Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 03.01.2010
FDIC Shuts Down Banks in Nevada and Washington By STEPHEN BERNARD AP - ABC News Regulators shut down banks in Nevada and Washington; putting US bank failures at 22 for year Regulators shut down banks in Nevada and Washington on Friday, marking the 21st and 22nd failures this year of federally insured banks. The Federal Deposit Insurance Corp. was appointed receiver of Carson River Community Bank, based in Carson City, Nev. and Rainier Pacific Bank in Tacoma, Wash. Carson River Community Bank had $51.1 million in assets and $50 million in deposits as of Dec. 31. Rainier Pacific Bank had $717.8 million in assets and $446.2 million in deposits as of Dec. 31.
I.M.F. Chief Suggests Look at New Reserve Currency By SEWELL CHAN - NY Times WASHINGTON — The chief of the International Monetary Fund said Friday that the organization should reorient itself to better detect systemic risks to the global economy and quickly step in with emergency loans when financial crises emerge. The I.M.F. leader, Dominique Strauss-Kahn, also floated the idea of creating a global reserve currency that could serve as an alternative to the dollar. After a speech at the I.M.F. headquarters, Mr. Strauss-Kahn said in response to a question about the fiscal crisis in Greece that the fund would be “happy to help if asked” but that the European Union appeared able to resolve the crisis on its own.
Head of IMF Proposes New Reserve Currency By HARRY DUNPHY AP - ABC News IMF's Strauss-Kahn suggests IMF may one day provide global reserve asset Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar. "That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.
Michael Levy: Gold, The Real Reserve Currency
Coming Commercial Real Estate Crisis; 3000 Community Banks at Risk by Mike “Mish” Shedlock Here are a couple of stories similar to thousands playing out across the country, and tens of thousands more to come. The second article gets to the heart of the upcoming commercial real estate bust. The Minneapolis Star Tribune is reporting Brookdale Mall sold at auction for big markdown. A sheriff's foreclosure auction produced just one bid -- from the mall's mortgage-holders, who bid $12.5 million.
Crisis-Related Bank Failures Racing Toward 1,000 By Rocky Vega - DailyReckoning.com 02/27/10 Stockholm, Sweden – A new projection is now showing that roughly 1,000 US banks may fail because of the financial crisis that uncovered the toxic assets hidden on bank balance sheets. According to Reuters:
“James Dunne, senior managing principal of Sandler O’Neill, said 300 to 400 banks could be seized this year, especially as institutions start to deal with deteriorating commercial real estate loans.
“‘This is going to be a very slow recovery,’ Dunne said in an interview with Reuters.
“Regulators have seized 185 banks since January 2008. The Federal Deposit Insurance Corp has said the pace of failures is expected to peak this year.
“The agency said earlier this week that its ‘problem’ bank list jumped 27 percent during the fourth quarter to 702.”
Why the US economy could suffer another contraction Gerard Jackson - BrookesNews.Com Last December I pointed out that AMS (Austrian definition of the money supply*) had peaked in June 2009, even as the monetary base accelerated, and that this must mean that bank deposits are not expanding. The result would be "an inadvertent 'monetary tightening' that will have a detrimental impact on economic activity" which the fall in capital orders appeared to indicate. This now seems to be the case with the latest survey showing the demand for capital goods (plant and machinery) still falling.
Preparing for the Inevitable Bursting Bubble By RON LIEBER - NY Times Financial bubbles are a way of life now. They can upend your industry, send your portfolio into spasms and leave you with whiplash. And then, once you’ve recovered, the next one will hit. Or so you might think, as a veteran of two gut-wrenching market declines and a housing bubble over the last decade. There’s plenty of reason to expect more surprises, given the number of hedge funds moving large amounts of money quickly around the world and the big banks making their own trades.
True Fiscal Insanity: Creating Money to Buy Government Debt By The Mogambo Guru - DailyReckoning.com 02/26/10 Tampa Bay, Florida – I knew that something was amiss when I woke up and the house was quiet. Having the benefit of seeing a lot of movies where things were “too quiet”, I instantly knew that things being “too quiet!” meant that Indians were going to be attacking, or the Japanese attacking, or the Germans attacking, sometimes government goons rushing the place, or zombies, or the police. I dunno who, but you get the point. Grabbing the bare necessities (a couple of pistols, a few Uzi submachine guns, a rocket-propelled grenade launcher and a lot of spare ammunition) I rolled off the bed onto the floor with the idea of scuttling into the closet to cringe in a defensive posture, bristling with weapons, making my enemies stop and think before killing me, giving me, I figure, a additional three more seconds to live!
Time for Goldman to Come Clean Reuters via WashingtonTimes Even mighty Goldman Sachs makes mistakes. The Wall Street bank’s decision to help Greece keep some of its debts hidden from public view in 2001 was one of them. The arrangement, which allowed the Greek government to present accounts that understated the state’s liabilities by 1.6 percent of its gross domestic product, wasn’t illegal or against any regulations, and it was approved by Europe’s statistical authorities. But helping a client reduce the transparency of its finances is ethically questionable. For its own sake, as well as that of its shareholders, it’s time for Goldman to admit that it compromised its principles.
California is a greater risk than Greece, warns JP Morgan chief By James Quinn - Telegraph Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes. Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged. California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.
Seeds of War By Joel Bowman - DailyReckoning.com 02/28/10 Taipei, Taiwan – A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald’s The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.) Then, almost as quickly as it had begun, the party ended. Black Tuesday, October 1929, was somewhat akin to calling “closing time” at the Gatsby mansion cocktail party. Markets crashed, the public panicked and central planners did everything in their power to exacerbate the situation they themselves had caused in the first place.
Pictures of a Market Crash: Beware the Ides of March, And What Follows After JESSE'S CAFÉ AMÉRICAIN There are a fair number of private and public forecasters with whom I speak that anticipate a significant market decline in March. As you know I tend to agree, but with the important caveat that we are in a very different monetary landscape than the last time the Fed engaged in quantitative easing, the early 1930's. The biggest difference is the lack of 'external standards.' This introduces an element of 'policy decisions' that has been discussed here on several occasions.
FDIC Auctions $610.5 Million in Loans From Failed U.S. Lenders By Brian Louis -- Feb. 27 (Bloomberg) -- The Federal Deposit Insurance Corp. is seeking bids for $610.5 million of unpaid loans it’s holding from failed U.S. lenders including IndyMac Bank, Silverton Bank and New Frontier Bank. The loans are backed in part by land, developed lots and condominium construction projects, said Peter Tobin, managing director of New York-based Mission Capital Advisors LLC, the FDIC’s marketing agent and financial adviser for the offering. Most of the properties are in Colorado, California, Utah and Idaho, and about 78 percent of the debt is 90 days or more past due, according to a description on Mission Capital’s Web site.
Gold rises to 1-week high; strikes record in sterling By Lewa Pardomuan SINGAPORE, March 1 (Reuters) - Gold rose to a 1-week high on Monday on bargain hunting driven by a firmer euro, while sterling-priced bullion struck another record as the British currency tumbled against the U.S. dollar. Silver, also used in photography and electronics, jumped to its strongest in almost a month to track gold and the price of copper, which surged on worries about supply after an 8.8-magnitude quake hit top producer Chile.
Gold steadies, silver, copper surge SINGAPORE (Commodity Online) : Gold prices steadied in Asian trade Monday mainly on bargain hunting based on a strong euro amid a recovered dollar. Gold for immediate delivery was seen trading at $1116.32 an ounce at 11.30 a.m Singapore time while U.S. gold futures for April delivery hit an intraday high of $1,120.7 an ounce. Analysts said the precious yellow metal may drop for the first time in three days as the dollar stemmed its decline, damping investor demand for an alternative investment.
Do we really want $5,000 gold? Author: Lawrence Williams - MineWeb.com What does $5,000 gold really mean? Perhaps social chaos and, if so, who really wants that? General talk of gold as a potentially spectacular investment as opposed to an inflation hedge glosses over the true picture. Over the ages, gold has kept up with inflation pretty well, and it will probably continue to do so in the future, but it may not make you wealthy, just protect whatever wealth you have. True there have been periods when gold has outpaced the decline in currency values due to inflation, but that is usually when it is playing catch-up from a period of underperformance. Now some ultra gold bulls out there are predicting $5,000 gold - or even higher. While we think this unlikely in the foreseeable future, think what this means if it should come about. It can only really happen if there is an equivalent decline in the US dollar - or the onset of hyper dollar inflation.
Gold Futures Rise as Investors Seek Alternative to Currencies By Pham-Duy Nguyen and Nicholas Larkin Feb. 26 (Bloomberg) -- Gold rose for a second straight day, capping the first monthly gain since November, on speculation that concern over Greece’s debt will increase demand for bullion as an alternative to holding currency. Greece’s credit rating may be lowered within months if it fails to meet the objectives in its plan to reduce a budget deficit, Moody’s Investors Service said yesterday. The dollar fell as much as 1 percent against the euro after yesterday climbing to near a nine-month high.
Why central banks are not keen to buy IMF gold By Tex Norton - Commodity Online The IMF didn't get any bids for its latest offer to auction 191.3 tonnes of the remaining gold that it wants to sell. Apparently the central banks of the world have shown a distinct lack of interest in the proposed bullion sale. So gold game-over, correct? Not exactly. Recall that India bought 200 tonnes of gold from the International Monetary Fund late in 2009, along with Sri Lanka (10 tonnes) and Mauritius (two). The IMF gold sale is purportedly based on the IMF's desire to raise funds to help poor countries. I'll leave a discussion of that ill-conceived notion for discussion at another time. The fact remains that the gold is for sale and apparently no buyers are willing to step-up and be counted. At least, not publicly counted. Wonder why?
Gold bulls, bullion market and IMF gold sale By Jon Nadler - Commodity Online Gold prices showed additional firmness overnight and early this morning. For the most part, bullion prices managed to remain above the $1,100 an ounce mark as additional weakness pushed the U.S. dollar to near 80.50 on the trade-weighted index and as European stocks edged higher, reflecting a bit of a fresh resurgence in risk appetite. “Recovery has thus far mainly been fueled by a slight – and mostly technical – bounce in the EUR/USD pair and some short covering”, said Matthias Detremmerie, founder of Goldessential.com. The recovery in gold still needs to break above last week’s high around $1,131.50 before chartists would agree that further upside is likely. On the other hand: “To the downside, any manifest gold price weakness below the $1,088.00 an ounce level might likely to invoke fresh liquidations.”
Why gold price turns volatile during IMF gold sale By Jeff Clark - Commodity Online How many IMF officials does it take to change a light bulb? As you probably read, the International Monetary Fund announced they would proceed with selling the remaining 191.3 tonnes of gold from the 403.3 tonnes planned. The money is to be used for lending to poor countries. Lending implies the money will be repaid, which, in the case of the IMF, is a joke that isn’t funny. But that’s a topic for another day. The IMF stated that sales will be conducted in the open market, which is interesting because until now, gold has only been made available to central banks. While the IMF remains open to central banks buying some of the gold, sales will be conducted “in a phased manner over time” to avoid disruptions to the open market.
Gold, Currency Crisis and Debt-liquidating Depression or a Hyperinflationary Blow-off By: The_Gold_Report - MarketOracle.com -- However the evolving global currency crisis ultimately manifests itself, either total deflation and a debt-liquidating depression or a hyperinflationary blow-off, David Morgan of The Morgan Report says "There's none better than gold—and silver is probably just as good—if you're worried about a crisis hedge." In the interim, David tells us in this exclusive Gold Report interview, the time might be right to build cash and watch the markets. He likes the old adage: when in doubt, stay out. But he also likes finding opportunities in undervalued and overlooked resource equities for speculative investments.
Gold Prices Have ‘Substantial Upside,’ ETF’s Tuckwell Says By Kim Kyoungwha and Haslinda Amin Feb. 26 (Bloomberg) -- Gold prices may gain as investors seek a hedge against inflation and volatile markets, said Graham Tuckwell, chairman of ETF Securities Ltd. There’s “a lot of safety in commodities, particularly in gold, as a good hedge against volatile times,” Tuckwell said in an interview with Bloomberg Television. “There’s a substantial upside” for gold “as inflation comes through the system and the whole concept of fiat currencies is questioned.”
The Euro and a Conspiracy of Hedge Funds, Wheres All the Greek Gold? By: John Mauldin - MarketOracle.com The economy grew in the fourth quarter by 5.9%, the most in years. The adjusted monetary base is exploding. Bank reserves are literally through the roof. The Fed is flooding money into the system in an effort to get banks to lend. An historically normal response by banks (to increase lending) would have been massively inflationary, causing the Fed to stomp on the brakes. Despite raising the almost meaningless discount rate (as who uses it?), this week Ben Bernanke assured Congress of an easy monetary policy, with rates remaining low for a long time. Many ask, how can this not be inflationary?
COMEX INVENTORY DATA REVEAL AN ALARMING TREND By Adrian Douglas For more than 6 months I have been gathering data released daily by the COMEX concerning delivery notices and inventory levels of gold and silver. This data must be captured and recorded each day as there is no database of historical data available to the general public. Studying data on a daily basis is not conducive to seeing the big picture so I have just completed a study of what can be discerned by looking at the entire 6 months of data. The results are very revealing.
Dollar Declines Against Yen, Euro on Greek Aid, Home Sales Drop By Inyoung Hwang and Ben Levisohn Feb. 26 (Bloomberg) -- The dollar fell against the euro and the yen as German lawmakers said aid to Greece may come through a state-owned lender and sales of U.S. existing homes unexpectedly declined last month. The euro gained against the dollar as German officials said the nation is considering buying Greek bonds through state-owned lender KfW Group. The greenback depreciated against all of its 16 most-traded counterparts except the pound as home purchases dropped 7.2 percent last month, the second-largest decline ever.
Jim Rogers on Bloomberg: High Spending May Haunt Indian Economy
China Currency Poses Greatest Danger to Global Economic Recovery By: Bryan Rich - MarketOracle.com Toward the end of last year, many market followers were speculating on a Fed hike as early as the first half of 2010. Global stock markets had experienced explosive bounces, commodity prices had surged from the crisis lows, and risk spreads and market volatility had all subsided. In short, markets were pricing in a very optimistic outlook for global economic recovery - a return to normalcy. But just two short months into 2010, the exuberance about recovery has deflated. As I’ve explained in many of my Money and Markets columns, the world is still saddled with problems and vulnerable to lurking threats …
Will China Use Its U.S. Bond Holdings as a Weapon? By BRUCE WATSON - Daily Finance Following the $6.4 billion U.S. arms sale to Taiwan in January, some members of the Chinese military have advocated using China's considerable U.S. Treasury bond holdings as a weapon to retaliate against America. In a recent article in Chinese magazine Outlook Weekly, senior army officers at China's military university called for a stern response to the arms sale, stating that "we could sanction [the U.S.] using economic means, such as dumping some U.S. government bonds."
Germany and France agree to rescue Greece, with conditions By Rupert Neate - Telegraph Germany and France are putting together a plan to buy as much as €30bn (£26.7bn) of Greek debt to help the country avoid a calamitous sovereign default – but only if Athens commits to slashing public spending. Sources close to the German finance ministry said Germany’s state-owned KfW bank will buy Greek bonds or provide guarantees to other banks to buy them. France’s state-owned Caisse des Depots will also be involved in the aid package, according to Greek newspaper Ta Nea. The debt sale under consideration is thought to be between €20bn and €30bn. About half will be sold to France and Germany and half to debt investors.
EU Crafts Aid Plan as Rehn to Push Greece to Cut Budget Deficit By Simon Kennedy and Maria Petrakis -- March 1 (Bloomberg) -- European Union Monetary Affairs Commissioner Olli Rehn will likely push Greece to do more to cut its budget deficit today as governments craft a possible rescue package for the cash-strapped nation. Rehn will meet with Prime Minister George Papandreou as German lawmakers say euro-area officials are devising a plan to grant Greece about 25 billion euros ($34 billion) in aid should it need help financing its debt, possibly by using state-owned lenders such as the KfW Group to buy its bonds.
Germany's frugality bemoaned for inhibiting euro zone growth By Anthony Faiola - Washington Post BERLIN -- Greek extravagance touched off the biggest crisis in the 11-year history of the euro. But the world's most ambitious monetary union faces a less obvious problem that might be even harder to lick -- German frugality. Adoption of the euro a decade ago ushered in an era of cheap credit, soaring salaries and big government in nations like Greece, Spain and Portugal. Their debt-fueled splurges are now coming home to roost, with Greece the first to come close to running out of cash to operate the government, raising fears of a default. Germany -- Europe's economic powerhouse -- is expected to take a leading role in a rescue effort to prevent a possible run on the euro and the outbreak of a new bout of turmoil in global bond, currency and stock markets.
Treasuries Gain on Lower-Than-Anticipated Economic Data, Greece By Cordell Eddings and Susanne Walker -- Feb. 27 (Bloomberg) -- Treasuries advanced for the first time in three weeks as weaker-than-forecast economic reports and the threat of credit-rating downgrades for Greece spurred demand for the safety of U.S. government debt. Yields on 30-year bonds fell the most this week in six months as reports showed sales of new and existing homes unexpectedly tumbled, consumer confidence dropped and fourth- quarter consumer spending grew less than forecast. A report on March 5 is forecast to show that U.S. employers cut 50,000 jobs in February.
Is Goldman Finally About to be Leashed and Collared? Naked Capitalism Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits. Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing to military success (he argues that England was able to punch above its economic weight due to its superior tax collection apparatus and more highly developed bond markets). The Rothschilds, which among other things financed governments at war, went to some lengths to underplay their influence so as not to threaten their state patrons/clients. The problem is that the behaviors that contributed to Goldman’s commercial success have over time become unbalanced, and are putting it at odds with governments.
The US recession and the myth of 1937 Gerard Jackson - BrookesNews.Com The current situation has many people referring back to the Great Depression, particularly the 1937 downturn. As usual they are drawing the wrong conclusions. The lesson that so many have failed to grasp is that the Great Depression is a tragic testimony as to what can happen to a country when governments defy economic laws. Let us begin with Roosevelt's 1935 Wagner Act. This had been passed in reaction to the Supreme Court's decision to declare the economically destructive National Recovery Act unconstitutional. However, constitutional lawyers advised business that the Wagner Act was also unconstitutional. In view of this advice most big businesses ignored the Act and used free market prices to increase output and employment. As a result unemployment fell from 9.1 million in 1935 to 6.4 million in 1937, iron and steel production rose to more than 100 per cent the 1933-34 level and car production more than doubled the 1933 level.
Zero Point of Systemic Collapse by Chris Hedges We stand on the cusp of one of humanity’s most dangerous moments. Aleksandr Herzen, speaking a century ago to a group of anarchists about how to overthrow the czar, reminded his listeners that it was not their job to save a dying system but to replace it: “We think we are the doctors. We are the disease.” All resistance must recognize that the body politic and global capitalism are dead. We should stop wasting energy trying to reform or appeal to it. This does not mean the end of resistance, but it does mean very different forms of resistance. It means turning our energies toward building sustainable communities to weather the coming crisis, since we will be unable to survive and resist without a cooperative effort.
Ron Paul's Texas Straight Talk 3/1/10 on his questioning of Ben Bernanke and Hillary Clinton
Report Shows Government's Liabilities Surging MoneyNews.com The federal government fell further into the red in 2009, with its financial position hitting a deficit of $11.46 trillion. That figure is 12.3 percent higher than the previous year, according to a new report issued by the Treasury Department on Friday. The annual report shows that the government's big entitlement programs such as Social Security and Medicare are facing a deficit over the next 75 years of $45.88 trillion, an increase in that deficit of $2.9 trillion in just one year.
Fannie Posts $72 Billion Loss for '09 By NICK TIMIRAOS - WSJ Fannie Mae reported a staggering $72 billion net loss for 2009, underscoring the challenges that still face the nation's largest mortgage financier and offering more grim news for taxpayers who may ultimately pick up the bill. The Washington-based company posted a $15.2 billion fourth-quarter loss and said it asked the U.S. Treasury for another $15.3 billion to stay afloat, bringing its total bailout tab past $76 billion. The quarterly results were an improvement from the year-ago period, when Fannie reported a $25.2 billion loss, but the annual loss surpassed the year-earlier loss of $58.7 billion.
Fannie Taps Treasury for $15.3 Billion More After a 10th Loss By Dawn Kopecki Feb. 27 (Bloomberg) -- Fannie Mae will seek $15.3 billion in U.S. aid, bringing the total owed under a government lifeline to $76.2 billion, after its 10th consecutive quarterly loss. The mortgage-finance company posted a fourth-quarter net loss of $16.3 billion, or $2.87 a share, Washington-based Fannie Mae said in a filing yesterday with the Securities and Exchange Commission. Fannie Mae, which owns or guarantees about 28 percent of the $11.8 trillion U.S. home-loan market, has been hobbled by a three-year housing slump that wiped 28 percent from home values nationwide and led to record foreclosures.
FDIC Auctions $610.5 Million in Loans From Failed U.S. Lenders By Brian Louis -- Feb. 27 (Bloomberg) -- The Federal Deposit Insurance Corp. is seeking bids for $610.5 million of unpaid loans it’s holding from failed U.S. lenders including IndyMac Bank, Silverton Bank and New Frontier Bank. The loans are backed in part by land, developed lots and condominium construction projects, said Peter Tobin, managing director of New York-based Mission Capital Advisors LLC, the FDIC’s marketing agent and financial adviser for the offering. Most of the properties are in Colorado, California, Utah and Idaho, and about 78 percent of the debt is 90 days or more past due, according to a description on Mission Capital’s Web site.
Carry Trades May Play Larger Role in Currency Markets, BIS Says By Bo Nielsen -- Feb. 28 (Bloomberg) -- The rise of carry trades, in which investors take advantage of interest-rate differences between countries, may signal bigger swings in currencies during crises, the Bank for International Settlements said. Variations in interest rates played a larger role in the latest financial turmoil than in either the Asian financial crisis of 1997-1998, or following the Russian debt default in 1998, the Basel, Switzerland-based BIS said in its quarterly report released today. That may reflect the “increasing role carry trades play in exchange rate movements,” it said.
