Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Thurs 10.01.2009
Fed may boost rates while economy still weak: Kohn The Federal Reserve may need to begin to pull back its extensive support for the weak U.S. economy before it has healed enough to substantially lower the jobless rate and get factories working again, Fed Vice Chairman Donald Kohn said on Wednesday. "Tightening (monetary policy) while there's still slack in the economy is something that we have to do every time," he told a monetary policy conference at the Cato Institute. Kohn said the Fed -- the U.S. central bank -- would base its actions on its forecast for the path of the economy, and would not wait for clear evidence the recovery has taken hold:
Foreclosures, Delinquencies Continue to Rise Lenders stepped up efforts to help strapped borrowers during the second quarter of 2009, but their actions weren't enough to stem rising mortgage delinquencies and foreclosures, a federal banking regulator reported Wednesday. Since the first quarter of 2009, actions to rescue borrowers from foreclosure increased nearly 75%, as lenders ramped up their participation in the government's loan modification program, the Office of the Comptroller of the Currency said. Such actions, which totaled 440,000 during the quarter, once again climbed more quickly than new foreclosures.
Foreclosure blight: The cleanup crawls along Washington put up billions to save blighted areas by buying abandoned homes. But states and cities are having trouble getting properties away from banks. A controversial $3.9 billion federal program aimed at saving neighborhoods blighted by foreclosure is hitting hurdles that could threaten its effectiveness. The Neighborhood Stabilization Program, passed by Congress last year, gives states and localities money to acquire and rehabilitate abandoned properties. The big problem: officials are having trouble getting their hands on those houses, which are being scooped up instead by private investors and homebuyers at rock-bottom prices.
Weak Economy Still Pushing Foreclosures, Delinquencies The number of home foreclosures in process and delinquent mortgages rose during the second quarter, while home retention actions also increased, U.S. bank regulators said on Wednesday. Foreclosures jumped 16 percent to 2.9 percent of serviced mortgages, while home retention actions such as loan modifications rose 21.7 percent, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a report.
Thomas Sowell - Obama's Economic Policy
50% Of Rescued Mortgages Have Re-Defaulted The latest data from the Office of the Comptroller of the Currency (OCC) shows that over 50% of homeowners who had their loans previously modified in order to avoid foreclosure have re-defaulted. This seems like an awfully high failure rate.
Treasury: 2 firms have been cleared to start buying toxic bank assets The Treasury Department said Wednesday that two large investment funds have raised the minimum amounts needed to begin purchasing toxic assets from banks, finally launching this part of the government's financial rescue effort. Invesco and the TCW Group both cleared the $500 million target to begin operations to purchase toxic assets, according to Treasury. They are among nine firms that received initial approval to participate in the program earlier this year. Treasury said it expected the other seven firms would be cleared to begin operations in the next month. The goal of the program is to rid banks of bad loans so they can resume more normal lending, which is key for sustaining any economic recovery.
No Way Has Housing Bottomed, Says David Levy Bulls are beside themselves about the recent performance of the Case Shiller house-price index: Prices have risen for three straight months! This happy (if short) string of data has given rise to the widespread belief that the housing bust is over, that buyers can safely return, that folks who want to sell their houses are smart to "rent for a year until the market has come back." Keep dreaming, says David Levy, of the Jerome Levy Forecasting Center. House prices have plenty further to fall.
Peak gold and weak dollar means $2,000+ A highly regarded resource sector expert who discusses his field fervently, Byron King is unconvinced that the recession is behind us, he is equally sure that the "bottomless pit" mentality of stimulus spending will wreck the dollar. Those are among the reasons he sees $2,000-per-ounce gold on the not-too-distant horizon.
Gold Well Supported in Mid to High $900/oz Region Gold is currently trading at $1,001.80/oz and has bounced from a low of $991/oz and continues to follow currency movements. This week is the first week of the new Central Banks' Gold Agreement, which caps gold sales from official reserves. The third CBGA pact, which will run until September 2014, will limit gold sales to 400 tonnes a year, down from 500 tonnes from 2004-2009 pact. Western central banks are increasingly reluctant to deplete their gold reserves and with central banks internationally becoming net buyers of gold (particularly the Chinese in what is becoming known as the 'Chinese gold put'), the yellow metal is likely to be well supported in the mid to high $900/oz region.
Gold Consolidates Around $1000/oz Gold continues its consolidation around the highly psychological $1000/oz level. A more protracted decline in gold was avoided this week after a sizable depreciation of the Dollar against both the Euro and the Pound over the last couple sessions. However, we maintain our negative trend outlooks on these major Dollar crosses for the time being, meaning a downward pressure in gold persists. We're witnessing a battle of the bulls and the bears across the marketplace, highlighted by gold's fluctuation around $1000/oz. While it seems the downtrend is gaining traction in major Dollar pairs, the bulls continue to keep the S&P's head above water amid mixed global economic data and a pickup in M&A activity. The strength in U.S. equities is the counterbalance against a strengthening Dollar, holding gold above 9/10 lows and our multiple uptrend lines.
Gold push higher, dollar consolidates Despite gold push higher past Wednesday, greenback managed to stay in range against major rivals, if we took commodity currencies out of the equation. With Wall Street slightly down regional shares markets are expected to move in tight ranges, and even lower, ahead of Thursday and Friday U.S. reports. EUR/USD quotes around 1.4640, contained to the upside by 1.4680 area strong static area, and by 1.4600 38.2% retracement of daily 1.4190/1.4843 rally. GBP/USD back under 1.6000 after strong retreat from 1.6110 key resistance zone, needs to clear the 1.5920 level to regain downside strength.
Gold Sets New Monthly Record in Dollars, "Panic Buying" Absent THE PRICE OF GOLD moved back above $1000 an ounce Wednesday morning in London, heading for its best-ever monthly average in Dollar as the US currency lost 3.5% of its forex value from the end of August. Asian shares finished the day higher, but Tokyo's Nikkei's closed September down 2.5% on the month. An IMF report claimed that "Risks to the global financial system have subsided as a result of unprecedented policy actions and a nascent global economic recovery", but European stock markets gave back early gains despite news of a drop in German unemployment.
Gold reaches for best quarter since 2008 Analysts expect bullion to rise 7% for the July - September quarter Gold firmed on Wednesday and was poised to post its best quarterly performance since the first quarter of 2008, helped by dollar weakness and technical momentum. Spot gold XAU= was at $996.30 per ounce at 0358 GMT, up 0.6% against the notional close in New York of $990.70, supported by Wednesday's retreat in the greenback.
Gold, Silver Post Biggest Gains in Four Weeks as Dollar Slumps Gold and silver prices posted the biggest gains in almost four weeks as the dollar slid, sparking demand for the metals as alternative investments. The greenback dropped as much as 0.8 percent against a basket of six major currencies. This quarter, gold jumped 8.8 percent, the most since the three months ended March 31, 2008. The metal has climbed 14 percent this year, while the dollar was down 5.7 percent.
Probability of high inflation ahead and value of gold On one hand, the deflationists are claiming that given the extremely high debt levels in the West, further inflation is impossible. On the other side of the argument, many proponents of inflation are calling for Zimbabwe style hyperinflation. In this business, everyone is entitled to their opinion; however it is my contention that we will get neither deflation nor hyperinflation. If my assessment is correct, once business activity picks up, our world will have to deal with high inflation.
Investors refuse to dump gold Investors' new mantra is gold and realty. In India, always conventional wisdom favoured that gold and realty prices must go up in the long run for the simple reason that they can never come down over such a period. Even rural India considers both of them to be safe investments and this is ingrained in Indian psyche. They also help to buffer against inflation and bring in capital appreciation to levels comparable with those on the stock market.
Is Gold a Reasonable Investment or Not? This essay rounds up arguments for gold as a reasonable investment. Commentators such as Ambrose Evans-Pritchard and Byron King argue that China's hunger for gold will put a floor on gold prices. Specifically, they argue that China will "buy the dips" in gold prices, effectively putting a minimum on how low gold prices can go. It is conventional wisdom that gold is a hedge against inflation.
The Triple Breakout in Gold and Natural Gas Gold Stocks Index – The Leading Indicator for Gold Bullion I watch the price of gold stocks very closely because when there is large divergence from the price action of gold bullion I can get in a trade before the general public does. Tuesday we saw gold stocks put in a powerful rally yet gold bullion did not move much. This told me there was going to be some positive action Wednesday in gold and there was a very nice rally, indeed. This monthly chart of gold stocks shows a monthly breakout which is exciting to see. Most rallies last between 3-6 months on a breakout like this. That being said we could still have another 1-3 months of sideways price action as gold bullion tries to clear out the over head supply.
Gold Market Manipulation Smoking Guns and Monetary Power The transcending value seen in the Dollar has lost its foundation..." A SHORT SERIES of secret memos, published and dissected at ZeroHedge, provide the "smoking gun" of gold-market manipulation. Apparently. And given this little slew of dusty archive-digging – throwing up three documents from 1968 to 1975, each one declassified within thirty years – then "If over 40 years ago the Fed and the members of the gold 'Pool' were openly intervening in the gold market, one can only imagine what the situation is now..."
Peter Schiff September 27 2009 CNN - Your Money
Could Gold Perform Well In a Deflation, Contrary to Commonly-Accepted Wisdom? . . . . The stock of the biggest U.S. gold company - Homestake - soared during the Great Depression. Gold bugs argue that Homestake's success proves that gold does well during periods of deflation. "Homestake stock sold for about $65 per share in 1929. By 1933, the average stock price for Homestake was around $370. This represents a gain of more than 450% over the course of four years. The Dow Jones Industrial Average fell 89% over the three years between its 1929 peak to its 1932 bottom. Not only did stock prices increase for Homestake, but dividends also skyrocketed. In 1929, Homestake paid dividends of about $7 per share. By 1935, dividends had increased to $56, a staggering rate of 800% over six years. During these deflationary times, gold stocks not only retained their values but provided significant returns for investors. Deflation, the underlying crisis during the Great Depression, results in heightened gold stock prices. The reason why is that deflation diluted the value of the U.S. dollar while the price of gold was fixed by the government. . . . "
How Inflation Concealed the DJIA's Precipitous Decline over the Last Decade The DJIA may seem to have been stagnant since the bursting of Nasdaq bubble (give or take 10%, depending on when you measured the price level), but taking a closer look at these major market indices paints a much more clear picture of reality. Sure it is roughly the same level (hovering around 9-10k) around 2000, but nominal values have distorted the true performance and likely fooled many retail investors into thinking they have at least broke even (though even that is not a comforting feeling either). But as we have been able to ship much of our inflation abroad for the time being in addition to fooling the everyday investor into thinking inflation has been rather benign over this time period, most things in the investment world require taking a closer. Looking behind the smoke and mirrors often paints a much more disturbing picture, as is the case regarding the Dow Jones. To give a rough idea behind what I mean it is best to compare the performance of the DJIA to such things as Oil, Gold, Silver or a more mainstream comparison in the USD index.
Dollar Falls as Signs of Global Recovery Spur Demand for Risk The dollar dropped against most of its major counterparts and posted a second straight quarterly loss against the euro as evidence the global economy is recovering boosted demand for higher-yielding assets. The Swiss franc fell from almost a three-month high versus the euro on speculation the central bank sold the currency to curb its gain. The greenback declined as the International Monetary Fund cut its projection for writedowns and the European Central Bank said it will lend banks less than economists forecast in its second 12-month auction of unlimited funds.
Safe Harbour No More The US dollar (USD) is the world’s “reserve currency”. This status is arguably the greatest privilege enjoyed by the US as an economic entity. Most people don’t appreciate its significance. As the world’s reserve currency, the USD is used by other countries across the globe to back up their own respective paper currencies. In some cases, it’s as basic as a country stockpiling US dollars in their central bank vaults. When asked what supports their Pesos, Rubles, or Yen, the powers that be simply point to their pile of US dollars as proof of value. Upon reflection, it’s quite obvious how tenuous it is to back up one’s currency with a pile of paper issued by another country, but this is exactly how the world of international currency has worked for decades. And it has worked quite well…until now.
Marc Faber Dollar weakening the market
The ‘top dollar’ could soon be history The US consumer is no longer all-powerful – and it’s time to ‘re-balance’ The post-G20 fall-out continues. Robert Zoellick, president of the World Bank, warned yesterday that America's days as an unchallenged economic superpower are numbered and that the dollar is likely to lose its No. 1 spot as the global reserve currency to the euro and the Chinese renminbi. "The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," he warned, offering the euro as a "respectable alternative" for international transactions and predicting that the renminbi would "evolve into a force in financial markets".
Treasury Says It Will Release The TARP Payment Data Tomorrow or Friday The data on dividend and interest payments by TARP banks will be released tomorrow or Friday, a Treasury Department spokeswoman tells us. Meg Reilly of Treasury told us there has been no policy change regarding the release of the data. She declined to give any reason for the delay.
Are U.S. Treasuries A Bubble Ready To Pop? The standard theory is that the price/cost of risk-free long-term debt is a function of (a) the cost of short-term debt plus (b) some function of the market's anticipation of the likely course of inflation or deflation over the term of the debt. Governments (the Fed) can control short-term rate but they are at the mercy of markets to fix long-term rates. And of course markets are "efficient", unless of course there is a "bubble", when...Err...they are not. But then US Treasuries cannot be a bubble - who ever heard of such an idea!
Kohn plays down tightening challenge Fed has faced the question of when to tighten before, he says A leading voice at the Federal Reserve played down the complexity of the challenge facing the central bank on the question of when to pull the trigger to hike interest rates, saying that the situation was not so different from past episodes. "The headache isn't that much different than usual," Kohn told an audience of monetary policy experts gathered at the Cato Institute, a conservative think tank. The timing will be tricky, but do-able, he said. "Given the highly unusual economic and financial circumstances, judging when the time is appropriate to remove policy accommodation, and then calibrating that removal, will be challenging," Kohn said. Read his prepared remarks.
G20 Outmuscles G7 on Currency Issues Group of 20 leaders say they want to rebalance the world economy but getting them to accept a weaker U.S. dollar in the process could prove a lot to ask. That's especially true now that the Group of 20, which includes emerging markets like China and India, has supplanted the Group of Seven rich countries as the forum for managing the global economy. In fact, coordinating currency policy of any kind may get a lot harder if it requires getting 20 countries, with disparate interests and priorities, to pull in the same direction.
Future of the Dollar CNBC talks about the death of the Dollar and the increase in the price of Gold, how the IMF will step in and help with the slow and controlled decline of the American Dollar. National Security Issues are also discussed.
Greenspan Sees Growth Slowing as Stocks ‘Flatten Out’ Former Federal Reserve Chairman Alan Greenspan said he sees the U.S. economy slowing next year as the surge in stocks comes to an end. “The odds are we flatten out,” Greenspan said today in a Bloomberg television interview, referring to the equity market. “That flattening out will put some sort of dull face on 2010.”
Bernanke Urges ‘Strong’ Consumer Financial Protection Federal Reserve Chairman Ben S. Bernanke will tell lawmakers that protecting consumers of financial services is “vitally important,” while omitting prior criticism of an Obama administration proposal to shift such powers from the Fed to a new agency. “It is vitally important that consumers be protected from unfair and deceptive practices in their financial dealings,” Bernanke says in testimony obtained by Bloomberg News and prepared for a hearing tomorrow of the House Financial Services Committee. “Strong consumer protection” helps preserve savings and promote confidence in financial firms and markets, he said.
Red October Get ready for next month. I always find myself approaching October with a little trepidation. As soon as all those 3rd quarter earnings (or lack thereof) start coming in we could be in for quite a shock. It just seems that surprises of the worst kind show up in the stock market in Octobers past (especially the most recent one).
Beware the Current Bull Market in Derivatives The Dow is near 10,000 again. The business press is full of stories about the resurgence in mergers, IPOs and even so-called blank check companies. There’s one statistic, however, that should give investors pause: the growth in the total dollar value of derivative contracts at the top too-big-to-fail banks in the United States. In the second quarter of this year, the notional value of derivatives contracts at JPMorgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C) increased by $1.92 trillion, to $191 trillion. Shockingly, Citi is responsible for most of that gain from the end of the first quarter.
Jim Rogers The Third US Stimulus Package (NWO SERIES/ THE TRUTH ABOUT THE ECONOMY)
IMF sees another wave of bank losses International Monetary Fund says new writedowns of about $1.5 trillion needed globally through the end of 2010. The International Monetary Fund on Wednesday lowered its estimate for global writedowns for banks and other financial institutions to $3.4 trillion but warned that loan losses were set to rise as unemployment grew. In April the IMF estimated in its Global Financial Stability Report that global bank losses could reach $4 trillion but said it cut the figure by $600 billion to reflect rising securities values and new methodology for calculating writedowns.
The FDIC Just Doesn't Get the Economic Situation FDIC insured institutions are required to prepay their estimated quarterly risk-based assessments for the 4th quarter of 2009 and for all of 2010, 2011 and 2012 by the end of 2009. This is FDIC MADNESS! The assessments will total about $45 billion, but that’s not enough to bring the fund back to a ratio of 1.15 versus insured deposits. This alignment must be completed by the end of June 2013 five years after the Deposit Insurance Fund dipped below 1.15 at the end of June 2008. We were at 0.22 at the end of Q2 2009. Right now the DIF is in arrears by $4.7 billion.
I.M.F. Calls for Overhaul of Financial System The International Monetary Fund said Wednesday that “the global economy has turned a corner” after the harrowing start to 2009, but that only a thorough restructuring of the financial system could prevent a return to crisis and pave the way for solid growth within the next 18 months. However, the I.M.F. did say that its estimate of total writedowns at banks and other financial institutions had declined by $600 billion, from $4 trillion six months ago to $3.4 trillion today, in part because the value of complex securities at the heart of the crisis has stabilized.
IMF: Another $1.5 Trillion in Bank Writedowns Coming The International Monetary Fund on Wednesday lowered its estimate for global writedowns for banks and other financial institutions to $3.4 trillion but warned that loan losses were set to rise as unemployment grew. In April the IMF estimated in its Global Financial Stability Report that global bank losses could reach $4 trillion but said it cut the figure by $600 billion to reflect rising securities values and new methodology for calculating writedowns.
Bank-Bailout Fund Faces Years in Red as Failures Jolt System The government said the fund that protects consumer bank deposits has fallen into the red and will remain there into 2012, a pointed symbol of how the aftershocks of the financial crisis will reverberate for years as banks continue to fail at a high rate. The negative balance is a headache for the Federal Deposit Insurance Corp., which runs the fund. On Tuesday, it proposed the unprecedented step of having the banking industry prepay $45 billion in fees by the end of the year to give the government more breathing room to handle future failures.
Ron Paul on Daily Show End the Fed edition
CIT Group again on brink of collapse CIT Group shares plunge on report lender is again on brink of bankruptcy CIT Group Inc. shares plunged Wednesday as the commercial lender is reportedly trying to craft an exchange that would cut its debt and offer bondholders an equity stake in the company in a bid to avoid bankruptcy. Shares of the New York-based financial firm, one of the largest U.S. lenders to small and midsize businesses, fell 85 cents, or 38.6 percent, to $1.35 in morning trading.
Bank of America Chief Resigns Under Fire Lewis to Leave at Year End as Lender Faces New York Probe of Merrill Deal; Fed Up After a Year of Criticism; Successor Unclea After scrambling for months to keep his grip on the bank he helped build from a scrappy Southern outsider to the nation's largest in assets, Bank of America Corp. Chief Executive Kenneth D. Lewis said he will resign by year end. The 62-year-old Mr. Lewis, who has led the Charlotte, N.C., bank since 2001, notified the board of his decision Wednesday. A person close to him says Mr. Lewis was fed up with the criticism that haunted him following the takeover of Merrill Lynch & Co.
Bank of America CEO Ken Lewis to retire Beleaguered chief executive Ken Lewis to leave after tumultuous tenure. Bank under fire for its merger with Merrill Lynch last year. Ken Lewis, the beleaguered CEO of Bank of America, announced Wednesday that he will retire at year's end. Lewis, who was stripped of his chairman title in April, will also step down from the board. No successor was named. "Bank of America is well positioned to meet the continuing challenges of the economy and markets," said Lewis, 62. "I am particularly heartened by the results that are emerging from the decisions and initiatives of the difficult past year-and-a-half. The Merrill Lynch and Countrywide integrations are on track and returning value already."
Can an Accounting Trick Rescue the FDIC? Can an accounting trick save the Federal Deposit Insurance Corp.? That's what FDIC chief Sheila Bair and Co. seem to be hoping. On Tuesday, the cash-depleted FDIC hatched a plan to require banks to prepay three years of quarterly fees. The FDIC expects to quickly generate $45 billion in cash, an amount it normally would've had to wait years to get its hands on. But in a quirk of accounting rules, the banks won't have to expense the upfront payments this year, even though they will be handing over the cash in the next few months — in amounts that could run into the billions of dollars for some banks. The FDIC says the move will solve its liquidity problems — the FDIC officially slid into the red this week for the first time since 1991. But it's not certain whether the plan will boost confidence in the banking system, as the FDIC seems to hope.
FDIC bailout, German elections
Fractional Reserve Banking Made Easy The paper bills in our wallet are not money. And they are not Notes as in "Federal Reserve Note" written on the top of the bill. They are actually just Tokens. Federal Reserve Tokens, if you like, is what should be written on top of the bills. They are not redeemable for anything other than themselves. And they represent only one thing: Your belief in their value. Hopefully, your belief extends to the next person you try to give them to. The only real use for them is paying your taxes to either the state or federal government. You can be sure, however, that both will stop accepting them as payment even for taxes if you and I stop believing in the paper bills.
private mortgage insurance volume hits record low The volume of private mortgage insurance written fell to a record low in August, according to data from the Mortgage Insurance Companies of America (MICA). The group, which includes the likes of MGIC, Genworth, Radian, PMI, and other heavy hitters, wrote just $5.77 billion in new insurance during the month, down from $7.5 billion a month earlier and $10.2 billion a year ago. The previous low was back in November 2008, when the group wrote just $5.83 billion in new mortgage insurance.
47% will pay no federal income tax An increasing number of households end up owing nothing in major federal taxes, but the situation may not be sustainable over the long run. Most people think they pay too much to Uncle Sam, but for some people it simply is not true. In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center. Some in that group will even get additional money from the government because they qualify for refundable tax breaks.
U.S. retail landlords less willing to negotiate While retailers are likely to face another tough holiday season, it may be much more difficult for them to extract any concessions from their landlords to help ease the ride, a top restructuring expert said on Tuesday. "We're seeing now that landlords have pulled back some from negotiating," Kenneth Frieze, who heads the business development and marketing groups at asset recovery firm Gordon Brothers Group, said at the Reuters Restructuring Summit in New York. Earlier this year, as some retailers were on the cusp of bankruptcy, many demanded that landlords reduce their rent, saying they could not survive without such concessions.
U.S. Q2 home foreclosures, mortgage delinquencies up The number of home foreclosures in process and delinquent mortgages rose during the second quarter, while home retention actions also increased, U.S. bank regulators said on Wednesday. Foreclosures jumped 16 percent to 2.9 percent of serviced mortgages, while home retention actions such as loan modifications rose 21.7 percent, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a report.
Loan Delinquencies Rise Lenders are doing more to help borrowers, but loan delinquencies are rising faster than ever, reports CNBC's Diana Olick.
Oil above $67 despite high inventories Oil rises above $67 in European trade despite increase in US crude inventories Strengthening stock markets in Europe helped push oil prices above $67 a barrel Wednesday despite data showing U.S. crude inventories rose for a third week, suggesting consumer demand remains weak. By mid-afternoon in Europe, benchmark crude for November delivery was up 69 cents at $67.40 in electronic trading on the New York Mercantile Exchange. The contract fell 13 cents to settle at $66.71 on Tuesday.
GM to shut down Saturn after Penske walks away GM to shut down Saturn after Penske terminates talks with GM on uncertain future assembly General Motors Co. said Wednesday it would shut down its Saturn brand after an agreement with Penske Automotive Group Inc. to acquire it fell apart. Penske, citing concerns of whether it could continue to supply vehicles after a manufacturing contract with GM ran out, ended talks with GM Wednesday to acquire the brand. GM CEO Fritz Henderson said in statement that Saturn and its dealership network will be phased out.
Credit Card Noose Tightens in Deflation When B of A spokesman Lawrence DiRita turned up on the evening news not long ago to assure listeners that his employer was willing to work on a case-by-case basis with troubled customers, we decided to call his bluff. Would DiRita, formerly a high-ranking official in the Defense Department, go to bat for the borrower whose “teaser” loan from the bank was about to shoot up overnight from 0% to 12.24%? Everyone with a credit card has been offered such a loan at one time or another, and it was once possible to initiate one at rates varying from 0% to 4%, with no additional fee for the balance transfer. Not any longer, though.
Alan Grayson on the GOP Health Care Plan: "Don't Get Sick! And if You Do Get Sick, Die Quickly!"'
U.S. To Break Up Soon? According to Macedonian Radio and Television On-line (MRT), a Russian professor predicts the United States will fall apart in July 2010. MRT reports, "'Mr. Obama is similar to the last Soviet leader Mikhail Gorbachev. Gorbachev was also making great promises for the Soviet Union, but the situation was only getting worse,' he said. By next summer, according to Professor Panarin, the US will disintegrate into six blocs--and everyone will get their piece. 'The probability that the United States of America fall apart in July 2010 is more than 50 percent,' said Igor Panarin, Professor at Moscow's Diplomatic Academy within the Russian Federation's Ministry of Foreign Affairs.
Twilight of Pax Americana Since the end of WWII, the world has depended on the United States for stability. But with American military and economic dominance waning, capitalism and global security are threatened. The international order that emerged after World War II has rightly been termed the Pax Americana; it's a Washington-led arrangement that has maintained political stability and promoted an open global economic system. Today, however, the Pax Americana is withering, thanks to what the National Intelligence Council in a recent report described as a "global shift in relative wealth and economic power without precedent in modern history" -- a shift that has accelerated enormously as a result of the economic crisis of 2007-2009.
John Ensign: Public option would be popular, so let’s not do it So goes Ensign’s opposition, stated in Senate panel debate Republican Sen. John Ensign delivered one of the more curious arguments against a government-run, public health care option during a long and lofty Senate committee debate Tuesday. People might like it and use it. Then it would become popular, and too big to fail. And the government would have to support it. “Does anyone really believe this Congress will let this government program go away if it has a constituency?” Ensign asked his colleagues on the Senate Finance Committee. “To have a large program like this, once it’s started, you’re never going to get rid of it.” The public option would be a government-run health care alternative to the private insurance market. It’s intended to provide an option for those currently without health insurance, and, through competition, rein in rising insurance costs.
Prescriptions now biggest cause of fatal drug overdoses Debra Jones didn't begin taking painkillers to get high. Jones, 50, was trying to relieve chronic pain caused by rheumatoid arthritis. Yet after taking the painkiller Percocet safely for 10 years, the stay-at-home mother of three became addicted after a friend suggested that crushing her pills could bring faster relief. It worked. The rush of medication also gave her more energy. Over time, she began to rely on that energy boost to get through the day. She began taking six or seven pills a day instead of the three to four a day as prescribed.
Senate health-care debate eyed for week of Oct. 12 Anti-abortion provisions rejected in Finance Committee Senators could begin debating a sweeping health-care bill the week of Oct. 12, the Senate majority leader said Wednesday, as members of the Finance Committee pressed on with a bill-writing session and turned back amendments related to abortion. Members of the finance panel have gotten to a little more than 80 amendments out of more than 500 on a sweeping health-care overhaul proposed by Max Baucus, D-Mont., the committee's chairman. Wednesday, they rejected amendments offered by Sen. Orrin Hatch, R-Utah, that would have strengthened anti-abortion parts of the bill. Senators also voted on Wednesday to increase penalties on employers that do not offer health insurance to their workers.
Senate Democrats unveil climate bill calling for a 20% cut in emissions Leading senators say ambitious climate change bill will give America a chance to reclaim its energy independence Democratic leaders took on the epic challenge of getting the US Senate to act on global warming today with the formal unveiling of a bill proposing an ambitious 20% cut in greenhouse gas emissions. Senate Democrats turned out in strength for today's launch, which was seen at home and abroad as a crucial moment for advancing Barack Obama's agenda.
Israel rethinks anti-Iran warnings Suddenly, the Iranian "existential threat" seems to have receded from Israel's horizon. It began with a bombshell Sept 18 newspaper interview in which Defense Minister Ehud Barak asserted that a nuclear-armed Iran could not destroy the Jewish state. Similar public remarks followed from the general in charge of all military operations. Even hawkish Foreign Minister Avigdor Lieberman now sounds skittish about his government's long hinted-at willingness to go to war rather than see an enemy get the means to make a bomb.
U.S. May Seek Bilateral Talks With Iranians World Powers Meeting on Nuclear Issue The United States hopes to launch a process here Thursday that could rein in Tehran's nuclear ambitions and possibly reorient Iran's role in the world, though U.S. officials are skeptical that Tehran will act decisively when its diplomats sit down for long-awaited discussions with world powers. U.S. officials signaled Wednesday that they will seek a rare bilateral meeting with Iranian diplomats during the discussions. The talks between Iran and major powers, expected to last through the day, have been structured to allow for both group meetings and informal, bilateral sessions with Iran; a senior administration official said the latter would be "an opportunity to reinforce the main concerns we will be emphasizing in the meeting." He spoke on the condition of anonymity because of the diplomatic sensitivity ahead of the talks.
Both Sides to Blame for the Georgia-Russia War After last year's war between Russia and Georgia, which left at least 250 people dead and parts of Georgia in ruin, both countries were eager to point the finger of blame at one another for starting the conflict. On Wednesday, an independent investigating team issued a highly anticipated report saying that neither country can escape fault. In the 1,100-page report, the investigators said that Georgia fired the first shots in the August 2008 conflict when it launched an attack on the breakaway region of South Ossetia, which the team deemed "unjustifiable" under international law. But the report, which was sponsored by the European Union, said the attack followed months of Russian provocation, including a heavy military build-up in the region and increased support for separatist movements in both South Ossetia and Abkhazia, another breakaway region of Georgia.
Tariff May Further Strain U.S.-China Trade Companies that import solar panels to the United States are facing up to $70 million in unexpected tariffs. The bill comes at a time when the industry is already struggling and could hurt both foreign solar panel makers and foreign and American distributors. It could also further strain trade relations between the United States and China. The issue began with a short letter to United States customs officials last December from the small American subsidiary of a Spanish energy company. The subsidiary, GES USA, wanted to know what the tariff would be to import certain solar panels from China.
Steve Quayle on Alex Jones Tv 1/6: Red Dawn in America!!
Steve Quayle on Alex Jones Tv 2/6: Red Dawn in America!!
Steve Quayle on Alex Jones Tv 3/6: Red Dawn in America!!
Steve Quayle on Alex Jones Tv 4/6: Red Dawn in America!!
Steve Quayle on Alex Jones Tv 5/6: Red Dawn in America!!
Steve Quayle on Alex Jones Tv 6/6: Red Dawn in America!!
The Foreclosure Shadow Is Growing There are all kinds of "experts" out there who are claiming that the housing market has bottomed, stabilized, halted it's precipitous drop, etc. So why does Doom remain so "doomish"? Back during the boom we complained that all the bullish reports out there constantly considered demand [which apparently was going to grow forever] without considering supply, and supply remains the horsefly in the ointment. Today Barron's discussed a highly respected report by Amherst Securities Group, and what they report on the shadow inventory of foreclosures is alarming: . . . . . . . . Put another way, of the 56 million units that the Mortgage Bankers Association says make up the mortgage universe, Amherst gauges 6.94 million units are in what it dubs the "delinquency pipeline" eventually headed for liquidation. And it reckons that another 300,000 mortgages replenish that unwelcome flow every month.
Weak Analysis Finds Hope In Latest Case-Shiller Numbers . . . . It doesn't matter what the level of sales if it is not making a dent in the supply. But wait, there's more: Sales aren't the only thing that have the analysts ecstatic. They are pleased at what they are calling "signs of stability": . . . . . There is nothing "stable" about a 13.3% annual price drop. Remember back in the good old days, oh say 2005 when we were told price declines were simply unthinkable? Can you imagine how the talking heads would have laughed at even the suggestion that in a few years we would be looking at double-digit price drops? The analysts can put all the spin on it they like, but "not quite as horrible as last month" is still horrible, and not indicative of "stability". That's not even on the horizon.
home builders can’t get financing either The majority of builders of single-family homes have pointed to a severe lack of credit as the biggest threat to a potential housing recovery, according to a survey from the National Association of Home Builders (NAHB). The new builder survey of acquisition, development and construction (AD&C) financing found that 63 percent of respondents felt the availability of credit for single-family construction loans deteriorated in the second quarter.
Gold Gains in New York, Erasing Earlier Loss, as Dollar Eases Gold rose in New York, erasing an earlier loss, as the dollar pared gains, spurring demand for the precious metal as an alternative investment. The dollar climbed as much as 0.4 percent against a basket of six major currencies before trading little changed. Gold has advanced 12 percent this year, while the greenback fell 5.2 percent against the basket.
Paul asks Fed: Are you in the gold market? During last Friday's hearing of the House Financial Services Committee on his legislation to audit the Federal Reserve System, U.S. Rep. Ron Paul asked the Fed's general counsel, Scott G. Alvarez, whether the Fed has ever been involved in the gold market. Four days earlier GATA had disclosed the Fed's admission that it has records of its "gold swap arrangements" with "foreign banks" that it wants to conceal from the public:
Ron Paul HR 1207 Hearing 9-25-09 2 of 5
The No. 1 Way to Profit When Silver Upstages Gold While prices of gold don't necessarily affect silver prices or vice versa, history has demonstrated that when gold rises or falls, silver usually follows suit. This time around, silver has failed to match the gains that gold posted in recent months, spawning a widespread believe that silver is poised for a bull run. Such factors as a decline in supply and a weakening U.S. dollar have buttressed that bullish belief. And so has the fact that China's government is strongly encouraging that country's residents to buy the white metal. With Beijing's plan to inject $587 billion (4 trillion yuan) into China's economy, and a growing desire to diversify away from the U.S. dollar as its key reserve currency, the Asian giant could increase its reliance on such precious metals as gold and silver - especially if global inflation takes hold.
Gold $1,700+ Driven by Massive Debt Monetization Suppose one was a football coach, whatever kind of football you like. You have a play that has been used in every game in the season thus far. Each time the play was executed, it failed. What would you as coach do? Yes, most coaches would toss the play, and never use it again. However, if one's college degree was in economics, the response would be quite different. Those economics trained coaches would just keep using that same play, despite all evidence that it does not work. Now, consider the results posted in our first chart, below. In the world game of economics, some winners and losers exist. Can you determine the loser? The winners? The reason China and India are experiencing economic growth is that real change has been instituted in those countries. They, admittedly at their own glacial speed, are reducing the interference of government in the economy. As that happens, engines of economic growth have developed. Companies are building factories and hiring people. The government is building infrastructure that fosters and encourages growth.
Gold Money Versus the Monetary Ambitions of Governments China's government follows a mercantilist trade policy, meaning that it attempts to manipulate international trade -- via tariffs, subsidies, regulations and exchange rates -- in order to maximize the amount of money that flows into the country. This policy is unlikely to change anytime soon. Also, China's government exerts very direct and stringent control over its banking system, as evidenced by the rapid expansion of bank credit during the first half of this year at the behest of the government, and the subsequent slowing in the rate of credit expansion, again at the behest of the government. Thanks to its domination of the banks, China's government has a level of control over money supply that central-planners in the US and Europe can only dream about.
