Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 09.01.2009
‘Gold lures investors globally, no matter the price’ . . . . This summer has seen a rise in the price of gold being traded on international markets. With concerns about inflation, as governments print more money to try and get the world out of recession, the gold markets show no signs of cooling unlike the currency markets which continue to fluctuate. Investors are rushing to Gold, the safest store of wealth.
The Move to $1,000 Things are looking good, dear gold bug. Characteristically gold hits its seasonal low in late summer, often in August, and then begins to rise as the month comes to an end. This late-August drift higher is a sign of the exhaustion of selling pressure and a precursor of the autumn rally (which in many years is quite powerful). This year is better than normal. Gold hit its seasonal low in early July. Its August low was some 25 points above the July low, and the late August lift was quite evident. Tomorrow is September. Gone are those (few) sharp one-day scares that had us all so worried. They were merely the results of a few news items causing some of your weak sisters to panic and sell out. But if you follow the weak sisters (rather than regarding their fear as an opportunity to buy), then you become a weak sister yourself.
Will Gold Reach $5000 Plus? Gold has been one of the most misportrayed mediums of wealth since the 1970's. Usually it has been marketed as the hedge against inflation during the good old days of the 1970's and 1980's. However, this has been a great misconception of the role gold truly plays. It is coming into its own and is still poised to rally to at least test the $3000 level if not much higher. But this portentious view harbors within a lot of correlations on a global scale that truly needs some in-depth understanding. Gold is not about to make such a rally without critical developments in government. Gold is not the hedge against "inflation" but against the "collapse in the confidence of government". Government holds power only for as long as the people allow it. People are complacent and will not tolerate much. During the 1970's and the days of OPEC, I will never forget a riot in Philadelphia of white middle class workers overturning cars and setting them on fire because people could not even get to work. There is a thin line between civilized conduct and a mob. When people can no longer function in a basic way, holy hell breaks loose.
Gold Looks to Close August with Monthly High Gold is currently trading at $954/oz after finishing higher last week which was important technically. Gold is looking to close the month of August with a monthly higher close (July 31st close $953.75/oz) but the shorts will as ever be attempting to paint the tape. Expectations for gold to break above resistance at $1,000/oz in the coming months are growing and any dips are expected to be bought. Overnight, the equity markets closed down with the Shanghai market leading the way with a 6.7% plunge. The Nikkei took little comfort from the sweeping success of the Democratic Party over the lengthy rule of the LDP and closed down 0.4%. This is a big week in terms of economic releases and Friday's nonfarm payrolls will be watched closely to see if the green shoots are being affected by an autumnal chill.
Glenn Beck: Is the USA Heading Towards Its Zimbabwe Hyperinflation Moment?
History Lesson September Is Best Month for Gold We’re heading into September next week, so it’s a good time to revisit the historic seasonality of gold and gold stocks. Over the past four decades, September has been the best time for gold in terms of its month-over-month price appreciation. You can see this on the chart below – in a typical year, the price of gold in September rises 2.5 percent above its August price. The gold price has risen in 16 of the 20 Septembers since 1989, by far the best success ratio of any month of the year.
GOLD THOUGHTS Investors should be taking some clues from the thinking of American voters. Their view, as documented by the respected Rasmusen polling organization, is rejection of the growth killing policies of the Obama Regime. Per Rasmusen, a mere 46% of voters approve of Obama Regime while 53% disapprove. The vote is in on the economic prospects for the U.S. due to policies of the failing and fading Obama Regime, and it is in the negative column.
There will be a rush to invest “cash” money (previously held in banks) into treasury bonds backed by the government as opposed to the FDIC
The gold price will explode upwards
The US Dollar will not move inversely to the gold price. More likely, it will also rise, albeit less violently as the “safest” and “most liquid” treasury markets are denominated in US$.
Rising silver demand and how far prices can go . . . . In the long run, however, Mr. Morgan expects that once gold breaches the $1,000 level and remains there for several trading days, it will be time to look for the next level in silver. "I'm expecting to see around the $1,250, $1,300 level in gold," he said. "Silver may be lagging at that point - somewhere in the $15-$17 range - but once gold goes through it, it will have a magnet effect for silver. You'll see silver reach the $21 high it experienced last year and move upward."
As hybrid cars gobble rare metals, shortage loom The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods. That makes Toyota's market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world's dominant rare earths producer, limits exports while global demand swells.
Is hyperinflation on the way? We’re spending like there’s no tomorrow. The government printing presses continue to pump out currency with the backing of the Federal Reserve and, as a result, a bottomless pit is being created for all of us. It is of the utmost folly to think that these spending programs by the politicians in Washington are of lasting benefit (think future tax increases) to the populace as a whole. Sure, the CARS program provided a temporary boost for a few — mainly dealers who sell vehicles bearing Japanese labels — but with no substantial gain for American label manufacturers. Reports indicate that sales prices were bumped up during this program and a large number of purchasers are having second thoughts about the added credit indebtedness they have taken on (think future repossessions).
Five Wall Street Banks Seek to Protect Lucrative OTC Derivatives Market This story about the Wall Street lobby was interesting, particularly since this morning Bill Dudley, friend of Wall Street, Goldman alumnus, and Chairman of the NY Fed, called for the continuing purchase of over a trillion dollars in bad mortgage debt from these banks at above market prices here.
Cautiously, Private Equity Looks for Exits Offerings Increase as Stock Markets Pick Up; Coming Up -- Ancestry.com, InfrastruX Group As private-equity firms test the IPO waters for a way to exit from their investments, one thing is clear: They are treading cautiously in the way they are structuring their deals. Private-equity-backed companies accounted for close to half the initial public offerings launched in busier years such as 2006 and 2007, but when the IPO market effectively closed down in the second half of 2008, all types of deals were shut out.
Wall Street Stealth Lobby Defends $35 Billion Derivatives Haul Wall Street is suiting up for a battle to protect one of its richest fiefdoms, the $592 trillion over-the-counter derivatives market that is facing the biggest overhaul since its creation 30 years ago. Five U.S. commercial banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp., are on track to earn more than $35 billion this year trading unregulated derivatives contracts. At stake is how much of that business they and other dealers will be able to keep.
Shanghai loan fears hit global shares China market suffers biggest fall in a year Chinese stocks on Monday recorded their biggest fall in more than a year as investors fretted a slowdown in bank lending would stall the economic recovery in China and around the world. The 6.7 per cent slump was the worst since June 2008 and capped a dismal August for the Shanghai Composite index, which recorded its second biggest monthly loss for 15 years. The index fell 21.8 per cent last month, compared with a 4.1 per cent drop by Hong Kong’s Hang Seng index, a 3 per cent rise in the S&P 500 index and an 8.4 per cent gain in the FTSE 100 index over the same period.
Flight to Safety Appears Imminent In the past week, three pieces of information arrived my inbox, which led me to thinking about the integrity of the banking system:
The Swedish Central Bank is about to charge negative interest rates. i.e. Commercial banks who have reserves in excess of their requirements and who do not lend this money out will be penalized for not doing so.
Several articles appeared which “speculate” that up to 1,000 banks are in danger of failing and that the FDIC has insufficient reserves to cope with this.
Mathematical modeling, based on a formula developed by physicist Cesare Marchetti, when applied to bank failures, results in the following forecast:
Inflation Will Accelerate Next Decade, Economists Say The Federal Reserve will be unable to prevent the trillions of dollars in government stimulus pumped into the U.S. economy from stoking inflation over the next decade, a survey of business economists showed. The price gauge tracked by the central bank will rise 3 percent a year on average from 2014 through 2018, according to the median estimate in a poll taken by the National Association for Business Economics. The rate exceeds the 2 percent pace that the respondents said was the Fed’s unofficial target.
Dudley Says Fed Can Avoid a ‘Bad Inflation Outcome’ New York Federal Reserve Bank President William Dudley said the Fed has the tools to prevent inflation from accelerating and doesn’t need to begin trimming its balance sheet. “It’s a little bit premature to be so confident that you want to pull all these things back right now, because the economy still isn’t growing very fast and we do have a very high unemployment rate,” Dudley said today in an interview on CNBC.
Faber: Central Banks Blowing New Bubble One stimulus will lead to the next one, and then more money printing, and then the collapse. The US government will go bust, then it will go to war. Buy a farm and a gun.
Bond Market Eyeing 10% Jobless Rate Rejects Recovery The bond market isn’t buying all the optimism over the end of the global recession. While the International Monetary Fund said last week the economic recovery will be faster than it forecast in July, investors pushed yields on government debt to the lowest level since April, according to the Merrill Lynch & Co. Global Sovereign Broad Market Plus Index. The gauge, which tracks $15.4 trillion of bonds worldwide, gained 0.73 percent this month, the most since 1.02 percent in March.
The Fed’s Interesting Week By: Dr. Ron Paul It has been an interesting week indeed for the Federal Reserve. Early this week, it was announced that President Obama intends to reappoint Fed Chairman Ben Bernanke to a second term in January, signaling a vote of confidence in him. Bernanke seems to be popular with the administration and with Wall Street, and with good reason. His lending policies have left big banks flush with newly created cash that covers up old mistakes and allows for new ones. By buying up mountains of Treasury debt he has also enabled spending to soar to ridiculous levels that should startle any responsible economist, and scare any American concerned about the value of the dollar. However, these highly sensitive decisions about our money are not made by economists, they are made by politicians. Bernanke, like most of his predecessors, is the politician’s best friend. However, there is no reason to believe any other central planner would behave any differently, considering the immense political pressure on the Fed.
Ideas to cut the federal deficit could cost homeowners billions Options that lawmakers are likely to consider to raise revenue include slashing the maximum deduction for mortgage interest or replacing it with a flat 15% tax credit. Reporting from Washington - You might assume that during August, with the Senate and House on their summer break, nothing much happens on Capitol Hill. You know the old saw: Your money is safe when Congress is out of town. But that's not quite the way it works. Committee staffs, economists, tax lawyers and policy shapers never really leave town. For example, the nonpartisan Congressional Budget Office this month delivered its latest revenue-raising options for Senate and House consideration as they write this fall's tax and budget legislation.
Treasury Default Not So Unthinkable Although we can be certain Americans and their government owe far more than they will ever be able to repay, the question of how this debt eventually will be discharged is the economic conundrum of the day. Some think hyperinflation is the only way out, since it would allowing debtors to repay all that they owe with worthless bank notes that would be in copious supply. However, this is hardly a solution, since those on the receiving end – i.e. the lenders -- would be ruined, as would the bond markets, banks and all other institutional conduits and agents of saving.
FDIC to Ratchet Up Scrutiny of Newly Chartered Banks They Are Overrepresented in Failures New banks will face tighter oversight under federal rules announced Friday, as the Federal Deposit Insurance Corp. looks to minimize the potential for payouts to depositors at troubled institutions. Newly created banks are historically more likely to fail than their more established competitors. So the agency said in a letter Friday that it will now put them under more intensive supervision and capital requirements for their first seven years of operation, instead of the current three years.
Driving a Fiat Currency into a Tree Floy Lilley at the Mises Institute, in her essay at LewRockwell.com, notes that the gold-standard dollar “provided us with nothing less than relative peace and prosperity over a span of 136 years” until that fateful year, 1913. So how does she quantify “relative peace and security”? Well, one good way is to look at the value of the dollar, which would be strong if the country was a good investment, which it was, and in fact, “It had not only retained one hundred percent of its value, it had gained eleven percent. That’s right. The dollar we started with in 1776 bought us eleven percent more after almost seven generations.”
The Duplicity of Ben Bernanke President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve System. Barring a rejection by the Senate, Mr. Bernanke will retain his title as the fourteenth Fed chairman on February 1, 2010. Consider Mr. Bernanke's track record against his stated goals as Fed chairman. In opposition to his predecessor, Alan Greenspan, Bernanke said that he would communicate clearly and openly with the investment community. This, he said, would remove an element of uncertainty for investors.
Banana Ben Strikes Again Just when you thought it was safe to hold dollars, even for just a little while, Fed Chairman Ben Bernanke once again climbed aboard his helicopter and spread some more confetti (US dollars) across the sky. Apparently having the world’s reserve currency drop 13% since March, even as measured against a basket of other flawed fiat currencies isn’t enough. And if you were to measure the dollar’s performance against hard assets like copper since March, the currency has lost 50%. Yet despite those facts, Fed head Bernanke thought it wise to increase the size of the monetary base by $86 billion just last week alone! That brought the base total to over $1.73 trillion, the highest level since May and just $37 billion off its all time record high.
Bernanke’s Victory Lap Despite vocal criticism of the Federal Reserve’s stewardship of the economy over the past decade, President Obama’s renomination of Ben Bernanke to a second term as Fed Chairman nevertheless served to reassure and boost financial markets. While it is true that markets tend to crave predictability from government, rewarding the continuation of horrible Bush-era policies is perhaps pushing the boundaries of nostalgia. More interestingly, President Obama, who campaigned for ‘change,’ has clearly come down once again on the side of continuity.
Commercial Mortgage Defaults Jump for U.S. Banks The default rate on commercial mortgages held by U.S. banks more than doubled in the second quarter from a year earlier amid falling rents and occupancies for malls, office buildings and warehouses. Loans that were 90 days or more past due climbed to 2.88 percent of outstanding balances in the second quarter, from 1.18 percent a year earlier, according to New York-based property research firm Real Estate Econometrics LLC. Defaults increased from 2.25 percent in the first quarter.
Somehow, Commercial Real Estate Is Still The "Next Shoe To Drop" So the next shoe to drop is commercial real estate. We know this because the Wall Street Journal said so today. Wait, why do we have the feeling we read that story a gazillion times? Ah, well, because we did. And we've been reading these for for quite some time now too. As Joe Weisenthal wrote back in May, addressing the “what is next shoe to drop” question:
Commercial Real Estate Lurks as Next Potential Mortgage Crisis Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat. Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn't been pretty.
Leverage Rising on Wall Street at Fastest Pace Since ‘07 Freeze Banks are increasing lending to buyers of high-yield company loans and mortgage bonds at what may be the fastest pace since the credit-market debacle began in 2007. Credit Suisse Group AG and Scotia Capital, a unit of Canada’s third-largest bank, said they’re offering credit to investors who want to purchase loans. SunTrust Banks Inc., which left the business last year, is “reaching out to clients” to provide financing, said Michael McCoy, a spokesman for the Atlanta-based bank. JPMorgan Chase & Co. and Citigroup Inc. are doing the same for loans and mortgage-backed securities, said people familiar with the situation.
Some warn of deflating asset bubble in China A month-long plunge in the main Chinese stock market is raising questions about the outlook for China's economy. The Shanghai composite index sank 6.7% Monday, worrying global investors and capping an August bear market that has stripped more than 23% from share prices. The nerve-jarring drop prompted some — including the head of China's $298 billion state-run investment fund and a former top Morgan Stanley economist — to warn of a deflating asset bubble. "Some of us were over-optimistic about the ability of China to become the engine of growth for the region and the global economy," said Joshua Aizenman, professor of economics at the University of California-Santa Cruz and a former consultant to the Chinese government.
The Case for Deflation The most important investment decision you will have to make this year and possibly for years to come is whether to structure your portfolio for deflation or inflation. So which is it, inflation or deflation? I've analyzed this issue in numerous posts, but every day there are new arguments one way or the other from some very smart people. The biggest deflation bears are rather pessimistic:
David Rosenberg says that deflationary periods can last years before inflation kicks in
Renowned economist Dr. Lacy Hunt says that we may have 15-20 years of deflation
Gas prices going up when they should be going down
Automobile dealerships closed without regard to profitability
Health Care reform: The Kevorkian is out of jail early
What’s going on? Bush Sr. said our way of life wasn’t negotiable in 1992 but as of October 2008, it's all over but the weeping and gnashing of teeth.
Glenn Beck: A Call to Action [1/2]
Glenn Beck: A Call to Action [2/2]
Glenn Beck: 2010 -- You're In or You're Out
Federal Government Will Borrow 40 Percent of the Money It Spends Next Year, Says White House Report According to the Obama administration’s mid-session budget update, the federal government will have to borrow nearly 40 percent of its total expenditures in 2010. The report, “Mid-Session Review, Budget of the U.S. Government, Fiscal Year 2010,” shows that 39.9 percent of all federal income will be borrowed, making borrowing the single largest share of revenue in 2010. The next largest component of federal revenue is the personal income tax, which accounts for only 27.3 percent of federal funds.
Wall Street ends August on losing note After giving the stock market solid gains during August, investors still worried about the economy backtracked a bit during the final day of the month. Stocks fell in light trading Monday after a plunge in China's main stock market sent a wave of selling around the world and added to concerns that stocks have rocketed too high, too fast. The Standard & Poor's 500 index, which is the basis for many mutual funds, ended August higher to post its sixth straight monthly gain. It is up 50.9 percent since early March, the best run since 1938.
Markets don't typically perform well in September September is the month when kids go back to school, leaves turn yellow and gold, and stock prices drop like ripe apples. The Standard & Poor's 500-stock index has fallen an average 0.9% in September since 1959, making it the worst month of the year for investors. (February is second, with an average 0.3% loss.)
History Continues To Repeat Many are now talking about how the markets appear to be managed these days, and these people are now taking conspiracy theories in this regard far more seriously. And without a doubt the Fed and Treasury are working overtime to keep the bubbles afloat, the bubbles in both equities and debt. The key in this regard for now is keeping interest rates low, however this will not be enough forever if revenues keep shrinking in the face of rising costs. Sooner or later, foreigners will see the US has no hope of honoring it’s debts short of hyperinflation and continued acceleration in monitization efforts (particularly in debt markets), and will begin pulling sufficient assets out of American markets to send market interest rates past the margin consumers can handle.
America - A Nation Dying in Her Sleep! . . . . There is a sleep from which some people never awaken. Some people die in their sleep, and this is also true in the spiritual sense. The United States of America is rapidly being destroyed, and people refuse to wake up and rise up to oppose the evil. Souls are being destroyed by mega-churches, televangelists, and religious organizations; and people sleep on while it happens. We must sound the alarm and bring people to the rude awakening of what is happening to them. It is almost over, and eternity is just ahead. The Apostle Paul wrote of this time we are now living in. In Romans 13:11-12 we read as follows: "And that, knowing the time, that now it is high time to awake out of sleep: for now is our salvation nearer than when we believed. The night is far spent, the day is at hand: let us therefore cast off the works of darkness, and let us put on the armour of light."
Band-Aids for the Recession A recent poll shows that most economists now believe that the recession, which began in December 2007, will end in the third quarter of 2009. There's been an uptick in manufacturing and consumer confidence, and the decline in housing prices appears to be flattening out. Unfortunately, the return to positive GDP will likely be short-lived. The current surge in production is mainly the result of President Obama's fiscal stimulus and the rebuilding of inventories that were slashed after Lehman Bros defaulted in September, 2008. These factors should boost GDP for two or perhaps three quarters before the economy lapses back into recession.
The Health Care Debacle May Have Saved Bernanke’s Job Ben Bernanke’s reappointment is viewed by some in the political and financial establishment of our nation’s capital as a sign of political weakness for President Obama.
Et Tu, Lefty? Allies Critical Of President Waffling on Health Care Riles His Loyal Pundits It is as inevitable in Washington as sweltering summers and steamy sex scandals. A president is going to be smacked around from the moment he takes office and the uplifting rhetoric of campaign rallies meets the gritty reality of governing. But the criticism of Barack Obama has turned strikingly personal as some of his liberal media allies have gone wobbly on him. After playing a cheerleading role during the campaign, some are bluntly questioning whether he's up to the job. If Obama is losing Paul Krugman, can the rest of the left be far behind?
Americans Agree: Throw the Bums Out! A new Rasmussen poll confirms it: A majority of Americans are tired of Congress. If they could vote to keep or replace the entire Congress, just 25% of voters nationwide would keep the current batch of legislators. A new Rasmussen Reports national telephone survey finds that 57% would vote to replace the entire Congress and start all over again. That's not surprising, actually, given that Congressional approval ratings have been generally abysmal for a while. It suggests little about how people might actually vote, however, given that people tend to prefer their representative even while disliking Congress as a whole.
Sean Hannity & Dick Morris Discuss Barack Obama, ObamaCare & A Double Dip Recession
Feds steady housing market, perhaps permanently How long it will last is question Home sales are showing faint signs of life only after massive federal rescue efforts, raising questions about whether the government will ever be able to withdraw its support without prompting another collapse in the housing market. Some analysts say the government may be permanently in the mortgage business after taking control of Fannie Mae and Freddie Mac a year ago and purchasing nearly half of their mortgage-backed securities in an effort to spur a revival in home sales by keeping the interest rates on 30-year mortgages near record lows. The result of these efforts is that the government now owns or guarantees a majority of mortgages in the United States.
Why Christmas Will Kill Retail Swine flu. C’mon people, all you technical players and bulls out there have put your money on the riskiest bets since the March 8 low. Bets like retail, home and commercial real estate. Get real. You’re probably already worried about your long positions. Technicals indicate we’re overbought. Optimism is the highest since 2003. Up volume is weak. Earnings multiples are too high during this ending (as some of you believe) recession. But swine flu will kill your portfolio. It is no black swan: billions of people will be exposed to a flu virus, not vaporized in a nuclear blast. But the virus is hospitalizing too many folks, too many of those affected are in the ICU, and the northern hemisphere is experiencing flu season way too early for investors to underplay swine flu.
Is Unemployment the Worst Since the Great Depression? Hidden behind the unemployment rate are some startling numbers The "Great Recession" is the name that has stuck for the economic decline that began in late 2007. But there's some reason to think that using the word recession is being kind. The U.S. gross domestic product has shrunk 3.9 percent in the past year, the worst drop since the Great Depression. Plenty of observers are willing to say that this recession is much deeper than anything we've seen since the 1930s—including the big dip in the early 1980s, generally accepted as the other candidate for the worst recession since the Great Depression. "I think it's way worse today," says Ridgely Evers of Tapit Partners, a longtime entrepreneur and venture capitalist who founded the software company Netbooks (now known as WorkingPoint). In the recession of 1981 and 1982, "people recognized it as a dip. [Today,] nobody thinks we are going to come back out in relatively short order." This recession seems to have dragged on longer. According to the National Bureau of Economic Research (NBER), the U.S. economy was in recession from July 1981 to November 1982—16 months. But the current recession started in December 2007, says the NBER, so it's already longer than the last big one.
Will Boeing move to Beijing? Boeing (BA) CEO Jim McNerney is eager to move the company to China. Whether moving Boeing to China means shifting its headquarters from Chicago to Beijing is up in the air. But Boeing already has $600 million in supplier partnerships with China -- such as a deal with Shenyang Aircraft Corporation to build an assembly for the 787's vertical fin. And Stan Sorscher, who spent 20 years at Boeing before taking a post at the Society of Professional Engineers in Aerospace (SPEEA) in 2000, told me that McNerney is hooked on the idea of shifting Boeing to China.
Credit lines dry up for auto dealers To help ailing auto dealers, the Small Business Administration launched new loan offerings -- but so far, few banks are playing along. Most small businesses are having trouble finding loans and credit lines these days, but auto dealers are in their own special financing hell. Their inventory is expensive, their industry is in shambles, and their largest lenders are in tatters. Recognizing that dealers need help, the Small Business Administration began rolling out new programs tailored for them. Four months in, the new programs are drawing a tepid response from lenders. A pilot project launched in July to back inventory loans to auto dealers has so far approved just one loan, according to the SBA.
Debt consumes senior citizens in retirement Golden years in the red Retirement is no longer the debt-free zone it used to be. Rising health care and energy costs and the phasing out of traditional pensions have been making that widely sought goal tougher to reach for some time. Now the recession and market slide have compounded the challenge, taking giant chunks out of home values, stock portfolios and job opportunities for older workers. Zero debt is hardly a must. Some retirees are content paying off mortgages they have well under control. Others like using credit to buy investment real estate for a second home, or a houseboat, or charge a special trip.
Boomers Take a Step Back Down the Career Ladder Desperately in search of jobs, many laid-off workers lower their standards and accept entry-level jobs Ed Bankos, 61, of Charlotte, N.C., has applied for about 20 jobs online since he was laid off in May, but he hasn't gotten a single job interview. "You just E-mail them your résumé, and you sit back and you wait," says Bankos, who worked at a company that makes steel molds. Over the past three months, Bankos has steadily lowered his expectations for finding a new job. At the peak of his career, he made $70,000 annually. Now he's applying for jobs that pay $12 to $13 an hour. Bankos is one of a growing number of baby boomers considering stepping back down a rung or two on the career ladder. Here's how to cope with the new job-search reality.
THE REAL TEDDY KENNEDY: DEADLY LEGACY FOR AMERICA Teddy Kennedy died last week, but his history grows more deadly for future Americans. Instead of a rich legacy bequeathed upon the United States by forever U.S. Senator Teddy Kennedy, the oft-intoxicated, blubbery fourth brother of the Kennedy clan—four decades ago--drunkenly drove over a bridge that caused the death of Mary Jo Kopechne, left the scene and lied about what happened. The reality behind the façade of Edward Kennedy
Palin's Father Says Daughter Busy Writing Book The father of Sarah Palin, the former governor of Alaska and vice presidential nominee, says his daughter is steering clear of the media spotlight to focus on writing a book of memoirs. Chuck Heath, in Idaho campaigning for a Republican congressional candidate, says Palin has been away from her Alaska home for more than a month.
A PRIMER ON “MARTIAL LAW” It is difficult these days not to come upon some pessimistic patriotic commentator expressing the fear that something called “martial law” may soon be imposed on this country, as the General Government’s response to a new “terrorist attack”, or to the economic and social chaos arising out of a collapse of the monetary and banking systems, or to some other dire event that frightens hapless Americans into trading a sure and certain loss of their liberties for a dollop of conjectural safety. An optimistic patriot might scoff at such fears. But both pessimists and optimists typically share the same implicit first premise: namely, that the form of “martial law” they have in mind is legitimate. Most of the time, this is a rather glaring and dangerous error.
Europe’s Ban on Old-Style Bulbs Begins Restrictions on the sale of incandescent bulbs begin going into effect across most of Europe on Tuesday in the continent’s latest effort to get people to save energy and combat global warming. But even advocates concede the change is proving problematic. Under the European Union rules, shops will no longer be allowed to buy or import most incandescent frosted glass bulbs starting Tuesday. Retailers can continue selling off their stock until they run out.
Dr Stan Monteith Radio Liberty 082509 1/4 - Catherin Austin Fitts -- Growing distrust of government; people are waking up.
Dr Stan Monteith Radio Liberty 082509 2/4 - Catherin Austin Fitts
Dr Stan Monteith Radio Liberty 082509 3/4 - Catherin Austin Fitts
Dr Stan Monteith Radio Liberty 082509 4/4 - Catherin Austin Fitts
Regulators Shutter Three U.S. Banks, Bringing 2009 Toll to 84 Regulators closed banks in California, Maryland and Minnesota yesterday, pushing U.S. bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression. The Federal Deposit Insurance Corp. was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of Lake Forest, Minnesota, after yesterday’s closings, the FDIC said. Assets of $1.9 billion and deposits of $1.7 billion from the three banks were turned over to new lenders at a total cost of about $446 million to the FDIC’s deposit insurance fund, according to agency statements.
Raft of Deals for Failed Banks Puts U.S. on Hook for Billions The biggest spur to deal-making among banks isn't private-equity cash or foreign investors. It is the federal government. To encourage banks to pick through the wreckage of their collapsed competitors, the Federal Deposit Insurance Corp. has agreed to assume most of the risk on $80 billion in loans and other assets. The agency expects it will eventually have to cover $14 billion in future losses on deals cut so far. The initiative amounts to a subsidy for the banking industry.
FDIC Walks a Tightrope The Federal Deposit Insurance Corporation’s chieftain, Sheila C. Bair, whose agency overseas and insures your bank accounts, had to paint a rosier picture of American banking than deserved as she delivered the FDIC’s 2nd Quarter 2009 banking report. We would all want her to be an icon of stability rather than display panic since modern banking really relies upon faith. Banks have small reserves that anchor against their customer’s deposits which are loaned out to generate profits. So banking is a faith proposition that bankers are conservative, don’t take undue risks, and will manage your money while exercising good judgment. Of course, that isn’t the picture of modern American banking, and banked money is at greater risk now than it was months ago.
Gold to touch $1,250–$1,260 by December . . . . I think it's important we all watch key numbers for gold. There's pressure at $1,007; that's a hard resistance number. We have to get through there. The next technical number that's very important is $1,032.50. If we can rally past it, it appears we'll start a run-away to the upside. If I see some closes in gold past $1,050, I'm going to be a happy camper. I think at that price we're going to be off and running toward my $1,250–$1,260 forecast for December. My high call for gold on the December futures has been $1,250–$1,260 for months. I want to stick with that, although some have said it could go into the $1,300s. The pressure is definitely on the upside.
PRECIOUS-Gold climbs above $950/oz as dollar languishes Gold rose above $950 an ounce in Europe on Friday after heavy selling of the dollar late in the previous session boosted interest in the metal as an alternative asset, with rising oil prices also lending support. Spot gold was bid at $951.85 an ounce at 0922 GMT, against $946.75 an ounce late in New York on Thursday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $953.50 an ounce. Platinum fell, but losses were limited by a strike at South Africa's Impala Platinum and news that a union had rejected the latest wage offer from Anglo Platinum, the world's largest producer of the metal.
'Good as gold' still rings true Demand for gold is soaring and NZ Mint has opened the country's first trading floor in its new Auckland CBD headquarters. The mint's head bullion trader, Mike O'Kane, says gold has never been more popular. The price is currently relatively static, trading in a tight range around US$920 ($1356) to US$970 an ounce, after peaking at a record of more than US$1000 an ounce in February. But O'Kane expects strong price growth in the next six months as the US dollar weakens and inflation pressure climbs following last week's forecast of a US$9 trillion federal deficit facing the United States.
'Comex gold futures will fall like WTC twin towers' As I see it, the debt tower will topple when hit by permanent gold backwardation, just as the twin towers of the World Trade center did. The reason is that the availability of gold is indispensable for maintaining our system of irredeemable debt. Only then are bondholders, like the participants of the game of musical chairs, satisfied that there are plenty of vacant chairs available, so let's get on with bond trading and gold futures trading, and let the music roar on.
Gold, silver prices surge on festival demand in India Growing jewellery purchases in the wake of festival and marriage seasons have led to a surge in gold and bullion prices in Indian spot and futures market. On Saturday, gold and silver prices went up considerably well in the Mumbai bullion market, the benchmark market for bullion prices. Gold prices on rose by Rs 60 to close at Rs 15,360 per 10 gram in the bullion market here on buying by stockists and jewellery makers following firming global trend.
Is the General Stock Market Overbought and What Does It Mean for Silver and Gold? This week The Wall Street Journal reported that silver has enjoyed greater price gains than gold so far in 2009. The Journal noted that silver often follows gold, although sometimes with greater moves since it is a less-active market and thus more prone to volatile price swings. Naturally, silver’s stillness is limited to many consolidation periods, and to the early parts of a particular upleg. When silver finally does move near the end of a rally, the move is likely to be substantial. So far in 2009, December silver futures have risen 26%, while December gold is up 6%, the Journal reported.
Fed is Accelerating the Monetization of Debt, High Inflation is on Its Way The public is enraged at what the liberals and socialists have tried to foist on them. Worse yet, the administration has submitted to Wall Street and the insurance giants, which they intended to do from before the beginning. Just look at the line up of campaign contributors. The same goes for the euthanasia section. This could well have been a loss leader to get the rest of this monstrosity passed. The exercise will cost the President and Congress dearly as their approval ratings sink to 41% and 12% respectively. November of 2010 will be the time of reckoning.
USGovt Yuan Bond Threat The tables are fast turning against the deeply indebted USGovt officials. USA Inc is in deep trouble. Its productive engines in both finance and industry are either wrecked or sputtering, even as its debt burden grows exponentially. Debt default litters the landscape. Next its sovereign bonds will be have to be sold to some extent outside the US$ Sphere, which will put at great risk its stock, namely the USDollar itself. Let’s call them USGovt Dragon Bonds. The custodians desperately seek creditors to supply much needed capital in order to fund the gigantic and growing USGovt debts, which by the way are grossly understated. The last resort is to monetize the USTreasury Bond issuance, a process well along. With the aid of the USDollar Swap Facility, the USFed has been able to secretly bid on USTBonds from foreign soil, have it appear like foreign bids, and conceal the continued and broadening monetization initiative. The United States is boldly defying the creditor nations, printing money, and buying its own debt. When more fully revealed, the USDollar will suffer the consequences. A sense of betrayal will surely come, much like discovery that the CIA has been flooding the globe with counterfeit $100 bills, or Wall Street has been flooding the globe with counterfeit Fannie Mae Bonds. Closer to home, it is akin to selling lemonade has been secretly watered down, or putting lawn mower clippings into the reefer batch before sale.
U.S. Budget Deficit Worse Than Thought
Treasury Clues in Uncertain Markets Investors like things they can rely on. Right now, one of the few things they can bank on is uncertainty. Markets are split on whether the nascent recovery is sustainable. Companies are offering vague guidance for even the next six months. Policy makers, too, remain uncertain about the path of the economy and when to withdraw their huge policy responses.
USD Falls Steeply on Thin Trading and Market Optimism After a period of steady appreciation, the USD took a sharp nose dive at the end of European market hours to close yesterday's trading at 1.4364 versus the EUR, 1.6284 against the Pound, and 1.0877 against the CAD. The greenback fell due to several reasons that are linked to thin summer trading.
Dollar knocked down ... for now The greenback becomes cheaper to borrow than the yen for the first time since 1993, raising questions about further declines in the already weak currency. The dollar continued to lose ground Friday at the end of a week in which it became cheaper for banks to borrow in yen than dollars for the first time in 16 years. The greenback has been retreating since March, when rising stock and commodity prices began luring investors into more risky investments and away from the safety of U.S. currency. At the same time, the dollar has been weakened by an ever-expanding U.S. budget deficit, which has made some of the nation's main trading partners nervous.
Why Did The U.S. Government Confiscate Gold In 1933 And Can It Happen Again? – Part 3 We previously stated that gold ownership was made illegal on 1st May 1933. What we did not tell you and we correct now, was that U.S. citizens, under Order 6102, were to own up to $100 in gold coin [+5 ounces]. Today that would be worth under $5,000 a mere token gesture to real gold owners. It acted as a tiny ‘escape valve’ to the general body of citizens and did not detract from the fact that effective gold ownership was abolished. So that we fully understand the attitude of governments to gold [which remains real money in times of crisis] we add this paragraph:
Meltdown 101: Why banks' struggles have worsened . . . . A cascade of collapses began last year as the financial crisis struck. Eighty-four banks have fallen so far this year as tumbling home prices and spiking unemployment pushed loan defaults upward. That's the largest number in a year since the early 1990s, at the apex of the savings and loan crisis. It compares with 25 bank failures last year and three in 2007. The failures have sapped billions from the federal deposit insurance fund, which guarantees account holders' money when banks go under. The fund stood at $10.4 billion in the second quarter, its lowest point since 1992.
The Power of the U.S. Fed, Deflation and U.S. Dollar Devaluation The non-federal, private federal reserve corporation has a no-bid contract to print money out of thin air and charge U.S. citizens money (interest) for this enormous privilege. Their so-called powers are legion and they are the cause of much distortion and inequality in our economy, to be sure.
Impending Bank Holiday - The Collapse of The US Dollar This Bank Holiday is no 'Holiday' at all, but one similar to that engineered by FDR in March, 1933 which finished the collapse of the World's economy. Another forced “bank holiday” will likely lead to a formal devaluation of the already broadsided U.S. dollar. But devalue against what? The euro? Doubtful. Gold? Maybe, but highly doubtful - or, devalued against the IMF basket of currencies, which is more likely. When I posed the question of the actual reality of such an event occurring to several of my sources including those within several Federal Agencies (CIA, FBI, Attorney Generals office, DHS) I received the following statement almost verbatim from each and every one of them - "The way it will come down is that starting 8/24, no later than Labor Day, groups of banks will be closed in certain regions of the country for a week or so. They will open again, and then other groups of banks in different regions will be closed; and on and on it will go, until all the banks in the country have gone through that process.
Bank Runs, China, Peter Schiff, Gerald Celente, Max Keiser Max Kaiser speaks about the predicted bank run and currency destruction of the US economy. He also speaks about how China will be on top of the depression because they are spending their stimulus on domestic growth. Peter Schiff makes a guest appearance, as well as Gerald Celente.
Bill Would Give President Emergency Control of Internet Internet companies and civil liberties groups were alarmed this spring when a U.S. Senate bill proposed handing the White House the power to disconnect private-sector computers from the Internet. They're not much happier about a revised version that aides to Sen. Jay Rockefeller, a West Virginia Democrat, have spent months drafting behind closed doors. CNET News has obtained a copy of the 55-page draft of S.773 (excerpt), which still appears to permit the president to seize temporary control of private-sector networks during a so-called cybersecurity emergency.
The Coming Great Depression Why Government Is Powerless . . . . The stock market by no means predicts the economy. A stock market crash does not cause a Depression. The Crash of 1903 was properly titled - "The Rich Man's Panic." What has always distinguished a recession from a Depression is the stock market drop may signal a recession, but the collapse in debt signals a Depression. This Depression was set in motion by (1) excessive leverage by the banks once more, but (2) the lifting of usury laws back in 1980 to fight inflation that opened the door to the highest consumer interest rates in thousands of years and shifted spending that created jobs into the banks as interest on things like credit cards. As a percent of GDP, household debt doubled since 1980 making the banks rich and now the clear and present danger to our economic survival. A greater proportion of spending by the consumer that use to go to savings and creating jobs, goes to interest and that has undermined the ability to avoid a major economic melt-down.
The Great Depression and Today - Sobering Parallels Abound The market has been up, which puts investors in a good mood. It is this feeling of security, however, that preceded every major market meltdown. Think back to the 2000 and 2007 stock market highs and compare it today. 1929 was no different. In fact, the parallels are fear inspiringly similar. If there's ever been a lesson to be learned from history, it's RIGHT NOW. It's been said (and perhaps you are getting tired of hearing it) that history may not repeat itself, but it certainly rhymes. Furthermore, those who don't learn from history are doomed to repeat it.
US Bank Enemies At The Gates While all manner of attention remains transfixed inside the United States on a remedy and recovery of its bank sector, once again Americans make dangerous assumptions. They tend to assume that the US Federal Reserve near 0% interest rates, Quantitative Easing (aka exploding Printing Pre$$ output), endless liquidity facilities (e.g. TALF), TARP funds (aka Wall Street slush fund), Stress Tests (rigged), bank stock sales (aided by FASB accounting fraud), bank carry trades (exploiting low short-term & higher long-term rates), and the passage of time can revive the US banking industry. They tend domestically to overlook the gradually worsening insolvency condition. Banks are bracing for a new wave of commercial mortgage losses, of prime Option ARMortgage losses, and credit card losses. The delinquency rate of prime Option ARMs is now higher than subprime home loans!!
China Import-From-Export Transformation Buoys Asia’s Currencies China, battling its worst export slump in more than two decades, is finally getting consumers to pick up some of the slack. The government’s 4 trillion yuan ($585 billion) stimulus plan -- coupled with record lending, tax cuts and subsidies -- has spurred a 60 percent gain in property sales in the first seven months from a year ago, driven car sales 70 percent higher in July and is stoking demand for televisions and computers.
The Power Of The fed And Deflation The non-federal, private federal reserve corporation has a no-bid contract to print money out of thin air and charge U.S. citizens money (interest) for this enormous privilege. Their so-called powers are legion and they are the cause of much distortion and inequality in our economy, to be sure. But the belief that the fed can inflate forever in a fiat system ignores a few important concepts. First, a debt-based system requires someone to get into debt. There has to be a willing and capable borrower for a banker to acquire a new debt slave. The American public is now finally at the point of saturation and is, in aggregate, underwater and a poor credit risk. Additionally, people in the United States in aggregate are (finally) starting to become scared to take on more debt. These are new secular trends not to be taken lightly.
Release of Federal Reserve Docs To CAUSE PANIC! he release of Federal Reserve documents could cause massive panic when it is revealed which banks and financial institutions received more than $2 Trillion dollars worth of bail out money. Federal Reserve ordered to release documents
I do not recall this in my lifetime. A majority in the House of Representatives has co-signed H.R. 1207, a bill introduced by Ron Paul to have the Federal Reserve System audited by an independent government agency, the Comptroller General's office. The bill has been bottled up in committee by Barney Frank, who has insisted that he is doing this in order to better coordinate consideration of the best way to gain greater transparency from the Federal Reserve. He has not said that he favors an independent audit of the FED.
Frank Said to Back Broader Fed Audits Rep. Ron Paul said he has a commitment from the chairman of the House Financial Services Committee, Barney Frank, to advance the Texas Republican's legislation opening the Federal Reserve to broader federal audits. In an interview Friday, Mr. Paul said Mr. Frank agreed to allow a vote on the bill and to work on language that would allow the Government Accountability Office, the investigative arm of Congress, to audit the Fed's monetary-policy operations. While details are unresolved, the discussions increase the likelihood that some version of Mr. Paul's bill will pass the House. "Barney told me, 'It's going to come. You're going to get what you want,' " Mr. Paul said. "We're going to have some hearings and we'll get a vote."
Why The Fed Is So Desperate To Keep Its Bailout Gifts Secret Bloomberg sued the Fed to force it to reveal the names of the banks that have dumped all their crap assets onto the Fed's balance sheet (a.k.a., the taxpayer). And Bloomberg won! But the Fed is still refusing to reveal which banks it has secretly bailed out. And the Fed is now appealing the ruling. The Fed says its refusal to reveal the names is about "competition." Please.
Rewarding Failure: Unintended Consequences of Bank Bailouts Mount American taxpayers have pocketed a 10 percent return on bailing out banks that were dubbed "too big to fail" and have paid back their TARP funds, The WSJ reports, citing SNL Financial. Hurray! Right? So why no cheers from our guest John Tamny, editor of RealClearMarkets.com? "No, we shouldn't be celebrating this...banks are too important to be bailed out," Tamny says. "Big surprise that the government got some of its money back saving banks that should have been allowed to die. There's going to be a natural return there, but it shouldn't have happened."
No Free Lunch Modern fiat currencies are not going to disappear, no matter how hard Obama and Bernanke try to destroy them. They are simply too good of a medium of exchange. The ease with which labor is divided over the whole globe and capital exchanges are transacted across thousands of miles, instantaneously, is a planetary first! It is a marvel of the modern computer age!
Cap And Trade Will Be Huge For Investment Banking The cap and trade bill will be huge business for investment banks, leading to a boom in M&A and underwriting activity, says Kyle Stock on the WSJ's Deal Journal blog. In particular, U.S. industrial companies will begin to look more attractive to companies in Europe, which has had a carbon market since 2005. While the U.S. power market has long looked good to foreigners, because Americans buy a relatively large amount of electricity per-capita and the regulatory structure here lends itself to rate increases, European companies have shied away from acquisitions because of the carbon question mark. They would likely be bolder if carbon had a price and a fixed supply.
All Of The Government's Global Warming Solutions Are Dumb We've had twenty years of futile government efforts to stop global warming, yet we are pursuing the same policies that led to the futility. How about trying something new, asks Bjorn Lomborg in today's Wall Street Journal Opinion section. Lomborg's op-ed is mostly restating what he's said elsewhere. He thinks we should spend money on researching technology and consider geo-engineering our solutions.
Gerald Celente Speaks About Cap & Trade Gerald Celente speaks about the cap and trade policies of the various governments implementing the false global warming paradigm.
Nearly A Third Of Banks Lose Money The number FDIC problem banks rose while asset quality continues to deteriorate. The number of "problem banks" in the United States reached a 15 year high, while 28.3% were unprofitable, according to the Federal Deposit Insurance Corporation, which delievered a litany of painful quarterly data from the lending industry. "Banking, and by extention the FDIC, is going to be under considerable stress for the foreseeable future," said Brian Olasov, managing director at the law firm McKenna, Long & Aldridge.
The Bailout Didn’t Work The long run inflationary consequences of the bailouts of our financial system has sent us on a path of national ruin, famed economist Peter Boettke argues. Despite the short term gains in the stock market and what looks like the start of an economic recovery, the cycle of debt, deficits and government expansion will be economically crippling, he says
"Better" Corporate Governance Made Banks Riskier Banks that were more responsive to shareholders performed much better before the financial crisis and much worse during it, a new study demonstrates. A pair of finance professors examined the returns and governance styles of banks before and during the crisis. What they found is that many of the banks with that are considered "better governed" according to standard models of corporate governance, fared far worse during the crisis.
Peter Schiff on CNBC 28 Aug 2009
Banks 'Too Big to Fail' Have Grown Even Bigger Behemoths Born of the Bailout Reduce Consumer Choice, Tempt Corporate Moral Hazard When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation's leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system. Today, the biggest of those banks are even bigger.
Rep. Frank Eyes Fed Audit, Emergency Lending Curbs Rep. Barney Frank, the chairman of the U.S. House of Representatives Financial Services Committee, said he plans legislation to restrict the Federal Reserve's emergency lending powers and subject the central bank to a "complete audit." At a recent town hall meeting, Frank said the House would pass a bill to use an audit to crack open the central bank's books more widely, but in a way that will not encroach on the central bank's monetary policy independence. In addition, he said the House would move to rein in the authority that allows the Fed to lend to a wide range of non-bank firms in "unusual and exigent circumstances." A bill sponsored by Texas Republican Rep. Ron Paul that would allow the Government Accountability Office, a federal watchdog agency, to audit Fed interest-rate decisions has won the co-sponsorship of more than half of the House.
'Spread the wealth! Change the whole system' Using White House position to push communist policies? Just days before his White House appointment, Van Jones, Obama's environmental adviser, used a forum at a major youth convention to push for what can easily be interpreted as a communist or socialist agenda. As WND previously reported, Van Jones, special adviser for green jobs, enterprise and innovation to the White House Council on Environmental Quality, is an admitted black nationalist and radical communist.
Our quarter-century penance is just starting Never in modern times has there been such a flat contradiction between the euphoria of markets and the stern warnings of officialdom at central banks and financial watchdogs. Corporate credit has seen the steepest rally in almost a hundred years, according to Morgan Stanley. Hedge funds are reviving the final bubble play of early 2007, writing put options on long-dated "volatility" contracts to wring out extra profit. It is as if the Great Contraction – as the Bank of England now calls it – was just a random shock, as if we should naturally expect "V-shaped" resurgence to take us back to where we were. Yet that is what precisely we are being told will not and cannot happen.
A Shocking Fall The syndrome of hope and false expectations Some readers might feel that we are prophets of doom and that there is only gloomy news coming out of Matterhorn Asset Management. For people who want only good news we suggest that you listen to politicians or read the newspapers or your average stockbroker’s forecast. This is where you find the good news. But if you do listen to these people, remember that virtually nobody warned you about the events in the last couple of years, and that today most of these people are saying that the worst is over. And this is also what stockmarkets are telling us, isn’t it? These “optimists” whether they are politicians, bankers or from the media all make their living based on good news and this is why they will continually tell you lies and never warn you about the risks.
America's Deepening Inferiority Complex Begins to Bite Russia As the US beats a path through a social, political and economic forest of epic proportions, is it mere coincidence that news stories on Russia are becoming more hostile than ever? Strangely, the end of the Cold War did not significantly alter the Western media’s perceptions of Russia. In fact, the collapse of communism seems to have forced the American media establishment to dish out the dirt on Russia with more gusto than ever before.
Swiss Banks Ordered To Reveal Accounts Swiss Banks have been ordered to reveal their account holders from the United States. Could this trigger a bank run? For a select breed of upper-bracket Americans, it has been one of their inalienable rights, along with life, liberty and the pursuit of obscene wealth. We're talking about the right to beat the tax man by stashing your cash in secret, numbered foreign bank accounts.
An Echo Chamber of Boom and Bust THE global signs of a recovery in economic confidence seem puzzling. It is a large and diverse world, after all, so why should confidence have rebounded so quickly in so many places? Government stimulus and bailout packages have generally not been big enough to have such a profound effect. What happened? Economic analysts often turn to indicators like employment, housing starts or retail sales as causes of a recovery, when in fact they are merely symptoms. For a fuller explanation, look beyond the traditional economic links and think of the world economy as driven by social epidemics, contagion of ideas and huge feedback loops that gradually change world views.
Uncomfortable Choices in a Deflationary High Deficits Economic Environment We have arrived at this particular economic moment in time by the choices we have made, which now leave us with choices in our future that will be neither easy, convenient, nor comfortable. Sometimes there are just no good choices, only less-bad ones. In this week's letter we look at what some of those choices might be, and ponder their possible consequences. Are we headed for a double-dip recession? Read on.
True Bottom Lies Far, Far Below Because we never shared investors’ wild enthusiasm for Cerberus, its near-collapse in recent days hardly came as a shock. The once-huge private-equity firm specialized in distressed assets at a time when even the bluest of blue-chip companies – the name Lehman Brothers springs to mind – have fallen into mortal peril literally overnight. Cerberus’s biggest gambles were in GMAC and Chrysler. The latter company’s future looked as bleak to us five years ago as it did in May, when the automaker went belly-up. What could Cerberus CEO Stephen Feinberg have been thinking?
No Wage Growth; No Economic Recovery A recent poll shows that most economists now believe that the recession, which began in December 2007, will end in the third quarter of 2009. There's been an uptick in manufacturing and consumer confidence, and the decline in housing prices appears to be flattening out. Unfortunately, the return to positive GDP will likely be short-lived. The current surge in production is mainly the result of President Obama's fiscal stimulus and the rebuilding of inventories that were slashed after Lehman Bros defaulted in September, 2008. These factors should boost GDP for two or perhaps three quarters before the economy lapses back into recession.
pt 1/3 Peter Schiff on King World News August 28 2009
pt 2/3 Peter Schiff on King World News August 28 2009
pt 3/3 Peter Schiff on King World News August 28 2009
Subprime Lenders Head the Line for Federal Subsidies About two dozen firms that led the country into the subprime debacle are now lined up to receive billions of taxpayer dollars through a federal program aimed at stemming foreclosures, according to a report released Wednesday, Aug. 26. The report, issued by Washington's Center for Public Integrity, found that at least 21 of the top 25 firms taking part in the Home Affordable Modification Program, or HAMP, were heavily involved in the frenzied lending that led to the subprime blowup. The firms originated or serviced subprime loans, or both.
Stocks brace for September The week ahead brings reports on manufacturing and the job market, as investors try to stretch out the advance. With stocks now sitting more than 50% above March lows and notorious rally-spoiler September in sight, the calls for a pullback have been getting louder. But the momentum of the stock rally and other signs of optimism in the economy might just keep investors buying. "We're up sharply from the lows, moving into the seasonally weak September through October period and everyone is talking about a correction," said Rick Campagna, chief investment officer at 300 North Capital. "And that's why it won't happen."
Stagnant Incomes Raise Recovery Fears Household income in the U.S. is essentially stagnant, raising doubts about whether consumers already hurt by job losses can sustain an economic recovery. The now-ended Cash for Clunkers program helped lift consumer spending last month and is expected to provide an even bigger boost in August. But any rebound could falter if shoppers don't boost their buying, which makes up about 70 percent of U.S. economic activity. "Consumers just don't have the financial firepower to go out and spend more," said Mark Zandi, chief economist at Moody's Economy.com. "Unless businesses curtail their job cuts, the recovery could very well peter out."
As Internet Booms, the Postal Service Fights Back Amid unrelenting bad news, the Postal Service is striving to make the case that mail is here to stay. “We’re very optimistic about the future of mail because mail has great value,” said Susan Plonkey, vice president for sales. “Mail works.” Top postal officials say the recession is to blame for the agency’s $7 billion deficit and a steep drop in the volume of mail, and they express confidence that mail, particularly advertising, will rebound.
Recession Finally Hits Down on the Farm The American farm, which has weathered the global recession better than most U.S. industries, is starting to succumb to the downturn. The Agriculture Department forecast Thursday that U.S. farm profits will fall 38% this year, indicating that the slump is taking hold in rural America. Much of the sector had escaped the harsher aspects of the crisis, such as the big drop in property values plaguing city dwellers and suburbanites.
Automakers are stuck in small car quandary Gas prices, times may require them, but Americans still don’t want them If the wildly successful Cash for Clunkers program proved anything, it's that with the right kind of financial incentive Americans will buy small, fuel-efficient cars. Armed with rebates of up to $4,500 from the federal government, consumers snapped up cars such as the Honda Civic and Ford Focus. They did pretty much the same thing last summer when gasoline prices in the U.S. roared past four bucks a gallon.
California Holds Massive Garage Sale Gov. Arnold Schwarzenegger is hoping that the "Great California Garage Sale" will turn government clutter like surplus prison uniforms and office furniture into cash to bulk up the state's depleted finances. On offer as the state clears out clutter are nearly 600 state-owned vehicles and thousands of pieces of office furniture, computers, electronics, jewelry, pianos, even a surf board, a food saver and an Xbox 360 gaming system.
Financial crisis cripples new affordable housing Building of low-cost homes drops by more than half in two years For thousands of low-income renters nationwide — but especially in rural towns and small cities — the recession is hitting home in an unexpected way. Nationwide, funding to build low-cost apartments has dropped by more than half in two years to $4 billion. Hundreds of projects can't get off the ground because the federal tax credits that help offset development costs are currently worthless to traditional investors.
4 hidden costs of health care If you're going to fix the system, start with the problems that make it so expensive in the first place. Health care is by far the most cartelized, anti-competitive big business in America. The market is crippled by a web of quotas, entry barriers, monopolistic licensing laws, and discount limits that wouldn't be tolerated in any other industry.
Like Your Health-Insurance Plan? Great. Keep It! Don't Like It? Too Bad. Keep It! As Obama has attempted to sell health-care reform to the public this year, one of the key messages has been that those who like their current plans will be able to keep them. One of the main reasons he's emphasized this is that, during the HillaryCare debate in 1994, the fact that many people would have to switch away from their plans proved a major obstacle to reform. Of course, Obama usually omits the fact that those people will only get to keep their plans if their employers continue to offer them, which is a less than sure thing given the structural changes to the insurance system that reformers are proposing but it's certainly more true under current proposals than it was in 1994.
Howard Dean: Democrats Left Tort Reform Out of Health Care Bill Because They Feared 'Taking On' Trial Lawyers Former Democratic National Committee Chairman Howard Dean, a medical doctor who served as governor of Vermont, said at a town hall meeting on Tuesday night that Democrats in Congress did not include tort reform in the health care bill because they were fearful of “taking on” the trial lawyers.
Until Medical Bills Do Us Part Critics fret that health care reform would undermine American family values, not least by convening somber death panels to wheel away Grandma as if she were Old Yeller. But peel away the emotions and fearmongering, and in fact it is the existing system that unnecessarily takes lives and breaks apart families. My friend M. — you’ll understand in a moment why she’s terrified of my using her name — had to make a searing decision a year ago. She was married to a sweet, gentle man whom she loved, but who had become increasingly absent-minded. Finally, he was diagnosed with early-onset dementia.
At 58, a Life Story in Need of a Rewrite MICHAEL BLATTMAN, 58, took a prudent path to a successful business career. Armed with an M.B.A., he started with the federal government, working at the General Accounting Office and Federal Reserve, before moving to the Sallie Mae student loan program, where he rose to be director of national sales. From 2001 to 2008 he was a senior vice president for a private student-loan company and at his high point earned $225,000 a year in salary and bonuses, he says. He also taught business courses at the University of Maryland; lived in a 4,000-square-foot home in upscale Potomac, Md., and drove a Mercedes.
Drug Use On The Rise Among Elderly As Baby Boomers Age If you assume that providing healthcare to Baby Boomers (as they become elderly) is going to be like treating past generations of the elderly, think again. In addition to hip replacements and all that stuff, you should add drug treatment, given the Baby Boom generation's higher use rates than previous generations.
Baby Boomers Still Using Drugs Drug use among adults between the ages of 50 and 59 is on the rise, a factor "driven" by the "aging of the Baby Boom cohort," which has a higher lifetime drug use rate than previous generations, reports the federal Substance Abuse and Mental Health Service Administration -- but not, it seems, a higher percentage of lifetime users than subsequent generations.
The Grapes of Wrath revisited: The changing face of Valle Vista, Arizona Seventy years on from John Steinbeck's tough take on depression-era America, Chris McGreal continues his series tracing the route of The Grapes of Wrath and finds that the foreclosures of this decade are stripping homes to the rafters in one Arizona retreat Patti Levine is under siege. There are the plans to build a sprawling factory on one side of her pristine desert paradise and proposals for a huge solar power plant on the other. Mexicans are flooding across the border, forcing her to wait for a doctor, and a large chunk of her retirement fund has been wiped out on the New York stock exchange. And now, the country has gone and elected a president who, if you're sitting in the middle of an Arizona country club, looks very much as if he wants to turn the US into the Soviet Union, and worst of all, strip Levine of her guns. "I have a licence to carry a concealed weapon and when I fly my airplane I take my gun. When you're single and you're 64 years old you gotta be careful. Even here," she says.
G20 fears oil price may derail recovery Finance ministers and central bankers of the G20 countries, who meet in London this week, will celebrate signs that the worst of the recession is over and that upturns have begun in some countries. However, they will also warn of continued fragilities in the banking system and the need to remain vigilant against further crises. They will say that the rise in the oil price, currently $73 a barrel, poses a potential threat to recovery.
Seniors Leaning on Credit Balances Balloon for Older Cardholders -- and Health Bills Don't Help Alice Smith thought she would live comfortably and quietly in her Hyattsville retirement community. Instead she's fretfully dodging calls from her creditors. She owes more than $10,000 to four credit card companies and more than $7,000 to a credit union -- in part, she said, because of spending to help her family. She doesn't give exact figures because she is unsure of them: With late fees and higher interest rates, the amount she owes has grown. Her income has not. Through a pension and Social Security from her former job at a National Institutes of Health laboratory, she receives about $2,000 a month. Her rent is $955. She doesn't know how she can ever pay down her debts. So she thinks she just might not.
State fairs offer many people badly needed jobs A year's worth of failed job leads prepared Richard Briggs for anything, including night shifts as a Minnesota State Fair custodian. For $8.50 an hour, the out-of-work financial analyst vacuums and cleans bathrooms in fairground buildings. Briggs, 38, said he's "something of a curiosity" among his co-workers. "You know, they don't hire financial analysts to clean the sidewalks," Briggs said. A crippled economy has sent droves of unemployed and underemployed people to fairs nationwide, with many reporting record numbers of applicants to tear tickets, serve food and clean up after crowds.
Chinese Tire-Import Spat Puts Obama in Trade-Policy Pickle A politically charged case involving Chinese tire imports will soon force the hand of an Obama administration that has yet to articulate a clear trade policy to anxious global trading partners. President Barack Obama has until Sept. 17 to rule on a U.S. International Trade Commission recommendation that the White House put a 55% tariff on low-grade car tires imported from China. The ITC's finding followed a complaint by the United Steelworkers that a flood of cheap Chinese tires in recent years had cost more than 5,000 union jobs.
What high street banking will look like in 2020 [UK] Banking technology is developing so swiftly that soon you’ll be able to buy things without your PIN or plastic Imagine a world where, when you walk into your bank, messages and adverts pop up that address you by name. A world where debit and credit cards are extinct and business is done by a swipe of your mobile phone. A world where you make payments using an iris scan and do not have to remember those pesky PINs. It might sound like the premise of the futuristic 2002 film Minority Report, based on the novel by the science-fiction master Philip K. Dick. But the technology to make all this possible is already being developed. What sounds far-fetched now could be the norm in just a few years.
Weary Britons flee gloom to a land Down Under Britons who have had enough of rising unemployment and dismal weather are resorting to a time-honoured tradition to escape the gloom — they are moving to Australia. Hays, the international recruitment consultancy, has reported a 20 per cent increase in the number of Brits seeking jobs in Australia and New Zealand in the past year. It is receiving 200 inquiries a week from people seeking work Down Under.
Mullen blasts US 'strategic communication' efforts in Afghanistan Criticism by highest US military officer comes as officials admit the US is losing the war of ideas against the Taliban The highest officer in the US military today issued a scathing critique of American "strategic communication" efforts in Afghanistan and the Muslim world, writing that the gap between promised improvements and actual developments harms the credibility of the US message. In an article written for Joint Force Quarterly, a military publication, Admiral Mike Mullen said that US efforts in Afghanistan and elsewhere to send a positive message about US military action and development efforts hurt US credibility when they do not coincide with what the populace sees on the ground.
As US fades, Iran ups the ante in Iraq In the chaos following the disputed June presidential elections in Iran, journalist Spencer Ackerman reported that the administration of United States President Barack Obama "insisted that it would not interfere with the struggle for power between regime-backed President Mahmud Ahmadinejad and the thousands of demonstrators who contend the election was stolen". It didn't take long, however, for the world to learn that this policy was quickly fine-tuned and adjusted to Iran's expanding socio-political crisis.
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Preparing for a major bank shakeout Rising failures and a weak economic recovery could accelerate a decades-long trend towards fewer, bigger banks. The problem bank list is just about the only part of the industry that's growing right now. The sector's financial problems, outlined by regulators in excruciating detail on Thursday, could speed a shakeout that already has slashed banks' ranks by almost half over two decades. "We could end up with a couple thousand fewer banks within a few years," said Terry Moore, managing director of consulting firm Accenture's North American banking practice. "You could say we're overbanked right now."
Obama's Spending Spree, Budget Numbers "Have All Gone Mad," Analyst Says When retail expert and all-around economy watcher Howard Davidowitz appeared on Tech Ticker in February declaring the worst was yet to come for the U.S. economy and that Americans' standard of living has changed permanently, our comment boards lit up. But surely with the latest rally off the March lows, bearish Davidowitz is more bullish, right? Not a chance. Look at your financial history books.
'Gold has enduring ability to hold value over time' Which is the commodity that holds real value over time? Ofcourse, many people believed gold is the answer. Now confirmation regarding this has come from updated version of the influential book, The Golden Constant: The English and American Experience by Roy W Jastram published by World Gold Council.
Gold rises in thin trading as dollar falls after jobless data Gold futures rose in light trading on Thursday, as the dollar moved lower after the government reported a drop in the past week's jobless claims, raising gold's appeal as an investment alternative. Gold for December delivery ended up $1.60, or 0.2%, at $947.40 an ounce on the Comex division of the New York Mercantile Exchange. Futures have been trading in small ranges this week. "Given the holidays coming up over the next two weeks, we expect the metal to remain range-bound, holding in the current $930 to $965 range," said James Moore, an analyst at TheBullionDesk.com.
Gold Bugs Rejoice: Bernanke's Back, Stronger than Eve In a bit a political sleight of hand, the Obama team moved boldly and swiftly to deflect attention from the unbelievably bad US national debt forecast by appointing "Helicopter" Ben to another term. There is much debate over whether or not this is the best move and rest assured there will be plenty of political grandstanding over it. That aside, what can we expect from a Bernanke-led Fed going forward? Well, that depends on where you believe we are in the deflation vs. inflation debate. I personally have been in the deflation camp for some time now, but am now starting to come around to the inflationary side. Here's why:
Gold Break Out Looms as "Stocks Battle Bonds" THE PRICE OF GOLD held inside this week's tight range early Thursday in London, trading up to $949 an ounce as Asian stock markets closed 1% lower and European stocks moved sideways. Crude oil ticked lower towards $71 per barrel. Government bond prices rose. The Dollar was little changed vs. the Euro ahead of a revised GDP estimate, expected to show the US economy contracting by 1.5% between April and end-June. "Gold doesn't really have its own momentum," said one Hong Kong dealer to Reuters this morning. "I suspect that will remain the case until after the US Labor Day holiday [on Sept. 7] when most people, including fund managers, return from their holidays."
Central Banks Hoard Gold "European central banks party to the Central Bank Gold Agreement have signed a five-year deal that will cut the annual sales limit to 400 metric tons of gold and allow the International Monetary Fund to join as a signatory it it wishes. ... Analysts said the lower ceiling on gold sales was a belated recognition that central banks have become less willing to sell reserves, reflecting a change in thinking at central banks at a time when the dollar is in decline and inflation worries are widespread. ... The latest deal provides certainty to the market that none of the European central banks will flood the market to take advantage of high prices. The gold holdings of the 10 largest signatories total more than 11,000 tons, valued at $350 billion. ... However, the lower ceiling is an encouraging development for gold prices, as it suggests gold is regaining its former status as a monetary asset. 'Many central banks are reviewing their position on gold
Monday's Million Ounce Silver Withdrawal COMEX registered Silver Stocks took a million ounce hit on Monday, dropping total COMEX silver stocks to slightly less than 116.5 Moz. Of that amount, only 61.5 Moz is registered (available for delivery against contracts). Total COMEX stocks haven't been this low since 2006 and are off significantly from the 134 Moz reported in 2008. With current stock levels, COMEX has 517 Moz under contract vs 61.5 Moz of registered silver to back those contracts.
The Rise of Inflation Premiums We are not alone in believing that the seeds of long-term inflation were sown, nicely watered and nurtured by the recent massive cash injection to the US economy. Others have been quite vocal in declaring that the we are quite wrong; they are certain that deflationary conditions will abound. We are happy to be proved wrong, but simply cannot see any fundamental or technical deflationary indicators. This article will provide a quick overview of one of our favorite tools used to determine inflation/deflation.
Prelude to stagflation? Transition from crisis to stagflation Now that we are just about 2 years into the world financial/credit crisis, it's time to ask what is next in one or two years. One is to ask will stagflation emerge in 2010 and after, which is highly gold bullish long term. Crisis to stagflation? We may be moving from a two year crisis stage to a post stage of stagflation that lasts years. There are several aspects to clarify first. First, assuming there is NOT another credit meltdown this Fall/Winter, and the USD does NOT have a big devaluation event, but rather tails down gradually, then I expect stagflation to emerge. The US and Western economy could do a Japan esq battle with deflation for a decade. It is caused by a hobbled credit system and huge government deficits.
U.S. dollar bulls may be hobbled by economy The U.S. economy has been improving, and dollar investors are starting to take notice. But punters who bet on more greenback gains from stronger U.S. economic data and interest rate hikes could be disappointed. Having been largely driven by swings in risk sentiment over the past year, the currency market is slowly refocusing its attention on growth and yield differentials as the global recession nears an end. This has stoked the enthusiasm of dollar bulls, who argue that a U.S.-led recovery and potential interest-rate increases by the Federal Reserve would boost the appeal of the dollar over other major currencies.
A New World Currency The Valun Mutual Money Plan As Conceived By E. C. Riegel The current economic crisis has brought into broad focus the failings of Government issued money. As pointed out brilliantly by E. C. Riegel in "Flight From Inflation" and "A New Approach To Freedom", the failure of a fiat currency is that it is issued by institutions that provide no enterprise value and thus cause inflation. Inflation is a tax, pure and simple. Debt monetization is deferred bankruptcy. Bankruptcy leads to usurpation. Usurpation can only lead to either of two ends: war or tyranny. Tyranny will take either of three forms: Socialism, Communism or Fascism. All three metastasize through political money. Its enemy is enterprise money.
Looming Crises Golden Exits In July, Vienna's Erste Bank, released its 2009 Special Report on Gold, In Gold We Trust. The analysis of the current gold market and its future direction by Ronald-Peter Stöferle and his colleagues at Erste Bank is commendable both for its information and its timeliness; for, today, the future of gold is inextricably interwoven with everyone's future-whether they know it or not. The current economic collapse has its roots in a crisis caused by the decline in the value of paper money over time resulting from the removal of gold and silver from global monetary systems. Previously, for much of mankind's history, money was gold and/or silver and its value was intrinsic and fixed.
Why the deficit will raise taxes The nation's debt must be brought to heel, and doing so will require tough choices beyond spending cuts, experts say. A $9 trillion federal deficit over 10 years may be too hard to comprehend. But this part is easy: Such unwieldy amounts of debt could have an impact on Americans' bottom line one way or the other -- if not tomorrow, then the day after. The U.S. government has been spending a great deal more than it has been taking in, and it is on track to do so well beyond the next 10 years. It has been borrowing money to make all that spending possible and it has to pay the money back with interest. How, you ask? By borrowing more.
In 2010 IRS could cut 401(k) contribution limit to $16,000 Low inflation has made food and gas more affordable during the recession, but there's a downside: Social Security beneficiaries probably won't get a raise next year, and the IRS may reduce the amount workers can contribute to their 401(k) plans. The IRS will announce 2010 contribution limits for 401(k) plans in October, based on a formula tied to the inflation rate in the third quarter vs. the year-ago quarter. For 2009, most workers can contribute up to $16,500 to their 401(k) plans, plus an additional $5,500 if they're 50 or older.
Hummel: The US Will Default On Its Debt The flood of debt that the US is taking on in its efforts rescue to economy will combine with huge social insurance obligations--Medicare, MedicaidSocial Security--to create an unsustainable level of public indebtedness, economist Jeffrey Rogers Hummel argues in at length here. Faced with this mountain of debt, policy makers will have just two choices: repudiate the debt or engage in hyper inflation to monetize it, Hummel writes. And faced with that choice the Treasury will likely protect the currency and default on Treasuries.
US Bank Enemies At The Gates While all manner of attention remains transfixed inside the United States on a remedy and recovery of its bank sector, once again Americans make dangerous assumptions. They tend to assume that the US Federal Reserve near 0% interest rates, Quantitative Easing (aka exploding Printing Pre$$ output), endless liquidity facilities (e.g. TALF), TARP funds (aka Wall Street slush fund), Stress Tests (rigged), bank stock sales (aided by FASB accounting fraud), bank carry trades (exploiting low short-term & higher long-term rates), and the passage of time can revive the US banking industry. They tend domestically to overlook the gradually worsening insolvency condition. Banks are bracing for a new wave of commercial mortgage losses, of prime Option ARMortgage losses, and credit card losses. The delinquency rate of prime Option ARMs is now higher than subprime home loans!!
