Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 02.01.2010
''Iran will deliver telling blow to global powers on Feb. 11th Iranian President Mahmoud Ahmadinejad says the nation will deliver a harsh blow to the "global arrogance" on this year's anniversary of the Islamic Revolution. "The Islamic Revolution opened a window to liberty for the human race, which was trapped in the dead ends of materialism," Ahmadinejad said during a cabinet meeting on Sunday.
US raises stakes on Iran by sending in ships and missiles Chris McGreal - Guardian Pentagon says Patriot shield will deter strike on American allies in the Gulf Tension between the US and Iran heightened dramatically today with the disclosure that Barack Obama is deploying a missile shield to protect American allies in the Gulf from attack by Tehran. The US is dispatching Patriot defensive missiles to four countries – Qatar, United Arab Emirates, Bahrain and Kuwait – and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.
U.S. expanding missile defenses in Gulf WASHINGTON (Reuters) - The United States has expanded land- and sea-based missile defense systems in and around the Gulf to counter what it sees as Iran's growing missile threat, U.S. officials said. The deployments include expanded land-based Patriot defensive missile installations in Kuwait, Qatar, UAE and Bahrain, as well as Navy ships with missile defense systems in and around the Mediterranean, officials said. General David Petraeus, who as head of U.S. Central Command is responsible for military operations across the Middle East, said this month that the United States has stationed eight Patriot missile batteries in four Gulf countries, which he did not identify.
US boosts missile presence in Gulf as warning to Iran By James Sturcke - Guardian Pentagon expands Patriot missile programme across Middle East after Tehran repeatedly spurns hand of diplomacy The Obama administration is intensifying pressure on Iran by increasing its missile defences in the Middle East to defend against potential missile strikes in the region by Tehran, it emerged today. The US military has boosted the capability of land-based Patriot defensive missiles in several Arab nations in the Gulf, and one official told the Associated Press the navy was also increasing the presence of ships capable of knocking out hostile missiles in flight
Fears that US missiles move may be exploited by Iran's hardlinersDeployment may strengthen repressive regime in Tehran and could lead to action against US interests in region By Robert Tait - Guardian - Iran greeted news of the US plans to station missile defences in neighbouring Arab states with a stony official silence today. While the development went unreported by the two official news agencies, IRNA and Fars, the closest thing to a government response was a comment from a hardline MP, Hassan Sobhani-niya, that the matter would "probably" be discussed by the parliament's national security and foreign policy committee on Tuesday.
China, Iran Prompt U.S. Air-Sea Battle Plan in Strategy Review By Viola Gienger and Tony Capaccio Feb. 1 (Bloomberg) -- The U.S. military is drawing up a new air-sea battle plan in response to threats such as China’s persistent military build-up and Iran’s possession of advanced weapons, according to the Pentagon’s latest strategy review. The Air Force and Navy are seeking more effective ways of ensuring continued access to the western Pacific and countering potential threats to American bases and personnel, according to the Quadrennial Defense Review to be released later today.
#11:Florida Community Bank, Immokalee, Florida Florida Community Bank, Immokalee, Florida, is the 11th FDIC victim of 2010. The agency estimates that the cost to its deposit insurance fund (DIF) will be $352.6 million.
#15:American Marine Bank, Bainbridge Island, Washington American Marine Bank, Bainbridge Island, Washington, is the 15th FDIC-insured institution to fail in the nation this year. The FDIC closed the ailing bank at an estimated cost of $58.9 million to the Deposit Insurance Fund (DIF).
US banks face insider trading probe By Tom Braithwaite in Washington Neil Barofsky, the special inspector-general overseeing the US government’s financial rescue efforts, is to probe allegations of insider trading among bank executives and their associates. Eight of the largest banks in the US received between $2bn and $25bn in October 2008 under a programme to prop up the financial system led by Hank Paulson, then Treasury secretary. Dozens more institutions followed and Mr Barofsky, who examines the troubled asset relief programme, is looking into whether information improperly made its way to trading rooms during a feverish period in which the government and banks were frequently exchanging information.
Bankers in favour of paying global fee [TAX] By Patrick Jenkins, Tom Braithwaite - FT Some of the world’s most prominent bankers have come out in favour of a global bank wind-down fund, a concession from the industry after weeks of fighting proposals for new taxes in the US and Europe. Josef Ackermann, chief executive of Deutsche Bank, told the Financial Times on Friday : “To help solve the too-big-to-fail problem I’m advocating a European rescue and resolution fund for banks. Of course, the capital for this fund would have to come from banks to a large degree.”
Herbert Hoover Obama by Peter Schiff - Lew Rockwell The Precarious State of Our Union In this week's much anticipated State of the Union address, President Obama again demonstrated his poor understanding of the fundamental problems that confront our nation. By following the advice of the same people who helped guide our economy to the precipice of total collapse, Obama now threatens to push it over the edge.
'Walking away' not immoral, prof says by J. Craig Anderson - The Arizona Republic He expands defense of homeowner in default Arizona law professor Brent White says the only thing standing between many "underwater" homeowners and a better financial future is a misguided sense that walking away from a loan commitment is morally wrong. White, an associate professor at University of Arizona's James E. Rogers College of Law, has spent the past few months presenting his argument to other lawyers, real-estate professionals and the national media. It started with a 50-page discussion paper he published in October, in which White argues that underwater homeowners, those whose unpaid loan balance exceeds the value of their home, are being manipulated into picking up the tab for a real-estate crash that borrowers and lenders created equally. "I'm all for a society where people must take personal responsibility, but that should also apply to the banks and financial institutions," he said.
Growth spurt expected to slow this year By Patrice Hill - Washington Times Jobs, credit remain tight After the best quarterly growth in six years at the end of 2009, the economy is expected to settle down in 2010 to a more subdued state that reflects underlying difficulties with jobs and credit still weighing on consumers. Investors were pleasantly surprised on Friday by a report showing sizzling growth at a 5.7 percent annual rate in the final quarter of 2009 — more than doubling the 2.2 percent growth rate in the summer, when the economy emerged from recession. But the growth spurt was almost entirely fed by one-time events — in particular, a slowdown in a massive liquidation of overstocked goods by businesses that held back the economy throughout 2009.
Rising Corporate Debt Could Bankrupt Firms, Crash Market by 2013 By MATTHEW SCOTT - Daily Finance Wall Street's love of leverage is threatening to turn around and bite it in the assets, as many companies find their issuance of debt could potentially become their undoing. Massive amounts of corporate debt issued between 2003 and 2007 will come due over the next four years, and companies' inability to refinance their debt will leave them stuck with high interest payments, dragging down corporate earnings and forcing some companies into bankruptcy. Standard & Poor's estimates that 807 speculative grade issues were originated in the U.S. from 2006 through 2009, and while only 82 (11%) of those bonds have defaulted, an alarming number of these issues still have below investment-grade ratings and are very much at risk of default.
Gold the Only Best Bull Market in Town Gold is trying to carve out a bottom, as it fell 11.20 for the week, closing at $1081.50 (-1.02%). Downside momentum has lessened from last week’s 3% decline. The big question now is: where is gold going to from here? No one knows for sure, but let’s take a look at where it is, and where it has come from, in order to determine the most probable scenario going forward. The following chart gives a long term perspective on gold – covering the start of its bull market until the present. It is a monthly chart that rises from the lower left to the upper right: a bullish signature.
Why no one can defeat gold By Jim Sinclair There is no boom. I am in the one business which has proven since 1985 when I started it, as the perfect forecasting indicator. I am in food wholesale. It relates to food service (restaurants) and retail stores. In every past downturn, I do well about 6 months before the statistics point towards a nice up tick in conditions in terms of my sales to food service. When things look iffy, my sales to retail pick up just prior to the numbers coming out that things look not so cool. It has worked like clockwork for me in ‘knowing’ the future.
Are Precious Metals Melting or Firming Up? by Chris Vermeulen The past two months have been tough on the precious metals sector. We saw precious metals lead the market higher all of last year until December 2009 when prices plummeted as the US Dollar started to bounce. The continued rise in stocks indicated an extreme overbought condition and alerted us that a sharp pullback was going to take place.
Will a Threatened Euro Affect the Gold Price by Julian D. W. Phillips Claude Trichet, head of the European Central Bank dismissed talk of Greece exiting the Euro as their national currency. The fact that he felt it necessary to issue such a statement meant that the prospect was being discussed outside the E.C.B. Instead, the EU is considering sanctions against the country to bring it into line with the E.U. The stress is high in the Eurozone!
Why dollar decline is a boost for gold By Jim Sinclair WARNING: In the last two days you have received two emails, both more than likely unsolicited by you, yet not unwelcome. There are some misassumptions concerning their argument for the US dollar and gold in both communications. The first is: "Fed’s Currency Swap Lines: A BIG deal for the Dollar" This article written in good faith, I am sure, but fails on three points. 1. It properly defines the basic currency swap between central banks but fails to follow the money through the transaction to its final destination. The swaps done with the ECU, Swiss, British and other non-US central banks were for the purpose of bailing out those non-US banks that were the losing debit counter party to major US derivative dealers.
The Ultimate Bubble and the Mother of All Carry Trades Among the many opinions expressed by billionaire investor George Soros over the course of the 2010 World Economic Forum in Davos, Switzerland was his statement on January 28 in an interview with Maria Bartiromo, host of CNBC's Closing Bell, that "When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold." New York spot gold closed at $1085.40 down $1.80, but the price of gold is not as much about gold as it is about the value of currencies, particularly the US dollar.
China, Gold, the Dollar and the Dow By CHARLES HUGH SMITH When the Dow Jones Industrial Average fell over 500 points last week and global markets dropped 5% in a matter of days, investors everywhere began pondering the question: Is this just a brief dip in the uptrend, or a more ominous change of trend? Investors and money managers are trying to assess which markets and commodities might be topping out and which are still rising. If one market is topping out, then common sense suggests moving money from that position into an investment that is still trending up.
China is new gold king China has emerged as the gold king in 2009 as far as production and consumption are concerned. China’s gold output reached 313.98 tonnes in 2009, up 11.34 per cent year-on-year. This was the first time that China’s gold output had exceeded 300 tonnes, setting a new record. So far, China’s gold output has been first in the world for 3 consecutive years. In 2009, the industrial output value of China’s gold industry reached 137.53 billion yuan, up 18.56 per cent year-on-year.
On the Edge with Max Keiser - 29 January 2010 (1/3)
On the Edge with Max Keiser - 29 January 2010 - (2/3)
On the Edge with Max Keiser - 29 January 2010 - (3/3)
Roubini Sees ‘Dismal’ Growth as Summers Rues ‘Human Recession’ By Simon Kennedy and Erik Schatzker -- Feb. 1 (Bloomberg) -- Nouriel Roubini, the New York University professor who anticipated the financial crisis, said the U.S. growth outlook remains “very dismal” and White House economic adviser Lawrence Summers said the economy is still mired in a “human recession.” Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, after the U.S. reported the fastest growth in six years, their comments underscored concern that that emergency measures to rescue banks and fight the recession may be withdrawn too soon.
Brace yourselves for the next wave of the bear market Brian Milner - The Globe & Mail If the ‘January barometer' proves accurate, the next 11 months will see stock slide further People who believe the old saw that whatever the markets do in January sets the pattern for the rest of the year must be battening down the hatches for stormy times ahead. The world's leading stock indexes all finished the first month of 2010 in the red. Investors – especially those who never quite bought the bull-is-back story but didn't want to miss the great rally of 2009 –pulled more money out of U.S. equity funds in the last days of January than in any single week since mid-2008. Emerging-market equity funds suffered their worst withdrawal symptoms in six months.
Second leg crash, what's next in 2010? Christopher Laird A lot of people realize that the world financial and commodity markets have rocketed around 60 pct since March 2009. Around the summer/fall people realized that the markets got ahead of the world economy, which is still terrible. Unemployment is still rising and one day this month there were US job losses of 50,000 announced. Hey if jobs are again going to tank (they are) then this gig of so called recovery is over. I had told subscribers that we expected December retail sales to be dismal, and that US economic stats in early 2010 would highly disappoint.
Brutal economy of 1700s has an eerie similarity Neil Reynolds - The Globe & Mail A central bank and a brilliant central banker, easy credit and novel financial investments, high taxes and expansive state debt Robert Prechter, the iconoclastic Atlanta market analyst (publisher of the Elliott Wave Theorist), says the world remains in a bear market of "supercycle" degree - meaning that the world's current economic troubles will be "the deepest and longest since the 1700s." Assume for a disturbing moment that he is right. What went wrong in the 18th century? In what way are we replicating the wrong? What consequences should we anticipate?
Obama's $3.8 trillion budget heading to Congress By Martin Crutsinger AP WASHINGTON — The Obama administration on Sunday endorsed spending an additional $100 billion to attack painfully high unemployment as it prepared to send Congress a $3.8 trillion budget that would provide billions more to pull the country out of the Great Recession while increasing taxes on the wealthy and imposing a spending freeze on many government programs. White House spokesman Robert Gibbs said the administration believed "somewhere in the $100 billion range" would be the appropriate amount for a new jobs measure made up of a business tax credit to encourage hiring, increased infrastructure spending and money from the government's bailout fund to get banks to increase loans to struggling small businesses.
Obama's Rail Plan: A Drop in the Bucket By BRUCE WATSON - Daily finance On Thursday, President Obama and Vice President Biden announced the recipients of almost $8 billion in stimulus grants that are designed to begin development of high-speed rail (HSR) networks. The money will go to 13 "travel corridors," and will include lines in Oregon-Washington-Canada, California, Wisconsin-to-Chicago, Iowa, Detroit-to-Chicago, St. Louis-to-Kansas City, St. Louis-to-Chicago, Cleveland-to-Cincinnati, Texas, Tampa-to-Orlando, Charlotte-to-Washington, and the Northeast Corridor.
Gerald Celente on Financial Sense News Hour January 16, 2010
Bailout cop: TARP's not working By David Ellis - CNNMoney The watchdog charged with monitoring the government's $700 billion bailout unleashed one of his harshest criticisms of the program to date, questioning its overall effectiveness. In his latest quarterly report to Congress, special inspector general Neil Barofsky said that the Troubled Asset Relief Program, or TARP, has failed to boost bank lending as well as halt the spread of foreclosures -- two key aims of the sprawling program.
TARP overseer says bank bailout program has mixed results By Ronald D. Orol, MarketWatch TARP stabilized system, but bailed out banks lend less; more foreclosures soon The government's $700 billion bank bailout bill has met its goal of helping bring the financial markets back from the brink, but has so far failed to increase lending from the banks who received the taxpayer assistance, a key government overseer reported Sunday in a generally critical review of the program. "On the positive side, there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008," according to a quarterly report to Congress submitted by the office of the Special Inspector General for the government's $700 billion Troubled Asset Relief Program.
Volcker on Big Banks: ‘Structural Changes’ Needed Clearly making his mark as the chief proponent of separating big banks from their lucrative-but-riskier speculative investment operations, former Federal Reserve chairman Paul Volcker said “structural changes” are needed to avoid repeating history with another crippling financial crisis. In an opinion piece – “How to Reform Our Financial System” – published today on the New York Times website, Volcker gave his rationale for supporting capital markets trading restrictions on the biggest commercial banks where a significant portion of Americans keep their money.
How to Reform Our Financial System By PAUL VOLCKER - NY Times PRESIDENT OBAMA 10 days ago set out one important element in the needed structural reform of the financial system. No one can reasonably contest the need for such reform, in the United States and in other countries as well. We have after all a system that broke down in the most serious crisis in 75 years. The cost has been enormous in terms of unemployment and lost production. The repercussions have been international.
Why Politics Makes It Hard to Fix the Banks By JAMES CULLEN Bank earnings season is under way, and with the financial results will come disclosures about average per-employee compensation that politicians seeking support for additional regulations or taxes on big banks will pounce on. Some of the proposals may make their way in some form into President Obama's financial reform plan. At the same time, the banks' decreased lending will be portrayed as a sign that banks are ungrateful to the American public for the generous bailouts they received -- and that they're unwilling to help restart the economy. Each of these arguments is based on a truthful data point.
Bernanke May Have Harder Fight Defending Fed After Confirmation By Scott Lanman Jan. 29 (Bloomberg) -- Ben S. Bernanke, who won Senate approval for a second term as Federal Reserve chairman over a record number of opponents, may now have a tougher fight against threats to the central bank itself. Lawmakers are considering legislation to remove a shield from congressional audits of monetary policy and strip the Fed of bank-supervision powers, measures that Bernanke opposes.
Kohn Says Predicting Fed Policy Impact Especially Hard By Joshua Zumbrun Jan. 29 (Bloomberg) -- Federal Reserve Vice Chairman Donald Kohn said predicting the impact of a monetary policy tightening on interest rates is difficult because of “historically low” borrowing costs and the Fed’s unprecedented expansion in assets. “We are in uncharted waters for monetary policy and the financial markets,” Kohn said today to a symposium in Arlington, Virginia. “The response of interest rates across the maturity spectrum to an actual or expected tightening of monetary policy is always hard to predict, but is especially so in current circumstances.”
At A.I.G., Risky Trading Wasn’t Just on the Fringe By MARY WILLIAMS WALSH - NY Times Ever since the American International Group nearly collapsed, the conventional wisdom has been that the exotic derivatives that drove it to the brink were the product of a lone, unregulated subsidiary in London. The Federal Reserve chairman, Ben S. Bernanke, called the London branch “a hedge fund, basically, attached to a large and stable insurance company.” But the suggestion that A.I.G.’s core insurance business did not dabble in derivatives is not quite true. One of its biggest insurance units, incorporated in Delaware, was also dealing in the derivatives known as credit-default swaps, according to regulatory filings with the state.
Is Geithner In or Out? Geithner bashing not seen threatening job--for now WASHINGTON (Reuters) - Those seeking clues on whether U.S. Treasury Secretary Timothy Geithner will keep his job after another congressional scolding got a big one for the "yes" column on Wednesday night -- a warm embrace from the boss. As a grinning President Barack Obama made his way to the podium in the Capitol building to deliver his State of the Union address and he stopped to put his hand on Geithner's shoulder, chatting with him longer than others he greeted. "They arranged it right at the end of the aisle, perfect for the cameras," said Larry Sabato, director of the Center for Politics at the University of Virginia.
1/27/10 Ron Paul on Fox Business: Geithner and AIG
U.S. Can't Afford Not to Have a Second Stimulus Package By LITA EPSTEIN Mark Zandi, chief economist at Moody's Economy.com, and Rudolph Penner, a fellow at the Urban Institute and former Congressional Budget Office director, both said Friday that an additional stimulus package would be required to improve the U.S. economy and allow the nation to avoid a double-dip recession. The two spoke during a conference at the Urban Institute titled "Does the Economy Need – and Can We Afford – Another Jolt of Stimulus?"
Reining in Wall Street's "casino culture" Banking insiders are skeptical about President Obama's plan to cut risk-taking. But others say the new rules will go a long way in reining in Wall Street's cowboys. Obama last week proposed a law that would bar banks from betting in financial markets with their own money, known as proprietary trading. Called the "Volcker rule," after Obama advisor Paul Volcker, the law aims to prevent banks from taking risks that drag them to the brink of failure. No sooner did Obama propose the idea than analysts and bank officials criticized the attempt to limit proprietary trading, in part because of the gray area between banks taking risk and helping customers.
Warning: Capt Bernanke's sinking U.S.S. Titanic By Paul B. Farrell, MarketWatch Cheap money's again blowing new 'icebergs' Let's call it "Titanic II," a classic remake. The Fed's the new Titanic. Bernanke, the egomaniacal captain. His character reminds me of Bogart playing the paranoid, obsessive Captain Queeg in "The Caine Mutiny." Remember that threatened Navy captain who navigates into a fog, panics, nearly rams a battleship? That's "Capt. Ben" in "Titanic II." And given his handling of our banking system and the global economy, he'll sink the Titanic. Capt. Ben's a tragic figure.
Deputies serving more evictions during recession, but most people leave without a fight By Jennifer Squires - Santa Cruz Sentinel The attempted eviction of a renter Tuesday led to an hours-long police standoff and closed roads before sheriff's deputies decided to leave the man inside the Vienna Drive home and seek an arrest warrant. That situation was an extreme example of something deputies are doing more and more often in Santa Cruz County: evictions. "Those spiked when the recession started," Sgt. Dan Campos said, adding it's "notable" how busy the civil service unit at the Sheriff's Office is. Eviction orders handled by deputies rose 25 percent in the past two years and of the 367 orders served in 2009, one-third of the homes were being vacated because of foreclosure, according to Colleen O'Reilly, the civil process supervisor at the Sheriff's Office.
Knives Are Drawn for Proposed Cuts By GREG HITT And NEIL KING JR. - WSJ WASHINGTON—President Barack Obama's plan to reduce the deficit faces a tough battle on Capitol Hill, and prospects for a rapid return to fiscal austerity remain slim. Mr. Obama, responding to growing public concern over deficit spending, will propose as part of his fiscal 2011 budget to freeze basic government spending, outside of national security programs. He also plans to appoint a commission to recommend ways to reduce the deficit. But Republicans are skeptical. Special-interest groups are lining up to protect their own share of the budget. And even some top Democrats are breaking with their president to float their own ideas on how to tackle the deficit.
AMERICA DIDN'T BUY IT By Ezra Klein - Washington Post Few are as good at delivering a high-stakes speech as President Obama, something he proved again in Wednesday's State of the Union. The speech, which focused on jobs and the economy, was feisty, confident and -- rare for presidential addresses -- funny. The insta-poll numbers were great. Joe Klein called it "Obama at his best." It was so good, in fact, that virtually nobody noticed that Obama had already lost the argument.
We've Been Neo-Conned by Ron Paul - Lew Rockwell The modern-day, limited-government movement has been co-opted. The conservatives have failed in their effort to shrink the size of government. There has not been, nor will there soon be, a conservative revolution in Washington. Political party control of the federal government has changed, but the inexorable growth in the size and scope of government has continued unabated. The liberal arguments for limited government in personal affairs and foreign military adventurism were never seriously considered as part of this revolution.
Wages and benefits rise in 2009 by smallest amount on records going back 27 years MARTIN CRUTSINGER - AP -- Wages and benefits paid to U.S. workers posted a modest gain in the fourth quarter, ending a year in which recession-battered workers saw their compensation rise by the smallest amount on records going back more than a quarter-century. The anemic gains have raised concerns about the durability of the economic recovery. The fear is that consumer spending, which accounts for 70 percent of economic activity, could falter if households don't have the income growth to support their spending.
Henry Paulson's book offers a glimpse inside the economic crisis By Zachary A. Goldfarb - Washington Post -- The Washington memoir, typically published after a calamitous event or the end of a political campaign, often brings a nugget or two of news. But that's a tall order for Henry M. Paulson Jr.'s "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," as many authors have already published thick tomes examining the financial crisis of fall 2008. As Treasury secretary, Paulson helped oversee the government's intervention, and his memoir is the first lengthy account of the crisis from a key decision-maker. The book offers a look at Paulson's thinking during those scary days, as well as his sometimes unvarnished opinions of other Washington characters, many of whom had central roles in managing the government's response.
Paulson Says Russia Urged China to Dump Fannie, Freddie Bonds By Michael McKee and Alex Nicholson Jan. 29 (Bloomberg) -- Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said. Paulson learned of the “disruptive scheme” while attending the Beijing Summer Olympics, according to his memoir, “On The Brink.”
The Places They Go When Banks Say No By ANDREW MARTIN - NY Times IN the glory days of the digital photo frame business, when his products were still a novelty and shoppers were flush with cash, getting a bank loan to manufacture them was a cinch, Michael Levy says. “We would say: ‘We got a $1 million order from the Sharper Image. We need financing. With a snap of the fingers, the guy drove down to my office, we’d sign a document, he’d give us the money,” Mr. Levy recalls, sitting in the Deer Park, Long Island, office of the Media Street Group that he runs with his brother, Norm.
In tough economic times, shoppers take haggling to new heights By Michael S. Rosenwald - Washington Post The price tag on the smooth pair of Cole Haan loafers at Macy's said $148. I considered that a fair opening bid. Standing across from the salesman and the cash register, I said, "Can you knock off 25 percent?" The salesman said, "Can't do it." But I pressed on: "I'll get them on the Internet or at one of your competitors, so let's just do this here." Salesman: "Geez. You're like the second person who has tried to do this today." We stared at the shoe box. I liked what was inside. The loafers fit well, but they would feel even more comfortable with a discount.
Crisis of the Government Party by Patrick J. Buchanan - Lew Rockwell President Obama is in a dilemma from which there appears to be no easy or early escape. Democrats are the Party of Government. They feed it, and it feeds them. The larger government grows, the more agencies that are created, the more bureaucrats who are hired, the more people who become beneficiaries, the more deeply entrenched in power the Party of Government becomes. At the local, state and federal level, there are 19 million to 20 million government employees. And if one takes only Social Security, Medicare, Medicaid, food stamps and earned income tax credits, we are talking of scores of millions who depend on government checks for the necessities of their daily life.
Overseer Sheds Doubt on TARP Helping Small-Biz, Foreclosures A somber and pessimistic assessment of the government’s bailout program has been issued by the official overseer of the $700 billion Troubled Asset Relief Program (TARP) – concluding that the fundamental problems in the U.S. financial system are still in place for another crisis. The report also pointed out that TARP has yet to provide increased loans to small businesses, despite the announced creation of such a plan 10 months ago.
Obama’s $30B Plan for Small Businesses May Not Work In his State of the Union speech, President Barack Obama proposed taking $30 billion out of the bailout money returned by big banks and injecting the funds into community banks to generate more small business loans. But the plan will likely fall short in a lending arena where low demand matches low access to credit. Moreover, the small-biz bailout has already generated enough opposition to place it in doubt – particularly if a full vote by Congress is required.
Obama Housing Rescue Threatened by Foreclosures, Unemployment By Kathleen Howley -- Jan. 29 (Bloomberg) -- President Barack Obama’s efforts to bolster the U.S. housing market, the trigger of the worst recession since the 1930s, may be undone by record unemployment and repossessions by lenders. Foreclosures probably will reach 3 million this year, surpassing the record of 2.82 million in 2009, according to Irvine, California-based RealtyTrac Inc. That would more than offset an estimated 448,000-unit rise in home sales, based on the average forecast of the National Association of Realtors, the Mortgage Bankers Association and Fannie Mae.
Bottom In Home Prices, a Decade Away MKC Global Humans are an optimistic breed by nature. There are some pessimists (or “realists” as they prefer to be called) among us; but on balance humans believe in a better future. This ensures that investment professionals will continue to track investor psychology for many years to come. When the naturally optimistic demographic becomes a group of Doom and Gloomers (or vice versa), we take notice. The same is true for participants in the real estate as well as stock markets.
Flipping Foreclosures: Will 90-Day Rule Waiver Ease Crisis? U.S. Housing officials hope to ease the impact on communities hardest hit by foreclosures with a one-year waiver of its rule against providing FHA-insured mortgages on homes resold within 90 days. Beginning Monday, Feb. 1, its good news for flippers – investors who acquire below-market properties that often need improvements, then quickly attempt to sell for a profit. They will now have a much larger pool of potential buyers – those first-time homebuyers or others who need the backing of the Federal Housing Administration, FHA, to qualify for a mortgage.
Lenders Pursue Mortgage Payoffs Long After Homeowners Default By Kathleen M. Howley -- Jan. 28 (Bloomberg) -- When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default. King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes. Amid a crisis that stripped $6.4 trillion, or 28 percent, from the value of U.S. residential real estate since the 2006 peak, lenders are exercising their rights to pursue unpaid mortgage balances. To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors.
Obama Says Republicans Can Help End Washington’s ‘Sour Climate’ By Nicholas Johnston and James Rowley -- Jan. 30 (Bloomberg) -- President Barack Obama engaged in an unusual public debate with House Republicans yesterday, challenging them to help end the “sour climate” in Congress and defending his agenda for the economy and health care. Obama delivered remarks to the Republicans’ annual retreat, then answered sometimes pointed questions from the lawmakers over almost 90 minutes at a hotel in Baltimore, a session that was televised at the administration’s suggestion.
Colorado's share of stimulus so far: $3.36 billion Denver Business Journal Colorado was awarded $3.36 billion in federal stimulus funds during 2009, the U.S. government reported Saturday. The amount received to date, however, is considerably less: $953 million. The stimulus package was signed into law by President Barack Obama in Denver nearly a year ago. The data just released covers Feb. 17 through Dec. 31. Colorado recipients of stimulus funds received 738 contracts valued at $1 billion, 2,079 grants worth $2.36 billion and two loans for $584,000.
Turning union cash to ash By Nolan Finley Union greed has dismembered Michigan Legend has it that during a brutal contract bar -gaining session, Harry Bennett, Hen-ry Ford's enforcer, attempted to break the tension by passing around snapshots taken during a visit to Maxon Lodge, a gorgeous hideaway in the woods of northern Michigan. Walter Reuther, architect of the United Auto Workers' rise, looked over the photographs, tossed them on the table and said to Bennett: "Come the revolution, we'll own that place." It was no idle threat. In 1967, flush with cash from a bulging membership, the UAW purchased the lodge and 1,000 acres on Black Lake.
Tesla to stop selling electric sports car next year It sounds like the initial public offering of electric-car maker Tesla is already being greeted with skepticism, but some of the fine print about its plans may give potential investors even greater cause for concern. A reading of the fine print by Wired's Autopia blog uncovers some disturbing product-planning news. To wit, the company's only product, the first true freeway-capable, mass-produced electric car of the modern age, will go bye-bye next year.
Detroit bomb attempt alters sports security By Howard Fendrich AP The massive, multimillion-dollar security operations for the Super Bowl and Winter Olympics are being adjusted in light of recent breaches such as the attempted Christmas Day bombing of an airliner and the White House party crashers. Sports and government officials say such lapses -- where individuals got past guards on the ground -- are leading to increased screening efforts at major upcoming events, including the NFL championship game between the Indianapolis Colts and New Orleans Saints in Miami next Sunday and the Winter Olympic Games, which start Feb. 12 in Vancouver, British Columbia.
Peres' Iranophobia rhetoric begins to sway IAEA chief Israeli President Shimon Peres has verbally attacked Iran during his first meeting with the new chief of the UN nuclear watchdog, claiming that it poses a threat to the entire world. Peres made the remarks on Saturday in a meeting with International Atomic Energy Agency Director General Yukia Amano on the sidelines of the World Economic Forum in Davos, Switzerland, the Israeli daily Haaretz reported.
Bankers at Davos Face Global Ire By MARCUS WALKER And EMMA MOODY - WSJ DAVOS, Switzerland—Not so long ago, financiers ruled the roost at the glitzy annual gathering of the global economic elite here in the Swiss Alps. At this year's of the World Economic Forum, the unofficial theme seems to be "First, kill all the bankers." The ire directed at bankers from all sides is palpable, acknowledged Donald Moore, chairman of Morgan Stanley in Europe, as he stood alone reading some charts amidst the hubbub at the forum's Global Village cafe. Asked which other groups of people have been similarly unpopular in Davos in the past, he said: "terrorists." The quip reflects the mounting alarm with which bankers have come to view their besieged profession—even in Davos, a usually cozy gathering.
Should Germany bail out Club Med or leave the euro altogether? By Ambrose Evans-Pritchard - Telegraph -- Germany faces a terrible dilemma. Either Europe's paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury, and debt union, or the euro will start to unravel, and with it Germany's strategic investment in the post-war order. The spike in yields on 10-year Greek bonds to 400 basis points above German Bunds has been shockingly swift – a warning to Britain, too, that markets can suddenly strike any country that takes creditors for granted. We can argue over whether Greece, Portugal, or Spain are at risk of being forced out of the euro. But there is another nagging question: whether events will cause Germany and its satellites to withdraw, bequeathing the legal carcass of EMU to the Club Med bloc.
Clinton to work with Russia on European security PARIS (Reuters) - Secretary of State Hillary Clinton on Friday recommitted the United States to the defense of Europe and pledged to work with NATO allies and former foe Russia to boost security in the face of new threats. "European security remains an anchor of U.S. foreign policy," Clinton told a conference during a visit to France, which last year rejoined the command structure of the North Atlantic Treaty Organization (NATO). Clinton's speech was aimed at reassuring Washington's European allies of continued U.S. commitment in the face of a sometimes strained relationship with Russia, which still sees the former Soviet bloc as part of its sphere of influence.
China Bosses Davos as Nobody Discusses What Happened to Google By Rob Delaney and Ari Levy -- Jan. 30 (Bloomberg) -- Google Inc.’s opposition to censorship in China was the one topic left off the table in Davos -- at China’s request. “China didn’t want to discuss Google,” Josef Ackermann, chief executive officer of Deutsche Bank AG and a co-chairman of this year’s World Economic Forum, said in an interview. China’s Vice Premier Li Keqiang made that clear, he said. “Google has backed off a little bit.”
U.S.-China Relations Cool on Arms Deal By ANDREW BROWNE And JASON DEAN - WSJ BEIJING—China's suspension of military exchanges with the U.S. in retaliation for a $6.4 billion arms sale to Taiwan heightens the risk of friction between Beijing and Washington at a time when they are already at loggerheads over a host of security and economic issues. China announced the freeze on military exchanges Saturday, and summoned the U.S. ambassador to Beijing for a formal complaint, following the Obama administration's announcement Friday that it is proceeding with the sale of antimissile systems, helicopters and other arms to Taiwan.
Aerospace sector fears China sanctions Beijing’s reaction to Taiwan arms deal stirs US concern By Kevin Brown in Singapore, Kathrin Hille in Beijing and Daniel Dombey in Washington - Reuters -- Aerospace executives and the US government reacted with concern on Sunday to a Chinese threat to impose sanctions on American groups involved in a $6.4bn arms deal with Taiwan. Giovanni Bisignani, director-general of the International Air Transport Association, the global airline industry body, called for fresh talks between Beijing and Washington to avert a crisis over the arms package.
U.S. Starts to Push Back Against China in Growing Rift By HELENE COOPER - NYTimes WASHINGTON — For the past year, China has adopted an increasingly muscular position toward the United States, berating American officials for the global economic crisis, stage-managing President Obama’s visit to China in November, refusing to back a tougher climate change agreement in Copenhagen and standing fast against American demands for tough new Security Council sanctions against Iran.
Taiwan has guns, beef — and politics By Sol Sanders - Washington Times President Obama's Chinese New Year's gift, an arms purchase offer even with a $6.4 billion price tag, couldn't be more welcome to Taiwanese President Ma Ying-jeou. Last March his Kuomintang swept back into office with anti-corruption slogans, promising better relations with the Gigantest Panda across the Taiwan Strait. That peaceful transition reconfirmed for 23 million Taiwanese the first representative government in Chinese civilization's vaunted 5,000-year history. But now the Mandarin-accented, Hong Kong-born, sleek politician's polls are drooping.
Davos Dispute Escalates as Policy Makers, Bankers Square Off By Simon Kennedy and Christine Harper -- Jan. 30 (Bloomberg) -- Policy makers pushed back at bankers who have warned of excessive and uncoordinated attempts to toughen financial regulation as they jostled for control of an industry that required an unprecedented government bailout. Bank chief executive officers, led by Josef Ackermann of Deutsche Bank AG, are scheduled to meet privately today with finance ministers and central bankers to keep talks on track and assert their influence on the penultimate day of the World Economic Forum annual meeting in Davos, Switzerland.
No chance of Greek default: EU Clara Ferreira-Marques - Reuters Almunia says Greece will not leave euro zone A top European Union official said on Friday there was no risk that Greece would default or leave the euro zone and the country's finance minister said he was not aware of any bailout talks. “No, Greece will not default. Please. In the euro area, the default does not exist because with a single currency the possibility to get funding in your own currency is much bigger,” monetary affairs commissioner Joaquin Almunia told Bloomberg TV. “There is no bailout problem.”
Dollar to Rally as Greece’s ‘Stone Age’ Looms By Inyoung Hwang Jan. 29 (Bloomberg) -- The dollar will benefit as a potential “financial stone age” for Greece and other nations threatens to break up the euro, according to Walter J. Zimmermann Jr., chief technical analyst at United-ICAP. The greenback may rise to a level last reached more than six years ago against the currencies of major U.S. trading partners as the European budget crisis reduces demand for higher-yielding assets, according to Zimmermann, whose firm is a technical research unit of ICAP Plc, the world’s largest inter- dealer broker.
How the Greek leader forgot about his debt crisis By Edmund Conway - Telegraph What do you do if your country is in economic crisis, when you have a self-acknowledged “credibility deficit”, when you may have to resort to an emergency International Monetary Fund loan – oh, and you happen to be in Davos – the ideal place to meet world leaders and bankers to sort it out? If you’re George Papandreou, the answer is you hole yourself up in a small cinema watching clips from Avatar for two hours.
Nato chief: more casualties and violence in Afghanistan in 2010 By Rosa Prince - Telegraph The newly-appointed Nato civilian representative in Afghanistan has warned that 2010 will bring "many more" casualties and an “awful lot of violence” in the fight against the Taliban. But Mark Sedwill, the senior British diplomat who will represent the coalition in non-military matters, predicted that this year would also see a turning point in the conflict, as Nato beefed up its strategy politically and in terms of its fighting force. Predicting that troops would be fighting for between three and five more years, he told the BBC’s Andrew Marr show: "This year will be another very challenging year.
The Quigley Formula - Part 1 of 8 A lecture by G. Edward Griffin on the New World Order. He explains in detail how they are organized, and how they have infiltrated all of the power centers of the Western world and are the real people that control our countries. They are quickly moving us into a one world government. This is a truly eye opening presentation
Senate agrees to record increase in debt limit to $14.3 trillion By Lori Montgomery - Washington Post The Senate agreed Thursday to raise the legal limit on government borrowing to $14.3 trillion, a historic high that would permit the Treasury Department to cover the nation's bills through early next year. The vote fell along party lines, with all 60 Democrats supporting and 39 Republicans opposing a plan to increase the cap by a record $1.9 trillion. The 40th Republican, Sen. Mike Enzi of Wyoming, said his no vote was accidentally unrecorded. If lawmakers had approved a smaller increase, Democrats would have had to revisit the deeply unpopular topic of the soaring national debt before facing voters in November.
Experts See Another Global Dip Ahead By MARCUS WALKER Davos Attendees Pin Hopes on Emerging Economies, Saying Debt and Deficits Will Trouble U.S.; Sparring Over Bank Rules DAVOS—The global economic recovery could lose pace later this year, dashing hopes for a rapid escape from the deepest downturn of the postwar era, economists and investors said at the World Economic Forum's annual meeting at this Swiss ski resort. Heavy debts will weigh on governments and households in the U.S. and Europe for some time, while hopes for global growth will continue to rest on fast-developing countries such as India and China, predicted participants at the meeting's opening debate on the economy.
The Daily Show with John Stewart Elizabeth Warren, January 26, 2010 Congress' chief economic watchdog talks about her work overseeing the bank bailout.
Bullion coin sales fetch $1.7 bn for US Mint WASHINGTON (Commodity Online): The sale of bullion coins by US Mint reached a record high in FY 2009 when it approached $1.7 bn, nearly 80% of the last year's sales revenue, according to Edmund C Moy, United States Mint Director. US Mint in its annual report pointed out that bullion coins accounts for 58% of sles revenue in 2009 compared to 34% in 2008. The Mint was able to meet the demand for 22-karat gold and silver one-ounce bullion coins by the third quarter of FY 2009, the annual report said.
Why Buffett and Soros hate gold By Jim Sinclair Today I have received many emails concerning Mr. Soros’ dislike of gold. You may have noticed that Mr. Buffett and Mr. Soros seem to be in a PR contest for the position of spokesperson for the future of the USA. Many Americans erroneously see gold as anti-American and those that do not see a major future for the US dollar as traitors. You will recall Mr. Buffett’s recent entry into the railroad business was deemed by him and others as being a vote of absolute confidence in America’s continued economic recovery and its sustainability. It is sort of a quasi-competition for economic President of the USA.
Russia’s gold, Forex reserves dip by $5.8 billion MOSCOW (Commodity Online): Russia’s gold and foreign-exchange reserves for the first time in this year fell by $5.8 billion to $435.6 billion in the week ended January 22, said Central Bank. Reserves rose $500 million to $441.4 billion in the previous week. After reaching a record high of $597.5 billion in August 2008, reserves sank dramatically in late 2008 and early 2009 as the central bank spent more than $200 billion to support the struggling ruble.
Win With Silver Jeff Nielsen With the Olympics just days away, and with precious metals sitting at very attractive prices (following this utterly absurd move lower), this is the perfect time to point out that when "going for gold" one can often be better off taking home silver. As with many of the greatest, long-term investment opportunities, the reasons for investing in silver are numerous and obvious - and will (like all things) become much more obvious, in hindsight. The simplest place to start is with the patterns in price movement, and the reasons for those patterns.
Investors embracing platinum, palladium David Pett, Financial Post All hail the new king in the world of precious metals: platinum. After a year in which everyone seemed to be backing the truck up for gold, investors are turning their attention to platinum, an outperformer versus gold in 2009 that continues to offer better prospects for price appreciation. In the past month alone, platinum and its near cousin palladium have climbed as much as 12% and 15%, reaching a peak last week after getting a huge boost from the launch of two exchange-traded funds in the United States.
The Pelosi Fed Is the Dollar’s Worst Nightmare by Caroline Baum Jan. 28 (Bloomberg) -- Within days of the Republican upset in the Massachusetts special election for the late Ted Kennedy’s seat, Barbara Boxer saw the way forward. “It is time for a change -- it is time for Main Street to have a champion at the Fed,” the three-term California Democratic senator said on Jan. 22. “Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve chairman must represent a clean break from the failed policies of the past.”
Chavez Dangles Better Exchange Rate, With Caveat Jan. 28 (Bloomberg) -- Venezuelan President Hugo Chavez, offered to give private companies a preferential exchange rate to import goods provided they form joint ventures with his government. Chavez, seeking to boost production to emerge from an economic recession, said firms willing to work with the government can get a rate of 2.6 bolivars per dollar. Companies that don’t align with his administration will import finished goods and raw materials at 4.3 per dollar.
Bill Clinton Says Reward Bernanke, Advance Overhaul By Alison Vekshin and Ryan Chilcote Jan. 27 (Bloomberg) -- Former U.S. President Bill Clinton said the Senate should confirm Federal Reserve Chairman Ben S. Bernanke to reward him for responding to the financial crisis and owning up to mistakes. “Bernanke’s decisions have been very good, they have kept the American economy going and given us a chance to heal,” Clinton said today in an interview at the World Economic Forum in Davos, Switzerland. “I think the beginning is to confirm and reward both his acknowledgement of past lax regulation and his service since the financial meltdown.”
State of the Union
Senate OKs 2nd term for Bernanke as Fed chief The Senate on Thursday handed Federal Reserve Chairman Ben S. Bernanke a second term after a week of contentious and sometimes suspenseful debate. Easily approving the nomination with a 70-30 vote, the Senate rejected arguments by senators mostly at the political extremes on the left and right that Mr. Bernanke made fatal mistakes that led to the global financial crisis and great recession of the past two years. The Senate's action ensures that the former Bush administration economist, mild-mannered Princeton professor and expert on the Great Depression will steer the world's most powerful central bank for another four years.
Bernanke May Have Harder Fight Defending Fed After Confirmation By Scott Lanman Jan. 29 (Bloomberg) -- Ben S. Bernanke, who won Senate approval for a second term as Federal Reserve chairman over a record number of opponents, may now have a tougher fight against threats to the central bank itself. Lawmakers are considering legislation to remove a shield from congressional audits of monetary policy and strip the Fed of bank-supervision powers, measures that Bernanke opposes.
Bernanke agonistes By William F. Shughart II - Washington Times Fed chairman's job is to manage money supply, period Bernanke repeating mistakes of the Great Depression President Obama pulled out all the stops to clinch Senate approval of his nomination of Ben S. Bernanke to a second four-year term as chairman of the Federal Reserve. Now that the president seems to have enough votes for his nominee in hand, news of yet another "Louisiana Purchase" may be grabbing headlines soon.
Save the Middle Class While Fixing Banks for Good Michael Pento While I'm disgusted with the level of banker's bonuses and with the obscene leverage practices financial institutions undertook, I do not think the answer to how we clean up them up now is to pile on yet more regulation. To be sure, banks that helped bring down the world economy and then subsequently got bailed out by the taxpayers should not be making billions of dollars in bonuses, especially while the middle class is suffering so greatly. And if we're going to keep the FDIC in effect, a certain amount of regulation is required to protect taxpayer-backed deposits. But the real remedy does not rest with government, as it was their consistent meddling with markets that engendered the crisis to begin with.
Blackstone CEO Says Banker Bashing Risks Recovery By Anne-Sylvaine Chassany and Eric Schatzker Jan. 28 (Bloomberg) -- Banks may start to rein in lending, putting the economic recovery at risk, if politicians keep attacking them and regulatory uncertainty persists, Blackstone Group LP Chief Executive Officer Steven Schwarzman said. “Financial institutions will feel under siege and they will retreat,” Schwarzman said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland. “Their entire world is being shaken and they’re being attacked personally,” he said. “We don’t need those financial institutions insecure.”
Obama's "Venezuelan-style" Policies Will Cause Stock Market Crash, Dick Bove Says by Peter Gorenstein - To paraphrase Miller Tabak equity strategist Peter Boockvar, a political science degree on Wall Street may be more important than a finance degree these days. Since the crisis created the need for unprecedented government intervention, stocks are influenced just as much by policy decisions as they are by fundamentals and valuations. Last week's announcement of the "Volcker Rule" and President Obama's digs at the "banker [who] puts the rest of us at risk for his own selfish gain" in the State of the Union address are just the latest examples. Be afraid, Be very afraid.
Fed nods to Hill's economy concerns By Patrice Hill Treasury chief defends moves The Federal Reserve acknowledged concerns on Capitol Hill about consumers who are out of jobs and short on credit, saying Wednesday that it may continue programs to support mortgages, small businesses and consumers loans this year if financial conditions don't improve. The Fed's nod to senators, who say they have demanded that it pay more attention to middle-class problems in closed-door meetings with Chairman Ben S. Bernanke in recent days, came as prospects for Mr. Bernanke's confirmation to a second term continued to improve, with a vote on shutting off debate in the Senate scheduled for Thursday.
The Fed's Anti-Inflation Exit Strategy Will Fail By ALLAN H. MELTZER - WSJ Sooner or later the pressure to lend out excess bank reserves will be unstoppable. Federal Reserve Chairman Ben Bernanke has explained his exit strategy to prevent future inflation. The Fed recently began to pay interest to banks on the reserves they hold in their vaults. Using this new tool, it claims the ability to get banks to keep the money instead of lending it out, thus containing the money supply and inflation. I don't believe this will work, and no one else should. The exit strategy is incomplete. Proponents are guilty of practicing economics without prices. They never say what the interest rate on reserves must be to get banks to hold the approximately $1 trillion of reserves above the minimum they're legally required to hold. That's the critical question.
Senate permits gov't to borrow $1.9T more WASHINGTON (AP) -- Majority Democrats in the U.S. Senate muscled through legislation Thursday that would allow the government to go $1.9 trillion deeper in debt. Democratic leaders were able to prevail on the politically volatile 60-39 vote only because Republican Sen.-elect Scott Brown of Massachusetts has yet to be seated. Republicans had insisted on a 60-vote, supermajority threshold to pass the measure. An earlier test vote succeeded on a 60-40 vote. The measure would put the government on track for a national debt of $14.3 trillion, or about $45,000 for every American, and it served as a vivid reminder of the United States' dire fiscal straits.
What the New York Fed Bought in A.I.G.’s Bailout One more secret of the American International Group’s bailout became public on Wednesday: a list of the tens of billions of dollars in toxic assets that the Federal Reserve Bank of New York bought for 100 cents on the dollar from A.I.G.’s trading partners. Representative Darrell Issa of California, the ranking Republican on the House Oversight and Government Reform Committee, released the list after the committee’s hearing on the A.I.G. bailout, even though he said the New York Fed wanted to keep it under wraps until 2018. But Mr. Issa said it made little sense to keep the information private.
Geithner draws fire defending Fed on AIG bailout By TOM RAUM and DANIEL WAGNER - AP Democrats and Republicans alike pummeled Treasury Secretary Timothy Geithner on Wednesday over his role in the $180 billion bailout of insurance giant AIG Inc., venting public anger over Wall Street's return to prosperity while 10 percent of Americans are still jobless. Geithner, one of the original architects of the government's 2008 response to the financial crisis as president of the Federal Reserve Bank of New York, defended the use of taxpayer money as necessary to head off "potentially catastrophic damage to the economy." But members of the House Committee on Oversight and Government Reform hammered away at why regulators allowed American International Group to pass on billions of the bailout money to big Wall Street banks that were business partners.
Note to Congress: You Gave Geithner a Pass by Peter Gorenstein Treasury Secretary Timothy Geithner probably wouldn't characterize Wednesday's congressional testimony on the AIG bailout as "fun." Yet, it wasn't as grueling as it should have been. And, that's the fault of Congress. The Secretary spent much of the House hearing defending the decision to rescue the insurance giant, saying he takes "full responsibility, and great pride" in making the tough choices in those dark days. Many agree; saving AIG was, as he describes it, "terrible" and "tragic," yet necessary.
Geithner: 'I'll carry the burden' of AIG forever By David Goldman NEW YORK (CNNMoney.com) -- A day after facing furious lawmakers on Capitol Hill, Treasury Secretary Tim Geithner told CNN on Thursday that he would forever "carry the burden" of the decision to bail out AIG but defended it as the government's only option. AIG was on the brink of collapse in September 2008 when Geithner, then the president of the Federal Reserve Bank of New York, captained the troubled insurer's bailout.
The Danger behind the Fed's Exceptional Profits Mises Daily: by Mateusz Mac A few days ago, the Fed announced that it had "earned" a record-high amount of money in 2009. Then it turned $46 billion over to the Treasury. Here we are in the midst of a serious recession, with the unemployment rate high, the housing market still in a slump, and the stock market making only small steps toward recovery. In this climate, the Fed is making profits. That's impressive, isn't it? Unfortunately, the Fed's huge earnings are a signal that the economy is still in terrible shape and that its condition is worsening.
Obama pledges $8B for high-speed rail By Joseph Weber President Obama on Thursday awarded $8 billion in federal grants to start a nationwide high-speed rail system he hopes will create jobs and speed up U.S. travel. "There's no reason Europe or China should have the fastest trains when we can build them right here in America," the president said at a town-hall meeting at the University of Tampa's Bob Martinez Sports Center in Florida, one 31 states that will receive grant money. The money is part of the American Recovery and Reinvestment Act and is the largest investment in U.S. infrastructure since the Interstate Highway System was begun in the 1950s.
And So The Great Recession Continues
The Coming Obama Retirement Trap Has Started! Ron Holland . . . . Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.
Capitalist Fools Megan McArdle Commercial real estate is dominated by financial professionals, not hustlers looking for a quick flip. So why is the market about to melt down? Few places in New York are less likely to inspire grand dreams than Stuyvesant Town and Peter Cooper Village, the twin housing projects that sprawl across 80 acres of the Lower East Side. Built by MetLife in the 1940s, the project encompasses block after block of boxy brick apartment buildings and stolid public spaces, entirely barren of inviting corners or eye-catching detail. The critic Lewis Mumford dubbed it "the architecture of the Police State"; a slightly kinder motto might have been "What do you expect for $68.50 a month?"
U.S. 2009 Foreclosures Go Beyond Sun Belt States U.S. foreclosure actions firmly centered around Sun Belt states in 2009 but activity spread to previously insulated areas, and unemployment became the biggest driving factor, RealtyTrac said on Thursday. Cities in four Sun Belt states accounted for all top 20 foreclosure rates in 2009 among metropolitan areas with a population of 200,000 or more, the Irvine, Calif.-based real estate data company said. California accounted for nine of the top 20 metro foreclosure rates, followed by Florida with eight, Nevada with two and Arizona with one, the company said in its Year-End 2009 Metropolitan Foreclosure Market Report.
Yet another try at foreclosure rescue By Tami Luhb NEW YORK (CNNMoney.com) -- Under fire for the low number of people receiving long-term mortgage help, the Treasury Department on Thursday announced new guidelines that will require applicants to provide all paperwork before getting a trial modification. The new policy will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance under President's Obama foreclosure prevention plan.
House Price Recovery Just A Head Fake, Says Alpert, Especially In New York by Peter Gorenstein In the second half of 2009, house prices staged a surprising recovery, leading many to conclude that the housing bust was done. Keep dreaming, says Dan Alpert of Westwood Capital. The rise in the second half of 2009 was mainly the result of pent-up demand combined with a tax-break, subsidized mortgage rates, and other incentives. The housing market is still awash in excess inventory, and Alpert says this will eventually drive prices down to 8%-10% below the lows of early last year. The good news?
Las Vegas: Most foreclosures of any city in 2009 By Les Christie NEW YORK (CNNMoney.com) -- Cities in the so-called Sand States dominated the foreclosure rankings in 2009, with the 20 worst-hit metro areas residing in Nevada, Florida, California and Arizona. Las Vegas had the largest number of foreclosure filings of any city last year, with 12% of its households receiving at least one during the year, according to RealtyTrac, the online marketer of foreclosed homes. That was more than five times the national average.
RealtyTrac: S. Florida among top 10 for foreclosures in 2009 South Florida Business Journal The Miami-Fort Lauderdale metropolitan area ranked among the top 10 U.S. metro areas with the highest foreclosure rates in 2009, according to a newly released report by RealtyTrac, the Irvine, Calif.-based online marketplace for foreclosures. The report found there were 172,894 properties with foreclosure filings in the local metro area, or one in every 14 homes. The rate was up 43.5 percent from 2008 and up nearly 200 percent from 2007. Florida accounted for eight of the top 20 metro foreclosure rates. Only California, with nine, had more.
Calif. had most metros with high foreclosures in 2009 Silicon Valley / San Jose Business Journal California accounted for nine of the top 20 metro foreclosure rates during 2009, according to a report released Thursday by RealtyTrac. The Irvine company said California was followed by Florida with eight, Nevada with two and Arizona with one.
Obama to unveil new tax breaks to spur jobs growth, hike wages By Michael A. Fletcher - Washington Post In an effort to spur job creation, President Obama plans on Friday to unveil a $33 billion package of tax breaks aimed at encouraging businesses to hire new workers and give employees raises. The proposal would provide a $5,000 tax credit for each new worker hired in 2010, while subsidizing wage increases by reimbursing Social Security tax increases for businesses that expand their payrolls. The tax breaks would be capped at $500,000 per business, meaning that they would mostly benefit small firms, according to senior administration officials who briefed reporters on the plan. The tax break on pay increases would apply only to workers making $106,800 or less.
Obama Aid Plans for `Strained' Middle Class Limited in Reach By Mike Dorning Jan. 28 (Bloomberg) -- President Barack Obama vowed last night to help “strained but hopeful” middle-class Americans prevail over adversity. The aid programs he unveiled will be modest in scope and limited in impact, analysts said. These initiatives were a centerpiece of Obama’s first State of the Union address, which was aimed at helping him regain political momentum as he contends with an unemployment rate hovering at 10 percent and voter disaffection that cost his Democratic Party a Senate seat in Massachusetts this month.
$5,000 tax credit for each new job a big part of Obama's plan By Richard Wolf, USA TODAY President Obama's new effort to give tax credits to companies that create jobs is getting a cool reception from the nation's job creators. One sentence from his State of the Union address Wednesday night will become the focus of his visit to Baltimore today: a $5,000 tax credit for each job created on a net basis in 2010, up to $500,000 per company. The idea is to prod companies to hire more workers. They also can increase wages or hours and be reimbursed for their share of the additional Social Security payroll taxes. There's only one problem: Business groups say the credit won't do much to boost hiring.
Pelosi suggests maneuver to pass healthcare overhaul By Noam N. Levey - LA Times The speaker says the House should pass the Senate's version of the plan and then use 'budget reconciliation' to make changes that some lawmakers want. The procedure could circumvent a GOP filibuster. Reporting from Washington - Laying out a possible path to approving healthcare legislation, House Speaker Nancy Pelosi (D-San Francisco) said Wednesday that the House should pass the Senate's version and then use a process known as "budget reconciliation" to make the changes some lawmakers are demanding.
Rally For The Republic - Tom Woods Speaks! (Part 1/2)
Rally For The Republic - Tom Woods Speaks! (Part 2/2)
Wal-Mart reorganizes U.S. operations to help spur growth By Mae Anderson, AP NEW YORK — Wal-Mart Stores, the world's largest retailer, said Thursday it is realigning its U.S. operations in an effort to give more autonomy to executives in regional markets and reinvigorate U.S. growth. Wal-Mart is combining its U.S. realty, store operations and logistics divisions and reorganizing operations under three geographic business units headed up by regional presidents: West, South and North.
Appliance World shutters Denver-area stores Denver Business Journal - by Renee McGaw and Mark Harden Appliance World stores in the Denver area have been closed in the wake of the chain's parent company filing for bankruptcy protection three months ago. "Effective immediately, Appliance World stores are permanently closed," a notice on the retailer's website said Thursday. The chain has five metro-area stores, in Denver, Arvada, Aurora, Littleton and Highlands Ranch, plus one in Colorado Springs, according to the website.
Toyota's Tylenol moment By Alex Taylor III NEW YORK (Fortune) -- In the midst of its biggest recall ever, Toyota is grappling with an existential crisis. By suspending production and sales of eight models in the U.S. and recalling millions of vehicles, it is putting its business on hold for an indefinite amount of time while it attempts to correct its twin problems of sticky accelerators and faulty carpets. This is an especially difficult dilemma for the company, because it has built its reputation not on looks or performance or great deals, but upon quality and dependability.
Ford Halts Production of Vehicle in China By MATTHEW DOLAN - WSJ Ford Motor Co. has stopped production of a full-size commercial vehicle in China after discovering that the gas pedal used came from the supplier involved in the recall at Toyota Motor Co. The production halt affects the diesel version of its full-size Transit Classic commercial vehicle that Ford makes in China with one of its joint-venture partners, Jiangling Motors Corp., according to Ford spokesman Said Deep.
Tea Party Herds the Angry, Lands in Hot Water by Margaret Carlson Jan. 28 (Bloomberg) -- The Tea Party activists claimed a huge victory in Massachusetts when Scott Brown, a former Cosmopolitan centerfold driving a pickup, captured the hallowed seat of Ted Kennedy. In November, they claimed the scalp of Dede Scozzafava, the mainstream Republican forced to drop out of a special congressional election in New York when the tea partiers found her insufficiently conservative. Florida state senator Marco Rubio happily credits tea partiers for helping him pull ahead of the once-popular governor, Charlie Crist, for the Republican nomination for U.S. Senate in Florida.
Why Class Warfare Will Dominate Obama's Presidency Rick Newman There are always haves and have-nots in America, and the poor always envy the rich. That means there's an ambient level of class warfare, even when times are good. The hostility intensifies when times are tough, which is obviously the case now. And we should probably get used to it, because Americans have good reason to get more angry, not less. The outrage makes sense. Since World War II, living standards have mostly risen, with each generation better off than the one that came before. The rising tide has continually lifted the middle class, and a lot of people felt satisfied as long as they felt they were getting ahead.
Geothermal-power site withdrawn again from BLM auction Denver Business Journal A 799-acre parcel of federal land in Colorado that’s slated for geothermal development will not be offered as planned in a scheduled lease auction on Feb. 11, the Bureau of Land Management’s Colorado state office said Thursday. The tract is near Buena Vista and Mount Princeton Hot Springs. “The parcel will undergo additional environmental review and analysis,” Greg Shoop, BLM Front Range District Manager, said in a statement. “We received several substantive comments in writing after our Jan. 14 public information meeting in Buena Vista that caused us to decide to further review the current stipulations on the parcel.”
The President's Nuclear Vision By JOE BIDEN - WSJ We will spend what is necessary to maintain the safety, security and effectiveness of our weapons The United States faces no greater threat than the spread of nuclear weapons. That is why, last April in Prague, President Obama laid out a comprehensive agenda to reverse their spread, and to pursue the peace and security of a world without them. He understands that this ultimate goal will not be reached quickly. But by acting on a number of fronts, we can ensure our security, strengthen the global nonproliferation regime, and keep vulnerable nuclear material out of terrorist hands. For as long as nuclear weapons are required to defend our country and our allies, we will maintain a safe, secure and effective nuclear arsenal. The president's Prague vision is central to this administration's efforts to protect the American people—and that is why we are increasing investments in our nuclear arsenal and infrastructure in this year's budget and beyond.
Environmentalism Not About the Earth But About Control, 2 By Frederick Meekins - CHCoffeehouse Those still not convinced should ask themselves before they run off and join such groups how much control they want to cede over their lives to the beneficence of the collective. For once one signs over the very right to ownership to one’s dwelling and possessions, where does it end? Willing to relinquish rights to the conjugal affections of your spouse to the group? Don’t snicker. In many cults, those not willing to surrender their spouses to the group are labeled as being insufficiently devoted to the group or “too individualistic” in orientation. Interestingly this allegation is invoked increasingly in the churches of today as they totter ever closer to the edges of apostasy and unbelief.
UN in secret peace talks with Taliban Julian Borger - guardian.co.uk Kabul envoy met top commanders in Dubai this month to discuss terms Taliban commanders held secret exploratory talks with a United Nations special envoy this month to discuss peace terms, it emerged tonight. Regional commanders on the Taliban's leadership council, the Quetta Shura, sought a meeting with the UN special representative in Afghanistan, Kai Eide, and it took place in Dubai on 8 January. "They requested a meeting to talk about talks. They want protection, to be able to come out in public. They don't want to vanish into places like Bagram," the Reuters news agency quoted a UN official as saying, referring to the Bagram detention centre at a US military base outside Kabul.
EU signals last-resort backing for Greece By Tony Barber in Brussels and David Oakley in London The European Union made clear on Thursday it would not abandon Greece and let Athens’ mounting debt crisis jeopardise the eurozone, even as Germany and France played down suggestions they had already formulated an emergency rescue plan. “It’s quite clear that economic policies are not just a matter of national concern but European concern,” José Manuel Barroso, European Commission president, told reporters in Brussels. According to high-level EU officials, Greece would in the last resort receive emergency support in an operation involving eurozone governments and the Commission but not the International Monetary Fund.
Greek Bonds Show Waning Faith It Can Avoid Bailout By Matthew Brown and Keith Jenkins Jan. 29 (Bloomberg) -- Greece bonds and credit-default swaps show investors are starting to doubt that the nation can reduce the largest budget deficit in the European Union without help from outside. The nation’s government bonds are the world’s worst performers in January, losing 4.19 percent in local currency terms and extending their decline over the past three months to 10 percent, Bloomberg/EFFAS indexes show. Credit-default swaps tied to Greece trade at about the same levels as Dubai when it got a $10 billion bailout from Abu Dhabi in December.
Funds flee Greece as Germany warns of "fatal" eurozone crisis By Ambrose Evans-Pritchard - Telegraph Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region's economic crisis has turned dangerous and could prove "fatal" for the entire eurozone. The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading. Spreads over German Bunds reached almost four percentage points, by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral. Contagion hit Portuguese, Spanish, Irish, and Italian bonds. George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a "attack on the eurozone" by speculators and political foes. "We are being targeted, particularly by those with an ulterior motive."
No EU bailout for Greece as PM promises to 'put house in order' Greece's embattled prime minister, George Papandreou, has said his country must solve its deep-rooted budgetary problems itself, and warned that speculators were targeting Greece as the weak link in the eurozone. With Greek bonds again under ferocious pressure on the financial markets today, Papandreou said Athens was not expecting to be bailed out by the other 15 members of the single currency. "The problem we have is home-made," he said in a discussion on the future of the eurozone at the World Economic Forum in Davos. "We Greeks are responsible for putting our own house in order."
German bank chief rules out aid for crisis-hit Greece The head of the German central bank, Axel Weber, said that any aid for crisis-hit Greece at the European level would be counterproductive and impossible to justify politically. Weber, among the most influential members of the European Central Bank (ECB) board and one of the favourites to take over the presidency of the bank next year, said the ECB could not help one state when others were also struggling. "Politically, it would not be possible to tell voters that one country is being helped out so that it can avoid the painful savings that other countries have made," Weber told the Boersen Zeitung financial paper.
Europe Lays Plans for How to Bail Out Greece By STEPHEN CASTLE and MATTHEW SALTMARSH BRUSSELS — France, Germany and other European countries have begun discussing privately how they can come to the aid of fellow euro-zone member Greece, as doubts intensify over the country’s ability to get its budget under control. Despite public attempts to discourage such expectations, discussions are under way, although the shape or scale of a possible bailout package has yet to be determined, according to officials in several capitals, all speaking on condition of anonymity.
Obama promises jobs, deficit control in new focus Caren Bohan and Ross Colvin WASHINGTON (Reuters) - President Barack Obama will promise Americans on Wednesday that he will revive jobs growth and curb exploding deficits, as he seeks to recalibrate his agenda after his worst political setback since taking office. Obama's State of the Union address, which begins shortly after 9 p.m. (0200 GMT Thursday), will include a call for a bipartisan panel to address the surging federal debt. The speech follows the loss by his Democratic party of a pivotal Senate seat in Massachusetts. Obama will aim to tap into public discontent, stemming mainly from the still-struggling economy and a stubbornly high 10 percent unemployment rate, while buying time for his administration to regroup.
Text: Obama’s State of the Union Address Following is the prepared text of President Obama's State of the Union address, delivered Jan. 27, 2010, as released by the White House: Madame Speaker, Vice President Biden, Members of Congress, distinguished guests, and fellow Americans: Our Constitution declares that from time to time, the President shall give to Congress information about the state of our union. For two hundred and twenty years, our leaders have fulfilled this duty. They have done so during periods of prosperity and tranquility. And they have done so in the midst of war and depression; at moments of great strife and great struggle.
CNN's Ali Velshi interviews Congressman Ron Paul On the economy, the state of the union and the Federal Reserve
Investing in Gold? Pay close attention to Dollar By Sol Palha - Commodity Online The theme for the past few years has been to diversify into overseas markets. This theme has been taken too far. Money has flowed into these markets at stunning rates (especially China) and if the dollar should surprise everyone by mounting a strong rally, the biggest markets to get hit will be the developing markets. The theme being pumped now in these markets is that this is where the growth is (long term yes, but in the intermediate time frames these markets are more than ready to mount a strong correction). This mantra is especially true of China, where several sectors are simultaneously experiencing bubble like formations.
Dollar Near Six-Month High Against Euro on Fed Rate Outlook By Yoshiaki Nohara and Ron Harui (Bloomberg) The dollar traded near a six-month high against the euro on speculation the Federal Reserve will relax its low-interest rate stance amid signs the U.S. economy is gathering momentum, boosting demand for the nation’s assets. The dollar was near a four-month high against the Swiss franc after Kansas City Fed President Thomas Hoenig said the time has come to change the promise to keep rates low and before a report forecast to show the U.S. economy expanded at the fastest pace in almost four years. The euro was near its weakest in nine months against the yen on concern that budget deficits in the 16-nation region will widen, backing the case for the European Central Bank to keep interest rates low.
Monetary Unwinding and Secondary Recession by Gary North - Lew Rockwell Officials at the Federal Reserve System insist that the FED will unwind its more than doubled monetary base. They do not say when. They do not say how. But they insist that they will do this when the economy recovers. The FED has begun this process. The press has not paid any attention to this, but the evidence is unmistakable. Any time you want to monitor any of this, search Google for "Federal Reserve charts." You can see for yourself.
First, there has been a decline of the adjusted monetary base. This began in early December. This is the major indicator of Federal Reserve policy.
Second, M1 has also fallen in recent weeks.
Third, the M1 multiplier has yet to recover.
A Day Before Vote on Bernanke, Fed Leaves Rates Alone By SEWELL CHAN - NYTimes The Federal Reserve decided not to rock the boat on Wednesday. At its first meeting of the year, which came on the eve of a Senate vote that will determine whether Ben S. Bernanke can continue as Fed chairman, the central bank’s policy-setting committee voted to keep short-term interest rates near zero. But it offered a slightly more optimistic assessment of economic activity than it had in December. In fact, many economists are predicting much stronger growth in the fourth quarter, more than double the 2.2 percent annual rate of expansion in the third quarter.
Fed nods to Hill's economy concerns By Patrice Hill Treasury chief defends moves The Federal Reserve acknowledged concerns on Capitol Hill about consumers who are out of jobs and short on credit, saying Wednesday that it may continue programs to support mortgages, small businesses and consumers loans this year if financial conditions don't improve. The Fed's nod to senators, who say they have demanded that it pay more attention to middle-class problems in closed-door meetings with Chairman Ben S. Bernanke in recent days, came as prospects for Mr. Bernanke's confirmation to a second term continued to improve, with a vote on shutting off debate in the Senate scheduled for Thursday.
Geithner: 'I had no role' in an AIG cover up Treasury Secretary Timothy Geithner told lawmakers Wednesday that he had no involvement in an apparent attempt by government regulators to withhold crucial information about AIG's bailout from the public. "I had no role in making decisions regarding what to disclose," Geithner testified at a hearing held by the House Oversight Committee Wednesday.
Paulson: Geithner Recuse himself NY Fed - WTH is Dan Jester Goldman Sachs TARP FED Treasury Ties
See Who Was Paid Off In The AIG Bailout A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the winning end. An unredacted document obtained by the Huffington Post list the damage in detail. Goldman Sachs alone, for instance, got $14 billion in government money for assets worth $6 billion at the time -- a de facto $8 billion subsidy, courtesy of taxpayers. The list was produced as part of a congressional investigation led by the House Oversight and Government Reform Committee into the federal bailout of AIG.
Geithner AIG Recusal Was 'After the Fact,' Issa Says By Lizzie O'Leary and Andrew Frye - Bloomberg U.S. Representative Darrell Issa said he wasn't satisfied with Timothy F. Geithner's explanation that he was recused from matters involving American International Group Inc. in his last weeks running the Federal Reserve Bank of New York. Geithner, now Treasury secretary, is scheduled to testify today before the House oversight committee on the September 2008 bailout of AIG and efforts by the New York Fed to limit what the insurer made public about the rescue. Geithner was recused from "working on issues involving specific companies," including AIG, after he was nominated on Nov. 24, 2008, for the cabinet post, a spokeswoman for the Treasury Department said this month.
Geithner Says A.I.G. Rescue Prevented a Depression By MARY WILLIAMS WALSH and SEWELL CHAN - NYTimes WASHINGTON - In questioning that at times took on the air of a cross-examination, the Treasury Secretary Timothy F. Geithner on Wednesday defended the government actions in bailing out the American International Group, saying Washington did what was necessary to prevent "a second Great Depression." But Mr. Geithner said he was not involved in withholding information about deals that sent billions of taxpayer dollars from the bailout of A.I.G. , the insurance giant, to big banks. "I withdrew from monetary policy decisions," Mr. Geithner said, "and day-to-day management of the New York Fed."