Worry-free plan: Gold, bonds and cash Only thing for certain is history repeats One year after the great financial meltdown, investors are torn between rising optimism and fear history could repeat itself this fall. There has been much comment on whether investors have learned their lesson, but as Alan Greenspan told the BBC recently, human nature never changes. At some point, one hopes years from now, there will be another financial crisis, although the trajectory may be much different from a year ago.
Dollar Falls Against Yen on Speculation Fed Will Keep Rates Low The dollar fell against the yen, paring earlier gains, on speculation the Federal Reserve will keep record-low interest rates unchanged for an extended period. The U.S. currency retreated from near a two-week high against the euro as Asian stocks rose and before a report this week forecast to show employers cut fewer jobs in September, damping demand safe-haven currencies.
Dollar's days of dominance may end World Bank President Robert B. Zoellick warned Monday that, with foreign economic powers rising quickly on the world stage, time is running out for the privileged role enjoyed by the American currency. The dollar's status as the world's reserve currency has given the U.S. prestige and privileges that are unique in the world, lifting living standards by enabling Americans to borrow cheaply and consume far more than they produce with little consequence for decades. "The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," Mr. Zoellick said in a speech to Johns Hopkins University's School for Advanced International Studies in Washington. "Looking forward, there will increasingly be other options to the dollar."
Myth 2: “Deflation Will Cause a Run on the Dollar, Which Will Make Prices Rise”
Myth 3: “Consumers Remain the Engine Driving the U.S. Economy”
U.S. Fed May Wait Too Long to Raise Rates, Hanke Says The U.S. Federal Reserve may keep its benchmark interest rate at a record low for "too long," increasing pressure on the dollar to weaken, said Steve Hanke, a professor at Johns Hopkins University. Fed Chairman Ben S. Bernanke and other policy makers may hold off increasing rates until after the mid-term Congressional elections in November 2010, as inflation stays within the central bank's target range, Hanke said in an interview in Kuala Lumpur late yesterday. The U.S. economy will probably slow once rates are increased, resulting in a W-shaped recovery, he said.
Fed's Fisher says policy reversal could be swift Dallas Federal Reserve President Richard Fisher said on Tuesday that the winding down of the Fed's accommodative monetary policies needed to start as soon as the economy shows convincing signs of traction. "When it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation," Fisher said in a speech to the Texas Christian University Business Network of Dallas.
The Road to Zimbabwe Sprinkled among all the official talk about efforts to end the current recession, you’ll hear assurances, notably from Federal Reserve Chairman Ben Bernanke, that when the economy does revive, it won’t be allowed to blast off into runaway inflation. The Fed, we’re being promised, will prevent such a launch by reabsorbing the hundreds of billions of dollars of excess liquidity it recently created to halt the credit crisis.
Ron Paul We live in very dangerous times 1 of 3 . . . dollar in big trouble
How's that Fannie and Freddie "Rescue" Working Out? It was just over a year ago that Fannie Mae and Freddie Mac were placed in conservatorship. So is the footing stronger a year later? Nope. Fannie Mae said Tuesday that delinquencies in its mortgage portfolio continued to rise, putting further pressure on the mortgage financier. It and smaller sibling Freddie Mac were put into conservatorship a year ago by the federal government amid fears of mounting losses. Fannie said July serious delinquencies, or those at least 90 days behind, rose to 4.17% from 3.94% in June and 1.45% a year earlier. Fannie's delinquencies have been worse than Freddie's. . . . . . . . . Conservatorship has not been about placing the two GSEs on a stronger footing, it has been about keeping the party going. The party has been limping along somewhat, but at what price?
FDIC Discloses Deposit Insurance Fund Is Now Negative In an unprecedented disclosure, the FDIC has highlighted that it expects the DIF reserve ratio to be negative as of September 30. As there are a whopping 48 hours before that deadline, one can safely assume that the DIF is now well into negative territory: as of today depositors have no insurance courtesy of a banking system that has leeched out all the capital of the Federal Deposit Insurance Corporation. Let's pray there is no run on the bank soon.
FDIC Weighing Unappealing Options for Fund Replenishment When the Federal Deposit Insurance Corporation's (FDIC) board meets today (Tuesday), it will be faced with some tough questions about how it will replenish its still-shrinking fund in the wake of mounting bank failures. The FDIC has seen its fund that protects more than $4.5 trillion in bank deposits shrink to just $10.4 billion from $45.2 billion at the end of the second quarter in 2008. Its "problem list," or banks that run a higher risk of failure, grew to 416 in the second quarter of this year, up from 305 in the first quarter. That's the highest number since the second quarter of 1994, when there were 434 banks on the list.
F.D.I.C. Moves to Replenish Bank Fund Acknowledging that they had greatly underestimated the problems plaguing the nation's banking system, federal officials proposed a plan on Tuesday to replenish the fund that protects bank depositors. They also announced that the fund, which began the year with more than $34 billion on hand but has been battered by bank collapses, would fall into deficit this week.
Taxing Banks to Pay for, and Prevent, Future Bailouts Financial market regulation seems dauntingly complex, but conceptually it is no different than an efficient highway toll. Both public interventions are justified by negative externalities, which occur when one person’s activity adversely impacts other people. On the highways, each driver slows everyone else, and tolls can speed traffic by keeping price-sensitive drivers off the road. In the financial markets, institutional risk-taking creates the risk of failure and federal bailout. The reason to intervene, on either the highways or the Bourse, is to limit the social damage created by people and companies that act without worrying about the costs that they impose upon others.
FDIC Proposes Banks Prepay Deposit Fees Through 2012 The Federal Deposit Insurance Corp. is asking lenders to prepay three years of premiums, raising $45 billion, to replenish reserves drained by the fastest pace of bank failures in 17 years. The insurance fund will have a negative balance as of tomorrow after 120 banks were shut in the past two years, and will be positive by 2012, the staff said. Banks failures may cost $100 billion through 2013 with half the cost already incurred, the FDIC said. The agency today rejected options for a second special fee or borrowing from the Treasury Department.
FDIC staff propose banks prepay fees Federal Deposit Insurance Corp staff recommended on Tuesday that the agency get banks to prepay three years of fees to help cover the cost of bank failures, expecting a $100-billion cleanup bill through 2013. The board of the FDIC was meeting Tuesday and is expected to vote shortly on whether to formally propose that banks prepay $45 billion of regular quarterly assessments, but not recognize the hit to their earnings until the fees are normally due.
Bank of America, 3 Other Banks’ FDIC Fees May Top $10 Billion The Federal Deposit Insurance Corp.’s plan to bolster its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion. Bank of America, the biggest U.S. lender by deposits, may owe $3.5 billion under the FDIC proposal for banks to prepay three years of premiums, based on the lowest assessment rate multiplied by the bank’s $900 billion in second-quarter U.S. deposits. “This seems like a very hefty amount,” said Tim Yeager, a finance professor at the University of Arkansas and former economist at the Federal Reserve Bank of St. Louis. “The FDIC’s projections of future losses are pretty severe, and they are trying everything they can to avoid tapping the Treasury.”
US banks made $5.2B trading derivatives in 2Q U.S. commercial banks earned $5.2 billion trading derivatives in the second quarter, as the level of risk eased in the global market for the complex financial instruments, according to a government report released Friday. Derivatives, traded in an unregulated $600 trillion market, were partly blamed for the financial crisis that ignited a year ago. The value of derivatives hinges on an underlying investment or commodity - such as currency rates, oil futures or interest rates. The derivative is designed to reduce the risk of loss from the underlying asset. Derivatives trading is dominated by about 20 big banks worldwide.
"I guess the bailouts are working- for Goldman Sachs"
Fed to work with lawmakers on naming borrowers The Federal Reserve is willing to work with U.S. lawmakers on ways to release names of companies that borrow from the central bank after a time lag so the disclosures do not disrupt markets, a Fed official said. Scott Alvarez, the Fed's general counsel, told the House of Representatives Financial Services Committee on Friday that the idea was "something that we're giving serious consideration with and we'd be happy to work with you on."
China's rise underscore's U.S. decline: Volcker Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the United States. "I don't know how we accommodate ourselves to it," Volker, an economic adviser to President Barack Obama, said in an interview with PBS's Charlie Rose taped on Monday in New York. "You cannot be dependent upon these countries for US$3-trillion to US$4-trillion dollars of your debt and think that they're going to be passive observers of whatever you do."
Pimco's Gross Buys Treasuries Amid Deflation Concern Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., said he's been buying longer maturity Treasuries in recent weeks as protection against deflation. "There has been significant flattening on the long end of the curve," Gross said in an interview from Newport Beach, California, with Bloomberg Radio. "This reflects the re- emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth."
Treasury Bonds: Here Comes the Bull Market Flattener In my last article entitle 30y US bond yield sends encouraging signal dated September 11, I wrote: "Should they overcome this 4.10-4.20% area, then that would be a significant long-term bullish signal for the entire UST market!" On Friday, the US TBond yield has indeed closed below this area at 4.09%! In turn, I see my bond-bullish picture confirmed and reiterate my tactic as well as strategic stance as yields should drop amid a flatter curve.
Dollar Advances to Two-Week High on Russia's Treasury Holdings The dollar rose to a two-week high versus the euro as Russia said it will maintain the share of U.S. Treasuries in its international currency reserves, reducing concern central banks will diversify away from the greenback. Sterling gained the most versus the euro since June as a report showed the U.K.'s economy shrank less than previously estimated and an index of retail sales rose to the highest level in five months. The dollar pared its gain versus the yen as U.S. consumer confidence unexpectedly fell this month.
Marc Farber: Equities Safer than Dollars Here is a terrifying interview with Marc Faber, editor of the Gloom Doom & Boom Report. I find it unsettling how calm and polite he is as he lays out the case for an inevitable collapse of the US dollar hegemony and the destruction of our economic system. And in case you think he is some sort of doomsayer who just now happens to be correct, keep in mind that throughout his lengthy career, he has made some unbelievable calls - both long and short. So he clearly is not a perma-bear of the Howard Ruff variety. The last time Ruff was on CNBC hoarsely growling his ever pessimistic prognosis, I wondered if this was a contrarian signal from the trading gods. With hindsight’s approval we know that it most certainly was.
The "credit-based" monetary system One of the arguments put forward by deflationists (people who are forecasting deflation) is that today's monetary system is credit-based and hyperinflation is not possible under such a system. What they mean by "credit-based" is that new money is borrowed into existence, the implication being that in order to get a net increase of $1 in the total money supply there must be a net increase of at least $1 in the economy-wide debt burden. As a result (so the argument goes), the more the supply of money is inflated the more the economy is weighed down by debt, thus improving the odds of an eventual deflationary outcome.
China at 60: Military marching lockstep with economic growth Hundreds of battle tanks will rumble down the Avenue of Eternal Peace in Beijing next week. Squadrons of J-10 fighter jets will scream over Tiananmen Square and wave after wave of AWACS reconnaissance aircraft, helicopters, aerial tankers, transport planes, bombers and fighters will stage a flypast to salute a parade of five thousand soldiers flaunting the latest in cruise and intercontinental ballistic missiles, armoured personnel carriers, assault guns and mobile missile launchers. The military review to mark the 60th anniversary of the founding of Communist China next Thursday will showcase the latest Chinese military hardware and herald the emergence of a new global superpower.
Capitalism versus Statism From the very first we run into grave problems with the term "capitalism." When we realize that the word was coined by capitalism's most famous enemy, Karl Marx, it is not surprising that a neutral or a pro-"capitalist" analyst might find the term lacking in precision. For capitalism tends to be a catchall, a portmanteau concept that Marxists apply to virtually every society on the face of the globe, with the exception of a few possible "feudalist" countries and the Communist nations (although, of course, the Chinese consider Yugoslavia and Russia "capitalist," while many Trotskyites would include China as well). Marxists, for example, consider India as a "capitalist" country, but India, hagridden by a vast and monstrous network of restrictions, castes, state regulations, and monopoly privileges is about as far from free-market capitalism as can be imagined.
Ron Paul We live in very dangerous times 2 of 3 .... dollar collapse, run away inflation, run-a-way interest rates, etc.
CIT in talks for loan of up to $10 bln CIT Group Inc (CIT.N) is negotiating a new credit facility that could be $10 billion, which could help the finance company pay off maturing debt and stave off bankruptcy, people familiar with the situation said. The details of the facility are still being negotiated, and its size might be substantially smaller than $10 billion or even zero if the company successfully renegotiates the terms of some of its existing credit lines, two people familiar with the matter said.
The Coffin Shaped Recovery While often wrong, Bernanke is right about the recession. It's almost over. But a depression is about to replace it. There has been much discussion about this recovery, whether it will be a "U", "V" or a "W" shaped recovery. The answer is none of the above. It is going to be "C -shaped" recovery, but not as in the letter "C" but as in coffin. It would be a miracle if trillions of dollars of debt could be wiped out with one stock market crash and be succeeded by a new bull market driven by another large offering of credit by the Fed.
U.S. consumer woes overshadow housing cheer U.S. house prices rose for a third month in July, but consumer confidence fell unexpectedly in September as the worst job market in 26 years fueled worries about personal finances, private reports showed on Tuesday. The reports show it is still early days for the economic rebound, following the worst recession in decades, and it could take a long time before consumers begin to contribute to growth.
U.S. Stocks Retreat on Unexpected Drop in Consumer Confidence U.S. stocks retreated after an unexpected decline in consumer confidence overshadowed a smaller-than-forecast drop in home prices. Crude oil fell as the dollar strengthened, while Treasuries were little changed. Benchmark indexes erased most of an early advance as the Conference Board's confidence index slipped to 53.1, trailing the median economist estimate of 57. Energy companies led the decline before the introduction of proposed legislation to control global warming. Lennar Corp. and KB Home climbed more than 1.5 percent as the S&P/Case-Shiller home-price index fell 13.3 percent in July from a year earlier, the smallest drop in 17 months.
Most small business owners say recession isn't over for them Most small business owners remain cautious in their economic outlook, with more than two-thirds saying the recession is not over for them, according to this month’s Discover Small Business Watch index released on Monday. In addition, more than half of owners rate the economy as poor, up from 48 percent in August. Only 10 percent said it’s excellent or good. That’s a change after three consecutive months of gains. The index fell 2.1 points to 87.7 in September from August. The latest Discover index is based on a random telephone survey of 750 U.S. small business owners who have less than five employees and 3,000 consumers.
The Banking System Is Insolvent Let's put some numbers on this. There are roughly 125 million single-family homes in the US. Of those, roughly 30% have no mortgage on them at all. This leaves 87.5 million single-family homes with mortgages. Let us assume the average outstanding balance is $200,000 across the entire set and will take a 40% loss severity. This is less than S&P has estimated for subprime loans and only assumes a roughly 20% market deficiency in the home price (the rest is from legal, rehabilitation and marketing expenses.) These numbers are, with a high degree of confidence (90%+) low - that is, losses will exceed these estimates, perhaps dramatically so. It is, for example, quite reasonable to believe that due to the concentration of defaults in higher-priced areas (e.g. California and Florida) that the average outstanding balance could be close to double that $200,000 value and the loss due to negative equity higher.
Unprecedented U.S. corp. defaults seen for '09 U.S. corporate debt default rates are expected to hit "unprecedented" levels in 2009, even though the economy may be past the halfway mark of the U.S. recession, according to a forecast unveiled on Monday at the Reuters Restructuring Summit. "There is a lot of pain left -- we are only just half way through the 600 or so defaults in this cycle," said Phil Kleweno, a partner at Bain's corporate renewal group. The forecast for the 2009 corporate default rate has risen to 12 percent to 14 percent, from a May forecast of 11 percent to 13 percent, according to Bain's corporate default outlook. That suggests a total of about 180 to 210 companies could default on their debt this year.
Calm now, but more bankruptcies seen Bankruptcy professionals have noted a curious calm in the pace of corporate Chapter 11 filings, But don't relax yet, they say. A recent slowdown just marks a calm period before another storm of business collapses. Things may be getting slightly better in the U.S. economy, and paradoxically, that makes it more likely companies will be pushed into bankruptcy in coming months. For one, the largest U.S. banks posted surprisingly strong profits during the first half of the year. That has made them more willing to foreclose on deadbeat debtors, pushing them into bankruptcy.
Ron Paul We live in very dangerous times 3 of 3
In One Home, a Mighty City's Rise and Fall Price of Typical Detroit House: $7,100 DETROIT -- On a grassy lot on a quiet block on a graceful boulevard stands the answer to a perplexing question: Why does the typical house in Detroit sell for $7,100? The brick-and-stucco home at 1626 W. Boston Blvd. has watched almost a century of Detroit's ups and downs, through industrial brilliance and racial discord, economic decline and financial collapse. Its owners have played a part in it all. There was the engineer whose innovation elevated auto makers into kings; the teacher who watched fellow whites flee to the suburbs; the black plumber who broke the color barrier; the cop driven out by crime.
Connecting the Dots to the U.S. Housing Market Recovery Dot 1 - There is a “shadow market” of 2.7 million homes that are technically in foreclosure but are yet to be reclaimed by the lender, says a Wall Street Journal study today. While it’s no secret banks are kicking the can down the road on finalizing foreclosures (and consequently accepting the mortgage loan as a loss) this is the first guess at the total number of such homes that we’ve heard: “As of July, mortgage companies hadn't begun the foreclosure process on 1.2 million loans that were at least 90 days past due,” says the study. “An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn't yet acquired the property. The figures don't include home-equity loans and other second mortgages.
Foreclosures sitting longer, selling cheaper Trend acute in city's African-American neighborhoods In Chicago neighborhoods gripped by foreclosures, it's becoming alarmingly apparent that everybody loses. Communities are seeing more homes fall into foreclosure and become vacant. Once reclaimed by lenders, it is taking longer to sell them; 33 percent of single-family foreclosures made in the past three years were unsold at the end of 2008, leaving area residents with boarded-up, unsafe eyesores on their streets.
Cash for Clunkers Will Go Wrong, But Not For the Right Reasons If I were to design a stimulus plan, Cash for Clunkers might be among them. The target of the plan was to incent the public to trade in gas guzzling 'clunkers' for more fuel efficient, safer cars. It provided a spark of buying at a time of serious economic recession. This is a classic case of promoting an economic and societal 'good' while providing a stimulus to spur economic activity. This is precisely the type of program that Big Business and its demimonde of commentators like when they are the primary beneficiary. Let's say, in a program of tax incentives to promote useful capital expenditure spending. And what many of the private individuals who complain about the program like when it benefits them personally, such as the deduction of mortgage interest. So why is this likely to fail, at least in part?
Guns allowed in Arizona bars starting Wednesday Bartender Randy Shields was serving British brews and Arizona ambers as usual at Shady's bar in east Phoenix when he saw a customer walk in with a hunting knife strapped to his hip. A disturbing image flashed through his mind — "that knife sliding between my ribs." The customer willingly turned over the knife while he was in the bar, but Shields still worries about a new Arizona law that goes into effect Wednesday that will allow guns into Arizona bars and restaurants that serve alcohol. Under the law, backed by the National Rifle Association, the 138,350 people with concealed-weapons permits in Arizona will be allowed to bring their guns into bars and restaurants that haven't posted signs banning them. Those carrying the weapons aren't allowed to drink alcohol.
Pickup Sales Fall in Another Blow to Automakers The closing of a big General Motors truck plant this week is another sign that America’s love affair with pickup trucks is fading fast. Sales of pickups have declined sharply this year, more than the drop in overall vehicle sales, which are at their lowest in 25 years. In 2004, for example, auto companies sold nearly 2.5 million pickups in the United States, many of which were used as everyday transportation, not just as work trucks or to haul trailers. This year, the industry likely will sell only about a million trucks.
Credit limits, self-discipline threaten holiday sales It's not just lower credit limits and the difficulty of getting a credit card that's striking fear into the hearts of retailers desperate for holiday sales -- it's consumers' new desire to save. No matter if their personal credit scores are good or bad, shoppers will manage their money more carefully. That bodes ill for the holiday shopping period in which the bulk of most retailers' profits are made. In addition, tougher restrictions on credit card fees and other terms mean many stores will offer more creative ways to use debit, or cold hard cash, to pay for gifts.
U.S. Fed pursues tough new credit card rules The U.S. Federal Reserve on Tuesday proposed tough new credit card rules to protect consumers from potentially costly practices by lenders and moved to implement legislation enacted in May. "This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," said Fed Board Governor Elizabeth Duke said in a statement. The proposals, issued for public comment, represent part of the Fed's implementation of the Credit Card Act, which was signed into law by President Barack Obama in May.
Democrats Say Older People Should Not Pay More for Health Insurance Premiums Old people get sick more than young people, and in most states that adds up to them paying a lot more for their health insurance premiums. President Barack Obama and congressional Democrats want to restrict that practice as part of a top-to-bottom reshaping of the nation's health care system, a change that will help them politically with aging Americans skeptical about the government's plans. Urging them to do it is AARP, the powerful senior citizens' lobby, which says making older people pay more amounts to age discrimination.
Doctor Admits Vaccine Is More Deadly Than Swine Flu Itself and will not give it to his kids
Gibbs: 'I Have No Idea' If People Can Exclude Certain Diseases and Abortions from Electronic Health Records White House Press Secretary Robert Gibbs told CNSNews.com he has "no idea" if people can opt out of having certain diseases and abortions excluded from the Electronic Health Records that doctors and other health care providers must create for every American by 2014 under provisions in the stimulus law that Obama signed in February. In July, President Obama personally told the AARP that his administration was working to "computerize" comprehensive medical records so that people would not have to repeat their entire medical history, including "every medication they've taken, every surgery they've gotten," each time they went to a new health care provider.
Russia still cool on new U.S. anti-missile scheme Russia remains suspicious about Washington's new anti-missile plans and fears its strategic nuclear weapons could still be threatened by the reconfigured scheme, the country's envoy to NATO said on Tuesday. Dmitry Rogozin's comments showed Moscow's distrust as it awaits details on Pentagon plans to create new mobile interceptor missiles, dropping an earlier U.S. scheme to set up fixed bases in Poland and the Czech Republic.
Geopolitical Intelligence Report, Obama's Move on Iran and Afghanistan During the 2008 U.S. presidential campaign, now-U.S. Vice President Joe Biden said that like all U.S. presidents, Barack Obama would face a foreign policy test early in his presidency if elected. That test is now here. His test comprises two apparently distinct challenges, one in Afghanistan and one in Iran. While different problems, they have three elements in common. First, they involve the question of his administration’s overarching strategy in the Islamic world. Second, the problems are approaching decision points (and making no decision represents a decision here). And third, they are playing out very differently than Obama expected during the 2008 campaign.
Ron Paul HR 1207 Hearing 9-25-09 1 of 5 Rep. Barney Frank (D-MA) chaired a hearing on legislation that would require the Government Accountability Office to audit the Federal Reserve. Scott Alvarez, General Counsel to the Board of Governors of the Federal Reserve and Thomas Woods of the Ludwig von Mises Institute testified before the committee. Washington, DC :.
Ron Paul HR 1207 Hearing 9-25-09 2 of 5 - also above
Gold, silver inch higher, other commodities mixed Gold and silver prices have broken a three-day losing streak, rising slightly in quiet trading. Oil prices are higher, while soft commodities are mixed. Gold for December delivery is up $2.50 at $994.10 an ounce, while December silver is up 13.5 cents at $16.1950 an ounce. Higher prices are being supported by a rebound in stocks, analysts say, which rose amid news of two big acquisitions.
Gold Rises in New York as Dollar Erases Gains, Boosting Demand Gold rose for the first time in four sessions as the dollar erased earlier gains, increasing demand for the precious metal as an alternative investment. The U.S. Dollar Index, a six-currency gauge of the greenback's strength, was little changed after earlier advancing as much as 0.6 percent. Before today, gold gained 12 percent this year while the greenback lost 5.5 percent.
Gold Hit by Dollar, Yen Strength as Markets Fear Repeat of Fall '08 The PRICE OF GOLD bounced from its lowest level against the US Dollar in 13 sessions early on Monday, recovering last week's close at $992 an ounce by lunchtime in London and rising sharply against Euros and Sterling. European equities held flat but Asian shares finished the day sharply lower. The US Dollar jumped again on the forex market, outpaced only by the Japanese Yen, which reached an 8-month high on rumors the new Tokyo government may let the currency rise unhindered. Government bonds ticked lower. Crude oil slipped below $66 per barrel – more than 8% below last week's start.
Preserve Your Wealth with Precious Metals In this extraordinary environment, preserving your personal wealth becomes priority one. Before you make another major financial decision, it is imperative to understand the big picture by recognizing and understanding three critical issues. First, we are in a secular bear market for financial assets (stocks and bonds). Second, the consequences of the global bailouts will likely be highly inflationary. Third, we are at a pivotal point in the long-term investment cycle. Let’s examine each of these three keys in more detail.
A Few Facts about Silver and Gold Silver is less than 1/4 of its 1980 cost (nominal prices, not inflation adjusted). Is there anything else on the planet you can think of that is currently 1/4 of its 1980 price? Oh, and do they have the following attributes? Silver is an industrial metal and a monetary metal. 5,000 years of sound history as a measure of value and store of wealth, portable, fungible, divisible and unique.
Aristotle 384 - 322 BC - Qualities of good money
Durable: Money must stand the test of time and the elements. It must not fade, corrode, or change through time;
Portable: Good money needs to hold a high amount of 'worth' relative to its weight and size;
Divisible: Money should be relatively easy to separate and re-combine without affecting its fundamental characteristics. An extension of this idea is that the item should be "fungible", defined as "being freely exchangeable or replaceable, in whole or in part, for another of like nature or kind."
Intrinsically Valuable: This value of money should be independent of any other object and contained in the money itself, starting with rarity.
Gold was $850 in 1980 Everyone into Gold has heard it many times and some, like me, want to scream every time some mainstream financial analyst puts this comment into one of their articles or commentaries. It must be part of the Wall Street and financial planner training manual. It goes something like this, for those who haven't heard or seen it yet: "Gold was $850/ounce in 1980 and in 2009 it is only around $850/ounce. When you factor in inflation, if you bought Gold at the exact top of its previous bull market in 1980 at $850, this would have been a terrible long-term investment."
Will any central bank outside CBGA buy IMF gold? We have been waiting such a long time for clarity on how International Monetary Fund (IMF) is to conduct its gold sales of 403.63 tonnes, writes Julian Phillips of the Gold Forecaster. The IMF Executive Board has now approved those gold sales. Now the head of the IMF, Dominique Strauss-Kahn, has said "These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market.
The case for inflation -- and gold Top investors in precious metals are waiting for a pullback to buy, but they say gold looks like a promising inflation hedge well into the future. China is hungry for it, too. On a recent trip to New York, I had the opportunity to meet with my (very successful) metal trader friends and some other smart investors, as well as listen to a star-studded cast of brilliant thinkers/investors who shared their world views at the Grant's Interest Rate Observer fall conference. My metal trader friends all want to see a big flush in gold -- a fairly quick 5% to 8% price drop -- before piling in. But they say if the drop doesn't happen in the next week or so, it probably won't.
The Silver Shortage Will Come Based on the supply and demand situation of silver, it's only a question of time when a silver shortage will come. Nobody can predict exactly when this is going to happen, but we have more and more signs that those who control the price of silver are sweating to balance the supply. The biggest question I have is, will the shorts be successful to cover their short position on time? Right now the CFTC seems to want to force all the manipulators to get in line by making them obey new rules of position limits, but I feel that the banks who are the big shorts will be exempt. Mr. Butler thinks that the CFTC will do the right thing, but I am skeptical. We argue about this a lot, as we both have strong opinions.
What Causes a Depression? …how does it all work? We’re doing some serious thinking this week. What is it that actually causes a depression? A stock market collapse? Or too much debt? How come government can appear to cure the problem sometimes – 2001-2007 – but not other times? How come the Japanese were not able to increase consumer prices? Even now…Japan’s inflation rate is negative. And why is it, despite the most massive effort at monetary inflation ever undertaken, the US bond market still forecasts an inflation rate of less than 2%? An interview with Richard Koo, author of The Balance Sheet Recession, and a new book by Ken Rogoff and Carmen Reinhart are helping us understand what it going on. More to come… In the meantime, the Dow went down 42 points on Friday. Gold dropped $7. Still no sign of the Chinese coming to the rescue in the gold market. “Global rally shows signs of running out of steam,” says The Financial Times.
From Deflation to Inflation Step by step, with little fanfare and great complacency, we are witnessing a fundamental, global shift that's rapidly transforming the investment scene: The forces of deflation are temporarily receding; and in the meantime, the forces of inflation threaten to roar back with a vengeance. They are everywhere. They could be overwhelming. They must NOT be ignored …
Obama Stock Rally Persists on $3.5 Trillion in Money Market Fund Hoarding Americans holding $3.5 trillion in cash are giving money managers increasing confidence that the stock market rally under President Barack Obama will continue through the end of the year. Even after reducing money-market accounts by 11 percent this year, investors have cash equal to 73 percent of Standard & Poor's 500 Index companies' net assets, according to data compiled by the Investment Company Institute and Bloomberg. At the peak of the bull market in 2007, the measure of buying power was 62 percent.
Trichet Says Strong Dollar Is 'Extremely Important' European Central Bank President Jean-Claude Trichet said a strong dollar is "extremely important" for the world economy and it's too early for the ECB to unwind emergency stimulus measures. "In the present situation it is extremely important that we can have in the framework at the level of global finance and the global economy a strong dollar, as the authorities in the U.S. are saying," Trichet told lawmakers in Brussels today. "The solidity of the dollar is very important."
Living, Dying by Currencies Is No Way to Succeed Less than two weeks into the job, Hirohisa Fujii is annoying corporate Japan. It's a good thing. Japan's new finance minister doesn't support a weak yen. In the currency world, with its winks, nods and secret handshakes, that's tantamount to appropriating former U.S. Treasury Secretary Robert Rubin's strong-dollar policy. Fujii's view is the right one for Japan's future. Asia's, too.
Zoellick Says U.S. Dollar's Primacy Not a Certainty World Bank President Robert Zoellick said the U.S. shouldn't take for granted the dollar's status as the world's main reserve currency. In remarks set for delivery tomorrow, Zoellick said the "next upheaval" in the international economic order is under way as emerging nations gain greater influence. "The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," according to excerpts released by the World Bank.
Bernanke’s Grand Strategy to Let the U.S. Dollar Fall By now it should be abundantly clear to you that my warnings are coming to pass. Gold is acting firm, having made a new 12-month high above $1,000 an ounce, and within a whisker of a new record high. And while it might not fully blast off yet, in time, it will — to well over $2,000 an ounce … then even higher to $3,000 … and ultimately, probably by the middle of the next decade, even to $5,000. Meanwhile, the U.S. dollar has sunk to a new 12-month low and is a mere 7 percent above its record low reached in July 2008. It won’t take much for the dollar to start plunging, almost out of control. A brief rally here and there, yes. But the long-term trend for the dollar is down, down, DOWN.
Schiff: Dollar is the New Peso The U.S. dollar will continue weakening, and investors may borrow it to invest in higher-yielding assets, says Peter Schiff, president of Euro Pacific Capital. I don't know when (the dollar) is going to strengthen, Schiff told CNBC. The dollar isn't the new yen, its unfortunately the new peso. A weak dollar and low U.S. interest rates push the greenback toward becoming a carry trade currency, which, like the yen for many years, attracts investors to borrow it cheaply to invest elsewhere.
Roubini: No Plausible Alternative to Dollar Former Clinton White House senior economist Nouriel Roubini opines that there is a global liquidity crisis, but since all plausible alternatives to the U.S. dollar lack liquidity, creditors like China and Japan are still willing to furnish financing for U.S. federal debt. As the G-20 prepared to meet in Pittsburgh last week to discuss the global economy, Roubini wrote in Forbes that it is unlikely Americas creditors will raise many hackles for now. G-20 leaders will probably avoid making specific reference to individual currencies, and will particularly avoid references to the U.S. dollar, Roubini wrote.
The dollar is dead - long live the renminbi Whatever happens at the G20, the days of Western dominance are at an end, says Jeremy Warner. Sometimes it takes a crisis to restore reason and equilibrium to the world, and so it is with the trade and capital imbalances that were arguably the root cause of the financial collapse of the past two years. To economic purists, the changes now under way in demand and trade are inevitable, necessary and even desirable. Even so, dollar supremacy and the geo-political dominance of the West are both likely long-term casualties. One, almost unnoticed, effect of the downturn is that past imbalances in trade and capital flows are correcting themselves of their own volition, the simple consequence of lower demand in once profligate consumer nations.
The Real Reasons Behind Fed Secrecy by Ron Paul Last week I was very pleased that the Financial Services Committee held a hearing on the Federal Reserve Transparency Act, HR 1207. The bill has 295 cosponsors and there is also strong support for the companion bill in the Senate. This hearing was a major step forward in getting the bill passed. I was pleased that the hearing was well-attended, especially considering that it was held on a Friday at nine o’clock in the morning! I have been talking about the immense, unchecked power of the Federal Reserve for many years, while the attention of Congress was always on other things. It was gratifying to see my colleagues asking probing questions and demonstrating genuine concern about this important issue as well.
Dollar crashes against yen! Just when the worldwide onslaught against the U.S. dollar seemed to be temporarily subsiding, a new round of attacks hit Friday - this time from Japan. On August 30, in a landslide election victory that shook the world, the left-of-center Democratic Party of Japan derailed the ruling party and swept a new leader to power, Yukio Hatoyama. It was the most significant tipping point in that country's politics since 1955. Now, 30 days later, we are starting to see the repercussions for the U.S. dollar: For the first time in decades, the new Japanese regime is effectively giving up supporting the greenback in the currency markets!
China and Japan Control U.S. Solvency The United States could be in for a major crisis if China and Japan lose their appetite for our government debt, hedge fund legend Julian Robertson says. "It's almost Armageddon if the Japanese and Chinese don't buy our debt, The founder and chairman of Tiger Management told CNBC. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation, and I think we ought to try and get out of it." Together, Japan and China hold a whopping $1.52 trillion of Treasuries. They are financing a U.S. budget deficit that may reach $2 trillion this year.
Chinese Spending Puts Treasuries in Danger China may soon begin importing more than it exports thanks to rising income levels and government stimulus programs. That, says one economist, may mean bad news for U.S. Treasuries and ultimately, higher interest rates. If China saves much less and spends more as a nation, it has less money to buy U.S. Treasuries, which would force up rates and make borrowing more expensive here.
THE GREAT CHINA CONUNDRUM Probably the biggest “X-factor” in the ongoing effort at reviving the global economy is China. China is seen by many as the world’s emerging industrial powerhouse and its relationship with the United States is considered to be crucial for its own development, as well as for the strength of the world economy. With the U.S. in the role as the world’s premier consumer and China considered to be the major industrial player, all eyes are on the respective economies of these two great nations.
Debt, the Rogue Elephant In Our Living Room What does “unsustainable” mean and look like with respect to our economy. Most of the public media (bubblevision), experts, pundits, economists, academics and elected officials don’t know economic history or choose to ignore it. I do believe the American people should understand these things and they aren’t taught in most universities. We need to keep our eye on the ball here and pay attention to what is being done, not what is being said. “Talk doesn’t cook rice” – Chinese proverb. This IS the elephant in our living room.
