Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 02.08.2010
Greek Ouzo crisis escalates into global margin call as confidence ebbs By Ambrose Evans-Pritchard - Telegraph -- For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action. Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity - while admirable in one sense - is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes.
Is Tim Geithner Paying Attention To The Global Economy? By Peter Boone and Simon Johnson - Baseline Scenario In an interview that will air Sunday on ABC, Treasury Secretary Tim Geithner says, ""We have much, much lower risk of (a double-dip recession) today than at any time over the last 12 months or so … We are in an economy that was growing at the rate of almost 6 percent of GDP in the fourth quarter of last year. The most rapid rate in six years. So we are beginning the process of healing.". . . . . . . . But the problems now spreading from Greece to Spain, Portugal, Ireland and even Italy portend major trouble ahead for the US in the second half of this year - particularly because our banks remain in such weak shape.
Europe Risks Another Global Depression By Simon Johnson - Baseline Scenario The entirely pointless G7 meeting this weekend only served to underline the fact that Europe is again entering a serious economic crisis. At the end of the meeting yesterday, Treasury Secretary Tim Geithner told reporters, "I just want to underscore they made it clear to us, they the European authorities, that they will manage this [the Greek debt crisis] with great care."
China and U.S. heading for a cold war? What impact on gold? Author: Lawrence Williams - Mineweb LONDON - Chinese and U.S relations are at a low ebb and continuing to deteriorate fast so it seems and an article in today's Sunday Times in London says many Chinese hawks are promoting a cold war. Indeed things appear to have got so bad that military leaders in China are preparing for the possibility of a limited armed conflict, possibly over Taiwan or Korea, although this seems very unlikely.
China's hawks demand cold war on the US Michael Sheridan - Times Online MORE than half of Chinese people questioned in a poll believe China and America are heading for a new "cold war". The finding came after battles over Taiwan, Tibet, trade, climate change, internet freedom and human rights which have poisoned relations in the three months since President Barack Obama made a fruitless visit to Beijing. According to diplomatic sources, a rancorous postmortem examination is under way inside the US government, led by officials who think the president was badly advised and was made to appear weak.
Dollar will doom, Gold will boom: Jim Sinclair By Jim Sinclair - Commodity Online The Euro is down again today on the sovereign debt concerns focusing on a debt to GDP percentage. The nations presently in focus of this have been quite impolitely nicknamed PIIGS. The PIIGS are Portugal, Italy, Ireland, Greece and Spain. Although this means little to floor traders, Forex speculators of F-TV guess what nation stands directly in the middle of the PIGS on the debt to GDP percentage? Yes, you are right, the USA. . . . So what does this mean for the future? Gold will be elected the currency of choice.
Gold price hinges on money supply Gold price has a positive correlation with money supply growth, according to a new empirical study produced by the World Gold Council, a fact that is extremely pertinent in today's environment of elevated money supply growth. Moreover, money supply growth tends to precede gold price increases by 6 to 9 months.
Inflation in Recent Monetary History Recorded at the Mises Institute Supporters Summit, 31 October 2008; Auburn, Alabama. Joseph Salerno is a senior fellow at Ludwig von Mises Institute, professor of economics at Pace University, and editor of the 'Quarterly Journal of Austrian Economics'.
Are banks creating gold price bubble? By David Lew - Commodity Online Two months after gold posted the historic high price of $1,227 per ounce, bullion investors have been caught in pains of losing money for every ounce of the yellow metal. On Thursday, gold plunged to its biggest one-day loss in 16 months. The yellow metal fell 4.4% in volatile trade, plunging below $1,060 an ounce. . . . . . . . According to Ernst and Young, which employs 144,000 people around the world, gold price will continue to rise in the long-term, reaching as much as $2,500 per ounce within the next two years. "The underlying factors driving up gold prices remain in play and will continue to do so for some time, meaning that the precious metal will remain an attractive proposition. Gold prices will remain high. The world is not out of trouble and inflationary pressures cannot be ignored," the investment bank said.
