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.
Rising Debt May Cause Sun to Set on U.S. Economy As an economic power, the U.S. may go the way of the British Empire because of the government’s increasing debt burden, according to Richard A. Posner, an economist and federal judge. The CHART OF THE DAY shows how the public debt, or the national debt aside from liabilities for entitlement programs, has climbed in the past year. The chart goes back to March 2005, when the U.S. Treasury started giving daily updates on the debt. Public debt will keep growing rapidly, Posner wrote earlier this week on a blog he shares with Gary Becker, an economics and sociology professor at the University of Chicago.
China MOF: To Issue 2-Year, 3-Year, 5-Year Yuan Bonds In HK China's Ministry of Finance said Thursday it will sell CNY6 billion worth of two-year, three-year and five-year yuan-denominated bonds in Hong Kong on Sept. 28 in its first yuan sovereign bond sale outside mainland China. The ministry will sell CNY2 billion or more of the bonds to retail investors, a statement on its Web site said. The ministry will issue the two-year bonds mainly to retail investors, the five-year bonds mainly to institutional investors, and the three-year bonds to both sets of investors.
Don't Blame Free Markets for the Crisis: They Never Existed A rhetorical question for free-market critics: Do the following policies reflect a laissez-faire economy?
Artificially cheap money - America's central bank regularly provides heaps of cash to their member banks, especially when unsustainable rallies stall and sputter. Liquidity is the cause and the cure. This is anything but laissez-faire. Keeping interest rates low mangles the free-market, rewarding reckless borrowers and lenders, and punishing savers.
Bailouts - Banks feel safe taking huge risks, and for good reason. The taxpayer will surely bail them out. The absolute worst-case scenario for an executive who loses billions is getting fired. But when you only need a few months to make millions, who cares about getting canned?
Meddling in Housing; Freddie, Fannie & More - The housing market has been propped-up too long. The stated goal of GSEs like Fannie and Freddie are to facilitate affordable housing. Problem is, they're become a significant part of the problem. They contributed to the housing bubble, and shifted debt from private to public hands. Further bailouts seem inevitable. In short, they are anything-but free-market.
FDIC Packages Loans From Failed Banks Officials Ink First Deal Under New Plan The Federal Deposit Insurance Corp. launched a new program Wednesday to subsidize investor purchases of loans that the agency has acquired from failed banks, as it tries to attract more bids and higher prices for its rapidly expanding collection of troubled assets. The long-awaited program was announced earlier this year as a way to help banks that remained in business get rid of their soured loans, but a lack of interest from banks led the FDIC to focus on its own holdings instead.
The Geithner-To-Goldman Clock Treasury Secretary Tim Geithner has survived his early brush with death. He has recovered from early missteps, and those who still loathe the Wall Street bailouts, PPIP, AIG, and other Geithner policies have cooled down now that the stock market is rising. So, for the moment, Geithner's job is safe. Which means he can start focusing on the next one. It sucks to be paid like a government employee when most people you work with and schmooze with are loaded. Especially when you can't even unload the dime-a-dozen million-dollar house in the burbs you got stuck with when you were a nobody.
Jim Rogers Investment strategy in time of crisis
Exclusive Interview: Congressman Alan Grayson Talks Fed Transparency and Missing Money . . . . Congressman Grayson: They are performing a truly remarkable, surreptitious transfer of wealth from public to private hands. They are taking their ability to print money and shore up failed banks. They are simply stuffing money into the pockets of private interests. In the case of the half a trillion dollars, they stuffed the money into foreign private pockets. In the case of another $230 billion, it has been tracked as a secret bailout to Citicorp in the US. The fact is the Federal Reserve continuously puts all of us on the hook for decisions they make to play favorites with private interests to the tune of trillions of dollars.
Bailout Recipient Banks Lending Drops For Sixth Consecutive Month It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June.
Exposure at Default: As Banks Shrink, So Does the Economy . . . . Suffice to say that before Treasury Secretary Tim Geithner and the other G-20 finance ministers set about to raise capital levels, they need to understand that the earnings of the banking industry are going to be impaired for years as the cost of resolving failed banks is repaid. Restoring solvency is the first issue for many banks, then we can talk about increased capital and restrictions on risk taking equally. And as the banking industry shrinks defensively in order to conserve capital and fund liabilities impaired by realized losses, the credit available to the US economy also shrinks. You can't have economic growth without credit growth.
Volcker Calls for Restricting Banks' Risk, Trading Activity Former Federal Reserve Chairman Paul Volcker on Wednesday said banks should operate in a much less risky fashion, including not making trading bets with their own capital, comments that could provoke intensified debates over the future of financial regulation. Mr. Volcker, who currently is chairman of the White House's Economic Recovery Advisory Board, suggested banks should be restricted to trading on their client's behalf instead of making bets with their own money through internal units that often act like hedge funds.
Clearing skies over U.S. economy open rift at Fed An improving U.S. economy has exposed a widening rift at the Federal Reserve over how quickly to scale back the central bank's aid measures, a debate that will be front and center when policy-makers meet next week. A steady drumbeat of surprisingly positive economic data and a rise in investor appetite for risk, which have pushed the Dow Jones industrial average to 11-month highs, puts a robust economic recovery on the table as a possibility.
Ron Paul Q&A: Audit the Fed, Then End It For three decades, Rep. Ron Paul has waged a lonely battle in Congress to abolish the Federal Reserve. But he has more foot soldiers across the nation today, particularly after the financial crisis, who are leading the drive for wider congressional audits of the central bank. In his new book – End the Fed – released today, Rep. Paul walks through his critique of the central bank and lays out a strategy (briefly) for eliminating it. We sat down with the congressman to hear his views on a money system backed by gold, the Fed’s challenge of withdrawing its stimulus and his legislation to audit the central bank.
The Money Monopoly How the Federal Reserve rips you off BY RON PAUL Most Americans haven’t thought much about the strange entity that controls the nation’s money. Visitors to Washington can see the Federal Reserve’s palatial headquarters, the monetary parallel to the Supreme Court or the U.S. Capitol. We hear the Fed chairman testify to Congress, citing complex data, making predictions, and attempting to intimidate anyone who would take issue. He postures as master of the universe, completely knowledgeable and in control. But how much do we really know about what goes on inside the Fed? Even with the newest round of bailouts, journalists had difficulty determining where the money was coming from and where it was headed. From its founding in 1913, secrecy and inside deals have been part of the way the Fed works.
Bail, rescue, print formula no cure for what ails America Some might believe that we have reached a culmination of sorts for the financial crisis that began in 2008 and that from here things are going to get better. This study draws the opposite conclusion. The bail, rescue and print formula being employed by the federal government and central bank today is simply a continuation of policies that brought about the crisis in the first place. Only now, as you are about to read, they are being conducted on a far grander scale. The repercussions, I might add, are likely to arrive on a far grander scale as well.
Not good enough East Europe's premier economic forum could be much better KRYNICA is Poland’s Davos. And in some respects last week’s annual economic forum held in the mountains of southern Poland is just like the World Economic Forum, the plutocrats’ Swiss get-together. It is scenic, fun and prime networking territory; meetings that would otherwise take months to arrange can happen over a quick coffee. Late at night, formality disappears as drinks flow and tongues loosen.
G-20 Nearing Agreement on Shifting IMF Quotas, Officials Say Leaders from the Group of 20 are approaching an agreement that would give more power at the International Monetary Fund to developing countries judged to be underrepresented, two officials from G-20 nations said. Talks before next week’s summit in Pittsburgh are focusing on a 5 percent shift of so-called IMF quotas from countries with disproportionate influence, said the officials, who spoke on condition they not be identified by name or nationality. Quotas determine members’ voting rights, financial commitments and access to IMF loans.
Obama, G-20 Will Pledge to Keep Stimulus, Froman Says President Barack Obama and other Group of 20 leaders next week will pledge to keep economic stimulus policies in place until a recovery is certain, the White House’s G-20 liaison said. In talks in Pittsburgh, the U.S. also will seek to phase out fossil-fuel subsidies and agree on how to rein in bankers’ bonuses, Michael Froman, a deputy assistant to Obama, said in an interview yesterday. The U.S. wants to build on a G-20 agreement in London earlier this month to toughen oversight of compensation practices and curb pay excesses, he said.
Foreign Buyers Added Most to Munis as Build America Deals Began Foreign buyers boosted holdings of U.S. municipal securities by a larger percentage than any other investor group in the second quarter as issuers started selling taxable Build America Bonds, offering yields higher than tax- exempt debt. Holdings of long-term municipal securities in “the rest of the world” rose $5.6 billion, or 14 percent, to $45.6 billion during the April-through-June period, the highest in a year, according to Federal Reserve data released today.
Retailers, Banks Battle Over Credit Card Fees A battle is brewing over the processing fees that banks charge merchants each time a customer uses a credit or debit card. Congress is considering three bills that would regulate the so-called interchange fees -- which generally amount to 1 to 2 percent of a total sale and totaled $48 billion in 2008. Meanwhile, the Government Accountability Office is doing a study of the fees, as required by a law signed by President Obama in May that bans many unfair credit card industry practices.
Housing Starts Rise. But Remain at Historically Low Levels The Census Bureau reported housing starts and permits for new construction rose to their highest level in nine months, however, homebuilding remains at historically low levels. U.S. housing starts rose from an upwardly revised annual rate of 589,000 in July to 598,000 last month, down 29.6 percent from a year ago and a full 74 percent below the peak of homebuilding activity in January 2006.
Southern California Real Estate Booming Again Judging from the trend in year-over-year prices, it looks like happy days are here again, though none of the six counties have posted a positive result for two years. That may change in the months ahead as Orange County is only a few percent shy of break even, no doubt aided by an increase in sales at the high end that boosts median prices, all else being equal. The median price paid for all of Southern California rose 2.6 percent, from $268,000 in July to $275,000 last month, however this is down 16.7 percent from a year ago.
Recession May Be Ending but Unemployment's Set to Rise When recession bites, businesses lose sales, but their overheads remain. Ultimately, there comes a point where they will have to shed the workforce to save on costs; often there is little work for employees to do since demand is down. Eventually, when the economy moves out of recession, businesses need to get enough custom (demand) before they can start re-hiring. This explains why employments statistics lag behind the recession.
Americans holding back on spending Our friend, Mike Dorning, reports from his new perch at Bloomberg News, that Americans do not appear bullish about the economy recovery promised. Only 8 percent of all adults surveyed plan to increase household spending, almost one-third will spend less, and 58 percent expect to "stay the course," a Bloomberg News poll has found. More than three in four said they reduced spending in the past year. "People I never thought would lose their jobs have lost their jobs," said Angela Payton, 42, a university publications editor in Florence, South Carolina. She kept her children out of summer camp, stopped buying organic milk and plans to curtail the party for her daughter's 6th birthday in November.
Nearly Half Of US Households Hit By Job Losses Or Pay Cuts Nearly half the country has had a pay cut or job loss in the last year, according to a new poll from the Washington Post and ABC News. A shocking 41 percent say that in the last year someone in their household has had their pay or work hours cut. Twenty-seven percent say someone in their home has been laid off or lost their job.
Social Security Sent More than $40 Million in Checks to Dead People, Inspector General Finds The Social Security Administration (SSA) has issued benefit checks totaling $40.3 million to an estimated 6,100 beneficiaries for months - and in some cases for decades -- after receiving notification of their deaths, according to a June audit report from the agency's Office of Inspector General. Approximately 1,760 of the 6,100 listed as deceased actually were dead, the government auditor estimated. The rest were alive, but had been wrongly listed as deceased. During a sample audit in 2008, the inspector general uncovered 228 cases where beneficiaries had been receiving payments from SSA when they were already listed as dead. Of those, 88 were verified to have died. Another 140 were found to still be alive.
Healthcare Reform is More Corporate Welfare Last Wednesday the nation was riveted to the President's speech on healthcare reform before Congress. While the President's concern for the uninsured is no doubt sincere, his plan amounts to a magnanimous gift to the health insurance industry, despite any implications to the contrary. For decades the insurance industry has been lobbying for mandated coverage for everyone. Imagine if the cell phone industry or the cable TV industry received such a gift from government? If government were to fine individuals simply for not buying a corporation's product, it would be an incredible and completely unfair boon to that industry, at the expense of freedom and the free market. Yet this is what the current healthcare reform plans intend to do for the very powerful health insurance industry.
Bill Clinton Says Obama Will Prevail on Health-Care Overhaul Former U.S. President Bill Clinton predicted that Barack Obama would prevail in his bid to win passage of his health-care initiative and that some Republican senators likely would support the legislation. Clinton, the last president to attempt a broad overhaul of health care, said the Obama administration could win over Olympia Snowe and Susan Collins, both Republicans from Maine. Senate Finance Committee Chairman Max Baucus introduced an $856 billion plan yesterday that would require just about all U.S. citizens to have insurance or pay a penalty.
Half a loaf—or just half-baked? WHEN Barack Obama outlined his vision for health reform to Congress on September 9th, he insisted that any bill must cut the uninsured by 30m, cost only $900 billion and raise the federal deficit not “one dime”. The leading congressional bills thus far fail the test, but Max Baucus, the head of the Senate’s powerful Finance Committee, now says he can pull this off. After intense bipartisan negotiations, Mr Baucus (pictured) unveiled his bill on September 16th. His effort would force most Americans to obtain cover, but in return insurers must agree not to drop coverage because customers have “pre-existing conditions” or because spending caps have been reached.
Ice-cream and burgers can control your brain: study It's official. That tub of ice-cream really can control your brain and say "eat me." A U.S. study by UT Southwestern Medical Center at Dallas has found that fat from certain foods such ice-cream and burgers heads to the brain. Once there, the fat molecules trigger the brain to send messages to the body's cells, warning them to ignore the appetite-suppressing signals from leptin and insulin, hormones involved in weight regulation -- for up to three days. "Normally, our body is primed to say when we've had enough, but that doesn't always happen when we're eating something good," said researcher Deborah Clegg in a statement.
Schools Defy Beijing, Remove Web Filter BEIJING -- Some Chinese schools are removing the Web-filtering software that Chinese authorities ordered installed on all computers this summer, further weakening the influence of a controversial censorship measure that was intended for PC users throughout China. Schools are still required to use the software, called Green Dam-Youth Escort, but the extent to which they heed the requirement is unclear. Calls to a number of schools gave a varied picture: Some schools use the software, others installed it but have since removed it, and yet others never installed it. The disparity may be a result of how stringently local governments enforce the requirement.
Feds keep little-used airports in business WILLIAMSBURG, Ky. — One of the USA's newest airports has a 5,500-foot lighted runway, a Colonial-style terminal with white columns, and hundreds of acres for growth. But Kentucky's Williamsburg-Whitley County Airport lacks one feature: airline passengers. Built using $11 million in federal money, the airport is used only by private airplanes. Many are piston-engine aircraft owned by residents such as Keith Brashear, the airport board chairman who keeps his two-seat Cessna in the airport hangar. On a typical day, the airport has just two or three flights, manager Jessica Roberts says. Some days, there are none.
House to vote on extending unemployment benefits Legislation calls for jobless Americans in high-unemployment states to get an additional 13 weeks of checks. Jobless Americans in high-unemployment states would see their benefits extended for another 13 weeks under legislation to be considered by Congress next Wednesday. The House measure would lengthen benefits for the more than 300,000 people who live in states with unemployment rates greater than 8.5% and who are set to run out of compensation by the end of this month, a Democratic aide said. The legislation would also help another 1 million people who are scheduled to lose benefits by the end of the year. Some 26 states and the District of Columbia fall into this category. Workers in other states could qualify if their state is expected to hit an 8.5% unemployment rate soon or meets other criteria. The national unemployment rate hit 9.7% in August, the highest in 26 years.
Palin, Gingrich skip values event Texas governor opts of out poll Nearly 2,000 social conservative activists from 49 states gather for a Values Voters Summit in Washington Friday and Saturday, but movement favorites former Gov. Sarah Palin and former House Speaker Newt Gingrich will not be addressing the throng. Beauty queen Carrie Prejean - whose defense of California's referendum against gay marriage cost her the Miss USA crown earlier this year - will be a featured speaker, but a planned 2012 presidential straw poll lost a bit of luster after conservative Texas GOP Gov. Rick Perry took his name off the mock ballot for summit participants. Mrs. Palin, who resigned as Alaska's governor in July, and Mr. Gingrich, the former Georgia congressman, are the two biggest draws for conservatives across the country. Despite their physical absence, Mrs. Palin and Mr. Gingrich will be part of the straw poll - the first major sampling of social and religious conservatives' preferences for 2012.
Republicans Denounce Pelosi for Warning Against 'Incitement' The House Republicans' top campaign chief strongly denounced Speaker Nancy Pelosi's comments that appeared to question whether today's angry conservative protests were similar to anti-gay rallies in the late 1970s that preceded the assassination of two San Francisco political leaders. Rep. Pete Sessions (Texas), chairman of the National Republican Congressional Committee, said Pelosi crossed the line when she related the rhetoric of anti-gay protesters in San Francisco in 1978 -- the year Harvey Milk, the first openly gay member of the city's board of supervisors, and his political ally, Mayor George Moscone, were killed by former supervisor Dan White -- to that of contemporary conservatives while answering a question about the protests against President Obama's health-care proposals. "The Speaker is now likening genuine opposition to assassination. Such insulting rhetoric not only undermines the credibility of her office, but it underscores the desperate attempt by her party to divert attention away from a failing agenda," Sessions said in a statement.
Missile Defense and Washington’s foolish Eurasia Strategy Eight months into the Obama Presidency the outlines of Administration foreign policy are becoming very clear and what is emerging is a foreign policy establishment flying blind on automatic pilot, evidently unable to make the fundamental policy changes required of its new geopolitical and economic position in the world since the collapse of the Greenspan “revolution in finance” September 2008. For the first time since it emerged as the world’s dominant power after 1945 the US policy establishment is unable to combine its military “stick” with any economic “carrot.” The Obama effort marks the end of an era of geopolitics. Latest reports that Obama has decided to cancel US plans for an anti-nuclear missile defense in Poland and the Czech Republic suggest that a major internal battle is underway among US policy elites over what has clearly been a failed US foreign policy strategy.
Missiles in Turkey traded for shield, diplomat says The announcement Thursday that the Obama administration is canceling missile defense deployments in Europe may be part of a trade that includes sending other missiles to Turkey. The decision to scrap the deployments in Poland and the Czech Republic came days after the administration announced the proposed sale of $7.8 billion in Patriot PAC-3 anti-missile batteries and related gear to Turkey. A European diplomat who asked not to be named because he was discussing intergovernmental discussions said the United States was looking for a less costly alternative more in tune with its evaluation of Iran's missile program. "This was a costly program," he said of the scrapped deployments in Poland and the Czech Republic. "They may find other ways to do this was less cost . . . with missiles of a different type in theater."
Obama shifting missiles, Eastern Europe The Obama administration will significantly alter plans to create a massive missile defense system in Eastern Europe, abandoning blueprints for a large ground-based radar and interceptors based in the Czech Republic and Poland. The European missile defense system was a thorn in the side of U.S. relations with Russia, which viewed the radar and interceptors as a threat to its strategic nuclear force, a contention that the U.S. has long denied. The decision by the White House reverses a major Bush administration initiative to counter the threat of Iranian long-range missiles by extending the ground-based interceptor system to Europe.
White House Scraps Bush’s Approach to Missile Shield President Obama announced on Thursday that he would scrap former President George W. Bush’s planned missile defense system in Poland and the Czech Republic and instead deploy a reconfigured system aimed more at intercepting short- and medium-range Iranian missiles. Mr. Obama decided not to deploy a sophisticated radar system in the Czech Republic or 10 ground-based interceptors in Poland, as Mr. Bush had planned. Instead, the new system his administration is developing would deploy smaller SM-3 missiles, at first aboard ships and later on land somewhere in Europe, possibly even in Poland or the Czech Republic.
Obama to Abandon European Missile Defense, Media Reports Say The Obama administration is on the verge of abandoning proposals to build a missile defense shield in Europe which caused a major rift between the U.S. and Russia, the Wall Street Journal reported Thursday. The move will resonate in Poland and the Czech Republic, where governments weathered domestic unease and Russian fury by signing agreements with the Bush administration in 2008 to host elements of the system – ten missile interceptors and a radar tracking station respectively.
Three months after his disputed re-election, Iran’s president, Mahmoud Ahmadinejad, is still failing to reassert his—and his government’s—grip THOUGH it has crushed street protests, jailed dissidents, mounted show trials and hardened censorship, Iran’s ultraconservative, military-backed government remains shaky as it faces a string of testing challenges, including a looming diplomatic showdown over its nuclear ambitions. For sure, it has a physical hold on the Islamic Republic. Its increasingly militarised look, its uninhibited resort to coercion, its domination of parliament and the state-controlled press, and the tacit approval all this gets from Iran’s supreme leader, Ayatollah Ali Khamenei, show its determination to prevail at any cost. But opposition has not faded. Not only do the two defeated reformist presidential candidates still insist they were cheated, but other powerful figures, including top clerics, persist in decrying the abuse of human rights.
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Thurs 09.17.2009
Rep. Alan Grayson Announces a Hearing on Ron Paul's Bill to Audit the Federal Reserve (HR 1207) Rep. Alan Grayson announces there will be a hearing in late September on the bill to audit the Federal Reserve. If this bill passes, the audit will be the first time the central bank has been independently audited.
End the Fed Ron Paul has since the inception of his tenure in Congress waged a heroic battle for financial sanity, and in End the Fed he gives us insights from that struggle available nowhere else. Dr. Paul had from an early age an affinity for the free market. "In the 1960s," he tells us, "I discovered the writings of economists such as Ludwig von Mises, F.A. Hayek, Murray N. Rothbard, and Hans F. Sennholz. I gradually found the answers I had been searching for. Even for the experts, it literally took centuries to fully understand the nature of money and the business cycle."
Ron Paul: Fed Threatens Depression, $100 Bills Worthless Don't Steal, the Government Hates Competition. ~ Plaque on the desk of Rep. Ron Paul Judging by the plaque on the desk of Ron Paul, R-TX, the so-called (by his detractors) "Doctor No" of the Congress, one would think he hates government. But, as he shows in his latest book, End the Fed (Grand Central Publishing, 224 pages, $21.99) he doesn't hate government, he just wants it to do what the Constitution says it should do – nothing more and nothing less.
Volcker Says ‘Long Way to Go’ for Full U.S. Recovery Paul Volcker, the former Federal Reserve chairman who’s an economic adviser to President Barack Obama, said there’s a “long way to go” before the economy returns to pre-recession levels. “It will be a long slog -- a matter of years -- with the risk of some relapses along the way,” Volcker said today at a financial conference in Beverly Hills, California. While Volcker said he sees signs that the economy is in the “early stages of recovery,” he also warned that “it is way too soon to resume business as usual.”
We will have a Currency market crisis Jim Rogers on CNBC 14 Sept 2009
Gold Rises to Record Settlement Price on Inflation Concern Gold rose to a record settlement price on speculation that a global economic recovery will stoke inflation. Silver jumped to a 13-month high as the dollar’s slump boosted demand for metals as alternative investments. The worst U.S. recession since the 1930s has probably ended, Federal Reserve Chairman Ben S. Bernanke said yesterday. The dollar slid to its lowest level in almost a year against a basket of six major currencies as the economic outlook reduced demand for the greenback as a haven. Gold futures were 1.3 percent below a record $1,033.90 an ounce set in March 2008.
Gold all there when Ft. Knox opened doors America’s gold bullion depository at Ft. Knox, Ky., was built to be impregnable to enemy invasion, but 35 years ago, it was invaded by 120 members of a press contingent. It remains a gold-letter day for those who made it to the “A” list and attended. . . . . . It was difficult not to be struck by the irony of seeing the end result of the destruction of so many formerly collectible coins.
Gold and Stocks Move Sharply Higher Stock markets stampeded higher on Wednesday and major Wall Street benchmarks touched their highest levels in 11 months on optimism that an economic rebound was under way. Financial shares like credit-card companies and regional banks led a buying spree that lifted most corners of the financial markets. Investors anticipating a resurgence in industrial output clamored to snap up crude oil, copper and other raw materials used to feed factories. Those who expect inflation pushed the price of gold sharply higher. And optimistic stock traders helped to send the Dow 100 points higher
Poland, Gold, Dollar, China, Trade by Peter Schiff
Gold still powering past $1,000 The precious metal continues to rally as investors eye a weak U.S. dollar and fret about inflation. Gold prices settled Wednesday at their highest point as the dollar slumped and inflation concerns boosted demand for the metal as a hedge against rising prices. Gold for December delivery, the most active contract, settled at $1,020.20 an ounce, up $13.90 from Tuesday's close of $1,006.30 per ounce. December gold hit an intraday high of $1023.30 on Wednesday. That's about $10 below the highest intraday price, set on March 18, 2008, when it traded as high as $1,033.90 an ounce.
Stocks, Commodities Climb on Speculation Economy Is Growing U.S. stocks climbed, extending a global advance that sent the MSCI World Index to an almost one- year high, and commodities gained amid speculation the economy has returned to growth. Gold rose to a record close as the dollar slid to its weakest against the euro in almost a year. General Electric Co. jumped 6.3 percent and Alcoa Inc. climbed 3.4 percent after the Federal Reserve said industrial production increased more than forecast. New York Times Co. and Gannett Co. surged more than 10 percent after a market-research firm said some media companies may see improvement in advertising spending. American Express Co. rallied 3.4 percent after Sandler O’Neill & Partners LP upgraded the shares.
Kinross Says Gold Industry Faces Reserve Crisis Kinross Gold Corp., Canada’s third- largest producer of the precious metal, said the gold industry is facing a crisis of declining reserves as investor demand outpaces supply. “We may be in the midst of a perfect storm in terms of price and industry dynamics,” Tye Burt, chief executive officer of the Toronto-based company, said at a conference in Denver today. “Globally production has been in decline since the peak of 81 million ounces in 2001 to 77 million ounces last year, and we see that decline continuing long term.”
Peter Schiff says DEFLATION will be BIG . . . . . when you measure it in gold !
Long Term Gold Chart Targets 1325 Projecting this leg in the gold bull market has been of keen interest to us on one dimension, since we do have some trading activity in our own account. However, on the long term for our core positions it is of no more interest now than it was when gold was trading at 550, 450, or even 250. Gold is in a bull market, and you never give up your core positions in a bull market. You can trade around them if you are an aggressive trader. As an aside, to anyone who can read a chart and as you can plainly see for yourself, gold is in an obvious bull market. If you are dealing with someone who says it is not then they can only a) be incapable of reading a chart, b) be blinded by a mistaken belief, or c) be talking their or someone else's book. There seem to be a few analysts, never bullish on gold in a spectacular bull market, working for major gold trading houses, that fit into this last category.
SO SPECULATIVE BETTING on gold going higher now equals a record-busting 752-tonne position in Comex futures and options, yet this is not a bubble according to Michael Pento of Deltaga. Let's say otherwise. Let's say that gold prices, surging by almost $100-per-ounce in barely a month, are very much in a bubble...blown up by near-zero interest rates worldwide and a sharply negative cost of borrowing after inflation. Were that the case, the question before potential and existing investors would be simple: Is this "irrational exuberance" or a "permanently high plateau"?
Gold, silver advance in Asian trade Gold prices hover near $1010 an ounce in Asian trade Wednesday as the dollar hit a one-year low against a basket of major currencies. Gold for immediate delivery was seen trading at $1,008.48 an ounce at 11.00 a.m. in Singapore time while Silver for immediate delivery gained 0.2 percent to $17.0725 an ounce at the same time.
Gold Is Money "Gold is money and nothing else" ~ JP Morgan, testifying to the Pujo Committee, 1913.
Gold's recent breach of the symbolic US$1,000 level has elicited a predictable amount of commentary from mainstream analysts. The problem is, much of it is ill-informed. Due to the general amnesia of most market analysts, of all asset classes gold remains the most misunderstood. In order to comprehend why gold is rising and why it will continue to rise in the years ahead, we need to review some history. As JP Morgan pointed out early last century, gold is money, and nothing else. Grasp this simple fact and you understand gold. More to the point, gold is international money. It always has been. Over thousands of years of human economic interaction, gold (and silver) evolved as the chosen medium of exchange. These two precious metals contained all the qualities necessary to facilitate growing trade and economic interaction. The most important quality of course was man's inability to create the metals out of nothing. Alchemists tried, but to no avail. This inability to manipulate supply made the metals perfect for the role of money.
China may ban export of gold, silver Last week Alan Greenspan noted that "Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies." In other words, people are buying gold as a hedge against inflation. Here in China, our firm SinoLatin Capital has been approached by numerous Chinese companies specifically looking to acquire gold mines in Latin America. We've studied the market for some time and we see China making several Latin American gold mining acquisitions over the next few years. How can retail investors benefit from these trends? One interesting way to play the South American gold market is AngloGold Ashanti (AU).
Peter Schiff: Americans must prepare for deepening unemployment, inflation and possible bread lines Rockstar Economist Peter Schiff tells RT's Marina Portnaya that Lehman Brothers failure was a success not a failure. He says Americans will face increasing unemployment, inflation, and possible bread-lines if government backed bail-outs continue.
World to America: We Want Our Gold Back The world is preparing to abandon the U.S. dollar and the UK pound. Pronouncements from Hong Kong, the United Arab Emirates, Switzerland and Germany have made clear that the Anglo-Saxon financial system's doom is only a matter of time. A huge announcement out of Hong Kong rattled the financial world on September 3. Although big media relegated the story to the back pages, it should have been front and center! What's the news? China is demanding its gold back. "Hong Kong is pulling all its physical gold holdings from depositories in London," reported MarketWatch (emphasis mine throughout).
If gold is in full swing, why not Gold Stocks? he precious metals bull market is in full swing. The gains in precious metals have been slow and solid. There are bouts of euphoric urgency and small corrections all along an upward trend. Those are the signs of a true bull market. But I'm not here to regale you with the virtues of owning gold and silver and why you must have some gold and silver stocks in your portfolio. We've been over it before. Today you'll learn how to turn this bull market into an absolute fortune.
Gold Gains vs. All Currencies as "Recession Over" Means No End to Liquidity Stimulus THE PRICE OF GOLD jumped to new 18-month highs versus the US Dollar in Asian trade on Wednesday, adding 7.2% from the start of Sept. as world stock markets reached 12-month highs and commodity prices rose together with government bonds. Briefly touching $1,021 an ounce in London trade, gold also reached its best level for UK investors since late April at £616 an ounce. Eurozone investors now ready to buy gold saw the price add 1.6% from Tuesday's low, but it held shy of last week's 5-month high near €700 an ounce as the single currency jumped on the forex market, breaking a fresh 2009-high vs. the Dollar.
Go for Gold: Inflation Is Here and Going to Get "Much, Much Worse," Pento Says As is so often the case, Tuesday afternoon's headlines missed the nuance of the story. Ben Bernanke's full statement told a much less ebullient tale: "From a technical perspective, the recession is very likely over at this point," he said. "It's still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was." Michael Pento, chief economist at Delta Global Advisors, has a more fundamental critique of the coverage: "Why would anybody listen to this guy in the first place?," Pento wonders. "[Bernanke] told us the recession wasn't even going to occur. He was very slow to reduce interest rates and now very very slow to raise them. So I wouldn't put any credence in anything he does, at all."
Dollar Drops to Lowest Level in Almost Year Against Euro The dollar declined to the weakest level versus the euro in almost a year as an increase in America’s industrial output encouraged investors to sell the U.S. currency and buy higher-yielding assets. New Zealand’s currency was one of the biggest winners among 16 counterparts measured against the yen and dollar as investors were lured to a three-month deposit rate almost 10 times higher than in the U.S. So-called carry trades funded with equal amounts of dollars and yen gained 1.3 percent this week, according to data compiled by Bloomberg.
Dollar May Fall Further After Reaching Lowest in Almost a Year The dollar may extend its decline after sliding to the weakest level versus the euro in almost a year as an increase in America’s industrial output encouraged investors to shift funds to higher-yielding assets. The euro gained yesterday versus the dollar as traders succeeded on their third attempt at pushing the currency past $1.4720, a technical level just above the Dec. 18 high. The Mexican peso and South African rand were two of the biggest winners against the dollar and yen among the 16 most-traded currencies tracked by Bloomberg, on increased risk demand.
If We're Screwed By Our Debt, Then So Is The Rest Of The World The Economist's latest debt clock, highlighted by Lawrence earlier today, makes it clear that while the US debt is a huge problem, most of the industrialized world sits in a similar boat. According to The Economist's 2010 forecast data, the USA's debt to GDP ratio will indeed be high, though it will be similar to that of Canada, Spain, the UK, and Germany. It will be lower than that of France, Italy, and Japan. Thus while the increase in US debt over the last decade has been dramatic (thanks to two wars and lots of stimulus), on a relative basis to other countries the US is still manageable. This doesn't mean that the debt shouldn't be reduced. It should be. It is also surely a long-term problem. It's just that debt hysteria is unwarranted and unproductive at this stage.
The Economist Wants Us To Feel Bad About Global Debt The Economist just launched the Global Public Debt Clock. Maybe it should be called the Global Guilt Counter. As the magazine notes, "The worst global economic storm since the 1930s may be beginning to clear, but another cloud already looms on the financial horizon: massive public debt." A sampling of data from the clock paints a scary picture: Global Debt Comparison - Current Global Public Debt
Oil Trades Near $72 After Supplies Drop to Lowest Since January Crude oil traded near $72 a barrel in New York after the U.S. Energy Department reported that stockpiles of the fuel in the biggest energy consuming nation dropped to the lowest level since January. Inventories fell 4.73 million barrels, the weekly report showed yesterday, more than the 2.5 million-barrel decline forecast in a Bloomberg News analyst survey. Prices also gained as the dollar declined to the weakest level in almost a year and as U.S. equities advanced.
Why $200 Oil Is Just Around the Corner Jeff Rubin believes that oil prices are going to escalate much higher. In his book Why Your World is About to Get a Whole Lot Smaller, Rubin foretells $200 oil and a vastly transformed global economic picture coming into focus very soon. The premise of Rubin's book is that oil is a finite resource and so-called "easy" oil is waning. Inevitably production will be unable to keep up with the growing demand worldwide, and the price of oil will skyrocket. The chief economist at CIBC World Markets in Canada for 20 years, Rubin correctly predicted the price of oil reaching $50 in 2005 and $100 in 2007. No one believed him then, either.
Exposing Gold Price Manipulation by Fed Reserve and US Government; the system is rigged The US Ponzi schemes are exposed and the gold scam could be bigger than the Bernie Madoff scandal!
Copper Rises Most in Three Weeks as U.S. Factory Output Gains Copper prices jumped the most in more than three weeks on signs of reviving economic growth in the U.S., the world’s second-biggest user of the metal. U.S. industrial production rose in August for a second month, the first consecutive gains since December 2007, the Federal Reserve said. Fed Chairman Ben S. Bernanke yesterday said the U.S. recession, which began in December 2007, is “likely over.” Billionaire investor Warren Buffett today said the economy has stopped declining. Copper has more than doubled this year on signs of rising metal demand.
U.S. May Welcome Carry Trades, Credit Suisse Says The U.S. may “welcome” carry trades in dollars as returns overseas flow back to American investors, Credit Suisse Group AG said. High returns generated in other countries will help the dollar maintain its status as the world’s reserve currency, even as the greenback weakens, said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo. “A weak dollar should be welcomed, since it signals a recovery in the global economy and financial markets,” Shirakawa said by telephone today. “The U.S. will likely welcome dollar carry trades.”
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.
Is the Fed's Pumping Inflationary? Given the recent, massive increase in commercial banks' excess reserves, many commentators are of the view that banks will sooner or later start employing these reserves in lending and thus cause an increase in the inflation rate. Even former Federal Reserve Chairman Alan Greenspan is alarmed by the massive pumping by the Fed and other central banks. Speaking via satellite to a conference in Mumbai on September 8, 2009, Greenspan said that central banks need to diffuse the large increases in their assets.
The Third Rail of Academia The Social Security system has long been described as the third rail of American politics. "Touch it, and you die." You get electrocuted. If you should somehow survive, the next subway train will cut you in pieces. There is such a rail in academia: the Federal Reserve System.
Bank Failures Could Surge as Commercial Real Estate Losses Continue to Mount The dark cloud of commercial real estate loan defaults is inching closer, threatening to shutter more banks, even as the U.S. Federal Reserve declares the recession to be over. Commercial property values in the U.S. have plummeted 36% since peaking in 2007, and the commercial real estate market is unlikely to recover before 2012, according to the quarterly PricewaterhouseCoopers Korpacz Real Estate Investor Survey, released yesterday (Tuesday). Office rents in New York and San Francisco may drop 20% through next year, the survey found. "The biggest problem is that commercial real estate lags what happens in the economy," Susan Smith, who is the director of PricewaterhouseCoopers' real estate advisory practice and editor-in-chief of the survey, told Bloomberg News. "Companies are looking for ways to cut costs, many are continuing to reduce workers and are continuing to reduce their space needs."
