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 pio
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