Markets, AIG, Housing, health care
Don't go wobbly on us now, Ben Bernanke By Ambrose Evans-Pritchard - Telegraph Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget." The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It's a catastrophe", said the Schools Superintedent. In Alexander County, the sheriff's patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
Fed officials at odds on right level for rates Mark Felsenthal and Kristina Cooke NEW YORK (Reuters) - Two top Fed officials on Friday offered divergent signals on interest rates, with one arguing they should remain near zero for at least six months and another wishing to raise them "sooner rather than later." Charles Evans reiterated the central bank's commitment to keep borrowing costs at exceptionally low levels for an extended period, which he defined as lasting three or four Fed meetings or at least six months. "I still think it's going to be an extended period of time that interest rates are going to be low," Evans, the Chicago Federal Reserve Bank president told CNBC television. "It's a time of still too much uncertainty. Consumers are being very careful with the labor market situation," he said.
Tighter Financial Conditions Test Recovery By JON HILSENRATH Despite near-zero interest rates and a continuing flood of credit into the U.S. economy from the Federal Reserve, financial conditions tightened in the second half of 2009, according to a new study produced by a collection of Wall Street and academic researchers. Tight financial conditions could hobble the recovery and point out a contradiction: While interest rates remain near historic lows, the availability of credit is still constrained.
Why ‘Too Big to Fail’ is Too Short-Sighted to Succeed ResearchRecap.com NERA Economic Consulting argues in a new white paper that limiting the size of financial institutions may actually result in more risk-taking, not less. Selected excerpts: Legislative proposals that rely on a size-based identification process would erroneously identify a number of financial firms as systemically risky, when in fact they are not. Other firms that do in fact pose significant systemic risk would fail to be identified. Such a process, if enacted, would create a cross-subsidy of significant magnitude from firms that do not pose systemic risk to those firms whose activities are systemically risky.
AIG and Pru close to $35bn Asian deal By Francesco Guerrera in New York, Sundeep Tucker in Hong Kong and Paul J Davies in London - FT -- AIG and Prudential are close to agreeing the sale of AIA, the US life group’s Asian business, to the UK’s biggest insurer for about $35bn in cash, shares and other securities, in a deal expected to be announced this week. After a weekend of tense talks, the board of the government-controlled US insurer decided to press ahead with the sale of AIA, one of the jewels in AIG’s crown, and scrap a planned $10bn-$20bn partial listing of the unit, people close to the situation said. No deal has yet been sealed and the talks could still collapse but under the terms being discussed, Prudential would pay about $25bn in cash and the remaining $10bn in shares and other securities such as preferred stocks and options.
Government went deeper in red in 2009: Treasury WASHINGTON (Reuters) - The government's financial position, reported on an accrual basis that more accurately accounts for long-term liabilities, continued to deteriorate in fiscal 2009, a report issued by the Treasury Department on Friday showed. The government's net position, after deducting liabilities from assets, was in shortfall by $11.46 trillion in the fiscal year that ended Sept 30, 2009, compared with $10.2 trillion in fiscal 2008. Its net operating costs for fiscal 2009 were $1.3 trillion, up from $1 trillion in fiscal 2008 because of weaker revenues and spending to try to revive the economy, Treasury Secretary Timothy Geithner said in a foreword to the report.
Peter Schiff on Freedom Watch with Judge Napolitano 24 Feb 2010
Did Woodstock Hippies Lead to the Financial Collapse? By MARK GUARINO, The Christian Science Monitor New Film Claims Hippies-Turned-Boomers as Responsible for Excessive Spending, the Mortgage Crisis, and Recklessness on Wall Street A new film is gaining traction among tea-party followers for suggesting that the collapse of the US financial system has roots dating back 40 years to the Summer of Love. "Generation Zero," a film set to premiere in March, examines what producer David Bossie says is a "historic perspective on a generational change" that led to the September 2008 bank collapse. Bossie says generational narcissism, as represented by the 1969 Woodstock Festival, is responsible for the excessive spending, mortgage crisis, and recklessness on Wall Street.
Obama's Plan to Stem Foreclosures Would Do More Harm Than Good - By ZAC BISSONNETTE - Daily Finance -- The Obama administration is mulling a plan that would require lenders to make efforts to enroll homeowners in the government's Home Affordable Modification Program (HAMP) before they pursue foreclosure. According to a memo reviewed by Bloomberg, the proposal "prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed."
Obama Says Nation Cannot Lose Opportunity to Act on Health Care By Nicholas Johnston -- Feb. 27 (Bloomberg) -- President Barack Obama said this week’s summit on health care showed Republicans and Democrats can find some common ground on the issue, while indicating he’ll move forward even if all disagreements can’t be resolved. In his weekly address, Obama said the nation can’t afford to miss this chance to enact health-care legislation that would expand coverage to 31 million uninsured Americans.
What do we need health insurers for anyway? By Michael Hiltzik - LA Times Angela Braly can't kid me. When the chief executive of gargantuan health insurer WellPoint (parent of Blue Cross of California) went before a congressional subcommittee the other day, she displayed all the smile-through-the-tears pluck of Annie looking to a sunny tomorrow or Scarlett swearing to God she'll never be hungry again. WellPoint didn't really want to jack up health premiums on its customers by as much as 39%, she said -- it had no choice. "We care deeply about our California customers," she said. But what she was really telling the committee members was this: "Please put us out of our misery."
Administration proposes help for middle class By Blake Ellis, staff reporter NEW YORK (CNNMoney.com) -- In its first annual report released Friday, the Obama administration's middle-class task force introduced plans to address the "middle-class squeeze" in the U.S. economy. Vice President Joe Biden, who heads the year-old task force, said that the administration's focus over the past year has been on issues including retirement security, access to affordable education, the balance of work and caregiving and the creation of jobs for middle-class workers.
The secret lives of America's debtors By Julianne Pepitone NEW YORK (CNNMoney.com) -- Americans are loaded up with credit card debt. What's worse is that some husbands, wives and even children hide those money woes from their families. The results are often devastating. Hidden debt is a common and insidious problem. "It's a form of cheating so subtle you don't even know you're doing it," said Bonnie Eaker Weil, a relationship expert and author of the book Financial Infidelity. "It's a power struggle that can be more harmful to a relationship than adultery."
Brookdale sold at auction for big markdown By SUSAN FEYDER, Star Tribune A sheriff's foreclosure auction produced just one bid -- from the mall's mortgage-holders, who bid $12.5 million. Brookdale Center went on the auction block at a sheriff's foreclosure sale Friday, netting just one bid of $12.5 million from the shopping mall's lenders. The bid from Brookdale Mall HH LLC was well below the $51.8 million owed on a $54.2 million mortgage by the property's owners, Brooks Mall Properties of Coral Gables, Fla.
Jobless benefits start ending on Sunday By Tami Luhby NEW YORK (CNNMoney.com) -- Depending on extended unemployment benefits to see you through the Great Recession? You'd better not: The Senate failed to push back the Feb. 28 deadline to apply for this safety net. Starting Monday, the jobless will no longer be able to apply for federal unemployment benefits or the COBRA health insurance subsidy.
US manufacturers face skills shortages By Hal Weitzman in Chicago - FT Manufacturing companies in the US are struggling to find workers with technical skills even though the sector has shed more than 2m jobs in the past two years. The shortage of skilled staff could restrict companies’ ability to step up production as the economic recovery gathers pace. In interviews with the Financial Times, groups ranging from Boeing – one of the US’s biggest manufacturers and exporters – to small companies also said they faced a wave of skilled workers reaching retirement age in the next few years, with a shortage of younger workers to replace them.
Existing home sales drop By Ben Rooney NEW YORK (CNNMoney.com) -- Sales of existing homes unexpectedly fell in January, according to an industry report published Friday, highlighting concerns that the housing market is weaker than previously thought. The National Association of Realtors reported that home resales fell 7.2% last month to a seasonally adjusted annual rate of 5.05 million units, down from the revised rate of 5.44 million in December. Still, on a year-over-year basis, sales were up 11.4%.
Another Foreclosure Alternative By BOB TEDESCHI - NY Times Deeds in lieu of foreclosure HOMEOWNERS on the verge of foreclosure will often seek a short sale as a graceful exit from an otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender. But with short sales beyond the reach of some homeowners — they typically won’t qualify if they have a second mortgage on the home — another foreclosure alternative is emerging: “deeds in lieu of foreclosure.”
FICO is Shocked by Default Data By Addison Wiggin - DailyReckoning.com 02/26/10 Baltimore, Maryland – FICO, the outfit that computes your vaunted “credit score,” has just noticed that consumers with high scores are more likely to default on their mortgages than their credit cards. Last year, the firm says, folks with FICO scores of 760 or higher defaulted on real estate loans at three times the pace they defaulted on plastic.
FDIC to test principal reduction for underwater borrowers By Renae Merle - Washington Post The Federal Deposit Insurance Corp. is developing a program to test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure. The program would be aimed at a growing population of homeowners who are underwater on their loans, estimated at more than 20 percent of borrowers, or 11 million homeowners. Economists consider these borrowers among the most vulnerable to foreclosure, and some industry officials worry that more of them will simply walk away from their mortgages, or "strategically default," rather than spend a decade or more trying to regain positive equity.
Many borrowers in default stay put as lenders delay evictions By Alana Semuels - LA Times Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend. It's been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction. A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.
Many borrowers in default stay put as lenders delay evictions
Home resales drop for second consecutive month By Alejandro Lazo - LA Times In January, 7.2% fewer previously owned homes sold in January than December, which was down from November, the National Assn. of Realtors reports. If you're still having trouble selling your house, you're not alone. Sales of previously owned homes in January stumbled considerably for the second consecutive month. The National Assn. of Realtors in Washington said Friday that sales fell 7.2%. January sales were the lowest since June but 11.5% higher than in January 2009.
Green policies are laying down the foundations for future famines Viv Forbes - BrookesNews.Com This generation of pampered westerners is the first tribe in the history of the world that seems determined to destroy its ability to produce food. The history of the human race has always been a battle for protein in the face of the continual challenge of natural climate change. Nothing has changed for this generation, except the wildfire spread of a destructive new religion that requires the sacrifice of food producers on a global warming altar. Food creation needs solar energy, land, carbon dioxide and water. All four food resources are under threat.
Carbon taxes energy production and technology: more green nonsense Gerard Jackson - BrookesNews.Com Greens argue that solar and wind power are genuine alternatives to centralized electricity generation. Therefore the long term effect of a carbon tax would be to substitute the latter for the former with little or no loss in production. Critics counter that these alternative energy sources are very inefficient and would require substantial subsidies. This approach leaves me somewhat bewildered. To argue that solar and wind are inefficient alternatives to coal-fired power stations because they are more costly is no argument at all.
Toyota 'deliberately withheld' evidence in safety lawsuits, House panel says By Ken Bensinger and Ralph Vartabedian - LA Times -- Memos from a former Toyota lawyer describe failure to produce evidence in vehicle rollover lawsuits, says the chairman of the House Oversight and Government Reform Committee. Toyota Motor Corp. "deliberately withheld" evidence in lawsuits related to vehicle safety, exhibiting a "systematic disregard for the law," the chairman of a congressional committee said. The firm created "secret electronic 'Books of Knowledge' " that included information about design problems, yet never disclosed their existence in lawsuits, according to internal company documents released by the committee Friday.
Doctors tell Barack Obama to quit smoking Ewen MacAskill, Washington - guardian.co.uk, The American president has been trying to kick the habit for sometime, apart from the smoking he is in excellent health Barack Obama is still struggling to kick smoking, according to his first medical examination since becoming president. Obama is sensitive about his cigarette habit and tetchy with reporters who raise it. But after his 90-minute medical at the Navy hospital outside Washington yesterday morning, his doctors confirmed he had not yet managed to conquer the habit and suggested he "continue smoking cessation efforts". The doctors said the president used medication to try to ease the pangs, they described it as "nicotine replacement therapy, self-use".
Obama signs one-year extension of Patriot Act Sunset District Libertarian ExaminerRobert Taylor Sunday was supposed to be a glorious holiday for fans of civil liberties. The Patriot Act was set to expire today, but thanks to President Obama's signature, it now has a one-year extension. There are three scary sections of the Patriot Act that will stay in place. From the AP, the extensions will:
Authorize court-approved roving wiretaps that permit surveillance on multiple phones.
Allow court-approved seizure of records and property in anti-terrorism operations.
Permit surveillance against a so-called lone wolf, a non-U.S. citizen engaged in terrorism who may not be part of a recognized terrorist group.
How nuclear equipment reached Iran By PETER ENAV and DEBBY WU Associated Press How restricted nuclear equipment ended up where it wasn't supposed to Early last year, a Chinese company placed an order with a Taiwanese agent for 108 nuclear-related pressure gauges. But something happened along the way. Paperwork was backdated. Plans were rerouted, orders reconfigured, shipping redirected. And the gauges ended up in a very different place: Iran.
US steps up diplomatic pressure on Russia over Iran sanctions By Adrian Blomfield and Andrew Osborn in Moscow - Telegraph The US and its western allies have stepped up a behind-the-scenes campaign to persuade Russia to back tough United Nations sanctions against Iran. Amid fears that Moscow remains intent on weakening a planned Security Council resolution punishing Tehran for its nuclear programme, western diplomats are seeking to convince Russia to support much more robust measures. They hope the West's case for robust action will be strengthened on Monday when the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, meets in Vienna to discuss a damning new report on Iran's atomic intentions.
EXCELLENT INTERVIEW . . . take time to listen to what Bob Chapman has to say about the 16 nations that will likely be pushed into bankruptcy by October 2010 (include ring of fire nations - USA and UK) - just in time to suspend US November elections . . . plus more on Goldman Sachs engineering the financial destruction of sovereign nations, and endeavoring to get rid of their competitors
Bob Chapman's Friday Report on Alex Jones Tv 1/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 2/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 3/4: Power Grab by The EU
Bob Chapman's Friday Report on Alex Jones Tv 4/4: Power Grab by The EU
Greek PM says economic crisis confirmed worst fears Dina Kyriakidou ATHENS (Reuters) - Prime Minister George Papandreou on Friday vowed to ignore the political costs and take drastic measures to pull Greece out of a debt crisis threatening the stability of the euro zone. Speaking to parliament after a visit by EU economic inspectors, Papandreou said Greece did not want other countries to pay for its debts but expected solidarity from its European peers as it struggled with worse than expected fiscal problems. "Unfortunately, history has fully confirmed our worst fears," he said. "Our duty today is to forget about political costs and only think about the survival of our country ... Past policies make it necessary to proceed to brutal changes." . . . .
"There is only one dilemma: Will we let the country go bankrupt or will we react? Will we let the speculators strangle us, or will we take our fate in our own hands?" Papandreou said. . . . .
EU peers and markets were shocked when Papandreou's socialists revealed after last October's election that the previous government had understated its budget deficit by half. . . .
Fed Examines Greek Bank Debt The Senate warms to the Fed as a bank regulator. CNBC's Steve Liesman has the details on Bernanke's thoughts on credit default swaps.
Bank CEO: New wave of failures is possible by Russ Wiles - The Arizona Republic In a couple of years, Americans will look back on the tough economy with a sigh of relief. But, in the meantime, they'd better make sure their bank deposits are protected. Richard Davis, top executive at U.S. Bancorp, told members of the Economic Club of Phoenix on Thursday that he expects the economy will tread water for a few quarters before turning more decisively upward next year. But, in coming months, he warned that a possible new wave of bank failures could be more painful than what has transpired so far, in the sense that government regulators might have trouble finding white knights for some weak players. With most recent bank failures, regulators have managed to find healthy banks to acquire troubled banks, creating a fairly seamless transition for customers, employees and others.
TPG head says FDIC buyout curbs boost failures By Ned Barnett CHAPEL HILL, N.C., (Reuters) - David Bonderman, co-founder of giant private equity firm TPG, said on Thursday that regulators are accelerating bank failures by limiting private equity's ability to buy into and reorganize struggling banks. The Federal Deposit Insurance Corp, concerned about equity funds exploiting the depressed assets of troubled banks by quickly selling them off, has limited the percentage of ownership and control by outside investors. . . . "The FDIC has taken the view that they are terrified of private equity guys -- or anybody else for that matter -- getting control of a financial institution," he said.
Clinton compares Iran showdown to Cuban missile crisis AFP - Breitbart US Secretary of State Hillary Clinton on Thursday compared the showdown with Iran over its nuclear program to the Cuban missile crisis in 1962, which brought the world to the brink of nuclear war.Clinton told lawmakers that "we are engaged in very intensive diplomacy," saying it is similar to what president John F. Kennedy did when he forced the Soviet Union to withdraw missiles it had deployed in Cuba, near US shores.
Iran and Syria put on show of unity in alliance Clinton finds 'troubling' Ian Black, guardian.co.uk Ahmadinejad and Assad accuse the Americans of trying to dominate Middle East Iran and Syria put on a show of defiant unity today, scorning US efforts to break up their alliance and warning Israel not to risk attacking either of them. Mahmoud Ahmadinejad, the Iranian president, flew to Damascus for talks with Bashar al-Assad days after the US appointed an ambassador to Syria after a five-year gap – a move seen by some as the start of a diplomatic thaw. "The Americans want to dominate the region but they feel Iran and Syria are preventing that," Ahmadinejad said during a press conference with Assad.
How the Fed Lost Control of Monetary Policy Dr. Jeffrey Lewis - SilverBearCafe.com While investors contemplate the recent increase in the Federal Reserve Discount rate, astute investors realize this arbitrary figure means nothing in regards to fighting inflation or decreasing the money supply. Although the Federal Discount rate may have made an impact in 2008, its impact on the market was lost after the Fed expanded the balance sheet to buy illiquid assets in late 2008 through 2009.
Euro in danger as the Greek crisis deepens and Merkel admits currency is at risk By MAIL Online -- Greece's debt crisis has plunged the euro into a ‘ difficult situation’, the German Chancellor Angela Merkel admitted last night, prompting fresh fears about the collapse of the single currency. In the gravest sign yet of the international threat posed by Greece’s crippled economy, Mrs Merkel warned for the first time that the eurozone faces a ‘ dangerous’ period. The beleaguered euro initially fell in the wake of her comments and fresh speculation that Greece’s international credit rating may be downgraded.
The Coming Euro Collapse - Euro Crisis BBC Special
The Coming Euro Collapse - Euro Crisis BBC Special Part 2
WILL THE UNITED STATES DEFAULT ON ITS DEBT? PragmaticvCapitalist Barney Frank: “Do you think there is any realistic prospect of America defaulting on its debt in the foreseeable future?” Bernanke: “Not unless Congress decides not to pay which I don’t anticipate….”
Let’s get this straight. The United States government CANNOT default on its obligations without some sort of mental lapse from Congress (the trade here, short sovereign US CDS every time it spikes). The government is the sole supplier of the sovereign currency. The government has a monopoly on money & carries NO foreign currency denominated debt. If they have fiscal problems they simply print more. They press a button on a computer and magic money appears in an account. That’s literally how it works. The US government is not a household or a state. They are not Greece who does not print their own currency. It’s ENTIRELY different.
FDIC to test principal reduction for underwater borrowers By Renae Merle - Washington Post The Federal Deposit Insurance Corp. is developing a program to test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure. The program would be aimed at a growing population of homeowners who are underwater on their loans, estimated at more than 20 percent of borrowers, or 11 million homeowners. Economists consider these borrowers among the most vulnerable to foreclosure, and some industry officials worry that more of them will simply walk away from their mortgages, or "strategically default," rather than spend a decade or more trying to regain positive equity.
Why inflation is virtually guaranteed By Terry Coxon in The Casey Report: There are two ways for a commercial bank to get into trouble. One is to take in money from depositors and put it into loans that don’t get repaid, or into investments that lose value. The second is to take in money through checking accounts and short-term CDs and put it into fixed-rate, long-term loans. Even if the long-term loans get repaid, the cost of holding on to the short-term deposits can crush a bank if interest rates rise enough. The bank must pay more and more to keep the deposits from leaving, even though the earnings on the bank’s long-term loans are frozen. The Federal Reserve has embraced both dangers. Most of what it has bought is high-risk paper (the mortgage-backed securities), which means it faces the risk of loss from defaults. And most of its investments, including the Treasury securities, are fixed-rate, long-term paper, which means that, even without defaults, the income they produce is frozen.
Why Bob Prechter Is Wrong on Deflation: Ben Bernanke "Wants Inflation" After a year of "reflation" in the economy and financial markets, the tide seems to be turning on the whole inflation vs. deflation debate. Recent data on U.S. durable goods, consumer confidence and new homes sales, along with uncertainty over European sovereign debt speak to the deflationary cycle Robert Prechter says is already upon. On Thursday, renewed concerns about Greece's credit rating and the future of the EU gave the dollar a boost, with commodities and equities suffering as a result. Broadly speaking, the market action seems to justify Prechter's warning. Not so fast, says Peter Boockvar, equity strategist at Miller Tabak, who believes inflation remains a bigger long-term threat to the market and U.S. economy.
Fed's Bullard says inflation expectations trump all Mark Felsenthal - Reuters TEXARKANA, Texas (Reuters) - The Federal Reserve is watching increases in inflation expectations carefully and would act if there was a spike, a senior Fed official said on Thursday. "If inflation expectations went up sharply, that would trump all other concerns and the Fed would take action," St. Louis Federal Reserve Bank President James Bullard said in response to questions after a speech to a business group. Market indexes of inflation expectations, while lower in the last few weeks, had risen over the past year, said Bullard, a voter this year on the Fed's policy-setting panel who is generally ranked as an anti-inflation hawk.
The Bank of the Fed is Closed…Forever By: Robert Singer - MarketOracle.co.uk In an effort to explain our escalating financial crisis, an American Nightmare (an Environmental Dream), the pundits are focusing their angst on the 44th POTUS, who might very well go down as the single most inept president in all of American history. Barack Obama is not inept, greedy or stupid and he isn’t one of “us”. . . . . The decision to have Obama preside over the greatest financial calamity since the Great Depression was made five years ago; the November election was a formality. (Why Joseph Biden will be the Next Vice President of the United States) . . . . However, the policies at the Federal Reserve have changed…inexplicably, monumentally and historically: As of October 2008, the men behind the Federal Reserve, all connected to the House of Rothschild, are no longer giving up what’s left of their real wealth so the middle class can live the American Dream, a nightmare for the planet.
Clinton says U.S. deficit now a security issue By Andrew Quinn WASHINGTON (Reuters) - Secretary of State Hillary Clinton on Thursday said "outrageous" advice from former Federal Reserve Chairman Alan Greenspan helped create record U.S. budget deficits that put national security at risk. Appearing before congressional panels to defend the State Department's $52.8 billion budget request for 2011, Clinton said the massive U.S. foreign debt had sapped U.S. strength around the world. "It breaks my heart that 10 years ago we had a balanced budget, that we were on the way of paying down the debt of the United States of America," Clinton said.
