Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 10.30.2009
In White House Vs. Fox News War Of Words, Who Gets Your Vote? The stories about what the Obama White House has to say about Fox News Channel keep coming. There was White House communications director saying telling Howard Kurtz of The Washington Post and CNN "let's not pretend they're a news network the way CNN is."
Stock analysts issue 'Black Tuesday' warning Trends on anniversary of 1929 collapse indicate markets on verge of 'crash' On this 80th anniversary of the "Black Tuesday" stock market collapse, some analysts are experiencing déjà vu, warning a major crash in the stock market is imminent. Graham Summers, senior market strategist at OmniSans Research, wrote in the firm's daily e-letter yesterday that the markets may finally be on the verge of the crash he has been predicting for more than two months. "Well, judging from the market's action today, I believe we may be within 48 hours of getting the "Official Sell" signal I've been waiting for," he wrote in "Gain, Pains, and Capital."
Great Depression, Great Recession: What 1929 can teach us about 2009 How do you commemorate the worst stock market crash in history? With the news that another devastating economic implosion may be nearing its end. That's where America finds itself on the 80th anniversary of the Great Depression -- reacting to the first positive GDP numbers in a year, slowly pulling itself out of the Great Recession, and looking for ways to make sure the country doesn't wind up mired in a decade of dismal economic conditions similar to the one that began 80 years ago on Oct. 29, 1929. Analysts and market watchers have been comparing the two meltdowns all year, and investors can take note of the similarities in their causes as they consider how to navigate their portfolios through the aftermath (we hope) of the most recent one.
Phony GDP Growth
Stock Market Black Monday Crash, Ancient History Or Imminent Future? Once upon a time, the term "Black Monday" was to Wall Street what the name "Lord Voldemort" was to Hogwarts. It turned the air freezing cold and sent traders flinching around every corner in fear of a repeat of the October 19, 1987 or October 28, 1929 meltdown. Case in point: The 2008 "Black Monday" anniversary. At the time, the U.S. stock market was locked in a ferocious downtrend that included regular, triple-digit daily declines of 400 points and more. Needless to say, when the final two Mondays of October arrived, the least superstitious investors surrounded their portfolios with more good-luck talismans than a Bingo player.
From US Bank Failures to Civil Unrest: How Soon? How Bad? According to Bloomberg, the FDIC said 416 banks with combined assets of $299.8 billion were on its list of "problem" lenders at mid year. Meanwhile 106 banks have been closed by regulators this year to date. This compares with 179 banks which were shut down during the Savings and Loan Fiasco of 1992. Last week FDIC Chairman Sheila Bair told a Senate subcommittee on financial institutions -- "The most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters is in Commercial Real Estate lending." What does it mean?
Central banks chill asset rally The liquidity tide is turning. Authorities across large parts of the world have either begun to tighten the spigot or are taking steps to wean their economies off emergency stimulus. This is a treacherous moment for markets. Oil-rich Norway raised rates a quarter point to 1.5pc on Wednesday, the first European country to move since the crisis. Governor Svein Gjedrem said asset prices have "risen sharply and probably excessively". The Norges Bank is taking pre-emptive action to choke off a property bubble, though manufacturing remains sluggish. The era of "asset targeting" has begun. Australia took the plunge earlier this month. It dodged recession over the winter and has since been lifted by China's torrid demand for commodities. Israel kicked off in August.
Fed's Massive Secret Wall Street Bailout Still Going Strong Remember last fall, when our government explained that the reason we needed to give $800 billion to Wall Street was so the banks could lend it back to us and shock the economy back to life again? That was a happy story! And we fell for it. What happened, of course, was that the banks took the money, stopped lending, and used it to pay themselves and their shareholders through the nose. Twelve months later, the banks still aren't lending, and we're still bailing them out hand over fist.
Dollar Set for Fourth Monthly Loss Against Euro on Risk Demand The dollar headed for a fourth monthly drop against the euro, its longest stretch since 2004, as the U.S.’s return to growth renewed optimism a global recovery will quicken, aiding demand for higher-yielding assets. The yen was little changed against the euro, set for the biggest monthly slide since May, after a government report showed Japan’s jobless rate unexpectedly dropped for a second month, reducing demand for the relative safety of the Japanese currency. Australia’s dollar is rising for a record ninth month as global stocks rallied and prices climbed for commodities that comprise more than half the South Pacific nation’s exports.
Gold's a Great Investment Because There's a War Coming The people who are telling you to buy gold because of impending hyper-inflation don't know what they're talking about, says "cycles" analyst Charles Nenner. Yes, gold has done well in times of inflation. But it has also done well in times of deflation. So the causality link between inflation and gold I wildly overblown. The real reason to own gold, says Nenner, is that there's a war coming. Gold does well in times of military conflict, and we're heading pell-mell into an era of military conflict.
Checking in on Gold Has gold topped out? The guys over at MarketClub don't think so. They take a look at the gold chart and highlight why the recent dip is just a normal course of action for the longer-term uptrend. Here's their video on gold where they highlight support levels to buy at and identify price targets going forward. They note that gold clearing the psychological and technical resistance area of $1000 was a big deal (duh). However, even more important could be the fact that it has been able to remain above that threshold for over a month.
Gold Rises Most in Three Weeks as Dollar’s Drop Spurs Demand Gold rose the most in three weeks as a sliding dollar increased the metal’s appeal as an alternative investment. The greenback tumbled for the first time in five sessions against the euro after a report showed the U.S. economy, the world’s biggest, expanded in the third quarter for the first time since June 2008, stoking demand for higher-yielding assets. Before today, gold futures dropped 3.2 percent since Oct. 21 after reaching a record $1,072 an ounce a week earlier.
Gold rebounds as U.S. returns to growth, dollar falls Copper tops $3 a pound as greenback dips for first session in six Gold futures closed above $1,047 an ounce, breaking five straight sessions of losses, after a report showing the U.S. economy expanded for the first time in a year enticed investors back to commodities and stocks. Gold for December delivery added to gains throughout the session to end at $1,047.10 by the close of floor trading in New York. Gold rose $16.60 an ounce, or 1.6%, to mark the contract's highest close since Friday. December silver rose 42 cents, or 2.6%, to $16.655 an ounce. "It's the better economic figures, better oil and better moving averages in gold," that are supporting prices Thursday, said George Gero, vice president of global futures at RBC Capital Markets.
'Believe in gold. But gold is not a religion' The US dollar fell along with the yen overnight, as speculation ahead of the release of US GDP data pushed stock index futures higher and reignited a modicum of risk appetite. Following four days of climbing against the euro, and backing away from the 75 mark on the trade-weighted index, the greenback slipped 0.20 this morning, coming down to 76.27 and this action resulted in partial repairs of yesterday's $12 rout in gold prices. Yesterday's sell-off capped the longest slide in gold since March - the dollar was cited a the prime mover, yet again.
Seeing Next Boom, Tudor Goes for Gold Those who doubt an economic recovery is under way may want to check out the latest investor letter from Paul Tudor Jones. The legendary hedge fund manager of Tudor Investment sees a wave of money flowing into the markets, pushing up stocks, commodities and other assets in what he terms “The Great Liquidity Race.” Winning the race, Mr. Jones posits, will be gold, emerging-market equities denominated in local currencies and commodity-related stocks. “I have never been a gold bug,” he says in the letter. “It is just an asset that, like everything else in life, has its time and place. And that time is now.”
U.S. Gold Futures Rise on GDP Thursday morning gold futures extended gains trading after the U.S. third-quarter gross domestic product reading came in higher than expected. That sends the U.S. dollar lower and equities futures higher. In recent trading, December gold was up $7.20 at $1,037.70 on the Comex division of the New York Mercantile Exchange. The U.S. economy expanded in the third quarter for the first time in more than a year thanks to a bounce back in consumer spending, but a weak labor market is expected to keep the recovery subdued.
What Is Your Exposure? A well-known truism is that every investor needs to start with savings. But what if that “savings” gave the investor too much exposure to risk? What investors or people in general need in this financial environment is savings that don’t deteriorate. We are in an environment now where the idea of making money, which is kind of the preamble to being American, is going away. In other words, today’s environment is, he who loses the least, wins, and the way that you do that is to hold a currency that doesn’t devalue over time. There really are only two currencies, and they are gold and silver.
Golden Accumulation Opportunity Actually, the golden opportunity is for buying silver at current prices. The motive for lifting the USDollar was the gargantuan $115 billion in USTreasurys offered this week. With bond yields rising from gargantuan supply, the USGovt and USDept Treasury and USFed did not wish to have both bond principal values fall and the USDollar fall. So the witch doctors engineered a meager semi-lifeless US$ rally, and a full 100-cent silver price discount. The claim again came that the bond auction bid/cover was strong at over 3:1 ratio. But 1.0 of that comes from the primary dealers who are bound to bid. The rest came in majority from foreign central banks. Same Modus Operandi by the Big Boyz. The difference is that precious metals were taken down in price, using the typical naked shorting of futures contracts sponsored and endorsed by the USGovt, which refuses to enforce the regulatory requirement to maintain 80% metal in inventory.
***** Very Funny Spoof ***** US To Trade Gold Reserves For Cash Through Cash4Gold.com
Weak Dollar Is ‘Welcome Change’ for McDonald’s, PPG Profits McDonald’s Corp., United Technologies Corp. and PPG Industries Inc. are among the companies whose earnings may get a boost in the fourth quarter from a weak dollar because of foreign operations and exports. U.S. firms are benefiting when they convert revenue from Europe with the euro touching $1.50 this month and having climbed 16 percent from a year ago as of yesterday. United Technologies, the maker of Pratt & Whitney jet engines, adds $10 million in annual operating income for every penny the euro gains against the dollar, Chief Financial Officer Gregory Hayes said in an Oct. 20 conference call.
Decline and fall of the U.S. dollar Commentary: Bigger dynamics drive the greenback's value As the dollar slowly grinds towards all-time lows, there's been a lot of blustery speech about its fate. Many economic experts believe this weakness bodes very badly for the country and that government banking authorities should act quickly to prop up the world's most important currency. Others welcome the slide as an opportunity to boost our economy with rising exports and the chance to repay our growing debts with cheaper dollars tomorrow. The reality lies somewhere in the middle of these extremes because of much bigger dynamics driving the dollar's value. Economic ascendancy around the globe has put the dollar in a major downtrend for decades, populated by periodic swings of renewed strength. Our large trade deficits with countries like China, creating a transfer of wealth overseas, have been fueled both by American consumerism and the "dirty pool" of the Chinese currency peg.
Dangerous Inflationary Side Effects of G20 Ultra-Easy Money Operating under the elixir of ultra-low interest rates, and flush with trillions of fiat currency at their disposal, courtesy of the world’s top-20 central banks, hedge funds and banking Oligarchs are once again making risky and daring bets in commodities, emerging markets, junk bonds, and blue-chip stocks, defying gravity with trades that would have been un-thinkable just six-months ago. In order to engineer a 180-degree turnaround in trader psychology, from the chronic fear of meltdowns last year, to the opposite side of the spectrum - the euphoric illusions of V-shaped recoveries, the “Group-of-20” have committed $12-trillion of taxpayer money, equivalent to a fifth of the entire globe’s annual economic output. The G-20’s largesse has been used to fund capital injections into banks, soaking-up toxic assets, guaranteeing financial company debt, and flooding the world credit and stock markets with ultra-cheap liquidity.
The Next Economic Crisis, Spiralling Inflation As the credit crisis ends, a bigger one is just beginning “The US government has a technology, called a printing press… that allows it to produce as many US dollars as it wishes at essentially no cost.” – Ben Bernanke The US economy contracted for four consecutive quarters since October 2008, something we have not seen since the Great Depression. A V-shaped recovery is simply not in the cards because the credit crisis has caused deep, systemic damage. Having said that, if the recession ends this year, it certainly won’t be because the global economy is healthy.
Inflation Supply Shock Inferno The gasoline for rampant inflation already permeates the US economy – and all it will take is one bad day for a series of interrelated supply shocks to set off an inflationary inferno. As we will cover in this article, the accelerant in this case is the $700 billion annual United States trade deficit. We’ll explore how the real world economics of being the world’s largest debtor in a globalized economy trump insular deflationist monetary theory, as well as what happens when you pit exogenous supply shocks against Santa Claus
The current notional value of the derivatives market is
The current notional value of derivatives on US commercial banks’ balance sheets is $203 trillion.
97% of these ($196 trillion) sit on FIVE banks’ balance sheets (more on this shortly)
If even 1% of this $203 trillion is “at risk” … you’re talking about $2 TRILLION in at risk bets made in the derivatives market
If 10% of that 1% end badly, you’re talking about $200 billion in losses
Total equity at the five banks is $737 billion. So if you assume that only 1% of derivatives are “at risk” (odds are it’s more) and 10% of that at risk money is lost, you’ve wiped out nearly 1/3 of the banks’ equity.
The Economy Grows! Don't Rejoice, Forecaster Charles Nenner Says Things Will Sour Again in 2010 The recession is over! Pundits and economists have been saying it for months, and now the third-quarter GDP results back that claim. The economy grew at a 3.5% pace in the third quarter on the back of President Obama's stimulus bill. But, many of those same voices also acknowledge that as government assistance fades so to will the economic recovery. Market and economic forecaster Charles Nenner agrees.
Central banks chill asset rally The liquidity tide is turning. Authorities across large parts of the world have either begun to tighten the spigot or are taking steps to wean their economies off emergency stimulus. This is a treacherous moment for markets. Oil-rich Norway raised rates a quarter point to 1.5pc on Wednesday, the first European country to move since the crisis. Governor Svein Gjedrem said asset prices have "risen sharply and probably excessively". The Norges Bank is taking pre-emptive action to choke off a property bubble, though manufacturing remains sluggish. The era of "asset targeting" has begun. Australia took the plunge earlier this month. It dodged recession over the winter and has since been lifted by China's torrid demand for commodities. Israel kicked off in August.
Dangerous Side Effects of Ultra-Easy Money Operating under the elixir of ultra-low interest rates, and flush with trillions of fiat currency at their disposal, courtesy of the world’s top-20 central banks, hedge funds and banking Oligarchs are once again making risky and daring bets in commodities, emerging markets, junk bonds, and blue-chip stocks, defying gravity with trades that would have been un-thinkable just six-months ago.
How the Nation’s Only State-Owned Bank Became the Envy of Wall Street The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer.
Emerging Market Economies in the New World Disorder Chris Mayer writes: In horse racing, a match race is when two horses race against each other. One of the most famous such races happened at Pimlico, when Seabiscuit beat War Admiral in November 1938. In markets, one of the most watched and ongoing match races is the one between Emerging (or developing) Markets and Developed Markets. The former include China, India, Brazil and others. The latter include the US, the EU and Japan. Which one do we bet on and when?
F.D.I.C. Chief Criticizes Reform Plan Senior regulators and some lawmakers clashed once again with the Obama administration on Thursday, finding fault with central elements of the White House’s latest plan to unwind large financial companies when their troubles imperil the financial system. Describing the details of the legislation to the House Financial Services Committee, Treasury Secretary Timothy F. Geithner emphasized that the plan would give officials the tools to more tightly supervise the largest financial companies. The government would also have the authority to order companies to shed risky assets or limit trading activities if they posed a threat to the companies’ stability.
FDIC, Geithner Clash on Financial Failure Fund A top U.S. bank regulator said on Thursday a government mechanism to dismantle troubled giant financial companies should be pre-funded, a departure from the administration's draft legislation on the subject. Sheila Bair, chairman of the Federal Deposit Insurance Corp, said that Congress should establish a Financial Company Resolution Fund (FCRF) that is pre-funded by assessments on financial companies with assets of at least $10 billion.
Do banks have something to hide? Even experts have a hard time getting a handle on how bad losses might get as the commercial real estate market implodes. The banks have taken some lumps since the economy went bad. But some believe their biggest headaches are yet to come. The pace at which U.S. commercial banks are adding to their loan loss reserves has slowed this year, while loans continue to go bad at a brisk pace. Despite the optimism of lenders like Wells Fargo, some observers warn that banks aren't socking away enough for a rainier day.
Doubts greet financial oversight plan OBAMA REFORMS FACE BATTLE Lawmakers question proper role of agencies The Obama administration on Thursday ran into skepticism from lawmakers on both sides of the aisle, as well as a key regulator, as it pushed for broad new powers to monitor risks throughout the financial system and to wind down large, troubled financial firms whose failure could endanger the economy. The criticisms included how the proposals would be funded, whether the Federal Reserve stood to gain too much influence and if the government would end up with the ability to continually bail out big financial firms without congressional approval.
House Passes Stopgap Spending Measure The House Thursday approved a stopgap spending measure to avoid a shutdown for 11 Cabinet-level departments whose budgets won't be enacted by a midnight Saturday deadline. The measure would give Congress until Dec. 18 to finish seven incomplete spending measures that were supposed to be wrapped up by Sept. 30. The bill passed by a 247-178 vote and now goes to the Senate, which must pass it this week to avoid a partial shutdown. The legislation also extends highway programs and federal loan guarantees for larger mortgages.
Federal deficit: Trail of broken promises Republicans and Democrats rage about the long-term deficit, as if they had nothing to do with it. But both parties undermine efforts to get it under control When it comes to figuring out what has caused the country's record accumulation of debt, just about every politician in Washington has a theory. The theories usually boil down to this: The other guy did it. The other party's White House. A previous Congress. You get the picture. In reality, growing the deficit has been very much a bipartisan effort. Members of Congress from both parties and presidents past and present have all contributed to the problem.
7 on defense panel scrutinized Separate probes focus on ties to lobbying firm founded by Hill aide Nearly half the members of a powerful House subcommittee in control of Pentagon spending are under scrutiny by ethics investigators in Congress, who have trained their lens on the relationships between seven panel members and an influential lobbying firm founded by a former Capitol Hill aide. The investigations by two separate ethics offices include an examination of the chairman of the Appropriations subcommittee on defense, John P. Murtha (D-Pa.), as well as others who helped steer federal funds to clients of the PMA Group. The lawmakers received campaign contributions from the firm and its clients. A document obtained by The Washington Post shows that the subcommittee members under scrutiny also include Peter J. Visclosky (D-Ind.), James P. Moran Jr. (D-Va.), Norm Dicks (D-Wash.), Marcy Kaptur (D-Ohio) , C.W. Bill Young (R-Fla.) and Todd Tiahrt (R-Kan.).
Investors Sense Rout in Stocks After 8-Month Rally An eight-month, 68 percent rally in global stocks failed to convince investors and analysts that it’s time to take on more risk or dispel their concerns about U.S. economic policies and its banking system. Only 31 percent of respondents to a poll of investors and analysts who are Bloomberg subscribers in the U.S., Europe and Asia see investment opportunities, down from 35 percent in the previous survey in July. Almost 40 percent in the latest quarterly survey, the Bloomberg Global Poll, say they are still hunkering down. U.S. investors are even more cautious, with more than 50 percent saying they are in a defensive crouch.
Moody’s May Downgrade Mortgage Bonds With New Outlook Moody’s Investors Service said it’s planning a review of U.S. home-loan securities that will likely lead to another round of rating changes based on a new view that property prices won’t bottom until next year’s third quarter. The firm will boost its loss projections by “significant” amounts for prime-jumbo, Alt-A, option adjustable-rate and subprime mortgages backing bonds issued between 2005 and 2008, also after seeing higher losses per foreclosure than expected, Moody’s said today in a statement. Recent data showing rising home prices doesn’t prove the slump is over, the company said.
Does a Fall in Bank Credit Lead to Deflation? US credit is undergoing a major contraction. In the week ending October 14, US commercial-bank lending stood at $5,686.8 billion: a fall of 6.6% from the end of January. Year on year, loans fell by 7% in October after declining by 5.8% in September. On the same basis of comparison, in October last year, loans increased by 6.6%. The growth momentum of commercial-bank business loans has also had a large decline so far this October. Year on year, these loans plunged by 15.9% after falling by 13% in September, and rising by 19.1% in October last year. Since the end of January, business loans fell by $215.7 billion.
Commercial Real-Estate Crush, The Next Crisis Not to Be Wasted? As I walked home recently from a weekend trip to the grocery store, I passed a total of 13 vacant offices with signs saying "for lease" or "for sale." These spaces ranged from approximately 500 to 5,000 square feet according to their signs, and they are stretched along a main, commercial street in the center of Tucson, AZ. There is also an eight-screen movie theater that sits empty as well. These empty commercial spaces span a very short stretch of road; less than three-quarters of a mile. The former places of business (mostly restaurants, ice cream shops, and coffee shops, along with a few real-estate offices) are empty now, and have been for quite some time.
Fed Ends Treasury Buys That Capped Rates, Stabilized Housing The Federal Reserve completed its $300 billion Treasury purchase program today amid signs the seven-month buying spree helped stabilize the housing market and limited increases in borrowing costs. Yields on the benchmark 10-year note, which help determine rates on everything from mortgages to corporate bonds, never rose above 4 percent after the central bank began acquiring the debt. They are less than half a percentage point higher than the day before the program was announced on March 18, even though the U.S. sold a record $1.25 trillion in notes and bonds, more than double the amount in the year-earlier period.
Treasury Secretary Geithner set to prosecute thousands on tax charges The Internal Revenue Service will be more aggressive in collecting back taxes and prosecuting Americans accused of tax evasion, according to the new Treasury Secretary, Timothy Geithner. The Internal Revenue Service, one of the Treasury Department's agencies, claims that billions of dollars in income tax assessments were not paid by Americans. If not collected, annual unpaid taxes keep accumulating each year along with penalty and interest charges to create an inventory of "tax debts," which approached $300 billion at the end of fiscal year 2007.
Newspapers Cannot Survive Real estate investment legend Sam Zell acknowledges that his $8.2 billion takeover of Tribune Co. didn't work out so well. But he says the failure simply reflects a dying industry. Tribune Co., owner of the Chicago Tribune, has declared bankruptcy. I think with some reasonable luck, it'll be out (of bankruptcy) probably the end of the first quarter, Zell told Bloomberg. Bankruptcies by definition are frustrating, and I think they'll continue to be. The Tribune takeover was the worst business decision of his career, Zell says.
Price to PepsiCo for Not Being in Court: $1.26 Billion What's the cost of not showing up to court? For PepsiCo Inc., it's a $1.26 billion default judgment. A Wisconsin state court socked the company with the monster award in a case alleging that PepsiCo stole the idea to bottle and sell purified water from two Wisconsin men. Now the company is scrambling to salvage the situation. The damages award was handed down on Sept. 30. PepsiCo filed motions to vacate the order and dismiss the claims on Oct. 13, saying it wasn't even aware of the lawsuit until Oct. 6. The litigation began in April when Charles Joyce and James Voigt sued the soft drink maker and two of its distributors, alleging they had misappropriated trade secrets from confidential discussions the plaintiffs had with the distributors in 1981 about selling purified water. The information was illicitly passed to PepsiCo, which used it to develop and sell Aquafina bottled water, the plaintiffs allege in the case filed in the Circuit Court of Jefferson County before Judge Jacqueline Erwin.
Goldman Sachs: Home Prices Will Drop More Goldman Sachs analysts think home prices will resume their decline as government stimulus measures wane. The risk of renewed home price declines remains significant, Alec Phillips, a Goldman economist, wrote in a note to clients. Our working assumption is a further 5 percent to 10 percent decline by mid-2010. The home market has been buoyed by government measures, such as the $8,000 first-time buyer tax credit, foreclosure halts and Federal Reserve purchases of mortgage-backed securities.
U.S. Home Vacancies Rise to 18.8 Million on Defaults About 18.8 million homes stood empty in the U.S. during the third quarter as banks seized properties from delinquent borrowers and new home sales fell in September. The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report today. The record high was in the first quarter, when 18.95 million homes were vacant. The homeownership rate, meaning households that own their own residence, stood at 67.6 percent.
Homebuyer Tax Credit Measure Backed by Administration The Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the nation’s housing market. The tax break, enacted earlier this year as part of the $787 billion economic stimulus package, has “brought new families into the housing market and contributed to three consecutive months of rising home prices,” Treasury Secretary Timothy Geithner said today in a statement. The tax break will expire Nov. 30 unless Congress intervenes.
Clunkers: Taxpayers paid $24,000 per car Auto sales analysts at Edmunds.com say the pricey program resulted in relatively few additional car sales A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com. Still, auto sales contributed heavily to the economy's expansion in the third quarter, adding 1.7 percentage points to the nation's gross domestic product growth.
China reportedly probing trade case against U.S. autos China is launching a trade investigation that could lead to new import duties on U.S. autos, according to a report Thursday. Beijing is considering the tariffs on cars and sport utility vehicles made by General Motors Co. , Ford Motor Co. and Chrysler, according to a Reuters report, citing a U.S. industry official. The probe is apparently aimed at alleged unfair pricing and government subsidies, the report said. The report cited Steve Collins, president of the American Automotive Policy Council, as saying the U.S. government had received documents spelling out charges by Chinese officials this week, but that they had not been translated fully and that it was too early to comment on specifics
Postal Service turns to selling greeting cards to boost revenue Facing declining mail volume, workforce cuts through employee buyouts and the possible closure of hundreds of post offices, the U.S. Postal Service has a new "get well" remedy: greeting cards. About 1,500 post offices nationwide started selling Hallmark greeting cards two weeks ago, part of a one-year experiment that may lead all 34,000 postal outlets to sell the cards and offer other goods and services, including banking, insurance and cellphones.
Something really scary for Obama's Democrats This is one Mr. Deeds who apparently isn't going to town. The collapse of the Democratic campaign for governor of Virginia speaks volumes - chapters, anyway - about what the body politic is trying to tell Barack Obama's Democrats. They're learning, painfully, that campaigning without George W. Bush is baffling, frustrating and scary. Worse, it offers a preview of what the congressional campaigning will be like next year. One Obama doorbell ringer, working neighborhoods in Northern Virginia for Creigh Deeds, says even the promise of free pizza can't lure faithful Democrats to a rally.
HITECH - Your Medical History in the Machine In the future, a visit to your family physician, or any specialist, will begin with a quick scan of the computer screen, where a few keystrokes will tell the doctor everything he or she needs to know about you – all the way from how much you weighed at birth, to X-rays of that bone you broke when you flipped your motorcycle thirty years ago, to how much you spent on blood work last year, right up to the hypertension pills you took after dinner yesterday (and maybe even what you ate, although hopefully not). Much of your medical info is already stored electronically, of course, but much more is stuffed into old paper file folders. Nor is there any centralized database that routes your records wherever they are wanted. That is going to change, and change dramatically.
Ron Paul on H1N1
Constitutionality of health overhaul questioned Legal scholars divided over Congress' authority On top of all the other obstacles facing President Obama in his quest to pass health reform is this one: Does the U.S. Constitution allow the government to require uninsured Americans to buy medical insurance or impose a tax penalty if they refuse? Congress has never before required citizens to purchase any good or service, but that is what both House and Senate health bills would mandate.
Private Insurers Protest against Government-Run Insurance Plan As House Democrats presented their health care legislation than the insurance industry gave it a thumbs-down. Karen Ignagni, president and chief executive of America’s Health Insurance Plans, which represents many of the nation’s insurance companies, warned in a statement issued on Thursday that the House bill would increase costs for consumers and employers and disrupt the current health care system. She also painted a dire picture of the consequences of a government-run insurance plan, or public option, which is designed to compete with private insurers. She said it would “bankrupt hospitals, dismantle employer coverage, exacerbate cost-shifting from Medicare and Medicaid, and ultimately increase the federal deficit,” The New York Times reports.
House Health Plan Has Public Option, Millionaire Tax House leaders unveiled an $894 billion plan to overhaul the U.S. health system by creating a government-run insurance program, requiring employers to cover workers and imposing a surtax on the wealthiest Americans. The legislation comes after three months of negotiations among Democrats and represents the most sweeping health-care changes since the 1965 creation of the Medicare program for the elderly. The 10-year measure would put new restrictions on insurers, encourage greater use of preventive medicine and require Americans to buy coverage, with aid if needed.
Obama asks small businesses to back health reform President Obama appealed Thursday to small businesses to support congressional legislation on health-insurance reform, saying it will revive America's entrepreneurial spirit slowed by the high costs of coverage for owners and their employees. "We all know that family premiums have skyrocketed more than 130 percent over the past decade," the president said from the White House. "But small businesses have been hit harder than most. . . . in part because small businesses pay higher administrative costs than large ones, your employees pay up to 18 percent more in premiums for the very same health insurance policies."
Plan to Drill on Colorado Plateau Meets Resistance RIFLE, Colo. — Standing in a canyon in hilly terrain, Ken Neubecker cast his fly into a cold stream. Minutes later he had a bite. Thrashing at the end of his line was a speckled green fish, a scarce Colorado cutthroat trout. Mr. Neubecker was fishing on the Roan Plateau, a high stretch of terrain beloved by hunters, anglers and hikers for its clear streams, herds of deer and elk, and rugged beauty. “There just aren’t many places like this in the West,” Mr. Neubecker said. “It’s a real gem.” Energy companies are looking at the Roan Plateau, too — through entirely different eyes. Vast deposits of natural gas are believed to lie beneath the stretch on which Mr. Neubecker was fishing, and the companies want to drill.
Boxer pushes ahead on climate measure Effort may be stalled by GOP Senate Environment and Public Works Committee Chairman Barbara Boxer said late Thursday that she wants to hold drafting sessions as early as Tuesday on the climate change bill pending before her committee, but that the meetings could be delayed by Republican stalling tactics. A spokesman for Sen. James M. Inhofe of Oklahoma, the ranking Republican on the panel, said committee Republicans were leaning toward boycotting the sessions and would meet soon to decide whether they would stay away. At least two members of the minority must attend the sessions, known as markups, for them to be convened, according to committee rules.
Climate Deal May Be Unlikely in 2010 If Summit Fails Countries are unlikely to agree on a treaty with binding greenhouse-gas reduction targets next year if United Nations-led climate talks fail in Copenhagen this December, Denmark’s minister for climate and energy said. “Do we believe that we’ll have stronger figures by March or April? No, it’s very unlikely to happen,” Connie Hedegaard said in a meeting with journalists in the Danish capital.
Tehran seeks big changes to nuclear deal Iran on Thursday night indicated it wanted to make significant changes to a draft agreement with the US and other world powers over its nuclear programme, in a move that may scupper the chances of any final accord being reached. Almost two weeks after starting negotiations with the US, France and Russia over the draft, Iran finally delivered its response to the International Atomic Energy Agency in Vienna. The agency said last night it was negotiating with Iran and other parties over the accord, but western diplomats suggested Tehran’s demands were unacceptable. The US, France and Russia have proposed that Iran should transfer two-thirds of its current stock of low enriched uranium out of the country for manufacture into more highly enriched fuel used for cancer treatments. They are also insisting that the full batch of LEU designated for transfer should be shipped out before the end of the year. If Iran were to do so at this speed and on this scale, it would underscore that the material could not be used for a nuclear weapon.
China and US move to defuse trade row China and the US resolved several thorny trade disputes on Thursday even as Beijing confirmed it was investigating potential dumping of US-made cars in the Chinese market. At a high-level meeting of officials from both countries in the eastern Chinese city of Hangzhou, China said it would allow US pork imports and relax restrictions on wind power components and government procurement rules. Thursday’s meeting comes three weeks before the first visit to China of President Barack Obama and against a backdrop persistent trade tensions, concerns about the strength of the US economy and renewed criticism of China’s currency policy. Last month Mr Obama imposed a 35 per cent duty on imports of Chinese tyres and Beijing responded by launching anti-dumping investigations into US imports of auto parts and poultry.
Iran Reply to UN Fuel Plan Falls Short of Acceptance The United Nations nuclear agency was consulting with the world powers and Iran after the country failed to fully accept a UN-brokered plan to provide it with fuel for a medical-research reactor. “Iran’s technical and economic concerns in relation to the provision of fuel for this research reactor should be addressed,” Aliasghar Soltanieh, Iran’s ambassador to the UN’s International Atomic Energy Agency in Vienna, said after delivering his country’s response to the proposed deal today, the state-run Iranian Students News Agency reported. He said Iran would continue talks in Vienna “with a positive view.”
Lindsey Williams Back on Alex Jones Tv 1/6: Lindsey Takes Your Questions
Lindsey Williams Back on Alex Jones Tv 2/6: Lindsey Takes Your Questions
Lindsey Williams Back on Alex Jones Tv 3/6: Lindsey Takes Your Questions
Lindsey Williams Back on Alex Jones Tv 4/6: Lindsey Takes Your Questions
Lindsey Williams Back on Alex Jones Tv 5/6: Lindsey Takes Your Questions
Lindsey Williams Back on Alex Jones Tv 6/6: Lindsey Takes Your Questions
Glenn Beck Interviews Lord Monckton On Climate Treaty Part 1
Glenn Beck Interviews Lord Monckton On Climate Treaty Part 2
Facing A Total Breakdown Of Financial Markets Yet another bank bights the dust, stocks have net outflows of capital, big insider sell offs and other bad moves that enable insiders to control the market, biggest S&P rally ever, Plunge protection team working overtime, Gold in a new phase. This is another victim of the FDIC Friday Night Financial Follies. Early Friday morning, state and federal agents walked into the Bank of Elmwood and closed the failed 49-year-old independent bank after a year of struggling to improve a bleak financial situation, officials announced Friday.
Dollar ‘Over-Owned,’ Will Fall to Record, Gross Tells CNBC The dollar is an over-owned currency and likely to fall to an all-time low against major counterparts, Pacific Investment Management Co.’s Bill Gross said in an interview on CNBC. “The Chinese, the Asians, have owned too many dollars for too long,” said Gross, a founder and co-chief investment officer of the world’s biggest manager of bond funds. “The dollar becomes more and more owned and less and less desirable, so ultimately the direction is down. I don’t sense stability in the dollar.”
Fed Up with the FED The political movement to curtail the Federal Reserve goes from fringe to mainstream. Rep. Ron Paul (R-Texas), the libertarian-leaning congressman and failed 2008 GOP presidential candidate, has been suspicious of the Federal Reserve since before first entering Congress in 1976. In a 1981 article that mentioned the then-obscure legislator, United Press International reported that Paul "has proposed abolishing the Federal Reserve, repealing laws which make the dollar legal tender, and switching to currency issued by banks, 100 percent backed by gold."
When Money Dies Bottom line: "When money dies, so do people." Hyperinflation in a modern urban nation would kill people. I think it would kill a lot of people. Why? Because we rely on the social division of labor to feed ourselves, heat our homes, and supply everything else that we buy or sell. This requires a highly complex price system. At the heart of this system is money. It would not exist without money. The free market coordinates the buying selling of billions of products and services. Products are tracked by an identifier called a stock keeping unit, or SKU. In the region around New York City, there are something in the range of ten billion SKUs, according to economist Eric Beinhocker (The Origin of Wealth, 2007, p. 9). This does not count services. The service sector is more than twice the size of the goods sector in the United States.
Death Cometh for the Greenback THE DOLLAR is in trouble. That’s clear, and it’s been true for a while. The cornerstone of the global economic system has long been the greenback. In the aftermath of the Vietnam War and the oil shocks that brought on inflation, the value of the dollar relative to other currencies could not be maintained, so countries moved away from pegging their currencies to America’s. But still, the almighty dollar was used by countries all over the world for their reserves. The reserves provided backing for the currency and the country. They were a bank account that could be drawn upon in times of need. If oil prices shot up, a crop failed or lenders demanded their money back, there was a stockpile of money that could be used.
Peter Schiff talks about the US Dollar
Inflation by Stealth So for now, inflation is like a ninja stalking our economy. It's lurking in the shadows but can't easily be seen. But once its strikes, it will be fast and deadly. Over the past two years, the federal government and the Federal Reserve have dispersed trillions of public dollars, run up enormous deficits, and kept interest rates at zero. In just about any economic textbook, this combination of policies would be described as the perfect recipe for inflation. Yet, with the exception of the usual increases in health care and education, prices by and large are not rising. Many have concluded that our economic leadership has simply outsmarted the textbooks. The benign CPI figures are serving as a rallying point behind which the financial talking-heads are forming a parade of optimism. The low CPI is their 'proof' that inflation is not a pressing concern. This view is two dimensional.
Congress fears risk of economic relapse Eyes housing, jobless aid Fear that the economy might fall back into recession is compelling Congress to extend unemployment benefits and incentives for homebuying that lawmakers hope will help sustain growth. The threat of a relapse in housing has prompted Senate leaders to start negotiating an extension of the first-time homebuyers' tax credit, now set to expire Nov. 30. They hope to attach the measure to legislation extending soon-to-expire unemployment benefits and then pass both by the end of the week.
USD Future and a World Currency Some very big questions With the USD fluttering around 76 on the US Dollar currency basket index, the USDX it’s a good time to pontificate on its near term future, and longer term future. Gold’s big rally since 2002 begs a lot of major questions. The US is now flirting with an immediate debt of around $14 trillion (US Treasury bonds etc, and not including future liabilities like Medicare). The US now passes a key level of indebtedness considered to be a first stage of crisis. That puts US current debt at 100 pct of GDP. Just this week, the US needs to sell a record $130 plus billion of debt, for one week. The US is running a fiscal deficit of about $2 trillion a year, and for the total government budget that amounts to 40% of its budget. Imagine trying to run your own personal life that way.
Power Shift On Monday, November 2nd, it will have been seven months since the G2o met in London to expand the international currency known as the Special Drawing Rights. If you want to brush up on the background of this international currency, our November 2008 newsletter, states: Consider the history of SDRs from the IMF’s own website. The Special Drawing Right (SDR) was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar. The U.S. dollar-value of the SDR is posted daily on the IMF's website. As we read the IMF’s website further, we learn that the IMF has been trying to expand the number of SDRs in circulation for years.
Gold to Rise to $2,000 Amid ‘Massive’ Inflation, Superfund Says Gold may rise to a record $2,000 an ounce in the next three years as investors hedge against “massive” inflation sparked by governments printing money, according to Superfund Financial Singapore Pte’s Aaron Smith. “In the next few years, after the deflation cycle, we’ll see massive inflation,” Managing Director Smith, 30, said in an interview. “Soon, when you go to buy a cup of coffee, you’ll pay $20 or $30 because the dollar won’t be worth anything.”
'Gold to hit $2,000 in three years' Aaron Smith is the managing director of Superfund Financial (Singapore) Pte Ltd with a deep knowledge in the bullion trade. In a recent interview to Bloomberg news agency, Aaron said that gold may rise to a record $2,000 an ounce in the next three years as investors hedge against massive inflation sparked by governments printing money. This prediction by one of the world's leading providers of managed futures funds is not without reason.
Silver Unmasked Hyperinflation Most individuals have no clue about the dynamics of silver, thinking there is an infinite supply of it both above and below ground. But those Savvy investors who incorporate commodity based stocks in their portfolios likely own the silver ETF (SLV) or silver miners with a high degree of leverage to the price of silver. The largest of this group include Silver Wheaton (SLW), Pan American Silver (PAAS), Coeur d'Alene Mines (CDE), Silver Standard Resources (SSRI), Hecla Mining (HL). There are also numerous junior and exploration companies that will provide extraordinary returns over the long term.
Soros: Buy Hard Assets, And Don't Keep Betting On A Weak Dollar This week’s Guru Outlook takes a look inside the mind of George Soros – one of the original masters of the global macro hedge fund universe. Soros, of course, became famous for breaking the Bank of England. Soros made a spectacularly leveraged bet against the British Pound which netted him over $1B in a day. Soros rose to recent notoriety for predicting the financial crisis. He was far more bearish than most others and appeared to have a crystal ball with a play-by-play for each step of the crisis. Like some of the guru’s we’ve spoken of lately, he wasn’t bearish all the way up. Soros saw the decline in markets as a buying opportunity and has taken the liberty to make billions for his investors on both the way down and the way up.
Newcrest Says Gold Outlook Strong on Investor Demand Newcrest Mining Ltd., Australia’s largest gold mining company, said the outlook for the precious metal was strong as the global financial crisis increased demand from investors. “Demand for gold as a store of value has strengthened during the recent global uncertainties,” Chairman Don Mercer said today in a copy of a speech to the company’s annual general meeting in Melbourne. Jewelry demand has been “flat”, he said.
Revival of the Petrodollar Recycling Machine Generally we think of the Federal Reserve as being very queasy, in an old school sort of way, about rising oil prices. But at a time of collapsed trade flows and the attendant reduction in Dollar reserve building, might the Fed secretly welcome an advance in the price of oil? Readers of this site know that in a number of posts this year I’ve laid out the case that recession is bullish for sovereign debt, but collapse is not. In addition, at a time of 1.5 -2.0 Trillion dollar annual budget deficits in the US, I’ve also noted the punk rate of saving here domestically that cannot hope to cover such spending increases. And so, into this gaping maw the Fed itself has been active, buying 300 Billion of Treasury debt so far in 2009. But with the rise in the price of oil, have oil producer recycling flows started back up again.
The dollar's fall is felt overseas Europe, Japan fear fallout Declining value aids U.S. economic recovery The dramatic decline of the U.S. dollar is aiding the American economic recovery but setting off alarm bells overseas, with corporate executives, politicians and pundits calling it among the biggest threats to the rebounds underway in Europe and Japan. Mounting concern abroad over the shrinking dollar underscores how exchange rates have emerged as a growing source of friction, with many countries jockeying for the weakest currency to boost exports and protect their markets from foreign competition.
Bankster Holiday Evidence that the U.S. is a failed state is piling up faster than I can record it. One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and advance their private interests. Another conclusive hallmark is rising income inequality, as the insiders manipulate economic policy for their enrichment at the expense of everyone else. Income inequality in the U.S. is now the most extreme of all countries. The 2008 Organization for Economic Cooperation and Development report, “Income Distribution and Poverty in OECD Countries,” concludes that the U.S. is the country with the highest inequality and poverty rate across the OECD and that, since 2000, nowhere has there been such a stark rise in income inequality as in the U.S.
Those who cash out 401(k) plans are at risk Younger worker especially ignoring advice to not take money out of plans Millions of workers take a huge chance with their retirement savings every year: They cash out their 401(k) accounts when they lose their jobs or move to new employers. When people cash out, a chunk of their money just disappears. Employers and financial advisers have warned workers about the possibility of retiring poor, something that's more likely to happen when people cash out their accounts. The rhetoric to keep saving ratcheted higher over the past year as stock prices fell and the average retirement account balance fell by a third.
N.Y. Fed pushed AIG on contracts After federal bailout, insurance giant lost its leverage with banks The Federal Reserve Bank of New York said Tuesday that it had no choice but to instruct American International Group last November to reimburse the full amount of what it owed to big banks on derivatives contracts, a move that ended months of effort by the insurance giant to negotiate lower payments.
Tim Geithner, Don't You Dare Bail Out GMAC Again Tim Geithner's getting ready to shovel more taxpayer money down the rat hole, this time to GMAC. GMAC, in case you're in understandable denial, has been bailed out twice already. And now Tim Geithner wants to shovel another $2.8 billion in. What is the US taxpayer getting in exchange for all these GMAC bailouts? Preferred stock. Why are we getting preferred stock, which is neither a claim on the future upside of the company's equity, nor a senior debt security that will be completely repaid in the event that taxpayers finally get mad as hell and won't take it anymore?
The Full Story Of How Tim Geithner Secretly Bailed Out Wall Street And Screwed The Taxpayer Last Fall When the historians finally finish sorting through the appalling decisions that have been made in the past two years, this one will probably be at the top of the heap. Last fall, as AIG began to realize how screwed it was, it started negotiating with the counterparties to all the credit default swaps it had written. One of the AIG's goals was to persuade these counterparties--including Goldman Sachs--to accept buyouts discounts of as much as $0.40 cents on the dollar. These sorts of negotiations are exactly what should happen when a company gets in trouble. It goes to its creditors and says, look, we can't pay you everything, so here's your choice: Take something, or take your chances in banktuptcy court. (And, in this case, this wouldn't have been much of a choice, given the standing of CDS holders in the liquidation line).
Dylan Ratigan: Goldman Sachs magic trick
Governments Never in Default Pay More Interest Than Companies California is the world’s eighth- largest economy. Diamond Offshore Drilling Inc. is the largest U.S.-based deepwater oil driller. The state known for its wine, Hollywood and earthquakes collected about $80 billion in taxes in the year ended June 30, compared with $3.6 billion in revenue for Houston-based Diamond. The two have similar credit ratings, and the state can rely on its taxing authority to address deficits. Still, the company got a better deal than California when each borrowed money this month.
Will The Government Really Be Able To Keep The List Of Too Big To Fail Firms Secret? Does anyone think that the government's proposal to keep the list of systemically risky firms secret is actually a workable idea? The new proposal (PDF) out of the House Financial Services Committee proposes to create a new framework for identifying financial firms that would threaten financial stability if distressed or have a nature, scope or mix of activities that pose a threat to the economy. The proposal says the new financial regulatory council will make a list of the firms and then periodically revise the list of identified firms, adding or subtracting firms as the market changes. It then goes on to insist that the council may not publicly release the list of companies identified.
A Short History of British Bankruptcy If we manage to escape national bankruptcy, we have set up a slavery far more oppressive than any previous form of bondage..." BRITAIN'S BANKRUPTCY has been a long time coming. "By our political folly we have a put a large part, probably the greater part, of the nation in possession of rights to draw from the public purse," wrote Ernest J.P.Benn in his hilarious Account Rendered of 1930. How hilarious? Forced to live with the "smudge readers" at passport control, policemen demanding to see one's driving license down at the station, and Whitehall drones obsessed with how many pencil sharpeners their department controlled, Britain's moneyed classes knew the lower orders could only travel, drive and wear white-collared shirts if kill-joy regulations applied to the gentry and their staff alike.
Deflation fears as Eurozone and US credit contracts Bank lending to firms and households in the eurozone has fallen for the first time, raising fears of an economic relapse and a slide into deflation next year. Data from the European Central Bank shows that the M3 broad money supply has contracted over the last six months, confounding expectations that ultra-low interest rates would soon boost monetary growth. Loans to the private sector fell 0.3pc from a year earlier, the first such decline since the data started in 1983. The M3 figures include a wide range of bank accounts. They are watched closely by experts for early warnings about the economy a year or so ahead.
Rogoff, Ferguson Say Global Financial Crisis Is Not Yet Over The global financial crisis isn’t over, said Harvard University professors Kenneth Rogoff and Niall Ferguson, who challenged assertions by Group of 20 leaders at last month’s meeting in Pittsburgh. “The G-20 is right that it’s over for all the banks they guaranteed,” Rogoff, former chief economist at the International Monetary Fund, said today in an interview with Bloomberg Radio. As a consequence of bailouts and stimulus measures, “the financial crisis may eventually morph into a government-debt crisis.”
Adrian Salbuchi, Argentina is Talking, (1) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Adrian Salbuchi, Argentina is Talking (2) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Adrian Salbuchi, Argentina is Talking (3) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Adrian Salbuchi, Argentina is Talking (4) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Adrian Salbuchi, Argentina is Talking (5) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Adrian Salbuchi, Argentina is Talking (6) (NWO SOCIETY/ 'Social Unrest', 'Martial Law' & 'War')
Midnight Candles Bill Gross A cold wind from the future blows into my nighttime bedroom, more often than not during those midnight hours when fear dominates and hope retreats to a netherworld. This wind is a spectre, an oracle of darkness and eventual death, not easily dismissed. Once merely a whisper, its decibels intensify with the advancing years. It will be heard, this reaper – this grim reaper, yet in the nights when it howls the loudest I fight back, silently screaming for it to get out, to leave me alone, to let it all be a bad dream. It never is. Shakespeare’s Macbeth expressed it more subtly: “Out, out, brief candle!” Yet the finer words provide no solace; the final act is always the same.
Bernanke, Shirakawa Trail Gjedrem as World Policy Split Widens The global monetary policy divide is widening as the Federal Reserve, Bank of Japan and major counterparts lag behind Norway and Australia in raising interest rates, a trend that’s set to continue into 2010. While Fed Chairman Ben S. Bernanke and BOJ Governor Masaaki Shirakawa may soon unwind some of their emergency measures, JPMorgan Chase & Co. doesn’t expect a Group of Seven member to lift rates before the third quarter. The divergence may boost the currencies of those nations shifting first, with New York University professor Nouriel Roubini warning low U.S. rates may be generating “huge” bubbles as investors borrow dollars to invest in other assets.
Top China Banker: We Must Raise Rates China must raise interest rates if the country wants to avoid seeing an asset-price bubble burst, says Qin Xiao, chairman of China Merchants Bank, the country's sixth-largest bank. Economic stimulus programs are inflating stock and real estate prices, and the country should not be afraid of tempering its red-hot growth rates. Monetary policy must not neglect asset-price movements, Qin tells the Financial Times. Therefore it is urgent that China shifts from a loose monetary policy stance to a neutral one.
U.S. foreclosures spike in new regions in 3rd qtr U.S. mortgage defaults ebbed in some hard-hit cities in the third quarter, but unemployment created new trouble spots as foreclosures set a record in the quarter, real estate data company RealtyTrac said on Wednesday. Foreclosure activity declined in five of the top 10 metro areas from a year earlier, at least temporarily aided by government programs to modify terms of home loans. Job loss as well and mortgage rate resets, however, are severely curbing the ability of homeowners to make timely payments. Many metro areas with the 50 highest foreclosure rates had sharp increases in filings during the past three months.
City of Houston is Bankrupt (So are California, Oregon, and Pension Plans in General) Houston, we have a problem. We are bankrupt.That is the finding of Bob Lemer, CPA, Retired Partner at Ernst & Young; Aubrey M. Farb, CPA, Retired Partner at Grant Thornton; and Tom Roberts, CPA, Retired Partner at Fitts Roberts.Cover LetterOctober 22, 2009Name, Title and Address [see list below]Subject: Finances of the City of HoustonDear : [see list below]Enclosed is our partial analysis of the very serious financial situation at the City of Houston. We would be derelict if we failed to share this financial analysis with you. This financial heads up will assist you in meeting your fiduciary responsibilities to Houston voters, taxpayers, readers, viewers or investors---as the case may be.We feel a public discussion of the City’s financial situation is necessary and firmly believe that addressing the City’s financial condition is in the best interest of the Houston economy and Houston taxpayers. We believe the sooner the City of Houston addresses the financial shortfall the better.
Credit cards still use practices to be banned Study: Fees, rates increasing ahead of law to stop them taking effect Not only have credit card companies continued to use practices that will be outlawed under a strict law due to take effect in February, in many cases their policies have gotten harsher since the law passed. A review of nearly 400 cards offered by the largest 12 card issuers in the U.S. found nearly all contracts still allow banks to raise interest rates on outstanding balances. Most also still have penalty interest rates that can be triggered with just one or two late payments or overlimit transactions. And most still allow banks to apply payments to the lowest interest portion of balances first.
Foreclosures double in Washington area Subprime borrowers in three counties bear the brunt, report says The number of Washington area homeowners in foreclosure has more that doubled in the past year, according to a report to be released Wednesday that shows the problem remains most acute in a few counties and could get worse as more borrowers fall behind on their payments. About 2.7 percent of local borrowers are in the foreclosure process, meaning that the bank has started the legal process to take back the property, according to the report by the Urban Institute, a nonprofit policy research group based in Washington. That was slightly below the national average of 2.9 percent.
South Florida homeowners walking away from underwater mortgages Andres Duque thought he got a real steal when he paid $125,000 for his Little Haiti condo. But four years later, similar units are selling for $35,000 and even less. And so, faced with the prospect of being underwater on his mortgage - owing more than the unit is worth - for the next 20 years, Duque, 33, made what seemed to him like a rational choice: to cut and run.
Homeowners walking away from underwater mortgages Many South Florida homeowners who can afford to make their mortgage payments are choosing not to, forcing the lender to foreclose. It's called strategic default. Walking away, however, is fraught with financial, legal and ethical dilemmas. Lenders, government and the credit industry are starting to pay more attention to how strategic defaulters think and behave -- in an effort to convince them to tough it out. ``It's a huge problem, and it doesn't get addressed in the process right now,'' said Ron Kaniuk, a Boca Raton foreclosure and bankruptcy attorney. He said lenders are encouraging the trend by primarily offering loan modifications only to those who have fallen behind or are seriously at risk of foreclosure.
Senators agree to extend homebuyer tax credit Senators agree to extend tax credit for first-time homebuyers, expanding it to repeat buyers Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers. The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said Wednesday that new home sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit. Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
New home sales fall a surprising 3.6 percent September new US home sales post surprise drop as benefit of first-time buyer tax credit wanes Sales of new U.S. homes dropped unexpectedly last month as the effects of a temporary tax credit for first-time owners started to wane. The Commerce Department said Wednesday that sales fell 3.6 percent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed by Thomson Reuters had expected a pace of 440,000. It was the first decline since March. Sales in September were off 7.8 percent from a year ago. Despite the surprising decline, the market is up 22 percent from the bottom in January, though down more than 70 percent from the peak in July 2005.
MAX KEISER in Fall of the Republic the Presidency of Barack Obama - all of Max Keiser's clip taken from Fall of the Republic the Presidency of Barack Obama released on October 21st 2009
China to pursue trade case against US automakers China to launch investigation that could result in higher tariffs on US autos China has told the U.S. that it will take steps that could lead to higher tariffs on imports of autos made by GM, Chrysler and Ford. Steve Collins, president of industry trade group the American Automotive Policy Council, said Wednesday that U.S. officials have told the three Detroit automakers that China is expected to begin an investigation under anti-dumping laws into their business practices as soon as next week.
China to launch case against U.S. Big Three automakers China has told the United States that it plans to formally launch an investigation that could lead to new import duties on autos and sports utility vehicles made by Chrysler, Ford and General Motors, a U.S. industry official said on Wednesday. "The documents containing the charges were presented by China to the U.S. government this week, but have not yet been translated. Therefore we are not in a position to comment on the matter at this time," Steve Collins, president of the American Automotive Policy Council, told Reuters.
Treasury, GMAC in talks for 3rd round of US aid Treasury says auto lender GMAC in talks for billions more in taxpayer funds to boost capital GMAC, the former lending arm of General Motors Co., is in talks with the Treasury Department for a third injection of taxpayer aid, a further sign of the U.S. government's entrenchment in the auto industry. The government mandated earlier this year that GMAC Financial Services raise an additional $11.5 billion in capital by early November after undergoing a "stress test" along with 18 other banks. While other banks deemed undercapitalized have been able to raise funds from private investors, GMAC has been forced to go back to the government.
Cash for Clunkers: Good for dealers, automakers, bad for taxpayers Car sales and research site Edmunds.com estimated today that each new car sold under the Cash for Clunkers government subsidy program cost the American taxpayers more than $24,000. Edmunds estimated that 82 percent of vehicle sales during the program would have happened anyway (then or at some point in the near future), so the program only enticed about 18 percent of the buyers who participated in the program, which moved 690,000 new vehicles off the lots of very relieved dealers.
Revelations of the Swine Flu and Forced Vaccinations - Just Say No to the Vaccine
WHO memos 1972 explains how to turn vaccines into a means of killing Two key memorandums from WHO, discovered by Patrick Jordan, prove WHO has intentionally created the three-shot killer vaccine that people in the USA and other countries could soon be forced to take. 1972 WHO Bulletin 47, No 2 Memordanda #1 and #2 Virus-associated immunopathology: Animal models and implications for human disease * technically outline the ability to create biological weapons in the form of vaccines that:
First totally disable the Immune System.
Load every cell of the Victim’s body up with Infection.
Switch the Immune System on causing the host to kill themselves in a Cytokine Storm.
One, Two, Three, Dead. These WHO Memorandas describe the three-stage impact of the three "shots" many people will be forced to take this fall to allegedly treat a virus that WHO also helped create and release.
House to unveil health bill Thursday House Democrats plan to release their health care reform bill Thursday after reaching agreement within their party on how to structure the government-run insurance program. A ceremony is planned for outside the Capitol to release the legislation, which would dramatically alter the nation's health care system. The House and Senate reform bills would create a national health insurance program, but the Senate plan would allow states to "opt out" of the program. Both chambers could begin debate on their bills as soon as late next week.
Joe Lieberman: I'll block vote on Harry Reid's plan Sen. Joe Lieberman (I-Conn.) said Tuesday that he’d back a GOP filibuster of Senate Majority Leader Harry Reid’s health care reform bill. Lieberman, who caucuses with Democrats and is positioning himself as a fiscal hawk on the issue, said he opposes any health care bill that includes a government-run insurance program — even if it includes a provision allowing states to opt out of the program, as Reid has said the Senate bill will. "We're trying to do too much at once," Lieberman said. “To put this government-created insurance company on top of everything else is just asking for trouble for the taxpayers, for the premium payers and for the national debt. I don’t think we need it now."
Amendment Would Let Kansas Opt Out of Potential Health Reforms Kansas Senator Mary Pilcher-Cook of Shawnee, along with colleagues in the Kansas House from Wichita and Emporia, is planning an attempt to amend the Kansas Constitution, should Congress pass health reforms that mandate everyone carry health insurance. The amendment would allow the state to basically opt-out of such legislation. Cook tells KMBZ it would need the support of two-thirds of lawmakers, and then a thumbs up from the Kansas people on the 2010 ballot.
Big U.S. companies balk at healthcare public option Some of the nation's largest companies pushed back against U.S. Democrats' plans to deliver a government-run insurance option in a healthcare overhaul, decrying it as a step backward that would drive up costs for employers and their workers. The Business Roundtable, comprised of chief executives at Verizon Communications, JPMorgan, General Electric, Wal-Mart and other companies that together employ more than 12 million people, said the federal government is inefficient and would underpay providers. That would result in providers boosting prices for private insurers and employers, the group said on Wednesday.
Centrists unsure about Reid's public option Citing principle and pragmatism, moderate Democrats stay on fence Senate Majority Leader Harry M. Reid's risky decision to bring to the chamber's floor a health-care bill containing a government insurance plan was met with skepticism by moderate Democrats, who said they still do not know whether they could support a public option on a final vote. The latest challenge to the Nevada Democrat's move came from Sen. Joseph I. Lieberman (I-Conn.), who told reporters that he was "inclined to support" a procedural motion to bring the measure to the floor. But he remains opposed to a government-run insurance plan in any form -- even with an "opt-out" provision for states that Reid said Monday he will include in the legislation.
Sean Hannity And Sen. John McCain On Public Option "Opt-Out" Plan
A good time to be a conservative Bien-pensant conservative elites and establishment-friendly Republican big shots yearn for a more moderate, temperate and sophisticated Republican Party. It's not likely to happen. And probably just as well. The Gallup poll released Monday shows the public's conservatism at a high-water mark. Some 40 percent of Americans call themselves conservative, compared with 36 percent who self-describe as moderates and 20 percent as liberals. The conservative number is as high as it's been in the two decades that Gallup has been asking the question.
Lou Dobbs: U.N. Push For "Climate Change" Stalls
Afghan, Pakistan carnage raises heat on Obama Carnage in Pakistan and America's bloodiest month in Afghanistan are sharpening President Barack Obama's dilemma on troop deployments while stoking political demands for swifter action. "We watch this situation continue to deteriorate while this long protracted process of decision making goes on," Republican Senator John McCain told CBS on Wednesday.
U.S., China trade talks precede visit by Obama HANGZHOU, China (AP) | U.S. officials will raise perennial trade issues, including copyright piracy and Chinese restrictions on U.S. farm products, in talks Thursday that are expected to reduce frictions ahead of President Obama's first visit to China. Before the annual talks, held in the eastern Chinese city of Hangzhou, U.S. Commerce Secretary Gary Locke said he hoped for progress on protecting intellectual property, clean energy, medical devices and pharmaceuticals -- the sorts of nuts-and-bolts issues the gathering will focus on.
Bill O'Reilly: "Will Afghanistan Be President Obama's Waterloo?"
Coming in December: World government It is impossible to overstate the importance of the climate-change treaty now being negotiated for adoption at the Copenhagen, Denmark, U.N. meeting in December. The Kyoto Protocol was bad enough. It required the United States to reduce its carbon emissions 7 percent below 1990 levels by 2012. When fully implemented, the Kyoto target was supposed to reduce global carbon emissions by 5.2 percent. Thanks to George W. Bush, the U.S. did not participate in the Kyoto accord. According to the World Bank, global emissions have risen by 19 percent since 1990. U.S. emissions have risen 20 percent since 1990. India's and China's emissions have risen by 88 percent and 73 percent respectively. Neither of these countries was bound by the Kyoto Protocol. The new treaty now under negotiation seeks to impose an emissions reduction requirement on developed countries of as much as 45 percent below 1990 levels by 2017, and by as much as 95 percent by 2050. (Read paragraph 31 on page 16 of the 181-page negotiating text). These numbers are completely ridiculous; compliance would require a return to the Stone Age.
Celente: Wall Street has hijacked Washington DC Although Wall Street seems to be optimistic about economic recovery in the near future, economists like George Soros and Gerald Celente warn that things could only get worse in the future. Celente calls the U.S. economic system 'perverted.' RT's Dina Gusovsky gets more details from Celente.
Gold steady as dollar takes a breather Some analysts see a correction to the $1,025-$1,030 level before further move upwards Gold steadied above $1,040 per ounce on Tuesday as a rally in the dollar paused, soothing concern among investors who rushed to sell the precious metal the previous day on a jump in the greenback from a 14-month low versus the euro. As of 0310 GMT, spot gold XAU= was up 0.4% at $1,041.60 an ounce from New York's notional close of $1,037.10. Bullion hit a low of $1,036 earlier on Tuesday, its lowest price since Oct. 6, as it fell about 3 percent from a record high above $1,070 hit on Oct. 14. Gold has rallied in the last two months as the dollar steadily weakened, making bullion cheaper for non-dollar holders and boosting investor interest in gold as a hedge.
Gold over $1000 and still no gold bubble For the past ten years we could run ourselves ragged trying to counter the gold disinformation machine. . . . . . . . Gold does not rise in response to future inflation fears but in response to currency risk. As the risk to the dollar has risen every year since 1998, so has gold; the greater the risk, the greater the rise.
Gold Blast-Off Starts Friday? There are two significant events this week that could exert pressure for higher gold prices. Because of this, I expect to see major behind-the-scenes actions to try to suppress gold (and silver) prices until the middle of Thursday afternoon. First, the U.S. government’s Treasury debt auctions will sell the greatest amount of debt ever sold in one week. The net debt increase of $153 billion is so high it will exceed the current authorized federal debt limit. Flooding the financial markets with so much debt is a sign of weakness for the U.S. dollar. As the dollars declines in value, the price of gold in U.S. dollars invariably rises.
How High Could Gold Go? Not 'How High Will Gold Go?'. Nobody knows for sure. Anyone who says they know is a fool, has inside (illegal) information, or has a hidden agenda. The answer is not knowable as the future is uncertain. However, we can make inferences and educated guesses by looking at the past and surveying the present. After all, history tends to rhyme and there is nothing new under the sun. . . . . . . . . The world is currently in the midst of a bull market in precious metals. Gold has been in a bull market in US$ terms since at least 2001 (as has silver). Even better, this bull has not been limited to the U.S., but is present in all major world currencies, and seems likely to continue for some time. The reasons are manifold: Currency debasement, Economic uncertainty, Decreased mine supply, Central Bank net buying, Geopolitical concerns. One could write a book, really.
Gold, Exchange Rates and the London Fixing. The Gold Price and non-U.S. $ Gold prices While the rise in the $ price of gold has been sound, without being spectacular [the rise of late has only been around 10% over the average of the last 18 months], it has barely moved in many currencies. With South Africa, as one of the leading gold producer’s currencies, the Rand, the gold price has hardly moved, while gold investors there have steadily built up their holdings. In that period the Rand has strengthened from a low point of around R10: U.S. $1 [October 2008], to R7.4: $1, sucking out all the benefits of a $ rise in the gold price.
Gold Declines on Concern Rising Dollar May Erode Metal Demand Gold fell for a fourth straight session, the longest slide since August, amid concern that the dollar will extend a rally, curbing demand for the precious metal as an alternative asset. The dollar rose against a basket of six major currencies, adding to three consecutive advances since Oct. 21, when it touched a 14-month low. Gold, which often moves inversely to the greenback, has dropped 2.7 percent in the past four sessions. “Gold doesn’t have that much buying interest,” said Matt Zeman, a LaSalle Futures Group Inc. metals trader in Chicago. “The dollar could undergo a wicked short-covering rally, and the gold market needs to look out below.”
Gold Neckline Play. Easy on The Trampoline All hail the regulators. They've done it again. The banksters are masters at directing the public's anger at a red herring, while they operate a vastly larger robbery elsewhere. An example is bank manager salaries. The public is focused on those salaries, not on the trillions of dollars that have simply disappeared after being handed to the banksters, printed money now, to be paid in real money by your great grandchildren over the next 100 years. Should any taxpayer refuse to pay his share to the banksters, it's "hi ho hi ho off to the clink you go."
Russia scraps gold sales plan for 2009 We can dwell on yesterday's happenings after we take a quick scan of the markets as they stand on this crisp Tuesday morning. Gold, still nervous, and still trading at under the $1040 level (namely, at $1038.00) - trying really to get up off the floor and dust itself off. Silver, down another 10 cents, breaking the $17 level, also still hoping for a recovery, following its worst drop in a month. Platinum and palladium, down a bit more. The former, at $1325, the latter at $327. The dollar, off a tiny fraction, but still orbiting very near the 76-mark on the index. Oil, up a third of a dollar, but not looking very strong.
Gold rides emotional wave, to stay above $1000 What is happening to gold? Is every investor in the world buying gold dumping equity and other commodities? Why the mad rush to buy gold even at a rate above $1000 per ounce? These are questions that haunt market analysts for the past one year. Still there seems no end to the crave for gold among buyers. Indians, who normally stay away from gold when the prices are above Rs 15,000 per 10 gm, bought 56 tonnes of gold during the Diwali week, throwing recession blues to the wind.
Factors converge for possible run on gold Rob Kirby of Kirby Analytics in Toronto has reported details of a recent “run on the bank” in the London Bullion Market Association Gold Exchange. The London Bullion Market is the world’s largest gold exchange with daily turnover now running almost equal to a year’s global gold mine output. Since this market theoretically is trading contracts for actual delivery of physical metal, gold sellers are supposed to be ready to deliver the real thing and not paper.
How to effectively play the Gold/Silver ratio Whether you're a gold bug or a silver buff, you've been a happy camper so far in 2009. As of Friday's close, gold was at $1,056.40, up 20 percent year-to-date. Silver has done even better; it was up 56 percent to settle at $17.723. The upward trend has many investors going long in both metals, but there's more you can do with gold and silver than just buy and hold. You can also play the two metals off one another—but to do it successfully, you must first understand the ever-changing gold/silver ratio.
Silver to soar above $20? In the melee over gold, silver is being ignored by several investors. This fact has now come to light and many people are slowly showing interest in putting their money in silver which is giving big returns for the past few months. The silver spot price had touched $17.80 an ounce before dropping to $17.10 on Monday. According to analysts, this was a long-awaited correction in silver prices. Silver has been tracking gold’s rally on an ever-weakening dollar. And the downward pressure on dollar is expected to continue as long as the Fed keeps up its low-interest rate.
When Will Inflation Really Hit Us? Most of us are gathered at the station, watching for the Inflation Express to come rumbling in. But we've been waiting for a while now. Just when should we expect the big locomotive to arrive and start pushing the prices of most things uphill? We'd all like to know the exact date, of course, but no one can know for sure. Not even a careful reading of the Mayan calendar will help. What we can do is estimate a time range for price inflation to show up, and that alone should have some important implications for investment decisions.
U.S. stock market closely tracking moves of dollar Some analysts believe relationship will persist until Fed raises rates The U.S. stock market is paying more attention than usual to the movements of the U.S. dollar, with the greenback's newfound status as a funding currency leaving its moves highly correlated to equities and other riskier assets. Since the S&P 500 (SPX 1,063, -3.54, -0.33%) hit a low in early March, the index of large-cap stocks has jumped nearly 60%. The U.S. dollar has moved in the opposite direction, falling 15%. "We expect the relationship between the movement in the dollar and stock prices to continue for several more months until the Fed actually steps in and begins to lift short-term interest rates," said Fred Dickson, chief market strategist at Davidson Companies
The US Dollar Rally of 2008: The Consequence of a Bull Market in Fraud The theory of a short squeeze in Eurodollars which we had first put forward last year "The Dollar Rally and Deflationary Imbalances in the US Dollar Holdings of Overseas Banks" seems to be confirmed by this paper from the NY Federal Reserve bank, and the latest figures on cross border currency transactions from the BIS. "Highlighting the international dimensions of the financial crisis that began in the fall of 2007, authors Niall Coffey, Warren B. Hrung, Hoai-Luu Nguyen and Asani Sarkar examine the difficulties international firms encountered obtaining U.S. dollars and the ensuing effects on the foreign exchange (FX) swap market. Analysis shows that as firms increasingly turned to the FX swap market to obtain funding, the dollar "basis"-the premium paid for dollar funding-became persistently large and positive, primarily as a result of higher funding costs paid by smaller firms and non-U.S. banks." The Global Financial Crisis and Offshore Dollar Markets
USD Wobbles on Chinese Currency Diversification Concerns Gold fell yesterday as oil prices and equities came under pressure and the dollar rose. The dollar has fallen marginally today after the People's Bank of China said that while the dollar may remain dominant, the share of the euro and the yen should increase in its foreign exchange reserves. Diversification of China's nearly $2.3 trillion stockpile of foreign exchange reserves is a long-standing policy that aims to avoid short-term volatility, a senior central banker said. Officials in the People's Bank of China recently stated that they were increasing their gold reserves which currently constitute just some 2% of their entire foreign exchange reserves.
Marc Faber Dollar will become wall paper
Dollar turns mixed as uneasy consumers send investors reaching for safety Poor reading on US consumers props dollar The dollar was choppy in Tuesday trading after a report showed consumers' confidence dropping this month, raising doubts about the vitality of the economy's recovery. The 16-nation euro dropped to $1.4812 in morning New York trading from $1.4859 late Monday. Meanwhile, the British pound rose to $1.6314 from $1.6303. The dollar fell to 92.13 Japanese yen from 92.21 yen. The dollar had been weaker in overnight trading in Asia and Europe before the release of this morning's report from the Conference Board on consumers' sentiment. The Consumer Confidence Index dropped to 47.7 in October, the second-lowest reading since May.
The Global Financial Crisis and Offshore Dollar Markets The Federal Reserve Bank of New York today released The Global Financial Crisis and Offshore Dollar Markets, the latest article in its series Current Issues in Economics and Finance. Highlighting the international dimensions of the financial crisis that began in the fall of 2007, authors Niall Coffey, Warren B. Hrung, Hoai-Luu Nguyen and Asani Sarkar examine the difficulties international firms encountered obtaining U.S. dollars and the ensuing effects on the foreign exchange (FX) swap market. Analysis shows that as firms increasingly turned to the FX swap market to obtain funding, the dollar "basis"-the premium paid for dollar funding-became persistently large and positive, primarily as a result of higher funding costs paid by smaller firms and non-U.S. banks.
Abolishing Risk Destroys America and Your Wealth Our willingness to engage in risks drives our prosperity. We urgently need a public debate on risk, one driven by reason, not emotion. Without risk, individuals are bound to lose the purchasing power of their savings; corporations that don’t take risk will fade into oblivion; and governments that regulate away risks destroy the growth engine of their nation. The U.S. is the most prosperous nation because it has embraced risk taking. Silicon Valley has created some of the greatest innovation because it has been a magnet for entrepreneurs. When we evaluate our love-hate relationship with investment banks, let’s not forget that as one of their key roles, they facilitate the aggregation and deployment of risk takers’ capital. When policy makers interfere with crucial elements of the American growth engine, we all deserve a broad debate on the subject.
Economy is kick-started, but can it motor ahead? Over the past year, the U.S. government has thrown almost every tool at its disposal toward making the economy grow again. And it has worked, at least for now. The trillion-dollar question for the economy now is: What will happen when those government supports are gone? While the government has successfully jump-started the U.S. economy, there are emerging signs that its engine still isn't running very well, and may even sputter out.
Commerzbank Says Too Early to Call End of Dollar-Weakness Trend The dollar’s gains yesterday are unlikely to signal the end of the U.S. currency’s depreciating trend, according to Commerzbank AG. “It would probably be premature to call this the end of the dollar’s weakness,” a team led by Ulrich Leuchtmann in Frankfurt wrote in a report today. “It remains under pressure due to the low interest rates and the resulting attractiveness as a financing currency for carry trades.”
Today in Commodities: U.S. Dollar on the Doorstep If the dollar does in fact rally and this is not another head fake expect a wash out. Oil made a new low but buyers came in, tomorrow’s inventory report will be the “X” factor. We’re still expecting a sell off to $75ish but will need some help from the dollar. A falling stock market would also help as the correlation is strong.