Treasuries Little Changed on Inflation, Interest-Rate Outlook Treasuries were little changed as investors speculated Federal Reserve officials will signal interest rates will remain at record-low levels for the foreseeable future as inflation remains subdued. Ten-year yields held within three basis points of the lowest level in more than two weeks before government reports this week that may show the unemployment rate increased in September and gross domestic product shrank last quarter at a faster pace than previously estimated. Treasuries rose the most in a month last week after policy makers said weakness in the economy is "likely to continue to dampen cost pressures." There will be seven speeches by Fed officials this week.
Fed Members Walk Fine Line on Economy Remarks The Federal Reserve's high-wire act in easing the extraordinary support it has provided the economy was on display Friday. Fed Chairman Ben Bernanke said a key consumer lending program is still needed, while one of his colleagues talked about acting forcefully when the time comes to boost interest rates. Fed member Kevin Warsh's comments that the central bank can't wait for the economy to return to normal before embarking on a rate-raising campaign to fend off inflation rattled some investors.
Negative Bond Returns Converge With Mortgage Miracle Federal Reserve Chairman Ben S. Bernanke has some good news for investors: Treasury bondholders will lose money for the first time in 10 years amid an unprecedented decline in the gap between the interest rate on 30-year mortgages and government notes, signaling an end to the worst financial crisis since the Great Depression. Yields on benchmark 10-year notes will end the year little changed at 3.36 percent before rising to 3.65 percent by mid- 2010 as bond prices fall, according to the average estimate in a Bloomberg News survey of JPMorgan Chase & Co., Goldman Sachs Group Inc. and the rest of the 18 primary dealers that trade Treasuries directly with the central bank.
The Global Carry Trade and the Crimes of Patriots Our trip to Chicago last week to participate in "The International Financial Crisis" conference sponsored by the Federal Reserve Bank of Chicago and the World Bank was instructive in several ways. First and foremost, it confirmed that the US economics profession is still trying to defend the old ways and means in terms of analytical methods for bank safety and soundness. While there were many calls for "reform" of regulation, we heard nary a suggestion that the mish-mash of quantitative methods that currently comprise the framework for assessing the safety and soundness of banks needs to be set aside and a new approach defined. Indeed, the foreign participants in the two-days of presentations seem to be far more advanced in their thinking about bank safety and soundness than their counterparts from the US.
Trade Wars Guarantee An End To The Party On one side of the formula we have the continued need for speed in monetary creation by whatever means, capably characterized by Doug Noland in his weekly commentary explaining that while it will all end badly, government largesse will likely get out of control before its all over. The point he is getting at here is that because of all it’s meddling, the government (and us) is locked in an inflation death grip it necessarily needs to keep building on or face implosion. So in essence, Doug is alluding to the risk of hyperinflation, or the closest we will ever come to it on a macro-scale. And he is perfectly correct in this accounting of our dire circumstances, and the eventual disastrous effects of all this government intervention to keep the bailout finance bubble growing. One day this thing is going to pop, like all bubbles do, and it will be game over for the global economy, US Dollar ($) hegemony, runaway socialism, and unchecked fiat currency regimes.
Volcker: Obama Financial Reform Plan Too Risky Former Federal Reserve Chairman Paul Volcker isn't too happy with the White Houses proposal for financial regulation reform because it retains the too big to fail doctrine. The Obama administration plans to subject systemically important financial firms to more stringent regulation by the Fed. In testimony before Congress, Volcker pointed out that this idea implies the government will be prepared to bail out the firms in a crisis, encouraging even more risky behavior in a phenomenon known as moral hazard.
Rally in 'toxic' securities set to boost banks The recent rally in the markets for "toxic" securities could deliver a significant boost to US banks' third-quarter earnings if financial groups decide to book accounting gains on assets that caused them billions of dollars in losses during the crisis. Wall Street executives and analysts say the significant rise in the price of mortgage-backed securities and other once-battered debt offers banks the first meaningful chance to "write up" some of the value of these distressed assets.
G-20 Plans to End 'Financial Balance of Terror' After Summit President Barack Obama and fellow Group of 20 leaders are trying to end what Obama adviser Lawrence Summers has called the "financial balance of terror." World leaders, meeting in Pittsburgh last week, adopted a framework for more durable economic growth as they sought to prevent a replay of the worst crisis since the Great Depression. They also acknowledged the growing clout of China and other emerging economies by giving them a bigger voice in decision- making.
Dobbs & Panel On The New World Order In Relation To The G20
G20 sets up long struggle over bank capital rules The long fight over bank capital standards can begin now that the G20 speeches are done, with U.S. and French industry lobbyists already digging in. In a struggle that will unfold at least through 2012, bankers will grapple with national authorities working to implement G20 goals set last week by leaders in Pittsburgh.
The Government is the Mortgage Market It’s time to ask ourselves a collective question; what have we learned from the economic chaos caused by a collapsing real estate market, which was itself caused by government intervention and easy credit? The answer is unfortunately, an emphatic nothing! Rather than let the market dictate the appropriate price level of real estate, our government is seeking to re-inflate the bubble, only this time with fire and hydrogen instead of just hot air.
Federal Reserve Buys More Than 100% of Mortgages Issued in 2009 This is important information. What I've found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market. Just as important as a person's desire to buy a home is their ability to gain access to mortgage funding. The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level. The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
Why U.S. Treasury Should Loan TARP to FDIC Bank Failure Friday, Lagging Home Sales, Should the TARP be Rolled Up, and Tracking the Charts for the S&P 500 Only one bank failure on Bank Failure Friday brings the total to 50 in the third quarter, Georgian Bank became the 95th bank failure in 2009 bringing the total to 120 since “The Great Credit Crunch” began at the end of 2007. Like almost all bank failures this $2 billion private bank had overexposures to C&D and CRE loans with risk to capital ratios of 559% and 741% versus the ignored regulatory guidelines of 100% and 300%. I estimate that the FDIC’s Deposit Insurance Fund is in arrears by $4.6 billion. Existing and New Home Sales are running out of stimulus
freddie mac delinquency rate hits record high The delinquency rate on single-family homes hit a record high 3.13 percent last month at mortgage financier Freddie Mac. That’s up from 2.95 percent in July and roughly 200 percent higher than the 1.11 percent delinquency rate seen in August 2008, shortly before the company was placed into government conservatorship. The delinquency rate is based on loans that are at least 90 days past due or somewhere in the foreclosure process.
Is Arthur Laffer Setting Up Another Debt Bomb? Arthur Laffer, the primary architect of Reagan’s debt bomb that we are currently trying to defuse, has now executed a complete 180° turn from his monetary policies that gutted the Midwest industrial base in the 1980s. In a WSJ article on September 22, 2009, he claims the problems of the Great Depression are not caused primarily by tight monetary policy but rather tariffs and taxes. While he gets the facts he mentions right, he ignores the timing of taxes and deficits, tariffs and balance of trade.
Economic engine Railroads planning for economy to get back on track Rows of locomotives are still parked at Union Pacific Railroad's Davidson Rail Yard under the Hulen Street bridge in Fort Worth, waiting for the company's shipping volume to go back to pre-recession levels. Both Union Pacific and Burlington Northern Santa Fe Railway have seen shipping volumes and demand drop during the last year, with Burlington Northern continuing to see flat and dropping volume numbers, and Union Pacific seeing slight increases in some types of goods. Because of the recession, Union Pacific currently has 4,500 employees furloughed, 54,000 rail cars waiting in storage, and 1,850 locomotives parked, said Clint
IMF Says Loan Recipients Face Slow Recovery and High Risks The International Monetary Fund said that as many as 20 countries getting loan support from the Washington-based lender will probably face a slow economic recovery as fiscal challenges arise in the years ahead. The IMF, which has rescued economies from Pakistan to Iceland since the start of the global financial crisis, said in a report today that, while there are signs of stabilization in troubled countries, many loan recipients may need assistance beyond their current arrangements. The fund singled out Latvia, Iceland and Ukraine as facing the greatest difficulties.
No Retirement All the scaredy-cats are trembling in their shoes this week as gold dipped below the $1,000 level. Foolish people. Can’t they see that the U.S. dollar is in free fall? We told subscribers this on August 3, when the U.S. dollar index broke 78.20, thus completing a double top. That double top is now working out its implications, and the dollar bulls are taking it on the chin. As the dollar goes down, gold will go up. All those people who took part in the flew to “safety” got things a little bit wrong. Instead of taking part in a flight to safety, they have taken part in a flight from their senses. I would like to say that they will wake up after this is over poorer but wiser. However, that is not what happened in the 1970s. In the ‘70s, those people who followed the establishment woke up at the end of the decade a lot poorer than they had been but every bit as stupid.
Tight lending environment expected to continue The commercial real estate industry should be prepared to further weather the current economic storm for the coming six to 18 months as loans continue to mature in an ever-tightening lending atmosphere - at least according to one local expert. Ben Loughry, managing partner at Integra Realty Resources, gave his mid-year status report on the nation and the Dallas-Fort Worth area at the Sept. 23 Society of Commercial Realtors monthly breakfast. While Loughry said Texas has been fortunate to avoid market plummets to the degree of some U.S. regions, the Lone Star State is beginning to feel the pinch.
$35 Billion Slated for Local Housing The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials. The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt. The effort, which could be announced as early as this week, is aimed at relieving pressure on government-operated housing finance agencies, which have been struggling to find funding amid the downturn. These agencies, or HFAs, are a small part of the housing market but are critical to many first-time and low-income home buyers, who can get lower-rate mortgages through an HFA than they could through a private-sector lender. Rates are typically 0.5 to one percentage point lower than commercial lenders.
Unprecedented U.S. corporate default seen for '09 U.S. corporate debt default rates are expected to hit "unprecedented" levels in 2009, even though the economy may be past the halfway mark of the U.S. recession, according to a forecast unveiled on Monday at the Reuters Restructuring Summit."There is a lot of pain left - we are only just half way through the 600 or so defaults in this cycle," said Phil Kleweno, a partner at Bain's corporate renewal group.
For more, 'affordable' isn't so Tight credit is hurting those looking to move into or build lower-cost housing, even as demand rises It's never been easy building new homes affordable to people with moderate incomes, but selling them - that's usually a snap. Which is why no one at a Baltimore nonprofit that finished eight townhouses in December expected they'd still be sitting empty today. Demand isn't the problem. It's the credit crunch. With home prices and apartment rents both falling nationwide, it might seem like a good time to get more people into residences that don't overwhelm their monthly budgets. But affordable-housing activists say the reality is just the opposite.
Unemployment Confronts Obama Rhetoric With Chronic Joblessness Full employment ain't what it used to be. Economists since the mid-1990s have reckoned that full employment was equivalent to about a 5 percent unemployment rate, taking into account the time required to switch jobs. Now Nobel Prize winner Edmund Phelps and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian say the fallout from the deepest recession in more than five decades is driving the so-called natural rate higher, perhaps to 7 percent.
Insurer Sales Decline Matches Biggest in 22 Years U.S. property and casualty insurers posted a 4.8 percent sales decline in the second quarter, matching the biggest drop in at least 22 years, on rising unemployment and reduced demand for coverage. The value of coverage sold, called written premiums, fell to $106.3 billion in the three months ended June 30 from $111.7 billion in the same period a year earlier, Insurance Services Offices Inc. said in a study today.
Health care in America: Ron Paul vs. Howard Dean As the health care debate in the U.S. heats up, RT's Dina Gusovsky speaks to Democrat Howard Dean and Republican Ron Paul to get a sense of where they stand in the health care battle. Both are doctors, both politicians, and both think they know how to fix health care. But what do the American people really want?
Health care: Insurance regulators rule Healthcare overhaul legislation moving through the Senate Finance Committee would put crucial rule-making authority in the hands of a private association of state insurance commissioners that consumer advocates fear is too closely tied to the industry. The National Assn. of Insurance Commissioners currently writes model laws and regulations that individual states are free to accept or discard. Under the bill by Sen. Max Baucus (D-Mont.), it would craft a model rule governing "health insurance rating, issuance and marketing requirements" that would become "the new federal minimum standard without any further congressional action." States would be permitted to deviate from the standards only by appealing to the Department of Health and Human Services.
Push for new Kan. transport plan to be renewed Backers of a new transportation program in Kansas have relaunched their campaign to get it passed with a report warning of approaching problems in the state's highway system. Topeka-based Economic Lifelines held a news conference Monday to highlight the findings in a new report by a national nonprofit groups. The report says Kansas will fall $6.4 billion short of funding its highway system's needs over the next decade.
Michigan Faces Another Government Shutdown Economically beleaguered Michigan faces a possible government shutdown shuttering highway rest areas, state parks, construction projects and the state lottery if lawmakers fail to reach a budget deal in the next few days. The state with the nation's highest unemployment rate has a nearly $3 billion shortfall. Federal recovery act money will fill more than half the gap, but the spending cuts or tax increases needed to fill the rest have caused bitter infighting at the state Capitol.
Whitman Seeks to Slash California Spending Republican gubernatorial candidate Meg Whitman sought to redirect attention from her spotty voting record Saturday as she promoted a platform of fiscal discipline to the party faithful. Speaking to the state Republican Party convention near Palm Springs, the billionaire former CEO of the online auction company eBay Inc. outlined a program of severe austerity for state government if she is elected next year.
Merkel warns on spending cuts, fearing Depression era The era of cosy consensus in German politics is over. The election victor is arch-Thatcherite Guido Westerwelle, who led his pro-business Free Democrats to their best result ever with acerbic attacks on the welfare state and trade unions – which he called a "plague on our country". The era of cosy consensus in German politics is over. The election victor is arch-Thatcherite Guido Westerwelle, who led his pro-business Free Democrats to their best result ever with acerbic attacks on the welfare state and trade unions – which he called a "plague on our country". Chancellor Angela Merkel's Christian Democrats and Bavarian allies survived the vote with a clipped mandate. She will have to give ground to Mr Westerwelle in the Centre-Right coalition as he presses for his great shrinkage of Germany's Leviathan state – tax cuts, spending cuts, subsidy cuts, labour reform, and emasculation of the state Landesbanken – whatever her own preference for playing the consensual role of national "Mutti" (Mum).
Iran flexes muscle ahead of talks with major powers Iran test-fired missiles on Monday which a commander said could reach any regional target, flexing its military muscle before crucial talks this week with major powers worried about Tehran's nuclear ambitions. The missile drills of the elite Revolutionary Guards coincide with escalating tension in Iran's nuclear dispute with the West, after last week's disclosure by Tehran that it is building a second uranium enrichment plant.
Iran tests most advanced missiles Iran tested its most advanced missiles Monday to cap two days of war games, raising more international concern and stronger pressure to quickly come clean on the newly revealed nuclear site Tehran was secretly constructing. State television said the powerful Revolutionary Guard, which controls Iran's missile program, successfully tested upgraded versions of the medium-range Shahab-3 and Sajjil missiles. Both can carry warheads and reach up to 1,200 miles (2,000 kilometers), putting Israel, U.S. military bases in the Middle East, and parts of Europe within striking distance.
China May Hamper Western Efforts to Increase Pressure on Tehran China has expressed concern about Iran's disclosure that it is building a second uranium enrichment plant. The country urged, however, that an escalating row be resolved by talks, as Western nations try to increase pressure on Tehran. China has long said it sticks to a doctrine of "non interference" in the affairs of other nations, partly because it does not want the United States or Europe criticizing its behavior or policies.
China and Russia Undermining U.S. Power The giants of the East are positioned to upset U.S. sanctions on Iran by supplying Tehran with gasoline. U.S.-led fuel sanctions on Iran are being undermined by China and Russia. Chinese companies are already selling gasoline to Iran, and Russia is poised to follow suit. Because Russia has so often thwarted sanctions on Iran in the United Nations Security Council, the U.S. has been forced to get more creative. In anticipation of Iran's refusal to enter into talks about its nuclear program, the United States has developed a sanctions plan that bypasses the UN.
pt 1/2 Gerald Celente on Freedom watch with Judge Napolitano
pt 2/2 Gerald Celente on Freedom watch with Judge Napolitano
Money figures show there's trouble ahead Private credit is contracting on both sides of the Atlantic. The M3 money data is flashing early warning signals of a deflation crisis next year in nearly half the world economy. Emergency schemes that have propped up spending are being withdrawn, gently or otherwise. Unemployment benefits have masked social hardship unto now but these are starting to expire with cliff-edge effects.The jobless army in Spain will be reduced to €100 a week; in Estonia to €15. Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".
World Bank says don't take dollar's place for granted World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging. In excerpts released on Sunday from a speech that he is to deliver on Monday, Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources.
Regulators close Ga. bank; 95th US failure in '09 Regulators on Friday shut down Atlanta-based Georgian Bank, the 95th U.S. bank to fail this year as loan defaults rise in the worst financial climate in decades. In coming months, more banks are expected to buckle under the weight of commercial real estate and other loans that go sour. Those failures could imperil the insurance fund for deposits, already at the lowest point in nearly 20 years. The Federal Deposit Insurance Corp. took over Georgian Bank, with about $2 billion in assets and $2 billion in deposits as of July 24. First Citizens Bank and Trust Co., based in Columbia, S.C., agreed to assume the assets and deposits of the failed bank. Georgian Bank's five branches will reopen Monday as offices of First Citizens Bank.
Borrowing 'Til We Drop: The Government Debt Bomb U.S. consumers have finally stopped borrowing more money each quarter. In fact, they're actually starting to reduce their debts. If this process continues--if consumers get their debts down to reasonable levels--it will eventually make the country's primary economic engine, shoppers, stronger and more sustainable. Meanwhile, however, the economy is being sustained by one huge borrower that is taking on debt faster than it has any time since World War II: The government. Government spending and government lending is REPLACING private spending and lending. And if it weren't, the economy would have collapsed.
A Rich Uncle Is Picking Up the Borrowing Slack THE United States government is borrowing money like never before. The national debt rose by more than a third over a one-year period, far more than it ever did at any time since World War II. In the past, when the government became a heavy borrower, there was talk about crowding out private borrowers. But this time, interest rates have remained low and no one seems to be worried about that.
GOLD VS DOLLAR
Fed’s Strategy Reduces U.S. Bailout to $11.6 Trillion The Federal Reserve decided to keep pumping $1.25 trillion of new money into the mortgage market to focus on rescuing the U.S. economy as the financial system revives and banks ask for less help. The Fed is allowing some of the 10 support programs it created or expanded after the credit crisis began in August 2007 to expire or shrink. That caused the first decline in the amount of money the U.S. has committed on behalf of taxpayers to end the recession, according to data compiled by Bloomberg.
Podesta Says Value-Added Tax ‘More Plausible’ as Deficits Grow John Podesta compared the nation’s current budget crisis to the situation former President Bill Clinton faced in 1993 and said some form of a value-added tax is “more plausible today than it ever has been.” “There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.
Selecting the Dominant Theme: Money Supply, Real Assets, and Global Growth The current economic environment is characterized by several trends, each of which suggests Real Assets as a core theme.
Liquidity has been shown to be indispensible in the minds of policymakers: the first signs of economic weakness constitute a crisis and generate a panic call for liquidity.
Global monetary growth should equal or exceed 10% per annum over the foreseeable future to accommodate the growth “fix” in the developed world and the urgency of the growth in emerging markets.
Real Assets: property, commodities, raw materials, metals, will benefit from the increasing supply of paper money (based on the premise in point #2 at the rate of at least 10% per year).
The I.M.F. and Central Banks are going to support Gold! As an almost revered subject, the question of whether central banks across the world will be buyers or sellers of gold is one usually left until after the event. Central Banks themselves are usually very unhappy to talk about their gold policy. When they do it is a once-in-several-years-event. As a result we watch the behavior patterns of the last decade to see what lies ahead. First we look at the I.M.F and look at just how it will support gold. The I.M.F. Gold Sales.
World Gold Panic Gold Prices Set to Skyrocket - Are you ready? . . . . Gold is looking to wrap up September with record monthly prices. The yellow metal has traded over $1,000 an ounce in 12 of the 18 trading days of the month so far. And with only three business days left in September next week, the average monthly price for gold is currently $998 an ounce. This compares to March 2008, when gold prices topped the $1,000 level for the first time in history and averaged $968 for the month. A new average monthly record is extremely bullish for gold prices right now. It is a sign that the third and final investment mania stage of the gold bull market is in bloom — that's when gold prices skyrocket.
Gold to Usher in Brave New World “You Lie!” - Looks like US politics are starting to heat up a bit. The nation deserves a little excitement. Clinton was a lot of fun but George just seemed to put us all to sleep. The way both parties are going at it today you’d think this was Custer’s Last Stand. Maybe a better analogy is the Rubicon. . . . . . . . . Nouriel Roubini - "…fiat currencies globally are being created at a double digit rate by the world's central banks....” “Short-term rates of 0% are bullish for gold, which serves as a store of value but is a useful hedge against deflation as well, since deflation is inherently destabilizing for financial assets. In the 2001-03 deflationary period, gold rose more than 30%, not to mention the prospect of a return to a dollar bear market... “”Gold tends to be less sensitive to global economic slowdown than industrial metals or energy and works better as a hedge against crisis than inflation”
Despite G20 weasel words gold should stay in the driving seat However much politicians try to talk it up, the global economy still looks to be in a parlous state and the dollar is likely to return to weakness, with both elements positive for gold Dollar strength and a boost in profit taking saw gold close below $1,000 this past weekend after a couple of weeks where it has spent most of the time above the magic figure. But, has anything really changed? In essence one suspects that, given the amount of time spent above the level, $1000 may no longer be seen as the psychological barrier it had proved to be, but just another point on a continuing upward path in the gold price. When it breaks back up through this level, which it surely will, may mostly depend on the strength or otherwise of the dollar in the short term.
The gold rush fueled by fear: Thousands of small investors flock to bullion for safety To be honest there's not a lot you can do with it apart from look at it, but that has not prevented generations of investors from coveting gold. In recent weeks gold fever has returned, with the price breaking through the $1,000 an per ounce barrier - and the driving force appears to be fear. Evy Hambro, who runs the £1.7billion BlackRock Gold & General investment fund, which invests in gold mining shares, says: 'First it was fear of recession and now it is fear of inflation and worries over the weakness of the US dollar. People are looking for gold as a currency that can preserve their purchasing power over time.'
Marc Faber Weak Dollar Means Inflation
What If Everyone in the World Wanted a 1-ounce Gold Coin? If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around? According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.
Déjà vu all over again? Unlike before, sentiment now supports a higher gold price Gold's drop in recent days, after rising to the $1,020-an-ounce level just one week ago, certainly appears to be déjà vu all over again. On four previous occasions over the last two years, gold has approached, or slightly exceeded, the $1,000 level. On each of those earlier occasions, gold promptly retreated. But there is one big difference: Gold timers are a lot more discouraged now than on any of those four previous occasions. Contrarian analysts, who believe that the consensus is rarely right, therefore give gold better odds this time around of mounting a rally that rises to markedly higher levels. If so, then this week's correction in the gold market would be a mere pause -- and not the beginning of a major bear market.
Gold Fails to Break to New Highs, What's It Waiting For? The latest thrust didn’t quite make it into new all time high territory. What is it waiting for? Gaddafi talked, Ahmadinejad smiled, Chavez smelled, Obama whined and throughout it all Medvedev must have been smirking. What more is there to get gold screaming into new highs? Although the week’s gold action seemed to be taking a turn for the worst it still has had no real impact upon the long term trend for gold. The long term P&F chart is still in a strong bullish trend although it has changed direction this past week and still might move lower without long term impact. The price remains above its positive sloping long term moving average line. The long term momentum indicator remains in its positive zone although it has dropped below its now negative sloping trigger line. The long term volume trend remains positive with the volume indicator above its positive sloping trigger line. Despite the weakness starting to show in the momentum indicator, to be expected during a short down price period, the rest of the indicators are still strongly positive giving us a long term rating that is BULLISH.
Gold Falls, Capping First Weekly Drop Since July; Silver Sinks Gold fell, capping the biggest weekly decline since mid-July, as the metal’s failure to reach a record discouraged investors who had bet on a longer rally. Silver tumbled. Gold traded below $1,000 for the second straight day after climbing to $1,025.80 on Sept. 17, near the all-time high of $1,033.90 set in March 2008. Silver sank the most in a week since February. Before today, silver surged 44 percent and gold rose 13 percent this year, heading for a ninth-straight annual gain.
Audit the Fed Gold "Audit the Fed" questioning exposes key kink in the Federal Reserve's Gold Manipulation armor! Alan Grayson made great strides today in getting the Federal Reserve to admit that there is a problem with the ownership of Fed gold and has gotten the General Council of the Federal Reserve, Scott G. Alvarez, to agree to a GAO audit..of sorts. Here is the exchange and you can tell that Mr. Alverez is dancing around the gold audit question trying to steer the line of questioning towards the physical presence of the gold and NOT any ownership issues related to loans, swaps or derivatives.
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
IMF vows to have say on currencies ’Fund could avoid singling out countries for blame’ The IMF will not shy away from commenting on controversial currency issues in its new role supporting the G20 accord on a framework for balanced global growth agreed in Pittsburgh on Friday, its managing director has said. His comments came as the World Bank president welcomed G20 endorsement of a plan to create a crisis-response loan facility for the poorest countries. “If the IMF is not talking about currency, who will?” said Dominique Strauss-Kahn, IMF chief. Asked whether this meant including currency issues in the IMF’s reports back to the G20 on progress implementing the balanced growth agenda, he said: “Yes.”
Fed May Reveal Names Of Foreign Borrowers Under pressure from Congressional critics like Ron Paul, Alan Grayson, and Barney Frank, the Federal Reserve may reveal the names of foreign banks it has lent money to. WSJ: The Federal Reserve, under pressure from Congress to be more transparent, is "giving serious consideration" to releasing the names of firms that receive loans from the central bank, a top Fed official said Friday. At a House hearing, Fed General Counsel Scott Alvarez struck a conciliatory tone when a top lawmaker indicated that he wanted more information revealed about the Fed's loans.
Hard-pressed politicians produce irritating taxes State and local governments are raising taxes and inventing new ones as they scramble to balance their budgets even as the nation's economy begins to emerge from the deepest recession in seven decades. State budgets typically take a year or two to reflect improvements in the national economy, the National Association of State Budget Officers and the National Governors Association explained in its latest fiscal survey of states. The report warned that "state fiscal conditions will remain weak in fiscal 2010 and likely into fiscal years 2011 and 2012."
The Inflation/Deflation Forces Battles On here is a great debate raging between students of monetary economics. On the one hand, there are the deflationists who point to the massive deleveraging in the housing, mortgage, credit and stock markets. The fall in prices in these asset markets, at least through March 2009, was devastating and destroyed trillions of dollars of wealth and credit. On the other hand, there are the inflationists who focus on Fed policies and the money supply. Since the onset of the financial crisis, the Fed has taken the federal funds rate down to 0% and initiated countless programs including the purchase of $1.45 trillion in Fannie Mae (FNM) and Freddie Mac (FRE) debt and mortgage backed securities, guaranteeing hundreds of billions of dollars in new bank debt, purcashing hundreds of billions of commercial paper, etc… This has resulted in a massive increase in the money supply which logically will lead to inflation, argue the inflationists.
Julian Robertson: Inflation Could Hit 15-20% Mr. Robertson explains just how dependent the US has become on China and Japan. Should the Chinese and Japanese stop buying US bonds, inflation could hit 15-20%.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,”
"I don't know where we could get the money. I think we've let ourselves get in a terrible situation." Yet who would be worse off in this doomsday scenario?
Rampant Debt Monetization Means U.S. Financial System is Doomed Nearly half the nation's 25 biggest retail chains expect to hire fewer holiday workers this season than they did last year, another sign that retailers aren't counting on recession-strained shoppers to relax the tight grip on their pocketbooks this year. About 40% of stores surveyed across a broad swath of retailing, including consumer-electronic chain Best Buy Inc., teen-retailer American Eagle Outfitters Inc., and luxury-goods seller Saks Inc., told the Hay Group, a human resources consulting firm, that they expect to hire between 5% and 25% fewer temporary workers this year than last, when the recession forced many retailers to trim staff in response to falling sales. That's a grimmer outlook than the Hay survey found a year ago, when 29% of retailers said they would be slashing their holiday workforce.
IMF’s Strauss-Kahn Seeks Recovery First, Then Inflation Fight Former U.S. Federal Reserve Chairman Alan Greenspan expressed concern over inflation, while Dominique Strauss-Kahn, the International Monetary Fund’s managing director, speaking to the Yalta European Conference in southern Ukraine, suggested first securing an economic recovery. “Going out of the crisis will have consequences, we need to discuss an exit strategy,” said Strauss-Kahn during the video link. “But we need to secure the recovery before we address the problem” of inflation.
The Price of Pretense in Pittsburgh by Peter Schiff As another G20 meeting rolls around, this time on home soil, the time comes once again for the economically curious but politically unconnected to wonder what is really happening behind closed doors. But while admiring the pageantry, chuckling at the awkward group photos, and parsing the joint communiqués like newly found Dead Sea scrolls, the overwhelming majority of observers will miss the meeting's dominant theme: hypocrisy.
Before We Eulogize the Dollar In debates over the fate of the U.S. dollar there appears to be a need for clarification. While since last spring the dollar has declined about 15% in value compared to a basket of other major currencies, on the domestic front a dollar today buys about 30% more common stock than it did two years ago at the peak, and the dollar also rose substantially in value vs. real estate during the same period. This distinction is critical because for most people the value of the dollar in terms of foreign currencies is probably not a day-to-day concern. Any change the dollar’s purchasing power in terms of domestic assets, however, is very important both now and when planning for the future. Tens of trillions of dollars of credit-from-nowhere now in existence fuel demand for goods and services, bidding up asset prices across the entire world economy. This mountain of credit was built on three pillars.
Fractional reserve banking.
Government debt issuance.
Packaging of collateralized debt obligations (CDOs) into "securities."
Leaders of G-20 Vow to Reshape Global Economy One year after a financial crisis that began in the United States tipped the world into a severe recession, leaders from both rich countries and fast-growing powerhouses like China agreed on Friday to a far-reaching effort to revamp the economic system. The agreements, if carried out by national governments, would lead to much tighter regulation over financial institutions, complex financial instruments and executive pay. They could also lead to big changes and more outside scrutiny over the economic strategies of individual countries, including the United States.
How G-20 Affects Your Life
U.S. dollar seen caught in G20 meeting's crosshairs A pledge from Group of 20 leaders to bring the global economy back into balance is not seen as good for the dollar in the long run, underscoring its anemic performance in recent weeks. Short-term reactions in other markets to the G20 meeting of rich and emerging economies in Pittsburgh this past week will be muted, analysts say, but bank stocks and energy prices could also be hurt over a longer period of time by G20 actions.
Scepticism over G20 pledge of new era World leaders promised a new era of economic co-operation at the close of the G20 summit in Pittsburgh on Friday, endorsing new guidelines for bankers’ pay, a tight timetable for regulatory reform and a new framework for balanced growth. But little progress was made on trade or climate change and many experts expressed doubt that the accord on growth would actually result in policy changes by leading nations.
G-20 Agrees to Boost Emerging Nations Clout at IMF, World Bank Leaders from the Group of 20 nations vowed to give emerging countries a greater say at the International Monetary Fund and the World Bank, recognizing their rising influence as the global economy starts to recover. Policy makers agreed to boost the clout at the IMF of China and other “underrepresented” emerging markets through a transfer of at least 5 percentage points of so-called quotas, which determine voting shares and access to IMF loans, from countries with disproportionate influence. They also decided to boost emerging nations’ share at the World Bank by “at least” 3 percentage points.
G-20 Pledges to Avoid Protectionism After Obama’s Tire Tariff Global leaders pledged to avoid protectionism, repeating a promise made at earlier summits of the Group of 20, just two weeks after President Barack Obama imposed tariffs on Chinese tire imports. At the conclusion of a two-day meeting in Pittsburgh, the leaders said in a statement today that they would also redouble efforts to reach by next year a new agreement to cut tariffs and subsidies in the World Trade Organization as part of the so-called Doha Round.
U.S., China Have a ‘Credibility’ Gap on G-20’s Economic Pledge A push from U.S. President Barack Obama and Chinese leader Hu Jintao to shrink trade and investment imbalances is probably years away from being fulfilled, according to comments from their own officials. Group of 20 leaders met in Pittsburgh yesterday aiming to reduce global capital imbalances blamed for contributing to the financial crisis, including a U.S. reliance on borrowing from abroad to finance spending, and Chinese dependence on exports.
G-20 Unites to Curb Bank Pay, Align Economic Policy Group of 20 leaders built on the common front they forged in fighting the financial crisis to chart a shared path toward a more stable banking system and a stronger global economy. President Barack Obama and his counterparts ended their Pittsburgh meeting yesterday promising to “raise standards together” to ensure banks restrain pay and build up capital buffers. They also established a peer-review process to monitor individual efforts to rebalance economies and to hand emerging nations a greater say in managing world growth.
G-20 Puts Off Climate Finance, Asking Ministers to Study Aid Group of 20 leaders put off tackling how to help poor nations deal with climate change, directing finance ministers to report in November on “a range of possible options” for the world’s most vulnerable countries. The world leaders also agreed to phase out almost $300 billion in subsidies for fossil fuels in the “medium term.” They asked that each country develop strategies and timetables to end the government aid, according to a statement issued after the meeting yesterday in Pittsburgh.
Faber: Dollar Weakening the Market
Credit Thaw Risks Turning Treasurys' Gains to Mush The Treasury market has benefited from the fragile state of the U.S. economy, but the unfolding recovery in the credit markets could yet push government bonds off their perch. Corporate-debt markets are overtaking the real economy on the road to health. Central-bank officials are now paying more attention to these stronger signals to guide them in deciding how soon to remove market support and to start raising interest rates.
The Fed's Toughest Job Lies Ahead! Talk that was simmering before, about how the Fed will manage the eventual withdrawal of its massive economic stimulus programs, intensified this week when the Fed’s statement after its FOMC meeting was even more positive about the economic recovery than its previous statements. The Fed said “Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing.”
Treasuries Gain as Recovery Concern Fuels Demand at Auctions Treasury 10-year notes gained the most in six weeks as reports signaling the housing recovery will be slow to gain speed bolstered demand at three note auctions totaling $112 billion. The Federal Reserve reiterated that inflation would remain subdued and said it would leave rates low for an “extended” period of time. The difference in yields between two- and 10- year notes narrowed to 2.34 percentage points yesterday, the lowest since May 18. Reports next week are forecast to show consumer confidence and the unemployment rate rose in September.
Double Dip Economic Recession? Unemployment is high and rising. But if the recession is over, won't employment start to rise? The quick answer is no. We look deeper into the Statistical Recovery and find yet more reasons to be concerned about near-term deflation. This week we consider all things unemployment and ponder the need to create at least 15 million jobs in the next five years to return to a full-employment economy - and the implications for both the US and world economies if we don't. Economic is often about what we can clearly see, and yet it is understanding what we can't see that gives us true insight. We start with a collection of facts that we can see and then begin a thought exercise to find the implications.