Max Keiser on Inside Story - Greek Debt Crisis - (1/2)
Max Keiser on Inside Story - Greek Debt Crisis - (2/2) Exposing co-mingling of IMF, Goldman Sachs and other Wall Street firms
US senator warns of ‘financial meltdown’ risk By Edward Luce in Washington The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire. In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt. “We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”
Bernanke Says Deficit Action Is Key By SUDEEP REDDY - WSJ Fed chairman says investors' continued faith in U.S. economy could fade quickly without signs that Congress is crafting plans to align federal expenditures and revenue Federal Reserve Chairman Ben Bernanke faced a barrage of questions about the risks of a rising federal deficit as he delivered his semiannual economic report to Congress this week. Mr. Bernanke's repeated response during a pair of hearings was that markets haven't lost faith in the U.S. economy yet. But he said the situation could change quickly without a credible plan from lawmakers to bring projected government spending in line with tax revenue.
Goldman Sachs faces Fed inquiry over Greek debt By James Quinn - Telegraph Goldman Sachs' role in masking Greece's real debt burden is to be investigated by the US Federal Reserve and the Securities and Exchange Commission (SEC). Ben Bernanke, chairman of the central bank, confirmed that Goldman and a number of other unnamed banks are the subject of two examinations. Mr Bernanke, who stopped short of saying an official inquiry had been launched by either regulator, warned that using derivative "instruments in a way that potentially destabilises a company or a country is counterproductive." The revelations, which came as ratings agencies Standard & Poor's and Moody's warned that they may downgrade the Hellenic nation's sovereign debt within a month, only serve to increase the already intense glare on the Wall Street investment bank over its involvement with the Greek government.
Fed to Examine If Wall Street Is Betting On Default by Greece By: CNBC.com with Reuters and AP The Federal Reserve will look into a report that several Wall Street firms, including Goldman Sachs, have been betting on a default by Greece on its sovereign debt, Fed Chairman Ben Bernanke told the Senate Banking Committee on Thursday. "We are looking into a number of questions related to Goldman Sachs and other companies in their derivatives arrangements with Greece,'' Bernanke said in response to a question for Senate banking Committee Chairman Chris Dodd. Bernanke said the Securities and Exchange Commission was also "interested'' in the issue.
This is one of the biggest Wall Street frauds ever... By Porter Stansberry in the S&A Digest: One of the best lessons I've learned over my career as an investment analyst is the myth of excellent management or "great execution" is really just that – a myth. When I see companies in troubled industries reporting quarter after quarter of great results, while all of their peers are getting killed, I know a fraud is going on. I remember in the early 2000s, WorldCom kept reporting profits when all of the other long-distance carriers were getting killed. I knew it couldn't last. And it didn't. WorldCom's accounting was revealed to be a fraud – the company was counting its network access costs as capital expenses. Once the real numbers came out, the company collapsed in what was the largest bankruptcy in American history at that point.
Fed probing Goldman's role in Greece, Bernanke says By Greg Robb, MarketWatch Bernanke said the investigation included other companies. "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Bernanke said in testimony before the Senate Banking Committee. The European Union has demanded that the Greek government provide details of how it used currency swaps and other instruments. Greece in 2001 borrowed billions, with the aid of Goldman Sachs in a deal hidden from public view because it was treated as a currency trade rather than a loan.
Fed Examines Swaps Deals by Goldman and Others By LUCA DI LEO AND SUSANNE CRAIG - WSJ Federal Reserve Chairman Ben Bernanke said the central bank is examining controversial derivatives transactions that Goldman Sachs Group Inc. and other banks made with Greece. "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Mr. Bernanke told the Senate Banking Committee on Thursday. The Securities and Exchange Commission also is exploring the matter, he said.
US will suffer its own Greek crisis By Bill Fleckenstein - MSN Money Though the spotlight is now on Europe's financial difficulties, a recent move by China could signal the start of a similar, but much bigger, funding squeeze in America. If there were a gold medal awarded to a sovereign entity with the largest financial problems, Greece might be in the unhappy position of claiming the title. But outsized media attention notwithstanding, bigger catastrophes than Greece lie ahead. Greece is merely one of many sovereign entities that have lived beyond their means for a long time. At some point, we in America will suffer the consequences of having the world focus on our imbalances. Besides size, the major difference (for the time being) is that Greece no longer has its own printing press -- nor do any other countries that use the euro. That is the real problem, at least so far as the euro goes.
Bob Chapman on The Power Hour with Joyce Riley 1/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 2/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 3/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 4/4: Insolvency in Europe shows our future
Germany debt chief hints at Greek rescue By Ambrose Evans-Pritchard - Telegraph The head of Germany's debt agency has warned that Greek withdrawal from the euro would have calamitous effects and destroy Europe's monetary union, a prospect that leaves Berlin with little choice other backing an EU rescue plan."If one member of the eurozone were to step out for any reason, this would be a collapse of the entire system," said Carl Heinz Daube, director of the Finanzagentur. "It would mean that after ten years, the euro experiment has ended." Mr Daube said a range of options are "under discussion" for a possible assistance for Greece but confessed that the issue is a very hot potato in Germany. "It is very hard to clarify to a man on the street why one country should step in to help another country," he told the Euromoney bond congress in London.
Would Some Big Banks Profit From a Greek Debt Default? By PETER COHAN - DailyFinance.com Greece is in financial trouble -- and that's creating winners and losers. The losers are the Greek people, who are suffering from the government's austerity measures so Greece can show a more balanced budget -- and perhaps get bailed out by wealthier EU members. Holders of Greek debt could also suffer if Greece defaults. That is, unless you happen to be a big bank or other institutional investor who has bought a credit default swap to offset any loss incurred should Greece actually default on its sovereign debt. But Goldman Sachs Group (GS) -- which has used such credit insurance to bet against Greek debt and earlier helped mask Greece's debt problems -- could come out as a winner. And that has caught the eye of Fed Chairman Ben Bernanke.
Greece: A Game of 'Chicken' with the ECB? By Natascha Gewaltig - BusinessWeek.com Some traders think the country could force the ECB to soften its stance on austerity measures and possible financial aid by delaying a bond sale, says Action Economics If Moody's Investors Service follows other rating agencies in downgrading Greece's debt, the nation could be in the position that its government debt may no longer be eligible as collateral in European Central Bank refinancing operations. Moody's warned on Feb.25 that "if in a few months it appears there are significant deviations from the plan [to reduce Greece's deficit], then it is pretty likely that we would adjust the rating accordingly." Such a departure could lead to a cut of "a couple of notches" from its current A2 designation.
New Century Bank must raise $30M, review senior executives By: Lorene Yue - Crain's ChicagoBusiness.com Federal and state regulators are ordering New Century Bank of Chicago to shore up its capital by more than $30 million, as they question whether senior executives are able to manage the institution. The consent order between New Century Bank, the Federal Deposit Insurance Corp. and the Illinois Department of Financial and Professional Regulation was issued Feb. 17 and released Wednesday. It gives New Century two months to hire an independent firm to conduct a broad analysis of the institution's senior executive office "for the purpose of providing qualified management for the bank." The study will evaluate current management's experience and pay, and help determine how many senior officers are needed to manage the bank.
Senators Urge U.S. Action on Chinese Currency Manipulation By COREY BOLES - WSJ WASHINGTON—A bipartisan group of senators urged the Obama administration to act urgently to investigate allegations the Chinese government is keeping its currency artificially low, saying a failure to do so is manifestly harming U.S. manufactures. In a letter sent to Commerce Secretary Gary Locke Thursday, the group of 15 senators, including six Republicans, said there are serious concerns about the department's failure to conclude that China's currency manipulation is in fact a "countervailable subsidy" to its domestic exporters. "In the face of China's actions to subsidize its exports at the expense of U.S. manufacturers and workers, the Department needs to act," the lawmakers said in the letter.
Gold bounces back from 2-week low By Deborah Levine, MarketWatch Gold futures ended higher for the first day in the past four on Thursday, after being in negative territory, as revived concerns about Greece's ability to address its financing problems boosted the U.S. dollar versus the euro. The greenback gave back some of those gains as the day wore on, helping gold turn higher as an alternative investment.
Subtle Signs Gold’s Correction Is Over By: Rick Ackerman, GoldSeek.com The technical evidence was subtle, but gold appeared to have its best day in months on Thursday. The night before, we had told subscribers to brace for a new wave of selling that would bring the April Comex contract down to at least $1073, exactly $23 below the previous day’s settlement price. When the dust had settled, however, the futures had fallen no lower than $1088 – off a mere $8 from the previous day’s close. Moreover, the reversal from the day’s lows was swift and decisive, leaving April Gold at $1108 by day’s end, $20 off the lows. Most encouraging of all, however, was that the bounce came precisely from a “Hidden Pivot midpoint,” and that it ultimately blew past two resistance peaks on the hourly chart without pausing for breath
Gold rises 1 percent on report China to buy IMF gold Barani Krishnan - Reuters Gold rose 1 percent on Thursday, rebounding from two-week lows and snapping three days of declines as investors scrambled to cover short positions after a report that China will buy IMF-auctioned bullion. Spot gold, which reflects the price of bullion, was bid at $1,105.55 an ounce by 2:50 p.m. EST (1950 GMT), up from $1,097.25 in New York late on Wednesday. In the futures market, U.S. gold for delivery in April settled up $11.30 at $1,108.50 an ounce on the COMEX metals division of the New York Mercantile Exchange.
Will she won't she? - China's gold dance Author: Lawrence Williams - MineWeb.com First the rumours are that China won't buy the IMF gold, then there are equally strong rumours that it will. If China or India, the other rumoured buyer, don't cough up does it really matter? No sooner had most Western pundits come to the conclusion that China was unlikely to buy the IMF's remaining 191.3 tonnes of gold for sale, with reports in China Daily lending support to this interpretation of Chinese buying policy, than the Russians in the form of Pravda published an article saying that China was in talks with the IMF to relieve that august body of this bullion which is obviously burning a hole in its pockets. The Pravda report quoted the FinMarket news agency as saying that Chinese officials have confirmed the nation will buy the IMF gold - this immediately follows reports from other Chinese officials that it won't buy the IMF gold. Naturally the gold price has been bouncing up and down like a yoyo. Either the Chinese are having a huge laugh at the expense of gullible Western - and other Asian - investors, or there are groups of gold bulls and bears out there busy placing stories in the media to suit their particular investment policies.
Is China jumping to grab 191 tonnes of IMF gold? By Jon Nadler - CommodityOnline.com Bullion prices fell by nearly a further 1% below their afternoon New York closing levels during overnight Asian trading, as buyers became scarce amid the worsening Greek credit situation and the US dollar’s rise to the 81 mark on the trade-weighted index. A sobering set of remarks by Fed chief Ben Bernanke on his first day of testimony before the HFSC on Wednesday added to concerns regarding the progress of the US economic recovery. Apparently, more remain worried about “de” rather than “in” when it comes to “flation” at the present time.
China May Buy More Gold; $1,100 An Ounce Appears To Be Support Level Robert Lenzner - Forbes A report that China's central bank will buy another $7 billion of gold bullion from the IMF, which has been periodically raising funds by the sale of its precious metals reserves, has been touted as helping to put a floor under the price of gold at around $1,100 an ounce Wednesday. Several days ago, billionaire investor George Soros disclosed he had more than doubled his position in gold bullion, making him one of the largest hedge fund holders of gold along with John Paulson and others.The IMF sold roughly the same amount to India last year. The tiny island nation of Mauritius and Sri Lanka also added gold to their reserves.
Will India buy IMF gold again? NEW DELHI (Commodity Online): Will India do it again? That is the question being asked by investors and bullion market analysts now. After India’s surprise buying of 200 tonnes of IMF gold in November last year, now several news agency reports said that India is another potential candidate to buy more gold from the International Monetary Fund when it begins selling 191.3 tonnes of the precious metal. The uncertain outlook for two of the world’s major reserve currencies — the dollar and euro — provides a spur for central banks, including the Reserve Bank of India, to buy gold.
Gold, the IMF, and Dirty Jokes by Jeff Clark - FinancialSense.com How many IMF officials does it take to change a light bulb? As you probably read, the International Monetary Fund announced they would proceed with selling the remaining 191.3 tonnes of gold from the 403.3 tonnes planned. The money is to be used for lending to poor countries. Lending implies the money will be repaid, which, in the case of the IMF, is a joke that isn’t funny. But that’s a topic for another day. The IMF stated that sales will be conducted in the open market, which is interesting because until now, gold has only been made available to central banks. While the IMF remains open to central banks buying some of the gold, sales will be conducted “in a phased manner over time” to avoid disruptions to the open market.
Gold: A picture tells a thousand words Author: Rhona O'Connell - MineWeb.com The net long dollar position on Inter continental exchange is 150 times the six-year average; CME Euro is heavily oversold As gold appears to be marking time amidst an array of uncertainties, it is probably quicker for the reader to look at a series of pictures than to be presented with screeds of text. Essentially gold's superficially lack-lustre performance in the middle of February can be lain at the feet of questions over future economic policies for the world's largest industrial countries, including interpretation of Dr Bernanke's latest statements, the moves within China and the latest concerns over Europe, notably the likelihood of a downgrade of Greece's debt.
Gold's 2010 Outlook Australasian Investment Review The outlook for gold looks promising in 2010, according to the World Gold Council and will be underpinned by investment demand. This confident forecast came from the WGC, despite an 11% fall in demand for the metal in 2009, owing to weaker industrial and jewellery demand. For that we can blame the recession, the lingering impact of the credit crunch and the soaring price of the metal which charged back through $US1000 an ounce around last September and went on to top $US1200 an ounce.
At Least Greenspan Told the Truth Once Peter Souleles B. Com. LLB. - SilverBearCafe.com "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan In view of the above statement by Alan Greenspan, I call upon every politician, journalist, banker and economist to explain their words and their actions in defending and extending the lies created out of fiat money, quantitative easing and credit creation. Greenspan's statement has never been addressed by the abovementioned gentlemen and never will be. They do not have the integrity to admit the truth and possibly lack the intellect to understand it as well. Jon Nadler over at Kitco recently quoted the journalist David Frum to the tune of 600 words as to why it would not be possible to go back to the gold standard and how the gold standard has caused more recessions than the fiat system.
Quack Economists and the Fraud of GDP Bill Bonner Now... about that 'recovery'... It's true that there are some signs of "stabilization." The unemployment rate is not getting badder as fast as it was a few months ago. And house prices seem to have stopped falling – for the moment. It's also true that the economy managed to register positive 'growth' in the last quarter... mostly thanks to government spending and inventory restocking. The trouble is, all of these things are consistent with a depression - especially a depression that the feds are fighting every inch of the way. In the 1930s, there were several years of growth... and there were great years for the stock market too. Then, things fell apart again. The nation ended the '30s not one penny richer than it had been when it began them.
Sovereign Debt Follies Bob Hoye - Institutional Advisors "It Has Taught Us Nothing" Another episode of sovereign defaults seems to be well under way, which prompts the question about just how bad can it get? The above quotation is from a 1933 study of that example of government defaults and as the writer notes, it was preceded by a "new borrowing orgy". The word "new" is important because the literature often includes the description "new financial era". The first one, the South Sea Bubble, culminated in June 1720 and it has essentially been the model for five subsequent ones, including the example that completed in 2007.
Over-Arching Sovereign Debt Crisis Jim Willie, CB. - SilverBearCafe.com Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The issue is rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigner must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of containment incites laughter. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last.
CNBC'S FAST MONEY ACKNOWLEDGES THE PLUNGE PROTECTION TEAM After Denying The Existence of Plunge Protection Team (aka Presidents Working Group on Financial Markets) - back in 2008, the CNBC network has finally come to grips and stop lying to the public. Today they are fully acknowledging the Plunge Protection Team and Cheering them on stating that the PPT will step in and rescue the stock market. This is what happens to the DOW when OTC Derivatives are in control.
Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity By Aki Ito and Jason Clenfield Feb. 24 (Bloomberg) -- Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks. Following banking crises, “we usually see a bunch of sovereign defaults, say in a few years,” Rogoff, a former chief economist at the International Monetary Fund, said at a forum in Tokyo yesterday. “I predict we will again.” The U.S. is likely to tighten monetary policy before cutting government spending, sending “shockwaves” through financial markets, Rogoff said in an interview after the speech. Fiscal policy won’t be curbed until soaring bond yields trigger “very painful” tax increases and spending cuts, he said.
Geithner's Gotta Go By MIKE WHITNEY How Goldman Sachs and AIG Got Top Dollar for Worthless Assets Would it be wrong to take out a $1,000,000 policy on your wife and then put strychnine in her double-tall nonfat mocha?Not if you are Goldman Sachs it wouldn't. In fact--according to an article on today's Bloomberg News--that's exactly what they did. They slapped together $17.2 billion in garbage CDOs and then insured the hell out of them with credit default swaps (CDS) issued by AIG. As soon as the CDS blew up, G-Sax collected 100 cents on the dollar for their ingenuity. (G Sax received $14B altogether)
Bernanke Defends Fed’s Ability to Supervise Banks By SEWELL CHAN - NY Times WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, urged Congress on Thursday not to strip the central bank of its power to regulate banks, warning that to do so would be a “grave mistake.” Mr. Bernanke said the Fed would gladly surrender the authority it used in 2008 to arrange the sale of Bear Stearns and bailouts of Citigroup and the American International Group. But he said the Fed was uniquely positioned to provide “strong, consolidated supervision” of the biggest financial companies.
Obama May Prohibit Home-Loan Foreclosures Without HAMP Review By Dawn Kopecki Feb. 25 (Bloomberg) -- The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.
Jobless Claims Unexpectedly Rise By JOSEPH LAZZARO - Dailyfinance.com Another setback on the employment front, as jobless claims unexpectedly jumped for the second straight week, this time rising 22,000 to 496,000 for the week ending February 20, the U.S. Labor Department announced Thursday. Economists surveyed by Bloomberg News had expected jobless claims to total 460,000. Meanwhile, the four-week moving average increased 6,000 to 473,750, while continuing claims rose 6,000 to 4.617 million. A year ago, initial jobless claims totaled 656,000, the four-week moving average was at 632,500, and continuing claims totaled 5.065 million.
Educating the Masses Linda Brady Traynham - SilverBearCafe.com If you were in charge of the educational system, what would you do and why? Mull that one over while I tell you how I would go about it, and I’ll make it easier by stipulating grandly that price is no object. Snicker. Will people never stop falling for my sucker bets? Very seldom does money expended on education equal excellence of outcome, as Washington, D. C., has been demonstrating for decades. No doubt you remember that Hillary Clinton had a free hand revamping the schools of Arkansas, resulting in a national rating of dead last, so we can conclude that lawyers aren’t necessary either.
Doctors threaten Medicare backlash By Parija Kavilanz - CNN Money With a 21% cut to Medicare reimbursement rates set to take effect Monday, the nation's largest physician organization has informed its members about their options -- which include shutting off practices to new Medicare patients. "To our physicians, we are providing information on their Medicare participation options, including how to remove themselves from the Medicare program," said James Rohack, president of the American Medical Association, whose more than 250,000 members include doctors, medical students and faculty members.
Barack Obama health care summit descends into bickering By Toby Harnden - Telegraph It did not take long for the bipartisan health care summit to degenerate into the kind of bickering and points-scoring that has created a crescendo of anger about the conduct of politics in Washington. President Barack Obama preached that the White House health care summit should not be "political theatre where we're just playing to the camera" or about trading "respective talking points". Then he reminded his 2008 opponent John McCain: "We're not campaigning any more. The election is over." The barely concealed message was: "I won and you lost, buddy." When Mitch McConnell, the Senate Minority Leader, grumbled that Democrats had talked for 52 minutes and Republicans just 24, Mr Obama shot back: "I'm the President. I didn't count my time."
New Tack Pays Few Dividends for White House By JONATHAN WEISMAN - WSJ President Barack Obama's decision to unveil his own health-care plan Monday signals a sharp tactical shift. After a year marked by extensive congressional consultation — and little progress—the White House is rolling out policy decisions fully formed after closely held internal deliberations. Mr. Obama faced criticism in the past for espousing broad policy goals and leaving Congress to work out the details. Many Democrats openly called on him to provide more leadership. But the recent shift toward more assertiveness has irked Republicans and Democrats alike, failed to bridge political differences and even threatens initiatives ranging from the 9/11 terror trials to financial regulation.
Obama listens at health summit, but mostly hears himself By Joseph Curl POLITICAL THEATER - Washington Times President Obama pledged to "listen" at the outset of his much-ballyhooed bipartisan health care summit on Thursday. Turns out he meant he'd be listening to his own voice. By the end of the televised event, Mr. Obama had spoken for 119 minutes - nine minutes more than the 110 minutes consumed by 17 Republicans. The 21 Democratic lawmakers used 114 minutes, giving the president and his supporters a whopping 233 minutes, according to a "talk clock" kept by GOP aides.
California subpoenas big health insurers' financial records By Duke Helfand and Marc Lifsher - LA Times Prosecutors are seeking documents from Anthem, Aetna, Cigna, Blue Shield, Kaiser, Health Net and PacifiCare in a probe of whether they raised rates illegally and denied payment of legitimate claims. Reporting from Sacramento and Los Angeles - The California state attorney general's office said Thursday that it had subpoenaed financial records of California's seven largest health insurance companies as part of an investigation into whether they illegally raised customer premiums and denied payment of legitimate claims.
Lew Rockwell and Chris Manion on Freedom Watch 2/22/10: Goldwater Conservatism
* * * * * Beware of McCain's Freedom-Destroying Dietary Supplement Regulatory Bill by Ann Shibler - JBS.org . . . . Senator John McCain (R-Ariz.) wants this same FDA, with its dismal safety record, to regulate dietary supplements. The Dietary Supplement Safety Act (DSSA), S. 3002 (text of this bill posted on Senator McCain's website), that McCain has introduced with one cosponsor, would repeal key provisions of the Dietary Supplement Health and Education Act (DSHEA) to “more effectively regulate dietary supplements that may pose safety risks unknown to consumers.”
Under attack by the DSSA is the once-protected field of supplements, as they have always been considered food. Potencies would have to be reduced to comply with what appears to be a plan modeled after the European Food Safety Authority. A new list of “Accepted Dietary Ingredients” would be “prepared, published, and maintained by the Secretary,” in the future. That’s a bit like being handed a blank check and told to fill it out later as one wishes. It could certainly be used to severely limit access to, and even production of, hundreds of life-sustaining and essential mineral, herb, and vitamin products.