Roubini Says Dollar-Funded Carry Trades Are Fueling ‘Huge’ Asset Bubble Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini. “We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
Will a Dollar Rally Stop the Asset Reflation Story? It's so amazing how the rally we've seen in stocks, commodities, emerging market assets and gold are all dependent on a single factor: the US dollar weakness. I mean, it has been a no-brainer. US dollar down, bonds down, everything else up. Now with the dollar index rallying 0.70% last night, voila! We had this massive reversal in stocks, gold and commodities. Now with so much of the asset reflation story hinged on just this one phenomenon, could a rally in the US dollar force a massive unwinding of trades in the related assets?
Dimon defends dollar -- and JPMorgan The chief executive officer of JPMorgan Chase said the U.S. needs a strong dollar and that job creation is key to a rebound; also says his bank is not 'too big to fail.' JPMorgan Chase chief executive officer defended the dollar -- and the size of his company -- at a securities industry conference Tuesday. "The ultimate strength of the dollar will depend on the strength of the United States," Dimon said. Dimon discussed the dollar and other key financial topics with PBS host Charlie Rose as part of the Securities Industry and Financial Markets Association (SIFMA) annual meeting held in New York.
House to take on 'too big to fail' On Thursday, House lawmakers will start thinking about shaping bills that would prevent future financial crisis. But creating such power comes with risks One year after risky practices by the nation's biggest banks almost brought down the economy, many of those institutions are even bigger -- and some say even riskier. This week, a key committee is set to release legislation that finally addresses the issue, according to House aides. The legislation, from the House Financial Services Committee, would aim to better watch and take over those institutions currently deemed "too big to fail."
What is Money? Money is primarily a medium of exchange or means of exchange. It is a way for a person to trade what he has for what he wants. Ideal money serves three critical functions: it acts as a medium of exchange; a store of value; and a means of economic calculation. Medium of Exchange To properly understand money as a medium of exchange one must first go back to the first methods of trade. Before money was invented one would have to engage in direct barter. A farmer who produced grain – but wanted shoes for his family – would have to find someone who, a) had shoes and, b) wanted grain. You can imagine the difficulty involved in finding that perfect someone who had what the farmer wanted and wanted what the farmer had.
Most U.S. Stocks Retreat on Bond Auction, Consumer Confidence Most U.S. stocks fell for a third day as stronger-than-forecast demand in a Treasury auction and an unexpected drop in consumer confidence spurred concern investors are questioning the strength of the economic recovery. Alcoa Inc., Walt Disney Co. and Hewlett-Packard Co. lost at least 1.1 percent after the Conference Board’s gauge of sentiment trailed estimates and its measure of employment availability slumped to a 26-year low. International Business Machines Corp. helped lead the market higher earlier after its board approved $5 billion in buyback funds. Treasuries rose following the record $44 billion auction of two-year notes.
Wall Street plays new game of risk Banks, emerging markets and techs are on fire. And while there are some signs of economic improvement, some worry that it's not enough to sustain the rally. Hey there risk. Welcome back. What's shaking? Banks and other financial stocks have soared this year and have helped lift the broader market. Shares of top Internet companies are surging too. And while some of them appear to be reasonably valued -- if not necessarily cheap -- the fact that the dot-coms are on the march again is clearly a sign that investors have regained their appetite for riskier assets.
Bank protesters descend on downtown Chicago Angenita Tanner, a 45-year-old owner of a day care center, said that times are so tough that her customers have begun paying with food instead of money. "Everything's in limbo," said Tanner, who lives in Chicago's Woodlawn neighborhood. "It just seems like everyone is struggling." Tanner this morning joined about 3,000 people in downtown Chicago to protest the American Bankers Association convention. The event, organized by a host of unions, human rights and advocacy groups, is part of a series of protests aimed at bankers and congressmen who are trying to prevent financial reform. On Sunday, protesters tried unsuccessfully to crash the convention's opening reception.
Dismantling America By Thomas Sowell Just one year ago, would you have believed that an unelected government official, not even a Cabinet member confirmed by the Senate but simply one of the many "czars" appointed by the President, could arbitrarily cut the pay of executives in private businesses by 50 percent or 90 percent? Did you think that another "czar" would be talking about restricting talk radio? That there would be plans afloat to subsidize newspapers-- that is, to create a situation where some newspapers' survival would depend on the government liking what they publish? Did you imagine that anyone would even be talking about having a panel of so-called "experts" deciding who could and could not get life-saving medical treatments?
Death of 'Soul of Capitalism': Bogle, Faber, Moore 20 reasons America has lost its soul and collapse is inevitable Jack Bogle published "The Battle for the Soul of Capitalism" four years ago. The battle's over. The sequel should be titled: "Capitalism Died a Lost Soul." Worse, we've lost "America's Soul." And, worldwide, the consequences will be catastrophic. That's why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today."
Regulators Prepare for the Next 'Big One' Global economic policy makers are just beginning to grapple with a key issue rising out of last year's bankruptcy of Lehman Brothers Holdings: how to react if -- or when -- the next big global bank spins out of control. While the furor over bankers' bonuses has captured most of the headlines, policy makers are in the process of assigning each of the world's 25 most complex international banks to a multinational crisis-management team to draw up contingency plans if they run into trouble. But remarks from current and former officials underscore the major challenges such an effort will face. At the heart of the problem, said Harvey Pitt, who chaired the U.S. Securities and Exchange Commission from 2001 to 2003, are "fundamental concerns about sovereignty."
Bill in works to let U.S. dissolve [non-financial] failing firms Intent is to avoid bailouts 'No taxpayer money' would be spent House Democrats and the Obama administration are preparing to introduce major legislation aimed at eliminating the devil's choice the government faced last fall, when officials felt forced to decide between spending billions of dollars to rescue some of the nation's most powerful financial firms or letting their failures sink the economy.
Obama financial reforms advance in Congress The Obama administration made gains on Tuesday in its push for U.S. financial reform, unveiling a landmark bill to tackle systemic risk in the economy and winning congressional committee approval for a measure to expose hedge funds to more government scrutiny. The systemic risk bill would grant vast powers to a new systemic risk regulatory council, the Federal Reserve and the Federal Deposit Insurance Corp to monitor and address risks to economic stability posed by shaky financial holding companies.
Tim Geithner's $14 Billion Gift of Taxpayer Funds to Goldman Sachs: Crisis Profiteering? Tim Geithner should be given the option to resign immediately, or be fired. He is either incompetent, too conflicted to do his job with the banks properly, or possibly both. Stephen Friedman should be investigated for $5.4 million in profits made through potential insider trading. His breach of fiduciary responsibility as chairman of the NY Fed is shocking.
Financial regulation fight is a "just war": Geithner Treasury Secretary Timothy Geithner on Tuesday told a packed room of Wall Street dealers and bankers they could not look America in the eye and argue that financial regulation is fine as it is. Geithner said the financial system was tragically fragile after experiencing the worst crisis since the 1930s, and the government must respond by adding new regulation as well as improving on current ones.
House Bill Would Charge Biggest Firms for Resolution A U.S. House committee is calling for financial firms with more than $10 billion in assets to pay the costs after the government takes over companies deemed too big to fail, according to draft legislation released today. The House Financial Services Committee measure lays out rules for dealing with institutions whose collapse would pose risks to the financial system. The bill is a compromise worked out by the Treasury Department and the panel’s Democratic chairman, Barney Frank of Massachusetts.
New York Fed's Secret Decision on AIG Swaps Cost Americans $13 Billion In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb. Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.
Treasuries Rise as 2-Year Sale Draws Most Demand in Two Years Treasuries rallied as a record $44 billion sale of two-year notes drew the strongest demand since the financial crisis began and a report showed confidence among U.S. consumers unexpectedly fell this month. Two-year note yields declined as much as 10 basis points, the most on an intraday basis since June 9. The auction drew a bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, of 3.63. That’s the most since August 2007 and the second-highest since at least 1992. An investor class that includes foreign central banks purchased 44.5 percent of the securities, versus an average of 42.6 percent for the past 10 sales.
Pellegrini Says Shorting U.S Debt ‘Attractive Bet’ Paolo Pellegrini, the former Paulson & Co. hedge-fund manager who helped make more than $3 billion with bets on a U.S. housing crash, said shorting long-term U.S. debt is the “only attractive bet” for investors. “I always like to think about assets that are likely to experience a breakdown; the only thing I’m pretty comfortable with right now is U.S. Treasury securities and U.S. agency mortgage-backed securities,” he said in a telephone interview from Beijing today. “I think that those are overpriced so they are attractive shorts.”
Valero to Shut Delaware, Louisiana Plants for Repairs Valero Energy Corp., the largest U.S. refiner, said it will shut its Delaware refinery in November for repairs and its Norco, Louisiana, plant in January for planned work. “It’s more cost-effective” to shut a refinery when repairing major processing units, Bill Day, a company spokesman, said in an interview. Four other refineries will undergo planned repairs, Day said in releasing a maintenance schedule for the fourth quarter and the first quarter of 2010. The Delaware refinery will shut in November for 52 days to repair the 81,000-barrel-a-day fluid catalytic cracker and alkylation unit. The plant shut a coker and gasifier this month and is cutting jobs as Valero seeks strategic alternatives for the money-losing operation, including a possible sale.
House Bill Would Charge Biggest Firms for Resolution Biggest Banks Would Bear Bulk of Future Bailout Costs Under House Plan A U.S. House committee is calling for financial firms with more than $10 billion in assets to pay the costs after the government takes over companies deemed too big to fail, according to draft legislation released today. The House Financial Services Committee measure lays out rules for dealing with institutions whose collapse would pose risks to the financial system. The bill is a compromise worked out by the Treasury Department and the panel’s Democratic chairman, Barney Frank of Massachusetts.
Civilization at the Crossroads In our last letter we stated that, "American capitalism ended in 1913 and remains "An Unknown Ideal." We also commented that, "A troubling question arises: Has the financial community hijacked government?" We are going to discuss those issues in an historical and philosophical context. We all today live in a twilight zone where things seemingly are and yet aren't. We must travel down some roads, which are troubling and rather dark. But, it is necessary, because it is today's reality. We can say at the start that you will find the trip unbelievable - I know I did when I first stumbled down this path. Matter of fact, at first I totally dismissed it as absolute insanity and therefore not possible. For, it was inconceivable that the morality of man could descend to such naked malevolence.
U.S. Economy: Consumer Confidence Down on Job Concern Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment. The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.
Gloom Spreads on Economy, but GOP Doesn't Gain Americans are growing increasingly pessimistic about the economy after a mild upswing of attitudes in September. But Republicans haven't been able to profit politically from the economic gloom, according to a new Wall Street Journal/NBC News poll. The survey found a country in a decidedly negative mood, nearly a year after the election of President Barack Obama. For the first time during the Obama presidency, a majority of Americans sees the country as being on the wrong track.
Consumers: Current economy at 26-year low Conference Board's reading of consumer confidence falls in October, surprising economists. A key measure of consumer confidence continued to slip in October, with consumers' gauge of the current economic situation falling to a 26-year low, a research group said Tuesday. The Conference Board, the New York-based research group said its Consumer Confidence Index fell to 47.7 in October from an upwardly revised 53.4 in September. Economists were expecting the index to increase to 53.5, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation's economic activity.
IRS to rich tax cheats: Be afraid. Be very afraid. Internal Revenue Service ramps up efforts to target international tax dodgers worth $30 million or more. The Internal Revenue Service detailed plans on Monday to weed out wealthy, international tax cheats with renewed urgency. IRS Commissioner Douglas Shulman said the agency recently formed the Global High Wealth Industry task force to target investors with assets "in the neighborhood of $30 million." Shulman, as he addressed members of the American Institute of Certified Public Accountants in Washington, DC., said that a more "holistic" approach was necessary to find international tax cheats, given the growth in Americans investing overseas, and the broad and complicated nature of modern financing.
Net neutrality is far from neutral Access to the internet is not a right – it's a commercial business. Governments seem to have forgotten that fact When the internet first came into existence 40 years ago, it was a tool used by researchers who wanted to collaborate and share information with their colleagues, and commercial interests had nothing to do with it. Now, however, the internet is filled with behind-the-scenes, pay-per-ranking, prioritised content with premium services that are spooned out to the consumer in bite-sized pieces by powerful content-providing companies.
Obama Announces $3.4 Billion in ‘Smart-Grid’ Grants President Barack Obama today announced $3.4 billion in government grants to improve the efficiency of the nation’s electrical transmission network. “We are making the largest-ever investment in a smarter, stronger and more secure electric grid,” while boosting a “clean-energy economy,” Obama said in Arcadia, Florida, at one of the nation’s largest solar-power generating facilities.
Treasury, GMAC in talks for 3rd round of US aid Treasury says auto lender GMAC in talks for billions more in taxpayer funds to boost capital GMAC Financial Services is in talks with the Treasury Department for a third injection of taxpayer aid as the auto lender faces a November deadline to raise the $11.5 billion capital cushion mandated by results of the government's "stress test" earlier this year. A Treasury Department spokesman confirmed Tuesday that GMAC is in discussions about securing additional government help. Of the 19 banks that underwent the government's stress tests, 10 were determined to be undercapitalized. GMAC is the only one of those to not have been able to raise all of its necessary capital from investors.
GMAC Asks for Fresh Lifeline Lender in Advanced Talks for Third Slug of Taxpayer Cash -- at Least $2.8 Billion More In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said. The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.
A maker of electric cars plans to use old GM plant in Delaware California-based Fisker is poised to revamp Wilmington factory The White House is expected to announce Tuesday a multimillion-dollar deal that will convert a closed General Motors plant in Wilmington, Del., into a factory making electric vehicles. Vice President Biden will make the announcement that Fisker Automotive of Irvine, Calif., is expected to invest $175 million to retool the plant. Fisker, which will pay the old GM $18 million for the facility and equipment, is getting tax incentives from the state of Delaware, although officials there declined Monday to say how much.
Obama Risks a Domestic Military 'Intervention' There is a remote, although gaining, possibility America's military will intervene as a last resort to resolve the "Obama problem." Don't dismiss it as unrealistic. America isn't the Third World. If a military coup does occur here it will be civilized. That it has never happened doesn't mean it wont. Describing what may be afoot is not to advocate it. So, view the following through military eyes: Officers swear to "support and defend the Constitution of the United States against all enemies, foreign and domestic." Unlike enlisted personnel, they do not swear to "obey the orders of the president of the United States." Top military officers can see the Constitution they are sworn to defend being trampled as American institutions and enterprises are nationalized. They can see that Americans are increasingly alarmed that this nation, under President Barack Obama, may not even be recognizable as America by the 2012 election, in which he will surely seek continuation in office.
Deal-Breaker for Climate-Change Treaty May Be U.S. When Barack Obama was elected president, he was heralded as a possible savior for climate- treaty talks that had dragged on for years while George W. Bush rejected limits on U.S. greenhouse-gas emissions. “America is back” at the United Nations negotiating table, Democratic Senator John Kerry declared after the November election. Danish climate minister Connie Hedegaard said U.S. emissions policy moved forward 35 years overnight.
President Obama 'still undecided' about attending Copenhagen climate conference The White House yesterday kept alive campaigners’ hopes that President Obama could travel to the UN climate change summit in Copenhagen despite the slim chances of a comprehensive deal being signed there. Responding to a report in The Times that a presidential appearance was highly unlikely given the obstacles to a breakthrough at the meeting, an Administration spokesman insisted that “no decision has been made”.
Britain needs to learn to love Latin America again Latin America was an integral part of the British mercantile system in the 19th Century. Argentina was known as the honorary Spanish-speaking member of the imperial family. Harrods opened its only foreign branch in Buenos Aires. LATIN America was an integral part of the British mercantile system in the 19th Century. Argentina was known as the honorary Spanish-speaking member of the imperial family. Harrods opened its only foreign branch in Buenos Aires. Divorce came in the 1930s and 1940s as populist governments turned inwards. With a few shining exceptions, British companies have largely shunned Latin America ever since. The perception has lingered that the region is run by colonels, and prone to episodic debt crises. This caricature is a quarter century out of date.
63 Per Cent of Americans Thinks Obama Has No Clear Plan for Afghanistan According to U.S. military officials a series of powerful bombs killed eight American soldiers and an interpreter in southern Afghanistan Tuesday morning. The attacks, a day after 14 Americans died in two helicopter crashes, made October the deadliest month for the U.S. military of the eight-year Afghanistan war. The growing violence -- along with continued political turmoil in Afghanistan -- will likely be a factor in the Obama administration's deliberations over its war strategy.
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Dollar Rises as Euro Fails to Surpass Technical Tipping Point The dollar rose the most against the euro in almost two months, reversing its drop to a 14-month low after the European currency failed to exceed a level above $1.50 that trading patterns indicated would have propelled it higher. The U.S. greenback rose against the South African rand and the New Zealand dollar on bets a drop in stocks discouraged investors from buying higher-yielding assets. South Korea’s won was the best performer versus the dollar among 10 emerging- market Asian currencies as the nation’s economy grew at the fastest pace in seven years. “At some point, the euro will fall victim to its own success,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “We’ve seen the euro touching new highs but really struggling to extend them significantly.”
Dollar Will Be Worthless Amid ‘Disaster’ in U.S., Faber Says The dollar will become worthless when people eventually realize the fiscal situation in the U.S. is a “disaster,” said Marc Faber, publisher of the Gloom, Boom & Doom report. “It will go to a value of zero eventually, but not right now,” Faber said today in an interview on Bloomberg Television. “Looking at Mr. Obama’s administration, it should already be there. I think it will take about 10 years until people realize that the fiscal situation of the U.S. is a complete disaster.”
Marc Faber, Dollar Will Eventually Go to Value of Zero, Oct 26, 2009
Are Stocks About To Be Killed In A Dollar Squeeze? Today the price action (mainly on the bid per NYSE tick) on the S&P500 & Nasdaq indicated a clear inverse correlation between the dollar and equities. Obviously the connection has always been part of the equation, what has not been as obvious is how many traders are watching this trade. As I posted earlier today on twitter, UUP showed large volume spikes today following the rumor of S&P downgrading the banking sector. If you look a bit further out you can see UUP has been in a downtrend finally finding some historical support down here around 22ish. As Roubini mentioned a dollar collapse is a lot less likely than a dollar rally. If this is the case profits from the rally we begin to be taken aggressively out of fear of, this will create great sell side pressure on equities and commodities alike. This timing is almost perfect, the rally has been way over extended, near 60%, we are exhibiting price action (tight ranges, easier to fall than to rise) in the index's which indicates a toppy environment. I am basing this off of most good news is being sold in relation to earnings, as NOT good enough.
Troubled Dollar could shed 60% more value The rapid breakdown of the dollar after putting in a series of new highs illustrates what lies in store for it in the years to come. However, in the interim some sort of relief rally is to be expected as the dollar has mounted a very hard correction in a relatively short period of time. A 2 year chart reveals that the dollar is very close to hitting a very strong support zone that falls in the 75.00-75.50 ranges. A test of this zone should lead to a bounce that has the potential of taking the dollar to the 80-82 ranges.
US-China currency war eclipses Davos, and threatens the world Turning a corner in the labyrinthine corridors of the Davos nerve-centre, I ran smack into Chinese premier Wen Jiabao – followed by a regiment of retainers and senior offices in full regalia. They have not quite adapted to the “sport” dress code of capitalism in Alpine retreat. Jeroen van der Weer – a Davos stalwart – wears horrendous corduroy trousers (pink sometimes) with a 1950s-era Tyrolean woolly. I dread to think how they react to Swiss prices if they venture into the restaurants. Mr Jiabao smiled at me benignly, but he is not in a good mood. Indeed, he is fuming over the remarks by US Treasury Secretary Tim Geithner that China was “manipulating” its currency to gain market share. Reports were circulating this afternoon in Davos that Mr Jiabao erupted into a tirade after lunch at the mere mention of Mr Geithner’s name.
Dollar wobbles after Chinese comments The dollar dropped to a fresh 14-month low against the euro in intraday trade yesterday after the People's Bank of China suggested that, while the dollar should remain dominant, the share of the euro and the yen should increase in its foreign exchange reserves. The exact composition of China's $2,270bn foreign exchange stockpile, the world's largest, is a state secret, but it is estimated that it is held 60 per cent in dollars, 30 per cent in euros and the remainder in sterling and yen. Fears that China would diversify its reserves away from a weakening dollar have been a drag on the US currency in recent months, amid repeated concerns from Chinese authorities over the value of its stockpiles. The dollar fell to a low of $1.5061 against the euro, its weakest level since August 2008, on the news. But the dollar pared its losses against the single currency, after the author of the report, which appeared in the Financial News, a paper published by the PBC, said it was purely a "personal view".
China faces 'economic slowdown' in 2010 China may face an economic slowdown next year, Stephen Roach, the chairman of Morgan Stanley Asia, has warned. A massive government stimulus package and more than $1 trillion of new bank lending helped the Chinese economy jump 8.9pc in the third quarter. However, Mr Roach warned that China still faces "tough challenges in the years ahead". Speaking in Shanghai over the weekend, Mr Roach said: "China's growth model is much more about supply than demand. It's not a sustainable model for China. It's not a sustainable model for any nation."
George Soros on the Global Economy, China and Regulation Chrystia Freeland, U.S. managing editor of the Financial Times, interviewed George Soros, the legendary fund manager, about the state of the world economy, relations between the U.S. and China, his investment performance and regulating bankers’ compensation. A link to the transcript of the interview follows at the end of the post.
China Needs ‘Unexpected’ Yuan Jump to Limit Inflows China should allow an immediate one- off jump in the yuan’s value and widen the currency’s trading band to stem inflows of speculative capital that may fuel inflation, said UBS AG economist Wang Tao. “China’s economic fundamentals mean that the yuan should strengthen,” the Beijing-based Wang said in a phone interview yesterday. “The central bank will find it harder to manage liquidity and inflation when a flood of speculative funds returns, betting on the yuan’s appreciation.”
Platinum demand soars in China In China platinum is taking big strides with the demand for the metal rising even in remote areas. Higher sales are being fueled by holiday-related jewellery sales and for bridal rings, which were helped by 2009 being considered an auspicious year for getting married and an increasing desire for platinum. Platinum jewellery sales in China increased by more than 400,000 ounces, compared to the same period in 2008, largely in response to lower platinum prices, but also given the reduced premium over gold.
Here's Why Asia Must Eventually Ditch the Dollar Talk is cheap, and all ASEAN’s leaders did last weekend was to talk about an Asian currency zone and free trade agreement by 2015. News reports exaggerate the near-term ability to maneuver of the major players, for example, this rather overwrought report in the Times of India Oct. 23: BEIJING: China is set to use the ASEAN meet to sell the idea of making the Yuan an international currency. It is using the sense of uncertainty about the US dollar to sell a new dream of enlarged regional trade, financial support from Beijing and reduced dependence on the volatile dollar.
'US taking laissez faire approach to dollar' With all the 'strong dollar' rhetoric coming from the Fed and broken-record Bernanke, it's a wonder any investors are making money. But one we know and trust is. . .because he's not listening. "The U.S. will continue to take a laissez faire approach to the dollar," says John Doody, Economics Professor for nearly two decades and current author and publisher of Gold Stock Analyst. In this exclusive interview with The Gold Report, John explains how he measures gold's price performance, why he believes most investors don't have enough gold stocks in their portfolios and which companies he's making money on right now.
Niall Ferguson: U.S. Empire in Decline, on Collision Course with China The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money. "People have predicted the end of America in the past and been wrong," Ferguson concedes. "But let's face it: If you're trying to borrow $9 trillion to save your financial system...and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?"
DOLLAR ALERT - REVENGE of the GREENBACK... The dollar is at a crossroads and there are two probable scenarios. One is a final plunge following the recent grinding decline to an intermediate low that is followed by an intermediate reversal. The other is that it suddenly breaks out upside from the severe downtrend it has been stuck in since early March and rallies strongly, strongly because it is likely to be juiced by a sudden wave of panic short-covering.
Please Mr Geithner Don't Pass the Buck on the Dollar It seems nobody in this country wants to take responsibility for the secular decline in the value of the U.S. dollar. When Fed Chairman Ben Bernanke is asked about the currency's decline, he refers the query to the Treasury Department. When the president is asked about the dollar, he often gives the tired old platitude that the U.S. has a strong dollar policy, but his vacuous words seem more like perfunctory utterances than a bona fide dollar-boosting strategy.
Dollar firms as concerns over stocks, banks mount The dollar turned higher on Monday, fed by safe-haven demand as analysts cited pressure on U.S. stocks nearing technical resistance levels, while concerns over the health of financial firms returned. "The dollar is now rallying across the board," said Ashraf Laidi, chief market strategist at CMC Markets. "The parameters of risk appetite were drawn by $82 oil and by 1,100 on the S&P 500," he said. Rising concerns that stocks might be overstretched were fed by worries over the financial sector of the market, following the downgrades of several big U.S. banks, Laidi said. . . . . . . . a Chinese central bank researcher called for moving some of the country's massive foreign reserves into euro and yen holdings.
America's Weak Dollar Policy: "You Can Envision All Sorts of Crises" . . . . With the U.S. Treasury set to auction a record $123 billion of notes this week and the Fed's $300 billion Treasury purchase program set to expire, those risks should not be taken lightly. Of course, such concerns have been circulating for a while and have not come to fruition, to date. It's "very difficult to say" when foreigners stop talking about diversifying away from the dollar and take more concerted action, Tilman admits. But "it's hard to imagine a lot of foreign buyers are going to tolerate further declines in the dollar. "
Dollar Advances as Bank Losses, Stock Drop Spur Safety Demand The dollar gained for a third day against the euro and reached a one-month high versus the yen on concern U.S. bank losses will derail the global economic recovery, sapping demand for higher-yielding assets. The dollar traded near the highest in almost one month against the yen on speculation U.S. lawmakers will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout. Australia’s dollar traded near the lowest in a week before a report tomorrow that may show consumer price gains slowed, reducing pressure on the central bank to raise interest rates.
Conditions are Ripe for Dollar Rally The strong recovery in the U.S. Dollar late in the week and the inability to break it sharply lower could be a sign that a short-covering rally is imminent. Rumors that the Fed may begin to raise interest rates earlier than expected, a poor U.K. economy and fear of intervention all helped boost the Dollar on Friday. The uptrend continued on the daily USD JPY chart as rumors swirled that traders are betting the Fed will raise interest rates sooner than expected. Traders who sold Dollars and bought Yen when U.S. interest rates became the lowest in the world are not being forced to buy back their positions. This is helping to boost the USD JPY. There will come a point when the Yen once again becomes the world's carry trade. The Dollar should rally substantially and equities should break hard when this occurs.
Dollar Not in a Disorderly Drop, Pimco’s Clarida Says The dollar is not experiencing a “disorderly” decline and will likely remain the world’s main reserve currency for a number of years, according to Richard Clarida of Pacific Investment Management Co. “My bet is that we don’t see a disorderly decline,” Clarida, a global strategic adviser to Pimco, said in a Bloomberg Television interview in New York.
Peter Schiff issues a Red Alert: "Get out of the US dollar"
Anything Less Than Full Disclosure is Unacceptable By: Dr. Ron Paul Last week a new bill was introduced in the Senate to audit the Federal Reserve. Some backers of my bill HR1207 and the existing Senate companion bill S.604 were a little miffed at this, but depending on how you think about it, this new legislation poses no great threat to our efforts. With the economy in shambles, people are looking for answers - not just because of lost savings on Wall Street, but because of lost houses on Main Street. Because of the many problems we face, the Federal Reserve and its powers over the economy have come under scrutiny. This translates into a lot of political pressure on Congress. With all the House Republicans signed on as co-sponsors and over half of the Democrats, HR 1207 has enormous bipartisan support. It would be disingenuous for Washington not to embrace the principles behind this bill after all the promises for transparency. How can one credibly argue for more transparency in government in one breath and defend the secrecy of the Federal Reserve in the next?
$2,000. Gold Zero Discount Value of Gold in the Total Banking System The U.S. banking system has many banks with large amounts of bad loans on their books. How do these bad loans affect the value of the dollar and gold? Specifically, how do they affect the Zero Discount Value (ZDV) of gold? . . . . . . . . To estimate the ZDV in this simple situation, in which no other assets than gold qualify as valuable assets, divide the monetary base by the number of ounces (oz) of gold that the bank holds. If, for example, 200 oz. of gold are held against 400,000 dollars of monetary base, then the ZDV is $400,000/200 oz. = $2,000 an oz. Only if gold is valued at $2,000 an oz. does every dollar that has been issued by the central bank correspond to one dollar’s worth of gold.
Gold: How the Mainstream Gets It So Wrong It turns out that public perception and mainstream TV commentators have had things entirely wrong. Data shows that gold has been outperforming equities for the last 40 years. Gold today is at $1,050. That’s 30X times the gold price of $35 in 1971, when the United States went off the gold standard. That represents a 3,000% gain. The Dow Jones Industrial Average (DJIA) in 1971 traded around 900. It’s now 10,000. That’s a gain of about 10X, or 1,000%, over the same period of time. Gold has outperformed the DJIA by a factor of 3 since coming off the gold standard.
'Gold price should be at least $3000 per ounce' When you get right down to it, no matter what techniques one might rely on for his investment decisions there is one thing that they all have in common. In order to be successful an investor has to be on the right side of the longer term trends. We are all bombarded with daily charts and sometimes weekly, but looking at the long term monthly charts can reveal areas where price on the long term has historically shown to be important turning or continuation points. Not only do they give you a perspective or where price has been in the past, it gives you an idea of where price is now in relation to where major peaks and bottoms occurred.
Boiling Point I remember well when gold rose from the measly price of $400 to above $700, the excitement was contagious. Then it rose from $700 to $1000 and the excitement was marginal. Now as we are at the beginning of the next major up-leg the excitement is moribund. The only excitement is from select institutional investors and central bankers, but even they are a rare breed and certainly not listened to by the masses, but they will. There are three obvious stages to a bull market, smart money accumulation being the first. That stage is just winding down now. We are only at the beginning of the second stage where gold climbs the so called wall of worry as institutions and funds accumulate before telling their clients to get into the market.
Gold Calls the World Bankers’ Bluffs In Friday’s essay we discussed the frightening chart of the US dollar index. In particular we focused on the manner in which the Dollar has broken critical support (76) and is on its way to its all time low of 72. Below that… and we’re in uncharted territory. Long-time readers know that I’m no fan of Ben Bernanke. But Bailout Ben is in no way unique in his thinking (though he has managed to spend more money than WWI, WWII, and the New Deal combined). Indeed, virtually every central bank in the world has engaged in a massive printing orgy. Australia, Canada, China, Germany, Korea, Russia, even South Africa and Turkey have all engaged in Stimulus plans in one form or another.
Gold in the Early Stages of Breaking Out in Multiple Currencies October 2009 has developed into a truly glorious month. For the first time in history the average monthly price for US$Gold will exceed $1,000. Certainly all are celebrating such a wonderful event. Perhaps the most important aspect of this remarkable event is that the purveyors of price suppression and manipulation theories can now turn off the lights in their caves. Reality has crushed their misconceptions. If an $800 bull market is price suppression, give me some more!
Hold That Gold! Eric Hommelberg argues that gold has significantly outperformed the Dow in terms of valuations, and as he sees it, the bull run will last at least until the middle of the next decade. The rhythm of this market over the past eight years tells him that $1,000 gold is history, and we can expect the current climb to push the price past the $1,250 mark next spring. . . . . . . . . Again, investors were waiting for a trigger. When the news came out that the Gulf Arabs - along with China, Russia, Japan and France - plan to end dollar dealings for oil, all heck broke loose. The news made it very clear that a new basket of currencies will most likely include gold - as well as the yen, the yuan and the euro. Sure enough, it was very dollar-bearish - and therefore very gold-bullish news. This prompted, of course, a buying spree for gold, which overwhelmed the short players in the short term.
Gold Says Stimulus "Making a Mess" as Private Investors Forecast Higher Prices, Lose Confidence in Fiat Money THE PRICE OF GOLD gave back early gains in London on Monday, dipping below last week's all-time record finish versus the Dollar as European stock markets also gave back an early 1% rise. Asian trading was light, with Hong Kong closed for a holiday. Oil drifted lower to $80 per barrel, while the major currencies – and government bonds – were little changed. This week the US Treasury will issue a record $123 billion in new debt.
"If gold is telling us anything today," writes Fidelity International analyst Tom Stevenson in London's Daily Telegraph, "it is that governments – principally America's and [the UK] – are about to make a mess of the exit from their economic stimulus programs."
Gold Falls as Dollar’s Rebound Erodes Demand for Alternative Gold fell the most in more than a week after the dollar rebounded, eroding the appeal of the precious metal as an alternative asset. Silver posted the biggest decline in a month. The greenback rose as much as 0.8 percent against a basket of six major currencies after dropping as much as 0.4 percent earlier. Gold, which typically moves inversely to the U.S. currency, climbed to a record $1,072 an ounce on Oct. 14. “It’s all predicated on the dollar,” said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “If the dollar rallies, gold can see some downside.”
The War on the U.S. Dollar Last week, I showed you the most shocking numbers I’ve seen in my lifetime: Up until the day Lehman Brothers collapsed in September of last year, it took the Fed 5,012 days — 13 years and 8 months — to double the cash currency and reserves in the coffers of U.S. banks. In contrast, after the Lehman Brothers collapse, it took Bernanke’s Fed only 112 days to double the size of those reserves. He accelerated the pace of bank reserve expansion by a factor of 45 to 1. . . . . . . . The dollar is careening toward its lowest level in history! Gold is going through the roof right now, plowing past every barrier, surging to its highest level of all time. Major oil producers all over the world are talking about abandoning the dollar as the basis for global oil contracts, right now!
Green Monster I’m a fan of economics and of history, as well as politics, a combination that forms some very interesting cycles to research, discuss and argue on. None is so interesting than the death of great nations, for here there is always the self destruction that comes before the final breakups and invasions. As they say: Rome did not fall to the barbarians, all they did was kick in the rotting gates. It can be safely said, that the last time a great nation destroyed itself through its own hubris and economic folly was the early Soviet Union (though in the end the late Soviet Union still died by the economic hand). Now we get the opportunity to watch the Americans do the exact same thing to themselves. The most amazing thing of course, is that they are just repeating the failed mistakes of the past. One would expect their fellow travelers in suicide, the British, to have spoken up by now, but unfortunately for the British, their education system is now even more of a joke than that of the Americans.
The War Over the U.S. Dollar Versus Gold A fierce war of words has erupted in recent weeks between the two major camps in monetary circles. The first camp – the gold bulls/dollar bears – have been loudly voicing their twin belief that the gold price is poised to skyrocket while the dollar price is perched for a collapse. The other side – the gold bears/dollar bulls – are making the counter claim the gold price is setting up for a crash. . . . . . . . Before we examine the claim of the “coming gold crash,” let’s examine the dollar crash scenario. Is it possible that the “powers that be” would allow the mighty greenback to cascade to new depths, eroding purchasing power for millions of Americans in the process? After all, no government has ever outlived its currency. Why would the federal government allow the dollar’s value to be sabotaged at the expense of its own survival? The possibility of an outright dollar implosion must therefore be seen as a slender one.
"Obama Demands Pay in Euros!" The "dollar debate" on the Internet has been ferocious and emotionally-charged, but sadly lacking in logic. To oppose the "dollar will crash" theorists is like arguing a woman's right to choose with the fist-waving throng assembled outside an abortion clinic. The results are equally disappointing. To say that "minds are already made up and the issue is settled", is an understatement. For many, the dollar's transition from the world's reserve currency to a Wiemar era Deutschemark is not a question "if" but only of "when". . . . . . . .
Here's a likely scenario of what could take place in the next few months:
Even though the signs of severe deflation are visible everywhere, investors short the greenback and the dollar plunges to $1.60 per euro. That increases public angst which sets off a firestorm on Capital Hill. The Congress forces the Fed to stop its quantitative easing (QE) program (which has already pumped over $1 trillion into US Treasuries and mortgage-backed securities) and long-term interest rates spike overnight. This puts downward pressure on the housing market and the slump deepens. More jobs are lost, more banks and financial institutions default, perfectly good businesses cannot role over their debt and call it quits, prices fall across the board, the stock market retraces its March lows, and the economy ends up in the ditch.
Calling a Market Top – Feldstein for Fed Chair Stock market trend: Inflection Point – Likely Trend Reversal It ain’t over til it’s over, but as a speculating man, I’ve been betting that we’ve reached a market top in the U.S. and that that top may well be signaling the onset of a double dip U.S. recession in one to two quarters. Loyal readers will know that I took most of my profits off the table some weeks ago and went to a cash and hedged strategy. In this next phase, I will hold my long positions in my cycle-resistant biotechs but I am moving cautiously and in small steps towards a net short position on the broad U.S. market to try to capture some of what I believe will be a downward move (TWM is my favorite shorting tool for the broad market).
America on a "Shaky Bridge Over a Volcano" With a meaningful economic recovery facing an uphill battle, Tilman says it may require another bubble before serious financial reform takes hold. "I'm thinking about the current environment. Unfortunately it's this shaky bridge over a volcano," he says. Meanwhile, Tilman points to three big themes:
The timing of the next bubble will depend on the U.S. economy and the dollar.
Economic signs point to extreme caution by mid-2010.
Ultimately, we still need the right kind of transparency among financial institutions for true financial reform.
Russia to sell two-thirds of its gold holdings Dollar weakness was manifest once gain as the new trading week got underway, with the US currency recording a fresh 14-month low against the euro overnight. The greenback also slipped on the trade-weighted index, losing 0.13 to 75.31 at last check. This morning's macroeconomic news reveals a mixed bag of confidence, one that is dependent on geography. German consumer sentiment slipped for the first time in more than a year, as locals worry about continuing job losses. Over in the UK, in the midst of a rather nasty economic picture, business confidence levels rose to an 18-month high based on the latest survey.
Not Inflation Or Deflation – But Speculation Call it what you want, the primary condition our condition is in is not inflation, or deflation, or even stagflation for that matter, although it’s much closer than the other two definitions in describing the macro. Why would the term stagflation better describe macro-conditions? Answer: Because the mature state of globalization that guarantees us a constant state of overproduction moving forward, which depresses prices, is being countered by monetary inflation, which has increased certain prices, but primarily only those under government influence, leaving the rest of the economy sluggish. And it gets worse when one realizes our fiat currency monetary system is also mature from this perspective as well, with gambling now the backbone of non-government activities within aged economies (US, Europe, etc.), which cannot go on indefinitely.
Corn, Soybeans Climb as Dollar Rally Halts, Increasing Demand Corn rallied, rebounding from the largest decline since June, and soybeans rose as a weakening dollar boosted the demand outlook for supplies from the U.S., the world’s biggest producer of the crops. Corn gained as much as 0.7 percent as the Dollar Index declined for the first day in four against six major currencies, increasing demand for commodities as an alternative investment. The grain lost 5 percent yesterday in Chicago trading, the steepest drop since June 30.
Oil Trades Below $79 as Dollar Gain Cuts Demand for Commodities Crude oil traded below $79 a barrel after falling the most in a month as the dollar rose, reducing investor demand for commodities to hedge against inflation. Oil also fell as a surge to a one-year high of $82 a barrel last week increased prices at a faster pace than a recovery in demand. OPEC may boost production targets at its meeting in December as prices climbed above $75, the group’s president said. “The rally will not sustain, eventually oil should go back down towards $70,” said Clarence Chu, a trader with options dealers Hudson Capital Energy in Singapore. “Demand hasn’t really come back.”
Asian Nations Aim to Succeed Where Bernanke Failed on Bubbles Policy makers from South Korea to Singapore, confronted with rising real-estate values that threaten to mimic in Asia the U.S. mortgage bubble that roiled the global economy, are stepping up efforts to rein in prices. Regulators in South Korea, Hong Kong and Singapore told banks in recent weeks they need to tighten lending standards. Central banks including India’s and South Korea’s have signaled a readiness to raise interest rates in the coming months.
Clock ticking on debt ceiling US is about to reach its credit limit This week Uncle Sam plans to sell $123 billion worth of Treasurys. That will bring the country's debt level very close to the $12.1 trillion debt ceiling. Roughly $211 billion separates what the country owes and its self-imposed credit limit. And by Friday, after another week of massive debt sales by the Treasury Department, that gap will likely have narrowed considerably. It is now expected that the $12.104 trillion debt ceiling could be breached by the end of November. It is also expected that lawmakers will raise the ceiling, as they have done more than 90 times since 1940 -- eight of them since 2002.
Back-Door Taxes Hit U.S. With Financing in the Dark Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007. He didn’t know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe. “I thought they were money markets that were just paying more,” Calvanese said in an interview. “Nobody ever used the term ‘CDO,’ and I am not sure I would have known what that was anyway.”
Wall Street firms should not be called banks, US official says Head of government insurer says legal constraints on using the word 'bank' needed to dispel confusion One of America's top financial regulators has suggested that Wall Street institutions should be banned from calling themselves "banks" in an effort to clear a fog of confusion about the word in both political and consumer circles. Sheila Bair, chair of the Federal Deposit Insurance Corporation (FDIC), suggested that only commercial deposit-taking institutions, where customers' cash is safeguarded by a guarantee, should be permitted to describe themselves as banks.
Central Banks Hitting Assets Question Greenspan View Central bankers from Washington to Oslo are taking greater account of accelerating asset prices to avoid the policy mistakes that inflated two speculative bubbles in a decade and led to the worst financial crisis since the Great Depression. A month after warning that property prices are rising “probably excessively,” Norges Bank Governor Svein Gjedrem is set to increase interest rates on Oct. 28. Reserve Bank of Australia Governor Glenn Stevens cited costlier real estate as a reason for raising rates three weeks ago.
Geithner Widens Bills-to-Bonds Gap With New Sales Treasury Secretary Timothy Geithner’s plans to lock in near record-low borrowing costs in 2010 may mean a second year of losses on longer-term bonds. After selling $1.9 trillion of short-term securities to finance President Barack Obama’s efforts to end the worst recession since the 1930s, the Treasury plans to lengthen the average due date of its outstanding debt to 72 months from a 26- year low of 49 months. That may mean boosting sales of 10- and 30-year bonds by 40 percent over the next year to $600 billion, according to FTN Financial in Memphis, Tennessee, driving down prices of longer-term securities.
No relief in sight for Main Street banks With loan losses still mounting, some regional banks aren't looking to return to profitability until 2011. JPMorgan Chase, Goldman Sachs and other Wall Street megabanks may be showing signs of recovery lately, but things are hardly looking up for regional banks. From the Rust Belt to the Deep South, big commercial lenders with more routine banking businesses have endured some of their worst losses since the financial crisis began more than a year ago.
Treasury near deal on 'too big to fail' The Treasury Department and a senior House Democrat have decided against making financial firms pay up front the costs of dismantling them if regulators decide they have grown "too big to fail," according to a House aide familiar with the plan. Instead, those companies would be allowed to borrow money from the government. The government would then recoup the costs by either seizing the firm's profits or seeking restitution from the entire industry, the aide said. The aide spoke on condition of anonymity because details had not been released. Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, was expected to announce the agreement by Tuesday.
Abolishing Risk Destroys America and Your Wealth Our willingness to engage in risks drives our prosperity. We urgently need a public debate on risk, one driven by reason, not emotion. Without risk, individuals are bound to lose the purchasing power of their savings; corporations that don’t take risk will fade into oblivion; and governments that regulate away risks destroy the growth engine of their nation.
Got Perfect Credit? You Could Be Charged For It! Bank Of America, Citigroup First To Try Out Idea, Which Will Undoubtedly Alienate Many Who Follow The Rules Loraine Mullen-Kress carries a Bank of America credit card and religiously pays off her balance. "Flawless credit," she boasted. Yet now, her good credit habits could cost her. Earlier this month Bank of America started notifying customers like Mullen-Kress that they will be charged a new annual fee of $29 to $99. "There is a big segment of their population that they will have never made money on, which is people who pay their bills on time every month," said Ben Woolsey, Director of Consumer Research at CreditCards.com.
Madoff Secrets Go to the Grave Jeffry Picower, found dead at the bottom of his swimming pool yesterday, was Suspect Number One in terms of what happened to Madoff’s billions. Now, Allan Dodds Frank asks, will they ever find the money? Before he was found in his swimming trunks, dead at the bottom of the pool at Casa Del Sud, his $33 million oceanfront mansion in Palm Beach, Jeffry Picower held the keys to Bernard Madoff’s vault.
Seven battles that will decide the future of the presidency Obama has set a deadline of next month to have a bill on the Oval Office desk to extend health insurance to the 46 million Americans who have no cover. It is possible, though unlikely, that he will get no bill at all, but more likely, and almost as controversial, is that he will end up with a bill that has been so watered down it will disappoint reformers. Having lost ground to the Republicans over the summer, and seen support for healthcare slip in the polls, he will tonight in a rare address to Congress try to wrest back the initiative.
After the Billionaires Plundered Alabama Town, Troops Were Called in ... Illegally One of this year's more disturbing stories that were ignored was the illegal Army occupation of Samson, Alab., in March following a shooting spree that raged across two towns by a disgruntled worker, leaving 11 people dead. As I wrote at the time, Michael McLendon, 27, went on a killing rampage following years of relentless corporate exploitation and harassment against him, his mother (whom he mercy-killed), and the entire rural Alabama region, which suffered like so many parts of rural America at the hands of billionaire goons like chicken oligarch Bo Pilgrim of Pilgrim's Pride notoriety. One of the creepiest details to emerge in the shooting rampage were reports that troops from nearby Fort Rucker were brought into Samson and other surrounding areas to patrol the streets. This is a clear violation of the Posse Comitatus Act, every freedom-loving American's worst nightmare.
Fed Change To Home Appraisal Rules Has Been A Disaster It makes sense that the government wants to prevent home prices from becoming over-inflated again, but tut instead of helping out the now distressed housing market, recent changes to the way homes are appraised has actually lowered the value of existing prices: Detroit News: At issue is the Home Valuation Code of Conduct for mortgages securitized or held by Fannie Mae or Freddie Mac, which deal with about 70 percent of U.S. mortgages.
Fed appraisal rules sink home values New regulations kill home sales, industry groups say Federal actions intended to stabilize inflated real estate prices that led to last year's financial meltdown are instead depressing prices and killing some sales in an already weak market. At issue is the Home Valuation Code of Conduct for mortgages securitized or held by Fannie Mae or Freddie Mac, which deal with about 70 percent of U.S. mortgages. The new rules, which took effect May 1, were intended to prevent cozy relationships between appraisers, agents and brokers that could lead to bias, fraud and inflated home values.
Are You Middle Class? Maybe Not For Long Many people write of the imminent destruction of the U.S. middle class (of which I consider myself a member) but few have explained specifically how this occurs. Understanding the mechanism seems important if I hope to avoid the fate of most of my peers. An insight on this question came from an unexpected quarter. A gentleman by the name of Fernando Aguirre, who posts on Internet forums and his blog as FerFAL, has written voluminously about his experiences as an Argentine citizen during and after the economic cataclysm that wracked his country in 2001. I first found a long forum post, and then a Google search of "FerFAL" revealed a larger web presence, including a recently published book.
Stuy Town Ruling Already Screwing Other Commercial Landlords Last week's ruling against the owners of New York City mega-plex Stuyvesant Town, which noted that the landlords improperly raised rates, is already being used as a precedent against others. NY DailyNews (via SquareFeet): Residents of 1600 Sedgwick Ave. in Morris Heights allege that landlord Riverview Redevelopment illegally jacked up rents to market rates on 80 apartments after taking them out of a federal affordable housing program last February.
Nelson Says Senate to Extend, Reduce Homebuyer Credit Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said. “We should be able to extend that later this week,” Nelson, a Democrat, told reporters traveling today with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.
The Case-Shiller Will Show Housing Is Falling Again The last few Case-Shiller reports have shown sequentially increasing home prices, but this could come to an end when the new numbers come out tomorrow. (Or, more likely, next month, when the September numbers are finally reported).
From our October 2009 Real-time Housing Report, The Altos Research 10-City Composite Index was down by 0.5% in September and 1.1% during the third quarter.
Using the housing market ask prices and more specifically, looking at the ask prices of new sellers entering the market each week, it’s clear that new sellers are viewing the market more pessimistically than sellers entering the market during the Spring. This would make sense because of the clear seasonality in the national housing market.
Jobless rates stubborn Economists warn of low employment in near future Even with an economic revival, many U.S. jobs lost during the recession may be gone forever, and a weak employment market could linger for years. That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting. The words "it's different this time" are always suspect. But economists and policymakers say the job-creating dynamics of previous recoveries can't be counted on now.
60 Minutes [ October 25 ] The $60 Billion Fraud PART 1
60 Minutes [ 10/25 ] The $60 Billion Fraud PART 2
Health care: How the U.S. system is designed to waste your money On Monday, Thomson Reuters released "Where Can $700 Billion in Waste Be Cut Annually from the U.S. Healthcare System," a white paper exploring American health-care costs. The report identified six factors -- administrative inefficiency, provider inefficiency, lack of care coordination, unwarranted use, preventable conditions, and fraud -- that cost the U.S. health-care system roughly $700 billion a year. That's a shocking figure, but $700 billion is a conservative estimate. The price of waste may be as much as $850 billion annually, the report concluded, and other studies suggest the figure may be closer to $1.2 trillion. Given that the most expensive health-care proposal on the table in Congress would cost about $1 trillion, it's clear that significant industry reform could fund most of the cost of universal health insurance.
US health bill will include public option Compromise allows states to opt out Harry Reid, the US Democratic Senate leader, on Monday signalled the tide may have turned in favour of a more liberal version of healthcare reform when he said the impending Senate bill would include a government insurance plan, or “public option”. Mr Reid’s announcement, which follows two weeks of intense consultation with the 60-strong Democratic caucus in the Senate, marks a sharp turnround from a few weeks ago when the US healthcare debate was dominated by conservatives opposed to virtually any kind of reform.
Prices still aren't right for consumers The government's key inflation measure has shown lower consumer prices most of this year, but there are a lot of reasons why it doesn't feel that way. The government says consumers are paying less for their everyday needs compared to a year ago. But if it feels like your dollar is not going as far as it used to, you're not alone. The Consumer Price Index is down 1.3% from a year ago, meaning that the typical market basket of goods and services should be costing you that much less. But there are a number of factors, some having to do with how CPI is calculated by the Labor Department's Bureau of Labor Statistics (BLS) and some having to do with economic behavior, which can make those savings seem like a mirage.
American Preeminence Is Disappearing Fifteen Years Early You may not be prepared for time-travel, but welcome to 2025 anyway! Your rooms may be a little small, your ability to demand better accommodations may have gone out the window, and the amenities may not be to your taste, but get used to it. It's going to be your reality from now on. Okay, now for the serious version of the above: In November 2008, the National Intelligence Council (NIC), an affiliate of the Central Intelligence Agency, issued the latest in a series of futuristic publications intended to guide the incoming Obama administration. Peering into its analytic crystal ball in a report entitled Global Trends 2025, it predicted that America's global preeminence would gradually disappear over the next 15 years -- in conjunction with the rise of new global powerhouses, especially China and India. The report examined many facets of the future strategic environment, but its most startling, and news-making, finding concerned the projected long-term erosion of American dominance and the emergence of new global competitors. "Although the United States is likely to remain the single most powerful actor [in 2025]," it stated definitively, the country's "relative strength -- even in the military realm -- will decline and U.S. leverage will become more constrained."
***** Consider this *****
For the 2010 Census: Name and Address Only (Congress Will Obey the Constitution When the People Demand It) Next year the country will go through another census. The people and the states – the creators and on-going sustainers of the federal government – have authorized this undertaking (U.S. Constitution, Article I, section 2). The census should be seen not as a burden but rather as an opportunity for Americans to practice self-government. Let me explain. Our written Constitution embodies ideas to which every member of Congress has taken an Article VI oath to support. In taking their constitutional oath the members of Congress are joined by every member of the 50 state legislatures, every federal executive, legislative, judicial officer, and every executive, legislative, judicial officer of the 50 states, as well as all military personnel. That so many are required to take the oath "to support this Constitution" is ample evidence that the Framers thought their written document to be quite important, a belief shared by most Americans. Our Constitution is written in clear, understandable English. Consider the census provision. "The [first] actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States [March, 1789], and within every subsequent Term of ten Years, in such Manner as they [Congress] shall by Law direct." This allows Congress to count us, but only count us. The operative word, "Enumeration."
US Senate opens debate on climate change The Senate’s environment and public works committee will on Tuesday start hearings on a climate change bill, although it is unlikely that any legislation could be enacted before the Copenhagen summit in December. The draft bill, put forward by Barbara Boxer of California, chair of the committee, and John Kerry of Massachusetts, who heads the Senate foreign relations committee, aims to cut US emissions by 20 per cent by 2020.
New Climate Change Agreement Is Unlikely to Be Achieved Deutsche Bank AG analysts said, global plans to slow climate change will probably fail through 2020. Nations will require further limits equivalent to total yearly emissions in the U.S. Analysis of 270 climate policies indicate they won’t keep emissions from rising in 2020 to levels that exceed what is needed to keep temperatures from advancing 2 degrees Celsius (3.6 Fahrenheit), according to analysts including Mark Fulton, global head of climate change investment research at Deutsche Bank’s asset-management division.
Americans Pull Strings in Afghan Election Henry Kissinger once observed that being America's ally can be more dangerous than being its enemy. Take poor Hamid Karzai, the amiable former business consultant and CIA "asset" installed by Washington as Afghanistan's president. As the U.S. increasingly gets its backside kicked in Afghanistan, it has blamed the powerless Karzai for its woes and bumbling. You can almost hear Washington rebuking, "Bad puppet! Bad puppet!" The U.S. Congressional Research service just revealed it costs a staggering $1.3 million per annum to keep an American soldier in Afghanistan. Costs for Canadian troops are likely similar. This huge expense can't go on forever.
Are You Ready for the Next Crisis? One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.
On the Edge with Max Keiser - 23 October 2009 (1/4)
On the Edge with Max Keiser - 23 October 2009 (2/4)
On the Edge with . . . Paul Craig Roberts (3/4)
On the Edge with . . . Paul Craig Roberts & The New Welfare Queens (4/4)
U.S. Bank Failures Exceed 100 for Year, First Time Since 1992 U.S. regulators closed more than 100 banks in a single year for the first time since 1992, signaling the financial crisis hasn’t abated for lenders struggling with mounting losses tied to commercial real estate. Seven banks -- three in Florida and one each in Georgia, Wisconsin, Minnesota and Illinois -- were shut yesterday, according to the Federal Deposit Insurance Corp., pushing this year’s total to 106. That’s the most since the savings-and-loan crisis led regulators to shutter 179 institutions in 1992.
Bank failures stack up: Now 106 for 2009 Banks in Florida, Georgia, Illinois, Minnesota and Wisconsin, were shuttered, costing the FDIC an estimated $356.6 million The tally of bank failures easily broke past the No. 100 milestone on Friday night, with regulators announcing the year's 106th closure. That's more than four times the number that were closed in 2008, and the highest total since 1992, when 181 banks failed. Earlier on Friday evening the dubious honor of the 100th failure went to Partners Bank, of Naples, Fla., which had $65.5 million in assets, according to the Federal Deposit Insurance Corp.
Bank failures hit 106; many troubled banks remain open It's a big number that only tells part of the story. The number of banks that have failed so far this year topped 100 on Friday -- hitting 106 by the end of the day -- the most in nearly two decades. But the trouble in the banking system from bad loans and the recession goes even deeper. Dozens, perhaps hundreds, of other banks remain open even though they are as weak as many that have been shuttered. Regulators are seizing banks slowly and selectively -- partly to avoid inciting panic and partly because buyers for bad banks are hard to find. Plus, going slow buys time. An economic recovery could save some banks that would otherwise go under.
'Gold to touch $1,250 per ounce soon' The head of a New Jersey-based brokerage firm has suggested that gold prices could reach as high as $1,250 per ounce by the end of the year, Bloomberg reports. Investors have been turning to the yellow metal in recent weeks over fears about the dollar and the prospect of oil price-led inflation, taking it to a record high of $1,070 per ounce. However, Philip Gotthelf, president of Equidex Brokerage Group in Closter, explained that there is no reason why additional gains cannot be made in the final two months of 2009.
High Gold Prices Here To Stay When gold hit $700 people said it would fall. Wrong. And wrong again at $1,000. Two years ago, almost to the day, gold sold for $787.50 an ounce. Many prognosticators and market savants said vehemently that gold's move was too strong and must correct. At the time I wrote: "Gold has risen to new highs this morning. It is the festive Diwali and marriage season in India, and investors there are buying. More important, gold has made new highs in several different currencies, not only dollars." In August 2007 the yellow metal bottomed under $660 per ounce. Since then, approximately two years and two months later, gold has appreciated $400 per ounce--66%. If you have owned the coins, bullion or mining stocks you can realize, in hindsight, the "store of value" utility of gold. Interestingly gold mining companies such as Goldcorp have not responded similarly to gold's gigantic move in the past two years.
Gold poised to make fourth straight week of gains But, investors focused on the pace of the dollar's slide Spot gold held above $1,060 an ounce on Friday and was on track to post its fourth straight week of gains, with investors focusing on the pace of the dollar's slide after it hit a new 14-month low versus the euro. Gold edged up to $1,061.70 an ounce by 0536 GMT, up 0.2% from New York's notional close of $1,060.00. At its current level, it is poised to rise 0.7% on the week. "The mood looks good enough for gold to test $1,070.40 in the near future ... The dollar is down against major European currencies, Asian currencies are strong as well," said Kaname Gokon, deputy general manager at Japanese commodity brokerage Okato Shoji Co's research section.
Pension Funds to Buy Gold as Insurance Pension funds will increase gold holdings to acquire “financial insurance,” pushing prices higher as currencies drop, according to Shayne McGuire, director of global research at the Teacher Retirement System of Texas. “I think the largest institutions like our own are realizing that we barely own any,” McGuire said in an interview in Hong Kong. “The same thing applies to most of the pension funds which manage trillions of dollars in world wealth.”
Gold gives a precious insight into economy What a strange and fascinating commodity gold is – a store of value that is no one's liability, which cannot be printed or debauched by governments but which, with no income stream, has no objective value. A simultaneous hedge against both deflationary slump and inflationary spiral, it is little wonder gold should be the investment of choice for the Armageddon crowd. Gold attracts conspiracy theories like no other asset. Google "Yamashita's Gold" and enter into a half-plausible thriller of Japanese wartime loot and abandoned bullion in the Philippines. It is the stuff of an airport page-turner but what can it tell us about the real world? Some serious people think that the recent rally in the gold price really is different this time. It's not like the safe-haven spikes that have pushed the yellow metal through $1,000 an ounce on a handful of recent occasions but each time failed to hold the gain. Traders are pointing to the shallowness of recent pull-backs and the volume of bets buying speculators the right to purchase gold at between $1,100 and $1,200 an ounce.
Rising Gold Dances, but Won't Die, with the Dollar With all the 'strong dollar' rhetoric coming from the Fed and broken-record Bernanke, it's a wonder any investors are making money. But one we know and trust is. . .because he's not listening. "The U.S. will continue to take a laissez faire approach to the dollar," says John Doody, Economics Professor for nearly two decades and current author and publisher of Gold Stock Analyst. In this exclusive interview with The Gold Report, John explains how he measures gold's price performance, why he believes most investors don't have enough gold stocks in their portfolios and which companies he's making money on right now.
Gold mutual funds may be a golden opportunity to run with the bullion bulls It appears that swine flu is not the only sickness going around – gold fever is also in the air. Inflation fears and a weak dollar have persuaded investors to move more money into gold, pushing the price of the precious metal above the $1,000 mark. Feverish investors have helped gold to climb to an all-time high of around $1,066 an ounce this week, and analysts are forecasting higher prices next year. Even luxury department store Harrods has gotten into the "cash for gold" business, last week agreeing to accept its exclusive clientele's cash for actual Swiss gold bars.
Outpaced gold's rally remains 53% below 1980 inflation-adjusted high In 1980, gold hit a then-record of $873 an ounce. In today's dollars, that would be $2 287, according to the US Labor Department's inflation calculator. Record government debt and interest rates close to 0 percent are pushing gold higher for a ninth consecutive year, and options show investors expect the rally to continue. When prices reached all-time highs the contract with the most open interest was the December call to buy the metal at $1 200. The contract to purchase at $1 500 an ounce was the third biggest.
Will Obama's Economic Policies Destroy the US Dollar? One doesn't need to be an economic genius to see that the US dollar is in trouble. That Americans are hopelessly confused about what is happening to their currency is no surprise. However, before we get to the point of whether Obama's economics will do the dollar in I think it is important to provide a brief outline of the history behind the economic thinking that is sometimes used to explain exchange rate movements in the hope that this will give readers a better understanding of the current situation.
China won't sell dollars to buy gold China is on a gold buying spree these days to ensure that the country overtakes the United States in gold reserves. China, which is "underweight" on gold holdings, will increase buying as the economy expands, said Jeffrey Rhodes, chief executive officer of INTL Commodities DMCC. China’s 1,054 tons of gold represents less than two percent of its reserves, Dubai-based Rhodes said in an interview today. That compares with the international average of 10.2 percent held by central banks worldwide which have under 30,000 tons of the metal, equivalent to about $960 billion.
The Big Secret in Gold The little-known state of the gold market as prices close at a new weekly high... YOU WON'T read it in your Sunday paper, nor elsewhere online this weekend. But this autumn's gold rush has, in truth, been no such thing at all. No one's actually buying gold right now. Not the physical metal (and not the exchange-traded trusts either)...not at anything like the rate they were buying a year or six months ago. Instead, this rush differs in kind from the surge of autumn '07 or the panic of late '08. Because it's a rush solely in leverage. Hedge funds and prop desks have been buying gold futures and options with virtually free finance. Hence the surge in stocks, bonds and commodities too, of course. Because anything traded on margin looks a safe bet when finance costs you 1% or less per year. And especially when your major funding currency – the long mighty but now tired and emotional Dollar – is universally condemned to fall further.
Gold Market – Accident Waiting to Happen or Crime Scene? Don’t shoot the messenger My analysis suggests that the data on the volume of gold traded, if put in its proper context, does not tally with my estimate of the amount of gold that is held in the form of bars which conform to “London Good Delivery” standard. In my opinion, one of the following is true: Alternative 1: On average there is more than one ownership claim on each gold bar conforming to London Good Delivery (LGD) standard on the “pool” of gold which acts as liquidity for the massive OTC gold trade based in London. . . . Alternative 2: There is FAR more gold bullion held in private hands than is acknowledged by current industry estimates.
The Great Silver Heist In an attempt to continue to purvey the "big picture" in the silver market, here are some interesting facts for your consideration. Silver is as important a strategic commodity as oil. The need for a supply of silver in times of war is so essential, that a shortage of the metal could pose dire and direct consequences to the continued well being of our country. With the evolution of technology, silver has become so intrinsically important, that a lack of it will adversely affect America's national security. Meanwhile, as a result of the collusion between industrial users, central bankers, the Commodity Futures Trade Commission, (CFTC), the Chicago Board of Trade, (CBOT), and government regulators, spanning the past fifty years, inventories have all but disappeared.
The War Over the Dollar Versus Gold A fierce war of words has erupted in recent weeks between the two major camps in monetary circles. The first camp - the gold bulls/dollar bears - have been loudly voicing their twin belief that the gold price is poised to skyrocket while the dollar price is perched for a collapse. The other side - the gold bears/dollar bulls - are making the counter claim the gold price is setting up for a crash.
Dollar Forced to Abdicate By: Peter Schiff For the most part, the value of the dollar is given cursory attention by the financial media. Typically, its movements are assigned an importance on par with much less determinative metrics such as natural gas futures and construction permits. It's only when major milestones are reached that anyone really takes notice of the dollar. We are living through one of those times. The great dollar rally of 2008-2009 has come full circle. When the financial crisis exploded in its full ugliness in mid-2008, the dollar, which had steadily declined over the previous four to five years, put in a rally for the record books. By March 2009, as investors across the world sought safety from the financial storm, the index had surged more than 25%. Since then, the dollar has steadily declined to the point where nearly all those gains have vanished. In short, the panic rally has given way to the long term trend.
The Dollar is now collapsing - Peter Schiff | Part 1
The Dollar is now collapsing - Peter Schiff | Part 2
CNBC Tells Peter Schiff Falling Dollar Is A Good Thing
Dollar Trades Near One-Month High Versus Yen on Rate Outlook The dollar traded near a one-month high against the yen on speculation the Federal Reserve will increase interest rates sooner than economists forecast. The dollar may gain versus higher-yielding currencies such as Australia’s dollar after Philadelphia Fed President Charles Plosser told Bloomberg Radio last week his “instinct is the time for raising rates will be before many of my colleagues” think it is. Fed officials are likely to discuss next month how and when to signal the possibility of higher U.S. interest rates, the Wall Street Journal reported without citing anyone.
Dollar hegemony for another century By Ambrose Evans-Pritchard Let me stick my neck out. The dollar will still be the world’s dominant reserve currency in 2030, sharing a degree of leadership in uneasy condominium with the Chinese yuan. It will then regain much of its hegemonic status as the 21st century unfolds. It may indeed end the century even stronger than it was at the start. The aging crisis in Asia — and indeed the outright demographic implosion in Japan and China, not to mention China’s water crisis — will soon be obvious to everybody. Talk of Oriental supremacy will start to sound overblown at first, and then preposterous.
George Soros Sees Renminbi Link Saving the US Dollar So long as the Chinese renminbi is linked to the US dollar billionaire hedge fund manager George Soros says he does not see how the decline in the US dollar can go too far. It is this sort of simple logic from the man who broke the Bank of England for a $1 billion profit in 1992 that makes currency traders sit up and pay attention. Mr. Soros has also made some bad calls but his $7 billion fortune stands as testimony that he is right more often than he is wrong.
Soros: China Must Be Part Of The New World Order In a recent interview Soros spills the beans, talks about the new world order and describes the current and future managed and well plot out destruction of the American dollar, all though he warns it might spin out of control.
When Will Inflation Really Hit Us? Most of us are gathered at the station, watching for the Inflation Express to come rumbling in. But we've been waiting for a while now. Just when should we expect the big locomotive to arrive and start pushing the prices of most things uphill? We’d all like to know the exact date, of course, but no one can know for sure. Not even a careful reading of the Mayan calendar will help. What we can do is estimate a time range for price inflation to show up, and that alone should have some important implications for investment decisions.
Global Money In a conclusion that smacks of problem, reaction, solution Garten adds "In terms of US and international politics, a Global Monetary Authority is probably an idea whose time has not yet come. That may change as today’s crisis evolves." What he describes is nothing less than a global financial dictatorship, operating across borders and forcing nations and corporations to register and adhere to strict monitoring and obey the same regulations. The implementation of such a system would represent total interventionism and the absolute final nail in the coffin of the free market.
Soros calls Wall St profits ‘gifts’ from state The big profits made by some of Wall Street’s leading banks are “hidden gifts” from the state, and taxpayer resentment of such companies is “justified”, George Soros, the fund manager, said in an interview with the Financial Times. “Those earnings are not the achievement of risk-takers,” Mr Soros said. “These are gifts, hidden gifts, from the government, so I don’t think that those monies should be used to pay bonuses. There’s a resentment which I think is justified.”
Unexpected Market Moves Should Not Be Ignored In the last two weeks, in Reflation Supported By Stocks, Commodities, and Oil, and Gold, Recessions, Bonds, and 1987, we hypothesized that recent bullish moves in gold, oil, and the CRB Index were evidence of successful "reflation" of asset prices via monetary and fiscal policy. This week, we can add copper and emerging markets to the bullish evidence list. From a fundamental perspective, the desire to hold copper is based on economic need (you want to make a product), and inflation protection (you want to own hard assets rather than paper currencies).
How long before a G7 central bank raises rates? Hardly a day goes by without mention of the phrase “exit strategies”, which is the jargon that economists use for central banks raising interest rates from their current exceptionally low levels (and, where applicable, unwinding their policies of so-called quantitative easing). So far, two central banks have embarked on the route to monetary policy normalisation: the Bank of Israel raised rates from 0.5 per cent to 0.75 per cent at the end of August, followed this month by the Reserve Bank of Australia, which upped its official rate from 3 per cent to 3.25 per cent — the first G20 central bank to do so. The Norwegian central bank meets this week and is widely expected to raise interest rates by 0.25 per cent to 1.5 per cent. But how long will it be until G7 central banks, such as the Bank of England, the US Federal Reserve and the European, Central Bank follow suit? Warren Told To Quit Now Because the Banks Always Win - Consumer Financial Protection Agency October 22, 2009 - The House Financial Services Committee votes 39 to 29 in support of the agency, which would have the power to impose new rules on subprime mortgages, payday loans and other financial products.
Treasuries Fall for Third Week on Fed Speculation; Supply Looms Treasury 10-year notes fell for a third week as investors speculated the Federal Reserve may begin to signal an increase in interest rates from historic lows and as the U.S. prepared to auction a record $123 billion of notes. The yield on the two-year security, most sensitive to monetary policy, yesterday rose above 1 percent for the first time this month as Fed Bank of Philadelphia President Charles Plosser on Oct. 22 told Bloomberg Radio his “instinct is the time for raising rates will be before many of my colleagues” think it is. The U.S. economy expanded in the third quarter for the first time since June 2008, a Commerce Department report will show next week as the Fed is scheduled to end its $300 billion Treasury purchase program.
Here Comes the Monetary Expansion Bubble The best looking economy that debt money can buy. We have included some graphs to put this in perspective. But the bottom line is that the economy may be growing nominally based on an explosion in Federal Debt. We are almost certain that the debt is being applied in ways that will do no good, provide no sustained benefit, to anyone except a few narrow sectors and especially the FIRE sector. Too bad the chain deflator is broken, but it may catch up on adjustments. These positive numbers, especially if there is an upside surprise, are due to an unprecedented monetary inflation, not seen since the early 1930's, and a bringing forward of future sales in automobiles through government programs.
Recovery doubts, asset bubbles and hopes for a slower recovery Why a more gradual recovery would be better for everyone but could be boring for commodities On Tuesday, the MSCI All-Country World Index hit its highest level since September 2008. Up as much as 75% from their pre-crisis lows, stocks, including all manner of miners, have been buoyed not only by a firming belief that the worst of this crisis is over but, also by a rash of economic and corporate earnings data. And, on Wednesday, expectations were that the UK would put out numbers Friday showing it was on the mend. But that was not to be. On Thursday, markets took a little bit of a hit after China announced slightly worse than expected GDP numbers - the Asian superpower grew at 8.9% in the third quarter as opposed to the 9.1% some analysts were expecting.
Curtain call for Inflationary run The collapse of 2008 occurred because the US was clearly on an unsustainable path of excessive consumption and speculation, financed by credit. Debts are IOU’s with repayment terms, which means debtors must pay interest to creditors; borrowers therefore are on the hook for the principle as well as the interest, and the whole system falls apart when debtors are unable to pay because they 1) don’t produce anything, or 2) are denied new credit that becomes scarce when booms turn to bust. Borrowing to consume is debt that is of the non self-liquidating type, an issue we have regularly written about. As it turns out, this type of borrowing was not limited to the know-nothing consumer and his get-rich-quick schemes this past decade, but government and corporations as well, who, one might think, should know better. The US economy is largely dependent on debt and smooth running credit markets. In the years leading-up to the collapse of 2008, large US corporations -- many not in the ‘finance’ business but rather industrial type companies -- greedily created finance arms to get a cut of the huge profits being generated by shuffling paper within the ballooning debt bubble.
The Snowball of Derivatives: The Specter of a Second Black Swan Banking sector consolidation (via acquisition of failed banks) and the generalized bailout of bondholders, actions both promoted by governments, have aggravated the problems of “too big to fail” and “moral hazard”. Hence incentives for reckless behavior have actually heightened. So far there has been lots of talk within the G-20 and other forums but little action to tackle the problem at national and especially at transnational levels. As Nouriel Roubini and others have pointed out, one could argue that systemic risks have in fact increased relative to the pre-crisis period. A follow-up financial meltdown would be devastating. Governments should not only hope for the best but act swiftly to forestall the worst .The arrival of a Taleb’s second black swan on stage would mean complete chaos.
Fed Weighs Shift to Market Signals As the Federal Reserve's next meeting approaches in early November, an internal debate is brewing about how and when to signal the possibility of interest-rate increases. The Fed has said since March that it will keep rates very low for an "extended period." Long before it raises rates, however, it will need to change that public signal to financial markets. Because the recovery is so young and is expected to be so weak, many central bank officials are comfortable, for now, keeping rates very low. But they are beginning to strategize about how to walk away from the "extended period" language.