The “Other” Carry-Trade… HRA Journal Commentary Until the middle of this decade Yen-carry trade was all the rage. Traders borrowed money at ultra low rates in Tokyo and then moved it into higher yielding assets. The difference between the low cost of Yen and higher yields elsewhere, the “positive carry”, was pocketed. Hedge funds ran this trade, using huge leverage levels. This trade was blamed by some for the run up in base metal prices during this period, on the assumption that hedgers were loading up on metal with this leveraged capital.
Yen Rallies to Seven-Month High as Japan Opposes Intervention The yen rose to a seven-month high versus the dollar as Japan’s new government reiterated its opposition to intervening to stem a currency’s gain and the Federal Reserve pledged to keep interest rates low. Sterling dropped to a three-month low below $1.60 this week after Bank of England Governor Mervyn King was quoted by a newspaper as saying the pound’s weakness is aiding in rebalancing the U.K.’s economy. The dollar reached a one-year low versus euro on increased demand for riskier assets before a report next week forecast to show U.S. job losses slowed.
Tepid Economic Data Suggest a Sluggish Recovery Consumer sentiment and new-home sales showed signs of improvement Friday, while sales of durable goods fell, signaling the U.S. economy's recovery won't be a smooth ride. Optimism among U.S. consumers reached its highest level in September since January 2008, and new-home sales posted their fifth-straight month of improvements. But manufacturers' orders for durable goods -- big-ticket items designed to last three years or more -- tumbled 2.4% to a seasonally adjusted $164.44 billion in August, on a plunge in aircraft orders.
Wolin Says Financial Regulatory Overhaul Likely This Year Deputy Treasury Secretary Neal Wolin, the department’s No. 2 official, said he expects Congress to revamp financial regulations for Wall Street this year. Congress is considering legislation that would impose tighter regulations on banks, lenders, and other financial institutions following the worst recession since the Great Depression. One proposal, the creation of a Consumer Financial Protection Agency, remains a top priority for President Barack Obama, Wolin said in an interview today at a conference hosted by the Congressional Black Caucus in Washington.
Enter the Recession’s Waiting Room A BUNCH of the guys drove straight to a bar. You get laid off from a job that pays $15 an hour, plus health care and other benefits — it’s Miller time. Time for a convoy to one of the watering holes in this town, 80 miles west of Omaha, where you can buy a beer at 10 in the morning. Few of the employees of Katana Summit, a wind-tower manufacturer, saw it coming. On that day in early August, and in another round of cuts a few weeks later, about half of the plant’s 195-person payroll was eliminated, a shock that came with one notable consolation: the executives said they hoped to hire everyone back soon.
Don't bank on your home as an ATM The coming decades won't repeat the dramatic rise in real estate values that previous generations experienced, economists say. It may be time to return to viewing the home simply as a place to live. For generations of Americans, a home was seen not simply as a dwelling, but as an engine of personal wealth. That view was promoted by the home-building and real estate sales industries as well as the U.S. government, which subsidized home loans and provided tax deductions for mortgage interest. There have been booms and busts along the way, but from the second half of the last century through the start of this one, nothing derailed the real estate locomotive on its uphill climb. The train stalled here and there and rolled back now and then, but each time it roared back up and got homeowners to the mountaintop.
Home buyer tax credit might be extended for service members Rep. Charles B. Rangel's bill would also stop the IRS from taking back the credit from those who couldn't use their houses as a principal residence for 36 months because they had to deploy elsewhere. Reporting from Washington - Will Congress extend the wildly popular $8,000 home buyer tax credit beyond its Dec. 1 expiration date? That's a question generating huge pressure on Capitol Hill from would-be buyers who haven't found the right house as well as from realty agents, builders, lenders and squads of lobbyists working on their behalf.
Durable Goods Orders Unexpectedly Drop Demand for U.S. durable goods unexpectedly fell in August and sales of new homes rose less than forecast, restraining the pace of the economic recovery. Orders for goods made to last several years dropped 2.4 percent, the biggest decline since January, the Commerce Department said today in Washington. Consumer sentiment improved, a separate report showed.
Another Reason We Won't Have A V-Shaped Recovery: Jobs In order for the U.S. economy to go roaring right back to the 3%-4% long-term growth the bulls are looking for, consumer spending will have to rebound. Consumer spending is still 70%+ of the economy, and it's hard to get a supertanker cruising along at top speed if 70% of its power is removed. In order for consumer spending to come roaring back, however, one critical thing has to happen: • Consumers have to be employed
U.S. Job Seekers Exceed Openings by Record Ratio Despite signs that the economy has resumed growing, unemployed Americans now confront a job market that is bleaker than ever in the current recession, and employment prospects are still getting worse. Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed.
The Mortgage Machine Backfires WITH the mortgage bust approaching Year Three, it is increasingly up to the nation’s courts to examine the dubious practices that guided the mania. A ruling that the Kansas Supreme Court issued last month has done precisely that, and it has significant implications for both the mortgage industry and troubled borrowers. The opinion spotlights a crucial but obscure cog in the nation’s lending machinery: a privately owned loan tracking service known as the Mortgage Electronic Registration System. This registry, created in 1997 to improve profits and efficiency among lenders, eliminates the need to record changes in property ownership in local land records.
Mortgage Electronic Registration Systems (MERS): A System Designed to Create the Mortgage Back Security Bubble. I’ve gotten many e-mails regarding the Mortgage Electronic Registration Systems (MERS) case out of the Kansas Supreme Court. This is an important case but first let us discuss what MERS is. MERS claims to be a privately-held company and their function is keeping track of a confidential electronic registry of mortgages and the modifications to servicing rights and ownership of the loans. However, if you dig deeper into MERS and their shareholders you will find the same crony bankers that have led our economy off the financial cliff. Some of the shareholders include AIG, Fannie Mae, Freddie Mac, WaMu, CitiMortgage, Countrywide, GMAC, Guaranty Bank, and Merrill Lynch. It is a stunner how these same players show up in every financial war we have been dealing with.
Job losses, early retirements hurt Social Security Big job losses, spike in early retirements claims from seniors swamp Social Security system Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s. The deficits -- $10 billion in 2010 and $9 billion in 2011 -- won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.
With Stimulus Fading, Here Comes Credit Crunch Part II The Telegraph's feisty Ambrose Evans-Pritchard pours a gallon of ice cold water over your v-shaped dreams. There's no real growth, even with massive government stimulus, and oh yeah, there's another credit crunch coming. Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".
Ford Begins Work on 3rd China Car Plant in Asia Push Ford Motor Co. began work on a third Chinese car plant as it strives to challenge General Motors Co. and Volkswagen AG in a country set to pass the U.S. as the world’s biggest auto market. The $490 million plant will make revamped Focus cars when it opens in 2012, Ford Chief Executive Officer Alan Mulally said today at a groundbreaking ceremony in Chongqing, southern China. The factory, which will be able to make 150,000 vehicles a year, will boost Ford’s overall car capacity in the country to 600,000.
VP Biden: If stimulus fails, 'I'm dead' Vice President Joe Biden told the nation's governors Thursday that if the $787 billion stimulus fails, "I'm dead." Biden, who holds regular calls with governors and mayors to chart the progress of the stimulus package, said he was pushing accountability standards purely out of "self-interest." "If it fails, I'm dead," he said. Biden held the conference call with almost all the governors -- Louisiana Gov. Bobby Jindal (R) did not participate -- to encourage them to make the Oct. 15 deadline for reporting the number of jobs created and saved by the stimulus package.
Bill Clinton speaks of vast, right-wing conspiracy Bill Clinton says a vast, right-wing conspiracy that once targeted him is now focusing on President Barack Obama. The ex-president made the comment in a television interview when he was asked about one of the signature moments of the Monica Lewinsky affair over a decade ago. Back then, first lady Hillary Rodham Clinton used the term "vast, right-wing conspiracy" to describe how her husband's political enemies were out to destroy his presidency.
Bill Clinton: Vast Right-Wing Conspiracy Now Targeting Obama
Bill Clinton: 'Vast right-wing conspiracy' still going strong Former President Bill Clinton said Sunday that the “vast right-wing conspiracy” that worked against his presidency is alive and well, albeit in slightly reduced numbers. “It's not as strong as it was, because America has changed demographically. But it's as virulent as it was,” Clinton said on NBC’s "Meet the Press." Clinton went on to say that the things being said about President Barack Obama are “like when they accused me of murder.” He said it’s poisonous for the nation.
Obama at the Precipice THE most intriguing, and possibly most fateful, news of last week could not be found in the health care horse-trading in Congress, or in the international zoo at the United Nations, or in the Iran slapdown in Pittsburgh. It was an item tucked into a blog at ABCNews.com. George Stephanopoulos reported that the new “must-read book” for President Obama’s war team is “Lessons in Disaster” by Gordon M. Goldstein, a foreign-policy scholar who had collaborated with McGeorge Bundy, the Kennedy-Johnson national security adviser, on writing a Robert McNamara-style mea culpa about his role as an architect of the Vietnam War.
China’s Mr. Wu Keeps Talking AT 79, Wu Jinglian is considered China’s most famous economist. In the 1980s and ’90s, he was an adviser to China’s leaders, including Deng Xiaoping. He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.” Last year, China’s state-controlled media slapped him with a new moniker: spy.
Banking, Energy Sanctions Are Iran Option, Gates Says Iran’s construction of a secret nuclear facility may prompt additional economic sanctions, including restrictions on banking and on oil and gas technology, U.S. Defense Secretary Robert Gates said. “There is no military option that does anything but buy time,” Gates said in an interview on CNN’s “State of the Union” today. The U.S. and the other members of the United Nations Security Council should also continue to pursue negotiations, such as the meeting scheduled with Iran on Oct. 1, he said.
Iran tests short-range missiles amid nuclear tension Iran tested a missile-launching system and two types of missiles Sunday, the state-run Press TV said. The missile tests come amid tension over the Islamic republic's nuclear program. The missiles, fired at targets around the country Sunday, included the Fateh-110, a short-range ground-to-ground missile, and Tondar-69, a short-range naval missile, the station said. Iran plans to test the long-range Shahab missile on Monday.
Clinton: Iran needs to prove it isn't pursuing nuclear weapons Iran said it test-fired short-range missiles in a show of force Sunday as Secretary of State Hillary Rodham Clinton said that the country would have to prove it is not developing nuclear weapons or face more sanctions. Clinton, in an appearance taped Friday for CBS' "Face the Nation," said that the revelation of a nuclear facility near the holy city of Qom just raised additional suspicions about the intent of the Iranians' nuclear program. "We believe that it is a covert facility designed for uranium enrichment," she said.
U.S. to Iran: Prove your nuclear program is peaceful Top U.S. officials say the underground nuclear facility that Iran revealed last week is illegal and likely intended for military purposes. "I think that certainly the intelligence people have no doubt that ... this is an illicit nuclear facility, if only ... because the Iranians kept it a secret," Defense Secretary Robert Gates said in an interview broadcast Sunday on CNN's "State of the Union."
General Stanley McChrystal demands 40,000 more troops for Afghanistan The US commander of Nato forces in Afghanistan has asked for 40,000 more troops, according to reports in Washington. General Stanley McChrystal’s request was delivered to Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, at a meeting in Germany on Friday, The New York Times reported. News of the recommendation emerged as another British soldier was killed in Afghanistan, taking total British fatalities since 2001 to 218. Three French soldiers and two American military personnel also died over the weekend.
Afghans divided over foreign forces Nato allies seen as oppressors and saviours A bullet-shaped niche hewn from the mountainside is all that remains of the colossal stone Buddha that watched over the Bamiyan valley for 1,500 years before the Taliban demolished it with dynamite. Fragments of the fallen giant and its smaller twin joined the debris left by armies past: from the carcasses of Soviet tanks to the hilltop ruins of the City of Screams, site of a 13th century massacre by Genghis Khan.
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Fri 09.25.2009
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
Oil Set for Biggest Weekly Drop Since July on Recovery Concerns Crude oil in New York is poised for its biggest weekly drop since July after U.S. sales of existing homes unexpectedly slumped, bolstering skepticism about the pace of recovery in the biggest energy consuming nation. Oil declined this week after a gain in U.S. fuel stockpiles increased speculation of a supply glut. Prices also came under pressure from a stronger dollar, reducing investors’ need for commodities such as oil as an inflation hedge.
Ron Paul: G-20 Summit in Pittsburgh
UK Inflation Forecast Will RPI Deflation Return to Inflation? . . . . RPI deflation in the face of panic interest rate cuts from 5% at the beginning of October 2008 to just 0.5% by the last cut of March 2009, coupled with unprecedented quantitative easing aka "money printing" to drive down long-term interest rates and hence mortgage rates resulted in deflation for those with large mortgages of as much as minus 5%, therefore this as I mentioned some 4 months ago would provide for a for mini 'temporary' cash flow boost for those mortgage holders that have secure employment during the recession and therefore contributing to the summer bounce in house prices that has now transpired and looks sent to continue into the end of the year and therefore contribute towards upward pressure on consumer prices.
Obama Pledge to Engage UN Runs Into Resentment of U.S. Power President Barack Obama pledged a new era of U.S. engagement at the United Nations in his first address to the world body yesterday, and urged other leaders to join him. Old rifts surfaced soon after the applause faded. Libyan leader Muammar Qaddafi, speaking from the same podium afterward, tried to rip in two a pocket-sized copy of the UN Charter during a speech that ranged from colonialism to the assassination of President John F. Kennedy. He said the U.S. veto in the Security Council violated its provision that all members be treated equally and called for power to go to the majority of the 192 nations that comprise the General Assembly.
Security Council passes nuclear resolution President Obama chairs body President Obama on Thursday became the first U.S. president to chair a U.N. Security Council meeting, presiding over the passage of a resolution intended to make it harder for Iran to develop a nuclear weapon. Mr. Obama entered the grand and historic hall, made a brief circuit around the room to shake hands with many of the leaders present, and then convened the meeting with a rap of the gavel. The resolution was passed unanimously by all 15 members of the Security Council, a result virtually guaranteed by extensive advance work conducted by U.S. diplomats. Resolution 1887 will limit the spread of nuclear weapons already existing and will strengthen the Nuclear Non-Proliferation Treaty.
A New Magna Carta for Our Times “Magna Carta (1215) was the first document forced onto an English King by a group of his subjects (the barons) in an attempt to limit his powers by law and protect their privileges.” Let us think of President Obama in the place of the English King, and the Group of G-20 meeting in Pittsburgh, Pa. this week as Obama’s Barons. The present-day Barons – the Presidents of the G-20 countries – are restless. They are not happy with the conduct of affairs of their King, Obama. Unfortunately, they do not have the gumption to demand what they really need, which is a return to the gold standard. Perhaps they do not have the necessary gumption, because they do not know that they need the return of the gold standard.
MEDIOCRATY AT THE UNITED NATIONS The performance and behavior of various kings, presidents, and world leaders at the United Nations' 64th session, in New York, reminds me of junior high school. Secretary of State Hillary Clinton and the U.S. Ambassador to the UN Susan Rice walked out on Qaddafi. Canada's Foreign Minister Lawrence Cannon, and just about everybody else, walked out on Ahmadinejad. Nobody walked out on President Obama, but nobody listens to him and nobody cares. It would be refreshing if, in the future, an American president would skip the event altogether and spare all of us the annual spectacle. However, that is not likely to happen as politicians find it hard to resist inertia and brake away from the existing line of motion. That is especially true of Barak Obama, who never seems to pass up an opportunity to give a speech.
U.S. offers China more power in world group Deal is key to G-20 strategy The Obama administration is pursuing a grand bargain with China that would address the lopsided economic relationship that contributed to the financial crisis and prevent it from destabilizing the world economy in the future. The deal with China would be a critical part of a framework agreement the White House is hoping to forge with Group of 20 leaders in Pittsburgh this week, aimed at bringing greater balance to economic growth around the world.
SC-IV Battle for Worldwide Financial Sphere Hegemony PROPHECY Or plausible consideration of cyclical relationships, and fractal repetition If one embraces the notion that cycles exist within economies and financial markets, and that, progressions within cycles are fractal and of various size and degree, one must then conclude there is a dynamic level of general repetition continuously occurring across various timeframes. The footprints of such fractal repetitions record themselves continuously via data points plotted across the axis of price and time. They do so through recorded price chart data gathered throughout the course of history.
Ron Paul and Rand Paul on Big Government
Financial meltdown tops agenda as G20 summit convenes in Pittsburgh Leaders will descend on Pittsburgh today to kick off two days of talks on economic stability, financial regulation, climate change and bankers' bonuses The US is winning international support for an ambitious plan to rebalance the global economy as leaders convene for a G20 summit at a heavily fortified Pittsburgh with the global financial meltdown at the top of the agenda. Fresh from the UN general assembly in New York, heads of government and a vast diplomatic entourage will descend on Pittsburgh today to kick off two days of talks on economic stability, financial regulation, climate change and bankers' bonuses.
G8 Nations Will No Longer Meet Separately, Without G20 The G8 nations will announce Friday that they will no longer meet separately without the entire G20, reports NBC's Chuck Todd. The G8 nations will instead meet the night before any G20 meeting, particularly when it comes to national security issues that historically the G8 has dealt with. According to the White House, the G8 is not being dissolved. Instead it will conduct its meetings combined with G20 meetings – which means it will hold only one meeting annually. China is not a member of the G8 nations. South Korea is likely to be the venue for next year’s G20 meeting.
Darling warns bankers 'the party's over' Alistair Darling has laid down a stark warning to bankers ahead of the G20 summit in Pittsburgh, which starts today. Speaking to the BBC, the Chancellor said that there was a limit to how much regulation could achieve and that bankers had to change their attitudes, adding: “The party has got to be over.” Mr Darling said: “We’ve got to get into a situation where [bankers] behave sensibly. “After all, there are very few bankers in the world who would still be standing if it hadn’t been for the fact that taxpayers all over the world had to step in and save them last year.”
‘Age of Austerity’ Awaits G-20 as Debt Haunts Rogoff Global leaders may be saddled with the weakest recovery since World War II if they are to pay off the $9 trillion tab they ran up rescuing the world economy from the deepest financial slump in seven decades. U.S. President Barack Obama and his counterparts from the Group of 20 nations meet in Pittsburgh today warning that the recovery is still too weak to start reversing lifelines to banks and the broader economy. Their next challenge will be to reduce the resulting debt before it sparks higher bond yields and erodes their governments’ creditworthiness.
G20: Passing the buck in Pittsburgh Everyone knows something needs to be done to prevent another crisis, but will the G20 leaders agree on a course of action? There's nothing like a crisis to bring out the best in people, particularly international statesmen. Unfortunately, the very real problems facing the world don't look like a crisis any more. The banking disaster, which temporarily united April's G20 in London, has passed before politicians had time to work out how to stop it happening again. Friday's return summit in Pittsburgh threatens to turn into a rather less dignified game of passing the buck.
G20 needs bigger buffers to prevent another banking crash The best way forward for the G20 summit would be to force banks to hold on to more of their profits Barack Obama wants to address imbalances in the global economy. Gordon Brown wants to talk about growth. Angela Merkel wants to concentrate on financial reform. Oh dear, the G20 summit in Pittsburgh has not started well. Merkel is in no doubt about who is to blame – London and Washington: "We should not start looking for ersatz issues and forget the topic of financial regulation.
Geithner Sees G-20 Consensus, Backs Strong Dollar Treasury Secretary Timothy Geithner said Group of 20 nations have a “strong consensus” to reduce reliance on exports, and he reiterated the U.S. has a “special responsibility” to ensure the dollar stays the world’s reserve currency. “A strong dollar is very important in the United States,” Geithner said in response to a question at a press conference today in Pittsburgh, where G-20 leaders begin two days of talks.
G-20 Nears ‘Broad Agreement’ on Curbing Banker Pay, U.S. Says World leaders are poised to crack down on banker pay as they seek to temper the risk-taking that helped trigger the worst financial crisis since the Great Depression. As President Barack Obama and his counterparts from the Group of 20 began a summit in Pittsburgh today, U.S. officials said they were uniting behind a plan to force banks to tie compensation more closely to risk and tighten capital requirements. Divisions remain on how to overhaul control of the International Monetary Fund.
US May Face 'Armageddon' If China, Japan Don't Buy Debt The US is too dependent on Japan and China buying up the country's debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC. "It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it." Robertson said inflation is a big risk if foreign countries were to stop buying bonds.
Tensions over IMF threaten to mar G20 European differences with the Obama administration threaten to overshadow Friday’s G20 summit in Pittsburgh, with Britain and France resisting US plans to overhaul the International Monetary Fund. UK and French officials were exasperated on Thursday by US proposals that could threaten both countries’ seats on the IMF board of directors, the Financial Times has learnt. Under the US plans, the IMF board would be cut from 24 seats to 20 with fewer European representatives.
Four things you must know about the global puzzle The jamborees at the UN and G20 leave the world’s new landscape still a work in progress. But some of the contours stand in sharper relief From New York to Pittsburgh you could hear the crunching and grinding of geopolitical plates. The latest jamborees at the United Nations and the Group of 20 leave the new global landscape still very much a work in progress. Some of the contours, though, stand in sharper relief. To my mind, four things stood out from this week’s surfeit of summitry: China’s, albeit reluctant, embrace of multilateralism; the rising challenge from the Middle East to western and, especially, US power; Barack Obama’s effort to frame new rules for the global game; and Europe’s place on the margins of influence.
Trade Battle Explained The Obama Administration waited until the wee hours of September 11th, 2009 to quietly inform Americans of its decision to slap new tariffs against low-end tire imports from China. Coming only days before this week's important G-20 meeting in Pittsburgh, an occasion when China will likely renew its campaign to push the world towards a post-dollar economy, the timing of the announcement seems particularly ill-advised. To be frank, it is like waving a red flag in front of a bull. It is not surprising that China instantly retaliated with their own duties on U.S. auto parts and agricultural products.
COMEX Gold surges up by $ 2.3 Gold prices rose with modest gains in the mid London trade after a visit in the negative territory on Thursday. Traders were waiting for US weekly jobless results and the developments of the Group of 20 meeting Pittsburgh. An ounce of Gold on the COMEX Division of the New York Mercantile Exchange trades at $ 1016.7 up $ 2.3. The counter may face resistance around Rs 1019 and 1025 levels.
Gold Supported by Fed Statement Gold touched $1,015/oz this morning before retreating to $1,002/oz and then rebounded back to that figure again. Gold needs to re-test recent highs above $1,020/oz to plough its own furrow rather than taking its direction from the vagaries of dollars fortunes. The Federal Reserve left its target rate for overnight loans between banks in a record-low range between zero and 0.25 percent, and said it will stay "exceptionally low" for an "extended period."
Gold and silver prices could come down in the short term - VM Group London's VM Group, in its latest analysis of global metals markets, take a conservative view on gold and silver prices in the short to medium term In its latest commodities report the VM Group, which produces its Metals Monthly on behalf of BNP Paribas and Fortis Bank, is a little cautious on the immediate outlook for gold and silver, but seems to suggest that any short term downside is likely to be limited. For gold the analysts feel that the metal has been helped by a plunging US currency, mining company buybacks and renewed investor demand, but on past performance they feel that a pullback may develop as investors take profits; however this could be relatively small, given that they point out that gold's gains have not seemed bubble-like and scrap supply is limited.
Gold drops on Central Banks' decision to scale back lending The dollar rose on the news Gold prices tumbled on Thursday in a sell-off triggered by the dollar's rise after major central banks including the U.S. Federal Reserve announced plans to scale back some emergency lending facilities. Spot gold fell to $992.60 an ounce, the lowest since September 15. It was bid at $997 at 15h06 GMT compared with $1,007.05 late in New York on Wednesday. The dollar recovered from earlier losses after major central banks announced plans to scale back massive injections of dollars into their banking systems in a sign that removal of monetary stimulus was already underway.
Gold Gains in London as Dollar Drop Against Euro Spurs Demand Gold gained in London as the dollar weakened against the euro, increasing the metal’s appeal as an alternative investment. The dollar fell as much as 0.4 percent against the euro as a report showed German business confidence rose to a 12-month high this month. Bullion has climbed 15 percent in 2009, while the dollar, which yesterday slid to the lowest level in a year against the single European currency, has lost 5.4 percent. “The dollar and risk sentiment will continue to lead gold in coming sessions,” James Moore, an analyst at TheBullionDesk.com in London, said in a note. The metal is “well placed to set fresh highs,” he said.
If Housing Were Priced in Gold Pricing U.S. homes in gold reveals that housing has fallen by two-thirds from its 2005 peak. Frequent contributor Harun I. suggested an interesting relative-value experiment: how has housing performed in the past 20 years when priced in gold? Readers of this site know that relative performance/purchasing power has long been a theme of Harun's and of this site. Considering all metrics of value in terms of purchasing power reveals much more insightful measures of value than nominal prices.
A Maginot Line For Gold Bugs Gold's drop below $1,000 today in unison with a falling market, increased economic worries, and a strengthening dollar, should be setting off alarm bells for gold bugs inside their fall-out shelters. The market has taken a turn for the bearish... yet gold is down almost 2% in a day. So what scenario exactly is gold hedging against? Should the current economic recovery come to a halt, deflation, not inflation, is likely to be the prime concern.
Today is the 140 Year Anniversary of Black Friday 1869 and the Gold 'Crash' Today is the 140 Year Anniversary of the original Black Friday on September 24th, 1869. Since then the word ‘Black’ has been used to describe any day that the stock market, currencies or financial markets have crashed. There have been many, many such crashes but the one that birthed the term happened on this day 140 years ago. This financial crisis is one of the many to have challenged humanity throughout history. It came about when the Union government started printing non gold backed dollar “greenbacks” to finance the war effort and a subsequent attempt to corner the gold market. This led to a bank panic where savers attempted to withdraw their life savings (in gold coinage) from banks causing a bank run.
Dollar’s days as the world’s only reserve currency could be numbered Economists are calling for changes, but many question whether the Chinese yuan is suitable for the job OVER the next two days, world leaders gathered at the G20 summit in Pittsburgh will attempt to address the issue of the persistent global imbalances that have been cited as a long-term cause of the recent economic downturn. Integral to this debate has been the long-standing issue of the US dollar’s hegemonic status as the world’s reserve currency – IMF data shows that nearly 65 per cent of allocated foreign exchange reserves were held in dollars in the first quarter of 2009. The dollar’s reserve currency status allowed the US government to build up its current account deficit from just $11bn back in 1998 to as much as $60bn a decade later without being under the same compulsion as other countries to undertake the necessary macroeconomic or exchange-rate adjustments to bring their deficit back under control.
Inflation is Our Future At present, there is a lot of confusion amongst the investment community and opinion is divided as to whether we will witness inflation or deflation. On one hand, the deflationists are claiming that given the extremely high debt levels in the West, further inflation is impossible. On the other side of the argument, many proponents of inflation are calling for Zimbabwe style hyper-inflation. In this business, everyone is entitled to their opinion; however it is my contention that we will get neither deflation nor hyper-inflation. If my assessment is correct, once business activity picks up, our world will have to deal with high inflation.
Did the Fed Say Inflation Risks Are Very High? The Fed stated "inflation to remain subdued for some time as resource slack dampens cost pressures.” Does this really mean “inflation could skyrocket at any moment, but right we are really lucky to have too much supply to meet demand"? Its true that these comments aren't new from the Fed as seen from Jeff Pietsch's article comparing today to the August meeting. However it does seem that the Fed is banking on the fact that they are out of the woods for the short-term and can continue to follow their easing policy actions. The big question, though, is not when prices will go up due to heightened demand, but whether the recent move in gold has proven that commodity prices are taking high inflation for granted and therefore will rise before fundamentals support the move.
Dollar rally, housing sales, record treasury auction, moral hazard
Germany declares economic war If there are any German readers of this blog, I would like to know what they think of the latest breath-taking provocations of German finance minister Peer Steinbrück. Remember that Herr Steinbrück is not a journalist, pundit, or back-bench maverick. He speaks officially for the German government and for the German nation on the international stage. Every assertion that he made about Britain in his interview with Stern is either factually wrong, or such a serious distortion of events that it amounts to a smear. Furthermore, it was quite threatening.
Spain tips into depression Spain is sliding into a full-blown economic depression with unemployment approaching levels not seen since the Second Republic of the 1930s and little chance of recovery until well into the next decade, according to a clutch of reports over recent days. The Madrid research group RR de Acuña & Asociados said the collapse of Spain's building industry will cause the economy to contract for the next three years, with a peak to trough loss of over 11pc of GDP. The grim forecast is starkly at odds with claims by premier Jose Luis Zapatero, who still says Spain's recession will be milder than elsewhere in Europe. RR de Acuña said the overhang of unsold properties on the market, or still being built, has reached 1,623,000 . This dwarfs annual demand of 218,000, and will take six or seven years to clear. The group said Spain's unemployment will peak at around 25pc, comparable to the worst chapter of the Great Depression.
King Says British Banks Got Within Hours of Collapse Bank of England Governor Mervyn King said two British banks got within hours of a liquidity shortfall on Oct. 6, 2008, and the day after as the U.K. financial system came to the brink of collapse. “Two of our major banks which had had difficulty in obtaining funding could raise money only for one week then only for one day, and then on that Monday and Tuesday it was not possible even for those two banks really to be confident they could get to the end of the day,” the BBC cited King as saying in an interview to be broadcast later today.
Banks Forced to Hold More Capital Won’t Cut Loans U.S. banks won’t reduce lending if they are required to increase capital because the additional cushion for losses will lower their cost of funds, according to a paper by the Pew Financial Reform Project. Banks would maintain lending volume and raise capital rather than reduce assets to achieve the required capital ratios, according to the paper by Douglas Elliott, a fellow in economic studies at the Brookings Institution in Washington.
Breakup the Insolvent Giant Banks Using 100 Year Old Anti-Trust Laws I have previously pointed out that we can (and should) break up the giant, insolvent banks under a number of different laws. Indeed, the government could break up the “systemically dangerous institutions” under 100-year old antitrust laws. The Sherman Act The two primary U.S. antitrust laws are the Sherman and the Clayton Acts. I'll give a very brief overview of the two acts. The Sherman Act (15 U.S.C. Sections 1-7) - enacted in 1890 - makes trusts and cartels illegal.
Volcker Criticizes Obama Plan on ‘Systemically Important’ Firms Former Federal Reserve Chairman Paul Volcker criticized the Obama administration’s plan to subject “systemically important” financial firms to more stringent regulation by the Fed. Volcker told lawmakers today that such a designation would imply government readiness to support the firms in a crisis, encouraging even more risky behavior in a phenomenon known as “moral hazard.”
Volcker backs new bank taxes Paul Volcker, the former Federal Reserve chairman, expressed more doubts over the White House’s plan for financial regulatory reform on Thursday and backed new taxes on banks. Mr Volcker, chairman of the Fed between 1979 and 1987, said he was concerned that the financial sector had grown out of proportion to the US economy. The White House adviser said he was “very interested” by ideas for a tax on transactions between banks, which was floated on Thursday by Peer Steinbrück, German finance minister, and recently by Lord Turner, head of the UK Financial Services Authority.
Fed's exit strategy may use money market funds The U.S. Federal Reserve is studying the idea of borrowing from money market mutual funds as part of eventual steps to withdraw stimulus, the Financial Times reported on Thursday. The Fed would borrow from the funds via reverse repurchase agreements involving some of the huge portfolio of mortgage-backed securities and U.S. Treasuries that it acquired as it fought the financial crisis, the newspaper reported, without citing any sources.
World Stocks Fall After Dramatic US Reversal Yesterday everything was going all fine and good until the very end of the day, when stocks sold off in dramatic fashion. And the rest of the world followed suit overnight. AP: In early trading in Europe, Germany's DAX was down 1.2 percent, Britain's FTSE 100 lost 0.7 percent and France's CAC 40 dropped 1 percent. Stock futures pointed to losses on Wall Street. Dow Jones industrial average futures shed 0.4 percent to 9,678, and Standard & Poor's 500 futures slipped 0.4 percent to 1,054.40.
Fed keeps rates low in 'weak' recovery The Federal Reserve on Wednesday said the economy has significantly improved and likely is growing again, led by gains in the long-stalled housing market. But the Fed said the recovery is likely to be weak, held back by consumers who remain depressed by losses of jobs and income and by businesses that continue to trim staff and investment. For that reason, the Fed said it would keep its target rate for bank lending near zero "for an extended period" to nurture the recovery.
Treasury: Wall Street bailout will continue The Treasury Department official who oversees the government's $700 billion Wall Street bailout says the program has been a success but will need to continue for the foreseeable future. "We still have a long way to go before true recovery takes hold, but we are now pointed in the right direction," Assistant Treasury Secretary Herbert M. Allison Jr. told the Senate Banking, Housing and Urban Affairs Committee on Thursday.
UN backs Obama on nuclear controls Resolution aims to close loopholes Barack Obama won backing on Thursday from the United Nations for measures to move towards his vision of a world without nuclear weapons, although he faces mounting obstacles at home to keeping his side of the bargain. Mr Obama, who became the first US president to chair the UN Security Coun?cil, won unanimous sup?port for a resolution Washington says should lead to tighter controls on weapons states, an end to loopholes exploited by countries such as Iran and a lower risk of new nuclear arms race.
Palin, Sounding Like Ron Paul, Takes on the Fed Former Alaska Gov. Sarah Palin fired a shot at the Federal Reserve in her coming-out speech in Hong Kong today, blaming the central bank for the current crisis and disagreeing with the idea that the Fed should have a greater role in preventing the next crisis. It was an echo of fellow Republican and Texas congressman Ron Paul, who has led the charge in Congress to perform an audit of the Federal Reserve with an eye to eventually eliminating it. “How can we discuss reform without addressing the government policies at the root of the problems? The root of the collapse? And how can we think that setting up the Fed as the monitor of systemic risk in the financial sector will result in meaningful reform?” she said. “The words ‘fox’ and ‘henhouse’ come to mind. The Fed’s decisions helped create the bubble. Look at the root cause of most asset bubbles, and you’ll see the Fed somewhere in the background.”
Fed Paints Stark Picture Of Credit Quality Credit quality sucks, says The Fed Credit quality declined sharply for loan commitments of $20 million or more held by multiple federally supervised institutions, according to the 32nd annual review of Shared National Credits (SNC). The credit risk of these large loan commitments was shared among U.S. bank organizations, foreign bank organizations (FBO), and nonbanks such as securitization pools, hedge funds, insurance companies, and pension funds. Credit quality deteriorated across all entities, but nonbanks held 47 percent of classified assets in the SNC portfolio, despite making up only 21.2 percent of the SNC portfolio. U.S. bank organizations held 30.2 percent of the classified assets and made up 40.8 percent of the SNC portfolio.
America has mortgaged its Future Marc Faber
There Goes The Housing Rebound Existing home sales slumped 2.7% in August from July, surprising many economists who expected a small increase in today's National Association of Realtors (NAR) release. Average selling price fell 2.2% from July as well. NAR: “Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus. The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions,” he said. “Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can’t take a housing rebound for granted.”
Existing-Home Sales Unexpectedly Fall Sales of existing U.S. homes unexpectedly fell last month for the first time since March, signaling the housing recovery will be slow to gain speed. Purchases dropped 2.7 percent in August to a 5.1 million annual rate, the second-highest level in the last 23 months, the National Association of Realtors said today in Washington. The median price dropped 12.5 percent from August 2008. A government report showed unemployment claims declined.