We are in the midst of a revolution Gerald Celente on RT Sept 14 2009
New Rules Ease the Restructuring of CMBS Loans Treasury Relaxes Restrictions on Refinancing in an Effort to Stave Off Commercial-Mortgage Defaults The Treasury, responding to the growing pain in the commercial real-estate industry, released new tax rules that make it easier for distressed property owners to restructure loans that were packaged by Wall Street firms and sold as securities. Most in the real-estate industry, which lobbied intensely for the move, applauded the action. But some warned it has opened a Pandora's box, especially for servicers of the securities who will likely come under new pressure from borrowers and competing classes of investors.
Fed, IRS try to limit problem loans in commercial real estate The Federal Reserve is stepping up its scrutiny of commercial real estate loans at smaller banks, which have seen delinquency rates double in the past year. At the same time, the IRS issued rules Tuesday designed to make it easier to refinance some commercial real estate loans, to try to curb the number of defaults. Instead of reviewing individual banks, Fed examiners are comparing results across the industry to better assess broader risks, a Fed official said Wednesday. The official spoke on condition of anonymity because of the confidential nature of bank reviews.
Fed Broadens Its Oversight To Include Subprime Lenders Policy Extended to Bank Subsidiaries The Federal Reserve announced Tuesday that it will extend its regulatory umbrella to cover a group of lenders that includes several major originators of subprime loans, policing whether they follow federal laws that protect consumers of mortgages, credit cards and other financial products. Federal banking regulators already oversee companies that own banks, known as holding companies, along with the banks themselves. Under the new policy, the Fed will extend the same oversight to other businesses owned by those holding companies, such as units that make home-equity loans.
MONEY MARKET FUNDS NO LONGER GUARANTEED - SEPTEMBER 18 Below is David Galland's take on the fact that as of this Friday the US Government will no longer guarantee Money Market Funds. The key points are that the smart money is getting out of MM funds. Assets in these funds have declined by 15% in the last month. There is still $2 trillion in non-Treasury MM funds. Are you sure your MM fund is safe? The 2nd more important point is that the Treasury is trying to force this money into the Big Banks. DO NOT LET IT HAPPEN. If you withdraw your money, put it in a local credit union or small bank in your community. DO NOT REWARD THE WHORING TARP BANKS. We need to make them fail for the good of the country.
TARP: Treasury Looks to Shift Rescue's Focus To Small Businesses and Community Banks The Obama administration is retooling its rescue of the financial system, looking to wind down programs viewed as having run their course while considering new initiatives to address areas of lingering concern, such as small businesses and community banks. This shift comes as Treasury Secretary Timothy F. Geithner and his colleagues are trumpeting their stewardship of the federal bailout efforts, as they did Thursday in a series of remarks on Capitol Hill and to the press. President Obama is scheduled to give what the White House called a major address on the financial crisis on Monday, the one-year anniversary of Lehman Brothers' collapse.
Mortgage applications fell 8.6% last week: MBA The volume of mortgage applications filed last week fell a seasonally adjusted 8.6% compared with the week before, the result of a drop in both applications to refinance an existing loan as well as those to purchase a home, the Mortgage Bankers Association reported Wednesday. The average rate on 30-year fixed-rate mortgages rose for the week ended Sept. 11, while rates on 15-year fixed-rate mortgages and one-year adjustable-rate mortgages fell, according to the MBA's weekly survey, which covers about half of all U.S. retail residential mortgage applications. Results were adjusted for the Labor Day holiday.
Break up the big banks President Barack Obama pledged on Monday "to put an end to the idea that some firms are 'too big to fail.'" Though he outlined some worthy prescriptions, he failed to face up to the very size and power of the financial institutions that makes "too big to fail" possible. For the big have gotten even bigger since the start of the financial crisis. At the end of 2007, the Big Four banks - Citigroup, JPMorgan Chase, Bank of America and Wells Fargo - held 32 percent of all deposits in FDIC-insured institutions. As of June 30th, it was 39 percent.
Goldman's big rebound raises some eyebrows On a clear day, Lloyd Blankfein can look through the windows of his office on the 30th floor at the tip of Manhattan and see the Linden housing project in the East New York section of Brooklyn. That's the rough neighborhood where he grew up, the son of a mail sorter at the local post office. As head of Goldman Sachs (GS) today, Blankfein has come a long way from the projects to becoming one of the highest-paid CEOs on Wall Street. Perhaps he's come too far, because it's a place that many people who live in his old neighborhood might find hard to comprehend. After all, Blankfein and his fellow executives make eight-figure salaries running a company that devised and dabbled in the complex financial products that many believe caused the near-collapse of the global economy last year.
Next Leg Down Will Be "More Painful Than The Last," Pento Says Puzzled by the strength and duration of the stock market rally? Michael Pento, chief economist at Delta Global Advisors, says it all makes perfect sense. "If the Federal Reserve is going to pay you less than 1% to deposit your savings... what are you going to do with that money?" Hence, the rally off the March lows. Unfortunately for investors, Pento argues the rally is meaningless because our "purchasing power… is eroding everyday" as the U.S. dollar continues to lose value. "You can't sit back and say since the S&P (500) is up over 50% that happy days are here again," he protests. "You have to look at it in real terms."
Pimco’s Gross Boosts Government Debt to 5-Year High Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., increased holdings of government-related debt last month to the most in five years and cut mortgage securities. Gross boosted the $177.5 billion Total Return Fund’s investment in Treasuries, so-called agency debt and other bonds linked to the government to 44 percent of assets, the most since August 2004, from 25 percent in July, according to Pimco’s Web site. The fund cut mortgage debt to 38 percent, the lowest level since February 2007, from 47 percent.
U.S. Economy: Data Point to Growth Without Inflation Reports on industrial production and consumer prices today showed the U.S. economy is emerging from the economic slump without spurring inflation. Output at factories, mines and utilities climbed 0.8 percent last month, exceeding the median estimate of economists surveyed by Bloomberg News, data from the Federal Reserve in Washington showed. The Labor Department said the cost of living climbed 0.4 percent, and was down 1.5 percent from August 2008.
SNB May Hold Rate at 0.25%, Keep Battling Deflation ‘Specter’ The Swiss central bank may hold its key interest rate near zero and keep measures in place to fight the risk of deflation even as the economy shows signs of emerging from recession. The Swiss National Bank, led by Jean-Pierre Roth, will leave the three-month Libor target at 0.25 percent at today’s quarterly monetary policy assessment, according to all 21 economists in a Bloomberg News survey. The SNB publishes the decision in Zurich at 2 p.m., when it will also release a policy statement.
World Bank: Poor Face Long Recovery The global recession is expected to push 89 million more people into extreme poverty by the end of 2010, the World Bank said Wednesday as it called on the leaders of the 20 largest economies to engage in "responsible globalization." Although economic data show the worst recession of the post-World War II era might have ended in the United States, and global trade has begun to pick up again, low-income countries are still reeling from the effects of a financial crisis created by their wealthier counterparts.
Cuomo Subpoenas 5 Bank of America Directors Attorney General Andrew M. Cuomo of New York has issued subpoenas to five board members of Bank of America as part of his continuing investigation into the bank’s hastily arranged takeover of Merrill Lynch, a person briefed on the inquiry told DealBook on Wednesday. The subpoenaed directors include “those most likely to have been briefed the most” about the merger in November and December, including members of the bank’s audit committee, this person said. Another person briefed on the inquiry said they were members of the bank’s audit committee at the time of the Merrill deal.
Fed Examining Mid-Sized Banks’ Losses to Commercial Real Estate Federal Reserve supervisors are examining the vulnerability of medium-sized lenders to falling commercial real-estate values to gauge the size of potential losses across the banking system. The Fed is focusing on banks smaller than the 19 largest lenders examined in detail in May, a central bank official said on condition of anonymity. The process involves gathering data from individual banks and comparing it to their peers, an approach known internally as a “horizontal review.”
FDIC Gains Private Partner for Toxic Loans Texas Company is First Winning Bidder to Begin Taking Over Loans from Failed Franklin Bank The Federal Deposit Insurance Corp. has named the first winning bidder under a test of the government's program to back private purchases of toxic mortgage assets and get them off banks' balance sheets. Fort Worth, Texas-based Residential Credit Solutions Inc. is paying $64.2 million for a 50 percent stake in a new company that will have about $1.3 billion in home mortgages from the failed Franklin Bank.
In Original Reformer, a Model After the Crash of '29, Ferdinand Pecora Took On the 'Banksters' Of His Day and Ushered In Powerful New Regulation of Wall St. The last time Washington enacted sweeping financial reform, more than 75 years ago, the catalyst was a cigar-smoking, Sicilian-born immigrant named Ferdinand Pecora. A former New York prosecutor, Pecora was the last in a series of investigators hired to examine the causes that led to the stock market crash of 1929 for the Senate Committee on Banking and Currency. In early 1933, the newly-elected Democratic president, Franklin D. Roosevelt, gave the bulldog lawyer his blessing to dig deep into the excesses that had plunged the nation into the Great Depression.
Greenspan Bubble Theory Draws 4.8 Million Shrugs As Alan Greenspan tirelessly makes the rounds to save his legacy, Singapore is reminding us why the former Federal Reserve chairman’s efforts aren’t working. Mr. “We Can’t Detect Bubbles” probably never thought he could learn a thing or three from an economy of 4.8 million people. This week, Singapore’s National Development Minister Mah Bow Tan unveiled measures to prevent excessive price swings in the real-estate market.
Alan Grayson and Nassim Taleb Talk Punishment
Senate panel releases healthcare plan without public option U.S. Senator Max Baucus unveiled his plan for a 10-year, $856 billion healthcare overhaul on Wednesday that would revamp insurance rules but does not include a government-run option backed by liberal Democrats. Baucus, the chairman of the Senate Finance Committee, made the bill public after months of negotiations that alienated some of his fellow Democrats and attracted no Republican supporters.
45% Of Doctors Would Consider Quitting If Congress Passes Health Care Overhaul Two of every three practicing physicians oppose the medical overhaul plan under consideration in Washington, and hundreds of thousands would think about shutting down their practices or retiring early if it were adopted, a new IBD/TIPP Poll has found. The poll contradicts the claims of not only the White House, but also doctors' own lobby - the powerful American Medical Association - both of which suggest the medical profession is behind the proposed overhaul.
Hoyer Won't Answer Directly Whether Immigration Reform Would Make Current Illegal Aliens Eligible for Federally Subsidized Health Insurance Under Obamacare House Majority Leader Rep. Steny Hoyer (D-Md.) intimated that if comprehensive immigration reform is passed, it could provide a method for immigrants currently living illegally in the U.S. to get federally subsidized health care. Hoyer, speaking at his weekly press briefing Tuesday, was asked by CNSNews.com whether creating a pathway to citizenship for illegal aliens--a key part of comprehensive reform--would mean that currently-illegal aliens would become eligible for federal health care subsidies under the health-care reform plan.
Average family health insurance policy: $13,375, up 5% An average family health insurance policy now costs more than some compact cars, and four in 10 companies will likely pass more of that expense on to workers, according to a closely watched survey of businesses released Tuesday. The average cost of a family policy offered by employers was $13,375 this year, up 5% from 2008, the Kaiser Family Foundation and the Health Research & Educational Trust survey found. By comparison, wages rose 3% over that period, the study said.
New health care plan and your wallet Sen. Baucus' health care reform proposal contains a number of measures that have the potential to affect Americans' bottom line. The health reform debate is still far from the finish line, but Wednesday brought an important milestone: A key senator's highly-anticipated proposal echoing many of the reforms that President Obama is calling for. "My bill is very, very similar to the framework that the president was talking about when he gave his message the other day. It's very similar," Senate Finance Committee Chairman Max Baucus, D-Mont., told reporters.
Taxing High-End Health Plans May Pit Obama Vs. Labor Allies President Obama will likely enjoy a warm reception when he speaks at the AFL-CIO convention on Tuesday, but Big Labor isn't happy about his latest idea for how to pay for a health care overhaul. His speech to Congress last week left out House Democrats' plan to slap a surcharge on high earners. Instead, he embraced taxing insurers on high-cost health plans, which is part of Senate efforts to craft a centrist bill. Obama offered few specifics beyond a slimmer $900 billion price tag. But his financing idea is drawing fire from union allies, driving home how difficult it will be to pay for even a scaled-down health bill.
Are You Ready To Pay $31,000 For Health Insurance? If healthcare inflation continues at the same pace it has over the last 5 years, then you'll be paying $31,000/year for health insurance for your family by the year 2019, according to the Kaiser Family Foundation. If we're really lucky, and it's only as bad as it was over the last 10 years, then you'll only be paying $24,180 per year. What, you don't pay for health insurance cause your employer pays for it? Get real. It's just coming out of your salary.
Blockbuster to close up to 960 stores by end of 2010 Top U.S. movie rental chain Blockbuster Inc, which is facing tough competition from Netflix Inc and Coinstar Inc's Redbox, plans to close up to 960 stores by the end of next year. The company said in a regulatory filing on Tuesday that along with the conversion of certain stores to outlets and lease mitigation or termination efforts, total store closures would be in the range of 1,335 to 1,560.
ACORN Sting Lands Housing Group in Conservative Crosshairs It began, ridiculously enough, with two young conservatives dressed in "pimp" and "prostitute" costumes that looked like they had been picked up on the cheap for a Halloween party. And it could end with anti-poverty group ACORN, the scandal-prone longtime Republican target, seeing its government support evaporate. ACORN, the Association of Community Organizations for Reform Now, is finding itself under fire thanks to conservative activists James O'Keefe and Hannah Giles, who dressed in less-than-convincing outfits and headed to ACORN offices around the country with a hidden camera. What they found, in some locations, was ACORN workers who offered tips on how to hide money and falsify taxes for a prostitution operation.
House Passes Alan Grayson's Resolution Encouraging High School Students to Learn the Constitution
‘Black Swan’ Author Taleb Wants His Obama Vote Back U.S. President Barack Obama has failed to appoint advisers and regulators who understand the complexity of financial systems, Nassim Taleb, author of “The Black Swan,” told a group of business people in Toronto. “I want my vote back,” Taleb, who said he voted for Obama, told the group. The U.S. has three times the debt, relative to the country’s economic output, as it had in the 1980s, Taleb said. He blamed rising overconfidence around the world. U.S. Federal Reserve Chairman Ben Bernanke, who was appointed to a second term last month by Obama, contributed to that misperception, Taleb said.
U.S. industrial output rises again, inflation tame U.S. industrial production rose for a second straight month in August, reinforcing views the nation's recession had ended, while a spike in gasoline costs pushed consumer prices higher. A separate report showed confidence among U.S. homebuilders this month vaulted to its highest level since May 2008. The Federal Reserve said on Wednesday that output at the nation's factories, mines and utilities increased 0.8 percent last month after gaining 1 percent in July. The data came a day after Fed Chairman Ben Bernanke said the economic slump that started in December 2007 was "very likely over".
Obama Disagrees with Carter Statement on Racism A day after former president Jimmy Carter said that race is at the heart of much of the opposition to President Obama, President Obama said through his spokesman that he disagrees. "The president does not believe that the criticism comes based on the color of his skin," Gibbs said Wednesday. "We understand that people have disagreements with some of the decisions that we've made and some of the extraordinary actions that had to be undertaken by this administration. . . . The president does not believe that it's based on the color of his skin." The official White House reaction joined a host of responses to Carter that were passionate and, predictably, all over the political map as it builds on a summer of increasing discontent.
U.S. unemployment not to peak until 2011: Krugman Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday. He said the global economy seems to be stabilizing at a level that is "unacceptably poor" and added it is possible that the recession will be a double-dip one. "(U.S.) unemployment will peak in early 2011 ... certainly staying very high and possibly rising all next year," Krugman told a business meeting in Slovenia, adding his forecast was based on data from previous U.S. economic crises.
The Final Demise Of A Speculative Housing Bubble The speculative mania in housing has been extended by massive Federal Reserve and government intervention; the government now owns or guarantees 2/3 of U.S. mortgages. While speculative bubbles may pop in terms of sales and valuations, the psychology that underpinned the mania lives on for some time--especially if government extends the speculation with massive interventions. I sincerely doubt the average American understands the full measure of Federal intervention to prop up the U.S. housing market.
Builder confidence up, but tax fears loom An industry group says the nascent recovery in residential real estate could be derailed if a popular credit isn't renewed. An index of home builders' confidence rose in September for the third month in a row, but an industry group said Wednesday the fragile residential real estate market recovery could be cut short if a popular government tax credit isn't extended. The National Association of Home Builders said that its Housing Market Index, which it compiles for Wells Fargo, rose one point last month to 19 -- the highest level since May 2008.
No Easy Exit for Government as Housing Market's Savior After a year of extraordinary interventions in the economy, the federal government is starting to pare its support for the private sector. It doesn't look that way to Peter Lansing, president of mortgage firm Universal Lending. The Denver home lender sees every day how dependent the housing market has become on the government. At the height of the boom, just 20% of Universal's mortgages were backed by the Federal Housing Administration, an arm of the government that guarantees loans to borrowers who can't afford big down payments. Today, the FHA accounts for more than 80% of his business. For Mr. Lansing, this represents a new way of life -- more government, more paperwork, but also a lot of sales that wouldn't have happened otherwise.
With a Quick Rise, Hard Fall, Home Lender Marked an Era OCALA, Fla. -- Lee Farkas's run in the mortgage business began when he bought a tiny lender here in 1991. It ended last month with an email to his 2,500 employees bearing the subject line: "The saddest day of my life." Mr. Farkas, a college dropout, turned to the business after running a maker of storage tanks in New Mexico, working at a liquor store in the Virgin Islands and renovating houses in central Florida. From that unlikely start, he built his company -- Taylor, Bean & Whitaker Mortgage Corp. -- into the nation's 12th-largest home-mortgage lender.
CAUTION: Monetary System Collapse
Chinese-tire restrictions open door for other trade protections President Obama's decision to impose restrictions on Chinese tire imports has opened the door to requests for similar protection from foreign competition by other U.S. industries and interests, trade experts warn, creating the conditions for an escalation of tensions with China. Administration supporters have said Mr. Obama's tough action early in his tenure will give him credibility with congressional Democrats and labor unions for later trade battles, but some warn that is a dangerous strategy.
U.S. Steel Files Complaint Against Chinese Steel Pipe U.S. Steel Corp. asked the U.S. Commerce Department to impose dumping and anti-subsidy duties of as much as 90 percent on some steel pipe imports from China, five days after the Obama administration set tariffs on Chinese tires. The petition was filed today with the U.S. International Trade Commission against $400 million in imports of pipes used in chemical, petrochemical, refineries and related operations, according to Roger Schagrin, a lawyer for the U.S. producers. The U.S. imposed tariffs this month on a different type of steel pipe from China in a separate case.
Globalism vs. Americanism Pat Buchanan Down at the Chinese outlet store in Albany known as Wal-Mart, Chinese tires have so successfully undercut U.S.-made tires that the Cooper Tire factory in that south Georgia town had to shut down. Twenty-one hundred Georgians lost their jobs. The tale of Cooper Tire and what it portends is told in last week's Washington Post by Peter Whoriskey. How could tires made on the other side of the world, then shipped to Albany, be sold for less than tires made in Albany? Here's how. At Cooper Tire, the wages were $18 to $21 per hour. In China, they are a fraction of that. The Albany factory is subject to U.S. health-and-safety, wage-and-hour and civil rights laws from which Chinese plants are exempt. Environmental standards had to be met at Cooper Tire or the plant would have been closed. Chinese factories are notorious polluters.
Never Reviewed by NYT or WashPost, Mark Levin's 'Liberty and Tyranny' Has Now Sold 1 Million Copies Without ever having been reviewed by either the New York Times or the Washington Post, Mark Levin’s Liberty and Tyranny: A Conservative Manifesto has now sold one million copies, according to its publisher, Threshold Editions. Levin is a nationally syndicated radio host, president of the Landmark Legal Foundation, and served as chief of staff to Atty. Gen. Ed Meese in the Reagan Justice Department.
Union Members Say They Want More Hardball From Obama Union activist Harriet Applegate has had enough of President Barack Obama seeking compromises with political opponents to advance his agenda. It’s time for some “hardball,” she said. “He should ignore the opposition, because they are mean- spirited and hateful,” Applegate, executive secretary of the AFL-CIO for a swatch of Ohio including Cleveland, said at the labor federation’s national convention this week. “Whether he is enough of a hardball player remains to be seen.”
Senate battle brewing: surveillance vs privacy A battle appeared to be emerging in the U.S. Senate over extending terrorism surveillance methods versus bolstering privacy protections. The Obama administration wants to extend three key surveillance techniques adopted in the Patriot Act law after the Sept. 11, 2001 attacks to track terrorism suspects. They are roving wiretaps to track multiple communications devices an individual may use; access business records; and what’s known as the “lone wolf” provision to watch an individual who may be hatching terror plots but isn’t part of a bigger group. Those three expire Dec. 31.
Senate passes measure to allow gun transport on Amtrak Amtrak would lose its federal subsidies if it doesn't put a system in place by early next year to check and track firearms so that passengers can legally put the weapons in their checked baggage, the Senate voted Wednesday. The measure, an amendment to the transportation and housing appropriations bill, passed 68-30. The House version of the bill, passed in July, does not include the provision, so further steps would be needed for it to reach President Obama's desk.
New Volkswagen Gets 158 Miles Per Gallon! Volkswagen showed off two new eco-cars at the Frankfurt Autoshow, the E-Up! and the L1. Each of them has a unique look, and neither is aimed at the mass market. The E-Up is stripped down electric city car. It's smaller than a Mini, and it will get 60-80 miles per charge. The car is supposed to be available in Europe by 2013.
Lamborghini Flaunts $1.6 Million Supercar, Defying Recession Lamborghini SpA, Ferrari SpA and Bentley Motors Ltd. are shrugging off the economic recession by flaunting some of the most expensive high-performance vehicles they’ve ever produced. Undeterred by a 40 percent slump in the luxury-car market in the past 12 months, Lamborghini is using the Frankfurt Motor Show to unveil the 1.1 million-euro ($1.6 million) Reventon Roadster supercar, the costliest model it has ever made.
Mary Travers of Peter, Paul and Mary dead at 72 DANBURY, Conn. - Mary Travers, one-third of the hugely popular 1960s folk trio Peter, Paul and Mary, has died. The band's publicist, Heather Lylis, says Travers died at Danbury Hospital in Connecticut on Wednesday. She was 72 and had battled leukemia for several years. Travers joined forces with Peter Yarrow and Noel Paul Stookey in the early 1960s.
Henry Gibson dies at 73; original cast member of 'Laugh-In' The veteran actor found fame four decades ago as a meek poet on the landmark TV comedy show and most recently had a recurring role on 'Boston Legal.' Henry Gibson, a veteran character actor who came to fame in the late 1960s as the flower-holding poet on TV's landmark satirical comedy show "Rowan & Martin's Laugh-In," has died. He was 73. Gibson died late Monday night at his home in Malibu after a short battle with cancer, said his son Jon.
Gold at record high after Bernanke says recession is over Gold futures climbed back above the $1,000-an-ounce mark to finish at a new record on Tuesday, after upbeat U.S. economic reports and as Federal Reserve Chairman Ben Bernanke said the recession is likely over. However, he and other Fed officials reiterated views that unemployment will remain high and that the economy stay weak well into next year, fueling expectations that the central bank will continue to provide ample liquidity. The front-month September gold contract ended up $5.10, or 0.5%, at $1,005.0 an ounce on the Comex division of the New York Mercantile Exchange. This marks the highest settlement for a nearby gold contract. The more active December contract rose $5.20, or 0.5%, to finish at $1,006.30 an ounce. "Gold is continuing to knock on the $1,000-an-ounce door without making a concerted effort either way to test resistance or support," analysts at Goldcore said in a note.
Could China Propel Gold to $2,000? Last week Alan Greenspan noted that "Rising prices of precious metals and other commodities are an indication of a very early stage of an endeavor to move away from paper currencies.” In other words, people are buying gold as a hedge against inflation. Here in China, our firm SinoLatin Capital has been approached by numerous Chinese companies specifically looking to acquire gold mines in Latin America. We've studied the market for some time and we see China making several Latin American gold mining acquisitions over the next few years. How can retail investors benefit from these trends? One interesting way to play the South American gold market is AngloGold Ashanti (AU). The South African mining company is moving forward on what they consider to be "one of the most important gold discoveries worldwide in the past decade" in the country of Colombia. The project, known as The Colossus (La Colosa in Spanish), is reputed to contain reserves of over 12 million ounces. The project is facing considerable environmental scrutiny but it looks like it will move forward this year.
Gold Futures Advance on Inflation-Hedge Demand; Silver Gains Gold rose, closing above $1,000 an ounce for the third straight session, as commodities climbed on demand for a hedge against inflation. Silver also gained. Federal Reserve Chairman Ben S. Bernanke said the worst U.S. recession since the 1930s has probably ended, while warning that growth may not be strong enough to reduce unemployment quickly. The Fed has kept its benchmark lending rate as low as zero since December. It authorized $1.45 trillion in purchases of mortgage-backed securities and other housing debt this year.
$5,000/oz gold? Rob McEwen says it's coming in 2014 or 2015 Über gold promoter Rob McEwen has also developed a taste for silver mining When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar. In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either in 2014 or 2015.
This gold rally no flash in the pan Investors betting U.S. stimulus will trigger inflation Gold investors have been the harshest critics of central bank policy over the past year, judging by the push in the gold price through US$1000 last week. That number says less about personal demand for gold and more about investor distaste for the U.S. dollar. It is a sentiment that is likely to build over the coming years even if gold fails to hold this important psychological barrier. Gold investors are balking at the Faustian bargain that U.S. policymakers entered into a year ago allegedly to save the world's financial system from collapsing -- a deal that called for trillions of dollars of government spending and money creation that in past episodes has led to inflation.
Gold has nowhere to go but up! This is the view of a number of market commentators who see a few pivotal economic events coming together to support the price of the yellow metal Gold will soon become the next global asset bubble now that pivotal global economic events are finally converging to propel its ascent into record territory. This is the most recent consensus shared by many key business leaders who have the most at stake. Among them is Rupert Robinson, CEO of the venerable London-based Schroders Private Bank, which manages nearly US $200 billion of investment assets, including a sizeable stake in gold futures and gold-backed exchange traded funds (ETFs). He argues that if inflation gathers momentum, long-term interest rates will rise, which in turn should accelerate the weakening of the US dollar. This makes gold the ultimate safe haven alternative to holding US ‘fiat' money (a currency that is not backed by anything of tangible value).
A Floor Beneath the Gold Price The UK Telegraph recently quoted at length Cheng Siwei, former vice chairman of the Standing Committee of the Chinese Communist Party. He explained how Beijing is dismayed by the “credit easing” coming out of the Federal Reserve. “If they [the Fed] keep printing money to buy bonds,” said Mr. Cheng, “it will lead to inflation, and after a year or two, the dollar will fall hard. Most of our [Chinese] foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen and other currencies.” Mr. Cheng was referring to over $2 trillion of Chinese foreign reserves, the world’s largest holding. “Gold is definitely an alternative,” said Mr. Cheng, “but when we buy, the price goes up. We have to do it carefully so as not to stimulate the market.” From Mr. Cheng’s lips to God’s ears – and now to ours. We have direct testimony from a high-level cadre that China, while cautious, is a key driving force in the gold market. China is buying.
$1,000 Gold—Can It Last? Gold cracked the $1,000-an-ounce barrier for a second time last week, and the New York spot price is now hovering right around that four-digit mark. The first time this happened, in March 2008, the price plummeted to the low $900s within a couple of days. No one knows what gold will do this time around, but there are some plausible reasons why the price could stay higher longer.
A Look at the Factors Driving Gold Except for two constraints, China would swap its whole $2 trillion portfolio of US Treasury securities for food, energy and mineral producing capacity:
No-one will buy their Treasuries, and
No-one will sell them the farmland, oil fields and mines.
I recently spent a couple of weeks in Australia, and the business question I heard most frequently was: When will the world dump the dollar as a reserve currency? It’s easy for the Aussies to talk about this, because that thrice-blessed land is bursting with food, energy and mineral resources. The best way to answer their question is with another question: When are you going to put Australia up for auction? China would buy the whole continent in a heartbeat.
Gold Producer De-Hedging Will Stop Supporting Prices Gold producers' de-hedging of gold exposure, in response to rising prices, may have given the rally extra legs. Producers have de-hedged so much over the last year and a half that there might not be many hedges left to unwind further. Barrick Gold's recent announcement to remove its hedges could thus be the tail-end of a process that has run its course.
Why gold producers are abandoning their hedges Sideways price action defined much of the overnight period in the precious metals markets, although the bias was towards slightly lower values. Gold retreated to the low $990s once again but traded in a narrow, barely six-dollar range, as the dollar added a few more points on the trade-weighted index during the Asian and European sessions.
Commodities May Lure $20 Billion in Rest of Year, Tiberius Says Commodities will probably attract $20 billion during the rest of the year as investors seek to buy more energy and metals assets as a hedge against inflation, said Tiberius Asset Management AG, which manages about $1.5 billion. Total investments in raw materials from oil to gold rose to more than $200 billion in the first half from $160 billion at the end of 2008, the Zug, Switzerland-based firm said today in a monthly report, citing “external estimates.” About half of the gains came from new investment flows and the rest from price appreciation, it said.
Gold-Silver ratio back to Lehman bankruptcy levels Where is the gold-silver ratio headed? Now that gold price has zoomed above the $1000 mark per bounce, what is happening to the most watched ratio between two hot commodities--gold and silver. According to a report from Scotia Mocatta commodities research, the gold-silver ratio continues its grind back towards pre Lehman bankruptcy levels. Last year, around this time, the collapse of global banking giant Lehman Brothers had crippled the stocks and commodities markets, and sent the global economy to the verge of recession.
How China monetized silver as a currency Silver is as hot a commodity as gold these days. Silver was the first official currency in the world, much before the world invented paper currencies. Do you know that silver was the official currency of China till 1930? Read some interesting facts on silver as an enduring currency since early history
The new China syndrome: The threat to Canada Though its money is welcome, we should have no illusions that China is a normal investor that plays by our rules T he “China Syndrome” describes a nuclear meltdown in which molten material from an American nuclear reactor blasts a hole through the Earth’s crust and reaches China. It could just as well describe the consequences of the U.S. financial and economic meltdown, which has left China with trillions of U.S. dollars that it is now using to go on a global shopping spree to meet its insatiable demand for oil, copper, iron ore, aluminum and other minerals while reducing its exposure to a fall in the value of the increasingly vulnerable U.S. dollar.
Greenspan Sees Threat Congress to Hamper Fed Inflation Fight Former Federal Reserve Chairman Alan Greenspan said he’s worried that lawmakers will hamper U.S. central bank efforts to rein in its monetary stimulus, and that inflation might “swamp” the bond market. “It’s the politics in the United States that worries me, whether the Congress will basically feel comfortable” with the Fed withdrawing its stimulus, Greenspan said in a broadcast to Tokyo clients of Deutsche Bank Securities Inc. today. He later said that “if inflation rears its head, it will swamp long-term markets,” referring to bonds.
Dollar Trades Near Lowest in 2009 on Record Low Borrowing Costs The dollar traded near the weakest level against the euro this year as record low borrowing costs encouraged investors to sell the greenback and buy higher- yielding assets outside the U.S. Sterling fell yesterday from near a five-week high versus the dollar as a report raised speculation that the U.K.’s housing slump will resume next year. The Brazilian real and Norwegian krone gained versus the dollar as U.S. stocks rose to the highest level in almost a year, encouraging investors to reduce holdings of the world’s main reserve currency as a haven.
Ron Paul on "Morning Joe," 9/15/09
Buffett says U.S. economy ‘has not turned up’ The U.S. economy has not begun to climb out of the worst recession since the Great Depression, but the "terror" that followed last year's near- collapse of the financial system is gone, due in part to government intervention, Warren Buffett said Tuesday. Mr. Buffett maintained a positive outlook on the government's much criticized Troubled Asset Relief Program (TARP) for banks, saying it may ultimately turn a profit for the government. "At the moment we don't see it getting better or worse, but that's better than you could say six months ago," said the billionaire known as The Sage of Omaha for his long history of successful investments. "The terror of last year is gone and that's thanks in part to the government."
Poorer but no wiser America falls behind in the global wealth wars A year after the Lehman Bros. collapse and subsequent credit crisis comes new confirmation that America is falling behind. A report by the Boston Consulting Group finds that the U.S. is no longer home to the greatest chunk of the world's wealth. That honor now belongs to Europe. Of course, it's not like anybody is really getting ahead. Global wealth fell nearly 12% in the past year to $92.4 trillion. It's just that America's share is falling faster than Europe's, where total wealth declined a mere 5.8%.
Europe overtakes the US as world’s wealthiest region The economic and financial crisis of the last 18 months has transformed the global map of the world’s wealthiest people, with Europe nudging out North America as the richest region, according to a new report by The Boston Consulting Group. BCG’s said that global wealth fell 11.7% to $92.4 trillion in 2008 – the first decline since 2001. BCG said it is unlikely to return to its pre-2007 levels for four years. North America saw the biggest decline in wealth, falling by 21.8% last year. The big drop was partly put down to the large percentage of wealth held by Americans in equities. Latin America was the only region where wealth grew, by 3%. Total wealth in Europe fell 5.8% to $32.7 trillion last year.
'We're going to have zombie capitalism for the next 15-20 years,' says Jim Rogers Legendary global investor and chairman of Singapore- based Rogers Holdings, Jim Rogers said the Fed and the US Treasury should have let 10 banks fail, not just Lehman Brothers, for the financial system to clean itself up. Speaking to CNBC Wordwide Exchange today Rogers said "All the government officials and bureaucrats loved the fact Lehman failed, because they could all jump in and support banks." "This whole problem was not caused by Lehman Brothers or Lehman Brothers failure. Lehman was an effect not a cause." "The real problem over the past 10-15 years has been that regulators have not let people fail. Had they let people fail we would have solved this problem a long time ago. I don't know why they're not in jail," Rogers said.
U.S. credit card defaults up, signal consumer stress Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks' consumer lending woes are far from over. The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.
Meredith Whitney: Big Test Coming Next Month Meredith Whitney isn't buying Fed Chair Ben Bernanke's argument that the recession is technically over. Whitney said this morning that the economy is still weak and that it will “face a big test next month when the government starts winding down its massive support programs," according to CNBC. Whitney offers a bleak view of the near future, saying that jobs are still not being created, real estate sales are still suffering, and the liquidity to the consumer and small business is still contracting.
The Greatest Sucker's Rally in History? In the past six months, Aaron and I have talked a lot about the similarity between the rally of early 1930 and the one we're having today. The early 1930 rally came after the market had fallen nearly 50% in the fall of 1929. The spring rally took the market up nearly 50% again, to a level that was only about 20% below the previous peak. That rally, of course, was also the biggest sucker's rally in history. After the market peaked in April 1930, it crashed again, eventually ending up down 89% from the 1929 high and more than 80% from the 1930 high. The market did not reach the 1930 high again for another quarter of a century.
Risk of deflationary collapse greater now than in 2007 Regarding the outlook, my analysis is grim. I am not a doomsayer, I follow the cash, and so far, I've been correct, and the government has been wrong. Here's the situation. We are at greater risk of a total meltdown due to a deflationary collapse than we were in 2007. After the greatest Ponzi scheme in the history of the capital markets, we've seen history's greatest fiscal and monetary expansion, but it hasn't worked. Debt levels of consumers and business exceed the capacity to repay.
On The edge with Max Keiser/ 09/ 11 /2009/ P1
On The edge with Max Keiser/ 09 /11 /2009/ P2
On The edge with Max Keiser/ 09 /11 /2009/ P3
Majority of Americans find Wall Street pay unreasonable A majority of Americans believe Wall Street executive compensation is "unreasonable," and that bankers fared better than others during the financial crisis, a poll conducted for Reuters shows. But while Americans may be stewing over outsized pay, they differ about what the Obama Administration should or can do about it, according to the phone poll of 1,000 adults by Ipsos Public Affairs between September 11 and September 14.
Lehman Post Mortem, Did Bernanke and Paulson Blackmail Congress?"Lehman's fate was sealed not in the boardroom of that gaudy Manhattan headquarters. It was sealed downtown, in the gloomy gray building of the New York Federal Reserve, the Wall Street branch of the U.S. central bank." Stephen Foley, U.K. Independent
Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who wanted to create a financial 9-11 to scare Congress into complying with his demands for $700 billion in emergency funding (TARP) for underwater US banking behemoths. The whole incident wreaks of conflict of interest, corruption, and blackmail.
U.S. rebuffing big banks' push to exit bailout Some of the largest U.S. banks will remain caught in the government's financial bailout program for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter. Banks such as Citigroup and Bank of America Corp have been chafing under the government's reins and want to exit the Troubled Asset Relief Program (TARP), which delivered capital infusions to banks along with limits on pay, share repurchases and dividends.