Will Capitalism Save Or Destroy Your Retirement? Capitalism is one of the most powerful economic forces in the history of mankind, and in theory forms the base for traditional retirement investing. But is that how it's really going to work? Author and financial expert Daniel R. Amerman, CFA, challenges a key aspect of conventional retirement investing, and shows why capitalism may destroy more retirement wealth than it creates.
As Microsoft Goes, So Goes Nation? Although the Wall Street Journal’s classy copy desk deserves praise for adapting so quickly to the paper’s tabloid transformation under Rupert Murdoch, the headline writers appear to be struggling to find a balance between truth, sensationalism and, in this case, wishful thinking. Here’s the headline -- and see if you can spot the dereliction of syntax: “Microsoft Feeds Hopes for a Recovery”. Did you infer that the hoped-for recovery supposedly being fed by Microsoft encompassed the broad U.S. economy? We did too, since it was logical to think that’s what the headline meant. After all, who among us knows a single person who even remotely cares whether Microsoft itself recovers from its Vista-induced kamikaze dive?
Cellphone Makers Dumping Windows Mobile For Google Android Since 1996, Microsoft has been writing operating systems for little computers to carry in your pocket. It was a lonely business until the company’s perennial rival, Apple, introduced the Web-browsing, music-playing iPhone. But now that smartphones are popular, Microsoft’s operating system, Windows Mobile, is foundering. More cellphone makers are turning to the free Android operating system made by Microsoft’s latest nemesis, Google.
Banks Piling Cash At Fed New data show excess reserves topped $1 trillion this week, a record. What's up? Do banks know something the rest of us don't? Despite pressure from politicians to take federal bailout money and lend it to companies and consumers to kick the economy out of its doldrums, banks continue to horde cash in dizzying amounts. Weekly data released Thursday by the Federal Reserve show excess reserves held at the Fed--the equivalent of banks stuffing bills into shoe boxes for storage--topped $1 trillion this week, a record, after climbing steadily since the markets froze up last October.
Obama tells bailed-out banks to pay up Big banks that got big bailout bucks should return the favor by lending more to qualified small businesses, President Obama says. In his weekly radio and Internet address Saturday, Mr. Obama said too many small-business owners remain unable to get credit despite administration moves to jump-start lending, which was virtually frozen when the financial crisis took hold last year. "These are the very taxpayers who stood by America's banks in a crisis, and now it's time for our banks to stand by creditworthy small businesses and make the loans they need to open their doors, grow their operations and create new jobs," Mr. Obama said.
Bernanke: Biggest banks will face more rules 'Capital surcharge' laid out as one option open to the Fed The nation's biggest banks will be subject to more rules and regulations in coming months in order to protect the financial system, Federal Reserve Board chief Ben Bernanke said Friday. "With the financial turmoil abating, now is the time for policymakers to take action to reduce the probability and severity of any future crisis," said Bernanke at a Cape Cod conference put on the Federal Reserve Bank of Boston.
Prosperity and the Roots of American Order In the first chapter of Russell Kirk's The Roots of American Order we read the following statement: "Our own society, like that of any other people, is held together by what is called an 'order.'" Without order, society doesn't cohere. Instead, it flies apart, breaks up, and disintegrates. And, I would argue, a process of disintegration has been underway in the United States for many years. The breakup of the American order has been masked by American prosperity, which has continued throughout the process of social disintegration. To a very great extent, the financial crisis we are experiencing today is no ordinary economic downturn. It is also the result of spiritual and moral degeneration together with the total collapse of paternal authority.
Neil Cavuto on the Democrat "Closed Door" Policy
Real estate lender Capmark files for bankruptcy Company is one of largest handling commercial properties in the U.S. Capmark Financial Group, one of the nation's largest commercial real estate lenders, has filed for bankruptcy protection amid mounting bad debt. Capmark has been hurt by rising losses on mortgage loans. In its Chapter 11 filing Sunday in Delaware bankruptcy court, the company listed total debt of $21 billion and assets of $20.1 billion. It seeks to reorganize under court protection, reducing its debt while continuing to operate its businesses. Many U.S. banks have been hurt by rising losses on commercial real estate loans. With millions of jobs lost and office space remaining empty during the recession, developers have been forced to default on loans. Analysts predict that commercial real estate defaults will rise rapidly.
Household Debt Can Hasten Recovery, When It Goes Unpaid The pain of millions of people across America losing their homes hardly inspires confidence in the future. But in a brutal way, it could be restoring the financial health of the U.S. consumer faster than many recognize. One of the biggest clouds on the economic horizon is the vast amount of debt U.S. households took on during the boom years. The Federal Reserve puts total household debt, including mortgage debt, at about $13.7 trillion, or 125% of annual after-tax income, a burden that many economists believe will take several years to pare down to what they see as a more sustainable level of 100%. During that "deleveraging" process, the logic goes, U.S. consumers -- whose spending makes up more than two-thirds of the U.S. economy and about one-fifth of the global economy -- won't be able to play a leading role in any recovery.
Should the U.S. ban real estate lending? Lending money to people to build and buy real estate is a risky business that periodically costs taxpayers huge amounts of money. Not only do taxpayers lose as a result of all the tax incentives associated with real estate, but they also pay when the banks that make bad real estate loans go bankrupt. While there are clear benefits to owning real estate, the business of real estate lending costs America so much that I think we ought to let real estate prices drop to a level at which people can afford it without borrowing.
Largest Pension Fund in U.S. Faces Iffy Future Russell Read, the former chief investment officer of Calpers, the largest pension fund in the United States, knows his trees. Read owned a 500-acre Maine forest landscaped with the same mix of maples and oaks the colonists would have seen when they first arrived on the shores of America. Bob Carlson, who was a board member at the California Public Employees' Retirement System for nearly half its history, recalls asking about commodities like timber during Read's interview for the position at Calpers.
In Detroit, a housing auction of last resort Hours of ‘no bid’ broken up by speculators outbidding locals on foreclosures In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag. "OK," he said. "We only have 300 more pages to go."
Jobless rates stubborn Economists warn of low employment in near future Even with an economic revival, many U.S. jobs lost during the recession may be gone forever, and a weak employment market could linger for years. That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting. The words "it's different this time" are always suspect. But economists and policymakers say the job-creating dynamics of previous recoveries can't be counted on now.
In the Shadow of Leviathan: Americas' Arising Fear-Based Society "Thought crime was not a thing that could be concealed forever. You might dodge successfully for awhile...but sooner or later they were bound to get you." George Orwell, 1984 "The fact is we are witnessing an all-out drive to impose thought control that seeks to ban the ability---the right---to think or speak for one's self. Thinking is becoming a crime." (Globally Acceptable Truth and the Crime of Thinking, Tom DeWeese, Address to the 10th Annual Freedom 21 Conference, 10/16/09) In an article entitled “Dems Undermine Free Speech in Hate Crimes Ploy,” the Washington Examiner exposes the insidious machinations of House statists in their determination to impose totalitarian hate crime laws upon the American people. Hate crime laws do much more than undermine free speech however, for in that what one says is the result of what first takes place in the mind, hate crime laws are mind-control devices.
The 2010 Census Master Address File: Issues and Concerns 10-21-09: OGR Information Policy, National Archives and Census Subcommittee
Losing their lifeline - 7,000 a day As the Senate debates whether to extend unemployment benefits, more than 200,000 jobless Americans are set to see their checks stop in October. Another day, another 7,000 people run out of unemployment benefits. One month after the House passed a bill extending unemployment benefits, the issue is still being debated in the Senate. Democratic leaders in the Senate introduced a bill two weeks ago to lengthen benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks. Senate Republicans want to add several amendments, including one that would pay for the extra benefits with stimulus funds rather than by extending a federal unemployment tax.
Gas jumps nearly 18 cents in 2 weeks The average price of a gallon of self-serve regular was $2.655 as of October 23, Lundberg survey reports. Gasoline prices jumped nearly 18 cents over the past two weeks, the first two-week rise since early August, according to a survey published Sunday. The average price of a gallon of self-serve regular was $2.655 as of October 23, said Trilby Lundberg, author of the Lundberg Survey. Since the October 9 survey, the average price per gallon has climbed by 17.82 cents. The current price is 12.3 cents less than the price a year ago. The retail price of diesel fuel jumped a similar amount in the past two weeks -- 16.75 cents. The price of diesel fuel is $2.817, Lundberg said.
28% Plunge In Our Standard Of Living What is the most immediate danger for 300 million Americans from the limitless bailout of the most politically powerful special interest group in America, the bankers of Wall Street? Author and financial expert Daniel R. Amerman, CFA, illustrates the very real danger of a 12% to 28% plunge in the standard of living for the average family, and shows how it could occur in a matter of weeks or months.
Food will never be so cheap again Biofuel refineries in the US have set fresh records for grain use every month since May. Almost a third of the US corn harvest will be diverted into ethanol for motors this year, or 12pc of the global crop. The world's grain stocks have dropped from four to 2.6 months cover since 2000, despite two bumper harvests in North America. China's inventories are at a 30-year low. Asian rice stocks are near danger level. Yet farm commodities have largely missed out on Bernanke's reflation rally in metals, oil, and everything else. Dylan Grice from Société Générale sees "bargain basement" prices.
Obama Declares Swine Flu a National Emergency President Barack Obama declared swine flu a national emergency, the White House announced in a statement yesterday. The declaration is designed to help U.S. medical treatment facilities deal with a surge in H1N1 influenza patients by waiving government rules on a case-by-case basis, the announcement said. That might make it easier for hospitals to set up separate emergency facilities to deal with an influx of flu patients.
Estate Tax Bill Coming Soon A U.S. estate tax bill is in the works and may arrive soon on the floor of the United States' House of Representatives, lower house Democratic Leader Steny Hoyer said on Friday. "We would like to bring to the floor in the next few weeks, if not next week, a bill to deal with the estate tax issue," Hoyer said on the floor in discussions about the House's upcoming schedule.
US bookshops urge regulator to investigate online price war Wal-Mart, Amazon and Target are making loss leaders out of bestsellers, say US booksellers Independent bookshops in the US have urged the justice department to investigate a "predatory" online price war between huge retailers such as Wal-Mart, Amazon and Target that has cut the price of hard-back bestsellers to $9. Works by popular authors including John Grisham, Stephen King and Barbara Kingsolver, typically selling for $25 to $35, have been the subject of deep discounts by powerful US players this month in a battle for online supremacy in book sales.
AT&T, Google Battle Over Web Rules There's nothing neutral in the battle between AT&T Inc. and Google Inc. over the future of the Internet. Google, the powerhouse of Silicon Valley, and AT&T, champion for the old-line phone industry, are marshaling political allies, lobbyists and - in AT&T's case - labor unions for a fight over proposed "net neutrality" rules that could affect tens of billions of dollars in investments needed to upgrade the U.S. broadband network, which lags in speed and affordability compared with some countries. On Thursday, the Federal Communications Commission made good on its promise to push new rules that would require Internet providers such as AT&T to deliver Web traffic without delay.
Act now against Net Neutrality The time is coming that the left is going to begin its drive for Single Payer Internet, and so the time has come for us to fight back. Finland is gradually nationalizing the Internet and declaring use of other people’s Internet hardware a “right,” and the left is cheering. Obama’s “Internet Czar” does not hide the left’s hopes for an end to freedom and markets for Internet service. FCC Chairman Julius Genachowski, President Barack Obama, and the rest of the radical left want to use the Net Neutrality movement as the crisis that gives cover to sweeping big government action, allowing the FCC to pick winners and losers and dictate to private individuals and firms how their private property must be run, putting government bureaucrats in charge of the Internet.
***** Climate Change | NWO plans *****
EU, U.S., to form energy council A joint European-U.S. energy council to coordinate policy on both sides of the Atlantic is expected to begin work in November, a U.S. official said. The official, speaking on condition his name not be used, told the EU Observer that President Obama and Jose Manuel Barroso, president of the European Commission, are scheduled to announce the council at a Nov. 3 summit meeting in Washington. The council is to hold its first meeting the next day. "Energy is an important foreign policy priority for the U.S. and a very important component of our bilateral relationship with the E.U.," the official said. "We wanted to have a form of engagement with the Europeans to reflect that and to raise it to the policy level, to the cabinet level."
Obama is dithering on Afghanistan After eight years of government by gut instinct, most Americans welcomed the arrival of a deliberative president. Yes, get the experts in. Reflect, weigh their advice. What a good idea. And so it is if you are attempting, say, to reform the healthcare system. (A shame it was not tried.) There is even more to be said for taking your time if you are contemplating going to war. But when you are already fighting one, it has drawbacks. The US has been at war in Afghanistan for eight years – and it is losing. On this issue, Barack Obama is giving deliberation a bad name. He needs to make his mind up. The White House is touchy about this and is deflecting critics by blaming the previous administration. Mr Obama is asking hard questions his predecessor ignored, goes the line. True enough, Mr Obama inherited a wretched situation – but the recent dithering is all his own.
10-23-09 Iran to reject UN proposals... Harsh sanctions or war to break out? Echoes of Iraq?
What if Israel strikes Iran from the air? By Ed Timperlake With Russia and China slow-rolling any meaningful Iranian sanctions, a fundamental question being left out of the current debate about stopping Iran's quest for a nuclear weapon is this: What could happen after the Israeli Air Force (IAF) takes out Iranian weapon sites? America, working through the United Nations, has been trying to initiate sanctions to stop Iran's nuclear weapon programs. Our efforts have proven to be rather ineffectual but probably delayed imports of some major state-of-the art weapons from Russia, China and North Korea. But to Israel it must appear the world does not take very seriously two famous words - "never again!"
Iran must give up its nuke materials .... otherwise sanctions or possible war looms! Tensions grow and the outcome of these negotiations will determine if war breaks out in the region. I predict the talks will fail and soon a major escalation in tensions and possible attacks on Iran will ensue.
Obama Calls America to Lead World on Climate Change Friday President Barack Obama said he saw consensus building in the U.S. Congress on climate change and energy legislation. Both issues are critical to international talks on a new global warming pact. Obama, who supports a bill to cut U.S. greenhouse gas emissions, promoted the legislation during a visit to Massachusetts, saying it would transform the U.S. energy system and spur the United States to lead the world on developing technology for "clean" types of fuel.
Senate Climate Measure Would Give Away Most Pollution Permits Lawmakers would give away for free the bulk of all pollution permits under a plan to curb global warming introduced yesterday by Senator Barbara Boxer. The 923-page measure is similar to legislation the House passed in June. The Senate bill gives away free carbon dioxide emission permits to some industries, including 35.5 percent for utilities, 15 percent for manufacturers and 2.25 percent for oil refineries.
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Bank Failure 100 Is Near; Morrison Buys It is only a matter of hours before the 100th bank failure of 2009. When that happens, 72-year-old John Morrison will be ready. The chief executive of tiny Stillwater, Minn.-based Central Bank has been on an acquisition spree since August, buying two failed banks and adding them to his 16-branch network. He has just received the government's blessing to purchase another bank that is about to fail -- though he won't name it before the deal is announced.
Dollar’s Doom Puts a Face on New $1 Million Bill Forty years ago, the U.S. government said the $100 bill would be the highest-denomination note. With the Federal Reserve now trying to print its way out of the financial crisis, it may be time to revisit that decision. Reinstating $10,000 or $100,000 notes -- which existed in limited fashion years ago -- won’t cut it. In today’s, “Brother, can you spare a trillion dollars?” economy, we need to think bigger -- a $1 million bill may be in order.
Disorderly Decline’ of Dollar Cannot Be Ruled Out A “disorderly decline” of the dollar, leading to the end of its reserve-currency status, cannot be ruled out, Pacific Investment Management Co. said. An orderly dollar decline is the “most likely scenario,” Richard Clarida, a Newport-Beach, California-based global strategic adviser at Pimco, wrote in a note to clients today. “A disorderly decline, while unlikely, cannot be ruled out.”
The Dollar is on Death Row: Negative Interest Rates Are Here, the US has $118 Trillion in Obligations, Got Gold? “The idea of making money earn a negative return is not entirely new. In the late 19th century, the German economist Silvio Gesell argued for a tax on holding money. He was concerned that during times of financial stress, people hoard money rather than lend it. John Maynard Keynes approvingly cited the idea of a carrying tax on money. With banks now holding substantial excess reserves, Gesell’s concern about cash hoarding suddenly seems very modern. If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative.
10/21/09 Ron Paul with Tavis Smiley (Part 1/2)
10/21/09 Ron Paul with Tavis Smiley (Part 2/2)
Companies Globally Are Shorting The Dollar This chart, courtesy FT Alphaville, compares the inverted dollar index with total Foreign Financial Commercial Paper in dollars. As you can see, as the dollar's gotten (much) cheaper, commercial paper issuance has soared. Everyone wants to borrow in the dollar on the bet that it will be cheap to repay when the bills come due.
Monetizing the markets, the next stage? Gold implications What I predicted effectively has already happened. Central banks have monetized the markets to the tune of tens of $trillions worth. When I first wrote that, I thought to myself, ‘how will they actually do it? Surely, they cannot monetized $ten or twenty trillions?’ Well, they have, and they are. (Monetizing markets means central banks buy up troubled assets, stocks, etc with public money, putting a floor under them- another term they use for this is ‘quantitative easing’. One major way they all do this is to buy stock futures.)
Weak dollar raises talk of alternative world currency Just about every day seems to bring more bad news for the dollar. Recent months have witnessed a steady erosion in the greenback's value, down 16% since March against the currencies of the top U.S. trading partners. On Wednesday, the euro broke through the symbolically important $1.50 barrier for the first time in 14 months. Depending on whom you believe, a dollar hovering near its 52-week low represents either the market's devastating verdict on the Obama administration's profligacy or a salutary rediscovery of risk by newly emboldened investors.
Battered dollar struggles to gain traction The dollar was a touch weaker on Thursday, as it continued to trade around 14-month lows against the euro as global equities staged a late rally and boosted risk appetite. This undermined the dollar, which is a haven, prompting some switching out of the US currency. The dollar hit lows of $1.5027 against the euro, its weakest level since August 2008, in late afternoon New York trade. The dollar also eased slightly against the pound to $1.6623, fell 0.13 per cent to SFr1.0013 against the Swiss franc, but gained 0.38 per cent to Y91.31 against the yen.
Yuan Pegged Spurs China Exports Luring Pimco as Dollar Weakens Investors are the most bullish on the yuan in 14 months as China’s exporters say the currency’s link to the slumping dollar is helping revive sales. Contracts based on expectations for the currency’s value a year from now show the yuan will appreciate 2.8 percent, compared with estimates for 0.5 percent two months ago, data compiled by Bloomberg show. Twelve-month non-deliverable forwards touched 6.5440 per dollar on Oct. 20, the strongest level since August 2008. They were at 6.6384 yesterday, compared with a spot exchange rate of 6.8261.
Inflation fears drive dollar dip Oil prices surge as investors worry about deficit, Fed strategy Fears of inflation and large U.S. budget deficits drove the dollar on Wednesday to its weakest level since August 2008 and helped push oil prices to their highest in more than a year. The euro rose above $1.50, while crude oil prices climbed over $81 a barrel in trading on the New York Mercantile Exchange. Analysts said that investors and traders are worried that the Federal Reserve, fearing another dip in the economy, will hold interest rates low for too long and fuel a bout of inflation. And investors also fear that the Obama administration will be unable to rein in trillions of dollars of deficit spending used to revive the economy.
The Next Currency to Crash Jack's the best guy I know at currency analysis. I've known him for 16 years. Back in the mid-1990s, we worked 20 feet away from each other at a firm specializing in international investing. Jack taught me a lot about currencies and managing my trading (cutting your losses and such). . . . . . . . . In short, Jack thinks the Japanese yen today is like a ticking time bomb. It's ready to explode... We just don't know when. As of this month, the time may be right.
California moves east as New York nears a zero cash level. Think about this when you hear anything to do with stopping or curtailing QE.
Think about CIT’s major executive resignation before you become too happy about a $6 billion dollar loan from the private sector that would take the most senior debt level and therefore rights.
1968 to 1980 was a dress rehearsal as far as gold and the US dollar are concerned today.
Today is not a dress rehearsal where gold and the US dollar is concerned.
A permanent change in the US dollar’s international importance is in motion.
Is Euro set to displace Dollar as global currency? Since the beginning of currency, there has always been a “top dog” of the bunch. At any one time, there is always one dominant reserve currency for the world. There are lots of debates on which currency will be the next big thing and if there will one day be a one currency world. Today, the American dollar is the dominant currency, but a lot are speculating that the Euro may take its place. Forecasting this is very hard to do, so it will take time to see what the results will actually be. Some people don’t believe that the Euro will dominate the dollar, but will indeed share in its financial spoils. This in fact isn’t true because if you look back in history, all of the spoils go to the top dog.
10/22/2009 (1 of 2) Steep Market Declines Coming
10/22/2009 (2 of 2) Steep Market Declines Coming
Gold slumps as dollar rebounds on Chinese 'tightening' Gold futures closed lower Thursday as the U.S. dollar gained on concerns that Chinese government policies could cool a global economic recovery, reducing gold's allure as an alternative to paper currencies. Other metals also closed lower, with copper and silver shedding more than 1%. "There's some intermediate profit-taking going on. Any time you get a little bit of a dollar bounce, you see gold sell off," said Zach Oxman, managing director at TrendMax Futures, a commodities trading firm in Rancho Santa Fe, Calif.
Gold IS Gold IS the best game in town and when the music stops it may be the ONLY game in town that can yield any sort of return. The music I refer to here is the sound of spin given some measure of credibility (only to the un-initiated) by massive stimulus spending which has kept this farce of an economy on its last legs through various stages for 9 years. Why do I claim that gold is the best game in town? Gold has outpaced all investment classes over recent years - meaning that it IS the leading investment class of this decade. Gold IS at record highs and has broken above resistance in USD but you have heard all that already. Gold IS real money and vital to the monetary system at the highest levels, it IS real wealth and it IS a real store of wealth.
Gold prices in lofty range of $1,050-$1,060 Gold prices have shot through record highs two weeks ago and have since stayed in a lofty range of $1,050-$1,060 an ounce, due largely to a plunging US dollar. Two years ago, similar circumstances would have sparked predictions of an mergers and acquisition (M&A) feeding frenzy, but acquisition-minded miners are now exercising caution in valuing targets. Why is that? Aren’t the record gold prices an ideal bait?
Gold: Where is it headed? How will it perform? Gold prices are ruling above $1000 per ounce and there is no bull stops for the yellow metal even after Diwali in India. Market analysts are still clueless about the future of the metal as a prediction of gold’s future course is almost impossible at present. Still most of the analysts favour one thing that the metal will continue its bull run for some more time.
Gold Against the Dow - The Forest Ratio charts get into an important concept of relative value and relative gains. These things are extremely important in a paper currency world where the value of money itself is constantly changing. In 95% of cases, this is due to a loss of value in the currency, as all paper money (i.e. fiat) systems are abused until the currency becomes worthless and is replaced with a new currency. No historical exceptions actually. In other words, breaking even when investing may mean you are losing money and potentially lots of it. An example of this concept can be found using a nominal versus an inflation-adjusted chart of the Dow Jones to show two very seemingly dissimilar bear markets - the 1930s and the 1970s. Deflation versus inflation.
Gold prices climbing like a fast forward creeper We’ve all heard that inflation drives up gold prices. When inflation is on the rise, investors buy more gold to hedge their portfolios. And, with all the government bailouts and stimulus packages, it’s hard to deny that inflation is coming. After all, the money supply has more than doubled since October. Yet few people realize that inflation may be the least of the reasons why gold prices will push higher. Since bottoming out in 2001, gold prices have risen by nearly 300% and have twice targeted the $1000 mark. And that’s happened in a relatively “inflation-free zone.”
Gold's no-confidence vote on Obama Five peace-loving Norwegians have recently expressed their belief that Barack Obama holds great promise as a global leader. Much of the rest of the world is not nearly as sanguine, and the world is expressing its opinion openly, albeit quietly, by retreating from the dollar and embracing gold. Unfortunately, the flight from the dollar to gold has more ominous implications than does being jettisoned from sponsoring the Olympic Games.
10/22/09 Ron Paul at Joint Economic Committee Hearing
Crude Oil Poised for Fourth Week of Gains on Economic Recovery Crude oil traded above $81 a barrel in New York, poised for a fourth week of gains, on improved prospects for an economic recovery in the U.S., the world’s biggest energy consumer. Oil has advanced 3.3 percent this week as U.S. equities gained on better-than-estimated company earnings, boosting speculation that the worst recession since the 1930s is over. Prices also increased as the dollar declined against the euro, adding to the appeal of commodities as an alternative investment.
The World Is Terrified To Raise Rates Before The U.S. There's a huge problem with the entire world trying to have weaker currencies relative to the dollar right now. It's that they've all become slaves to U.S. interest rate policy, even more so than they already may have been. Right now, raising interest rates in any country before the U.S. does so is likely to strengthen that country's currency against the dollar, all else being equal. For example, Australia hiked its main interest rate to 3.25% from 3% early this month and the currency moved higher, both ahead of the hike, likely on anticipation, and then afterwards as well. There are many factors at play in currency markets, but higher interest rates make Aussie dollars even more appealing. For countries with a strong desire to keep exports competitive, that's a big problem.
Treasury Sets Record $123 Billion Bond Auction Week The U.S. government announced a record volume of $123 billion worth of bond auctions next week, which came at the high end of some analysts' expectations but caused no major market ructions. The figure beats the previous record of $115 billion set in July and includes two-, five- and seven-year notes in tandem with an offering of previously issued five-year Treasury Inflation Protected Securities. Upside surprises came in a slightly larger-than-expected seven-year note sale of $31 billion and a chunkier TIPS offering of $7 billion.
Taxpayers Fleeced When Leaders Tap Muni Marke State, county and municipal entities across the nation enjoy a privileged position in the debt markets -- the interest they pay is often tax-free and their market is lightly regulated. So, how is it possible that local entities frequently pay too much to borrow money? Consider the example of Build America Bonds. Part of President Obama’s economic stimulus program, the U.S. Treasury subsidizes their repayment, providing issuers with 35 percent of debt service costs. While BABs are taxable rather than tax- exempt, the subsidy gives them a far bigger advantage.
Reducing Deficit Key to US Rating: Moody's The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday. The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances. The White House has forecast deficits of more than $1 trillion through fiscal 2011. "The Aaa rating of the U.S. is not guaranteed," said Steven Hess, Moody's lead analyst for the United States said in an interview with Reuters Television. "So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy."
Pay czar to slash bailout banks' salaries Heeding the public backlash against corporate bailouts, the Treasury's executive paymaster Kenneth Feinberg is preparing to slash by half the pay of top executives at the seven biggest beneficiaries of government aid. The cash pay of the top 25 executives at Citigroup, Bank of America, American International Group, General Motors, Chrysler and their financial subsidiaries will be slashed by 90 percent on average, and their stock compensation will be restricted so they cannot quickly cash it in, according to sources with knowledge of Mr. Feinberg's planned announcement later this week. Overall pay of the executives will average about half of what they earned last year.
10/22/09 Judge Napolitano on White House Slashing Salaries
Fed next to challenge Wall Street pay policies The Federal Reserve announced a proposal Thursday to set guidelines on the pay policies of U.S. banks. The central bank said it will examine 28 major banks and smaller, regional banks to make sure their compensation polices "do not undermine their safety and soundness." "Compensation practices at some banking organizations have led to misaligned incentives and excessive risk-taking, contributing to bank losses and financial instability," Fed Chairman Ben S. Bernanke said.
Fed pay rules to rein in risk-taking In a landmark moment for US finance, the Federal Reserve on Thursday unveiled draft rules for bankers’ pay extending the reach of regulators deep into the compensation practices of leading financial firms. But the Fed did not support a standard benchmark for the proportion of bonuses that should be deferred, in line with a proposal adopted by many European nations – raising fears over an uneven playing field between US and European banks.
U.S. cuts pay at bailed out firms, BofA hits back The U.S. pay czar on Thursday slashed compensation for top earners at seven bailed-out companies for the final two months of the year, and was immediately slammed by the country's largest bank which claimed the cuts could send talent fleeing. Many of the firms, which have together received more than $300 billion in taxpayer aid, issued conciliatory statements, but Bank of America said the ruling would put it at a disadvantage in competing with companies not under the pay czar's thumb.
Goldman should be allowed to fail . . . . So, if Goldman Sachs took on more risk when its equity was held by outsiders than with its partners’ own money, what can we expect now that the government implicitly accepts that it is “too big to fail”? Goldman has an even bigger incentive to risk other people’s money. This is the problem I identified last week, with the most powerful broker-dealer on Wall Street having the same privileges as the most mundane commercial bank. Not only does the fact that it may pay $23bn in bonuses this year upset people, but also its incentives are skewed. Solving this requires two things to be addressed. First, Goldman’s intention to operate as a institutional Wall Street firm – complete with its own hedge and private equity funds – while having government and Fed support. Second, its tradition of setting aside half its revenues each year for employees.
Goldman Exec: Inequality Is The Path To Prosperity This quote will not go over well, at least in America where we're really sensitive about this stuff. Lord Griffith Of Fforestfatch (really), a former Thatcher advisor and vice-chairman of Goldman Sachs (GS) international, defended his company's massive compensation at a debate.
Goldman Sachs vice-chairman says: 'Learn to tolerate inequality' One of Goldman Sachs’s senior advisers in London has said that British taxpayers should “tolerate the inequality” stemming from the investment bank’s plans to dole out a record $22bn (£13.4bn) in pay and bonuses this year for the sake of the “common good”.
A Deficit Revolt in the Senate? Within the next few weeks, probably as soon as the votes on health-care reform have been taken, the Senate faces the painful duty of once again raising the statutory limit on the national debt, as the House already has done. It is never fun for the party in power, but this year will be harder than ever on the Democrats. The final accounting on the just-ended fiscal year, delivered last week, showed a record deficit of $1.4 trillion, a gap that is the largest since the end of World War II when measured against the size of the overall economy. The Republicans are poised to pounce. Senate Republican leader Mitch McConnell accused the Democrats of "acting like a teenager on a spending spree with his parent's credit card with no regard to who pays the bill."
Lindsey Williams Back on Alex Jones TV 1/4: Total Economic Collapse of America in 2 Years?
Lindsey Williams Back on Alex Jones TV 2/4: Total Economic Collapse of America in 2 Years?
Lindsey Williams Back on Alex Jones TV 3/4: Total Economic Collapse of America in 2 Years?
Lindsey Williams Back on Alex Jones TV 4/4: Total Economic Collapse of America in 2 Years?
Community banks to get bailout money as Obama seeks to boost small business To spur lending to small businesses, it is 'essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on,' the president says. Reporting from Washington - President Obama, looking to boost lending to small business, will start using some of the leftover federal bailout funds to shore up smaller community banks and induce them to offer credit to firms he called the "backbone of the American economy." Smaller financial institutions are in greater need of capital to grow and expand, whereas the country's large banks have moved past their need for what's left of the $700-billion Troubled Asset Relief Program, Obama said Thursday at a family-owned storage business in suburban Washington.
The Gathering Storm in Commercial Real Estate (CRE) Commercial real estate is a house a cards about to collapse on multiple fronts for deeply structural reasons. Correspondent Thomas H.submitted this fascinating story: 'Pop-up' stores are becoming an overnight sensation. (Los Angeles Times) The basic idea is that retailers are not signing 5-year leases anymore--they're signing 20-day leases for 'pop-up' stores which have the lifespan of an insect and low costs for retailers seeking to unload discounted inventory in a hurry.
Bernanke: Speeding up credit card rules could hurt consumers Cautions against date move Federal Reserve Chairman Ben S. Bernanke warned Congress this week about efforts to move up the effective date of tough new rules for credit card companies, saying such action could hurt consumers as much or more than help them. Mr. Bernanke's comments may pose difficulties to the House Financial Services Committee as it anticipates marking up a bill this week that would move up enactment of credit card protection regulations to Dec. 1 - weeks earlier than scheduled. While the new deadline could benefit consumers by providing protections earlier than scheduled, it also would force the Federal Reserve to implement the new rules without giving the public and the credit card industry time for comment, "which could lead to unintended consequences."
Joblessness Will Stick Around The unemployment rate in the United States will not drop quickly or soon, says Wharton professor and author Jeremy Siegel. While it appears the recession is over, investors should not expect the unemployment rate to bounce back as quickly, he told the Wisconsin State Journal. While unemployment figures could start improving as soon as December or January, the rates will stay high for the near future, Siegel said.
Obama Wrestling With Jobs Outlook Increasingly alarmed over bleak employment forecasts, the Obama administration is searching for ways to boost job growth without adding to the federal budget deficit. White House economist Christina Romer, in remarks that ratcheted up the administration's pessimism, told a congressional panel Thursday that "labor market conditions will remain painfully weak through 2010." She said that the jobless rate, which hit 9.8% last month, would likely remain "at its severely elevated level" for at least another year.
Cap-and-Trade Will Cost Jobs A House Bill authorizing a cap-and-trade system of pollution credits will slow economic recovery by keep unemployment high, according to the head of the Congressional Budget Office. CBO Director Douglas W. Elmendorf said those employed in fossil-fuel industries would look for jobs in sectors that would fare better under cape-and-trade legislation, such as power and wind energy businesses. But, not everyone will find employment, which could slow economic growth over decades.
U.S. Initial Jobless Claims Rose More Than Forecast More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover. Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said today in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased.
Arizona jobless funds running out Arizona will have to borrow about $600 million from the federal government to continue paying unemployment benefits through 2010, with the funds to be replenished by a sharp increase in company unemployment-insurance taxes. Without those moves, the fund used to pay out benefits would be empty by March, according to the Arizona Department of Economic Security. The state agency, which manages the program, stressed that the decision to borrow will not affect the 145,000 Arizonans currently collecting unemployment benefits. They should continue to file for and receive weekly payments in the usual manner.
Coloradans file record new jobless claims A total of 7,284 Coloradans filed new claims for unemployment benefits in early January, the largest in any single week since at least 1987, the farthest back that records are available. The number of Colorado claims filed during the week ended Jan. 10 was up by 2,820 from the previous week, and up 3,271 from the same week in 2008, according to data released Thursday by the U.S. Department of Labor. Nationwide, initial claims for unemployment benefits rose by 62,000 to 589,000 in the week ended Jan. 17, matching the highest level in 26 years, as employers continued to slash jobs amid slowing economic growth.
Colorado ‘mass layoffs’ jump in September The number of Colorado businesses that laid off 50 or more employees at a time jumped in September after reaching an 11-month low in August, the U.S. Department of Labor reported Thursday. There were 14 “mass layoffs” at Colorado companies in September, up from five in August, the Labor Department’s Bureau of Labor Statistics said in its monthly report on large-scale layoffs. BLS said that 1,036 Colorado workers filed for unemployment insurance as a result of mass layoffs in September, up from 374 in August.
Fraud Reported in Program to Help New Homebuyers Just as Congressional leaders are calling to extend a popular tax credit for first-time homebuyers, government investigators are reporting new findings that point to widespread fraud in the program. A previously undisclosed report from the Treasury Department's inspector general said that as of Sept. 30, the Internal Revenue Service had identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations. In late July, the I.R.S. announced its first successful prosecution.
10/22/09 John Stossel on Homebuyer Credit Fraud John Stossel talks about the not-so-surprising fraud in a government program designed to give tax credits to first time home buyers.
4-year-olds are getting federal tax credits for buying homes It’s more than passing strange that, in the U.S. Senate, Johnny Isakson of Georgia has been pushing an expanded tax credit for homebuyers while, in the House, U.S. Rep. John Lewis of Atlanta is examining abuse of the same. The following paragraphs are from Lewis’ opening statements at a hearing held this morning by a House Ways and Means subcommittee, which the Georgia congressman chairs:
Foreclosures Are More Profitable Than Loan Modifications, According To New Report Mortgage companies are more likely to foreclose on homeowners than modify their loans because they make more money off foreclosures, argues a new report by a consumer advocacy group. While homeowners, lenders and investors typically lose money on a foreclosure, mortgage servicers do not, says report author Diane E. Thompson, of counsel at the National Consumer Law Center. Servicers are the companies that manage the mortgages and collect payments.
Foreclosure leads to cheap home auctions on eBay Apparently the U.S foreclosure crisis has cheap home buyers making bargain purchases on eBay. With some moderate sized homes selling on eBay outright (free and clear of liens) for less than $5,000.One cheap home sale took place October 8, 2009, where a large 4 bedroom, 2 bathroom, Victorian home located in Oil City, Pennsylvania received 23 bids (Selling on eBay) before it sold out right for only $4,100. According to James Massey, publisher of www.AffordableHousingAuctions.com, a free website which tracks cheap home auctions nationwide. “In our current economic situation, people in hard hit areas are understandably scared to commit to a home purchase, it’s likely affecting the bidding. I’ve been seeing homes in those (economically distressed) areas selling for less than $5,000 for awhile now.”
We Are the Deadbeat Nation. Join Us. There is an important movement forming with the goal of making most or all real estate foreclosures go away over the issue of securitization. Securitization entails bundling of your mortgage with other mortgages, slicing and tranching that bundle, and selling it as a bond or bonds. A mortgage servicer then takes over receiving and processing your checks, and in turn makes sure those further up the pipeline get paid. For mortgage bailout advocates, securitization has become a phrase like "cloning" or "warlords" or "health care reform." It is valuable because it is drained of meaning, and thus seems to offer an easy pro/con choice on ideas that are nebulous and often unrelated. Activists have picked up the idea that the securitization process means your mortgage either doesn't exist or is being manipulated against you.
Senate blocks Medicare payment bill The measure to overturn a scheduled 21% reduction in doctors' fees is blocked by a mixture of Republicans and centrist Democrats who objected that its $250-billion cost over 10 years was not offset. Reporting from Washington - With budget anxieties pervading the congressional healthcare debate, the Senate on Wednesday sidetracked popular legislation that would have increased Medicare payments to doctors by nearly $250 billion over the next decade. Voicing concern about adding that much money to the federal deficit, a coalition of 12 centrist Democrats, one independent and all the Senate's Republicans voted to block consideration of the bill, at least for now.
House bill would expand health coverage, repeal anti-trust exemption House leaders are closing in on an $871 billion health-care package that would extend insurance to millions of Americans who don't have it, raise taxes on the nation's richest families and repeal the insurance industry's long-standing anti-trust exemption, House Speaker Nancy Pelosi (D-Calif.) said Thursday. A measure to strip the industry of protection from federal investigations into price-fixing and other business practices won bipartisan approval in a House committee on Wednesday. This morning, Pelosi told reporters that she would include that measure in the health care package Democrats hope to bring before the full House early next month.
The Housing Slide Has Officially Resumed The last few Case-Shiller readings showed improved sequential home prices in many regions, but analysts widely expect the index to droop again, as the summer home buying season ends. We'll see. The next one will be crucial. In the meantime, other research indicates that the slide is back. Here, for example, is the FHFA, which today said that home prices declined 0.3% from July to August, after past months showed increases. This is an interesting chart showing home prices off the peak.
Home Prices Tick Down 0.5% in September, Says Altos The 10-City Composite Index of house prices declined 0.5% in September and 1.1% during the third quarter, according to real estate market data provider Altos Research. The index is a measure of home prices based on summaries of metrics associated with active residential property listings. After bottoming out at $470,017 in January, it gradually increased to $509,030 in July before again declining and was $503,401 in September. Of the 26 markets Altos Research examines, asking prices increased in only five, including Los Angeles, which experienced a 1.5% increase, the largest of the 26 markets. Phoenix had the largest monthly decrease of 3.7%.
Housing, tax credits, and realtors So, the home buyers tax credit is in the news again and it's becoming quite controversial... Proponents would like to see the program extended well into next year and have the credit expanded to $15,000 (or more), removing the first-time home buyer requirement which, by the way, really didn't restrict this to new home buyers at all, just those who hadn't owned a home in the last three years.
A 28% Plunge In Our Standard Of Living Crisis & Globalization For the average person, what is the immediate danger from the financial crisis? Not just the financial crisis itself, but the government and Federal Reserve's response to the financial crisis, which is essentially to create trillions of dollars out of thin air? For you and me, what’s the immediate, tangible danger of this limitless bailout of the most politically powerful special interest group in America, the bankers of Wall Street?
Bill giving FDA new powers to oversee food supply has wide support Industry and public backing -- a recent poll showed 90% of voters favor measures similar to those in the legislation -- add up to a 'quick win for both parties,' supporters say. Reporting from Washington - Legislation granting the Food and Drug Administration new powers to oversee the nation's food supply has elbowed its way onto Congress' crammed calendar with bipartisan support and rare agreement between consumer groups and an industry stung by product recalls. The legislation, sponsored by Sen. Richard J. Durbin (D-Ill.), would require the FDA to step up inspections of food facilities and to issue new rules to improve the quality of imported food and to combat contaminants in fresh produce. The measure also would give the agency authority to recall products on its own, instead of relying on industry cooperation.
FCC to begin crafting 'net neutrality' rules Federal regulators took an important step Thursday toward prohibiting broadband providers from favoring or discriminating against certain kinds of Internet traffic. Despite the concerns of the agency's two Republicans and prominent telecommunications companies, the Federal Communications Commission voted to begin writing so-called "network neutrality" regulations. Proponents say the rules would prevent phone and cable companies from abusing their control over the market for broadband access. FCC Chairman Julius Genachowski said the rules are needed to ensure that broadband subscribers can access all legal Web sites and services, including Internet calling applications and video sites that compete with the broadband companies' core businesses.
[Note from the WebBabe on Net Neutrality: The Net is the last bastion of freedom; government involvement always muddies the waters even if original objective appears to be beneficial. This matter warrants your close scrutiny so let your elected officials in Washington D.C. know this is not slam/dunk legislation in the minds of the voting public (i.e. taxpayers, voters). Learn about the REAL "Rules of the Net" ISBN: 0786881356 - book written in 1996 (out-of-print but available at www.abebooks.com) then you will understand why. Just my .02 worth]
FCC moves forward on net neutrality rule-making in unanimous vote With a unanimous vote to move forward on a rule-making process for how the federal government will police access to the Internet, FCC Chairman Julius Genachowski won a victory on his first major policy issue at the agency. The chairman, picked by President Obama, said, "The heart of the problem is that, taken together, we face a dangerous combination of an uncertain legal framework with ongoing as well as emerging challenges to a free and open Internet." Republican Commissioners Robert McDowell and Meredith Attwell Baker voted in favor of the proposal but said they dissented on "facts" of the proposal. They said their votes are for the beginning of a data-gathering process, which should last at least 120 days. They did not say whether they will vote in favor of ultimate rules and have disagreed that the Internet appears to need more regulation. "Today we do disagree on substance. I do not agree with the majority’s view that the Internet is showing breaks and cracks and that the government ... needs to fix it," McDowell said. "Nonetheless it is important to remember that the commission is starting a process, not ending one."
Net Neutrality: A Brief Primer . . . . Neutrality advocates often portray the policy as a way of keeping the Internet free from corporate control. But the truth is that there are big corporations, and big corporate interests, on both sides. On the pro-neutrality side are the companies whose businesses operate at the edge of the web: Silicon Valley Web services like Facebook, Amazon, Google, and Twitter. On the other side are the companies who manage the Internet's core: ISPs like Comcast, AT&T, and Verizon. Much of the debate comes down to a power struggle between these two interests: Will network owners and administrators be allowed to determine access rules, prices, and traffic-management mechanisms on the networks they control? Or will the government step in and regulate those networks, forcing them to operate more or less as dumb pipes, thus shielding the edge-network, web-service companies whose business models rely on those networks from management practices that they don't like?
***** VERY IMPORTANT FIGHT *****
FCC Approves Net Neutrality Rules, Now the Fight Begins The FCC approved strong openness rules for wired and wireless broadband connections to the internet Thursday, leaving the details of the rules open to public debate for the next 60 days. The move will gratify President Obama’s grassroots supporters and internet services like Google, but draw the wrath of large telecoms like AT&T and the wireless industry. The FCC’s five commissioners unanimously agreed to expand and codify rules from 2005 that require cable and DSL providers to allow their customers to use whatever devices or online services they want so long as they don’t hurt the network. A similar rule applied to AT&T’s phone monopoly in the 1960s led to the fax machine, the football phone and the internet.
The 107-page FCC proposal (.pdf) was made public several hours after the vote. However, the rules are only a draft and will be subject to intense public debate and lobbying in the next 60 days. After that, the FCC will issue final rules, which will then likely face court and Congressional challenges.
McCain introduces bill to block FCC's net neutrality rules U.S. Sen. John McCain, (R-Ariz.), has introduced legislation that would block the U.S. Federal Communications Commission from creating new net neutrality rules, on the same day that the FCC took the first step toward doing so. McCain on Thursday introduced the Internet Freedom Act, which would keep the FCC from enacting rules prohibiting broadband providers from selectively blocking or slowing Internet content and applications. Net neutrality rules would create "onerous federal regulation," McCain said in a written statement.
The NET is already being thoroughly policed - we don't need MORE rules & regs aimed at networks and ISPs for casual users (i.e. most of us)
Oct. 23, 1995: First Computer-Network Wiretap 1995: A federal judge for the first time authorizes a wiretap of a computer network. It leads to hacking charges against a young Argentine for breaking into sensitive U.S. government sites. Arrested and later extradited to the United States was Julio Cesar Ardita, who was 21 at the time. His online name was “griton” — Spanish for “screamer.” The hacks, using a dial-up modem, were traced to his parents’ Buenos Aires apartment, located near the university where Ardita was studying computer science. U.S. authorities said he first accessed a system at Harvard University’s Faculty of Arts and Sciences. Using a sniffer, he obtained passwords as users accessed other systems.
Senate OKs FBI Net Spying - 09.14.01 [legislation after 9/11] FBI agents soon may be able to spy on Internet users legally without a court order. On Thursday evening, two days after the worst terrorist attack in U.S. history, the Senate approved the "Combating Terrorism Act of 2001," which enhances police wiretap powers and permits monitoring in more situations. The measure, proposed by Orrin Hatch (R-Utah) and Dianne Feinstein (D-California), says any U.S. attorney or state attorney general can order the installation of the FBI's Carnivore surveillance system. Previously, there were stiffer restrictions on Carnivore and other Internet surveillance techniques. Its bipartisan sponsors argue that such laws are necessary to thwart terrorism. "It is essential that we give our law enforcement authorities every possible tool to search out and bring to justice those individuals who have brought such indiscriminate death into our backyard," Hatch said during the debate on the Senate floor.
Strapped Colorado colleges want relief from unfunded state mandates Cash-strapped Colorado colleges will not ask for more flexibility in raising tuition rates in the upcoming legislative session, but will seek to opt out of any state-issued funding mandates that do not come with funding increases attached. Representatives of a majority of the state’s public colleges and universities gathered at the Capitol Thursday to speak with Senate Majority Leader John Morse, D-Colorado Springs, about the financial struggles the schools are facing. The state has turned to higher ed to absorb more than $30 million in budget cuts for this fiscal year. And with the budget expected to shrink as much as $1.2 billion next year, school officials fear that they may get hit much harder.
America's gun spree could run out of ammo Fears of limits from a liberal president are firing sales, but gun-makers only have so many weapons in their arsenals. Private equity shop Cerberus plans to float gun-maker Freedom Group soon. It had better hurry. President Barack Obama's victory sent weapon sales -- and the valuations of firearms producers -- shooting upward. Falling backlogs hint sales could plunge. The U.S. gun bubble may backfire. Two sparks set off this speculative burst in the gun business. First, fears of economic calamity inspired sales of weapons -- Sturm, Ruger's 30 shot autoload SR-556 rifle is useful according to the company for shooting varmints and for "personal defense", presumably pesky biped varmints.
Johnny Gaskins and the End of Law As the federal government has become more powerful and more invasive, we have seen an explosion of new laws and regulations. Interestingly, as the number of laws increase, we have seen a similar decrease in anything that resembles the rule of law. The successful North Carolina criminal defense attorney Johnny Gaskins has found out the hard way that in the federal system, law has disappeared altogether. . . . . . . . . Johnny Gaskins was a keeper of the law who built his career defending those who disregarded it. But a jury decided Oct. 9 that Gaskins had gone from being an officer of the court to being a criminal. Gaskins, a Raleigh criminal defense lawyer, was convicted of dividing large sums of money into small deposits so that his bank would not fulfill an Internal Revenue Service requirement to report cash transactions of more than $10,000. The rule is intended to flag large sums of cash that might be tied to illegal activity.
Judge Napolitano: Facial Recognition Software to Find Fugitives is Illegal! Judge Andrew Napolitano speaks out against the use of facial recognition software to find fugitives and says it's an invasion of privacy and unconstitutional.
U.S. arrests 300 in raids on Mexican drug cartel U.S. law enforcement agencies arrested 303 people in 19 states over the past two days in the largest strike against a major Mexican drug trafficking cartel in the United States, officials said on Thursday. Attorney General Eric Holder said the sweep against networks of the La Familia Michoacana cartel involved more than 3,000 federal, state and local law officers.
China's push for oil in Gulf of Mexico puts U.S. in awkward spot Four years after denying a Chinese bid to buy Unocal, the U.S. may be in too weak an economic position to object. Rebuffing China could also push it into the arms of countries hostile to the U.S. Reporting from Beijing - A Chinese company's gambit to drill for oil in U.S. territory demonstrates China's determination to lock up the raw materials it needs to sustain its rapid growth, wherever those resources lie. The state-owned China National Offshore Oil Corp., or CNOOC, reportedly is negotiating the purchase of leases owned by the Norwegian StatoilHydro in U.S. waters in the Gulf of Mexico, the source of about a quarter of U.S. crude oil production. China's push to enter U.S. turf comes four years after CNOOC's $18.5-billion bid to buy Unocal Corp. was scuttled by Congress on national security grounds. The El Segundo oil firm eventually merged with Chevron Corp. of San Ramon.
Treaties and the Constitution On October 14, climate change expert Lord Christopher Monckton gave a presentation in St. Paul, Minn. on the subject of global warming and the threat to U.S. sovereignty if the U.S. joins the treaty to be debated in Copenhagen this December. Lord Monckton is wrong, however, when he states that the U.S. Constitution says that a treaty takes precedence over the Constitution, that the president can make it U.S. law by signing it, and that nothing can be done to reverse it. The Constitution is an act by We the People. Treaties and federal statutes are the enactments of our representatives. The U.S. Supreme Court has acknowledged the supremacy of the Constitution over both: It would be manifestly contrary to the objectives of those who created the Constitution, as well as those who were responsible for the Bill of Rights -- let alone alien to our entire constitutional history and tradition -- to construe Article VI as permitting the United States to exercise power under an international agreement without observing constitutional prohibitions. In effect, such construction would permit amendment of that document in a manner not sanctioned by Article V. The prohibitions of the Constitution were designed to apply to all branches of the National Government and they cannot be nullified by the Executive or by the Executive and the Senate combined.
Gates says moving ahead on Afghan troop policy U.S. Defense Secretary Robert Gates said on Thursday he is moving ahead with his recommendation on whether to send more troops to Afghanistan and would first tell the president before a NATO defense ministers meeting this week. Gates, speaking in Seoul after meetings with South Korean officials, gave no indication of what his recommendations to President Barack Obama may be regarding troop deployments. He was headed to the meeting in the Slovak capital of Bratislava that will be held on Thursday and Friday.
Webster Tarpley on Alex Jones Tv 1/3: U.S. Attacks Iran Via CIA-Funded Jundullah Terror Group
Webster Tarpley on Alex Jones Tv 2/3: U.S. Attacks Iran Via CIA-Funded Jundullah Terror Group
Webster Tarpley on Alex Jones Tv 3/3: U.S. Attacks Iran Via CIA-Funded Jundullah Terror Group
US Joins Ranks Of Failed States In any failed state, the greatest threat to the population comes from the government and the police... The US has every characteristic of a failed state. The US government's current operating budget is dependent on foreign financing and money creation. Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorism and military aggression. Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war's financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400.
Fall Of The Republic 1/14: The Presidency Of Barack H Obama
Fall Of The Republic 2/14: The Presidency Of Barack H Obama
Fall Of The Republic 3/14: The Presidency Of Barack H Obama
Fall Of The Republic 4/14: The Presidency Of Barack H Obama
Fall Of The Republic 5/14: The Presidency Of Barack H Obama
Fall Of The Republic 6/14: The Presidency Of Barack H Obama
Fall Of The Republic 7/14: The Presidency Of Barack H Obama
Fall Of The Republic 8/14: The Presidency Of Barack H Obama
Fall Of The Republic 9/14: The Presidency Of Barack H Obama
Fall Of The Republic 10/14: The Presidency Of Barack H Obama
Fall Of The Republic 11/14: The Presidency Of Barack H Obama
Fall Of The Republic 12/14: The Presidency Of Barack H Obama
Fall Of The Republic 13/14: The Presidency Of Barack H Obama
Fall Of The Republic 14/14: The Presidency Of Barack H Obama
Financial Implosion and Stagnation Back To The Real Economy "The first rule of central banking," economist James K. Galbraith wrote recently, is that "when the ship starts to sink, central bankers must bail like hell." In response to a financial crisis of a magnitude not seen since the Great Depression, the Federal Reserve and other central banks, backed by their treasury departments, have been "bailing like hell" for more than a year. Beginning in July 2007 when the collapse of two Bear Stearns hedge funds that had speculated heavily in mortgage-backed securities signaled the onset of a major credit crunch, the Federal Reserve Board and the U.S. Treasury Department have pulled out all the stops as finance has imploded. They have flooded the financial sector with hundreds of billions of dollars and have promised to pour in trillions more if necessary-operating on a scale and with an array of tools that is unprecedented.
Drudge focuses on dollar decline with 18 'dollar' articles in 20 days; From Oct 1 -20, AllAmericanGold posted 134 'dollar' articles and videos.
Zeroing in on the dollar's decline On Tuesday, Matt Drudge ran a headline about the weakening U.S. dollar on his website, Drudgereport.com. In and of itself, that would be unremarkable, except that it was the 18th time Drudge had posted a link to a story about the weak dollar this month. And October was only 20 days old. Clearly, Matt Drudge has developed a fascination with the declining U.S. dollar. "He's fixated on it," said Tom Rosenstiel, director of the Pew Research Center's Project for Excellence in Journalism. "There's no question that Drudge can alter what people are paying attention to." Market watchers say it's unlikely that Drudge is actually moving the currency markets with his relentless attention.
Dollar's fall renews fears of higher oil prices Concerns about oil prices and inflation rise as dollar hits 14-month low against euro Hitting a 14-month low against the euro, the sinking dollar renewed concerns Wednesday about higher oil prices and other inflationary threats. A lower dollar can help U.S. manufacturers by making their exports cheaper for foreigners to buy. It also benefits factories in China, which pegs its currency to the dollar. But a weakening dollar hurts European businesses because their goods become relatively more expensive. Since early March, when the dollar hit a high for the year against the euro and other major currencies, it has declined about 12 percent against a basket of major currencies. On Wednesday, the dollar's value against the euro fell below the psychological barrier of $1.50. In response, oil prices jumped to a new high for the year, settling at $81.37 a barrel.
Doug Casey on Protecting Your Cash L: Doug, we talked last week about getting assets out of your home country, especially the U.S., where to take them and what to do with them. In so doing, you touched on the inevitability of currency controls just ahead, especially for Americans. Can you tell us more about that? Doug: Yes, I’m quite serious about what I said about "the grim reality of impending currency controls." As the global economy continues to deteriorate, governments will have to appear to be "doing something." It’s going to become very fashionable to institute some sort of foreign exchange control. Why might that be? Because obviously, people who are taking their money out of the country are unpatriotic…
Another new low for the Dollar
Gold advances as investors seek dollar alternative Gold gained for a third day in New York as a weaker dollar fueled demand for the metal as an alternative investment. Platinum and palladium reached the highest prices in more than a year. The U.S. Dollar Index slid as much as 0.5 percent to a 14- month low. Hedge funds and other large speculators hold their most-bullish position ever in futures, helping to propel gold 21 percent higher this year as a weaker dollar and rising government debt spur concern that inflation may accelerate. Gold futures touched an all-time high of US$1,072 an ounce on Oct. 14. “The dollar is weaker against other currencies,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said Tuesday by phone.
How decisive is gold's move above $1000 an ounce? At this point, I am a little reluctant to say this is the final blast-off and we will never see gold trade below $1000 again, writes David Morgan of the Silver-Investor. Certainly the percentages are with the precious metals investors, and it seems gold has nowhere to go but up. As we know, you're at a level that has been resistance in the past ($1000 an ounce) – an area that proved resistance for quite some time. And once that level is penetrated decisively, then you have a strong probability that the trend is going to continue. In fact, we alerted our subscribers to that very fact! The biggest caveat is that the big, big picture is very tenuous going forward in the October/November timeframe. The powers that be seem to think that the recession is over, but the facts send a different message.
Gold rises above $1,060 on gains in euro, oil Gold prices clawed back above $1,060 an ounce Wednesday as oil rallied and the euro rose above $1.50 for the first time in 14 months. The metal continued to take heart from a steadily falling dollar. Investors were turning to gold as the depreciation of global currencies threatened the value of paper assets. Weak physical demand among jewelers and exchange-traded funds has put gold at the mercy of the currency markets, traders said. Spot gold was at $1,062.70 an ounce at 3:07 p.m. EDT compared with $1,054.00 late Tuesday in New York.
Has Gold Confirmed Weekly Breakout? With the new highs we have seen in October, the time has arrived where gold is making an important decision in its medium and long term price direction. In other words it has arrived at a major inflection point when viewed on a weekly price chart. We’ve been tracking this medium term breakout scenario and this is a follow-up to some of the recent articles published. Why Price charts? We live in a world where a few months ago, there was a glut of oil. That was about 25 dollars per barrel ago lower. If we were using the same formula in unemployment claims as we did in the past, the current unemployment reading would be 16% in the USA. Just because they’ve changed the formula and tell us its only 10%, the reality is that it’s really 16%. Yet, the stock market will think nothing of tacking on 3400 points in 6 months. How about the CPI (consumer price inflation)? That indicator is the most useless thing we have to measure inflation. The ONLY DEFLATION that I see is if you own gold. Then yes, the price of everything is going lower.
'Gold to touch $1,200 by December' Gold prices eased to under $1050 per ounce ahead of New York's midweek session opening, driven mainly by further light selling from speculators. The US dollar recorded only marginal gains overnight and was last seen hovering near the 75.50 mark on the trade-weighted index, while crude oil lost a somewhat more substantial chunk in value, falling more than $1.1 to very near $78 per barrel. Otherwise, conditions were muted, with very little in the way of activity being recorded in India, where potential buyers were seen clustering orders beneath the $1050 an ounce zone.
The New Gold Rush A remarkable piece of news came out of London last week. Harrods, one of Europe's best-known department stores, has begun selling gold bullion. This unprecedented move by the famous retailer reflects the rapidly growing appetite for investment-grade gold, which has been enjoying a bull run even as the world is bogged down in a global recession. Used as a hedge against currency weakness, especially the dollar, gold has been trading at record highs. Many analysts think this is no temporary spike, but a long-term surge that will continue as the word monetary system is pulled down by the mismanaged and collapsing dollar.
Gold coins, bars set to outshine jewellery MUMBAI (Reuters) - Gold investors in India, the world's largest consumer, are likely to outstrip jewellery buyers in 2-3 years with the economy on the rebound and buyers seeking new ways to protect their investments from pilferage. "The signs of heavy increase in investment demand are visible and may outperform jewellery demand in 2-3 years" said Anjani Sinha, president of Indian Bullion Market Association (IBMA), which represents about 10,000 jewellers across the country.
Arabian Gold: Will The Gulf go For Revaluation and a Gold Standard? Talk about revaluation of the Gulf currencies is back on the agenda as rising inflation exerts pressure on the Gulf dollar pegs, while at the same time rumors of discussions about linking a new single currency to a gold standard have been so emphatically denied that skeptics wonder if there is some truth in it. Over the past year Gulf States have seen inflation retreat from the double-digit levels of the oil boom years. But with oil prices having more than doubled since a low last December, those inflationary forces could be about to reassert themselves.
To All Who Value Gold and Liberty: When Will Atlas Shrug? History reveals, very clearly, that fiat currency always leads to destruction of wealth, disorder, political unrest and misery, every time, always. According to Keynes " Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some." Using the benefit of four hundred years of observation, we can say, beyond a shadow of a doubt, that men of no character will create fictions supporting the idea that fractional banking and fiat currency, if managed properly, will function to benefit mankind. But we know, as sure as we know that earth revolves around the sun, it is always used for theft - ALWAYS. Over the past 96 years the fiction building spinners of deceit have been quietly stealing from the poor, middle class and wealthy alike and then using the plunder to tighten the shackles of financial slavery.
Fish, Wasps, the Dollar & Gold The US dollar rally. My grandfather was in the orchard business. Fruit trees. He used to hang a big fish from the trees. The wasps that ate the fruit would eat the fish. They wouldn't just eat it, they would gorge on it in a frenzy, until they couldn't even fly. Then they would just fall to the ground. My grandfather was a pretty popular fellow with the wasps. Unfortunately for Team Wasp, my grandfather wasn't as generous as he appeared to be. He placed a bucket of water under the fish. As the greedy wasps ate too much, they did fall, but not to the ground. They landed in the water and drowned.
US Dollar Falling vs Gold (Sept 28, 2009)
The Cheap Dollar: Great News for Everyone Else I’d just like to send a special word of thanks to Chairman Bernanke on behalf of all the parts of the world that operate on dollars, or where the currency is explicitly or implicitly linked to the dollar. Thank you…your actions are really helping to stimulate the economy (outside of the USA). Example: These days you can borrow dollars for almost nothing and invest in property in Hong Kong or Dubai (where currency is tied to the US dollar), or in Tehran (where property is basically priced in dollars). Then you can watch it go up 20% to 30% a year in US dollars, gear that at 70% to 80% and all anyone can say is “Thank you!” And on top of that, seeing as all the Zombie Banks don’t want to lend to anyone in the US and are instead using the money that the Fed is handing them for free to speculate, for example, on the price of oil. Could it go to $100? Perhaps $200?
The perils of cheap money Here’s a little nugget from Germany. The regulator BaFin has woken up to the danger that near-zero interest rates are a major danger for the Germany’s €700bn life insurance industry. They may not be able to meet their premiums. If deflation takes hold, they risk going the way of all those life insurers that went bust in Japan during the 1990s. BaFin thought it had covered every possible shock – a share price crash, a debt crisis, etc – but nobody ever paid much attention to the long-term actuarial shock of low rates.
Hey Everybody! A New World Currency! Oct 1, 2009
Is alternative to dollar in works? Plan for 'Special Drawing Rights' creates competition for reserve currency The administration of President Barack Obama, without congressional authorization, is advancing a plan that could end the use of the U.S. dollar as the world reserve currency by setting up International Monetary Fund Special Drawing Rights to compete. The move comes as the dollar heads toward a 14-month low of $1.50/euro and as some top fund managers, including some of President Obama's top financial supporters, worry the decline will continue as long as Obama depends on China to fund trillion dollar budget deficits. It is Obama's promise to participate in a G20 nations agreement by giving $250 billion to the IMF to set up the alternative reserve currency that now has been documented in the final communiqué of the London meeting, according to the G20 website
Gold Futures Gain as Dollar Drops to 14-Month Low Versus Euro Gold rose for the fourth straight session as a decline in the dollar boosted the appeal of precious metals and other commodities as alternative assets. The euro topped $1.50 for the first time since August 2008 on optimism that the global economic recovery is gathering momentum, increasing demand for riskier assets at the expense of the greenback. Gold futures have climbed 20 percent this year, reaching a record $1,072 an ounce on Oct. 14, as the dollar slumped against major currencies. “Gold’s move is all dollar-driven,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “You’re going to see continued erosion in the dollar. I’m very bullish on gold.”
Attack by Central Bank Lilliputians The US Federal Reserve continues to talk about their urgent Exit Strategy. My theory is they will be doing mostly talking and almost no doing. The nations that talk the least will be hiking interest rates the most, like Australia. The United States might be dead last in hiking interest rates. The credibility of the USFed will in the process continue to be harmed much more than already, which is rock bottom. The Dollar Carry Trade and the lost Petro-Dollar advantage will work to destroy the USDollar as the global reserve currency. The USFed will have to resort to unusual means to keep the world ‘interested’ and ‘involved’ in the USDollar at all. When they lose interest and involvement, the US$ will descend into the Third World. The USDollar will then be forced to find its true value, based on its own merit.
Media Litmus Test In a small bit of Washington irony, a government panel convened this week under the guise of ensuring 'expressive freedom' on the Internet, while at the same time the Obama Administration put Fox News on notice that ideological rectitude would be a prerequisite for White House engagement. This heightened wrangling with the media comes at a time when ordinary Americans are rapidly becoming disillusioned with the major parties. Their disgust is evident in innumerable web discussion sites that, for many, have replaced the major media outlets as the primary source of information. In its focus to keep control of the conversation, the Administration is seeking to disguise the fact that the 'change' Mr. Obama promised in the election is unlikely to materialize.
Why is the Fed so secretive and why must they rely on public ignorance? Our view is that the elitists are currently buying time for the dollar, and stalling the rally in precious metals, by weakening other currencies until they are ready for the big stock takedown/correction. This process of supporting the dollar is becoming extremely expensive and difficult, so they had to take the Dow down 200 points on Thursday to start some stock contagion in Asia and Europe to flush some money into dollars and treasuries. The FTSE, Nikkei and Hang Seng were all down big in the aftermath of Thursday's US market takedown. We believe that the Illuminati will probably try to punish all the stock shorts in mid October on options expiration day by having one final round of short-covering before taking the markets down for the big correction to start a dollar rally just as the precious metals seasonal rally goes into full swing. This yellow fever crash is just a repeat of last year's strategy, but it will not be as severe for purely political reasons. In this manner, they will flush everyone else out of their short positions so that only they can make any money when the boom gets lowered and there will be many put options that expire worthless in yet another round of total criminality reminiscent of what they just did to the gold and silver call options this month
A conversation with a Wells Fargo banker Part 1 of 3
A conversation with a Wells Fargo banker Part 2 of 3
A conversation with a Wells Fargo banker Part 3 of 3
TARP watchdog: Full repayment 'unlikely' The auto industry, AIG and other struggling recipients of the government's $700 billion Wall Street bailout will make it "extremely unlikely" that taxpayers will receive a full return on their investments, says a new report by the Treasury Department's independent watchdog. About 17 percent of Troubled Asset Relief Program (TARP) loans issued since the program began a year ago have been repaid, according to a 252-page report released Wednesdayby TARP's Special Inspector General Neil Barofsky. But with a handful of major bailout recipients battling for survival, such as General Motors, Chrysler and insurer American International Group (AIG), "full recovery is far from certain," says the study, which examines the Treasury's handling of TARP for the third quarter of 2009.
Big Banks: The Consensus Is Cracking Just when our biggest banks thought they were out of the woods and into the money, the official consensus in their favor begins to crack. The Obama administration’s publicly stated view – from the highest level in the White House - remains that the banks cannot or should not be broken up. Their argument is that the big banks can be regulated into permanently low risk behavior.
Ron Paul talks Economics on CNN
Fed’s Fisher Says U.S. Needs to Be ‘Mindful’ of Debt Sales Federal Reserve Bank of Dallas President Richard Fisher said the U.S. must return to fiscal sustainability to avoid flooding the market with excessive government debt. “We are issuing copious amounts of debt and I think we have to be very mindful of the fact that we can issue too much,” he said in an interview today with the Toronto-based BNN television network. The U.S. central bank doesn’t plan to raise interest rates “imminently,” he said. Referring to economic data, Fisher said “bad numbers are getting less worse” in the U.S., which faces a “tough slog” next year with growth “significantly below potential.”
Feinberg Said to Order 50% Pay Cuts at Rescued Firms Executives at seven bailed-out companies including Citigroup Inc. and Bank of America Corp. will have their pay cut by an average of 50 percent after negotiations with Kenneth R. Feinberg, the U.S. special master on compensation, two people familiar with the matter said. The cash portion of salaries for the 25 highest-paid employees will be slashed 90 percent, according to a person familiar with the plan who spoke anonymously because the details haven't been announced. Some cash will be replaced by shares that employees will be restricted from selling immediately, the same person said. An announcement could come this week.
U.S. to Order Steep Pay Cuts at Firms That Got Most Aid Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday. Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.
Turn Goldman anger into government action Ratigan: Banks continue to steal from the taxpayers who bailed them out In a world where real competition, modern technology and lack of special government standing means most American businesses have no choice but to adapt and innovate — Wall Street's wimp's only apparent skill is rigging the game.
White House to push for big pay cuts Obama's pay czar will demand 50% decline in compensation, on average, for top earners at seven firms that received the most bailout funds. The Obama administration will soon order the nation's biggest bailed-out companies to drastically cut pay packages for their top executives, a senior administration official confirmed to CNN Wednesday. Kenneth Feinberg, who was named the White House's pay czar in June, will demand that the seven largest bailout recipients lower the total compensation for their top 25 highest paid employees by 50%, on average, the official told CNN.
Volcker Fails to Sell a Bank Strategy Listen to a top economist in the Obama administration describe Paul A. Volcker, the former Federal Reserve chairman who endorsed Mr. Obama early in his election campaign and who stood by his side during the financial crisis. . . . . . . . He wants the nation’s banks to be prohibited from owning and trading risky securities, the very practice that got the biggest ones into deep trouble in 2008. And the administration is saying no, it will not separate commercial banking from investment operations.
Like it or not, here comes more stimulus There's a push to extend some expiring provisions from the American Recovery and Reinvestment Act. But it will be done in bits and pieces. You won't see it all in one neat package. And you won't hear the White House call it stimulus. But there's a good chance lawmakers will decide to extend some of the stimulus measures included in the $787 billion economic recovery package passed in February and possibly create some new ones as well. On Wednesday, House Democrats are convening a forum of economists to debate the state of the economy, with a specific focus on job creation. And lawmakers are convening hearings on Capitol Hill this week to discuss the economic outlook and the state of the housing market.
Bailout's hidden costs SigTARP Neil Barofsky, overseer of the $700 billion TARP program, says the cost to taxpayers will be a lot greater than the government is letting on. The $700 billion bailout will ultimately cost taxpayers billions of dollars, but the government stands to lose much more than the money it's pouring into companies. Neil Barofsky, special inspector general for Treasury's financial sector rescue, wrote in a report released Wednesday that the bailout has several hidden costs. One is the hard cost of borrowing money to fund the rescues of banks and other companies. The others are, according to Barofsky, less tangible but no less important: The danger that comes with rewarding companies that took excessive risk, and the loss of the government's credibility with taxpayers.
The Warning (see full PBS video online) "We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?
"The Warning": Sneak Peek 1 | PBS
"The Warning": Sneak Peek 2 | PBS
In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.
Derivatives Warning - Michael Greenberger interview This is a collection of soundbites from Prof. Michael Greenberger from the University of Maryland School of Law who was interviewed for a PBS FRONTLINE program concerning Brooksley Born, former chairman of the Commodity Futures Trading Commission, who attempted to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the 2008 financial collapse.
Housing numbers bother investors Dow drops from '09 high A disappointing report on housing starts made investors nervous about the economy Tuesday and sent stocks lower even as profits at many companies exceed expectations. The major indexes slipped about half a percent, and the Dow Jones industrials lost 50 points. Stocks retreated from 2009 highs after the Commerce Department said applications for home-building permits fell in September by the largest amount in five months. That is a discouraging signal for future construction. A rebound in the dollar from 14-month lows against other major currencies also hurt stocks by driving down commodities prices and, in turn, sending energy and materials companies lower. Bond prices rose after the government said wholesale prices fell last month.
Frozen Auction-Rate Bonds Cost U.S. $63.5 Billion The U.S. economy would get a $63.5 billion boost if businesses were able to free up their funds trapped in the auction-rate debt market based on student loans, a study prepared for holders of the securities shows. Businesses haven’t had access to about $25 billion in the auction-rate bonds since February 2008, when trading collapsed after the investment banks that managed the sales quit serving as buyers of last resort. Including student-loan securities held by banks, a total of $75 billion of the debt is outstanding, according to Mark Murphy, a spokesman for SecondMarket Inc., a New York-based clearinghouse for illiquid securities.
Americans save more but will they keep buying Treasurys? Americans may be embracing a more-frugal lifestyle, but when it comes to saving and investing, analysts are more skeptical the recession has changed behavior for good. After being burned during the credit crisis and the recession, Americans have flocked into safe assets and still hold more bonds than they have in years. But some see signs that the trend may not last, especially if once-frugal investors go back to rolling the dice with aggressive investments to recover losses elsewhere. "The desired savings rate has risen, but just as people say they will exercise every day, they don't necessarily do it," said Dick Hoey, chief economist at BNY Mellon.
