear it will affect the real economy. To quell that threat, those authorities said on Tuesday that they had issued new regulations aimed at restricting the trade and use of virtual money. China is one of the world’s biggest markets for huge so-called multiplayer online games like World of Warcraft, and tens of millions of young people are believed to be trading virtual goods and credits for real goods and cash.
Honduras: Another "Failed State" South of US Borders What is it about democracy and rule of law that is so repulsive to third-world banana republics? Now the pitiful state of Honduras has officially joined the ranks as a “failed state” next to Mexico, the swine flu center of the universe.
“TEGUCIGALPA, Honduras (June 28) - Soldiers seized the national palace and flew President Manuel Zelaya into exile Sunday, hours before a disputed constitutional referendum. Zelaya, a leftist ally of Venezuelan President Hugo Chavez, said he was victim of a coup. “Hours later, Congress voted to accept what it said was Zelaya’s letter of resignation, but Zelaya said the letter wasn’t his and vowed to remain in power.
Honduras and Chavez: What You Should Know, What the Centralized Media Is Not Telling You The “coup” in the Central American nation of Honduras is the first major blow to the Marxist expansion sponsored by Hugo Chavez, but the American people are to a great extent being kept in the dark by the centralized news media. The Associated Press, upon which most news outlets in the United States depend, appears to be slanting its reporting to support the pro-Chavez version of events in Honduras. The AP tells us that much of the world has condemned the deposing of Manuel Zelaya. We also are told that Hugo Chavez, president of oil-rich Venezuela, has vowed to remove the new president of Honduras, Roberto Micheletti, and that U.S. president Barack Obama has called the Micheletti government “illegal.”
Obama Sides With Marxists Over Honduras The so-called “military coup” in Honduras was a successful effort by Honduran patriots to preserve their constitutional system of government from an international alliance of communists and socialists backed by Iran. Not surprisingly, America’s Marxist President has come down on the anti-American side. If all of this is news to you, consider yourself a victim of the “state-run media,” as Rush Limbaugh calls it. We are being bombarded with liberal media propaganda that a “military coup” took place in Honduras, and that the U.S. should therefore oppose it.
U.S. Pursues Financial Leverage Over North Korea The Obama administration is preparing to wield broad financial pressure to try to force North Korea to dial back its weapons program, building on strategies former President George W. Bush employed, but then unwound. The Treasury Department is taking a leading role and will work through international banking channels to try to restrict funds to 17 North Korean banks and companies that U.S. officials say are central players in Pyongyang's nuclear and weapons trade. These firms serve as a financial lifeline to leader Kim Jong Il, his family and ruling circle.
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Tues 06.30.2009
World Globalization of the Banking & Regulatory Structure BASEL, SWITZERLAND -The power base of the world has shifted…it is no longer in London, New York City, Washington D. C., or Tokyo. Neither is it in Beijing or Moscow. It is Basel, Switzerland. In 1930, the Bank for International Settlements-BIS was set up as a result of the Young Plan which was named after the man who presided over the Allied Reparation Committee, Owen D Young. Basel was chosen as its location because everyone could get on a train from anywhere in Europe to attend its meetings. When you walk out of the main train station, the BIS is within easy walking distance of one block. A modern 18 story high building belies the power it extends globally. There is nothing about the building that calls anyone's attention to it other than the plaque near the glass front doors that basically says it is private property. The world's power brokers walk to the BIS without fanfare and are set apart from the citizenry by their business suit and ID pass.
Beijing Formalizes Call for New Reserve Currency China's central bank reiterated its call for the creation of a new international currency that could replace currencies such as the dollar in countries' official reserves. In its annual report on financial stability, issued Friday, the People's Bank of China said the country will push reform of the international currency system to make it more diversified and reasonable. While it didn't specifically target the U.S. currency, it said it aims to reduce over-reliance on the current reserve currencies, of which the dollar is the biggest.
Better Listen What China Has to Say Shocked by the fact that lamestream media and Twitter are all about Michael Jackson's death from what appears to be a drug overdose, I enjoy being the spoiler for a world that seemingly does not know how to set its priorities anymore. While 33 of the 42 commercial media I regularly read headline with Jacko, it is Chinese media that published the truly important news of the day. Here's the executive version of Chinese economic news picked from the English language People's Daily Online.
Economic analysis Larry Levin, of Secretsoftraders.com and CNBC's Steve Liesman and Rick Santelli share their analysis or recent economic data.
Will Gold Beat The Summer Doldrums This Year? Summer is not traditionally a good time for gold prices but this year could be the first exception in this bull market. Much depends on how stock markets fare from here. If there is a sharp correction then that would rally the dollar and take gold prices down, at least for a month or two.
This Summer May Prove Hot for Gold Prices Despite the Seasonal Tendencies I am often asked at this time whether it is a good idea to be in the precious metals market during the summer period known as the Summer Doldrums, in which demand for gold dries up temporarily while farmers in India plant crops and wait for the Monsoon rains. When they harvest in the early September, demand for gold picks up again as they are anxious to convert their profits into gold. After looking at the seasonal effects on gold one might think it prudent to wait through the summer in hopes of entering the market at lower prices. However, after considering important fundamental factors such as the increase in the money supply, it is clear that it is not a good idea to wait until summer's end to enter a market that rather sooner than later is heading higher. Naturally, there will be pullbacks along the way, but the potential cost of being completely out of the market is too steep.
Debtors Revolt in the Offing - Check Local Listings A debtors revolt is coming and, ironically, the dozen or so Too Big Too Fail (TBTF), systemically important financial institutions which control the bulk of about a trillion dollars of unsecured credit card lending, and which so generously received and in many cases still show on their balance sheets copious amounts of taxpayer capital borrowed from China, are now enacting the very policies which will be the cause of said revolt.
Inflation We will start with the most significant, the most pernicious and the most misunderstood of all the methods of economic fraud that are being directed against you: inflation. To most of us, inflation means a rise in the average level of all prices for goods and services. It is not an increase in one price or in some prices but an increase in the average of all prices. Without question, inflation is the most deadly of economic evils. It knows no geographical boundaries. It respects neither sex, nor race, nor creed, nor state of health or wealth.
Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity We have all heard that the U.S. economy cannot go the way of Argentina in 2001 when foreign investors expressed lost confidence in the government and refused to roll over maturing short-term government bonds. Money fled the country as foreign currency reserves dwindled. A balance of payments crisis facilitated by investor panic led to the very outcome investor’s feared: the world’s largest ever sovereign bond default, a collapsing currency, and hyperinflation.
Economist Marc Faber Interview - Part 1
Surviving Hyperinflation: An Update In the early 1980s, Harry E. Figgie, Jr. (the founder of Figgie International, Inc.) became concerned that the United States' government was following the same destructive path that lead countries such as Argentina, Bolivia, and Brazil into hyperinflationary economic collapse. In the 1980s, each of these South American countries were running massive annual deficits, were accumulating unmanageable national debts, and each respectively had a central bank creating money, out of thin air, at a reckless pace. In looking at the frighteningly similar profligate behavior, on the part of the U.S. Government, Mr. Figgie became concerned that hyperinflation could emerge in the United States as well.
Hyper-Deflation on the Streets of Paris Scarcely a block from our office in Paris is a monetary phenomenon that has escaped the financial press. In one of the highest-cost economies in the world, you can buy a woman's shirt for 2 euros. A dress? Four euros. A man's jacket can be had for the price of a cup of coffee. The shop is tended by Chinese merchants…apparently dodging France's employment laws by only hiring family members. The merchandise, too, dodges high rents by squatting the sidewalk, under improvised blue awnings.
Apples and Inflation Last week on CNBC's "The Kudlow Report" there was a thrilling debate over inflation between Alan Blinder and Arthur Laffer. Mr. Laffer (former member of Reagan's Economic Policy Advisory Board) encapsulated his position that we need to fear the return of inflation by simply stating that "…if you have a huge increase the supply of apples, the price of apples falls." While Mr. Blinder (former Vice Chairman of the Board of Governors of the Federal Reserve System) responded by stating, "If people suddenly want to hoard apples and the apple suppliers provide a lot of apples, you're not going to have inflation of apple prices."
Silver lining During the worst financial meltdown we have ever witnessed many investors expected gold and other precious metals to skyrocket to levels never seen before. In fact throughout the Lehman's debacle the price of gold actually fizzled like a Hong Kong typhoon and year on year January 2008 to December 2008 made very little gain. If gold was going to do anything short of spectacular we would have expected it to happen during the course of the last quarter of 2008. Yet some are still expecting gold to break through to highs once more in the future. They may be right, but our belief is they could be waiting for quite some time.
Economist Marc Faber Interview - Part 2
West 'must see through radical overhaul of banks' Regulators and governments across the West must not lose their resolve to see through a radical overhaul of banks and financial supervision, the world's top central bankers have warned, echoing a tough weekend message from Lord Mandelson, the Business Secretary. In its annual report, the Bank for International Settlements (BIS), regarded as the "central bankers' central bank", which is coordinating debate over a long-term shake-up of the financial system, highlighted "the risk that officials will fail to finish their repair task".
It's Time To Yank the Shroud Off the Fed Ron Paul's Audit Bill Is Gathering Steam! He may have faded from the national political scene a year ago, after his dark-horse presidential run came to naught, but Rep. Ron Paul's influence is still being felt in campaigns and policy debates across the country. Indeed, the latest legislative priority of the libertarian Texas Republican - auditing the Federal Reserve - has gained support in unlikely quarters. Paul's legislation, popularly known as the "Audit the Fed" bill, has drawn 244 cosponsors, ranging from Ohio's John A. Boehner, the conservative Republican floor leader, to Michigan's John Conyers Jr., the liberal Democratic chairman of the Judiciary Committee. Some Democrats have even picked up on Paul's rhetoric. "It's time to yank the shroud off the Fed and shine some light on these events," New York Democrat Edolphus Towns, chairman of the Oversight and Government Reform Committee, said at a hearing last week about the shotgun marriage between Bank of America and Merrill Lynch last fall to stave off the latter's collapse.
The Time Has Come Well people, we are here. I am here. Gold is here. But the question, dear reader, is... are you here? Gold is going to turn and punch through the $1000 barrier like it was not there. The U.S. dollar is going to drop like a stone. And yet, the vast majority of people are walking around in a daze. When I talk to ordinary Americans, they tell me that things are bad. This is their way of agreeing with the consensus media position of last fall which confuses falling prices with economic bad and buys the whole media line of that time.
Bernanke on the Great Depression A major result of last year's credit storm is a lingering sense of dread and foreboding among investors. Many are waiting for the proverbial "other shoe to drop" as the memories of last year's crisis, and its attendant economic effects, are still fresh in mind. Until recently it was unthinkable to mainstream economists and pundits that an event as devastating as the Great Depression could occur in the U.S. The financial events of the past two years have altered their thinking, however, and now the "D-word" is bandied about in the news with the same liberality the word recession used to be.
Treasuries Head for Steepest First-Half Loss in Three Decades Treasuries headed for their steepest first-half loss in at least three decades as government and Federal Reserve efforts to combat the U.S. economic recession take hold. Government securities were little changed today before an industry report that economists said will show U.S. consumer confidence rose to a nine-month high in June. The biggest gain in U.S. corporate bonds on record and a rally in stocks globally cut demand for the relative safety of government debt as investors sought higher-yielding assets.
Bank Of America/Merrill Lynch: How Did Private Deal Turn Into Public Bailout II? Part 1
Rising national debt raises prospects of eventual inflation Inflation is as dead as the Wicked Witch of the West in a waterfall. The consumer price index has actually fallen 1.3% in the past 12 months. So why is everyone so worried about soaring prices? In a word: debt. The government owes the world $11.4 trillion - $37,000 for every person in the U.S. In the next fiscal year, the government will add $1.8 trillion to the deficit.
Paulson to tell his side of Merrill deal Former Treasury Secretary has agreed to talk to a House panel about his part in last September's Bank of America-Merrill Lynch merger. Former Treasury Secretary Henry Paulson will return to Capitol Hill later this month to testify before lawmakers investigating the government's role in last fall's Bank of America acquisition of troubled Merrill Lynch. The House Committee on Oversight and Government Reform Committee said Monday that Paulson would appear on July 16. It would mark his first appearance before Congress since he left office in January.
Paulson Finally To Face Music On Govt. Role In Bank of America-Merrill Merger The House Oversight Committee has been like a dog with a bone with last year's $50 billion merger between Bank of America and troubled brokerage Merrill Lynch. The committee -- specifically, GOP members led by Rep. Darrell Issa (R-Calif.) -- believes that not only did Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson force Bank of America chief executive Ken Lewis into going through with the merger, even as he was getting cold feet, they believe Bernanke's Fed covered up the strong-arming.
States Can Investigate National Banks, Justices Rule The Supreme Court paved the way on Monday for states to enforce fair-lending laws and other consumer protection measures against the nation's biggest banks, striking down a rule that limited such powers to federal banking regulators. The court concluded that rules issued by federal banking regulators under the National Bank Act - a law passed in 1864 - could not block, or pre-empt, efforts by the states to enforce their laws. The case began with letters sent in 2005 by the New York attorney general at the time, Eliot Spitzer, to several national banks, including Citigroup, JPMorgan Chase and Wells Fargo, inquiring about their lending practices to minority customers.
BIS Sees Risk Central Banks Will Raise Interest Rates Too Late The Bank for International Settlements said there's a risk central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation. History shows that policy makers "have a tendency to be late, tightening financial conditions slowly for fear of doing it prematurely or too severely," the BIS, which oversees central banks, said in its annual report published today in Basel, Switzerland. "Because their current expansionary actions were prompted by a nearly catastrophic crisis, central bankers' fears of reversing too quickly are likely to be particularly intense, increasing the risk that they will tighten too late."
George Soros Talking about Jim Rogers and Warren Buffett 11 June In China
Banks on tighter leash after High Court ruling The U.S. Supreme Court decision to let states enforce their consumer protection laws against federally chartered banks will give regulators greater power to police lending abuses in an industry already under intense pressure to reform. Monday's 5-4 ruling striking down a rule by the U.S. Office of the Comptroller of the Currency barring state oversight is likely to fuel critics who believe lending abuse has driven millions of people into financial distress, whether through mortgages, credit cards or other forms of consumer credit.
Spitzer says chance to probe banks was lost Former New York Governor Eliot Spitzer hailed the Supreme Court's decision on Monday that allows the state's mortgage lending probe, one initiated by Spitzer in 2005, to finally proceed after a protracted legal battle with federal regulators. Yet the former attorney general laments the lost opportunity regulators had to question and possibly halt subprime mortgage activities that ultimately caused massive damage to banks and the economy.
Dollar Rises as China Says Currency May Dominate Global Trade The dollar rose after China said the U.S. currency may keep dominating global trade and ruled out any "sudden" changes to its foreign-exchange reserves. The dollar gained versus the Australian dollar, yen and Swiss franc after Guan Tao, deputy head of the international payment department at the State Administration of Foreign Exchange, wrote in Chinamoney Magazine that the greenback may maintain its status as the world's reserve currency. The yen fell against the New Zealand dollar after a Japanese report showed retail sales slid for a ninth month in May, reducing the currency's appeal as a refuge.
Hong Kong Banks 'Killing Themselves' in Mortgage War Hong Kong high school teacher Chris Poon's dream of buying his first apartment was dashed in December when banks refused to fund more than 50 percent of the HK$3.5 million ($450,000) purchase. Poon, 33, tried again in May and got a loan covering 70 percent of the price for the 700-square-foot (65-square-meter) apartment in Hong Kong's Sai Wan Ho district from BOC Hong Kong (Holdings) Ltd. The mortgage rate was 2.25 percent, down from the 3.5 percent that Poon was discussing with lenders last year.
Madoff Is Sentenced to 150 Years for Ponzi Scheme For one brief moment on Monday morning, Bernard L. Madoff stood up in a federal courtroom in Manhattan and turned to face the people who lost their life savings to his huge Ponzi scheme. "I'm sorry," he told them. "I know that doesn't help you." What did help some of the victims - if anything could - was the sentence Mr. Madoff received minutes later: 150 years in prison for operating one of the largest frauds in Wall Street history, an operation that ensnared millionaires, private foundations, a Nobel Prize laureate and hundreds of small investors who lost their life savings to an investment guru they had trusted completely.
AND NOW, A WORD FROM THE ECONOMY HERSELF
A Recipe for Economic Destruction Those whom the gods wish to destroy they first make mad is an ancient saying that Obama seems intent on confirming with his energy bill. It has been estimated that if implemented this bill will added $9 trillion to energy costs by 2050. And the bad news does not stop there. Critics point out that the these costs will be felt throughout the US economy, particularly in the production of goods and services. However, Americans will not have to wait until 2050 for a severe energy crisis to strike.
Basic Premises by Charley Reese What follows are a few of the basic premises on which I base my thinking. You might or might not agree with them, but may I suggest that you make a list of your own basic premises. It will help you clarify your thinking.
Government is inherently incompetent, and no matter what task it is assigned, it will do it in the most expensive and inefficient way possible.
The American government is corrupt from top to bottom.
If you rely on the mass media to inform you about your community, state and nation, you will, with rare exceptions, be woefully ignorant of what is really going on.
The universal franchise is a bad idea. The notion that the destiny of the nation should be put in the hands of ignoramuses, parasites, boobs, party hacks and idiots is absurd on its face.
Public education in America is a failure and is so flawed it cannot be reformed.
Not much has changed in the past 5,000 years of human history.
Social Security Will Go Bankrupt by 2037 Four Years Earlier Than Projected The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives. Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.
Government Bails Out General Electric "But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE...Public records show that GE Capital, the company's massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government's actions have been "powerful and helpful" to the company." That fact that public money is being used to support General Electric, through their GE Credit group which chartered two small Utah banks raises several issues.
Housing in Peril as Obama Fails to Get Breakthrough Driving through Riverside, California, Bruce Norris pointed to a half-dozen empty houses with "For Sale" signs stuck in untended lawns that he said investors might buy if banks would just extend some credit. "People today look at us as the enemy," said Norris, 57, head of Riverside-based Norris Group, which purchases and renovates homes to rent or sell. "That's a big problem for housing because if we can't get the financing we need, a lot of these properties are going to sit vacant."
WHERE CREDIT IS DUE song parody from versusplus.com about CREDIT CARDS & THE CRISIS
U.S. "mass layoffs" at RECORD high Large-scale lay-offs in the U.S. (defined as lay-offs of 50 or greater at one time) hit the highest level since this statistic was created in 1995, according to an article from CNN. This is yet another indication that the U.S. economy is plummeting downward - with absolutely no signs of stability, let alone a "recovery". Up to this point, the U.S. government has been very successful in duping market sheep (i.e. the "experts") through publishing totally fraudulent monthly jobs reports. With the U.S. economy losing roughly 2 million jobs each month (see "U.S. economy to lose 20 MILLION jobs this year"), the government claimed that less than 400,000 jobs were lost in May.
The Truth Alone Will Not Set You Free The ability of the corporate state to pacify the country by extending credit and providing cheap manufactured goods to the masses is gone. The pernicious idea that democracy lies in the choice between competing brands and the freedom to accumulate vast sums of personal wealth at the expense of others has collapsed. The conflation of freedom with the free market has been exposed as a sham. The travails of the poor are rapidly becoming the travails of the middle class, especially as unemployment insurance runs out and people get a taste of Bill Clinton's draconian welfare reform. And class warfare, once buried under the happy illusion that we were all going to enter an age of prosperity with unfettered capitalism, is returning with a vengeance.
Lawmakers Face Pressure to Resolve U.S. Health Issues Lawmakers working to overhaul the U.S. health-care system face a pressure-filled July after leaving town this week without resolving the biggest questions dividing Democrats and Republicans. When lawmakers return on July 6 after a weeklong recess, the push will be on to overcome differences over issues ranging from whether to set up a new government entity to compete with private insurers to how much to tax the most generous employer- provided insurance plans to generate revenue.
White House Announces New Lighting Standards Aiming to keep the focus on climate change legislation, President Barack Obama put a plug in for administration efforts to make lamps and lighting equipment use less energy. "I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and businesses," the president said, standing alongside Energy Secretary Steven Chu at the White House.
Deficit forces California to issue IOUs California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red. Once the US's richest state, California now has the dubious distinction of having the worst credit rating in the country. It is facing a budget deficit of $24bn (€17bn, £14.5bn) yet Arnold Schwarzenegger, its governor, and the state assembly cannot agree on a budget that would address the shortfall.
General Motors Seeks Approval to Sell Itself General Motors is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a "New GM" in a plan to reinvigorate the automaker under U.S. government ownership. GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration's autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a "New GM" and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury.
Chevrolet races to meet demand for 2010 Camaro General Motors says it's struggling to meet demand for its new 2010 Chevrolet Camaro, with some buyers paying $500 to $2,500 more than the sticker price. The Camaro is creating enough buzz to play a key role in GM's turnaround. It is drawing showroom traffic - every dealer got at least one initially to build interest - while GM is in Chapter 11 bankruptcy protection.
Obama Opposes Trade Sanctions in Climate Bill President Obama on Sunday praised the energy bill passed by the House late last week as an "extraordinary first step," but he spoke out against a provision that would impose trade penalties on countries that do not accept limits on global warming pollution. "At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade," Mr. Obama said, "I think we have to be very careful about sending any protectionist signals out there." He added, "I think there may be other ways of doing it than with a tariff approach."
Ron Paul on Cap and Trade
Warren Buffett Slams "Cap and Trade" as a Regressive Tax on All Americans
Where government ships radiation, infectious waste Public exposed as contagious medical trash routinely trucked across America's highways Contaminated needles and scalpels, bloodied bandages, body parts, unused prescription drugs, soiled hospital garments, radioactive waste and refuse tainted with infectious disease: These are only a few items that may be discarded on a curbside, abandoned in a nearby lake or piled in a dumpster headed for the local landfill. Some say Americans are simply oblivious to the imminent risk of major hazards and contagions spreading throughout their communities at any given time.
Honduran army stands firm as US condemns coup Latin America unites as riot police turn on protesters The United States States stood alongside governments across Latin America voicing support for President Manuel Zelaya of Honduras one day after he was ousted and dispatched in his pyjamas to exile. After a few hours in Costa Rica, Mr Zelaya flew late on Sunday aboard a jet provided by President Hugo Chavez of Venezuela to the Nicaraguan capital, Managua. He remained there yesterday with Mr Chavez and other leftist leaders from the region. Meanwhile, the Organisation of American States (OAS), said it would recognise no other government in Honduras but that of Mr Zelaya.
China, Brazil reported planning currency trade deal The central bank governors of China and Brazil have agreed in principle to allow trade between the two countries to be settled in their respective currencies, reports said Sunday. People's Bank of China Gov. Zhou Xiaochuan and Banco Central do Brazil President Henrique Meirelles met on the sidelines of the Bank for International Settlement's annual general meeting in Basel and said they would study how to implement the plan, the reports said. The move would bypass the U.S. dollar, to settle trade invoices in Chinese yuan and Brazilian reals.
Peter Schiff on Glen Beck - Cap and Trade Bill Is A Giant Tax on Productivity
Warren Buffett Slams "Cap and Trade" as a Regressive Tax on All Americans
Gold Rises to Two-Week High as Record Rates Drive Down Dollar Gold touched a two-week high and marked its first weekly gain since May as the dollar weakened and a benchmark lending rate touched a record low in London, increasing the metal's appeal as an alternative investment. The dollar declined as the three-month London interbank offered rate, or Libor, slipped below 0.6 percent for the first time. The dollar-based rate, a benchmark for about $360 trillion in financial products, peaked at 4.82 percent on Oct. 10. On June 24, the Federal Reserve left unchanged its target bank- lending rate at zero percent to 0.25 percent, the lowest ever.
'Gold to go through $2,000. Gold bullion best asset' There are many reasons to own gold. I think one of the biggest ones is the actual devaluation and debasement of currencies. Having said that, one of the lesser-known ones is the derivative market; if you look at the derivative market on a global basis, it is absolutely enormous. And the downfall of the financial system last year in part was the fact that many of the banks in the financial system in the U.S. and around the world had a capital base that was leveraged up 30 times or more on their balance sheet. The derivatives market is hundreds of trillions of dollars. When you look at that relative to the capital base of the whole financial system, the whole financial system gets dwarfed.
pt 1/2 Peter Schiff on Gold Seek Radio June 20, 2009
The Great American Bubble Machine The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup – which in turn got a $300 billion taxpayer bailout from Paulson.
Why demand for Comex gold bars is rising The most popular question I receive on a daily basis is to comment on the gold to silver ratio. Here is my answer and promise to you: As pressure to deliver gold hits the COMEX exchange in the last quarter of 2009 with titanic force, the ratio trades will totally explode, killing the gold to silver spread traders. With gold to silver ratios you are not buying insurance, you are a gambleholic buying decimation.
Chinese Gold Moves Setting the Market Up For a Price Spike It is interesting to hear a senior economic researcher from the Chinese Communist Party calling for bigger gold purchases by China to diversify away from the US dollar whose devaluation looks inevitable with the printing of money to finance deficits. This conclusion from Li Lianzhong, head of the party's policy research office, came in a statement late last week but is only the latest indication of the way the wind is blowing in the People's Republic.
Keep the Faith-Higher Gold Price Will Come . . . . There are many reasons to own gold. I think one of the biggest ones is the actual devaluation and debasement of currencies. Having said that, one of the lesser-known ones is the derivative market; if you look at the derivative market on a global basis, it is absolutely enormous. And the downfall of the financial system last year in part was the fact that many of the banks in the financial system in the U.S. and around the world had a capital base that was leveraged up 30 times or more on their balance sheet. The derivatives market is hundreds of trillions of dollars. When you look at that relative to the capital base of the whole financial system, the whole financial system gets dwarfed.
pt 2/2 Peter Schiff on Gold Seek Radio June 20, 2009
Bank failure list tops 45 The FDIC says banks in Georgia, Minnesota and California were shuttered by state regulators. Local banks in Georgia, Minnesota and California were closed Friday by state regulators, bringing the total number of failed banks this year to 45, according to the Federal Deposit Insurance Corporation. The financial crisis has taken a heavy toll on small banks across the nation as losses in the housing market mount and unemployment dents household wealth. Analysts expect the trend to continue even as larger banks stabilize and the overall economy begins to recover.
China's banks are an accident waiting to happen to every one of us Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waterChina's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn blitz of new lending issued since December. Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump. Fitch Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.
Ron Paul: Storming the Fed As far as finance and business goes, at least one rule generally holds true… And this rule makes your job as an investor, entrepreneur or analyst ten times easier. The rule? If you can't explain a particular investment or innovation to an eleven-year-old, then something shady is going on. Credit Default Swaps, Securitization, GSEs, CDOs…all of these things were considered "financial wizardry" back in the bubble days. Now they've been exposed as little more than Wall Street's version of three-card Monte.
Treasuries in Trouble? This was a big week for the bond market. The U.S. auctioned over $100 billion in 2, 5 and 7-year notes. As we've discussed over the last several weeks, these bond auctions are critical for the U.S. in financing its deficit spending. The U.S. government has already run up a $1 trillion budget deficit this fiscal year. They need money coming "into the till" to keep up this spending. And a lot of it.
Gerald Celente Obamageddon 2012
A Minority View Ready to sell apples for $5. each as in the thirties? Recently there's been a spate of articles about the inflation/deflation debate. According to the dominant view, the inflation the U.S. has experienced these past 75-plus years will inevitably continue and very likely accelerate as the managers running the Fed and U.S. Treasury attempt to deal with a monstrous overhanging debt bubble by cheapening the dollars with which repayment is made.
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.
Double Whammy Misguided government policies have already dealt vicious body blows to our economy, but that hasn't stopped politicians this week from launching two new kicks to the groin: a national health insurance plan and a carbon emissions regulation system called "cap and trade." Even if these plans could achieve their desired ends, which is highly unlikely, I would have hoped Washington would refrain from throwing more monkey wrenches into the economy until it shows some signs of resurgence. The last thing we need right now is to further encumber our economy with higher taxes and additional regulations.
Inflation and the Dollar "Whenever, therefore, people are deceived and form opinions wide of the truth, it is clear that the error has slid into their minds through the medium of certain resemblances to that truth." -- Socrates BC 469-399, Greek Philosopher of Athens Inflation is defined as an increase in the money supply and not as many economists falsely refer to it as an increase in the cost of goods. The price increase is a direct result of inflation, but it is not the definition but just a symptom of inflation. If one looks at the above two charts one immediately spots how dramatically the money supply has risen in the last 12 months. In less than 12 months the money supply has risen to a level that is double that of 2003. M1 is increasing at levels not seen for over 40 years; take a moment to digest this fact, when the economy is broken, when savings are low, when companies are scaling back, we have drug addicts driving the printing press to the breaking point. 1+ 1 always equal two and pushing the printing press into over drive must equate to some form of very strong inflation and most likely hyperinflation.
Dollar May Weaken on 'Upside' Earnings Surprises, JPMorgan Says The dollar may weaken against major counterparts as U.S. corporate earnings beat analysts' forecasts, driving stocks higher and encouraging investors to buy higher-yielding assets overseas. "With most activity data beating expectations, U.S. earnings should surprise on the upside," said John Normand, head of global currency strategy at JPMorgan Chase & Co. in London, in an interview. "That tends to be associated with increased risk taking, whether through non-U.S. equities or higher-yielding currencies. Both flows are dollar-negative."
Is the recession over? Peter Schiff on CNBC 26 June
"Repressed Inflation": The Ailment of the Modern Economy Inflation Plus Collectivism Recent experience in many countries enables us to draw the picture of a strange distortion and stasis in economic life and to diagnose an economic ailment that, more and more, is proving to be the worst of all, and that to a very large extent explains the persistence of Europe's distress. I have in mind that cross between collectivism and inflation, for which I have suggested the name of "repressed inflation" - first in my essay "Lehren des deutschen Wirtschaftsmarasmus"[1] and later, more systematically, in "Offene und zurückgestaute Inflation"[2] Typically, what happens is as follows. As a result of the war and of postwar mismanagement, serious inflation developed in the sense that the means of payment are increasing strongly, while the production of goods stagnates. Were the government to permit an "open" inflation, this disproportion between the volume of money and the volume of goods would lead to the consequence we all know, namely, a general rise in prices and incomes.
Inflation - the real threat to sustained recovery The rise in global stock prices from early March to mid-June is arguably the primary cause of the surprising positive turn in the economic environment. The $12,000bn of newly created corporate equity value has added significantly to the capital buffer that supports the debt issued by financial and non-financial companies. Corporate debt, as a consequence, has been upgraded and yields have fallen. Previously capital-strapped companies have been able to raise considerable debt and equity in recent months. Market fears of bank insolvency, particularly, have been assuaged.
Members of U.S. House Financial Services Committee snapped up or dumped bank stocks as bottom fell out of market As financial markets tumbled and the government worked to stave off panic by pumping billions of dollars into banks last fall, several members of Congress who oversee the banking industry were grabbing up or dumping bank stocks. Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup -- some of the very corporations their committee would later rap for greed, a Plain Dealer examination of congressional stock market transactions shows.
Building America With Obama Bonds Signals Munis' Fall Barack Obama may be the worst thing that ever happened to tax-exempt bonds and, so far, states and municipalities are loving it. Build America bonds, taxable securities that pay 1 percentage point more in interest than corporate debt on average, are such a hit with investors that the government is already considering expanding the program, according to John J. Cross, the Treasury's tax legislative counsel. Municipalities sold $14.4 billion of the securities and Barclays Plc analysts predict the amount may grow 10-fold because the federal government helps pay the bonds' interest.
On the Edge with Max Keiser - 26 June 2009 (pt 1 of 4)
Bond Dealers Say Worst Over as Demand Soars at Treasury Sales Wall Street's largest bond-trading firms say the worst may be over for investors in Treasuries after government securities posted their biggest first-half losses in at least three decades. The 16 primary dealers, which trade directly with the Federal Reserve and are obligated to bid at Treasury auctions, forecast the benchmark 10-year note yield will finish the year little changed at 3.58 percent, after rising from 2.21 percent at the end of 2008, according to a survey by Bloomberg News.
Obama adviser not ready to back a second stimulus A senior White House adviser said Sunday the economic stimulus has not yet "broken the back of the recession" but set aside calls for a second massive spending bill. Republicans, meanwhile, called spending under way a failure. White House adviser David Axelrod urged patience for President Barack Obama's $787 billion economic stimulus package in the face of sliding poll numbers. Former Massachusetts Gov. Mitt Romney, a past and potentially future presidential candidate, said the spending was ill-designed and served only to expand the size of government.
Is stimulus creating jobs? Yes but ... House committee reports 21,000 actual highway and transit jobs created or saved. White House says number is in line with its 150,000 jobs estimate. So just how many stimulus jobs have been created or saved so far? The figure remains elusive, but Congress provided one of the first peeks this week by reporting that stimulus has funded 21,000 highway and transit jobs as of May 31. The number, one of the first counts of actual stimulus-based employment, is based on state reports to the House Transportation and Infrastructure Committee. Thousands of indirect jobs -- such as the deli employee who prepares lunch for the construction crew or the workers who produce the steel needed for projects -- were also created or sustained.
Surmounting the Main Threat "Some people think that the Federal Reserve Banks are United States Government Institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders." -- The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s In the near-century since 1913, (the year the U.S. Federal Reserve was established) the World's Reserve Currency, the U.S. Dollar, has lost at least 96% of its purchasing power. Among the many casualties of this Massive Devaluation are Retirees, Investors, and Savers who "stored", they thought, the fruits of their labors in U.S. Dollar (i.e. U.S. Federal Reserve Note) denominated paper "Assets".
On the Edge with Max Keiser - 26 June 2009 - (pt 2 of 4)
U.S.'s debtor status worsens dramatically Foreigners hold 50 percent In the midst of the longest, and probably deepest, postwar recession last year, the U.S. investment position with the rest of the world sharply deteriorated. At the end of 2008, America's net international investment position was minus $3.47 trillion, the Commerce Department reported Friday. That represents the difference between the value of U.S. assets owned by foreigners ($23.36 trillion) and the value of foreign assets owned by Americans ($19.89 trillion).
Greed, Fear, and Sheeple . . . . Greed and fear are the strongest motivators for Sheeple-style investors driving both bull and bear markets and the so-called business cycle. You will find this idea within most mainstream schools of economic thought. But in Austrian economic theory, the business cycle is a phenomenon resulting from state and central bank attempts to fiat engineer the supply and demand balance thru interest rate manipulation. Periods of monetary expansion or inflationary "booms" are followed by periodic deflationary recessions or depressions where mal-investments fail and free up capital for new ventures. Government and central bank interference serve to prolong the inevitable "busts" and to retard the inevitable recovery.
Whither the Consumer Americans, the once-reckless free spenders, are embracing a new era of saving that threatens to reverberate across the global economy and snuff out hopes of a quick recovery America has always been a land of extremes, a place where, at various times, consumption and frugality have each wielded sacral sway. It shouldn't come as a surprise, then, that just as the country begins to extricate itself from what might be described as the paradox of gluttony, it is now in danger of succumbing to the paradox of thrift - and dragging much of the global economy along with it.
Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending Earlier this week I noted that I had changed my mind on the Community Reinvestment Act. Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble. Once I realized this, I had to abandon my suspicion that the anti-CRA case was a figment of the rhetoric of Republicans attempting to distract attention from their own role in the mortgage mess.
On the Edge with Max Keiser - 26 June 2009 - (pt 3 of 4)
Unemployment claims unexpectedly rise... First-time claims for state unemployment benefits rose unexpectedly in the latest week, the Labor Department reported Thursday. The number of initial claims in the week ending June 20 rose 15,000 to 627,000. It's the highest level since mid-May. A Labor Department official said that some states reported more end-of-school-year claims. Many states allow bus drivers and cafeteria workers to file for unemployment during school breaks.
G.M. to Maintain Legal Liability for Claims General Motors and the Obama administration have reached a deal for the carmaker to assume responsibility for product liability claims filed after it emerges from bankruptcy as a new company, even those claims involving vehicles made by the old company, according to documents filed in bankruptcy court late Friday. The deal resolves a problem that could have upended G.M.'s plan for a quick restructuring.
Obama open to new health-benefits tax The White House left open the possibility Sunday that President Obama might pay for his health care overhaul by taxing employer-provided health insurance even though he had campaigned on not raising taxes on middle-class families. White House adviser David Axelrod said the administration wouldn't rule out taxing some employees' benefits to fund a health care agenda that has yet to take final form. The move would be a compromise with fellow Democrats, who are pushing the proposal as a way to pay for the massive undertaking without ballooning the federal deficit.
Obamacare: Cheaper than you think President Obama is a pretty good persuader, but he's been having a hard time selling his health care reform plan. His health care town hall meeting on ABC last Wednesday drew dismal ratings, garnering fewer viewers than a rerun of CSI: New York (and drawing gleeful responses from many of his non-fans). Meanwhile, some of his putative allies in the Democratic party have been sniping away at the plan, and negotiators in the senate have been slashing costs by lopping off some of the plan's most progressive elements, like subsidies for lower-income Americans to help them afford to buy insurance. (Huh? Wasn't helping the uninsured get insurance one of the main reasons for the plan in the first place?)
On the Edge with Max Keiser - 26 June 2009 - (pt 4 of 4)
Unions' Health Benefits May Avoid Tax Under Proposal The U.S. Senate proposal to impose taxes for the first time on "gold-plated" health plans may bypass generous employee benefits negotiated by unions. Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing some employer-provided benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years.
Rebellion on the Range Over a Cattle ID Plan HORSE SPRINGS, N.M. - Wranglers at the Platt ranch were marking calves the old-fashioned way last week, roping them from horseback and burning a brand onto their haunches. What they were emphatically not doing, said Jay Platt, the third-generation proprietor of the ranch, was abiding by a federally recommended livestock identification plan, intended to speed the tracing of animal diseases, that has caused an uproar among ranchers. They were not attaching the recommended tags with microchips that would allow the computerized recording of livestock movements from birth to the slaughterhouse.
What The Heck Is Cap And Trade? Did you come late to the party on cap and trade? Now that it's one step closer to being law, here's a primer what it is and how it works. Cap-and-trade? Offsets? Pollution credits? The climate bill under consideration in the U.S. House of Representatives tackles global warming with new limits on pollution and a market-based approach to encourage more environmentally friendly business practices. But what exactly do the proposed rules mean, and how would they work? Some questions and answers about the bill, a top legislative priority for President Barack Obama:
Obama peddles climate bill to Senate Warns of 'misinformation,' insists legislation promotes economic growth President Obama, handed a crucial victory Friday night with the House of Representatives' approval of a sweeping climate-change bill, urged the Senate on Saturday to disregard "misinformation" and pass the legislation. "Don't believe the misinformation out there that suggests there is somehow a contradiction between investing in clean energy and economic growth," the president said in his weekly Saturday address. "It's just not true.
Climate-Change Bill Clears U.S. House, Sent to Senate The U.S. House narrowly passed legislation to impose the nation's first limits on greenhouse- gas emissions linked to global warming, handing President Barack Obama a win on one of his top policy priorities. The 219-212 House vote yesterday signaled the fight that lies ahead in the Senate for the plan, which would create a market for trading pollution permits to curb emissions. Obama called the measure "a bold and necessary step that holds the promise of creating new industry and millions of new jobs." The bill, he said, would usher in "a critical transition to a clean-energy economy without untenable burdens on the American people."
Obama Says Climate-Change Measure Will Transform U.S. Economy President Barack Obama said climate- change legislation passed by the U.S. House yesterday would help transform the nation's economy and create millions of new jobs in alternative energy industries. In his weekly address on the radio and the Internet, Obama said incentives to develop technologies such as wind, solar and geothermal power would reduce the nation's dependence on fossil fuels and lead to a stronger economy. "The nation that leads in the creation of a clean energy economy will be the nation that leads the 21st century global economy," he said.
House Narrowly Passes Bill Designed to Influence Earth's Climate by Restricting U.S. Industry and Imposing Costs on American Families The U.S. House of Representatives narrowly passed a bill yesterday that is intended to influence the Earth's climate by limiting the emission of carbon and other designated "greenhouse gases" within the United States thus imposing costs on American families. The conservative Heritage Foundation estimates that by 2035 the bill would cut the Gross Domestic Product of the United States by $6,790 per family of four and impose $4,600 in carbon taxes per family. The Heritage Foundation analysis countered an analysis by the Congressional Budget Office that determined that the bill would only cost $175 per household in 2020.
Latham blasts cap-and-trade on House floor
Climate Change Bill May Be Election Issue As Democrats strained to win over crucial holdouts on the way to narrow, party-line approval of global warming legislation, they were dogged by a critical question: Has the political climate changed since 1993? Veteran members of both parties vividly remember when many House Democrats, in the early months of the Clinton administration, reluctantly backed a proposed B.T.U. tax - a new levy on each unit of energy consumed - only to see it ignored by the Senate and seized as a campaign issue by Republicans, who took control of the House the next year.
ACORN changes name in hopes to change image An Iowa Congressman says while ACORN can change its name, it can't change its stained reputation. Human Events has reported that the Association of Community Organizers for Reform Now, more commonly known as ACORN, is changing its name. The new moniker, Community Organizations International (COI), is the organization's attempt to change its image. Congressman Steve King (R-Iowa), who has been battling for accountability from the organization, says it is already under investigation in more than a dozen states for alleged voter fraud, the result of widespread allegations during the 2008 presidential campaign. "It appears to be a criminal enterprise. They have 250 to 270 affiliates. It's a spiderweb of a corporate entanglement," he contends. "They produced over 400,000 fraudulent voter registration forms. They are under investigation in at least 14 states."
Britain is no longer a Christian nation, claims Church of England BishopBritain is no longer a Christian nation and the Church of England could die out within a generation, an Anglican bishop has warned. The Rt Rev Paul Richardson said declining church attendance and the rise in multiculturalism meant that "Christian Britain is dead". He criticised his fellow bishops for failing to appreciate the scale of the crisis and warned that their inaction could seal the Church's fate. As one of the Church's longest-serving bishops, the comments by the assistant Bishop of Newcastle are set to fuel the debate over its future.
hmmmmmmmm. . . .
Barack Obama has recently repeatedly stated that the United States is NOT a Christian nation and went so far as to say we are one of the largest Muslim countries! http://www.youtube.com/watch?v=NaxZPiiKyMw
Obama In Turkey "We Do Not Consider Ourselves A Christian Nation"
Bill Clinton also said that we are no longer predominately a nation of Christians and Jews.
America Is Still A Christian Nation We have heard Obama make the proclamation that we are no longer a Christian Nation. That flies in the face that over 85% of Americans profess to be Christians. Obama says we can be considered the largest Muslim Nation in the world. Is that because he is himself a Muslim? According to Shari'a Law, Barack Hussein Obama is indeed a Muslim albeit that he is currently an apostate Muslim if he is not a practicing Muslim. However, there ar5e those that make the assertion that Obama is a Jihadi plant being groomed over a period of years to become what he is today, in the position that he is in today. I can see that but I have not fully bought into that concept. However, I do not at this time summarily dismiss it either. . . . . . . . .
WASHINGTON - Former President Bill Clinton has told an Arab-American audience of 1,000 people that the U.S. is no longer just a black-white country, nor a country that is dominated by Christians and a powerful Jewish minority.
In a speech to the group on Saturday, Clinton said that given the growing numbers of Muslims, Hindus and other religious groups here, Americans should be mindful of the nation's changing demographics, which led to the election of Barack Obama as president.
Clinton said by 2050 the U.S. will no longer have a majority of people with European heritage and that in an interdependent world "this is a very positive thing." [...]
U.S. and Russia Differ on a Treaty for Cyberspace The United States and Russia are locked in a fundamental dispute over how to counter the growing threat of cyberwar attacks that could wreak havoc on computer systems and the Internet. Both nations agree that cyberspace is an emerging battleground. The two sides are expected to address the subject when President Obama visits Russia next week and at the General Assembly of the United Nations in November, according to a senior State Department official. But there the agreement ends.
Honduran President Is Ousted in Coup MEXICO CITY - The Honduran president, Manuel Zelaya, was ousted by the army on Sunday after pressing ahead with plans for a referendum that opponents said could lay the groundwork for his eventual re-election, in the first military coup in Central America since the end of the cold war. Soldiers entered the presidential palace in the capital, Tegucigalpa, and disarmed the presidential guard early Sunday, military officials said. Mr. Zelaya's private secretary, Eduardo Enrique Reina, confirmed the arrest.
Syrian group threatens 'force' against Israel Warns it may move to capture strategic Golan Heights JERUSALEM - A Syrian militant group threatened over the weekend to seize the strategic Golan Heights by force if a peace agreement involving the strategic plateau is not reached with Israel. Israel's Army Radio reported a group calling itself the Syrian Committee for the Liberation of the Golan on Saturday said it would move to capture the Golan, adding Israel has not shown willingness to achieve peace or to return what they called "Syrian land."
New clashes in Iran as standoff worsens with West Several thousand protesters - some chanting "Where is my vote?" - clashed with riot police in Tehran on Sunday as Iran detained local employees of the British Embassy, escalating the regime's standoff with the West and earning it a stinging rebuke from the European Union. Witnesses said riot police used tear gas and clubs to break up a crowd of up to 3,000 protesters who had gathered near north Tehran's Ghoba Mosque in the country's first major post-election unrest in four days.
Iran Escalates Its Fight With Britain; New Clashes Erupt Iran's government said Sunday that it had arrested Iranian employees of the British Embassy, while the police in Tehran beat and fired tear gas at several thousand protesters who joined a demonstration at a mosque in support of the defeated presidential candidate Mir Hussein Moussavi. The government's arrest of nine Iranian employees of the British Embassy was a significant escalation in its conflict with Britain, which Tehran has sought to cast as an instigator of the unrest since the disputed June 12 election. It said the embassy employees played a significant role in organizing the protests, which have reached across the country and across social and economic lines.
Iran's Basij militia turns strong arm against dissent Heroic image fades in Iran They have become the face of repression since Iran's disputed June 12 elections, but the auxiliary security force known as the Basij once played a heroic role. During the 1980-88 Iran-Iraq war, volunteers as young as 13 in the Basij-e Mostazafan, or "Mobilization of the Oppressed," walked through minefields to defend their country against the invading forces of Iraqi dictator Saddam Hussein. With plastic keys around their necks promising immediate entry to heaven if they died, they formed a human wave that shielded more experienced soldiers.
Elite Power in Iran We hear so much about democracy, about "people power" and "public opinion" that we forget how everything depends on the right leadership. We fool ourselves that "the people" rule, that the majority decides, that "the public" is something that has an existence independent of pollsters, opinion-makers, and media manipulation. The fact is, as earlier researchers have shown, "democracy" is just another way of organizing oligarchy (a.k.a., "the elite"). That being said, a country's elite is not always in agreement with itself. There are "reformers" who suggest new possibilities for a country. There are sophisticated people who must either be recognized or eliminated. And the measure of a regime is whether that regime accepts the natural leaders in its midst, and allows them their place; or whether it persecutes them.
Just for chuckles - a little satire with a point
US To Trade Gold Reserves For Cash Through Cash4Gold.com
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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Thurs 06.25.2009
YOU CAN’T BORROW YOUR WAY OUT OF DEBT “Rather than love, than money, than fame, give me truth.” - Henry David Thoreau Time is running out. The public relations campaign being conducted by the Obama administration, Federal Reserve and nation’s largest banks is beginning to fail. The lies, half-truths, and cover-up regarding the solvency of the largest banks in the U.S. will be revealed as reality interrupts their master plan. The politicians and government bureaucrats know that 80% of the population don’t understand or care about economic issues. The plan is insidious, systematic and deceptively simple:
'Dollar faces challenge as reserve currency' A leading economist said in Seoul yesterday that the U.S. dollar's supremacy as the world's reserve currency is facing profound challenges as the balance of economic and financial power shifts East amid the current economic crisis. "There is a slow-burning fuse underneath the dollar," Gerard Lyons, chief economist at Standard Chartered Bank, said in the World Economic Forum. Underscoring the strengthening role of Asia, Lyons said that the depth of the global downturn drove key emerging economies, such as China and Russia, to cite the possibility of a new global reserve currency.
Near-record growth in the custodial holdings at the Fed; ongoing angst about the dollar’s role as a reserve currency … by Brad Setser CFR Central banks haven’t lost their appetite for Treasuries. At least not shorter-dated notes. John Jansen noted before yesterday’s 2-year auction “the central banks love that sector [of the curve].” And the auction result certainly didn’t give him cause to backtrack. Indirect bids — a proxy for central banks — snapped up close to 70% of the auction. Jansen again: The Treasury sold $ 40 billion 2 year notes today and the bidding interest from central banks was frantic. The indirect category of bidding ( which the street holds is a proxy for central bank interest) took 68 percent of the total. That leaves about $ 13 billion for the rest of us. Central banks also seem increasingly interested in five year notes. Indirect bids at today’s five year auction were quite high as well.*
In-Depth Look - Roubini On The Economy - Bloomberg Interview and discussion with Nouriel Roubini of the New York University. He talks about home sale revenues, health-care reform, and currencies.
Hyperinflation still fuels gold’s worth The economic packages announced by the US and other countries have a big impact on gold prices. Because this has fueled speculation that the economic packages will cause hyperinflation and that has contributed to gold’s popularity. So, gold’s popularity is remaining strong due to the current weaknesses in global economies. Buyers in the US are still opting to purchase the precious metal due to fears over hyperinflation, which would see the value of the dollar fall.
Chinese official urges buying of gold, U.S. land top Communist Party research chief said Thursday that China should buy gold and U.S. real estate rather than Treasurys, according to a Reuters report. Li Lianzhong, who is head of economics at the party's policy research office, said the U.S. dollar is poised for a fall, making gold and land better investments for China's $1.95 trillion in foreign exchange reserves, the report said. It quoted Li as saying Beijing should also focus on buying up energy and natural resources.
As Global Currencies Weaken, Gold Posts Triple Digit Gains Worldwide Thus what started as one country trying to keep a strong currency from hurting its economic interests morphs into an endless cycle that doesn’t do much to help the world economy in the long run. But this powerful global trend does benefit one particular “currency.” In fact, it has benefited investors by generating returns in the multiple hundreds of a percent - minimum - to anyone on earth who has owned it since 2000. This currency is the world’s oldest form of money, one that’s been in use long before any of the other currencies were even dreamed about. And it will be used long after all of them are merely memories chronicled in history books. It is a form of money that cannot be printed at will and artificially cheapened. And even though all central banks own it, it is the creation of none of them. In case you haven’t already guessed, I’m speaking about gold.
Gold Jumps as ECB Front-Runs the Fed, Lends Near-Half Trillion Euros at 1.0% THE PRICE OF GOLD leapt overnight and early Wednesday, recovering all and more of this week's losses at $938 an ounce as world stock markets ticked higher but crude oil slipped for the second day running. US Treasury bond prices also drifted as the US Dollar Index held flat ahead of today's interest-rate announcement from the Federal Reserve, widely expected to reaffirm its commitment to Quantitative Easing and 0% interest rates. The world's No.1 reserve currency rose however against its main competitor, the Euro, after the European Central Bank pumped a record €442 billion ($618bn) into the region's banks, offering unlimited loans for 12 months at the current policy rate of just 1%. French, German and Italian investors saw the Gold Price in Euros bounce sharply from its lowest level since April 6th at €655 an ounce.
Gold & Deflation: A Trick Question SO DOES THE PRICE OF GOLD rise or fall in a deflation?Hint: It's a trick question, already tripping up plenty of would-be advisors. Because gold must fall during deflation, since it rose during the '70s inflation. Right? "Gold prices, in real inflation-adjusted terms, unsurprisingly tended to increase during inflationary times," nods one commentator, writing in London but posted at the Business Times in Singapore. "Its purchasing power tended to sag during depressions and deflation."
Bullion & Metals: China frightens Commodity Bulls As Grant’s Interest Rate Observer has been known to say, “We wrote it. Did you read it?” My slim hope is that the Chinese really and truly know what they are doing, because, in fueling investor optimism with such flair, they are playing a high stakes game. My worry is that they drop the ball, somehow, and the result shows up as a violent wake-up call for “high beta” assets...emerging market equities, energy, commodities and the like.
China & IMF Gold Sales; The Real Story China's recent veiled threats towards the establishment have been taken to heart. As China announced increased gold reserves from 600 to 1,054 tonnes it was an obvious warning. Initially I thought it was a direct threat against the ocean of Treasuries being issued, but I think I have a clearer answer now. China wants the IMF's gold!
Gold & US Dollar Update Below is a weekly line chart of Gold. Each data point is the closing price on Friday. There are two main supports. The first is at about $880 where the 40-week and 80-week moving averages reside. Should that area break then look for a bottom close to $800. There is a lot of support filling in towards $800. My thinking is that the market will trade in similar fashion (triangle) to what we saw in 2005 and 2007. The bottom chart on the picture is the width of the 40-week bollinger bands. The lower 80-week band (black) is actually inside of the lower 40-week band. This means that long-term volatility is actually more compressed then intermediate or medium term volatility. A few more months of consolidation would help close the 40-week bands. The lower band is already starting to move up.
Silver market will overtake gold David Morgan, whose interest in silver dates to the tender age of 11, returns to The Gold Report today to discuss the latest buzz about his favorite subject. One of the world's leading authorities on silver as a commodity, an investment, a safe haven and an increasingly important manufacturing metal, he expects this year's stronger-than-anticipated late spring climb to lose momentum before the end of the month. Longer term, though, the founder of the respected monthly, The Morgan Report, sees silver appreciating at a faster pace than gold. And while he also likes the idea of monetizing silver—rather than gold, because silver is far more liquid—that's one wish he does not expect to see granted.
State shutdowns loom as deadlines near At least 19 states still have to approve their fiscal 2010 budgets before next Tuesday. If they don't, staffers might not be paid and services might shut down. One week and counting. An unprecedented number of states have only days left to pass their fiscal 2010 budgets. At least 19 states are still hammering out their spending plans as the recession wreaks havoc with their finances and sparks fights between governors and lawmakers. If spending plans aren't approved, state workers may not receive their paychecks and some government offices may shut down. "A lot of states are coming down to the wire," said Todd Haggerty, research analyst for the National Conference of State Legislatures. "More than what's typical. The unprecedented economic situation is creating a lot of difficulty this year."
Yes Virginia, there was an international financial crisis in 2007 and 2008 Now that the markets have lost a bit of their froth, it seems fitting to note just how sharply trade — and private financial flows — have contracted over the past year. The US q1 balance of payments data is rather stunning. Trade (as we all know) contracted far more rapidly during this cycle than in the past. But the fall in private financial flows — outflows as well as inflows — has been even sharper than the fall in trade flows. US private investment in the rest of the world rebounded a bit in the first quarter, but private demand for US financial assets remained in the doldrums. Private investors were still pulling funds out of the US in the first quarter.
pt 1/2 Marc Faber on The Alex Jones 23 June 2009
Return of the Dead Hand For much of the world, the period from the 1960s through the early 1980s was an era of ever-greater government intervention into the economy. The period, an expansion of policy built on an intellectual foundation of Marxism, socialism, corporatism, and progressivism culminated in economic stagnation and inflation in the market-oriented mercantilist-interventionist countries such as the "Great Society" in the United States and economic collapse in the Marxist dominated Soviet block.
H.R. 675: Building Obama’s Civilian National Security Force In January, without any recognizable corporate media coverage, Rep. Bob Filner, a California Democrat, introduced H.R. 675. The bill would amend title 10 of the United States Code and extend to civilian employees of the Department of Defense the authority to execute warrants, make arrests, and carry firearms. The bill was referred to the Armed Services Committee on January 26, 2009. Filner’s bill would amend the United States code with the following: “Sec. 1585b. Law enforcement officers of the Department of Defense: authority to execute warrants, make arrests, and carry firearms… for any offense against the United States.”
U.N. to Emerge as Global IRS While our media sleep, the United Nations is proceeding, with President Obama’s acquiescence, to implement a global plan to create a new international socialist order financed by global taxes on the American people. The Conference on the World Financial and Economic Crisis and its Impact on Development that begins on Wednesday will consider adoption of a document calling for “new voluntary and innovative sources of financing initiatives to provide additional stable sources of development finance...” This is U.N.-speak for global taxes. They are anything but “voluntary” for the people forced to pay them. The most “popular” proposals, which could generate tens of billions of dollars in revenue for global purposes, involve taxes on greenhouse gas emissions and financial transactions such as stock trades.
pt 2/2 Marc Faber on The Alex Jones 23 June 2009
Barney Frank Says Fannie And Freddie's Lending Standards Are Too High Of all the things you could say about Fannie Mae (FNM) and Freddie Mac (FRE), too-strict lending standards probably wouldn't come to mind. Afterall, the companies have been backstopped to the tune of $400 billion, which has to mean their standards were too loose. But powerful Congressman Barney Frank, in a desperate attempt to reflate the old bubble, says the two GSEs are being too stingy, particularly with respect to condos.
Barney the Underwriter Telling Fannie Mae to take more credit risk. Now there's an idea. Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers. You read that right. After two years of telling us how lax lending standards drove up the market and led to loans that should never have been made, Mr. Frank wants Fannie and Freddie to take more risk in condo developments with high percentages of unsold units, high delinquency rates or high concentrations of ownership within the development.
Fed Board Maintains the Status Quo Facing an economy that is perking up slightly but still deep in recession, the Federal Reserve left its rescue policies unchanged on Wednesday and said that it would keep interest rates low for “an extended period.” As expected, the central bank said that it would keep its benchmark overnight interest rate at virtually zero — where it has been since December — and signaled that it would continue buying long-term Treasury bonds and other government-backed securities to keep long-term rates low.
Peter Schiff Vlog Report 24 June 2009
Dollar climbs after the Fed The U.S. central bank says the economy will remain weak even as the pace of the decline has slowed. The dollar rose against rival currencies Wednesday as investors took shelter in the U.S. currency after the Federal Reserve said the economy would "remain weak for some time." The Fed also indicated that the pace of the economic contraction has slowed but didn't signal any major change in its unconventional monetary policy measures, including its purchases of U.S. Treasury bonds and mortgage backed securities. As was widely expected, the U.S. central bank held its key interest rate steady at a historic low near zero percent.
Shares Slip and Bonds Fall After Fed Statement Stocks ended mixed but mostly higher Wednesday after the Federal Reserve said the economy was on the mend. Bond prices fell, however, after the Fed said it would not step up its spending to purchase Treasuries and other debt to lower interest rates. The central bank’s decision Wednesday to leave its main lending rate at a low of zero to 0.25 percent was not a surprise, but some investors have been hoping the central bank would do more to revive the economy. Others wanted it to more clearly lay out how it would keep inflation in check.
The Erosion of the Dollar and the Rise of the East The outcome of the push for globalization is a severe decline in the median standard of living in the US and an erosion of those individual liberties and freedoms which has made the US somewhat unique on the vast historical sweep of world history. Few understand this. One cannot be completely sovereign when the push for 'competitiveness' is used to consistently erode the commitment to individual freedom. David Rockefeller, and Sam Walton, and Bill Gates, looked at the social and economic structure of the People's Republic of China and saw the new American paradigm. Not in the evolution of China to democracy and freedom, but in the subjugation of the United States to huddled masses docilely wearing the yoke of debt subservience to the ruling elite.
Commodity Bulls Snared by China Stimulus Snafu . . . . The bulls happily embraced the China story and ran with it as fast and far as they could, taking oil and copper and the like to eight-month highs. But, as it turns out, much of China’s stockpiling drive looks to have been pure speculation. And not even official speculation sanctioned and planned out by the mandarins in Beijing... but instead a fast and loose misallocation of funds. As part of China’s economic stimulus plan, Chinese banks were ordered to lend massive sums to steelmakers, iron ore importers and other industrial players. A large portion of these funds was plowed directly into big commodity price bets.
Obama's Economic Reforms Should Re-structure the System -- Not Just Reform It A recent study cited by the Editor of the Financial Times argues that we are now in a Depression although no one wants to use the term or face the music. Recall that it took the National Bureau of Economic Research a full year to recognize the reality of a recession that analysts at investment banks had been acknowledging for as long. Despite everything that has happened, and is continuing to occur on the economic front---a rise in unemployment claims, mounting foreclosures, and escalating bankruptcies-the sense of crisis is being downplayed to stoke confidence and encourage the belief in "green shoots" and an emerging recovery.
Lending money in return for your soul A financial firm in Russia is offering loans to citizens for their eternal soul. Russia Today reported that a financial company named "Kontora" in the Latvian capital Riga offers every adult citizen loans in cash. According to the article, the financial institute has an extraordinary client agreement form saying that the loan is given using as security, "the client's immaterial being, namely immortal soul." Except for the clause saying that the soul is owned by the company until the last cent of payment, there are none for force majeure. The "soul-sellers" can lend money for 90 days maximum with the 1 percent credit each day. If clients do not pay back the debt in 90 days, their souls are the property of the company. However, the agreement offers a second chance: the agreement includes that the soul may be bought back from Kontora on its own terms, possibly with an extra sum of money for each individual case.
Buffett: Yes, We're Monetizing The Debt Tim Geithner says it's impossible because we have a strong independent Federal Reserve, but Warren Buffett has no reason to be politically correct. And in his interview with CNBC, he told Becky Quick: we are monetizing the debt. We are using printed paper to pay our government. It's obvious, really. That's what quantitative easing is, but the government says it's not that way. So Buffett is concerned about inflation -- in sounds like it's inevitable to him -- though he says deflation is something we'll never see in our lifetime.
Inflation or Hyperinflation? Inflation is dead – long live inflation! We hear about the threat of hyperinflation in the media – is this for real, can it happen in the U.S.? Are we hyping up the word inflation, is it an inflationary play of words to grab attention to discuss the threat of hyperinflation? Let’s deflate the hype and put inflation where it belongs… at the forefront of your concerns. Stop right here. In the words of European Central Bank (ECB) President Jean-Claude Trichet, what we suggest is “extraordinarily counterproductive.” Discussing how policies pursued by the Federal Reserve (Fed) and other central banks might lead to inflation makes the job of central banks more difficult. That’s because the best predictor of future inflation may be inflation expectations.
A Final Word on Inflation and Deflation A serious bout of inflation is rarely caused by normal business activity, such as commercial bank lending and private debt. In almost every case that I have studied, a very serious monetary inflation is triggered by excessive government debt obligations, and not private debt, that can no longer be adequately serviced by a productive real economy and domestic taxation. That unserviceable debt becomes 'monetized' and a serious inflation results. It is a form of debt default.
Deflation vs. Inflation - Which Is the Bigger Threat? As far as my two cents goes, one could easily argue that the dollar's long-standing role as a reserve currency means that there are a great many "unnatural" holders of the U.S. currency around the globe. Generally speaking, they require more incentives than Americans to remain invested. In a world where the U.S. is no longer seen as the leader it once was, where the risks stemming from hyper-expansive fiscal and monetary policies are increasingly apparent and growing by the day, and where many old truths are no longer being taken for granted, it is not a stretch to think that today's demand for the currency could easily evolve into tomorrow's rapidly growing supply.
Buffett: No Green Shoots At All Add Berkshire Hathaway (BRK) CEO Warren Buffett to the "no green shoots" crowd. In an interview with CNBC's Becky Quick, the Oracle says they're just not there. And he should know, given Berkshire Hathaway's involvement in everything from housing to finance to utilities to manufacturing to retailing to candy. If there were any, he'd have seen some and he sound pretty unequivocal about it.
The Commercial Real Estate "Stomach Blow" Philip Blumberg, CEO of Blumberg Capital Partners speaking at the Reuters 2009 Global Real Estate Summit in New York:
Democrats Agree to Concessions on Climate Bill An agreement on a string of demands sought by farmers and lawmakers from rural areas erased a major obstacle facing a massive climate bill that for the first time would limit the pollution linked to global warming and redirect the nation toward greater use of clean energy. With some Democrats still worried about the bill's impact on energy costs, especially in regions that rely heavily on coal for power, Democratic leaders on Wednesday were looking for broader support for the bill ahead of a vote scheduled for Friday.
Waxman clueless about his Cap & Trade bill: “You’re asking me?!” Rep. Waxman: "I don't know the details. I rely on the scientists."