Here’s Why the U.S.-China Tire Tiff Could Lead to Great Depression II When U.S. President Barack Obama late Friday (Sept. 11) signed an order that imposed an additional duty of 35% on tires imported from China, it set up the potential for an old-fashioned trade war. Currently, global trade is down only 20%. During normal times, worldwide commerce would recover on its own. But as most investors understand all too well, these aren’t normal times. Global trade fell by 35% after last September’s financial crash. And it plunged 65% between 1929 and 1932 as a result of the Great Depression. With the worldwide economy already in a weakened state, a bare-fisted trade war between the world’s two most important trading partners – the United States and China – would be devastating.
‘We still have the same disease' On anniversary of Lehman collapse, author of The Black Swan can say 'I told you so' On the anniversary of the spectacular collapse of Lehman Brothers, Nassim Nicholas Taleb is one of those people who can say, “I told you so.” For the past decade, he's been warning that the global economy has become far more vulnerable to unpredictable events that can cause vast disruption. He famously foresaw the credit crunch that brought the financial system to its knees.
A Protectionist President Like Hoover, Obama is abdicating U.S. trade leadership. President Obama traveled to Wall Street yesterday to press his case for more financial regulation, but the bigger economic issue of the day concerned other White House policies. To wit, what does it mean for the world economy if America now has its first protectionist President since Herbert Hoover? The smell of trade war is suddenly in the air. Mr. Obama slapped a 35% tariff on Chinese tires Friday night, and China responded on the weekend by threatening to retaliate against U.S. chickens and auto parts. That followed French President Nicolas Sarkozy's demand on Thursday that Europe impose a carbon tariff on imports from countries that don't follow its cap-and-trade diktats. "We need to impose a carbon tax at [Europe's] border. I will lead that battle," he said.
Barack Obama Half-Way Endorsed Sheila Bair's Reform Plan Yesterday The most important line in Barack Obama's speech yesterday on the need for new financial regulation may have been his endorsement of Sheila Bair's plan to form a "financial council" of regulators rather than radical plans before Congress to concentrate all regulatory powers in the Federal Reserve. "While holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we'll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don't fit neatly into an organizational chart," the president said.
Ron Paul: Need More Regulation
What The Judge's Crushing Denial Of SEC/BofA Agreement Really Means In a crushing memorandum order issued yesterday, a federal judge in Manhattan (the increasingly beloved-by-the-masses Jed S. Rakoff) denied the $33 million handshake agreement the SEC made with Bank of America to end the agency's lawsuit related to the bank's alleged failure to properly disclose bonus payments made to Merrill Lynch employees.
Economic Inequality: The Wall Street Journal Is Just Wrong For anyone with even a passing familiarity with issues associated with economic inequality, The Wall Street Journal front page story last week was shocking. It's use of bad data was a misuse of this important forum. In effect, the article says that economic inequality was never really a problem, and even if it is we no longer have to worry about it. These conclusions are just plain wrong.
No Easy Exit for Government as Housing Market's Savior After a year of extraordinary interventions in the economy, the federal government is starting to pare its support for the private sector. It doesn't look that way to Peter Lansing, president of mortgage firm Universal Lending. The Denver home lender sees every day how dependent the housing market has become on the government. At the height of the boom, just 20% of Universal's mortgages were backed by the Federal Housing Administration, an arm of the government that guarantees loans to borrowers who can't afford big down payments. Today, the FHA accounts for more than 80% of his business. For Mr. Lansing, this represents a new way of life -- more government, more paperwork, but also a lot of sales that wouldn't have happened otherwise.
Fed Likely to Keep Buying Mortgage Instruments The Federal Reserve, which convenes its policy meeting next week, is likely to stay the course to buy $1.45 trillion in mortgage-linked securities despite potential resistance from a few regional Fed presidents. Central-bank officials plan to discuss winding down those purchases over the coming months to limit disruption to the market when the buying comes to an end. Some regional Fed policy makers have suggested the Fed might halt the program before it finishes its purchases of $1.25 trillion in mortgage-backed securities and $200 billion in Fannie Mae and Freddie Mac debt announced in the past year. But they are a small minority across the Fed system.
Treasuries Little Changed After Retail Sales, Fed Debt Purchase Treasuries were little changed as the Federal Reserve bought U.S. debt and government reports showed retail sales and producer prices rose in August. U.S. government securities earlier declined as retail sales increased last month by the most in three years. The Fed bought $2.049 billion of Treasuries maturing between February 2021 and August 2022, part of its effort to cap consumer borrowing costs. The spread between two- and 10-year yields widened to 2.51 percentage points, from 2.44 percentage points at the end of last week.
Economic Megatrends That Will Drive Our Future We are plunged deep into the biggest credit-business cycle in world history. Many cycles have been worldwide, but this one dwarfs all others, including the Great Depression. An ocean of money and credit flooded every corner of the globe. The culture of easy wealth worked its way into the smallest economies from Norway to Chile, from Iceland to Mongolia. Economies built on commodities exports, even energy exporters, have felt its impact. The inevitable bust sent the world into economic decline wiping out trillions of dollars of wealth. Built largely on credit, the resulting debt is now being liquidated causing worldwide deflation.
George Bush and Hank Paulson Face Off On The Crisis George Bush speechwriter Matt Latimer tells the tale of what the economic crisis looked like from inside the White House — and much of it reads like an attack on Hank Paulson, who he describes as “pretty much a nonperson at the White House.” Latimer pins the blame on the White House’s seeming ineffectiveness during the crisis—those days when George Bush would pop in and out of the White House like a cuckoo clock and deliver a speech no one really understood or cared about—on the Treasury’s lack of communication with the White House. Basically, he accuses Paulson of shutting the President out of policy making.
Bernanke, Consumers Offer Signs of Recovery Retail Sales Jump; Fed Chief Says Recession Is Likely Over U.S. Federal Reserve Chairman Ben Bernanke made his most emphatic declaration yet that the recession has ended, as a separate data release Tuesday showed a rebound in retail sales. But Mr. Bernanke reiterated that tight credit conditions and a soft labor market will prove to be a challenge. From a technical perspective, the "recession is very likely over at this point," Mr. Bernanke said in a question-and-answer session at the Brookings Institution. But he added that even if recovery is under way, the economy will still seem weak because credit conditions remain tight and any decline in the unemployment rate will probably happen gradually. He noted that one risk is that the economy will grow in the second half of 2009, but not enough to trigger a rapid recovery in employment.
Financial System ‘Only Looks’ Fixed, Ranieri Says Lewis Ranieri, the mortgage-bond pioneer, said the U.S. housing market is “still very fragile” and commercial real estate is at the beginning of a cycle that will damage banks, potentially disrupting the economic recovery. The financial system “isn’t fixed yet, it only looks like it’s fixed,” Ranieri, chairman of New York-based Hyperion Partners LP, said in an interview today. The economy is “going to be OK, but I think to believe we’re going to get instant gratification is unrealistic,” he said. “We’re looking at a very slow two-plus-year recovery.”
US Census Bureau Confirms Rising Poverty, Falling Incomes, and Growing Numbers of Uninsured In early September, The US Census Bureau released its new report titled, "Income, Poverty, and Health Insurance Coverage in the United States: 2008" showing disturbing data that portends much worse ahead under a president and Congress doing nothing to address it. In 2008, poverty reached 13.2% of the population, its highest level in 11 years, the result of millions losing jobs during the first year of the gravest economic crisis since the 1930s. For blacks, the figure was nearly double at 24.7%, and 31% of all Americans were impoverished for at least two months between 2004 and 2007, years of economic expansion. At yearend 2008, even by the Bureau's conservative measures, 39.8 million people were impoverished, the highest level since 1960, and 17.1 million lived in extreme poverty at below one-half the official threshold. In addition, for the first time since the 1930s, median household income failed to increase over a 10-year period from 1999 - 2008.
Many Employers to Raise Cost of Health Benefits, Survey Finds Though Americans who already have medical coverage may be wary of change, a new survey indicates that they may be hard-pressed to escape it -- even in the absence of health-care reform. As businesses contend with rising costs, many workers face an erosion of health benefits next year, according to an annual survey released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust. Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.
Sick and Wrong How Washington is screwing up health care reform – and why it may take a revolt to fix it Let's start with the obvious: America has not only the worst but the dumbest health care system in the developed world. It's become a black leprosy eating away at the American experiment - a bureaucracy so insipid and mean and illogical that even our darkest criminal minds wouldn't be equal to dreaming it up on purpose. The system doesn't work for anyone. It cheats patients and leaves them to die, denies insurance to 47 million Americans, forces hospitals to spend billions haggling over claims, and systematically bleeds and harasses doctors with the specter of catastrophic litigation. Even as a mechanism for delivering bonuses to insurance-company fat cats, it's a miserable failure: Greedy insurance bosses who spent a generation denying preventive care to patients now see their profits sapped by millions of customers who enter the system only when they're sick with incurably expensive illnesses.
Credit cards take steps to help their users manage debt After years of encouraging consumers to load up on debt, the credit card industry is trying a novel tactic: helping borrowers manage their debt. Tuesday, JPMorgan Chase unveiled new card features that even critics are applauding as a shift in how consumers can track and manage purchases, as well as pay off debt.
Many mortgage modifications push payments .... higher Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes. Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes or other costs into the principal, sometimes turning a difficult payment into an impossible one. That is one reason that many reworked mortgages are sliding back into default.
Fight Looming on Tax Break to Buy Houses When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.
For 'Capitalism,' Moore Sells Short Politicians of All Denominations Just when it looked as if conservatives might be cornering the market on angry populism, along comes Michael Moore. But that doesn't mean Democrats in Washington should rest easy. "Capitalism: A Love Story," the filmmaker provocateur's latest documentary, which he screened at the AFL-CIO convention here for the film's American premiere Monday night, piles some blame on prominent Dems, too. "Capitalism," opening nationwide Oct. 2, manages to use just about everything lousy that's happened in the past year to build Moore's manifesto against ruthless free-market Reaganomics -- from foreclosures on prairie farmhouses to kids unjustly jailed in Pennsylvania to the plane crash in Buffalo. It's all wrapped up, literally, by the spectacle of Moore stretching police tape around the hallowed institutions of Wall Street.
Capitalism : A Love Story - Trailer Michael Moore's next film explores the root causes of the global economic meltdown and takes a comical look at the corporate and political shenanigans that culminated in what Moore has described as the biggest robbery in the history of this country the massive transfer of U.S. taxpayer money to private financial institutions.
Hear him out - he advocates going back to a DEMOCRACY, in which we all participate, instead of capitalism or socialism.
'Cash for Clunkers' Clouds Retail-Sales Outlook "Cash for clunkers" may have just as fleeting an effect on U.S. retail sales as automakers' no- interest loans did in the last recession, according to Dan Greenhaus, chief economic strategist at Miller Tabak & Co. The CHART OF THE DAY shows sales figures for October 2001, when interest-free financing was initially offered, and the four months before and after the incentive took effect. Greenhaus had a similar chart, based on data from the Commerce Department, in a report today that drew the comparison.
Fuel standards: More mpg coming New regulation requires all cars and light trucks sold in the U.S. to get an average of 35.5 miles per gallon by model year 2016. A final proposal for new fuel economy standards was unveiled Tuesday in a joint announcement by the Department of Transportation and the Environmental Protection Agency. The regulation requires all passenger cars and light trucks sold in the United States to get an overall average of 35.5 miles per gallon by model year 2016. By that year, cars will be expected to average about 39 mpg and 30 mpg for trucks. Current fuel economy standards for new cars are 27.5 mpg for cars and 23.1 mpg for trucks.
Bernanke Sees Shadow Markets a Shadow of Former Self The U.S. shadow financial system - the agglomeration of its lightly regulated hedge funds and private equity firms and the securitization markets that fall outside of traditional bank oversight - will recover from the financial crisis, but it will be smaller, simpler and less opaque. So says Federal Reserve Chairman Ben Bernanke.
Obama Supports Extending Patriot Act Business Records Snooping The Obama administration supports extending a controversial provision of the Patriot Act that allows investigators to demand that businesses turn over sensitive financial records, without specifying the investigation's target or why the files are needed. A company receiving a letter demanding the records is subject to a permanent gag order, prohibited from ever disclosing that the government asked for the records. The law doesn’t even specify whether the company can call a lawyer or appeal to a judge, although the feds claim they always allow a company to obtain legal counsel.
***** IMPORTANT INTERVIEW *****
Glenn Beck with David Horowitz on Obama's Communist Czars, Part 1
Glenn Beck with David Horowitz on Obama's Communist Czars Part 2
Coke CEO Calls Obama a Commie Things are getting rough out there. President Barack Obama called Kanye West a "jackass" yesterday, the same day that the CEO of Coca-Cola basically called the president a commie: Coca-Cola Co. Chairman and Chief Executive Officer Muhtar Kent said the idea of a federal tax on soft drinks, under consideration by the U.S. Congress and President Barack Obama, is “outrageous.” “I have never seen it work where a government tells people what to eat and what to drink,” Kent said today, responding to an audience question at the Rotary Club of Atlanta. “If it worked, the Soviet Union would still be around.”
The End of Liberaltarianism So Obama loves huge government, is prosecuting the wars in Afghanistan and Iraq pretty much along Bushian lines, hasn't closed Gitmo, and hasn't done anything about "don't ask, don't tell." And now, my foolish "liberaltarian" friends, comes the coup de grace. From the AP: The Obama administration supports extending three key provisions of the Patriot Act that are due to expire at the end of the year, the Justice Department told Congress in a letter made public Tuesday.
What’s the Point of Demonstrating? Thousands of Americans have just staged a demonstration in Washington, D.C., to express their displeasure with the growth of government in general and the Obama administration’s health-insurance proposals in particular. Such demonstrations are a tradition in this country. The First Amendment, which people usually associate with freedom of speech, religion, and the press, also stipulates that Congress shall make no law abridging “the right of the people peacefully to assemble, and to petition the Government for a redress of grievances.” The Founders knew that people would sometimes desire to complain publicly against government policies that affected them adversely. After all, their own revolution had begun amid many such protests against the British government.
A Message To The Revolution: The Easiest Way To Destroy A Movement Is To Become It JustGetThere | I guess you could say that the media's new catch phrase these days is Tea Party. A couple of years ago, this tradition was reborn by a nationwide grassroots movement of non-partisan freedom lovers, who are seeking a return to the Constitutional roots of this nation. Arising first as the Ron Paul Revolution and now the Campaign For Liberty, this diverse and tech-savvy group of creative individuals reignited the idea of liberty in the political collective consciousness. Congressman Ron Paul has stated many times, "freedom is popular", so as our liberties continue to be curtailed, the resistance grows. Our instinctive reflex is to rebuke these incremental attacks on our un-a-lien-able rights. This human dynamic to rebel against tyranny is also well known by the elite controllers of the world today. The veritable peaceful, organic, spontaneous, synchronistic rebellion by the immensely informed sovereigns, united under one banner of freedom, has to be prevented at all costs by the establishment. A genuine social movement would enable a paradigm shift to occur, which would enhance the publics understanding of the true geopolitical construct that sustains the status quo. This will allow people to stop fixating on presidential appointments and start focusing on the control system itself, and the architects of the global agenda who manipulate both sides of the political spectrum.
Obama policies put 500,000 jobs at risk: study The United States risks losing out on more than 500,000 jobs to countries such as Canada and in Europe under trade policies pursued by Barack Obama, the U.S. President, a new study shows. The study, commissioned by a major U.S. trade group and released Tuesday, found 585,800 U.S. jobs could be lost because of the Obama administration's failure to approve pending free-trade agreements, as well as the "Buy American" restrictions in the US$787-billion economic stimulus package and a spat with truckers crossing the border from Mexico.
Fix America's trade regime US free trade agreements are hurting America's global partners. It's time for Obama to make good on his pledge to reform Nafta On the campaign trail, Barack Obama said: "I voted against Cafta, never supported Nafta and will not support Nafta-style trade agreements in the future." The now president has released a statement saying he will unveil the administration's trade policy agenda ahead of the G20 meeting in late September. This is welcome news, given that the Obama administration has been slow to move on this pressing issue – so much so that some critics have suggested that Obama has abandoned this core campaign pledge. As the administration rightly put top focus on Afghanistan, Iraq and healthcare, Congress has been paving the way for a comprehensive trade reform package that is now ready for the president to incorporate into his new agenda.
Obama to unveil trade policy agenda ahead of G-20 summit US President Barack Obama is to unveil his administration’s trade policy agenda ahead of a meeting of leaders of the Group of 20 developed and emerging nations, his top trade envoy said. Obama will elaborate on his trade policy before the G-20 summit to be held September 24-25 in Pittsburgh, Pennsylvania, US Trade Representative (USTR) Ron Kirk told reporters. “I will not prejudge what the president might do,” Kirk said when asked to give a glimpse of Obama’s expected trade statement. “I think it would be more an illumination of how this president, this administration sees trade as in the integral part our overall economic strategy,” he said.
Government Medicine vs. the Elderly London - In Britain in 2007-08, 16.5% of deaths came after 'terminal sedation.' Rarely has the Atlantic seemed as wide as when America's health-care debate provoked a near unanimous response from British politicians boasting of the superiority of their country's National Health Service. Prime Minister Gordon Brown used Twitter to tell the world that the NHS can mean the difference between life and death. His wife added, "we love the NHS." Opposition leader David Cameron tweeted back that his plans to outspend Labour showed the Conservatives were more committed to the NHS than Labour. This outbreak of NHS jingoism was brought to an abrupt halt by the Patients Association, an independent charity. In a report, the association presented a catalogue of end-of-life cases that demonstrated, in its words, "a consistent pattern of shocking standards of care." It provided details of what it described as "appalling treatment," which could be found across the NHS.
Nato chief calls for closer ties with Russia Nato’s top diplomat has called for an “open-minded and unprecedented dialogue” with Russia to reduce security tensions in Europe and confront common threats. As he prepares for an effort to engage Moscow on European security, Anders Fogh Rasmussen, who took over as secretary-general a month ago, said he wanted to begin an “open and frank conversation [with the Kremlin] that creates a new atmosphere”. In an interview, the former Danish prime minister also said climate change could lead to conflict as countries battled for scarce resources, including those in the Arctic.
Billion-Dollar Pyramid Scheme Rivets Lebanon TURA, Lebanon — The investor, a heavyset man in a gray polo shirt, sat back in a plastic chair in his hardware store and sighed, unable to explain how his life savings had vanished so quickly into thin air. “It’s a disaster, a tsunami,” he said. “Some farmers mortgaged their fields and brought in cash. Others sold land they had inherited from their parents. Teachers gave up all their savings. Old people lost everything they had.”
Obama Is Pushing Israel Toward War President Obama can't outsource matters of war and peace to another state. Events are fast pushing Israel toward a pre-emptive military strike on Iran's nuclear facilities, probably by next spring. That strike could well fail. Or it could succeed at the price of oil at $300 a barrel, a Middle East war, and American servicemen caught in between. So why is the Obama administration doing everything it can to speed the war process along? At July's G-8 summit in Italy, Iran was given a September deadline to start negotiations over its nuclear programs. Last week, Iran gave its answer: No. Instead, what Tehran offered was a five-page document that was the diplomatic equivalent of a giant kiss-off.
Clock ticking for Iran as Israel appears ready for strike In the rare moments when it's not preoccupied with the decline of U.S. President Barack Obama in the polls and with the debate over its government's proposed health-care reforms, the American press continues to deal almost obsessively with another pressing issue: the deadlock in efforts to stop Iran's nuclear program and the growing likelihood that the endgame will be an Israeli attack on Iran's nuclear facilities. In the past few weeks alone, an editorial in The Wall Street Journal warned the president that the United States must put a quick halt to the Iranian nuclear program, because otherwise Israel will bomb the facilities. "An Israeli strike on Iran would be the most dangerous foreign policy issue President Obama could face," the paper wrote.
Celente: Revolution next for U.S.
Gerald Celente The Next American Revolution 13 aug 2009
Michael Savage - Martial Law Will Likely Be Declared Soon in America - August 14, 2009
Debtor's Revolt: Woman Refuses To Pay Off Bank Of America Credit Card For years, Ann Minch of Red Bluff, Calif., has carried a balance of several thousand dollars on her Bank of America credit card, making minimum monthly payments of about $130, sometimes paying an extra $50 or $100. She says she's never missed a payment. Bank of America rewarded her loyalty this year by repeatedly raising her interest rate, which reached 30 percent in July. Fed up, the 46-year-old stepmother of two turned to YouTube.
"There comes a time when a person must be willing to sacrifice in order to take a stand for what's right," said Minch in a Sept. 8 webcam video. "Now, this is one of those times, and if I'm successful this will be the proverbial first shot fired in an American debtors' revolution against the usury and plunder perpetrated by the banking elite, the Federal Reserve and the federal government."
DEBTORS REVOLT BEGINS NOW!
DEBTORS REVOLT ARMY: THE BATTLE PLAN!
Americans Have Been Taken Hostage The American people have been taken hostage to a broken system. It is a system that remains in place to this day. A system where bank lobbyists have been spending in record numbers to make sure it stays that way. A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built. It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.
Gold: Is $1,000 the New Floor or the Same Old Ceiling? This week gold finally touched $1,000 (as indicated in one of the previous essays) so without further ado, we will get right to the charts. Let's begin with the chart (courtesy of http://stockcharts.com) that features gold in other currencies than the U.S. Dollar. . . . . . . . . UDN is the symbol for PowerShares DB US Dollar Index Bearish Fund, which moves in the exact opposite direction to the USD Index. Since the USD Index is a weighted average of dollar's currency exchange rates with world's most important currencies, we may use the gold: UDN ratio to estimate the value of gold priced in "other currencies".
A golden opportunity for investors? The busy money-printing machines are more predictable than the still-sputtering economy, making gold a smart choice even after a spike to $1,000 an ounce. Economic activity continues to be fitful. But Jim Grant (in a recent issue of Grant's Interest Rate Observer; subscription required) makes the case, based on his own reasoning and research from the Economic Cycle Research Institute, that whatever bounce the economy is experiencing or will experience in the short term might be bigger than people think. That's not to say that any economic bounce will evolve into a "normal" job-creating, self-reinforcing recovery. I don't believe it will. But at this point, it's not important to have an opinion about that.
Will gold steal the show this week too? Gold remained the supreme commander in all the commodities traded last week. But with festive season close, the price rise may not be a cakewalk for those who were planning to buy the commodity. In states like Kerala, where gold is more of a prestige symbol than investment, there are huge dents in the pockets of those families who are planning marriage for their daughters.
Ron Paul, CNN "American Morning," 9/14/09 Congressman Ron Paul discusses his new book "End The Fed," as well as other economic issues and Federal Reserve-related topics on CNN's "American Morning."
Gold and Oil Part Company Real-time Monetary Inflation (last 12-months): 1.8%* Gold aficionados are feeling pretty good now. COMEX spot gold seems to have definitively broken out of its trading range to clear its February high above the $1,000-mark. Where the gold market goes from here is now topic No. 1 in chat rooms and cocktail parties. Some folks that followed the trading tactic we illustrated ("Good Times For Gold Traders" and "Has Gold Finally Broken Out?") are no doubt contributing to the palaver.
Who Else Has Been Buying Gold? The question is are you the last one now to be buying gold? The list of successful hedge fund managers who have been buying gold has been growing. It is not just hedge funds…how about China? What I find interesting is the fact that the hedge fund managers who successfully called the housing crisis are now buying gold. It is not just they are simply buying, they are buying in a big way. John Paulson who made a fortune in the subprime crisis is now betting heavily on gold. He has invested almost 50% of his fund in gold. He is not alone.
Gold Falls as Speculative Holdings Reach Record, Dollar Climbs Gold fell from an 18-month high on speculation that investors may begin selling out of long positions, which climbed to a record last week, and the dollar strengthened, halting a six-session slide. Silver also declined. Some investors buy metals, including gold, as an alternative investment. Hedge-fund managers and other large speculators increased their net-long position in New York gold futures by 22 percent to 224,676 contracts in the week ended Sept. 8, U.S. Commodity Futures Trading Commission data show. The dollar gained as much as 0.6 percent against a basket of six major currencies.
pt 1/3 Marc Faber on Bloomberg Sept 10 2009
China urges its citizens to purchase gold and silver Recent television advertisements by China's Central Television, which is state-controlled, has urged its citizens to purchase gold and silver bullion. According to a report published by the Thunder Road Report, an announcer in one advertisement tells the viewers that it is very easy to purchase silver bullion, "China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in."
When There's No One Left to Trust Fraud and corruption are being exposed at the highest levels of our financial markets. The integrity of our so called "free" markets has been badly damaged and rightly so. The cover up, fraud and deceit have reached biblical proportions. When the government decides to intervene on behalf of certain market participants and ignores its own role in the previous bubble and its subsequent collapse, a dangerous precedent is set that destroys trust. When trust breaks down, paper assets become worth less in the eyes of those with money to invest and people turn to reliable asset classes like Gold instead. So far, nothing has been different this time around - history is repeating right in front of our eyes. The old shiny "barbarous relic" is the best performing asset class of the past decade with no end to the Gold bull market in sight. Gold has outperformed Buffett and Gates combined over the past decade by more than a country mile and will continue to do so.
Greenbacks Gases, Gold & the Coming Shift Bankers in charge of our economies makes as much sense as candy makers being in charge of our diets At the end of a good movie, oftentimes apparently unrelated events are woven together and it becomes clear how and why things happened. If, today, it feels as if we are at the end of an era, it is because we are; and, just like the movies, only at the end do certain events and the reasons for them become clear. The removal of gold from the global monetary system was not by accident. It allowed governments to do what they could not otherwise do. Gold cannot be printed. Paper money can. Therein lays the cause and consequence of what is happening today.
China encourages Silver Bullion for investment
Look Who's Betting on Inflation If you've been reading the popular press for the past 6 months, there's been a slew of articles talking about deflation. I've been somewhat skeptical of the long term probability of deflation and have been investing in gold and commodities in anticipation of inflation. Looks like I was a little early to the game (which, on Wall Street is just the same as being wrong!). Now however, it looks like we are warming up the printing presses and gold has hit $1,000 twice in a week in anticipation of future inflation. Legendary hedge fund manager John Paulson, who made $2.5 Billion last year from his trades, has been betting heavily on gold and his fund has nearly 50% of its assets in gold or gold-related investments like gold mining stocks and ETFs. The gold ETF, GLD reportedly makes up 30% of his fund!
Manic Swings - Inflation or Deflation? Part 1: Bipolar markets are essential to the "adjustment process" when voters and politicians prefer denial to a painful reality On my website, which is an active investor's chatboard called GlobalEdgeInvestors dotcom, we became obsessed. Almost everyone joined in, trying to work out which of the two "-flations" was most likely. Several argued the current downwards pressure on price would not last, and massive money printing by the Fed would eventually hit the economy, and must somehow morph into much higher inflation. Some were listening to Marc Faber, who is "certain the US will experience hyperinflation" sometime in the future. On the other side of the debate, we saw persuasive arguments from Bob Prechter and Mish Shedlock who believe we will soon be living with even worse deflationary pressures. In this article, I explore the idea that there is another possibility. We may live through a long period where we continue to see both forces in conflict, bringing continuing price swings.
CNBC, 09/10/09, Meredith Whitney says banks are on life support, will not be the leaders
Dollar Near Weakest This Year on Record-Low Borrowing Costs The dollar traded near the weakest level against the euro this year as record low borrowing costs encouraged investors to sell the greenback and buy higher- yielding assets outside the world's largest economy. The euro was near a nine-month high against the dollar before a German report that economists said will show investor confidence rose to the highest in more than three years, adding to signs Europe's recession is abating. The dollar slid to the lowest in more than a year against the Swiss franc after Federal Reserve Bank of San Francisco President Janet Yellen said prospects for a "tepid" recovery require policy makers guard more against inflation becoming too low rather than too high.
U.S. Dollar Entering Free Fall Crash Territory Martin's off this week. So I'm writing you today from Asia with a passionate plea to our country - to its citizens and especially to our leaders in Washington. We are now the laughing stock of Asia. Our dollars are no longer respected; our ambitions, no longer mimicked. Our way of life, often based on consuming far beyond our means, is being flat-out rejected. I can't even exchange a $100 bill on the street here anymore: Most of the street money changers will take euros, Singapore dollars, even Chinese yuan. But fearful of losing their shirt with sinking exchange rates, they don't want U.S. dollars.
Dollar gains on stock dip, trade spat Investors also worry about trade issues between U.S. and China, as Obama announces additional tariff on tire imports. The dollar gained against most currencies Monday amid falling global stocks and as investors fretted over a growing trade spat between the United States and China. The dollar index, a gauge for the greenback's performance against six major currencies, stood at 76.931, up from 76.608 in late trade Friday and recovering from a one-year low of 76.457 hit late last week.
U.N.'s anti-Dollar Talk a Problem of Our Own Making A new report from an organization called the U.N. Conference on Trade and Development (UNCTAD) calls for the U.S. dollar to be ditched and replaced with a new global reserve currency. Why is it that the U.N. always concludes that central is better? This discussion, of course, has been prodded by our country's financial crisis and drunken sailor-like spending. It's not just the U.N. The dollar's standing as the world's reserve currency has been under broad attack. Partly out of nationalist resentment, the dollar has been slapped by the likes of China, Russia, India and Brazil, with calls for its replacement. Now the U.N. has joined those looking to seat the greenback in the cheap seats, for good.
The Continuing Disaster of Wall Street, One Year Later Robert Reich's Blog As he attempted to do with health care reform last week, the President is trying to breathe new life into financial reform. He's using the anniversary of the death of Lehman Brothers and the near-death experience of the rest of the Street, culminating with a $600 billion taxpayer financed bailout, to summon the political will for change. Yet the prospects seem dubious. As with health care reform, he has stood on the sidelines for months and allowed vested interests to frame the debate. Nor has he come up with a sufficiently bold or coherent set of reforms likely to change the way the Street does business, even if enacted.
BAAAMM!!—Rick Santelli on NBC/CNBC Obama-Propaganda; Rips Media for Ignoring 9/12 D.C. March
The Coming Wave of Resource Nationalizations Pessimist: Things are so bad, they cannot possibly get worse… Optimist: Sure, they can! . . . . Since sometime in 2006 we have had this theory of "The Coming Wave of Resource Nationalizations". The latter has an "s" to impress upon you that we are talking about all natural resources in all countries. Not literally, but we believe it will be a worldwide sweeping event encompassing all classes of natural resources. It sounds scary, yet it will be akin to a depression – it's merely a recession when your neighbor loses his job and will only turn into a depression when you lose yours. We also believe that this will be the Chapter One of what some call the (coming) "Resource Wars".
U.S. Economy May See Its Slowest Recovery Since 1945 The U.S. recovery may be the slowest since World War II to regain all the ground lost during the recession, even if economists' more optimistic forecasts for expansion turn out to be right. The slump this time was so deep, said JPMorgan Chase & Co. chief economist Bruce Kasman, that the 3.5 percent average quarterly growth rate he sees in the next year won't be enough to bring gross domestic product back to its $13.42 trillion pre- crisis peak. That's in contrast with the last 10 recoveries, when GDP returned to its previous levels within 12 months.
US credit shrinks at Great Depression rate prompting fears of double-dip recession Both bank credit and the M3 money supply in the United States have been contracting at rates comparable to the onset of the Great Depression since early summer, raising fears of a double-dip recession in 2010 and a slide into debt-deflation. Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August (from $7,147bn to $6,886bn). "There has been nothing like this in the USA since the 1930s," he said. "The rapid destruction of money balances is madness." The M3 "broad" money supply, watched as an early warning signal for the economy a year or so later, has been falling at a 5pc annual rate. Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an "epic" 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.
Iceland: what ugly secrets are waiting to be exposed in the meltdown? Almost a year since the collapse of the Icelandic banks, the rotten nature of these financial corpses is slowly beginning to emerge. Iceland: what ugly secrets are waiting to be exposed in the meltdown? For months rumours of share-ramping, market manipulation, excessive loans to their owners and unusual transfers off-shore have been circling Kaupthing, Glitnir and Landsbanki, whose failure last October left 300,000 British customers unable to access their money. It has now become clear that this was no ordinary crash. Iceland's special investigation into "suspicions of criminal activity" at the three banks is likely to stretch from Reykjavik to London, Luxembourg and the British Virgin Islands. Eva Joly, the French-Norwegian MEP and fraud expert hired by Iceland and now working with the Serious Fraud Office, now believes it will be "the largest investigation in history of an economic and banking bank collapse". - Telegraph
pt 2/3 Marc Faber on Bloomberg Sept 10 2009
American Heritage - Bye, The definition of our American Heritage is simply the handing down from generation to generation a tradition of freedom and self sufficiency. Of course, as we all know, those days are receding rapidly. . . . . . . . There is a rumor circulating that a bank holiday may be on its way. This is the type of holiday where the banks are all closed across the nation and your money becomes temporarily unavailable. Even your savings box would be off limits. FDR did this shortly after coming to office. Anyone paying attention? Sure, it's just a rumor, but a very scary rumor with lasting and permanent consequences should it turn out to be true. We are all too consumed impatiently waiting for the new trillion plus free health insurance program.
More Bank Failures Mean TARP Through 2010 Three more banks failed on Friday, bringing the total for the year to 92. This plus the 25 that failed in 2008 brings the total for "The Great Credit Crunch" to 117 on our way to my predicted 500 to 800 by the end of 2011 into 2012. All three seized banks had extreme overexposures to Commercial Real Estate including C&D loans. Corus Bank (CORS) was the only publicly traded bank and this $7 billion bank had mine boggling exposures. Corus was on our list of problem banks with a C&D exposure of 2066% of risk based capital, versus the regulatory guideline is just 100%.
'Tighter grip on economy needed' World leaders pledged trillions of dollars to tackle the global slump Most people want their government to take more control over the regulation and running of national economies, a BBC World Service poll has found. Overall a total of 67% of people wanted an increase in "government regulation and oversight of the national economy". In the 20 countries polled, 60% backed more spending to boost the economy. There was much less support for banking bail-outs with most Americans, Germans and Mexicans opposed. However, most Britons did back the rescue measures.
Forget Reform, Galbraith Wants a "Total Restructuring" of Wall Street President Obama is slated to make a major address on Wall Street today aimed at reviving the effort to reform the financial system and prove his administration can walk and chew gum at the same time, i.e. simultaneously tackle health care and Wall Street reform. Even advocates of Wall Street reform don't believe it will occur this year, as Larry Summers suggested Friday. "I would be surprised if it happens that quickly," says James Galbraith, the Lloyd M. Bentsen Jr. Chair of Government/Business Relations and Professor of Government at the University of Texas.
Obama issues warning to bankers Barack Obama: "We intend to pass regulatory reform through Congress" US President Barack Obama has warned bankers against complacency, saying that some in the industry are ignoring the lessons of the financial crisis. "We will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis," he said. He called on Wall Street to support "the most ambitious overhaul of the financial system since the Great Depression". The financial system was returning to normal but had not recovered, he added. "There are some in the financial industry who are misreading this moment," said President Obama in a speech to mark one year since the collapse of Lehman Brothers bank.
Obama Says U.S. Must Avoid Removing Economic Stimulus Too Soon President Barack Obama said recent data suggest the U.S. economy is returning to growth and the administration must avoid removing stimulus programs prematurely. "All the indicators would tend to suggest that we're starting to see growth," Obama said today in a Bloomberg Television interview. "What we have to be careful of is taking the crutches away from the patient too early."
Bank Group Urges G-20 to Keep Stimulus Efforts An organization representing the world's largest banks urged the Group of 20 to maintain economic-stimulus programs and recognize steps the financial industry is taking to improve its practices. Facing heated rhetoric by leaders of the G-20 leading and developing countries about bankers' pay and a return to "business as usual," the Institute of International Finance emphasized in a letter to President Barack Obama that "this is not the case at all."
Investigate and Indict the "Snakes" Behind the Subprime Mess, Galbraith Says A year after the Lehman collapse brought the housing and financial crisis to a head, will those responsible ever be brought to justice? That's the subject of the accompanying clip with economist James K. Galbraith. The blame starts with the regulators who failed to reign in the out of control housing securitization market, according to the University of Texas Professor. "In many ways they were deliberately negligent. They were encouraging activity they should have been discouraging," he says, putting former Fed Chairman Alan Greenspan at the top of his "negligent" list.
Addison Wiggin on the founding of Agora, the Empire of Debt and the Agora outlook: Deflation now, inflation laterAddison Wiggin: The most interesting question to me right now is not necessarily where is the world's economy headed, but what is the fate of capitalism? The West grew wealthy, one empire at a time, largely sharing the same capitalist values. Spain, the Netherlands, France, England, then finally the United States were all ascendant empires. If, as we suspect, the mantle of capitalism is passing to the Chinese... or the Russians, the Brazilians or the Indians, or even to the United Arab Emirates, it will be the first time in modern history that the employment of capital is done so by countries outside the traditional roots of Western European values. That, in and of itself, is not a bad thing. But it is interesting. And I'm not sure many people in the West are prepared for it.