Depression Causes a Shift in Economic Models By Bill Bonner - The Daily Reckoning This afternoon, your editor’s aging aunt called from Pennsylvania. “This economy has been very hard on my family,” she explained. “I’ve got two sons-in-law…and they’re both laid off from their jobs.” “What do they do?” we wondered. “One drives a truck for a steel producer. The other is in construction. There’s just not much work, I guess.” Nope. And that’s why, despite all the recovery talk, real people are turning real gloomy. Consumer confidence just registered its lowest reading since 1983. People don’t have jobs…and they’re beginning to worry that it could be a long time before they work again. Mortgage demand just fell to its lowest point in 13 years. State tax receipts are still falling – for the 5th quarter in a row. And the number of problem banks just rose 27%.
License to Kill? Intelligence Chief Says U.S. Can Take Out American Terrorists By JASON RYAN - ABC News Director of National Intelligence Says Intelligence Community Can Target Citizens Presenting a Terrorist Threat The director of national intelligence affirmed rather bluntly today that the U.S. intelligence community has authority to target American citizens for assassination if they present a direct terrorist threat to the United States. "We take direct actions against terrorists in the intelligence community; if & we think that direct action will involve killing an American, we get specific permission to do that," Director of National Intelligence Dennis Blair told the House Intelligence Committee. Rep. Peter Hoekstra D-Mich., addressed the issue at today's hearing. "The targeting of Americans -- it's a very sensitive issue, but again there's been more information in the public domain than what has been shared with this committee," he said.
Ron Paul to Obama: Don't Assassinate American Citizens!
Blockbuster to Close More Stores After Another Awful Quarter By DAN BURROWS -DailyFinance.com -- Struggling video-rental chain Blockbuster (BBI) posted another dismal earnings report for the fourth quarter -- a period that is usually its strongest because of the holidays. The company -- long under assault from Netflix (NFLX), rental kiosks and online video offerings -- shut down 253 of its U.S. stores in January. It now plans to shutter another 150 or so in April, and additional closures are planned for a total of between 500 and 545 stores in 2010. The latest moves follow Blockbuster's closure of 374 U.S. stores last year, which left it with 3,525 entering 2010.
ANARCHY AT THE DOOR By Sheriff Jim R. Schwiesow, Ret. - NewsWithViews.com FROM TYRANNY TO TYRANNY Contrary to popular belief the revolutionary war was not the result of the colonists’ disaffection with monarchical control, indeed from forty to sixty percent of the population maintained a loyalty to the Crown and thirty-five thousand plus colonists fought on the British side in the war for independence. The fact is that the war was brought about by burdensome taxation and heavy-handed enforcement by a dictatorial and controlling British Monarchy.
Microsoft Wins Right to Kill Vast Spam Network By DOUGLAS MCINTYRE - DailyFinance.com It's a shame that Microsoft (MSFT) had to go to court to shut down a vast network of computers that spread spam and viruses across the Internet. But in a nation of laws, the world's largest software company had not choice. Fortunately, the case was not in the legal system for long. Microsoft filed a suit in federal court on Monday, February 21st that, "targets a botnet identified as Waledac. It accuses 27 unnamed 'John Doe' defendants of violating federal laws against computer crime," according to The Wall Street Journal.
Microsoft Battles Cyber Criminals By NICK WINGFIELD - WSJ Microsoft Corp. launched a novel legal assault to take down a global network of PCs suspected of spreading spam and harmful computer code, adding what the company believes could become a potent weapon in the battle against cyber criminals. But security experts say it isn't yet clear how effective Microsoft's approach will be, while online rights groups warn that the activities of innocent computer users could be inadvertently disrupted.
Caught on Tape: Selling America's Secrets Rare Video Obtained By "60 Minutes" Shows Pentagon Employee Selling Secrets to Chinese Spy (CBS) "60 Minutes" has obtained an FBI videotape showing a Defense Department employee selling secrets to a Chinese spy for cash. The video, which has never been made public before, offers a rare glimpse into the secretive world of espionage and illustrates how China’s spying may now pose the biggest espionage threat to the U.S. "60 Minutes" correspondent Scott Pelley's report will be broadcast this Sunday, Feb. 28, at 7 p.m. ET/PT.
Ron Paul Questions Hillary on $1 Billion London Fortress
Navy intercepts Argentinian warship near British waters Telegraph.co.uk The Royal Navy has intercepted an Argentinian warship near British waters in an apparent escalation of the row over the Falkland Islands. Destroyer HMS York spotted the vessel around ten miles inside the disputed “oil zone” around the South Atlantic islands. The British crew had to radio the Argentinian ship, a smaller corvette named ARA Drummond, to demand that it change its course. Sources told The Sun that the ship made an “innocent navigational blunder” and were embarrassed about the mistake. It is believed that the Drummond was spotted sailing alongside a French fleet before it broke away and headed for the disputed zone. Under international law, the 15 miles of sea surrounding the Falklands are officially British waters.
China is misread by bulls and bears alike By Michael Pettis - FT It is easy to get over?-excited about China. When bulls aren’t predicting near infinite-growth and competing to proclaim earlier and earlier dates by which China’s economy will become the world’s largest, bears are proclaiming the country on the verge of collapse. In the past two months informed consensus seems to have shifted from the former view to the latter. To some extent this represents a welcome dose of reality. In spite of outstanding growth rates in 2009, China nonetheless has serious structural problems that were actually exacerbated by the quality of last year’s growth. Many observers seem now to be waking up to this fact.
China postpones military exchanges with US By Kathrin Hille in Beijing and Daniel Dombey in Beijing - FT China has postponed several high-level military exchanges with the US, in the first tangible sign of retaliation over Washington’s decision to sell $6.4bn in arms to Taiwan. “China has decided to suspend arrangements for some planned mutual visits between the US and the Chinese military,” a Chinese military spokesman said on Thursday. A Pentagon spokesman said the postponed exchanges included a planned trip by General Chen Bingde, China’s chief of the general staff, to the US. A visit to China by Admiral Robert Willard, the head of US Pacific Command, has also been postponed. The spokesman said it was too early to speculate whether other military exchanges would be impacted.
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Thurs 02.25.2010
In Debt We Trust By The Daily Reckoning - WallStreetPit.com Wherever we look at the world economy today, we see a wall of risk…and potential financial catastrophe. We see a large number of virtually bankrupt major sovereign states (US, UK, Spain, Italy, Greece, Japan and many more) teetering atop a financial system that is bankrupt, but is temporarily kept alive with phony valuations and unlimited money printing. Increasingly, therefore, investors will want to exchange this funny money for gold. Governments like the US and the UK are committed to printing increasing amounts of worthless paper money in order to finance their growing deficits. The consequence of this rescue mission will be a hyperinflationary depression in many countries, due to many currencies becoming worthless.
Bernanke delivers warning on U.S. debt By Patrice Hill - Washington Times Stage is set in U.S. for a Greek tragedy With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt. Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.
Is the Economy Headed for a Slowdown? By James Picerno - WallStreetPit.com Yesterday’s sharp downturn in the Conference Board’s consumer confidence index for February has rattled investors, but the shift in sentiment isn’t surprising. With the labor market still weak, it’s only reasonable to expect that there’ll be a price to pay in Joe Sixpack’s outlook. As the Conference Board’s Lynn Franco said in the accompanying press release, consumers “remain extremely pessimistic about their income prospects. This combination of earnings and job anxieties is likely to continue to curb spending.”
Bullish a Year Ago, Robert Prechter Now Sees "the Biggest Bubble in History" by Aaron Task - TechTicker.com In February 2009, Robert Prechter of Elliott Wave International predicted a market rally that would be "sharp and scary for anyone who is short." In recent months, Prechter returned to more familiar territory, declaring here in November the market was in a "topping area." "The individual investor has been more or less abandoning stocks" and buying bond funds, Prechter concedes. "I think that is going from the frying pan into the fire. The bond market is the biggest bubble in the history of the world. " Corporate debt, municipal debt, mortgages and consumer loans will all suffer in the great deflation Prechter believes is already underway
Nationwide Strike Paralyzes Greece By SEBASTIAN MOFFETT And COSTAS PARIS - WSJ ATHENS—Tens of thousands of Greeks took to the streets Wednesday as much of the country went on a 24-hour strike against government austerity measures. A small group of youths threw Molotov cocktails at police, who responded with tear gas. However, the 20,000 people who filed through downtown Athens—a relatively large crowd for a Greek strike—mostly limited themselves to chanting anti-government slogans.
Europe at risk of double-dip recession By Ambrose Evans-Pritchard - Telegraph A blizzard of bad data from France, Germany, and Italy have raised concerns that Europe's fragile recovery is stalling already, with mounting risks of a double-dip recession this year. French household spending dropped 2.7pc in January, led by a 19pc collapse in car sales following the end of France's scrappage scheme. Germany's IFO business confidence index dropped for the first time since the depths of the crisis in December 2008, partly due to bad weather. Confidence relapsed in Italy. Mervyn King, the Bank of England's Governor, said Europe's rebound "appears to have stalled" , posing fresh risks for Britain as well. "My particular concerns at present derive from the state of the world economy and our largest trading partner, the euro area," he said.
Wealthy Greeks Send Money Abroad By COSTAS PARIS - WSJ ATHENS--Wealthy Greeks are pulling their money out of local banks and sending it abroad, fearing increased government scrutiny on assets and a run on the banks if Athens is forced to turn to the International Monetary Fund, according to private bankers and other people with knowledge of the situation. "There is a lot of uncertainty out there," said a senior private banker at a Greek bank. "We've had a number of customers asking to move funds out of Greece, mostly to Cyprus, Luxembourg and Switzerland."
Greek rescue in danger as deputy prime minister attacks 'Nazi' Germany By Ambrose Evans-Pritchard - Telegraph -- Greece has greatly damaged its chances of an EU bail-out by lashing out at Germany over war-time atrocities and accusing Italy of cooking its books to hide public debt. The escalating dispute came as a general strike in Greece spilled over into violent clashes between hooded youths and riot police in Athens. Chants of "burn the banks" are a foretaste of tensions once austerity measures bite in earnest later this year. Public and private sector unions joined forces to bring the country to a standstill for 24 hours, halting flights, trains, and shipping, and shutting schools and hospitals.
Greece will be start of sovereign default domino effect, warns Ken Rogoff By James Quinn - Telegraph The former chief economist of the International Monetary Fund has predicted "a bunch of sovereign defaults" in the next few years, and gave warning that Greece is likely to be the first domino of several to fall. Professor Kenneth Rogoff, now a respected Harvard academic, also argued that substantial sovereign debt loads will force major global economies to tighten monetary policy, leading to further worldwide "shockwaves." Prof Rogoff's vision of the world's governments weighed down with debt is not a new phenomenon. "Greece is just the beginning," he said. "We usually see a bunch of sovereign defaults [in the years following a banking crisis]... I predict we will again. It's very hard to call the timing but it will happen."
Niall Ferguson On Sovereign Debt
Gold prices will touch or surpass $1,500 in 2010 Commodity Online "Gold's positive fundamentals, the high level of investor interest in key geographic markets and global monetary economic developments promise to push the yellow metal much higher," according to Jeffrey Nichols, managing director of American Precious Metals Advisors. In this Gold Report exclusive, the leading precious metals economist outlines the reasons for gold to continue its upward trajectory—not the least of which include the ailing USD and foreign central banks' reluctance to keep buying U.S. government debt. Regardless of the near-term prospects for gold, the long-term fundamentals promise substantial appreciation later this year and beyond. We remain firm in our conviction that gold prices will touch or surpass $1,500 in 2010— and continue to move higher in subsequent years.
Proposed Fed Tax not to impact physical metals By Dr Jeffrey Lewis - Commodity Online In an unprecedented modern move, the Federal government is considering a new investment tax as a way of paying for a huge annual deficit. The investment tax would cost investors .25% on purchases of stocks and exchange-traded funds outside of retirement accounts and would generate an estimated $90 – $100 billion in annual income for the US Treasury. Nothing is Safe If there is anything that the Federal Government has proven in the past two years, and even many years prior, no amount of private property is safe from the power-hungry arm of government. SEC rules have already declared that the government has the right to seize investors assets in time of intense economic hardship, and this new bill drafted by Congress opens the door for the government to steal parts of your wealth via taxation, if only penny by penny.
Gold: Long-Term Fundamentals Remain Promising GoldSeek.com "Gold's positive fundamentals, the high level of investor interest in key geographic markets and global monetary economic developments promise to push the yellow metal much higher," according to Jeffrey Nichols, managing director of American Precious Metals Advisors. In this Gold Report exclusive, the leading precious metals economist outlines the reasons for gold to continue its upward trajectory—not the least of which include the ailing USD and foreign central banks' reluctance to keep buying U.S. government debt.
Once again, IMF to decide gold’s fate! By Geena Paul NEW YORK (Commodity Online): Again, the bullion market is abuzz with talks that the International Monetary Fund (IMF) is ready to offload its 191 tonnes of gold in the market. This means the IMF will sell its gold to one of the official holders of the metal after considering bids by all interested parties. When the IMF did a sale of this kind in October last year, the gold market saw a flurry of activities and the prices soared to new heights. Gold struck a record high rising above $1,178 an ounce in November last year following the IMF sale of 200 tonne gold to India’s Reserve Bank. Gold had jumped nearly 13 per cent since the beginning of November as investors poured money into the precious metal after India’s central bank bought the metal from IMF. The central banks of Russia and Sri Lanka had separately bought gold after India’s move in 2009 end.
Thunder Road Reports On Irregularities In The Gold Market by Tyler Durden - ZeroHedge.com Paul Mylchreest submits the following exhaustive Thunder Road report (from October 15, 2009), which is a follow-up to the previously posted Redburn Partners report. A detailed analysis on some of the less discussed aspects of the gold market, this is another must read for all who have even an incipient interest in the gold market. Paul's proposed investigative alternatives are as follows: Alternative 1: On average there is more than one ownership claim on each gold bar conforming to London Good Delivery (LGD) standard on the “pool” of gold which acts as liquidity for the massive OTC gold trade based in London. . . . or Alternative 2: There is FAR more gold bullion held in private hands than is acknowledged by current industry estimates. It is the large amount of additional gold on top of known gold stocks which provides sufficient liquidity to support the high volumes traded through London. . . .
1931 for the Euro, Part II By: Adrian Ash - goldseek.com It wasn't called the "irrevocable exchange rate" for nothing... PRICING YOUR money in gold – in a world where everyone else does the same, and at fixed exchange rates, too – makes for a big problem if the welfare state begins gobbling up more wealth, year after year, than it earns in taxation. "No [social] safety nets were allowed. If the gold stock was flowing outward [thanks to the currency falling on the international exchanges], interest rates had to rise to attract foreign funds and the domestic economy had to be suppressed to curtail imports."
It's All Greek to Me Peter Schiff - 321gold.com If the global economy were a three ring circus, then the center ring attraction would be the currency and debt battle quietly and slowly building between the United States and China. But for the past month the world's attention has been distracted by a much more entertaining sideshow in which European unity, and the ongoing viability of the euro, is being tested by the Greek debt crisis. I believe the short-term problems in Europe are being overblown and the potential demise of the euro highly exaggerated. For those who can connect the dots however, the Greek drama throws some much needed light on the far more daunting problems unfolding within our own fiscal house.
Banks Bet Greece Defaults on Debt They Helped Hide By NELSON D. SCHWARTZ and ERIC DASH - NY Times Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin. Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.
Treasuries Rise as Greece Debt Concern Spurs Demand for Safety By Wes Goodman -- Feb. 25 (Bloomberg) -- Treasuries rose on speculation demonstrations in Greece will make it tougher for the government to cut the European Union’s biggest budget deficit, increasing demand for the relative safety of U.S. securities. Ten-year yields approached a one-week low after Greece’s unions shut transportation, medical and educational facilities yesterday, protesting Prime Minister George Papandreou’s drive to reduce the deficit. Standard & Poor’s said yesterday it may lower Greece’s credit rating by the end of March.
PIMCO: The US Falls Into the Sovereign Debt Ring of Fire by Vince Veneziani - LewRockwell.com In the latest PIMCO investor letter, Bill Gross brings up a chart he likes to call "The Ring of Fire." As you can see, this chart/graph details the amount of debt a country has in relation to their GDP. Countries in the fire zone are headed for hell in a handbasket. PIMCO predicts these countries, which include the U.S., will increase public debt to greater than 90% over the next few years, which will in turn stall growth.
The Euro's Next Battleground: Spain By STEPHEN FIDLER - WSJ MADRID—Greece set off the crisis rattling the euro zone. Spain could determine whether the 16-nation currency stands or falls. The euro zone's No. 4 economy, Spain has an unemployment rate of 19%, a deflating housing bubble, big debts and a gaping budget deficit. Its gross domestic product contracted 3.6% in 2009 and is expected to shrink again this year, leaving Spain in its deepest and longest recession in a half-century.
Fiscal Tightening Could Sink Pound, UBS Cautions By KATIE MARTIN - WSJ LONDON—UBS AG, one of the world's biggest currency-dealing banks, warned that premature fiscal tightening in the U.K.—in a worst-case scenario—could knock some 30% off the currency's value against the dollar. In a note to clients Wednesday, the bank said any moves to cut public spending too hard, too fast and too long before the U.K. economy has recovered from its recent slump would be "the gravest mistake for sterling." In the worst-case scenario, the pound could tumble back to its mid-1980s lows of "$1.05 and below," from around $1.54 now, the bank said.
IMF names China central bank official as special advisor By Myra P. Saefong, MarketWatch TOKYO (MarketWatch) -- The International Monetary Fund said Wednesday that it will name Zhu Min, currently deputy governor of the People's Bank of China, as special advisor to the managing director, a role that's expected to boost the IMF's understanding of Asia and emerging markets. Zhu, who is responsible for international affairs at the Chinese central bank, will likely assume his position at the IMF on May 3. As special advisor, Zhu will "play an important role in working with me and my management team in meeting the challenges facing our global membership in the period ahead, and in strengthening the fund's understanding of Asia and emerging markets more generally," IMF Managing Director Dominique Strauss-Kahn said in a statement.
When Will China De-Peg? The Daily Reckoning - WallStreetPit.com Recently we claimed that borrowing your way to national prosperity is a sure-fire way to servitude and political instability. Today, we aim to prove it. To do so, we cite this article from Reuters. It suggests that China is using or should use its large holdings of US Treasury bonds as a cudgel with which to bludgeon the United States, its strategic adversary/indispensable economic partner.
Sustained recovery still in question, Bernanke says By Greg Robb, MarketWatch Fed chairman provides few clues on the future of interest rates The U.S. economic recovery is still not yet on a sustainable path, and near-zero interest rates are still needed, Federal Reserve Board Chairman Ben Bernanke told lawmakers Wednesday. Bernanke's prepared testimony yielded very few surprises, and he gave no new clues regarding the future of monetary policy. As a result, Fed watchers maintained their own forecasts for monetary policy. Many see the first rate hikes coming in the fall of 2010; others see no move until next year.
Ron Paul, Bernanke Testimony
Bernanke Forecasts Long Period of Low Interest Rates By SEWELL CHAN - NY Times WASHINGTON - Ben S. Bernanke, making his first appearance before Congress since the Senate confirmed him last month to a second term as chairman of the Federal Reserve, reaffirmed on Wednesday that short-term interest rates would remain exceptionally low - near zero - for "an extended period." In presenting the Fed's semiannual monetary report to Congress, Mr. Bernanke did not waver from the Jan. 27 statement of the central bank's key policy making board, or from a Feb. 10 statement in which he explained to Congress the strategies for gradually reducing the vast sums that banks hold in reserves at the Fed.
Geithner: US Needs Growth Before Attacking Deficit AP via CNBC Assessing a tough governmental juggling act, Treasury Secretary Timothy Geithner assured lawmakers Wednesday that stimulus spending to spur the economy now isn't in conflict with a need for longer-term austerity. Geithner told the House Budget Committee that before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth.
Bernanke seeks to preserve Fed's power by compromising with Congress By Neil Irwin - Washington Post -- Federal Reserve Chairman Ben S. Bernanke launched a wide-ranging effort Wednesday to fend off congressional efforts to take powers away from the central bank, laying out a series of compromises and olive branches meant to defuse lawmakers' criticism. Testifying before the House Financial Services Committee, Bernanke said he will support legislation to disclose the names of companies that take advantage of special Fed lending programs, so long as enough time has passed since the loan requests to avoid stigmatizing the firms. He also said he will support expanding congressional oversight of many Fed functions if its power over monetary policy is exempted.
Greenspan was DY-NO-MITE! By: Tim Iacono - GoldSeek.com One of the most disturbing aspects of the recent economic collapse and the ongoing financial market crisis is that there is still widespread disagreement over who or what caused it. All too often, pundits say, "You can't lay all the blame for our current condition on one institution or one man" and that is true, but these same commentators oftentimes skirt answering the toughest of questions about what nearly brought the whole financial system down by distributing the blame among many players and many failings.
A Regional Fed President Torpedoes Bernanke By: Gary North - GoldSeek.com . . . . Charles Plosser gave a speech hostile to Federal Reserve policy. Plosser is the President of the Federal Reserve Bank of Philadelphia. He went public with his concerns. He delivered a speech to the World Affairs Council of Philadelphia on February 17. The WAC has chapters in major cities. It is an important outlet for people in high positions inside the Establishment. His speech is here. He said: "The views expressed today are my own and not necessarily those of the Federal Reserve System or the FOM." You can say that again, Chuck! His basic pitch was the same old story: the need for an independent central bank. That goes back to 1694: the founding of the Bank of England.
* * * * * 21st CENTURY BREAKDOWN “Wherever we’re headed, America is evolving in ways most of us don’t like or understand. Individually focused yet collectively adrift, we wonder if we’re heading toward a waterfall. Are we?” Strauss & Howe – The Fourth Turning . . . . Progressives like Arianna Huffington clearly don’t comprehend what is happening. The anger and disillusionment of the population are seen as worrisome and disturbing by those who believe history is linear. The entrenched ruling elite should be apprehensive. During a Crisis existing institutions are torn down as the social fabric of the country undergoes wrenching changes. Those in power are rightfully fearful of the masses they have screwed for decades. President Obama, Ben Bernanke, Timothy Geithner, and the majority of economists and TV pundits are convinced the Crisis has passed and they have successfully maneuvered the country through the worst, avoiding a second Great Depression. History suggests otherwise. We have yet to experience the nastiest part of the Crisis.