Why Default on U.S. Treasuries is Likely Jeffrey Rogers Hummel Almost everyone is aware that federal government spending in the United States is scheduled to skyrocket, primarily because of Social Security, Medicare, and Medicaid. Recent "stimulus" packages have accelerated the process. Only the naively optimistic actually believe that politicians will fully resolve this looming fiscal crisis with some judicious combination of tax hikes and program cuts. Many predict that, instead, the government will inflate its way out of this future bind, using Federal Reserve monetary expansion to fill the shortfall between outlays and receipts. But I believe, in contrast, that it is far more likely that the United States will be driven to an outright default on Treasury securities, openly reneging on the interest due on its formal debt and probably repudiating part of the principal.
US 'problem' bank list hits 15-year high Insurance fund at lowest since 1993 The number of US banks at risk of failure is at a 15-year-high while the fund protecting depositors is at its lowest level since 1993, according to figures that highlight the spread of the crisis to the lower reaches of the financial system. The Federal Deposit Insurance Corporation, a banking regulator, on Thursday said the number of "problem banks" had risen from 305 to 416 during the second quarter. The FDIC does not name the lenders on the "problem list" but said that total assets of that group had increased from $220bn to $299.8bn in the three months through June.
Bankers watch as Sweden goes negative Riksbank experiment to boost commercial lending by charging for deposits may set precedent for the world For a world first, the announcement came with remarkably little fanfare. But last month, the Swedish Riksbank entered uncharted territory when it became the world's first central bank to introduce negative interest rates on bank deposits. Even at the deepest point of Japan's financial crisis, the country's central bank shied away from such a measure, which is designed to encourage commercial banks to boost lending.
Does Government Spending Bring Prosperity? Many leaders in high places now [1955] promise us that our government will never again permit poverty and depression to devastate our land. They propose more government spending as a cure for every economic evil. And millions of people believe that such a program will work. The underlying philosophy behind political spending is not new. Similar ideas have appeared throughout all history. They came to full flower shortly after the economic collapse of 1929, when unbalanced budgets were generally accepted as necessary economic measures for relieving those in distress. You could not let innocent people starve, could you?
FDIC is broke - Bank Holiday? The government agency that guarantees you won't lose your money in a bank failure may need a lifeline of its own. The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year. That has happened only once before - during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest. On Thursday, the agency reveals how much is left in its reserves. FDIC Chairman Sheila Bair may also use the quarterly briefing to say how the agency plans to shore up its accounts.
Bank Losses Drain Deposit Fund, F.D.I.C. Reports Even though financial stocks have rallied nearly 70 percent since the end of March, the Federal Deposit Insurance Corporation issued another grim quarterly report Thursday on the health of the nation's banks. The agency reported that the banking industry lost $3.7 billion in the second quarter amid a surge in bad loans made to home builders, commercial real estate developers and small and midsize businesses. Its deposit insurance fund dropped 20 percent, to $10.4 billion, its lowest level in nearly 16 years. And the number of "problem banks" increased to 416, from 305 in the first quarter, and is expected to remain high.
Agency that insures bank deposits may need help The government agency that guarantees you won't lose your money in a bank failure may need a lifeline of its own. The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year. That has happened only once before - during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest. On Thursday, the agency reveals how much is left in its reserves. FDIC Chairman Sheila Bair may also use the quarterly briefing to say how the agency plans to shore up its accounts.
Congressman Dr. Ron Paul on Strategy to Pass HR1207 & S 604 to Audit The Federal Reserve
Geithner: Auditing the Fed Is a "Line That We Don't Want to Cross" In an interview released today by Digg and the Wall Street Journal, Treasury Secretary Timothy Geithner was pressured about the growing popular movement to Audit the Fed spearheaded by Texas Congressman Ron Paul. A visibly uncomfortable Geithner attempts to dismiss the question by stating "I'm sure people understand that you want to keep politics out of monetary policy." When Geithner is again pressed on the issue, he makes the stunning assertion that conducting an audit of the Federal Reserve-something never before done in its 96 year history-is a "line that we don't want to cross," proclaiming that such a move would be "problematic for the country."
Bernanke Being Rewarded for Failure Ayn Rand wrote, "when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." America is not doomed, but the fellows in Washington are pushing for that outcome. It seems that all the characters that encouraged this financial crisis are being rewarded, and Ben Bernanke's re-nomination is no exception to this rule. He was on the Board of Governors when Alan Greenspan grew our bubble economy. Known as 'Helicopter Ben,' Bernanke was the most vocal supporter of low interest rates to combat the bogus threat of deflation, even if it meant dropping cash from helicopters. He succeeded in his aim - as it is hard for prices to decline while the money supply is growing by double digits.
Monopoly Money Round Two with a Teetering Economy Remember the whole scam of "repackaging" sub-prime mortgages with "good" instruments to get AAA rated investment instruments, which then fed into the credit default market, which brought the global economy to its knees (where we still are)? Well ... they are doing it again. According to a report by Matt Apuzzo with the Associated Press, Wall Street's way out of the economic mess is virtually the same one that got us into the mess.
Bernanke: Central Bankers' Bob the Builder? First, the good news about Bernanke's nomination for a second term as head of the Federal Reserve (Fed): we know what we are getting and may be able to prepare for the risks his continued leadership may pose to inflation and the dollar. The bad news: more of the same. Let's examine the good news first. You see, until recently banking had been a relatively simple business, as exemplified by the 3-6-3 rule: pay your depositors 3%; lend to them at 6%; and be off to the golf course by 3pm. This model began to fall apart in the 1970s for most corporate banks, but what hasn't changed is that central bankers typically like to keep things as simple as possible by moving levers such as interest rates and money supply. One reason central bankers like to keep things simple is because they are (as tough as it might be for some to admit) pawns like the rest of us in a dynamic economy. At times, they may try to intervene in the markets to assert their power, but in the long-run such activity may be akin to sipping water from the ocean using a straw.
Bernanke Has His Hands Full, Again resident Obama's decision to nominate Fed Chairman, Ben Bernanke for another four year term had pundits chattering, both approvingly and disapprovingly. Those who believe that Mr. Bernanke deserves another term point to his calm under fire and his in-depth knowledge of the great depression as the reason for averting a catastrophe. Detractors point to his previous time at the Fed when he was part and parcel to then Fed Chairman Alan Greenspan's policy of keeping short-term borrowing rates very low for an extended period of time as a prime cause of the housing bubble. There is some truth on both sides of the debate.
Federal Reserve Says Disclosing Loans Will Hurt Banks The Federal Reserve argued yesterday that identifying the financial institutions that benefited from its emergency loans would harm the companies and render the central bank's planned appeal of a court ruling moot. The Fed's board of governors asked Manhattan Chief U.S. District Judge Loretta Preska to delay enforcement of her Aug. 24 decision that the identities of borrowers in 11 lending programs must be made public by Aug. 31. The central bank wants Preska to stay her order until the U.S. Court of Appeals in New York can hear the case.
Glenn Beck 8 24 09 Debt, Corruption, Obama pt 1
Loans That Looked Easy Pose Threats to Recovery When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing. Mr. Clavon, 63, was planning to sell the home in a few years and retire to Palm Springs. So he got a loan called an option adjustable rate mortgage, or option ARM, which allowed him to pay less than the interest for the first five years. On his annual salary of $100,000 as a television camera operator, he could afford the $2,200 initial mortgage payments. And he planned to sell the home before the mortgage reset.
Dollar May Surpass 'Established Lows,' Goldman Says The dollar may weaken through "established lows" as signs of a global economic recovery drive gains in equities and oil, Goldman Sachs Group Inc. said. "That kind of shift could easily be prompted by continued good news from the macro front and the persistently negative dollar-equity and dollar-oil correlations," Thomas Stolper, an economist at Goldman Sachs in London, wrote in a report yesterday. "Dollar bulls could well end up disappointed. Even a short-term move beyond our three- and six-month forecasts of $1.45 per euro is getting increasingly likely."
The Struggle for the Control of the Nation's Money Murray Rothbard had a remarkable ability to throw unexpected light on historical controversies. Again and again in his work, he pointed out factors that earlier authors had overlooked. After Rothbard has finished with a topic, we can never see it in the same way again. This talent is much in evidence in the present book, a collection of several long articles by Rothbard that together constitute a comprehensive look at American monetary history for the period indicated in the book's title.
Could Kennedy's Death Spell Trouble for Bank Regulation? The passing of Senator Edward Kennedy threatens to shake up committee chairs in the Senate and in the process may deal the banks the upper hand in their fight with new regulation. Senator Christopher Dodd who chairs the Senate Banking Committee is in line to succeed Kennedy as chairman of the Health, Education, Labor and Pensions Committee. The man who is in line to replace Dodd is Senator Tim Johnson from South Dakota. Dodd is likely to make the move though he isn't obliged to do so, but given some of the ethical questions surrounding him and his finances, he might well want to avoid the spotlight of a bruising fight involving the banks.
Banks face mounting pressure before G20 Britain weighed new curbs on banks and a key forum outlined rules to prevent a replay of the global financial crisis on Thursday as pressure mounted for more regulation ahead of a G20 summit. The head of Britain's Financial Services Authority (FSA) said he would support moves to raise capital requirements for banks and impose taxes on financial transactions to cut the bloated banking sector down to size.
Bernanke, the patch-it banker The good news about the nomination of Ben Bernanke for a second term as head of the United States Federal Reserve is that we know what we are getting and may be able to prepare for the risks his continued leadership may pose to inflation and the dollar. The bad news - more of the same. Until recently, banking was a relatively simple business, as exemplified by the 3-6-3 rule: pay your depositors 3%; lend to them at 6%; and be off to the golf course by 3pm. This model began to fall apart in the 1970s for most corporate banks, but what hasn't changed is that central bankers typically like to keep things as simple as possible by moving levers such as interest rates and money supply.
Glenn Beck 8 24 09 Debt, Corruption, Obama pt 2 unfunded liabilities, loss of household wealth, credit derivatives (644 trillion), other US debts etc.
Why Aren't Lenders Doing More Loan Modifications? Daily, in the newspapers, radio, television and the internet, articles are written about the difficulty that borrowers face in getting loan modifications. These reports come not just from reporters, but from loan modification companies and also attorneys who are attempting to do the loan modifications. At the same time, the Federal Government and the Obama Administration announce new programs to assist homeowners in getting loan modifications. These programs are going to solve the problems that homeowners have, and are going to save their homes. Yet, closer inspection of the program's details raises eyebrows about if the new program will benefit homeowners. Then within a few months of implementing the program, reports come out that the programs are not working. Homeowners are not getting the needed help. Foreclosures are increasing.
Act fast! Homebuyer tax credit ends soon There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home. Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time home buyers tax credit. Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid. The bad part: It ends on Dec. 1.
Are higher taxes inevitable? Obama is in a bind, given his no-tax campaign pledge. But the recession, stimulus spending, and higher interest on national debt are ballooning federal deficits, perhaps to risky levels. Higher taxes, anyone? After an era of falling taxes, the federal government may be getting close to a change in the other direction. This isn't something that politicians have proposed or that the American public wants. And this threshold won't necessarily be crossed during President Obama's term in office. After all, he campaigned on a pledge to reduce taxes for 95 percent of Americans. But fiscal-policy experts generally say the question is not whether US taxes will go higher, but when. Some say it's likely that Mr. Obama will at least begin the process of reversing America's tax cut trend. The reason: Federal deficits are on an unsustainable path, which could put the whole economy's vibrancy and stability at risk.
Labor Day travel scaled back this year, according to AAA survey But some experts see pent-up demand for pleasure travel during the last long weekend of summer Americans may be putting the brakes on Labor Day weekend travel plans this year, as economic strains combine with a quirk of the calendar. Capping a rough "staycation" summer for the tourism business, the AAA estimated that 39.1 million people will travel at least 50 miles between the Thursday and Monday of Labor Day weekend -- down 6 million, or 13.3 percent, from last year's tally. It's expected to be the first decline since 2006.
Glenn Beck - ACORN funding - eligible for 4.1 billion of stimulus (i.e. taxpayer money); people who are looting the country
Real US unemployment rate at 16 pct: Fed official The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday. "If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.
Power is shut off as bills pile up More Americans are having their power shut off as the weak economy makes it harder to pay bills. "We see record numbers of households becoming disconnected or in danger of disconnection," says Mark Bixby, energy director of Rockford, Ill. Five years ago, his office distributed federal funds annually to about 300 households that had their power cut off. Last year, it was 1,834 households, and the number is likely to go up this year, he says: "It's families that can't find work."
Too soon for exit strategies in healing global economy: IMF The global economy is recovering from a severe downturn but it is too soon for governments to begin winding down stimulus efforts, an International Monetary Fund spokeswoman said Thursday. "The global economy is of course improving... today's US GDP numbers I think support that," IMF spokeswoman Caroline Atkinson said at a news conference. "The outlook is improving but we do feel that it is very important to stress that it is no time for complacency," she added.
Accused financier Stanford hospitalized Jailed financier Stanford taken to hospital, ex-CFO Davis pleads guilty in massive fraud Texas financier R. Allen Stanford, jailed on charges of bilking investors out of $7 billion, was hospitalized Thursday with an irregular heartbeat and high pulse, just hours before his ex-finance chief became the first person to plead guilty in the case. Stanford was set to appear in a Houston federal courtroom for a hearing on whether he can get a new attorney. His current lawyer, Dick DeGuerin, has asked for permission to quit the case because he doesn't have assurances he will be paid. In the same courtroom, Stanford's former chief financial officer, James. M. Davis, pleaded guilty Thursday to three counts: conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a Securities and Exchange Commission investigation.
Tax Man Rangel Forgets to Pay His Own Rangel also didn't confess up to at least five other investments, reports say Embattled Rep. Charles Rangel, who is now under more scrutiny for failing to disclose his personal assets, also somehow forgot to pay taxes on two plots of land he has in New Jersey, records show. Rangel is the powerful chairman of the Ways and Means Committee, which writes the tax code, making the blunder that much harder to believe. Rangel's ownership of the small, undeveloped properties came to light on Tuesday only after he drastically amended at least six years of financial-disclosure forms he had filed annually with the House clerk as required by law, the New York Post reported.
TAX CHIEF CHARLIE A TAX 'CHEAT,' TOO The Tax Man is a deadbeat. Rep. Charles Rangel, chairman of the tax-writing Ways and Means Committee, has failed to pay taxes on two plots of land he has in New Jersey, records show. Rangel's ownership of the small, undeveloped properties came to light on Tuesday only after he drastically amended at least six years of financial-disclosure forms he had filed annually with the House clerk as required by law.
Toyota to shut California auto plant in March Toyota Motor Corp. has decided to shut its plant in Fremont, Calif., the last auto-assembly line on the West Coast. The decision was handed down Thursday by Toyota's board. It sets March 2010 as the final month for its production contract at the New United Motor Manufacturing Inc. facility, known as the Nummi plant -- located at the southeast end of the San Francisco Bay Area. Production of vehicles made at the plant -- the Corolla sedan and Tacoma pickup -- will be transferred to wholly-owned Toyota facilities, the world's largest car maker said. The Tacomas will be made a facility in San Antonio, and the Corollas both in Cambridge, Canada, and in an unspecified Japanese plant.
Harley-Davidson to sell motorcycles in India Harley-Davidson to sell motorcycles in India in 2010, hopes growing economy will speed sales Harley-Davidson Inc. said Thursday it will begin selling motorcycles next year in India, the world's second-largest motorcycle market, where the company hopes its iconic, heavyweight bikes will find a niche among the country's rising middle class. The Milwaukee-based company said it has established a subsidiary near Delhi and has begun scouting the country for dealers. "Given the rapid development of India's economy and physical infrastructure, this is exactly the right time to bring the world's greatest motorcycles to one of the world's largest motorcycling nations," said Mark Levatich, Harley's chief operating officer, in a statement.
Toys 'R' Us launches Cash for Clunkers, baby-style Add cash for cribs to the stack of programs modeled after the government's car swap program. Toys "R" Us is offering customers the chance to trade used cribs, car seats and other children's items in exchange for a store discount. The three-week program begins Friday and ends Sept. 20. Customers will receive a 20% discount on selected items, and there is no limit to the number of products to be turned in.
'Cash for clunkers' final tally: nearly 700,000 cars sold The monthlong program comes in just under its $3-billion budget. California dealers request the biggest share of reimbursements: $326.8 million. Reporting from Los Angeles and Washington Martin Zimmerman -- Government officials declared the "cash for clunkers" program a winner as they released final data Wednesday showing the program sparked the sale of nearly 700,000 new vehicles, boosting a devastated industry and the struggling economy. But the coming weeks will show whether the program was a bargain or a lemon.
Clunkers: Good for Detroit, better for Japan Under the Cash for Clunker rebate, foreign car sales beat domestic brands. While Detroit has benefited from Cash for Clunkers, foreign automakers have gained even more. Some critics of the program warned that because it let consumers buy domestic or foreign cars, Clunkers could end up spending more American tax dollars to help foreign companies than American ones. And in fact, foreign automakers -- and foreign auto factories -- have gained somewhat more from the program than domestic automakers have.
Meeting regulations costly for gas stations Charlie Thomas is worried that he may be forced to shut down his Satellite Beach, Fla., gas station in part because a state law requires all stations to install tanks to pump gas with at least 10% ethanol by year's end. A combination of environmental rules, mandatory equipment replacement, the down economy, increased competition from big-box stores and rising credit-card fees is putting the squeeze on independent gas station owners such as Thomas. "I don't know what the future is going to bring me," says Thomas, who has owned and operated his gas station and repair shop for 20 years.
Health care run by trial lawyers Jim Moran and Howard Dean admit who's in control Political power, rather than substance, is at the heart of the Democrats' proposed health care legislation. Admission of that power-politics reality was the most significant occurrence in a very odd town-hall meeting Tuesday night held by Virginia Democratic Rep. James P. Moran. It is now clearer than ever that plaintiffs' lawyers collectively are the political powerhouse running the health care show. A constituent at the meeting, quite reasonably, asked Mr. Moran the following question: "There is $200 billion of savings over 10 years if you have [lawsuit] reform, and nobody loses but the lawyers. Why isn't [lawsuit] reform in the bill?"
A New Dawn WAKE UP! The bear market is over! Rapid house price appreciation has returned! The winter is over, a new day is dawning, and everything is all right. NOT. Well, you would think all was well by the asking prices of today's WTF trio. The mentality of the herd was evident during the house price rally. No price was too high because someone would always pay more. Making a million dollars on the sale of your home was not a dream, it was an entitlement.
A Letter to the Poor My sisters and brothers living in poverty, You're probably surprised to receive this since we don't get much mail other than foreclosure and eviction notices, but it's important for us to begin talking to each other, and I'm hoping this is one way to get the conversation started. I don't have to tell you that we can't expect to receive much help from anyone these days. The politicians have spent all the government money on fighting wars and helping bankers, so there's nothing left for health care or public works jobs or college for our kids. At least that's what most of the Democrats and all the Republicans claim, and they're backed up on this by all the radio and cable TV talkers. Big surprise, huh?
No one is safe from identity theft: Fed chief Ben Bernanke's bank account hit by ring No one is safe from identity theft, not even the chairman of the Federal Reserve. Ben Bernanke's personal checking account became entangled in an elaborate identity-theft scheme after his wife Anna's purse was stolen last August. According to a District of Columbia police report, it contained her Social Security card, checkbook, credit cards and IDs. It's not been revealed how much money was taken, but someone started cashing checks on the Bernankes' bank account just days after the purse was snatched from her chair in a coffee shop.
Interim Kennedy Successor May Be Named Next Month Massachusetts Governor Deval Patrick could temporarily replace the late U.S. Senator Edward Kennedy as early as the fourth week in September under a timetable being considered by Democratic members of the Legislature, a key committee chairman said today. "It is possible to get it done" by Sept. 24 or 25, said state Representative Michael Moran, a Boston Democrat and co- chairman of the Joint Committee on Election Laws. "Is it likely? I can't answer that," he said in an interview today. "There are too many moving parts."
A NEW RELIGION MASQUERADING AS CHRISTIANITY - Part 1 Recently the Barna Research Group released a study on the religious practices of liberals and Christians. According to the report:
"The research…discovered that liberals are more likely than conservatives to develop their own set of religious beliefs rather than adopt those proposed by a church or other entity. A great er percentage of liberals also indicated they are very open to accepting different moral views than those they presently possess."
Liberal "Christians" abhor "fundamentalist" Christianity so they cast it aside and adopt their own set of religious beliefs and values. Times have changed, after all, so they feel it's incumbent upon them to bring Christianity out of the Dark Ages into our postmodern world. Christianity must shed its traditional, orthodox beliefs to blend in with the popular culture.
A NEW RELIGION MASQUERADING AS CHRISTIANITY - Part 2 When I was a liberal I loved mocking the Bible. I'd get giddy arguing with conservatives over Bible stories that to me were ludicrous. One example is the biblical account of Moses parting the Red Sea to help the Israelites escape Pharaoh's pursuing army. Boy did I scoff at that one! I categorized Christians who bought into the miraculous signs and wonders in the Bible as "unenlightened twits." My Christian friend who set me straight on abortion (part one) challenged me to read "Mere Christianity" by Oxford don C. S. Lewis. The book is a classic of Christian apologetics written in the 1940s. I knew it would be hard reading, nevertheless I accepted the challenge. It wasn't exactly a page turner but I managed to get through it. Reading "Mere Christianity" opened my eyes to what the Christian faith is all about.
Obama Creates A National Civillian Private Security Force, BUT WHOSE THE ENEMY???
Almost Heaven almost gone? "Patriot" haven now silent a decade later Woodland, Idaho -- The "No Trespassing" signs increase with the elevation along the Woodland grade until the tiny development of Almost Heaven, where they seem to mark nearly every house and trailer. But there's few people to keep out of Almost Heaven these days. Interest in the so-called covenant community tapered off years ago after founder James "Bo" Gritz left, and nearby Woodland residents say many of the patriot movement's most vocal members have long since left as well. "When Bo Gritz left, things kind of settled down," said Glenn Simler, a farmer who has lived in the peaceful Quaker settlement of Woodland for all of his 84 years. "The ones that seemed to be troublemakers took off -- I don't really know why. Law enforcement in the area got to them. It just wasn't a place that fit their ideas."
U.S. moves toward formal cutoff of aid to Honduras U.S. State Department staff have recommended that the ouster of Honduran President Manuel Zelaya be declared a "military coup," a U.S. official said on Thursday, a step that could cut off tens of millions of dollars in U.S. funding to the impoverished Central American nation. The official, who spoke on condition he not be named, said State Department staff had made such a recommendation to Secretary of State Hillary Clinton, who was expected to make a decision on the matter soon.
Afghan elections expose US war doubts Washington continues to wait on results from last week's elections in Afghanistan, but few analysts here expect the outcome to provide much of a boost to the United States-backed campaign against the Taliban, regardless of who wins. This skepticism about the elections is just one symptom of a growing sense of disillusionment in the US about the course of the war in Afghanistan, both in the foreign policy establishment and among the general populace.
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Thurs 08.27.2009
U.S. problem bank list hits 416, insurance fund falls The number of problem U.S. banks and thrifts on an official watchlist rose sharply to 416 in the second quarter of 2009 from 305 in the prior quarter, as the industry recorded a $3.7 billion loss. The Federal Deposit Insurance Corp said on Thursday that the industry swung back to a loss in the second quarter after reporting a $7.6 billion profit in the first quarter, primarily due to costs associated with rising levels of bad loans and falling asset values.
The Dollar Will Fall, The Only Question Is "When?" $9 trillion. That's the estimated size of the U.S. deficit for the next decade. It's also nearly $2 trillion more than the Obama administration projected back in February. The New York Times says that figure represents, "5.1 percent of the economy's estimated gross domestic product for the decade, a higher level than is generally considered healthy." Todd Harrison, CEO of Minyanville.com says it also means the dollar will collapse under the weight of the ever-increasing debt balance. The tough question is when?
Federal Debt Prediction: Dollar Bearish, Gold Bullish Gold traded positively overnight and into early morning trading and currently trades at $948.50/oz. A cold warning concerning the US's worsening debt situation was released yesterday through the federal debt prediction. Figures revealed a total prediction of its 10-year deficit to be $7,14obn. That's $2,000bn more than that forecast back in February which is dollar bearish and gold bullish.
Gold's Sluggish Summer "Near Its End" as Huge US Debts Threaten the Dollar THE PRICE OF GOLD drifted sideways in what one Hong Kong dealer called "sluggish" trade early Wednesday, briefly touching $950 an ounce as a rally in Asian stock markets failed to carry over to Europe. The Gold Price in Sterling rose to £582 an ounce, its best level since June 10th, as the Pound sank to a 6-week low on the forex market. For US, Eurozone and Japanese buyers, the Gold Price held in the middle of this summer's trading ranges, recording an AM Gold Fix in London just north of its June-to-Aug. averages.
Key Gold Price Drivers We remain "extremely optimistic" on the gold-price outlook - but, unlike many other bullish analysts, we believe the metal's ascent will take several years to reach its next long-term cyclical peak. In the meantime, expect high volatility and a difficult climb, fraught with sharp reversals along the way that will, at times, cause some observers to wonder if the market has already topped out. Ultimately, gold will most likely climb into the US$2000 to $3000 range - but it could go even higher given the right confluence of economic and political developments . . . or if a late cycle mania produces a final bubble before the market shifts into reverse.
Gold Wars, Part I: Central Banks supreme There are many changing dynamics in the precious metals market which suggest that we are about to witness exponential, upward moves in prices for gold and silver - which dwarf the gains these metals made when they more-than-tripled in vale. For silver, it is a relatively straightforward issue of supply and demand: demand is surging in numerous areas, while decades of price-suppression has resulted in the evaporation of global stockpiles. In the case of gold, however, the normal fundamentals of supply and demand do not apply. As a commodity which is never consumed, total stockpiles of gold grow every year. Conversely, even with a tripling in price, the supply of gold remains flat - despite the huge surge in Chinese gold production - suggesting that "peak gold" has arrived
Gold shows 15% gain for year-on-year period Volatility continued to buffet markets overnight and was most visible in the oil pits, where the commodity fell another 3% after having broken its apparently unstoppable momentum. A rise to $75 per barrel was quickly reversed once apprehensions about on-going demand surfaced yesterday. US inventory data came due today, and it showed a rise - at least as tracked by the API. The market was still awaiting the EIA data.
China to increase gold output by 30% every year The Chinese are right behind India in gold consumption as their gold mining and import activities are going full throttle. China has recently tied up with several international miners to extract its huge Gold reserves. This is a part of a plan to boost output by 30 percent each year through 2012. China may overtake India as the world's top gold consumer this year, according to the World Gold Council. China's strategy is to continue to grow its portfolio of quality assets and capitalize on its leading position in China's growing gold industry.
The US Dollar Versus Gold - Flea on a Bull's Back Gold versus paper. That's the real battle under the surface. This is the more important battle from a societal standpoint. Honest money or crooked money. Humans will always cheat, steal and lie, but when a system is set up specifically to promote cheating, stealing and lying, this is exactly what happens on a large scale. Though we were only on a quasi-Gold standard from 1934-1971 in the United States, it at least provided a modicum of restraint. Before 1933, we were on a fairly "pure" Gold standard for several decades.
“The Central Bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation, then by deflation the banks and corporations that grow up around them will deprive the people of all their property, until their children will wake up homeless on the continent their Fathers conquered.” ~ Thomas Jefferson.
In July 2008 the commercial gold traders (often referred to as the COT’s), were ‘net short’ 247,000 contracts. (This number is arrived at by deducting their total ‘long’ positions from their total ‘short’ positions). When this net short position gets high enough to satisfy them, (they were obviously happy with 247,000), they look for an opportunity to ‘cap a rally’, and then by selling heavily into the rally, they force hedge funds and margined traders to ‘cough up’ their long positions, so they can cover enough short positions to start the game over again. By September they were able to reduce their net short positions to 94,000 and they pocketed $250 per ounce in the process. Not bad for a 60 day effort.
Roubini Warns Of Double-Dip Slump - Bloomberg
Nouriel Roubini Concerned Inflation Will Drag the Global Economy Into a Double-Dip Recession Nouriel Roubini, professor at the Stern Business School at New York University said in an op-ed piece in today's (Monday's) edition of the Financial Times that while the global economy is "starting to bottom out" there is "a rising risk of a double-dip W-shaped recession," mainly because of the threat posed by inflation. According to Roubini, who is often credited with predicting the financial meltdown, there are three open questions concerning the global economy:
When will the recession be over?
What will be the shape of the economic recovery?
Are there risks of a relapse?
Galloping Consumption: Gold & China's Savings Glut, Part I NOW THE banking crisis is over – "Bernanke stays put, home prices up," as Fox News reports – the career academics who failed to spot and prevent it can get back to fretting about the most macro of tasks: How to rebalance the global economy? The rich West spends, emerging Asia saves. For global trade, this means the West (or rather the US, UK and most of Western Europe) goes shopping for what Asia (and Germany) makes. Which in turn means poor Asia in fact funds this consumption, hoarding Treasury bonds as I.O.U's, representing the ultimate in vendor finance.
Inflation Breeds Even More Inflation Early in the 20th century, Ludwig von Mises warned against the consequences of granting the government control over the money supply. Such a regime inevitably creates money through bank credit that is not backed by real savings - a type of money that Mises termed "fiduciary media." Mises knew that breakdowns of economic activity were the inevitable outcome of government interference in the monetary sphere. However, public opinion has not correctly diagnosed the root cause, regularly blaming instead the free market system - rather than the government - for the malaise. In times of crisis, people call for more government intervention in all sorts of markets, thereby setting into motion a spiral of intervention which, over time, erodes the liberal economic and social order.
Rope to the Hyper-Inflationalists Up until the end of the prior recession to March 2003, the S&P500 was positively correlated to the dollar. This correlation was rigged by central bank Gold sales to the aforementioned "banksters" while the masses were pre-occupied with dot.com. Since March 2003, the dollar and S&P500 inverted to opposing correlation. This opposing correlation is due to flight of dollars to the more productive, less indebted, developing world when exports are booming to positive consumer markets, and conversely the hoarding of dollars to service global dollar denominated debt when income and exports decrease (no de-coupling!).
Deficit Projected To Soar With New Programs 10-Year Estimate of $9 Trillion Fuels Critics of President's Agenda The nation would be forced to borrow more than $9 trillion to support President Obama's initiatives and other federal programs over the next decade, the White House said Tuesday, a sharp increase in projected deficits that provided fresh ammunition to critics of the president's sweeping proposal to expand health coverage to the uninsured. In their traditional summertime budget review, administration officials acknowledged that they relied on overly optimistic assumptions about the economy when they forecast in March that Obama's budget plans would generate deficits of $7.1 trillion over the next 10 years. After factoring in the severity of the recession and the prospect of a more sluggish recovery, the White House concluded that the budget outlook is significantly worse.
As Budget Deficit Grows, So Do Doubts on Dollar he U.S. economy may be showing signs of recovering from the financial crisis, but the jury is still out on the future of the U.S. dollar. While many analysts expect the dollar to strengthen in coming months as the crisis fades and the U.S. economy turns toward growth, a growing chorus of investors is expressing concern about the longer-term outlook for the greenback. In a new twist to an old refrain among economists, who have long worried about the effects of growing U.S. debt, they say that the huge liabilities the U.S. is taking on to dig its way out of crisis could ultimately undermine faith in the dollar.
A Timely Apocalypse Could 'Save' Debtors If nothing else can stop a runaway stock market, there's always the astrologers. Pick any day of the year, and odds are it's circled in red on some star-gazing guru's End of Days calendar. The higher stocks go, the louder their predictions of disaster. Not that we haven't joined the chorus of despair ourselves from time to time. How else is a guru supposed to gin up business during the dog days of summer? At the moment, the sexiest prediction out there is the Mayan apocalypse slated in 2012. Perhaps the Mayans would have pushed that date back a few years, giving themselves a little extra room, if they'd known that Goldman Sachs - the antichrist at the moment -- would be running the world.
Dismantle Bernanke's 'Happy Conspiracy' ... now! 6 reasons more power for the Fed will destroy capitalism and democracy At last week's annual Jackson Hole meeting of Fed execs, Boss Ben Bernanke's braggadocio about saving the world from another Great Depression had the feel of an egomaniacal dictator trying to cement his legacy in history. Any good behaviorist would tell you Bernanke's got some dangerous biases isolating him from reality (remember two years ago when he was denying the meltdown). His brash claims and radical, secretive policies present a grave danger to American capitalism and democracy. In fact, Bernanke now appears to be America's (and the world's) most dangerous man, far more dangerous than Hank Paulson and the "Goldman Conspiracy" ever was.
Glenn Beck: August 26, 1/5, Rush Limbaugh
Glenn Beck: August 26, 2/5, Rush Limbaugh
Glenn Beck: August 26, 3/5, Rush Limbaugh
Glenn Beck: August 26, 4/5, Rush Limbaugh
Glenn Beck: August 26, 5/5, Rush Limbaugh
Phony Fed Audit What Would Be Involved in an Audit of the Federal Reserve? There has been a self-conscious effort to confuse the proposed audit of the Federal Reserve, initiated by Ron Paul, in order to fight off what would be unveiled and revealed by that very audit. So before we get into what an audit of the Federal Reserve would entail, let’s look at part of the basic argument Ben Bernanke has brought forth concerning the issue. Here’s what Bernanke has said concerning an audit: “Because GAO reviews may be initiated at the request of members of Congress, reviews or the threat of reviews in these areas could be seen as efforts to try to influence monetary policy decisions.”
German state to lend directly as second credit crunch looms Germany could directly intervene in the credit insurance and lending markets as soon as September to head off a looming credit crunch, as it fears the economic recovery may soon falter as banks refuse to roll over loans. The finance minister, Peer Steinbrück, said broad sectors of the German economy are in trouble even if the country has avoided a full-blown lending crisis so far. "Conditions have become much tougher for some industries - electrical engineering, machine tools, suppliers, chemicals and shipbuilding. We have clear evidence from both small and large companies that lending is jammed. "The banks are not stepping up to their responsibility to provide credit," he told the German paper Handelsblatt.
Mortgage applications rise as refinancing demand jumps U.S. mortgage applications rose for a second straight week, with demand for home refinancing loans rising to its highest level since early June, data from an industry group showed on Wednesday. Applications for loans to buy a home, an early indicator of sales, rose slightly, but nevertheless gained for a fourth consecutive week. The trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.
Fed’s Lockhart Says Low Rates Needed for Recovery The U.S. economy needs the stimulus from low interest rates for some time as it begins a “fragile” recovery from the worst recession since the 1930s, said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta. “Overall, the U.S. economy is improving but still fragile,” Lockhart said today in remarks prepared for a speech in Chattanooga, Tennessee. “The FOMC has stated its intention to keep the policy interest rate low for an extended period. I agree that this approach is needed.”
With Reappointment in the Bag, Fed Chairman Ben Bernanke Turns to Face Troublesome New Challenges For U.S. Federal Reserve Chairman Ben S. Bernanke, the biggest challenges are still to come. U.S. President Barack Obama yesterday (Tuesday) nominated Bernanke for a second four-year term as chairman of the U.S. Federal Reserve. The appointment was mildly controversial and must be approved by the Senate, but lawmakers and investors overwhelmingly approved of the decision to the central bank chief who has shepherded the U.S. economy though its worst financial crisis in more than 70 years.
Bernanke May Redefine Fed Mission in Financial-Market Stability Ben S. Bernanke’s renomination allows him to redefine the Federal Reserve’s mission as he expands its power over financial markets and pulls back on a credit surge the central bank used to keep the economy from collapse, economists say. Bernanke’s agenda during the next four years will include elevating the Fed’s role in reducing excessive risk in major financial institutions, figuring out how to curtail asset bubbles, and scaling back $1.2 trillion of monetary stimulus.
The troubling side of Ben Bernanke He has saved the world but he helped cause the crisis in the first place, writes Ambrose Evans-Pritchard. Ben Bernanke has proved himself a heroic fire-fighter, saving world from a calamitous spiral into debt deflation by showering markets with liquidity. A good thing too. He helped cause the raging fire of 2007-2009 in the first place. As a Princeton professor and then a junior Federal Reserve governor, Mr Bernanke was the intellectual architect of his predecessor Alan Greenspan's policies that so distorted global finance and pushed debt to historic extremes.
Which Bernanke Are We Getting at the Fed? Ben Bernanke will be nominated for a second term as chairman of the Federal Reserve. But which Bernanke are we getting? There are at least three.
The Bernanke who led the charge to rescue the US (and world's) financial system after the Lehman-AIG collapse. If you accept that the choice from late September was "Collapse or Rescue," this Bernanke did a great job.
The Bernanke who argued for keeping interest rates low as the housing bubble developed. This Bernanke was part of the Greenspan Illusion - the Fed should ignore bubbles and "just clean up afterwards." Is that still Bernanke's view? Surely, he has learned from that experience.
Then there is Bernanke-the-reformer. Given #1 and #2 above, shouldn't he be pushing hard for tough re-regulation of the financial system - particularly those dodgy parts where markets meet banking? But is there any sign of such an agenda, even with regard to recently trampled consumers - let alone "too big to fail" financial institutions?
Most likely, we're in for another bubble
Bernanke's other banking problem: Identity theft Some critics of recently reappointed Federal Reserve Chairman Ben Bernanke argue that he was too slow to realize that the financial system was teetering on the brink of collapse during 2008. But Bernanke might have had another, more personal banking issue on his mind at the time, Newsweek reports: his wife Anna's purse was stolen in August 2008, and the thieves used its contents to access the couple's joint checking account. A court affadavit filed in June shows that 10 people are charged in the fraud, which used the Bernankes' bank account to inflate the value of other accounts that then had money withdrawn from them. The 22-page document identifies a victim known as "B. B.," who had $900 stolen from his account, but another complaint against one of the alleged members of the ring used Ben Bernanke's full name.
Peter Schiff on aljazeera Riz Khan Global recession 24 Aug 09
The Devil We Know by Peter Schiff Ayn Rand wrote, "when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." America is not doomed, but the fellows in Washington are pushing for that outcome. It seems that all the characters that encouraged this financial crisis are being rewarded, and Ben Bernanke's re-nomination is no exception to this rule. He was on the Board of Governors when Alan Greenspan grew our bubble economy. Known as 'Helicopter Ben,' Bernanke was the most vocal supporter of low interest rates to combat the bogus threat of deflation, even if it meant dropping cash from helicopters. He succeeded in his aim – as it is hard for prices to decline while the money supply is growing by double digits.
Kicking the bailout habit The FDIC wants banks to stand on their own two feet, but withdrawing insurance on big checking accounts won't be popular. Washington gets another chance to kick the bailout habit this week, when regulators consider the fate of a subsidy that has been good to smaller banks. The board of the Federal Deposit Insurance Corp. is scheduled to meet Wednesday. On the agenda is the status of the Transaction Account Guarantee Program, which provides unlimited federal insurance for noninterest-bearing checking accounts -- those used by businesses and governments for meeting payroll, for instance.
Joe Gregory Wants Lehman To Pay Him $233 Million If there is such thing as a sense of shame or culpability on Wall Street over the destruction we all witnessed last year, not much of it has rubbed off on former Lehman president Joseph Gregory. Gregory, who was Dick Fuld’s right hand man at Lehman, has filed a claim against Lehman’s bankruptcy estate for $233 million in deferred compensation in the form of performance- and restricted-stock grants.
The Great Banking Recovery Or The Next Bubble? Should we be happy that the value of investments owned by commercial banks has begun to rapidly climb? Or should we be worried that the value is climbing at such a rapid clip that it looks a bit like an unsustainable bubble? Or is it just evidence of banks hoarding money and refusing to lend it out, holding Treasuries and securities instead?
Obama continues peddling fantasy deficit numbers The White House released new estimates of the additional deficits which the U.S. government will rack-up over the next decade - now projected to exceed $9 trillion . In just one year that estimate has worsened by $2 trillion. This is another illustration of how White House 'accounting' has absolutely no connection to the real world.
Obama Has Lost The Center As the President's ratings tank, let us quickly examine why: His presidency is the Mirror Image of G.W. Bush's-only he has done in six months what it took Bush six years to accomplish: while keeping his base happy, he has alienated the center of the political spectrum and thus lost his ability to lead the country. Here is a general rule of American electoral politics: you must have a passionate base to get nominated, but to rule effectively you must also have strong appeal in the political Center.
The Most Dangerous Words on Wall Street: "The Crisis Is Over" Add today's durable goods number to the growing list of "better-than-expected" economic reports that have convinced many market players, economists and regulators the worst is behind us. But such complacency about the crisis being over is "one of the most bearish things in the marketplace right now," says Todd Harrison, CEO of Minyanville.com.
Recovery won't improve unemployment Optimism about the economy may be growing, but don't expect that to mean job growth, too The mood regarding the U.S. economy may be inching, ever so slowly, toward optimism. But don't expect to see much improvement on the jobs front anytime soon. The economy's following a script for a jobless recovery, and unemployment is likely to stay high, if not get slightly worse. The Congressional Budget Office painted a worsening picture for joblessness on Tuesday: The CBO sees unemployment peaking at 10.4% next year from an average of 9.3% this year, before it falls to 9.1% in 2011.
The Calm Before the Financial Storm? Is the rally over? Not at all! The world’s bankers say the economy is recovering. Investors believe them; they’re bidding up stocks. The Dow rose 155 points on Friday. And today, stocks are rising in Asia. Oil is over $74. Gold rose $13 on Friday…to close at $954. And the dollar is killing us softly…sinking to $1.43 per euro on Friday. Stocks and oil are at their highest levels so far this year. With such profits at hand people figure they don’t need the dollar. Investors run to the safety of the greenback when financial storms approach. But now…they think it will be clear sailing.
Foreclosure guilt haunts home buyers Right about now, Anya Sanko should be enjoying the thrill of being a first-time home buyer. She bided her time, saved her money and jumped into the market in time to snap up a 1,785-square-foot home with a pool for $143,000. Yet Sanko, 37, is having a hard time celebrating. Her parents lost their house in Michigan to foreclosure after her father lost his job, her sister's home equity has evaporated and friends struggling with mortgages don't want to hear it.
Agency that insures bank deposits may need help The government agency that guarantees you won't lose your money in a bank failure may need a lifeline of its own. The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year. That has happened only once before — during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.
Don't mess with Texas banks A strong local economy and healthy profit margins add to the Lone Star State's allure. No wonder all the big national banks want to do more business in Texas. The old adage that everything is bigger in Texas still seems to hold water --especially when it comes to the business of banking. Before Guaranty Financial Group collapsed last week, the Austin-based thrift reportedly drew intense interest from lenders and investors across the country. U.S. Bancorp, Wells Fargo and the private equity pros that bought IndyMac were said to have either bid or consider an offer for its assets. Guaranty was ultimately sold to Spain's Banco Bilbao Vizcaya Argentaria.
Government Agencies Would Need $16.6 Billion in New Tax Revenue to Buy Carbon Allowances Under Global Warming Legislation A new Government Accountability Office (GAO) study says that all levels of government – federal, state, and local – will have to come up with a total of $16.6 billion in additional revenue to purchase carbon allowances, if cap-and-trade – to allegedly combat global warming -- is enacted into law. Experts say this could prompt increases in taxes. This is the second government report to estimate that the proposed climate-change legislation, formally known as the American Clean Energy and Security Act of 2009, will eventually cost consumers more.
RAND advises pharmaceutical company on strategies in vaccinating low-income students The pieces of the pandemic puzzle are coming together as the H1N1 Swine Flu hysteria is reaching new heights. A largely uncovered white paper published by RAND Corporation in March of 2009, sponsored by pharmaceutical giant Sanofi Pasteur, identifies parental consent laws, medical homes, and lack of access to medical records as main barriers “for immunizing low-income adolescents.” The solution proposed to Sanofi Pasteur? Turn schools into a vaccine wonderland. The triad of barriers to mass-vaccinate adolescents which were identified in RAND Corp’s white paper are:
Parental Consent Laws
Absence of a reliable Medical Home
Access to vaccine registration information
Feds put focus on swine flu vaccines Federal authorities plan to initiate a nationwide campaign in the coming weeks to persuade Americans to get the swine flu vaccine and to erase any public skepticism about the flu's danger and the safety of immunizations. Even as the Centers for Disease Control and Prevention has manufacturers working overtime to produce a vaccine for the swine flu by mid-October, government officials are concerned that demand for immunization will not be high. In particular, parents participating in focus groups this summer expressed concern that ramping up vaccine production would make it less safe than the seasonal flu vaccine.
Jail time and $1000/day fine for refusing swine flu vaccine If you are no longer worried about swine flu, maybe you should be. This new law passed in MA. imposes fines of $1000 a day and 30 days jail time for refusing the swine flu vaccine. . . . . . . . . Government is using every excuse it can manufacture find in order to take away our freedoms here in the US and around the world. This is the biggest campaign to vaccinate people that I have ever seen, and I doubt it has anything to do with our actual well-being. There will be a lot of people who refuse the vaccine, which is why federal and local government has been gearing up in order to deal with that. I wonder if the 600 or so internment camps in the US were built for situations just like these?
Quarantine or $1000 a day fine for refusing the vaccine
SEBELIUS FORGETS TO MENTION THE $415 MILLION SPENT ON SQUALENE ADJUVANT
2 energy companies are seeking tax incentives to convert shuttered southeast Mich. Ford plant Two alternative energy companies plan to buy a shuttered Ford Motor Co. factory in southeast Michigan and convert it into a renewable energy park that could employ at least 2,800 workers within five years, energy company leaders told state lawmakers Wednesday. Xtreme Power of Kyle, Texas, and Clairvoyant Energy of Santa Barbara, Calif., said they want to purchase the sprawling 320-acre Wixom Assembly Plant if state tax incentives and federal loans are approved. Ford said it plans to sell the factory to the companies.
House panel approves tax credit for energy park at old Wixom plant A tax break tailored to two renewable energy companies that intend to launch an energy park at the abandoned Ford Wixom plant was unanimously approved by a state House committee this morning. The specialized tax credit for a maximum of $100 million -- $25 million a year over four years -- is created for Xtreme Power of Austin, Texas, and Clairvoyant Energy of Santa Barbara, Calif. The companies expect to create about 4,300 jobs and invest $725 million to refurbish the plant shuttered two years ago and to install high-tech equipment to make solar power cells and large-scale storage batteries. Average salaries will be about $40,000 a year. The bill passed 11-0 in the House Economic and Quality of Life Committee and could move to the House floor as early as today, committee chairman Ed Clemente said.
Highway stimulus: Just a 'down payment' The Recovery Act's funding for highway projects won't make enough of an impact on jobs and necessary infrastructure projects. Much more is still needed. The government promised $27.5 billion in stimulus funds to help fix the nation's crumbling roads and bridges as part of a broader effort to save jobs. The effort is working...sort of. Nearly three-quarters of the funding has gone to short-term, road paving projects rather than longer-term work like repairing bridges and building new highways. Furthermore, jobs that paving projects create or save last for a shorter duration than other types of road construction.
Windshields to wine glasses: What happens to Clunkers The metal, tires, and even the oil filters from the cars scrapped in the Cash for Clunkers program will be recycled into everything from handbags and high-rises. Next time you're sipping your favorite wine, examine the glass closely: If it's thick and greenish, it might have been the windshield of an old, junked car. UncommonGoods, an online retailer based in Brooklyn, N.Y., peddles wine glasses, beer glasses and punch bowls that are manufactured in Colombia from recycled windshield glass. On its web site, the company advertises these glasses as having "a slight green hue from the tint originally added to lessen the sun's glare."
Valley's commercial real-estate crisis to worsen The Valley's commercial real-estate crisis isn't just about buildings, it's about everything and everyone inside. The impact isn't as easy to see as the fallout from the home-mortgage mess, with its sea of empty homes and for-sale signs, but it's likely to become more noticeable to Valley consumers as the commercial crisis worsens this year, predicts Scottsdale consultant Robert Kline. "It will affect them when they start to see their favorite hotel, restaurant or store go out of business," said Kline, owner of R.W. Kline LLC. "This is also about jobs."
Peak Oil – Supply data doesn’t lie ENERGY – After the epic crash last year, the price of oil is stabilising and it should rise exponentially over the following years. Over the past year, global consumption has stayed weak, however once the economy recovers, crude oil should resume its secular bull-market. Despite the ‘demand destruction’ hype, it is interesting to note that during this severe global recession, worldwide oil usage has dropped by a minuscule 2.7%. So, what will happen when the world comes out of this recession? Who will rise up to the challenge and meet our insatiable thirst for energy? These are critical questions not many are willing to ask.
State prepares to challenge U.S. gun laws 'This is an issue where the federal government has no business' Supporters of a first-of-a-kind law in Montana that declared weapons or ammunition made and kept in the state were exempt from federal rules are preparing for a court challenge to the federal government's insistence it will regulate those items. The Montana Shooting Sports Association and the Second Amendment Foundation have formed a strategic alliance with plans to litigate over the Montana Firearms Freedom Act.
Singapore faces a 'silver tsunami' Elderly Singaporeans are being forced into shelters for "abandoned parents" or suing their children for financial support as the island state grapples with the rising health-care costs of an aging society. The trend has grave implications for the economy, and has led to some controversial proposals: one minister has suggested all elderly be shipped to Malaysia.
Chinese troops offer an Afghan solution China's latest military exercises in long-range deployment could be a hint that it is ready to commit thousands of troops to Afghanistan. Beijing's involvement might even go beyond troops on the ground; it could facilitate a grand bargain between India and Pakistan on the future "control" of Afghanistan's security.
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Wed 08.26.2009
Massachusetts Sen. Ted Kennedy Dies at 77 Ted Kennedy: 1932 - 2009 Edward M. Kennedy, one of the most powerful and influential senators in American history and one of three brothers whose political triumphs and personal tragedies captivated the nation for decades, died late Tuesday at his home in Hyannis Port, Mass., at age 77. He had been battling brain cancer.
Kennedy successor to be chosen by special election Unlike most states, a successor to fill Sen. Edward Kennedy's seat in the Senate will be chosen through a special election, not by the governor. Massachusetts law requires a special election for the seat no sooner than 145 days and no later than 160 days after a vacancy occurs. The law bans an interim appointee. The law was changed in 2004, when Sen. John Kerry, D-Mass., became his party's presidential nominee and Republican Mitt Romney was the state's governor. Before the change, the governor would have appointed a replacement to serve until the next general election.
Top bank regulator warns about excess risk Wants failure to be an option Big banks and Wall Street firms appear to be taking big risks again, possibly putting taxpayers in jeopardy, thanks to generous government programs that guarantee they will get bailed out no matter how badly they bungle, Federal Deposit Insurance Corp. Chairman Sheila C. Bair said in an interview Tuesday with The Washington Times. Ms. Bair, who was among the first to call for a crackdown on the mortgage abuses that led to the global financial crisis, said large institutions that currently enjoy extensive government backing must also be subject to a "harsh" new regimen that ensures they are no longer "too big to fail" and will be shut down like smaller banks if their recklessness gets them into trouble again.
In nervous economic times, Americans have gold fever They caught it big time last fall, when the financial system teetered and the recession seemed to flirt with tipping into depression. The fever drove the price of the hot metal above $900 an ounce, double what it was in 2005. This summer, with fears of big government and worries about inflation, the gold market showed no signs of cooling. Even the unknown drives our desire for gold.
Gold Rises as Dollar Drop Spurs Demand for Metal; Silver Gains Gold rose as a weaker dollar increased the metal's appeal as an alternative investment. Silver gained. The U.S. Dollar Index, a six-currency gauge of the greenback's value, fell as much as 0.4 percent to 77.927 as reports showing a gain in U.S. consumer confidence and a slower drop in home prices discouraged demand for the currency as a refuge. Gold typically moves inversely to the dollar, which has dropped 3.8 percent this year.
Gold Stuck in "Narrow Range" Forecasts of Post-Summer Surge Battle "Finite Investors Pool" THE PRICE OF GOLD pushed higher overnight in Asia and early Tuesday in London, unwinding half of yesterday's 1.5% drop as the US Dollar eased back, together with world stock markets. Crude oil retreated from Monday's new 2009 highs, while government bond prices rose. Ten-year German Bund yields ticked down to 3.29%. Ten-year US Treasuries yields fell to 3.46%. "Large selling on the [Gold Futures] electronic market helped break through stops" says Swiss refinery group MKS of yesterday's $14 drop, noting that "the market is currently illiquid."
Gold ‘Deja Vu’ Shows Advance Above $1,000 Gold will rise to more than $1,000 an ounce next month based on moving-average “deja vu” patterns since the start of 2005, according to Barclays Capital. This year’s trading was similar to previous patterns that indicated gold has a tendency to “break higher” in September and the 200-week moving average showed the uptrend on the precious metal remained intact, Jordan Kotick and other analysts at Barclays wrote in a report on Aug. 21.
Gold Gains After Biggest Drop in a Week as Dollar Weakens Gold rose as some investors judged yesterday’s 1.2 percent drop to be a buying opportunity and as a weaker dollar increased the metal’s appeal as an alternative investment. Bullion’s decline was the biggest in a week. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, fell as much as 0.4 percent as reports showing a gain in U.S. consumer confidence and a slower drop in home prices discouraged demand for the currency as a refuge. Gold typically moves inversely to the dollar.
China beats India in gold demand Even as the world’s biggest consumer of India is shying away from buying gold jewellery, China is emerging as the world leader in yellow metal market. According to a recent report, demand for gold jewellery in China grew in the second quarter, driven mainly by the country’s better-than-expected economic growth. The demand rose 4 per cent annually to 78.7 tonnes in the second quarter in China.
Being contrary about gold Gold timers have grown increasingly cautious -- a good sign If bull markets like to climb a wall of worry, then get ready for higher gold prices in the days and weeks ahead. hat's because gold timers in recent weeks have become increasingly skeptical about gold's near-term prospects. Consider the average recommended gold market exposure that exists among gold timing newsletters tracked by the Hulbert Financial Digest. As of Monday night, this average stood at just 3.8% -- which means that the typical gold timing newsletter right now has virtually no exposure to the gold market whatsoever.
The Metastasis of Moral Hazard and its Effect on Gold To those who study the numbers, it is now obvious that America's fiscal situation is hopeless. Given the country's current debt and unfunded liabilities of $75,000,000,000,000, an amount growing by at least $5,000,000,000,000 per year, it will be statistically impossible for the United States to pay its obligations unless it repudiates them in large measure, or the dollar is sacrificed on the altar of searing, society-altering inflation.
Recession sparking modern-day U.S. gold rush nationwide Maybe it was the nail in Ray's head. Maybe it was the economy. His wife said one as much as the other drove the decision to auction off everything that wouldn't fit in the trailer and leave Vermont for the mother lode. "Thought we'd try to make a living at it," Kim Lague said, standing in a mining camp that was busier during the Great Depression than it was in the Gold Rush of 1849, and is busy once again.
Waiting for Economy Roubini Can Believe In Means Missing Rally Making money on the thinking of Nouriel Roubini isn't what it used to be. The New York University professor, who in 2006 foretold the worst financial unraveling since the Great Depression, has yet to say the economy is worth investing in again. "There is a big risk of a double-dip recession," wrote Roubini, also known as Dr. Doom, in his column in the Financial Times this week.
Confiscation Anatomy - A Different View Please do not take this post as a definitive, final statement on this very complex topic. This is only one view of many that explains why confiscation will not happen. Once you understand the dynamics of a completely demonetized, free, non-fractional, physical-only gold market (freegold), it will become clear that this is where the river of time is taking us. This particular post is meant only to encourage a focused discussion on this "concern", for the benefit of us all. In fact, think of this post as a primer or introduction if you will. Or if you prefer, think of it as a dose of ocular Xanax for your "gold-angst".
An Overdue Collapse of Money The Economist magazine had the Buttonwood blog titled "Law of Easy Money," which immediately gets your hopes up that there is such a thing as "easy money," which actually exists (just ask Connecticut's Senator Chris Dodd!), but unfortunately not for guys like you and me who don't have the political power and grease to extort money and skim taxpayers, which is gratuitously rude and scandalous, I agree, but which only shows the depth of my contempt for the huge, huge, cancerously huge, ridiculously and dangerously incompetent, ignorant and stupid system of governments in America, as exemplified by the despicable Congress and the even more despicable Senator Dodd.
Bank Reserves and Inflation Recent arguments between deflationists (those who are forecasting deflation) and inflationists (those who are forecasting inflation) often boil down to opposing views about what will happen to the huge quantity of reserves that the Fed has supplied to the US banking industry over the past year. The inflationists claim that these reserves will, in the not-too-distant future, support a massive increase in the money supply via the famous "money multiplier" (for every additional dollar of reserves, the banking industry can supposedly create an additional 10 dollars of deposits). The deflationists, on the other hand, claim that this won't happen because the banking industry's collective balance sheet is now so grossly impaired that there will be no meaningful expansion in the total volume of bank lending for a long time to come.
Senator warns of hyperinflation rivaling the 1980s The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday. Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke's ability to hold down inflation would be the metric by which the Fed's success would be measured.
FDIC to Ease Entry for Private-Equity Firms Buying Failed Banks The Federal Deposit Insurance Corp., is poised to make it easier for private-equity firms to buy banks after the fastest pace of bank closings in 17 years cost the agency’s insurance fund more than $21 billion. The FDIC board meets tomorrow in Washington and probably will lower the requirements for private investors to buy failed lenders after a proposal made in July sparked opposition from the industry. The agency needs new bidders as bankers avoid buying failed lenders, forcing the FDIC to share losses or take other steps that deplete its insurance fund.
FDIC chief: Banks need to be willing to modify loans Banks need to move more aggressively to modify loans for consumers who are having difficulty paying their mortgages, Federal Deposit Insurance Corp. Chairman Sheila C. Bair said in an interview with editors and reporters at The Washington Times on Tuesday. Despite constant prodding by regulators for months, many banks and investors remain reluctant to offer more lenient terms for borrowers using streamlined programs sponsored by the government, she said, acknowledging that the programs so far have made little headway in preventing a renewed wave of foreclosures, which are expected to mount into the millions this year and next.
See Uncle Sam Borrow See Uncle Sam borrow. Borrow, Uncle Sam, borrow! Borrow. Borrow. Borrow. Uncle Sam likes to borrow. Borrowing is fun. See Uncle Sam spend. Spend, Uncle Sam, spend! Spend. Spend. Spend. Uncle Sam likes to spend. Spending is fun. It is fun to borrow and spend… Sustainable or Unsustainable? Let the reader decide…And while trying to decide, let the reader also guess whether America’s skyrocketing debt load will ever cause a rain cloud to pass over Wall Street.
Treasury auctions hit a ludicrous rate of $5 trillion per year,
The third and fatal stage of a great country’s life-cycle,
See Uncle Sam spend and borrow like there’s no tomorrow and more...
Status Quo Is Not an Option The summer of disinformation seems to have accomplished its goal: to preserve for the private insurance industry an effective monopoly over how much most Americans pay for health care, and on what terms they can buy it. No one will come out and say this. But that will be the result if the so-called public option is dropped from the proposed menu of choices in a new health “exchange” envisioned in reform proposals being considered on Capitol Hill.
Congressional Agency Sees $1.4 Trillion Deficit, 10.2% Joblessness in 2010 CBO Forecasts $1.4 Trillion Deficit Next Year The U.S. government will run a budget deficit of $1.6 trillion this year and $1.4 trillion in 2010, and the unemployment rate next year will be higher than the White House forecasts, the Congressional Budget Office said.
Court Orders Federal Reserve to Disclose Emergency Loan Details [similar to yesterday's article] The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit. Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank yesterday, rejecting the argument that loan records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions.
Bernanke's Self-Promotional Reappointment Campaign A Stunning Success Ben Bernanke's self promotional media blitz culminating with Orwellian Madness "Bernanke Saved The World", was a stunning success for Bernanke in his bid to be reappointed Fed Chairman. Unfortunately, Bernanke's win is everyone else's loss. Bloomberg tells the story of his reappointment in Bernanke to Be Nominated for Second Fed Term by Obama. Obama will make the announcement tomorrow on Martha's Vineyard, Massachusetts, where he is vacationing with his family, and Bernanke is expected to join him, Axelrod said. The nomination requires Senate approval. Bernanke's four-year term as chairman expires Jan. 31. "The president believes that Bernanke has provided extraordinary leadership during the most difficult financial crisis we've faced since the Great Depression," Axelrod said. "As we build our economy that leadership is still needed."
Bernanke Team May Have New Look as Second Term Begins Federal Reserve Chairman Ben S. Bernanke, nominated today for a second four-year term at the helm of the central bank, will be working with a reshaped team. President Barack Obama, who nominated Bernanke for a second term beginning in February, still must fill two other vacancies on the Fed's Board of Governors, which has operated without its full seven-member complement since April 2006. On top of that, Vice Chairman Donald Kohn's term expires in June, and Gary Stern, the longest-serving policy maker, will retire when a replacement is named.
Why Did Obama Lie To The Press And Reappoint Bernanke Now? It was only yesterday when President Barack Obama sent his spokesguy to inform the Air Force One press pool that they should relax and assured them that "nobody's looking to make any news." Then, as Mediaite's Glynnis MacNicol points out, Obama goes ahead and interrupts his Martha's Vineyard vacation by holding a press conference to announce that he will be reappointing Ben Bernanke as Fed chairman. There are at least five months before Obama had to make this decision, making this timing very suspicious. We can imagine that the conspiracy theorists are already guessing why Bernanke had to be reappointed right now!
"It's the Devil We Know": Bernanke Reappointed But Hold the Cheers Stocks rallied Tuesday morning following President Obama's reappointment of Ben Bernanke to a second term as Fed chairman. The decision removes uncertainty over Bernanke's fate at a critical time in the economy's recovery - and ahead of this week's record-setting auction of Treasury notes. At least - that's how it looks on the surface. But Howard Lindzon, partner at Knight's Bridge Capital Partners and co-founder of StockTwits.com, doesn't think Bernanke deserves credit for either avoiding a second Depression -- or for Tuesday's rally.
6 Bad Calls By Ben Bernanke Ben Bernake got the good news that he gets to keep his job today. We decided to rain on his party by tracking down some of the worst of his predictions and misreadings of the economy. Here's the good news: Bernanke actually seems to have figured out how bad things had become by mid-2008. After the collapse of Bear Stearns, he basically stopped saying stupid things.
Speaking At Jackson Hole STILL AN UNCERTAIN OUTLOOK "Strains persist" in the world banking system and finance markets across the globe, Ben Bernanke said on August 21 at the Jackson Hole, Wyoming annual Federal Reserve meeting of banking and finance deciders. He of course cautioned, like other leading bankers that the economic recovery "...is likely to be relatively slow at first, with unemployment declining only gradually from high levels." Energy and food prices are rising faster than warranted by fundamentals, in the opinion of many deciders, including Bernanke. As these deciders, and influential purveyors of market comment such as Nouriel Roubini and The Economist's columnists will quickly add, higher food and energy prices could increase the risk of double-dip recession. This outlook, they say, is driven faster by "speculative trades", working exactly like, and hand-in-hand with those which have driven equity values up by around 40% in the past 4 months on most major markets.
Bernanke's 2nd-Term Challenge Will Be to Undo First-Term Steps As he looks forward to a second term as chairman of the Federal Reserve, Ben S. Bernanke's biggest challenge will be to undo much of what made him a hero during his first term. n nominating Mr. Bernanke on Tuesday, Mr. Obama praised the Fed chairman for his "bold action and out-of-the-box thinking," saying it had helped avoid a repeat of the Great Depression. But most of those bold actions - lending hundreds of billions of dollars to banks and businesses, slashing overnight interest rates to nearly zero, having the Fed almost single-handedly finance the mortgage market - will have to be reversed or rolled back over the next few years.
The case against Bernanke Barack Obama has rendered one of his most important post-crisis verdicts: Ben Bernanke will be nominated for a second term as chairman of the Federal Reserve. This is a very shortsighted decision. While America's head central banker deserves credit for being creative and courageous in orchestrating an unusually aggressive monetary easing programme, it is important to remember that his pre-crisis actions played an equally critical role in setting the stage for the most wrenching recession since the 1930s. It is as if a doctor guilty of malpractice is being given credit for inventing a miracle cure. Maybe the patient needs a new doctor.
Bernanke forgives himself for Lehman Bros. failure Now that Ben Bernanke is being nominated for another term as Federal Reserve chairman, he'll have to explain the mistakes of the past year to a skeptical, ornery U.S. Senate. No problem, he already has an answer in mind for the single event that in retrospect did more than any other to put the financial system into cardiac arrest. In a speech to fellow economists at the Fed's annual conference last week in Jackson Hole, Wyo., Bernanke tried out a glossy version of that particular history. Allowing Wall Street investment bank Lehman Bros. to die was more or less all Lehman's fault.
2:1 for Bloomberg Against Secretive Fed Ben Bernanke did not have time to celebrate his reappointment for another 4 years as Federal Reserve chairman on Tuesday. The day before US president Barack Obama decided to keep Bernanke as Fed head information provider Bloomberg dropped a new bomb shell regarding a lawsuit initiated by the news agency under the Freedom Of Information Act (FOIA) against the Fed. Bloomberg requires the Fed to publish who got the $2 Trillion in bank aid. Find all the details of the pending lawsuit in this post from November 7, 2008. The Fed appealed this FOIA request last December, citing concerns that this information would endanger the borrowers of the $2 Trillion.
Top Dem money man charged with fraud One of the nation's top Democratic fundraisers, who helped bring hundreds of thousands of dollars into the presidential campaigns of both Hillary Rodham Clinton and later Barack Obama, was arrested Tuesday on charges that he masterminded a $74 million fraud against giant lender Citigroup Inc. The United States attorney in New York announced the arrest of Hassan Nemazee two days after FBI agents interviewed him at Newark Liberty International Airport as he was checking in for a flight to Italy.
Citing worse than expected economy White House and Congress offer bleak budget outlooks In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion - more than the sum of all previous deficits since America's founding. And it says by the next decade's end the national debt will equal three-quarters of the entire U.S. economy. But before President Barack Obama can do much about it, he'll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.
Bove: Morgan Stanley Is Doomed Dick Bove is not too happy with Morgan Stanley and he's letting everyone know it. In a report he released today, Bove in essence says that if the bank fails to dramatically shifts gears, it is pretty much doomed. Bove is questioning the soundness of the bank's latest strategy: increasing trading risk and adding traders. He notes that the bank has had problems with timing for the past decade, generally moving "with too little, or too much, too late."
Green Shoots or Greater Depression While we aren't contrarian for the sake of being contrary, more often than not that is the position in which we find ourselves. Today, with the media falling all over itself to paint a rosy outlook for the economy while simultaneously voicing encouragement to the new administration in its remake of the nation in previously unimaginable ways, it's hard not to question our conviction that the worst is yet to come. Could the economy really recover this quickly from the traumatic trifecta of a record real estate bubble, leviathan levels of debt, and a global credit collapse? We don't see it as remotely possible, but yet… but yet… there for everyone to see are countless happy headlines and breathless exhortations that the worst is behind us. So, is it Green Shoots or Greater Depression?
Forget About The Chinese Stock Market The Whole Chinese Economy Is A Bubble Waiting To Burst Financial commentators are obsessively debating whether the recent rise in the Chinese stock market means there's a bubble -- and if so, when it's going to burst. My take? Who cares! What happens to the broader Chinese economy is what we should really be watching. It will have a far-reaching impact on the rest of the world -- much more far-reaching than a decline in stocks.
House boosts benefit for top aides Says student-loan subsidies needed in hiring market A month after they voted to punish some corporate executives for taking hefty bonus payouts, members of the House of Representatives quietly gave their own staffers a new potential bonus by making even their top-earning aides eligible for taxpayer dollars to repay their student loans. The change, which took effect in May, means House employees earning up to $168,411, or the top level, are now eligible for government-funded subsidies to help pay down their student loans.
U.S. between a deficit and a hard place White House estimates $9 trillion in deficits over decade, citing cost of economic rescue as a major reason. Congress' budget office also shows increase in deficit outlook. New estimates of the federal deficit leave many questions unanswered but underscore one cold fact of life in Washington right now: Boosting the economy without making an already bad deficit worse is really hard to do. The Obama administration said Tuesday that it now expects the 10-year budget deficit to reach $9 trillion, or about $2 trillion more than it estimated earlier in the year.
October is the Cruelest Month If analysts like Robert Prechter and the Elliott (not the poet) Wave theorists are correct, and the 2009 market recovery is similar to the 61% retracement in 1930 following the '29 crash, then we are on the verge of a frightening collapse. As Prechter notes in a recent interview: "What I have been saying publicly is that the Dow could go below 1,000 which is a radical enough statement." Could it happen? If history repeats itself . . .
From a year ago . . . America's "House of Cards" If It Falls, What Comes Next? The world is in the midst of great geopolitical change. Old superpowers are waning, new ones are rising, alliances are shifting-what lies ahead? Generally, human beings are wary of change-particularly change that is uncertain or negative. Such is the common sentiment among Americans in recent months. Several polls show that the vast majority of the U.S. population is unhappy, concerned and otherwise gloomy about the country's current and future status. As journalist Fareed Zakaria wrote in Newsweek, "Americans see that a new world is coming into being, but fear it is one being shaped in distant lands and by foreign people." Great geopolitical change is occurring; a "new world" is indeed emerging. Mr. Zakaria and others have referred to this as the "rise of the rest"-suggesting that the newfound wealth and might of China, India, Brazil and other nations will create a new balance between the West and "the rest."