Faber Report: Shadow Inventory
Luxury Hotels Risk Default as $850 Rooms Remain Empty Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing. Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company’s watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than $850 a night.
Seniors' hopes, fears at center of health debate For the moment, the health care fight is all about older folks. Democrats agonized Thursday over how to soothe worried seniors but decided one idea was too risky because it could antagonize the powerful drug industry whose support is critically needed for President Barack Obama's broader overhaul. The Senate Finance Committee defeated a Democratic amendment that would have gradually closed the coverage gap in the Medicare drug benefit at the expense of drug makers. Nonetheless, another proposal to shield seniors in Medicare private insurance plans from benefit cuts remained alive.
In search of the middle class Who are they and why is everyone out to get them? 'Make them pay more for the higher education of their children," says the Confederation of British Industry. "Should they really be getting child benefit?" muse policy wonks of all stripes. The poor creatures. Only Gordon Brown is their nominally leftist friend. Who are they? The middle classes, of course. But who, seriously, are the middle classes? And why are they, alone among British people, routinely referred to in the mainstream political discourse as "a class".
Area where census worker died has troubled history A census worker found hanged from a tree with the word "fed" scrawled on his chest met his end in a corner of Appalachia with an abundance of meth labs and marijuana fields — and a reputation for mistrusting government that dates back to the days of moonshiners and "revenuers." But the investigation has yet to determine whether the death of the 51-year-old part-time schoolteacher represents real anti-government sentiment. At this point, police cannot say whether Bill Sparkman's death was a homicide, an accident or even a suicide. "We are not downplaying the significance of his position with the U.S. Census bureau," said Capt. Lisa Rudzinski, commander of the Kentucky State Police post in London. "We can assure the public we are looking at every possible aspect of Mr. Sparkman's death."
Gore-Backed Car Firm Gets Large U.S. Loan A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000. The award this week to California startup Fisker Automotive Inc. follows a $465 million government loan to Tesla Motors Inc., purveyors of a $109,000 British-built electric Roadster. Tesla, like Fisker, is a California startup focusing on high-end hybrids, with a number of celebrity endorsements that is backed by investors that have contributed to Democratic campaigns.
Administration Will Cut Border Patrol Deployed on U.S-Mexico Border Even though the Border Patrol now reports that almost 1,300 miles of the U.S.-Mexico border is not under effective control, and the Department of Justice says that vast stretches of the border are “easily breached,” and the Government Accountability Office has revealed that three persons “linked to terrorism” and 530 aliens from “special interest countries” were intercepted at Border Patrol checkpoints last year, the administration is nonetheless now planning to decrease the number of Border Patrol agents deployed on the U.S.-Mexico border.
GM to sell cheap electric cars in India US firm announces joint venture with Reva, the firm behind the G-Wiz, but experts say demand will be low because Indian electricity supplies remain unreliable General Motors, one of the world's biggest carmakers, and the Bangalore-based company behind the G-Wiz electric car have announced a joint venture to produce "affordable" electric cars in India. The new vehicle, which has been road-tested, will be based on GM's popular Spark hatchback, which in India costs a quarter of a million rupees (£3,000). Neither GM nor its partner, Reva, would be drawn on the electric version's price tag, though both said it would be "competitive and affordable".
Global Warming or Global Freezing: is the ice really melting? President Obama just made a melodramatic appeal at the United Nations for global measures to dramatically curb what he called “the climate threat,” current euphemism for what is more popularly known as Global Warming, the theory that man-made CO2 emissions from cars, coal plants and other man-made sources are causing the earth to warm to the point the polar icecaps are irreversibly melting and threatening to flood a quarter or more of the earth’s surface. There’s only one thing wrong with Mr. Obama’s dramatic scenario: it is scientifically utterly wrong. Since 2007 the polar icecaps have been growing not melting and the earth has been cooling, not warming.
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Thurs 09.24.2009
Peter Schiff: U.S. Rally Is Doomed, Gold Will Hit $5000 Unlike the "legitimate bull markets" of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a "rally in a bear market," and is lagging the rest of the world "for a reason." The worst is not over, according to Euro Pacific Capital's Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold. A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce "in the next couple of years," and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
Gold & Silver: The Shining Stars Mary Anne & Pamela Aden Gold, silver and gold shares are jumping up. Gold hit a record high this month and all three are in 'break out' mode. The time of truth is at hand and it won't take much more strength to confirm that a stronger phase of the eight year old bull market has begun. GOLD IS MONEY We have often talked about gold's role in the monetary system. For many years it was tossed aside as a barbaric relic and the thinking was that it was old fashioned. Nixon reinforced this in the 1970s when he closed the gold window by taking the U. S. dollar off the gold standard. An energetic economy then became most important.
Gold ends lower in floor trading heading higher after Fed Gold futures ended slightly lower in Wednesday's floor session, but moved higher in after-hours trading as the Federal Reserve extended liquidity-boosting programs that pressure the dollar and raised gold's investment appeal. Gold for December delivery, the most active contract, slid $1.10, or 0.1%, to end at $1,014.40 an ounce on the Comex division of the New York Mercantile Exchange. It was last up 0.4% at $1,018.20 in electronic trading. The thinly traded September contract ended down $1.20, or 0.1%, at $1,013. In a statement released after a two-day policy meeting, the Fed kept its target for its federal funds rate set at a range of zero to 0.25%. It also announced that it has extended its purchase of mortgage-backed securities and agency debt into the first quarter of 2010 from December.
Will Gold Be the Turd In G-20’s Punch Bowl? With a glower of contempt toward the bankers, gold remains easily aloft above $1000, developing thrust for the next big move. We wrote here a while back that blast-off from $1000 would follow the realization that G-20 can do nothing to restore stability to the world’s tottering financial system. Now, the question is whether anything at all will be “realized” in the wake of the Pittsburgh meeting. We hesitate to call it a summit because the event seems to have slipped off the news media’s radar. Unable to recall the actual dates of the session, we searched Google’s news pages in vain for this information. Tellingly, there was only a sidebar from the New York Times about how the meeting would probably be a net positive for Pittsburgh’s economy.
How China became the '800-Pound' Gorilla in the Gold Market With prices testing their record high of $1,033 an ounce set last year gold has again become the hot topic of conversation. But while many analysts are focusing on threat of inflation - which could be a byproduct of the U.S. Federal Reserve's reluctance to withdraw monetary stimulus - investors should really be watching China. "In the post-financial crisis global economy, China is quickly becoming the proverbial '800-pound gorilla' - the player that has to be courted, but that can't be tamed," said Money Morning Contributing Editor Peter Krauth.
Buggish on Gold The trouble with being a contrarian is that you can never be quite contrarian enough. We began having doubts about the ‘feds inflate…gold soars’ hypothesis last year. It was too easy…too obvious. And if it were that easy to inflate a nation’s currency, how come the Japanese couldn’t get the hang of it in the ’90s? So, we moved towards a contrarian position – inflation, yes…but not for a while. And gold? Well, we are in it for the long run. In the short run, anything could happen. To clarify our view on gold, The Daily Reckoning is not bearish on the metal. It is not bullish on the metal either. It is buggish. We are gold bugs. In the long run, gold will retain its value. Since that’s all we ask of it, we are always satisfied. Even if it is down in the short run – and it went through an 18-year downcycle from 1980 to 1998 – it will come back in the long run.
Why America wants IMF gold sale proceeds Narrow ranges defined the overnight trading hours for gold, as the metal gyrated between $1010 and $1020 per ounce, closely tracking the dollar's own close orbit around the 76.10 mark on the trade-weighted index. Nevertheless, the greenback is still at, or near a one-year low point against the euro and sentiment shows little in the way of improving as yet. Today's FOMC meeting could make a difference, but not necessarily mark a turning point. The Fed is expected to underscore the idea that the US economic recovery has indeed begun, but it is also expected to leave rates alone for the time being.
IMF gold sale unlikely to affect prices Four days after the IMF took the decision to unload more than 400 tones of gold, analysts said it is unlikely to have a major impact on the market at a time when prices of the metal are at a near-record high. Morgan Stanley analysts said they did not see the IMF gold sales 'as a material threat' to current prices or their forecast of 1,000 dollars per ounce for 2010.
China keen to buy IMF gold in yuan, not in dollar The gold was sharply higher yesterday, supported by a very weak trade in the U.S. Dollar and the metals stable performance yesterday as crude was down $3.00 and the dollar was sharply higher. The market easily absorbed the IMF planned sale of 403.3 tonnes of gold, a minor setback that appears to have been a short term buying opportunity after last night's Asian and European performance in the gold.
China to ship its gold from London to new vault . . . . The second big announcement is that the Hong Kong Monetary Authority has built its own high-tech vault to store its own gold, and they just requested delivery. Up to this point, the Chinese gold had been stored and vaulted in London, England. So now the Chinese are requesting their gold be shipped from London to their new vault in Hong Kong. This has major implications because this is a large amount of physical gold, and I think what it's going to do is begin to expose the naked shorts who have been playing this game with the gold and silver markets, trying to keep a cap on the prices. So this is a major, major development.
Fed Admits Hiding Gold Swap Arrangements The Federal Reserve System has disclosed to GATA that it has gold swap arrangements with foreign banks that it does not want the public to know about. The disclosure contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally. The Fed's disclosure came this week in a letter to GATA's Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA's administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund's treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)
What do these guys know of December Gold? . . . . The latest data from the US Commodity Futures Trading Commission showed the net long position held by reporting speculators stood at a record-high 255,183 lots. Proportionally, 93.6% of open contract positions held by these traders were purchases. Because among speculators, money managers have turned almost universally bullish. Fully 99.6% of the contracts held by buy-and-roll index funds, together with trend-following managed accounts and institutional funds, are on the long side of Gold.
Seven Points to Look For in October Just a quick note I wanted to make about what I am thinking in preparation for October -- a month notorious for volatility and market crashes.
Currently, I'm still long gold, silver, and the Australian dollar against the USD (trades documented in my trade journal). These trades have been working out very well for me. Regardless of what happens in October, I'm confident about them.
We're coming up on the 50% retracement level from the US equities crash in October 2008 (as noted in this recommended video and discussion). This will be a key break or bounce level, in my opinion. Look for the 50% level on both the S&P 500 and the DJIA.
Non-US equities, in my opinion, remain safer than US equities. Many non-US equities have rallied more so than US equities.
New Deadly Dollar Carry Trade A powerful hidden engine existed for close to 20 years called the Yen Carry Trade. The engine produced tainted trillion$ for its privileged participants, whose access to cheap money was assured and whose control of government policy was tight. The engine served two important purposes. It kept the Japanese Yen currency exchange rate low, sufficient for maintaining the export juggernaut that sent products around global supply routes with names like Toyota, Honda, Komatsu, Mitsubishi, Nikon, Toshiba, and Fuji for a string of years. It also supplied a torrent of funds to feed both the Japanese and Western (think US, UK, Europe) financial markets its most important channel in existence. The Yen Carry Trade was that important. The Bank of Japan and a host of Tokyo-based financial firms relied upon this carry trade for basically free money. This important money making machine required Japanese interest rates and currency to remain low, and USTreasury Bond yields and US$ currency to remain high. Those halcyon days are largely done, since the Yen is on a rising uptrend and the US$ is on the falling downtrend, even as US long-term rates are stuck below a defended steel bar. Nowadays, the insider firms are struggling to avoid a wrestling match with the Grim Reaper. They are falling like flies.
Investors Watch Impact on the Dollar World leaders' moves at the Group of 20 meeting in Pittsburgh this week will be closely watched by investors worried that a reshaping of the global economy could affect the dollar's dominant role in trade and finance. The G-20 doesn't have currency issues on its official agenda, but leaders of the world's 20 largest economies are finalizing a plan that, if implemented, would encourage more U.S. savings and fiscal discipline while at the same time prodding China to shift its economy toward domestic spending and away from its heavy reliance on exports.
Dollar Rises From One-Year Low as Fed Reduces Demand for Risk The dollar rose from a one-year low versus the euro as the Federal Reserve failed to increase confidence in the U.S. economy, reducing demand for higher- yielding assets funded in the greenback. The U.S. currency had weakened earlier as the Fed signaled it intends to keep holding down borrowing costs. The dollar erased its decline as the decision to end its $1.45 trillion in purchases of mortgage-backed securities and housing agency debt three months later than previously scheduled indicated the recovery won’t be as robust as expected.
Dollar near 1-year low after Fed Greenback holds near one-year low after central bank leaves key rate near 0%. The dollar hovered near a one-year low Wednesday after the Federal Reserve left a key interest rate unchanged near 0%, though it said "economic activity has picked up." At 2:15 p.m. ET, the U.S. central bank released a statement at the end of its two-day policy meeting. The Fed kept interest rates at a record low between 0-0.25%. Investors were also looking to the Group of 20 meeting in Pittsburgh this week, where world leaders will call for a global effort to tighten financial regulation in order to prevent future financial crises.
G20 Hypocrisy
G-20: Do global summits matter? Leaders of the world's biggest economies converge again. They will call for strengthening the financial system that collapsed - just like they did twice before. Let's try this again. When Group of 20 leaders meet in Pittsburgh this week, they will call for a coordinated global effort to tighten financial regulation to prevent future financial collapse. That sounds a lot like the same thing they said at the previous two meetings they convened over the past year in April and last November.
Obama's world vision: U.N. speech today President Obama will ask world leaders today to join him in confronting a range of vexing issues, including nuclear arms proliferation and climate change, and will appeal for the international cooperation he thinks will advance interests around the globe, aides said. In a morning address to the United Nations General Assembly, Obama will call for several specific commitments, including support for the major elements of a nonproliferation resolution he plans to introduce before the U.N. Security Council on Thursday. Obama also will be "setting the table" for more specific appeals in the weeks and months to come, according to a senior administration official familiar with the speech but who requested anonymity.
Obama to U.N.: U.S. alone can't solve all In a sweeping call for international cooperation, President Obama this morning challenged world leaders to set aside "an almost reflexive anti-Americanism" and work together with him and other nations on common goals such as nuclear disarmament, climate change and Middle East peace. An anti-American sentiment has served as an "excuse for our collective inaction," Obama told members of the United Nations General Assembly, at a time when collaboration is more important than at any time in history. "Like all of you, my responsibility is to act in the interest of my nation and my people, and I will never apologize for defending those interests," Obama said. "But it is my deeply held belief that in the year 2009 - more than at any point in human history - the interests of nations and peoples are shared."
Obama United Nations Speech - part 1
Obama United Nations Speech - part 2
Obama United Nations Speech - part 3
White House Pares Its Financial Reform Plan As a senior House Democrat announced an ambitious schedule to complete legislation overhauling the nation's financial system, the Obama administration on Wednesday abandoned a symbolically significant provision in the face of widespread political and industry opposition. At a hearing before the House Financial Services Committee, Treasury Secretary Timothy F. Geithner announced that the administration had dropped one provision in its plan for a consumer financial protection agency - a requirement for banks and other financial services companies to offer "plain vanilla" products, like 30-year fixed mortgages and low-interest, low-fee credit cards.
House Hears from Geithner on Financial Regulatory Reform As the Federal Open Market Committee (FOMC) meets today to wrap up a session largely expected to result in no change to the low federal funds rate - the overnight rate at which banks lend to each other - the House Financial Services Committee heard testimony on the Administration's plans for sweeping financial regulatory reform. Committee chairman Barney Frank (D-Mass.) said in opening statements there should be a mechanism for putting non-bank financial institutions "out of everyone's misery," adding "there will be a death panel" enforced by the legislation eventually adopted.
Geithner Presses Congress Again for New Financial Regulations Treasury Secretary Timothy F. Geithner on Wednesday once again pressed Congress to pass a sweeping overhaul of the nation's financial regulatory system, telling members of the House Financial Services Committee that "we can't let the momentum for reform fade as the memory of the crisis recedes." Geithner spent much of the morning's hearing trying to allay lawmakers' reservations about parts of the Obama administration's reform proposals, and to urge them to act before the end of the year.
Congress Takes On Credit Ratings Ex-Moody's Analyst Says Inflated Ratings Continue; 'Moral Responsibility' Throughout the financial crisis, major credit-ratings firms were criticized for their overly rosy ratings of complex debt securities, which deteriorated soon after and led to billions of dollars of investor losses. Despite months of regulatory scrutiny and some internal changes at the firms, a recently departed Moody's Corp. analyst says inflated ratings are still being issued. He has taken his concerns to congressional investigators.
Delayed Foreclosures Stalk Market Debra and Arthur Scriven were served notice in June 2008 that their mortgage lender, a unit of Citigroup Inc., was preparing to foreclose on their home. Fifteen months later, the Scrivens are still in their home near Columbia, S.C., and battling to stay there, even though a dispute with the lender over how much they owe prompted them to stop making regular payments last year. Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. While that buys time for families to work out their problems, some analysts believe the delays are prolonging the mortgage crisis and creating a growing "shadow" inventory of pent-up supply that will eventually hit the market.
The Economy is a Lie, too Americans cannot get any truth out of their government about anything, the economy included. Americans are being driven into the ground economically, with one million school children now homeless, while Federal Reserve chairman Ben Bernanke announces that the recession is over. The spin that masquerades as news is becoming more delusional. Consumer spending is 70% of the US economy. It is the driving force, and it has been shut down. Except for the super rich, there has been no growth in consumer incomes in the 21st century. Statistician John Williams of shadowstats.com reports that real household income has never recovered its pre-2001 peak.
U.S. Distressed Debt Ratio Falls Below 25% Continuing its descent in 2009, Standard & Poor’s distress ratio has hit another low this year, reaching 23.5% as of Sept. 15, down from 25.3% in August. The decrease in distress is coincident with movement in corporate bond spreads. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 basis points (bps) relative to Treasuries.
Fed Leaves Interest Rate Unchanged But Notes Improvement The economy has "picked up" in recent weeks, Federal Reserve policymakers said Wednesday, as they left interest rates unchanged near zero and indicated that a program to support mortgage lending will be wound down over the coming months. Following a two-day meeting, the Federal Open Market Committee affirmed the view, widely held among economists, that the recession ended this summer and that an expansion has begun. But it also noted that the job market remains weak and the recovery remains tentative, suggesting it will continue its policies to try to get the economy back on track.
Treasuries Rise After Federal Reserve Slows Mortgage Purchases Treasuries rose for a second day after Federal Reserve officials said they’ll end a $1.45 trillion mortgage-bond purchase program later than scheduled and will keep interest rates at a record low for an extended period. Shorter-maturity debt led the gains as central bankers reiterated their pledge to keep rates accommodative while saying the U.S. economy has started to recover from recession. The target rate for overnight loans between banks was left in a range of zero to 0.25 percent. Government securities slumped earlier after a record $40 billion five-year note auction drew weaker-than-forecast demand.
Economic Dark Matter "A debt bubble, yes. But a consumption binge...?" IT'S A COMMON-PLACE of political, investment and bar-room debate that the Anglo-Saxon economies enjoyed a debt-fuelled consumer boom over the last decade or so. In fact, it's a given...the one sure thing any analysis builds on, whether it's begging for votes, fund-management fees or a shared cab-ride home. The US and UK piled more debt on household balance-sheets than any other nations in history, forgetting to add a balancing item beyond the apparent value of the roof over their heads. Thing is, the data don't support it. Worse yet, they don't deny it either. Anglo-Saxony took on a record volume of household debt, simply to keep household spending growing on trend. Something ugly but hidden – economic dark matter – forced consumers deep into hock just to keep pace during the early 21st century.
Same 4-bedroom house - wildly different prices The cost of a middle-management-type home varies significantly depending on where in the country you live. But there are some huge spreads within states, as well. Imagine you're a mid-level executive living in Grayling, Mich., the "Canoe Capital of the World." You've received a job offer that pays twice as much in posh La Jolla, Calif., the seaside resort near San Diego. It sounds like a no-brainer, right? Not only will you earn all that extra money, you'll be enjoying some of the best weather in the United States. You can boat year round.
How the Government is Setting Us Up for a Second Subprime Crisis Is the government creating another subprime-mortgage bubble? The first time around, the three-headed federal serpent - the Bush administration, the Treasury Department and the U.S. Federal Reserve - used Fannie Mae and Freddie Mac to "legitimize" trillions of dollars worth of toxic financial waste known as subprime mortgages. The result was the worst financial crisis since the Great Depression - a mess that was global in nature. And we're now headed for a repeat performance.
A New Bubble Of the Fed's Creation For the past two years, the central challenge of U.S. economic policy has been to find a way to stabilize the financial system and the economy without reinflating the bubble or going back to the days of consuming more than we produce. In the end, that may prove harder than it seems. Yes, the financial crisis has passed and the economy is growing again, but there's a good chance that growth will be temporary -- the result of one-time events like "Cash for Clunkers," the tax credit for first-time home buyers and the restocking of inventories allowed to dwindle during last year's crisis. But with businesses still reducing payrolls, bank lending still contracting, and anxious consumers determined to save more and spend less, a sustained recovery in 2010 isn't looking very likely.
Mortgage Delinquencies Still Climbing for Subprime Borrowers: Equifax Delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax's consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report.
A Coming Flood of Bank Owned Homes "There's going to be a flood of bank-owned homes listed for sale at some point." -John Burns, a real-estate consultant based in Irvine, Calif. Yes, there certainly will be. Burns estimates there will be a "large numbers of foreclosures" that will drive home prices down 6% next year. Analyst Ivy Zelman pegs the number of coming foreclosures at three million to four million homes over the next few years. All of the voluntary foreclosure moratoriums have slowed "the flow of properties headed toward foreclosure sales" regardless of deep in distress borrowers are. These delays only work to prolong the mortgage crisis and prevent prices from falling to more natural levels. Thus, it creates a "growing 'shadow' inventory of pent-up supply that will eventually hit the market."
FDIC Watched as ‘Hot Money’ Boomed at New Frontier New Frontier Bank, the largest lender in northern Colorado, had a lot to be proud of in early 2007. Assets had grown by 66 percent the previous year and profits by 53 percent. American Banker rated the bank the ninth- most efficient in the country. Regulators knew the reality was different. In mid-2007, the Federal Deposit Insurance Corp., citing weak management, a rise in soured loans and an increased reliance on volatile funding, told executives to slow growth and add capital, according to board minutes of the privately held bank obtained under the Freedom of Information Act.
California Sells $8.8 Billion in Notes on Record Retail Demand California sold $8.8 billion of short-term notes in its annual borrowing to boost cash flow, collecting more than twice as much in orders from individual investors as from institutional buyers such as mutual funds. The $6.64 billion in so-called retail orders was the most recorded for a municipal debt sale, the state treasurer’s office said in a statement today, citing underwriters led by JPMorgan Chase & Co. that handled the deal.
New Push Wednesday to Post House Bills Online Before Lawmakers Vote on Them A Democrat has joined a Republican in trying to force action on a bill that would require the House to post the final text of major bills online at least 72 hours before voting on them. The idea is to give Americans time to read legislation that may affect their lives and wallets. In June, Reps. John Culberson (R-Texas) and Brian Baird (D-Wash.) introduced a resolution requiring the text of major bills to be posted online for at least 72 hours before they come up for a vote. On Wednesday, Culberson, Baird and Rep. Greg Walden (R-Ore.) filed a discharge petition, a process used to force a bill out of committee. If the petition is signed by at least 218 House members, House Speaker Nancy Pelosi will be required to schedule the resolution for an up-or-down vote on the House floor.
Card Defaults Surge in August to 11.49%, Moody’s Says U.S. credit-card defaults rose to a record in August and more losses may lie ahead as delinquencies climbed for the first time since March, according to Moody’s Investors Service. Write-offs rose to 11.49 percent from 10.52 percent in July, Moody’s said today in a report. Loans at least 30 days delinquent rose to 5.8 percent from 5.73 percent. “Early- stage” delinquencies, or loans overdue 30 to 59 days, surged to 1.65 percent, from 1.41 percent, signaling higher losses in coming months. Banks typically write off loans after 180 days.
It Is Going To Be A Rocky Road Let's face it: most Americans live in a world of false security. This is somewhat understandable, given the fact that the majority of the U.S. population was born after 1945. Few remember the dangers and hardships of World War II; fewer still remember the Great Depression. Few Americans know what it's like to not have some sort of "supercenter" nearby with shelves stocked with every kind of food imaginable, twenty-four hours a day. Few know what life was like before there were restaurants of all sizes and types on virtually every street corner in America. And only a handful remembers when most roads were unpaved, or when sports were truly a pastime and not a megabuck obsession.
Modern living within the world's only "superpower" has created a giant unsuspecting, soft, lackadaisical, and lethargic society. We expect the government to keep our streets safe, our roads paved, our stores stocked, our jobs secure, and our enemies at bay. However, in the desire to make government the panacea for all our problems, we have sold not only our independence, but also our virtue.
In-Depth Look - Housing And The Fed
Moody's: Some Home Price Won't Rebound Until 2030 Moody's, (MCO) forecasts that some home prices may not return to their pre-recession levels until 2030. This means that hundreds of thousands of Americans may find it impossible to sell their houses without making payments to their banks to cover underwater home loans. MarketWatch reports that a new Moody' housing forecasts says that "It will take more than a decade to completely recover from the 40% peak-to-trough decline in national home prices."
U.S. Employment Recovery ‘Not on the Cards,’ Stiglitz Says The U.S. economic recovery won’t be strong enough to curb rising unemployment in the next two years, Nobel laureate Joseph Stiglitz said. “Some people are declaring victory -- the recession is behind us,” Stiglitz said at an event in Pittsburgh sponsored by critics of globalization before tomorrow’s meeting of the Group of 20 nations. “The fact is that the unemployment rate is still high -- likely to go up -- and for these individuals the recession is not over”
The Dark Years are here In this newsletter we will outline what is likely to be the devastating effect of the credit bubbles, government money printing and of the disastrous actions that governments are taking. Starting in the next 6 months and culminating in 2011-12 the world will experience a series of tumultuous events which will be life changing for most people in the world. But 2011-12 will not be the beginning of an upturn in the world economy but instead the start of a long period of economic, political and social upheaval that could last for a couple of decades.
Extending jobless benefits: In Senate's hands With aid for many jobless to run out this month, House approves bill extending unemployment benefits. More than a million people could receive an additional 13 weeks of unemployment benefits under a bill approved by the House on Tuesday. The bill extends benefits for those living in states with jobless rates higher than 8.5%. Some 27 states, plus the District of Columbia and Puerto Rico, fall into this category. The national unemployment rate hit 9.7% in August, the highest in 26 years.
Current Health Care Bills Conflict with Catholic Moral Teaching Skinning the 'Health Care Cat' A very odd and macabre saying that I have always found somewhat disturbing is that "there's more than one way to skin a cat." The point of the saying is that in the undertaking of a complex project, there are usually a variety of ways to reach the goal, some better than others. This is true of the current and often passionate debate concerning health care reform. Needless to say, health care reform is a very complex issue, with many important peripheral issues, such as cost and how to pay for it, economic impact, the role of the federal government, abortion, euthanasia, tort reform, etc. But as such, health care reform is particularly important in that, as Catholics, we understand the principles that should be at the very heart of this delicate work.
The Bigger Scandal: Catholic Church Funding of ACORN Federal funding of ACORN is not just a Democratic Party or Obama Administration problem. As a chart produced by House Republican Leader John Boehner shows, most of the federal money going to the organization was provided under President George W. Bush. This is not something that most Republicans want to talk about, especially now that they can use ACORN funding as a weapon against Obama and the Democrats. To Boehner's credit, however, he had sent a letter to Bush asking him to block all federal funding of ACORN. The Bush Administration did not comply. While Obama has strong ties to ACORN, they were originally established through the U.S. Catholic Church, which has also funded ACORN and similar organizations to the tune of millions of dollars. This is another taboo topic for most of the media. Even conservative news organizations are afraid of raising the issue, apparently fearing being tagged with the "anti-Catholic" label.
Peter Schiff on Foreign Policy
Justice Dept. to Limit Use of State Secrets Privilege The Justice Department is preparing to impose new limits on the government assertion of the state secrets privilege used to block lawsuits for national security reasons. The practice was a major flashpoint in the debate over the escalation of executive power and secrecy during the Bush administration. The new policy, which could be announced as early as Wednesday, would require approval by Attorney General Eric H. Holder Jr. if military or espionage agencies wanted to assert the privilege to withhold classified evidence sought in court or to ask a judge to dismiss a lawsuit at its onset.
********* keep you eye on this man ************
"Europe in the World" Speech by Javier Solana Globalisation is good. And anyway pretty much unstoppable. It spreads prosperity and makes us richer culturally. It brings people together across continents. Of course, it has a dark side too. It makes us more vulnerable to shocks and has brought new problems in its wake. It needs a human face. . . . [face of the antichrist, perhaps; don't sell him short - he's powerful]
Obama's First Middle East Summit Yields Little Progress President Obama on Tuesday told the protagonists in one of the most intractable conflicts of the last century to "disentangle" themselves from history and "take risks for peace." "It's difficult to disentangle ourselves from history, but we must do so," U.S. Mideast envoy George Mitchell quoted Obama as telling Israeli Prime Minister Binyamin Netanyahu and Palestinian Authority chairman Mahmoud Abbas. "The only reason to hold office is to get things done."
Pentagon Delays Troop Call Request for Additional Forces on Hold as White House Seeks Review of Afghan Strategy The Pentagon has told its top commander in Afghanistan to delay submitting his request for additional troops, defense officials say, amid signs that the Obama administration is rethinking its strategy for combating a resurgent Taliban. A senior Pentagon official says the administration has asked for the reprieve so it can complete a review of the U.S.-led war effort. "We have to make sure we have the right strategy" before looking at additional troop requests, the official said. "Things have changed on the ground fairly considerably."
Why Is Appeasing the Russians More Important than American and Allied Security? Last week was perhaps the worst for this White House so far. The administration earned its first "F," when the president cancelled plans to emplace a missile defense shield in Western Europe that would protect our allies, U.S. bases overseas, as well as the American homeland from a long-range missile threat from Iran. The Iranian missile threat is growing. It is stunning to hear government officials claim that they cancel defenses because they are "less" concerned about an Iranian threat. Even assertions from the administration that intelligence suggests the threat is not there yet proved pretty empty, when the White House later admitted they had "no new intelligence," they were just interpreting the available intelligence "differently."
Scrapped Missile Defense System Presents Critical Security Dilemmas Secretary of Defense Robert Gates announced Thursday that a deployment of ground based interceptors in Poland, based on the design of currently deployed missiles now in California and Alaska, would be scrapped along with a radar system that was to be deployed in the Czech Republic. The two-stage interceptor planned for Poland had yet to be fully developed. Original plans had the deployment occurring some time between 2013-15.
White House ‘confused’ on Iran President Obama spoke Wednesday at the U.N. General Assembly as he tackles a range of thorny international issues with his counterparts. Obama said Iran and North Korea “must be held accountable” if they continue to ignore international nuclear weapons treaties. Iran recently reiterated its unwillingness to give up its nuclear program, which the United States and other Western nations fear is being used to develop nuclear weapons. Iran insists its program is strictly for civilian power.
Bin Laden to U.S.: ‘Drop Israel, Let’s Talk’ In a 12-minute address on audio tape, al Qaeda chief Osama bin Laden, spoke to the American people on the eighth anniversary of 9/11. The tape was produced by the as-Sahab propaganda arm of the terror group and posted on various Jihadists forums on Monday night. His address, directed "to the American People," asserted that the main reason for the al Qaeda attacks on New York and Washington on September 11, 2001, was U.S. support for Israel as well as "some other injustices." Interestingly, Osama claimed the war between the two "nations," i.e the American nation and the Islamic "Umma," can stop if the White House eliminated what he called the "Israel lobby." He accused the latter of pushing for the wars in Iraq and Afghanistan. Note that in this speech he doesn't mention the battlefields of Afghanistan, Iraq, Somalia, and Chechnya, he only targets U.S.-Israeli relations.
Biden Warns of 2010 Doomsday Election Vice President Joe Biden has spoken and the GOP is listening. From ABC News' Jake Tapper Vice President Joe Biden said today that if Democrats were to lose 35 House seats they currently hold in traditionally Republican districts, it would mean doomsday for President Obama’s agenda. Biden said Republicans are pinning their political strategy on flipping these seats. “If they take them back, this the end of the road for what Barack and I are trying to do,” the vice president said at a fundraiser for Rep. Gabrielle Giffords (D-AZ) today in Greenville, Delaware. Republicans need to pick up 40 seats next November to take back control of the House.
Ahmadinejad’s Nuclear Offer Ahmadinejad Offers to Buy Uranium From the US The Iranian president discusses his proposal to buy enriched uranium from the United States, his continued denial of the Holocaust, and Tehran's detention of journalist Maziar Bahari. In an exclusive wide-ranging hour-and-a-half interview with NEWSWEEK's Lally Weymouth and editors from The Washington Post, Iranian President Mahmoud Ahmadinejad discussed his upcoming talks with the United States, his opinion of President Obama, and his continued denial of the Holocaust, as well as the U.S.-led effort in Afghanistan, which he views as doomed. In it he previewed his offer to purchase enriched uranium from the United States for medicinal purposes, which proliferation experts say is likely a nonstarter.
33 Minutes - America's Missile Defense in a New Missile Age The 33 Minutes film trailer gives viewers a seven minute preview of the groundbreaking film about missile defense in America. The HD film will be released February 2009, and will outline what immediate steps need to be taken to protect America and its citizens. More information on the film can be found at http://www.heritage.org/33-minutes/
Obama Arms Summit Skirts Iran, North Korea Disputes President Barack Obama will have Chinese and Russian support at the United Nations tomorrow for his bid to put the world body on record against the spread of nuclear weapons. That doesn’t mean those nations are ready to get tough with Iran or North Korea. Obama, as the first U.S. president to preside over a UN Security Council meeting, will call for a vote on a draft resolution to curb the proliferation and testing of nuclear arms and to safeguard fissile materials. On those goals, he likely will have the unanimous backing of leaders gathered in New York, according to interviews with Security Council diplomats.
United States Sacrifices Poland And The Czech Republic On 17 September 2009 the United States formally announced the intent to abandon the plan for placing ballistic missile defense (BMD) armaments in the Czech Republic and Poland. While the stated purpose of these missiles is protection from Iranian intercontinental ballistic missiles (ICBM) the geo-political implications are mainly with Russia. As the United States has overextended itself as the policeman of the world the national debt has skyrocketed and the FRN$ is under intense pressure because it is destined like all other illusions before it for the fiat currency graveyard. Therefore, it is not surprising to see Poland and the Czech Republic feeling betrayed by being sacrificed on the altar of fiat currency.
Gold Market: Almost 100% Of Money Managers Are Long If you are long gold, you're no contrarian. U.S. Commodity Futures Trading Commission (CFTC) data shows that the net long position of speculators in gold has reached an all-time high of 93.6%. Worse yet, nearly 100% of money manager speculators within this data, such as gold-related index funds and managed accounts, are long gold. There's a dearth of traditional market players on the long side. Which has caused some professional traders to worry they might run out of people to sell to, once investment funds' buying interest is exhausted.
Gold And Silver Into the Next Decade The critical juncture we suggested for silver last week has not changed. All the factors we have looked at point to silver dropping in the medium term though the shorter term (days to weeks) has scope for volatility. The RMA parameter mentioned before has sounded an alarm but for now a low decibel one.