Obama Says U.S. Financial Rules Overhaul Will Happen This Year President Barack Obama said he is "very optimistic" rules overhauling federal oversight of the financial-services industry will be adopted this year to prevent future crises and keep taxpayers from bailing out Wall Street. The banking industry won't succeed in efforts to defeat a proposal to create a Consumer Financial Protection Agency, and Obama in a Bloomberg Television interview today rejected opposition in Congress to his plan to give the Federal Reserve new authority to monitor firms for systemic risk.
Obama Gets Stern With Wall Street Reminded of Bailout, Bankers Asked to Rein In Excesses, Support New Regulations President Obama delivered a stern message to Wall Street on Monday: Don't forget what we did for you. A year after the failure of investment bank Lehman Brothers and an unprecedented government campaign to prevent the collapse of the financial system, Obama encouraged the industry to reform itself voluntarily and not to stand in the way of new laws meant to prevent excesses from returning.
We Can't Break Up the Giant Banks, Can We? Yes We Can! Top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion. In response, defenders of the too-big-to-fails make one or more of the following arguments:
The government does not have the authority to break up the big boys
To break up the banks, the government would have to nationalize them, which would be socialism
The giant banks have now recovered and are no longer insolvent, so it would be counter-productive to break them up
We need the giant banks to restore credit to the economy None of these arguments are persuasive.
The Government Does Have Authority to Break Up the Big Boys
Future bailouts are part of the plan peaking on the anniversary of the start of the financial meltdown, President Barack Obama warned bankers not to "expect that next time, American taxpayers will be there to break their fall." That's not a serious threat. Obama's plan for overhauling the financial system creates a new category for the largest banks, those whose failures would threaten the wider financial system. These "Tier I" companies will face stricter rules designed to limit how much risk they can take and how much damage they would do if they fail. But when big banks do fail, taxpayers still will be on the hook. Not rescuing these "systemically important banks" would, by definition, threaten the broader financial system.
pt 3/3 Marc Faber on Bloomberg Sept 10 2009
U.S. and China, The Alarming Tale of Two Economies The contrast between the U.S. and China has never been more disturbing. Here in the U.S., our government is sinking into debt at the fastest pace in history. The federal deficit has nearly quadrupled in a year. New spending programs now before Congress seem to guarantee even higher deficits and debt ahead. To finance its skyrocketing debt, the U.S. Treasury and Federal Reserve are burying the planet under an avalanche of treasuries and newly printed dollars. As a result, the greenback suffered its largest weekly decline last week, plunging to a new one-year low. Last week, we also learned that U.S. home foreclosures have just hit new all-time record highs and are still rising. Personal bankruptcies are exploding - even among the rich. Unemployment is still soaring. Consumer borrowing is contracting at a disturbing rate.
Fed Official Expects 'Tepid' Recovery Janet Yellen, the president of the Federal Reserve Bank of San Francisco, made a clear call Monday for keeping the Fed's accommodative monetary-policy stance in place for some time. Ms. Yellen, who has positioned herself over the past few months as one of the more dovish members of the Federal Open Market Committee, said intervention by the Fed and the U.S. Treasury had averted the "second Great Depression," but that it was too early to cut monetary stimulus.
We have averted second Depression, Obama claims President Obama will declare today that his economic policies have saved America from a second Great Depression, but a tumultuous 48 hours of protests over his massive spending plans could drown out his reassurance. Mr Obama is due to speak on Wall Street a year after Lehman Brothers collapsed, unleashing a global financial meltdown and the worst economic crisis since the Depression. In his speech - a week before he hosts the Group of 20 summit in Pittsburgh - he will argue that February's $787 billion (£471.2 billion) stimulus has staved off economic catastrophe.
US-China trade dispute about more than tires The US tariff on Chinese tires could have a ripple effect. Trade disputes have been rising among other nations. President Obama has ratcheted up US-China trade tensions at a sensitive moment for the global economy. The dispute in question centers around automobile tires, and the White House has sided with US manufacturing workers who say they are being harmed by rapidly rising imports from China. The president's decision has implications for a fragile domestic economy: A new 35 percent tariff on Chinese tires could help some American factory workers keep their jobs, at a time when economists say America needs manufacturing industries as a core platform for future economic growth. But the move also promises to make US consumers - already struggling in the recession-battered economy - pay higher prices for tires.
Tariff could flatten cheap tires from China President Obama's tariff plan for Chinese tires could squeeze U.S. consumers, while forcing Goodyear and Cooper to import from elsewhere. President Obama is increasing tariffs on Chinese-made tires, and that could put the squeeze on U.S. manufacturers overseas and cash-strapped consumers at home. The U.S. imports 50 million tires from China every year -- more than one-fifth of all the tires sold in America -- and beginning Sept. 26, the tariffs on these tires will rise to 35%. And even though the rate would fall to 30% the following year and 25% the year after that, the increase could still spark a diplomatic spat between the two countries.
Protectionist Measures Expected to Rise, Report Warns This weekend's U.S.-China trade skirmish is just the tip of a coming protectionist iceberg, according to a report released Monday by Global Trade Alert, a team of trade analysts backed by independent think tanks, the World Bank and the U.K. government. A report by the World Trade Organization, backed by its 153 members and also released Monday, found "slippage" in promises to abstain from protectionism, but drew less dramatic conclusions. Governments have planned 130 protectionist measures that have yet to be implemented, according to the GTA's research. These include state aid funds, higher tariffs, immigration restrictions and export subsidies.
Senate Votes 83-7 to Defund Community Group ACORN In the wake of numerous scandals and the Census Bureau's severing of ties with the community group ACORN, the US Senate voted overwhelmingly today to deny housing and community grant funds to the organization in an 83-7 vote. Earlier today, I posted a report here at DJ on the community group ACORN's troubled history and recent scandals involving the 'pimp and ho' stings of their Baltimore, D.C. and Brooklyn offices, and what consequences might result. The Census Bureau had already cut ties with ACORN two days ago. Today, the US Senate weighed in:
CNBC, 09/10/09, Meredith Whitney, People are spending less, credit will contract $2.7 trillion
Public trust in US media eroding: Pew study Public trust in the US media is eroding and increasing numbers of Americans believe news coverage is inaccurate and biased, according to a study released on Monday. Just 29 percent of the 1,506 adults surveyed by the Pew Research Center for the People and the Press between July 22-26 said news organizations generally get the facts straight. Sixty-three percent said news stories are often inaccurate, up from 34 percent in a 1985 study, Pew said. Sixty percent of those polled said the press is biased, up from 45 percent in 1985. Just 26 percent in the latest survey said that news organizations are careful their reporting is not politically biased.
The US Golden Age Is Over, Destruction of an Empire Edward Gibbon described the happiest age of mankind as the period of the "five good emperors" between AD98 and AD180, when Marcus Aurelius died. What was America's Golden Age? is much too soon to write the history of America's decline and fall. Still, that doesn't stop us from guessing. We would name the period between the fall of the Berlin Wall and the fall of Lehman Bros - a period of only 19 years - as the peak of US power and wealth. Of course, Americans were dreaming during those years. The dreams were the usual imperial sort - that the US Empire was such a benefit to the rest of the world that the foreigners would support it indefinitely. Rome didn't take any chances; it forced its conquered nations to render tribute…slaves…gold…and wheat. The American empire depended on trade…and the dollar. As long as the United States had a commercial advantage, the empire was profitable. But as the 20th century aged, so did the US economy. Its competitors - notably Germany and Japan - had a big advantage. They had been bombed out in the '40s. They could build anew. America's trade advantage slipped away…and then its trade balance went negative in the mid-'80s. It has been getting more negative almost every year.
The Future is Calling G. Edward Griffin (Editors Note: This is Mr. Griffin's analysis of the War on Terrorism and much more. Terrorism is a distraction for deeper issues. Both hawks and doves are playing into the hands of those who are using the conflict for their own hidden agendas. You will discover the Council on Foreign Relations, an organization that has dominated U.S. public policy since World War I. You will learn about the ideology called collectivism that motivates this group and find that its members believe that the best way to bring about desirable changes in society is to engage in war. Mr. Griffin meticulously documents how these people, working within the American government, plotted to involve the U.S. in both World Wars. They even encouraged enemy attacks so they could claim the status of victim instead of aggressor. The lessons and parallels for the War on Terrorism are chilling. - JSB)
Quietly Building the Totalitarian State in America, With the Full Complicity of the Big Media All intelligent political analysts have known since Ancient Greece that the Tyrannical State always arrives on gentle cat's paws, as Plato and others put it a few centuries after the basic strategies and tactics of Building The Secret Tyrannical State had been used so effectively by Peisistratus to build the first full-blown tyranny in Athens [though some objected that Solon's "new deal for all" was a tyranny]. The Tyrant always arrives as the Great Friend of the People promising them new freedoms and a vast cornucopia of free goodies. Peisistratus was lucky enough to have new loads of silver to mint real coins to buy the submission of the masses for a while, expand trade and prosperity. Most states in the modern world use the Miracle Cures of Paper Money and the Central Planning of Finance, as has been done in the U.S. to a stunning extreme by the Fed and the Big Banks working under that vast government umbrella of guaranteed free money for them.
Lilly cutting 5,500 jobs before Zyprexa lapse Eli Lilly and Co said on Monday it plans to cut 5,500 jobs, or 13.5 percent of its workforce, as it girds for generic competition by 2011 on its Zyprexa schizophrenia drug and Gemzar cancer treatment. The Indianapolis-based drugmaker, whose revenue outlook has also been dimmed by competition for its Byetta diabetes drug and safety concerns for its recently approved Effient blood clot preventer, said it aims to cut annual costs by $1 billion by the end of 2011.
NRA endorses McDonnell for Va. governor The National Rifle Association announced Monday that it will endorse Republican candidate Robert F. McDonnell for governor because he has been "steadfast and forthright in his support of gun rights." During a conference call with reporters, Chris W. Cox, the NRA's chief lobbyist, said the organization will bring its resources to bear in favor of the candidate, which includes calling its more than 120,000 Virginia members, state concealed-carry permit holders, hunters and gun collectors to ask that they support the Republican.
Home sales in Grand Junction, Colo., have taken a plunge The housing market in Grand Junction, Colo., is in reverse. Nationwide, the cities that were hit by the housing bubble are seeing home sales climb, while Grand Junction is watching sales tumble. "The first quarter of this year was the worst quarter that we've ever had," says Sandy Barger, chairman of the Grand Junction Area Realtor Association. In July, its home sales were down 42% from a year ago. Grand Junction, the state's largest city on the western slope of the Rocky Mountains, has been the victim of its own boom and bust.
It's Too Late to Save Sears, Matthews Says The long awaited turnaround story at Sears may never happen. Why? Because reclusive hedge fund impresario and Sears Holding Corp. Chairman Edward Lampert doesn't know how to run a retail business, says Jeff Matthews of hedge fund RAM Partners. After Sears posted a surprise quarterly loss, a Barron's report on August 24 stated the stock could fall another 50%. Lampert shot back with a letter claiming the article was "inaccurate" and "biased."
One year later, banking crisis alters lives Craig Coffey, a former machinist living in Las Vegas, was approaching retirement until the economic crisis last fall "blew up" 40 percent of his expected pension income. Rather than retire, Mr. Coffey had to stay employed and is now working as a salesman making $8 an hour plus commission. "My life was thrown into a downhill spiral," he said, but he considers himself lucky to have found a job rather than end up unemployed and destitute. "It's not my first choice. But at 60 and your savings almost totally wiped out, you take what you can get."
Ambrose Evans-Pritchard: does the EU club have a future? The economic crisis has transformed the global economic landscape. The dreams of a decade ago now seem grandiose Broadly speaking, the world is run at the outset of the 21st Century by the United States and China together in uneasy condominium. This is the surprising reality of our era. The pattern is unlikely to change much until India takes its full place, perhaps in 40 years. The baton passed from Europe's tired hands at London's G20 summit in April, where the only meeting that mattered was the tete-a-tete between Barack Obama and Hu Jintao. The two Pacific superpowers are meshed together by their "dollar-yuan" currency and de facto debt union, and by their Strategic Economic Dialogue. Let's just call it G2 for short. China's return to great power status is well known, but some may be surprised to learn that America's share of global GDP has scarcely changed in 30 years, falling slightly to 20 per cent depending how you measure it.
China Watched for Sign of New Leader BEIJING - China's governing Communist Party will convene its annual policy meeting on Tuesday with a sober, if not soporific, mandate to root out government corruption and make the party adapt to changing times. But lurking in the background is a more compelling topic: Who will become China's next ruler in 2012? Analysts will watch the meeting, the annual plenary session of the party's 17th Central Committee, to see whether Vice President Xi Jinping is given the additional title of vice chairman of the Central Military Commission.
Bin Laden warns U.S. on Israel ties Al Qaeda leader Osama bin Laden warned the American people over their government's close ties with Israel in an apparently new audio tape posted on an Islamist website Monday. "The time has come for you to liberate yourselves from fear and the ideological terrorism of neo-conservatives and the Israeli lobby," Bin Laden's latest tape said. "The reason for our dispute with you is your support for your ally Israel, occupying our land in Palestine."
3 more down: Bank failure tally hits 92 Regulators close banks in Illinois, Minnesota and Washington at a cost of more than $2 billion to the FDIC. Regulators closed one large bank in Illinois on Friday in one of the biggest collapses of the year, while two other smaller failures pushed the 2009 total to 92. Customers of the banks, however, are protected. The Federal Deposit Insurance Corp, which has insured bank deposits since the Great Depression, covers customer accounts up to $250,000. In Illinois, 16 banks have failed so far this year, including Chicago-based Corus Bank, which was closed by the Office of the Comptroller of the Currency on Friday.
Regulators seize construction lender Corus Bank Federal regulators on Friday said they seized Corus Bancshares, a major Chicago-based lender to condominium, office and hotel projects, adding it to the long list of banks that have succumbed this year to the recession and waves of loan defaults. The Federal Deposit Insurance Corp. took over Corus Bank, which had $7 billion in total assets, and its deposits. The deposits will be assumed by MB Financial, which is also based in Chicago.
Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc. “In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview yesterday in Paris. “The problems are worse than they were in 2007 before the crisis.”
Same Old Hope: This Bubble Is Different This time is different. That’s what people argue every time a bubble inflates, and what they think every time they are chastened by its popping. But century after century, decade after decade and year after year, human beings irrationally exuberate all over again. Not long ago, the housing bubble burst and brought the global economy to a standstill. Now economists, recognizing that bubbles tend to come in bunches, are on the lookout for the next market to fizzle. They say that governments, central banks and international bodies should scrutinize a few markets that look likely to froth over in the next few years, like capital markets in China, commodities like gold and oil, and government bonds in heavily indebted countries like the United States.
The Threat of Hyper-Depression In the Keynesian heydays of the 1950s and 1960s, most economists and policy makers believed in the “Phillips Curve,” which was the (alleged) tradeoff between unemployment and price inflation. The idea was that the Federal Reserve could cure a recession by printing money, or that the Fed could cure runaway inflation by jacking up interest rates. Each of these moves had its downside, of course, but the point was that the Fed could choose one poison or the other. This Keynesian orthodoxy was shattered in the 1970s when the United States suffered through “stagflation,” which was high unemployment and high inflation. This outcome was not supposed to be possible, according to the popular macroeconomics models, and it left policy makers with no clear choice. If the Fed raised rates to stem the inflation, it would hurt the economy even more, but if the Fed cut rates (through printing more money) the inflation problem would worsen. The vacuum created by this crisis in both theory and policy was filled by the Reagan Revolution and supply-side economics.
Cheap dollars are sowing the seeds of the next world crisis After years of selling cheap goods to debt-fuelled Western consumers, China now has $2 trillion dollars of foreign exchange reserves. That's 2,000 billion – a reserve haul no less 25 times bigger than that of the UK. In a world of systemic instability, reserves mean power. Reserves mean you can defend your currency, stabilise your banking system and boost your economy without resorting to yet more borrowing – or, worse still, the printing press. More than half of China's reserves are denominated in dollars. So when the dollar falls, China loses serious money. When you're talking about a dollar-reserve number involving 12 zeros, even a modest weakening of the greenback sees China's wealth takes a mighty hit.
Gold ends at record high of $1,004 as dollar weakens Gold futures settled at a new record Friday, ending higher for a fourth straight week as the U.S. dollar fell against the euro to a fresh one-year low, boosting gold's investment appeal. The thinly traded September gold contract ended up $9.50, or 1%, at $1,004.90 an ounce on the Comex division of the New York Mercantile Exchange, the highest settlement for a nearby gold contract. The earlier record was $1,003.20 hit on March 18, 2008. The September contract rose to $1,011.90 earlier.
Gold Rush: China drives global gold market Gold finally made its run above the magical $1,000 mark on Tuesday, September 8th, 2009 breaking free from a two-month trading range between $930 and $970 an ounce. For the third time, gold soared past the $1,000 level, causing the market to eye the precious metal's record of $1,033.90 reached in March 2008. While Citigroup (C) is predicting a $2,000 scenario by next year due to continuing dollar weakness, a number of bullish factors, both near and long term, have converged to boost gold.
Gold Is Now Underwritten by China There is really only one government in the world that understands the virtues of gold – China. Not only is the country buying all the gold that they can without pushing the price up but they are also encouraging the Chinese people via the media to buy gold and silver. Power corrupts Let us first look at the US and ex Fed Chairman Greenspan to demonstrate how sound individuals become totally corrupt and dishonest once they become politicians. (Yes, the chairman of the Fed is political position which permits no integrity). In 1966 Greenspan wrote an essay – “Gold and Economic Freedom”- in which he spells out the importance of gold.
Gold and Economic Freedom by Alan Greenspan (Part 1)
China's immense, and growing, impact on the global gold market There seems little doubt that China's economic strength can lead to it dominating gold price movement for the foreseeable future. There is little doubt that China nowadays has the financial muscle to effectively control the global gold price. The mere sniff of a report that it is taking gold into its official reserves to counteract dollar decline is sufficient to, at the least, stabilise the gold price - and there seems to be little doubt that it is so doing, but at the moment in a manner that is not designed to de-stabilise the dollar or, on the other hand, not to contribute to a quantum leap in the yellow metal's valuation - yet.
Gold Wars, Part II: The Empire Strikes Back A second Cold War could be fought with dollars and gold . . . . Indeed, as we approach the end of the second five-year gold sales-agreement among Western central banks, what was originally intended as a “ceiling” for annual gold sales by the Manipulators has become a quota – a target which the anti-gold cabal is trying and failing to meet. During this five-year term, the annual ceiling/quota is 500 tons per year. Yet, with only a month until the expiry of this agreement in September, Western central banks haven't even been able to scrounge-up 200 tons of gold to dump in this final year.
Gold Resumes March Upward For three days, I have watched this flag pattern develop in gold (the chart below is Dec futures but it should be equally apparent in GLD and other instruments): These kind of flag patterns represent healthy pullbacks within a bull trend. In the strongest markets, the pullbacks don’t last very long. The fact that it only lasted three days signals that the gold rally has legs. Because gold broke decisively out of the flag, I remain bullish. I added incrementally to longs in New Gold (NGD), US Gold (UXG), Rubicon Minerals (RBY), and silver futures. As discussed earlier, these positions are not intended to be a prediction that gold or silver is going to reach any particular target. It's just a recognition that gold is within earshot of all-time highs, and that this kind of momentum tends to persist (the trend is your friend until it bends, as they say).
Has Barrick Been Barricked by the U.S.? According to an announcement dated September 8, 2009, Barrick is going to throw into the dustbin its long-standing hedge policy, and pay for buying back its hedge-book by diluting the value of its common stocks through issuing more than 81 million new shares, or about 10 percent of the outstanding. The so-called hedges of Barrick have been thoroughly discredited and will soon be history. So-called, because the long-term forward sales contracts in question that the parvenu gold miner has invented and flaunted are not proper hedges and never have been. They are a fraud. They are naked short positions pretending to be balanced by gold ore reserves in the moon (or on this earth which, for hedging purposes, is practically the same thing). Part of the newsworthy story, of course, is the fact that the hedge book of Barrick has been increasingly under water for some nine years now, threatening the unfriendly giant with drowning.
Precious Metals –What Do I Do Now? It seems more and more people are waking up to the fact that gold and silver are not only moving up but are also much safer investments currently than any other alternative. At the present time, I treat the commodity differently than I treat the underlining mining equities. As far as buying bullion or coins, basically I think investors should buy them at any time. Certainly you’re better off buying silver at $15.00 than you are if you’re buying it at $20.00, but the metals themselves, from a long-term perspective, will preserve your wealth and possibly multiply it. Many agree that the real metal is your core position. That is the investment that really counts the most.
Gold and Economic Freedom by Alan Greenspan (Part 2)
Canary in the Coal Mine by Peter Schiff Like a battering ram in a medieval siege, gold keeps hammering away at the gate. For the third time in less than twelve months, the yellow metal is once again crashing into the $1,000 per ounce level. As of press time, it looks like gold will close above that level today and will set a new record in the process. Even if the breach is fleeting, who can doubt that it will mount another assault soon? In the meantime, there is no shortage of market analysts who are not buying gold while questioning the motives of those who are. Although they offer a variety of strained reasons, they nearly all agree that it has nothing to do with inflation, which is nearly universally considered dead and buried. As a self-confessed gold bug, I can assure all that inflation is the only reason I buy gold. And recently, I'm buying a lot.
Gold at Resistance For most of this year gold has been navigating a symmetrical triangle, mostly above 900. Recently it broke out of that triangle and is challenging the resistance at the all-time closing high of 1005.5. For any breakout above that level to be "decisive" -- not likely to fail -- gold would have to reach at least 1036. We are on a buy signal for gold, and the chart is bullish, so we should assume that the outcome will be bullish; however, note that the resistance in this area has been quite stubborn for almost two years. Gold and the dollar have an inverse relationship, but more recently gold has not been as strong as the dollar has been weak. I interpret this to be a result of the heavy buying of gold that took place as stocks were crashing in 2008 and 2009.
Inflation Scorecard: Gold up and Dollar Down Judging from the market action in gold, oil and the dollar this week, it looks as if the reflation trade is now upon us. Both yellow and black gold rose, but more significantly, the narrowing in both markets' contango accelerated. A shrinkage in carry costs typically bespeaks a reduction in the storable supply of a commodity. The dollar took an outsized beating in the forex market this week as near-term credit spreads continued to shrink. The yield curve steepened in compensation for the increased inflation risk.
The Gold Battle Rages On This past week saw some great moves by gold and silver and their equities. Even some of the smaller stocks really woke up moving more than 30% in some cases. While this is still an exception the day is coming when the junior and exploration stocks will see moves like that on a regular basis. Until that time, accumulate. I’ve gone short on the fundamental section this week in favour of posting more charts. Every chart is a weekly chart which clears away the noise, and gives a much cleaner picture of price action. The picture looks very good, but I always get nervous near a breakout point. Gold has not yet broken out to the upside, but is very close.
Defend the Gold Standard For some reason, there are a lot of people out there who can't stand the gold standard. Maybe their hostility is in reaction to the large (and growing) number of gold bugs who think the worst day in history was August 15, 1971. But since I'm an economist, not a psychoanalyst, all I can really do is patiently explain how silly the antigold arguments are, rather than speculate on the motives of their authors. For today's article I will focus on a recent Bloomberg piece with the suggestive title, "Gold Standard Fans Yearn for Great Depression."
Gold Standard Fans Yearn for Great Depression Gold can be worn as jewelry, used as an investment and deployed as a hedge against economic and political risk. It can also serve as the anchor of a country’s monetary and exchange-rate policy. The first is a matter of personal taste. Investments and hedges are often related; their success boils down to the price initially paid for the metal. History shows that as a hedge and investment, bullion over the years has performed both spectacularly and miserably, depending on the time frame.
Gold vs. Currencies: Surprising Outperformance Figures The gold "bugs" seem to imply that nothing has outperformed gold in the long run and they see its return over the past decade (246%) as proof its superiority. What has outperformed gold? Platinum has gained 255% over the past 10-years. Still in the precious metal universe. In the currency universe, several have outperformed gold over the past decade, though I am not sure that that out performance means that they were or are good investments.
What Will Conditions Be Like, Globally For Gold To Be Confiscated Part 5 . . . . Will the U.S. Taxman have any chance of exposing the 47,500 account holders? The agreement made between the Swiss and U.S. Authorities clearly tells us NO! This defines for us, the extent of “financial sovereignty”. Without Swiss government support, the U.S. Taxman cannot overrule Swiss Banking Secrecy Laws. All that is left to the U.S. Taxman is prosecute suspicions at home and attack locally [U.S.] owned assets by U.S. citizens, but then he needs proof positive to be able to do so. This does not appear to be available in the case of 47,500 secret Swiss Bank Accounts. So the solid conclusion we can draw is that Jurisdiction rules!
Max Keiser with Rob Kirby, consultant to GATA - 11 September 2009
Gold Bugs Are The Real Estate Punters Of Yesteryear For a true gold bug, it's not enough to simply own a gold ETF. You need to own real slabs of the yellow heaven to be part of the inner circle. Given that physical holdings of gold in exchange-traded securities jumped 33% year to date, this cycle is expanding at an alarming rate. Feeling the competition from physical gold, ETF managers are also out marketing like never before.
What the Heck Is Going on with China? That’s a question that Westerners have been asking for, oh, several millennia now. Or at least since Marco Polo aimed his ponies down the old Silk Road in 1271. Now as then, China keeps its own counsel. We know what they want us to know, plus what we can surmise from rumor and reading between the lines. But lately, we’ve been able to add presumption to news and come up with something that looks very significant. Specifically, there’s been a flood of tantalizing stories out of the East that, taken together, strongly suggest a growing preoccupation with a form of money that was ancient even in Signor Polo’s time. And it ain’t silk. It’s gold.
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" In the chart below, note the sharp drop in inflation (US Consumer Price Index) most recently, shown below. Gold hasn't budged, and actually went higher, arguably due to expectations that recent deflation is temporary. Yet if this is the case, then guess what could happen to the price of gold should current inflation expectations prove too high?
Will New Fed 'Tools' Avert Hyperinflation? People often accuse me of making “irresponsible” forecasts of massive price inflation. Even though they know that history is replete with examples of central banks ruining their currencies, these critics are sure that “it can’t happen here.” So in the present article I’d like to make the brief case for why we should all be very alarmed about the prospects for the U.S. dollar. First, let’s look at what those penny pinchers in the federal government are up to. The Congressional Budget Office (CBO) recently released its analysis of the Obama Administration’s ten-year budget proposal. The projected deficit for (fiscal year) 2009 is a whopping $1.8 trillion. Now the president has said, in effect, that you need to spend money to save money, but the CBO projects deficits once again exceeding $1 trillion by 2018. In fact, over the whole CBO forecast from 2009–2019, the lowest the deficit ever goes is $658 billion.
Stephen Roach: 1-In-3 Chance We're Screwed Morgan Stanley Asia chairman Stephen Roach believes that there is a 1-in-3 chance that the US relapses into recession, should the economy encounter any further economic shocks. Speaking at The World Economic Forum from the Chinese port city of Dalian, he explained that the US consumer is dead and "not coming back".
Shock May Put Global Relapse Odds as High as 1-in-3, Roach Says Odds of a U.S.-led “relapse” into global recession may be as high as one-in-three if any shock to the world’s biggest economy adds to depressed consumer demand, according to Stephen Roach of Morgan Stanley. Economies emerging from recession need a “growth cushion” to avoid the possibility of a repeated slump, Roach, chairman of Morgan Stanley Asia, said in an interview in Dalian, China, yesterday, where he was attending a World Economic Forum event.
Elements of Deflation, Part 2 Just as water is formed by the basic elements hydrogen and oxygen, deflation has its own fundamental components. Last week we started exploring those elements, and this week we continue. I feel that the most fundamental of decisions we face in building investment portfolios is correctly deciding whether we are faced with inflation or deflation in our future. (And I tell you later on when to worry about inflation.) Most investments behave quite differently depending on whether we are in a deflationary or inflationary environment. Get this answer wrong and it could rise up to bite you.
Federal deficit surges to $1.38 trillion through August The federal deficit surged higher into record territory in August, hitting $1.38 trillion with one month left in the budget year. The soaring deficits have raised worries about the willingness of foreigners to keep purchasing Treasury debt. The Chinese, now the largest foreign owners of U.S. Treasury securities, have expressed concerns about runaway deficits. Treasury Secretary Timothy Geithner and other administration officials have sought to address those concerns by insisting that once the recession is over and the financial system is stabilized, the administration will move forcefully to get the deficits under control.
Global economic crisis to continue: IMF chief The global economic crisis will continue and countries must do more to adopt financial market regulations, International Monetary Fund Managing Director Dominique Strauss-Kahn told a German magazine on Saturday. "The global economic crisis will continue, even if Germany and France had some good figures in the second quarter," Strauss-Kahn was quoted as saying in an advance copy of an article to be published in Der Spiegel on Sunday.
Gold investors warned to liquidate after 'buying frenzy' London's leading gold forecaster has advised clients to liquidate holdings of gold and silver until the latest speculative fever abates, warning that futures contracts on New York's Comex exchange are flashing warning signals. John Reade, an analyst at UBS, said the number of "net long" positions held by speculators reached 29.02m an ounce last week, a record high. Investors watch Comex contracts as an indicator of froth in the market. Last week saw a jump of 6.4m ounces in net long contracts, a rare occurrence. When such sudden moves have occurred in the past, gold has fallen 5pc over the subsequent month on average.
pt 1/2 Gerald Celente on Howestreet.com Sept 11 2009
Cheap dollars are sowing the seeds of the next world crisis After years of selling cheap goods to debt-fuelled Western consumers, China now has $2 trillion dollars of foreign exchange reserves. That's 2,000 billion – a reserve haul no less 25 times bigger than that of the UK. In a world of systemic instability, reserves mean power. Reserves mean you can defend your currency, stabilise your banking system and boost your economy without resorting to yet more borrowing – or, worse still, the printing press. More than half of China's reserves are denominated in dollars. So when the dollar falls, China loses serious money. When you're talking about a dollar-reserve number involving 12 zeros, even a modest weakening of the greenback sees China's wealth takes a mighty hit.
Fiat Money: How Else You Gonna Kill 600,000 Americans? A few years ago on these pages, I harshly criticized an article urging New Yorkers to "eat local," and went so far as to dub the young lady's column, "The worst economics article ever." I am here to report that her record has been smashed. Floyd Norris's recent New York Times article on the greenback is hands down the worst economics article I have ever read. Not only is it jam-packed full of false history, but it uses the falsehoods to justify monstrous crimes, both in the past and present.
One Year Later and the Worst Is Still to Come This week was the anniversary of the Lehman bankruptcy and financial collapse of last autumn and it was curious to hear the financial pundits talking as though this problem is fully behind us. There were also some widely trumpeted figures about the success of the Chinese mega-stimulus (equivalent to 50 per cent of GDP in the first half) in sustaining GDP growth around eight per cent. Chinese exports slump Almost uncommented was the 20 per cent slump in Chinese exports over the first eight months of the year, and that in the world’s most export dependent economy.
The Coming Blowback of Banking Fraud The Double Dip Recession, or the "W" shaped recovery that a minority of economists such as Joseph Stiglitz, are now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the current upleg of the "W" shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until to this point, the mission has been a resounding success. For those unfamiliar with the term "blowback", "blowback" is a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.
U.S. Is Finding Role in Business Hard to Unwind When President Obama travels to Wall Street on Monday to speak from Federal Hall, where the founders once argued bitterly over how much the government should control the national economy, he is likely to cast himself as a “reluctant shareholder” in America’s biggest industries and financial institutions. But one year after the collapse of Lehman Brothers set off a series of federal interventions, the government is the nation’s biggest lender, insurer, automaker and guarantor against risk for investors large and small.
Flaw in Free Markets: Humans THERE is broad agreement that Alan Greenspan, the former Fed chairman, was wrong to have believed that market forces alone would insulate society from excessive financial risk. But Mr. Greenspan was wrong for reasons very different from those offered by his most vocal critics. Those critics fault Mr. Greenspan for having overestimated the strength of competitive forces, a point he essentially conceded in Congressional testimony last fall. But the financial crisis was not caused by a shortfall in competition. On the contrary, it was fueled by competition’s growing strength.
State Budgets: "We Ain't Seen Nothing Yet" Already the U.S. federal budget is in terrible shape. According to David Walker, former head of the Government Accountability Office, "Our off balance sheet obligations associated with Social Security and Medicare put us in a $56 trillion financial hole - and that's before the recession was officially declared last year. America now owes more than Americans are worth - and the gap is growing!" ... "Our $56 trillion in unfunded obligations amount to $483,000 per household. That's 10 times the median household income - so it's as if everyone had a second or third mortgage on a house equal to 10 times their income but no house they can lay claim to." And the direction is not about to change.
Why some small banks still love TARP With the traditional means of accessing the capital markets closed, small banks have little choice but to seek federal aid. When it comes to TARP, it's better late than never for some banks. Many community banks are still seeking funds through the government's controversial Troubled Asset Relief Program -- despite all the baggage that comes with a TARP loan. Last week, the Nebraska-based State Bank of Bartley became the latest recipient of the program, accepting $1.7 million in government aid, according to the latest Treasury Department's transaction report.
Bailout tracker: What's going, what's coming The government has gotten back hundreds of billions of dollars in bailout loans, but it still has more than $2 trillion to wind down. As government regulators switch from crisis-mode to rescue mode, many of the biggest and most successful bailout programs are well on their way to extinction. But there are plenty of others that are gaining momentum as the economy heads toward a recovery. In fact, the wind-up has nearly cancelled out the wind-down, and the government still has about $2.2 trillion of loans to reclaim. "These programs were crutches helping banks and institutions get through this crisis," said Larry Kaplan, former special counsel at the Office of Thrift Services and counsel in the banking and financial institutions practice at Paul Hastings. "There are some whose bones have healed, but not everyone's has. The world isn't repaired yet."
Lehman is a footnote in the great East-West globalization crisis You can see why markets and governments both like to blame Lehman Brothers for the "Great Contraction". Such wishful thinking shields investors from the nasty reality that deeper forces are at work: it absolves officialdom from its own destructive role in fixing the price of credit too low for 20 years, luring us into debt. As my colleague Jeremy Warner puts it, Lehman no more caused the economic convulsions of the last year than the assassination of an Austrian prince caused the First World War. There was the little matter of a rising Germany then, and a rising China now. Both scrambled the international system, albeit in different ways. The 48 hours that killed Lehman and AIG – and would have killed Merrill, Morgan Stanley, and Goldman Sachs within a week if Washington had not stepped in – merely brought to a head the inevitable exhaustion of a global order in which the West chokes debt, and the East chokes on export capacity.
The Financial Industry Will Not Be Reigned In! Did you think it would last, that feeling that Congress and the people were mad as hell and not going to take it anymore? I refer to the anger over what Wall Street and the banking industry has done to the nation yet again, and the determination they will be brought under control so it can never happen again. Not going to happen. The stock market is rallying again. This economic crisis is over. So the need to worry about it happening again in the future, and taking steps to prevent it, has been pushed to the back burner, and will eventually die a natural death. That’s the way it’s been for a hundred years.
How to Fight Deflation The slight rebound in housing looks a lot different when one considers how much the Fed is meddling in the market. Fed chair Ben Bernanke has purchased $240 billion in US Treasuries to keep long-term interest rates artificially low while - at the same time - buying $740 billion in Fannie Mae and Freddie Mac mortgage-backed securities (MBS) to provide the financing for new home buyers. It's the double-whammy; and that's not all. Bernanke plans to continue buying agency MBS (monetization) until he reaches $1.45 trillion, which will make Uncle Sam the biggest player in the housing market by far. How's that for central planning?
U.S. Concerned on Debt Demand, Treasury’s Dollar Says The U.S. government is concerned about overall demand for Treasuries, not appetite from individual countries, said David Dollar, the U.S. Treasury Department’s economic and financial emissary to China. “The interest rate on long-term treasury bonds is at a very low level by historical standards,” Dollar said today at the World Economic Forum meeting in Dalian, China. “That says that the market has confidence the U.S. will get the fiscal problem under control.”
pt 2/2 Gerald Celente on Howestreet.com Sept 11 2009
Dollar falls to one-year low The greenback remains weak despite a selloff on Wall Street as investors flock to the Japanese yen for safety. The dollar fell to a one-year low against a basket of currencies in volatile trading Friday as safe-haven demand evaporated and investors fret about the stability of the U.S. currency. The greenback took a beating earlier this week as investors flocked to higher yielding assets such as stocks and commodities. Because the dollar is seen as a safe haven, it tends to lose ground when investors become more confident and shift money into more risky markets.