Preparing for the Worst "Is the crisis over?" is a question I am often asked. "Is the economy coming back?" My reply is, "I don't think so. I would prepare for the worst." Like most people, I wish for a better future for all of us. Life is better when people are working, happy, and spending money. The stock market has been going up since March 9, 2009. Talk of "green shoots" fill the air. Yet, in spite of the more positive news, I continue to recommend that people prepare for the worst. The following are some of my reasons:
Rough ride ahead over plans to widen powers Barack Obama was supposed to be taking a news-free holiday this week. But the White House needed something to divert attention from the release on Tuesday of alarming new national debt projections. Ben Bernanke was happy to oblige. "I can't see any other reason why the White House would rush out Bernanke's reappointment on a day like this," says Bill Gale, a senior economist at the Brookings Institution.
Scrutiny for S.E.C. In Merrill Bonuses A federal judge told the Securities and Exchange Commission on Tuesday to give a better explanation of why it had agreed to a settlement with Bank of America over bonus disclosures without pressing the bank's executives harder. The order, by Judge Jed S. Rakoff, came a day after the agency revealed that lawyers advised Bank of America's executives not to disclose in a shareholder proxy billions of dollars in bonuses paid by Merrill Lynch just before the two banks merged. This month the judge asked the two sides to say who at the bank had made the decision not to disclose Merrill's planned bonuses just ahead of a shareholder vote on the merger.
RI gov to shut down state government for 12 days Rhode Island will shut down its state government for 12 days and hopes to trim millions of dollars in funding for local governments under a plan Gov. Don Carcieri outlined Monday to balance a budget hammered by surging unemployment and plummeting tax revenue. The shutdown will force 81 percent of the roughly 13,550-member state work force, excluding its college system, to stay home a dozen days without pay before the start of the new fiscal year in July. The closures come as the worst recession in decades has eliminated hundreds of millions of dollars in tax collections and pushed unemployment to 12.7 percent, the second-highest jobless rate in the nation behind Michigan.
Colonial BancGroup files Chapter 11 Colonial BancGroup Inc filed for Chapter 11 bankruptcy protection on Tuesday, 11 days after regulators seized its banking operations and sold most of those assets to BB&T Corp. The company filed for protection from creditors with the U.S. bankruptcy court in Montgomery, Alabama, where it is based. Tuesday's filing was expected, and covers the holding company, which was not part of the asset sale to Winston-Salem, North Carolina-based BB&T, a southeast U.S. regional bank.
Bankruptcy's repeat offenders Many big companies have managed to emerge from Chapter 11, but it's a lot harder to bounce back from a second bust...or a third. Will the third time be a charm for this beleaguered gambling chain? Trump Entertainment Resorts, which owns three casinos in Atlantic City, N.J., filed its third bankruptcy -- known in legal circles as a "Chapter 33" -- in February. Donald Trump, who no longer runs the company, forged a deal in August to buy it back for $100 million, vowing to make the casinos thrive again.
Clinton fundraiser accused in alleged fraud Nemazee said to have secured $74m Citi loan A prominent Democratic fundraiser who served as a national finance chairman of Hillary Clinton's presidential campaign has been accused in an alleged $74m scheme to defraud Citigroup, federal prosecutors said on Monday. Hassan Nemazee was accused of using false documents to secure a loan of $74m from Citi. He was on his way to Rome on Sunday when he was interviewed by federal investigators at Newark Liberty International Airport. On Monday, prosecutors said, he repaid the loan.
Fannie, Freddie Shares Soar, Puzzling Analysts Stocks Considered To Have No Value The beauty of the stock market, according to a prevailing theory, is that the price of a company's shares should reflect all known information about the firm. So maybe the investors who sharply bid up the shares of Fannie Mae and Freddie Mac on Monday have studied the companies, which owe the government nearly $100 billion and must pay massive dividends each year to the U.S. Treasury, and concluded that they are a smart long-term investment.
House Price Crash Only 75% Done -- Westwood Capital Dan Alpert of Westwood Capital isn't buying the "housing has bottomed" argument. He thinks we're closer to the bottom than the top (thank goodness), but that we're only 75% of the way there. The silver lining? Some markets have overshot. So here's hoping you live in one.
Cure Rates Plunge Among Prime RMBS, Fitch Says A slower cure rate among delinquent loans erased improvements in the number of loans rolling into delinquency status among US residential mortgage-backed securities (RMBS), according to Fitch Ratings. Cure rates decrease as fewer delinquent loans return to current payment status each months. The prime cure rate slipped from an average 45% during ‘00-’06 to 6.6% today. Alt-A cure rates dropped to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%.
Deluge Ahead or Smooth Sailing for the Market? Many traders, given all the statistics, trends, and patterns at their disposal, have been reluctant to buy stocks for a while now. Momentum traders would contest, however, that by not buying, you would have missed out on some pretty decent gains for stocks over the past few months. It's true- even your most reliable indicators often will tell you when to enter a trade, but they won't always tell you how long a market may stay in a trend. The old axiom about the market remaining irrational longer than you can remain solvent comes to mind. But that begs the question: Is the market irrational here?
Food Prices Likely to Start Ticking Up Prices for beef, milk, eggs and some other grocery items have been dropping for several months, providing relief for consumers who suffered through the steep increases of a year ago. But prices are likely to start edging upward again as the economy recovers, according to a new federal report and economic analysts. "The impact from lower energy prices on grocery store prices has largely been played out, and so we're now looking at grocery store prices to rise modestly through the end of the year," said Mark Vitner, a managing director and senior economist at Wells Fargo.
The Unemployed Never Had It So Bad Not only has unemployment increased during this downturn, but it is taking longer than ever for people to find new jobs. Capital Economics believes this could be due to the changing skills required for the jobs of tomorrow. Thus a recovery in employment could take longer than in previous downturns and demand for education companies is likely to persist as well.
Thomas Sowell - Obama's Health Care Reform
Is Medicaid Needed For Our Sick Financial System? In their maniacal quest to destroy the US economy, and indeed the world economy, in order to create an Orwellian one world police state of feudality, the Illuminists have greatly erred and have grossly miscalculated the timing of the financial disaster with their other pet projects. Asking people to undertake these costly legislative atrocities would have been very difficult even during prosperous times when the sheople might have been fooled into thinking they could afford such nitwit legislation, but under the current catastrophic financial conditions, the US public will not stand for such extravagant foolishness even if they agreed with the legislation itself, which most of them vehemently do not. When Meredith Whitney pulled the plug on Citibank's toxic waste, she may have prematurely created a negative financial environment that was inimical to future Illuminist plans.
Perspective on the Rally My bias is bearish. That is because I do not believe that an economy can be run effectively by using fiat money creation and taxation to produce funds for stimulus, which is then aimed at consumer spending, some very unproductive infrastructure boondoggles and other pet projects. I do not believe that pumping new life into the big banks and big Wall Street houses - the very institutions that led the US to ruin while chasing ever higher morally hazardous short term gains - can do anything other than misallocate capital once again, on a grand scale.
Hot Button No guns The Rev. Jesse Jackson says right-wingers are engaging in a dangerous "Wild West fantasy" by bringing weapons to political events. In a Monday column for the Tribune Media Services he wrote, "This isn't just harmless macho posturing. What we are witnessing is a dangerous and toxic mixture of hate groups and laws that allow them to carry guns, even to a presidential event." Mr. Jackson, a longtime supporter of gun-control laws, called for a new law to prohibit citizens from doing this in the future
Has the Church Become Irrelevant? By Chuck Baldwin America's Christian heritage is both rich and deep. What most historians and educators refuse to acknowledge, our forebears understood clearly: it was mostly Christians and churches that formed and shaped the new land that became known as the United States of America.
Mortgages: Economy drowning in underwater homeowners We are at a time in the economic cycle in which upside-down homes may be as big a concern as anything else happening in the economy. Chicago matches the national average in that roughly one in three home mortgages are upside down. Walk down a street in Las Vegas, and nine in 10 homes are upside down. In Phoenix, it's eight in 10. In Miami the figure is seven in 10.
Insurers expect cost of health care claims to rise 10.5% Costs for employer-provided health plans are expected to rise more than 10% within the next 12 months, a jump workers may feel in their paychecks or through changes to their insurance coverage. An aging population, rising costs and growing patient demand for services are among the reasons for the higher costs cited in an Aon Consulting report released Tuesday. The expected increase doesn't necessarily mean the premiums employees pay will grow at the same clip. Actual increases for each insurer or plan can vary by such factors as plan design, geography or the general health of the people covered.
AARP - Leading the Elderly to Slaughter?
Time For The Elderly to Check Out? Are the people finally waking up to ObamaCare? Many years ago I ran into this TV program I believed to be for children. I remember watching this young dinosaur pushing his elderly grandma in a wheel chair. It seems the old grandma's time had come for her to check in at the tar pit and apparently it was his duty to dump her. I never watched it again and I only saw it for a short segment. I never forgot that scenario but it came to my mind when I read about the portion of Obama's health plan including "end of life" voluntary death counseling and Obama himself recommending maybe grandma should take a pain pill rather than have expensive surgery. Or did Obama see the movie on Family T.V. that I saw in 2001 about how the Eskimo elderly when they get to old to be productive, the whole family escorts them to an iceberg where they float out to sea and have "death with dignity?" He is happy to set sail before he starts embarrassing himself. The old man says as he floats off, "If there is a change in policy in the next couple of weeks, be sure to track me down."
Postal Service Offers Employees Buyouts to Quit The Postal Service is offering up to $450 million to employees if they will agree to quit their jobs, it announced Tuesday, the latest effort by the financially struggling agency to reduce its costs amid a sharp decline in mail volume. Up to 30,000 employees can take the $15,000 bonus, which the Postal Service describes as a way to save up to $500 million during the next fiscal year, which begins in October.
Auto Industry Braces For Hangover After The 'Clunker' Party As the U.S. government's popular "Cash for Clunkers" program shut down officially at 8 p.m. Monday, it left behind mounds of paperwork and empty lots at dealerships across the country. Over the weekend, an onslaught of customers descended on dealerships, hoping to take advantage of the offer, which allowed consumers to trade in their gas guzzlers for a voucher worth up to $4,500 toward a new vehicle. In back offices, accountants and other dealership workers sat at their computers until the wee hours of Sunday morning, uploading their applications to the government's Web site.
'Cash for Refrigerators' Debuts in Fall. Really. Before heading home to face the anger at the now infamous health care "town halls," Congress rushed through an extension to what was then considered a popular program: Cash for Clunkers. Then, like much of the August break, Cash for Clunkers went sideways as critics picked apart the program's weaknesses, consumers stopped showing up with so many clunkers, and dealers started making noise about something as simple as when they might actually get the rebate money that the government promised.
Unconstitutional Government - Internet Privacy Neil Cavuto interviews security expert Robert Siciliano and Judge Andrew Napolitano regarding government's latest assault on Internet privacy.
Why America Failed as Global Sheriff Due to crippling domestic problems, the United States can no longer play world policeman. Can this great free nation ever return to unrivaled international prominence? They pulled back. Six years, three months and 11 days after declaring war on Iraq, United States troops moved out of the nation's major cities. America's armed forces ceded control to the new Iraqi Army, beginning a timeline for complete withdrawal by 2011. Iraq and Afghanistan are a microcosm of America's role as a global police force, with both successes and failures: free democratic elections, toppling Saddam Hussein's brutal regime, and keeping the War on Terror away from the U.S. home front-persistent terror attacks overseas, a lucrative heroin trade, billions of dollars spent on military operations while U.S. citizens reel from financial downturn, and no clean exit strategy in sight.
China Racing Ahead of U.S. in the Drive to Go Solar President Obama wants to make the United States "the world's leading exporter of renewable energy," but in his seven months in office, it is China that has stepped on the gas in an effort to become the dominant player in green energy - especially in solar power, and even in the United States. Chinese companies have already played a leading role in pushing down the price of solar panels by almost half over the last year. Shi Zhengrong, the chief executive and founder of China's biggest solar panel manufacturer, Suntech Power Holdings, said in an interview here that Suntech, to build market share, is selling solar panels on the American market for less than the cost of the materials, assembly and shipping.
Toyota to cut production capacity at Japan factory Toyota to suspend production at Japanese line amid plans to lower annual output Toyota Motor Corp. said Wednesday it plans to cut production capacity at one of its factories in Japan. The company will suspend production at one of two lines at a factory in central Aichi prefecture from Spring of next year until the second half of 2011, lowering its overall capacity by 220,000 vehicles, spokesman Paul Nolasco said. Toyota currently has the ability to produce about 10 million vehicles annually. But that is far more than it will need this year -- the company plans to cut its global output to 6.68 million vehicles in 2009, a 28 percent cut from the 9.24 million it produced last year.
Papa John's founder finds his beloved 1971 Camaro The founder of the Papa John's pizza chain has finally reunited with the muscle car he sold years ago to help keep his family's business afloat. John Schnatter sold the gold-and-black 1971 Chevrolet Camaro Z28 for $2,800 in 1983. The money helped save his father's tavern in Jeffersonville, Ind., and he used the rest to start what would become a worldwide pizza business. But he still missed his beloved Camaro and spent years searching for it. He created a Web site on the search, held promotional appearances and eventually offered $250,000 to whoever found it.
Anheuser-Busch, MillerCoors: price hikes in fall The nation's top brewers said Tuesday they plan to raise prices this fall, even as some of their top brands are seeing sales volume drop. Anheuser-Busch, maker of Bud Light and Budweiser, and MillerCoors, maker of Blue Moon and Miller Light, both say they're going to raise prices. But neither brewer would say how big the increases would be. Pete Marino, a spokesman for MillerCoors, said the increases will be made on a local basis, depending on the market. "Pricing has been very strong on the MillerCoors portfolio and we believe that we can take a moderate price increase in the fall," he said.
Because They Failed to Take Away Our Guns, They're Coming After Our Ammo It's called the Ammunition Accountability Act (AAA). You've got to love the name. It sounds so noble. But remember the great gun writer, Mel Tappan's, universal rule of law: "The nobler the language, the more nefarious the purpose of any legal instrument." It's been proposed in 18 states and, with some minor difference among them, here's what it will do once enacted:
How the repeal of all gun laws will free America, Part 2 What would happen if we repealed all gun laws in 2010? In the last edition, I posted how 20,000 gun laws and other programs cloned from American Gun Control have furnished valuable information as to how far officials can push all Americans. I wrote how armed citizens do not fight tyranny with a gun directly, but how armed citizens impeach those abusive, costly anti-crime programs which, themselves tyrannize Americans. There is a difference. Disarm America and abusive programs are made to seem necessary. Restore the second amendment, and dozens of programs are proven to be utterly worthless boondoggles.
US takes on Israeli-Palestinian conflict and Iran's nuclear programme in one massive gamble Washington's plan to link two intractable problems raises international hopes of deal to restart the Middle East peace process The Obama administration's approach to two of the world's most intractable and dangerous problems, the Israeli-Palestinian conflict and Iran's nuclear programme, is to link them together in the search for a solution to both. The new US strategy aims to use its Iran policy to gain leverage on Binyamin Netanyahu's government. Sanctions planned against Iran's energy sector if Tehran does not compromise on uranium enrichment by the end of next month are not only aimed at pre-empting Israeli military action; they are also a bargaining chip offered in part exchange for a substantial freeze on Jewish settlements in the West Bank. "The message is: Iran is an existential threat to Israel; settlements are not," said one official close to the negotiations.
N Korea invites US envoy to nuclear talks Under increasing pressure to bargain with the international community, Pyongyang has invited Stephen Bosworth, the US special representative for North Korea, to attend talks on its nuclear programme, according to South Korean media. North Korea has long been eager for bilateral talks with the US, with officials reminding Washington this month of its interest in meetings with Bill Richardson, the governor of New Mexico, and Bill Clinton, the former US president. But the US has sought to address the nuclear issue through multilateral talks that pull in South Korea, Japan, China and Russia. Pyongyang vowed this year never to return to these six-party talks.
pt 1/3 Gerald Celente on Financial Newshour Aug 21 2009
pt 2/3 Gerald Celente on Financial Newshour Aug 21 2009
pt 3/3 Gerald Celente on Financial Newshour Aug 21 2009
Obama to Nominate Fed Chairman Bernanke to New Term President Obama plans to nominate Federal Reserve Chairman Ben S. Bernanke to another term Tuesday morning, White House officials confirmed Monday night, ending speculation about the fate of the nation's top banker. Bernanke was chosen by former president George W. Bush to succeed Alan Greenspan and has headed the central bank since early 2006. As the Fed chairman, he has helped guide the nation through the worst economic crisis since the Great Depression. As president, Obama has largely followed Bernanke's response to the crisis, fashioning a bank bailout and stimulus plan that extended the efforts of Bernanke and the Bush administration.
The Fraud Of The Fed Far too many look for easy ways to get rich quick these days, only to be disappointed or shocked when reality bites in the end. Because of this there are no shortage of Ponzi like schemes characterizing the financial landscape, one by one being found out to be frauds, with Bernie Madoff at the top of the list in history thus far. The public was shocked when they discovered the size of the Ponzi scheme he was able to put together and perpetuate for so long, as usually, operations like this fall apart much quicker. Of course the reason for this was because a far larger Ponzi scheme of which the public remains oblivious enabled Bernie to maintain the illusion for as long as he did as it is at the very heart of our fiat currency based monetary system, that being the Fed. The Fed (and Treasury) have been issuing credit and printing fiat currency on an increasingly unhealthy basis for years now, since Nixon went off the gold standard in 1971, putting the US (and world) on the fiat currency system we find ourselves today.
Why the Federal Reserve Bank Must Die “The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” Representative from Texas Ron Paul questioning Federal Reserve Chairman Ben Bernanke
Tom Woods : Dynamics of the FED
Is This It For Gold? It has been just more than 17 months since gold reached the $1000 level for the first time. Gold has been consolidating since that time in a range of $680 to $ 1000. The price pattern that it formed during that period is actually very similar to the consolidating pattern formed during 12 May 2006 to 16 August 2007. The main difference being: the range of the previous consolidation being shallower at a range of $542 to $730 as compared to the latter. Below are 2 charts illustrating the latter parts of the 2 consolidations. The similarity of the2 consolidations has been highlighted by other market commentators and I have been watching it for a while myself. Look at it and judge for yourself.
Without prospects, they're prospectors Metal's high price and economy's low ebb create new California gold rush Maybe it was the nail in Ray's head. Maybe it was the economy. His wife said one as much as the other drove the decision to auction off everything that wouldn't fit in the trailer and leave Vermont for the mother lode. "Thought we'd try to make a living at it," Kim Lague said, standing in a mining camp that was busier during the Great Depression than it was in the Gold Rush of 1849, and is busy once again.
$1,000 Or Bust Listen carefully, dear gold bug. You are living in a world which is insane. All around you are the incredibly stupid people who, in the past, believed that the earth was flat and that one could fly by standing on a magic carpet. From every source of opinion comes the 21st century version of those beliefs. Above is the 10 year chart of the CRB index. Let us consider the subjects of fact and opinion:
Bullion: Silver continues to outperform gold Precious metals built on Friday's gains during the overnight hours, but their advances were uneven as well as uncertain as the hour of NY's opening approached. The US dollar was poised to reach a five-week low against the yen, while trading just above the 78.05 mark on the trade-weighted index. Crude oil continued a few notches above the $74-per-barrel marker, while the euro appeared comfortably resting near $1.43 on the price tickers this morning.
The Perpetual Burn Just when I think that I have probably heard of every scam imaginable in the coin industry, another one or two brand new ones materialize out of nowhere. These innovative scams are clever, but brutally cruel. Observing these things over the years I have come to the conclusion that a thief's mind never rests. Night and day these leather-backed slimies concoct multitudes of new ways to rob people. Over the past few months I have talked with a number of people who have been bitten by these diamond backs.
Bundesbank Confirms Germany's Gold Is In Play Germany's central bank, the Bundesbank, today confirmed that much of its gold is held outside the country at "trading centers" where the bank conducts "its gold activities." The Bundesbank's statement, unsigned and issued by the bank's press office, came as an e-mailed reply to GATA consultant Rob Kirby of Kirby Analytics in Toronto (http://www.kirbyanalytics.com/), who sought the Bundesbank's comment on international journalist Max Keiser's recent assertion that the Bundesbank had told him that most of Germany's gold is in the custody of the United States in New York:
Platinum price to zoom as Chinese demand rises Gold, contrary to our expectations, shot up on Friday, easily breaking above $950 when New York opened. Gold is holding its ground well above $950 this morning, despite the greenback looking to break below $1.4300 against the euro. Activity in the physical market has slowed, as the possibility of a technical break-out above $960 looms. This seems to be discouraging the market from taking any large short positions. Gold support is at $941 and $929, and resistance at $961 and $969.
Global Debt Bubble, Causes and Solutions Australian economist Steve Keen is one of the very few who have called this economic crisis correctly. What distinguishes Keen is that his economic forecasts are based on levels of debt and changes in levels of debt as opposed to money supply, output capacity and other things that led most economists astray.
We Need Sunlight to Disinfect the Legislative Process! by Ron Paul During August recess, many legislators have heard an unexpected amount of discontent from their constituents about what is happening on Capitol Hill, particularly regarding healthcare. Some people are justifiably terrified at what the government could do to healthcare, should it get its claws even further into it. Others demand a public option for health insurance and are adamant that healthcare be treated as yet another absolute entitlement. One thing everyone agrees on is that the final bill needs to be read and understood by all legislators before a vote is taken. To any American, this is common sense. In Washington, that is unlikely to happen.
Bankers Craving Bonuses Fudge Loan-Loss Reality There are plenty of lessons to be learned from the credit crunch. Too bad we didn’t learn them from past upheavals. Back in the early 1990s, postmortems of the savings and loan crisis found banks had too much leeway in determining potential losses. This ended up leading to bigger losses and making it tougher for regulators to deal with weakened institutions.
In New Phase of Crisis, Securities Sink Banks U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks. Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history, and broker a sale of the Texas bank to Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty's woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation's worst lenders.
Why Is the Fed Creating Excess Reserves in the Banking System and Paying Interest on Them? There have been some interesting side discussions at various venues including Naked Capitalism about the recent essay which I had posted titled When At First You Don't Succeed, Bring in the Reserves. Let me clarify some points. Yes, banking reserves in the US are a function of the Fed's Balance Sheet, by definition, because they are in the narrowest sense merely an accounting function, an entry on the books of the Fed reflecting actions undertaken by the Fed. With purpose, I put the formal definitions of Reserve Bank Credit and Reserve Balances at the bottom of each chart. I had hoped this would make that point clear.
Fed Focus - Changing the Role from Villain to Hero However, a good part of problems in financial crisis are due to faulty monetary policy, together with gradualism and massive amounts of leveraging, so credit quality deteriorated. As principal overseer, the Fed did not safeguard the system.
US Dollar Analysis. Sea Change Coming "The people who delivered this problem to us don't have a whole lot of sanity, except where it reflects their own personal wealth." - Jim Sinclair. Aprox 65% of all monetary transactions in the world involve US dollars. Think about that very very carefully. If the bankers were to create a "situation of insanity", where the dollar began to hyperinflate, or even appeared set to hyperinflate, a stampede out of dollars and into gold would take place. Think about the economic ramifications of such an event. It would be a global economic catastrophe of unprecedented size. It would be the largest wealth transfer in the history of the world, because for every seller there is a buyer, by definition. Somebody has to be a buyer of all the sold dollars…or the price of the dollar would collapse to zero.
The World Financial System's Achilles' Heel The dollar fell to $1.42 per euro yesterday. Many believe it is the Achilles' heel of the entire world financial system - and Warren Buffett is among them. The story goes, Achilles was dipped in the river Styx and made invulnerable. But his mother held him by his heel, leaving that part untouched by the magic waters. Naturally, that is where a poison arrow got him. The moral of this story is that you have to go all the way. If you want your baby to be invulnerable, put him all the way under the water…even the heels. Or, maybe there's another point: that there's always some place where you're vulnerable.
Almighty dollar is not so mighty, but ... The greenback has slid as investors flood back into stocks and commodities on end of recession hopes. But shouldn't a recovery be good news for the dollar? The dollar goes down. Stocks go up. Lather. Rinse. Repeat. One constant during the market's big rally -- now nearing its sixth month -- is that the greenback has taken a hit against the euro, yen and other currencies. But some experts think that may be about to change. Stocks and the dollar could begin to move in the same direction. In fact, the dollar was up slightly Monday even as stocks once again moved higher.
Big, Bad, Budget Blow-Up: New Deficit Projections Substantially Higher Than Previously Estimated Turns out the budget deficit is worse than anyone expected. A lot worse. It's set to balloon like someone fed it a buffet platter of ever-lasting gobstoppers. From the AP: The Obama administration is expected to boost its estimate of the federal deficit over the next decade by $2 trillion, a move likely to trigger political wrangling over who's to blame and how harmful all the red ink will be. The White House's Office of Management and Budget is expected to forecast $9 trillion in deficits over the next 10 years, up from a $7 trillion estimate earlier this year, according to White House officials who spoke last week on the condition of anonymity.
Peter Schiff clips
Fed Must Make Public Reports on Emergency Bank Loans The Federal Reserve must make records about emergency lending to financial institutions public within five days because it failed to convince a judge the documents should be exempt from the Freedom of Information Act. Manhattan Chief U.S. District Judge Loretta Preska rejected the central bank's argument that the records aren't covered by the law because their disclosure would harm borrowers' competitive positions. The collateral lists "are central to understanding and assessing the government's response to the most cataclysmic financial crisis in America since the Great Depression," according to the lawsuit that led to the ruling.
Federal deficits: $9 trillion and counting The White House and the Congressional Budget Office will offer updates on their 10-year federal deficit estimates, as well as their economic outlooks. In just over a month, the federal government's fiscal year will draw to a close, leaving in its wake one of the biggest annual deficits in U.S. history -- and a forecast of more record debt to come. Just how much more will be the question on Tuesday. The Congressional Budget Office and the White House Office of Management and Budget are set to release separate updates of their 10-year deficit estimates, along with updates on their economic outlooks.
Operation: Kickstart Kick start the vote for the Federal Reserve Transparency Act. Over 280 cosponsors for HR1207 in Congress and they still won't bring it to the floor for a vote. Pledge to send a snail mail letter to Barney Frank and Nancy Pelosi
Meltdown 101: Huge budget deficits expected Get ready to hear a lot of huge numbers Tuesday: The Obama administration is expected to boost its estimate of the federal deficit over the next decade by $2 trillion, a move likely to trigger political wrangling over who's to blame and how harmful all the red ink will be. The White House's Office of Management and Budget is expected to forecast $9 trillion in deficits over the next 10 years, up from a $7 trillion estimate earlier this year, according to White House officials who spoke last week on the condition of anonymity. The increase is largely due to lower-than-expected tax revenues as a result of the recession. Meanwhile, the Congressional Budget Office will issue its own deficit forecasts Tuesday. The CBO estimated in March that the deficit for 2010-19 would total $9.1 trillion.
NY Fed Launches Interactive Maps Of Economic Collapse The kind folks at the New York Fed have launched a useful service whereby citizens can look at the collapse of the credit economy in real, interactive time as they buy Fannie, Freddie and Citi stock (which at last check had a pro forma market cap higher than Bank of America). The link for the maps can be found here ----in case anyone needs ongoing confirmation of the prevalence of red shoots. At first glance, it seems that delinquent auto loans is where much more red is still due, while the bloodletting in mortgages has reached quite epic proportions and shows no sign of abating.
Was the 2008 Financial Collapse An Inside Job? Maybe it's the smoke from Mt. Vesuvius that keeps Arianna Huffington and the financial community from seeing that the economic collapse has nothing to do with the Fed "missing" the warning signs leading up to the October meltdown. "Things do not happen. Things are made to happen." John F. Kennedy The Fed didn't miss anything; the October meltdown was an inside job.
The Buzz over Bernanke Last week's buzz in Jackson Hole Wyoming and around Wall Street is whether or not Banana Ben Bernanke should be reappointed to the Fed Chair. CNBC also held a panel discussing this issue with Bob McTeer (former President of the Dallas Fed). The consensus was that it was ridiculous not to have Barack Obama indicate he would serve another term as soon as possible. The agreed upon reason being that no one could do a better job than he has done. So please allow me to inject a little sanity into the discussion. While most people in our industry are quick to hoist Mr. Bernanke on a pedestal-just as the former maestro Allan Greenspan was-I think the entire institution should be canned.
Ron Paul questions Ben Bernanke on definition of inflation 07 21 2009
Financial Crisis Called Off Whew, what a relief! Everybody from Ben Bernanke and a Who's Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to - wonder of wonders! - the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund - every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world's capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe . . .
We saved the world from disaster, Fed's Bernanke says Without strong action by central banks, recession would have been much worse The global economy is now beginning to emerge from its worst crisis in generations, but the downturn might have been much worse if central banks hadn't acted so forcefully last fall, Federal Reserve Chairman Ben Bernanke said Friday. In a speech at the Kansas City Fed's annual retreat in Jackson Hole, Wyo., Bernanke summarized a hellish year and explained modestly how he and his central bank colleagues saved the world from a bigger disaster. Read his full remarks.
Distressed Issues Still To Be Dealt With It's getting better all the time or so says both the Beatles and the financial markets. The economic data regarding housing indicated that sales are picking up, however that is offset by the consumer data indicating that spending is not happening and jobs continue to be hard to secure. The housing (as well as car sales) data continue to be skewed by government bailout efforts. What makes the data more concerning for the long-term viability of any recovery that we may be in the middle of is much of the activity came from distressed sales, inventories of unsold homes still rose and home prices are still falling. With mortgage rates stable, we would have expected a bigger boost to sales given the rather depressed prices for homes. While encouraging, we would like to see a healthier consumer and the data from retailers as well as incomes remain poor with jobs still a messy picture. The persistent rise in the stock market may be signaling an end to the recession or investors may be whistling past the graveyard.
Money, Banking and the Federal Reserve
New deficit projections pose risks to Obama's agenda President Barack Obama's domestic policy proposals will face the reality of skyrocketing deficits on Tuesday when officials release two government reports projecting huge budget shortfalls over the next decade. The White House budget office and the Congressional Budget Office (CBO), a non-partisan arm of Congress, release updated economic forecasts and deficit estimates on Tuesday, providing further fiscal fodder to opponents of Obama's nearly $1 trillion healthcare overhaul plan. Many of the figures are already known.
Striving to be Free Well, our world is definitely in the throes of wild and wooly change. The United States has begun losing its dreams. It doesn't even know how to dream anymore. Its only goal is getting rich in the next bubble. Its only hope is winning 1 million dollars by retirement. Doesn't want to make anything. Doesn't want to produce anything. Walla! Its dreams are being answered. All the jobs are south and east. So, with no worry over the difficult task of employment the US can concentrate on its hope of prosperity without producing anything.
Cerberus Investors Freak Out, Demand Their Money Back Even though hedge funds are said to be recovering from last year’s bloodbath, “green shoots” are all over the place, and even jocks are finding it timely to launch some funds, clients of Cerberus Capital Management are erring on the safe side of the street, choosing to redeem most of their money. Hedge funds were hit with record withdrawals last year, forcing them to liquidate holdings at fire sale prices to meet the demands, which triggered many to close shop. And with funds as large and respected as Cerberus still being hit with redemptions, the state of the asset class might not be as rosy as many are saying it is.
Cash for Clunkers jolt to US car sales, not a fix As Cash for Clunkers comes to an end, auto industry comes down from its sugar high Now comes the hard part for the auto industry -- luring customers without big Cash for Clunkers discounts. The popular government rebates gave auto sales a jolt, but it was only temporary. Now car makers and dealerships are forced once again to confront the worst market in a quarter-century. While Cash for Clunkers may have proved there are still car buyers out there, it is unlikely the heavy demand will last. In fact, the big rush to car lots this month may have had the unintended effect of stealing sales from this fall and next year.
Latest in Stimulus: 'Cash for Refrigerators' A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history. Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)
Do Voters Really Hate Inflation? Of the economic ills our government can help bring about, it's commonly assumed that "inflation" is the one that is guaranteed to make voters angry, and prompt them to th the bastards out come election time. In Arnold Kling's outlook for how we might deal with our debt burden, he suggests that the "inflate our way out of it" strategy would be too politically costly to seriously pursue. Obviously nobody likes the loss of buying power that comes with meaningful inflation, but this hard link between inflation and voter dissatisfaction strikes us weaker than people assume. It all seems to stem from the 70s and the election of Reagan. That's one datapoint and hardly conclusive about voter behavior.
In-Depth Look - Shape of the Economic Recovery For ordinary working people, there won't be a recovery. China is exporting their recession to us. Analysis and Discussion with University of Maryland Business Professor Peter Morici: Recovery Will Be an "X"
Remember me? Wall Street repackages debt for sale Solution or just deja vu? Wall Street has new way to turn mortgage debt into AAA bonds Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It's a lot like what got banks in trouble in the first place. In recent months investment banks have been repackaging old mortgage securities and offering to sell them as new products, a plan that's nearly identical to the complicated investment packages at the heart of the market's collapse. "There is a little bit of deja vu in this," said Arizona State University economics professor Herbert Kaufman.
The Man Who Sells America's I.O.U.'s The brightly illuminated room looks like mission control for a space flight. Seven people, wearing headphones, stare intently at computer screens. Three minutes before the deadline, a disembodied voice exclaims, "We have coverage." This is no shuttle launch. It is an auction of United States Treasury securities, and $32 billion has just been sold in a blink. It was another successful operation for Van Zeck, the commissioner of the public debt, who has the world's biggest credit card.
Will Obama Impose A "Wealth Tax" To Avoid Default? GMU economist Arnold Kling looks down the road and wonders how America is going to deal with its epic mountain of debt: Other countries that have defaulted have not had the option of enacting wealth taxes. When you are in a banana republic with shaky government finances and you have a lot of wealth, you send that wealth over to the United States, where your government cannot get to it. That "safe haven" motive is what keeps the dollar so strong. Anyway, by the time the banana republic gets around to enacting a wealth tax, all the wealth has fled the country and there is nothing left to tax. So the banana republic defaults.
Fed to Steal State Pension Funds Congress may confiscate every state pension fund into the bankrupt social security system. Indications that this strategy is being discussed in Washington have come in to us from several sources over the last few days. Tonight, a correspondent who has just come home from a Tea Party Townhall Meeting in Salado, Texas with US Representative John Carter (R-Round Rock) issued the warning. She said, "Representative Carter informed the crowd that talk has been bandied about Congress to appropriate every state's pension plans into the bankrupt Social Security System." She is absolutely 100% sure that she understood him correctly.
Healthcare Bill Includes $10 Billion Earmarked For Union Retirees Based on this Detroit News report, it sounds like at least one healthcare reform bill includes a big fat gift to the UAW: The United Auto Workers is urging its members to back efforts in Congress to reform health care coverage, citing a provision that includes $10 billion to defray the medical costs of union members and others in retirees. The bill, approved by a House committee late last month, includes Section 164, a reinsurance program for retirees, according to a summary of the bill from House Speaker Nancy Pelosi's office. It sets aside $10 billion to establish a temporary reinsurance program to provide reimbursement to participating employment-based plans for part of the cost of providing health benefits to retirees age 55-64 and their families. A Senate version has nearly identical language.
Connecticut Mortgages: 1 In 17 In Foreclosure Or Overdue Foreclosures and seriously delinquent home loans in Connecticut have jumped to their highest level in at least 30 years as unemployment increasingly hurts homeowners with traditional mortgages. The state had 31,979 residential mortgages either in foreclosure or 90 or more days past due, according to a report Thursday from the Mortgage Bankers Association. That's equal to 6 percent of all home loans as of June 30, or one mortgage in every 17.
Once Homeowners Stop Making Mortgage Payments, They Almost Never Go Back To Paying Back in the good old days, nearly half of the people who were delinquent on their mortgages would start paying again. But now, thanks in large part to people owning more on their mortgage than their house is worth, hardly anyone who has stopped paying their mortgage gets around to “curing” their delinquency and paying it off again.
Huge Plunge In Mortgage Cure Rates Portends Foreclosure Disaster Mortgage cure rates have fallen off a cliff. For those unfamiliar with the term, a "cure rate" pertains to those who go delinquent on loans then catch up and become current. Late payments that don't "cure" have a tendency to get later and later over time, before they eventually default.
Now, beer to come in big aluminium bottles Finally, beer bottles are getting a makeover. We are used to the traditional glass beer bottles. But, things are changing fast with the recession forcing companies to find out innovative ways to cut costs and damages. The gall bottles are always breakable and it weighs more causing an escalation in shipping charges. So, Mile Brewing Company, a regional brewer located in Georgetown, Delaware, has chosen to package its beer exclusively in a 22-ounce aluminum bottle. The bottle, developed by Exal Corporation of Youngstown, Ohio, is the largest ready-to-drink aluminum bottle in North America and a market first.
Next Year's Census Count Promises to Rejigger Political Map The federal government has hired tens of thousands of temporary workers to prepare for the 2010 Census -- a population count that could remake the political map even as the foreclosure crisis makes it more difficult to account for millions of dislocated Americans. Early analysis indicates that Texas will likely be the biggest winner since the prior count a decade ago, picking up three or four seats in the U.S. House of Representatives, according to the National Conference of State Legislatures and Election Data Services Inc., a political-consulting firm. Other states poised to gain at least one seat include Arizona, Nevada, Georgia, Florida and Utah.
******* Important! ********* World faces hi-tech crunch as China eyes ban on rare metal exports Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons. A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs. China mines over 95pc of the world’s rare earth minerals, mostly in Inner Mongolia. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.
VeriChip Corporation Re-Launches its VeriMed Health Link Electronic Health Records System Company Believes Its History and Expertise in Patient Identification and Electronic Medical Records Will Position It to Benefit from Federal Stimulus Funding VeriChip Corporation ("VeriChip" or the "Company"), a provider of radio frequency identification (RFID) systems for healthcare and patient-related needs, announced today that it is re-launching its VeriMed™ Health Link electronic health records system. The Company believes its history and expertise in patient identification and EHRs will position it to benefit from stimulus funds provided under the American Recovery and Reinvestment Act (ARRA) of 2009, which authorized $23 billion in spending for healthcare information technology, with a concentration on the implementation and adoption of EHRs.
Michael Savage - The Communist Revolution Going on in America
Democracy Going Dark: The Electronic Police State The FBI's Multi-Billion "High-Tech Surveillance" Program The Federal Bureau of Investigation's budget request for fiscal year 2010 reveals that America's political police intend to greatly expand their high-tech surveillance capabilities. According to ABC News, the FBI is seeking additional funds for the development of "a new 'Advanced Electronic Surveillance' program which is being funded at $233.9 million for 2010. The program has 133 employees, 15 of whom are agents." Known as "Going Dark," the program is designed to beef up the Bureau's already formidable electronic surveillance, intelligence collection and evidence gathering capabilities "as well as those of the greater Intelligence Community," ABC reports. An FBI spokesperson told the network:
Neoliberalism, Charter Schools and the Chicago Model Obama and Duncan's Education Policy: Like Bush's, Only Worse In his first major speech on education since his election and swearing in as President, a speech made to an unscheduled meeting of the Council of Chief State School officers, held on March 10, 2009 in Washington D.C., Barrack Obama repeated the claims heard from many quarters that the United States must drastically improve student achievement to regain lost international standing in the world. He called for tying teachers' pay to student performance (merit pay) and for expanding charter schools throughout the nation. In calling for merit pay for teachers, Obama argued: "Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom."
Averages unreliable for predictions, author says The problem with averages, says Sam L. Savage, is that "plans based on average assumptions are wrong on average." This is the thesis of his new book, "The Flaw of Averages" (John Wiley & Sons Inc., $22.95). He argues that this flaw helped to mask the subprime-mortgage crisis and contributed to General Motors Corp.'s bankruptcy, among countless other disasters. It is the flaw of averages that causes businessmen, engineers, generals and others to underestimate risk in the face of uncertainty. To make his point immediately clear, Mr. Savage, whose father was a highly acclaimed statistician at the University of Chicago and author of "The Foundations of Statistics," cites the apocryphal example of the statistician who drowned while wading across a river that was, on average, only three feet deep.
Small businesses turn against health plan Democrats need bloc to push reform Over the course of two years, the annual health insurance premiums at David White's auto shop in Bar Harbor, Maine, more than doubled from $23,000 to $47,000. "It was platinum coverage," he said of the insurance plan, which covered himself, three employees and their families. "I was happy to do it." The rising costs eventually proved too much to handle, and he canceled the plan. Now he's hoping that a health care reform plan in Congress will allow him and his employees to enroll in a proposed government-run program.
In the red, US school districts cut yellow buses As a mother of two, Feleccia Moore-Davis is accustomed to the usual back-to-school swirl of new supplies, new clothes and new routines. But this year, that final flurry of summer is accompanied by an unusual worry. Moore-Davis does not yet know how her children will get to school. Last month, the financially pressed Houston-area school district her two daughters attend decided to end bus service for students living within two miles of schools. Now Moore-Davis is contemplating the bustling intersections and streets without sidewalks the girls would have to navigate if they walked to school, and wondering whether her own work schedule can be reconfigured for drop-offs and pickups.
Fear over economy lead to more gun permits Fear over economy, violence and gun control all behind spike in gun permit requests Gun owners worried that a bad economy could lead to increased violence and suspicious that new stricter gun laws are on the horizon are rushing in record numbers to get concealed weapons permits. From Washington state to Florida, state officials say more people are deciding to pack heat. In some cases, states are reporting a near doubling in the number of concealed carry permits.
Mullen Says Afghan Security Situation 'Serious,' Getting Worse A top U.S. military official said Afghanistan's security situation is getting worse, as Senator John McCain warned that there aren't enough troops deployed in the country. "It is serious and it is deteriorating," Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, said on CNN's "State of the Union" program yesterday. "The Taliban insurgency has gotten better, more sophisticated. Their tactics, just in my recent visits out there and talking with our troops, certainly indicate that."
pt 1/3 Dr Marc Faber on King World News Hyperinflation high probability
pt 2/3 Dr Marc Faber on King World News Hyperinflation high probability
pt 3/3 Dr Marc Faber on King World News Hyperinflation high probability
Guaranty Bank Is 81st to Fail Federal regulators shut down Guaranty Bank in Texas on Friday and agreed to absorb the bulk of potential losses on a portfolio of assets sold to the U.S. division of a Spanish bank. Guaranty's collapse marks the 10th largest bank failure in U.S. history as government officials continue to close some of the larger troubled banks on their problem list. Regulators also closed three smaller banks in Georgia and Alabama with combined assets of $927 million. The FDIC predicted the four failures would cost its already depleted deposit insurance fund $3.3 billion.
Third largest bank failure of 2009 announced Texas-based Guaranty Bank is bought by Spanish bank. Regulators also seize institutions in Alabama and Georgia, bringing this year's tally to 81. Guaranty Bank was closed by federal regulators Friday in the third largest bank failure this year bringing the total number of failures to 81 in 2009. The Federal Deposit Insurance Corporation was named receiver of the Austin, TX-based thrift, which had approximately $13 billion in assets and $12 billion in deposits as of June. BBVA Compass, a U.S. subsidiary of Spanish bank Banco Bilbao Vizcaya Argentaria, agreed to assume all of Guaranty's deposits and will buy $12 billion of its assets. The FDIC said it would share losses on $11 billion of the failed bank's assets.
80 U.S. Bankrupt Bailed Out Banks This Year, Hitting Depression Era Level Georgia and Alabama banks with combined assets of $927 million were seized by regulators, pushing the tally of failed U.S. lenders this year to 80 amid the worst economic crisis since the Great Depression. State regulators shut CapitalSouth Bank of Birmingham, Alabama, and First Coweta Bank of Newnan, Georgia, and the U.S. Office of Thrift Supervision closed ebank, an Atlanta-based Internet lender. The three banks had $841 million in deposits, and the failures will cost the Federal Deposit Insurance Corp. $262 million, the agency said today in news releases. A total of 18 Georgia banks collapsed this year, 23 percent of the total.
Analyst Bove sees 150-200 more U.S. bank failures A prominent banking analyst said on Sunday that 150 to 200 more U.S. banks will fail in the current banking crisis, and the industry's payments to keep the Federal Deposit Insurance Corp afloat could eat up 25 percent of pretax income in 2010. Richard Bove of Rochdale Securities said this will likely force the FDIC, which insures deposits, to turn increasingly to non-U.S. banks and private equity funds to shore up the banking system.
Gold Retains Its Value, as Usual . . . . Gold is coming along nicely as it continues to under perform. The next advance can only happen from a solid base, which is what is being built here. I have not ceased being bullish since 2002 and there is certainly no reason to change now. The question is, will the bottom line of the ascending triangle be hit first at around 800? I have not shown the lower probability line that intersects the 700 area, but I suppose that is a possibility as well. No matter, the weekly chart of gold is bullish and there is a shelf life on the opportunity to get aboard the good ship Safety.
Gold Jumps as Bernanke Speaks, Long Dull Summer Nears Its End THE PRICE OF GOLD leapt towards the start of New York trade on Friday, adding $10 inside five minutes and reversing the last fortnight's drop as European shares rose to fresh 10-month highs. Unwinding all of August's 2.3% loss above $955 an ounce, gold also rose against the other major currencies, hitting one-week highs for Japanese, Euro and UK investors.
Precious metals on a bullish run Precious metals like gold and silver appear to be forming a bullish pennant formation, which generally leads to higher prices. Currently the US dollar is hovering around a support level, which is the 76- 79 range. Only time will tell if the US$ breaks down sending gold to new highs in the coming months. You can clearly see the pennant formation with gold nearing is apex. Soon enough spot gold prices are going to Blast off or Drop off.
Gold: London dominates global bullion market Physical gold is the most valuable asset for many investors across the world. Which are the major physical gold markets in the world? How is physical gold traded? Here is all about how to own physical gold. The main world markets for physical gold are in London and Zurich, and London is pre-eminent.
Gold Market Update UPSIDE BREAKOUT ALERT: gold is now believed to be very close to an upside breakout to new highs, a development that should lead to a rapid advance towards the $1300 area, and it should be noted that this scenario will not be negated by a brief sharp drop that may be aimed at wrong-footing a lot of traders. The reasons for shifting from our recent stance of neutral/bullish to flat out bullish are as follows...
Why a new Central Bank Gold Agreement When, Little to No Gold Will be Sold? In the week when a new Agreement by European central banks regarding gold sales, only a tiny sale of 0.15 tonnes of gold was made the week before last and last week saw no sales. In the fist few months of the last year of the Agreement beginning on the 26th September 2008, as you can see from the Table below, around 140 tonnes of gold were sold by the signatories to the Central Bank Gold Agreement.
GATA Presses Fed to give Up Its Golden Secrets Yesterday GATA's Washington-area law firm, William J. Olson P.C. of Vienna, Virginia -- http://www.lawandfreedom.com/ -- filed with the Federal Reserve Board an administrative appeal of the Fed's most recent refusal to grant us access to the agency's records involving the U.S. gold reserve. By letter dated August 5, the Fed reported to us that 137 pages of documents being withheld "contain the following kinds of exempt information: 'trade secrets and commercial or financial information obtained from a person and privileged or confidential' (confidential commercial information); and 'inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency' (staff memoranda, draft memoranda and letters, and intra- and inter-agency communications). Such information is exempt from disclosure under authority of Exemptions 4 and 5 of the [Freedom of Information] Act, respectively, 5 U.S.C. 552(b)(4) and (b)(5)."
Want Out of Dollars? Gold vs. the Euro Correlations come and go, but the path of Euros and gold rarely diverge vs. the Dollar... "The DOLLAR is not a good store of value," says Nobel prize-winner Joseph Stiglitz, finally catching onto the last nine decades' 95% loss of purchasing power. "Right now," he told an audience in Bangkok on Friday, "the Dollar is yielding almost no return and yet anybody looking at the Dollar has to say there's a high degree of risk." Gold also yields nothing, but your risk in the metal is somewhat lower. At least it will still be a lump of rare, precious, yellow and shiny metal tomorrow. Whereas the Dollar...or Euro?
Gold Sideways Megaphone Pattern Continues, Is the U.S. Dollar the Key? Gold is still in that megaphone pattern and still going nowhere but sideways. One would expect that it can’t continue like this much longer but who knows? I think that many gold investor/speculators are looking to the U. S. $ for some sign as to which way gold will go. There is a very large contingent of industry professionals that correlate the dollar movement with that opposite to gold. Now, some time back (I guess a couple of years ago) I showed a correlation between the U.S. $ Index and gold price movement. That did show a long term correlation but not all the time, so one must always be prepared for the next movement maybe being another of those “not this time” events.
Silver to Jump 29% on ‘Crushing’ U.S. Debt Silver prices will jump 29 percent by the end of the year as soaring U.S. debt spurs inflation, said Dennis Wheeler, the chief executive officer of Coeur d’Alene Mines Corp., the largest U.S. producer of the metal. Demand from investors seeking a store of wealth accounts for more than half of silver’s 23 percent price jump this year before today, Wheeler said in an interview in New York. The metal will reach $18 an ounce with supplies little changed and demand buoyed by purchases from exchange-traded funds, he said. “We have this crushing new debt and dollar weakness,” Wheeler said today. “The outlook for precious metals is very positive, and silver will be No. 1.”
Silver and China Recently it was announced on a Chinese news service that silver bullion is now being offered to the Chinese public. Please note this is a very small operation and at this point none of us knows if this will really catch on with the Chinese investing public. There are some subtleties going on in China that not too many people write about. China actually has a fairly long history with silver and I might suggest that readers check out the archive section at Silver-Investor.com and read what Charles Savoie has written on this subject. I know many of my colleagues are not as bullish on silver as I am, yet going back many years I recall reading an article in Barron's by John Doody.
Bullish Stampede Persists Buy the DIPS or just HOLD For those adopting such strategy, we suggest using one hand to hold your nose, and keep your free hand at the ready in pulling the sell-trigger when appropriate. We have not changed our view from a few weeks ago, which opined that our trusted shepherds of illusion would like nothing more than to ignite another long-term cycle of buy & hold fever as the only means by which participants can hope to survive amid the artificially created buying frenzy. As the desired bullish stampede persists, the results of their handiwork must now have them nearing multiple interventionist orgasms. Are you about ready for a cigarette Ben, cigar, or perhaps reappointment to another term as worshiped god and savior of all humankind?
Zimbabwe considering gold-backed currency The country is looking for an alternative to its hyperinflation-ravaged Zimbabwean dollar that was replaced by multiple currencies in January Zimbabwe's central bank governor Gideon Gono on Thursday proposed the introduction of a gold-backed local currency, which was destroyed by hyperinflation and replaced by multiple foreign currencies in January. A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai in a bid to end a political crisis introduced multiple foreign currencies to stop sky-rocketing inflation and revive the economy. But Gono, a Mugabe ally whose reappointment last year has been opposed by Tsvangirai, says the shortage of foreign currencies in the country was hurting economic recovery efforts.
Searching for the Economic Depression and Finding It Last week I was telling a visiting filmmaker from overseas about the financial crisis and how it was getting worse. He looked at me askance. The market had just gone up, he said, and the White House was talking about an emerging recovery. “I have been in New York before, he said, and it looks the same.” A lot of the pain is hidden, I told him, hidden behind the deceptive spin in our media or buried in the denial and delusions of many people on the streets who have not taken the trouble to try to understand the nature of the calamity they are living through.
Seized Texas Bank Sold to Spanish Firm Guaranty Deal Shows FDIC's Willingness to Broaden Search for Buyers The federal government is casting more broadly as it seeks buyers for a growing number of failed banks, including entertaining bids from foreign firms and seeking to attract new investors to the industry by easing restrictions. The results were on display Friday, as regulators seized Guaranty Bank of Texas and immediately sold its branches, deposits and most of its assets to Spain's Banco Bilbao Vizcaya Argentaria. The failure of Guaranty, with $13 billion in loans and other assets, was the 10th-largest in U.S. history and the fourth-largest since the financial crisis began last year.
Uh Oh: China Doesn't Want To Lend Us Money Anymore The United States needs to borrow nearly $10 trillion over the next decade, including about $1.6 trillion this year. Where's it going to come from? This is critical question, because resistance on the part of creditors will drive up interest rates, clobbering the housing market and demolishing the value of whatever cash savings Americans have left. The other answer--our government lending the money to itself--will destroy the value of the dollar, and that wouldn't help too many people, either (except debtors--it would help debtors because they will be able to repay nominal debts with toilet-paper dollars.
The Inevitable Path Toward Capital Controls in America The Future Fund has sold more than a quarter of its Telstra shares, according to today's Age. That's interesting. The most underused word in investing is "sell." If you don't sell, you can't make a profit. We've been working with Swarm Trader Gabriel Andre to see if buying and selling the blue chips is more profitable than buying and holding. Of course it's impossible to tell based on the results of a couple of months of testing if trading the big stocks is a better retirement strategy than simply buying them and forgetting them. We'll keep you posted on the results. In the meantime, the Fund is counting on it 1.3 billion remaining shares in Telstra to help fund the pensions of Australia's public sector. Good luck with that.
Roubini sees "big risk" of double-dip recession Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the world's recent financial troubles, sees a "big risk" of a double-dip recession, according to an opinion piece posted on the Financial Times' website on Sunday. Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that U.S. and western European economies will likely experience "anemic" and "below trend" growth for at least a couple of years.
Survival of the Unfittest Peter Schiff on Obamanomics Renowned investor and economist Peter Schiff, the president of investment firm Euro Pacific Capital and author of Bull Moves in Bear Markets said government stimulus is the problem, not the solution and that this recession is 'necessary' as it would allow the market to correct itself from the sins of the past. We cannot keep on reflating a busted bubble, says Schiff. Speaking in an exclusive interview with Dan Mangru of Moneynews.com Schiff said: "As painful as it is, this recession is necessary.” “We’re never going to have a vibrant economy if we keep concentrating on reflating a busted bubble".
Even Warren Buffett Is Now Saying U.S. Treasury Bonds Could Crack! Mike Larson writes: I’ve made no secret about my view on U.S. bonds and the U.S. dollar … I’ve minced no words, and cut no corners . . . . “No government, or central bank, is bigger than the bond and currency markets. Foreign bondholders aren’t going to sit idly by while any government … even the government of the U.S. … openly decides to trash its currency by printing it with reckless abandon. And they aren’t going to sit by while the government manipulates prices higher.
Top Goldman Clients Given Analyst Tips In Advance Susanne Craig at WSJ takes a deep dive into the practices of Goldman Sachs (GS) stock analysts, and notes that preferred clients get, well, preferred access to ideas and advice. Here's the nut of it: Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show.
Goldman's Trading Tips Reward Its Biggest Clients Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show. The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry's research didn't find out he was bullish until his written report was issued six days later, after Janus shares had jumped 5.8%.
Consumer Spending Probably Decelerated: U.S. Economy Preview Consumer spending in the U.S. probably rose in July at half the pace of the previous month, showing the biggest part of the economy is struggling to rebound, economists said before reports this week. Purchases increased 0.2 percent after a 0.4 percent gain in June, according to the median estimate of 61 economists surveyed by Bloomberg News before a Commerce Department report Aug. 28. Other figures may show orders for long-lasting goods jumped and sales of new homes improved.
Days Away From Economic Chaos? America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks. It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.
Fed's rate path, inflation aims may clash-paper The U.S. Federal Reserve's stated intention to keep interest rates exceptionally low for "an extended period" may conflict with its desire to avoid inflation, an academic economist told central bankers on Saturday. "The point of keeping interest rates low in the future is to promote economic activity today, but the price is a future rise in inflation," Carl Walsh of the University of California, Santa Cruz, wrote in a paper presented at the Kansas City Federal Reserve's annual Jackson Hole conference. "It is not clear how one has one without the other."
Central bankers stress not rushing for exits If there was one message from central bankers gathered at this mountain retreat this weekend it was this: Don't expect us to raise interest rates any time soon. A series of speakers at the Kansas City Federal Reserve Bank's annual conference, which drew the monetary policy elite from around the world, heralded the global economy's apparent push out of its deep recession. But they noted that economies were recovering only with extraordinary stimulus from governments and central banks, and said it was too soon to talk of a self-sustaining recovery.
World Bankers Suggest Rebound May Have Begun Central bankers from around the world expressed growing confidence on Friday that the worst of the financial crisis was over and that a global economic recovery was beginning to take shape. “The prospects for a return to growth in the near term appear good,” declared Ben S. Bernanke, chairman of the Federal Reserve, offering optimism both about the United States and the worldwide outlook.
ECB, Fed Defend Response to Financial Crisis at Forum European Central Bank President Jean-Claude Trichet defended his institution against criticism that it’s been too cautious in combating the deepest economic slump since the 1930s. The policies of the world’s major central banks, led by Trichet, Federal Reserve Chairman Ben S. Bernanke and Bank of Japan Governor Masaaki Shirakawa, were scrutinized by economists at the annual symposium in Jackson Hole, Wyoming, this weekend sponsored by the Kansas City Fed.
Central Bankers Breathing Easier JACKSON HOLE, Wyo. -- Central bankers at the Federal Reserve's annual retreat in the Grand Tetons are breathing easier about the outlook for the global economy than just a few months ago. "Fears of financial collapse have receded substantially," Federal Reserve Chairman Ben Bernanke said Friday at the Federal Reserve Bank of Kansas City's conference here. "After contracting sharply over the past year, economic activity appears to be leveling out, both in the U.S. and abroad, and the prospects for a return to growth in the next year appear good."
A Great New Bull Market? Unlikely The strength of the stock market rally seems surprising in light of ongoing weakness in consumer spending and housing. The strength is not unusual, however. And it's not an indication that we're in a great new bull market. In our opinion, the economy's fundamentals and the market's valuation still suggest that we're in the middle of a long bear market. We still have trouble seeing how the economy is going to go right back to 3%-4% sustainable growth in the face of our massive debt, increased consumer saving, debt reduction, overcapacity, tighter lending standards, high unemployment, and housing weakness. And we don't see how corporations will quickly generate the record-high profit margins that produced the previous market high without cutting so many more employees that they will kill the economy in the process.
US budget deficit projected to reach $9tn over the next decade The Obama administration expects the federal deficit over the next decade to be $2tn bigger than previously estimated, White House officials said today, a setback for a president already facing a Congress and public wary over spending. The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9tn instead of the $7tn previously estimated. The new figure reflects slumping revenues from a worse economic picture than was expected earlier this year. The officials spoke only on the condition of anonymity ahead of next week's announcement. Ten-year forecasts are volatile figures subject to change over time. But the higher number will likely create political difficulties for Barack Obama in Congress and could create anxiety with foreign buyers of US debt.
The Cap-and-Trade Bait and Switch The climate bill in Congress is not the market solution the president promised. As a candidate for president in April 2008, Barack Obama told Fox News that "a cap-and-trade system is a smarter way of controlling pollution" than "top-down" regulation. He was right. With cap and trade the market decides where and how to cut emissions. With top-down regulation, as Mr. Obama explained, regulators dictate "every single rule that a company has to abide by, which creates a lot of bureaucracy and red tape and often-times is less efficient."
The Statistical Recovery, Part Three This week we further explore why this recovery will be a Statistical Recovery, or one that, as someone said, is a recovery only a statistician could love. We look at capacity utilization, more on housing, some thoughts on debt and deflation, and some intriguing charts on volatility in the last secular bear-market cycle. This letter will print a little longer, but there are lots of charts:
The Bounce Is Aging, But The Depression Is Young The following is an excerpt from Robert Prechter's Elliott Wave Theorist. Elliott Wave International is currently offering Bob's recent Elliott Wave Theorist, free. On February 23, EWT called for the S&P to bottom in the 600s and then begin a sharp rally, the biggest since the 2007 high. The S&P bottomed at 667 on March 6. Then the stock market and commodities went almost straight up for three months as the dollar fell. On March 18, Treasury bonds had their biggest up day ever, thanks to the Fed’s initiating its T-bond buying program. The next day, EWT reiterated our bearish stance on Treasury bonds. T-bond futures declined relentlessly from the previous day’s high at 130-15 to a low of 111-21 on June 11.
Larry Flynt: Obama Can't Stand Up To The Bankers Hustler publisher Larry Flynt is not exactly who we expected to raise a populist battle cry, but here you go. From the Huffington Post: Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.
Sunday talk muddles Obama's message If it's Sunday, it's time for top aides and allies of President Obama to fan out on the news talk shows. And if it's Monday, it may very well be time for the White House to walk back everything said on Sunday. For decades now, presidents have used the political shows to spread their messages at the top of the week, so the administration's agenda can exert some control over the way news coverage unfolds. However, that basic formula has not been clicking for the vaunted Obama message machine this summer.
Tom DeLay questions whether Obama was born in the U.S.
Homelessness grows in shadow of White House At 6 a.m., a block from the manicured lawns of the White House, Poppy Cali starts his days. The 36-year-old Navy veteran wakes up just after dawn, before the park security can find him sleeping on the steps of the General Services Administration building near the grate that he uses to warm himself in the winter. He carries two bags, a yellow suitcase and a small black rolling carry-on. In the yellow bag are his shoes; in the other are his clean clothes, underwear, socks, chef jackets and a tie for job interviews. Around his arm is a leather strap with two keys to a safe deposit box where he stores his IDs. His real name he keeps to himself; in the streets he goes only by Poppy. "If you lose your ID, it's a wrap," he said. "You're lost forever."
Dough for Dumps? After having given away billions faster than even the optimists had anticipated, it was announced today that the federal government's "Cash for Clunkers" program is coming to an early end. But, based on the standards of economic analysis which prevail in Washington, Wall Street and academia, the program must be considered a master stroke of public policy. These experts will tell you that by mandating that citizens destroy older (but still working) vehicles to receive $4,500 toward the purchase of a new car, the program not only revved up the economy by encouraging Americans to borrow more, but it may have, perhaps, made some great strides in saving the planet by reducing carbon emissions.
Virginia elections indicator of national mood Across the state, voters offer opinions on jobs, guns, Obama, economy Virginians don't necessarily align themselves with a specific party, but one thing they all appear to agree on is that things in Virginia need to get better. The Washington Times traveled hundreds of miles around Virginia, talking to dozens of residents about how they see themselves, their politicians and the issues that are important to them. Since the last election, Virginia has been dubbed a purple state — not fully Democratic or Republican but rather a state in play. Residents in cities across the commonwealth described themselves mostly as independent and say they are less concerned about what party is in power than what they do with that power.
Consumer Spending Probably Decelerated: U.S. Economy Preview Consumer spending in the U.S. probably rose in July at half the pace of the previous month, showing the biggest part of the economy is struggling to rebound, economists said before reports this week. Purchases increased 0.2 percent after a 0.4 percent gain in June, according to the median estimate of 61 economists surveyed by Bloomberg News before a Commerce Department report Aug. 28. Other figures may show orders for long-lasting goods jumped and sales of new homes improved.
Never Ask the Wolves to Help You Against the Dogs On Aug. 16 we read in Pravda.info the comments of Vladimir Filin, a self-described Marxist and former GRU officer living in Kiev, well-connected to KGB structures, supposedly aligned against Putin, marching in the "revolutionary movement of all enslaved peoples" (especially those in Finland, according to his Live Journal blog). Filin's business interests reach from the poppy fields of Tajikistan to the lumber mills and chicken farms of Brazil. He has been accused of narcotics and arms trafficking, with supposed connections to subversive political activities (like coup-plotting). He is the president and chairman of a private intelligence company called "Far West, LLC." As it happens, he has a reputation to maintain in the world of political-military gossip
Sovereignty or Secession? Some Things to Consider “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the states respectively, or to the people.” ~ Tenth Amendment in the Bill of Rights Now, here’s the problem. I am part of “the people” and as a part of the people I should be able to tell the federal government that I am not going to pay attention to those mandates that they pass on to us that are not their authority under the Constitution. The only problem with that, well make it a couple of problems, is that if the federal government passes Cap and Trade, for example, I will have to pay the same increases as someone who agrees with it, whether I want to or not. I won’t be able to heat or air condition my home, fuel my car or pickup, or pay for the everyday things we all need, without paying as well for those increases that will be brought on by Cap and Trade.
Seller, beware: Feds cracking down on garage sales If you're planning a garage sale or organizing a church bazaar, you'd best beware: You could be breaking a new federal law. As part of a campaign called Resale Roundup, the federal government is cracking down on the secondhand sales of dangerous and defective products. The initiative, which targets toys and other products for children, enforces a new provision that makes it a crime to resell anything that's been recalled by its manufacturer. "Those who resell recalled children's products are not only breaking the law, they are putting children's lives at risk," said Inez Tenenbaum, the recently confirmed chairwoman of the Consumer Product Safety Commission.
Millions face shrinking Social Security checks Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments will not rise. The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975. By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
CHART OF THE DAY: When Social Security Runs Out The CBO has updated its projections for both outlays and revenue (via Market Ticker). For now, outlays are still less than revenue, though the "surplus" consists of IOUs. But the day is coming when the government won't have that surplus anymore, and that could happen very shortly. The "outlays" line is an estimate, but the dark green shaded space shows the range of possibilities, including the possibility that a shortfall is just around the corner.
Rise of the Super-Rich Hits a Sobering Wall The rich have been getting richer for so long that the trend has come to seem almost permanent. They began to pull away from everyone else in the 1970s. By 2006, income was more concentrated at the top than it had been since the late 1920s. The recent news about resurgent Wall Street pay has seemed to suggest that not even the Great Recession could reverse the rise in income inequality. But economists say — and data is beginning to show — that a significant change may in fact be under way. The rich, as a group, are no longer getting richer. Over the last two years, they have become poorer. And many may not return to their old levels of wealth and income anytime soon.
Missouri governor orders freeze on $60 million in spending Gov. Jay Nixon on Thursday identified $60 million in spending restrictions across Missouri government, signaling his administration's latest effort to cut expenses in the recession. The restrictions essentially prohibit state agencies from spending money already allocated in their budgets and will be felt in almost every office of government. In all, the state will eliminate or leave vacant about 200 jobs, although state officials could not say how many would actually be layoffs.
Cost of economic downturn shows itself in domestic court Court workers call the Modesto law enforcement officer "a sweetheart," even as he transformed into a man who became explosively angry and punched through walls in his house. He was losing his wife. He'd already lost his house and his overtime pay. "All I've ever done is work for my family," he told a court mediator, his anguish and frustration growing. "That's what men do." Officials say anger over the economic meltdown and its impact on families is spilling through the courthouse doors.
Credit card reforms begin 45 days on rate change; 21 days till payment due New rules meant to give credit card users more information and stop policies that many consider abusive are starting to take effect. While the bulk of the Credit CARD Act — as in "credit card accountability, responsibility, and disclosure" — won't kick in until February, two provisions aimed at helping consumers understand their banks' practices became mandatory Thursday.
Credit Card Delinquency Wave Reaching Tidal Force This is a story that has been brewing for a while and we've tried to cover it when we're not tracking hedge fund portfolios. So far in 2009, the data surrounding credit card charge offs and mortgage delinquencies has not been pretty... at all. Just now after the close of the second quarter, we see that both metrics have hit the highest rates since the Federal Reserve began tracking them. Credit card delinquencies (payments more than 30 days late) rose to 6.7% up from 6.68%. Charge-offs (listed as 'uncollectible' by the banks) rose to 9.55%, up from 7.64%. The scary thing here is that this trend is accelerating . . . .
In real estate, agent scrambles to survive Real-estate agents have been among those hardest hit by the housing collapse. As the entire Phoenix real-estate industry remakes itself in pursuit of a recovery, agents who once sold 10 homes a week and earned six-figure salaries now tend foreclosure properties for little more than gas money while they hope for a listing. Brett Barry is a well-known north Phoenix agent who has gone from selling dream homes to handling evictions and open houses for foreclosure homes. He moved his office into his living room, works much longer hours for far less money but still makes his living selling homes.
Debating How Much Weed Killer Is Safe in Your Water Glass For decades, farmers, lawn care workers and professional green thumbs have relied on the popular weed killer atrazine to protect their crops, golf courses and manicured lawns. But atrazine often washes into water supplies and has become among the most common contaminants in American reservoirs and other sources of drinking water.
Health goal set for chromium in California drinking water More than five years after a state deadline, California officials released an initial public health goal Thursday for how much of the carcinogenic chemical chromium 6 can exist in drinking water without significant health risk. A public health goal is a step toward setting a drinking water standard. The next step includes a period of public comment. "This draft public health goal document is the first in the nation that identifies a health-protective level of chromium 6 in drinking water," said Joan Denton, director of the California Office of Environmental Health Hazard Assessment, in a news release. Chromium 6 is a heavy industrial metal also known as hexavalent chromium, or more popularly as the "Erin Brockovich chemical."
Remember The Water Crisis? It's Getting Worse Draught in China has just left five million people facing a water shortage, and more could be affected by year-end. This comes as a harsh reminder that a global water crisis is still approaching and that companies which can help solve water-related problems have massive growth ahead. AFP: The drought, which has hit an area stretching from Inner Mongolia region in the north to Jilin province in the northeast, has lasted since late July, the agency said.
Next step in H1N1 scare: Microchip implants Company developing under-the-skin devices to detect 'bio-threats' A Florida-based company that boasts selling the world's first and only federally approved radio microchip for implanting in humans is now turning its development branch toward "emergency preparedness," hoping to produce an implant that can automatically detect in its host's bloodstream the presence of swine flu or other viruses deemed a "bio-threat." VeriChip Corporation currently sells a small, under-the-skin Radio Frequency Identification capsule, or RFID, that patients can opt to have implanted, containing a number computer-linked to their medical records, enabling doctors with a special reader to access the information even if the patient is unconscious or unidentified. The company boasts its microchip, roughly the size of a grain of rice, is the only such implant approved by the U.S. Food and Drug Administration
Dying for affordable healthcare — the uninsured speak In a week of claim and counter-claim about the merits of healthcare provision in the US and UK, Ed Pilkington travelled to Quindaro, Kansas, to see how the poorest survive In the furious debate gripping America over the future of its health system, one voice has been lost amid the shouting. It is that of a distinguished gynaecologist, aged 67, called Dr Joseph Manley. For 35 years Manley had a thriving health clinic in Kansas. He lived in the most affluent neighbourhood of Kansas City and treated himself to a new Porsche every year. But this is not a story about doctors' remuneration and their lavish lifestyles.