Obama wants help for small businesses President Obama asked Congress on Wednesday to help community banks lend money to small businesses -- pillars of the U.S. economy hit hard by the recession. "Major banks need no new assistance," Mr. Obama said while visiting a small business in suburban Washington. "Make more money available so banks can watch [small businesses] grow from down the street, not Wall Street."
Obama administration shifts focus of rescue to small business, housing market The Obama administration is winding down several massive rescue programs that aided large banks and U.S. automakers during the heat of the financial crisis and launching more moderate initiatives to help small businesses and the housing market. The moves are being billed by senior administration officials as a "new direction" for the government's oft-maligned $700 billion bailout program, which has been credited for preventing a collapse of the financial system and angering politicians and ordinary Americans on both ends of the political spectrum for helping big banks who may have triggered the crisis in the first place.
Safety Nets for the Rich The headline next to it said: "Bailout Helps Revive Banks, And Bonuses." We've spent the last few decades shoveling money at the rich like there was no tomorrow. We abandoned the poor, put an economic stranglehold on the middle class and all but bankrupted the federal government - while giving the banks and megacorporations and the rest of the swells at the top of the economic pyramid just about everything they've wanted. And we still don't seem to have learned the proper lessons. We've allowed so many people to fall into the terrible abyss of unemployment that no one - not the Obama administration, not the labor unions and most certainly no one in the Republican Party - has a clue about how to put them back to work.
Population Reduction after economic collapse 2009
7 Months After Stimulus 49 of 50 States Have Lost Jobs The table below compares the White House's February 2009 projection of the number of jobs that would be created by the 2009 stimulus law (through the end of 2010) with the actual change in state payroll employment through September 2009 (the latest figures available). According to the data, 49 States and the District of Columbia have lost jobs since stimulus was enacted. Only North Dakota has seen net job creation following the February 2009 stimulus.
White House aide says hiring tax credit "complex" A White House economist said on Wednesday a proposed tax credit for business hiring was a "fairly complex" idea but that the administration was not at the stage of ruling in or out specific options for boosting the U.S. economy. As President Barack Obama and U.S. lawmakers consider ways to give an added lift to the economy and the job market, the business tax credit proposal has gained some attention on Capitol Hill. "It's a fairly complex idea," Jared Bernstein, chief economist to Vice President Joe Biden, told Reuters Television in an interview.
GM, Chrysler Recovery Not Assured, Rattner Says A successful recovery for General Motors Co. and Chrysler Group LLC is "far from assured" and will take time, the former head of the federal government’s auto task force said. The comments by Steven Rattner today may add pressure on GM and Chrysler to redouble restructuring efforts after the companies emerged from bankruptcy. GM chose a new U.S. sales chief this month, and Chief Executive Fritz Henderson said GM was “on path” to reach its financial goals. Chrysler will unveil its plan Nov. 4.
Walmart Sees 'Tough' Holiday Season With Late Buying Wal-Mart Stores Inc., the world’s largest retailer, expects a "tough" holiday shopping season with consumers delaying purchases, said John Fleming, chief merchandising officer. Walmart plans to reduce prices as the season advances in areas including home, food and gifts, Fleming told analysts today at a conference in Rogers, Arkansas. Consumers’ wallets "are challenged," Fleming said. The holiday season "is going to be tough, it is going to be late."
Unemployment in Nevada, Florida Increases to Record Unemployment rose in 23 U.S. states in September and hit records in Nevada, Rhode Island and Florida. Nevada’s jobless rate, at 13.3 percent, was the second- highest among U.S. states behind Michigan, the Labor Department said today in Washington. Unemployment in Rhode Island reached 13 percent, and Florida’s rate climbed to 11 percent, the highest since data began in 1976.
Easy-money mortgages still provided, by the feds o you thought easy-money mortgages with little or no down payment for people with bad credit was a thing of the past? Think again. You can get just such a loan today - and it's guaranteed by the federal government. Loans insured by the Federal Housing Administration (FHA) have become "the new subprime," and these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans.
Mortgage applications plummet Industry group says activity sank by 13.7% last week as interest rates inched higher and tax credit expiration drew nearer. Mortgage applications plunged last week as rates ticked higher above 5%, an industry group said Wednesday, as the expiration of a home buyer tax credit drew nearer. The Mortgage Bankers Association said its index of mortgage application volume fell 13.7% in the week ended Oct. 16 from the prior week. The decline in activity came as rates on the widely-used 30-year fixed mortgage increased to 5.07% from 5.02%, according to the MBA. The week's adjustments included the Columbus Day holiday.
White House skeptical on renewing home buyers' credit The Obama administration is still considering whether to back extending a popular tax credit for first-time home buyers but is skeptical the government can afford the cost, Housing and Urban Development Secretary Shaun Donovan said Tuesday. The $8,000 tax credit, which will expire at the end of November, has boosted home sales in recent months, helping to revive a flagging housing market that had been a key factor driving the recession.
California Sending out Approximately 475,000 Notice of Defaults for 2009 yet Overall Foreclosures Declining. Shadow Inventory, Q3 Defaults, Toxic Loans. The State of the National Housing Market. California is on path for a record 2009. By the end of the year over 475,000 notice of defaults will be sent to California homeowners. This of course is simply from lenders that actually even bother to send a notice of default. The shadow inventory is growing and we have some concrete data showing the mismanagement in the housing market. Banks for the most part are playing hot potato with bad mortgages like Alt-A and option ARMs. It is interesting to note that today, we have data showing a record number of notice of defaults for 2009 yet actual foreclosures are less than 2008. What gives? Well for Q3 we found out that the median months behind before a lender filed a NOD is 5 months. That is right, 5 months with no payment before the lender even notices.
The Influenza Pandemic of 1918
Hospitals "Full-Up": The 1918 Influenza Pandemic
Bernanke Airs Concern on Speeding Up Credit-Card Law Speeding up the effective date of new credit-card rules to Dec. 1 from next year may result in "unintended consequences" for banks, said Federal Reserve Chairman Ben Bernanke. "Card issuers must be afforded sufficient time for implementation to allow for an orderly transition and to avoid unintended consequences, compliance difficulties and potential liabilities," Bernanke said yesterday in a letter to Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee.
Democrats to Consider Credit Options for 'Underbanked' Americans On Friday, Rep. Barney Frank, chairman of the House Financial Services Committee, will join FDIC Vice Chairman Marty Gruenberg and others in a discussion of "new, safe and affordable credit options for America's underbanked." The policy discussion on Capitol Hill comes as banks - reacting to new credit card rules imposed by Democrats - start pulling the plastic from current credit-card holders, a move that is sure to lead to even more "underbanked" Americans. Press reports note that Citibank recently canceled a number of credit card accounts affiliated with the Shell, ExxonMobil, Citgo and Phillips 66-Conoco oil companies.
Pelosi Says House Health Plan Would Reduce Deficit, Citing CBO House Speaker Nancy Pelosi said health-care legislation being considered by her chamber would reduce the U.S. budget deficit over the next 20 years, meeting one of President Barack Obama’s main demands for the overhaul. Pelosi cited preliminary estimates by the Congressional Budget Office that various plans being debated by House Democrats for the biggest health-care expansion in four decades would cut the deficit over both the short and long term.
Obama Targets Insurance Companies Banks for Resisting Health-Care Changes President Barack Obama criticized insurance companies and banks as he urged supporters to pressure Congress to back his moves to revamp the health-care system and overhaul financial regulations. Insurers and the financial industry are resisting changes because they were "doing just fine under the status quo," the president told donors in New York City last night.
Republicans Look to Farmer to Retake U.S. House Stephen Fincher, a gospel-singing farmer, has never lived outside of Frog Jump, Tennessee. He hasn’t even visited Washington, D.C. Now he wants to work there. His profile -- a political neophyte with deep roots in his town of fewer than 400 people -- is emerging as a prototype for the kind of Republican candidate that his party is mobilizing in an effort to regain control of Congress next year. In background and temperament, Fincher fits his district, two hours north of Memphis, which is currently represented by Democrat John Tanner. It’s a formula that worked for Democrats in 2006, who under the leadership of then Representative Rahm Emanuel regained control of the House of Representatives for the first time since 1994. The Republican challenge will be at least as difficult.
Got a cell-phone or Wi-Fi router? Feds can search your house The FCC claims that its powers to inspect radio equipment in order to catch pirate radio stations means that it can also enter and search any home that has a WiFi access point, a cordless phone, a baby monitor, or a cell phone. "Anything using RF energy -- we have the right to inspect it to make sure it is not causing interference," says FCC spokesman David Fiske. That includes devices like Wi-Fi routers that use unlicensed spectrum, Fiske says.
"Make Mine Freedom" The more things CHANGE, the more they stay the same. It's freedom that makes America work. Based on actual events, this video interpretation of the 1948 classic will entertain you and make you think.
This is the bust in the boomtown that banks built Beneath Charlotte's shiny skyline, 'a new humility' CHARLOTTE -- A monument to the financial crisis is rising amid this city's thicket of skyscrapers: a gleaming, glass-walled trophy tower that was intended as a fitting headquarters for Wachovia's national banking empire. It will open instead as the headquarters of a regional power company. Wachovia, unable to survive a run of bad decisions, was swallowed by San Francisco-based Wells Fargo during the depths of the crisis last year.
If You Don't Hate the Cap and Trade Bill, Let Me Show You Section 304 . . . . bet you thought that if you bought a house, you actually own it and can, with reasonable exceptions, do with it what you want. You probably think that if you want to live in a log cabin, with wood stoves that belch smoke into the air for heat, and an old washer and dryer that don't have those little EnergyStar stickers on them you can because it's your life and your property. You paid for it with money you earned with the sweat of your brow and what the heck is America anyhow if a body can't live in the home they want furnished with the appliances they want? Ah, silly you. You didn't reckon on the Democratic Party's desire to control every miniscule aspect of your life. Let me introduce you to a little section of the Waxman-Markey cap-and-trade bill called the "Building Energy Performance Labeling Program". It's section 304 of the bill and it says, basically, that your house belongs to the state. See, the Federal Government really wants a country full of energy-efficient homes, so much so that the bill mandates that new homes be 30 percent more energy efficient than the current building code on the very day the law is signed. That efficiency goes up to 50 percent by 2014 and only goes higher from there, all the way to 2030. That, by the way, is not merely a target but a requirement of the law. New homes must reach those efficiency targets no matter what.
China, India Forge Alternative to UN Climate-Protection Treaty China and India’s joint plan to cut greenhouse-gas emissions provides the developing world with an alternative to the global climate treaty that wealthier nations want them to sign in Copenhagen this year, analysts said. Asia’s two biggest polluters from burning carbon-based fuels said they will collaborate on renewable power and energy- efficiency projects, in a memorandum of understanding yesterday in New Delhi. They rejected limits on their emissions proposed by industrialized nations under an international climate accord.
Barack Obama's Rules for Revolution - The Alinsky Model When you take a hard look at what Barack Obama already has done and plans to do, you quickly realize he is not Jimmy Carter. He is not even Bill Clinton. That's because Barack Obama, working in concert with the ultra-liberal socialists that run the Democrat party, is radically transforming America. Right now, the Freedom Center is pulling out all stops to expose the radical agenda of Barack Obama and the socialist leadership in Congress is trying to force on the American people.
Michael Savage We Must Stop The Copenhagen Climate Treaty
Ships Collide Off Texas, Cause Fuel Spill Two ships collided off the coast of Galveston, Texas, late yesterday, causing a bunker-fuel spill after a tank ruptured, the U.S. Coast Guard said. About 18,000 gallons (429 barrels) of fuel was spilled, Petty Officer Prentice Danner, a Coast Guard spokesman, said in a telephone interview today. The tank is no longer leaking and there were no injuries, according to a Coast Guard statement. Crew onboard Russia’s Sovcomflot OAO’s Krymsk, an 820-foot Aframax-class oil tanker, transferred fuel from a ruptured tank to an undamaged reservoir after the ship was hit by Malaysia’s American Eagle Tankers Inc.’s AET Endeavour, a 160-foot tug, during a lightering operation, according to the Coast Guard. Lightering is the offshore ship-to-ship transfer of oil.
Terrorist suspect arrested in Massachusetts Plot targeted U.S. shopping malls, politicians and military stationed in Iraq Federal prosecutors said Wednesday they have arrested a Massachusetts man in connection with terrorist plots that included attacks on U.S. shopping malls and on two White House officials. The suspect has been identified as Tarek Mehanna, 27, of Sudbury, Mass. He has been charged in connection with plotting with other terrorists from 2001 to May 2008 to carry out overseas and domestic terrorist attacks, which included killing shoppers and first responders at malls. However, none of the attacks was carried out because the conspirators could not obtain automatic weapons.
Brazil seeks to curb its soar-away currency South American nation reveals plans to impose tax on inward investment in stocks and bonds as value of real surges Brazil is taking extraordinary steps to curb the upward climb of its currency, the real, with a tax on inward investment into Brazilian stocks and bonds. The tax on capital inflows, which takes effect today, will take the form of a 2 per cent levy on foreign investment in the stock market and in fixed-income securities, such as government bonds.
Foreign investor tax sends Brazil’s markets reeling Brazil’s financial markets took a tumble on Tuesday as the Government erected a speed bump in the path of foreign investors, taxing their purchases of Brazilian stocks and bonds. The new levy of 2 per cent, imposed on Tuesday, is intended to put a lid on the soaring value of the Brazilian currency, which has been driven up by inflows of capital from foreign investors. News of the tax arrested the upward march of the Bovespa Index, Brazil’s stock market barometer, and pummelled the real, which fell 2.3 per cent against the dollar to 1.752 reals. The real has risen by more than a third against the dollar this year, creating anxiety among Brazilian exporters, who fear a loss of competitiveness.
Biden sent to soothe Europe on Russia overtures WARSAW | Vice President Joseph R. Biden Jr. arrived here Tuesday on the first leg of a delicate diplomatic repair mission that follows the Obama administration's abrupt reversal on missile defense, a decision that rekindled deep-seated unease in a region where the U.S. is seen as the only reliable counterweight to a potentially menacing Russian neighbor. By visiting with top Polish, Czech and Romanian officials this week, the vice president is hoping to reassure the three NATO allies that the United States remains deeply committed to their security. And, he intends his visit to serve as an important marker, coming 20 years after the fall of the Berlin Wall, in the evolution of American relations with the former Eastern Bloc nations.
Biden, Polish leaders agree on revised missile plan The Obama administration reached a new agreement Wednesday with top Polish government officials to place a new generation of missile interceptors on Polish soil, a surprising turnabout from just a few weeks earlier when it appeared the United States was ready to abandon its missile defense program in Eastern Europe. Vice President Joseph R. Biden Jr. and Polish Prime Minister Donald Tusk emerged from a lengthy private discussion to announce that Poland's participation in the missile defense system was, essentially, back on -- though in a new format that involves delivering a smaller number of defensive weapons in 2018. Mr. Tusk said through a translator that he considered the revised proposal "a very interesting idea." "We are ready to participate in this project," he said.
Prophecy, speculation, or scare tactics. We'll find out this weekend.
October 25, 2009 - America's Date with Destiny ... Six independent sources suggest October 25, 2009 is a critical date for the United States of America:
William Hague addresses US fears over Tories' EU allies William Hague, the shadow foreign secretary, yesterday defended the Conservatives' alliance with far-right parties in Europe during a meeting in Washington with the US secretary of state, Hillary Clinton. Hague sought to reassure Clinton about the Conservatives' partners, some of whose members have taken part in commemoration services for the Waffen-SS in Latvia and questioned the need to apologise for an anti-Jewish pogrom in Poland.
Israelis say deal near with U.S. on Mideast talks U.S. President Barack Obama's Middle East envoy is close to a deal with Israel on terms for resuming peace talks with the Palestinians, Israeli officials said on Wednesday. "There appears to be a meeting of the minds and hopefully the Israeli-Palestinian dialogue will be able to re-start in the near future," an Israeli official said, summing up talks held by negotiators for Prime Minister Benjamin Netanyahu in Washington.
Israel Property Market May Lose Top Ranking on Borrowing Costs Israel, the best-performing residential property market this year, may lose its standing after becoming one of the first countries to raise interest rates since the global recession began. "A bubble began to emerge this year, fueled by the Bank of Israel," said Shlomo Maoz, chief economist at Excellence Investments Ltd. in Tel Aviv. "The bank is now beginning to raise rates again to fight inflation." The higher borrowing costs will dampen demand for mortgages, leading to a drop in property prices by the middle of next year, Maoz said in an interview. He was one of two economists in a Bloomberg survey of 10 to correctly forecast an increase in the key interest rate to 0.75 percent in August.
China’s Economy Grows 8.9%, Fastest Pace in a Year China’s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. Gross domestic product grew 8.9 percent in the third quarter from a year earlier, the statistics bureau said in Beijing today. The median of 34 estimates in a Bloomberg News survey was for a 9 percent gain. Separate reports showed industrial production and retail sales advanced at a faster pace in September.
China Risks Property-Market 'Bubbles' to Boost Growth, Xie Says China is risking property-market "bubbles" to promote growth in the world's third-largest economy, according to former Morgan Stanley Asian economist Andy Xie. "People are looking at the bubbles as a way to gain economic growth in the short term," Xie said in a Bloomberg Television interview in Hong Kong today. "They are not sure of long-term damages that they may suffer."
U.S. envoy Holbrooke missing from Afghan talks President Obama called Richard Holbrooke "one of the most talented diplomats of his generation" when he named the globe-trotting foreign policy expert to be special representative for Afghanistan and Pakistan. But 10 months later, Mr. Holbrooke was anchored in Washington and far from the front lines of diplomacy that led to Tuesday's Afghan election deal. The Obama administration used other intermediaries to apply the pressure that got Afghan President Hamid Karzai to agree to a runoff after fraud-tainted elections. And when Mr. Obama praised his diplomatic team for its success, Mr. Holbrooke's name was pointedly missing. There was high praise for U.S. Ambassador to Afghanistan Karl Eikenberry and "great congratulations" to Sen. John Kerry, Massachusetts Democrat, who met with Mr. Karzai.
The Real Reason for More Troops in Afghanistan We can all look back at the wonderful decision that was made to send more troops to Korea. If we had not, we could have been bogged down in a quagmire there that would have required 50 plus years of American lives, involvement and money. What a wonderful decision it was to send more troops to Vietnam. If we had not, we could have lost over 58,000 soldier's lives; killed millions of Vietnamese soldiers and civilians and been forced to flee the country with our tails between our legs, deserting our allies to the horrors of communist retribution. Good thing our wonderful leaders had the wisdom and courage to send "more troops." Now we are forced with the same dilemma; send more troops or face military defeat.
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Wake Up Washington! China Is Already Dumping the Dollar, Niall Ferguson Says Just as U.S. policymakers are too sanguine about China's military power, Harvard Professor Niall Ferguson says Washington D.C. is too complacent about China's ability to wean itself off the dollar. With about 1.7 trillion of dollar-denominated assets (mainly Treasuries) in its foreign currency reserves, conventional wisdom goes something like this: If China were to diversify away from the dollar or merely allow the renminbi to float, much less dump its greenbacks wholesale, they would be shooting themselves in the proverbial foot. That's both as investors and because further dollar weakness would put a damper on their biggest export market. (A weaker dollar makes foreign goods more expensive for Americans, meaning Chinese imports would become less "cheap.")
Recognizing a Bubble - Dynamics of Free Money . . . . The present reflation is fostered by a Fed printing money as if there were no tomorrow. However, there will be a tomorrow, and in our opinion, when tomorrow comes the Fed is likely to print even more money, not less. Here's why: while the government can try to boost this economy, it has been extremely "inefficient" at doing so, meaning that a lot more stimulus than many think - both fiscal and monetary - is likely to be necessary. The stimuli will go somewhere, though likely not where the government wants it to go; a possible worse side effect is that they may be creating a highly unstable environment dependent on continued stimulus.
U.S. flooding the world with dollars Europe Officials Concerned on Dollar, Euro’s Gains European finance officials are concerned the euro’s climb to a 14-month high against the dollar is eroding exports as an aide to French President Nicolas Sarkozy called the move a “disaster” for the economy. “Excessive volatility” in currency rates is “bad for economic development,” European Central Bank President Jean- Claude Trichet said in an unscheduled appearance at a press conference late yesterday after a meeting of euro-area finance ministers in Luxembourg. “It’s a problem which worries us,” said Luxembourg’s Jean-Claude Juncker, who led the talks.
Lipsky Says Currency Values Not Impeding Recovery Major currency valuations aren’t hampering the global economy’s return to growth, the No. 2 official at the International Monetary Fund said today. “In the near term, the currency relationships among the major trading currencies are not an impediment to recovery at this time,” IMF First Deputy Managing Director John Lipsky said in an interview on CNBC. He said the IMF monitors currencies “on a multilateral, inflation-adjusted, medium-term basis.”
Euro at $1.50 is 'disaster' for Europe France has given its clearest indication to date that the surging euro is a threat to Europe's fragile recovery and will not be tolerated for much longer. "The euro at $1.50 is a disaster for the European economy and industry," said Henri Guaino, right-hand man of President Nicolas Sarkozy. The currency has risen 15pc in trade-weighted terms since March, equivalent to six quarter of a percentage-point rises in interest rates. It briefly flirted with $1.50 against the dollar on Tuesday before falling back on intervention fears. What concerns European policymakers most is the lockstep rise against China's yuan. Beijing has clamped the yuan firmly to the weak dollar for over a year, quietly benefiting from the export advantages. It accumulated $68bn in reserves in September alone as a side-effect of holding down the currency. Fresh reserves are mostly being invested in eurozone bonds, pushing the euro higher.
Without dollar fall, U.S. will repeat crisis The United States may face a series of asset price bubbles and a rerun of the financial crisis unless it lets the dollar fall "at least" another 25 percent, economist Bernard Connolly said on Tuesday. Because fierce international resistance will likely prevent such a large dollar devaluation, Connolly told Reuters the Federal Reserve may instead have to extend indefinitely its artificial support of a struggling U.S. economy by purchasing another $2 trillion in U.S. Treasuries and federal housing agency debt.
Corporate America: Sinking Dollar Undermining Economy Chief executives from the biggest U.S. corporations worry that the slumping dollar could sap U.S. credibility around the globe, spur inflation and ultimately undermine the economy. The dollar has fallen to a 14-month low; and while a weaker dollar makes U.S. products cheaper overseas, chief executives gathered for the Business Council meeting in Cary, North Carolina, expressed deep concern that the anemic dollar signals serious jitters. "The issue is currency devaluation, and the worry is that it essentially lowers our credibility in the world," said Office Depot Inc CEO Steve Odland in an interview with Reuters on the sidelines of the conference. CEOs say that a slew of government spending programs on health care and other priorities could undercut economic recovery.
Dollar to Extend Slide as Global Economy Recovers, Pimco Says The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum, Pimco’s strategic adviser Richard Clarida wrote on the company’s Web site. Those forces include massive budget deficits, bets the Federal Reserve will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
The U.S. Dollar Will Not Crash The dollar is not going to crash. There may be grumblings in foreign capitals and "secret meetings" between finance ministers but, for now, the dollar appears to be safe. Foreign countries don't trade in dollars because they like America. They do it because they have no choice. If they want oil, they need dollars; it's as simple as that. It's great to talk about a "basket of currencies" replacing the dollar, but that's still a work-in-progress. It might happen, or it might not; no one really knows. What's clear, is that we still live in dollar-centric world where paper claims on wealth are arbitrarily increased at will by a handful of unelected officials at the Federal Reserve. It's a process which relies more on Gutenberg than moral authority.
Is alternative to dollar in works? Plan for 'Special Drawing Rights' creates competition for reserve currency The administration of President Barack Obama, without congressional authorization, is advancing a plan that could end the use of the U.S. dollar as the world reserve currency by setting up International Monetary Fund Special Drawing Rights to compete. The move comes as the dollar heads toward a 14-month low of $1.50/euro and as some top fund managers, including some of President Obama's top financial supporters, worry the decline will continue as long as Obama depends on China to fund trillion dollar budget deficits.
The Dollar Is Dying a Slow Death, Says Niall 'Ascent of Money' Ferguson The weakening dollar is dying a slow death. "It's clear where we're headed," says Niall Ferguson, author of The Ascent of Money. "Ten years from now there will be more than one international reserve currency," he tells Tech Ticker. Ferguson dismisses the dollar loyalists, citing the British pound – the last international reserve currency - as his example. "These things don't last forever" but don't expect it to happen overnight. "It's a long multi-decade process," he states. Even with the dollar near a 14-month low against the Euro, he claims it's not without historical precedence for the greenback to lose "another 20%" this year.
Zero Discount Value of Gold and Dethroning the U.S. Dollar A truly major change in the global monetary system is beginning to materialize. The dollar is starting to be dethroned. Foreign governments and central banks are going to do the dethroning. I have no prediction as to how slowly or quickly this process will take. The major dethroners, the Chinese, are on record as favoring a slow process. The transition is already occurring, however. Now that attitudes have shifted among the dethroners, they are likely to keep at it. The transition will be away from the dollar’s use in international exchange and toward the use of stronger and/or more stable currencies. International deals are being made already in non-dollar currencies or through barter.
PRECIOUS-Gold steadies above $1,050/oz TOKYO, Oct 21 (Reuters) - Cash gold steadied above $1,050 per ounce on Wednesday after snapping a two-day gain a day earlier on a recovery in the dollar and a lack of physical buying.
Gold keeps rising on weak dollar Gold prices advanced further in late Asian trade Tuesday as the dollar continued its southward journey. Spot gold was seen trading at $1062.12 an ounce at 4.30 p.m Singapore time while December gold futures were at $1,063.60 an ounce at the same time. However, immediate-delivery bullion lost 0.1 percent to $1,062.69 in London. The U.S. Dollar Index slid as much as 0.5 percent to a 14- month low. Hedge funds and other large speculators hold their most-bullish position ever in futures, helping to propel gold 20 percent higher this year as a weaker dollar and rising government debt spur concern that inflation may accelerate.
Gold and the “Dis-Savings” Glut This morning the price of oil rose over $79. Gold is trading at $1,051…about one-tenth the price of the Dow. The Dow fell 67 points on Friday. Investors began to wonder if the news coming from the banks was as good as the first reports indicated. For example, the Bank of America reported losing a billion dollars on its consumer accounts. It is all very well for JPMorgan and Goldman to make money. They’re investment banks. And they’re making money thanks to the US government’s generous bailouts. They pay almost nothing for borrowed funds…in dollars, of course. And then they take the money and bet against the dollar. So far, those bets are doing pretty well.
Let’s Talk About Gold! Wow! What can you say about gold?! It’s amazing how quickly now things are developing. The dollar is falling faster than anyone guessed and the rise of inflation will be just around the corner. What we are entering now is equivalent to falling into a black hole. We have gone too far with the mindless money creation. Now the rest of the world realizes that any investment in the dollar is guaranteed simply to depreciate. Even light does not escape from the depths of a black hole. The US dollar sure isn’t going to do any better.
Greenlight's Einhorn holds gold, slams US policies David Einhorn, the hedge fund manager who had warned on Lehman Brothers' precarious finances, on Monday said he is buying gold and betting that interest rates will rise as he lambasted the U.S. government's financial chiefs for short-sighted policy decisions. The exploding size of the national deficit, which reflects government policies that have simply rewarded bad behavior with massive bailouts, will make gold and gold stocks as well as call options on higher rates good investments, said Einhorn.
Gold ends higher as housing data hits stocks, lifts dollar Gold finished slightly higher after a volatile session, as the dollar hovered near 14-month lows and crude oil futures touched a new high for the year above $80 a barrel. Gold for December delivery rose 50 cents, or 0.05%, to end at $1,058.10 an ounce on the Comex division of the New York Mercantile Exchange. It earlier rose to a high of $1,066.20 an ounce. The thinly traded October contract also gained 0.05% to finish at $1,057.80. The precious metal still finished well off morning highs as weak U.S. housing data and mixed earnings eventually led investors to sell stocks and oil and to buy dollars, reducing gold's appeal as a hedge against a weaker currency and rising prices.
Gold above $1,000 isn't close to 'uncharted territory' Yesterday's Bloomberg News story with gold price predictions, appended here, may be most important for noting how much the gold price has lagged behind even official calculations of inflation and the growth of the world's money supply, strong evidence of the international central bank gold price suppression scheme. But as much fun as gold price predictions are, they are not really very useful, for few of them take the suppression scheme into account and anticipate the international political decisions that will perpetuate or end it more than ordinary market decisions will. In fact the world has no idea of a fair price for gold, a free-market price, since gold has never traded that way in modern times. In modern times the gold price always has been subjected to some degree of government intervention, sometimes open intervention, more lately largely surreptitious intervention.
Gold's Real Inflation Adjusted High at USD 7,150/oz Gold is trading at $1.063/oz this morning and traded between $1,048/oz and $1,066/oz over the last 24 hrs. In EUR and GBP terms, gold is trading at €710/oz and £648/oz respectively. Gold continues to gradually eke out gains and consolidate at near record levels on continuing oil strength and dollar weakness. Buying of physical remains robust on all price dips and this bodes well for further record highs in the short term. Most analysts have been wrong and bearish on gold in recent weeks, months and years and the predictions made by more bullish analysts that gold would reach its inflation adjusted high of over $2,300/oz were far from the consensus. But there is a gradual realization among some analysts that we are living in unprecedented financial and economic times and quantitative easing, near zero percent interest rates and the explosion of public debt on western governments’ balance sheets all mean that gold is very likely to reach its inflation adjusted high of 30 years ago at over $2,300/oz.
Is the London gold market a fractional system? . . . . Adrian Douglas’ assertion is that there is at a minimum four owners for each ounce of unallocated metal held in London. His support for this is to apply the ratio of average daily share trading in GLD (11.9m) to its shares outstanding (325m), rounding to a ratio of 1:30, to an estimate of the daily trading in gold in London to derive the amount of gold London should have. This is then compared to an estimate of what London does have, resulting in the 1:4 fractional ratio.
Gerald Celente on 'green shoots' - there is no recovery The Corbett report 19 Oct 2009
Who Woke the Dragon China is a sleeping dragon. Let it sleep. If it wakes, it will shake the world. -Napoléon Bonaparte It has been said God doesn't speak to mankind because mankind doesn't listen. Be that as it may, it is certainly true that England didn't listen to Napoléon's warning regarding China. Contrary to Napoléon's advice, England woke China up. In 1999 China was a source of cheap labor, the dot.com bubble hadn't yet burst, the financial deregulation allowed by the repeal of Glass-Steagall still had to work its destructive magic and global growth appeared to be endless. Life, however, was about to change. In 2000 the dot.com bubble burst and in 2007 the largest bubble in history, the US real estate bubble collapsed freezing credit markets around the world. Investment banks Bear Stearns and Lehman's fell, stock markets crashed and out of the rubble of change China emerged as a world power.
Senators Unveil New Bill to Audit the Fed Proponents of auditing the Federal Reserve have a new bill to support their cause. Sen. Jeff Merkley (D., Ore.) and Sen. Bob Corker (R., Tenn.) introduced legislation today to require the Government Accountability Office to audit several of the central bank’s emergency lending programs that were created during the financial crisis. The two junior senators are joining a movement that has drawn more than two-thirds of the House and a third of the Senate. But their legislation, the Federal Reserve Accountability Act, is intended to sidestep criticism that auditing the central bank would hinder the Fed’s independence in conducting monetary policy. The bill directs the GAO — the investigative arm of Congress — to audit emergency lending programs that aren’t already subject to government audits. (Institution-specific lending programs, such as those tied to AIG and Bear Stearns, are already open to GAO review, as are programs conducted jointly with the Treasury Department.)
Hank Paulson Held A Secret Meeting With Goldman Sachs In Moscow During that long summer between the collapse of Bear Stearns and the collapse of Lehman Brothers, Hank Paulson held a secret meeting with the board of Goldman Sachs in Moscow. Andrew Ross Sorkin tells the tale of the meeting in his new book, Too Big To Fail: When Paulson learned that Goldman’s board would be in Moscow at the same time as him, he had [Treasury chief of staff] Jim Wilkinson organize a meeting with them. Nothing formal, purely social — for old times’ sake.
Bernanke Guilty of Coercion and Market Manipulation In April Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis I made the case that BAC chairman Lewis was guilty of fraud and Paulson was guilty of coercion in regards to the shotgun wedding between Bank of America and Merrill Lynch. The case against Bernanke was weaker because of Bernanke's selective memory. When confronted by Congress with his role in this mess, Bernanke defense was that he did not remember what he said while Paulson called Bank of America a "Turn in the Punchbowl". Please see Bernanke Suffers From Selective Memory Loss; Paulson Calls Bank of America "Turd in the Punchbowl" for details. In July, Paulson attempted to defend himself, and in doing so Paulson Admitted Coercion. I asked again "Where are the Indictments?" Today, I am asking the same thing again.
Geithner says core TARP programs ending The Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery, Treasury Secretary Timothy Geithner said on Tuesday. "We are now at the point where we can begin to wind down the programs that really defined TARP in its initial stages," Geithner told Reuters in an interview, referring to the Troubled Asset Relief Program.
If Bernake Doesn’t Raise The Fed Interest Rate Very Soon There Will Be BIG Trouble The debate about whether it was Alan Greenspan’s “fault” will continue for generations, the “other side” summed up their position nicely in a quip that came up in the debate about whether to let the Fed have more power, “ That’s like buying your teenager a sports car after he wreaked the family saloon”. Greenspan did point out at one stage that with $100 trillion of debt created by the private sector of which $20 trillion was “manufactured” between 1998 and 2007 by securitization of assets in USA, something that the Fed had, or elected to have, no control over, what the Fed did or did not do to with the base rate was largely irrelevant.
Top banks cut small business lending by $8 billion As small business loans continue to dry up, the President readies a new set of initiatives aimed at reversing the trend. President Obama is trying -- again -- to help small business get the cash they desperately need. The President will visit a small business in Maryland on Wednesday to present a series of initiatives aimed at increasing bank lending to small businesses, according to a White House official. The programs the President will unveil include an increase in the maximum amount businesses can borrow through the Small Business Administration's primary loan program, which currently stands at $2 million. In addition, the Treasury Department will expand access for smaller banks to the Troubled Asset Relief Program (TARP), a move aimed at spurring more local lending by community banks.
Big banks take your money and run The titans that survived last year's tumult have gathered deposits by the bushel. But they have shown less of a knack for lending it out. A river of cash has flowed into the biggest banks over the past year. But for borrowers, it has been more of a meandering stream. Deposits at the top five bank holding companies soared 29% in the year ended June 30, according to the Federal Deposit Insurance Corp. Yet only one of those banks -- PNC of Pittsburgh -- boosted its lending by the same magnitude, according to midyear data from regulatory filings.
Anatomy of a Scam: This “Prime Bank Program” Has Already Cost Investors Billions Two years ago, an associate of mine lost $100,000 because he didn’t listen to me. A year ago, I saved a manufacturing company from the same scam. And just last week I saved a friend of mine $300,000. For several years now, a far-fetched but seemingly plausible investment opportunity has been wreaking havoc across the globe. In the United States alone, an estimated $10 billion has been lost in this particular gambit. The scheme is typically hidden behind such legitimate-sounding names as “Prime Bank Trading Programs,” “High-Yield Investment Programs,” or “Roll Programs.”
At rescued banks, perks keep rolling BOSSES BENEFIT AFTER BAILOUT Fringe compensation rose 4 percent last year Even as the nation's biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives. The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.
Morgan Stanley Resumes PAC Giving After TARP Funding Repayment Morgan Stanley’s political action committee resumed donations in the third quarter of this year after the New York-based investment bank paid back its U.S. taxpayer rescue funds, Federal Election Commission records show. The PAC had ceased making campaign contributions until Morgan Stanley repaid $10 billion in June under the Troubled Asset Relief Program. After making no donations during the first six months of this year, Morgan Stanley gave $157,500 between July 1 and Sept. 30, including $120,000 in September. The investment bank made $374,000 in political contributions during the first nine months of 2007; its donation total for the comparable period this year represents a 58 percent reduction.
TARP Chief Elizabeth Warren Says We’ll Never Know Where TARP Funds Went Elizabeth Warren is the person charged with overseeing the U.S. banking bailout, formally known as TARP. In a recent interview with Aaron Task of The Economist, speaking on the proposed Consumer Financial Protection Agency, she said: “The banks, big banks, always get what they want. They have all the money, all the lobbyists. And boy is that true on this one. There’s just not a lobby on the other side.” No lobby on the other side? The “pro-Consumer Financial Protection Agency” side? Isn’t that the President of the United State’s side? Does that side need a lobby? Oh dear. The President needs a lobby.
Dow Could Go to 13,000. But Will Likely Reverse (Suddenly) By More Than 20% This is the analysis used to predict in May that the Dow would reach 10,000 without a major reversal, (personally I didn’t expect then that it would happen so quickly). I’ve put on my estimate of where I reckon it is now (in red). It’s approaching the “danger zone” (dotted black ring), although reversals when the mispricing is negative tend to be more restrained. That analysis was based on two lines of logic, the first is to calculate what International Valuation Standards calls “other-than-market-value” (some people call that “fundamentals” but since so many people have so many opinions on what that is I don’t use that word, and I do it strictly in accordance with IVS with some don’t).
Global Recovery "Tenuous," Years of Slower Growth Ahead, says Former IMF Economist The recession may be over but with unemployment hovering near 10%, talk of a V-shaped recovery is exaggerated, says Zanny Minton Beddoes, economics editor at The Economist. Like famed investor George Soros, Minton Beddoes believes in a 'backward square-root shaped' recovery, i.e., a sharp recovery followed by a prolonged bout of slow or no growth. "We may be in a world economy that congenitally has a slower speed limit as a result of this crisis," she says. At this point the "global recovery is tenuous," the former IMF staff economist tells Tech Ticker. More importantly, "it's a recovery on the back of government support."
Will High Unemployment Strangle the Recovery? The worst recession since the Great Depression has already eliminated 7.2 million jobs, and analysts figure 750,000 more jobs could disappear over the next six months. That means the administration of U.S. President Barack Obama may be forced to employ a second stimulus if it wants to preserve the fledgling recovery that has carried the Dow Jones Industrial Average back above 10,000. The U.S. unemployment rate officially hit 28-year high of 9.8% in September, according to the Labor Department. But that number grows to 16.8% when you add the number of “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers,” also known as the “underemployment” rate.
Obama Administration Announcing Another Dumb Housing Bailout Plan If at first you don’t succeed, you can try, and try, and try again- especially if you can just hand the check to the taxpayers. Here’s how the Treasury Department described the latest housing program in their press release yesterday: On February18, President Obama announced the Homeowner Affordability and Stability Plan, a comprehensive plan to stabilize the U.S. housing market by supporting low mortgage rates, providing alternatives to foreclosures, and expanding access to refinancing and loan modifications through the Making Home Affordable program. The plan is working. Millions of Americans have refinanced to lower rates, mortgage markets are helping families buy their own homes, and our modification initiative is giving households a second chance to stay in their homes.
Mortgage help to aid states The Obama administration on Monday unveiled a program to support state and local housing finance agencies. The plan will help the agencies finance mortgages for first-time homebuyers and develop rental housing. The agencies have had a hard time raising money because of the housing crisis and credit crunch. This year, the agencies have sold about $4 billion in tax-exempt bonds -- one-fourth the amount in a typical year. That reduction is limiting the number of loans they can make. The new program uses mortgage finance companies Fannie Mae and Freddie Mac to help fix the financing crunch. The two companies will package mortgages made by the housing agencies and sell them as bonds to the Treasury Department.
Homes: About to get much cheaper National home prices are forecast to shrink another 11%. Miami, Las Vegas and Phoenix will record steep declines, but a few cities will actually post gains. If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower. Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices. Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.
Employers Hold Off on Hiring Companies across the economy are holding off on hiring even as the profit outlook improves, amid economic uncertainty and their own success at raising productivity in rough waters. Hiring always lags behind in economic recoveries, but the outlook this time is worse, many economists say. Most forecasters now expect a prolonged period of high unemployment, even though the government is expected to report next week that the economy grew in the third quarter, after four quarters of contraction. That is sure to frustrate the jobless and could be a problem for the Obama administration.
Blankfein: 'We contribute to growth' Facing jeers over outlandish pay, the CEO of Goldman Sachs stresses the social goods of his firm's business. Furor over bonuses shouldn't obscure the role Goldman Sachs plays in fostering global economic growth, CEO Lloyd Blankfein said Friday. Blankfein, speaking at a breakfast conversation hosted by Fortune, emphasized that the investment firm serves "an important social purpose" by channeling pools of money held by pension funds and others to companies and governments around the world.
How Uncle Sam is killing your savings Ultralow rates are hurting the nation's prudent savers as they bear the brunt of Wall Street. This is a quiz. What do the record-high Wall Street bonuses have in common with the record-low yields for savers? Answer: They show yet another way that prudent people, especially those living on fixed incomes, are being screwed by the government's bailout of the imprudent. Here's the deal. The government is spending trillions to keep interest rates down in order to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers' incomes.
Citi closes gas-linked MasterCards without warning Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected. Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was "closed at credit grantor's request" on the Shell MasterCard account. "They said there was a routine review," said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time. Burdette isn't alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.
Latest bank fee is for paying off credit card on time every month You floss regularly, yield to oncoming traffic and use your credit cards judiciously, dutifully paying off your balance every month. You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case. Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.
Countrywide Mortgages Lead California in Defaults Default notices on California home mortgages rose almost 19 percent in the third quarter from a year earlier as job losses and falling property prices deepened the state’s housing recession, MDA DataQuick said. Loans originated by Countrywide Financial Corp. accounted for 6.8 percent of the 111,689 default notices recorded by MDA DataQuick. Washington Mutual Inc. originated 4.6 percent of the sour loans and Wells Fargo & Co. almost 4 percent, San Diego- based MDA DataQuick said today in a statement. “There’s a batch of truly nasty loans that were made in mid-2006,” John Walsh, MDA DataQuick’s president, said in the statement. “It’s taking a long time to process them.”
Finance Committee [Health Care] bill has been filed Senate Finance Committee members have been notified that the committee's health reform bill was filed today. S. 1796 weighs in at 1,502 pages, according to a Senate Republican leadership source. . . . . . To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.
Income levels rise in 36 states, but not in Arizona Personal income rose in 36 states and the District of Columbia during the second quarter of 2009, a sharp turnaround from the 49-state decline in the first quarter. But new figures from the U.S. Bureau of Economic Analysis (BEA) show that Arizona incomes were down 0.1 percent, ranking the state 40th out of the 50 states and the District of Columbia. North Dakota registered the fastest income growth rate during the three-month span of April, May and June. Personal income jumped 1.5 percent in that state, compared to the period of January, February and March.
Unemployment: Now That's Sustainable! Every time the media reports the unemployment numbers, it reminds me of George Orwell's book, 1984. In the legendary book, a governmental organization referred to as the "Ministry of Truth" would report through the telescreens that the price of chocolate was going down. Winston Smith, the lead character of the book, knew good and well that the price of chocolate was not going down but was actually going up. We are certainly living in Orwell's world! The difference between ours and the fictional world of Orwell, is that we are not being propagandized about chocolate, but rather unemployment statistics. The controlled news media always attempts to "butter up" the bad numbers, by putting a positive spin on the fact that we are losing our jobs, month after month.
Higher jobless rates could be new normal Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years. That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting. The words "it's different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can't be counted on now. Here's why: The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.
Economic Shock: 1 in 6 Americans in Poverty The level of poverty in America is even worse than first believed. A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure. The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.
Personal Bankruptcy Filings Skyrocket In Connecticut Personal bankruptcy filings in Connecticut skyrocketed 44 percent in the third quarter compared with a year earlier as job losses and salary cuts squeezed household budgets burdened by high credit card bills, a new report showed Monday. There were 2,569 personal bankruptcy filings in the state in the three months ending Sept. 30, compared with 1,773 for the same period in 2008, according to the report from The Warren Group.
Internet Influences Positively Old Brain Researchers found that older adults who started browsing the Web experienced improved brain function after only a few days. In a research scientists stated that a much greater extent of activity was detected especially in the areas of the brain that make decisions, the thinking brain after just a week of practice, -- "which makes sense because, when you're searching online, you're making a lot of decisions".
Financing to Become Critical for Climate Treaty This week the world's major economies met in London this week. Some of these countries of the Major Economies Forum (MEF) are long-term, hardcore fossil fuel addicts – rich countries including the US, UK and the rest of Europe – while developing countries are only just getting a taste for high-carbon development. Gordon Brown is right that world leaders must engage seriously in securing a strong and fair agreement and that action must be taken now. The question, of course, is how.
Israel Wants International War Laws to Be Changed Tuesday Israel's Prime Minister Benjamin Netanyahu instructed his government to draft an initiative to amend the international laws of war after the Goldstone report on its war in Gaza. The security cabinet did not, however, discuss calls made by ministers for an internal investigation into the 22-day offensive at the turn of the year that killed some 1,400 Palestinians and 13 Israelis, an official told AFP. "The prime minister instructed the relevant government bodies to examine a worldwide campaign to amend the international laws of war to adapt them to the spread of global terrorism," his office said in a statement.
Asia Said to Be Leading the Globe Out of Crisis Ben S. Bernanke, the chairman of the Federal Reserve, said on Monday that Asian nations were pulling the global economy out of its downturn but warned that both Asia and the United States needed to do more to reduce global trade imbalances. Speaking at a conference on Asia hosted by the Federal Reserve Bank of San Francisco, Mr. Bernanke said Asian countries had bounced back from the global recession faster than the rest of the world and had reported “impressive” growth.
William Hague under pressure from US over Conservative allies in Europe Clinton urged to condemn party's links with Polish and Latvian right-wingers The shadow foreign secretary, William Hague, is to meet the US secretary of state, Hillary Clinton, in Washington tomorrow amid concern in the Obama administration about the Conservatives' European policy and Jewish outrage at their alliance with far-right parties with alleged antisemitic and neo-Nazi links. There is growing unease in the White House that David Cameron's Euroscepticism could undermine the ability of a Conservative government to influence events in the EU, threatening to weaken Britain in the eyes of the US. Clinton, while anxious not be seen to be interfering in a domestic election, has discussed the issue informally in Europe.
U.S. offers much, Russia gives little It's not easy to craft a new relationship with Russia. Just ask Secretary of State Hillary Rodham Clinton. During a two-day visit to Moscow last week, she went out of her way to improve ties, going beyond even what her friend and Russian-speaker Madeleine K. Albright tried when she held the job from 1997 to 2001. But while the body language is better, the Russians appear to be pocketing the U.S. moves and giving little in return, diplomats and analysts say. "So far, the 'reset' of the relationship has been mostly on the U.S. side and that remains the case after [Mrs. Clinton's] meetings," said Angela E. Stent, director of the Center for Eurasian, Russian and East European Studies at Georgetown University's School of Foreign Service.
Barack Obama's envoy hails 'great opportunity' in Afghanistan President Hamid Karzai's decision to call a run-off election next month was hailed today by Senator John Kerry, who had been hastily dispatched to Kabul by Barack Obama to make it clear to Karzai that resolution of the political crisis was a prerequisite for increased military support. Kerry said that lack of a clear outcome in the election had left "many Afghans with legitimate doubts about the future". He said: "With the nation facing extraordinary challenges, a time of real uncertainty has been transformed into a time of great opportunity."
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Tues 10.20.2009
Congressman Mike Rogers' opening statement on Health Care reform in Washington D.C.
Colorado insurers say health care bill would lead to "system collapse Colorado insurance executives, cautious supporters of health care reform throughout the past year, are now warning that current proposals could cause a "system collapse." At issue are what insurance companies consider absurdly low penalties for people who choose not to buy health insurance. Their concern: People will buy insurance only when they desperately need it, such as after they're diagnosed with cancer or heart disease. Healthy people might choose to pay the penalty, now proposed at a few hundred dollars per year, because it is far less expensive than buying insurance.
Poll: majorities support public option, health insurance mandate As Democratic congressional leaders and White House officials work to shape health care bills that will go to the House and Senate floors, a new Washington Post-ABC News poll shows that support for a government-run health plan to compete with private insurers has rebounded from its summertime lows and now wins clear majority support from the public. Americans remain sharply divided about both the overall health care package and President Obama's leadership on the issue, reflecting the intense partisan battle that has raged for months over the administration's top legislative priority. But majorities now back two key and controversial provisions: both the so-called public option and a new mandate requiring all Americans to carry health insurance.
Alan Grayson on Bill Maher: GOP Health Care Reform Would Be Letting You Bring A Gun to the Doctor
Gold at $2,000 Becomes Inflation-Adjusted Bullseye for ‘80 High Gold’s rally to a record means prices are still 53 percent below the 1980 inflation-adjusted peak. While gold rose 19 percent this year to $1,072 an ounce on Oct. 14, consumer prices almost tripled in the past three decades, eroding the metal’s value. Bullion hasn’t kept pace with the cost of bread, fuel or medical care. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.
Gold climbs above $1050 as dollar eases Gold prices advanced again Monday as the dollar pared early gains against major currencies and oil hit a new one year high. The precious yellow metal was seen trading at $1050.85 an ounce at 3.00 p.m Indian time while U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $4.20 to $1,055.70 an ounce. Analysts said gold is on the way to set new record highs above the peak of $1,070.40 an ounce it set last week if the dollar continues to weaken against the euro, boosting interest in the metal as an alternative asset.
Gold is Money Does this strike you as a curious title for an FOFOA blog post? I'll bet some of you are saying yes while others are thinking "huh? What kind of a stupid question is that?" Onward... One of the greatest compliments I receive is when people say that I write in a way that anyone can understand. But one of the reasons my posts come across this way is that I really try to avoid stereotypical and dogmatic words. I especially try to avoid words deeply embedded in our elite academia. The problem is that these words carry so much baggage. They carry a standardized mental picture that is often wrong. In fact, some words carry multiple images specific to different factions of belief.
David Einhorn Has A Gold Treasure Trove Somewhere In Manhattan David Einhorn revealed that Greenlight Capital has amassed a hoard of gold somewhere in Manhattan. Einhorn, the hedge fund manager famous for shorting Lehman Brothers back before shorting Lehman was cool, was talking at the Value Investing Congress in New York today. He was discussing his reasons for buying gold as a hedge against inflation.
GOLD AND SILVER RALLY OVEREXTENDED OR JUST GETTING STARTED? Gold and Silver are slowly becoming mainstream news when it comes to investing. Many investors are wondering if these precious metals are overextended or just getting started. The precious metals doubled bottomed back in November of 2008 and have moved almost straight up since. Since November Gold is up over 43% while Silver is up an astonishing 84%! During that same time period the S&P 500 is up almost 28%.
Is Gold Too High? . . . . To answer our original question, is gold too high? Gold is now in the second upswing of the commodity pendulum. In the first upswing, it multiplied by a factor of 25. So far, gold has multiplied by a factor of 4. Are we near the end? Probably not. I regularly monitor this second upswing of the commodity pendulum and estimate where we are now as compared with the pattern of the 1970s.
Gold in Early Stage of Uptrend Measured in Foreign Currencies, Crude Oil Near Breakout The first chart shows the gold price divided by the US Dollar Index Bearish Fund. In effect, it shows how gold is moving when measured in the currencies the US Dollar Index consists of. The index is a weighted geometric mean of the dollar's value compared with:
Euro (EUR), 57.6% weight
Japanese yen (JPY), 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight.
Gold recently broke out from a cup and handle formation marked by the thick green line, and appears to be starting a significant move against paper currencies in general, not just the U.S. Dollar.
Gold's virtual hostage crisis continues on Comex Gold prices started the new week off in Asia overnight by reversing Friday's slim gains and re-testing the $1050 level as a strengthening US dollar was once again part of the background picture. More than 13.5 tonnes of gold flowed out of the combined balances of gold ETFs on Friday. During a week when the metal inked new records into the books? The overnight losses in gold did not amount to more than $5 however, and the yellow metal was able to retake the mid-$1050s prior to the start of Monday's NY session. The European common currency also fell in the early hours, for a second day, due to concerns that Old World financial policy makers will discuss the currency’s recent strength and what to do about it, when they meet later today.
What Does Adens’ $5,800 Gold Projection Mean for Gold and Silver Junior Equities? The only bull market we can compare the current eight year rise in the price of gold to is the ten year rise in the 1970s. The Aden sisters, Mary Anne and Pamela, have extrapolated the future price of gold using the same growth rate as in the ‘70s and applied it to the current bull market and reported their findings in their latest Aden Forecast. They determined that if one were to compare the bull market’s second rise from 1976 to 1980 to the current bull market we could see gold eventually reach $4,100 during the next run-up. They further reported that if one were to take the entire bull market gain in the 1970s at 2,300% and extrapolate it to today’s situation then $5,800 would be the equivalent upside target.
Gold bears gathering, but gold bulls defiant Argument pits technical indicators against fundamentals Gold ends the week weakly, and the gold bears scent blood. But the gold bulls are still bellowing. Last week saw the highest U.S.-dollar gold price ever, just over $1,070, and the highest London P.M. fix ($1,059.50). Yet by the end of the week gold was $13.50 off its peak, less than $3 up on the week. Many voices were to be heard predicting an important -- possibly short-term -- decline. The bears cite a variety of technical indicators. The bulls deploy sweeping fundamental arguments, often very impressively.
THE GOLD BASIS IS DEAD ? LONG LIVE THE GOLD BASIS! . . . . There seems to be circumstantial evidence that this month the gold exchanges are unable to honor their expiring contracts for which delivery notices have been issued in September. It has occurred in spite of a robust, even increasing, contango. Furthermore, circumstantial evidence exists that counterparties to these expiring contracts for future delivery — bullion banks, to be precise, the name of J.P.Morgan and Deutsche Bank being prominently mentioned — have offered bribe money up to 125 percent of the quoted spot price to holders of long contracts if they would take settlement in paper, on condition that the embarrassing affair will be kept secret. If true, these maneuvers are motivated by the desire to conceal the real gold basis, and to deny that gold is in or approaching backwardation. If the truth were widely known, then there would be a run on the bullion banks.. . . . There seems to be circumstantial evidence that this month the gold exchanges are unable to honor their expiring contracts for which delivery notices have been issued in September. It has occurred in spite of a robust, even increasing, contango.
Physical Gold Inches Closer To Monetization, Now Allowed As Margin CollateralHere's some hope for those who wish we could back to a gold standard. Physical gold can now be posted as margin collateral with the CME Group for any exchange product. Dow Jones: Clearing member firms will be allowed to post up to a maximum of $200 million worth of gold as collateral to cover performance bond, or margin, requirements, Hughes said. The policy was a byproduct of CME's recent launch of clearing services for over-the-counter London gold spot and forward?contracts, he said.
CME To Allow Gold As Margin Requirement Collateral Is JPMorgan in urgent need of gold replenishment? If one reads between the lines of today's surprising announcement out of the CME, that the Chicago exchange will allow the use of gold as collateral for margin requirements (for up to $200 million), with the actual physical gold to be stored at JPM's bank in London, that is one possible explanation. From a Nasdaq press release: U.S.-based clearing house CME Group Inc. (CME) will allow physical gold to be used as collateral for margin requirements on all exchange products, a spokesman said Monday.
Is your gold really there? Continuing doubts are being expressed that all the gold claimed to be held by Central Banks and others may not be there, or title is being held by several parties as the statistics just don't appear to add up. It doesn't just seem to be GATA which nowadays is questioning whether the volume of gold held in ETFs and in official reserves is really there - or perhaps there is more than one title to what is actually in the world's gold vaults? Would a run on gold bullion thus create panic among the Bankers? Banking has run for centuries with the banks themselves only keeping on hand a fraction of the money owed to depositors with the balances loaned out and not always immediately available, if indeed it is even there at all, so when there is a run - like that on Britain's Northern Rock last year - the bank concerned can find it tough to keep its head above water. Northern Rock, in the event, needed to be bailed out by the U.K. government.
Platinum: A Stronger Safe Haven Than Gold? Gold has scored a lot of press lately, and for good reason: Its price just keeps on making new records and breaking them. Just last week, the yellow metal recently struck a new all-time high of $1,072/oz. But on a year-to-date basis, another precious metal has quietly outshone gold's returns: platinum. As we've discussed before, platinum is both an industrial metal and an investment vehicle, used to make jewelry, construct automobile catalytic converters and as a safe haven for bullion investors. Last year, the white metal was still in hot demand: According to Platinum Today, in 2008, miners across the globe produced 185.7 metric tons of platinum, but consumers used 197.4 metric tons of the white metal—a deficit of 11.7 metric tons.
Ron Paul: US Dollar Collapse When China Stops Buying Debt In February of 2009 Ron Paul warned of a US Dollar collapse when China stops buying out debt in this video. There are many good points that Mr. Paul points out in the video but none were more prophetic then calling for the dollar bubble to burst. When the video was recorded the US Dollar index was around 86. Today the US Dollar Index is currently at 75.5. Another ironic fact about this video is that shortly after this video was recorded President Obama went on 60 Minutes and made the statement that “the dollar is still strong.” Unfortunately the dollar was not strong and we have seen that as a 10% drop has happened since the president’s statement. For those of you wondering why the value of the dollar continues to decline it is truly supply and demand.
Won Crushes Yen as Dollar Substitute in Asian Rally Asian central banks are running out of ammunition to fight their currencies’ biggest rally since 1998, paving the way for South Korea, Taiwan, Indonesia, Thailand and India to help lead foreign-exchange performance next year. JPMorgan Chase & Co.’s index of Asian currencies has risen 5.6 percent since its strongest two quarters in 11 years began March 31. Of 34 currencies ranked by Bloomberg forecast surveys, the won, Taiwan dollar, rupiah, baht and rupee will be among next year’s dozen strongest, median estimates show. The won has the best prospects and is the second-most undervalued of 16 major currencies as measured by purchasing power.
Dollar continues to push gold upwards Dollar hits a 14 month low, oil a 12 month high and gold trades at a new historical high. Once again the US dollar is on the skids, and while much of the action was probably focused on the Yen and the Pound, the greenback lost some 200 pips against the Euro and the dollar index dropped to a 14-month low amid concerns over the mushrooming U.S. budget deficit and debt burden. This decline in the dollar has led central banks to diversify, and their diversification moves could push the dollar down further. The dollar index is now below 76. Meanwhile, gold continued its record-breaking run with December gold touching the $1070 an ounce level, the highest ever. The metal is up 19% this year, heading for the ninth straight annual gain, while the dollar has dropped 6.6% against a basket of six major currencies, since the beginning of the year.
Dollar slips as N.Y. Fed clarifies steps toward 'exit strategy' The U.S. dollar declined on Monday after the Federal Reserve Bank of New York shed light on some recent activity that market participants had interpreted as preparation for removing liquidity from the financial system. The dollar index , a measure of the greenback against a trade-weighted basket of currencies, stood at 75.373 down, from 75.584 late Friday. The greenback also faced pressure as benchmark U.S. equity indexes advanced about 1%, luring investors into riskier assets and away from the relative safety of the dollar.
Banks Tell Traders To Keep Attacking The Dollar It's no wonder the Dollar keeps taking a beating: Traders at banks are being told to keep hammering away at the poor greenback. An internal RBS memo tells traders in no uncertain terms to: Stay with the established themes of
USD weakness and
carry/trends trump valuations.
One place to oppose this is GBP. In part, their bet is to be on the same side as emerging market governments, such as those in Latin America: Expectations of a relatively strong economic recovery and USD weakness should increase pressure on the region's Governments to intervene to stem FX appreciation.
Dollar Touches Lowest Level in 14 Months on Fed’s Rate Signal The dollar touched a 14-month low against the euro as the Federal Reserve signaled it will keep borrowing costs down while assessing a way to drain cash from the financial system. Canada’s dollar rose against the U.S. currency yesterday for the first time in three days, climbing to almost the highest level since July 2008 on a rally in crude oil. The U.S. dollar declined against 13 of the 16 most-traded currencies tracked by Bloomberg as a gain in stocks encouraged demand for higher- yielding assets at the expense of the greenback.
The European Union at a crossroads in 2010: an accomplice or a victim of the collapse of the dollar?" The major trends at work in the 4th and 5th phases of the global systemic crisis (the decanting phase and the global geopolitical dislocation phase) are unveiling every day (1). Everyone has now realized that the United States is being swept into an uncontrollable spiral involving widespread insolvency of the country and gross incompetence of the U.S. elite in implementing the necessary solutions. The foretold US default is well underway as exemplified by the falling dollar and the flight of capital from the country: only the name of the liquidator and the recognition of the bankruptcy are still missing, but it shouldn't be long now. Following the example of its leader, the Western bloc (which Japan has undertaken to move away from, implementing completely new political, economic, financial and diplomatic policies (2)), is in total decay symbolized by NATO's coalition in Afghanistan (3).
Debt Spiral Financial Holocaust Fiat Currencies Zero Bound, the Next Down Leg The demise of the G7 financial systems, currencies and economies continues to march along as incomes collapse. The social welfare states and their banking system’s Ponzi finance-based economies are BROKE, their obligations and promises irredeemable and unpayable. A debt spiral is in full view, irreversible with policymakers unable or unwilling and opposed to making the changes required to CREATE PRIVATE SECTOR INCOME GROWTH and control SPENDING, and which must be done to avert the final CALAMITY.
FLECKENSTEIN: THE FED IS REINFLATING OUR PROBLEMS Bill Fleckenstein has navigated this market flawlessly over the last year and more importantly, he has absolutely nailed the macro outlook. He believes the Fed is reinflating all of our problems and believes that nothing has been resolved over the last year: Fleckenstein is correct, and he has a lot of company that he may not be aware of that are with him. To list just a few: Karl Denninger, Tavakoli,Simon Johnson, Jim Rogers, Marc Faber and loads of others. Unfortunately they are not given as much time and credence on TV as the sunshine pumpers. Some of these idiots will be trying to make an extra buck right up until the implosion when they lose it all. Not logical is it? Obama, Geithner, Bernanke and company are crazy to be doing what they are doing. You can’t stop an avalanche or a primary trend ( per Richard Russell). What you can do is get out of the way and try to reduce the damage done.
The End of 'Easy Oil' The world isn't running out of crude oil but it is running out of “easy” oil. That is, the massive, technically easy- and cheap-to-produce onshore oilfields that have been the bastion of global production for decades are reaching maturity. Mounting evidence suggests that the decline rate on these mature fields is a good deal higher than analysts usually include in their models. The faster the decline rate, the harder it is for producers to generate real production growth; companies must first offset lost production. To compensate, producers are tapping complex, distant and expensive-to-produce oil reserves.
The Countdown Has Begun? Banking and Intelligence Sources Warn of Possible Nuclear Device Attacks in U.S. Cities In this climate of possible Banking implosions, potential WW III scenarios, continued destruction of the American middle class, and Martial Law threats against American rights and liberties, the Q-files crew pays very close attention to all information coming from various HAM radio operators monitoring the HF radio frequencies used by the Military, Intelligence, and Law Enforcement groups. Continued monitoring over the last 6 years has produced many telltale heads up warnings and confirmations of other intel from sources that have been brought to you by the Q-Files crew on the Radio programs and in alerts and commentaries posted on this website and in several cases has also provided critical information to Military and Intelligence operators who for whatever reason were not apprised of that information.........including a fumbled handling of an alert of an incoming Russian Bomber Bogey given by a P3 Orion plane to a bumbling, incompetent National Comm Center operator who suggested that the P3 Orion handle the intercept of said Russian Bomber. When in near real time the Q-Files got this word out .......the urgent request by the P3 Orion for an immediate scramble of interceptor fighter craft onto that Bogey........lit up the afterburners on more than one airbase on the east coast and said Bogey was intercepted and escorted back where they came from .
The History of the Future: Trends 2012 Autumn 2012, the “Greatest Depression” has spread worldwide. Billions are unemployed, homeless and desperate. Countries bankrupt, trade pacts broken, tariffs rise, borders close. Protectionist, nationalist and anti-globalization movements have moved out of the margins and into the mainstream. Immigrants brought in during boom times – blamed for bringing down wages, stealing jobs and rising crime – are being rounded up and deported. Despite differences between the 1930’s Great Depression and today’s “Greatest Depression,” unsettling similarities conjure up memories of pre-World War II. From the United Kingdom to Russia, war drums eerily beat.
[Financial] Armageddon in Alabama Proves Parable for Local U.S. Governments In its 190-year history, Jefferson County, Alabama, has endured a cholera epidemic, a pounding in the Civil War, gunslingers, labor riots and terrorism by the Ku Klux Klan. Now this namesake of Thomas Jefferson, anchored by Birmingham, is staring at what one local politician calls financial “Armageddon.” The spectacle -- a tax struck down, about 1,000 county employees furloughed, a politician indicted over $3 billion in sewer debt that may lead to the largest municipal bankruptcy in history -- has elbowed its way up the ladder of county lore. “People want to kill somebody, but they don’t know who to shoot at,” says Russell Cunningham, past president of the Birmingham Regional Chamber of Commerce.
The Greatest Depression Is Coming Good times will not be returning any time soon. We continue to lose jobs month over month. And, while the statistics being released are showing a slow down, this is basically a fabrication. There are thousands of people falling off of unemployment compensation each week — none of them are reflected in the official numbers. Shadowstats.com estimates unemployment is above 20%. Take it for what you will, but these numbers are rapidly approaching the unemployment rate during the last well known depression. Credit is contracting. The last decade in America has seen credit, or debt, however you want to look at it, essentially become a second income. No more. The banks may be getting billions in loans, but for the individual on the street, credit is frozen. Couple this with the loss of primary income streams and you have a lot of people with no money for even essential goods.
China gets tough over America’s ballooning debt Americans should be hoping that the Chinese will be kinder to us than we were to the Brits after the second world war. Readers of a certain age will remember, and the younger ones who study history will have learnt, what creditor Uncle Sam did to debtor John Bull when Britain sent John Maynard Keynes to Washington to negotiate a loan from us. Britain had spent blood and treasure to beat the Nazis, and was hoping for a gift of $3 billion, a credit line of $5 billion, and other generosity. But President Harry Truman, advised by communist spies such as Harry Dexter White, insisted on terms so onerous that the pound was supplanted by the dollar and Britain was, in the view of some, expelled from the first rank of economic powers for decades, until Margaret Thatcher decided that her government’s job was not to manage decline.
China's Monster GDP Will Mask Underlying Weakness China could show some serious economic growth according to an RBS report: This week features a very important batch of macroeconomic data from China (on Thursday), including Q3 GDP, inflation and industrial production for September. The strong rebound in activity in emerging Asia attracted the attention of market participants during the summer, as they were relentlessly focusing on assessing the shape and the pace of the nascent recovery. In July, the preliminary estimate of the Q2 GDP figures for Singapore and Korea (an annualized 20% after a series of quarters of negative growth for the former and a 9.7% annualized for the latter – the fastest quarterly growth in more than five years) were already hinting that the region was in recovery mode and that growth dynamics were stronger than in the developed world, thanks to the resumption of the global trade cycle, the strong policy support and much healthier internal demand.
Marching Toward Zombieland When sober-minded individuals begin to regard an enterprise within a nation as "an enemy of the people" you can bet that some serious blood is going to flow. This is now essentially the situation for the Goldman Sachs company, which last week announced third-quarter earnings of over $3 billion largely derived from converting zero percent loans from taxpayers into zero risk profits off of anything paying more than zero percent in interest, revenue, or dividends. The "people" across this big country may not have a clue how any of this is done, and there may be much to fault them on from the care-and-feeding of their own bodies to the content of their dreams, but you can't argue with the fact that they are heavily armed to an extreme. And although it may be hard to measure with precision, one might venture to state that they are increasingly pissed off. How else explain popular entertainments like "Zombieland?"
Financial Holocaust, Zero Bound and the Next Leg Down The demise of the G7 financial systems, currencies and economies continues to march along as incomes collapse. The social welfare states and their banking system’s Ponzi finance-based economies are BROKE, their obligations and promises irredeemable and unpayable. A debt spiral is in full view, irreversible with policy makers unable or unwilling and opposed to making the changes required to CREATE PRIVATE SECTOR INCOME GROWTH and control SPENDING, and which must be done to avert the final CALAMITY. The greatest transfer of wealth from those who store it in paper to those who don’t is unfolding. A Crack-up Boom approaches…
Bernanke says US must 'substantially reduce' budget deficits Federal Reserve Chairman Ben Bernanke on Monday called for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis. Bernanke's remarks to a Fed conference in Santa Barbara, Calif., comes just days after the federal government on Friday reported a $1.42 trillion deficit for 2009 budget year that ended Sept. 30. The previous year's deficit was $459 billion.
How The Federal Reserve Bailed Out The World When the financial system almost imploded in the fall of 2008, one of the primary responses by the Federal Reserve was the issuance of an unprecedented amount of FX liquidity lines in the form of swaps to foreign Central Banks. The number went from practically zero to a peak of $582 billion on December 10, 2008. The number of swaps outstanding was almost directly inversely correlated with the value of the dollar (much more on that shortly).
FDIC Failed to Limit Commercial Real-Estate Loans The Federal Deposit Insurance Corp. failed to enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed, reports by the agency’s watchdog show. The FDIC’s Office of Inspector General analyzed 23 lenders taken over by regulators from August 2008 to March and found that for 20, the agency’s examiners didn’t identify the issue early enough or should have taken stronger supervisory action after recognizing the banks had dangerously high levels of the loans before they failed. The findings are in separate reports posted this year on the inspector general’s Web site.
Four Banks in Govt’s 'Healthy Bank' Bailout Struggle to Survive The government has doled out billions to 687 banks over the past year through a program meant to bolster already “healthy” banks. But an increasing number of those are troubled. Four banks in particular are foundering, including one that has acknowledged its executives cooked its books. As then-Treasury Secretary Hank Paulson explained last October, the Capital Purchase Program was aimed at boosting the overall economy by investing in banks that “will deploy, not hoard, their capital.” Each bank seeking the money first had to win approval from its regulator, but the Treasury Department made the final decision.
Big financial firms losing power on Capitol Hill House panel to vote on subjecting national banks to state rules Large banks are on the verge of losing a key legislative battle over the shape of financial reform, an unusual setback that reflects the continued political backlash over their role in creating the financial crisis. The House Financial Services Committee is expected to vote Tuesday to let state governments protect bank customers by imposing restrictions that go beyond existing federal laws, according to congressional and industry sources.
Georgia banks bracing for major hit Banks dealing with bad residential real estate loans wary of potential commercial losses Even as many Georgia banks grapple with bad residential real estate loans, experts say a new danger lurks: a deteriorating market for shopping centers, office buildings and other commercial property. Most of Georgia's 300 small, community-based banks have relatively light exposure to these kinds of loans, experts say, allowing them to watch the coming crisis from the sidelines. But for banks already in trouble, commercial real estate losses will deepen the pain, said Jeff Davis, a banking analyst with FTN Equity Capital Markets Corp.
Bankruptices Blindsiding Lenders Recent bankruptcy filings by small U.S. businesses show a trend that could complicate lenders' efforts to identify at-risk borrowers, a new study reveals. PayNet Inc, which provides analytic tools to the commercial credit industry, looked at 750 small business bankruptcy filers and found 50 percent were current with one or more of their lenders when they threw in the towel and sought protection from their creditors. "Approximately half the lenders never saw it coming," PayNet President Bill Phelan said. "They were blindsided." PayNet will officially release the study on Monday at the annual convention of the Equipment Leasing and Finance Association in San Diego.
Banks' outlook depends on credit risks Loan quality, not "normalized" profits, should be the focus this week when Wells Fargo and U.S. Bancorp report third-quarter results Now that fears of a global financial meltdown have faded, many on Wall Street have returned to one of their favorite pastimes: cheerleading bank stocks. In jargon reminiscent of the creative "pro forma" accounting (in which extraordinary expenses were made to vanish) era of the late 1990s, analysts are now commonly referring to "normalized earnings" in their bank research reports. By "normalized," they mean profits stripped of all those messy loan losses and multibillion-dollar, reserve-building charges that brought bank stocks to their knees a year ago.
Invesco to acquire Morgan Stanley unit for $1.5B Invesco to buy Morgan Stanley asset management business in $1.5 billion cash-and-stock deal Money manager Invesco said Monday it will acquire Morgan Stanley's retail asset management business in a cash and stock deal valued at $1.5 billion. The unit, which includes Van Kampen Investments, has $119 billion in assets under management, Invesco said. As part of the deal, New York-based Morgan Stanley will receive a 9.4 equity stake in Invesco and $500 million in cash.
Commercial Real Estate Debt Jumps Amid Soaring Delinquencies Yields on bonds backed by hotel, shopping-center and skyscraper loans narrowed relative to benchmarks as U.S. programs help drive demand even as late payments soar on the underlying commercial real estate debt, according to Barclays Capital. The gap, or spread, on top-ranked commercial-mortgage backed securities tightened 0.15 percentage point relative to benchmark swap rates to 6.25 percentage points for the week ended Oct. 15, Barclays data show. That compares with 10.15 percentage points in March, according to Barclays.