Deflation Is Coming and There's Nothing Bernanke Can Do About It, Says Robert Prechter by Peter Gorenstein - TechTicker.com Contrary to popular belief, noted technical analyst Robert Prechter says the extraordinary action taken by the Federal Reserve to bail out the economy will not lead to runaway inflation. "Deflation is gaining the upper hand very, very slowly, but it's happening,"
Troubled banking industry sharply reduced lending in 2009 By Binyamin Appelbaum - Washington Post Lending by the banking industry fell by $587 billion, or 7.5 percent, in 2009, the largest annual decline since the 1940s, as the number of troubled financial institutions rose sharply, the Federal Deposit Insurance Corp. reported Tuesday. FDIC Chairman Sheila C. Bair said that some small banks have reduced lending because of financial weakness, a problem the Obama administration aims to address with a proposal to pump $30 billion in new federal aid into community banks. The FDIC considered 702 banks to be in some danger of failing as of the end of 2009, more than double the number at the beginning of the year.
Fed to Get $200 Billion Boost Money From Treasury Will Make It Easier to Raise Interest Rates Down the Line By JON HILSENRATH - WSJ -- The Treasury said it will borrow $200 billion and leave the cash proceeds on deposit with the Federal Reserve, reviving a program that will make it easier for the Fed to raise interest rates when the time comes. Officials sought to dispel the notion that the move marks a step toward tightening credit now. Fed Chairman Ben Bernanke, testifying before the House Financial Services Committee on Wednesday, is likely to reiterate assurances that the Fed will keep short-term interest rates low for an "extended period," meaning at least several more months, because inflation is low and the economy is burdened by lots of excess capacity.
Freddie Mac loses $7.8B in 4Q, may need more taxpayer cash By Alan Zibel, AP Real Estate Writer WASHINGTON — Freddie Mac lost $7.8 billion in the final three months last year, but the mortgage finance company didn't need a federal cash infusion for the third quarter in a row. Freddie Mac, which has been controlled by federal regulators since September 2008, lost $2.39 a share, the company said Wednesday. The loss included $1.3 billion in dividends paid to the Treasury Department, which has an almost 80% stake in the company, based in McLean, Va.
At F.D.I.C. , Bracing for a Wave of Failures By ERIC DASH - NY Times The Federal Deposit Insurance Corporation is bracing for a new wave of bank failures that could cost the agency many billions of dollars and further strain its finances. With bank failures running at their highest level in nearly two decades, the F.D.I.C. is racing to keep up with rising losses to its insurance fund, which safeguards savers' deposits. On Tuesday, the agency announced that it had placed 702 lenders on its list of "problem" banks, the highest number since 1993.
FDIC’s Problem Banks List: Where Will It End? By Addison Wiggin - The DailyReckoning 02/24/10 Baltimore, Maryland – The FDIC is even more broke than it was three months ago. The fund the FDIC uses to “insure” your bank account went $20.9 billion in the red during the fourth quarter of 2009. That’s more than twice the deficit reported when the fund first entered negative territory in the previous quarter. Incredibly, the FDIC is still trying to reassure us that all is well because it’s collecting three years of advance payments on the annual assessments paid by its member banks. The fees total $45 billion – barely twice the amount of the current deficit. Yeah, we feel better.
S.E.C. Restricts Short-Selling and Addresses a Global Accounting Shift By FLOYD NORRIS - NY Times -- A sharply divided Securities and Exchange Commission voted on Wednesday to restrict selling stocks short when they are falling rapidly, with the majority voicing hopes the action would improve investor confidence and the dissenters saying there was no evidence that any action was needed. The commission also said it hoped to approve the switch of American companies to international accounting standards by the end of 2011, but it set a series of conditions that made eventual adoption of the standards appear less than certain.
Bust Up the Health Insurance Trusts By Robert Reich - WallStreetPit.com ears ago I worked at an agency in Washington called the Federal Trade Commission. The FTC predates the New Deal. It was set up in 1914 during the administration of Woodrow Wilson, at a time when many of America’s industries had combined into giant trusts that had enormous market and political power. The FTC was designed to root out such unfair practices. It ought to take on the health insurance trusts. . . . . . . . . Rates are soaring all over the country. Insurers have been seeking to raise premiums 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon and a wallet-popping 56 percent in Michigan. How can insurers raise prices as much as they want without fear of losing customers?
Insurer blames health costs for California rate hikes AP - LA Times . . . . In prepared testimony for a House investigative subcommittee, Angela Braly, president of WellPoint Inc., blamed the increases on the growing price tags for hospital care and pharmaceuticals. She also cited the ailing economy, which has caused many younger, healthier people to save money by dropping coverage, leaving her company covering an older, sicker population. “Raising our premiums was not something we wanted to do,” Braly said. “But we believe this was the most prudent choice.”
11.3 million homeowners underwater on mortgage By Rex Nutting, MarketWatch WASHINGTON (MarketWatch) -- More than 11.3 million homeowners -- nearly one-fourth of all Americans with a mortgage -- owe more on their loan than their home is now worth, according to a report released Tuesday by FirstAmerican CoreLogic. More than 10% of people with mortgages owe 25% more than their home is worth. The number of underwater mortgages increased by about 620,000 from the third quarter, the firm said. Another 2.3 million mortgages had less than 5% equity in their home, which could be wiped out if home prices fall further.
New-Home Sales at a Low in U.S. By JAVIER C. HERNANDEZ - NY Times New-home sales unexpectedly fell to a new low in January, the Commerce Department reported Wednesday, rekindling worries that a turnaround for the housing market would be elusive in an era of high unemployment and huge debt burdens. Sales fell 11.2 percent in January - the third consecutive month of declines - to a seasonally adjusted annual rate of 309,000, the lowest since record keeping began in 1963. Analysts had forecast an increase of 3.5 percent.
Weak New Home Sales Report Least of Housing's Problems, Barry Ritholtz Says by Aaron Task - TechTicker.com . . . . Ritholtz believes about the best you can say about housing is "the pace of deterioration has stabilized," as S&P's David Blitzer put it regarding this week's Case-Shiller report. In addition to "obvious" issues such as high unemployment, still historically high prices and tougher lending standards, he cites the following:
Benefits for jobless to end if Congress doesn't act by Erin Zlomek -The Arizona Republic The long-term unemployment benefits of more than 82,000 Arizonans remain in limbo as the U.S. Senate considers action on a benefits-extension bill. The Senate is expected to pass the extension, and it is expected to be signed into law. But lawmakers are cutting it close. Because the vote hasn't taken place and the outcome remains uncertain, the state Department of Economic Security was planning to begin mailing benefit cancellation notices to residents today.
California One Step Closer To Insolvency After State Cancels $2 Billion General Obligation Bond Sale by Tyler Durden - ZeroHedge.com -- Five days ago a great white hope appeared for the great bankrupt Golden State (Baa1/A-), in the form of $2 billion in GO bonds, which were supposed to be promptly syndicated via underwriters JPMorgan and Morgan Stanley. This would have been the first bond sale for California since November: a critical milestone as the state creeps ever closer to a full-on default. Unfortunately, the creeping just turned into a casual jog after Jane Wells (@janewells) just tweeted that California has cancelled its bond sale "after legislature fails to approve cash management flexibility bill [the] Treasurer said he needed to attract investors."And seriously, did California think it would succeed where so many other high yield issuers have recently failed?
Senate Approves $15 Billion Jobs Bill By CARL HULSE -NY Times WASHINGTON — In what Democrats hope is the first in a series of legislative victories, the Senate on Wednesday easily approved a $15 billion plan to spur job creation, a vote that lawmakers hoped would show that they were taking steps to improve the nation’s employment outlook. The coalition that passed the relatively modest measure by 70 to 28 included 55 Democrats, 2 independents and 13 Republicans, a show of bipartisan consensus that has been rare on Capitol Hill in recent months. Democratic leaders said they hoped to follow up with other measures that would encourage small businesses to expand and would provide assistance to those who remain out of work.
Senate breaks rule, OKs jobs bill 'Pay-go' no-go after 2 weeks By Stephen Dinan - Washington Times It took less than two weeks for lawmakers on Capitol Hill to vote to break rules requiring that new spending be offset elsewhere in the budget, waiving the requirement just minutes before a strong bipartisan majority pushed through a $15 billion job-creation bill in the Senate on Wednesday. The bill provides money to continue funding highway construction and offers a tax break for businesses that hire unemployed workers. Given the state of the economy, supporters said, the bill was too important to hold up.
Big Questions Still Linger on Eve of Health Care Meeting By DAVID LEONHARDT - NY Times Three years ago this month, a presidential candidate - John Edwards, as a matter of fact - started a debate on health reform by announcing a plan to cover the uninsured. Since then, we've had an election, town hall meetings, speeches, Congressional hearings and a special election in Massachusetts. Now comes Thursday's bipartisan meeting at the White House, which feels a bit like the start of the final act. And Congress could still end up passing a sweeping bill, a small bill or no bill at all. What follows is a guide to the big lingering questions: Isn't this meeting just for show?
More than healthcare riding on Thursday's summit By Peter Nicholas - LA Times President Obama's move to renew the healthcare debate at this stage could alter the political landscape ahead of the midterm election. Reporting from Washington - The healthcare summit that convenes Thursday in Washington has emerged as a high-stakes gambit for President Obama and opposing Republican lawmakers, carrying risks for both sides that could not only alter the outcome of the healthcare debate but also November's midterm elections.
Lawmakers in 44 states warn Congress By Seanna Adcox, THE ASSOCIATED PRESS Angry voters spur bills for sovereignty COLUMBIA, S.C. | With tax collections dropping and jobless rates at record highs, state legislators hundreds of miles from Washington have found an easy way to appeal to conservative voters: Bash the federal government. Lawmakers in 44 states have introduced measures warning Congress not to trample states' rights and dozens of other resolutions opposing the government on issues including gun control and health care. Their efforts play to people angry with the status quo. A recent Pew Research Center poll found high anti-incumbent sentiment among voters ahead of the November congressional elections.
Check this out: Deposit money by taking a photo By Andrew Vanacore, Associated Press NEW YORK — In the near future, you might not even have to visit a bank or an ATM to deposit a check. You'll simply snap a couple of photos of it with your cellphone. Applications to do just that are already available for Apple's iPhone and other gadgets from USAA, a company that provides insurance and banking mainly for military veterans. Chase, Bank of America and Citibank are among the banks planning to release similar applications this year.
Math teacher hailed as hero after Colorado school shooting By Nicholas Riccardi - LA Times David Benke plays down his role in stopping the attack at the Littleton middle school. Accused gunman Bruco Strong Eagle Eastwood is held on $1-million bail on two counts of attempted murder. David Benke plays down his role in stopping the attack at the Littleton middle school. Accused gunman Bruco Strong Eagle Eastwood is held on $1-million bail on two counts of attempted murder. Reporting from Denver - During regular emergency drills at Deer Creek Middle School in suburban Denver, math teacher David Benke always told himself and his students that, should something dire occur, he would try to protect them.
Clinton: Political fights hurt U.S. image By Nicholas Kralev - Washington Times Wants world to see 'unity and strength' President Obama's diminished political power as a result of fights between the White House and Congress has damaged both his and the country's image abroad, Secretary of State Hillary Rodham Clinton said Wednesday. Even as she thanked Congress for its bipartisan support for many of the Obama administration's foreign policy goals, Mrs. Clinton said during two Senate committee hearings that recent bickering on domestic issues concerns her and that she hopes "we can figure out a better way to address it."
As Deadline Nears, G.M.'s Sale of Hummer Faces Several Big Obstacles By KEITH BRADSHER - NY Times -- HONG KONG - Hostility from Chinese regulators and financing problems are increasingly likely to scuttle plans by an obscure Chinese machinery company to buy the Hummer division from General Motors, people close to the negotiations said on Tuesday. General Motors has already extended repeatedly its deadline for completing the deal, with the current deadline at the end of this week; the original deadline was last September. But the buyer, the Sichuan Tengzhong Heavy Industrial Machinery Company, has failed to win regulatory approval for the deal at a time when senior Chinese officials are trying to put a new emphasis on limiting China's dependence on imported oil and protecting the environment.
GM to Shut Hummer After Sale Collapses By NORIHIKO SHIROUZU And SHARON TERLEP - WSJ General Motors Co.'s beefy Hummers will join its Pontiac and Saturn in the scrap yard of failed brands after a $150 million deal to sell the line to a Chinese equipment maker collapsed. Sichuan Tengzhong Heavy Industrial Machinery Wednesday failed to win approval from Chinese regulators for its bid. GM said it would wind down Hummer operations after concluding Tengzhong would not be able to finalize the deal. "We are disappointed that the deal with Tengzhong could not be completed," said John Smith, GM vice-president of corporate planning and alliances. GM sold just 9,046 Hummers in the U.S. last year, down from more than 71,000 in 2006.
GM to Wind Down Hummer as Sichuan Tengzhong Sale Accord Fails By Katie Merx -- Feb. 25 (Bloomberg) -- General Motors Co. said it will close Hummer, the maker of military-inspired sport-utility vehicles, after Sichuan Tengzhong Heavy Industrial Machinery Co. couldn’t win Chinese approval to buy the unit. Winding down the brand will take several months, Nick Richards, a spokesman, said yesterday. Some of the 3,000 people now employed at Hummer work on other vehicles, so GM doesn’t know how many jobs will be lost, Richards said.
Bloom Energy Claims a New Fuel Cell Technology By TODD WOODY - NY Times SUNNYVALE, Calif. - A Silicon Valley company is claiming a breakthrough in a decades-old quest to develop fuel cells that can supply affordable and relatively clean electricity. Google, Bank of America, Wal-Mart and other large corporations have been testing the devices, which will be formally introduced on Wednesday. The start-up, Bloom Energy, has raised about $400 million from investors and spent nearly a decade developing a new variety of solid oxide fuel cell, considered the most efficient but most technologically challenging fuel-cell technology.
EU wants global halt on executions by 2015 Associated Press via AZCentral.com GENEVA - Spain's prime minister says the European Union wants a halt to all executions by 2015 as a step toward abolishing the death penalty. Jose Luis Rodriguez Zapatero says Spain will speak with countries that still have capital punishment in the hope of persuading them to eliminate the practice. Spain now holds the rotating EU presidency.
Judge Napolitano and Angela Keaton on Obama's foreign policy
Niall Ferguson: Empires Fall Quickly and Without Warning Michael Panzner - SeekingAlpha.com In an article for the March/April issue of Foreign Affairs, "Complexity and Collapse: Empires on the Edge of Chaos," due out later this week, author and historian Niall Ferguson posits that the life cycles of great powers might not follow the long-accepted pattern of gradual rise and fall. Rather, he says, "it is possible that this whole conceptual framework is, in fact, flawed," and that empires fall quickly and without warning. With that in mind, Ferguson explores what it might mean for the geopolitical status quo.
Ferguson: We're One Downgrade Away From The End Of American Empire Gregory White - Business Insider -- Niall Ferguson is candidly calling time on the American Empire, or at least pointing to the combination of factors that will soon lead to its demise, in the latest issue of Foreign Affairs. Ferguson, who has become one of the leading intellectuals of the deficit hawk camp, theorizes that empires don't decline in the slow, cyclical process long assumed. Instead it is dramatic events that push them over the edge to oblivion.
FDIC Says 702 Banks Now in Danger of Collapse By MATTHEW JAFFE - ABC News Federal Deposit Insurance Corp.: Banks 'Problem List' Most Since 1993 In the wake of the worst financial crisis since the Great Depression, the government agency that insures bank deposits announced today that 702 banks are on the brink of failure, the most in the last 17 years. The Federal Deposit Insurance Corporation, in its report for the fourth quarter of 2009, said 702 banks are on their so-called "Problem List" as of the end of last year, a 27 percent increase from the end of the third quarter. Both the 702 banks and their combined $402 billion in assets are the highest since the second quarter of 1993.
Commercial Real Estate Loans Drive More Banks Onto FDIC’s “Problem List” By Rocky Vega - The Daily Reckoning Over 700 banks in the US are distressed according to the FDIC, the largest number since 1993. The latest additions to the “problem list” are largely resulting from commercial real estate loans gone sour. The FDIC anticipates bank difficulties continuing to worsen in 2010 before there’s any chance of the situation beginning to improve. According to MarketWatch: “Based on the result, roughly one in 11 of the approximately 8,000 U.S. banks are on this list, with regulators expecting a significant expansion in the number of failures throughout 2010, boosted in large part by increased losses on commercial real estate sustained by mid-sized and smaller banks. See more on analyst expectations for 2010 bank failures.
Over-Arching Sovereign Debt Crisis by Jim Willi - FinancialSense.com Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The issue is rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigner must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of containment incites laughter. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last.
'Death of American Capitalism:' The 10 final scenes By Paul B. Farrell, MarketWatch Munger warns 2012 is our tipping point on 'road to ruin' Good news, Americans are "downbeat about today. Upbeat about tomorrow," says the latest USA Today/Gallup Poll. "Americans feel battered by hard times, record home foreclosures, stubbornly high unemployment rates and war." And yes, we are "fed up with Washington and convinced more than 3 to 1 that the nation is heading in the wrong direction," yet there's "confidence that there will be better times ahead, that the classic American dream endures and hasn't been extinguished. It's not even at its low ebb." Why? Because we're in denial!
Liquidating the Empire Patrick J. Buchanan - SilverBearCafe.com A decade ago, Oldsmobile went. Last year, Pontiac. Saturn, Saab and Hummer were discontinued. A thousand GM dealerships shut down. To those who grew up in a "GM family," where buying a Chrysler was like converting to Islam, what happened to GM was deeply saddening. Yet the amputations had to be done - or GM would die. And the same may be about to happen to the American Imperium. Its birth can be traced to World War II, when America put 16 million men in uniform and sent millions across the seas to crush Nazi Germany and Japan. After V-E and V-J Day, the boys came home.
Nearly 25% of all mortgages are underwater By Les Christi - CNN Money More bad news on the housing bust front: Nearly 25% of all mortgage borrowers were underwater, meaning they more on their loans than their homes are worth. First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners -- or 24% of all homes with mortgages -- were underwater as of the end of 2009. That's up from 23% and 10.7 million borrowers three month earlier.
Concerns grow over China's sale of US bonds By Ambrose Evans-Pritchard - Telegraph Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first. A front-page story in the state’s China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, giving it a stronger imprimatur. It follows a piece last week in China Daily, the Politburo’s voice, citing an official from the Chinese Academy of Sciences praising the move to "slash" holdings of US debt. This was published on the same day that US President Barack Obama received the Dalai Lama at the White House, defying protests from Beijing.
Debt Dynamite Dominoes: The Coming Financial Catastrophe by Andrew Gavin Marshall - LewRockwell.com Understanding the Nature of the Global Economic Crisis The people have been lulled into a false sense of safety under the rouse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.
Gold recovers in Asia as dollar eases SINGAPORE (Commodity Online) : Gold prices recovered in Asian trade Wednesday after the greenback declined, reviving demand for the precious metal as an alternative investment. Spot fold was seen trading at $1107.55 an ounce at 11.30 a.m Singapore time while US gold futures for April delivery was at $ 1107 an ounce at the same time.
Precious Metals Headed Higher: Here's How I Know Chris Marchese - SilverBearCafe.com Precious metals have been showing signs of an impending breakout to the upside. I'm not one for technical analysis or price action in equities or anything else for that matter, but the current rebound in the precious metals, notably gold, has caught my eye. While gold held its own around $1,100/oz, reaching a low around $1,080, it is currently trading above $1,125/oz. My bullish sentiment on gold in the near and medium term and especially longer term is due to the following:
The rush to invest money in gold or any gold form Ian Gordon - CommodityOnline.com Never mind that fruit trees are blossoming all over the Northern Hemisphere. It doesn't matter that Punxsutawney Phil of Pennsylvania saw his shadow on February 2. We're in for a lot more of a long, harsh Winter—a real whopper in terms of the Kondratieff cycle that the Longwave Group's Ian Gordon has become expert at analyzing and interpreting. In this exclusive interview with The Gold Report, Ian pulls no punches about the dreadful times ahead as economies wring out decade's worth of accumulated debt. The only gleams shining through in his dreary forecast: ample opportunities in precious metals equities.
China unlikely to buy IMF gold - Milling Stanley Author: Lawrence Williams -MineWeb.com In an interview with Bloomberg, the World Gold Council's George Milling-Stanley reckoned that China was not a realistic buyer of the remaining 191.3 tonnes of IMF gold for sale. Contrary to much speculation among the pro-gold sector, the World Gold Council feels that China is actually "not a realistic candidate" to buy all, or any, of the IMF's remaining 191.3 tonnes of gold which is still up for sale. In an interview with Bloomberg, George Milling Stanley, the WGC's New York-based managing director for government affairs is quoted as saying "We're not surprised to see that China has not" taken up any of the IMF's gold for sale and is far more likely to "buy local gold production" with which to bolster and diversify its currency reserves.
'Buy Farmland and Gold,' Advises Dr. Doom by Leo Lewis - LewRockwell.com The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a “dirty war” by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash. The bleak warning of social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers. Dr. Faber, who advised his audience to pull out of American stocks one week before the 1987 crash and was among a handful who predicted the more recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant for the nickname Dr. Doom.
PaperBug Fight In The Gold Jail Stewart Thomson - 321Gold.com There's a new competition underway in the gold community. The Gman worshippers and the toilet paper currency worshippers, having failed totally to make you any money in gold, or money in anything for that matter, have now decided to remake their own story of the 1929 boom and bust era, and use it to see if you're ready, willing, and able to report to the Constitution with your chainsaw, to help them carve up what's left of it. Their kindergarten analysis is that the depression was actually caused by the Gold Standard. Here's a wake-up-call for these failed traders: The boom in 1929 was caused by low interest rates, extreme leverage (90% on NYSE stock trades), and the banksters pumping the media non-stop that we were in a new era. The banksters sold massive amounts of stock to an already all-in public.