Biden, Sebelius to unveil funds for electronic medical records Vice President Joe Biden and Health and Human Services Secretary Kathleen Sebelius Thursday will formally announce the application process for $1.2 billion in grants to help expand the nation's electronic medical records system. The funding, included in the $787 billion economic stimulus, comes as the vice president campaigns for a legislative health insurance overhaul at a roundtable discussion at Mt. Sinai Hospital in Chicago. He and Sebelius will be joined by David Blumenthal, the national coordinator for health information technology. It's one of two administration events this week to highlight the efficiencies of electronic medical records, something concrete Democrats can point to as they promote their call for broader changes to the nation's health care system. A second event is scheduled for Friday in Ohio.
A dread disease, no known cure By Wesley Pruden Somewhere betwixt swine and swindle, we've got a flu crisis. Well, maybe not a real crisis, or even a semi-convincing phony crisis, but the government is working on it. What we have, actually, is a crisis of hysteria promoted in certain government precincts. Swine flu, even with its scientific-sounding new name, H1N1, has only disappointed the crisis-mongers since it was identified in the spring. The virus sprang from Mexico, currently regarded as the source of everything bad or even suspicious, and it quickly jumped the Rio Grande. Then, after a fortnight in the petri dish of the mainstream media, leaped across the Atlantic.
Democracy will not bring freedom So they voted. But for what? Democracy? Certainly not "Jeffersonian" democracy, as President Obama reminded us. Yes, the Afghans wanted to vote. They showed great courage in the face of the Taliban's threats. But there's a problem. It's not just the stitched-up Karzai administration that will almost certainly return, nor the war criminals he employs (Abdul Rashid Dostum should be in the dock at The Hague for war crimes, not in Kabul), nor the corruption and the hideous human rights abuses, but the unassailable fact that ethnically-divided societies vote on ethnic lines.
Pentagon Plans For Global Military Supremacy Rick Rozoff writes: From August 17-20 the annual U.S. Space and Missile Defense Conference was conducted in Huntsville, Alabama, which hosts the headquarters of the Pentagon's Missile Defense Agency (MDA). Among the over 2,000 participants were the Missile Defense Agency's new director, Army Lt. Gen. Patrick O'Reilly, the vice chairman of the Joint Chiefs of Staff Marine Gen. James Cartwright, commander of the Space and Missile Defense Command/Army Forces Strategic Command Army Lt. Gen. Kevin Campbell and NASA (National Aeronautics and Space Administration) Administrator Charles Bolden Jr.
US faces tough choices Afghan war 'serious,' 'deteriorating' The top U.S. military officer described the situation in Afghanistan as "serious" and "deteriorating" but refused to say Sunday whether defeating a resilient enemy would require more than the 68,000 American troops already committed. Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, also expressed concern about eroding public support as the United States and NATO enter their ninth year of combat and reconstruction operations. Adm. Mullen's comments underscore the challenges that the United States and its allies face against a resurgent Taliban and al Qaeda fighters who use safe havens in neighboring Pakistan to hide and launch attacks.
Koreas hold talks amid funeral for Kim Dae-jung Tens of thousands of mourners filled the lawn outside parliament for the state funeral Sunday of former President Kim Dae-jung, a longtime defender of democracy and an advocate of reconciliation who won the Nobel Peace Prize for his efforts to reach out to communist North Korea. The man who made history by holding a summit with North Korean leader Kim Jong-il in 2000 also managed to bring the two Koreas together with his death Tuesday at age 85. A North Korean delegation dispatched to Seoul to mourn him held talks Sunday with South Korea's president, relaying a message from Kim Jong-il during the first high-level contact between the rival nations after many months of tension.
China powers ahead as it seizes the green energy crown from Europe China is running away with the green technology prize. It has conquered a third of the world market for solar cells and is on a breakneck course to build 100 gigawatts of wind turbines by 2020, doubling again the global capacity for wind power across vast stretches of Inner Mongolia and Xinjiang. Suntech Power in Wuxi has just broken the world record for capturing photovoltaic solar energy, achieving a 15.6pc conversion rate with a commercial-grade module. Trina Solar is neck-and-neck with America's First Solar, the low-cost star that has already broken the cost barrier of $1 (61p) per watt with thin film based on cadmium telluride. The Chinese trio of Suntech, Trina and Yingling all expect to be below 70 cents per watt by 2012, bringing the magical goal of "grid parity" with fossil fuels into grasp.
pt 1/3 Gerald Celente on Dr. Gianni Hayes 22 July 2009
pt 2/3 Gerald Celente on Dr. Gianni Hayes 22 July 2009
pt 3/3 Gerald Celente on Dr. Gianni Hayes 22 July 2009
The limits of US influence With rising debt and a stretched military, America is no longer a superpower. Its promises to aid allies overseas ring hollow During his recent trip to Georgia and Ukraine, vice-president Joe Biden assured them the United States would not recognise any spheres of influence. Countries can "choose their own partnerships and their own alliances". In short, Nato membership is still open. That position has a certain nobility. It is, however, wildly unrealistic. In the first place, spheres of influence exist, even if some choose to not recognise them. The power of a state is like gravity: it has its greatest influence on those objects closest to it. As a saying popular in this hemisphere goes: "Poor Mexico: so far from God, so close to the United States."
Gold Prepares to Breakout... or Has It Already? During secular bear markets, precious metals like gold play an important role in a properly aligned investment portfolio. When stocks perform poorly, as they tend to within a secular bear market environment, investor interest in gold as a safe haven increases substantially. Accordingly, secular bear markets in stocks have historically been closely correlated with secular bull markets in gold, and the current secular bear is proving to be no different. The current secular bull market in gold began in 2001 as seen below on the monthly chart:
Silver and Monetary Considerations of Hyperinflation Many of you are probably too young to appreciate the full impact of the hyperinflation in Germany after WW1. It was devastating. This picture shows you the amount of paper that was equal to one silver dollar, or ? of one troy ounce of fine silver. After seven years of constantly accelerating inflation, the mark is finally stabilized at the rate of over 4 trillion to a U.S. dollar. The black market rate, however, was an incredible 12 trillion to the dollar at this time. The pre-inflation exchange rate for the mark was by contrast a modest 4.2 to the U.S. dollar. Can anyone say Hyperinflation?
Sound Money: The Impossible Dream? Our gold standard money didn’t fail us in 1913; it was murdered. Did it deserve to die? What was its crime? It had provided us with nothing less than relative peace and prosperity over a span of 136 years. It had not only retained one hundred percent of its value, it had gained eleven percent. That’s right. The dollar we started with in 1776 bought us eleven percent more after almost seven generations. Then, J.P. Morgan’s creatures picked a quiet 23rd of December in 1913 to suffocate our sound money system. Since that manslaughter, the purchasing power of a dollar has plummeted over 95%. We now pay twenty times more than J.P. Morgan did for any item.
Monetization of USTreasurys In Isolation Every few months a chart comes along that needs almost no follow-on paragraphs to make the point of the issue. The chart provided by CIGA Eric covers several important types of US$-based bonds, their inflow and outflow, and the aggregate GrandNet. The financial data is publicly available from the USGovt TIC Reports. The messages are clear. Inflows of foreign funds are dwindling. In the case of USAgency Mortgage Bonds and USCorp Bonds, the nation is witnessing something unprecedented, the net outflow of funds. This is outright rejection. This chart exposes the isolation problem of the USDollar in the bond world, clearly the most important market beneath the currency market. The printing press is the last option.
Getting ready for the dollar’s fall It just won’t go away, this needling worry about the U.S. dollar losing its coveted top-dog status. No matter that there are plenty of reasonable arguments to support the dollar as the world reserve currency — namely there’s just no alternative — for perhaps decades to come. Yet, in a world where once-rock-solid assumptions quickly turn to dust, investors should keep an eye on the dollar since changing perceptions are chipping away at its cherished status as currency to the world.
Stiglitz Sees Risk to Dollar, Need for Reserve System The dollar’s role as a good store of value is “questionable” and the currency has a high degree of risk, said Nobel Prize-winning economist Joseph Stiglitz. “There is a need for a global reserve system,” Stiglitz, a Columbia University economics professor, said at a conference in Bangkok today. Support from countries like China should ensure orderly discussions on a new reserve system, he added. The dollar has lost 12 percent since March 5 against an index comprising the euro, yen and four other major currencies. China, the world’s largest holder of foreign-currency reserves, and Russia have both called for a new global currency to replace the dollar as the dominant place to store reserves.
Short View: China’s dollar anxiety Media accounts of fund managers’ prognostications are often mentioned along with their assets under management, as if that were a gauge of how seriously they should be taken. A more convincing metric is long-run performance, though that is hardly foolproof. This week, when the largest bond investor, Pimco, and the most productive, Warren Buffett, warned of the dollar’s fragility, its value quivered and commodities rallied. But the most influential investor speaks mostly through actions, not words. True, Wen Jiabao, Chinese premier, has said of China’s dollar exposure that he is “definitely a little worried”. More alarming are his actions as chairman of People’s Republic of China Capital Management Inc, with $2,100bn in assets, including $776bn in US Treasuries.
Markets watch for policy clues as central bankers gather As central bankers meet for their annual pow-wow in Jackson Hole, Wyoming, bond and currency analysts say they're listening for comments on how and when ultra-loose monetary polices will end. "We're looking for how they think the programs will be withdrawn and the speed at which they withdraw them," said Sebastien Galy, a senior currency strategist at BNP Paribas in New York. The meeting of central bank chiefs from the U.S., Europe, Japan and other industrialized nations, as well as influential academics, isn't known for big pronouncements that suddenly move markets.
Bernanke's tough task: Withdrawing emergency aid Tricky task looms for Fed chief: How to reel in emergency aid without derailing a recovery When the financial system was teetering, Federal Reserve Chairman Ben Bernanke flooded it with trillions of dollars to save the banks and free up credit for consumers and businesses. Looming in the future is a high-risk challenge for the economy's rescuer-in-chief: He will have to mop up that money without disrupting a nascent recovery. Bernanke speaks Friday morning at an annual Fed conference in Jackson Hole, Wyoming, where he'll look back over the past year of the financial crisis and talk about how the lessons learned can help shape policy decisions going forward.
Bernanke Diverging With King Means Dollar May Decline Federal Reserve Chairman Ben S. Bernanke and fellow central bankers gathering in Jackson Hole, Wyoming, are showing scant signs of reprising the coordinated stance they took fighting the worst financial crisis since the Great Depression as they deal with its aftermath. The danger is that such a disjointed approach will lead to volatile financial markets, a damaging drop of the dollar and slower global growth, Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co., said in an interview.
Wall St Unspun - August/19/09
The Fed’s independence is at risk As leaders gather this week for the annual Jackson Hole symposium on the economy, they should consider the future of the Federal Reserve as lender of last resort. Over many decades and especially in this financial crisis, the Fed has used its balance sheet to be a classic lender of last resort. But its ability to do so depends upon its economic credibility and political independence, attributes the Fed has compromised in this crisis.
Bernanke's Apoplithorismosphobia Fed Chairman Ben Bernanke, like most mainstream economists, has an irrational fear of deflation - whether it is understood as falling prices or a contracting money supply. I have coined the term "apoplithorismosphobia" for this psychological malady. In contrast, average Americans love deflation whether it's at Wal-Mart, in the Cash for Clunkers program, or from the tax credit for first time home buyers. Austrian economists love most forms of deflation too, and we think it is the ultimate cure for economic crises.
In New Phase of Crisis, Securities Sink Banks U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks. Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history, and broker a sale of the Texas bank to Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty's woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation's worst lenders.
Bill Fleckenstein on King World News | Part 1/3
Fed's Balance Sheet Increases to $2.06 Trillion on MBS, Treasury Purchases The size of the Federal Reserve’s balance sheet rose 2.3 percent as the central bank bought more U.S. Treasuries and mortgage-backed securities. Fed assets gained $46.2 billion to $2.06 trillion in the week that ended yesterday, the central bank said today in Washington. Holdings of mortgage-backed securities jumped $66.6 billion to $609.5 billion, and the Fed’s portfolio of U.S. Treasury securities increased $7.1 billion to $736.1 billion.
US stimulus tsar to unleash 1m inspector-generals Republicans this week pronounced Barack Obama’s six-month-old $787bn stimulus a failure. But Earl Devaney, the former secret service agent who heads Mr Obama’s stimulus monitoring board, says critics do not yet have the tools to judge accurately. Mr Devaney, who meets weekly with Joe Biden, the vice-president, to monitor the outflow of stimulus money, is scrambling to set up the most complex government website in history by the October 10 deadline imposed by Congress.
Most Failing Banks Are Doing It the Old-School Way Banks are now losing money and going broke the old-fashioned way: They made loans that will never be repaid. As the number of banks closed by the Federal Deposit Insurance Corporation has grown rapidly this year, it has become clear that most of them had nothing to do with the strange financial products that seemed to dominate the news when the big banks were nearing collapse and being bailed out by the government. There were no C.D.O’s, or S.I.V.’s or AAA-rated “supersenior tranches” that turned out to have little value. Certainly there were no “C.D.O.-squareds.”
FDIC May Add to Special Fees as Mounting Failures Drain Reserve Colonial BancGroup Inc.’s collapse and the prospect of mounting failures among regional lenders may prompt the Federal Deposit Insurance Corp. to impose a special fee as soon as next month to boost reserves by $5.6 billion. The FDIC board might act sooner than expected after the Aug. 14 failure of Alabama-based Colonial cost the agency’s insurance fund $2.8 billion, and as banks such as Chicago-based Corus Bankshares Inc. report dwindling capital and Guaranty Financial Group Inc. of Austin, Texas, says it may fail. The fund fell to the lowest level since 1992 in the first quarter.
Bill Fleckenstein on King World News | Part 2/3
Expect banks to be hit with major fees for deposit insurance FDIC considers another $5.6 billion fee on banks; 77 insolvencies for 2009 so far The manner in which five banks collapsed on Friday, costing the resource-stretched Federal Deposit Insurance Corp. roughly $3.7 billion, is raising concerns about the agency's depleted insurance fund used to protect depositors. That's driving expectations the agency will look in the short-term to cover losses by slapping large additional special fees on banks, with larger financial institutions taking on the brunt of the costs. The bank collapses and the FDIC's depleted deposit insurance fund -- $13 billion on hand as of May -- are leading observers to speculate that the agency will hit banks with two large special fees it said it would consider in September and December that could each roughly match a $5.6 billion one-time fee it charged banks in May. That fee is payable by Sept. 30.
Corporate Defaults Soar to $453 Billion, S&P Reports Corporate defaults worldwide rose in 2009, surpassing the number for the whole of 2008, Standard & Poor’s said in a report today. A total of 201 issuers defaulted through Aug. 12, affecting $453.1 billion of debt, S&P said. That’s up from 126 defaults totaling $433 billion for all of last year, the report said. The speculative-grade default rate reached 8.6 percent in July, up from 8.3 percent the month before, according to the ratings firm. The number of defaulted high-yield bonds is now 10-times the level recorded in November 2007, S&P data show.
Cardholders Get Rude Surprise at the Register Reassessing Risk, Issuers Quietly Cancel Accounts, And It's Perfectly Legal In March, Mary Horowitz was trying to pay for a birthday spa treatment when she learned that American Express had canceled her card. The Durham, N.C., lawyer spent the afternoon on the phone with AmEx customer service. Representatives told her that her card was canceled and that a letter was on its way that would tell her more. Ms. Horowitz had received no advanced notification of the cancellation and had successfully used the card two weeks before.
4 million home loans are delinquent Mortgage lenders say the flood of foreclosures has not yet crested. Highwater mark should come this fall. The number of Americans who have fallen at least 30 days behind on their home loan payments jumped 44% in the second quarter from a year ago, according to an industry report. That puts delinquencies at a record 9.24% of mortgages, according to the National Delinquency Report from the Mortgage Bankers Association (MBA). That represents more than 4 million of the 45 million borrowers covered by the report.
Mounting joblessness fuels US housing crisis Proportion of loans in foreclosure jumps More than one in every eight homeowners with a mortgage was behind on home loan payments or in some stage of foreclosure at the end of the second quarter, as mounting unemployment aggravated the housing crisis, the Mortgage Bankers Association said on Thursday. The percentage of loans that were in foreclosure or at least one payment past due rose to 13.16 per cent, the highest increase since the MBA began keeping records in 1972 and a jump of more than a percentage point since the first quarter.
Bill Fleckenstein on King World News | Part 3/3
How banks really used TARP money A TARP overseer releases banks' statements on how they spent TARP money and how they are complying with pay restrictions. If you're looking for the most detailed look yet about how banks have used funds from the $700 billion bailout, you're in luck. That is, if you are willing to pour through thousands of pages of surveys. Neil Barofsky, special investigator general of the Troubled Asset Relief Program, released the bailed out banks' responses to letters he sent them in early February on Thursday.
U.S. starts long, gradual and fragile recovery The U.S. economy is recovering more strongly than expected from its worst recession in decades, but next year will be lackluster and risks of a double-dip downturn remain, economists said in a Reuters poll. After shrinking by 1.0 percent in the second quarter on an annualized basis, U.S. gross domestic product will grow 2.4 percent in the current quarter and 2.2 percent in the final three months of the year, according to a sample of around 70 economists.
Government Jobs Have Grown Since Recession While the private sector has shed 6.9 million jobs since the beginning of the recession, state and local governments have expanded their payrolls and added 110,000 jobs, according to a report issued Thursday by the Nelson A. Rockefeller Institute of Government. The report, based on an analysis of federal jobs data, found that state and local governments steadily added jobs for eight months after the recession began in December 2007, with their employment peaking last August. State and local governments have since lost 55,000 jobs, but from the beginning of the recession through last month they gained a net of 110,000 jobs, the report found, in part because of the federal stimulus program.
Why We Couldn't Abolish Slavery Then and Can't Abolish Government Now Slavery existed for thousands of years, in all sorts of societies and all parts of the world. To imagine human social life without it required an extraordinary effort. Yet, from time to time, eccentrics emerged to oppose it, most of them arguing that slavery is a moral monstrosity and therefore people should get rid of it. Such advocates generally elicited reactions that ranged from gentle amusement to harsh scorn and violent assault. When people bothered to give reasons for opposing the proposed abolition, they advanced many different ideas. In the first column of the accompanying table, I list ten such ideas that I have encountered in my reading. At one time, countless people found one or more of these reasons an adequate ground on which to oppose the abolition of slavery.
Are We Just Property? Slave : A person that is the legal property of another and is forced to obey them. - Oxford American Dictionary
Single acts of tyranny may be ascribed to the accidental opinion of the day; but a series of oppressions, begun at a distinguished period, and pursued unalterably through every change of ministers (administrators) too plainly proves a deliberate, systematic plan of reducing us to slavery. -Thomas Jefferson
Human history is the history of individuals. Individuals can form groups which can be later remembered by their group name, but individuals make up all groups. The history of humans can be examined from the point of view of the individual and more importantly by the condition of the individual measured by values broadly applicable to all individuals. Values such as freedoms providing liberty, freedom from coercion by others, and happiness as defined by components producing an aggregate assessment of happiness. All of human history can be analyzed using the measure of the individual's condition as defined above.
Americans: Serfs Ruled by Oligarchs Americans think that they have "freedom and democracy" and that politicians are held accountable by elections. The fact of the matter is that the US is ruled by powerful interest groups who control politicians with campaign contributions. Our real rulers are an oligarchy of financial and military/security interests and AIPAC, which influences US foreign policy for the benefit of Israel. Have a look at economic policy. It is being run for the benefit of large financial concerns, such as Goldman Sachs. It was the banks, not the millions of Americans who have lost homes, jobs, health insurance, and pensions, that received $700 billion in TARP funds. The banks used this gift of capital to make more profits. In the middle of the worst economic downturn since the Great Depression, Goldman Sachs announced record second quarter profits and large six-figure bonuses for every employee.
The Free Market as Regulator by Ron Paul Since the bailouts last fall, lawmakers have been behaving as quasi-owners of the bailed-out banks and businesses, leading to calls for increased regulation of executive compensation and other wasteful expenditures. We have heard much about bonuses and executive pay packages that sound more like lottery winnings than an honest salary. Many lawmakers voted in favor of these unconstitutional bailouts, believing that these corporations were too big to fail, and allowing them to go under would precipitate widespread economic disaster. This second wave of citizen outrage at the bailouts has left these lawmakers with a bit of egg on their face, and once again, they feel the need to "do something" to "fix" it. Shouldn't there be a regulatory structure in place governing executive compensation? Politically, it seems quite feasible. People are outraged that the system has once again gutted the many to make a few at the top fantastically wealthy. But they are incorrectly demonizing the free market.
China Executes More Corrupt Millionaires... While in America, AIG Swipes Another $249 Million in Bonuses There's a reason why the Chinese are ascendant while America is in decline. Because the Chinese walk upright and aren't afraid to apply justice to the pigs who are ruining their country; while at the same time, Americans bow and scrape to the same people who loot them, dreaming like peasants of the day they can become Donald Trump's "Apprentice." It's a grotesque role-reversal, and we ought to be ashamed.
A Surprise Increase in U.S. Jobless Claims The number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly for a second consecutive week, an indication that jobs remain scarce even as other data shows the economy is stabilizing. Many economists expect the economy to grow at a modest pace in the second half of this year, bringing an end to the longest recession since World War II. But jobs are likely to remain scarce, and many analysts worry that persistently high unemployment could cause consumers to hold back on spending, threatening a recovery.
You're fired! You're hired! As economic conditions improve, more companies are recalling previously laid off workers, with mixed success. The recession has left more than 6 million people out of a job. But for some of them, the job they lost may end up being the job they find again. About 38% of employers have indicated they anticipate some type of recall of cut workers, according to a recent report from the Labor Department. Companies, including General Motors, Ford Motor, Dell, AK Steel and truck maker Oshkosh, have already reached out to previously laid-off employees to meet rising demand.
Unemployment tops US foreclosure contributors US foreclosure crisis deepens as rising unemployment overtakes the issue of defaulted mortgages as the prime cause of home loss across America. As jobs fly overseas and more Americans lose their paychecks, the figure of foreclosures triggered by joblessness also exceeds the one prompted by mortgage loan defaults across the States. Recent economic projections by Moody's Economy.com reveal that over 1.8 million people will have to abandon their property in 2009 despite the USD 75 billion allocated by President Barack Obama to help prevent the spike in home foreclosures. The figure suggests an estimated 400,000 additional foreclosures when compared with last year's 1.4 million home loss record.
Initial U.S. jobless claims rise by 15,000 in latest week Continuing jobless claims rise to 6.24 million First-time filings for state unemployment benefits rose by 15,000 to a seasonally adjusted 576,000 last week, marking the highest level in initial claims since July 25. Both initial claims and continuing claims ticked up in the latest readings, indicating that it's still very tough to find or keep a job. "After 22 straight weeks of readings above 600,000, the latest figure marked the seventh consecutive result below that level, underscoring the fact that the pace of layoffs has eased somewhat," wrote economist Omair Sharif of RBS Securities.
U.S. Files Age Bias Suit Against AT&T The Equal Employment Opportunity Commission said Thursday that it had filed an age discrimination lawsuit against AT&T, the country’s largest telecommunications provider. The commission said AT&T had discriminated against older employees by denying them the chance to be rehired solely because they left under early retirement plans. That led to a disproportionate number of older workers not having the same opportunity to apply for re-employment with the company as younger workers, which amounts to age discrimination, the agency said.
U.S. to end "clunker" rebates on August 24 The U.S. government said it will suspend its popular "Cash for Clunkers" auto rebates on Monday as the program's $3 billion budget runs dry, a month after it was launched. The program, offering payments of up to $4,500 to people who trade in old gas guzzlers for new, fuel-efficient vehicles, will end at 8 p.m., August 24, by which time all applications for the rebates must be submitted to Washington.
What This Country Needs Is a 'Cash for Clunkers' Program for the Housing Sector Over the past six months, one of the most amazing and miraculous events has occurred in the history of economics. Few Americans appear to have grasped how truly remarkable and miraculous the event truly was, even though it occurred right under their noses. The miraculous event to which I refer is our far-seeing leader’s program designed to 1) trick Americans into buying new cars they can’t afford, and 2) melt down their old cars, intentionally destroying them. Or, as the program has been termed by its brilliant originators, it’s a "Cash for Clunkers" program.
Markets don't work for health care Commentary: Without a government role, we're sicker and poorer Some of the most strident opposition to health-care reform stems from the literally fatal misconception that markets are the answer to our medical needs. According to this libertarian view, government intervention in health care is never justified and always harmful. In fact, totally free markets are abysmally bad at delivering health care. That's why every advanced economy, to one degree or another, has given government a large role in providing health care to its citizens. We've tried the market approach to health care and the result has always been the same: Poor health and poor people.
Obama reaches out to Democratic base on health care Calls public insurance plan 'important' in outreach with supporters President Barack Obama on Thursday took a new tack in his effort to sell his health-care reform plans, reaching out to his Democratic base as the White House struggles to overcome political hurdles blocking an overhaul of the U.S. system. In an event at Democratic Party headquarters, Obama defended a public health-insurance plan as a potentially better deal for consumers and said his proposals would allow patients to keep their doctors or current insurance plans. He also called on supporters to help him swat down what he said were falsehoods about his plans, including that they would give illegal immigrants health care. "We're going to have to cut through a lot of nonsense out there," said Obama.
The end of the phone as we know it Startups and disruptors (yes, Google) seek to rethink voice calling. Andy Jagoe is zigging while the rest of the mobile world zags. Let everyone else chase the next hot iPhone app. He’s betting the next big thing is a twist on the same old thing: making calls. He may be right. Jagoe, CEO and co-founder of startup 3jam, is one of several Silicon Valley dreamers who thinks he can reinvent the phone call. And really, let’s admit it’s in need of some Internet-style innovation. We’re in 2009, for crying out loud. Why isn’t call forwarding as easy as e-mail forwarding? Why don’t your voicemails live in a nifty little online inbox?
Whole Foods' rotten core Whole Foods organic food-loving customers are right to feel bruised by its founder's opposition to healthcare reform Whole Foods CEO John Mackey wrote a thunderous comment piece in which he derided the public option, Barack Obama's biggest campaign promise to progressives, and put forward a stridently conservative view of healthcare for America. Does Mackey know who his customer base is? Did he really not foresee the backlash that has ensued – the howls across the blogosphere and Twitter, the Facebook petition to boycott Whole Foods?
Back-to-school looks weak for apparel retailers If earnings reports released on Thursday are a sign of business to come, U.S. apparel retailers will have to continue cutting costs and discounting as slumping sales persist. Gap Inc, operator of the Gap, Old Navy and Banana Republic chains, streamlined operations and reduced inefficiencies to generate a quarterly profit that beat analysts' expectations. But its revenue fell 7 percent in the quarter and same-store sales dropped as much as 15 percent in its stores.
Pelosi Says She Can’t Pass Bill Without Public Option U.S. House Speaker Nancy Pelosi said she won’t be able to pass health-care legislation in her chamber if the measure doesn’t include a government-run insurance plan to compete with private insurers. “There’s no way I can pass a bill in the House of Representatives without a public option,” Pelosi, a California Democrat, said at a press conference in San Francisco today.
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Texe Marrs on Alex Jones Tv 1/4: Witchcraft In The White House!!
Texe Marrs on Alex Jones Tv 2/4: Witchcraft In The White House!!
Texe Marrs on Alex Jones Tv 3/4: Witchcraft In The White House!!
Texe Marrs on Alex Jones Tv 4/4: Witchcraft In The White House!!
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"Pale Horse" on Alex Jones Tv 1/4: Is Pale Horse Real? You Be The Judge!!
"Pale Horse" on Alex Jones Tv 2/4: Is Pale Horse Real? You Be The Judge!!
"Pale Horse" on Alex Jones Tv 3/4: Is Pale Horse Real? You Be The Judge!!
"Pale Horse" on Alex Jones Tv 4/4: Is Pale Horse Real? You Be The Judge!!
Where are we in the Gold Cycle? The world is slowly moving to wards tangibles and away from financials. The ongoing commodity bull market is eight years old and considering that commodity bull markets over the past 100 years have lasted on average 17 years, the current bull-run could go on for another decade. And the long-term leading indicators for oil, copper and the base metals are all reinforcing this. As for gold, its main purpose is money. Gold is the ultimate currency, it's a safe haven and it thrives during economic uncertainty. Gold and commodities tend to move together in a general wave but it will outperform or underperform the other metals and commodities at times.
Q2 gold demand robust: Indian sales up and central banks net buyersDespite an uptick in jewellery demand, gold had to shoulder a weighty burden of excess supply in the second quarter A recent piece on Mineweb carried the headline "Gold needs good news if it is to break through the $960 barrier". The latest issue of Gold Demand Trends, published by the World Gold Council using figures compiled by independent research house GFMS gives some good news, but illustrates also that the market still has some way to go before overall physical demand can again be regarded as truly vibrant, although some of the early necessary ingredients are there.
American Spirit Emerging By: John Browne Despite growing concerns about the growth in Federal spending, voiced this week by none other than Warren Buffett, Washington seems determined to keep its foot on the money pumping accelerator for as long as it can. But even though Washington continues to ignore the realities, alarm bells are beginning to ring at town halls across the country. Last week the Fed left its key short-term rates frozen at 0 to 0.25 percent, enabling banks to borrow at near zero and reap spreads as high as 6 to 24 percent. The Fed also continued its policy of paying interest on banks' reserves, further boosting Wall Street's bottom line. The government has decided to save the banks, no matter how much the public has to suffer.
The Morality Hazard of the Fed Ron Paul's new book, End the Fed (out next month) illuminates the real reasons behind America's recent stunning economic collapse. The Federal Reserve would just as soon you not read it, and instead believe the standard refrains from the standard economists (including those at the Fed): "No one saw it coming! How could anyone have predicted it?" One school of economic thought - the Austrian School - predicted it, and the world's most famous practitioner of that school, Dr. Ron Paul, has been warning of it for over 30 years. In fact, Ron Paul's vision of our current slow motion decline is what got Dr. Paul into politics in the first place. A primary catalyst behind his decision to seek office was Richard Nixon's decision to "temporarily" remove the dollar's gold backing in 1971. This set the table for the mess we're now in.
Nixon Ends Bretton Woods International Monetary System On August 15, 1971, President Nixon announced on TV 3 dramatic changes in economic policy. He imposed a wage-price freeze. He ended the Bretton Woods international monetary system. And he imposed a temporary surcharge (tariff) on all imports. The Bretton Woods system was created towards the end of World War II and involved fixed exchange rates with the U.S. dollar as the key currency - but also a role for gold linked to the dollar at $35/ounce. The system began to falter in the 1960s because of an excess of dollars flowing out of the U.S. which foreign central banks had to absorb. A run on gold in 1968 was stemmed by a patch on Bretton Woods known as the two-tier gold system. All of this was ended unilaterally by the Nixon decision. After a brief attempt to create a modified fixed exchange rate system, the world moved to flexible rates.
Deflation Theory Is Lemon We Have All Been Sold For much of the last year, central bankers, industrial leaders and politicians have been warning us about deflation. Falling prices, they tell us, will create another 1930s-style depression. The only answer is to print money furiously. Now it turns out the theory is a lemon. Deflation is no threat at all. It doesn't prevent an economy from functioning, and it doesn't stop it from recovering either. The evidence suggests a period of sustained deflation might be what indebted economies need to get them back on the right track.
Rubicon Says Gold Deposit May Rival Campbell Complex Rubicon Minerals Corp. Chief Executive Officer David Adamson said gold resources at the company's Phoenix deposit in Canada may rival Goldcorp Inc.'s nearby Campbell mine. "The size of the system we're currently defining is as large as the Campbell deposit, and the Campbell system was producing for well over 40 years," Adamson said in a telephone interview yesterday. "The more we drill, the larger this system gets."
Dollar to lose reserve currency status: Jim Rogers Price weakness continued to be manifest in the precious and base metals complexes overnight, as China's stock market index fell another 4.3% and came to the point of requiring the 'bear market' label to be applied to it by market technicians. Albeit analysts see the Chinese market implosion this month as somewhat counterintuitive, there are other signs that point to justifiable apprehensions.
Dollar to Lose Reserve Status - But Is There an Alternative Currency? Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will probably fall as it loses its status as a reserve currency. The dollar will especially drop against emerging-market counterparts, Curtis A. Mewbourne , a Pimco portfolio manager, wrote in a report on the company’s Web site. Investors should consider cutting their holdings of the U.S. currency, he said. “While we have not yet reached the point where a new global reserve currency will arise, we are clearly seeing a loss of status for the U.S. dollar as a store of value even in the absence of a single viable alternative,” Mewbourne wrote. Though I agree that the US dollar is losing status and will continue to fall against currencies of fast-growing emerging nations, it is difficult to see any alternative to the dollar as a reserve currency in the foreseeable future. Having said that, I am long gold, and expect to see gold hit new highs as all fiat currencies lose value relative to real assets.
FDIC Sees Ag Banks As The Next Big Crisis I bet this headline will catch the attention of readers from the beltway of Washington, D.C. to the depths of rural America. This is the word on the street circulating in conversations with lenders and producers in agriculture and rural America on my recent Road Warrior travels. While these rumors may be false, perception becomes reality in the boardrooms and loan committees of our lending institutions, which will ripple to producers.
Ron Paul: The Free Market as Regulator 8/17/09
PIMCO: Dollar Supremacy Is Coming To An End PIMCO portfolio manager Curtis Mewbourne is getting a lot of attention for a new report predicting the long-term demise of the dollar, or at least its end as the undisputed reserve currency. This kind of stuff is great for sensational headlines, though Mewbourne's own argument isn't particularly sensational or novel. It basically comes down to: The emerging economies, notably China, are coming on fast, and China is starting to do more trade directly with other countries without the need for dollars.
How Quickly Could The Dollar Collapse? We popped up on the “wrong” side of the inflation/deflation argument here the other day with a hyperinflation scenario that seems to us not just possible but likely. Although we hold fast to a prediction that deflation is going to run its course, throwing tens of millions of Americans into bankruptcy, before relief comes to debtors, we are persuaded that at some point well down the road the U.S. will throw the switch to hyperinflate. Even so, we believe that the attendant collapse of the dollar will play out far more quickly than the collapse of the German mark during the Weimar hyperinflation of 1922-23. So swiftly will this occur, in our opinion, that the hyperinflationary spike will begin and end in mere weeks, leaving deflationary to dominate both before (as it continues to do now) and long after.
The FDIC Is Broke. Now What? (Part II) An additional pressure on the DIF stems from the fact that losses from prior FDIC enforcements have been dramatically higher than initial estimates. With each new FDIC report, we see less money in the DIF kitty than expected. This next article does a great job of articulating that this is because bank assets are worth a lot less than originally thought: On January 1 2009 the FDIC reported it had $17,276 million in the DIF and according to press releases for each failed bank, the estimated total costs for FDIC’s DIF during Q1 amounted to $2,146 million, leaving $14,997 million in the fund. However, according to the latest FDIC Quarterly report the fund counted $13,007 million at the start of Q2, – a difference of $1,990 million.
Deficit to be $1.58 trillion this year Federal deficit to reach $1.58 trillion for fiscal year The White House plans to announce the federal deficit will be about $262 billion less than officials predicted earlier this year -- in part because the administration has provided less aid than expected to Wall Street. The federal deficit this year will total $1.58 trillion, a senior White House official said late Wednesday. That's three times more red ink than last year. The official spoke on the condition of anonymity to discuss the report before its release next Tuesday while President Barack Obama will be on vacation in Massachusetts. The new deficit numbers are record shattering, but would give the Obama administration the opportunity to say that its policies have avoided a more extreme financial crisis and eliminated the need for further bank infusions.
Buffett: Debt Mountain Could Turn America Into A Banana Republic Berkshire Hathaway CEO Warren Buffett, a supporter of Barack Obama and an indirect beneficiary of the bailouts, writes in a NYT op-ed to warn about the crushing mountain of debt the US government is now building up. After laying out the staggering numbers, he concludes thusly: I want to emphasize that there is nothing evil or destructive in an increase in debt that is proportional to an increase in income or assets. As the resources of individuals, corporations and countries grow, each can handle more debt. The United States remains by far the most prosperous country on earth, and its debt-carrying capacity will grow in the future just as it has in the past.
Judge Napolitano: Everything the Government Runs is Bankrupt! 8/18/09
Pension funds back buy-out fight over bank deals ‘Chilling effect’ on revival efforts cited in letter to FDIC A coalition of large US state pension funds has backed the private equity industry’s opposition to new rules on takeovers of troubled lenders, saying the plan would have a “chilling effect” on attempts to revive the country’s banking system. The warning by funds from states including New York, New Jersey and Oregon, which manage billions of dollars on behalf of public workers and are big investors in private equity, will strengthen the buy-out industry’s lobbying against the proposed measures.
Texas bank hit by California dreaming Although the failure of Austin-based Guaranty Bank looms, its problems reflect the housing bubble in the Golden State rather than issues at home. Bank regulators have a Texas-sized problem on their hands -- though it's easy to see much of the trouble resides farther west. Guaranty Bank, an Austin-based savings institution with $13.5 billion in assets, is expected to be seized by the FDIC by the end of the week. According to multiple reports late Wednesday, Spanish bank Banco Bilbao Vizcaya (BBV) has won the bidding for Guaranty. Representatives for the FDIC and Guaranty were not immediately available for comment.
JP Morgan Bails Out California Remember when the US government had to bail out investment banks? Now a bank is bailing out the state of California. California had been covering its budget shortfalls by issuing IOUs to pay for services, making it the first state to issue its own fiat currency since the Civil War. The program ran into trouble when banks announced they wouldn't keep cashing the IOUs.
PIMCO'S El-Erian: U.S. stock rally has hit a wall Mohamed El-Erian, the chief executive of top bond fund manager PIMCO, on Tuesday said the rally in U.S. stocks had topped out because valuations have shot up too quickly. Asked if U.S. stocks have hit a wall, El-Erian told Reuters Television: "I think we have, and I think what you are seeing is a massive tug of war going on."
US, European markets recover after China slump World stock markets recover earlier losses, some wonder if this year's gains can be sustained World markets recovered earlier losses Wednesday, as investors weighed the importance of a sharp drop in China's main index, which some took as a sign that stocks are overpriced after this year's powerful rally. With a lack of new economic data across most of Europe and the U.S., investors focused on the jitters in Asia, where Shanghai's index fell as much as 5 percent on worries that the Chinese government's easy credit policy to support the economy will not fuel a sustainable recovery. But the open in Wall Street gave investors some confidence, allowing indexes to trim some losses.
The Greenback Effect IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions. The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.
Judge Napolitano Interviews Peter Flaherty 8/19/09: JPMorgan's ties with Obama, ACORN
Documentary Spotlights Closing of Ohio GM Plant One is staining his deck. Another is studying Web design. A third has given up off-roading to save money. All are unemployed, stripped of jobs they thought were safe forever. Now, the autoworkers are stars of a documentary film that chronicles their final months at a General Motors Corp. sport utility vehicle plant in Moraine, just south of Dayton. They're among nearly 1,100 people who lost their jobs when GM closed the plant in December. Many of the workers plan to attend a special screening of HBO's documentary, ''The Last Truck: Closing of a GM Plant,'' on Wednesday night. The 40-minute film is scheduled to debut on Labor Day.
UBS to disclose 4,450 Swiss accounts 'Historic' move helps IRS pursue tax evaders, funds Under an agreement negotiated by the governments of Switzerland and the U.S., the IRS will get access to less than one-fourth of the accounts held by Americans at Swiss banking giant UBS AG that the bank itself previously acknowledged were kept secret from U.S. tax authorities. It's a deal the Swiss and outside banking analysts say will preserve Switzerland's centuries-old reputation for secrecy and security, but also gives U.S. authorities a start in pursuing wealthy tax scofflaws.
NYC Commercial Real Estate Deals Fall 90% This is definitely a horrible time to be a commercial real estate broker in NYC. In the first half of the year, there were only 3 transactions worth more than $30 million, which is 1/10th of the normal volume by this time. What's more, valuations are down by half. Cap rates -- essentially a building's PE ratio -- have gone from the 3 to the 7s, meaning the building is throwing off about 7% of its purchase price in income each year.
Will US Banking Collapse 2009?
Reduced World Trade Is Destroying Container Ships One very tangible manifestation of weak consumer demand is what's happening with container ships. World trade is down, so the number of ships needed to transfer stuff from country to country is necessarily less. And idle ships cost a lot of money. What to do? Destroy them.
If the recession did not get you, the recovery might Difficult and dangerous times lie ahead. They will test businesses to the limit. I am referring not to the recession – old news from the viewpoint of the City and the media – but to the recovery. For while the downturn has had upsides for many companies, an upturn also has downsides. This column is a little previous. Most businesses see no signs of a bounce back. “We are bumping along the bottom,” says veteran entrepreneur John Timpson, touring his 620 home service stores. But hacks are always in a hurry to be first with the news, or an angle on it. We are like party guests who arrive while the hostess is still doing her hair, eat all the nibbles and duck out just as the dancing starts.
Credit card interest rates up 20 percent in six months, study says Problems with your credit card? Can't pay because of high interest rates? It no wonder. Credit card rates have risen 20 percent in the first six months of the year in advance of new consumer-oriented legislation going into effect, according to a study by the Pew Charitable Trusts.
Spending Quandaries Mount as the Recession Continues The recession is proving to be as stubborn as a toddler who won't go to bed. The longer it slogs on, the more your nerves are frayed. And, understandably, some people have become more indecisive in making financial choices. It's hard for people to determine whether to hold on to their savings, buy what they need or want, or pay down debt. During a recent online discussion, I received lots of questions from chat participants trying to sort all this out. Here are some of the decision dilemmas:
Buffett: We're Going to Be Crushed Under Mountain of Debt A highly influential American has finally hit the panic button about the tremendous mountain of debt the country is piling up. Last year, Warren Buffett says, we were justified in using any means necessary to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we'll destroy the value of the dollar and many Americans' life savings.
8/19/09 Peter Schiff on Fox Business: Warren Buffett is dead wrong on how to fix economy!
From Tea Parties to The 912 Project, Americans Are Challenging The Government Be it the Tea Party gatherings, or a 912 Movement that will march on Washington, Americans are at the end of their patience in dealing with a government that is running amok. In Sacramento, California citizens have formed a national "Tea Party Express" that will be conducting a series of 35 tea party rallies across the United States to oppose the Obama Administration's healthcare proposal. Their caravan will start in California on August 28 and travel eastward arriving at their destination just before a massive 9/12/09 Taxpayer March in Washington D.C. Television ads will be run in advance of the 35 rallies as the Tea Party Express travels across the country.
Certified pre-owned cats Shelters stocked with pets Patrick Boehringer of Canton, Mich., couldn't be a more satisfied customer. He calls Apricot, his Certified Pre-Owned Cat, "the best animal I ever had." Apricot came with a free "multipoint inspection" including spay/neuter surgery, vaccinations, behavioral evaluation and grooming. And you can't beat the price: As the Certified Pre-Owned Cats campaign poster says, with no money down, no financing and no payments, these cats are "better than new!" The Michigan Humane Society's clever ad campaign is an effort to draw attention to a problem that shelters across the country are dealing with: The large number of adult cats looking for homes.
Obama's Well Organized Community Is Falling Apart It's now official-the average American is not as stupid as Washington DC Democrats and their international leftist friends thought. Their mystery messiah has already gone from hero to zero after only eight months in power, and Obama has now become a noose around the neck of every American Democrat, and every international fascist who "hoped" Obama could usher in Marxist "change."
Obama Hurt by Health-Care Confusion, Lack of Leadership Another day brings another new poll showing what's obvious to all but the most strident Democratic partisans: Obama's health-care reform effort is floundering. According to the latest NBC/Wall Street Journal poll:
Obama's overall approval ratings have fallen to 51% vs. 61% in April.
Only 41% approve of Obama's handling of health-care reform and only 24% believe it will improve the quality of care.
54% worry the government will go too far in reforming the system while 41% worry it won't do enough to lower costs and cover the uninsured.
Obamacare Puts Families Making $192,920 on Welfare The current debate over whether the national health care plan being developed in Congress should or should not include a so-called "public option"-a health insurance plan set up by the government to compete with private health insurance providers-misses the point. In reality, the entirety of the congressional health care plan is a "public option." It is all about one thing: putting government in control of health care.
Obamacare: Quintessential Socialism The overriding characteristic of President Obama's National Socialist healthcare is forced equality of consumption, a major step in the direction of egalitarian distribution of income. Emphasis is upon the word forced. As we see with the widespread town hall protests against the President's proposed National Socialist healthcare proposals, people do not willingly surrender the fruits of many years' labor to the government in the name of an undefined abstraction called the common good. Particularly is this true when it is liberal-progressive bureaucrats who decide arbitrarily what constitutes the common good.
House Dems seek info from health insurers House Democrats request detailed records from industry opposed to health legislation Dozens of the nation's largest insurance firms must decide whether to honor a request from House Democrats for detailed financial records, part of an investigation into executive compensation and other business practices in an industry that opposes President Barack Obama's health care proposals. A spokesman for Rep. Bart Stupak, D-Mich., said Tuesday night that 52 letters had been sent to health insurers with $2 billion or more in annual premiums. He said letters were not dispatched to other industry groups, some of which have been airing television advertising in support of Obama's call for legislation.
What The Obama Health Care Reform Legislation Actually Says With all the yelling about a government takeover of health care or lofty promises that everything will be fixed at no cost, it's easy to forget what the legislation actually says. In fact, it's hard to figure it out in the first place. Finally, there's a fact-based, no-spin primer on the draft bills in Congress now: Miyanville's "What ObamaCare Really Means To You And Your Dear Old Granny." It's hard to distill the distilled -- there's a lot more plainly laid out in the article -- but here's a basic breakdown of what's in current legislation:
If you have insurance now, you can keep it
Even if you get sick, you can actually use your insurance.
You'll have a choice of health care insurance plans.
'None Of The Above' Is Not An Option.
Your employer will likely cover you
Medicare and Medicaid would be reformed, but essentially expanded
It looks like the richest Americans are going to pay up, one way or another
There are a lot of scary lies out there.
Dealers want end to Cash for Clunkers National Automobile Dealers Association wants an orderly closure of program and again expresses concerns that funds are running out. The National Automobile Dealers Association is urging the federal government to begin shutting down the Cash for Clunkers program immediately. In a statement released Wednesday evening, NADA said that, given the rapid pace at which deals are being done, it will be difficult to say when the program's funds may run out.
Climate Bill ‘Out of Control,’ Former Senator Says Cap-and-trade legislation to limit U.S. carbon dioxide emissions has “gotten out of control” and needs to be scaled back in Congress, said former Democratic Senator Timothy Wirth. “The Republicans are right -- it’s a cap-and-tax bill,” Wirth, a climate-change negotiator during President Bill Clinton’s administration, said in an Aug. 14 interview. “That’s what it is because they are raising revenue to do all sorts of things, especially to take care of the coal industry, and it makes no sense.”
Japan Weighing the nuclear option In his 2008 New Year's speech, Japanese political doyen and former Prime Minister Yasuhiro Nakasone warned that without a clear-cut national vision and objective, Japan might tread a path toward ruin like the ancient city-state of Carthage, which was defeated and destroyed by Rome in 146 B.C. Referring to the confusion in the country over how to address the question of national security, especially the alliance between Japan and the United States, Nakasone made these points:
Why Asia Will Supplant Detroit as the Global Center of the Auto Industry Asia is poised to become the "new" Detroit. Here in the United States, at a cost of a mere $3 billion, the "Cash-for-Clunkers" program appears to have given new hope to the U.S. auto industry. But that new hope is destined to be short-lived. It's true that - in terms of value delivered for the money invested - "Cash for Clunkers" has eclipsed every other stimulus program that has been tried. But the program has a projected lifespan of only three months, meaning it can't reverse the powerful global forces that are destined to turn the U.S. auto market from leader to laggard on the global stage.
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Dollar decline to catapult gold to $2,500 There is no safe haven in buying the currency or debt of a BANKRUPT nation seeking to borrow ever more. That is a fact that no algorithm can extinguish. Gold and good precious metal shares are insurance. Speculators, even bullish speculators, are the enemy of gold as they set themselves up to be used as the means of doing exactly what you see today, getting killed and THEREIN REDUCING PRICE. Leverage is your enemy as the gold banks strike at the weakest part of the gold market to accomplish their ends. Stop speculating in credit against mega money. The gold banks will lose against the cash market alone.
Central banks are NOT ordinary gold investors Central banks run the world's biggest Ponzi scheme, issuing bits of paper that people will accept in return for real goods and services. If you enjoyed this privilege to the tune of a few trillion dollars that finance an empire, expending a few tonnes of gold to keep it going would be a no-brainer. Central banks do not sell gold to get a few billion of their own fiat money in return, money they probably would throw on top of the stack of half a trillion freshly printed notes that rolled off their presses just that morning. No, central banks sell gold to make it appear that the paper stuff is more desirable than its true supply and demand fundamentals would allow. And when the game looks like it's coming to an end, the central banks can always buy back the gold.
Panning for gold makes a comeback in bad economy Ashley Michalak and Nate Neitz are dipping pans of dirt into a long wooden trough on a hot summer day. But these aren't ordinary pans, and it's not ordinary dirt. They're gold pans, and the dirt — they hope — is pay dirt. The two cousins are panning for gold at the Cotton Patch Gold Mine in the heart of the nation's oldest gold-mining country. "It's cool. You never know what you're going to find," says Nate, 12. Ashley, 11, has found two small pieces of gold, about the size of a pencil tip. By the end of the day, the two will bring home 10 small flakes of gold in tiny plastic bottles.
Peter Schiff we are in worse shape than we were 6 months ago Aug. 17 2009
Dubai beats India in gold imports, bullion demand Gold, the king of commodities, has emerged as the most happening investment vehicle in Dubai, the city of gold in Middle East. According to figures from the Dubai Multi Commodity Center, gold imports by Dubai rose by 13 percent on a year-on-year basis to 300 tonnes in the first half of 2009. The gold investment demand in Dubai is going up that the city kingdom has beaten India--the largest gold consumer in the wolrd--in the imports of the yellow metal.
Gold Bulls and Bears Fight To Standstill, Trend About to Resolve Gold's bulls and bears have fought each other to a standstill so that an eerie calm now exists in the gold market, rather like the period in Europe known as the Phony War which was an early stage of the 2nd World War, where despite having declared war on each other, the major powers did not engage in significant military operations. Just as this phase was the "calm before the storm" it is clear from an examination of the gold chart that this time of tranquillity is about to end - that much we can be fairly sure about.
Transparent aluminium created Oxford University researchers have created a transparent form of aluminium by bombarding the metal with the world’s most powerful soft X-ray laser. According the scientists, a short pulse from the Flash laser dislodged a core electron from every aluminium atom in a sample without disrupting the metal’s crystalline structure. The aluminium piece became nearly invisible to extreme ultraviolet radiation. According to Oxford University’s professor Justin Wark, this is a completely new state of matter, and could lead to further discoveries regarding nuclear fusion and conditions inside large planets.
Bernanke’s Federal Reserve Interest Rate Indecision Meeting What the Fed Said, Didn’t Say, and Strongly Implied If I had to sum up the Fed’s meeting last week, the message was essentially — “We think things are looking better, but we can’t come out and say that yet. We really want to stop intervening but we’re in pretty deep and this recovery is pretty darn fragile. Umm, so yeah, we’re not sure what to do next.” Officially, of course, the words were far more official sounding and even more convoluted. On one hand, the Federal Open Market Committee’s official statement noted that “economic activity is leveling out” and “conditions in financial markets have improved further in recent weeks.”
Morgan Stanley issues alert on corporate bonds after explosive rally Corporate bonds have seen the most explosive rally in nearly a hundred years since the markets touched bottom last winter, but, according to a report by Morgan Stanley, they look increasing vulnerable as they pull far ahead of equities. Andrew Sheet, the bank's European credit strategist, has advised clients to beware signs of creeping angst in the credit options markets, where volatility has been flashing an early warning signal for some weeks. "The pace of the recent rally has, for the first time, begun to show signs of over-extension," he said.
Is This Market Heading For A Serious Correction? You can’t move on Wall Street without hearing talk of a serious correction. And after Monday's 2% loss it seems the bears are starting to dominate this market. Jittery investors are cashing out after new data raised concerns that the economy isn’t recovering at nearly the rate needed to support current valuations. What's at the heart of the sell off? The health of the consumer, that's what. Investors may have bet too aggressively that the consumer is about to bounce back.
Pimco Says Dollar to Fall as It Loses Reserve Status Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will probably fall as it loses its status as a reserve currency. The dollar will especially drop against emerging-market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. Investors should consider cutting their holdings of the U.S. currency, he said.
On the Edge With Max Keiser - August 14, 2009 (Part 1 of 3)
Coming Soon: Banking Crisis of Historic Proportions With everyone (well, almost everyone - I am one of the lonely skeptics) convinced that we have stepped back from the "edge of the abyss", the title of this article may be viewed as laughable. When you connect the dots, as I will in this article, you will at least stop laughing, and, maybe, realize that we still have a big problem. We have a confluence of five factors that have the potential to create damage to banking not seen in 80 years, and that includes the Great Depression. We'll hit these factors one at a time.
Inflation and the Fall of the Roman Empire Two centuries ago, in 1776, there were two books published in England, both of which are read avidly today. One of them was Adam Smith's The Wealth of Nations and the other was Edward Gibbon's Decline and Fall of the Roman Empire. Gibbon's multi-volume work is the tale of a state that survived for twelve centuries in the west and for another thousand years in the east, at Constantinople.
Banks switch one flawed pay system for another Banks are lowering bonuses to defuse popular outrage, but by curtailing employee incentives, compensation experts say the banks and the U.S. government are failing to fix practices that led to the financial crisis. Bonuses and lavish perks for bank staff attracted public fury as the two-year-old financial crisis triggered billions in writedowns and credit losses, and prompted the U.S. government to set aside $700 billion to bail out banks.
Bad banks -- They're baaack! Seeking to lure more buyers at a time of intense distress, the FDIC has dusted off the oft-touted, but rarely used, plan of setting up bad banks. Will it work this time Facing mounting bank failures, regulators are putting a new twist on a familiar idea: splitting a bank's good assets from the bad ones. The Federal Deposit Insurance Corp. said last month it would consider splitting the toxic assets of a failed bank from its more valuable parts, such as deposits and loans that aren't going sour. The goal is to help the FDIC, facing the biggest wave of bank failures in almost two decades, find new buyers for the remains of failed banks while limiting losses on its depleted insurance fund.
Why we need to regulate the banks sooner, not later When in doubt, bail it out,” is the policy mantra 11 months after the September 2008 collapse of Lehman Brothers. With the global economy tentatively emerging from recession, and investors salivating over the remaining banks’ apparent return to profitability, some are beginning to ask: “Did we really need to suffer so much?” Too many policymakers, investors and economists have concluded that US authorities could have engineered a smooth exit from the bubble economy if only Lehman had been bailed out. Too many now believe that any move towards greater financial regulation should be sharply circumscribed since it was the government that dropped the ball.
The Max Kieser/Tyler Durden Interview In this edition of Max Kieser’s “On the Edge”, he discusses the shenanigans in the financial markets with Tyler Durden of Zero Hedge, a fairly new, but already influential financial blog. Durden writes under the pseudonym of Brad Pitt’s character in the movie Fight Club, subscribing to the “critical importance of anonymity and its role in dissident speech” (via Wall St. Cheat Sheet). The four authors of Zero Hedge are ex-Wall Streeters with over two decades of corporate financial advisory, investing and operational experience.
On the Edge With Max Keiser - August 14, 2009 (Part 2 of 3)
Germany braces for second wave of credit crunch Germany's economics ministry is drawing up a raft of special measures with the Bundesbank to head off a fresh financial crisis, fearing that a loan squeeze by struggling banks will set off a serious credit crunch early next year. "The most difficult phase for financing is going to be in the first and second quarter of 2010," said Hartmut Schauerte, the economic state secretary. "We are working as a government to create instruments that can offset a feared credit crunch or any credit squeeze in sectors of the economy," he said. Mr Schauerte said firms with weak balance sheets may struggle to roll over loans as they come due in coming months. Negotiations with banks could prove "very difficult".
SEC Delays Action on Restricting Short Sales Agency Proposes New Approach, Seeks Comment The Securities and Exchange Commission on Monday delayed a decision on whether to put in place new measures to limit short-selling stocks, underscoring the difficulty of pursuing new financial regulations. The SEC moved swiftly in April to propose new curbs after executives, investors and lawmakers complained that short-selling helped crater the stocks of banks and other firms at the height of the financial crisis. Short-selling involves a bet that a company's shares will fall, and abundant short-selling can push down the price of a company's shares.
Hello, Deflation Yes, inflation will eventually be a problem, when the economy or stagflation ignites and Bernanke waits too long to peel off the stimulus for fear of triggering a 1937-like relapse. But now the problem is the opposite: Deflation.
Credit card defaults seen peaking this year Credit card loan defaults, which have risen sharply in recent months and which many analysts feared could rival mortgages as a headache for banks, could peak sooner than widely expected. Guarded optimism that the worst would soon pass for the credit card industry increased by better-than-forecast default rates for July reported by several big credit card lenders on Monday.
Credit Card Companies Rush To Increase Rates Before New Laws This isn't surprising, but it's annoying. U.S. banks keep raising credit card rates, increasing their profit even though they've enjoyed steep discounts on their own borrowing, courtesy of Uncle Sam. . . . The real issue is that on Thursday, Obama's new credit card rules go into force. These rules limit the card companies' ability to unilaterally raise rates. So naturally the play is to pass along hikes while they still can. Problem not solved.
Credit card rates rise in 1st half of '09 Group says bank profit from credit card debt rose as their costs to borrow money declined. The nation's banks raised credit card rates and increased their profit from lending to consumers in the first half of 2009, according to a consumer advocacy group. The Pew Safe Credit Cards Project said Monday the median lowest advertised credit card rate rose to 11.99% in July from 9.99% in December. At the same time, the group said, the profit banks made on credit card debt rose 46%.
On the Edge With Max Keiser - August 14, 2009 (Part 3 of 3)
Producer prices fall almost 1% PPI falls 0.9% in July - a record annual decline - as prices at the pump sank. U.S. producer prices fell by a larger-than expected amount in July and notched a record decline compared with a year earlier as gasoline prices plummeted, government data Tuesday showed. The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate dropped by 0.9% versus a 1.8% gain in June. Analysts polled by Reuters had expected producer prices to decline by 0.3% last month.
Unemployment Spike Compounds Foreclosure Crisis The country's growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind. Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody's Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase.
Bad economy sparks more complaints of wage theft More workers are getting stiffed just when they need their pay the most. The Complaints of wage theft have risen as the economy tumbled. Allegations range from underpayment to not getting paid at all. "It's definitely on the rise nationally because of the economic crisis," says Ted Smukler, public policy director of Interfaith Worker Justice, a Chicago organization that advocates for better wages, benefits and working conditions. "Employers are desperate to shave corners when their profits are going down, and some are just greedy."
Union members pack Obama's town halls GRAND JUNCTION, Colo. | Andrew Carillo and Melissa McCollister cheered loudly from near the back row of the Central High School gymnasium as President Obama stepped on stage to make his pitch for health care reform. The two organizers for the United Food and Commercial Workers (UFCW) Local 7 proudly wore their union T-shirts, and boisterously supported the president because of what they think his initiative will do for the 25,000 grocery stockers, meatpackers and warehouse workers that they represent. "We have to negotiate for health care every time a contract comes up," said Mr. Carillo, 24, a union employee. "Year after year, it just gets more and more expensive."
Tax Bills Put Pressure on Struggling Homeowners Hard times are causing more homeowners to fall behind on their property taxes. But in thousands of cases, they are not responsible to their local governments, but to private companies that charge double-digit interest and thousands of dollars in service fees. This is because in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder. It seemed a painless way to turn old debts into cash to finance schools or public services.
pt 1/2 Gerald Celente on Goldseek Radio Aug 15th
GM raises production as "clunker" sales rise General Motors Co said on Tuesday it is increasing production in North America for the second half of 2009 after a surge in sales ignited by the U.S. government's "Cash for Clunkers" incentives program. The No. 1 U.S. carmaker said it would build 60,000 more vehicles than planned for the third and fourth quarters by increasing overtime and adding shifts at several North American assembly plants. The move will bring about 1,350 hourly workers in the United States and Canada back to assembly lines, GM said.
Retiring? Pay Off Your Mortgage The collapse of the real-estate market is teaching a painful lesson to many seniors about the risks of carrying debt into retirement. Under most circumstances, any kind of debt cuts into financial flexibility for those on a fixed income. But mortgage debt is particularly insidious. It magnifies losses when home prices fall and puts seniors at risk of losing the roof over their heads.
81% Of Americans Think Their Homes Are About To Spike It seems a gigantic crash that nearly toppled the entire financial system wasn't enough to disabuse Americans of the idea that homes are just a good investment, no matter what. While most pundits agree we haven't seen the bottom in housing prices -- and many would-be buyers remain gun-shy, indicating that they agree with the pundits -- homeowners themselves are convinced that sunny times are right around the corner.
The First Die-off Sunday, I got a taste of the oldest established permanent traffic fiasco in America known as Escape From Cape Cod. This is not a regular thing for me. I have no family there and never did. Friends invited us out to an idyllic hidden corner of the place far from the clam bars filled with shrieking babies and other more typical attractions. We arrived in good order at mid-week and had a fine time. Once installed, we didn't get in a car for four days.
More than 30% of Dallas-Ft Worth mortgages are underwater, study says Nationwide, almost a third of houses with loans are worth less than the debt More than 30 percent of Dallas-Fort Worth mortgage holders now owe more than their property is worth. That’s a big increase from the 21 percent of local home borrowers who were underwater at the end of 2008, according to a study released Monday by First American CoreLogic.
pt 2/2 Gerald Celente on Goldseek Radio Aug 15th
Town hall protests not just about health care People are upset? We've been watching American television with increasing interest - and also Youtube which has a good selection of town hall clips. What we're noticing is confirmed by this article excerpt above, that while the town hall meetings are being used by protestors as a venue to discuss healthcare, there is implicitly a larger frame of reference that the mainstream media is simply ignoring. But we believe in the near future that this larger frame of reference will become increasingly hard to ignore. Eventually, it will become the most important element in the American national revival.
Obama foes turn to ’60s radical for tactical tip Opponents of Barack Obama’s healthcare proposals are using the tactics of Saul Alinksy, the legendary leftwing activist who helped inspire the US president when he was a young community organiser, says Dick Armey, head of Freedom Works, a group fighting against universal healthcare. Mr Armey, who was the Republican majority leader in the House of Representatives for most of the 1990s, said his group, which is behind many of the “tea party” protests that have disrupted town-hall meetings in the past two weeks, draws consciously on the forms of agitation pioneered by Mr Alinsky.
Egypt: U.S. to release Mideast peace-talk plans in Sept. President Obama told Egyptian President Hosni Mubarak Tuesday that the U.S. government is planning to release a comprehensive blueprint for Middle East peace talks next month, the Egyptian government said after a meeting at the White House. Mr. Mubarak's first trip to the United States in six years focused on the effort to restart talks between the Israelis and Palestinians. But the 81-year-old Mr. Mubarak's visit also raised questions from critics about whether the White House has abandoned attempts begun by the Bush administration to challenge the aging leader on human rights and democratic governance inside his country.
Obama, Mubarak Discuss Mideast Peace Eager to help the Middle East "move away from a status quo" that he said is not working for either side, President Obama described his meetings with Egyptian leader Hosni Mubarak on Tuesday as fruitful and expressed confidence that a breakthrough in the stalled peace process is on the horizon. "There has been movement in the right direction," Obama said. "If all sides are willing to move off of the rut that we're in currently, then I think there is an extraordinary opportunity to make real progress. But we're not there yet."
The Crash Course My name is Chris Martenson. I'm not an economist. I'm a trained research scientist, and a former Fortune 300 VP. Most importantly, though, I'm a concerned citizen. I think the next twenty years are going to look very different from the last twenty years. This is my attempt to explain why. This is what I call the Crash Course. This series of videos is, I think, the clearest and most straightforward explanation of how our economy, energy systems and environment interact -- how we got to where we are today, and some reasonable expectations for the future.
Crash Course:
Chapter 1 - Three Beliefs by Chris Martenson
Crash Course: Chapter 2 - The Three E's by Chris Martenson
Gold Gains as Biggest Drop Since June Boosts Investment Appeal Gold rebounded as the dollar declined and after the biggest drop in more than two months boosted the metal’s appeal as an alternative investment. Bullion, which typically moves inversely to the dollar, snapped a two-day decline as the Dollar Index, a gauge of the U.S. currency’s strength, slipped after two days of gains. “Gold is slightly firmer as we’ve seen a very heavy sell- off in the last two sessions,” Hassall said. “It’s too early to say the downtrend in the dollar has been broken, so I think we should probably look for some support for gold around $930.”
Why Gold Will Break US$1,000 This title should also read “and why gold equities will fly”. At GoldOz we have successfully predicted the Price of Gold (POG) movements on a fairly regular basis the past few years. This is a bold statement backed up by public record. The long consolidation patterns in the POG in between the strong up-legs have been quite regular since 2002. The extent of each price rise has been harder to predict however so we steer clear of this claim and prefer to follow the market until it “feels” and acts like a top.
Why Buying Gold Is a Political Statement For many people, buying gold is not just an investment, it is a political statement. None makes the case better, I think, than Professor Antal Fekete (see his series of Monetary Economics lectures or Whither Gold). Antal’s work has a strong moral sense, specifically that there is something wrong with the way society works, and a focus on making it better. The best gold advocates (I prefer this term instead of “goldbugs”, which implies emotional irrationality) I feel have this moral element to their work. It takes the form of a belief that fiat currencies, which lack any limits, are detrimental to society.
Gold and Why Gold Now Understanding these times is its own reward. If, however, you understand the role of gold in these times, a reward of another magnitude awaits you. Economic cycles of expansion and contraction are the inevitable result of central bank credit flows. So, too, are deflationary depressions and hyperinflations. Though far less frequent, the destruction caused by deflationary depressions and hyperinflations more than make up for their infrequency; and, today, after perhaps the longest absence of each in recent history, we are now about to experience both - perhaps this time in tandem. This will not be just a deflationary depression, it will be deflationary depression accompanied by a monetary crisis of epic proportions.
Does Gold Mining Matter? What Determines the Price of Gold? The outlooks of gold analysts are diverse. After reading the latest WGC report, Mineweb is bullish: "Gold demand tops US$100 billion and mine supply remains under threat." John Nadler, however, is bearish, citing the expected "additional 400-500 tonnes per annum" that will result from the exploration boom of the last few years. Tom Barlow even asks, "Are we running out of gold?"
Dollar, Equities Put Pressure on Gold Legendary investor Jim Rogers says he can't wait for the International Monetary Fund to sell some of its gold holdings. Should that cause the price of gold to dip, Rogers says he will buy some more. In fact, Rogers says he buys gold whenever he thinks about it. "If it goes down I'll buy some more, and if it goes up I'll buy some more," Rogers said in a CNBC interview. "I periodically buy some gold. I don't have a method to it. I just buy it." The IMF is the world's third largest owner of gold reserves. The number-one holder of gold is the United States, followed by Deutsche Bundesbank.
Central banking schemes, the Internet effect, silver, gold . . . . the Federal Reserve is creating so impossibly-much money and credit, which is a Frighteningly Bad, Bad Thing (FBBT), because inflation in the money supply leads to inflation in consumer prices, and I, like everyone I know, am already sick to death of paying the constantly higher prices of the Fed's previous monetary excesses, and I am sick of listening to my wife and kids always whining and complaining, yammer yammer yammer, about how they need more money, more money, more money, always more and more money, because things cost more money, and deep down in my writhing, churning guts I can feel a big showdown coming, sort of like in the movie "High Noon" when everybody is nervously waiting around for the train to arrive.
The Worst is Ahead of Us Did the Stimulus Bill Work? The news that the jobless rate in this country has gone from 9.5 percent in June to 9.4 percent last month has led President Obama to declare that his policies have "saved the U.S. economy from catastrophe" and have led to another rally in the stock market. While I wish I could agree with the President - I really do wish that - I cannot do so, and I must say, "Not so fast, Mr. Obama."
Pessimism Still Grips Wall Street In recent weeks, it seemed as if nothing could hold back investors trying to will a recovery into reality. Stocks gained week after week, adding up to a 42 percent rise since mid-March, despite troubling news of bank loan defaults, mixed corporate earnings reports and lukewarm forecasts from Federal Reserve Bank officials. Then consumer data sobered investors.
The Waterfall Effect Well, the inflation-deflation debate has surfaced once again. Not in a big way, but in a way that drives me to clarify my position a little. Perhaps you will be surprised. Divergence Today's economy consists of an expanding divide driven by opposing forces. Like the jaws of life, they are ripping open a gap between reality (real economic goods) and fantasy (the US dollar). On one side we have the collapsing real economy, and on the other we have unprecedented electronic reproduction of the base unit of measure. On one side we have the exponential expansion of social promises denominated in trillions of dollars, and on the other we have a real economy incapable of delivering such value.
FDIC Coffers Down To $13 Billion With a clip of 4 or 5 bank failures per week -- a few of which aren't so tiny -- the FDIC's reserves are dwindling. WSJ: For the 102 banks that have collapsed in the past two years, the FDIC's estimated cost averaged 25% of assets. That is up from the 19% rate between 1989 and 1995, when 747 financial institutions were closed by regulators, according to the FDIC. The agency's insurance fund already has dipped to $13 billion, with more than 300 battered banks and thrifts still on an undisclosed FDIC list of problem institutions.