The climate change e-mails EPA doesn’t want you to see Another day, another Obama cover-up. The Competitive Enterprise Institute has obtained internal EPA e-mails that show the agency willfully and recklessly disregarded scientific data that undermined the bureaucracy’s global warming zealotry. This information is especially relevant as Congress rushes to pass the cap-and-trade nightmare on Friday. CEI general counsel Sam Kazman has notified the EPA and requested that the internal communications and suppressed study be released to the public and added to the public record. Will another whistleblower be disappeared? Note especially this warning to the dissenting scientist: “The time for such discussion of fundamental issues has passed for this round. The administrator and the administration has decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision… I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office.”
US Government's Climate Con-job Obama administration “report” on climate change is deceitful, scare-mongering, bogus science… Suppose a company doctored data, misrepresented study findings, replaced observations with computer simulations, and hired PR flacks to promote its new “wonder drug.” News stories, congressional hearings and subpoenas would be in overdrive. Fines and jail sentences would follow. And rightly so. But the standards change when “climate catastrophe” is involved.
Warren Buffett Slams "Cap and Trade" as a Regressive Tax on All Americans
Congress Must Pay for What It Spends Democrats won't be the party of deficits. In recent years, America's fiscal story has been one of steady decline -- from record surpluses to record deficits. In 2001, the federal government had a projected 10-year surplus of $5.6 trillion. Today, we are looking at a fiscal year 2009 deficit of $1.7 trillion. A number of factors have brought us to this cash-strapped point, including reckless tax cuts, the cost of two wars, entitlement programs that have grown on autopilot, and the necessary, though costly, efforts to get our economy out of recession. But by far the worst decision was the abandonment in the Bush years of the principle that our country should pay for what it buys. It's time to learn from that error and establish that principle in law.
A Bank Holiday on Deck? We've been hearing the same rumours about embassies buying foreign currencies for their own use as cited here, but have not been able to obtain enough confidence to comment on it before this public disclosure in a major news source. Harry Schulz apparently thinks a bank holiday is in the offing. We think that if something decisive like this happens it is more likely related to a de facto devaluation of the dollar, a market break, that would be very brief. The Banks would close in order to allow the markets to stabilize. The occasion is therefore likely to be a major failure of a household name in banking, or perhaps even the failure of the State of California. California is the size of a large national economy.
Rewriting Rules to Protect Money Funds The Securities and Exchange Commission proposed more stringent rules for money market funds on Wednesday in an attempt to avert runs like the one that erupted last fall. Until last September, money market funds had been deemed a safe place to store cash. Then investors rushed to pull their cash out of the Reserve Primary fund, a multibillion-dollar fund, during the worst of the financial crisis.
CNBC: Alan Grayson Asks for Investigation on $306B Treasury-Fed-FDIC Citigroup Deal
Rules to prevent ‘breaking the buck’ advance SEC votes unanimously for tightened regulations for money-market funds Federal regulators on Wednesday proposed tightened rules for money-market mutual funds that will require them to hold a reserve of assets that could be easily sold and to invest only in the highest quality securities. The Securities and Exchange Commission action came after a $60 billion money fund "broke the buck," exposing investors to losses that could ultimately reach about 8 cents on the dollar. The value of the Primary Reserve Fund's assets in September fell to 97 cents per investor dollar — below the dollar-for-dollar level needed for full repayment.
The Great Depression Although the Great Depression engulfed the world economy many years ago, it lives on as a nightmare for individuals old enough to remember and as a frightening specter in the textbooks of our youth. Some 13 million Americans were unemployed, "not wanted" in the production process. One worker out of every four was walking the streets in want and despair. Thousands of banks, hundreds of thousands of businesses, and millions of farmers fell into bankruptcy or ceased operations entirely. Nearly everyone suffered painful losses of wealth and income.
Gov. Mark Sanford Admits Affair, Resigns Republican Governors Association Columbia, S.C. (AP) – Gov. Mark Sanford admitted Wednesday he's been having an affair with a woman he visited on a secret trip to Argentina and said he'll resign as head of the Republican Governors Association. Sanford, a rumored 2012 presidential candidate, refused to say whether he'll leave office. "I've let down a lot of people, that's the bottom line," Sanford said at a news conference. He said he's known the woman about eight years, but their relationship turned into something more a year ago while he was on an economic development trip to Argentina. Sanford, a 49-year-old father of four, choked up during remarks to reporters. He said his wife has known about the affair for the last five months.
DID TAXPAYERS FUND SANFORD’S LOVE JAUNTS? Some Mark Sanford trips were taxpayer-paid South Carolina Gov. Mark Sanford has taken at least three taxpayer-paid trips to Argentina, however, it’s unclear whether he met his girlfriend during any of them. At his news conference in Columbia Wednesday, Sanford said he paid for his most recent trip with is own money. “It was my own ticket,” he told reporters. But sometime after his 2002 election as governor, Sanford traveled to Argentina on the dime of the South Carolina Department of Commerce. Though it’s unclear precisely when the trip occurred, it likely would have taken place after he had met the woman. Sanford said Wednesday he met the woman eight years ago, though a romantic relationship did not develop until one year ago.
Obama woos governors on health care President Barack Obama made a strong pitch for health care reform on Wednesday, hosting a handful of key governors at the White House and planning a televised town hall meeting on the topic in the East Room as negotiations over his top priority progressed on Capitol Hill. “There’s no perfect unanimity across the table in terms of every single aspect of reform,” Obama said after his meeting with five governors. “I think everybody here wants to make sure that governors have flexibility, that they have input into how legislation is being shaped on the Hill. ... And we’re committed to working with them in the weeks and months to come to make sure that when we get health reform done, it is in partnership with the states, where the rubber so often hits the road.”
Government Health Plans Always Ration Care Europe offers a glimpse of the future if President Obama and congressional Democrats have their way. Only by expanding government control of health care can we bring down its cost. That's the faulty premise of the various proposals for health reform now being batted around Washington. The claimed cost control depends on politically safe ideas such as preventive care or the adoption of electronic health records. And neither -- even according to the Congressional Budget Office -- will do much to reduce spending. If these proposals are implemented and fail to produce savings, government will turn to a less appealing but more familiar tool to cut costs: the regulation of access to drugs and medical services. Medicare is already going down this path. What will be new about government-run health care is the instrument of regulatory control. There will be an omnipotent federal health board. Buried in current reform proposals, this board deserves closer scrutiny.
Obama leaves door open to tax on health benefits Obama leaves door open to tax on health benefits in struggled for overhaul legislation President Barack Obama left the door open to a new tax on health care benefits Wednesday, and officials said top lawmakers and the White House were seeking $150 billion in concessions from the nation's hospitals as they sought support for legislation struggling to emerge in Congress. "I don't want to prejudge what they're doing," the president said, referring to proposals in the Senate to tax workers who get expensive insurance policies. Obama, who campaigned against the tax when he ran for president, drew a quick rebuff from organized labor.
Obama Quietly Pushing Back Healthcare Deadline to December? The folks at http://HealthcareHorseRace.com have discovered an interesting inconsistency with Obama’s June 20 statements on his healthcare bill deadline and that posted in the “official” transcript on the White House website. As far as the White House website is concerned, the goal is to have a bill before the president by October. But in verbal statement reported by several media sources, Obama himself has said December and not October. So, what we have here is a hint that Obama might realize his bill is in major trouble and he is quietly trying to push back the expectations on his self-imposed deadline.
Union: Shreveport GM plant to shut by 2012 General Motors plans to close its assembly and stamping plants in Shreveport, La., no later than June 2012, a union official said Wednesday. Doug Ebey, the president of United Auto Workers Local 2166, said the company filed documents late Tuesday in bankruptcy court saying that the plants, which employ 950 people, are "not going to be part of the new General Motors when it emerges from bankruptcy."
Indian automakers aim to eat Detroit's lunch Mahindra & Mahindra's small diesel-powered trucks to go on sale here by the end of this year, while Tata Motors' Nano car is slated stateside in 2011 It wasn't too long ago that the thought of buying a reliable car from Korea seemed laughable. Today, Korean vehicles are common fare and automakers from India are getting ready to invade the U.S. market. Experts say their vehicles are no joke. Plus, Detroit's turmoil could give Indian automakers a foot in the door here. With General Motors and Chrysler both looking to save money, in part by trimming their dealer ranks, hundreds of new-car dealers could be ready to sign up with new competitors like these.
Why Did New Homes Sales Go Down When Existing Home Sales Improved? The grim news from the government today was that sales of new homes are down 32.8 percent from a year ago. The government also said that new home sales had decline 0.6 percent since April. The inventory of new houses for sale now represents 10.2 months worth of sales, down slightly from the 10.8 months of inventory at this time last year. The downtick in new home sales may surprise some people who noticed that existing home sales actually improved in May. Why are existing homes selling more than new homes?
California Could Run Out of Money by July 28 To hear Gov. Arnold Schwarzenegger and state finance officials tell it, July 28 is California's last stand before fiscal Armageddon. Top financial officers say that's when the state will run out of cash to pay its daily expenses unless lawmakers pass a balanced budget. Schwarzenegger has warned that government will come to a "grinding halt." The state controller describes "a meltdown." But what exactly will happen just five weeks from now is less clear-cut than the dire pronouncements suggest.
California May Be Forced to Issue I.O.U.’s Signaling that California is slipping deeper into financial crisis, the state’s controller said Wednesday that his office would soon be forced to issue i.o.u.’s to scores of the state’s creditors, as lawmakers failed at their first attempt as a body to close the state’s multibillion-dollar shortfall. If the i.o.u.’s are issued as threatened, it would be the first time since 1992 — when Gov. Pete Wilson paid roughly 100,000 state employees with them — that the warrants were used to hold over those to whom the state owed money. Before that budget crisis, California last issued the warrants during the Depression.
California: Harbinger of National Doom? If you were given the perfect country, could you mess it up as bad as California? Begin with fertile, productive, well-irrigated soils capable of growing just about anything. Add vast agricultural tracts and miles upon miles of wine country with lush, bountiful vineyards. Include majestic mountain ranges containing rich deposits of gold, silver and other useful metals, and covered with thick, immense forests with every type of timber imaginable. Toss in critical navigable rivers to move these resources to market. Insert vast oil and natural gas deposits while you are at it, along with wind, water, geothermal and solar resources. Give it a long coastline with beautiful beaches, plentiful fresh water, ocean fisheries, many natural harbors, a well-connected transportation grid with first-class roads, rails and airports too. Don’t forget universities at the cutting edge of technology and an unparalleled educational system.
Southern California Churches Advocate Arming Congregants The genius of concealed carry of handguns is that would-be murderers remain uncertain as to who is armed and who isn’t. You never know if the target is armed with lethal force, and more to the point, how alert and prepared they are to resist. This is true for everyone interested in being as safe as they can be from future violence, because it comes to the realization of specific unalterable realities: you’re on your own. It’s a matter of positive attitude, not belligerence. This week some Southern California Church Leaders came to that very same conclusion, and took up a position advocating not only a very discreet security presence of professionals, but also took the advice of their consultants and adopted the policy of advocating concealed carry of handguns among the congregation.
U.S. monitoring several N.K. ships for possible WMD The United States said Wednesday it is closely monitoring several North Korean ships for allegedly carrying weapons of mass destruction for possible proliferation, although it was tailing only one at the moment, according to Yonhap News. "We have been interested in this one ship, but we've been interested in, frankly, multiple ships," Pentagon press secretary Geoff Morrell said, but added, "It's the only ship that we have tracked like this." Morrell was talking about the Kang Nam, the North Korean ship that the U.S. military has been shadowing since its departure from a North Korean port early last week, possibly on its way to Myanmar. He would not discuss where the ship was headed.
Russia Facing Long Recession, World Bank Says The recession in Russia will run deeper and longer than it appeared even a few months ago, the World Bank concluded in a report released Wednesday, underscoring the impression that Russia has been one of the countries hit hardest in the downturn. The Russian economy, which seesaws from boom to bust along with commodity prices in the best of times, has experienced the most extreme swing from growth to contraction of any large economy in the current downturn.
Iran 2.0 The world of wired dissidents will grow. Mark down the Iranian people as an inconvenient truth. Those who have become close followers of the Iranian nuclear-weapon program -- now approaching its fifth anniversary of Western wheel-spinning in the Persian sand -- know that the menu of options on the table has been limited. One was bomb Iran. No need to rehearse the reasons given for not doing that, other than the clear understanding that the West simply won't do it. Two was sanctions, mainly a gasoline embargo. Again, the main show-stopper is that the Western powers won't do it.
Fresh Clashes as Ruling Cleric Says Iran Will Not Yield TEHRAN — Iranian officials stepped up efforts to crush the remaining resistance to a disputed presidential election on Wednesday, as security forces overwhelmed a small group of protesters with brutal beatings, tear gas, and gunshots in the air. Intelligence agents shut down an office of the defeated presidential candidate, saying it was a “headquarters for a psychological war.”
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Wed 06.24.2009
Six Minutes with the Renegade Economist - Michael Hudson
Not paying mortgage, yet stuck with keys Foreclosure backlog imperils recovery A growing number of American homeowners are falling into financial limbo: They're badly behind on payments, but their banks have not yet foreclosed. The backlog of seriously delinquent mortgages, which so far affects about 1 million borrowers, is a shadow over hopes for a rebound in the nation's housing markets. It masks the full extent of the foreclosure crisis and threatens to depress prices even further just as some parts of the country are hinting at recovery. For lenders, it could portend even more financial losses tied to the mortgage meltdown. "It just means foreclosure rates are going to keep rising," said Patrick Newport, an economist for IHS Global Insight.
Dollar Near 3-Week Low Versus Yen Before Fed Policy Statement The dollar traded near a three-week low against the yen on speculation the Federal Reserve will today signal it intends to refrain from raising interest rates this year as policy makers attempt to revive economic growth. The greenback fell the most in six weeks against the euro yesterday as traders added to bets the Federal Open Market Committee will keep the benchmark rate unchanged at 0.25 percent at the end of its policy meeting today. The yen weakened against 13 of the 16 major currencies after a Japanese report showed exports declined at a faster pace in May, damping the appeal of the currency as a refuge from the global recession.
Bernanke Set to Defend Record Amid Debate on New Term Federal Reserve Chairman Ben S. Bernanke will defend his unprecedented actions to prevent a financial collapse as debate on whether he should be reappointed begins. Bernanke, whose term expires Jan. 31, faces lawmakers at a hearing this week on steps to aid Bank of America Corp.'s takeover of Merrill Lynch & Co. as Congress increasingly questions the Fed's interventions. The session comes after a two-day meeting on monetary policy that began today.
Obama on Bernanke and the Fed $$ President Barack Obama has been dodging questions recently about whether he'll reappoint Ben Bernanke as Federal Reserve chairman in January. At a press conference today, he offered the same prepackaged response we've heard from someone who's probably aware of market risks in addition to wider policy implications: "I'm not going to make news about Ben Bernanke, although I think he has done a fine job under very difficult circumstances."
Gold Bounces Off 5-Week Low Bernanke Accused of Stoking Mortgage Bubble, as Late Monsoon Threatens Indian Demand THE PRICE OF WHOLESALE GOLD BULLION bounced off a new 5-week low at $914 per ounce early Tuesday in London after the US Dollar rose on the currency markets but the Japanese Yen rose faster still. Tokyo Gold Futures closed the day 2.8% lower, and the Nikkei stock index dropped to its worst level so far this month. Spot Gold recovered to $924 per ounce, down 1.1% from last week's finish in Dollars, as the Yen - a key funding currency for "carry trade" investors - eased back. The fear of higher interest rates triggered adjustments in the markets overnight. This week the Treasury will auction a record $104 billion in notes. This huge amount of supply hitting the market is expected to help push yields higher.
On Gold and Silver Coin Shortages What is price? Sure it is the 'amount of money expected, required, or given in payment for something.' But even that definition is too broad as it begs the question of expected or required by whom? Value, utility and price are all subject to individual human action and therefore the price of something is primordially chaotic. Yet an underlying assumption pervades Western financial thinking: the Efficient Market Hypothesis. For example, often the price of gold is quoted or found in various places and this single price, usually called the spot price of gold, is supposed to represent the value billions of humans have for the ancient metal of kings. But really this pricing mechanism is only an illusion of solidarity.
Will Gold Bounce Back to All-Time Highs in July? Gold: The continued pressure of a strong dollar saw gold fall yesterday as it technically broke through the trend-line of $934. Despite equity weakness, gold remains heavy. A move lower in the short term would seem likely. However, with the gold/silver ratio of 68.7, a 1st quarter low, this downward trend may soon be capped and a bounce back to all time highs in July may be possible. It has gained slightly this morning and is currently trading at $920.34.
Marc Faber: 10-20% Inflation Coming to the U.S The latest short snippet of Marc Faber - He calls 10-20% price increases Hyperinflation which is interesting, because most associate that term with Zimbabwe or the Weimar Republic. But he makes a good point; if you annualize 10-20% purchasing power losses over half a decade, it wipes out much of your buying power very quickly. On the plus side the US deficits will be paid back to our creditors in increasingly worthless dollars and all the problems I raise about our massive debts will become inconsequential. It also means you can go out and spend like mad, and build up your own debts because by 2019, the dollar you pay them back with will be akin to toilet paper. Green shoots... green shoots.
Will economy's 'green shoots' wither? Though sprigs of optimism permeate Wall Street, a bellwether business says it doesn't know when things will get better. Meanwhile, mortgage rates are up, and boomers can't even think about retiring. FedEx last Wednesday tempered the enthusiasm of folks on "green shoot" watch. While stating its belief that the economy had hit bottom, the company also said it had no "visibility" to predict future earnings or any expectations of a real uptick in business. Much of this economic green shoot talk has centered on slight improvements in still-weak/sloppy business conditions. But a lot of that has been a function of companies restocking inventory after the collapse in business at the end of last year and the start of this one.
Ron Paul 6/22/2009 "Obama Funds War/Taxpayers Are Buying Global Oppression Through IMF"
Bankster “Holiday” Planned for September? Bob Chapman’s influential International Forecaster is reporting on the possibility of a so-called “bank holiday” planned for late August or early September. According to Chapman’s sources, U.S. embassies around the world are selling dollars and stockpiling money from respective countries where they operate. “Some US embassies worldwide are being advised to purchase massive amounts of local currencies,” writes Harry Schultz, “enough to last them a year.” Schultz publishes the Harry Schultz Letter, an international investment, financial, economic, and geopolitical newsletter named as “Newsletter of the Year” by Peter Brimelow of Market Watch in 2005 and 2008. Schultz believes the global elite are in the process of engineering an FDR-style “bank holiday” of undetermined length in order to “sort-out the bank mess” and impose new bank rules.
What Exit Strategy? The Drama Isn't Over Although many spectators like to leave sporting events early to avoid traffic on the way home, the Federal Reserve plans to sit in its seat -- and keep its options open -- until it is certain that the economy is out of the woods. New York University economics professor Mark Gertler, a close colleague of Ben Bernanke before the Fed chairman came to Washington, says the U.S. central bank is unlikely to rush into any "exit strategy" from current policy just yet.
The Depression Case Reiterated In a semi-free country such as the US there are two prerequisites for a peace-time economic depression, where a depression is defined as a period of 5-10 years or longer of economic stagnation or outright contraction. The first is a massive expansion of credit based on fractional reserve banking (supported, nowadays, by a powerful central bank), and the second is a far-reaching attempt by the government to prevent the corrective process from running its natural course after the credit bubble has burst.
Fed Chief Works to Secure More Power for Agency During the debate over financial regulation, the Federal Reserve chairman, Ben S. Bernanke, has been surprisingly quiet. But behind the scenes, he has been a forceful proponent of giving the Fed more power, both defending his management of the economic crisis and arguing that more authority would help the agency act more decisively to reduce the chances of a recurrence, according to interviews with lawmakers and officials from the Fed, the Treasury and the White House. Despite criticism by some lawmakers that the Fed failed to anticipate the problems that led to the crisis, Mr. Bernanke has told associates that such critics fail to recognize the extraordinary actions taken by the central bank over the last year.
POTENTIALLY IT IS SCARY While reading the report on the Obama administration's proposed new financial regulations, we were concerned to see the following. "In order to improve accountability in the use of other crisis tools, we also propose that the Federal Reserve Board receive prior written approval from the Secretary of the Treasury for emergency lending under its 'unusual and exigent circumstances' authority."
Three TARP Banks Already Classified as Deadbeats? Uh-Oh The Wall Street Journal reports that three banks that received TARP funds have stopped paying the required dividends to the Treasury. The Treasury says a "number" of banks have not been making their payments. Pacific Capital Bancorp, a Santa Barbara, Calif., lender that got $180.6 million from the Treasury Department in November, has since posted net losses of $49.7 million. Seacoast Banking Corp. of Florida, of Stuart, Fla., and Midwest Banc Holdings Inc., of Melrose Park, Ill., have also halted their TARP-related dividends, citing the banking industry's turmoil and a desire to fortify their balance sheets.
we have no economic model in place in the U.S. to provide the jobs to pay off this debt (our GDP is 30% based on a financial sector, which was built on a house of derivative cards) and fully two thirds of our GDP is based on consumer spending, which is a bit circular in terms of helping to support further consumer spending;
we have an aging population of baby boomers that just lost 40-50% of their retirement and significant home value but they are going to be retiring beginning in a year or two, with increasing percentages over the next 10-15 years;
our government cannot fund its upcoming Medicare or Social Security obligations, much less fund the current multi-trillion dollar bailout - which in time could/should lead to a severe weakening of the dollar; and
we have more than twice the retail footage per person here than in nearly any other country and there is no way for us to support this much retail.
Obama Says Second Fiscal Stimulus Bill Not Yet Needed President Barack Obama said a second stimulus package isn't needed yet, though he expects the U.S. unemployment rate will exceed 10 percent this year. "I think its important to see how the economy evolves and how effective the first stimulus is," Obama said at a White House news conference. He said it is "pretty clear" that unemployment will continue rising before the recovery takes hold and said it isn't surprising that initial forecasts from his administration missed the mark.
Deflation: It's Back At some point in the last month, everyone came to the conclusion that Ben Bernanke had whipped deflation ("it"), and that the only question left was how to avoid inflation once the economy rebounded. The talk was all about rising yields, soaring commodities, a weakening dollar, and how to drain liquidity when the time came. Would the Fed be able to stick the landing? Could we tolerate a little bit of inflation if it meant not cutting the recovery short? What a difference a week makes. Here comes the D-word again. With the rally sputtering, and the economy showing few meaningful signs of recovery, suddenly the market is back to its old fears.
Black Swan Trader Bets Reputation on Inflation $$ Mark Spitznagel made a fortune predicting the "black swan" that hit markets last year. Now the relatively unknown hedge-fund manager is emerging from the shadow of his collaborator, Nassim Nicholas Taleb, with a big bet inflation will soar. The 38-year old Mr. Spitznagel managed the Black Swan funds to triple digit returns last year with a bet on volatility. The returns have brought a flood of cash, sending assets for his firm, Universa Investments LP, rising to $6 billion from $300 million.
Inflation: As Inevitable as Death and Taxes We've been arguing for some time that the Federal Reserve and others who influence the economy must choose between two great evils - inflation and deflation. No middle ground remains open. What's more, inflation remains the more palatable of the two. A nation can endure high inflation for a time without destroying its long-term economic prospects. For example, after World War II, Japan experienced inflation on the order of 40% annually for several years. Yet it segued from that ordeal to become an economic juggernaut for much of the seceding decades. Similarly, high inflation plagued Brazil during the early 1990s. Yet today Brazil is one of the strongest emerging economies. The U.S. can only envy its growth rate. Warren Buffett, moreover, has singled out Brazil's currency as one he would like to invest in.
Question Authority: Always and Forever Hereafter For some time, I have been trying to figure out why the nation and we as individuals are in the fix we are in now. Many reasons manifest themselves. We labor under a government of such monstrous reach and epic incompetence that it makes the Soviets now look like a paragon of efficiency and probity. We suffer under a ruling class that has not simply been a gangster government under Obamunism but has been this way since the defeat of the original Constitution in 1865. With each illegitimate war since 1898, the power of the Federal government has increased exponentially. With each manufactured crisis, liberties and freedoms have withered and died. This is simply the latest and greatest improvement in the ongoing process of our overseers to find emerging ways to increase the output of our slavery.
'Pretty Boy' Paulson and the Goldman Gang 'Public Enemies' run, not rob, our banks today Yes, two Great Depressions linked in a mysterious time-warp: Bank robbers and robber banks. Back in the dark days of the first Great Depression John Dillinger was admired, a dapper Robin Hood. Banks were the real villains. Dillinger, Bonnie and Clyde, "Pretty Boy" Floyd, and "Machine Gun" Kelly were the "American Idols" of their day -- "Public Enemies" to the FBI. But folk heroes to an angry public who cheered when Dillinger destroyed bank records during holdups. . . . . . . . Today it's far worse. Back in the 1930s we got a flood of new laws and regulations protecting small investors and consumers. Today we just got Obama's proposed new legislation that's already being watered down by Wall Street lobbyists. How? Easy.
Mortgage bankers cut U.S. loan origination forecast Mortgage originations in the U.S. may total $2.03 trillion this year, 27 percent less than earlier forecast, as rising interest rates reduce home refinancings, the Mortgage Bankers Association said. Today's forecast cuts $700 billion from the Washington- based group's March estimate, a change MBA Chief Economist Jay Brinkmann said came because the Federal Reserve's pledge to buy as much as $300 billion in U.S. Treasuries hasn't been enough to keep Treasury yields and mortgage rates down.
Confidence in Obama's stimulus plan falling Americans' confidence in President Barack Obama's $787 billion economic stimulus plan is waning, a new Washington Post-ABC News poll found, even as his overall approval rating remains high. Fifty-two percent of respondents said that the stimulus package has succeeded or will succeed in restoring the economy, down from 59% two months ago, the poll found. The poll was taken June 18-21 and has a margin of error of plus or minus three percentage points.
As the US Goes Broke... Who's Laughing at Peter Schiff Now? When Peter Schiff was making the rounds on U.S. cable news shows in 2007, warning about the collapse of the housing market, anchors and fellow guests literally laughed in his face when he launched into his gloomy predictions. That kind of meltdown could never happen, they said. The economy was on rock-solid ground. In those rosier economic days, Schiff, the president of Darien, Conn.'s Euro Pacific Capital, was repeatedly cast as a successful broker who'd gone off the deep end.
'Government-Run' Health Care is 'Buzz Word,' Says Dodd On the Scene Sen. Christopher Dodd (D-Conn.) said that describing President Obama's "public option" health care proposal as "government-run" is a "buzz word"...
Tightening credit puts a squeeze on business owners Businesses that depended on credit cards to make purchases and manage monthly cash flow are paying higher interest, having trouble opening new lines or seeing existing ones canceled. For small-business owners who rely on business credit cards, the recessionary landscape looks extra bleak these days. OfficeMax Inc. is no longer accepting its own credit cards after the financial company that ran its program and made the loans terminated the arrangement last month. About 100,000 small businesses were affected by the move, the national office supply retailer said.
Red Roof Inn Defaults $$ Hotel Chain Fails to Meet $367 Million Debt Obligations Red Roof Inn Inc., a hotel chain popular with business travelers on a budget, defaulted on $367 million face amount of mortgage debt, the latest hotel casualty in an industry that has been hard hit by the recession. The defaults were reported by credit-rating company Realpoint LLC based on reports by the mortgages' servicing company. Red Roof confirmed the defaults Tuesday. In 2007, Red Roof was acquired from Accor SA for $1.3 billion by a group led by Citigroup Inc.'s Global Special Situations Unit and including hotel manager Westmont Hospitality Group. The deal left Citigroup with a 79% stake in Red Roof. This month, Red Roof's owners missed scheduled payments on four mortgages with 131 Red Roof Inns pledged as collateral. All told, Red Roof's properties carry nearly $1.2 billion in debt, including mortgages, mezzanine loans and other notes.
U.S. House Leaders Schedule Climate-Change Bill Vote The U.S. House of Representatives plans to vote on a proposed "cap-and-trade" law to cut greenhouse gas emissions by the end of this week, a spokesman for Speaker Nancy Pelosi said. "There are some issues still under discussion, but we are confident we can resolve them by the time the bill goes to the floor on Friday," Pelosi spokesman Drew Hammill said by e-mail. Democrats have been negotiating the details of the climate- change measure, which would cut U.S. greenhouse gas emissions 17 percent below 2005 levels by 2020, since it passed the House Energy and Commerce Committee on May 21.
Wee the people: Port-a-potty named for Pelosi Tea partiers dedicate new thrones to Washington's 'imperial' leaders Enthusiastic tea partiers in Virginia have decided to give "imperial leaders" in Washington a seat of power they believe they truly deserve - a portable toilet throne. Tea party organizer Karen Miner Hurd told WND her group is expecting between 3,000 and 5,000 people at the upcoming June 26 protest at Chesapeake City Park in Chesapeake, Va. While she is excited about the turnout, Hurd has a predicament: She must raise funds for 30 portable toilets on a shoe-string budget. "How do you tell people you need money for bathrooms?" she asked. "Does that excite or inspire anybody? Not very much." So Hurd asked taxpayers to sponsor commodes and name them with their least favorite politicians.
Trucking firms edgy over rising diesel prices Last summer, as Americans strained to pay $4 for gasoline, truck drivers and other users of diesel fuel were paying nearly $5 per gallon to fill their tanks, and the price gap between the two fuels appeared to be widening. Not so anymore. Recently, the nationwide average diesel price fell below that of gasoline for the first time in nearly two years as global economic headwinds gutted demand for goods moved by diesel-powered trucks, ships and trains and manufacturing activity declined.
No one home: 1 in 9 housing units vacant A record 1 in 9 U.S. homes are vacant, a glut created by the housing boom and subsequent collapse. "The numbers are further documentation of the gravity of the housing problem," says Nicolas Retsinas, head of Harvard University's Joint Center for Housing Studies. "This inventory is delaying any kind of housing recovery." . . .
More than 14 million housing units are vacant. That number does not include an estimated 4.8 million seasonal or vacation homes, most of which are occupied part of the year. The combined vacancy rate of almost 15% is higher than during previous recessions: 11% in 1991 and 9.4% in 1984.
About 3% of owned homes are vacant. In normal times, "maybe 1% should be vacant," Myers says.
More than 9% of homes built since 2000 are vacant compared with about 2% for older homes.
Homes priced at $500,000 or more are just as likely to be empty as homes that cost less than $100,000.
Million-dollar homes hard to move in down economy From a bunkhouse-turned-sales office on the shores of Lake Thonotosassa, Steve Powell manages home sales at the millionaire enclave of Stonelake Ranch. It's 98 rural home sites set serenely in rolling horse country 30 minutes east of downtown Tampa. Despite the 13,000- and 20,000-square-foot mansions taking shape at Stonelake, real estate isn't exactly rocking on Lake Thonotosassa. Developers have trimmed prices as much as 30 percent, and sales have crumbled by about two-thirds the past couple of years. Powell spots fewer Mercedes and Lexuses rolling up the wooded, winding lanes of Stonelake.
Home Sales Keep Rising, Prices Keep Falling Sales of existing homes were up again in May, the second month of increasing sales. The rise was 2.4%, pushing sales up to an annual rate of 4.77 million from 4.66 million in April. What seems to be driving the sales is cheaper prices. The median price for an existing home was $173,000, down 16.8% from $207,900 in May 2008. Don't get too excited about the numbers, however. Home sales always increase as we move into the summer months. Families want to move between school years, driving up sales from March through the summer months. Sales tend to decline in the fall and winter. Still, we suppose you can take some comfort that sales are following the usual seasonal rising pattern rather than continuing to fall.
U.S. May mass layoffs jump tie record: Labor Dept The number of mass layoffs by U.S. employers rose last month to tie a record set in March, according to government data released on Tuesday that suggested the labor market has yet to stabilize. The Labor Department said the number of mass layoff actions -- defined as job cuts involving at least 50 people from a single employer -- increased to 2,933 in May from 2,712 in April, resulting in the loss of 312,880 jobs. It was the largest loss of jobs connected to mass layoffs on records dating to 1995.
May existing home sales rise less than expected Existing home sales rise 2.4 percent in May; prices plunge 16.8 percent Sales of previously occupied homes rose modestly from April to May, the third monthly increase this year, but signs of a housing recovery are fragile at best. The National Association of Realtors said Tuesday that home sales rose 2.4 percent to a seasonally adjusted annual pace of 4.77 million, up from a downwardly revised rate of 4.66 million in April. The results, however, missed analysts' expectations and stock markets edged lower on the news. "While activity has stabilized, a meaningful recovery has yet to begin," wrote Paul Dales, U.S. economist with Capital Economics.
Lost jobs forcing more out of homes The nation's foreclosure crisis — once largely confined to only a few corners of the country — is spreading to new areas as the economy teeters. The foreclosure rates in 40 of the nation's counties that have the most households have already doubled from last year, a USA TODAY analysis of data from the listing firm RealtyTrac shows. Most were in areas far removed from the avalanche of bad mortgages and lost homes that have hammered the U.S. housing market. Among the new areas: Boise and Green Bay, Wis. "The ripple effect is just broadening out to cover a lot more places," says Susan Wachter, who studies real estate and finance at the University of Pennsylvania's Wharton School.
Insurance industry lays down marker on health care Insurers warn government plan would "dismantle" employer coverage The insurance industry Tuesday laid down a marker on health care, warning in stark terms that a proposed government insurance plan would dismantle the employer coverage Americans have relied on for a half century and overtake the system. In a joint letter to senators, the two largest industry groups also said they don't believe it's possible to design a government plan that can compete fairly with private companies in a revamped health care market. That particular statement seemed to be aimed at lawmakers of both parties who are seeking a compromise on the contentious issue.
Can the U.S. Afford to Let California Fail? With his round face and sad eyes, Oracio Sandoval, 33, sits at a Los Angeles County welfare office in Carson, Calif., armed with a thick pile of job-application forms. Out of work since January, Sandoval is struggling to stay afloat financially. Married with two children, he and his wife used to make $3,000 a month. Now they rely on her $800 from Starbucks and their CalWORKs payment of $250. "It's not much, but it helps. We just barely make ends meet for rent and the bills. I am not sure how much longer we can go on like this," he says. Sandoval, like many of California's 39 million residents, is caught up in the pain of the worst recession in 50 years and a state's flailing attempt to balance its books by making brutal cuts in programs long seen as essential. The Sandoval family is but one of more than 154,000 welfare cases in Los Angeles County. Governor Arnold Schwarzenegger says the state should abolish its welfare program. Doing so would save $1.3 billion and rip a large gaping hole in the safety net that now keeps more than 500,000 California families like the Sandovals out of homeless shelters.
AutoNation vs Carmax
Ford Among First to Get Loans for More Efficient Cars Three automakers, including the Ford Motor Company, will get the first $8 billion from a $25 billion loan program intended to accelerate development of more fuel-efficient vehicles, the national energy secretary said Tuesday. Ford, the only Detroit automaker that did not receive emergency government loans this year, will get $5.9 billion to help it retool 11 factories in the Midwest. The money, about half as much as Ford had requested, will help it make 13 of its models more fuel-efficient. Ford plans to start selling four models of electric vehicles by 2012.
GM to cut 4,000 more white-collar jobs by year end General Motors offers retirement incentives to cut 4,000 more white-collar jobs by year's end About 4,000 more salaried workers at General Motors Corp. will lose their jobs by the end of the year as the automaker continues to downsize. The company notified its more than 27,000 U.S. white-collar workers by e-mail Tuesday that that it will offer standard severance packages, and employees near retirement age will have the opportunity to retire early, spokesman Tom Wilkinson said. Some involuntary cuts will be necessary, Wilkinson said, as GM tries to shrink its U.S. salaried work force to around 23,500 by year's end. The automaker is in Chapter 11 bankruptcy protection and has received about $20 billion in loans from the U.S. government. The Treasury Department's auto task force is overseeing its plans to restructure and emerge from bankruptcy as a leaner, more competitive company.
Survivalism grows popular in Valley Valley residents growing food, obtaining guns, sharing ideas As the recession lingers, some Phoenix-area residents are shifting attention from their financial troubles, including falling home values and shrinking retirement savings, to stockpiling food and ammo. They worry the economic turmoil could lead to skyrocketing inflation, food scarcity, even violence. To prepare, they are forming social-networking groups to discuss how to store grains, purify water, plant gardens and, if needed, shoot guns. "Most of us feel that if things do get better, it will be a long way out," said Jeff Rodriguez, a 26-year-old software engineer from Glendale. "I want to have some preparations in place."
Free State Project A New Strategy in our Lifetime What the Free State Project is... The Free State Project is an effort to recruit 20,000 liberty-loving people to move to New Hampshire. We are looking for neighborly, productive, tolerant folks from all walks of life, of all ages, creeds, and colors who agree to the political philosophy expressed in our Statement of Intent, that government exists at most to protect people's rights, and should neither provide for people nor punish them for activities that interfere with no one else.
Free State Project featured on "Chronicle" (1 / 2)
Free State Project featured on "Chronicle" (2 / 2)
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Obama ratchets up language on Iran violence President says he's 'appalled and outraged' by protesters' deaths Dramatically hardening the U.S. reaction to Iran's disputed elections and bloody aftermath, President Barack Obama condemned the violence against protesters Tuesday and lent his strongest support yet to their accusations the hardline victory was a fraud. Obama, who has been accused by some Republicans of being too timid in his response to events in Iran, declared himself "appalled and outraged" by the deaths and intimidation in Tehran's streets - and scoffed at suggestions he was toughening his rhetoric in response to the criticism.
Barack Obama strikes out as Tehran tightens its 'iron fist' President Obama condemned Iran's "iron fist" last night after the regime flooded Tehran with armed security to quash street demonstrations. In his strongest language yet on the post-election crackdown, Mr Obama said that America had been "appalled and outraged by the threats, beatings and imprisonments" of recent days. He also invoked the death of Neda Salehi Agha Soltan, the 26-year-old student shot dead on Saturday, saying: "Those who stand up for justice are always on the right side of history." His comments came on a day when Tehran tightened its grip on power and the West hardened its position.
North Korean ship tests new U.N. sanctions Intelligence officials, diplomats suspect illicit arms heading to Myanmar SEOUL, South Korea - An American destroyer tailed a North Korean ship Tuesday as it sailed along China's coast, U.S. officials said, amid concerns the vessel is carrying illicit arms destined for Myanmar. The sailing sets up the first test of a new U.N. Security Council resolution that authorizes member states to inspect North Korean vessels suspected of carrying banned weapons or materials. The sanctions are punishment for an underground nuclear test the North carried out last month in defiance of past resolutions.
North Korea drops new hints on missile launch Country's weapons slow to develop, but U.S. defense prepares for the worst An impending missile test threatened by North Korea is expected to launch short- to medium-range missiles rather than a long-range missile similar to one tested in April, according to U.S. intelligence reports. North Korea issued a warning over the weekend to mariners of upcoming live-fire missile exercises. The exclusion zone cited in the notice covers a stretch in the Sea of Japan, 279 miles by 68.2 miles off the coast of Wonsan, North Korea. The warning lasts from June 25 to July 10, from approximately 8 a.m. to 8 p.m. local time, a U.S. counterproliferation official said.
As China Stirs Economy, Some See Protectionism China has begun a concerted effort to keep its export economy humming, even as demand for its goods has plummeted with the global downturn. Risking the ire of the United States and other trading partners, the Chinese government has quietly started adopting policies aimed at encouraging exports while curbing imports, even though China, as one of the world's largest exporters, has aggressively criticized protectionism in other countries. The government has sharply expanded three programs to help exporters, giving them larger tax rebates, more generous loans from state-owned banks to finance trade, and more government-paid travel to promote themselves at trade shows around the world.
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Tues 06.23.2009
International Bailout Brings Us Closer to Economic Collapse By: Dr. Ron Paul, U.S. Congressman Last week Congress passed the war supplemental appropriations bill. In an affront to all those who thought they voted for a peace candidate, the current president will be sending another $106 billion we don't have to continue the bloodshed in Afghanistan and Iraq, without a hint of a plan to bring our troops home. Many of my colleagues who voted with me as I opposed every war supplemental request under the previous administration seem to have changed their tune. I maintain that a vote to fund the war is a vote in favor of the war. Congress exercises its constitutional prerogatives through the power of the purse, and as long as Congress continues to enable these dangerous interventions abroad, there is no end in sight, that is until we face total economic collapse.
State of the Nation From 2005 to 2009, the U.S. debt has increased $14 trillion dollars, while GDP went up a bit less than $2 trillion. It now takes over $7 dollars of new debt to "create" $1 of GDP "growth". In 2006 the ratio was less than $5 dollars. Soon, it will be double that amount. This is not a good thing; nor is it sustainable. It is a path to bankruptcy, ruin, and utter despair. It is a national disgrace. A free people should not accept the unacceptable. The Declaration of Independence explains it very simply in straightforward language that covers ALL particulars. The government and Federal Reserve have committed about $12.8 trillion to restart the credit markets and end the longest economic slump since the 1930s. The bond market is responding accordingly - rates are rising and prices are falling. This is a thumbs down vote of no confidence to the Fed, as it should be.
The Verdict - Judge Napolitano on Obama's Plan Giving Unlimited power to the Federal Reserve
Buying Gold to Keep Up with Inflation . . . . For the time being, I am keen to accumulate gold. We may still be in a deflationary environment but the impending inflation from all the printed money is no laughing matter. As it is, we are damned if we store our cash under the mattress and damned if we don't. Think of inflation as a silent tax which eats away at our wealth which has been accumulated painstakingly from investments and savings. The same amount of money will purchase lesser goods in future. The Federal Reserve has lighted the fuse of hyperinflation with its intervention in the Treasury bonds market. While its Quantitative Easing through buying debt with printed money achieved a shock and awe effect in March, this weapon to control interest rates has become blunt after repeated use. Long term interest rates will find its own level according to supply and demand, not artificial intervention.
If uncertainty and fear continue, and chaos and rioting begin...
If stock markets languish or suffer another meltdown...
If the recovery spending of the world's governments proves futile...
If government interference in the economy continues to increase...
If the value of the U.S. dollar takes a major fall...
If world recovery from the current recession/depression takes years...
If you're still wondering whether you have enough "safe" money...
...would you feel you own enough gold?
GOLD THOUGHTS Perhaps we should establish an official day of mourning for the loss of independent thinking now so widespread among today's journalists. In the U.S., independent journalism has died. Most of the reporting media has now become the official apparatchik of the Obama Regime. With one national network moving into the White House for daily supervision, all pretense of independence has been lost. We can probably, given access to the internet, learn to survive the death of journalism as a profession. However, our wealth may not survive the loss of an independent central bank. Since Federal Reserve actions are somewhat greater than a butterfly in Africa flapping its wings, the rest of the world may need to worry about yet to come financial chaos.
Market Gold Action and Chinese Owned Treasuries It is long believed that the price of gold and silver has been manipulated, not only by the large bullion banks, but by some of the central banks with the full collusion of some governments. The number of articles concerning this very subject, complete with statistics, are too numerous to mention here. The one that stands out for me was the recent news out of Russia by their financial community complaining about the 'artificial' low price of gold, with more credence afforded GATA (Gold Anti Trust Action) by the Russians when they sent a high level official observer to a recent world wide GATA conference. Shortly after this event, Russia publicly issued a statement voicing their concerns about the ongoing manipulation of the price of gold.
Gold Falls as Inflation Concerns Wane on Deepening Global Slump Gold prices slid to a five-week low after the World Bank forecast a deeper contraction in the global economy this year, curbing the appeal of the metal as a hedge against inflation. Silver also dropped. The U.S. Dollar Index, a gauge of the greenback's value, against six currencies, rose as much as 0.8 percent after the Washington-based lender said the global recession will be deeper than it forecast in March, fanning demand for dollars as a refuge and curbing inflation worries. Crude oil slid for a second session. Some investors buy gold as an inflation hedge.
Gold Still Taking Direction from Currency Markets Gold: Gold steadied on Friday as the dollar index reversed earlier losses but it is still taking its direction from the currency markets. The dollar remains in a very tight range ahead of a Federal Reserve meeting next week. Furthermore, the lack of any sell-off in gold in the wake of the latest IMF gold sale would indicate that the effect of these sales is already factored into the price. The IMF also declared that it "should continue to hold a relatively large amount of gold among its assets, not only for prudential reasons, but also to meet unforeseen contingencies." Gold is currently trading at $931.
David Morgan explains why silver remains the 'people's metal' and why it may be a better investment than gold . . . . Throughout history, about 10 times as much silver has been mined than gold. In the 12th century to about the 17th century, silver was worth about one-tenth to one-twelfth the price of gold. During the time of Sir Isaac Newton, who put England back on a gold standard to recover from a horrible financial crisis, he was asked to determine the "correct" ratio of silver to gold and set it at 15.5 to 1. This I call the classic or monetary ratio, and that stood while most of the world was on the silver standard. Remember, the pound sterling was a defined weight of silver.
No Gold, No Bullets: Now It's Personal Facts have a different feel when they're personal. And speaking personally, evidence that Americans are seriously spooked is starting to pile up. In the past few months:
My father-in-law decided he wanted some gold, so I called a local coin store and asked Kevin, the shop's owner, to find us some Krugerrands. He predicted a few weeks for delivery, which seemed reasonable given the chatter about tight supplies, so I placed an order and wrote a big check. That was three months ago, and the coins still aren't in. I called Kevin the other day and found him both busy and frustrated. "I could make a million dollars this year if I could only get inventory," he said. "This would be a career year." He apologized for the long wait and said there were now only a few people ahead of us on the list.
30-Years of Inflation Coming, But "Deflation Scare" Not Over Yet, Cycle Maven Says Everyone is right to fret about inflation but the "deflation scare" isn't over yet, says Charles Nenner, founder of the Charles Nenner Research Center. Renowned for his cycle work, Nenner sees deflation remaining dominant until year-end and inflation not picking up for another 18 months. But that will be the start of a 30-year (yes, year) upcycle for inflation says Nenner, who spent 12 years as a market-timing consultant for Goldman Sachs. The investing implications of this scenario are clear:
Nenner is bullish on gold for the long-term and even more bullish on gold mining stocks, which he says are currently cheap relative to bullion.
After a secular decline, Treasury yields are set to rise, with Nenner predicting the 10-year yield will reach 5.50% by Spring 2013, a 45% rise from Friday's close of 3.78%.
The Deflating Bubble There is an epidemic of bankruptcies: Circuit City, Sharper Image, Goody's, Gottschalk's, Comp USA, Levitz Furniture, Chrysler, GM. Not to mention all the local businesses that don't make the news when they close up shop. And the rash of corporate bustouts is far from over according to consulting firm Bain & Company, who predicts nearly 100 large ($100 million or more in assets) corporate bankruptcies by next year. We're in a period of severe losses - a cluster of errors, as Murray Rothbard described it - with thirty-seven banks having failed already this year, and many more to come. But as gruesome as the economic news sounds, Rothbard explained that this is the recovery.
Dollapocalypticism Is the Greenback Toast? Dollar obituaries are nothing new. The currency has been presumed dead more times than Shane Macgowan. But like the lead singer of The Pogues, the greenback has somehow withstood repeated knocks and scrapes over the years and lived on, battered, bruised and a couple of teeth the lighter, to fight another day. In the 1970s and 1980s there were plenty predicting its demise, although at that point the main challenger was the Japanese yen. And in the years preceding this crisis, economists and investors including Peter Schiff and George Soros were lining up to declare the dollar's demise as the world's reserve currency. In the late 1990s, the creation of the euro gave dollar sceptics another stick to beat the currency with, and no doubt the European currency has claimed some of the prominence in its first decade.
Bernanke Must Reassure Market About Rate Strategy Chairman Ben S. Bernanke has to convince investors the Federal Reserve can take back more than $1 trillion it pumped into the U.S. banking system to pull the economy out of the longest decline in more than six decades. Bernanke and his colleagues, who meet June 23 and 24 to map monetary strategy, have said they need to continue buying assets and keep interest rates low for a long time to help revive growth. Rising Treasury bond yields show Wall Street is concerned their policy may lead to an inflationary bubble: Ten- year notes reached an eight-month high of 3.95 percent June 10.
Economist Roubini sees double dip recession There is a risk that advanced economies will suffer a double dip recession, leading economist Nouriel Roubini said on Monday. Roubini, who rose to prominence for predicting the global credit crisis, said he saw more signs of "yellow weeds" than the green shoots of economic recovery. "I see there is a risk of a relapse, or of a double dip recession," Roubini, who heads economics research firm RGE Global Monitor, told a conference on long-term investment.
The U.S. and the U.K. Will Both Default on Their Debt by the End of Summer As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer.
World Bank warns of social unrest The head of the World Bank has warned that the global economic crisis could lead to serious social upheaval. "If we do no take measures, there is a risk of a serious human and social crisis with very serious political implications," Robert Zoellick said. He pointed to Eastern Europe, which faces the "tricky situation" of fast-shrinking economies and protests. Mr Zoellick suggested governments should start preparing for high levels of unemployment.
World Bank sees deeper and longer slump World Bank urges continued government stimulus as private sector investment famine cripples recovery in developing countries The global recession will be deeper and longer than expected said the World Bank today which is forecasting a harsher downturn this year as the famine in private sector investment cripples recovery among developing countries. The world economy will shrink more aggressively this year, predicts the bank, contracting by 2.9 per cent, a much steeper decline than it predicted in March when the institution forecast a 1.7 per cent contraction. The recovery in 2010 will be weaker, an expansion of 2 per cent compared with its previous prediction of 2.3 per cent.
Some Common Fallacies About Inflation and Deflation: the Weimar Nightmare in Review There are several fallacies making the rounds of the economic community, often put forward by pundits on the infomercials for corporate America, and also on the internet among well-meaning but badly informed bloggers. The first of these monetary fallacies is that 'the output gap will prevent inflation.' The second is that a lack of net bank lending or other 'debt destruction' will require a deflationary outcome. Let's deal with the output gap theory first. Output gap is the economic measure of the difference between the actual output of an economy and the output it could achieve when it is most efficient, or at full capacity.
When Money Dies: The Nightmare of the Weimar Collapse WHEN a nation's money is no longer a source of security, and when inflation has become the concern of an entire people, it is natural to turn for information and guidance to the history of other societies who have already undergone this most tragic and upsetting of human experiences. Yet to survey the great array of literature of all kinds — economic, military, social, historic, political, and biographical — which deals with the fortunes of the defeated Central Powers after the First World War is to discover one particular shortage. Either the economic analyses of the times (for reasons best known to economists who sometimes tend to think that inflations are deliberate acts of fiscal policy) have ignored the human element, to say nothing in the case of the Weimar Republic and of post-revolutionary Austria of the military and political elements; or the historical accounts, though of impressive erudition and insight, have overlooked — or at least much underestimated — inflation as one of the most powerful engines of the upheavals which they narrate.
Part 1: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Sorry America, We Still Have No Clue What To Do About 'Too Big To Fail' More than a year after the Federal Reserve and the Treasury Department stepped in to prevent the bankruptcy of Bear Stearns, there's still no official policy to solving the too big to fail problem. Even worse, there don't seem to be very many serious proposals to restoring market processes, reducing moral hazard The Obama administration rolled out another description last week: "Tier 1 Financial Holding Companies." and ending the implied taxpayer guarantee of large, complex, systemically important financial firms. Barack Obama and Tim Geithner's regulatory overhaul last week falls short of doing anything serious. So far short, actually, that it's probably fair to say it falls short of doing anything at all about the problem.
Big Banks in Trouble: Huge Mortgage Write-Downs Seem Inevitable Are The Banks Paying Back TARP Money Too Soon? Since the beginning of the year, major banks have raised over $200 billion in capital, far in excess of the $75 billion of new capital that the government stress tests had called for. The market prices of major bank stocks have recovered dramatically since March, indicating that Wall Street investors see a recovery in the banking industry. In addition, the banking industry is enjoying one of the largest net interest margins in history due to a very low cost of funds. Wells Fargo (WFC), for example, in the fourth quarter saw its average cost of funds decline to 1.5% while its net interest margin exceeded 4%. With banks able to access cheap funding thanks to the super low rate money policy of the Federal Reserve, banks almost have a license to print money.
TRANSFER OF WEALTH There can be no doubt that the global economy is undergoing a massive transformation and we have now entered an era of 'Big Government'. After decades of excess credit and over-consumption, the developed world is finally being forced to deal with private-sector deleveraging. However, the governments seem to have other plans and they've decided to fight these deflationary forces tooth and nail. Their solution - even more credit and even more consumption! Rather than accept a painful adjustment period, policymakers are desperately trying to revive the party. And in the process, they are making the situation much worse. All over the world, governments are spending trillions of dollars in order to clean up the mess. Unfortunately, the stark reality is that these governments have no money. So, in most instances, these glorious state-sponsored spending programs are being financed by borrowing and money-printing.
Ronald Reagan on Socialism & Liberalism
Sonia Sotomayor's Mortgage Policy Wrecked America Sonia Sotomayor, Barack Obama's nominee for a seat on the Supreme Court, served on the board of a New York State agency charged with providing discounted mortgages to middle and low income homebuyers from 1987 to 1992. During the time, she was a consistent advocate of pushing the agency to provide more mortgages to low-income home buyers. In short, she advocated the kind of aggressive lending practices that helped create the mortgage meltdown. Sotomayor's tenure on the State of New York Mortgage Agency preceded the current mortgage crisis by close to two decades, so she can't be held directly responsible for our current problems. But in many ways, her approach to home ownership mirrored--or perhaps foreshadowed--the policies that led to the housing boom and bust.
Obama's banking end around The government wants to make it harder for retailers, industrial firms and other non-banks to own banks. But six months ago, it made a big exception for GMAC. One road to regulatory reform runs through Detroit and Utah -- and there are signs the ride could get bumpy. The Obama administration's financial oversight reform program would force industrial loan companies, or ILCs -- banks owned by the likes of retailer Target (TGT, Fortune 500) and carmaker Toyota (TM) -- to submit to Federal Reserve rules and regulations.
Goldman Prepares To Pay Biggest Bonuses Ever (GS) Remember the days when the age of excess on Wall Street were over? We were told the new normal would mean smaller bonuses, reduced egos, no more bottle service and a New York City devastated by the loss of income trickling down from investment bankers to the rest of us. Well, Goldman may have received that memo but it didn't care much for it. Because the big bonus is back at 85 Broad, baby.
The Fed Plots The Next Disastrous GSE The Federal Reserve is planning to create a government sponsored entity to act as a central clearing house and guarantor of the overnight lending market used by investment banks to fund operations, the Financial Times reports. The idea is that the government would create some kind of overnight repurchase market 'utility' that would act as the go-between for lenders such as money market funds and borrowers such as investment banks. That's a role currently played by private banks, principally JP Morgan Chase and Bank of New York Mellon.
Here come the real estate vultures REITs are raising cash to take advantage of bargain prices on distressed commercial properties and mortgages. These are tempting times for real estate bargain hunters. Whether it's the tony house down the street with an asking price that keeps dropping or office space at a deep discount, if you have the means, there are deals to be had. Individual investors snapping up foreclosed houses have helped boost home-sale figures sharply in recent months (although prices have remained depressed). And now some real estate investment trusts are raising money to fund acquisitions of distressed commercial properties.
An Outrageous Prediction The Great Reflation . . . . It's no secret the governments and central banks of the world have opened up the monetary floodgates to reinflate the global economy. The United States has been leading the way. The Federal Reserve alone has committed more than a trillion dollars to monetizing the ballooning U.S. government deficit. Also, it has extended loans and guaranteed debt to the tune of $13 trillion. Most other countries have followed suit. . . . . . . . The governments want to go back in time to a few years ago when all was "well." They want to reinflate the housing bubble. They want to take everything back to where consumers borrowed and spent too much, factories produced too much, and people were happy. They're hoping to kick the can down the road far enough past the next election and they're not going to let any natural economic forces stop them.
Economist Phelps Says U.S. Wealth May Take 15 Years to Rebound U.S. households may take as long as 15 years to rebuild wealth lost in the recession, said Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006. "The only way we're going to get a healthy, full recovery is over a long period of time, involving households rebuilding their balance sheets and companies in trouble rebalancing their balance sheets," Phelps said in an interview today with Bloomberg Television. "There's no silver bullet that's going to get us into good shape quickly."
Part 2: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Insiders Selling Heavily: What's Up? Bloomberg files this report on the recent rise of insider selling, company executives dumping the most shares since mid-2007, shortly before the broad stock market's peak. . . . . . . . . Surely this can't be a good development for retail investors , many of whom have just recently convinced themselves that it's OK to put some money back into stocks again.
Pessimistic executives cash out of shares Markets tumble as ‘green shoots’ wither Growing pessimism about the prospects for a global economic recovery sent stock and commodity prices tumbling on Monday while new data showed that leading US corporate executives were cashing out of their share holdings at a rapid pace. US government bond yields followed equity prices lower, confounding analysts who had expected that Treasury rates would rise this week as the federal government auctioned off a record $104bn of debt.
Insiders Exit Shares at the Fastest Pace in Two Years Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago. Insiders of Standard & Poor's 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.
Financial Market is like a Soap Opera The financial markets are beginning to resemble a soap opera rather than the economic landscape. The daily drama of early losses, wiped out by the end of the day or the breathless rise in oil prices or even the on again, off again love affair with the dollar or gold (you pick!). But too, like a soap opera, you can walk away for a couple of weeks and pick up right where you left off, never feeling as though you missed much. The S&P 500 is merely two points better than three weeks ago and commodity prices have changed little over the past six weeks. So, dear viewer, what cliffhanger will be on tap this week? There will be housing news that has yet to rally and remains on life-support (could yet another government bailout save the day?!). The consumer is out of intensive care, but may relapse depending upon spending numbers on Friday. All of this excitement is in advance of earnings season that will kick off in two weeks - for heaven's sake, don't touch that dial!!
Stocks tumble on bleak world outlook A surprisingly bleak forecast for the world economy sent stocks tumbling to their lowest level this month. Major stock indexes dropped by more than 2 percent Monday, sending the Dow Jones industrial average down 201 points, after the World Bank estimated the global economy will shrink 2.9 percent in 2009. It previously predicted a 1.7 percent contraction. Investors began buying up stocks in March on hopes that the economy was poised to begin recovering. The grim assessment from the World Bank runs counter to hopes that have been building for months that a gradual recovery was beginning.
Which Country Will Drive the Global Economy Out of Its Recession? This morning the World Bank reminded us that the recession is a world-wide affair, and that the U.S. is probably gaining share of the world's economy despite our economic problems. In other words, while it might be bad here, lots of places have it far worse. Overall, the world's economy is expected to contract by 2.9% -- a sharply lower forecast than the 1.7% drop it was looking for in March. The OECD high-income countries are expected to see a 4.2% decline. The primary cause of the world-wide slump is a 9.7% decline in world trade.
Deflation more likely "Hyperinflation" in the USA is a concept which has been freely bandied about in recent weeks, and a friend - who lives in Switzerland - recently queried this analyst's view that deflation is the more likely eventual outcome for the world economy as a whole. In the conversation which ensued, what finally emerged was that communication on the subject is fraught with definitional issues. For example, my friend pointed to the comment by Marc Farber that "I am 100 percent sure that the US will go into hyperinflation", as quoted on Bloomberg May 27, 2009 The response of this analyst was: "Well, let's think it through on a step by step basis".
Part 3: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Clinton to skip G8, OSCE meetings in Europe U.S. Secretary of State Hillary Clinton will not attend international meetings in Italy and Greece this week because of an injury to her arm, the U.S. State Department said on Monday. The top U.S. diplomat had surgery on Friday to repair her right elbow, which she broke on Wednesday when she tripped and fell in the State Department's basement.
White House sees 10 percent unemployment within months The U.S. unemployment rate is likely rise from already high levels to 10 percent in the next couple of months, a White House spokesman said on Monday. "I think the president has said this, and I would certainly say this, I think you're likely to see unemployment at 10 percent within the next couple of months," White House spokesman Robert Gibbs told reporters.
A High Unemployment Rate Correlates to a High Rate of Inflation It absolutely amazes me how sanguine the Fed, Treasury and Administration are about the prospects for subdued inflation. What they and many economists like to point to as the source of their optimism is the high rate of unemployment, which is currently 9.4%. But the truth is that inflation actually causes higher rates of unemployment, while it is false to believe that inflation can be prevented by a labor slack in the economy.
TH*NK*NG (RECOVERIES) I've been thinking about recoveries. Actually I've been thinking about my post-operative return to normal, my recovery goals, the status of the US recovery, and the US recovery goals. My open heart surgery will be a scant three weeks in the past on Wednesday. My recovery is progressing exceptionally well. To all who have thought of me and prayed for me, a most heartfelt THANK YOU! I am now back home, I have progressed from sponge baths to hand held (sit down) showers, I can comfortably walk up and down 14 steps, and I can now walk around my entire block unassisted (with only one brief pause at the half way point and with the company of a neighbor - just in case ). Monday, I retrieved my Scottie, Mac II, from the kennel. I wish I could say that things are going as well for the US and the economy.
Waiting to Exhale As we pen this brief, equity markets deliberate near term direction as they levitate from a hyper-thrust of massive (save our monopolies) intervention in tandem with a crumbling currency. Share prices are attempting to recover from what is without doubt, an outright failure of long-term fundamentals and stewardship by every practical measure. Stock markets cling to coveted reactionary gains from the very precipice, deciding fatefully, whether the blind masses harbor enough denial or hubris to print yet another series of fresh highs in June. Perhaps they will, and perhaps they will not.
The Real Crisis Is Food: Beginning of the Bull for Agriculture The real crisis is coming… and it's coming fast. Indeed, it started last year, almost entirely off the radar of the American public. While all eyes were glued to the carnage in the stock market and brokerage account balances, a far more serious crisis began to unfold rocking 30 countries around the globe. I'm talking about food shortages. Aside from a few rice shortages that were induced by export restrictions in Asia, food received little or no coverage from the financial media in 2008. Yet, food shortages started riots in over 30 countries worldwide. In Egypt people were actually stabbing each other while standing in line for bread.
Part 4: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Echo boomers a lifeline for embattled U.S. housing The children of baby boomers will eventually resuscitate the pummeled U.S. housing market, Harvard University said on Monday, but in the meantime, limits on income and credit are sustaining the three-year bust. The highest unemployment in almost 26 years, record foreclosures and rigid lending threaten to overcome emerging home sales progress despite unprecedented efforts by the Obama administration, Harvard's State of the Nation's Housing 2009 report said.
Recovery's Missing Ingredient: New Jobs Experts Warn of A Long Dry Spell Despite signs that the recession gripping the nation's economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration's message of optimism about the economic outlook. The likelihood of severe unemployment extending into the 2010 midterm elections and beyond poses a significant political hurdle to President Obama and congressional Democrats, who are already under fire for what critics label profligate spending. Continuing high unemployment rates would undercut the fundamental argument behind much of that spending: the promise that it will create new jobs and improve the prospects of working Americans, which Obama has called the ultimate measure of a healthy economy.
Rhyming And Reason Will history repeat in terms of the widely followed stock market comparisons that many now put against present conditions. As you may know, often, when a system that is used to forecast financial markets becomes too popular, changes in outcomes occur despite previously tight correlations. And it could be argued we are at such a juncture now, as new services are cropping up everywhere in this regard. Still however, this does not preclude similarities being maintained, as despite speculator-induced differences that may be present today, these exercises are measurements in human behavioral extremes, which history has taught us generally tend to be bounded by similar measures.
Part 5: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Dealer cuts may hurt domestic car sales Local retailers outnumbered Chrysler's dealer closings and planned cuts by General Motors will cause domestic automakers to lose sales to foreign rivals, affected dealers say. After the closings there will be 80 fewer domestic dealers than import dealers in Maryland, according to figures by R.L. Polk & Co. provided by Jack Fitzgerald, co-chairman of the newly formed Committee to Restore Dealer Rights. There will be 45 foreign-car sale-and-service outlets on the Rockville Pike corridor from the D.C. line to Gaithersburg, compared with seven domestic counterparts, he said. "It's like surrender. Are they waving the white flag?" said Mr. Fitzgerald, 73.
As Detroit Crumbles, China Emerges as Auto Epicenter America's auto titans are dismantling their global empires. But across the Pacific, it's as if the global economic forces that have pummeled Detroit never struck. Chinese auto sales are up, and this year China is projected to displace Japan as the world's largest car producer. Now, the auto world is buzzing that China's auto industry may try to pick up the pieces of Detroit -- at a bargain. Chinese companies have tried to dampen speculation, issuing regulatory filings that deny bids to buy Ford's Volvo or General Motor's Saab. But there's little doubt among analysts that Chinese automakers are interested in the United States and that Detroit's automakers are interested in them.