Fed may shun "gradualist" rate hike pace The last time the Federal Reserve was raising interest rates, it did so at a snail's pace. But it may not take that gradual approach to tightening policy the next time around. Fed officials are stressing there will be no exit from the U.S. central bank's extraordinarily accommodative interest-rate stance for an "extended period" and analysts do not expect the first rate hike until 2010 or 2011.
Stiglitz Urges End to GDP ‘Fetish’ in Favor of Broader Measures Joseph Stiglitz, the Nobel Prize- winning economist, urged world leaders to drop an obsession with examining gross domestic product and focus more on broader measures of prosperity. “GDP has increasingly become used as a measure of societal well-being and changes in the structure of the economy and our society have made it increasingly poor one,” Stiglitz said in an interview today in Paris.
Tea Party March on DC Draws Somewhere between 2 million and 60,000 People. Go figure. A number of Reasoners were in the crowd at yesterday's Taxpayer March on Washington to cover the event (look for a Reason.tv bit in the coming hours). Like myself, Matt Welch was surprised by the turnout, which was gigantic. Welch is ready to eat his hat if the crowd wasn't "at least a healthy six figures." Press accounts are pegging the crowd at somewhere between (get this) 60,000 (ABC News) and and "in excess of 75,000" (local officials) 1.2 million (local police agency estimates) and 2 million people (ABC News again, Fox News, The Daily Mail, and various other outlets).
Meredith Whitney: Home Prices Could Drop Another 25% In case you missed it, Meredith Whitney was on Squawk Box yesterday. And she was once again playing the role of harbinger of doom. She told Squawk that home prices could fall by another 25 percent because of high unemployment and another leg down will come for stocks. What's more, she said the financial sector will be in trouble as many more loans go bust. "No bank underwrote a loan with 10 percent unemployment on the horizon," Whitney said. "I think there is no doubt that home prices will go down dramatically from here, it's just a question of when."
FDIC pushes mortgage help for jobless Buyers of failed banks who get assistance from the agency should consider giving forbearance plans to unemployed borrowers. Some unemployed homeowners at risk for foreclosure could get a temporary break on their mortgage payments under a plan being pushed by the FDIC. The Federal Deposit Insurance Corp. said on Friday it is encouraging certain banks to reduce mortgage payments for the unemployed or underemployed for at least six months.
Curbing medical lawsuits: What Obama really means The president gave a nod to Republicans with his pledge to tackle medical malpractice. But he's talking about it in a different way. Here's a glimpse of what's ahead. As President Obama turns up the heat on health care reform, one new and surprising detail to emerge is his pledge to tackle medical malpractice. "I don't believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs," Obama said Wednesday night. Obama's decision to wade into the issue has some insiders scratching their heads, because cutting down on medical malpractice lawsuits is a Republican tenet.
Crude Reality A Closer Look at the Almost Perfect Crime Some time ago, GATA Secretary / Treasurer Chris Powell gave a speech titled, There are no markets anymore, just interventions. These sage words have stuck in my head. While Mr. Powell was specifically referencing manipulations in the precious metals markets, I am revisiting the concept as it relates to the crude oil market. The ongoing surreptitious “management’ of strategic commodity prices by the U.S. Government and its agents needs to be exposed for what it really is – UNFAIR TRADE and AN ABUSE OF PRIVILEGE. These practices have resulted in a litany of unsustainable, unfair and damaging outcomes in many markets with results that favor privileged insiders at the expense of the common good. I continue to be amazed at the lack of uptake by the media to these over-arching issues that impact the well being and daily lives of all citizens and media’s feeble attempts to explain the ‘unexplainable’ based on free market principles when markets are not free.
GM will offer 60-day, money-back guarantee on new cars Frustrated that many shoppers won't even consider its cars, General Motors says starting Monday, buyers of new GM models can bring them back within 60 days, no questions asked, and get back the price of the car. GM's Vauxhall brand used a money-back guarantee in the U.K. some years ago, GM marketing chief Bob Lutz says, and only 2% to 3% of buyers brought vehicles back for refunds — about what he expects for the U.S. program. "There is a certain amount of risk. So what? Doing nothing is not an option," he says.
Obama, Treasury Study Say Losing Healthcare Is Common Aside from cost, health-care reforms fall into two categories, broadly speaking: Covering the uninsured and reassuring the insured. Now, President Obama and a new Treasury study make the case that the two aren't so different. The gist of it: Even if you have insurance now, you really should care about coverage for the uninsured -- because plenty of people who have insurance lose it. And the Treasury's new study makes the case with some pretty striking numbers -- numbers that go beyond the usual snapshot telling us how many people lack coverage (46 million at last count), or how many have lose coverage recently (17,000 a day over the last year, Obama says).
Pelosi’s ‘Immoral’ Insurers May Gain in Obama Plan The U.S. health-care overhaul proposed in Congress will do more than impose greater controls on private insurers. It will also swell their profits. New legislation may generate 10 million more customers for Amerigroup Corp.,UnitedHealth Group Inc. and other companies that administer Medicaid, the government plan that covers the poorest Americans, according to James Carlson, Amerigroup’s chief executive officer. Molina Healthcare Inc.’s Medicaid enrollment may jump by 43 percent, CEO J. Mario Molina said. WellPoint Inc., the largest U.S. insurer, may also gain.
Thousands Pack D.C. to Protest Spending Sept. 12, 2009: Fiuscally conservative demonstrators took to the streets of Washington D.C. to rally against the president's health care plan and what they say is out-of-control spending. NBC's Tom Costello reports.
Thousands Protest Spending - DC - 9.12.09 Thousands ... maybe 10s of thousands.... of Americans protesting today in DC. Appears to be a mix of Dems and Republicans joined together. Good to see that people are realizing neither party is representing their best interest.
DeMint Calls Out Obama and Congress: ‘Americans Are Awake, They’re Informed, And They’re Outraged’ Speaking before a massive crowd of cheering protestors attending the “Taxpayer March on Washington” at the West front of the U.S. Capitol today, Sen. Jim DeMint (R.-S.C.) issued a challenge to President Barack Obama and Congress. “I think you all know that the president has warned us that if we disagree with him, he is going to call us out,” said DeMint. “Okay, Mr. President, we are out. Ladies and gentlemen, welcome to Waterloo.”
A Somber Warning on Afghanistan Western powers now in Afghanistan run the risk of suffering the fate of the Soviet Union there if they cannot halt the growing insurgency and an Afghan perception that they are foreign invaders, according to Zbigniew Brzezinski, the former U.S. national security adviser to President Jimmy Carter. In a speech opening a weekend gathering of military and foreign policy experts, Mr. Brzezinski, who was national security adviser when the Soviet Union invaded Afghanistan in late 1979, endorsed a British and German call, backed by France, for a new international conference on the country. He also set the tone for a weekend of somber assessments of the situation.
EU faces 'existential' danger from economic crisis Mario Monti, the European Union's former Competition tsar, says abandonment of free market principles is deadly. The global financial crisis has inflicted such damage to free market principles that it risks undermining the core function of Brussels and triggering the disintegration of the European Union, according to the EU's most revered economic figure. "The EU faces a quasi-existential crisis," said Mario Monti, who ran the EU's market and competition directorates for a decade. "The special role played by the Commission in EU integration is based on the market, and this crisis has brought the market economy itself into crisis. It has lost respectability. This threatens to tip the Community into disintegration," he told The Daily Telegraph.
Ruble Devaluation Won’t Fix Russia’s Economic Woes A ruble devaluation won’t solve Russia’s economic problems as the world’s largest energy exporter faces “a very difficult next couple of years,” said European Bank for Reconstruction and Development Chief Economist Erik Berglof. “This is the wrong way to think about the recovery in Russia,” Berglof said in a Sept. 10 interview in London.
China Weighs Tariffs on Some U.S. Exports as Tensions Rise China unexpectedly increased pressure Sunday on the United States in a widening trade dispute, taking the first steps toward imposing tariffs on American exports of automotive products and chicken meat in retaliation for President Obama’s decision late Friday to levy tariffs on tires from China. The Chinese government’s strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. “The U.S. is shameless!” said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds.
China investigates US auto, chicken imports BEIJING China is launching antidumping investigations into imported U.S. auto and chicken products, the government said Sunday, adding to a string of trade disputes with Washington including a recent decision to raise tariffs on Chinese-made tires. The Commerce Ministry said it would look into complaints that American auto and chicken products are being dumped into the Chinese market or are benefiting from subsidies. The ministry said there are concerns the U.S. imports have "dealt a blow to domestic industries."
China to Probe Alleged ‘Dumping’ of U.S. Products China announced a probe into the alleged dumping of American auto and chicken products, two days after U.S. President Barack Obama imposed tariffs on imports of tires from the Asian nation. Chinese industries have complained that they’re being hurt by “unfair trade practices,” the nation’s Ministry of Commerce said on its Web site yesterday. The Beijing-based ministry is also looking into subsidies for the products, it said. It didn’t specify the imports’ value.
pt 1/5 Peter Schiff on FinancialSenseHour deflation vs Inflation debate 12 Sept 2009
pt 2/5 Peter Schiff on FinancialSenseHour deflation vs Inflation debate 12 Sept 2009
pt 3/5 Peter Schiff on FinancialSenseHour deflation vs Inflation debate 12 Sept 2009
pt 4/5 Peter Schiff on FinancialSenseHour deflation vs Inflation debate 12 Sept 2009
pt 5/5 Peter Schiff on FinancialSenseHour deflation vs Inflation debate 12 Sept 2009
Organizers Predict Thousands of Tea Party Activists Will Attend Saturday’s March on Washington Hell hath no fury like an angry taxpayer ignored – and thousands of angry taxpayers are expected to come to the nation’s capital Saturday, Sept. 12, to march on the National Mall. They are the same Americans who staged “tea parties” this Spring to protest the $700 billion mortgage bailout and passage of the $787 billion economic stimulus bill -- and the same people who turned out in droves over the August congressional break at town hall meetings around the country to express their outrage over a proposed trillion dollar health-care “reform.” This time, however, thousands upon thousands of them are expected to descend on "one place" -- D.C. -- at "one time" -- over the next three days, culminating in a 1 p.m. march on Saturday, according to march organizers.
The 9-12 Project Glenn Beck will be anchoring the coverage of 9-12 events, live on Fox News on September 12, 2009 from 1-3pm ET
Money Talks, Gold Shouts In the second quarter of 2008, when it became clear that bankrupted financial institutions would be bailed out by the federal government, gold did a funny thing. In the wake of a financial crisis of that magnitude, one normally would have expected asset prices, including gold, to plummet. Most observers expected the metal to dip from the $800 level down to $600, or below. Instead, gold held up well during the teeth of the crisis, and has recently increased to just over $1,000.
Gold’s next stop: $1,600! With the gold crossing $1000 mark, market analysts and hedge fund managers expect the yellow metals to touch $1600 in the coming months. Their argument is based on the increased demand during the festival season in India and more and more investors opting for assets with lasting value rather than volatile currencies. According to market researchers, all the fundamentals for a huge rise are in place. If gold breaks last year’s high price, it can cross $1,200 to $1,400. Spot gold rose through the psychologically significant barrier of $1,000 an ounce this week, its highest since March 2008 when it hit a record $1,030.80.
Gold, silver, platinum to go up In a forecast which may help boost the gold prices again, Citigroup has said that concerns over the dollar and inflation caused by the government policies to tackle recession will push precious metal prices up in the long term. As a result, the bank hiked its gold, silver and platinum price forecasts for 2009 and 2010. Turbulence in dollar and concern over inflation will lift precious metal prices in the years to come, it said. The bank expected gold prices to average $940 an ounce this year, up from a previous forecast of $908, and $966 in 2010, up from $925.
Gold Little Changed as Dollar Slips Against Euro; Silver Gains Gold was little changed, paring an earlier decline, as the dollar slipped against the euro, boosting the metal’s appeal as an alternative asset. Silver rose. The dollar sank as much as 0.4 percent against the European currency, erasing an earlier gain. Gold fell as much as 1.4 percent before rebounding. On Sept. 8, gold, which tends to rise when the dollar weakens, reached $1,009.70 an ounce in New York, the highest since March 2008. The price briefly topped $1,000 today, after the day’s settlement, as the greenback declined.
Gold at $1000: WGC says gold's demand base rising The World Gold Council said on Thursdat that the surge of gold price above $1000 this week reflects the sustained global demand for the yellow metal and the emergence of gold as the safest asset. WGC said the gold price breaking through the 'symbolic' $1000.00/oz mark reaching $1004.50 shows the great investment potential of the yellow metal. Before early September, the highest 2009 price was on 20 February when gold fixed (in the afternoon) at $989 and it has traded in the range $870 to $993 ever since, with an average price over that period of $879. The rise translates to an annual increase of more than 21 percent on the average price in September 2008, which was $829.93oz.
"US is on the 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 Kaizer to RussiaToday.
Cheap Gold and Low Interest Rates Obligation to Perform At economic, monetary and fiscal extremes like the present, there is little or no remaining flexibility in the global system. When or if gold and oil prices break out to highs beyond present levels, little credibility will remain for hopes of a sustained, robust and non-inflationary global economic recovery. At such times, waves of change overwhelm and replace previous models, structures or cycles. For the present and massive Keynesian-type attempts to revive global economic growth, because only the short-term matters, dixit Keynes, this must produce results in the short-term. This urgent need to perform can be analyzed and quantified. For the recovery in economic growth the need for concrete and near-term results is now extreme.
Reasons for Major Gold Breakout Basically the reasons extend from the many tentacles and ramifications of the Grand Paradigm Shift in progress, the complete overturn of the USDollar global financial system. It is being turned upside down before it goes inside out, and finally fractures into a million pieces. This is an irreversible process that is already one year into the collapse process. Here are reasons according to my analysis and perceptions. They only number 13 this time:
PARADIGM SHIFT away from a USDollar centric world manifested as the global revolt against the USDollar in reserves management and transaction settlement, extended from bank structures
colossal irresponsibility of major central banks with expanded balance sheets, money creation, and credit growth, endorsing their government profligacy
failure of the central bank franchise model, exhibited by the ongoing credit crisis, insolvency of banks, and desperate attempt by the US Federal Reserve to serve as the global bank
Gold: Bankers have turned hoarders There are many changing dynamics in the precious metals market which suggest that we are about to witness exponential, upward moves in prices for gold and silver -- which dwarf the gains these metals made when they more-than-tripled in value. For silver, it is a relatively straightforward issue of supply and demand: demand is surging in numerous areas, while decades of price-suppression has resulted in the evaporation of global stockpiles. In the case of gold, however, the normal fundamentals of supply and demand do not apply. As a commodity which is never consumed, total stockpiles of gold grow every year. Conversely, even with a tripling in price, the supply of gold remains flat -- despite the huge surge in Chinese gold production -- suggesting that "peak gold" has arrived.
Gold still needs to lodge a proper foothold at $1,000 Gold managed to reclaim the $1,000-an-ounce level this week to trade at levels not seen in more than a year, but it'll need quite a bit more than a friendly boost to gain a good foothold, retain its spot and climb to fresh record highs. "There is no guarantee gold will now rise to stratospheric levels," said Mark Leibovit, chief market strategist for VRTrader.com. After all, the precious metal has already come a long way in a short period of time. "Since the start of the financial crisis, gold is up more than 50%, primarily due to the world's lack of confidence in the monetary system -- especially the U .S. monetary system which constitutes the largest part of global reserves held by countries," said Marcus Hudson, president of Hudson & Associates, a commodity-hedging advisory firm.
Gold bulls see safe haven in economic straits Gold broke through the $1,000-an-ounce barrier this week, and many on Wall Street believe it can keep going higher. Traditionally, investors have viewed gold as a "safe haven" in times of economic uncertainty, and analysts have no reason to believe it is any different in the current recession. Despite signs that the economy is clawing its way back, the dollar remains weak and inflation fears are rife, and investors are looking for reliable places to put their money.
Barrick Gold expects $4 billion from share offer Barrick Gold Corp said on Thursday that proceeds from its pending equity offering will total around $4 billion, making the stock sale the biggest in Canadian history, according to Thomson Reuters data. The world's top gold miner said underwriters exercised in full their option to purchase an additional 14.21 million shares at a price of $36.95.
G-20 Governments Inflate the Global Economy to Economic Prosperity Who says central bankers can’t inflate an economy to prosperity? To head-off the worst economic downturn since the Great Depression, the “Group-of-20” central banks have slashed interest rates to record lows, while politicians have funneled trillions into the coffers of the most powerful Oligarchic banks. So far, the cost of mopping up after the world financial crisis is a staggering $12-trillion, or equivalent to around a fifth of the world’s annual economic output.
US Economy Still on Runway as Recovery Won’t Fly This recovery is wonderful in every way, except the important ones. It is like a shiny new airplane. It has glossy aluminum wings. It has plush seats in the first class section. Trim stewardesses serve drinks. Movies are available on demand in all sections. A majority of those polled by Bloomberg think things are great; 61% said they thought they economy had taken off and was flying high. Stocks are up. Commodities are up. And here's another Bloomberg headline: "Global investors give Federal Reserve Chairman Ben S. Bernanke top marks..." The recovery has won the approval of economists and the public. It has almost everything going for it. It just won't fly! Comes news this morning that the US economy is still on the runway.
Jim Rogers: We Need More Lehmans "Letting Lehman fail was perhaps the only thing governments have done right during this whole drama," Jim Rogers says in brief statement to the Financial Times today. Rogers argues that the government's actions to rescue Long Term Capital Management ten years ago created systemic risk based on the assumption that the government would ride to the rescue. "Had the central bank allowed the failure of Long Term Capital Management to run its course, Lehman, Bear Stearns, et al would still be here," he says.
The Super Bubble to Come Sometimes, a number of forces come together to greatly alter events. I'm reluctant to employ the overused cliche, "A Perfect Storm," but I am at a loss to imagine a better one to describe the confluence of forces I see converging for silver. Any one of the factors about to impact the price would be formidable, but in conjunction with one another should prove historic in force. Consider first world supply and demand. Although current production (mining plus recycling) exceeds total industrial demand that's not the case when investment demand is included. Prior to 2006 a structural deficit existed, where total fabrication demand exceeded total production, causing world silver inventories to decline to the lowest levels in hundreds of years. That ended in 2006. However, starting in 2006, the world began to wake up to the investment merits of silver.
10 Bubbles In The Making One year after America's brush with economic catastrophe, there's plenty of looking back at the bubbles that caused financial chaos. But what's next? There are surely dangerous economic bubbles forming as we speak. As Alan Greenspan warned this week, "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue." The trick, of course, is spotting them. By definition, most people don't spot a bubble before they form and burst.
US Dollar As Reserve Currency Not Working Very Well We read with interest earlier this week a call by the United Nations Conference on Trade and Development for a new global reserve currency. Apparently the current set-up of having the US dollar as a reserve currency isn't working very well. They're quick learners at the UN obviously! Their report makes some of the right noises, "The dollar-based reserve system is increasingly challenged." Hmm, a slight understatement there. If "increasingly challenged" is a euphemism for "dead" then we'd agree. But we don't think that's what they mean.
How We At Goldman Would Regulate The Financial System The following speech was delivered yesterday at the Handelsblatt Banking Conference in Germany. Good afternoon. Thank you for the opportunity to be with you today. I thought I would take a few minutes to attempt to frame some of the core policy and regulatory issues that all of us are trying to come to consensus around in the next few months. In the wake of the financial crisis, there has been no shortage of approaches to regulatory reform, both here in Germany and globally. In a relatively brief period, we have witnessed a number of proposed changes to the rules and regulations that govern our industry and markets more broadly.
What Happens If The Yuan Replaces The Dollar As The Main Reserve Currency Most Americans will view China’s effort to dethrone the U.S. dollar as the world’s main reserve currency as one of the biggest economic threats that this country will have to face. But the reality is that this tectonic shift in global finance – and the economic shockwaves that will result – could provide investors with some of the greatest profit plays they’ll see in their lifetimes. No matter which camp you’re in, the China-spawned changes are headed our way.
Now in Production A little over a week ago, an obscure Chinese Government agency threatened to allow Chinese companies to default on their derivatives losses. As regular readers well understand, I have been warning about the dangers of a massive derivatives induced financial collapse for 8 years. It may be here. It may be now. Derivatives are about $600 trillion now, down from $700 trillion a year ago; up from $100 trillion eight years ago and totally out of control. Every fool in the world is making giant bets with monopoly money borrowed from other people. A year ago, with oil prices north of $140 a barrel, a number of Chinese companies bought futures contracts on energy. Those are way underwater and those companies don't much feel like paying.
Geithner Tells Town Hall: 'We Have to Change Things' Treasury Secretary Timothy Geithner offered a spirited defense of the government's efforts to forestall another Great Depression but cautioned that the recovery would be slow and painful. "We understood how bad this was—how damaging this was—and we did things that people were incredibly critical of because we knew that this was getting away from us," Geithner told a special CNBC town hall meeting Thursday. In the wide-ranging session, which took place nearly a year to the day after the failure of Lehman Brothers and the implosion of the nation's financial system, Geithner said the country needs not only to fix what is broken but also take preventive measures against a similar collapse happening again.
Banking on Geithner
Geithner says less need for government in markets U.S. Treasury Secretary Timothy Geithner said Thursday a strengthening economy means the government can end some of the extraordinary support it put in place for markets and prepare for a slow recovery. Appearing before the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program, Geithner said the economy was in far better shape now than a year ago when it was "on the verge of collapse," though it still had problems. "As we enter this new phase, we must begin winding down some of the extraordinary support we put in place for the financial system," he said. "We are now in a position to evolve our strategy as we move from crisis response to recovery."
The Government's Effort Has Failed The Federal Reserve's latest (through July) G19 update is out, showing consumer credit. To say that these figures are ugly would be an understatement. In fact, there is simply no way you can spin this - while this contraction in credit has to happen it has horrifying implications if our Washington policymakers don't get on the stick and deal with the underlying issues here and now instead of pretending that everything is ok or worse, try to "borrow our way to prosperity."
A year after financial crisis, the consumer economy is dead One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes. Historians will look to September 2008 as a watershed for the U.S. economy. On Sept. 7, the government seized mortgage titans Fannie Mae and Freddie Mac. Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage.
Bernanke's Bad Money To combat the financial crisis set off by the collapse of the housing bubble, the Federal Reserve Board has lent out more than $2 trillion through various special lending facilities. While the Fed discloses aggregate information on the loans made through each of the facilities, it will not disclose how much money it lent to specific banks or under what terms. By contrast, the Treasury puts this information about its $700 billion TARP bailout up on its website.
Geithner Says Government to Reduce Role in Markets U.S. Treasury Secretary Timothy Geithner said the government is moving to withdraw some of its support for financial markets and cautioned that the recovery will have “more than the usual ups and downs.” “As we enter this new phase we must begin winding down some of the extraordinary support we put in place,” Geithner told the Congressional Oversight Panel that monitors the $700 billion financial-rescue program. “We are now in a position to evolve our strategy as we move from crisis response to recovery, from rescuing the economy to repairing and rebuilding the foundation for future growth.”
Where Do the Feds Get Any Money? Gold futures tapped the $1,000-an-ounce mark in early morning trading, a level the precious metal hadn't reached since February. "As long as the Federal Reserve and the US government take actions that debase the dollar, the dollar price of gold will rise," says GoldMoney.com's James Turk. "Similarly, as long as the Bank of England and the UK government take actions that debase the pound, the Sterling price of silver will rise. It is a certainty, just like night follows day.
Economy Still Fragile, Fed Reports Has a Rebound Started? Depends on Whom You Ask, Survey of Country Indicates. An economic recovery may well have arrived, but a Federal Reserve report released Wednesday shows just how varied it is proving to be among different industries and different regions. The mixed picture underscores how fragile the economy remains. While growth overall may have resumed, the nation is still vulnerable to new shocks as long as there are such large pockets of weakness.
America's Borrowing Binge
Insiders sell like there's no tomorrow Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now? Can hundreds of stock-selling insiders be wrong? The stock market has mounted an historic rally since it hit a low in March. The S&P 500 is up 55%, as U.S. job losses have slowed and credit markets have stabilized. But against that improving backdrop, one indicator has turned distinctly bearish: Corporate officers and directors have been selling shares at a pace last seen just before the onset of the subprime malaise two years ago. While a wave of insider selling doesn't necessarily foretell a stock market downturn, it suggests that those with the first read on business trends don't believe current stock prices are justified by economic fundamentals. "It's not a very complicated story," said Charles Biderman, who runs market research firm Trim Tabs. "Insiders know better than you and me. If prices are too high, they sell."
Failing loans for commercial real estate threaten small banks Bank stocks have roared back from a near-death experience, which might be diverting attention from a new threat looming for the industry: commercial real estate. The speed at which loans on commercial properties such as office buildings and malls are souring is "unprecedented," a recent report from Deutsche Bank said. The delinquency rates on these loans reached 4.1% in June, more than double the March rate. Banks are most vulnerable because they hold about $1 trillion of commercial real estate loans and an additional $530 billion in construction loans.
Geithner defends bank bailouts at town-hall meeting Treasury secretary addresses concerns about how taxpayers can afford costs Treasury Secretary Timothy Geithner late Thursday responded to criticism of the Obama administration's bank bailout endeavors, addressing public frustration about billions in taxpayer dollars going to bankers. "I wouldn't give a penny to a banker, to benefit a banker," Geithner said at a town hall meeting hosted by CNBC at the Newseum in Washington. "But if you let the system get to the point where people are taking their money out of banks, where people can't get credit, where things stop, then you will see companies fail, unemployment rise, pension values fall by 30%, people having to work a decade longer than expected because of that damage." The town-hall meeting followed Geithner's announcement earlier Thursday of a series of proposals to phase out some bank-rescue initiatives and programs.
US starts to unwind state bank support Geithner says focus should be on recovery The US is starting to pare back its emergency support for banks and financial markets, Treasury secretary Tim Geithner declared on Thursday, saying that the financial system no longer needed extensive government props. Almost a year since the collapse of Lehman Brothers triggered a financial panic that tipped the world into a deep recession, Mr Geithner said it was time to move from crisis response to recovery.
Treasury Secretary Geithner: System 'back from brink' Treasury Secretary Timothy Geithner testified Thursday that the financial system has "stepped back from the brink," allowing the government to wind down some programs designed to calm jittery markets. Policymakers must change strategy as they switch from "rescuing the economy to repairing and rebuilding the financial system," Geithner told the Congressional Oversight Panel overseeing federal bailout funds.
Final Words from the Treasury Secretary
U.S. Trade Deficit Widens Most Since 1999 on Imports The U.S. trade deficit widened in July and imports gained by a record in percentage terms as demand for cars, computers and oil increased. The gap between imports and exports increased 16 percent, the most in more than a decade, to $32 billion from a revised $27.5 billion in June that was larger than previously estimated, the Commerce Department said today in Washington. Imports soared 4.7 percent, outpacing a 2.2 percent gain in exports.
A year after financial crisis, new world order emerges One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes. Historians will look at September 2008 as a watershed for the U.S. economy. On Sept. 7, the government seized mortgage titans Fannie Mae and Freddie Mac. Eight days later, investment bank Lehman Brothers filed for bankruptcy, sparking a global financial panic that threatened to topple blue-chip financial institutions around the world. In the several months that followed, governments from Washington to Beijing responded with unprecedented intervention into financial markets and across their economies, seeking to stop the wreckage and stem the damage.
Wen Signals Unprecendented Spending Will Drive Chinese Rebound China’s Premier Wen Jiabao signaled he will maintain unprecedented government spending to drive a recovery from the slowest expansion in almost a decade. “China’s economic rebound is unstable, unbalanced and not yet solid,” Wen said yesterday in a speech at the World Economic Forum in Dalian, a city in northeastern China. “We cannot and will not change the direction of our policies when the conditions aren’t appropriate.”
U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments. A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.
Eviction patrol heats up on U.S. foreclosures It's home to Disneyland -- "the happiest place on earth" -- but deputies enforcing home evictions in Anaheim find mold, backed-up plumbing, marijuana crops, abandoned grandparents and the occasional suicide. Orange County Sheriff's Deputy Ramona Figueroa says nothing surprises her any more but the job is getting worse, and she hopes the downward slide doesn't last too much longer. One common task these days is serving eviction notices to people who have done nothing wrong -- who rent properties that have fallen into foreclosure, or are repossessed to recover unpaid debts. "They are shocked and surprised," Figueroa said as she went on her rounds. "And here I am giving them a five-day notice and they explain that just five days earlier the homeowner was at the home collecting rent."
Congress must extend unemployment benefits: Pelosi Congress must extend unemployment benefits before they expire for the 1.5 million Americans who risk exhausting them, House of Representatives Speaker Nancy Pelosi said on Thursday. "We cannot let that run out," Pelosi said at a news conference. "It's pretty clear cut ... this is very necessary for us to address that." Pelosi did not say when the House intends to act. The unemployment rate stood at 9.7 percent in August, the highest figure since 1983, and is expected to remain high well into next year even as the economy recovers from the worst economic downturn since the Great Depression of the 1930s.
Income fell sharply last year Household income fell sharply and poverty rates rose in 2008 as the severe effects of the recession took their toll on Americans' finances, the Census Bureau reported Thursday. Median household income dropped 3.6% to $50,303 in 2008, the bureau reported. That was the sharpest drop since at least 1967 and sent income to its lowest point since 1997.
Jeff Sessions quotes Ron Paul on the Deficit: "We Cannot Borrow our Way to Prosperity" [1~2]
Wave of Unemployment in the U.S. What to Expect and What to Do Individuals who look for work but can't find it are miserable. On the national level, high unemployment is both cause and effect concerning other problems with the economy. As we'll see below, high unemployment results from a weak economy and - in turn - weakens the economy. Until the causes of, and solutions to, high levels of unemployment are understood, we will not be able to solve the problem. How High is Unemployment? Before we can even start looking at causes or solutions, we have to understand what the current level of unemployment really is, and what the trends portend for the future.
U.S. poverty rate hits 11-year high The U.S. poverty rate hit its highest level in 11 years in 2008 as the worst recession since the Great Depression threw millions of Americans out of work, a government report showed on Thursday. The Census Bureau said the poverty rate -- the percentage of people living in poverty -- jumped to 13.2 percent, the highest level since 1997, from 12.5 percent in 2007. About 39.8 million Americans were living in poverty, up from 37.3 million in 2007.
Poverty rate jumps for the first time since '04 Poverty in the West and the Midwest jumped in 2008, while levels in the South and Northeast held steady, Census report says. National rate rises to 13.2%. The poverty rate rose last year to 13.2%, the highest level since 1997, said a report released Thursday. That marks the first statistically significant annual increase since 2004, according to the annual Census Bureau report "Income, Poverty, and Health Insurance Coverage in the United States: 2008." Last year, 39.8 million people lived below the poverty level, which is $22,025 for a family of four, according to the Office of Management and Budget. That's up 3.9% from 2007, when 37.3 million people lived in poverty.
Pelosi: We'll ‘Squeeze’ Medicare to Pay for Health Care Bill House Speaker Nancy Pelosi (D-Calif.) said today that Congress will pay for half of the $1 trillion health care reform bill that President Obama wants enacted by “squeezing” Medicare and Medicaid to wring out what she called “waste, fraud, abuse, redundancy, obsolescence and whatever it is.” Pelosi was asked at her weekly press briefing if she agreed with President Obama that much of the health care reform plan can be paid for by cutting Medicare and Medicaid. “Half the bill will be paid for by squeezing excesses out of the [Medicare and Medicaid] system, and there is $500 billion dollars to do that and we’re looking for more,” Pelosi said. “That can be achieved--waste, fraud, abuse, redundancy, obsolescence, whatever it is. Squeeze it out of the system; and that means out of the providers and the rest as well.”
Congressman Mike Rogers' opening statement on Health Care reform in Washington D.C. Congressman Rogers' makes his opening statement on Health Care reform legislation that is under debate in Congress.
Obama changes talking points on uninsured Tucked into President Barack Obama's speech to the U.S. Congress was a new talking point -- that his aim is to get health insurance for 30 million uninsured people, not 46 million. "There are now more than 30 million American citizens who cannot get coverage," Obama said on Wednesday. Back in August, he had said: "We've got 46-47 million people without health insurance in our country." Why the change? White House spokesman Robert Gibbs said Obama was making the point that under his plan, illegal immigrants would not get health insurance.
Obama Won’t Give Federal Insurance Benefits to Illegal Aliens, He’ll Make Them Legal First In his speech to a joint session of Congress last night, President Obama said that his health care reform plan will not insure “illegal immigrants.” The statement instantly became a matter of controversy when Rep. Joe Wilson (R.-S.C.) yelled out in the House chamber, “You lie.” Wilson has since apologized for his outburst. But President Obama’s statement about illegal aliens and health care reform deserves further scrutiny.
TARP auto fund loss projected Oversight panel also says taxpayers were 'left in the dark' Taxpayers are not likely to recover their $81 billion investment in Chrysler and General Motors, a government watchdog panel said Wednesday, recommending that the federal government consider shifting its stake in the troubled automakers to an independent trust. The Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) also charged that taxpayers were "left in the dark" on specifics of the government's decision to use the $700 billion bailout fund to aid the Michigan automakers.
Jeff Sessions quotes Ron Paul on the Deficit: "We Cannot Borrow our Way to Prosperity" [2~2]
The future of car buying: Don't supersize me Big cars and trucks are out. Smaller ones that offer more for your dollar are in. And many drivers will hang onto the new cars they buy longer. We've seen some of this before — in the 1970s. But there's reason to believe that this time, American car-buying habits have changed forever. Scarred by the worst financial crisis since the 1930s and still leery of high gas prices, people are walking into showrooms intent on spending less. The trend is strongest among baby boomers, who are 44 to 63 years old and make up a quarter of the population, dealers and industry analysts say.
GM introduces money-back guarantee Buyers will be allowed to return their car or truck within 60 days if they're not satisfied. Buy a new General Motors car. Don't like it? Return it and get your money back. General Motors, in a bid to appeal to consumers upset about decades of poor quality and the carmaker's government bailout, is launching an unusual program: money-back guarantees. Between Sept. 14 and Nov. 30, buyers will be able to return Buick, Cadillac, Chevrolet or GMC products within 60 days if they don't like them, the automaker announced Thursday. Such programs are commonplace in other businesses, but not for cars. For one thing, cars cost, on average, about $25,000 and they lose a lot of value as soon as they leave a dealer lot.
Steve Jobs: Apple Tablet Is Going To Destroy The Kindle Apple is reportedly working on a tablet computer -- sort of a big iPod touch -- which could be used as an e-book reader, Internet browsing device, movie viewer, game machine, etc. Look out, Amazon Kindle, Steve Jobs hints in an interview with the New York Times' David Pogue yesterday. “I’m sure there will always be dedicated devices, and they may have a few advantages in doing just one thing,” Jobs said. “But I think the general-purpose devices will win the day. Because I think people just probably aren’t willing to pay for a dedicated device.”
John Stossel To Fox News And Fox Business News We've heard a source and TVNewser confirms that longtime 60 Minutes 20/20 mischief-maker John Stossel is on his way out and heading to Fox or Fox News. This week is said to be his last at the network. The move would make sense. Stossel's conservative/libertarian sensibilities would make sense on the network, and it would give him a higher profile in the newsmedia. TVNewser: He's expected to signed a multi-year deal with Fox which will include regular appearances on Fox News Channel during daytime and primetime. He'll also host four, hour-long specials on Fox News, much like the business/consumer specials he'd hosted for years on ABC.
U.S. heads for record overseas arms sales in 2009 The United States is close to a new peak in government-to-government arms sales, poised to top last year's record $36.4 billion, Pentagon figures showed. With one month left in fiscal 2009, the value of such deals stood at $35.3 billion, not including any that may be wrapped up by the September 30 close of the fiscal year, the Pentagon's Defense Security Cooperation Agency said Thursday. "Anything could tip the scale on this," said Charles Taylor, an agency spokesman.
Russian report: Netanyahu may be planning attack PM's rushed visit to Moscow under cloud of secrecy occupies Russian media. Kommersant paper quotes 'informed Israeli' source as saying 'It can't be ruled out that Israel may be ready to move on to decisive actions with regards to Iran, and Netanyahu decided to inform Kremlin of this' Russian media on Thursday continued to cover Israeli Prime Minister Benjamin Netanyahu's mysterious visit to Moscow, that was leaked to the media from his office. Kommersant newspaper quoted "experts" as saying they believe a visit of this kind could have stemmed from urgent circumstances, "for example, in the event that Israel plans to attack Iran".
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Thurs 09.10.2009
Is the Fun for Gold Just Beginning? You likely heard that the Central Bank Gold Agreement was extended by the signatory banks last month. This is the agreement where central banks around the world agree to limit sales and to do so in an orderly fashion so as to not disrupt prices. While most writers focused on the fact that the agreement set a lower limit (400 tonnes per year, down from 500) – clearly a bullish indicator – I think there’s a more obvious fact many are overlooking that’s even more bullish.