Deflation Relative to What? As the deflation versus inflation debate rages on, both sides present reasonable arguments that sound plausible. I am in the camp that believes stocks, commodities, corporate bonds and real estate have much further to fall. Now falling prices are not the same thing as deflation, but they are a visible symptom. To be honest, I am a pragmatist. I am not as concerned about getting my exact definitions right as I am understanding what to do with my savings.
U.S. Extends Credit Plan Into 2010 With banks still tightening their lending standards, and borrowers skittish about taking on debt, the Federal Reserve and the Treasury extended one of their main emergency credit programs — the Term Asset-Backed Securities Lending Facility, or TALF — for several more months. Despite signs of an economic recovery, and vast government assistance to financial institutions, the Fed reported on Monday that banks were still tightening their lending standards and did not expect to reverse course until the second half of next year.
Traces of cocaine found on up to 90% of dollar bills in American cities It's an image much beloved of Hollywood directors: the head lowered over a mirror, a crisp greenback tightly rolled and inserted in a nostril, then applied at the other end to a line of white powder. Researchers from the American Chemical Society in Washington have discovered that the practice of consuming cocaine through rolled up paper money is far more than just a cinematic cliché. They found that in big cities in the US, up to 90% of the notes tested positive for traces of the drug. In Washington itself, the percentage of notes with cocaine residue reached 93%, a prevalence almost matched by other urban areas such as Boston, Detroit and Baltimore.
Fed and Treasury Extend Lending Program The Federal Reserve and the Treasury took another cautious step on Monday toward unwinding the sprawling emergency credit programs they erected in response to the financial crisis. The two agencies said they would extend their joint program to finance consumer and business lending for up to six more months. But they pointedly added that they did not plan to expand it any further. "Conditions in financial markets have improved considerably in recent months," they said. "Nonetheless, markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired and seem likely to remain so for some time."
Fed survey: Banks still cautious about lending Institutions say they'll keep tighter standards up through mid-2010 The Federal Reserve says most banks expect their lending to remain tight through the second half of next year, with the exception of mortgage standards, which already are loosening a bit. The Fed's latest survey of loan officers found that about 20 percent of U.S. banks tightened their lending standards on prime home mortgages in the April-June quarter, down from around 50 percent in the previous quarter.
Banks still reluctant to lend Fewer banks tightened lending standards in the past three months, but loans are still tough to come by. Banks said this won't change until next year at the earliest. Loans for consumers and businesses remained tough to come by over the past three months, according to a report published Monday by the Federal Reserve. In the central bank's latest survey of senior loan officers, banks said they lent less from May through July, as demand for loans dwindled further and the creditworthiness of potential loan recipients worsened.
S.E.C. Floats a Short-Selling Proposal The Securities and Exchange Commission, after months of considering what to do about short-selling, came up with a new idea on Monday that could make it virtually impossible to place an order to sell stock short and be sure it would be executed quickly. The commission asked for additional comments on that idea, delaying for at least a month the possibility of commission action.
Feds now tracking metro business vacancies Orlando fell in line with the nationwide average for other U.S. cities when it came to second-quarter business vacancies, according to the U.S. Department of Housing and Urban Development. The four-county metro area has a 10.19 percent vacancy rate for commercial properties, compared with an average of 10.56 percent for 392 metro areas. Volusia County fared slightly worse than Metro Orlando, with a 10.37 percent vacancy rate.
Fed Extends TALF Program for Commercial Real Estate The Federal Reserve extended by three to six months an emergency program aimed at restarting credit markets, a move that may cushion the commercial real- estate industry from rising defaults and falling prices. The Term Asset-Backed Securities Loan Facility, with a capacity of as much as $1 trillion, will expire June 30 for newly issued commercial mortgage-backed securities, instead of Dec. 31, the Fed and U.S. Treasury said today in a statement in Washington. For other asset-backed securities and CMBS sold before Jan. 1, the plan was extended three months to March 31.
A Recovery Foundation Built on Sand Instead of allowing a cathartic and reconciling recession to run its course, the Fed decided last year to again bail out the economy by greatly expanding the money supply. In this latest case of artificial intervention, the expansion in the monetary base was a record-breaking trillion dollars, but that intervention has abated in the last few months. What should become clear fairly soon is that the apparent recovery in the markets and the economy has been built primarily on the devaluation of the US dollar, not from a healing of the economy’s fundamentals. That clarity will become evident once the dollar begins to make a brief rebound.
China said to be buying U.S. mortgages The China Investment Corp. is set to invest up to $2 billion in mortgage-backed securities because it considers the housing market set for a recovery. China's $200 billion sovereign wealth fund, which suffered big paper losses on stakes in Morgan Stanley (MS, Fortune 500) and Blackstone (BX), is set to invest up to $2 billion in U.S. mortgages as it eyes a property market recovery, two people with direct knowledge of the matter said Monday. China Investment Corp. (CIC) plans to invest soon in U.S. taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF).
China Buys Treasuries, Proving Dollar Demise Overdone For the first time since the start of the global financial crisis, the U.S. government is breaking its reliance on short-term debt as foreign buyers pile into longer-term securities. When the U.S. raised $75 billion last week, a group that includes international investors purchased a record amount of 3- year notes, the biggest share of 10-year notes since 2005 and almost half of the 30-year bonds sold, according to Treasury data. That helped extend the average maturity of U.S. debt from a 25-year low in the second quarter and showed diminishing concerns over the record U.S. budget deficit and inflation.
Weak sales, joblessness endanger recovery Stock markets around the world plunged Monday on worries that the U.S. consumer remains mired in debt and unemployment and will be unable to contribute to the much-heralded global economic recovery. The Dow Jones Industrial Average lost nearly 200 points or 2 percent for a second straight trading session, and China's main stock index plummeted nearly 6 percent as investors came to the realization that U.S. consumers -- the prime engine of growth in the U.S. and around the world -- remain on the sidelines of the emerging recovery.
'The Stimulus Isn't Working,' Republican Says -- Six Months Out Six months have passed since President Barack Obama signed the $787-billion stimulus bill into law, promising that it would "create or save three and a half million jobs over the next two years." On Monday, Rep. Mike Pence, chairman of the House Republican Conference, said the results are in - and "the stimulus isn't working."
Optimism about a recovery starting to fizzle Observers expect stocks' rally to end as economic reality starts to set in What happened to all the optimism? Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is "leveling out." Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound - and share prices could be due for a bigger pullback after a 50 percent surge since March.
Is This the Start of the Big One? I don't believe in market calls, and trying to time turns is a perilous game. But most savvy people I know have been skeptical of this rally, beyond the initial strong bounce off the bottom. It has not had the characteristics of a bull market. Volumes have been underwhelming, no new leadership group has emerged, and as greybeards like to point out, comparatively short, large amplitude rallies are a bear market speciality. In addition, this one has had some troubling features. Most notable has been the almost insistent media cheerleading, particularly from atypical venues for that sort of thing, like Bloomberg. Investors who are not at all the conspiracy-minded sort wonder if there has been an official hand in the "almost nary a bad word will be said" news posture. Tyler Durden has regularly claimed that major trading desks have been actively squeezing shorts. There have been far too many days with suspicious end of session rallies.
Stocks plunge as investors worry about consumers Stocks plunge on concerns about consumer spending; investors push into safety of Treasurys Investors' rising fears about consumer spending are turning stocks into a risky investment again. Stocks plunged and Treasury prices soared Monday as investors around the world feared that consumers are too anxious to lift the economy into recovery. The losses on stock exchanges extended the heavy selling that began Friday with a disappointing reading on consumer confidence. And bond investors, once again searching for a safe investment, bought heavily into Treasurys.
Oil falls 3 percent on recovery jitters Oil fell over 3 percent to below $66 a barrel on Monday, its lowest this month, as investors became more cautious about the pace of global economic recovery and a potential revival in energy demand. U.S. equities fell broadly, pressured by persistent concern for the global economy, with data from Japan, the third largest oil consumer, showing that economic recovery may be shaky.
No V-Shaped Recovery, Says Dr. Doom Nouriel Roubini warns about a double-dip recession Last week, Nouriel Roubini was slightly bullish, predicting a global recovery by the end of the year -- with plenty of caveats. But today, with the markets down, the recession-caller and NYU economist is back to his signature pessimism: Roubini/RGE: Today, 20 months into the US recession-a recession that became global in the summer of 2008 with a massive recoupling-the V-shaped decoupling view is out the window. This is the worst US and global recession in 60 years. If the US recession were-as is most likely-to be over at the end of the year, it will have been three times as long and about fives times as deep-in terms of the cumulative decline in output-as the previous two
The Signs Don't Point To a Typical Recovery Economic Head Winds May Weaken Comeback The wounded U.S. economy has shown signs of improvement in recent weeks. But many economists, who were caught off guard by the brutality of the downturn, are accentuating the negative, bracing for head winds that could cause the recovery to be weak.
CFTC: The Key to Market Manipulation Goldman Sachs is once again warning the world of a coming spike in oil prices that will remind everyone of 2008. The current financial crisis is to blame. While we focus on fixing the banking sector, we've forgotten that there are fundamental problems with the commodities markets. The spike from 2008 will return because there's been "decades" of poor investment decisions by oil producers.
Reader's Digest Plans Chapter 11 Filing Reader's Digest Association, the publisher that was taken private in 2007 by an investor group led by Ripplewood Holdings, said Monday that it plans to file for Chapter 11 bankruptcy protection to carry out a debt-for-equity swap that would give lenders control of the company. Reader's Digest said in a statement it had reached an agreement in principle with the majority of its senior lenders to convert a "substantial portion" of its $1.6 billion in senior secured debt into equity. The company did not make a $27 million interest payment due Monday on its notes, and will use a 30-day grace period to continue talks with lenders about what it called a "pre-arranged" bankruptcy filing.
With credit tight, Fed extends consumer loan plan With credit tight, Federal Reserve extends consumer lending program through March With banks limiting the availability of auto, student and other consumer loans, the Federal Reserve said Monday it would extend a program intended to help spur more lending at low rates. The program is set up to provide up to $1 trillion in low-cost financing to investors to buy securities backed by consumer and commercial loans. But private economists said the program, Term Asset-Backed Securities Loan Facility, or TALF, has so far provided little benefit for consumers and businesses still struggling to get credit. The program, originally set to expire at the end of the year, has two parts.
Home Prices: There's No Quick Recovery Ahead So, is our long national nightmare over? Has the housing market finally hit bottom? There has been some muted -- albeit exhausted -- cheering from homeowners in recent weeks. But before we break out the champagne, look out for further potential problems just down the road. The good news? According to the closely watched Case-Shiller Home Price Index, which tracks home prices across 20 major cities nationwide, the three-year housing slump slowed sharply in April and May.
Sorry, Tax Cuts Wouldn't Fix The Economy This is not a political commentary, but simply one to emphasize that good investors are never dogmatic. Those who are "disciplined", but inflexible, have historically suffered long periods of underperformance. Perma-bulls and perma-bears suffer when the market moves against them. Similarly, strict value managers suffer every time the profits cycle decelerates, and growth managers suffer when the cycle accelerates. Flexibility is the key to being a good investor.
Brace for a Wave of Foreclosures, the Dam is About to Break . . . . The biggest factor in foreclosures and walk-aways is whether or not someone is underwater. If someone with equity always has a chance to sell. The second biggest factor is "skin in the game". Those who put down 20% are far less likely to abandon their properties than someone who put down 10% or less. In light of the above, and given the preponderance of "liar loans" and low down payments in the problem states, those thinking clearly might be expecting to see a giant wave of foreclosures striking shore right about now. And they would be correct.
Compulsory Social Insurance The essence of the program of German étatisme is social insurance. But people outside the German Empire have also come to look upon social insurance as the highest point to which the insight of the statesman and political wisdom can attain. If some praise the wonderful results of these institutions, others can only reproach them for not going far enough, for not including all classes, and for not giving the favored all that, in their opinion, they should have. Social insurance, it was said, ultimately aimed at giving every citizen adequate care and the best medical treatment in sickness and adequate sustenance if he should become incapable of work through accident, sickness or old age, or if he should fail to find work on conditions he considered necessary.
Glenn Beck: How Much Is Your Life Worth? Obama's 'Health Care' Will Tell You
Once Again Obama Misstates Number of Uninsured Americans-This Time in a New York Times Op-Ed President Obama for a third time has misstated the number of Americans who lack health insurance, this time doing it in an op-ed piece published Saturday by the New York Times. "I don't have to explain to the nearly 46 million Americans who don't have health insurance how important this is," Obama said in the op-ed about his efforts to reform the American health care industry. In a July 22 primetime press conference, Obama falsely said there were "47 million Americans who have no health insurance." At an August 11 town hall meeting in Portsmouth, N.H., he falsely said "nearly 46 million Americans don't have health insurance coverage today" and that "46 million of our fellow citizens have no coverage."
Swine flu jab link to killer nerve disease: Leaked letter reveals concern of neurologists over 25 deaths in America A warning that the new swine flu jab is linked to a deadly nerve disease has been sent by the Government to senior neurologists in a confidential letter. The letter from the Health Protection Agency, the official body that oversees public health, has been leaked to The Mail on Sunday, leading to demands to know why the information has not been given to the public before the vaccination of millions of people, including children, begins. It tells the neurologists that they must be alert for an increase in a brain disorder called Guillain-Barre Syndrome (GBS), which could be triggered by the vaccine.
Militarization of Swine Flu Preparations The increasing militarization of preparations for an outbreak of swine flu is proceeding rapidly and without very much public debate, despite the relatively mild nature of the disease so far and the fact that many experts believe the panic has been overblown. Earlier this week, Republican Representative Paul Broun of Georgia warned a town hall meeting that a “socialistic elite” may be preparing to declare martial law in the United States using a pandemic disease as the pretext. “They’re trying to develop an environment where they can take over,” he told attendees according to an article in the Athens Banner-Herald. “We’ve seen that historically.”
Here Are Our Healthcare Choices--Pick One Everyone who is trashing Obama's healthcare plan should be required to answer the following multiple choice question: Pick A or B:
A. I don't want any changes to our healthcare system. I'm cool with the fact that 50 million Americans don't have coverage.
B. I agree that our system needs to be reformed, but I think there's a better option than the one Obama's proposing.
Glenn Beck: How Much Is Your Life Worth? Obama's 'Health Care' Will Tell You
Overburdened doctors are shunning all types of insurance Like a lot of their patients, doctors are sick of long waits in the waiting room and dealing with insurance companies. That's why a growing number of primary care physicians are adopting a direct fee-for-service or "retainer-based" model of care that minimizes acceptance of insurance. Except for lab tests and other special services, your insurance plan is no good with them. In a retainer practice, doctors charge patients an annual fee ranging from $1,500 to as high as over $10,000 for round-the-clock access to physicians, sometimes including house calls. Other services included in the membership are annual physicals, preventive care programs and hospital visits.
Only a third of nurses willing to have swine flu vaccine: poll Only a third of nurses have said they are willing to have the vaccine against swine flu amid fears it has not been tested enough, a survey has found. Frontline health and social care workers will be among the first to be vaccinated in October along with people with serious underlying health problems and pregnant women. However a survey by Nursing Times has found many frontline nurses have reservations. Only one in three said they are prepared to have the H1N1 vaccine with a third undecided and the rest saying no.
Obama faces backlash over potential retreat on public healthcare option US president's healthcare provision is now likely to be run by private insurance companies Barack Obama faced a backlash from the left today after his administration signalled retreat over the introduction of a government-run national health plan. Progressives dubbed the move 'treachery' and 'betrayal'. Obama will continue to push for reform this year but the new healthcare provision is now likely to be run by private insurance companies rather than by the federal government, which had been his preferred option.
Health-Care Failure a Symptom of Washington's Bigger Ills Will the President abandon the public health insurance option in order to pass some kind of health-care reform? That’s the latest decision being bandied about in the West Wing. For now, the White House says, President Obama "believes the public option is the best way" to reform health care. The fact that they’re now debating this point hints at the President’s willingness to bend his views in order to pass some kind of legislation. Will he get something passed or will it be a redux of the "Clinton-Care" failure? Megan McArdle, business and economic editor at the Atlantic Monthly, says it's too early to tell.
The Unemployment Dam Is Breaking primary bulwark against foreclosures and destitution is about to give way. Almost 500,000 Americans will exhaust their unemployment insurance benefits by September. That includes 354,000 for that month alone. The economic consequences will be severe. Social unrest is inevitable. Unemployment insurance is the only thing keeping many Americans in their homes and off the street. But time is running out. The National Employment Law Project, a national advocacy group, released a study last weekend that should ring warning bells. Over 140,000 people in America have collected the maximum unemployment benefit available under the law-despite the fact that Congress extended payouts for an additional 33 weeks. Currently, people can draw payments for up to 79 weeks in 24 states. Other states offer help for between 46 and 72 weeks.
Bulletins From Clunkerville Is the economy really recovering or is it all just hype? Here's what we know. The Fed doesn't drop rates to zero unless its facing a 5 alarm fire and needs to pull out all the stops. The idea is to flood the markets with liquidity in order to avoid a complete financial meltdown. It's a last-ditch maneuver and the Fed does not take it lightly.
Grim forecast for L.A. and Long Beach ports The busiest U.S. seaport complex won't fully recover from the economic downturn until 2013, a report says. Imports at both facilities fell in July from a year earlier. As the ports of Los Angeles and Long Beach post another round of dismal monthly import statistics, a new assessment finds that the nation's busiest seaport complex will need at least four more years to fully recover its momentum -- not to mention the jobs, incomes and revenues that went with it -- after the worst global recession in 60 years. The recovery will be so slow and painful that a return to the pace set during the economic boom year of 2006 -- when the ports handled 15.8 million cargo containers bound for most parts of the U.S. -- won't come before 2013.
Conservatives Now Outnumber Liberals in All 50 States, Says Gallup Poll Self-identified conservatives outnumber self-identified liberals in all 50 states of the union, according to the Gallup Poll. At the same time, more Americans nationwide are saying this year that they are conservative than have made that claim in any of the last four years. In 2009, 40% percent of respondents in Gallup surveys that have interviewed more than 160,000 Americans have said that they are either "conservative" (31%) or "very conservative" (9%). That is the highest percentage in any year since 2004.
Obama stand on settlements raises tension Majority see president as 'pro-Palestinian' President Obama's harsh criticism of West Bank settlements during his heavily publicized June speech to the Arab world in Cairo continues to reverberate here, undercutting his popularity and heightening tensions with some pro-Israel advocates in the United States. Navigating the complex relationship with Israel is a delicate task for any administration, but relations are especially delicate now as Mr. Obama is making a major push to build trust with the region's vast Muslim population and coordinate a diplomatic drive to halt Iran's nuclear programs.
And everyone who shares the creed from sea to shining sea.
As of Friday August 14, 2009, FDIC is Bankrupt Bank Failure Friday is in full swing. Tonight there were 5 more failures, numbers 73 through 77 on the year. In the biggest failure since WaMu, BB&T Takes Over Colonial. Colonial BancGroup Inc., the Alabama lender facing a criminal probe, had its banking operations closed by regulators and taken over by BB&T Corp. in the biggest bank failure since Washington Mutual Inc. collapsed last year. Branches and deposits of Colonial, Alabama’s second-largest bank, were turned over to Winston-Salem, North Carolina-based BB&T in a deal brokered by the Federal Deposit Insurance Corp., the regulator said today. The failure of Montgomery-based Colonial followed a Florida expansion that saddled the lender with more than $1.7 billion in soured real-estate loans.
Colonial bank closed by federal officials Biggest U.S. failure this year Real estate lender Colonial BancGroup Inc. has been shut down by federal officials in the biggest U.S. bank failure this year. The Federal Deposit Insurance Corp., which was appointed receiver of the Montgomery, Ala.-based Colonial and its approximately $25 billion in assets, said the failed bank's 346 branches in Alabama, Florida, Georgia, Nevada and Texas were reopening at their normal times starting on Saturday as offices of Winston-Salem, N.C.-based BB&T. The FDIC has approved the sale of Colonial's $20 billion in deposits and about $22 billion of its assets to BB&T Corp.
Colonial's failure could make mortgages more scarce Colonial BancGroup controls 25% of all warehouse-lending funds. If that money disappears, mortgage loans will be even harder to get. The collapse of Colonial BancGroup poses another hazard to the still-shaky housing market: Mortgages could become even harder to get. The Southern regional bank, based in Montgomery, Ala., was the largest remaining player in warehouse lending, which provides short-term financing to independent mortgage bankers. At one time, these mortgage bankers originated half of all U.S. home loans using these funds.
Biggest Bank Failure of the Year So Far Another handful of banks have taken the Friday powder, bringing the total number of 2009 failures to 77. Among the dead was the largest bank to go under this year. The Federal Deposit Insurance Corp. reports that Colonial BancGroup Inc. of Montgomery, Alabama has been liquidated, dying with about $25 billion in assets. Resistance Is Futile Dept: The remains of Colonial now become part of the Naughty 19, as Winston-Salem, N.C.-based BB&T Corp. takes over its assets, branches and other operations.
Toxic Loans Topping 5% May Push 150 Banks to Point of No Return More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival. The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.
BB&T buys Colonial bank; 4 other banks fail Southern regional bank Colonial BancGroup sees rival grab its branches and deposits. Troubled Colonial BancGroup will be bought by rival BB&T Friday, the government said after state regulators closed the bank whose assets had been frozen by a federal judge. The Montgomery, Ala., bank, which has 346 branches spread across Florida, Alabama, Georgia, Nevada, and Texas, is the sixth largest bank failure in U.S. history and by far the largest failure of 2009. With $25 billion in assets and $20 billion in deposits, Colonial is 100 times larger than the typical bank to have failed this year.
Major Bank Fails in South Colonial's Assets Sold to Rival in 6th-Largest Collapse on Record; Blow to FDIC Regulators seized Colonial Bank on Friday after reaching a deal to sell its branches, deposits and most of its assets to rival BB&T Corp. in the sixth-largest bank failure in U.S. history. The demise of Colonial, a regional bank based in Montgomery, Ala., with assets of $25 billion and 346 branches in five states, signals an ominous phase in the nation's banking crisis. Even as some large institutions show signs of stabilizing, a slew of regional lenders remain on the ropes. And regulators appear to be giving up hope that some of them can be saved. Colonial, a unit of Colonial BancGroup Inc., is the largest bank to fail since Washington Mutual Inc.'s banking operations collapsed last September and were sold to J.P. Morgan Chase & Co.
Feasting on failed banks Big banks are scooping up troubled, smaller institutions at a time when growth is hard to come by -- and thanks to favorable FDIC rules, more deals are likely. Shares of BB&T Corp. shot higher Friday after reports that it might be scooping up the remains of Colonial BancGroup. It's no wonder: Such purchases give healthier banks a chance to grow on the cheap. That's valuable at a time when many institutions have been shrinking in response to the recession. More than 70 banks have failed this year. Scores of additional failures are expected in coming years, as the industry works through trillions of dollars worth of residential and commercial real estate problems.
pt1/4 Gerald Celente 14 Aug 2009 "the banks are robbing us . . . "
Gold above $1,000 will drive commodity market In the first place, I think it's a misconception that gold has a summer slump. We ran a study in the July mid-month update, where we looked at the charts for gold in each of the eight years so far in this bull market, which began in 2001. Gold never hit its low in the summer. Its lows have always been early in the year or the second half. Maybe one way people think about summer being a slump period is that typically the strongest time for gold has been the second half of the year. In six out of the eight years of this bull market, the high was hit in the last four months, from September through December.
Will Gold Hit $1,000 This Fall? In a recent commentary, you predicted gold will soon climb above $1,000/oz and stay there. Why do you think so? Turk: I expect it to happen fairly soon, maybe September, October. Really, I've been expecting it all this year, and there's finally enough momentum now in the gold market, I think, to take it higher. The reason is really quite simple: When you debase the dollar, you're going to get a higher gold price. And the federal government and Federal Reserve are clearly on a path where the dollar is being debased. The government is spending and borrowing too much, and the Federal Reserve is just churning out currency. In that kind of environment, a higher gold price can be expected.
The Commodity World Is Growing In Strength, Gold the Special One! The commodity market is bubbling. Whether it be sugar reaching a three year high, copper and other base metals reaching almost one year highs, or oil and gold rising further. The markets are looking good. They’re moving up on signs that the global recession is easing. This is boosting demand, especially in China and Asia, which is pushing prices up.
Central Bank Gold Agreement Last Friday, the central banks of Europe extended their landmark agreement on gold sales. 18 national central banks, along with the European Central Bank itself, signed the third Central Bank Gold Agreement. CBGA 3, like its two predecessors, has major implications for gold that investors need to understand. Due to their propensity to sell gold from their massive hoards, central banks have long sparked fear and suspicion among gold investors. While CBs absolutely add supply, thus weighing on gold’s price, the misinformation and intentional disinformation surrounding these institutions is often way overdone. Instead of fearing them, taking a pragmatic perspective is far more prudent and profitable for investors.
The great march of silver and gold from 400 BC "There is no reason to invest in gold," said the finance editor of a major newspaper interviewing me recently. "If gold goes up because of inflation, then so does everything else, so why buy it? It's not really a good investment." She was serious. Yes, she is a finance writer. And yes, it's a newspaper you've heard of. I was so dumbfounded that I must have sounded like an infant struggling to form its first words when I attempted to counter this inane line of thinking. Tell me you're a deflationist, tell me the Fed will rescue us, tell me foreigners will keep buying our debt – but don't tell me that gold serves no purpose
Why did the U.S. government confiscate gold in 1933 and can it happen again?In this the second part of this series we look at the big global picture when President Roosevelt’s Administration confiscated the gold of U.S. citizens. Based on this part, in the next part we contemplate whether it can happen again. At the right you will see the actual executive order in which U.S. citizens lost the right to own gold. From May 1st 1933 until 1971, U.S. citizens could no longer hold gold as a protection against paper money, which also lost its gold backing at the same time. Foreign central banks could continue to exchange the U.S. dollars that came into their possession [known as Eurodollars for decades] for gold and did so particularly when the $ was devalued and then floated against the gold price in 1971.
Silver Outperforms Gold, So Should I Sell My Metals or Buy More? Legendary investor Jim Rogers says he can't wait for the International Monetary Fund to sell some of its gold holdings. Should that cause the price of gold to dip, Rogers says he will buy some more. In fact, Rogers says he buys gold whenever he thinks about it. "If it goes down I'll buy some more, and if it goes up I'll buy some more," Rogers said in a CNBC interview. "I periodically buy some gold. I don't have a method to it. I just buy it." The IMF is the world's third largest owner of gold reserves. The number one holder of gold is the United States, followed by Deutsche Bundesbank.
pt 2/4 Gerald Celente 14 Aug 2009
Pressure (Countdown) Toward Breakdown The Paradigm Shift continues to displace the power centers and introduce new ones. Those bright souls who ignore the shift will be well prepared for systems that soon do not stand. The Americans are the last to know, oblivious to the global shift in progress. They continue to seek a return to normalcy, when old conditions are as gone as a baby’s innocence during teen years. The crux of the matter is that the United States is no longer in control of its fate. Meetings with creditor nation leaders result in new orders given, and new policy directives enacted. Comparisons are made to China, but they too are a distraction. China can embark on its own path, can stimulate with huge sums of money, since they have actual savings. The US has massive debts, as insolvency has infiltrated to destroy systems pertaining to banking, home mortgages, federal operations, and industry. The nation is as hollowed out as its leaders are compromised. The major theme of this decade is USGovt leaders working hidden agendas.
Inflation Fears? Check the Historical Record There are some economists who are concerned about future inflation because of the loose, expansionary monetary policy in 2008, e.g. see Brian Wesbury and Bob Stein here, here and here. I don't think inflation will be a problem, and here's why: The chart above (click to enlarge) shows the annual growth rate in the M2 money supply (percent change from the same month in the previous year, data here) monthly from January 1960 to July 2009.
The Weimar hyperinflation - 1923 – Germany The most famous of modern monetary disasters occurred in Germany in 1923. The indirect cause of the German hyperinflation was the Treaty of Versailles, which brought to a close the First World War. More directly it was the level of reparations which the German people were required to pay to the victors. More directly still it was the occupation by France and Belgium of Germany's industrial heartland in the Ruhr valley, as an attempt to force the payment of those reparations, which were outstanding. Germany was already proving ungovernable as democrats, republicans, communists and the extreme right vied for power. Assassinations were rife. In reaction to the Ruhr occupation the government, such as it was, encouraged the closure of factories to prevent the achievement of the foreign occupiers' aims, and it offered payment in newly printed money to Germans thrown out of work.
There's no quick fix to the global economy's excess capacity There is one overwhelming fact about the world economy that cannot be wished away. Excess capacity in industry is hovering at levels not seen since the Great Depression. Too many steel mills have been built, too many plants making cars, computer chips or solar panels, too many ships, too many houses. They have outstripped the spending power of those supposed to buy the products. This is more or less what happened in the 1920s when electrification and Ford’s assembly line methods lifted output faster than wages. It is a key reason why the Slump proved so intractable, though debt then was far lower than today. Thankfully, leaders in the US and Europe have this time prevented an implosion of the money supply and domino bank failures. But they have not resolved the elemental causes of our (misnamed) Credit Crisis; nor can they.
U.S. Housing Market Crash Means Collapse Of The "Ownership Society" Bush's "ownership society" has collapsed under the dead weight of debt. There is too much debt and too little income to support it. Please consider President shifts focus to renting, not owning. The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.
Businessman who paid in gold and silver coin found guilty of tax fraud A federal jury Friday found Las Vegas businessman Robert Kahre guilty of all 57 felony counts of evading taxes, failing to withhold taxes from workers' wages, and engaging in fraud during real estate transactions. Three other defendants were found guilty of most but not all of their related charges. Kahre had claimed he tried to legally avoid taxes by creating a cash payroll system that disbursed gold and silver coins, on the theory that recipients could go by the coins' face value for tax purposes. Though the trial lasted almost three months, the jury took only a day and a half to deliberate.
Las Vegas businessman Kahre guilty of 57 counts Federal charges against four included evading taxes, real estate fraud A federal jury Friday found Las Vegas businessman Robert Kahre guilty of all 57 felony counts of evading taxes, failing to withhold taxes from workers' wages, and engaging in fraud during real estate transactions. Three other defendants were found guilty of most, but not all, of their related charges. Kahre had claimed he tried to legally avoid taxes by creating a cash payroll system that disbursed gold and silver coins, on the theory that recipients could go by the coins' face value for tax purposes.
pt 3/4 Gerald Celente 14 Aug 2009
President shifts focus to renting, not owning Using $4.25b to build affordable housing The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.
How Obama's transparency promise holds up The Obama administration vowed to be open about the bailouts and stimulus, but overseers say many aspects of the rescue plans are as clear as mud. The Obama administration pledged unprecedented transparency in its accounting of the $700 billion bank and auto bailouts (TARP) and the $787.2 billion Recovery Act. A lot of information has been made public but there are some key details where the transparency falls far short. Here's what we still don't know:
How are banks using TARP funds?
Who are bailed out banks lending to?
What is the value of the assets that Treasury has accumulated as a result of TARP?
Where are stimulus funds ultimately going?
FDIC chief sees 'resistance' on Hill to Obama's plans Opposes more power for Fed The head of the Federal Deposit Insurance Corp. is arguing against key pillars of the Obama administration's plan to overhaul the financial system, saying they would not survive in Congress and that she has better ideas. In an interview with the Associated Press, FDIC Chairman Sheila C. Bair said Congress would not go along with expanding the Federal Reserve's authority to regulate large financial companies or with giving a new consumer protection agency enforcement powers over banks. Power to enforce rules for banks now belongs to Ms. Bair's agency and other bank regulators.
Take Away Stimulus Spending and You’ve Got an Economy Entering Depression The Dow was up 120 points yesterday. Now, we're beating the bounce of 1930. The post-crash bounce in 1930 lasted fifth months. Ours began on March 9th...so it is now in its sixth month. And like 1930, people are coming to believe that recession is almost over...and happy times are here again. Heck, we're sure the trouble is behind us now; 53 economists said so!
Less Government or Lower Wages? You Decide. The nationwide revelry surrounding our apparent economic recovery was disrupted this week by the release of lower-than-expected retail sales data. However, rather than sending a chill up the spines of those hoping for a quick end to the downturn, the numbers should be welcomed. Though this may come as a surprise to most observers, lower retail sales are precisely what our economy needs.
Big Business Goes Big for Health Care Reform Why drug companies and insurance providers are backing ObamaCare "What disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand," Frank Rich wrote in Sunday's New York Times. That manipulation should disturb us. But contrary to Rich, it is not the work of "corporatists" who have sprung up to attack progressive reforms proposed by Obama and the Democratic majority. Manipulation is what we got many years ago when we traded a more or less free market for the "progressive" interventionist state. When government is big, the well-connected always have an advantage over the rest of us in influencing public policy.
Emanuel Wields Power Freely, and Faces the Risks As White House chief of staff, Rahm Emanuel was the one to bring the hammer down on Sidney Blumenthal. Secretary of State Hillary Rodham Clinton wanted to hire Mr. Blumenthal, a loyal confidant who had helped her promote the idea of a “vast right-wing conspiracy” more than a decade ago. But President Obama’s campaign veterans still blamed him for spreading harsh attacks against their candidate in the primary showdown with Mrs. Clinton last year.
pt 4/4 Gerald Celente 14 Aug 2009
Secret Takeovers Last month George Friedman of STRATFOR.com wrote something of special interest. According to Friedman, on July 17 a crowd near Tehran University was heard chanting “Death to Russia!” This particular crowd contained “elements” hostile to Iranian President Ahmadinejad. At the same time, another crowd supporting the Iranian president was shouting “Death to America.” This remarkable exchange reveals a situation where the supporters of dictatorship in Iran denounce America while those who seek freedom denounce Russia. Strange as it sounds, Iran is a microcosm that reflects the global macrocosm. Russia has penetrated Iran, just as Russia has penetrated so many other countries. When the Iranian president, like the president of Venezuela or the dictator of North Korea, requires advice and assistance, he travels to Moscow. At Moscow he is “refreshed” by his Russian handlers.
Pressure (Countdown) Toward Breakdown The Paradigm Shift continues to displace the power centers and introduce new ones. Those bright souls who ignore the shift will be well prepared for systems that soon do not stand. The Americans are the last to know, oblivious to the global shift in progress. They continue to seek a return to normalcy, when old conditions are as gone as a baby’s innocence during teen years. The crux of the matter is that the United States is no longer in control of its fate. Meetings with creditor nation leaders result in new orders given, and new policy directives enacted. Comparisons are made to China, but they too are a distraction. China can embark on its own path, can stimulate with huge sums of money, since they have actual savings. The US has massive debts, as insolvency has infiltrated to destroy systems pertaining to banking, home mortgages, federal operations, and industry. The nation is as hollowed out as its leaders are compromised. The major theme of this decade is USGovt leaders working hidden agendas for personal and family gain within a syndicate in full view to see.
White House Preparing to Kill 'Public Option?' Bowing to Republican pressure, President Barack Obama's administration signaled on Sunday it is ready to abandon the idea of giving Americans the option of government-run insurance as part of a new U.S. health care system. Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession would likely enrage his liberal supporters but could deliver Obama a much-needed win on a top domestic priority opposed by GOP lawmakers.
Americans Had to Work from January 1 to August 12 This Year Just to Cover Cost of Government Americans had to work from January 1 until August 12 this year just to cover the cost of government. That is 26 days more than they had to work last year to cover the cost of government. “Cost of Government Day” this year fell on Wednesday, August 12, according to Americans for Tax Reform, the conservative group that calculates when the day occurs. Cost of Government Day is the day in the year when the American people have earned enough income to pay the total cost of the spending and regulatory burden imposed by government at the federal, state, and local level.
Say goodbye to Saturday mail? On this sultry weekend in the middle of August, take a look at what's on your kitchen counter. Or maybe you've left it on top of the wooden table in your front hallway. Or tossed it onto the chair next to the couch in your living room. Chances are it may still be there: The Saturday mail -- the bills, magazines, promotional fliers, and maybe a few actual letters that showed up in your mailbox as always this weekend, and that you haven't quite gotten around to dealing with yet. Look at it closely, because soon enough, it may be gone.
For Arizona jobless, the wait for benefits is agonizing Unemployment checks arrive months late for some Shirley Whattler lost her job at DHL a year ago and was living on $265 per week in unemployment benefits. The Chandler resident was able to make partial payments on her mortgage until the money suddenly stopped in July. For weeks, she called and called the Arizona agency in charge of the program. The few times she reached a live person, she was promised that the money was on its way. It never arrived.
Here's Why We Need Healthcare Reform OUR nation is now engaged in a great debate about the future of health care in America. And over the past few weeks, much of the media attention has been focused on the loudest voices. What we haven’t heard are the voices of the millions upon millions of Americans who quietly struggle every day with a system that often works better for the health-insurance companies than it does for them.
Healthcare rationing: Real scary Concerns about government bureaucracies gaining oversight of your treatment are not misplaced. We need reforms, but the answer is not central planning. By Newt Gingrich When Sarah Palin said that the emerging healthcare reform legislation would lead to "death panels" and government rationing of care, her language was explosive, but her premise about rationing was not. The most critical test of any reform proposal is whether it will empower individuals or impose on them. It is a fact that the leading bills in Congress would increase the power of government and decrease individual freedom. You cannot spend an additional $1 trillion of taxpayer money and reduce the role of government. You will get new bureaucracies, more regulation, more complexity. That means you will have less control of your healthcare.
Healthcare Plan Based on Economic Fantasy by Ron Paul As the healthcare debate rages on, there is one reality that even the proponents of this hostile takeover of healthcare by government cannot ignore – and that is money. The government simply does not have the money for a new, expansive, public healthcare plan. The country is in a deep recession that will deepen even further with the coming collapse of the commercial real estate market. The last thing we need is for government to increase and expand taxes to pay for another damaging, wasteful program. Foreigners are becoming less enthusiastic about buying our debt, and creating another open-ended welfare program when we cannot pay for what is already in place, will not help. Champions of socialized medicine want to tax the rich, tax businesses that already cannot afford to provide health plans to employees, and tax people who don’t want to participate in the government’s scheme by buying an approved healthcare plan. Presumably, all these taxes are to induce compliance. This is not freedom, nor will it improve healthcare.
Sebelius: Government-run insurance plan 'not essential' The Obama administration's health secretary said Sunday that the president is willing to accept nonprofit insurance cooperatives rather than a government-run option as part of health-overhaul legislation, a major concession that could attract the support of some conservative Democrats and moderate Republicans who now oppose the effort. Health and Human Services Secretary Kathleen Sebelius said on CNN's "State of the Union" that while President Obama "continues to be very supportive of some options for consumers" in the health insurance market, a government-run public-option plan is "not the essential element.
The Whole Foods Alternative to ObamaCare "The problem with socialism is that eventually you run out of other people's money." ~ Margaret Thatcher With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people's money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.
A Four-Step Healthcare Solution It's true that the US health-care system is a mess, but this demonstrates not market but government failure. To cure the problem requires not different or more government regulations and bureaucracies, as self-serving politicians want us to believe, but the elimination of all existing government controls.
Md. wants to give swine flu vaccine to millions Shots will be available mid-October at earliest Millions of Marylanders would be immunized against swine flu for free or for a nominal fee under a plan being developed by state health officials, whose goal is to provide the vaccine to every resident who wants it. The vaccination plan is unprecedented in scope but depends on a robust supply of the vaccine, which is expected to be ready by mid-October at the earliest. When it becomes available, Maryland will begin distributing the vaccine to doctors, pharmacists, local health departments and other partners.
57 Trillion Reasons To Murder 100 Million The U.S. debt of $57 trillion in unfunded liabilities, according to common sense, is compelling reason for federal governors conspiring with special interests to murder 100 million Americans this fall using poisonous vaccinations. According to federal deficit calculators at USDebtClock.org, more than $57 trillion is currently owed, including $39 trillion(T) in medicaid/medicare debt, $10T in social security payables, plus $8T in prescription drug liabilities, levying$189,210.00 in servitude upon every American citizen. The mafia kills people for a lot less. Do you really think your debt collection is proceeding differently?
California's Prison Crisis: Be Very Afraid The exact cause of the 11-hour riot that broke out Aug. 8 at the California Institution for Men in Chino, Calif., won't be known until an official investigation by the California Department of Corrections and Rehabilitation (CDCR) is completed. However, to some criminal-justice experts the violence that erupted at the facility, located about 40 miles east of Los Angeles, was an inevitable consequence of a state prison system long hobbled by massive overcrowding, program cuts and understaffed facilities. And given the state's ongoing budget woes — with $1.2 billion in cuts mandated to the prison budget — the situation is likely to only get worse.
The “Second American Revolution” Has Begun By Gerald Celente The natives are restless. The third shot of the “Second American Revolution” has been fired. History is being made. But just as with the first two shots, the third shot is not being heard. America is seething. Not since the Civil War has anything like this happened. But the protests are either being intentionally downplayed or ignorantly misinterpreted. The first shot was fired on April 15, 2009. Over 700 anti-tax rallies and “Tea Parties” erupted nationwide. Rather than acknowledge their significance, the general media either ignored or ridiculed both protests and protestors, playing on “tea bagging” for its sexual innuendo.
G.I. Jane Breaks the Combat Barrier As the convoy rumbled up the road in Iraq, Specialist Veronica Alfaro was struck by the beauty of fireflies dancing in the night. Then she heard the unmistakable pinging of tracer rounds and, in a Baghdad moment, realized the insects were illuminated bullets. he jumped from behind the wheel of her gun truck, grabbed her medical bag and sprinted 50 yards to a stalled civilian truck. On the way, bullets kicked up dust near her feet. She pulled the badly wounded driver to the ground and got to work.
pt 1/2 Peter Schiff 15 Aug 2009 Peter Schiff why I will run as a Republican and not an independent
The Rich Get Richer And The Poor Get... Fired U.C. Berkeley professor Emmanuel Saez has updated his study of U.S. income distribution. The bottom line? U.S. income inequality has hit a record high: Professor Saez's numbers go through 2007. Judging from what happened after the last recession, income disparity will likely ease in 2008 and 2009 as the richest 10% of Americans get clobbered by stock and house wealth destruction.
Gold Gains in New York, London as Weaker Dollar Spurs Demand Gold gained the most in at least a week in New York and London as the dollar weakened, increasing the metal's appeal as an alternative investment. Silver climbed to a two-month high. The dollar slid as much as 0.9 percent against the euro after the German economy, Europe's largest, unexpectedly expanded in the second quarter and the Federal Reserve yesterday pledged to keep interest rates low for an "extended period" and said the U.S. recession is easing. Bullion tends to climb when the greenback weakens.
The USAGOLD Annual Survey of Investments for 2009 Gold rises 113.8% over five year period There is an old saying that in the land of the blind, the one-eyed jack is king. Similarly, in the land of little or no yield and plunging asset values, there is something to be said for that which holds its own, as gold did in USAGOLD's Annual Survey of Investments for 2009. When viewing the chart, please keep in mind that it covers the 365 days from July through June. In years past, the midyear starting point for our survey has not provided any distinct advantage to our readers, but this year it happens to cover precisely what many believe to be the most destructive period in financial markets since the Great Depression. As a result, what you see here are the performance rankings for key investments since the full inception of the crisis during the summer of 2008.
Are We Being Conned About Gold Confiscation? There's a lot of Internet chatter these days about the possibility of the U.S. government seizing its citizens' private gold holdings. What are the chances? Well, it's always good to bear in mind that there is no telling what the government might do. It's already doing things that were unthinkable just a few years ago. If President Obama believes there is political hay to be made from seizing your gold - or even if he sincerely thinks such a move would be "good for the country" - we're sure he won't hesitate to make the grab. After all, his favorite predecessor, Franklin Roosevelt, set the precedent.
What You Have in Common with King Nebuchadnezzar “There’s no reason to invest in gold,” said the finance editor of a major newspaper interviewing me. “If gold goes up because of inflation, then so does everything else, so why buy it? It’s not really a good investment.” She was serious. Yes, she is a finance writer. And yes, it’s a newspaper you’ve heard of. I was so dumbfounded that I must have sounded like an infant struggling to form its first words when I attempted to counter this inane line of thinking. Tell me you’re a deflationist, tell me the Fed will rescue us, tell me foreigners will keep buying our debt – but don’t tell me that gold serves no purpose!
Dollar Falls Versus Yen After Unexpected Drop in Retail Sales The dollar declined versus the yen after a report showed U.S. retail sales unexpectedly fell last month, adding to concern the nation's consumers will stay reluctant to increase spending. The euro advanced versus the dollar as the yield advantage of U.S. bonds over German securities narrowed and economic data showed Europe's economy shrank less than economists predicted in the second quarter. France and Germany unexpectedly grew as consumer and government spending climbed, according to reports from statistics offices in Wiesbaden and Paris.
The Debt Paradox Strictly speaking, it's impossible for the world to be in debt. All borrowing nets out somewhere in the world, since we don't borrow money from people on other planets. But does this mean the entire world can't be wildly leveraged? No, quite the contrary. Imagine an entire world in which we devoted the bare minimum of our physical and human resources to things like oil exploration, food growing, bridge repair, drug discovery and building maintenance. We'd be highly leveraged in the sense that any unplanned event (e.g. a tornado, an earthquake, or a new strain of flu) would be devastating. Conversely, the world could "save" a lot by devoting resources to such contingencies: so, we'd keep more grain in grain elevators, and we'd always have people performing infrastructure maintenance, so that they could survive natural disasters.
Economists Call for Bernanke to Stay, Say Recession Is Over Economists are nearly unanimous that Ben Bernanke should be reappointed to another term as Federal Reserve chairman, and they said there is a 71% chance that President Barack Obama will ask him to stay on, according to a survey. Meanwhile, the majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over. Battling the downturn defined most of Mr. Bernanke's term, which began in early 2006 and expires in January, and economists say his handling of the crisis has earned him four more years as Fed chief.
Fed a Rudderless Ship? How much excitement can a statement by the Federal Reserve's Open Market Committee (FOMC) generate? Given that the Fed has been printing over a $1 trillion of fresh currency over the past year, more are indeed taking note when the Fed speaks. In our assessment, the Fed statement is a compromise of what may be an internal dispute at the FOMC. We are referring to a $300 billion program to buy Treasury Bonds, previously scheduled to run out in September. Buying Treasury Bonds is intended to lower long-term interest rates; and from what we can tell, it is in the Fed's foremost interest to keep long-term rates low to keep the nascent economic recovery on track.
CIT to submit capital plan to NY Fed Troubled lender CIT Group Inc (NYSE:CIT - News) on Thursday said it agreed to provide a capital and liquidity management plan to its regulator within 15 days, sending its shares up by as much as 19 percent. CIT, which is trying to restructure and avoid bankruptcy, agreed on Wednesday to submit a plan to the Federal Reserve Bank of New York outlining how it will maintain sufficient capital at its Utah-based bank and the bank holding company.
Obama Wants Big Banks To Pay More for Oversight Fees Would Fund New Regulators The Obama administration is pressing ahead with its broad overhaul of financial regulation by proposing to hike the fees big financial firms pay for federal oversight while easing the burden for smaller ones, officials said. The new two-tiered, pay-for-regulation approach is intended to partly cover the costs of more vigorous bank regulation and a new consumer financial protection agency. It reflects the administration's view that large banks and lenders should pay more because they are more complex and expensive to regulate, a Treasury Department official said.
U.S. budget deficit for '09 hits $1.27 trillion, and climbing Although everyone knows that the U.S. is borrowing and spending at an unprecedented pace, the numbers are all the more stunning -- or frightening -- when you see them in the Treasury's detailed monthly statement of receipts and outlays. The 33-page July statement, available here, shows the federal budget deficit ballooned to $1.27 trillion in the first 10 months of the government's fiscal year (which ends Sept. 30), up 227% from the $388-billion deficit in the same period of fiscal 2008. The government has spent $3.01 trillion so far this fiscal year, a jump of $524 billion, or 21%, compared with the first 10 months of fiscal 2008.
The Next Wave of the Financial Crisis Is Coming (And Why) These excerpts from the most recent TARP Congressional Oversight Panel Report make the risks in the US financial system abundantly clear. Do you think that the Congress has the will and the ability to act on their recommendation, with the men currently in positions of power on the key Committees? Do you believe that the Obama Administration is capable of reforming itself and effecting genuine change with Wall Street denizens forming their policy? "In order to advance a full recovery in the economy, there must be greater transparency, accountability, and clarity, from both the government and banks, about the scope of the troubled asset problem."
RBS uber-bear issues fresh alert on global stock markets Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts. Britain's Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears. "We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients.
Meet the Geniuses Who Lost Our Money FOOL'S GOLD How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe Ever wonder, looking at your 401(k) account statement, what exactly happened last fall, when the financial system nearly collapsed and trillions of dollars of "wealth" evaporated? Gillian Tett's splendid book might be the explanatory tonic you've been looking for. There are other good books that help untangle the disaster of 2008, notably Mark Zandi's "Financial Shock" and Charles R. Morris's "The Two Trillion Dollar Meltdown" -- both are accessible works by experts who wrote for a general audience, but neither is as engaging as Tett's. A writer for London's Financial Times, she brings an unusual credential to financial journalism: a PhD in social anthropology. Anthropologists, as Tett notes at the end of her book, look for holistic descriptions of human cultures that "link different parts of a social structure." She has done just that in "Fool's Gold," which illuminates a basic truth: Apart from natural disasters, the great events that alter human history are, however complicated, the work of human beings. In the end, economic forces, the tides of history and such are just manifestations of human foibles, often encouraged by dysfunctional cultures such as the one on Wall Street.
Goldman Sachs: A massive scandal
Challenges of the Fed's Rescue Party The Federal Reserve is back in favor. But believing in the fallibility of the central bank could serve investors well. Economists now overwhelmingly believe Chairman Ben Bernanke should be reappointed. The Fed appears to have brought the financial system and economy back from the brink through exceptionally low rates and huge asset purchases. Those have boosted stock and bond markets, bolstering the pro-Fed constituency on Wall Street.
The Lessons of the ‘Stimulus' Bill Very little of the money is going to meaningful infrastructure projects. With some members of Congress now considering a second stimulus bill, my recommendation is that lawmakers pause, take a deep breath, and learn from history about the consequences of good intentions gone bad. For example, after the tragic attacks of 9/11, Congress and President George W. Bush answered the call to "do something" by passing a hastily put together spending bill that sent tens of millions of dollars to states and cities in the name of homeland security.
Bailed-out banks: Meet the pay czar What a bailed out banker is worth Firms that required multiple interventions, including GM, Citi and AIG, to submit pay plans for top performers to White House overseer Ken Feinberg. Just how much is a rainmaker at a bailed-out bank really worth? Or a senior executive at a recently bankrupt automaker for that matter? Such questions will soon be a subject of discussion at the White House as the biggest recipients of government aid begin submitting compensation plans for their top 100 employees to the Obama administration's recently appointed pay czar. Seven companies -- AIG, Chrysler, Citigroup, Chrysler Financial, Bank of America, General Motors and GMAC -- are due to submit proposed employment contracts for their 25 highest-paid employees Friday. Compensation proposals for the next 75 most compensated employees are due by Oct. 13.
July Foreclosures Spike To Record Highs What happened to the green shoots home builders recently told us about? Foreclosures are worse than ever. RealtyTrac: RealtyTrac the leading online marketplace for foreclosure properties, today released its July 2009 U.S. Foreclosure Market Report™, which shows foreclosure filings - default notices, scheduled auctions and bank repossessions - were reported on 360,149 U.S. properties during the month, an increase of nearly 7 percent from the previous month and an increase of 32 percent from July 2008. The report also shows that one in every 355 U.S. housing units received a foreclosure filing in July.
Foreclosure plague: No cure yet The foreclosure plague continued to devastate last month. There were more than 360,000 properties with foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- an increase of 7% from June and 32% from July 2008, according to RealtyTrac, an online marketer of foreclosed homes. In fact, one in every 355 U.S. homes had at least one filing during July.
Foreclosures rise 7 percent in July from June The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage. Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee's sale. That's the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago. Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.
Recession and debt drag on commercial real estate Even as the housing market starts to show signs of recovery, fortunes for commercial real estate are looking increasingly grim - and that could spell trouble for the fragile U.S. banking sector. The weak economy and rising unemployment have forced businesses to cut back on rental space, resulting in declining revenue for many landlords. And tighter underwriting standards and falling real estate values have made it much harder for them to refinance. The rate at which property owners are defaulting on loans is climbing at an unparalleled pace. Many banks are stuck with shopping malls, hotels and offices buildings they've repossessed and can't sell. Scores of banks have been closed down this year, many of them, including Horizon Bank in Pine City, Minn., and Omni National in Atlanta, because of sour commercial loans.
Homebuilder Bob Toll Wants Cash-For-Clunkers-For-Houses Rosy-eyed Bob Toll says buyers are returning to buy Toll Brothers houses, but he still wants a housing bailout. Specifically, he wants cash-for-clunkers-for-houses.
U.S. mortgage rates rise, may curb demand U.S. mortgage rates rose in the latest week as Treasury yields climbed, according to a survey released on Thursday, a move that may dampen home loan demand. Interest rates on U.S. 30-year fixed-rate mortgages averaged 5.29 percent for the week ending August 13, up from the previous week's 5.22 percent, said a survey released by home funding company Freddie Mac. Mortgage rates remained above 5 percent for an eleventh straight week. Experts say mortgage rates at 5 percent and below are what is necessary to make a significant impact on home loan demand.
Sorry, There's No Way Oil Runs Back To $150 We found another oil bear, but this one's not quite as extreme as Robert Pretcher (who thinks oil will crash to $10). Edward Morseis, Managing Director of Louis Capital Markets and an ex-State Department energy official, argues in the upcoming issue of Foreign Affairs that oil prices won't shoot back to the moon, as key producers boost production and capacity:
Consumers not feeling a recovery Surprise drop in July retail sales and an unexpected decline in Wal-Mart's same-store sales show Americans still aren't in the mood to spend. Two key reports Thursday showed one thing: happy days are not here again for American consumers. Retail sales fell in July after two straight months of gains, the government reported Thursday, a drop that surprised economists. Without car sales from the "Cash for Clunkers," the numbers would have been even worse. And Wal-Mart (WMT, Fortune 500), the world's largest retailer, reported an unexpected decline in its key measure of U.S. sales. "From a consumer finance position, people are still struggling," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com. "Wages have fallen from the previous year and consumers don't [still] have alternative sources of cash."
Will Lousy Retail Sales And Initial Jobless Claims Kill The Rally? Jobless claims rose a bit to 558,000 (higher than expected), and retail sales for July fell (much worse than expected). Both are surprising, given the widespread consensus that we're in the middle of a v-shaped recovery. Will these data points finally kill the rally dead...or will traders dismiss them as noise and start scarfing up stocks again? We're on the edge of our seats.
Retail Sales in U.S. Unexpectedly Declined in July Sales at U.S. retailers unexpectedly fell in July as a boost from the cash-for-clunkers automobile incentive program failed to overcome cuts in other spending. The 0.1 percent decrease in sales, the first drop in three months, followed a revised 0.8 percent gain in June that was larger than previously estimated, Commerce Department figures showed today in Washington. Purchases excluding automobiles fell 0.6 percent, also more than anticipated.
US retail sales' surprise dip clouds recovery US retail sales unexpectedly dipped 0.1 percent in July, government data showed Thursday in a report highlighting weakness in consumer demand that is crucial for recovery from recession. The Commerce Department's headline figure surprised most analysts who had expected a monthly sales increase of 0.7 percent in July after two months in a row of gains, and dented those looking for "green shoots" of recovery. "This is awful -- a reality check for the green shooters," said Ian Shepherdson of High Frequency Economics. A separate report of an unexpected rise in weekly new unemployment insurance claims, however, revealed continued signs of stabilization in the ailing labor market that may eventually get wary consumers to pry open their wallets again.
Retail Sales Fell in July Despite Clunkers Program U.S. retail sales unexpectedly fell in July despite the debut of the government's "cash for clunkers" program meant to jump-start the auto business and help turn around the economy. Separately, U.S. businesses let inventories tumble again in June and got solid help from a surge in sales that cleared away some of the excess supply built up during the long recession. Retail sales last month dropped 0.1%, the Commerce Department said Thursday.
Warning over US cash-for-clunkers scheme The popular US cash-for-clunkers programme may be drawing money from other consumer purchases and could also undermine future car sales, US economists have warned. Motor vehicle and parts sales, down 8 per cent on the year, jumped 2.4 per cent from June, according to data from the US commerce department on Thursday, but other retail sales fell 0.6 per cent in July. “With income flows very constrained and household balance sheets over- leveraged, any incremental increase is likely to weigh on non-automotive sales,” said Joshua Shapiro, chief US Economist at MFR, a consultancy, noting that fading interest suggests current car sales are borrowed from the future.
Food Firms Warn of Sugar Shortage Some of America's biggest food companies say the U.S. could "virtually run out of sugar" if the Obama administration doesn't ease import restrictions amid soaring prices for the key commodity. In a letter to Agriculture Secretary Thomas Vilsack, the big brands -- including Kraft Foods Inc., General Mills Inc., Hershey Co. and Mars Inc. -- bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products.
Buy it NOW, while you can still get things you need at a reasonable prices. When inventories are depleted, supply & demand kicks in and prices will skyrocket. . . .
Inventories fall for 10th straight month in June Businesses reduced inventories for a 10th straight month in June, although total business sales posted the first increase in nearly a year. The Commerce Department said Thursday that businesses cut stockpiles 1.1 percent in June, slightly larger than the 0.9 percent drop economists expected. The reductions have translated into sharp production cutbacks at factories, adding to the steep recession. But in an encouraging sign for the future, the government said business sales at all levels rose 0.9 percent in June after being flat in May. It marked the first increase in total sales since July 2008.
Deficit Plays Into Health Reform Bill Needs to Rein In Federal Spending, Key Lawmakers Say With polls showing rising concern over the government's grim financial situation, key Republicans and a growing number of Democrats say it will be hard to push an ambitious health reform bill through Congress unless it reduces projected federal spending on medical care and begins to bring the national debt under control. "It's not good enough that it's just paid for; it actually has to start driving long-term costs down," said Sen. Mark Warner (D-Va.), one of nine freshman Democrats who last month urged Senate leaders to pay more attention to controlling federal health spending in this era of "exploding debt and deficits."
Medicare For All Isn't The Answer My company ran a hospital in London. We don't want to go the government route. With Congress now in recess, the debate over health-care reform has moved to each member's home district. The American people have rightly been asking elected officials many probing questions. While few Americans deny we need health-insurance reform (too many people lack adequate coverage), most believe we receive the best quality health care in the world and do not want to see it compromised. Several advocacy groups and members of Congress want a single-payer insurance system, modeled after Medicare, to cover all Americans. They say Medicare works to provide health care to seniors, so government should extend the program to Americans of all ages. Others want to create a government-run plan, sometimes called a "public option," which they say would compete with private insurance but would only be two steps away from a single-payer system.
Palin doubles down on 'death panels' Former Alaska GOP Gov. Sarah Palin defended her claim that the Democratic health care proposal would create "death panels" in a statement Wednesday night slamming President Barack Obama. "Yesterday President Obama responded to my statement that Democratic health care proposals would lead to rationed care; that the sick, the elderly and the disabled would suffer the most under such rationing; and that under such a system, these 'unproductive' members of society could face the prospect of government bureaucrats determining whether they deserve health care," Palin wrote in a note on her Facebook page.
The Real Death Panels When Republican politicians and right-wing talking heads bemoan the fictitious "death panels" that they claim would arise from health care reform, they are concealing a sinister reality from their followers. The ugly fact is that every year we fail to reform the existing system, that failure condemns tens of thousands of people to die-either because they have no insurance or because their insurance companies deny coverage or benefits when they become ill. The best estimate of the annual death toll among Americans of working age due to lack of insurance or under-insurance is at least 20,000, according to studies conducted over the past decade by medical researchers, and the number is almost certainly rising as more and more people lose their coverage as costs continue to go up.
Beyond Health Care, A Social Security Crisis Looms As Congress agonizes over health care, an even more daunting and dangerous challenge is bearing down: how to shore up Social Security to keep it from burying the nation ever deeper in debt. What to do about mushrooming government payments as millions of baby boomers retire? How about a giant federal Ponzi scheme? That might work for a while. But wait. That's pretty much the current system. Social Security takes contributions from today's workers and uses them to pay the old-age benefits that were promised to retirees. But there are serious concerns how long that can last. President Barack Obama has said he'll tackle Social Security and related "entitlement" programs when the health care overhaul is resolved. But the anger and intensity of that debate could complicate his effort.
The Self-Employed Push to Repeal the 'Health-Care Tax' Missing from Washington's health-reform discussion is a simple change that would make insurance more affordable for millions of the nation's smallest business owners by letting them fully deduct the cost of their health insurance premiums. By a quirk in the tax code, self-employed workers who buy their own health insurance essentially pay an extra tax on their premiums. They're the only taxpayers in the system who pay taxes on premiums, which count as a business expense for corporations and pretax income for employees. Because self-employed workers have no corporate employers to match their payroll tax contributions to Social Security and Medicare, they pay double the rate of wage and salary workers in a levy known as the self-employment tax equal to 15.3% of their net earnings. That's on top of regular state and federal income taxes, and the income they spend on health premiums is not exempt.
Life with Big Brother: Why is National Guard recruiting for 'internment' cops? Ad campaign seeks workers at 'civilian resettlement facility' An ad campaign featured on a U.S. Army website seeking those who would be interested in being an "Internment/Resettlement" specialist is raising alarms across the country, generating concerns that there is some truth in those theories about domestic detention camps, a roundup of dissidents and a crackdown on "threatening" conservatives.
FEMA camps: Not just for April fools anymore In January, 2006, it was revealed that Halliburton subsidiary KBR had received a $385 million contract to build detention facilities "for an emergency influx of immigrants." KBR stated at the time that it was a "contingency contract" and that it "was conceivable" that no such facilities would actually be built. Since that time there has been a lot of conjecture but little in the way of proof that construction of "FEMA camps" had begun. But, on March 28, 2009, the satellite image at right of the "Swift Luck Greens" facility in central Wyoming was "accidentally" made available by the Department of Homeland Security and pulled down within an hour. Several other images are also available and can be found with a simple Google search.
Officials see rise in militia groups across US Militia groups with gripes against the government are regrouping across the country and could grow rapidly, according to an organization that tracks such trends. The stress of a poor economy and a liberal administration led by a black president are among the causes for the recent rise, the report from the Southern Poverty Law Center says. Conspiracy theories about a secret Mexican plan to reclaim the Southwest are also growing amid the public debate about illegal immigration.
B.C. Sockeye Salmon Migration Touches Record Low as Waters Warm The sockeye-salmon migration to British Columbia’s Fraser River has collapsed to a record low for the second summer in three, raising concern among native Indians that the species’ survival may be threatened. As many as 9.4 million fish expected to migrate from the Pacific Ocean may have disappeared, prompting Canadian officials to ban commercial and sport fishing of Fraser sockeye. “I’ve fished the river all my life, and I’ve never seen anything like this,” Ernie Crey, 60, an adviser to the Sto:lo native Indians, who live along the Fraser and rely on the sockeye for food, said today in a telephone interview.
China Dictates Corporate Bond Rates The Chinese government wants to unilaterally raise corporate bond yields in a bid to attract more investors to the market. They believe current yields are too low, thus there should be a minimum floor for each maturity. . . . Yields on new corporate bonds have dropped below those in the secondary market because of the "strong bargaining power of companies," said Feng Guanghua, deputy secretary of the National Association of Financial Market Institutional Investors, which also attended the meeting.
China to Force Higher Rates for Corporate Bonds Chinese companies will need to boost yields on some new corporate bonds to make them more competitive as the government seeks to spur investor interest in fixed- income securities. New five-year notes in the interbank market -- the biggest of China's three corporate bond markets -- must offer a minimum 4.2 percent yield, according to minutes of an Aug. 7 meeting between the National Association of Financial Market Institutional Investors and 16 underwriters. That compares with 3.9 percent for an Aug. 3 issue by China's top-rated Aviation Industry Corp. and the 2.95 coupon rate in a June issue by Microsoft Corp., the world's largest software maker.
China to roll out the big guns Military modernization tops the agenda of Chinese President Hu Jintao. More hardware, including jets and missiles, will soon be unveiled as Beijing tries to narrow the gap between China's and the United States' combat capabilities.
Putin, Erdogan seal 'grand bargain' Russian Prime Minister Vladimir Putin left Turkey last week with a plethora of signed energy and trade deals in his briefcase, at their core a "grand bargain" on energy pipelines. A new era, then, between the two countries - or did Turkish Premier Recep Tayyip Erdogan give away something for next to nothing?
Tough sanctions won't tame Tehran United States officials are talking tough and threatening even-stiffer sanctions should Tehran refuse to discuss its nuclear portfolio by the end of September. This ploy isn't going to work - the world would not be allowed to continue to move 40% of its oil through the Strait of Hormuz if Iran were suffocating under a crippling embargo. Intensified sanctions are only a preamble to war.
Saudi Arabia wavers on Obama's plan Washington's pro-Israel camp is calling on Arab leaders to make dramatic peace overtures to Israel, a request Saudi Arabia is quick to dismiss, saying the Israelis deserve no special rewards. Riyadh is in a good position to refuse as it is one of the most influential players in the Arab-Israeli peacemaking process and almost immune to American pressure.
Ron Paul on "The ED Show" MSNBC 8/12/09 - RP2012 - "Live FREE or DIE" Rep. Ron Paul, R-Texas, joins the Ed Show to discuss whether Americans should be allowed to bring guns to protests like William Kostric did at a protest outside President Barack Obamas health care town hall.
*********** IMPORTANT! *************
Read this legislation on the table. TAKE IT SERIOUSLY! If passed, among other things, you will basically need a photo license issued by Uncle Sam to own/sell/buy firearms. You will be required to register all of your firearms under your social security number, and give complete information on each one in your possession; you will be fingerprinted; subject to physical and mental evaluation (access to your medical records), and the government will have the right to inspect where you are storing them; all private sales must be reported ($25. fee). Fail to follow the law (if passed) and the fine is punishable with up to 5 years in jail; and of course you would loose your right to own a firearm (any rifle with a clip or ANY pistol).
Go here: http://thomas.loc.gov Type in H.R. 45 into search box (search by bill number) READ the ENTIRE BILL before the legislature and let your representative in the House know your thoughts about this House Resolution 45 now being considered by your elected officials.
SUMMARY AS OF: 1/6/2009--Introduced. Blair Holt's Firearm Licensing and Record of Sale Act of 2009 - Amends the Brady Handgun Violence Prevention Act to prohibit a person from possessing a firearm unless that person has been issued a firearm license under this Act or a state system certified under this Act and such license has not been invalidated or revoked. Prescribes license application, issuance, and renewal requirements.
Prohibits transferring or receiving a qualifying firearm unless the recipient presents a valid firearms license, the license is verified, and the dealer records a tracking authorization number. Prescribes firearms transfer reporting and record keeping requirements. Directs the Attorney General to establish and maintain a federal record of sale system.
Prohibits: (1) transferring a firearm to any person other than a licensee, unless the transfer is processed through a licensed dealer in accordance with national instant criminal background check system requirements, with exceptions; (2) a licensed manufacturer or dealer from failing to comply with reporting and record keeping requirements of this Act; (3) failing to report the loss or theft of the firearm to the Attorney General within 72 hours; (4) failing to report to the Attorney General an address change within 60 days; or (5) keeping a loaded firearm, or an unloaded firearm and ammunition for the firearm, knowingly or recklessly disregarding the risk that a child is capable of gaining access, if a child uses the firearm and causes death or serious bodily injury.
Prescribes criminal penalties for violations of firearms provisions covered by this Act.
Directs the Attorney General to: (1) establish and maintain a firearm injury information clearinghouse; (2) conduct continuing studies and investigations of firearm-related deaths and injuries; and (3) collect and maintain current production and sales figures of each licensed manufacturer.
Authorizes the Attorney General to certify state firearm licensing or record of sale systems.
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H.R. 45: License and Restrict Gun Owners of America; Obama's Gun Control Plan
Part 1: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Part 2: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Part 3: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Part 4: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Part 5: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Part 6: 08/12/2009 Freedom Watch 27 w/ Tom Woods, Ron Paul, Nick Gillespie, and more
Feds to Little People We Need Your Gold No, they haven't done it yet. This is a headline from the future, as well as a story from the past that has been largely forgotten. But as the problems with unrestrained issuance of debt money continue to grow and leak into the realm of official discussion, it may well be coming. Leona Helmsley once said that "only the little people pay taxes". Soon we may find that the little people will no longer be able to protect their wealth by owning gold or silver. Probably gold and silver have further to go in price, but I am suggesting that those price increases will continue to be suppressed and that government may well call in the gold before prices really take off, thus awarding itself the lion's share of the appreciation that gold and silver owners have been waiting for, just as they did in 1933.
Credit Implosion And Depression Coming, We Are So Screwed Another happy forecast from Elliot Wave guru Bob Prechter (who may waste his time staring at charts most of the day, but also talks fundamentals): In July, Ben Bernanke told a town hall meeting, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." According to New York Times columnist Paul Krugman in that regard he's succeeded. Bernanke's rescue of the financial sector in tandem with the Obama Administration's stimulus plan prevented a "full replay" of the Great Depression, the Nobel Prize-winning economist writes. But like President Bush declaring "Mission Accomplished" in 2003, Elliott Wave International founder, Bob Prechter thinks Krugman and Bernanke are premature in declaring victory over the credit crunch. Prechter, who famously predicted the 1987 stock market crash, tells Tech Ticker "the march towards depression, which is being fueled by deflationary trend, is pretty well intact."