Reverse mortgages: Subprime mess déjà vu? Reverse mortgages are increasingly the go-to solution for retirees confronting insufficient nest eggs and paltry income payouts in today’s low-rate environment. Last year, the number of new Home Equity Conversion Mortgages insured by the federal government amounted to 112,000 — more than 14 times the HECMs that were originated in 2001. The 2009 tally is expected to be even higher. Last week’s news that 2010 Social Security benefits will not be given a cost-of-living adjustment — for the first time since inflation protection was added to the program in 1975 — will likely fuel demand for reverse mortgages. And lenders on the prowl for post-meltdown revenue sources are eager to boost the supply. The Government Accountability Office reports that 1,500 lenders made their first reverse mortgage in 2008, more than doubling the number of lenders offering these deals.
A new crisis: Lenders abandon properties Owner, neighbors, city left to deal with a home that no one has any incentive to improve. As if the mortgage foreclosure crisis wasn’t bad enough, sometime last year a new phenomenon began to emerge: Experts say mortgage lenders and banks began walking away from foreclosed properties, especially in urban areas. The so-called “walkaways” can occur along several different paths, but the effect is the same — after threatening or getting foreclosure, the lender attempts to abandon the usually vacant property, leaving the original owner, the neighbors and the city to live with the damage.
Drop in foreclosures called ‘very scary’ Lenders’ actions show they think properties are not worth pursuing. Nobody is sure exactly how many bank walkaways are occurring. For various reasons, they can’t be identified in searches of public real estate and court data without individually pulling case files, experts say. But nobody questions that they are on the increase. David Rothstein, a researcher with Policy Matters Ohio, summarized the way they occur like this:
The lender files a foreclosure, gets the foreclosure judgment in court, takes the property to sheriff’s auction but doesn’t bid on it if no one else does.
The lender files as above, gets the judgment, sets the sheriff’s auction, then cancels the sale at the last minute.
The lender files as above but then never requests a sheriff’s auction.
The lender doesn’t even bother to file foreclosure.
All of these actions leave the foreclosed property in the hands of the original owner who, in many cases, has moved out and is unaware the lender hasn’t taken it.
Foreclosures pose challenge, cost to census count Foreclosures will make it tougher and more expensive to get an accurate census count next year as families move in with relatives or are left homeless, the Census Bureau's director said Tuesday. Director Robert Groves said he expects some of the census questionnaires mailed out in 2010 will land at empty homes in areas hard hit by the housing crisis. That means census workers will need to make more door-to-door visits to verify whether anyone lives at these addresses, and that costs more money. "One absolutely unambiguous impact of the foreclosures is there's going to be more people knocking on doors. It's going to be more expensive to do that," Groves told reporters during a visit to Los Angeles. Job losses have left more than 13 percent of American homeowners with a mortgage behind on their payments or in foreclosure, according to an August report by the Mortgage Bankers Association. The worst of the trouble has been concentrated in California, Nevada, Arizona and Florida.
Yet another housing bailout on the way Obama administration unveils plan to prop up state and local agencies that provide mortgages to first-time and lower-income homebuyers. Just as federal officials seek to wind down many bailout programs, the Obama administration announced Monday yet another initiative to prop up the housing market. Administration officials unveiled a plan to aid state and local housing finance agencies, which provide mortgages to first-time and lower-income homebuyers and enable the development or rehabilitation of rental properties. Officials declined to put a pricetag on the program, but said there would be no cost to taxpayers. "This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times," said Treasury Secretary Tim Geithner.
Mortgage applicants face new checks on spending habits Homebuyers applying for mortgages will have to provide much more detailed information about their monthly spending habits under new rules to clamp down on reckless lending. As part of an attempt to curb irresponsible borrowing, Ministers are also planning new limits on credit card lending. On Monday, the Financial Services Authority will tell lenders they must carry out in-depth examinations of households' disposable income before granting a mortgage. Under current rules, lenders are not obliged to ask would-be customers for bank statements or other evidence of spending patterns when they apply for mortgages.
Administration unveils new effort to provide mortgage financing for state housing agencies The Obama administration on Monday unveiled a new program to support state and local housing finance agencies. The plan will help the agencies finance mortgages for first-time homebuyers and develop rental housing. The agencies have had a hard time raising money because of the housing crisis and credit crunch. This year, the agencies have sold about $4 billion in tax-exempt bonds — one-fourth the amount in a typical year. That reduction is limiting the number of loans they can make.
Showdown in Chicago! The same financial institutions that caused the economic crisis and took billions in taxpayer bailouts are back to earning incredible profits. Meanwhile, Americans face shrinking pensions, rising foreclosures and unemployment, state budget cuts, predatory lending, outrageous overdraft fees, and sky-high credit card interest rates.
THERE IS NO RECOVERY ON MAIN STREET The recent reports of record bonuses on Wall Street have Main Street citizens dumbfounded as to the current economic situation. What did Main Street get out of the bailouts? What has changed from a year ago? With unemployment at 10% and a record wealth gap the skepticism regarding the stock market rally and the economic recovery increases with every day. The job market is actually still worsening, consumer credit conditions have worsened and small businesses are struggling more than ever. A recent report from the NFIB on small businesses confirms many of the underlying concerns about the economic recovery. Chief among these problems is the weakness in the credit markets and the continued weakness in sales growth. The latest survey of small businesses showed slight improvement in business optimism which bottomed in March 2009. 32% of respondents continue to be concerned about the rebound in sales.
Erickson Retirement Communities files for bankruptcy Catonsville-based company operates 19 retirement communities with 23,000 residents Erickson Retirement Communities says it has filed a voluntary petition for Chapter 11 bankruptcy and has agreed to be purchased by Redwood Capital Investments LLC. Erickson spokesman Mel Tansill says the bankruptcy filing in Dallas and the agreement with Redwood took place on Monday. He says Erickson must restructure its debt to complete the sale.
Detroit youth, jobless and facing crime, see dead end on road to adulthood in distressed city Like the rundown houses and shuttered storefronts in his Detroit neighborhood, bleakness abounds in LeRoy Taylor's future. He is among tens of thousands reaching adulthood in a city where the American Dream appears just outside their reach. Taylor, 20, spends empty hours on basketball courts, zoned out in front of a television or aimlessly pedaling through streets he desperately wants to leave, but doesn't have the work skills, education or money to do so. "I fill out applications. No one will call me back," said Taylor, stopping his bike long enough to hustle change for cigarettes near a west side bus stop. "It's useless. It's real scary."
Celente: Government is bribing seniors Next year, for the first time ever, social security recipients will not receive a cost of living adjustment in their payments. Instead, Barack Obama is proposing a one-time $250 payment right before next fall's midterm elections. Gerald Celente says that the cost of living really hasn't decreased, the government is basing their measurements on a decreasing standard of living and the payout is just to keep people quiet.
U.S. quietly begins to study gun safety More than a decade after Congress cut funding for firearms research by the Centers for Disease Control and Prevention (CDC), another federal health agency has been spending millions of dollars to study such topics as whether teenagers who carry firearms run a different risk of getting shot compared with suffering other sorts of injuries. The National Institutes of Health (NIH) also has been financing research to investigate whether having many liquor stores in a neighborhood puts people at greater risk of getting shot.
White House boasts: We 'control' news media Communications chief offers shocking confession to foreign government President Obama's presidential campaign focused on "making" the news media cover certain issues while rarely communicating anything to the press unless it was "controlled," White House Communications Director Anita Dunn disclosed to the Dominican government at a videotaped conference. "Very rarely did we communicate through the press anything that we didn't absolutely control," said Dunn. "One of the reasons we did so many of the David Plouffe videos was not just for our supporters, but also because it was a way for us to get our message out without having to actually talk to reporters," said Dunn, referring to Plouffe, who was Obama's chief campaign manager.
The Nazis and Christianity My recent American Thinker article "The Godless Delusion" generated a substantial volume of email and comment from atheists. Although I have directly responded to some of the people, assertions they have made -- some politely and others rudely -- require a detailed response. I have decided to focus on one particular theme that was most common: Many atheists presume that the Nazis were a weird variation of Christianity. The sources that I use come from very old books, rather than Wikipedia. I own these books and the books were written during the very years in which Nazism came to power. The authors of these books came from a wide variety of perspectives -- Christian, Jewish, atheist, Marxist and the like.
READY TO REVOLT: Oath Keepers pledges to prevent dictatorship in United States Group asks police and military to lay down arms in response to orders deemed unlawful Depending on your perspective, the Oath Keepers are either strident defenders of liberty or dangerous peddlers of paranoia. In the age of town halls, talk radio and tea parties, middle ground of opinion is hard to find. Launched in March by Las Vegan Stewart Rhodes, Oath Keepers bills itself as a nonpartisan group of current and retired law enforcement and military personnel who vow to fulfill their oaths to the Constitution.
Thatcher adviser: Copenhagen goal is 1-world government 'Global warming' to be used as 'pretext' for 'change' A former science adviser to British Prime Minister Margaret Thatcher says the real purpose of the United Nations Climate Change Conference in Copenhagen on Dec. 7-18 is to use global warming hype as a pretext to lay the foundation for a one-world government. "At [the 2009 United Nations Climate Change Conference in] Copenhagen this December, weeks away, a treaty will be signed," Lord Christopher Monckton told a Minnesota Free Market Institute audience on Thursday at Bethel University in St. Paul. "Your president will sign it. Most of the Third World countries will sign it, because they think they're going to get money out of it. Most of the left-wing regimes from the European Union will rubber stamp it. Virtually nobody won't sign it," he told the audience of some 700 attendees.
Climate concerns may turn dung into cash cow Some people are smelling opportunity in the manure of hundreds of thousands of cattle that are raised on Greeley's outskirts. Investors are lining up to support a planned clean energy park that eventually will convert some of the methane gas released from the manure piles into power for a cheese factory and other businesses. JBS USA, which runs two of the largest feed yards and the Greeley meatpacking plant, is testing a new technology that heats the cattle excrement and turns it into energy. "What once used to be a waste stream that was just a byproduct ... they are now recognizing has value," said Bruce Biggi, the economic development coordinator for the city of Greeley, which received an $82,000 grant from the governor's energy office this year for the park.
Unlike Obama, Americans reject European model An interesting paradox. Last year America elected a president who, in attitudes and policies, is closer to the elites of Western Europe than any of his predecessors. Yet in the nine months that he has been in office ordinary Americans have been moving away from those attitudes and policies and have increasingly embraced positions that over the years have made Americans distinctive from those in other advanced Western democracies. Barack Obama's European tendencies aren't in doubt. His policies on government spending, taxation, health care and carbon emissions would all tend to bring America in line with European norms, to a far greater degree than any other president of the last 40 years and probably any president ever.
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World Government in December? Obama Poised to Cede US Sovereignty via UN Climate Change Treaty On October 14th 2009, Lord Christopher Monckton, a noted climate change expert, gave a presentation at Bethel College in St. Paul, MN in which he issued a dire warning regarding the United Nations Climate Change Treaty which is scheduled to be signed in Copenhagen in December 2009.
Bank failures drain FDIC insurance Fund in red for only 2nd time Nearly 100 banks have failed so far this year, pushing the Federal Deposit Insurance Corp.'s insurance fund into the red for only the second time since its founding in 1933. As the worsening commercial real estate debacle continues to ravage the balance sheets of thousands of mostly small and medium-sized banks, analysts expect hundreds more could fail before the problem abates.
Bank failures create regional winners Strong lenders benefit from buying troubled rivals seized by FDIC The wave of bank failures washing over the U.S. is creating opportunities for regional lenders that are strong enough to pick up the debris, with help from the Federal Deposit Insurance Corp. US Bancorp and Zions Bancorp have already benefited from buying failed banks in so-called FDIC-assisted deals where the regulator promises to cover a lot of the future losses on the assets being assumed. Other banks that could do similar deals include Columbia Banking System, Hancock Holding Co. and People's United Financial Inc, according to Keefe, Bruyette & Woods.
Bank failures near 100 for year As milestones go, it's one we could just as well live without. This year is shaping up to be the first since 1992 to see the failure of at least 100 banks, and experts suggest we could be no more than 10% of the way through this cycle of bank collapses, which is sure to be the worst run of closures since the Great Depression. The parade of bank failures continued on Friday as the FDIC took control of the 99th this year after the San Joaquin Bank of Bakersfield, Calif., was closed by state regulators. So far 99 banks have failed in 2009.
'Gold will go to $1224 and zoom to $1650' A significant number of articles written lately, some with superb prose and many sent to me by CIGAs, would convince you that the market in gold is simply a major move in a regular market and is therefore now well priced. What is assumed by others is that in some way this is a "Dress Rehearsal" for some event way into the future that may or may not happen at all. Let me assure you this is no dress rehearsal, but today’s gold market is the "Real Thing." It is the Real Things because there is a huge difference between the US dollar in the 1970s and the US dollar today.
The Federal Reserve Is Openly Telling You to Buy Gold and Silver At the end of last year, I began writing about what I saw happening as the Federal Reserve started assuming the liabilities of the investment banks and the federal government began deficit spending at an unprecedented pace. I've been calling these changes the "End of America" because I believe the fiscal policies of the U.S. will result in a massive devaluation of the dollar and the end of the U.S. dollar as the world's reserve currency. To get an idea of why I'm concerned, have a look at a chart James Bullard, president of the Federal Reserve Bank of St. Louis, included in a recent presentation to the National Association for Business Economics.
Marc Faber On Gold and Silver-Bloomberg
Gold, silver lead commodities boom Commodities prices continue to benefit from growing optimism about global economic trends and conditions. Gold, silver, and oil all have benefited from this. Other commodities also have done well, as investors, some fabricators, and others have built inventories. The inventory building largely ended when the prices of many commodities, including base metals, rose sharply in the second quarter. This has left commodities vulnerable to a sell-off and a drop in prices. Any drop in prices is likely to be met with renewed buying for inventories and on expectations of stronger demand for commodities over the next several quarters.
Gold's bull run set to roar ahead Gold has once again been stealing the headlines after breaking through to a new high this week and many believe its bull run is set to continue. On Wednesday bullion's price tag broke breached the $1,070 per ounce mark, representing a staggering 53% rise over the past 12 months. And Charles Gibson, head of mining research at Edison Investment Research, taking present circumstances into account, has forecast a price of $1,900 for gold by 2013. Since the end of August alone, the gold price has risen by almost 13%. But in the days since Wednesday, it has pulled back to circa $1,050. The weak dollar, which fell to its lowest in more than a year against a basket of other currencies, helped boost demand for bullion with the price hitting its peak at 7am on 14 October.
Chinese Gold Buying to Continue Record gold prices are not scaring Chinese buyers. Gold might be a luxury most can live without when times are hard, but for cautious investors in China, the world's top producer and consumer of bullion, it has become a matter of necessity as a hedging tool. Most members of the financial community are confident that the price of gold will continue to rise and are investing in the precious middle.
Gold speculators at record high on Comex A second day of falling prices in gold was brought to you courtesy of a strengthening dollar. Initial support at $1048 was once again breached early this morning, precipitated by a gain of -.026 in the USD on the index (now at 75.70) and a slip in crude oil (off 50 cents near $77.10 pbbl). Gold spot prices have touched a low of $1043.50 in the minutes preceding the NY market’s opening. The emergence of profit-taking is becoming a bit more visible, although Thursday’s afternoon settlement at $1050 appeared to manifest continuing hardiness among the longs. The overriding component in this morning’s near $6 drop was attributable to dollar strength, as seen on our newly-launched index, below.
Gold Rebounds in New York on Bets Dollar Will Extend Slump Gold prices rebounded in New York on speculation that the dollar will extend a slump, enhancing the appeal of the precious metal as an alternative asset. The greenback is headed for the second straight weekly loss against a basket of six major currencies. Before today, gold rose 19 percent this year, while the dollar dropped 7.2 percent. “On any type of dip, there will be buyers,” said Tom Hartmann, an AltaVest Worldwide Trading LLC analyst in Mission Viejo, California. “People want exposure to gold. Gold is directly dependent on the direction of the dollar, and over the long term, the dollar is headed lower.”
How much imaginary gold has been sold? On October 10 I published an article that postulated that the gold market is a Ponzi scheme because it sells gold that doesn't exist by implementation of the principles of fractional reserve banking. (See http://www.gata.org/node/7887.) Since writing that article further information has come to light that supports this claim and allows an estimate of how much gold has been sold that doesn't exist if the owners of the gold ask for it. In other words, there are several owners for each ounce of physical gold.
How much imaginary gold has been sold?Part 2 I have written this follow-up after some e-mail exchanges with some readers and GATA Chairman Bill Murphy. I think additional text may clarify the original article. First I would like to emphasize that there lately are various reports of difficulty in meeting gold deliveries in London. This has been described as a "lack of liquidity." If there is a "lack of liquidity" in the London gold market, then there is fraud. No other explanation possible. If the OTC market traded only gold that was in the vaults on a 100 percent reserve ratio, there could never be a lack of liquidity. Recent information indicates there is a lack of liquidity, so there is a fraud. Period. Now all we are trying to do is to estimate the scale of it.
Marc Faber On $USD and Money Printing
Global Markets in Review: Risky Assets Disconnect from Fundamentals Risky assets remained in favor during the past week, generally helped along by fairly robust economic data and better-than-expected corporate earnings reports. A number of bourses, crude oil, inflation-linked bonds and high-yielding corporate bonds and currencies recorded fresh highs for the year, whereas gold hit an all-time high of $1,070.20 per ounce. Assets such as government bonds and the U.S. dollar saw fading demand as safe havens, now that the global economy is on the mend. Similarly, credit default spreads tightened markedly and the CBOE Volatility Index (VIX) declined to its lowest level since early September 2008.
Is This the Final Blast-Off? At this point, I am a little reluctant to state this is the final blast-off and that we will not see gold below US$1,000 ever again. Certainly the percentages are with the precious metals investors and it seems gold has nowhere to go but up. As we know, you’re at a level that has been resistance in the past ($1,000), and that area has been resistance for gold for quite some time. And once that level is penetrated for three days in a row then you have a strong probability that the trend is going to continue. In fact, we alerted our subscribers to that very fact!
Dollar’s Decline Brings Troubles but Helps U.S. Exports As economists, pundits and politicians debate the reasons for the dollar’s rapid fall, Robert Stevenson and his workers in downtown Buffalo, N.Y., watch the slide with glee. Mr. Stevenson’s family-owned company, Eastman Machine, has been making cutting tools for the textile industry for 120 years. A year ago, in the depths of the financial crisis, Mr. Stevenson had to lay off a dozen workers, but the dollar’s 16 percent decline since March has made his products much more competitive overseas. Next month, Mr. Stevenson hopes to sign a multimillion-dollar deal in Europe that could enable him to rehire his workers.
Dollar Touches 14-Month Low on Outlook for Fed’s Target Rate The dollar dropped the most against the euro in more than a month and reached a 14-month low on speculation the Federal Reserve will trail other central banks in boosting interest rates. Sterling rose against all of its major rivals this week on signs the Bank of England may suspend quantitative easing, reducing concern it’s flooding the market with new currency. The dollar slid as minutes of the Fed’s September meeting showed some policy makers were open to boosting purchases of mortgage- backed securities. The greenback may extend its decline when the central bank releases its Beige Book business survey next week.
Weak Dollar? Not So Much in China China Peg Holds Up Weakening Dollar There is renewed talk about the weak dollar. But don’t believe it. Where it really counts, the dollar is not moving at all. In February, the dollar hit a high against most currencies amid fears of worldwide recession and a desire for the safety of American investments. It was then worth 80 euro cents, and 6.82 Chinese renminbi. This week, as the dollar neared 67 euro cents, it was still worth 6.82 renminbi. If you are good in arithmetic, you will immediately realize that the euro has been rising against the Chinese currency. And so has the Japanese yen, the British pound and most every other currency you have heard of. The strongest and most resilient economy in the worldwide recession has one of the weakest currencies.
No Relief in Sight for Dollar The dollar's drubbing will resume this week as yield-chasing investors focus on interest-rate differentials and abandon the low-yielding buck for its higher-paying counterparts. After hitting a series of 14-month highs last week against the dollar, the euro took a breather from its run on Friday, but there isn't much in the way of the euro hitting $1.50 this week. "The momentum seems to be with the euro," said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. Continued positive U.S. corporate earnings and global economic data should support the euro, but most important will be comments from Federal Reserve officials, said Camilla Sutton, currency strategist at Scotia Capital in Toronto.
Marc Faber On Inflation and Intel
The US Dollar Is Doomed! Commentary on Gold Amid all the news of the past several weeks that has been extremely supportive of higher gold prices in the short- and long-term, a real bombshell exploded early last week. On Monday, October 5, The Independent, a London newspaper, carried a story by Robert Fisk reporting that China, Russia, France, and at least four nations of the Gulf Co-operation Council were secretly negotiating to abandon use of the US dollar for payment of oil contracts. Fisk attributed this information to Middle East officials and bankers in Hong Kong. If this comes to pass, in lieu of the US dollar, new contracts would be settled by a market basket of currencies including the China yuan, Japan yen, Euro, a new Gulf Co-operation Council currency—and gold!
Will Cheap Dollar Bring Back Buyers? Logic dictates that runaway printing of dollars begets higher prices. Except when you are a foreign buyer with an eye on U.S. targets. In dollar terms, the S&P Composite 1500 index has risen 63% since its March low. Priced in euros, though, it is up only 38%. Given the greenback's decline, can we expect foreign buyers to descend on corporate America like British shoppers blitzing Macy's? It has happened in the past. Foreign direct investment in the U.S. surged during periods of dollar weakness in the late 1970s and early 1980s and after 1986.
U.S., China Yuan Dealings May Turn ‘Contentious’ The U.S. view that China is keeping its currency undervalued in order to boost exports will foster a “more contentious” relationship between the two nations, said Stephen Roach, chairman of Morgan Stanley Asia in Hong Kong. The convergence of mounting U.S. unemployment and next year’s Congressional elections will make it easy for both Republicans and Democrats to criticize China, Roach said in a Bloomberg Television interview aired today in New York. “It will get more contentious as we move into 2010,” he said. “There’ll be a lot of cries on both sides of the aisle to do something about the plight of the American worker. China is, unfortunately, the whipping boy in many of these discussions.”
Value Is in Eye of the Holder Web of Factors Make It Hard to Peg Greenback's Worth Despite all of the ink and tears spilled on the dollar's recent decline, one nagging question still hasn't been answered: What's the dollar really worth? Economists and analysts around the world have several yardsticks for measuring a currency's value, but at the end of the day they all come up short in some way -- and they often arrive at different conclusions.
Get Out Now! Some very smart people are saying some very scary things. I've successfully scared the heck out of some of you with predictions of the dollar's looming demise. Yet I've not said it nearly as forcefully as Swiss banker Dr. Konrad Hummler. Here's what he wrote in his recent Wegelin Investment Commentary: "It's time to take advantage of the recovery of the U.S. dollar to get one's currency diversification in order." Read between the lines. He's telling you the dollar is going down ... hard.
Karl Marx Predicted Collapse of US Dollar in 1857 The great October fall of the US dollar is turning into an avalanche. On Tuesday, the American currency lost nine kopeks in Russia and reached a new minimum mark this year - 29.5 rubles per dollar. Within six months (April through September) the dollar lost over 10 percent at the world foreign exchange trading, which marked the sharpest decline since 1991. Some experts believe that the American currency is close to collapse, which may lead to a new financial crisis. The tendency of the US dollar devaluation has been observed for a few years, but the current rate of decline is unprecedented. Some jokesters even rushed to re-read the letters of Karl Marx to Friedrich Engels written during the US financial panic of 1857 discussing the collapse of America. It would have been funny if it wasn’t so serious.
Sterling fall is a life-saver for UK economy The sharp slide in the pound has been a godsend for the UK economy and may have helped Britain avert a much more serious crisis, according to the German bank Dresdner Kleinwort. "If the currency had not gone down so far, think how much worse it could have been. A weaker sterling is just what you need in the current situation," said David Owen, the bank's chief economist for developed markets . He said exporters taking advantage of the 20pc fall in sterling to boost profit margins, giving them a vital cushion to help survive the collapse in lending. This is the same pattern seen after the ejection of the pound from Europe's Exchange Rate Mechanism in 1992.
Pound could slide to $1.50 against dollar The pound could slide as low as $1.50 against the dollar in the coming years as the exodus of foreign investors from sterling gathers pace, experts have warned. The days of the $2 pound are gone for at least five years, they added, as sterling dropped to a new two-year low against the greenback. The pound dropped almost two cents compared with its previous close to $1.8386 - the first time it has dipped beneath the $1.84 mark since mid-2006. It also hit a new 12-year low on its trade-weighted index, which measures it against a basket of other currencies, falling 0.1 points to 90.5.
A sterling crash is a godsend Britain has twice averted disaster over the past century by a timely – if humiliating – crash in sterling. In neither case was it obvious that this would lead to a decade-long revival in British fortunes. Commentators told us in 1992 that exit from Europe's Exchange Mechanism would ignite inflation. They misjudged the slack in the UK economy, and the M3 monetary collapse. Cheap Asian exports were, in any case, starting to cap global goods prices. It opened the way for 14 years of low-inflation growth, the longest stretch of unbroken expansion in UK history. The last phase was bogus, driven by 120pc mortgages and Gordon Brown's fiscal blow-off – too loose by 5pc of GDP, adjusted for the cycle. But the first decade was real.
On the Edge with Max Keiser - 16 October 2009 Dollar and British Pound on slide down slippery slope
On the Edge with Max Keiser 2
On the Edge with . . . Michael Hudson Latvia Crisis; similarities to suffering in Iceland - debts being piled onto the population. British neo-liberals controlling the debt
On the Edge with . . . Michael Hudson (2/2) Sweden reasserting feudalism over Latvia
Treasuries Show No Lost Appetite With Zero Dollar Returns Investors can’t get enough Treasuries even as the U.S. budget deficit climbs beyond $1 trillion, the government sells a record amount of debt and the dollar declines to the weakest level since August 2008. Foreign buyers increased their holdings for a fourth consecutive month in August, to an all-time high of $3.45 trillion, according to Treasury Department data released Oct. 16. U.S. demand is being spurred by a rising savings rate and concern the economic recovery may falter. Fixed-income funds have attracted 18 times more money than stock funds this year, according to data compiled by Morningstar Inc. and Bloomberg.
Geithner says U.S. must live within its means ... someday The United States must live within its means once its economy recovers if it is to preserve global confidence in the U.S. dollar's status, Treasury Secretary Timothy Geithner said on Friday. The comments came as the Obama administration reported a record U.S. budget deficit for the fiscal year ended September of $1.4 trillion. At 10 percent of gross domestic product, it was the biggest U.S. fiscal shortfall since World War Two. Rescuing the economy and some of the country's biggest banks from the worst recession since the Great Depression took a toll on U.S. finances, and the White House has forecast deficits of more than $1 trillion through fiscal 2011. "Future deficits are too high, and the president is committed to working with Congress to bring them down to a sustainable level as the economy recovers," Geithner said in a statement accompanying the fiscal data.
Goldman Sachs' Black Magic, Here's How They Did It How did Goldman, Sachs & Co. -- saved a year ago by the US taxpayer -- magically make $3 billion in 3 months a year later? This as the US dollar collapses, unemployment soars and foreclosures hit a record? Here is the Goldman, Sachs & Co. revenue break down for the past 3 months:
Financial Advisory-M/A: 325 million.
Equity Underwriting: 363 million.
Debt Underwriting: 211 million.
Trading-Principal Investments: 10 billion.
Notice that 10 billion is much bigger than two or three hundred million made from the traditional Wall Street businesses. That $10 billion is evidence of their magic trick. For we the taxpayer gave Goldman Sachs the following:
10 Billion in TARP
11 Billion from the Fed
30 Billion from the FDIC
13 Billion from AIG
We are paying an enormous price for the myth that banks are too big to fail Lloyds necks £5bn more and bankers binge. Where is the apology or inquest from those who brought our economy to its knees? What did we expect? Bankers are not Mother Theresa. Over the past year taxpayers have given them half a trillion pounds in cash, loans, shares, lucre, dosh, quantitative easing, whatever, with not a string or condition attached. We knew, or at least some of us did, what they would do next. They would not give the money back. They would certainly not lend it to collapsing manufacturers or high street retailers, whom the government had refused to help. Instead they would pay off the gambling debts they had run up from money previously entrusted to them by the public as depositors. They would spend the rest on bonuses, houses, Porsches, yachts, brothels (says the Guardian), Cotswolds farms, commodity shares, bonuses, bonuses and yet more bonuses. After a while, you just cannot get rid of the bloody stuff.
Peter Schiff On Freedom Watch
Could Obama's Change Run Out of Cash? Much has been made of President Obama’s desire to fundamentally restructure large portions of the federal bureaucracy—but what if he runs out of money first? The Washington Post reported that the federal budget deficit, at $1.4 trillion for this fiscal year, is, “unequaled in the postwar era.” Democrats, the paper notes, are defending Obama’s budget, believing George W. Bush and the financial collapse left him no choice but to spend his way out of an economic death spiral. Still, the startling figure casts a shadow over the administration’s attempts to spur job creation, economic recovery, and expansion of the social safety net, all of which would likely require more outlays and thus even larger deficits.
The Vampire Squids Leeching Small Business . . . . There is a deep disconnect between the phony "we support small business" propaganda and the reality that tens of thousands of small businesses--a larger source of employment than global corporations who happen to be headquartered in the U.S.--are hanging on by a thread. In the propaganda, the U.S. is an entrepreneurial heaven where anyone can become the next Bill Gates. The reality is that a high-cost partnership of State and state-protected cartels is sucking the life out of small business with endless junk fees (licensing, permits, surcharges, business taxes on gross income, etc.), skyrocketing healthcare costs and an assortment of other overhead costs--such as outrageous credit card transactions levied by a cartel.
Beware the Second Leg of the Next Great Recession Think the pain is over? Guess again. There's no doubt that there are green shoots in the economy. The housing market, which brought on the crash, may finally be starting to recover. Housing stats bottomed in January, and it looks like the rate of decline of housing prices is slowing. Volumes are rising at MasterCard and appear more or less stable at Visa. And corporate earnings aren't as big a disaster as everyone thought they'd be. But now is not the time to be complacent.
White House officials blast Wall Street bonuses Obama administration officials on Sunday blasted record payouts to the nation's top Wall Street executives, calling the bonuses offensive and advocating new financial regulations they say would prevent future taxpayer bailouts. The nation's top financial firms, including many who benefited from money paid out by the federal government through the Troubled Asset Relief Program (TARP), are on track to receive billions more in compensation than they did last year.
"Astonishing" That Big Banks Are Taking Taxpayer Money, Writing the Rules, Warren Says Elizabeth Warren may be the American consumer's new best friend. Warren, charged with overseeing the U.S. banking bailout (formally known as TARP), is pushing an agency that's devoted to looking out for individual Americans. The proposed Consumer Financial Protection Agency would set more transparent rules for financial institutions to ensure consumers get help in understanding terms of their loans and agreements. Banks, however, are opposing another regulator.
7 Reasons China Will Lead the Global Economic Recovery The recent 21% tumble in the Chinese markets had investors around the world bailing out of China as fast as they could. But, this sell-off actually created one of the biggest buying opportunities of a lifetime. Here's why China is poised to take off - and how to cash in as China leads the global economic recovery. August 2009 was one of the worst months ever for the Chinese stock market, with stocks dipping 21%. But the major sell-off wasn't based on any fundamental news - it was a case of frightened investors worried that China is the next bubble.
Tying It Together: Massive, Pernicious Fraud Let's not mince words here: The entire finance and real-estate "industry" is filled with massive, pernicious fraud, and we now have only one question remaining - will The Government do its lawful and mandated job, that of prosecuting the bad actors, or has it joined with the fraudsters, become one with them, and thus, declare itself as a gang of mobsters rather than a legitimate government? The latter, of course will beg only the question of what should be an ordinary American's response.
Recession Will Be 'Full-Blown Depression' This global recession will turn into a "full-blown depression," Nicu Harajchi, CEO of N1 Asset Management, said Friday, adding that global stimulus hasn't come down to Main Street. Wall Street is making money, while consumers aren't, Harajchi told CNBC. "We have seen the G20 coming out with cross border capital injections of $5 trillion this year… But a lot of this money hasn't really come down to Main Street," he said. "When it comes down to corporate America, corporate Europe or even in Asia, in Japan, we are not seeing Main Street making any money," he said. "Consumers are losing their jobs. They are struggling with their mortgages, with their credit. And we are just seeing this continuing."
Government Measures No Match for Second Wave of Foreclosures When the Obama administration in March instituted programs to help homeowners modify mortgage payments or refinance for lower interest rates, the idea was to curb the foreclosure crisis that has gripped the United States for the past two years. But roughly seven months later, it looks like the federal programs have merely delayed the inevitable, and a substantial second wave of foreclosures is becoming more likely.
Massachusetts Land Court Upholds Ruling Reversing Thousands of Foreclosures This is starting to get interesting, although it is far from conclusive. Massachusetts Land Court judge Keith Long reaffirmed a 2009 ruling (Ibanez) that invalidated foreclosures on two properties because the lenders did not hold clear title to them at the time of the foreclosure sale. Now this decision is still subject to appeal, and Richard Vetstein of the Massachusetts Law Blog (hat tip reader Barbara W) thinks the Massachusetts Supreme Judicial Court might hear the case directly, given the potential significance of the ruling.
Foreclosures: 'Worst three months of all time' Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading. Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday. "They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes. During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.
Foreclosures Force Ex-Homeowners To Turn to Shelters CLEVELAND — The first night after she surrendered her house to foreclosure, Sheri West endured the darkness in her Hyundai sedan. She parked in her old driveway, with her flower-print dresses and hats piled in boxes on the back seat, and three cherished houseplants on the floor. She used her backyard as a restroom. The second night, she stayed with a friend, and so it continued for more than a year: Ms. West — mother of three grown children, grandmother to six and great-grandmother to one — passed months on the couches of friends and relatives, and in the front seat of her car.
Warren: Housing Market Getting Worse There's been a lot of talk lately about a recovery in the housing market – even reports of bubbles re-inflating in certain markets. Elizabeth Warren, chair of the Congressional Oversight Panel, isn't buying it. "We see things getting worse in the housing market," Warren says, citing the pernicious effects of foreclosures, which rose 5% in the third quarter to a total of 937,840, according to RealtyTrac. "The long-term impact of high foreclosure rates on our housing market and overall economy would be disastrous," Warren warns, citing estimates that 10 to 12 million U.S. homes could ultimately go into foreclosure. "We have to get foreclosures under control."
Revisiting the Solvency vs. Liquidity Dilemma In a contributory post that I made for another site, one of the commenters alleged that it was misleading to say that the failed bulge bracket banks had backing from the Federal Reserve, or else they wouldn't have failed. This is simply not true. The blessing of the government does not necessarily cure all of your ills. The Federal Reserve opened its discount window to the remaining bulge bracket banks after Bear Stearns (Is this the Breaking of the Bear?) filed for bankruptcy. It even decided to allow much lower grade collateral, degrading its standards to the point where it took stock and MBS, if I am not mistaken. This liquidity backstop (among other programs) did not prevent the collapse of Lehman Brothers, nor the very near collapse of Merrill Lynch. The remaining two bulge bracket banks were literally forced to become commercial banks to stave off their downfall. This history is barely a year old and is already lost on some.
Preparing for the Next Crash: Now Is the Time . . . . In general, my own prescription is all that I will share. I am 58 years old, and have amassed a fair amount of savings over the past twenty years. My general rules for the current period now are:
Get liquid. Have little or no debt. Be in cash and diversified. Reduce your expenses.
Get as far away as you can from Wall Street and dollar based assets as is practical.
Put something you can spare from savings into long term assets that are not directly contingent on anyone else whom you cannot trust:
Personal food production, preservation, and preparation
Precious metals as insurance against monetary inflation / breakdown
Essentials for daily living and personal health care
Investments in practical education
Personal infrastructure and efficiency
Have a contingency plan for a systemic shock.
Jobless flock to sign up for the military The anemic job market, an increase in sign-on bonuses and new attitudes towards military service are proving to be a winning combination for recruiting. The nation's armed services wrapped up a record year for recruiting as a withering job market and bigger bonuses trumped two unpopular wars. The Department of Defense said it met or exceeded recruitment goals for all branches of the armed services for fiscal year 2009, which ended Sept. 30, for the first time since 1973, when the draft ended and U.S. forces withdrew from Vietnam. "We're pleased to report that for the first time since the advent of the all-volunteer force, all of the military components, active and reserve, meet their number as well as their quality goals," said Bill Carr, deputy undersecretary of Defense for Military Personnel Policy, at a Pentagon press conference on Tuesday.
The Flip Side of a ‘Jobless Recovery’ Perhaps one of the most preposterous statements made during the ongoing financial crisis was by Ben Bernanke when he stated that we would have a ‘jobless recovery’. Certainly this is not a new term, but that doesn’t change the fact that in concept, the idea that a real recovery can occur with rising unemployment seems pretty ludicrous. Again, the devil is in the details and it all comes back to how you define your terminology and ask “A recovery for whom?”
N.C. jobless rate remains 10.8 percent North Carolina's unemployment rate held steady at 10.8 percent during September, according to the N.C. Employment Security Commission. Seasonally adjusted employment increased by about 9,700 workers, to about 4.04 million. Unemployment increased by about 2,800 workers, to about 490,000.
The free market is not up to the job of creating work America has always been a country that thrives on hard work, thrift and self-reliance. We have all absorbed Benjamin Franklin’s maxim: “Early to bed and early to rise, makes a man healthy, wealthy, and wise.” This helped create jobs. In an application of Schumpeter’s notion of creative destruction, the US lost 44m jobs in the last two decades of the 20th century, but simultaneously created 73m private sector jobs. A stunning 55 per cent of the total workforce was in new jobs by the turn of the century, two-thirds of them in industries that paid more than the average wage. This is no fluke. It is because we benefit from a unique brand of entrepreneurial bottom-up capitalism.
Social Security Freeze Means Seniors Must Scrimp Lament for a better cut of meat… If her check were bigger, 76-year-old Agnes Conti might be able to spring for a better cut of meat for her pot roast. She could afford to send her nine grandchildren more than $20 for their birthdays and Christmas. She'd be able to spring for some nice new clothes, like she sees on QVC, not what she settles for at Walmart. If only. The government has said the Social Security checks Conti and tens of millions of other seniors rely on as their primary source of income will not increase next year as consumer prices have fallen overall. And while the retired hospital clerk will get by, she'll be watching her spending even closer, knowing she can't expect the annual raise she's been accustomed to.
Government-Funded Studies Focus on 'Futile' End-of-Life Care A surprising number of frail, elderly Americans in nursing homes are suffering from futile care at the end of their lives, two new federally funded studies reveal. One found that putting nursing home residents with failing kidneys on dialysis didn't improve their quality of life and may even push them into further decline. The other showed many with advanced dementia will die within six months and perhaps should have hospice care instead of aggressive treatment. Medical experts say the new research emphasizes the need for doctors, caregivers and families to consider making the feeble elderly who are near death comfortable rather than treating them as if a cure were possible -- more like the palliative care given to terminally ill cancer patients.
Disarming America As part of the next arms reduction treaty between superpowers, the United States has tentatively agreed to unprecedented Russian access to American nuclear missile sites. According to published accounts, Russian weapons inspectors will be given an open door to American nuclear sites in order to monitor the number of missiles and warheads. Russian Foreign Minister Sergei Lavrov is quite satisfied with the deal. Perhaps it is an error of omission, but there is no news of a similar concession from the Russian side. This is psychologically and strategically significant: first, because it presents us with a President and a Secretary of State who are mistaken in their assessment of Kremlin trustworthiness; second, because it shows weakness in the President; third, because the Russians are demonstrating a kind of superiority.
Little-Known Egyptian Is Key Al-Qaida Figure He's a heavyweight in al-Qaida but little known outside jihadi and intelligence circles even though he runs the terrorist movement's operations in a key front -- Afghanistan -- and may be linked to a plot in New York. Mustafa al-Yazid makes no secret of his contempt for the United States, once calling it "the evil empire leading crusades against the Muslims." "We have reached the point where we see no difference between the state and the American people," al-Yazid told Pakistan's Geo TV in a June 2008 interview. "The United States is a non-Muslim state bent on the destruction of Muslims."
End of US$ Global Reserve Currency The heralded end to the Petro-Dollar defacto standard completes the loop, the vicious cycle that will work to destroy the USDollar. In a sense, the US$ had to face an end, its sunset guaranteed when Nixon defaulted on its redemption value. The United States served as custodian for the global reserve currency. Naturally, the most damage will be to the US as a consequence of its twilight, especially after the recent era of fraud & counterfeit. Few look back to that date in 1971 as prophetic for declaring the USDollar’s days as limited and finite. The world will continue to trade the US$ in future years, but it must stand on its own value, based upon its own merit, the result of balancing its supply & demand, from the integrity of its fundamentals.
The Dangers of a New Global Reserve Currency A key topic at the G20 meeting is sure to be the future of the dollar as an international reserve currency. The global financial crisis, which started with the US subprime crisis, has eroded confidence in the dollar as an anchor for international payments. Moreover, large US fiscal deficits could add more than US$10 trillion to US government debt over the next decade – on top of trillions of dollars of implicit debt in social security and Medicare. The US debt bomb poses a growing risk to China and other countries that hold large amounts of their foreign- exchange reserves in dollar denominated assets, primarily US government securities. If foreign central banks are less willing to hold US debt, the Federal Reserve may be the buyer of first resort.
Can IMF Currency Replace the Dollar? World leaders at the G-20 meeting agreed to create new international money worth $250 billion. The IMF will oversee the new money called SDRs (Special Drawing Rights). Some people believe — and China fervently hopes — that SDRs will in due course replace the dollar as the main world reserve currency. I, however, am a sceptic. I doubt if the amount of SDRs will ever rival the dollar, euro or yen. Far from becoming a separate international currency, the SDR will remain a derivative of the dollar and a few other major national currencies.
World at risk from China forex policy: Treasury But no finding of manipulation China's foreign-exchange policy risks "unwinding" some of the progress made in reducing global trade imbalances during the financial crisis, the U.S. Treasury said Thursday in its latest report on foreign-exchange trading. But the department repeated its previous finding that China was not formally manipulating its currency. The absence of a finding of manipulation is important. Under the legislation prompting the review, a finding of manipulation would set off a series of steps that might end in the U.S. imposing duties on Chinese imports. The U.S. said it was not pleased with Chinese foreign-exchange policy.
Administration declines to cite China on currency manipulation The Obama administration on Thursday declined to name China as a country that is manipulating its currency to gain unfair trade advantages. The Treasury Department did say it has "serious concerns" about a lack of flexibility in the value of China's currency against other currencies, and the country's rapid accumulation of foreign exchange reserves including U.S. dollars. The latest finding is certain to spark protests among American manufacturers who contend that China is keeping its currency at artificially low levels against the dollar to gain unfair trade advantages. The critics say the weak Chinese currency has resulted in lost U.S. jobs.
U.S. Criticizes China for Lack of Exchange-Rate ‘Flexibility’ The U.S. Treasury Department criticized China for the “lack of flexibility” of the yuan and a buildup of foreign-exchange reserves while stopping short of branding the nation a manipulator of its currency. “The recent lack of flexibility of the renminbi exchange rate and China’s renewed accumulation of foreign-exchange reserves risk unwinding some of the progress made in reducing imbalances,” the Treasury said in its semiannual report to Congress on the currency policies, using another name for the yuan.
Sumitomo Forecasts Dollar to 50 Yen, End of Dollar as Reserve Currency "We can no longer stop the big wave of dollar weakness," said Daisuke Uno at Sumitomo. Nothing goes straight up or straight down. Look for corrections in the precious metals and the dollar, and the strengthening currencies such as the Aussie dollar, which seems headed to US dollar parity. However, the macro trend is apparent. We get a chuckle over this dollar weakness when free market people like Steve Forbes come out and look for market intervention to stop it. The market is taking the dollar where it should be, where it needs to go. If only countries with obvious pegs and ongoing manipulation to support export mercantilism were also to allow their currencies to float more freely. It is going to kill off global trade. It is the great failure of the WTO and US trade policy to have allowed pegs and overt currency manipulation policies which are de facto tariffs and subsidies on trade. A 'crash' in the US stock market, should one occur, will temporarily jar nearly everything. More likely is a long slow slide as in the second phase of the Great Depression, from 1931 to 1933.
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.'s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy. "The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger," said Daisuke Uno at Sumitomo Mitsui, a unit of Japan's third- biggest bank. "The dollar's fall won't stop until there's a change to the global currency system."
The Dollar in Your Wallet Is Only Worth 18¢ “A dollar is worth only 70¢ now,” my Dad jabbered as we worked in the backyard. “And they say it’ll only be worth 50¢ in a few years.” It was the mid-‘70s. I was helping my Dad build a dirt road to our barn and he wasn’t happy. Not about the hard work or humidity, but from what was happening to the dollar. Inflation was starting to kick into high gear, grabbing headlines that even a girl-chasing teenager could understand. I remember being appalled by the thought of going to the store and having the clerk demand $1.30 for an item marked $1. Knowing what I know now, my thinking wasn’t that far off.
Greenspan Says He’s Not Concerned About Dollar’s Drop Former Federal Reserve Chairman Alan Greenspan said he’s not “overly concerned” about the recent weakening of the U.S. dollar, while warning of long-term costs to the country and its currency from the rising national debt. “I’m not overly concerned about the most recent decline in the dollar,” which has returned to its value preceding the financial crisis, Greenspan said today at a Council on Foreign Relations forum in New York. At the same time, he warned it may become increasingly difficult to finance the federal debt.
Are We Stuck with the Dollar? Like so many people, I own gold and silver as a hedge against the "Latin Americanization" of the United States-money printing, deficits and debt. The talk about ending the world's dollar dependency should be music to the ears of the millions of us who have sought refuge in precious metals. But we are in a trap from which there is no immediate escape. In the absence of a new gold standard, the alternatives to the dollar are even worse.
Treasury: Dollar Will Prevail As Long As U.S. Policies Are Sound With all the noise about the weakness of the dollar and foreign investors’ uneasiness about future fiscal policy and inflation — and periodic talk from China or the Middle East about abandoning the dollar in favor of some other currency or a basket of currencies — the dollar continues to be the world’s dominant currency. And, the U.S. Treasury said Thursday, “As long as the United States maintains sound macroeconomic policies and deep, liquid, and open financial markets, the dollar will continue to be the major reserve currency.”
European nations opt for dollar issues European governments are having to raise money in dollars because of difficulties in attracting investors in their domestic markets due to the intense competition for funds. Central and eastern European governments have been particularly hard hit by the crowding-out effect as sovereign debt issuance has soared to record levels, enabling investors to be much choosier over the bonds they buy. Croatia joined the growing trend of issuing in dollars on Wednesday when it announced plans to issue its first bond in the US currency, with Barclays Capital, Citigroup and JPMorgan arranging the deal. It is expected to raise $500m.
US hardens stance on renminbi rigidity Treasury stops short of labelling China ‘manipulator’ The Obama administration said on Thursday that it had “serious concerns” about the value of the renminbi, but stopped short of accusing China of manipulating its currency in a closely watched report to Congress. The Treasury toughened its language on China in its semi-annual report on exchange rate policies. While acknowledging that Beijing had been important in steadying the global economy, it said recent moves to accumulate more foreign exchange reserves “risk unwinding some of the progress made in reducing imbalances”. But the Treasury did not say China was manipulating its currency, in spite of pressure from US labour groups and scores of legislators who argue that the undervalued renminbi makes China’s exports unfairly cheap. Pressure has built this year as manufacturers suffer huge job losses and the unemployment rate creeps towards 10 per cent.
Foreclosures Rise 5 Percent from Summer to Fall The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs. The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.
More Illinois homeowners falling into foreclosure New default notices were up in September, but overall filings dropped from August The number of homeowners receiving default notices -- the first step in the foreclosure process -- continued to rise in Illinois last month, a bad omen for the state's housing industry and economy. Lenders filed initial court documents last month against 7,174 Illinois homeowners whose mortgages were delinquent, according to data scheduled to be released Thursday by RealtyTrac. That compares with 6,892 filings in August and 6,770 filings in June.
Foreclosures Reach All-Time High in Q309: RealtyTrac According to RealtyTrac, one in every 136 homes in the US received a foreclosure filing during Q309, the highest reported quarterly foreclosure rate since RealtyTrac began issuing its report in the first quarter of 2005. Foreclosure filings increased 5% from the previous quarter and climbed 23% from Q308, according to the report. Nearly 938,000 homeowners received a foreclosure filing in Q309. Filings in September dipped 4% from the month before but jumped 29% from September 2008. Despite the monthly decrease, September registered the third highest monthly total since RealtyTrac began reporting - trailing only July and August of 2009.
US foreclosure activity surges 23% in third quarter Foreclosure activity among US properties rose to the highest level on record in the third quarter, as bold government stimulus measures failed to keep homeowners from defaulting. Default notices, auction sales and bank repossessions jumped by five per cent from the second quarter to the third quarter and were up by 23 per cent year-on-year, according to RealtyTrac. That was the highest quarterly increase since the foreclosure tracking company started keeping records in 2005. In spite of the sharp quarterly increase, foreclosure filings eased in September for the second month running. However, the total of 937,840 filings was the third highest monthly number on record.
CA Foreclosures Flatten, AZ Foreclosures Soar California foreclosure filings in September flattened from the previous month but remain well above the levels from a year earlier, according to ForeclosureRadar's monthly foreclosure report. From August, filings in California increased only 1.08% in September, but the volume has grown by 123% from last year. The report attributes the spike to the dramatic drop in filings in September 2008 after CA Senate Bill 1137 went into effect, requiring lenders to contact borrowers before filing a Notice of Default. Since government intervention began in September 2008, foreclosure sales remain stunted, dropping 8.6% from the previous month and 40.6% from a year ago. But the percentage of foreclosures sold to third parties, who are usually investors, grew by 215% from last year and 3.27% from August, according to the report.
Mountain of modifications Industry tries to keep up with avalanche of troubled mortgages Millions of homeowners are struggling to make their monthly mortgage payments and the continued deterioration in the job market guarantees millions more will be at risk in the coming months. That is putting a huge burden on mortgage-modification programs, both those run by the government and an increasing number operated by private industry, which are in a struggle of their own to stay ahead of the tide of potential foreclosures.
Peter Schiff Vlog - Consumer Spending, Gold New High, Dollar New Low October 13, 2009
Selling your gold? Don't get taken As gold prices hit record highs, consumers are rushing to trade their bling for some serious cash. But experts warn that you shouldn't jump at the first cash-for-your-gold ad you see on TV. With the price of gold as high as it's ever been, more people are rummaging through their dresser drawers, safe-deposit boxes and anywhere else they can to trade their forgotten bling for a thick wad of cash. But proceed with extreme caution -- especially if you find yourself lured by a late-night infomercial promising fast and easy cash for simply mailing your jewels in a pre-paid plastic envelope. "Ask yourself, would you send cash to Con Edison (the electric company) in the mail?" said Michael Gusky, a 30-year gold jewelry industry veteran and founder of scrap gold dealer Goldfellow.com.
Gold is in a Bull Market The other big news is that gold has reached a new high. It rose yesterday to $1065 yesterday - an increase of $7. "Why so high...so fast?" That was the question in our Daily Reckoning analyst meeting this morning. "In the last big boom in gold - in the late '70s - gold followed inflation...and the central bank. Investors saw inflation increasing. And they saw the central bank failing to react fast enough. They bought gold to protect themselves. "But now...there is no inflation. And central banks are alert to the problem. They haven't raised rates...but they don't need to. There's no need to protect against a problem that doesn't exist. So what are investors trying to protect against?" No one at the table had a good answer.
Investors setting gold standard at more than $1,000 an ounce After piercing the sky-high, yet psychologically important $1,000-an-ounce barrier two weeks ago, the price of gold hit yet another record high yesterday. The surge in the spot price of gold to $1,069.70 an ounce yesterday comes at a time of international worry about the perceived weakness of the U.S. dollar, the vulnerability of the U.S. economy and the growing potential for runaway inflation. Gold closed yesterday at $1,064.20 an ounce. "Gold is ultimately the only currency you can't print more of," said Natalie Dempster, head of investments for the World Gold Council in New York. "The rally should not be seen as news, but a continuation of an eight-year trend."
Buy Gold in Harrods As Precious Metals Go Retail If you wanted a more potent symbol of the rise of gold among retail investors then the news that London department store Harrods is to sell gold coins and bullion over the counter from today is surely just that. Apparently Harrods is the only place in London where you can pick up a 12.5kg bullion bar off the shelf. One could imagine bumping into Jim Sinclair with his trolley loaded or some of the guys from The Daily Reckoning popping in for a bullion bar after lunch.
Harrods to sell gold bullion over the counter Harrods has announced that in conjunction with Swiss independent refiner PAMP it will sell a range of gold bullion products at the top department store. A report in the UK's Daily Telegraph suggests an interesting new phenomenon in the availability of over-the-counter gold sales. According to the newspaper the UK's top department store, Harrods, has joined forces with Swiss precious metals refiner - Produits Artistiques Métaux Précieux (PAMP), to sell a range of gold bars across the counter of the department store's banking division.
Sterling rises against dollar and euro The pound rallied against both the dollar and euro on Thursday as traders unwound short positions on sterling amid increased optimism from the Bank of England. The currency closed up more than three cents against the dollar at $1.6267, and almost two cents against the euro at €1.0889. Currency experts said the rise was partly explained by comments made by Paul Fisher, a member of the Bank of England's Monetary Policy Committee, who said there were positive signs that the MPC's £175bn Quantitative Easing (QE) programme was working.
Next Wave of Banking Crisis to come from Eastern Europe One day soon before you even have your morning orange juice you'll find Gold up $150 and Silver $3 up in one day. There are no safe haven paper monies to which you can hide. Physical gold and silver are the only monies with no counter-party risk. Beware the ETFs. Like the COMEX, and "pooled" storage accounts they are paper pyramids. Now, there is  widespread disbelief that the US Treasury still owns the Gold Treasury stock it says it does. US Dollar perched just above 75, and a drop to below 72 will trigger a panic OUT of the dollar. People will demand in-hand gold and silver at any price. Coordinated government currency interference will be a short-term fix, but unable to stem the tide. America cannot withstand another two years of domestic defeats, so this congress must go in 2010. No leadership can be this ignorant of economic matters, consequently our economic and sovereign peril must be deliberate.
European banks face an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date. Unlike the losses of US banks which derive initially from their exposures to low-quality sub-prime real estate and other securitized lending, the problems of western European banks, most especially in Austria , Sweden and perhaps Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of extreme low international interest rates to clients in eastern European countries.
The Great Inflation/Deflation Debate Recently, Jim Puplava (Financial Sense) hosted an excellent debate between proponents of inflation and those of deflation. With excitement I listened to the interviews hoping to learn of any arguments that I had not heard of and to find clues as to what is in store for the near future. I was surprised to find that the advocates of both sides are actually quite in agreement on the general subject, and their opinions only vary on some of the details as to what time frame or what definitions/investing-aspects to look at. Let me summarize in the following paragraph. Almost all interviewees agree that in the long-run the supply of money and credit will grow and this will lead to a lower value of the currency (the dollar), and hence higher aggregate prices. This has happened to all fiat currencies in history, has happened to the dollar since 1913, and the incentives exist for government to continue on this path.
Regulatory Cat and Mouse Many commentators have argued that if the U.S. Federal Reserve had followed a stricter monetary policy earlier this decade when the housing bubble was forming, and if Congress had not deregulated banking but had imposed tighter financial standards, the housing boom and bust — and the subsequent financial crisis and recession — would have been averted. We are skeptical that economists can detect bubbles in real time through technical means with any degree of unanimity. Even if they could, we doubt the Fed would have altered its policy in the early 21st century, and we suspect that political leaders would have exerted considerable pressure to maintain that policy. Concerning regulation, we find that the banking reform of the late 1990s had little effect on the housing boom and bust, and that the many reform ideas currently proposed would have done little or nothing to avert the crisis.
Fed Officials Question Expansion’s Durability, Discuss More Aid Federal Reserve policy makers doubted the durability of the recovery and for the first time signaled they were open to boosting purchases of mortgage bonds to further prop up the housing market. Some Federal Open Market Committee members argued that expanding their purchases above $1.25 trillion might help to “reduce economic slack more quickly,” according to minutes of the Federal Open Market Committee’s Sept. 22-23 meeting released yesterday in Washington.
Federal Reserve System – Banking Fraud What is the Federal Reserve Bank (FED) and why do we have it? The FED is a central bank. Central banks are supposed to implement a country's fiscal policies. They monitor commercial banks to ensure that they maintain sufficient assets, like cash, so as to remain solvent and stable. Central banks also do business, such as currency exchanges and gold transactions, with other central banks. In theory, a central bank should be good for a country, and they might be if it wasn't for the fact that they are not owned or controlled by the government of the country they are serving. Private central banks, including our FED, operate not in the interest of the public good but for profit.
Time to Start Over Plans in Congress simply pile on new mandates, taxes and subsidies If you're going the wrong way down a road, the answer isn't to step on the gas, but to turn around. It is not that the U.S. doesn't need health care reform, but it needs the right type of reform. Problematic as our system often is, it is possible to make things worse. All the bills making their way through Congress start from the same failed premise: They would put the government in charge of one-sixth of our economy and some of the important personal and private decisions in our lives.
Inflation Fear Ignites Scramble for TIPS Whats worse: Inflation, or just the fear of it? Despite a still deflating economy, investors have decided on fear of inflation over the real thing, it seems. Treasury Inflation Protected Securities have surged 7.9 percent this year, while Treasuries have lost 2.8 percent, according to Merrill Lynch indices. Thats the biggest spread in favor of TIPS since the government first issued them in 1997, Bloomberg reports.
Fed Leaders Differed on Outlook Meeting Minutes Show Varied Inflation Views There were simmering disagreements among top Federal Reserve officials at their last policymaking meeting, according to minutes released Wednesday, as central bankers who were largely unified during the past year diverged in their views on the risks of inflation. The final vote was unanimous at the Sept. 22-23 meeting of the Federal Open Market Committee, as the Fed decided to keep its target interest rate near zero and to wind down by March a program that buys mortgage-backed securities. But the minutes, combined with recent speeches by Fed leaders, make clear that some senior officials are starting to stake different positions on how soon the central bank should withdraw its aggressive steps to support the economy.
U.S. Stock Markets Disconnected from Reality Earlier this year, I predicted that the 2009 rally in U.S. stocks could bring the Dow Jones Index as high as 10,000. It looks like that level has been achieved. If, at this point, the index reverses course, I would have made a fairly good prediction. However, it is important to get beyond the charts and look at the fundamentals. The furious six-month rally in the stock market has certainly not been mirrored by the economy as a whole. Instead, the country remains in recession, with unemployment continuing to rise and corporate earnings continuing to decline. This has pushed up trading multiples to the point that where value is now a distant memory. How could the stock markets have recovered so strongly in the face of economic recession.
Citi still playing catch-up as credit losses bite Citigroup Inc posted a quarterly per-share loss as it suffered $8 billion of credit losses, raising questions about when the bank can return to sustained profitability. The loss per share was narrower than analysts expected but still underlined how far the bank has to go to catch up with stronger rivals like JPMorgan Chase & Co. Citigroup has received $45 billion of capital from the U.S. government and is now one-third owned by taxpayers, while JPMorgan has paid back the government bailout it received last year. Citigroup's shares were down 6 percent to $4.70 in afternoon trade.
Goldman Sachs: Your tax dollars, their big bonuses Goldman Sachs is having a banner year, and is getting a big boost from government programs. It's probably cold comfort, but Goldman Sachs couldn't have done it without your help. The New York-based investment firm turned another eye-popping profit Thursday, earning $3.2 billion in the third quarter, as revenue from trading rose fourfold from a year ago. As Wall Street firms typically do, Goldman set almost half that sum aside to compensate its workers. Through the first nine months of 2009, the firm socked away $16.7 billion, enough to pay the average Goldmanite $526,814. The bonus pool is on pace to hit $21 billion for 2009, which would match the record bonus payout of 2007.
U.S. Credit-Card Defaults Resume Ascent as Unemployment Worsens JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., the biggest U.S. credit- card lenders, said defaults climbed in August as the unemployment rate jumped and the impact of tax refunds waned. American Express Co. was the only one of six card-issuers releasing data today to report an improvement in the rate of both defaults and delinquencies, a signal of future write-offs. The industry's data may signal that the second quarter's improvement will be short-lived as tax refunds and federal efforts to stimulate the economy run out. Defaults tend to track the jobless rate, which dipped in July for the first time since the start of the recession before resuming its climb to 9.7 percent in August.
Capital One Card Write-Offs Advance to 9.4 Percent Capital One Financial Corp., the Virginia credit-card lender that's returning federal bailout money, said uncollectible U.S. card loans rose in May. Capital One wrote off 9.41 percent of U.S. card loans on an annualized basis, compared with 8.56 percent reported for April, the McLean-based bank said today in a federal filing. Loans 30 days or more overdue declined to 4.9 percent from 5.04 percent. Credit-card profits have been under pressure this year as the jobless rate climbed to 9.4 percent in May, the highest since 1983. Overdue payments historically rise and fall with the U.S. unemployment rate because consumers are more prone to default when they lose their jobs.
Credit-Card Losses Ease but Not Much Loan data from U.S. credit-card issuers offered scant evidence of an imminent turnaround, dashing hopes that positive trends from a month earlier were gaining momentum. The numbers released Tuesday indicate that consumers still are struggling to find their financial footing. "Broadly speaking, the data don't give us any evidence that things are improving materially," said Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods. Issuers of plastic, including Capital One Financial Corp., J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc., Discover Financial Services and American Express Co. also are coping with legislation that will bite into income.
Geithner says U.S. should avoid lengthy slump The United States should avoid a prolonged slump thanks to its stimulus efforts, but policy-makers must refrain from applying the brakes too soon, Treasury Secretary Timothy Geithner said late Thursday. Actions taken by the Federal Reserve and Obama administration have "improved prospects we won't be consigned to a prolonged period of below-trend growth," Geithner said at a conference held by the Economist magazine in New York. Policy-makers need to avoid withdrawing support for the economy and financial system too early, he added. "Risks on the growth front are still the dominant risks."
Greenspan Says U.S. Should Consider Breaking Up Large Banks U.S. regulators should consider breaking up large financial institutions considered "too big to fail," former Federal Reserve Chairman Alan Greenspan said. Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York.
Lenders get back nearly 60% on foreclosures Lenders recovered almost 60 percent of the loan value for properties that were foreclosed in 2009, according to an analysis by Real Capital Analytics. In a report released Thursday, the New York firm said lenders recovered $1.9 billion on 145 defaulted commercial mortgages totaling $3.2 billion. In an indication that more is yet to come, Dan Fasulo, managing director for Real Capital, said in an e-mail, “For the entire U.S. we have only been able to track 145 recovery rates — that’s how little of the distress has been cleaned up until now.” How much a lender was able to recover in a foreclosure depended on location, type of asset and, most of all, the purpose of the loan. In a bad sign for the lenders of Sunnyvale Town Center, the massive mixed-use project that’s just 40 percent complete, the report said that loans on partially completed developments recover less than a third — 32 percent — of the value.
Banks face big rise in capital holdings New rules that require banks to do more to protect themselves against trading losses will force them to increase their total capital holdings by an average of 11.5 per cent, according to an impact study by the Basel committee on banking supervision. The rules, adopted in July by the committee’s 27 member nations, force banks to set aside capital against the possibility of credit defaults or downgrades and to test their trading-book risk in deeply stressed markets. All major banks must adhere to the new requirements by the end of 2010, including those in the US, which has not subscribed to some of Basel’s rules in the past.
Partisan Politics-A Fool's Game for the Masses Because I despise politics in general, and the two major parties in this country in particular, I go through life constantly bemused by all the weight that people put on partisan political loyalties and on adherence to the normative demarcations the parties promote. Henry Adams observed that "politics, as a practice, whatever its professions, has always been the systematic organization of hatreds." This marshalling of hatreds is not the whole of politics, to be sure, but it is an essential element. Thus, Democrats encourage people to hate big corporations, and Republicans encourage people to hate welfare recipients.
Ron Paul on CNN
Federal Reserve officials see a stronger US economy but a recovery "restrained" Federal Reserve officials see a stronger US economy but a recovery "restrained" by high unemployment and challenging credit conditions, minutes issued on Wednesday show. The dollar fell after expectations of continued low interest rates, were signalled by a low inflation outlook. The minutes of the September 22-23 meeting of the Federal Open Market Committee (FOMC) show worries about unemployment and the strength of the recovery. Some policymakers said expanding the central bank's $1.25 trillion mortgage-backed securities purchase program may help boost the economy amid concerns the recovery may fade.
Wall Street firms set to break new records in 2009 with pay rising to $140bn; Bailed-out insurance giant AIG paid "retention bonuses" to kitchen staff Wall Street firms are set to break new records with employee pay set to rise to $140bn this year. Meanwhile, it has been reported that the bailed-out insurance giant AIG paid "retention bonuses" to kitchen staff earlier this year from a $168m pot, that was ostensibly designed to keep staff from leaving the government controlled firm. Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did in the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.
The Biggest Bust Will Follow the Biggest Bubble Our “Crash Alert” flag goes back up the pole… October is almost half over. Will we get through the month without a major sell-off? Dear reader, if you think we know the answer to that you’ve got us mixed up with someone else. Someone who is crazy. No one with his wits about him thinks he knows what the stock market is going to do. Still, we have our hunches. We think it’s time for a major pull back. Frankly, we’ll be disappointed if we don’t get one soon. Because, once again stocks are too expensive. Too expensive for what? Too expensive for the circumstances.
Ex-FSA chief Sir Howard Davies sees 'dramatic’ risks for Britain The British people are living in a fool's paradise and have yet to understand the gravity of the economic crisis, according a former head of the Financial Services Authority. Sir Howard Davies, now Director of the London School of Economics, said Britain faces a dangerous rise in the levels of public debt – even taking into account tax increases planned for coming years. "The next six months are going to be extremely delicate in the UK", he told a gathering of HSBC clients in London. "It is very clear that something dramatic has to happen to control spending: but is the economy robust enough to survive fiscal tightening?"
The End of Money and the Future of Civilization It’s too late for anyone to pretend that the U.S. government, whether under President Barack Obama or anyone else, can divert our nation from long-term economic decline. The U.S. is increasingly in a state of political, economic, and moral paralysis, caught as it were between the “rock” of protracted recession and the “hard place” of terminal government debt. Even if the stock market can be shored up by more government borrowing for “stimulus” spending, it’s a temporary reprieve, because nothing can bring back the consumer purchasing power that was lost when the banks stopped pumping money into the economy through out-of-control mortgage lending. We simply no longer have the job base for people to earn the income they need to live.
How We Solved the Other Great Depression The other Great Depression? The really bad one? Government did nothing, and it went away on its own. And that's why nobody talks about it now. Thats the conclusion of economist Thomas E. Woods, Jr., who says the Great Depression of 1920 was over in a year because the government let it run its course, primarily due to the fact that President Woodrow Wilson suffered a couple of semi-debilitating strokes that left him unable to intervene. Consequently, very little was done to arrest the economic decline and, by the summer of 1921, recovery was on its way.
Why You've Never Heard of the Great Depression of 1920 Presented by Thomas E. Woods, Jr., at "The Great Depression: What We Can Learn From It Today," the Mises Circle in Colorado; sponsored by Limited Government Forum of Colorado Springs and hosted by the Ludwig von Mises Institute. Recorded Saturday, 4 April 2009.
Warren Harding and the Forgotten Depression of 1920 It is a cliché that if we do not study the past we are condemned to repeat it. Almost equally certain, however, is that if there are lessons to be learned from an historical episode, the political class will draw all the wrong ones – and often deliberately so. Far from viewing the past as a potential source of wisdom and insight, political regimes have a habit of employing history as an ideological weapon, to be distorted and manipulated in the service of present-day ambitions. That’s what Winston Churchill meant when he described the history of the Soviet Union as “unpredictable.”
Social Security: No COLA This Year There will be no cost of living increase for more than 50 million Social Security recipients next year, the first year without a raise since automatic adjustments were adopted in 1975, the government announced Thursday. Blame falling consumer prices. By law, cost of living adjustments are pegged to inflation, which is negative this year because of lower energy costs. Social Security payments, however, cannot go down. Thursday's announcement comes a day after President Barack Obama called for a second round of $250 stimulus payments for seniors, veterans, retired railroad workers and people with disabilities.
Obama Wants $250 Payments to Seniors President Barack Obama called on Congress Wednesday to approve $250 payments to more than 50 million seniors to make up for no increase in Social Security next year. The Social Security Administration is scheduled to announce Thursday that there will be no cost of living increase next year. By law, increases are pegged to inflation, which has been negative this year. It would mark the first year without an increase in Social Security payments since automatic adjustments were adopted in 1975.
No 2010 increase in Social Security Seniors' benefits will not be adjusted for cost of living because of low consumer prices. Obama urges $250 emergency payments. There will be no cost-of-living increase for 57 million Social Security beneficiaries next year because consumer prices have fallen, the Social Security Administration announced on Thursday. It marks the first time that Social Security benefits have not been increased year over year since the cost-of-living adjustment was put into effect in 1975. To help counterbalance the hit, President Obama is calling on Congress to send another $250 relief payment to seniors and other Americans to stem the economic strain.
Retailers Have Room for Home Improvement More property changing hands should mean plenty of repairs around the house. However, it may take some time to fix up sales at home-improvement retailers. The summer brought positive news about existing-home sales, which increased every month from June to August, according to the National Association of Realtors. That's surely promising for the likes of Home Depot and Lowe's. And yet, shoppers remain reticent to open their wallets. On Wednesday, the Census Bureau said sales at building and garden-equipment retailers fell 13.7% from a year earlier in the third quarter, faster than the 12% decline in the second quarter. Both Home Depot and Lowe's participate in the survey.
Obama should lay off Fox News, critics say WASHINGTON - In the nearly nine months since U.S. President Barack Obama took office, no American news organization has annoyed, frustrated or outraged the White House more than Rupert Murdoch's Fox News Channel. But a decision by the Obama administration this week to dramatically escalate its hostilities with the cable network has drawn criticism from conservatives and liberals alike, and raised questions about whether the White House needs to develop a thicker skin as media criticism of the president grows.
Climate deal hopes boosted Developing countries have dropped long-standing demands for access to rich countries’ technology to cut greenhouse gas emissions, removing a big obstacle to an international deal on climate change, European officials said on Thursday. Countries such as China and India have pushed for rich countries to give them low-carbon technologies ever since the lead-up to the 1997 Kyoto protocol. The demand has been a sticking point in negotiations before this December’s climate change summit in Copenhagen with rich countries, arguing that any such move could force private sector companies to give away their intellectual property.
Kissinger hopes for Canadian Afghan role post-2011 PARIS - Former American secretary of state Henry Kissinger said Wednesday he hopes Canada will maintain its combat role in Afghanistan after 2011, though he said he respects the Canadian government's right to make its own decision. Mr. Kissinger made the comment in Paris while calling on U.S. President Barack Obama to accept U.S. and NATO commander in Afghanistan Gen. Stanley McChrystal's request for 40,000 more soldiers to fight the Taliban insurgency.
Brussels warns on long-term costs of ageing The public finances of the UK, Spain and 10 other European Union countries are at long-term high risk, because of projected increases in welfare expenditure and the impact of the world financial crisis, according to a report by the European Commission. The 175-page study, published this week, placed only five of the EU’s 27 countries in the low-risk category – Bulgaria, Denmark, Estonia, Finland and Sweden. Ten countries, including France, Germany, Italy and Poland, were identified as medium-risk. The report was released in the midst of delicate discussions among EU governments about when and how to withdraw anti-recession spending programmes that are expected to increase the EU’s public debt by 20 percentage points in the three years from 2008 to 2010.
German 'Wise Men' fear credit crunch in 2010 Germany's leading institutes have warned that the pace of economic recovery is "unsustainable" and that the country's banks may face a fresh crisis over the next year as bad debts surface in earnest. 'There is still a significant risk of further shocks to the international financial system,' said a joint report by the five 'Wise Men', a panel that advises the government. Emergency action by the European Central Bank and authorities worldwide "averted a looming collapse" of Germany's banks over the Winter but lenders are still too frail to renew normal lending. "Credit to non-financial firms has clearly been declining. Financial conditions are likely to worsen further. Banks are facing large write-offs on toxic debt and a rising toll of company insolvencies," it said.