Obama, citing his smoking woes, signs tobacco law Obama signs anti-smoking bill, citing his own difficulty in breaking the cigarette habit Lamenting his first teenage cigarette, President Barack Obama ruefully admitted on Monday that he's spent his adult life fighting the habit. Then he signed the nation's toughest anti-smoking law, aiming to keep thousands of other teens from getting hooked. Obama praised the historic legislation, which gives the Food and Drug Administration unprecedented authority to regulate what goes into tobacco products, to make public the ingredients and to prohibit marketing campaigns geared toward children. But he didn't say how his own struggle was coming since he moved into the White House. And aides were no more forthcoming.
Panel Might Revise Health-Care Bill Senator Charles E. Grassley of Iowa, the top Republican on the Senate Finance Committee, said on Sunday that the panel would consider revisiting its version of health-care legislation to gain more support. An overhaul of the nation’s health-care system was part of President Obama’s campaign pledge to expand coverage to those who do not have health insurance while lowering costs in general. But an initial price tag for the Senate Finance Committee’s proposal came to $1.6 trillion, according to the Congressional Budget Office. That figure caused enough consternation that the chairman, Senator Max Baucus of Montana, postponed a drafting session that was to have begun this week.
Obama's Senior Moment If you have any sense that you may be getting sick in the years ahead, I suggest you get sick immediately. If you will be in need of surgery or any other medical procedure, do it now! If not immediately, be certain that you hand yourself over to the healthcare professionals before October 15 of this year. That is the date on which President Barack Obama hopes to sign his healthcare bill once it has gone through the congressional baloney grinder. . . . . . . . . Also at the heart of President Obama's plan is the restriction of services for older people, people 65 and older who by virtue of modern medicine may actually be ten and fifteen years younger in terms of good health than they would have been a generation ago. Alas, they still have higher health risks and costs than younger people. Thus they are going to bear the brunt of the Obama Administration's cost cuts, for 27-30% of Medicaid spending is spent for caring for people at the end of their lives.
Obama May Lack Votes for Health-Care, Feinstein Says President Barack Obama may not have enough votes in the U.S. Senate to pass his effort to overhaul the nation's health-care system, California Democrat Dianne Feinstein said. "I don't know that he has the votes right now," Feinstein said today on CNN's "State of the Union" program. "I think there's a lot of concern in the Democratic caucus." Controlling costs of the new system is a "difficult subject." Republican Senator Richard Lugar of Indiana said on the same program that the overhaul should be done slowly, and not this year, to ensure it doesn't "threaten the basic structure of the economy."
More credit card rules could hurt Visa, MasterCard Visa Inc and MasterCard Inc, the world's largest payment networks, could face lower revenue and pressure on their stock prices amid a push for increased U.S. regulation of credit cards. Specifically, Congress is mulling regulations on interchange rates -- fees retailers and merchants have to pay to banks that issue credit cards. Most immediately, that would affect the banks that collect those fees. But some investors and analysts are concerned the banks -- already battered by credit losses and toxic assets -- could try to share the haircut with Visa and MasterCard.
Part 6: 6/17/09 Freedom Watch 19 w/ Ron Paul, Peter Schiff, Tom Woods, Lew Rockwell, more
Mystery solved: South Carolina governor taking a hike A mystery surrounding the whereabouts of South Carolina Gov. Mark Sanford was apparently solved late Monday when a Sanford spokesman said he was hiking along the Appalachian Trail. "I apologize for taking so long to send this update, and was waiting to see if (we had) a more definitive idea of what part of the trail he was on before we did so," Joel Sawyer said in an e-mail to reporters.
People on terrorist watch list allowed to buy guns When people on the government's terrorist watch list have tried to buy guns or explosives in recent years, the government has let them the vast majority of the time. That's the finding of a new report by the Government Accountability Office, sent to lawmakers last month and released publicly Monday. From February 2004 to February 2009, 963 background checks using the FBI's National Instant Criminal Background Check System "resulted in valid matches with terrorist watch list records; of these matches, approximately 90 percent were allowed to proceed because the checks revealed no prohibiting information," the GAO report says. About 10 percent were denied.
Japan May End $1.5 Billion Venezuela Loan Plans After Seizures Japan may cancel a planned $1.5 billion loan for Venezuela's El Palito and Puerto La Cruz oil refineries after the South American nation seized Japanese company assets, said a person familiar with the situation. The Japan Bank for International Cooperation, or JBIC, is reviewing loans for the upgrades after Venezuela took over Japanese iron and chemicals assets and fell behind on payments to oil-service contractors, according to the person, who declined to be identified because the review isn't public. The refineries have a combined 327,000 barrels-a-day of capacity.
China wants Ahmadinejad election recognized China's communist government, showing concern that mounting protests in Iran could spark another "color" revolution in a close economic ally, has called for the disputed election results to be recognized and cautioned the United States and other Western powers not to meddle in Iran's affairs. The messages, relayed through China's vast and tightly controlled state media, have glossed over reports of mass demonstrations and the deaths of protesters at the hands of Iranian security forces. Such news and images, coming only weeks after the 20th anniversary of China's violent crackdown on students in Tiananmen Square, could reopen delicate questions about political developments here and undermine Chinese relations with a key oil supplier and customer for Chinese goods.
Stopping the bomb is what counts Raw numbers don't mean very much in the Middle East, where running into the streets to demonstrate, usually but not always against the Great Satan, is the national sport. It's more fun than evening prayers at the mosque. What is impressive is the simple fact of the outpouring of popular sentiment in Tehran. Lifting even a finger to mock the indifference and arrogance of the Supreme Leader Ayatollah Ali Khamenei (Impertinence Be Upon Him), or even President Mahmoud Ahmadinejad (Palaver Be Upon Him), is asking for a hard thump on the head, or worse. Usually much worse.
Fighting tears, shah's son calls crisis a 'moment of truth' The son of the former shah of Iran called Monday for solidarity against Iran's Islamic regime, warning that the democratic movement born out of the election crisis might not succeed without international support. "The moment of truth has arrived," Reza Shah Pahlavi said at Washington's National Press Club. "The people of Iran need to know who stands with them."
Iranian Leaders Try to Divert Attention by Pointing at West, Israel, 'Terrorists' Amid a weekend of deadly violence in Tehran, Iran's leaders launched a concerted drive to deflect blame for the unprecedented post-election turmoil away from the state and towards its customary enemies - the West and Israel. Iran's president, foreign minister and influential parliamentary speaker all lashed out at key European countries and the United States, taking their cue from the supreme leader, Ayatollah Ali Khamenei, who in a sermon on Friday described Western governments as "hungry wolves in ambush."
Neda And Iran's YouTube Revolution More than Twitter, it is the ubiquity of digital cameras and the democratization of video publishing that makes this revolution so different. If it were up to CNN and the old school broadcast networks, you would have never heard of Neda, the 26-year-old Iranian girl. She was shot in the heart by Iranian Security Forces as the cell phone cameras rolled and her father stood by. More than some sophisticated Internet filtering program, these guardians of the TV screen were the real censors. They controlled the visual information pipeline. No longer.
Obama: U.S. ready for possible N.Korea missile launch The United States military is prepared for the possibility that North Korea may attempt to launch a missile toward Hawaii, President Barack Obama said in remarks released on Sunday. "This administration -- and our military -- is fully prepared for any contingencies," Obama said in an interview with CBS television when asked about reported North Korean intentions to fire a missile toward Hawaii on or about July 4. Pressed on whether his comments were a warning of a military response, Obama said no.
Iranian Guards Issue Warning as Vote Errors Are Admitted TEHRAN — Threatening to crush dissent, the powerful Revolutionary Guards warned protesters Monday that they would face a “revolutionary confrontation” if they returned to the streets in their challenge to the presidential election results and their defiance of the country’s leadership. The warning, on the Guards’ Web site, was issued despite an admission by Iran’s most senior panel of election monitors that the number of votes cast in 50 cities exceeded the actual number of voters, according to a state television report two days after the country’s supreme leader pronounced the ballot to be fair.
Dalian 2009 World Economic Forum - Sir Martin Sorrell
East Asia 2009 - World Economic Forum Highlights 19.06.2009 Highlights from the World Economic Forum on East Asia 2009. Some 400 business, government and civil society leaders met in Seoul, Republic of Korea, from 18-19 June to discuss the implications of the economic crisis on the region.
We The People Stimulus Package Bob Basso author of "Common Sense" plays the role of Thomas Paine to ignite the fire of change in America. Patriotism and Pride for America lead Thomas Paine to help take back America!
World economy headed for another crash The world economy will face a crisis in the next two years even bigger than the downturn currently buffeting the global financial system, a respected US forecaster warned Monday. Author Harry S. Dent, who predicted Japan's slide into recession in the 1990s and the present slump, dismissed claims the worst was over for the world economy and that"green shoots" were emerging from the fiscal firestorm. Dent said the baby-boomer generation was set to cut back on spending, sending the share and property markets into downward spirals that would dwarf the recent recovery.
IMF Gold Sale: WGC welcomes US approval The World Gold Council (WGC), the apex global body on gold, has welcomed the US Congress approval to the gold sale plan from the International Monetary Fund (IMF). Last week, the US House of Representatives approved an agreement to allow US members of the IMF board to agree the proposed $13 billion sale of 400 tonnes of IMF gold to shore up its finances.
If History Repeats, Gold Will Surge Soon After the recent turn of events that closed the door on a new high for the price of gold this spring (summer arrives this weekend), attention turns to a very encouraging historical pattern that has developed during the current decade - surges late in the odd-numbered years of 2001, 2003, 2005, and 2007 leading to much higher levels after the snow melts. Will the 2009-2010 period produce a similar result? We'll find out soon enough.
Gold Market Update Gold broke down and went into decline, as predicted in the last update posted early this month. At that time our maximum downside target was the strong support in the $880 area, but now there are strong signs that the decline has either run its course, or is close to having done so, and that a breakout to new highs may be close at hand.
Pushing on a String Back in 1973, gold standard advocate John Exter made a phrase famous in hard-money circles: "Pushing on a string." Exter argued that prices of all assets except gold (he ignored silver) would someday collapse because of the pyramiding of debt. Banks would eventually cease to lend, out of fear of default. That would cause the default. The FED would inflate the monetary base, he said, but this would not reverse the price decline. The commercial banks would not lend. The FED would therefore push on a string. Its attempt to inflate would fail. Exter had been a central banker (Sri Lanka) and a senior officer at Citibank. He was the first deflation predictor in the hard-money movement. He was soon joined by C. Vern Myers.
Gold as an Investment, Deflation / Inflation Wrap Up Your author is a big fan of the precious metals, both gold and silver. I have dropped enough pixels with my ideas on the "why" that I will not rerun all that now. I wanted to clarify any misconceptions of ideas any may have about my stance on the metals. I am not and have never implied or stated that anyone should run out and convert all of their wealth to gold. I think gold needs to be a part of any portfolio. As a fan of the metals, gold and silver make up about 20% of my investment capital and about 5% of my entire net worth. So in no way am I an all or nothing kind of thinker on this.
Golden Shoots: How Gold price is consolidating No green shoots. There are no green shoots. Every single piece of economic and market news we observe confirms our view that the current optimism in the world economy is purely based on sentiment and not on facts. The current corrective rallies in world stock markets were forecast by us in our January Newsletter. Corrective rallies create false optimism and hope. This is what we are seeing currently.
Illegal gold mining thriving in S Africa JOHANNESBURG: With the gold prices soaring, South Africa is facing a serious problem of illegal mining. The country has been facing the issue for years but the rise in prices of the yellow metal has caused a surge in illegal mining also. Following several deaths during illegal mining in Welkom, the Parliament's select committee on economic development visited gold producer Harmony's Eland shaft.
Is this the death of the dollar? After two smugglers were stopped last week with what at first appeared to be $134 billion in US state bonds, the tension and paranoia surrounding the fate of the dollar hit a new high. Border guards in Chiasso see plenty of smugglers and plenty of false-bottomed suitcases, but no one in the town, which straddles the Italian-Swiss frontier, had ever seen anything like this. Trussed up in front of the police in the train station were two Japanese men, and beside them a suitcase with a booty unlike any other. Concealed at the bottom of the bag were some rather incredible sheets of paper. The documents were apparently dollar-denominated US government bonds with a face value of a staggering $134 billion.
Dollar vulnerable as countries diversify The U.S. dollar, whose leading role in world currency markets has faced increasing questions, will remain under pressure for years as more countries diversify their reserve holdings, top analysts and strategists said this week. Still, no other currency appears ready to take over the dollar's dominant role in foreign exchange markets in the foreseeable future, which will likely prevent any precipitous fall in the greenback, the analysts and strategists said at the Reuters Investment Outlook Summit in New York.
Federal Regulators Close 3 Small Banks Federal regulators closed three small banks on Friday, bringing the number of bank failures to 40 so far this year. The largest of the banks closed on Friday was the Cooperative Bank of Wilmington, N.C., with $970 million in assets and $774 million in deposits, the Federal Deposit Insurance Corporation said. The failure is expected to cost the F.D.I.C. deposit insurance fund an estimated $217 million. First Bank of Troy, N.C., will purchase all the deposits, except about $57 million in brokered deposits. The F.D.I.C. said it would pay the brokers directly. The Cooperative Bank's 24 branches will reopen on Monday as branches of First Bank.
Hyperinflation Could Hit US In 5-10 Years says Marc Faber
Don't believe the hyperinflation hype - dare to make cuts London asset managers 36 South are launching a "hyperinflation fund" for those convinced that money-printing by central banks around the world must lead to Weimar or Zimbabwe soon enough. Flush from last year's 234pc rise in their Black Swan Fund, they are betting that quantitative easing and war-time deficits have sown the seeds of inflation reaching "10pc, 15pc, 20pc, or more". They capture the mood of the times, but are they right? We know that the Fed's balance sheet has exploded (to $2.07 trillion), but that is only half the story. Data from the St Louis Fed shows that the "monetary multiplier" has collapsed from a decade-average of 1.6 to the depths of 0.893. The "velocity" of money has slowed to a crawl.
Why Inflation Isn't the Danger SOME people with hypersensitive sniffers say the whiff of future inflation is in the air. What's that, you say? Aren't we experiencing deflation right now? The answer is yes. But, apparently, for those who are sufficiently hawkish, the recent activities of the Federal Reserve conjure up visions of inflation. The central bank is holding the Fed funds rate at nearly zero and has created a mountain of bank reserves to fight the financial crisis. Yes, these moves are unusual, but these are unusual times. Concluding that the Fed is leading us into inflation assumes a degree of incompetence that I simply don't buy. Let me explain.
Back in the U.S.S.A. by Peter Schiff Harry Browne, the former Libertarian Party candidate for president, used to say: "the government is great at breaking your leg, handing you a crutch, and saying 'You see, without me you couldn't walk.'" That maxim is clearly illustrated by the financial industry regulatory reforms proposed this week by the Obama Administration.
Tracking the $700 Billion Bailout The government has provided money to hundreds of banks and a handful of insurers and automakers as part of the $700 billion Troubled Asset Relief Program. Some small firms have repaid the government, and many big banks have announced they intend to return the money.
Treasury's Got Bill Gross on Speed Dial Every day, Bill Gross, the world's most successful bond fund manager, withdraws into a conference room at lunchtime with his lieutenants to discuss his firm's investments. The blinds are drawn to keep out the sunshine, and he forbids any fiddling with BlackBerrys or cellphones. He wants everyone disconnected from the outside world and focused on what matters most to him: mining riches for his clients at Pimco, the swiftly growing money management firm.
Fed unlikely to try new aids for economy, for now With the recession easing, Federal Reserve policymakers are unlikely to launch any major new efforts to revive the economy when they meet this week. Instead, Fed Chairman Ben Bernanke and his colleagues, wary of overdoing the stimulus medicine and fanning inflation later, are expected to stand pat, economists say. The Fed has taken unprecedented steps to try to lift the country out of recession. They include a bold effort announced in March to plow $1.2 trillion into the economy in an attempt to lower interest rates and spur more spending by Americans.
pt1/2 Gerald Celente on Max Keiser's on The Edge
Corporate Lenders Fight Back Against Fed Power-Grab One of the first big battles over the Obama administration's proposals to remake the regulations governing the financial sector looks to be over industrial loan-companies. Several executives of the ILCs said that they are lobbying Congress to defeat a proposal by the Obama administration that would force them to convert to bank-holding companies and be subject to regulation by the Federal Reserve, the Wall Street Journal reports.
The Ending of America's Financial-Military Empire The city of Yekaterinburg, Russia's largest east of the Urals, may become known not only as the end of the road for the tsars but of American hegemony too; as the place not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground. Challenging America is the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the so-called BRIC nations --Brazil, Russia, India and China.
Too Big to Fail, or Too Big to Handle? "No one should assume that the government will step in to bail them out if their firm fails." That's Timothy F. Geithner, the Treasury secretary, talking tough with lawmakers last week as he promoted the government's remake of the financial regulatory framework. Talk is cheap, however. And the notion that the plan shows a new aversion to bailouts is not at all supported by its chapter and verse. In fact, there's precious little in the 88-page document about how the government will eliminate systemic risks posed by financial firms that aren't allowed to fail because they're simply too big or to interconnected to other important economic players here and abroad.
Obama Blueprint Deepens Federal Role in Markets Plan to Overhaul Financial Regulation Focuses on Consumer Protection, Risk The Obama administration last night detailed a series of proposals to involve the government more deeply in private markets, from helping to steer borrowers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to curb the kinds of reckless risk-taking that sparked the economic crisis.
pt2/2 Gerald Celente on Max Keiser's on The Edge
Jobless rate rises in nearly all states Forty-eight states and the District of Columbia post unemployment rates rise in May, while only one state - Nebraska - registers a decrease. Forty-eight states and the District of Columbia recorded unemployment rate increases in May, the government reported Friday. One state registered a rate decrease, and one state had no rate change. Several states and regions posted their highest unemployment rate since the report debuted in 1976. Over the year, jobless rates were higher in all 50 states and the District of Columbia. Michigan once again led the nation with a 14.1% jobless rate, up from 12.9% a month earlier, followed again by Oregon at 12.4%, up from 12% in April. Thirteen states have rates above 10%.
How the bailout bashed the banks They were rescued from a crisis of their own making, but the political thrashing has left bad blood between business and government. An inside look at the trouble with TARP. Washington's most dramatic foray into the nation's financial sector since the Great Depression began on Oct. 13 with a misnamed acronym, an unwitting tribe of CEOs, and a confused staff of Treasury officials. It was a foreshadowing of the misadventure to come. "I don't even know who the 9 companies are. Do you?" Michele Davis, assistant secretary for public affairs, wrote in an e-mail sent at 7:15 a.m. on that history-making Monday. "No clue," Treasury chief of staff Jim Wilkinson responded. "Let me get the list."
Fed plans repo markets revamp Concern over repurchase system stability The US Federal Reserve is considering dramatic changes to the giant repurchase - or repo - markets where banks around the world raise overnight dollar loans. The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say. The Fed's deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year.
ECB's Trichet says no room for more debt There is no room for governments that have borrowed billions to fight the economic crisis to accumulate more debt, European Central Bank President Jean-Claude Trichet said on Sunday. "There is a moment where you can't spend anymore and you can't accumulate any more debt. I think we are at that moment," Trichet told Europe 1 radio. He said the massive injection of funds into the economy through government stimulus packages had been the appropriate response to the economic crisis but he said states would have to bring public finances back under control as soon as possible.
Worse than subprime? Other mortgages imploding slowly Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump. The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.
And Now for Something Entirely Different: Divided We Stand What would California look like broken in three? Or a Republic of New England? With the federal government reaching for ever more power, redrawing the map is enticing. Remember that classic Beatles riff of the 1960s: "You say you want a revolution?" Imagine this instead: a devolution. Picture an America that is run not, as now, by a top-heavy Washington autocracy but, in freewheeling style, by an assemblage of largely autonomous regional republics reflecting the eclectic economic and cultural character of the society.
Cap And Trade Will Cost Households Just $175 Annually Cap and trade legislation will cost $175 annually for the average household, or just .2% of after-tax income, says the Congressional Budget Office. On Friday, the CBO released a report assessing cap and trade costs to households. It analyzed the cost of the program in 2020. At that point the legislation would be eight years old, so the economy should have adjusted to changes presented by the legislation. The CBO assumed a $28 price for a carbon credit. In 2020, 17% of the emissions would be sold and 83% given away.
California's credit rating in jeopardy Moody's Investor Service says the state's already low credit rating could tumble toward 'junk' if a $24 billion budget gap isn't closed. California, which is struggling to close a $24.3 billion budget gap, faces the prospect of a "multi-notch" downgrade in its credit rating if the state's legislature fails to act quickly to produce a budget, Moody's Investors Service warned Friday. Moody's decision to place California's general obligation debt on alert for a possible "multi-notch" downgrade stunned state officials. The state's current A2 credit rating is Moody's sixth-highest investment grade and makes California the lowest rated of the 50 states.
Dems worry that health plan lacks votes A Republican senator seeking a bipartisan health care deal spoke Sunday of lowering expectations while one of President Obama's Democratic allies questioned whether the White House had the votes necessary for a such a costly and comprehensive plan during a recession. Mr. Obama's proposal to provide health care coverage for some 50 million Americans who lack it has become a contentious point for a Democratic-controlled House and Senate struggling to reach a consensus Mr. Obama desperately wants.
Upward tick in gas prices may be coming to an end Run-up in gasoline prices appears to be over, but could Iranian strife send prices higher? After rising nearly every day for the past two months and climbing 67 percent so far this year, it looks like gasoline prices may be ready to take a break. Gas prices were up for a 54th straight day Sunday, by 0.1 cents, to a new national average of $2.693 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The recent run-up exceeds anything that oil analysts say they have seen since the 1970s. But the streak should end Monday or Tuesday, Tom Kloza, publisher and chief oil analyst for OPIS, said Sunday.
'Cash for clunkers' coming soon Congress approves a measure to subsidize car purchases - consumers can get as much as $4,500 to trade in old cars. Vehicles bought after July 1 eligible A $1 billion Washington program to give vouchers to consumers who replace junky cars with fuel-efficient models is likely to ramp up very soon. Congress passed the "cash for clunkers" measure late Thursday night as part of the $106 billion war spending bill. President Barack Obama plans to sign the bill into law. "We are gratified that the Congress delivered on this administration priority, and President Obama looks forward to signing it into law," according to an administration statement. [Gov Web site with details: http://www.cars.gov]
Cracking the 'Great Firewall' of China's Web censorship Hacking Past China's Web Censors If an Internet user in China searches for the word "persecution," he or she is likely to come up with a link to a blank screen that says "page cannot be displayed." The same is true of searches for "Tibetan independence," "democracy movements" or stranger sounding terms such as "oriental red space time" code for an anti-censorship video made secretly by reporters at China's state TV station. It's a reflection of the stifling, bizarre and sometimes dangerous world of Internet censorship in China. The communist government in Beijing is intensifying its efforts to control what its citizens can read and discuss online as political tensions rise ahead of this summer's Olympic Game
U.S. Destroyer Shadows North Korean Ship A North Korean cargo ship shadowed by a United States Navy destroyer was reportedly steaming toward Myanmar on Sunday, posing what could be the first test of how far the United States and its allies will go under a new United Nations resolution to stop the North's military shipments. The United States began tracking the 2,000-ton freighter Kang Nam after it left Nampo, a port near Pyongyang, North Korea, on Wednesday. Pentagon officials have said they suspect the ship of carrying prohibited materials, but have declined to say where it may be headed. North Korea has said it would consider interception an "act of war" and act accordingly.
Confidential memo reveals US plan to provoke an invasion of Iraq A confidential record of a meeting between President Bush and Tony Blair before the invasion of Iraq, outlining their intention to go to war without a second United Nations resolution, will be an explosive issue for the official inquiry into the UK's role in toppling Saddam Hussein. The memo, written on 31 January 2003, almost two months before the invasion and seen by the Observer, confirms that as the two men became increasingly aware UN inspectors would fail to find weapons of mass destruction (WMD) they had to contemplate alternative scenarios that might trigger a second resolution legitimising military action.
Senator: Obama 'timid, passive' over Iran Republican senators criticized President Obama on Sunday for not taking a tougher public stand in support of Iranians protesting the outcome of the country's contested presidential election, with one saying the president had been "timid and passive." As thousands of Iranians flooded city streets in the past week to demonstrate for a new election, Republicans have been turning up the heat on Mr. Obama. The president has sought to send a measured message to the Iranian leadership, with which he still hopes to open a dialogue over its nuclear program.
Congress votes to stand by Iran protesters Congress one-upped President Obama with a tough response to Iran's elections Friday as both chambers voted overwhelmingly to decry Tehran's clampdown on protesters challenging the victory of President Mahmoud Ahmadinejad. Republicans pushed the resolution after criticizing Mr. Obama's comments on the situation as tepid, arguing that the U.S. should express solidarity for supporters of Mr. Ahmadinejad's challenger, Mir Hossein Mousavi, who is accusing the hard-line government of rigging the election.
Obama: U.S. prepared for any N. Korean threat President Obama said the United States is "prepared for any contingencies" involving North Korea -- including the regime's reported threat to launch a long-range missile toward Hawaii. Japanese media have reported the North Koreans appear to be preparing for a long-range test near July 4. Defense Secretary Robert M. Gates has ordered additional protections for Hawaii in case a missile is launched over the Pacific Ocean.
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Gates Orders Measures Against North Korea Missile Gates Orders Missile Interceptors to Hawaii in Case of North Korea Launch Defense Secretary Robert Gates said he has ordered the U.S. military to take defensive measures should North Korea attempt to fire a ballistic missile toward Hawaii, even as officials express skepticism of the possibility. "I think we are in a good position, should it become necessary, to protect American territory," Gates told reporters at the Pentagon today. Gates said he has directed the deployment of a missile interceptor system known as Theater High Altitude Area Defense, or Thaad, to Hawaii and the positioning of a sea- based radar system near the U.S. state.
NKorea may fire missile toward Hawaii North Korea may fire a long-range ballistic missile toward Hawaii in early July, a Japanese newspaper said Thursday, amid escalating tensions between the communist country and the United States over Pyongyang's nuclear and missile programs. The missile, believed to be a long-range Taepodong-2, would be launched from North Korea's Dongchang-ni site on the northwestern coast, said the Yomiuri daily, Japan's top-selling newspaper. It cited an analysis by the Japanese Defense Ministry and intelligence gathered by U.S. reconnaissance satellites. The missile launch could come between July 4 and 8, the paper said. It noted North Korea had fired the Taepodong-2 missile on July 4, 1996. Also July 8 is the anniversary of the 1994 death of North Korea founder Kim Il Sung.
OBAMA, CHANGE AND CHINAPart 5 Group of Two the wrong number As former US National Security Advisor Zbigniew Brzezinski's "Group of Two" (or G-2) concept of a US-China convergence in geopolitical interests is not yet official US policy, China is likely to merely keep monitoring signs of its evolution in US policymaking without direct formal official response, while exploiting the concept's diplomatic possibilities for improving bilateral relations.
Part 1:The song stays the same Foreign policy is fundamentally based on national interests that change only slowly and infrequently, except under crisis situations. Still, even in normal times, electoral changes of administration inevitably bring changes in style and nuance in the formulation and implementation of foreign policy within a context of continuity. Yet the Barack Obama administration has come into power at a time of unprecedented and severe global financial and economic crises that have profound implications in US national interests and US position in a changing geo-economic-political world order. Crisis conditions that are crying out for change are enhancing the new president's ability to live up to his campaign slogan of "Obama for Change" not just domestically but also in foreign policy. The question is whether Obama's campaign for change can survive his politics of change.
Part 2:A dangerous balance Since the end of World War II, the issue of China has extended beyond the confines of foreign policy to stay as a prominent bone of contention in US domestic politics. Until Richard Nixon's opening to China in 1972, the old anti-communist China lobby was in many ways as controversially powerful as the Israeli lobby. This state of affairs first developed after anti-imperialist revolutionary forces led by the Chinese Communist Party liberated China in 1949 after which Republicans in US partisan politics accused the Democrats of having "lost" China, as if China was their's to lose.
Part 3:The New Deal dollar and the Obama dollar Much talk has been floating around comparing United States President Barack Obama with president Franklin D Roosevelt and the yet-to-be-fully-developed - or revealed - Obama recovery plan with the New Deal. So far, the differences between the two leaders in crisis are more visible than the similarities. Obama's US$787 billion stimulus package is viewed by many economists as too small for the task and too diffused to tackle the immediate need of halting layoffs and promoting new job creation. The $275 billion home mortgage refinancing plan managed by newly installed Treasury Secretary Tim Geithner is beset with complexity that few seem to fully understand or know how to navigate.
Part 4:Brzezinski's G-2 grand strategy Larry Summers, US Treasury secretary under president Bill Clinton and now President Barack Obama's top economic advisor and director of the White House National Economic Council, has proposed a multilateral approach to deal with multilateral global economic problems that would involve a new grouping larger than the Group of Seven richest nations with advanced economies. This moves in the opposition direction of the geopolitical call by Zbigniew Brzezinski for Washington and Beijing to set up an informal Group of Two (G-2), involving only the US and China, in a leadership bid to jointly address a wide range of global challenges of bilateral interests.
Gold Cracks $1,000? Global Politics Could Be the Catalyst In July of 08 and again in February of 09 were the first two efforts at $1,000. Those were tough months. In 08 half of Wall Street was going out of business. In March of 09 Citi (C) was looking like a goner and so was the global economy. Of course none of that stuff came true. I was scared during both of those periods. You would have been nuts not to have been. The fear was about deflation. 30's style. Gold was breaking to record highs while every other asset class was collapsing. The rapid decline in demand created a big pool of workers and the economy quickly fell well below capacity. There was no inflation forecast in the gold price. It was all fear of deflation.
Russia gold, forex reserve dips Russia’s central bank on Thursday said country’s gold and foreign exchange reserves posted their first weekly fall in six weeks, shrinking by $2.9 billion or 0.07 percent as it stopped buying dollars in currency interventions. Russia's reserves, the world's third largest, stood at $406.6 billion on June 12 down from $409.5 billion a week earlier, central bank data showed.
Online trading of gold bars to begin soon In a boom for gold traders, there is good news that online trading of Indian gold delivery bars will begin from June-end. According to reports, only imported gold bars (certified by the London Bullion Exchange Market Association) are being traded at present. Indian Bullion Market Association (IBMA) technical panel has approved the terms and conditions for Indian gold delivery bar, and by June end the online trading is expected to start. A transparent physical market of Indian gold bar would come into existence with regard to its price, quality and weight.
History of Silver, Part III: Inventories Are Gone For nearly 5,000 years, the price ratio between gold and silver has averaged approximately 15:1. This number is very close to the 17:1 ratio which represents the natural occurrence of the two elements in the Earth's crust. It is interesting to note, however, that through most of history the price ratio has favored silver. In the last century, that ratio has rapidly, if unevenly risen. As of this moment, the gold:silver price ratio is once again nearing 70:1. Given the historical data, the natural assumption to make is that the world must be practically overflowing with silver for the price ratio to have gotten this skewed. In fact, this couldn't be further from the truth.
U.S. Dollar: the Good, the Bad and the Ugly Russian President Medvedev suggests the dollar is on its way out; Russian Finance minister Kudrin says there is no substitute for the dollar. The Chinese see a need to diversify out of the dollar; the Japanese say their trust in the dollar is unshakable. Let's look at this puzzle and make some sense of it. It's usually more productive to look at what policy makers do rather than what they say. Having said that, this time around, the talk also speaks volumes. Notably, world leaders have expressed their concern about the U.S. dollar and a need to diversify, to reduce dependence on the U.S., to build new alliances as well as to strengthen domestic markets. This is the strategic perspective.
China Commodities Undercut US Dollar China is directing their mountain of reserves away from acquired mining firms and toward managed hedge funds. This is a new direction for Beijing, clearly in response to the refusal by Rio Tinto to permit a $19 billion stake from the Chinese aluminum giant Chinalco. They were frustrated and angered by the other refusal with the failed Unocal dea in 2005. Clearly, whether stated openly or not, the Chinese are thwarted by USGovt and UKGovt hidden leaders from investing in strategic firms. From their point of view, tarnished by ill feelings, their money is good for credit supply but not good for commodity supply lines. So China will continue its pursuit of significant interests in commodity firms, both metals and energy related, and will amplify the pressures by taking scattered interests in hedge funds.
Will China Drop U.S. Debt? Unlikely There has been a lot made out of the prospect that China will drop US Treasuries, and even that the rest of the world will follow suit and take on some form of a new global currency. Let's look at it from a behavioral perspective. China essentially has two choices:
It could continue buying US Treasuries, while running the risk that the debt will continue to fall in value, or
Begin selling off its Treasuries and adopt a new preferred form of reserves.
Which decision makes the most financial sense? That would be option 1. If the second option were implemented, it would result in a massive loss of reserves for the Chinese. Their remaining Treasuries would plummet and they would put themselves in a race with other Treasury-holders to dump them the quickest.
China's Buying A New Currency And It Sure AIN'T The Dollar Let's talk about China. China is the US's largest creditor. All told, the People's Republic has $700+ billion in US Treasuries. However, if you account for other dollar denominated investments, China is believed to have 70% of its $1.7 trillion in foreign reserves sitting in green backs. That's an unbelievable amount of money invested in the US dollar. Needless to say, the Chinese are not too happy about our Central Bank's decision to print TRILLIONS of dollars propping up the US financial system. Indeed, the initial rumblings of what will eventually turn into outright conflict (either economic or war) have already begun. China's Premier Wen Jiabao recently commented, "We have lent a huge amount of money to the USOf course we are concerned about the safety of our assets. To be honest, I am definitely a little worried."
An Alternative Reserve Currency? In days of old, when men were bold... err... better not go there; ok, let's try this. Trade has been an integral part of man's existence since the caveman with the pelts gave some to the caveman with the fire so that they could both spend a leisurely evening reading by fireplace while Wilma and Betty went out to gather more wood, sporting the latest in outerwear, of course. As things progressed and transportation improved to something you rode on and then in the circle of trading, partners grew organically as accessibility increased. For a long time most trade went on with those people and countries that were geographically closest to you. Trade has existed for a very long time but export-led economies are truly a 20th century phenomenon. With this in mind it was interesting to read some of what went on at the summit held this past weekend in Yekaterinberg, Russia, attended by Brazil, Russia, India and China or the BRIC countries as they are more commonly referred to.
Massive Govt. Spending Prevented a Depression, But "There Is No Free Lunch," Roubini Says New polling shows the American public still supports President Obama overall, but is less enamored with his handling of the economy, particularly when it comes to deficits. Massive government spending, dramatic Fed easing and the Wall Street bailouts were necessary to prevent "Great Depression number two," says Nouriel Roubini, professor at NYU's Stern School and chairman of RGE Monitor. "But there is no free lunch."
Obama’s Economic Misfits Finally Get It Now they tell us. On Monday, two men with considerable responsibility for enabling the banking meltdown confronted the error of their ways. Not directly, of course, for accountability is hardly the mark of either Lawrence Summers, the top White House economic adviser, or Treasury Secretary Timothy Geithner. Their careers have long been fueled by error. Summers was one of the leading prophets of radical financial deregulation in the Clinton administration. And Geithner, as head of the New York Fed, looked the other way during Wall Street’s collapse and then responded by opening wide the spigot of taxpayer dollars to resuscitate Citigroup and AIG.
OBAMA’S FINANCIAL PLAN FAILS TO IMPRESS President Obama compares his “sweeping overhaul of the financial regulatory system” to FDR’s crackdown on Wall Street, but The New York Times’ Joe Nocera isn’t buying it. “Everywhere you look in the plan, you see the same thing,” he writes. “Additional regulation on the margin, but nothing that amounts to a true overhaul.” The problem, according to Nocera, is that Obama is unwilling to anger the bankers, and that just doesn’t make for very effective regulation.
Senate questions Obama's financial oversight plan Senators: Obama's financial oversight plan might not be enough to prevent meltdown President Barack Obama's plan to increase oversight of U.S. banks and other financial institutions met with skepticism on Capitol Hill on Thursday, where senators sharply questioned whether it was enough to prevent another economic meltdown. The lack of a ringing endorsement suggests the proposal was headed for a rewrite by a Congress sensitive to voter frustration with the government's handling of the economy. "They're very angry, and they are worried. And they are wondering who's looking out for them," Sen. Christopher Dodd, chairman of the Senate Banking Committee, said of his constituents. In testimony before the panel, Treasury Secretary Timothy Geithner defended the proposal as the nation's best shot.
Federal regulator is blamed in bank failures The Office of Thrift Supervision botched its oversight of Downey Savings & Loan and PFF Bank & Trust, say reports from the Treasury Department's inspector general. A federal thrift regulator bungled its oversight of Downey Savings & Loan, allowing the Newport Beach thrift to pile on billions of dollars in high-risk mortgages and eventually collapse, according to a government report. The regulators from the beleaguered Office of Thrift Supervision also botched their oversight of Pomona-based PFF Bank & Trust, which collapsed along with Downey last fall, according to reports issued this week by the U.S. Treasury Department's inspector general.
Geithner Defends Plan to Give Fed Stepped-Up Powers Treasury Secretary Timothy Geithner defended the administration's proposal to give the Federal Reserve increased powers in his first public tussle with lawmakers skeptical whether the central bank is up to the job. Advocating for President Barack Obama's regulatory overhaul on Capitol Hill, the Treasury chief faced repeated questions from senators who cited previous regulatory failures at the Fed and potential conflicts with its monetary-policy duties.
Geithner on the Hill to Push Financial Overhaul President Obama's plan to overhaul the regulatory structure of the nation's financial system faces formidable obstacles on Capitol Hill, if the reception accorded Timothy F. Geithner, the Treasury secretary, on Thursday was any indication. Mr. Geithner went before the Senate banking committee and urged the lawmakers to act quickly on the president's plan. "Every financial crisis of the last generation has sparked some effort at reform," Mr. Geithner said. "But past efforts have begun too late, after the will to act has subsided." One senator after another said his or her will to act was in no danger of subsiding. But they also signaled an unwillingness to accept the White House recommendations intact, particularly the idea of expanding the powers of the Federal Reserve to enable it to regulate risk across the financial system.
MSNBC interview with Dr Ron Paul (6/18/09)
Geithner: Fed can handle new powers Treasury Secretary Timothy F. Geithner defended the administration's plan to increase the Federal Reserve's powers on Thursday, saying the agency is best positioned to become a super-regulator that would oversee financial firms deemed "too big to fail." "It already supervises and regulates bank holding companies, including all major U.S. commercial and investment banks," Mr. Geithner told the Senate Banking, Housing and Urban Affairs Committee. "Our plan gives a modest amount of additional authority - and accountability - to the Fed to carry out that mission."
Geithner Won't Say If Bailout Program Will Be Extended . . . . Sen. Kay Bailey Hutchison (R-Texas) voiced the common sentiment that Congress was "misled" when it gave Treasury $700 billion to buy troubled assets from banks, The Post's Binya Appelbaum reports. Treasury has since used the money to invest in banks, insurance companies and automakers, among other things. Hutchison wants to know whether Treasury will extend the bailout program for another 10 months at the end of the year, something the original legislation allows the administration to do. Geithner said no decision has been made, and proceeded to defend the bailout as subject to multiple layers of oversight. He also said the administration has adhered to spending principles it outlined at the beginning of the year.
Whose Fed is it anyway? Questions, answers about institution's underpinnings What is the Federal Reserve System? Answer: The Federal Reserve System, or the Fed, was created in 1913 by the Federal Reserve Act after the Panic of 1907. It is a quasi-public, quasi-private institution that operates as the central banking system of the United States under the oversight of Congress. The Fed conducts monetary policy, mostly by manipulating short-term interest rates, in pursuit of the three goals outlined in the Federal Reserve Act: "maximum employment, stable prices and moderate long-term interest rates." The Fed also supervises and regulates bank holding companies and its member banks (all nationally chartered banks are required to be members, and state banks may become members). And the Fed is the lead regulator on consumer-finance issues.
Broader Fed role provokes wide dissent Obama outlines finance reforms President Obama's plan to revamp financial regulations triggered immediate criticism Wednesday from both the political left and right over the expanded policing authorities given to the Federal Reserve while business groups grumbled about a powerful new agency charged with protecting consumers against abusive lending. The broad plan would step up regulation of nearly every financial institution while extending government control to markets and players such as hedge funds that escaped supervision in the past. But it keeps much of the patchwork quilt of regulatory agencies created in the last century as the government responded to financial crises like the one that precipitated the current overhaul last fall.
What if the Fed had a sale and no one came? The Federal Reserve received no requests from investors for loans to buy new commercial mortgage-backed securities under an emergency program aimed at reducing borrowing costs and reviving U.S. economic growth. The Fed has made $25.2 billion in TALF loans for other securities, including those backed by auto and credit-card debt. "This is not an embarrassment for the Fed, but it does show there is a slow discovery process on the part of investors and originators," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. As Roseanna used to say, "Oh, nevermind!"
Beijing issues fiat: 'Buy China' China has imposed a requirement for its stimulus projects to use domestically made goods, a move that could strain ties with trading partners after Beijing criticized Washington's "Buy American" stimulus provisions. Projects must obtain official permission to use imported goods, said an order issued by China's main planning agency and eight other government bodies. Even before the order, business groups worried that foreign companies might be excluded from construction and other projects financed by Beijing's 4 trillion yuan ($586 billion) stimulus. Foreign makers of wind turbines complain they have been shut out of bidding on a $5 billion stimulus-financed power project.
The 'Buy Chinese' Trade Dispute Beijing's recent command to "buy Chinese" may elevate tensions between China and its trading partners. It's official: China wants to shut foreign companies out of its 4-trillion-yuan ($586 billion) economic stimulus package. The "Buy Chinese" command laid down publicly by top planners in Beijing will unavoidably intensify the tension between China and its trading partners. Before a potential trade war between China and the West, the state media this week fired back at criticism from the Western press aimed at the "Buy Chinese" policy. In an article titled "Balance tilts in favor of local firms," China Daily defended Beijing's latest policy, which essentially banned local authorities from granting government contracts within its stimulus package to foreign companies, as a reasonable response to "rising protests about too many fat contracts being awarded to foreign companies."
2010 Budget: Pie in the Sky President Obama's 2010 budget proposal has a theme song, "Lucy in the sky with diamonds". It's overly optimistic about the possibilities of the rest of his term as president and leaves out much of the cold, hard reality that is our present economic existance. While acknowledging the drop in revenues for 2009, the 2010 budget is assuming a 9% increase in revenue for 2010, followed by yearly increases of 14% and 13.5% to reach his goal of cutting the budget deficit in half in four years. Based on Obama's numbers, that will cut the yearly deficit to between 581 and 658 billion dollars in 2012. The budget also assumes a decline in federal spending after 2009, which is possible, provided all the bailouts are over, but still reflects a spending increase of 19% over 2008 levels.
GM, Chrysler Bailouts Trim Obama's Approval Ratings The government's bailouts of General Motors Corp. and Chrysler LLC are unpopular among large numbers of Americans, and that is helping to drag down President Barack Obama's approval ratings, according to three new polls. A survey published today by the Pew Research Center for the People & the Press found that the percentage of respondents approving of the way Obama is handling the economy dropped to 52 percent from 60 percent in April. Fifty-eight percent said they opposed spending billions of U.S. taxpayer dollars to keep the automakers afloat, compared with 36 percent in favor.
Market Shifting from the Twilight Zone to the Danger Zone It looks like the euphoria has finally started to wear off the past several days as continuing unfavorable fundamental data has started to catch up with our counter trend rally. All the talk of green shoots, upon closer examination, turns out to be just wild onions. Though we are short term slightly oversold after the past several days and could see a relatively small bounce over the next few days, many are starting to look at the market with a little more jaundiced outlook after a strong three month rally.
FIAT MONEY IN DEATH THROES "Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. If you wish to remain the slaves of Bankers and pay the cost of your own slavery, then let them continue to create deposits." -Sir Joshua Stamp (1880-1941) (One time governor of the Bank of England, in his Commencement Address at the University of Texas in 1927. Reportedly he was the second wealthiest individual in Britain.) Make no mistake about it: in this credit collapse we are witnessing the death throes of irredeemable currency. In vain have governments and their client banks tried, for hundreds of years, to graft this repulsive and degenerate bastard on the living organism of society. The result was always the same: the healthy organism rejected the unnatural implant in its own good time.
What Happens After Banks Repay TARP Loans? As banks repay their TARP loans, the moment may mark the beginning of harder times for the financial services industry. Wednesday, U.S. Bancorp (USB) and financial holding company BB&T (BBT) both agreed to pay back their loans. U.S. Bancorp agreed to pay back $6.6 billion in loans, asking Treasury for permission to buy back a 10-year warrant for its common stock issued to the government as part of the original bailout. Meanwhile, BB&T agreed to repurchase $3.1 billion in preferred shares from Treasury, including a dividend payment of $13.9 million, in order to wrestle control back to the boardroom.
Globalism or Localism A Peek at Financial Ecosystems World Trade, free trade, regional currency blocs, global warming, G-8, G-20, New World Order, carbon taxes, Central Banking and Debt Based Money Systems, expanded roles for the World Bank and I. M. F. - collectively, these are all factors - or components of a financial eco-system - which have contributed to our current deteriorating, global economic circumstances.
Alan Grayson and Industry Representatives on Insurance and Systemic Risk Rep. Alan Grayson asks a variety of industry representatives on 6/16/09 about systemic risk as it pertains to the insurance industry. This is a lead-up to the unveiling of the administration proposals on financial regulation.
California's Economy: Too Big to Fail? Despite a $24 billion budget deficit and a legislature in stalemate, California lawmakers haven't persuaded the Obama Administration to bail out the state California's economy is in deep distress. Political gridlock is preventing tax increases and spending cuts, and the recession has pushed its deficit over the edge. Governor Arnold Schwarzenegger's proposals to fix the mess have been rejected by California voters, most recently on May 19. On June 16, Standard & Poor's put California's credit rating-already the lowest among states-on watch for a downgrade.
Obama Tries to Seize Moment of Opportunity on Health Care In their heart of hearts, few in the Obama administration would have predicted late last year that they would be this well positioned by June to achieve a major victory on health care. As the economy faltered, and attention focused on Wall Street and Detroit, it seemed unthinkable that Congress would be ready to devote the summer of 2009 to the costly proposition of providing health coverage for all, a goal that has eluded presidents since Theodore Roosevelt.
Health care costs to rise 9% in 2010 Employers who offer health insurance coverage could see a 9% cost increase next year, and their workers may face an even bigger hit, according to a report Thursday from consulting firm PricewaterhouseCoopers. Costs will rise in part because workers worried about losing their jobs are using their health care more while they still have it, the firm said in the report released to the Associated Press. The report also said rising unemployment is driving up medical costs.
How health reform may help ... or hurt Fixing health care has giant consequences. Here are the potential economic rewards for getting it right and the perils of getting it wrong. Americans are being told daily that health reform isn't just the right thing to do -- it will also help save the economy. "Health care reform is not part of the problem when it comes to our fiscal future, it is a fundamental part of the solution," President Obama said in a recent address. The crux of the problem: The United States spends far more on health care than do other developed countries, but it often gets far less bang for its buck. Meanwhile, a large number of Americans either can't afford insurance or have insurance that doesn't adequately cover their medical costs.
Millions face tsunami risk across Mediterranean warn experts Millions of people living and holidaying along the Mediterranean coast are at risk of being hit with a tsunami, a new report warns. The World Disasters Report, by the International Federation of Red Cross and Red Crescent Societies, said there is no tsunami early-warning alert system for the region, even though it is considered to be more vulnerable than the Indian Ocean. More than 300,000 people were killed when a tsunami struck Indonesia and southern Thailand in December 2004. Disaster expert, Peter Rees-Gildea, said the perception that climate change is a Third World problem is changing since Hurricane Katrina hit New Orleans and flooding caused chaos Gloucester in Britain.
Swiss Regulators Ponder Way to Restrict Big Banks Swiss financial regulators said Thursday that they were considering assuming new emergency powers that would allow them to break up large banks to wind down troubled business units that are not essential to the economy. The Swiss National Bank, in its 2009 financial stability report, said it wanted to develop a better approach than bailouts to deal with crises at big banks whose collapse would threaten the whole financial system. "There can be no more taboos, given our experiences of the last two years," Philipp Hildebrand, the vice chairman of the bank, said in Berne, Switzerland. Swiss authorities, including the central bank and the Financial Market Supervisory Authority, signaled an aggressive approach to the "too big to fail" problem that has vexed policy makers in Europe and the United States.
Khamenei-Rafsanjani Split Limits Iran's Power to Quell Uprising In 1989, Akbar Hashemi Rafsanjani, then the most powerful figure in Iran, supported Ayatollah Ali Khamenei's appointment as supreme spiritual leader. Now, the two men are locked in conflict amid a wave of protests against the June 12 re-election of President Mahmoud Ahmadinejad, a Khamenei ally. Rafsanjani supports Mir Hossein Mousavi, who says that he won the vote and has drawn hundreds of thousands of Iranians into the streets to rally behind him.
The IRGC shakes its iron fist The disputed presidential election in Iran is transforming into a ferocious struggle between religious radicals and reformists. This has been a historical battle in Iran which has been going on for the past 100 years between tradition and modernity. Behind the scenes there is another story - the fight is also over large sums of money. Reformists claim the 125,000-member Iranian Revolutionary Guards Corps (IRGC), or Sepah, controls as much as half of the total imports in terms of value through illegal jetties, and governs almost one-third of the whole economy. From engineering and construction to oil, wherever huge sums of money are involved, openly or covertly, the IRGC's presence is apparent.
Mousavi states his case Mir Hossein Mousavi, the reformist candidate challenging Iran's authorities on the result of last week's presidential elections, is a masterful tactician who wants to overturn the re-election of his rival, President Mahmud Ahmadinejad, with allegations of a massive conspiracy that he claims cheated him and millions of his supporters. These supporters, identifiable by the color green they have adopted, have taken to the streets in the tens of thousands and on Thursday were to stage a "day of mourning" for what they say is a lost election. This follows a "silent" march through the streets of the capital on Wednesday. To date, at least 10 people - some Iranian sources say 32 - have been killed in clashes.
DeMint asks for N.K. on terror list Sen. Jim DeMint, South Carolina Republican, urged President Obama to put North Korea back on the list of state sponsors of terror, arguing that the regime took advantage of the Bush administration's decision to take Pyongyang off the list. "All North Korea did after we took them off that list was to use the flexibility that we gave them to reclaim the assets that had been frozen and use them to expedite their nuclear program," he said in an interview on The Washington Times' morning radio show, "America's Morning News." "They're basically slapping us in the face for trying to do something,...a good gesture."
OBAMAGEDEON - We're in debt to the tune of $513,000.00 PER HOUSEHOLD in the USA; they are bankrupting America.
pt 1/3 Gerald Celente on Canadian talk radio -18 June 2009
pt 2/3 Gerald Celente on Canadian talk radio -18 June 2009
pt 3/3 Gerald Celente on Canadian talk radio -18 June 2009
Mega-deals and security to link China and Russia Russia and China have signed multi-million dollar deals during a meeting of the countries’ heads in Moscow. President Medvedev said overcoming the global financial crisis depends greatly on the countries’ cooperation. Russian President Dmitry Medvedev and Chinese leader Hu Jintao have signed a joint declaration and plan for Russo-Chinese partnership. They have put their signatures to three memorandums of understanding, namely for cooperation in gas and coal, and stimulating bilateral trade. Amidst the financial turmoil, Russia and China are yet again challenging the dominance of the dollar.
Mega-deals and security to link China and Russia Russia and China have signed multi-million dollar deals during a meeting of the countries heads in Moscow. President Medvedev said overcoming the global financial crisis depends greatly on the countries cooperation.
Flying Kites This week, the BRIC countries (Brazil, Russia, India, and China) conspicuously gathered in Moscow for their first-ever economic summit. Although these countries are divided by culture and geography, they are united by healthy economic growth and their concern about unprecedented levels of U.S. debt and the safety of their respective reserves. There can be no doubt that these emerging economic powers are trying to chart an economic path that will free them from dependence on the American financial system. And there is ample evidence that the first coordinated steps are being taken. Although their combined GDP represents only fifteen percent of the global economy, these four countries together hold some 40 percent of the world's currency reserves, more than half of which is denominated in dollars. As they begin to openly question the continued role the U.S. dollar as the world's official 'reserve,' attention should be paid.
Russia Makes the First Call for the Monetization of Gold Russia is proposing the inclusion of the ruble, yuan and gold as a part of a revised basket of currencies to form the valuation of the IMF's special drawing rights seen as the coming new alternative global reserve currency, reported AP. At a summit meeting yesterday, Russia and China challenged the reserve currency status of the dollar with two initiatives, while at the same time professing their support for the greenback in which both countries have huge bond holdings. Gold for SDRs China is to extend a $10 billion loan to a regional group that comprises Russia and four central Asian states, presumably money that would previously have bought US bonds. And Russian president Dmitry Medvedev called for the strengthening of the international monetary system 'not only by making the dollar strong, but also by creating other reserve currencies'.
Focus on N. Korea and reserve currency in Russia-China talks North Korea's nuclear threat and the global financial meltdown are to loom large in talks between Russian and Chinese leaders in Moscow.
China Exim Bank Signs Pact With Russia Bank For Foreign Trade - $$ BEIJING (Dow Jones)--Export-Import Bank of China and the Russian Bank for Foreign Trade signed a US$700 million framework loan agreement, according to a joint statement from both countries. Exim Bank is one of China's policy banks, while the Russian bank is 77.5%-owned by the government. The agreement was signed during Chinese President Hu Jintao's visit to Russia this week, according to the joint statement posted on the Chinese government's Web site Thursday.
Emerging Economies Meet in Russia YEKATERINBURG, Russia - Leaders of the four largest emerging market economies discussed ways to reduce their reliance on the United States at their first formal summit meeting on Tuesday. But they concluded with only a cautious statement suggesting a move away from the dollar's role in global commerce and a call for greater representation of developing countries in global financial institutions. By some predictions, the four nations, Brazil, Russia, India and China, a group referred to as the BRIC group, will surpass the current leading economies by the middle of this century, a tectonic shift that by this reckoning will eventually nudge the United States and Western Europe away from the center of world productivity and power.
The yuan lies in waiting EIJING - Pundits in China are scratching their heads over the future of their currency, the yuan, which has been brought to the fore by the present financial crisis. Their thinking has recently become urgent, compared with previous perceptions that the yuan could be kept not fully convertible - and thus shielded from foreign interference - for many years. Certainly, there will be no problem if the US economy recovers soon and the dollar makes a robust comeback as the world currency. In that case, the yuan can continue to piggyback on the dollar, or with the exchange rate slowly and steadily crawling upward according to the necessities of trade. Yet, what if the US economy and its dollar do not come back? David Goldman (also know as ATol's Spengler) already made this suggestion: "I believe that China and other Asian countries will decouple from the United States during the next five years, partly because the American economy will remain moribund, partly because American policy will continue to be incompetent, and partly because their own domestic market and financial systems will be able to bear the burden."
The world is now changedPart 3 Decoupling on the part of the under-developed economies is defined as accelerating along the path of eliminating inordinate reliance upon the US and other developed economies as export markets. Decoupling would also tend to undermine reliance upon the dollar and boost the role of regional currencies in trade, finance and in forex reserves composition. Decoupling would be accomplished fundamentally by boosting domestic demand and by increasing trade amongst the emerging economies to replace the strategic loss of trade volumes with the developed economies.
Part 2BRIC group plans own revolution Russia announced on June 10 that it will purchase US$10 billion of the new SDR-denominated International Monetary Fund bonds. It also announced that it will further diversify its $140 billion of US dollar holdings. Brazil will also buy $10 billion worth of the new bonds, and China will buy $50 billion of the new bonds. India will likely announce its own purchases very soon. These are merely the opening moves by the BRIC (Brazil, Russia, India, China) countries, leaders of the emerging market economies of the world. Their summit on Tuesday in the central Russian city of Yekaterinburg, scene of the July 1918 execution of Tsar Nicholas II and his family, may prove to be a milestone in efforts to engineer the architecture of a new global order spanning financial, economic, trade, and monetary matters.
Medvedev urges 'fairer global order' Dmitry Medvedev called on Tuesday for a "fairer global economic order" after leaders of the four biggest emerging economies held their first formal summit. He described the Russian city of Yekaterinburg, where the talks were held, as "the epicentre of world politics", adding that the need for developing world nations to meet in new formats was "obvious". Talks between the leaders of the Bric group, Brazil, Russia, India and China, focused on the search for measures to ease the global financial crisis while seeking a greater role for emerging economies in a multi-polar world.
Gerald Celente on Russia Today 17 June 2009
The American Empire Is Bankrupt This week marks the end of the dollar''s reign as the world''s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That''s over. It is not coming back. And what is to come will be very, very painful. Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America's imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.
Standard & Poor's cuts ratings on 18 banks Credit ratings agency Standard & Poor's on Wednesday cut ratings on 18 banks amid concern about further weakening in the financial sector. S&P said the changes reflected its assessment that volatility will remain in the financial sector and the industry is expected to face tighter regulatory oversight. S&P also said loan losses, which have plagued the industry for more than a year, are likely to continue to increase and could grow beyond expectations.
China risks trade suicide Beijing is playing with fire by issuing a 'Buy China' edict for its stimulus package. As the world's top exporter with a $400bn current account surplus and an economy that lives off the America and European market, it will pay the highest price if it triggers a global retreat into protectionist blocs. The Chinese elite no doubt feel provoked by what they call the "poison" of the US `Buy American' clause, but the Obama White House managed to tone down the worst excesses of Capitol Hill and in any case the Chinese version is more restrictive. It bans the purchase of foreign equipment for investment projects unless a special exemption is obtained. The measures apply to European goods, even though EU states have not imposed any such "Buy Europe" clause of their own. EU producers of wind turbines have already been excluded from a $5bn wind project, whether or not they have factories in China.
Ganging Up on Gold and the U.S. Dollar What is the significance, you may wonder, of the Russian Finance Minister suggesting the reserve currency days of the U.S. dollar are surely numbered, followed the next day by a statement from his deputy contradicting him thoroughly? Apparently a coincidence, Japan's finance minister just happens to state publicly that same day that Japan has 'full confidence" in the U.S. dollar. Somebody, it would seem, is running around the international backstage putting the arm on government finance types to wax supportive of the U.S. dollar. As a result, we now have press headlines issued minute by minute that contradict each other completely: "Dollar down on Russian comments," reads one at 10:47 a.m.Tuesday. Two minutes later, "Dollar advances as Russia says no alternative to U.S. currency".
Obama lights North Korea's fuse If words were launched as missiles rather than missives, the United States and North Korea would be firing salvo on salvo in an escalating war in which much of the North would be in ruins and parts of the US in flames. As it is, the war of words they're waging gets more intense by the day with the dreaded "nuclear" word being used with alarming frequency. It was one thing for North Korea to declare its need for nuclear weapons to "bolster defense" against the US, say it was producing ever-more plutonium for atomic bombs and reveal its nascent program for enriching uranium for still more bombs.
Central Planning Is Back In Vogue At the root of central planning ideology is the belief that a group of well-meaning government officials and/or experts is more capable than the unrestrained free market of allocating resources for the betterment of society. However, whenever and wherever central planning of the economy has been attempted it has always been a failure, with the magnitude of the failure generally being proportional to the breadth of the central planning experiment (small-scale attempts to centrally plan have tended to create relatively minor problems whereas efforts to centrally plan the majority of economic activity have led to total disaster). It always fails because the market process is so complex, and yet so smooth, that any attempt by the government to control it will 'throw a spanner into the works'. But unfortunately, each new generation seems to operate under the assumption that the only reason central planning has never worked in the past is because the right people haven't been in charge.
Eric Cantor - Allow Our Voice to be Heard In an unprecedented abuse of power, House Democrats shut out the minority party from offering amendments to spending bills. Spending in Washington is OUT OF CONTROL!
US Mint Bullion Allocation Ends, Silver and Gold Eagles Soar The US Mint on Monday ended the allocation process which limited the number of gold and silver American Eagle bullion coins authorized dealers could order. Ironically, as of Monday also, week-over-week sales soared 8.1 percent for the silver eagles and 9.1 for the gold eagles. Even with the latest surge, the Mint is apparently confident that enough silver and gold blanks are on hand that rationing is no longer needed - at least in the near term. And with that, a buzz of excitement immediately begins with collectors now wondering whether the Mint has sufficient inventory to begin producing the previously suspended 2009 collector proof and uncirculated versions. Of that, no word has yet been given
Gold Gains Slightly as Dollar Falls, Silver Advances Gold climbed Wednesday for the second straight day as the U.S. dollar slid against other world currencies and despite a government report showing an annual dip in inflation. Silver advanced as well but platinum fell short. In other markets, oil closed higher while U.S. stocks ended mixed.
Gold, Silver, Economy + More US MARKETS The next major move in the stock market will be down. We are seeing the last vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to 8500 will end as soon as all the financial institutions that need to sell what stock is necessary to bolster their balance sheets. Our guess is the rally has been aided in a big way by short covering and the participation of the US government. Those who believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken during the summer as volume dries up during the vacation season. In addition, second quarter earnings will be very disappointing, especially in the financial segment. Unemployment continues to worsen and capacity utilization is at its lowest level in years. Banks continue to cut credit lines and not lend nearly as much as they did before. Citigroup's earnings should turn down again. They won't have another $2.7 billion gain or another $400 million mark-to-market fictitious gain. Absent those gains they would have lost $2.8 billion.
Gold "Safe" from Commodities Sell-Off as US Price Deflation Hits 6-Decade Record THE PRICE OF GOLD slipped for US and Euro investors but rose towards 3-session highs for UK buyers on Wednesday as the British Pound fell on worsening economic news. World stock markets dropped along with commodity prices, while new US data showed Consumer Price Inflation sinking to minus 1.3% in May, the sharpest year-on-year deflation in prices since Jan. 1950. "Gold is relatively safe from the current correction in the commodities complex because it didn't rally as much," said Wallace Ng at Fortis Bank in Hong Kong to Bloomberg earlier. "We expect gold to trade in the $920 to $950 range in the near term, while holding on to its close relationship to the Dollar."
Coming market crash: Time to review Yesterday this analyst had the bizarre experience of watching two consecutive and conflicting items on the evening Television news:
A well respected economic forecasting organization is expecting Australian domestic real estate prices to rise by around 19% over the coming three years.
Over one million homeowners in Australia have fallen behind in their mortgage payments in an environment where one of the country's largest banks has just moved to raise its mortgage interest rates.
Question: If 2 above is a fact, then how can 1 above be possible?
A Recent History of the US Economy
Pick a Number...Any Number, Part II "We didn't abandon the money-supply aggregates. They abandoned us..." TIME WAS that central banks targeted and fretted about keeping their currency stable against the Dollar. But as the Dollar-led inflation of 1950-1980 destroyed the value of bonds and savings worldwide - and then destroyed equities, as well as any sober hope of business and hiring plans - policy-makers tried to target instead the volume of cash flowing around their domestic economy. Monetarism in turn fell apart as first the mid-80s "super Dollar" and then globalized deregulation of finance pulled the various "M" aggregates down, up and finally out of the window. "We didn't abandon the aggregates," says one practitioner in Steven Solomon's 1995 book The Confidence Game; "they abandoned us."
Obama Lays Out 'Sweeping Overhaul' of Financial Rules President Barack Obama proposed the most sweeping overhaul of the U.S. financial regulatory system in 75 years, seeking to correct a "cascade of mistakes" that toppled major securities firms, froze credit markets and destroyed $26.4 trillion in stock market value around the world. The proposal, much of which will be subject to approval by Congress, sets out the biggest overhaul of market rules in more than seven decades, adding an additional layer of regulation for the biggest firms. It would create an agency for monitoring consumer financial products, make the Federal Reserve the overseer of companies deemed too big to fail, and bring hedge and private equity funds under federal scrutiny.
Not Everyone Is Cheering Over Fed's Dominant Role Lawmakers, Consumer Groups Fault Central Bank for Failing to Use Its Authority in Run-Up to Crisis, Then Acting Secretively The Federal Reserve would become the nation's most powerful financial overseer, an approach that is becoming a flashpoint as lawmakers and consumer groups attack the central bank for its role in creating and handling the financial crisis. The proposal, if passed into law, would represent one of the biggest changes ever in the Fed's role. The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution. The nation's biggest and most interconnected firms would be subject to heightened oversight by the central bank.