Get ready to buy gold Regular readers will know I have been looking for an 'entry point', a good time to buy gold sometime in the summer. Yet, except for a momentary blip a fortnight ago, there has been no sell-off of any great note. Gold continues to range-trade between about $970 per ounce on the upside and $910 on the down. But as I suggested on Monday - Today's biggest contrarian bet - the US dollar - it seems a rally of sorts is starting in the US dollar, so we should get a corresponding drop in gold priced in dollars.
Take Gold as U.S. Dollar and Euro Both Set to Fall Claus Vogt writes: In 1999 Europe started a unique monetary experiment by introducing a common fiat currency, the euro. Today, the euro is legal tender in 22 countries. There are, however, huge disparities between the economies and policies of these countries, which makes for equally huge conflicts of interest. This was one of the main concerns of the euro’s opponents before its introduction. They argued that these large economic differences would make it impossible to have a common monetary policy fitting all. Consequently, it would be impossible to enforce the necessary fiscal policies to ensure a stable currency …
Gold & US Dollar Relationship When it comes to Gold, there is actually too much focus or incorrect focus on the US Dollar. The fact is that throughout this bull market, Gold has been leading the US Dollar. In other words, the breakouts in Gold occur well in advance of the breakdowns in the dollar. Also, bottoms in Gold occur in advance of tops in the dollar. See the chart below.
The Gold Money Supply Is the gold and silver bull over? Can we all sell our core and speculative holdings in anticipation of another precious metals desert ahead? The action in gold and silver since the crash of March 2008 would make us wonder if the multiyear moves in these metals is over. I was never inclined to accept that but a recent finding has made me modify those views. In a nutshell, there will be a desert for gold and silver but it is not yet and this bull is not over yet.
Will America confiscate gold and ban COMEX? If the United States' government decides to confiscate gold in the future, what impact might that have on the gold price, gold mining stocks, and the Comex gold futures market. We assure you, this is not a fatuous question. Is it possible, you may well ask, under what circumstances this could happen as it did in 1933...? That year, the US government banned the ownership of gold by US citizens and purchased all but rare Gold Coins from the US public on pain of a $10,000 fine or imprisonment. Washington did this at $20 an ounce. Two years later they had revalued gold to $35 an ounce, thus knocking the forced sellers some 43% lower against the metal in terms of their newly devalued dollars. So there is a precedent!
Shifting Sands The monstrous typhoon that pounded away at coastal areas of the Pacific last weekend certainly qualified as a disaster for anyone who happened to be in its path. But for those of us safely in bed, the storm not only provided some remarkable meteorological footage, but also a stealth lesson in economics. The most dramatic image, which involved a water torrent sucking away the sand beneath a stoutly built six-story hotel, struck me as an apt metaphor for the current economic environment. As the hotel’s foundations became exposed, the building toppled over like a massive domino. It was a vivid reminder that no structure, no matter how mighty, is safe if its foundation is weak.
Credit tightening threatens China's 'giant Ponzi scheme' China's loan growth plunged in July while exports fell 23pc from a year ago after grinding lower for nine months as consumers in the West tighten their belts further. The data raise fresh doubts about the strength of global trade and whether the world can rely on China's growth miracle to power recovery. Separately, the Baltic Dry Index - measuring freight rates for bulk goods - has tipped over, dropping 25pc since late July. The shipping figures buttress reports that China has stopped building up stocks of metals and other commodities after a spate of frantic buying over the early summer.
Jim Rogers on the China Bubble
The Federal Reserve is Immoral During the first few days of each month comes a task that is increasingly approached with dread around here and, unfortunately, that condition is likely to persist for some time. Shortly after banks make their month-end update to various short-term savings accounts that we hold, these balances are queried, only to find that, almost without exception, interest credited is less than it was in prior months and far less than it was eight or ten months ago. Why? Largely as a result of the Federal Reserve keeping short-term interest rates pegged to zero.
Fed signals end of government debt-buying program; says economy 'leveling out' The Federal Reserve is delivering a vote of confidence in the recovery, saying economic activity is "leveling out." The central bank also signaled that it would soon end one of its programs aimed at propping up the economy. The Fed said it would gradually slow the pace of its program to buy Treasury securities so that it will shut down at the end of October, versus September. The program is aimed at lowering rates on mortgages and other consumer debt, a move to spur Americans to spend more.
A pessimist's prediction: Hyperinflation Does the Fed's massive money printing mean inflation is about to soar? I'm not jumping on that bandwagon, but gold is still an attractive bet right now. Last week's 26-year high in the price of sugar must have stuck in the craw of the deflationist camp, those who fear a bout of falling prices. And that's as good a segue as any to the inflation-vs.-deflation debate. I've spilled plenty of ink on this important topic (for example, read "What's next: Inflation or deflation?"), and this week I'd like to turn to a friend of mine, Marc Faber, for his assessment.
The Quiet Coup ONE THING YOU learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your "clients" come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You're never at the top of anyone's dance card. The reason, of course, is that the IMF specializes in telling its clients what they don't want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials-from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere-trudging to the fund when circumstances were dire and all else had failed.
The Crony Capitalist Bailout Nation Were the bailouts even constitutional? looming threats upon USA credibility, bond values, interest rates and hyperinflation,TARP should have bailed out the people, Swap arrangements are smoke and mirrors, markets will devalue the dollar, Moral Hazard has already deeply damaged the nation The starting point for all analysis of the ongoing bailout orgy that is currently being used in crony capitalist fashion to transfer wealth from our middle class to the Illuminati and their transnational conglomerates is whether these bailouts are authorized by the US Constitution. The answer is a resounding NO!!! Nothing in the Constitution could ever be interpreted in any manner that would in any way allow the conversion of our quasi-capitalist republic into a Marxist-fascistic police state, which is the last thing our Founding Fathers had in mind. How can our government simply hand over fiat money created out of thin air, which in itself totally violates the provisions in our Constitution dealing with the issuance of money, to whoever they deem to be too-big-to-fail?
We're not dealing with the cancer in our banking system.
We're not making the structural changes we need to make.
We're not being aggressive enough about restructuring debt (debt for equity swaps).
Bernanke is a wimpy Greenspan sycophant
Obama's rewarding the fools who got us here (Summers, Bernanke, Geithner)
The banksters are taking over again
Big worries over small, midsize banks Losses are swelling at thousands of smaller banks around the country, including several in New York. Some will have to close if they can't find more capital. When Savoy Bank opened its doors with a branch at 52nd Street and Broadway in early 2008, management proclaimed it had identified "literally thousands of small businesses that fit our target customer profile" within a 10-block radius. Unfortunately, it seems as if most of those customers were involved in real estate. About three-quarters of the loans made from the upstart bank's single branch in midtown were commercial or residential real estate loans made just as the sector hit free-fall. That led to losses that drained the bank's capital and put depositors' money at risk. On June 8, regulators slapped the year-old institution with a cease-and-desist order, saying that Savoy engaged in "unsafe or unsound banking practices." They gave the $57-million-asset bank four months to raise new cash and take other steps to restore its financial health. Savoy's chief executive, John Tremblay, didn't return a call seeking comment.
Goodbye local bank branch Lenders are culling locations as a result of the recession and industry consolidation. How deep will they go Don't look now, but your local bank branch might be disappearing. Faced with a severe economic environment and massive consolidation within the industry, banks are taking a hard look at their retail banking locations. Severe loan losses in areas like credit cards and commercial real estate, have also put banks' capital levels under severe pressure, prompting some lenders to look for ways to cut expenses. "Banks are broadly reassessing their branches," said Bob Meara, senior analyst at the consultancy Celent. "What we don't know is how they are going to react."
A Free Market Call to Arms Want to save the economy? It's not easy, but it starts with entrepreneurs and executives like me and you. The biggest problem is, as much as we think the government helps small businesses and start-ups, the government actually harm entrepreneurs' long-term objectives. Ever wonder why, with all the money provided through loans and grants, most startups fail within their first 5 years? Lots of these failed startups can be attributed to inexperienced entrepreneurs entering into an already competitive marketplace. Some of these entrepreneurs lack management skills, others didn't take the time to formulate a thorough business plan, analyze the market and competition, or bring enough capital to the table. Many entrepreneurs actually bring too much "capital" to the table; but they do so in the form of loans which they ultimately cannot pay back (this is where I reiterate the importance of a thorough business plan). Outside lack of planning the single biggest threat to a small businesses success is the government.
Local Currencies Becoming More Popular California isn't the only place creating a currency to compete with the US dollars. It's happening all over the country, according to the Los Angeles Times. Last popularized during the Great Depression, scrip, or locally created stand-ins for U.S. currency, is making a comeback. Pittsboro, population 2,500, is one of a handful of communities that launched its own money in recent months. It reports an avalanche of calls from other communities that have lost faith in the global financial system...
Local currencies cash in on recession Communities in North Carolina, Massachusetts, Arizona and elsewhere print their own money to encourage shoppers to patronize local businesses. Local money was last popular during the Great Depression. Reporting from Pittsboro, N.C. -- The stimulus for this mill town turned artist's colony arrived in the form of green bills bearing sketches of herons, turtles and trees. A few dozen local businesses banded together this spring to distribute the Plenty -- a local currency intended to replace the dollar. Now 15,000 Plenties are in circulation here, used everywhere from the organic food co-op to the feed store to, starting this month, the Piggly Wiggly supermarket.
Marc Faber Is Still A Hardcore Bear Roubini may be turning, but one of the other Dr. Dooms (there are many) Marc Faber remains a bear. He predicts a stronger dollar, tightening in global liquidity and a "correction" in asset prices.
Faber: 100% Sure US Will Have Zimbabwe-Style Hyperinflation More gloom from the always-cheerful Marc Faber. Bloomberg: Prices may increase at rates "close to" Zimbabwe's gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe's inflation rate reached 231 million percent in July, the last annual rate published by the statistics office. "I am 100 percent sure that the U.S. will go into hyperinflation," Faber said. "The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."
Fed Faces Its Zimbabwe Moment Is the central bank confident enough about the recovery to take the economy off life support? When stock markets plumbed new lows in March, the Federal Reserve responded with nearly every tool in its box. It announced it would create new money to buy $1.25 trillion in mortgages and $300 billion in government debt.
Home Prices Collapsing Even Faster Chart of the day The Case-Shiller has been signalling an improvement in the second derivative of housing prices for a few months, and in the latest report it even showed a sequential increase. But check out the NAR's numbers for all of Q2. The year-over-year drop in the median sales price of single family homes showed its worst decline ever. They didn't even have a second derivative gain improvement.
Recession Over? Not According To The IEA The end of the recession seems like a forgone conclusion. Plenty of economists think so, stocks are climbing, and the U.S. Fed said today that economic activity is "leveling out." But there's one hold out: the International Energy Agency, who says oil fundamentals remain pretty bleak.
Bubble Economics: The Illusion of Wealth The economic position that the United States is now in is the result of a series of economic bubbles. To explain the nature of bubbles, I'm going to start by talking about their history; I'm not going to go all the way back to Tulip Mania and John Law, but I do want to mention some things from the Roaring Twenties that might sound familiar to us today.
A runaway deficit may soon test Obama's luck President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. And that pretty much sums up the 44th president of the US as he takes a well-earned summer break after just over six months in the world's biggest and toughest job. His stimulus bill has clearly made a significant contribution to stabilising the US economy since its passage in February. His cap-and-trade bill to reduce carbon dioxide emissions passed the House of Representatives in June. He has set in motion significant overhauls of financial regulation and healthcare. Considering the magnitude of the economic crisis he inherited, his popularity is holding up well. His current 56 per cent approval rating is significantly better than Bill Clinton's (44 per cent) at the same stage in his first term and about the same as George W. Bush's.
The New Fall Fashion is Inflation Get ready to be hit by some startling inflation data. The data soon to be released by the government will put a dagger through the hearts of those who are predicting a protracted period of deflation. Wall Street and Washington are telling you inflation isn't something we need to be concerned about for years to come. The truth is starting this October the reported Consumer Price Inflation data will become ugly. That is because the year over year comparisons of energy and commodity prices become very unfavorable.
Elizabeth Warren Introduces COP's August Report The Continued Risk of Troubled Assets
If You Read Nothing Else About the Financial Crisis Read (and Remember) This... "The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government-a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we're running out of time."
Obama: Medal of Freedom recipients are 'agents of change' Today's recipients of the Presidential Medal of Freedom are an honor roll of civil rights. They range from Sidney Poitier, the first black man to win an Oscar; to Billie Jean Moffitt King, a pioneer in equal rights for women and gays as well as a tennis champion; to Ted Kennedy, the veteran senator whose brain cancer prevented him from attending the ceremony in the East Room. "The truest test of a person's life is what we do for one another," Obama said in making the award to "these agents of change." The 16 honorees make a good deal of the history behind the liberation and empowerment of blacks, women, Hispanics, gays, Native Americans, the diseased, the physically handicapped, and the poor.
Bill Gross Pares Back On Mortgage Debt Bill Gross' Total Return Fund reduced its holdings of mortgage debt to the lowest levels in two years, but still has a 47% of assets in the securities. This lines up pretty well with his relatively bearish August Outlook where makes the case for a more risk-averse posture, arguing that the US is in for lower growth over the next few years, dropping from a 5% nominal GDP growth rate down to a 3% rate.
NYT Could Take A $1 Billion Bath Selling The Boston Globe The cash-strapped New York Times Company (NYT) is trying to sell the Boston Globe, which it bought for $1.1 billion in 1993. But if the Times were to take the best offer on the table we know about, it would have to sell the paper for about $94 million. That offer comes from California private equity firm Platinum Equity, which, according to the LA Times, offered to pay $35 million and assume $59 million in liabilities.
Pink Slip Nation I don't know when the term "pink slip" originated. The term is at least a century old. It refers to a "you're fired" notice. The American economy shows no signs of reversing its relentless increase in the rate of unemployment. Jobs are disappearing at a rate not seen since the 1981–82 recession. Companies continue to cut costs by laying off workers. This is the main source of the increase in corporate earnings – not increased output, but decreased output. How is this profitable? Because of increased output per surviving worker. In the midst of recession, businesses are learning how to cut costs. Labor in most businesses is the #1 cost. Cut labor, and you cut costs faster than by cutting anything else. Workers see what is happening. They are working harder because they are facing pink slips.
Jim Rogers America is Collapsing Part 1 of 5 (January, 2009)
Jim Rogers America is Collapsing Part 2 of 5
Jim Rogers America is Collapsing Part 3 of 5
Jim Rogers America is Collapsing pt 4/5
Jim Rogers America is Collapsing pt 5/5
The Vegas way out A study shows more homeowners here are willing to default on their mortgages, even if they could pay Las Vegas homeowners are more likely than those elsewhere to walk away from their mortgages even though they can afford them, according to a study by two Chicago-area universities. The reason: Las Vegas - where 81 percent of homes are worth less than their mortgages based on the latest figures - leads the nation in the rate of foreclosures. And the decision to default on a mortgage can be contagious. The more it occurs, the more acceptable it becomes.
Lenders hesitating to repossess California homes The backlog of homes in default is growing. In July, default notices were up 12% from a year earlier but repossessions were down 40% . The backlog of California homes in default, but not yet repossessed, keeps growing. At some point, many of these properties will be repossessed and put back on the market. Until then they remain, clogging the system as "shadow inventory," most likely to be foreclosed and sold again.
Zillow's Prediction for 'Underwater' Homeowners Despite the optimism generated by some of the recent real estate market data on home sales and home prices, here comes yet another forecast to dampen that enthusiasm. . . . . . . . . "The negative-equity rate will rise and spin off more foreclosures," Stan Humphries, Zillow's chief economist, said in an interview. "I see a substantial downside risk to prices and don't think we'll see a bottom until the middle of next year."
U.S. Underwater Mortgages May Reach 30%, Zillow Says Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said. Homeowners are being hurt by price declines. The estimated median value for single-family houses slid to $186,500 in the period, a 12 percent drop from a year earlier and the 10th consecutive quarterly decrease, the Seattle-based real estate data service said in a report today.
Mortgage-Backed Securities Haunt Washington's Loan-Mod Plan Making Home Affordable, the White House's $75 billion mortgage modification program, says it will prevent 3 to 4 million Americans from losing their homes. But the program has gotten off to a slow start -- only 9% of eligible homeowners have had their terms adjusted -- and officials are pressuring banks to speed up the process. A new study puts more weight behind the idea that a contributing factor to the crisis is also what's holding back the solution: mortgage-backed securities.
Home Price Declines Accelerate in Second Quarter Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values. The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008's second quarter.
Unspinning the Unemployment Numbers Last Friday, a Bloomberg.com headline read: "U.S. Stocks Gain, Treasuries Drop as Unemployment Rate Declines." Let's have a look at the reported decline in the rate of unemployment. Do you believe that the U.S. auto industry added 28,000 jobs in July amidst the GM bankruptcy, sell-off and close-down of GM auto divisions, and demise of GM suppliers? No? Well, that's what the Bureau of Labor Statistics reported. The 28,000 new jobs were created by "seasonal adjustments." July is a month when jobs are automatically added by the BLS to seasonally smooth the layoffs of autoworkers during July's retooling for the new model year. This year, most of the retooling did not occur, yet the annual seasonal adjustments did. Adjustments are also made for supporting industries, which are partially idled while auto production halts for retooling.
The Economic Fallout Has Decimated the Black Middle Class40 percent of African Americans will have experienced unemployment or underemployment by 2010 and child poverty will increase to slightly over half. To judge from most of the commentary on the Gates-Crowley affair, you would think that a "black elite" has gotten dangerously out of hand. First Gates (Cambridge, Yale, Harvard) showed insufficient deference to Crowley, then Obama (Occidental, Harvard) piled on to accuse the police of having acted "stupidly." Was this "the end of white America" which the Atlantic had warned of in its January/February cover story? Or had the injuries of class -- working class in Crowley's case -- finally trumped the grievances of race?
A "Changed" America Not As Good As The Old America Change is not always good. A "changed" America is definitely not as good as the America we had before we decided to exchange freedom for socialism. Today, Americans are just beginning to awaken to learn that the nightmare they are experiencing is not a nightmare one experiences during REM sleep. In fact, they learn, to their utter surprise, they are NOT sleeping. This nightmare is NO DREAM. It is REAL. And, it was brought on by Americans who THOUGHT they wanted, and yes, even NEEDED change. Many of the votes that were cast last November for "Change" were votes from young people who had no idea what they were trading and what they were getting for the trade. They are the product of a public education system in America now almost totally ruled over by the political left, which still seeks the Nirvana of Utopia through Socialism. After 12 or more years in the public education system, then 2 to 4 more years in the bastions of liberalism/socialism we refer to as colleges and universities, is it any wonder their Pavlovian response in the voting booth was to pull all the levers by the names of the candidates who were decidedly left-wing candidates? Hardly! They were simply reacting to the stimuli implanted in their malleable minds as they made their way through an education system designed to do just that.
The Threat Is Real: Why Right-Wing Rage at Townhall Meetings Could Quickly Turn DeadlyThe insurance industry has agitated the far right to prevent health reform, but they don't know whom they're messing with. From the Internet to Sarah Palin this strange claim is being made: Obama wants to kill the elderly and the infirm with his health care plan. Palin even said her Down's Syndrome child would be a target. The claim is being repeated, or rather screamed, by angry groups invading town hall meetings that congresspeople have organized to discuss health care reform. How on earth can the outright lie that health-care reform will lead to the euthanasia of the elderly be accepted by anyone, even by those on the far anti-Obama right?
How the White House's Deal With Big Pharma Undermines Democracy When an industry gets secret concessions in return for a promise to lend its support to a key piece of legislation, we're in big trouble. I'm a strong supporter of universal health insurance, and a fan of the Obama administration. But I'm appalled by the deal the White House has made with the pharmaceutical industry's lobbying arm to buy their support. Last week, after being reported in the Los Angeles Times, the White House confirmed it has promised Big Pharma that any healthcare legislation will bar the government from using its huge purchasing power to negotiate lower drug prices. That's basically the same deal George W. Bush struck in getting the Medicare drug benefit, and it's proven a bonanza for the drug industry.
Obama gives powerful drug lobby a seat at healthcare table The pharmaceutical industry, once condemned by the president as a source of healthcare problems, has become a White House partner. Reporting from Washington -- As a candidate for president, Barack Obama lambasted drug companies and the influence they wielded in Washington. He even ran a television ad targeting the industry's chief lobbyist, former Louisiana congressman Billy Tauzin, and the role Tauzin played in preventing Medicare from negotiating for lower drug prices.
Peter Schiff Ambushed On MSNBC This interview with Peter Schiff, in which he discusses healthcare policy among other things, is really one of the worst conducted interviews we've seen in a long time. Schiff can barely get in a word.
Peter Schiff MSNBC Healthcare 2009 08 06
Health care will run into spending bills after recess Members of Congress will come back from their summer break in September to a plate full of health care reform -- that's if they survive the latest rancorous and sometimes violent town hall meetings. Senators are getting an earful on the subject from constituents. House members, who began their recess a week earlier, also got a head start on hearing from residents in their districts, facing sometimes contentious comments.
Record home-price fall last quarter Median home prices fell a record 15.6% during the three months ended June 30, compared to the same period in 2008, according to an industry report. There is good news though: The survey from the National Association of Realtors reported the median home price rose 4% compared to the first quarter of 2009 -- to $174,100 from $167,300. The increase in median price was not a surprise, representing, as it did, the traditionally strong spring selling season. But the jump did offer the prospect that the worst of the price declines may be behind us.
As homeowners head 'underwater,' another housing crisis loomsAlmost half of homeowners with a mortgage could be underwater by 2011, says Deutsche Bank. We asked how that will play out Karen Weaver, global head of Deutsche Bank's securitization research division -- responsible for analyzing credit default swaps, collateralized mortgage obligations, and other exotic Wall Street products -- said last week that 48% of U.S. mortgage owners will end up owing more than their home is worth by 2011. The figure may have left many Americans wondering how this could be possible. But consider that 27% of U.S. homeowners with a mortgage are already "underwater." And according to Deutsche Bank, home prices may fall another 14% before hitting a bottom.
Home Price Declines Accelerate in Second Quarter Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values. The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008's second quarter.
Why Are Internment Camps Being Built? The Internet is abuzz with news about the construction of internment camps all across America. Of course, "mainstream" media outlets refuse to touch the subject; or if they do, they pooh-pooh the story; they do what Glenn Beck recently did: try to debunk the story as fallacious and impugn people who speak of it as "conspiracy nuts." The fact that the Becks, Hannitys, Limbaughs, and O'Reillys of the media circus refuse to deal with the construction of large numbers of internment camps does not make them disappear, however. For starters, all anyone need do to begin a serious investigation of the subject of internment camps is Google the phrase "FEMA Camps." There is more than enough evidence in that search engine alone to keep one busy with some in-depth private investigation of the subject for quite a while.
Angry White Men To hear the Obamaites, those raucous crowds pouring into town hall meetings are "mobs" of "thugs" whose rage has been "manufactured" by K Street lobbyists and right-wing Republican operatives. Press secretary Robert Gibbs compares them to the Young Republicans of the "Brooks Brothers riot" during the Florida recount. But is it wise for the White House to denigrate and insult scores of thousands with the fire and energy to come to town meetings in August, and who appear to represent millions? Is this depiction fair or accurate?
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"Obama seems to think the country owes it to him to accept ObamaCare because he was kind enough to agree to be our president." --Wall Street Journal columnist James Taranto
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Turns Out, Putting People In Charge Of Their Own Health Works The idea of high-deductible, catastrophic health insurance plans, coupled with tax-free health savings accounts has been pushed as a possible solution to healthcare costs for awhile, but so far it hasn't really taken off. In theory, it puts the consumer in control of quotidian healthcare decisions, while the insurance company does what an insurance company does best -- protect against unlikely, unpredictable fiscal calamity.
Whole Foods' Healthcare Is Way Better Than Dumb Obamacare The CEO of Whole Foods, John Mackey, offers several good suggestions on how the country can improve health care without turning it over to Congress. He also describes Whole Foods' healthcare plan, which sounds smart. . . . . . . . . John Mackey, WSJ: While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction-toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:
FYI --- Judge orders Microsoft to stop selling Word A judge on Tuesday ordered Microsoft to stop selling Word, one of its premier products, in its current form due to patent infringement. Judge Leonard Davis of the U.S. District Court for the Eastern District of Texas issued a permanent injunction that "prohibits Microsoft from selling or importing to the United States any Microsoft Word products that have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML," according to a statement released by attorneys for the plantiff, i4i.
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Wed 08.12.2009
The Debt Crisis Cannot Be Solved with More Debt The principal problem with the current economic crisis is that the authorities are trying to solve the debt crisis by adding more debt — which is akin to trying to cure a viral infection by injecting more viruses. In case some have forgotten, the United States is undergoing a serious credit crisis, that is, a debt crisis. All sectors of the American economy are suffering from a chronic addiction to credit, which manifests itself as the disease of excess debt. Household, business, and public debt have reached all-time highs. Consequently, it would not seem logical for the federal government to fight the debt crisis by adding trillions of dollars to the national debt and by lowering interest rates to promote even more credit.
This is No Recession...It's a Planned Demolition Credit is not flowing. In fact, credit is contracting. That means things aren't getting better; they're getting worse. When credit contracts in a consumer-driven economy, bad things happen. Business investment drops, unemployment soars, earnings plunge, and GDP shrinks. The Fed has spent more than a trillion dollars trying to get consumers to start borrowing again, but without success. The country's credit engines are grinding to a halt. Bernanke has increased excess reserves in the banking system by $800 billion, but lending is still slow. The banks are hoarding capital in order to deal with the losses from toxic assets, non performing loans, and a $3.5 trillion commercial real estate bubble that's following housing into the toilet. That's why the rate of bank failures is accelerating. 2010 will be even worse; the list is growing. It's a bloodbath.
The Next Phase of the Credit Contraction and Stocks Bear Market Although the waiting is the hardest part. The next phase of the credit contraction and next down leg in the bear market is set to begin. Elliott Wave just announced that on a recent day there were only 3% bulls on a daily sentiment index for the US Dollar. Now I don't care what you think about the Dollar or it's ultimate fate, a trader should be interested in taking the other side of that trade!
August Buying Time for Gold It is not always wise to invest in anything based on "seasonal" patterns, as 2008 showed pretty clearly. But that said, August is traditionally an excellent time to buy gold. And Raymond James analysts Brad Humphrey and Bart Jaworski pointed out that gold has tracked its seasonal pattern very closely this year — it did well in the winter, sold off in early spring and rebounded in May. "This seasonality has historically provided excellent buying opportunities early in [the third quarter] as demonstrated in seven of the past eight years," they wrote in a note to clients.
Dow Fire Starts. Buy Gold & Stay Strong . . . . The bankers plan to watch you blow yourselves up again. They want you to start selling your gold now. The carrot will be "you'll get in cheaper" lower. Don't do it. You have to get rid of thoughts like, "If support breaks, we're heading lower," and start laying in your buy orders at those lower prices. I doubt if more than 10% of the gold community have any buy orders for gold at lower prices in the market right now. Probably 50% of you have stoploss (takeloss) orders instead. Throw your stops in the garbage and replace them with buy orders. Don't sell the world's lowest risk investment into weakness as a loser. Buy it into weakness side by side with the bankers. As a winner.
Frank Holmes on why gold is poised to go higher and how he will help get it there There's never just one factor driving the price of gold. When you see a big surge in gold it's because many factors - such as production declines, an increase in industrial use, inflationary expectations, low limits on official sales and geopolitical worries -- are aligned. In the current bull market, such factors are being exaggerated by the dollar's decline against other currencies.
Gold Versus Stocks...Trade of the Decade Stocks have been a terrible investment over the past decade and they are about to get worse. Gold has been one of the best if not the best investment over the past decade and is about to get better. When you examine investments via relative merits, Gold has trounced general equities. Gold has also trounced paper cash, regardless of the fiat currency held, as well as real estate and commodities over the past decade. Despite this vast outperformance and the fact that Gold is safe and retains its value over the long term, it continues to be a relatively shunned asset class. This is bullish and will help sustain the "wall of worry" that continues to drive the current secular Gold bull market.
Gold price to soar to $1500 in 2010 bull market It’s really getting interesting in the gold market. The big question is: “Will Gold break through the US$1000 level and advanced to new all time highs or will it once again fail while trying ? To be honest: I am still quite sceptic at the moment. I expect another sell off, before Gold can run to new highs, but let’s have look at the charts first.
Bank Closures "As to your Bank Holiday information of this morning, the following is from a close CIA connection, the way it will come down is that starting 8/24, groups of banks will be closed in certain regions of the country for a week or so. They will open again, and then other groups of banks in different regions will be closed; and on and on it will go, until all the banks in the country have gone through that process. The banks will be opened with a new global currency. Indeed the ratio will be 1 to 6, or 1 to 12. Thus, if you had formerly $6M in the Bank, after a ratio of 1 to 6 with the new currency, you will get 1M value in the supposed new legal tender." . . . . . . . . any of you who have much money in the bank might want to consider changing some of it to gold coins, Swiss francs or some other safer currency before the end of August.
Fed under spotlight on interest rates US Federal Reserve policymakers end a two-day meeting on Wednesday with a statement that could provide a hint about the timing of interest rate rises, but no more. Although futures markets are pricing in an interest rate rise as soon as this winter, there are plenty of economists betting that conventional tightening will not occur until well into 2010 – if then. “My main problem is I just don’t encounter anyone who believes that the futures market is an accurate depiction,” says David Greenlaw, chief economist at Morgan Stanley.
Fed gathers to take U.S. economy’s pulse Policymakers expected to leave its banking lending rate steady With the U.S. economy turning a corner, Federal Reserve policymakers will consider whether some programs intended to ease the recession and stem the financial crisis should be extended. Fed Chairman Ben Bernanke and his colleagues open a two-day meeting Tuesday afternoon, where they will sift through economic data and anecdotal information about how businesses and consumers are faring nationwide. So far, many of those barometers suggest the worst recession since World War II is ending and that the economy has started to grow again, or will soon.
Traders Brace For September Collapse When everyone is thinking the same thing, it never happens, and what everyone is thinking right now is that when August is over, and we get down to business, this market's going to be in for some hurt. Folks have been saying it all summer, as bulls make mincemeat of bears without mercy. And now traders are starting to place their bets on the wheels coming off soon.
'The Gifts that Keep on Taking' There have been plenty of discussions about how much the bailouts of the financial system will cost U.S. taxpayers, with estimates ranging from $2 trillion to as high as $24 trillion. But maybe the focus should be elsewhere. Even if we assume that the lower number is closer to the mark, these efforts have proved to be much more expensive than we were led to believe, and the resources committed so far have not achieved the results predicted by policymakers. The truth is, while the banking system has - until now, at least - avoided financial Armageddon, conditions have not returned anywhere close to normal. Although equity investors seem to think that the worst is behind us, the banking sector remains in critical condition and dependent on the Federal Reserve for its continued survival. Meanwhile, many markets and financing mechanisms that Main Street has traditionally relied on are still frozen or broken.
Troubled Assets May Still Pose Risk The Treasury Department’s $700 billion bailout program has stabilized the banking system, but it has done little to prod banks to fully deal with the troubled loans on their books, a Congressional oversight panel said in a report to be released Tuesday. The Troubled Asset Relief Program was originally conceived as a program for the government to buy troubled and unsalable mortgages and mortgage-backed securities. But the Treasury has never actually used the program to buy assets, in part because it was faster to invest money directly into the nation’s banks and in part because banks have not wanted to sell their problem loans and book the loss in their value.
Withdrawing the Stimulus There has been a lot of discussion in the mainstream financial press about how and when the Fed will withdraw the "monetary stimulus" it has provided over the past year. Also, Ben Bernanke has recently gone into considerable detail about the methods he will use, once the economy is on a stronger footing, to gradually remove any excess money before an inflation problem arises. Unfortunately, these discussions and Bernanke's detailed plans betray a terrible misunderstanding about how money-supply changes affect the economy.
Americans Want Federal Reserve’s Secret Shenanigans Exposed A recent survey by a major U.S. polling firm has found that an overwhelming majority of Americans support auditing the privately owned and controlled Federal Reserve. According to the respected national polling company Rasmussen Reports, 75 percent of American respondents said they “favor auditing the Fed and making the results available to the public.”
Money versus credit Fed is displaying monetary myopia The Federal Reserve has little time for money. Not dismissive of the contents of your wallet, per se, the US central bank sees limited value in measures of money as economic indicators. The Fed stopped tracking the broadest measure of US money in 2006, arguing it had not been used in interest rate decisions for some time. Now, it brands its response to the economic crisis “credit easing”, reflecting its focus on banks’ balance sheets, rather than “quantitative easing”, or boosting the money supply.
“Banks Still Hold Many Risky Loans of Uncertain Value” Despite signs that the financial system has stabilized, banks remain threatened by billions of dollars of bad loans on their balance sheets, and more could fail if the economy worsens, a congressional watchdog reports. In its latest assessment of the $700 billion financial system bailout, the Congressional Oversight Panel warns that banks still hold many risky loans of uncertain value. If unemployment rises sharply or the commercial real estate market collapses — as many economists fear — the banking system could again lose its footing, the panel says in a report to be released Tuesday.
Temporary Recession or the End of Growth? Everyone agrees: our economy is sick. The inescapable symptoms include declines in consumer spending and consumer confidence, together with a contraction of international trade and available credit. Add a collapse in real estate values and carnage in the automotive and airline industries and the picture looks grim indeed. But why are both the U.S. economy and the larger global economy ailing? Among the mainstream media, world leaders, and America's economists-in-chief (Treasury Secretary Geithner and Federal Reserve Chairman Bernanke) there is near-unanimity of opinion: these recent troubles are primarily due to a combination of bad real estate loans and poor regulation of financial derivatives.
FHA: Growth Is the Problem Have we learned anything about the risks of mortgage lending over the past couple of years? If a Wall Street Journal article is to be believed, the answer is no. The Journal focuses on the spectacular growth of the FHA since Fannie (FNM) and Freddie (FRE)melted down and the troubling signs accompanying that growth: Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?
Housing Woes Are Far from Over Residential real estate site Zillow.com released a discouraging report on the future of the housing market in the United States. The web site compiles information regarding home prices, mortgage values, tax rates, and other important information and has become a leading authority on residential real estate. Among the findings of Zillow’s analysis is that nearly one-quarter of all U.S. mortgage holders are now underwater on their mortgage loans. Declining home values are of course the culprit and could continue to fall through at least the next year. They estimate that by mid-2010 that number could continue to rise and reach about 30%. This prediction is actually a great deal better than the opinion expressed just last week by analysts at Deutsche Bank (DB) , which claimed that as many as 48% of mortgage holders could be underwater as prices continue to fall through early 2011.
Will Commercial Real Estate Pose the Next Hurdle for the Federal Reserve? Having last month addressed concerns about inflation by outlining a stimulus “exit strategy,” U.S. Federal Reserve Chairman Ben S. Bernanke may turn his attention to the growing threat posed by commercial real estate at the Federal Open Market Committee’s (FOMC) two-day meeting taking place tomorrow (Tuesday) and Wednesday.
What the Government Bailouts Are Hiding Inquiring minds are reading Cash for Clunkers Is Just a Broken Windshield by Caroline Baum. It's the best trashing to date of "cash for clunkers" program. "Transferring money from taxpayers to car buyers is a transfer. The money taken from taxpayers can’t be used for something else. "This is the lesson of Frederic Bastiat’s essay, 'That Which is Seen, and That Which is Unseen.' Bastiat, a nineteenth century French political economist, tells the story of a shopkeeper who has to hire a glazier to repair a broken window, providing work and income for him in the process. That’s what is seen.
Deflationary Debt Destruction Must Run Its Course My vacation back to the US surprised and confounded many of my old friends: they know I moved back to park my wealth in dollars. Incredulously they asked how I could possibly not believe the US government, along with their crony partner the Federal Reserve, will not devalue the dollar to "settle" our debt with foreign lenders. A normal default (since we all know there is no way to possibly pay this debt back, nor is their enough capital in the world to buy our newly needed "financings") isn't palatable, they say, so the only direction for the dollar is down. I agree, but only in the long run. In the short run it is more nuanced, as illustrated by the recent meeting between Chinese and US officials (berries).
Obama Drops The Hammer On Credit Default Swaps Traders The Obama administration has sent its plan to regulate those financial weapons of mass destruction, credit default swaps, to Congress: WASHINGTON (AP) -- The Obama administration on Tuesday sent Congress legislation seeking to impose broad new oversight on derivatives, the complex financial instruments blamed for hastening the global economic crisis.
Two Days on the Job, and Leaving for Vacation Benmosche Said to Start AIG Tenure With Croatian Trip Robert Benmosche, the chief executive officer of American International Group Inc., plans to spend part of his first month leading the insurer in Croatia on vacation, according to two people familiar with the situation. Benmosche, 65, who started yesterday as CEO and president of the bailed-out company, will leave for about two weeks, according to one of the people, who declined to be identified because the plans were private. Mark Herr, an AIG spokesman, said the New York-based firm wouldn’t comment on CEO travel.
Executive Pay Hysteria Spreads Beyond Wall Street The uproar about big pay and little accountability for Wall Street's executives is starting to spill over into other areas of the economy -- particular when it involves companies that draw big dollars from the taxpayer. Wall Street Journal reports that government contractors -- especially in Medicare and defense -- are drawing increased scrutiny from federal auditors for their executive compensation using taxpayer dollars:
The Market Bubble Is About to Pop You may find it hard to resist going whole-hog into the market these days, especially as we are likely to get a very strong third quarter. By some estimates, growth could be 4%. It could even reach 6%. However, all the growth we'll see will be the result of unsustainable factors such as inventory accumulation, car production increases (due to the “cash for clunkers” program), etc. With this in mind, you must resist the urge to increase your weighting in stocks. Long-term, we still face substantial headwinds. But our feeling is, if the market bubble does pop, it will likely be the last pop.
Stocks: The latest Fed bubble Are the government programs supporting the financial sector reinflating global stock markets even as economies stumble? The Federal Reserve has spent the past year cleaning up after a housing bubble it helped create. But along the way it may have pumped up another bubble, this time in stocks. To head off the worst downturn since the Great Depression, the central bank has slashed interest rates while funneling money to banks. The Fed has mostly won praise for its efforts. The pace of job losses has slowed, and there has been a modest recovery in output.
Economics of Oblivion Albert Jay Nock believed Gresham's Law operated in ideas as surely as in economics, with error displacing reason from men's minds as inexorably as bad money drives good money from men's markets. Nock's theory seems fast on the way to proof a posteriori, especially in our colleges and universities and particularly in the teaching and textbooks of the "new economics."
Pay Is Scrutinized at U.S. Contractors Executive pay at government contractors is drawing scrutiny from federal auditors, who have questioned some companies about compensation and pensions they have charged taxpayers. The questions come amid a broader examination of executive pay, especially at financial companies receiving taxpayer-funded bailouts. Contractors also receive government money, though until recently the question of how much of it has gone to executive pay hasn't been a big issue for lawmakers or auditors.
The incredible shrinking home The size of newly built homes fell in 2008 for the first time in almost 15 years. Is the McMansion era on the wane? For the first time in almost 15 years, the size of new homes built in the United States is shrinking. New homes are now 7% smaller -- or the size of one average-sized room. To be precise, the median square footage of newly built homes fell to 2,065 square feet in the first three months of this year, compared with the same period last year, according to the U.S. Census Bureau. This caps off 2008, when home size fell every quarter, marking first year of declines since 1994. That could indicate that the romance between Americans and morbidly obese McMansions has finally cooled.
Who Is Behind Barack Obama’s Rise to Stardom? Is Barack Obama the product of a vast socialist conspiracy designed to undermine the fundamental tenets established by our Founding Fathers, all bankrolled and organized by elite financiers? The answer is unequivocally yes.
Blair bank targeted in £8.5bn FSA probe The bank where Tony Blair is an adviser is the target of an unprecedented probe involving billions of pounds of customers' funds, the Daily Mail can disclose. JP Morgan Chase, whose chief executive Jamie Dimon last year recruited the former prime minister as an adviser, is being investigated by the City's watchdog, the Financial Services Authority for allegedly failing to keep track of £8.5billion of clients' money.
U.S. Freezes Assets of North Korea Bank The U.S. moved Tuesday to freeze the assets of a North Korean bank accused of providing financial services to companies involved in Pyongyang's missile programs. The Treasury Department's action against Korea Kwangson Banking Corp., or KKBC, means any bank accounts or other financial assets found in the United States that belong to the firm are blocked. Americans also are prohibited from doing business with the bank. It is based in North Korea and has operated at least one overseas branch in Dandong, China.
Madoff CFO DiPascali: I Helped Thus ends any question about whether Bernie Madoff lied in his own confession when he said he acted alone. (He lied). After months of secretly working with the FBI, Bernard Madoff's right-hand man emerged in federal court on Tuesday and pleaded guilty to conspiracy and other charges, contradicting claims by the disgraced financier that he acted alone. "I was loyal to him. I ended up being loyal to a terrible, terrible fault," Frank DiPascali told a judge during a hearing at which his long-rumored cooperation deal with the government was confirmed.
Interest in Cash for Clunkers sputters In 'Gold Rush mentality,' demand for cars peaked in July and could fall to pre-Clunkers levels next week, report says. After sparking an initial rush to showrooms, the Cash for Clunkers program seems to be running out of fuel. Interest in Cash for Clunkers has fallen 15% since its peak, and the number of people planning to buy cars could fall to pre-Clunkers levels by next week, an auto research group said Tuesday. Under the Clunkers program, which launched July 27, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less.
A Clunker of a Program? Just off the main road in Springfield, Vt., a long-depressed Connecticut River town best known for winning the competition as the true home of the cartoon character Homer Simpson, stands a temporary monument to Washington’s effort to marry economic stimulus and environmental consciousness.
Cash for Clunkers by Ron Paul The Cash for Clunkers program has received a lot of attention this week on Capitol Hill and across the country. The program offers a voucher of up to $4500 in federal funds to anyone who trades in a working used car for a new one with better fuel economy. Congress was shocked at how quickly people responded to promises of free money and drained the program, while car dealers have been equally shocked at how slow and arduous the government’s website to claim the rebates has been.
Gerald Celente Jobless Recovery Is Like Being Half Pregnant
Americans working much harder – for less pay Productivity surged, labor costs dropped sharply in the second quarter Feel like you’re working a lot harder these days, putting in longer hours for the same pay — or even less? The latest round of government data on worker productivity indicates that you probably are. The Labor Department said Tuesday that the American work force produced, at an annual rate, 6.4 percent more of the goods they made and services they provided in the second quarter of this year compared to a year ago. At the same time, “unit labor costs” — the amount employers paid for all that extra work — fell by 5.8 percent. The jump in productivity was higher than expected; the cut in labor costs more than double expectations.
The Census Gestapo! Just when I thought the census invasions were over, at least until the actual count next spring, the census Gestapo, or "Complete Count Committees" (CCC) are forming all around this nation-state. Once again, the long arm of government is using state and local political types to form neighbor watching and neighbor invading "community" committees. One should not take this lightly, as this is a massive government-organized army out to invade the privacy of virtually everyone. The normal culprits will be involved in this idiocy, including government agencies, education, business, faith-based organizations, nosy community "leaders," local do-gooders, and of course the government-controlled media.
The Riots Will Come When times are good, it is far easier for everybody to get along. But times are changing. The economy is changing life in America. Popular daytime shows and print and online articles are about the topics that are on people’s minds the most: people losing their jobs, families with home foreclosures, how to feed a family for less in these hard economic times, and so forth. Many Americans are finally being forced to make lifestyle changes—some of them very unpleasant. Tension is building with every foreclosure.
Employers slow to hire amid hope of recovery Reticence is why many economists see high unemployment continuing U.S. employers who have cut jobs over the past year are in no hurry to start hiring again just because the recession is tapering off. From a North Carolina machine maker to an Oregon heating-and-cooling company, small business owners say they need to see several months of rising sales before they start adding staff.
The Roots of Rage at a Town Hall Meeting They got up before dawn in large numbers with angry signs and American flag T-shirts, and many were seething with frustration at issues that went far beyond overhauling health care. More than 1,000 people showed up here Tuesday morning in this largely Republican town in central Pennsylvania for a town-hall-style meeting with Senator Arlen Specter, though the auditorium could seat only 250. Like many of the dozens of such meetings held by members of Congress over the last few weeks, this one was punctuated with rowdy moments, and interviews with many of those who showed up made it clear just how much underlying dissent motivated them.
More noise than debate on US health reform Rage rather than the substance of the issues is the story at Democrats’ town-hall meetings Democratic members of Congress are taking the case for health reform to a series of “town-hall meetings”. In many cases these have turned into brawls—and so far as most reporting is concerned, rage rather than the substance of the issues is now the story. Many protesters are hoping not to debate but to shut the meetings down. They carry posters of politicians with devils’ horns, or of Obama with a Hitler moustache. They claim the administration wants to bring in euthanasia, among other things. It is all very ugly.
Conservatives use NHS as ammunition against Obama healthcare plan As Barack Obama and members of Congress spend the August recess discussing America's healthcare system in town hall meetings, Fox News and a group called Conservatives for Patients Rights (CPR) are comparing the president's reform plan - unfavourably - to the British NHS. Both Fox and CPR have invited UK doctors, politicians and patients to voice their concerns and frustrations on the air.
Glenn beck-Nationalized health Care-British care
Obama Wants It Both Ways On Healthcare Obama's approach to pushing healthcare reform forward faces a major contradiction. See, generally speaking the current major stakeholders (the AMA, insurance companies, the drug lobby, etc.) favor some version of reform. But Obama wants them as enemies, because it's easier to blame them than it is to blame intransigent blue-dog democrats.
ObamaCare is Eugenics - `Complete Lives System` The ‘Complete Lives System‘ promoted by Ezekiel Emanuel, brother of Rahm Emanuel, and how it would be used to reduce health care costs for the very young and very old in an emergency. Glenn’s other point is that a financial emergency would be highly likely if the Health Care Bill is passed, therefore The ‘Complete Lives System‘ would need to be implemented. AARP is also mentioned (they are backing this insane legislation). Even Glenn Beck admits it is Eugenics! or will he come back next week crying `n` denying? A method called ‘Life-years’ is described, which would determine how the details of rationing health care would be carried out.
Obama Eugenics - ObamaCare is Eugenics admits Glenn BeckIf you are under 15 or will soon be or already are over 55, beware! Watch this carefully, all the way through.
Obamageddon The Celente thesis: war as the "solution" to economic depression An American president is launching the most ambitious, the most expensive, and certainly the most dangerous military campaign since the Vietnam War – and the antiwar movement, such as it is, is missing in action. After a long and bloody campaign in Iraq and the election of a U.S. president pledged to get us out, our government is once again revving up its war machine and taking aim at yet another "terrorist" stronghold, this time in Afghanistan. Yet the antiwar movement’s motor seems stuck in the wrong gear, making no motions toward mounting anything like an effective protest. What gives?
Obama Trains Minions How to Silence and Destroy the American People Prior to Congress taking one of its myriad vacations--this one entitled the “August Recess"--Dictator-in-Chief Obama held both an email campaign and conference calls to train his (paid?) Obama supporters and his willing Democrat Congressional sycophants on how to smother opposition to ObamaCare and other ObamaPrograms designed to destroy We-the-People. Currently, as Obama and members of his administration cannot argue the merits of ObamaCare--due to the fact that that there are no virtues for humans contained within the bill--the now inarguably tyrannical and totalitarian leader of the USA has sicced his SEIU and others on any Americans who protest against his faux healthcare program. And those he has instructed are now beginning to exhibit an Obama full attack mode against We-the-People who object to Obama owning our bodies and deciding whether we will be allowed to live or die. Note: If you don’t believe me, read the bill.
Governors oppose DoD emergency powers A bipartisan pair of governors is opposing a new Defense Department proposal to handle natural and terrorism-related disasters, contending that a murky chain of command could lead to more problems than solutions. Vermont Gov. Jim Douglas (R), chairman of the National Governors Association, and Vice Chairman Gov. Joe Manchin (D) of West Virginia penned a letter opposing the Pentagon proposal, which they said would hinder a state's effort to respond to a disaster.
Obama Says Buy American Stimulus Rule Doesn’t Hurt Canada Trade “Buy American” rules that Congress included in the U.S. economic stimulus package don’t endanger free trade with Canada, President Barack Obama said after meeting with the leaders of Canada and Mexico. “This has in no way endangered the billions of dollars of trade taking place between our two countries,” Obama said yesterday, noting that Canadian Prime Minister Stephen Harper raises the issue “every time I see him.”
There’s a Solution in Afghanistan but Not the Way We’re Headed It would be a great service to the American nation if Barack Obama would tell us what he himself thinks the wars in Afghanistan and Pakistan are about. To capture Osama bin Laden? There have been eight years in which to capture bin Laden and it’s not been done yet, and there seems no reason to think that anything important would change if the thousands of Marines now scheduled for Afghanistan did capture him. What did it change to capture and execute Saddam Hussein in Iraq?
Russia Plays Hardball With America Two Russian subs sighted off America’s East Coast serve as a reminder of just how Russia views the current U.S. administration. Russia sent a rather unpleasant present to President Obama on the occasion of his 48th birthday. Last Tuesday, two Russian attack submarines were sighted off America’s East Coast, apparently the first such sighting for 15 years. This is the latest in a series of provocations that Russia has launched at the U.S. since America’s current president took office.
U.S. Firms Probed in Mexico Oil Scam The U.S. government is investigating whether several U.S. companies took part in a cross-border scheme to siphon oil products from Mexico's state oil company and smuggle them across the border. The probe is part of a broader two-year joint U.S.-Mexican investigation into a network of Mexican oil smugglers supported by the Gulf drug cartel, one of Mexico's most powerful and brutal criminal organizations.
Hugo Chávez tells army to prepare for conflict with Colombia Venezuela ordered its army yesterday to prepare for conflict, after accusing Colombia of making a provocative incursion into its territory. In his weekly television show, Hello President, Hugo Chávez accused the US of ordering the alleged incursion. The socialist leader had already warned of conflict over a Colombian plan to give the US access to seven military bases. Mr Chávez, who is attending a regional summit in Ecuador, said that the “Yankees” were already commanding Colombian armed forces.
Iran-Venezuela ties worry US Speaking at the Center for Strategic and International Studies (CSIS), three leading academics in the fields of Iranian, Venezuelan and US foreign policy examined the relationship between Iran and Venezuela. Over the past decade, Iran and Venezuela have increasingly cooperated with each other economically and militarily. President Mahmud Ahmadinejad of Iran and his counterpart President Hugo Chavez have expressed support of each other's most unpopular policies - often while expressing antipathy towards the US as well.
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Tues 08.11.2009
Inflation could force gold to be new global currency IT'S party time again, it seems, in world stock markets and revellers are beginning to sound as though the financial crash and the global recession were nothing more than a pause for breath. Yet the 'ghost at the banquet' is the gold price which, at near US$1,000 an ounce, is an unwelcome guest to have around just when it seems the good times are ready to roll again. Even as advanced and emerging equity markets hit their highest level for the year on Monday of this week, the gold price continued its upward climb and reached US$955 an ounce. What's more, even those investment managers who do not normally display a tendency toward hyperbole said it would hit US$2,000 an ounce soon and could go on to reach US$3,000.
Why Gold Investing is Crucial Gold investing is going to be the only investing in a short while. Wait just a minute, you exclaim! What in the world are you talking about? How could gold investing be the only investing? That makes no sense at all! Well, the answer to that question may seem like it doesn't come from this world, and that is partly correct. The world as we know it is about to change and gold investing is going to become the only investing! The U.S. Dollar is being destroyed by the government and the Federal Reserve. The policy that the Fed has introduced, quantitative easing, is going to insure inflation in the the years ahead and for years to come. Gold will be the beneficiary of this misguided policy and that is why gold investing will be the only investing for the next couple of years.
Gold Versus Stocks Trade of the Decade Stocks have been a terrible investment over the past decade and they are about to get worse. Gold has been one of the best if not the best investment over the past decade and is about to get better. When you examine investments via relative merits, Gold has trounced general equities. Gold has also trounced paper cash, regardless of the fiat currency held, as well as real estate and commodities over the past decade.
Gold, the perfect antidote to Wall Street chaos So you think of gold as just a wartime investment. Think again. Because it’s negatively correlated — meaning it rises when stocks, bonds, real estate and Treasury bills fall — gold is a solid investment any time government debt translates to inflation. And it’s the perfect antidote to current Wall Street chaos and difficult financial times, according to New York based Ross Metals.
Ride the Gold Juggernaut The U.S. dollar is in a world of hurt, and that means the golden juggernaut — the long-term rise of gold — is gathering steam. What do I mean by a world of hurt? I mean the U.S. dollar tumbled below crucial support. Oh sure, it could bounce higher for a bit — nothing travels in a straight line — but the easiest path for the greenback is lower. That means the easiest path for gold is … you guessed it … higher. Gold still needs to get above the $1,000 level, but its climb should be easier now. That puts my target of $1,300 gold, which I explained in my recent “Gold Fever” report, squarely in sight.
U.S. Dollar Index the Key to Financial Market Dynamics Over the next couple of weeks, I will attempt to put together an asset class road map that should help navigate the weeks and months ahead. In a nutshell, I would have to state that I like commodities over long term Treasury yields and equities, and the key driver will be the falling US Dollar Index.
Fed Laundering Money through the Big Banks Into the Stock Market Fed Chairman Ben Bernanke is a man who knows how Washington works and uses that knowledge to great effect. His appearances on Capital Hill are always worth watching. He sits politely with his hands folded in front of him playing the bashful professor while one one preening congressman after another makes a fool out of themself. In contrast, Bernanke looks like a modest and thoughtful academic faithfully upholding the public's trust. But things aren't always as they seem. The Fed chief is sticking it to the American people big-time and no one seems to have any idea of what's really going on. Former hedge fund manager Andy Kessler sums it up in a recent Wall Street Journal article, "The Bernanke Market".
Is America Broke “The time is near at hand which must determine whether Americans are to be free men or slaves.” The United States was once the largest creditor nation on earth, the envy of the world. Everyone wanted to come to America in search of the American Dream. Now, we are the largest debtor nation, and many question our leadership. One bread winner used to make enough to support the entire family. It now takes two. The American Dream is a thing of the past, slipping between our fingers like so many grains of sand. We should ask ourselves why? The savings of the American people is at all time lows. Debt levels are at historic highs. Our government is running deficits of unprecedented proportions. What has happened in the past few decades to cause such drastic changes to our standard of living and way of life?
Is America Broke Part II, The Debt God Evidence that a dollar a bill (Federal Reserve Note) is not the dollar of the Constitution was provided. The first is a promise to pay. The second is an honest weight of silver: 371.25 grains of fine silver – the silver dollar. This distinction lies at the heart of why the financial system is falling apart. A system of paper fiat debt-money is destined to fail. It can be no other way. Paper money is created out of thin air. Excess credit creation fuels booms that eventually go bust.
The Federal Reserve Bank America's Biggest Unspoken Problem Indeed there are plenty of problems facing the United States of America today. Of course, there have always been problems and probably always will. It's the nature of things. There are lots of things one can do about problems. You could panic. You could consult with friends. You could write down a plan. You might have to take immediate action. Every problem is different. The one action that most agree is a bad idea is ignoring a problem. Even worse is to adapt behaviors that help the problem along.
The Collapse of the Dollar... And How to Profit from it James Turk has specialized in international banking, finance and investments since graduating in 1969 from George Washington University with a B.A. degree in International Economics. His business career began at The Chase Manhattan Bank (now JP Morgan Chase Bank), which included assignments in Thailand, the Philippines and Hong Kong. He subsequently joined the investment and trading company of a prominent precious metals trader based in Greenwich, Connecticut. He moved to the United Arab Emirates in December 1983 to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, a position he held until resigning in 1987.
All Eyes Turn To Meeting of Fed Committee No August vacation for economy-watchers yet, as another big week is on the way. The main event is a meeting of the Federal Reserve's policymaking committee on Tuesday and Wednesday. It's a forgone conclusion that the central bank will leave its main target lending rate near zero and continue signaling that the number is likely to remain there for some time. The interesting question will be what, if anything, the Fed chooses to do with its more unconventional programs. A program to buy $300 billion worth of U.S. Treasury bonds is set to run out in September if the Fed does not expand it; the program is meant to lower long-term interest rates and improve lending conditions more generally.
Fed does not need more power The Obama administration’s financial reform proposals would grant the Federal Reserve significant new powers. These powers – which fall under the rubric “systemic risk authority” – will have a negative impact on the conduct of monetary policy. The unintended consequence would be to increase not reduce systemic risk. What are these new powers? The Fed would be given authority to determine whether any "individual financial firm poses a threat to financial stability". All such Fed-designated firms would then be placed in a special group called "Tier I Financial Holding Companies". The Fed would then have the power to supervise all companies in this group. They would also become subject to a new "resolution regime" through which the government could, at a moment's notice, take one over or order its sale.
Punch bowl to stay on table after Fed meeting Central bank to maintain easy policy despite improved outlook Even though some Federal Reserve officials and market participants want the party to end, the central bank is going to keep the punch bowl full after its two-day meeting this week, analysts said. Former Fed Chairman William McChesney Martin once famously quipped that the Fed's primary role was to take the punch bowl away before a party really starts cooking. But it's important not to take away the spirits too soon. "Although some hawks want to take the punch bowl off the table, I don't think they will convince [Fed chief Ben] Bernanke," said David Jones, a veteran Fed watcher. Bernanke, a student of the Great Depression, knows that the Fed made a mistake of tightening too soon during the late 1930s, thereby prolonging the downturn, Jones said. "That is something Bernanke is going to avoid," Jones said.
How Is America Going To End? Who's most likely to secede? In the American end times, our government will take one of two forms. One possibility is that federalism will give way to an all-powerful central government. (In yesterday's global-warming thought experiment, this was the climate strongman scenario.) The other option is decentralization - in the absence of a unifying national interest, the United States of America will fragment and be supplanted by regional governance. America was designed to avoid these two extremes - to keep the states and the national government in balance. The United States will end when the equilibrium mandated by the Constitution no longer holds. Tomorrow, I'll look at how the country might transition from democracy to totalitarianism. Today, I'll focus on America's disintegration.
Economists Lead the Way to Calamity Goldman gets a hidden bailout...Wall Street uses bailout money for bonuses...Cash for Clunkers... nationalizing GM... quantitative easing... Geithner lies to the Chinese... Crackpot ideas! Corruption! What next? But the most breathtaking scene is the one no one seems to notice... Perhaps it is because we have our head in the clouds...so far above the surface of everyday life that we can look down and see what is happening... or perhaps because you have to be a connoisseur of absurdity to appreciate it... strange...bizarre...almost surreal...even when you see it, you don't quite believe it... First, the voters ruined themselves...now it's the government's turn! The US federal government is digging its own grave...bankrupting itself with its eyes wide shut. And it's not alone...
The Investment / Savings Trap In the past five chapters we explored the numerous ways in which you are being secretly and openly robbed of your earnings. Others are using the guns of the law to steal a major part of everything you produce. If you're frugal, however, even after these confidence men have taken their toll, you may still have accumulated some savings and investments. Assuming you have, you now face the second assault. You face inflation as it waits to sap the purchasing power of your savings; the taxmen who would steal part of your earnings from your savings and give it to the swindlers; the investment salesmen and brokers who make their living off your lack of expertise; the managers who manage the things in which you invest; the occasional schemer who would take your money through fraud; and finally, the convulsions of speculation that grip all investment markets in the aftermath of inflation.
Treasurer Fear of Credit Freeze Seen in Cash Hoarding Two years after credit markets seized up and caused the worst financial crisis since the Great Depression, companies are hoarding the most cash in at least a decade. "Every action we take or contemplate taking is measured by its impact on our balance sheet and liquidity," Mark Jacobs, the chief executive officer of Houston-based RRI Energy Inc., told analysts and investors on Aug. 3. The company sold its Texas retail electricity business and the Reliant brand name in May, helping triple cash and equivalents from a year earlier to 18 percent of assets, according to data compiled by Bloomberg.
Rep. Marcy Kaptur: Big Banks Stripped the Wealth of the Middle Class Representative Marcy Kaptur of Ohio discusses how the concentration of financial power over the last 25 years has strangled the middle class.
Congresswoman Marcy Kaptur - Fed is a Counterfeiter!
Red Alert: Final Phase USA Takeover by Federal Reserve
Ambac Posts $2.4 Billion Loss on Home-Loan Claims Ambac Financial Group Inc., the second-largest bond insurer, posted a $2.4 billion second- quarter loss as claims on bonds backed by home-equity loans continued to rise. The net loss of $8.33 a share compares with year-earlier profit of $823.1 million, or $2.80 a share, the New York-based company said in a statement today. The company's shares fell as much as 27 percent. The results contrast with those of Ambac's bigger competitor MBIA Inc., which said two days ago that it earned $894.7 million in the most recent three-month period. MBIA offset an increase in losses on mortgage securities for the quarter by reporting that it expects to recover $1.1 billion from lenders who included ineligible loans in the pools backing MBIA-insured bonds.
Consumer Bankruptcies May Hit 1.4 Million for 2009, Study Says Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the trade group American Bankruptcy Institute. More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
Getting debt under control Commentary: U.S. consumers are putting their affairs in order Even as analysts debate whether the stock market's five-month rally is nearing its end, it's clear that consumers are more interested in paying down their own debts than they in betting on the market. June marked the fifth consecutive month in which consumers paid down credit cards and shaved other debt, according to the Federal Reserve. In a depressing economy, reducing debt is no surprise, but the Fed's big news was that the amount Americans put into debt reduction was twice as much as economists expected. All told, the Fed says that Americans cut $10.3 billion off of the wrong side of their balance sheet, or more than 4% of the $2.5 trillion consumers owe. Analysts expected the debt reduction to be closer to $5 billion.
Fed Focusing on Real-Estate Recession as Bernanke Convenes FOMC The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed. Property values have fallen 35 percent since October 2007, according to Moody's Investors Service. That's making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale.
Taxpayers Lose as Flippers Profit in Muni Bonds: Chart of Day Almost all secondary market sales of new municipal issues occur within the first 30 days of pricing, with a network of buyers reselling the bonds to make quick profits getting them into the hands of individual investors. The CHART OF THE DAY, taken from the Municipal Securities Rulemaking Board's 2008 Fact Book, depicts this pattern of new municipal bond trades. Underwriters sell the bonds in large blocks or amounts to so-called favored institutional investors, such as mutual funds, who in turn sell them to other buyers, who sell them to individuals, the "retail" crowd. Traders, money managers, bond issuers and the former head of the Municipal Securities Rulemaking Board have all commented on how intermediate buyers profit by marking up bonds and reselling, or "flipping" them to individuals.
Thomson $2 Billion Swaps to Face Credit Event Ruling Credit-default swap dealers and investors will rule on whether Thomson SA triggered a "restructuring credit event" that will pay out contracts linked to about $2 billion of debt. Commerzbank AG asked for the ruling after the unprofitable consumer electronics company said it got permission to defer a $72.5 million repayment on its 6.05 percent privately placed notes due 2009. Thomson agreed to the waiver with "a sufficient number of holders to bind all holders," it said on its Web site. Thomson's plan to cut its 2.8 billion euros ($4 billion) of debt through the sale of shares, exchangeable bonds and assets fueled speculation the debt swaps may be triggered. An auction will be held to determine the amount sellers of protection will pay if a committee decides the contracts should be tripped.
Memo to Bernanke: Remove the Life Support, "Let the Chips Fall Where They May" With the Fed set for a two-day policy meeting this week, the question of "exit strategies" is paramount on investors' minds. Among many others, Scott Bleier, president of CreateCapital.com, says they Fed has "already gone too far" and it's time to pull back on the extraordinary (some would say "extralegal") support for the financial markets. "The Fed needs to be able to say 'look the markets needed our support, we were there and now it's time we allow the markets to function on their own, pull off the life support and let the chips fall where they may,'" Bleier says. Barring that, we are going to remain in a "recovery" that's government sponsored with the capital markets propped up by Uncle Sam, rather than based on economic fundamentals, he says.
USPS traveling in ruts of the Pony Express It's Time to Stay the Courier So you think your business has problems. Consider the plight of John E. Potter, the chief executive of the second-largest employer in America. On the one hand, he has a guaranteed monopoly for much of his business. On the other hand, monopoly or not, the combination of the Internet and the recession is absolutely crushing his company, just as it is for so many other companies across the country. His last quarter's results, which were announced on Wednesday, revealed a loss of $2.4 billion. The business is on track to lose a staggering $7 billion in 2009, on around $68 billion in revenue. That's practically General Motors territory.
7-cent mistake leads family to lose their home A family is losing its home because it underpaid the mortgage by 7 cents in January, a legal aid group says. "The bank seems more interested in having another empty house in Michigan than working with the family," Sydney Rooks, a lawyer for Legal Services of Eastern Michigan, said last week. Rooks said Creg and Bonnie Berger inadvertently underpaid their mortgage because a postal clerk issued a money order for $440 rather than $440.07. The couple didn't catch the mistake and they were four weeks late making February's payment of $690.07. She said they had been late before.
Calif. GM dealers to sell cars on eBay Trial begins Tuesday Hundreds of General Motors' California dealers will let consumers haggle over the prices of new cars and trucks through the eBay online marketplace under a trial that begins Tuesday. About 225 of California's 250 GM dealers are set to take part in the program. They will be selling Buick, Chevrolet, GMC and Pontiac vehicles on cobranded Web sites through eBay Inc.'s online auto marketplace, eBay Motors, until Sept. 8. The cars will also be searchable through eBay Motors and eBay's main site. Although the companies previously said such a trial was in the works, details weren't released until Monday.
Bankruptcy in Valley up 85% over July 2008 A lot of cash-strapped Arizonans probably wish they could send their financial problems on vacation right about now. But job, housing and other money pressures aren't abating so far this summer, with Valley bankruptcy filings last month hitting their highest level of the year. The 2,319 Phoenix-area filings in July represented an 85 percent jump over the pace in July 2008. They're also the highest monthly total since federal bankruptcy laws were changed in late 2005.
Democrats, Media Distorting Town Hall Facts No shortage of chutzpah on the part of the White House, Democrats, and mainstream media. Even after White House press fixture Helen Thomas criticized the planting of reporters at so-called press conferences, the manipulation of public events and sentiments continues. Now we see the president, Dem Party, and Machiavellian media revving up their propaganda engines to push an unsuspecting public into believing that town hall meetings are staged, rent-a-mobs are bullying congressional members, and insurance companies are choreographing the entire scenario.
Castor Oil Part 1 (Kathy Castor Town Hall Meeting in Tampa) This is part one of the Tampa Town Hall meeting on August 6. Left Wing organizers are seen passing out Obama Flyers and signs. Once they see that others had their own signs, they quickly pick them up and hid them. Hundreds of people are outside trying to get in, many of them who had been waiting for hours while others were able to sneak in the back door. Even with all this, there was still many in the audience that booed once Kathy Castor started detailing the Health Care Plan.
White House 'Reality Check' Web Site Claims Health Care Reform 'Would Not Add One Penny to Deficit' Despite CBO Reports to Contrary A new Web site launched Monday by the Obama administration to rebut alleged disinformation about the administration's efforts to reform the health care system claims that reform "would not add one penny to the deficit"--despite the fact that the two health care reform bills that have been analyzed by the Congressional Budget Office are predicted by the CBO to increase the national debt by $239 billion and $1.042 trillion respectively. The administration, meanwhile, has not produced any health-care reform legislation that has been independently determined to be deficit-neutral.
Castor Oil Part 2 Part 2 of the Tampa Town Hall meeting on August 6. Even the people that was selectively allowed in weren't buying the Obama Care that Congresswoman Kathy Castor was selling.
Health care's big money wasters More than $1.2 trillion spent on health care each year is a waste of money. Members of the medical community identify the leading causes. Down the drain: $1.2 trillion. That's half of the $2.2 trillion the United States spends on health care each year, according to the most recent data from accounting firm PricewaterhouseCoopers' Health Research Institute. What counts as waste? The report identified 16 different areas in which health care dollars are squandered. But in talking to doctors, nurses, hospital groups and patient advocacy groups, six areas totaling nearly $500 billion stood out as issues to be dealt with in the health care reform debate.
Barack Obama's USA: SEIU Union and/or ACORN Goons Get Violent at Kathy Castor Tampa Town Hall
Town hall attacks on health care -- mob rule or democracy in action? Opponents of health care reform are disrupting town halls from coast to coast. As Ticket reported last week, protesters in Maryland hung a congressman in effigy. In Texas, anti-reformers held a sign showing a tombstone with Democratic Rep. Lloyd Doggett's name on it. And in Missouri, police arrested six people outside a health care forum with Democratic Rep. Russ Carnahan after protesters organized by the conservative St. Louis Tea Party clashed with pro-reform union workers.
Barack Obama's USA: Union and/or ACORN Goons Get Violent at Kathy Castor Tampa Town Hall (Part 2)
Look for the union label The 'persuasion of power' is employed to squash dissent Politics is getting increasingly violent as Democrats desperately try to salvage their health care bill. Rep. Brian Baird, Washington Democrat, said last week that public protest against the government health care plan "is close to Brown Shirt tactics." For Mr. Baird to characterize his constituents as Nazi storm troops is distasteful, to say the least. Yet it is fully in line with the tone set by House Speaker Nancy Pelosi, who misleadingly decried protesters "carrying swastikas." Closer examination revealed that in every case, the symbol was being used as a warning against the arrogance of power of which Mrs. Pelosi has become emblematic. Democratic talking points characterize the spontaneous grass-roots opposition to the planned government takeover of the health care system as being organized by a shadowy cabal of lobbyists and insurance companies. However, the real storm troops are being deployed openly by organized labor in an attempt to squelch dissent.