Gold is set to soar higher, near term expect $1300 Yesterday, gold broke the $1,000-an-ounce barrier, after rising from $950 per ounce last week. It was the precious metal’s fifth run-up to the round number. And now there are many signs indicating that yesterday’s decisive break is of major importance. An analysis shows that from November 2008 through February 2009, gold rose from around $700 to nearly $1,000. The ensuing consolidation took six months … and ended last week. This consolidation has the form of a triangle, which typically confirms a trend.
Gold Party Barely Started The FRN$, the world’s reserve currency, has no definition and the quantitative easing will fail. After all, what is a dollar? Because there is no definition therefore it is impossible to perform accurate, or even semi-acccurate, calculations of value using this tool. Consequently, other key ratios ought to be used to hone in and focus on value. . . . . . . . This upleg in gold and silver will have significant strength because of the long period of consolidation just like in 2004 and 2006 which provided the foundation for the uplegs in 2005 and 2007 that took gold from $400 to $700 and $650 to $1,000, respectively. If the current upleg is similar to the previous two then the 200 day relative prices for gold and silver at the top of this upleg would be about 1.5x and 1.7x, respectively.
Gold soars, dollar slides, investors hedge Worries about loose money and budget policies around the world sent gold soaring and the U.S. dollar slumping Tuesday, reviving a trend that threatens to reignite inflation for consumers while tarnishing the privileged reserve status of the dollar. Gold broke through the $1,000-an-ounce barrier for the first time since February as investors piled into the best alternative to the dollar and a classic hedge against inflation. Worries about rising prices were triggered over the long weekend after the Group of 20 finance ministers at a London meeting stressed they are intent on maintaining loose money policies and will not move to lower bloated government deficits until the global economy clearly recovers.
The Beginning of the Gold Era Gold has had an amazing run for a week, and on Tuesday morning (9/8) at HK market around 2-3am EST, Gold finally broke $1,000 again, an important key resistance level. It seems that the monthly chart has given a better resistance and support levels than the daily or weekly chart, from a long term perspective. Please see the monthly close chart to now from early 1970s when U.S. finally gave up the gold standard linking gold to US dollar.
Dollar Collapsing, Gold Soaring: Are The Gold Bugs Finally Right? For longer than anyone can remember, gold bugs have been predicting the demise of paper-based currencies and the rise of their favorite yellow metal. Yesterday, gold cracked $1,000 per ounce, a level it has broken only briefly in the past. And the dollar continued its collapse. So are the gold bugs finally right? Should you swap all your dollars for gold dust and stash it in a safe-deposit box (maybe picking up some guns and cat food while you're at it)?
Gold above $1000 means weak dollar? Finally, gold prices soared above the psychological $1000 per ounce on Tuesday, giving big relief to investors. With gold breaking the barrier, according to analysts, the yellow metal may witness further surge in the coming days. The price of gold rose above $1,000 per ounce on Tuesday to its highest level in nearly 18 months, spurred by concerns over the weakness of the US dollar, expectations of low international interest rates for an extended period and regular bullion purchases by China.
$1,000 Gold . . . . Right now gold is poised at the $1,000 mark. It came up to this point in March 2008 and again in Feb. 2009. In both these cases, I recommended selling for the near term and standing aside. But this time is the charm. Who are you going to believe, the people who have been lying to you since 1933 and have been wrong on every major economic event or the people who have hit the nail on the head again and again? . . . . . . . . If gold can cleanly break $1,000, then that level will become support. It will be a floor instead of a ceiling, and there will be good times ahead for the gold bugs.
Gold, Stocks and the 10-Year Cycle Peak . . . . Endeavour Silver’s Chairman and CEO, Bradford Cooke, was quite bullish on where he sees gold and silver prices headed: “I feel the precious metals by their very natures are separate and distinct from other metals. There’s no question gold and silver will exhibit leadership as the commodities cycle resumes its march forward and inflation raises ugly head. Everything moves in cycles but we are optimistic about the future of the metals. That gold and silver price has tremendous opportunities for gains going forward. When prices finally peak there is a risk of a bubble at the top of these markets. Gold could run two-to-three thousand dollars. We could see $25 to $50 silver. I consider myself a modest bull. Long-term, the sustainable prices of these metals in U.S. dollar terms will be significantly higher than current prices.”
Gold Rally Signals Move Away From Currencies, Greenspan Says Gold prices that jumped above $1,000 an ounce this week are signaling that investors are buying metals to hedge against declines in currencies, former Federal Reserve Chairman Alan Greenspan said. The gains are “strictly a monetary phenomenon,” Greenspan said today at an investment conference in New York. Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies,” he said. The price of gold has jumped 13 percent this year as rising government debt coupled with declines in the dollar spurred demand for the metal as a haven. Silver, platinum and palladium also gained.
Why gold at $1,000 an ounce could just be the beginning How significant is gold's break through $1,000 on Tuesday? We have been here before, most recently in February, but each time the yellow metal has failed to hold the line. Flagging industrial and jewellery demand has ultimately overwhelmed the gold bugs' desire to push the price through what feels like an important psychological barrier (even if it's really just a round number). There are some good theoretical reasons why gold could be poised for a meaningful push higher, but none is quite as compelling to me as a bit of anecdotal evidence which will mean more to readers over the age of about 50 than to everyone else.
Gold Aims to Retest Record Highs After Breaking Through the $1,000 Mark Is gold ready to break out? Gold broke through the psychologically important $1,000-an-ounce level for the first time in 18 months yesterday (Tuesday) as the U.S. dollar slumped against key foreign currencies, exacerbating investor fears that loose fiscal and monetary policies will spur inflation as the U.S. economy recovers.
Gold May Reach Record on Weaker Dollar Gold, trading near an 18-month high in New York, may advance to a record before the end of the year as investors seek to hedge against a weaker dollar and possible inflation, a survey showed. Bullion futures will surpass the $1,033.90 an ounce reached in March 2008, according to 10 of 12 traders, investors and analysts surveyed by Bloomberg. Gold for December delivery climbed as high as $1,009.70 an ounce on the New York Mercantile Exchange’s Comex unit yesterday after breaching $1,000 for the first time since Feb. 20.
Citigroup raises gold, silver and platinum forecasts The bank says concerns over the dollar and inflation are likely to boost precious metal prices over the long term Citigroup (C.N) raised its gold, silver and platinum price forecasts for 2009 and 2010, saying a rocky outlook for the dollar and concern over inflation were likely to boost precious metals prices in the years to come. The bank said it expects gold prices to average $940 an ounce this year, up from a previous forecast of $908, and $966 in 2010, up from $925. It sees silver prices at $14.30 an ounce this year, rising to $16.10 in 2010, against previous forecasts of $13.30 and $14.30 respectively.
Gold Waiting to Pounce On Summit’s Failures With the G-20 meeting in Pittsburgh just two weeks off, we didn’t expect gold’s widely anticipated push past $1000 to be a piece of cake. Indeed, Bernanke & Friends are probably throwing everything they’ve got at gold right now to suppress its price. And for all we know, Uncle Sam has loaned every ingot (supposedly) in Fort Knox to carry-traders at J.P. Morgan and Goldman Sachs. The ability of these well-connected bullion bankers to borrow more or less unlimited quantities of physical gold is for them even better than a license to print money, since money itself is most surely not what it used to be. The feather merchants have repaid the government’s kindness by sitting on gold futures prices. This price-fixing operation is all the more impressive because its perpetrators have managed so far to peg bullion to $1000 even though the U.S. dollar has broken some key technical supports in recent days.
George Washington Fund Adds Commodities as Inflation Protection George Washington University is increasing holdings of commodities such as oil and natural gas out of concern that a return to inflation rates last seen in the 1970s may ravage the value of its $1 billion endowment. U.S. consumer prices may rise 8 percent annually within three to five years because of unprecedented government spending and deficits, said Donald Lindsey, the Washington school’s chief investment officer. Growth in the consumer price index averaged 7.4 percent from 1970 through 1979, a period remembered for economic stagnation and eroding values of fixed-income investments, compared with 0.1 percent in 2008.
Why encouraging the population of China to import gold makes sense The big news in gold is that there are signs that the Chinese government is now inviting the Chinese to buy gold and silver. Some good reasons for China to favor gold purchases by its population: China has trade surpluses which bring in unwanted additional amounts of foreign currencies and swell China’s already enormous Reserves. The Chinese are well aware that the foreign currencies with which their exports are paid, are only fiat money payments and that the Reserves to which they give rise are nothing more than shaky investments whose value is at risk – 60 to 70% of China’s Reserves are dollars which are being savagely debased and the euro is not in much better condition.
China can no longer afford to let gold or silver price slump Chinese state endorsement of gold and silver as good investments means the country can no longer afford to let precious metals prices drop by any significant amount. With Chinese state institutions hawking gold and silver to the general populace as a good investment (see China pushes silver and gold investment to the masses) - the latest news on this front being that the biggest Chinese bank, the Industrial and Commercial Bank of China (ICBC), is setting up a special precious metals department to handle growing investor demand for gold and silver within the country, the corollary is that therefore the country cannot afford to let precious metals prices fall substantially and thus alienate millions of its citizens who have been taking state advice to buy them.
Barrick Gold plans to raise $3.5bn Barrick Gold is to raise up to $3.5bn through a share offering that will eliminate most of its remaining gold hedging contracts, giving the world’s biggest gold producer full exposure to changes in the precious metal’s market price. The Toronto-based company announced the move hours after gold climbed above $1,000 an ounce for the first time since March 2008. Investors’ renewed interest has been ascribed to weakness in the US dollar and continuing low interest rates that have dampened returns on holding cash and other liquid investments.
The Super Bubble to Come Sometimes, a number of forces come together to greatly alter events. I’m reluctant to employ the overused cliché, “A Perfect Storm,” but I am at a loss to imagine a better one to describe the confluence of forces I see converging for silver. Any one of the factors about to impact the price would be formidable, but in conjunction with one another should prove historic in force. Consider first world supply and demand. Although current production (mining plus recycling) exceeds total industrial demand that’s not the case when investment demand is included. Prior to 2006 a structural deficit existed, where total fabrication demand exceeded total production, causing world silver inventories to decline to the lowest levels in hundreds of years. That ended in 2006. However, starting in 2006, the world began to wake up to the investment merits of silver.
Shenanigans in the Silver Valley For anyone bored with fake "Reality Shows" or turned off by "Soaps" with a lack of plot you might want to consider following the antics of those involved with what I will title "Shenanigans in the Silver Valley." Our saga of the shenanigans begins with the assumption of a 15-year lease on the Sunshine Mine by Ray Demotte of Sterling Mining some six years ago. The lease called for payments of $10,000 a month to SPMI and provided for a $3 million to $5 million buyout depending on the price of silver.
Banks Face Loss of Debt Guarantee The Federal Deposit Insurance Corp. is preparing to wind down an emergency program it launched last year, which could become an early test of how the banking industry will fare without extraordinary government assistance. The FDIC's program, which guaranteed debt issued by banks, is credited with helping to stabilize the financial system during last year's turmoil. The agency said it was considering either letting the debt-guarantee program expire on Oct. 31, or continuing it for another six months for "emergency" purposes. The latter would require case-by-case approval from FDIC Chairman Sheila Bair and a hefty fee from participants. "As domestic credit and liquidity markets appear to be normalizing and the number of entities utilizing the Debt Guarantee Program has decreased, now is an important time to make clear our intent to end the program," Ms. Bair said.
Banks Load Up on Mortgages, in New Way Banks have been silent partners in the meteoric rise of the Federal Housing Administration. In the past year, the nation's financial institutions have snapped up securities backed by Ginnie Mae, a government-owned agency that guarantees payments on mortgages backed by the FHA. That helped drive demand for Ginnie securities and created an outlet for billions of dollars of FHA-backed loans made to borrowers who in many cases couldn't afford big down payments. As of June 30, the roughly 8,500 federally insured banks and thrifts were holding $113.5 billion of Ginnie securities, compared with just $41 billion a year earlier, according to a Wall Street Journal analysis of bank financial disclosures. It is the largest amount that banks have reported holding since at least 1994.
As an Exotic Mortgage Resets, Payments Skyrocket Edward and Maria Moller are worried about losing their house — not now, but in 2013. That is when the suburban San Diego schoolteachers will see their mortgage payments jump, most likely beyond their ability to pay. Like millions of buyers during the boom, the Mollers leveraged their way into a house they could not otherwise afford by taking out a loan that required them to make only interest payments at first, putting off payments on the principal for several years.
USD Clamor; The USD won’t go quietly As gold tries to break and hold $1000 it brings up the larger question of how long the USD has to last. At the very least, after the markets digest the debate over deflation which is USD bullish, the question becomes: how long can the USD hold together before it falls in value drastically. Big drumbeat out there I am sure that you know about China vigorously complaining about the abuse of the USD, most loudly complaining about the Fed’s quantitative easing (buying any and all bad assets from banks and putting them on their balance sheet – called monetization, which is printing the money to replace the losses). The Fed had to back off this Summer from that plan and significantly reduce those policies, said in large part due to China’s vigorous complaints.
A Tale of Two Inflations For some time now, the disparity between price increases for imported goods and price increases for domestic goods and services has been of great interest to me and, after working through all of the applicable Labor Department data on this subject, it quickly becomes clear that there is an interesting story to tell here about two very different types of U.S. inflation in recent years - domestic inflation and imported inflation.
China to Issue Yuan-Denominated Bonds in Hong Kong The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar. The yuan bond issue, the equivalent of $879 million, will “promote the yuan in neighboring countries and improve the yuan’s international status,” the ministry said on its Web site. “The first step toward internationalization is regionalization,” Shi Lei, a currency analyst at Bank of China in Beijing, said during an interview. “China wants to develop the offshore market in Hong Kong.”
Fed Says Economy Stable or Improving in Most of U.S. The Federal Reserve said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August, adding anecdotal evidence that the worst U.S. recession in seven decades is over. Five districts, including San Francisco, home to the biggest regional economy, “mentioned signs of improvement,” the Fed said today in its Beige Book business survey, published two weeks before officials meet to set monetary policy. The exception was the St. Louis district, which said the contraction’s pace “appeared to be moderating.”
Never Say Never to Monetization If you want to know what kind of monetary morons we have in charge of the Federal Reserve, then you have come to the right place, because a record of sorts was set last week, in that the loathsome, disastrous Federal Reserve bought up – in the last 12 short months – $1.011 trillion in US government securities! Yikes! And remember… This is the Federal Reserve! This is a lousy private bank operating irresponsibly, at the behest of the Congress, and whose shadowy owners include, to one degree or another, foreigners and foreign central banks that are operating by the grace of their own governments which are just as corrupt and desperate as our own, but it was the Fed that created enough money to buy a trillion dollar’s worth of US government bonds for itself! A trillion!
Debt, Inflation, & Deflation The impact from a central bank’s credit policy is perhaps the most misunderstood factor in the study of economics. The majority believes easy credit from the Federal Reserve and expanding deficits by the federal government will quickly lead to price inflation. Because of this belief, and because of the Federal Reserve’s ballooning balance sheet, a large number of investors have recently embraced “inflationary hedges” and “inflationary investments” aimed at protecting their wealth against monetary depreciation.
Senate May Narrow Proposed Regulatory Role for Fed The Obama administration's vision for revamping the nation's financial regulatory system could face significant revisions in the Senate, where proposed reform legislation departs from the White House proposal on several key points, according to staff members, lobbyists and a lawmaker briefed on the plans. A bill taking shape in the Senate Banking Committee could give the Federal Reserve far less authority than the administration sought in the reform proposal it unveiled in June. Senators on both sides of the aisle have expressed a lack of confidence in the Fed in the wake of the financial crisis, challenging everything from the central bank's transparency to its ability to protect consumers.
Ron Paul Has the Council on Foreign Relations Worried Near the start of this year Ron Paul (R-Texas) introduced H.R. 1207, the Federal Reserve Transparency Act of 2009. The bill was referred to the House Committee on Financial Services. As of this writing, H.R. 1207 has 282 cosponsors. A Senate equivalent, S.604, the Federal Reserve Sunshine Act of 2009, has been introduced by Bernie Sanders (I-Vt.). It has 23 cosponsors. Both bills have received a tremendous groundswell of grass-roots support. Much of the support is coming from ordinary people who have become aware of the fact that the Federal Reserve has created trillions of dollars literally out of nothing during the past calendar year in its effort to micromanage its way out of the worst economic crisis since the Great Depression.
Greenspan Sees ‘Fairly Pronounced Recovery’ in U.S. The U.S. economy will start to pull out of a recession by yearend, helped by “remarkable growth” in productivity and a depletion of inventories, former Federal Reserve Chairman Alan Greenspan said. “A lot of pieces are falling into place for recovery,” Greenspan said today in a speech in New York. He predicted “a fairly pronounced recovery not only in the U.S.,” but globally. “Surprises are on the upside.” Greenspan said last month the U.S. economy could resume growth with a 2.5 percent expansion in the current quarter, while adding there was still a risk of a “second wave down.”
The Great Fakeroo Recovery There is something affected, something not believable, something agitpropish, about all the cheers for the glorious economic recovery we are experiencing. Some of its biggest boosters don't even quite believe it. I'm thinking of the reporter on National Public Radio a few days ago who, at the end of a segment, offered a passing warning that the bust did not come to an "organic" end, but rather was artificially stopped by government intervention. That's an intriguing admission, suggesting that not even this reporter really believed it. I certainly don't believe it. In fact, I seriously doubt that even the champions of this great fakeroo believe it.
CIC Looks to Pile Cash Into U.S. Real Estate China's $300 billion sovereign-wealth fund is eyeing big investments in distressed U.S. real estate, according to people familiar with the matter. To finance some of the deals, China may rely on an old trading partner: the U.S. government. In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge of the matter.
Perkier Economy Pushes Dollar Back Down the Slide The U.S. dollar continued its descent Wednesday, probably resuming a slide that began earlier in the decade, as improving economic conditions have prompted investors to seek higher returns in emerging markets and in gold futures. The decline of the dollar was temporarily reversed last year as the global economy found itself in the grip of the worst downturn since the Great Depression. Despite the nose-diving U.S. economy, nervous investors and central banks looked to greenbacks and U.S. Treasurys as safe havens and loaded up accordingly.
Banks Ease Burden Of Credit Card Debt Consumer Stress Has Firms More Eager to Bargain As more Americans lose work, many are increasingly struggling to pay their credit card bills, forcing banks to do what they had been loath to do in the past: forgive some of the debt or modify it in the cardholders' favor. Much public attention has been paid to efforts at modifying mortgages to keep borrowers from losing their homes. But in another battered corner of the credit market, credit card issuers are quietly negotiating with borrowers rather than giving up entirely on millions of debts. Lenders are looking to restructure credit card accounts by lowering interest rates or minimum monthly payments for a specific period of time, waiving fees, or settling the debt by accepting less than what is owed.
FDIC Proposes Six-Month Extension for Debt Guarantees The Federal Deposit Insurance Corp. proposed a six-month, emergency-only extension to its debt guarantee program as regulators move to wean companies from federal aid approved at the height of last year’s credit crisis. The five-member FDIC board today unanimously approved seeking comment for 15 days on extending the program. The FDIC now guarantees eligible debt issued before the scheduled Oct. 31 expiration by banks that get agency approval and pay a fee.
Bankruptcy filings up 22% in August vs. last year Nevada has replaced Tennessee as the state with the most bankruptcies, as filings continue to stack up nationally. From January to August, national bankruptcy filings reached 954,911, up from 703,732 in the same period of 2008, according to Automated Access to Court Electronic Records. In August, filings were up 22% compared with August 2008. It is likely that filings will total 1.45 million this year, says Robert Lawless, professor of law at the University of Illinois.
Wealthy Families Face Bankruptcy on Real Estate Crash Wealthy individuals’ Chapter 11 bankruptcy filings jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center, a research firm in Burlingame, California. More individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured are using Chapter 11 of the U.S. bankruptcy code typically associated with business reorganizations. Falling U.S. home prices leave them unable to refinance or sell properties when they drop below the value of the mortgage, said Joseph Baldi, a Chicago bankruptcy attorney.
Waiting for Deep Pockets to Open Recovery May Well Wait on the Wealthy to Step Up Their Spending In this new era of frugality, well-to-do shoppers have gone into hiding and stowed away their splashy logos. But they may hold the key to a consumer recovery. Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround.
Overspending on Debit Cards Is a Boon for Banks When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully. So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.
12% of eligible borrowers helped by Obama plan Some 360,165 delinquent borrowers getting help, up from 235,247, or 9%, a month ago. Treasury wants loan servicers to do more. Mortgage servicers have picked up the pace of loan modifications over the past month, after coming under fire for not doing enough to help troubled borrowers. Servicers have placed 12% of eligible troubled borrowers into trial modifications under President Obama's foreclosure prevention plan, the Treasury Department said Wednesday.
Treasury sees millions more foreclosures Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration's housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday. A Treasury report showed 360,165 people had their monthly payments reduced through August, up from 235,247 through July, but a senior Treasury official conceded much more must be done to soften the impact of a severe and prolonged housing crisis.
Defaults on Banks’ Commercial Mortgages Seen Rising Above 5% The default rate on commercial mortgages held by U.S. banks will rise to 5.4 percent in 2011, the highest since at least 1992, as banks anticipate more losses amid falling rents, according to Real Estate Econometrics LLC. The property research firm increased its projected default rates for 2009 to 2011 amid declining occupancies and incomes at hotels, shopping malls and office buildings. Defaults will rise to 4.2 percent this year and 5.3 percent next year before peaking at 5.4 percent in 2011, the New York- based firm said. Previously, it estimated rates of 4.1 percent this year, 5.2 percent next year and 5.3 percent in 2011.
Another Wave of Foreclosures Looms Ballooning Payments Put Mortgages at Risk, Posing New Setback to Market The housing market faces the prospect of a new round of foreclosures as hundreds of thousands of risky home loans known as option adjustable-rate mortgages reset to significantly higher payments that could force borrowers to fall behind, according to a report released Tuesday by Fitch Ratings. About 70 percent of the $189 billion in outstanding option ARMs will reset by 2011, the report said, which would be another setback to a teetering housing market still struggling to recover from the mortgage meltdown that precipitated the financial crisis.
Consumer Credit Plummets Tight lending standards, low demand, and high charge-offs lead to record drop. Consumer credit dropped like a rock in July on a mix of tight supply, weak demand, and charge-offs of bad debt. The U.S. Federal Reserve reported consumer credit fell by $21.6 billion, well below the $15.5 decrease recorded in June, marking a 10.4% annualized drop.
Republican shouts 'You lie' during Obama speech It took less than an hour after he heckled President Obama for Rep. Joe Wilson to become an Internet sensation. When Mr. Obama told lawmakers during a joint address to Congress that his health care plan does not cover illegal immigrants, Mr. Wilson, a South Carolina Republican, shouted in the chamber, "You lie!" The controversy over whether illegal immigrants can benefit from the health reforms Mr. Obama is proposing was a hot topic at a number of health care town halls over the August congressional recess. Mr. Obama noticeably paused after Mr. Wilson's outburst, then repeated, "It's not true."
Barack Obama hits back at healthcare plan critics President issues rousing speech to Congress and promises not to be deflected from universal healthcare plan Barack Obama tried to put his presidency back on course last night with a rare fighting speech to Congress rounding on his Republican critics and promising he would not be deflected from his ambitious plan to extend healthcare to all Americans. With polls showing support for both the president and his healthcare plan slipping, Obama used a rare speech to a joint session of Congress to try to win over not only the public but sceptical members of his Democratic party who could decide the fate of his reform plan.
Obama calls for Congress to face health care challenge President Obama on Wednesday made a passionate call for Congress to fix the nation's ailing health care system in the same spirit that created Social Security and Medicare in difficult times. In a joint speech to Congress heralded as vital to his push for a health care overhaul, Obama offered his most detailed outline for legislation while challenging Republican opponents to build on issues of agreement rather than play politics to exploit differences. The speech struck a chord with some Americans: Two out of three Americans who watched the speech, favor his health care plans, a 14-point gain among speech-watchers, according to a CNN/Opinion Research Corp. national poll. Most viewers were Democrats, according to the poll.
Tech Companies Push to Digitize Patients’ Records On one proposal for health care reform at least, there is a rare bipartisan consensus: the push to computerize patient records. The goal of moving paper medical records into the digital age has been championed for years by health care policy makers across the political spectrum, from Hillary Rodham Clinton to Newt Gingrich. As a presidential candidate, Barack Obama, too, was an advocate, and the economic crisis opened the door for an ambitious step — $19 billion put into the recovery package to encourage doctors and hospitals to install and use electronic health records.
Evicted From Your Brand New Clunker Roger Wiegand of Trader Tracks Newsletter finally says what I always figured: “Cash for Clunkers was a real clunker. One out of four auto buyers using this program is having buyer’s remorse as they just signed-up for so many new payments they cannot afford.” Thanks, Roger! I always had a hard time believing in the unbelievable “Cash for Clunkers” program, where the government astonishingly gives up to $4,500 to people who buy a new car!
Taxpayers face heavy losses on auto bailout Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday. The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors. and Chrysler late last year is unlikely to be repaid. "I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department. "But it may not be enough."
Chinese Jet Ambitions Take Aim at Aging Airbus, Boeing Models China is taking aim at the heart of the global commercial aerospace industry with a jet dubbed “The Big Plane,” seeking to crack the duopoly Boeing Co. and Airbus SAS hold in the $70-billion-a-year market. Government-controlled planemaker Commercial Aircraft Corp. of China showcased a model at the Hong Kong air show yesterday of the 168-seater C919 that it’s slated to enter service in 2016. Comac is marketing the jet as a cheaper alternative that uses as much as 15 percent less fuel than Boeing 737s and Airbus A320s airplanes, which dominate the single-aisle plane market.
Fed officials see slow recovery for labor market U.S. labor markets could take years to recover from the setbacks of the current recession, which have pushed the unemployment rate to a 26-year high, top Federal Reserve policy-makers said on Wednesday. But the officials said the Fed may need to end its ultra-accommodative policy stance long before the jobless rate starts to plummet if inflation starts to rise. For now, though, that seems some way off given the tentative nature of the economic recovery.
A Jobless Recovery Part Three It looks like this will be the third jobless recovery in a row. Coming out of the last two recessions we had what has become to be known as a jobless recovery. Job growth usually surges coming out of a recession as companies rush to bring on new employees to rebuild inventories that were depleted in the downturn. However, what has occurred since the early 1990’s is that we have had to wait until the economy was able to build an asset bubble before significant job growth was able to be realized. The truth is that a substantial percentage of GDP growth and job creation has surrounded the financial services industry and real estate-bubbles that were wrought upon the consumer thanks to the Federal Reserve and financial institutions. This is the direct result of imbalances that have occurred from the false signals caused through inflation.
Post office closures threat adds to property market woe The possible closing of more than 400 post offices across the US in an effort to cut costs could further dent the struggling commercial property market as rising retail vacancies continue to weigh on prices. The US postal service has said it is placing 413 of its 37,000 retail locations under review for "consolidation" as it faces a record loss of $6bn (£3.7bn) this year. The mail carrier has seen a dramatic drop in package volume owing to cost-conscious Americans cutting back in favour of cheap alternatives such as e-mail. "At the end of the day, it's just more retail space that's going to be available that's going to put pressure on already embattled landlords," said Victor Calanog, director of research at Reis, property research company.
Limit Your Exposure To Cell Phone Radiation Where does you cell phone rank? Four billion people around the globe own cell phones. As the market for new devices has grown, so have concerns about the safety of cell phone radiation. Recent studies find significantly higher risks for brain and salivary gland tumors among people using cell phones for 10 years or longer. The state of the science is provocative and troubling, and much more research is essential.
‘E-Bomb’ Doomsday Conference Starts Today It’ll fry pace makers, destroy iPhones, and turn laptops into useless paperweights. It’s the scariest thing most people outside the Washington Beltway have never heard of: electromagnetic pulse weapons. And you can learn all about it starting today at the EMPACT conference in Niagara Falls, New York. Electromagnetic pulse, or EMP, is a burst of electromagnetic radiation that fries electronics, from satellites to toaster ovens. The effects of a nuclear EMP were first observed after the 1962 Starfish Prime nuclear test, which knocked out satellites and electronics. EMP weapons are specifically designed to maximize this electronics-killing effect, which can be done by detonating a high-altitude nuclear explosion. Though the effect is most commonly associated with a nuclear blast, the U.S. military, among others, has been looking at conventional weapons that harness the EMP effect. Those who worry about these weapons say that a single EMP attack could shut down the continental United States, creating mass havoc caused by the breakdown in infrastructure.
Obama at the Rubicon If the aphorism holds – the guerrilla wins if he does not lose – the Taliban are winning and America is losing the war in Afghanistan. Well into the eighth year of war, the Taliban are more numerous than ever, inflicting more casualties than ever, operating in more provinces than ever, and controlling more territory than ever. And their tactics are more sophisticated. Gen. Stanley McChrystal calls the situation “serious.” Chairman of the Joint Chiefs Adm. Michael Mullen calls it “serious” and “deteriorating.”
Europe’s Complicity in Evil There is a widespread supposition that Obama, being black and a member of an oppressed race, will imbue US foreign policy with a higher morality than the world experienced from Bush and Clinton. This is a delusion. Obama represents the same ideology of American "exceptionalism" as other recent presidents. This ideology designates the United States as The Virtuous Nation and supplies the basis for the belief that America has the right, indeed the responsibility, to impose its hegemony upon the world by bribery or by force. The claim of American exceptionalism produces a form of patriotism that blinds the US population to the immorality of America’s wars of aggression.
Faith in Obama’s Foreign Policy Fading Fast Analysts See Obama's First Eight Months Rife With Failure Eight months into his administration, analysts and advocates of President Obama’s foreign policy platform are quickly losing faith with a series of failures and what they see is an increasing backpeddling toward the bellicose policies of his predecessor. A dramatic escalation in Afghanistan, the centerpiece of his foreign policy, has led to abject failure, rising violence, and calls from military brass for yet another new policy, coupled with yet another escalation. Even looking past the disastrous results on the ground, many officials are growing disillusioned with the president’s unwillingness to define any of his goals in the war, even as he throws ever increasing numbers of troops at it.
U.S. again warns of nuke threat as Iran offers talks The United States warned Wednesday that Iran is close to having the capabilities to produce a nuclear weapon, and joined major European powers in urging Tehran to "turn the page" and engage in dialogue to prove its atomic program is peaceful. Glyn Davies, the chief U.S. envoy to the International Atomic Energy Agency (IAEA), said the latest report by the nuclear watchdog shows that Tehran is either very near to achieving or already in possession of sufficient low-enriched uranium to produce one nuclear weapon, if the decision were made to further enrich it to weapons-grade quality.
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Wed 09.09.2009
Market crisis 'will happen again' Mr Greenspan says bankers should have predicted the crash The world will suffer another financial crisis, former Federal Reserve chief Alan Greenspan has told the BBC. "The crisis will happen again but it will be different," he told BBC Two's The Love of Money series. He added that he had predicted the crash would come as a reaction to a long period of prosperity. But while it may take time and be a difficult process, the global economy would eventually "get through it", Mr Greenspan added. "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
Alan Greenspan warns of US inflation risks THE US economy may witness double-digit inflation in a few years unless the central bank tightens up its monetary policy, Alan Greenspan warned. "Unless we roll in this whole degree of expansion, we will be in trouble,” the former chairman of the Federal Reserve told a conference in Mumbai via videoconferencing. “I am not talking 3-5 per cent inflation, I am talking double-digit inflation in the US.” He said inflation in the US may begin to pick up sometime in 2012 unless measures were taken to roll back the huge monetary base. However, the global inflation rate -- excluding food and energy prices -- will continue to go down through this year and into next year, he said, pointing to a considerably slack global economy.
Possible October surprises Economists' crystal balls are clouded right now. They see signs of a burgeoning global recovery, but retail sales and other key data surprise with their weakness. There is no sign of inflation, yet commodity prices are extraordinary strong, given we are in the depths of a major recession. The reality is that fiscal and monetary experiments have been tried that have never been tried before, and their combined effect is only beginning to be felt. Conventional wisdom, based on the experience of the 1970s, holds that over-expansionary monetary policies should lead to inflation, while large budget deficits should lead to higher interest rates. Yet there is little sign of accelerating consumer price inflation at present (although Federal Reserve Chairman Ben Bernanke's 3am fear of deflation has also not appeared), while interest rates have trended down in the last few weeks, contrary to expectations of "crowding out" from the US Treasury's unprecedentedly large budget deficit.
Precious Metals - The Investment of the Century Gold and silver are on the verge of breaking out to the upside right on schedule. It is going to be a tumultuous fall and the precious metals and their related equities will be the beneficiary. China has been quietly taking over the role of economic superpower, but recently the silence has been upped to a quiet roar. They are ridding themselves of US dollar reserves at an astonishing rate by buying companies outright, buying stakes in them, huge infrastructure development projects, building up commodity stockpiles, buying new SDR bonds and of course accumulating precious metals.
Gold rushes above $1,000 mark Concerns about inflation and dollar send safe-haven metal soaring to highest level since February. Gold prices surged past the $1,000-an-ounce mark Tuesday amid investor concerns about inflation and the weakness of the dollar. The December contract on the New York Mercantile Exchange rose as high as $1,009.70, its highest level since February, before easing back to $1,006.40, up $9.70. As the economic outlook remains bleak, gold has benefited. It's considered a safe-haven because precious metals tend to retain their value in times of economic stress.
Gold price tops $1,000 on weak dollar, low interest rates Gold prices rose above $1,000 per ounce on Tuesday to its highest since March 2008 — suggesting investors are wary of the U.S. dollar's weakness and expect international interest rates to remain low for some time. The gold contract for December delivery traded up $6.50, or 0.7%, at $1,003.20 per troy ounce on the New York Mercantile Exchange. It had gone as high as $1,009.70; that is the highest since it hit a record of $1,033.90 on March 17 last year.
Peter Schiff on Gold Prices
Should we care about $1,000 gold? Or has the "key psychological level" lost some of its impact Since early morning trade in Europe began Tuesday, headlines were shouting about the psychological $1,000 level. First, they were asking whether or not gold would break through it and then later, wondering whether or not the breach was likely to be sustained. But, another question to ask is: "How significant is the $1,000 mark. According to Aram Shishmanian, CEO of World Gold Council, "Reaching the $1000 mark once again shows that this price level is no longer the watershed for gold that it once was.
U.S. Stocks Rise a Third Day as Gold Tops $1,000, Dollar Falls Stocks rose worldwide, driving the Standard & Poor’s 500 Index higher for a third day, as gains in metals boosted the profit outlook for raw-material companies. Gold climbed above $1,000 an ounce as the dollar fell to the lowest level this year against the euro. Alcoa Inc. and Chevron Corp. advanced at least 2.2 percent as bullion reached an 18-month high, copper added 3.1 percent and oil surged 4.5 percent. General Electric Co. gained 4.5 percent after JPMorgan Chase & Co. recommended buying the shares, saying expectations for the company are too low.
Gold Hits 18-Month High, "Target Now $1,325" as Stocks, Oil & Euro Rise on "Flood of Liquidity" THE PRICE OF GOLD rose to an 18-month high for US investors in early London trade on Tuesday, breaking Feb's high of $1,006 an ounce as world stock markets rose for the third session running and crude oil gained 2.5%. Ahead of New York traders returning from the long Labor Day weekend, the Dollar fell hard on the foreign exchange market, dropping to a two-week low of $1.6550 per Pound and a new 2009 low of $1.4480 against the Euro.
Gold at a $1000 an ounce Sept 8 2009
Once more into the breach for gold but will it stay over $1,000? This morning the gold price breached $1,000 in European trading and all eyes will be on the U.S. market when it opens after the Labor Day holiday. Can the price be sustained this time? The gold price started the day today knocking on gold bug heaven's door and the door has opened with the price surging through the magic $1,000 level in this morning's European trading. Gold futures had moved above the $1,000 figure again briefly in New York yesterday. Gold has breached $1,000 before but has always been thrust back within a short time and what may yet be worrying for the gold advocates is that when it has failed to sustain the $1000 level, the subsequent fall back has tended to be fairly dramatic as positions are unwound.
Can Gold Go Even Higher? Gold had a fairly quiet day yesterday, prompted by the Labour Day holiday in the US. This morning was a different story when gold, as expected, broke through the psychological $1000/oz level in late Asian trading. Initially, profit taking was seen at $1004/oz and the price fell back to $1,000/oz prior to rallying to over $1,007/oz. Gold looks very good technically and some investors are putting their trust in gold to see whether it pushes to new record highs just above $1,030/oz. Especially as extremely loose fiscal and monetary policies are likely to create an inflation headache down the road. GFMS report that there have recently been some "significant lumpy transactions" and "a degree of illiquidity" in the physical market which is a development worth monitoring.
Gold breaks out, U.S. dollar breaks down For the time being, the U.S. markets continue to absorb technical challenges. And while the near-term backdrop favors further consolidation -- at least sideways chopping around, if not a retest of the August low -- the longer-term uptrend is intact.