Geithner Says AIG Rescue Avoided ‘Utter Collapse’ Treasury Secretary Timothy F. Geithner said American International Group Inc.’s bailout helped repair the U.S. economy, and that regulators didn’t have “the luxury of time” to get concessions from banks that benefited from the insurer’s rescue. The Federal Reserve Bank of New York, led by Geithner when AIG was aided in 2008, was motivated to “get the best deal for the American taxpayer,” he said today at a hearing of the House Oversight and Government Reform Committee.
AIG Hearing: It Wasn't My Job, Paulson Says
Why the markets hate Washington By Paul R. La Monica NEW YORK (CNNMoney.com) -The markets might be a heck of a lot calmer if everybody in Washington would just shut up. Of course, that's not going to happen anytime soon. Treasury Secretary Tim Geithner is testifying in front of Congress Wednesday about the government's mishandling of the AIG "rescue." Later on, the Federal Reserve will release its latest statement about the economy and interest rates.
Fed renews vow to keep rates low, with a dissent Emily Kaiser and Pedro da Costa WASHINGTON (Reuters) - The Federal Reserve on Wednesday offered a guardedly upbeat view of the U.S. economy and renewed its pledge to keep interest rates near zero despite the objection of one policy maker. The decision to hold rates steady by the Fed's policy-setting Open Market Committee was 9-1, with Kansas City Federal Reserve Bank President Thomas Hoenig dissenting because he wanted the central bank to eliminate a phrase vowing to keep rates exceptionally low for "an extended period." The FOMC statement reflected a somewhat brighter tone than previously and appeared to put more faith in the sustainability of a nascent economic rebound.
Bernanke bad for limited government and the little guy by JONATHAN WITT - Acton Institute This week's reappointment vote for Fed Chairman Ben Bernanke has created some strange bedfellows in Washington. A muddled middle of Republicans and Democrats supports the Keynesian's reappointment, but the real odd couples are among the opposition. For different if overlapping reasons, free market proponents and far-left figures such as democratic-socialist Bernie Sanders of Vermont are both convinced that Bernanke has done much to hurt our economy, particularly those in the bottom half of our economy.
Bernanke Met With 24 Senators After Renomination as Fed Chief By Craig Torres and Christopher Anstey (Bloomberg) Federal Reserve Chairman Ben S. Bernanke had conversations with 18 of the 23 legislators on the Senate Banking Committee prior to their 16-7 vote this month to recommend that the full Senate confirm him to a second term. The Fed chief had contact with 24 senators between August 4 and Nov. 30, almost all at congressional office buildings, after his Aug. 25 nomination to another four-year term as chairman by President Barack Obama. The meetings and phone calls were listed in a daybook provided by the Fed yesterday in response to Freedom of Information Act requests by Bloomberg News.
“This is unprecedented political contact for a Fed chairman in such a short period,” Thomas said, “especially considering Bernanke’s vow before his first Senate confirmation hearing that ‘I will be strictly independent of all political influences.’”
As Bernanke awaits 2nd term, Fed mulls exit plan By JEANNINE AVERSA, AP Now that the economy is on the mend, the Federal Reserve this year can focus on how and when to pull back the stimulus money pumped out to fight the financial crisis. With his prospects for another term brightening, Ben Bernanke will lead that effort. At their first meeting of the year, Fed policymakers are likely weighing such matters, including which tools to use. The officials resumed discussions Wednesday morning and are slated to issue a policy statement in the afternoon when they wrap up their two-day session. No major changes in rates or economic support programs are expected to be announced. The big question is whether Fed policymakers will signal their timing and strategy to reverse course.
Senate Should Reject a Second Term for Bernanke By Desmond Lachman - Amer Enterprise Institute This week the Senate should not shy away from rejecting President Obama's nomination of Ben Bernanke for a second term as Federal Reserve chairman. To be sure, Wall Street's knee-jerk reaction to such a rejection must be expected to be negative. However, the Senate should base its decision not on how Wall Street might initially react but rather on what is in the U.S. economy's longer-term interest. A careful examination of Bernanke's highly checkered record as Fed chairman over the past four years would reveal that there have to be better candidates than Bernanke to head the Fed at this difficult juncture for the economy.
The Bernanke Deception and the Stirring of American Populism Chris Whalen captures an interesting aspect of change that not only the august US Senators are missing, but most of the mainstream media in the States as well, at least judging by the discussions on their Sunday political shows. All of them seem equally out of touch, arrogantly aloof and insulated from the mood of the nation. It is interesting also to hear the financial princes growling from lofty Davos about 'Obama's outburst' regarding the Volcker Rule and the impertinence of the Americans in daring to set national regulations for their banks.
Stunned Wall Street Firms Don't Want to Wage War on Obama By Robert Schmidt (Bloomberg) When Treasury Secretary Timothy F. Geithner and White House adviser Valerie Jarrett hosted a private dinner with the leaders of six banks to discuss financial regulation on Jan. 20, the bankers soon changed the subject. The president needed to stop demonizing Wall Street, they told Jarrett, according to three people familiar with the meeting. What the executives, including Brian Moynihan, the chief executive officer of Bank of America Corp., and Robert Kelly, the chief executive of Bank of New York Mellon Corp., didn't know was that President Barack Obama, who had proposed a new tax on the biggest banks six days earlier, was about to strike again.
French Were Willing to Negotiate AIG Discounts By Jody Shenn, Bob Ivry and Alan Katz (Bloomberg) A French regulator was willing to discuss allowing lower payments to retire American International Group Inc.'s obligations to the country's banks, according to congressional testimony that undermines part of the rationale the Federal Reserve Bank of New York gave for paying full value. France's regulator was "open to further negotiations" to discuss the possibility of concessions by AIG counterparties Societe Generale SA and Credit Agricole SA's Calyon unit, in November 2008, Neil Barofsky, the special inspector general for the Treasury Department's Troubled Asset Relief Program, said in prepared remarks for a House oversight committee hearing today.
UK economy lies 'on bed of nitroglycerine' Jill Treanor and Patrick Wintour - guardian.co.uk Bill Gross deals blow to government with warning to his investors that Britain's debt makes it a 'must to avoid' The government's hopes of claiming credit for reviving the British economy suffered a severe blow today when the world's biggest buyers of bonds warned that the UK was a "must to avoid" for his investors as its debt was "resting on a bed of nitroglycerine". The intervention by Bill Gross, co-founder of California-based fund managers Pimco, came on the day official figures confirmed that Britain had emerged from the deepest recession since the 1930s – but only by the narrowest of margins.
Why No Presidental Wrath Aimed at Greedy Lawyers? By John Lillpop Capitol Hill Coffee House Everyone knows that President Obama has made health care reform his signature issue. He walks, talks, eats, and sleeps health care reform, all the while preaching that the entire American economy faces ruin unless soaring medical costs are contained. He has even stated that the issue is of such personal significance that he would be willing to leave the presidency after one-term, if needed to enact meaningful reform. Given Barack Obama's alleged passion, just why is it that the president has steadfastly refused to take on greedy trial attorneys, those ambulance-chasing barristers who are largely responsible for out-of-control jumps in health care costs?
Why the Government Wants to Hijack Your 401(k) BY KEITH FITZ-GERALD, Chief Investment Strategist, Money Morning - It's bad enough that we've been forced to bail out Wall Street. But now the Obama administration is hatching plans to raid our retirement savings, too. To say that I'm "outraged" doesn't come close to describing the emotions I experience every time I think about the government's latest hare-brained scheme. According to widespread media reports, both the U.S. Treasury Department and the Department of Labor plan are planning to stage a public-comment period before implementing regulations that would require U.S. savers to invest portions of their 401(k) savings plans and Individual Retirement Accounts (IRAs) into annuities or other "steady" payment streams backed by U.S. government bonds.
Marc Faber: The Real Value of GOLD vs Paper in Troubled Times - 1/2
U.S. May Retool Loan Program for Underwater Borrowers The Obama administration's $300 billion Hope for Homeowners program may be retooled to help the growing number of Americans who owe more than their properties are worth as current anti-foreclosure efforts fail to account for these "underwater" borrowers. The changes would be at least the third lease on life for the program, which began in October 2008 during the Bush administration and has so far helped just 96 of the 400,000 homeowners originally targeted.
Double Standard: Of Morals and Mortgages You've probably heard that a high-profile realty group that had agreed to pay $5.4 billion for a New York City housing complex just announced it was not going to make good on its loans. You might describe the (former) owners as misguided, stupid, or unfortunate. You probably wouldn't think of calling them immoral. So why is the average homeowner's decision to walk away or keep up with the payments on an underwater mortgage considered a moral issue?
Dean Baker: We're Still In a Housing Bubble By Nick Timiraos - WSJ Home prices have posted six months of gains, according to the Case-Shiller home price index, released this morning. But some housing bears say that the fundamentals don't support those price gains and that, even once the market finds a bottom, home prices aren't likely to show significant appreciation for many years to come. Housing economist Dean Baker, the co-director of the Center for Economic and Policy Research, laid out his case at a risk conference last week for why we still have a housing bubble. Adjusted for inflation, home prices are still 15-20% higher than they were in the mid-1990s. "There's no plausible fundamental explanation for that," he says.
Housing recovery could take a decade, economists warn By Renae Merle - Washington Post Even as the housing market shows signs of improvement, including in new data released Tuesday, economists warn that it could take up to a decade for many homeowners to regain equity in their homes, while some people in the hardest-hit regions of the country may not see a recovery during their lifetime. Home prices have fallen 30 percent since reaching their peak in 2006, and many economists think they will take another tumble this year as more foreclosures pile on the market. The pace of recovery will vary throughout the country, with homes in the most battered markets taking the longest to regain value.
Fed May Take Risk MBS Program End Won't Hurt Housing By Steve Matthews and Vivien Lou Chen - Bloomberg The Federal Reserve may take a chance the housing market can stage a comeback without its support by announcing today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March. Fed Chairman Ben S. Bernanke and other policy makers meet as a government report showed sales of new homes unexpectedly dropped in December. With financial markets rebounding, the central bank has said it plans to end emergency aid to bond dealers and money markets by Feb. 1.
Buffett's Berkshire to be added to S&P indexes Company will replace Burlington railroad after acquisition deal is done OMAHA, Neb. - Warren Buffett's Berkshire Hathaway Inc. will soon join the S&P 500 and S&P 100 stock indexes after it acquires Burlington Northern Santa Fe Corp., Standard & Poor's said Tuesday. Buffett's company will replace BNSF in both indexes after shareholders approve Berkshire's acquisition of the railroad company next month.
Main Street frustration: 'Everything is going to banks' By Catherine Clifford NEW YORK (CNNMoney.com) -- In his State of the Union speech Wednesday night, President Obama is widely expected to tout a slew of federal initiatives aimed at stimulating small business hiring and growth. Again. Small companies employ around half of America's workers and drive most of the country's job growth. Obama talks frequently in his speeches about the vital role small companies play, and his administration has launched several efforts to bolster struggling Main Street businesses. But most of the president's small business proposals remain in limbo, caught in bureaucratic logjams and the Great Black Hole of Congress.
Marc Faber: The Real Value of GOLD vs Paper in Troubled Times - 2/2
Americans hate their jobs more than ever Satisfaction level hits new low, especially among younger workers Americans hate their jobs more than ever before in the past 20 years, with fewer than half saying they are satisfied. The trend is strongest among workers under the age of 25, less than 39 percent of whom are satisfied with their jobs. Workers age 45 to 54 have the second lowest level of satisfaction (less than 45 percent), according a survey conducted by The Conference Board, a market information company that also puts out the Consumer Confidence Index and the Leading Economic Indicators.
Record foreclosure filings threaten housing recovery posted by Mathew Padilla - OCRegister The total of outstanding foreclosure auction notices on Orange County homes hit 10,513 at the end of December, the highest in this housing downturn, reports http://ForeclosureRadar.com . The total has more than doubled in the nine months since March, when it was 4,573. ForeclosureRadar tracks outstanding notices of trustee's sale, which announce a house or condo will be sold at auction. Such notices are usually good for only one year. Sean O'Toole, head of ForeclosureRadar, said although foreclosure filings overall decreased at the end of 2009, the backlog of delinquent loans keeps growing.
U.S. Cattle Herd Falls to 1958 Low as Losses Climb By Whitney McFerron Jan. 27 (Bloomberg) -- The U.S. cattle herd may have shrunk to the smallest size since 1958, as mounting losses during the recession spurred beef and dairy producers to cull animals, analysts said. Wholesale choice-beef prices averaged $1.4071 a pound last year, the lowest level since at least 2004, as U.S. job losses climbed and meat demand waned. Corn, the main ingredient in livestock feed, jumped to a record $7.9925 a bushel in 2008 on the Chicago Board of Trade, and prices averaged about $3.79 last year, the third-highest annual average since at least 1959.
GM offers $1,000 incentive to Toyota owners by Peter Valdes-Dapena NEW YORK (CNNMoney.com) General Motors is offering incentives of $1,000 and low financing rates specifically for Toyota customers worried about their recalled vehicles, beginning Wednesday. "We decided to make this offer after receiving many e-mails and calls from our dealers, who have been approached by Toyota customers asking for help," GM said in a statement. The offers will run through the end of February.
Ex-attorney pleads guilty in $1.2B Ponzi scam Scott Rothstein, 47, pleads guilty to all five counts against him FORT LAUDERDALE, Fla. - A disbarred attorney who courted politicians and star athletes and led a flamboyant lifestyle even by South Florida standards pleaded guilty Wednesday to federal charges that he ran a $1.2 billion Ponzi scheme. Scott Rothstein, 47, pleaded guilty to all five counts against him, including wire fraud, money-laundering conspiracy and a racketeering charge commonly used to take down Mafia chieftains. The charges carry a maximum potential sentence of 100 years in federal prison. Sentencing is set for May 6.
Oregon says yes to taxing wealthy, businesses By TIM FOUGHT - AP PORTLAND, Ore. - Oregon has set aside its history of shooting down tax increases on statewide ballots, with voters endorsing higher taxes amid a brutal economic slump. Democrats in the Oregon Legislature made it as easy as they could for the voters to raise taxes on somebody else, and the electorate responded Tuesday by approving Measures 66 and 67. The increases approved Tuesday will hit people with taxable income upward of $125,000 - estimated at fewer than 3 percent of filers. Many businesses who had been paying an annual $10 minimum will see that rise to at least $150.
The Democrats' Communication Problem By KATE PICKERT - Time Health Reform: Did the Dems Misread the Public Mood? Democrats are still smarting from Scott Brown's upset victory in Massachusetts last week. Health reform seemed inevitable and then, suddenly, it wasn't. As Karen pointed out, Democratic lawmakers are still searching for a path forward that might include reconciliation. They may succeed, but certainly not because the American people got on board with their plans. No, if Democrats manage to squeak by comprehensive health care reform legislation, they will do it in the face of polls showing that the majority of the American people oppose their efforts. Most Republicans would no doubt argue that the public is rejecting the Democratic plan for reforming the U.S. health care system, but a report released yesterday shows the Democrats came up short in a far more fundamental sense. They failed to convince the public that the system is flawed enough that it needs fixing.
Home-schoolers win asylum in U.S. By Ben Conery Germans fled 'persecution' A U.S. immigration judge's decision to grant political asylum to a German family with "a well-founded fear of persecution" for home-schooling their children should send a powerful message to the German government to change its stance on home schooling, the family's attorney said Wednesday. "Home-schoolers are not a threat to German society," said Michael Donnelly, one of the Home School Legal Defense Association's team of lawyers representing Uwe Romeike; his wife, Hannelore; and their five children.
Embrace Tea Party to Win Back N.Y. By John LeBoutillier - C H Coffehouse Last week’s stunner in Massachusetts holds a lesson for the New York GOP. Sen.-elect Scott Brown, though running on the Republican ticket, never mentioned his party in his campaign speech. Instead, he campaigned as an independent and a proud member of the tea party movement. He knew that the palpable anger of voters is directed against both major political parties.
It is not only Christians who are oppressed by the control freakery of the House of Commons By Gerald Warner - UK Telegraph - Last night's defeat by the House of Lords of the aggressively anti-Christian provisions in Harriet Harman's Equality Bill should not be allowed to gloss over the malevolent intent of the House of Commons in promoting this legislation. The impertinently intrusive provisions of the Bill demonstrated that the state has acquired pretensions far beyond its legitimate scope and urgently requires to be cut down to size.
Environmentalism Not About the Earth But About Control, Part 1 By Frederick Meekins - Capitol Hill Coffee House - For decades, American motorists have been subjected to propaganda insisting that they either need to drive less or give up safe, comfortable automobiles in favor of what amount to motorized coffins in order to preserve natural resources and environmental quality. Now that this policy goal is pretty much on the road to being implemented, the elites running our lives are not content to sit back in the glow of their accomplishment but are rather laying the groundwork for the next phase in their grand dream of limiting the free movement of the American people.
Blankfein Avoids Apology as London Risks Suicide: Mark Gilbert When almost every media mention of your institution is accompanied by the nickname “vampire squid,” you might think it prudent to learn a little humility. Not, it seems, if your name is Lloyd Blankfein. The Goldman Sachs Group Inc. chief executive officer missed another opportunity to express contrition when he appeared before the U.S. Financial Crisis Inquiry Commission earlier this month. While his answers weren’t quite belligerent, he offered little in the way of an apology.
As China Rises, Conflict With West Rises Too By KATRIN BENNHOLD DAVOS, Switzerland —As recently as 2008, when China was still an emerging economy eager to put its best foot forward for Western consumers, it lifted censorship, at least temporarily, on several Web sites before the Beijing Olympics. At the same time, it responded to pleas from U.S. and European politicians to cooperate on several other fronts.
In Davos, Signs of Shift in Global Power By KATRIN BENNHOLD and ALISON SMALE - NY Times AVOS, Switzerland — For years, the power brokers who gathered in the Swiss Alps to mull over the state of the world worried collectively about an outdated system of global governance. From the United Nations Security Council and the International Monetary Fund to the Group of 8, the arguments went, international institutions were unfit to solve global problems because they no longer represented the balance of power in the world.AL
China Reigns in Davos The 40th World Economic Forum started working in Davos on January 27. Russia’s Vladimir Putin opened the forum last year, but neither Russian, nor US leaders are going to attend the event this year. This year the forum pays special attention to developing countries – over 30 impressive delegations arrived in Davos to take part in the forum.
History repeats itself and it could happen again:
Part 1| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 2| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 3| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 4| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 5| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
Part 6| Glenn Beck Documentary: "The Revolutionary Holocaust: Live Free...Or Die" - 01/22/10
"Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem
Gold Prices Tick Up Despite Dollar's Rise Gold prices were rising Tuesday despite a stronger U.S. dollar as bargain hunters bought gold as an alternative asset. Gold for February delivery was adding $1.90 to $1,097.60 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,103.20 and as low as $1,085.20. The U.S. dollar index was rising 0.43% to $78.53. Risk appetite for commodities was on shaky ground Tuesday after Standard & Poor's announced it may lower its debt rating on Japan unless "measures can be taken to stem fiscal and deflationary pressures." There is also increased fear among investors that China could further restrict lending.
How gold created liquidity in 1907 market crash By Clif Droke In their timely look at the panic of 1907, Robert Bruner and Sean Carr focus attention on what they believe to be the underlying causes of the ’07 stock market crash and recession, drawing parallels between it and the credit crisis of more recent times. Their book, “The Panic of 1907: Lessons Learned from the Market’s Perfect Storm,” is now available in soft cover published by John Wiley & Sons (2007). The authors list seven contributing factors to the 1907 crisis:
Complexity
Buoyant economic growth
Inadequate safety buffers
Adverse leadership
Real economic shock
Undue fear and greed and other behavioral aberrations
Failure of collective action
Financial Elite's Behaviour Has Opened Floodgates for Gold by Lorimer Wilson In spite of philosophical differences in many areas of politics and economics, Ron Paul and Simon Johnson agree that the cosiness that exists between the U. S. Congress and the financial elite has not worked, and is not working, in the best interest of the average American. They both suggest that major changes must be made in that relationship to strengthen the American economy. Is it too late, however, to avoid the repercussions of an even weaker greenback, rising inflation and the opening of the floodgates in the price of all investments related to gold and silver?
Gold Advances on Speculation Dollar to Drop, Boosting Appeal Gold advanced on speculation the dollar may slip against major currencies, boosting the metal’s appeal as an alternative asset. Gold for immediate delivery climbed 0.3 percent to $1,101.35 an ounce at 9:36 a.m. in Singapore. Bullion for April delivery added 0.2 percent to $1,101.70 an ounce in New York. The Dollar Index, a six-currency gauge of the greenback’s value, shed 0.1 percent to 78.447 after strengthening as much as 0.6 percent yesterday. Gold has gained 22 percent in the past year as the dollar dropped 7.1 percent.
The Case for Commodities in 2010 (And Beyond) By Frank Holmes The biggest emerging economies have ambitious plans that require a greater share of the world's limited commodities. This trend is spurring profound and permanent disruptions in how these resources are allocated now and in the future. For investors, these disruptions present opportunities. Simply put, an investment in natural resources is a vote of confidence in global economic growth. Rapid urbanization and industrialization, better infrastructure and growing consumption in emerging markets are among the key themes in the global growth story. They are also key drivers in the rising demand for oil, steel, copper, cement and other resources.
Chinese dig deep to join the gold rush Tania Branigan in Beijing The assistant pushed the red velvet sacks across the counter discreetly. The customer quickly slipped them into her bag. With a brief, nervous look around, she walked briskly from the shop, already clutching her car keys. Few people feel comfortable lugging around a kilo of pure gold bars. But that doesn't stop Chinese shoppers from thronging to Caibai, the number one place for buying the precious metal. The Beijing store's 5,000 daily customers are at the forefront of a new gold rush.
The Fort Knox Conundrum: Chinese say they received bogus bars of gold traced to U.S. By Pat Shannan Could over 1 million bars of gold, much of which is still held in Fort Knox, Ky., be counterfeit? An October 2009 discovery that suggests this may be true has been suppressed by the mainstream media but has been circulating among the “big money” brokers and financial kingpins. It is just now being revealed to the public. Gold is regularly exchanged between countries to pay debts and to settle the so-called balance of trade. It is often also used as a hedge against a falling currency. Gold is regularly traded and stored in vaults under the strict supervision of a special organization based in London, known as the London Bullion Market Association (LBMA). That’s why news of counterfeit gold bars was a surprise to many experts.
China's Credit-Tightening Moves Could Boost the Dollar and Yen China's decision to rein in credit may help to strengthen both the yen and the dollar as investors look to avoid risk. The chairman of China's Banking Regulatory Commission, Liu Mingkang, said last week that he expects new yuan lending in 2010 to be around 7.5 trillion yuan ($1.1 trillion). That's down from 9.59 trillion yuan ($1.4 trillion) in 2009, but still more the double the 2008 level.
Volatility and Politics Are Feeding Fears of a Market Correction Javier C. Hernandez Brace yourself for another wild ride on Wall Street. Worries about the strength of the global recovery and proposals from Washington to clamp down on banks have sent fresh jitters through financial markets, prompting chatter among traders that stocks could be poised for that rare but alarming phenomenon: a correction. Such a development would mean a 10 percent or greater sell-off in everything from high-powered Nasdaq technology shares to bread-and-butter Dow industrials.
Jim Rogers on Bloomberg: Bernanke is Part of the Problem, Not the Solution!
Bernanke: Too big to fail Just a year after he unleashed a flood of dollars in a bid to prevent a second Great Depression, Ben Bernanke's job is on the line. More than a dozen senators have said they will oppose the Fed chairman's reappointment after his first term ends on Jan. 31. The rest of the vote counting is still in question. "Bernanke is caught in a crossfire, because bashing Wall Street is awfully popular politically right now," said Desmond Lachman, a resident fellow at the American Enterprise Institute in Washington. "That's the way the winds are blowing this month."
Bernanke's Job Is Done. Now the Fed Needs a Jobs Creator It's time to send Fed Chair Ben Bernanke back to Princeton University. Bernanke is an expert in Depression-era economics, and his decision to flood financial markets with cash probably saved the U.S. from the fate the nation suffered in the 1930s. But Bernanke lacks the know-how the U.S. needs now -- how to use Fed policy to create job growth. That's why I'd replace him with an economist who understands something about how to generate employment.
Gerald Celente anybody calling this a hearing is deaf
Questions Geithner Cannot Escape Please consider The Question Geithner Can’t Escape: Why Pay Off AIG’s Partners? Not only is Bernanke coming under attack, questions keep popping up about treasury secretary Tim Geithner. The latest political clamor over AIG, poised to combust next Wednesday at a House hearing on backdoor payments to banks that made risky deals with the company, centers on the Federal Reserve’s effort to conceal details of those payments. But senior officials, including Treasury Secretary Timothy Geithner, have so far evaded a key question: Why were AIG’s trading partners fully paid with taxpayer money instead of being told to take a loss?
At NYFed, Geithner was told of benefit to banks in AIG bailout By Hugh Son NEW YORK -- Timothy F. Geithner, who has denied that the financial condition of American International Group Inc.'s bank counterparties was a consideration in structuring the insurer's bailout, was told by a senior colleague that the rescue was a way to remove "uncertainty" for the firms. Buying mortgage-linked assets from banks was better "from a financial-stability perspective" than other plans to shield AIG from losses on contracts guaranteeing the bonds, Margaret McConnell, then a Federal Reserve Bank of New York vice president, wrote in an e-mail to Geithner on Oct. 22, 2008. Geithner, now Treasury secretary, led the New York Fed at the time of AIG's rescue and McConnell's e-mail.
Goldman Sachs Drove Most Costly Bargain for AIG, BlackRock Document Shows Goldman Sachs Group Inc. was the most aggressive bank counterparty to American International Group Inc. before its bailout, demanding more collateral while assigning lower values to real estate assets backed by the insurer, documents obtained by lawmakers show.
AIG and NY Fed under fire for hiding bailout facts AIG and the Federal Reserve Bank of New York have become targets of an investigation into whether the overseer had instructed the troubled insurer not to disclose certain key information to the public. Neil Barofsky, special inspector general for the $700 billion bailout, is set to tell the House Oversight Committee on Wednesday that he has initiated an investigation into whether the New York Fed instructed AIG (AIG, Fortune 500) not to disclose more than a dozen controversial counterparty transactions to the Securities and Exchange Commission.
Tom Woods on Freedom Watch w/ Judge Napolitano 1/22/10
The Never-Ending Goldman-AIG Saga Suspicions of malfeasance without much evidence. Even among those who usually find themselves in agreement, much screaming and fighting has centered on Goldman and the AIG bailout. The controversy will be the subject of yet another potentially inflamed congressional hearing today. At issue is whether the New York Fed (proprietor, Tim Geithner) engaged in shameful and scurrilous activity in OK'ing terms that fully covered Goldman Sachs and other counterparties on certain AIG commitments to cover losses on mortgage-related derivatives.
'It All Came Together': Emails Reveal Fed Staffers During AIG Crisis By MICHAEL R. CRITTENDEN And SERENA NG At 10.47 p.m. on Nov. 9, 2008, the culmination of a frenetic week in which government officials hatched a deal to prevent American International Group Inc. from a major ratings downgrade and possible bankruptcy, a senior Federal Reserve official sent a congratulatory email. "it all came together....amazing to watch it happen over the course of the day," wrote Sarah Dahlgren, the Federal Reserve Bank of New York's point person on AIG, in an email titled "busy day" to several of the Fed's outside advisers. "can't believe what's happened in just under eight weeks...and there's a long road ahead..." she added. "please share with your team.....this is a milestone on the journey."
Judge Napolitano: Could Geithner Face Criminal Charges over AIG Coverup?
Helicopter Ben Bernanke: Understanding the Chairman By: Dr. Jeffrey Lewis When it comes to precious metals investing, there is no entity as important as the Federal Reserve. The Federal Reserve, which sets monetary policy and has a direct impact on the purchasing power of the greenback, has virtually complete control over inflation, deflation and the price of your metals. In the coming weeks, Ben Bernanke, the current Fed chairman, will be up for reappointment by the Senate of the United States. Bernanke's reappointment is virtually guaranteed, with enough lawmakers on either side of the aisle willing to give him a second term. Many lawmakers, happy with his swift actions following the financial crisis, have said they will absolutely vote to reappoint him as head.
'Daunting' outlook will mean bulging deficits The U.S. government's fiscal outlook is "daunting," with deficits averaging at least $600 billion a year over the next decade, the Congressional Budget Office said Tuesday. The debt accrued over the next 10 years will top $6 trillion -- $1.35 trillion of which will hit this year. And that's the optimistic projection: The agency's forecast assumes that lawmakers don't adopt the very expensive policies everyone expects them to adopt.
No Brakes on This Train Things are so bad in Congress these days that it can’t even outsource the tough decisions. The Senate today rejected a proposal to create a bipartisan commission to come up with a plan to address the federal government’s mountain of debt. Under the legislation, the commission would come up with a plan to reduce future deficits—some combination of spending cuts and tax increases—and submit it to Congress for an up-or-down vote after this year’s congressional elections. Only 53 senators voted for the commission—seven short of the 60 needed to create it. Many Democrats feared the commission’s plan would lead to cuts in entitlements like Social Security and Medicare, while many Republicans didn’t want to open the door to tax increases.
Creating the Next Great Depression
White House, Democratic lawmakers cut deal on deficit commission Faced with growing alarm over the nation's soaring debt, the White House and congressional Democrats tentatively agreed Tuesday to create an independent budget commission and to put its recommendations for fiscal solvency to a vote in Congress by the end of this year. Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs -- including Medicare, Medicaid and Social Security -- that threaten to drive the nation's debt to levels not seen since World War II.
Obama to Call for Three-Year Freeze on Some Spending By Roger Runningen President Barack Obama will call in his State of the Union address for a three-year freeze on spending for many domestic programs as part of his strategy to rein in the federal budget deficit. The proposal, which wouldn’t affect spending on national security, would save an estimated $250 billion over a decade and reduce the deficit by $10 billion to $15 billion in 2011, according to two officials, who briefed reporters on the plan. Last year’s budget shortfall was a record $1.4 trillion, and the Congressional Budget Office today forecast this year’s will be $1.35 trillion, second-highest ever.
Is the president panicking? by Robert Reich His spending freeze invokes memories of Clinton's shift right in '94. It's worse because it could doom the recovery President Obama today offered a set of proposals for helping America’s troubled middle class. All are sensible and worthwhile. But none will bring jobs back. And Americans could be forgiven for wondering how the president plans to enact any of these ideas anyway, when he can no longer muster 60 votes in the Senate. The bigger news is Obama is planning a three-year budget freeze on a big chunk of discretionary spending. Wall Street is delighted. But it means Main Street is in worse trouble than ever. A spending freeze will make it even harder to get jobs back because government is the last spender around. Consumers have pulled back, investors won’t do much until they know consumers are out there, and exports are minuscule.
Senate nixes debt commission The Senate on Tuesday rejected a proposal to create a bipartisan commission charged with reining in the country's debt. The goal was to create a framework to force Congress to make some tough choices -- specifically tax increases and spending cuts. Had it passed, Congress would have been required to take speedy votes on the commission's recommendations. The recommendations would have gone up for a vote by the end of this year.
Debt limit: What's the fuss? Before closing shop for the year, the Senate on Thursday raised the debt ceiling by $290 billion. That's good: The government needed to act so it can keep borrowing the money it needs to pay the bills. And $290 billion sounds like a lot of money. But it's not really. In fact, it's only expected to cover the Treasury's borrowing needs through mid-February.
$4.8 trillion - Interest on U.S. debt Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest. More than half. In fact, $4.8 trillion. If that's hard to grasp, here's another way to look at why that's a problem. In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.
Deficit: What caused it, why it matters The government is spending more than it's bringing in. A lot more. The result is a deficit. Here's why that gap must be brought under control. When George Bush took office at the beginning of 2001, the federal government was running a substantial budget surplus and projected rising surpluses "as far as the eye could see." Now, the United States is facing massive current deficits -- as a share of the economy, the largest since World War II -- and an increasingly dire and unsustainable outlook over the next 10 years and beyond.
The Founding of the Federal Reserve
With a Recovery Like This, Who Needs Enemies? By Bill Bonner What a recovery! If the economy keeps recovering like this we’ll soon all be busted… House sales are falling…unemployment is rising…and people are getting poorer! The Dow rallied a piddly 23 points yesterday. Oil is selling for less than $75 this morning. Stocks are in trouble. As we said yesterday, this could be the beginning of the end for this bear market. We’ve seen the first leg down. We’ve seen the rally. We’re ready for the next big plunge. Yesterday, the latest numbers on existing house sales for December came out. They were disappointing – nearly 17% lower than the year before.
Japan's debt at risk. Is U.S. next? Credit rating agency Standard & Poor's raised the prospect of a downgrade in Japan's sovereign debt rating Tuesday. That's reigniting fears that the U.S. could be next. The agency said it is concerned about large deficits and a sluggish growth outlook in Japan -- which currently ranks as the world's No. 2 economy. S&P lowered its outlook on Japan's debt to negative from stable. The reduced outlook signals the risk of an actual downgrade in its debt in the future. S&P's rating on Japan's debt is AA, one step below its best possible rating.
Congressional Budget Office Sees 2010 Budget Deficit of $1.35 Trillion Washington (AP) - The latest congressional budget estimates out Tuesday predict a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession. The Congressional Budget Office report predicts a sluggish economic recovery and continued high deficits that present twin political problems for President Barack Obama and his Democratic allies.
On the Edge with Max Keiser - 22 January 2010 (1/3)
Fed Weighs Interest on Reserves as New Policy Rate Federal Reserve policy makers are considering adopting a new benchmark interest rate to replace the one they’ve used for the last two decades. The central bank has been unable to control the federal funds rate since the September 2008 bankruptcy of Lehman Brothers Holdings Inc., when it began flooding financial markets with $1 trillion to prevent the economy from collapsing. Officials, who began a two-day meeting at 2 p.m. today in Washington, have said they may replace or supplement the fed funds rate with interest paid on excess bank reserves.
The Federal Reserve Is Inflating Another Bubble By Thomas Brewton Stock market exuberance is symptomatic of a rapidly expanding money supply’s corrosive effect. In the last two trading days of the week ending January 23rd, the Dow Industrial Index plummeted 430.170 points, the worst decline in a year. Major factors, according to Street gossip, were continuing weakness in corporate sales and growing fears that Helicopter Ben Bernanke might not be re-appointed Fed chairman.
Obama's deficit-reduction plan - State of the Union President Obama's State of the Union address will raise the curtain on how he plans to tackle the unsustainable growth in U.S. debt over the next decade. At the same time, he'll be engaged in a tough balancing act: Laying out how he'll close the gap while making proposals to boost hiring and help the middle class. Obama is set, for instance, to offer a number of sweeteners such as nearly doubling the child care tax credit. How can he square the circle? For one thing, the expectation is that most deficit-related measures he proposes wouldn't be implemented before the economy regains a stronger footing.
On the Edge with Max Keiser - 22 January 2010 (2/3)
Obama Puts Social Security on the Chopping Block Hope for lasting liberal change was washed away on Tuesday-not just with the loss of the Democrats' super-majority in the Senate, but with a closed-door deal that would lead to cuts in bedrock liberal programs such as Social Security, Medicare, and Medicaid. While Massachusetts voters were casting their ballots to install Republican Scott Brown in Ted Kennedy's Senate seat, President Obama was hammering out an agreement with Democratic leaders to support a commission on the deficit with the power to propose reductions to entitlement programs. This proposal represents a capitulation to conservatives in both parties, and leaves liberals surrendering not only on health care, but on the core achievements of the New Deal and the Great Society.
Double Standard: Of Morals and Mortgages You've probably heard that a high-profile realty group that had agreed to pay $5.4 billion for a New York City housing complex just announced it was not going to make good on its loans. You might describe the (former) owners as misguided, stupid, or unfortunate. You probably wouldn't think of calling them immoral. So why is the average homeowner's decision to walk away or keep up with the payments on an underwater mortgage considered a moral issue?
Renters Market by Katie Kuehner-Hebert Commercial and residential rents are dropping across the U.S., creating big problems for small property owners. The weak economy has hammered many of the mom-and-pop stores that rent commercial space from Robert Phillips, whose company owns and manages property in San Diego. In some cases he has helped them through tough times by offering them as much as four free months of rent. “The retail sector especially is really struggling, so everybody’s looking for help,” says Phillips, president and chief executive officer of Pacific Coast Commercial Asset Management.
The Dead Loan Zone by Charles P. Wallace The economy is starting to show signs of recovery, but deep exposure to bad commercial real estate loans coupled with ongoing joblessness will hit small banks for years to come. As 2009 draws to a close, the banking industry is reeling from one of its worst years ever. There were 133 bank failures in the U.S. as of mid-December, up from 25 the year before. The bank-failure problem is straining the resources of the Federal Deposit Insurance Corp., which has demanded a bailout of sorts for itself from larger, more stable lenders. Even as the economy returns to slow growth mode, the troubled job market begins to stabilize and the systemic risk within the financial system appears to subside, the banking industry will continue to suffer. The aftershocks of the two-year-old financial crisis will continue to be felt in 2010. While most of the troubles in the residential real estate market have washed through bank balance sheets, problems in the commercial real estate market are still cresting.
On the Edge with Max Keiser . . . and Chris Cook
Home Depot to cut 1,000 staffers as it consolidates jobs, ends some pilot programs By: MAE ANDERSON AP Home Depot Inc., the largest U.S. home-improvement retailer, said Tuesday it is laying off 1,000 staffers as it cuts three pilot programs and cuts some support positions. An internal memo sent to staffers by CEO Frank Blake said about 900 of the cuts stem from consolidating some support functions in its human resources, finance and other divisions. The rest come from the company closing a small-format pilot store in Wilson, N.C.; a temporary hurricane recovery outlet in Waveland, Miss.; and a clearance outlet in Austell, Ga. Blake said in the memo there were no plans to close any full-size Home Depot stores.
Senate Democrats Said to Consider $80 Billion Jobs Legislation Lawmakers are set to consider a jobs-stimulus package totaling about $80 billion that would provide tax credits to small and medium-sized businesses that hire workers, a Democratic senator said. The plan, to be presented today to Senate Democrats, would include aid to state governments to prevent layoffs and additional funding for infrastructure projects, said the senator, who asked not be identified. The package also will likely include energy-related provisions such as incentives to weatherize homes, a Senate aide said.
Manchurian Candidates: Supreme Court allows China and others unlimited spending in US elections In Thursday's Supreme Court decision in Citizens United v. Federal Election Commission, the Court ruled that corporations should be treated the same as "natural persons", i.e. humans. Well, in that case, expect the Supreme Court to next rule that Wal-Mart can run for President. The ruling, which junks federal laws that now bar corporations from stuffing campaign coffers,will not, as progressives fear, cause an avalanche of corporate cash into politics. Sadly, that's already happened: we have been snowed under by tens of millions of dollars given through corporate PACs and "bundling" of individual contributions from corporate pay-rollers. The Court's decision is far, far more dangerous to U.S. democracy. Think: Manchurian candidates
Dr. Bill Deagle - Financial Armageddon 2010
Record number of young Americans jobless CHICAGO (Reuters) - The U.S. economic recession has taken a particularly heavy toll on young Americans, with a record one out five black men aged 20 to 24 neither working nor in school, according to research released on Tuesday. Teenagers have found it significantly harder to get a job since the recession began in late 2007, with black youths and young people from low-income families faring the worst, wrote Andrew Sum of Northeastern University in Boston, a employment researcher commissioned by the Chicago Urban League and the Alternative Schools Network. "Low-income and minority youth, who depended on part-time jobs as a significant stepping stone to future employment, have been forced out of the job market and economically marginalized," Herman Brewer of the Chicago Urban League said in a statement.
Verizon to Cut 13,000 Jobs, Posts Loss By ROGER CHENG Verizon Communications Inc. swung to a fourth-quarter loss as a result of heavy charges, and announced plans to cut 13,000 more jobs as executives cast a downbeat note on the economic recovery. While the New York telecommunications giant's wireless arm remained resilient in the face of lower consumer spending, its legacy wireline segment wasn't so fortunate. Verizon said there haven't been any indications of a pickup in spending on the business side, while the number of new FiOS customers disappointed Wall Street.
Murray Rothbard: The Railroading of the American People (American Economy Lecture #2)
Foreclosure relief program riddled with flaws Latest effort to save homes having only limited impact, faces challenges By John W. Schoen Millions of Americans who are struggling to save their homes from foreclosure are trapped in a labyrinth of disappointment and misinformation created by the very institutions they've been told are trying to help them. Ten months into the government's third program in two years to stop a record wave of foreclosures, homeowners, housing counselors, consumer advocates and attorneys working with borrowers report that the latest effort is falling far short of its goal. In many cases, lenders are moving to foreclose even after homeowners get approved for loan modification, housing counselors and attorneys say.
GM to build electric motors in Maryland Betting that hybrid and electric vehicles will play a growing role on American highways, General Motors is expected to announce Tuesday a $246 million investment to add production of electric motors at its White Marsh, Md., manufacturing plant. The decision reflects confidence at GM and other automakers that the "electrification" of the U.S. fleet is not far away, with GM officials likening the importance of electric-motor technology to that of engines in gasoline cars.
General Motors says it has agreed to sell Saab to Dutch carmaker Spyker By: TOBY STERLING AP AMSTERDAM - General Motors Co. said Tuesday it has reached an agreement to sell its struggling Saab Automobile arm to the small Dutch luxury carmaker Spyker Cars NV. GM has not specified terms of the deal, but a Wall Street Journal report citing anonymous sources says the sale price is roughly $74 million, and GM will retain preferred shares in Saab worth $326 million. As part of the deal, the Swedish government will guarantee a euro400 million ($566 million) loan from the European Investment Bank to Spyker, the Journal reported.
After Three Months, Only 35 Subscriptions for Newsday's Web Site Web site redesign and relaunch cost the Dolans $4 million In late October, Newsday, the Long Island daily that the Dolans bought for $650 million, put its web site, newsday.com, behind a pay wall. The paper was one of the first non-business newspapers to take the plunge by putting up a pay wall, so in media circles it has been followed with interest. Could its fate be a sign of what others, including The New York Times, might expect? So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com? The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.
The Dark Side of Inspiration: Avatar’s Suicide Hotline In 1977, I stood up and cheered along with my fellow moviegoers, as Luke Skywalker destroyed the Death Star in that summer’s visionary blockbuster Star Wars. Our joyful reaction was involuntary. And I remember how energetic I felt following the movie when we stepped out of the dark theater into the bright sunshine: infused with youthful energy and hope for all the things I would do in my life. Many viewers of this year’s blockbuster Avatar are experiencing the opposite response to the film – that is, entering the darkness as they exit the theater – a response that now has Avatar suicide hotlines and depression forums set up worldwide to support them. People are looking around at their world, our world, and struggling with feelings of depression and hopelessness, including suicidal thoughts. They long for the beauty of Pandora, the film’s utopian world, and – importantly – they feel that attaining that world in this one is impossible.
Oliver Stone: bankers helped Hitler Oscar-winning director adds to storm he kicked up earlier this month over his upcoming TV documentary, The Secret History of the United States Adolf Hitler was aided in his rise to power by western bankers who appreciated his tough line on communist agitators and worker power, Oliver Stone told reporters in Bangkok yesterday. Following on from the comments he made to TV critics in Pasadena earlier this month about his upcoming 10-hour TV documentary on The Secret History of the United States, the film-maker said the German dictator had seduced the nation's military industrial complex with his ambitious promises. In the Thai capital to deliver a lecture to high-school students on the role of film in peace-building, Stone said: "Hitler is a monster. There is no question. I have no empathy for Hitler at all. He was a crazy psychopath.
Murray Rothbard: The Civil War and Its Legacy (American Economy Lecture #1)
With Apple Tablet, Print Media Hope for a Payday by Brad Stone and Stephanie Clifford With the widely anticipated introduction of a tablet computer at an event here on Wednesday morning, Apple may be giving the media industry a kind of time machine - a chance to undo mistakes of the past. Almost all media companies have run aground in the Internet Age as they gave away their print and video content on the Web and watched paying customers drift away as a result. People who have seen the tablet say Apple will market it not just as a way to read news, books and other material, but also a way for companies to charge for all that content. By marrying its famously slick software and slender designs with the iTunes payment system, Apple could help create a way for media companies to alter the economics and consumer attitudes of the digital era.
1983 Apple Event Bill Gates and Steve Jobs
Internet companies voice alarm over Italian law By Daniel Flynn Draft law alarms Internet companies and civil groups Internet companies and civil liberty groups have voiced alarm over a proposed Italian law which would make online service providers responsible for their audiovisual content and copyright infringements by users. The draft, due to be approved next month, would make Internet Service Providers (ISPs) like Fastweb and Telecom Italia, and Web sites like Google's YouTube, responsible for monitoring TV content on their pages, industry experts say.
Pentagon Report Calls for Office of ‘Strategic Deception’ By Noah Shachtman The Defense Department needs to get better at lying and fooling people about its intentions. That’s the conclusion from an influential Pentagon panel, the Defense Science Board (DSB), which recommends that the military and intelligence communities join in a new agency devoted to “strategic surprise/deception.” Tricking battlefield opponents has been a part of war since guys started beating each other with bones and sticks. But these days, such moves are harder to pull off, the DSB notes in a January report (.pdf) first unearthed by InsideDefense.com. “In an era of ubiquitous information access, anonymous leaks and public demands for transparency, deception operations are extraordinarily difficult. Nevertheless, successful strategic deception has in the past provided the United States with significant advantages that translated into operational and tactical success. Successful deception also minimizes U.S. vulnerabilities, while simultaneously setting conditions to surprise adversaries.”
US not ready to cope with biological terror attack, report warns Obama administration lax in preparing measures to protect large numbers of Americans at risk, says commission Barack Obama is planning to announce new proposals to respond to any bioterrorism attack after a government commission today warned that the US was ill-prepared for such an event. The commission on the prevention of weapons of mass destruction proliferation, set up by Congress to monitor the government's readiness for a nuclear or biological attack, said the Obama administration had been lax in preparing measures to protect the large numbers of Americans at risk from the release of deadly viruses or bacteria.
Gen. Petraeus: Afghan War Will Take Longer Than Iraq CENTCOM Commander Hasn't Heard Any Talk of a Timetable In an in-depth interview with the Times of London gearing up for the London Conference on Afghanistan later this week, CENTCOM commander General David Petraeus again cautioned that the war was going to "get harder before it gets easier." Likening the January 2007 surge in Iraq to President Obama's December escalation, the general said he thought that the war in Afghanistan was going to take longer than the war in Iraq.
Mediterranean Union - Barcelona Process to have Barcelona meeting today The Barcelona Process was officially launched in Barcelona, Spain on November 27-28, 1995 by Javier Solana. Fifteen EU nations and twelve North African and Middle East nations (Libya excluded) participated. Javier Solana was given sole credit for the diplomatic accomplishment. The USA was denied participant status at that meeting and was given "observer status only." The goals were to:
Battle religious fundamentalism, world-wide.
Favorable trading terms for the participants leading to a Mediterranean Free Trade Zone by 2010.
Get the USA out of the Mediterranean and/or greatly reduce its presence there.
Behind the scenes, Javier Solana and friends have been intensely busy with various hidden manifestations and d/b/a's (doing business as) of the Barcelona Process entity. It has been variously known as:
European Neighbourhood Policy
Union for the Mediterranean (UfM)
MFTZ (Mediterranean Free Trade Zone)
Euro-Mediterranean Free Trade Zone
EU-MEFTA (European Union - Mediterranean Free Trade Association)
Solana director of Spanish Security Strategy -- Just in time for Spanish EU/WEU joint presidencies! Well, maybe Acciona, the ESADE Business School, etc. aren't enough. Looks like our very good friend is back -- this time as director of the Spanish Security Strategy. This sounds so very much like his carefully crafted European Security Strategy. More important, this new appointment for Javier Solana comes JUST IN TIME for the Spanish EU - WEU joint presidencies to begin in just a few days. His alter ego, Cristina Gallach has been named the spokesperson for those Spanish presidencies. The next six months should be very interesting, perhaps disturbing, and most revealing. In addition to the link on the headline, here's another place to practice your Spanish by reading about it in that language from very current news.
Roubini Never More Pessimistic on Euro Area, Calls Spain a Risk By Simon Kennedy and Thomas R. Keene New York University Professor Nouriel Roubini said he’s never been more pessimistic about the future of European monetary union, saying Spain poses a looming threat to the euro region holding together. “Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos, Switzerland. “It’s a rising risk.”
Fears of Greek debt crisis ease as investors rush for bonds Concerns over a possible debt crisis in Greece eased yesterday after huge demand for the Greek Government’s first bond issue of this year. Greece had planned to sell €5 billion (£4.4 billion) of new five-year bonds to investors, but, after about €25 billion of demand emerged, it decided to issue €8 billion. The auction had been seen as a key test of investors’ appetite for Greek government debt and was heralded as a triumph by the authorities in Athens. “There was a lot of interest,” Spyros Papanikolaou, head of Greece’s public debt management agency, said. “This proves the trust [that] investors have in Greece’s economy. Greece [has] proved [that] it can raise the funds it needs for 2010 without a problem.”
Greece’s Near Miss, Spending Reform, Volatility Returns, The New Oil Frontier and More! by Addison Wiggin & Ian Mathias We can hear the sigh of relief all the way across the Atlantic. The euro survived its gravest test since inception early this morning. Greece, nation of olive groves and ancient myths, successfully issued about $13 billion in debt at auction. In a foreshadowing event for all nations with heavy debt loads, the Greek treasury will have to pay 6.2% interest on the notes -- half a point higher than when the auction began and nearly three points higher than the German equivalent.
Davos Too Big to Fail as Bankers Recoil in Political Backlash For a sign of how the mood has changed at the World Economic Forum in Davos this week, consider the speakers at an invitation-only client lunch hosted by Paul Calello, who runs Credit Suisse Group AG’s investment bank. Last year’s panel on “Financial Market Dynamics” featured senior executives from financial companies JPMorgan Chase & Co., Blackstone Group LP, hedge fund Eton Park Capital Management and NYSE Euronext. This year clients will learn about “Leadership, Responsibility and the Recovery of the Financial System” from U.K. and Swiss regulators and Laura D’Andrea Tyson, an economics professor who has served in the U.S. government.
DAVOS-Head of Davos security dead, police suspect suicide DAVOS, Jan 26 (Reuters) - The police commander heading security at the World Economic Forum in Switzerland was found dead on Tuesday, local authorities said, adding that his death appeared to be suicide.
Koreas exchange fire near sea border, markets drop North and South Korea on Wednesday exchanged what appeared to be artillery fire near a disputed sea border with the South off the west coast of the peninsula, Yonhap news agency reported government officials as saying. South Korea's presidential Blue House said both sides were firing into the air and there were no casualties, according to Yonhap. It has called a meeting of top national security officials. The rare exchange of fire rattled markets, with Seoul's main stock exchange extending losses and the won wiping out early gains against the dollar.
Two Koreas trade fire, spooks markets By Jack Kim SEOUL, Jan 27 (Reuters) - North and South Korea exchanged artillery fire near their disputed sea border on Wednesday, the second time in three months the rivals have clashed and briefly sending prices down on jittery Seoul financial markets. Analysts doubted the latest clash would escalate and saw it more as an attempt by Pyongyang to stress the instability on the Korean peninsula and press home its demand for a peace deal that would open the way to international aid for its ruined economy.
North Korea may be readying missile test SEOUL (Reuters) - North Korea has declared a no-sail zone off its west coast, indicating it may be readying to test-launch missiles in the area, South Korean news broadcaster YTN on Tuesday quoted a military official as saying. The area is near a contested sea border with the South that was the site of a brief naval clash in November between the states, technically still at war, that left a South Korean ship pockmarked with bullet holes and a North Korean vessel limping back to port in flames. About a month before that clash, North Korea rattled regional security by firing short-range missiles off its east coast.
Dubai Helps Iran Evade Sanctions as Smugglers Ignore U.S. Laws On a sweltering mid-October evening, horns blare as pickup trucks at Dubai Creek wharf jockey to deliver cargo bound for Iran. Televisions, cartons of toothpaste, car parts, refrigerators and DVD players stretch for about a mile on the dock along the murky waterway that snakes to the Persian Gulf.
In the Next Industrial Revolution, Atoms Are the New Bits By Chris Anderson The door of a dry-cleaner-size storefront in an industrial park in Wareham, Massachusetts, an hour south of Boston, might not look like a portal to the future of American manufacturing, but it is. This is the headquarters of Local Motors, the first open source car company to reach production. Step inside and the office reveals itself as a mind-blowing example of the power of micro-factories. [note- he used an iMac to design the chip]
Americans' love affair with motorhomes By Kevin Connolly It was the Germans who invented the motor car and steered us all towards the boundless possibilities and endless problems of the age of internal combustion. But it took the genius of America to recognise that with a little extra hammering and spannering the motor car could readily be converted into the motor home. I am told it was a matter of days - weeks at most - before someone had converted the first horseless buggy into the first recreational vehicle (RV). It was a clumsy-looking behemoth whose passengers rode - very slowly - high above the road surface on what was essentially a four-wheeled roof garden, complete with balcony. But practicality was not the point. The point was Americans had brought their restless love of the open road and their romantic affinity for far horizons into the motor age.
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Tues 01.26.2010
The Scary Budget Numbers By David Walker The recession and attendant financial shock appear to be easing as I write this. But in Washington, financial imprudence is part of the fabric of government. You can see that in a single document that gets updated every year: the US budget. In putting together the budget, the president and Congress set our national priorities and allocate resources among them. The results have been pretty consistent. Over the forty years ending in 2008, revenues have averaged about 18.3 percent of our economy and spending has averaged over 20.6 percent, resulting in an average deficit of about 2.4 percent.
Marc Faber on the debt threat
The push for a debt commission The Senate on Tuesday is likely to vote on a proposal that would create a bipartisan commission charged with reining in the country's debt. The goal: Create a framework for forcing Congress to make some tough choices -- specifically tax increases and spending cuts. In a surprise move Saturday, President Obama issued his support for the fiscal commission proposal, which was introduced as an amendment to legislation that would raise the country's legal debt limit by $1.9 trillion.
We Are All Speculators Now n·vest (n-vst) v.in·vest·ed, in·vest·ing, in·vests v.tr.1. To commit (money or capital) in order to gain a financial return
When the Keynesian fractional reserve fiat banking model was sold to the public, the idea was that the citizens would accumulate wealth and prosper, furthering wealth and prosperity among the many and building the nation from the ground up. Using hindsight, we now know it was all a fraud. The American Dream was sold on the idea that a citizen could work hard and save. You could "invest" your savings and earn a rate of return greater than the increase in the cost of living, thus increasing your real wealth over time with the magic of compound interest. That was the incentive to save.
A Simpleton’s Trade: Sell US Stocks and Buy Gold Bill Bonner The yen is falling. It's down 5% against the dollar since November. Investors are finally noticing. With a deficit of 50% of GDP, the Japanese government walks where angels fear to tread. Americans aren't far behind. To make a long story short, our money is on the angels. Only an economist would dare to look 10 years ahead. Only a fool would put money on it. Today, we do both. But our new "Trade of the Decade," is not so much a look into the future as it is a look at the past.
Gold is in long term bull market The timing for an intermediate low for gold has arrived. January 21st is day number thirty-three in the originally anticipated window of 31 to 37 trading days from the December 3rd high. The magnitude of the past two day’s action (down $53) likely did a good job of shaking out many long speculators. If prices stabilize and then turn higher in the coming weeks we will have enough participants back on the sidelines to support the next rally. We continue to categorize the break as merely a correction in what will be viewed as a pause in the longer term bull market.
Expect gold to gain more than 30% this year Gold ended 2009 on a disappointing note as a sharp correction resulted in by far the worst December performance since the bull market began in 2001. The yellow metal, nevertheless, posted its ninth consecutive higher year-end close and enjoyed its third best year out of the past nine by appreciating 25 per cent. However, what transpired in December deserves closer examination.
Bernanke, Freddie & Fannie, tax cuts and student loans
Next decade is all for gold In the coming decade, nobody can stop the rise of gold, that is what the opinion of Owen Hegarty, an Australian expert in mineral resources. He told a Chinese news agency that gold prices are expected to remain on an upward track in a decade to come despite recent fluctuations. For the foreseeable future, or at least in this decade, all reasons to buy gold are positive, he said.
Gold advances as dollar dips Gold prices recovered in Asian trade Monday as the dollar dropped, reviving demand for the precious metal as an alternative asset. Spot gold was seen trading at $1,099.81 an ounce at 12.00 noon Singapore time while February delivery in New York was at $1,099.20 an ounce at the same time.
Gold unlikely to fall below $1000: Jeff Nichols Gold gained over 24% in 2009 recording a high of $1226 in December which led analysts to predict the yellow metal to zoom to $1500 and beyond in 2010. But dollar strength and tight liquidity conditions due to monetary policies announced in China and banking restrictions on risk taking by US President Obama have cast shadows in the commodities sector.
Chinese Dragon Rattles Commodities, Gold, Brazil Although the US remains the world's #1 economy it's increasingly feeling the heat of a Chinese dragon, breathing down its neck. At the beginning of the twenty-first century, the US-economy was eight-times larger than China's - a decade later the figure was down to four-times. China's $4.9-trillion economy has already passed Germany's to become the world's third largest, and is on course to overtake #2 Japan this year. China has emerged to become the world's largest exporter, shipping $1.2-trillion of goods abroad last year, and overtaking Germany, which held the title of world's biggest exporter since 2002. Factories employing low-paid workers to assemble iPods, computers, shoes, and toys are leading the boom.
For 9 years, no stopping gold Gold has gained some new status in 2009 with more and more investors putting their money on gold. In 2009, gold price surged 24.6% to close at $1,096 per ounce after breaking through the $1,000 psychological resistance level. 2009 marked the 9th uninterrupted gain in gold price. Prior to that gold price fell for 20 years. Between 2004-2008, 60% of the gold came from mines, 28% from recycling of gold from scrap and another 12% from sales by central banks.
U.S. gold ends higher, but investors cautious U.S. gold futures ended higher Monday on a combination of a dollar drop, crude oil gains and renewed physical buying after last week's sharp losses. Gold for February delivery GCG0 settled up $6 at $1,095.70 an ounce on the COMEX division of the New York Mercantile Exchange.
US Mint Silver Eagle Sales Top 3 Million, Best Ever January US Mint American Silver Eagle sales have already scored their best ever January. Who would have thought? After all, there is still a full week left in the month. On top of that, the bullion coins are rationed, they were unavailable for seven days, and U.S. silver futures tumbled 8.1 percent last week (6.7 percent in London). Yet, January 2010 is now in the history books. It is the best starting month of a year for the series that dates back to 1986. Despite all the aforementioned obstacles, authorized buyers scooped up 3,090,500 Silver Eagles from the United States Mint as of Friday, Jan. 22.
Art Cashin: Bank-Bashing May Cause Bear Market US markets rose Monday, after logging the worst week since March 2009. What's driving today's stock action and what's next? Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock market insights. Cashin said the main factor lifting markets is "the Bernanke Bounce": optimism arising from hopes that Ben Bernanke is closer to winning a second term as Federal Reserve chairman.
Legalize Competing Currencies Dr. Ron Paul, U.S. Congressman Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae. They have even set up a commission to investigate the crisis as if it were all in the past.
Dollar May Resume Fall, JPM Says: Technical Analysis The dollar may resume its long-term decline because it failed to break through key resistance levels even after a two-month rally, JPMorgan Chase & Co. said. The Dollar Index, which InterContinental Exchange Inc. uses to gauge the strength of the greenback against a basket of six currencies, needs to break through 79.02, a 38.2 percent retracement of its decline to a 15-month low of 74.17 in November from 86.871 in April, to “seriously question” the currency’s long-term slide, wrote Niall O’Connor, a technical strategist in New York.
Dollar Value Sent to the Corn Fields Maybe this is the next leg down. Maybe it isn’t. In either case, we don’t want to be holding a lot of stocks and real estate when we find out. If we’re right about the depression/deleveraging… And if we’re right about the bear market… You’re probably going to see stocks lose another half of their value. Remember, a correction is equal and opposite to the deception that preceded it. That deception is almost a hundred years old…and has added trillions of (largely fictitious) dollars to the nation’s wealth. An Everest of mistakes has been made. Can all this deception be corrected in 2 years…with the feds fighting every inch of the way? Can problems caused by too much credit be cured by more credit? Can a generation’s worth of mistakes be hidden under the carpet of bailouts? Can the boondoggles be washed away by more boondoggles?
Dollar slides as stocks gain Orders for Greek bonds support the euro The U.S. dollar slumped versus the euro on Monday, though the buck was mixed versus other major counterparts, as fiscally troubled Greece found strong demand for its five-year syndicated bond issue. The move lower retraced some of its advance from last week, when several factors revived investors' desire to shift away from riskier assets, including stocks, toward the perceived relative safety of the dollar.
Insights from the Wall Street Journal I spend a lot of time on these pages explaining why I see more hard times ahead. Aside from the fact that I believe what I write -- unlike many of those who've decided that gloom-and-doom is the new black (and a good way to make a buck) -- I genuinely detest the shills, charlatans, and pseudointellectuals who permeate Washington, Wall Street, and segments of the mainstream media, and who've made it their mission to mislead people about the way things are.
Stock market on alert over commercial real-estate exposures FDIC: commercial loans losses behind majority of bank failures so far this year U.S. stock-market analysts are pointing to a growing divide between banks, with regional players especially vulnerable to blow-ups in commercial real estate, as illustrated by the latest round of bank failures. Regulators on Friday shut down five more banks in New Mexico, Oregon, Washington, Florida and Missouri, bringing to nine the count of U.S. bank failures so far this year.
Fed bashers: Washington's odd couple The anti-fed stances of Ron Paul (left) and Bernie Sanders resonate with many on Main Street . "These are vulgar, obscene people who, in many cases, I really do believe, have serious emotional problems. In this country we have people who have drug problems, people who have alcohol problems." Just who are the addicts that Bernie Sanders, his white hair mussed, is getting all worked up about on this frigid Washington afternoon? "Compulsive moneymakers," he says. And Sanders, Vermont's independent junior senator and a onetime college radical who still pockets an authentic 1920 EUGENE DEBS FOR PRESIDENT key chain, is just getting started.
Where will the next crisis hit? Commentary: This market is filled with land mines It's official: The worst of the financial crisis is over. That's what the World Bank said in its 2009 annual report, released Wednesday. But that doesn't mean it's completely behind us. The after-shocks of the subprime meltdown and the collapse of Lehman Brothers in September 2008 continue to ripple through the financial system and the global economy. Two weeks ago, I predicted that there would be a "financial mini-crisis or two that ignites investors' fears" in 2010. It would be "worse than Dubai, but nowhere near as bad as the fall of Lehman," I wrote. Read Six big predictions for 2010.
Economic Black Hole: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.
Bonds & Zombies that ate America Two weeks ago we noted that the biggest factor which was holding down the yields in US and European bond markets was the price-insensitive buying by three investors groups: Asian central banks, Western pensions and insurance funds and, most importantly, Japanese private investors. This paper will explore in greater detail the bizarre behaviour of these seemingly brain-dead "zombie investors", who gobble up whatever paper the US government may throw towards them, regardless of value or price.
Obama targets middle class with new plan President Obama trained his sights on the sagging economy Monday, outlining a series of proposals to ease the burden on middle-class families, such as expanding the child tax credit and easing student loan bills, that will be included in his second federal budget next week. A week after Mr. Obama took on some of Wall Street's biggest players, Monday's announcement is another preview of the more populist tone expected to dominate Mr. Obama's State of the Union address to Congress on Wednesday. Aides say the president will focus in his speech on ways to restore economic security for struggling families at a time of 10 percent national unemployment.
Debt panel called 'easy way out' Obama-backed commission faces vote amid criticisms A federal debt commission backed by President Obama and a bipartisan group of Senate budget hawks faces a long-shot bid in a vote Tuesday amid concern that it would raise taxes and cut federal programs. Advocates, including the top Democrat and top Republican on the Budget Committee, argue that Congress has been fiscally irresponsible as the nation's debt hovers about $12 trillion and the annual deficit reached a record $1.4 trillion last year.
Obama rolls out initiatives to help middle-class families Promising repeatedly to "keep fighting" for average Americans, President Obama rolled out new proposals Monday to help struggling middle-class families, setting the stage for his first State of the Union address Wednesday night. "Unfortunately, the middle class has been under assault for a long time," Obama told a gathering of his Task Force on Middle Class Families at the Eisenhower Executive Office Building adjacent to the White House. "Too many Americans have known their own painful recessions long before any economist declared that there was a recession."
Paul on Future of Fed Rep. Paul Kanjorski (D-PA) and Rep. Ron Paul (R-TX) share their opposing views of the Fed and Chairman Ben Bernanke.
Obama to propose freeze on government spending Under mounting pressure to rein in mammoth budget deficits, President Obama will propose in his State of the Union address a three-year freeze on federal spending that is not related to national security, a concession to public concern about government spending that could dramatically curtail Obama's legislative ambitions. The freeze would take effect in October and limit the overall budget for agencies other than the military, veterans affairs, homeland security and certain international programs to $447 billion a year for the remainder of Obama's first term, senior administration officials said Monday, imposing sharp limits on his ability to begin initiatives for education, the environment and other areas of domestic policy.
Obama Proposes New Financial Regulations, Declines to Tell Administration Financial Officials What They Mean Last week, President Obama announced a major new proposal for regulating financial sector activities. The proposal, which is expected to significantly alter the way large financial institutions like Goldman Sachs do business, would... uh... it would... well, as Clusterstock's John Carney reports, the administration hasn't quite gotten around to figuring that out yet: The Treasury Department has been scrambling to figure out what the new proposals unveiled by Barack Obama last week limiting the size and scope of banks. The proposals came out of the White House rather than the Treasury Department. Inside of Treasury there is the feeling that the basis of the plan came from “political people” instead of “economic policy experts,” according to a person familiar with the matter.
Market Crash if US Policies Continue: Dick Bove Some worry Washington actions may create a new bear market. But Dick Bove, financial strategist at Rochdale Securities, fears the worst: He warns that America's government may instigate a full-fledged market crash. Bove offered CNBC his insights — and named bank stocks that are still strong investments. "We all agree the market is driven by money. If the money supply increases, the money gets into the market and stock prices go up," Bove noted. "But last week, what we saw was a shot at both of the areas where money creation occurs in the United States."
Obama Seeks Freeze on Many Domestic Programs President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday. The officials said the proposal would be a major component both of Mr. Obama’s State of the Union address on Wednesday and of the budget he will send to Congress on Monday for the fiscal year that begins in October.
Chief TARP investigator to open two AIG probes The special inspector general for the government's $700 billion Wall Street rescue plan is opening a pair of probes into the government's rescue of American International Group Inc., including efforts to slow public disclosure of all of the terms of the deal. Special Inspector General Neil Barofsky disclosed the existence of the investigations in testimony prepared for a Wednesday hearing before the House Committee on Oversight and Government Reform. Barofsky, who can conduct criminal and civil investigations, said he is investigating whether there was "any misconduct relating to the disclosure or lack thereof" surrounding the November 2008 transactions to pay off the insurer's counterparties.
SEC mulled national security status for AIG details U.S. securities regulators originally treated the New York Federal Reserve's bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters. The request to keep the details secret were made by the New York Federal Reserve -- a regulator that helped orchestrate the bailout -- and by the giant insurer itself, according to the e-mails.
Not your father's FDIC
Obama sees Geithner, Summers staying on President Barack Obama on Monday said he expects Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers to stay in their jobs, and called them "terrific advisers." "You know, we haven't had the conversation because my presumption is that they are staying. There's a lot of 'hue and cry' in Washington because this is what happens," Obama said in an interview with ABC News. Some liberal supporters of Obama have criticized Geithner and Summers as being too cozy with Wall Street. And it raised some eyebrows when former Federal Reserve Chairman Paul Volcker was the one standing at the president's side when he announced new bank rules.
If Geithner Goes, The Top Two Contenders Tim Geithner will soon find himself on the hot seat again, as he’s summoned to Congress. Considering the mood in DC, could his job be on the line? The latest storm of controversy stems from Geithner’s role involving AIG payments to banks when he headed the New York Federal Reserve. Specifically, lawmakers want to hear about his decision to pay banks in full to retire $62.1 billion in credit default swaps sold by AIG, and whether Geither disclosed information about those payments properly.
Bank tax 'strictly political,' but popular President Barack Obama's proposed new tax on large financial institutions has a good chance of passing Congress, despite objections that it is unfair and could make credit even harder to get. The president wants to slap a tax on financial institutions with more than $50 billion in assets as a way to ensure that taxpayers recover “every single dime” of the federal government's $700 billion financial rescue program.
Bernanke likely to win second term as Fed chief: analysts A firestorm of doubt that erupted late last week over whether lawmakers' support for Federal Reserve Chairman Ben Bernanke was eroding has been all but extinguished almost as quickly, with key members of the Senate saying it looked like he has the votes to be confirmed for a second four-year term. "When it comes to Bernanke, the adults have taken over," said Greg Valliere, chief policy strategist at Potomac Research group. Bernanke could get up to 70 votes in the Senate, Valliere said, a number that would be comfortably above the 60 votes that he needs to overcome determined opposition.
A bailout for Bernanke Republicans find something to be in favor of Ben Bernanke's future as the leader of the Federal Reserve was in doubt late last week, but he's been bailed out by a strange coalition: The White House and the Senate Republican leadership. On Friday, it appeared that Bernanke's confirmation to a second term as Fed chairman was in trouble, with several liberal Democrats declaring their opposition. Senate Democratic leader Harry Reid was also wavering.
Bank of China's Ambiguous Plans The first concrete plans from a major Chinese bank to raise new capital have yielded more questions than answers. Bank of China wants to sell up to $5.9 billion in convertible bonds, and is considering—eventually—selling stock equivalent to 20% of its existing share capital, either in Shanghai or Hong Kong. Investors have been worried about the coming capital issuance; the bank's Hong Kong-listed stock is down 23% since mid-November. Of all the top Chinese banks, BOC was the most zealous in pushing loans out last year, with its lending book growing 38%.
China May Consider One-Time Yuan Gain, Goldman's O'Neill Says China will probably let its currency appreciate by at least 5 percent in a one-time move and raise interest rates to cool the economy and curb inflationary pressures, Goldman Sachs Group Inc. Chief Economist Jim O'Neill said. The Chinese government may allow the yuan to have "a bigger one-off move than people talk about, at least 5 percent, maybe more," O'Neill said in an interview today at the London School of Economics. "They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players."
Tell Senate “No” on Bernanke Cloture The Administration put on a full court press this weekend to shore up Bernanke’s confirmation vote, which was looking increasingly doubtful as of Friday. Over the weekend, Democratic and Republican leaders in the Senate said they were confident that Bernanke would be confirmed. The media took up the call, with stories appearing in virtually every MSM outlet blaring that Bernanke was in. But how seriously should we take this declaration of victory? Contrary to the efforts to present the confirmation vote as sealed, it is not in the bag: Of senators who made statements or were contacted by Bloomberg yesterday and today, 27 said they would vote for or were leaning in favor of Bernanke, while 16 were opposed or leaning against him, and 30 were undecided.