Public 'scared' of overtaxing system Americans don't want a government that's too big to fail, and they're scared the cost of President Obama's health care overhaul would overtax a system already bursting at the seams, says the man former President Bill Clinton tapped to oversee the government's performance. David M. Walker, the former comptroller general of the United States, says the angry outbursts at town halls nationwide show that every-day Americans are increasingly more aware and more concerned than their elected officials regarding the budget deficit, the national debt, and promises by the government to spend money it doesn't have.
"Bank Accounts & ACORN Funding" Kathy Castor Town Hall Person asked about why the Healthcare Bill allows for the gov't to intrude into our bank accounts and also asks about special treatment for ACORN and other groups. This constituent was allowed to ask a question, but the congresswoman had already snuck out the back door without being asked any questions. Background: When we entered the room, they thought we were union members when in fact we were against Obama's Health Care plan. There were 2 rows reserved for Union Members who were ushered in via the back door of the room. Those who opposed Kathy Castor's support of Healthcare were not allowed in. Union members blocked the doors.
House leaders call noisy disruption of healthcare forums 'un-American' Nancy Pelosi and Steny Hoyer say an 'ugly campaign is underway' in the dramatic protests. Republican Mitch McConnell says Democrats are just trying to change the subject. House Speaker Nancy Pelosi and Majority Leader Steny Hoyer, insisting at the start of a long and politically heated summer congressional recess that healthcare reform can be achieved this fall, today are calling the disruption of town-hall meetings by vocal protesters "simply un-American." "We believe it is healthy for such a historic effort to be subject to so much scrutiny and debate," Pelosi (D-Calif.) and Hoyer (D-Md.) wrote in a USA Today opinion piece published today.
NH Senator Refuses to Meet with Constituents (1/2) Town Hall discussions around the country have not been going very well for politicians. New Hampshire is no exception. See what happened when OTN went to ask a few tough questions to US Senator Jeanne Shaheen.
Obama braces for 'vigorous' town hall health talk Ready for health care confrontation, Obama says 'sensible, reasoned' arguments will prevail A day before facing a potentially boisterous town hall in New Hampshire, President Barack Obama praised the spirited debate over his health care plans on Monday and predicted "sensible and reasoned arguments" would ultimately prevail in Congress. Obama plans to pivot his message somewhat on Tuesday, addressing people who already have insurance through their employers and highlighting how his proposals would affect them. The White House is retooling its message amid polling that shows Americans -- especially those who have coverage -- are skeptical of Democratic proposals to expand to cover many of the 50 million or more uninsured.
NH Senator Refuses to Meet with Constituents (2/2)
Gasoline prices near their peak Summer price spike is below normal due to weak economy, but markets and storms could change the forecast. Gasoline prices, which have surged 19 cents in the past 20 days, are not far from the highest level industry analysts expect this summer, but they remain well below last year's record. The average national price for a gallon of gas could fluctuate between $2.55 and $2.70 a gallon in the coming weeks, according to spokesman Troy Green of motorist group AAA. But he warned that the estimate depends on such factors as the price of crude oil, which has risen in the past few weeks, and the severity of the so-far quiet hurricane season.
Obama Promises Solution to U.S.-Mexico Trucking Spat President Barack Obama told his Mexican counterpart Felipe Calderon that he is committed to resolving a dispute over truck access to U.S. highways. Obama said he will also address safety concerns about the trucks raised by the U.S. Congress, an administration official said after the two leaders met in Guadalajara yesterday at a summit of North American leaders. Calderon told Obama that the dispute has hurt trade, raised consumer costs and reduced job creation, according to a statement from his press office.
Towards a North American Energy Corridor As a result of NAFTA, North America is already a well-integrated energy market with Canada and Mexico among the U.S.'s top energy trading partners. Through the Security and Prosperity Partnership (SPP), the North American Energy Working Group has further integrated a continental energy strategy. Other initiatives are also pushing towards a single North American energy policy.
Two Major Quakes Strike in Less Than 15 Minutes Two potentially destructive earthquakes struck minutes apart in the Indian Ocean and Japan today, generating tsunami alerts for India, Myanmar, Indonesia, Thailand, Bangladesh and Japan. The larger of the two quakes was a magnitude-7.6 temblor that hit the Andaman Islands in the Indian Ocean. It was followed less than 15 minutes later by a 6.6-magnitude quake in Japan southwest of Tokyo. The tsunami watch was later canceled, the U.S. Pacific Tsunami Warning Center said, adding that no significant tsunami was generated. The alert was in effect for as long as three hours after the quake struck parts of India, Myanmar, Indonesia, Thailand and Bangladesh, the Japan Meteorological Agency said.
7.6 magnitude quake hits Indian Ocean U.S. officials on Monday reported that a huge 7.6 magnitude earthquake struck in the Indian Ocean and issued a regional tsunami watch for India, Myanmar, Indonesia, Thailand and Bangladesh that was lifted later. The U.S. Geological Survey said the quake was about 160 miles (257 kilometers) north of Port Blair in India's Andaman Islands and about 20.6 miles (33 kilometers) deep. "The danger for a tsunami is real," William Leith, an earthquake manager at the USGS, said in an interview.
Strong earthquake strikes southwest of Tokyo A strong earthquake jolted Tokyo and surrounding areas early on Tuesday morning, throwing food and bottles from store shelves, disrupting transport and closing a nuclear plant for safety checks. The magnitude 6.5 quake rattled houses across the Tokyo region and prompted the suspension of train services and the closure of highways for inspections, but there were no immediate reports of major damage.
The Blodget - Spitzer Interview: Who Killed Wall Street? Part 1 Eliot reflects on the near-collapse of our financial system and answers an all-important question: Who screwed up?
Part 2: Spitzer's Verdict: Pay Citi Trader $100 Million
Part 3: Is It Spitzer's Fault AIG Nearly Destroyed the World?
Part 4: Spitzer to Failed Regulators: "Do Your Job" - Don't Got to Lunch with Investment Bankers
Part 5: The Comebacks
Part 6: Spitzer's Wise Investment Advice: You Can't Win So Don't Play
Crash Course: Inflation (Pt. 2) How Much is a Trillion? by Chris Martenson
3 US banks bite the dust last week; 72 failures this year The signs of economic recovery notwithstanding, woes are mounting on the American banking sector, as 72 banks have collapsed so far this year, nearly three times more than the number of bank failures in 2008. On an average, 10 banks have gone belly up every month this year. In 2008, 25 banks went out of business. In the first week of August, the authorities closed down three entities, First State Bank, Community National Bank of Sarasota County and Community First Bank.
Gold Bullion Regaining Its Glitter Is gold bullion coming back to life? Should one read anything into the rise of 6.2% (+$56) since the yellow metal's low of early July? When it comes to gold bullion and gold stocks, I need to confess I started my investment career in 1984 as none other than a mining analyst. Ever since those days of calculating net present values on my trusted HP 12C I have been intrigued by the shenanigans of the yellow metal and related stocks. And I have also learnt over the years that one should never underestimate the ability of the gold price to surprise when least expected.
Gold - Short Term Guidelines When Gold prices get off to a good start in August the initial rally generally lasts fourteen to eighteen trading days and tops out by the nineteenth of the month. Having bottomed at $925 on July 29th we project an optimum time window for an interim high by the week of August 17th. Corrections from the August highs retrace 50% to 70% of the preceding rally before staging the next leg on the upside.
Crunch Time for Gold Have you noticed the sea change in gold volatility lately? Gold was, for awhile, "the opposite stock." Now, it's more likely that big moves in the S&P 500, most particularly upside moves, will be accompanied by sympathetic movement in gold prices.
Last Week Gold Declined, But Only Half As Much as the USD Rallied - What's Next? . . . . The fundamental situation in the precious metals market justifies a move above the $1000 level, as does the size of the correction that followed the initial breakout above the four-digit barrier. Still, despite the previous bearish signals, the situation in the USD market has become murky, and consequently, makes specific calls for the PM sector very risky. The precious metals themselves are showing strength, but if the USD will move higher from here, the PM's rise could be delayed.
Germany's gold is in U.S. custody, Bundesbank confirms International journalist Max Keiser has just posted a nine-minute documentary he has done about the British government's gold sales that were begun in 1999 and now are disparaged as "Brown's Bottom," after then-Chancellor, now-Prime Minister Gordon Brown, who decided upon the sales and remains unashamed that they marked the bottom of the gold market. Keiser's documentary is based largely on an interview with Conservative Party opposition Member of Parliament Phillip Hammond, who is shadow chief secretary of the treasury and who remarks that the British gold sales seem to have been structured precisely to knock the price of gold down rather than to maximize the return to the British government. Hammond also wonders aloud whether "something other than achieving the best price" might have been the objective of the gold sales scheme.
Max Keiser - "Brown's Bottom" Documentary from Max Keiser about Gordon Brown's sale of half of Britain's gold reserves at the bottom of the gold market.
What makes gold precious and valuable? Have you any idea how much gold has been mined off so far? Or how much space would all the mined gold so far fill? According to New York -based Ross Metals, 161,000 tonnes of gold have been mined, with more than half of that being extracted in the last 50 years. The quantity might sound huge, but it is barely enough to fit two Olympic-size swimming pools and that's all the gold in history of mankind.
Peak Gold: Are gold deposits vanishing? You don't hear a lot about "peak gold," but the fact is that great gold deposits are harder and more costly to find these days. Then getting the few finds into production takes more time and money than ever before. . . . . . . . . If fear and inflation win out, the gold price will continue to rise. I personally don't know why it would rise dramatically over the next year, but I can see a volatile uptrend through the $1,200 mark over the next few years.
Central banks renew pact on gold sale Finally, the decision is out. European central banks will go for another five-year cap on gold sales but the limit has been cut by 100 tonnes to 400 tonnes. According to a statement issued by the banks, the institutions agreed to limit total gold sales to 400 tonnes a year, with total sales over the five-year period capped at 2,000 tonnes. That's less than the annual cap of 500 tonnes in the current agreement, which expires on 26 September. The plan takes effect on September 27, immediately after the expiration of an existing five-year agreement.
New Central Bank Sales-Agreement Very Gold-Bullish Europe's central banks jointly announced a new sales agreement to govern the gold they annually dump onto the market. They announced a 20% lower quota - down to 400 tons per year - despite the price of gold sitting only a couple of rallies away from a new, nominal record. The fact that these central banks are significantly reducing their gold sales despite the high price of gold can only be interpreted two ways. First, it could simply signify that these central banks have much less gold to sell, and thus will be steadily reducing their sales no matter how high the price of gold goes.
Central banks globally hold 29,697 tonnes of gold While it was widely expected, the Central Bank Gold Agreement CBGA2 has been rolled over into a CBGA3. Under the new agreement announced on Friday morning, signatories won't be allowed to sell more than 400 tonnes of gold. This restriction is 100 tonnes a year less than the 500 tonnes a year under CBGA2. In total, the sales will not exceed 2,000 tonnes in five years. Signatories to the agreement includes the 16 Eurozone central banks, the ECB, the Swiss Central Bank, and the Swedish Central Bank. While the immediate impact might be limited, we view the long-term impact of CBGA3 as positive for gold.
Why central banks capped gold sales at 2,000 tons Gold opened under only mild selling pressure on this last trading day of the first week of August. Overseas (read: Chinese) stock market developments helped push oil prices lower and the US dollar somewhat higher this morning, while New York was gearing up for what could turn into an unpleasant day in the wake of US unemployment statistics. Bullion started Friday's session off with small losses on the order of $1.50 per ounce, quoted at $961.60 as participants hung on for the release of the jobs data.
Ron Paul: Obama 'Deserves an F' Rep. Ron Paul (R-Texas) said Thursday that President Barack Obama deserves a failing grade for his first 200 days in office. The libertarian-minded Republican ultimately graded the president at a just-passing "D" when asked to rate Obama's performance during an interview on CNN's "American Morning," though only because he decided to factor in extenuating circumstances.
'Experts' Never Learn by Peter Schiff There is an inexplicable, but somehow widely held, belief that stock market movements are predictive of economic conditions. As such, the current rally in U.S. stock prices has caused many people to conclude that the recession is nearing an end. The widespread optimism is not confined to Wall Street, as even Barack Obama has pointed to the bubbly markets to vindicate his economic policies. However, reality is clearly at odds with these optimistic assumptions.
Paulson's Calls to Goldman Tested Ethics Before he became President George W. Bush's Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.
In Fed We Trust While Regulators Slept Forget Stephen King. For readers determined to decipher the baffling collapse of Wall Street, David Wessel's account of what has transpired behind closed doors in Washington over the past couple of years provides a tale that's nothing short of hair-raising. Wessel, economics editor at The Wall Street Journal, reveals in scary detail how unprepared the politicians and regulators truly were for the calamity, and how close we came to a depression that could easily have rivaled what the nation saw in the 1930s.
Jim Rogers on the China Bubble
Geithner Asks Congress to Increase Federal Debt Limit U.S. Treasury Secretary Timothy Geithner asked Congress to increase the $12.1 trillion debt limit on Friday, saying it is "critically important" that they act in the next two months. Mr. Geithner, in a letter to U.S. lawmakers, said that the Treasury projects that the current debt limit could be reached as early mid-October. Increasing the limit is important to instilling confidence in global investors, Mr. Geithner said. The Treasury didn't request a specific increase in the letter. "It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Mr. Geithner said in a letter to lawmakers.
U.S. Federal Deficit at $1.3 Trillion, and Counting The budget deficit last year was high, but we are beating it by $880 billion. Oh joy. The CBO suggests that this estimate understates things because it just includes payments to Fannie Mae and Freddie Mac and does not include their total operations, which are horrendous money sinks.
Where did that bank bailout go? Watchdogs aren't sure Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation's financial sector, it's still difficult to answer some of the most basic questions about where the money went. Despite a new oversight panel, a new special inspector general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don't have all the weapons they need. Ten months into the Troubled Asset Relief Program, some members of Congress say that some oversight of bailout dollars has been so lacking that it's essentially worthless.
Obama likely in no rush to nod on Bernanke's fate President Barack Obama is unlikely to tip his hand as soon as financial markets would like on whether he plans to name Federal Reserve Chairman Ben Bernanke to another term. Many investors have signaled they would prefer Bernanke to get a new four-year term after his first one expires on January 31, 2010 and they would like Obama to lay to rest any uncertainty about the renomination without delay.
Banks line up for second round of TARP Under regulatory pressure and facing few capital-raising options, some small lenders are looking to the government for help. Again. For some banks, the grim reality is that another dose of TARP may be their best shot at salvation. Overwhelmed by loan losses, some hard-hit lenders are hitting up the Treasury Department for even more money from the Troubled Asset Relief Program. Last week, Midwest Banc Holdings (MBHI), a community bank based just outside of Chicago, outlined an extensive capital raising initiative after suffering its second consecutive quarterly loss. The bank said it had applied for as much as $138 million under Treasury's Capital Assistance Program, or CAP, an extension of the original TARP. The bank received $84.7 million in TARP funds last December.
Banks make $38bn from overdraft fees Poorer consumers are worst affected US banks stand to collect a record $38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research. The fees are nearly double those reported in 2000. The finding is likely to increase public hostility towards the financial sector, which has been under political pressure to ease the burden on consumers by increasing credit availability and lending more fairly after being bailed out by taxpayers.
Problem Bank List (Unofficial) This is an unofficial list of Problem Banks. The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay - the most recent data is from June 30th. The Fed and OTC data is more timely, and the OCC a little lagged.
Hold or Fold, but Don't Waver BUY-AND-HOLD investing isn't for the faint of heart. It works only if you're willing to hang onto losing stocks for very long periods, in downturns that may be far sharper than you ever imagined. If you don't have such fortitude, you're better off selling at the first sign of trouble and sitting on the sidelines. Those, at least, are the implications of one of the first academic explorations of the recent liquidity crisis, "When Everyone Runs for the Exit," by Lasse H. Pedersen, a professor of finance at New York University. The study began circulating this summer in academic circles. In a liquidity crisis, as we have seen all too recently, a sudden tightening of credit sets off a vicious cycle of margin calls that lead to forced sales, which in turn cause asset prices to plunge, and so on. Invariably, the abruptness and severity of the crisis test the emotional and financial reserves of investors.
Are we in for shortages in 2010 Commodity shortages are likely next year as output of metals and agricultural products potentially rises too slowly to match revival of demand, according to a Goldman Sachs Group study. The Reuters/Jefferies CRB Index of 19 commodities has added 17 percent this year, driven by energy and metals prices. Limits on production growth and swelling demand in developing nations will keep driving prices higher and probably curb usage in industrialized countries like the U.S., Goldman Sachs said.
On the Edge with Max Keiser - 07 August 2009 (1/3) thoughts about auditing the Fed!
Fed likely to keep key interest rate at record low With the economy strengthening but still fragile, Federal Reserve policymakers are expected to hold a key lending rate at a record low this week and will weigh whether to extend some programs that were created to ease the financial crisis. Fed Chairman Ben Bernanke and his colleagues also are likely to signal that while the recession is winding down, the pain isn't over. Though the unemployment rate dipped to 9.4 percent in July - its first drop in 15 months - economists predict it will start climbing again. Many, including people in the Obama administration and at the Fed, say it could still top 10 percent this year.
Fed to dampen rate hike talk, halt Treasury buying The Federal Reserve meets this week with the delicate task of curbing a surge in expectations that it is ready to starting raising interest rates, without snuffing out crucial optimism on the economy. Policy-makers are also likely to allow a controversial scheme to buy $300 billion of longer-dated Treasuries to end on schedule in September. But they may discuss extending a separate program to support the flow of credit to consumers and business, with an eye on propping up commercial real estate.
Entering the Greatest Depression in History While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. Indicators show that the next possible burst is the commercial real estate bubble. However, the main event on the horizon is the “bailout bubble” and the general world debt bubble, which will plunge the world into a Great Depression the likes of which have never before been seen.
On the Edge with Max Keiser - 07 August 2009 (2/3) clip includes "Brown's Bottom", also show above
Gov. orders review of outdated business regs New York Gov. David Paterson announces he will start a program to eliminate or revise some of the states more burdensome rules and regulations. The days are numbered for a bizarre state regulation requiring some restaurants to display a sign saying "parevine sold here," as well as other antiquated or obsolete rules that Albany imposes on businesses. Gov. David Paterson announced Friday that he will sign an executive order establishing a program to eliminate or revise regulations that unnecessarily burden businesses, including health care providers, as well as local governments. A committee will be formed to systematically review one group of agencies at a time. For each group, affected constituencies and the public will get a 60-day period to comment on whether existing regulations are "unnecessary, unbalanced, or unwise," the governor's office said.
Murdoch signals end of free news Mr Murdoch has warned of possible job losses News Corp is set to start charging online customers for news content across all its websites. The media giant is looking for additional revenue streams after announcing big losses. The company lost $3.4bn in the year to the end of June, which chief executive Rupert Murdoch said had been "the most difficult in recent history". News Corp owns the Times and Sun newspapers in the UK and the New York Post and Wall Street Journal in the US.
8/7/09 Judge Napolitano's Verdict on Fishy White House Request Judge Andrew Napolitano on an outrageous White House request to forward them anything about health insurance reform that might seem "fishy."
Small is beautiful (and successful) for newspapers Newspapers are hurting all over the United States, but the pain is less severe at small publications like The Blackshear Times in Georgia. The weekly newspaper fills an information vacuum in a county of 17,000 people who live about 75 miles from the closest metropolitan market, in Jacksonville, Fla. That has made it easier for The Times to hold on to its 3,500 subscribers and keep its revenue stable in a recession that's ravaging much of the newspaper industry. "CNN is not coming to my town to cover the news and there aren't a whole lot of bloggers here either," said Robert M. Williams Jr., The Times' editor and publisher. "Community newspapers are still a great investment because we provide something you can't get anywhere else."
Single-Payer Groceries, Anyone? The American Socialist Party (ASP), whose members entertainingly call themselves "Democrats," is determined to use its control of the executive and legislative branches of government to destroy the private health insurance and healthcare industries in favor of "single-payer" healthcare. Of course, when government is the single payer that means government-run monopoly. Average people instinctively understand that monopoly is never in their best interest, but to politicians who will administer and benefit from the monopoly the thinking is apparently "it's good to be the monopolist," as Mel Brooks might say.
Hunger hits Detroit's middle class Food has long been an issue in this city without a major supermarket. Now demand for assistance is rising, affecting a whole new set of people. On a side street in an old industrial neighborhood, a delivery man stacks a dolly of goods outside a store. Ten feet away stands another man clad in military fatigues, combat boots and what appears to be a flak jacket. He looks straight out of Baghdad. But this isn't Iraq. It's southeast Detroit, and he's there to guard the groceries. "No pictures, put the camera down," he yells. My companion and I, on a tour of how people in this city are using urban farms to grow their own food, speed off.
The Unemployment Dam Is Breaking A torrent of broke and unemployed workers may be about to start flooding the streets. A primary bulwark against foreclosures and destitution is about to give way. Almost 500,000 Americans will exhaust their unemployment insurance benefits by September. That includes 354,000 for that month alone. The economic consequences will be severe. Social unrest is inevitable.
Market rally, economic growth depend on consumer Now that housing and even unemployment are showing signs of improvement, Wall Street wants consumers to do their part to heal the economy. Investors get some insight this week into how consumers are spending from a government report on July retail sales. They'll also find out if consumers helped major retailers including Wal-Mart Stores Inc. and Macy's Inc. join the stream of companies that reported better-than-expected second-quarter earnings and forecasts. "What we'll see now is close attention to consumer behavior," said Joe Heider, president of Dawson Wealth Management in Cleveland.
On the Edge with Max Keiser - 07 August 2009 (3/3)
No swift recovery for US jobs market It is Barack Obama's 200th day in office, but he's unlikely to be celebrating. The latest US unemployment figures are better than expected but still a depressing read, with 247,000 US citizens losing their jobs in July. It means that a total of 9.4% of the population is now out of work. Although this is a marked improvement on the figures for June, economists say unemployment is likely to reach an uncomfortable 10% this year.
If Americans Do Not Return to Work, There Is No Recovery First, a historical note... US equities have just come off their best July since 1989. Overall, the market is up over 8% for the year. But if we look backward (after all, hindsight is 20/20), March 1989 also saw a huge run up. It was followed by an even stronger rally in July, during which volume dried up. It appears the same is happening now. What came next in 1989 was a big sell-off in September, followed by an even greater one in October. Don't look now, but history tends to repeat itself. Also, consider the fundamental picture. We have rallied 48% from the March lows on the back of what? Good earnings? Good employment figures? Good spending figures? Expanding GDP? No.
Another Hurdle for the Jobless: Credit Inquiries Digging out of debt keeps getting harder for the unemployed as more companies use detailed credit checks to screen job prospects. Out of work since December, Juan Ochoa was delighted when a staffing firm recently responded to his posting on Hotjobs.com with an opening for a data entry clerk. Before he could do much more, though, the firm checked his credit history. The interest vanished. There were too many collections claims against him, the firm said.
And You Thought a Prescription Was Private MORE than 10 years after she tried without success to have a baby, Marcy Campbell Krinsk is still receiving painful reminders in her mail. The ads and promotions started after she bought fertility drugs at a pharmacy in San Diego. Marketers got hold of her name, and she found coupons and samples in her mail that shadowed the growth of an imaginary child - at first, for Pampers and baby formula, then for discounts on family photos, and all the way through the years to gifts suitable for an elementary school graduate.
Health care debate degenerates into brawls, death threats Rep. Emanuel Cleaver will hold his monthly "Coffee with Cleaver" Saturday morning, and the Missouri Democrat, a Methodist minister, is praying for the best. He's expecting the worst, however, based on what's been happening around the country as the debate over overhauling the nation's health care system grows increasingly bitter and more divisive. "President Obama underestimated the free-fall the nation had already taken in partisan hostility when he talked about bringing change to Washington," said Cleaver, who supports reform. "It has gotten worse. There is something at play here that is indescribable."
Health-care outbursts foreshadow a hot August Loud outbursts, hot tempers and pleas for civility at town hall meetings around the country Saturday foreshadowed a long, hot August as Democratic lawmakers returning home faced resistance to proposals to reform the nation's costly health care system. At a meeting in Des Moines, Sen. Tom Harkin of Iowa, was interrupted several times by people in the audience shouting criticism and questions, even though he said he didn't expect Iowans to take part in what he called "scare tactics, misinformation and obstruction." "As we have seen in recent days, opponents are pulling out all stops to kill the reform effort. This is a shame," Harkin said. But his words didn't stop some in the estimated crowd of 200 from disrupting the meeting, where uniformed police officers were present. Des Moines police said no one was arrested.
MSNBC: 45-65% Of Healthcare Protesters Are Racist and Sarah Palin Fans
Medicare's Hospital Program Went Broke in 2008. Nobody Noticed. This is taken from a March 25, 2008 press release from the U.S. government's Department of Health and Human Services. This year the HI Trust Fund will spend more than its income, and from 2009 through 2017, about $342 billion will need to be transferred from the Federal treasury to cover beneficiaries' hospital insurance costs. Was this front-page news? Of course not. Did the media cover this up? In the sense of not reporting it, yes. In the sense of actively comprehending it and deliberately suppressing it, no. The one-sentence admission indicated that the Federal deficit is going to climb. Medicare is politically untouchable. Old people have been promised coverage, and no politician is going to tell granny she must fork over her life's savings to pay for her own health care expenses. Not yet, anyway. Not this year.
Medicare Trustees Report Shows Serious Financial Status of Medicare Program In their annual report, the Medicare Trustees today announced that both the Medicare Hospital Trust Fund and the Supplementary Medical Insurance Trust Fund expenditures are growing faster than the rest of the economy. The Trustees report expenditures were $432 billion in 2007, or 3.2 percent of gross domestic product (GDP), and are projected to increase to nearly 11 percent of GDP in 75 years.
In the U.K. . . . . . . A request to snoop on public every 60 secs Councils, police and other public bodies are seeking access to people's private telephone and email records almost 1,400 times a day, new figures have disclosed. The authorities made more than 500,000 requests for confidential communications data last year, equivalent to spying on one in every 78 adults, leading to claims that Britain had "sleepwalked into a surveillance society". An official report also disclosed that hundreds of errors had been made in these "interception" operations, with the wrong phone numbers or emails being monitored.
The US government is using laws designed for dealing with a very deadly pandemic or bioterrorism to bring in a mass vaccination program for swine flu, specifically the Public Readiness and Emergency Preparedness Act of 2006.
This law removes liability from the manufacturer, medical practitioners who use the product, and from “government program planners” who decided on using the law. A suit can only be brought if the DHHS Secretary allows it, and if there is willful misconduct on the part of the manufacturer. This law has been invoked for swine flu drugs (tamiflu and relenza) for swine flu vaccines, and for novel vaccine adjuvants (which may be used in vaccines to stretch the supply and possibly convey broader immunity)
If testing of these products is very limited, then the manufacturers are unlikely to become aware of their flaws, and specifically their adverse effects. Then there can be no willful misconduct.
Due to the fear that swine flu will cause a large outbreak once students return to schools, where the virus might rapidly spread, the US government has stated that vaccine is likely to be available, and used, before clinical trials are completed. WHO says vaccine will be ready in September. Novartis began testing in humans in late July, and Sanofi-Aventis and Glaxo-Smith Kline are starting now.
Town Hall Protestor attacked by Union members supporting Obama & the DNC Union Supporters of Obama's healthcare reform attack a town hall protestor. Then tell him because he is black he should support Obama's plan
Palin accuses Obama of pushing Medicare 'death panel' Further staking out right-wing political ground in a Facebook post today, former Gov. Palin blasted Democratic-led health care reform and accused President Obama of backing a "death panel" that would withhold Medicare funds from the elderly and disabled when funding runs short.
Obama Health Care Equals Euthanasia The shoe has dropped. The hammer fallen. The word given. The new health care system must be trimmed. The Congressional Budget Office (CBO) estimates that Obama’s Health Care Plan will cost 1.5 trillion more than the White House estimated. Medicare is prioritized for budget cuts [The Heritage Foundation]. Half of all medical costs come in the last six month of life, so the Obama Administration will start rationing the elderly. Did someone say automatic euthanasia?
"The Health Insurers Have Already Won" One of the guest bloggers here, the esteemed Ed Harrison, was initially more hopeful about Obama than some of us (I an sufficiently cynical that I find it hard to get excited about any politician, although I will confess to falling for Australia's Kevin Rudd) but is now calling him a black Herbert Hoover. Even that is not quite sufficient, but is directionally correct. One of the defining characteristics of Team Obama its preference for spin in lieu of substance. Admiittedly, the Bushies had a variant of that, in their obsession with the visual staging of any presidential appearance (the attention to props and lighting detail would do Annie Liebowitz proud).
FreedomWorks' President Matt Kibbe on MSNBC's Morning Meeting
Obama in first summit with Mexico, Canada leaders US President Barack Obama attends his first summit of North American leaders in Mexico on Sunday, with the economic crisis and swine flu on an agenda overshadowed by Mexican drug violence. Hundreds of Mexican soldiers and police deployed in the western city of Guadalajara for the summit in which Obama, Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper were due to discuss a wide range of topics affecting the region of almost 450 million inhabitants.
one man's oipinion . . . . Obama and the union thugs President Obama and them thar Democrats are trying to impose the government into the healthcare in the United States of America (USA) and the majority of the American people do not want it. However Democratic Senator Chuck Schumer from New York (NY) said he did not care what the American people want, they were going to pass the healthcare bill. The Constitution is about 23 pages, while the healthcare bill passed by the Democrats in the House of Representatives is well over a 1,000 pages.
OAS delegation to visit Honduras The OAS suspended Honduras from the grouping after the coup in June The foreign ministers of six OAS states will arrive on Tuesday and hold talks with the Honduran interim government. They hope it will accept a plan under which ousted President Manuel Zelaya would return and elections be held. Mr Zelaya was sent into exile after a coup in June amid a power struggle over his plans for constitutional change.
Ransomed for terms The ultimate price is often much steeper Former President Bill Clinton has returned from Pyongyang with former Vice President Al Gore's employees Laura Ling and Euna Lee. The two women, reporters for Mr. Gore's Current TV operation, were seized by North Korean border guards on March 17 along the frozen Tumen River -- the border between North Korea and China. On June 8, following a five-day "trial," Pyongyang's Central Court convicted the women of "illegal entry to commit hostilities against the Korean nation" and sentenced them to 12 years at hard labor.
U.S. willing to talk directly with N. Korea The Obama administration said Sunday it is willing to hold direct talks with North Korea over its nuclear weapons if it first resumes international negotiations. Despite reports of his declining health, North Korean leader Kim Jong-il seems fully in charge of the reclusive communist country, White House national security adviser James L. Jones said. Mr. Jones said former President Bill Clinton passed no official messages and made no promises during his mission last week to bring home two American journalists convicted of and held in prison for illegally entering North Korea.
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Fri 08.07.2009
Americans Drowning in Debt Almost half of American homeowners will be underwater in 2011
Gold-Silver Ratio continues to decline Short covering before the session began carried the metal higher to open in NY at 954.75/955.75. Personal Income and Spending numbers both came in near expectation, having a benign impact on the metal.
Commodities bull market led by gold, silver, energy Gold & Silver Sector With the recent move in precious metals we are seeing gold stocks surge higher. The monthly chart generates long term buy signals. We are looking for a breakout above the red resistance trend line and if we get a breakout then I expect prices to surge higher for gold stocks, gold and silver bullion.
Indicators suggest gold poised for big breakout by end Q3 The slow trading months of summer are usually a time when gold prices decline, but economic analysts at Blanchard and Company, America's largest precious metals investment firm, say that indicators this year have them believing the metal is poised for a big breakout by the end of the third quarter. Specifically, inflation, possible hyper-inflation, dollar weakness, and supply/demand and investor demand fundamentals are all positive for the price of gold toward the end of the summer.
Gold Coins: Mints working overtime as demand leaps World over, the gold mints are working overtime to meet the demand for gold coins. Same is the case with UK's Royal Mint. The Royal; Mint, which was set up in 13th century, has doubled production of gold coins in the second quarter as demand surged for bullion to diversify investments. According to a report published in a leading British daily, output climbed to 16,910 ounces from 8,030 ounces a year earlier. First-half production jumped 86pc to 45,406 ounces. Demand for physical gold as a store of value and hedge against inflation has increased as governments spend trillions of dollars to combat the worst recession since World War II.
Gold Is Looking Good Gold has been on the move lately thanks to a weak dollar, but yesterday we had a move that did not coincide with the dollar's weakness. The dollar remained relatively flat as gold added another $8.80 to close about $969 which has been a fantastic 2 day run. I would wait for a pullback before opening a new position as there may be some near-term weakness in the price if the dollar firms here. I expect the dollar to continue its weakness moving forward which will be good for the yellow metal and I was very pleased with the flat nature of the DXY today and the upward price of all the precious metals. I am a long-term gold bull and think there is significant upside especially if it can break and hold about the magical $1,000 level.
Gold Will Hit $1300
Metals Snap-Back Rally The continued enthusiasm for metals can be tied to a combination of devaluation of the Greenback and hopes that western recessions are bottoming. The deteriorating US Dollar is an element that will have to be weighed against the demand picture for the next decade. However, western demand hasn't been fundamental to pricing metal, or oil, for over a decade. Current enthusiasm, especially in light summer trading, should be treated gingerly.
86% Surge in Gold Sovereign Production in UK The UK's Royal Mint doubled its production of sovereign gold coins in the first half of 2009 as British retail investors snapped up a hedge against inflation that does not attract capital gains tax as a coin of the realm. Bloomberg News extracted the data under a Freedom of Information Act request. The Royal Mint output climbed from 8,030 ounces in the second quarter of 2008 to 16,910 ounces for the comparable period this year. For the first half of 2009 production surged 86 per cent to 45,406 ounces.
China's gold output leaps by 13.5% In its bid to overtake other leading gold producing nations, China produced 13.49 per cent more gold year on year in the first half of 2009 to 146.505 tonnes. The total industrial output value of gold companies reached 60.08 billion yuan (8.79 billion U.S. dollars) in the six months nationwide, down 0.16 percent year on year, the ministry said, without giving details. Profit of these companies reached 5.57 billion yuan, down 15.75 percent year on year. Gold is the hottest commodity that several countries are after. While countries like China is aggressively trying to raise the gold reserves month-on-month, India is trying to export gold to destinations like the Gulf nations.
Zimbabwe set to become platinum hub Zimbabwe, a country with 100000 per cent inflation, is all set to produce a million ounces of platinum a year in the next ten to 15 years. That is the impact reforms sweeping the African nation now. The country has already changed its mining laws to attract foreign investment and mining giants are now lining up to tap the potential of Zimbabwe. The country is currently producing at a rate of 170 000 oz/y and there were good prospects for growth. The development of the Zimplats and Mimosa operations were examples of the progress that could be made by the Zimbabwe mining industry in a liberalised macroeconomic environment.
Max Keiser on Face Off - Criminal Banking Syndicates - 06 August 2009 (1/2) Max Keiser debates banker bonuses, criminal banking syndicates
Max Keiser on Face Off - Criminal Banking Syndicate - 06 Aug 2009 (2/2) Shareholders have no power, moral hazard, gold backed currency.
Historic Changes in Silver Market As I have been writing about for the past month or so, I think that big change is coming to the silver market. I believe that this change will be historic in nature. Since there are never any guarantees, I will present my reasons for expecting this great change in silver and leave it for you to decide on the merits of my argument. The first thing I see is a change in the pattern of investment accumulation of physical silver over the past few months. While pure retail demand appears to have cooled off from an anecdotal viewpoint given the overall choppy price action, actual demand statistics remain remarkably strong. In other words, reports from retail dealers indicate sluggish new buying interest, yet the official numbers indicate otherwise.
Mexican Silver One of the favorite theories of the silver bugs is that the world is out of silver and no one will ever produce it again so the price is going to rocket to $100 an ounce. It's a good theory but it ignores economics and after hearing ten years of it, the theory is getting a little long in the teeth. Mexico has one mine that produces 30 million ounces a year and has several districts that have produced over 1 billion ounces in total. I visited one of those districts a few days ago. I can assure my readers that Mexico has barely been scratched. There is a lot of silver. If you want to see $100 silver, you need to be on your knees praying for the world to go back on the gold standard, that's the only thing that is going to make silver go up 500%.
USD Situation There have been disturbing stories/rumors going around that the USD is poised for a crash episode in the Fall. The stories are basically anecdotal. One suggests that US embassies have been told to gather a year's local currency in their host country. That is one example. That story has also been denied by others in the US embassy organization, again, not officially, but anecdotally to me. We view these particular stories as more or less just rumors.
GDP, cash for clunkers, dollar, debt, depression
Fractional Reserve Banking in Pictures (PART 1/2) Dishonest Money: The Fall of the Dollar "The few who understand the system, will either be so interested in its profits, or so dependent on its favors, that there will be no opposition from that class. The great body of people, mentally incapable of comprehending the tremendous advantages, will bear its burden without complaint." - Lord Rothschild, European central banker
Geithner's Friends Are MIA After Tirade Last Friday Tim Geithner unfurled a slew of four-letter words that were not TARP, TALF or PPIP while blasting the banking regulators charged with executing Obama's overhaul of the financial system. The tirade was odd because Geithner takes pains to present himself as levelheaded and "deeply pragmatic"--as he was described 29 times in the crisis book Fool's Gold. And it was unsettling, because career public servants who have spent the past year working hundred-hour weeks on bureaucrat paychecks would not seem to be the most deserving recipients of Geithner's wrath.
US stocks slip after jobless claims report US stocks fall slightly despite better-than-expected weekly jobless claims report Investors are still having trouble making up their mind about the U.S. economy's prospects. An initial rise in stocks on Thursday quickly lost steam, and major indicators turned slightly lower in morning trading. New evidence that layoffs are stabilizing is being offset by sluggish retail sales reports. At the same time, investors are hesitant to make any big moves ahead of the government's tally of monthly job losses on Friday.
Five Reasons the Market Could Crash This Fall With all this blather about "green shoots" and economic "recovery" and new "bull market," I thought I'd inject a little reality into the collective financial dialogue. The following are ALL true, all valid, and all horrifying…
Commercial Real Estate Bubble About to Burst
U.S. Considers Remaking Mortgage Giants 'Bad Bank' Would Wipe the Slate Clean for Fannie Mae, Freddie Mac by Taking Their Toxic Loans The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said. The bad debts the firms own would be placed in new government-backed financial institutions -- so-called bad banks -- that would take responsibility for collecting as much of the outstanding balance as possible. What would be left would be two healthy financial companies with a clean slate.
WHAT DO THE CHINESE THINK ABOUT THE DOLLAR? China has been making it increasingly clear that it is not at all happy with the Federal Reserve's policy of quantitative easing. In a recent report, the People's Central Bank stated that,"A policy mistake made by some major central bank may bring inflation risks to the whole world."I wonder what nation they were talking about? The bank also expressed concern about the stability of the United States Treasury bond market. Richard Fisher, president of the Dallas Federal Reserve Bank, recently visited China. He admitted that,"Senior officials of the Chinese government grilled me about whether or not we are going to monetize the actions of our legislature. I must have been asked about that a hundred times in China." It is clear that the Chinese fear that the United States is going to renege on its debt by debasing its currency.
Where did $1.5 Trillion Dollars Go? Lawmakers are trying to pass a bill which would ask for an audit of the Federal Reserve. But there are some media outlets that are taking a different route. They are filing lawsuits under the Freedom of Information Act through which they try to find out which banks received bailouts and how much money they got. Just recently one such lawsuit was rejected. The problem might be that the Federal Reserve itself doesn't know where half a trillion dollars went.
WHERE DO WE GO FROM HERE? We are currently seeing a stock market rally, and many in the media are proclaiming that happy days are here again. Lost in the celebration is the fact that the current stock market rally has absolutely nothing to do with the fundamentals behind our economy. It has everything to do with mass psychology. Simply put, it was time for the market to rally after it had crashed to its low point in March, 2009.
Controlling the Global Economy: Bilderberg, Trilateral Commission, Federal Reserve Global Power and Global Government: Part 3 In 1954, the Bilderberg Group was founded in the Netherlands, which was a secretive meeting held once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as "an informal network of influential people who could consult each other privately and confidentially."[1] Regular participants include the CEOs or Chairman of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world.
The Thrill of a Lifetime? Anyone looking for thrills these days should forget roller coasters and skydiving. Instead, simply buy a few shares of U.S. stock. The past year has reminded us how truly stomach-churning the financial ride can be. And after a white-knuckled drop in 2008, investors who held on are now enjoying a dizzying ascent. In the past five months alone, the S&P has risen by 22 percent and the NASDAQ by 33 percent. Emerging markets are back almost to their pre-recession levels. Even individual American stocks have performed in a stellar manner. Apple, Cisco and Oracle have all risen by over 200 percent. Ford, an aging relic once given up for dead, has risen by 268 percent!
BRACE for "OCTOBER CRASH"
National Bankruptcy: Our Expiring Economy Tent cities springing up all over America are filling with the homeless unemployed from the worst economy since the 1930s. While Americans live in tents, the Obama government has embarked on a $1 billion crash program to build a mega-embassy in Islamabad, Pakistan, to rival the one the Bush government built in Baghdad. Hard times have now afflicted Americans for so long that even the extension of unemployment benefits from 6-18 months for 24 high-unemployment states, and to 46-72 weeks in other states, is beginning to run out. By Christmas, 1.5 million Americans will have exhausted unemployment benefits while unemployment rolls continue to rise.
Why Default on U.S. Treasuries is Likely Almost everyone is aware that federal government spending in the United States is scheduled to skyrocket, primarily because of Social Security, Medicare, and Medicaid. Recent "stimulus" packages have accelerated the process. Only the naively optimistic actually believe that politicians will fully resolve this looming fiscal crisis with some judicious combination of tax hikes and program cuts. Many predict that, instead, the government will inflate its way out of this future bind, using Federal Reserve monetary expansion to fill the shortfall between outlays and receipts. But I believe, in contrast, that it is far more likely that the United States will be driven to an outright default on Treasury securities, openly reneging on the interest due on its formal debt and probably repudiating part of the principal.
Obama likely in no rush to nod on Bernanke's fate President Barack Obama is unlikely to tip his hand as soon as financial markets would like on whether he plans to name Federal Reserve Chairman Ben Bernanke to another term. Many investors have signaled they would prefer Bernanke to get a new four-year term after his first one expires on January 31, 2010 and they would like Obama to lay to rest any uncertainty about the renomination without delay.
Cracking Down on the Fed John Browne of Euro Pacific Capital on whether the Federal Reserve has made the right moves in steering the economy out of recession.
End the Fed? A not-so-crazy idea. Congressman Ron Paul's bill may never pass, but history suggests the US economy would be better off without the Federal Reserve. Athens, Ga. - Since it was introduced in February, Representative Ron Paul's "Audit the Fed" bill (H.R. 1207) has gained 282 congressional cosponsors. If adopted, the bill would allow the Government Accountability Office to review, not only the Federal Reserve's balance sheet, but its recent monetary policy deliberations and transactions. Fed Chairman Ben Bernanke opposes the plan, saying it would undermine the Fed's hallowed independence.
GDP Fallacy Do Governments Willfully Mislead People? Last week I published an article titled:"The 11th Hour, Moments Before A US Economic Meltdown. In my writing I laid out a theory to explain how the government makes choices in its attempt is to solve the economic problems ailing the United States. I considered and wrote out my theory as a way to rationalize what had been happening within the financial markets over the last several weeks. As everyone knows, recently the markets have been on a tear upward. Much to my bewilderment, this run up has not been driven by powerful fundamental changes, key technical levels, or been followed by significant changes in trade volume. So what happened?How can we explain the irrational reasons for a market climbing when it should be falling apart? To get up to speed in this discussion, or to find out for the first time the reasons why I think we're going forward even though we shouldn't be revisit my original story via the link above.
Jim Rogers Says U.S. Commodity Curbs to Drive Markets Overseas U.S. proposals to place curbs on commodities trading will drive business overseas, particularly to Asia, said Jim Rogers, chairman of Rogers Holdings. "It is remarkable because America is shooting itself in the foot again," he said in an interview in Singapore today. "It's going to drive the business away and the rest of the world is going to welcome it with open arms." U.S. Treasury Secretary Timothy Geithner is urging Congress to rein in the $592 trillion derivatives market with new U.S. laws that are "difficult to evade." Opaque financial products contributed to almost $1.5 trillion in writedowns and losses at the world's biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg.
The Future of the U.S Dollar 2nd wave of world economic depression; dollar crisis due to hyperinflation
China Warns Developed Nations of Inflation, Currency Threats China's central bank warned that monetary easing by developed nations threatens to cause "severe" inflation and currency volatility. "Failure to manage the degree of easing may lead to concerns about mid- and long-term inflation and exchange-rate stability," the People's Bank of China said in a quarterly monetary policy report, posted on its Web site yesterday.
China Faces Delicate Task of Reining in Bank Lending When China announced three weeks ago that its economy had grown by 7.1 percent in the first half of this year, this country appeared to be a lone bright spot during the global recession. But many economists now worry that too much of China's growth was fueled by aggressive, state-directed lending that could eventually result in a soaring number of bad loans and mounting government debt.
European car sales /Max Keiser
Fannie Mae to Tap $10.7 Billion in Treasury Capital Fannie Mae, the mortgage-finance company taken over by the government, asked the U.S. Treasury for a $10.7 billion capital investment as an eighth straight quarterly loss drove its net worth below zero once again. A second-quarter net loss of $14.8 billion, or $2.67 a share, pushed the company to request money for the third time from a $200 billion government lifeline, Washington-based Fannie Mae said in a filing today with the Securities and Exchange Commission.
Sotomayor Confirmed by Senate, 68-31 Voting largely along party lines, the Senate on Thursday confirmed Judge Sonia Sotomayor as the 111th justice of the Supreme Court. She will be the first Hispanic and the third woman to serve on the court. Chief Justice John G. Roberts Jr. was expected to administer the oath of office to Judge Sotomayor, 55, in the next few days, with a formal ceremony likely in September. She succeeds Justice David H. Souter, who retired in June.
Obama sends stimulus aid to foreign firms Grants impel electric cars Nearly half of the $2.4 billion in federal grant money awarded Wednesday to stimulate the U.S. economy and boost the production of hybrid and electric vehicles went to six companies with ties to places as far away as Russia, China, South Korea and France. President Obama announced the grants during a visit to Indiana and said the funds would create domestic jobs and instigate more "green" manufacturing in the United States. But because so few American companies have the necessary technology, much of the money will initially go toward manufacturing electric vehicle batteries overseas.
Ugly Jobs Report Mean More Stimulus? Aqua America CEO Nick DeBenedictis on his company's earnings and employment and gives stimulus predictions
Congress Passes Bill Giving $2 Billion to 'Clunkers' The U.S. Congress gave final approval to an emergency measure adding $2 billion to the "cash for clunkers" auto purchase program after consumer demand drained the initial $1 billion in less than a week. The Senate voted 60-37 to inject cash into the program after rejecting a series of amendments that would have halted it for at least a month. The Senate action, following a House vote last week, sends the legislation to President Barack Obama, who plans to sign it into law.
Boeing's July Orders, Deliveries Drop on Lower Demand Boeing Co., the world's second- biggest commercial-jet builder, said it won 44 orders and delivered 33 aircraft last month, bringing total purchase contracts this year to 129 and total shipments to 279, according to the Chicago-based company's Web site update today. That compares with 70 orders and 36 deliveries in July 2008, and 522 orders with 277 deliveries in the first seven months of last year. There have been 89 cancellations so far this year for a net order tally of 40.
Job options narrow as U.S. recession bites Former corporate executive Don Yows took an entry-level job that set his career in information technology back by two decades. Rick Cumins is selling off his gun collection to make ends meet as his real estate business falters. Options are dwindling in the United States -- even for those with experience, skills and education as the world's largest economy sheds jobs in the face of recession.
Zuckerman Says U.S. Economy Is `Worse Than It Looks' Mortimer Zuckerman, chairman of Boston Properties Inc. and owner of the New York Daily News, talks with Bloomberg's Margaret Brennan about the outlook for the U.S. economy.
Democratic Senators Demand Trade Protections in Climate Plan Ten U.S. Senate Democrats demanded today that that any climate legislation include trade protections to prevent U.S. manufacturers from being put at a competitive disadvantage. The senators, including Carl Levin and Debbie Stabenow of Michigan and Sherrod Brown of Ohio, called for a so-called border adjustment mechanism that would impose costs on goods from countries that don't have the same limits as the U.S. does on greenhouse gases blamed for climate change. "We would find it extremely difficult to support a final measure that does not effectively deal with these important issues," the senators said in a letter to President Barack Obama today.
Commodity Shortage Likely in 2010, Goldman Sachs Say A commodity shortage is likely next year as output of metals and agricultural products potentially rises too slowly to match revived demand, Goldman Sachs Group Inc. said. Supply of cotton, soybeans, copper and zinc will be dictated by China, New York-based analysts Anthony Carpet, Laura Conigliaro and Robert Boroujerdi said in a report dated yesterday. The country consumes about a quarter to a third of world production of those raw materials and relies on supplies from abroad, they said. "We expect a redux of 2008, when severe supply constraints forced the rationing of demand through sharply higher prices to keep markets balanced," the analysts said.
Automakers Start Rush for New Models Trying to stimulate demand and return to profitability, Detroit automakers are rushing to get new models into dealerships. New and redesigned models typically command higher prices, generating larger profit margins. They also tend to sell faster and give buyers a more positive image of a brand. But developing new vehicles can take several years and cost hundreds of millions of dollars, a process that adds more costs at a time when all three Detroit carmakers have dwindling cash reserves. Yet with so many brands to choose from, and with technology rapidly changing, analysts say that automakers cannot afford to let vehicles go stale.
Commercial Real Estate Catastrophe Jeff DeBoer, CEO of The Real Estate Roundtable, on the looming crisis that awaits commercial real estate.
Did Morgan Stanley Just Screw Taxpayers Out Of $400 Million? This morning Morgan Stanley said it paid $950 million to repurchase warrants issued to the government as part of last fall's bank bailout program. So how does that stack up against recent TARP exits? Not very well, according to TARP warrant expert Linus Wilson. "This deal was not as good as the Goldman Sachs and American Express deals for taxpayers," economist Wilson says. Linus uses options pricing techniques to evaluate the present value of the warrants and compares it to what firms are actually paying. Taxpayers got 98 cents on the dollar--basically full price--from Goldman Sachs. American Express paid about 107 cents on the dollar.
Goldman Now Sitting on a Commercial Junk Pile Goldman Sachs (GS), as I've pointed out before, has done a good job reducing its exposure to commerical mortgages by selling off potentially troublesome loans well ahead of the curve. But it appears what's left in Goldman's commercial mortgage bin is all but untradeable, if not potenially toxic. The Wall Street firm has pushed just about all of its remaining commercial real estate loans and securities backed by those kind of loans into its Level 3 trash pile. For Wall Street firms, Level 3 is a category of assets that are difficult if not impossible to value because there is not ready market for them.
A Tale Of Two Commercial Real Estate Markets Here's a story that highlights the absurdity of real estate these days: Yesterday, in China, a 1.7 million square foot plot in a Beijing and a 2.2 million square foot plot in a Shanghai suburb fetched $623 million and $446 million, respectively. In Chicago, the 2.7 million square foot site of the old post office is about to be auctioned off, and the bids are starting at $300,000. (It will obviously go way higher than that, but probably nothing like it would once have gone for.)
U.S. Economy: Products vs. Profits Jeremy Siegel, Wharton finance professor, and Stephen Lerner, of the Service Employees International Union (SEIU), debate whether the U.S. should focus more on products or profits.
Same Store Sales Stink (July) Let's cut the crap here and now: there is no evidence of a consumer rebound anywhere in the same-store sales numbers. Discounters, which have largely been holding up amid the recession, reported largely lower results. Costco Wholesale Corp. reported a 2% drop in the U.S. excluding gasoline, and Target Corp. maintained its woes with a worse-than-expected 6.5% decline. Target Chairman and Chief Executive Gregg Steinhafel said the company was beginning to see "modestly improving risk trends" in its credit-card segment, which has struggled amid rising delinquencies and charge-offs.
Retailers Report Sluggish Sales Retailers posted generally lower same-store sales for last month, though many companies' results beat analysts' downbeat expectations. The poor July showing is building a case for caution going into the Christmas shopping season. Retailers are likely ordering less, which may mean discounts won't have to be as big this holiday season as last. Big names like Costco Wholesale Corp., Target Inc. and Macy's Inc. continued to fall short of already low expectations.
The Descent into Homelessness - The 5 Stages Preparing Americans for Hyperinflation
David Rosenberg: 'Clunkers' Exposes Government Stupidit Gluskin-Sheff economist David Rosenberg has some harsh words about the Cash For Clunkers program in his daily letter: We couldn't believe this when we saw this quote from the U.S. Transportation Secretary (Ray Lahood) in yesterday's NYT (page B3) on the "Cash for Clunkers" program: "There obviously is a real pent-up demand in America ... people love to buy cars, and we've given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who's going to be able to get a rebate from the government to buy a new vehicle."
Goldman: Get Ready For Oil Prices To Go Back To $147 Goldman Sachs is once again warning the world of a coming spike in oil prices that will remind everyone of 2008. The current financial crisis is to blame. While we focus on fixing the banking sector, we've forgotten that there are fundamental problems with the commodities markets. The spike from 2008 will return because there's been "decades" of poor investment decisions by oil producers.
White House Affirms Deal on Drug Cost Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion. Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.
Obama IN HIS OWN WORDS saying His Health Care Plan will ELIMINATE private insurance
Euthanasia Scare Shows a Tough Sell on Health Care Representative Tom Perriello said he was approached by two senior citizens who were trembling with fear. The source of their terror, he said, was their belief that President Barack Obama supports euthanasia for the elderly. The Virginia Democrat said the two constituents were clutching a leaflet from a religious group that purported to be a copy of Obama's health-care plan. It claimed the overhaul "would pull the plug and decide a 24-year-old's life was important and that an 85-year-old's wasn't," Perriello said.
Population Reduction After The Economic Collapse
ObamaCare's Real Price Tag The funding gap is a canyon by year 10. As ObamaCare sinks in the polls, Democrats are complaining that the critics are distorting their proposals. But the truth is that the closer one inspects the actual details, the worse it all looks. Today's example is the vast debt canyon that would open just beyond the 10-year window under which the bill is officially "scored" for cost purposes.
Red Ink Watch: Postal Problems Don Soifer of the Consumer Postal Council weighs in on the fate of the United States Postal Service.
Watch out! Obama is creating White House 'Enemies' List Yesterday I wrote about "Chicago-style" politics in the White House. I had no idea that the actions of Obama and his team would soon be going from bad to worse. Not only are they trying to intimidate sitting governors and members of Congress, but now they are trying to intimidate regular citizens. The White House is now putting the hammer down on people who disagree with Obama's health care proposals, and they want to know who these people are. In fact, the White House is encouraging people to report any "fishy" e-mails they receive. This is beyond "Chicago-style" politics. This type of intimidation cuts at the heart of free speech. Speak out against Obama, and you'll find yourself on a new White House "enemies" list.
Citizens accused of 'mob' activity by Democrats say they won't quit Conservative activists are vowing to keep up their fight against President Barack Obama's health care plans, even as the Democratic Party pushes back hard, accusing Republicans of organizing angry mobs. Democrats and the White House are claiming that the sometimes rowdy protests that have disrupted Democratic lawmakers' meetings and health care events around the country are largely orchestrated from afar by insurers, lobbyists, Republican Party activists and others. "This mob activity is straight from the playbook of high-level Republican political operatives," the Democratic National Committee says in a new Web video. "They have no plan for moving our country forward, so they've called out the mob."
Mission returns Clinton to world stage N. Korea may be just the start When Bill Clinton landed on American soil Wednesday after completing his secret mission to North Korea, he had not only secured the release of two American captives, but he also had opened a new chapter of his post-presidency. To his friends and longtime supporters, the successful mission put an end to a political purgatory Mr. Clinton has occupied since the darkest hours of the 2008 presidential primaries. It provided proof that he could make a disciplined return to the global stage in a deferential role. And his understated handling of the journey, during which he issued only a brief written statement saying he was "very happy" with the outcome, has led some of his close friends to speculate about his re-emergence, perhaps as the ultimate American diplomatic envoy. Face to Face/ Ronald Neumann/ 08 /05/ 2009 /part1 Discussion of our foreign policy; Afghanistan and Iran
Max Keiser: Bank Holiday in the fall ? - Dollar Devaluation! - - - BUY GOLD - BUY SILVER The truth about markets with Max Keiser
Gold leads commodities to hedge against inflation We've all heard that the stock market always looks forward, never back. You can see the proof. Just take a look at companies that recently announced great earnings, but still hedged their bets on future guidance. The reason is that the market wants to know what's going to happen in the future. It couldn't care less about what's already in the bank. Right now, the markets know one thing for sure: The U.S. Treasury is printing money and dumping it into the financial system at historically unprecedented rates in an effort to stimulate the economy.
Gold - Is the 17 month consolidation complete? Monthly Seasonal Gold Update Another month has come to an end in the gold market and it is always good to review where we've been and where we might be going. For those of you who follow the market closely, you know how important it is to constantly review the important aspects of the market and to keep those aspects in the forefront. Even if you view from a distance, a good monthly review is essential to keep up with the price trends of the gold market. The past 17 months sideways consolidation to a certain degree can sometimes put us in a frame of mind in gold that we get so used to the sideways trend that we might sometimes miss what is brewing underneath the market. In the article below you will read what I think is good evidence that this market is preparing for its next LEG of price movement.
Are Your Ready For Gold Rush? Last week, I explained why junior and exploration gold-mining stocks will be spectacular investments in the impending 21st Century gold rush. I will discuss specific stocks in the weeks ahead, but first let's talk about how to accumulate them. Because juniors are quite different from other stocks, the best approach to building a portfolio is to stick with a game plan formulated in advance. For starters, you should look for stocks of companies that hold the most resources or have the greatest potential relative to their market capitalization. There are some companies that have a $10 million capitalization, with good results and the potential for one to three million ounces. If the price of gold were to rise to $1,500 or $2,000 next year, odds are excellent that such stocks would increase in value by five or ten times.
The coming dollar devaluation, Obama to do like Roosevelt FDR
Cash For Clunkers Stalls In Senate The Senate sure is dragging out this latest handout to car companies and consumers (a.k.a., "Cash For Clunkers"). Perhaps it's the niggling realization that it's just a flat-out giveaway. Associated Press, WASHINGTON - Negotiations to save the dwindling "cash-for-clunkers" fund dragged out in the Senate on Wednesday, prompting Majority Leader Harry Reid to warn vacation-bound lawmakers they might be stuck in the Capitol a few more days if they don't pass a $2 billion replenishment for the car rebate program quickly.
UhOh! . . . a form of censorship, maybe, and why now?? You Tube Pulls Hundreds Of Ron Paul Videos You Tube has expanded its zealous copyright crusade by suspending the popular C-Span Junkie user channel, and in doing so has pulled hundreds of viral Ron Paul videos, which are now completely dead. The C-Span Junkie user channel, a non-partisan archive of short clips taken from C-Span broadcasts of events in the Congress and the Senate, has been the home of the vast majority of You Tube videos you have seen of Bernanke, Geithner, Paulson and others being confronted in Congress, as well as Ron Paul's speeches on the House floor. A total of more than 6400 videos in all have been pulled, hundreds of which featured the Texan Congressman. Whether or not C-Span itself requested that You Tube pull the channel is not known, but it is clearly in the public interest and constitutes fair use to show a clip less than 10 minutes in length of what the people who are supposedly our Representatives are saying in Congress on our behalf. As we have highlighted before, You Tube arbitrarily suspends accounts based on flimsy copyright claims that aren't even properly investigated.
Bob Chapman on Alex Jones Tv 1/2:Bank "Holiday" Coming??
Bob Chapman on Alex Jones Tv 2/2: Government control of water; ban ranching
The Most Important Economic Phenomenon and How to Play It The most important economic phenomenon lying ahead of us, which we must understand as traders and/or investors, is the inflation-versus-deflation battle. Below I discuss this most important of all financial phenomena, one poorly understood by the public at large, as we lead into specific ways to position ourselves in the marketplace. Inflation-or-deflation is a phenomenon not just of money supply, but of money in circulation. When Federal Reserve Chairman Ben Bernanke was interviewed recently by Congressman Ron Paul (R-TX), one of the smartest guys in Congress, he didn't give the full answer.
What the Fed is REALLY Trying to Hide In Fighting an Audit 75% of Americans and at least 276 Congress members and 19 Senators want to audit the Fed, but the Fed is fighting tooth and nail to keep everything hidden. Most people assume that the Fed wants to keep secret the list of banks which received bailout money. You know, something along the lines of "we gave Goldman Sachs $100 billion". But what the Fed is really struggling to keep hidden is the fact that the entire financial system is based on massive manipulation and fraud by the Fed and its primary dealers. Specifically, the Fed is desperately trying to hide that many trillions of the government's bailouts have gone to inflating the stock market, buying up the U.S. government's own treasuries, and gaming the currency and gold markets.
Wall Street falls further after data U.S. stocks extended losses on Wednesday, with the Nasdaq down more than 1 percent, after data showed the services sector contracted more than expected in July, overshadowing a bigger than expected rise in factory orders.
U.S. to sell more inflation-protected bonds The U.S. Treasury Department plans to ramp up sales of inflation-protected bonds to help fund the nation's growing budget deficit, The Wall Street Journal said on Tuesday, citing people familiar with the matter. China, the largest holder of U.S. government debt, is among investors that have indicated they want to buy more of the securities, the newspaper said, citing the people. An announcement will be part of the Treasury Department's scheduled announcement on funding for the third quarter, the newspaper said, citing the people.
U.S. Economy: Service Industries Shrank at Faster Pace in July Service industries in the U.S. shrank more than forecast in July, and companies cut another 371,000 jobs, indicating rising unemployment will erode spending. The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4 from 47 in June, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction. ADP Employer Services said companies cut staff last month more than economists anticipated.
Congressman Alan Grayson on King World News | Part 1/2 In this ground breaking interview Congressman Grayson discusses corruption at the Federal Reserve, the SEC and his tough questioning of Fed Chairman Ben Bernanke this week, we also discuss his take on Bernankes responses and much more. Congressman Alan Grayson was the first President of IDT Corp., a telecom/Internet company. It grew to be a $2 billion-a-year business, on the Fortune 1000 list, and traded on the New York Stock Exchange. In short, Alan has lived the American Dream, starting a successful business and seeing it grow.
Bank Regulators Resist Reform Aspects of Plan Would Undermine Oversight of Industry, Officials Say The nation's banking regulators are defying pressure from the Obama administration to line up in support of key proposed reforms, testifying before Congress on Tuesday that elements of the plan would actually weaken oversight of the financial industry. Treasury Secretary Timothy F. Geithner summoned the heads of half a dozen agencies for a caustic scolding Friday and told them they were interfering unacceptably in a political process, according to people familiar with the meeting.
Bank Balances Shift With Rule Changes After One Tweak Improved the Books, Another Could Erase Gains and More A controversial change in accounting rules earlier this year has allowed banks to claim billions of dollars in additional earnings simply by tweaking their bookkeeping, greatly enhancing the appearance that the industry is returning to health. A study by an accounting expert found that 45 financial firms reported higher first-quarter earnings because of the change. The total benefit exceeded $3 billion. Some large firms, including Prudential Financial and Bank of New York Mellon, were able to report profits rather than losses.
Weak economic data puts stock market rally on hold Wall Street rally goes on hold after report of weakening business at service companies Wall Street's summer rally is on hold after investors got some unpleasant news about the health of the service sector. The Institute for Supply Management reported Wednesday that business at service companies was weaker than expected last month. The trade group's services index, a measure of the health of retail, financial services, transportation and health care companies, fell to 46.4 from 47 in June, marking the 10th straight month of declines. A reading below 50 indicates the sector is shrinking.
Gasparino-Taibbi: Both Right On Goldman? Today, Barry Ritholtz weighs in on the debate over Goldman Sachs between Matt Taibbi and Charlie Gasparino. His verdict? They're both right. Writes Ritholtz: "How often do you read two utterly opposing viewpoints - and find yourself agreeing with both of them?" He explains the reconciliation: "I suspect Gasparino is reading Taibbi's piece literally - perhaps too literally. The best way to enjoy it is to think of it as the culmination of frustration by the public, with the struggling masses infuriated at Goldman's role in this crisis - their CEO requesting a special exemption for more leverage from the SEC (and getting it for themselves and 4 other firms), that same CEO becoming Treasury Secretary, and then doling out trillions of dollars to inept and insolvent financial companies, and finally, Goldman Sachs hoovering up billions. We know they sucked out $12.9 billion dollars via from AIG direct pass thru of bailout monies - must be nice to get 100 cents on the dollar! Most people are probably unaware that Goldman also grabbed $5.9 billion dollars just before AIG collapsed - a transfer that if AIG went thru the bankruptcy process, most likely would not have been permitted to stand.
Uncle Sam Demands Info On Goldman Pay Uncle Sam wants to know why Goldman bankers are making so much money. Oh, and what it's up to with those tricky credit derivative instruments. As Reuters notes, GS is cooperating with a U.S. Government request after an outpouring of frustration from official and public sources following its $3.44 billion net earnings between April and June -- and a $6.65 billion allocation in the quarter for compensation expenses.
Congressman Alan Grayson on King World News | Part 2/2
Government queries Goldman about compensation The U.S. government has queried Goldman Sachs Group Inc (GS.N) about its compensation practices and credit derivative instruments, the firm said on Wednesday. Goldman, in a regulatory filing, said it was cooperating with the requests -- tied to hot button issues that have captivated Wall Street and Washington.
Citi plans to sell 20 consumer finance businesses: report Citigroup (C.N) plans to sell 20 businesses in consumer finance area, many of them located in Europe, its CEO Vikram Pandit said in an interview with Singapore's Business Times. He said the move was due to the shift in the consumer finance market where "there is less funding availability and they are probably less robust as businesses." Pandit also said that the group's capital position following the completion of the exchange of preferred shares for common equity in July, reflected an "incredible financial strength."
New Battery Stimulus Spending Is Another GM Bailout The President announced today $2.4 billion in stimulus spending on advanced battery technology spread across 48 different projects. The money will go to a variety of battery makers, tech companies, automakers and Universities. General Motors appears to be the biggest winner, essentially receiving $392.8 million to advance development of its hybrid plug-in, the Volt. Of that sum, $151.4 million goes to Compact Power, a subsidiary of LG Chem, who is producing batteries for the Volt. The rest goes directly to General Motors.
Commercial foreclosures rocket Valley is 'at the tip of the iceberg' for notices, expert says More than 2,000 commercial properties in Maricopa County have received 90-day foreclosure notices since Jan. 1, representing $6.3 billion in real-estate loans on which the borrowers have failed to make payments. That number is staggering when placed in contrast with the average commercial foreclosure rate over the past decade, which has been practically zero. The problem, sparked by property-value declines and a paucity of refinancing options, has produced a steady flow of distressed commercial properties onto the market, with a heavy emphasis on small and midsize office and retail centers.
Peter Schiff - Get Out of The American Dollar, Bonds & American Stocks
U.S. Treasury to Sell $75 Billion in Long-Term Debt The U.S. Treasury plans to sell a record $75 billion in its quarterly auctions of debt next week and indicated plans to expand inflation-indexed securities next year as it finances unprecedented budget deficits. The Treasury plans to auction $37 billion in three-year notes on Aug. 11, $23 billion in 10-year notes Aug. 12 and $15 billion in 30-year bonds Aug. 13. The amounts matched the median forecast of analysts surveyed by Bloomberg News.
Fed Likely to End $300 Billion Treasury Purchases The Federal Reserve is likely to let its plan to purchase up to $300 billion in U.S. Treasuries expire in mid-September as scheduled, and its decision may be announced next week, former Fed Governor Laurence Meyer said. Plans to buy as much as $1.25 trillion of mortgage-backed securities and $200 billion of federal agency debt expire at the end of the year, so the decision on whether to extend them may be delayed, Meyer, vice chairman of St. Louis-based Macroeconomic Advisers LLC, wrote in a report released yesterday.
Treasury hits BofA, Wells on mortgage modifications The U.S. Treasury Department on Tuesday started naming and shaming banks that it said are not doing their part to keep Americans from losing their homes, including Bank of America Corp and Wells Fargo & Co. Disappointment over foreclosure prevention efforts comes roughly five months after the Obama administration unveiled a housing rescue plan designed to encourage mortgage companies to lower monthly mortgage costs for as many as 4 million struggling borrowers. Stanching the record number of home foreclosures is seen as a key to an economic recovery.
Treasury warns on credit ratings regulation The Obama administration is resisting calls to get involved with ensuring that credit ratings are reliable and said on Wednesday this would force investors to rely even more on the ratings. Although credit rating agencies have been accused of assigning top ratings to complex securities that later crumbled in value, the government should not be in the business of regulating their methodologies or ratings performance, a top Treasury official told Congress.
Foreclosures surged in July Lenders rushed to foreclose on homes in metropolitan Phoenix during the last week of July. Each day last week, the number of foreclosures climbed an average of 60. Due to the surge, foreclosures hit a new monthly record of 5,316 in July, compared with 5,149 in June, Information Market reports. Valley real-estate market watchers say the recent increase could be due to the expiration of federally mandated foreclosure moratoriums and problems with loan modifications. The U.S. Treasury Department released its first monthly report on its Making Home Affordable loan-modification program on Tuesday.
Dollar's collapse. The story
About half of U.S. mortgages seen underwater by 2011 The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday. Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.
Just 9% of eligible homeowners have had mortgage modified Some of the nation's largest servicers are making minor progress in reworking home mortgages into more affordable monthly payments for financially strapped homeowners. In total, just 9% of eligible homeowners who are delinquent have gotten a trial mortgage modification under a federal program, according to a report Tuesday by the Treasury Department. The report lists the modification progress of major lenders since the Obama administration first announced a $75 billion housing recovery plan in March. "We have been disappointed …about the variation in service performance in helping people in a timely fashion and with the respect they deserve," says Michael Barr, Treasury's assistant secretary for financial institutions. "We're going to be requiring ramped up efforts across the board."