Why there is golden silence on IMF gold sale By David Lew - Commodity Online It is three months since India's central bank-the Reserve Bank of India (RBI)-bought 200 tonnes of gold from the International Monetary Fund (IMF) for an astronomical price of $1,045 per ounce. India's sudden decision to jump into the fray and purchase the yellow metal from IMF led to a historic surge in gold price.
All Currencies Are Suspect By: Gary - iSockAnalyst A comment on the blog last week got me to wondering. One of our Canadian friends made the comment that he's made nothing off of gold because the Canadian dollar has been strong. I think he was insinuating that the price of gold was only rising in the US and that only because the Fed is destroying the US dollar. . . . . . . . . Every country in the world is printing at a furious rate. No one is innocent.
Ron Paul Warns of Social Unrest and Martial Law
Jilted: The Looming Dollar Disaster Robert Morley - theTrumpet.com The Fed faces a choice: suffocate the economy or destroy the dollar. Foreign lenders head for the door. Most Americans have no idea what is happening to the economy. Many people think America is emerging from a vicious little recession, and will soon be back on the road to prosperity. America always has, so it always will, is the common reasoning. Yet this time, things may turn out very different.
Social Obligations Will Lead Western States to Default Mark Faber: RT - Business -- The United States' top credit rating is at risk, with its triple 'A' status warned it may be downgraded if the economy grows at a slower pace than expected, says ratings agency Moody's. The US is predicted to have a $1.5 trillion deficit in 2010, which could be a real problem for the country's seemingly insatiable appetite for borrowing. Outspoken investor and writer Marc Faber doesn't give America much time before it goes bust.
Goldman's role in AIG collapse By Gretchen Morgenson, Louise Story - NY Times Testy Conflict With Goldman Helped Push A.I.G. to Edge Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months. A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world's biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.
Goldman CEO Blankfein gets $9M stock bonus Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein is getting a $9 million restricted stock bonus for 2009. Like other bank CEOs, he received no bonus in 2008. (AP) - Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein is getting a $9 million stock bonus for 2009. The bank said in a securities filing Friday that Mr. Blankfein will receive more than 58,000 shares of restricted stock. Mr. Blankfein can't cash in the shares for five years. He will receive no cash as part of his bonus.
J.P. Morgan gives Dimon $16M stock bonus After receiving no bonus in 2008, J.P. Morgan Chase & Co. Chief Executive Jamie Dimon is taking home a stock bonus worth nearly $16 million for his leadership role. AP) - J.P. Morgan Chase & Co. Chief Executive Jamie Dimon is getting a stock bonus valued at nearly $16 million for 2009 after steering the big bank through the aftermath of the financial crisis.
US SEC's Schapiro: Considering Short Sale Restrictons in Coming Weeks WASHINGTON (MNI) - The Securities and Exchange Commission will consider proposals to restrict short selling "in coming weeks," Chairman Mary Schapiro said Friday. She added her agency is not done yet with the reform of money market funds, and will examine the benefits of switching to floating net asset values from the current stable regime in particular. In a speech titled "Looking Ahead and Moving Forward" at the "SEC Speaks" event organized by the Practising Law Institute, Schapiro also said the Commission is looking at other possible reforms for the money market fund regulatory framework, echoing recent comments she made at an open meeting dedicated to the topic.
Smashing Myths and Restoring Sound Money
Could Ben Bernanke Be a CEO? By Vedran Vuk, Casey Research Ben Bernanke has got to be laughing it up after being reappointed to another term as Federal Reserve chairman. What else could we expect from the ex-lawyers and lifetime Beltway bandits voting on global monetary policy? As he starts his second term, I'm once again reminded about how supremely unqualified this man is for the job. Prior to becoming Fed chairman, Ben Bernanke basically had zero experience outside academia. His resume only includes three full-time years working for the Federal Reserve and eight months on George W. Bush's Council of Economic Advisors. The other 23 years of his career were spent teaching college.