Economy Flounders, Despite the Stimulus by Ron Paul A year after a nearly $800 billion stimulus package was passed, the U.S. economy still finds itself mired in mediocrity. Economic growth is stagnant, unemployment remains higher than almost any time since the Great Depression and millions of Americans are upset that trillions of taxpayer dollars have been committed to numerous government bailout programs with no improvement of the economy within sight. They question, rightfully, where this money is going and why it hasn't been as helpful as the government has claimed.
Obama Would 'Rather Be Really Good One-Term President' Obama Tells Diane Sawyer That Health Care Bill Had Political Cost President Obama, buffeted by criticism of his massive health care reform bill and election setbacks, said today he remained determined to tackle health care and other big problems despite the political dangers to his presidency. "I'd rather be a really good one-term president than a mediocre two-term president," he told ABC's "World News" anchor Diane Sawyer in an exclusive interview today.
Obama: 'I'd Rather Be Good One-Term President Than Mediocre Two-Termer' - Brit Hume: Really?
Bond Rally on Borrowed Time as Options Foresee Tightening January's surprise rally in Treasuries may prove fleeting, as options traders bet on bigger price swings in bonds and waning volatility in stocks for the first time since 2006. Barclays Capital indexes show interest-rate volatility rose from a six-month low in November on speculation borrowing costs will increase as the improving economy allows the Federal Reserve to remove the unprecedented cash it pumped into the financial system. At the same time, confidence in the outlook for profits helped push the Chicago Board Options Exchange Volatility Index to an almost two-year low this month.
Treasuries Fall, Yields Rise From One-Month Low, Before GDP Treasuries fell, pushing yields up from a one-month low, on speculation a government report this week will show the U.S. economy expanded in the last quarter of 2009 at the fastest pace in almost four years. Government securities also dropped as traders bet Federal Reserve Chairman Ben S. Bernanke will win Senate confirmation for a second term this week to pursue his policies for spurring the U.S. economy. The Treasury Department prepared to auction a record-tying $118 billion of two-, five-and seven-year notes in three sales starting tomorrow.
Wall Street Firms Cut Pay, ‘Buckling’ to Washington Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation in the fourth quarter, responding to political pressure that will probably persist as details of bonuses for their top executives emerge in coming weeks. The three Wall Street firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion. The total fell short of the $46.1 billion five analysts expected this month and is almost $10 billion less than what some analysts estimated in October.
Nomura’s Sheard Says China to Pick Up Slack of U.S. Consumer Developing countries led by China and India will supplant the American consumer as the source of “natural growth” for the global economy, according to Paul Sheard of Nomura Securities International Inc. There will be “less exuberant and robust consumption than we had in the past few years” in the U.S. because the American household will continue to “tighten its belt,” New-York based Sheard, global chief economist at Nomura, said in a Bloomberg Television interview in Hong Kong today. “There are other parts of the world, though, that can take up some of that slack,” such as China and India, he said.
Chief of Staff Draws Fire From Left as Obama Falters President Barack Obama's liberal backers have a long list of grievances. The Guantanamo Bay prison is still open. Health care hasn't been transformed. And Wall Street banks are still paying huge bonuses. But they are directing their anger less at Mr. Obama than at the man who works down the hall from him. Chief of Staff Rahm Emanuel, they say, is the prime obstacle to the changes they thought Mr. Obama's election would bring.
We' The People By: CAPTAINHOOK That’s quite the title, no? But without making it even longer, because it covers a vast and complicated subject, it encapsulates what I think will be the most important event that could become apparent to the masses this coming year, which means process would accelerate to a more recognizable end. Let me explain what I mean now that all this confusing stuff is up in the air and in need of some grounding; like our currencies. In the first place one needs to understand the difference between currency and money.
Stiglitz pinpoints 'moral' core of crisis By Henry CK Liu Nobel Laureate economist Joseph Stiglitz, a Roosevelt Institute senior fellow and its chief economist, said on CNBC on January 19 that the US is infested with "ersatz capitalism", a flawed, unfair system that socializes economic losses and privatizes the gains. He decries the "moral depravity" that has led to the current financial crisis. Stiglitz served in the Bill Clinton administration as chairman of the Council of Economic Advisers (1995-97) before moving to the World Bank as its chief economist, where he developed a Pauline epiphany against the very neo-liberalism he helped promote in the form of "the Third Way", to criticize belatedly but rightly and vocally policies of the International Monetary Fund (IMF).
Peter Schiff: Barack Obama’s Wall Street Reforms Are Doomed To Failure . . . . Once again, President Obama completely missed the mark on the causes of and solutions to the financial crisis. In his speech this morning, the President outlined a major initiative to increase regulation of banks. He claims the financial crisis was caused by reckless speculation by greedy bankers in search of quick profits. What he fails to acknowledge is that this behavior was the direct result of the cheap credit supplied by the Federal Reserve and the moral hazard supplied by government regulations and subsidies.
Bill Gates Supports Bank Fees, Expects Tax Increases Gates on the U.S. Economy, the Importance of Innovation and Why He Joined Twitter Billionaire businessman and philanthropist Bill Gates said he isn't surprised by the sluggish economic recovery, adding that tax increases are needed to balance the federal budget. "The budget is very, very out of balance," Gates said on"Good Morning America" today. "Without changes in taxes or entitlement policies, it won't get back into balance. Taxes are going to have to go up and entitlements are going to have to be moderated."
1,336 mutual funds cease to exist in 2009 The mutual fund universe continues to get smaller. Activia Growth didn't grow enough. Dreyfus Passport is among the departed. HealthShares Cancer lost its long struggle. All told, 1,336 mutual funds — counting each share class separately — were liquidated last year, says fund-tracker Lipper. Counting each individual portfolio, about 425 funds died last year. In 2008, fund managers liquidated 826 funds, or 145 individual portfolios.
No Mortgage, Still Foreclosed? Bank of America Sued for Seizing Wrong Homes In the Last Four Months, Three Homeowners Have Sued Bank of America for Mistakenly Foreclosing on Their Homes Some 2.8 million homeowners faced the threat of foreclosure last year, but it wasn't supposed to happen to Charlie and Maria Cordoso. In 2005, the New Bedford, Mass. couple paid in full -- in cash -- for a house in Springville, Fla., and rented it out with plans eventually to use the home as a retirement getaway. They said they were shocked to learn earlier this month that Bank of America had locked them out and removed their clothing and furniture from the property. "All the love I put in that house -- I fix things up every time I go there," Charlie Cordoso, a construction worker, told ABC affiliate WCVB Boston. "Bank of America or somebody should apologize."
Peter Schiff on CNBC 22 January 2010
Cash Strapped Illinois Accelerates Property Tax Collections In a futile attempt to stay solvent, the state of Illinois has resorted to a trick I have not seen before, accelerating property tax collections. Until this year, property taxes have been collected in two equal installments. This year it's 55% in the first half, 45% in the second half. Here is an Email from "Abundance" describing what has happened. It must be getting bad here in Illinois. I opened up my first tax installment and was surprised to see that it was $300-$350 more than I expected.It turns out that taxes were in fact NOT raised. There was a note that said that "the Illinois Assembly voted to require that 55 percent of annual real estate taxes be collected during the first installment."
Business owners brace for another rough year Do you have any idea if the economy will rebound in 2010? Small business owners don't, and it's the single biggest challenge they face in planning for the year ahead, according to a recent survey by the National Small Business Association. The industry trade group polled 450 small business owners around the country for its year-end report. Economic uncertainty is their biggest challenge, respondents said: 64% called it a threat to the growth and survival of their business. More than 70% said their sales dropped or stayed flat in 2010, with just 22% reporting revenue growth.
What If the Goverment Cuts Its Lifeline for Housing? If the government carries through with its plans, major support for the housing industry could end by April, leaving the sector to fend for itself. That could happen because of two critical decisions: The Federal Reserve plans to stop buying mortgages by the end of March, and the tax credit for home purchases will end with contracts signed by April 30 (buyers have until June 30 to complete their purchases).
The Worst Housing Flip of All Time Back in the height of the bubble, just three short years ago, this plot of land, glass and concrete represented the biggest real estate deal in US history: This morning, we filed it in our bulging “signs of the times” folder… Witness one of the worst housing “flips” of our time: The busted owners of NYC’s Stuyvesant Town and Peter Cooper Village returned the city-within-a-city to their creditors today.
Biggest Real Estate Deal in History Goes Belly-Up On Monday, Tishman Speyer Properties announced its decision to give up ownership of Manhattan's massive Peter Cooper Village (PCV) and Stuyvesant Town housing complexes. As this project, the biggest single-property real estate deal in history, imploded, it became a symbol of an overloaded real estate market bloated on a glut of hype, money and boundless optimism.
Existing Home Sales Plunged 16.7% in December The nearly year-long, positive trend in the U.S. housing sector ended 2009 on a sour note, as existing home sales plunged 16.7% in December to a 5.45 million-unit annualized rate, the National Association of Realtors announced Monday. Sales fell as the federal government's original tax credit program expired. December's existing sales tumble was the largest one-month drop since the NAR started keeping records for this statistic.
Signs Of The Apocalypse: The Return Of The Layoff Layoffs in unrelated industries, even when close together in time, are just that—unrelated. That is until they begin to grow rapidly in number. Three of America’s largest firm announced firings or signaled them during the last week. Wal-Mart cut the deepest, which is frightening because it is the most financially healthy company in the world. In a surprise announcement, the world’s largest retailer said it would cut 10% of its Sam’s Club division, which means nearly 12,000 workers will get axed. The news cannot be good for the staggering retail sector. Christmas was weak, but Wall St. assumed that Wal-Mart was doing as well as if not better than its smaller competitors. The Wal-Mart move will give other retail firms “permission” to take fresh looks at their staff levels without the stigma of announcing firings ahead of other large store chains.
Sad Violins: Philadelphia Orchestra May File for Bankruptcy The recession has undermined the pilings supporting many once-stable organizations, ranging from financial institutions to restaurants to newspaper publishers. Now the economy may claim another victim: The Philadelphia Orchestra. The 110-year old cultural mainstay may declare bankruptcy after ticket sales dwindled this season and its endowment failed to meet its goal, according to the Philadelphia Inquirer.
Sugar Hits 29-Year High Strong demand for sugar catapulted prices above 30 cents a pound in intraday trading to a 29-year high. The tight global supply situation was illustrated by news Monday that Indonesia expected a 530,976-metric-ton production shortfall at the end of April, which will be met largely through imports totaling 500,000 tons. Efforts to import white sugar have been stymied by soaring world prices and a lack of sellers.
Oil rises over $75 on weaker dollar, Wall St gains Oil prices rose to $75 a barrel on Monday as support from a weaker dollar, higher U.S. stocks, and an oil spill in Texas which limited crude oil deliveries to some U.S. refiners. Still, oil prices were still near a one-month low of $74 a barrel after having fallen by almost $10 a barrel over the last two weeks since hitting a 15-month peak of $83.95 on January 11.
900 auto dealers file to appeal shutdown About 900 General Motors and Chrysler dealerships that got the ax as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association. The nearly 3,000 dealerships the auto manufacturers scrapped have until Monday to file with the AAA for an independent arbitration of their case. But applications from dealers are still rolling in, so it's hard to tell what the final count will be, said India Johnson, senior vice president of AAA.
Full-strength beer in Colorado convenience stores? A Colorado Springs Republican introduced the first of what is expected to be a full menu of proposals this year to expand liquor sales in Colorado. House Bill 1186, sponsored by Rep. Larry Liston, would let convenience stores of less than 5,000 square feet sell beer with an alcohol content of more than the currently allowed 3.2 percent maximum, just as liquor stores can do. The bill does not allow sales of wine or spirits at the stores and does not touch on whether grocery stores can sell full-strength beer or wine.
20 years later, greed's still good for Douglas in 'Wall Street' sequel NEW YORK — Gordon Gekko, that cutthroat swashbuckler of a corporate raider who once sneered "Lunch is for wimps," is holding sway over a table at a jammed Manhattan restaurant. No, it's not an '80s flashback but a scene being shot for Wall Street: Money Never Sleeps, a sequel to the 1987 original due this spring that takes place more than 20 years later. Instead of the ambition-served-raw atmosphere of the 21 Club depicted in the first film, the locale is Shun Lee, an Upper West Side institution where decorative demon-eyed monkeys dangle above the bar like mute witnesses. And rather than coercing a would-be high-stakes player into doing his shady bidding, Gekko is focused on reconnecting with Winnie, his estranged daughter whom he hardly knows after serving a hefty 14-year jail sentence for insider trading.
Beijing accuses U.S. of cyberwarfare By Bill Gertz China's government and state-run media stepped up criticism of the United States on Monday over the issue of computer network cyber-attacks. The Chinese accused the Pentagon of boosting cyberwarfare efforts, and suggested Washington both covertly used electronic social networks to foment recent protests in Iran and was behind recent computer attacks on the Chinese Internet-search engine Baidu.
Greece's Line In The Sand Greece has drawn a line, albeit an expensive one, in the sand. The success of its 8 billion euros ($11.3 billion) five-year bond sale, for which orders reached 25 billion euros, means the market should step back from a trade that was starting to price in the unthinkable: an imminent default by a euro-zone sovereign. But while Greece passed this test and its bonds should rally, the market now will expect Greek authorities to be similarly proactive in cutting spending and raising taxes to rein in the country's runaway budget deficit.
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Mon 01.25.2010
# 5 - Premier American Bank, Miami, Florida The fifth bank failure of the new year is Premier American Bank, Miami, Florida. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $85 million.
#6 - Bank of Leeton, Leeton, Missouri Bank of Leeton, Leeton, Missouri is the sixth FDIC-insured institution to fail in the nation this year, and the first in Missouri.
#7 - Charter Bank, Santa Fe, New Mexico Charter Bank, Santa Fe, New Mexico, becomes he seventh FDIC-insured institution to fail in the nation this year, at an estimated cost to the Deposit Insurance Fund (DIF) will be $201.9 million.
#8 - Evergreen Bank, Seattle, Washington Evergreen Bank, Seattle, Washington, becomes the eighth FDIC-insured institution to fail in the nation this year, and the agency estimates that the cost to the Deposit Insurance Fund (DIF) will be $64.2 million.
#9 - Columbia River Bank, The Dalles, Oregon Columbia River Bank, The Dalles, Oregon, is the ninth FDIC-insured institution to fail in the nation this year. The agency estimates that the cost to the Deposit Insurance Fund (DIF) will be $172.5 million.
Volcker Rule is necessary to prevent bank failures turning into a crisis Obama's bold action should lead to a new Glass-Steagall Act, writes Terry Smith You heard it here first. On September 20 2008 The Daily Telegraph ran an article entitled "Strong medicine needed to cure ills of cheap money" in which I wrote: "I think US regulators should re-impose the Glass-Steagall Act." Last week President Obama announced the Volcker Rule, named after Paul Volcker - a central banker of undoubted integrity and ability. This almost certainly means that in substance we are going to get a new Glass-Steagall Act.
Seven things about the economy that everyone should be more worried about than they are As a coda to Hanrahan’s series, here is a list of seven things all of us should be more alarmed by than we currently are, going forward. A common theme underlying them all is that while our leaders -- and the voices of conventional wisdom -- treat our current recession as cyclical in nature, and are essentially mostly just waiting around for growth to pick up again, there is plenty of reason to believe that this crisis was instead an expression of structural problems. And if that is so, and we don’t take the proper action, then the wait could be a long one.
The middle class may never be the same again
The recovery could take a really long time
The recovery could only be temporary
Then what? This time, we don’t have the tools to get out of a recession
The ‘very serious’ people in Washington are still obsessed about the deficit
Whatever is making the stock market go up could go away
The hugely irresponsible financial sector remains unchastened
State of the Republic Address Part 1 of 3
Is America a failed state? Barack Obama won the Democratic nomination and then the presidency by offering the same program that Peter Pan gave the Darling children: Close your eyes, think happy thoughts, and you will be able to fly. "Yes we can" in the meantime has changed to "No he can't," as America lost five million jobs in 2009 and its effective unemployment rate, including so-called long-term discouraged workers, rose to 22%, a level unseen since the Great Depression.
Scandal: Albert Edwards Alleges Central Banks Were Complicit In Robbing The Middle Classes We apologize in advance for the NY Magazine-style headline, but this is a report that has to be read by all Senators who are preparing to reconfirm Bernanke for a second term. When voting for the Chairman, be aware that all of America will now look at you as the perpetrators who are encouraging the greatest inter and intra-generational theft to continue, and as prescribed by Newton 3rd law, sooner or later, an appropriate reaction will come from the very same middle class that you are seeking to doom into a state of perpetual penury and a declining standard of living. America spoke in Massachusetts, and will speak again very soon if you do not send the appropriate signal that you have heard its anger - Do Not Reconfirm Bernanke. You have been warned.
Obama's Bank Bashing May Ignite M&A While bull markets and easy financing are critical for strong M&A, another important factor is government action. For example, the Telecommunications Reform Act of 1996 led to a surge in M&A activity, as the government allowed competition in local and long-distance communications. This is why President Obama's recent statement on finance reform is so important, especially to the private equity and hedge fund sectors. He declared: "No bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund."
Populist backlash puts Federal Reserve Chairman Ben Bernanke under siege The populist brushfire that has burned through Democratic fortunes this week threatened Friday to claim Federal Reserve Chairman Ben S. Bernanke, imperiling his nomination for a second term and sending an unsettled stock market tumbling for the third straight day. Once viewed as the rock at the center of the government's response to the financial crisis, Bernanke has become a target for mounting anti-Wall Street fervor with two Democratic senators registering their opposition Friday and other support softening
Obama Sharpens His Populist Tone ELYRIA, Ohio—President Barack Obama tried to relaunch his political agenda Friday with a populist attack on banks and insurance companies that signaled he would fight for his priorities going into the fall elections rather than give ground to Republicans on key issues. Mr. Obama's campaign-style speech here capped one of the most bruising weeks of his year in office. The president traveled to this swing-state manufacturing town ostensibly to deliver a speech about jobs and the economy, but instead he repeatedly veered off-script to interject pledges to battle his political foes over health care and other issues "so long as I have breath in me."
WSJ's Personal Columnist Jason Zweig discusses President Obama's plan to curb excessive risk taking at big banks. He also tells Kelsey Hubbard his proposals for better financial regulation.
Fannie Mae, Freddie Mac Should Be Eliminated, Frank Says A top House Democrat on Friday said his committee was preparing to recommend "abolishing" mortgage-finance giants Fannie Mae and Freddie Mac and rebuilding the U.S. housing-finance system from scratch. "The remedy here is...as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance," said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.
The Secret Bank Bailout There's one method that the Federal Reserve has been employing to shovel money to the bank elite that is rarely mentioned, though I hear the sums that have been shoveled are in the billions and they are showing up on the books of firms like Goldman Sachs as pure profit. It's really pure scam. Here's what went on for months, according to traders familiar with the situation. When the Federal Reserve buys and sells Treasury securities it does so through primary dealers. Goldman Sachs and JPMorgan are among the select elite firms that, naturally, got into this club.
Geithner's phone logs count down AIG bailout The Treasury secretary, then head of the New York Federal Reserve, had conversations with more than 30 business and political leaders on the day the insurance giant secured its federal lifeline. Treasury Secretary Timothy F. Geithner spoke with more than 30 business and political leaders on the day American International Group Inc. was bailed out by the U.S. government, his phone logs show. At the time, Geithner ran the Federal Reserve Bank of New York, which helped organize AIG's rescue, on Sept. 16, 2008, when the calls took place. The logs were submitted by the New York Fed in response to a subpoena last week from the House Oversight and Government Reform Committee.
BAIR MUST RESIGN: Conflict Of Interest What the hell is THIS? Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. It gets better... Mortgage documents for that 14-room home include a provision, known as a second-home rider, stating that Bair and her husband must keep the house for their “exclusive use and enjoyment” and may not use it as a rental or timeshare.
Liz Warren and Paul Volcker: “Break Up TBTF Banks,” but Geithner Says “No” When President Obama announced additional measures to deal with too-big-to-fail (TBTF) banks, yesterday, it was Paul Volcker standing behind him, not the usual economic team of Tim Geithner and Larry Summers. Volcker has been a strong champion of breaking up the TBTF banks and sharply curtailing the casino activities of traditional depository banks. So does Obama mean it?
MSNBC's Rachel Maddow - TARP oversight Chair Liz Warren on Obama's tough stand
Uncertainty on Bernanke Vote Raises Economic Fears A Bernanke defeat could raise risk of 'double dip' recession, but approval seems more likely A defeat of Federal Reserve Chairman Ben Bernanke's quest for another four-year term could raise the risk of a "double dip" recession if political jousting over a successor were to drag on for months, economists warn. But Bernanke's prospects appeared to brighten Sunday, with three more senators, including Republican leader Mitch McConnell of Kentucky, predicting he'll be confirmed. A vote is expected later this week.
Opposition To Bernanke Growing In Wake Of Mass. Vote One day after indicating that he had not decided on whether to support Ben Bernanke's renomination, Senate Majority Leader Harry Reid (D-Nev.) announced late Friday afternoon that he will support giving the Federal Reserve chairman another term. His full statement: Every decision I make about our economy is governed by the goal of putting Nevadans and Americans back to work, helping them keep their homes, and strengthening the middle class. My vote to confirm Ben Bernanke for a second term as Chairman of the Federal Reserve is no different.
Bernanke Vote: 'Unthinkable Has Become a Possibility' Ben Bernanke's nomination for a second term as U.S. Federal Reserve chairman, once seen as a sure thing, appeared in jeopardy on Friday after two more Senate Democrats said they would vote against it. "I believe there will be the votes to confirm him. But it's going to be very close," a senior Democratic leadership aide said. See the latest tally of announced voting decisions in the chart on page 2 of this story. With the U.S. job market in disarray and voters angry at Wall Street, members of Congress facing mid-term elections in November have come down hard on the central bank and its leadership.
Dodd, Gregg Predict Bernanke Will Win Confirmation Vote Sen. Christopher Dodd (D., Conn.), chairman of the Senate Banking Committee, and Sen. Judd Gregg (R., N.H.), a member of the committee, said they expect Ben Bernanke to win Senate backing for a second term as chairman of the Federal Reserve despite substantial opposition in the Senate. "In the last few days there have been a flurry of media reports on Chairman Bernanke's confirmation prospects, highlighting a very vocal opposition," the two senators said in a statement Saturday. "Chairman Bernanke has done an excellent job responding to one of the most significant financial crises our country has ever encountered. We support his nomination because he is the right leader to guide the Federal Reserve in this recovering economy. Based on our discussions with our colleagues, we are very confident that Chairman Bernanke will win confirmation by the Senate for a second term."
Support for Bernanke confirmation The White House says it is confident of Ben Bernanke's confirmation as Federal Reserve chairman for a second term. The top Republican in the US Senate, Mitch McConnell, also said that he believed Mr Bernanke would be confirmed with bi-partisan support. However Mr McConnell did not say if he would be voting for Mr Bernanke. There has been opposition from senators in both parties to Mr Bernanke's second term. Critics say he did not do enough to prevent the economic crisis.
Bernanke's Doom Loop Two Bank of England economists have written one of the most perceptive and forthright papers in the history of central banking: "Banking on the State." Compared with any of the dozens of deadly dull, equation-filled, narrowly focused, recommendation-avoiding, career-enhancing, résumé-padding, utterly useless academic exercises published in the dozen regional Federal Reserve bank journals every month, this paper stands out like a diamond in an immense dung hill.
State of the Republic Address Part 2 of 3
After the Welfare State, what? Hugo Salinas Price Raising the price of gold to $20,000 dollars an ounce would imply a corresponding devaluation in the value of all paper money. In the 40's and 50's of the last century, about 70% of reserves of central banks were in the form of gold at $35 US dollars an ounce. At the present time, reserves of central banks, excluding gold, are about $8 Trillion dollars (not all of which, however, are dollars). If these imaginary digital reserves (for such they are) were to once again amount to not more than 30% of total central bank reserves, the price of gold would have to increase substantially. We can calculate the approximate price of gold that would be necessary in order to have the gold component of reserves resume the proportion it at one time took up of total central bank reserves, 70%.
Volatility: Fasten your seat belt in gold When in the history of the United States has there been a credible movement to remove both the Chairman of the Federal Reserve and the Secretary of the US Treasury? The answer is never since the invention of the private bank, the US Federal Reserve. I have been telling you for months that there is a war going on between the Banksters and Daddy Warbucks. This is best understood as the desire to bring the power of the Federal Reserve into the Oval office, not by trusting an appointee but by absolute control over the appointee. Failing that the plan is to emasculate the Fed.
Gold prices to behave like a roller-coaster ride Gold prices will continue to witness an uptrend in 2010 but investors should expect continued high volatility-resembling an amusement park roller coaster ride, according to Jeffrey Nichols, Senior Economic Advisor to Rosland Capital. In his latest commentary on market trends, Jeffrey Nichols said that gold prices won't move up higher without interruption.The two main sources of gold price volatility will continue to be the investment demand for the yellow metal and volatility in dollar's exchange rate.
The mad, mad world of gold! Investors are now acting very cautiously as far as gold is concerned. They are not certain where is the metal headed for. So, they read almost all literature published in business magazines, newspapers and internet. But, it seems, even God can’t predict the future of gold. Because, every market analyst has a different opinion as far as gold is concerned. Some of them say the price of gold has risen more than four-fold since 2001 and was up another 24 per cent in 2009, hitting an all-time high of $1,228 last December. But it has dropped $100 recently, in tandem with a rally in the US dollar. Gold bugs argue that a growing risk of inflation and questions about how the US will pay off its massive debt means gold could be headed to $5,000 or higher, while sceptics see a golden bubble waiting to burst. Is the great gold rush of the past decade about to end?
Gold remains volatile on Obama plans Gold prices remained highly volatile in Asian trade Friday mainly on US president Obama’s plans to restrict risk taking by banks. US gold futures for February delivery was seen trading at $1094.80 per ounce at 11.30 a.m Singapore time while spot gold was at $1094.80 an ounce at the same time. On Thursday, March delivery settled at $1103.20 on the COMEX division of the New York Mercantile Exchange while Spot gold closed at $1094.20 an ounce.
January 20, 2010 Competing Currencies
Gold Price: Don't create false bubbles Yes, yes, David, the elites want to pry gold from the naive, so they stage a bear market. And yes, gold price is dominated by speculative buyers. But none of the three reasons you suggest for a bear gold market are more than transient. Where the value of an ounce of gold is in question is the surprising lack of overwhelming public demand in the face of many buy recommendations and the rationale that if paper money fails, there will be a gold rush that will be too late -- by then gold supply would evaporate.
Central Banks bet on gold reserve In 2009, almost all central banks showed an increased love for gold. In the recent past, Russia’s central bank added 800,000 ounces of gold to its reserves last month, increasing its holdings of the metal to $22.4 billion. The bank’s gold reserves climbed to 20.5 million ounces from 19.7 million the previous month. And, India’s central bank also purchased gold in 2009 to increase its foreign reserves.
Dude, Is That Gold Bar for Real? As the 10-year gold bull continues its stunning run, rumors of fakery seem to be cropping up as fast as new Eagles can be minted. Should you be worried? Do you need to run to the coin shop for a home test kit? Well, the counterfeiters are out there, and have been for millennia, but how to counter them? You probably remember movies about the Old West, wherein a shady-looking character would offer to exchange a gold coin for a horse, and the nag's owner would bite down on the coin. That was about all you could do, if you lacked proper assaying equipment and had to make a snap judgment on the fly: depend on your teeth to tell you whether the metal in your hand was sufficiently soft to be genuine gold.
Silver: The Race Is On Ed Zimmer What do the following items tell you? Price of silver falls by nearly 5% in one day. In less than 11 days the available stock of silver to cover paper shorts falls by nearly 15%. In the first few minutes of oveseas trade, silver begins to recover it's losses. The answer is that the race to own silver is on. From the US Government saying that it can't get enough blanks to make the silver eagle to the fact that silver stocks are continuing to decline rapidly since the first of the year, the signs are all pointing to an increase in the future. Allow me to point out what I am seeing and you can make up your own mind.
Dollar gains as uncertainty swirls The dollar extended its recent gains Friday against the euro and the pound as possible changes in U.S. financial regulations, tightening of monetary policy in China and credit turmoil in Greece drove investors to the perceived safety of the U.S. currency. The 16-nation euro tilted higher in overnight trading, moving up from the 6-month low of $1.4028 reached in Thursday's trading. But in morning trading in New York, the euro dropped to $1.4092 compared to $1.4103 late Thursday. The British pound tumbled to $1.6084 from $1.6209 late Thursday. But the dollar slipped to 90.14 Japanese yen from 90.38 yen.
Euro is an orphan against US Dollar In the last two weeks of December we made the following comments In the short to intermediate time frames, we would like to point to several new factors, which suggest that Gold could potentially pull back more, the dollar could mount a stronger than expected rally which should lead to a rather strong pull back in the Euro and other competing currencies. Certainly, the dollars rapid move from 74.57 to a high of 78.50 has caught a lot of traders with their trousers down.
Cramer: Could Obama Cause 1,000-Point Correction? Cramer’s Game Plans most often use earnings, analyst meetings and industry conferences as key catalyst, but President Obama’s crackdown on the banks has changed all that. Now investors have to take into account a new factor – politics – when deciding whether to buy or sell a stock. Case in point: Friday’s 217-point loss in the Dow and the S&P 500’s 2% decline following the president’s continued talk of increased regulation. And it’s more than just Obama. There’s speculation that Treasury Secretary Timothy Geithner could be replaced, and Federal Reserve Chairman Ben Bernanke’s reconfirmation is by no means a sure thing. The loss of either man could cause the first serious correction since the bottom in March, Cramer said – “a thousand points, minimum.”
Anger Over Bankers' Pay Obscures More Critical Issues When the talk turns to changing banking regulation, the American public appears to be fixated on executive pay. Following the British decision to tax bonuses in excess of £25,000, or about $40,000, bankers in the United States are wondering what action Congress may take if payouts this year stoke a burst of public fury. After all, the House of Representatives passed a bill in March that would have taxed employees of American International Group at 90 percent on any amount they earned exceeding $250,000. That died when the Senate did not take it up, but it illustrated the depth of anger against high bonuses at companies that took government bailouts.
State of the Republic Address Part 3 of 3
The Take: A sea change in Obama's demeanor The populist drumbeat emanating from the White House is a predictable reaction to the shellacking Democrats took in Massachusetts last week and the drop that began some months ago in President Obama's poll numbers. It is at best a partial answer to what ails the president and Democrats in Congress. The president's rhetoric over the past week suggests he has decided to try to fight anger with anger. If Americans are fed up with bank bailouts and bonuses going to their top executives, Obama wants people to believe that he resents them just as much.
Obama Endorses Deficit Task Force Obama endorses task force to recommend ways to battle spiraling budget deficits President Barack Obama Saturday endorsed a bipartisan plan to name a special task force charged with coming up with a plan to curb the spiraling budget deficit, though the idea has lots of opposition from both his allies and rivals on Capitol Hill. The bipartisan 18-member panel backed by Obama would study the issue for much of the year and, if 14 members agree, report a deficit reduction blueprint after the November elections that would be voted on before the new Congress convenes next year. The 14 would have to include at least half of the panel's Republicans — a big obstacle.
PAUL VOLCKER TO THE RESCUE President Barack Obama might have done well to keep former Federal Reserve Chairman Paul Volcker in closer reach during his first year of office rather than rely on the dubious advice of Timothy Geithner and Lawrence Summers. Too late for that—but hopefully not too late for Volcker to help the president in his future dealings with Wall Street.
Many are rejecting loan modifications Homeowners are opting to flee rather than accept loan modifications that might still leave them underwater on their mortgages. Desperate homeowners scrambling to get a loan modification through federal foreclosure relief programs are beginning to shun the offer, opting for a strictly business approach to the dilemma -- walking away. Because the majority of modifications don't reduce the principal payment on loans made during the overpriced boom years, people with underwater mortgages could still be drowning 10 years out.
Lessons from the Panic of 1907 by Clif Droke In their timely look at the panic of 1907, Robert Bruner and Sean Carr focus attention on what they believe to be the underlying causes of the '07 stock market crash and recession, drawing parallels between it and the credit crisis of more recent times. Their book, "The Panic of 1907: Lessons Learned from the Market's Perfect Storm," is now available in soft cover published by John Wiley & Sons (2007). The authors list seven contributing factors to the 1907 crisis:
Complexity
Buoyant economic growth
Inadequate safety buffers
Adverse leadership
Real economic shock
Undue fear and greed and other behavioral aberrations
Failure of collective action
Congress Sacks Samoan Economy . . . . For generations, American Samoa offered strong advantages for tuna canners. The close proximity to vast Pacific tuna schools, the islands' good port facilities, political association with the United States, and an abundance of relatively inexpensive labor (by American standards) enticed StarKist and Chicken of the Sea to locate their primary canning facilities in American Samoa. Although the workers were paid, in recent years, wages that were below the U.S. minimum, given the low taxes and living costs, these wages were enough to offer the average worker a standard of living that was superior to the denizens of other islands in that area of the Pacific. But then, in 2007, Washington came to the "rescue." As part of its efforts to provide a "living wage" for all Americans, Congress passed a law to step up the minimum wage to $7.25 per hour across all U.S. states and territories by 2009.
Bank of China to sell up to $5.8 billion in bonds Bank of China plans to sell up to 40 billion yuan ($5.8 billion) in bonds to replenish its capital and meet government standards following a record surge in lending last year amid Beijing's stimulus measures, a state-run news agency reported. Bank of China plans to sell up to 40 billion yuan ($5.8 billion) in bonds to replenish its capital and meet government standards following a record surge in lending last year amid Beijing's stimulus measures, a state-run news agency reported. Regulators have warned some banks that they have fallen below minimum capital requirements after handing out some 9.5 trillion yuan in loans last year.
The Unforeseen Consequences of Credit Legislation A hallmark of state failure is its incapacity to predict the market's response to the policies it puts forth. Indeed, on many levels the state is powerless to change the market's ends, instead only serving to redirect its means. Credit-card legislation passed last December sets forth a glut of regulations governing the ways in which credit-card agencies may transact with their customers. Various rules set to come into effect in July 2010 will
The Bill Comes Due for Socialism By Alan Caruba "The problem with socialism is that you eventually run out of other people’s money.” -- Margaret Thatcher, former British Prime Minister It began as a beautiful cruise to a land of “hope and change”, but it has become a nightmare in which the ship of state is being deliberately steered toward a whirlpool of debt from which, if Obama is successful, the nation cannot escape. One of the primary reasons the U.S. economy has grown over the years has been the confidence in its innovation and productivity. It has generated investment from around the world from those who wanted to profit from our success story. There was a time when U.S. securities were the safest in the world, but that is no longer the case.
Prepare Now to Escape Obama's Retirement Trap As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is in a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered as is our ability to finance the national debt.
450,000 at risk in foreclosure-prevention program Hundreds of thousands of troubled homeowners who are making lower mortgage payments on a trial basis are at risk of being kicked out of President Obama's foreclosure-prevention program. Companies that service the mortgages have until Jan. 31 to review all trial modifications that have been underway for several months under the Home Affordable Modification Program (HAMP), according to a Treasury Department guideline issued late last month. The Treasury Dept. said it would issue new guidelines next week, but wouldn't give details.
Thoughts on the End Game . . . . As I wrote in my 2010 forecast, this year is a waiting game. There are so many choices we must make, and the paths we will take from those choices vary wildly. But make no mistake, we are coming close to the end game. Some countries and economies are closer to that point than others, but the entire developed world is lurching, in almost drunken fashion, towards our economic denouement.
Taking Tea with the Lizards Joe Bageant The Republican Party will beat the living piss out of anybody for a buck. The Democrats will fly the flag of FDR, even as they pirate the public coffers on behalf of Wall Street. Don't think the American people have not noticed these things. After thirty years of pistol whipping and emptying of their wallets, they've started to figure out there just may be a public robbery underway, with both parties as accomplices. And so Americans at both ends of the political spectrum are finally wising up to the need for a third party.
Sam’s Club Cuts 11,200 Jobs SAN FRANCISCO (Reuters) - Sam's Club, the warehouse club division of Wal-Mart Stores Inc is cutting roughly 11,200 jobs, or about 10 percent of its workforce, as it outsources in-store product demonstrations and eliminates new business membership representative jobs. Sam's Club Chief Executive Officer Brian Cornell said on Sunday that the retailer would outline charges associated with the job cuts in February, when it releases fourth-quarter results. He said he did not expect any "material impact" on its financial results. "We look at this as an investment in the in-club experience," Cornell said in an interview. "This is not a cost-cutting move for us in the short term. We really hope it will be cost neutral for our operation. It's an investment in building loyalty, enhancing the member experience and driving future growth."
District unemployment reached 12.1 percent in December Unemployment reached a record 12.1 percent in the District in December, keeping the city's jobless rate well above national levels and much higher than in Virginia and Maryland. The District's unemployment rate rose from 11.8 percent in November, according to a Bureau of Labor Statistics report released Friday, even as the nation's jobless rate stabilized at 10 percent in December. Maryland's unemployment level increased to 7.5 percent from 7.3 percent, and Virginia's rose to 6.9 percent after staying at 6.6 percent for four straight months.
California's unemployment rate stays flat at 12.4% The jobless rate remains unchanged from November's revised figure as employers lay off 38,800 workers in December, capping a dismal year in which the state lost more than half a million jobs. California employers cut more workers from their staffs in December, capping a dismal year in which the state lost more than half a million jobs. Payrolls shrank by 38,800 jobs last month, while the unemployment rate remained flat at 12.4% from the revised figure in November, which previously was pegged at 12.3%
Unemployed in an Abnormal Business Cycle Fear. You can almost smell it. So far, there's just a whiff of it...a faint odor...a little trace in the air...like the smell in a subway car after a bum has left. Yesterday, the Dow fell 213 points. Oil dropped to $76. Gold lost $9. What caused it? What sets off a crash? Yesterday was hardly a crash. But our Crash Alert flag still flies. Because this is a market in danger. It is a market looking for a reason to crash. You never know for sure when or why markets crash. At a certain point, markets become like drunks who want to play a game of Russian roulette. First, they have to find the revolver. Then, they find the trigger.
Health Care Is Dead—Just Don't Tell the Left If you needed any additional evidence that health-care-reform-as-we-know-it has gone the way of the Dodo, look no further than Obama's remarks on the subject today: "We've gotten pretty far down the road, but I have to admit, we've run into a bit of a buzz saw along the way. The long process of getting things done runs headlong into the special interests, their armies of lobbyists, and partisan politics aimed at exploiting fears instead of getting things done. And the longer it's taken, the uglier the process has looked."
What Would a Tea Party-Led United States Look Like? Although post-election research may ultimately reveal that the Democrats, Independents, and Republicans who voted for Scott Brown did not consider themselves Tea Partiers, let's, for the sake of argument, say that the Massachusetts U.S. Senate race was another election won by the Tea Partiers, and the values and planks they stand for.
Oil in Haiti - Economic Reasons for the UN/US occupation There is evidence that the United States found oil in Haiti decades ago and due to the geopolitical circumstances and big business interests of that era made the decision to keep Haitian oil in reserve for when Middle Eastern oil had dried up. This is detailed by Dr. Georges Michel in an article dated March 27, 2004 outlining the history of oil explorations and oil reserves in Haiti and in the research of Dr. Ginette and Daniel Mathurin. There is also good evidence that these very same big US oil companies and their inter-related monopolies of engineering and defense contractors made plans, decades ago, to use Haiti's deep water ports either for oil refineries or to develop oil tank farm sites or depots where crude oil could be stored and later transferred to small tankers to serve U.S. and Caribbean ports. This is detailed in a paper about the Dunn Plantation at Fort Liberte in Haiti.
Haiti: An Unwelcome Katrina Redux by Cynthia McKinney George W. Bush, massive military deployment, logistical snags and slow aid delivery are evocative of the Hurricane Katrina debacle. Cynthia McKinney draws attention to the construction of the U.S. fifth-largest embassy in the world in Port-au-Prince, the discovery of oil resources in Haiti, the existence of decade-old plans to exploit Haiti’s deep water ports for oil-related activities. From the beginning, in fact, U.S. assistance to Haiti has looked more like an invasion than a humanitarian relief operation.
[UK] Terrorist threat level raised to 'severe' Britain's terrorist threat level was raised tonight from “substantial” to “severe” - meaning that counter-terrorism agencies believe an attack is “highly likely”. The measure was approved at a meeting of the Government’s Cobra emergency committee and announced by Alan Johnson, the Home Secretary. The Times understands that the decision to raise the threat level is connected to the conference on Afghanistan taking place at Lancaster House, London, next Thursday.
Bolivia, Costa Rica hit by strong earthquakes Bolivia and Costa Rica were struck by strong earthquakes with magnitudes of up to 5.3 on the Richter scale on Saturday, the US Geological Survey reported. Bolivia was hit by two quakes within an hour, one with a magnitude 5.3 and other 5.2, the Virginia-based earthquake monitoring centre reported. The border region of Costa Rica and Panama experienced two quakes in the same time period, one a magnitude of 5.2 and the other 4.7.
Venezuela oil 'may double Saudi Arabia' A new US assessment of Venezuela's oil reserves could give the country double the supplies of Saudi Arabia. Scientists working for the US Geological Survey say Venezuela's Orinoco belt region holds twice as much petroleum as previously thought. The geologists estimate the area could yield more than 500bn barrels of crude oil. This assessment is far more optimistic than even the best case scenario put forward by President Hugo Chavez.
One quarter of US grain crops fed to cars - not people, new figures show New analysis of 2009 US Department of Agriculture figures suggests biofuel revolution is impacting on world food supplies One-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars rather than being used to feed people, according to new analysis which suggests that the biofuel revolution launched by former President George Bush in 2007 is impacting on world food supplies.
Bin Laden claims Christmas bombing attempt CAIRO — Osama bin Laden claimed responsibility for the failed attempt to bomb a Detroit-bound airliner on Christmas in a new audio message released Sunday threatening more attacks on the United States. The United States said there was no indication to suggest that bin Laden or any of his top lieutenants had anything to do with the attempted attack and that the claim may have been motivated by the wish of the terror network's leaders to appear in control of al Qaeda's offshoots.
Bin Laden Says "Hi" to American President . . . . In a message carried by the Al Jazeera Arabic news channel, Bin Laden addressed President Barak Obama saying there would be no peace for America unless there was security for Palestinians. He described the attempt by Nigerian Umar Farouk Abdulmutallab to detonate a bomb on plane on Christmas day as a "confirmation" of previous attacks, including September 11. He promised further attacks if the US continued to support Israel.
U.S. appears to lower expectations in Middle East Reporting from Jerusalem - As U.S. envoy George J. Mitchell wrapped up his Mideast trip Friday with little to show for his efforts to kick-start peace talks, the Obama administration was signaling a growing pessimism that Israelis and Palestinians would return to negotiations any time soon. In his first visit since November, Mitchell met separately with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas. But officials on both sides said little progress was made toward restarting talks that collapsed a year ago.
War Looms Between Israel and Hezbollah It looks like a hop, skip and a jump. There’s the first electrified fence, then the dirt strip to identify footprints, then the tarmac road, then one more electrified fence, and then acres and acres of trees. Orchards rather than tanks. Galilee spreads beyond, soft and moist and dark green in the winter afternoon—a peaceful Israel, you might think. And a peaceful Lebanon to the north, tobacco plantations amid the stony hills, just an occasional UN armoured vehicle to keep you on your toes. “Major Pardin says you cannot take pictures,” a Malaysian UN soldier tells me. Then a second one says the same. Then along comes a Lebanese army intelligence officer and stares at our papers. “OK, you have permission,” he declares, and I snap away with my old 36-frame real-film Nikon; the fields, the frontier fence, the high-tech surveillance tower on the horizon. This must be the most photographed border in the world.
Putin warns against despotism, chaos in Russia Russian Prime Minister Vladimir Putin on Friday warned against the dangers of totalitarianism and despotism but said Russia must not adopt a similar political system to its neighbour Ukraine. "We shouldn't allow the 'Ukraine-ization' of political life in Russia but we should on no account slide in the other direction, towards totalitarianism and despotism," Putin said.
---- more news on situation in Greece ----
ECB president: Greece must put finances in order BERLIN -- Greece and other euro-zone countries with excessive budget deficits must do everything they can to put their finances in order, the president of the European Central Bank said in an interview published Saturday. The European Union has been pressing Athens to implement a strict austerity plan and plug its deficit, which stands at more than four times the EU-mandated limit of 3 percent of gross domestic product. "Not only Greece, but also other countries - that goes without saying - must do everything they can to put their national finances in order, bringing them fully into line with the provisions of the Stability and Growth Pact," ECB President Jean-Claude Trichet said in an interview with the German weekly Focus.
Greeks fret about faulty data ATHENS, Greece -- Greece is greeting European outrage over its dubious economic data with repentance, defensiveness and fear that no one will believe them again - even if they do clean up the statistics and accounting agencies slammed by an EU report for faking growth and deficit figures. "Right now, even if everything they say is correct, they are not going to believe it," Manolis Kontopirakis, who headed Greece's statistics agency between 2004 and 2009, told the AP. Kontopirakis quit shortly after Prime Minister George Papandreou's Socialists took over from the conservative New Democracy government in October. He angrily refuted claims his agency had knowingly forwarded the faulty data, which he said had hurt Greece's standing abroad.
Analysts wary of Greece's debt crisis plan
ECB Provopoulos: Greek Economy 'Unwaveringly Tied' To Euro: Greece's economy is "unwaveringly tied" to the euro, and the country will make the "bold" adjustments needed to fix its problems and remain in the single currency union, European Central Bank Governing Council member and Bank of Greece Governor George Provopoulos said Friday. Writing in the Financial Times, Provopoulos insisted that the idea Greece will leave the eurozone and create its own national currency is "based on flawed reasoning."
Greece's Economy Discussing Greece's economic state with Ulrich Leuchtmann, head of FX research at Commerzbank and CNBC's Silvia Wadhwa
Greek prime minister urges protesting farmers to end roadblocks, says no room for handouts ATHENS, Greece - The Greek prime minister has urged protesting farmers to end their eight-day roadblock campaign, saying Friday that Greece's debt crisis left no room for handouts. Prime Minister George Papandreou said it would be "a crime against Greeks' prosperity and security" if the government caved in to demands from pressure groups. The farmers are blocking highways and border crossings to demand payment of delayed aid and new subsidies, in what is seen as a major test for the center-left government elected in October.
Papaconstantinou Expects Greek Debt to Peak Next Year
Greece's Austerity Plan is 'Decade-Long Project' Airtime: Wed. Jan. 20 2010 | 5:00 ST ET The euro dropped to a 5-month low versus the dollar Wednesday as concerns about Greece's fiscal problems nagged investors. Michael Massourakis from Alpha Bank called the country's austerity plan "a decade-long project" in that after the proposed three-year period "the debt-to-GDP ratio will still remain at around 113%."
Analysts wary of Greece's debt crisis plan
Greece Remains a Concern: Fitch Airtime: Wed. Jan. 20 2010 | 5:00 ST ET Greece remains a concern for rating agency Fitch, which says that after two downgrades it will continue to keep the country on negative watch. CNBC's Stephane Pedrazzi spoke to Brian Coulton from Fitch to find out why the agency is so concerned.
Big Banks Have Already Figured Out The Loophole In Obama’s New Rules Big banks have already begun poking the holes in Obama’s new rules—holes they expect their banks to pass through basically unchanged. The president promised this morning to work with Congress to ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.
Opposition To Bernanke Growing In Wake Of Mass. Vote: Sanders HuffPost's Jeff Muskus and I polled as many senators as we could find Thursday after posting this story.The question: Would they commit to reconfirming Federal Reserve Chairman Ben Bernanke. We found 26 senators in all. Half were undecided; one wouldn't say; three were outright nays; only nine were firmly in the aye column. Sen. Barbara Mikulski (D-Md.) summed it for many of her colleagues: The decision, she said, "gives me heartburn."
Hyperinflation, Money Demand, and the Crack-up Boom In the early 1920s, Ludwig von Mises became a witness to hyperinflation in Austria and Germany — monetary developments that caused irreparable and (in the German case) cataclysmic damage to civilization. Mises's policy advice was instrumental in helping to stop hyperinflation in Austria in 1922. In his Memoirs, however, he expressed the view that his instruction — halting the printing press — was heeded too late: Austria's currency did not collapse — as did Germany's in 1923. The crack up boom did not occur. Nevertheless, the country had to bear the destructive consequences of continuing inflation for many years. Its banking, credit, and insurance systems had suffered wounds that could no longer heal, and no halt could be put to the consumption of capital.
Stimulating Depression Through Government Spending “China’s lending curb sparks a rush for safety.” That’s how The Financial Times describes what happened yesterday. Investors were more moved by fear than by greed. Dow sold off 112 points. Gold dropped $27. The dollar and bonds were up. The first thing we note is that investors are idiots. They’re looking for safety in the wrong places. Sell gold? Buy the dollar? And bonds? It may be a good move in the short run…but this kind of safety is too dangerous for us. The second thing that comes to mind is a question: is this the beginning of the end? Today, stocks in Asia are still falling…presumably for the same reason. China is reporting such hot growth that the authorities will be forced to throw a bucket of water on it. At least, that’s what a lot of investors are thinking.
Geithner aired concern on bank limits-sources U.S. Treasury Secretary Timothy Geithner has expressed some skepticism behind closed doors about the broad bank limits proposed on Thursday by his boss, President Barack Obama, according to financial industry sources. The sources, speaking anonymously because Geithner has not spoken publicly about his reservations, said the Treasury chief is concerned the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness.
Obama's 'Volcker Rule' shifts power away from Geithner For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner. Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama's right as the president endorsed his proposal and branded it the "Volcker Rule." Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.
The ‘Volcker Rule’ as a modern-day Glass-Steagall Reform could shake markets’ boom-and-bust cycle For Glass-Steagall in the 1930s, read the Volcker Rule for a new decade. Instead of the crude separation of commercial and investment banking, we will now see an equally crude split of the banking business from proprietary trading, hedge funds and private equity. Some salient points on Glass-Steagall are often missed. First, for decades, it worked. The US financial reforms of the 1930s helped to deliver decades of stable economic growth and reasonably stable growth in equity markets.
Senate Proposes Increasing U.S. Debt Limit to $14.3 Trillion The U.S. debt limit would be raised by $1.9 trillion to $14.29 trillion under an amendment proposed in the Senate. The chamber began debate yesterday on raising the debt ceiling for the fifth time in two years after lower tax revenue from the recession and higher stimulus spending boosted the calendar-year budget deficit to an all-time high last year. “If Congress does not enact this legislation, and soon, then the Treasury would default on its debt for the first time in history,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.
GOP, Dems in "Death Embrace": U.S. Budget "About to Go Off a Cliff," Cal Prof Says Raise taxes or cut spending? Washington must take action on both fronts to curb U.S. debt or run the risk of a dollar crisis, according to a report by the Committee on the Fiscal Future of the United States, a panel of bipartisan experts. "The Republican and Democrats are in a death embrace and about to go off a cliff," says Alan Auerbach economist at University of California at Berkeley. Not a member of the panel, Auerbach has studied the government debt for 15 years. He tells Tech Ticker the near-term "challenge is to take credible action on the deficit without damaging the economic recovery.
It's going to be tough when Chinese families have American house-boys Ah, Mr. Obama, there's that pesky will of the people again. The people of Massachusetts gave President Obama and his socialistic, government-takeover plans what amounted to a boot-kick to the groin. In a shocking upset, a senate seat in Mass. which had literally been "owned" by the Democrats for half a century went to a relatively unknown Republican named Scott Brown. Clearly, the Democratic majority in both houses are in jeopardy, particularly since many disheartened Dems will now retire. Two underlying reasons were responsible for the shocking Democrat defeat - unemployment and a fierce dislike of the Obama administration's bungling takeover of everything in sight, with emphasis on the puzzling private health system.
Is there gold in Fort Knox? Buried inside a 109,000-acre U.S. Army post in Kentucky sits one of the Federal Reserve's most secure assets and its only gold depository: the 73-year-old Fort Knox vault. Its glittering gold bricks, totaling 147.3 million ounces (that's about $168 billion at current prices), are stacked inside massive granite walls topped with a bombproof roof. Or are they? It's hard to know for sure. Few people have been inside Fort Knox, a highly classified bunker ringed by fences and multiple alarms and guarded by Apache helicopter gunships. When the U.S. finished building Fort Knox in 1937, the gold was shipped in on a special nine-car train manned by machine gunners and loaded onto Army trucks protected by a U.S. Calvary brigade. And the fort has been pretty much off limits since then. A U.S. Mint spokesman said in an email statement to MoneyWatch that the accounting firm KPMG, which audits the Mint, "has been present in the vault at Fort Knox." The Mint won't comment on exactly how much gold is in there, though.
US Mint Sales: 2010 Silver Eagles Explode on Release In what has become almost a weekly routine of late, the United States Mint again reported unimpressive sales according to their latest figures. A few bright spots did emerge, however. The most impressive gains come not from a numismatic item, but from the US Mint’s bullion coins. Recall that the bullion 2009 American Silver Eagles sold out on January 12th, with 2010-dated coins not appearing for sale until this last Tuesday. The situation left authorized purchasers with no silver bullion options for almost a full week.
Gold slides on dollar rise, fear that China may cool growth Gold futures extended their loss into a second session Thursday, pressured as Chinese inflation data fed expectations Beijing was moving to slow the country's growth, and by a rise in the U.S. dollar. Sapping demand for precious metals, often seen as an alternative to paper currencies, investors throughout much of the metals session bid up the U.S. dollar on concerns about sovereign debt and proposed U.S. bank restrictions.
Why Deflation Is Good for Precious Metals Among the myths being constantly circulated by gold-bears is that gold (and silver) only perform well in high-inflation environments. As with many of the pronouncements of the gold-bears, this is another case of them drawing conclusions based upon their own, faulty understanding of markets, history, and precious metals, themselves. To properly understand this issue requires understanding the true nature of money. While I have covered this issue in a previous commentary, this concept is so important, and so few people understand it that it is worth explaining this point again. The starting point is to list the four properties which all good “money” must exhibit.
A store of value
Evenly divisible
Uniform
Rare (or “precious”)
Gold: Something's Brewing Lease rates in the London bullion market have risen precipitously. Well, it's not so much that lease rates are rising - they're pretty cheap compared with their year-ago levels - it's more that forward rates are at historic lows. Forward rates determine the pricing of bullion transactions in the over-the-counter market. A decline in forward rates implies one of two things: There's either a scarcity of metal available for swap or lease transactions, or there's heavy forward selling. So, which is it? Well, we can gather some clues from the COMEX market. The latest Commodity Futures Trading Commission data show commercial accounts engaging in heavy selling and long liquidation. To boot, money managers have built their largest short position since August 2009 (and, if you're a contrarian, small speculators have taken up their strongest long position in a year and a half).
Money Magazine Still Hates Gold, So Buy It Over the last decade, it would have been possible for investors to make lots of money doing exactly the opposite of what Money Magazine has been telling their readers to do and one of the best examples of this can be found in their very consistent advice about gold. Put simply, the yellow metal has no place in a Money Magazine reader's investment portfolio, that is, if they want to RETIRE RICH like the happy couple in the magazine cover below.
Paper gold can not produce bullion: Jim Sinclair Because of paper gold, market games can be played. What cannot be done is for paper gold to produce bullion. The bullies can attack the paper gold market in unison, but they cannot create supply in real bullion with the ease of highly leveraged paper. The pros depend on the under-financed public to stampede under the pressure of fear of loss. Believe me, I used to run the locals (pros) all over the lot, and on occasion I got significant paybacks.
No bull stops for silver in 2010 It seems bullion analysts are now going for silver as they believe that silver will outperform gold in 2010. A report in I-Net Bridge, said if silver continues its upward trend, it could easily outperform gold during 2010. While the price of gold increased by more than 30% last year, silver prices increased by more than 60%. Many analysts said it is important for investors to include some silver as well as gold in their precious metals portfolio. In fact, at current levels silver looks extremely undervalued and it may trade as high as $25 per ounce in 2010.
Silver: The Race Is On What do the following items tell you? Price of silver falls by nearly 5% in one day. In less than 11 days the available stock of silver to cover paper shorts falls by nearly 15%. In the first few minutes of oveseas trade, silver begins to recover it's losses. The answer is that the race to own silver is on. From the US Government saying that it can't get enough blanks to make the silver eagle to the fact that silver stocks are continuing to decline rapidly since the first of the year, the signs are all pointing to an increase in the future. Allow me to point out what I am seeing and you can make up your own mind.
Celente: Banks gambling with taxpayer money
Inflation 101 We want all our readers to understand that inflation is a disaster for society and it only benefits the elite. In fact, we will go even further by stating that inflation is a hidden tax, an insidious crime against the public. It is the easiest way for any government to confiscate the savings of the public and for generations, wealth has been transferred in this manner. In our opinion, inflation is evil and the sole reason why human beings have become modern-day slaves. Remember, money is supposed to be a store of value, however due to reckless central bank-sponsored inflation, it can no longer fulfill this critical role.
Russia diversifies into Canadian dollars Russia’s central bank announced on Wednesday that it had started buying Canadian dollars and securities in a bid to diversify its foreign exchange reserves. Analysts said the move could be a sign of increased diversification of emerging market central bank assets away from the dollar and into investments denominated in other commodity-linked currencies, such as the Australian dollar.
China Statement’s Missing Words May Signal Shift on Stimulus Seven missing words in a statement issued yesterday by China’s statistics bureau fueled speculation that the government will officially change its fiscal and monetary policy stance. The agency’s fourth-quarter economic growth announcement omitted a reference to maintaining a “moderately loose monetary policy” and a “proactive fiscal policy” in its outlook section. While Ma Jiantang, who heads the bureau, later cited the “moderately loose” pledge in a question-and-answer session with journalists, the written statement mirrored the same omission by Premier Wen Jiabao in a Jan. 19 report.
Japan, China, Greece and Geithner The bankruptcy filing of the Japanese -formerly national- airline JAL gets surprisingly little press beyond a litany of numbers. This may not be so wise, since the fact that the Japanese government lets the carrier go down is not exactly without meaning. Tokyo sends a message. And while that can vary from a strong message (we won't pay anymore) to a weak one (we can't pay anymore), there can be little doubt that the intended signal is that Japanese industries, even those too big or too beautiful to fail, may find themselves all alone when they get into trouble. And that is not what they've gotten used to over the past 20 years.
Roubini says China can't bring recovery alone Noted economist Nouriel Roubini said Thursday that expectations China can buoy the global economy on its own will meet with disappointment, adding that a glut of worldwide industrial capacity threatens recovery from the financial crisis. Roubini, who gained fame by predicting the current global recession, told a financial forum in Hong Kong that it would take "a decade if not a generation" before Chinese consumers are in a position to have a meaningful impact. "China cannot be the only engine of global economic growth," though its frenzied pace of development is offering some support for regional economies and commodity markets, he said.
The Risky Rich . . . (sovereign nations) Nouriel Roubini Today’s swollen fiscal deficits and public debt are fueling concerns about sovereign risk in many advanced economies. Traditionally, sovereign risk has been concentrated in emerging-market economies. After all, in the last decade or so, Russia, Argentina, and Ecuador defaulted on their public debts, while Pakistan, Ukraine, and Uruguay coercively restructured their public debt under the threat of default. But, in large part – and with a few exceptions in Central and Eastern Europe – emerging-market economies improved their fiscal performance by reducing overall deficits, running large primary surpluses, lowering their stock of public debt-to-GDP ratios, and reducing the currency and maturity mismatches in their public debt. As a result, sovereign risk today is a greater problem in advanced economies than in most emerging-market economies.
Goldman Expects to Keep Cake, Eat Same, Stick Public with Tab Dick Bove says that Obama's proposal will be good for Goldman Sachs because it will take away the prop trading from banks that have deposits, but will not affect Goldman Sachs who will once again eliminate more competition. So buy the stock. Hard to imagine anything short of Armageddon that would cause the word 'sell' to emanate from his bloviateness when he is talking his book. And Goldman Sachs says that it is 'unrealistic' to take away their place at the Fed's teats as a subsidy sucking bank holding company
Welcome back, Glass-Steagall In honor of the latest banking overhaul proposed by President Obama (with inflation fighter Paul Volcker to boot) I give you the following ditty. Sing it along to the tune of "Welcome Back, Kotter" -- a TV show that was popular just before Volcker became the chairman of the Fed! I call it "Welcome back, Glass-Steagall." I guess that makes Citigroup, JPMorgan Chase and Goldman Sachs some of the Sweathogs. And poor Bank of America has to be Horshack.
Wall St's rout seen as onset of correction The sharp slide in U.S. stocks this week portends more trouble for Wall Street in the days ahead as investors worry if the recent rally is sustainable. With major indexes breaching key technical support levels on Wednesday, market technicians said Wall Street was likely to see the onset of a long-anticipated correction following a 70 percent run-up in the benchmark S&P 500 from March 2009. "This is the beginning of a correction. It's been brewing for months," said John Kosar, market technician and president of Asbury Research in Chicago. "There's more risk on the downside than opportunity on the upside here until we get a correction."
Wall Street's worst day in months Stocks tumbled Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations.
Lawmakers angry over bank closure Federal regulators received a verbal lashing Thursday from House lawmakers over the shutdown of a Chicago bank strongly tied to the local community and the government's handling of bank closings. Picking over the carcass of Park National Bank — a relatively healthy institution closed by regulators last October — were a House Financial Services subcommittee, bank executives and federal agency officials. Park National and tiny Citizens National Bank, based in Teague, Texas, were in comparatively good financial shape but were shuttered along with seven severely troubled banks under the same corporate umbrella, a bank holding company called FBOP Corp. The other banks were mostly in the West; the nine had combined assets of $19.4 billion.
Obama hammers Wall Street banks President calls for the biggest regulatory overhaul since the 1930s The global banking industry was thrown into turmoil on Thursday after President Barack Obama , responding to public rage over the financial crisis, proposed the most far-reaching overhaul of Wall Street since the 1930s. In reforms that could force the restructuring of some of the biggest names in US finance, including JPMorgan Chase and Goldman Sachs, Mr Obama promised that “never again will the American taxpayer be held hostage by a bank that is too big to fail”.
New bank regulations, China, and the dollar.
Paul Volcker Prevails Paul Volcker, legendary central banker turned radical reformer of our financial system, has won an important round. The WSJ is now reporting: President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country's biggest banks, marking the administration's latest assault on Wall Street in what could mark a return -- at least in spirit -- to some of the curbs on finance put in place during the Great Depression.
The Return of the Safety Trade Barely a week ago, we called it the China Sneeze Play. Once again, world markets catch cold after China starts sniffling. Rumors abounded yesterday that the China Banking Regulatory Commission asked several banks to stop making loans. The CBRC’s chairman denied it, but then the Bank of China — one of the country’s biggest banks — announced it is curbing its lending.
Message of the Markets: Inflation Will Force the Fed's Hand, Crippling Recovery Until the past 24 hours, the stock market appeared to be pricing in a V-shaped economic recovery, an outlook also supported by a very steep yield curve. Jim Bianco, president of Bianco Research, says these indicators speak to the recovery of the financial sector far more than that broader economy, where the message is still "indeterminate." The yield curve recently hit a record for steepness, meaning the difference between short- and long-term Treasury rates was as wide as it's ever been.
Obama Calls for Limiting Size, Risk-Taking of Banks President Barack Obama, tapping into voter anger over bank bailouts, called for limiting the size and trading activities of financial institutions as a way to reduce risk-taking and prevent another financial crisis. The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. He also proposes expanding a 10 percent market-share cap on deposits to include other liabilities such as non-deposit funding to restrict growth and consolidation.
Is Obama the physician, or the embalmer? The gentlemen of the press (and the ladies, too) are mostly a decent sort, often a bit prideful and sometimes with not very much to be prideful about. They're comfortable only by running in a herd. Trying to think alone gives them a migraine. A fortnight ago, Scott Brown was merely a footnote to the ritual of selecting a successor to Teddy Kennedy, not worth the attention of respectable reporters, pundits or pollsters. Everyone in the herd was sure that "the Kennedy mystique," though tattered and frayed, would produce a suitable substitute to fill Teddy's size twelves.
Bank Supervisors in U.S. Impose Tougher Rules Without Overhaul U.S. banking supervisors are using existing authority to raise standards for capital, liquidity and risk management without waiting for the Obama administration and Congress to hammer out a new regulatory structure. Agencies led by the Federal Reserve and the Office of the Comptroller of the Currency this year are set to propose rule revisions that would increase the amount of capital large banks must set aside against the risk of trading losses, according to government officials. The revisions would follow recommendations of the Basel Committee, the global coordinator for banking regulations based in Switzerland.
Obama in declaration of war on Wall Street Dangerous populist flirtation with Glass-Steagall Markets nosedived on Thursday when Barack Obama set out broad new measures on financial regulation. The most significant of them is banning deposit-taking banks from proprietary trading that is “unrelated to serving customers”. This activity has generated politically incendiary profits for banks and bonuses for bankers. The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr Obama – both on the left and on the right – will say that he comes late to the game.
Supreme Court Rolls Back Campaign Finance Restrictions By a 5-4 decision, the Supreme Court on Thursday rolled back restrictions on corporate spending on federal campaigns. The decision could unleash a torrent of corporate-funded attack ads in upcoming elections. "Because speech is an essential mechanism of democracy -- it is the means to hold officials accountable to the people -- political speech must prevail against laws that would suppress it by design or inadvertence," wrote Justice Anthony Kennedy for the majority.
Whitney Tilson makes a pretty simple, yet solid point against U.S. homebuilders. The U.S. has a massive oversupply of housing right now, as evidenced by the collapse of housing prices. Millions of additional foreclosures are on the way as well. Thus until the U.S. works off its massive oversupply of housing, it won't need any new houses for a long, long time. Thus there will be little work for homebuilders and their employees even if the economy is recovering.
FDIC’s WaMu role under investigation by Senate subcommittee A congressional subcommittee is investigating the Federal Deposit Insurance Corp.’s role in the seizure and sale of Seattle-based Washington Mutual Bank in September 2008, a court document shows. A document recently filed in U.S. Bankruptcy Court in Delaware as part of the Washington Mutual bankruptcy case shows that the Senate Permanent Subcommittee on Investigations (PSI) has subpoenaed the FDIC for documents related to the resolution of WaMu.
FDIC Chief Got Bank of America Loans While Working On Its Rescue Agency Grants Sheila Bair Retroactive Ethics Waiver on Mortgages Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. In the weeks between the closings on her two mortgage loans, Bair met with Bank of America’s chief negotiator in the bailout talks.
FDIC geared up for busy year of bank failures FDIC says expects failure rate to remain high in 2010 The U.S. agency charged with dismantling or selling off failed banks said it is equipped to deal with what it sees as a busy 2010, according to remarks to be delivered before Congress on Thursday. The Federal Deposit Insurance Corp expects that bank failures will remain elevated this year, said Mitchell Glassman, director of the FDIC's division of resolutions and receiverships.
Walking Away From Your Mortgage Is Morally Wrong And Financially Stupid, Says McArdle As millions of Americans begin to realize that it will be years if not decades before their houses are worth what they owe on them, there has been lots of talk about whether it's okay to just voluntarily walk away from your mortgage. I argued last week that, in some circumstances, it is okay -- because your mortgage is a business contract between you and a bank. As the contract makes clear, if you stop paying, the bank gets the house, and you lose your equity and credit rating. That seems like a fair trade, especially if you have tried to renegotiate the mortgage first. Our guest Megan McArdle, economics editor for The Atlantic, thinks this argument is wrong. First, Megan says, walking away from your mortgage voluntarily is often financially stupid: There are plenty of fees and costs associated with defaulting, and your credit rating will be destroyed for years.
Homebuilders Turn to Private Equity for Financing More than 40 U.S. homebuilders have teamed up with private equity firms to acquire and complete unfinished subdivisions as banks cut construction lending. The investments will pay off for the builders and their investors if the prices are low enough and the locations are in areas where demand is recovering, said Megan McGrath, a home building industry analyst at Barclays Capital Inc. in New York.
Small wonders Home sizes fall as builders, buyers embrace economic reality New-home buyers responded to the tough times in 2009 by opting for smaller houses, driving down the average size of a house built in the U.S. for the first time in 27 years. Data released Wednesday by the National Association of Home Builders found the average size of a new home that was completed in 2009 fell to 2,480 square feet from 2,520 square feet in 2008. The last time the average completed-home size fell by a statistically significant amount was 1982.
Pelosi: House won't support Senate health care bill, at least for now The Senate health care bill has too many unpopular provisions to win approval from the House at this time, House Speaker Nancy Pelosi said Thursday. Pelosi's comment to reporters appeared to dash the chances that Democrats will take the easiest route for passing a health care bill: having the House approve the Senate version unchanged. "I don't think it's possible to pass the Senate bill in the House," Pelosi said. "I don't see the votes for it at this time."
Pelosi doesn't have votes to pass health bill House Speaker Nancy Pelosi said Thursday that she doesn't have the votes to pass the Senate's health reform bill as some rank-and-file Democrats signaled support for a scaled-down measure - one that deletes parts of both bills or breaks them into pieces, such as insurance industry reforms and Medicaid expansion. The comment marks a serious setback in efforts to pass President Obama's top legislative priority now that Democrats are one vote shy of enough to overcome a Republican filibuster in the Senate.
Rise in jobless claims signals bump in recover A surprising jump in first-time claims for unemployment aid sent a painful reminder Thursday that jobs remain scarce six months into the economic recovery. The surge in last week's claims deflated hopes among some analysts that the economy would produce a net gain in jobs in January and help fuel the recovery.
Jobless Claims in U.S. Unexpectedly Rise on Backlog More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays. Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington. The jump was due to an “administrative” accumulation from late December and early January holidays, and did not reflect “economic” reasons, a Labor Department spokesman said.
Jobless claims up, regional manufacturing dips The number of U.S. workers newly applying for unemployment benefits unexpectedly rose last week and regional manufacturing slipped in January, hinting at some slowing in the pace of economic recovery. The Labor Department said on Thursday initial claims for state unemployment benefits rose 36,000 to 482,000 last week as a backlog of applications from the holidays was processed. It was the third straight week that claims rose. Analysts had expected new claims to slip to 440,000. Separate data showed factory activity in the Mid-Atlantic region slowed in January to a three-month low, while a gauge of economic prospects scaled a record high last month.
Tech job cuts hit 4-year high Planned job cuts at tech companies rose in 2009 for the second straight year, hitting the highest level in four years, according to a report released Tuesday. Outplacement firm Challenger, Gray & Christmas Inc. reported that tech sector employers announced 174,629 job cuts in 2009. That's a 12.3% increase from cuts announced in 2008, and the highest total since 2005.