Gold $1,500 This Year Post summer doldrums, we're now beginning to see a nice fall run up in the price of gold—one that marks the beginning of a parabolic move, according to Greg McCoach. The seasoned bullion dealer, investor and newsletter writer sees a number of factors culminating in ever-increasing prices going forward. In this exclusive interview with The Gold Report, Greg reveals current and forthcoming events that will continue driving the yellow metal's price northward. . .not the least of which involves the commercial real estate market and its "associated derivative sewage."
Gold Rally has Legs: Mining Industry Leaders Agree Some believe $1,000 will be the new base for the next major upside movement Record high gold prices are here to stay, according to several of the world's most prominent gold mining industry executives. This was their emphatic proclamation at the Denver Gold Group's prestigious annual conference at the Grand Hyatt Hotel in Denver. And as if on cue, gold's performance gave plenty of credence to their bullish remarks. Having easily breached the psychologically all-important $1,000 an ounce mark the week prior to the conference, gold's spot price continued to gather momentum. Which, of course, delighted attendees at the world's most important annual congregation of gold mining and investment industry movers and shakers.
Weak dollar to support gold prices An analyst at the largest bank in Africa has claimed that dollar weakness is likely to support Gold Prices in the long term, Bloomberg reports. The yellow metal's recent rally above the psychologically-significant $1,000-per-ounce mark was largely motivated by the struggling greenback, with which it shares an inverse relationship. Now Walter de Wet, a London-based employee of Standard Bank, has explained that this trend looks set to continue after strong Gold Buying support was found just below four-figure territory.
PBOC’s Hu Proposes Multinational Fund, Warns on Further Crises China’s central bank deputy governor, Hu Xiaolian, proposed setting up a multinational sovereign wealth fund to invest in developing nations and help reduce the danger of another financial crisis. “Considerations can be to setting up a ‘supra-sovereign wealth investment fund’ to help channel capital inflow” into developing nations to help them become engines of global growth, Hu said in a paper posted on a Group of 20 Web site maintained by the U.K. Treasury. Hu reiterated Chinese calls for greater use of special drawing rights, the International Monetary Fund’s unit of account, instead of the dollar.
China in the queue for IMF gold sale CHINA may purchase some of the 403.3 tonnes of gold being offered by the International Monetary Fund, Market News International has reported. China would consider the purchase to diversify its reserves if the price was right and the potential return was relatively high, the report said, citing an unidentified government source. There was no indication China was seeking to buy all of the gold on offer, the report said.
Mini Inflation Blow-Off Coming into September the markets had the potential to experience either a deflation scare or a mini blow-off in inflation-related plays. Within the first few trading days of September it became apparent that it was more likely going to be the latter. The blow-off in inflation-related plays is taking most equities and commodities higher, with gold and silver stocks leading the way. It will probably end within the next two months, but it hasn't ended yet. A point we would like to emphasis today is that the price surge currently underway is the natural result of the large increase in the supply of money engineered by governments and their central banks in the midst of the great deflation scare that occurred during the final four months of last year.
Euro hits 1-yr high as mkt resumes dollar selling The euro hit a one-year high against a broadly weak dollar on Tuesday as dealers took advantage of the U.S. currency's rise the previous session to resume selling ahead of a Federal Reserve monetary policy meeting and a Group of 20 summit later in the week. With no major economic data releases or events to offer direction on Tuesday and liquidity lighter than usual owing to holidays in Japan, the dollar was at the mercy of technicals, positioning and pre-placed orders being triggered.
US Dollar Slumps Amid Worries About Fed and G20 Meetings The U.S. dollar slid to a one year low against the euro on Tuesday around $1.48 as deteriorating sentiment toward the U.S. currency encouraged selling ahead of a Federal Reserve meeting and Group of 20 summit this week. Traders took advantage of a dollar rally the prior session to resume selling on Tuesday on the view that the Fed will signal plans to maintain loose monetary policy well into 2010. Currency investors are also bracing for G20 leaders to discuss rebalancing of the global economy this week, a process that would almost certainly require a weaker dollar.
IMF Is Poised to Be Policy Watchdog G-20 Nations Are Expected to Expand Fund's Widening Portfolio to Include Oversight of Economic Plans The International Monetary Fund was the surprise winner at the last summit of the Group of 20 leaders, which agreed to quadruple the organization's resources to $1 trillion. This time it may earn a nod as best supporting actor. The G-20 has since turned to the IMF to figure out how to withdraw trillions of dollars in stimulus spending and to identify the warning signs of new crises. At this week's Pittsburgh summit, the G-20 is likely to give the IMF an additional job: Monitoring whether nations are changing their economic policies to promote long-term growth.
Obama seeks G-20 support to repair global economy President Barack Obama says he is determined to go after the "reckless risk-taking" that pushed the global economy into the worst financial crisis since the 1930s, and he is also pushing for countries to promote more balanced growth going forward. He is getting support for his efforts from other leaders, although significant differences remain as Obama prepares to serve as host for a Group of 20 meeting of the world's leading economies on Thursday and Friday in Pittsburgh.
G20 support builds for rebalancing world economy Leaders from some of the largest Western powers rallied support Tuesday behind a U.S. plan to build a more balanced global economy and warned against returning to business as usual once recovery takes hold. British Prime Minister Gordon Brown said there was substantial backing among the Group of 20 nations for creating a new framework to shrink surpluses in export-rich countries such as China and boosting savings in debt-laden nations including the United States.
'Save America! US on slippery slope to economic collapse' The U.S. dollar-based post WWII phantasmagorical world of never having to pay your debts is coming to a close, states financial journalist Max Keiser to RT.
Chinese climate plan upstages Obama at U.N. U.S. warns world leaders of 'irreversible catastrophe' President Obama warned world leaders of an "irreversible catastrophe" if they fail to address climate change in time, but it was China's leader who upstaged his American counterpart Tuesday by presenting the most detailed proposal. Chinese President Hu Jintao unveiled an ambitious plan that included planting enough trees to cover an area the size of Norway, expanding China's use of nuclear energy and pledging to generate 15 percent of the country's energy needs from renewable sources within a decade. Mr. Obama's energy reform package remains stalled behind two other major domestic initiatives in Congress.
The growing debt bomb Facing a one- to three-year countdown Assume you had put much of your savings into U.S. government bonds and then you learned the following. In just the last eight months, the Congressional Budget Office estimates of the amount of additional federal debt to be held by the public grew by an astounding $4 trillion for the 2010-19 period; and that the amount of federal debt held by the public grew from $5.9 trillion to $7.5 trillion in just the last 12 months. In addition, you learned that the federal government (i.e., taxpayers) now owns (primarily through Fannie Mae and Freddie Mac) or insures (through the Federal Housing Administration and other government programs) about 80 percent of the $14.6 trillion of home mortgages outstanding in the United States. Last week, Congress passed a bill requiring all student loans be made by the federal government rather than banks, which means the taxpayers will be 100 percent liable for any student loan defaults.
Fed Said to Start Talks With Dealers on Using Reverse Repos The Federal Reserve has started talks with bond dealers about withdrawing the unprecedented amount of cash injected into the financial system the last two years, according to people with knowledge of the discussions. Central bank officials are discussing plans to use so- called reverse repurchase agreements to drain some of the $1 trillion they pumped into the economy, said the people, who declined to be identified because the talks are private. That’s where the Fed sells securities to its 18 primary dealers for a specific period, temporarily decreasing the amount of money available in the banking system.
The US economy will only grow 2% per year over the next decade, thanks to the clobbered consumer
Excess supply will keep driving prices down
The Fed won't implement an "exit strategy" for years
Yes, Q3 GDP will be positive, but Q4 will go negative again and the market will collapse in disappointment. The recession won't end until the middle of next year.
Gary Shilling On Bloomberg
Dollar Declines to One-Year Low Versus Euro Before Fed Decision The dollar declined to a one-year low against the euro on speculation Federal Reserve policy makers will signal today this will keep interest rates low, diminishing the allure of U.S. assets. The greenback fell versus 13 of its 16 major counterparts after a government report showed New Zealand’s economy unexpectedly expanded for the first time in six quarters, spurring investors to buy higher-yielding assets. The U.S. dollar also declined on concern Group of 20 leaders, meeting in Pittsburgh starting tomorrow, will call for a reduction in global trade imbalances that may cause further gains in the dollar’s counterparts.
Citi: No Clear Relationship Between Gold And Inflation Here's more evidence that evidence that you can be right about future inflation or dollar weakness, yet still be wrong by being long gold. Citi: "There is no obvious relationship between the gold price and inflation. There have been times when the gold price has risen when inflation is declining, and times when gold has fallen when inflation is rising. Inflation expectations may be just as important"
The Fed Is Printing... Yet Money Supply Is Falling Despite the Federal Reserve's well-publicized and much-hated massive dollar creation, money supply actually fell in August. Thus the Fed still has much room to keep rates ultra-low, which the Federal Open Market Committee will likely do at tomorrow's meeting. Regardless of what many may fear, deflation, not inflation, remains the key danger to the US economy. Should the nascent US recovery sputter, this will become even more the case.
The Dollar Carry Trade - Dollar Danger Zones One of the reasons the USD is weak is the Dollar Carry trade. This video explains how this trade works by comparing the USD to the Australia dollar. The video also talks about the Dollar DOW relationship. Charts of the DOW with declining volume compared to the USD chart which looks like a mirror. Dollar breakdown levels, what does a gold breakout mean.
The Fed's dollar conundrum The central bank has flooded the world with dollars to avert collapse and start a recovery. But what if the U.S. economy doesn't reap the rewards? Whose recovery is the Fed stimulating, anyway? A year after the near collapse of the financial markets, the global economy has stabilized. Job losses have slowed and stocks have posted a sharp rally. Yet skeptics warn that a major driver of the recovery in stock and bond markets -- a round of unprecedented emergency money printing by the Federal Reserve -- could actually slow the healing of the real economy.
Why there are fears for pound and dollar As sterling drops to near-parity with the euro, there are huge concerns for the greenback too On the eve of the G20 summit in Pittsburgh, economists are growing anxious over rumors that central banks are planning to tighten money supply and shut down stimulus programmes, potentially sending global stock markets into a new tailspin. Prime Minister Gordon Brown yesterday denied the notion but still these and similar fears are playing havoc with currencies, especially sterling and the dollar.
Economics 101 - Bob Chapman on Sound Money vs. Fiat Money Bob Chapman of The International Forecaster joins us to discuss sound money and fiat money. We discuss the gold standard, why it was dropped by Nixon, and the current Federal Reserve fiat system.
FDIC Considers Prepaid Bank Fees The Federal Deposit Insurance Corp. is leaning toward asking banks to prepay future fees as a way to quickly rebuild the agency's deposit-insurance fund, people familiar with the matter said. Such a move is within the agency's power and would have banks push forward some of their payments in order to recapitalize the FDIC's fund, which is supported by fees levied on the banking industry. The agency is expected to propose a new policy at a board meeting next week. A final decision on how to recapitalize the fund hasn't been made, the people said. Recent reports said the FDIC was considering borrowing money from the banking industry to replenish the fund, a prospect downplayed by FDIC officials Tuesday. "It is an option, although it is not under serious consideration," a spokesman said.
Goldman: Deflationary Forces Will Send Treasuries to 3% Deflationary forces are still strong says Goldman Sachs. They expect inflation to set new lows in the near term, sending US 10-year treasury yields back down to 3% as a result. The UK and Australia are likely to benefit from similar government bond rallies. With the 10-year currently at 3.45%, this implies that a substantial bond rally could be in the cards. Such an event would also likely lead to a strengthening dollar if inflation eases as Goldman expects, and foreign investors bid up US debt.
Bullish Today, Marc Faber Is "Highly Confident" the Future Will Be Very Bleak "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society," Marc Faber writes in the September issue of The Gloom, Boom & Doom Report. A statement like that pretty much speaks for itself, but it's a bit more complicated than appears on first blush. Faber has been bullish -- especially on commodities and emerging market stocks -- for some time now and believes the current global recovery trade will last another two-to-three years, as discussed in more detail in a forthcoming clip. But he has major long-term concerns about the dollar's long-term viability given rising U.S. deficits, massive unfunded mandates and the fact "we have a money-printer at the Fed."
Shrinking Money Supply Dampens Inflation Fears The soft economy and weak bank lending all but ensure the Federal Reserve will stick with its stimulative policies The Federal Reserve stands accused of risking high inflation by recklessly printing too much money. But as Fed rate setters meet in Washington on Sept. 22-23, they won't see an excess of money sloshing around. Just the opposite. Paradoxically, the latest statistics show a shrinkage in the broadest measures of money. The upshot: Members of the rate-setting Federal Open Market Committee are likely to announce on the afternoon of Sept. 23 that they are sticking with their stimulative monetary policy. Inflation, while always a risk, remains more of a long-term threat. The economy is so soft and the banking system is so weak that deflation remains a clearer and more present danger.
Why aren't there more handcuffs on Wall Street? A year after the bailout, no top financial CEO faces punishment for his risky business. Yet. More than a year into the gravest financial crisis since the Great Depression, millions of Americans have seen their home values and retirement savings plunge and their jobs evaporate. What they haven't seen are any Wall Street tycoons forced to swap their multi-million dollar jobs and custom-made suits for dishwashing and prison stripes.
Pay rules may prompt Goldman to shed bank charter Some investors believe Goldman Sachs Group Inc (GS.N) may try to shed its commercial banking charter to sidestep U.S. government efforts to rein in exorbitant Wall Street pay. But regulators may force the firm to stay in the banking system. The U.S. Federal Reserve is proposing new rules to limit pay packages in an effort to curb excessive risk-taking. Banks are expected to bridle under the new restrictions, with Goldman taking particular umbrage because of its history of outsized compensation deals for strong performers.
Bank of America Screwed Taxpayers Out Of Billions We asked professor Linus Wilson, a finance professor at the University of Louisiana at Lafayette, to analyze Bank of America's agreement with the US Treasury to end the $118 billion asset guarantee by paying $425 million. As you'll see, once again the taxpayers got screwed. Here's Wilson's report: This agreement is another example of a “too-big-to-fail” bank underpaying taxpayers for the insurance that helped keep it afloat during the market troughs.
BofA, facing stepped-up scrutiny, shrinks its board to 15 Meanwhile, strategy and marketing executive to meet today with House committee regarding Merrill Lynch deal. Bank of America Corp. on Monday said it has completed the changeover on its board, as directors elected a new member and capped the board's size at 15. Chad Holliday Jr., chairman of DuPont Co., joins a board that has added six new members and lost 10 since last spring's annual meeting. The revamp came after Bank of America chief executive Ken Lewis lost his chairmanship and as the government stepped up scrutiny of the bank after its Merrill Lynch & Co. acquisition.
SEC going to trial against BofA over bonuses The Securities and Exchange Commission said Monday it will go to trial against Bank of America Corp. over bonuses at Merrill Lynch, opening the possibility of also bringing charges against bank executives, a week after a judge's stinging rejection of a $33 million settlement of the case. The SEC said it will "vigorously pursue" its case against Bank of America, which acquired Merrill in a hastily arranged deal a year ago. The agency had accused the bank, one of the biggest U.S. financial institutions, of failing to disclose to shareholders that it had authorized Merrill to pay up to $5.8 billion in bonuses.
Michel Chossudovsky on the Banker Bailouts Michel Chossudovsky, the director of the Centre for Research on Globalization, sits down with The Corbett Report to discuss the real meaning of the banker bailouts.
Rep. Frank extracts vanilla from consumer agency The Congress' chief author of financial regulatory reform moved on Tuesday to kill the most controversial part of an Obama administration proposal for a new government watchdog for financial consumers. Banks would not be required to offer so-called "plain vanilla" versions of financial products, such as mortgages, under draft legislative language drawn up by Democratic Representative Barney Frank and obtained by Reuters.
Paulson becoming bailouts' poster boy But why does he catch all of the heat and not Geithner or Bernanke? One year later, we have entered a new phase of the economic crisis, where the bailout's architects have moved from worrying about CDOs, MBS, and SIVs to fretting about a new toxic asset: That's CYL, or "cover your legacy," and it's being offloaded on former Treasury Secretary Hank Paulson. It's now clear that Henry Paulson is experiencing a remarkable abandonment by his former compatriots in last year's bailouts. In a cast of dozens of lawmakers, regulators, and Wall Street CEOs who bicker endlessly, they nearly all agree on this: Paulson deserves the bulk of the blame for designing a hasty, sloppy, expensive series of last-minute bailouts of the financial system.
ARM Payment Shock a Myth? We've been talking a lot recently about the "next wave" of foreclosures that would be driven by adjustable rate mortgage resets. In a research note today, FBR's Paul miller is taking an interesting tack: "While we remain very concerned about the impact of continued job losses on default rates, our analysis suggests that payment shock from ARM resets should not be a problem, as long as the Federal Reserve can keep short-term rates at record lows."
A Get-Out-Of-Jail-Free Card For 60 Million Mortgages? Could half of all U.S. mortgages -- some 60 million -- be protected from foreclosure? That's how some are interpreting a ruling from the Kansas Supreme Court. Ellen Brown/Huffington Post: A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose -- on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS.
House Votes to Extend Unemployment Pay for 13 Weeks The U.S. House voted to extend jobless benefits for 13 weeks in states hardest hit by the recession amid the worst surge in long-term unemployment in more than half a century. The chamber today approved, 331-83, a measure that would continue aid to about 300,000 Americans projected to exhaust their benefits by the end of this month. The aid to people in 27 states with unemployment rates of at least 8.5 percent, when combined with prior extensions, would mean they could receive benefits for as much as 92 weeks. The bill goes to the Senate.
Mass Unemployment in the Name of Norma Rae Thirty years ago Sally Field won the Best Actress Academy Award for her gritty portrayal of Norma Rae, a widowed small-town Southern textile-mill worker. Even those who haven't seen the entire movie have viewed stills or clips of a sweaty Field standing atop a work bench holding over her head a piece of cardboard with UNION written in black letters. The scene portrayed happened verbatim to the woman who inspired the movie, Crystal Lee Sutton, who acted in defiance after being fired for copying a flyer put up by the mill that claimed black workers would run the union she and labor organizer Eli Zivkovich were agitating for at the J.P. Stevens textile mill in Roanoke Rapids, North Carolina.
Unemployment benefits: Bill could help more than 1 million jobless With aid for many jobless to run out this month, House approves bill extending unemployment benefits. More than a million people could receive an additional 13 weeks of unemployment benefits under a bill approved by the House on Tuesday. The bill extends benefits for those living in states with jobless rates higher than 8.5%. Some 27 states, plus the District of Columbia and Puerto Rico, fall into this category. The national unemployment rate hit 9.7% in August, the highest in 26 years. The legislation now moves to the Senate, where the Democratic leadership has said they will try to address the issue soon. A bill has yet to be introduced.
John Williams on Unemployment Statistics John Williams of ShadowStats.com joins us to discuss unemployment statistics, and how they are manipulated by governments to hide painful economic realities. We go into the history of unemployment reporting and discuss the commonly-cited U3 number vs. the more accurate U6 number. For more information on how economic statistics are fudged by the powers that be for their political purposes, please visit Mr. Williams' website: http://www.shadowstats.com
Ford to announce 3rd China car plant Ford Motor Co (F.N) and its Chinese partner will announce plans on Friday for their third car manufacturing plant in China, where sales may soon outpace its existing capacity, an industry source said on Tuesday. Ford, which competes with General Motors GM.UL and others globally, produces the Focus, Mondeo and other sedan models in China in a tie-up with Chongqing Changan Automobile Co (000625.SZ) and Japan's Mazda Motor (7261.T).
China appeals U.S. win in WTO trade dispute Dispute concerns restrictions on sale of U.S. music, films in China China appealed Tuesday a United States win in a trade dispute over restrictions on the sale of U.S. music, films and books in the Asian country. The World Trade Organization announced the appeal in a statement to its members. Chinese officials said it was filed Tuesday, but documents were not immediately made public. The ruling last month came down decisively against Beijing's policy of forcing American media producers to route their business through state-owned companies.
Obama issues stern challenge on Mideast peace An impatient U.S. President Barack Obama scolded Israeli and Palestinian leaders on Tuesday for not doing more to unblock the peace process and urged them to relaunch negotiations soon. "It is past time to talk about starting negotiations. It is time to move forward," Obama told Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas, who met for the first time since Netanyahu took office in March.
A reluctant handshake - but no deal as Middle East plan falters Setback for Barack Obama's peace initiative as Israel rejects call for settlement freeze Barack Obama failed to achieve a hoped-for breakthrough aimed at the resumption of Middle East negotiations yesterday during a three-way meeting with the Israeli and Palestinian leaders in New York. The president had only one success to show for months of effort: a tentative handshake between the Israeli prime minister, Binyamin Netanyahu, and the Palestinian president, Mahmoud Abbas, who met for the first time since the Israeli leader took office in March. The two appeared reluctant to shake hands, smiling hesitantly and having to be coaxed by Obama.
The Afghan Disaster In the private sector, there is always a test of success. The business must make a profit. It can sustain some losses but the clock is always running on those. At some point, after all cuts have been made and costs are trimmed to a minimum, the business has to close shop. The summer of losses must become the autumn of profits, or else it's all over.
Financial Summit - CNBC Squawk William Gross, of Pimco; Robert Doll, of BlackRock; and Daniel Tishman, of Tishman Construction, share their market insight. Monday Sept 21, 2009
FDIC could borrow from banks to shore up its fund Regulators may borrow billions from big banks to shore up the dwindling fund that insures regular deposit accounts. The loans would go to the fund maintained by the Federal Deposit Insurance Corp. that insure depositors when banks fail, said industry and government officials familiar with the FDIC board's thinking, who requested anonymity because the plans are still evolving. Regulators also are considering levying a special emergency fee on all banks, charging regular fees early or tapping a $100 billion credit line with the U.S. Treasury, the people said. The fund, which insures deposit accounts up to $250,000, is at its lowest point since 1992, at the height of the savings-and-loan crisis. Ongoing losses on commercial real estate and other loans continue to cause multiple bank failures each week.
FDIC considers borrowing billions from big banks Big, healthy banks may lend billions to shore up the government fund that insures regular deposit accounts, according to a report Tuesday. The fund maintained by the Federal Deposit Insurance Corp. has suffered major losses from bank failures during the financial crisis and is at its lowest point since 1992, the height of the savings-and-loan crisis. The bank loans would let the FDIC avoid using a credit line with the Treasury that FDIC Chairman Sheila Bair is reluctant to tap, The New York Times reports, citing senior regulators. Bankers and lobbyists strongly support the plan.
Massive Relief for U.S. Homeowners and Trouble for the Banks A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership.
Over Half A Million Defaulters Are Gaming The System Waves of Americans faced with negative home equity are choosing to game the system and walk away from their mortgages and strategically default, despite their likely ability to pay. Research by Experian and Oliver Wyman shows that there were 588,000 strategic defaulters in 2008, concentrated in regions worst hit by the housing bust such as California and Florida. The thing is, these strategic defaulters are frequently the type of borrower with perfect credit histories and high credit scores. Unfortunately, they also tend to be the type of people pretty knowledgeable about the trade-off between owing a few hundred thousand dollars on a house and destroying their credit history via default.
U.S. mortgage delinquencies set record High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday. Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.
Housing Suffering Relapse Confronts Bernanke Credit Conundrum The recovering housing market may be heading for a relapse as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke consider ending support for the source of the global financial crisis. The Obama administration is studying whether to let a first-time home buyers' tax credit expire as scheduled at the end of November. Bernanke and his Fed colleagues may continue talking this week about how to wind down purchases of mortgage- backed securities, according to Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. The two programs have helped stabilize real-estate demand, with new-house sales rising 9.6 percent in July from the prior month, the most since 2005.
Lennar touts signs of recovery as loss widens Lennar Corp (LEN.N), the No. 3 U.S. homebuilder, reported a larger quarterly loss on Monday, as it wrote down the value of land and other assets to deal with the recession, but it pointed out signs of real estate market recovery. Lennar said its net loss widened to $171.6 million, or 97 cents per share, in the third quarter ended August 31 from $89 million, or 56 cents per share, a year earlier.
Gold, The Big Score Well, here we are with the price of gold above $1,000. Since this is the day so many thought would never come, it is time for reflection. I have lived my life in a society in which most of the “experts” have been wrong over and over. I was a gold bug in 1970, when gold was $35/oz. I turned bearish on gold Jan. 21, 1980, the day it hit its high of $875/oz. I became a stock bug in 1982 with the DJI at 780. Then I predicted Black Monday 1987. I turned bullish on gold again at the end of 2002 with the metal at $325. And I predicted a long term top in the stock market at the beginning of 2007.
Gold - Healthy Pullback in Uptrend Gold has bumped up against its recent highs. This is an area where over the past it has reversed lower. Will this occur again? In my analysis, the likelihood is that Gold will break through to new relative highs. There may be a pullback in the short-term, but it will be a relatively small and healthy correction.
Gold in a Beautiful Long-term Secular Bull Market The short and intermediate-term future for Gold and any investment for that matter are tricky to navigate. I have guessed right and wrong many times on shorter-term moves. It seems that the best most investors can hope to do is identify the long-term secular bull market (i.e. the major bull market of the current 10-20 year period) that is in progress, buy into it, and hold on.
Gold is More Like a Religion or a Political Position Of all the many miseries that man faces on his journey from cradle to grave, few of them can be eased by enlightened central banking. And a credit contraction is not one of them. Japan proved it. After the Japanese market collapsed in 1990, public officials went to work with their characteristic energy and incompetence. They lowered the cost of borrowing to nearly zero. But did consumers take up the money and add to the demand for bread and bicycles? No. They didn't want to borrow. They wanted to save. They had speculated during the previous bubble years and lost money. Then, with retirement approaching, a penny saved was worth even more to them than a penny earned. They saved more than ever...and the consumer economy sank.
Gold price could hit $1,600 per ounce The head of a leading gold mining company has predicted that Gold Prices could hit $1,600 per ounce in the medium term, Reuters reports. Gold is well-known for the inverse relationship it shares with the dollar but it has also shown signs of following similar price movements to oil in the past few years.
The Case for Precious Metals Is Only Getting Stronger Whoever thinks we are out of the woods is in for a rude awakening. We are merely in the eye of the storm. I won't even get into the catastrophe that will be commercial real estate, rather the next likely current bailout experiment which is the FHA or perhaps the next round of banking crisis (see below). The following facts would be actually quite entertaining if the bailout money wasn't coming directly out of the taxpayers’ pockets --> the printing press (more inflation). The FHA now controls over a trillion in existing / recently originated mortgages.
China Said to Consider Buying Gold From IMF China may purchase some of the 403.3 metric tons of gold being offered by the International Monetary Fund, Market News International reported, citing two unidentified government sources. China will consider the purchase to diversify its reserves if the price is right and the potential return relatively high, the report said, citing one of the sources. There is no indication China is seeking to buy all of the gold on offer, the report said, citing no one.
Gold is seen as insurance policy against inflation More people are Investing in Gold as a result of speculation over the long-term effects of inflation in global economies. That is according to a trader from Seoul's Hyundai Futures Co, who told Bloomberg that the chances are high there will be further "upward momentum" in demand for Gold Investment. Steve Chun was quoted by the publication as stating: "Investor demand is very strong as an improvement in the global economy raises the prospect of inflation."
Is Pent-Up Inflation From Fed Printing Waiting On Deck? Inquiring minds are wondering about the possibility of "pent-up" inflation from the massive expansion money supply by the Fed. Our search for the truth starts with the question "Which Comes First: The Printing or The Lending?" This is a critical question given the massive expansion of base money by the Fed as shown in the following chart.
From Deflation to Inflation Step by step, with little fanfare and great complacency, we are witnessing a fundamental, global shift that’s rapidly transforming the investment scene: The forces of deflation are temporarily receding; and in the meantime, the forces of inflation threaten to roar back with a vengeance. hey are everywhere. They could be overwhelming. They must NOT be ignored …
Is Fed Money Printing About to Trigger Inflation? Inquiring minds are wondering about the possibility of "pent-up" inflation from the massive expansion money supply by the Fed. Our search for the truth starts with the question "Which Comes First: The Printing or The Lending?" This is a critical question given the massive expansion of base money by the Fed as shown in the following chart. Since the beginning of the recession, the Fed has expanded base money supply from $800 billion to $1.7 trillion. Conventional wisdom suggests this money is going to come soaring into the economy at any second causing hyperinflation on the notion banks will lend out 10 times the amount of reserves. So is this pent-up inflation just waiting to break out? Hardly.
The 545 People Responsible for All of America's Woes Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered why, if both the Democrats and the Republicans are against deficits, we have deficits? Have you ever wondered why, if all the politicians are against inflation and high taxes, we have inflation and high taxes? You and I don't propose a federal budget. The president does. You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don't write the tax code. Congress does. You and I don't set fiscal policy. Congress does. You and I don't control monetary policy. The Federal Reserve Bank does.
The Ratchet Effect It appears our self-serving bureaucracy thinks they can keep fooling the markets indefinitely, where now they have resorted to attempting to ratchet stocks higher against precious metals. Of course the funny part of it all is as you know from our last meeting precious metals charts are telling us it will take hyperinflation to keep equities moving higher however, as the dollar ($) decline is getting stretched to say the least. Price managers don’t want stocks heading lower into October however, for fear of a panic that gets out of control.
The Quiet Grab While all the hubbub here in the US has centered around abominations such as cash 4 clunkers, tax credits for buying homes, and the other machinations directed at returning the US to the blissful year of 2005, other portions of the world have taken notice and have been conducting some activities of their own. They have been locking down ever-growing stockpiles of critical basic materials needed to run their economies. These strategic moves have certainly not been done in secret, but given how we spend our intellectual energies here in America, they might as well have been. Leading the pack has been China, but there have certainly been others.
The Event Since at least 2000, there has been a heated debate over the **BIGGEST FINANCIAL ISSUE OF ALL TIME**: “will there be Inflation or Deflation?” And so far the answer has been “Yes”. Since 2000 we have had both Inflation and Deflation, each measurably so. Never deterred, the argument has now shifted to: “Which way will it ULTIMATELY go, in the final analysis?”
Slack Attack: Fed Faces Test on Inflation Tens of thousands of people who moved here in the past decade saw a booming real-estate market and plentiful jobs amid the mountains of Central Oregon. Now they see slack. A year and a half of recession has left local manufacturer Bright Wood Corp. with too much capacity at its plants that make window and door components. Bright Wood has laid off nearly half of its work force, shut an 80,000-square-foot factory in Bend, and sold or stored its extra equipment.
Commercial Real Estate Is Next Bubble to Burst: Tishman Commercial real estate is the "second shoe" to drop in hurting the economy, Daniel Tishman, chairman and CEO of the Tishman Construction Corporation told CNBC. "We're getting through the single housing real estate market OK but the numbers involved in commercial real estate in all sectors are staggering," Tishman said. "Trillions of dollars are involved in commercial loans. The roll over of those loans in the next 5-7 years is going to happen and the money just isn't there for refinancing." Tishman, whose company is one of the oldest construction firms in the US, said the industry needs government help.
Oil falls below $70 as Chinese demand drops, dollar regains footingEnergy prices drop sharply ahead of Fed meeting Oil prices fell for a third straight day before the U.S. Federal Reserve meets to discuss monetary policy, which for months has helped to drive crude prices higher. Benchmark crude for October delivery lost more than 3 percent, or $2.33, to settle at $69.71 a barrel on the New York Mercantile Exchange. With the October contract set to expire on Tuesday, traders were focusing more on the November contract, which fell $2.56 to settle at $69.93.
Debt Could Lead U.S. Into Another Economic Crisis Deficit spending and government debt are reaching a level that could culminate in another economic crisis as big as the one that hit the United States last year, Minnesota's Republican Governor Tim Pawlenty told CNSNews.com. "One of the main things I'm very worried about is this administration and the Democratically-controlled Congress running on a pathway to bankruptcy," Pawlenty said. "I mean, we have a reckless amount of deficit and debt in this country. The Obama administration and this Congress are exponentially growing that."
Debt costs to rise as bank collateral re-use falls Corporate, mortgage and other debt issuers may be facing permanently higher costs as large banks face new restrictions on their use of client assets. Banks have relied on their ability to reuse hundreds of billions of dollars in client assets that are posted against repurchase agreements, securities lending agreements and derivatives to back new trades and loans, boosting liquidity in many markets.
America Digs Deeper Into Debt It’s amazing but true. Even after all we’ve been through and all we have supposedly learned about the danger of being over leveraged and borrowing more than you can pay back, we are still piling on debt. I know that’s not what you hear in the media. Wall Street and Washington are busy telling you that we are continuing to pay down debt and the health of the country’s balance sheet is improving. The truth is that consumers and businesses are paying down debt but their budgetary prudence is more than being offset by the profligacy of the government.
Fed seen in no hurry to raise rates The Federal Reserve meets this week against an improving economic backdrop, but with inflation not an imminent threat, the U.S. central bank is seen as in no hurry to raise interest rates. Economists expect the policy-setting Federal Open Market Committee to hold the target range for overnight interest rates steady at zero to 0.25 percent until at least 2010.
Complacency & Miscalculation Vs Hindsight & Foresight The day of the great panic is arriving and when it does arrive, do you believe that a fistful of dollars in a bank account will carry any respect and value? The currency of the nation will not be the dollar any longer. It will be the cent, because that is what everyone will get back from their savings and investments - cents in the dollar. In the mad scramble that will ensue, it will be dog eats dog as the payment system alternately freezes up and then gyrates. There is only one fact that should keep you awake at night and that is the fact that the USA has run up more debt than is possible to repay. I repeat that is a fact. It's not hyperbole or slander. The question is therefore, "when will everyone understand the ramifications of this on their savings, investments and future?" The answer is, "when it is too late."
Al Gore Talks about Global Governace and the NWO
Nations Ready Big Changes to Global Economic Policy Rush to Set a Plan for Growth Ahead of G-20 Summit, but Enforcement Issues Loom The Group of 20 nations is scrambling to finalize a plan before this week's Pittsburgh summit that would commit the U.S., Europe and China to make big changes in national economic policies to produce lasting growth as the world recovers from the worst recession in decades. The G-20 summit, the third such gathering in a year, is shaping up as a test of whether industrialized and developing nations can function as a board of directors for the global economy.
Obama to Tell the G20 to Fix the US By Changing the World When you can't run a state, run for President. When you can't run your country, attempt to run the world. This directive to the G20 is probably going to make the Organizer-in-Chief's recent pathetic sermonette on altruism and self-denial to Wall Street seem effective by comparison. Unless he is as prime an example of boobus Americanus as he appears to be by his actions, we suspect that this proposal is intended merely to be a blue sky diversion to a broadly unachievable goal from a genuine agenda for reform and action on the table including regulating bankers' pay, which might be an annoying hindrance to Obama's constituents on Wall Street. It has been estimated that the reforms on the table from Europe, for example, might cut the trading revenues at Goldman Sachs by a third.
Obama wants G-20 to rethink global economy U.S. proposal foresees big changes in economies. Europeans pressing to curb bankers' pay, bonuses. President Barack Obama said Sunday he would push world leaders this week for a reshaping of the global economy in response to the deepest financial crisis in decades. In Europe, officials kept up pressure for a deal to curb bankers' pay and bonuses at a two-day summit of leaders from the Group of 20 countries, which begins on Thursday. The summit will be held in the former steelmaking center of Pittsburgh, Pennsylvania, marking the third time in less than a year that leaders of countries accounting for about 85% of the world economy will have met to coordinate their responses to the crisis.