Geithner: Big deficits 'will never' harm U.S. credit rating Associated Press - The Examiner WASHINGTON - Treasury Secretary Timothy Geithner says the U.S. government "will never" lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.
No double-dip slump but recovery slow: Geithner WASHINGTON (Reuters) - The risk the U.S. economy will slip back into recession is lower now than at any time in the past year, Treasury Secretary Timothy Geithner said on Sunday, while conceding that recovery will be slow and uneven. In an interview on ABC News' "This Week", Geithner said the U.S. economy expanded at nearly a 6 percent annual rate in the fourth quarter of 2009 and said the economy was definitely "healing" after the financial crisis that drove it into recession in late 2007. "This is going to take a while, and it's going to be uneven," Geithner said in an interview taped before leaving for the Canadian Arctic on Friday to attend a meeting of Group of Seven finance ministers and central bankers in Iqaluit, capital of a vast native Inuit territory called Nunavut.
Bankers Visit Members of Congress on an Image-Repair Mission By Jim Kuhnhenn -- Washington (AP) - Chief executives at some of the biggest financial institutions are on a mission to repair their image with Congress and the public, part of a strategy to gain more influence over legislation that would overhaul financial regulations and intrude further into their business.
Nouriel Roubini CNN Money From Davos
Group of 7 Vows to Keep Cash Flowing By Sewell Chan - NY Times Finance ministers from seven of the world's biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments. "We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established," Alistair Darling, Britain's chancellor of the Exchequer, said in Iqaluit, Nunavut, where finance ministers and central bankers from the Group of 7 nations were meeting. The European debt crisis, and its spread from Greece to other countries in the euro zone like Portugal, Spain and Italy, were a focus of the two-day talks.
'Pay option' mortgages could swell foreclosures New wave of defaults likely as risky loans reset to sharply higher payments By John W. Schoen - msnbc.com -- Some time after Sharren McGarry went to work as a mortgage consultant at Wachovia's Stuart, Fla., branch in July 2007, she and her colleagues were directed to market a mortgage called the "Pick A Pay" loan. Sales commissions on the product were double the rates for conventional mortgages, and she was required to make sure nearly half the loans she sold were "Pick A Pay," she said.
The second wave of mortgage defaults and foreclosures will hit the economy this year Bob Chapman - International Forecaster -- As we have been forecasting for the last two years, the second wave of mortgage defaults and foreclosures will hit the economy this year. Not only will we have failure in prime loans and option-arm loans, but we are faced with a new crop of subprime and ALT-A loans put into motion by Fannie Mae, Freddie Mac, Ginnie Mae and FHA. In addition, we find it of great interest that the FHA is changing the rules to purchase homes. That, of course, means less homes will be purchased. The incidence of unemployment may be lessening, but it isn't going away. Those of you who keep your ear to the ground know that real unemployment is 22.5% and in cities like Detroit it is somewhere near 45 to 50 percent. This is the result of free trade, globalization, offshoring and outsourcing.
CFR: When the Fed Stops Monetizing US Sovereign Debt... JESSE'S CAFÉ AMÉRICAIN The people at the Council on Foreign Relations speculate that US interest rates on Treasury debt will be increasing around the end of the first quarter if the Fed discountinues its monetization of mortgage debt. As the Fed has essentially purchased ALL new US Treasury issuance since 2009, that seems to be a reasonable bet. "The Federal Reserve plans to stop buying securities issued by government housing loan agencies Fannie Mae and Freddie Mac by the end of the first quarter.
It Is Now Mathematically Impossible To Pay Off The U.S. National Debt A lot of people are very upset about the rapidly increasing U.S. national debt these days and they are demanding a solution. What they don't realize is that there simply is not a solution under the current U.S. financial system. It is now mathematically impossible for the U.S. government to pay off the U.S. national debt. You see, the truth is that the U.S. government now owes more dollars than actually exist. If the U.S. government went out today and took every single penny from every single American bank, business and taxpayer, they still would not be able to pay off the national debt. And if they did that, obviously American society would stop functioning because nobody would have any money to buy or sell anything. And the U.S. government would still be massively in debt.