Toyota recall: 2.3 million cars Toyota Motor Sales USA is recalling 2.3 million vehicles to correct a problem that could cause the vehicles' gas pedals to stick. This new recall is separate from an on-going recall of 4.2 million Toyota and Lexus vehicles to correct a problem in which the pedals could become stuck under a loose floor mat.
Cost of gas up 14 cents in the last three weeks Nationally, the average cost of a gallon of regular has risen to $2.74 The average price of regular gasoline in the United States is up 14 cents over a three-week period to $2.74. That's according to the national Lundberg Survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.86. Premium was at $2.97.
The Greatest Threat of the 21st Century: Not AGW but Eco-Fascism As you freeze your butt off in a winter whose severity the politicised weather forecasters of the Met Office utterly failed to predict, and as you wonder how you can afford gas and electricity bills which have been grotesquely inflated by taxes and legislation designed to “combat global warming”, spare a thought for a fellow victim of eco-fascism who’s even worse off than you. In a week or so this poor man could be dead.
Air America Radio closing, filing for bankruptcy Air America Radio, a radio network that was launched in 2004 as a liberal alternative to Rush Limbaugh and other conservative commentators, on Thursday shut down abruptly due to financial woes. The network once boasted hosts such as Al Franken and Rachel Maddow, but struggled from the outset, including multiple management shake-ups, a bankruptcy in 2006 and sale for $4.25 million the following year. Air America ceased airing new programs Thursday afternoon and said it will soon file to be liquidated under Chapter 7 bankruptcy. It began broadcasting reruns of programs and would end those as well Monday night.
Liberal talk radio Air America shuts down Air America, the liberal talk-radio network that launched with much fanfare in 2004, ceased operation on Thursday, whipped by the “difficult” economic climate that led to a drop off in local and national advertising revenue. The network, best known for hosting a show by Al Franken, a comedian who was elected as a US senator in 2008, was positioned as a counter to the strength of conservative radio embodied by well-known radio hosts including Rush Limbaugh.
Why Americans Should Care About the Debt Crisis in Greece Is Greece about to go bust? The Greek government says they don't need a rescue package but they are exploring all options to claw out of a mounting debt crisis to cover their near-term budget shortfall. Investors are still skeptical. Yields on Greece's benchmark 10-year bond are trading near record premiums to comparable German debt after briefly touching a record high on Wednesday. The cost of insuring that debt through credit default swaps is also near unprecedented levels. European Union officials say they are not worried about Greece defaulting and have refused to discuss talks of a bailout.
Sarkozy’s Three-Way NATO Bet France’s return to NATO’s integrated military structure after a 43-year absence last year brought to an end one of the exceptions françaises. It also helped frame the growing debate over whether to develop European defense more effectively or to seriously reform the Atlantic alliance. At first glance, it may seem that France chose NATO at the expense of the ten-year-old European Security and Defense Policy (ESDP). But that interpretation takes too pessimistic a view of ESDP’s achievements over the past decade, and is based on a flawed understanding of the relationships between NATO and the European Union.
Haiti wants to move 400,000 out of capital Suburb picked to start; aid still backed up with 1,400 flights waiting PORT-AU-PRINCE, Haiti - Haiti's government on Thursday unveiled plans to move 400,000 earthquake victims to new settlements outside the destroyed capital. The first wave of 100,000 people were to be sent to transitional tent villages of 10,000 each near Croix Des Bouquets, a suburb north of Port-au-Prince, Interior Minister Paul Antoine Bien-Aime told reporters.
Haiti to move 400,000 quake survivors to temporary camps Haiti says it will resettle 400,000 earthquake survivors from its stricken capital to temporary camps outside town. The chief of staff to President Rene Preval tells The Associated Press that the government is concerned about sanitary conditions in the hundreds of tent cities that have sprung up in Port-au-Prince since the Jan. 12 quake. Doctors have warned of outbreaks of disease among the hundreds of thousands in the overcrowded camps.
Russia says to start Iran nuclear plant in 2010 MOSCOW, Jan 21 (Reuters) - Russia will start up the reactor at Iran's Bushehr nuclear power plant this year, the chief of Russia's state nuclear corporation told reporters on Thursday. "2010 is the year of Bushehr," Rosatom chief Sergei Kiriyenko told reporters after a cabinet meeting in Moscow. "There is absolutely no doubt that it will be built this year. Everything is going according to schedule," he said. (Reporting by Darya Korsunskaya, writing by Guy Faulconbridge, editing by Conor Humphries)
Russia vows quick completion of Iran atom plant Russia's energy minister pledged Sunday a quick completion of Iran's first nuclear power station, two weeks after announcing the latest delay, but refrained from giving a specific time for its launch. The comment from Sergei Shmatko came after talks with Iranian Oil Minister Massoud Mirkazemi and as Iran's government announced plans to build 10 new uranium enrichment plants, in a major expansion of its disputed nuclear program. In mid-November, Shmatko said that technical issues would prevent engineers from starting up the reactor at Bushehr -- being built by Russian state contractor Atomstroyexport -- by the end of the year as previously planned.
Distrust could dampen census count With the start of the nation's decennial census just weeks away, nearly one in five persons might decline to participate in the high-stakes head count, citing mostly a lack of interest but also a broader distrust of the federal government. A poll released Wednesday by the Pew Research Center highlighted the challenges as the U.S. Census Bureau prepares to begin its tally in March. The findings come as some groups question whether the agency's $300 million outreach effort is doing enough to reach hard-to-count communities.
Identifying Sure Signs Of The Final Economic Plunge Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.
Gold And Dollar Decoupling
Price Inflation Of Oil
Dollar Loses World Reserve Currency Statu
U.S. Treasury Dump
Simultaneous Dow / Dollar Drop
Jobs And Housing
Grocery Store Peculiarities
Bank Holiday
Terror Attack / New War
$8 million in assets - and can't get a mortgage The wealthy have money problems, too -- yeah they do. Even refinancing a mortgage for their fancy digs or getting a new loan can be near impossible these days thanks to skittish lenders. And the higher the loan value, the more they worry. Still, that people with high six-figure incomes, stellar credit histories and gobs of assets get mortgage requests turned down seems weird. "It's amazing really," said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., "but it makes sense when you think about it."
BofA: Attitudes Changing Towards Default Within the next couple of years, probably somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes are worth. (See Homeowners With Negative Equity) One of the greatest fears for lenders (and investors in mortgage backed securities) is that it will become socially acceptable for upside down middle class Americans to walk away from their homes. "There's been a change in social attitudes toward default," Mr. Lewis says. Bankers typically have believed that cash-strapped borrowers would fall behind on their credit cards, car payments and other debts -- but would regard mortgage defaults as calamities to be avoided at all costs. That isn't always so anymore, he says.
Now, Even Borrowers With Good Credit Pose Risks Kenneth Lewis acted far ahead of the competition in 2001, when he got Bank of America out of the business of issuing subprime mortgages. While profit margins on these loans to risky borrowers seemed tempting, the bank's chief executive believed the default risks were too hefty to justify. It took a while for Mr. Lewis to be proved right, but BofA's payoff has been huge. The big Charlotte, N.C., bank has largely sidestepped the subprime mess, emerging -- despite taking some hits on investments it made in securities tied to subprime loans -- with the highest net income of any U.S. commercial bank this year. Meanwhile, some of its rivals have sustained multibillion-dollar losses from subprime lending.
'Greater Depression is going to be really serious' Louis: So, what's on your mind this week, Doug? I understand you've had a "guru moment." Doug: Well, it's nothing but a gut feeling, but I think the stock market is riding for a big fall this year. Everyone was afraid the world was going to come to an end a year ago, and it almost did. But governments all around the world stepped in and printed up trillions of their various currency units - it's not just the United States. And still, retail price inflation hasn't blossomed. It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem. It stems from an economic version of the theory that all we need to fear is fear itself. As long as we have the right psychology, everything is going to be okay - total nonsense.
Is there gold in Fort Knox? Buried inside a 109,000-acre U.S. Army post in Kentucky sits one of the Federal Reserve's most secure assets and its only gold depository: the 73-year-old Fort Knox vault. Its glittering gold bricks, totaling 147.3 million ounces (that's about $168 billion at current prices), are stacked inside massive granite walls topped with a bombproof roof. Or are they? It's hard to know for sure. Few people have been inside Fort Knox, a highly classified bunker ringed by fences and multiple alarms and guarded by Apache helicopter gunships. When the U.S. finished building Fort Knox in 1937, the gold was shipped in on a special nine-car train manned by machine gunners and loaded onto Army trucks protected by a U.S. Calvary brigade. And the fort has been pretty much off limits since then. A U.S. Mint spokesman said in an email statement to MoneyWatch that the accounting firm KPMG, which audits the Mint, "has been present in the vault at Fort Knox." The Mint won't comment on exactly how much gold is in there, though. That's why U.S. Rep. Ron Paul, R-Texas, a 2008 presidential candidate known for his libertarian streak, wants to have a look around. Paul introduced a bill to audit the Federal Reserve, which includes Fort Knox's gold. "My attitude is: Let's just find out what's there," he says.
Gold steady a day after slump, China data eyed TOKYO, Jan 21 (Reuters) - Gold steadied above $1,100 per ounce on Thursday after falling more than 2 percent the previous day, when investors became risk averse as the dollar rose and China's tightening bank lending capped economic optimism. Market participants were eagerly awaiting a set of Chinese economic indicators on Thursday, including CPI and gross domestic product data.
Gold prices to go higher from here A leading industry analyst has revealed that he believes diminishing global gold mine returns will underpin a continuance in Gold Price rises. Writing for Forbes India, Evy Hambro, managing director and portfolio manager with the natural resources team at Blackrock Mutual Fund, says that reduced supplies in conjunction with weakened economies has created attractive Gold Investment opportunities. He said: "Market fundamentals suggest that Gold Prices could continue to trend higher from here."
'Real interest rates are the prime driver of gold price' Pinetree Capital Resource Analyst Craig Stanley sheds some light for The Gold Report on how real interest rates are driving gold's rise. Although the 10-year real rate is positive now, he says if it goes negative, and stays negative, "Look out. The gold price could really spike." In this exclusive Gold Report interview, he discusses some of the junior exploration and development companies in Pinetree's portfolio.
Don't bet against gold with the dollar Each crash and economic downturn has been followed by another freedom-elimination, another axe-chop into the constitution, another new law courtesy of the Gman. So it all "never happens again". Risk isn't going away regardless of the promises made to you by the Gman, the banksters, the golf ball advisors, and self-appointed master traders. Which is why the foundational gold pyramid generator that I use extends to zero. Many of you still don't really understand risk properly. I keep telling you to get "out there," to go visit at least one factory owner, preferably several of these risk/reward experts.
Gold rush grips Australia Bullion lovers have been reading the fantastic stories that have been coming out of China in the last one year on the gold buying frenzy and the gold production momentum that is going on in the dragon country. China is today the largest producer of gold. China has beaten India to emerge as the largest consumer of gold. China now wants to emerge as the No 1 country in the world with the largest deposit of gold reserves.
Lower Lows Coming in Gold A forecast for Comex Gold sent out to subscribers Monday night came within a dime of nailing the low of yesterday’s $33 plunge. That’s the good news, and some subscribers evidently were able to make hay with the prediction. The bad news is that it looks doubtful that the 1106.80 print that marked the February contract’s intraday low will hold, given the recent strength in the U.S. dollar. You can see how powerful the greenback’s uptrend is in the chart, below, of the NYBOT Dollar Index. Yesterday the index scored its most impressive gain in six weeks, rallying to within a hair of a “Hidden Pivot resistance” at 78.69. The actual high was 78.45, and although it could turn out to be an important top, this looks doubtful given the shallow pullback that has occurred so far. If the resistance point is decisively exceeded today, however – say, by 0.10 points or more – or if it is exceeded on a closing basis for two consecutive days, we’d infer that the rally is bound for at least 80.78 -- roughly three percent above current levels.
Gold Pares Advance as Dollar Rallies on China Economic Data Gold pared gains as the dollar rebounded after China’s economy in the fourth quarter expanded at the fastest pace since 2007. China’s gross domestic product climbed 10.7 percent from the same period a year ago, more than the median forecast of 10.5 percent in a Bloomberg News survey, adding to speculation the world’s third-largest economy will limit lending and raise borrowing costs to curb inflation and accelerating asset prices.
US Dollar (DX) Longer Term Charts Here is the longer term view of the US Dollar as measured by a basket of currencies. Can it 'break out' here? Yes, certainly. Europe and Japan have their problems, and in the world of fiat, the grading of the paper is done 'on a curve.' The central banks and their mavens, who intervene at least indirectly in the currency markets with a certain obsessiveness these days of non-stop financial engineering, like to shove their manipulation around the plate as well. They don't 'tweak' the economy; they are the economy, at least at the margins.
Debt and Deleveraging: The global credit bubble and its economic consequences. In this report, we analyze in detail how debt and leverage have evolved in the public and private sectors in ten mature economies and four emerging economies. We also built an extensive database covering 45 episodes since 1930 in which an economy deleveraged, or significantly reduced its total debt-to-GDP ratio. With this database, we were able to identify four typical paths, or “archetypes,” for the deleveraging process. This enabled us to analyze the macroeconomic channels for deleveraging and the economic consequences of the process in the past. Finally, we have identified the practical implications of our work for policy makers, financial regulators, and business executives.
Deflation in Everything But the Cost of Living THEY WERE SUPPOSED to avert depression. The Bank of England continues to tout their "success". But it looks like the best that money-printing and zero rates might now deliver is '70s-style stagflation, plus '30s-style wealth destruction and a glacé cherry on top. Giving Britain its "stag" – as in stagnation – are economic output, wages, capital investment, real estate prices and now, perhaps, a return of the bear market in London shares. Whether or not GDP shows an uptick for the end of 2009, this is the deepest British recession since 1931. Business investment sank to a 6-year low on the last quarterly data, and the number of people out of work for 12 months or more has risen by two-thirds since Northern Rock was bailed out, breaking the dam of bail-outs worldwide in late 2007.
Why Deflation Is Not Inevitable (Sadly) Over the past month, I have written seven lengthy articles on the totally erroneous theory that consumer price deflation is inevitable, no matter what the U.S. government and the Federal Reserve System do. I would like to believe that this will end the debate. It won't. Why not? Because there are people in the hard money movement who reject the Austrian theory of the business cycle. They reject the views of central banking offered by Ludwig von Mises and Murray Rothbard. Incredibly, some of them claim to be followers of Mises. If so, they do not understand what he wrote. Yet Mises was easy to understand on monetary theory.
New IMF, Same Old Problems For the past couple of years, the International Monetary Fund has been thumping its chest that it has changed and is ready to take the lead on global economic issues. A report by the IMF’s independent evaluation office, which is charged with critiquing the institution, suggests the IMF still has a long way to go. Only a minority of officials in the richest, most powerful countries, found the IMF’s analyses “compelling,” the evaluation group found.
Merkel Calls for Global Exit Strategy BERLIN--Chancellor Angela Merkel said Wednesday exports will remain crucial for Germany's economy and warned that European Union countries' efforts to return to sound finances needed to be coordinated with the U.S. and Japan. Ms. Merkel said finding an "internationally coordinated exit strategy" is possibly the "biggest challenge" to overcoming the global financial crisis that peaked in late 2008. Germany debt-limit rules won't matter if a "very different policy" is being pursued in the U.S., Japan, or elsewhere, she said. "The crisis, which hasn't mainly originated in Europe, has taught us that if one big player in the global competition doesn't stick to rules, all others have to pay for the consequences," Ms. Merkel said.
Greece Debt Default Could Take Eurozone Down With it Don Miller writes: As the European Commission holds its regular monthly meeting in Brussels this week, ministers find themselves debating what to do about the Greek debt crisis -- the biggest credibility test the Eurozone has faced since the single currency was created. The question is whether the 16 countries that share the European Union's (EU) currency can force a rogue member with a weak economy to take drastic measures to cut its budget deficit without calling in the International Monetary Fund (IMF) or sparking social unrest.
Leaders Prepare For Disappointment in Europe LONDON -- With warnings of another slowdown in the euro-zone economy and powerful head-winds in the U.K., policy makers this week appeared to be preparing consumers and investors for disappointment. Juergen Stark, a member of the European Central Bank's policy council, said that the recovery in the 16-country euro zone could lose traction in the first part of this year. "It is likely that the first half of 2010 will go more slowly than in the second half of 2009," Stark said Wednesday at an economics seminar in Leipzig, Germany. "This doesn't mean a double-dip recession, but more in the character of a gradual and bumpy economic recovery over the next quarters," Mr. Stark said.
Stocks get knocked back Stocks slumped Wednesday as a strong dollar and questions about China's lending practices slammed commodities, one of the leaders of the recent rally. IBM dragged on the tech sector as investors picked apart the company's outlook one day after sending the stock higher.
Hedge Funds Hold Investors ‘Hostage’ After Rebound Hedge funds’ best year in a decade is giving little comfort to Jason D. Papastavrou. The founder of New York-based ARIS Capital Management LLC, which has about $250 million invested in hedge funds, is still waiting to get back $155 million from 22 managers that restricted withdrawals in 2008. “We don’t object to the illiquidity,” Papastavrou said in an interview. “We object to how some managers are abusing the situation and holding investors’ money hostage to generate fees.”
Fed’s Dudley: Banking System Remains Under Strain Federal Reserve Bank of New York President William Dudley flagged the uneven recovery of the financial system Wednesday, in comments that also said central bank policy was aimed at trying to help that healing process continue. “The capital markets have recovered” but “the banking system is still under quite a bit of strain,” Dudley said. For banks, “it is a healing process, it will take some time,” and that’s “one of the reasons why we have our monetary policy setting where it is,” Dudley said.
China May Buy Less U.S. Debt, CASS Researcher Says China, which cut Treasury holdings by the most in five months in November, may scale back purchases of U.S. debt on concern the dollar will decline, said Liu Yuhui, an economist at the Chinese Academy of Social Sciences. The Asian nation’s investors, the biggest foreign holders of U.S. government debt, trimmed holdings by $9.3 billion in November to $789.6 billion, a Treasury Department report showed yesterday. The decline came even as Chinese foreign-exchange reserves swelled $61 billion in the month.
China Curbs Bank Loans as Asset Bubble Worries Grow Unemployment is in the double digits in the United States. China, meanwhile, is expected to expand its GDP at near double-digit rates again. Given the starkly different scenarios, it's easy to be envious of the emerging giant's seemingly comfortable position in the global economy. But China is actually in the midst of a high-stakes balancing act. And Wednesday's announcement that China is planning to further curb bank lending -- the latest in a series of maneuvers to deflate potential asset bubbles -- sheds more light on the tough choices the country is now facing.
China’s GDP Growth Accelerates to Fastest Since 2007 China’s growth rate accelerated to the fastest pace since 2007 in the fourth quarter, signaling a need to rein in credit growth that threatens to destabilize the world’s fastest-growing major economy. Gross domestic product rose 10.7 percent from a year before, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing. Asset-price gains, particularly in property, are creating problems for the government to guide the economy, Ma Jiantang, who heads the bureau, told reporters after the release.
Mexico Peso Falls the Most in 2010 as China Curbs Bank Lending Mexico’s peso fell the most in 2010 on concern China’s move to curb bank lending will slow the global economic recovery, reducing demand for higher-yielding, emerging-market assets. The MSCI Emerging Markets Index of 22 nations lost 1.8 percent after Liu Mingkang, China’s chief banking regulator, said some banks were asked to pare lending after a record 9.59 trillion yuan ($1.4 trillion) in new loans in 2009.
World Bank sees risk of recovery losing steam The global economic crisis is largely over and a modest recovery is under way but it could quickly lose steam as governments pull back some of the extraordinary liquidity they pumped into markets, the World Bank said on Wednesday. The World Bank’s annual Global Economic Prospects report for 2010 said the fragile recovery posed special risks for developing countries including stiffer borrowing costs, reduced credit and capital flows. To deal with tighter financial conditions, which could impede investment, the World Bank said there was “considerable scope” for countries to cut domestic borrowing costs and promote local capital markets.
No New Normal on Wall Street as Economists Dismiss Pimco’s GDP “New normal” may not be the new norm after all. Wall Street economists aren’t buying the theory propounded by Bill Gross and Mohamed El-Erian, co-chief investment officers at Pacific Investment Management Co., that the U.S. will be mired in long-term sluggish growth averaging 2 percent a year. They see potential real growth, or the rate of expansion at which inflation is steady, at 2.5 percent, matching the average quarterly rate of the past 20 years, according to the median forecast in a Bloomberg News survey of 46 economists.
The Source of America's Imperial Presidency By William Pfaff The imposingly versatile Garry Wills, Northwestern University historian, political polemicist, sometime philosopher, theologian and church historian, has a new book inspired by liberal disappointment with President Barack Obama, blaming Obama's faults as well as other U.S. presidential disorders on the atom bomb. He argues in "Bomb Power" that possession of the bomb-a product of an enormous and a secret scientific undertaking, the Manhattan Project, launched by Franklin D. Roosevelt-has ever since given U.S. presidents an intoxicating degree of unchecked personal power, so that there is "no constitutional check on his actions ... [which amounts to] a violent break in our whole governmental system."
'Scott Brown' candidates rising up As Washington struggled to discern a meaning from Massachusetts' special election, candidates outside the Beltway said one message is clear: Outsider, grass-roots campaigns that tap voters' anger at Washington arrogance will win in 2010. Republican Scott Brown, who outhustled his opponent Tuesday to win a Senate seat that Democrats had held since 1953, became an instant brand name, with Republicans claiming to be "Scott Brown" candidates in their own races and Democratic candidates trying to heed the lessons of his shocking victory.
Three Nagging Questions About Barack Obama By Ruth Marcus Since the start of his presidency, I've been wrestling with three questions about Barack Obama: Did he take on too much? Is he too hands-off in his dealings with Congress? And the biggest, which puzzled me throughout the campaign as well-where is he, exactly, on the political spectrum? These are questions without certain answers. For one thing, the counterfactual can never be fully known: What if he hadn't chosen to press health care and climate change and financial reform? What if he had been more clear about his bottom line on health reform earlier in the process? For another, the story of Obama's presidency is unfolding. The first chapters do not presage the outcome.
Obama's Domestic Agenda Needs a Reset I think Massachusetts Republican State Senator Scott Brown's victory in the election to replace the late Senator Ted Kennedy is 40% a result of his far superior campaign -- his defeated opponent was a painfully inept campaigner -- and 60% a bolt of lightning delivered to the White House's nervous system from voters in what had previously been thought of as the safest Democratic state in the union. The message traveling down that bolt of lightning was that perennial favorite -- it's the economy, stupid.
Republicans Want the Senate Back With Just One Win For the weight given yesterday’s Senate race in Massachusetts, you would think the Democratic majority status in the Senate hung in the balance. It didn’t. But its supermajority status did, and that’s what counts these days, sad to say. Without 60 votes to kill a threatened filibuster, it might take a legislative trick to get health-care reform passed, for example. This isn’t just about health care. Not long ago, either party would have considered itself on solid ground with 59 votes in the 100-member Senate. Filibusters aimed at killing bills were rarely undertaken or even threatened when a strong majority supported the measure.
Massachusetts Message: Democrats Must Create Jobs, or Else Massachusetts Republican Scott Brown's stunning win over Democrat Martha Coakley for the U.S. Senate seat vacated by the passing of Edward M. Kennedy both reshapes the public policy landscape and puts President Barack Obama and Congressional Democrats on notice: Fix the economy and bring back job growth -- or face large seat losses in the November Congressional election.
Democrats Propose $1.9T Increase in Debt Limit Senate Democrats propose $1.9 trillion increase in federal debt limit Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion. The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.
Bank of America losses grow to $5.2 billion Losses at Bank of America widened to $5.2 billion in the fourth quarter, as its results were squeezed by the company's decision to return bailout money owed to the government. Even as consumer loan troubles again ate away at profits, much of the decline was prompted by its repayment of $45 billion the company received through TARP, or the Troubled Asset Relief Program.
Cautious about the economy, big banks report slow lending Two of the nation's largest banks said Wednesday that loan losses generally have stopped increasing but that relatively few customers are seeking new loans, reports that are in broad agreement with other indicators showing that the economy remains weak. Bank of America and Wells Fargo posted starkly different annual results. Bank of America said it lost $2.2 billion during 2009, its first annual loss in at least 20 years, and Wells Fargo reported an $8 billion annual profit, among its largest ever.
Obama to Nationalize Student Lending with Pending Budget Bill A bill currently before the Senate would empower the Obama administration to nationalize the student lending industry, eliminating the federally subsidized private loans millions of university students rely on to finance their educations. The Student Aid and Fiscal Responsibility Act – currently being considered by the Senate Health, Education, Labor, and Pensions (HELP) Committee – would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.
Loan Troubles Bedevil Banks Wells Fargo swings to profit, adding to round of improved results a year after meltdown The loan troubles of many U.S. consumers weighed down fourth-quarter results at Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, but bank executives predicted loan losses are near a peak. The three banks hold a combined 24% of all U.S. deposits and operate more than 15,000 retail branches, making them important barometers of consumer sentiment and the health of the U.S. banking industry.
States urge action on foreclosures Cut loan principal for borrowers whose homes are worth much less than their mortgages. Attack the problem of option adjustable rate mortgages. Cut down on red tape. Those are some of the ideas in a plan issued Wednesday by a group of state officials who have been working for more than two years to stem the foreclosure tide. The state attorneys general and banking regulators urged the Obama administration and loan servicing firms to step up their efforts.
Cold Weather Chills Housing Starts New-home construction fell in December, as bad weather kept construction crews from breaking ground. But an increase in newly issued building permits suggested the decline was only temporary. Separately, inflation at the wholesale level was muted last month, as higher food prices were offset by a decline in energy prices. The number of new-home starts in December fell 4% from November to a seasonally adjusted 557,000 annual rate, the Commerce Department said Wednesday.
Obama Cracking Down On Contractor Tax Cheats President Barack Obama is ordering a new crackdown on federal contractors who don't pay their taxes. He was signing an executive order Wednesday telling federal agency chiefs to take steps to bar those companies from receiving new government contracts. Obama was also directing the IRS to review contractor filings to ensure the companies are not lying about the taxes they've paid. "It is simply wrong for companies to take taxpayer dollars and not be taxpayers themselves," Obama said in his prepared remarks. "We need to insist on the same sense of responsibility in Washington that so many of you strive to uphold in your own lives, in your own families and in your own businesses."
Rocky mountain coming down The Democratic West under threat AT A beer distributor’s in Loveland, Colorado, Scott McInnis, the front-runner in the race for the state’s Republican gubernatorial nomination, was talking about Bill Ritter, the state’s Democratic governor. At the end of the previous Republican administration, he reckoned, there were plenty of jobs, and Colorado was known as a business-friendly state. But Mr Ritter had slapped punitive regulations on the oil and gas industry, and failed to compete effectively for big military projects. Recent polls had shown Mr Ritter trailing in a matchup with Mr McInnis. The next day, January 6th, Democrats were stunned when Mr Ritter announced that he would not stand for re-election this year after all.
Housing starts fall, producer prices rise New U.S. housing starts unexpectedly fell in December, likely the result of unusually cold weather, while producer prices rose for a third straight month. The Commerce Department said on Wednesday housing starts fell 4 percent to a seasonally adjusted annual rate of 557,000 units, pulled down by a drop in groundbreaking activity for single-family dwellings. Analysts polled by Reuters had expected housing starts to rise to 580,000 units. Building permits, however, soared in December. "At first glance housing starts were disappointing. But, they were offset by a huge jump in building permits. The data is suggestive of a continued gain in housing construction over the next several months," said Michelle Meyer, economist at Barclays Capital in New York.
‘Tranche Warfare’ Erupts as Property Owners Slide Into Default When Lightstone Group bought Extended Stay Hotels Inc. in June 2007, it relied on more than $7 billion in debt financing to complete the $8 billion deal just weeks before the leveraged-buyout market imploded. Today, Extended Stay’s creditors are battling each other after the company filed the largest bankruptcy case by a U.S. hotel owner. A company reorganization plan, which includes financing from Centerbridge Partners LP and Paulson & Co., may be challenged by a proposal from Starwood Capital Group LLC that is backed by some so-called mezzanine lenders.
Harder to get an Uncle Sam mortgage It's going to be harder to get a government-backed mortgage from now on. Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday. The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger down payments.
FHA Raises Premiums, Down Payments as Mortgages Sour The cost of a government-guaranteed mortgage will be more expensive for U.S. homebuyers as the Federal Housing Administration raises insurance rates and tightens credit- score rules to combat a rise in delinquencies. The premiums FHA charges to insure mortgages will rise to 2.25 percent from 1.75 percent this year, the agency said in a statement today. Borrowers who have credit scores below 580 will also have to make down payments of at least 10 percent, up from 3.5 percent, and allowable seller concessions will be cut by half.
Jobs bill: New Senate math means rough road The road for another stimulus bill just got tougher following Tuesday's election of Republican Scott Brown to the Senate in Democratic stronghold Massachusetts. After health care, Congress' next big priority is to pass something that shows voters in an election year that they're on top of the nation's unemployment scourge.
Study: Unemployment to Stay High Through 2013 Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows. In some areas, such as California's central valley and cities in Nevada, unemployment rates will stay at or above 10 percent through 2013, according to the report published on Wednesday by the U.S. Conference of Mayors and research group Global Insight. The mayors group released the report a day ahead of a meeting with U.S. President Barack Obama in which it will seek federal financial aid for small and large cities.
Sioux City John Morrell Plant to Close The city of Sioux City issued a written announcement Tuesday evening regarding the future of the John Morrell Plant. John Morrell employees roughly 1,400 workers. Sioux City Economic Development Director Marty Dougherty shared the following: "Mayor Mike Hobart was contacted by phone late Tuesday afternoon by John Morrell Plant Manager Dan Pacquin indicating the Sioux City plant would close April 20. The City is awaiting Economic development and the Siouxland Chamber of Commerce. More information will be provided tomorrow [Wednesday] after meeting with Morrell officials."
Jobless rates seen high for many more years Unemployment rates will likely peak in most U.S. cities in 2010, but it will be many more years before jobless rates hit their lows of the last decade, a report released by a U.S. mayors group shows. In some areas, such as California's central valley and cities in Nevada, unemployment rates will stay at or above 10 percent through 2013, according to the report published on Wednesday by the U.S. Conference of Mayors and research group Global Insight. The mayors group released the report a day ahead of a meeting with U.S. President Barack Obama in which it will seek federal financial aid for small and large cities. "What is just as alarming as the double-digit unemployment in many of the nation's major metro areas is the lethargic rate at which it will recede once the job market turns around," the report said.
Man fired for bringing dog to work PetSmart eventually offered Eric Favetta his job back "We love to see healthy, happy pets" is PetSmart's motto — but apparently the policy doesn't apply to pets belonging to employees. Eric Favetta, a 31-year-old PetSmart employee, was fired for "theft of services" after bringing his dog to work during an overnight shift he'd picked up as a favor to his manager, according to the Newark Star-Ledger. (The Secaucus, N.J., store added an overnight shift in order to prep the store for a visit by officials from Martha Stewart's company, who wanted to discuss selling products at PetSmart.)
Accidental entrepreneurs on the rise Unable to find work, some simply start their own business Andy Owen never thought he’d go into business for himself. “I was dragged in kicking and screaming,” he said. “I like working for other people.” Things changed when he was laid off from his job at a Michigan school district in June 2008 amid the nation's worst recession in decades. He quickly found that he was unable to land another job that paid enough to afford child care for the baby he and his wife were expecting.
Oil tumbles 2% on China worries Oil prices plunged Wednesday on a stronger dollar and amid investor concern that the Chinese government will continue to tighten its credit policy. What prices are doing: Oil fell $1.87, or nearly 2%, to settle at $77.62 a barrel, after dipping as low as $76.96 a barrel earlier in the session. On Tuesday, oil rose for the first time in six days, recovering from its lowest level so far this year. What's driving prices: Reports that China has asked major banks to cease lending until the end of the month in order to tighten the country's credit market spooked investors. The news comes a week after the Chinese government raised bank reserve requirements for the first time since 2008.
Detroit auto show: A dose of reality hits the Motor City Dream cars and exotic concepts have been in short supply during this year’s Detroit auto show. Reality has set in, with mega horsepower motors and flamboyant styling giving way to small cars and speeches about fuel efficiency. But the harsh economic realities that sent car sales tumbling – and brought Chrysler and General Motors to the brink of collapse – have provided some welcome surprises during this year’s show.
POPULAR MUSIC: A KEY ILLUMINATI TOOL Music is a powerful influence, both for good and evil. In The Republic, Plato recognized its potential as a disintegrating force and advocated its control. In the modern era, Antonio Gramsci recognized that Communism (an Illuminati movement) could succeed only if the traditional culture, including music, was first subverted. For the past two generations, popular music has become openly hostile to traditional values. While some forms, such as country, have resisted this trend, most popular music is a purveyor of drugs, rebellion, perverted sex, the primitive and the occult, and Satanism. Traditional values always rest upon a religious foundation, so the most powerful attack in a culture war is an attack upon the underlying faith. Satanism, which inverts the Judeo-Christian tradition -- calling evil good and good evil -- is the sharpest possible attack.
New York Times to Charge for Some Web Content in 2011 New York Times Co. will begin charging users for some content on its namesake Web site in 2011, its second attempt in four years to make online readers pay amid slumping circulation and advertising sales. The New York-based publisher said in a statement today that it will give users access to a set number of articles a month for free on NYTimes.com and charge a fee for further reading. Subscribers to the New York Times print edition won’t be charged for Web access.
What Massachusetts Got Right By Robert Scheer The president got creamed in Massachusetts. No amount of blaming this disastrous outcome on the weaknesses of the local Democratic candidate or her Republican opponent's strengths can gainsay that fact. Obama's opportunistic search for win-win solutions to our health care concerns and our larger economic problems is leading to a lose-lose outcome for the president and the country. The two issues that mattered on Election Day were the economy, which Obama has sold out to Wall Street-as quite a few disgruntled voters pointed out-and his plea to save health care reform, which the voters who had backed him for the presidency with a huge majority now spurned.
The Surveillance Society: Trading Freedom For The Illusion Of Safety Governments, regardless of their political structure or historical background, have always striven to not only control information, but also to gather it from the people by covert means. Often, this secretive observation of the citizenry escalates into a completely open and full-fledged surveillance state. The U.S. in particular stands on a precarious edge: the line between abhorring invasion of privacy, and embracing invasion of privacy as necessary for the “greater good.” Many people assume that such a mindset is forced on the masses by the elite, that strength of arms is somehow required to make them accept the conditions of a police state, but this is not always so. It is very difficult for governments, despite any technological developments or resources they may have, to enforce and maintain a fascistic political construct. In order to retain control, they must build a “Surveillance Culture;” a society in which the people watch each other, and where individuals censor themselves instead of being censored by the authorities. In the end, a police state cannot exist without the help of the people it means to dominate. By spying on each other, we destroy ourselves.
America is More Like Haiti than We'd Like to Think The recent earthquake in the island nation of Haiti illustrates the fragility of all societies. While Haiti is unusual in its lack of infrastructure and its high dependence on foreign aid--more than half of its annual government budget comes from foreign aid--it is still similar in many ways to other nations: From the 1960s to the turn of the 21st century, as in many other nations, Haiti became an urbanized nation. Before the 1960s a substantial portion of Haitian society still lived on rural semi-self sufficient farmsteads. But as urbanization and specialization went on, fewer and fewer people lived off the land and more and more citizens became dependent on foreign aid and a scant number of industrial jobs. This trend has been repeated around the globe, making nearly all societies increasingly vulnerable to disasters, man-made or natural. The resiliency of traditional agrarian societies has sadly become a thing of the past. Here in America, 2% of the population now feeds the other 98%. This is now something that First, Second, and Third World nations have in common. America is more like Haiti than we'd like to think. Human nature is the same in every culture and nation: fundamentally sinful.
Pope criticizes the ‘cruelty’ of capitalism In a new book, Benedict XVI decries power of rich over the poor VATICAN CITY - Benedict XVI criticizes the “cruelty” of capitalism and colonialism and the power of the wealthy over the poor in his first book as pope released on Friday. Benedict began writing his personal meditation on Jesus Christ’s teachings, entitled “Jesus of Nazareth,” in 2003 when he was still Cardinal Joseph Ratzinger. He stressed that the book is an expression of his “personal search for the face of the Lord” and is by no means official Catholic Church doctrine. “Everyone is free, then, to contradict me,” he wrote.
UN abandons climate change deadline The timetable to reach a global deal to tackle climate change lay in tatters on Wednesday after the UN waived the first deadline of the process laid out at last month’s fractious Copenhagen summit. Nations agreed then to declare their emissions reduction targets by the end of this month. Developed countries would state their intended cuts by 2020: developing countries would outline how they would curb emissions growth. But Yvo de Boer, the UN’s senior climate change official, admitted that the deadline had in effect been shelved.
Lord Monckton Questions Global Warming Science
Increased “Risk of Secession” in European Union 01/20/10 Stockholm, Sweden – Ambrose Evans-Pritchard has recently pulled some noteworthy quotes from the European Central Bank’s December 2009 guide on expulsion from the EU, such as, “recent developments have, perhaps, increased the risk of secession…” The new document is part of a legal working paper series and is entitled, “Withdrawal and expulsion from the EU and EMU: some reflections” (PDF). With the ongoing economic upheaval throughout the industrialized world, and especially in the PIGS (Portugal, Italy, Greece, and Spain) nations, it’s looking like an increasingly useful resource for EU leaders to have on hand.
It was less corrupt under the Taliban, say Afghans Corruption in Afghanistan has become so entrenched that the population is being forced to pay out the equivalent of a quarter of the country's GDP in bribes, according to a UN report published yesterday. Six out of 10 Afghans view corruption as a bigger problem than violence, the dossier, compiled by the UN Office of Drugs and Crime (UNODC), found. It showed that many illicit payments – totalling $2.5bn (£1.5bn) – were made to officials in order to obtain essential public services.
Israel deports US journalist News editor for Palestinian agency put on flight to New York Israeli authorities today deported an American journalist who was working as an editor for a Palestinian news agency. Jared Malsin, who is Jewish and in his late 20s, was detained at Tel Aviv's Ben Gurion airport eight days ago as he returned from a holiday in Prague. His girlfriend, a Lutheran church volunteer who flew back with him, was deported two days later., but Malsin was held in detention at a cell in the airport while he began a legal challenge to his deportation order.
The peace process will resume, but why? Israeli-Palestinian final status talks will be renewed because the international community -particularly the United States but also the moderate Arab states - wants this to happen. Probably sooner rather than later a formula will be found for sitting the two sides' negotiating teams down with US envoy George Mitchell.
Iran to unveil three new home-built satellites: report TEHRAN — Iran will unveil three new satellites in February, a report said Wednesday, amid Western concerns that Tehran is using its nuclear and space industries to develop atomic and ballistic weapons. ISNA news agency quoted Communications Minister Reza Taghipour as saying that one of the three home-built communications satellites is still under construction. Taghipour named the three satellites as Toloo (Dawn), Ya Mahdi and Mesbah-2, but did not elaborate on exactly when they would be launched.
U.S. to deploy missiles near Russia President Obama sent two of his top national security officials to Moscow on Wednesday to clear the last hurdles to a new nuclear pact, but a revelation that U.S. missiles will soon be deployed near Russian territory could complicate the talks. The White House said that National Security Adviser James L. Jones and Joint Chiefs of Staff Chairman Adm. Mike Mullen will meet with Russian officials "primarily to discuss the remaining issues left to conclude" a follow-on to the 1991 Strategic Arms Reduction Treaty (START), which the U.S. ambassador to Moscow predicted will be completed within weeks.
Iran in billion-euro gas deal with Germany TEHRAN — Iran has signed a one-billion-euro (1.44-billion-dollar) deal with a German firm to build 100 gas turbo-compressors, an industry official said in newspapers on Wednesday. The contract provides for the unnamed German firm to transfer the know-how to build, install and run the equipment needed to exploit and transport gas, said Iran's Gas Engineering and Development Company head, Ali Reza Gharibi. The German company has already delivered 45 such turbo-compressors to Iran, Gharibi said, according to Iran Daily. Industry experts said he was apparently referring to Siemens. But the National Iranian Gas Company (NIGC) denied the signing of a deal.
Republican Brown Wins Massachusetts Senate Election Republican Scott Brown won the Massachusetts Senate seat of the late Democrat Edward Kennedy, a political upset that imperils health-care legislation in Congress and sends a warning shot to Democrats ahead of November’s elections. Brown was leading Democratic state Attorney General Martha Coakley 52-47 percent with 92 percent of the state’s precincts reporting, according to the Associated Press, which projected Brown as the winner. Independent candidate Joseph Kennedy, no relation to the late senator, had about 1 percent of the vote.
Government is Too Big to Succeed Ron Paul Last week, the Financial Crisis Inquiry Commission kicked off their first round of hearings on the causes of the economic meltdown on Wall Street. The commission is being compared to the the Pecora Commission launched in 1932 to investigate the causes of the Great Depression. The Pecora commission is beloved by those who believe the solution to every problem is more laws because it was used to justify a number of new laws, including Glass-Steagall. Of course, none of those laws addressed the real causes of the Great Depression. It was the introduction of unsound monetary policy and central economic planning pursued by the Federal Reserve that really threw everything off balance. The Fed was founded in 1913 to stabilize the economy and prevent a recurrence of the short-lived Panic of 1907, but instead it promptly produced the Great Depression which lasted more than 15 years.
Marc Faber on Central Banks Blowing Ever Larger Debt Bubbles
Is The U.S. Economy Being Tanked By Mistake or By Intent? The government wants Americans to believe the greatest economic collapse in history was the result of ineptness and mistakes yet still have confidence in their financial institutions. Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to "mistakes"? Not malfeasance - just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?
Gold Price Holds at $1,132 as Inflation Risks Weigh on Gold The gold price opened the week near unchanged at $1,132 per ounce as rising concerns of inflation kept a lid on the price of gold and the rest of the commodity complex. The gold price also fought off strength in the U.S. Dollar Index (DXY), which traded higher by 0.69% to 77.599 as the opening bell rang. Gold mining stocks, as represented by the Market Vectors Gold Mining ETF (GDX), also opened relatively unchanged alongside the price of gold. As the global economy recovers, investors and traders continue to grapple with the question of whether the massive infusions of money into the system from central bankers will spark inflation. The potential policy response to this question has implications for the price of gold and gold mining stocks as well as the broader investment landscape.
A $1,600 Gold Price in 2010? Gold to Rise as System Collapses Gold price volatility has picked up in the past few weeks as diverging views about the next move in the price of gold have intensified. The gold price declined $152 off its early December high of $1,226.50 before rallying to move comfortably back above $1,100 per ounce. While gold has seen violent daily and monthly oscillations, the longer-term trend has been decidedly positive over the past decade - with investors driving up the gold price 281% over the past ten years. The events of the last 18 months have further strengthened the fundamental investment case for gold as conveyed to Barron's by their all-star panel of money managers and investment strategists. No longer relegated to the backwater of the investment landscape, gold-related investments have slowly but surely entered into the mainstream.
Gold "Set to Break Higher" as UK Inflation Jumps, Eurozone Faces "No Good Solution" to Greek Deficit THE PRICE OF GOLD slipped against the US and UK currencies on Tuesday but rose to a one-week high for Euro investors as the single currency fell on a series of poor data. Construction output in the 16-nation Eurozone shrank 8% in Nov. from the same month in 2008, new figures showed. Economic sentiment in Germany also fell on the ZEW survey. Consumer-price inflation here in the UK meantime jumped at a record pace during Dec., nearing the 3.0% level at which the Bank of England must publicly defend its policies. Bank interest rates for UK savers have now lagged inflation since June 2008.
The Future of Gold & Silver . . . . Although it is true that both gold and silver have been subjected to the grossest and most egregious manipulation of any commodity in history, I fully understand the necessity of these actions over the past 40 years. No fiat monetary system could have survived this long without the secret computer price control mechanisms in place...especially in gold and silver as they ARE the only true competition to fiat money.
2010 To Mark Dollar Demise Well, that was another year, and decade, one that was characterized by exacting prices for almost a century of easy money led by the Fed. And it continues today with bubble dynamics in economies and markets considered a normal expectation these days, explaining why gold was top performer over the past 10-years, and should remain in that spot moving forward as well baring silver’s remonetization. That is to say, anybody, like Time Magazine, expecting smooth sailing over the next 10-years is most likely barking up the wrong tree with all the problems that still lie ahead for us, problems ranging from increasingly unmanageable debts and deficits, which are a result of the big turn in the credit cycle in 2008, to the pending demise of the dollar ($) as the world’s reserve currency.
Sound Familiar? In 1933 Roosevelt decided that the key to ending the depression was to create inflation. To that extent he took the US off the gold standard. Actually he just arbitrarily revalued gold from $20.00 to about $35.00. The value of the dollar quickly dropped about 40%. By this time Europe was already off the gold standard and competitive currency devaluation was already well underway on the continent. In order to compete the US followed suit. So what was the result of Roosevelt's inflation scheme? Initially the economy saw a small uptick. Employment picked up slightly although it still remained high all the way into WWII. But there are always unintended consequences when the government meddles in the market and this time was no different.
Howard Ruff: Reprising (and Preparing for) Rough Times TGR: You have written quite a bit about the U.S. government's growing debt and unfunded liabilities, heading toward an even more aggressive printing of money and inflation. How convinced are you that this is the only outcome? Howard Ruff: I am basically staking my reputation on it. I guess I can't do any more than that. I am convinced that we're moving into a socialist age, and the Obama Administration is deliberately trying to create European socialism here in America. All of their objectives require creating money. Until we have a new administration with a new philosophy—which isn't going to be printing all this money—I think inflation is in our future.
Hyperinflation Nation Part 1 of 2
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4 Reasons Why Bernanke Will Refuse to Fight Inflation With recent news of inflation rising in Australia we turn an eye to the same eventuality at home in the US. Despite overwhelming growth in the monetary base, little inflation has yet to appear in government measures. Not that we’re one to trust those… Inflation’s unlikely to keep at bay much longer. To date, banks have been hoarding new money pumped into the system as excess reserves (to protect themselves against grotesque losses like the $7.6 billion Citigroup reported losing last quarter). However, banks will again begin to lend once they feel there’s room to maneuver, and the resulting burst of growth in the money supply will lead to rapid inflation.
China, Asset Bubble, And Jim Rogers News reports about dangerous asset bubbles in China are now reaching a crescendo as the government continues to take steps to rein them in. Bloomberg has a number of reports today about soaring home prices, soaring stock prices, and one famous investor who now sees a bubble. First up, a story about the bubblicious property market China property sales jumped 75.5 percent to 4.4 trillion yuan ($644 billion) last year, led by the eastern cities of Zhejiang and Shanghai, as record new loans boosted buying.
The Message of Massachusetts A crisis is a terrible thing to exploit. Whether or not Republican Scott Brown wins today in Massachusetts, the special Senate election has already shaken up American politics. The close race to replace Ted Kennedy, liberalism's patron saint, shows that voters are rebelling even in the bluest of states against the last year's unbridled pursuit of partisan liberal governance. Tomorrow marks the anniversary of President Obama's Inaugural, and it's worth recalling the extraordinary political opportunity he had a year ago. An anxious country was looking for leadership amid a recession, and Democrats had huge majorities and faced a dispirited, unpopular GOP. With monetary policy stimulus already flowing, Democrats were poised to get the political credit for the inevitable economic recovery.
Obama 'Surprised and Frustrated' and 'Not Pleased' by Massachusetts Senate Race President Barack Obama is "surprised and frustrated" and "not pleased" with the Senate race that will conclude in Massachusetts today, White House Spokesman Robert Gibbs told reporters during Tuesday's press briefing. During the briefing, Gibbs fielded several questions about the special U.S. Senate election between Republican state Sen. Scott Brown and Democratic Attorney General Martha Coakly. Recent polls show the Republican Brown leading in the race to fill the seat long held by the late Sen. Edward M. Kennedy.
Coakley adviser memo: D.C. Dems 'failed' Coakley The Coakley campaign is bridling at finger-pointing from the White House and Washington Democrats, and an outside adviser to the campaign has provided to POLITICO a memo aimed at rebutting the charge that Coakley failed and making the case that national Democrats failed her. The adviser, who made the case to my colleague Jonathan Martin on the condition of anonymity in response, he said, to "the current leaking coming out of the White House and the DNC that is chalking all of this up to a "bad candidate".
Japan Airlines announces bankruptcy Its debt reaches 16.5 billion dollars. It is the largest bankruptcy in the postwar history of Japan. Under state control, the company will continue to fly, but will fire 15700 people. At a cost to taxpayers of 44 billion yen. Japan Airlines (JAL) today announced bankruptcy. The largest airline in Asia, hit by the global crisis, now has a debt that is about 16.5 billion U.S. dollars. Yesterday, the company's shares fell to their lowest point in 59 years of history, pulling down the value of JAL is now estimated at 150 million U.S. dollars, more or less the price of a new jumbo jet.
Marc Faber Says Worry about Portugal, Ireland, Italy, Greece, and Spain Soverign Debt Defaults After every financial crisis there's a sovereign debt crisis, Marc Faber says. Countries that borrowed too much during the boom times start struggling to pay their competitors back, and eventually some of them default. The countries most likely to blow up this time around are the "PIIGS": Portugal, Ireland, Italy, Greece, and Spain. One ore more of them, Faber says, will likely default in the next couple of years. And, that could result in the death of the Euro currency. Longer-term, Faber says, Japan and the US are in line for the same fate.
Bernanke Yields To Pressure, Welcomes 'Full Review' Of AIG, Copies Boilerplate Language From Prior Testimony Ben Bernanke has yielded to increasing public pressure to finally disclose all the details surrounding the AIG: 28.22, 0.16 bailout, and in a letter to Acting Comptroller General Gene Dodaro, Bernanke said he would welcome a full review of the AIG taxpayer bailout by the GAO and will make available "all records and personnel necessary to conduct this review," emphasizing that a review should give taxpayers "the most complete understanding of our decisions and actions." One wonders why stop at AIG? Why not open up the Fed to a GAO audit on all bank bailout activities undertaken in the period commencing with the GSE nationalization, and culminating with the Lehman bankruptcy. Surely that would provide an ever more "most complete" understanding of just who got what and how much taxpayer capital was put just so Wall Street could enjoy another record bonus season.
Bernanke, Hoping to Quiet Critics, Seeks Review of Fed's A.I.G. Bailout The Federal Reserve chairman Ben S. Bernanke asked a government auditor on Tuesday to review the Fed's actions in bailing out the American International Group, as controversy persisted over the central bank's role in extending billions in credit to the insurer. Mr. Bernanke, in a letter to the acting comptroller general Gene Dodaro, said the Fed would make available to the auditor, the Government Accountability Office, all documents and personnel necessary to conduct the review.
Federal Reserve No Longer To Keep Its Secrets about AIG Bailout The Federal Reserve is giving up on the fight to keep some of its bank bailout dealings secret. Federal Reserve Chairman Ben Bernanke (pictured) sent a letter to the General Accountability Office inviting the congressional auditors to conduct a "full review" of the Fed's aid to struggling insurance giant AIG (AIG), according to a report from Bloomberg. "The Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG," Bernanke said Tuesday in a letter to Gene Dodaro, acting head of the Government Accountability Office. A copy of the letter was released by the Fed. Geithner: Not Aware Of Secrets Pact
AIG bailout probe widens to include Paulson House committee also calls N.Y. Fed chair Friedman to testify A House of Representatives committee is broadening its investigation of secretive bank bailouts to include former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York Chairman Stephen Friedman. The Committee on Oversight and Government Reform has invited Paulson and Friedman to testify about their roles in the bailout of American International Group Inc., according to the committee's chairman, Democratic Rep. Edolphus Towns.
New York Fed Says AIG Phrase Marked for Deletion Was Inaccurate The Federal Reserve Bank of New York said its attorneys suggested American International Group Inc. not disclose information about full-value payouts to banks because it wasn’t “precisely accurate.” “The counterparties ultimately received slightly less than 100 percent of par value,” the New York Fed said in a statement today on its Web site. The central bank said it “sought to ensure” that AIG had the “greatest possible precision” in its securities filings. E-mails released this month showed that the New York Fed asked the company to withhold information from the public about payments to banks. The New York Fed indicated it made 250,000 pages of documents available to Congress as lawmakers seek information on the Fed’s oversight of AIG.
A "Bloodbath" By Any Other Name: More Pain Ahead for Big Banks, Whalen Says A big week of bank earnings accelerates midweek with results expected from Morgan Stanley, Bank of America, US Bancorp and Wells Fargo on Wednesday, followed by Goldman Sachs, American Express and Capital One Financial on Thursday. So what should investors expect? More revenue disappointments, such as those already posted by JP Morgan and Citigroup, according to Chris Whalen of Institutional Risk Analytics. "Right now the total egg - credit -- is shrinking," Whalen says. "The bank side is not a source of growth. Can you pull it out on the capital market side? Maybe, but I'm not sure where that comes from" given many of the big banks have loaded up on low-risk securities in the aftermath of 2008's bloodbath.
Big, in Banks, Is in the Eye of the Beholder Jamie Dimon, chief of JP Morgan Chase, may have strong arguments that banks should be able to grow as big as they want, but there is a swelling chorus of leaders in the United States and abroad who are more concerned about the risk that such huge banks present to the rest of the economy, Andrew Ross Sorkin writes in his latest column in The New York Times. Where Mr. Dimon and his opponents seem to agree, however, is on the advantages of a "resolution authority," which would give the government the ability to put a too-big-to-fail financial company into a conservatorship in much the same way the Federal Deposit Insurance Corporation is able to unwind a commercial bank without putting it into bankruptcy, Mr. Sorkin writes.
Souring Mortgages, Weak Market Put Loan Agency on a Tightrope David Stevens bought his first home almost 25 years ago, paying just 3% down with a loan backed by the Federal Housing Administration. "I had no money in the bank," he says. "If it weren't for the FHA, I wouldn't have gotten that home." Now, as FHA commissioner, Mr. Stevens has to decide how many others to let through that door. Souring FHA-insured mortgages are threatening the agency's finances. Congress is pressuring him to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.
TARP Tax Trickery: Banks Won't Really Pay Back All $90 billion Remember that story last week about the new tax proposed by President Obama, which will be designed to recoup $90 billion in lost TARP money from the nation's largest financial firms? Well, there's a catch: The banks won't actually be repaying $90 billion. They'll only have to pay $58.5 billion, because the "Financial Crisis Responsibility Fee" will be tax deductible. Henry Blodget, who writes the Clusterstock blog for Business Insider, made that little tidbit public today. And his source for the claim that the fee will be tax deductible? The Treasury Department, which he says emphasized it during a conference call with Wall Street. I guess Treasury is trying to mute financial industry opposition to the new fee by saying "Hey, it won't be as bad as it sounds."
Secret bill-writing on the rise The civics books say the House and Senate produce a final bill by sitting around a table where the public can watch them work out their differences. It's a quaint idea, but a different modern reality has been on display this month. Democrats are refusing to open to the public the end-stage negotiations on how the government is going to change the delivery of health care. And it's not just on the high-profile health care bill; the trend on much legislation is to shut the door and keep the minority party, cable TV and other media on the outside.
Waterboard JP Morgan and The Mortgage Bankers Assn How to give an economics writer a coronary: Recommend something that has been done twice before, and both times led to disaster, including being a major contributor to The Great Depression. Well guess what: JP Morgan and the other banks are doing exactly that. Oct. 13 (Bloomberg) -- Banks will push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults, according to JPMorgan Chase & Co.
MBS, R.I.P.? A Treasury rule on loan modifications riles the securities market. The $1.7 trillion mortgage securitization market is still a mess, despite (or in part because of) the Federal Reserve's $700 billion splurge into the market. But another reason may be Treasury's decision to undermine private mortgage-backed securities (MBS) contracts. BlackRock Inc. Chairman Laurence Fink went so far recently as to call this "one of the biggest issues facing American capitalism." He's worried that to protect banks from billions of dollars more in writedowns on bad second liens (a.k.a., home-equity loans), Treasury is trashing private contracts. "There is modification going on protecting our banks, protecting their balance sheets" and "I'm just very worried about it." Until that issue is cleared up, he says, we won't "get a vibrant securitization market back."
New York Fed Told AIG To 'Stand Down' On All Counterparty Discussions In one week, Tim Geithner will testify before Congress on his involvement in the AIG disclosuregate scandal, which, in late 2008 sought to prevent material information about AIG counterparty make-whole arrangements from seeing the light of day. Of course, in March of 2009, following political pressure, AIG: 28.22, 0.16 and the FBRNY caved and disclosed that $27 billion in taxpayer capital had been used to yield to the bankers' every whim and to take them out at par, while their underlying AIG CDOs were priced 50% lower, if not more. Zero Hedge previously wondered when will Goldman be approached by the SEC with questions on whether or not they sold their direct AIG protection in the form of CDS to parties under a "big boy" letter, or did Goldman transact on a $2.5 billion notional position while in possession of material, non-public information. This, of course, in addition to having absolutely no impairments on their actual CDOs, thereby providing the firm with material excess returns over and above what their total capital at risk would have been. With Goldman's Stephen Friedman accompanying Geithner in the hearings, he hope that someone in authority will finally ask the right questions.
Could Geithner Face Criminal Charges?
Do Obama and Geithner Have the Same Flaw: Accommodation Instead of Moral Action? A lot of us have been wondering, despondently, why the Hell Barack Obama is keeping Timothy Geithner on the job as Treasury Secretary, given his central role in the plunder of trillions of dollars from American taxpayers, and his record of subverting democracy in the service of Wall Street billionaires. Geithner's the guy that drove the getaway car in the heist -- so why was he hired to run the Treasury? You'd expect to see a guy as corrupt as Geithner serving as the Finance Minister in some Central Asian autocracy -- but not in Barack Obama's government, not after all he promised in the campaign.
Two More Reasons to Sell Treasury Bonds Two more reasons to sell US Treasury bonds: Fannie Mae and Freddie Mac. These two giant mortgage lenders are poster children for the dangers of wrapping government guarantees around the credit markets. With help from the state-sponsored banking system, these two government-sponsored entities (GSEs) perverted the process of credit intermediation and artificially suppressed the cost of mortgage loans over many decades.
A Cadillac Tax Exemption From an Edsel Administration By David Limbaugh This past Sunday marked the first time President Barack Obama graced a Washington, D.C., church with his presence since Oct. 11, but apparently it was not to sit in a pew and worship. Instead, he was doing the sermonizing and politicking -- gloriously intermingling church and state as only liberals are allowed to do in this country. Don't get me wrong; I'm no scold when it comes to the church-state separation mania, which I think has been grossly expanded by liberals not to preserve the constitutional protection of religious liberty, but to selectively suppress it. But here I am digressing before I've even gotten started on the main focus of today's rant.
Markets Decoupling 1/19/10 Pay close attention to the relationship between different asset classes and even different commodities, i.e dollar, oil, and metals. Our second objective at $77 in February Crude was reached today but prices did not stay there for long as oil reversed closing above $79/barrel. We suggest covering all remaining shorts and have yet to get clients long but we may have some bullish strategies to come. We still want to see a lower print in natural gas before issuing any buy recommendation, for those brave souls who remain short stay the course. For all energy contracts start following March as February goes off this week. All losses in Equities were gotten back today on the major indices?? As we said in last week's blog and this morning's commentary we think a correction is long overdue but look for a close below the 20 day MA to confirm.
More Market Infintalism, High Unemployment, Shrinkage Fed credit report says Americans now borrowing a lot less, Goldman Sachs fingered for causing the economic crisis, personal bankruptcies soar, mortgage market shrinking, vacancies grow, tax collections shrink, banks create extraordinary means to keep afloat Americans borrowed less for a 10th consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades. The Federal Reserve said yesterday that total borrowing dropped by $17.5 billion in November, a much bigger decline than the $5 billion decrease economists had expected.
Senate GOP calls for cutting public workers' pay 5 percent, hiking health care costs LANSING, MICH. - Senate Majority Leader Mike Bishop said Tuesday the pay of teachers, professors and state and local government workers should be cut by 5 percent and held at that level for the next three years to save money. The Rochester Republican told reporters he is proposing a constitutional amendment to go to the voters in August that would suspend collective bargaining rights and allow the pay cut to take effect.
Fail Britannia? If the United Kingdom collapses, it will be impossible to stop America from crumbling too. BY ROBERT MORLEY Addicted to debt and devoid of industry, Great Britain faces economic catastrophe. But if Britain crashes, it will not crash alone. It won't be the story of an isolated island fading into history, but of 200 years of Anglo-Saxon dominance coming to an abrupt end. Even though it's not even on the radar screen for most Americans, Great Britain is headed toward a debt crisis, and thus a currency crisis. On January 8, the Telegraph reported that Neil Woodford, head of Invesco Perpetual, said there was a "high probability" of Britain losing its aaa credit rating-something that has never happened before.
Risks to Sustained Economic Recovery (With Lessons Learned from Winston Churchill and Teddy Roosevelt) Remarks before the Annual Meeting of the Waco Business League - speech by Richard W. Fisher . . . . These are times that try men's and women's souls: They are not particularly felicitous economic times. The Federal Reserve has worked tirelessly for the past two years to rescue the financial system and the economy from plunging into the abyss of depression and chaos. As last year came to a close, we saw our efforts begin to bear some fruit: Interest rates and spreads between the yields on various key financial instruments have come down significantly. The markets for bonds and stocks have come back to life, and the economy-while subject to taking one step back for every few it takes forward-has nonetheless begun a palpable, if tepid, recovery. We are not yet out of the woods.
Lieberman: Massachusetts Election Shows Public "Really Skeptical" About the HC bill By Philip Klein Sen. Joe Lieberman on Tuesday said that even a close race in Massachusetts would show that the public is "really skeptical" about the health care bill that he voted for. "It's pretty clear that if Scott Brown doesn't win, it's certainly going to be close, and that in itself is newsworthy," Lieberman said on a Fox appearance with Neil Cavuto. Cavuto asked him to explain the message being sent by Bay State voters. "I think the message is, from the voters of Massachusetts, that people are anxious about the future, and they're unhappy about what's happening in Washington," he said. "They're anxious about the economy, the continued unemployment. They don't like all of the partisanship and deal making here in Washington. And they're really skeptical about this health care bill."
Progressives Abandon Universal Coverage Forever Understanding the Senate's plan to ban undocumented aliens from buying health coverage No one can accuse the health care legislation currently in the works of being perfect. But whether the flaws in the final sausage after the House and Senate bills are reconciled are acceptable to self-respecting progressives ought to depend on this: Do they help—or hinder—the ultimate objective of universal coverage? By this measure, if the provisions in the current Senate bill concerning undocumented aliens make it into the final bill, progressives, who put principle above politics, should bid adios to the whole effort. The bill would turn the undocumented into a permanent underclass of health care have-nots, making universal coverage unattainable.
Pelosi: "We will have healthcare -- one way or another" House speaker sounds confident of reform passage, even with a big loss for Democrats possibly on the horizon Given what looks like the impending loss of the party's Senate supermajority, Democrats have reason to be down in the dumps about healthcare reform. But if that's the way House Speaker Nancy Pelosi's feeling, she's not showing it publicly. "Let's remove all doubt, we will have healthcare one way or another," Pelosi said during an event in San Francisco on Monday. "Certainly the dynamic would change depending on what happens in Massachusetts. Just the question about how we would proceed. But it doesn't mean we won't have a health care bill."
House may be considering passing unamended Senate health care measure A top House Democrat said Tuesday that the Senate health care bill is "better than nothing," an indication that the House of Representatives is considering passing the more conservative Senate measure with no alterations. The House Democratic leadership may resort to that course of action if Massachusetts Republican state Sen. Scott Brown wins Tuesday's race to fill the vacancy created by the death of Democratic Sen. Ted Kennedy.
International Hearings Begin On "Falsified" Swine Flu Pandemic In order to promote their patented drugs and vaccines against flu, pharmaceutical companies influenced scientists and official agencies, responsible for public health standards to alarm governments worldwide and make them squander tight health resources for inefficient vaccine strategies and needlessly expose millions of healthy people to the risk of an unknown amount of side-effects of insufficiently tested vaccines.
If the sales price is 20% or more above the acquisition cost the lender must meet conditions concerning appraisal and property inspection
The waiver is limited to forward mortgages, no Home Equity Conversion Mortgages
Here is the actual wording of the waiver from the HUD website: "Mortgagees" in this case would be the banks and their subsidiaries that have foreclosed on the home. So all you entrepreneurial flippers need to check the fine print, and perhaps team up for a percentage from the banks, who are in the driver's seat on this HUD exception to the anti-flipping rule passed in 2003. This does provide yet another opportunity for the banks and their subsidiaries to skin more money from the foreclosure transaction with the help of public subsidy. So if you are the entrepreneurial sort, you'll have to grease the palms of the banks to gain access to the FHA for those quick flips.
Homebuilding's biggest CEOs to skip U.S. trade show The homebuilding industry's biggest trade show meets this week, but most of its biggest executives will not be there. The International Builders' Show, happening this week in Las Vegas, is the marquee event of the homebuilding industry, equivalent to the Consumer Electronic Show for technology or Fashion Week for retailers. It will attract about 55,000 builders, contractors and other industry professionals to a maze of booths and exhibits featuring more than 1,000 companies selling everything from skylights to stoves.
The Double Dip In Builder Confidence Is Here The NAHB reported its December housing market index, which came in at 15, missing expectations of a rebound from November's reading of 16, and is now at the low levels last seen in June. The double dip, at least in perceptions of what is happening to the housing market is here, and follows the recent housing starts inflection point. Additionally, builder confidence for current sales also slipped by a point to 15, even as optimism for sales in the next 6 months held at 26. Lastly, the measure of traffic from prospective buyers declined one point to 12, the lowest level since the market bottom in March 2009.
Banks seized 30,000 S. Fla. homes in 2009 Banks seized more than 30,000 homes in South Florida through foreclosure last year, a 16 percent increase from 2008, according to a new report from CondoVultures.com. Lenders filed 97,000 foreclosure notices in 2009, but not all of those homes have been seized.
Be Prepared For Softening Of US Housing Data Tertiary reports are warning of renewed weakness in the US housing sector. Today the NAHB Housing Market Index was reported. This little watched survey of home builders tracks present sales, 6-month sales expectations and traffic of prospective buyers (of single family homes). The index ranges from 1 to 100. It most recently peaked in Sept 09 at 19. NAHB reported today that its index slipped to 15 from 16 in December. It has not risen since Sept and is back to where it was in June.
FBI illegally collected thousands of phone records between 2002 and 2006 The FBI violated the law in collecting about 2,000 U.S. telephone records during the Bush administration, though the violations weren't intentional, officials said Tuesday. Citing internal memos and interviews, the Washington Post said the FBI invoked nonexistent terrorism emergencies or persuaded phone companies to provide information as it illegally gathered records between 2002 and 2006.
Senate not seen passing climate bill in 2010 The Senate is unlikely to pass climate change legislation this year after going through the contentious health care debate, and will focus on a separate energy bill that has more bipartisan support, a key Democratic senator said on Tuesday. Democrats are seeking to iron out differences between sweeping bills passed by the Senate and House of Representatives to revamp the $2.5 trillion U.S. healthcare system, President Barack Obama's top domestic priority. "It is my assessment that we likely will not do climate change this year, but will do an energy bill instead," Senator Byron Dorgan, told reporters in a telephone conference call.
Apple's Secret Cloud Strategy And Why Lala Is Critical . . . . An upcoming major revision of iTunes will copy each user's catalog to the net making it available from any browser or net connected ipod/touch/tablet. The Lala upload technology will be bundled into a future iTunes upgrade which will automatically be installed for the 100+ million itunes users with a simple "An upgrade is available…" notification dialog box. After installation iTunes will push in the background their entire media library to their personal mobile iTunes area. Once loaded, users will be able to navigate and play their music, videos and playlists from their personal URL using a browser based iTunes experience.
Predators and the Constitution The feds usurp another area of state law. Sex offenders are the least sympathetic of legal plaintiffs. Still, we were dismayed last week to see so many Supreme Court Justices during oral arguments apparently willing to let the federal government take over an area of law governing criminals that the Constitution grants to the states. The question in U.S. v. Comstock is whether sex offenders who have already completed their federal criminal sentences may then see their incarceration extended through a process of "civil commitment" by the federal government. The law in question, the 2006 Adam Walsh Child Protection Act, allows the Attorney General to certify a person as a danger to the population and keep him in federal custody. The law tramples on the traditional power of states to protect public health and safety.
Pope's visit to Rome synagogue: taking into account Israel and the Church in Israel It would seem to have by now become de rigueur for the reigning Pontiff to make a visit to the Great Synagogue of Rome - like, for example, the visit to the President of the Italian Republic (and the President's visit to the Vatican Apostolic Palace) - and it is good that this is so, it is comforting. To be sure, on each occasion it is a matter for a choice that the Pope makes with sovereign freedom, but an expected one, a foreseeable one. The truly "historic" and the properly "epoch making" importance are inevitably reserved to the very first occasion, which being the "first in history" is therefore necessarily unrepeatable as such. If nonetheless the visit that the Supreme Pontiff has deigned to make to the Great Synagogue of Rome on 17 January 2010, although being the second one, after the first one made by the Venerable John Paul II (in 1986), may yet be seen by future historians as "epoch making" in its own right, this may well be due to a truly singular circumstance: Provision was made for the presence in the Synagogue, with the Pope, of the principal Authorities of the Catholic Church in Israel: The Apostolic Nuncio, the Custos of the Holy Land, the Latin Patriarch of Jerusalem. The territories of the respective missions of the Custos and the Patriarch do, it is true, extend well beyond the confines of the Jewish State, but they do include it in its entirety.
US accused of 'occupying' Haiti as troops flood in France accused the US of "occupying" Haiti on Monday as thousands of American troops flooded into the country to take charge of aid efforts and security. The French minister in charge of humanitarian relief called on the UN to "clarify" the American role amid claims the military build up was hampering aid efforts. Alain Joyandet admitted he had been involved in a scuffle with a US commander in the airport's control tower over the flight plan for a French evacuation flight. "This is about helping Haiti, not about occupying Haiti," Mr Joyandet said. Geneva-based charity Medecins Sans Frontieres backed his calls saying hundreds of lives were being put at risk as planes carrying vital medical supplies were being turned away by American air traffic controllers.
Obama gets 'F' for Mideast policy On the eve of a four-day visit to the United States, hawkish Likud MK Danny Danon on Monday launched a blistering assault on President Barack Obama's Middle East policies, declaring that he would give Obama "a failing grade" for his first year in office. "I would give Obama an 'F' for serious lack of knowledge or understanding on topics related to the Israeli-Palestinian conflict," said Danon, speaking to The Jerusalem Post ahead of his US trip.