The dollar breaking down, gold breaking out
target="_blank">The Beginning of the Gold Era Gold has had an amazing run for a week, and on Tuesday morning (9/8) at HK market around 2-3am EST, Gold finally broke $1,000 again, an important key resistance level. It seems that the monthly chart has given a better resistance and support levels than the daily or weekly chart, from a long term perspective. Please see the monthly close chart to now from early 1970s when U.S. finally gave up the gold standard linking gold to US dollar.
The Patriotic and Moral Imperative for Owning Gold and Silver I pledge allegiance to the flag... Remember when you learned those words? It was back when everything was simple. The Pledge of Allegiance was written in 1892 by Francis Bellamy, the circulation manager of the Boston based "The Youth's Companion" magazine. The end of the Nineteenth Century was a much simpler time. The world was a much simpler place. It is not so simple anymore. When we recite those seemingly patriotic words, what are we really pledging our allegiance to? To the flag? To the United States? To the Republic for which it stands?
Explosion in the Price of Gold Imminent Six months ago, at the Prosperity Dispatch, we had the opportunity to sit down with John Embry, the chief investment strategist at Sprott Asset Management. He is one of the world’s leading gold experts. That was March though and not too many investors were interested in buying anything. But Embry said to look past the short-term and focus on the big picture.
Three Indications Gold and Silver Will Continue Rising Precious Metals are tacking on more strength this morning after a strong showing last week. Gold futures are now above the symbolic $1,000 per ounce level, and the December silver contract is at $16.75. While there have been several false starts this summer where precious metals have traded higher, only to be forced back into a trading range, today’s move appears to be setting up a true (and potentially long-term) positive trend. The following are three indications that the current move is legitimate.
Gold Breaks Out Past $1,000 An Ounce, Silver Close To $17 Gold prices sprinted past the $1,000 an ounce mark this morning, and silver climbed even faster to approach $17. But this might also be taken as a warning that investors are about to shift out of stocks which are looking very overbought. Shares have enjoyed a huge rally in most markets since the lows of March and have been riding for a fall for more than a month. Last week investors also ominously moved money heavily into bonds, depressing yields, and the gold and silver price surge may represent another shift to risk aversion.
Gold ends below $1,000 Futures hit 18-month high in session Gold futures rose Tuesday to an 18-month high, as a weaker dollar boosted the metal's investment appeal, but ended the day below the $1,000-an-ounce mark. Silver and copper also rallied. The thinly traded September contract rose as high as $1,006.90 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a nearby futures contract since March 18, 2008. The contract ended at $997.90, up $3, or 0.3%. It's the highest settlement for a nearby contract since Feb. 20. Also on the Comex, the most active contract, for December delivery, ended up $3.10, or 0.3%, at $999.80 an ounce.
pt 1/4 Jim Rogers The Banking Conversation sept 02 2009
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 maximise 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.
China Admits Gold's Monetary Role: Time to Buy From Dr. Zhou Xiaochuan, Governor of the People’s Bank of China, writing in The Alchemist (issue 36, 2004): Gold is a commodity that combines the attributes of a currency, financial commodity and general commodity. Despite the declining function of gold as currency in the world, the activeness and development of investment activities with gold as the target indicates that gold still has a strong financial nature and remains an indispensable investment tool. In major financial centers in the world, the gold market, together with the money market, securities market and FX market, constitutes the main part of the financial market.
China, Gold and the Non-Open Door The December gold future price has risen to over $1000 and this may mean that the precious metal will again trade in quadruple digits on spot markets, as it did half a year ago, however briefly. This reflects the moves by the world's biggest coupon clipper, China. There are various theories around the price of gold, most of them conspiratorial nonsense. Believing in plots is a tempting way to handle world complexity. You get a simple answer to why things do not work out as you think they should, with a ready-made if vague villain. Now that the Cold War is over, evil puppeteers range from Pres. Obama to the Bilderberg Group, from central banks to the ghost of J.P. Morgan. The opposite side in the Gold War...
Gold & Silver Technical Trading Charts Gold is once again the hot commodity, as the price rises to the $1000 per ounce level. This $1000 - $1033 is a technical pivot point for gold. One of two things is going to take place in the coming weeks. If the price of gold can move above $1033 then I expect to see a lot of traders and investors buying gold, as they panic into the position because they do not want to miss another gold rally. Also traders who are short gold will be forced to cover their positions and this will send the price of gold rocketing higher towards the $1200- $1500 area. On the other hand, if gold fails to break higher, we will see a swift sell off, as everyone sells their position.
Forget gold. Silver is shining bright. Silver has outperformed the yellow metal in recent months - and the silver spike might have more to do with a global economic recovery than inflation fears. All that glitters isn't necessarily gold. If you want a really hot metal, check out silver. Yeah, the price of gold rose above $1,000 an ounce Tuesday. And Gold is now up more than 5% in the past month and nearly 15% this year. But silver has done even better as of late. Silver prices hit a 13-month high of about $16.72 an ounce Tuesday and silver prices are now up about 40% so far this year. Silver doesn't get as much attention for obvious reasons. "Gold above $1,000" is a sexier headline than "Silver surges past $16."
Dollar Index on Defensive, May Fall to 76 The Dollar Index may fall to the lowest level since Lehman Brothers Holdings Inc. declared bankruptcy after the benchmark fell today to the least this year, according to JPMorgan Chase & Co. technical analysis. The greenback’s value versus major U.S. trading partners in Europe, Canada and Japan may decline to as low as 76 after breaking through a “support zone” between 77.40 and 77.45, wrote Niall O’Connor, a technical analyst at JPMorgan. The euro’s rise to an eight-month high will probably push the currency up to $1.4640 per dollar, he predicted.
pt 2/4 Jim Rogers The Banking Conversation sept 02 2009
Dollar dips near 1-year low Gold prices above $1000 push dollar down more than 1%. The dollar fell to its lowest in almost a year Tuesday after gains in global stocks fed into renewed risk appetite as trading volume picked up at the end of summer holidays in the United States. Some analysts said the dollar may resume seasonal declines as volume increases after a brief period in which the greenback rose following upbeat economic indicators. A rally in gold prices above $1,000 and concerns over the dollar's long-term status as the world's reserve currency, sparked by a United Nations report on Monday, also undermined demand for the greenback.
U.N. Panel Calls For Dollar Reserve Role To Be Eliminated A United Nations panel weighed into the dollar reserve currency debate, arguing for a new system of soft pegs to correct severe deficits in debtor nations like the U.S. and surpluses in countries like China. The report from the United Nations conference on Trade and Development, issued on Monday, said the world economy would be better off with a system where governments intervene when necessary to either defend or depress their own currencies. "A viable solution to the exchange-rate problem would be a system of managed flexible exchange rates targeting a rate that is consistent with a sustainable current-account position, which is preferable to any 'corner solution.' But since the exchange rate is a variable that involves more than one currency, there is a much better chance of achieving a stable pattern of exchange rates in a multilaterally agreed framework for exchange-rate management," said the U.N. body.
Webster Tarpley: US Dollar is Dead
Dollar Declines as Commodities Surge Investors banking on an economic recovery clamored on Tuesday to buy crude oil, metals and other investments that could benefit once global commerce revives. At the same time, they shunned the dollar, sending it lower against other major currencies. As stocks closed higher, the dollar fell to $1.45 against the euro, its lowest point of the year, as traders bet that worldwide demand for American securities and currency would abate as investors sought better returns in other markets.
Is the U.S. Dollar Finished? Since March, perhaps the most obvious trade has been to take the short side of the U.S. Dollar. However, the easy money's been shorting the dollar, and the next round of easy money will be made where nobody else is looking: buying the U.S. Dollar. That’s because quite frankly, the dollar is oversold and everybody hates it. In an almost lockstep countertrend with stocks, the dollar has been plummeting since March. When you couple the …
Oversold nature of the greenback with the
Extreme pessimism toward the currency
… You have a recipe for a sharp rally. A rally so strong that it should send the shorts running with their tails between their legs.
Pathology of the U.S. Debt Bubble The global financial crisis, although triggered by the US subprime mortgage debacle, has its root cause elsewhere: global debt overdose. Most explanations focused on irresponsible debtors and careless lenders, whether pointing to excessive borrowings by consumers or even by entire countries, tell only part of the story. There is another facet to this crisis which has remained shrouded in mystery: the steady and imbalanced growth in the indebtedness of financial institutions among G8 nations. That is where the most worrisome overdose occurred: one with lasting implications for global financial stability.
Is another 9/11 set to unfold? "Heart of a Soldier" tells the story of two men who, well before it happened, foretold not only of the terrorist attack of 9/11 but also the 1993 bombing in the World Trade Center parking garage that preceded it. One of the men, Rick Rescorla, was chief of security for Morgan Stanley with an office in the World Trade Center. He died on 9/11, but not before he shepherded all but six of Morgan Stanley's 2,700 employees to safety because of a well-prepared and well-executed evacuation plan. He'd have made it out, too, had he not gone back in the building looking for those six. The other man, Daniel J. Hill, is still alive. With another Sept. 11 approaching I wanted to talk to The Man Who Predicted 9/11.
pt 3/4 Jim Rogers The Banking Conversation sept 02 2009
What Is Money The first section of the first chapter in The Great Credit Contraction addresses the conflicting definitions of money and currency. If one does not have a correct understanding of money and currency then they will have flawed conclusions regarding inflation or deflation. This will lead to inaccuracies when performing mental calculations of value and result in poorly allocated capital. WHAT IS MONEY The terms money, money substitutes, illusions and currency are often used interchangeably. Since they do not mean the same thing this misuse can be confusing. Even many of the leading experts in this subject have difficulty agreeing on definitions. The conflation of these terms causes great problems in understanding monetary science. Therefore, we will separate and distinguish each.
The equities markets have had a huge run up of over 50%. They are overbought. At approximately 18x 2009 Earnings, they are priced far above fair value. At the beginning of March 2009, they were price at only 11x 2009 Earnings. According to Art Cashin and others, fair value for the S&P500 is at about 850 to 880. At approximately 1020, the S&P500 is far from there.
The Insider Selling/Insider Buying ratio is 30.6. This is the highest that ratio has been since it has been tracked (2004). Those corporate officers probably know something.
Retail Sales are still decreasing. They were down about 4.4% for Aug. year over year according to Redbook. The much anticipated back to school season has been a bust so far. Even the Cash for Clunkers program, which gave automakers a shot in the arm, disappointed analysts. Plus it likely robbed future auto sales to record better numbers now. The national rate of auto loans that were 60 days past due was up 7.35 percent for the Quarter ended in June. That doesn’t sound like a lot of people are going to be able to afford to buy new cars soon.
Barack Obama accused of making 'Depression' mistakes Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan. His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says. There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.
Confidence? Does it make you confident that not only the US, but global authorities will do and say anything to keep hope alive? To keep 'the rally' alive? It's only currency after all, and it's global. Get your ducks in a row and get out of a conventional mindset if you still have such a construct. These people [G20] mean business and this is not Business 101 that you learned in school.
Nouriel Roubini Sept 04
Regional Banks Continue to Fail The FDIC reported 24 bank failures for the second quarter of 2009, and now there are 44 in the third quarter for a total of 89 year to date in 2009. One of the failed banks was publicly traded Vantus Bank (FFSX), a $458 million bank on our list of problem banks. So far in 2009, 23 failures were on our list. The FDIC Deposit Insurance Fund is below zero so the FDIC is likely tapping that extra $22 billion that they found in their coffers.
Did Central Banks Pull Back From The Latest Treasury Auction? The latest 3-year US Treasury auction went well, with the bid-to-cover above that of August and also recent averages. Demand was strong, but from whom? Bloomberg: Indirect bidders, a class of investors that includes foreign central banks bought 54.2 percent of the notes at today’s auction. They bought 62.5 percent of the securities in August, the most ever.
Treasuries Fall After 3-Year Sale as 10-Year Auction Looms Treasuries declined on speculation stronger-than-forecast demand at today’s auction of $38 billion in three-year notes may not extend to tomorrow’s $20 billion sale of 10-year debt. The notes sold today yielded 1.487 percent, the lowest level since May, compared with a forecast of 1.50 percent in a Bloomberg News survey of 10 of the Federal Reserve’s 18 primary dealers. The auction was the first of three this week totaling $70 billion. Treasury 10-year notes drew less-than-forecast demand at the previous sale of the debt on Aug. 12.
The 10 Who Blew The Recession Last week we presented our list of the 25 recession winners -- the individuals who navigated the crisis and emerged even more powerful. Today we list 10 individuals who had the chance to win big, but somehow didn't fully seize the moment. Many are like Meredith Whitney (pictured) individuals who gained instant celebrity due to the crisis, but who have seen the lustre come off just as quickly, as the crisis fades. Others managed to snatch defeat from the jaws of victory.
China's stimulus powers world economies U.S. too late to lead way While politicians in Washington debate whether President Obama's stimulus program is helping to pull the U.S. economy out of a recession, economists have already declared the winner in the stimulus race, and it's China. The Asian giant's massive $586 billion stimulus package -- implemented with speed in November just as the world economy was crashing -- is credited with helping to stabilize world markets and contribute to a budding recovery in Asia, Europe and the United States, where the stimulus package came too late to prevent the worst recession in modern times.
pt 4/4 Jim Rogers The Banking Conversation sept 02 2009
The New York Times Endorses Restrictions on Political Speech From today's lead editorial in The New York Times: The Supreme Court may be about to radically change politics by striking down the longstanding rule that says corporations cannot spend directly on federal elections. If the floodgates open, money from big business could overwhelm the electoral process, as well as the making of laws on issues like tax policy and bank regulation. The court, which is scheduled to hear arguments on this issue on Wednesday, is rushing to decide a monumental question at breakneck speed and seems willing to throw established precedents and judicial modesty out the window....
Democrat Proposes Fines Up to $3,800 for Those Who Don’t Sign Up for Health Insurance Americans who fail to sign up for a medical plan after health care overhaul takes effect could be hit with fines of up to $3,800, according to a new proposal circulated Tuesday by a senior Democrat. Meanwhile, on the eve of a major health care speech by President Barack Obama, a government health insurance option overwhelmingly favored by progressive Democrats appeared to be losing critically needed support. Lawmakers returned to Capitol Hill with little sign that many of the difficult issues surrounding a health care overhaul can be easily resolved.
A Threat to Fair Elections The Supreme Court may be about to radically change politics by striking down the longstanding rule that says corporations cannot spend directly on federal elections. If the floodgates open, money from big business could overwhelm the electoral process, as well as the making of laws on issues like tax policy and bank regulation. The court, which is scheduled to hear arguments on this issue on Wednesday, is rushing to decide a monumental question at breakneck speed and seems willing to throw established precedents and judicial modesty out the window.
Oil Trades Near $71 as Dollar Declines, OPEC Ministers Gather Crude oil traded little changed near $71 a barrel after rising yesterday as a slump in the dollar spurred demand for commodities, and as OPEC ministers gathered in Vienna to set output levels. Oil gained as much as 5.5 percent yesterday as the U.S. currency dropped to the lowest level this year against the euro and on speculation inflation will accelerate. The oil market is in “good shape,” Saudi Arabian Oil Minister Ali al-Naimi said, signaling the group is unlikely to change production. “The dollar is continuing to put immense pressure on oil to trade higher thanks to its downward price spiral,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “Equities confidence and stabilization is helping to put a floor under the price of oil.”
Anything-But-Treasuries Credit Gaining After AIG Ruin Wall Street’s biggest bond dealers are loosening their grip on U.S. government debt at a record pace, signaling a continued rally in credit markets. Holdings of Treasuries by the 18 primary dealers of U.S. government debt that trade directly with the Federal Reserve fell to a negative $10.5 billion last month -- a so-called net short position -- from a record net long of $93.6 billion in June, according to data compiled by the central bank. The fastest turnaround since the Fed began tracking the data in 1997 shows dealers are purchasing and financing higher- risk debt even as investors express doubt about the economic recovery. Dealers typically place bets against Treasuries to hedge corporate and mortgage bonds, and net short positions averaged $63 billion in the 10 years before the collapse of subprime home loans caused credit markets to freeze in 2007.
G20 misses chance to do something of value What a difference half a year makes. When the finance ministers and central bankers from the world's leading nations met in the spring, the mood was one of crisis; the agenda was dominated by one imperative: to seal an agreement to pour an unprecedented amount of cash into their stricken economies. Yesterday's G20 finance ministers' summit in London could hardly have been more of a contrast. The mood this time was of tentative satisfaction: massive injections of taxpayer cash and cuts in interest rates have at least ensured that, so far, this has not developed into another Great Depression. And while the ministers – in particular Alistair Darling and US Treasury Secretary Tim Geithner – were at pains to emphasise the fact that the world economy is not yet out of the woods, attention is now starting to swing to the question of how best to clean up and fix the financial and economic system.
G-20 Europeans Defeated By Tim Geithner In meetings in London to set the agenda for the Group of 20 economic meeting in Pittsburgh later this month, Treasury Secretary Tim Geithner scored a major win over Europeans with rival financial reform plans. Backed by British officials, the US officials set the official agenda to focus on capital requirements at banks rather than bankers bonuses. The bonus provisions that were agreed were far more watered down than had been wanted by French and German officials.
WSJ 1930s Articles Show Eerie Similarities The excerpts below come courtesy of David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates. An old contact of ours at Merrill Lynch pointed out these articles from the Wall Street Journal after the initial post-crash rally that took the market up some 50% from the interim lows. Sounds eerily similar to what we hear today: August 28, 1930: There’s a large amount of money on the sidelines waiting for investment opportunities; this should be felt in market when “cheerful sentiment is more firmly entrenched.” Economists point out that banks and insurance companies “never before had so much money lying idle.”
Stiglitz Says a New U.S. Recession Won’t Spread to Europe, Asia Nations in Asia and Europe wouldn’t automatically return to recession if the U.S. economy contracts again, Nobel Prize-winning economist Joseph Stiglitz said. Stiglitz forecast last week a “significant chance” the U.S. will slip back into recession after a brief recovery. While that would have a “negative effect” on the rest of the world, it wouldn’t prevent other economies from expanding, he said in an interview today in Reykjavik, Iceland. “Asia is restructuring itself to be less dependent on the U.S. and they have huge reserves,” Stiglitz, a Columbia University professor, said. “So they could continue on the path of recovery.”
Consumer credit dives by 10% Outstanding credit declines by a record $21.6 billion in July -- the sixth consecutive month. Total U.S. consumer credit fell by a record $21.6 billion in July, Federal Reserve data showed on Tuesday, the latest hint household spending would be too weak to drive the economy's recovery from recession. July consumer credit outstanding fell at a 10.4% annual rate to $2.47 trillion, steeper than analysts' expectations for a $4.0 billion drop. Total credit in June tumbled $15.5 billion rather than the $10.3 billion drop previously estimated by the U.S. central bank.
A Universal Option Generally speaking, the strategies that make sense when deflation is underway are different than those that apply when hyperinflation is running rampant. There are some exceptions, however. When the printing presses are running flat out and a nation's currency is falling through the floor, the lack of a viable medium of exchange forces people to try and swap whatever value they might have or control via a more direct interaction -- that is, through bartering. Yet the same holds true when cash is in short supply. In "Swap Nation Why Bartering Is Making a Comeback," Readers Digest highlights the growing trend of Americans substituting what they have for what they don't. If you're feeling squeezed by the recession, maybe it's time for a dollarless deal. These folks have mastered the art of the trade.
Frugality: The new normal in America? Americans' cutbacks a shift in paradigm A year after "shop 'til you drop" stopped, the nation fixates on this question: Will consumer spending ever return to pre-recession levels? Increasingly, the answer appears to be no. Belt-tightening in bad times is normal. And after every other recession since World War II, penny-pinching quickly fell out of fashion and Americans resumed their demand for houses, cars and everything else. This time, it's different. Like the Great Depression in the 1930s, the Great Recession seems destined to turn many Americans into lasting coupon-cutters, scrimpers and savers. Consumers dug a debt hole over the past decade from which there's no easy climb out. The population segment that drives spending the most - baby boomers - faces special pressure: Boomers are running out of time.
Theft of fixtures becomes major risk in foreclosures With a $165,000 price tag, the two-story, four-bedroom house for sale in Avondale was a steal. Three years ago, when the house was new, a family paid $416,000 for it. But its soaring living-room ceiling, whirlpool bath, three-car garage and pool with a slide and waterfall weren't enough to make it much more than a handyman's special. Thieves made off with the home's $30,000 custom-kitchen and other fixtures after it went into foreclosure.
Clunker remorse Roger Wiegand of Trader Tracks Newsletter finally says what I always figured: "Cash for Clunkers was a real clunker. One out of four auto buyers using this program is having buyer's remorse as they just signed up for so many new payments they cannot afford." Thanks, Roger! I always had a hard time believing in the unbelievable "Cash for Clunkers" program, where the United States government astonishingly gives up to US$4,500 to people who buy a new car!
10,000 working parents to lose health insurance State is unable to provide matching funds for federal program Nearly 10,000 working parents will lose their health insurance this month in the wake of state budget cuts, leaving some families with nowhere to turn as they seek affordable coverage. KidsCare Parents, a program that provides low-income families with inexpensive insurance, will end Sept. 30. The Arizona Health Care Cost Containment System, which administers the program, could not pay the $6 million annual cost following cuts by the Legislature. The state faces a $3 billion budget shortfall. The move comes as demand for government assistance is skyrocketing. Arizona has lost an estimated 240,000 jobs since December 2007, and AHCCCS has added 150,000 people to its rolls since January.
Job outlook hits worst-ever level Employers' hiring plans at lowest point in Manpower survey's history Employers' hiring plans for the upcoming fourth quarter dropped to their lowest level in the history of Manpower's Employment Outlook Survey, which started in 1962. A net -3% of employers said they'll hire in the fourth quarter, down from -2% in the third quarter, on a seasonally adjusted basis, according to the Milwaukee-based firm's survey of more than 28,000 employers. Before this year, the survey's previous low point was a net 1% hiring outlook for the third quarter of 1982.
The Boomers are Out of Time – And Out of Money Clowns to the left of us…jokers to the right… The Simpleton’s Analysis: Consumers cut back. The economy sank. Now, government must take action. It must help people out and take up the slack. The downturn took $12 trillion off Americans’ net worth. The feds have pledged about $12 trillion to fix the problem. But wait, where does government get any money? Hey, they borrow it, just like consumers did. And besides, it’s ultimately the same money – taxpayers’ money. So what’s the big diff?
China showcases big jet, hopes to become major aviation player China showcased its newest and biggest commercial plane Tuesday — a jetliner with as many as 200 seats that could boost the country's fledgling aviation industry to compete with Western rivals like Boeing and Airbus. The narrow-body, single-aisle C919 plane is scheduled to take its maiden voyage in 2014 before being delivered to buyers in 2016, according to Wang Wenbin, an official with the plane's manufacturer, state-backed Commercial Aircraft of China.
Climate Bill to Be Slowed by Health-Care Debate The health-care debate threatens to keep energy and climate legislation on the back burner when the Congress returns from recess Tuesday and enters the final push of 2009. President Barack Obama is scheduled to plead his case on health care in a joint address to Congress this week, as Senate Majority Leader Harry Reid (D., Nev.), delays action on climate and energy legislation. The Senate's top Democrat now says that climate legislation will be considered by the end of the year -- a deadline that buys time to see whether Democrats will have the political strength to take up climate change after a bruising health-care fight.
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Tues 09.08.2009
Regulators shut down 5 more banks; 89 failures this year Regulators on Friday shut down banks in Missouri, Illinois, Iowa and Arizona, pushing to 89 the number of banks that have failed this year under the weight of the soured economy and rising loan defaults. The Federal Deposit Insurance Corp. took over First Bank of Kansas City, based in Kansas City, Mo., with $16 million in assets and $15 million in deposits and shut down Sioux City, Iowa-based Vantus Bank with $458 million in assets and $368 million in deposits. The FDIC seized two banks in Illinois; Oak Forest-based InBank, with $212 million in assets and $199 million in deposits and Platinum Community Bank in Rolling Meadows, which had $346 million in assets and $305 million in deposits.
Gold Is Still the Opportunity of a Lifetime Last October was a pretty brutal time to be in the prognostication business. I had just called Gold the opportunity of a lifetime at the end of August at a price of around $800/ounce. By the time late October came around, the price had fallen to around $725 and the catcalls had begun in earnest. The Keynesian Kakistocracy was out in full force, hurling insults so rich and humorous that I felt compelled to write some of them down. Now a year later it is time to do another quick review and probably set myself up for yet another barrage of hate mail if the price of Gold doesn’t immediately set a course for Mars.
Gold May Advance Toward $1,000 as Weakening Dollar Spurs Demand Gold, little changed near a six- month high in London today, may rise toward $1,000 an ounce as a weakening dollar increases the metal’s appeal as an alternative investment. Silver climbed to a 13-month high. The dollar slipped as much as 0.4 percent against the euro as a report showed European investor confidence increased for a second month in September. Gold tends to rise when the greenback weakens. Bullion last surpassed $1,000 on Feb. 20.
China, Bernanke, and the price of gold China has issued what amounts to the “Beijing Put” on gold. You can make a lot of money, but you really can’t lose. I happened to see quite a bit of Cheng Siwei at the Ambrosetti Workshop, a gathering of politicians and global strategists at Lake Como, including a dinner at Villa d’Este last night at which he listened very attentively as a number of American guests tore President Obama’s economic and health policy to shreds. Mr Cheng was until recently Vice-Chairman of the Communist Party’s Standing Committee, and is now a sort of economic ambassador for China around the world — a charming man, by the way, who left Hong Kong for mainland China in 1950 at the age of 16, as young idealist eager to serve the revolution. Sixty years later, he calls himself simply “a survivior”.
Gold is a Currency You Can Rely On I get comments and questions from people who don't understand why Gold is money and don't understand why it has any value other than as jewelry. The two most important functions of money in my opinion is that is function as a unit of exchange and a store of value. Money should also be durable, portable, divisible, acceptable, uniform and in limited supply to function effectively. Gold meets all of these characteristics with the exception of acceptability. It is true that you cannot use pieces of Gold to buy things in most modern settings. This is because most governments around the world have made Gold illegal for daily transactions because they do not want competition for their fiat (i.e. "by decree") paper currency. However, Gold can be exchanged for local currency almost everywhere in the world, so in a sense, it does have a limited form of widespread acceptability.
A September for gold If history's any judge, fall is a great time to be a gold bug. Over the past 16 of 20 Septembers, the gold price has gone up, says Frank Holmes, CEO and chief investment officer of U.S. Global Investors. On average, he says, gold rises about 2.5% over its August price - not too shabby. But will it be enough to break $1,000 for good? HAI associate editor Lara Crigger recently spoke with Mr. Holmes about gold investing, including what drives the September spike (and the October correction), which miners he's got his eye on and why deflation is just as good for gold as inflation.
Quiet Day for Precious Metals During Labour Day Holiday With the Labour Day national holiday in the US today, it should be a quiet day for the precious metals. However, even though a firmer dollar and a bout of profit taking pulled gold back from $1000/oz last week, it only retreated as far as $986/oz before climbing back to $994/oz. This is a strong indicator that gold can maintain its bull trend. The next level of resistance is $997/oz with $1,005/oz and $1,032/oz thereafter.
On the Edge with Max Keiser - 04 September 2009 (1/4)
Gold looking for a new support level The sharp break above $960 could suggest a further jump to around $1,110 The sudden upward move in gold last week wasn't entirely surprising. Since March this year, many investors have experienced some frustration as gold has been consolidating between $900 and $960 an ounce. Then on Wednesday, the yellow metal broke out decisively above the top of a bullish triangle pattern which I have been writing about for a few weeks. While gold has the tendency to defy the technicals this break suggests a further upside move to the $1,110 level. If gold closes above $1,000 per ounce during the next few sessions, it could establish a new support level and finally hold above the $1,000 level. If this happens then we could be on the brink of the next leg up in the gold bull market, but we first need to see a break through the all-time high that was set on March 17, 2008, when it hit a high of $1030.80 per ounce.
Gold price could hit $1,300/oz in 2011-BMO Capital Markets BMO Capital Markets asserts the market has become quite divided on the outlook for gold and gold stocks with no clear consensus on the gold outlook. BMO Capital Markets suggests the bear case could see the gold price retreating to US$750/oz in 2010 while the bull case hints the price could reach US$1,300/oz in 2011. In a recently published report, BMO analysts David Haughton, Andrew Breichmanas and Bart Melek advised silver could outperform in a bull case gold scenario perhaps reaching $22.03 next year. In a bear case, silver could be as low as $11.45/oz in 2010.
The old normal, new normal and rising gold The "old normal" is back. But the new normal is coming. And in the meantime, gold is on the move. What does it all mean? The "old normal" is the way things were before they fall apart. Nearly everyone would like to believe that nothing has changed all that much since September of 2007. Sure, there was a massive stock market crash and a serious blow to confidence in the global financial system. But all of that is ancient history!
More Support for Gold's Bullish Outlook This short update comes to you from Cape Town airport where I am awaiting my flight to Johannesburg, and then to Frankfurt and finally Ljubljana (capital of Slovenia) where I will be spending the next few days with a group of South African business people. I often argued the bull case for gold over the past few months. With gold having surged by $40 an ounce (+4.1%) to $994 this week, it would certainly seem as if renewed interest in the yellow metal is being stirred up.
Gold Is Speaking In the current global manic rush by central banks to inflate and by governments to spend that paper, there are a few observers who have expressed concern that at some future date this wholesale, last ditch Keynesian and Statist approach just might actually produce "inflation." Many Wall St. types argue "No, inflation is not the problem and is not likely to be the problem for some time. And besides, gold is quiet, not signaling any concern about inflation." Though they like to espouse free market generalities from time to time, these same Wall St. types actually want the State(s) to intervene to protect this or that asset class – to which they are personally attached and now sinking with. While investors are down in most asset categories by 40% in 2008, the orthodox investor and his portfolio manager can’t weather another 20% drop this year! "Oh sure, Keynes was full of it, but good grief we can’t stop this stimulus because it just might work. It must work!"
Why You Should Have Some Gold in Your Portfolio The price of gold has suddenly caught a bid, jumping over $40/ounce in the past week. Gold appears to be breaking to the upside of a consolidation range that has been in place since February of this year. Gold had been lagging behind the 2009 performance of commodities such as oil and copper, which are more correlated to global economic growth. However, concerns about U.S. monetary and fiscal debauchery appear to be heating up, and gold is now in a seasonally strong period that runs through the end of the year. It remains to be seen whether the current move will carry gold decisively through the $1000 barrier, which was last tested at the height of the financial and banking crisis in February.
Gold steady below $1,000 Gold held broadly steady on Monday just shy of $995 per ounce, consolidating stellar gains last week that took it tantalizingly close to the $1,000 psychological level, with buyers encouraged by dollar weakness. Silver took support from gold's strength and gains in benchmark base metal copper, hitting a high of $16.34 an ounce, its firmest since August 2008.
Gold shines as China dumps greenback NOT before time -- and great timing, at that. After problems in recent years with declining gold output -- production fell by 4 per cent in the 2009 fiscal year -- Australia is back on the growth path. Melbourne-based Surbiton Associates, which produces quarterly statistics on the local gold sector, tells us production of the yellow metal not only turned around and rose in the June quarter (by two tonnes) after three quarters of decline but we're on track to become the world's second-largest producer within a year (behind China but ahead of present No.2, the US). Surbiton's Sandra Close says gold production should get a further boost in the present quarter from the startup of the Boddington mine in Western Australia and several other companies joining the list of producers over the next nine months.
On the Edge with Max Keiser - 04 September 2009 (2/4)
Gold investment demand zooms in China Gold's traditional role as a safe haven asset in times of economic instability has been considerably enforced during the financial turbulence, and the ongoing economic uncertainty becomes the most effective motivity for the rise of gold prices. As for China, thanks to encouraging policies established for the gold industry, the gold production in China has enjoyed continuous growth in recent years. By utilizing the capital market, the Chinese gold mining companies accelerate the paces of resources acquisition and integration so as to promote the competitiveness in the international market.
Gold march to continue Bullion is witnessing a big surge now. With the gold prices touching all time high of Rs 15,785 per 10 gm after advancing by Rs 50 per 10 gm on brisk demand from industrial users last week, this week is expected to add some more glitter to the yellow metal. Silver also surged by Rs 150 to a 14-month high of Rs 25,790 per kg last week. This trend just before the festivals is expected to continue for some time now. Standard gold was quoted at Rs 15,785 and pure gold at Rs 15,855 in Mumbai last week.
China's hidden gold purchase policy There seems to be little doubt that China continues to buy gold for its reserves, but surreptitiously, as it has no desire to move the markets unduly, and it knows full well that any announcement of a big gold purchase will likely do just that. It is not exactly a secret that Chinese government economists and bankers are disturbed about the U.S. Quantitative Easing moves. They feel that this has ultimately to lead to significant inflation and a corresponding big decline in the value of the dollar within the next few years and with some $2 trillion in reserves this is not something they are keen to precipitate by announcements of a major gold purchase programme - or even by showing the world that its gold reserves are increasing.
Gold Investment Underpinned by Wealth Preservation as Inflation Systemic Risk Rise THE PRICE OF GOLD held near last week's close in Asia and London on Monday morning, trading at $994 an ounce as analysts agreed $1,000 would soon be reached but argued whether that price is sustainable. "Overall, the big picture [for gold] remains bullish," says the Sept. edition of Metal Matters from London market-makers Scotia Mocatta. "The combination of a correction to the current over-extended equity rally, and the knock this would give investors and banks, could well see more investors turn to bullion again as they seek refuge."
Gold bugs brace, as metal tests $1,000 again All the usual elements are in place, including potential disappointment Gold seems poised to break $1,000 again, again, again. But the battered bugs are wary, at least short-term. On Friday, spot gold closed at $994.50, up some $50 on the week. All the usual elements are in place. The charts are looking good. Dow Theory Letters' Richard Russell said on Friday: "Gold has just undergone a huge upside breakout. After a $40 rise in two days, gold needs to correct, which it's doing today. On the Point and Figure chart, the next upside target is the 1,000 box. Above 1,000, I think gold could go for a record-high price above 1,005."
Gold hedging on the rise in Pakistan Pakistan is witnessing a surge in hedging of gold. Dealers told newspapers that the domestic gold prices are rising in line with the trend of global gold markets. But, the increase is usually not as much as internationally because people stop buying the metal when prices are too high. Yellow metal has gained as much as 30 per cent in 2009 as compared to same period in last year in Pakistan. The international investors put money into gold on poor returns on investments and international economic recession.
Gold Short-term Overbought, Silver Critically Overbought Gold has broken out of its large Symmetrical Triangle to the upside, and is now in position for "the big one" - the breakout above the wall of resistance approaching last year's highs in the $1030 area. However, those who are expecting it to accomplish this immediately are likely to be disappointed as its short-term overbought status and especially silver's critically overbought condition and very high Commercial short position are pointing to an imminent reaction, although this reaction should present a great buying opportunity ahead of the major breakout.
Ten Rules of Silver Investing . . . . Silver has been money more often, for longer periods of time, in more places in the world than gold has. And that is because it's the merchant-class metal, because most of the time in your daily transactions, what are you buying? You're not buying your car or your house; the car is perhaps a purchase you make every five years, the house sometimes once in a generation. But it's the silver that passes hands on a daily basis. Certainly I am a gold advocate. Indeed, as I say in this Number One rule, it's a way to preserve large amounts of wealth in a very small space and that's great and all investors should recognize that fact. But if you're really thinking outside the envelope, silver is absolutely the place you should be for part of your money.
On the Edge with Max Keiser - 04 September 2009 (3/4)
Warnings Ignored: Whose Short the Silver A remarkable story recently appeared in a leading Chinese business publication that threatens to upend the world of commodities. It seems that the government of China may be preparing the way for state-owned investment funds to walk away or default on OTC commodity derivatives contracts held with foreign banks if those contracts cause loss to the funds.
When This New Bubble Bursts, It's All Over “Our society is now based on consumption .. 70 per cent of the GDP. This is more than we produce. So to pay our bills, we use funny money invented in 1913 with the creation of the Federal Reserve and the fiat dollar based on credit (debt).. the fractional reserve system. In 1930’s you bought what you could afford. You saved up to buy your home. The easy credit of the 90’s has destroyed the country. Now you borrow what you can’t afford .. and the nation’s done the same.”
Report Rekindles China Derivatives Debate A weekend report in a Chinese magazine that state-owned companies had the right to renege on commodity derivative contracts caused concern among foreign banks on Monday, though it was met with some disbelief. Caijing, a leading financial magazine in China, quoted an unidentified industry source as saying that the Assets Supervision and Administration Commission, or Sasac, the regulator in charge of state-owned enterprises, had sent a letter to six foreign financial institutions saying that the Chinese companies could break their agreement on the commodities hedging contracts, which have been causing them huge losses.