In Face of Sanctions, China Premier Warms to Iran BEIJING — The Chinese prime minister, Wen Jiabao, said Thursday that China would maintain high-level exchanges with Iran, saluted the two countries’ increasing cooperation and said they would work closely together on international affairs, remarks that appeared to undercut the United States’ effort for international cooperation on threatening Iran with stricter economic sanctions over its nuclear program. “The Sino-Iran relationship has witnessed rapid development, as the two countries’ leaders have had frequent exchanges, and cooperation in trade and energy has widened and deepened,” Mr. Wen said during a meeting at the Great Hall of the People with Iran’s first vice president, Mohmmad Reza Rahimi, , according to Xinhua, the state news agency.
60% Of PERFORMING Borrowers Underwater Here's a scary stat to ponder as consider how realistic banks are being about their losses. FT Alphaville: In a report released on Tuesday, the rating agency estimated approximately 60 per cent of the remaining performing borrowers from the 2006-2007 vintages are underwater. Two aspects of that assertion immediately stand out. The first is that these borrowers are still considered “performing”, meaning they aren’t late on their payments and are certainly not in foreclosure. Given the not-irrational propensity of borrowers in negative equity to walk away from their homes, that statistic bodes ill for the already depressed US housing market.
Majority of current RMBS borrowers underwater, Fitch says How’s this for a negative equity data point: the majority of borrowers whose home loans have been wrapped into a US residential mortgage backed securities transaction owe more on their mortgages than their homes are currently worth, according to Fitch. In a report released on Tuesday, the rating agency estimated approximately 60 per cent of the remaining performing borrowers from the 2006-2007 vintages are underwater. Two aspects of that assertion immediately stand out. The first is that these borrowers are still considered “performing”, meaning they aren’t late on their payments and are certainly not in foreclosure. Given the not-irrational propensity of borrowers in negative equity to walk away from their homes, that statistic bodes ill for the already depressed US housing market.
A Bounce? Indeed. A Boom? Not Yet. THE sudden rise in home prices suggests that the psychology of the market has shifted substantially. But what should we expect in the months ahead? Not necessarily that we’re entering a new housing boom. To a large extent, where we’re heading depends on what home buyers are thinking. Some clues are found in the annual home-buyer surveys that Karl Case, the Wellesley economics professor, and I have run for years. For the surveys, we canvas recent home buyers in four cities — Los Angeles, San Francisco, Milwaukee and Boston; the surveys are now being conducted under the auspices of the Yale School of Management. We have just received the 2009 results, with responses from June and July.
Worst Yet to Come for Wealthy Homeowners Despite some signs that the worst of the U.S. residential housing crisis may be over, many wealthy homeowners are still being squeezed by the combination of weak home prices and the stock market crash. "I think for wealthy homeowners it will get worse before it gets better," said Dennis Hedlund, founder of iEmergent, a forecaster for mortgage and real estate companies. "I don't think home prices have bottomed yet. Many people are stuck at the high end, as there aren't many buyers out there," Hedlund said of owners of luxury properties. From California to Massachusetts, the U.S. housing crisis came after years of easy credit and soaring property values. Towns like the western Chicago suburb of St. Charles saw an unprecedented growth of wealth, especially in high-end homes.
CondoVultures: Fate Of S. Florida Housing Market All Depends On The Federal Government The latest numbers on foreclosures and short-sales in South Florida are predictably horrific. CondoVultures: Foreclosure actions in the tricounty South Florida region jumped by 25 percent in the third quarter ending Sept. 30 on a year-over-year basis, reaching 22,411 lis pendens filings in Miami-Dade, Broward, and Palm Beach counties, according to a new report from Condo Vultures® LLC. Broward, where Fort Lauderdale, Hollywood, and Pompano Beach are located, led the surge with 11,196 foreclosure actions filed between July and September 2009 compared to 7,960 actions filed during the same period in 2008, according to the report produced using the Condo Vultures® Foreclosure Database™.
Fat U.S. bank profits mask housing woes Americans are still losing their houses in record numbers amid tight credit and high unemployment JPMorgan Chase & Co.'s fat investment banking profit masks a dark underside of the U.S. recovery – the housing market is still a mess and homeowners are defaulting at an alarming rate. Heralding what's in store for other major banks, JPMorgan reported almost $3.6-billion (U.S.) in profit in the third quarter – a stunning 580-per-cent surge from the same quarter last year – cementing the perception that banks are emerging strong and healthy from the recession.
Moody's: Commercial Mortgages Going Bad At Record Pace Here's the scary thing about the commercial real estate situation: It's not even starting with the second derivative improvement. Things are still getting worse faster says Moody's. (via Research Recap) The Moody’s Delinquency Tracker (DQT) measured a 41 basis point increase in the month of September. The DQT now stands at 3.64%. This represents a 310 basis points increase over the same time last year. The DQT is now nearly 350 basis points higher than the low of 0.22% reached in July 2007.
Commercial Real Estate Watch: Stuyvesant Town Set To Implode This one's been in trouble for awhile, and now WSJ is reporting that the epic NYC apartment complex Stuyvesant Town is just months away from implosion. The 56-building, 11,000 unit complex was acquired at the peak of the bubble for $5.4 billion by Tishman Speyer and BlackRock, with investors ranging from CALPERS (naturally) to the Church of England (not as obvious).
Peter Schiff - Dow 10,000-So What
Gold Just Broke Its Neck, Targets $5,250? . . . . Well, here were are in October 2009, and gold is definitely making a major move upwards. To me, the reason here is simple: investors have begun to realize that every central bank on the planet is hell bent on devaluing their currencies. Everyone and their mother believes the Fed’s actions are hurting the US dollar. But few people have taken noticed that the Europeans don’t want a strong euro, just as the Japanese don’t want a strong yen, just as the Swiss don’t want a strong franc. Why? None of these guys want their currencies to appreciate too far against the dollar because most if not ALL of them export to the US or trade products based in dollars. Having a strong currency against a weak dollar means increased production costs against a lower sales price. This means LOWER profitability.
Gold's Next Bull Market Has Begun Gold just broke its “neckline.” If you’ll recall, in August I wrote about the massive inverse head and shoulders pattern gold had formed during the last three years. I presented the below chart to illustrate this: . . . . . . . . As you can see, gold’s recent rally took it above the critical point of upward resistance. This indicates that the next leg up in the gold bull market has begun. The reason here is simple: investors have begun to realize that every central bank on the planet is hell bent on devaluing their currencies.
Gold headed for $1650 on falling dollar We can keep you updated on developments and Trader Dan can keep you updated on technical matters as the drama in gold will never end. The dollar is headed for much bigger trouble quite soon. Gold is going to $1224, $1650 and then on to Alf’s numbers. The US dollar will touch its past low, fight a bit, but then give it up to the carry trade and fundamental economics. All we have warned you of is happening now. The countdown of days needs to be understood as a countdown for just what is happening. That countdown is to the faltering of a major area of dollar support becoming invalid as the carry trade monster devours any currency it adopts.
'Gold to surge to $1500-$2000 in 12 months' . . . . There's a lot of confusion out there now, but the bull market in gold is not about jewelry demand; it's about money. As gold keeps reaching new record highs, it's becoming more apparent what's driving it. The true issue at hand is trust (or lack of it) in the value of paper money – specifically the US Dollar. What's really made this country so strong has been the value of its currency.
If gold pushes higher, silver should follow Precious metals remain well supported despite the net speculative long positions in the futures market being very high. We expect these positions to remain high for the rest of Q4:09. They raise the risk of price corrections. However, we also believe dips should be bought during the next quarter. China released its September auto sales data this morning. Auto sales rose 83.6% y/y, to 1.015 million units. US auto sales remain weak after the end of the “cash-for-clunkers” programme; China’s physical demand for PGM has supported the market over the past year.
Gold’s New Friends Press rumors of planning meetings to shift crude pricing away from the US$, plus a 0.25% increase in Australia’s bank rate, has put some serious bounce in gold and silver prices. The yellow metal has convincingly moved past its old high, in US$ terms, and we expect that move to continue. Whether the details of the meetings reported in London’s The Independent are accurate in every detail or not, markets have had no problem accepting the basic point that the greenback cannot expect long term support as the globe’s reserve currency.
Is the Liquidity Lifting the Dow and Gold Sustainable, or a Bubble? Record liquidity in the markets has temporarily welded the optimism of both bulls and bears in stocks and commodities. The Dow closed at 9712.28, up 15% in the third quarter, the best quarterly performance since 1998, and up 52% from the March bottom. Gold appears to have stabilized above $1,000 per ounce, the highest level since March of 2008 during the Bear Stearns meltdown. There may be a showdown for stocks and commodities, with High Noon rapidly approaching.
Gold Suggests Global Inflation Is Approaching What would signal inflation on a global scale? We think the ultimate test is a breakdown in the value of paper or fiat currencies. That is, a strengthening of gold and crude relative to the world’s strongest paper currency which, at this point in time, is the Aussie dollar. If Gold breaks above AUD1180 it will mean a 4 month high for gold in Aussie dollars and that is enough for us to signal a change in trend.
Gold, Saving and Unintended Consequences It is very likely that two ultra-long-term trends reversed direction over the past two years, the first being the expansion of private-sector credit in the US and the second being the contraction of the US savings rate. The trend reversals are, of course, inter-related, in that the new trends towards less debt and more savings are being driven by economic hardship in the present and the revelation that the economic future will not be as rosy as previously thought.
US Dollar Crashes Through Major Support Level This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance. Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.
U.S. dollar drop overrides official pleas for strength Doubts about Washington's sincerity, Fed's low-rate regime offset rhetoric Increased public hang-wringing over the U.S. dollar's drop -- from finance officials in Tokyo to Brussels to Washington -- have failed to lift the greenback as investors bet major central banks won't back up their remarks by buying dollars. The U.S. dollar index, which measures the U.S. dollar against a basket of six currencies, has lost 4% since Sept. 1, bringing its drop this year to nearly 7% and its level to a 14-month low.
Who's Benefiting from the Dollar's Demise? The dollar is out as the world's predominant reserve currency. Central banks around the world increased their foreign currency holdings by $413 billion in the second quarter, the most since at least 2003, according to data compiled by Bloomberg News. But 63% of that new cash was put into currencies other than the dollar. That's a record-high percentage for any quarter with more than an $80 billion increase in holdings. The dollar's 37% share of new reserves is down from about a 63% average a decade ago.
Morgan Stanley: It's A Good Time For The Dollar To Fall A dollar decline is much-needed and good news for the U.S. economy, as long as it is orderly, according to Morgan Stanley's Richer Berner in a piece today. Richard Berner: Some fear that, by allowing the dollar to decline, the Fed is playing with fire, risking a destabilizing crash in the currency. I disagree. I view a weaker dollar as an adjunct to US monetary policy that helps prevent inflation from falling too low and is a stimulant to growth. His key points:
It counters deflationary forces in the U.S. economy.
It helps shift production back to the U.S. and boosts exports, thus helping the country achieve more balanced growth.
It will be tolerated by foreign countries as long as it is orderly.
Yet we should remain vigilant that the decline doesn't get out of control
Dollar hit on Fed’s signal of low rates The dollar fell on Wednesday after minutes from the Federal Reserve’s last policy meeting showed that some committee members favoured increased purchases of assets such as mortgage-backed securities to speed recovery. While the committee simply agreed to keep open the option of either expanding or reducing the purchases if the economic outlook changed, only one policymaker made the case for scaling back buying – leaving an overall doveish skew.
Dollar weakness spurs another record high for gold Momentum is still high but a lot of market players are starting to get cautious Gold hit record highs on Wednesday as the U.S. dollar extended losses to a 14-month low against a basket of currencies on growing optimism about the global economy. Spot gold rose as high as $1,069.45 per ounce. Gold has rallied about 13% since the start of September and has gained 22% this year. Most-active December gold futures rose to a high of $1,071.10 as of 0320 GMT. They stood at $1,065.0 on the COMEX division of the New York Mercantile Exchange. Previous highs were touched only a day before
Dollar 'Downtrend' May Be Continuous for Some Time The dollar's decline may persist amid speculation the Federal Reserve won't need to raise interest rates for some time, according to Royal Bank of Scotland Group Plc. Comments yesterday from Fed Vice Chairman Donald Kohn feel "like a slap-down of the recent rash of more hawkish rhetoric," Greg Gibbs, a foreign-exchange strategist in Sydney, wrote today in a report. "It reads to me like, sure we can raise rates and quickly if we have to, but we are very unlikely to have to, at least for a long time.
The Message of Dollar Disdain With U.S. debt set to exceed 100% of GDP in 2011, it's no wonder people are looking for alternative ways to preserve wealth. Unprecedented spending, unending fiscal deficits, unconscionable accumulations of government debt: These are the trends that are shaping America's financial future. And since loose monetary policy and a weak U.S. dollar are part of the mix, apparently, it's no wonder people around the world are searching for an alternative form of money in which to calculate and preserve their own wealth. It may be too soon to dismiss the dollar as an utterly debauched currency. It still is the most used for international transactions and constitutes over 60% of other countries' official foreign-exchange reserves. But the reputation of our nation's money is being severely compromised.
Dollar Drops as JPMorgan Profit Encourages Higher-Yield Demand The dollar fell to a 14-month low against the euro as JPMorgan Chase & Co.'s earnings beat analysts' estimates, buoying global stocks and encouraging investors to buy higher-yielding assets. The U.S. currency dropped against most of the 16 most- traded counterparts tracked by Bloomberg including the South African rand and the Brazilian real as retail sales fell in September less than economists forecast, spurring risk demand. Canada's dollar approached parity with the U.S. currency and Norway's krone rose as crude oil rallied above $75 a barrel.
Time to Hire Bernard Madoff to Run U.S. Treasury No, this isn't hyperbole. It's what many economists are saying as they look at U.S. finances and how central banks are increasingly snubbing the world's reserve currency. It barely needs to be said that this could all end very badly. It's not that foreign-currency holdings are falling. It's that nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, according to Barclays Capital. That's the highest percentage in any quarter, with more than an $80 billion increase.
The people vs Wall Street Bear Stearns bankers on trial in first criminal case of the credit crunch Amidst the economic wreckage, after 7 million job losses and approaching 2 million home foreclosures in the US alone, with businesses and consumers around the world still struggling to get finance after the long credit crunch, Wall Street is finally on trial. A little piece of Wall Street, at least. In the first major case against bankers at the heart of the financial meltdown, a jury of 12 mainly working-class New Yorkers will decide the fate of the two Bear Stearns managers whose hedge funds imploded in 2007, signalling the start of the crisis. Ralph Cioffi, 53, and Matt Tannin, 48, pocketed millions of dollars in pay during the boom years, but the events of 2007 left their investors nursing losses of $1.6bn and ruined forever the reputation of Bear Stearns, one of the oldest investment banks on Wall Street.
Don't trust Dow 10,000 The stock market is supposed to be a leading indicator, predicting what happens next. But the rally doesn't mean the nation's economic woes are over. As the Dow closed above 10,000 for the first time in more than a year Wednesday, economists cautioned that the blue-chip average shouldn't be seen as giving a green light to the economy. The stock market is what is known as a leading economic indicator, as investors place bets on how strong they believe company results and the broader economy will be in the near future. Lately, there has been a growing consensus among both investors and economists that the battered U.S. economy hit bottom and turned around earlier this year, and is now in a recovery.
FDIC bank fund in the red until 2012 Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief. The government insurance fund designed to protect consumer bank deposits will likely stay in the red through 2012, Federal Deposit Insurance Corp. chief Sheila Bair said Wednesday. Testifying before members of the Senate Banking Committee, the nation's top commercial bank regulator stressed that her agency was taking immediate steps to replenish the dwindling fund. But she said those efforts would not put the rescue fund in the black until a little more than two years from now at the earliest.
Regulator: 17 Percent of National Banks on Watch List The regulator for the largest U.S. banks said on Wednesday that 17 percent of national banks are now considered "problem banks." Comptroller of the Currency John Dugan said credit quality continues to deteriorate across almost all classes of banking assets, in nearly all sizes of banks. He said national banks will need to set aside more capital and reserves to absorb these potential losses, which could cause more small institutions to fail. But he also noted that the vast majority of national banks are strong and will be able to withstand the declining asset quality.
We're Screwed If Just One Central Bank Makes An Error Australia recently raised its policy interest rate 25 bps, becoming the first major economy to do so since the financial crisis a year ago prompted all major economies to rapidly cut interest rates to historical lows. Financial markets had been chattering about economic stimuli exits for about a month before Canberra's move. The consensus was that central banks would keep rates extremely low through 2010, and possibly beyond, on grounds that the economic recovery is still shaky.
U.S. Will Set Guidelines to Modify Commercial Real-Estate Loans U.S. bank regulators, saying losses on souring commercial real-estate loans pose the biggest risk to lenders, will issue guidelines to help the institutions modify the agreements. Reduced demand for space has led to falling rental rates, adding to losses on the loans, leaders of the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision said in remarks prepared for delivery at a Senate Banking Committee hearing today. "The most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters is in CRE lending," FDIC Chairman Sheila Bair said, referring to commercial real estate. "Prudent loan workouts are often in the best interest of financial institutions and borrowers."
Bank regulators: Real estate loans biggest concern Losses mounting on commercial real estate loans pose biggest concern, federal regulators say With regulators warning that rising losses on commercial real estate loans pose risks for U.S. banks, senators asked Wednesday for greater attention to be focused on vulnerable smaller banks. The smaller, community banks are especially exposed to commercial real estate loans, which now pose the biggest challenge for many financial institutions and their overseers, Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers at a Senate hearing.
Loan losses could eclipse positive bank earnings If the nation's major banks report big third-quarter profits, don't take the numbers at face value. Although trading gains could drive strong earnings for banks like JPMorgan Chase & Co. and Goldman Sachs Group Inc., mounting loan losses and the prospect of tougher capital requirements and higher deposit insurance fees are expected to eat into the banks' profits well into 2010 and beyond.
Roubini's RGE Raises Latin America 2010 GDP Forecast RGE Monitor, Nouriel Roubini's economic research and advisory service, raised its forecast for Latin American growth in 2010, saying global stimulus plans and interest-rate cuts are sparking a rebound. The region's economy will grow 3.3 percent in 2010 after shrinking 2.6 percent this year, RGE wrote in an e-mailed note today. That compares with RGE's earlier forecast for 3 percent growth in 2010 and a 3 percent contraction this year. Brazil, Latin America's biggest economy, is leading the recovery in the region, New York-based RGE said.
Washington to Refinance Less as Muni Yields Jump to 7-Week High Washington state scaled back the week's largest tax-exempt bond auction by more than a third after benchmark municipal yields jumped to a seven-week high. The state, which is home to Seattle and Microsoft Corp., will take interest-cost bids from banks for $563.9 million of bonds, 36 percent less than planned. Rising borrowing costs cut into Washington's ability to refinance existing debt with the deal, which also will fund capital projects, said Chris McGann, a spokesman for the treasurer's office in Olympia.
CFTC, SEC Can't Ban Abusive Swaps Under Frank Plan Representative Barney Frank said his proposal to regulate the $592 trillion over-the-counter derivatives market won't give the government authority to ban "abusive swaps." "There was concern that a broad grant to ban abusive swaps would be unsettling," Frank, chairman of the House Financial Services Committee, said today as his panel began action on his measure.
The Latest Signs Of Complete Economic Meltdown: Phase 2 Begins by Giordano Bruno At the end of 2008 we reported on the first phase of the "Great Recession" as it is now often referred, mentioning the importance of China and the BRIC nations in the eventual collapse of the dollar, and the continuing saga of unemployment which would grind on despite any effort (or lack of effort) on the part of the Federal Reserve and the government to flood the economy with liquidity, artificially propping up credit markets and the Dow. The first phase of the collapse is nearly complete. The stock market tumbled near the 7000 point mark giving the government an opening to force through bailout legislation increasing government spending and the national debt to levels never before seen in history, while the private Federal Reserve has been quietly injecting fiat capital (no one knows exactly how much) into numerous domestic and foreign banks, the names of which the Fed has as yet refused to disclose. Some estimates, including that of Bloomberg, place the Federal Reserve's money creation at around $24 trillion.
Fed officials were conflicted over revival program Fed officials were conflicted over program to drive down mortgage rates, aid housing Amid uncertainties about strength of the budding recovery, Federal Reserve policymakers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and prop up the housing market, according to a document released Wednesday. In the end, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed said it would do so by the end of March.
Financial bills take stumbling steps Barney Frank, who chairs the House financial services committee, tried to drag two key elements of financial regulatory reform – derivatives and consumer protection legislation – towards passage on Wednesday. But the chairman faces a difficult task in the next few weeks of shepherding the bills through the committee and past a vote on the House floor. Republicans condemn them as an infringement on freedom and some Democrats worry they do not go far enough to constrain risky behaviour. The regulatory revamp could still pass this year, according to administration officials and leading lawmakers, but differences between and within the parties and with the Senate continue to cast doubt on the timetable and eventual form of the law.
Muni Defaults Top $4 Billion Amid Real Estate Swoon Municipal bond defaults soared past $4 billion for the year through the end of September, driven partly by the bursting of the real estate bubble, according to the Distressed Debt Securities Newsletter. There were 137 defaults totaling $4.2 billion in the period, including more than $1 billion in the third quarter, according to the Miami Lakes, Florida-based newsletter. The pace trails the 12-month record of 2008, when there were 150 defaults totaling $7.8 billion, including a $3.8 billion sewer bond issue by Jefferson County, Alabama, according to the newsletter.
Geithner Aides Reaped Millions Working for Banks, Hedge Funds Some of Treasury Secretary Timothy Geithner's closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms. The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.
New Rivals Pose Threat to New York Stock Exchange For most of the 217 years since its founding under a buttonwood tree on Wall Street, the New York Stock Exchange was the high temple of American capitalism. Behind its Greco-Roman facade, traders raised a Dante-esque din in their pursuit of the almighty dollar. Good times or bad, the daily melee on the cavernous trading floor made the Big Board the greatest marketplace for stocks in the world. But now, even as the Dow Jones industrial average topped 10,000 for the first time since the financial crisis sent it tumbling, the exchange and its hometown face an unsettling truth: the Big Board, the symbolic heart of New York’s financial industry, is getting smaller.
Number Of Exporters To US Collapses At Fastest Pace Since February China claims its exporters had a good September, but everyone knows how dicey official Chinese statistics can be. According to Panjiva, which monitors all shipping manifests to see how many companies are exporting goods to the United States, things aren't so rosey. Granted this isn't just China, but we still think it's meaningful to compare and contrast, at least. Panjiva blog: The word from Panjiva’s research team: global trade activity declined in September. Specifically, from August to September, there was a 5% decline in the number of global manufacturers shipping to the U.S. market. Similarly, there was a 4% decline in the number of U.S. companies receiving waterborne shipments from global manufacturers.
Many Small Investors Have Sat Out Rally Rebound Driven by Institutional Clients NEW YORK, Oct. 14 -- Wall Street may be cheering the rally in the U.S. stock market, but many individual investors watched the Dow Jones industrial average soar past the 10,000 mark Wednesday on the sidelines. Still shell-shocked from the ravaging of their retirement accounts during the financial crisis, mom-and-pop investors remained cautious as the Dow soared 53 percent from its March 9 low to Wednesday's closing price of 10,015.86. The likely drivers of the rally are instead institutional investors such as large pension funds and hedge funds, market analysts said. And in interviews over the past two weeks, fund managers and financial advisers said most small investors have only recently begun to talk about getting more aggressive with their beaten-down portfolios
Extending the Recession Indefinitely Unemployment continues to tick upward. Small businesses forgo profits on two-for-one deals just to keep the doors open. But we're in recovery. Treasury Secretary Timothy Geithner, the guy who couldn't get around to paying his own taxes, says so. After all, government is doing all it can to speed the recovery, isn't it? "Fed keeps key rate near zero," the business-page headline screamed on September 24. Low interest rates should get things "stimulated," shouldn't they? Then, three days later, over a Washington dateline, "Jobless benefits extension backed: Lawmakers voted 331-83 to extend jobless benefits by 13 weeks in 27 states, including Nevada, where the unemployment rate is above 8.5 percent."
Is There a 401(k) Fix? Over the past 30 years, the way we save for retirement has come to be dominated by one plan: the 401(k). But the financial crisis and resulting market meltdown showed the 401(k) to be far from perfect. A number of academics and others have proposed either changes to the 401(k) system or scrapping it altogether. Roger Ferguson Jr., chief executive of the investment firm TIAA-CREF, is one of the few financial executives who have backed changing the system. Ferguson's opinion is sure to have some sway. He is a former vice chairman of the Federal Reserve and a member of President Obama's Economic Recovery Advisory Board. As the CEO of TIAA-CREF, Ferguson heads one of the largest providers of retirement plans - the go-to accounts for employees of colleges, hospitals and other nonprofit organizations.
Still on the Job, but at Half the Pay MECHANICSVILLE, Va. - The dark blue captain's hat, with its golden oak-leaf clusters, sits atop a bookcase in Bryan Lawlor's home, out of reach of the children. The uniform their father wears still displays the four stripes of a commercial airline captain, but the hat stays home. The rules forbid that extra display of authority, now that Mr. Lawlor has been downgraded to first officer. He is now in the co-pilot's seat in the 50-seat commuter jets he flies, not for any failure in skill. He wears his captain's stripes, he explains, to make that point. But with air travel down, his employer cut costs by downgrading 130 captains, those with the lowest seniority, to first officers, automatically cutting the wage of each by roughly 50 percent - to $34,000 in Mr. Lawlor's case.
Bleak U.S. Job Market Boosts Military Recruitment Aided by a bleak job market, the U.S. military met all of its recruitment goals in the past year for the first time since it became an all-volunteer force in 1973, the Pentagon said on Tuesday. Military services have been stretched thin by conflicts in Afghanistan and Iraq, giving added weight to recruitment efforts as President Barack Obama considers sending another 40,000 U.S. troops to Afghanistan next year. The United States already has 67,000 troops in Afghanistan and about 119,000 in Iraq. Pentagon officials said recruitment gains were fueled by the deepest U.S. recession since the Great Depression and an unemployment rate nearing 10 percent.
1 in 3 U.S. Jobs Could Go Abroad Former White House economist Alan Blinder says that 38 percent of American workers are in tradable, and therefore, offshorable, occupations, and the government needs to find a policy to address the potentially massive job losses immediately. Although overshadowed by the financial crisis and the world recession right now, the debate over offshoring that is, outsourcing work to foreign, often poorer, countries seems poised to stage a comeback as a public policy concern, writes Blinder, who is also a former vice chairman of the Fed and is now a Princeton University professor.
Boomers Have Their Backs Against the Wall Two important items in the news today: First, Bloomberg reports that retails sales fell 2.1% in September – the biggest decrease this year. Know what that means? It means the “Age of Thrift” is here…and that consumers really are cutting back – just like we said they would. And it means that the consumer economy is not going to return to robust growth anytime soon. And it means, too, that people will find it hard to find jobs for a very long time. Another thing it means is that housing prices are not likely to recover – not in our lifetimes. That was a once-a-century bubble and it has blown up.
U.S. Retail Sales Reflect End of Car Rebate Plan Retail sales fell last month as a frenzy of car-buying spurred by government rebates came to an end, the government reported on Wednesday. But economists greeted the news with a cheer because sales excluding automobiles actually grew in September, suggesting that consumer spending was increasing, even with rising unemployment and uncertainty about whether consumers can lead the economy higher. Many economists are worried that wary consumers will spend the recovery on the sidelines. Investors and homeowners lost trillions in wealth as their home values declined and retirement savings plunged, and many are trying to rebuild their finances and cut their debts.
Stagnant Prices Prevent Social Security Increase Obama Endorses $250 Emergency Payments President Obama on Wednesday attempted to preempt the announcement that Social Security recipients will not see an increase in their benefit checks for the first time in three decades, pressing Congress for a one-time payment of $250 to help seniors and disabled Americans weather the recession. Obama's proposal, which is expected to cost at least $13 billion, came as the administration continues to grope for ways to sustain an apparent economic rebound without the kind of massive spending package that could be labeled a second stimulus act by critics.
Insurers Vow to Fight Health Bill Drugmakers Support The U.S. health-care overhaul that emerged yesterday from the Senate Finance Committee after a month-long debate won support from every health industry group except insurers, who said the failure to require all Americans to get coverage will drive up premiums. The $829 billion proposal, written by Montana Democrat Max Baucus, now must be reconciled with four competing House and Senate versions, all of which include a government-run medical plan. The insurance industry's criticism of the Baucus bill centers on reduced penalties on individuals who fail to get insurance, and taxes on so- called Cadillac health policies.
Obama beset by America's far right Just days after the Nobel committee in Oslo awarded United States President Barack Obama its coveted peace prize, two of Washington's most prominent foreign policy hawks launched a new group and ad campaign designed to depict the president as weak and defend the more aggressive policies of his predecessor, George W Bush. The new group, Keep America Safe, was co-founded by neo-conservative heavyweight William Kristol, who also edits The Weekly Standard; and Elizabeth (Liz) Cheney, the outspoken daughter of Bush's vice president, Dick Cheney, who is believed to harbor political ambitions of her own.
Former right-wing leader warns of religious right violence: ‘Anyone can be killed’ Frank Schaeffer is an outspoken critic of the politicized Christian evangelical right. He sees the “End Times” movement as anti-Semitic. He fears that a right-wing terrorist might assassinate the President of the United States. None of these talking points would be novel on the left, but Schaeffer is hardly a bleeding heart liberal. His father, Dr. Francis Schaeffer, is considered to be the godfather of the modern religious right movement. Schaeffer himself took up the family mission and became a prominent speaker and writer, promoting many of the sentiments that have given rise to the politically active, extremely well organized and zealous movement of today. He left the religious right in the 1980s, and was a Republican until 2000.
North Carolina church to burn ‘Satan’s books,’ including works of Mother Teresa A Baptist Church near Asheville, N.C., is hosting a "Halloween book burning" to purge the area of "Satan's" works, which include all non-King James versions of the Bible, popular books by many religious authors and even country music. The website for the Amazing Grace Baptist Church in Canton, N.C., says there are "scriptural bases" for the book burning. The site quotes Acts 19:18-20: "And many that believed, came and confessed and shewed their deeds. Many of them also which used curious arts, brought their books together, and burned them before all men: and they counted the price of them, and found it fifty thousand pieces of silver. So mightily grew the word of God and prevailed."
'Toughest sheriff' vows face-off with feds over illegals Street sweep planned as pact expires PHOENIX | The man who likes to call himself "America's toughest sheriff," Joe Arpaio of Maricopa County, Ariz., is planning a Friday showdown with the feds. The sheriff has announced he will defy the U.S. Department of Homeland Security by doing a street sweep for illegal immigrants one day after the expiration of the agreement that has permitted him to conduct such operations for the past three years. The sheriff has said he expects the deal not to be extended, though federal officials have remained publicly noncommittal. Deputies, and Sheriff Arpaio, will stake out an intersection somewhere in the Phoenix metro area to stop cars for traffic violations - everything from speeding to broken taillights to driving while intoxicated. Both drivers and passengers will be held if deputies determine that they are illegal immigrants - regardless of how minor was the initial infraction.
Why Hardin, Montana Wants Criminals So Badly The Montana town of Hardin wanted a private prison. Or Gitmo detainees. Anything, really, to resuscitate its economy. Hardin, Mont., population 3,500, is just 15 miles northwest of the Little Bighorn Battlefield Memorial, a national monument honoring the hundreds of U.S. soldiers and Cheyenne and Lakota Indians who died in 1876 fighting over this now largely forgotten land. With unemployment above 10 percent and the county's poverty rate at twice the national average, Hardin's town leaders have long been desperate to create jobs and fuel economic development. As with many hard-luck towns in the dusty Northern Plains, these days, the only thing anyone passes through Hardin for is a glimpse of the distant past.
The 10 Countries Most At Risk Of A Meltdown We're not out of the woods yet. Should the world economy stagnate, or worse yet "double-dip", a handful of countries could once again be pushed to brink. Meltdowns come in many shapes and forms, yet they always result in a pariah state. Who are the most likely candidates for this?
Russia Bolivia to launch gas joint venture The latest news report that Russia will sign an agreement with the Bolivian government to explore and produce natural gas is a significant setback for US domination of its traditional Latin American sphere of influence. Since it was declared in 1823 as the Monroe Doctrine, the United States, especially its banking elites have regarded South America as a de facto ‘American plantation.’ The move by Russia’s state-owned Gazprom into Bolivia must be seen as Moscow’s asymmetric geopolitical response to US expansion of NATO to the doorstep of Moscow in recent years. The US is ill-prepared to counter with any economic incentive.
Vatican Backs Obama's Global Agenda Some pro-life Catholics are acting shocked that the Vatican warmly greeted the awarding of the Nobel Peace Prize to President Obama, who is pro-abortion. They don’t seem to understand that the Vatican and Obama agree on most major international issues. This is the untold story-- how Obama and the Vatican accept major ingredients of what has been called a New World Order. Another untold story is how, despite a disagreement over abortion, the U.S. Catholic Bishops and the Obama Administration agree on major aspects of so-called health care reform. These topics are mostly taboo in the liberal and conservative media. Liberal and conservative Catholics alike would prefer not to discuss how the Catholic Church, here and abroad, functions like a liberal/left-wing political lobby.
Obama's climate change bill could hurt US economy, Senate told Testimony by congressional budget office director casts a shadow over Obama's efforts to sell his climate change agenda Barack Obama's efforts to act on climate change could extract "significant costs" on America's GDP and employment, the congressional budget office said today. In testimony before the Senate's energy committee, the CBO director, Douglas Elmendorf, said that a climate change bill passed by the House of Representatives last June would cut US GDP by between one quarter and three quarters of a percent by 2020. The costs of dealing with climate change would rise further still by 2050 when the bill envisages an 80% cut in US greenhouse gas emissions. America's GDP would be between 1% and 3.5% below where it might have been in a business as usual scenario, Elmendorf said.
French Bank to Repay Government Bailout PARIS - Crédit Agricole, the French bank, said Wednesday that it would repay the €3 billion of debt the government bought last December, becoming the latest big bank to pay back a bailout. The lender said it would pay back the $4.5 billion on Oct. 27, making it the last French bank to outline how it would return state funds that propped up its capital reserves during the financial crisis. Unlike other major banks in France, Crédit Agricole did not opt to give the state preferred shares for a second tranche of aid in May. In the past several months, the bank said, it has issued subordinated notes in the institutional market in Europe and the United States, in a sense preparing to replace those bought by the state last year.
Some See Iran as Ready for Nuclear Deal RIYADH, Saudi Arabia — Iran says it has no plans to build nuclear weapons. Western nations say they do not believe Iran and periodically release intelligence reports that they say prove Iran has been working on building a bomb. For years, that has been the point of contention in an intractable international dispute. But as the United States and its Western allies prepare for a second round of direct negotiations with Tehran this month, that may no longer be the central question. The more pertinent point, Iran experts and regional analysts say, is that Iran finally may be ready to make a deal.
Clinton Leaves Moscow Without Firm Backing on Iran Russian President Dmitry Medvedev held out the prospect of support for Iran sanctions in talks with Secretary of State Hillary Clinton, a U.S. official said in Moscow after Russia's foreign minister called any sanctions threat counterproductive. Clinton and Russian Foreign Minister Sergei Lavrov agreed yesterday that the focus for now should be on diplomacy aimed at ensuring that Iran makes its nuclear program more transparent. Medvedev's subsequent private comments, while welcomed by U.S. officials as a sign of accord with Russia, fell short of a clear, public endorsement of future sanctions.
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Wed 10.14.2009
Gold Heading to $3000 Unless America Hits the "Reset" Button, Tice Says Among the cavalcade of gold bulls to recently grace Tech Ticker's stage, David Tice is something of a centrist. Gold will hit at least $3000 per ounce before the current rally ends says Tice, Federated's chief portfolio strategist for bear markets. The forecast falls roughly in between Peter Schiff's $5000 per ounce call and Jimmy Rogers' forecast of $2000. With gold hitting yet another new high of $1064 Tuesday and bullish sentiment for the metal soaring, Tice is wary about the potential for a short-term reversal in the dollar down-gold up trend. "We certainly could have a pullback," he says. "However, we believe this rally in gold is going to on for a long time."
Gold Settles at New Nominal High of $1,065 as Dollar Slips Gold prices settled at another nominal high Tuesday as the dollar's slide to its lowest since August 2008 against the euro fueled buying of precious metals. Silver, platinum, palladium and rhodium also rallied to multi-month peaks.
Gold price set to hit $1,600 mark: Gold Fields Gold has decided to take a breather. On Tuesday morning in Asia, gold fell slightly as investors locked in profits a day after the precious metal tested an all-time high above $1,060 an ounce. Gold is seen as being in consolidation mode now that the $1,060 mark is said to be providing short-term technical resistance, although the overall trend remains bullish unless gold were to slip below the $1,000 mark.
Gold strides onto record turf again The precious metal continues its streak as the dollar remains weak and inflation concerns persist. Gold rallied to a intraday record Tuesday as the dollar slid to a 14-month low and investors remained concerned about the threat of inflation. December gold was up $6.30 to $1,063 an ounce after climbing to a high of $1,069.70 earlier in the session. That topped the previous intraday record of $1,062.70 an ounce on Oct. 8. Gold has been on a record-breaking run since prices rose firmly above $1,000 an ounce last month. Many analysts expect the rally to continue into next year.
Officially reported gold reserves The largest gold holdings in tonnes as reported by the World Gold Council (derived from numbers reported to the International Monetary Fund) can be seen in the table below, per 22 September 2005 and 14 December 2007, ranked by their 2005 holdings. Although the United States has the largest reserves of individual countries, in total the eurozone gold holdings are greater (11,065 tonnes as of December 2007). The Eurozone numbers in the following table are a double count as they are also included under the individual countries. Additionally, the gold listed for each of the countries in the table may not be physically stored in the country listed, as central banks generally have not allowed independent audits of their reserves.
How Much Gold Does the US Have In Its Reserves? Looking around the web, and considering some recent questions regarding gold and SDRs on the Fed's and Treasury's balance sheets and reserve statements, I came across quite a bit more confusion and misinformation than one might have expected to find on what should be a fairly straightfoward question, ranging from completely incorrect but precise numbers to 'shitloads' at Yahoo!Answers. So, I spent some time reading the relevant source documents, and have decided to publish this little fact sheet here, so that one might at least be able to find some of the basic facts about the US gold holdings on the books of the Treasury and the Fed in one place, with references.
What's Next for Gold and the Dollar? In our May issue of our newsletter we looked into the changing importance of and outlined our investment case for gold. At that time, we made the following forecasts:
Trading within narrow range (USD 860-950) for Q2, 2009
Move towards and eventually breach the USD 1,’000 mark in Q3/Q4, 2009
Increased supply/demand shortfall
Increased demand as inflation hedge
Now, about six months later, these forecasts have become reality
Uncertainty in Currencies Leads to Higher Gold Prices Gold closed Friday night trading at $1,048/oz and is currently trading $3 higher at $1,051/oz. In euro and GBP terms, gold is trading at €713/oz and £666/oz and has risen sharply in these currencies in recent days. Support for gold is currently seen at $1,040/oz and resistance at $1,062/oz. The record weekly close was bullish from a technical perspective but gold may need a correction and consolidation prior to challenging the next psychological level of $1,100/oz.
Gold Hits 6th Record High in 5 Days as "Loose Monetary Policy" Drives Flight to Hard Assets THE PRICE OF GOLD jumped yet again early Tuesday, hitting its fifth record high in six days at the London Gold Fix. World stock markets held flat while the US Dollar slipped on the currency market. US Treasury bonds rose together with German Bunds. Crude oil rose above $74 per barrel, a 7-week high. "Price action [in gold] bodes well for continued upward movement as the week progresses," says market-maker Scotia Mocatta in its technical analysis. "The negatives to bear in mind are the massive open long positions," warns a London dealer.
Going for the Gold There's a lot of confusion out there now, but the bull market in gold is not about jewelry demand; it's about money. As gold keeps reaching new record highs, it's becoming more apparent what's driving it. The true issue at hand is trust (or lack of it) in the value of paper money—specifically the U.S. dollar. What's really made this country so strong has been the value of its currency. We're seeing a shift away from U.S. dollar reserve assets. The value of the dollar had been primarily driven by demand in its global use, including trade in dollars, specifically, the oil trade. There are growing rumors about shifting some of that oil trade away from the dollar, and at the same time, central banks around the world are diversifying away from it.
Abandoning the USS Dollar, As Gold Shines Again Robert Fisk's article in The Independent on October 6, “The Demise of the Dollar,” has created many shock waves in the currency markets. Fisk reported that major Arab nations are secretly planning to dump the current petrodollar scheme in favor of pricing oil in a basket of currencies. Included in this basket will be the yen, yuan, euro, a new, pan-Arab currency, and gold bullion. Co-conspirators include Saudi Arabia, Russia, Brazil, China, France, and the formerly compliant Japanese. This validated my July prediction that the Persian Gulf states will eventually accept yuan in exchange for oil.
Collapsing Monetary Base Deflationary Threat to Gold With $Gold now trading firmly above US$1,000, at least on a temporary basis, all are joyous that the Gold Bugs have won. The paper equity charlatans have been vanquished, at least for now. Those fanning emotions with stories about cabals, price suppression, and manipulation may now have to find some other drivel to pedal. GATA, the Gullible and Truly Amateurish, has now firmly been proven a purveyor of fantasy. Those that have opposed Gold and Silver ETFs can now, with knuckles dragging on the ground, return to the back of their caves
Lots of Chinese fakes out there In a previous column, based on the quality of the counterfeits from China that I have seen, I made the contention that there are several different "shops" producing the fakes. This has proved to be true. At the American Numismatic Association Summer Seminar in Colorado Springs, Colo., I had the opportunity to look in on a class dealing with the Chinese counterfeiting threat taught by Dr. Gregory Dubay and Beth Deisher. I could only stay about 20 minutes but it was a real eye-opener." Dubay has divided the fake coins into several categories based on how deceptive each is. Although I returned the class handout after adding some comments and suggestions, I'll try to recall some of the general points it contained. I recommend that readers attend this presentation if you get the chance.
Millions Lost From Counterfeit Coins, Hobby Leaders Warn Chinese-made counterfeit coins pose a significant financial threat to unsuspecting consumers, according to leaders of five of the country’s most influential rare coin organizations. They warn the public is spending millions of dollars on fake U.S. coins offered in online auctions and elsewhere, such as flea markets and swap meets. In a jointly-issued consumer advisory (below) the groups caution the public not to purchase any so-called "replica" coins because they may be in violation of federal law. They also urge consumers to only purchase genuine rare coins from reputable, professional dealers or face the risk of losing money on copies that are illegal to re-sell.
Silver price to boom, outpacing investment in gold On Monday, silver closed up at $17.76 an ounce, while gold ended the day at $1057.50 an ounce. Further dollar declines and inflation concerns are helping to propel not only precious metals prices but base metals like copper as well, which closed at $2.8330 per pound. Increased inflation fears and dollar woes have pushed many investors into safe haven assets, so silver has taken much of its price direction from gold this year; however, as industrial production levels pick up the white metal will undoubtedly outpace gold.
The Best Reasons to Buy Silver and Gold Now The spot price of gold soared to its highest level ever this week, as the dollar tanked and precious metals bears got mauled. But many investors, still sitting on the sidelines, ask themselves: Do I want to buy now? NOW?! When gold is over $1,000 an ounce?! I understand those investors’ concerns — and if you’re one of them, nobody can make the decision for you. It’s doubly hard because the mainstream media is cranking up its anti-gold propaganda to a feverish pitch, like the story that ran in the Wall Street Journal on Tuesday, “Gold Is Still a Lousy Investment.”
Sterling tumbles on shock UK inflation fall The pound tumbled to a fresh six-month low against the euro today after inflation fell by more than expected to 1.1 per cent in September due to shrinking energy prices. Sterling declined by 0.5 per cent, making one euro worth 93.8p, the weakest level since March, while the pound lost ground against the dollar at $1.5722 The consumer price index (CPI) measure of inflation fell from 1.6 per sent in the 12 months to August and the 1.1 per cent reading for September is below the 1.3 per cent expected by economists. Inflation is now at its lowest rate since September 2004.
Pound falls after surprise drop in inflation Sterling hit a 6?-month low against the euro on Tuesday after a bigger-than-expected easing in British inflation last month. The Consumer Prices Index (CPI) showed that prices rose 1.1pc in September compared with a year earlier. City economists had expected the figure would come in at 1.3pc. Prices have not registered such a small increase since September 2004. Sterling fell to 94p against the euro - it was last trading at this level in late March. The pound also weakened against a basket of The FTSE 100 came off its year high to fall below 5200 as the inflation figures bolstered the view that interest rates will low for some time. The index of leading shares dipped 0.8pc to 5168 in afternoon trading.
Fed's Kohn Vows Inflation Vigilance U.S. Federal Reserve Vice Chairman Donald Kohn on Tuesday again will pledge vigilance against inflation, promising to monitor data closely for any signs of a rise in the indicator, which at the moment remains subdued. "The persistence of economic slack, accompanied by stable longer-term inflation expectations, will keep inflation subdued for some time," Mr. Kohn plans to tell the National Association for Business Economics at a conference in St. Louis. "The substantial rise in the unemployment rate and the plunge in capacity utilization suggest that the margin of slack in labor and product markets is considerable," he will say, according to the prepared text of the speech.
The Dollar Is Now China's Problem . . . . As Kenneth Rogoff notes, the current U.S./China imbalance resembles the U.S./Europe imbalances of the 1960s-70s. Europe didn't do so well in that deal, as the inflation of the 1970s eroded much of the dollar's value. But the issue is bigger now, and affects more than just China: In the run-up to the financial crisis, the U.S. external deficit was soaking up almost 70% of the excess funds saved by China, Japan, Germany, Russia, Saudi Arabia, and all the countries with current-account surpluses combined. But, rather than taking significant action, the U.S. continued to grease the wheels of its financial sector. Europeans, who were called on to improve productivity and raise domestic demand, reformed their economies at a glacial pace, while China maintained its export-led growth strategy.
Dollar loses reserve status to yen & euro Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency. Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.
Debt Crisis of 2008 Transformed Into Dollar Crisis of 2009-2010! Fed Chairman Bernanke and Treasury Secretary Geithner are in for a rude awakening. Even as they declare “victory” in their battle against the debt disaster on Wall Street, they face defeat in the war against four dangerous, unintended consequences on Main Street: Dangerous Consequence #1 Fed Rewarding High-Roller Gamblers, While Punishing Prudent U.S. Savers! Bernanke promises he’ll keep official interest rates near zero indefinitely, vows to print as much paper money as needed, and leaves the distinct impression that he won’t change course until hell freezes over. In a nutshell, he isn’t just following a traditional easy-money policy. He’s pushing a free-money policy! For the world’s high-rolling speculators, this is like manna from heaven.
A Dollar Rout or just more Bernanke Trickery? Consumer credit is falling fast. In July, consumer credit plunged by $19 billion, followed by an August drop of $12 billion, a 5.8 percent annual rate. Credit card spending decreased by nearly $10 billion in August, while non-revolving debt, including auto loans, fell by $2 billion. Credit has shrunk for 7 consecutive months, the longest period of decline since 1991. The banks have shrugged off their commitment under the TARP program to increase lending to consumers and businesses. They've either deposited their excess reserves with the Fed--where they earn interest--or invested them in the equities markets for better returns. The bottom line: Credit is shrinking and the economy is slipping further into deflation.
Why America loves the plunging Dollar Index fund activity across the commodity spectrum is intensifying with huge sums of money pouring back into the rather small world of commodities. Current fundamentals in many of these markets do not justify moves of the extent that are occurring as this tidal wave of hot money overwhelms commercial hedge selling. Nonetheless, the “reflation trade” with the US Dollar on the short end of the stick as carry traders relentlessly beat it down to exchange these borrowed funds for things tangible is lifting the commodity boat across the board with few exceptions. This is being reflected in the Continuous Commodity Index which is the one that I track to keep tabs on this sector as a whole.
When Money Becomes Worthless The Financial Times last Tuesday noted a disturbing new trend - hedge fund and other investors are increasingly seeking to invest in physical commodities themselves, rather than in futures. Given the excess of global liquidity, this is not entirely surprising. It does, however, raise an ominous possibility of a supply shortage in one or more commodities, caused by investor demand that exceeds available mine output and inventory. That could potentially produce a collapse in economic activity similar to that from the 1837-41 and 1929-33 liquidity busts, but with the opposite cause.
Fed Policies and the Dollar The seemingly hawkish stance taken by several Fed officials including Bernanke has helped spur a new bout of dollar short covering. There is a sharp adjustment in interest rate expectations which is evident in the Fed funds futures strip. The market sees a little chance of a hike in Q1 but a higher target is fully discounted by the middle of Q2. The Dec 2010 funds contract is off 12.5 bp Tuesday to imply an effective Fed funds rate at the end of next year of 1.32%. Given that the next meeting is in the middle of Dec 2010, then it is implying an almost 1.5% Fed funds target by the end of next year. Although we have been in the camp that saw a risk of the first rate hike around the middle of next year, the market seems to be getting ahead of itself. At the same time, the US debt market is experiencing a sharp drop today with 2 and 10 year yields are 9-10 bp and 30-year yield up 7 bp. The long bond is experiencing its biggest drop since August after the lukewarm reception to yesterday's auction.
Ponzi Finance Ponzi Finance Deflationary Debt Deleveraging Downward Spiral Continues The Federal Reserve reported that as of June 30, 2009 total U.S. debt was $52.8 trillion. Total U.S. debt includes government, corporate and consumer debt. Importantly, however, it does not include a few trillion in "off balance sheet" financing, contingent unfunded pension plans for corporate and state and local governments, or unfunded liabilities of the U.S. government for such items as Medicare, Social Security and other programs. Currently GDP stands at $14.2 trillion, so there is approximately $3.73 in debt for every dollar of output in the United States, a level unprecedented in our history (Chart 1). Normally, debt levels as a percent of GDP would be uninteresting and immaterial; however, the current level of debt is unique in two ways. First, the asset side of the balance sheet purchased by the debt is falling in price. Second, the money that was borrowed to purchase those assets was often fraudulently expended. Neither the borrower nor the lender really expected the debt to be serviced. Rather, each party expected the asset price to rise extinguishing the debt.
Debt Monetization: He's Heading for That Small Moon I received numerous e-mails and comments in response to Friday’s piece, many of which were very reasonable critiques, all of which I appreciated. One basic question which was asked multiple times was why I make a distinction between what the Fed is currently doing (quantitative easing) and debt monetization. I’m going to try to answer this question below. As always, please feel free to comment and/or write me an e-mail if you have further questions. I welcome the debate. If however you start an e-mail with, “You idiot!” I am somewhat less likely to respond.
Does Deflation Pose a Threat to the US Economy? Many commentators are of the view that the biggest threat to the economy is deflation rather than inflation, because of the present economic slack. The United States used only 69.6% of its industrial capacity in August, against 77.6% in August last year and the historical average of 81.1% since January 1967. In Q2 this year, the real GDP stood 7.6% below the potential real GDP. This gap stood at 6.8% in Q1 and 1.6% in Q2 last year.
Deflation or Inflation? Here is the Answer… Part 2 Demand and supply are an important factor in this debate and I believe that this becomes a source of misunderstanding. Inflationists talk about the money supply exploding and that this massive increase will (sooner or later) mean higher prices and even to the point of hyperinflation. The deflationists tell us that we are (and will continue to be) in a powerful deflationary environment. What gives? Demand and supply complete the observation. Look…if a trillion dollars is printed right now but this money is not flowing toward anything (“demand”) then you probably won’t see a price increase. Demand has decreased for some goods, some services and some assets in recent years. However, demand has increased (or has had continued strength) in other goods, services and assets. In other words, BOTH of the inflationists and deflationists can be correct if you break down the picture. You can have inflation in one part of the economic picture but not another. You can have demand and supply bring prices down in one part of the economy and not another.
COMMODITIES BOOM OR NEW BERMUDA TRIANGLE? COMMODITY BOOM AND FINANCIAL CRASH In a Yang-Yin world where only two paradigms, models or states are possible - obviously not the real world - commodity boom should replace financial crash, like day follows night. To some, including Jim Rogers, this is already in the works. Speaking from Singapore in interview with the UK Daily Telegraph on 8 October, he said: "Commodities are the best place to be, if you ask me, based on supply and demand". He also believes crude oil will run out in 15 or 20 years "unless something happens", despite quite large recent discoveries. "The supply of everything continues to decline," he said, adding: "If the world economy recovers, commodities will do the best, because supply is being restricted. If the world economy does not recover, commodities will still be the best place to be, because governments are printing huge amounts of money." (Daily Telegraph, 8 October 2009).
Stock Market Bull Trap Heading for a 50% Crash to 5,000 At the risk of getting ahead of myself prior to being able to confirm the turn, I am suggesting stock market action over the past week bears the distinct odor of a bull trap, with even informed technicians still waiting for a push to 50% retracements on the indexes. In this respect then, you should realize the context of such a bull trap would be profound in that we are talking about the March lows being tested and violated, meaning for example the S&P 500 (SPX) could be on its way down to test its namesake at 500 before this next sequence is all over. You will remember from previous discussions, and in framing context correctly here, it’s possible we could be looking at a Supercycle Degree Affair lower in global stock markets directly ahead, implying 500 on the SPX would be an optimistic target for a low.
Stock Market Bubble Now the Most Expensive US Market Of All Time That’s the current P/E for the S&P 500 based on reported earnings (earnings that include write-downs). According to David Rosenberg of Gluskin Shef (and former Chief Economist of Merrill Lynch), no US market has ever been this expensive in history. The Tech Bubble, which by all accounts was an extraordinarily overpriced market traded around a P/E of 40 during its peak. I realize not everyone likes to use reported earnings as a measure of value. After all, all those write-downs that are obliterating reported earnings are a one time event due to the worst credit collapse in 80+ years.
Russia and China sign trade deals China and Russia have signed trade agreements worth $3.5bn. About 40 contracts were signed by Russian and Chinese businessmen and officials, Russian deputy prime minister Alexander Zhukov said. The head of Russia's Gazprom, Alexei Miller, said a preliminary deal had also been struck on supplying 70bn cubic metres a year of gas to China. The agreements came during the second day of a visit to Beijing by Russian Prime Minister Vladimir Putin. Russia is keen to bolster its economy, which President Dmitry Medvedev has said will decline by 7.5% in 2009.
Jim Rogers on the Next 10 Years I’m moving to China ... possibly to live in a bunker. At least that was my inclination after listening to a presentation by Jim Rogers Thursday. Now don’t get me wrong - Mr. Commodities wasn’t all doom and gloom. In fact, his talk was both informative and highly entertaining. But Rogers doesn’t sugarcoat things - he’s very matter-of-fact about his concerns and projections for the future. And most of them don’t bode well for the U.S. I’ll be posting an interview with Jim Rogers on the site in the coming week, but for now, I just wanted to offer some highlights from his speech at ETF Securities' mini-conference and the Q&A that followed.
'Unbanked' but No Longer Ignored Regulators, Firms Take Aim At Payday-Lending Market For years, the country's makeshift network of payday lenders and check cashers has operated with little competition or federal regulation. But as the financial crisis sparks a new wave of consumer protections, lawmakers and the private sector alike are training their sights on an industry that caters to the most vulnerable of populations: the estimated 40 million households on the margins of the nation's financial system, with limited, if any, access to banks or credit.
Geithner endorses Frank's consumer, derivatives legislation Key House panel to vote on swaps, consumer protection agency Wednesday Treasury Secretary Timothy Geithner on Tuesday expressed support for changes made to major legislation expected to come to a vote Wednesday to create a "sweeping" Consumer Financial Protection Agency and impose new transparency requirements on derivatives. "There are some improvements to the bill, but core reforms seem intact," Geithner told reporters, referring to changes made to an Obama administration proposal on bank-regulation reform introduced by House Financial Services Committee Chairman Barney Frank, D-Mass.
Bank watchdogs crack the whip Regulators press storm-tossed banks to shore up leaky balance sheets. But for some, it's too late for change. Here's another sign of a sickly banking sector: a flurry of letters urging banks to raise money -- and fast. Federal bank watchdogs issued 29 so-called prompt corrective action letters for the year through August. That's up from just seven over the same period a year ago, according to data tracker SNL Financial. A prompt corrective action letter comes when regulators determine a bank has become undercapitalized, meaning it doesn't have a big enough cushion against future losses. The directives typically give banks as long as a month to bulk up, usually through issuing more shares.
New rules to limit banker discretion: N.Y. Fed chief The post-crisis rules for banks should include some automatic measures that limit the discretion of bankers during times of stress, said William Dudley, the president of the Federal Reserve Bank of New York on Tuesday. For instance, rules need to be developed that limit the ability of banks to pay dividends during a crisis, Dudley said. The issue of pay remains at the forefront of reform discussions, and a decision from The Obama administration's pay czar, Kenneth Feinberg, about executive-pay packages at seven top recipients of federal bailout funds may be released any day.
Summers: Bush era set stage for 'abyss' A top White House official issued a robust defense of the Obama administration's recovery policies on Monday with a pointed critique of economic conditions and fiscal policies during the presidency of George W. Bush. In a letter to House Republican leader John Boehner, White House chief economic adviser Lawrence Summers said President Barack Obama "is committed to not repeating the fiscal mistakes of the last eight years." Summers' letter was in response to correspondence Obama received last week from Boehner and other top House Republicans, who complained that the administration was having no impact on unemployment and recommended a series of tax breaks to invigorate the economy.
Washington starts cooking third stimulus Bleak job report moves plan from back burner The bleak September jobs report appears to have cracked the political logjam blocking progress on a third stimulus package. Many economists have come to think that a third stimulus makes good sense. "I think the economy needs more help and they should provide it," said Mark Zandi, chief economist at Moody's Economy.com. This by itself would never be enough to get a package through Congress. But analysts say that Democrats are likely to need a new initiative to show voters they are trying to create more jobs.
A Second Great Depression Is Still Possible Over the past year the global economy has experienced a massive contraction, the deepest since the Great Depression of the 1930s. But this spring, economists started talking of “green shoots” of recovery and that optimistic assessment quickly spread to Wall Street. More recently, on the anniversary of the Lehman Brothers crash, Ben Bernanke, Federal Reserve chairman, officially blessed this consensus by declaring the recession is “very likely over”.
US Consumer Expectations - Next 5+ years I created the following chart to help individuals visualize (in 30 seconds or less) what we (as US consumers) can expect to see over the next 5 or more years. I hope it helps to clarify some of the issues in play and assists you in making the right decisions when preparing for your family's future. (Disclaimer: see sidebar - this is not investment advice - merely my learned opinion) Bottom line: The US Dollar is in a very precarious situation and when we combine our Gvt's excessive monetary printing (to offset a deflationary economy) with a total loss of international confidence in the world's reserve, the dollar WILL FALL (mid-long term) - causing our cost of living to significantly rise and our standard of living to fall (precipitously) - ultimately leading to a hyperinflationary depression.
Will Taxpayers Have to Bail Out the FHA? Government officials testifying before Congress on Thursday staunchly denied that the Federal Housing Administration (FHA) is destined to be the next financial institution to require a taxpayer bailout. But at least one critic testified that the agency is about to burn through its cash reserves in the next 24 to 36 months and will require a federal bailout to survive. Former Fannie Mae executive Edward J. Pinto predicted at a hearing in front of a House Financial Services panel that the FHA will incur $40 billion in losses, rendering it unable to cover its bad loans without taxpayer help.
Foreclosures still haunt Phoenix home market Foreclosures continue to plague the Phoenix home market preventing a recovery from taking hold. Two-thirds of the homes sold last month were either new foreclosures or resales recent foreclosures, according to the September Realty Studies report from the W. P. Carey School of Business at Arizona State University. “Although the level of activity appears strong, the market is being driven by either homes being foreclosed or being sold back into the market by the lender,” said associate professor of real estate and report author Jay Butler.
MBA: Foreclosures, unemployment to peak next year SAN DIEGO — Foreclosures will peak by the end of next year and unemployment will climb above 10 percent as the housing market and U.S. economy grapple with the aftermath of the recession, the Mortgage Bankers Association’s chief economist said Tuesday. Jay Brinkmann’s forecast, released at the trade association’s annual convention and expo in San Diego, envisions a slowly growing economy and improving housing market, with home price declines abating and fixed mortgage interest rates remaining below 6 percent.
Stimulus: Creating jobs or not? White House and states say thousands of people have jobs because of stimulus, but Republicans say more needs to be done. Is the largest one-time economic recovery effort in U.S. history creating jobs? According to new reports from governors across the country, it is. Republicans in Congress say it's not, and the debate is getting louder. States and other recipients of stimulus funding have handed in their first assessments of the $787 billion recovery act in recent days. While the Obama administration plans to make these reports public by month's end, some governors have released their initial evaluations.
Building the Labor Force with Forced Labor Government Jobs, a road to bigger economic woes The number of people eligible for work is known as the Labor Force. It should not now, nor should it ever be, thought of as the number of people government can force into labor. I would hope Robert Reich (former Labor Secretary under Bill Clinton) would understand that by now. Mr. Reich is a gentleman I respect and like. However, in a commentary a published October 2nd 2009 “The Truth About Jobs That No One Wants to Tell You”, the now Public Policy professor at University of California, Berkeley makes it clear that he doesn’t know where viable labor growth must emanate from, or how it must be achieved. To be sure, he does get a few things right in his article. For example, he points out that the real rate of unemployment and underemployment is closer to 20%, rather than the current 9.8% unemployment rate reported by the Bureau of Labor Statistics.
Colo. 1st state to cut minimum wage as living costs fall DENVER — Colorado will become the first state to reduce its minimum wage because of a falling cost of living. The state Department of Labor and Employment ordered the wage down to $7.24 from $7.28. That's lower than the federal minimum wage of $7.25, so most minimum wage workers would lose only 3 cents an hour. Colorado is one of 10 states where the minimum wage is tied to inflation. The indexing is thought to protect low-wage workers from having flat wages as the cost of living goes up.
Obama's ex-doctor: Insurers 'screwing it up' Chicago physician says companies are telling doctors how to do their job. President Obama's former personal physician of 22 years, Dr. David Scheiner, has been very vocal on the issue of health insurance, particularly with his criticism of commercial insurers and how he feels they are meddling with the doctor-patient relationship. Scheiner has publicly stated his support for a government-run "single payer" system.
Senate Finance Panel Approves Health Bill, 14-9 The Senate Finance Committee Tuesday approved its health-overhaul measure, pushing a revamp of the U.S.'s health-care system closer to reality than it has been in decades. The vote was 14-9, with Sen. Olympia Snowe of Maine the only Republican to join the 13 Democrats on the panel. Ms. Snowe indicated earlier in the day that she would support the measure. The Senate Finance panel, led by Chairman Max Baucus, becomes the last of five congressional panels to act on a health-overhaul bill, and it marks the biggest step forward yet for President Barack Obama's top domestic priority. The Baucus-proposed 10-year, $829 billion plan would require all Americans to purchase insurance and aims to hold down spiraling medical costs over the long term.
Olympia Snowe Voting "YES" On Baucus Bill It looks like the stars are aligning for Sen. Max Baucus's healthcare reform plan. First he got a good CBO score, and now wavering GOPer Olympica Snowe has given it the thumbs up. Of all the Republicans, Snowe seemed the liberal Maine Senator seemed most likely to jump over to the Democrats, though she's played her cards very close to the vest.
Historic boost to Barack Obama's health reforms after key Republican's support One senator's vote on Capitol Hill was set to give an historic boost today to the most ambitious US health reform proposals in a century, handing President Obama a significant domestic victory. After months of political trench warfare, Senator Olympia Snowe, a Republican, was due to vote to support a healthcare reform bill that aims to bring affordable insurance to 30 million Americans at a cost of $829 billion over ten years. Senator Snowe, of Maine, was the only Republican to have considered backing the health Bill on which President Obama's reformist credentials largely depend.
Alan Grayson: "If the President has a BLT tomorrow, the Republicans will try to ban bacon."
Energy crisis is postponed as new gas rescues the world Engineers have performed their magic once again. The world is not going to run short of energy as soon as feared. America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all. The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected
War breaks out between Fox News and the Obama administration White House communications director fires opening shot in a formal conflict that has been brewing for months War has officially been declared after months of skirmishing. First to the front was Fox News' latest star, Glenn Beck, who laid out the battle plan with a map, a couple of toy tanks and a plastic attack helicopter. "What a bunch of warmongers we have in the White House. America is fighting the war in Iraq, they're fighting in Afghanistan, Osama Bin Laden, al-Qaida, the Taliban. And now these people have taken on another enemy: Fox News," said the anchor who once wept out of patriotic fervour as he introduced Sarah Palin.
Glenn Beck Goes After White House For Criticizing FOX News FOX's Glenn Beck Goes After White House [Anita Dunn White House Communication Director] For Criticizing FOX News - 10/12/09
Foreclosures Grow in Housing Market's Top Tiers New data suggest that foreclosures are rising in more expensive housing markets. About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. "The slope of that curve in recent months is much sharper than it was recently," said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up.
Graham's endorsement boosts climate bill S.C. senator promotes plan The surprise endorsement of climate-change legislation by a leading Senate Republican has jump-started the languishing proposal but also has raised the prospect that it will include two major items that environmentalists dislike: more nuclear power and more offshore oil drilling. In an op-ed published Sunday, Sen. Lindsey Graham of South Carolina joined with Sen. John Kerry of Massachusetts, the chamber's leading Democratic advocate of climate legislation, to promote a bipartisan plan to reduce greenhouse-gas emissions.
Kentucky pastor drops flock for his Glock The Kentucky pastor who drew notice earlier this year for hosting a God-and-guns event at his church is giving up his flock for his Glock. Pastor Ken Pagano resigned his post last month at the New Bethel Church in Louisville, Ky., after nearly 30 years in the ministry, saying he wants to focus on Second Amendment and church-security issues. "Thirty years was a good, long run, but it's time for a change," Mr. Pagano said in an interview with The Washington Times. "If I can write my own ticket, I want to get involved more in Second Amendment issues as they affect the church, and I can do more from outside the pulpit than from behind it."
Avoid Windows Malware: Bank on a Live CD Don't use Microsoft Windows when accessing your bank account online. An investigative series I've been writing about organized cyber crime gangs stealing millions of dollars from small to mid-sized businesses has generated more than a few responses from business owners who were concerned about how best to protect themselves from this type of fraud. The simplest, most cost-effective answer I know of? Don't use Microsoft Windows when accessing your bank account online. I do not offer this recommendation lightly (and at the end of this column you'll find a link to another column wherein I explain an easy-to-use alternative). But I have interviewed dozens of victim companies that lost anywhere from $10,000 to $500,000 dollars because of a single malware infection. I have heard stories worthy of a screenplay about the myriad ways cyber crooks are evading nearly every security obstacle the banks put in their way.
Adobe Warns of Critical Threat to Reader, Acrobat Users Adobe Systems Inc. late Thursday issued an alert saying that hackers are exploiting a newly-discovered vulnerability in its free PDF Reader and Acrobat products to break into Microsoft Windows systems. Adobe said it plans to release a patch to fix this vulnerability next Tuesday, in keeping with its recent shift to push out security updates in tandem with Microsoft's regular monthly patch cycle, which occurs on the second Tuesday of each month (a.k.a. "Patch Tuesday").
Saving Face in Afghanistan by Ron Paul This past week there has been a lot of discussion and debate on the continuing war in Afghanistan. Lasting twice as long as World War II and with no end in sight, the war in Afghanistan has been one of the longest conflicts in which our country has ever been involved. The situation has only gotten worse with recent escalations. The current debate is focused entirely on the question of troop levels. How many more troops should be sent over in order to pursue the war? The administration has already approved an additional 21,000 American service men and women to be deployed by November, which will increase our troop levels to 68,000. Will another 40,000 do the job? Or should we eventually build up the levels to 100,000 in addition to that? Why not 500,000 – just to be “safe”? And how will public support be brought back around to supporting this war again when 58 percent are now against it?
Obama quietly deploying 13,000 more US troops to Afghanistan Move is separate from Nato commander General Stanley McChrystal's request to increase troop levels President Barack Obama is quietly deploying an extra 13,000 troops to Afghanistan, an unannounced move that is separate from a request by the US commander in the country for even more reinforcements. The extra 13,000 is part of a gradual shift in priority since Obama became president away from Iraq to Afghanistan. The White House and the Pentagon both announced earlier this year that the number of US troops in Afghanistan was to be raised by 21,000, bringing the total at present to 62,000, with the aim of 68,000 by the end of the year.
Behind Montana Jail Fiasco: How Private Prison Developers Prey On Desperate Towns With the unraveling of the deal for the shadowy American Private Police Force to take over and populate an empty jail in Hardin, Montana, it's pretty clear that the small city got played by an ex-con and his (supposed) private security firm. But an investigation by TPMmuckraker into how Hardin ended up with the 92,000 square foot facility in the first place suggests that, long before "low-level card shark" Michael Hilton ever came to town, Hardin officials had already been taken for a ride by a far more powerful set of players: a well-organized consortium of private companies headquartered around the country, which specializes in pitching speculative and risky prison projects to local governments desperate for jobs.
Dutch Seize Bank After Run on Assets The Dutch central bank shuttered DSB Bank NV, a struggling consumer and mortgage lender, after a run by depositors that followed a call from a consumer group to pull money out of the controversial institution. The government said it would begin an investigation into what happened at the bank, a privately owned institution with reported assets of some €8 billion ($11.77 billion). The DSB seizure was described by the government as a one-off situation unconnected with last year's financial crisis. However, it dealt a further blow to a financial system hit hard by a global credit crunch that resulted in the nationalization of former financial giant Fortis and in multi-billion-euro state bailouts for ING Groep NV and insurer Aegon NV.
Middle East and Africa bear untold riches for exporters If you think that Asia's industrial revolution will drive a "commodity supercycle" for another decade or two, think again. Africa is likely to see a profound change in its fortunes and the Middle East will become ever richer. With the confluence of "peak oil", scarce metals, and constrained food, the best endowed of these regions will see a steady climb in their terms of trade. The OECD says Africa has the potential to become an agricultural superbloc, if it can unlock the wealth of the savannahs by allowing farmers to use their land as collateral for credit. Africa has seen its greatest resurgence since colonial independence, growing at a 6pc rate in the five years to 2008. Foreign direct investment (FDI) tripled to $30.6bn.
Palestinian faith in Obama 'evaporates' Leaked memo from President Mahmoud Abbas accuses White House of buckling under pressure from Israel Palestinian political leaders have expressed acute disappointment in the Obama administration, saying their hopes that it could bring peace to the Middle East have "evaporated" and accusing the White House of giving in to Israeli pressure. The unusually frank comments come in an internal memo from the Fatah party, led by the Palestinian president, Mahmoud Abbas, but reflect a broader frustration among Palestinian politicians that Washington's very public push for peace in the Middle East has yet to produce even a restarting of peace talks between Israelis and Palestinians.
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Tues 10.13.2009
Obama Dollar Retreats Most Against Commodities in Wealth Shift President Barack Obama’s effort to lead the world economic recovery by spending the U.S. out of its recession is undermining the dollar, triggering record commodities rallies as investors scour the globe for hard assets. As threats of a financial meltdown fade, the currency is falling victim to an unprecedented budget deficit, near-zero interest rates and slow growth. The dollar is down 10 percent against six trading partners’ legal tender in Treasury Secretary Timothy Geithner’s first eight-and-a-half months, the sharpest drop for a new occupant of that office since the Reagan administration’s James Baker persuaded world leaders to boost the deutsche mark and yen by debasing the dollar in 1985. This year’s drop followed its best two quarters in 16 years.
A Paper Money Horror Story Asset bubbles come and go. Each begins with a story: Japan as No. 1, the East Asian miracle, dotcom mania, how financial innovations eliminate risk – just to mention the latest four. Each begins with a plausibly bullish story, which is then magnified by the financial markets, creating the inevitable bubble. Back in the 1980s, Japan produced world-conquering, seemingly invincible companies like Sony and Toyota. Their competitive gains justified the re-rating of Japan’s asset prices. The issue was by how much? This is where imagination ran riot. Next came the East Asian miracle – a story of gross domestic product. The “Asian Tiger” economies generated high GDP growth rates even while the US economy was depressed. Financial markets caught on to that, extrapolated the trend ad infinitum, and re-priced their assets accordingly.
Robert Fisk on the Gulf 'ditching the dollar' in oil trade Gulf states have held secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in the trade of oil, the UK's Independent newspaper says. The report by Robert Fisk, the newspaper's Middle East correspondent, was published on Tuesday and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong. Al Jazeera has this exclusive interview with Robert Fisk and Steven King, chief economist from the HSBC Group.