'Middle East conflict driving Christians out' A Vatican document released Tuesday blamed the Israeli-Palestinian conflict and the "occupying" of lands for fomenting most of the conflicts in the Middle East, driving Christians out and making life difficult for those who remain. The document is a guide for discussions for an Oct. 10-24 meeting of Mideast bishops convened by Pope Benedict XVI to discuss the plight of the Christian minority in the overwhelmingly Muslim region. The exodus of Christians from the region and religious discrimination faced by those who remain are main issues on the table.
Forecast: Debt to dwarf GDP Former budget office chiefs say 'something has to give' A blue-ribbon panel that includes three former heads of the Congressional Budget Office is telling President Obama and the Democrat-controlled Congress that the federal deficit must be cut now or the national debt within about two generations will be 600 percent of the Gross Domestic Product. "The debt level of the United States is unsustainable, something has to give," said Rudolph Penner, former head of the CBO and co-chair of a report issued last week by the National Research Council and the National Academy of Public Administration. The report concludes federal deficit spending is so out of control that unless Obama and Democrat leaders on the Hill make changes now, debt in 2080 will be six times what the nation produces.
Why you should cling to gold Even our school of economics and investors have become habituated to the social, political and financial calamity at hand. The outlaw financial leadership of the entire Western world has sold out our heritage on both sides of the pond. Governments, states, municipalities, towns and hamlets are broke. Insurance companies, banks and major investment houses are valuing their assets from worth-less to worth-full. The stampede to the bonus stock holder’s asset give away is clearly because this is the last dip at the well for a decade. All paper money in the West is the common shares of the bankrupts.
Gold prices not to fall in 2010: WGC Most of Indian households are now expecting the gold prices to come down so that they can start buying the yellow metals which they had shunned for sometime now due to the soaring prices. But, if the World Gold Council’s opinion is anything to go by, the gold prices are unlikely to come down in 2010. According to an interview given to the Economic Times by Ajay Mitra, managing director, World Gold Council (India), for investors, gold is as good as currency even in terms of returns. Also, gold has more stability. While it is also volatile, gold has never dropped in its value and you cannot substitute gold with anything else as it is finite.
Gold edges up above $1131 in Asia Gold remained highly volatile but showed signs of recovery in Asian trade Monday despite a firm dollar. Gold for immediate delivery was seen trading at $1,131.20 per ounce at 11.30 a.m Singapore time while gold futures for February delivery were at $1,131.50 per ounce, up 0.1 percent at the same time. The dollar remained firm against major currencies on Monday, with the euro being vulnerable to falls by concerns about fiscal problems buffeting Greece.
Platinum at 17-Month High on Investment, Industrial Demand Platinum climbed to a 17-month high on speculation investment and industrial demand will increase. Gold rose as the dollar weakened. Palladium advanced for a fifth day to the highest since July 2008. The metal held in ETF Securities Ltd.’s exchange- traded commodities products rose 2.6 percent to a record 679,938 ounces on Jan. 15, according to the company’s Web site. Platinum and palladium are used mainly in catalytic converters that curb pollution from automobiles. “Assets are obviously being reallocated in favor of the newly issued platinum and palladium ETFs,” Commerzbank AG analysts led by Eugen Weinberg, said in a note. “They seem to establish themselves as a large demand component alongside the jewelry and car industry demand.”
Platinum, palladium drive gold and silver prices Gold ticked higher for US and Euro investors early Monday but held inside a tight range while Asian stock markets closed the day 1% lower and European shares rose. Little economic news was due for release as US markets stayed closed for Martin Luther King Day. Government bonds were flat across the board. Commodity prices dropped 1% on average, as crude oil held below $79 per barrel and foodstuffs fell.
Keeping Precious Metals Offshore An increasing number of Americans are concerned enough about the threat of precious metals confiscation to want to store gold or silver overseas. But laws in effect in 21 states may stand in their way. I learned about these laws last year when one of my subscribers in Arizona called. He wanted to buy gold from a foreign dealer for storage offshore, but the dealer refused to sell to him. The reason: the Arizona Model Commodities Act. After some research, I learned that 21 states have enacted the MCA or some variation of it: Arizona, California, Colorado, Georgia, Idaho, Indiana, Iowa, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Utah, and Washington.
Dollar Near Four-Week Low Against Yen on U.S. Growth Concern The dollar traded near a four-week low against the yen on speculation the U.S. economic recovery will slow, prompting the Federal Reserve to keep interest rates near zero to sustain growth. The U.S. currency declined before U.S. reports this week forecast to show building permits rose at a slower pace and manufacturing in the Philadelphia region fell. The pound surged to a six-week high against the dollar on speculation Kraft Foods Inc. of the U.S. will acquire U.K. chocolate maker Cadbury Plc.
China About To End Dollar-Peg Having received several comments and questions from readers about the future of China's monetary policy, which "pegs" the price of the renminbi to the U.S. dollar, that usually serves as a good indicator that this is a topic worthy of a more detailed discussion. The general attitude I have encountered (which is obviously fuelled by how the mainstream media chooses to report this issue) is that China's government is likely to retain the dollar-peg either because a) that has been its policy throughout the last decade; or b) that China is somehow "trapped" into maintaining the "peg". I firmly believe the exact opposite: that China's government is very close to abandoning the dollar-peg, and (in fact) has made a multitude of preparations to do so.
Ron Paul: "Prepare for Revolutionary Changes in the Not-too-distant Future.” It certainly sounds as though Representative Paul expects some significant developments. Change is in the wind.
How the big banks rigged the market When Lloyd Blankfein met politicians in London a little while ago he brushed aside warnings that investment banks faced higher taxes if they ignored the rising public outcry about multibillion-dollar bonus pools. The Goldman chief executive seemed to believe governments would not dare. That misjudgment – a measure of the breathtaking hubris that, even after all that has happened, continues to separate bankers from just about everyone else – may explain Goldman’s response to the British government’s decision to apply a 50 per cent tax to this year’s payouts.
Banks pull another $1 billion from small business lending The nation's biggest banks cut their collective small business lending balance by another $1 billion in November, according to a Treasury report released late Friday. The drop marked the seventh straight month of declines. The 22 banks that got the most help from the Treasury's bailout programs have cut their small business loan balances $12.5 billion since April, when the Treasury began requiring them to file monthly reports on the tally. The banks' total lending has fallen 4.6% in that seven-month period, to $256.8 billion.
Souring Mortgages, Weak Market Force FHA to Walk a Tightrope David Stevens bought his first home almost 25 years ago, paying just 3% down with a loan backed by the Federal Housing Administration. "I had no money in the bank," he says. "If it weren't for the FHA, I wouldn't have gotten that home." Now, as FHA commissioner, Mr. Stevens has to decide how many others to let through that door. Souring FHA-insured mortgages are threatening the agency's finances. Congress is pressuring him to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.
Economic Breakdown on the Financial Highway The stock market fell 100 points on the Dow index on Friday. We hope Daily Reckoning readers are out of US stocks. Sooner or later this jig is going to be up. You don’t want to be heavily invested when it does. Right now, the market is dilly-dallying. Investors are enjoying a picnic. Alas, they’ve spread their picnic blanket on the side of Vesuvius. It could blow up at any time. We are in a depression. Not yet a ‘great’ depression. But it’s a pretty good depression; and we’ll take what we can get.
IMF chief: double-dip a risk if stimulus ends to early TOKYO (Reuters) - Developed countries may slip back into recession if they abandon strategies deployed to battle the global financial crisis too early, the head of the International Monetary Fund warned on Monday. Recovery in private demand and employment are necessary conditions for governments to begin unwinding policies designed to support their economies, though the right timing depends on specific conditions in each nation, Dominique Strauss-Kahn said. "Recovery in advanced economies has been sluggish," he told reporters in Tokyo. "We have to be cautious because the recovery has been fragile."
Inflation Is Tame, but Other Data Bode Ill Industrial Production Posts Increase Holiday discounting helped keep inflation at bay in December, but fresh data on the state of U.S. industry suggest price pressures could yet become an obstacle to recovery. The Labor Department reported Friday that its index of consumer prices rose a tame 0.1% in December from the previous month, held down by decelerating fuel prices and declines in the prices of items such as toys, televisions and new cars. In a reflection of the depth of the recession and a sharp drop in oil prices, the index average for all of 2009 was 0.4% lower than in 2008—the first such full-year decline since 1955.
Inflation 101 Inflation is a hidden tax, an insidious crime against the public. It is the easiest way for any government to confiscate the savings of the public and for generations, wealth has been transferred in this manner. Remember, money is supposed to be a store of value, however due to reckless central bank-sponsored inflation, it can no longer fulfill this critical role. Unfortunately, nobody questions the inexplicable loss of the purchasing power of their savings, thus, central banks get away with financial murder.
Identifying Sure Signs Of The Final Economic Plunge Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.
Roubini on the Massive Debts of the Wealthiest Nations Government debt continues to be one of the most written about topics of 2010… and for good reason. The most developed and wealthy economies can’t seem to refrain from spawning the extraordinary levels of debt that were historically seen only in emerging markets (which for the most part, seem to have improved their balance sheets). Today Nouriel Roubini points a finger at some of the worst offenders:
Wall St. Weighs a Challenge to a Proposed Tax Wall Street's main lobbying arm has hired a top Supreme Court litigator to study a possible legal battle against a bank tax proposed by the Obama administration, on the theory that it would be unconstitutional, according to three industry officials briefed on the matter. In an e-mail message sent last week to the heads of Wall Street legal departments, executives of the lobbying group, the Securities Industry and Financial Markets Association, wrote that a bank tax might be unconstitutional because it would unfairly single out and penalize big banks, according to these officials, who did not want to be identified to preserve relationships with the group's members.
What's Plan B if Senate dawdles on Bernanke? The Senate faces some weighty issues when it reconvenes this week. Health care. A jobs bill. The debt ceiling. And then there's the Jan. 31 deadline to confirm Federal Reserve Chairman Ben Bernanke for a second term. Nobody's really worried that Bernanke will lose his seat. But there is a chance the Senate won't vote before his term expires. The question is: What happens then? In back rooms at the Senate and the Fed, staffers and attorneys have been scratching their heads and looking at laws and historical precedents to figure out Plan B for temporary succession.
SEC Admits It’s Investigating Bank of America, Wells Fargo, Citigroup, and Goldman Sachs The head of the Securities and Exchange Commission (SEC), Mary Schapiro, admitted today that it is investigating the sales practices of Collateralized Debt Obligations (CDOs) of Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and Goldman Sachs (NYSE:GS). The admission came before the Federal Crisis Inquiry Commission on Thursday and was the most direct indication to date that the regulators are investigating the sales practices of investment bankers that lead up the meltdown in the credit market and the collapse of the financial markets.
Judge Andrew Napolitano on The Alex Jones Show 1/2: Geithner's Bankergate & 3rd Party Rising
Judge Andrew Napolitano on The Alex Jones Show 2/2: Geithner's Bankergate & 3rd Party Rising
An Officer of Too Many Banks In a few foreclosure cases, judges have noticed that the same individual appears as an officer of various banks. In several of these cases, the judges have dismissed the foreclosure actions and ordered that such actions cannot be refiled unless the foreclosing party presents an Affidavit with the three-year employment history of the bank “officer.” In most of these cases, the Bank has never refiled – presumably unable to explain the issue of the same individual appearing as an officer of many banks.
Five Potential Potholes on the Road to U.S. Recovery Last week's news that business inventories and industrial production are rising suggests the recovery is improving along the well-worn lines followed by previous exits from recession. Production and inventories rise, eventually driving improvements in employment. That in turn triggers a "virtuous cycle" of renewed consumer spending that powers further production increases, and so on. But unlike the previous recessions in 2001 and 1991, there are five potentially significant "potholes" in the road ahead, any one of which could thwart the recovery.
China Pushes 1-Year Bill Yield Higher for Second Week China’s central bank guided its benchmark one-year bill yield higher for the second time this year to curb record loan growth and prevent bubbles in the nation’s property and stock markets. The People’s Bank of China sold the bills at a yield of 1.9264 percent in open-market operations, the highest in 14 months, according to traders at Industrial & Commercial Bank of China Ltd. and BOC International Holdings Ltd. The yield rose eight basis points, or 0.08 percentage point, matching last week’s increase, said the traders, who asked not to be identified.
Iceland Credit Risks Rise ‘Considerably,’ S&P Says Iceland’s credit risk may rise “considerably” as the island faces the threat of a shelved emergency bailout and a government collapse, Standard & Poor’s said. “The risk is there that the program will fall apart and with that, the downside risks would increase very considerably,” Moritz Kraemer, S&P’s managing director for Europe, the Middle East and Africa, said in a Jan. 15 telephone interview. If the outlook for the bailout program doesn’t improve, “it’s quite possible” the government will collapse.
New Short Sale Fraud Allegations: Second Liens During the bubble we had banks that knew (because the FBI had warned them in 2004, there were stories in the media in 2006, and in 2007 HUD published a study) that virtually ALL stated and reduced-documentation loans were fraudulent. They wrote 'em and securitized 'em anyway and I have not been able to find ONE prospectus from that period in which the above fact was disclosed to buyers of that securitized debt. Not one.
Homes owned less than 90 days soon to be eligible for FHA financing Soon it will be easier to finance foreclosed properties with FHA loans. HUD Secretary Shaun Donovan announced today that FHA financing will be permitted on homes owned by sellers for less than 90 days in a bid to stabilize home prices and accelerate the sale of vacant properties. The agency currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days, making it difficult for those who acquire foreclosed properties to resell them, as FHA loans are the most widely used nowadays.
Nestle Targets Elderly Malnutrition to Fight Danone’s Gains Nestle SA will begin selling drinks to fight malnutrition among the elderly in an effort to revive its nutrition business, which has trailed sales and profit forecasts every year since they were set in 2006. Resource SeniorActiv supplements will go on sale in Switzerland this year, the company’s nutrition unit said in an e-mailed statement today. The product includes protein, calcium and vitamin D to promote muscle strength and prevent bone fractures, the world’s largest food company said.
American Samoa: The real story 60 Minutes missed
Triple Digit Oil and Economic Change Triple digit oil and the economic change that it would bring is something that intrigues, and will have a cascading impact on the real economy and globalization. It is not that we will be running out of oil. Rather, we will be running out of cheap oil, light sweet Arabian crude, to be replaced eventually by synthetic oil rendered from tar sands and shale. The implication is $200 per barrel oil and $7.00 per gallon gasoline. Demand for oil is peaking in developed nations like the US and Canada, and may never exceed the levels of the past few years. But demand growth in the developing nations is increasing, and perhaps dramatically. World gasoline production has not grown in the past four years.
As Shrinking Newsrooms Use Upstarts' Content, Vetting Questions Arise News comes from more and more outlets, about which readers know less and less. Publishers and broadcasters have always called on freelance journalists. But a generation ago, if they used material from another organization, it was usually limited to a handful of large, well-known and respected ones like The Associated Press or Reuters. With established newsrooms shrinking, a raft of smaller news outlets have cropped up in the last few years, selling or simply giving news reports to the traditional media - groups like ProPublica, Global Post, Politico and Kaiser Health News.
Massachusetts Senate vote likely to be close Democrats were bracing themselves for what could be a devastating defeat in Wednesday’s Massachusetts election for the US Senate. Some – but not all – last-minute opinion polls showed a surge in support for the little-known Republican candidate over Martha Coakley, the state’s Democratic attorney-general. The loss of a seat held for decades by Ted Kennedy to the Republican, Scott Brown, would not only be a symbolic blow to Democrats. It would bring an end to their 60-seat “super-majority” in the upper chamber and raise doubts about their ability to pass sweeping healthcare reform or any other key initiative on the agenda of Barack Obama, president.
MA Senate Race's Impact on Health-Care Reform
Illinois among leaders in 2009 foreclosures Illinois, along with California, Florida and Arizona, shared the dubious distinction last year of accounting for more than half of the nation's foreclosure activity, according to data scheduled to be released Thursday. A total of 131,132 Illinois homes, or one in every 40, received a foreclosure filing last year, an increase of almost 32 percent over 2008, according to RealtyTrac, a Web site that tracks foreclosures. During the fourth quarter alone, foreclosure activity in Illinois was up almost 29 percent from the third quarter.
Will the Feds Fund Deficits with 401(k)s? The writing is on the wall for retirement assets held in conventional ways. A report last week in Business Week shows that the U.S. Feds have 401(k) assets in their sites. “The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
1 million Americans give up on job searches Long-term unemployment and labor-force dropouts hit record highs Nearly 1 million unemployed American workers, frustrated with a lack of available jobs, are dropping out of the labor force, Jerome Corsi's Red Alert reports. Likewise, the number of individuals unemployed for more than 27 weeks dramatically worsened in the first year of the Obama administration. Discouraged workers are not counted in official unemployment statistics.
Commercial Real Estate Collapse - The Next Wave
Therapists Report Increase in Green Disputes Couples arguing more over save-the-planet issues Gordon Fleming is, by his own account, an environmentally sensitive guy. He bikes 12 1/2 miles to and from his job at a software company outside Santa Barbara, Calif. He recycles as much as possible and takes reusable bags to the grocery store. Still, his girlfriend, Shelly Cobb, feels he has not gone far enough. Ms. Cobb chides him for running the water too long while he shaves or showers. And she finds it "depressing," she tells him, that he continues to buy a steady stream of items online when her aim is for them to lead a less materialistic life.
Democrats Aim to Bypass Senate Health Care Vote A panicky White House and Democratic allies are scrambling for a plan to salvage their hard-fought health care package in case a Republican wins Tuesday's Senate race in Massachusetts, which would enable the GOP to block further Senate action. The likeliest scenario would require persuading House Democrats to accept a bill the Senate passed last month, despite their objections to several parts.
Health Bill Can Pass Senate With 51 Votes, Van Hollen Says Even if Democrats lose the Jan. 19 special election to pick a new Massachusetts senator, Congress may still pass a health-care overhaul by using a process called reconciliation, a top House Democrat said. That procedure requires 51 votes rather than the 60 needed to prevent Republicans from blocking votes on President Barack Obama’s top legislative priorities. That supermajority is at risk as the Massachusetts race has tightened. “Even before Massachusetts and that race was on the radar screen, we prepared for the process of using reconciliation,” said Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee.
Federal health care foes plot for state opt-outs Congress can pass a federal health care bill and President Obama can sign it, but that doesn't mean the states plan to abide by it. Lawmakers in 30 states are pressing for constitutional amendments to exempt individuals from the requirement to purchase health care, a pivotal piece of the legislation under debate in Congress. In Colorado, organizers of a proposed ballot measure filed language with the state elections office Friday. They would like the state legislature to place the amendment on the ballot, but given that both houses are controlled by Democrats, that's unlikely.
Brown: Senate win would send 'message' Scott Brown, the Republican Senate candidate seeking to fill the seat held for nearly 50 years by liberal icon Edward M. Kennedy, had a simple message Sunday for why Massachusetts voters should send him to Washington. "I want to be the person to go down there to send health care back to the drawing board," he shouted to cheers from several hundred supporters, standing on a bare concrete floor in the makeshift campaign headquarters on Grafton Street.
Democrats Face Loss of Senate Seat in Massachusetts Democrats risk losing their most iconic U.S. Senate seat, held for almost 47 years by the late Edward Kennedy, to a once little-known Republican in a Massachusetts election tomorrow that could cost them their 60- vote Senate supermajority needed to help pass a health-care overhaul. In just over a week, Democrat Martha Coakley, the state attorney general once considered a shoo-in for the Senate, has watched her lead evaporate. Some polls show her trailing state Senator Scott Brown, who was more than 30 points behind last November. The nonpartisan Rothenberg Political Report today moved its rating of the race to likely Republican takeover.
Is Ron Paul Really An Anti-Semite or the only one with the balls to tell us the truth!?
Social Security rarely uses E-Verify Despite helping run the government's electronic database designed to weed out illegal-immigrant workers, Social Security failed to run E-Verify checks on its own employees nearly 20 percent of the time. An audit by the Social Security Administration's inspector general says the agency outright failed to check 19 percent of its hires in 2008 and 2009, and of the checks it did run, nearly half of them weren't performed in a timely manner.
Retailing hardware isn’t what business Google is in.
They don’t wanna compete against their partners.
Google’s damaging its brand name.
The Nexus One is a stupid name anyway.
The cell phone business will hurt Google’s gross margins.
Is it finally time to see Apple's tablet? Apple Inc. on Monday morning announced an invitation-only special event in San Francisco Jan. 27 at which it is widely expected the company will unveil its much-anticipated tablet device. All Things Digital reported the company's invitation reads, "come see our latest creation." The Wall Street Journal reported earlier that Apple planned to announce a multimedia tablet device later in January but did not plan on shipping the product until March, citing people briefed by the company.
Why America and China will clash Google’s clash with China is about much more than the fate of a single, powerful firm. The company’s decision to pull out of China, unless the government there changes its policies on censorship, is a harbinger of increasingly stormy relations between the US and China. The reason that the Google case is so significant is because it suggests that the assumptions on which US policy to China have been based since the Tiananmen massacre of 1989 could be plain wrong. The US has accepted – even welcomed – China’s emergence as a giant economic power because American policymakers convinced themselves that economic opening would lead to political liberalisation in China.
U.S. to repatriate most Haitian refugees Officials brace for surge as plight worsens .S. authorities are readying for an influx of Haitians seeking to escape their earthquake-racked nation, even though the policy for migrants remains the same: With few exceptions, they will go back. Fears of a mass migration have not materialized so far, but conditions in Haiti become more dire each day and U.S. officials don't want to be caught off guard.
Greece is the word Could Europe kill the chances of a global economic recovery? There are growing concerns about the health of several European nations, most particularly Greece. Standard & Poor's, Moody's Investors Service and Fitch Ratings all downgraded their credit ratings for Greece last month. And in a report last week about Europe by Moody's, analysts at that agency wrote that the economic outlooks in Greece and Portugal are so troubling that they run the risk of a "slow death."
Iran never halted nuke work in '03 Intelligence estimate contradicts '07 report By Bill Gertz U.S. intelligence agencies now suspect that Iran never halted work on its nuclear arms program in 2003, as stated in a national intelligence estimate made public three years ago, U.S. officials said. Differences among analysts now focus on whether the country's supreme leader has given or will soon give orders for full-scale production of nuclear weapons. The new consensus emerging among analysts in the 16 agencies that make up the U.S. intelligence community on Iran's nuclear arms program is expected to be the highlight of a classified national intelligence estimate nearing completion that will replace the estimate issued in 2007.
Al-Qaida seeking tools for nuclear 9/11 Intel agents 'certain' terrorists will try for Pakistan's bombs LONDON – Agents for Britain's MI6 Secret Intelligence Service say they are "certain" al-Qaida is poised to try and grab some of the 80 nuclear weapons that Pakistan possesses, according to a report from Joseph Farah's G2 Bulletin. The al-Qaida leadership – Osama bin Laden and Ayman a-Zawahri – are believed to have spent the winter months in Pakistan's Tribal Areas finalizing their plans for an attack. It will spearhead al-Qaida's global network and its capability to carry out a wide range of terrorist onslaughts.
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George Washington's Remarkable Vision NOTE: The following was originally published by Wesley Bradshaw in the National Review, Vol. 4, No. 12, December 1880 (and handed down to me by my grandmother). The last time I ever saw Anthony Sherman was on July 4, 1859, in Independence Square. He was then 99 years old, and becoming very feeble. But though so old, his dimming eyes rekindled as he gazed upon Independence Hall, which he came to visit once more. "Let us go into the hall," he said. "I want to tell you an incident of Washington's life - one which no one alive knows of except myself; and, if you live, you will before long, see it verified. "From the opening of the Revolution we experienced all phases of fortune, now good and now ill; one time victorious and another conquered. The darkest period we had, I think, was when Washington, after several reverses, retreated to Valley Forge, where he resolved to spend the winter of 1777. Ah! I have often seen our dear commander's care-worn cheeks, as he would be conversing with a confidential officer about the condition of his poor soldiers. You have doubtless heard the story of Washington's going to the thicket to pray. Well, it was not only true, but he used often to pray in secret for aid and comfort from God, the interposition of whose Divine Providence brought us safely through the darkest days of tribulation.
RETURN OF THE "THIRD WAY" By Balint Vazsonyi [First published October 30, 1998, in The Washington Times] The wolf sports a brand new suit of sheep's clothing called the "Third Way." It has been tailored by prime minister Tony Blair of Britain, and by President and Mrs. Clinton in America. The newly-elected chancellor of Germany and the prime minister of France have hastened to add their affirmative vote. Approval from Italy is a forgone conclusion. "Third Way, Better Way" writes Tony Blair (Washington Post, 9/27). Better than what? There is only confusion as he recalls a profusion of agendas from the recent past. He carefully avoids any mention of political philosophies, let alone principles. He knows why.
The Third Way's bad karma By Joyce Mucci - web posted July 26, 1999 Bill Clinton found it. Tony Blair found it. Germany's Gerhard Schroeder found it too. Lest you think these middle-aged leaders have found the Jesus of the Bible - you haven't found "It". It is the Third Way. Chiefly, supporters of the Third Way are mainly liberal Democrats of the American variety, the Labor Party of the British ilk, Social Democrats of Germany, the Communist Party of Italy and the French. The Third Way is a free-market, entrepreneurial, capitalistic approach to social and environmental programs. The Democrats in America are not unlike their counterparts in Europe in that they share the same problem - trying to advance social and environmental programs with no money. So they embrace capitalism, not because they buy into the philosophy of freedom, but they exploit the benefits of capitalism to further their agenda. This is not a new idea.
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CFTC to Limit Gold and Silver Trading So it comes down to this. The American CFTC which runs gold and silver trading is concerned about "speculative bubbles" and is determined to get ahead of the curve. It may impose limits on how much metal can be purchased, in aggregate, on any given day or even set up a trading band that cannot be breached day-to-day. Who knows? The concern is generated by the meltdown of stock markets and fiat-money driven investing generally is said to have generated the CFTC's interest in limiting speculation on a variety of commodities. Where the CFTC goes, by the way, others throughout the West, and even Asia, etc., shall likely follow.
A Toothless CFTC: Trying to Bite Down on Gold and Silver The U.S. CFTC (Commodity Futures Trading Commission) announced on January 14th that it was going to investigate trading in the gold and silver markets. This follows the commission's high profile hearings on speculation in the oil and natural gas markets held in the summer of 2009. Those led to the demise of the popular ETF, DXO, and caused the natural gas ETF UNG to trade so irregularly that it no longer behaved like an ETF. Both of these were investment vehicles for the small investor. Big-time speculators went on their merry way untouched and unscathed by the CFTC's action that was supposedly aimed at protecting the public. Anyone who was the least bit cynical might conclude that the CFTC's actual purpose was to protect the profits of the large commercial users of the commodities it regulates.
Commodity Market: CFTC, speculators and gold As many of the readers are aware, once a week the CFTC publishes a Commitment of Traders report which details the internal positioning of the various players that comprise the futures markets through Tuesday of the week which the report is issued. Not that long ago, the CFTC, in response to numerous industry requests, issued a Disaggregated report which further breaks down the categories that we in the trade have come to know as the Commercials, the Large Speculators (predominantly Funds) and the Unreportables or the General Public.
Geithner doesn't understand it Here's a fascinating look into how the mind of Treasury Secretary Tim Geithner works. While others have focused on the comments about the AIG bailout, this item at the Business Insider providing a transcript of the objectionable comments, I was more taken by how Geithner doesn't "understand" certain concepts that everyone else does.
Regulators seize 2nd and 3rd bank failures of 2010 Regulators on Friday shut down two small banks in Illinois and Minnesota, the second and third bank failures of 2010 following 140 closures last year amid the weak economy and mounting loan defaults. The Federal Deposit Insurance Corp. took over St. Stephen State Bank of St. Stephen, Minn., with $24.7 million in assets and $23.4 million in deposits, and Town Community Bank and Trust, based in Antioch, Ill., with $69.6 million in assets and $67.4 million in deposits.
Bank Failures Begin Again After seeing the number of bank failures tick up to 140 last year, there's some slight comfort in seeing the annual total only reach four. The feeling of relief disappears, of course, when you realize that we're only two weeks into 2010. The effects of the late 2008 financial crisis are still with us, as three small banks learned this week -- in Illinois, Minnesota and Utah. As expected, the 2009 trend continues. The Federal Deposit Insurance Corporation's takeover of the banks follows the closure of the much larger Horizon Bank in Bellingham, Wash., the week before.
Two Banks Fail in Minnesota and Illinois Banks in Minnesota and Illinois were shut down by state regulators Friday, becoming the second and third banks to fail in 2010 after 140 last year. In Illinois, regulators shut down Town Community Bank & Trust in Antioch. State regulators in Minnesota, meanwhile, closed St. Stephen State Bank, which is based in St. Stephens. Town Community Bank & Trust, which only had one branch, had about $69.6 million in assets and $67.4 million in total deposits as of Sept. 30, 2009, according to the Federal Deposit Insurance Corp.
Officials request criminal probe in New Frontier Bank collapse Northern Colorado’s congressional delegation turned up the heat on former New Frontier Bank officials Tuesday, calling for a federal investigation into the bank’s collapse. U.S. Sens. Michael Bennet and Mark Udall along with U.S. Rep. Betsy Markey asked U.S. Attorney General Eric Holder to investigate possible fraud connected to the April failure. The bank was closed by federal regulators for unsafe and unsound banking practices leaving numerous businesses and farmers with loans they couldn’t refinance and without lines of credit crucial to run their businesses. New Frontier Bank, headquartered in Greeley, had branches in Windsor and Longmont.
GOP, Dems in "Death Embrace": U.S. Budget "About to Go Off a Cliff," Cal Prof Says Raise taxes or cut spending? Washington must take action on both fronts to curb U.S. debt or run the risk of a dollar crisis, according to a report by the Committee on the Fiscal Future of the United States, a panel of bipartisan experts. "The Republican and Democrats are in a death embrace and about to go off a cliff," says Alan Auerbach economist at University of California at Berkeley. Not a member of the panel, Auerbach has studied the government debt for 15 years. He tells Tech Ticker the near-term "challenge is to take credible action on the deficit without damaging the economic recovery.
Gerald Celente: Financial mafia controlling US and Wall Street Even as Barack Obama makes a public show of calling out major US banks, some analysts remain skeptical about his sincerity. Gerald Celente says that Wall Street owns Washington and real reform has yet to be put in place.
U.S. government, on its way to bankruptcy The U.S. government is quite literally out of control. I’m not talking about a government which shows an almost total disregard for the U.S. Constitution. I’m not talking about elitist politicians in Congress who think they know what’s best for you, who think it’s their job to take care of you from cradle to grave, whether you like it or not. I’m not even talking about an administration whose policies sometimes appear to have more in common with the command and control societies of Benito Mussolini or Karl Marx than they do with the freedom loving societies of Thomas Jefferson and James Madison.
Is America's financial collapse inevitable? Patrick J. Buchanan We were blindsided. We never saw it coming. So said Goldman Sachs CEO Lloyd Blankfein of the financial crisis of 2008. He likened its probability to four hurricanes hitting the East Coast in a single season. Blankfein was reminded by the chairman of the Financial Crisis Inquiry Committee, Phil Angelides, that hurricanes are "acts of God." Financial crises are manmade. Yet Blankfein was backed up by Jamie Dimon of JPMorgan, who said, "Somehow, we just missed ... that home prices don't go up forever." The Wall Street titans thus conceded they did not foresee the housing bubble ever bursting and they did not consider the possibility of a collapse in value of the sub-prime mortgage securities piled up on their books.
When the Fed Stops the Music Last week we delved into the uncertainties that face us and that make forecasting for 2010 problematical. Will the government actually increase taxes as much as they say, with unemployment still likely to be at 10%? Or will cooler heads prevail? Would such an increase cause a recession? Will the markets anticipate the effects of such a major increase in advance? How will the mortgage market react when the Fed stops buying mortgage securities at the end of March? There are so many things in the air, and today we explore more of them, as I continue (perhaps foolishly) to try and peer into what is a very cloudy crystal ball.
Examining the True State of State Finances US states are in rather poor shape, financially speaking, and California's latest debt downgrade has shined a light on this topic once again. This brings us to today's question: are California's fiscal problems indicative of a larger trend toward deteriorating state finances and budget shortfalls? I'd like to start out by thanking Gregor Macdonald and the Stocktwits gang for discussing some of these issues in the last Sunday's MacroTwits hour on Stocktwits TV and for sharing some of the links I'll be posting for you here today.
Lawmakers Say Plan to Create Commission on U.S. Government Debt Faltering A push to set up a special commission whose recommendations for reducing the U.S. government’s debt would be guaranteed a vote in Congress faces an uphill battle, lawmakers said. Senator Judd Gregg, a New Hampshire Republican who is one of the commission’s main advocates, said in an interview yesterday that proponents remain short of the 60 votes needed for Senate approval. He is leading the effort with Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.
US Commercial Real Estate a Multi-Trillion Dollar Bloodbath in Progress Residential Real Estate in the US is in serious trouble, and a drag on the real economy. And yet it is holding up a bit because the Fed is buying over $1 Trillion in mortgage debt, presumably at artificially high prices to support it, and of course the too big to fail Wall Street Banks who were wallowing in the residential real estate bubble. Commercial Real Estate is much worse, a bloodbath in progress. Down 42% and dropping with store, office and apartment vacancies soaring. And much of that paper is held by regional banks and REITs like Boston Properties (BXP), Vornado Realty Trust, Brookfield Properties, and a host of private firms and trusts.
Paulson Asked to Testify at AIG Bailout Hearing With Geithner Former Treasury Secretary Henry Paulson has been asked to join his successor Timothy Geithner in testifying before a House panel examining bailout payments to American International Group Inc.’s trading partners. Paulson was invited to a Jan. 27 hearing set by Edolphus Towns, chairman of the House Oversight and Government Reform Committee, about the decision to fully reimburse AIG’s bank counterparties for $62.1 billion in derivatives. Stephen Friedman, the former Federal Reserve Bank of New York chairman who serves on the board of Goldman Sachs Group Inc., was also asked to appear, Towns said in a statement yesterday.
Groveling at the Fed: Greenspan and Bernanke Federal Reserve Chairman Ben S. Bernanke gave a speech on January 3, 2010 that was incomprehensible. The address itself will be discussed later. It is important first to consider the precedent of Federal Reserve chairmen making absurd claims – and getting away with it. A place to start is Alan Greenspan's 2002 speech in Jackson Hole, Wyoming. The then Federal Reserve chairman explained that central banks could not identify bubbles because "only history books and musty archives gave us clues to the appropriate stance for the policy." There are several problems with this excuse, not to mention his even less credible fiddle-faddle. More important though, is that the chairman's address was disseminated with very little opposition along channels of communication. Economists cheered or remained silent. With a few notable exceptions, the media reported Greenspan's speech as if it was a press release, which it was.
New e-mails show AIG mulled bank payment disclosures The New York Federal Reserve Bank actively worked with bailed out insurer AIG to build a case against disclosing details of AIG's payments to banks just days after the insurer considered making them public, documents released late on Saturday showed. Lawyers for the Fed bank, which had taken over a pool of AIG assets as part of a $180 billion government bailout of the insurer in 2008, advised that AIG maintain a "confidential treatment request" from the Securities and Exchange Commission, according to e-mails provided by Rep. Darrell Issa, a U.S. lawmaker probing the matter. A separate batch of e-mails made public earlier this month showed that New York Fed had advised AIG not to disclose the payments in a securities filing in late 2008.
House panel asks Paulson to testify in AIG probe A House panel slated to look into the collapse and bailout of insurer American International Group has widened its probe, adding former Treasury Secretary Henry Paulson to its list of invited witnesses. Paulson, who was asked on Friday to testify, would join his successor, Timothy Geithner, in explaining the roles they played in not disclosing payments AIG made to bank counterparties after receiving a taxpayer bailout. Democratic Rep. Edolphus Towns, chair of the House Oversight and Government Reform Committee, labeled the payments a "backdoor bailout" for banks and scheduled a January 27 hearing.
AIG probe widens to include Henry Paulson, Stephen Friedman A House committee is broadening its probe of secretive bank bailouts to include former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York Chairman Stephen Friedman. The Committee on Oversight and Government Reform has invited Paulson and Friedman to testify about their roles in the bailout of American International Group, according to Chairman Edolphus Towns, a New York Democrat. Lawmakers want to know more about deals that funneled billions from AIG to banks including Goldman Sachs Group. Friedman is a Goldman director and resigned from the New York Fed after concerns he had conflicts of interest.
McEwen Says Gold May Reach $5,000 an Ounce By 2012
Gold holds steady around $1,130/oz Gold prices held steady around $1,130 per ounce on Monday as the closure of the New York market later in the day kept many investors on the sidelines. Spot gold was at $1,132.40 per ounce as of 0006 GMT, up 0.2 percent from New York's notional close of $1,129.90. It hit a five-week high of $1,161.50 on Jan. 11. Gold has fallen 2.5 percent since then, as a rise in the dollar hurt investor sentiment.
Gold to hit $5,000/ounce Gold at $5,000? Yeah, this may be a reality if you follow the arguments offered by some analysts. Some reasons for this argument are since hitting the bottom in 2001, gold has posted a positive return in every year. Moreover, during the past 10 years, gold has become the trade of the decade, beating commodities, oil, corporate bonds, US Treasuries and US stocks.
Gold Is Safer than Treasuries as an Inflation Hedge “Truth, like gold, is to be obtained not by its growth, but by washing away from it all that is not gold.” -- Leo Nikolaevich Tolstoy Any time an asset increases in dollar terms, you have to ask yourself two questions:
Is the asset rising alone, relative to the rest of the economy?
Or is the asset rising in value along with everything else in the economy?
If, for instance, you had bought 1000 shares of Microsoft in 1988, you would have seen their values rise dramatically over the next decade, while most other asset values stayed relatively low across the economy as a whole. If, however, you had bought, say, shares of Coca-Cola in 1995, you would have seen the value of those shares rise only slightly over the next decade, relative to everything else.
Psychology able to affect price of gold Ancient alchemists tried to create gold from a diverse mixture of common elements. The behavior of the gold price is the result of a diverse mixture of modern common elements. These include the strength or weakness of the US dollar. It includes the timing of the inevitable rise in interest rates in Europe, America, and other countries such as Australia. Added to this mixture is the strength of the Chinese economy and global reactions to increases in bank capital reserve ratios. Of course, the fundamentals of supply and demand are also added to the mixture. This is an effervescent combination that adds volatility to the behavior of the gold price.
How Does the U.S. $ Really Affect the Gold Price? We have to ask ourselves what prompts investors large and small to go out and buy gold for their portfolios. Are they moved by a single piece of news that is seen on television or one piece of U.S. economic news? No, the average gold investor has accumulated reasons over time, which convinces him that it is wise to hold gold. But the real truth is that the gold market is global and affected by a vast number of investors each with his own reasons for buying gold from Mongolia to Manhattan. And at this moment in time, it is the non-U.S. investor that is driving the gold price.
Gold market poised for new push to record A growing weight of investment money is poised to enter the gold market in the first half of 2010 and is likely to push gold prices to fresh records, international precious metals consultancy GFMS said on Wednesday. According to the company's latest Gold Survey Update investor demand will be driven by fears of a double dip recession, continuing huge government deficits, very loose monetary policy and a belief that "...notable if not runaway inflation is set to return".
Gold Falls as Rallying Dollar Cuts Investor Demand for Metals Gold prices fell as the dollar’s rally sapped investor demand for the metal as an alternative asset. Palladium jumped to an 18-month high. The greenback gained as much as 0.8 percent against a basket of six major currencies, halting a five-session slide. Demand for the dollar as a haven increased amid speculation that China’s economy will cool following central bank steps to tighten credit. Gold has climbed 40 percent in 12 months as the dollar declined 8.5 percent.
Mike Maloney - Gold should reach $15,000/oz!
2010 Outlook: Precious Metals Price To Rise 21% A survey of analysts suggests that prices for precious metals will increase by 21% in 2010, led by a 40% increase in the cost of palladium to $370/troy ounce from $264 in 2009. Platinum is projected to increase to an average $1,442/oz, a 20% gain from $1,200 in 2009. The platinum group metals, which include rhodium, are projected to rise in price because of improved demand from makers of automotive catalytic converters. Rhodium is seen increasing by 19% to a transaction price average to $1,723/oz from $1,445 in 2009.
Uptrend still intact, but gold looks to be in consolidation phase for now The price of gold in Dollars ticked back from US$1,145 per ounce for the third time in two days early Friday, slipping to around US$1,130 in what one dealer called "choppy trading" as silver also retreated. "We are riding a small Elliot Wave higher," said Thursday technical analysis from Scotia Mocatta, the bullion bank. "Our thoughts are that we are in a small wave 4 consolidation of a move that started down at 1075 in December. We would like an eventual test to levels above 1161, but will stop-loss the long gold position below 1113."
Jim Rogers to buy gold if it falls to $1000/oz Global guru of commodity investment Jim Rogers said there is no question of bubble forming in commodities sector except gold. In an interview with CNBC-TV18, he said many commodities are still down from record highs. “What kind of bubble are you talking about,” he asked? “Name one commodity that is in a bubble and all time high except gold,” he added.
Gold may plunge if US economy recovers well Just how do the US economy and US policies affect Gold Prices...? To judge how the United States, its currency and its economics affect Gold Prices, we must first ask ourselves what prompts investors large and small to go out and Buy Gold for their portfolios. Is gold moved by a single piece of news that is seen on television or one piece of US economic news? No, the average Gold Investor has accumulated reasons over time, which convinces him that it is wise to hold gold. But the real truth is that the gold market is global and affected by a vast number of investors each with his own reasons for Buying Gold from Mongolia to Manhattan. And at this moment in time, it is the non-US investor that is driving the Gold Price.
Gold Price Waiting for Trigger for a Futher Decline Unexpected events often have a shock effect on the markets. The shock may last for some time or go away quickly. As far as the precious metals market is concerned, the recent earthquake should have only a minor effect. We now have nine years of a basic long term bull market in gold bullion. How long will it last? Who knows? We will continue following it until it collapses and then follow it towards the next bull market. The bull and bear markets will continue for at least as long as I will be on this planet.
Fake gold bars in Bank of England and Fort Knox It’s one thing to counterfeit a twenty or hundred dollar bill. The amount of financial damage is usually limited to a specific region and only affects dozens of people and thousands of dollars. Secret Service agents quickly notify the banks on how to recognize these phony bills and retail outlets usually have procedures in place (such as special pens to test the paper) to stop their proliferation. But what about gold? This is the most sacred of all commodities because it is thought to be the most trusted, reliable and valuable means of saving wealth.
The Importance of Sound Money Sound money is the hallmark of a prosperous society. Fraudulent money impoverishes and enslaves societies, and history teaches it commonly rips them apart in blood-soaked wars. Sound money not only imposes fiscal discipline upon government, impeding reckless federal spending and imprudent warfare, but it also provides a stable unit of account, store of value, and medium of exchange for entrepreneurs, businesses, and individuals. When the Federal Reserve inflates or deflates the money supply, there is no net benefit to society whatsoever. Obviously, the key to prosperity does not lie in running a printing press endlessly, like Zimbabwe, and it defies logic that America's prosperity would increase if every American deflated the money supply by burning a $100 bill.
Dollar to Stay Weak as Foreign Investors Avoid U.S., HSBC Says The dollar may stay “weak” against most currencies in 2010 as foreign investors shun assets denominated in the U.S. currency and buy higher-yielding securities, HSBC Holdings Plc strategists said. “A dollar recovery would require overseas investors to be enthusiastic buyers of U.S. assets,” a team of analysts at HSBC led by David Bloom in London wrote in a research note published today. “Given the domestic financial imbalances, this seems unlikely, and we expect the dollar to remain weak throughout 2010.”
Inflation outpaces wages, squeezing U.S. consumers The spending power of families is being squeezed, government data showed Friday, highlighting doubts about consumers' ability to drive the economic rebound. Workers saw their inflation-adjusted weekly wages fall 1.6 percent last year — the sharpest drop since 1990 — even as consumer prices rose only modestly. Slack pay and scarce job growth, along with tight credit and a rising savings rate, are holding back spending. That's hindering the recovery.
Inflation: Finding the value of a dollar . . . . And one of the economic factors they are watching closely is inflation. There is usually some minimal amount of inflation, but a serious bout of widespread, rapidly rising prices is one of the big fears many investors have. The government has issued record levels of debt to stabilize the financial system and the economy, prompting some to worry the flood of dollars will drive up prices on everything from furniture to energy and electronics.
On the Edge with Max Keiser - 15 January 2010
On the Edge with Max Keiser - 15 January 2010 (2/3)
On the Edge with Max Keiser - 15 January 2010 - (3/3)
What Crash History Tells Us to Expect For 2010 Many have wondered why the 10-year cycle peak in late September/early October didn’t produce a more meaningful correction in the broad market. Instead, the 10-year cycle peak produced only a marginal six percent pullback in the S&P 500 Index (SPX) instead of the much deeper one usually associated with the 10-year peak. A look at the past reveals why: the first full year following a crash low has never produced a sizable correction in the stock market. That historical truism certainly proved itself out in 2009. But what of the second year after a crash? What can we expect in the coming year based on market history? We’ll be taking up this question in the commentary that follows.
No Double Dipping...Yet This week’s letter is abbreviated since most things were mentioned in the update to subscribers, and quite frankly that long update burnt me out. To be sure the major indices are still a buy, but there is more and more talk that a double-dip recession coming soon and I agree. While the charts still say buy, I’d be careful. Even on the big US business network a trader mentioned that he though the market would continue higher because of ongoing government intervention. It’s great to hear those words spoken on primetime, but they are rarely ever followed up on.
Double dip recession risk significant, Martin Feldstein warns Prominent Harvard economist says Obama administration must show it can manage growing deficit The U.S. economy faces a “significant risk” of another recession in 2010, unless the Obama administration promotes confidence it can manage a growing fiscal deficit, a prominent Harvard University economist said Thursday. Without public approval, namely from investors, U.S. bond yields will climb, taxes will rise and a fragile recovery will be short lived, Martin Feldstein told Reuters in an interview.
Obama's Latest Ruse: the Bank Tax When president Obama was awarded Advertising Age’s 2009 Marketer of the Year award, we were alerted to expect carefully crafted public relations posturing in defense of the reputation of Brand Obama. We have not been disappointed. The president has regularly taken verbal pot shots at the financial oligarchy in a cynical effort to convey the impression that he shares the public’s outrage at the behavior of the plutocrats. But he has thrown no sticks and stones at the banksters, who know as well as you and I that mere words can never hurt them.
Banks are just the first target on the tax agenda President Obama has proposed what may be the most popular tax increase in American history: He wants the biggest banks to fork over about $9 billion a year for the next decade via a "financial crisis responsibility fee." "We want our money back, and we're going to get it," Obama declared Thursday. That probably was something of a shock to Goldman Sachs Group Chairman Lloyd Blankfein, for one. He must have figured he had paid in full in July, when Goldman wrote checks for $11.1 billion to return government capital received in 2008 under the financial-industry bailout program.
Perform or perish, Saudi Prince tells Vikram Pandit Saudi Prince Alwaleed bin Talal, who is a major shareholder in the Citigroup, has told the bank's Indian-American CEO Vikram Pandit that his two-year honeymoon is now over and 2010 is a make or break year for him. "I don't threaten those CEOs that I meet but I told him (Vikram Pandit) that the market gave you two years' leeway, but I think now it's time to deliver and 2010 for him is really the year to make it or break it and he has to deliver," Alwaleed said in an interview. Alwaleed had recently met with Pandit and he had told him that he must deliver solid results in 2010.
Poland's Economy is No Joke Peter Schiff My visit to Krynica was a breath of fresh air, and a startling reminder of how far America has strayed... Watching the world's leaders stumble their way through the economic crisis, it often feels as if political success and economic understanding are mutually exclusive. Even the Chinese, who over the past generation have engineered a dramatic turnaround from their Maoist economic nightmare, show a remarkable willingness to pursue a monetary policy (a currency peg to the U.S. dollar) that yields no benefit to their citizens. Amid this morass of economic quackery, it is refreshing to see a clear ray of sanity emanating from one country: Poland.
Big Banks Accused of Short Sale Fraud Just as regulators, lawmakers and all forms of financial oversight boards are talking about new regulations to guard against mortgage fraud and another mortgage meltdown, there appears to be yet a new mortgage fraud out there today, allegedly perpetuated by agents of, yes, the big banks. I was first alerted to this by Jeremy Brandt, the CEO of several companies that bring short sale agents, investors and sellers together.
Walkaways, Pay Option ARMS Hit Banks Bad A lot of reports out today collectively gave me a very bad feeling about the state of our current housing recovery. First, Amherst Securities Group took a look at Pay Option ARMs. These are the adjustable rate loans so popular in 2006 that allowed you to choose your monthly mortgage payment, while tacking what you don't spend on to the principal of your loan. Only 9 percent of these loans had full documentation from the borrower and 76 percent were originated in California, Florida, Arizona and Nevada, our four disaster states for housing. It should therefore come as no shock that they are suddenly approaching subprime in their delinquency status. So while we all sit around saying that the subprime loans have already worked their way through the system, they're fast being replaced by POA's. "For 2006 securitized issuance, 61% of subprime loans have defaulted, as have 49% of the option ARMs," according to the Amherst report.
Mortgage plan has helped 7% of borrowers who signed up The Obama administration's mortgage relief plan provided help to only 7% of borrowers who signed up last year, another black mark for the struggling program. The plan was announced with great fanfare 11 months ago, but has done little to stem the foreclosure crisis or its drag on home prices. A record 2.8 million households were threatened with foreclosure last year, up more than 20% from a year earlier, RealtyTrac reported this week. Home prices, meanwhile, are down 30% nationally from the peak in mid-2006. As of last month, only about 66,500 homeowners of the 900,000 enrolled had received permanent relief last year, the Treasury Department said Friday. Another 46,000 have been approved and should be completed soon.
MediaNews Holding Company to Seek Bankruptcy Protection The holding company of MediaNews Group Inc., the publisher of dozens of newspapers including the Denver Post and San Jose Mercury News, said Friday that it plans to seek bankruptcy protection, the latest in a string of troubled newspaper companies to seek refuge from creditors amid unsustainable debt loads. The holding company, Affiliated Media Inc., said it reached an agreement with its lenders for a streamlined bankruptcy that will hand a majority of new stock to creditors, a group led by Bank of America Corp. The company's existing equity will be canceled, the holding company said.
New York Times Ready to Charge Online Readers New York Times Chairman Arthur Sulzberger Jr. appears close to announcing that the paper will begin charging for access to its website, according to people familiar with internal deliberations. After a year of sometimes fraught debate inside the paper, the choice for some time has been between a Wall Street Journal-type pay wall and the metered system adopted by the Financial Times, in which readers can sample a certain number of free articles before being asked to subscribe. The Times seems to have settled on the metered system. One personal friend of Sulzberger said a final decision could come within days, and a senior newsroom source agreed, adding that the plan could be announced in a matter of weeks. (Apple's tablet computer is rumored to launch on January 27, and sources speculate that Sulzberger will strike a content partnership for the new device, which could dovetail with the paid strategy.) It will likely be months before the Times actually begins to charge for content, perhaps sometime this spring. Executive Editor Bill Keller declined to comment. Times spokesperson Diane McNulty said: "We'll announce a decision when we believe that we have crafted the best possible business approach. No details till then."
Denver Post owner plans prepackaged Ch. 11 filing DENVER—Affiliated Media Inc., the holding company for MediaNews Group Inc. newspapers including The Denver Post and San Jose Mercury News, said Friday that it plans to file for Chapter 11 bankruptcy protection. The company said it would file a "prepackaged" plan already approved by lenders, which should allow it to emerge from bankruptcy more quickly. A date for the filing hasn't been announced, but the company said it would be in the near future. The reorganization plan was expected to be filed in federal bankruptcy court in Delaware.
Jim Rogers-Agricultural Commodity Prices To Go Through the Roof
Home foreclosures up 44% Foreclosure filings in the five-county region jumped a whopping 44 percent last year, but nowhere was the pain more deeply felt than in Currituck County, where the number of filings increased by more than 150. Currituck Clerk of Superior Court Sheila Tyler said she’s seen people from all walks of life — some with children — who are facing losing their homes. “Unfortunately it’s not just the mega boxes over on the beach,” Tyler said of the types of homes being foreclosed on. “It is the heart and soul of Currituck, and that’s sad. That’s very, very sad because these are hardworking people that are victims of the economy.”
Foreclosures jump in December after months of declines Foreclosure filings increased 14% in December from November, the first monthly increase since foreclosure activity peaked in July, according to a RealtyTrac report out Thursday. Foreclosure filings were reported on 349,519 properties in December, which were also 15% higher than in December 2008, RealtyTrac said.
Nonprime Borrowers With Negative Equity: Not a Pretty Picture A new report sheds some light on the growing problem of negative equity, and unsurprisingly, the numbers do not paint a pretty picture. The report by the Government Accountability Office, which was published last month and released publicly on Wednesday, estimates that in 16 major metro markets, nearly six in ten borrowers who took out subprime or Alt-A mortgages between 2000 and 2007 owe more than their homes are worth.
Loan Modification Recipients Fall Short, Drop Out About 25 percent of homeowners who received trial loan modifications through President Barack Obama’s main foreclosure prevention plan are failing to keep up with their new reduced payments, the Treasury Department said. At least 196,000 borrowers have missed some or all of their required payments, according to comments Treasury officials made on a conference call today and calculations from government data. An additional 115,000 homeowners who started trial repayment plans last year have either dropped out or been kicked out of Obama’s Home Affordable Modification Program, the officials said.
Bank of America to release homes Bank of America expects to release about 6,000 foreclosed properties into the Nevada housing market in 2010, or about 500 a month, an executive with the bank said Wednesday. It's part of the so-called "phantom inventory" of foreclosed homes being held by banks as they work out loan modifications and negotiate short sales, two of the more desirable alternatives to foreclosure.
Yes, It's Okay To Walk Away From Your Mortgage As many Americans begin to realize that it will be many years (if not decades) before their houses are worth what they owe on them, the idea of walking away from your mortgage is going mainstream. Not surprisingly, the mortgage industry is doing everything it can to prevent this, including telling homeowners that they have a "moral obligation" to pay. But do they? Is it okay to walk away from your mortgage for no other reason that it doesn't make financial sense to keep throwing your hard-earned money away?
Big Banks Demand Cash Payments "Off the Books" from Homeowners to Avoid Foreclosure"The Hobbs Act defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. S 1951." Interesting story in which Citi and J.P. Morgan among second lien holders are demanding cash payments "off the books" from homeowners in order to allow a short sale to proceed in lieu of a foreclosure, a total loss and a black mark on their credit record. Was my characterization of the big Wall Street banks as 'sociopathic' a bit harsh as a reader asked? No, more likely understated. Remember, this is not some small local lender facing a loss and trying to get something out of it for their trouble. These are the TARP-sucking, discount window-feeding, bonus paying, fraudulent flim-flam 29.9% interest-charging pigmen who are demanding a pound of flesh from the down and out and the dispossessed as a consequence of their own reckless lending practices.
For health care, a frantic ride in the final days Like a roller-coaster ride on its last twisting turns, President Barack Obama's campaign to remake health care is barreling into final days of breathless suspense and headlong momentum. Democrats, led by Obama himself, are deploying this weekend to salvage an unpredictable Senate race in Massachusetts, while senior White House and congressional staffers in Washington hurry to finish work on cost and coverage options at the heart of the sweeping legislation.
Putting the health-care bill's big numbers in perspective No matter what the players involved in the health-care reform fight want for the bill, they're all united in one respect: They want you to believe this is the biggest thing in the world. Republicans want you to believe it's a dangerous proposal that will wreck a sixth of the economy. Democrats want you to believe it's a marvelous bill that will fix the health-care system. The news media frequently take both claims at face value. It's time for some real talk on health-care reform. By the standards of what Congress generally does in a year, this bill is very big. But by the standards of the health-care system, it's not that big at all. It goes two-thirds of the way on covering the uninsured. It makes a courageous, but insufficient, start on cost control. This is the beginning, not the end, of reform.
The Decline And Fall Of America - Official Movie Trailer #1
All the Reich Moves The formula for an American variant of Fascism includes, but is not limited to, the following:
A fusion of institutions the constitutional Framers intended to keep separate; abolition or nullification of any residual checks on the power of the central government.
Barack Obama's January 11 executive order creating a "Council of Governors" to help "synchronize" policy regarding foreign and domestic military operations doesn't merely add another redundant layer of bureaucracy to the overgrown Homeland Security apparatus. It represents a critical milestone in the devolution of the American republic into an undisguised Reich.
Misleading claims about Safeway wellness incentives shape health-care bill It's a seductively simple solution to rising health-care costs. Require workers to pay higher premiums if they flunk tests for measures such as weight, blood pressure and cholesterol. Then, bingo: You not only get a fitter workforce, you slash medical expenses. Politicians of both parties have embraced that idea and expanded upon it in the Senate reform bill, inspired largely by the claims of Steven A. Burd, Safeway's chief executive. Burd says he has set an example for employers nationwide by rewarding employees for healthy behavior.
Drug Companies Threatening to Oppose Health Bill The drug industry is threatening to end its support for President Barack Obama's health overhaul effort because of a rift over protecting brand-name biotech drugs from low-cost generic competitors. The Associated Press has obtained an e-mail to board members of the Pharmaceutical Research and Manufacturers of America from the trade group's president saying "we could not support the bill" if the industry gets less than 12 years of competitive protection for the expensive products.
Big Tobacco in Secret Talks with Government Tobacco industry lawyers met secretly with Solicitor General Elena Kagan in an effort to avoid the government's last-ditch attempt to extract billions from companies that illegally concealed the dangers of cigarette smoking, the Associated Press has learned. Four cigarette makers that control nearly 90% of U.S. retail cigarette sales have until Feb. 19 to persuade the government not to go to the Supreme Court and ask the justices to step into a landmark 10-year-old racketeering lawsuit.
Tobacco Companies Said to Have Met With U.S. on Suit Tobacco company lawyers met with U.S. Solicitor General Elena Kagan last month to urge her not to file a Supreme Court appeal in the government’s racketeering case against the industry, an official involved in the Justice Department’s deliberations about the case said. The meeting, reported by the Associated Press earlier today, ultimately might lead to settlement talks, though the two sides haven’t had any contact since then, the person said. The discussion with Kagan, the Obama administration’s top Supreme Court lawyer, led to an internal Justice Department meeting about the government’s options, the person said.
Navy's future linked to flexible weapons: chief Increasing pressure on the overall U.S. defense budget means the Navy must focus even more buying flexible and affordable weapons systems that can adapt to changing threats and needs, the Navy's top officer said. Chief of Naval Operations Admiral Gary Roughead, calling himself "a capacity guy," said his top priority was to proceed with plans to buy dozens of smaller, relatively inexpensive littoral combat ships (LCS) to expand the Navy fleet from 287 to 313 and meet growing demand for naval forces.
MySQL founder turns to China, Russia to halt Oracle HELSINKI (Reuters) - Michael Widenius, the creator of the MySQL database, said he is turning his vocal campaign against Oracle's planned takeover of Sun Microsystems to China and Russia because the European Commission appears set to clear the deal. The Russian Federal Antimonopoly Service last week continued its review of the $7 billion deal, asking for input from interested parties, and the Chinese Ministry of Commerce has yet to approve the deal. "They are powerful, self-confident and open-source-friendly countries and they have every right and opportunity to do a better job on this than the EU," Widenius said in a statement.
Google-China standoff sheds light on global Net intrigue Google's bombshell announcement that it might pull up stakes in China because of cyberattacks and censorship points up a concern long overdue for higher scrutiny, security experts say. For more than a decade, China and other nations have been ramping up state-sponsored cyberintrusions of commercial and military targets. Public outrage has been muted mainly because victimized organizations have disclosed as little as possible.
China at Odds With Future in Internet Fight BEIJING — At the elite Tsinghua University here, some students were joking Friday that they had better download all the Internet information they wanted now in case Google left the country. But to many of the young, well-educated Chinese who are Google’s loyal users here, the company’s threat to leave is in fact no laughing matter. Interviews in Beijing’s downtown and university district indicated that many viewed the possible loss of Google’s maps, translation service, sketching software, access to scholarly papers and search function with real distress.
Saudi Billionaire Eyes New Links With News Corp. Saudi billionaire Prince Alwaleed eyes expanding alliance with Murdoch's News Corp. The Saudi billionaire whose investment firm is one of the biggest stakeholders in Rupert Murdoch's News Corp. said he is looking to expand his alliances with the media giant, in the latest indication that his appetite for growth remains robust even as his company retrenches. Prince Alwaleed bin Talal, a nephew of the Saudi king and who was listed last year by Forbes as the world's 22nd richest person, met with News Corp.'s chief executive Rupert Murdoch on Jan. 14 in a meeting that "touched upon future potential alliances with News Corp.," according to a statement released by his Kingdom Holding Co. late Saturday.
Saudi Arabia and the Oil Bank As crude oil prices climbed back over US$80.00 per barrel during 2009 - after the dramatic spike to $147 and subsequent collapse to $35 - United States politicians and regulators were in no doubt as to who to blame. They accused "speculators" such as exchange traded funds (ETFs) and hedge funds of manipulating oil prices through the use of futures and options contracts on the dominant exchanges - the New York Mercantile Exchange and the Intercontinental Exchange - and also off exchange, through bilateral over-the-counter (OTC) contracts. But the truth lies elsewhere.
IEA sees world oil use in 2010 highest since 2007 Global oil demand this year will reach the highest level since 2007, with rising consumption led by faster growth in emerging economies in Asia, the International Energy Agency said on Friday. The Paris-based adviser to 28 industrialised economies revised upwards by 10,000 barrels per day (bpd) its expectations for the rise in global oil demand this year. It now sees demand increasing by 1.4 million barrels per day in 2010.
Will China Supersede Saudi Arabia as the Key to U.S. Oil Prices? The signs are everywhere that oil is headed for stratospheric highs - $200, $250 or even $300 a barrel. Some of these signs are just plain obvious. But even the subtle indicators are telling us that some very expensive energy costs headed our way. Let me tell you about one such indicator that I came across over the New Year holiday. A tiny news item said that Saudi Arabian oil concern Aramco is abandoning a lease on Caribbean oil storage, and further reported that PetroChina Co. Ltd. is moving in to take Aramco's place.
China’s Round-The-Clock Auto Factories Still Cannot Meet Demand Nissan Motor Co.’s factory in central China is making cars almost 24 hours a day, yet Pan Xiaowei still waited three months for her new Tiida compact to arrive at the dealership. “It wasn’t like this a couple of years ago,” said Pan, 34, whose husband runs a property development company in Shandong province. “We used to buy and get a car straight away, and now you have to pre-order and wait.”
Haitians receive little help despite promises PORT-AU-PRINCE (Reuters) - U.S. troops will help keep order on Haiti's increasingly lawless streets, the country's president said on Sunday as desperate earthquake survivors waited for food, water and medicine. World leaders have pledged massive assistance to rebuild Haiti after the earthquake killed as many as 200,000 people, but five days into the crisis aid distribution was still random, chaotic and minimal.
Haitian Violence Hampers Earthquake Relief Efforts Violence in Haiti is hampering the assistance of earthquake victims as the U.S., the United Nations and aid groups work to deliver supplies to victims of the earthquake that ravaged the Western Hemisphere’s poorest nation. Violent disturbances are impeding efforts to support the Haitian government in the fifth day after the disaster struck, U.S. Southern Command Lieutenant General Ken Keen, who is overseeing relief efforts, said on ABC’s “This Week” program.
ECB prepares legal ground for euro rupture as Greek crisis escalates Fears of a euro break-up have reached the point where the European Central Bank feels compelled to issue a legal analysis of what would happen if a country tried to leave monetary union. “Recent developments have, perhaps, increased the risk of secession (however modestly), as well as the urgency of addressing it as a possible scenario,” said the document, entitled Withdrawal and expulsion from the EU and EMU: some reflections. The author makes a string of vaulting, Jesuitical, and mischievous claims, as EU lawyers often do. Half a century of ever-closer union has created a “new legal order” that transcends a “largely obsolete concept of sovereignty” and imposes a “permanent limitation” on the states’ rights.
US to Send Formal Message to China on Google Case The U.S. State Department said Friday it will soon give China a formal diplomatic message expressing its concern about cyber attacks that prompted Google to threaten to pull out of China. "We will be issuing a formal demarche to the Chinese government in Beijing on this issue in the coming days, probably early next week," U.S. State Department spokesman P.J. Crowley told reporters. "It will express our concern for this incident and request information from China as to an explanation of how it happened and what they plan to do about it," the spokesman added.
A global fiasco is brewing in Japan I have felt rather lonely after suggesting in my New Year Predictions that Japan is dangerously close to blowing up on its sovereign debts, with consequences that will be felt across the world. My intended point — overly condensed — was that 2010 will prove to be the year that Japan flips from deflation to something very different: the beginnings of debt monetization by a terrified central bank that will ultimately spin out of control, perhaps crossing into hyperinflation by the middle of the decade.
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Fri 01.15.2010
Sovereign defaults head 2010 risk hit list for WEF The risk that deteriorating government finances could push economies into full-fledged debt crises tops a list of threats facing the world in 2010, according to a report by the World Economic Forum. Major world economies have responded to the steep downturn created by the financial crisis with stimulus packages and by underwriting private debt obligations, causing deficits to balloon. This may have helped keep a worse recession at bay, but high debt has become a growing concern for financial markets.
THE RECESSION ON MAIN STREET CONTINUES As the most hated rally in the history of rallies continues the entirety of Main Street remains entrenched in recession. The truth is, little has changed since we last took an in-depth look at the so-called recovery on Main Street. Unemployment remains extraordinarily high, consumer sentiment remains near its lows, small businesses continue to struggle and consumers are still burdened with heavily indebted balance sheets. The latest NFIB status report on small business continues to report a recession-like environment: For small business owners, 2009 ended with a thud. The Optimism Index fell and finished just seven points ahead of March which was the second lowest reading in 35 years of survey history, even though the economy posted positive growth in the second half of the year.
You can't file for your $8,000 homebuyer tax credit Did you purchase a home after Nov. 6? Don't expect your $8,000 homebuyer tax credit any time soon. Since Congress passed the tax credit last February as part of the stimulus program, more than 1.4 million buyers have scrambled to take advantage of it, according to the IRS. All they had to do was file an amendment to their 2008 tax returns (the ones they filed last spring) and claim the promised refund of 10% of the purchase price -- up to $8,000.
As Buildings Empty, Banks' Credit Woes Pile Up Commercial real-estate problems may be about to douse the recent rally enjoyed by regional banks. As banks start releasing fourth-quarter earnings this week, the losses and reserves tied to commercial real-estate loans could spike even higher than some analysts think. Regional banks could get hit hardest, given typically greater exposure to commercial property than their bigger brethren.
The Evidence Piles Up That Housing Is Double Dipping The latest Case-Shiller numbers have been disappointing, but they're a few months behind the curve, so it's hard to tell, exactly, what's going on right now. But lesser-known measures, which attempt to track what's going on right now indicate that the right now isn't so hot. David Rosenberg pointed to a couple of them in an earlier note this week, showing price weakening in December. And the latest Altos Research real time numbers don't look good either, with their 1-city composite falling 1% sequentially in the last month of the year. Granted, seasonal factors are at play, but given the sharp fall, a rebounding housing market could, possibly, overcome that. So far it's not happening.
The Lunacy of Government
Homeowners Say Banks Not Following Rules for Loan Modifications Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.
Retail sales fall unexpectedly, jobless claims up U.S. consumers unexpectedly curbed their Christmas spending in December and more people filed claims for jobless benefits last week, casting fresh doubts on the durability of the economic recovery once government support fades. The Commerce Department said on Thursday retail sales fell 0.3 percent last month, the first decline since September, as consumers spent less on vehicles and an array of other goods during the holiday shopping month.
Gold shines as US dollar falls AFTER choppy trading, gold futures moved higher into the close on some late-session fund buying as the US dollar sank against its major rivals. Benchmark February gold rose $US6.20 to settle at $US1143 an ounce on the Comex division of the New York Mercantile Exchange. Lightly traded nearby January gold also gained $US6.20, to $US1142.60. "You have end-of-day fund buying," said Michael Gross, broker and futures analyst with OptionSellers.com.
Gold Is Safer than Treasuries as an Inflation Hedge “Truth, like gold, is to be obtained not by its growth, but by washing away from it all that is not gold.” -- Leo Nikolaevich Tolstoy Any time an asset increases in dollar terms, you have to ask yourself two questions:
Is the asset rising alone, relative to the rest of the economy?
Or is the asset rising in value along with everything else in the economy?
If, for instance, you had bought 1000 shares of Microsoft in 1988, you would have seen their values rise dramatically over the next decade, while most other asset values stayed relatively low across the economy as a whole. If, however, you had bought, say, shares of Coca-Cola in 1995, you would have seen the value of those shares rise only slightly over the next decade, relative to everything else.
Gold Rises in Late Buying as Dollar Sinks After choppy trading, gold futures closed higher on some late-session fund buying as the U.S. dollar sank against its major rivals. "You have end-of-day fund buying," says Michael Gross, broker and futures analyst with OptionSellers.com. "The amateurs buy on the open and the pros buy on the close."
Gold to cross $1,300 in 2010: GFMS Gold prices will hit record highs in 2010 as investments in the precious metal is expected to rise in the first half of the year. This forecast was made by global research firm GFMS this week. Gold will cost more than $1,200 per ounce by the second quarter of this year, GFMS said.
Gold Gains for Second Straight Day on Bets Dollar Will Fall Gold prices rose for a second straight day on speculation that the dollar will slide, boosting demand for the metal as an alternative asset. Platinum and palladium jumped. The greenback headed for the longest slide in four months against a basket of major currencies. Yesterday, William Dudley, the president of the Federal Reserve Bank of New York, said lending rates may remain low for as long as two years. Today, U.S. retail sales unexpectedly fell. Gold rose 41 percent in the past 12 months, and the dollar is down 9.1 percent.
Gold inches up cautiously ahead of ECB policy announcement The yellow metal retained its bullish tone but liquidity was low as traders waited to hear from Jean-Claude Trichet and to find out how US retail sales were progressing Gold inched up on Thursday, keeping a bullish tone from the day before when a weaker dollar spurred short-covering and physical buying, but investors were trading cautiously before the European Central Bank's policy decision and U.S. data. Gold prices fell sharply on Tuesday when China's decision to raise bank reserve requirements sparked fears that spending would be curtailed and decrease bullion's appeal as a hedge against inflation.
Gold holds steady around $1,145/oz Gold prices held steady around $1,145 per ounce on Friday after gaining in New York the previous day on a fall in the dollar against other currencies. Gold futures got a lift on Thursday in defensive buying ahead of any future measures taken by the Commodity Futures Trading Commission to rein in speculation in metals trading, dealers said.