NYU Dean Goes Insane: Wants To Expand Homeownership And Guarantee Mortgages For The Poor Sometimes academics get an unfair rap for being too high up in their ivory towers, and being too divorced from "reality." Sometimes, though, that's just totally fair. And while we don't like to make criticisms too personal, this recent op-ed in the NYT times, written by NYU dean Dalton Conley, called "Safe at Home", is simply one of the most bizarre things we've seen in a long, long, long time.
Private sector loses 371,000 jobs in July U.S. private employers axed more jobs in July but at the slowest pace since October, offering a glimmer of hope the labor market is stabilizing. U.S. companies shed 371,000 jobs in July, compared with a revised 463,000 drop in June, a report by a private employment service said on Wednesday. The June decline was originally reported at 473,000.
Less snail mail, more red ink at post office Recession, e-mail, online bill payment add up to $2.4B quarterly loss for post office Buffeted by the recession and the popularity of e-mail and electronic bill payment, the Postal Service lost $2.4 billion from April through June, officials said Wednesday. That brings the year's losses so far to $4.7 billion. And the Postal Service expects to be $7 billion in the red when the fiscal year ends Sept. 30. "What has occurred in the economy is unprecedented and it has created a much greater challenge than we can respond to quickly," Postmaster General John Potter said in a briefing. "We're trying to navigate our way through a challenging period of time."
Glenn Beck prepare for the worst pt.1
Post Office Finances Now Officially High Risk - No Kidding GAO is adding the US Postal Service's (USPS) financial condition to the list of high-risk areas needing attention by Congress and the executive branch to achieve broad-based transformation. I'm sure our bureaucratic wizards are in the lab cooking up the next round of public finance models, with complications rivaling those of String Theory. However, I'm also sure that there will be nothing new in terms of results, aside from increased stamp prices - and perhaps a spike in short-term disability by way of calculator calluses. Within the GAO report, one will find the crowning achievement of government detective work. The United States Postal Service's incompetence has finally shrieked loud enough for our masters to take notice. Here are some of the report's most keenly embarrassing lines.
Current Economic Downturn Is Worst Since Great Depression U.S. Economy Is in a Multiple-Dip Depression. The grand benchmark revision of the national income accounts on July 31, 2009 confirmed that the U.S. economy is in its worst economic contraction since the first downleg of the Great Depression, which was a double-dip depression. The current economic downturn increasingly will be referred to as a depression, and it is far from over. There will be intermittent blips of new activity, such as the current cash-for-clunkers automobile giveaway program that appears to be generating a one-time spike in auto sales. Yet, this downturn will continue to deteriorate, proving to be extremely protracted, extremely deep and particularly nonresponsive to traditional stimuli.
The Next Panic is Here We're in the midst of the next stock market panic and no one is paying attention. Worst of all, it will be the type of panic that will take more folks by surprise and, in the end, will turn out to be more costly to most investors than last fall's market sell-off. It's the most dangerous kind of panic of them all. But you don't have to get sucked into it. All you have to do is look at past panics to see the one right in front of us. Best of all though, as you'll see in a moment, there is one simple way you can guarantee you won't lose big in this panic and still profit from it all.
Glenn Beck prepare for the worst pt.2
American Incomes Head Down, Threatening Recovery in Spending Household income in the U.S. is weakening as the influence of the government's stimulus plan wanes, prompting economists, Federal Reserve officials and a Nobel laureate to warn that consumer spending may struggle. "Consumers have started to change their behavior and they are going to save more," said Richard Berner, co-head of global economics at Morgan Stanley in New York and a former researcher at the Fed. "You have pressure on wages, you have employment still declining."
The Hot Waitress Economic Indicator Have your waitresses been getting hotter lately? That might be a sign that the economy will still be troubled for some time. Hugo Lindgren of New York Magazine explains how the Hot Waitress Index works The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.
Senate Poised to Add $2 Billion to 'Clunkers' Program The U.S. Senate is poised to inject $2 billion into the "cash for clunkers" program, as Democrats secured enough support to pass the measure and Republicans said they won't block a vote. Senate Majority Leader Harry Reid, a Nevada Democrat, said he expects to reach an accord with Republicans that would allow the Senate to approve the money this week. If no agreement on timing is reached, Reid said he will try to pass a procedural motion that would force a final vote over this weekend.
U.S. 'Clunkers' Add 0.5 Percentage Point to GDP: Chart of Day The U.S. economy is poised to emerge from the worst postwar recession as early as this quarter, with manufacturers boosted by the government's "cash-for-clunkers" program, according to the two biggest U.S.-owned automakers. The CHART OF THE DAY shows the purchasing manager's index, the annualized rate of U.S. auto sales and changes in the nation's gross domestic product. The PMI reading in July was the highest since Lehman Brothers Holdings Inc. collapsed, and the gauge's trend signals August could be the first month since January 2008 when more manufacturers report improving business conditions than deteriorating.
Demand Will Fall Off A Cliff After 'Clunkers' Runs Out When the new spigot of cash for clunkers money dries out in the next few weeks, Nissan's COO, Toshiyuki Shiga, says we'll be right back where we started. We were in Japan last week to see Nissan unveil its new electric car, LEAF, and we had an opportunity, along with other reporters, to speak with Shiga. The first question thrown at Shiga was asking when he saw demand bouncing back. He says it's "too early" to predict, and while the second quarter beat estimates, there's still a "lot of risk" out there. Nissan "remains cautious."
Whoops: 'Clunkers' Causes Automakers To Run Out Of Cars Maybe the Senate should hold off on that plan to extend Cash-For-Clunkers, at least until manufacturers and dealers can replenish their stock. If nothing else, notes WSJ, the program has done wonders in terms of inventory reduction, probably working too well: Galpin Ford in North Hills, Calif., the country's largest Ford dealership by sales, is running low on Escape crossovers and Focus compacts, general manager Terry Miller said Tuesday. The Focus is the top-selling model under the clunker program, and the Escape is among the top 10 best-sellers, according to the Transportation Department.
Clunker cash won't drive true recovery Think of clunker cash as an economic shot in the arm, not a long-term fix The popular "cash-for-clunkers" program may be a well-timed shot of adrenaline for the economy, but it's not a prescription for a lasting recovery. The federal rebates of up to $4,500 to drivers who trade in a gas guzzler for a more fuel-efficient vehicle are steering cash to car dealers, giving a boost to troubled automakers and generating much-needed sales taxes for cities. All this will help the economy grow faster in the second half of the year than previously forecast. Yet the rebates will also steal economic growth from the future: They make car sales happen now that would have been made later anyway.
Glenn Beck prepare for the worst pt.3
Oil May Set 2009 High, Won't Fall Below $66: Technical Analysis Crude oil remains in a technical rally that may bring prices to a new 2009 high above $73 a barrel, while keeping the market from falling below $66, according to National Australia Bank Ltd. Oil may extend its three-week uptrend as long as it can settle above $72 a barrel in New York, according to Gordon Manning, a Sydney-based technical analyst. Such a move would also raise the market's support level, potentially offering traders an entry point in case of a decline.
Actually, There's Plenty Of Oil--The Problem Is The Cost Of Extracting It Peak oil obsessives are too focused on the "physical availability of conventional" oil, which is blinding them to a bigger issue, writes John Kemp at Reuters: First, the definition of "conventional" changes over time as a result of price and technology. Deepwater oil only became conventional 20 years ago, and ultra-deepwater in the last decade. In future, higher prices and technology changes could eventually shift ocean and arctic output into the "conventional" category and increase the reserve base substantially.
Why It's Okay For The USA To Fall Behind On Green Energy Whenever we hear that "America is falling behind" in a race to develop a new technology or grow an older economic sector, we suspect that the person talking doesn't understand the idea of comparative advantage. Developed by English economist David Ricardo (his parents were Spanish Jews, hence the un-Englishness of his name) in the nineteenth century, the idea holds that it makes sense for a country to concentrate on producing the goods for which production requires a lower opportunity cost than another country.
Financial Literacy - Deflation: When an Economy Implodes on Itself
Obama's Healthkill Plan Discussion Denied Senator's Office Sics Cops on Senior Citizens AGN-TCL Newswire. Oakley, California (8/3/09) Concerned about the upcoming mandatory health plan that would deny senior citizens adequate health care, a group of retirees simply wanted to talk to senator Dianne Feinstein. Feinstein's Los Angeles office had another idea; Get these old people out of here! Interesting. That is exactly what Obama intends to do. And he is going to force extra taxes on everybody on everything to fund his unwanted plan. And that includes those seniors who have given so much and now stand to lose the most.
Obama promises health overhaul with or without GOP President Barack Obama said Wednesday he's determined to get an overhaul of the health care system before the end of the year and, if necessary, without bipartisan support. His comments reflected a growing sense among Democrats that they may have to carry the legislation to expand coverage and try to control medical costs with votes from lawmakers of their own party - or at best a handful of Republicans.
'Get Rid of Old People' Health Plan Deadly For Seniors Earlier in the week, businessman Ron Reagan spoke at the Contra Costa Ministers Conference (CCMC) in Brentwood, California. He told of taking his wife on a dinner date to San Francisco. When he got his check he noticed a tax on the bill that he had never seen before. Looking closer he saw that the 3.5% extra tax on his bill was to fund the Universal Health Plan in the City of San Francisco. So citizens are paying this tax before the health plan bill has even passed since the small business owners have to pay for it. Then again, the Obama team was securing and preparing for the Victory Celebration in Chicago's Grant Park….months before the election took place! Expect to be finding extra taxes everywhere.
Homeland Secretary Napolitano predicts severe flu epidemic for fall U.S. Secretary of Homeland Security Janet Napolitano asserted Tuesday that pandemic flu is likely to flare up soon after schools open in the fall, well before any vaccine is available. Napolitano also acknowledged that there would not be enough pandemic flu vaccine for everyone, at least in the early stages of the flu season. "There will be prioritization of vaccinations," she told members of the USA TODAY editorial board. The flu strain causing the pandemic, a new strain of H1N1 flu that is also known as swine flu, is especially dangerous because it is genetically different from virtually every other known flu virus. As a result, most people are defenseless against it - making vaccine the keystone of any effort to prevent illness and save lives.
Diseased African Monkeys Used to Make Swine Flu Vaccines; Private Military Contractor Holds Key Patents To most people, vaccines sound medically harmless. "They're good for you!" say the doctors and drug companies, but they never really talk about what's in those vaccines. There's a good reason for that: If people knew what was really in those vaccines, they would never allow themselves to be injected with them. Aside from the dangerous ingredients many people already know about (like squalene or thimerosal), one of the key ingredients used in flu vaccines (including the vaccines being prepared for the swine flu pandemic) is the diseased flesh of African Green Monkeys. This is revealed in U.S. patent No. 5911998 - Method of producing a virus vaccine from an African green monkey kidney cell line.
Will We See $100 Oil?
Federal judges order California to release 43,000 inmates California must shrink the population of its teeming prisons by nearly 43,000 inmates over the next two years to meet constitutional standards, a panel of three federal judges ruled Tuesday, ordering the state to come up with a reduction plan by mid-September. The order cited Gov. Arnold Schwarzenegger's own words when he proclaimed a state of emergency in the corrections system in 2006 and warned of substantial risk to prison staff, inmates and the general public, saying "immediate action is necessary to prevent death and harm."
Why so many conspiracy theories? Why, recently, are so many Americans being taken in by conspiracy theories? Why are so many denying real history? As the nation recalled the splashdown of the rocket that landed on the moon in 1969, there was another wave of sentiment that the moon landing was just a government hoax. Honest-to-goodness scientists were dragged before cable TV cameras to insist, earnestly, that the moon landing had really happened. Even among tourists flocking to the National Air and Space Museum to see the moon rocks, one non-believer was overheard saying the rocks were clearly fakes. Good grief, folks! People who think the government spent millions of dollars and years of effort on a hoax that was kept secret for decades are just nuts. The government isn't capable of keeping secrets like that. - Scripps Howard (Ann McFeatters)
Feds at DefCon hacker conference alarmed after RFID's scanned It's one of the most hostile hacker environments in the country -- the DefCon hacker conference held every summer in Las Vegas. But despite the fact that attendees know they should take precautions to protect their data, federal agents at the conference got a scare on Friday when they were told they might have been caught in the sights of an RFID reader. The reader, connected to a web camera, sniffed data from RFID-enabled ID cards and other documents carried by attendees in pockets and backpacks as they passed a table where the equipment was stationed in full view.
Top Obama Adviser Urged a 'World of Zero Net Physical Growth' in 1995 World Bank Publication A top White House adviser to President Barack Obama argued that mankind eventually must face up to the need for a "world of zero net physical growth" and "population limitation" in an essay he co-authored that was included in a 1995 book on environmentally "sustainable" economic activity published by the World Bank. John P. Holdren, who is now director of the White House Office of Science and Technology Policy, co-authored the essay with Paul Ehrlich and Gretchen Daily of the Center for Conservation Biology at Stanford. Ehrlich has been a well-known population control advocate since he authored the 1968 bestseller, "The Population Bomb," in which he advocated zero population growth. At the time the 1995 essay was published, Holdren was a professor at the University of California.
Glenn Beck and Ron Paul talk about NWO
China Warns Global Easing Threatens Severe Inflation China's central bank warned that its counterparts in developed nations face difficult choices as monetary easing threatens to cause "severe" inflation and exchange-rate volatility. "Failure to manage the degree of easing may lead to concerns about mid- and long-term inflation and exchange-rate stability," the People's Bank of China said in a quarterly monetary policy report, posted on its Web site today. China, the owner of $801.5 billion of Treasuries, pressed the U.S. at a summit in Washington last month for economic polices to protect the dollar's value.
Can China Save the World? On a steamy Saturday afternoon just outside Shanghai, Zhang Yi is in a blessedly cool General Motors showroom, kicking the tires of the company's newer models. He's not there to beat the heat. He drives a small Volkswagen now and wants to upgrade. A middle manager at a state-owned steel company, Zhang has no worries about his job or China's economy. "Things are still pretty good," he says. "I have no problem now affording one of these," nodding toward the array of gleaming new Buicks nearby.
South Korea banks embrace securitization; costs weigh South Korean banks are set to return to the global mortgage securitization market and diversify their funding base, even if investor caution about Asian mortgage assets has recently raised costs for their securitized debt. Following Kookmin Bank's sale of $1 billion covered bonds in May, Woori Bank is aiming to sell $500 million worth of residential mortgage-backed securities (RMBS) around September, said an official of the country's No. 2 lender, asking not to be identified before the bank finalized the issue.
Russian general shrugs off U.S. submarine worries A senior Russian general on Wednesday shrugged off Washington's concern about Cold War-style patrols of Russian nuclear submarines off the U.S. coast, saying it was business as usual for Moscow to keep its navy in shape. "I don't know if it's news to anyone," Anatoly Nogovitsyn, Russia's deputy chief of general staff, told a news conference. "The navy should not stay idle at its moorings."
Iran/Russia - a deadly embrace Pt1 Pepe Escobar revisits the New Great Game The Bush administration has tried everything to drive a wedge between Iran and Russia - to no avail. The Obama administration now has to deal with some pretty established facts on the ground. In the first part of this report, Pepe Escobar analyzes the implications of the complex relationship between close allies Iran and Russia, articulated on three fronts: nuclear, energy security and weapons.
Iran/Russia - a deadly embrace - Pepe Escobar
Iran/Russia - a deadly embrace Pt2
Important 7-part interview by Alex Jones, with Steve Quayle - August 5, 2009
U.K. Royal Mint Doubles Gold Output as Demand Swells The U.K.'s Royal Mint, established in the 13th century, doubled production of gold coins in the second quarter as demand surged for bullion to diversify investments. Output climbed to 16,910 ounces from 8,030 ounces a year earlier, according to data obtained by Bloomberg News under a Freedom of Information Act request. First-half production jumped 86 percent to 45,406 ounces, the figures show.
Gold hits 2-month high; central banks seen selling less gold Gold futures rose Tuesday for a fourth session, climbing to the highest level in two months, as the U.S. dollar remained at 10-month low and as a consultancy forecast that global central banks will sell the lowest amount of gold in 15 years this year. GFMS of London said Monday that signatories of the Central Bank Gold Agreement are expected to sell about 140 metric tons this year, the lowest level since 1994. The firm also said last week that second-quarter supply of scrap gold plummeted by more than 40% from the previous quarter to 350 metric tons.
Gold Gains on Speculation Dollar Will Fall; Silver Prices Climb Gold rose to the highest in eight weeks on speculation that the dollar will weaken after touching a 10-month low yesterday, boosting demand for alternative investments. Silver climbed to a seven-week high. Gold climbed after the dollar slid yesterday to the lowest since Sept. 29 against a basket of six currencies, and following a report that gold-coin output by the U.K.'s Royal Mint soared 86 percent in the first half. The dollar was little changed against the euro as a report showed pending U.S. home sales rose more in June than forecast, curbing demand for haven assets.
Gold: French Curve Again? Or Blast Off I see a select few analysts have drawn attention to the horrific dividends versus stock market earnings situation. Including market technician Supremo Bob Hoye, who I consider alongside Trader Dan Norcini as the best technician in the world's gold community. The chart is going vertical, meaning the payouts are being made more, logarithmically more, with debt. Not earnings. When I look at the chart I see: A legalized ponzi scheme. Borrow money via corporate bonds (or the local pawn shop) to pay investors a huge dividend. The massive blobs of diluted stockholders can't be paid from earnings. Laying off workforce, shutting down operations, issuing corporate bonds to pay your dividends, not exactly a confidence builder for stockholders!
Peter Schiff 7/31/09 - Glenn Beck
Gold's Next Move Will Come from Inflation Figures Gold failed to settle above $960.0/oz yesterday despite the EUR/USD breaking its previous high and touching 1.4445. Gold will have to settle above $960.00/oz for it to test its previous high of $1,033.00/oz but a lackluster performance over the last few trading days suggests it is having difficulty. Direction today will come in the form of inflation figures out of Europe and the US, and the closely watched US Home Sales. If gold does break through $960.00/oz the next resistance will be $981.00/oz. Failing that we will revert to the current range of $905 - $960/oz.
GOODBYE DOLLAR - HELLO GOLD Or, we could say "Goodbye Paper Money - Hello Real Money" We have for some time warned investors that the era of the dollar as a reserve currency is coming to an end soon and that the strongest and safest currency is gold. All currencies are hopelessly declining in value against gold and this trend will accelerate in the next few months and years, starting now. Voltaire's statement from 1729 that "All paper money eventually returns to its intrinsic value - ZERO" is now ringing as true as ever.
IMF may dispose of 200 tonne gold in 2010 Finally, the much-talked about gold sale by International Monetary Fund (IMF) may happen in 2010. According to media reports in the US, the IMF may dispose of around 200 tonnes of its 400 tonne gold which was cleared for sale to raise funds. The G8 nations and the US Congress had already given the nod for gold sale to the IMF. Following this, according to market analysts, gold may fall to $850 an ounce in the second half of 2010. The IMF board is set to approve a gold sale before its annual meeting in October. A planned sale of 13 million ounces (403 tonnes) was accepted by the US last month. The markets will most likely see the sale begin in 2010 and around 200 tonnes may be sold per year.
Dollar decline to push up gold, silver prices Overseas gold prices fell overnight, as the metal's four-day winning streak was interrupted by profit-takers cashing in some very attractive chips at the redemption windows. Perceptions that bullion had once again gotten ahead of the equilibrium curve of the market's current background conditions brought gold back near $950 an ounce and participants have to now keep rooting for further declines in the US dollar in order to make a push beyond $965 not only materialize, but also hold intact.
Dollar Trades Near 2009 Low Before U.S. Company Jobs Report The dollar traded near the weakest level against the euro this year before a private report that economists say will show U.S. companies eliminated fewer jobs in July, reaffirming that the end of the recession may be near. Canada's dollar fell from near a 10-month high against the greenback yesterday as Finance Minister Jim Flaherty said "steps" could be taken to damp the currency's advance. The dollar recouped earlier losses versus the yen after an industry report showed pending resales of U.S. homes rose in June more than economists forecast.
Peter Schiff 8/4/09 - Reason TV
When China prepares its « Great Escape » from the dollar-trap for the end of summer 2009 LEAP/E2020 believes that the next stage of the crisis will result from a Chinese dream. Indeed, what on earth can China be dreaming of, caught – if we listen to Washington – in the “dollar trap” of its USD 1,400-billion worth of USD-denominated assets? If we believe US leaders and their scores of media experts, China is only dreaming of remaining a prisoner, and even intensifying the severity of its prison conditions by always buying more US Treasuries and Dollars. In fact, everyone knows what prisoners dream of. They dream of escaping of course, of getting away from prison. Therefore, LEAP/E2020 has no doubt that Beijing is constantly striving to find the means of disposing, as quickly as possible, of the mountain of « toxic » assets which US T-Bonds and Dollars have become, keeping the wealth of 1,300 billion Chinese citizens prisoner.
Higher commodity prices flash warning signs Shortages, inflation, or swooning bond markets - any way you slice it, price spikes could stop economic recovery in its tracks. Commodity prices are flashing a danger signal for the world economy. Generally, price spikes occur at the peak of economic cycles. This time however, a sharp rebound is coinciding with an economic trough. That could be caused by the recent rapid growth in global money supply, by large infrastructure-heavy fiscal stimulus programs or by the continued upsurge in demand for commodities in India and China. Whatever its cause, further price strength could spark inflation and stall recovery of the global economy.
The FDIC Is in Trouble As we all know, the Federal Deposit Insurance Corporation (FDIC) guarantees depositors that they'll get their money back if a bank fails, at least up to a certain amount. To fund its operations, the FDIC collects small fees from the banks that are held in reserve for the purpose of taking over troubled banks and paying off depositors. Since the Great Depression, a period marked by widespread runs on banks, the FDIC has done a good job of fulfilling its mandate. So how are they doing in this crisis?
Foreclosure Plan Is Off to a Bumpy Start A report card released Tuesday by the Treasury Department showed wide variations in how quickly mortgage companies are helping financially troubled borrowers under the Obama administration's foreclosure-prevention plan. So far, more than 400,000 borrowers have been offered help. More than 235,000 borrowers, or roughly 9% of those eligible for the program and at least 60 days past due, have begun trial mortgage modifications, the first step to getting a loan reworked.
Bernanke's Shell Game Fed Chairman Ben Bernanke is a man who knows how Washington works and uses that knowledge to great effect. His appearances on Capital Hill are always worth watching. He sits politely with his hands folded in front of him playing the bashful professor while one one preening congressman after another makes a fool out of himself. In contrast, Bernanke looks modest and thoughtful, faithfully upholding the public's trust. But things aren't always as they seem. The Fed chief is sticking it to the American people big-time and no one seems to have any idea of what's really going on. Former hedge fund manager Andy Kessler sums it up in a recent Wall Street Journal article, "The Bernanke Market".
Cash for Clunkers
Still growing … The Fed’s custodial holdings of Treasuries just topped $2 trillion. Custodial holdings of Treasuries rose by $25 billion in July. The overall pace of growth in the Fed’s custodial holdings did slow a bit in July, as some of the rise in Treasuries was offset by a fall in Agency holdings. But in a world where the US trade deficit is running at about $30 billion a month, a $15 billion monthly increase in the Fed’s custodial holdings is significant.
Becker Says Bernanke May Fail to Curb Inflation During Recovery Nobel Prize-winning economist Gary Becker said he is concerned that Federal Reserve Chairman Ben S. Bernanke may bend to political pressure and fail to raise interest rates quickly enough to contain inflation. Becker, a University of Chicago professor, warned that there is a "big risk" of inflation as the economy recovers, largely because of the hundreds of billions of dollars in excess reserves that banks have on deposit at the Fed. He said Bernanke "has the tools" to control inflation, by selling Treasury bonds rather than by purchasing them, and by reversing the central bank's emergency programs expanding credit.
Geithner's Outburst Gets Two Thumbs Down We were shocked to read last night that Treasury Secretary Tim Geithner had delivered an expletive-filled tirade to a team of financial regulators. From the Fed chairman to whom Geithner's plan would assign more power, to the FDIC chairman the proposal conspicuously ignores, all the major financial regulators have had constructive criticism.
Bair Stuffs Geithner, Fights Back Against Obama Reforms That expletive-laced tirade from Tim Geithner last week? It didn't go over so well. The regulators he ordered to fall in line on Obama's reform plan are now publicly rebuking him. Most notably, Sheila Bair. Reuters: Disagreement within the Obama administration over reshaping U.S. financial regulation flared on Tuesday, with top bank regulators defending their turf against key parts of a plan to overhaul bank supervision...
Read their lips: Mixed signals from Obama team on taxes The White House said Monday that Obama's commitment not to raise taxes on the middle class stands firm. Some economists question if that's realistic, given America's fiscal plight. Divergent messages from the Obama administration in the past two days hint at a tough political reality: Nobody likes higher taxes, but that may be the price of getting America's fiscal house back in order. Although Barack Obama campaigned on a pledge of no tax hikes on the middle class, top administration officials on Sunday appeared to open the door to rethinking that position.
On the Edge with Max Keiser - 31 July 2009 (1/3) Feds can listen to your conversation even when your cell phone is turned off!
Federal tax revenues plummeting The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab. The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
No end in sight for bank bailouts Even as the industry recovers, winding down last year's rescue programs and new ones put in place by the Obama administration may be easier said than done After rescuing the nation's banking system from utter disaster last fall, Washington now faces an arguably much trickier task: putting the bailout genie back in the bottle. Several initiatives are on course to expire later this year, putting regulators and the White House in the difficult position of having to decide whether the nation's banking industry is strong enough to go it alone.
Bank of America Settles S.E.C. Suit Over Merrill Deal It was a watershed moment of the financial crisis - a you-must-be-kidding payday that prompted a state investigation and an outcry in Congress. And, for Kenneth D. Lewis, it has become a nagging, multibillion-dollar headache. On Monday the Securities and Exchange Commission accused Bank of America, the bank Mr. Lewis runs, of misleading its shareholders about $5 billion in bonuses paid by Merrill Lynch, the ailing brokerage giant that Bank of America bought last year. The developments once again focus an uncomfortable spotlight on Mr. Lewis, who is struggling to win back investors and persuade them that his daring bet on Merrill will pay off.
Goldman Tells Employees: No Big Purchases In an effort to stem the collapse of its reputation, Goldman Sachs (GS) is imploring its employees not to make any big, ostentatious purchases that might draw attention and media scorn. NYPost: Goldman Sachs CEO Lloyd Blankfein has warned his employees to avoid making big-ticket, high-profile purchases as the gold-plated Wall Street firm hunkers down amid a firestorm of public and political anger over outsize bonus payments.
Banks Win, Taxpayers Lose: Stiglitz Wants "National Debate" on Bernanke The S&P closed above 1000 for the first time all year Monday, continuing a five-month rally that many credit to the government's actions to support the financial system. Even Nobel Prize-winning economist Joseph Stiglitz of Columbia University, a stalwart critic of the bank bailouts, admits the banking system is on firmer footing today. But that doesn't mean he's suddenly warmed up to the architects of the bailouts, notably Ben Bernanke, Tim Geithner and Larry Summers.
Why Won't Barney Frank Just Agree To Audit The Fed? We just received a phone call from a man in California named Peter who wanted to know why Barney Frank was holding up his fellow congressman Ron Paul's bill to audit the Federal Reserve. We assured Peter that Barney Frank had a long record of supporting Ron Paul's efforts to impose greater transparency upon the actions of the Fed. 'In 2007 Barney Frank had in fact given an affectionate interview on the subject of Ron Paul's quixotic campaign for the presidency to the New York Times magazine in which he said of his relationship with his colleague from Texas:
Why Bernanke Is in Panic Mode Usually, when Ben Bernanke is interviewed, he has the demeanor of a college professor in the presence of freshman students. Of course, as a full professor, he did not have to teach freshmen. That is for untenured assistant professors to do. Stammering and stuttering are therefore a real departure for him. There is a reason for this.
Rep. Congressman Grayson Demands Fed Accountability Rep. Alan Grayson, D-Fla., is upset that Congress is in the dark about much of the Federal Reserve's activity. He notes that he asked Fed Chairman Ben Bernanke what happened to $500 billion that the Fed extended in swaps to foreign countries, Grayson writes on the Naked Capitalism Web site. Bernanke's response: He didn't know. The $500 billion lent out should have been discussed by Congress, Grayson says. "That is how democracy is supposed to work - not through secret deliberations" of 12 unelected bankers, the members of the Federal Reserve. ... That's the point.
TARP bailout money we can kiss goodbye The government made money on American Express and Goldman Sachs, but 628 banks with outstanding debts are in considerably weaker condition. One of the things they teach in Successful Investing 101 is to cut your losses short and let your winnings run. But when it comes to the Troubled Assets Relief Program, the government is stuck doing the opposite. Its gains are being cut short, because its most profitable investments are being closed out, yet its losses will continue running.
Stimulus: What's been spent - what hasn't The Recovery Act funds are heading out the door, but the majority of programs have yet to be funded -- just as the Obama administration planned. The $787.2 billion stimulus plan is a lightning rod for criticism and second guessing, but love it or hate it, the massive program's funds are flowing as planned. According to Obama administration figures that date back to July 31, $240.4 billion, or more than 29%, of stimulus funds are now available for use. That's better than the roughly 25% that the Obama administration estimated for the end of July. Just $120.4 billion, or 15% of the stimulus total, has actually been paid out so far.
On the Edge with Max Keiser - 31 July 2009 (2/3)
US prime borrowers fall behind on payments Higher unemployment raises risk of mortgage defaults The number of US prime borrowers behind on home loan payments has risen sharply, signalling further problems for banks and investors. Standard & Poor’s said higher unemployment combined with a prolonged housing market slump had afflicted even the highest quality borrowers. The dollar volume of prime mortgages in delinquency or default rose 13.8 per cent between March and June, according to a study of private-label prime, subprime and Alt-A home loans conducted by S&P. Borrowers of Alt-A loans have slightly better credit histories than subprime borrowers.
Obama and the Continuing War on the Poor A mentor of mine, Clarence Carson, published a book in the 1970s entitled The War on the Poor. He took his title from Lyndon Johnson's so-called "war on poverty." Carson noted that actual wars are waged against real people rather than circumstances, and that if the government were engaged in a war it must be against some identifiable group of people. In his book, he identified the poor as that group by analyzing the economic impact of the various policies that Johnson pursued. In each new initiative of the Great Society, the effect of those policies was to raise prices on various products and cause the poor in America to suffer for the sake of a few special interests.
Fla.-based mortgage company suspended A prominent U.S. mortgage company is being investigated by the Housing and Urban Development Department after allegedly failing to submit a required financial report, raising concerns of fraud. The Federal Housing Administration on Tuesday suspended Taylor, Bean & Whitaker Mortgage Corp. from originating new FHA-insured mortgages, HUD said in a news release.
Stiglitz: America at "Serious Risk of Extended Malaise" Day by day, the "the recession is over" crowd continues to get larger and louder. But the U.S. faces "serious risk of an extended malaise" after the bursting of the credit bubble, says Nobel Prize-winning economist Joseph Stiglitz of Columbia University. Today's optimistic policymakers (current and former) and economists risk confusing the technical end of recession with a robust recovery, he says. "It would be a mistake to say 'because we're out of a sense of freefall and may have turned a corner [that] we're on the road to recovery.'"
Hunky Dory Whenever the herd mentality lines up along a compass point leading to "permanent prosperity," or a yellow brick road lined with green shoots, or something like that, I tend to see the edge of a cliff up ahead. We are now completely in the grips of the deadly diminishing returns of information technology. The more information comes to us about How Things Are, especially from TV, the more confused or wrong the conventional view gets it.
This Depression is Just Beginning Too bad Pulitzers aren't handed out for blog-entries. This year's award would go to Zero Hedge for its "The 'Money on the Sidelines' Fallacy" post. This short entry shows why the economy will continue its downward slide and why the US consumer will not get off the mat and resume spending as he has in the past. The fact is the Net Wealth of US Households has "declined from a peak of $22 trillion to just under $12 trillion in early March." Ouch! The problem is compounded by the fact that Total US Household debt, as of first quarter 2009, amounts to roughly $13 trillion, and has stayed within that range for the last 3 and a half years.
* * * * * Important article - see Max Keiser part 2 for interview of Dmitry Orlov Closing the 'Collapse Gap': the USSR was better prepared for collapse than the US by Dmitry Orlov Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is. My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the "Collapse Gap" – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.
Senate boosts food stamps as unemployment rises The Senate on Tuesday passed a $124.3 billion agriculture spending bill that pays to add millions of people to the food stamp rolls as rising numbers of the jobless are forced into the program. Money for the federal school lunch program is going up 12 percent as well, while a popular program that gives additional food aid for poor children and pregnant women received a 9 percent increase in funding. The bill passed by a 80-17 vote. As the nation's unemployment rate nears 10 percent, a record 34.4 million people — or one in nine Americans — were participating in the food stamp program as of May. That's an increase of 650,000 people from the previous month and up 6 million from the same time last year.
Consumer bankruptcies jump 34% Bankruptcy filings spike in July as households are squeezed by unemployment. Consumer bankruptcies surged in July to their highest level since October 2005 as U.S. households struggle under the burden of past debt and rising unemployment. Total filings reached 126,434 in July, a 34.3% increase from the same period a year ago and an 8.7% increase over June, according to a report released Tuesday from the the American Bankruptcy Institute. The number of filings was the highest monthly total since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in October 2005.
Senate boosts food stamps as unemployment rises The Senate on Tuesday passed a $124.3 billion agriculture spending bill that pays to add millions of people to the food stamp rolls as rising numbers of the jobless are forced into the program. Money for the federal school lunch program is going up 12 percent as well, while a popular program that gives additional food aid for poor children and pregnant women received a 9 percent increase in funding. The bill passed by a 80-17 vote.
On the Edge with Max Keiser - 31 July 2009 (3/3)
China Is A Ponzi Scheme Former Morgan Stanley analyst Andy Xie made some rather strong comments about the Chinese market (via Barry Ritholtz) My1510.cn: Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued. The odds are that both will adjust in the fourth quarter. However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future. The bursting will happen when the US dollar becomes strong again. The catalyst could be serious inflation that forces the Fed to raise interest rate.
American Incomes Head Down, Threatening Recovery in Spending Household income in the U.S. is weakening as the influence of the government's stimulus plan fades, prompting economists, Federal Reserve officials and a Nobel laureate to warn that consumer spending may stumble. "Consumers have started to change their behavior and they are going to save more," said Richard Berner, co-head of global economics at Morgan Stanley in New York and a former researcher at the Fed. "You have pressure on wages, you have employment still declining."
Consumer Bankruptcy Filings Most Since October 2005 Consumer bankruptcy filings in the U.S. rose to the highest level since October 2005, the American Bankruptcy Institute said in a statement. More than 126,000 new cases were filed by consumers last month, the nonpartisan research group said today, citing figures furnished to it by the National Bankruptcy Research Center. That was an 8.7 percent rise from June and a 34 percent increase from July 2008.
Senate Leader Expects to Extend Auto Program The secretary of transportation and the Senate majority leader both expressed confidence Tuesday that the Senate would revive the "cash for clunkers" program by voting to infuse it with another $2 billion, as the House did last week. The Senate minority leader said the Senate would hold a vote, although he did not predict the result. The Senate is scheduled to go home on Friday and simply getting the bill to the floor before then requires a consensus among the senators. If the bill were amended, it would effectively kill the program until Labor Day, since the House has already begun its August recess and would be unlikely to return to approve the Senate version.
Lean Inventories Imperil Car Sales With the U.S. Senate considering a vote on putting more money into the government's "Cash for Clunkers" program, some auto dealers are raising concerns about a new threat to the incentive program: tight inventories. The clunker program, which offers subsidies of as much as $4,500 to consumers who trade in older vehicles and buy new, more fuel-efficient models, sparked a surge in sales in late July, leaving many dealers with lean stocks of cars and trucks on their lots.
Clunker program in overdrive Consumers love the deals, but fallout could include higher prices Consumers have embraced the "cash for clunkers" program, lending a big boost to car sales and perhaps setting the stage for a stronger rebound down the road. But the stimulus may have some unintended consequences as well, skewing the mix of new- and used-car sales and driving up prices on the fuel-efficient vehicles most in demand as clunker replacements. "The reality is this is a brilliant stimulus package," said AutoNation Chief Executive Mike Jackson on the company's second-quarter earnings call last week. "This is exactly what stimulus programs are supposed to do." AutoNation is a network of new- and used-car dealers.
Harry Reid: We Have The Votes For Clunkers We agree that it's nonsensical crackpot economics, as the WSJ called it today, but people like Cash-For-Clunkers (at least the ones trading in their old cars for newer, foreign ones) and the Senate won't let the gravy train run out. The Senate will vote to extend the popular "cash-for-clunkers" car purchase program before going home on Friday, Majority Leader Harry Reid declared Tuesday in a strong signal the U.S. government will not let the trade-in rebates die under the surging demand that has almost exhausted federal backing.
California told to prepare massive prisoner release U.S. judges on Tuesday told California to prepare to release more than 40,000 of its 150,000 inmates to reduce overcrowding in state prisons, which suffer from massive healthcare problems. The cash-strapped state already plans to release ailing and short-term inmates for budget issues. That would clear up to 37,000 beds over two years, estimated California Department of Corrections and Rehabilitation Secretary Matthew Cate.
Army National Guard Recruiting FEMA Camp Or "Internment/Resettlement" Specialists The Army National Guard is now recruiting individuals to fill job positions described as an internment/resettlement specialist according to job postings on Monster.Com and other employment based Internet sites such as one listed here. In other words, they are recruiting individuals to man facilities that could be used to house political dissidents, so-called terrorists and other individuals that the government doesn't like. The term "resettlement" indicates that individuals holding this job position could also be responsible for moving people to other locations against their will. It is a documented fact that the U.S. government has numerous facilities at their disposal that could easily be used to house large numbers of people. Combine that, with this new job posting by the Army National Guard, and it seems as if the U.S. government is continuing to prepare for an eventual popular uprising.
Bill Clinton's 'rock star status' delivers in North Korea The former president succeeded in securing the release of two American journalists partly because he brought Pyongyang the prestige it craves. Bill Clinton's successful mission in securing the freedom of two American journalists jailed by North Korea - a testament to the clout the former president still has abroad - could represent something of a two-edged sword for President Obama. The release of the two journalists removes a thorn from the increasingly irritated relations between the US and North Korea. More broadly, it also constitutes a glimmer of hope for Mr. Obama's faith in dialogue as a foreign policy tool, some diplomatic analysts say. But the high-profile talks between the US and North Korea - carried out between a former US president and Pyongyang's dictator, Kim Jong-il - will also raise the discomfort level of US allies Japan and South Korea, both of which worry that a Washington-Pyongyang détente could come at their expense.
Clinton and Two Freed Journalists Leave N. Korea SEOUL, South Korea - Former President Bill Clinton left North Korea early Wednesday, after securing a pardon for two jailed American journalists from the reclusive North Korean president, Kim Jong-il, Reuters reported. The two journalists, Laura Ling, 32, and Euna Lee, 36, were returning to the United States with Mr. Clinton, the news agency reported, after having been held by North Korea since being detained by North Korean soldiers along the Chinese border on March 17. They were on a reporting assignment from Current TV, a San Francisco-based media company co-founded by Al Gore, the former vice president.
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Tues 08.04.2009
Gold Climbs to Two-Month High as Dollar Tumbles; Silver Gains Gold climbed to the highest in almost two months as a weaker dollar boosted demand for the metal as an alternative investment. Silver reached a seven-week high. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, slid as much as 1.1 percent to a 2009 low as gains in manufacturing in the U.S., China and the U.K. reduced demand for a haven. Gold tends to rise when the dollar falls. The metal touched $1,007.70 an ounce, this year’s high in New York, on Feb. 20.
Gold and Silver: The Only Attractive Investment Option With the S&P up 46 percent from its March low, a typical 50 percent retracement is almost complete ready for the next plunge lower in this bear market. Unless you are a born-again-bull or have shut yourself in a cupboard for the past two years, I do not understand how anybody can see a further upside in markets; at this point, the risk is all to the downside. At the same time, the outlook for the US dollar is not good, even if a new market crash brings a short rally for the greenback. At the very least then hedging the dollar with a currency of fixed supply looks attractive.
'Physical gold & silver is an insurance policy' . . . . One thing that no government bureaucrat will do at any level in the United States today is decrease spending. We’re bankrupt; we can’t afford to pay the debt that we already have. Obama is just expanding power and size of government enormously. What we must do at all levels is reduce government spending and these guys don’t want to do it. The government always wants to increase their power, not decrease it. The way they gain power and votes is to spend money. So they say there’s no alternative.
Why Gold Could Breakout to $1,300 by End of 2009 Gold may be nearing its next major leg up. No investment ever goes straight up or straight down. During the last bull market in gold, the precious metal rose 2,329% from a low of $35 in 1970 to a high of $850 in 1980. However, during that time, there was a period of 18 months in which gold fell nearly 50% (see the chart below).
Prepare for a monster five year Gold Stock run For those who don't know me, I am a firm believer that markets and sectors move almost entirely based on human behavioral and/or "herding" patterns. I wrote an article published here on 321gold.com in late February of this year outlining why I thought the market was about to start a bull cycle, and yet nobody knew it. Perhaps I got lucky, but that turned out to be accurate and then some, and it was certainly not based on fundamentals either. I couldn't find one solitary bull around the world, so I knew there was a good chance things were about to shift sentiment wise, and therefore market wise.
Precious Metals, Gold and Silver are Ready to Shine . . . . This week we have seen precious metals dip sharply, but briefly. Since the precious metals sector has moved higher rather rapidly in the middle of the previous month, such a correction is a healthy development and increases the probability of further gains. The existence of the bull market in gold is confirmed by the appropriate action in volume. As far as short term is concerned, we have just seen strength in PMs and in corresponding equities along with high volume, which indicates that more gains are likely in the not-too-distant future. Additionally, mining stocks appear to have formed a reverse head-and-shoulders pattern, which also has bullish implications.
Precious Metals: Gold gets support from weak dollar Gold prices rebounded in the last week, on the back of a weaker dollar and return in risk appetite in the financial markets. In the initial part of the week, Spot Gold prices witnessed a sell-off and touched a low of $924.80/oz. But prices witnessed a sharp recovery due to sharp rise in oil prices and a weaker dollar. The dollar declined against major currencies by 0.5%. Rise in crude oil prices increased demand for Gold as a hedge against inflation as oil prices rose 2% during the week. Positive US GDP data has raised hopes of recovery and boosted demand for higher-yielding assets like equities and commodities. Spot Silver prices followed suit and rose by 2.16% in the previous week.
GOLD THOUGHTS According to the diligent statistical elves of Barron’s Market Lab, the amount of U.S. Treasury Gross Public Debt outstanding is $11.611 trillion. A year ago, according to the same elite statisticians, that value was $9.533 trillion. In one year, the true deficit of the U.S. government was therefore $2.0178 trillion. That, my fellow Gold bugs, is a true accomplishment! How does one spend Two Trillion Dollars more than one receives in a single year?
Big Bounce in Commodities Gold, Silver, Oil and Nat Gas Last week we saw commodities sell down then put in solid bounce, which allowed us to generate new pivot lows for drawing support trend lines. This is the exact type of price action I have been waiting for. Natural Gas did nothing special but crude oil put in a very strong bounce and is now trading at a double resistance level which is explained later in the report.
INFLATION DEFLATION AND GOLD The current debt and asset deflation will not lead to a Japanese 1990’s style deflationary period. It is more likely to lead to hyperinflation in the US, the UK and many other countries. Hyperinflation Most people find it very hard to fathom that the current asset deflation is a necessary precursor to hyperinflation. The consequences of the credit and housing bubbles of the last few years have been a financial system which is leveraged to the hilt and with a foundation of quicksand. In order to prop up a sinking financial system just the US government has printed or committed to over $13 trillion and other governments have committed equally substantial amounts. But in spite of these massive amounts of liquidity added to the system, it is not creating inflation but deflation. This is for the simple reason that total financial asset contraction worldwide has been circa $90 trillion at the peak.
pt 1/2 Gerald Celente on Financial Sense Newshour Aug 1st 2009
Gold Bugs' Bet on China - a Mistake? A huge portion of Chinese national wealth is currently held in the US dollars (US government, agency and corporate debt). There are $6.5 trillion of currency reserves in the world today. $4.3 trillion is held in the US dollars and 34% of US dollar holdings, $1.43 trillion, belong to China. A decline in the US dollar exchange rate is extremely undesirable for the Chinese – the biggest holder of US debt in the world. Nevertheless, over the past few months, China repeatedly attacked the status of the USD as the world reserve currency.
WE ARE WITNESSING A NEW RENAISSANCE AND GOLD IS READY FOR $1,000/OZ Gold indeed took a breather while allowing commodity and equity markets to catch up. Now with crisis talk receding, inflation and deficit concerns will return to center stage. I look for gold to first break out of $950 by September, and rocket past $1,000 by end of October. Technically the above bullish reverse head-and-shoulder pattern predicts a peak for 2009 of $1,300-$1,500/oz
The Big Bounce in Gold, Silver, Oil & Nat Gas Last week we saw commodities sell down then put in solid bounce, which allowed us to generate new pivot lows for drawing support trend lines. This is the exact type of price action I have been waiting for. Natural Gas did nothing special but crude oil put in a very strong bounce and is now trading at a double resistance level which is explained later in the report.
Silver Investing, Risk and Reward One of the questions I am asked most frequently is, "Where can I invest in precious metals to maximize returns?" The answer is not as straightforward as one might expect. An area that comes to mind for many is the futures market, where the leverage is great and the rewards can be just as great. However, to be successful requires much more time, effort, and money than many a novice "futures trader" can handle. The amount of success in trading the futures is a very low percentage, something on the order of 2%-3%.
Silver Outpaces Gold While Dollar Drops to 2009 Low . . . . It is encouraging to the bullish cause to see gold building on last Friday’s stunning move higher as it shows that there was more at work there than end of the month positioning. Commodities were higher across the board today with only a few exceptions. Most notable was the strong move higher in both crude oil and natural gas. Nat gas has been the laggard due to oversupply issues and to see it moving sharply higher had to make even the most avid deflationist begin to struggle with self doubt. Even bonds acted “normal” today dropping hard as equities rallied and commodities soared. I am still at a loss to figure out what the heck happened in that pit last Friday as it made no sense whatsoever to this observer.
Sovereign wealth funds return to the fray Sovereign wealth funds are regaining their appetite for deals in western markets after making the lowest number of foreign investments during the first quarter since 2005, following a series of disastrous bets in high-profile public companies. State-owned investment funds from oil-rich countries and Asian exporters made just 26 investments worth a total $6.8bn in the first three months of the year, according to Monitor Group, the advisory firm, and Fondazione Eni Enrico Mattei, an international research centre.
China Tries to Solve Its Dollar Problem A huge portion of Chinese national wealth is currently held in the US dollars (US government, agency and corporate debt). There are $6.5 trillion of currency reserves in the world today. $4.3 trillion is held in the US dollars and 34% of US dollar holdings, $1.43 trillion, belong to China. A decline in the US dollar exchange rate is extremely undesirable for the Chinese – the biggest holder of US debt in the world. Nevertheless, over the past few months, China repeatedly attacked the status of the USD as the world reserve currency.
"The U.S. dollar is a worthless piece of paper." Mahmoud Ahmadinejad, Iranian President
[The U.S. dollar is] "losing its status as the world currency."Xu Jian, vice director, People's Bank of China
"It is the policy of the United States and it will remain the policy of the United States to remain committed to a strong dollar." Timothy Geithner, U.S. Treasury Secretary, (July 15, 2009)
[The dollar will remain the world’s dominant currency for] “many years to come.”He Yafei, China’s vice foreign minister, (July 5, 2009) Presently, there is a vacuum in international affairs coming from the decline in the moral and economic stature of the United States. It is a vacuum because no other country or organization has the credibility, legitimacy and capability to fill the gap. This is particularly true in monetary and financial affairs. By default, the U.S. dollar is de facto the main supranational key currency used to finance international trade and investment.
pt 2/2 Gerald Celente on Financial Sense Newshour Aug 1st 2009
Why We Can't Avoid Rampant Inflation William Patalon III writes: Has the massive Obama stimulus plan put us on a collision course with virulent inflation? It sure looks that way. Let me explain … When the U.S. Commerce Department on Friday said the U.S. economy contracted at a 1% annual pace in the second quarter, the report was actually seen as good news: It was a slower decline than in each of the two prior quarters, and economists had expected a contraction of 1.5%. "This is good news," Nariman Behravesh, an economist with IHS Global Insight Inc. (NYSE: IHS), told The San Francisco Chronicle.
Balkan-Style Inflation Is Coming to Us, Thanks to Our Masters Michael S. Rozeff writes: In 1963, Milton Friedman and Anna Schwartz wrote "Inflation is always and everywhere a monetary phenomenon." The thrust of this statement is that inflation is caused by unsound monetary arrangements – not by those who are raising prices or asking for higher wages, and not by oil speculators or by dealers in foreign exchange. This statement was made at a time when blame was being placed for inflation on groups in society.
Ben Bernanke's failure at the Fed The Federal Reserve chairman is lobbying to keep his job, but his response to the financial crisis has been exceptionally poor Departing from the normal practice of Federal Reserve board chairmen, Ben Bernanke has taken to barnstorming the country in recent months, giving public talks and recently appearing in a lengthy interview on the NewsHour with Jim Lehrer. The reason for seeking a higher profile is simple: Bernanke wants to keep his job. Bernanke's term ends in January. He was appointed by President George Bush. It would be understandable if President Barack Obama wanted to get his own person into this vital position. On the other hand, Bernanke has never been a rightwing ideologue, and he is one of the country's top monetary economists. In addition, Obama may be reluctant to change the Fed's leadership at a time when the financial system and economy are still fragile, so Bernanke may have a decent shot.
Plummeting tax revenues starve government just as Obama embarks on big plans The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab. The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
The Bankers' Cartel Murray Rothbard begins this outstanding book by calling attention to a paradox. The Federal Reserve System enjoys virtual immunity from congressional investigation. The few who propose to subject the Fed to even minimal scrutiny, such as Henry Gonzales of Texas, at once find a consensus arrayed against them (pp. 1ff.). They threaten the stability of the market, since – it is alleged – only the Fed's independence blocks the onset of uncontrollable inflation. Here lies the paradox. Inflation results from the infusion of new money into the economy, and it is the Fed that is responsible for its creation.
China moves to internationalize its currency China is rapidly accelerating its efforts to internationalize its currency with a series of maneuvres that could see the renminbi soar to become one of the top three traded monetary units in the world. By 2012, say analysts in Shanghai, as much as $2 trillion (£1.69 trillion) worth of trade flows may be settled using the “redback” as China stretches its commercial tentacles throughout the commodity-producing world and the emerging economies of Asia, Latin America and the Middle East.
Bob Chapman on gold, silver, a bank holiday and the monetary elite . . . . It begins with central banking and there is nothing to be said that can constitute a defense of central banking. A small group of men get together around a table and set interest rates, basically the price of money. They do so without supervision or the consent of those who use their money product and they do so pretty much in secret. There is no accountability and lately, again thanks to the Internet and YouTube, people can pretty well see how nonsensical the system is. We had a classical gold standard for 200 years that provided a good deal more monetary stability than the current system. There were problems with it, but the problems had little to do with the creation of money itself. Today we have a money problem and it is very obvious where the responsibility lies.
The Spot Price This is a question we get over and over, so I thought I'd just answer it. (Notice that premiums of gold and silver over 'spot' have decreased as of Wednesday!) The "Spot price" of gold and silver is at the mine, and the "spot price" of milk is at the milking station on the farm. The 'spot' price of oil is at the wellhead, and the 'spot' price of anything is at its basic point of origin, before any manufacturing, transportation or distribution takes place. In other words, no one can buy anything at the 'spot price.' The 'spot price,' is merely an indication of the market's position, and not the price of anything physical.
Dollar Trades Near Lowest Since Weeks After Lehman Bankruptcy The dollar traded near the lowest versus the currencies of six major U.S. trading partners since the weeks after Lehman Brothers Holdings Inc.’s September collapse as signs the recession is easing eroded safety demand. Sterling jumped yesterday to the highest level since October versus the dollar as HSBC Holdings Plc reported an unexpected first-half profit and a survey showed U.K. manufacturing expanded last month for the first time in more than a year. The yen fell against all of its most-traded counterparts as factories in the U.S. contracted in July at the slowest pace in 11 months.
U.S. Monetary Inflation as Budget Deficit $2 Trillion Higher than a Year Ago! According to the diligent statistical elves of Barron’s Market Lab, the amount of U.S. Treasury Gross Public Debt outstanding is $11.611 trillion. A year ago, according to the same elite statisticians, that value was $9.533 trillion. In one year, the true deficit of the U.S. government was therefore $2.0178 trillion. That, my fellow Gold bugs, is a true accomplishment! How does one spend Two Trillion Dollars more than one receives in a single year?
Peter Schiff predicts worse economy conditions under Obama
Inflation: An Intractable Political Phenomenon In 1963, Milton Friedman and Anna Schwartz wrote "Inflation is always and everywhere a monetary phenomenon." The thrust of this statement is that inflation is caused by unsound monetary arrangements – not by those who are raising prices or asking for higher wages, and not by oil speculators or by dealers in foreign exchange. This statement was made at a time when blame was being placed for inflation on groups in society.
TARP watchdog raids 2 banks Special inspector general overseeing bailout targets bank in Florida that failed to secure federal funds. Federal agents in Florida on Monday raided two banks that last week scuttled a deal that would have qualified one of them for federal bailout funds. The agents were acting on search warrants issued by the office of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.
FDIC seen moving fast on private equity A U.S. bank regulator is expected to move quickly in finalizing guidelines on private equity investments in failed banks, possibly easing one of its most controversial proposals, sources said on Monday. The rules could be finalized as soon as this month and could see a key measure that is being proposed for banks to be bought by private equity, the Tier 1 leverage ratio, reduced from a proposed 15 percent to around 10 percent, industry sources said.
FDIC warns banks may need more home equity reserves A U.S. regulator said on Monday banks may need to boost their reserves for losses on home equity loans, after housing prices fell by roughly one-third from their 2006 peak. In a letter to banks and examiners, the Federal Deposit Insurance Corp urged lenders to consider such factors as whether customers have borrowed more than their homes are worth, or modified their first mortgages.
Geithner loses his cool at regulators meeting U.S. Treasury Secretary Timothy Geithner blasted top U.S. regulators in an expletive-laden tirade amid frustration over President Barack Obama's faltering plan to overhaul financial regulation, the Wall Street Journal said on Monday, citing people familiar with the meeting. Geithner told regulators that "enough is enough," the newspaper said, citing one person familiar with the meeting last Friday with Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp Chairman Sheila Bair.
Geithner: More steps may be needed on economy U.S. Treasury Secretary says firming up economic recovery may require extending unemployment aid. U.S. Treasury Secretary Timothy Geithner said Sunday more actions may be necessary to firm up economic recovery, including extended unemployment aid, and declined to rule out future tax hikes to reduce massive budget deficits. Geithner also said the government needed to show the will to reverse massive deficits after the recovery, including raising tax revenues if necessary.
U.S. counting on public shame to help mortgage modifications The Obama administration wants to shame the mortgage industry into doing a better job of helping borrowers avoid losing their homes to foreclosure. By publishing the names of companies that are lagging in the government's plan to ease the housing crisis, officials are counting on public outrage to get the industry on track. The Treasury Department on Tuesday plans to report on the progress of loan servicers — companies that collect mortgage payments — that are in line for up to $50 billion in subsidies.
Foreclosures stabilize in key states Even as Americans suffer rising unemployment, foreclosure rates in three states hit hardest by the housing bust —California, Arizona and Florida— stabilized in June, offering hope that the worst of the real estate crisis is over, according to the Associated Press' monthly analysis of economic stress in more than 3,100 counties. The latest results of AP's Economic Stress Index show foreclosure and bankruptcy rates held steady from May in some states. Yet mounting unemployment is hampering an economic recovery in some regions, especially the Southeast and industrial Midwest.
CIT gets enough takers on debt repurchase program CIT Group on Monday cleared another hurdle in its restructuring effort as it attempts to avoid bankruptcy protection, saying it has received enough offers to complete a debt repurchase program. The embattled commercial lender, which nearly collapsed last month, said that as of Friday nearly 65% of the $1 billion in bonds due Aug. 17 have been tendered for repurchase. CIT Group has said failing to complete the offer could result in a bankruptcy filing.
Peter Schiff on Glenn Beck 7-31-09 "Depression is beginning"
Banks increase purchase of Treasuries Doubling average growth rate keeps borrowing cost low U.S. lenders bailed out by the government are returning the favor by stepping up purchases of Treasuries, helping to temper a rise in borrowing costs. Bank holdings of U.S. government securities are up 15.6 percent from a year ago, almost double the average annual growth rate of about 8 percent since the Federal Reserve began tracking the data in 1973, according to the Greenwich, Conn.-based trading and research firm MKM Partners LP.
White House: No new taxes to close federal deficit No tax increase for those making less than $250,000 a year, Gibbs says The White House on Monday sharply walked back comments made by two of President Obama's top economic advisers over the weekend that left open the possibility of new taxes on those making less than $250,000 a year, but offered no new plans for how the administration plans to close a massive federal deficit. "The president's clear commitment is not to raise taxes on those making less than $250,000 a year," said White House press secretary Robert Gibbs. "He is not raising taxes on those making less than $250,000 a year."
'Misleading' investors costs bank $33 million Bank of America agrees to fine to settle charges Bank of America Corp. has agreed to pay a $33 million penalty to settle government charges that it misled investors about Merrill Lynch's plans to pay bonuses to its executives, regulators said Monday. In seeking approval to buy Merrill, Bank of America told investors that Merrill would not pay year-end bonuses without Bank of America's consent. But the Securities and Exchange Commission said Bank of America had authorized New York-based Merrill to pay up to $5.8 billion in bonuses.
Bank Pay Outrageous, But Is That Recovery? Assuming Americans still have the capacity for outrage, they should soon be rioting in the streets following last week’s reports that nine big banks paid out $33 billion in bonuses in 2008. The Wall Street Journal put this travesty in perspective, noting that the bonuses were a third larger than California’s budget deficit. “Six of the nine banks paid out more in bonuses than they received in profit,’ the Journal reported, and “one in every 270 employees at the banks – [a total of 5,000 employees] --received more than $1 million.”
Where Do WE Go From Here? We are currently seeing a stock market rally, and many in the media are proclaiming that happy days are here again. Lost in the celebration is the fact that the current stock market rally has absolutely nothing to do with the fundamentals behind our economy. It has everything to do with mass psychology. Simply put, it was time for the market to rally after it had crashed to its low point in March, 2009.
The End of Western Civilization Butler Shaffer writes: My understanding of history, economics, and the laws of causation, have long led me to expect the present collapse of Western Civilization. I did not, however, anticipate the culture experiencing a free-fall into an awaiting black-hole. Like T.S. Eliot, I suspected Western society would end "not with a bang but a whimper." I envisioned a more gradual decline, one to which individuals could make the necessary adjustments in their lives that would lessen the impact and help to restore societal order.
pt 1/4 Peter Schiff on The Kudlow Report 31 July CNBC
Dismantling the Temple During the past year, the Fed has flooded the streets with money - distributing trillions of dollars to banks, financial markets and commercial interests - in an attempt to revive the credit system and get the economy growing again. As a result, the awesome authority of this cloistered institution is visible to many ordinary Americans for the first time. People and politicians are shocked and confused, and also angered, by what they see. They are beginning to ask some hard questions for which Federal Reserve governors do not have satisfactory answers.
Defending Capitalism I recently got into an argument with a marketing executive of India's biggest mutual fund, Unit Trust of India. We were discussing the recent media coverage of the 'public' outrage over a new Indian TV show called 'Sach ka Samna', it is the Indian counterpart to the American show 'Moment of Truth'. I haven't seen the show but I did see the public condemnation hailed on Indian media. It didn't bother me that people were speaking out against the show, but it did bother me when I saw members of Government condemning the show as if whole families were being murdered. It is surprising that the one thing that offends the government happens to be the revelation of truth.1
Wall Street profits from trades with Fed Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say. The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.
S&P 500 Tops 1,000; Metals Rise, Bonds Fall U.S. stocks advanced, sending the Standard & Poor’s 500 Index above 1,000 for the first time since November, and commodities surged the most since March while Treasuries and the dollar fell on speculation the recession is ending. Manufacturing and construction spending in the U.S. topped forecasts, and China’s factory output expanded. Copper climbed to the highest in 10 months, driving the UBS Bloomberg Constant Maturity Commodity Index to a 4.1 percent gain. Crude oil exceeded $70 a barrel for the first time since July 1. Ten-year Treasury notes declined the most in almost two months, and the dollar sank to the worst level against six trading partners since the weeks after Lehman Brothers Holdings Inc. collapsed.
Origins of the American Empire: Revolution, World Wars and World Order:Global Power and Global Government: Part 2 By the 1870s, John D. Rockefeller's Standard Oil Empire had a virtual monopoly over the United States, and even many foreign countries. In 1890, the King of Holland gave his blessing for the creation of an international oil company called Royal Dutch Oil Company, which was mainly founded to refine and sell kerosene from Indonesia, a Dutch colony. Also in 1890, a British company was founded with the intended purpose of shipping oil, the Shell Transport and Trading Company, and it "began transporting Royal Dutch oil from Sumatra to destinations everywhere," and eventually, "the two companies merged to become Royal Dutch Shell."
Up to 1,000 post offices could be closed The postal service is considering consolidating or closing as many as 1,000 local offices as it battles staggering financial problems. The post office has been struggling with a sharp decline in mail volume as people and businesses switch to e-mail both for personal contact and bill paying. The agency is facing a nearly $7 billion potential loss this fiscal year, despite a 2-cent increase in the price of stamps in May, cuts in staff and removal of collection boxes.
The price of U.S. recession is paid in jobs Long after President Barack Obama's first term ends in 2013, millions of U.S. families will still be paying the price for the recession. From auto workers in Detroit too old for retraining, to Hispanic migrants in Arizona with no homes to build, to new college graduates competing with experienced workers for scarce jobs, more and more people are facing long-lasting unemployment.
Profiles of U.S. long-term unemployed Profiles of the long-term unemployed in the United States: ALVIN GAINS, 56, former Chrysler worker For the second time in 30 years, Alvin Gains is leaving his home state of Michigan and moving to Texas to find work. "There are college kids who can't find a job, so there's no chance for someone my age," said Gains, 56. "But people are hiring in Houston, so it's time to go."
pt 2/4 Peter Schiff on The Kudlow Report 31 July CNBC
Cash for Clunkers with Bread and Circuses in Pax Americana The House of Representatives has now passed a bill allocating a total of 3 billion dollars for this insane idea. Like most of this administration’s plans, this one is being sold by sublimation. In this case, the idea is to exchange gas guzzlers for more fuel efficient vehicles rather than the honest approach, which would be to tell the American consumer that we will continue to mortgage our future for the present.
After 6,000 Take Buyouts, G.M. to Lay Off Thousands General Motors expects to lay off thousands of factory workers after the number who voluntarily quit through a recent buyout and early retirement program fell short of the carmaker’s target. G.M. said Monday that about 6,000 hourly workers had left as of Saturday. That means the company still has about 48,000 hourly workers, which is 7,500 more than its year-end goal of 40,500. A G.M. spokeswoman, Sherrie Childers Arb, said the company planned to meet with the United Automobile Workers union to determine how it could meet its goal by Dec. 31, but she said the company was not considering another buyout offer.
Global economy at risk from oil price rise The world economy cannot sustain any further rise in the oil price, the International Energy Agency’s chief economist warned as oil prices rose toward a record high for the year. Fatih Birol told the Financial Times that prices higher than about $70 could dampen a world economic recovery. “If we go one step further, if we see prices go much higher than that, we may see it slow down and strangle economic recovery,” he said of oil prices on Friday, when the European benchmark was around $70.
Are We Headed for Another Oil Shock? Global economic recovery and increased demand for oil - coupled with tighter supply - could provoke a 1970s-type oil shock. As the global economy recovers from the current downturn, there is a significant risk that resurgent energy demand will coincide with tight supply, vaulting oil prices higher again. Indeed, prices are already on the rise. Research by the McKinsey Global Institute (MGI), combining macroeconomic modeling with an understanding of industry dynamics, finds that unless business leaders and policymakers act decisively on both oil supply and demand, there is a risk that a second oil shock could follow economic recovery - indeed, one that could be lengthier than the second price spike that hit the world economy in the 1970s.
In Las Vegas, the house loses Las Vegas has gone from one of the fastest growing cities in the US to ground zero for the housing crisis True to form, banks and mortgage lenders, who have spent decades gambling America's capital in search of short-term profits, came out with guns blazing in opposition to recent proposals by the Obama administration to regulate their behaviour. In light of this, it might be useful to take a look at what happened to Las Vegas, the gambling capital of America, where the worst excesses of deregulation have turned the boom town into the ground zero of the US recession.
pt 3/4 Peter Schiff on The Kudlow Report 31 July CNBC
Peddling the Edsel when nobody's buying Congress is getting an earful about Barack Obama's health care "reform," but before August is out, nobody's ears will be big enough to hold it all. Not even the president's. The congressional poodles, soon to be fanning out across the country to sample down-home sentiment, will hide out as much as they can. Nobody likes to be shouted down or risk receiving his daily serving of fruit and vegetables served on the fly. Some congressmen will handpick their crowds, hiring smaller auditoriums to keep the numbers down. One Web site dedicated to defeating Obamacare warns congressional constituents to give their congressmen a taste of cold anger, but be nice, if only to avoid inviting sympathy for the undeserving.
Obama health care numbers fail to tally CBO forecasts counter claims that plans will control spending Some of President Obama's health care numbers don't seem to add up, and that's complicating his efforts to pass his top domestic priority. Mr. Obama could be falling into the same trap that snagged George W. Bush when he was pushing private accounts for Social Security as part of his "ownership society" in 2005. Mr. Bush's claims that the proposal would help shore up Social Security's long-term finances were hard to document mathematically and wound up feeding greater public skepticism.
Senate Democrats impatient with healthcare pace With President Barack Obama's political fortunes on the line, Democrats in Congress vowed on Monday to push healthcare reform through the Senate with or without Republican support. "No matter what happens we are going to enact healthcare reform by the end of the year," said Senator Charles Schumer, one of the Democrats who has been working with Republicans to craft a bipartisan plan in that chamber.
Lawmakers Move to Sell Health-Care Plan to Voters Congressional Democrats, already behind in their bid to revamp the U.S. health-care system, will spend an August break trying to resolve discord within their party, fending off Republican attacks and taking on insurers. House members left Washington on July 31 after the last of three committees approved the legislation, setting the stage for a September floor vote. The Senate adjourns on Aug. 7 and has given up on getting plans through both of its panels before the recess, breaking President Barack Obama’s deadline for legislation.
Democrats Can’t Repeat 1994 Health-Care Failure Bill Kristol, a powerhouse policy guru for Republicans, often has a tin ear for politics. A week before last year’s presidential election he predicted John McCain would “win huge.” In May, he said President Barack Obama had decided to nominate Michigan Governor Jennifer Granholm to the Supreme Court, and he’s been a cheerleader for Sarah Palin. Kristol was prescient, though, 16 years ago in advising Republicans that defeating President Bill Clinton’s health-care overhaul would be devastating for the Democrats. He’s making the same case today, imploring Republicans to “go for the kill” on the Obama health-care initiative.
pt 4/4 Peter Schiff on The Kudlow Report 31 July CNBC
Government's Killer Robots Scientists Fear a Revolt A robot that makes a morning cuppa, a fridge that orders the weekly shop, a car that parks itself. Advances in artificial intelligence promise many benefits, but scientists are privately so worried they may be creating machines which end up outsmarting – and perhaps even endangering – humans that they held a secret meeting to discuss limiting their research. At the conference, held behind closed doors in Monterey Bay, California, leading researchers warned that mankind might lose control over computer-based systems that carry out a growing share of society’s workload, from waging war to chatting on the phone, and have already reached a level of indestructibility comparable with a cockroach. Bill Clinton Heads for North Korea, Yonhap Reports Former President Bill Clinton headed to North Korea to seek the release of two U.S. journalists who are serving a 12-year sentence in the communist nation, Yonhap News reported, without saying where it obtained the information. Andy Laine, a spokesman for the State Department in Washington, said on a conference call with reporters that he had “no information on those reports.” Aaron Tarver, a U.S. embassy spokesman in Seoul, said he hadn’t heard about a trip. The White House approved the mission, Politico reported.
Bill Clinton to Seek Release of U.S. Reporters in North Korea Former President Bill Clinton was headed to North Korea to negotiate the release of two American television journalists who were sentenced to 12 years of hard labor for illegally entering North Korean territory, an American who was briefed on the mission said late Monday night. Mr. Clinton was on his way to Pyongyang, the North Korean capital, the Yonhap news agency reported early Tuesday in Seoul, citing an unidentified source. The White House declined to comment.
Iran's Guards turn on Ahmadinejad Iran's Supreme Leader Ayatollah Ali Khamenei formally approved the second-term presidency of Mahmud Ahmadinejad on Monday after a controversial June 12 election that led to street protests during which at least 20 people were killed. Leading reformists say the vote was rigged, and at least two defeated presidential candidates claim the new government is illegitimate. With Khamenei's backing in place, Ahmadinejad is scheduled to be sworn in by the Majlis, Iran's parliament, on Wednesday. He will then have a two-week deadline to submit his cabinet nominees to parliament. Ahmadinejad has recently been engaged in a high-profile clash with Khamenei o
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