What Price for Gold, $2000 or $4000? No gold pricing model that comes up with a specific price for gold that I know of is complete. The most important missing factor is something that is not quantifiable. That factor is the degree of acceptance of the dollar in trade, exchange, and as a store of value versus the degree of acceptance of gold. This factor is qualitative. It depends on the behavior of those who use dollars and gold. There is model risk in all endeavors. In this case, it means that no matter how carefully we think we understand pricing, we don’t fully understand all the factors that drive pricing. If we did, the only downside risk would be in predicting these factors, and the model would be worth more than gold. The fact is that we do not know all the factors that influence the pricing of an asset. We always have to bear model risk.
Gold has begun a new move to the upside Some analysts are predicting much higher prices Only last week it seemed as if gold was stuck in a trading range between $990 and $1020. Then suddenly it shot up to the $1050 level. When the Australian unemployment figures were released, they were much better than market expectations. This resulted in a strong rally in the Australian dollar and gold reacted to the upside. Later in the week, when the U.S. Labor Department reported U.S. Initial jobless claims fell 33, 000 to 521,000 in the week ended Oct. 3, and when the ECB president commented on the importance of a strong dollar, the euro dropped against the US dollar to reach 1.4725, dragging down gold.
What $1000 Gold Is Telling Us… . . . . Central Banks are doing everything they can to prevent a bubble in gold, for it is the basis of all money, finance and trade. Gold is a proxy for the real rate of interest that reflects increasing scarcity of capital as it flees for freedom. At 1061.50, having quadrupled since 1999, gold is telling us real interest rates (deflation plus nominal rates) are the highest in history. With high interest rates comes higher tax rates. It is no accident Fed usury and income taxes came the same year to the home of the brave and land of the free in 1913 with a Princeton Academic President. 70% of Federal income taxes are paid by the working class. There were no tax cuts for the middle class. Then or now.
What Price Gold? . . . . There are many competing models that aim at estimating the worth of gold, now and in the future. They obviously give a range of different numbers. Bob Prechter has a model that predicts gold below $700. Paul van Eeden, last I looked, thought gold was fairly priced. Alf Field sees gold going to $6,000 or higher. The e-mail writer’s model looks for gold at $2,000 and higher. Which model or models should one choose? I’ll address only the two models that this writer presented. No gold pricing model that comes up with a specific price for gold that I know of is complete. The most important missing factor is something that is not quantifiable. That factor is the degree of acceptance of the dollar in trade, exchange, and as a store of value versus the degree of acceptance of gold. This factor is qualitative. It depends on the behavior of those who use dollars and gold.
"The rally will soon be over, and the only one place to be will be in gold and silver related assets . . ." The bear market rally will soon be over. It rallied 1,300 Dow points that it should have. All the back up data as to why this is in process was included in the last issue. The rally induced many investors to stay long and they did recoup as much as 80% of their losses in some instances. Now it is time to exit and move into gold and silver shares. Probably the biggest key is that gold recently spent two weeks above $1,000 and we believe gold is prepared for a breakout that will take its price anywhere from $1,200 to $1,700 an ounce. Gold’s long-term reverse head and shoulders pattern, one of the most powerful patterns in charting is in a breakout mode.
Gold rises as dollar slides and crude climbs to 7-week high Gold futures rose Monday, ending above $1,050 an ounce as a falling U.S. dollar and rising crude prices boosted the metal's appeal as a hedge against a weaker currency and potential inflation. Crude topped $73 a barrel and rose to the highest level in seven weeks. Other commodities were also mostly higher on Monday. Gold for October delivery rose $8.90, or 0.8%, to $1,056.70 an ounce on the Comex division of the New York Mercantile Exchange. The contract rallied 4.4% last week. It reached a record high above $1,060 on Thursday. Gold rose on "continued dollar weakness," said George Gero, a precious-metals trader for RBC Capital Markets. Higher crude kept "the buyers and sellers coming to add liquidity, now we may have a new higher trading range of $990 to $1,075."
Inflows to Gold "Speak for Themselves", Financial Press Blames "Greater Fool Theory" THE DOLLAR-PRICE OF GOLD ticked higher Monday morning in London, rising back through $1050 an ounce as world stock markets jumped and the Euro also gained vs. the Dollar. Government bonds pushed higher, as did crude oil, base metals and soft commodities. "Today could be quiet," said one London dealer in a note, "as the US is on holiday and volumes low." "A short consolidation at this level would create a strong base for the next leg higher though," says another.
Max Keiser with Jim Willie: Dollars now used in carry trade funding gold and oil. See interview part 2 below.
Lihir Gold says gold price to go beyond $1500/oz Lihir Gold, Australia’s gold giant, said the prices of yellow metal may go up to $1,500 an ounce after it surged to $1062.70 last week. The value of gold has soared in recent weeks as the US dollar experienced weakness, China restocked and investors looked for a hedge against inflation. Lihir Gold chief executive Arthur Hood said he expected the price of gold to continue to rise. There’s been talk this week about $1,500 and I see that as perfectly achievable, Hood said.
Gold's flywheel-like momentum continues Although some gains were seen in the dollar versus the euro and the pound earlier this morning, a hefty $1.78 addition to crude oil values helped keep gold's flywheel-like momentum going for yet another day. The yellow metal traded in a $10 band of from $1048 to $1058 and managed to recover most of Friday's $6 loss at several points during the overnight and early morning session in NY. Markets are noticeably thinner as some have taken the Columbus Day holiday (and Canadian Thanksgiving) off. As well, with the world of (base) metals congregating in London, there are numerous bodies absent from various desks around the world.
Gold Shines Despite Weak Fundamentals For gold bugs, the recent sky high prices for the precious metal have been a long time coming: nearly 30 years in fact. After cracking its record high of $1,048.20 earlier this week, gold has extended on those gains, and many gold enthusiasts believe the best times are yet to come for the precious metal. Gold traded up $12.40 to $1056.80 a troy ounce in midday trading Thursday. Gold mining stocks, such as Harmony Gold Mining, have benefited from the run-up.
Chinese banks to sell gold, silver bullion bars What is the reason for the gold’s big bull run in the recent past? Even as analysts give thousands of reasons like the dollar weakness and inflation fears, there are other big facts which investors should always keep a watch on. While a weakening US dollar, inflation worries and the uncertainty regarding a global economic recovery have contributed to the dizzying rise, buying by economic powerhouse China has contributed hugely to the rally.
Gold rush: Keep an eye on China, dollar movements Gold prices touched a new high of $1061.5 per troy ounce in the international spot markets last week. Bullion prices have risen by 20% in the past six months to cross the $1000 mark. In India, the price of the yellow metal has appreciated by nearly 10%, crossing the level of Rs 15,000 per 10 grams. While a weakening US dollar, inflation worries and the uncertainty regarding a global economic recovery have contributed to the dizzying rise, buying by economic powerhouse China has also contributed to the rally.
pt 1/2 Gerald Celente
Faces of Death: The US Dollar in Crisis The US economy has been in crisis since 2008 and despite optimistic statements by officials and commentators there are no fundamental signs that the crisis will end in the foreseeable future. Current economic data suggests a number of diverging and unsustainable trends. The US economy has suffered a real estate collapse, a stock market crash, a banking crisis, a near systemic collapse on a global scale, a credit crisis, the worst economic downturn in the US since the Great Depression, and an unprecedented global recession. Following two sequential economic bubbles, the dot-com bubble and the real estate bubble, no one has yet correctly called either the bottom for the US economy or the start of a US economic recovery. Nonetheless, each day, news reports, articles and statements by officials and commentators reveal new economic data and offer new analysis. Unfortunately, both the economic data and the interpretations offered by officials and commentators are contradictory.
Your dollars are just Monopoly money Since Nixon severed gold from the greenback in 1971, the dollar's comparative value has fallen 97%. Money printing today will only hasten the currency's destruction. This week's column is going to be a little different, as I'd like to discuss human nature and the paper we call money from a slightly different perspective. I was recently thinking about what has transpired in this country in the past decade: first the equity bubble, then the real estate/credit bubble and the steady debasement of the dollar (where a trickle of trouble threatens to turn into a flood). I have been struck by how few people seem to understand how all these events are related -- in that, at the root, they each have the irresponsible printing of money as the cause. (The sociological and psychological phenomena that go with that -- e.g., the regulators not doing their job -- are just part of the process.)
Dollar Collapse Plunges S&P 500 Back To 1996 And here you were thinking that the market's collapse had taken only six years or so off the value of your nest egg. After all, the S&P is back to 1,100, about the same level as late 2003. Silly you! As we've noted often in recent days, since your government is quietly destroying the value of the dollar (ostensibly to save your ass), the actual dollar-adjusted value of the S&P 500 is back to 1996 levels. Even after the recent 60% recovery!
The Virtue of Hoarding Most people would admit to hoarding money only with a tinge of guilt, because to be a hoarder carries with it the suggestion of being a miser — a Scrooge. And yet, every participant in an economy based on indirect exchange holds some amount of money and can be said to be hoarding it, that is, declining to spend it. Hoarding is a strategy for achieving personal goals or for dealing with economic uncertainty. However, some economists argue that hoarding money causes recessions. In the Keynesian universe, hoarding is a great evil because it means people are stifling demand for the economy's products and services.
Investors drop dollar, awaiting earnings The dollar weakened on Monday in subdued trade on holidays in Tokyo and New York, as investors held their breath for more indicators on the US economy and monetary policy, analysts said. "Whether this (fall in the dollar) continues this week will depend on US bank earnings -- JPMorgan, Goldman, Citigroup, Bank of America -- and central bank rhetoric," analysts at Barclay's Capital wrote in a note. "Part of the dollar's weakness stems from the declining need for a safe-haven currency and the rise in investors' appetite for risk."
The End of Money and the Future of Civilization It’s too late for anyone to pretend that the U.S. government, whether under President Barack Obama or anyone else, can divert our nation from long-term economic decline. The U.S. is increasingly in a state of political, economic, and moral paralysis, caught as it were between the “rock” of protracted recession and the “hard place” of terminal government debt. Even if the stock market can be shored up by more government borrowing for “stimulus” spending, it’s a temporary reprieve, because nothing can bring back the consumer purchasing power that was lost when the banks stopped pumping money into the economy through out-of-control mortgage lending. We simply no longer have the job base for people to earn the income they need to live.
Inflation Inevitable, Rogers Says: Could Be "Much Worse" Than the 1970s Given the Fed's extremely easy policies, runaway government spending and shortages of many commodities, inflation pressures are building and destined to get much worse, according to famed investor Jim Rogers of Rogers Holdings. "The Federal Reserve has laid the groundwork for some serious inflation down the road by printing all this money," Rogers says. "So have many other central banks." Although "the U.S. government lies about inflation" in its official data, inflationary pressures are already evident in nearly everything, excluding energy, Rogers says. Inflation is "going to continue, going to accelerate," he says. "We're going to be paying more for just about everything down the road."
Stone Calls U.S. Economic Growth Outlook ‘Troublesome’ in 2010 The economy may slow down early next year as unemployment rises and the boost from the government stimulus fades, said Raymond Stone, managing director at Stone & McCarthy Research in Skillman, New Jersey. “The more troublesome outlook is for the early part of 2010,” Stone said in a Bloomberg Radio interview today. With the end of the cash-for-clunkers incentive and tax credits for first-time homebuyers, “unless we get some footing from the fiscal stimulus we’ve already witnessed, we could have a slowdown in economic growth next year.”
CIT debt swap struggles, bankruptcy looms CIT Group Inc is seeing little interest from bondholders in a debt exchange offer aimed at repairing its fragile balance sheet, making bankruptcy increasingly likely, sources familiar with the matter said. The lender to small and medium-sized businesses said earlier this month it was looking for investors to approve a large debt exchange that would reduce its borrowings, or to approve a prepackaged bankruptcy.
Fed boss Bernanke sees no rush to boost rates Federal Reserve Chairman Ben Bernanke signaled Thursday he has no immediate plans to unwind policies aimed at pumping money into credit markets and spurring the economy. "My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period," he said in prepared remarks for delivery at the Federal Reserve Board Conference. The Fed has been proceeding with plans to buy $1.25 trillion in mortgage-backed securities, another $200 billion in mortgage-related debt, and $300 billion in Treasury securities. The initiatives have lowered interest rates for mortgages and other loans by funneling cash into credit markets.
Central Banks’ Reserve Shift Ignores Dollar Data Central banks have been shifting their record reserves into the euro at the expense of the U.S. dollar. Investors may not follow, with America’s saving rate and trade balance data back at levels that prevailed when the European currency was unveiled in 1999. The CHART OF THE DAY shows the percentage of allocated world currency reserves in dollars has fallen as holdings in euros increased in the past decade, according to quarterly data compiled by the International Monetary Fund. Also tracked are the U.S. personal-saving rate and trade balance as a percentage of gross domestic product.
Take America back from the banks Reining in the financial industry's power and greed will be a long, hard-fought war. But it is one that must be fought The elites hate to acknowledge it, but when large numbers of ordinary people are moved to action, it changes the narrow political world where the elites call the shots. Inside accounts reveal the extent to which Lyndon Johnson and Richard Nixon's conduct of the Vietnam war was constrained by the huge anti-war movement. It was the civil rights movement, not compelling arguments, that convinced members of the US Congress to end legal racial discrimination. More recently, the town hall meetings dominated by people opposed to healthcare reform have been a serious roadblock for those pushing reform.
Small U.S. firms face credit squeeze as crisis drags Small companies create more than half of America's jobs, but the entrepreneurs who drive this part of the economy continue to complain that access to credit two years into the recession remains scarce. Small business owners say banks remain extremely wary of risk and a world away from the carefree lending that inflated an epic boom in housing values that went bust and pushed America into its worst economic downturn in decades.
Central Banking: A Blight On Humanity Impeccably reliable sources have informed me that as recently as Sept. 30, 2009 - the last possible day of trade in the Sept. 09 gold futures - a number of well-heeled market participants "bought" substantial tonnage worth of gold futures on the London Bullion Market [LBMA] and immediately told their counterparties they wanted to take instantaneous delivery of the underlying physical bullion. The unexpected immediate demand for substantial tonnage of gold bullion created utter panic in at least two banks who were counterparties to this trade - J.P. Morgan Chase and Deutsche Bank - because they simply did not posses the gold bullion which they had sold short [an illegal act which in trading parlance is referred to as a "naked short"].
pt 2/2 Gerald Celente
Stiglitz: The Banks Must Be Restrained, The Financial System Must Be Reformed"We will have another armed robbery unless we prevent the banks, the banks that are too big to fail. We should say that if you’re too big to fail then you are too big to be. They need more restrictions, such as no derivative trading.” Joe Stiglitz If a Nobel Prize winner in economics says the obvious, besides a few diligent bloggers, perhaps other economists will obtain 'air cover' in speaking about the economic and regulatory absurdity taking place today in the US and the UK. Winning the Nobel is even better than tenure.
Summers: Banks Should Not Choose Their Regulator Financial firms should not be able to choose their own regulator, White House economic adviser Lawrence Summers said on Monday. He said the practice of "charter flipping," in order to report to a particular regulator, encouraged lax standards, and higher capital and leverage rules were needed to make the financial system more resilient in times of crisis. "We haven't seen the last bubble," Summers said at an economics conference. Summers also said weak demand will weigh on U.S. economic growth for some time as heavy debt loads and high unemployment constrain household spending.
Stiglitz Says Banks Should Be Banned From CDS Trading Large banks should be banned from trading derivatives including credit default swaps, said Joseph Stiglitz, the Nobel prize-winning economist. The CDS positions held by the five largest banks posed “significant risk” to the financial system, Stiglitz said at a press conference in Brussels. Big banks should have extra restrictions placed on them, including a ban on derivative trading, because of the risk that they would need government money if they fail, he said in a speech today.
The man behind 2009's biggest bank bust He built Alabama's Colonial Bank into a real estate money machine, only to see it become the largest bank failure this year. . . . . On Aug. 14, just a few months after Lowder, 67, announced his retirement as CEO and chairman of Colonial Bancgroup, federal and state regulators took control of the company he had founded and spent 28 years building into a regional banking powerhouse. The seizure of Colonial's roughly 350 branches and $26 billion in assets -- the bulk of which were then handed over to BB&T of North Carolina -- made it the sixth-biggest bank failure in U.S. history, the worst this year, and the third largest since the beginning of the credit crisis that plunged the markets into turmoil in 2008. (Only Washington Mutual and IndyMac, which went under last year, were bigger.)
Tire Trade Tirade In 2002, President George W. Bush helped make us poorer by signing off on higher steel tariffs. In 2009, President Barack Obama helped make us poorer by signing off on higher tire tariffs. Is this supposed to be change we can believe in? Economic analysis shows that trade creates wealth. The law of comparative advantage demonstrates that when we specialize and trade, we produce more wealth using the same resources. Preventing trade means that we use more resources to produce less wealth.
Consumer Credit Contracting at Record Levels Total Consumer Credit Outstanding in the US is contracting at a year-over-rate of almost 5 percent, which is a record for the post 1960 economy. The challenge facing Bernanke and the Obama economic team is how to get the US consumer spending again, if they cannot be paid a living wage, and if they can no longer be encouraged to borrow beyoned their means, by using their homes as a cash machine with variable interest rates, as they were encouraged to do by Fed Chairman Greenspan. This is as much a public policy question as it is an economic question. Large segment of the population which are homeless and and jobless tend to be destabilizing to the community. The liquidationist school is not without its attraction to the let-them-eat-cake frame of mind, but from a societal perspective it is fraught with peril and unintended consequences.
Foreclosures Grow in Housing Market's Top Tiers New data suggest that foreclosures are rising in more expensive housing markets. About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. "The slope of that curve in recent months is much sharper than it was recently," said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up.
U.S. home rescue plan delaying, not solving crisis Within weeks of taking office, U.S. President Barack Obama rode to the rescue of homeowners resigned to financial ruin. Obama, grappling with the worst U.S. housing crisis since the Great Depression, pledged to help as many as 9 million families keep their homes by reworking their mortgages. Eight months later, the plan is plagued by delays, red tape and, some critics say, a reluctance by banks to do their part. Just 17 percent of eligible borrowers have had their loans modified and monthly payments cut. Hardly any have been given a cut in the amount they owe on homes which are now worth less.
More Dark Clouds Ahead for Housing Industry On the surface, a glimmer of confidence is returning to the battered U.S. housing market, after more than three years of gut-wrenching defaults, price slumps and foreclosures. But investors and homeowners in California, the most populous U.S. state and a benchmark for housing across the country, are bracing for another fall as emergency government support measures fall short or expire. "All that has been achieved is to put off the real pain until later on," said Mark Jacques, a mortgage broker in Corona Del Mar, California. "I'm hunkering down for the storm." California led the United States when housing prices soared early this decade, spurred by an array of public policy incentives to encourage home ownership. The boom fueled a frenzy of lending and spending that drove the U.S. economy.
New Bill Would Raise Rates, Says Insurance Group Report Issued Before Key Committee Vote After months of collaboration on President Obama's attempt to overhaul the nation's health-care system, the insurance industry plans to strike out against the effort on Monday with a report warning that the typical family premium in 2019 could cost $4,000 more than projected. The critique, coming one day before a critical Senate committee vote on the legislation, sparked a sharp response from the Obama administration. It also signaled an end to the fragile detente between two central players in this year's health-care reform drama.
Health Reform to Have Impact on Private Health Insurance According to the new report from America's Health Insurance Plans, the bill pending before the Senate Finance Committee will cause health care costs to rise higher and faster than under the existing system. The report from PricewaterhouseCoopers states that "the proposal 'will increase premiums above what they would increase under the current system for both individual and family coverage in all four market segments from 2010-2019,'" said a memo from Karen Ignagni, president and CEO of AHIP. The White House, which had been working with the insurance industry, blasted the report and its timing.
Health insurance lobby attacks reforms The White House and the health insurance industry on Monday descended into open conflict on the eve of a critical Senate vote that could determine the fortunes of Barack Obama’s healthcare reform plans. Supporters of President Obama accused the health insurance industry of attempted “sabotage” after it issued a report by PwC, which estimated that premiums would rise much faster under the proposed reforms than they would have done otherwise. The 26-page report marked an abrupt end to the unlikely alliance between Mr Obama and America’s Health Insurance Plans – the main industry lobby group, which has spent about $100m on advertising to support the reforms.
Iconic Hummer brand sold to Chinese manufacturer General Motors announced Friday it had finalized plans to sell control of its iconic Hummer brand to a Chinese heavy equipment maker, pending approval from the U.S. and Chinese governments. While Hummer will be controlled by two Chinese automakers, CEO Jim Taylor said Friday the company plans to keep operations headquartered in the U.S.
Cubs file for bankruptcy protection to speed sale The Chicago Cubs baseball team filed for Chapter 11 bankruptcy protection Monday, a step that will allow its corporate parent to sell the team in an $845 million deal. The filing in Wilmington, Del., was anticipated and is expected to lead to a brief stay in Chapter 11 for the Cubs. It comes as part of the Tribune Co.'s plans to sell the team, Wrigley Field and related properties to the family of billionaire Joe Ricketts, the founder of TD Ameritrade. Tribune, which also owns the Chicago Tribune and the Los Angeles Times, filed for bankruptcy protection in December, but the Cubs were not included in the filing. The team's run through Chapter 11 is expected to protect its new owners from potential claims by Tribune creditors.
The Obama Justice Department’s Secret Blogging Team… Is it Illegal? Obama’s Attorney General, Eric Holder, has apparently hired a cadre of left-wing, Democrat campaign bloggers to troll through the Internet looking for news stories and blog posts that denigrate the Obama agenda. After such websites are found it is the job of these secret lefty bloggers to leave comments that come to the support of Obamaism in the comments sections. It seems that Eric Holder has created his own little propaganda unit in a valiant effort to become the Bloggi Riefenstahl of the Obama era.
Obama song at school brings charges of indoctrination Protesters sing of 'free minds' Protesters brought some different songs Monday to an elementary school where students sang in praise of President Obama, bringing criticism from conservative commentators who said children were being indoctrinated. About 70 protesters stood on a sidewalk across the street from the B. Bernice Young School waving flags and homemade placards, singing "God Bless America" and chanting slogans such as "No indoctrination" and "Free children, free minds."
Gerald Celente explains ‘Obamageddon’ forecast amid call for The Great American Renaissance Gerald Celente, founder of The Trends Research Institute and publisher of the quarterly Trends Journal, is a staple of news and Internet media. Dubbed “The Martial Artist of Trend Forecasting,” Celente is world-renowned for his authoritative forecasts on events in financial markets and socio-political movements. Over the past 30 years, Gerald has been interviewed and extensively quoted around the world; in the US, he has been featured in every major newspaper, and has been a guest on CBS Morning News, Glenn Beck, Good Morning America, NBC Nightly News, and The Oprah Winfrey Show, among other TV shows. Equally prominent in the blogosphere, Gerald can also be followed on social media networks like Facebook, Twitter and YouTube. I’m of course a fan of Gerald on Facebook - Nouriel Roubini and Peter Schiff, too - but let’s not get off topic. On the Internet, Celente has generated a high level of public interest; his forecasts are commonly discussed at prominent forums, as well as on websites that support conspiracy theories.
The History of The Future: Trends 2012 The 2nd American Revolution Autumn 2012, the “Greatest Depression” has spread worldwide. Billions are unemployed homeless and desperate. Countries bankrupt, trade pacts broken, tariffs rise, borders close. Protectionist, nationalist and anti-globalization movements have moved out of the margins and into the mainstream. Immigrants brought in during boom times — blamed for bringing down wages, stealing jobs and rising crime — are being rounded up and deported. Despite differences between the 1930’s Great Depression and today’s “Greatest Depression,” unsettling similarities conjure up memories of pre-World War II. From the United Kingdom to Russia, war drums eerily beat.
Iceland Shrinks 8% as Prices Increase 11% in Deepest Recession Arni Hallgrimsson lost his job as a public relations consultant when Iceland’s three biggest banks collapsed last year, putting him out of work for the first time since 1980. After a stint cleaning the docks at a whaling station during the summer hunt, he’s unemployed again. “Nightmares come to an end when you wake up, but this one just goes on and on and on and on,” the 53-year-old father of three said at his home in Reykjavik, Iceland’s capital. “I’ve applied for many jobs that fit my profile. Sometimes I’ve been on the short-list, but eventually not been offered the job.”
Argentina Forecast to Default Without Debt Accord Argentina will be forced to default by 2011 unless the government reaches an accord with investors holding $20 billion of bonds kept out of the last restructuring offer, Stone Harbor Investment Partners says. President Cristina Fernandez de Kirchner is negotiating terms of an agreement, which the government needs to regain access to international capital markets that it lost after stopping payments on $95 billion of debt in 2001. Since then, Argentina has relied on local markets and loans from Venezuela to meet financing needs, and seized about $24 billion of pension fund assets last year to compensate for falling tax revenue.
Russia may revise use of nuclear weapons in new military doctrine Russia's new military doctrine will contain some changes to the situations that could trigger the use of nuclear weapons or preventive strikes against potential foes, the secretary of Russia's Security Council said on Thursday. Russia will soon adopt a new military doctrine that aims to transform the Armed Forces into a more effective and mobile military force. Their structures will be "optimized" through the use of combined arms units performing similar tasks. "In respect to the possibility of preventive or nuclear strikes we will formulate some provisions that will be somewhat different from those contained in the current doctrine," Nikolai Patrushev said.
N. Korea Tests 5 Short-Range Missiles North Korea launched a barrage of five short-range missiles off its east coast on Monday in its first missile tests in three months, in an apparent provocation as the United States weighs whether to start bilateral talks, South Korean news media reported. The North Korean military launched two KN-02 surface-to-surface missiles, which have a range of 75 miles, from mobile launching pads on Monday morning and three in the afternoon, the South Korean news agency Yonhap reported, quoting an unidentified government source. Chosun, a daily South Korean newspaper, had a similar report.
***** outstanding photo of modern China ***** A picture is still worth a 1,000 words. Don't miss these 38 photos.
China, as seen by Elizabeth Dalziel Associated Press photographer Elizabeth Dalziel is based in Beijing, and has been documenting the people, places and events in China for the past several years, giving the world at large a glimpse into this region through her lens. Collected here are a recent handful of images of people from all walks of life, events large and small, and daily life in China, care of Elizabeth Dalziel.
On the Edge with Max Keiser - 09 October 2009
On the Edge with Max Keiser - 09 October 2009 (2/4)
On the Edge with Max Keiser - 09 October 2009 (3/4) (duplicate of video above) Interview with Jim Willie, Part 1 The "Demise of the Dollar" article & inflation/deflation.
On the Edge with Max Keiser - 09 October 2009 (4/4) Jim Willie, Part 2
Dollar Reaches Breaking Point as Banks Shift Reserves Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.
Gold Gains to Near Record in New York as Dollar Spurs Demand Gold rose in New York and London, nearing a record as a weaker dollar increased demand for the metal as an alternative investment. Silver climbed to a 14-month high. The Dollar Index, a six-currency gauge of the greenback’s value, dropped 0.3 percent after earlier climbing as much as 0.3 percent. The measure slipped to an almost 14-month low on Oct. 8. Bullion futures reached an all-time high of $1,062.70 an ounce that day and have advanced 19 percent this year. “Gold is basically ticking inversely to the dollar, and the dollar is a bit weaker,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva, by phone today. “As long as the dollar is weak, gold should trade higher.”
Chinese dump equity for gold With the stock market witnessing uncertainties, Chinese investors are increasingly lured into the glitter of gold now. As a result, China has seen a huge rush to invest in gold-related products as investors wanted to hedge against the recent stock market fluctuation and potential inflation. Chinese investors traditionally are more inclined to buy gold to hold value over time, and demand for gold-related products has been robust in recent years, said Wang Zhe, president of Shanghai Gold Exchange.
Jim Rogers "Quite Sure" Gold Will Hit $2000, Dollar Will Lose Reserve Status Famed investor Jim Rogers is "quite sure gold will go over $2000 per ounce during this bull market." Rogers' confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world's reserve currency. "Is it going to happen? Yes," Rogers says. "I don't like saying it [and] I'm extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was]." Rogers didn't offer a timetable, and it's likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status.
Gold price 'set to double in four years' Gold prices, which hit record highs last week, could nearly double again in the next four years, according to a report to be published tomorrow Analysts at Edison Investment Research have predicted that the price of gold price could hit $1,879 an ounce by 2013, driven by the aggressive monetary policy of central banks around the world and a chronic shortage of the precious metal. Charles Gibson, a gold expert at Edison, argues in the report that the peak in the gold price has been delayed because the world was still facing deflationary forces. Previously Mr Gibson had expected gold to reach $1,567 an ounce "in the near term".
Jim Rogers Claims 20 Year Commodities Boom to Replace Financial Crash In a Yang-Yin world where only two paradigms, models or states are possible - obviously not the real world - commodity boom should replace financial crash, like day follows night. To some, including Jim Rogers, this is already in the works. Speaking from Singapore in interview with the UK Daily Telegraph on 8 October, he forecast a commodities boom able to last 20 years. He said: "Commodities are the best place to be, if you ask me, based on supply and demand". He also believes crude oil will run out in 15 or 20 years "unless something happens", despite quite large recent discoveries and slow growing demand.
Jim Rogers Interview on Gold - Bloomberg - 10.7.09
Jim Rogers: Oil's Going to $200, Commodities Boom Will Last 20 Years Commodity traders, get ready for the ride of your life says Jim Rogers. There's no way supply for many commodities can keep up with the massive demand coming over the next two decades. Thus the long-term trend will be your friend. In Mr. Rogers view is that if there's a bubble right now, it's not in commodities, it's in treasuries. So, again, can we please get this man in a room with Bill Gross? Gold bugs: He sees your metal hitting $2,300.
'Gold is on a steady march to $2,000 an ounce' Gold is at an all-time high and the XAU index has recently achieved a new recovery high for the year. Is there a basis for this latest gold and silver stock rally in light of the recent 10-year cycle peak? What would be the justification for it based on the cycles? According to savvy market technician, seasoned chart reader and cycle analyst Clif Droke, the answer is that investors are responding to the 10-year cycle peak by running to the precious metals and its related vehicles by treating them as safe havens. The public's fear of a dollar collapse is no secret and has reached the saturation point.
Gold Touches a New Record "Gold continues to climb...stoked by inflation worries," says a headline in the International Herald Tribune. Yesterday, it touched a new record - $1,050 - even as the dollar rose, oil slumped under $70 and stocks dipped very slightly. Well, what do you expect? The United States added $1 trillion to its monetary base in the last year or so. The federal government is running a deficit of $1.7 trillion this year. And along comes Barack Obama with an idea to stimulate employment - spend more money! This time, Obama's plan is a kind of 'Cash for Workers' program...in which businesses get a tax credit for hiring new employees. Gold investors must think the new program will be the straw they've been waiting for. Government has piled on bales of costly new initiatives on this poor camel's back. Still, he stands up straight. So, is gold at $1,000 a bargain...or a trap? Or both.
Gold is a store of wealth: Merrill Lynch A senior figure at Blanchard and Co has suggested that he can see no reason why Gold Prices cannot continue to rise. The yellow metal has finally embarked on a significant break into four-figure territory and it reached an all-time highest level of $1,062 per ounce. David Beahm, vice-president of economic research at the precious metals investment firm, explained that ongoing weakness in the dollar should see those gains extended. "The only way this doesn't continue would be a stronger dollar," he told the news provider.
CNBC: James Turk on where gold is headed
JPMorgan: More Record Highs Due for Gold JPMorgan lifted its 2009 price forecasts for gold and silver on Friday and said new record highs for gold at $1,050-1,100 were likely in early 2010. In a research note, the bank said it has revised its 2009 price view for gold up to $948 an ounce from $939 an ounce predicted in July. It said it now sees silver at $14.30 an ounce, against a previous forecast of $13.90. For next year, it lifted its gold and silver forecasts to $1,006 an ounce from $950 and $15.80 an ounce from $13.40 respectively -- a rise of nearly 18 percent in silver's case. "Overall we are looking for gold to average around $1,000 an ounce in the fourth quarter...but new highs between $1,050 and $1,100 look likely for early 2010," it said.
Gold Analysis, Real or False Breakout? Gold has broken out above $1000 and everyone believes that it is headed towards $1500, $1200 being the immediate next target. Technically and otherwise, there has been lot of talk that Gold should be valued @ $2000 - $5000 range based on the real $$$ terms when compared to 1980's. However, if that were so easy, it would have already happened. Here are some of SB comments to the respective articles on the Internet.
Weak dollar helping faster gold price rise A prominent World Gold Council (WGC) official has claimed that the plight of the dollar could see Gold Prices continue to rise in the long term. Investors have been shifting their money into the yellow metal because it shares an inverse relationship with the greenback, which is struggling to pare losses at present. Now Rozanna Wozniak, head of investment research at the marketing organization, has explained that the apparent shakiness of the dollar's status as the world's reserve currency should keep Gold Prices heading upwards.
Gold coin market hots up in India With Pushyanakshtra, Dhanteras and Diwali round the corner, jewellers in India have started reeling out their products to beat competition from the banks and other big brands. In fact, this time around the jewellers have started selling imported gold and silver coins to customers, causing a big competition to the banks. And, certain jewellers are now offering the coins at lower price than the banks. Some of them have even announced some schemes with the gold and silver coins.
Gold Mega Bullish Technicals, Wow! If you're not into technical analysis, you're not into it. I understand. Drawing squiggles on a chart seems like reading tea leaves to many. I get it. I personally believe that it increases your odds of success if you have the fundamentals right. In other words, technical analysis in isolation is not attractive to me, but laid over a solid foundation of fundamental analysis makes sense to me. The symmetry is perfect. The break-out is textbook. Can it fail to materialize and can Gold fall significantly from here? Yes. Investing/Speculating is never certain (I learned that when shorting the market last May and June). But those calling for a failure or steep correction here in the U.S. denominated Gold price are ignoring the dominant trend:
Gold Enters Uncharted Waters Given the recent move to new highs in gold, I feel that a brief discussion on this topic is in order. As everyone knows, gold made a major bottom in 2001. This is where the most recent secular bull market in gold was obviously born. From a cyclical perspective, this was a 9-year cycle low, which is the dominant longer-term cycle in gold. In reality, this cycle has historically averaged 98.6 months, or 8.2 years in duration from low to low.
Gold Pares Weekly Gain as Stronger Dollar, Rally Spur Sales Gold prices dropped, paring the biggest weekly advance since April, as a stronger dollar cut demand and some investors sold the metal to lock in gains from its climb to a record. The U.S. Dollar Index rose as much as 0.8 percent, rebounding from the lowest level in almost 14 months, after Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to “tighten” U.S. monetary policy. Gold futures, up 4.4 percent this week, capped the biggest such gain since April 24, while the dollar is down 0.7 percent.
Can the G-20 Halt the Gold Bull Run? The G-20 meeting last week was hoped to be a watershed for the global economy. It was hoped that accepted that there has to be a global solution to the financial crisis that triggered the credit crunch and the worldwide recession. Those solutions had to include the full cooperation of other key governments, including China, before we could hope for a sound recovery of the global economy. If we have more superficial statements with no real action, expect yet another crisis as confidence is lost, not only in currencies, but in global money systems. You all know the old adage, "Cheat me once, shame on you cheat me twice, shame on me." Just how much 'spin' can the globe take, before losing heart?
Did Gold Traders Stage A Bear Raid On The US Dollar? This week's report in The Independent that the various oil-producing states were planning on dumping the US Dollar set the tone for a horrible rout of the greenback that only moderately with the help of some Asian intervention. There weren't many folks who took the details of the report too seriously -- it was very cloak & dagery, and the author Robert Fisk has a definite agenda -- but there was probably something to the idea that countries like Saudi Arabia and China have had some talks about a post dollar future. Politico: But some are wondering whether the story, resulting chatter, and Drudge links were part of some deliberate attempt to crush the greenback and cause gold to spike.
Jim Rogers-Abolish the Federal Reserve-Buy Silver
Dollar pounded over dismal week The dollar was sold off aggressively this week, prompting much rhetoric from major central banks, while some Asian monetary authorities actively participated in foreign exchange markets to stem the tide. Initial dollar losses were prompted by the Reserve Bank of Australia, which on Tuesday became the first major central bank to raise its main interest rate since the onset of the financial crisis.
Our Debt Will Kill Us John Mauldin sends a cheery reminder that you can't borrow your way to prosperity--or, more bluntly, that you can't solve a debt problem with more debt. The U.S.'s current budget assumptions predict that we will need to borrow at least $1 trillion a year for the next 5-10 years. $1 trillion is actually a lot of money. The $1 trillion has to come from somewhere. U.S. consumers are now saving a bit, which will help, but they aren't saving THAT much. Our usual lenders (e.g., China) have shown signs of pulling back. The Fed can't "monetize" the debt forever, or its balance sheet will consume the entire economy.
Investors weigh inflation and deflation risks Rising gold prices and falling government bond yields reflect investors’ uncertainty over whether inflation or deflation is the threat to fear for price stability. This week’s data should provide fuel for both sides of that debate. UK inflation data for September, due out on Tuesday, should show the headline consumer prices (CPI) measure fall from 1.6 per cent in August to 1.3 per cent, the lowest rate for five years. Higher petrol and diesel prices contributed to upward pressure on inflation in July and there was also a jump in used car prices. However, September will probably mark the trough for UK CPI inflation and sharp increases are forecast before the end of the year.
Fed's Bullard warns on inflation, unemployment Federal Reserve Bank of St. Louis President James Bullard said Sunday that unemployment is headed into double digits, while the medium-term inflation outlook poses more risk than generally believed, according to reported comments. "Unemployment is leveling off, but we still may be headed toward double digits," Bullard was quoted as saying in a Bloomberg report. According to data released earlier this month, the U.S. unemployment rate hit a 26-year high of 9.8% in September. See full story on September jobs report. Bullard also voiced concern that popular perceptions ignore the risk of high inflation.
Trending Towards Hyperinflation HYPERINFLATION is widely accepted as a period of out of control price rises, doubling the cost of living inside three years. It occurs when a currency loses its ability to store value, encouraging long-term savings to pour into circulation where they swamp the much narrower supply of consumer money, and cause the whole lot to lose purchasing power. There is no specific recipe, but the pattern we risk repeating today would be typical.
Making the case for a weaker dollar Imagine a world with a small current account deficit in the US, a somewhat larger deficit in the eurozone and a not too excessive Asian surplus. In such a world, economic commentators would no longer bang on about global imbalances and would have to find a different subject. In the long run, such a world would require significant reform of the international monetary system. In the short term, a fall in the dollar’s exchange rate would help get us there. And I note with some satisfaction that it is happening.
Killing the Goose What Were We Thinking? Let's Play Turn It Around Detroit, the Red Sox and the Yankees, and Traveling Too Much Peggy Noonan, maybe the most gifted essayist of our time, wrote a few weeks ago about the vague concern that many of us have that the monster looming up ahead of us has the potential (my interpretation) for not just plucking a few feathers from the goose that lays the golden egg (the US free-market economy), or stealing a few more of the valuable eggs, but of actually killing the goose. Today we look at the possibility that the fiscal path of the enormous US government deficits we are on could indeed kill the goose, or harm it so badly it will make the lost decades that Japan has suffered seem like a stroll in the park.
Failures of Small Banks Grow, Straining F.D.I.C. A year after Washington rescued the banks considered too big to fail, the ones deemed too small to save are approaching a grim milestone: the 100th bank failure of 2009. In what has become a ritual, the Federal Deposit Insurance Corporation has swooped down on a handful of troubled lenders almost every Friday, seizing 98 since January alone and putting their assets into the hands of another bank. While the parade of failures still represents a mere fraction of America's small banks, it underscores a growing divide between them and large institutions like Goldman Sachs, JPMorgan Chase and U.S. Bancorp, which are slowly growing stronger as the economy improves. Burdened by worsening commercial real estate loans, many small banks' troubles are just beginning. Many analysts say that the now-toxic loans could sink hundreds of small lenders over the next few years and place a significant drag on the economy.
Elizabeth Warren Introduces COP's October Report
Fed Said to Consider Clearing Banks, Drain Facility The Federal Reserve is considering accessing money market funds through clearing banks or creating a facility to drain the record amount of cash added to the financial system, according to people familiar with the plans. Those methods may help conserve the capital of the 18 primary dealers that act as counterparties for open market transactions as the Fed removes some of the more than $1 trillion the central bank pumped the economy, said the people, who declined to be identified because no decision has been made.
Chronic Depression This week, the Australian central bank became the first to declare victory. It raised its key lending rate 0.25% and gave a whoop... signaling an end to the slump. The European Central Bank fidgeted and vaguely threatened to raise rates too. But the Americans stayed in their trenches. New York Fed governor Bill Dudley said that even though the economy is recovering, any rate hikes in the United States would be over his dead body. Then, word came that even Alan Greenspan thinks a recovery is underway. "This is what a recovery looks like," said the maestro. That settled the matter as far as we are concerned. Alan Greenspan didn't see history's biggest financial bubble until it exploded in his face. In the following few words we undertake to show that Greenspan is as blind as ever.
The Federal Housing Agency used to insure 1 in 50 mortgages. But FHA now insures 1 in 4 mortgages, as the debt for bad mortgages has been dumped on the American people
"Banks have the power to create money". This again confirms and verifies that banks create money out of thin air, not based on the amount of reserve deposits on hand. See this and this
While - on paper - there are reserve requirements, banks have gone from 10 to 1 leverage (where they could lend out 10 times their reserves) to - in the case of JP Morgan - 100 to 1 leverage. But with derivatives, leverage might be much higher
Instead of holding hearings on the core problems with the financial system, Congress is holding hearings solely on arcane, peripheral issues
Preview: Simon Johnson & Rep. Marcy Kaptur | PBS
Preview 2: Simon Johnson & Rep. Marcy Kaptur | PBS
Shares in Wall Street banks head for fork in the road Spectacular profits and punishing losses will affect sharply the share prices of the big banks on Wall Street when they report their third-quarter figures this week. Lenders with strong share-trading businesses are expected to shine and those burdened by bad consumer and commercial loans will suffer, in what analysts term the “bifurcation” of the banking sector in the United States. Matt McCormick, an analyst with Bahl & Gaynor, the fund manager, said: “The haves are the ones who have capital market exposure and leverage; the have-nots are still in Tarp [the Troubled Asset Relief Programme], have considerable commercial real estate exposure and more credit card debt than their peers.”
Barney Frank Urges Banks To Behave Well U.S. Representative Barney Frank, in a weak attempt to build dialogue with big banks, warns them that Congress will rewrite the rules unless banks start playing nice. Last spring, Frank helped push a bill through Congress that imposes strict new rules on lenders, including a limitation on when and how banks hike rates. Most of the rules will take effect in mid-February, a date set by Congress to give banks time to prepare for the changes. But the Massachusetts Democrat, who chairs the House Financial Services Committee, said at a hearing on Thursday that lenders have abused the grace period by using the time to hike rates ahead of the new rules. He has introduced legislation that would move up the enactment date to Dec. 1.
The Speculative Bubble in Equities and the Case for Deflation, Stagflation and Implosion As part of their program of 'quantitative easing' which is another name for currency devaluation through extraordinary expansion of the monetary base, the Fed has very obviously created an inflationary bubble in the US equity market. Why has this happened? Because with a monetary expansion intended to help cure an credit bubble crisis that is not accompanied by significant financial market reform, systemic rebalancing, and government programs to cure and correct past abuses of the productive economy through financial engineering, the hot money given by the Fed and Treasury to the banking system will NOT flow into the real economy, but instead will seek high beta returns in financial assets.
Dr. Doom Wants Nickname Changed To "Dr. Realist" Nouriel Roubini wants a nickname-change. Compared to his outlook of a year ago, he's downright sunny. So now he would like to be called Dr. Realist. Somehow that doesn't have quite the same ring to it. Anyway, Nouriel's also still sounding gloomy, but only because the market has gone to the moon:
The Game - Part I: Queen of Hearts "Alice laughed: "There's no use trying," she said; "one can't believe impossible things." "I daresay you haven't had much practice," said the Queen. "When I was younger, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast." - Alice in Wonderland For over ten years we’ve debated a dozen analysts who forecast an extended price deflation here in the U.S. They keep coming back, even though the deflation they repeatedly predict year after year never arrives.
The Fed's $2.2 trillion fire hose Ben Bernanke and the Fed have lent and spent trillions, but as the recovery takes hold, they'll have to rein some of that back in. The Federal Reserve threw a lot of money at the crisis to get the gears of the economy turning again -- but it may soon be time to collect on the bill. Federal Reserve Chairman Ben Bernanke gave an update on the Fed's expensive economic rescue package Thursday evening, in a keynote address at a conference in Washington. Bernanke and the central bank have been engaged in unprecedented actions over the past year. After the Fed used the last of its rate-cutting bullets, dropping interest rates to zero in December 2008, it had to get creative to keep the recession from tailspinning into a depression.
Treasury 30-Year Bonds Fall Most in 2 Months on Supply, Rates Treasury 30-year bonds plunged the most in two months after demand was lower than average at a $12 billion auction of the securities and Ben S. Bernanke said the Federal Reserve is ready to tighten monetary policy. The difference in yields between two- and 30-year government debt increased to the widest amount in three weeks as yields on the longest maturity Treasuries climbed from near the lowest levels since April. The Fed releases minutes of its Sept. 23 meeting next week, while other reports are forecast by economists to show retail sales declined in September while the cost of living increased 0.1 percent from the prior month.
TARP Oversight Group Says Treasury Mortgage Plan Not Effective The group Congress created to oversee the U.S.’s $700 billion financial bailout said the government needs to increase its efforts to help struggling homeowners modify their mortgages. A split Congressional Oversight Panel said in a report issued today that it has doubts that the Treasury Department’s $50 billion loan-modification program will help prevent an estimated 3 million to 4 million foreclosures. The group’s two Republican members dissented from the Democratic appointees’ findings.
Geithner makes time to talk to Wall Street bankers Even during his most frenzied days, when Congress is demanding answers or the president himself is calling, Treasury Secretary Timothy Geithner makes time to talk to a select group of powerful Wall Street bankers. They are a small cadre of businessmen who have known and worked with Geithner for years, whose multibillion-dollar companies all survived the economic crisis with help from U.S. taxpayers. When they call, Geithner answers. He has spoken with them immediately after hanging up with President Barack Obama and before heading up to Capitol Hill, between phone calls with senators and after talking with the Federal Reserve chairman, according to a review by The Associated Press of seven months of his appointment calendars.
Derivatives Lobby Links With New Democrats to Blunt Obama Plan As President Barack Obama vowed in a Sept. 14 speech in New York’s Federal Hall to correct “reckless behavior and unchecked excess” on Wall Street, Mike McMahon and Barney Frank sat in the audience discussing how to ease proposed rules for the $592 trillion over-the-counter derivatives market. Side by side at 26 Wall St., across from the New York Stock Exchange, freshman congressman McMahon told House Financial Services Committee Chairman Frank he was worried that Obama’s derivatives plan, released in August, would penalize a wide swath of U.S. corporations and could push jobs in his home district overseas, McMahon said in an interview.
Predatory-lending lawsuits on the rise Homeowners and government officials are taking mortgage lenders to court for unfair lending practices During the housing boom, mortgage lenders were doling out the dough, giving loans to people who could never have qualified before. Now, homeowners and government officials are increasingly taking these institutions to court, alleging unfair and predatory practices. While many of these suits are still winding their way through the legal system, some banks have already settled for millions of dollars.
Banks still stuck with the junk Beset by delays, the government's program for ridding banks of bad assets is finally poised to take off. But problems still plague the controversial program. The nation's banks are still sitting on tens of billions of toxic assets -- and they likely will be for quite a while. The main problem: Tepid interest in a government program designed to cleanse banks' books, which became clogged with subprime mortgages sold at the height of the credit bubble.
The DEATH of Freedom in America - Peter Dale Scott
A Call to Action Peter Schiff Through my weekly commentaries, I have always tried to share my honest insight into the behavior of markets and recommend strategies to help people preserve their wealth. As investors, many readers have benefited from my advice; but as Americans, they are frustrated that they have to look abroad for decent returns because Washington continues making a mess of things at home. I am too.
Rich Uncle Pays Your Mortgage The economic meltdown has put the country on the fast track to socialism, but through a series of tiny steps. One need only to examine the supposed victories in the war on depression to see how this is happening. The latest is the claim that the Obama administration has successfully renegotiated many mortgage obligations in a way that allows people to keep their homes.
Tough choices for feds giving out broadband money With 2,200 broadband applications, competition for billions in stimulus dollars is intense The federal government will soon start handing out the first $4 billion from a pot of stimulus funds intended to spread high-speed Internet connections to more rural communities, poor neighborhoods and other pockets of the country clamoring for better access. The challenge is that the government has received $28 billion in requests. So the reviewers at the Commerce and Agriculture Departments who will award the broadband money must make hard choices. The 2,200 applications each envision something different -- more fiber-optic lines, for example, or computer labs or municipal wireless networks. But they all promise that their proposals will create jobs and bring new economic opportunities.
U.S. states suffer "unbelievable" revenue shortages The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues. Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.
California Budget Is Already in the Red 10 Weeks After Passage California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said. Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
How Long Before We Become a Nation of 50 Californias? While you discovered the dreary reality of Detroit, Michigan—that’s only one American city! Commensurately—Miami, Chicago, Houston, New York, Los Angeles and others follow toward a range of similar futures. Ask yourself, with 15 million Americans unemployed and 35 million subsisting on food stamps, does it make sense to import 160,000 legal immigrants into this country every 30 days and a total of 1.5 million plus annually? Especially when those immigrants cost American taxpayers (you) a total of $346 billion in resettling services across 15 federal agencies annually?
Li & Fung Seeks Producers With More Than $100 Million in Sales Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., said it’s considering acquisitions of several U.S. companies with hundreds of millions of dollars in annual sales. “We’ve never seen so many great opportunities,” President Bruce Rockowitz said in an Oct. 9 interview in New York. “It’s almost unprecedented.”
Americans Still Delusional About House Prices The recent upturn in house prices from April to July (3.6%) is the sharpest change in direction professor Robert Shiller has ever seen. It could signal a v-shaped recovery in house prices. Or it could be the "mother of all head fakes," as investor Whitney Tilson has described it. Robert Shiller's recent survey of attitudes about house prices suggests it's probably the latter. The survey also suggests that Americans are still delusional about the long-term trajectory for house prices.
The rich bail faster on mortgages Wealthy but 'underwater' homeowners are giving up on paying their mortgages as a financial tactic, a study finds. Those with smaller loans are less likely to do so. Increasingly, homeowners with good credit and no late payments are making what appears to be a strategic decision to walk away when their home's value falls below what's owed. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," concludes a report on research by Experian, the credit agency, and Oliver Wyman, a management consultant company. The better their credit rating, the more likely homeowners were to default. The trend is most pronounced where prices have fallen furthest: Florida and the West, especially California.
Why Oil Can't Ditch The Dollar Don't expect oil to drop the dollar any time soon as its primary unit of measure. While a few radical players may trade oil in Euros at the fringe, the major players have many reasons not the change the status quo. It's not just about economics. It's about politics as well. The Barrel: For a start, a mish-mash of currencies won't have a name or could be used as a tradable unit -- well unless they invent a new currency called the petro, which is backed by oil in the same way money used to be backed by gold in day's gone by. Even if buyers were forced to pay in non-dollar currencies, I doubt the US-based NYMEX and ICE trading exchanges will adopt anything other than dollars as the tradable currency.
Energy crisis is postponed as new gas rescues the world Engineers have performed their magic once again. The world is not going to run short of energy as soon as feared. America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all. The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected. Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels per day of oil equivalent, enough for 60 years' supply – and rising fast. "There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.
Fed’s Bullard Says U.S. Unemployment Rate May Rise Above 10% The U.S. unemployment rate may rise above 10 percent as employers cut payrolls further, Federal Reserve Bank of St. Louis President James Bullard said. “Unemployment is leveling off but we still may be headed toward double digits,” Bullard told reporters today after a speech in St. Louis. The rate was 9.8 percent in September, the highest since 1983.
The 'Democratization of Credit' Is Over -- Now It's Payback Time Karen King owes nearly $36,000, more than she's ever earned in a year. All day long, bill collectors call. She hunts for a second job, sometimes skips meals, and stays with other family members at a grandfather's crowded apartment, trying to get out of debt and turn her life around. She largely holds herself at fault. "Years ago, I lived for now. It was so stupid," the 28-year-old says. "It's depressing, but I can't live that life anymore." Now, she says, "I basically want to live for the future."
Will Capitalism Save Or Destroy Your Retirement? Is capitalism the greatest threat to the financial viability of state and local governments, major corporations and the retirement dreams of tens of millions of investors around the world? Or is capitalism the only force that can save pensions, governments and individuals? Capitalism is often simplistically portrayed as a beneficial tide that “lifts all boats” when it comes to long term investment. In this short article we will take a look at a more complex capitalism, an amoral storm of sorts, that sinks as many boats as it lifts. For individual investors, understanding the crucial differences between these views of capitalism could very well determine the difference between a prosperous retirement, and decades of unnecessary impoverishment as the result of simplistic misunderstandings of how capitalism actually works.
All I want for Christmas: A job This holiday season, there will be more workers competing for fewer jobs. 'It'll be a sad Christmas for my kids,' said one job seeker. Planning on boosting your income this holiday season by grabbing a temporary job in retail? Take a number. Retail employers, who usually boost their workforce ahead of the year-end shopping frenzy, have suffered dismal sales this year and are gearing up for a rough holiday season. With staffing levels already down, there will likely be a noticeable decline in openings for seasonal workers.
Some credit card companies rush to act before new law If you hold a Discover credit card, you're in luck -- the company has decided to freeze interest-rate hikes until a new credit card consumer protection bill takes effect in February. Bank of America was the first company to freeze its rates. Both moves come after outrage over credit card companies jacking up rates, increasing minimum payments and raising penalty fees before the new consumer protection law -- which would bar sudden increases -- is phased in.
U.S. May Not Make CO2-Emissions Pledge, Pershing Says The U.S. may not agree to cut greenhouse-gas emissions in a new treaty this year because there is no domestic law setting a framework, the country’s top negotiator said at United Nations climate talks in Bangkok. Without legislation advancing in Congress, it will be hard for the world’s biggest economy to pledge a target for itself in a global treaty, U.S. negotiator Jonathan Pershing told reporters today as negotiations wound up in the Thai capital.
Ron Paul: Obama wins the Nobel Peace Prize
Obama Pledges to End ‘Don’t Ask, Don’t Tell’ Policy President Barack Obama told the largest U.S. gay-rights group that he’ll work with Congress and the Pentagon to end the policy that forbids openly gay men and women from serving in the military. “I will end ‘don’t ask, don’t tell,’” Obama said in an address last night to at the Human Rights Campaign national dinner. “That’s my commitment to you.” The president gave no timetable for acting and said he realized many in the audience “don’t believe progress has come fast enough.” He said they would look back at his time in office and be able to say that “we put a stop against discrimination whether in the office or in the battlefield.”
Obama Risks Violence Unless He Pushes Mideast Peace resident Barack Obama risks triggering violence unless he follows through on his promises to promote Middle East peace, according to Prince Turki al-Faisal, a former Saudi ambassador to the U.S. Obama’s Nobel Peace Prize awarded two days ago is a call on the U.S. president to step up efforts to facilitate a peace agreement between the Israelis and the Arabs by pressing Israel to make compromises, Turki, 64, said in an interview yesterday in Riyadh. “I hope that by the end of his term, he will have come to deserve it.” “If he doesn’t take the bull by the horns on this issue, no one else will,” Turki said. “If he doesn’t, there will be more conflict, more bloodshed. It’s not going just to be confined to the West Bank and Gaza, as it has shown in the past 50 years, it has gone beyond the borders of the Middle East.”
Israel out of NATO event because of Gaza, Turkish official says Turkey excluded Israel from a planned NATO military exercise partly because of Turkey's criticism of Israel's Gaza offensive nearly a year ago, Turkey's foreign minister told CNN on Sunday. The Turkish government decided to change the list of participating countries and exclude Israel, according to the Israel Defense Forces. As a result, the NATO exercise was effectively scrapped, although a U.S. embassy representative said it was only postponed.
Conspiracy of the Rich: The 8 New Rules of Money by Robert Kiyosaki A free online book which was written in serial basis to help people understand how the current recession came about, and what they need to learn on how to survive through the coming rough years. Robert Kiyosaki is the bestselling author of the RICH DAD POOR DAD, which is the bestselling personal finance book of all time.
'Conspiracy Of The Rich' ABC News
Robert Kiyosaki - New Rules of Money, Part 1/7: Conventional Education Vs. Financial Literacy
Robert Kiyosaki - New Rules of Money, Part 2/7: The CASHFLOW Quadrant
Robert Kiyosaki - New Rules of Money, Part 3/7: Why Savers Are Losers in This Economy
Robert Kiyosaki - New Rules of Money, Part 4/7: Assets Vs. Liabilities
Robert Kiyosaki - New Rules of Money, Part 5/7: Good Debt Vs. Bad Debt
Robert Kiyosaki - New Rules of Money, Part 6/7: The Difference Between Buy, Sell & Fool
Robert Kiyosaki - New Rules of Money, Part 7/7: Focus
The questions are endless ...Meanwhile, unintended consequences are emerging from the massive sums that the Bernanke Fed has created. The stock market is rising in a liquidity bubble. Worse, gold is climbing into all-time high territory, and in so doing, it is advertising to the world that the dollar is sinking and that "something is dreadfully wrong." And the worst of it is that housing prices are not rising, they remain weak. And now commercial real estate is sinking. Currently, the talk is of "exit strategies." Strategies to undo the damage that the Fed has done. But the Fed isn't finished yet. And the story hasn't been told in full. What happens if a fed-up world decides to exit the dollar? Oil is priced and sold in dollars. What if the oil producers decide that they want a different currency. What happens then? The questions are endless. The problem -- you can't save the real world with fantasy money. When too much fantasy money is created, knowledgeable people turn to real money -- gold. Which is why central bankers fear and hate gold.
Divorcing the Dollar and Marrying Gold With their money and banking system having presented them with a case of system failure by disintegrating before their eyes and taking the economy with it, America’s economic experts who support and run the FED’s central banking–inconvertible paper dollar system cannot place the blame for this where it belongs, which is on the system itself, its supporters, and those who make its policies. They cannot bring themselves to diagnose the system’s ills and rectify them because they are at the center of them. They cannot stare the failure of inconvertible paper money squarely in the face and move to eliminate it. If they did, they’d be out of jobs and out of power.
Peter Schiff Gold to Hit $5,000 Per Ounce
Gold Arithmetic: Why the Gold Price Has No Ceiling What’s the price of the last ticket on last train out of Paris on the night the Germans march in? Whoever is carrying the most cash will get it, and that will be the price. Robert Merton, the great finance theorist, showed that in a multi-time-period model, investors hedge against the prospective change in the investment opportunity set. If sufficient hedges are not available the price of such hedges can be arbitrarily high. As I have tried to show in several recent articles, most recently this Sept. 15 essay at Asia Times, gold is a hedge against the collapse of America’s central role in world affairs.
Why gold could hit $1,500 on back of dollar’s decline One view is that gold has become a currency of its own – one you can’t print more of The dollar's decline has paused and the record-setting ascent in the value of gold has slowed but now the political pressure is mounting on President Obama to reassure global investors that the US remains a sound financial bet. Republican politicians are looking to make political hay from the currency's slide, depicting it as proof of declining US power. Sarah Palin, the beauty queen turned vice-presidential candidate turned bestselling memoirist, is using it to promote the case for increased domestic oil drilling.
Will gold become the new reserve currency? As the dollar's dominance fades gold's neutrality puts it in a good position to benefit As the dollar's dominance fades with the emergence of a multipolar world, gold may stand to gain the most of all assets, thanks to an unlikely quality -- neutrality. While no major currency is likely to replace the dollar any time soon, the need for an alternative is clear, and growing. China among others is considering how to diversify its more than $2 trillion in foreign exchange reserves, and talk of using other currencies to trade oil or commodities continues to circulate.
Gold Taking Off? This week gold prices broke out to new all-time highs above $1,000 and ounce. Short-term momentum is picking up for all kinds of gold-related assets as well. Is the trend sustainable? Yes, at least for now. Given the economic situation, more and more investors appear to be deciding to allocate a portfolio slice to precious metals. The gold market is actually small relative to most financial asset classes. It doesn’t take much activity to create a lot of movement. Another factor is that investors can now buy gold much more conveniently than in the past, thanks to ETFs like SPDR Gold Trust (GLD), iShares COMEX Gold Trust (IAU), and ETFS Physical Swiss Gold Shares (SGOL). A decade ago you would need to have a futures trading account to do this (unless you wanted to take possession of physical gold), and online trading was still a novelty. Now all it takes is a few mouse clicks.
Gold hits record high as dollar falls on oil pricing fears Gold hit a record high of $1,043.78 per ounce in intraday trade yesterday, as the dollar fell on reports that Arab states were considering pricing oil sales in currencies other than the dollar. The price of gold for immediate delivery finished the session $31.70 ahead at $1,036.70/oz . The report, which cited unnamed sources in Chinese banks and Gulf Arab bankers, was later denied by Mohammed al-Jasser, the director of Saudi Arabia's central bank. Russia and Kuwait also dismissed the speculation. A falling dollar makes purchases of commodities cheaper in other currencies and gold purchases can also act as a hedge against inflation.
Gold taps record above $1,060 Gold futures climbed above $1,060 an ounce Thursday, marking a record high for the third session in a row, as investment demand continued to rise and as the dollar weakened once more. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by physical gold, rose for a fourth straight session, reaching the highest level in three months. Also fostering the gains in gold, the dollar gave ground in currency trading, under renewed pressure as the European Central Bank and the Bank of England made no changes in their respective interest-rate policies.
Gold at $1050: Asians wait & watch With the international gold prices touching $1050 per ounce, gold buyers in Asian countries are adopting a wait and watch game. Since they are unsure about the fate of the current rally buyers just kept away from the market. Even though the global bullion markets were busy this week due to the high gold prices, shops and jewelry merchants in India’s commercial capital Mumbai and China did not show much enthusiasm, suggesting that the wave of retail scrap selling that greeted gold’s record run in March last year might not be quick to recur.
Gold Leads Commodity Rally on Outlook for Weak Dollar Gold climbed to a record for a third day and crude oil, copper, wheat and rubber all advanced as the dollar’s slump prompted investors to buy commodities as a hedge against potential inflation. Bullion is heading for a ninth annual gain as the Dollar Index, a six-currency gauge of the dollar’s value, has shed 6.4 percent this year. Oil has gained 58 percent since the start of the year on concern that record government spending to combat the global recession will devalue currencies, spurring inflation.
Gold's New Record High: Less than Half Its Real Price Gold continues to push higher and took out resistance of $1,050/oz yesterday and moved toward $1,060/oz before retreating slightly. With investors continuing to allocate funds into the gold market, the next target is likely to be an assault on the psychological $1,100/oz level. Increasing concerns of a double dip recession and of the outlook for major currencies is leading to continuing robust investment demand (significant gold ETF demand in recent days). A period of profit taking and correction is likely after the sharp moves up.
Gold Prices Rise Above $1,060 U.S. gold futures have turned back higher and broken above the record high hit overnight, supported again by a weaker U.S. dollar after both markets had corrected earlier this morning. Other precious metals have followed gold higher. Around 12:12 p.m. Eastern, December gold was up $15.90 to $1,060.30 an ounce on the Comex division of the New York Mercantile Exchange. "Gold is surging again," said Sterling Smith, commodity trading advisor and market analyst with Country Hedging. "We've been seeing a lot of headlines about gold making new record highs, which usually causes some nervousness. But we haven't seen that."
Gold: three reasons why the price will go higher The price of gold is still just over half of its prior peak in 'real' terms, even after the rally of the past eight years. As forecast, the gold price smashed through its previous record high of $1032/oz to trade at $1043/oz. We believe it should continue to perform well against most assets into the final quarter of 2009. Moreover, the price of gold is still just over half of its prior peak in 'real' terms, even after the rally of the past eight years - the nominal peak price in 1980 at $850/oz adjusted to account for inflation equates to an equivalent price today of $1,884/oz.
Why the price of gold is rising The price of gold has hit a new all-time high. The precious metal reached a record high of more than $1,050 an ounce on Thursday morning. It is the third record-setting price in as many days. There are several factors at play which are leading to demand for gold rising, pushing up the price:
Weakness of the dollar
Speculation
Inflation risk
Psychological
Seasonal
Gold: what next for the price? Gold has risen to a record high again – but where will the price go next? Should investors look to take profits or hang on for further gains? "I think investors should focus on what is happening to currency as that is the prime mover. The general sentiment is in favour of diversification but I don’t think that the metal will move by enormous amounts. Movements of 5pc get a lot of hype, but are not always deserved. "But I still think that gold is on an upward trend and perhaps $1,000 an ounce will be the new floor, although it could rise above $1,100. "I own gold in my personal portfolio and I have no intention of liquidating, while I’m 'long’ on gold in my professional portfolios and I increased weighting in gold about four weeks ago.
Gold Says "Cash is Cheap" as Policy-Makers Apply "Quick-Fix Stimulus" Once Again THE PRICE OF GOLD rose yet again in Asia and London on Thursday, hitting fresh all-time Dollar highs for the third day running in what one dealer called a "relentless [move] as fresh investment money continues to flood into the bullion market." Yesterday saw a near-1% rise in the volume of gold held by New York's SPDR Gold Trust, the world's largest gold ETF. Open interest in US gold futures leapt by 6% from Tuesday. "Arguably gold's biggest role is as a sentiment barometer," says the BBC. "A high gold price is an indicator that all is not well with the global economy."
Gold Breaks Out, But Beware a Potential Pullback Gold has been strong in conjunction with the weak dollar, one of the primary factors in the recently rally. There is a lot of chatter about the weak dollar, and central banks around the globe trying to diversify their dollar holdings and boost gold reserves. But central banks are notoriously poor market timers, and I would caution against falling in love with gold just as it is breaking out to new record highs. We are long gold in our portfolios currently, but I will look to take some profits if prices continue to rise short-term. A strong bounce in the dollar could easily shake out a lot of the newly minted gold bulls, and spark a sharp pullback.
Silver is the best hedge against inflation!
Secret Plan to Ditch Dollar - Implications for Gold and Oil In an October 6th article by Robert Fisk of Independent UK states: Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. The transitional currency could, according to sources, be gold: "The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold."
What Gold Bubble? Setting the Record Straight Fortune magazine published an article this morning titled, “Beware the gold bubble.” The story warns investors that market fundamentals do not support the recent rise in gold prices. Fortune cites one analyst who says that, in spite of its recent rise, gold currently exhibits “some of the poorest fundamentals I’ve ever seen in the market for a long time.” Apparently, this analyst is unaware that with interest rates near zero, the opportunity cost of holding gold has disappeared. About the most bullish macro scenario for the gold price is when the real rate of return on capital is well below historical norms for most asset classes. As the Consumer Price Index (CPI) figures in the fourth quarter turn positive due to the removal of the large, negative data points from 2008, negative real interest rates will become a reality once again. According to Macquarie’s research team, the gold price has risen at an annualized average 22% when real interest rates are less than zero.
The Case for Dumping Dollars, Buying Gold Gold just hit an all-time high of $1,045 and the dollar is coming under considerable pressure as China, Russia and other nations are calling for a new reserve currency. Rumors are swirling around that several countries are secretly planning to off-load their dollar reserves and begin settling international transactions in another currency. With the United States pushing towards a $2 Trillion annual deficit and doubling the money supply in a single year, there is legitimate cause for concern.
Why the Feds Seized the Gold in 1933 The question of confiscation reappears every time gold rallies, from those with enough history to be able to throw out a few facts and sound plausible, but not enough grounding in history and the law to actually place them in any sort of reasonable context. Below is a 'reprise' of a blog entry we posted early this year on the topic. The Feds acted on gold because at the time it WAS the currency of the country, and the government had some proper claims on it. When the US left the gold standard it relinquished all such claims, as gold became purely private property. Except perhaps if you are holding gold American eagles, which bear the patina of 'currency.'
New monetary target It is an unlikely rallying cry. At marches and meetings against big government across the US, where some placards damn the president, others bear a catchy slogan: “End the Fed”. Even Ron Paul can hardly believe it. Aged 74, fresh from a quixotic run for the presidency last year, the Texan Republican’s pet subject is winning a rash of converts. His book, also called End the Fed, is riding high in the bestseller lists. In it, he writes with delight about students in Ann Arbor, Michigan, chanting the phrase and burning dollar bills in the college quad as they discussed the crimes of the Federal Reserve.
Robert Fisk reveals truth behind 'dollar demise' report Famous British journalist Robert Fisk spoke to RT on his bombshell report, which caused the dollar to plummet. He says that the thunder of denials that the greenback is to be dropped in oil deals was expected, but the information he published was correct.
Falling Dollar: Finally Front-Page News The front page of the Financial Times captures the concern that has been expressed by this writer for at least the last four years. Today we see “Obama’s critics pounce on falling dollar as fears grow over currency:” . I don’t believe the focus is precisely spot on, for the cause of the problem is not just Obama and the Obama administration. The Republicans are just as responsible for this crisis as is the current administration. And the issue, to me, is not “whether or not” the dollar will remain a reserve currency. But we will get to that.
Deflation Overwhelms Niggling Price Hikes We’ve had a rollicking good time in the Rick’s Picks forum lately as inflationists sought to rise to the level of debate in explaining why deflation is unlikely. You can judge for yourself how well they succeeded, but on our scorecard, at least, they didn’t win a round. How could they have when they are evidently blind to evidence that the global engine is perilously close to being suffocated by deflation? As always, there were quite a few beleaguered consumers ready to testify that they are getting hammered by rising grocery prices. One of them is a friend of ours who lives in an L.A.-area home that has lost a third of its value in the last three years. That translates to about $400,000 – and yet, it is the seven percent increase in his sewer rates that seems to be bothering him most.
Death of Petro-Dollar, Told Ya So The story hit like a thief in the night, even bearing Biblical proportions. The end of the exlusive sale of MidEast oil in USDollars, the rise of Russian and Chinese influence in the Persian Gulf, the rise in importance for the Intl Monetary Fund basket of currencies, the final clarion call for the free ride by Americans on the Dollar Credit Card, and hidden implications that the Saudis must shop for a new security lord in the region with broad military might, these are revolutionary steps with profound geopolitical implications. The back-to-back stories in the UK Independent struck like powerful bolts of lightning in the middle of the night from a North American perspective. These articles by a highly respected journalist will be posted on the Banker Church Doors just like Martin Luther’s demands for change in the Protestant Reformation that smashed the monopolistic power of the Catholic Church centuries ago. Enough of the mixed metaphors. This is truly incredible news. The US will soon no longer be permitted to sell its indulgences. This is major Paradigm Shift material.
Dollar Trades at Lowest Level Since August 2008 on Risk Demand The dollar may extend its decline after trading at its lowest level in almost 14 months against the currencies of six major U.S. trading partners as signs of global economic recovery spur demand for riskier assets. The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said yesterday the region’s economy is emerging from a period of “free fall.” The rand posted the best performance against the greenback among 10 European, Middle Eastern and African currencies as investors sold dollar assets to earn higher yields.
Gerald Celente, U.S. Dollar’s Demise Will Be Felt Worldwide If the dollar collapses, it would spell economic disaster not just for the United States, but for the world, says Gerald Celente, director of the Trade Research Institute. “It is more than just the demise of the dollar – this is going to be felt worldwide. There’s a major financial crisis ahead. The United States, the world’s superpower, is failing on its most basic level,” Celente told RT. And the reason for the future demise of the American currency, Celente says, is the disproportionate financial system: “We can’t print money out of thin air, backed by nothing and producing practically nothing.” The researcher believes the crisis of the dollar is irreversible, since America is losing its gold – the value of its currency.
The Dollar Ain't the Deal
Asia steps in to support dollar Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China. The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year. Simon Derrick, at Bank of New York Mellon in London, said: “Other Asian central banks outside China are naturally looking to aggressively defend their competitive edge against undesirable currency strength as the dollar weakens.”
Asia acts to support the downcast dollar So much for the G20’s commitment to tackling trade and capital imbalances. Asian central banks have reportedly begun to intervene heavily in foreign exchange markets to support the sickly dollar. The reason? They are worried about what the weak dollar might do to exports. They also worry about the damage the shifting exchange rate does to the portfolio value of their foreign exchange reserves, which are largely held in dollars. There’s very little appetite among the big surplus nations of Asia for the correction in imbalances the IMF thinks desirable, nor, despite international lip service to “sustainable and balanced growth”, is there any centralised mechanism for ensuring it comes about.