Comments on Gold... Again Richard Russell I've been a fan of Noriel Roubini's, (my daughter's been to his parties) one of the very few economists who foresaw and predicted the housing collapse. That great call made Roubini famous. But I was surprised and dismayed to note Roubini's recent warning about what he termed the "gold bubble." Roubini is the son of an Iranian-Jewish family, and if that didn't provide him with respect for gold I don't know what would. Actually I was shocked that the brilliant Roubini didn't understand gold, all of which leads to today's site.
Central Banks have been net purchasers of gold since the second quarter of 2009 The survey estimates net sales from the sector were down 90% in 2009 compared to 2008. The latest interim Update to the GFMS Gold Survey 2009 reports that, on a quarterly basis, the official sector became a net purchaser of gold during the second quarter of 2009 and has remained so since. GFMS expects that IMF sales will augment official sector sales this year, but that modest purchases elsewhere will constrain volumes overall. The Survey estimates that net sales from the sector were down 90% in 2009 against 2008 levels, although the study does warn that estimates may be revised in the future as a result of the lag that often exists between central bank activity taking place and subsequently being identified.
Russian-Roulette Let’s consider a well publicized recent sale of Russian gold bullion to itself:Russia sells gold to itself The Russian central bank will spend $1bn next week, buying 30 metric tons of gold from Gokhran, the state repository. Gokhran had planned to sell 20-50 MT on the open market, but cancelled after news of the sale leaked. The sale would have helped plug Russia’s budget deficit, and, apparently, purchase some diamonds from state-run miner Alrosa…. Does this not strike you as being odd? In case you missed it, Russia announced that they are selling gold to THEMSELVES!?!?
Gold Production: South Africa slips to third rank Once global leader in gold production, South Africa used to show its golden muscle power with large mining projects and major mining companies stationed across the country. No longer can South Africa live in the glory of a golden era. South Africa has slipped to the third rank in gold production in the world.
Chinese Gold Production Explodes To Record Levels As Surging Prices Ramp Supply Chinese gold production for 2009 is expected to hit an all-time high of 310 tons once full statistics are released, according to the World Gold Association. CCTV: The world gold association predicts that global gold production in 2009 exceeded 2500 tons... 3-and-a-half percent higher than 2008. This is the first rise in world gold production in 9 years. China's 310 tons represent an output jump of over 10 percent year-on-year. However experts stress that maintaining such robust growth in production does not necessarily mean more negative impact on the environment.
Ron Paul Review: Haiti quake, Body Scanners & Yemen ops
Dollar Falls Against Most Rivals The dollar dropped against the yen and most other major currencies as falling Treasury yields combined with weaker-than-expected U.S economic data. But the greenback edged up on the euro. "Any time U.S. rates squeeze down, it puts downside pressure on the dollar," said Jacob Oubina, currency strategist at Forex.com in Bedminster, N.J.
Dollar Crisis Looms if US Doesn't Curb Debt: Experts The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday. "It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.
Ask Ye For Inflation And Ye Shall Get Inflation What we are witnessing is the fall of the mighty global US empire and the rise of the Chinese global empire. The interregnum we are just beginning to enter is, by definition, unstable. Just as the world's climate is unstable due to the natural end of the Interglacial warming period. In any system undergoing a change in fundamental dynamics, there are many once-stable systems that tip into collapse. And verities of the past become less certain. In the case of civilization itself: it is a precarious balancing act which can slide into barbarism and anarchy at the slightest tip of the scales. When whole populations decide they want nothing to do with civilization, it collapses. For whatever motivates this collapse, no civilization can exist unless the populace supports the concept and aspires to the civilizing nature of the dominant systems.
AIG: Who's To Blame? Hank Greenberg fingers Goldman Sachs on CNBC
Stimulus impact will fade in 6 months The $787 billion stimulus package enacted by Congress in February will continue to bolster the U.S. economy over the next several years but its impact will begin to diminish in about six months, the nonpartisan Congressional Budget Office said Thursday. The CBO report also found that after mid-2010, the package of government spending and tax cuts will continue to help support the economic demand but will have a negative impact on future growth.
The Tepee Shaped Recovery The shape of this economic recovery will not be in a “V”, as many pundits have promulgated, but instead may be the inversion of that letter…which will unfortunately look much more like a tepee. The upcoming downfall will surprise most investors who have been tricked into believing that a government can print and spend their way into prosperity. Undeniably, there has been a superficial recovery in the economy, which was presaged by a 65% rebound in the S&P 500 since March of 2009. Third quarter GDP was positive—albeit at a subpar and marginal 2.2%—and Q4 of 2009 and Q1 of 2010 should also show positive economic growth as well. But most of that growth will come from an inventory rebuild and not from a sustainable increase in output.
Banks Must Repay Taxpayers $90 Billion for Bailout: Obama President Barack Obama Thursday proposed Wall Street banks pay $90 billion over 10 years to reimburse taxpayers for the financial bailout, as he slammed bankers for their "massive profits and obscene bonuses." Striking a populist tone, Obama called for a fee on the biggest U.S banks to "recover every single dime" the government spent rescuing the financial sector from its worst crisis since the Great Depression.
UK banks face $10bn bill from US over bailouts Three British banks may have to pay more than $10 billion to the US Government as part of its crackdown on financial institutions bailed out by taxpayers (see Commentary, facing page). Royal Bank of Scotland, which is 84 per cent owned by the Government, may be on the hook for almost $1 billion to the US over the next decade under a stringent new levy announced by the Obama Administration yesterday. Barclays could face a total bill of about $5.6 billion over ten years, while HSBC may have to hand over $3.8 billion, Joseph Dickerson, an analyst at Execution, calculated as the details of the US levy emerged.
Regulators 'Failed' to Prevent The Financial Crisis: Bair Financial regulators, lulled into inaction by soaring bank and Wall Street profits, failed to protect Americans from the 2008 financial crisis, senior U.S. officials told an investigative panel on Thursday. In testimony that urged stricter oversight in future while admitting past errors, Federal Deposit Insurance Corp Chairman Sheila Bair headlined a second day of public hearings by Congress' Financial Crisis Inquiry Commission. "Not only did market discipline fail to prevent the excesses of the last few years, but the regulatory system also failed in its responsibilities," she said.
* * * * * Word on the Street Hear Rick Santelli's RANT about idiocy of bailout and why banks will not take risk of lending when they can make money in other ways (toward the end of this video clip).
U.S. financial crisis panel to call Greenspan, Cox U.S. regulators admitted to failing to head off the 2008 financial crisis as they appeared before a panel whose chairman said he plans to seek testimony from former Federal Reserve Chairman Alan Greenspan. As President Barack Obama proposed slapping a special fee on banks and criticized bankers' bonuses, the Financial Crisis Inquiry Commission heard regulators confess that they were lulled into inaction by soaring bank and Wall Street profits.
Holding Treasury's TARP Exit Strategy to a Higher Standard When Congress passed the Troubled Assets Relief Program in October, 2008, it also created the Congressional Oversight Panel (COP), a five-member board charged with the responsibility to "review the current state of financial markets and the regulatory system." In a report to Congress released on Jan. 14, COP says the Treasury Department should more clearly articulate an exit strategy from TARP. It also wants Treasury to reduce the "moral hazard" now seen in the financial marketplace, thanks to the widespread belief that the government will "rush in to rescue financial institutions deemed too big to fail."
Jim Rogers Interview by Martin Kronicle
In Capitol Hill hearing, bankers remain torn on their role in crisis A year after the financial system nearly went over the brink, the congressional commission investigating the roots of the crisis confronted four of the world's most powerful bankers on Wednesday and challenged them to take more responsibility for their role in upending the global economy. But under questioning from the chairman of the bipartisan commission, Philip Angelides, the bankers quickly made clear that they view this dark episode through a very different lens, describing themselves in large part as victims of circumstance. The bankers, representing four of the country's largest financial firms, acknowledged that their companies took excessive risks in the years leading up to the crisis but said they could not have anticipated the events that precipitated the meltdown.
Federal Reserve makes the case for keeping its power intact Central bank says its ability to supervise banks helps it conduct monetary policy Responding to Senate legislation that would strip the Federal Reserve of much of its bank- and consumer-protection supervision authority, the central bank on Thursday argued to Congress that its existing oversight of the banking industry improves its capacity to respond to a financial crisis and carry out its monetary-policy responsibilities. "The Federal Reserve's ability to effectively address actual and potential financial crises depends critically on the information, expertise and powers that it gains by virtue of being both a bank supervisor and a central bank," according to a letter sent by the Fed to the Senate Banking Committee. "These benefits of the Federal Reserve's supervisory role proved particularly important during the financial crisis that emerged in 2007."
Volcker: Fed could scale back authority Responding to concern that the Federal Reserve is already too powerful and therefore should not be put in charge of overseeing systemic risk to the country's financial system, Former Federal Reserve Chairman Paul Volcker on Thursday said the central bank's role in some areas such as consumer protection could be reviewed or scaled back.
FDIC chief puts blame on Fed for crisis The Federal Reserve was blamed by a fellow regulator for contributing to the financial crisis on Thursday as the central bank and one of its former chairmen fought back against congressional moves to curb its powers. In unusually pointed criticism, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, told the Financial Crisis Inquiry Commission that “much of the crisis may have been prevented” had the Fed dealt with subprime mortgages seven years before it did.
Small Banks For The Recovery America's heartland banks face rising bad loans, slack demand and government bias. But some are worth looking at. Lately, it seems like the only banks that get any attention from investors are those deemed too big to fail by politicians bestowing bailouts. Most American financial institutions, though, are more modest in their failures: bad loans are taking a bite out of their capital and they're trying to earn back enough to fill those holes.
Banks Should Pay for Financial Crisis: Rep. Frank Banks should be forced to pay the government billions of dollars because "they engaged in irresponsible activity...and were a major factor in creating the economic crisis," Rep. Barney Frank told CNBC. Earlier Thursday, President Obama proposed Wall Street banks pay $90 billion over 10 years to reimburse taxpayers for the financial bailout, as he slammed bankers for their "massive profits and obscene bonuses."
Who Is the 'One Big Bidder' For US Treasuries? There are a number of possibilities for the identity of the non-primary dealer domestic source of enormous purchases at the longer end of the yield curve in recent US Treasury auctions. It could be a misclassification, a branch of a bank representing a foreign power. The problem with this theory is that there have a particular reluctance to buy the long end of the curve. It also could be a legitimate domestic purchaser like a pension fund compelled to match duration of obligations, as is required by a little noted ruling of the US government a couple of years ago. They might be shifting out of other long term instruments with similar durations but more risk.
Volcker defends White House's tax on big banks Former Fed chairman calls president's move 'a reasonable response' Former Federal Reserve Chairman Paul Volcker on Thursday defended President Barack Obama's proposed tax on large financial institutions, saying the White House was offering "a reasonable response to the public's anger." After a speech to a gathering of business leaders, Volcker was asked for his view of the proposal -- which would involve financial firms with assets of more than $50 billion, such as Bank of America Corp. and Citigroup Inc., as well as American International Group Inc. -- and whether he thought it would increase bank lending.
Geithner Confident AIG Rescue Was ‘Necessary’ Action U.S. Treasury Secretary Timothy Geithner said he’s confident the government took the appropriate steps in rescuing American International Group Inc., though the need to do so was “deeply offensive” to him. “It was necessary to do,” Geithner said in an interview today on CNBC. “If we could have done it differently, we would have done it differently, but this was the best way to do it.”
Bernanke Fights to Keep Bank Powers in Senate Letter Federal Reserve Chairman Ben S. Bernanke told senators a proposal to strip the central bank of its authority to supervise banks could harm its ability to conduct monetary policy and provide emergency aid to lenders. The Fed’s role as supervisor provides information that helps officials decide when to change interest rates, the central bank said in an 11-page paper that makes the case to retain its examination powers. The document and a cover letter from Bernanke were sent yesterday to members of the Senate Banking Committee and released by the Fed today.
Report on Stimulus Bill's Impact Has a Problem of Numbers On Wednesday, the Council of Economic Advisers released its second quarterly report on the effect of the American Recovery and Reinvestment Act, better known as the stimulus bill. The report has already come under attack from critics of the Obama administration, including U.S. Rep Darrell Issa (R-Calif.), who characterized its conclusions as "self-serving and deceptive." Given the confusion about the numbers and their vulnerability to attack, it is worth asking if the report, rather than increasing worker confidence, has actually undermined the administration's position. This is likely to become a particularly pressing issue as the President is currently pushing another job creation bill.
Trader Talk With Art Cashin
U.S. Foreclosures May Rise to 3 Million This Year A record 3 million U.S. homes will be repossessed by lenders this year as high unemployment and depressed home values leave borrowers unable to make their house payment or sell, according to a RealtyTrac Inc. forecast. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. More than 4.5 million filings are expected this year, including default or auction notices and bank seizures, said Rick Sharga, senior vice president for the Irvine, California-based seller of default data and forecasts. There were 3.96 million filings in 2009.
Foreclosure Filings Still on the Rise. Labor Market is Major Influence on Outlook One in every 45 housing units in the United States was the subject of a foreclosure notice during the year just ended, and the number may still be heading up according to data released today by RealtyTrac. Over 3.95 million foreclosure filings of all types were served against U.S. homeowners, a 21 percent increase in foreclosure notices over 2008 and a 120 percent increase over 2007. The number of properties against whose owners the actions were served represented 2.21 percent of all U.S. housing units compared to 1.84 percent in 2008 and 1.03 percent in 2007.
Foreclosure Filings Hit New Record in 2009: RealtyTrac In 2009, a record 2.8 million properties received a foreclosure filing, a 21% jump from 2008 and a 120% increase from 2007, according to online marketplace RealtyTrac, which reported the numbers Thursday. A foreclosure filing includes default notices, scheduled foreclosure auctions and bank repossessions. In all, 2.2% of all U.S. housing units, or one in every 45 properties, received at least one foreclosure filing during the year. That number increased from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006.
Payment Shock Concerns Grow as Billions in Interest Only Loans Face Recast Date Fitch Ratings warned today that billions of prime and Alt-A mortgages that were written as interest-only (IO) loans are due to recast over the next two years. $47 billion of these loans convert to fully amortizing loans in the next 12 months and a total of $80 billion in Prime and Alt-A loans and another $50 billion Subprime loans will recast by the end of 2011. These conversions will result in substantially higher monthly payments.
Payment Shock Still Looms - Option ARMs - most toxic product ever created and getting worse. CNBC's David Faber discussing a report out yesterday on option ARMs.
Elected official says Geithner is ‘dubious’ Given that it’s virtually impossible to get anyone on Wall Street to admit they think Secretary of the Treasury Tim Geithner’s capacity to be trusted as an effective steward of our markets is nil, we got really excited when heard this. Chriss Street, the elected Treasurer of Orange County, Calif. —who knew that the wealthy So-Cal county, that former SEC Chairman Chris Cox was once a congressional rep, for has the second largest budget in the state — is telling East Coast-based hedge fund managers that he doesn’t think Geithner has the ethics to do the job. Street’s been telling hedgies he believes Geithner has lost credibility and, in fact, if you knew how he operated while at the NY Fed, he actually never had the independent credibility needed for such a powerful job as head of the government’s private bank.
Doug Casey Says Stock Market Set to Crash Doug: Well, it's nothing but a gut feeling, but I think the stock market is riding for a big fall this year. Everyone was afraid the world was going to come to an end a year ago, and it almost did. But governments all around the world stepped in and printed up trillions of their various currency units – it's not just the United States. And still, retail price inflation hasn't blossomed. It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem. It stems from an economic version of the theory that all we need to fear is fear itself. As long as we have the right psychology, everything is going to be okay – total nonsense.
Yes, It's Okay To Walk Away From Your Mortgage As many Americans begin to realize that it will be years (if not decades) before their houses are worth what they owe on them, the idea of walking away from your mortgage is going mainstream. Not surprisingly, the mortgage industry is doing everything it can to prevent this, including telling homeowners that they have a "moral obligation" to pay. But do they? Is it okay to walk away from your mortgage for no other reason than it doesn't make financial sense to keep throwing your hard-earned money away?
Holder: FBI warned about mortgage fraud problem in 2004 The commission investigating the causes of the financial crisis is looking into the assertion that the FBI issued a warning of a looming outbreak of mortgage fraud in 2004. The Financial Crisis Inquiry Commission quizzed Attorney General Eric Holder about whether the FBI acted on the warning. Chairman Phil Angelides also is raising the possibility that the FBI's focus on national security concerns after the Sept. 11 attacks might have weakened the bureau's ability to get a handle on the kind of risky banking practices that led to the worst financial crisis since the Depression.
Shiller's 2010 Housing Outlook
Google's China Hypocrisy Ignores Deep CIA Connections The western media is currently full of articles on Google's 'threat to quit China' over internet censorship issues, and the company's 'suspicion' that the Chinese government was behind attempts to 'break-in' to several Google email accounts used by 'Chinese dissidents'. However, the media has almost completely failed to report that Google's surface concern over 'human rights' in China is belied by its their deep involvement with some of the worst human rights abuses on the planet:
GM puts brakes on Hummer production General Motors has suspended production of Hummer vehicles pending Chinese government approval of its deal to sell the unit to Sichuan Tengzhong Heavy Industrial Machinery Co., a GM spokesman said Thursday. The H3 and H3T, the last two Hummer models still being made, are produced at GM's Shreveport, La., factory. The factory, which also makes the GMC Canyon and Chevrolet Colorado pick-ups, will stay open. The plant employs 1,120 people and no layoffs are planned.
Small Business Trends Suggest No Recovery On Horizon The National Federation of Independent Business (NFIB) Small Business Economic Trends for January 2010 is filled with 23 pages of graphs and text that suggest there is no recovery on the horizon. Let's take a look at a summary and some of the graphs. Charts and text with permission of and copyright of the NFIB Research Foundation. Highlights in red are mine.
Fitch: Retail Credit Card Defaults Near Records Credit card defaults on store-branded accounts hit near record levels during the holiday shopping season and the trend is likely to continue this year, Fitch Ratings analysts said Thursday. Fitch's report shows that more than one in every eight dollars of receivables was written off as uncollectible during the November collection period on an annualized basis.
Middle Class Discontent Middle class Americans feel ignored by Washington and corporations and are split over key economic policies, according to a new survey by Allstate and the National Journal. Allstate Chairman Tom Wilson discusses the results.
P&G to sell directly to customers on Web site Test could put it in competition with big retailers it does business with The maker of Tide detergent, Pampers diapers and Gillette shavers is taking hundreds of its popular consumer products directly to shoppers through a new Web site. The "eStore" that Procter & Gamble Co., the world's largest consumer products maker, is testing could put it in direct competition with some of its biggest customers, major traditional retailers.
Tentative Deal Forged on Health Bill Tax The White House reached a tentative agreement with union leaders early Thursday to tax high-cost insurance plans, officials said, removing one of the major stumbling blocks in the way of a final compromise on comprehensive health care legislation sought by President Barack Obama. Complete details of the tentative deal were not immediately available, although the White House was expected to present it to senior lawmakers later in the day. Union leaders also were returning to the White House.
White House closes in on health compromise The prospect of a vast overhaul of the US healthcare system gained momentum on Thursday after the Obama administration said it was “very, very close” to finalising a compromise between competing legislative proposals on Capitol Hill. Democratic hopes of passing a reform bill were stoked by news that the White House had reached a tentative deal with labour groups that would raise the threshold at which a tax on so-called “Cadillac” plans would apply and exempt until 2018 collectively bargained health benefits. Officials on Capitol Hill and at the White House would not offer more details of the compromise, but AFL-CIO labour federation officials said leaders in both House and Senate were “on board” with the deal.
IBM Bursts Into The Cloud A day after HP and Microsoft teamed up, competition gets more intense in corporate cloud computing. International Business Machines on Thursday announced the largest-ever enterprise cloud computing venture, with the migration of Panasonic to all of IBM's LotusLive collaboration services, including e-mail and social networking. The cloud computing market is expected to grow 28% annually, from $47 billion in 2008 to $126 billion by 2012, IBM (IBM - news - people) said, based on various market estimates. IBM has launched 11 cloud computing labs worldwide, most recently in Hong Kong. “Our goal is to have more than our fair share of market,” Sean Poulley, vice president of online collaboration services, told Forbes. “We think this is an exciting growth area.”
Follow the Law, China Tells Internet Companies BEIJING — Two days after Google announced that it would quit China unless the nation’s censors eased their grip, the Chinese government offered an indirect but unambiguous response: Companies that do business in China must follow the laws of the land. The comments, by two different officials on Thursday, suggested that China was unlikely to give ground on Google’s demands that its search engine results be unfiltered. In announcing its decision on Tuesday that it might leave the world’s biggest Internet market, Google also cited a series of cyberattacks aimed at breaching the accounts of human rights advocates on its e-mail service, Gmail.
Google’s threat to China traces back to founders They pledged to put principles before profits before company went public Google Inc. co-founders Sergey Brin and Larry Page have always said they put their principles before profit, even to the point of using their control of the company to take a stand. The billionaires' idealism underlies a potentially expensive decision disclosed this week: Google's threat to leave China's rapidly growing Internet market in defense of free speech and its users' privacy rights.
Accounts invaded, computers infected – human rights activists tell of cyber attacks Well-known human rights advocates in China and a Tibetan rights activist in the United States have disclosed that their Gmail accounts have been compromised. They came forward after Google's announcement of a sustained cyber attack on activists and other illicit accessing of accounts, but stressed that the problem goes back much further. Some in China said they had repeatedly suffered from hacking and blamed the authorities.
Google attacks traced back to China, says US internet security firm Verisign's iDefense Labs says IP addresses of attack 'correspond to single foreign entity consisting either of agents of Chinese state or proxies thereof' An American internet security firm says it has traced the sophisticated cyber-attack against Google and 30 other US companies back to the Chinese government "or its proxies". In its announcement that it might quit China, Google stopped short of accusing the Chinese government of responsibility for the attacks. However, the report from Verisign's iDefense Labs said the internet addresses "of the attack correspond to a single foreign entity consisting either of agents of the Chinese state or proxies thereof".
ECB - Greece No California At its monthly press conference, European Central Bank (ECB) President Trichet was assertive in calling for fiscal discipline in its 16 member states that comprise 330 million people using the euro. Asked about bailing out Greece or other member states with severe fiscal challenges, Trichet called the ECB collateral framework crystal clear, applying erga omnes (equally) to every member state; no special treatment will be provided to any one member. In the euro zone, member states may receive funding from the ECB by posting collateral, but only if their debt is appropriately rated by the major credit rating agencies.
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Thurs 01.14.2009
Gold price heading toward $1,650: Jim Sinclar The gold price boom in the last one year has turned several commodities analysts into bullion experts. But when it comes to consistent forecast of gold price, everyone loves to listen to what Jim Sinclair utters. A seasoned gold bull, Sinclair has been arguing all these years that gold is real money and thus gold price is headed for a boom.
THE PROBABILITY OF A CRISIS WILL BUILD DURING 2010 So says the team of equity analysts at Barclays. Although policymakers helped avoid the second Great Depression, Barclays believes we have simply kicked the can down the road. As their head of U.S. equity strategy said in November, the likelihood of Japanese style de-leveraging stagnation remains very high. Like TPC, the bank argues that 2010 will be a year of halves. While the first half is likely to be characterized by more of what we saw in 2010 (improvement in corporate profits and accommodative government actions) the second half is likely to be characterized by an increasing burden on the consumer as the baton is handed from the public sector to the private sector. Barclays says this passing of the baton has the potential for an even greater crisis as higher taxes, higher interest rates and lower government spending create increased risks.
545 People Charlie Reese Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits? Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don't propose a federal budget. The president does.
You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don't write the tax code, Congress does.
You and I don't set fiscal policy, Congress does.
You and I don't control monetary policy, the Federal Reserve Bank does.
Panel warns of perils of ballooning debt Investors may lose confidence The nation's ballooning debt will inevitably limit America's future wealth by reducing the size of the economy and the growth of its capital stock, while increasing the nation's dependence on foreign creditors, according to a new survey by a panel of top fiscal policy experts. A report issued Wednesday by the National Academy of Sciences (NAS) and the National Academy of Public Administration warned that, unless policies are changed, the cost of financing the government's rapidly expanding debt will rise sharply, especially after today's relatively rock-bottom rates return to historical levels. This cost will cut into funds to finance other government programs, the report, "Choosing the Nation's Fiscal Future," concluded.
Jumbo Mortgage Delinquencies Soar as High-End Home Inventory Builds Delinquencies on jumbo mortgages nearly tripled to 9.2% in December 2009 compared to the 3.2% rate December 2008 as the inventory of expensive homes continues to rise, according to a report from Fitch Ratings. This shouldn't be much of a surprise to the banks that allowed option adjustable-rate mortgages and interest-only mortgages to be concentrated in the high-cost housing market. Interest-only loans were commonly used to purchase homes valued at $750,000 or more. These exotic loans allowed borrowers to postpone making principle payments for three, five or seven years, but now those interest-only periods are ending, and the loans are beginning to reset to much higher payments.
Marc Faber's Outlook For 2010
A Funds Industry Built on Turning Debt into an Income Paying Asset In today's financial multiverse we find smart people saying seemingly sensible (but utterly destructive) things about debt. We also find Australian household debt-to-GDP ratios leading the Western world at 112%. And we find heaps of evidence that your best bet for a financial future is to retire now. More on all that in a moment. First up today is this little pearler from Bloomberg, "Australian banks, including Westpac Banking Corp. and Commonwealth Bank of Australia, risk more loan defaults as the government unwinds economic stimulus and the central bank raises interest rates, according to Fitch Ratings."
U.S. Chamber Warns of Double-Dip Recession The U.S. Chamber of Commerce warns that the United States economy faces a "double-dip" recession thanks to taxes and regulations on business imposed by the Congress and the Obama White House. In an interview with CNBC, Donohue said "uncertainty" over the potential expiration Bush tax cuts and other tax increases in legislation such as the healthcare bill is hurting employment by delaying hiring.
Bernanke Challenged on Rates' Role in Bust Federal Reserve Chairman Ben Bernanke says low interest rates engineered by the Fed in the early 2000s aren't to blame for the housing boom and bust. But he hasn't convinced fellow economists. Two surveys conducted by The Wall Street Journal this week found many economists believe low rates did contribute to the bubble.
The Biggest Financial Deception of the Decade Enron? Bear Stearns? Bernie Madoff? They're all big stories about big losses and have hurt a lot of employees and investors. But none come close to getting my vote for the decade's most dastardly deception... First came Enron, with $65.5 billion in assets, going belly-up and becoming the largest bankruptcy in US history at that time. The stock went from a high of $84.63 in December 2000 to a whopping 26¢ one year later. And what had we been told by the media? Fortune magazine dubbed Enron "America's Most Innovative Company" for six consecutive years.
From 700 billion to 12 trillion / The Economic Crisis that was and yet is In the movie ’2012’, in addition to blowing and sinking most of planet Earth to kingdom come, there also is made cryptic reference to other types of major catastrophes that may overtake this present world in the not too distant future. The collapse of the US dollar is one such event mentioned in the movie. Charlie, the only person in the movie who seems to be telling the truth is portrayed as ‘conspiracy nut’ which is the norm in Hollywood movies. People who reveal the world to be not quite as simply explicable as the mainstream media would have us believe are portrayed as suffering from paranoia or otherwise not ‘normal’, as for instance the Mel Gibson character in the movie ‘Conspiracy Theory’. At about 31 minutes into the movie ‘2012’, Charlie details the collapse of the ‘Economy’ to Jackson. To paraphrase Charlie tells Jackson very animatedly with lot of explosive noises (BOOM!) that first the stock market collapses, then the economy, then the dollar goes boom!
Fed Publishing Mathematical Gibberish to Hide Balance Sheet Secrets The Fed is pulling out all stops to defend its secrets, including publishing self-serving mathematical gibberish. Please consider the St. Louis Fed article on the Social Cost of Transparency. Unless you are an academic wonk, you will be stymied by pages that look like this .... Hiding Behind Empirical Formulas The problem is Bernanke places his complete faith in such gibberish, so much so that he has lost all sense of real world action by real people. The result is that in spite of his PhD, he could not see a housing bubble that was obvious to anyone using a single ounce of common sense.
Gold Rebounds on Outlook for Low U.S. Interest Rates, Dollar Gold rose for the third time in four sessions on speculation that the Federal Reserve will hold U.S. lending rates low for an extended period, eroding the value of the dollar. The greenback dropped as much as 0.5 percent against a basket of six major currencies. Gold rose 24 percent last year as the central bank kept rates at close to zero percent to spur the economy, helping send the dollar down 4.2 percent.
Gold Climbs as Dollar Falls, Silver Advances New York gold futures on Wednesday advanced for the third time in four days as the US dollar was pressured lower on expectations that the Fed would hold interest rates low for some time. The yellow metal on Tuesday had dropped the most in three weeks on profit taking and news of China clamping down on its monetary policy. In other metals, silver gained 1.6 percent but platinum finished down 0.3 percent. Platinum was not the only commodity to fall. New York crude oil prices dropped for a third straight day and below $80 a barrel after a government report showed higher than expected inventories. US stocks rallied late, with the Nasdaq rising the most at 1.12 percent.
Gold and Silver Recover from Earlier Plunge on Fresh U.S. Dollar Weakness THE PRICE OF GOLD regained a third of yesterday's 2.5% plunge in London dealing on Wednesday, bouncing as the US Dollar eased back and Wall Street futures pointed higher from Tuesday's 1.0% drop. By the time New York traders reached their desks, gold priced in Dollars stood little changed from last week's close at $1137 an ounce. US crude oil contracts meantime dropped below $80 per barrel as Asian stock markets closed sharply lower, catching up with Tuesday's late announcement from the Chinese central bank that it's raising the amount of cash commercial banks must keep in reserve to 16% of deposits.
Silver bull run to get into top gear in 2010 Silver bulls have been rewarded for their patience during the recent sell off with a very strong bullish weekly reversal bar, one that also forms one end of a very nice up trend line. For the moment, the momentum is now back in the hands of the bulls, and there seem to be numerous technical clues that suggest that another attempt to take out the March 2008 near $21.19 may be launched soon. A look at the weekly chart for cash Silver may help us discern how far this new reversal may run.
3 Way to Cash In on Precious Metals If you read the New York Times last weekend, you may have noticed an article on China's new foray into the business of solar collectors. Solar collection is a form of solar energy. However, rather than use photovoltaic panels to convert light directly into electricity, solar collection uses hundreds of thousands of mirrors (called heliostats) spread over a wide area to concentrate the sun's rays on tanks of water. The sunlight turns the water into steam which is then used to drive a turbine.
US gold ends up on physical demand, dollar dip U.S. gold futures ended higher in choppy trade on Wednesday as a lower dollar prompted physical buying and short covering after the previous session's sharp losses. Gold for February delivery GCG0 settles up $7.40 at $1,136.80 an ounce on the COMEX division of the New York Mercantile Exchange.
China eager to buy IMF gold for $1,000 per ounce Two months after India’s Reserve Bank made big global news with the purchase of 200 tonnes of gold from the International Monetary Fund (IMF), bullion traders are now waiting for the ‘golden’ news of 2010. The news in question: Will China buy the remaining 203 tonnes of gold from IMF soon?
Gold’s fluctuation raises hedge skill against currency A year ago we said we believed a full court press by G10 central bankers, finance ministers and governments would succeed in at least halting the slide. It did, and markets responded more strongly than even we had hoped for, and we were among the more optimistic observers 12 months ago. We also said a year ago that you were unlikely to see a repeat of 2008. It’s safe to say the same comment applies again. 2010 will not look like 2009.
Currencies Can Evaporate, But Not Silver or Gold Hugo Chavez, president of Venezuela, started 2010 off by devaluing the Venezuelan bolivar by 50% from 2.15 per dollar from 4.3 per dollar, along with several other silly little limits. This is continuing the theme of currency devaluations from late 2008 and 2009. But the evaporation of currency is not only limited to third world socialist governments with eroding infrastructure but also happening to every major currency. For cash balances the precious metals are the only refuge.
Silver prices likely to surge faster than gold As fears of a dollar meltdown have loomed ever larger in recent years, major investors, including central banks, have moved significant portions of their cash reserves into the euro, the currency of the European Union (EU). And while it is true that the euro offers some shelter from the American economic catastrophe, the currency does come with baggage that investors should not ignore.
How to protect you COMEX gold and silver bars A science oriented CIGA has developed a technological application that is unique to the precious metals market for the purpose of determining if your bullion has been counterfeited by including tungsten alloy. This technology is completely safe and non-destructive to the precious metal, and will be effective on everything from fractional ounce coins all the way up to the full size 100 and 1,000 ounce COMEX bars of gold and silver.
US Mint 2009 Silver Eagles Sell Out 2009 American Silver Eagle Bullion coins have sold out, the United States Mint announced late Tuesday morning. The remaining inventory was depleted earlier in the day, leaving Silver Eagles on the sidelines until Jan. 19. The US Mint reconfirmed today that the 19th is still the scheduled launch time for 2010 American Eagle gold and silver one ounce bullion coins.
Is 'short contracts' depressing silver prices? Are the concentrated holdings of silver “short contracts” on the COMEX commodities exchange artificially depressing the price of the precious metal? Yes, according to noted silver analyst, Theodore Butler, in a newsletter released by Investment Rarities, Inc., a Minneapolis-based investment firm.
Why you should move your money Bill Maher On Ending Abusive Relationships - With Your Bank
Dollar mixed against rivals The dollar was mixed against major currencies late Wednesday on speculation that the Bank of England will raise interest rates and after the Federal Reserve said economic activity is weak but improving. What prices are doing: The dollar was down 0.2% against the euro at $1.451 and fell 0.7% versus the British pound to $1.628. The greenback edged up 0.5% against the yen to ¥91.44.
Euro's Woes Will Be Tough Test The European single currency is facing its toughest test since inception in 1999 as the public finances of some of its 16 member nations slide deeper into crisis. The euro itself has slipped off recent highs, but isn't showing signs of a rout. Since hitting a high of $1.51 against the dollar in early December, the euro as of Wednesday had settled to just over $1.45.
Financial Crisis Inquiry Commission hears from bank CEOs Four top bank chief executives told a panel probing the financial crisis Wednesday that they made mistakes but didn't realize how bad they were at the time. In a heated exchange in Washington with the head of the Financial Crisis Inquiry Commission, Lloyd Blankfein, Goldman Sachs' CEO, agreed the banks had assumed too much exposure to risk at the height of the crisis, and he wished he could go back and change things.
More Foreclosure trouble ahead
What the Deflationists Are Missing An interesting article by Ambrose Evans-Pritchard came my way the other day. It’s worth a read, if for no other reason than that he paints an appropriately dark picture of the current state of the U.S. economy. While I very much share Mr. Evans-Pritchard’s view that the global economy is far from out of the woods, our views diverge in that he sees devastating deflation speeding our way down the tunnel. Casey Research readers of any duration know that we see devastating inflation. While we could both be right, with deflation first and inflation later, I’m not so convinced.
Reckoning With a Delusional Stock Market Poor Obama. The man is in way over his head. And what can he do? Few people understand what is going on in the economy...and none of them work for the Obama administration, as near as we can tell. The only one who seemed to be on the ball was his advisor, Paul Volcker. But Volcker got edged out by Larry Summers, a man with a long history of bad ideas on economic matters. Summers is a stalwart member of that very special club - modern economists. Never has an unarmed professional group done more damage to a society than Summers and his colleagues
Put In A New Pitcher: Time To Fire Tiny Tim Geithner As Unemployment Festers, A New Economic Strategy Team Is Needed When a pitcher gets tired, starts throwing walks or being hit, most attentive managers take him out of the game. When policies fail, as in the case of the security system that didn’t work to spot the alleged Christmas bomber, the President starts acting tough with bluster about the buck stopping here and orders to straighten out a failed system. But when tens of thousands of workers, once again, lose their jobs, the people responsible get winked at, not yanked. The President is contrite, his rhetoric subdued, even as the recovery he keeps talking about goes south.
House Plans To Subpoena Geithner Over AIG Decisions; Geithner's Got To Go Representative Edolphus Towns, chairman of the House Oversight and Government Reform Committee plans a Subpoena to probe Geithner's AIG decisions. Treasury Secretary Timothy Geithner came under increased scrutiny Tuesday when a key congressman said he would subpoena the Federal Reserve Bank of New York about bailout decisions made on Geithner's watch.
House subpoenas Treasury Sec. Geithner's AIG e-mails, phone logs A House committee probing bailout deals has subpoenaed the Federal Reserve Bank of New York for correspondence from Treasury Secretary Timothy Geithner and other officials. The House Oversight and Government Affairs Committee is examining New York Fed decisions that funneled billions of dollars to big banks including Goldman Sachs Group and Morgan Stanley.
Redacted AIG filing might have spotted worst deals Information about the American International Group bailout that regulators agreed to keep secret may reveal which banks held some of the worst performing mortgage-related securities at the time of the rescue. Reuters reported Monday that the Securities and Exchange Commission approved a request last May by AIG to keep confidential some portions of a year-old regulatory filing that provided details about the funneling of tens of billions of federal bailout dollars to banks like Societe Generale, Goldman Sachs, Deutsche Bank and Merrill Lynch. The SEC's order granting confidential treatment to the redacted portion of the filing, known as Schedule A - List of Derivative Transactions, lasts until November 25, 2018.
Treasury Investors Most Bearish in 2 Years on Supply Investors are the most bearish on Treasuries in more than two years as the reliance on government debt to revive economic growth weighs on sovereign issues, a survey of Bloomberg users showed. Yields on the benchmark U.S. 10-year note will rise over the next six months, according to the Bloomberg Professional Global Confidence Index. The 5,437 respondents from New York to Tokyo to Paris were optimistic on the outlook for the global economy for a sixth consecutive month, pushing the index, which began in November 2007, to a record high.
Black says Geithner 'cover-Up' Also a Bernanke Scandal Associate professor of economics and law at the University of Missouri'Kansas City, talks with Bloomberg's Betty Liu about Geithner;s role in decisions by the Fed
BILL MOYERS JOURNAL | William K. Black | PBS The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with Bill Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.
The Bankers’ Lineup The four bankers of the apocalypse strode into the room for the Congressional equivalent of a perp walk. They stood in a crooked line, and raised their hands haltingly, looking at one another as if to see whether the other guys were going to do it, too. It was one of the more indecisive swearings-in you will ever see on Capitol Hill. As cameras clacked Wednesday, four of the nation’s highest financial fliers – or, as some have concluded – lowest of low-lifes - took their places for the swearing-in before the 10-member commission charged with determining the causes of the nation’s financial debacle.
Fed officials say need firm recovery before hike Two top Federal Reserve policy-makers said on Wednesday that the U.S. central bank will need to be certain the economic recovery is firmly in place before tightening its monetary policy stance. New York Federal Reserve Bank President William Dudley and Chicago Federal Reserve Bank President Charles Evans said continued credit problems and a high rate of unemployment are constraints on the U.S. economic recovery..
Tim Geithner goes nut screaming and cursing at Ben Bernanke while licking China's boots Webster Griffin Tarpley explains why Tim Geithner was screaming and cursing at Ben Bernanke while licking China's boots - recorded on August 4th 2009
Morgan Stanley: China's Central Bank Has Tightened And Now Everyone Will Follow Morgan Stanley's Joachim Fels points out that China latest hike for its banks' reserve requirement ratio says a lot about what's to come for other major economies. Basically, he agrees with us that the Fed has been replaced by the PBOC. Central banks will try to mop up excess reserves in a similar fashion prior to actually hiking rates. Note in the chart to the right, we have G10 major developed economies' interest rates vs. those of Asia Ex-Japan (AXJ).
Krugman: Financial Reform Can't Stop Next Bubble Banking reform probably can't prevent bad loans or bubbles, only lessen the damage they do, writes Nobel Prize Winning economist Paul Krugman. In his recent column in The New York Times, Krugman, a professor of economics at Princeton University, notes reform should focus on ensuring that bubbles don’t destroy the U.S. financial system when they burst. “Bear in mind that the implosion of the 1990s stock bubble, while nasty — households took a $5 trillion hit — didn’t provoke a financial crisis,” writes Krugman.
Rising Unemployment And Obama's Hard Turn To The Left Should Freak Out Owners Of Bank Stocks Here’s another reason not to own financials: if Obama responds to the collapse of his poll numbers by taking a left turn towards radical populism, the proposed $120 billion “fee” on the banks may be the thin end of the wedge. By now the White House must have figured out that it’s stuck with 20%+ permanent unemployment, in which case the Democrats are toast in 2010 and Obama is out on his ear in 2012.
Jobs impact of stimulus disputed Taking its measure in election year The White House is touting "stunning" job numbers from the nearly year-old stimulus bill, drawing ridicule from Republicans who point to an economy still shedding jobs, among other evidence that stimulus money hasn't fulfilled its billing as an employment bonanza. With all sides agreeing that the outcome of this November's congressional elections rides heavily on the jobs picture, the issue is being aired out at the highest levels. President Obama had planned to emphasize jobs with a stop at a Maryland job-training center Wednesday, though that was canceled so he could spend time working on relief efforts for earthquake-stricken Haiti.
Unemployment The Most Important Challenge Facing the U.S. Economy From the start of the economic and financial crisis that began in 2007, I made it clear that this was not a garden variety recession. Instead, I said, it was the aftermath of the bursting of the largest real estate bubble the world had ever seen. Many developments of the past three years support my thesis. Now I predict that this will not be a garden variety recovery either. We should expect some false starts in the economy and a bear market rally for stocks.
Real Estate Bull Laub Sees Unprecedented Workout From Bad Debt Kenneth Laub has been through three commercial real estate boom and bust cycles during almost five decades as a broker and consultant to corporations such as Hess Corp. and International Paper Co. He says the current downturn will overshadow all of the others, Bloomberg Markets reports in its February 2010 issue.
Subprime Problems Persist, as Alt-A, Option ARM Crisis Brews While the impact of subprime defaults are still being felt in the mortgage finance market, other esoteric mortgage products that were popular during the housing boom, particularly Alternative-A (Alt-A) and option adjustable rate mortgages (ARMs), may provide another set of speed bumps on the road to recovery. Fitch Ratings‘ US subprime RMBS Price Index increased more than 5% month-over-month in January. The index tracks prices of residential mortgage-backed securities (RMBS) in the US.
Jacksonville foreclosures up 56% in 2009 Florida registered the nation’s third highest foreclosure rate in 2009, with 5.93 percent of its housing units receiving at least one foreclosure filing during the year, according to data just released by online foreclosure tracker RealtyTrac Inc. — an increase of 34.1 percent from 2008 and 212.6 percent from 2007. One in every 17 Florida homes received a foreclosure filing during the year. Florida also had the dubious distinction of having the nation’s second largest total of foreclosures in 2009, behind California, with 516,711 properties receiving a foreclosure filing. But fourth quarter activity was down nearly 9 percent from the previous quarter.
RealtyTrac: Colorado 10th in 2009 foreclosure rate Colorado saw foreclosure filings on 50,514 homes in 2009, up a small fraction from 2008, but with foreclosures rising sharply in other states, Colorado's foreclosure-rate ranking among all states fell from fifth to 10th, according to an annual report by RealtyTrac Inc. Colorado's total of foreclosed properties on the year was up 0.23 percent from 2008's 50,396, according to RealtyTrac, an Irvine, Calif.-based private marketer of foreclosure properties.
RealtyTrac: Foreclosures hit record high in '09 Ground zero for the real estate bust, Florida ranked among the top three states in the nation for the most foreclosures in 2009, according to RealtyTrac. The Irvine, Calif.-based company said the Sunshine State saw 5.93 percent of its homes receive at least one foreclosure filing during the year. Only Nevada and Arizona had more. However, Florida posted the nation’s second-highest number of foreclosure filings, with 516,711 properties going into default in 2009, up 34 percent from the previous year. That translates to one in every 17 homes.
Jim Rogers - overview of markets. New bull market in commodities.
U.S. Probes 15 FHA Lenders With High Defaults Federal housing officials are investigating 15 mortgage companies that have suspiciously high default rates for loans backed by the Federal Housing Administration. The Department of Housing and Urban Development's Office of Inspector General says it served subpoenas to corporate offices of the companies demanding documents and data about failed loans.
Taxorama: 7 changes on the docket Everybody's angry at banks. Federal deficits are wide and need addressing. And the president and Congress are starting to map out next year's budget. That means they're talking taxes in Washington. The capital is awash in proposals for how to raise revenue and score political points.
Dodge CEO: "We cannot screw it up this time" During the past decade, Ralph Gilles helped create some of Chrysler's most successful models: the 300C Sedan, the Dodge Magnum, and the redesigned Dodge Charger. But soon after the industry wunderkind became the company's design chief, Chrysler and America's auto industry collapsed. Italy's Fiat and a U.S. government bailout saved the company, and this past fall, executives pledged to become more efficient, reduce costs, double Chrysler's sales globally, nearly double its U.S. market share, and return to profitability in the coming years.
Back to the Future: GM Bets on Trucks General Motors Co. has freed up cash to fund a major update of its full-size pickups, a bet that consumers and businesses will resume buying trucks after a long lull in sales. Chairman and Chief Executive Edward E. Whitacre Jr. has agreed to fund the move, said GM product chief Tom Stephens. The remodeling could cost the company close to $1 billion, a person familiar with the matter said. GM, which had relied on full-size pickups such as the Chevrolet Silverado for a major portion of its U.S. revenue and operating profit, had put off redesigning the trucks as its finances collapsed and it underwent a government-backed bankruptcy reorganization last year.
Shortfalls for U.S. cities could reach $56 billion U.S. cities will face a collective budget shortfall of at least $56 billion over the next two years, with the current recession not seen hitting bottom until 2011, according to a report on Wednesday. The National League of Cities said that because economic recoveries in cities lag national ones by about two years, the pain from the recession that began in 2007 could continue for years to come. The collective shortfall could reach $83 billion through 2012, the league said. Cities will seek to cure revenue declines and spending pressures with higher service fees, layoffs, unpaid furloughs, and drawing on reserves or canceling infrastructure projects, the report said.
California Creditors Dread IOUs With Aid Plea Failing California’s hopes are fading for federal help in closing a projected $19.9 billion deficit that has caused the lowest-rated state’s borrowing costs to rise 24 percent since September. “We recognize they have enormous problems,” David Axelrod, senior adviser to President Barack Obama, said in an interview. “But we can’t solve all of those problems from Washington.”
Celente on 2010: Wave of Terror, Internet revolt & War on migration
Credit CARD Act interest rate protections already in effect If you haven't already received word from your credit card company about an increase in interest rates or fees on your existing account balances, consider yourself lucky. That’s because the window has closed on the banks’ ability to raise interest rates at any time for any reason with little notice. "Essentially, once you got past Jan. 8, the restrictions on ability to change major terms are already in effect now," Kenneth J. Clayton, senior vice president and general counsel for card policy for the American Bankers Association trade group, acknowledged Wednesday during a press briefing. "The protections that are afforded on the 22nd [of February] already exist."
Ross: U.S. Needs Another Cash for Clunkers Billionaire investor Wilbur Ross said on Wednesday that the U.S. economy is nowhere near a full recovery and forecast 2010 as a year of moderate growth for the nation's automotive industry sales. Ross also said he believed that automakers General Motors Co. and Chrysler both were on the path toward survival after undergoing their government-supported bankruptcy reorganizations in 2009.
How much does Congress feel Americans' pain in recession? Times are tough - very tough - for millions of Americans... but you could never tell by watching the way Congress spends our tax dollars on themselves. CBS News has a stunning report on the all-expense paid trip at least 20 members of Congress made to the Copenhagen climate summit last month. The bipartisan delegation led by House Speaker Nancy Pelosi was so large - it needed three military jets - two 737s and a Gulfstream Five. Some members brought along their spouses, children... plus there were also senators and staff members who made the trip to Denmark - most of them flying commercial.
One in Eight Americans Receives Food Stamps Some 37.9 million people — one in eight Americans — received food stamps to help buy food at latest count, the government said on Tuesday as enrollment set a record for the ninth month in a row. Food stamps are the primary federal anti-hunger program. It helps poor people buy groceries. The economic stimulus package boosted benefits by $80 a month for a family of four. Participation has surged since the financial-market turmoil more than a year ago and has set a record each month since December 2008.
The Food Stamp Story
Health care: A 'goldmine' for fraudsters There's a group of people who really love the U.S. health care system -- the fraudsters, scammers and organized criminal gangs who are bilking the system of as much as $100 billion a year. Health care identity theft dominated all other crimes in the sector last year, according to Louis Saccoccio, executive director of the National Health Care Anti-Fraud Association (NHCAA), an advocacy group whose members include insurers, law enforcement and regulatory agencies.
White House Defends Health Tax Opposed by Labor The White House on Monday defended President Barack Obama's support for taxing high-value insurance plans to pay for covering millions of uninsured Americans. The president is scheduled to meet with labor leaders on the issue Monday afternoon. Labor opposes the tax, arguing it would hurt union members who negotiated good health benefits instead of salary increases.
The cashless society According to the Telegraph there is the distinct possibility that the ‘cashless society’ may be just around the corner. In the report, Steve Perry of Visa Europe argues that card payments are cheaper than cash. What our Steve hasn’t hoisted in is that cards ARE cash. Or maybe he has but does not want us to realise the concept. The main reason for a noteless and coinless society he says is that electronic is cheaper.
Fed’s Beige Book: Economic expansion slows in Colorado region The economy in Colorado and six neighboring states “expanded more modestly in late November and December” than in previous weeks, the U.S. Federal Reserve reported in its latest “Beige Book” survey of the region’s business executives. Reports from the 12 Federal Reserve Districts around the nation showed slightly more robust improvement in most other regions of the nation. In Colorado and neighboring states that are part of the Fed’s 10th District, the latest Beige Book was in general less optimistic than the last six-week report, issued Dec. 2.
'Notional' Security By Thomas Sowell The latest "screw-up" that let a man with explosives get on a plan on Christmas day is only part of a larger laxness and irresponsibility when it comes to national security. This administration pays lip service to national security and gives out with a lot of rhetorical notions that makes it notional security instead of national security. The Muslim major who was arrested for the murders of American soldiers at Fort Hood had left so many clues to his hatred of this country that all you had to do was count the dots, without even connecting them, to see where he was coming from. But for a fellow officer to alert higher authorities to the danger would have meant risking damage to his own career moreso than to that of Major Nidal Hasan.
THE FAILURE OF SOCIALISM It is absolutely fascinating that the spin doctors of the progressive movement are so successful at painting our present economic crisis as a failure of capitalism. The media mantra of the day is that somehow Wall Street has betrayed Main Street. Nothing could be farther from the truth. The reality confronting us as a nation is that not even our capitalists can save us under a socialistic scheme of government regulation.
Obama to Seek $708 Billion for Wars in 2011 Request Is On Top of $33 Billion 'Emergency' Request In a request that will likely put the call for $33 billion in “emergency” war funds for 2010 in a new light, President Obama is now planning to request at least a $708 billion military budget for fiscal year 2011. This record amount for America’s already enormous military even surpasses the Bush Administration’s largest annual expenditures for wars. The revelation came as part of the Obama Administration’s “Quadrennial Defense Review,” (QDR) which laid out the size of its planned military budgets and military goals through 2015.
Germany Sells Another Submarine To Israel BRUSSELS – German Chancellor Angela Merkel and Israeli Prime Minister Benjamin Netanyahu, will, according to informed sources in Berlin, finalise the details of the sale of another Dolphin class submarine to Israel on January 18th when Mrs. Merkel will visit Israel. The sources said that the negotiations are now at an advanced stage. Israel has already taken delivery of three German submarines, which where ordered in 2005 and were expected to be handed over to the Israelis in 2010. Despite German demands, Israel has not paid for previous deliveries and Germany is now insisting on payment. The submarines have been built at a cost of 1.3 billion Euros with Germany covering one-third of the bill.
MOODY'S: Greece And Portugal On The March To A 'Slow Death' As fears rise this morning of a German led European double dip recession, Greece and Portugal are on the path to an economic "slow death," according to Moody’s Investors Service. The troubled countries have already had pressure on them for economic reform, with Greece being under near constant scrutiny from the European Central Bank. Difficult lending terms for the troubled economies and increasingly negative outlooks on each country's sovereign debt are forcing dramatic fiscal changes for each government.
American Judge Freezes Argentina's Account in U.S. An American judge has frozen a government account that Argentina's central bank holds with the U.S. Federal Reserve, a top Argentina official said Tuesday. Argentine Economy Minister Amado Boudou made the announcement amid a fight over whether the government of President Cristina Fernandez can tap central bank reserves to pay off national debt.
German Economy Suffers Worst Postwar Contraction Germany's economy contracted 5 percent in 2009 amid the global economic downturn, by far its worst performance since World War II, official data showed Wednesday. The figure published by the German Federal Statistical Office was in line with government predictions but slightly worse than the 4.8 percent contraction widely predicted by analysts.
Iceland Scrambles to Avoid Debt Referendum The Icelandic government held emergency talks Tuesday to come up with an agreement on repaying British and Dutch investors $5.7 billion so it can avoid a divisive referendum on the issue. A spokesman for Icelandic Prime Minister Johanna Sigurdardottir said the country's leading political parties had agreed to work together to revise terms for the disputed payment to the two countries over a failed Icelandic Internet bank.
SHIPPING CHOKEPOINTS OF THE ARABIAN PENINSULA The Arabian subcontinent located in Southwest Asia is, evidently, geopolitically very critical due to its vast oil and natural gas reserves. Three easily blocked straits, commonly known as "chokepoints," may hamper ships from entering or exiting this area or the Red Sea and Persian Gulf. These three narrow chokepoints are the Strait of Hormuz, Bab el Mandeb Strait, and the Gulf of Suez or the Suez Canal.
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The Recession Is Over, the Economic Depression Just Beginning In late 2009, former Merrill Lynch economist, now with the Canadian firm, Gluskin Sheff, said the following: "The credit collapse and the accompanying deflation and overcapacity are going to drive the economy and financial markets in 2010. We have said this repeatedly that this recession is really a depression because the (post-WW II) recessions were merely small backward steps in an inventory cycle but in the context of expanding credit. Whereas now, we are in a prolonged period of credit contraction, especially as it relates to households and small businesses."
Will Globalists Trigger Yet Another World War? World War III is the most iconic event in American culture that never happened. Since the early 1950's, generations have been preparing for it, writing books about it, producing films and fictional accounts on it, and even playing video games based on it. The concept of another world war is so ingrained into our popular consciousness that it has become almost mythological. It is a legend, a fantasy story of something far away and incomprehensible, often associated with Tim Lahaye novels and action adventure narratives of religious prophecy and Armageddon. World War III has become "entertainment."
Economy's got more people worried The economy is regaining ground as the most important issue on Americans' minds, according to a new CNN poll released Tuesday. The CNN/Opinion Research Corp. poll showed that 47% of those surveyed now rate the economy as the biggest challenge facing the nation, up from 40% in December. The economy has been the biggest domestic challenge throughout President Obama's first year in office. But it had been declining steadily since March, when 63% said the economy was a top priority.
Fed's Record Profit Does Not Change Anything. US Still "Doomed" says Marc Faber Wall Street banks aren't the only ones making money in the aftermath of the financial crisis. The Federal Reserve booked a record profit of $52.1 billion in 2009 -- $46.1 billion of that windfall was thanks to an increase in the value of the securities the Fed bought to rescue the financial system. That money will get turned over to the Treasury Department.
What Americans might face next: inflation Consumers increasingly uneasy about possible loss of purchasing power A historic economic crisis has left Americans with plenty of things to worry about. But is inflation one of them? And is there a risk that fretting over higher prices may actually bring them about?
Backus’ & Cooley’s 2010 List of Doom In the course of debunking1 the thesis that global imbalances were driving the great US housing boom/bust cycle, NYU Stern heavies David Backus and Thomas Cooley inadvertently provide Doomers with a short check-list of key assertions the faith in which has been keeping things floating in the air in recent years, and that (from what we in the Castle have been observing) are likely to come crashing down over the next 12 months or so.
The dollar is the de facto international reserve currency
U.S. Treasurys are the deepest and most liquid market of safe securities in the world
The U.S. has good institutions
The U.S. has favorable demographics
High energy prices don’t last forever
Taxpayers on the hook for aid to Fannie, Freddie Treasury removed caps on assistance A recent move by the Treasury Department to remove $200 billion caps on assistance to Fannie Mae and Freddie Mac eliminates any doubt that taxpayers will pay for all their losses for the next three years and appears to be a major step toward formally nationalizing the housing enterprises, analysts say.
Rally in precious metals to be led by gold, silver Gold jumped higher at the start of trade in Asia on Monday news of "gathering economic momentum" and strong commodity imports into China in China. Pointing to strong future demand for real assets, the data sent the price of Gold as high as $1161.60 by early New York trade, before gold fell back off a bit into the close.
Gold turns higher as dollar runs out of steam Platinum rises as China says it became world's largest market for cars Gold futures slumped on Tuesday, hit by concerns that China's moves to slow lending and impact demand from the world's largest consumer of many commodities. Gold for February delivery finished down $22, up $1.80, or 1.9%, at $1,229.40 an ounce on the Comex division of the New York Mercantile Exchange. The dollar also came off morning lows as concerns about U.S. earnings drove investors towards the safe haven of the U.S. unit. Gold had turned higher earlier as the U.S. dollar fell.
Fear and greed igniting gold price movements As gold prices move up, there is fear and greed in the bullion markets across the world. Fear is turning gold price volatile these days. Greed is turning investors to become speculators and manipulators in gold trading. If the yellow metal rises on day, the next day it plunges. Does anyone know where is the most precious of the metal in the world is heading these days?
Bears Should Fear Gold Above $1170 Early Monday evening, Gold was holding onto most of the impressive gains it scored a day earlier. You needn’t be a technician to see unfinished buying in the chart below. It shows Sunday’s explosive, $25 rally in the Comex February futures contract, followed by a tedious consolidation that was still in progress 24 hours later. Shorts have good reason to be nervous when gold shows such reluctance to give up ground. As recently as Christmas they were salivating over the prospect of a major selloff. Gold had come down hard from an all-time high of $1227 recorded earlier in the month. When quotes dipped beneath $1100 just before the holidays, some were predicting the bull market had breathed its last. In retrospect, it appears they were wrong. Assuming the $1075 retracement low holds, the correction will have amounted to about 12% -- mild and healthy, as far as bull-market consolidations go.
Gold dips on China concerns and stronger dollar Gold futures fell on Tuesday as China's move to slow its growth spooked markets and lifted the dollar, while oil futures slumped on warmer-weather forecasts. A day after data showed a big jump in Chinese imports of energy and iron ore in December, the People's Bank of China lifted the reserve requirements for banks by a half point and lifted its interbank rate for the second time in a week.
Zimbabwe, next gold leader? Zimbabwe, the country with over 1,00,000 per cent inflation, has done everything to cash in on the gold boom witnessed in the world during the past year. As a result, the country’s gold production has gone up by almost 35 per cent to 4.2 tonnes last year. This is a remarkable recovery fro Zimbabwe and its mining sector despite erratic power supply.
Gold Falls on China "Tightening" But Low US Rates "Will Support 2010 Investment" Says Top Forecaster THE PRICE OF GOLD fell early Tuesday in London dealing, dropping below $1148 an ounce as commodity prices and equities fell after China's central bank reduced credit supplies in the world's fastest-growing economy. The gold price gave back half of Monday's 2.1% jump against the Dollar after the People's Bank raised its yield on 1-year bills by 0.08% – twice the expected rise – and withdrew a one-day record worth $29 billion in cash from the Chinese bond market.
Vietnam gold exchanges are like ‘casinos’ Days after the Vietnam government announced the closure of some 20 gold exchanges operating in the country, investors have abandoned the gold trading floors and turnover in the bourses has plunged. Early this month, Vietnam’s central bank—the State of Bank of Vietnam—asked all the gold exchanges to shut shop by March 31. Vietnam has around 20 gold trading floors where investors could deposit a small fund and then trade 14 times the value of their initial investment.
Celente on 2010: Wave of Terror, Internet revolt & War on migration
Are "Short Contracts" Manipulating the Price of Silver? Are the concentrated holdings of silver "short contracts" on the COMEX commodities exchange artificially depressing the price of the precious metal? Yes, according to noted silver analyst, Theodore Butler, in a newsletter released by Investment Rarities, Inc., a Minneapolis-based investment firm.
Boom year ahead for platinum Last week saw a major move taking place in the platinum group metals sector with the launch of platinum and palladium-backed exchange-traded funds (ETFs) on New York. With the launch of the ETFs in US, investors have got yet another option to put their money and year 2010 is expected to be the year of the white metal.
How Does U.S. Dollar Weakness Impact Gold and Silver Investors? One of the factors that we mentioned was the USD Index, which was (and still is) very close to the cyclical turning point, as suggested by the previous analysis. Consequently, we believe it would be useful to comment on the performance of this important driver of gold and silver prices. [see chart] Reviewing the big picture before digging into details is particularly useful when signals are mixed - which appears to be the situation today. Signals coming from the longer time-frames are generally stronger than those from daily charts, so beginning with these types of charts allows us to see what are the main, long-term tendencies and then look for confirmation (or lack thereof).
Thoughts on Monetary Inflation Inflation: A deliberate policy, not the natural way The US Federal Reserve ("the Fed") was created in 1913. All the shares of the Fed are owned by private banks (every bank operating within the Federal Reserve system must have equity in the Fed), so it can be said that the Fed is privately owned. However, the shares held by the private banks confer almost none of the normal ownership privileges, and control of the Fed is almost completely within the hands of the US Government. It is therefore more accurate to consider the Fed a government agency—an agency that operates for the benefit of the government and the banks.
The Market's View: Inflationary Expectations Rising Real-time Monetary Inflation (last 12 months): 2.7% Sometimes it's good to be in last place. Take the currency derby as an example. A month ago, the price of gold was soaring to new highs in every reserve currency—Yankee dollars, euro, pounds sterling, yen and even Swiss francs. But after the first week of December, the jockeys steered their steeds off the course to partake of the holidays.
Hyperinflation History: La Terreur A while back a reviewer dismissed the idea of a dollar collapse by asking “Collapse against what?” His argument was that the other major currencies are a mess too, so in relative terms the dollar will be fine. This of course misses the point, but in a useful way because it illustrates how words that seem clear to a field’s insiders (in this case gold bugs and other gloom-and-doomers) can be confusing to normal people.
Bernanke "Not the Right Man for the Job Right Now", Johnson Says Former IMF chief economist Simon Johnson is joining a growing chorus of voices, who are frustrated the same men at the helm prior to the financial meltdown still have their jobs. Among the leaders in question are Fed Chairman Ben Bernanke, Treasury Secretary Tim Geithner and White House chief economic adviser Larry Summers, director of President Obama's National Economic Council.
The Fed Is Too Powerful To Be Unaccountable Now is the time to examine the proper functions of the Federal Reserve System–especially those of the Board–and make systemic changes. The popularity of US Rep. Ron Paul’s bill to audit the Fed taps into a great pent-up frustration about the unaccountability of the very powerful institution. Independent socialist Bernie Sanders of Vermont is the senate sponsor. While Dr. Paul, my former boss, wants to go as far as getting rid of the Fed, he wisely offered an opportunity for us to learn more and make a more informed decision.
Plosser: Fed must raise rates as economy improves The U.S. Federal Reserve will have to raise interest rates as the economy improves or risk losing the public's confidence in its commitment to keeping inflation low and stable, a top Federal Reserve policy maker said on Tuesday. Charles Plosser, president of the Philadelphia Federal Reserve Bank, said expectations for future inflation are currently "well-anchored," but warned that there is "considerable uncertainty" clouding the outlook for price pressures over the next two to five years.
Federal Reserve Bought 80% Of U.S. Debt In 2009 Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve.
Jamie Dimon on Bank Fees: Stop Villifying Us! Author Andrew Ross Sorkin Tells 'Good Morning America' Bankers 'Blindsided' by Potential White House Fees As Wall Street begins to hand out billions in bonuses and the White House considers placing huge fees on the nation's biggest banks, one executive says he's weary of the blame game. "I am a little tired of the constant vilification of these people," JPMorgan Chase CEO Jamie Dimon said Monday at a health care conference. "This is not a casino."
Large Wall Street bonuses spark talk of new levy on financial industry Lawmakers hope to avert a public backlash over multimillion-dollar bonuses at a time when the nation suffers with 10% unemployment and the federal government ails from record budget deficits. Reporting from Washington - As Wall Street prepares to pay rich bonuses once again, Obama administration officials are considering a new tax on the financial industry -- a move that could temper resentment over banking's rapid recovery at a time when more than 15 million Americans remain out of work.
What's Behind the 'Audit the Fed' Campaign? Richard Russell, old-timer writer of the Dow Theory Letters, Tuesday morning had the following to say about the U.S. Federal Reserve: We must never again allow a sinister group of individuals to seize control of our money system. The Founding Fathers foresaw the danger of paper money issued with no connection to gold. Moreover, it’s imperative that the discipline of gold be taught to all Americans so that the immoral concept of a Federal Reserve can never again be sneaked or thrust upon the American people.
Ron Paul on Bailouts
FDIC to bonus-loving banks: Pay up! The nation's top banking regulator is considering a new rule which could require lenders to pony up if they rely on potentially risky pay practices. In a proposal made Tuesday, the Federal Deposit Insurance Corporation said it wants employee compensation to be another factor in how it determines payments banks are required to make in order to support the agency's deposit insurance fund.
SEC Bring New Charges Against Bank of America SEC files new lawsuit against Bank of America, saying it failed to disclose losses at Merrill Federal regulators sued Bank of America Corp. on Tuesday, accusing the company of failing to disclose "staggering financial losses" at Merrill Lynch before shareholders approved a combination of the companies. The lawsuit filed by the Securities and Exchange Commission in U.S. District Court in Manhattan sought an order requiring Bank of America to pay a civil penalty for not telling shareholders it was losing $15.3 billion in the fourth quarter of 2008.
We Need Bank Reform Now Or Another Crisis Is Inevitable, Simon Johnson Says One of the most remarkable things about the financial crisis is that, despite nearly destroying the economy, it hasn't led to any meaningful banking reforms. One might think that, after a near-death experience, fixing the system would be a top priority. But for a variety of reasons, including the market recovery, nothing has changed. That's outrageous, says our guest Simon Johnson, MIT professor and former economist at the IMF. And it means that we're just heading for a similar crisis again.
To Curb Loans, China Tells Banks to Increase Reserves Chinese regulators ordered state-owned banks on Tuesday to set aside a larger share of their deposits as a reserve against failed loans, another in a string of indicators that Beijing is concerned about speculation in the nation’s fast-growing economy. In a posting on its Web site, the central bank raised the reserve requirement for major banks to 16 percent of assets as of Jan. 18, a half-percent increase from the current rate. Smaller banks would jump to 14 percent, from 13.5 percent.
Kern Central Credit Union (Kern Central) of Bakersfield, California Self-Help Credit Union will help the depositors of Kern Central Credit Union of Bakersfield, California, by assuming the assets and liabilities of the ailing credit union. The National Credit Union Administration, acting as the liquidating agent of Kern made the announcement today.
More loans going bad, but more get help . . . . The 254,200 foreclosure starts seen during the quarter helped push the number of loans guaranteed by Fannie and Freddie that were in the process of foreclosure or three or more payments behind at the end of September to 1.27 million -- a 20 percent increase from June and up 174 percent from a year ago. The number of loans delinquent by 60 days or more also grew by 260,300, to nearly 1.6 million.
Fed adopts new rules to protect credit card users from sudden hikes The Federal Reserve on Tuesday issued sweeping new rules to better protect Americans from sudden hikes in interest rates on credit cards. The new rules, which take effect on Feb. 22, generally bar rate increases during the first year after an account is opened. After the first year, companies must provide customers with a 45-day notice before bumping up rates.
New housing finance fell in November, ABS says BORROWERS will not be spared a fourth consecutive interest rate rise next month, despite a bigger-than-expected fall in housing finance commitments, economists say. Housing finance commitments for owner-occupied housing fell 5.6 per cent in November, seasonally adjusted, to 59,516, the Australian Bureau of Statistics said. The median market forecast was for housing finance commitments to have fallen 0.5 per cent in November.
Have You Walked Away From Your Underwater Mortgage? Between 11 and 15 million mortgages are currently underwater, meaning the home is worth less than the amount owed on it. For many people in that situation, the smart thing to do might be to walk away from the home. Both the New York Times and Washington Post have recently highlighted the trend of increasing numbers of people making that conscious though difficult choice.
Option ARM Payments Starting to “Skyrocket” At a time when many homeowners are struggling with reduced incomes, they are now facing higher house payments. The next wave of ARM resets has begun: Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.
Wal-Mart, the US retailer taking over the world by stealth It has beefed up its green credentials, but Wal-Mart's stance on unions and sheer global scale still provoke as much fear as admiration It hardly shrieks of billion-dollar glamour. The US nerve centre of the world's largest retailer, Wal-Mart, consists of a collection of low-slung prefabricated buildings along a four-lane highway in north-western Arkansas. Wal-Mart's head office is hundreds of miles from the nearest big city. It isn't even handy for the state capital, Little Rock, which is three and half hours' drive away.
GM: Tiger Woods doesn't get to drive free Cadillacs anymore General Motors says that its agreement with Tiger Woods that allowed him to have free vehicles, like the Cadillac Escalade he crashed in his Florida neighborhood on Nov. 27, ended two weeks ago. Even though Woods' endorsement contract for GM's Buick brand ended in 2008, Woods had been allowed to keep several vehicles, including the Cadillac SUV and reportedly a Buick Enclave crossover, for his personal use. But the agreement that allowed the world's richest professional golfer access to those new vehicles ended Dec. 31, said Buick spokeswoman Dayna Hart. The agreement was in place before the crash.
GM's Lutz: Higher gas tax would help Bob Lutz is generally not a close ally of environmentalists. The vice chairman of General Motors is a frequent critic of fuel economy rules and once declared that global warming was a "total crock" of excrement, although he used a more common and colorful word in that description.
GM: We'll sell more in China than the U.S. soon Chinese consumers bought more automobiles last year than Americans did for the first time. A top executive at General Motors thinks that it won't be long before it too will sell more cars in China than in its home market. In fact, Tim Lee, GM's Shanghai-based president of international operations, said at the auto industry's key trade show Tuesday that this day could come sooner rather than later.
Toyota revives plans to build Prius hybrid at idle Mississippi plant Toyota is reviving plans to produce its Prius hybrid in an idle factory in Blue Springs, Miss., "when the recovery hits full stride," its senior U.S. executive said tonight. Toyota president and CEO Yoshi Inaba also called on his own company to improve its customer service after last year's recall of 3.8 million Toyota and Lexus vehicles. The recall arose from reports of unintended acceleration which in some cases may have contributed to at least 20 fatalities.