Public Wary of Deficit, Economic Intervention After a fairly smooth opening, President Barack Obama faces new concerns among the American public about the budget deficit and government intervention in the economy as he works to enact ambitious health and energy legislation, a new Wall Street Journal/NBC News poll finds. These rising doubts threaten to overshadow the president's personal popularity and his agenda, in what may be a new phase of the Obama presidency. "The public is really moving from evaluating him as a charismatic and charming leader to his specific handling of the challenges facing the country," says Peter D. Hart, a Democratic pollster who conducts the survey with Republican Bill McInturff. Going forward, he says, Mr. Obama and his allies "are going to have to navigate in pretty choppy waters."
Foreclosure freeze prods banks to modify loans California implemented a new foreclosure moratorium on Monday to goad banks into modifying mortgages for struggling homeowners. The California Foreclosure Prevention Act, signed by Gov. Schwarzenegger in February, adds 90 days onto the time period between when homeowners default on a loan and when their home can be repossessed in foreclosure. Banks can avoid the 90-day holdup by having a comprehensive program in place to make mortgages more affordable by reducing the interest rate, extending the loan term, or reducing or deferring some of the principal. Such programs must be approved by regulators. "The goal is to compel banks to do systematic loan modifications across California to reduce our foreclosure rate, which is the highest in the nation," said Assemblyman Ted Lieu, D-Torrance, who wrote the bill. "Until we slow that down, the California economy cannot recover."
JPMorgan and 9 Other Banks Repay TARP Money JPMorgan Chase and nine other big banks said Wednesday that they had repaid the federal assistance money that they received in the fall during the height of the financial crisis. JPMorgan said it had returned $25 billion, with interest, to the government - money that the bank's chief executive, Jamie Dimon, has said it never needed in the first place. Morgan Stanley and Goldman Sachs said in separate announcements that they had each repaid their $10 billion in federal aid, joining a parade of financial institutions making their exit from the government rescue program. By late Wednesday afternoon, all 10 banks allowed to exit the government's Troubled Asset Relief Program had said they had repaid the TARP money. Among them, American Express returned $3.39 billion, Bank of New York Mellon $3 billion, Capital One Financial $3.57 billion, State Street $2 billion and Northern Trust $1.58 billion.
New rules put Fed in hot seat President Barack Obama will reveal plans on Wednesday for a new system of US financial regulation that expands the powers of the Federal Reserve so that it can assume primary responsibility for averting financial crises. Mr Obama will also announce plans for the creation of a council of financial regulators, intended to improve co-ordination between different agencies. The council will discuss systemic risks but the Fed will not need its approval to act against them. The president will also announce plans to create a new Consumer Financial Protection Agency and call for the elimination of the Office of Thrift Supervision, a bank regulator.
Money-Fund Rules May Change as Obama Seeks Regulatory Overhaul The U.S. may rewrite the rules for pricing money-market funds, a change the industry says will undermine the appeal of $3.5 trillion of investments used by individuals and institutions as an alternative to bank accounts. The financial regulation plan released today by President Barack Obama asked the Securities and Exchange Commission to require money funds to keep minimum levels of cash, reduce the maximum average maturity of holdings and diversify their investments. The recommendations are similar to those proposed in March by the Investment Company Institute, the asset- management industry's Washington-based trade group.
Wall Street Calls Obama's Mortgage-Market Debt Plan a Burden The Obama administration's plan to shore up the market for mortgage bonds by forcing banks to keep some on their books faces resistance on Wall Street, as bankers call the measure burdensome and a hindrance to new lending. The proposal, one of dozens of measures included in the financial-industry overhaul Obama unveiled today, requires firms to "retain 5 percent of the credit risk" whenever they package loans into bonds. Doing so may encourage banks to stiffen underwriting standards and prevent subsequent bond defaults, the Treasury Department said in its proposal.
Looking to Buy Gold? Grab a Sack of Quarters First FRANKFURT - If gold is the ultimate sanctuary for small investors who have taken furious flight to quality, then Thomas Geissler may have invented the ultimate vending machine. After creating an online platform for trading precious metals this year, his small company has hit on a frontier beyond the Internet: the seemingly endless line of devices at airports and train stations that spit out cigarettes, condoms, toothpaste and candy bars in exchange for a little cash. But his machines will allow customers to buy small chunks of gold.
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.
Fed May See Independence Dented in Rules Overhaul The Federal Reserve is likely to lose independence on one of its broadest lending tools and have governance of its regional banks questioned as lawmakers engage in the most sweeping overhaul of financial rules in decades. Congressional leaders and the Obama administration are seeking to limit the Fed's authority to make emergency loans to any corporations in "unusual and exigent circumstances," a Depression-era power the Fed used to save Bear Stearns Cos. and American International Group Inc. from disorderly collapse.
Definancialisation, Deglobalisation, Relocalisation The title of this talk is a bit of a mouthful, but what I want to say can be summed up in simpler words: we all have to prepare for life without much money, where imported goods are scarce, and where people have to provide for their own needs, and those of their immediate neighbours. I will take as my point of departure the unfolding collapse of the global economy, and discuss what might come next. It started with the collapse of the financial markets last year, and is now resulting in unprecedented decreases in the volumes of international trade. These developments are also starting to affect the political stability of various countries around the world. A few governments have already collapsed, others may be on their way, and before too long we may find our maps redrawn in dramatic way.
Bond Yields Soaring Bond yields soaring is not always an inflationary event. The traditional teaching is that rising bond yields indicate economic recovery and/or inflation. This is true until it isn't. The problem is that the best parallel for when it ain't true is what's happening right now. Damn, this investing stuff gets complicated when you look through actual history. Here it is in all its glory: A monthly long bond price chart from 1921-1933 (remember that a falling bond price means a rising yield)
Suitcase With $134 Billion Puts Dollar on Edge It's a plot better suited for a John Le Carre novel. Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear. Are these would-be smugglers agents of Kim Jong Il stashing North Korea's cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit? The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.
The New Zealand Carry Trade Expects Hyperinflation As the entire planet writhes and seethes with anger and distress, the US tries to continue sailing onwards, trying to restart the real estate and commercial lending markets. The Fed continues to consolidate power within its halls. We will take a little side visit to New Zealand to visit one of the biggest funnels for the Japanese carry trade to see how they are dealing with this reversal. The Canadian dollar is strengthening because they sell the US lots of oil. Oil is rising in price. Canada, like Japan and China, prefers a weak currency to aid export markets. Understanding how all this international finance operates is important. Even if we seem to lose every battle, the need to learn continues. Perhaps no one will read this until maybe 100 years from now, when a new international credit bubble forms!
Europe Offers Glimpse at Difficulties of Financial Reform LONDON - As the Obama administration announced a regulatory overhaul, a squabble between Brussels and Great Britain over a proposal for supervising financial markets and firms - many based in London - offered a glimpse of how difficult global regulatory reform is likely to be. In many ways the dispute on this side of the Atlantic is rooted in a decades long suspicion of any form of rule making that emanates from the European Union bureaucracy, especially if those rules staunch the profit potential of Britain's largest money maker, its financial sector rooted in The City.
For Boomers, recession is redefining retirement They grew up during a time of cultural change, and now are being forced to redefine retirement at midlife. The 77 million Americans in the Baby Boom generation face an economic storm: The Wall Street meltdown trampled their retirement nest eggs more than any other group. After losing jobs during what they thought would be some of their peak earning years, many are struggling to get back into the workforce. Health care costs are rising, and declining home values mean they might not be able to count on home equity to guarantee an easier retirement.
Eddie Bauer Files for Bankruptcy Eddie Bauer, the outdoor-clothing chain that sold goose-down coats to Mount Everest mountaineers and college students alike, filed for Chapter 11 bankruptcy protection on Wednesday and said it planned to sell itself for $202 million to CCMP Capital, a private equity firm. The company filed for Chapter 11 protection in Delaware, and court filings show that Bank of America, General Electric and the CIT Group have agreed to provide up to $100 million in financing during the bankruptcy case.
Obama Sees 10% Unemployment Rate, Chides Wall Street Critics President Barack Obama offered stern words for Wall Street and a prediction of 10 percent U.S. unemployment even as he said the "engines" of an economic recovery have begun to turn. "Wall Street seems to maybe have a shorter memory about how close we were to the abyss than I would have expected," Obama said, referring to criticism of the government's growing role in the economy and markets.
Chrysler to restart 7 assembly plants Chrysler Group LLC says it will resume making vehicles at seven of its North American factories starting June 29. All the company's factories were shut down May 4, shortly after it went into Chapter 11 bankruptcy protection. The company confirmed that factories in Sterling Heights and Warren, Mich.; St. Louis; Toledo, Ohio; Brampton and Windsor, Ontario; and Toluca, Mexico, would restart operations. Production at a Detroit factory resumed Monday. Parts plants that supply the assembly factories also will restart June 29, the company said.
Biggest Shift in U.S. Health Care Needs 45-Day Sprint The largest expansion of U.S. health care since the creation of Medicare in 1965 may emerge from legislation designed to reshape the medical industry and change how Americans receive and pay for care. Congress today began crafting legislation that Democratic leaders plan to push through both chambers by their August recess. The measure may require all Americans to get medical insurance, force insurers to accept all patients and end the tax break for employer-paid health benefits. These changes may be hammered out with unprecedented speed at the urging of President Barack Obama, who four days ago said "this is the moment."
Cantor On The House GOP Health Care Proposal This morning on MSNBC, House Republican Whip Eric Cantor (R-VA) discussed the House GOP health care proposal and the consequences of the Democrats' government-run health care plan.
Ankara Moscow and Washington in the Eurasian Pipeline Calculus Calculus has two main variants-derivative and integral. The Eurasian energy pipeline geopolitics between Turkey Washington and Moscow today has elements of both. It is highly derivative in that the major actors across Central Asia from China, Russia to Turkey are very engaged in a derived power game which has less to do with any specific state and more to do with maintaining Superpower hegemony for Washington. Integral as the de facto motion of various pipeline projects now underway or in discussion across Eurasia hold the potential to integrate the economic space of Eurasia in a way that poses a fundamental challenge to Washington's projection of Full Spectrum Dominance over the greatest land mass on earth.
Clinton clashes with Israelis over settlers Meeting at state department most tense for years Hillary Clinton, the US secretary of state, clashed face to face with her Israeli counterpart on Wednesday as the two countries remained at loggerheads over the expansion of settlements in occupied territory. In what appeared one of the most tense encounters between the sides for several years, Mrs Clinton and Avigdor Lieberman, Israel's foreign minister, disagreed on both the US call for a complete freeze on settlement growth and Israel's contention that the administration of George W. Bush, the former president, had signalled that some expansion was permissible.
U.S. to Confront, Not Board, North Korean Ships The Obama administration will order the Navy to hail and request permission to inspect North Korean ships at sea suspected of carrying arms or nuclear technology, but will not board them by force, senior administration officials said Monday. The new effort to intercept North Korean ships, and track them to their next port, where Washington will press for the inspections they refused at sea, is part of what the officials described as "vigorous enforcement" of the United Nations Security Council resolution approved Friday.
N. Korea warns U.S. of military retaliation SEOUL, South Korea (AP) -- North Korea warned Wednesday of a "thousand-fold" military retaliation against the U.S. and its allies if provoked, the latest threat in a drumbeat of rhetoric in defense of its rogue nuclear program. Japanese and South Korean news reports said North Korea is preparing an additional site for test-firing a long-range missile that experts say could be capable of striking the United States. Russia's deputy defense minister reportedly said it would shoot down any missile headed its way. The warning of a military strike, carried by the North's state media, came hours after President Barack Obama declared North Korea a "grave threat" to the world and pledged that recent U.N. sanctions on the communist regime will be aggressively enforced.
Iran's Latest Protests Are Seen as the Toughest to Stop In an iconic photograph of antigovernment demonstrations in Iran, a student with flowing black hair and a headband held aloft the bloody T-shirt of a wounded protester. After his face appeared on the cover of The Economist magazine in July 1999, Ahmad Batebi paid dearly for it, enduring nearly a decade of imprisonment and torture before fleeing into exile. On Tuesday, as he watched the swelling antigovernment protests in Iran from suburban Virginia, Mr. Batebi described a sense of dread mixing with happiness. "Every society has to make their own version of freedom and democracy, and that is what the Iranian people are doing right now," he said through a translator. "But I know that people are being beaten, some are going to jail and some will be killed."
Iranian Youth Protests Could Outlast Ahmadinejad Rule As hundreds of thousands of Iranians marched down Tehran's main thoroughfare to protest allegations of fraud in the country's June 12 presidential elections, a college student named Niloufar felt a sense of belonging. "It's heartwarming to feel you are not alone," said Niloufar, 21, who asked that her full name not be used out of concern for her safety. "We asked him to get our votes back and now we can't withdraw our support for him," she said yesterday, referring to opposition candidate Mir Hossein Mousavi, who spoke at the June 15 rally.
Obama, Siding With the Regime The turmoil in Iran since last week's election has confused the foreign policy debate here in the United States in interesting ways. Supporters of President Obama, who until very recently had railed against the Bush administration's "freedom agenda" and who insisted on a new "realism," have suddenly found themselves rooting for freedom and democracy in Iran. And in their desire to attribute all good things to the work of President Obama, they have even suggested that the ferment in Iran is due to Obama's public appeals to Iranians and Muslims.
Iran accuses U.S. of meddling after disputed vote Revolutionary Guard warns online media TEHRAN, Iran (AP) -- Iran accused the United States on Wednesday of "intolerable" meddling in its internal affairs, alleging for the first time that Washington has fueled a bitter postelection dispute. Opposition supporters marched in huge numbers through Tehran's streets for a third straight day to protest the outcome of the balloting. The Iranian government summoned the Swiss ambassador, who represents U.S. interests in Iran, to complain about American interference, state-run Press TV reported. The English-language channel said the government called Western interference "intolerable."
U.N. Atomic Energy Chief Says Iran Wants Bomb Technology PARIS -Mohamed ElBaradei, the head of the United Nations' nuclear watchdog agency, said it was his "gut feeling" that Iran's leaders wanted the technology to build nuclear weapons "to send a message to their neighbors, to the rest of the world: don't mess with us." He was speaking in a BBC interview broadcast Tuesday and Wednesday as protesters took to the streets of Teheran and other cities, demanding that last Friday's disputed election result be overturned and confronting President Mahmoud Ahmadinejad with the leadership's biggest domestic challenge since the Islamic revolution three decades ago.
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Mega-deals and security to link China and Russia Russia and China have signed multi-million dollar deals during a meeting of the countries’ heads in Moscow. President Medvedev said overcoming the global financial crisis depends greatly on the countries’ cooperation. Russian President Dmitry Medvedev and Chinese leader Hu Jintao have signed a joint declaration and plan for Russo-Chinese partnership. They have put their signatures to three memorandums of understanding, namely for cooperation in gas and coal, and stimulating bilateral trade.
Gold 'a safe option' in uncertain economy Investors are turning to gold due to the financial uncertainty currently being felt around the world, it has been observed. Moneywise noted that the precious metal is often seen as a safe option, particularly as an alternative to currencies. Head of research at ETF Securities Nicholas Brooks told the portal that the printing of money by central banks across the world means that currency is depreciating against gold.
Gold Rises Most in a Week as Declining Dollar Increases Demand Gold rose the most in more than a week as oil rallied and the dollar weakened, increasing demand for the metal as an alternative investment. Silver, platinum and palladium also gained. The U.S. Dollar Index, a gauge of the greenback’s value, dropped as much as 1 percent on concern that leaders of Brazil, Russia, India and China will act to lessen their dependence on the dollar as a reserve currency at a meeting today in Russia. Gold slid 3.6 percent in the previous two sessions to the lowest in more than three weeks as the dollar index gained 2.2 percent.
Employer's gold, silver payroll standard may bring hard time 'This is a case about money, greed and fraud' Robert Kahre, who owns numerous construction businesses in Las Vegas, is standing trial on 57 counts of income tax evasion, tax fraud and criminal conspiracy. If convicted on most counts, he could live out his life in prison. But attorney William Cohan paints Kahre as an American "hero" who believes his payroll system helped keep the U.S. monetary system sound, and was also a form of legal tax avoidance.
Obama wants agency to protect borrowers The Obama administration will propose a new agency to protect consumers from the kinds of lending abuses that led to the collapse of financial markets worldwide, while consolidating the supervision of big banks under one agency in a regulatory overhaul plan to be announced Wednesday. President Obama will propose consolidating the consumer protection functions of the Federal Reserve Board and other federal agencies into the Consumer Financial Protection Agency (CFPA), which will regulate consumer lending throughout the United States, guided by the principles of transparency, simplicity, fairness, accountability and access, senior administration officials said Tuesday on the condition of anonymity.
Roubini: U.S. Risks Double-Dip Recession The U.S. economy will not recover until the end of this year, and even then growth will remain meek and vulnerable to higher interest rates and commodity prices, economist Nouriel Roubini said on Tuesday. Roubini, who rose to prominence for predicting the global credit crisis, tore down the "green shoots" theory that a rebound is imminent, saying there was a significant risk of a "double-dip" recession where the economy expands slightly only to begin contracting again. "In addition to green shoots there are also yellow weeds," he told the Reuters Investment Outlook Summit in New York.
The buck drops here Don't be fooled - the greenback is headed in just one direction The rise in the dollar on Monday for the first time in weeks is nothing more than a dead-cat bounce. When it comes to currencies, stocks, bonds or anything else, nothing moves in a straight line. There are always ups and downs within any trend, no matter which direction. That being the case, while it was nice to see the beleaguered buck bounce back for a change, don't think for one moment that this is anything more than a short-term rise in an otherwise downward trend. Those who think they spot a turning point can marshal many arguments in favor of the dollar.
Dollar slumps against major currencies Russian president suggests the need for a global reserve currency other than the greenback. Traders focus on BRIC summit. The dollar fell across the board Tuesday, pressured by comments from Russia suggesting a need for a global reserve currency other than the greenback. Data showing a rebound in U.S. housing starts and an unexpectedly small rise in producer prices also weighed, reducing safe-haven demand for dollars, and investors snapped higher-yielding currencies such as the Australian dollar.
Obama to detail broad financial reform White House outlines administration's proposals for changing how financial sector is regulated. Obama to spell them out Wednesday. President Obama on Wednesday will finally announce his long-anticipated plan to restructure how banks and other firms are regulated in the hope of preventing another financial collapse. The far-reaching effort will propose a series of changes in how federal agencies oversee banks, Wall Street firms and the markets. Along the way, it would reorder the roles of some key Washington players in an attempt to tighten government supervision of the financial sector.
Financial Regulatory Overhaul Is Detailed Plan Deepens Federal Role in Markets The Obama administration last night detailed a series of proposals that would involve the government much more deeply in the private markets, from helping to steer consumers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to prevent the kinds of risk-taking that sparked the economic crisis.
Federal Reserve to gain power under plan Targets dangers to economy The Federal Reserve, already arguably the most powerful agency in the U.S. government, will get sweeping new authority to regulate any company whose failure could endanger the U.S. economy and markets under the Obama administration's regulatory overhaul plan. The final plan due to be released on Wednesday -- which originally aimed to streamline and consolidate banking and securities regulation in one or two agencies -- now is expected to sidestep most jurisdictional disputes and simply impose across the board standards to be applied by all financial regulators, according to administration and industry sources.
US banks to break free of state assistance JPMorgan Chase and Morgan Stanley will no longer issue government- guaranteed bonds in an effort to sever their financial ties to the US authorities and show investors they can fund themselves without Washington's help. In separate statements, the two banks said on Tuesday they did not expect to have to sell short-term bonds backed by the Federal Deposit Insurance Corp, a banking regulator. The announcements by the two banks, which could be followed by Goldman Sachs and the other institutions that passed the government's recent stress tests, make it likely the debt guarantee plan will not be extended beyond its October deadline.
Treasuries Little Changed After Federal Reserve Purchases Debt Treasuries were little changed after the Federal Reserve bought $6.45 billion of debt maturing between June 2012 and August 2012. The Fed bought $6 billion at its last purchase of securities with maturities around the range targeted today. The average size of the last five Fed purchases of securities due in this general maturity spectrum is $6.3 billion. Government debt fell earlier for the first time in three days after a report showed U.S. builders broke ground on more houses than forecast last month, suggesting the economy may be stabilizing.
BRICs May Buy Each Other’s Bonds in Shift From Dollar Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar as their leaders meet for a summit in Russia’s Ural Mountains. The leaders of the so-called BRIC countries will discuss measures to promote regional currencies, including “possibly placing part of reserves in the financial instruments of partner countries,” during their meeting in Yekaterinburg, Arkady Dvorkovich, Russian President Dmitry Medvedev’s top economic adviser, told reporters.
Russia challenges dollar, China offers loans China and Russia sought greater international clout at a summit Tuesday, with China promising a $10 billion loan to Central Asian countries, while Russia challenged the dominance of the U.S. dollar as a global reserve currency. Russia also gave a prominent platform to Iranian President Mahmoud Ahmadinejad amid massive protests in Iran over his bitterly disputed re-election and questions in the West about the vote. Chinese leader Hu Jintao said China will extend a $10 billion loan to a regional group that also includes Russia and four Central Asian states.
BRIC Dollar Bonds Beat Ruble, Real, Yuan Debt as Medvedev Frets For all the criticism of the U.S. currency by leaders of the so-called BRIC nations, dollar bonds sold by the largest emerging-market countries are outperforming debt traded in reais, rubles and yuan. Russian President Dmitry Medvedev, Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh and Brazilian President Luiz Inacio Lula da Silva called for a "more diversified" monetary system yesterday to reduce dependency on the world's reserve currency. The four leaders met in the Urals city of Yekaterinburg, where they planned to discuss buying each other's bonds and foreign exchange, said Arkady Dvorkovich, Medvedev's top economic adviser.
Precious Metals Update: Spring 2009 Gold's correction has been quite sharp but given the extent of the rise since mid April (from $864/oz to over $980/oz or over 13% in just 6 weeks) it is not unexpected. A 50% retracement of sharp rallies is quite common and yesterday's lows of $925/oz is very close to an exact 50% retracement. While the dollar has rallied in recent days on soothing comments by the some of the US largest creditors (Chinese and Russian officials), concerns regarding the dollar and a possible downgrade of the US credit rating will likely see gold once again challenge strong resistance at $1,000/oz in the coming weeks.
U.S. Dollar: the Good, the Bad and the Ugly Russian President Medvedev suggests the dollar is on its way out; Russian Finance minister Kudrin says there is no substitute for the dollar. The Chinese see a need to diversify out of the dollar; the Japanese say their trust in the dollar is unshakable. Let's look at this puzzle and make some sense of it.
Recession and the lure of gold coins Investing are buying up gold coins and bullion and it will remain a hot commodity until the recessionary trends are over whether it is in India or USA. Recently in India, the postal department, India Post had extended its sale of gold coins which began in October due to overwhelming response from investors. Large and small investors are buying up whatever gold coins are available according to Merit Financial, a leading US dealer and advisor for precious metals.
Silver Update A week or so ago we gave the short term view of silver that a decent sized top was in. Our first choice Elliott wave pattern (see below) looked complete as you can see from the chart we reproduce below. We had an alternate wave count which would be invalidated if it went below $14.80. That has now happened so the first choice count is vindicated.
Why silver zooms when gold rises Two weeks ago precious metals were as hot as ever. Gold prices were climbing. Gold stocks were doing even better. And silver prices were leading the way. The old adage, "when gold climbs, silver soars" was playing out perfectly. Gold booked its biggest monthly gain since November. Silver, however, climbed past $15 per ounce and had its biggest monthly climb in 22 years according to MarketWatch. Silver was showing its value as a dual-purpose commodity.
China may be headed for rapid inflation China's inflation rate may accelerate to worrisome levels if Beijing is too slow in reversing its loose monetary policy, analysts said, pointing to recent comments from top officials as sources of concern. "The government is choosing not to exit from the expansionary monetary policy at this moment," said Credit Suisse Economist Dong Tao in Hong Kong. "It's a clear indication that Beijing is not ready to normalize monetary conditions, and this should give more insurance to the short-term recovery but potentially to some trouble on the inflationary front." Chinese Premier Wen Jiabao said Monday that the central government would stick to its current effort to pump money into the economy, noting the nation's economic recovery was not assured and that authorities had to guard against downside risks.
pt 1/2 Peter Schiff Vlog Report 15 june 2009
'Buy China' policy set to raise tensions China has introduced an explicit "Buy Chinese" policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world. In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
Obama Warns Banks Not to Forget U.S. Was Near 'Abyss' President Barack Obama, warning Wall Street not to forget how it almost caused the financial system to collapse, said "sensible" new rules are needed to tighten oversight and restore confidence in U.S. markets. "Wall Street seems to maybe have a shorter memory about how close we were to the abyss than I would have expected," Obama said in an interview with Bloomberg Television today at the White House. "All we're doing is cleaning up after the mess that was made."
Making The Case In trying to explain the ongoing silver (and gold) manipulation, I normally rely upon a straight text approach, using words to convey my premise. Today, I'm going to alter that a bit and rely more on visual and audible tools. Thanks to Carl Loeb, I will present two graphs depicting the concentrated short position of the US banks in all commodities, as compiled by the CFTC. Also, thanks to Eric King of King World News, here's a link you can click on to hear my interview on the topic.
U.S. Likely to Lose AAA Rating Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market. Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy. Fears about the long-term vulnerability of the prized U.S. credit rating came to the fore after Standard & Poor's in May lowered its outlook on Britain, threatening the UK's top AAA rating. That move raised fears that the United States could face a similar risk, with the hefty amounts of government debt issued in both countries to pay for financial rescues causing budget deficits to swell.
Obama Praises Bernanke, Declines to Comment on Reappointment U.S. President Barack Obama praised Federal Reserve Chairman Ben S. Bernanke for doing an "extraordinary job" while declining to comment on whether he plans to nominate the central bank chief for a second term. Bernanke has "done an extraordinary job under extraordinary circumstances," Obama said today in an interview with Bloomberg Television at the White House. On a potential reappointment, Obama said, "I'm not making news on that today." Bernanke, 55, has been responsible for the Fed's unprecedented response to the financial crisis and recession, including lowering the main interest rate almost to zero; purchasing as much as $1.75 trillion in Treasuries and housing debt; and starting emergency-loan programs to aid bond dealers, mutual funds and corporations.
Systemic banking risk within Congress' purview The U.S. Congress probably has broad authority to empower regulators to take over big banks and other giant financial companies, even if shareholders and other creditors lose out, analysts said. The Obama administration is expected to propose on Wednesday the biggest regulatory overhaul of the industry since the 1930s, including giving the Federal Reserve power to oversee systemic risk in the economy in conjunction with an inter-agency council of regulators.
The Government Bubble It is clear that a concerted effort is being made to replace the ruptured private-sector debt bubble with a government debt bubble, although the effort is generally not labeled as such. Moreover, the dramatic increase in government debt that we are seeing is really just a symptom of expanding government. In the case of the US, for example, GW Bush presided over a rapid expansion of government power and the trend has accelerated under Obama.
Fed's Warsh warns of false optimism on U.S. economy A top Federal Reserve official warned on Tuesday not to take recent gains across a range of asset prices as proof the U.S. economy is on the verge of a strong recovery. "The panic's hasty retreat should not be confused with robust recovery," Federal Reserve Governor Kevin Warsh said in prepared remarks to the Institute of International Bankers annual meeting in New York.
pt 2/2 Peter Schiff Vlog Report 15 june 2009
Town's Friendly Bank Left Nasty Mess - $$ GREELEY, Colo. -- Larry Seastrom, the founder of New Frontier Bank, made it a mantra to invest in his community. That paid off big time, both for the bank and for this fast-growing college town on the broad plains of northeast Colorado. Founded a decade ago in a double-wide trailer, New Frontier hit $1 billion in assets in July of 2006 and, in a burst of growth, doubled to $2 billion in just 18 months. Then, just as quickly, it collapsed.
Plastic Green Shoots Most investors and pundits are celebrating the green shoots of economic stabilization and the belief that there will be a "V" shaped recovery in GDP growth. I believe, however, that what we are experiencing is just an artificially derived respite and that we have only entered the eye of our debt induced hurricane. There should be no mistaking what was the progenitor for near collapse of the economy late last year. It was clearly the overleveraged consumer and financial sectors, which was the direct result of artificially induced low interest rates and excess money creation.
The New Supersized Fed Fed watchers need to stop panicking when they look at the new supersized Fed balance sheet and monetary base. The Fed's balance sheet doesn't necessarily mean runaway inflation is in our future or that the Fed is out of control. The Fed got supersized because Bernanke & Company came to appreciate the U.S.'s special role in the world economy. The U.S. dollar is the world's primary reserve currency and a supersized Fed is what this special status requires. Many Fed watchers believe in a "cause and effect" relationship exists between the rapid buildup in the size of the Fed's balance sheet and both runaway inflation and a debasement of the U.S. dollar. I don't agree.
We Have Nothing to Fear But Obama and His Minions! Remember “Morning in America”? That was the motto of the Ronald Reagan Campaign back when he ran for President of the US. The man was elected twice by landsides. Obama’s use of fear to motivate Americans to do what he wants us to do is simply unprecedented in the history of American politics. It is known within the circles of the political elite as the “Politics of Fear.” No, I’m NOT kidding, Mr. and Mrs. American. You are being played for the fools Obama and the democrat/socialists believe that you are. So far they have not been wrong in their estimation of how easily Americans will react to fright.
Malpractice Lawsuits Are ‘Red Herring’ in Obama Plan Protecting doctors from lawsuits may do more to gain political cover for President Barack Obama’s health-care overhaul than to rein in medical costs. While Obama vowed to address physicians’ malpractice worries in a speech yesterday, annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra, a Harvard University economist. Chandra estimated the cost at $12 per person in the U.S., or about $3.6 billion, in a 2005 study. Insurer WellPoint Inc. said last month that liability wasn’t driving premiums.
Dr Ron Paul On Reforming Health Care
Sebelius says coverage to take years HHS Secretary Sebelius says coverage for all could take years to phase in Covering the uninsured could take several years, even if Congress passes a bill and President Barack Obama signs it into law this fall, HHS Secretary Kathleen Sebelius said Tuesday. "Will something probably be phased in? You bet," Sebelius said in a question-and-answer session with The Associated Press. "It won't start the day after the bill passes." It could take until sometime during the next presidential term, which starts in 2013, she said. A longer phase-in period could make it easier to handle the costs of the bill, which are already prompting second thoughts from some key lawmakers.
FDA: Consumers Need to Stop Using Zicam Nasal Products - $$ WASHINGTON--The U.S. Food and Drug Administration said consumers need to stop using certain Zicam cold and allergy products because they can cause permanent loss of smell. Shares of Matrixx Initiatives Inc., maker of Zicam, dropped 56% to $8.56 in recent action after hitting a 52-week low of $8.41 earlier in the day. Zicam is sold over-the-counter, primarily as a cold and allergy remedy. The products are sold in various forms including internasal products meant to be used in the nose. The FDA said consumers should stop using the internasal zinc-containing products. Matrixx is the only maker of internasal zinc products, the FDA says.
Obama to subsidize partners of gay federal workers President Barack Obama plans to extend health care and other benefits to the gay and lesbian partners of federal employees. White House officials say Obama plans to announce decision on Wednesday in the Oval Office. The official spoke on the condition of anonymity because the president had not yet made the announcement. The move would give partners of federal employees access to health care and financial benefits such as relocation fees for moves. Officials say Obama would detail more details of the decision on Wednesday.
Boeing May Rely on 777 to Beat Airbus on Jets, Tanker Boeing Co. surprised the crowd at the Paris Air Show with the new plane it says can outdo the next Airbus SAS jet and win back a $35 billion military tanker deal: the 14-year-old 777. The Chicago-based manufacturer, battling to overcome setbacks to its 787 Dreamliner, said it may build a new wing for the 777, improving fuel efficiency and allowing the plane to compete better with the A350 that Airbus will deliver in 2013. Boeing also will offer a 777 tanker design to the Pentagon in an effort to beat Airbus parent European Aeronautic, Defence & Space Co. for an aerial-refueling contract.
Oil Gains as U.S. Dollar Falls, Gasoline Surges to 8-Month High Crude oil rose and gasoline surged to an eight-month high as the dollar weakened against the euro, bolstering the appeal of energy as an alternative investment. Oil increased for the first time in three days as the dollar dropped against most of its major counterparts after leaders of Brazil, Russia, India and China considered reducing their dependence on the currency. Gasoline rose above $2.11 a gallon for the first time since Oct. 7.
‘Cash-For-Clunkers’ Vote May Open Path for $4,500 U.S. Vouchers U.S. consumers may be able to collect as much as $4,500 by September on vehicle trade-ins under “cash-for-clunkers” legislation up for a vote in the House today. The provision, scheduled to be taken up by the Senate after the House vote, gives vouchers to encourage Americans to swap older cars and light trucks for new, more fuel-efficient models. Automakers, whose U.S. sales fell 34 percent in May, support the plan as a way to get consumers into showrooms.
Swedes to repatriate Saab from GM Sweden wants Saab back. General Motors Corp. agreed Tuesday to sell the luxury carmaker to a consortium led by Koenigsegg Group AB, a Swedish company that sells only about a dozen custom sports cars a year. For GM, it would be yet another sale of a unique brand that lost its cachet in the auto giant's mass-production culture. The deal would return Saab to Swedish control for the first time in nearly 20 years. "Saab is a brand that is sort of iconic with a small core of consumers," said Jeremy Anwyl, chief executive officer of the car-shopping site Edmunds.com. "GM, for good or for ill, has not demonstrated expertise in nurturing these niche brands."
High-End Swedish Carmaker to Buy GM's Saab General Motors announced yesterday that it is selling Saab to the Swedish sports car manufacturer Koenigsegg -- the fourth brand to split from the firm and wind up in the arms of a company with little experience as a mass-market automaker. The sale, scheduled to close in the third quarter of this year, is contingent on a $600 million funding commitment from the European Investment Bank guaranteed by the Swedish government. GM and Koenigsegg, which is leading a group of investors, did not release any other financial details. But Saab has said it needs $1 billion to get through the economic downturn.
Speculation costs GM investors hefty price Call them the unlikely speculators. Mechanics, educators, engineers of modest means. These are among the roughly 100,000 people who own General Motors Corp. bonds. Some bought the bonds before they were downgraded to junk status yet decided to hang on to them. Others went in with eyes open, buying at a substantial discount to the bonds' face value, betting the company wouldn't crater and their gamble would eventually pay off. Speculation was what they did, whether they like the term or not.
Credit card defaults keep climbing Default rates in May continue to rise as borrowers struggle with the weak job market. Banks continue to write off credit card debt as consumers hurt by record high unemployment default at an increasing rate. Regulatory forms filed this week by some of the nation's largest banks showed default rates on credit cards rose in May. The default rate is a measure of loans that the bank does not expect to be repaid. "Data from May showed continued signs of stress for card issuers, reflective of worsening unemployment trends and deteriorating macro [economic] conditions," analysts at Bernstein Research said in a report Tuesday.
‘Millionaire Homes’ May Lose Value Until 2012 Prices for the most expensive U.S. homes may not reach bottom for another few years, according to JPMorgan Chase & Co. analysts. The CHART OF THE DAY shows the supply of unsold homes by price in California, data that the mortgage-bond analysts including John Sim and Matthew Jozoff used in a June 12 report to illustrate the weakening market for the most-expensive residential properties. The supply of homes priced $750,000 to $1 million held steady while the supply of more expensive properties increased. “Tighter lending standards and the lack of cheap financing for these borrowers continue to be key issues,” the New York- based analysts wrote, referring to “jumbo” mortgages. That’s after so-called interest-only and option adjustable-rate loans were a “major driver” of soaring values, they said.
US Faces Tragic Consequences with Iran Whenever faced with a rogue nation, the United States more often than not bends to the will of the United Nations or other entity that favors economic sanctions. This holds true for the current Administration of President Barack Obama. With the recent testing of missiles by the Iranian military, the world has been put on notice that this Islamofascist nation will continue to be the fly in the ointment for world peace.The United States National Security Strategy recently acknowledged that the US faces challenges from Iran, including Iran’s proliferation efforts and involvement in international terrorism.
British Airways Urges Staff to Work Without Pay - $$ LONDON -- British Airways PLC is urging staff to work periods unpaid as it increases its efforts to conserve cash. The U.K. flag carrier is offering staff one-week blocks of unpaid leave or unpaid work, with salary deductions spread over three months to six months where possible, it said in the latest edition of its in-house newsletter. The company, which last month reported a £375 million ($611.9 million) net loss for the fiscal year ended March 31, is expanding a plan that already offers employees unpaid leave or the chance to work part-time. It said more than 1,000 workers already have taken advantage of that plan, which was announced last month.
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Tues 06.16.2009
China wants U.S. to assume global duty of care for dollar BEIJING (Reuters) - If you owe your bank $1,000 you have a problem, but if you've borrowed $1 million it's the bank that has the problem. Going by that old maxim, then China, which has lent the United States upwards of $1.3 trillion, has a very big problem. And it knows it. As a consequence, Beijing is diversifying its overseas investments and pressing U.S. officials for an "exit strategy" from the ultra-loose fiscal and monetary policies that China fears will eventually inflate away the value of its U.S. bond holdings and fell the dollar. But China's pragmatic policymakers also know there is no practical alternative to the dollar as the world's main reserve currency.
* * * * * The Final Hour: The Coming Battle is Here! Joan Veon There has not really been a time in which the United States has had her financial foundation questioned until now. However, it was the Reagan tax laws in the early 1980’s which substantially increased the amount of debt that government, industry, and individuals took on in order to keep the "Reagan Revolution" going. It was then that America began to rely more heavily on foreign countries to carry our debt. The debt has continued to climb, and as a result of the 2008 Credit Crisis has caused our lenders to question our ability to repay. By the end of 2008, the federal debt grew to 41% of GDP. Both Russia and China have said that it is time to make other arrangements for the dollar. Recently, astute Chinese students laughed when our globalist treasury secretary stated that the $768B China has lent America was safe since 82% of its $2T in foreign reserves is in dollars.
G8 signals the end of the financial crisis, but what caused it? The weekend G8 communiqué, coming after four months of stabilisation in most financial markets, seemed to mark the official end of the financial crisis. If so, what lessons should be learnt for economic and financial policies in the months ahead? The history of the crisis in the next few paragraphs may not be the standard version presented by most commentators and economists, yet recent events suggest it to be a plausible account of what went wrong. The blunders that produced last autumn’s financial crisis had nothing to do with the supposedly inflationary monetary policies of Alan Greenspan, or the fiscal profligacy of Gordon Brown, or with Mervyn King’s lack of practical market experience, or Hu Jintao’s mercantilist approach to currencies and exports. All these and many other factors contributed to the vulnerability of the world economy, but none of them would have been enough to cause its near-collapse last autumn. For that we can blame the unforced errors of a man almost forgotten since he slipped quietly out of office at the beginning of this year: Henry Paulson, the former US Treasury Secretary and ex-chairman of Goldman Sachs.
European Agenda: 15. June 2009
BRIC seeks global voice at first summit MOSCOW (Reuters) - The leaders of the world's biggest emerging markets -- Brazil, Russia, India and China -- meet in the coming week for their first formal summit, seeking a louder voice on the global stage. Leaders of the so-called BRIC nations will discuss ways to reshape the global financial system after the worst economic crisis for decades and ideas for a new reserve currency to reduce dependency on the U.S. dollar may be on the agenda. "The good news is that rich countries are in crisis and that emerging countries are making a huge contribution to save the economy and, consequently, save the rich countries," Brazilian President Luiz Inacio Lula da Silva told Reuters on Wednesday.
Central Asia, Russia, India, Brazil in dialogue with China to find way out of economic crisis In Russia the 9th SCO summit is under way and the 1st between Brazil, Russia, India and China. The creation of a free trade zone, transport corridors and reserve currency will dominate talks. Beijing wants to increase its economic role, even through a series of bilateral relationships. Beijing (AsiaNews/Agencies) –China’s president Hu Jintao has flown to Yekaterinburg (Russia) to take part in the 9th annual Shanghai Cooperation Organization (Sco) summit, to discuss the economic crisis and collaboration. The Russian city will also host the 1st summit between the 4 major emerging economies: Brazil, Russia, India and China (so-called “Bric”).
Intriguing Plan in Michael Moore's Home Town: Bulldoze the Ghost 'Burbs, Return Them to Nature [Eric called this one a long time ago!] US cities may have to be bulldozed in order to survive Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline. The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature. Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area. The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint. Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.
The Geithner-Summers Proposal: Today's Foundation, Tomorrow's Crisis Writing in the Washington Post this morning, Tim Geithner and Larry Summers outline a five-point plan for dealing with the underlying problems in our financial system, entitled A New Financial Foundation. The authors are not completely clear on what they think caused the current crisis, but you can back out some points from their reasoning – and the implicit view seems quite at odds with reality.
A New Financial Foundation By Timothy Geithner and Lawrence Summers Over the past two years, we have faced the most severe financial crisis since the Great Depression. The financial system failed to perform its function as a reducer and distributor of risk. Instead, it magnified risks, precipitating an economic contraction that has hurt families and businesses around the world. We have taken extraordinary measures to help put America on a path to recovery. But it is not enough to simply repair the damage. The economic pain felt by ordinary Americans is a daily reminder that, even as we labor toward recovery, we must begin today to build the foundation for a stronger and safer system. This current financial crisis had many causes. It had its roots in the global imbalance in saving and consumption, in the widespread use of poorly understood financial instruments, in shortsightedness and excessive leverage at financial institutions. But it was also the product of basic failures in financial supervision and regulation.
Obama Lays Out Plans for National Health System President Obama, addressing the American Medical Association on Monday, offered a forceful defense of creating a controversial new government-sponsored health insurance program as part of a broad overhaul of the nation's system. Speaking to a group that has voiced strong reservations about the concept, he said: "The public option is not your enemy; it is your friend." In some of his strongest language to date, Obama took on critics who argue that a new public insurance plan will undermine the private sector and lead to a European-style single payer health system, calling those attacks a "Trojan horse."
Climate bill called 'energy tax' GOP offers alternative to cap-and-trade Republicans on Saturday slammed a Democratic bill before the House that seeks to address climate change, arguing that it amounts to an energy tax on consumers. In the Republican Party's weekly radio and Internet address, Rep. Mike Pence of Indiana said Congress should instead open the way for more domestic oil and natural-gas production and ease regulatory barriers for building new nuclear-power plants. "During these difficult times, the American people don't want a national energy tax out of Washington, D.C.," said Mr. Pence, the third-ranking House Republican. Mr. Pence reiterated what Republican lawmakers have been saying for weeks: that the climate bill being considered in the House capping releases of carbon dioxide and other greenhouse gases would lead to much higher energy costs and accomplish little to counter global warming if other nations do not act as well.
Global stocks slide, bonds up, US dollar jumps Global stocks fell sharply on Monday after weak U.S. manufacturing data and record job losses in Europe raised concerns about the world's economic health while boosting the safe-haven appeal of U.S. and euro zone debt. The U.S. dollar gained broadly after Russia expressed confidence in the greenback as the world's reserve currency, and the euro extended losses after the European Central Bank said euro zone banks face another $283 billion in write-downs. Crude oil fell more than 3.0 percent to below $70 a barrel in a further retreat from a near eight-month high. Nickel, zinc and lead prices tumbled more than 6.0 percent, while copper also slid after the manufacturing data signaled demand remains weak.
Zimbabwe banks on gold heavily Zimbabwe, the country with 1,00,000 per cent inflation, is now looking to its gold mines to rescue it from the financial mess. Gold has been Zimbabwe’s top export commodity or years but due to some tough laws in the country gold miners have been keeping away from Zimbabwe. However, the Zimbabwean government changed the laws in March and the results are visible now.
US dollar pushes down gold, silver prices Gold prices resumed their decline as the new trading week got underway, pressured by a renewed push to higher ground (up to 80.92 on the index) in the US dollar. The greenback was aided by supportive comments from...Russia. Yes, the same Russia whose leader Medvedev was heard questioning the dollar's reserve status, not that long ago. Says Bloomberg: "Russian Finance Minister Alexei Kudrin said the dollar is in “good shape,” further affirming that there’s no substitute for the world’s reserve currency. Kudrin rushed to reassure investors of Russia’s confidence in the dollar just days after his boss, President Dmitry Medvedev, questioned its global status, joining China’s central bank Governor Zhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.
History of Silver, Part II: the great "build" In Part II, I will provide an outline of the development of silver mining, and the huge growth of global, silver stockpiles which accompanied such production-growth - and which ended in the last century, when modern technology came up with an endless list of new applications for silver. As humanity entered the "Middle Ages", production of silver had been hampered by two constraints: the lack of new deposits/mines to offset the depleted reserves of older "First World" mines, and the primitive technology of that era - which made only rich, near-surface deposits feasible to mine.
True or False: U.S. Economic Stats Lie How is the economy treating you? Chances are, your answer is colored largely by three things: whether you’re working (if you want to), how much you’re making and how quickly your expenses are rising. Economists rely heavily on the same factors to judge the nation’s health. At last count, 9.4% of the workforce is jobless. Compared with a year ago, the goods and services we produce are worth 5.7% less while the ones we buy are 0.7% cheaper. Two bright people might see sharply different things in those numbers. To one, the shrinking economy is a healthy unwinding of past excess, for example, while to another it’s a dangerous downturn that calls for bold government action. But what if the numbers themselves are something we should be debating? In the alarming view of a vocal few, America’s economic measures are misstated -- rigged, really.
We Now Have A Total Gangster Government Rep. Michele Bachmann (R-Minn.) speaking on the House floor: Now weve moved into the realm of gangster government. We have gangster government when the Federal Government has set up a new cartel and private businesses now have to go begging with their hand out to their localhopefully well politically connectedCongressman or their Senator so they can buy a peace offering for that local business. Is that the kind of country we are going to have in the future?
Wall St tumbles after G8 meeting WALL Street stocks tumbled today after the Group of Eight finance chiefs warned the global economic outlook remained uncertain, despite encouraging recovery signs. The Dow Jones Industrial Average dropped 135.06 points (1.53 per cent) to 8,664.20 in opening trades. The tech-rich Nasdaq fell 25.37 points (1.36 per cent) to 1,833.43 and the broad-market Standard & Poor's 500 index retreated 15.67 points (1.66 per cent) to 930.54. "This negative disposition is being attributed to reports that Russia made dollar-supportive comments and that G8 ministers discussed how they should prepare to unwind stimulus spending as the economic recovery begins to take root,'' said Patrick O'Hare of Briefing.com.
Awakening ahead on bond delusion Washington and London are engaged in the most shortsighted and destructive friendly fire assault on the future of their own government bonds and currencies in recorded history. It is all being done in a vain and hazardous bid to revive their faulted bubble-based economic models that crashed last autumn. As in any friendly fire incident, they aren't aiming to attack and destroy their own bonds and currencies, but rather they believe they are attacking what they see as the real the enemy, collapsed international confidence, with what they see as their most advanced weapon - colossal spending. But their weapon's guidance system has gone haywire and it now has their own bonds and currencies in the crosshairs.
Geithner says rebound will take time It will be an ‘exceptionally challenging’ time for businesses, he says U.S. Treasury Secretary Timothy Geithner said on Monday the financial system was beginning to thaw but any renewed pick-up in the economy would likely be slower than usual. The United States is experiencing its worst recession in more than a half century, one driven in part by a ravaging banking crisis that brought corporate and consumer lending to a near standstill.
Krugman: We're About To Make The Same Mistake We Made In 1937 Paul Krugman takes on the chorus of folks who are pointing to green shoots, wringing their hands over spending and inflation, and demanding that the stimulus be rolled back. Obama is not taking us down the road to hell, says Krugman. The economy's still in lousy shape. Unemployment is still rising. In a liquidity trap like this, growth of the monetary base does NOT lead to inflation (see Japan). Raising the reserve requirements on banks, as inflation-howler Arthur Laffer wants to do, is exactly the mistake that killed our recovery in 1937. And so on...
Ron Paul, Rahm Emanuel: 'Capitol Hunks' "Beauties" in the beastly machine of Washington power and politics. Because, as the nay-sayers are wont to say, Washington is the Hollywood for ugly people, there may be some dubious distinction in making the list of beauties in the beastly assessment that Politico has made of "the hunks" of Washington. How else to explain a list that includes Ron Paul, Republican Texas congressman and thorn in the side of his own party, Peter Orszag, director of the Office of Management and Budget, and Rahm Emanuel, White House chief of staff?
HR 1207 Must Become Law! Contacting your congressperson to ask them to cosponsor legislation you believe in does work. Oh, we are always told that members of Congress care about the views of the folks back home. But, being a libertarian, I am usually on the other side of every political decision that is made. I mean, I haven't voted for a presidential winner or even the runner up in that contest since 1988. It is lonely in the political wilderness. That is why this week was special. HR. 1207 Federal Reserve Transparency Act of 2009 would "amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States." In other words, the legislation would force the Fed for the first time in its 95 year history to come clean and submit to an audit similar to the ones carried out against other private banks.
Obama eyes tighter controls on banks, Wall Street resident Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America's troubled financial institutions, proposing the most ambitious revision since the Great Depression of the 1930s. The goal is to prevent a recurrence of the economic crisis that erupted in the United States and exploded last fall with devastating consequences still reverberating around the world.
A new role as 'risk regulator' could reshape Fed Obama's financial overhaul could reshape Fed; some worry about `supercop' role The Obama administration's plan to revamp regulation and prevent any more crashes like those that felled AIG and Lehman Brothers includes a bold new idea: Empower the Federal Reserve to oversee the biggest financial players whose failure could threaten other institutions and the economy. But some lawmakers and economists say making the Fed a "systemic risk regulator" would itself be a high-stakes risk that would distract from its core mission: reviving the economy.
Weisenthal Talks The $134.5 Billion Bond Seizure On Glenn Beck Surprise surprise. Fox News is the only "mainstream" US news outlet to be interested in the story of the $134.5 billion in (probably fake) bonds that were seized in Italy. Host Glenn Beck had us on to talk about the story, and they even got the first quote from the Treasury.
Where $5.5 Trillion Thinks the U.S. is Headed With about US$5.5-trillion in assets under management, the more than 80 institutions that attended UBS’s Annual Reserve Management Seminar of Sovereign Institutions are an influential bunch. The event constitutes the largest private gathering of central bank reserve managers, multilateral institutions and sovereign wealth funds held annually. UBS provided a glimpse of their views about market valuations, economic and policy outcomes, as well as near and long-term issues of concern. Its survey found that reserve managers don’t appear convinced about the ‘green shoots’ of recovery. For example, 83% don’t think the U.S. Federal Reserve will hike rates before the end of the year. However, more than half expect the ECB will cut rates again in 2009.
International Demand for U.S. Assets Slowed in April International purchases of American financial assets grew more slowly in April as China, Japan and Russia pared demand for Treasuries, underscoring the danger of U.S. reliance on foreigners to finance its fiscal deficit. Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington. International holdings of Treasuries increased a net $41.9 billion, compared with the $55.3 billion gain in March. Including bills, the holdings fell a net $2.6 billion.
Foreign demand for US financial assets falls Foreign demand for long-term US financial assets falls in April; China, Japan cut holdings Foreign demand for long-term U.S. financial assets fell in April as both China and Japan trimmed their holdings of Treasury securities. The Treasury Department said Monday that net purchases of stocks, notes and bonds obtained by foreigners fell to $11.2 billion in April, from $55.4 billion in March. China, the largest holder of U.S. Treasury securities, trimmed its holdings to $763.5 billion in April, from $767.9 billion in March. Japan, the second largest holder of Treasury securities, reduced its holdings to $685.9 billion, from $686.7 billion a month earlier.
Japan's Faith in Strong Dollar Policy Is Laughable Comments such as those made by Japanese Finance Minister Kaoru Yosano as reported by Blooomberg on the subject of the attractiveness of long-term U.S. debt make you wonder where the Pacific island nation might be 60 years from now, independence-wise, as they seem to have made little progress since the end of World War II.
Obama's Civilian Security Force Roughly half the people in this country think Obama is this great "reasonable guy." Well, HE'S NOT!! This is just one of the hair brained, fascist, socialist, police state nightmares he's pushing for his global control freak masters.
Lawrence Summers calls Barack Obama defender of free markets PRESIDENT Barack Obama's chief economist has defended White House economic policies against criticism that they amounted to "a kind of back-door socialism". In a speech to the Council on Foreign Relations in New York, National Economic Council director Lawrence Summers said Mr Obama's interventions "will go with, rather than against, the grain of the market system". Mr Summers's remarks come as mainstream critics of Mr Obama's use of government mechanisms to revamp big segments of the economy are increasingly finding their voice.
China accused of ‘predatory pricing’ tactics India’s small and medium enterprises have warned that they are suffering because of cheap imports from China. They are urging New Delhi to accelerate anti-dumping investigations and impose tougher safety and quality checks on Chinese products. The appeal for greater government protection came amid rising tensions between New Delhi and Beijing over trade, after a high-profile dispute over an Indian ban on Chinese made toys.
IMF Raises Forecast for U.S. Economy, Risk of Debt The International Monetary Fund, which has rescued economies from Pakistan to Iceland in the past year, raised its outlook for the U.S. and called for steps to reduce concern about rising public debt and inflation. The IMF forecasts the world’s largest economy will contract 2.5 percent this year before expanding 0.75 percent in 2010, according to a statement today after an annual staff analysis of the U.S. In the IMF’s World Economic Outlook report released in April, the U.S. was forecast to contract 2.8 percent this year before stalling in 2010.
IMF revises up U.S. forecast, uncertainty weighs The International Monetary Fund on Monday said a heavy dose of stimulus would ease the U.S. recession this year and lift growth marginally in 2010. The IMF said the U.S. dollar was only modestly above the level implied by medium-term fundamentals and its value would depend on foreign appetite for U.S. assets. In its annual consultation with the United States, the IMF said U.S. policy-makers were correct to keep stimulus flowing for now, but would need to develop a well-defined exit strategy and turn their attention to the threat of ballooning deficits once the worst of the crisis has passed.
Fight Foreclosure - Demand The Banks Produce The Note! The banks have sold and resold mortgages so many times a huge number of banks no longer actually have any legal claim to property they foreclose on. It's time we stop the banks from literally stealing property they have no right to take. They get away with it because most people have no idea the fraud that is being committed against them and because most people do not have any legal representation or due process of law.
Citi and IFC in global trade funding alliance Moves to unblock world trade flows still jammed by the credit crunch have been backed by Citigroup, which on Monday unveils a $1.25bn funding tie-up with the International Finance Corporation, the private sector arm of the World Bank. Citi and the IFC are launching the partnership as part of a $50bn global trade finance initiative announced by the World Bank in April. The tie-up – the second the IFC has entered into with a bank since April – marks a new willingness by banks to finance trade in emerging markets.
Fed’s Tarullo Says Smaller U.S. Banks Should Better Manage Risk Federal Reserve Governor Daniel Tarullo said smaller U.S. banks, while likely to be subject to fewer new rules than large financial firms will, should do a better job of managing risks on loans and other assets. “The financial crisis and ensuing recession have revealed deficiencies in risk management” at large and small banks, Tarullo said today in a speech to bankers in Chapel Hill, North Carolina. Shifts to higher loan-to-asset ratios and increased commercial real estate loans may “exacerbate the risks faced by community banks,” he said.
Rep. Issa Breaks Down Bank Of America/Merrill Lynch Merger Hearing With Ken Lewis
Capital One Unadjusted Charge Off Rate Hits Record 9.91% A number you won't hear much about on CNBC: Capital One's official annualized U.S. credit card net charge-off rate hit 9.41% for May, however as footnote (1) advises, the real charge-off rate was actually 9.91%, a record for the company. Companies will fudge anything and everything for even 30 days worth of green shoots - in the meantime Ken Lewis will upgrade the stock and issue 3 equity follow-ons while State Street orchestrates a short squeeze.
Stocks in the Black on Gusher of Cash Is the economy on the mend? But governments around the world are pumping money into the economy at a frenetic pace. Because businesses can't put trillions of new dollars to work in such a short time, the money is finding its way into financial markets. Some investors have begun speaking of a "bailout bubble" being created in certain markets, and about a "melt-up" in demand fueled by the growing supply of money. "All that money that was printed had to go somewhere," says Joachim Fels, co-head of global economics at Morgan Stanley. "It has been pushing up commodity prices and stock prices, starting in emerging markets and then pushing over into developed markets."
Oversight Republicans Question President Obama's Phony "Jobs Saved/Created" Claims
Playing for Growth in Corporate Bonds Will rising government-bond yields upset the slam-dunk trade of the year: investment-grade corporate bonds? After all, 10-year Treasury yields hit 4% this week, from just over 2% earlier this year. The risks have risen, but company debt still looks attractive. The relationship between corporate- and government-bond yields isn't straightforward. The drivers of corporate-bond performance tend to be default rates, economic growth and shocks to risk appetite. Since 1970, corporate-bond-yield spreads have actually tended to widen more often when government-bond yields fall than when they rise, according to Dresdner Kleinwort.
Is Obama Already A Lame Duck? Remember the days when Barack Obama was going to usher in a new era of hope and change in the nation’s capital? Ever wonder what happened to that plan? Felix Salmon points out that despite Obama’s party running both houses of Congress, the president seems to be scaling back his agenda to please lawmakers. Democrats have stymied ambitious climate legislation. They’ve had a strong hand in undermining any far-reaching attempts to remake the financial regulatory structure. They’ve been mucking about in the auto-bailouts. And even Obama’s healthcare proposals may be in the process of being pared back.
Obama: Health care a 'ticking time-bomb' President brings his overhaul plan to the American Medical Association President Barack Obama is urging doctors gathered in Chicago to support wider insurance coverage and targeted federal spending cuts — calling health care "an escalating burden on our families and businesses." Obama spoke at the American Medical Association's annual meeting in his hometown Monday, tellings attendees that a system overhaul cannot wait.
Obama policy gives and then takes away When President Barack Obama increased unemployment benefits as part of his economic stimulus, he also made some Americans ineligible for hundreds of dollars a month in food stamps. By Under the economic recovery plan, laid-off workers have seen a $25 weekly bump in their unemployment checks as part of a broad expansion of benefits for the poor. But the law did not raise the income cap for food stamp eligibility, so the extra money has pushed some people over the limit. Laid-off workers and state officials are only now realizing the quirk, a consequence of pushing a $787 billion, 400-page bill through Congress and into law in three weeks. And for people hurt by the change, there's no way around it.
The Incredible Bread Machine Film Released in 1975 by World Research, Inc. Includes an introduction by then-Secretary of the Treasury, William E. Simon, and interviews with professors Walter Heller (University of Minnesota) and Milton Friedman (University of Chicago). Moderated by Dr. Richard Rogge (Wabash College). The film also features a cameo appearance by Murray N. Rothbard. Written by Karl Keating, Susan Love Brown, Patrea Post and Stuart Smith.
Bill Clinton: U.S. no longer dominated by Christians and Jews Former President Bill Clinton has told an Arab-American audience of 1,000 people that the U.S. is no longer just a black-white country, nor a country that is dominated by Christians and a powerful Jewish minority In a speech to the group on Saturday, Clinton said that given the growing numbers of Muslims, Hindus and other religious groups here, Americans should be mindful of the nation's changing demographics, which led to the election of Barack Obama as president. Clinton said by 2050 the U.S. will no longer have a majority of people with European heritage and that in an interdependent world "this is a very positive thing."
A NEW RELIGION MASQUERADING AS CHRISTIANITY Recently the Barna Research Group released a study on the religious practices of liberals and Christians. According to the report: "The research…discovered that liberals are more likely than conservatives to develop their own set of religious beliefs rather than adopt those proposed by a church or other entity. A great er percentage of liberals also indicated they are very open to accepting different moral views than those they presently possess."[1] Liberal "Christians" abhor "fundamentalist" Christianity so they cast it aside and adopt their own set of religious beliefs and values. Times have changed, after all, so they feel it's incumbent upon them to bring Christianity out of the Dark Ages into our postmodern world. Christianity must shed its traditional, orthodox beliefs to blend in with the popular culture. Their motto is, "If you destroy orthodoxy, they will come."
Conservatives: Four in 10 Americans Republicans may be in decline, the party out of power and apparently leaderless, but politicians still must contend with a formidable conservative base of voters that straddles party lines. Conservatives, polling finds, still represent the biggest bloc. So far this year, four in 10 Americans surveyed by the Gallup Poll call their political views conservative. Moderates account for 35 percent. And liberals log in at just 21 percent. "This represents a slight increase for conservatism in the U.S. since 2008, returning it to a level last seen in 2004,'' Gallup notes, with the liberal measure "in line with findings throughout this decade'' but "up from the 1990s.''
How The Spooks Took Over the News . . . . For the first time in human history, there is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it. The sheer ease with which this machinery has been able to do its work reflects a creeping structural weakness which now afflicts the production of our news. I've spent the last two years researching a book about falsehood, distortion and propaganda in the global media. The "Zarqawi letter" which made it on to the front page of The New York Times in February 2004 was one of a sequence of highly suspect documents which were said to have been written either by or to Zarqawi and which were fed into news media.
REPUBLIC DUMMY! I would like to address the kids of America, this country is not a Democracy. And if it was, we would be in utter chaos! You adults are lying to me and the other children of the world. You keep saying right in our face that America is a Democracy. Not only is that insulting, it is also ignorant. If you believe that America is a Democracy, than let me clarify the difference between Democtacy and Republic:
Democracy: Society where there is total rule of the majority of people. Every decision is made Democratically, so there is no real code of laws.
Republic: Society that is ruled by a code of laws. With a code of laws, the citizens of such society live in order and all is at peace.
If America was a Democracy, there would be no need for the Constitution (The greatest document ever written.) Or any other holy document our founders wrote. Why have a code of laws? All we would have is the majority of people making all of our decisions. The minority would be defenseless.
White House Tries to Strong Arm Progressive Dems We Can't Let That Happen The White House wants progressive House Democrats to abandon their constituents and their principles and vote for the War/IMF supplemental. Here's the lesson I want Rahm Emmanuel and Timothy Geithner to learn. To paraphrase another President from Illinois: you can piss on all of the progressive Democrats some of the time, and some of the progressive Democrats all of the time, but you cannot piss on all of the progressive Democrats, all of the time. What makes the present situation particularly outrageous is this: the White House and the House leadership now want progressive Democrats in the House to abandon their constituents, their commitments, and their principles and vote for the War/IMF supplemental. But when progressive Democrats tried to have input into the process earlier, they were locked out by the leadership, on orders from the White House and Treasury.
One Billion Stimulus Dollars to Save California’s Universities Tax cutting Republicans will not trumpet this, and tax-them-ever-more Democrats won't admit this, but over a billion dollars of President Obama's stimulus money is finding a happy home in California's universities. The scandal is not Governor Schwarzenegger's draconian cuts; it's that California's universities' unfettered growth grows unchecked for yet another season.
Boeing shut out of orders race at Paris Air Show No orders for Boeing, damp skies at Paris Air Show clouded by recession, Flight 447 crash Boeing didn't score a single jet order and its competitor Airbus didn't fare that much better on Monday's opening day of the Paris Air Show, where the mood among the world's aviation industry leaders was as damp as the weather. Worries about the unexplained crash of Air France Flight 447 hung in the air as airlines and planemakers gathered at the 100th anniversary of the world's first and largest air show. Pouring rain at the Le Bourget air field, combined with plunging revenue, layoffs and unprecedented losses in the industry, set the stage for a modest gathering.
The Hummer: America's Favorite Wasteful Toy Has Moved to the Land of Mao China now owns one of the West's most decadent consumer products. If you want to be seen as a flag-flying, macho American, you've got to have the right ride -- and nothing says swaggering hedonism and outta-my-way arrogance quite like a Hummer. Yes, it's a high-dollar, gas-guzzling symbol of excess, but hey, that's the point! As the founder of a Hummer support group once snarled, "Those who deface a Hummer in words or deed deface the American flag and what it stands for."
Notice-of-Trustee Sales are up 100% from Feb to May and subsequent foreclosures are up 75% from March to May.