"The Demise of the Dollar" Dennis Gartman "US Dollar going demonstrably lower"
Asia Will Ambush Dollar Shorts Over And Over Thursday's coordinated currency intervention by South Korea, Taiwan, the Philippines, and Thailand is just the start of what will happen should the dollar keep sliding. Most export-heavy countries around the world are far from ready to address the hard changes at home required to deal with a weak-dollar world. Their economies are growing fast. Yet for many leaders, this speedy growth is the only real legitimacy they have with their citizens, without which they could be in deep trouble. Thus they'll fight tooth and nail to forestall any change from the status quo whereby Americans consume, while they produce and grow.
Dollar stays down after ECB, BOE meetings Aussie dollar soars on unexpected improvement in jobless data The dollar declines versus the euro and other major counterparts on Thursday, after the European Central Bank said the economy in the euro zone is showing signs of stability and inflation expectations are firmly anchored. Traders deemed ECB president Jean-Claude Trichet's comments about the shared currency supportive of the euro, when they expected him to indicative the euro was too strong, which hurts exports and slows a recovery in manufacturing-driven economies. It also highlighted the lack of commentary from U.S. officials in support of a strong dollar, as the currency moves close to key levels of concern, analysts said.
Dollar Weakens on Australia Jobs Data The dollar is lower across a broad range of currencies late Thursday morning after strong Australian jobs data helped bolster renewed confidence in the global economic outlook. While it remains higher on the day, the euro ceded the gains it made against the dollar after European Central Bank President Jean-Claude Trichet said excessive currency volatility is negative for both the economy and financial stability, and that U.S. support for a strong dollar is extremely important.
US Economy is in Meltdown
Obama under fire over falling dollar The falling US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the potential erosion of America’s reserve currency status. Republican politicians have highlighted the dollar’s slide as evidence of waning US power. Sarah Palin, the former vice-presidential Republican candidate, on Wednesday sought to link the dollar decline to rising US indebtedness and dependence on foreign oil. “We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,” she wrote on her Facebook page.
China: US Dollars vs. Oil One of the great lessons I’ve learned over the years is to pay more attention to what people do rather than what they say. For example, I always found it peculiar when the CEO of a subprime mortgage lender, home builder or technology company protested in the media that business was “improving” or “bottoming” while selling shares like mad. Politicians are just as bad about saying one thing and doing another. Conversely, I have always admired people who do what they say they will do.
No Way Is The Weak Dollar Good For Our Economy That's the lesson that David Malpass of Encima Global LLC makes in today's WSJ. Some weak-dollar advocates believe that American workers will eventually get cheap enough in foreign-currency terms to win manufacturing jobs back. In practice, however, capital outflows overwhelm the trade flows, causing more job losses than cheap real wages create. This was the lesson of the British malaise, the Carter malaise, the Mexican malaise of the 1990s, Yeltsin's Russian malaise through 1999 and the rest. No countries have devalued their way into prosperity, while many - Hong Kong, China, Australia today - have used stable money to invite capital and jobs.
"Special Drawing Rights" to replace U.S. Dollar after the collapse - What can you do to stop it
Bernanke sees tighter policies as economy heals Federal Reserve Chairman Ben Bernanke said on Thursday that while the U.S. central bank's vast support for the economy will likely be needed for a while, the Fed will have to remove those measures as the economy heals to ward off inflation. The Fed has cut interest rates to near zero percent and pumped hundreds of billions into the financial system to counter the worst financial crisis since the Great Depression.
HSBC Chief: Second Downturn Coming Soon The CEO of one of the worlds leading banks, HSBC, Michael Geoghegan, reckons there will be a second downturn in the coming months and is now postponing plans to expand the already global superbank. Is this a V recovery or a W? (I think) its the latter. (If Im right), we have to be very careful we don't grow the balance sheet so far before the recovery has come only to write it back into the impairment line later on, Geoghegan told The Financial Times.
Growth optimism hits US dollar The dollar hit its lowest level for 14 months on a trade-weighted basis on Thursday as optimism over the prospects for global growth stemmed haven demand. Improving US retail sales figures and a stronger-than-expected fall in weekly jobless claims in the US added to the buoyant sentiment triggered by forecast-beating third-quarter earnings from Alcoa. The dollar index, which tracks its progress against a basket of six leading currencies, fell as much as 1 per cent to a low of 75.767. Late in New York, the dollar was down 0.2 per cent at Y88.45 against the yen and 0.6 per cent lower at SFr1.0262 against the Swiss franc.
Oil no longed traded in Dollars? Deficit Spending, Printing, Monetizing Debt, The Dollars Demise Glenn Beck explains how no longer trading oil in dollars will result in the collapse of the US dollar. He explains how foolish some Americans are to believe that the dollar will always reign supreme. He explains how the Soviet Union collapsed, and some of the similarities that we are facing now, such as being tied down in a war in Afghanistan with no end in sight. He also explains how there may come a time of great crisis when we will have to decide very quickly if we want to totally collapse, or if we want to fundamentally transform America instead.
What Is Money? Bait and Switch The phrase "bait and switch" refers to a sales practice of advertising a desirable item at a low price to get potential buyers into a showroom. Then the salesman tells the shopper that the firm has run out of the sought-after item. The salesman then uses his sales skills to sell the shopper a more expensive item. This practice is illegal. It is a form of fraud. It steals time from the shoppers. Bait and switch is at the heart of all fractional reserve banking. It is not illegal. It is the heart of the modern economy. A century ago, gold coins were money. There were no Federal Reserve Notes. Today, Federal Reserve Notes are money. Gold is not, except for central banks. This reversal was the product of a national bait-and-switch operation that began in 1914. A similar reversal occurred at the same time, though much more rapidly, in Europe: the outbreak of World War I.
Mr. Geithner, Wall Street is on Line 1 (again) When these men call, the Treasury boss listens Even during his most frenzied days, when Congress is demanding answers or the president himself is calling, Treasury Secretary Timothy Geithner makes time to talk to a select group of powerful Wall Street bankers. They are a small cadre of businessmen who have known and worked with Geithner for years, whose multibillion-dollar companies all survived the economic crisis with help from U.S. taxpayers.
Beware the Next Bubble The earliest known bubble was the “Dutch tulip mania” in 1637 which resulted in tulips contracts being sold for more than 10 times the annual income of a skilled craftsman (according to Wikipedia). And of course, shortly thereafter, the price of tulips crashed back to normal “flower levels”. All bubbles since have shared one thing in common – large groups of people thinking irrationally, all at the same time. The clean-up act Alan Greenspan has maintained that the government’s focus should be to reduce the effects resulting from a bursting bubble, as opposed to discouraging its development in the first place. When the tech bubble burst, the Fed reduced interest rates to 1% for an extended period of time and this is what many believe to have caused the next bubble.
Why Obama Must Spend More The latest signals from the White House suggest that President Barack Obama now realizes he must do more-and quickly-to ease the economic suffering of working families. He knows that most Americans believe his administration and Congress have so far provided more help to major banks and Wall Street investment firms than to workers and small companies, as a survey released by pollster Peter Hart reported recently.
Obama's critics pounce on falling dollar as fears grow over currency The falling US dollar is giving ammunition to the critics of the Obama administration and fuelling broader concerns about the potential erosion of America's reserve currency status. Sarah Palin, the former vice-presidential Republican candidate, yesterday sought to link the dollar decline to rising US indebtedness and dependence on foreign oil. "We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar," she wrote on her Facebook site.
Lunatic Fringe: Bernanke & The Dissolution Of The American Ideal This letter is going to be offensive to many many people. That's fine, I'll simply chose to use my first amendment rights, even though I understand it will bother a lot of folk. As you proceed through the letter, you're going to ask yourself a question, and it might go somehow along this line "Isn't InvestYourself about the economy and the markets? What's this rant got to do with that?" The answer of course will be "everything". So let's get to it. Oh and by the way, if you can't deal with what I'm about to go off on, please exercise your rights to hit the "unsubscribe" button while you are still free enough to do so. InvestYourself isn't going to solve the worlds problems. The giant gears of global society are turning and will not be repealed by a small newsletter writer. All we can hope for is that "some" amount of people ponder what we say for long enough that they actually "do" something for themselves. I'm not stupid enough to think I have all the answers, I don't. But I'm smart enough to know that when a ship is sinking, I want to be real close to the life raft. America the Titanic is sinking. The Captains are telling the passengers that everything is fine, she's a sturdy ship, and we'll be back on course in no time. Meanwhile the water is rising.
Corporate Communism: Out of Order
The Fed's Dilemma The Origin of the Dilemma The Federal Reserve (Fed) and other central banks currently face a dilemma. A strong central-bank balance sheet is essential for the quality of a currency and the stability of a financial system. Unfortunately, the financial crisis has seen substantial changes in the balance sheets of the world's major central banks. Besides the much-discussed quantitative easing (the expansion of central banks' balance sheets), there has also been substantial amounts of "qualitative easing" (balance-sheet policies that deteriorate the average quality of central-bank assets).[1] Quantitative easing may imply qualitative easing if the new assets on the balance sheet are of lower quality than the average existing quality of the assets held.
The Great Shift: China Rising, U.S. Falling We are living through one of the times in history when a major and irrevocable shift is taking place. It will be a time that will be the subject of controversy amongst historians and, no doubt, there will be arguments about causation, about what set off a chain reaction of change. They will perhaps ponder and wonder that so many people were so blind to what was actually taking place before their eyes. The shift that we are witnessing is the move of economic power from the West to the East. It is a well worn theme on Cynicus Economicus, that we are seeing the rise of China, and the fall of the US, and the process is now accelerating. Alongside the fall of the US, we are also seeing further declines in countries like the UK.
US clashes with EU and China on trade Global trade tensions ratcheted up on Thursday as the US opened an investigation into Chinese steel imports and clashed with the European Union over chickens. The US steel pipe investigation is likely to irritate Beijing, which last month accused its biggest trading partner of “rampant protectionism” after President Barack Obama imposed a heavy duty on imported Chinese tyres. That decision rattled many economists, who feared that Mr Obama would backtrack on his free trade promises in an attempt to pacify the politically important US unions. Resentment towards China has been growing in the US as the recession pummels manufacturers.
Saudi central bank chief defends dollar oil pricing, exchange peg Saudi Arabia's central bank chief denied holding talks on dropping the dollar as the currency for pricing oil, and said his country's foreign-exchange peg to the dollar is a matter of national economic interest. "We don't have any emotional or political attachment to the dollar, we have self-interest and it still serves our self- interests," Saudi Arabian central bank Governor Muhammad al- Jasser said in an interview yesterday in Istanbul, where he's attending annual International Monetary Fund and World Bank meetings.
A Guided Tour Of NYC Commercial Real Estate Wreckage Last night's PBS NewsHour took a look at the bearish obsession du jour, the commercial real estate market. Real estate analyst Bob White took them around to show some of the ugliest cases out there.
Middle America Discovers What Obama's Tire Tariff Will Do To Their Pocket Books Tariffs on Chinese tires isn't a subject that's just limited to discussions in The Economist and on the opinion page of the Wall Street Journal. In middle America (well, Vegas, which is kind of on the left coast) the local media is talking about how Obama's tire tariffs is going to whack consumers in the pocket book. We can't wait to see how that plays politically. KVBC: If it's been a while since you bought a new set of tires get ready for some sticker shock. President Obama imposed a new tariff on imported tires from China. Chinese tires have been popular, especially lately, because they are more affordable than their American counterparts. Now, the Chinese brands will cost you more.
Dell closing its last large U.S. plant Company will move North Carolina factory's production of PCs to sites overseas. Dell Inc. started production in its Winston-Salem, N.C., computer plant in 2005, pledging to make it a showplace of electronics manufacturing efficiency that would turn out $10 billion worth of computers a year and employ up to 1,500 people. But on Wednesday, Dell told its 905 workers there that the factory will be closed by January in a cost-cutting move that will send more of the company's manufacturing overseas. The announcement marked another painful step in Dell's two-year efficiency drive to slash $4 billion from its annual operating costs. It also spells the end for most of Dell's personal computer manufacturing in the United States.
U.S. Retail Center Vacancies Rise to 17-Year High Vacancies at U.S. shopping centers rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed, real estate research company Reis Inc. said. Vacancies at neighborhood and community shopping centers increased to 10.3 percent, the highest level since 1992, from 8.4 percent a year earlier, New York-based Reis said today. Vacancies at regional and super-regional malls rose to 8.6 percent from 6.6 percent a year earlier, a high for this decade.
Low Mortgage Rates Fail to Get Broker Phones Ringing Real estate broker R. Gilliam Kittrell III in Raleigh, North Carolina, answers the phone these days on the first ring. That’s when it rings at all. Mortgage rates near historic lows aren’t producing more buyers, said Kittrell, who recited terms on a rate sheet on his desk which he said were almost unprecedented in his 30 years as a broker: A 30-year fixed mortgage for 4.75 percent, a 15-year fixed for 4.25 percent, a 5-year adjustable at 3.5 percent.
F.H.A. Problems Raising Concern of Policy Makers A year after Fannie Mae and Freddie Mac teetered, industry executives and Washington policy makers are worrying that another government mortgage giant could be the next housing domino. Problems at the Federal Housing Administration, which guarantees mortgages with low down payments, are becoming so acute that some experts warn the agency might need a federal bailout. Running questions about the F.H.A.’s future — underscored by interviews with policy makers, analysts and home buyers — came to the fore on Thursday on Capitol Hill. In testimony before a House subcommittee, the F.H.A. commissioner, David H. Stevens, assured lawmakers that his agency would not need a bailout and that it was managing its risks.
Fannie and Freddie Continue to Struggle, Lawmakers Told In the year since the government stepped in to rescue the collapsing mortgage giants Fannie Mae and Freddie Mac, the agencies have taken $96 billion from the Treasury, and may still need more. That was the somber assessment delivered Thursday by the federal agency charged with overseeing the government-controlled Fannie and Freddie, which have lost a combined $165 billion since July 2007 as their bets on the housing market went bad. “The short-term outlook for the enterprises remains troubled,” said Edward J. DeMarco, acting director of the Federal Housing Finance Agency, in testimony before the Senate Banking Committee.
Obama, Congress Might Extend Tax Breaks, Housing Aid President Barack Obama and congressional leaders might extend or expand tax credits and housing aid as they seek to counter the decline in the U.S. housing market and reverse rising job losses. House Speaker Nancy Pelosi said lawmakers might extend an $8,000 tax credit for first-time homebuyers that is set to expire Dec. 1. Senate Banking Committee Chairman Christopher Dodd said he is “hopeful” that lawmakers will allow Fannie Mae, Freddie Mac and the Federal Housing Administration to continue financing larger mortgages past the year’s end.
Geithner: Loan Modification Program Accelerating Some half million American families are now participating in a home loan modification program initiated by the Obama administration to try to slow the rate of foreclosures, Treasury Secretary Timothy Geithner said on Thursday. In a telephone call with selected reporters ahead of release of a regular report on the program, he said about 40 percent of those eligible were now being helped. "We're announcing today that half a million families are now participating in loan modifications that are substantially reducing their mortgage costs and therefore increasing -- in the way a typical tax cut can operate -- the amount of money they can keep to devote to other important things," Geithner said.
FHA may be setting up repeat of housing bubble, lawmakers worry The percentage of loans backed by the agency that are delinquent or in foreclosure hit nearly 8% at the end of June. Critics say borrowers don't have enough of a stake in keeping up with payments. Reporting from Washington - In the wake of the mortgage meltdown, the Federal Housing Administration has emerged as a pillar of the still wobbly housing market -- providing vital insurance that enables borrowers to qualify for loans with as little as 3.5% down. This year alone the agency has backed nearly 2 million mortgages worth at least $328 billion. It insured 21.5% of all new mortgages last year, up from fewer than 6% in 2007.
Roubini: No Housing Market Bottom Yet U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday. Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital. "The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they're going to have massive, massive losses," Roubini of RGE Global Monitor told reporters after a presentation for a World Economic Forum report on the global financial system.
Housing Slump Erased $3.4 Trillion of Wealth in 2008 Below is a revealing chart from McKinsey, tracking housing prices around the world since 1970. It shows that the housing bubble was frothiest in the UK in the last decade or so, with the US in the middle of the pack and Germany the only country featured where prices are now lower than in 1970. As McKinsey points out, in 2008 the value of US residential real estate fell 10%. The global average fared only somewhat better, declining by almost 4%. “We estimate that falling home prices erased more than $3.4 trillion of household wealth in 2008," McKinsey wrote. "And because home prices are slow to correct, the current slide may persist for some time, which could depress global consumption.”
Thousands of Homeowners Cite Drywall for Ills When Bill Morgan, a retired policeman, moved into his newly built dream home in Williamsburg, Va., three years ago, his hopes were quickly dashed. His wife and daughter suffered constant nosebleeds and headaches. A persistent foul odor filled the house. Every piece of metal indoors corroded or turned black. In short order, Mr. Morgan moved out. The headaches and nosebleeds stopped, but the ensuing financial problems pushed him into personal bankruptcy. . . . . . . . Mr. Morgan, like many other American homebuyers who tell similar tales of woe, is blaming the drywall in his new home — specifically, drywall from China, imported during the housing boom to meet heavy demand — that he says is contaminated with various sulfur compounds.
GM Said to Near $150 Million Hummer Sale to Tengzhong General Motors Co., seeking to shed brands after emerging from bankruptcy, is nearing an agreement to sell its Hummer sport-utility vehicle business to China’s Sichuan Tengzhong Heavy Industrial Machinery Co. for about $150 million, said three people familiar with the deal. The parties are trying to reach a deal today or tomorrow, said the people, who asked not to be identified because the negotiations are private. GM estimated the brand’s value at $500 million in bankruptcy court documents.
Health Care Bill Gets Green Light in Cost Analysis The Senate Finance Committee legislation to revamp the health care system would provide coverage to 29 million uninsured Americans but would still pare future federal deficits by slowing the growth of spending on medical care, the nonpartisan Congressional Budget Office said Wednesday. The much-anticipated cost analysis showed the bill meeting President Obama’s main requirements, including his demand that health legislation not add “one dime to the deficit.” Indeed, the budget office said, the bill would reduce deficits by a total of $81 billion in the decade starting next year.
Health Insurance Exchanges: Will They Work? It is the sleeper issue in the current health care debate. Despite all the disagreement in Washington, every proposal now before Congress to overhaul the nation’s health care system includes creation of an insurance “exchange” — a marketplace that would operate something like a Travelocity Web site for insurance policies. In theory at least, the exchange would fix a fundamental flaw in the present system by giving small businesses and individuals a broad choice of insurance policies at competitive prices. Right now, such buyers typically have few affordable options.
Over A Million Men Overdiagnosed for Prostate Cancer, Treated Unnecessarily Since the prostate antigen screening test (PSA) began being widely used about 23 years ago, doctors have lauded its ability to detect prostate cancer at a very early stage. In fact, PSA testing has resulted in over a million additional men being diagnosed and treated for prostate cancer. The problem is, according to new research just published online in the Journal of the National Cancer Institute, most of these cases were overdiagnosed and subjected men to treatment they didn't need.
Green Tea could Naturally Prevent and Treat Osteoporosis, Scientists Say According to the National Institute of Arthritis, Musculoskeletal and Skin Diseases (NIAMS), the bone thinning condition known as osteoporosis is a major public health threat for 44 million Americans, 68 percent of whom are women. Approximately 10 million Americans already have osteoporosis and another 34 million more have low bone mass, placing them at high risk for this disease. Of course, Big Pharma claims it has the solution -- lots of prescription drugs (including the highly hyped Boniva, Fosamax and Reclast) that supposedly strengthen bones and treat osteoporosis. Unfortunately, these medications are loaded with potentially severe and even fatal side effects, including cancer and disintegration of bone in the jaw.
New Danger: Medical Industry Pushes Brain Scans for Healthy Technological advances, especially in critical emergency medical situations, can be life-saving. For example, scans of the body can locate with great precision a bullet that needs to be removed from near a vital organ, or detail how a shattered bone needs to be treated. But there's growing and worrisome evidence that the medical industry is pushing a variety of costly scans on the healthy and well, ignoring possible side effects (CT Scans Cause Cancer). The latest target for those selling scans-for-no-good-medical-reason? Your brain.
Doctor Admits Vaccine Is More Deadly Than Swine Flu Itself & Will Not Give It To His Kids The Swine Flu is an orchestrated attempt to spread fear and chaos into the population and to try to get people vaccinated, which everyone should know contains mercury that damages your nervous system. Mercury, of course, is one of the most toxic substances you can put in a human body. It is a heavy metal known to contribute to neurological disorders, including autism, dementia, and even Alzheimer's disease. Mercury also tends to build up in tissues in the human body and is not easily removed, so even small exposures to mercury can accumulate over time and end up compromising the health of the person involved. Baxter, the makers of the flu vaccines was caught putting live bird flu in the vaccines and making people get more sick and ill with the help of the World Health Organization (WHO). DO NOT TAKE THE VACCINE! Unless of course you want to have the possibility of dying and destroying your immune system and have all sorts of side effects and you are determined for your own personal destruction - then by all means get it. If you are an intelligent person and not a sheep who cannot critically think for yourself - research further and you will come to the conclusion that this vaccine is a big scam and should not enter one single human body.
Doctor Admits Vaccine Is More Deadly Than Swine Flu Itself & Will Not Give It To His Kids
Swine flu vaccine recipients could be tracked with RFID bracelets using Big Brother medical technology Here's the scene from some dark, present-day action movie: David Balfour breathed hard. He could hear the thumping of heavy boots outside his door, down the hall, mixed with the muffled grunts of military men. He had known they would come. It was obvious from the moment he refused the VaxTrax bracelet at the county clinic. They said it would keep him safe because they could pinpoint his location if he ever suffered a heart attack or an accident. As a bonus, his entire medical history was also imprinted in the RFID chip, so even if he was found unconscious, they could determine his medical status and start treatment right away.
Military check points to enforce swine flu vaccination shots!
Obama looks at Pakistan while reassessing Afghanistan strategy The president meets with advisors in a session devoted to a thorough update on the situation in Pakistan, where Al Qaeda's leadership is believed to be hiding. Reporting from Washington - President Obama shifted his focus to Pakistan on Wednesday as he continued his reassessment of his strategy for Afghanistan and approached the question of whether to further increase troop strength there. Eight years to the day after the Afghanistan war began, the president was reviewing a recommendation from his commander there, Gen. Stanley A. McChrystal, that suggests a range of troop increases depending on the strategy he ultimately chooses. White House officials say Obama is weeks away from making a decision.
Heads or tails, Obama loses On the eighth anniversary of the launch of United States military operations in Afghanistan, President Barack Obama spent a good part of Wednesday deliberating with his top advisers on what is likely to be one of the most momentous decisions of his tenure: the future of US involvement in that war. His military commanders on the ground, led by General Stanley McChrystal and the head of the US Central Command (Centcom), General David Petraeus, are reportedly urging Obama to increase the number of troops deployed to Afghanistan from the current 68,000 to over 100,000 as part of a comprehensive "counter-insurgency" (COIN) strategy.
Glenn Beck Are We Facing the End of the All Mighty Dollar? Part 1 (some overlap with video above)
Glenn Beck Are We Facing the End of the All Mighty Dollar? Part 2
The Currency Cabal On October 6th, The Independent newspaper of London set off shock-waves around the world with a report that secret meetings were held between the OPEC states, China, Russia, and others, in which the participants charted a course toward a new world reserve currency. Not surprisingly, the U.S. dollar nosedived on the news. The rout was only stemmed by Saudi and Chinese officials publicly denying the story. Whether or not this particular reporter got all his facts straight is largely immaterial. If such meetings have not been occurring, they soon will be. All the ingredients to stir financial discontent in these nations are present. It's not a question of if we will move to a post-dollar world, but when.
Preparation Time is Running Out This morning in London the gold price hit an all-time high in non-inflation-adjusted dollars of $1047. While some who hold gold might be rejoicing, I do not view this as good news at all. The campaign still has plenty of people to reach in this district, and may run out of time since we certainly do not have the funds to launch a major ad campaign. The all-time high in the gold price is a warning of dire times to come as it merely indicates that the dollar's purchasing power is at an all-time low. The next phase of the dollar crisis may be on the doorstep.
Reverse mortgages seen as next subprime crisis Reverse mortgages could be the next subprime crisis. Some of the same subprime lenders that helped drive the real estate boom with loans to home buyers who couldn't afford the payments are now targeting seniors, the National Consumer Law Center warned Tuesday. Brokers, who are given financial incentives to sell the loans, may be making misleading claims to potential customers, according to a report by Boston-based NCLC. "This market is designed to serve seniors, so when we find abuses cropping up and migrating from the subprime market to the senior market, that sounds an especially loud warning bell," said Rick Jurgens, an advocate at the NCLC who contributed to the report.
After sub-prime comes ‘old prime’ crisis Reverse mortgages sold to retired people threaten a new bubble As if lending to under-qualified borrowers hadn't caused enough damage already to the global financial system, mortgage companies have expanded into a new area of lending that could prove equally unstable. US watchdogs yesterday highlighted the growing dangers of so-called 'reverse mortgages' sold to retired people looking to unlock cash from the value of their homes. In the US, the loans are available only to borrowers aged 62 and over and are aggressively marketed by brokers looking to collect fees. The loan is repaid, with compound interest, when the borrower dies or moves.
He foresaw the mortgage mess; now, he sees an inflation wreck Investors who are convinced that serious inflation looms -- but who’ve been putting off buying gold or some other potential hedge -- will want to read the latest client letter from Kyle Bass, the hedge fund manager who made a fortune betting against mortgage-backed securities in 2007. Count him as convinced about inflation, too, even in the face of the deflationary forces now bearing down on the economy.
Buy Gold! Two days ago, the price of gold broke out to a new high and we are delighted with this result. As you will recall, we were expecting an upward breakout in gold and it looks as though its price will now surge over the following months. It is noteworthy that since the breakout occurred, gold has managed to stay above the previous high. The longer the price of gold stays above US$1,030, the greater the probability that the yellow metal will stage a spectacular rally until spring next year.
Gold hits record high above $1,050 on dollar weakness Gold hit record highs on the spot and futures markets on Thursday, marking historic peaks for the third straight session on continued weakness in the dollar. Spot gold rose as high as $1,050.55 per ounce as of 0118 GMT. U.S. gold futures were at $1,052.10.
Gold will continue to set new highs - Blanchard Analysts at gold dealer Blanchard & Co. see the recent upwards trend in the gold price as sustainable and likely to continue. U.S.'s largest gold dealers, Blanchard & Co. In New Orleans reckon that the current upwards trend is not only sustainable, but also that it should continue long term. Blanchard's chairman and CEO, Donald W. Doyle, comments that "The current rise in the price of gold and its projected sustainability can be attributed to the decline of the U.S. dollar and mounting pressure from the continuing rumble for it to cease being the currency of choice for oil trading. Whether or not that will happen remains to be seen. However, it does show how fragile the dollar is right now."
GOLD: BREAKOUT ALERT - POWERFUL UPTREND IMMINENT - target and trajectory… The impending gold breakout has been so long in the making that it has engendered a "we'll believe it when we see it" mentality amongst most market participants. What this means of course is that most will miss out on the big easy gains that will accrue during the dynamic phase of the next major uptrend and will turn up late at the party, as usual. We ourselves have had lingering doubts engendered in large part by the perceived risk of a dollar rally, but these doubts are now dissipating for reasons that will be set below.
Gold hits another record The precious metal continues to climb as investors fret about the weak dollar and inflation. Large funds do most of the buying. Gold continued to push higher into record territory Wednesday amid concerns about a weak dollar, inflation and technical-based buying by large investment funds. December gold rose $4.70 to settle at a fresh all-time high of $1,044.40 an ounce. Earlier in the session, gold traded as high as $1,048.20, topping Tuesday's intraday mark by $3 an ounce.
Gold Rises to New Record High Certainly one of the biggest stories of yesterday's market action is carrying over to today; gold's breakout to new record highs. We spoke quite a bit about gold in yesterday's Twitter stream, noting that gold's latest upsurge has come amidst a global tide of inflationary worry and growing anti-fiat money sentiment. This is quite remarkable, as much of gold's rise this decade was, previously, widely perceived as a "weak dollar story".
Gold Jumps to Record as Inflation Outlook Fuels Investor Demand Gold rose to a record on speculation that currencies will depreciate, spurring inflation and boosting the appeal of the precious metal for investors seeking to preserve their wealth. Gold futures climbed as high as $1,045 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The spot price is headed for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.7 percent against a basket of six major currencies.
Commodities in Final Stages of Basing – Gold, Silver, Oil, Gas Commodities have and continue to be a fantastic trading vehicle for those who can stomach volatility. After last year's market crash most commodities pulled back to normal if not lower than normal trading ranges. This allowed us to enter the market at 10+ year lows for natural gas. If we look at the weekly chart for gold, silver, oil, natural gas and the CRB commodity index we can see that commodities in general look ready to skyrocket higher approximately 34% on average in the next 4-12 months.
Gold to stay above $1000 - Harmony CEO But a strong rand is making life tough for South African producers The chief executive of Harmony Gold Mining Co. said the dollar price of gold could stay above $1,000 this year after it hit a new record, but a stronger rand was eroding gains for South African producers. Gold hit a record high on the spot and futures markets on Wednesday, with dollar weakness continuing to support sentiment by attracting fresh investment in the precious metal. By 0948 GMT, spot gold rose to $1,046.20/ounce , after the dollar fell against a basket of major currencies. "Certainly it will go higher. It wouldn't surprise me if it stayed above $1,000 an ounce," Graham Briggs, Chief Executive Officer of Harmony told Reuters.
What Will You Do When Gold Hits $1200 an Oz.? We along with several other analysts have been looking for an upside breakout in gold. Today, October 6th we got that breakout with gold exploding to over $1040 an oz into new high territory. I ask the question, jokingly, What Will You Do When Gold Hits $1200 an Oz, because we know that many investors are not even in the game as yet.
Key Levels to Watch for Gold The most salient feature of the weekly chart of spot gold is a cluster of critical support left behind this week at $1000-$985.00. Now that gold prices have spike to $1050 – likely on the way to $1180-$1220 next – any “intervening” weakness should be bought unless and until the price structure chews below $1000-$985. First pullback buy zone is $1037-$1033, with the second pullback buy zone at $1025-$1020. We’ve been participating in gold via the SPDR Gold Shares (NYSE: GLD) and Market Vectors Gold Miners ETF (NYSE: GDX).
Gold Rise to Record Shows Investors Split With Banks Gold’s rally to a record shows commodity investors remain concerned that the U.S. economic recovery will spur inflation even as Wall Street forecasts and government bonds suggest stable prices. Bullion has jumped 18 percent this year, heading for a ninth annual gain, and futures touched a record $1,049.70 an ounce today amid rising demand for a hedge against inflation and a weaker dollar. Economists surveyed in the past month expect U.S. consumer prices to fall 0.5 percent this year, the first drop in five decades.
Gold "Off the Charts" Signals Sharp Global Inflation Ahead THE PRICE OF GOLD touched fresh all-time Dollar highs in the first hour of London trade on Wednesday, recording an AM Gold Fix at $1047 an ounce before easing back as European stock markets retreated from new 13-month highs. "Having rallied 'off the charts'," says Barclays Capital's chief technical analyst, Jordan Kotick, "we are left to resort to projections and extrapolated trendlines to forecast where the move might stop." "[Uptrend] channel resistance currently is at $1,370; history suggests a run at $1,500." "The current gold price keeps the pressure higher," says the daily note from bullion bank Scotia Mocatta, "with our new targets at 1050 and 1090."
Gold understands that liquidity rallies do not create jobs Outside of minimum wage jobs and Wal-Mart poverty line work, today’s US economy appears unable to create good jobs. If the US economy cannot create new jobs, Americans will be in no position to save and invest for their futures, nor will they have any purchasing power that would boost the economy.
Gold Prices Soar to Record High on Report of Secret Plan to Dethrone the Dollar Gold prices surged to record high $1,045 an ounce yesterday (Tuesday), after a report surfaced that global oil producers are planning to stop using the U.S. dollar for oil trade. “There’s no telling the veracity of these reports, but the general trend has been going in this direction anyway: a weaker dollar and rising gold,” Brien Lundin, editor of the Gold Newsletter told MarketWatch. Finance ministers and central bank governors from China, Russia, Japan, Brazil, and Middle Eastern oil producers met to discuss plans to stop using the U.S. dollar for oil trade, The Independent reported. The dollar would be replaced by a basket of currencies that includes gold, which could be a big reason behind the precious metal’s recent run-up in price.
A New Way to Value Gold Within the context of the current economic crisis we have often heard about the flight to quality and safety assets, with gold being discussed as one such asset. Gold, the argument goes, is the best asset to protect against inflation. While this may be true to an extent, as perceptions drive markets, the view that gold is an inflation protecting asset is not necessarily accurate. If one considers gold to be a hedge not against inflation, but rather, a defense asset against the increasing risk of government instability, then inflation is actually the result of a deeper cause.
2009 Proof and Uncirculated Gold and Silver Eagles Canceled Today at Noon, the United States Mint issued a press release with some shocking and disappointing news. The collectible 2009 Proof and Uncirculated Gold and Silver Eagles will not be offered this year. As partial consolation, the press release also announced plans to offer the 2009 Proof Gold Buffalo, the 2009 Proof Platinum Eagle, and fractional weight Gold Eagle bullion coins. As it now stands, the following collector coins are now canceled:
2009 Proof Silver Eagle
2009-W Uncirculated Silver Eagle
2009 Annual Uncirculated Dollar Coin Set
2009 Proof $50 Gold Eagle (one ounce)
2009 Proof $25 Gold Eagle (one-half ounce)
2009 Proof $10 Gold Eagle (one-quarter ounce)
2009 Proof $5 Gold Eagle (one-tenth ounce)
2009 Proof Gold Eagle 4 Coin Set
Autumn 09's Inflation Time-Bomb THE PUBLISHED INFLATION DATA are surprisingly unsophisticated in so far as they compare current prices with a snapshot a year earlier. Just over a year ago, oil was every hedge fund manager's favorite speculation. In summer 2008 a barrel got to well over $140, before falling sharply back. That summer's high oil price had the effect of cancelling out the deflation which was occurring elsewhere in the economy, as the first phase of the credit crunch started to bite. It helped keep inflation up.
Fed Should Tighten Rates Sooner Rather Than Later, Hoenig Says Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank should start raising interest rates “sooner rather than later,” and such tightening wouldn’t derail the U.S. economic recovery. “Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy,” Hoenig said yesterday in a speech in Denver. “I would not support a tight monetary policy in the current environment, but my experience tells me that we will need to remove our very accommodative policy sooner rather than later.”
Deflation or Inflation? Here is the Answer… The debate over deflation/inflation continues as some of our most astute economic observers take sides. It is interesting for me to see some great commentators take opposing positions on one of the most important topics of our time. Frankly, I think that both sides are missing part of the picture. The debate concentrates on the after shocks of inflation/deflation: prices.
Geithner: Americans Have to Save More Americans will have to save more in the future, transforming the global economy, and Europeans and Japanese must work to boost domestic demand, U.S. Treasury Secretary Timothy Geithner was quoted as saying on Wednesday. "Everyone is going to have to come to terms with the fact that we are going to save more in the United States," Geithner said in an interview with German weekly Die Zeit, conducted on Sunday in Istanbul, and due to appear on Oct. 8. "If the U.S. starts saving more, that changes the whole world's economic reality," he said, according to the German text of the interview. Geithner said China was already doing a lot to consider how to put growth on a more sustainable path.
Ron Paul: Here Comes the BIG ONE Ron Paul has a bestseller. That sounds so nice I’ll say it twice. Ron Paul has a bestseller. His new book, End the Fed, is number 30 on Amazon as this is written -- with 167 mostly glowing reviews -- and his reception last week on Jon Stewart’s Daily Show was hugely positive. Stewart, more-or-less a left/libertarian, clearly sees Paul as one of the good guys, and his audience seems to agree.
Dollar's Slide Gives Rise to Calls for New Reserve The U.S. dollar continued its six-month slide Tuesday amid a growing international chorus that wants the dollar replaced -- or at least supplemented -- as the world's reserve currency, a move that would end the greenback's six decades of global dominance. The dollar has come under attack from abroad as the economic crisis has played out, thanks to the Federal Reserve's decision to flood a seized-up financial system with liquidity last fall. The central bank's moves likely staved off deflation, but the massive influx of new dollars has devalued existing ones. Foreign nations are worried that the massive U.S. national debt and rising deficits are not being addressed. And though inflation is not yet a concern in the United States, a prolonged slide in the dollar's value could lead to higher prices for consumers.
Santelli: Wouldn't You Hold Secret Dollar Meetings Too? Given the dollar's horrible performance, it only makes sense that secret meetings would happen between countries forced to depend on it. Rick Santelli: "If you were in the role of having to use a currency that wasn't yours, that was a reserve currency, that had all of the dynamics of the dollar, how many secret meetings would you have on your schedule?"
Dollar tumbles on report of its demise Gold price at record high as Independent story sends global markets into a frenzy The price of gold is surging on world markets amid fears that the old economic order based on the supremacy of the US dollar could be breaking down. A new spike has sent the cost of the precious metal to a level not seen before. The dollar slid sharply after yesterday's report in The Independent that Gulf Arab states are secretly planning to stop trading oil in dollars, and a senior UN official said that the US should be stripped of its position as the main source of currency reserves for other countries.
Faces of Death: The US Dollar in Crisis The US economy has been in crisis since 2008 and despite optimistic statements by officials and commentators there are no fundamental signs that the crisis will end in the foreseeable future. Current economic data suggests a number of diverging and unsustainable trends. The US economy has suffered a real estate collapse, a stock market crash, a banking crisis, a near systemic collapse on a global scale, a credit crisis, the worst economic downturn in the US since the Great Depression, and an unprecedented global recession. Following two sequential economic bubbles, the dot-com bubble and the real estate bubble, no one has yet correctly called either the bottom for the US economy or the start of a US economic recovery. Nonetheless, each day, news reports, articles and statements by officials and commentators reveal new economic data and offer new analysis. Unfortunately, both the economic data and the interpretations offered by officials and commentators are contradictory.
Celente on dollar: America sinks with its gold
Is the Sky Really Falling?...Dollar Hysteria Robert Fisk lit the fuse with his hyperventilating narrative which appears in Tuesday's UK Independent which went viral overnight spreading to every musty corner of the Internet and sending gold skyrocketing to $1,026 per oz. Now every doomsday website in cyber-world has headlined Fisk's "shocker" and the blogs are clogged with the frenzied commentary of bunker-dwelling survivalists and goldbugs who're certain that the world as we know it is about to end.
Will a Basket of Currencies Replace the Dollar? As everyone knows, Robert Fisk of the Independent wrote yesterday that the Middle Eastern oil producers, plus China, Japan and France have all agreed to start trading oil using a basket of currencies - including the yen, yuan, euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. instead of the dollar.
Fisk said this will start in 9 years.
But (as Tyler Durden also noted) Max Keiser has heard from his contacts in Paris and the Middle East that (see video on archives for Wed 10.07.2009):
The time schedule will be happening a lot faster than 9 years.
The basket of currencies against which oil is traded will include up to 50% gold
The G-20 Pittsburgh meeting included a discussion of using Special Drawing Rights and a basket of currencies to replace the dollar, with all currencies being adjusted and redistributed, with dollar taking a 50% devaluation to reflect debt America is carrying
I-Believe-in-Strong-Dollar Turns Relic as China Begs Stability More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning. Timothy Geithner, the current Treasury secretary, has tolerated the greenback’s 12 percent slide from its peak this year in March as measured by the Federal Reserve’s trade- weighted Real Major Currencies Dollar Index. While he said as recently as Oct. 3 that “it is very important to the United States that we continue to have a strong dollar,” the last time the U.S. intervened in markets to support its currency was 1995.
Will the Dollar get an “Arab oil shock”? Arab oil producing nations and the some world’s largest oil consumers including China and Japan are reliably reported to be secretly planning a long-term exit from pricing their oil trade in dollars. If true, it would spell the death knell for the dollar as world reserve currency, and for the USA as “the” global economic power.
Amid the global economic crisis, China rises Global economic crisis accelerates China's ascent, but what role will it play? The auto-parts maker Delphi Corp. is headquartered in Troy, Mich., in the heart of the region that made the United States the car capital of the world. It's a place where the phrase "buy American" is right at home. Now the 3,000 employees of Delphi's brake and suspension unit are getting a new boss. Battered by weak sales, Delphi is selling the unit to investors led by a company named Shougang Corp.
Krugman: World Trade Has Collapsed Faster Than In The Great Depression . . . . “When it comes to international trade, actually it’s not the Great Depression, it’s worse,” he said, presenting charts showing the decline in global trade activity falling much more steeply in the current downturn than during the Depression. “The scale of the collapse of world trade has been so large that it has produced a degree of international linkage that surpasses what even the pessimists imagined,” he said. “World trade acted as a transmission mechanism,” spreading economic distress “even to those countries that had relatively healthy financial systems,” such as Germany.
Euro-Zone Output Reflects Economic Fragility EU Warns Nine Countries on Deficits New output figures confirmed the euro zone's economic fragility, underscoring calls Wednesday for the 16-nation bloc to better coordinate economic policies, and for many European countries to cut budget deficits. The European Union statistics agency revised its measure of euro-zone gross domestic product for the second quarter to show a contraction of 0.2% from the first three months of the year and a 4.8% contraction from the second quarter of 2008. The new findings were downgrades from earlier readings of 0.1% and 4.7% contractions, respectively.
The Economic Recovery is an Illusion The Bank for International Settlements (BIS) Warns of Future Crises War is Peace, Freedom is Slavery, Ignorance is Strength, and Debt is Recovery In light of the ever-present and unyieldingly persistent exclamations of 'an end' to the recession, a 'solution' to the crisis, and a 'recovery' of the economy; we must remember that we are being told this by the very same people and institutions which told us, in years past, that there was 'nothing to worry about,' that 'the fundamentals are fine,' and that there was 'no danger' of an economic crisis.
What Central Bankers Say When They Mean ‘Awful’ Everywhere you look, there’s uncertainty. Uncertainty plays a key role in central bankers’ policy deliberations. The Federal Reserve says there’s “considerable uncertainty” about the strength of the recovery. In the euro zone, “uncertainty remains high,” European Central Bank President Jean-Claude Trichet said at a Sept. 3 press conference. He went on to qualify the degree of high-ness, calling it “high,” “very high” and “higher than usual” in the space of a half-hour. Trichet further categorized uncertainty as “ongoing” and “a major factor” in the outlook. The uncertainty principle isn’t confined to central banking. It has infected academia, too.
Debt-Market Paralysis Deepens Credit Drought A year after Washington rescued the big names of American finance, it’s still hard to get a loan. But the problem isn’t just tight-fisted banks. The continued disarray in debt-securitization markets, which in recent years were the source of roughly 60 percent of all credit in the United States, is making loans scarce and threatening to slow the economic recovery. Many of these markets are operating only because the government is propping them up.
Alan Grayson on CNBC: Bipartisan Call to Postpone Confirmation of Ben Bernanke
Ron Paul Calls for Delay in Bernanke Confirmation In a letter they will send to Senate Banking Committee Chairman Christopher Dodd this afternoon, Reps. Ron Paul (R., Tex.) and Alan Grayson (D., Fla.) will ask that the Senate hold off on Federal Reserve Chairman Ben Bernanke’s confirmation hearing until the central bank releases more information about its rescues. It is up to the Senate and not the House to confirm the Fed chairman, and the congressmen’s letter might not carry much weight in the neighboring chamber. Still, it is a sign of the potentially hostile environment Mr. Bernanke could face when he returns to Congress in the weeks ahead to defend his policies in confirmation hearings. Mr. Paul has won broad support in the House for a bill that would subject the Fed to audits by Congress’s Government Accountability Office.
Dear Chairman Dodd and members of the Banking Committee,
We are writing to ask you to postpone the confirmation of Ben Bernanke until the Federal Reserve releases documentation that will allow the public and the Senate to have a full understanding of the commitments that the Federal Reserve has made on our behalf. Without such an understanding, it is impossible to know whether Chairman Bernanke is fit to serve another term and fulfill the Federal Reserve’s dual mandate to ensure price stability and full employment. A list of said documentation is enumerated below. . .
Progressives Back Obama Push for Global Tax While policymakers debate a few million dollars for ACORN and a few hundred billion dollars more for health care reform, those committed to one-world government are moving ahead with plans for a global tax that could extract trillions of dollars out of Americans’ already depleted IRAs and stock holdings. One can’t exclude the possibility of such a tax being slipped into a health care or cap-and-trade bill that the Congress or the public could not have time to read before passage.
Fed Frets About Commercial Real Estate With Banks Slow to Take Losses, Fears of a Residential-Bust Repeat; 'More Pain Likely Lies Ahead' Banks in the U.S. "are slow" to take losses on their commercial real-estate loans being battered by slumping property values and rental payments, according to a Federal Reserve presentation to banking regulators last month. The remarks suggest that banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst. "Banks will be slow to recognize the severity of the loss -- just as they were in residential," according to the Fed presentation, which was reviewed by The Wall Street Journal.
Final estimate for U.S. budget deficit:$1.4 trillion The U.S. government spent a record $1.4 trillion more than it collected in the fiscal year ended September 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued. Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said.
Clinton: Bush Administration Should Have Rescued Lehman Former President Bill Clinton said the Bush White House should have rescued Lehman Brothers and it would have affected the economy and presidential election. “I feel more strongly now it was wrong,” said Mr. Clinton at the World Business Forum in New York. “They decided not to facilitate a loan to Lehman Brothers. They thought Lehman Brothers was so much smaller than AIG or Bear Stearns, they could afford to let it fail. The problem is that Lehman Brothers had already paid. When they failed, all the rest of us paid. It led to a collapse of the stock market. Every bank in America that had mortgage investments it hadn’t sold off looked like it had bad loans.”
Mortgage insurers may gain from Obama's housing push The Obama administration's latest effort to boost the beleaguered housing market is likely to help mortgage insurers as lower defaults will boost their liquidity. The new program aims to provide as much as $35 billion to state housing finance agencies, which provide low-cost mortgages to potential homebuyers with low to moderate incomes. As part of the program, government-controlled housing finance giants Fannie Mae and Freddie Mac, together with the U.S. Treasury, will buy as much as $20 billion of bonds issued by the housing finance agencies.
U.S. Consumer Credit Fell By $12 Billion in August U.S. consumer credit fell in August for a seventh straight month as banks maintained restrictive terms and job losses made households reluctant to borrow. Consumer credit fell by $12 billion, or 5.8 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $19 billion in July, less than previously estimated. The series of declines is the longest since 1991.
For Gun-Shy Consumers, Debit Is Replacing Credit The recession has cooled the American ardor for living on credit. After years of saying "Charge it," consumers are more often paying with their debit cards instead. Worry about jobs, fear of fluctuating interest rates on credit cards and wariness about spending too much are contributing to the change.
Used car prices climb to record high in September Used vehicle prices shot to an all-time high last month, spurred by falling inventories, according to a closely watched barometer of the second-hand car business. For those in the market for a used car, that's not necessarily bad news, said Tom Webb, chief economist at Manheim Consulting, which produces the index of the used car market. That's because the value of trade-in vehicles are fetching record prices, he said.
Oil Rises After Unexpected Decline in U.S. Crude Stockpiles Oil rose in New York after a government report showed an unexpected decline in U.S. crude supplies, boosting optimism about a demand recovery in the biggest energy-consuming nation. Oil pared yesterday’s 1.9 percent decline after the Energy Information Administration said crude stockpiles fell 978,000 barrels last week. A 2 million-barrel gain was forecast in a Bloomberg analyst survey. Alcoa Inc., the first Dow Jones Industrial Average company to report for the three months through Sept. 30, posted an unexpected third-quarter profit.
CBO: Finance Committee Health Bill Subsidizes Health Insurance for Americans Up to 400% of Poverty Level But Still Reduces Deficit by $81 Billion A “preliminary analysis” of the health care bill in the Senate Finance Committee by the Congressional Budget Office (CBO) shows that while the plan would subsidize the purchase of health insurance for people making up to 400 percent of the federal poverty level, the plan would also reduce the federal deficit by $81 billion over 10 years through tax increases, financial penalties, and savings apparently inherent in the plan’s design.
Senate health bill cost put at $829 billion The U.S. Senate Finance Committee's health bill would cost $829 billion and cut the deficit by $81 billion over 10 years, budget analysts said on Wednesday in a boost to President Barack Obama's efforts to reform health care. In a report that could help smooth the way for committee approval, the non-partisan Congressional Budget Office said the bill would reduce the number of uninsured people in the United States by about 29 million by the year 2019.
Medicaid Fraud More than $63 Million in 5 States Alone, GAO Report Finds A California man took on the name of a dead person to receive taxpayer-funded health care for more than three years, charging $200,000 to the Medicaid system, including $2,870 to buy controlled substances under an assumed identity. A Houston-area physician’s assistant kept on signing the name of the doctor who once employed her after that doctor had died. The prescriptions, many of which were also covered by Medicaid, were also for prescription pain killers.
Threat of next world war may be in cyberspace: UN The next world war could take place in cyberspace, the UN telecommunications agency chief warned Tuesday as experts called for action to stamp out cyber attacks. "The next world war could happen in cyberspace and that would be a catastrophe. We have to make sure that all countries understand that in that war, there is no such thing as a superpower," Hamadoun Toure said. "Loss of vital networks would quickly cripple any nation, and none is immune to cyberattack," added the secretary-general of the International Telecommunications Union during the ITU's Telecom World 2009 fair in Geneva.
US on hunt for 1,000 cyber security experts National Cyber Security Alliance declares Oct as cyber security month Even as the United States is on hunt for 1,000 cyber security experts in a bid to strengthen its public sector systems, a non-profit organization in the country has said that it would observe October as the National Cyber Security Awareness Month. The Department of Homeland Security (DHS) had been given the authority to hire the staff last week. DHS secretary of state Janet Napolitano said this new hiring authority would enable DHS to recruit the best cyber-analysts, developers and engineers in the world. "Effective cyber security requires all partners – individuals, communities, government entities and the private sector – to work together to protect our networks and strengthen our cyber-resiliency," Janet Napolitano said in a statement.
Massive Cyber Attacks on U.S. & British Military Communications What ya gonna do when the sats and computers go down? A primer in communications -urgent return to the past for communications back up. Yesterday on October 6, 2009 several acts of war against the U.S. and the U.K. were perpetrated and very few know about it. No it was not bullets, mortars, missiles, or even IEDS in Afghanistan or Iraq.......but the blows were none less telling in the world of 3 C's ........Command, Control, and Communications. Apparently, the entire National Communications Center capability to communicate went down at Andrews at least for enough of a duration to cause extreme consternation and a designation of RED. As many know, this is a vital Communications Center for the U.S. Military, Intelligence community, and the Commander In Chief. It going down caused numerous problems and no doubt many questions asked.
Presidential Powers During Cybersecurity Emergencies Our nation can be threatened not only by physical attacks on terra firma, but also in Cyberspace. Indeed, Cyber attacks could threaten all sorts of mission critical systems. For this reason, aides to Senator Jay Rockefeller reportedly have been working recently on a revised draft Senate bill that would give the President broad powers in the event of a Cybersecurity emergency, and that apparently would go so far as allowing the President to temporarily seize control over computer networks in the private sector.
NASA to bomb moon for water Lunar prospecting: Probe ready to touch moon water An enterprising robotic explorer will smash into the lunar frontier Friday in search of water ice hidden deep inside the darkest corners of the moon, spewing hundreds of thousands of pounds of dust high above the surface in a celestial event visible from Earth. Just four minutes will decide the outcome of three years of preparations, four months of space travel, and a $79 million investment put into the bold mission. Four minutes is the time that nine science instruments on the LCROSS probe will be able to directly study a cloud of dust thrown high above the moon by the impact of an empty Centaur rocket stage.
How to watch NASA’s big crash on the moon Rocket motor to smash into lunar south pole Friday to find hidden water ice Get ready for a unique cosmic collision! Early Friday morning, NASA's Lunar Crater Observation and Sensing Satellite will end its mission with a bang — literally. The probe — also known by its acronym, LCROSS — is currently carrying along the upper stage of the rocket that launched it on its way to the moon on June 18. NASA's game plan is to send that spent rocket motor on a course to smash into the lunar surface. Not just anywhere on the lunar surface, but to a thoroughly scrutinized crater called Cabeus that lies near the moon's south pole and is enveloped in perpetual darkness. The hoped-for result will be to find hidden water frozen inside the crater.
Russian Mercs: We’ll Out-Blackwater Blackwater The “Baghdad bubble” for private security firms may have burst long ago, but a company based in Russia still wants a piece of the action. That, at least, is how satellite channel Russia Today presents the Oryol anti-terror center, a group of former Russian soldiers who want to give Blackwater Xe a run for their money in Iraq. Has anyone mentioned to these guys that Blackwater is on the way out? It’s always worth watching Russia Today for laughs — and to remind ourselves how Al-Hurra probably looks like to Arab audiences. Plenty of Russians, in fact, are already “on the circuit” in Iraq. Back in 2005, I even spent time on the road in Baghdad with a team of ex-soldiers from the former Soviet Union. They were employed by Erinys, a British private security firm. The team leader was French; the management was British and South African; the drivers and shooters were from post-Soviet militaries. They were all experienced soldiers, although the country manager noted one slight problem: “On contact, everyone reverts to their native language.”
Russian anti-terror team to break Blackwater example in Iraq?
Latvia on the brink Troubles for Baltic economy might not spread -- but could It's never good news when a government bond auction fails. It's particularly bad news when an auction fails for a note maturing in just six months. And it's really bad news when there isn't any bid at all. Yet that's what happened Wednesday when Latvia tried to sell close to $17 million of paper. It's not hard to figure out why. The Baltic country is squabbling with Western -- mostly Swedish -- leaders over spending cuts, and it's a very real possibility that the country may be forced to devalue its euro-pegged currency if emergency global funds don't arrive.
Latvia's Woes Rise as Auction Fails Central Bank Warns of 'Wave of Distrust' Limiting a Recovery Slow progress on budget cuts and a government suggestion to let homeowners get out of mortgages more easily are causing "another wave of distrust" to roll over Latvia that could have worrying consequences, the Baltic nation's central bank warned Wednesday. The criticism came as a government bond auction failed to attract buyers, and worries about the economy weighed on the currencies of Sweden, whose banks are Latvia's major lenders, as well as other countries in the region.
Gates Hints at More Secret Nuke Sites in Iran Does Bob Gates know about more secret Iranian nuclear sites? It certainly sounds like it. Speaking alongside Secretary of State Hillary Clinton last night at a CNN/George Washington University forum, Gates addressed a wide variety of topics, the Secretary of Defense dropped what seemed to be a big hint that the United States knows much more about the Iranian nuclear program than the Iranians might think. Asked about his faith in potential verification protocols for Iran’s nuclear program, Gates commented that the administration’s attitudes towards Iran in the negotiations process would hinge on “what nuclear sites might they be prepared to be transparent about that have not been declared at this point.”
Climate a Bigger Challenge Than Recession, China Says China, the world’s biggest polluter, said climate change is a challenge that it shares with the world and is a more formidable one than the global recession. The world’s third-largest economy is committed to helping fight climate change and has taken “responsible” steps, Vice Minister of Science and Technology Liu Yanhua said at a conference in Hong Kong today, reiterating the stance of President Hu Jintao.
1/4 Marc Faber No Revival in US, Big crisis ahead, Oct 3, 2009
2/4 Marc Faber No Revival in US, Big crisis ahead, Oct 3, 2009
3/4 Marc Faber No Revival in US, Big crisis ahead, Oct 3, 2009
4/4 Marc Faber No Revival in US, Big crisis ahead, Oct 3, 2009
World War Three Anybody? When Alan Greenspan predicted three percent economic growth showing up in the reported figures for the third quarter of 2009, did he mean executive compensation packages? Maybe the lesson here is: don't ask a crackhead to predict the future supply of crack. Greenspan's greatest success may be to drive economics into such disrepute that it will be cut loose from the universities and only be taught by mail order or internet subscription from the same outfits that offer PhD's in astrology. That is, before the universities themselves go broke. . . . . . . . . Something's got to give in the remaining three months of 2009.
Asset Reflation Does Not Signal Recovery for U.S.'s Collapsed Economy If all the highly informed people who’ve been waging a war the past six months against rising stock prices would just step back for a moment, they would perhaps understand better that their macro views are supported, not negated, by asset reflation. For it’s this asset reflation that hints at the singular and doomed strategy of our monetary policy, and its overlay on our collapsed economy.
UN calls for new reserve currency The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit. "Important progress in managing imbalances can be made by reducing the reserve currency country?s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said. Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."
China calls time on dollar hegemony You can date the end of dollar hegemony from China's decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners. Beijing does not need to raise money abroad since it has $2 trillion in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency. "It's the tolling of the bell," said Michael Power from Investec Asset Management. "We are only beginning to grasp the enormity and historical significance of what has happened." It is this shift in China and other parts of rising Asia and Latin America that threatens dollar domination, not the pricing of oil contracts. The markets were rattled yesterday by reports – since denied – that China, France, Japan, Russia, and Gulf states were plotting to replace the Greenback as the currency for commodity sales, but it makes little difference whether crude is sold in dollars, euros, or Venetian Ducats.
China Discusses Reserves at IMF Meeting, EmergingMarkets Says China is holding talks with the International Monetary Fund concerning the management of global currency reserves, EmergingMarkets magazine reported, citing Liu Mingkang, chairman of China Banking Regulatory Commission. The government and the People’s Bank of China are having some “good conversations with the IMF” at its annual meeting in Istanbul regarding the reserves issue, the magazine cited Liu as saying in an interview. Liu declined to comment on the possible outcome, the magazine said on its Web site.
Don't Blame China Rather Than Point Fingers, U.S. Needs to Overhaul Its Own Financial System The time is here for our nation to actually do something about the recent financial crisis -- that is, do something to prevent it from happening again. But instead, many people are finding it easier to pass the buck than to, say, regulate the financial sector effectively. The recent Group of 20 conference in Pittsburgh was replete with talk about "global imbalances," which means -- in the spirit of the "South Park" movie -- "blame China!"
SDRs and the Endgame for the US Dollar Reserve Our take on this is that there is NO question that the US dollar will lose its reserve currency, and the Treasury and the Fed are aware of this. The game being played now on the international stage, largely behind the scenes until recently, is with regard to what will take its place and how it will be implemented. The talking heads on US financial television are largely talking their books even today, taking the position that nothing can replace the US dollar for the next fifteen years at least (Robert Altman-Bloomberg). Most of the anchors and house commentators are just shallow, nervous in a giggly sort of way, and astoundingly naive which may be attributed to their relative youth and lack of relevant experience in anything beyond looking good and being often wrong but never in doubt.
Max Keiser: Dollar to be buried way before 2018
Saudi Bank Governor Denies Talks to Replace Dollar Saudi Arabia hasn’t held talks with China and other countries on dropping the dollar as the currency for pricing oil, Saudi Central Bank Governor Muhammad al-Jasser said, denying a report in the U.K.’s Independent newspaper. The Independent report is “absolutely incorrect” and there has been “absolutely nothing” of that nature discussed between Saudi Arabia, the world’s biggest oil exporter, and other countries, al-Jasser told reporters in Istanbul, where he’s attending an International Monetary Fund summit. The dollar pared losses after his remarks.
U.S. Dollar Collapse Hysteria Robert Fisk lit the fuse with his hyperventilating narrative which appeared in Tuesday's UK Independent titled, "The Demise of the Dollar". The article went viral overnight spreading to every musty corner of the Internet and sending gold skyrocketing to $1,026 per oz. Now every doomsday website in cyber-world has headlined Fisk's "shocker" and the blogs are clogged with the frenzied commentary of bunker-dwelling survivalists and goldbugs who're certain that the world as we know it is about to end.
The G20: Time for a U.S. Attitude Adjustment There was an interesting article in Tuesday’s Financial Times. It was interesting because it has always seemed to me that the one who writes the agenda for a meeting is the one that most often ends up controlling the results that come out of that meeting. And, according to my reading of Gideon Rachman’s comments, that is exactly what Europe is trying to do. The thrust of Rachman’s argument ties in with my October 5 post, where I discussed the changing nature of the world’s economic and financial relationships as observed in the changes occurring within the G-20 (and the lessening of importance of the G-7) and the jockeying of nations for position within the World Bank and the International Monetary Fund.
New Report Crucifies IMF For Mismanaging The Crisis It's puzzling that Timothy Geithner has asked the International Monetary Fund (IMF) to be the world's economic watchdog for signs of the next investment bubble. That's because the IMF completely missed the last one. To make matters worse, according to a recent paper from The Center for Economic Policy and Research (CEPR), they even mismanaged their policy towards developing countries at the height of the financial crisis. This despite the organization having one of the largest economic research departments in the world.
IMF Reinvention Moves Forward The push to reinvent the International Monetary Fund took a significant step forward this week, with nations agreeing to a rough timetable to come up with plans to reform its governance and expand its role in the global economy. The agreements, reached during the IMF's semi-annual meeting in Istanbul that ends Wednesday, come as the mission of the 65-year-old Washington-based institution is being re-examined in the wake of the global financial crisis. The fund's 186 member nations agreed to draft a new and broader mandate for the fund before its meeting in Washington next spring. The nations also preliminarily agreed to reshape the fund's voting structure, promising a blueprint for giving more clout to emerging giants like Brazil and China by January 2011.
IMF Needs to Spot New Investment Bubbles: Geithner U.S. Treasury Secretary Timothy Geithner on Tuesday called on the International Monetary Fund to provide rigorous surveillance to spot new investment bubbles and keep country foreign exchange policies in line with goals to rebalance the global economy. In remarks prepared for delivery to the IMF and World Bank annual meetings here, Geithner said the IMF needed to help police economic and currency policies among the Group of 20 developed and emerging countries. "The IMF will need to be a truth-teller," Geithner said in the remarks, which were to be delivered by Treasury Acting Assistant Secretary Mark Sobel.
Is the World Conspiring Against the U.S. Dollar? It is not unusual to see the U.S. dollar down against the Canadian dollar, and other currencies, on a day when stock market indexes are rallying. In the old days of this stock market recovery, this action would be attributed to investors leaving the safety of U.S. Treasuries and embracing risk overseas. However, on Tuesday, the U.S. dollar’s downturn is being blamed on something a little scarier: The Independent newspaper has a scoop whose headline says it all: “The demise of the dollar.”
Is There Really a Global 'Cabal' Aiming to Dump the Dollar? British journalist Robert Fisk has published a rather sensational report in today’s The Independent that the Gulf Arab states are in secret discussions with China, Russia, Japan, and France on moves to dump the U.S. Dollar as the world’s chief trading currency. According to him: Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
How Far Has the Dollar Actually Fallen? . . . . The flight to the dollar during the panic began in the Summer of 2008 and ended in early 2009. As the panic subsided, other considerations such as interest rates took hold again and the dollar again began to weaken against the Euro. At the low point, it took nearly $1.60 to buy one Euro. Then, during the depths of the financial panic, it took only $1.25 to buy one Euro, but now that same Euro would cost $1.46 or so. What’s Next? The big difficulty we face now is that the economy is weak and the Fed likes to have low interest rates to help the economy begin to grow again. Low interest rates are helpful to overall economic activity, but, as you have seen, lower rates generally hurt the dollar. If we wanted to help out the weak dollar, the response would ideally be to raise interest rates. However, due to serious weakness in the economy, the Fed is hampered in its ability to respond to this situation and I believe it will opt to keep very low interest rates in order to promote economic growth.
Dollar trims losses after UK media report denial The dollar jumped across the board on Tuesday, trimming losses after Saudi and Russian authorities denied a media report saying Gulf Arab states were considering using currencies other than the dollar to trade oil. The euro EUR= slipped to around $1.4705 compared with around $1.4730 before the comments [ID:nFCC000043]. Still, the pair traded 0.4 percent higher on the day, after traders initially sold the U.S. currency in reaction to the report in the UK's Independent newspaper. The dollar index .DXY jumped to around 76.445 from around 76.3 before the comments.
Dollar Hegemony Is Ending Sudden Debt Public debt has increased by $2.5 trillion since just the end of 2007, when the current Great Recession is deemed to have started. It now stands at $11.7 trillion and represents 83% of GDP, up from 62% at the end of 2007. It stands to reason, therefore, that the entire world is closely re-examining the status of the dollar as its global reserve currency. Those that are most directly affected by such a flood of new dollars (remember, more debt = more dollars) are commodity producers who price their goods in our currency, chief amongst them the oil producers.
Jim Rogers Talks About Several Currencies
Gold bullion roars to dollar record But listed gold equities remain well below levels seen in early 2008, and conservative analysts see a weak dollar as gold's booster, for now. Dollar gold prices roared to record levels, above US $1,040 an ounce, on Tuesday, as the dollar sustained renewed pressure after Australia unexpectedly raised interest rates. With early signals that other developed economies may raise interest rates from multi decade, and even record, lows, investors are betting that inflation rates will rise, underpinning an ongoing switch of funds to hard assets such as gold bullion.
Soon, gold at $1600 per ounce! Those who are wondering where is gold headed for, here is the answer. The yellow metal is all set to hit $1,600 mark in the coming months. That is if the predictions of the head of one of world’s biggest gold mining companies come true. After watching the gold price movement, Nick Holland, chief executive of South Africa’s Gold Fields, world’s No. 4 gold producer, said the yellow metal is set to cross $1600 an ounce in the next six to 18 months.
Gold Price: How High, How Fast? The breaking of the old record high price for gold Tuesday was no surprise to long-time critics of American, and thus global, financial policy. Regardless of how much spin you can generate from a compromised media, the laws of supply and demand re-assert themselves inevitably. Will this bring the mainstream investor crowd any closer to the understanding that the gold standard is precisely that, and has not been diminished but merely obscured by the powerful marketing forces of the United States Treasury and her feckless sister, The United States Federal Reserve?
U.S. gold hits record high of $1,043.20 an ounce U.S. gold futures rose to an all-time high of $1,043.20 an ounce on Tuesday as a weakened U.S. currency prompted investors to buy gold as a hedge against dollar-denominated portfolios. That bested the previous record of $1,033.90 for COMEX gold on a second-month continuation basis set earlier this morning.
Gold hits record $1,045 on report of dollar's demise Australia rate hike, also pressures dollar; silver jumps 4.6% Gold finished at a new record closing level on Tuesday, after earlier hitting a record intraday high of $1,045 an ounce, as the dollar slumped on a report suggesting the end of dollar-based oil trading and as Australia hiked interest rates. A report in the U.K.'s Independent newspaper said that Gulf-area oil producers, along with China, Russia, Japan and France, are planning to eventually end dollar-based oil pricing.
Gold sets record high above $1,040 an ounce Gold surged to a record high above $1,040 an ounce Tuesday, as investors piled into the metal to preserve the value of their dollar-denominated assets against erosion by a weakening dollar and inflation. Both spot gold prices and U.S. gold futures have benefited from a convergence of factors, including technical buying, a report that some oil producers could switch to other currencies to price their crude and worries about the potential inflation impact of unprecedented global fiscal stimulus.
Price surge carries gold to new records and beyond Several factors have contributed to today's surge in the gold price which shot it past its previous U.S.dollar record. A confluence of factors seems to have helped propel the gold price to new nominal records - although still so far well below its peak in real terms of the late 1970s. But when gold peaked back then it spiked and fell back quickly. This time around there does appear to be much more solidity behind the rise, although today's run-up has the potential of being a spike with a fairly rapid correction to follow. The only question in this respect would be how far the spike has yet to go, and how deep the correction may be. Even so, such a correction may be shortlived in the current global economic climate.
Gold Values Up, Financial System Down Those who read the contrarian and alternative financial commentators may well be forgiven for wondering why the financial doomsday oft predicted hasn’t quite materialized. The financial crisis heralded by the crash in October 2008, preceded by the demise of Bear Stearns and Lehman Brothers, among others, by all accounts was the tip of the iceberg and the advent of the Great Depression of our age.
Gold soars to record on dollar standard talk A report raises doubts about the greenback's place in the oil market. Investors flock to gold and oil as the outlook for the U.S. currency dims. Gold surged to a record high Tuesday after a news report sparked widespread talk about the U.S. dollar being unseated as the currency for trading oil. Crude finished slightly higher. A report in Britain's daily newspaper The Independent said oil-exporting countries in the Middle East and big energy consumers such as China, Russia, Japan and France were working on a plan to end the practice of buying and selling crude in dollars. Instead, the U.S. dollar would be replaced with a basket of currencies, including the Japanese yen, Chinese yuan, the euro and gold.
Iran and the Bomb: Gold’s Blast-off? Gold prices will surge to unprecedented new highs in the event of a military showdown between Western powers and Iran. This is the consensus among various leading investment industry forecasters. Among them is Bob Moriarty, the editor of the popular mining investment news and analysis web site, www.321gold.com. A fighter pilot during the Vietnam War, he has some first-hand experience with America’s history in recent decades of embarking upon well-intended but ultimately protracted, unrewarding and unpopular military campaigns.
Put 10% of your assets into Gold… The economy imploded a year ago. It was traumatic and devastating to many, but it wasn’t really surprising to serious gold investors. . . . . . .
Debt cannot be papered over.
Inflated currency is no substitute for gold.
A personal portfolio should be diversified beyond stocks.
Consumer confidence cannot be manipulated indefinitely.
Politicians can’t ensure prosperity for this generation by bankrupting the next.
Gold Price Prediction The breaking of the old record high price for gold today is no surprise to long-time critics of American and thus global financial policy. Regardless of how much spin you can generate from a compromised media, the laws of supply and demand re-assert themselves inevitably. Will this bring the mainstream investor crowd any closer to the understanding that the gold standard is precisely that, and has not been diminished but merely obscured by the powerful marketing forces of the United States Treasury and her feckless whoring sister, The United States Federal Reserve?
Report from Europe: Golden Bulls Rule The slumbering bull went walkabout yesterday ahead of the kickoff in earning season as the cheerleaders of the V shaped recovery heralded the pickup in the US service sector. Indeed in the past 24 hours the news flow has certainly had a better tone, as evident in the bounce in US and European equity markets. The gain in services ISM to 50.9 means it is above 50 for the first time in 12 months. In terms of the details, business activity and new orders posted the strongest gains. The employment index, however, remained below 50 at 44.3. So the data remains equivocal, bearing in mind the Nonfarm Payrolls and the Manufacturing disappointments last week.
Threat to Petrodollar Sees Gold Surge to Near Record Highs The dollar came under sustained pressure as the Independent of London’s Robert Fisk broke a story stating that a group of Arab countries, Russia, France, Japan and China and others were in secret discussions to use a basket of currencies and gold to replace the dollar in order to trade oil. Although some officials have denied this report, the fact that it is mentioned at all raises the question as to how much longer the dollar will remain the global reserve currency. According to Chinese banking sources, the transitional currency in the move away from dollars, may well be gold.
Dollar's pain sets record gold up for more gains Record high gold prices may look stretched in the short-term but the dollar's decline and the specter of inflation are painting a bullish picture for prices later this year and next. The precious metal jumped to a high of $1,043.45 an ounce as the U.S. currency slipped against a basket of major currencies .DXY, sparking fresh interest in gold as an alternative asset.
Dollar Falls After Australia Unexpectedly Raises Interest Rates The dollar declined to its lowest level in almost two weeks versus the euro after Australia’s central bank unexpectedly raised interest rates on signs of economic strength, spurring demand for higher-yielding assets. Australia’s currency was the biggest gainer versus the dollar among the 16 most-traded currencies tracked by Bloomberg as the Reserve Bank lifted the benchmark cash target to 3.25 percent and signaled further increases. Gold futures climbed to a record high and crude oil advanced as the dollar’s decline boosted commodities as an inflation hedge.
Is Hyperinflation on the Way? On September 25th the Wall St. Journal published an opinion piece by Kevin M. Warsh, a member of the Federal Reserve Board of Governors since 2006, calling for a preemptive strike by the Fed at the roaring inflation he believes the country is at risk of due to Ben Bernanke’s easy money policies. The media picked up on this immediately as Weimar Republic-like debasement of the U.S. Dollar due to hyperinflation was sure to get the public’s attention. For those who weren’t around pushing wheelbarrows full of Marks at the time, what you could buy with 1 gold Mark at the start of 1918 took 1BN paper Marks by the end of 1923.
Australia becomes first G20 nation to increase interest ratesThe Reserve Bank of Australia yesterday became the first Western central bank to lift interest rates since the onset of the financial crisis, surprising economists with a quarter of a percentage point increase in the cost of borrowing. The central bank's move, which had not been expected so early, may ignite suspicions that other countries will soon tighten monetary policy. The
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