At auto show, Washington gets close-up look at investment DETROIT -- Forget the latest turbocharged engine or aerodynamic design. The star attraction Monday at the North American International Auto Show was the spectacle of House Speaker Nancy Pelosi (D-Calif.), House Majority Leader Steny H. Hoyer (D-Md.) and Secretary of Labor Hilda L. Solis, with a bevy of other Washington officials touring the show.
Detroit 2009: BYD e6 - world's first production dual-mode plug-in hybrid crossover The "BYD" in BYD Autos stands for Build Your Dreams, and this Chinese company is dreaming big huge. BYD is bent on becoming the world's largest automaker, and in order to achieve that goal, it's launched a series of ambitious projects that it hopes will reach the streets before larger, well-established carmakers.
A Rough Ride for Schwinn Bicycle As the World Economy Shifted, So Did the Fortunes of an American Classic MADISON, Wis. -- In the glass atrium that marks the entrance to the Pacific Cycle company, the old and the new of the bicycle business are displayed side by side. Each is called the Schwinn Sting Ray, and each in its time has been a bestseller. But the similarities end there. In the space of a generation, everything about the process of designing, producing and selling a Schwinn has changed.
Recession hits U.S. power generation The nation's economic decline led to the biggest drop in electric output since 1938, according to an industry trade group. A new report released Tuesday from the Edison Electric Institute says output fell by 3.7% for its second year of declines in a row. The group said the fall was triggered by the recession and cooler summer temperatures, which were more than 20% lower than normal in many parts of the country.
David Rosenberg: Unemployment Will Hit 12-13% David Rosenberg thinks the unemployment rate is headed much higher than anyone anticipates. . . . . Rosenberg is the only one (except Meredith Whitney) who is talking about 12-13%.
Too many job seekers, not enough jobs In another sign that the labor market is not out of the woods yet, the number of job openings fell again in November, according to a government report released Tuesday. With 15.3 million people out of work and employers hesitant to hire, job seekers still outnumber openings by more than six to one, the greatest differential since the Labor Department began tracking job openings in December 2000.
Job openings drop as hiring remains elusive The competition for jobs is intensifying as companies are reluctant to hire, leaving millions of unemployed Americans chasing fewer job openings. There were nearly 6.4 unemployed workers, on average, for each available job at the end of November, according to Labor Department data released Tuesday. That's up from 6.1 in October and a record high.
What they’re saying about Hickenlooper’s bid for Colorado governor Denver Mayor John Hickenlooper stepped into the Colorado gubernatorial race Tuesday, saying that his experience creating and running businesses makes him the best person to guide the state in figuring how to get residents back to work. Here’s a roundup of comments on Hickenlooper’s entry into the race.
7.0 quake hits Haiti; 'Serious loss of life' expected A major earthquake struck southern Haiti on Tuesday, knocking down buildings and power lines and inflicting what its ambassador to the United States called a catastrophe for the Western Hemisphere's poorest nation. Several eyewitnesses reported heavy damage and bodies in the streets of the capital, Port-au-Prince, where concrete-block homes line steep hillsides. There was no estimate of the dead and wounded Tuesday evening, but the U.S. State Department has been told to expect "serious loss of life," department spokesman P.J. Crowley told reporters in Washington.
7.0 quake leaves Haiti capital in 'total disaster and chaos' People wail from the rubble across Port-au-Prince, where a hospital reportedly collapsed and bodies lie in the streets. One aid official estimates 'there must be thousands of people dead.' Reporting from Mexico City - A mighty earthquake rocked the tiny, impoverished island nation of Haiti today, collapsing a hospital, the presidential palace and other buildings and triggering what one diplomat called a "catastrophe."
Chavez Evaporates Venezuelan Bolivar And Leads Country Into Darkness Hugo Chavez, president of Venezuela, started 2010 off by devaluing the Venezuelan bolivar by 50% from 4.3 per dollar to 2.15 per dollar, along with several other silly little limits. This is continuing the theme of currency devaluations from late 2008 and 2009. But the evaporation of currency is not only limited to third world socialist governments with eroding infrastructure but also happening to every major currency. For cash balances the precious metals are the only refuge.
Clinton Tries to Defuse Asian Tension HONOLULU — Secretary of State Hillary Rodham Clinton kicked off her travels this year, as she did last year, by flying across the Pacific rather than the Atlantic. But this time, her itinerary is more urgent. With tensions rising between the United States and both Japan and China, Asia has emerged as a diplomatic hornet’s nest, even beyond the perennial threat of North Korea.
Clinton, Japanese can't resolve base dispute U.S. seeks Okinawa location The United States and Japan failed to resolve a dispute over a U.S. military base on Okinawa island Tuesday, with Tokyo's new liberal government continuing to resist a commitment by its conservative predecessor to move the base to a different location on the same island.
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America slides deeper into depression as Wall Street revels December was the worst month for US unemployment since the Great Recession began. The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters. Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.
Coastal Federal closing branches Raleigh-based Coastal Federal Credit Union is closing its three branches in the Charlotte area plus a branch in Garner. The four branches are scheduled to shut their doors for good Feb. 26. That will leave Coastal Federal with 15 branches, all of them in the Triangle, said spokesman Joe Mecca. Coastal Federal decided to pull out of the Charlotte area because it has a relatively small membership base there -- 12,000-plus out of a total of 195,000 members -- and the competition is intense, said Mecca.
Survivor, America: "It's Only Going to Get Worse," Gerald Celente Says "It's only going to get worse," is the sobering forecast of Gerald Celente, director of the Trends Research Institute. As discussed in a prior segment, Celente believes the "bailout bubble" is going to burst and the U.S. economy will slip back into recession, if not worse, in 2010.
No Seat for Wall Street at Tea Party Could all those populist pitchforks currently pointed at Washington be turned toward Wall Street instead? That's the question that ought to worry Wall Street executives as they prepare to pay themselves nice bonuses this month, hard on the heels of a government bailout of the financial system, and amid continuing job losses around the rest of the country. Financial firms know they're in for heat on bonuses; they've already been chastised on national TV by President Barack Obama's chief economist.
Wall Street, politicians still don't get it The gamblers and the clueless are leading this nation into the abyss. If only we could throw out all of them There were many lists made of the "best" and "worst" of 2009. List-makers did themselves proud ticking off item after item.
Forecast 2010 - 2015: An Introduction I am in the midst of preparing a forecast for the next five to ten years for the United States economy, and by extension the world because of the intertwining effects of the dollar reserve currency and US consumption in the global economy. And of course the US position as the world's sole superpower.
National Debt- How Much Is A Billion Dollars? Dave Walker
Federal Reserve Seeks to Protect U.S. Bailout Secrets The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history.
Why the Fed Likes Independence Ron Paul Last week it was revealed that when Treasury Secretary Tim Geithner was Chairman of the New York Federal Reserve, he urged AIG officials not to disclose to the Securities Exchange Commission relevant details of agreements with banks to bail out Goldman Sachs. Apparently he felt at the time that regulators and the public would be angry that taxpayer money was used to fully compensate bankers who made some horrifically bad investment decisions.
Gold rises as rates outlook sinks dollar Gold futures rose Monday, boosted by a report of strong Chinese imports data and after a Federal Reserve official emphasized that U.S. interest rates are likely to stay low, pressuring the dollar.
Gold Rises Above $1160 On Reflation Elation Risk is brisk on Monday morning as traders try and jump on a speeding freight train. Chinese export data over the weekend helped light the fuse while prospects for a sustained low-interest rate environment in the US after Friday’s employment report added powder to keg.
Market Meltdowns, Inflation, Protecting Capital & Trading Commodities The purpose in owning commodities like gold, silver and oil is to protect oneself from the effect of inflation that I believe will begin to assert itself in the coming months. Unfortunately, the United States has taken a monetary policy of printing massive amounts of money to attempt an escape of deflation. In just the past 16 months, the monetary base has ballooned from $908 billion to $2.0 trillion.
Gold Touches Five Week High, Silver And Platinum Gain Besides lifting crude oil, China's import and export update also gave a boost to precious metal prices by triggering fund buying, boosting demand and driving gold to a five week high of US$1,156/oz, while silver and platinum reached US$18.81/oz and US$1,590/oz.
Considering the Purchase of Foreign Gold Coins When planning a vacation, there are all sorts of questions one must ask. Where would I like to go? How long do I want to stay there? Where will I stay? What will I do while I'm there? How do I plan my itinerary? Which airline is most reliable? How will I get about once there? Will I travel by taxi, bus, or walk? Will I be able to deal with any language barriers? Will anyone there speak English? Do I need to learn the basics of a foreign language first? How do I ensure I get the best prices?
Gold: A “Bridge over Troubled Water” Back in 1969, when Simon & Garfunkel recorded “Bridge over Troubled Water” the duo had a gut feeling that this song was going to make a very big splash. And they were right, as their recording went on to become a number-one hit (staying atop the charts for six weeks) – while being covered by literally dozens of other singers.
Gold Outlook for 2010: Gold Resuming its Historical Monetary Role – as the Anti-Currency Lately the pace of gold-related news has accelerated exponentially with gold’s rising price. While 2009 was an exciting year for gold, setting a new average high of $1,088, 2010 promises to be even more exciting. In 2009 gold resumed its historical monetary role - as the anti-currency. Therefore, the influences and events that affect its price are not simple commodity supply/demand fundamentals, but the more complex global monetary issues.
GATA is sewing the Fed On the Edge with Max Keiser . . . and Chris Powell
Gold May Extend Advance to One-Month High After Dollar Declines Gold, trading little changed in Asia, may reach its highest level in more than a month as a weaker dollar helps fuel demand for the precious metal. The U.S. currency fell to its lowest in three weeks against the euro yesterday on speculation the Federal Reserve will keep interest rates low to spur a recovery in the world’s largest economy. Gold typically moves inversely to the dollar.
How far can China push up gold prices? China has now become a decisive factor not only in industrial metals but also precious metals. It is all set to over take India in gold consumption. China’s gold consumption in 2009 has now been estimated at 450 tonnes,according to latest available data. This exceeds estimates for India’s net consumption last year, which is forecast at around 380 tonnes, according to the Bombay Bullion Association. Due to soaring gold prices, demand for gold in India plummeted while that of China rose 13.5% in 2009.
What Does The Recent Weakness in the USD Index Mean For Precious Metals Investors? During the past week we've sent a Market Alert to our Subscribers, in which we commented on the current developments on the precious metals market, and indicated what action appears to be profitable under those conditions, and in the following essay we would like to elaborate on one of the points raised in that particular message.
Why gold is currency and inflation hedge Too much is written about gold these days simply because the yellow metal price has been on a steady rise for the last one year. When gold touched $800 per ounce in January 2009, investors and gold bugs applauded, hailing the precious metal as the best investment asset that people should hold and continue to own.
Currency Crisis Will Drive Gold We have a really big flightless bird Down Under called the Emu. I will not draw absolute parallels between the European Monetary Union (EMU) and the Emu, even in jest, however the Euro looks like it will appear flightless at best this year. Perhaps the myth that they (Emu’s) bury their head in the sand when facing danger may come true for the EMU this year however don’t count on it. Dire monetary events may force a change of heart and a dose of reality.
Centamin starts Egypt gold exports Centamin Egypt said it had started commercial production at its flagship gold mine at Sukari in the North African country and made its first exports of the metal. Centamin is now Egypt's first gold exporter for decades. The start of an unspecified amount of gold exports to refining group Johnson Matthey coincided with the full optimisation of its processing facility, which can now handle 4 m tonnes of ore a year. Centamin expects to produce more than 200,000 oz in 2010, 300,000 ounces in 2011 and aims to reach 500,000 ounces by 2012.
Dollar Drops Most Since November on Fed Outlook After Payrolls The dollar posted its biggest drop against the euro since November on increased speculation that the Federal Reserve may extend stimulus measures after a report showed last week that employers unexpectedly cut jobs.
Bubble Dynamics In 2010 If asked the question, most ‘financial experts’ would likely tell you the possibility of a return to extreme bubble dynamics in stocks during 2010 is the most unlikely possibility, not after all the ones during the last decade. Besides the possibility of deflation Prechter and the likes sell to a public that sees the risks, which are in fact very real, because this is widely known and being countered by central authorities, a risk of opposites must also be considered – or so the charts tell us.
Peter Schiff on CNBC 06 January 2010
Geithner Has Support of Obama, Democratic Lawmakers, Aides Say Treasury Secretary Timothy Geithner retains the confidence of President Barack Obama as he faces questions about why the Federal Reserve Bank of New York tried to withhold details of the government’s financial-industry rescue, administration officials said.
Obama to target banks with new levy The Obama administration is planning to impose a new levy on top US banks, to pay for the financial bail-out as part of the budget to be presented in February. The surcharge will aim to recoup the full cost of the Tarp bail-out fund, which the administration estimates at $120bn, although officials expect the ultimate cost will be less than $100bn.
Obama Administration Mulls New Bank Tax By some measures, the U.S. government has already made a tidy profit on a part of its TARP investment in the financial industry. Of a total of around $364 billion invested so far, the U.S. Treasury has made profits totaling $16 billion in dividends and the sale of warrants, among other things. Several large and small banks, including JP Morgan Chase and Bank of America, have repaid the government in full for a total of $164 billion.
US regulators scrutinise banks’ hires US banking supervisors are taking a much more active hand in shaping banks’ top personnel decisions, as regulators seek to prevent a recurrence of management failures that helped precipitate the financial crisis. Bankers, their advisers and government regulators told the Financial Times that supervisors at the Federal Reserve Board and the Federal Deposit Insurance Corporation are asking more questions about potential appointees than they did two years ago.
Here Comes the Screw Job "The 401(k) system has to be fixed, and I don't know anybody who can fix it but the federal government." - John Bogle Late last week the federal government began floating proposals for reforming America's broken retirement system. The proposed reform centers around the idea of getting people to invest more conservatively and withdraw the money more slowly so that they don't outlive their savings.
TrimTabs suggests government manipulated stocks Analysts say government's financial rescues have fueled conspiracy theories The unusual circumstances that led the U.S. market to rally powerfully in 2009 might be explained by secret government moves to buy stocks, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market. "We cannot identify the source of the new money that pushed stock prices up so far so fast," Biderman said in a statement Tuesday.
SEC expands charges against BofA SEC expands charges against Bank of America, saying it failed to disclose losses at Merrill Federal regulators have expanded their charges against Bank of America Corp. over billions in bonuses paid at Merrill Lynch, accusing the bank of failing to disclose mounting losses at Merrill before a shareholder vote approving the combination of the two firms.
U.S. Bankers Are Fed Up With British Regulations LONDON — A tough new requirement by Britain’s securities regulator that top banking executives and earners must defer 60 percent of their total compensation for a three-year period is pushing some American banks with extensive London operations to say that they just won’t take it anymore.
Things Fall Apart in Eurozone As fears of a dollar meltdown have loomed ever larger in recent years, major investors, including central banks, have moved significant portions of their cash reserves into the euro, the currency of the European Union (EU). And while it is true that the euro offers some shelter from the American economic catastrophe, the currency does come with baggage that investors should not ignore.
1/3: Bankstergate: Geithners Cover-up of the AIG Bailout!!
2/3: Bankstergate: Geithners Cover-up of the AIG Bailout!!
3/3: Bankstergate: Geithners Cover-up of the AIG Bailout!!
Treasuries Advance as Asian Stocks Decline, Fed Rate on Hold Treasuries rose as Asian stocks fell and Australia said home-loan approvals declined in November by the most in 18 months, increasing demand for the relative safety of government debt.
Fitch Affirms U.S. AAA Rating, Warns of Expanding Deficit Fitch Ratings affirmed the U.S.’s AAA credit rating while saying difficult decisions will have to be made on spending and taxes to underpin market confidence in the sustainability of government finances.
Buy American: "Anti-China Backlash" Coming, Gerald Celente Says Recent import/export data show China replaced Germany as the world's largest exporter in 2009, and the U.S. as the world's biggest auto market. In 2010, China's surging economy is set to supplant Japan as the world's second largest. With the global economy still in trouble, especially in U.S. Europe, China's rise is spurring a "real anti-China backlash," according to Gerald Celente, director of the Trends Research Institute. "Those who have the gold rule [and] a lot of people don't want to see China rule."
Non-Current Mortgages Hit Record High 13.2%: LPS One in every 7.5 homeowners in the United States is either behind on their mortgage or in foreclosure, according to new data released by Lender Processing Services (LPS) Monday. That equates to a record high 13.2 percent of the nation’s home loans.
Shadow Inventory Causes Concern for 2010 Housing Market Although the Obama administration has worked to suppress foreclosures, it appears these efforts may not be enough, according to Bank Foreclosures Sale, a foreclosure listing service. High unemployment continues to plague the real estate market, and according to a recent article in the New York Times, an estimated 2.4 million foreclosed homes will be added to the list of 2010 foreclosures. As a result, Bank Foreclosures Sale predicts prices will decrease another 10 percent.
Fed split over impact of mortgage purchases Federal Reserve policy-makers are divided over the potential impact of their plan to end the purchase of mortgages on a still-fragile housing market recovery. Different Fed officials believe the spreads on mortgage-related securities could go up anywhere from a quarter to three-quarters of a percentage point when the Fed stops buying mortgages by the end of March.
Stockton, California Is Foreclosureville, USA, Has One Of The Worst Foreclosure Rates In The United States Stockton hardly looks like the most miserable city in the country. But the statistics and stories over the last two years make a case that it is: Since the housing crisis began, this inland port city 80 miles east of San Francisco has had one of the worst foreclosure rates in the country - for most of the time, the worst.
FHFA: FC Starts Down; Home Forfeitures Up he total delinquency rate for the Fannie Mae and Freddie Mac portfolios increased nearly 100 basis points (bps) to 7.6% in the third quarter, the companies' regulator, the Federal Housing Finance Agency (FHFA), reported Friday. The FHFA also reported a 15% decline in foreclosure starts and a 39% increase in short sales and deeds-in-lieu during the quarter.
Critics say new home-appraisal rules drive down values Home buyers who take out federally insured home loans will soon find their mortgage brokers can't select appraisers, part of an effort to ensure appraisers aren't pressured to inflate home values. Starting Feb. 15, mortgage brokers will no longer be able to order appraisals on loans insured by the Federal Housing Administration (FHA).
Wal-Mart to close 10 Sam's Clubs stores in U.S. Wal-Mart said Monday it will close 10 money-losing Sam's Club stores and cut 1,500 jobs to reduce costs. The stores will close Jan. 22. They are in Nampa, Idaho; La Quinta, Calif.; Louisville, Colo.; Vista, Calif.; Rolling Meadows, Ill.; Clay, N.Y.; and Irvine, Calif. The cities of Houston, Phoenix and Sacramento, will each lose one store.
China Ends U.S.’s Reign as Largest Auto Market China supplanted the U.S. as the world’s largest auto market after its 2009 vehicle sales jumped 46 percent, ending more than a century of American dominance that started with the Model T Ford.
Palin joins Fox News as contributor Sarah Palin has signed a multi-year broadcast deal to serve as a contributor to Fox News, a provocative venture that immediately shook the media landscape Monday, prompting heavy commentary from her fans and foes alike.
Sarah Palin rejects CPAC, accepts tea-party offer 'Going Rogue' author marches to her own drumbeat In step with the title of her No. 1 best-seller "Going Rogue," former GOP vice-presidential candidate Gov. Sarah Palin is bypassing the traditional summit for conservatives this year, the Conservative Political Action Conference, while planning to speak at a tea party event.
Chavez’s 3-Tiered Currency System May Spur Inflation President Hugo Chavez, struggling to stem an outflow of dollars and rein in a budget deficit, has adopted a multiple-tiered exchange-rate system that fueled corruption, food shortages and inflation in the 1980s.
Spending frenzy follows Venezuelan devaluation Long queues are reported at shops in Caracas, following the surprise devaluation of the bolivar on Friday. President Hugo Chávez announced a new multi-tiered exchange rate regime. The official value of the dollar, which has remained at 2.15 bolivars since March 2005, will now be fixed at 2.6 bolivars, a rate reserved for the import of essential goods such as food and medicine.
Israel Is Serious about Fencing Off Egypt Israel has unveiled plans for a security barrier running along the Egyptian border to keep out militants and African migrants. Announcing the £167 million) project, Benjamin Netanyahu, the Israeli prime minister, said: "This is a strategic decision to ensure the Jewish and democratic character of the state of Israel.
Yemeni Sheik Courts, Warns Foreign Governments Zindani Backs Fight Against al Qaeda, But Tells U.S., Others Not to Send Troops Yemen's most influential Islamic scholar warned foreign governments against sending troops to his country to battle al Qaeda, but said he would welcome international support to help Yemen stabilize and develop.
WTO to Probe U.S.- China Tire Rift The World Trade Organization will investigate import tariffs levied by the U.S. on Chinese tires in September, according to documents published Monday by the Geneva-based trade arbiter. The probe follows a Chinese appeal filed almost immediately after the tariffs were announced in September. It's part of a trade battle that has emerged since President Obama took the high-profile decision to approve extra tariffs of 35%, 25% and 20% over the next three years, in addition to the regular 4% levy on tires.
Al Gore sued by over 30,000 Scientists for Global Warming fraud - John Coleman.
Jobs or Tent Cities? Congressman Lamborn delivered a One Minute on the U.S. House of Representative Floor regarding a sign that appeared outside a homeless campground in the 5th District of Colorado.
First U.S. bank failure of 2010. . . Horizon Bank fails; bought by Washington Federal State regulators seized Horizon Bank on Friday evening, making it Washington’s first bank failure of 2010 and the fourth community bank to be seized in the state in the last 13 months. Washington Federal Inc., of Seattle, quickly snapped up the failed Bellingham bank from regulators, including all of its bank branches and deposits, except for brokered deposits, state and federal banking regulators said. The purchase price was not disclosed.
America slides deeper into depression as Wall Street revels December was the worst month for US unemployment since the Great Recession began. The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters. Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.
Banks Prepare for Bigger Bonuses, and Public’s Wrath Everyone on Wall Street is fixated on The Number. The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen. Bill Gross Say FED Will Exit Easy Monetary Policy, Quantitative Easing in March 2010 The latest PIMCO newsletter suggests that 2010 will be year of caution and change. And yet he gives ample suggestions to the coming holocaust in financial markets if things do not go as planned. The latest US and UK deficit is graph straight for the records. It is almost eclipsing the vertical rise of equity markets in 2009.
The Big Picture for U.S. Housing Market 2010 The typical essay I write on these pages is 700-1,500 words or so. Today’s essay will be setting an all time record for Gains, Pains, & Capital because my first 1,000 words are the following: [picture of chart - Monthly Mortgage Rate Resets 2007-2016] . . . . In plain terms, the primary difference between 2007-2008 and 2010-2011 is that this time around, the Fed has already thrown everything including the kitchen sink at the financial system. There are virtually NO weapons left in the Fed’s arsenal (save for just leaving a paper weight on the “print” button).
Why You Should Care About DJIA Priced in Gold Of the many forward looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold -- "the real money," as EWI's president Robert Prechter calls it.
Could the Fed Be Manufacturing Another Stock Market Crash? . . . . US Treasury is now facing a debt spiral: a situation where it needs to issue roughly $150 billion of new debt per month WHILE rolling over TRILLIONS in existing debt at a time when investors are willing to lend to it for shorter and shorter periods of time. Indeed, in the next two months alone, the US must roll over $133 billion in debt. And this is coming at the precise time that the US will begin issuing roughly $150-300 billion in new debt to finance our $1.5 trillion deficit. The big question now is… WHO’S going to be buying this stuff?
Who is Jim Rogers and why does he say America's next economic crisis is 1-3 years away?
Bubble warning Markets are too dependent on unsustainable government stimulus. Something’s got to give THE effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That’s largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets.
Surge in U.S. Personal Bankruptcies, Foreclosures and Job Losses The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses. And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.
Dubai’s First Foreclosure May Open Floodgates in Worst Market Dubai’s housing rout sent prices down 52 percent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice. Until now.
Two Fed officials say jobs key to exit strategy HARTFORD, Connecticut (Reuters) - Two Federal Reserve officials said on Friday they would like to see the U.S. jobs picture improve before the central bank withdraws its extraordinary support for the economy and markets.
Gold to hit $1375 this spring: Roger Wiegand The USA government bailouts including TARP and other specious global bank and corporate welfare programs placed a quick band aid on a strategic economic gaping wound. This post Lehman fix was only temporary repairing about 10% of all these problems. Now that big American business and her banks are partially fixed, these banker-idiots are back to their old games with derivatives trading, not making badly needed business loans, and stashing cash inside the guaranteed return nest of Treasury Department bills, notes and bonds. No loans for you or business but plenty for them.
Gold Bounces Off Long-term Critical Suppport Trend Line to Target $1575 2010 The first full week of trading in three weeks has been kind of positive but not all that bullish. Speculators are slowly dragging themselves away from their vacation spots and greater trading activity is expected over the next few weeks.
Gold to ride boom wave, not gloom, in 2010 With the New Year is just into its second week, bullion analysts are on high hopes that the metal will perform better in 2010 as the world is yet to come out of the recession blues. In a way analysts are all banking on the bad news so that gold can make a killing. So, the doomsayers are always backing gold as a safe haven and urging people to invest in the yellow metal.
Gold, silver prices to show continued strength Commodities prices are expected to show strength in the first few months of this year. The strength will not be one-way, however. Periods of profit taking should be expected at times.
U.S. Slaps Tariff on China; Gold Price Jumps . . . . Gold started the year marching higher, and on Tuesday, January 5th the U.S. announced additional duties on those Chinese steel products. In this game of tit-for-tat, it is difficult to say which of the two parties is instigating these actions and which is “retaliating”.
Gold rush continues Stock market declines while gold is up 286 percent - will it hold? Have the hucksters and gold bugs got it right this time? . . . . . . . . Over the last 10 years the blue chip Standard & Poors 500 Index is off 23 percent while gold is up 286 percent. But it is not just the hucksters who see value in this ancient, precious metal.
Gold jumps, Dollar falls on US job losses The wholesale price of gold bullion jumped after falling sharply in Asian trade on Friday, hitting US$1,137.70 an ounce after the United States reported much-worse-than-expected job losses for December. Falling by 85,000 against forecasts of a possible rise, non-farm payrolls shrank for the 23rd month running, taking the total number of jobs lost since January 2008 to 6.4 million.
Bullion: What is gold conspiracy? GATA is the Gold Anti-Trust Action committee. GATA alleges that the gold market is subject to systematic rigging by a series of US and global institutions, in contravention of the USA’s Anti-Trust laws and the Constitution of the USA. The goal of GATA is to bring a case to trial.
Gold Price Suppression and Management to End Is the Gold Price really Managed or Suppressed? We have absolutely no doubt that the gold price has been and may well be, being either suppressed or managed. Just look at the record of gold sales in the 70’s, 80’s 90’s and in this century so far. Gold was sold during these periods, first by the United States. It was done to discredit gold as money and to support the U.S. $ as the prime global reserve currency.
Gold to rise 30% in 2010, silver to reach $21.50 Gold prices surged 24% in 2009 and is set to rise 30% in 2010 in a volatile market, according to Ross Norman of BullionDesk.com. In a prediction released on Friday, Norman said that spot gold prices will average $1236 with possibility of prices touching $1425 and reaching a low of $1080.
Gerald Celente with Brannon Howse 05 January 2010
The ‘barbarous relic’ is back, and it may stay a while Reading the pronouncements of a number of analysts, this year is already mapped out. The US dollar will enjoy a return to stability, the global economy will begin to grow steadily again and there will be no further need for quantitative easing.
Still here, Still Bullish on Gold and Gold Stocks Still all in on Gold and the Gold sector. My Gold is not for sale or trading, it is my cash and cash is king in a secular bear market. My Gold stocks are speculative vehicles with significant inherent risk that I largely trade in and out of, for better or for worse. I remain rabidly bullish on Gold and Gold stocks at current levels.
One More Nail in the Coffin of the Gold Bears “The State is that great fiction by which everyone tries to live at the expense of everyone else.” ….. Frederic Bastiat. The bullish case for gold continues to build. The old adage ‘more dollars chasing fewer goods’ is particularly apt for gold.
LBMA paints rosy picture for precious metals Gold should clock up further price gains this year to just under $1,200 an ounce, according to the London Bullion Market latest annual survey of price forecasts for precious metals.
Gold Moves Higher, Start of a New Upleg? . . . . We are now poised at the beginning of a new year and a new decade. We can hope that the bad things that happened in the first decade were a coda to the previous century, and not an overture of what’s to come. Today the US is cleaning up the mess from the largest financial collapse in history. There is no doubt, as we have written before, that the US will remain vulnerable to misgivings about its sovereign creditworthiness. This is especially so when you consider the high proportion of US debt held overseas.
'Pension, hedge funds can push gold to $5000' Gold prices are set to steadily rise in 2010 if pension and hedge fund managers move even 5% of their assets into gold, according to Nick Barisheff, President and CEO of Bullion Management Group.
Still Bullish on Gold and Gold Stocks 2010 Still all in on Gold and the Gold sector. My Gold is not for sale or trading, it is my cash and cash is king in a secular bear market. My Gold stocks are speculative vehicles with significant inherent risk that I largely trade in and out of, for better or for worse. I remain rabidly bullish on Gold and Gold stocks at current levels.
Gold derivatives zoom by nearly 2300 tonnes On November 12, 2009, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries and Switzerland for the six months ending June 30, 2009. The total notional value of all gold derivatives rose to $425 billion from $332 billion at year-end 2008, corrected from the previously reported figure of $395 billion. Although gold prices more than recovered their decline over the prior six months to close at $935 (London PM), gross market values fell from a corrected $55 billion to $43 billion.
Get Your Gold the Hell Outta Here! That’s the directive that came down from HSBC USA in late November. It seems that everyone these days wants gold. Real, physical gold coins that they can hold in their hands, or bars that they’re assured are resting safely in a well-guarded vault. HSBC’s New York vault, for example, buried deep below its 5th Avenue tower, where it has stored people’s gold since it inherited the facility from Republic Bank a decade ago. But no more.
2010: Year of Silver When did you last heard about gold’s country cousin silver? Maybe, a small article on the last page of your business newspaper or somewhere at the end of the bullion reports on your favourite website. In that just forget your previous mistakes and sit up and think about silver as a better investment than gold in 2010. Even though gold hogged all the limelight in 2009 because of its safe haven demand, silver has been doing extremely well in 2009 also. But, 2010 will be the year of silver if the present trend continues. And, silver is certain to hog headlines in the New Year with the prices and demand set to scale new heights.
Not all plain sailing in emerging markets ...issues are from Asian countries. Mr Booth believes buying local currency debt through a fund is “safer than treasuries and gold.” He sees local currency as a good investment for making returns over the period ahead of global rebalancing and also as...
U.S. Dollar to be Hit Hard In 2010 The feast of cheap and limitless liquidity could not avoid interfering with the international currency market. While in the first six months of the year the crisis was beneficial for the US dollar, in the second half of the year speculators took it out on the dollar over and above. This year is expected to continue weakening of the American currency that dropped to the level of $1.6 for one Euro in 2009.
Dollar Falls Most Since November on Surprise Payrolls Drop The dollar posted its biggest weekly loss since November versus the currencies of major U.S. trading partners as an unexpected drop in jobs boosted speculation that the Federal Reserve may extend stimulus measures.
Doug Casey on Currency Regime Change . . . . My first reaction is to say, "Monkey see, monkey do." In imitation of the European Union, these people are monkeying around with what should be money. That's gold, of course. But you know, I've been surprised that the first of these Esperanto currencies, the euro, has lasted as long as it has.
Why Deflation is Not Ahead There is a debate going on within pro-gold circles: inflation or deflation. The deflationists predict that price deflation is inevitable and imminent. The inflationists insist that mass inflation is inevitable, but maybe not imminent. Deflationists rarely speak of mass deflation, let alone hyperdeflation. Just deflation. They do not say by what percent prices will fall each year or for how many years.
The 401(k) sucker punch DANIEL SOLIN If I were tasked with the responsibility of creating a really terrible 401(k) plan, here's how I would do it. The first critical decision would be to retain a broker as an adviser to the plan. An insurance company could do the job as well, but brokers have a lot more experience acting against the best interest of their clients.
Hank Greenberg Tells WSJ Goldman Sachs Behind AIG’s Collapse Hank Greenberg, former chief executive officer at American International Group Inc., said Goldman Sachs Group Inc. is responsible for the collapse of the insurer during the economic crisis, the Wall Street Journal reported yesterday. “It certainly wouldn’t be difficult to come to that conclusion,” Greenberg is quoted as telling the newspaper.
***Excellent explanation about why we don't know where OUR money went; thank Paulson.
Elizabeth Warren: "Just Take It," Said Hank Paulson to the Banks
FDIC considers plan to penalize banks whose pay practices encourage risky moves The Federal Deposit Insurance Corp. is considering financial penalties for banks whose pay practices encourage reckless behavior, potentially opening a new front in the federal government's effort to reshape the way bankers are paid, according to people familiar with the matter.
Fannie Mae and Freddie Mac Behind the big number of Canceled Foreclosure Auctions? $745 Billion Bailout to Erase Negative Equity for Every Underwater Homeowner. Fannie and Freddie Uncapped. Prelude to new Bailouts? Over the last two months we’ve noticed an interesting pattern in notice of trustee sale auction cancelations. This is the last step before the home is either sold at auction or taken back by the bank as a bank owned property. As we have highlighted, this process can take 18 months from the last payment made on the home given the slow pace banks are moving at.
U.S. Sells Off $1 Billion in Troubled Loans Investment vehicles managed by Colony Capital LLC, including Colony Financial Inc., bought about $1.02 billion in loans from the Federal Deposit Insurance Corporation, Colony said in a statement.
Fannie and Freddie, another American taxpayer nightmare It’s official. Fannie and Freddie are now full wards of the state, departments of the U.S. government. And their obligations are now the obligations of the American taxpayer. . . . . . . . . Now, Fannie and Freddie’s obligations are explicitly guaranteed, without limit by the U.S. Treasury for 3 years, and as needed thereafter.
Lawmakers Press For Geithner AIG Testimony U.S. lawmakers on Friday pressed for Treasury Secretary Timothy Geithner to testify on whether the New York Federal Reserve Bank improperly pressured AIG to withhold information on payments it made to banks after its government bailout. The requests came even as the Obama administration and the New York Fed rushed to say that Geithner, who headed the reserve bank at the time of the AIG rescue, was unaware of any emailed advice by Fed lawyers to limit disclosures.
Issa: If Senate Knew of Geithner's AIG Coverup, No Way He'd Be Treasury Secretary
Issa Visits Campbell Brown to Discuss Geithner-AIG-NY Fed Bailout Triangle
Michael Moore was first to suggest moving your money; Huffington jumped on bandwagon 2-1/2 months later. The trend is caching on.
Michael Moore on Morning Joe: 'Withdraw Your Money from Bailed Out Banks' "They shouldn't be handing out bonuses. They should he handing out warrants for arrests. ... If you have money in any of these banks that took TARP money, take the money out. Take the money out of those banks. Don't reward them. Don't ever trust your money with these people again. Put it in a bank that didn't take TARP money. Put it in a credit union. Just refuse to participate in this." -- Michael Moore on Morning Joe, Thursday, October 15th, 2009
Ordinary Americans lack the power to hurt the big banks Arianna Huffington is mad as hell and not going to take it anymore -- or doesn't think you should. The woman behind the Huffington Post recently exhorted Americans to yank their money out of big banks and open accounts at community banks instead. She called out the Big Four -- Bank of America, Citi, J.P. Morgan Chase and Wells Fargo -- by name for their "slap in the face to taxpayers." The crusade includes a link to a new Web site called Move Your Money (http://www.moveyourmoney.info), which includes clips from "It's a Wonderful Life" and a tool for finding a new bank courtesy of Institutional Risk Analytics.
MOVE YOUR MONEY
Move Your Money: Tell Us About Your Local Bank As national banks soak up bailout dollars, cut lending, and exploit overdraft fees, a number of Americans have decided to move their money to local banks. . . . . Below is a list of the four mega-banks that took the most government bailout money:
Partners Near Default on Stuyvesant Town The owners of Stuyvesant Town and Peter Cooper Village, the sprawling sister complexes overlooking the East River in Manhattan, will miss a $16 million loan payment on Friday, which would put them in technical default on their mortgages, and the 20,000 residents in limbo.
Delinquencies jump for home equity loans, lines of credit The third-quarter increases to record levels contrast with an improvement seen with other consumer loans, the American Bankers Assn. says. Delinquencies on home equity loans and lines of credit jumped to record levels in the third quarter, a banking trade group said Thursday.
CIA bomber video calls for attacks on U.S The suicide bomber who killed CIA agents in Afghanistan had made a video calling on militants to avenge the death of the Pakistani Taliban leader by carrying out attacks in and outside the United States, al Jazeera said.
Mehsud's death sparked CIA attack - 09 Jan 10
Rising gas prices could be a drag on economic recovery Just what Americans need as they try to dig out from the Great Recession: gas prices headed back toward $3 per gallon. The average price of a gallon of regular gasoline hit $2.70 on Thursday, according to the auto club AAA. That's up 67 percent from this time last year, and it's the highest price since October 2008 -- a fact not lost on drivers. Sayed Bilal, a cabdriver in Rockville, estimated that he's spending $200 more a month on gas than he's used to.
Ford’s Bet: It’s a Small World After All HE blew into the Ford Motor Company in 2006 as an outsider from a different industry, and he was hailed as the latest in a long line of purported saviors of a faltering, century-old automotive icon. . . . . the new Ford Focus, is arguably as important to Mr. Mulally as the Model T was to Henry Ford, the founder.
U.S. Job Losses in December Dim Hopes for Quick Upswing The nation lost 85,000 jobs from the economy in December, the Labor Department reported Friday, as hopes for a vigorous recovery ran headlong into the prospect that paychecks could remain painfully scarce into next year.
Massive 43% Jump in U.S. Emergency Unemployment Benefits, Government Manipulating Data? I was intrigued by a post by Zero Hedge asking Is The Government Misrepresenting Unemployment By 32%? "...government spent a record $14.7 billion on Unemployment Insurance Benefits as of December 30, a 24% jump sequentially from the $11.8 billion in November. Yet the DOL has disclosed a mere 1.7% increase in those to whom insurance benefits are paid: from 9.4 million to just under 9.6 million. To put the $14.7 billion number in perspective, in December the Federal Government paid a total of $14 billion ($700 million less) in Federal Salaries!
Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said. Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.
Obama's Green Jobs Program: $135,294 Per Job The White House announced Friday the awarding of $2.3 billion in tax credits — the money comes from last year’s stimulus bill — to companies to create “green jobs.”
Census Jobs May Jump-Start U.S. Employment Rebound in 2010 The 2010 census couldn’t have come at a better time for the U.S. economy. The government will hire about 1.2 million temporary workers in the first half of the year to administer the decennial population count, possibly providing a bridge to gains in private employment later in the year.
Making Sense of the Mixed-Up Unemployment Report DAN BURROWS This will be of no comfort to the combined 3,000 workers set to be laid off from UPS (UPS) and Lockheed Martin (LMT), or the 85,000 folks who lost their jobs in December, or the record 40% of Americans out of work for more than 27 weeks, but Friday's unemployment report wasn't all bad.
UPS Job Cuts: 1,800 U.S. Administrative Positions To Be Eliminated Shipping giant UPS Inc. will cut 1,800 management and administrative jobs, less than 1 percent of its global work force, as it repositions itself for a gradual economic recovery with improved technology and fewer employees. About 1,100 employees will be offered a voluntary separation package as part of the work force reduction, which is meant to streamline the company's U.S. small package segment.
Recession proves a perfect time to open a shoe repair business LAKE OSWEGO -- With so many people pounding the pavement for work these days, local cobblers have a new spring in their step. John Dunlop, a native Australian who once owned a shoe repair shop just down Pennsylvania Avenue from the White House, figured the recession was a perfect time to build a business in Oregon. "I've always wanted to get back into this type of work," said Dunlop, who came to Oregon in 2000 and has done repair work in several Portland shops -- some of which had waiting lists stretching to several weeks.
In Europe and U.S., Data Shows Murky Job Outlook The euro area has joined the United States in reaching a 10 percent unemployment rate as the American economy lost more jobs than expected in December, according to statistics released Friday. The latest data tempered hopes in Europe and the United States for a rapid recovery that did not depend on large doses of government support.
Government health insurance option appears doomed Senior House Democrats have largely abandoned hopes of including a government-run insurance option in the final compromise health care bill taking shape, according to several officials, and are pushing for other measures to rein in private insurers.
Nelson Says He Wants Medicaid Deal for All States Sen. Ben Nelson said Thursday he has asked Democratic leadership to extend to all states the extra Medicaid funding promised to Nebraska in the health care reform bill. The Democrat wouldn't say who he has spoken to regarding the so-called "Cornhusker Kickback" but that he would see to it that Nebraska doesn't get a special deal.
America’s Healthcare Fraud, Confessions of a Drug Rep If America ever expects to fix its broken healthcare system, all of the problems must first be identified. Only then can a solution be engineered. While Obama's plan certainly provides no real solution, the current system is clearly broken and needs a radical overhaul.
Webster Tarpley on RT 12/29/09 The recent failed attack on a US passenger jet traveling from Amsterdam to Detroit was a set-up provocation controlled by US intelligence, author and journalist Webster Tarpley stated to RT.
Fourth church attacked in Malaysia as Allah row deepens KUALA LUMPUR (Reuters) - Arsonists in Malaysia struck a fourth church on Saturday as the government tried to soothe tensions arising from a row over the use of the word "Allah" to refer to the Christian God. The unprecedented attacks risk dividing the mainly Muslim nation of 28 million people, which has significant religious minorities, and complicating Prime Minister Najib Razak's plan to win back support from the non-Muslims before the next elections by 2013.
Cook: Dems Could Lose The House Veteran political analyst Charlie Cook says retirements are creating a “vicious circle” for Democratic politicians. For the first time, he sees a significant risk that Democrats could lose the House this year if trends continue. (Somebody alert RNC Chairman Michael Steele).
Chávez Devalues Currency Amid Oil Fall CARACAS, Venezuela — President Hugo Chávez announced a sharp devaluation of Venezuela’s currency on Friday night, a move that reflects the financial stress faced by his government since the price of oil, the country’s top export commodity, fell from its peak as a result of the global financial crisis.
Chavez Devalues Bolivar 50%, First Time Since 2005 Venezuela devalued its currency by half yesterday, the first such action since March 2005, as President Hugo Chavez seeks to pull the economy from recession amid falling oil revenue.
Chavez says Venezuela jets intercepted U.S. plane President Hugo Chavez said he ordered two F-16 jets to intercept a U.S. military plane that twice entered Venezuelan skies on Friday, but Washington said none of its planes flew over the South American country's airspace.
Russia-Brazil Foreign Policy: Perspectives for 2010 Reflections on Russian foreign policy in 2009 and prospects for the development of relations with Brazil in 2010 The year 2009 was particularly symbolic for Russian foreign policy in terms of bilateral relations between Russia and the U.S., with the new recent American foreign policy of antagonism with the question of Iran's nuclear program and the establishment of the missile shield in Poland and Czech Republic regressed considerably.
U.S. Has Few Resources to Face Threats in Yemen As the Obama administration confronts the latest terrorism threat in Yemen, its diplomatic and development efforts are being constrained by a shortage of resources, a lack of in-house expertise and a fraught history with a Yemeni leader deeply ambivalent about American help. Administration officials said they focused on Yemen as a hothouse for Islamic terrorism from the day President Obama took office. The United States has tripled its foreign assistance to the country from 2008 levels and plans to spend up to $63 million on Yemen this year.
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US preparing forces for possibility of conflict with Iran The US does not want to see confrontation with Iran but is still preparing its military for that possibility, America's top uniformed officer said Thursday. "We've looked to do all we can to ensure that conflict doesn't break out there, while at the same time preparing forces, as we do for many contingencies that we understand might occur," Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said during an appearance at the Washington Institute for Near East Policy. Mullen had been asked whether the US military was stretched too thin to take further action in trouble spots beyond Iraq and Afghanistan.
Russia, China, Iran redraw energy map The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran. The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony?
Uh-oh: The return of $3 gas Baby, it's cold outside! And that's bad news for anybody who's been to the gas station lately. The frigid temperatures across much of the United States so far this year are one reason why energy prices have recently spiked. Crude oil is now hovering around $82.50 a barrel, barely below a 14-month high. Even more troublesome for consumers, the average price of an unleaded gallon of gasoline nationwide is now nearly $2.71 a gallon, according to AAA. Gas prices have shot up 7 cents in just the past week and are now higher than they were during any point in 2009.
Oil Could "Easily" Hit $90: Energy Key to 2010 Stock Market, Philip Roth Says
2010: Giant Gathering Storm Clouds The year 2008 bore my mark as the year the system broke. A public article addressed the issues, laid out before the breakdown occurred in September of that year. The consequences for the many failures, the desperate nationalizations, the hasty scrambles to put financial sewage under USGovt ownership, the realization of TARP as a vast slush fund for illegitimate bank rescues, the official monetization plans put forth to prevent bond implosions, and much more occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and the threats must again be laid out. A prelude was offered in an mid-December article entitled " Full Circle of Govt Debt Default" where a global sovereign debt ruin in vicious circle was displayed the sequence that started in the Untied States and will end in the Untied States.
Tea Party plans to protest General Motors during Nancy Pelosi's visit to Detroit Auto Show House Speaker Nancy Pelosi will have some company next week in Detroit: Organizers of the National Tax Day Tea Party movement are calling for a rally against General Motors outside the 2010 North American International Auto Show. "Come let Nancy Pelosi and Harry Reid hear what you think about the government takeover of General Motors," reads a message on a Facebook event page set up by the group. "They will be in Detroit on Monday and so will we! Will you join us?"
Kansas City Fed's Hoenig calls for sharp rate hikes, starting soon The Federal Reserve should start tightening monetary policy -- spelling higher U.S. interest rates -- "sooner rather than later," said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, on Thursday. "The Federal Reserve must curtail its emergency credit and financial market support programs, raise the federal-funds rate target from zero back to a more normal level, probably between 3.5% and 4.5%, and restore its balance sheet to pre-crisis size and configuration," Hoenig said in a speech at the Central Exchange in Kansas City. Hoenig will be a voting member of the Federal Open Market Committee, the panel charged with setting interest-rate policy, this year.
U.S. Warns Banks to Guard Against Rate-Rise Risks U.S. regulators including the Federal Reserve warned banks to guard against possible losses from an end to low interest rates and reduce risk or raise capital if needed. “In the current environment of historically low short-term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates,” the Federal Financial Institutions Examination Council, made up of agencies including the Fed and the Federal Deposit Insurance Corp., said in a statement today.
Employers unexpectedly cut jobs in December U.S. employers unexpectedly cut 85,000 jobs in December, cooling optimism on the labor market's recovery and keeping pressure on President Barack Obama to find ways to spur job growth. The Labor Department said on Friday that November payrolls were revised to show the economy actually added 4,000 jobs rather than losing 11,000 as initially reported, breaking a streak of consecutive losses that dates back to December 2007. With revisions to October, however, the economy lost 1,000 more jobs than previously estimated over the two months. The unemployment rate was unchanged at 10 percent in December, but that reflected a surprisingly large number of people leaving the labor force.
Harsh Realities: 85K Jobs Lost in December, "Real" Unemployment Rate at 17.3% The December payroll report was disappointing, with 85,000 jobs lost last month vs. expectations for a flat reading and "whispers" of a gain of as much as 40,000. The unemployment rate held steady at 10%, as expected. The December figures raise the stakes for President Obama, who is scheduled to speak about economic issues today at 2:40 p.m. ET. In the aftermath of Friday's jobs report, some observers are calling on the administration to do more to help the unemployed and spur job creation. Whether President Obama has the political capital to do more than jawbone remains to be seen.
Jobless Numbers May Signal Next Risk: Inflation What to watch when the data come out Friday. It’s a signal of just how bad the economy was last year that investors will probably cheer if the Labor Department announces Friday that the December unemployment rate came in at 10%. Never mind that you have to go back to the recession of 1982 to see similar jobless levels. After apparently hitting a peak of 10.2% in October, unemployment fell to 10% in November. Another month like that could indicate the economy has stopped shrinking and is even beginning to expand.
Geithner’s Fed Told AIG to Limit Swaps Disclosure The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show. AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
AIG Bailout Keeps Dogging Tim Geithner The fall out from the government rescue of American International Group keeps raining on Tim Geithner. The latest dust up: the Federal Reserve Bank of New York, while led by Geithner, pressured AIG not to disclose payments it made to such banks as Goldman Sachs Group and Deutsche Bank, to settle swap contracts at the height of the financial crisis, according to a Bloomberg report this morning. . . . . Emails between Geithner’s Fed and AIG lawyers show that the embattled insurer originally included the information about the swaps in a draft securities filing. But under review by the Fed, AIG was told to cross out references to the swap payments, which were made at 100 cents on the dollar.
Are Geithner's Days Numbered? Near the top of President Barack Obama's To Do list for 2010 should be finding a new Treasury Secretary. It's hard to see how Tim Geithner is going to recover from recent revelations about his role in the AIG bailout that saw counterparties like Goldman Sachs (GS) paid 100 cents on the dollar when, during that time, everyone else was getting a major haircut.
Latest AIG Revelations: One More Reason Why Geithner's Got to Go The latest revelations about the New York Fed's actions in the AIG bailout make one thing clear: Treasury Secretary Tim Geithner must go. Geithner must go not just because of the emails showing that his New York Fed ordered AIG to keep details of the bailout secret, but because of many other decisions and policies he has championed in the past two years. These decisions and policies have consistently put the interests of Wall Street ahead of the interests of the taxpayer, and they have undermined the public's confidence in the government at a time when the country needs it the most.
The AIG fiasco keeps getting worse The AIG bailout isn't going away, much as Treasury Secretary Tim Geithner might like it to. The $180 billion fiasco was back in the news Thursday, after Bloomberg reported that the Federal Reserve Bank of New York prodded the troubled insurer at the end of 2008 to withhold some gory details of its bailout deal from the public. The instructions came at a time when Geithner, who is now the Treasury secretary, led the New York Fed. Along with Fed chief Ben Bernanke and former Treasury Secretary Henry Paulson, Geithner was one of the key architects of the federal response to the economic meltdown of 2008.
Banks Should Make Swap Prices More Transparent, N.Y. Fed Says Goldman Sachs Group Inc., JPMorgan Chase & Co. and other banks in the $605 trillion over-the- counter derivatives market should make swap prices more transparent, according to the Federal Reserve Bank of New York. Derivatives regulation pending in Congress should support the use of electronic trading platforms for all market participants, the New York Fed said today in a staff report. In some cases, users should be required to employ a price-reporting system similar to one established for the corporate bond market in 2002, according to the report.
The Fed's Culture of Secrecy If and when the Fed embarks upon its soul-searching project, it shouldn’t just look at its regulatory failures and its inability to spot or care about the housing bubble. It must also think long and hard about its culture of secrecy, which seems generally designed to further the interests of its big-bank shareholders while keeping the public as ignorant as possible. Hugh Son has the story of the lengths to which the Fed and its Davis Polk lawyers were consistently telling AIG (AIG) to disclose as little as possible, even as the SEC was asking for more transparency from the publicly-listed corporation.
How your tax dollars were used to bribe members of Congress There’s a famous cartoon of a bird trying to eat a frog. The bird has the frog by the head but can’t swallow it because the frog has the bird by the neck and is choking the life out of it. Think of the bird as the Democrats, and the frog as either the cancerous healthcare bill, or the poor beleaguered American taxpayer. We think the Democrats are going to choke on this healthcare bill, or, if they finally pass it, the voters will strangle them in the coming election. Meanwhile . . .
Staring into a Spending Abyss The United States economy arrives in 2010 with hopes for a better year than last, but also with an old and large elephant in the national living room. Two symbolic elephants, really: the soaring federal budget deficit and the spiraling national debt. Those of a mind to see for themselves can go to www.usdebtclock.org for a quick and jarring representation of just how fast both are growing. Here you can see the dollar digits change at an eye-crossing blur on both the budget deficit and the national debt. (The U.S. Debt Clock Web site is a real-time compilation of federal economic and demographic statistics.)
Gerald Celente America like Zimbabwe Total Collapse pt 1/2 (1.02.2009)
Gold's steadfast performance... From the end of 2001 ($276.50) to the end of 2009 ($1104.00), gold has exactly quadrupled in value, registering fairly modest and methodical gains each and every year for the past eight years. From any fair-minded assessment, there is certainly nothing frothy or bubbly about its performance of the past year as it compares very typically to the range of these other annual metrics on a percentage basis.
U.S. Economy Gives More Reasons to Own Silver and Gold wise man once said "Hope for the best, plan for the worst." If he was still alive today he would probably conclude the world is "Nucking Futs". There are a number of indicators that point to the need to get out of debt, preserve your wealth, and prepare for the worst. Here's a compilation of items from here and there. - In 2009, Treasury Secretary Geithner signed off on a report that indicated the Social Security Trust Fund (SSTF) would, in 2016, pay out more than it took in from payroll taxes. Like most things the Government says, they were wrong. In 2009, seven years too soon, the SSTF took in 670B and paid out 676B. The SSTF still was in the black, thanks to interest on some 2.5T in US Treasury Bonds, but it was less than half of what was expected for 09. This does not bode well for the future.
Gold falls on stronger dollar, lower crude futures Gold futures fell Thursday for the first session in the past five as jitters that China may raise interest rates and cut global growth pressured commodities and lifted the dollar, reducing the metal's investment appeal. Crude-oil futures fell for the first time in 11 days, dropping from their highest level in nearly 15 months. Falling oil prices lessen the perceived threat of inflation. Read more on oil. The People's Bank of China made a move that fueled fears interest rates could rise soon. See story about China's rate. The dollar also rose against the yen after Japan's newly appointed top finance official talked down his country's currency. Read more about currencies.
Investment demand to fuel silver price in 2010 Precious metals prices were popping off of holiday lows Monday as traders returned to the markets. Gold had jumped as high as $1124 an ounce by 9:30am in New York and silver soared to $17.59 by 11am as a weaker dollar made the shiny cousins much more attractive. If silver continues to rally toward the $18 level, we can expect further price increases on industrial demand, says CommodityOnline, as manufacturers “buy on concerns of having to purchase silver at higher prices later.”
Dollar Holds Onto Gains China's Apparent Monetary Tightening Curtails Risk Plays The dollar retained its earlier gains as investors focused on U.S. jobs data scheduled for Friday. Caution ahead of the monthly employment report kept major currencies confined to narrow ranges on Thursday, and likely will keep movements constrained during overnight trading. "Unless we get anything untoward happening in Asia overnight, it's quite likely we've seen the extremes for the near term for the euro, and likely the yen, as well," said Shaun Osborne, chief currency strategist at TD Securities. Late Thursday in New York, the euro
2010 Preview: The Wonderful Wizard of USD The same day President Richard Nixon closed the "gold window” Ron Paul entered politics. Dr. Paul has been fighting to end the Federal Reserve ever since - he has been supporting a bill to audit the Fed since 1976. In 2009 Congressman Ron Paul’s bill to audit the Fed was included in the Wall Street reform bill and passed by the House. Only the Senate* stands in front of Congressman Paul’s heroic battle to audit the secretive act of the central bank wizards.
Japan finance minister: will act on yen if needed Japan's new finance minister said Friday that Tokyo would take action over the strong yen if needed, but added that in general markets should set currency levels. "Basically, the market determines foreign exchange" rates, Naoto Kan said at a news conference. As finance minister, however, it was his duty "to take action on foreign exchange when necessary," he added.
The Mess That Bernanke Is Making Worse If there is one man in the nation's capitol who maybe isn't too unhappy about Treasury Secretary Tim Geithner being in the news today, it's probably Fed Chairman Ben Bernanke who delivered a speech titled Monetary Policy and the Housing Bubble over the weekend, a topic that continues to generate a lot of discussion at mid-week, little of it positive.
Gerald Celente America like Zimbabwe Total Collapse pt 2/2 (1.02.2009)
Fed Plan to Stop Buying Mortgages Feeds Recovery Worries The Federal Reserve's pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the fragile housing recovery off course. Rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates, near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy.
Fed Debates Extending Its Mortgage Purchases Beyond March Should the Federal Reserve continue to support the housing market through its mortgage-purchase program beyond March 2010? That question stirred some contention at the Dec.15-16 meeting of the Federal Open Market Committee, according to the minutes of that meeting released Wednesday. All members at the meeting agreed there should be "no changes to the Committee's large scale asset purchase programs" at that time. The committee affirmed its intention to purchase $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt by the end of the first quarter of 2010, and to "gradually slow the pace of these purchases to promote a smooth transition in markets."
Investors wait to see who fills US mortgage hole As the US Federal Reserve pulls back from the mortgage market, will the government and its proxies, Fannie Mae and Freddie Mac, pick up the baton? Many investors are looking to Fannie and Freddie to play an expanded role in the market for mortgage-backed securities (MBS) – helping to keep the market liquid and mortgage rates low – as the Fed completes its $1,250bn (£780bn) purchase programme.
Fed emergency loans to banks up slightly Fed emergency loans to banks increase slightly but remain well below levels at peak of crisis Banks borrowed slightly more from the Federal Reserve's emergency lending program over the past week but the amount was still well below levels reached during the height of the financial crisis, the Fed said Thursday. Commercial banks averaged $19.45 billion in daily borrowing for the week that ended Wednesday. That was up from $18.74 billion in average borrowing for the previous week.
Bank of America to pay bonuses close to '07 levels Bank of America Corp will pay its investment bankers bonuses close to the levels of 2007, as it tries to reduce defections following its takeover of Merrill Lynch & Co., the Wall Street Journal said late Thursday. Citing people familiar with the matter, the paper said on its website some bankers were expected to receive bonuses equal to what they got in 2007, but the overall average was likely to be "somewhat" lower. Under the basic formula likely to be used, about 25 percent of 2009 bonuses will be paid in cash, with the rest as deferred payments of stock or cash that will vary in value with the company's performance, the Journal said.
Big pay for Fannie, Freddie CEOs As the nation's thoughts turned to eggnog and gift-giving on Christmas Eve, the news hit: "Fannie Mae, Freddie Mac executive compensation significantly reduced." Better yet, the government said the pay would be more aligned with "taxpayer interests." All this sounded like a reason for some holiday cheer. One might expect the government to keep pay under tight control at the mortgage giants, which have taken $111 billion in taxpayer money over the last year and just got a blank check for more. Instead, the taxpayer got scrooged.
Broken Promises: Obama's Legislative Agenda in Trouble, Politico's Vogel Says News that two senior Democrats -- Chris Dodd of Connecticut and Byron Dorgan of North Dakota -- are retiring from the Senate has shaken the ground under President Obama. "His legislative agenda is what's in trouble," says our guest Ken Vogel, senior reporter at Politico.com. Sure the President pushed through his health-care agenda. But "in doing so the Democrats dispensed with this idea that he (Obama) was going to really pursue a bipartisan course and seek consensus to bring on board Republicans. That's over."
FDIC Weighs Tying Fees to Banks' Pay The Federal Deposit Insurance Corp.'s board could vote next week to propose tying the fees lenders pay the agency for deposit insurance to the risk profile of compensation packages for executives, people familiar with the matter said. The plan, if adopted by the regulator, could serve as both a carrot and a stick for lenders. Banks with compensation structures the FDIC views as less risky, such as those that allow firms to claw back pay from executives, could be given a break on the fees they pay on deposit insurance. Firms that have pay structures the FDIC views as giving officials an incentive to put the company at more risk could be forced to pay more.
Feldstein Says Lack of 2010 Stimulus ‘Serious Cloud’ on Growth Harvard University economics professor Martin Feldstein said U.S. economic growth may falter this year because of a waning stimulus from federal spending and tax incentives for purchases of homes and autos. “These forms of stimulus will be missing in 2010, creating a serious cloud over the near-term economic outlook,” Feldstein said today during a panel discussion in Atlanta sponsored by the Allied Social Science Associations. His comments were echoed by Joseph Stiglitz, the Nobel Prize-winning economist, who said on the same panel that “robust” growth is unlikely soon.
Ron Paul: Don't Fire Bernanke - Fire the Fed!
Deficit, Budget Woes Need Solutions as U.S. Nears the Precipice The Obama administration has a lot to wish for in 2010, including a new health-care system and a sustainable economic recovery. But even if those wishes come true, policy makers face an even bigger problem in the new year and beyond: convincing the world that the U.S. government can get its finances back in order.
10 Emerging Financial Centers That Will Blindside New York and London The financial crisis slammed global banking hubs around the world. Were it not for government bailouts, Wall Street, The City and other banking hubs may never have recovered. The traditional financial powerhouses stand weakened, and others, long hungry to steal their business, are taking advantage. Around the world, regional banking centers like Toronto, Shanghai, Singapore and Zurich are poised for explosive growth and to become the new world financial leaders.
Chinese Decision on Rates Seen as ‘Turning Point’ HONG KONG — China’s central bank raised a key interest rate slightly Thursday for the first time in nearly five months, in what economists interpreted as the beginning of a broader move to tighten monetary policy and forestall inflation. After breaking stride a year ago during the global economic slowdown, the Chinese economy resumed galloping growth over the summer. Government investments, real estate construction and consumer spending are all rising briskly, thanks to a surge in lending by government-controlled banks. Even exports have begun to recover despite continued economic weakness in the European Union and the United States, China’s two biggest overseas markets.
Contrarian Investor Predicts Economic Crash in China SHANGHAI — James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc. As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.
It’s Not Our Fault It seems that the primary qualification needed by any chairman of the Federal Reserve is the ability to never admit error, no matter how damning the evidence. During his tenure on the job, Alan Greenspan set the standard for implausible deniability. But in a speech last weekend in Atlanta, current chairman Ben Bernanke did the Maestro one better. In a tortured academic dissertation, Bernanke explicitly denied any Fed culpability for inflating the housing bubble and for the financial crisis that began when it burst. Despite his best efforts, no one seemed particularly convinced. By taking such an absurd stand, he has destroyed any credibility he may have had left.
Ben Bernanke was Wrong
What Price a Planned Economy? The link between classical liberalism and present-day Socialism — often still misnamed liberalism — is undoubtedly the belief that the consummation of individual freedom requires relief from the most pressing economic cares. If this seems attainable only at the price of restricting freedom in economic activity, then that price must be paid; and it may be conceded that most of those who want to restrict private initiative in economic life do so in the hope of creating more freedom in spheres which they value higher.
The Gates of Hell Have Opened The abyss is widening, many have already fallen in. The Fat Boys at Goldman say they are doing God's work, do they really believe that. Maybe they know dark secrets we are not privy to. What does God's work entail? Stopping fear and panic? Holding up asset prices and presenting the illusion of a stable, recovering economy? If they fail, then hell will follow.
The Human Ecology of Collapse The old legend of the Holy Grail has a plot twist that's oddly relevant to the predicament of industrial civilization. A knight who went searching for the Grail, so the story has it, if he was brave and pure, would sooner or later reach an isolated castle in the midst of the desolate Waste Land. There the Grail could be found and the Waste Land made green again, but only if the knight asked the right question. Failing that, he would wake the next morning in a deserted castle, which would vanish behind him as soon as he left, and it might take years of searching to find the castle again.
Testing Taxpayers' Pain Threshold Global authorities repeatedly have said they will do whatever it takes to combat the credit crisis and recession. But are taxpayers prepared to pay whatever it takes? For some, like Latvia, Iceland and Ireland, austerity budgets already are in place; for others, the pain still lies ahead. Investors should watch out for clashes between the social contract governments have with citizens and the market contracts governments have with lenders and investors.
State Tax Revenue in U.S. Drops Most Since 1963, Study Says U.S. state tax collections fell the most in 46 years in the first three quarters of 2009 as the recession shrank revenue from sources including personal income, the Nelson A. Rockefeller Institute of Government said. Revenue dropped 13.3 percent, or $80 billion, compared with the same nine months of 2008, to $523 billion, the institute said. Collections in the third quarter alone sank 10.9 percent to about $162 billion, according to the report released today by the Albany-based body. It was the fourth straight quarterly decline. The institute is the public policy research arm of the State University of New York.
Principal Cuts on Lender Menus as Foreclosures Rise Efforts by U.S. banks to help distressed homeowners have focused mainly on temporary fixes such as interest-rate reductions that may only put off the day of reckoning, despite policy makers wanting them to do more. Banks may be forced to resort to a remedy they’ve been trying to avoid -- principal reductions -- as another wave of foreclosures looms and payments on risky loans rise, Bloomberg BusinessWeek magazine reports in the Jan. 18 issue.
Soaring rate of bankruptcies expected to continue in 2010 Debt, mortgage woes hit hard Not only did U.S. consumer bankruptcies jump by nearly a third in 2009, but bankruptcy analysts expect matters to worsen again in 2010 as the deepest economic downturn since the Great Depression continues to work its way through American households. Consumer bankruptcy filings exceeded 1.4 million last year compared with 1.06 million in 2008, an increase of 32 percent, according to the American Bankruptcy Institute (ABI), a nonpartisan, independent research and education organization. The ABI relied on data compiled by the National Bankruptcy Research Center.
Wave of Bankruptcies Hits States Hammered by Housing Bust Personal bankruptcies soared last year in Western states hit hardest by the real-estate bust. In states such as California, Arizona and Nevada, where housing prices soared and then collapsed during the past decade, consumer bankruptcy filings rose roughly twice as much as the national average increase of 32%. Homeowners fell behind on mortgages and could no longer tap into their home equity to pay down other debts.
Schwarzenegger Seeks U.S. Funds California Gov. Arnold Schwarzenegger on Wednesday asked Washington for funds to help close his state's massive budget shortfall -- a move some other states are likely to follow in coming months as they deal with their own fiscal woes. "The federal government is part of our budget problem," the Republican governor said in his annual State of the State address, reiterating a longstanding complaint that California sends far more money to Washington than it receives in return. Mr. Schwarzenegger also said federally mandated spending of state money has further strained California's coffers.
More California hotels in trouble in 2009 The number of California hotels that are in default or in foreclosure continued to increase in 2009 because of slumping travel demand and declining real estate values, according to a new hospitality report. The report by Atlas Hospitality Group said the number of hotels that were in foreclosure rose 313%, from 15 in 2008 to 62 in 2009. More than half of the foreclosed hotels have filed for bankruptcy. The number of hotels in default on their loans jumped 479%, from 53 in 2008 to 307 in 2009. The largest hotel to be foreclosed is the 469-room Marriott in downtown Los Angeles. Other troubled properties include the St. Regis Monarch Beach in Dana Point, the Sheraton Universal and the W hotel in San Diego.
Rubin, Oil Rally Predictor, Sees $100 Crude in 2010 Jeff Rubin, the former CIBC World Markets Inc. chief economist who accurately predicted oil’s surge during the last decade, expects crude to reach $90 a barrel this quarter and $100 by the year’s end. Accelerating demand in Asia and the Middle East will force consumers to rely on costlier non-conventional energy sources such as oil sands, said Rubin, who spent 20 years with the Toronto-based bank and last year published a book on energy economics, “Why Your World is About to Get a Whole Lot Smaller.” Rubin correctly forecast in 2007 that crude would reach $100.
Grassley seeks accounting of 'Cash for Clunkers' costs A top Senate Republican has asked for a full accounting of the "Cash for Clunkers" incentive program as the Department of Transportation puts the finishing touches on last summer's economic boost to the struggling auto industry. A report submitted to Congress in late December said the department has spent $77 million on administrative costs to run the Consumer Assistance to Recycle and Save Act, commonly known as CARS or by the Clunkers meme. The popular program provided up to $4,500 to customers trading in older vehicles. Congress added an additional $2 billion to the program last summer amid unexpectedly high demand.
A New Target for Conservatives: Power Companies The annual winter meeting of the nation’s biggest shareholder-owned electric utilities is normally a snooze, getting little attention from outsiders. Not this year. On Thursday, dozens of marchers -– some toting signs with slogans such as “Welcome, Carbon Crooks” -– protested outside the Edison Electric Institute’s annual board of directors meeting in Scottsdale, Ariz., venting their fury over the industry’s efforts to help congressional Democrats on legislation that would cap U.S. greenhouse-gas emissions.
7 million lost jobs: Gone forever? A two-year string of job losses appears to be near an end, if it hasn't ended already. But most economists don't expect the employment picture to significantly improve anytime this year -- or over the next few years for that matter. The unemployment rate, which stood at 10% in November, is expected to stay uncomfortably high for the foreseeable future. Some experts even suggest that the labor market won't be able to fully recover from the 7.2 million jobs lost since the start of 2008 before another recession and round of job losses.
Job Growth Erodes as Housing Bust Pushes Mobility to Record Low Raul Lopez, laid off from three construction jobs since October 2007, is focusing his search for work near Antioch, California, because his $392,000 mortgage is almost triple the price his home there would sell for today. “If it wasn’t for the house, I’d probably move closer to Oakland, Hayward, San Leandro, places where there are jobs,” said Lopez, 36, who is married with four daughters. The ability to relocate for employment, which helped the U.S. recover quickly after previous deep recessions, is the latest victim of the housing bust. About 12.5 percent of Americans moved in the year ended March 2009, the second-lowest ever, estimates Brookings Institution demographer William Frey, after a 60-year record low of 11.9 percent the previous year.
Delinquency Rate Rises for Mortgages Commercial Borrowers Fall Behind More than 6% of commercial-mortgage borrowers in the U.S. have fallen behind in their payments, a sign of potential troubles ahead as nearly $40 billion of commercial-mortgage-backed bonds come due this year. The percentage of loans 30 days or more delinquent rose to 6.07% in December from 5.65% a month earlier, according to data provider Trepp LLC, a commercial-mortgage data provider. That is the highest delinquency rate since the advent of commercial-mortgage-backed securities.
Walk Away From Your Mortgage! John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the "message" they will send to "their family and their kids and their friends." Courson was implying that homeowners - record numbers of whom continue to default - have a responsibility to make good. He wasn't referring to the people who have no choice, who can't afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay.
U.S. Now a Renters' Market With Apartment-Vacancy Rate at 30-Year High, Landlords Cut Prices 3% in 2009 Apartment vacancies hit a 30-year high in the fourth quarter, and rents fell as landlords scrambled to retain existing tenants and attract new ones. The vacancy rate ended the year at 8%, the highest level since Reis Inc., a New York research firm that tracks vacancies and rents in the top 79 U.S. markets, began its tally in 1980. Rents fell 3% last year, according to Reis, led by declines in San Jose, Calif., Seattle, San Francisco and other cities that had brisk growth until the recession.
Pelosi says Congress close to health deal U.S. House of Representatives Speaker Nancy Pelosi said on Wednesday congressional Democrats were close to agreement on merging their healthcare bills but still faced challenges in blending the two approaches. For the second consecutive day, Pelosi and other House Democratic leaders met with President Barack Obama at the White House to discuss ways to reconcile the House's healthcare overhaul with a version passed by the Senate. "We've had a very intense couple of days," Pelosi told reporters after the White House meeting. "I think we are very close to reconciliation, respectful of the challenges."