More debt, please.
Loans for Green Homes By Bob Tedeschi - NY Times BORROWERS looking to make energy upgrades in their homes that will lower utility bills, along with their environmental impact, may soon find additional options available to them. Fannie Mae, the government-backed company that sets lending standards for mortgages, said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements. And EnergyStar, a joint effort of the Department of Energy and the Environmental Protection Agency, is expected to introduce borrower incentives in New York, after running pilot programs in Colorado, Maine and Pennsylvania.
The Super-Sized Census Boondoggle By Michelle Malkin via CNS News If only the federal government were as responsible with our money as Pepsi is with theirs. The soda giant has been in the Super Bowl ad business for more than two decades. But this year, Pepsi determined it was economically unwise to pay $3 million for a 30-second spot. So, who's foolish enough to pay for Super Bowl gold-plated airtime? You and me and Washington, D.C. The U.S. Census Bureau will squander $2.5 million on a half-minute Super Bowl ad starring D-list celebrity Ed Begley Jr., plus two pre-game blurbs and 12-second "vignettes" featuring Super Bowl anchor James Brown. It's a drop in the census boondoggle bucket (otherwise known as the tax-subsidized National Democratic Future Voter Outreach Drive).
Why Politics Is Stuck in the Middle By Tyler Cowen - NY Times MARKET competition, under the proper circumstances, has the power to make a business better serve its customers. Cellphone companies, for example, compete via cheaper prices, clearer connections and better apps. Political competition, though no less vigorous, is conducted on very different terms - and often ends up stifling innovation instead of encouraging it.
Prepare for the Worst: Ron Paul Presented by Congressman Ron Paul at "The Failure of the Keynesian State," the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 23 January 2010. Includes introductory remarks by Mises Institute president Douglas E. French, and by Institute founder and chairman Llewellyn H. Rockwell, Jr..
Public-sector unions bleed taxpayers By: Michael Barone - The Examiner Growing up in Michigan in the heyday of the United Auto Workers, I long assumed that labor unions were part of the natural order of things. That's no longer clear. Last month the Labor Department reported that private-sector unions lost 834,000 members last year and now represent only 7.2 percent of private-sector employees. That's down from the all-time peak of 36 percent in 1953 and '54. But union membership is still growing in the public sector. Last year 37.4 percent of public-sector employees were union members. That percentage was down near zero in the 1950s. For the first time in history, a majority of union members are government employees.
Retirement Armageddon by Gary North - LewRockwell.com I have just posted a video of my 90-minute seminar: "Retirement Armageddon." It presents the background for a series of nasty surprises. For those of you who don't have time to watch a 90-minute video, let me summarize its implications. The U.S. government has a nasty surprise for tens of millions of retirees: a now-empty piggy bank. Two of them, actually: Social Security and Medicare. Congress will soon have a nasty surprise for voters: a larger deficit than announced to fill these now-empty piggy banks. The Federal Reserve System will also have a nasty surprise for investors: newly created digital money to fill up the empty piggy banks when the Treasury cannot sell any more debt at low interest rates.
Palin, TEA Party, won't 'sit down, shut up' by Mark Silva -Tribune's Washington Bureau 'Absurd' not to consider a candidacy or some other big role, Palin says. Sarah Palin, fresh from an appearance at the TEA Party Convention where she derided President Barack Obama for "the politics of personality,'' insists that the nascent political organization is just fine without a leader. "It's much bigger than any charismatic guy with a TelePrompTer,'' says Palin, who read her speech from a text in Nashville on Saturday night and could hear people in the audience calling, "Run, Sarah, Run.'' "It is the people's movement. It's about the people and I'm proud to be a part of this.'' Yet, she says, "it would be absurd'' for her not to consider playing some leadership role, potentially as a candidate for president.