BIG PRICE BOOST DOESN'T BOOST GOLD PRODUCTION Author: Dorothy Kosich - MineWeb.com Peak gold theory gains impressive adherents In his latest Basic Points analysis, global market strategist Don Coxe suggests investors maintain a high exposure to gold and gold miners whose production comes from politically secure areas. Global market strategist Don Coxe, chairman of Coxe Advisors, said he believes in "a hitherto-undiscovered erogenous zone in gold bugs: peak gold-which could be the latest Big Thing since peak oil." In his latest Basic Points, Hard Rocks and Hard Shocks, Coxe credits "Aaron Regent, Barrick's market-savvy new CEO" for "fueling the flames of desire" through the concept of peak gold. Regent has noted "that new mined production of gold has been declining for a decade," suggesting this could prove to be the equivalent of peak oil, the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.
Fool's Gold by Joseph Russo - FinancialSense.com Although in truth, it is valueless paper; in our collective reality, it is real and has legal purchasing powers. Despite such enslavement by government decree, it does not stop us from trading it, and hedging against its true intrinsic value. The fool's gold to which we refer is none other than the world's reserve currency, the $USD. Let us go back in time a month and share with you our thoughts on how this sorry example of a king fiat currency (world reserve no less) had been behaving.
How long can the U.S. dollar defy gravity? Steven C. Johnson, Kristina Cooke and David Lawder NEW YORK/WASHINGTON (Reuters) - The only time the U.S. dollar ever took a serious shellacking in the marketplace, the wounds were almost entirely self-inflicted. Facing mounting inflation and the escalating cost of the Vietnam War, President Richard Nixon, on August 15, 1971, took the United States off the gold standard, which had been in place since 1944 and required that the Federal Reserve back all dollars in circulation with gold. The move amounted to a made-in-America double-digit devaluation, shocking the country's foreign creditors.
Update the US Dollar Index by David Petch, FinancialSense.com It appears that we are either just entering the consolidation phase of the US dollar index for the next 6 to 8 weeks or there is one final move to the upside before entering the consolidation phase. Every market around the globe is experiencing difficulty in one form or another which is associated with high debt levels. As much as other countries would like to totally switch out of US dollars to other currencies, this is about as realistic as the US and Canadian governments pulling oil out of gas stations and replacing it with natural gas…there are mechanisms in place that slowly can be dismantled but there is a lot of infrastructure changes involved, the markets having many internal layers of infrastructure. At some point in the future, the USD is going to get clipped, but as long as most debt still is in USD, this paper game will continue.
Ron Paul - MSNBC Dylan Ratigan 02/23/10 On Tuesday, February 23, Ron Paul was interviewed on "The Dylan Ratigan Show" concerning his CPAC straw poll win, the future of the GOP, and the growth of government.
America's Greek Shield Matthew Craft - Forbes Budget woes abroad have made U.S. debt look safe, but the halo will fade. The Greek debt crisis has weighed on stock and corporate bond markets and spurred worries about the ability of other countries to cover their mounting debts. So far, to judge from U.S. Treasury bond prices, those concerns have yet to shake investors' confidence in the U.S. With the Treasury auctioning off another $126 billion in debt this week and growing confidence among bond traders that Greece will eventually be saved, Wall Street's researchers are beginning to wonder: When will the U.S. lose its halo?
Protesters blockade Greek stock exchange AP -Athens, Greece Members of a trade union on Monday blockaded the Athens Stock Market to protest government austerity measures aimed at tackling Greece's debt crisis. Protest organizers, backed by the Greek Communist Party, said they plan to maintain the blockade through Tuesday, but stock market officials said the exchange was running normally through online trading.
European banks face showdown over €1 trillion of debt By Ambrose Evans-Pritchard -Telegraph European banks need to roll over €1 trillion (£877bn) of debt over the next two years at a much higher cost and in direct competition with hungry sovereign states, according to a report by Morgan Stanley. The bank has advised clients to prepare for chillier times as monetary tightening begins in the US and China, causing major spill-over effects in Europe. Roughly €560bn of EU bank debt matures in 2010 and €540bn in 2011. The banks will have to roll over loans at a time when unprecedented bond issuance by governments worldwide risks saturating the debt markets. European states alone must raise €1.6 trillion this year.
Ifo’s Sinn Says Greece ‘Blackmailing’ Europe Neighbors Via Euro By Meera Louis Feb. 23 (Bloomberg) -- Hans-Werner Sinn, president of Germany’s Ifo economic institute, said debt-laden Greece is “blackmailing” its European neighbors through the euro. “Greece should never have entered the euro zone because they did not qualify and they are now blackmailing the other European countries via the euro,” Sinn said today in an interview in Brussels. “More than the euro would be weakened, they argue, if Greece was not helped, but I personally don´t think this is a problem,” he said.
Greenspan Says Crisis ‘By Far’ Worst, Recovery Uneven By Joshua Zumbrun Feb. 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the financial crisis was “by far” the worst in history and called the recovery from the global recession “extremely unbalanced.” The world economy has undergone “by far the greatest financial crisis globally ever,” Greenspan said today in a speech to the Credit Union National Association’s Governmental Affairs Conference in Washington.
US CMBS Delinquency Rate Not Likely to Peak Until 2011 Research Recap Despite an improving economy, Standard &Poor’s expects delinquencies on loans backing commercial mortgage-backed securities to keep rising until job numbers meaningfully improve and employers feel confident that a recovery is firmly underway. “In 2010, we expect higher vacancies and lower rents to continue to fuel delinquencies, especially for underperforming properties,” S&P says in its latest CMBS Quarterly Insights.
Banks May Use Payday-Style Loans to Replace Lost Overdraft Fees By Jeff Plungis Feb. 23 (Bloomberg) -- U.S. banks may expand their short- term lending at interest rates of 120 percent or more as they seek to replace more than $15 billion in lost revenue because of regulations limiting overdraft fees. “The smarter banks are trying to resell overdraft protection to consumers as a different product,” said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Massachusetts.
No Banker Left Behind By Robert Scheer - TruthDig.com They do have a license to steal. There is no other way to read Tuesday’s report from the New York state comptroller that bonuses for Wall Street financiers rose 17 percent to $20.3 billion in 2009. Of course that is less than the $32.9 billion for bonus rewards back in 2007, when those hotshots could still pretend that they were running sound businesses. The economy is anything but sound, but you would hardly know that from looking at the balance sheets of the big investment banks. The broker-dealer firms on Wall Street made a record profit, estimated at greater than $55 billion by the comptroller, and the only thing holding back even more grotesque bonuses was concern over criticism from a public that was hardly doing as well.
Volcker fooled Obama is poised to drop prop-trading ban By JOSH KOSMAN and MARK DeCAMBRE - NY Post The Obama administration is backing off a plan to bar commercial banks from engaging in proprietary trading, favoring instead a watered-down version of a key tenet of the proposed "Volcker rule" governing how banks operate, according to people familiar with the situation. Sources told The Post that instead of issuing an outright ban on prop trading -- or trading done on behalf of only the bank itself -- the White House will propose that federally insured banks keep higher cash reserves if they want to run such trading desks. The about-face comes amid signs the administration faced an uphill battle selling lawmakers and Treasury officials on an outright ban.
Treasury to Resume the Monetization of the Fed's Balance Sheet in Support of the Financial Markets Jesse's Café Américain -- This Treasury Program is designed to provide financing for the Fed's efforts to purchase and then liquidate toxic assets and derivatives from the financial sector, effectively monetizing their losses. The Treasury creates new notes and sells them on the open market. The money obtained in these sales is deposited at an account at the Federal Reserve. The Federal Reserve uses this money to purchase toxic assets from the banks.
Government Stimulus, One Year Later Texas Straight Talk - Ron Paul - FincialSense.com Last week marked the one year anniversary of the American Reinvestment and Recovery Act, or the stimulus bill, passing into law. While the debate over its success has been focused on whether or not it is stimulating the economy and on various questionable uses of funds, in my estimation this legislation is accomplishing exactly what it was intended to accomplish – grow the government. Those of us concerned about the ever increasing level of government debt gasped at the astonishing $787 billion cost estimates for this bill. True to form it has actually cost 10 percent more at $862 billion. We heard over and over that government could not sit around and do nothing while people lost their jobs and houses. The administration claimed that unemployment would not go above 8 percent if the stimulus bill passed. Now, a year later, the government estimates that unemployment is over 10 percent. The real number is closer to 20 percent. It appears that those promises were total fabrications in order to close the deal.
Is the U.S. Hiding How it Bailed Out AIG and Goldman? By PETER COHAN - DailyFinance Bloomberg News reports that Congressman Darrell Issa (R-Calif.) subpoenaed a document that makes it clearer how the U.S. Treasury may have used struggling insurer American International Group (AIG) as the vehicle for bailing out Goldman Sachs Group (GS). This document, which had been previously hidden, details the mortgage-backed securities on which Wall Street banks bought $62.1 billion in insurance from AIG. The details in the document released are significant. They disclose how the securities performed, with losses exceeding 75% of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs -- collateralized debt obligations -- in the first place.
Goldman Bets Against the Assets It Sold to AIG By Addison Wiggin - The Daily Reckoning 02/23/10 Baltimore, Maryland – “This is half-baked justice at best,” US District Judge Jed Rakoff wrote in an opinion yesterday afternoon. The SEC sued Bank of America for lying to their shareholders over the company having been forced to buy Merrill Lynch. In a move that smacks of some backroom deal you and I will never be privy to, the SEC sued for only $150 million. That’s 2.4% of the $3.6 billion in 11th-hour bonuses Merrill execs awarded themselves days before they merged with BofA. It’s an even smaller fraction of the $4.4 billion bonus pool Bank of America henchmen enjoyed last year.
Hedge Funds and the Global Economic Meltdown (Part 1)
Hedge Funds and the Global Economic Meltdown (Part 2)
Hedge Funds and the Global Economic Meltdown (Part 3)
Wall Street bonuses up 17%, top $20B for 2009 By Michael Gormley, AP - USA Today Wall Street bonuses rose 17% to more than $20 billion in 2009, the year after taxpayers bailed out the financial sector, the New York state comptroller says. Thomas DiNapoli says total compensation at the largest securities firms grew beyond that average increase. He says profits could surpass what he calls an unprecedented $55 billion last year. The Democrat says that's nearly three times Wall Street's record increase. The rate of growth was boosted in part by comparison with record losses in 2008 of nearly $43 billion.
* * * * * Interactive Map: The Economy Where You Live The fallout from the recession has cut deeply into the housing security, employment and income of many Americans. But some parts of the country are clearly faring better than others. Here, three interactive maps show foreclosure and jobless rates as well as household income by county.
Foreclosure Rates
Unemployment Rates
Median Household Income
Gregg, Wyden Offer Plan to Simplify U.S. Tax Code By PATRICK YOEST - WSJ WASHINGTON—Two senators Tuesday introduced a proposal to vastly simplify the nation's tax code by cutting the number of income tax brackets in half and flattening the corporate tax rate. The plan put forth by Sens. Judd Gregg (R., N.H.) and Ron Wyden (D., Ore.) would lower the number of marginal income tax rates to three: 15%, 25% and 35%. It also would eliminate the alternative minimum tax, which lawmakers scramble to "patch" each year in order to minimize its impact on middle-income taxpayers. The plan would create a single corporate income tax rate of 24%, but allow small businesses with receipts of up to $1 million to expense all of its equipment and inventory costs.
The "too big to fail" lie (as applied to US banks) Steve Saville - 321Gold.com "They are too big to fail" was the reason given for using trillions of dollars in money and guarantees to 'bail out' several large US banks during 2008-2009. Their failure, it was argued, would all but bring the entire economy to a standstill; such were the size and scope of their operations. Providing the banks whatever financial support they needed to remain in business was therefore touted as serving the "public interest". However, the "too big to fail" argument was a giant, multi-faceted lie. One part of the lie was that rescuing the banks would ensure the continued flow of credit to private individuals and businesses. It is now blatantly obvious that this was not true because bank lending has been in decline ever since the bailouts. Although, perhaps we are being unkind and it should be put down as a basic misunderstanding stemming from the popularity of fallacious Keynesian economic theories.
Keiser Report 19: Markets! Finance! Scandal! This week Max Keiser and co-host Stacy Herbert report on the scandals of George Soros and the IMF shaking out the gold market; US bank lending falling at the fastest rate in recorded history; and the trickle up unemployment pyramid. Keiser also speaks to The Market Ticker's Karl Denninger about CDOs, synthetic CDOs and hiding Greek debt.
Lehman's Ghost Haunts California By JOHN CARREYROU - WSJ SAN MATEO, Calif.—Little more than a year after the worst of the financial panic, Wall Street is bouncing back. But in this county just south of San Francisco, pain from the financial system's near-collapse is still felt every day. San Mateo, a scenic swath of peninsula between the Pacific Ocean and San Francisco Bay, saw $155 million evaporate when Lehman Brothers went bankrupt in September 2008. On top of deep budget cuts brought on by California's fiscal crisis, the loss on Lehman securities means San Mateo's 735,000 residents are taking a hit.
U.S. business investment continues to drop by James B. Kelleher CHICAGO (Reuters) - U.S. businesses continued to postpone financing new investments in their operations in January, but delinquencies among existing borrowers stabilized and outright defaults fell, according to a trade group for lenders that finance half the capital equipment investment in the United States. The Equipment Leasing and Finance Association told Reuters that the overall volume of financings used to fund equipment acquisitions fell to $3.4 billion in January, down 24.4 percent from last January and down 52 percent from the previous month.
* * * * * caveat lector: let the reader beware . . . 2010 US Census (2010 ACS Questionnaire) and the 2010 ACS Group Quarters:
[Disclaimer: PTG | AllAmericanGold.com does NOT necessarily agree with or endorse this (YouTube.com video by Jerry Day) point of view. Shown for discussion purposes only. YOU get the facts. Read the Fourth Amendment and the 2010 Census Constituent FAQs (both below) make you own informed decision regarding the 2010 US Census.]
The Census Is Getting Personal Without any apparent authority the Census Bureau has expanded it's information gathering activities. In addition to the once-in-10-years Census authorized by the Constitution, the Census Bureau conducts more in-depth "Surveys" of 250,000 Americans every month of every year. It has no Constitutional authority for that, in fact the Bureau is violating the 4th Amendment to the Bill of Rights by suggesting that Americans are "obligated" to provide any personal information whatsoever to government.
The Constitution allows the government to count people once every ten years, but does not require any American to BE COUNTED, OR TO PROVIDE ANY INFORMATION AT ALL, much less to provide personal information to the temporary worker and stranger who comes to your door with a Census Bureau badge.
Americans have been given very false impressions and presumptions of the authority of government to invade their lives. Even the Census takers themselves are sometimes misinformed of the limits of government.
Fourth Amendment Defined & Explained LectLaw.com FOURTH AMENDMENT [U.S. Constitution] 'The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.'
2010 Census Constituent FAQs 10. Do I have to respond to the 2010 Census? Yes, your participation in the 2010 Census is vital and required by law. Title 13 section 221 of the United States Code requires your response. Title 13 also requires that the Census Bureau keep respondents’ answers confidential and uses them only for tabulations that do not reveal any personal data about individuals or households.
11. What happens if I don’t respond? Although the law makes it a crime not to answer the decennial census, the American Community Survey and other mandatory censuses, and authorizes the courts to impose a fine of up to $5,000 for failure to respond, the Census Bureau views this approach as a last resort. Rather than emphasizing or seeking the imposition of penalties, we encourage response by explaining the importance of the questions we ask and how the information benefits the community.
Housing shaky as confidence sags on jobs worry John Parry and Wanfeng Zhou NEW YORK (Reuters) - U.S. consumer confidence sagged to a 10-month low this month on worries about jobs and fears gridlock in Washington could hinder efforts to restart employment, curbing the economic recovery. The housing market also remains rickety, data showed on Tuesday, further underscoring the economy's fragility. Confidence fell in February as consumers' short-term outlook on jobs worsened, according to a report from an industry group, stoking analysts' concerns that spending could falter and curb economic activity.
US housing market hit by ‘walkaways’ By Aline van Duy - FT Wayne B, a 62-year-old executive who works at an airport, and his wife Orapin, a dental assistant, are about to do something odd. The couple, with a pristine credit history, have decided to default on their $500,000 (£325,000, €370,000) mortgage on a townhouse in Livermore, a respectable city in California’s San Francisco Bay area. It is not that they are unable to afford the $4,600 monthly mortgage outgoings: they have never missed a payment. But the house they bought for $582,000 in May 2006 – at the peak of the US housing boom – is now not likely to be worth more than $315,000.
Home construction in metro Phoenix slowed in January by Catherine Reagor, The Arizona Republic Home construction in metro Phoenix slowed in January, but building is still ahead of a year ago. Housing values are up slightly The federal tax credit for homebuyers boosted new-home sales in metro Phoenix last year. But the expiration of the credit looms, and new-home sales and building have slowed again. In January, new-home closings in the Phoenix area fell to 479, the lowest level in decades, reports the "Phoenix Housing Market Letter." In November, Valley new-home sales surged to 1,312 as builders offered deals to rival foreclosure prices, and buyers rushed to take advantage of the tax credit. In December, there were 956 new-home sales.
Shiller concerned about housing [video] Yale economist Robert Shiller says he expects improvement in home prices by the summer, but remains concerned about the long-term outlook.
Case-Shiller Home Price Index Down 0.2% in December NEW YORK (Reuters) - Home prices unexpectedly slipped in December but the annual rate of decline slowed, reinforcing the housing market's rocky road to recovery, Standard & Poor's/Case-Shiller indexes showed on Tuesday. The S&P composite index of home prices in 20 metropolitan areas declined 0.2% in December, matching the dip in November, for a 3.1% annual drop. A Reuters survey had forecast that prices would be unchanged for the month and down 3.2% annually following a 5.3% annual drop in November.
No Job And $50,000 In Student Debt. Now What? Deb Weinstein - Forbes I had a plan to pay off my career-changing graduate school debt. Now all I can do is defer payments. Or win the lottery. I went to graduate school with a plan. I would duck out of the workforce for a year, use student loans to pay tuition and living expenses while I earned a master's in journalism, and then I'd land a (predictably low-paid) journalism day gig, while freelancing at night as an ad copywriter to pay off my student loans.
New York City Transit to Cut More Than 1,000 Jobs Associated Press - WSJ NEW YORK—New York's cash-strapped transit agency plans to cut more than 1,000 jobs, including up to 500 station agents. Metropolitan Transportation Authority Chairman Jay Walder said the layoffs are painful but the MTA must live within its means. The MTA has about 70,000 workers. The MTA said in December it was facing a $383 million budget gap. It's due largely to a cut in state aid and lower-than-expected revenues from a payroll tax.
Jittery Shoppers Dim Stores' Hopes By MIGUEL BUSTILLO, SARA MURRAY And RACHEL DODES - WSJ -- Americans show little sign of regaining the confidence that once made them world-champion shoppers, and that caution has retailers leery about the prospects for the economy in 2010. Several top store chains this week reported stronger results and lingering doubts. On Tuesday, Target Corp., Home Depot Inc. and Macy's Inc. joined a parade of consumer-focused companies in warning that sales gains will continue to be slow, especially in the year's first half.
Casket Makers Dig In as Sales Take Hit By DANA MATTIOLI - WSJ As their sales slow, some casket makers worry their business is hitting a dead end. Sales of caskets have been declining for years as more people choose cremation. But the economic slump is compounding the industry's woes as those who do pick caskets buy cheaper, more spartan accommodations for the hereafter. In response, casket makers are diversifying, building less expensive models and expanding cremation offerings. The country's biggest casket maker, Hillenbrand Inc., parent of Batesville Casket, is going outside the funeral business altogether. Earlier this year it said it would spend $435 million to buy K-Tron International Inc., which makes factory equipment.
Consumer confidence, job programs, Greenspan
Consumer confidence falls sharply in February NEW YORK (AP) — Americans' outlook on the economy went into relapse in February. Rising job worries sent a key barometer of confidence to its lowest point in 10 months, raising concerns about the U.S. economic recovery. The Conference Board said Tuesday its Consumer Confidence Index fell almost 11 points to 46 in February, down from a revised 56.5 in January. Analysts were expecting only a slight decrease to 55. It was the lowest level since the index recorded a 40.8 reading in April 2009.
U.S. Economy: Confidence Falls to Lowest Since April By Bob Willis Feb. 23 (Bloomberg) -- Confidence among U.S. consumers fell in February to the lowest level in 10 months, a sign that concern about job prospects may hold back the spending needed to sustain the recovery. The Conference Board’s confidence index slumped to 46, below the lowest forecast in a Bloomberg News survey of economists, from 56.5 in January, a report from the New York- based private research group showed today. A separate report showed home prices rose for a seventh month.
One million could lose jobless benefits in March By Tami Luhby NEW YORK (CNNMoney.com) -- More than 1 million people could lose their jobless benefits and health insurance subsidy in March if Congress doesn't act fast. When it returns from the President's Day recess on Monday, the Senate will have one week to extend the deadlines to apply for federal unemployment benefits and the COBRA health insurance subsidy. Currently, the jobless have until Feb. 28 to sign up.
Rich people still have jobs, poor people don't by BARBARA KIVIAT - Time.com Bob Herbert's column in yesterday's New York Times pointed out that the unemployment crisis is not hitting all parts of the income spectrum equally. I was pretty stunned by the numbers, which go like this: . . . . . . . . . . The data, which are for the fourth quarter, come from a new study (PDF) by Andrew Sum, Ishwar Khatiwada and Sheila Palma at Northeastern University's Center for Labor Market Studies. The researchers conclude that "what has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets."
Wealth Disparities in U.S. Approaching 1920s Levels Chart - Seekingalpha.com What a time to be an oligarch! All I wanted to do was vomit when I saw this. Folks, there is no way we can have economic prosperity in this country when the top 1% has all of the money. The middle class is basically being destroyed right in front of our very eyes. Consumption economies die when the consumers have no money to consume! I see growing signs of desperation and anger as the wealth of this nation continues to get transferred to the elite of this nation.
The Superman asset bubble Sale of first-edition comic pulls in $1 million at auction LONDON (MarketWatch) -- Forget gold, Chinese real estate or Greek debt derivatives. A new champion in the asset-bubble wars has emerged: Superman comics. A sale of the first Action Comics issue, from 1938, drew a winning bid of $1 million, according to an auction site called ComicConnect.com. That's three times what a copy of the premiere comic cost just last year. To be fair, last year's sale was of a slightly lower-quality copy, so the appreciation over the past 12 months may be somewhat less -- say, double. Still, compared with a lot of other investments over the past year, that's not too shabby. Returns over the longer term are only slightly less dramatic.
Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent
SBA Out of Funds to Facilitate Favorable Small Business Loans By LITA EPSTEIN - DailyFinance.com Funding ran out on Friday for a Small Business Administration program that increased loan guarantees and reduced or eliminated loan fees for its two largest small-business recovery lending programs -- a week or so earlier than had been expected. The most recent influx of funds for the American Reinvestment and Recovery Act program, $125 million, had been expected to last through February. This doesn't mean that loans will cease to be available to small businesses, but for now, those that need money will have to accept the relatively less-favorable terms of traditional SBA loans.
Why American Industry Could Become Dangerous By PETER COHAN - DailyFinance.com n January 2010, the Supreme Court gave corporations unlimited power to spend money on political campaigns, effectively swaying politicians in their favor. But by doing this, Washington could become less inclined to side with consumers and more inclined to rule in favor of the companies that they are supposed to regulate. The result could be ominous: products with safety problems could slip through. The reason: Because government, being funded by the corporations, would be more apt to look the other way instead of preventing a product from getting to market.
Data shows Wichita ranks low when it comes to wealth Wichita Business Journal Economists talk hopefully about a recovery, but the recession still holds America in its merciless grip. Key indicators tell the unhappy story. The national unemployment rate is hovering in double digits for the first time since 1983. Average wages have declined for two consecutive quarters, something that last occurred in the late 1970s. But the pain is not spread equally across the country. Many areas are being battered by the full force of the recession — Detroit and Phoenix are prime examples — yet others are remarkably comfortable.
Owner of Sears, Kmart plans to close 21 stores by spring USA Today HOFFMAN ESTATES, Ill. (AP) — Sears Holdings (SHLD) said Monday that it plans to shut 21 more stores around the country. The announcement brings to 56 the number of stores that the owner of Sears and Kmart has said over the past year that it will close. About 1,000 jobs will be affected when the stores close this spring.
Gerald Celente on GoldseekRadio
Insurance Frustration: Homeowners Angry Over Fixed Place Policies By CHRIS CUOMO and GERRY WAGSCHAL - ABC News For Homeowners Who Let Insurance Lapse, Banks Force More Expensive Policies Homeowners insurance serves two purposes -- it protects both the homeowner and the mortgage bank against a disaster. In this tough economy, more Americans have let their homeowners insurance lapse, but that decision has consequences. If they don't pay for coverage, their lenders will force a policy on them, at a much higher cost.
A Calamity in the Making By Bill Boyarsky A major reason for enacting health reform is the fate of elderly and disabled patients—especially the indigent—in nursing homes and assisted-care facilities. Except for the visits of relatives and thoughtful friends, they’re out of sight, out of mind, all but ignored by politicians and media tuning up for President Barack Obama’s health care summit Feb. 25. But nobody is affected more by the confluence of the health care stalemate and the recession than these patients. Care for roughly two-thirds of the almost 2 million in these facilities is paid for by Medicaid, the federal and state government aid program for those with low or no income. The stalemated health reform bill would extend Medicaid to cover more people. Another provision would create a federal long-term health insurance for the disabled, with benefits of $50 to $100 a day.
Obama: repeal health insurers' antitrust exemption By Ricardo Alonso-Zaldivar, AP - USA Today President Barack Obama urged Congress on Tuesday to strip health insurers of their decades-old exemption from federal antitrust laws — hardening his stand against the industry as he tries to revive his stalled health care overhaul. The White House announced Obama's support for a House bill that would repeal the industry's antitrust exemption, saying that would foster a more competitive marketplace and benefit consumers. The announcement follows Obama's call for new federal rate-setting powers that would give the Health and Human Services department the power to deny excessive increases in health insurance premiums.
Repealing the First Amendment The campaign finance crowd has more ideas for limiting speech It didn't take long for Congress to try an end-run around the Supreme Court's landmark January decision in Citizens United v. FEC. With a campaign finance bill due to be introduced this week, Democrats are proposing to repeal the First Amendment, at least for some people. Senator Chuck Schumer of New York and Representative Chris Van Hollen of Maryland want to prevent any company with more than 20% of foreign shareholders from spending money in U.S. elections, ban TARP recipients and government contractors from campaign spending, and require CEOs to pop up at the end of television commercials to "approve this message" just like politicians.
IPad's pre-release demand seen higher than iPhone's Silicon Valley / San Jose Business Journal A new survey suggests that demand for Apple Inc.'s new iPad tablet device is greater than what the iPhone saw before it was released. Analyst Mike Abramsky of market research firm RBC said a study by his company and ChangeWave Research showed that 13 percent of the 3,200 people surveyed indicated they are likely to buy an iPad.
When China Rules the World A Dig led by Martin Jacques - TruthDig.com China will soon become “the most powerful and influential country in the world,” says celebrated journalist Martin Jacques. It is predicted that by 2050, China’s economy will be twice that of the United States. What will Beijing do with all that power and influence?
PART 1: A Chinese Primacy in the Making Truthdig Interview: Martin Jacques . . . . So, my first question: “When China Rules the World: The End of the Western World and the Birth of a New Global Order.” Are you some kind of agent provocateur? This is to sell books? You don’t believe this, do you? Martin Jacques: Of course China will not rule the world any more than the United States has ruled the world for the last 60 years, or Britain before. But I think China will, in time, become the most powerful and influential country in the world, and that’s what I mean by ruling the world.
Truthdig Interview: Martin Jacques - Part 2 of 5 - Pluses and Minuses of Homogeny
Truthdig Interview: Martin Jacques - Part 3 of 5 - Coping With Political Change
Truthdig Interview: Martin Jacques - Part 4 of 5 - The Issue of Individualism
Truthdig Interview: Martin Jacques - Part 5 of 5 - Militarism Not on the Horizon
U.S. Allies in Europe Begin to Pull Back By William Pfaff - TruthDig.com PARIS—Last Friday five NATO governments made it known that they want American nuclear weapons removed from their territories. They include the Benelux three, together with Germany and Norway. The five reportedly will ask that all the European NATO governments endorse their position before a meeting in New York in May. The Dutch foreign minister described this as an attempt to seize the opportunity provided by President Barack Obama’s recent call for a de-nuclearized world. The latter is not likely to happen, but redundant or irrelevant—and by some reports incompetently guarded—American nuclear munitions have no place in Europe today. The Cold War was over 20 years ago. The American administration’s attention should at least be caught by the claim that these weapons may not be properly secured. One of Washington’s obsessions is the threat of a stolen nuclear weapon in terrorist hands.
US warns Iran 'time and patience is running out' AFP - Breitbart The United States warned Iran on Tuesday that "time and patience is running out" with its nuclear program, saying Tehran had shown no interest in allaying world fears.
After Iran Gets the Bomb James M. Lindsay and Ray Takeyh - Foreign Affairs Containment and Its Complications Summary: Despite international pressure, Iran appears to be continuing its march toward getting a nuclear bomb. But Washington can contain and mitigate the consequences of Tehran's nuclear defiance, keeping an abhorrent outcome from becoming a catastrophic one. The Islamic Republic of Iran is determined to become the world's tenth nuclear power. It is defying its international obligations and resisting concerted diplomatic pressure to stop it from enriching uranium. It has flouted several UN Security Council resolutions directing it to suspend enrichment and has refused to fully explain its nuclear activities to the International Atomic Energy Agency. Even a successful military strike against Iran's nuclear facilities would delay Iran's program by only a few years, and it would almost certainly harden Tehran's determination to go nuclear. The ongoing political unrest in Iran could topple the regime, leading to fundamental changes in Tehran's foreign policy and ending its pursuit of nuclear weapons. But that is an outcome that cannot be assumed. If Iran's nuclear program continues to progress at its current rate, Tehran could have the nuclear material needed to build a bomb before U.S. President Barack Obama's current term in office expires.
Lindsey Williams - The Elite are Smarter than You Think Prepare Now
David Walker Says U.S. on `Same Path' as Greece: Video David Walker, chief executive officer at Peter G. Peterson Foundation and a former U.S. comptroller general, talks with Bloomberg's Peter Cook about the U.S. budget deficit. Walker also discusses Greece's debt crisis and outlook for budget cuts.
Greece not alone in exploiting EU accounting flaws By Alex Chambers and Kirstin Ridley LONDON (Reuters) - Fury over Greece using derivatives that masked its debt conveniently ignores the fact that euro zone countries and EU bookkeepers have approved other deals worth billions of euros for over 10 years. Brussels has told Greece to provide details of a 2001 derivatives deal with U.S. investment bank Goldman Sachs (GS.N) that helped Athens dress up its public finances by deferring interest rate payments as it entered the euro. Goldman Sachs explained how the trades worked and that they were consistent with EU regulations in force at the time, in a statement made on its website on Sunday.
Falling Debt Dynamite Dominoes, The Coming Financial Catastrophe By: Andrew G Marshall - Market Oracle Understanding the Nature of the Global Economic Crisis - The people have been lulled into a false sense of safety under the rouse of a perceived “economic recovery.” Unfortunately, what the majority of people think does not make it so, especially when the people making the key decisions think and act to the contrary. The sovereign debt crises that have been unfolding in the past couple years and more recently in Greece, are canaries in the coal mine for the rest of Western “civilization.” The crisis threatens to spread to Spain, Portugal and Ireland; like dominoes, one country after another will collapse into a debt and currency crisis, all the way to America.
US Unemployment and the Technicolor Depression By Bill Bonner - The Daily Reckoning Worse than the Great Depression… Stocks ended Friday trading not much higher than where they began. Gold rose $3. Oil is trading over $80 a barrel this morning. And stocks in Asia are "recovering" from the Fed's discount rate increase of last week. If the market wanted to crash, it would have plenty of reasons to do so. China is tightening bank lending rules. Here in the US, there is the aforementioned Fed discount rate increase. In Europe, Greece is going back to the marketplace to raise more money. And in the Mideast, today's news tells us that many Kuwaiti could be wiped out by the latest downturn in their multi-billion dollar investment industry. Many things could go wrong; something will.
Bank Failure Friday Is Back As Feds Shut Down Four More Banks Last Week Mary Gordon - Business Week -- WASHINGTON (AP) -- Regulators shut four banks from California to Florida on Friday, boosting to 20 the number of U.S. bank failures this year following the 140 closures last year in the worst financial climate in decades. The Federal Deposit Insurance Corp. took over La Jolla Bank, FSB, in La Jolla, Calif. The bank had 10 branches and about $3.6 billion in assets and $2.8 billion in deposits.
Not So Fast for U.S. Economy, Inflation and therefore Fed Tightening By: Paul L Kasriel - Market Oracle Not so fast for the economy, for inflation and, therefore, for Fed tightening. The Commerce Department's first guess at Q4:2009 real GDP growth of 5.7% is likely to be the fastest quarterly annualized growth we see for some time. Rather, sequential annualized growth rates over the first three quarters of this year are going to be on the order of less than one-half that of the last year's fourth quarter. Although one month does not a trend make, consumer inflation in January already shows signs of abating a bit.
The euro will face bigger tests than Greece By George Soros - FT Otmar Issing, one of the fathers of the euro, correctly states the principle on which the single currency was founded. As he wrote in the FT last week, the euro was meant to be a monetary union but not a political one. Participating states established a common central bank but refused to surrender the right to tax their citizens to a common authority. This principle was enshrined in the Maastricht treaty and has since been rigorously interpreted by the German constitutional court. The euro was a unique and unusual construction whose viability is now being tested.
Pressures Rise Over Greece's Deficit Problem By MARCUS WALKER AND CHARLES FORELLE - WSJ A standoff between Greece and its euro-zone partners over the timing and terms of a potential rescue is nearing a crucial juncture as the cash-strapped country faces a key test of investor willingness to keep funding its ballooning deficit. Greece faces several important challenges in the coming days, including an expected bond auction, a planned general strike on Wednesday, and a visit from European Union officials that began Monday, aimed at pushing the country to take tougher steps to rein in its budget deficit.
Concern about FDIC’s proposals By Aline van Duynin - FT Proposed new rules from the Federal Deposit Insurance Corporation (FDIC) for banks seeking to raise funds in the securitised debt markets will create “substantial uncertainty” for investors and could further hamper efforts to revive this part of the capital markets, industry participants warned. In a letter to the FDIC, the US bank regulator which had requested comments on its so-called “safe harbour” rules to protect assets used as collateral for asset-backed securities when a bank fails, the American Securitization Forum, which represents investors, banks and issuers in this market, said it had “significant concerns”.
Glenn Beck Interview With David Walker on "Comeback America
How IMF is going to sell 191 tonnes of gold By Julian Phillips - Commodity Online When India announced its purchase of 200 tonnes of IMF gold in November, it added a statement that it might buy more of the International Monetary Fund's gold as well. This implied that it was limited by the IMF to the 200 tonnes it bought. But the IMF never said that. Rather it said it would announce the sale of any other portion of their gold to the public.
Holding on to $1500 forecast for gold, $25 silver By Jason Hamlin - Commodity Online Investors completely shrugged off news of the IMF gold sales as the price advanced $20 following the announcement. There are questions as to whether the IMF actually has physical gold to sell and there is historic correlation of gold going up after such announcements, not down as many would anticipate. GATA wrote about why the IMF sales don’t mean much and the market seemed to agree. The IMF announced their top priority was not to disrupt the gold markets, which is laughable in my opinion. Whether the gold will actually hit the open market still remains to be seen, but my take on the IMF sales is that it is much ado about nothing, other than the continued attempt to suppress the gold price.
Gold Gearing Up for a Big Move By: Howard Katz - Market Oracle There has been a sense in the gold market through the month of February that gold is going down, a sense of negativity and discouragement. Gold bugs are giving up and pulling out. The U.S. dollar index hit 81 on Friday. The Fed is tightening. “What more,” say the bears, “is there to say?” . . . . . . . . So here we face two giant forces causing higher prices: - the (second) upswing in the commodity pendulum, itself caused by the money created in the ‘80s and ‘90s; - the massive amount of money created by Helicopter Ben Bernanke in 2008-09 and still continuing.
Investing in Gold is a Move Toward Real Wealth By Bill Bonner -The Daily Reckoning Oil edged up towards $80 a barrel yesterday. And the latest numbers for producer prices showed more inflation than was expected. Meanwhile, jobless claims were up. And the Dow rose 86 points… What do investors see that we don’t? A mirage…the shimmering of hot money…money that comes from the feds. And they can’t believe it’s not real. But that’s the problem. No one can tell the difference between real money and the counterfeit stuff. Nor can they tell the difference between real prosperity and the phony variety. And who can really know whether the feds are doing some good…or just up to their usual tricks?
Economic Recovery and the Price of Gold By: Clif Droke - Market Oracle What a difference a month makes! It was only a month ago a leading financial publication came out with the story, "U.S. economy still hemorrhaging jobs despite stimulus." The press was all over the employment data and concluded that the stimulus had utterly failed. They were of course making the classic mistake of treating the employment numbers as coincident indicators, when in fact employment is the ultimate lagging indicator.
1001 Reasons to Own Gold By: Jeff Clark - Market Oracle The reason there are so many “reasons” is because gold is unlike any other asset. It...
responds to its own supply and demand
protects against short-sighted government actions and interventions
is a bellwether of market sentiment and economic outlook
protects against currency devaluation and inflation
is global
is one of the most beautiful metals ever found in the earth’s crust
is a store of value
is timeless
is money
How many assets can you say have all those characteristics? In spite of gold’s recent correction, the reasons haven’t decreased. In fact, the case for holding gold is stronger than ever. And over the past two weeks, a few “reasons” have surfaced that have fallen mostly under the radar. These, I believe, portend a higher gold price.
Redburn Partners On The Coming Gold War: "Gold Is Money And Nothing Else" by Tyler Durden - Zero Hedge A must read paper by Redburn Partners, "Gold War - Gold is money and nothing else", written in November 2007, which due to its extreme prescience on not only the shift of the economy following the bursting of the credit bubble, but being virtually spot on in its prediction on the price of gold, can serve as an sufficiently comprehensive introduction to anyone wishing to get up to speed with the primary forces determining the price of gold and its implications in a fiat-money world (and especially the prevailing current variant in which competitive devaluations galore).
Firm Dollar Fails To Spook Gold By: Rick Ackerma - GoldSeek The price of gold has corrected 15% since Comex futures hit an all-time high of $1229 per ounce in early December. How much more weakness will it take for gold to finish basing for the next big move -- a rally that we expect to carry into the mid-$1400s? A definitive answer could come this week, since the U.S. dollar, which has been in a bear rally since Thanksgiving, is close to some key Hidden Pivot resistance points. If the dollar were to blow past them it would be akin to the groundhog seeing his shadow – i.e., yet more weeks of winter for gold investors. However, there is evidence to suggest that it might be winter of the mildest sort, since gold has begun to show resilience whenever the dollar rallies.
Armed robbers steal 2000 ounces of gold from Troy Resources in Brazil APP - Perth, AU -- TROY Resources said today that armed robbers stole 2000 ounces of gold dore bars from its Andorinhas mine in Brazil after taking workers hostage. Troy said three workers were taken hostage but released unharmed after the theft on Monday and the loss is fully covered by the company's insurance. "A group of armed robbers took three site employees hostage on the road leaving the mine and returned to the Andorinhas site where approximately 2000 ounces of gold dore was taken," Troy said in a statement to the stock exchange on today. "The hostages were then released, unharmed."
Ron Paul: Suspend The Income Tax For 3-4 Years! (CNBC 1/2)
U.S. Dollar Entering Consolidation Phase By: David Petch - Market Oracle It appears that we are either just entering the consolidation phase of the US dollar index for the next 6 to 8 weeks or there is one final move to the upside before entering the consolidation phase. Every market around the globe is experiencing difficulty in one form or another which is associated with high debt levels. As much as other countries would like to totally switch out of US dollars to other currencies, this is about as realistic as the US and Canadian governments pulling oil out of gas stations and replacing it with natural gas…there are mechanisms in place that slowly can be dismantled but there is a lot of infrastructure changes involved, the markets having many internal layers of infrastructure. At some point in the future, the USD is going to get clipped, but as long as most debt still is in USD, this paper game will continue.
Dollar Falls Versus Euro on Bets Fed Will Keep Rates on Hold By Yoshiaki Nohara and Ron Harui - Business Week The dollar fell against the euro on prospects the Federal Reserve will hold its target interest rate near zero to sustain a recovery in the world’s biggest economy. The U.S. currency dropped against the yen for a third day on speculation Fed Chairman Ben S. Bernanke will tell Congress tomorrow that last week’s increase in the discount rate isn’t intended to drive up borrowing costs. The euro was near an 11- month low versus the Swiss franc as the International Monetary Fund sent a staff member to Athens to provide assistance, adding to concern over the nation’s debt crisis. The yen rose against Brazil’s real and the South Korean won as Asian stocks fell.
Solution to the Credit Crisis? The Campaign for State-owned Banks By: Ellen Brown - Market Oracle While bank bailouts fatten Wall Street, states continue to battle the credit crisis. In the search for innovative solutions, some political candidates are proposing that states generate their own credit by setting up their own banks. State budgets for 2010 face the largest shortfalls on record, totaling $194 billion or 28 percent of state budgets; and 2011 is expected to be worse. Unemployment has already officially hit 10 percent, and many economists expect it to rise higher. Continued high unemployment will keep state income tax receipts at low levels and increase demand for Medicaid and other essential services states provide.
Banks Pressure Customers to Keep Fees Rolling In By ANDREW MARTIN and RON LIEBER - NY Times For many households trying to improve their finances, tossing out pitches from the bank has become almost automatic. But in recent weeks, Chase has been fanning special letters out to consumers with an offer that it urges them not to refuse. “Your debit card may not work the same way anymore, even if you just made a deposit. Unless we hear from you,” the message, emblazoned in large red type, warns. “If you don’t contact us, your everyday debit card transactions that overdraw your account will not be authorized after August 15, 2010 — even in an emergency,” with “even in an emergency” underlined for emphasis.
Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs By Richard Teitelbaum Feb. 23 (Bloomberg) -- When a congressional panel convened a hearing on the government rescue of American International Group Inc. in January, the public scolding of Treasury Secretary Timothy F. Geithner got the most attention. Lawmakers said the former head of the New York Federal Reserve Bank had presided over a backdoor bailout of Wall Street firms and a coverup. Geithner countered that he had acted properly to avert the collapse of the financial system.
Government Sachs By Bill Bonner - Daily Reckoning Last week, Greek Finance Minister George Papaconstantinou slipped. He said not what he should have said, nor what he wanted to say. Unwittingly, he said something that was true: his country's budget was "out of control." He begged for more time to straighten it out. "We're trying to change the course of the Titanic," he said. The EU ministers gave him a month. Mr. Papaconstantinou was speaking of Greece. But he described much of Europe, Britain, Japan and the US. And, in his fortunate metaphor, he prophesied. The big ships can't be turned around. They're going to sink.
Goldman Sachs Says Greek Swaps Not ‘Inappropriate’ By Gavin Finch and Andrew MacAskill Feb. 22 (Bloomberg) -- Goldman Sachs Group Inc. did “nothing inappropriate” when it arranged currency swaps for Greece that reduced the nation’s national debt by 2.37 billion euros ($3.2 billion), a top executive said. “They did produce a rather small, but nevertheless not insignificant reduction, in Greece’s debt-to-GDP ratio,” Gerald Corrigan, chairman of Goldman Sachs’s regulated bank subsidiary, told a panel of U.K. lawmakers today. The swaps were “in conformity with existing rules and procedures.”
Wall Street's Bailout Hustle Matt Taibbi - Silver Bear Cafe Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America's pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman's role in precipitating the global financial crisis.
Fed's Yellen: U.S. economy still needs ultra-low rates By Ann Saphir SAN DIEGO (Reuters) - The U.S. economy still needs extraordinarily low interest rates, as inflation is "undesirably low" and growth will likely be sluggish for several years, a top Federal Reserve official said Monday. San Francisco Federal Reserve Bank President Janet Yellen told the University of San Diego's business school that the U.S. economy will likely grow at a pace of about 3.5 percent this year and 4.5 percent next year. "Even though the recession appears to be over, it does not mean that we are where we want to be. Even with my moderate growth forecast, the economy will be operating well below its potential for several years," Yellen said, according to prepared remarks.