CA foreclosure activity outpaces total house sales by 100% - infinite supply
In early April I was digging around my default and foreclosure database reviewing servicer and originator specific foreclosure numbers and noticed that a couple of the nation’s leading servicers were acting funny. At that point, most servicers had been ratcheting up Notice-of-Defaults for three months while scaling back sharply on filing new Notice-of-Trustee Sales. Subsequent foreclosures had been bouncing off of year and a half lows since October. Based upon the evidence from the two previously mentioned large-bank servicers, I then made the call about a wave of foreclosures about to hit.
False alarm calls increase with foreclosed homes SURPRISE, AZ -- Surprise and El Mirage firefighters have something in common, other than being neighbors in the West Valley. Firefighters from both departments are finding themselves on more and more false smoke alarm calls, and most are in foreclosed homes. "Neighbors can hear the alarm so they call us, but when we get up to the home, it's vacant, locked up and we're unable to access them," said Kevin Pool, assistant chief with the Surprise Fire Department. Pool said unless firefighters see smoke, they can't break into the home and turn it off. Instead they have to find the owner first to get permission. That's where the man hours come in. "We were handing the calls to our fire investigators to see if we could chase down the property owner, or realty company," said Pool. "But that became almost impossible with all the out of state bank-owned properties."
Auto Suppliers Attempt Reinvention The auto-industry meltdown is forcing a transformation among automotive suppliers, which are slowly diversifying into more-promising markets such as medical devices and green energy. The shift to nonautomotive products is under way at Abbott Workholding Products Inc. The Manhattan, Kan., company, whose industrial tools are used by the auto industry, now makes tools used to craft artificial knees and bone reinforcements. Elsewhere, Delphi Corp. is considering adapting its electric-car batteries for use in residential energy systems. "If you're really tied to auto, you're sweating bullets," says Abbott Chief Executive Carl Reed. "Those are the guys desperately trying to find something else."
Only GM Dealers That Donated To Republicans Were Shut Down! Congressman Ted Poe
Auto loan delinquencies jump in 1st quarter Rising figure shows consumers continue to be stressed by recession Those "green shoots" of economic rebound don't have very deep roots yet. While some economic indicators are pointing to better days ahead, data show consumers continued to struggle to make loan payments in the first quarter. The latest evidence showed in the rate of auto loan payments that were 60 days or more late, which skyrocketed nearly 28 percent in the first three months of the year, compared with the same period in 2008.
GM's deal erased many average Americans' savings When people think of "bondholders," they imagine tycoons. J.P. Morgan. Warren Buffett. Even the fictional Gordon Gekko of "Wall Street" fame. In fact, tens of thousands of the bondholders of General Motors Corp. are not rich at all — and never were, even before the value of their bonds collapsed in the months leading up to the giant automaker's bankruptcy filing. Plenty of GM's bondholders are Wall Street types. Most of the company's $27 billion in private debt is held by investment firms. But many of those firms are actually managing the money of individual investors. And fully 20 percent of the bonds are owned personally by roughly 100,000 mom-and-pop investors across the country, according to Main Street Bondholders, a group organized to lobby on their behalf.
It's official - cheap oil era is over Every summer, the Energy Information Administration of the US Department of Energy issues its International Energy Outlook (IEO), a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine communist party functions in the party journal Pravda once provided America's Kremlin watchers with insights into changes in the Soviet Union's top leadership circle.
Russian Costa del Sol gangsters inject hostages with 'KGB virus' Russian crime gangs on the Costa del Sol are injecting kidnap victims with what they claim is an experimental KGB virus to terrify them into paying ransoms. In the latest case, four Russians told their victim that he would die within 24 hours if he did not pay them €12,000 (£10,000). But the businessman called their bluff and alerted the police, who arrested the gang. The kidnappers had seized the Russian businessman in the middle of a street last week in Estepona, a Spanish resort popular with British tourists and expatriates. They put a hood over his head and bundled him into a waiting car. After being held for two days, during which he was subjected to threats, beatings and electric shocks, he was injected with a substance which the gang claimed was an experimental virus developed by the KGB, the former Russian security service.
Russia Seeks Bigger Afghan Role Before BRIC Summit President Dmitry Medvedev will seek to increase Russia’s role in resolving the conflict in Afghanistan at a regional security summit that may also include talks with reelected Iranian leader Mahmoud Ahmadinejad. Russia’s contribution may include “giving Afghanistan practical assistance in restoring its economy and expanding the practice of regular political consultations,” Sergei Prikhodko, an aide to Medvedev, told reporters in Moscow yesterday.
Doubts over US-China-Japan talks SHANGHAI - Senior officials from China, Japan and the United States are reportedly planning to hold their first-ever trilateral policy dialogue in Washington next month. But doubts over whether the talks will be able to address pressing security matters in Northeast Asia have already raised fears it will be little more than a talking shop. The three countries have well-established bilateral channels. China has held seven rounds of Strategic Economic Dialogue with America since 2005, and the Sino-Japan Economic Dialogue started in 2007. Japan and the US have the "2+2" dialogue that is attended by their foreign and defense ministers.
Netanyahu defies Obama with harsh conditions for Palestinian 'entity' Binyamin Netanyahu threw down the gauntlet to the US last night, grudgingly agreeing to a limited Palestinian state that would be demilitarised and not in control of its airspace or borders. The hawkish Prime Minister insisted that Israel would never give up a united Jerusalem as its capital, and said that established Jewish settlements in the West Bank would continue to expand — despite explicit objections from Washington. In a keynote speech that referred to a Palestinian “entity” far more frequently than an actual state, Mr Netanyahu tried to advance elements of his economic peace plan — whereby the Palestinians would get increased investment but only limited sovereignty — while still conceding to US insistence on the creation of an independent Palestinian country.
Netanyahu bows on Palestinian state Benjamin Netanyahu, Israel’s prime minister, on Sunday gave conditional backing to the goal of creating an independent Palestinian state, but insisted such an entity would have to be subject to tough limitations on its sovereignty. A Palestinian state, he said, would have to be demilitarised and barred from acquiring weapons and signing treaties with nations hostile to Israel. Mr Netanyahu also insisted that Jerusalem would remain the “united” capital of Israel, and rejected Palestinian claims to occupied Arab East Jerusalem, which they see as the capital of their future state.
Khamenei orders election inquiry, but a "coup" is what everyone is talking aboutDespite an Interior Ministry ban, tens of thousands of Mousavi supporters take to the streets of Tehran. Khamenei’s order comes as a surprise because he was the one who announced Ahmadinejad’s victory calling it a “divine blessing.” According to Rooz, the Interior Ministry had Mousavi as winner before action by the revolutionary guards stop everything. Tehran (AsiaNews/Agencies) – Iran’s Supreme Leader, Grand Ayatollah Khamenei, has ordered an investigation into allegations that last Friday’s elections were tainted by fraud. The decision was made public today after Mir-Hossein Mousavi, the candidate who lost to outgoing President Mahmoud Ahmadinejad, filed an official complaint.
The meaning of the Tehran spring It is 1979 in Tehran all over again. From Saturday to Sunday, the deafening sound deep in the night across Tehran's rooftops was a roaring, ubiquitous "Allah-u Akbar" (God is great). Then, in 1979, to hail the Islamic revolution; now, in 2009, to signify what appears to be the hijacking of the Islamic revolution. Then, the revolution was not televised; it was via (Ruhollah Khomeini) radio. Now, it is being broadcast all across the world. Let's cut to the chase: what Iranian presidential candidate Mir Hossein Mousavi qualified as "this dangerous charade" and Supreme Leader Ayatollah Ali Khamenei "the sweetness of the election", or better yet, a "divine assessment", has all the non-divine markings of intervention by the Iranian Republican Guards Corps (IRGC). This follows President Mahmud Ahmadinejad officially gaining 64% of the vote in defeating Mousavi in what in the days before Friday's vote had widely been called as a very close race.
Shots fired at huge election protest in Tehran Militia said to kill at least one; spiritual leader orders inquiry into polls TEHRAN, Iran - Shots were fired Monday at a rally by pro-reform presidential candidate Mir Hossein Mousavi, apparently by pro-government militia. An Associated Press photographer saw one person shot dead and several others who appeared to be seriously wounded in Tehran's Azadi Square. The shooting came from a compound for volunteer militia linked to Iran's powerful Revolutionary Guard. "There has been sporadic shooting out there ... I can see people running here," added a reporter of Iran's English-language Press TV.
Iran can no longer suppress its youth YouTube, Facebook and other websites have brought down a virtual wall between Iran and the West, writes Leyla Ferani. Earlier this year I spent a month living in Tehran. I’m a 21 year-old British-Iranian from London, and it was my first time back to the Islamic Republic since my twelfth birthday. By day, I dutifully donned a shawl and an overcoat, in public playing the part – like all Iranian girls my age – of the respectful and obedient woman. But at night, and in private, the shawls were off. The same girls – with their brothers and cousins – joined me in underground raves, fuelled by smuggled alcohol and copious amounts of cannabis. Among the city’s youth, the elections hardly entered conversation. When I asked Mazyiar, a twenty-six year-old, if he would vote, he shrugged, saying, “All the candidates are approved by the Ayatollah, what’s the point?”
Hundreds of thousands defy regime IRAN'S former reformist president Mohammad Khatami was set last night to join opposition leader Mir Hossein Mousavi at a banned rally in Tehran to protest the re-election of his successor Mahmoud Ahmadinejad. Hundreds of thousands of Mousavi supporters were streaming towards the capital's huge Azadi (Freedom) Square, in the largest display of opposition unity since Friday's elections ended with the former prime minister claiming widespread fraud. Appearing in public for the first time since the disputed vote triggered the worst unrest in a decade, Mr Mousavi, with fellow presidential candidate Mehdi Karroubi, stood on the roof of a car. Addressing the crowds through a loudhailer, the 67-year-old moderate who lost by a suspiciously wide margin to the hardline Mr Ahmadinejad, said he was ready to take part in a new election. "The vote of the people is more important than Mousavi or any other person," he said.
Ahmadi-Nejad defiant after election Mahmoud Ahmadi-Nejad said on Sunday that his declared re-election as president of Iran was a “blow to the oppressive system ruling the world” after a weekend in which thousands of protesters clashed with police and rivals demanded a re-run. Western leaders expressed dismay at the disputed results that awarded a landslide victory to the firebrand incumbent, with Joe Biden, the US vice-president, saying there was “real doubt” about them.
Pyongyang sends a radioactive riposte The North Korean riposte to the fresh set of sanctions imposed by the United Nations Security Council confirmed, among other things, what the George W Bush administration said for years. Yes, North Korea has a program for producing highly enriched uranium for nuclear warheads. The fact that North Korea has reserved its most sensational revelations and inflammatory rhetoric for Bush's successor, President Barack Obama, deepens the sense of confrontation. American liberals, accustomed to rising in wrath against Bush, are quiescent while waiting to see how Obama deals with the escalating threat to the peace and stability of Northeast Asia.
North Korea pre-emptive strikes on “key sites” in United States North Korea could have pre-emptive strikes on “key facilities of the United States in the event of any” provocation “by the United States. The statement was made by Vice-Minister of the People’s Armed forces of the DPRK Pak Jae Kyong, speaking at a major rally in central Pyongyang. The event was organized to protest against last week at the UN Security Council resolution condemning the second North Korean nuclear test. The document contains, among other things, calls upon all States to inspect ships entering the DPRK and made of it, to determine the presence on board of prohibited weapons and nuclear materials.
pt 1/3 Marc Faber Interview King World News 06 June
pt 2/3 Marc Faber Interview King World News 06 June 2009
pt 3/3 Marc Faber Interview King World News 06 June 2009
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VIDEO CONTEST - June 28, 2009
In a short, creative video, show us how you're changing your world for a chance to win $10,000. Other prizes. Three finalists will receive a trip for two to the Wanderlust Festival in Lake Tahoe, California, where one finalist will be announced as the Grand Prize Winner. Sponsored by Target and Converse.
Economic vision sought in 'Davos in Detroit' A US summit opening Monday aims to "define America's future in the global economy" in a gathering of business and economic leaders billed as "Davos in Detroit." Organizers of the three-day Michigan gathering argue that the world's biggest economy needs a new vision to maintain leadership and competitiveness, and will seek a consensus among leaders in the corporate, academic, labor and political sectors. "There have been other conferences and summits but on US soil there has never been anything like this before on the most important subjects on the economy," said Matt Friedman, spokesman for the Detroit Economic Club, which convened the event.
Gold is Still Money . . . . Have you ever traveled abroad and taken a look at the local currency and wondered how the citizens of that country could take seriously what looks like “Monopoly money?” I’ve got news for you: You’re using the same stuff. Monopoly money is the money over which some government has a monopoly. It is the currency of the realm only because the state makes it illegal to use any other type. Promissory notes issued by a state and declared the only legal tender are always doomed to depreciate to worthlessness because of the natural incentives and forces associated with governments. A state cannot resist a method of confiscating assets, particularly one that is hidden from the view of most voters and subjects. By extension, it is unreasonable to advocate a standard for such notes, which is simply a state’s promise that its currency will always be redeemable in a specific amount of something valuable, such as gold.
The paper gold marketer is afraid to look in the vault The Gold Report newsletter today interviewed Sprott Asset Management's chief investment strategist, John Embry, who remarked that he expects gold to reach $1,500 by the end of the year as hyperinflation begins. But amid the consternation about the gold that may be missing from the Royal Canadian Mint, the interview may be most worthwhile for Embry's reminder about the fundamentally dishonest structure of what passes for the international gold market. "If you look at the short positions that the commercials, that the bullion banks -- which are the agents of the U.S. government -- are running, it's a complete fraud," Embry says. "Because they couldn't possibly deliver on their paper promises if they were called by the people on the other side of the trade. The gold isn't there to deliver."
What Is Your Gold Standard
Gold, Silver, Economy + More (#4) The big question is how long can the dollar last as the world’s reserve currency? Needless to say, that is not an easy question to answer. We recently called the top on the dollar at 89.50 on the USDX. The USDX is six currencies versus the dollar on a weighted basis. More than a year ago the dollar hit a low on the USDX at 71.18. A phenomenal rally ensued from that level expedited by de-leveraging and the closing out positions within the carry trade. A good example of the carry trade was when a bank in NYC borrowed yen. At ?% interest, sold the yen for dollars and bought dollar denominated securities.
Will the Gold Price fall to $850 when consumer confidence really rises? Here we are with the gold price pulling back towards $900 after threatening $1,000. It hit $985 then pulled back into the $930’s. Traders did not want to be in the lead in taking it over $1,000. Now it needs time to re-group and build up the strength and the reason why it should go through $1,000. Long-term investors have been on the sidelines since gold ran through the $900 level and COMEX speculators have jumped in ‘boots an’ all’ taking it up on a Technical basis to just below $1,000. They have now joined the fray buying nearly 225 tonnes in the last four weeks. Where now? Many Analysts see the gold price backing off to $850 or less then running up to $1,200. This, if correct, would give a healthy trading range of over 50%. This is a range that even long-term investors should contemplate taking if it is going to happen? China's New Commodity Hoard In April, China announced that it purchased 454 metric tons of gold over the past six years. However, gold isn’t the only metal the Chinese have been buying. According to Michael Gaylard of Freight Investor Services, “They are building up some stockpiles right across the commodity spectrum, from base metals to coal.” China is taking advantage of the low commodity prices to scoop up bargains. The nation has been buying so much copper that the market slipped into a deficit in February, drawing down stockpiles, as average mine utilization fell 9%. Iron ore imports were up 33% in April, to a record 57 million metric tons.
Commodity Trends: Momentum loss on dollar gains Strengthening of U S dollar led to pressure on oil and other commodities while Dow entered positive territory for the first time since January, Japanese Nikkei Index rose above 10,000 nark for the first time since October on hopes of economic recovery. Demand for Euro fell sharply following 21.6% plunge in euro zone industrial production.
2009 Silver Eagle Bullion Coins Pass 12 Million in Sales 2009 American Eagle Silver Bullion Coin sales blazed passed the 12 million barrier this week and approached 1 million sold during the first eleven days in June, the latest US Mint sales figures reveal. The Mint’s authorized dealers purchased 377,000 silver eagles during the first eight days in June (ending Monday). By Wednesday the tally more than doubled to 777,000 sold. The figure then jumped to 930,000 on Thursday, bringing the year-to-date total to a record setting pace of 12,509,500.
BRIC summit watched for signals on dollar When the leaders of Brazil, Russia, India and China gather for their first full-fledged summit, they will be closely watched for signs of policy shifts that could affect the global role and strength of the U.S. dollar. During the summit Tuesday in the Ural Mountains city of Yekaterinburg, Russian President Dmitry Medvedev is likely to reprise Russia's call for a new global reserve currency to augment the dollar. The Russian proposal reflects both the Kremlin's push for greater international clout and a concern shared by other so-called BRIC members that soaring U.S. budget deficits could spur inflation and weaken the dollar.
Pick a Number...Any Number: Part I WANT TO KNOW WHERE the price of gold, oil, the S&P, Euro or overseas stock markets are heading? Pick a number, any number. Go on, choose whatever number you like! Because that's how policy-makers and their advisors would like to set the common denominator of asset prices – the value of money. "When I calibrate my favorite version of the Taylor rule using the most recent data," says Greg Mankiw, professor of economics at Harvard and chairman of Dubya Bush's "I get a target for the nominal federal funds rate of about negative 1%."
Ron Paul Support Surges For His Audit the Fed Bill The effort to increase the transparency of the Federal Reserve's operations has picked up surprising momentum over the last month, with more and more rank-and-file members of Congress steadily signing on to a bill introduced in February by Rep. Ron Paul (R-Texas) to expand the authority of the Government Accountability Office to audit the Fed. The bill has surged past 200 cosponsors and is just five short of the 218 needed for passage. On Tuesday, Rep. John Boehner of Ohio, the Republican Leader, signed on. Fifty-one Democrats have joined 156 Republicans so far to back HR 1207. A similar bill sponsored by Rep. Dennis Kucinich (D-Ohio) also has momentum and is on pace for a congressional hearing soon in the House Oversight and Government Reform Committee, where Kucinich is a subcommittee chairman.
Ron Paul "HR1207 Gains Majority Co-Sponsorship, Support Senate Version S604"
Bankers Are Scared. Are You? "What, me worry?" From its beginning in 1954, the official representative of Mad Magazine has been Alfred E. Newman. He is a dim-witted looking fellow, always smiling. His slogan is, "What, me worry?" Half a century ago, I took an image of Alfred and turned it into a campaign poster. I was running for student body president at my high school. I pasted a poster with my name and his picture on it on every locker on campus. I did it twice. I won. Today, the person I defeated is a professor of business. He was one of the 535 economists who issued a public warning about the anti-growth effects of Obama's tax hikes. He is worried. So am I. He and I are still in the labor force. We see what is coming for those who aren't. "What, me worry?" You bet!
Fed's future role at issue on Hill Congress struggles with complex plan for reordering financial regulation. A key hangup is how much new power to give the Federal Reserve. A major Obama administration plan to deal with financial companies too big to fail is becoming too big to zoom through Congress. Top White House and Treasury Department officials have been working behind the scenes for weeks to push lawmakers to start tackling legislation aimed at rescuing giant financial companies on the brink of failure -- like American International Group.
Fed to Keep Lid on Bond Buys - $$ Big Boost in Purchases Is Unlikely; Divisions Emerge Over Handling Risk of Inflation Federal Reserve officials are unlikely to significantly boost purchases of U.S. Treasurys and mortgage-backed securities when they meet in late June, but could make other adjustments in the face of rising bond yields and fresh signs of an improving economy. Fed officials have become more confident recently that they have stabilized the economy and set the stage for recovery. But divisions are brewing within the Fed over whether it should do more to speed the healing, pause, or start pulling back to avoid an outbreak of inflation.
Will Bond Holder Revolt Prompt New Stimulus Plan? Liberals and their allies in the media spend a lot of time and energy these days trying to convince Americans that all is right with the world despite a panic that has now turned over in to a recession and threatens to morph into a depression. All this under their direction of course but do not you dare bring up how their harebrained schemes to put people in houses they could not afford or give them loans they could not pay back led to the credit panic that started all this.
Debt, Schmedt: The Only People Borrowing These Days Are The Feds Yes, the Federal government is leveraging up like a 2007-era homeowner by borrowing more than 10% of GDP a year. But the rest of us are actually borrowing so little these days that the rate of total non-financial borrowing for the country is declining. What does that mean? It means that the credit creation of the economy as a whole is not spiraling out of control. This, in turn, should make it less likely that we'll get immediately slammed with hyper-inflation and/or collectively collapse into bankruptcy.
Flying Blind: Risk Management, Bank Debt And The Next Financial Disaster The news that ten banks were given permission to emerge from under TARP last week, and that several banks may actually do so as early as last week, has many breathing a sigh of relief that the banking crisis is over. Unfortunately, the very measures taken to end our latest crisis all but guarantee that we’ll shortly witness another round of financial catastrophe. This isn’t the kind of news people want to hear these days. When I’m chatting with friends at a saloon or a dinner party, people ask me what fixed the financial sector. They aren’t very interested in hearing that the sector isn’t actually fixed, much less that the apparent fix is actually making things worse.
No escape: As you file your taxes this month, you can take solace in knowing that the ritual dates back almost 5,000 years, to a time when Egyptians started paying taxes in goods and labor.
Collecting taxes became a lot easier after Egypt and Mesopotamia began using silver and gold bars as currency, around 2500 B.C.
Unfortunately, the invention of money also made theft a lot easier. Consequently, temples became the first banks because they were sturdy, frequently visited, and intimidating to would-be thieves
‘Recovery’ Helps Lies Gain Traction Bailing out the economy and the banking system has been such a brazenly corrupt, mendacious and, ultimately, doomed enterprise that one could almost forget for a moment how very clever the perpetrators are. If we needed proof that these guys are the slickest behind-the-scenes spin doctors around, consider the following two headlines that ran on successive days atop the Wall Street Journal’s front page. “Rate Rise Clouds Recovery” was the grim news that greeted us last Thursday, on day one. The article described how, despite the Federal Reserve’s explicit strategy of buying as much Treasury paper as it takes to hold market rates down, particularly in the mortgage sector, rates are rising anyway, and steeply.
Wall Street’s Toxic Message When the current crisis is over, the reputation of American- style capitalism will have taken a beating—not least because of the gap between what Washington practices and what it preaches. Disillusioned developing nations may well turn their backs on the free market, warns Nobel laureate Joseph E. Stiglitz, posing new threats to global stability and U.S. security. Every crisis comes to an end—and, bleak as things seem now, the current economic crisis too shall pass. But no crisis, especially one of this severity, recedes without leaving a legacy.
Joseph Stiglitz on America's Economic Meltdown
Bernanke's Next Parlor Trick Federal Reserve boss Ben Bernanke is getting ready to pull another rabbit out of his hat and he's hoping no one figures out what he's up to. Here's the scoop; the Fed chief needs to "borrow up to $3.25 trillion in the fiscal year ending Sept. 30" (Bloomberg) without triggering a run on the dollar. But, how? If the stock market keeps surging, investors will turn their backs on low-yielding US Treasuries and move into riskier securities hoping for better returns. The only way to attract more buyers to US debt is by raising interest rates which will kill the "green shoots" of recovery and make it harder for people to buy homes and cars. It's a conundrum.
Details Set for Remake of Financial Regulations - $$ President Barack Obama is expected Wednesday to propose the most sweeping reorganization of financial-market supervision since the 1930s, a revamp that would touch almost every corner of banking from how mortgages are underwritten to the way exotic financial instruments are traded. At the center of the plan, which administration officials are referring to as a "white paper," is a move to remake powers of the Federal Reserve to oversee the biggest financial players, give the government the power to unwind and break up systemically important companies -- much like the Federal Deposit Insurance Corp. does with failed banks -- and create a new regulator for consumer-oriented financial products, according to people involved in the process.
The Next Challenge For The Economy, Personified The financial crisis appears to be over (the bailed-out banks will likely struggle for years, but this will be just general crappiness rather than life-threatening panic). The stock market is up nearly 40%. The Fed is beginning to talk about inflation again. The housing market is showing early signs of stabilizing. Consumer confidence is once again on the rise. So what's left? Figuring out how to employ the 5+ million Americans who have lost their jobs in the past two years, especially those who used to work in real-estate, automotive, and finance.
Being Too Big To Fail Is Okay After All? Government officials, regulators, and Congress told us what we already knew, that one of the biggest contributors to the financial crisis was that in the wild merger and acquisition binge of the 1990s some major financial firms had become “too big to fail”, too intertwined with each other to fail. They had to be bailed out or the collapse of one or two could collapse the entire financial system. Of course what they didn’t say is that they, government officials, regulators, and Congress, made most of it possible, when in 1999 they rescinded the Glass-Steagall Act of 1933.
Kudrin Says Russia Has Full Confidence in Dollar Russia has full confidence in the dollar and there are no immediate plans to switch to a new reserve currency, Finance Minister Alexei Kudrin said. “It’s too early to speak of an alternative” to the dollar, Kudrin said in Lecce, Italy, in a television interview today after meeting with finance chiefs from the Group of Eight nations. The fundamentals of the dollar are still in “good shape.” Russia’s central bank said on June 10 some reserves may be moved from U.S. Treasuries into International Monetary Fund debt, reiterating comments made last month by Kudrin. That drove Treasuries and the dollar lower. Kudrin said yesterday that Russia’s announcement on May 26 to buy $10 billion of IMF bonds did not represent “a significant change” in his country’s stance on the dollar.
More Credit Crisis to Come The financial crisis is not over. The mortgage bubble infected a number of areas beyond just subprime. The subprime crisis was the first to drop, like a marathon dancer that falls to the floor exhausted. But there are still other dancers on the floor ready to topple over too. . . . Subprime is only one slice of low-grade bologna. It sits at the bottom. Alt-A is the next riskiest slice of mortgages above subprime. Alt-A are mortgages to people who are better credit risks than subprime, but still not prime. Documentation is still spotty as far as verifying income, and loan to values are high. Plus, about a quarter of these mortgages went to nonowner-occupied homes — which were subject to even greater speculation. The scary thing is that this mortgage market is 50-100% bigger than subprime.
Fascialism: The New American System "If classical liberalism spells individualism, fascism spells government." ~ Benito Mussolini, Fascism: Doctrines and Institutions, p. 10 The two worst scourges of humanity in the twentieth century were socialism and fascism. Together, they wrecked much of the world economy because of their shared "fatal conceit" (F.A. Hayek’s term) that government central planners were superior to private property and free markets. Fascist and socialist governments (not that there’s much difference between them) murdered over 100 million of their own citizens, as the sociologist R.J. Rummel has documented (See his book, Death by Government), and instigated wars that caused the deaths of millions more. Incredibly, the two-party duopoly that has long ruled America has adopted both fascism and socialism as the defining characteristics of our economic system. Call it Fascialism. It is a recipe for national economic suicide.
Holding It Together What are we barreling toward?” asks Peggy Noonan in her latest book. “A difficult time, I think,” she says. Has this famous Washington speech-writer become a pessimist? Is she referring to economic hard times? No. She is referring to a future attack on the United States. She therefore writes: “We know we live in an age of weapons of broad and immediate destruction, that they can be deployed against civilian populations by any group with the will, money, and mad focus to do it.” Even more alarming, she writes, “I think a lot of people are carrying around in their heads, unarticulated and even, in some cases, unnoticed, a sense that the wheels may be coming off the trolley and the trolley off the tracks, that in some deep and fundamental way things have broken down and can’t be fixed anytime soon.”
Inflation Will Save Us! Inflation Will Save Us! (1933 Propaganda Film)
Lewis Takes Heat but Defends Merrill Deal - $$ Lawmakers Question BofA's CEO on Role of Federal Officials; Paulson, Bernanke Next Up? Lawmakers grilled Bank of America Corp. Chief Executive Kenneth Lewis on his decisions to seek cover from the Federal Reserve and not tell shareholders about losses at Merrill Lynch & Co. last December. But Mr. Lewis stood his ground before the House Committee on Oversight and Government Reform on Thursday, defending the decision to go ahead with the government-assisted Merrill takeover and keep the firm's ballooning losses secret. The CEO also said he didn't feel that federal officials acted improperly in the deal.
Minimum Wage Hike Coming At The Worst Time Possible Ah, this question. The minimum wage/employment question. It's always guaranteed to set off a firestorm of dueling economic studies, showing either that an increase has a terrible effect on unemployment (hitting youngsters and African Americans particularly hard) or it has no effect. Econ prof David Neumark decided to wade into the muck with a WSJ op-ed today, nothing that in July the Federal Minimum Wage will jump from $6.55 to $7.25, which he argues is particularly unfortunate timing. Indeed, if you accept basic economic orthodoxy, it doesn't make much sense to make labor more expensive at the same time as companies are weighing job cuts.
Cessna Aircraft plans 1,300 more layoffs, longer furloughs Cessna Aircraft Co., the nation's largest builder of corporate jets, has announced an additional 1,300 layoffs. The cuts mean the company will have slashed its work force in half since the recession began. The recession has hurt demand for corporate jets. Cessna said Friday the cutbacks will affect all the company's facilities.
Cessna to lay off 1,300 in latest round Posted on Fri, Jun. 12, 2009 WICHITA - Cessna Aircraft Co. will reduce its work force by another 1,300 people, the company told employees this morning. Including the cuts announced today, Cessna has cut staffing by 8,200 people since November. Layoff notices will be distributed to 800 employees, primarily hourly workers on the production lines, on June 19, Cessna spokesman Bob Stangarone said. The 60-day notices will be distributed before the start of a four-week furlough. The remaining notices to about 500 people will be issued no later than August 14, the company said.
Team Obama ready to roll out pep plan to lift sagging US spirit President Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America’s troubled financial institutions, proposing the most ambitious revision since the Great Depression. The goal is to prevent a recurrence of the economic crisis that erupted in the United States and exploded last fall with devastating consequences still reverberating around the world. Unlike the government’s temporary ownership stake in automakers and major financial companies, the regulatory changes set to be announced Wednesday are designed to be permanent. They could result in a major realignment of power and authority among government agencies that set the rules for banking, lending and investing and touch American lives through daily transactions, from credit cards to mortgages and mutual funds.
Bill Maher Is Hoping for a Little More Audacity The “Real Time” host has some harsh words for the president, who, he says, is caving to insurance companies, banks and polluters: “This is not getting the job done. And this is not what I voted for.”
Biden refuses to rule out new tax on health care benefits Vice President Joe Biden said Sunday that the Obama administration opposes taxing the medical benefits employers provide workers to pay for health care reform, but he refused to rule it out entirely. "We do not think that is the way to go; we think that is the wrong way to finance this legislation," Biden said on NBC's "Meet the Press" program. Pressed on whether President Barack Obama would veto a bill from Congress containing such a mechanism, Biden said Obama would consider the measure in total before making a decision. Obama has outlined a series of steps to lower current costs and raise taxes to pay for an overhaul of the health care system, including creation of a government-funded "public" option for the nation's 46 million uninsured. He will speak Monday to the American Medical Association, which questions how a public option can work.
Obama Confronts Critics on Health Care Overhaul President Barack Obama challenged Republican critics Thursday to offer alternative plans for overhauling U.S. health care, declaring he's "happy to steal people's ideas" but that doing nothing about out-of-reach costs and uninsured Americans is not an option. "What else do we say to all those families who spend more on health care than on housing or on food?" Obama said at a town hall-style meeting, surrounded by supportive citizens in the nation's heartland. "What do we tell those businesses that are choosing between closing their doors and letting their workers go?"
Doctors and the Cost of Care As the debate over health care reform unfolds, policy makers and the public need to focus more attention on doctors and the huge role they play in determining the cost of medical care — costs that are rising relentlessly. Doctors largely decide what medical or surgical treatments are needed, whether it will be delivered in a hospital, what tests will be performed, and what drugs will be prescribed or medical devices implanted.
Why Healthcare Is Killing America Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don't stop to understand just how large a portion of our society's money is dedicated to healthcare. For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt.
Ron Paul: "No Need For Tobacco Police, Attempt To Spread War On Drugs"
Disease of Rich Extends Its Pain to Middle Class Lonnie Matthews, a retired building maintenance engineer in Burlington, N.C., has something in common with King Henry VIII, Sir Isaac Newton and Benjamin Franklin. He has gout. Often called the “disease of kings” because of its association with the rich foods and copious alcohol once available only to aristocrats, gout is staging a middle-class comeback as American society grows older and heavier. The rising tide of gout — an extremely painful arthritis of the big toe and other joints — is leading the pharmaceutical industry to rediscover what it had considered a disease of the past. Companies are now racing to improve upon decades-old generic drugs that do not work well for everyone.
Property Rights Take a Hit “Crony capitalism” is a term often applied to foreign nations where government interference circumvents market forces. The practice is widely associated with tin-pot dictators and second-rate economies. In such a system, support for the ruling regime is the best and only path to economic success. Who you know supersedes what you know, and favoritism trumps the rule of law. Unfortunately, this week's events demonstrate that the phrase now more aptly describes our own country.
Durbin: US already paying 'hidden' health taxes A top Democratic lawmaker says Americans are already paying a "hidden tax" to provide health care for the uninsured. The Illinois Democrat who is his party's No. 2 official in the Senate, Sen. Dick Durbin, says that there is a $1,000 surcharge in health care premiums to cover people who receive treatment in emergency rooms. Durbin says President Barack Obama's plan to overhaul the health system would reduce premiums and add more people to health care rolls. That, he says, would have a net effect of lowering the costs.
Readying Americans for Dangerous, Mandatory Vaccinations At least three US federal laws should concern all Americans and suggest what may be coming - mandatory vaccinations for hyped, non-existant threats, like H1N1 (Swine Flu). Vaccines and drugs like Tamiflu endanger human health but are hugely profitable to drug company manufacturers. The Project BioShield Act of 2004 (S. 15) became law on July 21, 2004 "to provide protections and countermeasures against chemical, radiological, or nuclear agents that may be used in a terrorist attack against the United States by giving the National Institutes of Health contracting flexibility, infrastructure improvements, and expediting the scientific peer review process, and streamlining the Food and Drug Administration approval process of countermeasures."
Obama's Health care reform is very close to what Clinton proposed, it's just presented differently
1 Of 5 What To Expect With OBAMA'S Proposed "HEALTH CARE REFORM"
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3 Of 5 What To Expect With OBAMA'S "HEALTH CARE REFORM"
4 Of 5 What To Expect With OBAMA'S Proposed "HEALTH CARE REFORM"
5 Of 5 What To Expect With OBAMA'S Proposed "HEALTH CARE REFORM"
Saving America Isn't Going To Be Easy If you’re like me, you are tired of feeling helpless as the price on foreign oil skyrockets and our national legislators sit on their...uh...hands, in Washington, (The per-barrel price on crude was at the highest level, so far this year, at this writing.) D.C. and DO NOTHING but dream up more rules and regulations to push oil prices even higher and gasoline prices at the pumps higher still. Even here in my home state legislators are trying desperately to find ways of pushing the state’s per gallon taxes on gasoline higher or just maintain the current level of state taxes per gallon on a commodity they KNOW we must have to move our goods and services and yes, even ourselves. Many, if not most of us depend on gasoline to get us to and from our jobs so that the economy, such as it is, will remain, at least viable.
Showdown over auto dealer cuts Auto dealers say closing facilities will not save automakers much money, but GM and Chrysler say closures are crucial to survival. These are hard times for car dealers. Across the nation, General Motors and Chrysler dealerships are pulling down their big roadside signs and closing their doors. The companies say they have no choice but to cut the cord and save money. The dealers, who say they are being scapegoated for the epic problems at GM and Chrysler, are hopping mad. So are lawmakers.
"Fix California By Chopping It Into Three States" It's Big Government time. So the secessionists are seizing their moment.. . . . California? America’s broke, ill-governed and way-too-big nation-like state might be saved, truly saved, not by an emergency federal bailout, but by a merciful carve-up into a trio of republics that would rely on their own ingenuity in making their connections to the wider world. And while we’re at it, let’s make this project bi-national—economic logic suggests a natural multilingual combination between Greater San Diego and Mexico’s Northern Baja, and, to the Pacific north, between Seattle and Vancouver in a megaregion already dubbed “Cascadia” by economic cartographers.
The Obama Haters’ Silent Enablers WHEN a Fox News anchor, reacting to his own network’s surging e-mail traffic, warns urgently on-camera of a rise in hate-filled, “amped up” Americans who are “taking the extra step and getting the gun out,” maybe we should listen. He has better sources in that underground than most. The anchor was Shepard Smith, speaking after Wednesday’s mayhem at the United States Holocaust Memorial Museum in Washington. Unlike the bloviators at his network and elsewhere on cable, Smith is famous for his highly caffeinated news-reading, not any political agenda. But very occasionally — notably during Hurricane Katrina — he hits the Howard Beale mad-as-hell wall. Joining those at Fox who routinely disregard the network’s “We report, you decide” mantra, he both reported and decided, loudly.
U.S. Government Is After Your Pocket Knives, Second Amendment Group Warns Second Amendment supporters are warning Americans about what they call an “unwarranted knife grab by Customs agents.” On May 21, the Customs and Border Protection Agency proposed revoking earlier rulings that said “assisted-opening knives” – including pocket knives – are not switchblades. The proposed new rule would expand the definition of “switchblade” to include knives that are opened with one hand as well as old-fashioned slip-joint knives, even the type of folding knives that Boy Scouts typically carry. Under the proposed rule, most knives would be prohibited from entering the United States, critics warn.
NIAGARA COURTS RULING: Taser use to obtain DNA not unconstitutional A decision by Falls Police to use a Taser to obtain a DNA sample from a suspect in an armed robbery, shooting and kidnapping is not unconstitutional. Niagara County Court Judge Sara Sheldon Sperrazza reached that conclusion in a 16 page decision handed down Wednesday that refused to dismiss an indictment against Ryan Smith and denied his request to have DNA evidence that links him to two separate criminal cases thrown out.
Weak security enables credit card hacks Every time you swipe your credit card and wait for the transaction to be approved, sensitive data including your name and account number are ferried from store to bank through computer networks, each step a potential opening for hackers. And while you may take steps to protect yourself against identity theft, an Associated Press investigation has found the banks and other companies that handle your information are not being nearly as cautious as they could. [another great excuse for implanting a smart chip with ALL your information, so you can't leave home without it!
Calls for Brown to go nuclear in City battle with EU As Europe's leaders prepare to strip Britain of ultimate control over finance, insurance, and securities, defenders of the City have begun to talk darkly of the nuclear option – known in EU lore as the "Luxembourg Compromise". Britain cannot veto the massive shift in regulatory power to Brussels now under way. Internal market laws are decided by qualified majority voting (QMV), and London has few friends in this fight. What Gordon Brown can do at next week's EU summit it to play the Luxembourg card by invoking "vital national interest", if he is willing to risk a showdown with fellow leaders. This has no legal status. It is the political equivalent of a stamping bull, or a viper's rattle. It means back off, or we strike.
The crucifixion of Latvia It is hard to pinpoint the moment when Argentina's currency peg became untenable in 2001, triggering the biggest sovereign default of modern times. The denouement sequence is worth rehearsing since it offers a crude guide for those with euro pegs in Eastern Europe, and ultimately perhaps for Club Med inside EMU. The explosive power of this broad group dwarfs Argentina. Contrary to revisionist talk, Argentina was not a basket case. Its imbalances were no worse than those of the Baltics, Balkans, Spain, or Greece, and arguably better. It ran a trade surplus in 1999 and 2000 until dollar revaluation against Brazil and Europe crushed exports. The economy shrank 5pc in 2001, mild compared to Latvia's 20pc slump this year.
Israel must seek security through peace: Solana CAIRO (AFP) — EU foreign policy chief Javier Solana on Sunday called on Israel to seek security through peace while warning that future talks with the European Union would depend on "Israel's behaviour." "What's important is to work to convince Israel that its security will be better guaranteed with peace and I think that President Obama clearly explained this in his speech and when he met the Israeli prime minister is Washington," Solana told journalists in Cairo. US President Barack Obama has been seeking to restart the stalled peace process since taking office in January, with his envoy George Mitchell having just toured the region and reaffirmed US support for a two-state solution.
Solana eyes "big step" in Palestinian-Israeli negotiations CAIRO, June 14 (Xinhua) -- Visiting European Union (EU) foreign policy chief Javier Solana said on Sunday that the EU will work with the Egyptian leadership to come up with a common stance on solving the Palestinian-Israeli conflict under international sponsorship. "I hope that we can move a little step in the right direction and next time will be a big one," Solana said at a press conference after meeting with Egyptian President Hosni Mubarak and Foreign Minister Ahmed Abu Gheit. As for Israel, Solana called on the Jewish country to accept peace as a guarantee to its security. "What is important is that Israelis are to get convinced that their own security will be better guaranteed with peace," Solana said.
[when they start talking "peace & safety" and sign a peace treaty, know that it is time to look out! . . . or look up.]
Israeli Premier Backs State for Palestinians, With Caveats JERUSALEM — The prime minister of Israel, Benjamin Netanyahu, on Sunday endorsed for the first time the principle of a Palestinian state alongside Israel, but on condition that the state was demilitarized and that the Palestinians recognized Israel as the state of the Jewish people. In a much-anticipated speech meant in part as an answer to President Obama’s address in Cairo on June 4, Mr. Netanyahu reversed his longstanding opposition to Palestinian statehood, a move seen as a concession to American pressure.
Carter warns US and Israel on collision course Israel is headed for a clash with main ally the United States over the issue of Jewish settlements, former US president Jimmy Carter said in an interview on Sunday. Asked by the liberal Haaretz newspaper whether the Jewish state was looking at a "head-on collision" with the United States if it doesn't comply with Washington's demands, Carter said "Yes." The former president, who brokered the historic peace treaty between Israel and Egypt in 1979, said Israeli settlements in the occupied West Bank were the biggest hurdle in the hobbled Middle East peace process, saying they were "illegal and (an) obstacle to peace."
Islamic Jihad wants Arab peace initiative's withdrawal Palestinian Islamic Jihad movement on Sunday called on Arab states to withdraw the Arab Peace Initiative in response to Israeli Prime Minister Benjamin Netanyahu's speech. "The misleading Netanyahu speech should motivate the Arab regimes to cancel their initiative and stop being subjected to compromise," said the less influential group in a press release. "We can not accept occupation being present on any span of Palestinian land," the statement added. At 1700 GMT, Netanyahu started to deliver a speech at Bar Ilan University in Tel Aviv, in which he accepted a demilitarized Palestinian statehood only when the Palestinians recognize Israel as the national homeland of Jews.
China, Egypt pledge stronger ties on anti-graft chief's Cairo visit CAIRO, June 14 (Xinhua) -- He Guoqiang, China's anti-graft chief, on Sunday met here with Egyptian President Hosni Mubarak, pledging to seek stronger bilateral ties. He, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, first extended the cordial greetings of Chinese President Hu Jintao to 81-year-old Mubarak. He hailed Mubarak as "a respected old and good friend" of the Chinese people for he made great contribution to the development of bilateral ties.
Biden Questions Vote but Sticks to Policy on Iran Vice President Joseph R. Biden Jr. cast doubt Sunday on the legitimacy of the re-election of President Mahmoud Ahmadinejad of Iran, but reaffirmed the administration’s intent to try to engage the Iranian government. “It sure looks like the way they’re suppressing speech, the way they’re suppressing crowds, the way in which people are being treated, that there’s some real doubt” about the result, Mr. Biden said. But the vice president made clear that despite the uncertainty surrounding Mr. Ahmadinejad’s contested victory, the United States would not abandon its Iran policy.
Ahmadinejad Boosted by Vote as Iran Faces ‘Return to the Past’ Iranian President Mahmoud Ahmadinejad vowed defiance against external “threats” as he defended his disputed re-election. He may have vanquished for now the internal threats to his authority. The president’s victory and its endorsement by Iran’s Supreme Leader, Ayatollah Ali Khamenei, sidelines those in the Islamic republic’s theocracy who favor easing tensions with the West, according to analysts. While his main opponent, former Prime Minister Mir Houssein Mousavi, says the vote was rigged and demands its annulment, his complaints and protests by his supporters are unlikely to shake the regime, said the analysts.
Unrest in Iran Deepens as Leading Critics Are Detained Violence and acrimony over Iran’s disputed election intensified on Sunday, with word that the authorities had detained more than 100 prominent opposition members, riots erupting in Tehran and other cities, and the incumbent hinting that his top challenger could face punishment for calling the result a sham. Two of the three opposition candidates and a clerical group issued fresh statements requesting an annulment of the election on Friday, which gave a lopsided victory to the incumbent, Mahmoud Ahmadinejad, a conservative who has become a polarizing figure at home and abroad. They did so despite a decree from Iran’s supreme leader, Ayatollah Ali Khamenei, that the outcome was fair.
A bigger struggle lies ahead If there was ever any doubt that the Islamic Republic offers a genuine form of democracy, the 2009 Iranian presidential election campaign has surely put the record straight. Iran is gripped by election fervor and Friday's poll offered a genuine choice. The outcome will have profound consequences for the country, the region and beyond. Predicting the results of Iranian elections is notoriously difficult. Both the 1997 and 2005 polls produced surprising results. The former propelled the reformist Mohammad Khatami to the presidency while the latter witnessed the rise of the incumbent Mahmud Ahmadinejad.
U.S. to enforce U.N. sanctions on DPRK: Biden U.S. Vice President Joe Biden said the United States would enforce sanctions set in the 1874 UN Security Council Resolution on the Democratic People's Republic of Korea (DPRK), NBC networks reported on Sunday. The United States will enforce the resolution, said Biden in an interview with NBC's "Meet the Press," adding "It is important that we make sure those sanctions stick and those sanctions prohibit them from exporting or importing weapons." The resolution, which was unanimously approved by the 15-memberbody, condemns Pyongyang's recent nuclear and missile tests and includes provisions for inspecting cargo coming out of the DPRK, a total ban on weapons exports from the country and stronger financial sanctions. The vice president dismissed the latest threat by the DPRK, adding that keeping the pressure on Pyongyang is necessary for the Northeast Asia' security and stability.
North Korea resolution lacks teeth The United Nations Security Council's draft resolution on North Korea's second underground nuclear test amounts to a slap on the wrist that's likely to have minimal impact after an initial burst of rhetoric and headlines. That's the impression given by an exercise in diplomatic sleight of hand that's gotten the reluctant Chinese and Russians to go along with a draft that condemns the nuclear test of May 25 "in the strongest terms" and demands the Democratic People's Republic of Korea (DPRK) "not conduct any further nuclear test" or launch more ballistic missiles.
N. Korean Heir Apparent Remains Mystery to West SEOUL, South Korea — There is only one photograph available outside North Korea thought to be that of the man South Korean officials believe will inherit the world’s most unpredictable regime, one that is armed with nuclear weapons. In that picture, the man, Kim Jong-un, a son of the ailing North Korean leader, Kim Jong-il, is an 11-year-old. “When Prince Jong-un shook hands with me, he fixed me with a vicious look,” Kim Jong-il’s former Japanese sushi chef wrote in a 2003 memoir describing his first encounter with the boy, then 7, dressed in a military uniform and known as a “prince” among his father’s aides. “I still cannot forget the look in his eyes. It seemed to say, ‘This is a despicable Japanese.’ ”
Sino-Russian baby comes of age By the yardstick of Jacques, the melancholy philosopher-clown in William Shakespeare's play As You Like It, the Shanghai Cooperation Organization (SCO) has indisputably passed the stage of "Mewing and pucking in the nurse's arms". Nor is SCO anymore the "whining schoolboy, with his satchel/And shining morning face, creeping like snail/Unwillingly to school". The SCO more and more resembles Jacques' lover, "Sighing like a furnace, with a woeful ballad/Made to his mistress' eyebrow." Indeed, if all the world's a stage and the regional organizations are players who make their exits and entrances, the SCO is doing remarkably well playing many parts. That it has finally reached adulthood is beyond dispute.
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Fri 06.12.2009
What Ail's the U.S. Economy?
Wall Street's False Armistice The best names in Wall Street banking have announced victory. Their crisis is over, back to business as usual. So why isn't the Obama White House celebrating this good news? Because this may not be a lasting peace for the president and his lieutenants. They are left standing in the mudhole of financial ruin, still surrounded by the failing economy and gradually losing their control over events. The leading bankers worked out a rare deal for themselves that essentially says to the government in Washington "heads we win, tails you lose."
OptionARM Homebuyers See Monthly Payments Go From $95 To $3,500 Will the coming wave of OptionARM mortgage resets look like the wave of subprime defaults? We're not sure what the housing market is like in Galt, California, but if we had to guess, Ms. Breitmaier is pretty under water right now, and a refi is probably out of the picture. Now this might not kill the banks -- after all, the chart below is well known and we're guessing that much of their portfolio has been slammed accordingly. But in terms of flooding the market with foreclosed home, slamming prices, it's too early to believe that it's all priced in. And generally, the effect that will have on the economy and consumer confidence will be brutal:
Option ARMs Threaten Housing Rebound as Resets Peak Shirley Breitmaier’s mortgage payment started out at $98 when she refinanced her three-bedroom home in Galt, California, in 2007. The 73-year-old widow may see it jump to $3,500 a month in two years. Breitmaier took out a payment-option adjustable rate mortgage, a loan popular during the housing boom for its low minimum payments before resetting at higher costs later. About 1 million option ARMs are estimated to reset higher in the next four years, according to real estate data firm First American CoreLogic of Santa Ana, California. About three quarters of those loans will adjust next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, the data show.
Dollar vs Gold: Dollar has no future The only things that are dollar positive is that the USDX as an index is small enough to manipulate, and the Commercials are still not yet in position for what is coming in gold. There is an axiom that states the more leveraged market always leads the less leveraged market. That axiom means an index will lead cash but stand behind the listed derivative market, which in turn stands behind the swap market for currencies. The means of manipulating almost everything is via the index trading supported by the ETF activity. The dollar has NO future outside of blind algorithms, spin and index manipulation. NONE.
When will gold price go above $,1000? Where is gold price heading? Is the bullion market overheated? Was the news that China has been amassing gold reserves the main reason for the recent rise in gold prices? Just look at these question-answers below.
Question: Do you expect Gold to take another hit to the downside before the end of the 3rd week in June, or is this it?
Question: The last time I asked you if Gold would cross the $1000 mark and you said it would make TWO attempts. I consider the FIRST attempt was made. The second week of June was weak as you wanted. Next week is the third week… and the Armstrong turn date.
Question: Can you explain why it was good for weakness in the 2nd week of June? Was it chart-wise? [read article for answers]
Junior Miner Buy-Out Binge Gold is making another run at $1,000, silver is up even more in percentage terms, and the financial markets are showering the established miners with cash: In February Newmont raised $1.7 billion, while Yamana, Agnico-Eagle, and Kinross Gold have between them raised over $800 million. And last week Goldcorp offered to sell $750 million of convertible bonds, but ended up with $860 million because the offering was oversubscribed.
Oil is back, but not as much as gold? One of crude's biggest fans recommends gold stocks Oil bubbles back. And an oil bull is charging again ... but mainly at gold. Oil traded above $71 a barrel on Wednesday, a seven-month high. Its surge is even being blamed for the stock market's softness over the last several days. And this is something of a vindication for a battered oil bull, Outstanding Investments, edited by Byron King. OI profited dramatically from the oil-price surge, and even got presciently worried at the top. Nevertheless, it was badly damaged by the Crash of 2008. But when I last looked, OI was confident that oil would rebound.
Gold prices bullish, analysts say $1000 gold near Gold prices are bullish, according to commodity analysts and the prospect for gold to rise above $1000 per ounce remain likely. Silver futures are also strong, with prices in New York up Wednesday morning. Standard Bank commodity research analyst Walter de Wet said, "The difference now is that physical buying [in gold] is taking place at a gold price which is $70 higher than it was in mid-April; this a bullish signal." Indeed, gold futures in New York were up $6.30 per ounce, or more than 0.6%, at $961 as of 9:30am ET Wednesday. Silver futures post a 16 cent per ounce increase, or more than 1%, to trade at $15.30 after having been as high as $15.40 per ounce earlier this morning.
"The Hunts Tried to Corner the Silver Market" Myth . . . . In 1979-80 the US Gov’t allowed the manipulation of gold/silver as a means to support the US dollar. And, now they’re doing it again. This explains WHY the CFTC is looking the other way on the ongoing and massive price manipulations. I surmise our very own PPT (Plunge Protection Team) is behind this. These are the same guys who are actively propping up the stock market. They’re pulling out every trick they have to support the dollar long enough to inflate away the National Debt and other US obligations. This is one of their strategies to delay the flight from the dollar–they don’t want traditional alternatives like gold and silver to appear more appealing than the dollar. But the dollar’s reserve currency standing is more threatened today than it has ever been. There will come a time when the dollar cannot be supported above 70. They will have to let it settle to 62 and battle to keep it there. Then, as Jim Sinclair says, they’ll have to allow it to slide to 52 before defending it again. Can they support the dollar indefinitely? No.
The Goldsmiths—Part LXXXV While many people following the precious metals markets have known for ages that there is a unique correlation between the price moves of gold vis-à-vis silver, not many persons are aware that such a linkage could change. It seems like as one of them goes up or down, the other quickly follows suit. The purpose of this Goldsmiths is not to review history and show the parallel moves since almost all of us are already aware of this phenomenon and need no proof or encouragement to accept that thesis. Instead of looking at the past on this question, this goldsmiths will look at the future and offer some ideas on why this historic relationship may begin to somewhat unravel in the coming days. Already, there are a number of analysts, investors and procrastinators who have allowed a decoupling between the two metals but in the context that silver will do much better than gold since it is in critical short supply and must go up in price.
S Africa gold production set to fall JOHANNESBURG: At a time when the world is digging deep for gold following the high prices of the yellow metal, South Africa may witness a fall in production as a result of its safety measures. S Africa’s gold production was hit by erratic power supplies and other measures initiated by the government to ensure safety. Last year, SA produced about 220 tonnes of gold, falling into third place after China and the US among the world’s biggest gold mining countries.
Miners line up to tap Zimbabwe gold HARARE: Finally, world has agreed to accept that Zimbabwe’s efforts to open its industry is genuine and miners across the globe are responding to the country’s new move to deregulate the industry. Following Zimbabwe’s deregulation step, ending 20-year-old state monopoly on buying gold, miners are now lining up to tap the country’s potential in gold mining.
It’s All Funny Money . . . . And even though it appears, and I readily admit, that I don’t know my head from a hole in the ground as pertains to types of gold, I am on solid, solid ground when I say that gold, silver and oil will rise in price as the dollar falls in purchasing power due to the vast expansions of the money supply, which is, itself, just a measure of the debt created in a fiat currency (since new dollars come from new debt these days), and which is doomed to fall, fall, fall in value. I admit that I only know this awful fact to be true 100% of the time for the past million years or so, and I actually admit that I do not know about the modern, present state of economics and economists, who think themselves capable of responsibly managing a fiat currency, and when I sneer in disrespect at such a notion, I know that I am on thin ground or shaky ice.
Bullion and Bandits: The Improbable Rise and Fall of E-Gold In a sparsely decorated office suite two floors above a neighborhood of strip malls and car dealerships, former oncologist Douglas Jackson is struggling to resuscitate a dying dream. Jackson, 51, is the maverick founder of E-Gold, the first-of-its-kind digital currency that was once used by millions of people in more than a hundred countries. Today the currency is barely alive. Stacks of cardboard evidence boxes in the office, marked “U.S. Secret Service,” help explain why, as does the pager-sized black box strapped to Jackson’s ankle: a tracking device that tells his probation officer whenever he leaves or enters his home. “It’s supposed to be jail,” he says. “Only it’s self-administered.”
Dollar will be a wild card for stocks this year The dollar is likely to remain an unpredictable factor in the market this year, amid fears that huge issuance of government debt could send the currency sharply lower and fuel inflation, as well as that further strength could curb a recent rally in commodities-related sectors and hit multinationals' overseas profits. "In the near term, the dollar is a wild card," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "There are so many variables there right now -- more than in other markets."
Dollar Collapse Should Be Taken ‘Seriously,’ RBS’s Ruskin Says Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Stamford, Connecticut, comments on the U.S. dollar, the British pound and the potential for the purchase of American assets by China. Ruskin spoke in a Bloomberg Radio interview. On the U.S. dollar: “We do need to be concerned about a dollar collapse. That doesn’t mean a dollar collapse is a central scenario but I think we have to take seriously the idea that the U.S. is in the point of currency debasement, is adding to the supply of dollars and we’re not 100 percent sure where that might end. “So far, the printing of money is not particularly large and therefore I think the threat to the dollar can be relatively restrained, but this is not the end of the story. There’s a real risk that fiscal financing needs might prompt much more printing of dollars.”
Cantor On MSNBC Moving the goal post on the economic stimulus and massive erosion of jobs; over 8 people a minute are loosing their jobs
10 reasons the worst of the crisis is over And why investors should still be scared Forget green shoots. We've seen a veritable hothouse of economic, market and political vegetation sprouting in the past several days that clearly shows the worst of the financial crisis is over. If only investors could be so sure. The latest piece of good news came from Mr. Green Shoot himself, Federal Reserve Chairman Ben Bernanke, when his central bank released its monthly Beige Book report Wednesday on economic activity, saying that five of its 12 district banks around the country reported that the downturn was moderating. That's not exactly a shotgun start to the next bull market. But it is progress. Here are nine other reasons to put down the revolver and the cans of Spam hoarded for the next great depression and begin to live again.
Still Facing Depression and Hyperinflation “Get ready for inflation and higher interest rates,” warns Art Laffer in the Wall Street Journal. Remember him? Creator of the ‘Laffer Curve.’ But don’t worry about inflation, adds Harvard professor Gregory Mankiw, also in the Wall Street Journal: Inflation is just what we need. “In the current environment, the goal could be to produce enough inflation to ensure that the real interest rate is sufficiently negative…” to force people to get rid of their money as fast as possible. Over in the bond market, investors are finding out what a little bit of inflation – or even hints of inflation – can do. People bought US Treasuries during the panic of ’08 for safety purposes. Now, they’re getting what we predicted. Alas, yes, they are getting what they deserve, not what they expected. Our friend Chuck Butler points out that prices of 10-year Treasuries have come down from $110 as recently as 5 months ago to just $94 this week. How’s that for safety – a 15% loss!
Deflation. Inflation. Why Not Both? Inflationists and deflationists remain locked in constant battle with each other, each with a litany of reasonable sounding arguments and convincing stats. The Fed is printing, true! Demanding is collapsing. Also true! Housing prices are still going down. True again! Oil prices are resuming upwards. Gold is going nowhere. And on and on it goes. But rather than seeing it as an either/or thing, why can't there be both. Gregor MacDonald has some very smart thoughts on the matter, as he draws an interesting comparison between oil volatility and changes in the supply of credit.
US government securities seized from Japanese nationals, not clear whether real or fakeBonds worth US$ 134.5 billion are seized. This is the largest financial smuggling case in history. But are they real? Concern over ‘funny money’ or counterfeit securities is spreading in Asia. The international press is silent. Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.
Charting Around Asia The China Syndrome . . . . US has a linked view of China in the world going forward. US Treasury through in this case the Fed Governor young Tim Geithner, has been pressing the case that China needs to urgently accelerate its domestic consumption to take up the slack caused by slumping consumption in US and elsewhere. Economists, who by definition like to pretend that they understand business cycles, argue that all consumption is a global net and what is lost in the West needs be made up in the East, otherwise slumping gross demand leads to a down turn in economic activity and output, called elsewhere “recession”, but known to your humble scribe as “reality”. For no apparent reason that I can ascertain this is a process to be avoided at all costs. The argument in favor of maintaining the unsupportable, ergo the lunatic 2006 economic momentum is couched in terms of employment, poverty for the East and living standards for the West.
Bond Volatility & Interest Rate Swaps The rising long-term USTreasury Bond yield continues to capture attention. The breakout chart for the 10-year Treasury shot up to 3.75% last week, but zoomed to touch 4.0% this week. Less attention has been directed at the short-term USTreasury Bill yields. What was a reasonably steady 2-year TBill yield in the 0.80% to 1.0% range has made a big move to 1.35% suddenly. Few have noticed, since mortgage rates are tied to the 10-year USTreasury. Much talk came in the last few weeks that China was rebalancing its USTreasury hoard, selling some long-term maturity bonds and buying shorter-term maturity bills. The rise in bond yields has actually been attributed to a USEconomic recovery, but that is absurd on its face, with a dozen statistics to debunk it. This China story was intended to mask the real events, to blame them in part for the US bond instability, and to divert attention away from a potentially important threat. Not only has the housing market stalled, with new mortgages and refinanced loans hitting a brick wall. The other major threat is to the Interest Rate Swap, those powerful credit derivative contracts that tie together the bond world in complex knitting.
Why the Meltdown Should Have Surprised No One The 2009 Henry Hazlitt Memorial Lecture, presented by Peter Schiff. Recorded at the annual Austrian Scholars Conference, Ludwig von Mises Institute, 13 March 2009.
ABBY NORMAL The pundits on CNBC who appear every morning proclaim that things are returning to normal. It amazes me that such supposedly intelligent people have no idea what normal means. Since 80% of the people interviewed on CNBC manage other people’s money, I’m guessing they are just trying to stay in business by lying to the average investor. If they were honest, they would say they have no idea what the future holds. If they were outspokenly honest, they would say that a Frankenstein’s Monster is loose in the countryside and will wreak havoc on the American economy for years.
Get Ready for More Bank Failures The worst may not be over for Wall Street, as unemployment blows through government stress test levels Employers chopped 345,000 jobs in the United States in May. The losses were far less than expected, but that is little comfort for a banking sector struggling to stay solvent. The national unemployment rate has now reached the critical zone and some analysts are wondering if round two of the banking crisis is on the way. On June 5, the Bureau of Labor Statistics surprised analysts with an employment report that showed fewer job losses than expected and far less than the over 500,000 jobs lost in April. But that is where the good news ends. America’s unemployment picture is now worse than the current administration had anticipated just a few months ago. U.S. unemployment stands at 9.4 percent, the highest in more than 25 years.
Follow the Overlooked Economic Numbers . . . . there are other indicators that don’t receive the same level of attention, whether they suggest good or bad news to come. Tuesday, for example, BLS released a relatively new report -- dating back to December 2000 -- on job openings and labor turnover. The report, for April, put job openings at a record low 2,531,000 -- but even more significantly, when matched with the BLS employment report, showed how competitive the job market has become: there were, according to the two BLS reports, more than five people unemployed for every job opening. The job turnover report demonstrated clearly employers have drastically reduced hiring. According to the report employers hired 17.1 million workers in the first four months of the year, that’s about 14% below hiring for the first four months of 2008. and the weakest four-month hiring record since this survey began.
Fear Rules The power of irrational fear in the US is extraordinary. It ranks up there with the Israel Lobby, the military/security complex, and the financial gangsters. Indeed, fear might be the most powerful force in America. Americans are at ease with their country’s aggression against Afghanistan, Iraq, and Pakistan, which has resulted in a million dead Muslim civilians and several million refugees, because the US government has filled Americans with fear of terrorists. “We have to kill them over there before they come over here.”
Believe None of What You Hear, Half What You See Reading through the press release we find that the Labor Department announced initial unemployment claims fell by 24,000 to a seasonally adjusted level of 601,000. Reading closer you will see that people claiming benefits for more than a week rose 59,000 to more than 6.8 million, the highest level EVER since records have been kept. Does that not make it increasingly apparent, that although initial unemployment may have lessened, ongoing unemployment is actually getting worse?
Initial Unemployment Claims Fall, But Overall Claims Continue to Climb In a continuing sign the economy is slowly recovering, the number of initial unemployment benefit claims was lower than analysts’ estimates. The number of claims fell by 24,000 to a seasonally adjusted 601,000 for the week ended June 6, according to the U.S. Department of Labor. Analysts were expecting the number to be 615,000, The Associated Press said. Continuing claims for the prior week increased by 59,000 to 6.8 million, representing the 19th consecutive week that number has risen. The four-week moving average for continuing claims was 6.7 million, an increase of 57,250.
Geithner Said to Tell Bernanke Fed Gains Most in Rules Overhaul The Federal Reserve is likely to emerge as the most powerful regulatory agency in the Obama administration’s plan for overhauling financial market oversight, people familiar with the proposal said. Treasury Secretary Timothy Geithner told Chairman Ben S. Bernanke in a June 9 meeting the administration will call for the Fed to be the regulator of firms deemed too big to fail, one of the people said. While a council of regulators would share oversight of financial risks, Treasury officials describe it as weak, lacking power to make final decisions on intervening with the firms, the people said.