We borrow money from China?! - Boston, 1773
FBI wants records kept of Web sites visited by Declan McCullagh - CNET WASHINGTON--The FBI is pressing Internet service providers to record which Web sites customers visit and retain those logs for two years, a requirement that law enforcement believes could help it in investigations of child pornography and other serious crimes. FBI Director Robert Mueller supports storing Internet users' "origin and destination information," a bureau attorney said at a federal task force meeting on Thursday. As far back as a 2006 speech, Mueller had called for data retention on the part of Internet providers, and emphasized the point two years later when explicitly asking Congress to enact a law making it mandatory. But it had not been clear before that the FBI was asking companies to begin to keep logs of what Web sites are visited, which few if any currently do.
Cyber attacks a cover for internet-censorship in US
NFL commish plans more international games NFL Commissioner Roger Goodell says he'd like to see the league play more games in London, Mexico and possibly the Far East. (AP) - The NFL is still eyeing a return to Mexico. Arizona and San Francisco played the NFL's first regular-season game outside the United States in Mexico in 2005, followed two years later by a game in London between Miami and the New York Giants.
Turn your office expense reports into toilet paper by Tim Hornyak - CNET If you've ever dreamed of sticking all that paperwork on your desk where the sun don't shine, a Japanese machine can turn it all into toilet paper for you. Appropriately named White Goat, this device designed for the office can take regular letter-size paper or shreds, including that sales report you cursed until you were blue in the face, and transform it into nearly pristine rolls of white tissue. White Goat was developed by Oriental Co., a small shredder maker based in Kiryu City, north of Tokyo, which says it's the first product of its kind in the world.
Office Paper to Toilet Paper - White Goat Paper Recycle
Buy Now, Pay Later (Maybe With Your Allowance) By Randall Stross - NY Times BUSINESSES don't let 13-year-olds pay for purchases with a promise. At least they didn't before last week. A new payment option for anyone without a credit card or a debit card, no matter how young, has just become available. It's initially offered by FooPets and Puzzle Pirates, online game companies that are business partners of Kwedit.com, a start-up based in Mountain View, Calif. Minors as well as adults can buy items in the games with a "Kwedit Promise," which can be paid off later in a number of ways - with a credit or debit card, for example, or with cash sent in a mailer that Kwedit supplies.
Paypal stops India money transfers San Jose Business Journal PayPal, the online payment system owned by eBay Inc., has reportedly stopped allowing personal money transfers to and from India. TechCrunch and Moneylife report that the move has suddenly cut off the preferred payment method of thousands of Indian users, including man IT software coders working for companies in Silicon Valley and elsewhere around the world. Online forums and message boards are being filled with unhappy PayPal users who say that funds requested through PayPal India are being reversed to senders.
Debt crisis unsettles European economy By Anthony Faiola - Washington Post via MSNBC Investor panic threatens to drive up borrowing costs for nations worldwide LONDON - Governments in Athens, Madrid and Lisbon struggled on Friday to quell fears of a looming debt crisis in Europe that is pummeling the euro and rippling across global markets, as authorities vowed to impose fiscal austerity and plug their yawning budget deficits. The problem, however, is that investors don't appear to believe them.
Greece sticks to austerity plan: finance minister ATHENS (Reuters) - Greece will stick to its deficit-cutting plan and the first three months of the year will be crucial for regaining investors and EU confidence, the country's finance minister said in an interview on Sunday. "As far as the budget is concerned, every day is a crucial test for us. The monthly figures we release are scrutinized by the markets and the (EU) Commission, but the first quarter will be certainly crucial," Finance Minister George Papaconstantinou said in an interview published on Greek newspaper Ethnos. "The measures we have already announced will be implemented unswervingly and will pay off," he added.
Is it possible that Israel will join the European Union? Italian Prime Minister Silvio Berlusconi, who was on an official visit to Israel, said Monday that his "greatest desire" is to see Israel join the European Union. He wasn't the first to think of that idea. Javier Solana, the European Union's foreign policy chief said last year that his organization's ties with Israel are stronger than those with candidate country Croatia: "There is no country outside the European continent that has this type of relationship that Israel has with the European Union.