G20 Leaders Meet to Rebalance World's Economy While Imposing Banking Reforms Leaders from the G20 nations, which represent 85% of the global economy, will hold an economic summit in Pittsburgh this week to determine how they can keep the economic recovery on track while rebalancing growth and imposing new regulatory restrictions on banks. U.S. President Barack Obama and his overseas counterparts will meet for the third time in less than a year on Sept. 24-25 to agree on a plan to compel banks to hold more capital reserves and curb risky trading techniques to prevent worldwide economies from falling back into the worst crisis since the Great Depression.
Europe, U.S., China must take IMF medicine: Trichet Persuading Europe, the United States and China to accept International Monetary Fund advice on economic polices may be difficult, European Central Bank President Jean-Claude Trichet said on Monday. The United States wants a discussion of a broad framework to solve the world's economic imbalances at a summit of G20 leaders in Pittsburgh on Thursday and Friday. The IMF would be charged with sketching out a plan and then checking whether each country was making progress.
G-20 Is Urged to Raise Bank Reserves World leaders at the Group of 20 meeting this week should force banks to build up their reserves substantially to avoid another acute financial crisis, a leading association of regulatory experts said Monday. Lurking behind the appeal from the European Shadow Financial Regulatory Committee, a panel of academics and former regulators, is a fear that the political momentum for deep-seated reform may be waning as the financial crisis ebbs in intensity. Although a recent meeting of G-20 finance ministers in London discussed ideas for increasing the reserves that banks must hold against losses, there was little sense of urgency. Treasury Secretary Timothy F. Geithner said he wanted to see a final agreement by the end of next year.
G-20 Bank Push Risks Profits From Goldman to Barclays Global leaders meet this week seeking to deliver the broadest financial regulation overhaul since the 1930s, potentially threatening profits and stock prices of banks from Goldman Sachs Group Inc. to Barclays Plc. President Barack Obama and his Group of 20 counterparts convene in Pittsburgh on Sept. 24-25 to cement a plan to force banks to curb leverage, hold more equity capital and keep a greater pool of assets that can be easily traded. Restraining bankers' pay and narrowing imbalances in trade and savings will also feature on the agenda as officials try to hammer out an accord to prevent a repeat of the worst crisis since the Great Depression and ensure a sustained recovery.
On the Edge with . . . Steve Keen (1/2)
On the Edge with . . . Steve Keen (2/2)
Fed Rejects Geithner Request for Study of Governance, Structure The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank's structure and governance, three people familiar with the matter said. The Obama administration proposed on June 17 a financial- regulatory overhaul including a "comprehensive review" of the Fed's "ability to accomplish its existing and proposed functions" and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and "a wide range of external experts."
Volcker Launches Bombshell on Wall Street and Washington While the insiders on Wall Street and Washington pander about real financial regulatory reform, former Fed chair Paul Volcker yesterday hit ground zero on this hotly debated topic. The heart of financial regulatory reform is centered on the implementation of leverage by our largest financial institutions. The leverage is exercised in a wide array of activities, both on and off-balance sheet. The capital utilized by the banks in these activities is credit that has not and will not flow directly through to the economy. Why? The banks believe that they will generate a greater return on the capital via proprietary activities rather than facilitating client business and addressing customer needs.
Are U.S. Treasury Bond Sales a Ponzi Scheme? In a bitter irony, the recipients of the bailout under TARP and Obama's proposed $750 billion aid to financial institutions are the creditors of the federal government. The Wall Street banks are the brokers and underwriters of the US public debt, although they hold only a portion of the debt, they transact and trade in US dollar denominated public debt instruments Worldwide. They act as creditors of the US State. They evaluate the creditworthiness of the US government, they rank the public debt through Moody's and Standard and Poor. They control the US Treasury, the Federal Reserve Board and the US Congress. They oversee and dictate fiscal and monetary policy, ensuring that the State acts in their interest...
The Real Problem With The Economy Is That It Doesn't Need You Anymore Roughly speaking the world's economy has always worked as a giant pass-along-game between the planet’s citizens. Person A needed stuff from person B and person B needed stuff from person C and person C needed stuff from person A. So everyone needed everybody. It has been a kind of giant circle of needs. But as a smaller and smaller number of people are needed to make the basic things that people need for survival, from food to energy, to clothing and housing, the less likely it is that some people will be needed at all.
China Can't Buy Enough Bonds as Dollar No Deterrent International investors are increasing purchases of Treasuries on a bet U.S. inflation will remain subdued, even as the dollar falls to the lowest levels of the year and the budget deficit tops $1 trillion. Investors outside the U.S. bought 43.1 percent of the $1.41 trillion of notes and bonds sold by the Treasury Department this year, compared with 27.1 percent of the $527 billion issued at this point in 2008, government figures show. The Merrill Lynch & Co. Treasury Master Index of U.S. securities returned 1.18 percent in the third quarter after the worst first half on record as demand from the investor group that includes central banks climbed to record levels at Treasury auctions.
Treasuries Gain as Stocks Decline, Federal Reserve Buys Debt Treasuries gained as stocks fell and the Federal Reserve began purchasing U.S. debt, part of its effort to reduce consumer borrowing costs. U.S. government securities gained over the past three months partly on speculation the economy will falter and inflation will remain subdued. The Fed will keep its target interest rate at a record low at the end of a two-day meeting on Sept. 23, according to a Bloomberg survey. The U.S. will auction $112 billion of notes this week, starting with a record $43 billion sale of two-year debt tomorrow.
Bank Of America Misses Deadline, Tells Congress To Take A Hike Bank of America (BAC) just missed its deadline On Friday, U.S. Rep. Edolphus Towns sent a sternly worded letter instructing the bank to reveal by noon today when it became aware of the gigantic losses at Merrill Lynch. That apparently didn't happen. DealBook/NYT: Bank of America did not meet a noon deadline on Monday to submit documents and other possible evidence in the Congressional investigation of the bank’s takeover of Merrill Lynch, according to a person close to the Congressional committee who was not authorized to discuss the situation on the record.
BofA mulls options if CEO Lewis is charged Bank of America Corp. directors were to be briefed Monday on their options if Chief Executive Kenneth Lewis is charged with civil fraud, The Wall Street Journal reports, citing a person familiar with the situation. The bank's board recently confirmed a new succession plan in case it needs to quickly make a change in BofA's leadership. The source told the newspaper the board stands behind Lewis, who joined the bank in 1969 and took the reins as CEO when Hugh McColl Jr. retired in 2001.
Bank of America: Did Ken Lewis Lie to Shareholders? Bank of America CEO Kenneth Lewis may be in for much more than a trip to the woodshed. Ever since Bank of America completed its deal to buy Merrill Lynch, questions have lingered about whether the chief executive was completely honest with shareholders about the state of Merrill — specifically about the year-end bonuses paid out to Merrill employees despite the investment bank's huge 2008 losses. Bank of America shareholders have already voted to remove Lewis from the post of chairman in part because losses at Merrill turned out to be worse than Lewis let on. But that has failed to put the issue to rest.
Recovery Still Far Off Despite Signs of Easing: Feldstein Despite signs that the recession is easing, the economy still has a long way to go before it recovers, well-known economist Martin Feldstein told CNBC in a live interview. "I see very few positives," said Feldstein, former chief economist for President Reagan and now president emeritus of the National Bureau of Economic Research. "Things are falling a little more slowly, but that doesn't mean they're going to start turning up anytime soon. So I think the people who are forecasting an upturn in September—I don't see that as the beginning of a sustainable, permanent expansion."
Reform or Bust In the grim period that followed Lehman's failure, it seemed inconceivable that bankers would, just a few months later, be going right back to the practices that brought the world's financial system to the edge of collapse. At the very least, one might have thought, they would show some restraint for fear of creating a public backlash. But now that we've stepped back a few paces from the brink - thanks, let's not forget, to immense, taxpayer-financed rescue packages - the financial sector is rapidly returning to business as usual. Even as the rest of the nation continues to suffer from rising unemployment and severe hardship, Wall Street paychecks are heading back to pre-crisis levels. And the industry is deploying its political clout to block even the most minimal reforms.
Trade Wars and Protectionism are not Free Trade By: Dr. Ron Paul Two weeks ago, both the administration and the Fed announced with straight faces that the recession was over and the signs of economic recovery were clear. Then last week, the president made a stunning decision that signals the administration’s determination to repeat the mistakes of the Great Depression. Much like the Smoot-Hawley Tariffs that set off a global trade war and effectively doomed us to ten more years of economic misery, Obama’s decision to enact steep tariffs on Chinese imported tires could spark a trade war with the single most important trading partner we have. Not only does China manufacture a whole host of products that end up on American store shelves, they are also still buying our Treasury debt.
Good News: Home Depot Is Hiring In Phoenix, Arizona If Phoenix, Arizona isn't ground zero for the meltdown of the housing market, it sure is close. Currently, about half of every home sold in the Phoenix area is a foreclosure sale--and that's actually an improvement over recent months. So we'll take whatever good news we can get when it comes to the housing market in Phoenix. And today that good news comes in the form of a local media report that Home Depot is looking to hire 100 people for sales and customer service positions.
Home Depot looks to fill more than 100 positions in Valley The Home Depot is looking to fill more than 100 positions in the Phoenix-area, according to a Monday report. The home improvement specialty retailer is seeking Merchandising Execution Associates.
First Cars, Then Houses? Although it was obvious from the start that the cash-for-clunkers program would not live up to the promises of proponents, hard evidence is beginning to trickle in that the pessimists were right. Instead of priming the pump for a self-sustaining recovery in the beleaguered auto sector (or the economy at large), the initiative simply borrowed sales from the future. Now that the government is no longer throwing free money at buyers, Automotive News reports in "September Sales Rate Will Tie Lowest on Record, Edmunds Says," the bottom has fallen out:
FDIC Orders Online Bank Auction of Exotic Cars, One-of-a-kind Chopper Penny Worley Auctioneers (www.WorleyAuctioneers.com) announces the online auction of exotic vehicles from New Frontier Bank, according to Jerry Jenkins. "Everyone has heard of the legendary government auctions of exotic vehicles, but this is the real deal," said Jenkins. "These exotic vehicles will sell to the highest bidder."
Accidental Landlords: Renting What Won't Sell From the front lines of the Great American Housing Bust: people who want to sell their houses but can't are turning their homes into rentals. Yes, there are early signs that home sales are steadying and prices are picking up, but some owners have been waiting for years to sell — to move to new towns, to better jobs — and simply can't hold out any longer. Their solution is to pack the old place with tenants and no longer be trapped by an unsalable property.
Votes to Defund ACORN Are Just Political Cover, Republican Lawmaker Says Although both the House and Senate have voted to de-fund the liberal activist group ACORN, it's unlikely such a proposal will be enacted any time soon, Rep. Michele Bachmann (R-Minn.) told CNSNews.com. If House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid really wanted to defund ACORN, "we could have done it yesterday," Bachmann told CNSNews.com. "It isn't that I'm saying these votes won't result in ultimately defunding ACORN, but right now you've got a vote on a housing bill and a vote on an education bill. How's that going to come together?"
'Abortion President' Makes False, Misleading Statements on Health Bill, Congressman Says President Barack Obama's assertion that the Democrat-backed health care overhaul would not publicly fund abortions is "demonstrably false and extraordinarily misleading," Rep. Chris Smith (R-N.J.) told the conservative Values Voters summit on Friday. Smith predicted that abortions would increase by as much a one third if the Democrats' health care legislation is enacted.
Sen. Max Baucus changes his health care bill to reflect concerns of Democrats, key Republican Senate Finance Chairman Max Baucus moved Monday to address concerns from fellow Democrats and one key Republican about his health care bill, tweaking the legislation to make newly required insurance more affordable. The changes came a day ahead of a committee session beginning Tuesday to amend and vote on the bill, which Baucus hopes his panel will approve by the end of the week. The Montana Democrat faces the difficult task in the days ahead of keeping his 13 committee Democrats on board while not moving so far to the left that he alienates Sen. Olympia Snowe, R-Maine, the only one of the panel's 10 Republicans seen as likely to vote for the bill.
A Tax on Cadillac Health Plans May Also Hit the Chevys Although cast as a tax on gold-plated insurance policies for the well-heeled, it has prompted anxiety among the middle class. The idea, proposed last Wednesday by Senator Max Baucus, is to help raise money for the nation's health care overhaul by placing a new excise tax on the most expensive health insurance policies, like the ones offered to partners at Goldman Sachs and other affluent professionals.
Senator Baucus to adjust health plan for affordability Senate Finance Committee Chairman Max Baucus said on Monday he would revise his healthcare reform bill to ease concerns among fellow Democrats about the affordability of insurance requirements for low- and middle-income families. The shift came one day before the committee begins consideration of a sweeping overhaul of the $2.5 trillion industry, President Barack Obama's top domestic priority.
Will Americans Obey Government Orders During a Swine Flu Pandemic? Local authorities are keen to know whether American citizens will obey the government in the event of an H1N1 pandemic and take the swine flu vaccine, amidst growing fears of quarantines and forced injections that have been circulating in recent weeks. Every sign points to the fact that health authorities are preparing mass vaccination programs and quarantines that could be instituted should the H1N1 virus make a deadlier comeback, which has been all but guaranteed by U.S. health authorities as well as the WHO. Part of those preparations include gauging the potential reaction of Americans to unpopular orders dictated by an increasingly distrusted government. How many citizens will follow orders to stay indoors, evacuate or take a shot?
Social Security Plan to Raise Verification Rate Meets Opposition The Social Security Administration (SSA) plans to raise its fees for verifying mortgage borrowers' identities, a move that is facing Congressional opposition. The fee for mortgage and financial institutions to authenticate borrower Social Security numbers is set to increase from $0.56 to $5.00 per verification on October 1. But Rep. Kay Granger (R-Texas) is said to be leading a Congressional challenge to the increase, according to a statement from Rapid Reporting, a Fort Worth, Texas-based national provider of third-party income, identity and employment verification services.
Conservatism is far from dead As the White House and Senate Democrats move toward Sen. Max Baucus' compromise on health care, there is a growing sense among Democrats that the political power of conservatism remains much stronger than some observers believed after Barack Obama's victory in November 2008. The White House has sent strong signals that the president is willing to abandon key components of the legislation that liberals have demanded, such as the public option, and to work with Baucus, whose proposal is far less ambitious than what other Democrats, including the president, have been pushing for.
Who's behind "Islam on Capitol Hill?" This Friday, Sept. 25, the organizers of "Islam on Capitol Hill" hope to bring thousands of Muslims to Washington, D.C. The program for the "Day of Islamic Unity?" . . . . Attorney and "main organizer" of "Islam on Capitol Hill", Hassen Ibn Abdellah is President of the Elizabeth, New Jersey Dar ul-Islam, Inc. Abdellah was, described October 25, 1993 by the New York Times, as the "most aggressively combative of the lawyers" representing the terrorists who staged the 1993 World Trade Center attacks. His client, the Egyptian-born Mahmud Abouhalima, was convicted of helping to manufacture and transport the bomb detonated in the 1993 attack and is now incarcerated in the Federal "Supermax" prison at Florence, Colorado.
Merkel, Steinmeier Face 'Mess' as Stimulus Peters out Germany's recovery from recession came in time to give a boost to Chancellor Angela Merkel's re- election bid in the Sept. 27 vote. It may not last much longer. Unemployment is set to jump and consumer spending to fall in 2010 as government stimulus runs out, according to the Halle- based IWH institute, an adviser to the government. Companies are warning of a credit crunch, and debt at a post-World War II high leaves policy makers with few options to counter a double dip.
Zbig Brzezinski: Obama Administration Should Tell Israel U.S. Will Attack Israeli Jets if They Try to Attack Iran The national security adviser for former President Jimmy Carter, Zbigniew Brzezinski, gave an interview to The Daily Beast in which he suggested President Obama should make it clear to Israel that if they attempt to attack Iran's nuclear weapons sites the U.S. Air Force will stop them. "We are not exactly impotent little babies," Brzezinski said. "They have to fly over our airspace in Iraq. Are we just going to sit there and watch? ... We have to be serious about denying them that right. That means a denial where you aren't just saying it. If they fly over, you go up and confront them. They have the choice of turning back or not. No one wishes for this but it could be a 'Liberty' in reverse.
Israel says still has military option on Iran Israel has not given up the option of a military response to Tehran's nuclear programme, senior officials said on Monday, after Russia's president said his Israeli counterpart assured him it would not attack Iran. Israeli Deputy Foreign Minister Danny Ayalon was asked by Reuters if that comment by Israeli President Shimon Peres, as reported on Sunday by Russian President Dmitry Medvedev, was a guarantee there would be no Israeli strike on Iran. Ayalon replied: "It is certainly not a guarantee.
Ron Paul: Obama Neutralized the Anti-War Left - 9/17/2009
General Calls for More U.S. Troops to Avoid Afghan Failure The top military commander in Afghanistan warns in a confidential assessment of the war there that he needs additional troops within the next year or else the conflict "will likely result in failure." The grim assessment is contained in a 66-page report that the commander, Gen. Stanley A. McChrystal, submitted to Defense Secretary Robert M. Gates on Aug. 30, and which is now under review by President Obama and his top national security advisers. The disclosure of details in the assessment, reported Sunday night by The Washington Post, coincided with new skepticism expressed by President Obama about sending any more troops into Afghanistan until he was certain that the strategy was clear.
Top U.S. Commander for Afghan War: More Forces or 'Mission Failure' Failure? Someone wound up with a whole lot of opium and heroin, and a bunch of corporations made a killing from a gusher of absurd and lucrative contracts. That sounds more like just another day at the office than failure to me-considering the criminal organizations involved and their blood soaked gravy train. Gen. Stanley McChrystal's shakedown reminds me of a classic bit of black comedy from my IT days, when "consultants" would show up to my festering tumor workplace du jour bearing, "innovate solutions": I used to think, "How come these bozos are so happy when this big top is weeks-or even days-away from total failure?"
Climate-Talks Deadlock May Ease After Obama, Hu Meet China and the U.S., the biggest producers of greenhouse gases, may propose new steps to fight global warming this week as they remain at odds over who should pay for a low-carbon world. U.S. President Barack Obama and China's President Hu Jintao plan to join more than 100 heads of state in New York tomorrow to discuss climate change initiatives at the United Nations. Hu will offer a new plan at the one-day summit, Xie Zhenhua, China's senior negotiator, said last week, giving no specifics.
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Mon 09.21.2009
Economic and Financial System Train Wreck Dead Ahead! Many ECONOMISTS AND MARKET ANALYSTS ARE PREDICTING AN END OF THE RECESSION AND GROWTH GOING FORWARD. MY RESPONSE IS THE NUMBERS HAVEN’T ADDED UP FOR YEARS, AND REGARDLESS OF WHAT THEY CLAIM, WE ARE ABOUT TO COMMENCE THE NEXT LEG DOWN INTO WHAT WILL become known as the GREATEST DEPRESSION in history. The numbers they point to are POLITICALLY-CORRECT measurements, but practically incorrect; any insights you may glean from them are HEADLINE illusions for the sheep that are being FLEECED and who have misplaced their faith in the government to PROVIDE for them.
Regulators seize 2 banks; 94 failures this year Regulators shut down two banking units of Irwin Financial on Friday, marking the 93rd and 94th failures this year of federally insured banks. The Federal Deposit Insurance Corp. was appointed receiver of Louisville-based Irwin Union Bank FSB and Columbus, Ind.-based Irwin Union Bank and Trust. As of Aug. 31, Irwin Bank FSB had $493 million in assets and $441 million in deposits, while Irwin Union Bank and Trust had $2.7 billion in assets and $2.1 billion in deposits. The FDIC said Friday both bank's deposits will be assumed by First Financial Bank in Hamilton, Ohio. First Financial also agreed to purchase essentially all of the two banks' assets. The FDIC and First Financial Bank reached a loss-share agreement covering about $2.5 billion of the two banks' combined assets.
First Bank Failures Announced in Indiana; Kentucky The first bank failures in Indiana and Kentucky were announced, Friday. The Federal Deposit Insurance Corporation announced it was appointed receiver for Louisville, Kentucky-based Irwin Union Bank, F.S.B., and Columbus, Indiana-based Irwin Union Bank and Trust Co., by the Office of Thrift Supervision and the Indiana Department of Financial Instutions, respectively. The two failed banks have a total of 27 bank branches and are subsidiaries of the Columbus, Indiana-based Irwin Financial Corporation. Irwin Union Bank and Trust Co. had a total of $2.7 billion in assets and deposits of $2.1 billion, and Irwin Union Bank had total assets of $493 million and deposits of $441 million as of Aug. 31, of this year.
DEBTORS UPDATE: BANK OF AMERICA RESPONDS!!!
More bank failures are likely A year after the financial crisis first stirred comparisons to the Great Depression, the pace of bank failures is rising. But as the annual count heads toward triple digits for the first time since 1992, finance experts warn that the worst may be yet to come, and also that the toll so far belies the magnitude of the crisis. As of Friday, the Federal Deposit Insurance Corp. had taken over 94 banks in 2009. The failures ranged from the tiny Dwelling House Savings & Loan Association, of Pittsburgh, with $13.4 million in assets, to Colonial BancGroup Inc., of Montgomery, Ala., with $25 billion in assets.
Residents Picket Bank Closure A group of concerned citizens, elected officials, and volunteers held a picket outside the National City Bank branch in the McGuffey Plaza to protest parent company PNC's decision to close that location October 9. "They're supposed to do a public notice, and a lot of people in this area don't even realize that this bank is closing next month," says Annie Gillam, Youngstown First Ward City Councilwoman.
JIM ROGERS... THE PANIC OF 2008 +1 YEAR
The Silver Lining Howard Ruff Gold and silver took an unexpected upward jump, probably triggered by Chinese TV telling 1.3 billion Chinese people to invest in gold and silver, which they could buy from their local bank. This resulted in an orgy of metals buying from the local banks. Gold and silver have been profitable but modest performers over the last year or two, probably because inflation is a big trigger for gold and silver, and society is not entranced with deflation due to the weakening economy, rising unemployment, and consumers increasing savings.
'Gold and Silver in Grand Supercycle' There's an old term most Gold Report readers will know—the wall of worry. As more and more investors and market participants worry about a crash or decline in the stock market, it actually tends to be counterproductive and produces the opposite effect. The market keeps rising on those fears, using fear as a wall to climb higher, as it were. This theory applies only in bull markets, however. . . . . . . . . Typically, the cycle peaks right around the beginning of October, then you see that one- to two-week pullback and then the recoil rally usually into December. I expect that pattern to basically repeat this time around.
Gold and Silver Signs of a Top or Evidence of Strength? This week the price of gold hovered above the $1000 level and managed to close above this important level, a very significant and optimistic development for anyone interested in the precious metals sector. But before we launch into euphoria and speed away, now might be a good time to look back into our rearview mirror. While we’re looking back, here is some interesting research to put things into historical perspective. Back in November, a researcher by the name of James Bianco crunched the numbers adjusted them to inflation and discovered that the government bailout cost more than -are you ready for this? - the Marshall Plan, the Louisiana Purchase, the race to the moon, the S&L crises, the Korean War, The New Deal, the invasion of Iraq, the Vietnam War and NASA combined.
$1,000 Gold – A Bargain Price Many gold gurus including myself have been forecasting $1,000 gold for years. Though U.S. driven debt and deficits have always been the key drivers behind my viewpoint, I can tell you no one foresaw just how big a financial hole the governments around the world would dig for themselves. Given the collapse of numerous financial institutions, various bailouts of the once great and mighty blue chip corporations like General Motors, and the trillions of debt needed to kick start the world economy, gold at $1,000 will be looked at as “cheap” in the years ahead.
All That Glitters Of all the many miseries that man faces on his journey from cradle to grave, few of them can be eased by enlightened central banking. And a credit contraction is not one of them. Japan proved it. After the Japanese market collapsed in 1990, public officials went to work with their characteristic energy and incompetence. They lowered the cost of borrowing to nearly zero. But did consumers take up the money and add to the demand for bread and bicycles? No. They didn’t want to borrow. They wanted to save. They had speculated during the previous bubble years and lost money. Then, with retirement approaching, a penny saved was worth even more to them than a penny earned. They saved more than ever…and the consumer economy sank.
Honest Money Gold and Silver Report: Market Wrap Gold was up for the week, gaining $1.40, to close at $1007.60 (continuous contract). The daily chart shows gold still positively above its recent breakout. The trend remains in place until such time that it isn't. Some consolidation is warranted, and perhaps a test of the breakout. RSI is overbought and turning down. All in all the bulk of the evidence is bullish, although waning slightly.
Real Gold Highs 3 One-thousand Federal Reserve Notes per troy ounce! This past week gold edged over $1000 to close at its highest levels ever witnessed. This much-maligned investment has nearly quadrupled since its secular bull’s humble beginnings in April 2001, a fantastic 297% gain compared to the S&P 500’s pathetic 7% loss over this 8+ year span. With gold being the best-performing major asset of this decade, and now surpassing the once-unthinkable $1000 mark, many investors are growing wary of its future prospects. Is gold too high today? Are $1000+ levels unsustainable? Is gold’s secular bull nearing its end after this metal’s epic run? These first tentative steps over $1000 are really fanning the flames of doubt.
The Real Price of Gold GOLD'S CURRENT price-tag of $1,000 an ounce suggests big doubts over the US Dollar, its domestic economy, and its status as the world's No.1 reserve currency. Or so we guess after 10 years of watching it quadruple from two-decade lows. But gold investors (old, new and everywhere) should note that this decade's bull market in bullion is about much more than the greenback. Here are three ways of judging what you might call the "real price of gold" instead.
The Global Gold Index
Gold vs. the Cost of Living
Gold Above $1,000, Is this Time Different? Many speculators are getting all excited. Gold, above $1000, gee – that must mean the sky is now the limit. If only it was that easy. Above $1000, we’ve been there before. We’re there again. Who knows, maybe THIS TIME things will be different. If we only go back to the start of the latest bull move it does look like we have broken above previous highs into new territory. Of course we all know that the all time high (at least by modern standards) was made in mid-March of 2008 at the $1034 level, so we’re not quite there yet.
It's Thirst For Gold, Oil, And Risk That's Killing The Dollar Everyone's talking about how the dollar's been getting smacked around, and yes it's within a hair of its lows for the year. Is this really a sign, as some would say, that the market is predicting massive inflation or even a dollar collapse? Please. Look around. Trade is picking up, and the world is hungry for oil, gold, and more risk. To buy those things, you need to take your dollars to the currency exchange shop, and get them converted into other currencies. It's why the Canadian dollar is doing so well, sitting nearly at its highs of the year.
Gold steady, halts retreat from 18-mth high Gold steadied on Friday as light buying emerged on dips toward $1,000 per ounce, after it declined $12 in the previous session from an 18-month high. Despite some technical indicators suggesting the market may be overbought, sentiment remained firm, analysts say, and many market participants still expect gold to break through its record high of $1,030.80 an ounce.
Gold and U.S. Dollar Inverse Relationship Trend Implications Gold was up for the week, gaining $1.40, to close at $1007.60 (continuous contract). The daily chart shows gold still positively above its recent breakout. The trend remains in place until such time that it isn’t. Some consolidation is warranted, and perhaps a test of the breakout. RSI is overbought and turning down. All in all the bulk of the evidence is bullish, although waning slightly.
Stop the Spending vote Peter Schiff
IMF Board Approves Sale of 403.3 Metric Tons of Gold The International Monetary Fund’s executive board approved gold sales of 403.3 metric tons valued at about $13 billion and pledged to avoid disrupting the market with the transactions. The IMF said it would “stand ready to sell gold directly to central banks.” The sales could also be conducted in the open market in a “phased manner” over time, the Washington- based lender said in an e-mailed statement today. “These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market,” IMF Managing Director Dominique Strauss-Kahn said in the statement.
IMF sales will never touch the gold market, but be absorbed by central banks seeking to diversify out of dollars.
IMF sales in the 1970s that had a market relationship via auction tranche sales took place in the conditions of a rising market.
IMF sales in the 1970s were credited with providing the means for major interests to enter the market in the 1970s by buying singular blocks of physical gold at one net price.
Gold is due a correction – but then it will hit $1,400 Gold closed last week above $1,000 an ounce, its highest ever weekly close. Yet who was reporting this fact in the Sunday papers? I was reading The Telegraph, whose financial coverage is generally ahead of the curve compared to the other broadsheets. I was delighted to see that, far from being on the front pages, gold's milestone got barely a passing mention.
The vast over-issuance of the U.S. $ internationally, has debauched its international value. In time this will lead to hugely falling buying power and translate into very high prices for the resources of the world. . . .
The rise of China is underestimated. In a relatively short period of time the Chinese presence in the global economy will be so great that it will outgrow the U.S. economy. . . .
HSBC bids farewell to dollar supremacy The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC. "The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief. "The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said
Dollar Falls to One-Year Low as Economy Spurs High-Yield Demand The dollar dropped to the lowest level in a year versus the euro as Federal Reserve Chairman Ben S. Bernanke’s declaration that the recession is likely over led investors to sell the U.S. currency and buy riskier assets. Sterling fell this week against all of its 16 most-traded counterparts tracked by Bloomberg on revived concern banking losses will stall the U.K.’s economic recovery. The Fed will likely keep its target lending rate at near zero next week and extend the end date of its $1.45 trillion program to buy securities, a strategy known as quantitative easing.
Recovery, Dollar Buoy Commodity Prices, Morgan Stanley Says Commodity prices may be supported in the medium-to-long term on a recovery in the global economy, a weak dollar and investment demand, Wang Qing, chief greater China economist at Morgan Stanley Asia, said today. The recovery, while “tepid” at the moment, may gain momentum through 2013 and bolster energy and metals, which are closely related to growth, Wang said at a forum in Shanghai.
US Economy Facing Death by a Thousand Cuts Roubini
"On March 5th with the U.S. Dollar Index at a multiyear high of 89, we wrote an article entitled, "The World is Awashed with Dollars" and said, "It's a real shame that those who lost most of their money in the stock market and Real Estate bubbles, and are now finally selling out after these markets have already collapsed, are positioning themselves to get wiped out all over again through massive inflation."
BlackRock's Fink Says Obama's Loan Rules Threaten the U.S. Mortgage Market BlackRock Inc. Chairman Laurence Fink said Obama administration programs to help homeowners stave off foreclosure may hinder the recovery of the mortgage market while benefiting banks that own second loans on the properties.
FHA Tightens Standards, Says Reserves Are Sufficient The Federal Housing Administration, the agency that insured more than 20 percent of U.S. single- family mortgages, said it has sufficient capital to withstand losses and will tighten credit standards to better manage risk. A chief risk officer will also be appointed to help coordinate the agency’s programs, and lenders will be required to have “skin in the game,” the FHA said in a statement today.
FHA Mortgage Insurance Reserves to Fall Below 2% The Federal Housing Administration, the government agency that insures more than 20 percent of U.S. single-family mortgages, said its reserves will fall below congressional requirements as home prices decline. The FHA isn’t in danger of failing, and the mortgage insurance fund will likely recover on its own within two years without any policy changes, Commissioner David H. Stevens told reporters on a conference call today. FHA is required by Congress to maintain a loan reserve ratio of at least 2 percent.
FHA bailout a sure thing
Housing Agency's Cash Reserves Will Drop Below Requirement The Federal Housing Administration has been hit so hard by the mortgage crisis that for the first time, the agency's cash reserves will drop below the minimum level set by Congress, FHA officials said. The FHA guaranteed about a quarter of all U.S. home loans made this year, and the reserves are meant as a financial cushion to ensure that the agency can cover unexpected losses. "It's very serious," FHA Commissioner David H. Stevens said in an interview. "There's nothing more serious that we're addressing right now, outside the housing crisis in general, than this issue."
The Housing Tsunami's Second Wave Spokesmen for the Obama Administration and the Wall Street establishment refer to the slight up tic in lower-priced housing prices and existing home sales as a positive sign that we're close to a bottom. Why is it, then, that housing prices in the mid to high-end range are still crashing? Indeed, if you close your eyes and listen to the happy talk, you could be swayed into believing that the massive credit losses from housing are coming to an end and economic recovery is finally here. But before singing the chorus to "happy days are here again", you'll need to open your eyes and take a look at some facts and their relationship to mortgage defaults.
We're All Going to Pay For the Housing Mess The citizens of the United States will be paying to clean up the collapse of the real estate bubble. It doesn't matter if one participated in the housing boom or not - we are all going to pay and pay dearly for this mess. Renters, owners and speculators are all equally on the hook if they are taxpayers (did you know that 40% of people living in the U.S. pay or owe no federal income tax?).
Uncle Sam Bets the House on Mortgages More than half of U.S. residential mortgages are being made by just three large banks. It is a stunning change, but is it good for the housing market, and to what extent will it boost profits over the long term for this elite trio: Wells Fargo, Bank of America and J.P. Morgan Chase? Right now, housing remains on government life support. Treasury-backed entities are guaranteeing about 85% of new mortgages, while the Fed buys 80% of the securities into which these taxpayer-backed mortgages are packaged.
N.Y. Insurance Regulator Suggests Limiting Moody’s as Rater New York state’s insurance regulator suggested Moody’s Investors Service should have its authorization to rate insurers’ holdings scaled back after the firm declined to attend a public hearing set for next week. “This is the thing that forces one to ask questions about the role that a company like that can play in our regulatory system,” Hampton Finer, deputy superintendent and chief economist at the New York Insurance Department, said yesterday in a phone interview. “We think there should be discussion about whether Moody’s will have its authorization status going forward or having it curtailed in some fashion.”
Fed Preparing to Step Up Regulation of Banks' Pay Goal Is to End Unwise Incentives The Federal Reserve is moving to restrict compensation practices at the nation's banks, expanding its regulatory reach to oversee how tens of thousands of bank employees ranging from chief executives to loan officers are paid. The Fed, acting under its existing powers as a bank regulator, aims to curtail pay practices that can encourage bank employees to take the kinds of irresponsible risks that may have led to the financial crisis. It is not seeking to set caps on the amount any individual employee can be paid, said sources familiar with the plans.
The regulators should be in jail Jim Rogers
Is Wells Fargo Making AIG’s Suicidal Mistake? Wells Fargo may be making the same mistake that destroyed AIG, turning the insurance company into a seemingly endless blackhole of losses. The San Francisco bank has responded with irritation to media reports and questions from research analysts about its derivatives exposure. It insists it has a firm handle on the losses it could take from credit default swaps Wachovia sold and it inherited.
10 Big Companies That Are Veering Toward Bankruptcy Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy. A new report by Audit Integrity identifies some high-profile names "that have the highest probability of declaring bankruptcy among publicly traded firms."
Academic Economists Lead Governments to the Edge of the Abyss 99.9% of academic economists living in ivory towers lost in world of their own formulae's and theories of what should happen and what could not happen not only did not see the crisis coming but far more dangerously led the government and central bank policy makers down a long winding garden path towards the edge of the financial and economic abyss. It was only after all of the economic theory was binned i.e. that which the academics had worked on and spouted for decades was financial armageddon avoided.
