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.
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