'Israel's obliteration is certain' By JPOST.com Staff Iran's supreme leader vows to "defend Palestinians due to their heartfelt beliefs." Iran's supreme leader Ayatollah Ali Khamenei said on Sunday the destruction of Israel was assured, while pledging to "defend Palestinians due to their heartfelt beliefs." "Israel is going downhill toward decline and fall and God willing its obliteration is certain," Khamenei said during a meeting with Islamic Jihad leader Ramadan Abdullah Shallah, according to the Teheran Times.
Chavez's Socialist Worker Militias Swell to 150,000 in Venezuela By Matt Cover (CNSNews.com) - Venezuela's socialist worker militias have grown to nearly 150,000 members since their formation in 2009. Organized by President Hugo Chavez in May 2009, the "workers' militias" are intended to allow Chavez's political party to assert control over key economic sectors. According to a Jan. 29 report in the Venezuelan El Universal newspaper -- translated by BBC Worldwide Monitoring - the ranks of Chavez's workers militias have swelled to around 150,000 members, most of whom work in "strategic" economic sectors, such as oil, electricity, transportation, and "basic companies."
USA Strongly Determined to Deploy Missiles as Near to Russia as Possible Pravda.ru -- Elements of the US missile defense system are to be put in operation in Romania (a country in Eastern Europe) already in 2015, an official spokesman for the US State Department said. Romania's decision to deploy SM-3 interceptor missiles on its territory was a "first step" in terms of the new anti-missile shield architecture, which would later also include ship-based interceptors in the Black Sea, US State Department spokesman Philip Crowley said. The choice that Romania made, will expand missile defense system in the south of Europe, Interfax reports. In addition, the USA continues negotiations with other countries of Europe - Poland, for example.
Thousands March in Tokyo for an End to U.S. Military Presence The voice of opposition is growing louder. Thousands of angry citizens from across Japan marched through the streets of Tokyo on January 30 to protest the continued U.S. military presence on Okinawa. Cabinet minister Mizuho Fukushima reassured the protesters that she would fight to get the military base off the island. Since the end of the Second World War, the U.S. has maintained a military presence in Japan. At present, there are around 47,000 U.S. soldiers stationed throughout the country, more than half of which are at the Futenma Air Station located on the southern island of Okinawa.
Iran's President Moves Ahead on Uranium Processing By Michael Slackman - NY Times CAIRO - Iran's president, Mahmoud Ahmadinejad, ordered the nation's atomic energy agency on Sunday to begin producing a special form of uranium that can be used to power a medical reactor in Tehran, but that could also move the country much closer to possessing fuel usable in nuclear weapons.
Iran ratchets up atom work despite sanctions threat TEHRAN (Reuters) - Iran's President Mahmoud Ahmadinejad gave instructions on Sunday for the production of higher-grade nuclear reactor fuel, prompting the United States and Germany to threaten carefully targeted new sanctions against Tehran. The head of Iran's Atomic Energy Organization said it would start producing uranium enriched to a level of 20 percent from Tuesday, state television reported. "We will hand over an official letter to the IAEA (International Atomic Energy Agency) tomorrow, informing the agency that we will start making 20 percent enriched fuel from Tuesday," Ali Akbar Salehi told Iran's Arabic-language state television station, al Alam.
US dismisses Iranian claims of nuclear agreement David Batty and agencies - guardian.co.uk Deal to reduce Iran's uranium stockpile in doubt as Tehran accused of stalling for time Western officials have disputed claims by Iran's foreign minister that his country is "approaching a final agreement" in its nuclear programme. Manouchehr Mottaki told a security conference in Munich yesterday that Iran was "serious" about making progress on a deal agreed in principle last October to swap most of its enriched uranium stockpile for fuel rods to use in nuclear power stations. Governments in Europe and the US fear the stockpile could be refined to make nuclear weapons.
Keynesian Predictions vs. American History Presented by Thomas E. Woods, Jr. at "The Failure of the Keynesian State," the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 23 January 2010. Includes introductory remarks by Mises Institute president Douglas E. French.
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