Rep. Grayson: How Do We Hold These People Accountable?
Volcker Says `No Practical Alternatives' to U.S. Dollar as World Currency Former Federal Reserve Chairman Paul Volcker said the global economic slump is easing “most clearly” in the U.S. and the U.K. “The sudden and unsettling drop in economic activity beginning last fall is slowing, most clearly in the United States and the U.K., perhaps with a short lag in Euroland, and still less clearly in Japan,” Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, said today in the text of a speech delivered in Beijing.
BRICs Buy IMF Debt to Join Big Leagues Brazil, Russia, India and China’s plan to shift some foreign reserves into International Monetary Fund bonds may be more a signal of their growing financial clout than a lack of demand for U.S. assets. “They’re saying they are part of the big leagues,” Alberto Ramos, an economist at Goldman Sachs Group Inc., said in a telephone interview from New York. “They’re not buying IMF bonds to diversify reserves. They want to be seen as having a large voice” in global markets, he said.
Fed Hit by Subpoena Fasten Your Seatbelt The Federal Reserve was served a subpoena from a Congressional committee Tuesday, as lawmakers demanded documents related to Bank of America’s acquisition of Merrill Lynch. In our view, this is a precursor of more trouble to come for the Fed. We have argued for some time that Fed Chairman Bernanke completely underestimates the political dimensions of the policies he pursues. The various "credit easing" programs have little to do with monetary policy, the domain of the Fed. Monetary policy ought to be concerned with money supply or the level of interest rates, thereby allowing the markets to decide where the money flows.
Lewis: The Feds made me do it Fed asked us to delay any break-up of Merrill Legislators charge that Lewis failed to disclose key information to shareholders Bank of America Corp. Chief Executive Kenneth Lewis told lawmakers on Thursday that government officials pressed him to buy Merrill Lynch & Co. after he became aware of major losses at the investment bank. However, lawmakers blasted Lewis for neglecting to meet government disclosure rules by failing to provide information to shareholders about widening losses at the mega-bank's acquisition target in November, before investors voted on the deal in December. "Did Paulson and Bernanke abuse their authority by ordering Mr. Lewis to go through with the Merrill acquisition, or did Mr. Lewis threaten to back out in order to squeeze more money out of the Federal government?" asked Oversight and Government Reform Committee Chairman Edolphus Towns, D-N.Y.
Bank Chief Tells of U.S. Pressure to Buy Merrill Lynch Flanked by a coterie of lawyers and lobbyists, Kenneth D. Lewis, Bank of America’s embattled chief executive, walked into yet another Congressional hearing room on Thursday as the sole witness in a merger drama that has shadowed his banking empire for months. But this time, lawmakers turned the spotlight on personalities who were not seated in the chamber: the federal officials who had pushed him to complete a troubled merger with Merrill Lynch late last year, despite knowing that huge losses riddled the once-mighty Wall Street firm.
Rep. Darrell Issa Previews Bank Of America Oversight Hearing
Two roadblocks on path to recovery Housing and jobs rebound essential to healing Will the green shoots of economic recovery be strangled by the weeds in the garden? That's what investors are wondering now that the spring's vigorous rally appears to have stalled. And it's not just the most immediate concerns -- higher energy prices and long-term interest rates -- that cause hand-wringing on Wall Street. There's growing concern that the more intractable problems of housing and jobs may mute any recovery and put a lid on stock prices. Despite some "less bad" news on the economic front, those two key areas show little improvement; by some measures, they're still deteriorating. And until they stabilize, we can't really say that the banking system or the economy is out of the woods.
Republican Whip Cantor (R-VA) Speaks at a Press Conference on the Economy, capital markets and Obama administration
Household wealth drops for 7th straight quarter Private-sector debt declines for the first time on record The net worth of U.S. households fell by $1.3 trillion in the first quarter, a seventh straight decline that has seen household wealth drop by nearly $14 trillion, the Federal Reserve reported Thursday. Household net worth fell at a 9.9% annual rate in the first three months of the year to $50.4 trillion, the lowest in more than four years. Net worth -- assets minus liabilities -- peaked at $64.4 trillion in the spring of 2007, the Fed said in its quarterly flow of funds report. Read more. U.S. families have lost 22% of their wealth since the peak. Much of the loss came in the fourth quarter of 2008, when households lost $4.9 trillion.
Mortgage Rates Hit Seven-Month High, Refi Stalls or the third consecutive week, mortgage rates climbed, driven again by an increase in bond yields, according to Freddie Mac’s (FRE: 0.71 0.00%) Primary Mortgage Market Survey. 30-year fixed-rate mortgages increased from 5.29% to an average 5.59% with an average 0.7 point for the week ending June 11, marking the highest rate recorded since the end of November, 2008. The 15-year fixed-rate mortgage averaged 5.06 this week, up from last week’s 4.79% average, but still well below the 5.93% average last year at this time.
Bubble Economics Presented by Douglas E. French at "The Great Depression: What We Can Learn From It Today," the Mises Circle in Colorado; sponsored by Limited Government Forum of Colorado Springs and hosted by the Ludwig von Mises Institute. Recorded Saturday, 4 April 2009.
Foreclosures Continue Surge As Banks End Moratorium U.S. banks ended a moratorium on foreclosures in March, resulting in a surge of foreclosure filings in May and propelling the number over 300,000 for an unprecedented third straight month, the latest report from RealtyTrac Inc. said yesterday (Thursday). The historic numbers highlight the struggles of the U.S. housing industry as it waits for President Barack Obama’s rescue programs to take effect.
Three Lenders Shut out of FHA The Federal Housing Administration (FHA) program that ensures lenders against default-related losses on Wednesday saw another three approved lenders get the boot. The US Department of Housing and Urban Development suspended three FHA lenders suspected of “serious violations” of HUD’s regulations, marking the first action to clean up the ranks of FHA lenders since taking the ax to more than 100 approvals in late May. The three lenders — Golden First Mortgage Corp., Great County Mortgage Bankers and Beneficial Mortgage Corp. — are now prohibited from originating FHA-insured mortgages until HUD completes its investigation. HUD took the action “to protect the financial soundness of FHA’s insurance fund,” according to a media statement.
Investors bet on Detroit housing market Real estate investors are flocking to Motor City for bargain housing prices. As Detroit home prices in Detroit crash, sales are heating up. But with all of the plant closings and layoffs, who's buying? Investors -- some of whom are snapping up five and 10 houses at a time. "I have investors from all over the country and the world," said Jeremy Burgess, co-founder of Urban Detroit Wholesalers, which buys undervalued homes to rehab and rent or to sell to other investors. "One Lithuanian woman just bought a second house." "Most of the local investors are out of money," added Mike Shannon, who specializes in Detroit foreclosures and has clients from New Zealand, Australia, England and other places.
Senate Votes to Allow F.D.A. to Regulate Tobacco More than four decades after the surgeon general declared smoking a health hazard, the Senate on Thursday cleared the final hurdle to empowering federal officials to regulate cigarettes and other forms of tobacco for the first time. The legislation, which the White House said President Obama would sign as soon as it reached his desk, will enable the Food and Drug Administration to impose potentially strict new controls on the making and marketing of products that eventually kill half their regular users. The House, which passed a similar bill in April, may vote on the Senate version as soon as Friday.
President Obama Calls for Real Health Care Reform The President makes clear that as Congress works through health care reform legislation, it must include fundamental changes that lower costs, ensure Americans have choices, and establish access to quality, affordable health care for all Americans. But what we cant welcome, the President says, is reform that just invests more money in the status quo reform that throws good money after bad habits
It's got to happen sometime Is health-care reform around the corner? I worked under a single payer healthcare system and lived to tell the tale. For 11 years, I worked in France as a journalist and was covered by the government-sponsored healthcare system comfortingly known as Social Security. It was not socialized medicine. I went to whatever private practitioners I chose and they had more freedom in the medical procedures they elected than U.S. physicians have under managed care. The French healthcare system, in fact, was rated the best in the world by the World Health Organization in 2000, the last time they attempted such a ranking before it became too complex.
Doctors Union Hopes To Kill Obama's Healthcare Plan The doctors union, also known as the AMA, says it will oppose Barack Obama's plan to create a government sponsored, universal health insurance program, putting it in line with insurance companies that have taken the same task. This can hardly be a surprise, as the private system of incredibly high prices, limited competition and strong year-over-year inflation suits them extremely well.
Businesses brace for battle over health-care mandate Companies getting nervous about insurance requirement in bills If congressional Democrats get their way, American businesses could soon be required to provide health benefits to their workers. That's got American companies worried and anxious as the health-care reform debate heats up in Washington this summer. Businesses may not be able to stop a mandate from becoming law. Companies are now under no requirement to provide their workers with insurance coverage, even though many do. In 2008, 63% of U.S. firms offered benefits, according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust. The overwhelming majority of firms providing coverage were those with 200 workers or more. But with health-care costs spiraling, companies aren't anxious to be told they have to cover employees or pay into a government fund instead.
This Time, We Won’t Scare Perhaps you’ve seen those television commercials denouncing health care reform as a plot to create a Canadian-style totalitarian nightmare, and you feel a wee bit scared. Back in the election campaign, some people spread rumors that Barack Obama might be a secret Muslim conspiring to impose Sharia law on us. That seems unlikely now, but what if he’s a covert Canadian plotting to impose ... health care? Rick Scott, a former hospital company chief executive, leads a group called Conservatives for Patients’ Rights. He was forced to resign as C.E.O. after his company defrauded the government through overbilling and is now spending his time trying to block meaningful health care reform by terrifying us with commercials of “real-life stories of the victims of government-run health care.”
62 Million Voiceless Americans Is it still called debate when only one side controls the conversation? That’s the question the 62 million Americans who didn’t vote for Obama are asking themselves. 62 million Americans now have absolutely no voice in the way our country is being governed. No say in the quadrupling of our debt or in the onerous taxes being piled on top of record unemployment. They have no say in the pending trillion dollar health care ‘reform’ or the more costly ‘cap and trade’ legislation steadily making its way through Congress. With Democrats firmly in control of the White House and the House of Representatives, and most likely the Senate, the left has found no need for bipartisanship. After all, ‘Obama won.’ Case closed.
Why You've Never Heard of the Great Depression of 1920
Nationalization of auto industry nearly complete. Chrysler completes asset sale to Fiat. Chrysler concluded the sale of its assets to Fiat Wednesday signaling an exit from Chapter 11 bankruptcy as a result. The Supreme Court threw out a challenge from three Indiana state funds who tried to block the sale to Fiat, which was the only stumbling block preventing the Obama administration-brokered deal with the European automaker from going ahead.
Auto Dealers at Risk Turn to Washington Auto dealers accustomed to negotiating sales on their car lots clustered in the Capitol instead this week, looking to their trusty, neighborhood lawmakers to do some hard bargaining for them. With about 2,000 Chrysler and General Motors dealers losing their franchises as the companies retrench, the dealers are pressing Congress to reverse what they see as an unfair process forcing some profitable businesses to close or stop selling new autos, with no explanation from the manufacturers of why they were singled out.
G.M. Said to Be Close to Sale of Saab General Motors is close to a deal to sell Saab, the Swedish carmaker, to Koenigsegg, a manufacturer of high-end sports cars that is also from Sweden, a person close to the negotiations said Thursday. “We are still working on the deal,” the person said, speaking on condition of anonymity because the agreement was incomplete. “It is not the done deal that some people in Sweden seem to think it is.” Swedish television reported that a group of Norwegian investors was involved in the deal. Saab separated from G.M. under Swedish law in February as G.M. embarked on the restructuring that led to its bankruptcy filing this month. Saab then announced its intention to seek new investors who would take it over.
GM gets new chairman, names former AT&T chief Whitacre to the post Former AT&T chief Ed Whitacre became the new chairman of General Motors on Tuesday and will take the seat once GM exits bankruptcy. In all, the 'new GM' will have a slat of 13 directors. Six existing GM board members will remain once the auto giant emerges from chapter 11. Those included interim Chairman Kent Kresa, Chief Executive Officer Fritz Henderson and directors Phil Laskawy, Kathryn Marinello, Erroll Davis Jr. and E. Neville Isdell.
**** AMEN!*** Rep. Eric Cantor (VA-07) on Cash for Clunkers
Schwarzenegger: No borrowing to keep California running Unless lawmakers agree on how to close the budget gap, California Gov. Arnold Schwarzenegger says he refuses to borrow money to keep the state running in the face of a $24.3 billion budget deficit and a new fiscal year on the horizon. "We need to just basically cut off all the funding and just let them have a taste of what it is like when the state comes to a shutdown -- grinding halt," Schwarzenegger said outside the state capital late Wednesday.
Europe Is Being Held Together With Duct Tape Among its many other sins, the greenback is a press hog. The world’s reserve currency, loved and loathed as it is, simply gets most of the ink these days. In that light many a U.S.-based commentator, not least your cynical Taipan Daily scribes, have repeatedly waxed eloquent on the long-run death of the dollar. But in our zeal we sometimes forget that, in order for the dollar to die, it has to die relative to other fiat currency offerings... and some of those others are looking pretty sick too. (The main exception, of course, being gold - the one and only “stateless currency” not subject to the whims of a printing press. As Grant’s Interest Rate Observer quips, “Show us a monetary asset whose value is not subject to governmental debasement and we will show you a Krugerrand.”) In short, the dollar is not the only basket case out there. Take the euro, for example. Now there’s a troubled currency if ever one existed.
In Mideast and Europe, Obama debuts 'global populism Over three days in the Middle East and Europe, President Obama began an ambitious recasting of politics and global perceptions - taking his case for a new beginning directly to the world's people. The American president started with a nuanced bid for US-Muslim understanding and Mideast peace at the storied Cairo University - and ended in front of a soaring statue at the American cemetery at Omaha beach in Normandy titled, "The Spirit of American Youth, Rising from the Waves."
Obama on Islam pleases, but there are some lies and silences An analysis of the US President’s speech by an expert on Islam and the Arab world. In general there is a lot of honesty and justified mea culpa. But there is also too much rhetoric on Islam’s contributions; historical falsehoods on the Cordoba Caliphate and the birth of Israel; ambiguity on Israeli settlements in the occupied territories; religious freedom is more than tolerance; forgetfulness on the everyday rights of women. The Pope said more in the Middle East. The wide ranging discourse delivered by Barack Obama yesterday in the University of Cairo is a proposal to move on from a conflict of civilisations to a new and prosperous era in relations between the West and Islam, or rather, the United States and Islam.
Signs of a new financial storm for September coming from Dubai and Saudi ArabiaDubai calls on the Rothschild bank for help, perhaps out of desperation. In Saudi Arabia a Saad Group company defaults. US, European and Asian banks are struggling. The end of Ramadan in September might mark the start of an economic depression worse than that of the 1930s. Rothschild’s Dubai office has been retained by Dubai’s Department of Finance for advice on the US$ 10 billion financial support fund (FSF) the emirate raised on the bond markets. Nakheel, the property development arm of Dubai World, was the first to benefit, but is likely to be the last of its kind because funds will be handed out on the basis of two criteria: urgency and strategic importance. In fact government-related corporations deemed essential for the long-term development of Dubai’s economy will be eligible for FSFs. They include firms involved in infrastructure, transportation (ex. the Metro and Maktoum airport projects), aviation, ports, shipping and tourism. Banking might be included and the Rothschild guidelines might be flexible with regard to real estate.
Poetic justice of a green revolution From the moment cool, calm, collected Iranian presidential candidate Mir Hossein Mousavi went all rhetorical guns blazing against President Mahmud Ahmadinejad in a debate on national TV, not only Iran but the West seem to have woken up and joined the fun. As Mousavi put it: "He [Ahmadinejad] says, 'why do you call me a dictator'? Well, I did not say that you are a dictator, but your methods definitely lead to dictatorship."
The race for cheerleader-in-chief Washington is waiting anxiously on the outcome of Friday's Iranian presidential elections, as incumbent President Mahmoud Ahmadinejad attempts to fend off challenger Mir Hossein Mousavi in a contest with significant implications for the diplomatic atmosphere between Iran and the United States. Experts caution that the concrete policy impact of the elections may be particularly great from a US perspective. Both leading candidates support a civilian nuclear program, and the president's influence on foreign policy in general - although a matter of some debate - is relatively small compared to that of Supreme Leader Ayatollah Ali Khamenei.
Rev. Jeremiah Wright says "Jews" are keeping him from President ObamaSame brashness. Same spontaneity. Same lightning-rod remarks. If you were thinking the Rev. Jeremiah Wright had been tempered by a national backlash that nearly derailed Barack Obama's trip to the White House, guess again. In an exclusive interview at the 95th annual Hampton University Ministers' Conference, Wright told the Daily Press that he has not spoken to his former church member since Obama became president, and he implied that the White House won't allow Obama to talk to him. "Them Jews ain't going to let him talk to me," Wright said.
Why the Taliban won't take over Pakistan Islamabad, Pakistan - It has become the statistic heard round the world. The Taliban are within 60 miles of Islamabad. Just 60 miles. Every dispatch about the insurgents' recent advance into the Pakistani district of Buner carried the ominous number. Washington quivered, too. A top counterinsurgency expert, David Kilcullen, reiterated that Pakistan could collapse within six months. Secretary of State Hillary Rodham Clinton said flatly if the country were to fall, the Taliban would have the "keys to the nuclear arsenal." On a visit to Islamabad, Sen. John Kerry - the proctor of $7.5 billion in Pakistani aid as head of the Senate Foreign Relations Committee - warned bluntly: "The government has to ratchet up the urgency."
Chinese exports continue to drop, uncertain signs of internal economic recoveryExperts agree that the partial signs of recovery are the result of government investments of up to 4 trillion Yuan. But they disagree on their evaluations for the next few months. Meanwhile the crisis hits non manufacturing Chinese companies, in particular the service industry. Beijing (AsiaNews/Agencies) – Investments in China increased by 40% in May. But experts believe that the weak signs of recovery are the result of heavy government investments that will amount to over 4 trillion Yuan (over 400 billion euro). Meanwhile the service industry is facing great difficulties.
China's rise stirs Vietnam's anxiety If there was a need to identify a consensus among Vietnamese across the spectrum from domestic to overseas, it must be the uneasy feeling towards China. The Vietnamese mentality regarding national security from time immemorial has been that of vigilance on China. Although Vietnamese pride for fighting off foreign invasions always runs high, the country’s history of 1,000-year Chinese domination is painful enough to be a relentless reminder. And three current developments seem to reinforce it to a significant extent.
North Korea to Match U.N. Resolution With New Nuclear Test U.S. intelligence officials are warning President Obama that North Korea intends to conduct another nuclear test in response to passage of a U.N. Security Council resolution this week condemning the communist country for its recent nuclear and ballistic missile tests, FOX News has learned. U.S. intelligence officials have warned President Obama and other senior American officials that North Korea intends to respond to the passage of a U.N. Security Council resolution this week -- condemning the communist country for its recent nuclear and ballistic missile tests -- with another nuclear test, FOX News has learned.
***** Watch this carefully ***** Nuclear war is Kim Jong-il's game plan "Our military first policy calls for an eye for an eye, a tooth for a tooth, retaliation for retaliation, ultra-hardline for hardline, war for war, total war for total war, nuclear war for nuclear war." - Kim Jong-il TOKYO - A little-noted fact about the second nuclear test conducted on May 25 by the Kim Jong-il administration of the Democratic People's Republic of Korea (DPRK) is that it was a highly successful fission trigger test for multi-megaton warheads. These types of warheads can be detonated in outer space, far above the United States, evaporating its key targets. This is a significant indication of the supreme leader's game plan for nuclear war with the crippled superpower and its allies, Japan and South Korea.
Why China Won’t Stop North Korea North Korea has nukes, and China isn’t really worried. Something’s not right. “A merciless offensive.” That’s what Kim Jong Il plans to launch using his nuclear weapons should North Korea be provoked. “Our nuclear deterrent will be a strong defensive means … as well as a merciless offensive means to deal a just retaliatory strike to those who touch the country’s dignity and sovereignty even a bit,” said the state-run newspaper Minju Joson on Tuesday (emphasis mine throughout). Pyongyang’s declaration, the first in which it referred to its nuclear arsenal as “offensive” in nature, was a major aftershock to a region already reeling from North Korea’s recent slew of nuclear and ballistic missile tests. If we believe Tuesday’s announcement, North Korea doesn’t just possess nukes—a frightening enough reality. It is ready and willing to use them.
A Recipe for the Next Great Depression FDR's Folly
Why the Present Depression Will Be Deeper than the Great Crash of 1929 Continuing our analysis of The Great Crash of 1929 by John Kenneth Galbraith: by understanding the causes of the Great Depression as elucidated by Galbraith, we can observe the differences between the present and 1929. These reveal why today's Depression will be even deeper than the 1929-1941 one and why today's policy "fixes" as pursued by that great student of Depression, Ben Bernanke, are fighting the last war- a Keynesian stimulus strategy doomed to catastrophic failure. I hesitate to call this topic "important" because such announcements instantly cut my readership in half. Thus I am inclined to call this topic "edgy," "explosive" and "contrarian," all of which sound more interesting than "important" (yawn). Galbraith begins his exploration of causes by noting that "economics does not allow final answers on these matters. But, as usual, something can be said."
Break the banks, for the good of the people Bailing out the big US banks has done nothing to improve them, writes Joseph Stiglitz. WITH all the talk of "green shoots" of economic recovery, America's banks are resisting efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details — and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past. The old system worked well for the banks so why should they embrace change? Indeed, the efforts to rescue them devoted such little thought to the kind of post-crisis financial system we want, that we will end up with a banking system that is less competitive, with the large banks that were "too big to fail" even larger.
US long-term interest rates hit high Tepid response to Treasury’s debt sale US long-term interest rates rose to the highest level of the year on Wednesday, threatening the “green shoots” of recovery, after the latest sale of 10-year government debt met with a tepid response from inflation-wary investors. Concerns about the growth of government borrowing forced the US Treasury to give investors in an auction of $19bn in 10-year notes a yield of 3.99 per cent – 4 basis points higher than the yield available before the auction. That constituted the biggest yield markup since a 10-year auction in May 2003, said Morgan Stanley. Yields on the 10-year note, the benchmark rate for US mortgages, hit a high of 4 per cent during the day, up from 3.6 per cent a week ago.
Gold May Be ‘Best Investment,’ Alpha’s Sperandeo Says Gold may be the best investment over the next three years as government stimulus packages boost the supply of money, hurting the dollar and fanning inflation, according to Victor Sperandeo of Alpha Technologies LLC. “Gold has to go up because the printing of paper around the world and the borrowing is in trillions of dollars,” Chief Executive Officer Sperandeo said at a media conference in Singapore to market an index as a hedge against rising prices. “I don’t know of any scenario that can make it go down.”
Oil headed to $85- $90 / barrel; Gold IS the CURRENCY to be in, with Silver - testing $ 1060 level, and then will move up quickly
Gold May Drop for Second Day as Dollar’s Rebound Pares Allure Gold, which traded little changed, may fall for a second day as a strengthening dollar curbs the metal’s appeal as an alternative investment. Silver declined. The dollar, which typically moves inversely to bullion, gained 0.6 percent against the euro yesterday and may advance for a second day after the so-called yield advantage of 10-year Treasury notes over comparable German bunds rose to the widest since October 2007, making U.S. assets more attractive.
Gold Prices Continue To See Lack Of Direction, Finish Flat Gold finished unchanged on Wednesday as a rise in oil prices balanced out a modestly stronger dollar. The metal has seen little direction through the week, hovering near the $950 mark. August-dated gold closed at $954.70 for a second straight day. Prices climbed as high as $966.70 and fell as low as $947.50. Crude oil prices rallied to $71.33, up $1.32 on the session, making gold more attractive as a safety investment. U.S. commercial crude oil inventories decreased by 4.4 million barrels from the previous week, according to data released On Wednesday. The dollar edged higher against the euro, moving to the good side of 1.4000. The greenback was little-changed against the pound after bouncing back from a weekly low. Gold usually moves in the opposite direction as the dollar. Russia to sell US Treasuries, eyes IMF bonds Russia's Central Bank says it plans to cut reserves it holds in U.S. Treasuries and invest in International Monetary Fund bonds instead, a senior official said Wednesday. Roughly 30 percent of Russia's $400 billion worth of hard currency reserves are currently held in U.S. Treasuries. "We are planning to gradually reduce the share of U.S. treasuries as a window of opportunity for working with other instruments is opening, and the situation with foreign banks has become clearer," Alexey Ulyukaev said in comments quoted by the state-run RIA Novosti news agency.
The China-Once-Again-Investing Corporation Sundeep Tucker of the FT (drawing on work by Z-Ben advisors) reports that the CIC is ready to allow its external managers to start buying equities: Early last year CIC picked two or three fund management groups for each of six investment mandates, four equity and two fixed income, with an aggregate sum of $12bn. Only the global fixed income mandate was funded before the shutters came down. The managers of the remaining five mandates have just been notified that they are finally about to be funded, in stages, over the coming weeks. A public announcement is expected imminently, according to Z-Ben Advisors, a Shanghai-based consultancy. Z-Ben says CIC has also earmarked a further $30bn of its liquid assets for passive mandates, which will also be handed to global portfolio managers over the next 6 to 12 months.
Treasury Holds 'Awful' Auction: 10-Year Yield Hits 3.95% U.S. Treasury prices fell Wednesday, sending benchmark yields up to 4.0 percent for the first time in eight months, after an auction of 10-year notes heightened concerns over the burgeoning U.S. budget deficit. It was the first test of the government's long-term borrowing ability since investors began to wonder last month whether the United States' prized AAA credit rating may be living on borrowed time. Overall demand and a key proxy for foreign interest were both robust, especially for the reopening of a previously issued security, but the high yield at the auction was above market expectations. This "tail," as it is known in the market, showed investors wanted the government to pay a premium in higher yields to get them to buy the bonds and tipped the balance for a negative interpretation of the sale.
Fed Would Be Shut Down If It Were Audited, Expert Says The Federal Reserve's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant's Interest Rate Observer, told CNBC.With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview. "If the Fed examiners were set upon the Fed's own documents—unlabeled documents—to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down," he said. "The Fed is undercapitalized in a way that Citicorp is undercapitalized."
Why The Shift Away From Treasuries May Not Mean What You Think It Does The debate over what the rise in the Treasury bond yield tells us about the economy is hobbled by the fact that too many of those looking for signals from the credit markets have not fully digested the effect of the implicit guarantee of financial corporate debt. Here’s the problem. Ordinarily, a shift of assets away from Treasury bonds toward privately-issued bonds signals a growing appetite for risk and yield, which might indicate either inflation fears or hopes or economic recovery. But the huge shift we’re seeing now (see the chart below, and Northern Trust economist Paul Kasriel’s analysis this morning) might signal something else entirely: that the market is pricing in the implicit government guarantee of the debt of financial companies. So instead of a shift away from risk-free assets, we may be seeing a shift between different classes of risk free assets.
China allows 2 banks in HK to sell yuan bonds May 19, 2009 Two major banks outside mainland China said Tuesday they've become the first foreign companies granted approval to sell bonds in Chinese yuan _ a step toward making it an international currency. The banks _ London-based HSBC Holdings and Hong Kong-based Bank of East Asia _ said in statements their subsidiaries in mainland China have been given permission by regulators to start issuing yuan-denominated bonds in Hong Kong. Other details, including the amounts and timing of the offerings, weren't released. It marks the first time firms based outside the mainland have been given the OK to sell such debt securities in Hong Kong, a move that furthers Beijing's goal of promoting the yuan as an alternative to the U.S. dollar for international trade and reserves. Tight government controls largely restrict the yuan's use beyond China's borders, giving Beijing influence over the currency's exchange rate, though that's slowly changing.
China's Commodity Buying Spree Strong buying by China has helped lift commodity prices around the world this spring, but growing evidence suggests that a sizable portion of this buying has been to build stockpiles in China, and may not be sustainable. At least 90 large freighters full of iron ore are idling off Chinese ports, where they face waits of up to two weeks to unload because port storage operations are overflowing, chief executives of shipping companies said in interviews this week. Yet actual steel production from that iron ore is recovering much more slowly in China, and Chinese steel exports remain weak.
Fed's Dollar Lie Called Out by Victorious Merkel The capitalist U.S. is nationalizing its biggest automaker, even as it pretends not to do so. Europe, for its part, is moving right. This week's elections for the European Parliament are an example of Europe's new mood. In Germany and France, voters supported incumbent conservative or centrist parties. In Spain and the U.K., they punished center-left parties that are at the helm. All over, the left got trounced.
Ron Paul on Montel Williams 6/10/2009 "Government's Practicing Economic Fascism"
Bonds fall on worries about government's debt load Bonds tumble on weak auction of 10-year notes, Russia's interest in reducing Treasury holdings Even the U.S. government is having a hard time getting a cheap loan nowadays. That's not a good sign for the average American borrower. The government was forced to lift the yield on 10-year Treasury notes to 3.99 percent to lure in buyers at an auction Wednesday. That was the highest yield it's offered since last August, before it started bailing out the nation's financial industry. In the end, the government still got plenty of buyers for its $19 billion in 10-year notes. The ratio of bids to notes sold was decent at 2.66, and indirect bidding -- a measure of foreign buying -- was fairly robust at 34 percent.
Nassim Taleb's Big Idea: There's Too Much Debt Out There Perhaps it's the limitation of the medium, but if your only introduction to Nasssim Taleb was his appearance on CNBC this morning, you'd think he was a very conventional thinker. The main theme he kept hammering home: There's too much debt and leverage in the system. In other words, he's making the same point as almost everyone else talking about the economy these days.
America's Sea of Red Ink Was Years in the Making There are two basic truths about the enormous deficits that the federal government will run in the coming years. The first is that President Obama's agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.
Obama's Plan For A Debt-Ridden Future President Obama has officially begun the era of bigger big government by proposing to go on a multitrillion dollar borrowing spree that risks doing to the "full faith and credit of the United States" what excessive borrowing during the housing bubble did to private credit. Under his budget plan for America's future, spending will average 23.7% of GDP for at least a decade (a whopping 20% higher than in 2000-08). Near-record deficits increasing at record rates will push the public debt of the U.S. beyond the economy's plausible capacity to pay — 70% of GDP by 2012, heading quickly to 82% of GDP in 2019 and on pace to be astronomically higher soon thereafter.
Citi Sets Plan to Convert $58 Billion in Stock Many of its rivals are getting ready to throw back the government’s lifeline, but not Citigroup: To the contrary, Citi on Wednesday said it was moving forward with a plan to convert a large chunk of its preferred shares into common equity. The long-awaited move is expected to give the United States government a 34 percent ownership stake in the troubled bank. Citi’s plan calls for about $58 billion worth of preferred stock and trust preferred securities, or TruUps, held by the government and private investors to become Citi common stock. The conversion will bolster the bank’s tangible common equity, which investors and regulators consider an important measure of capital strength.
Now It's The $15,000 Homebuyer Tax Credit? The government continues its desperate effort to make the cost of dwelling more expensive. There's already an $8,000 homebuyer tax credit, but it's obviously not done enough, so Senators Johnny Isaacson and Christopher Dodd are proposing to up it to $15,000.
Beige Book Is Dark And Gloomy, Again The Fed just released its latest "beige book" survey, and it doesn't have very much in the way of "green shoots." The survey shows that economic conditions deteriorated in many regions of the country. Labor markets are weak and commercial real estate is getting worse. Consumer lending is still very tight, despite lots of talk and programs meant to revive the credit markets. Demand for commercial and industrial loans is still falling.
Peter Schiff with Jon Stewart on The Daily Show
Defending the Nation From Common Sense This meeting of the Senate Military-Industrial Caucus will now come to order. The chair recognizes the senator from Northrop Grumman for a question. "We've noticed the increase in the amphibious ship fleet needs that go beyond traditional military missions," said Sen. Thad Cochran (R-Miss.). "Do you see a continuing need for shipbuilding in the amphibious area?"
The Fed’s Subprime Solution By JAMES GRANT Published: August 26, 2007 THE subprime mortgage crisis of 2007 is, in fact, a credit crisis — a worldwide disruption in lending and borrowing. It is only the latest in a long succession of such disturbances. Who’s to blame? The human race, first and foremost. Well-intended public policy, second. And Wall Street, third — if only for taking what generations of policy makers have so unwisely handed it. Possibly, one lender and one borrower could do business together without harm to themselves or to the economy around them. But masses of lenders and borrowers invariably seem to come to grief, as they have today — not only in mortgages but also in a variety of other debt instruments. First, they overdo it until the signs of excess become too obvious to ignore. Then, with contrite and fearful hearts, they proceed to underdo it. Such is the “credit cycle,” the eternal migration of lenders and borrowers between the extreme points of accommodation and stringency.
Obama to hurry recovery effort amid rising doubt Statistics fuel critics President Obama on Monday pushed to reinvigorate his $787 billion economic-stimulus program, promising to accelerate efforts to get money out the door, while dealing with critics who said some of his claims to create or preserve jobs have been exaggerated. Mr. Obama said he was "not satisfied" with the results of the stimulus program so far, though he highlighted some of the achievements he said were the result of the massive spending bill, which he signed into law in mid-February.
Geithner: Foreclosure relief still iffy Treasury Secretary Timothy F. Geithner told a Senate panel Tuesday he won't know for several months whether a key Obama administration program designed to help troubled homeowners avoid foreclosure will be successful. "I don't think we're going to know until probably early fall whether we've got the incentives right and whether they're going to prove powerful enough," Mr. Geithner said while testifying before the Senate Appropriations financial services and general government subcommittee.
A Regional Central Banker Blows the Whistle Thomas Hoenig is the president of the Federal Reserve Bank of Kansas City. In a recent speech, he laid out a scenario for what the Federal Reserve ought to do and what the U.S. government ought to do, and what will happen if they refuse. You can read it here. They will refuse. He did not say this, but it is clear to me that they will refuse, at least for the near term. I hope they won't refuse. Hoenig surveyed what he called "challenges." He said that we - a crucial word in the speech - must "begin now to address them genuinely and systematically or we risk repeating past mistakes and creating an environment that leads to our next set of crises.
Jim Rogers the Century of Asia
Printing Debt not Money We often hear and read about the government "printing money" like there's no tomorrow. Our federal government has certainly passed out enough money to the people who got us into this mess that it seems as though hyperinflation is theoretically possible. But every US Dollar printed in our current fiat monetary system is actually a debt.
Current Dollar Currency Controls One of America's greatest tyrants, Franklin Delano Roosevelt, exacerbated the rapidly shrinking United States share price. He greatly infringed on the Great Writ of Habeas Corpus, implemented Executive Order 6102, passed New Deal legislation, threatened to pack the Supreme Court if they did not vote his way resulting in a 'Constitutional revolution' and implemented extremely restrictive SEC rules. At least Roosevelt was not as tyrannical as Abraham Lincoln who, among plenty of other nefarious things, issued an arrest warrant for United States Supreme Court Chief Justice Roger when the Court checked Lincoln's abuse of Habeas Corpus. Then on 15 August 1971 Richard Nixon, who said he was not a crook, unilaterally declared international bankruptcy for the United States by refusing to honor the promise of gold convertibility. Now the federal government has no intelligible answer to 'What Is A Dollar?' and yet strut around in their costumes robbing people if they do not like how their unintelligible definition is applied.
Dollar, Bonds to Fall on Recovery Signs Investors worldwide predict that government bond prices and the U.S. dollar will weaken as demand for better-yielding assets increases amid rising confidence in the global economy, a survey of Bloomberg users shows. Participants forecast higher long-term bond yields over the next six months as investors sell Treasuries in favor of German, Brazilian and Japanese stocks and oil and copper, according to 2,410 respondents from New York to Tokyo to London in the Bloomberg Professional Global Confidence Index.
U.S. Posts Record May Budget Gap of $189.7 Billion The U.S. budget deficit, already approaching $1 trillion so far this fiscal year, widened in May from a year earlier as the recession subtracted from revenue and the government spent more to rejuvenate the economy. The excess of spending over revenue climbed to $189.7 billion, a record for the month and compared with a gap of $165.9 billion a year earlier, the Treasury said today in Washington. Spending rose 5.8 percent to $306.9 billion and revenue fell 5.7 percent to $117.2 billion. For the fiscal year to date, the shortfall totaled a record $991.9 billion.
Obama Tells American Businesses to Drop Dead I've finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing "failed" firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout. Once that happens, their new pay czar Kenneth Feinberg can set the wage for everybody and Rahm Emanuel can stack the boards of all of our companies with his political cronies.
Gerald Celente on 13 trillion $$ Bailout Bubble June 6 2009 - pt 1/2
Gerald Celente on Bailout Bubble June 6 2009 - pt 2/2
Oil Marches Past $71, Get Nervous Obama Oil continued its march upwards today, closing at $71.33. Today's reason for a rise: U.S. stockpiles fell by 4.4 million barrels, which was more than expected, and imports fell by 676,000 barrels. Inventories of gasoline also fell as refineries cut back on production and demand lifted. This gives investors even more reason to believe in a turnaround by the end of the year, which is going to drive the price of oil higher.
Possible compromise emerges in health care debate Senators see possible compromise on key issue in health care debate A potential compromise emerged Wednesday on one of the most vexing issues of the health care overhaul debate -- whether to create a new government-sponsored health plan to compete with private insurers. The compromise offered by Sen. Kent Conrad, D-N.D., would create health care cooperatives owned by groups of residents and small businesses, similar to how electric or other cooperatives operate. They'd be nonprofit, and without the government involvement that troubles Republicans and business groups about the public plan options.
Kennedy Health Plan Includes Long-Term Care Americans would be able to buy long-term care insurance from the government for $65 a month under a provision tucked into sweeping health care legislation that senators will begin considering next week. The 651-page bill, released Tuesday by Sen. Edward M. Kennedy, D-Mass., would revamp the way health insurance works. Insurance companies would face a slew of new government rules, dealing with everything from guaranteed coverage for people with health problems to possible limitations on profits. Taxpayers, employers and individuals would share in the cost of expanding coverage to nearly 50 million uninsured Americans.
Senate set to pass landmark tobacco bill The Senate easily overcame a last legislative hurdle Wednesday to a bill that for the first time would give the Food and Drug Administration the authority to regulate tobacco products. The bill advanced toward almost certain passage in a 67-30 vote that ended the possibility of a filibuster. A final vote could come as early as Wednesday night. The action brings anti-smoking groups and their allies in Congress a step closer to a goal that has eluded them for at least a decade: granting the FDA authority to impose new rules on the production, sale and marketing of cigarettes and other tobacco products.
Fed Emails Trash Ken Lewis, Suggest BOFA Deceived Shareholders In his testimony to Andrew Cuomo, Bank of America CEO Ken Lewis said that the reason he did not tell Bank of America shareholders about Merrill Lynch's "devastating" losses prior to the closing of the Merrill acquisition was that Hank Paulson and Ben Bernanke instructed him not to. Bernanke flat out denied this. Hank Paulson, meanwhile, told Cuomo that the Treasury just wanted to avoid promising something to Lewis that would require the Treasury to make a public disclosure.
Investigators say Fed threatened bank CEO Congressional investigators say documents prove the Fed threatened to oust bank CEO The Federal Reserve threatened to force the ouster of Bank of America CEO Kenneth Lewis if he didn't follow through with plans to buy Merrill Lynch & Co., Republicans said Wednesday after reviewing internal documents. Republicans also said there was evidence that the government tried to restrict information related to the merger from being publicly released. However, none of the documents showed that the government explicitly instructed Bank of America to hide Merrill Lynch's losses from shareholders, they said.
A Tale of Two Diverging Economic Worlds Increasingly a deep divide within the world of globalization is emerging which will have the most profound significance for the future of G7 nations' economic and political stability. The divide is between those nations which are still embedded within the dollar system, including countries in the Eurozone, versus those emerging economies-especially the BRIC-Brazil, Russia, India, China-where new economic markets and regions are rapidly replacing their over-dependence on the United States as prime export market and prime source for investment finance. The long-term consequences will be an aggravation of the trend of the United States as a political and economic superpower in terminal decline, while dynamic new economic zones, initially mainly of regional importance, will arise.
Cramer: Smartphones Set Off Sea Change The next great product cycle is upon us, Cramer said Wednesday, and it will trump almost all the other bad news we hear about the economy. This is big. Like, right up there with the personal computer. Or the switch to e-mail from snail mail and the rise of the Web. What is it? Smartphones and mobile Internet. Cramer called this the first true secular growth trend in ages, and Wall Street hasn’t yet realized its significance. Smartphones have gone from luxuries to necessities. We need these high-tech gadgets like we need cable television. Think about it: When is the last time you fidgeted with a rabbit-ear antennae? Used a library’s card catalogue? Read a hard-copy newspaper?
House OKs $4 billion 'clunker' bill Full House votes on a bill to subsidize new car sales for consumers who turn in gas guzzlers. Status of proposal in Senate is unclear. The House on Tuesday waded deeper into the rescue of the troubled auto industry when it passed a $4 billion plan to subsidize new cars sales for consumers who scrap old ones. By a vote of 298-119, the House approved the "cash for clunkers" program. The measure would give consumers vouchers worth as much as $4,500 to turn in gas guzzlers and buy new cars that are more fuel efficient. The legislation now goes to the Senate. President Obama has said he supports such a measure.
Default is not an option for California The Golden State's credit and reputation could not handle the bondholder backlash. California has to choose a way to erase its $24 billion budget deficit. But unlike recent examples in corporate America, default and bankruptcy can't be on the table. Stiffing state bondholders would only destroy the state's fragile credit and intensify future budget trouble. The Golden State's only real option is to make big cuts now and balance its books. Like other states, California has to have a balanced budget. It needs to close the gap in its 2009-10 projections by the end of this month. And with tax receipts down 27% from last year, it's set to run out of cash sometime in July.
At new Chrysler, problems of old Chrysler linger Chrysler gets a new life under Fiat, but still must overcome problems of the past Chrysler was reborn Wednesday under a new Italian parent, but it can't shake the shadows of its past: It's not selling enough cars, its fleet is tilted to trucks and sport utility vehicles, and help is more than a year away. A 42-day stay in bankruptcy court cleansed the company of much of its debt and labor costs, but many analysts say Chrysler's immediate future is bleak. It lost $8 billion in 2008, and sales are down by almost half for the first five months of this year.
U.S. Trade Deficit Widens as Exports Fall Again Regional economies in the United States are still hurting or even sliding lower as the recession lingers, though the rate of decline is tapering off. Meanwhile, higher oil prices are widening the gap between the nation's imports and exports. Those were the conclusions of two economic reports released Wednesday, which describe an economy still stuck in recession.
PRESIDENT OBAMA COMMENDS ALLIANCE OF CIVILIZATIONS Speaking in Cairo, US President Obama called for a new era of cooperative relations between the West and Muslim world and hailed "Turkey's leadership in the Alliance of Civilizations." [read New World Order] Reacting to President Obama's speech at the University of Cairo today, UN High Representative for the Alliance of Civilizations Jorge Sampaio "welcomed the bold vision set forth by the American President to inaugurate a new era of peace and cooperation between the "Muslim world" and the West based on mutual respect, trust and partnership."
US envoy pushes for prompt Mideast peace talks The United States seeks a "prompt resumption and early conclusion" of Israeli-Palestinian peace talks, Washington's special Mideast envoy said after talks Wednesday with Palestinian leaders. Former Sen. George Mitchell did not give any timetable in his prepared statement to reporters after meeting with Palestinian President Mahmoud Abbas in the West Bank town of Ramallah.
AHMADINEJAD BLAMES HITLER AND ISRAELIS FOR RIVALS’ SUCCESS Iran’s rowdy presidential campaign shows no signs of boredom heading into Friday’s election. Perhaps feeling the heat from rival Mir Hossein Mousavi, sitting President Mahmoud Ahmadinejad accused his opponents of “a return to Hitler’s methods” and collaborating with “Zionist entities.” The Revolutionary Guard, meanwhile, has warned Mousavi not to get any ideas.
Gerald Celente We're heading into an Obamageddonpt 1/4
Gerald Celente We're heading into an Obamageddonpt 2/4
Gerald Celente We're heading into an Obamageddonpt 3/4
Gerald Celente We're heading into an Obamageddonpt 4/4
Get Ready for Inflation and Higher Interest Rates The unprecedented expansion of the money supply could make the '70s look benign. Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be "wasted." Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now. Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That's more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers' expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.
The Consequences Have Started to Arrive The consequences of adopting a weak dollar and inflationary monetary policy to bail out the economy have begun to manifest themselves, although the real effects of the government’s $12.8 trillion dollar recovery plan have only just started to show up. Investors should not be surprised to learn that the commitments, guarantees, and prodigal spending of the past two Administrations have come with harrowing consequences. Surprising or not, these painful consequences are just beginning to appear and are rather insidious in nature.
Gold or Black Gold: Which is better investment? Driven by a small decline in the US dollar and by a not-so-small upward pop in crude oil, gold prices rose for the first day in three, this morning. Black gold gained nearly $1.50 per barrel and aimed to close in on the $70 level following detected optimism about the prospects of higher consumption of fuel as a result of the expected economic recovery.
Tupperware and ATMs– Gold Goes Mainstream Are we there yet? Are we there yet? We gold bugs are like little kids on a trip to the zoo; we just can’t wait to get there. “There” being the elusive point in time when the gold mania (no, make that Gold Mania) hits and everyone and their cat will want to invest in the yellow metal. Which of course will propel its price to dizzying heights. $1,500… $2,000… $5,000 an ounce – the sky’s the limit. At least that’s how the theory goes. But it’s not just a theory anymore: in the past year, we’ve been seeing unmistakable signs that gold indeed may be going mainstream.
Plunging Bond Market and Implications for Gold Since early May, the most dramatic events have occurred not in the stock market but in the bond market. Yields for the 5-year T-notes surged by almost 40% while the yields for the 10-year T-Bonds rose by almost 30% in the past 5 weeks. Both benchmarks have broken their multi-year downtrends in the past week. The 10-year yield is now approaching 4.0% while less than half a year ago it was only at around 2.0%. Short end yields also soared last week. 3-month T-bill yields rose by more than 40%, while 2-year yields appreciated by 37% and are now yielding 1.32%.
The worse is not over says Jim Rogers
GOLD THOUGHTS As the investment community celebrates the first bankruptcy of General Motors, a look around the world reveals the vast financial acumen of governments. We do not have to stop with the financial irresponsibility of the Obama Regime, evident by the two trillion dollar plus deficit. We could just as well turn to the expense account scandal that may bring down the UK government. Or, we could look to the financial wizardry of California, or the high finance skills so evident in Jefferson County, Alabama. Or, we could watch in wonder as oil production collapses in Mexico and Venezuela where politicians have squandered oil revenues. With such revealing evidence to turn to for confidence, we sometimes wonder how anyone can accept at face value the debts of these governments. Those debts being what we call fiat money. Gold bugs are not born. They are created by unbroken history of financial failures on the part of governments.
Myth Busting Gold, Deflation and Hyperinflation There are a lot of myths and “old wives’ tales” out there about Gold and the frequently accompanying topics of inflation and deflation. In no particular order, I’d like to debunk three big ones with facts rather than universally accepted catch-phrases that prey on lazy investors and speculators.
“Dollar down, Gold up” or “Dollar up, Gold down”
“The government is printing money and this will stop deflation and cause heavy inflation or hyperinflation”
“Gold and Gold stocks are lousy investments during deflation”
Gold fever is dead ahead and Gold bulls don't even have to pray for the destruction of their currency to profit from it.
The Consequences Have Started to Arrive The consequences of adopting a weak dollar and inflationary monetary policy to bail out the economy have begun to manifest themselves, although the real effects of the government’s $12.8 trillion dollar recovery plan have only just started to show up. Investors should not be surprised to learn that the commitments, guarantees, and prodigal spending of the past two Administrations have come with harrowing consequences. Surprising or not, these painful consequences are just beginning to appear and are rather insidious in nature.
Stepping on the Commodities Gas Pedal Oil has, finally, started to rise again, having been down below the breakeven point of pumping it, as they, too, have all kinds of rising costs like everybody else, as well as pension programs and myriad, large governmental entitlement programs to pay for. And what is this “breakeven point” for oil? The last I heard, a couple of years ago, is that oil needed to be higher than $70 a barrel to make their relevant governments’ budgets balance, taxes and duties being what they were. However, that was back when the inflationary idiocy of “quantitative easing” was still considered an absolute stupidity by every known theory of economics since Adam Smith in 1776, but which now has become “conventional operational mode” thanks to a system of cowardly, corrupt and embarrassingly ignorant-to-the-point-of-stupidity governments (especially the federal one), a laughably incompetent public school system that has turned out generations of ignoramuses, the irresponsible greed and ignorance of the populace, and an ignorant and often complicit media, a pox upon all their houses.
'Central Banks can't stop COMEX gold manipulation' . . . . The gold price is doing exactly what it should considering the lack of real negative good reasons and coordinated negative PR from the media and the gold banks. The dollar is going to suffer a very cold and awful winter.
Silver's Scarcity Premium The Gold Report: Mike, you're pretty optimistic on precious metals. Can you provide us an overview of why? Mike Kachanovsky: Right now in response to the crises that are occurring around the world, many governments have chosen to keep interest rates artificially low and issue large amounts of printed currency in the hopes of supporting their domestic economies. When you have that much additional currency being injected into economies, it creates inflation pressures and people seek security outside of paper money and in precious metals stocks. So that's why I think you're going to see more upside in the spot market price for gold and also for silver, which has, historically, been a monetary metal.
The next great crisis: America's debt At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse. Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing. What's worrying both Krugman and Ryan is the rapid increase in the federal debt - not so much the stimulus-driven rise to mountainous levels in the next few years, but the huge structural deficits that, under all projections, keep building the burden far into the future to unsustainable, ruinous heights. "The long-term outlook remains worrying," warned Krugman in his New York Times column. Krugman strongly supports President Obama's spending plans but bemoans the shortfall in taxes to pay for them.
Two Ways to Deleverage an Economy The dumb money is fairly easy to spot. It’s the money that always shows up late to the party, wearing yesterday’s fashions. It watches TV and thinks the reality shows show reality…it thinks Ben Bernanke is a great economist…that the SEC protects investors from fraud and misrepresentation…and that Tim Geithner makes sure the economy keeps running smoothly. It’s the dumb money that thinks you can correct a generation-long period of credit growth in 24 months…with less than 10% unemployment… Stocks have now been in a rally for three months. The longer this goes on, of course, the dumber money gets. People come to think the bounce is a permanent bull market. Yesterday, not much happened. Stocks held steady. Oil too. Gold fell $8…closing at $952. And the dollar rose to $1.39 per euro. But while the dumb money has its eyes on the stock market, the smart money is watching the economy.
****Very FUNNY! **** The Top Twelve Indicators that the Economy is Bad 12. CEO's are now playing miniature golf. 11. I got a pre-declined credit card in the mail. 10. I went to buy a toaster oven and they gave me a bank. 9. Hotwheels and Matchbox car companies are now trading higher than GM in the stock market. 8. Obama met with small businesses - GE, Pfizer, Chrysler, Citigroup and GM, to discuss the Stimulus Package. 7. McDonalds is selling the 1/4 ouncer. Read the article to see the rest of the 12 points.
Roubini: 9 Reasons The Recovery Will Be A Bust As we noted yesterday, Nouriel Roubini looks at what most people call "green shoots" and sees "yellow weeds." Here, he lays out nine reasons why he thinks the coming recovery will be a bust. Before we get to the bad news, though, it's worth noting that Nouriel now does allow for the possibility of a couple of quarters of positive GDP in the meantime. He's also talking about the possibility of inflation (new). And he suggests that an "anemic" recovery is merely possible, not a certainty.
China discovers value in the IMF China's fraught relations with the International Monetary Fund are driven by two conflicting agendas - the country's effort to gain unimpeded access to resources in the developing world on bilateral terms, and its interest in using the IMF's facilities as a international organization to issue Special Drawing Rights (SDR) assets to help Beijing diversify away from the US dollar. At the same time, the West is trying to incorporate China, Brazil, Russia and India, the "BRIC" countries, into the IMF system and thereby assert the continued relevance of Western financial institutions and leadership in the midst of the worst crisis since the modern international regime was created after World War II.
China Sees $30 Billion Overseas Lending on New Rules China’s top currency regulator relaxed controls on overseas lending, estimating the measures could encourage as much as $30 billion of new financing for businesses to expand abroad. Companies will be allowed to lend as much as 30 percent of the value of their total equity to units abroad, Sun Lujun, deputy director of the capital-account department at the State Administration of Foreign Exchange told a media briefing in Beijing today. The nation will let more firms provide such funding, including those not owned by the state.
Geithner Brings the Laughs In China Though the U.S. press mostly withheld mention of it last week, the international media had a big laugh over Treasury Secretary Geithner’s visit to China. Apparently more aware of the dollar’s withering condition than our chief dollar steward – a scary thought on its face – they clearly understood the audience laughter when Geithner told Chinese students that dollar-denominated “Chinese assets are very safe.” It doesn’t take an in-over-his-head Treasury secretary to understand that when the dollar is falling, the assets that pay out those dollars are necessarily imperiled. The Chinese, and all holders of U.S. Treasuries are necessarily skeptical, and with good reason. Whereas a dollar bought 1/250th of an ounce of gold in 2001, as of this writing it only buys 1/960th. Despite this stupendous collapse in the unit of account, Geithner remarkably believes that our federal debt is a good bet.
Tim Geithner Asks For A Bigger Treasury Budget Here's the highlight on financial regulation: "In the next few weeks, we will outline a comprehensive plan of reform that will include systemic risk regulations to ensure that no large and interconnected firm or market can take on so much risk that its failure could destabilize the entire financial system. The plan calls for bolstering consumer and investor protections. And it will streamline our out-of-date regulatory structure so that our regulatory system matches the size, shape and speed of our modern financial system. Together, these changes will help prevent another crisis of the magnitude that we have just lived through."
Tim Geithner Is Protecting Vikram Pandit Earlier today we mentioned that the government should be considering seizing Citigroup and breaking it up. Unfortunately, it seems that the Obama administration is going in the opposite direction: protecting Citi's chief executive from FDIC bosslady Sheila Bair, who has been agitating for changes to Citi's top management. It looks like Treasury Secretary Tim Geithner has become Pandit's best friend in Washington.
JPMorgan, Morgan Stanley Among 10 Banks Repaying JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley were among 10 lenders that won U.S. Treasury approval to buy back $68 billion of government shares, freeing them from added oversight that curbed lending practices, hiring and pay. “These repayments are an encouraging sign of financial repair,” Treasury Secretary Timothy Geithner said in a statement today. “But we still have work to do.”
Watchdog wants stress test do-over Congressional Oversight Panel cites rising unemployment as a reason why big banks need another stress test; also calls for more details about tests. Banks that were stress tested by the government earlier this year should undergo another round of examinations, a government watchdog group said Tuesday, amid signs that the U.S. economy may be deteriorating faster than first expected. In its latest report to lawmakers, the Congressional Oversight Panel pointed to the unemployment report for the month of May as a sign that the stress tests were not stressful enough.
Elizabeth Warren: Redo Stress Tests 'Right Now'
Foreclosure crisis spreads from subprime to prime mortgages The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom. It's a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods. It also threatens to undermine the housing recovery.
Fed seeks ways to stop banks from taking too much risk The Federal Reserve is beefing up its supervision of the nation's largest banks and developing proposals to ensure that lavish executive compensation doesn't encourage excessive risk-taking, a Fed governor said Monday. Daniel Tarullo, an expert on financial industry regulation, said Federal Reserve officials plan to scrutinize giant banks with an eye toward practices that might pose a risk to the entire financial system. The current crisis demonstrated that "systemic risk" posed by banks and other institutions judged too-big-to-fail was an unrecognized flaw in the nation's financial system.
Fed's future role at issue on Hill Congress struggles with complex plan for reordering financial regulation. A key hangup is how much new power to give the Federal Reserve. A major Obama administration plan to deal with financial companies too big to fail is becoming too big to zoom through Congress. Top White House and Treasury Department officials have been working behind the scenes for weeks to push lawmakers to start tackling legislation aimed at rescuing giant financial companies on the brink of failure -- like American International Group.
The New York Fed Has Been Captured By Citigroup, Top Obama Official Complains The New York Fed cannot effectively regulate Citi because it has been captured by the mega-bank, according to a top economic official inside the Obama administration. The close relationship between Citi executives and officials at the New York Fed is stymieing efforts to reform the bank and change its management, according to the official. The official asked not to be identified.
Fed Said to Retreat From Seeking Debt-Issuing Power The Federal Reserve has backed off from seeking a new tool to forestall inflation, refraining from asking Congress for the power to issue its own debt, according to a person familiar with the matter. Putting off the issue may avoid a political clash over whether the Fed should begin winding down its emergency lending programs while unemployment remains elevated. The central bank intends to rely instead on paying interest on banks’ reserve deposits to prevent a flood of cash into the economy.
Dollar Drops as Equity Gain, Economic View Reduce Refuge Demand The dollar fell against the euro for the first time in three days as a gain in U.S. stocks and speculation the global recession may be ending reduced demand for the greenback as a refuge. The pound advanced versus the dollar as Britain’s political turmoil eased and house prices showed signs of stabilizing last month. Goldman Sachs Group Inc. recommended that its clients buy the euro versus the dollar, citing a recovery in global growth expectations and a “broader pickup” in demand for higher- yielding assets.
Green Gold Trumps Black Gold A funny little thing happened in 2008 - investment in new power generation from renewable sources and technologies beat out investment in traditional fossil fuel sources by $30 billion. This fact has been brought to you by the recent UN report titled, "Global Trends in Sustainable Energy." Great news for climate change, right? Well, kind of. Despite all the investment, renewable energy is only responsible for 6.2% of global power capacity, so the green "revolution" still has a way to go.
Long-Term Economic Memory Loss If a person lives long enough, he can watch everyone forget everything they learned. Everyone includes Federal Reserve Chairmen, economists, Bank of America “strategists,” and even Bloomberg.com. Federal Reserve Chairman Ben Bernanke thinks he can hold down US long-term interest rates by purchasing mortgage bonds and US Treasuries. Sixty years ago the Federal Reserve understood that this was an impossible feat. After an acrimonious public dispute with the US Treasury, in 1951 the Federal Reserve forced an “Accord” on the government that eliminated the Fed’s obligation to monetize Treasury debt in order to hold down long term interest rates.
Kuwaiti Oil Minister: $100 Oil Will "Fuel Recession" Kuwait's oil minister Sheikh Ahmed Abdullah al-Sabah, is pretty finicky about oil. It has to be just right, otherwise we might have a mess on our hands, he says. When asked what's a good price for oil by Platts, he says, "There is no good price. There is a logical price. Logical is what market forces prevail at that time and for the time being $60 to $70 to $75 per barrel is acceptable." But he'd really hate to see a big spike. "Hopefully it will not jump to the hundreds, because this will fuel recession," it would be like "going back to square one."
Chavez: U.S Moving Left Of Venezuela
U.S. regulator: Be wary of reverse mortgages OCC's John Dugan says the loans aimed at older homeowners could target a vulnerable segment. Reverse mortgages could be the next subprime mortgage product to experience rapid growth while taking advantage of a vulnerable segment of the population, top U.S. bank regulator John Dugan said Monday. Dugan, who heads the Office of the Comptroller of the Currency and supervises some of the nation's largest banks, said regulators are crafting guidelines to ensure that robust consumer protections are in place for reverse mortgages.
Government readies emergency small biz loans Starting next week, struggling companies will be able to apply for up to $35,000 in debt-relief loans through a new stimulus program. One week before its emergency loan program is slated to launch, the Small Business Administration issued guidelines for banks and borrowers on how the new loans will work. Called "America's Recovery Capital," ARC loans are designed to make up to $35,000 available to struggling small business owners to temporarily help them keep up with payments on existing loans, including credit card debt. Authorized as part of February's stimulus bill, the program has been under development for four months. Many banks were waiting for the SBA's procedural guidance, released Monday, before deciding whether or not to participate. Here's a primer on how the emergency loans will work.
Seattle warned of 'imminent' nuke attack A US congressman has raised doubts over the country's capability to intercept long-range trans-Pacific strategic missiles once fired from 'rogue regimes'. Missouri Congressman Todd Akin has warned about a looming nuclear threat on the US's West coast as adversarial regimes such as North Korea expand their nuclear and rocket launching capacities. The 62-year-old Republican Congress member recently wrote his personal assessment of current nuclear issues threatening US security in which he demands a fortified scheme to tackle potential problems. "Now more than ever we need to continue a robust investment in missile defense. Cutting or canceling missile defense programs in the face of growing threats from North Korea and other rogue regimes will weaken the national security of our country and increase the threats from these governments that menace the safety and security of our allies and our own shores," wrote Akin.
U.N OFFICIAL SEEKS GLOBAL BAN ON PLASTIC BAGS The U.N.‘s top environmental official has called for a global ban on plastic bags, declaring: “There is simply zero justification for manufacturing them anymore, anywhere.” The ban is currently being tested in China, and already exists in the city of San Francisco. Los Angeles will hop on the environmental bandwagon in 2010.
China gold reserves hit 33.89 million ounces in April China’s State Administration of Foreign Exchange on Monday said the country’s gold reserves increased to 33.89 million ounces by the end of April. Hu Xiaolian, director of the State Administration of Foreign Exchange (SAFE) , had disclosed earlier that China's gold reserve was 1,054 tons in April.
Gold bounces below $950 Gold futures fell below $950 (U.S.) an ounce Monday as the U.S. dollar rose sharply for a second straight session amid signs of an economic recovery, decreasing the appeal of bullion as a hedge against the weakening U.S. currency. Platinum group metals tracked gold to drop sharply as a stronger greenback prompted across-the-board selling in dollar-denominated commodities. The Reuters/Jefferies CRB index dropped almost 1 per cent. “A lot of gold's weakness is dollar related. The market may be overdone ... with the fact that everybody is trying to pick $1,000 last week – it never materialized again,” said Bruce Dunn, vice-president of trading at New Jersey-based Auramet Trading. The dollar has rallied since Friday after data showed United States lost fewer jobs than expected in May, and recent better economic indicators also dented gold's status as a safe haven.
Gold Carry Trade Special Report: The Real Story Behind the True Gold Bull Market On July 24, 1998, Alan Greenspan stood before the House Committee on Banking and Financial Services and said, “Central banks stand ready to lease gold in increasing quantities should the price rise.” That is exactly what the gold carry trade consists of. It is the process in which central banks lease out gold bullion to be sold on the open market to suppress prices. Here’s the thing: The large majority of these transactions take place on the London Bullion Market (LBM). This is an over-the-counter (OTC) market in which there is little-to-no transparency. A number of organizations have conducted studies on the amount of gold lending that takes place. Some of the organizations include Gold Fields Mineral Services (GFMS), the World Gold Council (WGC), and Virtual Metals (VM). As a result of the lack of transparency, the numbers reported in regard to gold leasing vary slightly from one another. For the sake of argument, I will be using the most conservative figures reported.
Obama's China policy takes shape United States Treasury Secretary Timothy Geithner ended his China trip last week on a positive note. His visit, which came on the heels of House speaker Nancy Pelosi and Secretary of State Hillary Clinton's visit in February, said a great deal about change and continuity in the Barack Obama administration's China policy. A call for change was a hallmark of Obama's presidential campaign, but as president, and on China, his administration's handling of America's most important bilateral relationship has been marked by continuity. Engagement rather than confrontation captures of the essence of the approach and will guide Washington in developing "positive, cooperative and comprehensive" ties with Beijing.
Geithner unconvincing - China pushes Yuan internationally over concerns with U.S Dollar Treasury Secretary Geithner is another economic incompetent. He told China that he stood for a “strong dollar,” but that China should let its currency appreciate relative to the dollar, which, of course, would mean a weaker dollar. He simultaneously told China that their investments in US Treasury bonds were safe. His Chinese university audience, being economically literate, laughed at Geithner. It apparently did not dawn on the US Treasury Secretary that if Chinese money is rising in value relative to the US dollar, the value of Chinese investments in dollar-denominated US Treasury bonds is falling.
Top Chinese banker Guo Shuqing calls for wider use of yuan The head of China's second-largest bank has said the United States government should start issuing bonds in yuan, rather than dollars, in the latest indication of the increasing importance of the Chinese currency Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), also said he is exploring the possibility of issuing loans to trading companies in yuan, allowing Chinese and foreign companies to settle their bills in yuan rather than in dollars. Mr Guo said the issuing of yuan bonds in Hong Kong and Shanghai would help to develop the debt markets in China and promote the yuan as a major international currency. It was the first time the head of a major Chinese bank has called for the wider use of the yuan, although a chorus of senior government officials have already voiced their concerns about the stability of the dollar and have said the yuan should be used more widely.