Married Couples Pay More Than Unmarried Under Health Bill Some married couples would pay thousands of dollars more for the same health insurance coverage as unmarried people living together, under the health insurance overhaul plan pending in Congress. The built-in "marriage penalty" in both House and Senate healthcare bills has received scant attention. But for scores of low-income and middle-income couples, it could mean a hike of $2,000 or more in annual insurance premiums the moment they say "I do." The disparity comes about in part because subsidies for purchasing health insurance under the plan from congressional Democrats are pegged to federal poverty guidelines. That has the effect of limiting subsidies for married couples with a combined income, compared to if the individuals are single.
ObamaCare Transparency Promise Broken Transparency be damned. It seems as if many of the elites in Washington, D.C. were for transparency before they were against it. President Barack Obama, Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid all promised and pledged transparency as part of a covenant with the American people to allow them to take power. Those promises have been broken. One Senior Congressional Staffer tells Big Government that “for elected officials that promised the most transparent Congress ever, I never believed them, but it is stunning how fast they are going back on their promises as if they think the voters are too dumb to remember things they said 3 years ago.”
Obama OKs Taxing High End Health Plans President Barack Obama signaled to House Democratic leaders Wednesday that they'll have to drop their opposition to taxing high-end health insurance plans to pay for health coverage for millions of uninsured Americans. In a meeting at the White House, Obama expressed his preference for the insurance tax contained in the Senate's health overhaul bill, but largely opposed by House Democrats and organized labor, Democratic aides said. The aides spoke on condition of anonymity because the meeting was private.
No. 1 persecutor tests weapons on Christians North Korea tops list dominated by nations under Islamic law North Korea, which reportedly has used believers as guinea pigs to test chemical and biological weapons, is the world's worst persecutor of Christians, while Iran, which may be using Christians as scapegoats for internal opposition to its president, is No. 2 on the Open Doors 2010 World Watch List.
Fallen pawns in US's strategic game CHIANG MAI - Thailand's recent decision to send back more than 4,000 ethnic Hmong refugees to neighboring Laos has raised hackles with human-rights groups and stoked tensions with the United States and United Nations. The forced repatriation marks a controversial closure to the US Central Intelligence Agency's Vietnam War era support for the rebel Hmong, who continue in small numbers to resist the communist-run Lao government. The Hmong have been a sticking point in normalizing Thai-Laos bilateral relations, which have gradually improved since the end of the Cold War and a brief border war fought in 1987-1988. For Thailand, the repatriation removes a potentially destabilizing factor in its continued internal political battle between the government of Prime Minister Abhisit Vejjajiva and supporters of ousted former premier, Thaksin Shinawatra. Appeals to Thai nationalism have already inflamed a row with neighboring Cambodia, which Thaksin's operatives have exploited to their political advantage.
Gaza snakeheads and Mexican drug cartels What does a Gazan "snakehead" (or smuggling-tunnel owner) have in common with a drug dealer working for the Mexican cartel? Both have profit margins of around 400 percent: A Gazan snakehead can build a tunnel for $40,000 and make up to $200,000 each day; likewise, the wholesale price for a kilo of cocaine in America can run between $15,000 and $25,000 (depending on the seller's proximity to the Mexican border) and can fetch around $90,000. And both represent a seemingly unfixable border problem between two countries.
Yemen says there are limits to its military cooperation with United States SANAA, YEMEN -- In its strongest language yet, Yemen's government declared Thursday that there are limits to its military cooperation with the United States, warning that any direct U.S. action in this impoverished Middle Eastern nation could bolster the popularity of Islamist militants. "If there is direct intervention by the United States, it will strengthen al-Qaeda," warned Rashad al-Alimi, Yemen's deputy prime minister for security and defense. "We cannot accept any foreign troops on Yemeni territory."
What the Soviets Learned Thirty years ago today, on Dec. 24, 1979, the Soviet Union invaded Afghanistan. The United States saw the invasion as unmistakable evidence that the Soviets were committed to aggression in the Middle East and the Third World. It was “the greatest threat to peace since the Second World War,” President Jimmy Carter announced. But archival documents released since the cold war’s end show that the Soviet’s actions were defensive, not offensive. The Soviets had sincere, albeit highly exaggerated, concerns about US involvement in Afghanistan.
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Thurs 01.07.2010
America's Unhappy New Year The Baby Boom officially begins crashing this year. Some Baby Boomers began retiring early, but the big retirement Crash begins now and will go on for many years. This is a crashing demographic wave that is also a massive financial and economic crash. The peak income years of this large wave of Americans now suddenly and steadily drops for many years to come as more and more of them retire. Their disposable income and actual consumer spending will likely be far less than was expected a few years ago because of the massive drops in retirement savings and the soaring costs of health care which will demand far more frugal living than was true of their predecessor waves of retirees. This will be even greater as they suddenly realize that the Obama Central Plan for Medicare Cost Cuts will force them to pay far more of their own medical costs.
2010: Giant Gathering Storm Clouds The year 2008 bore my mark as the year the system broke. A public article addressed the issues, laid out before the breakdown occurred in September of that year. The consequences for the many failures, the desperate nationalizations, the hasty scrambles to put financial sewage under USGovt ownership, the realization of TARP as a vast slush fund for illegitimate bank rescues, the official monetization plans put forth to prevent bond implosions, and much more occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and the threats must again be laid out.
Global financial regulation overhaul in 2010? Global financial regulation has changed little since the 2008 banking crisis, but that won’t be the case much longer. US and EU authorities are expected to hammer out the definite shape of a new regulatory order in 2010 that will fundamentally change how world banks and markets operate. Stricter limits on leverage and capital will emerge, leading eventually to slimmer profits for banks, policy analysts said. Formerly unregulated off-exchange derivatives markets will have to conform to new procedures.
Nations in the red threaten stability Panel urges U.S. to act on deficit The world economic crisis has entered a new stage where the overstretched finances of the United States and other national governments have become the biggest threat to economic stability. While the prospect of an unprecedented string of U.S. budget deficits exceeding $1 trillion is causing much angst, the problems are even worse for smaller countries such as Greece, Iceland and Ireland, where draconian spending cuts and tax increases are needed to prevent immediate financial crises.
A Note to Bernanke: Sorry Ben, More Bureaucracy Isn't the Answer U.S. Federal Reserve Chairman Ben Bernanke's latest thesis is that the home mortgage bubble had little to do with record low interest rates, and was actually much more a problem of regulation. It sounds plausible - until you give it some real thought. After all, I believe that humanity has already tried a system with tight, vigorously enforced regulations, and no price mechanism. It was called the Soviet Union.
Obama prods Congress to pass health bill quickly President Barack Obama is prodding House and Senate Democrats to get him a final health care bill as soon as possible, encouraging them to bypass the usual negotiations between the two chambers in the interest of speed. Obama delivered the message at an Oval Office meeting Tuesday evening with House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer. Senate Majority Leader Harry Reid and his No. 2, Sen. Dick Durbin, D-Ill., joined in by phone.
Democrats defend closed-door process on health bill House Democrats huddled in private to decide what kind of compromise on health care legislation they would be willing to strike with the Senate while pressure mounts for them to end the secretive nature of the talks. House Speaker Nancy Pelosi, D-Calif., and her leadership team faced questions about openness after emerging from a closed-door meeting with top committee chairmen on legislation to overhaul the nation's health system.
Arkansas senator rips Nebraska health care deal U.S. Sen. Blanche Lincoln said a political deal that benefits Nebraska and may have clinched a lawmaker's support for health care legislation should be removed from the bill. The Democratic senator from Arkansas on Tuesday said she was disappointed about a provision in the Senate's health care bill that will require the federal government to permanently pay the entire cost of Medicaid expansion in Nebraska, while only paying the costs of expansion in the other 49 states for three years.
Health Care: Here Come the Unintended Consequences As a general rule, DollarCollapse.com doesn’t get involved in public policy debates. Not because they aren’t important, but because the damage has already been done. The U.S., along with Japan and most of Europe, has passed the point where policy fixes are possible. There’s no magic marginal tax rate or Fed Funds rate or immigration law that will avert disaster. All that’s left is for the current system to implode, one way or another. Then policy will matter again, as we try to fashion a workable new system from the rubble of the old.
Cal Thomas: A war by any other name Suppose Umar Farouk Abdul Mutallab, the Christmas Day underwear bomber, had succeeded and blown up Northwest Airlines flight 253, killing nearly 300 people on board and perhaps others on the ground? Would the response of the Obama administration have been different?
Paying for the Mistakes of the Public Economy . . . . You can’t cure a problem of too much debt by borrowing more…even if the borrower is the federal government. When the private sector was over-borrowing, it was absorbing resources it couldn’t really afford. Plus, it was sending the wrong signal to producers, leading them to believe they had real customers on the other end of the line. What they had were people pretending to have more purchasing power than they really had. And when the credit got turned off, these customers disappeared, leaving the manufacturing sector with too much capacity and the retail sector with too much floor space to sell it. Now, the government is doing the same thing – taking up resources it cannot really afford…and redirecting them to uses that it really can’t sustain.
Jim Rogers - UK in Big Trouble, Obama is an Economic Illiterate Jim Rogers discusses commodities, the debt crisis in the UK, and how Obama and his economic team will lead America into another financial crisis.
Gold to hit $1500 or higher this year and probability of $3000 longer term Precious metals analyst Jeff Nichols is looking to continuing strength in gold in 2010 and beyond before it peaks and that silver may outperform gold this year too. In his latest commentary on the gold and precious metals markets, precious metals market analyst Jeff Nichols reckons that gold remains in a bull market and will hit new records again this year, but the path is unlikely to be a smooth one. He notes that gold has enjoyed a long and enviable climb, rising some 380 percent from a cyclical low near $255 in 2001 to an all-time high just over $1,225 in early December last year and he suggests the bull market still has a long way to go, both in magnitude and duration.
Gold investment demand remains strong A leading industry analyst has suggested that conditions remain good for people wishing to Buy Gold. Evy Hambro, of Blackrock Gold & General Fund, said that a number of important conditions had come together recently to create the positive trend in Gold Prices, according to the Daily Telegraph. She told the news provider: "The recent new all-time high in the price of gold seems to have been caused by the convergence of a number of important drivers.
Gold : Set For Another Glittering Decade? . . . . Thus, after a decade of outperformance by gold, it is important to analyze if its still a good investment for the future or investors can shift from gold to other asset classes where returns can be superior. In my opinion, gold is still a great investment option (especially for investors in the Western world) and it will continue to outperform over the next decade as well. I have discussed below some of the major reasons for this opinion.
Gold – More Consolidation Before the Next Leg in the Bull Market Gold peaked one month ago at $1226. In the bull market of the past decade corrections have typically lasted 31 to 37 trading days, comprising an initial break of 13 (+/- 2) days and a recovery rally into the 22nd day (+/- 3). The decline into December 21st lasted 14 days and produced an RSI(14) reading of 37 right in line with the average time and technical readings of the past ten years.
Gold: This Time Is Different? . . . . How much further can governments abuse faith in their debts and currency? At a guess, we'll find out sometime before the end of 2019. But holding gold today – or even daring to buy gold's recent 12% drop – is a long way from saying this time is different. It is a bet instead on things all too much the same, starting with policy-makers caught between just the same "inflate or die" panic that kicked off when the Tech Stock bubble burst a decade ago.
China sends gold prices soaring India is no longer the elephant in the world’s gold dealing rooms. The Dragon has edged it out. In 2009, China bought more gold than India, making it the world’s top consumer. China pipped South Africa in 2007 as the world’s largest gold producer. Revving up production to take advantage of record prices is understandable. But why have the Chinese suddenly fallen in love with gold? And does this affect the price we pay? ET helps you join the dots. US Dollar Will Collapse at end of 2010 (Nov 25, 2009) Bob Chapman reports that his source at the top of the banking industry has told him that 2000+ banks are in imminent danger of collapse, the FDIC will be closed or collapsed by Sep 2010 or year end and official devaluation will happen by the end of 2010. The source has been queried about making room for a new currency.
More worried money to flow into gold in 2010 Gold, the decade's best performing asset has already matched the US stock-market's longest ever run of year-on-year gains (1982-89), averaging 16% annual returns since 2001, according to Adrian Ash, Head of Research at BullionVault.com, leading online gold dealing and ownership service. The risk of a major sovereign default looks set to draw more worried money into gold in 2010, BullionVault.com said in its 2010 outlook.
Gold may gain 35% in 2010: Jeffrey Nichols Investors can expect a gold bull market in 2010 while silver could outperform gold as was the case in 2009, according to Jeffrey Nichols, Senior Economic Advisor to Rosland Capital. "Gold rallied sharply on the first trading day of 2010 - in part, mirroring a weaker U.S. dollar but also reflecting reestablishment of long positions by some funds and speculators who, despite their bullish view of the market, sold metal in December to realize profits earned from last year's price surge.
Gold buying frenzy grips China The Chinese people are increasingly getting entangled in the luster for gold. The Chinese families are on a buying spree of gold ornaments, gold bars, gold coins and gold ETFs. But they are not alone. Chinese mining companies, bullion dealers, gold associations, jewelers and traders are all in the grip of the 'yellow' fever with one aim: buy and trade gold. China, indeed, is in the grip of a gold buying frenzy.
The US Dollar and Gold .... I do believe gold has bottomed and think we will work our way higher reasonably quickly to break above the recent high of $1,226 and on to about $1,500. I wrote extensively about how, in all of gold’s breakouts during this bull market, the price retraces the breakout to about the 50% level before moving back up, then roughly doubling the initial leg’s move, in my December 12, 2009 article It’s Only Halftime. That makes the recent move from $1,000 to $1,226 only half the move, and that is being conservative since we are now solidly into the second phase of the bull market, for sure this time.
Five reasons why you should own Silver coins There are a multitude of reasons the average investor should have at least some of their assets invested in silver. Consider these five reasons that can help you grow your assets while preserving your wealth. Silver Has Intrinsic Value Through thousands of years, silver has maintained its worth and its utility, providing a currency and a means of exchange through the rise and fall of great empires. Silver has always retained intrinsic value; indeed, silver has never fallen to zero, and it has appreciated decade after decade and century after century. One ounce of silver today would purchase just as much as it did thousands of years ago, without any significant risk.
Inflation may be next dragon to slay: Fed economist The Fed's extraordinary support for the financial system suggests it will have less margin for error to stave off inflation as recovery gathers steam, according to a St. Louis Federal Reserve Bank economist. The Fed -- the US central bank -- cut benchmark interest rates to near zero in December 2008 and created emergency lending and purchase programs as it battled the worst recession in more than 70 years.
Gulf may launch single currency in 2015 RIYADH: A single Gulf Arab currency could be launched in 2015 if countries from the Gulf Cooperation Council (GCC) speed up the process, a senior official from the bloc's secretariat said on Wednesday. Rulers from the world's top oil exporting region endorsed the much-delayed monetary union last month despite the pullout of the United Arab Emirates -the bloc's second-largest economy- and Oman. Policymakers from the other four states -Saudi Arabia, Kuwait, Qatar and Bahrain- are currently expected to set a timetable for the creation of a joint central bank, but launching the single currency is still a distant prospect.
Fed Governors Fretted Over Stimulus, High Unemployment Federal Reserve officials who gathered last month agreed the economy appeared solidly on its way to recovery and gaining momentum, according to minutes from the Dec. 15-16 meeting, released Wednesday. Nevertheless, some members disagreed over the need for continuing and future stimulus. In the committee's discussion of monetary policy, some members expressed concern that should the economy weaken or the mortgage market deteriorate, stimulus programs might again become necessary. But at least one other member thought the Fed should trim large-scale asset purchases, the funding mechanism the central bank uses to provide stimulus, citing improved financial market conditions and economic forecasts.
That they saw a need to watch the impact of the dollar on inflation . (A lower dollar does raise the cost of imports and the US is a big importer of goods
Fed Officials Discuss Increasing Purchases of debt instruments, if the economy were to weaken (the purchase program is scheduled to lapse in March)
They thought that Unemployment would remain high (there is a number of underemployed people who will keep the unemployment rate from falling significantly). . . .
Fed Admits It Accepts Unworthy Collateral In TALF Yesterday the Federal Reserve Board of New York made an announcement, indicating recent posturing that it would carefully pick collateral for the TALF program, has been a sham (not that we would expect anything out of Bernanke, Cheatem and Howe). One wonders what the utility of having so many new NRSROs recently hired by the Fed receive taxpayer money and to share their perspective on collateral quality, when the Fed openly overrides them and decides what legacy loans are TALF-worthy on its own.
Fed: "We May Keep Printing Money For Housing Market" The Federal Reserve is discussing re-entering the mortgage-backed securities market later this year if its buying power is needed to hold down interest rates, Market News said on Tuesday in a story citing Fed officials. The $5 trillion agency mortgage-backed securities market may weaken when last year's biggest buyer, the Federal Reserve, ends its $1.25 trillion agency MBS purchasing program at the end of the first quarter of 2010.
Marc Faber - 2010 Predictions - Long Term, The Dollar Is A Drop Kick
Still In A Credit Crisis, New Liquidity Threatens Inflation Market manipulations never fail to shock us, 13 trillion spent into a pit of debt and no relief in sight, unemployment numbers probably higher than they appear, crooks bailed out, taxpayer pays for it, bank lending way down, inflation predicted On thing we can say for sure about 2009 is that markets witnessed the worst manipulation ever by the President's "Working Group on Financial Markets."
In Order To Make The Ponzi Market Keep Going Ever Higher, Barney Frank Tries To Make Shorting Virtually Impossible As part of the Barney Frank proposed Manager's Amendment, which will accompany HR4173, the "Wall Street Reform and Consumer Protection Act of 2009", are three little-noticed rules that, if adopted, will make shorting stocks if not impossible, then extremely problematic and difficult. It is obvious why these rules would end up in an amendment: the outcry from retail and institutional traders would have been huge had these proposals made the full text of the proper Bill, and into the full view of the Mainstream Media. So why bother with these - simple. As everyone is aware, Ponzi schemes only work when constantly growing, as otherwise they blow up, implode under their own weight, once price discovery is attempted by all.
Can Federal Reserve Catch Next Bubble? As the Federal Reserve argues that greater regulatory power could safeguard the U.S. from future financial crises, questions remain about why the central bank didn't foresee the last one. As the New York Times' David Leonhardt points out, Fed Chairman Ben Bernanke and his predecessor, Alan Greenspan, continually downplayed the nation's housing bubble in the years before it burst and nearly dragged down the U.S. economy.
Fed minutes reveal angst over housing recovery Minutes: Members debated keeping mortgage-buying program past March Some Federal Reserve policymakers were sufficiently concerned last month about the recovery's staying power that they argued for expanding a $1.25 trillion program aimed at bolstering the housing market. Minutes of the Fed's closed-door meeting on Dec. 15-16 revealed that a "few members" thought the Fed's program to drive down rates by buying mortgage securities from Fannie Mae and Freddie Mac might need to be expanded and extended beyond its current end date of March 31. Such an additional dose of stimulus would be especially needed if the economic recovery were to weaken, they argued.
Shadow Inventory Finding 100,000 Shadow Properties while Public Views 19,000. Unlocking the Foreclosure Box - The Most Comprehensive Shadow Inventory Housing Analysis for Los Angeles County. Examining 269 Zip Codes and Finding 100,000 Shadow Properties while Public Views 19,000. One resolution I had coming into 2010 was getting a better number for the shadow inventory in Southern California. It is rather clear that shadow inventory is a real factor in the current market but how big is this inventory?
Dodd Dumped
Democrat Chris Dodd, the Senate Banking Committee Chairman, Is Retiring Democrat Chris Dodd, the Connecticut senator who wants to weaken the Fed and name a top financial cop, is expected to announce his decision to not seek reelection in 2010 at a press conference today, according to a report in the Washington Post. His popularity has waned, especially since it became pubic that he obtained two discounted VIP mortgages from Countrywide during the real estate boom. A Senate ethics panel later cleared Dodd of breaking rules by taking the mortgages, but its report said he should have done more to avoid the appearance of sweetheart deals.
Tea Party Movement Plans "Strike" for Jan. 20 As the one-year anniversary of President Obama's inauguration nears, the Tea Party movement is planning a "strike" against corporations they call responsible for "funding socialism" and "backing the leftist agenda" of the new president. Liberal politicians benefit from "large donors, labor union thugs, Hollywood elites and major media propagating our destruction," contends strike organizer Allen Hardage at the Tea Party Patriots web site.
ADP Reports Private Sector Shed Jobs Services Industry Adds Positions for First Time Since March 2008 Private-sector jobs in the U.S. fell by 84,000 in December, the smallest drop since March 2008, and service providers added jobs, according to a national employment report published Wednesday by payroll company Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. Separately, the U.S. non-manufacturing sector expanded in December, but barely, according to data released Wednesday by the Institute for Supply Management.
Jobs: The One Issue That Can Sink Democrats in November If unemployment is 10 percent or more next November, the Dems are in danger of losing the House and will almost certainly be short of the 60 votes they need in the Senate. Just about everything you'll hear coming out of Washington starting now is really about November's mid-term election. The gravitational pull of the midterms was already apparent last year, as Republicans marched in perfect lockstep to vote against whatever the President and Democrats proposed (Republicans always have authoritarian discipline on their side, which is why they're Republicans), but you haven't seen anything yet.
Lockheed Martin to cut 1,200 jobs Lockheed Martin plans to cut 1,200 jobs as it combines 2 electronics systems units Defense contractor Lockheed Martin said Wednesday it plans to cut 1,200 jobs to lower costs as it combines two units. The cuts amount to less than 1 percent of the company's total work force of about 140,000. The company says employees who will lose their jobs will be notified by early April. Lockheed announced in November its plans to combine two units in its electronics systems business -- the former Maritime Systems & Sensors business, based in Washington, D.C., and its Systems Integration unit in Owego, N.Y.
Denver loses 43,400 jobs in a year The Denver metro area lost 43,400 jobs -- 3.5 percent of its total employment -- in the 12 months ending in November, according to an analysis of new federal jobs data. The analysis is by G. Scott Thomas, projects editor of the Denver Business Journal's sister paper, Business First of Buffalo, N.Y. The Denver-Aurora-Broomfield area had 1,244,100 employed workers in November 2008, and 12 months later it had 1,200,700, Thomas' analysis indicates.
Buffalo, NY: 13,800 Local Jobs Vanish Into Thin Air The bad news keeps trickling in. We reported yesterday that the Buffalo area's unemployment rate hit 8.0 percent last November, up from 6.3 percent in the same month a year earlier. Those figures came from the U.S. Bureau of Labor Statistics, as does a separate report that the local market lost 13,800 jobs during the same 12-month period.
Milwaukee area loses 50,000 jobs in last year About 50,000 jobs disappeared in metropolitan Milwaukee from November 2008 to November 2009, according to new figures from the U.S. Bureau of Labor Statistics. The Milwaukee-Waukesha-West Allis area had 801,000 jobs in November 2009, down 5.9 percent from 851,500 jobs in November 2008, according to report. Los Angeles heads the list with a loss of 194,900 jobs over the 12-month period. Five other metros posted six-figure declines. The Chicago and New York metros were close behind with losses of 186,600 and 186,100 jobs, respectively.
Massachusetts cities lost 65,500 jobs in 2009 Massachusetts three-largest metro areas - Greater Boston, Worcester and Springfield - lost roughly 65,500 jobs in 2009, according to an analysis of federal jobs data. The decrease represented a 2.1 percent decline in jobs housed by those three statistical areas. Boston saw the largest year-over-year drop in total jobs, reporting 53,100 losses for the year. That put total employment in the Boston-Cambridge-Quincy statistical area at roughly 2.45 million positions - a 2.1 percent decline for the year, according to data analyzed by Business First, the Buffalo, N.Y.-based sister publication of the Boston Business Journal.
Nashville area lost 26,100 jobs The Nashville metro area lost 26,100 jobs between November 2008 and November 2009, a new report from the U.S. Bureau of Labor Statistics shows. The area had 731,700 jobs this past November, down 3.4 percent from 757,800 a year earlier. The bureau analyzed employment numbers in the 100 largest U.S. job markets. All but one of the 100 markets studied by the BLS lost jobs over the 12-month period. The lone exception was the McAllen-Edinburg-Mission area of south Texas, which posted a 1.2 percent gain.
Employment in 100 Biggest Markets (November 2009) A database with the latest job growth data for the nation's 100 biggest labor markets. Well, "job growth" is a misnomer, since 99 of the 100 lost jobs, but you get the idea.
IRS help line sets low bar for service It's hard to reach real person Need help with your taxes? Good luck reaching someone at the Internal Revenue Service. Three out of 10 people who call the toll-free help line this tax season won't get through to a human being - and that's if the agency meets its goals for service. Callers lucky enough to reach a representative will have to wait on hold an average of nearly 12 minutes, a level of service deemed unacceptable in a report issued Wednesday by National Taxpayer Advocate Nina E. Olson.
ACORN and Big Labor: Two Peas in a Pod With the unearthing of a memo detailing an ACORN scheme to use "dirty money hungry lawyers" to force "employers to open up negotiations" and its plan to create "a model for [union] organizing" that "building trades [unions] do not have," ACORN almost assuredly fits the federal definition of a labor organization under federal law 29 CFR 401.9 . But, the detailed scheme gets even better and closer to the line that makes ACORN a labor union.
Neither Sword Nor Shield: Full-Spectrum Civilian Disarmament "We need to make it clear," fulminated Patrick Lynch of the New York City Policeman's Benevolent Association, "that if someone lifts even a finger against a police officer, their life could be on the line." Taken literally, this would make a capital offense out of a familiar disrespectful gesture, a salute that is entirely appropriate when directed at officious tax-grazers of Lynch's ilk. It is scarcely an exaggeration to say that Lynch perceives criticism of the police as a species of crime.
Sleazy new debt-collector tactics It may not be your debt, but it could be your problem. Collection agencies are bullying blameless consumers into paying debts they never owed. Lisa Burk isn't Lisa Sterns, but Allied Interstate refused to believe her. The Minneapolis collection agency repeatedly called Lisa and her husband, Michael, according to a lawsuit filed by the Minnesota attorney general, and demanded that the couple pay a debt owed by one Lisa Sterns. The couple, just as repeatedly, told the collector they didn't know any Lisa Sterns and asked the company to stop calling.
Buffalo's debt collectors accused of bullying When Tobias "Bags of Money" Boyland went looking for a new career after serving 13 years in prison for armed robbery and drug dealing, he quickly found something that suited his sensibilities: He opened a collection agency. It was, in some ways, a natural move for a young man in Buffalo. Desperate for jobs, this chronically depressed Rust Belt city has become home to one of the biggest concentrations of debt collection businesses in the U.S.
Macy's To Close Five Stores In Annual Review Macy's Inc. (M) said Tuesday it would close five stores, affecting 307 full-and part-time employees, as part of an ongoing annual process to shutter underperforming locations. "We are committed to maintaining a healthy portfolio of stores, which requires us to make the difficult decision to close some stores that no longer meet our performance requirements, as well as to open new stores where we see opportunities," said Chairman and Chief Executive Terry J. Lundgren in a statement. A company spokesman said the department store typically announces its store-closing plans at the beginning of the year. Last year, Macy's closed 11 stores and the year before that, it shuttered nine. Macy's will close stores in Boise, Idaho; Waterford, Mich.; St. Ann, Mo.; Missoula, Mont.; and Burlington, N.J. Final clearance sales will begin Sunday and run for about 60 days. The company said some workers affected by the closings may be offered positions in nearby stores.
Walgreen Posts Surprise Drop in December Sales Walgreen Co.'s same-store sales fell 0.3% in December, the first drop since last February, as pharmacy-sales growth slowed with waning incidence of flu cases. Results were also hurt by the company's strategy of reining in holiday-related inventory. December same-store sales in the pharmacy department rose 1.8%, cut by 2.1 percentage points because of new generic drugs the past year. Prescriptions filled climbed 4.1% on a same-store basis. Walgreen's sales in the front end of stores were down 3.1% when counting stores open at least a year. That decline, the company said, was due to lower levels of seasonal inventory and lower flu incidence in December this year. Sales of non-pharmacy items have been a struggle for the drugstore chain in recent months, as the tough economy has taken a toll on consumers' wallets.
Monsanto Posts Loss as Sales Drop 36% Monsanto Co. swung to a loss for its fiscal first quarter as lower prices for Roundup and other weedkillers slashed margins. Sales tumbled 36%. The world's largest producer of genetically modified seeds reported a loss of $19 million, or three cents a share, for the quarter ended Nov. 30, compared with a prior-year profit of $556 million, or $1 a share. The St. Louis company last month forecast a loss of as much as five cents a share. Revenue dropped to $1.7 billion. Analysts polled by Thomson Reuters had forecast $1.98 billion. Sales of Roundup and other herbicides tumbled 63% to $509 million.
The Left Continues to Break: More Cracks in Net Neutrality Front With the Federal Communications Commission (FCC) set to make a decision on proposed net neutrality rules later this year, the fight between supporters of the controversial policy and its opponents continues to heat up. Yesterday, a group of minority and women's organizations reportedly called on the FCC to give serious consideration to the impact that net neutrality could have on what has been termed the "digital divide"-the widening of which, opponents argue, constitutes a potential unintended consequence of the policy, and one which has become a primary focal point of net neutrality critics' concern. In a letter and a proposal to the FCC, the groups-which include minority organizations that have previously spoken out regarding the net neutrality issue such as the Asian American Justice Center-have asked for a field hearing and workshop addressing the topic.
Old is New! Dick Tracy watch New Watch-Phone Is a Fun, Affordable Accessory How does $200 sound for an unlocked phone? Now make it a Dick Tracy-style watch phone and it's an accessory you just might put on your wish list. The W "phonewatch" from Kempler & Strauss combines a touchscreen interface with basic phone functionality so you can use the device while biking or hiking. The GSM phone can work with both AT&T and T-Mobile but it doesn't have 3G capability or Wi-Fi. Just open the back and pop in a SIM card there to get started. There is a microphone and a speaker on the device, but the company recommends that the phone be paired with a Bluetooth headset. The watch phone isn't intended as a replacement for your iPhone, Droid or your BlackBerry, says the company. Instead it has been created as a companion.
Intel's Otellini to unveil 'digital convergence' device Intel CEO and President Paul Otellini will likely unveil a device that links computers with televisions over a wireless network during his keynote presentation on Thursday at the International Consumer Electronics Show in Las Vegas. The upcoming device is a "digital convergence product" that was jointly developed by Intel and Netgear, said Chris Geiser, a product marketing manager in Netgear's home and consumer products group, during a press conference at CES on Wednesday.
Piece of Yale's Skull and Bones history on auction A human skull that once reportedly belonged to Yale's Skull and Bones society is now for sale in a Christie's auction with an estimated price of $10,000 to $20,000. A human skull that once apparently belonged to Yale's mysterious Skull and Bones society is now for sale. Christie's auction house believes the skull was used as a ballot box around 1872. It has a hinge on top and is surrounded by crossbones. Skull and Bones has closely guarded its members' names and its activities since the early 1970s. Publicly known members of the elite society include both presidents Bush.
Global matters bear close watch . . .
'Climate science' is an oxymoron. Time for Zero Tolerance of Green agendas Wow! That Copenhagen package really worked. Global warming has been dramatically reversed. In fact, if Al Gore could see his way to turning the heat back up just a little, most of us would be deeply appreciative… "Climate science" is the oxymoron of the century. There is not a city, town or hamlet in the country that has had its weather conditions correctly forecast, over periods as short as 12 hours, during the past week. This is the "exceptionally mild winter" that the climate change buffoons warned us would occur as a consequence of global warming. Their credibility is 20 degrees below zero.
Euro brinkmanship escalates as ECB shuts door on Greek bail-out The European Central Bank has given its clearest warning to date that there will be no EU bail-out for Greece if it fails to control its spiralling deficit, raising the stakes in a game of brinkmanship over the future of the euro. Jurgen Stark, the ECB's chief economist and the powerful German member on the bank's inner council, said Greece's problems are entirely "home-made" and do not meet the terms required to trigger the rescue mechanism under EU treaty law, which is limited to countries that face severe difficulties "beyond their own control". "The Treaties set out a 'no bail-out' clause, and the rules will be respected. This is crucial for guaranteeing the future of a monetary union among sovereign states with national budgets. Markets are deluding themselves if they think that the other member states will at a certain point dip their hands into their wallets to save Greece," Stark told the Italian daily Il Sole
Veto of repayment bill leaves Iceland isolated Iceland risks international isolation after refusing to honour its pledge to repay money lost in the IceSave bankruptcy. The Icelandic president, Olafur Ragnar Grimsson found himself caught between a rock and a hard place. Should he bow to the anger of his citizens, who were unwilling to repay 3.8 billion euros owed to the Netherlands and the UK? Or should he prevent his country from becoming economically and diplomatically isolated?
Angry Iceland defies the world Iceland's president has blocked a Bill to pay Britain and Holland up to £3.4bn for Icesave depositors, acknowledging that popular feeling in the island nation is too strong to proceed without a referendum. The move reopens a bitter dispute and greatly complicates Iceland's loan agreement with the International Monetary Fund. It has already led to a fresh downgrade to BB+ by Fitch Ratings, which called the decision "a significant setback to Iceland's efforts to restore normal financial relations with the rest of the world." The Icesave law was passed by Iceland's parliament in a knife-edge vote late last year, but a petition by the InDefense movement has changed the political landscape. The lobby collected 56,000 signatures - a quarter of voters.
Setback in Reykjavik Iceland Blocks 3.8 Billion Euro Repayment to Dutch, British The president of Iceland refused to sign a bill on Tuesday that would have paid back the governments of Britain and Holland for money lost to depositors at the collapsed IceSave bank. The move followed popular protest against the legislation, which would see repayment totalling 13,000 euros per Icelandic citizen. Iceland's president, Olafur Ragnar Grimsson, on Tuesday refused to sign a bill requiring his country to pay €3.8 billion ($5 billion) to the Netherlands and the United Kingdom to compensate for damages suffered due to IceSave's bankruptcy.
Iceland is swept into storm after Icesave veto Iceland was swept up in a political and economic storm on Wednesday, with clouds building over its credit rating, economic recovery and EU membership bid after the president vetoed compensation over the Icesave bank collapse. Iceland's President Olafur Ragnar Grimsson refused to sign on Tuesday the so-called Icesave bill on compensation to the British and Dutch governments, referring instead the issue to a referendum because of public opposition.
Rome and Berlin-Facing Up to War At the same time that the Kunduz bombing has provided the German government with a clear reason to amend the Bundeswehr's rules of engagement in battle, the Catholic Church is preparing for the German military to be placed on a war footing. The German Deutsche Welle headlined an article last Monday, "The Church Reaches Out to the Families of German Troops Abroad." The article mentioned that "the Catholic military bishopric has started a new program to help prepare families for the stresses of seeing loved ones sent away to conflict zones." This is the first time the church has accepted such a role since World War ii. The reason is obvious. Over the past 10 years German troops have increasingly been placed in theaters of conflict outside Germany's national borders.
German viewpoint . . . The (Eight) Issues that Will Shape the World in 2010 The past year seemed a fitting end to a decade during which the world lurched from crisis to crisis. The list of unfinished business is long and many pressing issues are set to demand attention in 2010. SPIEGEL presents the ones to watch. . . .
One Sudan or Two?
An End to Iraq's Maliki Era?
An Attack on Iranian Nuclear Facilities?
Can an African Team Win the 2010 World Cup?
Climate Hopes in Bonn
A Reduction in Subsidies for Europe's Farmers?
A Generation Change for the Middle East
Show of Strength in Shanghai
'The European Answer to the Failed Climate Summit in Copenhagen'An international power grid for green energy planned in Northern Europe could usher in a new era in both carbon-free power and cross-border competition among the continent's energy firms. But it's still a long way off, argue German commentators. Funding for a nine-nation project to link power-generation projects in a high-tech North Sea power grid was announced on Tuesday, sketching the future of European attempts to harness renewable energy. The idea is to link wind farms off Denmark, for example, with solar parks in Germany and tidal power stations in Belgium to create a regional grid of clean power, and it's been hailed on Wednesday morning by German papers as a major step in the fight against global warming.
Sarkozy Says Strong Euro Dents Competitiveness PARIS -- French President Nicolas Sarkozy said Wednesday that a strong euro is denting the competitiveness of the euro zone and risks handicapping European companies as they recover from the global recession. "If one produces in the euro zone and sells in dollars, with the euro rising and the dollar falling, how is it possible to offset the competitiveness gap?" Mr. Sarkozy asked French business leaders gathered in Cholet in western France. "This subject should be at the center of global debates."
How Russia Is About to Dramatically Change the World Over the next few days, Russia will change the world. It has completed a new oil pipeline and port complex that sets Russia up to become a more powerful oil exporter than Saudi Arabia. The ramifications for Europe and Asia are profound: The shape of the global economy-and the global balance of power-will be altered forever. December 28 was a big day of ceremony in Russia. Prime Minister Vladimir Putin pushed a button that transformed global oil dynamics-especially for Asia and Europe. The button released thousands of barrels of Siberian crude into a waiting Russian supertanker and heralded the opening of Russia's first modern Pacific-based oil export facilities.
Palestinian gunmen kill Egyptian guard in Gaza clash Hamas loyalists and Egyptian troops opened fire along Gaza's volatile border Wednesday, leaving an Egyptian soldier dead and more than a dozen Gazans hurt in the bloodiest clash between the two sides in a year. Accompanied by a barrage of rocks, the shooting underlined the mounting tensions over Egypt's construction of an underground steel wall that could seal Gaza's southern border, block hundreds of smuggling tunnels and deprive Gaza's Hamas rulers of their only lifeline.
Foreign ministers meet to revive Mediterranean Union CAIRO - The foreign ministers of Egypt, France, Jordan, Spain and Tunisia met in Cairo on Tuesday in an effort to revive the nascent Mediterranean Union, a year after its launch.
Press statement on (Union for the Mediterranean Initiative) Foreign Ministers of Egypt, France, Spain, Tunisia, and Jordan met on January 5th, 2010, in Cairo, to discuss developments related to the Union for the Mediterranean initiative, as well as means to boost it. The Foreign Ministers agreed on the importance for the initiative's institutional framework to start carrying out its duties as soon as possible, and welcomed the Jordanian candidate "Ahmad Masa'deh" to assume the position of the Secretary-General for "Union for the Mediterranean" secretariat. The Foreign Ministers agreed that the senior officials from all member states should consider the Jordanian candidature during their upcoming meeting on January 12th, 2010, in Brussels, in order to present a joint recommendation to the meeting of Foreign Ministers to approve the nomination by mid February 2010, so that the Secretary-General and the secretariat institutional framework can carry out their duties by the end of February.
MED UNION: HEADS OF STATE SUMMIT IN BARCELONA IN 2010 The summit of the heads of state of the 43 countries of the Mediterranean Union will take place in Barcelona June 7 2010, during the period of the Spanish presidency of the EU. Created a year ago on the initiative of the French president Nicolas Sarkozy, the Med Union is preparing for its definitive launch before the end of the year, after the pause imposed by the conflict in Gaza and the lack of an agreement between Israel and the Palestinians, according to what the director general of the European Institute for the Mediterranean (EIMed), Serena Florensa, explained to the media. The organisation of the summit should have fallen on a country of the Mediterranean's southern shore or to Belgium, which will take the baton of EU presidency in July 2010.
What Is Really Behind the Mediterranean Union? There are moments in history when the geopolitical balance seems to shift clearly in one direction or the other. Currently within the EU, power seems to have just moved noticeably from France to Germany on a clear issue of substance. It is not the first of such shifts and, while it may not be the last either. But it is substantial and merits comment. I refer to the issue of the Union of the Mediterranean.
Religious Divide Across The Atlantic Numerous past European travelers to America have commented on the apparent importance of religion to (most) Americans. Some did so in a positive way, while others appeared to be more prejudicial. Among the former, Alexis de Tocqueville's "Democracy in America" from the 1820's remains a classic work of reference, but this article will be more concerned with the opinions of a contemporary commentator, Josef Joffe, the editor/publisher of the German newspaper Die Zeit in Hamburg, Germany(*).
The Beginning of the End? The Iranian Regime's Fear of the People Bloody protests in Iran during the Ashura festival marked a turning point in the conflict between the regime and its opponents. For the first time, demonstrators responded to police brutality with violence of their own. But although the opposition movement is gaining ground, the government's massive security forces are still as powerful as ever.
Yemen captures key Al-Qaeda chief as embassies reopen Yemeni security forces, under US pressure to rein in extremists, Wednesday captured a key Al-Qaeda leader believed behind threats that saw foreign embassies in Sanaa hastily bolting their doors, police said. The arrest of Mohammed al-Hanq and two other suspected Al-Qaeda militants at a hospital in Raydah, north of capital, came as Yemen's authorities said Al-Qaeda militants were being choked countrywide and forced into "holes."
The abyss of poverty in Yemen, a breeding ground for al Qaeda After the fear of attacks, the Western embassies reopen. Emergency humanitarian assistance for refugees from the Horn of Africa: UN warning. The war between Saudis and Iran and the levity of the government. The instability of Yemen is now a "global threat". These are the words of Secretary of State Hillary Clinton and the conviction of most of the international community committed to preventing the opening a new front in the war after warnings from the White House about a possible military intervention against al-Qaeda sanctuaries in the country.
Unifying the Arab ranks compulsory, Prince Saud Al-Faisal said in a statement Prince Saud Al-Faisal, the Foreign Minister, explained here today that the message he conveyed from Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz to Syrian President Bashar Al Asad concerns the current regional situation and ways to reinforce consultation and work within Arab framework to solve regional problems.
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Gee Whiz! Why not make us wear one all the time!! Shock bracelets for airline passengers (July 12, 2008)
Federal Power Grab: Clean Water Restoration Act; CWRA; Federal control of all water, even ponds
GOP opposes expanded water act Calls bid stealthy power grab A group of 28 Republican lawmakers from Western states is fighting efforts by Democrats in the House and Senate to quietly expand the scope of the Clean Water Act, the federal government's main tool for regulating the quality of the nation's waterways. The lawmakers sent a letter Tuesday to House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada opposing efforts to rush through Congress the Clean Water Restoration Act, a bill that would allow the federal government to protect all waters of the U.S. from pollution, not just the "navigable" waters covered in current law. The letter says that the lawmakers would vote against any legislation that contains the expansion.
Inhofe Says Democrats Water Bill Biggest Bureaucratic Power Grab in a Generation
Democrats Vote To Hand Over Water Rights Regarding Ground Water to Federal Government
Senate Health-Care Bill Provision Would Make it Impossible for Future Congresses to Repeal Parts of Bill A provision deep within the Senate’s 2,000-page health-care overhaul bill would make it impossible, once approved, for the legislation to be repealed or changed by future Congresses -- a provision that a Senate Republican and a conservative analyst say is unconstitutional. On page 1,020, the bill states: “It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment or conference report that would repeal or otherwise change this subsection.”
Democratic Leaders Plan Secret Health Reform Deliberations Despite their claims to the contrary, the way that House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have handled the healthcare bill has been anything but transparent. And, if the left-wing blogosphere is to be believed, the two congressional leaders intend to keep the deliberations secret as they try to merge the House and Senate versions of the legislation into something that will pass both chambers. The Talking Points Memo website reported Monday that Democrats in both the House and Senate are saying the process will likely follow the path of the House taking up the Senate-passed legislation, amending it and sending it back to the Senate, which will have to pass it again. "This process cuts out the Republicans," a House Democratic aide told TPM, indicating the congressional majority intended to make sure the Republican minority would "not have a motion to recommit opportunity."
Willem Buiter warns of massive dollar collapse Americans must prepare themselves for a massive collapse in the dollar as investors around the world dump their US assets, a former Bank of England policymaker has warned. The long-held assumption that US assets - particularly government bonds - are a safe haven will soon be overturned as investors lose their patience with the world's biggest economy, according to Willem Buiter. Professor Buiter, a former Monetary Policy Committee member who is now at the London School of Economics, said this increasing disenchantment would result in an exodus of foreign cash from the US.
America Rising: An Open Letter to Democrat Politicians We elected you on a promise of hope and change. We regret it. In 2010, we are taking our country back. Blue collar democrats, independents, and conservatives. We love our country. We are proud of our founders. And we will fight for our traditions. We don't want your revolution.
Democrats Brace for Year of Living Dangerously From Afghanistan to jobs, there are big risks ahead for the ruling party and President Obama, says Bloomberg's Al Hunt This year will be a difficult one for Democrats. The only issue is how tough. If conditions and circumstances take a negative turn, Democrats could lose 40 seats in the U.S. House of Representatives and more than a half-dozen in the Senate in the November midterm elections. With this prospect, any lingering clout enjoyed by President Barack Obama would evaporate.
It Begins: Dorgan says he will not seek re-election in 2010 North Dakota Democrat Byron Dorgan says he will not seek re-election to the Senate in 2010, a surprise announcement that could give Republicans an opportunity to pick up a seat from the Republican-leaning state. Dorgan, who was first elected to the Senate in 1992 after serving a dozen years in the U.S. House, said he reached the decision after discussing his future with family over the holidays.
Personal Bankruptcy Filings Rising Fast The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses. And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.
Class Warfare American Style Matt Taibbi's reaction to the ZeroHedge story with regard to Turbo Tim's lifting of the government support on Christmas Eve for the GSE's was exactly my own. You can read it in its entirety here. What he does not overtly say is that this is class warfare, and it is becoming worse in the US than at any time since the 1930's. And the outcome of this will be a fundamental test of the US commitment to its republic. The media stokes the viewing public into emotionally-based and virulently distracting arguments about liberal versus conservative, while the gentried class skins them all alive. One only has to watch the 'news shows' on American television to see the lack of real content and discussion, with diametrically opposed 'strategists' hurling sound bytes at each other with all the depth of a school yard standoff.
America is losing the free world Ever since 1945, the US has regarded itself as the leader of the “free world”. But the Obama administration is facing an unexpected and unwelcome development in global politics. Four of the biggest and most strategically important democracies in the developing world – Brazil, India, South Africa and Turkey – are increasingly at odds with American foreign policy. Rather than siding with the US on the big international issues, they are just as likely to line up with authoritarian powers such as China and Iran.
Where Are The Damn Handcuffs? If you're not mad enough to contemplate the use of your pitchfork and torch after reading this, you are unfit to be an American and should immediately book yourself on a one-way flight - to Yemen. . . . . . . . . Now here's the problem. We were later told that the FDIC would not allow the banks to game the system like this. That was a lie too. It’s “absolutely ridiculous” that banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California-based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it.”The people involved need to be indicted for looting the Treasury and Geithner along with Sheila Bair must be removed from office for permitting it, after BOTH said it would not happen. They lied - period.
The Gates of Hell Have Opened The abyss is widening, many have already fallen in. The Fat Boys at Goldman say they are doing God's work, do they really believe that. Maybe they know dark secrets we are not privy to. What does God's work entail? Stopping fear and panic? Holding up asset prices and presenting the illusion of a stable, recovering economy? If they fail, then hell will follow.
Annus Horribilis Now that 2009 has passed into history, analysts have flooded the public with their opinions on how the events of the past year will impact the coming years. While most are optimistic, I feel that last year's developments have greatly exaggerated the imbalances in the U.S. economy. Although we may see a temporary respite from the turbulence, these mistakes will hinder our long-term viability. I fear that we have gone down a road that will destroy the value of the dollar and may even threaten the political stability of the United States.
China to control gold prices in 2010 How will India's reluctance to continue its gold buying spree affect the global bullion market? This is the question haunting many analysts across the globe as the world's numero uno consumer of gold, India, posts a huge fall in gold imports in 2009. But, the ray of hope for the bullion market is that China has fast emerged as the leader in gold buying. In fact, in 2009 China has pipped India to the post in gold purchases. Chinese New Year gold rush has already begun, and robust demand looks likely to continue through 2010. So, in the coming years, analysts will be watching China, instead of India, to make their decisions on investments in gold.
China to see rising gold sales in 2010 As a solid, tangible, intrinsically valuable store of wealth, gold will be increasingly popular in China with the nation soon set to surpass India as the biggest consumer, the China Daily reported Wednesday. China is already the largest gold producer in the world with an output of around 282.504 tons in the first 11 months of 2009. The figure represents a 14.6 percent increase over the same period in 2008, said the Ministry of Industry and Information Technology on its website Tuesday. Miners expanded output last year after bullion prices soared to record highs, with production alone reaching 27.952 tons, the newspaper quoted the ministry as saying.
Gold rises and dollar falls amid global recovery signs Gold rose as the US dollar fell yesterday and prospects for a global economic recovery encouraged investors to favour riskier assets over the greenback. Spot gold hit a three-week high at $1,127.70 and was bid at $1,125.65 an ounce at 13.07 GMT, against $1,121 late in New York on Monday. Platinum and palladium rose to their highest in well over a year on hopes the economic recovery will lift demand and the launch of new exchange-traded products backed by the white metals in the United States.
Gold to hit $1,300 by 2012: RBS A number of industry analysts have suggested that Gold Prices will remain intrinsically linked with the fortunes of the US dollar. James Moore, an analyst at London-based TheBullionDesk.com, mentioned in a recent report that Gold Prices could expect to continue to rise provided the dollar remains weak, according to Bloomberg. He said: "The weaker dollar and broad commodity gains should continue to push gold higher in coming sessions. The market should continue to be underpinned by investment and physical dip-buying." Mr Moore's observations are supported by Jon Nadler, a senior analyst with Kitco Metals Inc. in Montreal, who said in a report that Gold Prices depended on variances in the value of the US dollar.
Peter Schiff on CNBC 04 January 2010
Gold goes on the offence in 2010 Hi Ho, Hi Ho, it's to the inferno the paperbugs now go. Gold kicked off the first day of trading in 2010 by taking the gold shorty pants to the cleaners. Then the woodshed. The COT report released yesterday showed the fundsters dumping another 8000 gold longs into weakness in failure, while the banksters booked profit on about the same number of their shorts.
Three Charts: Gold, Silver, Dollar It will be interesting to see how the Fed and Treasury juggle the various markets that do not play well together, being stocks, dollar, and Treasuries, and of course those nasty reminders of dollar mortality, gold and silver. Although the ADP report tomorrow may be a bit light, we think the BLS will do its duty and show us a jobs positive report on Friday.
Gold: Above $1,133, next target comes at $1,169 - Oil N' Gold Gold prices have resumed uptrend after December's retreat, and XAU/USD has reached levels at $1,128 with intraday bias on the upside, targeting $ 1,133 level, according to the Oil N' Gold Technical analysis team. Gold's rebound from $1,075 is still in progress, according to the Oil N' Gold Team and further appreciation above $1,133 would target 1,169 area: "Intraday bias remains on the upside for 38.2% retracement of 1227.5 to 1075.2 at 1133.4 first. Break there will target 61.8% retracement at 1169.3 next."
Current status of gold and dollar Trades Gold and the US$ usually move in opposite directions. In recent months, however, gold has done a good job of breaking out in the positive direction in almost all currencies around the world. Right now we are in a position that is very hard to analyze without some tools and that's what I'll try to show you today (based on close 1/4/2010). First, let's look at the U.S. $$ in terms of short and medium term potential
Glittering gold scales new peak The yellow metal's allure as a solid, tangible, intrinsically valuable store of wealth seems to be growing further in China with the nation soon set to surpass India as the biggest consumer. China is already the largest gold producer in the world with an output of around 282.504 tons in the first 11 months of 2009. That figure represents a 14.6 percent increase over the same period in 2008, said the Ministry of Industry and Information Technology on its website yesterday. Miners expanded output last year after bullion prices soared to record highs, with production in November alone reaching 27.952 tons, said the ministry.
Gold: Place to go when you're scared: Milchan Even though the year 2009 saw billionaires' wealth rising, many of them are still not sure of the prospects in store for them in 2010. According to a Forbes survey of billionaires from around the world on topics ranging from global warming and the weakening dollar to the price of gold and best places to invest in 2010, no unanimous opinion was there on global economy. Nearly all of the billionaires quizzed a year ago had predicted an economic recovery, but this year's participants were less unanimous.
Outlook for 2010 & A World First Welcome to 2010 and a happy New Year to all from the GoldOz team. I have been looking at the trends, contemplating chart technicals and talking to some equity & finance analysts. This year will initially see a continuation of the trends established in 2009. I understand that this seems like a bland statement. The stock market reads future trends and outcomes at times and has factored (government sponsored) growth this year. Thanks to the vast overflow and after effect of the stimulus capital flows this will come to pass initially and therefore I consider that the highest probability is that the stock market rally will continue in the first half.
Why Jim Rogers and Nouriel Roubini fight over gold It takes serious guts to call a top in a nine-year bull market for gold, and a flair for controversy to do so while suggesting that those who think otherwise "delude themselves." That is precisely what upstart uber-economist Nouriel Roubini has done, but I predict he will find himself gobbling down a guru-sized slice of humble pie as subsequent chapters of gold's epic revaluation unfold.
Fed Statements Clear Any Doubts of Gold Hitting $1,700 Apparently, the Federal Reserve does not believe that the low interest rate policy caused the housing bubble. Previously it informed us that low interest rate policies did not cause the technology stock market bubble. We are now to understand that low interest rates do not inflate the prices of any assets. On some days this author does have doubts about $Gold exceeding $1,700. Then, the Chairman of the Federal Reserve makes a speech such as he did. All doubts flee, and belief in Gold as an investment savior is renewed. One has to wonder after such a speech if no greater waste of money exists than that spent on an education in economics.
Gold Rises Slightly, Silver Jumps 1.9% New York gold futures advanced modestly on Tuesday as a seesawing US dollar eventually tilted stronger toward the end of the trading day, curbing the yellow metal’s appeal and cutting into its earlier gains. Silver shined the brightest, jumping 1.9 percent. Platinum rose 0.9 percent. In other markets, crude oil advanced for the ninth consecutive session while US stocks ended mixed with narrow movement.
Dollar Trades Near Two-Week Low Against Yen on Yield Outlook The dollar traded near the lowest in almost two weeks against the yen as signs of an uneven recovery in the U.S. weakened speculation the Federal Reserve will make an early end to its efforts to keep interest rates low. The greenback fell the most against the yen in four weeks yesterday as the yield premium of 10-year Treasuries over similar-dated Japanese bonds narrowed before a U.S. report that economists said will show jobless claims rose. New Zealand’s dollar retreated from a six-week high after Fonterra Cooperative Group Ltd., the world’s largest dairy producer, said the price of whole milk powder fell for the first time in six months.
The Federal Reserve Needs More Money The Federal Reserve needs more money to continue purchasing US government debt, the aggregate amount of which is soaring because of ballooning deficits. But the Fed has a problem. The US government doesn't pay its bills with 'cash currency', the green paper Americans carry around in their pocket. So the Fed cannot crank up the printing press like central banks did in Weimar Germany in the 1920s, or in recent years, in Zimbabwe. The US government needs 'deposit currency' – or 'electronic' currency, to put it into Mr. Bernanke's terms – so that it can pay its bills by check or wire transfer. Payment for goods and services by deposit currency are made through the banking system, and nearly all commerce in the United States is conducted in this way. So where will the Federal Reserve get enough deposit currency to enable it to continue purchasing US government debt?
Inflationary Forces and a Tectonic Crack in U.S. Treasuries It seems that the long-awaited crack in US Treasuries is opening up before our eyes. For some time now (actually for the last 8 months) we have been bemused as to who would “logically” or “rationally” lend the US Government funds for 30 years and be compensated by less than 4.5% p.a! At that return, it simply says that the actions the US Treasury and Fed have undertaken over the last 2 years will have absolutely no impact on inflation!
Charting the Stealth Inflation Ahead Inflation has become the financial wolf that never came. But the danger is still there. And it may come in sheep's clothing. I'll sum up my point upfront: The most likely form of coming inflation is not high official CPI or interest rates, but high food and energy prices that are invisible to policy makers and their think-tanks. Now on to the long version. What the western governments have done in 08/09 are primarily two things:
Massive injection of liquidity and expansion of money supply, to partly compensate for financial deliveraging.
Massive transfer of private debt to public, to temporarily lessen the perception of credit risk in the system.
The Futility Economy It's the first business day of the new year and oil is trading above $80 a barrel, which means the price has re-entered the danger zone where it can crush industrial economies. This is a central element of the predicament we find ourselves in. The US economy is essentially a Happy Motoring economy. During the whole nervous period since the collapse of Lehman Brothers, American gasoline consumption hardly went down at all, though so many other activities collapsed, from house-building to trucking. Yesterday, The Seattle Times published a story with the idiotic headline: Oil Touches $80 on US Economy, Demand Optimism. Apparently, they think high oil prices are "a good sign."
Potential for Double Dip Increases as Stimulus Fades Last month we were skeptical of all the touting regarding the Holiday season and the possibility that it would save the day. The final verdict is that sales were not as bad as we expected, but nothing to cheer about either. The MasterCard SpendingPulse data (one of many data points) adjusted by the extra shopping day this season indicates growth of about 1% YoY, or slightly negative in real terms. So much for a strong season! After looking into the abyss and even with massive stimulus, we are only a few feet away from it. As the stimulus fades, the probability of a double dip increases.
Global Stocks Bear Market Rally Will End with Japan as Hyperinflation Rips Economy to Pieces Let me welcome you to a new year of Outside the Box. I doubt we will have trouble finding interesting commentary this year, as there are many things that could happen that demand our attention. We start with a short column by Ambrose Evans-Pritchard of the London Telegraph giving us a quick run down of the problems faced around the globe. He thinks the #1 problem is Japan, and I more or less agree.
China Think Tank Calls for One-Off 10% Rise in Yuan BEIJING -- Now is a good time to reform the yuan exchange-rate mechanism and allow a one-off 10% appreciation in the Chinese currency against the U.S. dollar, a prominent Chinese think tank said Wednesday, as it also warned the domestic economy is at risk of overheating this year. A 10% appreciation of the yuan against the U.S. dollar would have limited impact on the Chinese economy, according to an essay by Zhang Bin, a research fellow in the Institute of World Economic and Politics under the Chinese Academy of Social Sciences. China should allow the yuan to rise or fall as much as 3% annually against a basket of currencies, he said.
Bank Bailouts and the 2009 Federal Budget The Untold Story of Canada’s $275-Billion Financial Bailout If you’re still scratching your head with bewilderment trying to understand how the ‘free-market’ Conservatives could make an overnight turn to Keynesianism – from promising budget surpluses during the October 2008 Federal election to deficits in the 2009 Budget and into the future – then you’ve bought too much into the terms of the public debate set by the media and Parliamentary forces. The Conservatives have not broken with their old neoliberal ideas, even as they engage in last-ditch attempts to hold onto power in Parliament.
“Robert Rubin’s absurd economic recommendations” I should not be surprised to see that Robert Rubin, having been one of the single most destructive forces over the last two decades (Greenspan gets more heat because he was more visible, but Rubin has long had enormous sway) continues to have influence, not simply through his large network of well placed proteges (Larry Summers and Timothy Geithner as the most visible examples), but his ability to command attention (an article by him in Newsweek as the latest example).
Double-Dip Risk Seen in ‘Stall Speed’ Recovery Where there was despair a year ago, today there is hope. Policy makers have been successful in putting in a bottom to the most wrenching crisis and recession of the post-World War II era. Yet the outlook remains uncertain. That’s because the bottoming process, however encouraging, does little to inform us about the character of the coming economic recovery. There are four key reasons to remain skeptical about the vigor and sustainability of any rebound in the global economy:
Bernanke’s Ivory Tower Doesn’t Have a Mortgage You can almost hear the collective sigh of relief emanating from the Federal Reserve Board in Washington, and the nearby offices of Alan Greenspan, to Fed chief Ben Bernanke’s elegant, econometric argument that low interest rates didn’t cause the housing bubble. The Fed, in other words, is guilty of one count of regulatory oversight failure. As to the charge of using interest-rate policy to inflate the housing bubble that burst and destabilized the entire financial system, the defendant is not guilty.
Washington, Bernanke, Still Fighting Wrong War Sometime soon the U.S. Senate is expected to confirm Federal Reserve Chairman Ben Bernanke for a second term. Soon the Senate will also vote on legislation to overhaul the financial industry. Neither action directly determines the U.S. monetary outlook. Yet a monetary assumption underlies all of Washington’s finance- or banking-related activity these days. The shared belief is that the potential for deflation or credit-and- deflation-related spirals deserve our near-exclusive attention.
Roach Says Bernanke Should Start Exit Now If Recovery Strong Morgan Stanley Asia Ltd. Chairman Stephen Roach said U.S. policy makers should start to exit emergency stimulus measures now if the economic recovery is as strong as they say it is. “There is never an easy time to do it,” Roach said on Bloomberg Television today. “The longer they wait, the greater the chance they sow the seeds for the next bubble. So I’m in favor of an early exit strategy.”
Phony Growth from Fiscal Stimulus How was the first day of 2010? Well, most commentators would say it was a good day. The Dow rose 155 points. Oil closed over $81. The dollar fell. And gold shot up $22. Is that a good day, or what? ‘Or what’ is probably the best answer. Stocks rose. But are they forecasting a booming economy? Or more EZ money from the feds? Are they signaling the end of the slump? Or, no end to the feds’ rescue efforts? Here at The Daily Reckoning, we will stick with our view. We’re in a depression. It won’t end until it has done its work. And, with the feds trying to block it, prevent it, hold it off, deflect it and retard it, it could take years before this depression has finished its job.
Get the hell out of Dodge The Automatic Earth Right, Americans and their economy. Well, it's an ideal situation, isn’t it? Every marketeer’s wet dream. That is, through appealing to people's need and desire for hope and good tidings, you succeed in making them believe that they will benefit from the very things that hurt them more than anything else in the world. You have them convinced that black is white. This is what the US government, media, and big industry are pulling off, and since they do it so well, nary a soul is any the wiser for it. You use their very own cash to deceive them, by boosting markets for a while, which makes them believe the future is rosy, and you can use the resulting economic lull to take as much of their wealth as you can possibly carry.
Quickie Bankruptcy Filings: Companies Zoom In, Zoom Out For executives at lender CIT Group Inc., filing for bankruptcy seemed like a death sentence. No financial firm had ever survived a Chapter 11 process. But after cajoling from advisers, CIT filed a "prepackaged" bankruptcy-restructuring plan supported by an overwhelming number of its bondholders. The company entered court Nov. 1 and sped through Chapter 11 in just 40 days, emerging Dec. 10 after eliminating $10.5 billion in debt.
Oil, currencies drive DGCX volumes up in 2009 The Dubai Gold & Commodities Exchange (DGCX) has recorded 31.6% growth in volumes in 2009 as the Exchange recorded 1.5 million contracts valued at US $79 billion at the end of 2009. Surpassing the 2008 total volume of 1.142 million contracts, DGCX said that this is the highest annual volume to be achieved since inception. Currencies and crude oil were the key drivers for the rise in annual volume. While currencies recorded a 132% increase compared with last year, full year volume for crude oil futures rose by 140%.
Oil Could "Easily" Hit $90: Energy Key to 2010 Stock Market, Philip Roth Says Oil truly is "black gold" these days. Oil futures have climbed for nine straight sessions, rallying about 12% in that time. Phil Roth, chief technical market analyst with Miller Tabak, sees plenty of reasons not to bet against the trend. Examining the charts, he sees "very little resistance over head" and believes momentum could "easily" move oil into to $90-95 per barrel range.
Google Introduces Nexus One Handset to Take On iPhone Google Inc., aiming to take on Apple Inc.’s iPhone and defend its dominance in Web search, introduced a touch-screen mobile phone called Nexus One and opened an online store for the handset. The device is 0.45 inches (11.5 millimeters) thick, about the same as the iPhone, and has a larger screen than its rival. The phone costs $179 with a T-Mobile USA contract and $529 without it, Mario Queiroz, a Google vice president, said today at an event at Google headquarters in Mountain View, California.
Companies turn to virtual trade shows to save money Who needs handshakes and cocktail hours? With travel budgets deeply slashed across Corporate America, more companies are turning to virtual trade shows to connect with customers and suppliers. Virtual shows combine the latest technology in webcasting, online chats, video streaming, webinars and avatar graphics to offer the elements of trade shows: exhibitor booths, speeches, seminars, distribution of marketing literature and social "gatherings." The technology companies that develop virtual-meetings software, such as Unisfair, ON24 and Second Life, say they're seeing big demand. Event-planning firm Champion Exposition Services says about 70% of companies that it has queried are "producing, considering or interested in pursuing virtual events."
Coming Soon to the U.S.: Clean Energy from Mexico In the steep, dry mountains of Baja California (pictured), the wind whistles through the rocky crags. That's the sound of money to wind developers who see these mountains, which enjoy some of the best wind energy on the planet, as the perfect power plant for the burgeoning metropolis of San Diego, Calif., a few hundred miles away. Already, a small 10-megawatt windfarm is going up in these hills near the town of La Rumorosa.
Chinese companies evade U.S. sanctions Lack of enforcement allows targeted firms to sell goods Chinese state-owned companies sanctioned by the U.S. government for illicit arms sales to Iran evaded those restrictions by selling goods to U.S.-based companies, according to a report by a Washington research group. "Lax enforcement of U.S. sanctions is allowing Chinese companies to continue to ship goods to the United States even after being hit with an import ban for proliferation to Iran," the report by the Wisconsin Project on Nuclear Arms Control stated.
Heard Any Upbeat Business Stories? Wall Street traders bought just about everything in sight yesterday, inspired by news of a strong performance by global manufacturers in December and some loose talk from a Fed muckety-muck, vice chairman Donald Cohen, who thinks tightening to head off perceived inflation threats “could be expensive.” U.S. manufacturing reportedly grew at the fastest pace in more than three years, purchasing managers said. Europe and Asia reported similar surges, although we’re having trouble imagining who’s going to buy all that new inventory. Last week, we tried without success to determine just what it is that is still made in this country. The question drew some spirited discussion in the Rick’s Picks forum, but in the end there were no clear answers. One thing’s for sure, though: Whatever we still make cannot be easily found at Wal-Mart.
State Jobs Depend on Expansion of Gambling in Pennsylvania Government agencies in Pennsylvania have been told to start planning for staff furloughs in case the state legislature does not pass a bill expanding legal gambling by the end of this week. When the current budget was adopted last October, the General Assembly and the Rendell administration agreed that the state would raise $250 million by legalizing of table games at Pennsylvania's licensed casinos, which currently allow only slot machine gambling.
Severe unemployment worsens in cities The number of U.S. metropolitan areas with jobless rates above 15% increased in November, according to government figures released Tuesday, despite the biggest one-month drop in the national rate in more than three years. The Labor Department said 17 of 372 metropolitan areas surveyed suffered unemployment rates of at least 15% last month, up from 15 metro areas in October.
Americans’ job satisfaction falls to record low Economists warn discontent could stifle innovation, hurt U.S. productivity We can't get no job satisfaction. Even Americans who are lucky enough to have work in this economy are becoming more unhappy with their jobs, according to a new survey that found only 45 percent of Americans are satisfied with their work. That was the lowest level ever recorded by the Conference Board research group in more than 22 years of studying the issue. In 2008, 49 percent of those surveyed reported satisfaction with their jobs.
Premiums are key issue for health care negotiators Faced with giving up government health plan, House Democrats seek affordable premiums Congressional Democrats and President Barack Obama began work in earnest Tuesday on difficult issues still standing in the way of their national health care overhaul after months of tortuous debate. Topping the list: How to help Americans pay for insurance premiums. At a White House meeting that stretched into Tuesday evening, the president and Democratic congressional leaders agreed on fast-track negotiations that would bypass the need for a formal conference to resolve differences between the House and Senate health care bills. Obama "also stated his intention to work with leaders to strengthen affordability ... beyond what is in the Senate bill," said a House leadership aide, who spoke on condition of anonymity because the meeting was private.
Pensioners burn books for warmth [U.K] Hard-up pensioners have resorted to buying books from charity shops and burning them to keep warm. Volunteers have reported that ‘a large number’ of elderly customers are snapping up hardbacks as cheap fuel for their fires and stoves. Temperatures this week are forecast to plummet as low as -13ºC in the Scottish Highlands, with the mercury falling to -6ºC in London, -5ºC in Birmingham and -7ºC in Manchester as one of the coldest winters in years continues to bite. Workers at one charity shop in Swansea, in south Wales, described how the most vulnerable shoppers were seeking out thick books such as encyclopaedias for a few pence because they were cheaper than coal.
Silicon Valley ‘Bloodbath’ Leaves Buildings Empty Silicon Valley is beset by the biggest office property glut since the dot-com bust, leaving the U.S. technology hub with empty high-rises and office parks that make it impossible for landlords to sustain average rents. More than 43 million square feet (4 million square meters) -- the equivalent of 15 Empire State Buildings -- stood vacant at the end of the third quarter, the most in almost five years, according to CB Richard Ellis Group Inc. San Jose, Sunnyvale and Palo Alto have 11 empty office buildings with about 3 million square feet of the best quality space.
Phoenix Grubb & Ellis/BRE Commercial office joining Cassidy Turley ranks Grubb & Ellis/BRE Commercial LLC in Phoenix is breaking its alliance with Grubb & Ellis effective March 1 and will become part of a new national commercial real estate company named Cassidy Turley. The new firm will have 2,700 employees in 57 locations. It will be the fourth-largest commercial brokerage in the U.S. based on 2008 revenue, according to information released Tuesday by company executives. The Cassidy Turley brand includes numerous firms that previously were associated with Colliers International and NAI, but in Phoenix, the company’s executives wooed Grubb & Ellis/BRE Commercial to secure its presence in the Southwest.
Mesa Air files for Chapter 11 bankruptcy protection Mesa Air Group Inc., whose operations include flying regional routes for major airlines such as Delta, United and US Airways, has filed for Chapter 11 bankruptcy protection, hoping to shed financial obligations for leases on airplanes it no longer needs. Mesa, which currently flies 130 aircraft, said the filing will allow it to reorganize its operations and allow it to get rid of its extra planes and become more competitive. Mesa said Tuesday that its go!-Mokulele Hawaiian joint venture with Mokulele Airlines is not included in the bankruptcy filing and will run a full flight schedule.
GMAC headed for $5 billion loss GMAC, the troubled finance company that last week scored a third government bailout, said Tuesday it expects to post a record fourth-quarter loss of $5 billion. The company also said it has decided to try to sell its ResCap mortgage unit, which has lost billions of dollars since the U.S. housing market crashed. Those losses have strained the already stretched finances at GMAC, which is best known as a lender to the troubled U.S. auto industry.
Toyota, Honda sales off 20% in '09 A final-month spurt in sales couldn’t salvage a difficult 2009 for Honda and Toyota, makers of Hawaii's top-selling vehicles. Toyota and Honda both saw sales sink 20 percent for the year. Nissan’s sales were down 19 percent in 2009. All three Japanese automakers saw double-digit sales increases in December but they didn't offset the sales declines from earlier in the year. Toyota and Honda make the five best-selling cars and trucks in Hawaii, according
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