Priceless: How The Federal Reserve Bought The Economics Profession The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
Rick Santelli, The Banks should not have been saved
G20 Pittsburgh: Objectives and actions The G20 group of nations are meeting for the third time since the financial crisis in the Pittsburgh summit with regulation, stimulus plans and trade reform again on the agenda. Below we examine how G20 thinking has changed on the major topics, and how far the individual countries have followed their own prescriptions for reform.
War of Words on Banker Pay May Melt Into Accord at G-20 Talk Global leaders meeting at the Group of 20 summit in Pittsburgh next week are moving toward a compromise on compensation rules that fall short of the political rhetoric branding banker pay a worldwide disgrace. Pay caps, once pushed by French President Nicolas Sarkozy, were excluded from recommendations made by finance officials this month. European leaders now may be willing to endorse linking bonuses to a bank’s capital level, moving closer to a U.S. position that avoids specific limits.
Art Cashin, "We are not out of the woods"
Pittsburgh protesters demand G20 do more for jobs Protesters called on global leaders to do more to create jobs for the growing number of unemployed in the United States and globally at a peaceful march in Pittsburgh on Sunday. Leaders of 19 leading developed and developing economies and the European Union meet in the western Pennsylvania city on Thursday and Friday for a G20 meeting to discuss how to improve financial market reform to avoid another economic meltdown like the one that rocked the global economy a year ago.
Obama faces leadership test at U.N., G20 U.S. President Barack Obama begins his biggest week yet on the world stage, facing pressure for results on an agenda of rekindling Middle East peace talks, tackling climate change and reshaping financial regulations. Obama's global starpower remains strong but doubts are emerging about what he can deliver in a week in which he will make his United Nations debut and host a financial summit.
G20 should address global challenges Leaders of the Group of 20 nations meeting in the US city of Pittsburgh this week should set an ambitious agenda for “responsible globalisation” that links efforts to promote more balanced growth with financial stability, development and climate change, according to Robert Zoellick, World Bank president. “The challenge for the G20 is how do you sustain the momentum and co-operation they were able to achieve when staring into the abyss at the time of the London summit as the crisis wanes?” Mr Zoellick told the Financial Times.
Volcker Criticizes Obama Plan to Expand Fed’s Role Paul Volcker, a former Federal Reserve chairman and now a outside economic adviser to President Barack Obama, criticized the administration’s plan to give the Fed authority to supervise “systemically important” financial firms. “I don’t know what systemically important institutions are,” Volcker said. “But I’m sure that if you picked them out, people will assume they’re going to be saved, that they’re too big to fail.”
Treasuries Fall as Investors Bet on Recovery; Supply, Fed Ahead Treasury 10-year notes posted their first loss since the start of August as reports showed the economy is recovering from its worst slump in seven decades and the U.S. prepared to sell $112 billion of notes. Ten-year note yields increased the most in six weeks as retail sales and industrial rose more than forecast in August. Investors speculated the Federal Reserve will discuss rates and its exit strategy from programs intended to revive the economy at its Sept. 22-23 meeting.
Meredith Whitney: Wall Street's First Lady
The Fed’s Secret Money and the Media Cover-Up HR 1207 is a bill, first sponsored by Congressman Ron Paul in the U.S. House of Representatives, that will audit the Federal Reserve. The Federal Reseve has never been audited in it’s 96 year history. Contrary to popular belief, the Fed is not an arm of the U.S. Government but a subcontractor for monetary policy. It is the Fed that also produces the money in your pocket, thus the term Federal Reserve Note. The Bill, as of September 16, has 289 co-sponsors in Congress. If the Bill is signed into law, the Fed will be forced to open its books and show how clandestine policy decisions are made.
Fed not acting like there's a recovery The economy is showing signs that it is emerging out of a deep recession, but don't expect the Fed to change course quite yet. Federal Reserve Chairman Ben Bernanke has said that the recession is "very likely over," but the Fed isn't acting like we're in a recovery. Economists widely believe the central bank will keep interest rates between 0% and 0.25% at the conclusion of its two-day meeting next Wednesday. The Fed is also expected to say very little about its plans to wind down more than a trillion dollars in lending and bailout programs, and it will likely stay away from any overly enthusiastic language about the economic outlook.
You're All Wrong, There's No V-Shaped Recovery Coming Well, well.It's suddenly become very hip to believe in a V-shaped recovery, and to slam the pessimists for not knowing their history. As Jim Grant argued yesterday in the Wall Street Journal, the severity of the slump predicts the severity of the recovery -- it's just like physics! But economics isn't physics. And don't worry about not knowing your history, because economics isn't history either. Here's why we're not in for a v-shaped recovery.
The Recovery Will Sputter In 2010 Honeywell's ex-CEO Larry Bossidy isn't seeing any signs of a robust recovery. While GDP will rebound and the economy is getting better, he expects it to settle to an "anemic" growth level of just 2-3% in 2010 since unemployment will still be very high. His outlook is similar to that of Capital Economics, who see US GDP growth of just 3% in 2010, followed by an even slower 1.5% in 2011 once the effects of US stimulus wear off.
Lehman Brothers Revisited By: Peter Schiff As we pass the one year anniversary of the fall of Lehman Brothers, journalists, politicians and market analysts have seized on the occasion to offer seemingly sober assessments of what went wrong and what went right in the lead up and aftermath of the biggest financial event since Black Tuesday. The most popular storyline offered by these Monday morning quarterbacks is that the mistaken decision to allow Lehman to fail resulted from the Bush Administration's misplaced faith in the free markets. In this telling, the real crises began in the days following the Lehman bankruptcy, which unleashed a financial panic that would have caused complete economic collapse – if not for the subsequent federal intervention.
Jim Rogers and Lord Lamont one year after Lehman
Obama Sees Signs Economy to Grow While Unemployment Stays High President Barack Obama said the U.S., while showing many signs of emerging from recession, will probably face high unemployment for some time. “Probably the jobs picture is not going to improve considerably, and it could even get a little bit worse, over the next couple of months,” Obama said today in an interview on CNN’s “State of the Union” program. “We lost so many jobs that making up for those that have already been lost is going to require really high growth rates.”
California's unemployment rate hits 12.2% in August The rate rose from 11.9% in July, setting a record, but the pace of job losses slowed. California's jobless rate set a fresh postwar high in August, rising to 12.2% from 11.9% in July and putting more pressure on the state's tattered unemployment insurance fund. Though the state may be in the early stages of an economic rebound, the latest figures underscore what many economists fear: There is no obvious engine of job growth to put California's more than 2.2 million unemployed residents back to work quickly.
America on a collision course There's a standard scene in old movies about young hotheads behind the wheels of fast cars. It's the scene where the two lead actors play chicken. Each wants to prove that he's the one who won't back down. So they aim their cars at each other head-on and step on the gas, wanting to find out who will be the first to swerve. The climax is almost always disastrous. The moral of the story is that the carnage could have been avoided. Which brings us to our current ugly political atmosphere.
Obama defends insurance requirement During a round of five Sunday-morning talk-show appearances, President Obama defended a health reform proposal that would require all Americans to carry health insurance, and rejected the idea that his critics' anger over his plans is based on race. Mr. Obama, who opposed the insurance mandate during the presidential election, now finds himself defending the measure against lawmakers who worry that the exemptions written into the requirement won't relieve enough poor Americans of the cost.
Senators Plan Effort to Amend Baucus Plan on Public Option, Tax Baucus Health Plan Faces Scrutiny by Senate Panel Seeking 564 Amendments Senate Finance Committee members signaled an aggressive effort to reshape health-care legislation proposed by Chairman Max Baucus, drafting 564 amendments for consideration when the panel meets this week. Members of both parties want to make a host of changes to legislation designed to lower costs and expand coverage to the uninsured that Baucus introduced last week. They include expanding tax subsidies for low-income people to buy coverage, eliminating a proposed $215 billion tax on high-value health plans, and setting up a government-run insurance program to compete with private industry.
Nassim Taleb, Overtreatment reduces life expectancy
Homeowners who 'strategically default' on loans a growing problem A study shows that people who abruptly and intentionally abandon their mortgages often have high credit scores, in stark contrast with most financially distressed borrowers. Reporting from Washington - Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores? Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers.
Obama: healthcare won't hike middle class taxes President Barack Obama insisted he can overhaul the U.S. healthcare system without raising taxes for anyone but the wealthiest Americans, in a media barrage on Sunday as he sought to take control of the debate on his top domestic policy priority. In interviews with five Sunday television talk shows taped on Friday, he said his goals to expand healthcare and rein in costs would not lead to middle-class tax increases, and that he and his fellow Democrats are determined to pass the legislation despite a lack of Republican support.
Senator Brown Says Health Plan to Pass With Republican Support Congress will pass a health-care overhaul that will differ from legislation proposed by Finance Committee Chairman Max Baucus and some Republicans will back it, Democratic Senator Sherrod Brown predicted. “It is going to be the plan much more similar to the three House bills” or a version approved by the Senate health committee, which include a government-run insurance program, Brown, a member of the health panel, said in an interview with Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
House backs bill to overhaul student loan program The House voted Thursday in favor of the biggest overhaul of college aid programs since their creation in the 1960s — a bill to oust private lenders from the student loan business and put the government in charge. The vote was 253-171 in favor of a bill that fulfills nearly all of President Obama's campaign promises for higher education: The measure ends subsidies for private lenders, boosts Pell Grants for needy students and creates a grant program to improve community colleges, among other things. "These are reforms that have been talked about for years, but they're always blocked by special interests and their lobbyists," Obama said Thursday during a rally at the University of Maryland.
High Jobless Rates Could Last Years, O.E.C.D. Says The current downturn may keep jobless rates in developed economies elevated for longer than was the case after previous recessions, in part because conditions got so bad so quickly, the Organization for Economic Cooperation and Development reported Wednesday. In such an event, disaffected workers, particularly in the white-collar sector and among the young, will find themselves excluded from the market, damaging economic dynamism, experts and unions warned.
Unemployed -- without a lifeline In July, CNNMoney.com told the stories of 4 out-of-work Americans who had just lost their unemployment benefits. Here's where they are today. I'd run out of jobless insurance for the second time in a few years last October. I was first laid off in 2006, and it took me until February 2008 to find another job in technical sales -- it lasted only two months. When I turned 63, I applied for Social Security. Every penny of it goes to house payments. It would have been ideal to wait until I was 65, but that wasn't an option. Since July I still have not found work, and I've had to put my job search aside as I have a bad shoulder. Back in 1969, I had surgery on that shoulder to fix a recurring dislocation problem. The procedure they used back then is no longer in use because about 35 years down the road, you end up losing all of your cartilage in that shoulder joint.
Detroit swap: Auto plants for fashion showrooms Detroit has skilled manufactures and a unique industrial design sensibility -- strengths city planners are tapping as they try jumpstart a local fashion industry. Detroit's auto industry trained generations of workers in design and manufacturing. As that business fades and its jobs disappear, city planners are hoping to redeploy the city's creative minds and craftsmen toward a new and growing field: fashion. They may seem like wildly different industries, but cars and clothes have elements in common, Detroit fashion insiders say. The city's industrial history gives it a unique design sensibility, and its manufacturing capabilities play well to a growing demand for garments that are made in America.
White House quietly lobbies Senate as climate bill stalls Climate-change legislation has stalled on Capitol Hill, but the White House's unofficial "Green Cabinet" is quietly trying to revive the effort by lobbying dozens of senators. President Obama has dispatched Energy Secretary Steven Chu, Interior Secretary Ken Salazar and Environmental Protection Agency Administrator Lisa P. Jackson to Capitol Hill. White House aides said that they and other executive branch staffers, such as climate-change czar Carol Browner, have met with "dozens" of senators.
Peter Schiff making bid for Dodd's seat
Debt deflation laboratory of the Baltics Property prices in Estonia's Hanseatic capital of Tallinn have fallen by 59pc from their peak in the Baltic boom, a remarkable state of affairs for an EU country nestled against Russia on the most dangerous fault line in Europe. Cost per sq.m has dropped from €1,611 (£1,455) to €669 since April 2007, according to Ober-Haus Real Estate Advisors. Swedbank says up to 30pc of its mortgages in Estonia are in negative equity. Recent loans are in euros – not the local kroon. Professor Ülo Ennuste from Tallinn University says the private net wealth of Estonia's people has fallen below zero. I know of no other country in the world where this has occurred, though Latvia may be deeper in hock. Estonia's foreign debt is 116pc of GDP, second highest in Eastern Europe.
The Euro: why Britain is still better off out When the historical dust clears, Gordon Brown may find that his greatest achievement was to keep Britain out of the euro and preserve the fire-fighting powers of the Bank of England. Had we joined monetary union in 1999, interest rates set by the European Central Bank would have been near 2 per cent during the mid-years of this decade. This would have been like pouring petrol on the housing fire. The credit bubble would have been even worse. Once the bubble burst, the UK authorities would have been left with few instruments to cushion the downturn and manage the highest household debt burden in history. Britain would now be facing the sort of debt-deflation spiral under way in Ireland and Spain.
Russia Will Contain Deficit by Calling In Bank Loans, UBS Says Russia will curb its budget deficit as the central bank calls in emergency loans and hands the money back to the government, reducing pressure on the ruble and reining in inflation, according to UBS AG. “There’s still plenty of government money in the banks,” Clemens Grafe, chief economist at UBS in Moscow, said in an interview. “That’s basically how they get the rubles. They don’t have to print them, they just take the money back from the banks.”
Barack Obama ready to slash US nuclear arsenal Pentagon told to map out radical cuts as president prepares to chair UN talks Barack Obama has demanded the Pentagon conduct a radical review of US nuclear weapons doctrine to prepare the way for deep cuts in the country's arsenal, the Guardian can reveal. Obama has rejected the Pentagon's first draft of the "nuclear posture review" as being too timid, and has called for a range of more far-reaching options consistent with his goal of eventually abolishing nuclear weapons altogether, according to European officials. Those options include:
Reconfiguring the US nuclear force to allow for an arsenal measured in hundreds rather than thousands of deployed strategic warheads.
Redrafting nuclear doctrine to narrow the range of conditions under which the US would use nuclear weapons.
Exploring ways of guaranteeing the future reliability of nuclear weapons without testing or producing a new generation of warheads.
Obama to meet Netanyahu and Abbas US president seeks to restart peace talks Barack Obama, US president, will host a meeting between Israeli and Palestinian leaders in New York on Tuesday, seeking to break a Middle East stalemate after a troubled week for US diplomacy in the region. A weekend statement from the White House that Mr Obama would chair a joint session with Benjamin Netanyahu, the Israeli prime minister, and Mahmoud Abbas, the Palestinian Authority president, came after the failure of both sides to budge on the issue of Israeli settlement activity had threatened to scupper the encounter.
Obama Missile Plan Wins Russia Praise, No Iran Shift President Barack Obama’s decision to scrap a U.S. missile defense system in eastern Europe won praise from Russian leaders. What it didn’t win was a sign that they will cooperate to thwart Iran’s nuclear program. Obama stressed that his reversal of President George W. Bush’s plan to place radar and missile interceptors in the Czech Republic and Poland reflects a new assessment of Iran’s missile capabilities, not a response to Russian opposition.
National security adviser says Iran advancing in making medium-range missiles White House National Security Adviser James L. Jones says President Obama's decision to abandon a long-range missile defense site in Eastern Europe was driven by U.S. intelligence concerns that Iran is further along than previously thought in developing medium-range missiles that could strike Western Europe and the Middle East with nuclear warheads.
Russia considers nixing missile countermove Indicates defense, Iran concessions after U.S. policy switch Russia said Saturday it will scrap a plan to deploy missiles near Poland since Washington has dumped a planned missile shield in Eastern Europe. It also harshly criticized Iran's president for new comments denying the Holocaust. Neither move, however, represented ceding any significant ground. A plan to place Iskander missiles close to the Polish border was merely a threat. And while the Kremlin has previously criticized Tehran for questioning the reality of the Holocaust, Russian leaders have refused to back a Western push for tougher sanctions against Iran.
Money As Debt (1 of 5) Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.
Wells Fargo's Ticking Time Bomb: Credit Default Swaps On Commercial Mortgages Outside experts hired by Wells Fargo to pour through its books are reportedly shocked at the bank’s exposure to derivatives trades it took on when it acquired Wachovia may trigger huge losses at the bank, Teri Buhl reports at BankImplode.com It appears that Wachovia wrote credit default swaps on the junior tranches of commercial mortgage backed securities it was selling, which means that it is on the hook for losses in the riskiest CMBS tranches it sold. Wells itself might not even know the size of its exposure, Buhl reports.
Bank of America seeks foreclosure on two Miami projects Bank of America filed separate foreclosure cases against a developer who had two residential projects south of the Miami Metrozoo. Estate Homes Inc. was hit with an $8 million foreclosure lawsuit over its Estate Mansions, while Monteallegre and Urbanscapes face an $8.7 million complaint over their Sofia Estates. Both lawsuits were filed by BofA on Sept. 9 and named President Robert Vinas Jr. and managing members Peter Duarte and Grover Hubley.
Exclusive – Wells Fargo’s Commercial Portfolio is a ticking time bomb In order to sort through the disaster that is Wells Fargo’s (quote: WFC) commercial loan portfolio, the bank has hired help from outside experts to pour over the books… and they are shocked with what they are seeing. Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank. Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few years of its existence that it underwrote loans with extremely shoddy standards and paid traders to take them off their books.
"Option" mortgages to explode, officials warn The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset. "Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.
Don’t be surprised to see more bank failures Closures have been relatively slow, but FDIC is accelerating shutdowns By most measures, the past year has been the worst financial crisis in a lifetime. But not by one significant measure: Bank failures. The Federal Deposit Insurance Corp. has closed 92 banks so far in 2009, after seizing 25 ailing banks last year. By contrast, during the last banking crisis, 381 banks were seized in 1990, 268 in 1991, and 179 in 1992. Still, the pace of bank failures is accelerating. In recent days, three banks failed, including Illinois-based Corus Bank, doomed by $3.2 billion in construction loans, mostly to condominium developers.
Irwin Financial admits outlook dire Shares of Irwin Financial Corp. plummeted this morning after the banking company disclosed that regulators have ordered it to bolster its capital by the end of the month to levels “it has no realistic prospect of achieving.” The acknowledgement raises the prospect that Columbus-based Irwin will become the first Hoosier bank to be seized by regulators since the banking industry tanked last year. Nationally, more than 100 banks have failed since the start of 2008.
Peter Schiff Launches Senate Run Peter Schiff, the broker, author and financial pundit from Weston who has already taken in more than $1 million in campaign contributions and hired staff, confirmed on national TV this morning what has been widely expected for weeks: He is running for U.S. Senate.
Peter Schiff formally announces his candidacy for U.S. Senate
Gold to $3,000? The Gold Rush of 2009 likely hasn't come as a complete surprise to too many investors. After all, gold has been proven time and time again to be a "safe haven" investment that rises during uncertain economic times (such as the last two years), and questions about the dollar's future as the world's reserve currency (along with other factors placing downward pressure on the greenback) have led many to reconsider their strategic holdings. But the length and degree of the run-up in gold prices certainly caught a number of investors (myself included) off guard. Brett Arends poses a question I would have laughed at two years ago, but now take quite seriously: is it realistic to think gold could really go to $3,000?
Gold acting as a currency And it's being jumped on by a speculator bash. But, gold has good reasons to rally. Caution is warranted because speculators are involved. Longer term: The economic statistics reflect a bounce back from the cliff fall of last Winter for the Western and emerging economies. But that is not likely to last into later 09. If things again turn downward, there will be new stimulus packages by the US for sure, and likely by others. Gold is reflecting that expectation- the $trillions in stimulus. In fact, the only market that has convincingly held steady since 07 is gold, all the other basic commodities even oil nowhere near their highs. I might also point out that we called a gold bottom back in late Nov 08... A move from safety into stocks generally is causing the USD to fall and it's below 77 on the USDX as we speak. But gold is not following that script, ie people leaving flight to safety is usually gold bearish, but gold is operating more like a currency at this point and reacting to the world stimulus packages. Even if markets turn around and start to crash again like last year and 07, gold has held steady after its initial reactions to those sell offs, and recovered soon after. Gold is one of the safest bets out there if you are mostly concerned about saving your wealth. (And gold stocks; silver too but it's more volatile).
$1,600 gold likely if oil hits $100 - Gold Fields It helps that the long term relationship between oil and the yellow metal is currently bolstered by the declining quantity and quality of new gold exploration discoveries The price of gold could hit $1,600 an ounce if crude oil goes to $100 a barrel in the next six to 18 months, the chief executive of South Africa's Gold Fields, the world's No. 4 gold producer, said on Wednesday. "Some people say oil is going up to $100 a barrel in the next six to 18 months. If that's true, and if you look at the long-term relationship between gold and oil, you should find that gold would go to $1,500 to $1,600," Gold Fields CEO Nick Holland told Reuters in an interview during the Denver Gold Forum.
Could China Push Gold to the Moon? Inside sourceshave recently confirmed the Chinese government is actively promoting gold and silver investment to the masses. Some analysts now contend that China can no longer afford to let the gold or silver price slump. The rationale behind that contention is that with the Chinese government now telling the general populace to buy precious metals, it would be highly problematic should gold and silver subsequently take a nose dive. In many cases, what a government wants and what ultimately occurs can be wildly different, due to unintended consequences rarely foreseen by officialdom, and because once the masses get it into their heads to break one way or another, government’s desires are largely ignored. “You shall not smoke marijuana,” says the government. “Roll me another,” says John Q. Public.
Why Gold Is a Viable Alternative to Fiat Currencies Gold bullion has risen by $105 (11.6%) since its low of July 9, breaching $1,000 a few days ago and now trading at levels last seen at an intraday high of $1,033 in March 2008. Gold bulls argue that the yellow metal stands to gain from rising inflation expectations as governments engineer the biggest asset price reflation in human history. On the other hand, John Mauldin (Thoughts from the Frontline) is of the opinion the rise in gold does not really tell us anything about the future of inflation. It is his belief that if the Fed were to withdraw from the current economic battle, the forces of deflation would be felt in short order. Mauldin contends the answer to the question "Will we have inflation in our future?" is "You better hope so!" But gold may not be a bad performer in a deflationary environment either as a store of value as the economy sinks into the abyss.
Gold Surging in All Major Currencies Gold: Gold rose above the $1,020/oz barrier in late trading in Asia and rose to new 18 months highs at $1,023.60/oz this morning. Despite most analysts calling for a correction, there is buying at these levels and the market appears well supported. Gold's rise is again in all major currencies and not just in dollar and euro. Gold is again knocking on the €700/oz mark. British pound weakness has seen sterling gold rise from £570/oz to over £615/oz in the last month, as sterling has again come under pressure. This contradicts the oft repeated misconception that the falling dollar makes gold cheaper for holders of other currencies.
Gold Can Add More Glitter to Your Portfolio These days, yellow metal gold has become the most popular choice for investors due to its recent upside movements. The fall in dollar value against major currencies, along with ambiguity over further upside in equity markets, is convincing investors to park their money in gold as a safe haven for buying. Regarding price movements in 2009, with the favorable fundamental situations, it has been trading northward so far. We know that a cocktail of factors (injection of stimulus packages, excessive printing of paper money, widening trade deficit, rising debt, gold mine supply at a historic low, buying by central banks, historic interest rate cuts, deteriorating US economy, shrinking trade activities etc.) are likely to keep gold in an uptrend going forward.
Peter Schiff Discusses Senate Run - 9/17/09 CNBC Fast Money
The Flight To Quality Lands On Gold data says economy is weak, global capital and public money to reposition themselves next year, stock market, treasury market making bubbles currently, leverage insanity still rules lenders, gold to safeguard your wealth and sleep at night, energy estimates powered back Almost all important, pertinent data reflects continued weakness in the economy, especially retail sales and unemployment. There are small signs of inflation in spite of bogus government figures. In the flight to quality we see stronger gold, silver and commodities despite heavy market manipulation by the government. After more then two years of government and Fed intervention in the economy, only banks, Wall Street and insurance companies have been bailed out. The first part of the Stimulus package was unsuccessful, because the funds were not spent, they were used to eliminate debt. We do not think the next stimulus wave will be any more successful. The economy should now move sideways for a year with slight GDP gains and a slowing in job losses. There will be no dramatic changes unless banks start lending in a bigger way or there is another $2 trillion stimulus package.
The Stealth Gold Bull Market is Back One trouble with Americans is that we think we are the center of the world. We do have about 5% of the world's population, and use up about 25% of the resources. That's mostly a function of being significantly "wealthier" than the rest of the world. But that's mostly paper wealth. Will it last? Only if we buy at least 25% of the world's silver and gold. Do we? Not in gold, but we do in silver! Let's get to the facts. Worldwide, the world buys about 80 times as much gold as silver, for investment. The world annually purchases gold worth $80 billion (about 80 million oz., or 3500 tonnes). If American-led Central bank selling did not help meet demand and add to mine supply, then the gold price would go up faster than it already has. Remember, central bank selling is a manipulative and unsustainable supply source.
What Price Suits Gold? Leading Gold Bugs See Prices Tripling Someday, But Others Say its Current Level Is About Right Gold bullion just crossed $1,000 an ounce. But what's it really worth? Bud Conrad, chief economist at Casey Research and a leading gold bug, says it's worth far more. Based on long-term analyses of macroeconomic trends such as the money supply, he says, "a lot of ratios… get you into the $4,000 to $5,000 level without any problem. Congressman and former presidential candidate Ron Paul also a major gold bug likewise sees the price of bullion rising from today's levels. "It's trebled in the last ten years," he says. "There's no reason it can't triple in another ten years, that wouldn't surprise me." Congressman Paul says the government will erode the dollar's purchasing power, so gold will gain value however, he says this is a political opinion, and not investing advice. Is it realistic to think gold could really go to $3,000?
Warning: Gold Breakout...Next Week Before you send me scathing emails and put me onto the long list of precious metal bears let me say I remain a huge bull in regards to the precious metals and more specifically on gold and silver since they have monetary meaning. I am even more bullish on silver than gold because of it’s increasing industrial demand. I am finishing up an article on that so stay tuned next week. The message I want to portray today is the fact that tomorrow is quadruple witching day where contracts for stock index futures, stock index options, stock options and single stock futures expire. Too many times in the past bullish investors have been sucked in at the last minute and bought bullish contracts only to lose their shirt over the next few days as the price reverses quickly and takes their contracts out of the money allowing the contract sellers to pocket the full premium.
Four Major Developments All Gold Investors Should Watch Gold has finally breached the $1,000 level and looks like it might hold the line on this latest attempt. I anticipate that this psychologically-important level will turn from resistance into support as gold makes new highs towards the end of 2009. If I am correct, right now is the last chance investors will have to purchase gold for under $1,000/ounce. A series of new and significant events have unfolded over the past few weeks that have influenced the precious metals markets and will likely continue to support gold's price advance. If you are a gold investor, it is important that you understand these events and the impact they are likely to have on your investments.
Say Good-bye to your job CHRIS DODD! Peter Schiff will run for Connecticut Senate!
China takes control of gold prices China is becoming world’s super power in terms of economy and its power to control the market. Recently Cheng Siwei, former vice-chairman of the standing committee of the Chinese Communist Party, criticized the way US is printing money to beat economic downturn and said if the US continues to do so, China has to change its strategy of holding foreign reserves in US dollar. That is why China is slowly shifting to gold and other currencies. Gold is definitely an alternative, said Cheng, “but when we buy, the price goes up. We have to do it carefully so as not to stimulate the market”.
Gold dips after climbing to new 18-month high Gold futures finished lower on Thursday, retreating after hitting a fresh 18-month high, as the dollar gained back some ground after slumping to its lowest level this year. Gold for December delivery, the most active contract, fell $6.70, or 0.6% to finish at $1,013.50 an ounce. In Asian trade, it climbed as high as $1,025.80 an ounce, a fresh 18-month high. The front-month but lightly traded September contract fell $6.60, or 0.6%, to finish at $1,012.30 an ounce. The record intraday price for a front-month gold contract is $1,033.90 an ounce, set on March 17, 2008. The SPDR Gold Trust (GLD 99.43, +0.09, +0.09%) , the biggest gold exchange-traded fund, fell 0.6%. Analysts said a bleak outlook for the U.S. dollar earlier helped gold climb to an 18-month high.
Barrick Gold Ripe for Bear Raid Burn, Baby, Burn !!! Could it be that one response to the Chinese shot across the bow of the corrupted and leaky USS Derivative ship at sea is the announcement that Barrick Gold to cover their entire hedge book… again? Maybe! They covered them all in 2007, didn’t they? They said they did! This is turning out to be an event every two years. Maybe in 2011 they will announce cover and closure of their entire hedge book again. Last time, the key words in the fine print were closure of all hedged gold positions from operating mines. That meant they were willing to lose billion$ in shareholder equity on all mines not yet open, but with ongoing gold price exposure. No wonder they installed a new CEO recently. They have burned through over 20 years of profit in this hedge book strategy, useful for the USGovt but disastrous for shareholders. The ongoing dilution of their stock will continue for a few years more. The next big question is where will Barrick purchase the gold to fulfill the contracts and retire them with metal delivery.
A golden age for silver coming? Silver has been hitting 12-month highs but where does it go from here? With gold making firm friends with the $1,000 level many investors have salivated over for some time, it is unsurprising that attention has also turned to its more volatile friend, silver - especially when it too is hitting 12 month highs. But, the question is, what is the major driver for this metal at the moment, given that it serves two masters - "investors" looking to keep it as a store of value and "industry" which needs it for electronic equipment among other things? The answer to this question should provide some answers as to where it is likely to move in the future.
When Gold Ruled the Earth: Part I "Gold's investment performance has dominated this decade. How come so few people have noticed...?" NO FOOLING! It doesn't matter which currency you earn, spend or invest, gold bullion has been the best-performing asset class bar none this decade. That fact bears repeating, so you'll have to forgive me: Gold has dominated the last nine years for investors, smacking everything else in the nose and pulling their ears, too. So when finance advisors and hacks finally come to glance back at this decade, they'll see it - in fact - as the "decade of gold". Just as US tech stocks ruled the 1990s, rising 11-fold on the Nasdaq. Just as Japanese exporters owned the 1980s, up more than six times over on the Nikkei-225. Just as gold itself dominated the 1970s.
When Gold Ruled the Earth, Part II Ten years after gold's last bear market ended, just how much further might the metal have left to go from here...? WATCHING SOMEBODY ELSE slip on a banana-skin always raises a laugh. Not least in the divine comedy of money and finance. "It took three generations," wrote a professional metals consultant in Feb. 2009, "but we now seem to have reached the point in the world's history where, for the first time, gold is valued only for jewelry use and speculation. "The metal today has rapidly diminishing monetary use..." Whoops! Within a matter of weeks, two of the world's biggest monetary powers - Russia and China - publicly said they wanted to discuss including gold in a new global "basket" to replace the Dollar as reserve No.1...
Jim Rogers we need less regulation
Dodge the Coming Inflation Bubble public now paying for the corruption of central banks, injections of money only make people think all is well, the credit flood will drown us, not save us, more bank failures this week, big jet sale for F - 35 Joint Strike Fighter, tariffs for Chinese tires What do you do after you have zero interest rates and you have flooded the world with money and credit? The answer is you attempt to fight off higher interest rates and see if you can dodge the inflation bubble that follows. The commitment for this current fiasco to save the world's Illuminist banks has already caused an official debt responsibility for the US of more than $23 trillion of about 40% of world GDP. That is staggering and it is official. We wonder what the real figure is? It is also wise to remember that the Federal Reserve, and other reserve banks worldwide, all international, are responsible for the carnage we are witnessing.
Dollar Trades Near One-Year Low Versus Euro on Risk Appetite The dollar is poised for a second- straight weekly decline against the euro, as signs the global economy is emerging from the recession spur investors to buy higher-yielding assets. The Dollar Index traded near the weakest level in almost a year before reports next week forecast to show a gauge of leading indicators for the U.S. economy improved and German business confidence rose for a sixth month. New Zealand’s dollar headed for a 10th-consecutive week of advances, matching the record winning streak ending in May 1999, as borrowing costs for the greenback fell to a record amid the easing credit crunch.
Bullish Stance Wears Thin Readers familiar with my views know that I believe that the current stock market rally is a bullish chapter in an otherwise bearish novel. In the spring of this year, I had said I would not be surprised if the Dow were to hit 10,000 by the end of summer. While I was a little too optimistic on that particular forecast, it now looks as if U.S. stock markets are a bit ‘toppy' and a reversal may be in the cards. Seven factors, five tactical and two strategic, cause me to see a change in the wind. Tactically, the employment situation, falling house prices, tight credit, a sliding U.S. dollar and depressed world trade are cause for deep concern. But as these factors could show rapid changes over the short term, I am less inclined to set my investment bearings by these readings. More troubling are the two strategic issues, the continued creation of excessive debt in the United States and the continued growth of consumer spending as the overwhelming driver of U.S. gross domestic product (GDP). In order for a bull market in U.S. stocks to be sustainable, these problems must be brought to heel. However, making a dent in these imbalances would require the sort of political courage that is vanishingly rare in D.C.
Bailout Lies Threaten Your Savings There is a headline that has been all over the media ever since September 2008: “Bank Bailout Will Soak Taxpayers.” As obviously true as this headline appears to be, it is in fact, dangerously misleading. Indeed, as we will cover in this article, the idea that taxes will pay for the bailout is ludicrous, an insult to both your intelligence – and your net worth. Instead, the real source of the bailout monies will not be the taxes you pay, but the value of your savings. The value of your checking account, the value of your IRA or Keogh, and the value of all your investments are the true source of payment for Wall Street’s reckless mistakes. When we combine the bailout with the trouble the US was already in, the result could be a 95% reduction in value for all of our savings, retirement and otherwise, as we will illustrate step by step in this article.
U.S. Corporate Bond Risk Rises Most in Two Weeks, Swaps Show The cost to protect corporate bonds in the U.S. from default rose the most in more than two weeks from a 16-month low on concern the rally in risk is losing momentum. Credit swaps on the Markit CDX North America Investment- Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, climbed 3 basis points to 102 basis points at 4:03 p.m. in New York, after earlier rising to 104.25 basis points, according to Barclays Capital. That’s the biggest gain since Sept. 1, according to CMA DataVision.
Treasuries to Lose Momentum Before Auctions: Technical Analysis The Treasury market’s inability to drive yields below resistance levels will lead to lower prices as investors prepare for next week’s auctions, according to RBS Securities Inc. The yield on the 10-year Treasury note may increase to 3.60 percent after failing to remain below resistance at 3.30 percent, wrote William O’Donnell, U.S. government bond strategist at RBS in Stamford, Connecticut, in a note to clients today. Resistance is a level where sell orders are clustered. The note’s momentum, as measured by the 10-day relative strength index, hit a recent peak of 78 on Sept. 2 and declined to 50 yesterday. A level below 30 or above 70 indicates the yield may change direction.
Another $185B Could Soon Hit the Markets as U.S. Approaches Debt Ceiling The US debt ceiling currently rests at $12.104 Trillion, of which $11.792 Trillion is outstanding as of September 14, 2009. The debt ceiling is the maximum debt allowed by statute (not including future liabilities, such as Social Security and Medicare). Any change must be enacted by Congress, and as we quickly approach the ceiling this fall, such a debate would be easily politicized. In anticipation of such friction, Treasury will be cutting corners wherever it can to continue to issue debt at a record pace, preferably on the long end of the yield curve. One such corner is the Treasury's Supplementary Financing Program, which was created in September 2008.
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