Top China banker calls for U.S. sales of yuan bonds A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency. "I think the U.S. government and the World Bank can consider the possibility of issuing renminbi bonds in the Hong Kong market and the Shanghai market," said Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), the world's second-biggest bank by market value.
Nouriel Roubini "Yuan will become a reserve currency" Part 1/3
Nouriel Roubini "Yuan will become a reserve currency" Part 2/3
Nouriel Roubini "Yuan will become a reserve currency" Part 3/3
Krugman Against Ferguson: What Do Rising Treasury Yields Really Mean? What does the recent rise in treasury yields mean for the economy? The debate currently raging between Paul Krugman and Niall Ferguson pits traditionalists who think rising yields signal rising investor confidence against declinists who think yields are rising because the US is trashing its currency by monetizing debt. Unfortunately, both men may be basing their arguments on outdated metrics that don't take into account the radical changes we've wrought in the way our economy operates.
Obama repackages old US stimulus plan Obama defends revival plan, says it will provide 600,000 jobs this summer despite jobless rise President Barack Obama assured the nation his recovery plan was on track Monday, scrambling to calm Americans unnerved by unemployment rates still persistently rising nearly four months after he signed the biggest economic stimulus in history. Obama admitted his own dissatisfaction with the progress but said his administration would step up stimulus spending in the coming months. The White House acknowledged it has spent only $44 billion, or 5 percent, of the $787 billion stimulus, but that total has always been expected to rise sharply during the midyear period. "Now we're in a position to really accelerate," Obama said. He also repeated an earlier promise to create or save 600,000 jobs by late this year.
BRICs Add $60 Billion Reserves as Zhou Derides Dollar The BRICs are buying dollars at the fastest pace since before credit markets froze in September, protecting exports even as leaders of the biggest emerging markets consider alternatives to the U.S. currency. Brazil, Russia, India and China increased foreign reserves by more than $60 billion in May to limit currency gains as the first global recession since World War II restricted exports, data compiled by central banks and strategists show. Brazil bought the most dollars in a year, India’s reserves gained the most since January 2008 and Russia added the most foreign exchange since July.
the commercial real estate bubble is about to burst
Russia: New world reserve currency a decade away Developed nations are dragging their feet over reforms of the International Monetary Fund, where Moscow wants to have a greater say, Russian Finance Minister Alexei Kudrin said on Saturday. “We already see a lot of foot-dragging and tripping-up along this path,” said Kudrin during Russia’s premier economic forum in Saint Petersburg. “There is a need to make the IMF a true representative of the world’s leading economies. It’s not there right now,” he said, noting that China had a lower representation quota than Switzerland or Belgium.
Bernanke Conundrum Threatens Housing on Mortgage Rate The biggest price swings in Treasury bonds this year are undermining Federal Reserve Chairman Ben S. Bernanke’s efforts to cap consumer borrowing rates and pull the economy out of the worst recession in five decades. The yield on the benchmark 10-year Treasury note rose to 3.90 percent last week as volatility in government bonds hit a six-month high, according to Merrill Lynch & Co.’s MOVE Index of options prices. Thirty-year fixed-rate mortgages jumped to 5.45 percent from as low as 4.85 percent in April, according to Bankrate.com in North Palm Beach, Florida. Costs for homebuyers are now higher than in December.
Fed Approves Capital Raise Plans For All 10 Banks That Failed Stress TestsThe Federal Reserve says: The 10 banking organizations required by the Supervisory Capital Assessment Program to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment's more-adverse scenario. As supervisors, we will be working with the institutions to ensure their plans are implemented quickly and effectively. Supervisors also continue to work with all regulated financial institutions to review the quality of their corporate-governance, risk-management and capital-planning processes.
NOURIEL ROUBINI CNBC MAY 6TH, 2009
The depression quietly deepens It is lonely in the diminishing camp of bears, says Ambrose Evans-Pritchard. Those of us who still question whether the world has purged its toxins are reduced to the same tiny band of moaning Druids from early 2007, when we shook our heads in disbelief as the carry trade swept Iceland to fresh madness and bankers laughed off sub-prime rot at Bear Stearns. We learned then to thicken our skins with walnut juice, lie down in dark rooms, and dissent from Goldman Sachs. Such seclusion is called for once again as Goldman replays its BRIC anthem and raises its oil forecast to $85 a barrel this year, betting that the world will roar back on a tidal wave of liquidity.
Bank Profits From Accounting Rules Masking Looming Loan Losses Big banks in the U.S. say they’re on the mend. The five largest were profitable in the first quarter, rebounding from record losses for the industry in the fourth quarter. Share prices have jumped, with the KBW Bank Index doubling since March 6. Treasury Secretary Timothy Geithner, after “stress testing” 19 banks on their ability to withstand a worsening economy, declared in early May that Americans can be confident in the banks’ stability and resilience. Wells Fargo & Co. and Morgan Stanley were among banks raising $43 billion in new capital since then through share sales.
IMF, World Bank say recovery process still fragile The IMF and World Bank said on Monday the path to global economic recovery is rife with risks and the onus is on policymakers to avoid runaway inflation and other pitfalls that could derail the process. At a forum in Montreal, International Monetary Fund chief Dominique Strauss-Kahn and World Bank President Robert Zoellick turned their focus to life after the crisis, issuing a list of "do's and don'ts" for governments as they try to nurse their economies back to health. Strauss-Kahn maintained his forecast for a global economic recovery in early 2010, with the turnaround starting in September and October of this year.
Peter Schiff - CNBC Jun 8, 2009
Obama Aid Signals Deal With ‘Devil’ as Bankers Get New Rules President Barack Obama, in less than five months in office, kicked out the head of General Motors Corp., scored a majority stake in Chrysler LLC for the United Auto Workers and stiffened U.S. fuel-mileage standards. If pushing GM into the largest bankruptcy of a U.S. manufacturer in history wasn’t enough for a first year in office, the 47-year-old president also aims to cut greenhouse- gas emissions and increase health-care spending by $634 billion. His administration is proposing rules for the $592 trillion over-the-counter derivatives market and standards aligning bank executives’ pay with long-term performance.
Rush Limbaugh: Obama destroying U.S. economy Says Mikhail Gorbachev essentially endorsing Barack's plan Talk radio icon Rush Limbaugh says Barack Obama has become the Mikhail Gorbachev of the United States, overseeing its destruction. "Mikhail Gorbachev presided over the collapse of his country like Barack Obama is presiding over the collapse of his," Limbaugh said on his program today. "And so a man who knows how to collapse his own economy is now advising us on how to collapse ours.
Obama has launched the Green Trade Wars The global warming trade war has started—quietly, but just as surely as we knew it would. The Obama Administration is now subsidizing U.S. milk and cheese exports in a way that will punish New Zealand—which depends on its efficient grass-fed dairy exports for close to one-third of its total income. The reason? U.S. corn ethanol mandates have pushed American feed grain prices so high that the Administration felt it had to “give something” to U.S. dairy farmers.
U.S. top court judge delays Chrysler sale for now The sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA was temporarily blocked by a U.S. Supreme Court justice on Monday, with no indication how long the delay would last. In a one-sentence order, Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the sale "are stayed pending further order" by her or by the Supreme Court.
GM, Amtrak and an Increasingly Fascist America Last week, General Motors finally declared bankruptcy. Many in government thought $20 billion in taxpayer dollars would save the company, but as predicted, it only postponed the inevitable. The government will dump another $30 billion into GM and take a 60 percent controlling interest for it. Public officials are now involving themselves in tactical business decisions such as where GM’s headquarters should move and what kind of cars it will build.
New, Convoluted Auto Bailout The Senate is considering a so-called “Cash for Clunkers” program. The idea behind the legislation, offered by Debbie Stabenow (D-Mich.) and Sam Brownback (R-Kan.), is that if you trade in your older car or SUV, the government will provide you with a voucher up to $4,500 to purchase a new car or SUV that is more fuel efficient. Supposedly this would boost new car sales and help the beleaguered auto industry while also reducing global warming. In reality, it’s a big government idea with many startling, unintended consequences. Meanwhile, even the intended consequences are bad for taxpayers, because this legislation is estimated to cost between $3 and $4 billion.
Ron Paul: GM, Amtrak, and an Increasingly Fascist America
Today's Orwellian America If you have never faced the academic challenge of understanding the hidden warnings contained in George Orwell’s novels “Animal Farm” or “Nineteen Eighty-Four” (1984) the words of this commentary will have little meaning. However, everyone who has studied literature should be aware of the author’s very insightful messages. If you have read and understood the author, just pause and look around. It may have arrived some years later than the announced date, but you are already living in an Orwellian America.
The Next Big Thing: Neomedievalism The world is fragmenting, badly. Gird yourself for a new Dark Age. Many see the global economic crisis as proof that we live in one world. But as countries stumble to right the wrongs of the corporate masters of the universe, they are driving us right back to a future that looks like nothing more than a new Middle Ages, that centuries-long period of amorphous conflict from the fifth to the 15th century when city-states mattered as much as countries.
U.S. House health bill to include government plan Democrats in the U.S. House of Representatives are preparing to unveil a proposal for a sweeping healthcare overhaul that includes a new public insurance plan and would require individuals and businesses to obtain coverage, lawmakers said on Monday. Similar to legislation being developed in the Senate, the House bill would establish an insurance exchange to help people without employer-sponsored insurance find medical coverage. A new government insurance program would be one of the options available, lawmakers said.
Senate Feels Ted Kennedy’s Absence on Health Bill The run-up to major health care legislation is now a full-on frenzy, and some of the main power players were in yet another marathon meeting on Monday afternoon in the not-so-secret hideaway office of Senator Edward M. Kennedy. But Mr. Kennedy, the Democratic chairman of the Health, Education, Labor and Pensions Committee, who has been closely identified with the issue of health care over his nearly 47 years in the Senate, was back home in Massachusetts, where he is still being treated for brain cancer. Though Mr. Kennedy continues to work closely on the unfolding legislation and is in constant touch with staff members and colleagues, he is not expected to return to the Capitol as formal debate begins this month, either for committee hearings or when the legislation moves to the Senate floor.
Ailing Kennedy drafts vision of healthcare reform President Barack Obama's quest to overhaul U.S. healthcare rests in part on the frail shoulders of Senator Edward Kennedy, a champion of the cause now in the second year of fighting deadly brain cancer. A towering figure among Democrats who has called providing health insurance to all Americans "the cause of my life," Kennedy recently floated a bill seen as an first draft of Obama's high-stakes effort.
1Q credit card delinquency rate jumps 11 percent Rate of missed payments for bank-issued credit cards up 11 percent in 1st qtr, TransUnion says Credit card holders who in ordinary years might have used their tax refunds to pay down their balances apparently spent the money elsewhere as the recession deepened in the first quarter. That's one of the conclusions that may be drawn from data showing the delinquency rate for bank-issued credit cards rose 11 percent in the first three months of the year, according to credit reporting agency TransUnion.
Obama and ACORN Officials Set Sights on Gunowners ACORN, the publicly funded national organization linked to voter fraud in several states, is now actively interfering with the exercise of firearm civil rights in New Jersey, and the Second Amendment Foundation is calling for an immediate federal investigation. One example of ACORN’s gun control activism is when its officials intervened in an unsuccessful attempt to defend Jersey City, New Jersey’s local gun control ordinance, which was struck down December 13, 2006 in New Jersey state court as a violation of state law pre-empting stronger local gun ordinances.
Obama moves the 'red line' on Iran Just days before Iran's presidential elections on Friday, the International Atomic Energy Agency (IAEA) released another report on Iran's nuclear program that confirms the absence of any evidence of military misuse as well as Iran's nuclear transparency. The report nonetheless fails to give Iran a complete clean bill of heath and raises questions about the alleged studies and "possible military use". [1] This new report by the IAEA's director general Mohammad ElBaradei will be discussed by the agency's governing board later in June. For now, it appears to have given some ammunition to disparate and diametrically opposed positions on Iran's nuclear program.
North Korea pledges to retaliate against South Korea SEOUL, June 6 - North Korea said Saturday that South Korea will trigger a war on the peninsula after joining the U.S anti Proliferation drive. The threats of retaliation came after the South joined the PSI (Proliferation Security Initiative) after the Norths recent Nuclear test.
June 16th 2009 - South Korean President Lee Myung-bak visits the White House June 16
June 25th 2009 - Noon on the 59th Anniversary of the start of the Korean War, Thursday June 25th, 2009
With possible smaller missile tests if the DPRK can afford it, some question the funding of these events and the ties with Iran. Usually it would take about 2 months to prepare for any launch of ICBM’s but the recent activity being observed appears to imply further launches are to come.
Conversations With History: Judges and the Rule of Law Conversations host Harry Kreisler welcomes Judge J. Clifford Wallace of the Ninth Circuit for a discussion of the role of judges in democracies. Topics covered include: how judges decide, judicial activism and restraint, reforming judicial institutions, and the American judiciary as a model for other countries.
Regional bank in Illinois fails Bank of Lincolnwood becomes the 37th bank to be closed by regulators this year. Bank of Lincolnwood was shuttered by Illinois regulators Friday, bringing the number of failed banks this year to 37 and costing the Federal Federal Deposit Insurance Corp.'s deposit insurance fund $83 million. The two offices of Lincolnwood, Ill.-based bank will reopen Saturday as branches of Republic Bank of Chicago. Bank of Lincolnwood customers will retain their deposit insurance coverage, the FDIC said.
'Gold will remain in $900 to $1,000 price band' With generous enough cash flows to fund expansion and fuel organic growth without going to the market for capital expenditures, the companies that Mike Starogiannis follows should be in a position to drive stock valuations up. According to Mike, Wolverton Securities' Mining Research Analyst, as long as they enhance their production profiles, they are in good shape-unless the price of gold drops considerably. But in this exclusive interview with The Gold Report, he tells us that his sights are set on gold averaging in the neighborhood of $900 to $1,000 per ounce over the next year or two, and any spikes in either direction would be temporary phenomena.
Is COMEX taking gold market for a ride? "The commercial interests are still not ready for this. For the commercial interest to either miss this move or be buried by it is a reach. It could happen, but is unlikely to happen without a fight. We will be watching closely to call it for you. In truth the best possible action would be for gold to decline from some level into the third week of this month and then launch forward. However, to those utilizing gold to insure their standard of living and life it makes no difference at all. The reason for that is gold is going to $1650 and then on to Alf's numbers."
Gold, Silver, Economy + More A recovery is supposed to be in the works in the midst of increased savings, declining debt balances on credit cards, more bankruptcies, higher unemployment and new wave of foreclosures. Consumer participation in GDP is down from 72% to 70.4%. Bank and other financial firms' balance sheets are what they say they are and we have a stock market bear rally built on sand just as we had in 1931. And, lest we forget, bogus government statistics calculated to confuse professionals and investors alike. What an upside down world. How do you make money when you are losing money? Wait until late July and in August when the second quarter earnings are released by financial firms.
Gold Going Mainstream . . . . Gold is a safety net where the government cannot provide one. Gold is money and is the strongest currency now in existence. The U.S. Dollar, Euro or Yuan are no match for a currency that cannot be created out of thin air. Gold is not an industrial commodity and does not require significant economic activity to maintain its value. When things get bad in an economy, politicians create paper promises to pander to the proletariat. If it works, inflation results and savers are punished. If it doesn't work, confidence evaporates. We are conditioned to accept that inflation will always occur, but it can be a question of timing and larger cycles come into play.
Why Gold investors are switching to Silver Silver may not be as charming and glittering like gold. Though silver is treated like a poor man's gold in countries like India, the white metal continues to outpace the yellow metal in investment demand. So what is driving the silver market world-wide? And where is silver production and demand heading for the year 2009? Read some interesting factors from the World Silver Survey that drive silver market, and that help silver to out-beat gold often.
Inflation Fears Push Gold Near Record Price Here at The Ticker, we've been waving the yellow caution flag on inflation for some time. Now, investors appear to be agreeing. Gold was pushed to near-record price levels today, edging toward $1,000 per ounce. It's up 11 percent from an April low. Gold has only risen above $1,000 twice, both times during the current economic crisis. Typically, people buy gold for security when stocks swing wildly. Now, however, another reason is pushing gold higher -- fears of a return to 1970s-style double-digit inflation. Or worse: the 100 percent hyper-inflation of 1920s Germany and modern Latin America from time to time.
Manipulation of the Gold Market ATA argues that for over a decade, gold prices have been kept artificially low. Who's behind the manipulation, and why? It's what we call "The Gold Cartel": The United States government is the main culprit, with "hit men" like Goldman Sachs and J.P. Morgan Chase, and other central banks, like the Bank of England. It's been going on for some time now. Basically, it all started with [former U.S. Treasury Secretary under the Clinton Administration] Robert Rubin, back when he was the head of Goldman Sachs in London. He would borrow gold from the central banks at a 1% interest rate, and then sell it. He took this idea and made it the essence of his "Strong Dollar Policy" [while at the U.S. Treasury].
how Obama could confiscate your gold according to Marc Faber
Sell Platinum, Buy Palladium on $1,000 Spread: Chart of Day Investors should sell platinum and buy palladium when the spread between the precious metals exceeds $1,000, making platinum "extremely expensive" for industrial users, according to Equidex Brokerage Group Inc. The CHART OF THE DAY shows the difference reached $1,037 yesterday, the widest since September. The spread briefly rose to four digits on April 13, before narrowing in the next two weeks. An expanding gap encourages automakers to switch to using palladium in emissions-control devices, said Philip Gotthelf, president of Equidex in Closter, New Jersey.
Russian ruble to go palladium Boris Gryzlov, the speaker of the Russian Parliament, the State Duma, said that the participants of the Economic Forum in St. Petersburg would discuss a possibility of making ruble coins from precious metals. "We could offer the world the Russian ruble made of palladium. It would be a very strong currency. One may recollect the golden ruble, which Russia had during the tsarist times. It was a freely convertible currency and was circulating very well," Gryzlov told reporters Thursday.
The Importance of the Dow-Gold Ratio In very simple words, the Dow-Gold ratio tell investors how many ounces of gold is needed to buy one Dow Jones Industrial Index. If we consider today's index value and gold prices then: Dow-Gold Ratio = Value of Dow Jones / Value of Gold in Ounce = 8763.13 / 962.60 = 9.10 So, if the Dow-Gold ratio has to touch one, either gold will go ballistic in the long term or the Dow Jones Index will crash very significantly. Below is my opinion on why I feel that Dow-Gold ratio will touch one and why I also feel that it will be gold that will go ballistic in the long term leading to this ratio touching one.
Obama’s Economic Circle Keeps Tensions Simmering President Obama was getting his daily economic briefing one recent morning when a fly distracted him. The president swatted and missed, just as the pest buzzed near the shoes of Lawrence H. Summers, the chief White House economic adviser. “Couldn’t you aim a little higher?” deadpanned Christina D. Romer, the chairwoman of the Council of Economic Advisers. Mrs. Romer was joking, she said in an interview, adding, “There are only a few times that I felt like smacking Larry.” Yet few laughed in the president’s presence.
Doubts mount over US toxic asset plan Lenders turn cool on FDIC’s scheme The controversial US toxic asset clean-up plan, aimed at clearing bad loans from US banks’ books to enable them to raise capital and lend freely, has fallen behind schedule, and may never be fully implemented. The plan has fallen prey to concerns from potential investors and regulators and waning interest from the banks themselves. Investors fear that Congress may set caps on pay while regulators are beginning to doubt whether the plan is really necessary.
IMF Says New Reserve Currency to Replace Dollar Is Possible The International Monetary Fund said it's possible to take the "revolutionary" step of creating a new global reserve currency to replace the dollar over time. The IMF's so-called special drawing rights could be used as the basis for a new currency, First Deputy Managing Director John Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today. "There are many, many attractions in the long run to such an outcome," Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today. "But this is not a quick, short or easy decision," he said, adding that it would be "quite revolutionary."
What's Killing the U.S. Dollar and It's Impact on Income Investors and Markets While recent news on the US economy, especially the non-farms payroll data, as been positive (OK, more like less negative than expected), in the past weeks, a number of powerful long term market trends have continued in currency and commodities markets and should continue over the coming months, albeit with the usual short term counter moves. In sum, these include:
The weakening dollar against all major currencies.
The ensuing up trend in commodity prices (commodities are priced in USD) and their related currencies, the CAD and AUD against other major currencies.
U.S. Week Ahead: Inflation Worries Return Worries inflation could return as the recession shows signs of easing may keep investors on their toes next week. The Fed's Beige Book is due and Apple afficionados will gather in San Francisco for a developers conference.
Russian Warns Against Relying on Dollar ST. PETERSBURG, Russia - President Dmitri A. Medvedev, who rarely misses a chance to accuse the United States of causing the global financial crisis, told an economic forum on Friday that wobbly American financial policy had made the dollar an undesirable currency for reserves held by central banks. Russia, along with China and other nations, has floated the idea of forming a supernational currency to supplant the dollar, perhaps using the so-called special drawing rights units of the International Monetary Fund as a basis.
US dollar 'overvalued' THE US dollar is 'seriously overvalued,' mostly against the Chinese renminbi and some other Asian currencies, according to a new study published on Wednesday. The Peterson Institute for International Economics, a Washington-based think tank, said the majority of the 29 currencies it studied need to appreciate against the dollar, with a large rise especially needed by the Chinese currency. 'The principal counterpart to the overvalued dollar is the undervaluation of the Chinese renminbi, which would have needed to appreciate about 21 per cent on a weighted average basis and about 40 per cent against the dollar to achieve equilibrium,' said the study by economists William Cline and John Williamson.
Monetizing Debt: The Grandest of Larcenies "Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation," said Ben Bernanke in response to a question posed by a member of Congress. Then, he added… "The Federal Reserve will not monetize the debt." That last sentence has a ring to it. It reminds us of Richard Nixon's "I am not a crook." Surely, it is destined to make its way into the history books, alongside Bill Clinton's "I did not have sex with that woman" and the builder of the Titanic's "even God himself couldn't sink this ship."Monetizing the debt is precisely what the Fed will do. But it will not do so precisely. Instead, it will act clumsily…reluctantly…incompetently…accidentally…and finally, catastrophically.
CCB may offer renminbi trade credit Will see currency more widely used Guo Shuqing, chairman of China Construction Bank, said his bank, the second largest in China, was exploring offering renminbi-denominated trade finance credit that could make the Chinese currency more widely used internationally. His voice, the first from the head of a large Chinese bank, joins a chorus from senior government officials on currency matters that together reflect concerns about the stability of the US dollar and several efforts to promote the use of the renminbi more widely.
Merkel's inflationary fretting may wake the bears from hibernation Those of us who still question whether the world has purged its toxins are reduced to the same tiny band of moaning Druids from early 2007, when we shook our heads in disbelief as the carry trade swept Iceland to fresh madness and bankers laughed off sub-prime rot at Bear Stearns. We learned then to thicken our skins with walnut juice, lie down in dark rooms, and dissent from Goldman Sachs. Such seclusion is called for once again as Goldman replays its BRIC anthem and raises its oil forecast to $85 a barrel this year, betting that the world will roar back on a tidal wave of liquidity.
The Case Against the Fed By far the most secret and least accountable operation of the federal government is not, as one might expect, the CIA, DIA, or some other super-secret intelligence agency. The CIA and other intelligence operations are under control of the Congress. They are accountable: a Congressional committee supervises these operations, controls their budgets, and is informed of their covert activities. It is true that the committee hearings and activities are closed to the public; but at least the people's representatives in Congress insure some accountability for these secret agencies.
Fed Starts Talking Tough Again With nearly everyone now convinced that a repeat of the Great Depression is off the table, futures markets now pricing in hikes to short-term interest rates this year, fear of inflation and asset bubbles is now sweeping the land. The Federal Reserve is even starting to talk tough again. MarketWatch reports that San Francisco Fed President Janet Yellen thinks asset bubbles might better be popped next time around.
"Who is going to lend us the $2 trillion a year necessary to fund this spending?" and
What interest rates are they going to demand to do it?"
Exclusive Interview with Future Prediction Expert Gerald Celente It's the end of the world as the Greater Depression hits after 2010's failed "W-recovery" Human Events had the opportunity to interview forecaster extraordinaire Gerald Celente, President of Trends Research Institute, several days ago -- and the future he predicts looks bleak indeed. In fact, as Mr. Celente sees it, the Great Depression will seem like a mild recession as what waits for us in 2011 hits with the force of a Katrina financial hurricane.
Time to roll back the stimulus Testifying before the House Budget Committee this week, Federal Reserve Board Chairman Ben S. Bernanke said that when the time comes, the Fed will raise interest rates in order to stop inflation from building in the next recovery. . . . . . . But when you talk to traders and economists, the whispered story is that Mr. Bernanke and the Fed are no longer truly independent of the Obama White House and Treasury. As a result, Mr. Bernanke will not be able to slow the printing presses and gradually lift the near-zero target rate in a timely and effective manner. Already the Fed has created more than $1 trillion in new cash, and M2 money-supply growth is the fastest in 25 years.
U.S. to Propose Wider Oversight of Compensation The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor pay, according to two government officials. The proposal is part of a broad set of regulations on executive compensation expected to be announced by the administration as early as this week. Some of the rules are required by legislation enacted in the wake of the worst financial crisis since the Great Depression, and would apply only to companies that received taxpayer money.
The Charm Offensive Last week Team Obama took their dog and pony show on the road. Treasury Secretary Geithner went to China, Fed Chairman Bernanke to Capitol Hill, and the President himself began a Mideast tour in Saudi Arabia. This full-court press is not coincidental, and comes just as the federal government has begun unloading trillions of dollars in new Treasury obligations. The coordinated charm offensive is meant to assure the world-at-large that the United States can repay these obligations without destroying the dollar.
White House: Health care reform will pass this summer President Obama's senior adviser on Sunday said he is confident Congress will pass sweeping health care reform legislation this summer. "I really do," David Axelrod told CBS' "Face the Nation" program. "I think there's a sense of urgency about health care reform … there is a consensus that something has to be done." The president has made expanding health care coverage one of his top priorities for this year, though his push for a Medicare-style public insurance plan to compete with private insurers has faced strong resistance from Republicans on Capitol Hill.
Refinancing Boom Fizzles as Interest Rates Rise From Historic Lows A rise in interest rates has put a damper on a mortgage refinancing boom, according to industry data released yesterday, and created another potential stumbling block to a housing recovery. Mortgage interest rates, at historic lows for weeks, rose to 5.25 percent for a 30-year fixed rate loan last week, a level last seen in January. That led to a 16.2 percent seasonally adjusted drop in mortgage applications, according to the Mortgage Bankers Association's weekly market composite index, a measure of mortgage loan application volume.
1-Star Stocks Poised to Plunge: Capital One? Market-lagging returns could be written in this one-star. The problem for [Capital One] and other [credit card] companies is that what you owe them is unsecured debt. Over the next year or so, they are gonna have to write off an awful lot of that. All courtesy of the bad economy and the overleveraged consumers.
Michigan shuts 8 prisons to save $120M Struggling state looks to stem budget bleeding by closing 3 prisons and 5 prison camps. Michigan is facing a $1.4 billion budget deficit for fiscal 2010. Michigan officials said Friday that the state is closing three prisons and five prison camps in hopes of narrowing a $1.4 billion budget gap for fiscal 2010. The state, which has been hammered by the auto industry meltdown, estimates that it will save $120 million by shuttering the eight facilities. None of the 4,149 prisoners in the facilities will be released early, but up to 1,000 workers may lose their jobs.
Shiller Says Home Prices in U.S. May Decline for 'Some Time' Robert Shiller, the Yale University professor who predicted the collapse of the U.S. housing market, writes in a New York Times article today that home price declines "may well continue for some time." Shiller, co-founder of a home-price index that bears his name, said prices may "continue to fall, or stagnate" in 2010 and 2011. The S&P/Case Shiller index of 20 major cities showed median home prices were down 32 percent in March from their peak in July 2006.
Hey Homebuyers, Beware A False Bottom Before You Make That Bid The fall in housing prices -- like falling prices anywhere, really -- has the effect of perpetuating itself, by scaring would-be buyers. Nobody wants to catch a falling knife, particularly if they have to borrow a lot of money to do it. So you'd think that the correct strategy would be to site on the sidelines, wait, watch for home stabilization, and then buy. And since nobody thinks the market will just shoot back up in a straight line, there's really not much reason to worry about waiting. Patience is advised. But even stabilization may be misleading.
House Prices Likely To Crash Through Fair Value And Bottom Down 45%-50% House prices are finally approaching fair value. Unfortunately, unless the housing bubble behaves differently than almost every bubble before it, house prices will now crash right through fair value and stay below it for a number of years. When prices do finally bottom, moreover, they aren't likely to recover quickly.
Consumers perking up, but spending's still limited U.S. reading on retail sales for May expected to rise on autos, gas With stock prices rising and job losses slowing, consumers have perked up. But they're not getting carried away. While recent signs indicate the economic gloom is lifting, sentiment remains relatively weak and consumers are staying cautious. Data to be released this week are expected to show that retail sales and consumer sentiment are improving, though neither report will shine by economists' reckonings.
'World's cheapest car' coming to US India's Tata Motors hopes to offer the Nano, which costs $2,300, to Americans within two years. India's Tata Motors hopes to offer the Nano, dubbed the world's cheapest car, in the United States within two years, its chairman said. "It will need to meet all emission and crash standards and so we hope in the next two years we will be offering such a vehicle in the U.S," Ratan Tata told a panel at the Cornell Global Forum on Sustainable Global Enterprise late Wednesday. The company plans to offer a European version of the car, which costs about $2,300, in 2011.
Supreme Court Is Asked to Delay Chrysler Sale Three Indiana state funds asked the United States Supreme Court late Saturday to delay a deal to sell most of Chrysler's assets to Fiat, their last hope of challenging the transaction after two lower courts approved it. In documents filed to Justice Ruth Bader Ginsburg, lawyers for the funds asked to extend a stay on the sale, which is set to expire Monday at 4 p.m. The funds are seeking to have the high court re-examine the case, after the United States Court of Appeals for the Second Circuit upheld the sale Friday afternoon.
Chrysler dealers scramble to unload vehicles Dealers slated to lose franchises hurry to sell off inventory ahead of Tuesday terminations Hundreds of Chrysler dealers across the U.S. on the automaker's "hit list" are scrambling to dispose of their inventory by Tuesday when their franchise agreements are slated to be terminated. Auburn Hills, Michigan-based Chrysler has asked a bankruptcy court for permission to terminate the franchise agreements of 789 dealers, about 25 percent of the total. Chrysler needs to cut costs, and claims current sales levels do not justify a network of 3,189 dealers. For those facing termination, the last days of selling Dodge, Jeep and Chrysler vehicles have been filled with quick sales at deep discounts, along with sad goodbyes from longtime customers and feelings of dismay and anger toward the automaker they worked with for years.
G.M. in Deal to Sell Saturn to Penske Only two weeks ago, Roger Penske looked on from trackside as his team won the Indianapolis 500 car race. Now he has laid claim to what he hopes will be another trophy: Saturn. General Motors announced Friday that it had agreed to sell Saturn to the Penske Automotive Group, whose chairman is Mr. Penske, 72, who is one of the nation's biggest automobile dealers.
Jobs Report Unnerves the Credit Markets To many analysts, the news that 345,000 jobs were lost last month offered another hint that the economy might be bottoming out. But those figures were not a good omen for investors worried about inflation, or for the government's efforts to keep a lid on interest rates. As the government detailed its latest assessment of the job market, interest rates on Treasury issues shot up, reaching their highest since mid-November. The Treasury's benchmark 10-year note fell 30/32, to 94 7/32, as investors edged away from buying government debt in the face of exploding federal deficits.
Cuba in the OAS: Communist Fox in the Democratic Hen House? Cuba, the Bolivarian Left, and the OAS The charge for Cuba's return to the OAS was led by leaders with tarnished democratic credentials, notably Hugo Chávez of Venezuela and Daniel Ortega of Nicaragua. Along with Bolivia, the Dominican Republic, Honduras, and Cuba, they are members of the Bolivarian Alternative for the Americas (ALBA). Argentina, Ecuador, and Paraguay are also closely affiliated with the ideological line of their ALBA friends.
We Had Our Perestroika. It's High Time for Yours. By Mikhail Gorbachev Years ago, as the Cold War was coming to an end, I said to my fellow leaders around the globe: The world is on the cusp of great events, and in the face of new challenges all of us will have to change, you as well as we. For the most part, the reaction was polite but skeptical silence. In recent years, however, during speaking tours in the United States before university audiences and business groups, I have often told listeners that I feel Americans need their own change -- a perestroika, not like the one in my country, but an American perestroika -- and the reaction has been markedly different. Halls filled with thousands of people have responded with applause.
Obama lays his Likud trap There is a famous episode in the classic comedy show, Fawlty Towers in which the British hotelier played by John Cleese prepares for a party of German guests with the invocation "Don't mention the war!" Obama actually came to Cairo and pulled this off. Speaking on the eve of the 42nd anniversary of the Six-Day War in which Israel actually occupied the Occupied Territories, he gave a long and considered oration which did not mention the war that gave rise to the occupation and whose humiliation is still seared in Egyptian memory.
Arabs don't need Obama's lip-service US President Barack Obama arrived in the Middle East. He visited Saudi Arabia on Wednesday, although his visit to Egypt seems to be more important. Obama will deliver a landmark lecture at the Cairo University. The key ideas of Obama's lecture are as follows. The United States must not teach foreign governments on how they should govern their nations. Instead, the USA must encourage the development of universal principles of democracy, such as freedom of speech and freedom of conscience. George W. Bush delivered a number of similar speeches and drove Iraq and Afghanistan into the Middle Ages.
Obama's Cairo Speech Will Cost Lives President Obama, in his long-promised address to the Muslims given Thursday in Egypt, embraced Islam, gave a green light to Iran's nuclear program, and said that the "trauma" of 9-11 led America to act contrary to its ideals. In 6000 words, the president managed to prove that everything conservatives worried about -- his naivete, lack of expertise and belief in moral equivalency -- was correct and even understated. The Commander-in-Chief described his view of America's relationship to Islam and his own responsibility:
Obama, Like Bush, Just Doesn't Get It President Obama is in Cairo to deliver a major address to the Muslim world, which no doubt will explain that the U.S. government loves the people of the Middle East and is doing all sorts of good things to them. Alas, President Obama, like his predecessor, just doesn't get it. The reason that people in the Middle East are angry at the United States is because the U.S. government is over there. If the U.S. government wasn't involved in the Middle East, that would bring an end to the U.S. foreign-policy woes in that part of the world.
Arabs Welcome Obama's Speech, Say They Want Action Arabs welcomed President Barack Obama's call for a "new beginning" in relations with the Muslim world and urged the U.S. to match words with actions, while in Israel analysts said the speech would intensify pressure on their government to halt West Bank settlements. In an address at the golden-domed Grand Hall of Cairo University yesterday, Obama said both societies must end the "cycle of suspicion and discord" that has defined the relationship. While saying the U.S. bond with Israel is "unbreakable," he said the Israelis must halt expansion of settlements and recognize Palestinian aspirations for statehood.
For China-U.S. Talks on Climate, Issues Old and New For months the United States and China, by far the world's two biggest emitters of greenhouse gases, have been warily circling each other in hopes of breaking a long impasse on global warming policy. They are, as President Obama's chief climate negotiator puts it, "the two gorillas in the room," and if they do not reach some sort of truce, there is no chance of forging a meaningful international treaty in Copenhagen later this year to restrict emissions.
China's Hidden Bankruptcy Throughout 2008, only 3,500 enterprises formally filed for bankruptcy in China. Hiding behind this tiny number however is the approximately 800,000 businesses that exited the market by either cancelling their registration or having their business license revoked. The rise in the number of these hidden bankruptcies has emerged since a new bankruptcy code came into force in China on June 1, 2007. In order to solve problems that have emerged since the introduction of the new legislation, the Supreme People's Court has accelerated it's timetable to release judicial interpretations of the law.
Another Korean war? North Korea threatens to engulf the Korean Peninsula in an all-out war. Pyongyang's recent test of a nuclear bomb poses a serious threat to international security and regional stability. Dictator Kim Jong-il continues to thumb his nose at global leaders, especially President Obama. The ailing strongman has denuded Mr. Obama on the world stage, revealing his soft-power strategy to be ineffective and reckless. Washington's emphasis on diplomacy was supposed to facilitate rogue states into increased cooperation. Instead, it has only emboldened the likes of North Korea (and Iran) to press ahead with their nuclear-weapons programs. Mr. Obama's "open hand" has been met with Mr. Kim's iron fist - one that has smashed Uncle Sam in the face.
A sombre scoop for Pyongyang's pawns North Korean strategists must be loving every minute of it. They've got two American women in their net, charged with entering the country illegally and committing "hostile acts". They've got the United States State Department working behind the scenes for their release while talking tough in public about North Korean "provocations". They've got the women's relatives - including an older sister who once made a television documentary exposing the horrors of life in North Korea - appealing publicly for mercy. And they've also got activists across the US staging "vigils", praying and pleading for justice. But none of this is likely to have much impact on authorities in North Korea when it comes to deciding the fate of the two women, who were arrested by North Korean soldiers on March 17 while on assignment for Current TV, the San Francisco Internet television network that's half-owned by Al Gore, the former US vice president.
Obama Deception Extras 1 Watch coverage of the DNC in Denver where Obama supporters attempt to silence free speech by assaulting 9/11 truth activists, watch extended interviews with Jesse Ventura, Gerald Celente, Ralph Nader and KRS-One. Also learn about how Obama is a front man for the two party dictatorship.
Obama Deception Extras 2
Obama Deception Extras 3
AGENDA 21 DEPOPULATION 2009 PART 1
AGENDA 21 DEPOPULATION PART 2 "sustainable goal is the elimination of the middle class . . ."
Liberal Elite Meet Secretly & AGREE ON POPULATION CONTROL / Gates, Rockefeller,Oprah, Soros ......
US Treasuries=Sub-Prime Debt Gold at $2,000 . . . . Since this recession has been compared to the Great Depression of the 1930s, let's see what happened to the stock markets then. The Dow Jones peaked in Sept 1929 and then fell 48% by November. It then rose 50% in a bear market rally off that November bottom. The rally lasted till April 1930. The rally generated expectations that the worst was over. President Herbert Hoover told a group that had come to ask for a stimulative public works program in June 1930, "Gentlemen you have come sixty days too late. The Depression is over." He was wrong. By June 1932, the Dow Jones had lost 89% of its value from the 1929 peak and the Depression lasted until 1939 when World War II began.
Gold more alluring than ever With bullion prices edging ever closer to the $1 000 an ounce mark, the alluring gleam of gold is more intoxicating than ever. The price at the close of trade on Wednesday sat at $963,45. Investors are lapping it up as the impact of the global economic crisis deepens and countries everywhere spend trillions in a bid to rescue their economies, fanning the flames of inflation. The United States Federal Reserve has been flushing the economy with dollars, effectively eroding the currency's value and seeing investors take refuge in gold, traditionally viewed as a hedge against inflation and a back-up against a weak dollar. As Peter Major, gold analyst at Cadiz Financial Strategy Group, said, it is "the world's oldest currency".
Gold: Headed For A Bubble? Though it has captured investors' imaginations, no one can say what gold is really worth. Investment bubbles usually begin as legitimate bull markets, and I wouldn't be surprised if gold were next. First, there's a serious investment case. Central banks are flooding the world economy with liquidity. That's a peril to all paper currencies. Anything scarce and valuable, such as precious metals, ought to benefit. Gold is also coming off a very low floor from 10 years ago.
Did U.S. Export Over 175 Million Ounces of Gold? The United States Geological Survey (USGS) publishes monthly Mineral Industry Surveys with one series that focuses on gold production, imports and exports. These reports include information from the U.S. Census Bureau on the quantities of refined gold bullion and gold compounds exported from the US. The latest monthly report is from February 2009, which includes data for 2008 and early 2009. The February 2008 report is the oldest of these reports available at the USGS Web site (www.usgs.gov), which includes data for all of 2007. For prior years, there are annual reports that do not lay out the data in the same format.
The Bull and Bear Sides of Gold Poor Tim Geithner! When he asserted that China's Dollar assets are safe, he drew laughter from an audience of Chinese students. As well, an American delegation to the Gulf reportedly drew a blank back in May when it tried to get more petro-dollar investment into the U.S. As the USD continues to plunge and the price of gold heads for another test of the $1,000 level, I thought it is time to review the bull and bear case for gold. In this review, I consider the economic, technical, investor psychology and geopolitical viewpoints when making my assessment.
Liberal Elite Meet Secretly & AGREE ON POPULATION CONTROL / Gates, Rockefeller,Oprah, Soros ......
Precious Metals: Too Far, Too Fast? This year's bad economic news overshadowed the aspect of geopolitical risk, which again reared its ugly head over the past few weeks. North Korea has conducted a new nuclear test and fired short range missiles. Iran has made several moves that in slower news cycles would have dominated the headlines. Israel, worried about the situation in Iran, is conducting a five day drill, dubbed 'Turning point 3," to prepare Israel's rapid response capabilities in the event of simultaneous missile strikes and terrorist attacks. All this is bad enough without mentioning other flash points, such as Afghanistan, Pakistan, Nigeria and Venezuela.
China to consume 40% of global gold production The economic fundamentals for gold are favorable. Production of gold from South Africa, United States, Australia and Canada, has dwindled every year over this past decade. These countries, which combined to produce two thirds of the global gold through the 1980’s, now produce less than half of the gold mined today. In 2006, South Africa, the world’s largest producer of gold, hit its lowest production level of gold in 84 years.
India exports 30 tons gold coins, scrap gold to Dubai High gold prices, slumping jewellery sales and rising stock market conditions are prompting several Indian bullion dealers to export scrap gold and gold coins to several destinations in the Middle East, especially to Dubai. In the last few years, India has been the largest importer and consumer of gold. In 2008, India imported around 400 tonnes of gold, which is mainly used for making jewellery items and gold coins. But in the last five months of 2009, India’s gold imports have fallen to negligible levels, compared to previous years, that bullion dealers are now importing scrap gold to Dubai. India has so far imported only around 47 tons of gold this year.
Precious metals market rally may break down This year’s bad economic news overshadowed the aspect of geopolitical risk, which again reared its ugly head over the past few weeks. North Korea has conducted a new nuclear test and fired short range missiles. Iran has made several moves that in slower news cycles would have dominated the headlines. Israel, worried about the situation in Iran, is conducting a five day drill, dubbed ‘Turning point 3,” to prepare Israel’s rapid response capabilities in the event of simultaneous missile strikes and terrorist attacks. All this is bad enough without mentioning other flash points, such as Afghanistan, Pakistan, Nigeria and Venezuela.
pt 1/3 Marc Faber hyperinflation in the US like Zimbabwe
pt 2/3 Marc Faber hyperinflation in the US like Zimbabwe
pt 3/3 Marc Faber hyperinflation in the US like Zimbabwe
The First Steps to Hyper-Inflation NOT FOR THE first time the Financial Times says we gold buyers are "nuts" – a word which all too often follows on from "gold" in the financial media. I should rise above this sort of thing. What does it matter if the FT thinks me nuts? But I find I'm irritated, both for myself and on the collective behalf of successful gold investors. I don't think we deserve to be called "nuts" after our gold has for 6 years so consistently outperformed all those other serious investment classes so diligently analyzed on Wall Street and in the City. Gold continues to strengthen against the Dollar. Faint hopes of a swift "V-shaped" recession are dwindling, which is hardly surprising. Global economic activity up to 2007 was driven by rich world consumers buying things even they couldn't afford. In the US alone they have since lost about $12 trillion of private wealth – $120,000 per family. Judging by estimates published in The Economist this should induce a demand slump of about $500 billion per year, for 10 more years.
All Markets Suggesting Hyperinflation After watching the financial markets the past few weeks, it appears my greatest fear (and expectation), that of unchecked advancement of U.S. inflation, is coming to be – NOW. Perhaps using the taboo word “hyperinflation” doesn’t serve my purpose well, much as it hurt Cassandra to speak of “Armageddon.” But “unchecked advancement of inflation” and hyperinflation are one and the same, no matter what you call it. I have been speaking of the increasing likelihood of this event occurring for the past year, but now I fear the time for analyzing is about to end, and the time to act NOW.
Hedge Fund Managers Launching New "Hyperinflation" Funds
How Mark-to-Model Rules Are Killing The Government's Plan to Buy Banks Bad Assets The Wall Street Journal has a great story yesterday on how lobbyists pushed Congress to change the accounting rules. According to the WSJ, the financial services industry spent $27.6 million pushing lawmakers to help them relax the mark-to-market rules, which had forced banks and other financial firms to value bad assets at distressed prices. The rules have been at the center of huge losses at banks throughout the financial crisis. The lobbying paid off in the form of bigger profits in the past quarter and Wells Fargo, Citigroup, and other big banks. The whole story painted a pretty grim picture of what's happening in Washington, as Felix Salmon notes in a recent blog post.
Bernanke's Math - Does It Add Up? The current account deficit is down as we are less reliant on foreigners to finance our deficits; the government's deficit is increasingly covered by the domestic private sector as private sector borrowing is down. -- These were the approximate words of Fed Chairman Bernanke in testimony to the House Budget Committe. This statement is so troublesome, let's examine it a step at the time. The current account deficit reflects the amount foreigners need to buy in U.S. dollar denominated assets to keep the currency from falling. As the trade deficit shrinks because of weaker global trade, the current account deficit came down a bit last year. However, external financing is part of the current account and as the U.S. government has to raise trillions in the markets this year, it is difficult to imagine that the current account deficit will be down this year from last. It would imply that over $2 trillion in new U.S. government debt will be financend entirely domestically. Two main ways this may be achieved:
Bernanke Presses For Fiscal Restraint Prolonged Deficits Threaten Economy, Fed Chief Warns The nation needs to begin planning now to eventually bring taxes and spending in line, Federal Reserve Chairman Ben S. Bernanke said yesterday, arguing that large budget deficits, if sustained, could deepen the financial crisis and choke off the economy. Bernanke's testimony to Congress reflected growing concern among economists and investors that the nation's long-term fiscal imbalances could stand in the way of economic recovery by driving up the interest rates that the government, businesses and consumers pay to borrow money. The rate the government pays has already risen in recent weeks.
Bernanke's Deflation Preventing Scorecard In case no one is keeping track, Bernanke has now fired every bullet from his 2002 "helicopter drop" speech Deflation: Making Sure "It" Doesn't Happen Here. Bernanke's Scorecard Here is Bernanke's roadmap, and a "point-by-point" list from that speech.
Reduce nominal interest rate to zero. Check. That didn't work...
Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn't work...
Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn't work...
Make low-interest-rate loans to banks. Check. That didn't work.... read full article to see more points . . .
This Government Can't Be Serious . . . . Chinese Begin Buying Up Gold Individual Chinese investors are now rushing to hoard the precious yellow metal, hoping it will retain value if the dollar collapses. "The declining value of the dollar along with the worsening economic outlook is forcing investors to seek other anti-inflationary investment tools, like gold," Ping An securities analyst Xiao Zheng told The China Daily. China is the world's second-largest gold consuming country. In late April, the People's Bank of China announced its gold reserves had risen 454 tons since 2003 to 1,054 tons, a signal that the central bank is taking gold as a reliable hedge against financial uncertainties as fears over the global recession deepen. Analysts say they expect the Chinese government would continue to raise its gold holdings as the yuan becomes increasingly internationalized. Chinese demand for gold bullion reached 68.9 tons in 2008, up 176 percent from 25 tons in 2007.
As the Dollar Falls Off the Cliff ... Economic news remains focused on banks and housing, while the threat mounts to the US dollar from massive federal budget deficits in fiscal years 2009 and 2010. Earlier this year the dollar's exchange value rose against currencies, such as the euro. UK pound, and Swiss franc, against which the dollar had been steadily falling. The dollar's rise made US policymakers complacent, even though the rise was due to flight from over-leveraged financial instruments and falling stock markets into "safe" Treasuries. Since April, however, the dollar has steadily declined as investors and foreign central banks realize that the massive federal budget deficits are likely to be monetized. What happens to the dollar will be the key driver of what lies ahead. The likely scenario could be nasty.
Insouciance about debt is dangerously misplaced Sir, I am glad to have furnished grist to Martin Wolf's mill ("Rising government bond rates prove policy is working", June 3). But hyper-Keynesian fiscal policy on top of a large structural deficit is going to cause bigger problems in the future than he allows. Allow me to make four points in response. First, I have never said this crisis was a "mild" recession. I called it a Great Repression - a depression repressed by the Federal Reserve's timely and bold action. Now it is just a big recession. Nor have I ever argued for tax increases, which Mr Wolf implies. For years I have urged expenditure restraint on the US.
You ain't seen nothin' yet! . . . .Yet this week, Mr. Tim Geithner - the big banks' main man in Washington - is in China trying to reassure the Chinese that America takes its financial obligations seriously. That's something we never expected to see either. America may have the strongest economy on earth. But if the commies stop financing it, we're out of business. So Geithner is in China, hat in hand, like a major debtor called into the bank president's office. Geithner, of course, has no choice. He has to go... and say what he has to say. He will use all the right words. He will show the appropriate seriousness... he will smile when it is called for... and put on a grave face when he needs to. The trouble is, there's little he can do to help the Chinese. They want him to protect the dollar and the bond market. That's something he can't do. "It will be helpful if Mr. Geithner can show us some arithmetic," said Yu Yongding, a former advisor to the Chinese central bank. Yes, we'd like to see that arithmetic too. How do you add $1.75 trillion in deficits... pay for it with funny money from the Fed... and still come out even on the value of the dollar?
Bankruptcy filings rise to 6,000 a day as job losses take toll Consumer and commercial bankruptcy filings are on pace to reach a stunning 1.5 million this year, according to a report from Automated Access to Court Electronic Records. While well below the record 2 million filings in 2005, the number of filings is up sharply from last year's 1.1 million, says Robert Lawless, professor of law at the University of Illinois.
Welfare Spending Soars To Record Highs! [original article evidently removed from USA today(?)] The recession is driving the safety net of government benefits to historic highs, as one of every six dollars of America's income, under hussein and DIRTY HARRY, is now coming in the form of a federal or state check or voucher. With the middle-class worker bee footing the bill, while those who make over $250K a year, still don't pay their fair share of taxes, a promise hussein made, but it was a pure lie/ruse to the poor, and working class! Benefits, such as food stamps, unemployment and free health care for legal and illegal aliens accounted for 16.2% of personal income in the 1st quarter of 2009, the Bureau of Economic Analysis reported. That is the highest ever, since the nation began compiling records since 1929! In other words, we are paying out more in welfare benefits, than we did during the Great Depression
Doth Geithner Protest Too Much? "Chinese assets are very safe" This remarkable assertion regarding the safety of US debt securities held by China was made by Timothy Geithner, US Treasury Secretary, during his visit to China. That Mr. Geithner felt compelled to make this statement probably reinforced the unease China has about the finances of the United States. If the Chinese assets were actually "safe" and everyone knew it, there would have been no need to say that they were safe. Mr. Geithner's denial brings to mind another famous denial made by Richard Nixon during the Watergate affair - "I am not a crook". We all know how that turned out. If it wasn't obvious that everyone knew Nixon was a crook, he would not have had to deny it. If US assets are really safe, Geithner would not have to say that they are safe.
Marc Faber and Peter Schiff on The Glenn Beck
CHINA RISING - 21ST CENTURY JUGGARNAUT Do you ever get the feeling that we are being pursued by someone who wants to kill us? No matter what we do, they are still in pursuit. They never let up. We've tried deception, trickery, and frantic escapes. Now we have climbed a steep mountain and are cornered in a canyon with our pursuers above and a river below. We don't have many choices. We could give up, we can fight and die, or jump and hope to live another day. Our pursuers are not going to surrender. They are going to keep pursuing us until we're caught or dead.
The Plummeting Dollar Prosperity Plan It is becoming painfully obvious that the Fed, Treasury, and Administration's disastrous recovery plan hinges on the devaluation of the U.S. dollar. Their specious strategy stems from the belief that a falling currency can re-ignite exports and spark a recovery in manufacturing while putting a floor in U.S. asset prices. But just as the President's initials indicate, the plan stinks of B.O. Firstly, a falling currency does nothing to expand a country's exports or domestic production. Let's say for example, country "A" has a dollar that is trading in parity with that of country "B". Let us then assume that country A departs on a currency printing policy that mimics that of the United States. Let's also say that because of the increased supply of newly minted dollars, the value of country A's currency is eventually cut in half. Then, just one unit of country B's currency can be exchanged for two of A's dollars. The mistaken belief held by those who espouse a weak currency is that now country B can buy two dollars worth of goods with just one unit of their currency--thus expanding the foreign demand for A's goods and ushering in a manufacturing boom.
Inflating your troubles away not so easy - Goldman There is a growing fear U.S. policymakers may be tempted to purposefully generate high rates of inflation in order to reduce the real value of its mounting debt load but in a note on Tuesday Goldman Sachs a offers timely reminder of why that's not an easy game to play:
Given the large and growing output gap of the United States, any effort to generate high inflation would likely take several years to gain traction. In the meantime, long-term interest rates on treasury debt would rise markedly, which would significantly increase the financing cost to the government and raise borrowing rates when the economy least needs it.
This Market is a Fool’s Paradise Bernard Baruch, one of the world’s most legendary speculators, said, “The main purpose of the stock market is to make fools of as many men as possible.” Right now, that’s exactly what’s going on. And I assure you, a lot of folks will be made into complete fools in the next year or so. Chances are though, the folks who are going to look like fools are not who you think. A Fool and His Money The amount of bearishness from the market commentators is as strong as it ever was. The recent rally has only strengthened their resolve. The thing is though, market meltdowns don’t happen when everyone expects them to. They happen when everyone is feeling safe. They happen when the market is overconfident. They happen when no one can find a reason not to buy. Right now, there is none of these.
Fail, Fail, Fail, Fail How about a bit of reality? Not the ridiculous promises from Washington, the absurd talk of "green shoots" while unemployment soars and investment falls, the silly guarantees that GM has a bright future even as its stock price falls to less than the price of a Snickers bar, the nonsense about how if we spend more and inflate more. Recovery will come tomorrow morning. The war on recession is a flop. Fail, fail, fail. The full-scale war on recession began in January 2008. Unemployment was climbing and house prices were falling, and George Bush, whose entire persona was the war mode since 2001, decided he wouldn't tolerate declining economic conditions.
Banks borrow more from Fed in past week, investment firms pass Banks boosted borrowing from the Federal Reserve's emergency lending program over the past week, while investment firms took a pass for the third straight week. The Fed on Thursday said commercial banks averaged $41.9 billion in daily borrowing over the week that ended Wednesday. That was up from $38.2 billion in the week ending May 27. Investment firms didn't draw any loans over the past week from the Fed program. The last time they drew any money — just $482 million — was in the in the week that ended May 13. The following week, the firms didn't draw any loans, the first time that had happened since early September.
We Already Have A Systemic Risk Regulator, It's Called The Fed One of the key points made by Holman Jenkins in this piece we've been talking about all day is the fact that federal policy uncertainty was a key contributor to the crisis. Sure, the banks made a lot of mistake, and many deserve to have taken hard hits (and fail outright), but in terms of the sheer panic we saw last October, it was an uneven response from Washington -- during a volatile campaign -- that really threw the match on the gasoline. Proponents of the idea that it was the WaMu seizure (rather than Lehman failing) will certainly be receptive to this idea.
Alan Grayson Discusses Fannie Mae's Use of Derivatives with James Lockhart of the FHFA
Dudley's TALF Comments Add Signs of a PPIP Stall The Federal Reserve may not start lending against residential mortgage-backed securities under its Term Asset-Backed Securities Loan Facility, Federal Reserve Bank of New York President William Dudley indicated. "We're still in the process of assessing whether a legacy RMBS program is feasible, and if it were feasible, whether it would be significant enough to make a major impact," Dudley said at a conference today in New York hosted by the Securities and Financial Markets Association and Pension Real Estate Association.
Fed dismisses Tarp objections US regulators insisted that JPMorgan Chase and American Express raise equity this week before repaying bail-out funds, in spite of strong objections from executives who claimed the banks did not need the money, people close to the situation said. In fraught talks last week, Wall Street chiefs disagreed with the authorities over whether the Federal Reserve should require an equity offering as a condition for inclusion in the first wave of repayers of the troubled asset relief programme.
No Bond Safe From Obama's 'Shared-Sacrifice' Plan Bondholders have a new risk to contend with -- the Obama administration's policy of "shared sacrifice." The government's approach to the bankruptcies of General Motors Corp. and Chrysler LLC illustrates how this new, unstated policy works: Bondholders are told to give up legal rights, and cash, as part of a government-mandated tradeoff that favors a politically connected special-interest group. The big threat is that this policy will extend to all bonds, including Treasury and municipal debt, not just corporate obligations.
Julian Robertson Bets the Farm on Inflation Simply put, Julian Robertson is the definition of a hedge fund legend. And, his success is noted by the fortune he has amassed as he now graces the Forbes' billionaire list. He has pioneered a successful investment methodology, he has generated outstanding returns at his famous hedge fund Tiger Management, and his influence has sprouted some of the most successful modern day hedge funds in the form of the 'Tiger Cubs.' And, most importantly, he predicted the financial crisis two and a half years ago in an interview with Value Investor Insight. When he talks, you listen.
FHA Loans: Return to 0% Down A new Federal Housing Administration program will let first-time home buyers use their $8,000 tax credit for down payments or closing costs The days of home buying with little or no money down may be back-this time thanks to Uncle Sam. Blamed for contributing to the housing bubble, zero-down-payment loans largely vanished when the market crashed and Congress blocked seller financing for government-backed loans. Now the federal government will be forking over cash at closing.
Ron Paul on Fox Business: From Interventionism to Socialism Ron Paul and Neil Cavuto discuss Sonia Sotomayor's nomination for the U.S. Supreme Court and America's decline from interventionism to socialism.
Two Sides of the Same Gold Coin The modern multinational corporations, situated in gleaming glass and steel buildings all over the world, are not as they are popularly presented and commonly understood. Generally speaking they are no longer run by business entrepreneurs who successfully read the ebb and flow of supply and demand; nor managers who live or die based upon the success, or not, of their predictions. They are overseen by bureaucrats whose sole function is to ensure that the decisions and management responses of another time are successfully kept in place. They don't respond to observations of the current state of affairs, coupled with predictions of the future; they show blind obedience to the echoed revelations of the past.
IRS considers regulating tax preparers The Internal Revenue Service is considering for the first time requiring income tax preparers to be licensed by the federal government as a way to root out fraud and raise compliance with increasingly complex tax law. IRS Commissioner Douglas Shulman revealed the seismic shift in congressional testimony Thursday. He said erroneous tax returns were such a large problem that the United States could shrink the so-called tax gap - the difference between what the government receives and what it should collect - by making sure the nation's tax preparers do their job correctly.
It's the Economy, Stupid The Obama presidency will rise or fall on results. Tomorrow will likely bring more bad news for President Barack Obama on the number one issue for voters -- the economy. The Labor Department's monthly job report will almost certainly show unemployment topping 9%, with a couple hundred thousand more jobs lost in May. It will get worse before jobs get better. Congressional Budget Director Douglas W. Elmendorf recently predicted that unemployment will continue rising into the second half of next year and peak above 10%.
U.S. Homeowners Are "Effectively Broke" - Bloomberg
Are Banks Getting Ready To Flood The Market With Houses? No one really knows how many houses are owned by banks. Banks often buy homes in foreclosure to limit losses, hoping that they'll be able to turn the house around for a profit later. But after months and months of foreclosures, banks may now be preparing to sell the houses they've been buying. Anecdotal evidence from Las Vegas, one of the foreclosure capitals of the US, suggests that we're about to see a release of bank-owned home inventory into the market.
How many homes do banks really own? Housing analysts and Realtors have long speculated about how many foreclosures are lurking in the Las Vegas market. Foreclosures have dominated the housing market with more than 60 percent of the sales each month being bank-owned properties. That continues to drive down prices. With sales at their highest level since June 2006 and first-time homebuyers and investors gobbling up inventory, it has raised the question of whether lenders will flood the market with a backlog of foreclosures. Some analysts have suggested that banks may have as many as 25,000 homes in foreclosure inventory that they have been holding back to prevent prices from dropping too far.
Home foreclosures on the rise
S.E.C. Accuses Countrywide's Former Chief of Fraud Angelo R. Mozilo, the self-made man from the Bronx who built Countrywide Financial into the nation's largest mortgage lender before the credit squeeze hit, has been charged with securities fraud and insider trading in a civil suit brought by the Securities and Exchange Commission. Citing e-mail messages in which Mr. Mozilo referred to Countrywide loan products as "toxic" and "poison," S.E.C. officials said that he misled investors about growing risks in the company's lending practices from 2005 through 2007. During this time he also generated $140 million in profits by selling stock in the company, the S.E.C. said.
SEC Charging Mozilo With Insider Trading The Securities and Exchange Commission is expected to announce civil fraud charges against three former Countrywide executives this afternoon. Last month the SEC staff sent Countrywide founder and former chief executive Angelo Mozilo and two other executives "Wells letters" notifying them that they were recommending filing insider trading and disclosure violations.
Many U.S. Retailers' Sales Miss Expectations Most retailers posted disappointing May sales as recession-weary shoppers cut spending at stores ranging from high-end chains to discounters like Target Corp , pushing down retail shares. While there have been early signs of stabilization such as improving consumer confidence, issues such as unemployment and the troubled housing market have led many Americans to take on a thriftier attitude, spending on food and other everyday essentials and not much else.
Crude leads rally with charge towards $70 Crude oil prices charged towards $70 a barrel on Thursday, recouping the previous session's losses and leading a broad commodities rally. Nymex July West Texas Intermediate rose to $69.50 a barrel before settling at $68.81, up $2.69 on the day. ICE July Brent added $2.83 to close at $68.71 a barrel and traders cited upbeat forecasts from Goldman Sachs as a factor supporting prices.
Commodities Outlook - Cyclical Uptrend to Continue Into 2010 - Bloomberg
Indiana Challenges Constitutionality of TARP Money for Auto Bailout A lawsuit from the state of Indiana challenging the constitutionality of using federal Troubled Asset Relief Program (TARP) funds for automakers, is headed to a federal appeals court. While most public attention this week focused on the bankruptcy of General Motors, the U.S. Court of Appeals for the 2nd Circuit in New York halted the sale of Chrysler to Italian automaker Fiat Group, announcing it would hear arguments from the Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund, and the Major Moves Construction Fund on Friday at 2 p.m.
Meet the new, government-owned GM Bankruptcy will force lots of changes on the automaker, putting bureaucrats in the driver's seat. With General Motors having filed for bankruptcy, the question arises: What will the bankrupt company look like and how will it be different? The answer to the second part is "a lot." The answer to the first is nobody knows for sure, but it may not be pretty. At the outset, let's establish one fact: Assuming an entity called "General Motors" does emerge from bankruptcy, it will be a different company than the one that went in. Only the good bits will come out: Chevy, Cadillac, Buick, and GMC and the plants needed to make the parts and assemble the cars and trucks.
GM's Hummer Sale May Fail on China Regulatory Hurdles General Motors Corp., the largest U.S. carmaker in bankruptcy, may have its agreement to sell the unprofitable Hummer sport-utility vehicle brand blocked by Chinese regulators, threatening 3,000 U.S. jobs. Sichuan Tengzhong Heavy Industrial Machinery Co.'s bid for Hummer runs counter to China's attempts to develop a globally competitive auto industry by focusing on fuel-efficient vehicles, according to analysts. The government also wants to pare the nation's more than 100 automakers to ease competition.
The new 'good' job: 12 bucks an hour In the Midwest, communities race to replace dwindling auto jobs with renewable energy ones, but workers will have to sacrifice on their pay. Massive investment in renewable energy could ultimately create 4 million manufacturing jobs. But for the workers in the bottom rung of this movement, the shift to green jobs could very well mean a pay cut of nearly 60%, a trend spreading across the entire manufacturing sector. Many of the entry-level jobs making green energy components start at $12 an hour, much less than the now extinct $28 an hour job that had allowed high school-educated workers in the auto sector to achieve middle class status.