Silver Eventually Set to Challenge $21 Silver has made strong gains over the past couple of weeks as gold has broken out upside from its Triangle, but this rapid progress has resulted in it arriving once again at the important resistance level in the $15.90 - $16.40 area in a critically overbought condition. It therefore stands to reason that it is likely to react back or at least consolidate before significant further gains can be made, especially as the Commercials were piling on the shorts last week - and this is only what we know about as the data is only available up to last Tuesday's close, and it is fair to assume that they rose to even higher levels as silver rose sharply later in the week.
What Will Conditions Be Like, Globally For Gold To Be Confiscated Part 4 Today, most of individual wealth is held in Corporations, Funds, banking institutions and other legal entities and not by the individuals themselves as was the case in 1933. Today, corporations and Funds would be threatened in the same way as they were then and with potential imprisonment for the Officers of those legal entities. Few of these Officers would be prepared to go to prison on client’s behalf! Experience in other parts of the world shows us that these Officers would hand over the gold in their charge, immediately, if such a law were passed, with little to no regard for the beneficial owner. Let’s stress that point; when it comes to money, a nation’s interests sit heavily above those of its citizens. Holding gold is therefore a privilege, not a right, in the eyes of government.
Post-recession U.S. can bank on uncertainty Where do we go from here? A year after edging dangerously close to free fall, there are signs the economy is regaining a foothold. But Americans' sense of financial security is badly shaken and the nation is confronting questions that defy quick or comfortable answers.
Without easy credit, what does life hold for a nation of consumers?
With nest eggs broken, will older workers need to rethink retirement?
With old institutions gone - and the government propping up others - what will replace them?
China is now a net SELLER of U.S. Treasury notes and bonds! We told you this was coming. Heck: A blind man could have seen it a mile away. For many months now, we’ve predicted that Washington’s wild spending and borrowing spree would make the global investors who buy our longer-term Treasuries — notes and bonds — as nervous as long-tailed cats in a room full of rocking chairs. We’ve cautioned you that our sky-high deficits, record shattering borrowing by the U.S. Treasury and runaway money printing by the Federal Reserve would cause them to lose sleep, worrying about the real return on their money — not to mention, the return OF their money.
China alarmed by US money printing The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy. Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing". "We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como. "If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
On the Edge with Max Keiser - 04 September 2009 (4/4)
Alan Greenspan warns of US inflation risks THE US economy may witness double-digit inflation in a few years unless the central bank tightens up its monetary policy, Alan Greenspan warned. "Unless we roll in this whole degree of expansion, we will be in trouble,” the former chairman of the Federal Reserve told a conference in Mumbai via videoconferencing. “I am not talking 3-5 per cent inflation, I am talking double-digit inflation in the US.” He said inflation in the US may begin to pick up sometime in 2012 unless measures were taken to roll back the huge monetary base. However, the global inflation rate -- excluding food and energy prices -- will continue to go down through this year and into next year, he said, pointing to a considerably slack global economy.
Inflation and the Fall of the Roman Empire Two centuries ago, in 1776, there were two books published in England, both of which are read avidly today. One of them was Adam Smith's The Wealth of Nations and the other was Edward Gibbon's Decline and Fall of the Roman Empire. Gibbon's multivolume work is the tale of a state that survived for twelve centuries in the West and for another thousand years in the East, at Constantinople. Gibbon, in looking at this phenomenon, commented that the wonder was not that the Roman Empire had fallen, but rather that it had lasted so long. And scholars since Gibbon have devoted a great deal of energy to examining that problem: How was it that the Roman Empire lasted so long? And did it decline, or was it simply transformed into something else (that something else being the European civilization of which we are the heirs)?
The End of a Currency Debt Based Money and Interest Rates Isn't interest the real price of money? As more and more people demand money through credit, this drives up the cost of money, right? This drives up interest rates. Rising demand for easy money causes rising interest rates which cause falling bond valuations. Does it follow that artificially lowering the price of money will raise demand for easy money? Does it follow that artificially propping up the value of bonds and bills will levitate a plunging real world economy that is built on credit and debt? Don't bet on it!
Economy Will Be Back In Recession By Early Next Year We would like to believe that the economy is going to go roaring right back to steady 3%-4% growth. But we still haven't seen compelling facts to support that view. The bullish argument is that this is simply the way economies recover. And the stimulus-fueled rebound of Q2 and Q3 has certainly been v-shaped (see chart at right--which will continue up and to the right in Q3).
USDCAD Range Based on Thin Liquidity, Leverages Dollar Exposure When considering range trades early this week, it is vital to account for both exposure and liquidity. Over the past week, long-term congestion has exposed many technical ranges; but the bias behind sentiment has led these pairs to the same side of their trading zones: the extreme before a significant breakout in favor of risk appetite.
pt 1/2 Gerald Celente 05 Sept 2009
U.S. banks need to have higher capital: Greenspan Banks in the United States need higher capital than they currently have, Alan Greenspan, former chairman of the Federal Reserve told a Mumbai conference via satellite on Monday. "I think even in non-euphoria, non-crisis times, we need to have a larger buffer than we currently have," he said. Greenspan, who stepped down as Fed chairman in 2006 after 18 years at the helm, said the considerable slack in the world economy suggested the global rate of inflation excluding food and fuel will go down until the early part of next year.
It's September. The real test for stocks begins Wall Streeters return from a long holiday weekend to the market rally's first big challenger: September. Sunburned and barbecued out, Wall Streeters returning to work Tuesday face the first big challenge to the six-month-old rally. Even after a down week on Wall Street, punctuated by a mixed August jobs report, the S&P 500 remains 50% above the 12-year lows hit in March. Stocks churned in a narrow range for most of August, ending the month higher. But with fewer people around and trading in August, the market rally didn't really face much of a challenge. That won't be the case in September.
UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’ The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said. UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.
IMF revises up 2010 world GDP forecast The International Monetary Fund has revised up its forecast for economic growth this year and next in major industrialized economies and worldwide, according to a document obtained by Reuters on Friday. The IMF now forecasts the world economy will shrink by 1.3 percent in 2009, a shade less than its earlier forecast of 1.4 percent contraction, before growing by 2.9 percent in 2010, revised up from the 2.5 percent it expected in April.
Emerging-Market Stocks Rise to Highest in Year on G-20 Emerging-market stocks rose to the highest level in year after the Group of 20 nations agreed on steps to bolster the global financial system. The MSCI Emerging Markets Index of equities climbed 1.4 percent to 865.27, the highest closing level since Sept. 9, 2008. The OMX Vilnius Index in Lithuania jumped 5.7 percent to the strongest level in 11 months on speculation shares trading at less than a third of their average value for the past four years may rally. Mexico’s Bolsa gained 1 percent. U.S. and Brazilian markets were closed for a holiday.
Does the world have the courage to deal with its debts? Deflation is spreading from the core of the global system to the most unexpected regions of the world. It has even reached Latin America. Prices are sliding in Peru, Chile, Colombia, Paraguay, Bolivia, Ecuador, Guatemala, and El Salvador, to the consternation of everybody. Enough of the world has already fallen so far into pre-deflation conditions that any misjudgment by the big central banks from now risks setting off a chain-reaction that may prove very hard to stop. CPI inflation has dropped to –2.2pc in Japan (a modern record), -2.1pc in the US, -1.8pc in China, -1.4pc in Spain, -0.7pc in France, and -0.6pc in Germany. This was not anticipated by the authorities anywhere, so we should be wary of their assurances now that we face nothing more than a brief dip in prices before rising energy costs bring inflation back into familiar and safe territory. No doubt prices will rebound as the "base effect" of oil prices kicks in. But by how much; for how long?
Can a Central Bank Go Broke? Centralized monetary authorities enjoy a privileged position in the current monetary system. People tend to view the economists and politicians at these institutions as demigods, individuals who if given enough resources will ensure that the economy continues an ever-advancing and smooth trajectory. However, unlike the Greek demigods of yore, today's central bankers are mere mortals who must work within the confines and constraints of the institution that they head. While they present an aura of invincibility, the truth is that the effectiveness of their policies faces severe limits.
pt 2/2 Gerald Celente on Goldseek Radio 05 Sept 2009
G-20 May Curb Banker Pay, Profit at Pittsburgh Summit World leaders gathering in Pittsburgh this month may take the biggest step to curbing the pay and profits of bankers after their economic policy makers narrowed differences over bonuses and capital rules. Finance ministers and central bankers from the Group of 20 nations left weekend talks in London with a regulatory blueprint for a financial industry whose risk-taking triggered a global recession and required taxpayer-funded bailouts. The pledge to shore up the international financial system spurred European and Asian shares higher today.
G20 aims at bank pay and capital; stimulus to stay G20 finance leaders on Saturday took aim at excessive bank pay and risk-taking at the root of the financial crisis and insisted trillions of dollars of emergency economic supports would be needed for some time. Although the global economy looks brighter than when the Group of 20 finance ministers and central bankers met in April, their closing statement said they would not remove economic stimulus until the recovery was well entrenched.
Look What's Happening To Tax Receipts... What happens when tax receipts collapse and government spending goes through the roof? That's right. Taxes go up. Check out what happened during the Great Depression (bottom of this chart from Doug Short below). Tax rates went up for 40 years.
Mortgage Market Bound by Major U.S. Role Classes of Borrowers Cannot Find Loans as Publicly Backed Debt Mounts In the go-go years of the U.S. housing boom, virtually anybody could get a few hundred thousand dollars to buy a home, and private lenders flooded the market, aggressively pursuing borrowers no matter their means or financial history. Now the pendulum has swung to the other extreme. Only one lender of consequence remains: the federal government, which undertook one of its earliest and most dramatic rescues of the financial crisis by seizing control a year ago of the two largest mortgage finance companies in the world, Fannie Mae and Freddie Mac.
Obama names Treasury official to spur manufacturing President Barack Obama plans to announce on Monday that he has named a top Treasury Department official, Ron Bloom, to lead an effort aimed at revitalizing America's hard-hit manufacturing industry. The U.S. manufacturing industry has lost hundreds of thousands of jobs in recent years to overseas competition as some U.S. businesses have relocated abroad to take advantage of cheaper labor. Bringing an invigorated manufacturing base back to America was a campaign pledge of Obama last year.
Tea Party Express roars to D.C. When the "tea party" movement kicked off in April to protest record federal spending bills, trillion-dollar deficits and higher tax burdens, its members were fiercely independent and opposed any suggestion that they bond with a larger umbrella group, preferring to work within their local communities. But that go-it-alone approach is changing as a result of the war over health care, and the Tea Party Express tour is leading the way.
Job Creation Down 35%, Consumer Spending Down 33% From Year Ago Gallup Daily economic data aggregated on a monthly basis show that job creation in August is just not taking place in the U.S. economy. While Gallup data for the month also show a slight moderation in job loss, this is not sufficient to take up the slack for a 35% decline in the rate of job creation compared to a year ago. And, while confidence in the future direction of the U.S. economy is at its highest level in 20 months, Gallup data also show a continued delinking of consumer spending -- which is down 33% from a year ago.
Big Labor rising, but main goals unmet Obama, Democrats aim to reward backers The nation's labor unions added 428,000 recruits to their ranks last year and used that muscle to help get their candidates elected to the White House and Congress, but the first Labor Day of Barack Obama's presidency arrives with organized labor's two greatest goals unmet. Neither the Employee Free Choice Act nor a health care reform bill seeking near-universal insurance coverage has passed Congress. Moreover, major union-backed provisions in those bills face increasingly precarious prospects on Capitol Hill.
These Folks Aren't Counted As "Unemployed" The NYT takes a close look at four Americans who want to be working but have given up looking for jobs because it's too futile and depressing. These folks, of course, are not counted in the unemployment rate, because they haven't looked for a job recently. Instead, they're described as "discouraged" or "marginally attached". If these workers were included in the official tally, the unemployment rate would be over 11%. More importantly, the stories provide a picture of what 10+ million Americans are now going through, to one extent or another.
Unemployment Is Much Worse Than You Think There's another disturbing trend in the unemployment data (as if the headline rate wasn't enough): In the average recession, most job losses are attributed to temporary, cyclical factors--i.e., when the economy comes back, the jobs will, too. In this recession, however, more than half of jobs lost are gone for good. PIMCO portfolio manager Tony Crescenzi explains (charts from Bloomberg): Structural rather than cyclical influences on unemployment are running well above normal during the current recession, as is highlighted by the percentage of the unemployed that are “not on temporary layoff.”
More older Americans in poverty, according to revised formula The poverty rate among older Americans could be nearly twice as high as the traditional 10% level, according to a revision of a half-century-old formula for calculating medical costs and geographic variations in the cost of living. The National Academy of Science's formula, which is gaining credibility with public officials including some in the Obama administration, would put the poverty rate for Americans 65 and over at 18.6%, or 6.8 million people, compared with 9.7%, or 3.6 million people, under the existing measure. The original government formula, created in 1955, doesn't take account of rising costs of medical care and other factors. "It's a hidden problem," said Robin Talbert, president of the AARP Foundation, which provides job training and support to low-income seniors and is backing legislation that would adopt the NAS formula. "There are still many millions of older people on the edge, who don't have what they need to get by."
Peter Schiff: Debunking another critic
New frugality is the new normal, by necessity Even if shoppers' willingness to spend returns, ability likely to be constrained for years A year after "shop 'til you drop" stopped, the nation fixates on this question: Will consumer spending ever return to pre-recession levels? Increasingly, the answer appears to be no. Belt-tightening in bad times is normal. And after every other recession since World War II, penny-pinching quickly fell out of fashion and Americans resumed their demand for houses, cars and everything else. This time it's different. Like the Great Depression in the 1930s, the Great Recession seems destined to turn many Americans into lasting coupon-cutters, scrimpers and savers. Consumers dug a debt hole over the past decade from which there's no easy climb out. The population segment that drives spending the most -- baby boomers -- faces special pressure: Boomers are running out of time.
Obama nominee omitted ties to biotech Homeland nominee advised lobby President Obama's nominee at the Department of Homeland Security overseeing bioterrorism defense has served as a key adviser for a lobbying group funded by the pharmaceutical industry that has asked the government to spend more money for anthrax vaccines and biodefense research. But Dr. Tara O'Toole, whose confirmation as undersecretary of science and technology is pending, never reported her involvement with the lobbying group called the Alliance for Biosecurity in a recent government ethics filing.
Obama says "time to act" for healthcare reform U.S. President Barack Obama insisted on Monday "it's time to act" for healthcare reform as he geared up for a major address to Congress this week aimed at getting his top domestic policy priority back on track. Taking his case for a healthcare overhaul to America's economically hard-hit heartland, Obama sought to seize back the initiative on the divisive issue after losing ground to critics during a turbulent summer.
Obama unveils measures to spur retirement saving U.S. President Barack Obama announced new measures on Saturday to encourage Americans to save more money for retirement, a move the White House said would put the economy on a stronger footing in the future. Obama, in his weekly radio and Internet address, said the government would enact rules making it easier for small businesses to let workers automatically enroll in Individual Retirement Accounts (IRAs) and 401(k) retirement plans.
Aftershock - Las Vegas (podcast from BBC) Steve Evans is in Las Vegas for Business Daily measuring the aftershock exactly one year after the great financial earthquake, he speaks to a pawn broker who deals with guns, his business is booming and to a chef who lost his home and lived on the streets - And the director of a small local bank which closed.
Michael Moore takes on capitalism In his new film, the director of "Fahrenheit 9/11" delivers a provocative, ambitious look at the financial crisis. If anyone has profited from the free-enterprise system in the past 20 years, it's Michael Moore. Since 1989, when his "Roger & Me" pioneered the docu-comedy form of nonfiction film, Moore's movies, TV shows and best-selling books have given him an eight-figure net worth. And in all of these, he is the improbable star: a heavyset fellow with a doofus grin, alternately laughing and badgering but always at the center of his own attention. Why, there he is, at the end of his new movie, "Capitalism: A Love Story," wrapping the New York Stock Exchange building in yellow tape that reads: CRIME SCENE.
Michael Moore Calls Capitalism ‘Evil’ Michael Moore solidified his position as one of the biggest phonies of our times while at a recent Venice Film Festival outing. He debuted his latest sham documentary called “Capitalism: A Love Story.” Thanks to the free enterprise system, Moore has become super wealthy, which makes the two-hour flick a case study in hypocrisy. “Capitalism is an evil,” Moore proclaims, “and you cannot regulate evil.” According to Moore, regulating capitalism doesn't work, so his prescription is, “You have to eliminate it and replace it with something that is good for all people and that something is democracy.”
Israel authorizes new settler homes in West Bank Israel approved on Monday the building of 455 settler homes in the occupied West Bank, a move opposed by its U.S. ally and Palestinians but which could pave the way for a construction moratorium sought by Washington. A Defense Ministry list of the first such building permits since Prime Minister Benjamin Netanyahu took office in March showed the homes would be erected in areas Israel says it intends to keep in a future peace deal with the Palestinians.
Suzuki, Hyundai’s Indian Car Exports Beat China’s India, whose auto market is 19 percent of China’s, has the edge in exports. Suzuki Motor Corp.,Hyundai Motor Co., and Nissan Motor Co. are making India a hub for overseas sales of minicars as incentives lift demand for smaller, fuel-efficient autos. Helped by cheaper labor and a surging local market, India this year overtook China in auto exports and is challenging Thailand and South Korea as an alternative production center in Asia.
U.S. seeks clarity from North Korea on uranium North Korea's pursuit of a second path to nuclear weapons by enriching uranium is a problem likely to persist and Pyongyang needs to come clean about its intentions, a U.S. envoy for the reclusive state said on Sunday. North Korea, which has produced enough plutonium for an estimated six to eight bombs, said on Friday it had made advances in uranium enrichment, a move analysts saw as a tactic to put pressure on regional powers after a month of conciliatory gestures.
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Fri 09.04.2009
PTG schedule for holiday weekend: Friday - open until noon Monday - closed on Labor Day
China buys US$50b in IMF initial bond issue CHINA has agreed to buy US$50 billion worth of the International Monetary Fund's first bond issue to diversify the country's foreign reserves and boost the organization's lending strength as it works to speed recovery in the global economy. The sale is part of the Washington-based IMF's effort to raise US$500 billion to finance lending to help economies battered by the downturn. Under the deal, concluded in the US capital on Wednesday, China will buy up to 32 billion of the IMF's special drawing rights. SDRs are interest-bearing IMF assets based on a basket of four international currencies: the US dollar, the Japanese yen, the euro and the British pound. "The agreement offers China a safe investment instrument," the IMF said in a statement. "It will also boost the fund's capacity to help its membership - particularly the developing and emerging market countries - weather the global financial crisis, and facilitate an early recovery of the global economy."
IMF Signs US$50 Billion Note Purchase Agreement with China The Managing Director of the International Monetary Fund (IMF), Mr. Dominique Strauss-Kahn, and the Deputy Governor of the People’s Bank of China, Mr. Yi Gang, have signed an agreement under which the People’s Bank of China would purchase up to SDR 32 billion (around US$50 billion) in IMF notes. The note purchase agreement is the first in the history of the Fund, and follows the endorsement by the Executive Board on July 1, 2009 of the framework for issuing notes to the official sector. The Chinese authorities had expressed their intention to invest up to US$50 billion in IMF notes in June.
Let’s put the pieces together here. Just this past weekend China announced that State Owned Enterprises (SOEs) will be allowed to default on commodity derivative contracts. Think of that. China has given the green light and authorized the defaulting on commodity derivative contracts. This story broke over the weekend but has not gotten much mainstream media attention on this side of the pond. (North America). The only inference to it was the talk or “buzz” on the Wall Street floor that another bank was rumored to be close to defaulting. As Art Cashin of UBS Securities indicated in the video clip I posted earlier, normally when a market sells off on a rumor and the rumor turns out to be false, the market will tend to correct itself. IT DIDN’T.
Hong Kong recalls gold reserves, touts high-security vault In a challenge to London, Asian states invited to store bullion closer to home Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday. The facility, industry professionals said, would support Hong Kong's emergence as a Swiss-style trading hub for bullion and would lessen London's status as a key settlement-and-storage center. "Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region," said Sunil Kashyap, managing director at Scotia Capital in Hong Kong, adding that the facility was the first with official government backing in the region.
Chinese sovereign wealth fund dumping dollars for strategic investments like gold Reports suggest that China's main sovereign wealth fund and other state entities are under pressure to invest in strategic Western assets as the country tries to offload its dollars for firmer-based wealth including gold and oil. Several reports are coming out of China that there is pressure on state-controlled organisations - notably the country's main sovereign wealth fund, China Investment Corporation (CIC) to rapidly build investment in non-Chinese enterprises. While the CIC itself, with apparent access to some $300 billion in funds - and the possibility of more from the government - may be concentrating on hedge funds and other investment entities, there is another sector for Chinese state-owned companies looking at major investment in commodities. Indeed with the funds available as China seems to be dumping its US dollars in favour of more concrete assets, virtually no minerals sector is safe from Chinese participation.
China pushes silver and gold investment to the masses A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets. We are indebted again to Paul Mylchreest's Thunder Road Report for news that will bring big smiles to gold and silver investors everywhere. Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder. If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!
U.S. calls for global bank capital requirements Treasury proposes new international standards for banks to help prevent another financial crisis. The new rules come one day before G-20 finance ministers meet in London. The U.S. Treasury Department Thursday proposed tough international standards on capital and liquidity at banks, saying new rules are needed to reduce the risk of another global financial crisis. The standards call for higher capital levels at all banks and even more stringent requirements for banks that could pose a threat to overall financial stability. They also call for a simple constraint on leverage for all banks, as well as strict but flexible liquidity regulations.
Geithner Pushes for Tough Global Capital Rules Treasury Secretary Timothy Geithner sent a detailed letter to the finance ministers from the Group of 20 industrial and developing nations calling for tough new capital rules for the world’s largest banks. The standards, which Mr. Geithner said should be agreed on by the end of 2010 and implemented by the end of 2012, would call for much higher capital requirements at banks and require a much higher quality capital, with a heavy emphasis on equity.
U.S. Treasury Seeks Bank Capital Accord Before 2011 The U.S. Treasury Department said it wants a global agreement requiring banks to increase their capital cushions to be reached by the end of next year. In a statement of principles, issued today in Washington, the department said that an accord on capital and liquidity rules should be reached by the end of 2010 and be in place by the end of 2012. The rules must be “as uniform as possible across countries,” the statement said, “to better protect the safety and soundness of individual banking firms and the stability of the global financial system and economy.”
Professor Roubini China cannot drive the world out of recession Sept 1st 2009
Gold Trades Near $1,000, Heading for Best Week Since April Gold traded near $1,000 and was set for its strongest weekly advance since April after the price broke through a technically important level, luring investors. Gold was at $990.50 an ounce, close to a six-month high, after climbing 3.8 percent this week. A move through $976 means gold may have resumed a “bull-run,” targeting $1,033 and then potentially a high of $1,106, according to Barclays Capital.
Gold: Separation Before Liftoff The latest development in the gold world is highly favorable. Summarize by saying from the rooftops that GOLD LEADS THE CURRENCIES in price movement. Gold is not only a metal, but the most important of currencies, whose importance will soon be confirmed on a worldwide basis. The enlightened realize that if gold had been a core to the banking systems, and to the currency systems, that the entire bank credit crisis would not have occurred. The dimwitted that dominate the landscape still utter nonsense about gold, only to have their prattle squelched and overrun, as it seems so tiresome and vacant anymore. Gold has begun to respond finally to the global ruin of money, to the Western government fiscal ruin, and to the ruin of the United States and United Kingdom banking systems.
U.S. gold rises toward $1,000/oz in flight to quality U.S. gold futures rose to a six-month high on Thursday, rallying toward $1,000 an ounce as renewed uncertainties about the equities market prompted investors to allocate funds into safe-haven hard assets.
Uh oh. Gold's near $1,000 With gold nearing last year's highs, it's a cause for concern. But it is probably more a sign of long-term inflation worries than fear of another financial collapse. Are gold investors starting to sense something wrong that others are missing? The price of gold is nearing $1,000 an ounce. It closed at $997.70 Thursday, up $19.20 from Wednesday. This rise might be a cause for concern. In the past two years, gold has flirted with the "box of ziti" level -- a bit of slang for $1,000 from a memorable "Sopranos" episode -- a couple of times. And that usually has coincided with a time of immense strain in the markets
Has a New Bull Market in Gold Emerged? Up, up, and away… That’s how gold stocks moved today. The Market Vectors Gold Miners ETF (NYSE:GDX) climbed nearly 10% today. And the move was exceptionally strong. The ETF, which tracks the major gold stocks, opened about 2% higher and steadily climbed to close up almost 10%. The exceptionally strong move in gold stocks was propelled by a $20+ surge in the price of gold.
DJ Hong Kong Recalls Gold Reserves, Says It Can Store It At Home Hong Kong is pulling all its physical gold holdings from depositories in London, transferring it to a newly-built high-security depository at the city's airport, in a move that won praise from local traders Thursday. The facility, industry professionals said, would support Hong Kong's emergence as Swiss-style bullion trading hub and help lessen dependency upon London as center of settlement and storage. "Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region," said Sunil Kashyap, managing director at Scotia Capital in Hong Kong, adding that the facility was the first with official government backing in the region.
What Determines the Price of Gold? The outlooks of gold analysts are diverse. After reading the latest WGC report, Mineweb is bullish: "Gold demand tops US$100 billion and mine supply remains under threat." John Nadler, however, is bearish, citing the expected "additional 400–500 tonnes per annum" that will result from the exploration boom of the last few years. Tom Barlow even asks, "Are we running out of gold?"
Marc Faber Expect big moves in the dollar in the next 10 days
Investors Rush Into Gold ETFs Gold is popping, and is within spitting distance of the totally psychological $1,000 per oz. level. There are competing theories as to why. Some think the move foretells inflation or the collapse of the dollar. Others argue that it's a hedge against a stock market re-collapse.
Gold Jumps Within 2% of 2009 High; "Stock Slide Won't Help Dollar" THE PRICE OF GOLD touched new 3-month highs early Thursday against all major reserve currencies bar the Yen as stocks in emerging Asia rose but Tokyo shares fell. European stocks held flat. Crude oil rose $1 per barrel, but remained 8% below last week's nine-month high of $75. For US investors looking to Trade Gold ahead of the New York open, the price came within 2% of its 2009 high at $1,006 an ounce, trailing the record peak of $1,032 – hit when Bear Stearns collapsed in March '08 – by less than 4.5%. "For the first time since the stock markets turned round in March, gold seems to be moving under its own steam," wrote Phil Smith for Reuters Technical India this morning.
Big Move Coming It looks as though the multi-month correction in precious metals is coming to an end and very soon, we are going to get a major move. If the bull-market is still intact, then gold should break above US$1,000 per ounce within a few weeks. However, if the price of gold fails to do this, we could see a sharp decline in bullion and precious metals mining stocks. Put simply, if the price of gold fails to climb past US$1,000 per ounce and instead, it falls below US$920 per ounce, it will be a negative omen. At that point, our suggestion would be to immediately sell precious metals and related stocks.
Australian Gold Shares in Massive Break Out We have been working at the subject of international participation in the Australian Gold Sector – a “how to” for offshore investors. A file will be down loaded into our Gold Members subscription area within the next few days setting out the offshore Exchange Codes and methods to invest in this exciting gold sector from anywhere in the world. Australian gold stocks have traditionally traded at lower valuation metrics compared to their North American counterparts. This is on record and a matter of recorded fact. This time however, in this Gold Bull Market, it will be different for two monumental reasons. Please read and consider the following and see if you agree with my logic.
Unprecedented Federal Debt Former Comptroller General of the United States David Walker speaks at "Unprecedented Federal Debt: Putting Our Fiscal House in Order," a forum hosted by BPC Senior Fellow Senator Pete V. Domenici and the Bipartisan Policy Center.
Deficits Will Matter The defenders of supply-side economics have regaled conservatives with this slogan, "deficits don't matter," from the late 1970's until today. As far as I can determine, this was the only idea to come out of the supply-side movement that was ever agreed to by the mainstream Keynesians and Chicago School economists. They all agree: Federal deficits don't matter. Someday, yes, but not yet. Not now. Don't worry. Be happy. According to a recent article by Dr. Brian Riedl of the conservative Heritage Foundation, deficits do matter. They are going to matter a whole lot more over the next decade. They are going to matter to people who are dependent on the Federal government for handouts.
Americans think nation still mired in recession early 9 in 10 Americans say the country's still in a recession, according to a new national poll. Eighty-seven percent of people questioned in a CNN/Opinion Research Corporation survey released Thursday morning say the nation's in a serious, moderate or mild recession, and nearly 7 in 10 say things are going badly in the country today. "Economists may be speculating that the recession is over, but don't tell that to the American public," says CNN Polling Director Keating Holland.
US warns spending cut may damage recovery America has warned that it is too early to withdraw funding to boost the global economy ahead of a key meeting with G20 finance ministers in London this week. Timothy Geithner, the US Treasury Secretary, said: "You're seeing the first signs of positive growth in this country and around the world. We've come a very long way but we have to be realistic, we've got a long way to go still." Mr Geithner was speaking as he prepared to leave for London to meet with his counterparts on Friday and Saturday before G20 leaders attend a summit in Pittsburgh on September 24.
Slip-siding toward a nasty September First-term presidents, like congressmen on the run and baseball teams contending for the pennant, have to get serious after Labor Day. They're all running out of the margin where mistakes are not always fatal. Frightened congressmen, who will be returning to Washington all shook up from facing the music of angry and resentful voters back home, are desperate to find a little reassurance. But there is none. Their mantra for September is "slippage," as in, "my prospects for re-election may be slipping away." Going home to look for a job is the congressional fate worse than death.
Fed's Fisher sees muted U.S. economic recovery Dallas Federal Reserve Bank President Richard Fisher on Thursday gave a muted outlook for the U.S. economy, saying a long period of slow growth lies ahead even when the recession ends. "We are likely to see a prolonged period of sluggish economic performance and uncomfortably high unemployment as businesses reallocate capital and labor to fit the new economic landscape," Fisher said in remarks prepared for delivery at the University of California in Santa Barbara.
Commercial Loans Biggest Threat to Banks: FDIC’s Bair Commercial loans are likely to be the biggest drivers of future bank failure, Sheila Bair, Chairman of Federal Deposits Insurance Corporation, told CNBC Tuesday. Wall Street sold off sharply Tuesday on speculation that a big bank in the US or Europe may be heading for failure. Bair said investors should keep their cool, but warned that commercial loans overhang could still be a concern. Commercial loans are “going to be a bigger driver of bank failures towards the end of this year into next year,” she said, adding that residential mortgages were still a bigger percentage of where the credit distress was right now.
Fed leans on bankers' banks The U.S. central bank orders Midwest Independent Bancshares and Nebraska Bankers' Bank to increase oversight and improve risk management The Federal Reserve Thursday ordered Midwest Independent Bancshares Inc., a "bankers' bank" in Missouri that provides services to about 450 financial firms, to strengthen its board oversight and better manage its credit risk, including its exposure to commercial real estate. The Fed issued a similar order Thursday to Nebraska Bankers' Bank, an offshoot of Midwest Independent Bancshares.
What Would the United States Look Like Without the Federal Reserve? Since H.R. 1207 was introduced by Dr. Ron Paul in Congress this February, there has been a growing movement which questions whether the Fed should continue to operate without more oversight and some question whether or not the Federal Reserve should continue to operate at all.
Preparing Americans for Hyperinflation
Loan Losses Spark Concern Over FHA The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout. The rising losses at the FHA, part of the U.S. Department of Housing and Urban Development, come as the agency has rapidly increased its role in guaranteeing loans in an attempt to stabilize the housing market.
Regulator stiffens lender's capital adequacy ratios to 9% Chinese banks seeking to expand business must meet new standard HONG KONG (MarketWatch) -- China's banking regulator will not allow lenders whose capital adequacy ratio falls below 9% to open new businesses or expand retail outlets, according to a report Thursday. The new protocol, which encourages banks to keep more capital than the officially required ratio of 8%, was reported by Dow Jones Newswires, which cited a media report in the Thursday edition of the state-run China Securities Journal. The rule is expected to affect Shenzhen Development Bank Co., Shanghai Pudong Development Bank Co. and China Minsheng Banking Corp. Of China's 14-listed lenders, these are the only banks whose capital adequacy ratios are below 9% as of June 30, the report said.
Treasury Sec. Geithner says global economy still needs stimulus Treasury Secretary Timothy Geithner said Wednesday that efforts by the United States and other nations to fight a worldwide economic crisis have been able to pull the global economy "back from the abyss." But countries must continue to provide sizable amounts of support until there are clearer signs of recovery to avoid a classic mistake countries have made in past recessions, he said.
500 More Banks to Fail By End of 2010: Wilbur Ross The list of failed bank continues to grow as the FDIC’s troubled bank list currently stands at 416 troubled banks. Wilbur Ross, chairman and CEO of WL Ross & Co. explained that he expects to see further trouble ahead for banks. “I’m not surprised that the [FDIC’s] list is continuing to grow,” Ross told CNBC. “I think there’s going to be at least 500 more banks fail between now and end of next year.” Ross said commercial real estate is the currently the biggest problem for banks as opposed to residential.
Federal Reserve imposes restrictions on 2 banks The Federal Reserve has imposed restrictions on two correspondent banks in Nebraska and Missouri owned by Midwest Independent Bancshares of Jefferson City, Mo. because of concerns about the banks' exposure to the commercial real estate market. The agreements released Thursday put limits on the Nebraska Bankers' Bank of Lincoln, Neb., and Midwest Independent Bank of Jefferson City, which together have about $400 million in assets.
Gordon Brown’s $1 trillion global rescue package unravels Alistair Darling is scrambling to plug a gaping hole in the $1.1 trillion global rescue package agreed by G20 leaders in London — hailed at the time as Gordon Brown’s biggest success. Some countries, led by Germany, are even calling for the bailout to be scaled back amid fears that it risks burdening economies with too much debt and could encourage inflation. The breakdown of unity reflects the different speeds at which countries are emerging from recession and conflicting views about the outlook for the global economy.
The Reluctant Landlords With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord. Some have been forced to relocate for a job and can't sell their houses. Others have moved, but are holding on to their previous homes, hoping for prices to rebound before selling. Many are finding that rent checks don't come close to covering their mortgage payments.
Obama Stepping Into Congressional Health-Care Fight President Barack Obama will take a more direct role in the legislative fight over revamping U.S. health care and make his case directly to lawmakers and the public next week by addressing a joint session of Congress. Seeking to overcome strong opposition from Republicans and resistance from some Democrats in Congress, Obama plans to offer more details of what he wants in final legislation. The decision to hold the prime-time address in a venue typically reserved for the annual State of the Union illustrates how central the health-care overhaul is to Obama’s presidency.
Arson caused huge California wildfire The Station Fire that has killed two firefighters and burned more than 144,000 acres north of Los Angeles was caused by arson, authorities said Thursday night. "Forensic examination has led this team effort to conclude … that it was an act of arson," said Los Angeles County Sheriff's Department spokesman Steve Whitmore.
1.3 million to lose jobless benefits by year's end Jobless since January, Donald Money has already moved in with his elderly parents, stopped going to the movies and started using less of his prescription medication so it will last longer. This month, something else will fall by the wayside: Money's unemployment check. The 43-year-old former printing press operator is among the more than 1.3 million Americans whose unemployment insurance benefits will run out by the end of the year, placing extra strain on an economy that is just starting to recover from the worst downturn in a generation.
Food stamp list soars past 35 million More than 35 million Americans received food stamps in June, up 22 percent from June 2008 and a new record as the country continued to grapple with the worst recession since the Great Depression of the 1930s. The food stamp program, which helps cover the cost of groceries for one in nine Americans, has grown in step with the U.S. unemployment rate which stood at 9.4 percent in July.
Women gain as men lose jobs Women are on the verge of outnumbering men in the workforce for the first time, a historic reversal caused by long-term changes in women's roles and massive job losses for men during this recession. Women held 49.83% of the nation's 132 million jobs in June and they're gaining the vast majority of jobs in the few sectors of the economy that are growing, according to the most recent numbers available from the Bureau of Labor Statistics.
Looks Great, Less Nutritious? What's changed in the vitamin content of store-bought broccoli, tomatoes, and carrots. Eating all your vegetables was a lot better for you in the '50s. Store-bought veggies weren't as pretty back then, but according to USDA data, they were packed with a lot more nutrients than their modern counterparts. The likely reason for the nutritional drop is that hybrid crops are often bred for size and color, not nutrients. Below, the stats for a few crops that have gone to seed.
Home-schooled Christian ordered to public school Mom's religious views ripped by court as rigid A New Hampshire court ordered a home-schooled Christian girl to attend a public school this week after a judge criticized the "rigidity" of her mother's religious views and said the 10-year-old needed to consider other world views as she matures. Ever since the judge's ruling came out in July, the case has aroused the interest of home-schooling groups nationwide, who have asked why a court has the power to decide whether someone's religious views are too extreme.
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