Steve Jobs Returns! Apple CEO Steve Jobs will return from medical leave this month, sources tell the Wall Street Journal. He's bringing a new iPhone with him. During Jobs's leave, some Apple directors received weekly updates from his physician. "He was one real sick guy,'' says one source. "Fundamentally [Steve] was starving to death over a nine-month period. He couldn't digest protein. [But] he took corrective action.'' Sources who have seen the device also say that though Apple may not announce it next week, the latest version of the iPhone is ready enough for launch. They say the new phone will look much the same as the current model, but feature more processing power and new features like video editing.
Apple to launch cut-price version of iPhone Apple plans to introduce a cheaper version of its popular iPhone as soon as Monday, in a move that could dramatically increase the company's share of the market for web-surfing devices, people familiar with the initiative said on Thursday. Analysts said that the company wanted to show off either a $149 phone or a $99 phone, down from the current low end of $199 and still subsidised in exchange for an AT&T communications service contract. "It's either a $50 or a $100 cut," said Morgan Stanley analyst Kathryn Huberty. Citing a firm survey of consumers, she said that a $50 price cut could increase demand by 50 per cent and a $100 cut by 100 per cent.
Steve Jobs "was one real sick guy" Friday's Wall Street Journal carries a report on the state of Steve Jobs' health that makes his condition last January - before he went on a six month medical leave - sound more desperate than Apple let on at the time. "He was one real sick guy," an unnamed source told the Journal. "Fundamentally he was starving to death over a nine-month period. He couldn't digest protein. [But] he took corrective action." According to this source - who is said to have seen Apple's CEO in recent weeks - Jobs' recovery "is coming along" and he should be able to return to work before the end of June, as scheduled. The same source says that some Apple directors have been getting weekly updates on Jobs' health from his physician.
Purnell calls on Brown to quit Gordon Brown was on Thursday night fighting for his political life after a third cabinet minister resigned as the polls closed on local and European elections expected to inflict a drubbing on Labour. James Purnell, a leading Blairite, became the first cabinet minister to call openly for Mr Brown to go, as he dramatically quit as work and pensions secretary. Mr Purnell's move will rock the government, as he is the first cabinet minister to resign who was not expected to be sacked in the reshuffle.
How James Purnell's manoeuvre changes everything for Gordon Brown The resignation of cabinet minister James Purnell from the government changed everything. Westminster wits had taken to ridiculing the rebel movement against Gordon Brown as a "peasants' revolt", a cohort without influence. One thing 39-year-old James Purnell has never been described as is a peasant. As observers digested the emerging details of the backbench plot, that was just the start of the sneering. One cynical MP said an attempt by email to solicit support for the prime minister to resign was the equivalent of receiving an email from a Nigerian asking for financial assistance: not very convincing.
Latvian debt crisis shakes Eastern Europe Latvia has become the first EU country to face a sovereign debt crisis after failing to sell a single bill at a treasury auction worth $100m (£61m), prompting fears of a fresh storm in Eastern Europe as capital flight tests currency pegs. The central bank has been burning reserves to defend the lat in Europe's Exchange Rate Mechanism, but markets doubt whether Latvia has the political will to carry through draconian cuts in spending - or whether such a policy even makes sense at this stage. Tremors hit bank shares in Stockholm and triggered a sharp fall in Sweden's krona. Swedbank, SEB and other Swedish banks have $75bn of exposure to the Baltic states, and face cliff-edge losses if the pegs snap.
Latvia auction flop sparks fears of struggle to find debt buyers A failed Latvian government debt auction on Wednesday sent tremors across financial markets as investors feared that emerging nations round the world would struggle to find buyers for a huge wave of sovereign debt issuance. The auction failure revived concerns about the economies of central and eastern Europe and triggered a sell-off in the shares of Swedish banks, which have invested heavily in the Baltic nation. The currencies of several east European countries fell sharply against the dollar.
President Obama Speaks to the Muslim World from Cairo, Egypt "A New Beginning" The President gives a speech in Cairo, Egypt, outlining his personal commitment to engagement with the Muslim world, based upon mutual interests and mutual respect, and discusses how the United States and Muslim communities around the world can bridge some of the differences that have divided them. June 4, 2009
Obama Chides Israel, Arabs In His Overture to Muslims CAIRO, Egypt -- President Barack Obama waded into the heart of the Middle East conflict Thursday by forcefully reiterating his support for a Palestinian state and admonishing the Arab world to pursue peace with Israel as he made his long-awaited appeal to mend the rift between America and the Muslim world. In a wide-ranging speech before students at Cairo University that celebrated the common values of the two cultures, Mr. Obama called for a "new beginning" in the relationship.
Obama Calls for 'New Beginning' Between U.S., Muslims President Barack Obama pledged to "seek a new beginning" for the U.S. and the Muslim world, calling on people in both societies to find common ground and end a "cycle of suspicion and discord." In a speech at Cairo University today, Obama touched on tension points from the wars in Iraq and Afghanistan to religious freedom to women's rights, democracy and the threat of a nuclear-armed Iran. Some of his most direct language was used to address the Israeli-Palestinian conflict.
Can Barack Obama's soothing rhetoric douse the Muslim militants' flames? The President's plea for a new beginning will face formidable obstacles, says Con Coughlin Short of declaring his intention to convert to Islam, it is difficult to imagine what more Barack Obama might have said during his speech yesterday to demonstrate his seriousness about healing the poisonous rift between the West and the Muslim world.
Obama's speech, deconstructed Barack Obama greeted his audience in Arabic - assalaamu alaykum (peace on you) - quoted liberally from the Koran, praised Islam's history and culture and addressed the thorny issues of terrorism and Israel-Palestinian relations. But amid the rhetorical flourishes what was his message? The National Post's Natalie Alcoba spoke to two Islamic scholars, a Middle East expert and a linguist to find out. Selected excerpts from Cairo speech
Hugo Chavez Jokes That "Comrade Obama" Is Making Him Look A Right Winger The world's most famous socialist leader, Venezuelan President Hugo Chavez joked earlier this week that Barack Obama was making him look bad. During a speech on the "curse" of capitalism on Tuesday, Chavez said: "Hey, Obama has just nationalized nothing more and nothing less than General Motors. Comrade Obama! Fidel, careful or we are going to end up to his right."
Obama to push climate change bill: 'He's going to reserve the right to make a personal intervention' Suzanne Goldenberg on Obama's plan to push through the climate change bill [audio]
America's Sovereignty For Sale? Obama Has Not The Best Interest Of America At Heart! / 1 Of 3
America's Sovereignty For Sale? Obama Has Not The Best Interest Of America At Heart! / 2 Of 3
America's Sovereignty For Sale? Obama Has Not The Best Interest Of America At Heart! / 3 Of 3
Richard Gage on KMPH Fox 26 in Fresno, CA Architects and Engineers for 9/11 Truth --- Check out more info at: http://www.AE911Truth.org/
Gold, Crude Oil powering a new Commodity Cycle? Commodity prices are on fire led by the furious upward rally by the hot commodities--gold, crude oil and base metals. So is it the beginning of a new commodity cycle? Yes, it looks, the world is headed for a new commodity cycle powered by bullion and energy products and prices. It was not just the global equity markets that continued their good run in May. Recent indicators also pointed to continued momentum in commodity prices.
Two Sides of the Same Gold Coin The modern multinational corporations, situated in gleaming glass and steel buildings all over the world, are not as they are popularly presented and commonly understood. Generally speaking they are no longer run by business entrepreneurs who successfully read the ebb and flow of supply and demand; nor managers who live or die based upon the success, or not, of their predictions. They are overseen by bureaucrats whose sole function is to ensure that the decisions and management responses of another time are successfully kept in place. They don't respond to observations of the current state of affairs, coupled with predictions of the future; they show blind obedience to the echoed revelations of the past.
Gold Panic Inside The Oval Office "The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany ." I'll bet my last gold Kruggie that the Oval Office phone call was a desperate plea to buy more time before the Germans destroy the physical gold manipulation scheme. This together with rumblings of China, Russia, Saudi Arabia and Dubai scrambling to get their hands on physical gold has put the Obama Manipulation Team in major gold panic mode.
Mint can't account for missing gold OTTAWA - A significant quantity of gold, silver and other precious metals is unaccounted for at the Royal Canadian Mint. External auditors are investigating a discrepancy between the mint's 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa. The mystery raises possibilities from sloppy bookkeeping to a gold heist. Officials with the commercial Crown corporation are saying little and refuse to confirm the amount and value of the unaccounted for gold, silver and palladium.
Gold Fails After Trying to Push Through $990 Precious metals gained across the board Tuesday. Gold is once again trying to push through the $990 level and could be the one to watch over the next few days. A test of its year-to-date high of $1,005 could possibly be on the table in the near term as the weakening of US dollar continues. Silver is fast approaching a significant resistance of $16.43. Having touched $16.27 it is currently retreating back below $16.00.
Gold Falls as Dollar Gain Curbs Demand for Hedge; Silver Drops Gold fell the most in almost two months as the rebounding dollar curbed demand for the metal as an alternative investment. Silver also declined. The U.S. Dollar Index, a six-currency gauge of the greenback's value, rose for the first time in a week as investors sought the currency's refuge after equities fell. Gold typically moves in the opposite direction of the dollar index, which yesterday fell to the lowest since Dec. 18. Gold "is being driven still by the dollar," said Wolfgang Wrzesniok-Rossbach, the head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH. "The dollar has gained back and that's the reason why gold is off the highs."
Gold Stocks in a Depression What if deflation wins? While we think the odds are strongly stacked against it, particularly given the government's furious pace of money printing, the prudent investor understands - and respects - the time-tested adage, "Nothing is guaranteed." So while our chips sit squarely on the spot marked "inflation," what will happen to gold stocks if we're wrong? . . . . . . . . The bottom line is that the two largest gold producers - during a time of soup lines and falling standards of living - handed investors five and six times their money in four years.
Gold Rally Corrects After Strong Bull Run THE PRICE OF PHYSICAL gold dropped 1.5% from new 14-week highs in lunchtime trading in London on Wednesday, turning higher from $975 per ounce as equity markets fell and the US Dollar rallied on the foreign exchanges. "Higher interest rates would pose a risk to gold, but higher interest rates aren't going to happen," said Frank Holmes of US Global Investors in opening the World Mining Investment Congress in London on Tuesday - "much reduced in size this year from last" according to one delegate at the $6,000 event. "If you are not long, you are going to be wrong on gold. Longer term, governments will do everything to print money and gold will slowly become an important asset class worldwide."
Dollar's fate written in history Debt-based monetary systems are inherently unstable. Money is created out of thin air by the banks and lent to government, consumers and businesses. In order to service and repay those debts, the borrowers take on more debts. Asset prices are inflated, and the vicious cycle continues until the debtors are unable to borrow or the banks are unwilling to lend. At that point the system snaps, everything is sold off, and we have a financial crisis at hand. Here, we examine what happens to equity and currency markets in the aftermath of financial crisis and deduce what will be the likely outcome for the United States as it emerges from the present crisis.
6/2/2009 Campaign For Liberty Appears On Glenn Beck To Discuss HR1207 "Audit The Fed"
Bernanke warns on deficit Fed chief says US could face debt trap Ben Bernanke urged Congress on Wednesday to act now to bring down long-term budget deficits, warning that a failure to do so might lead to a future debt trap. The Federal Reserve chairman said the recent sharp increases in bond yields "appear to reflect concern about large federal deficits" as well as improved optimism about the economy and other factors. Since late April, the yield on the 10-year Treasury note has risen from below 3 per cent and peaked at 3.76 per cent last week, its highest level since November.
The End of the American Century . . . . George Gerber - "Fearful people are more dependent, more easily manipulated and controlled, more susceptible to deceptively simple, strong, tough measures and hard-line postures. ... They may accept and even welcome repression if it promises to relieve their insecurities." We are no longer waiting the new era. It's here now. Just grab your box of popcorn and go sit on the Lincoln Monument and watch the wheels of the new era slowly take traction and build up steam. What's first on the agenda? Well, it looks like our American automobile industry is being slowly nationalized.
Goldman Dumps China as U.S. Seeks Damage Control The U.S. Treasury's new financial attache in China has a name that could easily come out of a Dickens novel: David Dollar. The World Bank's country director for China will be Timothy Geithner's eyes and ears in Beijing. What better name for a man charged with helping keep the Chinese from dumping billions worth of U.S. debt than Dollar? Geithner's choice was announced this week while he made his first official China trip as Treasury secretary. While limiting dollar-dumping was Geithner's key goal, a bit of China-dumping by Goldman Sachs Group Inc. was emblematic of the bind in which the U.S. finds itself as banks are forced to sell strategic assets to pay for the Troubled Asset Relief Program.
North America's First Experience with Paper Money: Card Money in New France Everybody knows that New Orleans was founded by the French. But the area where we stand in Alabama also used to be part of the French North American empire in the 18th century. Not far from here, north of Montgomery, was a military fort called Fort Toulouse. The French controlled one third of the continent at the time. The reason why I have to deliver this presentation in English today, however, is of course that the French lost most of their empire in 1763, at the end of the Seven Years' War — or what Americans call the French and Indian War.
Geithner: China Will Keep Funding Us, And We're NOT Monetizing The Debt Tim Geithner flew all the way to China on a bond sales trip, and CNBC's Steve Liesman followed him there to snag a rather long interview on the major question of the day: Namely, what's the Chinese appetite for Americn debt? Those kids who laughed at Geithner not withstanding, the Treasury Secretary claims it remains strong and that the Chinese have strong confidence in the resilience and dynamics of our economy (though they're obviously not that confidence, since they're constantly jawboning and shifting more and more of their purchases to the short end of the curve).
Geithner Opens Up Debt Dialogue With China, but the Dollar Still May be Doomed Two days of talks between U.S. Treasury Secretary Timothy F. Geithner and Chinese officials culminated yesterday (Tuesday) with both parties reaffirming their confidence in the value of the dollar, and the viability of U.S. debt. Despite this public posturing, however, concerns remain about the dollar’s near-term strength. And given the United States’ precarious financial position, many observers question the dollar’s long-term ability to remain the world’s main reserve currency.
Tim Geithner Still Can't Sell His House Geithner faces sluggish market, rents out NY home Treasury secretary grapples with sluggish market -- for his own suburban NY home. The real estate market's troubles are hitting close to home for Treasury Secretary Timothy Geithner. After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn't sell and recently rented it out instead, according to real estate agents familiar with the deal. Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation's top economic official.
Peter Schiff Vlog Report 03 june 2009
Cut Spending, You Fools Economic Developments and Outlook The U.S. economy has contracted sharply since last fall, with real gross domestic product (GDP) having dropped at an average annual rate of about 6 percent during the fourth quarter of 2008 and the first quarter of this year. Among the enormous costs of the downturn is the loss of nearly 6 million jobs since the beginning of 2008. The most recent information on the labor market--the number of new and continuing claims for unemployment insurance through late May--suggests that sizable job losses and further increases in unemployment are likely over the next few months.
Heh Bernanke - YOU ARE A CLOWN! The increases in spending and reductions in taxes associated with the fiscal package and the financial stabilization program, along with the losses in revenues and increases in income-support payments associated with the weak economy, will widen the federal budget deficit substantially this year. The Administration recently submitted a proposed budget that projects the federal deficit to reach about $1.8 trillion this fiscal year before declining to $1.3 trillion in 2010 and roughly $900 billion in 2011. As a consequence of this elevated level of borrowing, the ratio of federal debt held by the public to nominal GDP is likely to move up from about 40 percent before the onset of the financial crisis to about 70 percent in 2011. These developments would leave the debt-to-GDP ratio at its highest level since the early 1950s, the years following the massive debt buildup during World War II.
Bernanke: start work now to curb US budget deficit Bernanke: Groundwork must be laid now to curb record-high US budget deficits Federal Reserve Chairman Ben Bernanke is urging Congress and the Obama administration to start plotting a strategy to curb record-high U.S. budget deficits. Failing to do so could eventually erode investor confidence and endanger the economy's prospects for long-term health, he said. Bernanke's comments, in prepared testimony Wednesday before the House Budget Committee, come as concerns grow at home and overseas about the United States' mounting red ink. "Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," Bernanke said.
Chill Out, Folks: S&P's Downgrades Won't Break The TALF Commercial Real Estate Bond Program Fears among credit investors that threatened ratings downgrades of commercial real estate debt could thwart government efforts to revive the market are vastly over-stated. Standard & Poor's warned this week that it was likely to downgrade tens of billions of dollars in triple A securities backed by recent commercial real estate loans. Some 90% of the securities backed by 2007 mortgages will likely face rating cuts. This came just about a week after, the Federal Reserve announced that it would expand the program to allow investors to buy CMBS through the Term Asset-backed Loan Facility--but said it would only be used to buy securities that are rated triple A.
Dear Ben: If You Don't Like All The Spending, Stop Propping Up The Debt Market Yesterday, when Tim Geithner was being interviewed by CNBC's Steve Liesman, he was asked about "monetizing the debt," basically having the Fed print up money to pay for the government's expenses. Geithner was clear. There's no risk of that in the United States of America, he said, because we've got a strong, independent central bank that's committed to fighting inflation. Independent is the key here. Ben Bernanke doesn't have to be a team player, and maybe he shouldn't be.
The US is Committing National Suicide Both GM and Chrysler should have been allowed to choose bankruptcy months ago, but the U.S. government in its infinite wisdom has thrown our money down a rat hole created by bad management and excessive labor union demands over the past four decades. Meanwhile, as was the case in the UK, Chrysler is now owned by an Italian auto manufacturer. The U.S. government now owns GM, AIG an insurance company, and billions in housing mortgages through the government entities of Freddie Mac and Fanny Mae. Kudlow said, “We’re talking about hundreds of billions of taxpayer dollars that will never be repaid.” That news is bad enough, but consider now that the U.S. government has just increased the standards of how much mileage must be achieved from a gallon of gasoline at the very same time it demands that more of that gasoline be mixed with ethanol. Ethanol reduces mileage. President Obama has already made clear that he wants GM to manufacture “green” automobiles. No one will buy them.
COP Field Hearing: The Credit Crisis and Small Business in Milwaukee
FDIC stalls sale of toxic loans Details of the Treasury's toxic asset plan are in doubt after the Federal Deposit Insurance Corporation on Wednesday said it was suspending a test run of the legacy loans programme. Sheila Bair, chairman of the FDIC, said development of the programme - designed to encourage investors to buy toxic, or legacy, loans from banks in order to restart the flow of credit - would continue but a pilot sale of assets was on hold. "Banks have been able to raise capital without having to sell bad assets through the LLP, which reflects renewed investor confidence in our banking system," Ms Bair said in a statement.
There Goes The Country Yesterday, after a painfully long death spiral, General Motors finally filed for Chapter 11 bankruptcy protection. Oftentimes, bankruptcy portends rebirth. Unfortunately, the politically-inspired GM plan holds no such possibilities. Under the current deal, the restructuring of GM will cost taxpayers some $100 billion (after the hidden costs of interest and refinancing are included). Even then, it is highly unlikely that GM will ever be competitive or that its debts will ever be repaid. Far worse, the massive government bailout will delay rather than encourage broader economic recovery. And yet, U.S. stock markets rose on the GM announcement as if it were good news.
Are You Scared Yet? Listening to President Obama explain why the United States is now the largest stakeholder in General Motors and, one assumes Chrysler-Fiat, I was intrigued by how he can say two opposite things in the same speech. Both auto companies could have been allowed to proceed toward bankruptcies months ago without any government intervention. A Rasmussen telephone survey reveals that 67% opposed this action. The U.S. Treasury has now been bled of $70 billion to allegedly keep GM from closing its doors, but a normal bankruptcy would have permitted it to restructure without an upper management and board of directors selected by the White House. The outcome would have assured that GM was not forced to manufacture sub-compact cars that few Americans want even though GM’s European operations already do turn them out. That being the case, why not just import them from Europe in response to whatever sales might exist here? In the meantime, however, most of its brands that appeal to Americans will be shuttered.
I, Barack Obama President Obama used the first-person singular pronoun "I" 34 times on Monday when he announced he was nationalizing General Motors. He used “Congress” once and “law” not at all. As Obama described it, the government takeover of General Motors was Obama’s decision made for Obama’s reasons. “Just over two months ago, I spoke with you in this same spot about the challenges facing our auto industry, and I laid out what needed to be done to save two of America's storied automakers,” said Obama.
Obama and the Socialists Press: Both Arrogant to the Core Barack Hussein-Obama and the socialists press are able get along so well because both are egoistic slobs. Hussein-Obama and the press are good at preaching to the rest of us on how we should live our lives, but have you noticed that Obama and his pals in the socialists press will live their lives unencumbered by the obstacles they place in our way? In other words, they do the opposite of what they tell us to do!
Dr. Nouriel Roubini Renowned economist Dr. Nouriel Roubini speaking about the current financial crisis at Yeshiva University's Alexander Brody Lecture Series.
Fight Government Encroachment into Healthcare! by Ron Paul With a faltering economy, and skyrocketing costs, healthcare continues to be a critical issue for all Americans. Unfortunately government encroachment into the doctor/patient relationship is poised to exacerbate our problems with healthcare. As an OB/GYN with over 30 years of experience in private practice, I understand that one of the foundations of quality healthcare is the patient's confidence that all information shared with his or her healthcare provider will remain private. And yet, the Federal Government plans to undermine this trust with establishment of mandatory electronic medical records collections and “unique health identifier” numbers assigned to all Americans. Funding for this program was among the numerous provisions jammed into the stimulus bill rushed through Congress earlier this year.
Worse-than-expected economic data hurts stocks Stocks fall, breaking 4-day rise, on worse-than-expected data on factory orders, services Investors are sending stocks lower after data on factory orders and the services industry came in below expectations. The decline is breaking a four-day advance, and many analysts say a pullback was due after the strong rise since last week. Comments from Federal Reserve Chairman Ben Bernanke in front of Congress have done little to reassure the market. Bernanke says the government needs to figure out a way to ease its massive debt load, and that failing to do so could undermine efforts to restore the economy to health.
Jim Rogers: S&P Could Go To 50,000 Ahh, Jim Rogers, always good for a nice headline (see: above). In an interview with the Economic Times of India, the famously dramatic and bearish investor, hits on all his favorite themes, like the collapse of the West, the appeal of commodities and farmland, and of course inflation and the collapse of the dollar. While he's negative on US assets -- he says he's gotten rid of all of his dollars, for the most part -- he advises against shorting this market.
Fund Managers can become farmers: Jim Rogers It's a bear market rally. I was going to say I don't think S&P 500 will see new highs. But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,00,000. Which is one reason why I am not shorting stocks right now. Because there is a possibility of this sort of a thing. There is a possibility that stocks could go through unheard of levels, but would be in worthless currency.
Median home price in Valley up in May [misleading headline?? . . . from Wednesday's show] The median price of Phoenix-area homes sold in May rebounded slightly from the previous month despite an increase in home foreclosures, according to the latest data from the Information Market and Cromford Report, local analysis firms. The number of homes sold also increased, to 8,690 in May from 8,156 in April, the analysts said. Based on data from Maricopa County Recorder's Office records, the median sale price for both new and resale homes was $130,000, a boost of about 3 percent. . . . . . . . . The percentage of Valley home sales involving bank-owned homes decreased to 57 percent in May, down from 68 percent the previous month, Orr said. Still, home foreclosures increased to 3,809 in May after dipping slightly to 3,103 the previous month. About 8,600 pending-foreclosure notices were issued, down from slightly fewer than 9,100 in April.
FEMA May Put Future Storm Victims in Foreclosed Homes Miami (AP) - The federal government is exploring how to put Florida hurricane evacuees in foreclosed homes if a Katrina-like storm devastates the region, and shelters, hotels and other housing options are full. Officials told The Associated Press on Tuesday that it is an effort to find some benefit in the foreclosure crisis and keep people close to their homes and communities instead of scattering them around the country, which happened when Hurricane Katrina devastated New Orleans and other parts of coastal Louisiana and Mississippi almost four years ago. Thousands of victims who lost their homes in the storm moved to Houston, Atlanta and other cities, and many never returned.
FEMA: Foreclosures = storm shelters Economic crisis meets natural disaster: The perfect FEMA storm The new director of the Federal Emergency Management Agency knows Florida well: Craig Fugate ran emergency preparedness and disaster relief in the Sunshine State before President Barack Obama moved him to Washington. So it seems only fitting that the Florida-bred FEMA chief should be looking at a Florida-styled solution to natural disasters that capitalizes on the state's economic crisis as well: The government is looking at placing displaced Floridians in foreclosed homes should a Katrina-like storm strike the hurricane-prone state, the AP reports.
The US unemployment numbers are way worse in the US than in the EU
Hummer's Chinese Buyer a Newcomer to Auto Industry Hummer owners are an unusual breed, but a little-known Chinese company's surprise purchase of the American maker of gas-guzzling, military-style SUVs is audacious even by their standards. Sichuan Tengzhong Heavy Industrial Machinery Co., which said Tuesday it was buying the General Motors Corp. unit, is four years old and has just 4,300 employees. It makes vehicles, but they are cement mixers and tow trucks, not passenger cars. Tengzhong is based in China's mountainous southwest, far from the east coast heart of China's auto industry.
Ballmer Says Tax Would Move Microsoft Jobs Offshore Microsoft Corp. Chief Executive Officer Steven Ballmer said the world's largest software company would move some employees offshore if Congress enacts President Barack Obama's plans to impose higher taxes on U.S. companies' foreign profits. "It makes U.S. jobs more expensive," Ballmer said in an interview. "We're better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S."
US companies cut 532,000 jobs in May US companies cut more than half a million jobs last month as the recession continued to chip away at the country's labour market, while the service sector shrank more than expected. Private companies cut 532,000 jobs from their payrolls in May, according to a survey by ADP Employer Services. Although that was fewer than the revised 545,000 jobs slashed in April, the number was worse than many predicted and pushed shares lower on Wednesday morning.
Californians debate selling classic landmarks Schwarzenegger plan would raise money to pay off some of state's deficit San Quentin State Prison. Los Angeles Memorial Coliseum. The California State Fairgrounds. Gov. Arnold Schwarzenegger's plan to put some of his state's biggest landmarks up for sale to help erase a $24 billion budget deficit is fraught with questions, chief among them: How can California taxpayers possibly get a good deal in this slumping real estate market? Schwarzenegger, who has also proposed deep cuts in education, health care, welfare and parks, wants to sell off some property outright, sell office buildings and then rent them back from the new landlords, and lease some state land to developers.
GM Bankruptcy May Say 'No Reason to Stay' to Detroit Residents General Motor Corp.'s bankruptcy is the last thing Detroit and the state of Michigan need. Michigan already has lost 780,000 jobs this decade, the most of any state. Its April unemployment rate of 12.9 percent was the highest in the country. The fourth-largest U.S. city for four decades starting in the 1930s, Detroit now ranks 11th. Its population of 916,952 is less than half the peak of 1.85 million in 1950. Now, with 6 of the 12 plants on GM's bankruptcy hit list located in the state, Michigan and Detroit are bracing for what may be an accelerated exodus of people and jobs.
UK government crisis deepens Gordon Brown looked increasingly beleaguered on Wednesday following the resignation of a fourth cabinet minister in 24 hours. When Mr Brown took over as prime minister from Tony Blair in June 2007, opinion polls gave Labour its biggest lead over the opposition Conservative party since before the 2003 invasion of Iraq. But that lead evaporated abruptly in October when, after weeks of speculation, Mr Brown ruled out an early election. Analysts see his indecision as the beginning of his descent in popularity.
East Asia 2009 World Economic Forum - Cho Suck-Rai 06.06.2009 Cho Suck-Rai, Chairman, Federation of Korean Industries (FKI), Republic of Korea discusses the upcoming World Economic Forum on East Asia, which takes place in Seoul from 18-19 June.
Screw China! Because the 20th anniversary of that time it massacred lots of unarmed students is coming up, the Chinese government is suddenly blocking Twitter, Hotmail, Flickr, Bing, Tumblr, Blogspot, Livejournal, and the Huffington Post. But you know what? Screw China. You're better off not doing business there, anyway.
China’s New Rebels In the spring of 1989, thousands of students from China’s elite universities occupied Tiananmen Square in Beijing for weeks to protest government corruption and demand democracy. More than a million people took to the streets. Then on June 4, as the world watched, Army troops and tanks rolled into the square, firing on the crowd and killing hundreds. In the 20 years since, China has become more open economically and the rise of the Internet has allowed ordinary citizens to connect to the rest of the world. Yet censorship and the lack of democratic freedoms remain unchanged, and students seem disinclined to take their grievances to the streets. We asked several dissidents — some in China and some in exile — as well as scholars of Chinese politics what forms of dissent are alive in China now? How has the government adapted its response to the people’s demands?
As Obama Begins Trip, Arabs Want Israeli Gesture RIYADH, Saudi Arabia — President Obama arrived here Wednesday afternoon, making his first visit to Saudi Arabia as he opened a five-day trip intended to improve relations between the United States and the Muslim world and push for progress in settling the Arab-Israeli conflict. “The United States and Saudi Arabia have a long history of friendship,” Mr. Obama said, standing alongside King Abdullah, as the two began a series of meetings. “We have a strategic relationship.
******* Important ********* DOMESTIC TERRORIST WATCHLIST; Targeting PRO-LIFERS & BIBLE PROPHECY TEACHERS!!! / 1 Of 3
Dollar weakness rekindles fund buying for gold Price firmness continued to be manifest in bullion as the New York session got underway this morning. Overnight, mild selling overseas brought gold to lows near $968 per ounce. However persistent dollar weakness rekindled fund buying and values returned to above $980 as Tuesday dawned. The trade will focus on the achievement of the four-digit mark, and as we told Bloomberg Radio yesterday, it may be a matter of hours until the third such try turns successful. Sources say that stops are in the market at 960 below and at $1010 above, but the arm-wrestling match to turn the market tide will (still) remain a dollar-centric issue. As it has been for the past month.
Gold Going Mainstream Time to Buy or Sell? As Good as Gold, says the Financial Times in a May 8th essay. To quote. "The glistering store of value, unwanted in 1999, is back in fashion." All one needs to do is "buy and hold." Around 1999, some of Europe's monetary authorities started selling gold - 3,800 tonnes of it for $56bn. Alas, they started the sales at the bottom of the market. Since then, the gold price has more than tripled. An astute evil-doer who snapped up all those ingots would have made $52bn from the central banks.
Gold is shining more in Hong Kong and Brazil The really happening news about is not coming from India now as its consumption and imports are falling due to high prices. In April 2009, India's gold import stood at 20 tonnes a far cry from the 300-odd tonnes it used to import annually. The Bombay Bullion Association has predicted that May imports could have trickled down to 10-15 tonnes. Simultaenously China is emerging as major consumer of gold and is expected to overtake the largest consumer, India by this year.
Gold refiners stockpile scrap gold in Middle East High gold prices coupled with economic miseries brought about by the global financial crisis are forcing people to sell their old gold. 2009 is the year of scrap gold and look at the Middle East bullion market if you need any proof. Even as gold prices continue to march ahead to a record $1000 per ounce, scrap gold and jewellery items are flooding the bullion market across the Gulf nations. Gold refiners in Dubai and other cities in the Middle East are these days buying/importing big quantities of scrap from foreign destinations such as gold consuming countries like China and India.
Northwestern Mutual Makes First Gold Buy in 152 Years Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company's 152-year history to hedge against further asset declines. "Gold just seems to make sense; it's a store of value," Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor's in Brooklyn. "In the Depression, gold did very, very well."
Quarterly $1 Trillion Monetization The rising long-term USTreasury Bond yield has captured attention. The breakout chart for the 10-year Treasury was pointed out here when it rose over 3.1%, hardly a high level. In the first week of May, a target of 3.5% was cited, one easily surpassed. It zoomed to 3.75%, enough to create some waves in the stock market distracted and preoccupied by nonsensical Green Shoots talk on the psychological side and by falsified bank balance sheets on the accounting side. Bigtime stress has come to the USTreasury complex, a story difficult to mask and conceal, since it is at the epicenter of the credit markets.
Jim Rogers: Profit From Commodities, Currencies and Bonds in time of Crisis
Geithner Tells China Its Holdings Are Safe U.S. Treasury Secretary Timothy F. Geithner on Monday sought to reassure China, America's biggest creditor, that its hundreds of billions of dollars of holdings in U.S. government debt remain safe, even as investors dumped Treasurys amid signs that the global recession is easing. In recent months, Chinese officials have worried publicly that massive U.S. spending could undermine the value of Treasury securities. Geithner, on a two-day visit to China, responded Monday by pledging to reduce the U.S. budget deficit and gradually eliminate "the extraordinary government support" the Obama administration has put in place.
Former Chinese Central Bank Advisor Questions Geithner's Math, Calls Federal Reserve Assets "Rubbish" A former Chinese central bank adviser says Global Crisis 'Inevitable' Unless U.S. Starts Saving. Another global financial crisis triggered by a loss of confidence in the dollar may be inevitable unless the U.S. saves more, said Yu Yongding, a former Chinese central bank adviser. It's "very natural" for the world to be concerned about the U.S. government's spending and planned record fiscal deficit, Yu said in e-mailed comments yesterday relating to a visit to Beijing by U.S. Treasury Secretary Timothy Geithner.
****Excellent USA devaluing its currency - China soon to be the New Single Global Currency (April 14, 2009). . . US headed for hyperinflation
Geithner: U.S. will lower deficit Investments safe, China is told Treasury Secretary Timothy F. Geithner, during a two-day visit to Beijing, tried to reassure nervous Chinese investors on Monday that the Obama administration is committed to fiscal discipline and lowering the deficit once the slumping global economy makes a recovery. The secretary, who was making his first trip to China since becoming secretary in January, added that the federal government's intervention in the private sector, including the $700 billion Wall Street "bailout," has played a crucial role in helping to stabilize the faltering U.S. economy.
Global Crisis 'Inevitable' Unless U.S. Starts Saving, Yu Says Another global financial crisis triggered by a loss of confidence in the dollar may be inevitable unless the U.S. saves more, said Yu Yongding, a former Chinese central bank adviser. It's "very natural" for the world to be concerned about the U.S. government's spending and planned record fiscal deficit, Yu said in e-mailed comments yesterday relating to a visit to Beijing by U.S. Treasury Secretary Timothy Geithner.
Geithner & China: Who Are You Fooling? Treasury Secretary Tim Geithner's trip to Asia has been heralded as a sales trip aimed at convincing the Chinese to keep buying U.S. Treasuries and thereby finance U.S. deficits. Such headlines are, in my humble opinion, an insult to the Chinese. Over and over again, we fall victim of the temptation to believe that Chinese leaders act in a vacuum, dictating policies out of a closet. Chinese leaders know very well the state of the Chinese, the U.S., and the world economy; they don't need a sales pitch. So what's the purpose of Geithner's trip then?
Geithner sees China backing U.S. policy, dollar Chinese officials are giving U.S. efforts to pump up its ailing economy a vote of confidence and understand why higher budget deficits are a temporary necessity, U.S. Treasury Secretary Timothy Geithner said on Tuesday. Geithner, on his first visit to China as Treasury chief, gave fresh assurances that Beijing can sleep easy over its huge holdings of U.S. Treasury debt because Washington is committed to keeping the dollar strong and inflation low.
China forced to support dollar to make yuan become convertible currency China is uncomfortable about being the principal creditor of the United States. Asia’s largest nation became the hostage of the US economy in the 21st century. The reserves of the People’s Republic of China are based on dollar assets - $2 trillion. US Treasury Bonds make $700 billion of the amount. China is forced to continue crediting the budget deficit of the United States not to let these reserves go down in value. However, China has been taking measures to overcome its dollar dependence. The head of the Chinese Central Bank put forward a suggestion in March of the current year to replace the dollar, as the international reserve currency, with the basket of currencies, which would be determined by the International Reserve Fund.
Signs of a new financial storm for September coming from Dubai and Saudi Arabia Dubai calls on the Rothschild bank for help, perhaps out of desperation. In Saudi Arabia a Saad Group company defaults. US, European and Asian banks are struggling. The end of Ramadan in September might mark the start of an economic depression worse than that of the 1930s. Rothschild's Dubai office has been retained by Dubai's Department of Finance for advice on the US$ 10 billion financial support fund (FSF) the emirate raised on the bond markets.
Africa 2009 World Economic Forum - Soud Ba'alawy Soud Ba'alawy, Executive Chairman, Dubai Group, United Arab Emirates discusses the upcoming World Economic Forum on Africa, which takes place in Cape Town from 10-12 June.
Dollar Struggles From Debt Worries as Stocks Waver The dollar slid to its weakest point since late September on Tuesday even as Treasury Secretary Timothy F. Geithner, in Beijing, tried to reassure the Chinese government that its investments in $1 trillion of United States debt were secure. But in the currency markets, investors who flocked to the safety of the dollar at the height of the financial crisis are beginning to shun the currency on concerns over inflation and the prospect of big buyers of United States debt losing their taste for Treasury notes.
Fed Said to Raise Standards for Banks' TARP Repayment Federal Reserve officials surprised bankers in the past week by demanding they raise specific amounts of new capital before repaying taxpayer funds, applying a more stringent assessment than the stress tests in May. JPMorgan Chase & Co. and American Express Co. were told they need to boost common equity, less than four weeks after being informed they had enough to withstand a deeper economic slump. Morgan Stanley was directed to raise more funds after already selling stock to cover its stress-test shortfall. One firm was told only yesterday, people with direct knowledge said.
Taxed for nothing With all the trillions of dollars of new money being deficit-spent by the US federal government, not the least of which is the mind-boggling US$1.84 trillion in new deficit-spending that the Barack Obama administration and Congress have conspired to enact and spend This Freaking Year (TFY), it is at least amusing to know that we taxpayers are paying taxes for nothing! Hahaha! Paying taxes for nothing! Now, there are many definitions of nothing, most of them referring directly to me, as in "you are nothing as a husband, father, employee, neighbor, citizen or even a pale resemblance to a normal human being", but in this particular case I am referring to all of the federal personal income taxes paid last year, net of refunds.
The Socialist Bailout of Wall Street The massive federal bailout of U.S. financial firms reflects everything that's wrong with the economic system of welfare and interventionism under which the United States has operated since at least the 1930s. There are critically important lessons in the bailout that the American people ignore at their peril. While most politicians and mainstream pundits are viewing the bailout as a necessary "reform," it is imperative that we place this "reform" in a much wider and deeper context. In doing so, we need to return to first principles.
Money Confusion and Inflation/Deflation The idea that collateralised debt and other products of the "shadow banking system" constitute money holds no water because you can't use these things to buy goods and services. If you don't believe us, try handing an ABS (Asset Backed Security) to the person at the Walmart checkout and see how far you get. Securities of various types can be posted as collateral when purchasing other investments, but that just means they have perceived value, not that they are money. Money is the general medium of exchange.
Hyperventilating Over Hyperinflation Are you among the many freaked freaked out by the steepening yield curve, convinced it means the world is pricing in massive inflation? Well, maybe it is, but first take a deep breath. Economist Menzie Chinn, writing at Econbrowser, notes some of the parallels between our situation and Japan's, which experienced both quantitative easing and huge public debts at the same time.
The Big Collapse Could Be Very Near The Federal Reserve appears to be increasingly nervous about the long term bond market. This is serious. How panicked are they? After leaking a story on Friday, they are back at it on Sunday. The Federal Reserve leaked to CNBC's Steve Liesman on Friday that they weren't targeting long rates. Why such a leak? Probably because the Fed did not want to appear impotent in controlling the long rate. So they put out the word through Liesman that they weren't targetting the long rate. Can you imagine what would happen to the markets if it sensed long rates were beyond the control of the Fed?
The Austrian Cure for Economic Illness An ill person may have diabetes or an infection. When an economy becomes ill people lose their jobs and watch the value of their homes and stock portfolios fall. A doctor evaluates symptoms and signs (physical findings), orders laboratory tests, and makes a diagnosis. Having determined the cause of the illness and its pathophysiology (how the disease alters bodily functions), the physician prescribes treatment and gives a prognosis, predicting how the patient will progress under the treatment and the likelihood of recovery. Government officials and their financial advisors approach economic illness the same way - they diagnose the trouble, institute treatment, and provide a reassuring prognosis.
Obama's cap and trade troubles Some time over the next few weeks, the US House of Representatives is likely to vote on what Barack Obama and others have described as an historic bill that would sharply reduce American carbon emissions. The headline looks good. The reality is not so flattering. On the surface, its objectives are impressive. The bill, brokered by Henry Waxman, the hard-working Democrat from California and chairman of the House energy committee, would be the first concrete step by the world's largest polluter to wean itself off hydrocarbons.
How Equity And Currency Markets Behave After Financial Crisis Debt-based monetary systems are inherently unstable. Money is created out of thin air by the banks and lent to government, consumers and businesses. In order to service and replay those debts, the borrowers take on more debts. Asset prices are inflated, and the vicious cycle continues until the debtors are unable to borrow or the banks are unwilling to lend. At that point the system snaps, everything is sold off, and we have a financial crisis at hand. In this paper we examine what happens to equity and currency markets in the aftermath of financial crisis.
Schwarzenegger: 'Our wallet is empty' Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient. Speaking to a rare mid-year joint session of the Legislature and other constitutional officers, Schwarzenegger acknowledged the billions of dollars in spending cuts he has proposed to close a $24.3 billion hole in the budget will be devastating to millions of Californians. "People come up to me all the time, pleading 'governor, please don't cut my program,'" he said. "They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It's an awful feeling. But we have no choice. "Our wallet is empty. Our bank is closed. Our credit is dried up."
U.S. Bets Billions on GM's Resurgence Obama Unveils Plan for Brief Bankruptcy, Nationalization President Obama laid out his case yesterday for committing billions of dollars more to the rescue of General Motors, arguing that the nationalization of the industrial giant was necessary to bolster the foundering U.S. economy. The former corporate icon filed for bankruptcy protection in the morning, on a historic day when another major American company, Chrysler, won permission to be merged with the Italian automaker Fiat.
Americans 'Don't Care' About GM, Bankruptcy-Stung Detroit Says General Motor Corp.'s reign as the world's largest automaker made Detroit a proud city, said Ted Dobski, a retired GM executive from nearby Beverly Hills. With its filing for bankruptcy yesterday, GM means something else to its hometown, he said. "Bankruptcy is an incredible stigma," said Dobski, 65. "I hate to see GM connected with that. GM is such an icon. GM is this area. It's Detroit."
Chinese Company Buying G.M.'s Hummer Brand General Motors has reached a preliminary agreement for the sale of its Hummer brand of large sport utility vehicles and pickup trucks to a machinery company in western China with ambitions to become a carmaker. The Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., based in Chengdu, concluded the agreement with G.M., which announced the deal Tuesday morning but did not confirm the identity of the buyer until Tuesday evening in Detroit.
Geithner to China Do Everything Necessary & WH Answers Rumors about China's Possible Interest in GM
Obama Aides Say Health-Care Costs Hinder Economy The Obama administration, kicking off a campaign for the president's health-care proposals, said the number of uninsured American will almost double in three decades and U.S. economic growth will suffer unless Congress acts. Legislation to revamp the health-care system likely would cut the rate of annual growth in costs by 1.5 percentage points, increasing the gross domestic product by more than 2 percent in 2020 above what it would be if no changes were made, according to projections by President Barack Obama's Council of Economic Advisers.
Healthcare overhaul seen boosting U.S. economy Overhauling the U.S. healthcare system to contain soaring costs and expand medical coverage to the uninsured would help boost U.S. economic output, lower budget deficits and raise workers' incomes, a White House report said on Tuesday. A report by the White House Council of Economic Advisers said healthcare spending, which currently accounts for about 18 percent of the country's economic output, could reach 34 percent by 2040 if the current rate of cost growth continues. It said that kind of growth rate was unsustainable.
American capitalism gone with a whimper It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people. True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists. Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.
Global recession makes world less safe Rising fuel and food prices followed by a dramatic economic slowdown in the global economy combined to make the world a "slightly less peaceful place" according to the latest Global Peace Index published on Tuesday. New Zealand and Scandinavian countries dominate the top positions in this year's rankings, based on measures of international policy and domestic conditions. Iraq, Afghanistan, Somalia, Israel and Sudan unsurprising make up the bottom rankings as the worst affected by military conflict, civil war, internal militarisation and threat of attack.
Israel wants Russia to dance to its tune “Stop supporting terrorist groups and giving weapons to the rogue states,” Israeli Foreign Minister Avigdor Lieberman said during his official visit to Moscow. The leader of the Yisrael Beiteinu Party, whose electorate mainly consists of immigrants from the former Soviet Union , stated that Israel would otherwise ruin the Middle East regulation conference. Lieberman’s visit to Moscow lasts from June 1 to June 3. The Russian-speaking official will have meetings with his Russian counterpart Sergey Lavrov, Prime Minister Vladimir Putin and President Dmitry Medvedev. What does Lieberman want in Russia? Pravda.Ru asked this question to Israeli political blogger Ilya Dubinsky.
U.S.-Israeli relationship takes new direction Pressure. Defiance. Collision. After George W. Bush's terms of endearment for Israel -- a country he once described as a "light unto nations" -- a different terminology is being used to describe its cloudy relationship with his successor, Barack Obama. At odds with Israeli Prime Minister Benjamin Netanyahu over Palestinian statehood and Jewish settlements in the West Bank, the new U.S. president will try to patch ties with the Muslim world in an address he will deliver in Egypt on Thursday.
Obama's Iran overture derailed The air was filled with friendly messages, smiles and nice compliments during the press conference held shortly after the meeting between Israel's Prime Minister Benjamin Netanyahu and American President Barack Obama. But the public niceties couldn't cover up deep disagreements between the leaders, especially with respect to dealing with Iran.
Iran could have bomb by year's end Head of research division of Military Intelligence tells Knesset's Foreign Affairs and Defense Committee that Islamic republic could have enough fissile material for its first nuclear weapon by end of 2009. 'Iran's speed is extremely troubling,' he adds. Iran could have enough fissile material for a first nuclear bomb by the end of the year, the head of the research division of Military Intelligence told the Knesset's Foreign Affairs and Defense Committee on Monday.
US to sell 'bunker buster' bombs to South Korea America has agreed to sell "bunker-buster" bombs to South Korea capable of destroying underground facilities in North Korea. The laser-guided GBU-28 bombs were first used in 1990 during the Gulf War to destroy underground command centres in Iraq. The 19-ft-long, 5,000lb bombs can penetrate over 20ft of concrete and 100ft of earth and could be used to target North Korea's intricate system of military bunkers and a series of munitions tunnels along the border.
North Korea's nuclear bravado is a bluff that USA needs North Korea has become the most talked-about country recently. Pyongyang conducted a nuclear test and threatened to start a war against South Korea. Experts say, however, that there will be no war: North Korea is too weak for that. Some of them say that North Korea may not have conducted the widely-discussed nuclear test. It is quite possible that North Korea’s nuclear threat is a bluff. North Korea has got what it wanted: it gained the global attention. The amount of statements that has been made recently can make a good entry into the Guinness Book of World Records.
North Korea's Kim moves to anoint youngest son as heir North Korean leader Kim Jong-il has signaled the anointment of his youngest son as heir to the ruling family dynasty as the rival Koreas bolstered their militaries along a disputed sea border on Tuesday. North Korea, whose increasingly military posturing after last week's nuclear test has prompted U.S. and South Korean forces to raise the alert level, is readying mid-range missiles for test launches, the South's Yonhap news agency reported a lawmaker as saying after a defense briefing.
North Korea may turn into European state North Korea’s leader Kim Jong-Il named his younger son, Kim Jong Un, his successor. Jong Un reportedly enjoys skiing and studies of English, German and French at a school in Switzerland. The age of Kim Jong-Il’s successor is not known exactly (he is reportedly 26). Moreover, it is not known whether the information about North Korea ’s next leader is true to fact. South Korean intelligence said that the statement about the successor to Kim Jong-Il was made on May 28. However, as it usually happens with North Korea , the information transpired only several days later. There can be hardly any information found about Kim Jong Un – even his birth date is unknown. His photographs have never been published anywhere. It was only said that Kim Jong Un had the privilege of leaving his native land. He finished an international high school in Switzerland and returned to his home country afterwards to study at a local military university. He is reportedly a fan of basketball.
Russia, China back "convincing response" to N.Korea Russia and China want a "convincing response" to North Korea's nuclear test from the United Nations Security Council, Russia's Foreign Ministry said on Tuesday. "Sergei Lavrov and Yang Jiechi expressed their common opinion on the necessity of a convincing response from the Security Council on the inadmissibility of ignoring the U.N. Security Council's resolution and the non-proliferation of weapons of mass destruction," the ministry said in a statement.
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Tues 06.02.2009
Gold Jumps Again in USD as Geithner Mocked In China Dollar Sinks Vs. All Assets Bar Long-Dated Treasuries THE PRICE OF PHYSICAL GOLD jumped in US Dollars for the third session running early Monday in London, recording the best AM Gold Fix since Feb. 24th at $987 per ounce. Stock markets also leapt worldwide – up more than 3.0% in Frankfurt – while commodities added to last month's 34-year record gains. The US Dollar fell against all other currencies. Long-dated government bonds also fell, pushing interest rates higher. "We believe in a Strong Dollar," said US Treasury secretary Tim Geithner to students at Peking University this weekend, "and we're going to make sure that we repair and reform the financial system so that we sustain confidence."Geithner's speech was greeted with laughter according to the London Times.
Cleared for takeoff? As the dollar slips, maybe gold should be on your radar screen The U.S. dollar has been more like a piñata than a reserve currency lately, and that has helped push gold prices back up. The problem with a falling dollar is that not many of us know what else to fill our wallet with should the dollar truly lose significant value. One "flight to quality" vehicle often touted as a safe haven is gold. The perception that precious metals are a sanctuary in economic storms may often pique investor interest. Has gold's time arrived? The relentless printing of money by the Federal Reserve and bailout after bailout has recently driven confidence in the greenback to a new low for the year. The recent action has made many investors nervous. These loose-money policies and low interest rates are, in my opinion, the main reason for the falling dollar.
The trillion dollar question Who is going to come out of the economic crisis stronger and with the whip hand - China or America, asks Niall Ferguson Two years ago, economist Moritz Schularick and I coined the word "Chimerica" to describe what we saw as the key relationship in the then-booming global economy: China plus America. Cheap Chinese labour was making US corporations highly profitable. Spendthrift American consumers, in turn, were keeping Chinese corporations busy with export orders. And the Chinese monetary authorities were converting export surpluses into dollar denominated reserves with the aim of preventing their own currency from appreciating. The unintended consequence was a multi-billion dollar credit line to the United States, financing America's deficit at rock-bottom rates.
US calls for China to have greater say in world economic affairs China must be given a seat at the top-table of world economic affairs, the US treasury secretary, Timothy Geithner, said yesterday as he moved to reassure China that its investments in the US dollar were safe. On the day US car giant General Motors filed for bankruptcy protection, Mr Geithner, said that mutual co-operation between China and the US was now fundamental to bringing the world out of the global financial crisis. "China is already too important to the global economy not to have a full seat at the international table," Mr Geithner said in a speech at the University of Peking, promising to support greater representation for China in world financial institutions.
Peter Schiff Vlog Report 01 June 2009
Dollar falls to 2009 low Risk appetite improves on U.S. stock gains, upbeat data from China and Europe. The dollar on Monday slid to its lowest price this year against the euro and a basket of currencies as stronger-than-expected U.S. data and sharp gains in equities reduced safe-haven demand for the greenback. The dollar, however, trimmed losses in afternoon trading as investors took profits in other currencies, but traders said this did not change the dollar's overall weak trend.
An Avalanche Of Cash Is Set To Slide Last month we read a book by Mark Buchanan entitled "Ubiquity-Why Catastrophes Happen." It was mentioned by financial commentator James Grant in one of his investment reports. The book does not deal directly with financial markets-just physical systems-and attempts to identify the similarities present when unexpected events surprised observers, whether they were earthquakes, landslides, forest fires, tidal waves, political events, or financial events. In each case a small shock triggered an unexpectedly large response out of all proportion to what was expected.
Financial markets not healthy, commodities volatile HAI: Last time we spoke, you said you "wouldn't hesitate" to buy gold. Do you still feel that way? Nusbaum: The short answer: yes. But the long answer comes back to the context in which I'd use it. Gold is insurance against big bad events, a means of reducing exposure to the volatility that may follow when something bad happens. It's also gotten a recent boost from what appears to be our willingness to devalue our way to prosperity, with the printing of money that so many other people have been talking about.
Gerald Celente on The Wall Street Shuffle pt 1/3
Retroflation Revisited Back in 2001-2002 I used the term “retroflation” in a series of newsletters and articles to describe what I saw as a battle between the forces of inflation and deflation. The Kress 30-year cycle had peaked in late 1999 and with it the 1990s bull market in stocks. The U.S. was in the throes of economic recession and tech stocks were in freefall. Yet the Kress cycles called for a major bottom in late 2002 with the 6-year/12-year cycle bottoming and the Fed was already beginning to aggressive cut interest rates, showing that it was serious about re-inflating the economy.
US core no longer the magnet Last week provided ample confirmation for the global reflation thesis. The dollar index dropped another 0.9%. Gold surged US$22 to $979. Crude oil jumped $4.67 to a six-month high, posting the largest one-month percentage gain since 1999 (according to Bloomberg). The Goldman Sachs Commodities index rallied 5.5% to an almost seven-month high (up 27% year-to-date). Emerging markets remain on fire. And the Baltic Dry Index rose again on Friday, increasing its streak of consecutive gains to 19.
Debt Is Your Worst Enemy Debt is your worst enemy right now – make no mistake about it. And the reasons for this understanding are plain for all to see, with the most profound being the next round of deleveraging might be just around the corner, meaning worsening asset price deflation would make it impossible for most to ever escape the debt death trap outside of a jubilee, which is the last thing our blood sucking financial institutions want. No, no, no. They are all for usury and kicking the little guy when he’s down however, with the most blatant example of this being credit card issuers (banks) jacking interest rates to exorbitant levels not just for those who miss a payment, but for everybody with an outstanding balance. What’s worse of course is this is being done in the face of a collapsing economy that greedy bankers are all too aware of, and despite evidence such policy could tip the economy over on its head.
Gerald Celente on The Wall Street Shuffle pt 2/3
Small banks have STRESS issues too Even community banks are stressing out over the federal government's recent "stress tests," which sent big banks scrambling to raise billions of dollars in new capital to survive the recession. Although small banks had little or no role in the meltdown of the subprime mortgage market, which started the whole financial crisis, many of them are dealing with some of the same recession-related issues as their much-bigger counterparts: rising loan defaults, falling real-estate values and deepening losses, to name a few.
Obama Led the US Economy Into a Fiscal Trap Containing a Monetary Time Bomb The majority of Americans elected an arrogant and bumbling ideologue to the presidency and so the rest of the world -- little Israel in particular -- will have to pay the price. However, Economics is what invariably brings the Obama's of this world undone. The reason being that if there were no economic laws there would be no need for free markets. Conceited self-preening politicians could, for instance, simply legislate for higher real wages without worrying about investment or rising unemployment, not that Obama is worrying at the moment about these things.
Geithner calls for closer ties with China Tim Geithner, the US Treasury secretary, arrived in China on his maiden visit on Monday with calls for China to make its currency more flexible in return for fiscal reforms on the part of the US. “A successful transition to a more balanced and stable global economy will require very substantial changes to economic policy and financial regulation around the world,” he told an audience at Peking University. “But some of the most important of those changes will have to come in China and the United States.” The remarks set the tone for two days of talks with Chinese leaders. Mr Geithner said both China and the US needed to reform the way their two economies interacted.
Gerald Celente on The Wall Street Shuffle pt 3/3
China's Yu Says U.S. Shouldn't Be Complacent About Treasuries China's former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn't be complacent about China continuing to buy Treasuries. "I wish to tell the U.S. government: 'Don't be complacent and think there isn't any alternative for China to buy your bills and bonds','' Yu said in an interview yesterday. "The euro is an alternative. And there are lots of raw materials we can still buy.'' Yu is scheduled to meet Geithner at the Grand Hyatt Hotel in Beijing today.
Treasury spending 'at higher level than in First World War' The full scale of the Government's spending spree has been laid bare by research that shows the Treasury is now spending more than it did in the thick of the First World War. Spending will this year surpass the 46.5pc of private sector gross domestic product level it hit when the Government was spending millions on mobilising troops, building weapons and financing trench warfare in 1917. The revelation forms part of a fortchcoming study for the Institute of Economic Affairs that traces the evolution of the Budget over the past century.
Dollar Weakens as Reports Spur Higher-Yielding Asset Demand The dollar fell to an eight-month low versus the Australian currency and dropped against the Norwegian krone after reports in the U.S. and China showed global growth may be recovering, sparking demand for higher-yielding assets. The Japanese yen weakened against all of the 16 most actively traded currencies, as a report showing manufacturing in China expanded for a third month encouraged Japanese investors to buy higher-yielding assets overseas. The dollar fell to the weakest level since October against the pound and the Canadian currency as stocks and commodities advanced after the U.S. manufacturing sector shrank at the slowest pace in eight months.
Peter Schiff 5/31/2009 "Time Is Running Out, Libertarians Need To Infiltrate The Republican Party"
Next Phase In The Crisis Bailouts Usher In Next Crisis History (and our recent Report titled "The Invisible Hourglass") suggests how this financial episode will end. The bailout borrowings are ushering in the next wave of the crisis. Just like the bankers who could not see their own downfall, it is the politicians and their Keynesian advisors that are now pushing us over the second cliff. As expected, the Treasury bond yield has risen sharply from 2.53% to over 4.5% in 5 months. The Fed is confused. According to Russell Napier (author of Anatomy of the Bear), yields over 6% could cause the next leg down.
'Cash for clunkers' rolling in Senate Lawmakers are expected later this week to consider a program to subsidize new auto purchases. A House panel has already approved a version. The Senate is poised this week to take its first crack at a "cash for clunkers" proposal to boost the troubled auto industry. Some senators plan to propose attaching the provision to an unrelated bill that would allow the Food and Drug Administration to regulate tobacco sales, according congressional aides and auto industry sources. President Obama has been pushing Congress to pass cash for clunkers, which would offer government subsidies to consumers who purchase certain new cars and scrap old ones.
American dream turns sour for GM workers Thousands of American car workers were reeling yesterday after General Motors made the world's biggest industrial bankruptcy filing, ending a way of life in towns across America's manufacturing heartland. Employees of the carmaker learnt for the first time which of GM's 11 plants would close and which three would be mothballed. About 21,000 of GM's 61,000 hourly workers will be made redundant by the end of the year, as well as about 6,000 of its 29,000 salaried staff. Thousands more in the car parts sector, car dealerships, retailers and even local authorities that rely on GM for income are expected to lose their jobs.
GM bankruptcy: End of an era After years of losses, the troubled automaker is forced into bankruptcy. GM is set to close a dozen facilities and cut more than 20,000 jobs. General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable that became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months. The bankruptcy is likely to lead to major changes and job cuts at the battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy.
GM Bankruptcy Spells Disaster for Small Suppliers The quote "What's good for General Motors is good for the country" is widely attributed to Former GM chief executive Charles Erwin Wilson, who made the remark during his confirmation hearings for Secretary of Defense in 1952. Back then it may have been true, but it's a different world now for General Motors, which is likely to file for bankruptcy next week.
Bankrupt G.M. Says It Owes $172 Billion General Motors filed for bankruptcy on Monday morning, submitting its reorganization papers to a federal clerk in Lower Manhattan in a move that President Obama said marked “the end of an old General Motors and the beginning of a new General Motors.” The bankruptcy of a once-proud auto giant that helped to define the nation’s car culture and played a part in creating the American middle class immediately rippled across the country, part of a process that the president said would take “a painful toll on many Americans” but lead ultimately to a strong company ready to compete in the 21st century.
The 31-Year-Old in Charge of Dismantling G.M. It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism. But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.
G.M. Designates 14 Plants for Closing General Motors said Monday that it would close 14 plants, including seven in Michigan, as part of its restructuring in bankruptcy. The plants being closed include an engine factory in Ypsilanti, Mich., where 42,000 workers built B-24 bombers during World War II, and the former Saturn assembly plant in Spring Hill, Tenn., that used to invite thousands of car buyers to “homecoming” celebrations.
Michigan reaction to GM bankruptcy filing Reaction from Michigan to Chapter 11 bankruptcy filing by General Motors Comments by: -- Democratic U.S. Sen. Debbie -- Republican U.S. Rep. Candice Miller -- Democratic U.S. Rep. John Dingell -- Republican U.S. Rep. Fred Upton -- Democratic U.S. Rep. Sander Levin -- Republican Oakland County Executive L. Brooks Patterson
General Motors holds a mirror up to America As president of General Motors when Eisenhower tapped him to become secretary of defence in 1953, “Engine Charlie” Wilson voiced at his Senate confirmation hearing what was then the conventional view. When asked whether he could make a decision in the interest of the US that was adverse to the interest of GM, he said he could. Then he reassured them that such a conflict would never arise. “I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. Our company is too big. It goes with the welfare of the country.”
Obama Administration Calls Itself a ‘Reluctant Equity Owner' in GM On orders from President Barack Obama, U.S. taxpayers will provide another $30.1 billion in loans to General Motors as the auto maker enters bankruptcy, the Obama administration announced Sunday evening. In a news release announcing the specific steps it will take to support GM, the administration also announced four specific management principles that will guide its actions – in the GM case and in other private-sectors intrusions. As CNSNews.com has reported, Obama is acting on Monday without the prior approval of Congress or any legislation authorizing his actions.
People Still Like SUVs Even though U.S. pump prices are nearly half the $4 per gallon ($1.06 per liter) levels of a year ago, the legions of American fans of gas-guzzling SUVs and trucks don't have much to celebrate. President Barack Obama's White House has unveiled new fuel-efficiency rules that will push auto companies into making more small cars and General Motors and Chrysler -- both heavily associated with large vehicles -- have sunk into bankruptcy. But don't expect many dents in the Sport Utility Vehicle fan club. Cities like Houston, where driving is at the heart of the daily routine, are proof of the American love affair with the big car.
Obama "Shocked and Outraged" by Tiller Murder: What About Innocent Lives Lost to Abortion? Vigilante justice is never acceptable, even when the target is an immoral and unethical physician doctor who, for a fee, will crush open the skull of a soon to be born fetus and claw the innocent being’s brains out until death ensues.
Ron Paul 6/1/09 "Forced Health Insurance Is Backdoor Approach To Creating Government Healthcare"
Health care clash to heat up as axe looms Top health care reform advocates on the Hill are going to have to pare their options this week - something they had been reluctant to do until now - as their self-imposed deadline to pass a bill draws closer. With lawmakers returning from a weeklong Memorial Day break, congressional leaders say they are still on track to pass a plan by August and two of the most anticipated proposals - from the Senate Finance and Senate Health, Education, Labor and Pensions committees - are expected to be marked up this month.
California Public School District Will Force All First Graders to Follow Curriculum That Normalizes Same-Sex Unions Calif., public schools are adopting a curriculum that will require first graders to read literature that equates same-sex unions with a family made up of a mother, father and child. Parents will not be allowed to opt their first graders out of the curriculum. Members of the Alameda United School District (AUSD) school board voted 3 to 2 last week to implement the “Safe Schools” curriculum, which supporters say is aimed at stopping anti-homosexual bullying in schools.
Wrong venue for Obama's Muslim speech Why should the president of the United States address the "Muslim world", as Barack Obama will do in Egypt this Thursday? What would happen if the leader of a big country addressed the "Christian world"? Half the world would giggle and the other half would sulk. There is no such thing as a Christian world, of course; there hasn't been since the Great Schism of 1054, even less so since the Reformation. Europe's nations agreed at the Treaty of Westphalia in 1648 to subordinate the confessional to political sovereignty. America, the new model of a nation, kept church separate from state. To utter the words "Christian world" would persuade the Muslim world that a foul conspiracy was afoot, perhaps a new Crusade.
Gates Says U.S. Missile Defense Could Repel North Korea Rocket Defense Secretary Robert Gates said the emerging U.S. missile-defense system is capable of repelling an attack from North Korea should the reclusive regime ever threaten American territory. Gates toured the missile-defense complex at Fort Greely, Alaska, today and climbed down into a silo to inspect one of the 16 interceptor rockets now positioned at the base. The Pentagon chief stopped in Alaska on the way back from an Asia security conference in Singapore and a visit to the Philippines.
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