Don’t Kid Yourself. Interest Rates are Going Up. by madhedgefundtrader - Zero Hedge Make no mistake. The shot has been fired across the bow, the chink has appeared in the armor, and the crack has opened up in the dike. The Fed’s move to raise the discount rate on Thursday from 0.5% to 0.75% may have been technical, widely telegraphed by the Fed minutes, and an unwind of an artificial spike down in rates the economy no longer needs. Sure there was only $15 billion in loans outstanding at the Fed window, against $1 trillion in excess bank reserves. But it was definitely an UP move for rates. The liquidity tide that has been floating all asset boats has reversed and is starting to recede. We’re about to find out who has been swimming without a swimming suit. The train is leaving the station.
Economic Recovery to Hurt US Treasuries By Addison Wiggin - The Daily Reckoning Most economists now “expect the recovery to remain firmly on track.” That’s the word today from the National Association of Business Economics (NABE), the group officially tasked with deciding if the economy is growing or receding. The NABE forecast 3.1% GDP growth this year, largely in line with their last broadcast back in November. That “firm recovery” will also move the unemployment rate down one tenth of a point this year, the group forecast, from 9.7% now to 9.6% in December. That’s good, right? C’mon… We never trust good news!
Gridlock Is Good for Bernanke Dollar in Fight Over Rate Audits By Scott Lanman and Mike Dorning -- Feb. 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may be in favor of a do-nothing Congress when it comes to his fight over audits of monetary policy. Opposition in the Senate to a measure that would allow the Government Accountability Office to examine Fed interest-rate decisions is likely to doom the populist cause after it passed in the House Dec. 11, according to Gregory R. Valliere, a chief strategist at Potomac Research Group in Washington. Its defeat would remove a threat that might weaken the dollar while giving Bernanke, who testifies before Congress this week, a freer hand to raise rates as he seeks to unwind a $1 trillion expansion of credit, investors said.
Ron Paul: America Is With Me On Foreign Policy (CNBC 2/2)
Civilization's Wrecking Crew J. R. Nyquist - Silver Bear Cafe Joseph Schumpeter once explained that many Marxists and Keynesians never read a line of Marx or Keynes. According to Thomas Sowell, "They have gotten their ideas second- or third-hand from the intelligentsia." One might say that Marxism and Keynesianism bear a resemblance to disease. If Bubonic plague is carried by flea-infested rats, Marxism and Keynesianism are carried by intellectuals. In the first instance, we are dealing with dangerous bacteria; in the second instance, we are dealing with dangerous ideas.
World of debate rages over stimulus fallout By David M. Dickson - Washington Times Trillions buy an uneven recovery Now that the patient seems to have survived, the world's economic doctors are trying to determine what the treatment — trillions and trillions of dollars in government stimulus spending — did to the long-term health of the global economy. The longest, deepest global recession since the Great Depression ended last summer. For the final quarter of 2009, China and India reported strong growth and the United States said gross domestic product rose at an annual rate of 5.7 percent.
Commercial Real Estate Apocalypse in 2011-2012 Mike Shedlock - Global Economic Trend Analysis Inquiring minds are digging deep into a 190 page PDF by the Congressional Oversight Panel regarding Commercial Real Estate Losses and the Risk to Financial Stability. Executive Summary Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.
Congressional Oversight Panel FEBRUARY OVERSIGHT REPORT Commercial Real Estate Losses and the Risk to Financial Stability
Elizabeth Warren: Why Washington Is Not Reforming the Financial System JESSE'S CAFÉ AMÉRICAIN -- Elizabeth Warren Discussing the Lack of Bank Reform on the Bill Maher Show. "The problems could not be more obvious, and quite frankly, the solutions are just about that obvious, but we just can't seem to get the two together...The reason that we are not changing things right now is because the banks have lobbyists in Washington in numbers I have never seen...People who just want to advocate for American families, people who want some changes to level the playing field do not have that kind of lobbying power. And so what we are really watching here is a David and Goliath story."
Gasoline heading above $3 a gallon by this summer; oil hits $80 a barrel By Chris Kahn, AP USA Today NEW YORK — Retail gas prices likely bottomed out last week, and they're again headed to above $3 a gallon this summer, experts said Monday. Pump prices typically rise this time of year as refineries switch to a more expensive grade of gas. But this year, prices are increasing after millions of Americans received pink slips and kept their cars in the driveway.
As Obama Unveils New Health Care Plan, Old Politics Await By JOSEPH LAZZARO - Daily Finance President Barack Obama unveiled a revised proposal to reform the health care system Monday. While it may attract new public support, it's likely to encounter the same old resistance: partisan opposition in Congress. Among other changes, the president has proposed the creation of a new Health Insurance Rate Authority to review changes in state-level health insurance premiums. The panel would "help States determine how rate review will be enforced and monitor insurance market behavior," the administration's proposal says. Controversial changes such as Anthem Blue Cross of California's recently announced 39% increase in premiums would presumably come under its review.
Obama Renews Health Push By LAURA MECKLER - WSJ Retooled $950 Billion Plan Aims to Get Legislation Through Over Republican Objections WASHINGTON—President Barack Obama is upping the ante on health care. In a last-ditch effort to salvage his overhaul of the sector, the president unveiled a $950 billion plan that lays the groundwork for his party to try pushing its legislation through Congress without Republican support. Instead of paring his ambitions, as some in the White House had recommended, the president proposed a new plan based on what the Senate passed in December, adding more spending, more subsidies and a revised mix of taxes.
How Obama wants to pay for health reform By Jeanne Saha - CNNMoney President Obama unveiled a $950 billion proposal for reforming health care Monday, and promised that the plan is fully paid for and would even reduce the deficit over 10 years by $100 billion. The new plan is a compromise of the House and Senate bills passed last year. The White House cost estimates were based on Congressional Budget Office (CBO) estimates of Congress' bills. The CBO, however, will not be doing a separate analysis of the president's proposal, at least not unless it is formally introduced as a bill at some point.
Premiums jump 14% on Medicare private plans By Ricardo Alonso-Zaldivar, AP USA Today WASHINGTON — Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year — another sign that spiraling costs are a problem even for those with solid insurance. A study to be released Friday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2% on average in 2010, after an increase of only 5.2% the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare.
ObamaCare, the Upgrade Peter Suderman - Reason.com In preparation for Thursday's almost-certain-to-feature-no-bipartisanship bipartisan health care summit, President Obama released a detailed upgrade to his health care reform plan this morning. The proposal, along with the summit, represent a last-ditch, last-chance, last-hurrah, end-of-the-road, double-overtime final showdown in which the White House puts it all on the line, goes for the gold, and takes it to the limit for the American people, or something. Whatever your cliche of choice, what matters is that even some of reform's most ardent supporters seem to recognize that this is it for health care reform; if it doesn't pass now, then the only thing left will be to write R.I.P. columns and fight over the book deals about How It Failed and Why The System Is Broken.
Obama Endorses Medicare Tax, More Drugmaker Fees By Ryan J. Donmoyer and Nicole Gaouette Feb. 22 (Bloomberg) -- President Barack Obama, seeking to break an impasse over health-care legislation, proposed a plan that includes the first Medicare tax on capital gains and higher fees on companies such as Pfizer Inc. and Merck & Co. to help cover millions of uninsured Americans. The measure, which also scales back a tax on high-end health benefits that was opposed by organized labor, marks a reversal from months of leaving the legislation’s details largely up to congressional Democrats, who have failed to agree on a plan. Obama relied mostly on a Senate bill passed in December, with elements of a House version passed in November.
Medicine for Diabetes Responsible for More Than 83,000 Deaths by Sara Sanz Pinto - Pravda.ru -- American authorities guarantee that the GlaxoSmithKline knew that the Avandia could provoke heart attacks Avandia, a drug often prescribed to patients with diabetes, may have caused millions of heart attacks around the world. This is the conclusion of a 334-page report submitted by the U.S. Senate on Saturday. According to the American authorities, the GlaxoSmith-Kline (GSK), pharmaceutical company that produces the drug, knew the risks to which patients were exposed, but always kept them hidden from the public. "GSK executives tried to intimidate independent researchers, using strategies to minimize or hide the findings that Avandia could increase cardiovascular risks and hid studies that were developing competing drugs with reduced risk," says the report.
Plastic bags: To pay or not to pay? By Melissa Eddy AP - Washington Times For decades the standard question at U.S. grocery store checkout counters has been "paper or plastic?" But since January, consumers in Washington have faced a different question: "Will you pay 5 cents for a bag?" Europeans long have accepted the idea of providing their own baskets, bags or nets to carry their purchases, or paying for bags. But in the United States, where retailers go out of their way to cater to customers' needs, being given a free paper or plastic bag to carry purchases is largely taken for granted. So not all Washingtonians are pleased.
Ford’s Jobless Recovery Means No Hiring in Retooling By Keith Naughton Feb. 22 (Bloomberg) -- Ford Motor Co.’s $1.6 billion U.S. investment plan will retool plants to build fuel-efficient autos to compete with Toyota Motor Corp. models. Hiring workers paid on par with Toyota’s will have to wait. After cutting 47 percent of its North American workforce since 2006, Ford isn’t ready to resume adding employees even as it upgrades factories and grabs a larger share of U.S. sales, Chief Financial Officer Lewis Booth said in an interview. One analyst estimates Ford may not hire for two years.
US senate moves ahead on $15bn jobs bill By Alan Rappeport - FT The US Senate on Monday voted to move forward on a $15bn jobs bill proposed by Harry Reid, leader of the Democratic majority in the Senate. The 62-30 vote in favour of ending “cloture” prevents a Republican filibuster and came as an exception to the months of gridlock in Congress. It will pave the way for a jobs bill to clear the Senate, just as other critical employment benefits are set to expire.
The 'Stimulus' Actually Raised Unemployment By ALAN REYNOLDS - Investors.com President Obama seized on the one-year anniversary of the American Recovery and Reinvestment Act (ARRA) as an opportunity to take credit for the belated and tenuous economic recovery. But the economy always recovered from recessions, long before anyone imagined that government borrowing could "create jobs." And we didn't used to have to wait nearly two years for signs of recovery, as we did this time.
The Decline: The Geography of a Recession by LaToya Egwuekwe According to the U.S. Department of Labor's Bureau of Labor Statistics, there are nearly 30 million people currently unemployed -- that's including those involuntarily working parttime and those who want a job, but have given up on trying to find one. In the face of the worst economic upheaval since the Great Depression, millions of Americans are hurting. "The Decline: The Geography of a Recession," as created by labor writer LaToya Egwuekwe, serves as a vivid representation of just how much. Watch the deteriorating transformation of the U.S. economy from January 2007 -- approximately one year before the start of the recession -- to the most recent unemployment data available today
The Jobs Aren't Coming Back: By PETER COHAN - Daily Finance Outdated Ideas Fuel Economists' Unrealistic Optimism Economists are forecasting a recovering U.S. economy. It's great that they're optimistic, but are they right? It could be that they're applying old forecasting models to an economy that has changed in fundamental ways. After all, since the advent of the Internet in the mid-1990s, businesses have found that they can meet demand with fewer workers. Outsourcing to cheaper labor markets has also become standard business practice. And that could mean a permanent class of millions of former workers who never get reemployed.
Americans Who Know Their Rights Are The Real Target Of Napolitano’s “Domestic Terror” Warning Paul Joseph Watson - Prison Planet.com Homeland Security chief says Muslim extremists at home are the main threat, but state and federal documents tell a different story Homeland Security chief Janet Napolitano cited examples of Muslim extremists in her warning Sunday that domestic terrorists were now as much a focus as international terrorism, but actual training manuals being used by state and federal authorities across America reveal that the primary target of the anti-terror apparatus hits a lot closer to home. “Americans who turn to terrorism and plot against the U.S. are now as big a concern as international terrorists, Homeland Security Secretary Janet Napolitano said Sunday,” reports the Associated Press. “In the last year, Napolitano said, she’s witnessed a movement from international extremism to domestic extremism – cases in which Americans radicalized and decided to plot attacks against the country.”
Napolitano Secretly Hosts Terrorist Groups In D.C. Corruption Chronicles - A Judicial Watch Blog In the Obama Administration’s latest effort to befriend radical Muslims, the cabinet official in charge of protecting the country’s safety covertly met with a group of extremist Arab, Muslim and Sikh organizations to discuss national security matters. Briefing radical Islamists who want to murder Americans about homeland security measures may seem like a bizarre tactic to counter terrorism, but it’s the center of Obama’s famous change rhetoric. Homeland Security Secretary Janet Napolitano, most concerned about a wave of anti-Muslim backlash after the Ft. Hood massacre, and her senior staff privately met in Washington D.C. with the groups. Among them was the terrorist Muslim Brotherhood, which is a sort of parent organization of Hamas and Al Qaeda.
Huckabee's blast exposes rift on the right By Ralph Z. Hallow - Washington Times Conservatives' conference 'less Republican' In a sign of lingering divisions on the right, former Arkansas Gov. Mike Huckabee blasted last week's Conservative Political Action Conference, the largest meeting of conservatives in the nation, saying it was unrepresentative of the Republican Party as a whole. "CPAC has become increasingly more libertarian and less Republican over the last years - one of the reasons I didn't go this year," said the former Southern Baptist minister, who enjoys a devoted following among Christian conservative voters and who ran for the GOP presidential nomination in 2008.
Iran to 'hide nuclear plants inside mountains' AFP - Breitbart Iran said on Monday it is considering plans to build two new uranium enrichment plants concealed inside mountains to avert air strikes, drawing condemnation from the United States. The announcement from Iran's atomic chief Ali Akbar Salehi came soon after top US General David Petraeus warned that Washington would now pursue a "pressure track" against Iran to thwart its galloping nuclear programme.
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The Decline: The Geography of a Recession by LaToya Egwuekwe
4 banks fail, 20 total in 2010 By Julianne Pepitone NEW YORK (CNNMoney.com) -- Regulators shuttered four banks Friday night, bringing the tally of institutions that have gone under so far this year to 20. Fridays closures cost the Federal Deposit Insurance Corporation almost $1.1 billion. Texas, Florida, Illinois and California each had one bank closed by regulators. The largest failure of the night was La Jolla Bank, FSB of La Jolla, California. It had approximately $3.6 billion in total assets and $2.8 billion in total deposits. OneWest Bank, FSB of Pasadena, California, assumed all of the Deposits of La Jolla Bank and agreed to purchase almost all of its assets.
Banks in Calif., Ill., Fla., Texas are shut down WASHINGTON (AP) — Regulators shut four banks from California to Florida on Friday, boosting to 20 the number of U.S. bank failures this year following the 140 closures last year in the worst financial climate in decades. The Federal Deposit Insurance Corp. took over La Jolla Bank, FSB, in La Jolla, Calif. The bank had 10 branches and about $3.6 billion in assets and $2.8 billion in deposits. Also seized was George Washington Savings Bank in Orland Park, Ill. It had four branches and about $412.8 million in assets and $397 million in deposits. The FDIC said OneWest Bank in Pasadena, Calif., agreed to assume all deposits and essentially all assets of La Jolla Bank. The takeover is expected to cost the deposit insurance fund an estimated $882.3 million.
Citi Warns of Withdrawal Gate by Ira Stoll - Future of Capitalism Seen on a recent Citibank statement: "Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change."
Citigroup Says Feds Ordered 7 Day Restriction On Bank Withdrawals Paul Joseph Watson - Prison Planet.com Announcement stokes fears of old fashioned bank runs if economy takes a turn for the worse A new advisory being sent by America’s third largest bank to its account holders has stoked fears that major financial institutions could be preparing for old fashioned bank runs if the economy takes a turn for the worse. Originally reported by John Carney over at the Business Insider website, Citigroup is sending the following information to customers along with their bank statements. “Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”
Governors' Gathering Hears That Worse Deficits Are Coming By DOUGLAS MCINTYRE - Daily Finance The nation's governors have seen the future of state finances, and that future looks poor. That was the word from Vermont Governor Jim Douglas (pictured) at this weekend's opening press conference of the winter meeting of the National Governors Association. "The situation is fairly poor for a lot of states around the country," Reuters quotes Douglas, the current chairman of the group, as saying. "In fact, most states." The governors reviewed a report based on preliminary findings by 45 state treasurers that showed states face widening budget gaps despite deep spending cuts.
Bad economies in states to worsen: governors WASHINGTON (Reuters) - The already gloomy conditions of states' economies are set to worsen, according to preliminary survey findings from the National Governors Association released on Saturday. "The situation is fairly poor for a lot of states around the country. In fact, most states," Vermont Governor Jim Douglas, who is chairman of the association, said at a press conference at its annual meeting. "What we're finding out from a fiscal standpoint is that the worst is yet to come," Douglas said.
Interest on U.S. government debt, a brewing time bomb MICHAEL POLLARO THE CONTRARIAN TAKE It’s not talked about much, at least by mainstream analysts, but make no mistake, it’s a time bomb, locked and loaded, and it’s set to blow the U.S. government’s budget sky high. That time bomb? The interest cost on the government’s debt. And what you ask will light the fuse? The end of the 30 year bull market in U.S. government debt, the end of record low interest rates. In my opinion, unless politicians decide to renege on the government’s obligations, it’s not a matter of if, it’s a matter of when. And in the end neither the U.S. government nor the Federal Reserve can do anything about it.
Gold extends gains as dollar dips SINGAPORE (Commodity Online) : Gold prices extended gains in Asian trade Monday mainly on dollar weakness over Greece bailout speculations. Spot gold was seen trading at $1126.58 an ounce at 11.30 a.m Singapore time while $1122.36 an ounce at the same time as the euro firmed against the dollar.
‘Inflation is a positive sign for gold market’ Interview with Lawrence Roulston - Commodity Online . . . . Certainly the situation remains very difficult, and it is not sustainable. But that doesn't necessarily imply that the U.S. economy will stop growing or revert back into a recession. There is effectively a mechanism in place that is taking the pressure off and that mechanism is the value of the U.S. dollar. The dollar has lost about half of its value relative to the Euro over the last five years. If your portfolio and assets are valued in dollar terms and are the same as they were five years ago, you've actually lost half the value because the dollar is worth half of what it was.
IMF sale may not stop gold from hitting $1,200 by April 1 By Shashank Shekhar Emirates Business 24/7 (REUTERS) Some analysts believe gold could touch $1,500 an ounce by the end of this yea. A rising demand for gold from financial institutions looking forward to restructure their portfolio before March has offset a possible decline of the yellow metal's prices on the back of a recent International Monetary Fund (IMF) announcement that it plans to sell remaining 191.3 tonnes of gold. Analysts based in Dubai observed that financial institutions, which are looking for safer havens in the countries where the financial year comes to an end in March, are heavily buying into the yellow metal, gold.
Gold in upward phase of long-term bull market By Jeffrey Nichols - Commodity Online The snap-back in the U.S. dollar price of gold this past week to $1,100 an ounce may mark the beginning of a new upward phase in the metal’s long-term bull market. Importantly, gold found support near its early February 14-week low point of $1,045 after a two-month-long retreat. But until gold breaks above its December U.S. dollar-denominated all-time high of $1,227 many players in U.S. markets will remain skeptical of the bull market’s staying power. A break above that level could touch off another speculative buying surge and drive the price much higher. But, meanwhile, developments elsewhere promise to move gold higher – from recent levels, first to $1,150, then $1,200 and eventually to new heights.
Sumitomo's Takai Discusses Gold Price, U.S. Dollar
Gold shows great resilience in the face of adversity Author: Lawrence Williams - MineWeb The gold price has recovered very quickly in each case from two successive announcements which were seen by some as marking the end of the gold bull market. A couple of days ago, Mineweb published an article for which the headline noted that the adverse impact on the gold price of the IMF announcement that it would broaden the sale base for the remaining 191.3 tonnes of gold on offer would be a one or two day wonder. And so it proved - probably less than a day in fact for the initial recovery to kick in, but then the price was knocked again by the U.S Fed raising its discount rate and thus effectively providing the first sign of monetary tightening in the U.S. Gold plunged again for less than 24 hours before it recovered virtually to pre-IMF sale announcement levels once more. And what's more the yellow metal achieved all this in the face of dollar strength - usually a precursor of gold price weakness.
Why Rogers, Soros, Faber invest in commodities DUBAI (Commodity Online): Commodities are the hottest investment assets that are emerging in a world that is increasingly shaken by the collapse of several currencies, ranging from the US dollar to the Euro. So when stock markets are on fire and bank interests are falling, where do people find investment solace? Yes, you guessed it right. It is in commodities that globally renowned investors like Jim Rogers, Marc Faber and George Soros are putting their money in.
IMF gold sale plan poses tricky twist for market By Veronica Brown & Jan Harvey LONDON (Reuters) - The International Monetary Funds long-planned sale of its 403 tonnes of gold has taken on a new twist that may chip away at one of the fundamental drivers for higher gold prices. The IMFs strategy to capitalise on surging gold to raise new resources for lending was first announced in 2008 and had been comfortably received by the market, with expectations for enthusiastic takers amongst Asias central banks.
Will China miss IMF gold buying bus? By David Lew - Commodity Online Will China miss buying gold from the International Monetary Fund (IMF)? It looks that China will miss the bus in buying gold from IMF as the latter is going ahead to sell 191 tonnes of gold soon in the open bullion market. Ever since India bought 200 tonnes of gold from the IMF in November 2009, speculation has been rife in the bullion market that China that has ambitious plans to mop up gold reserves would jump into the fray and buy the remaining yellow metal stock from IMF.
Palladium Still Shines by Jennifer Barry - Financial Sense Palladium had the most tumultuous decade of all the precious metals. Although it's hard to imagine today, it started the century more expensive than platinum. While gold and silver were languishing in 2000, palladium was soaring. During the technology bubble, a perceived shortage of tantalum caused producers of cell phones and other electronic gadgets to switch to palladium which was then much cheaper. As the price zoomed, Ford feared that it would not get enough of the element from Russia. The corporation bought large quantities in panic, pushing the price over US$1000.
Europe's monetary union has become an instrument of deflation torture By Ambrose Evans-Pritchard - Telegraph -- If the purpose of the euro was to bind Europe's tribes together and serve as catalyst for political union, EU elites must have been chastened by the outpouring of anti-German feeling in the Greek parliament last week. The Left called for war damages for Axis occupation and accused German banks of playing a "wretched game of profiteering at the expense of the Greek people". Mainstream New Democracy was no nicer. "How does Germany have the cheek to attack us over our finances when it has still not paid compensation for Greece's war victims? There are still Greeks weeping for lost brothers," said ex-minister Margaritis Tzimas.
Are US Taxpayers Bailing Out Greece? by Ron Paul - Lew Rockwell Last week we were reminded that ours is not the only country suffering from severe economic turmoil. The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.
Investors Bet Greece Won't Spill By DAVE KANSAS - WSJ Despite worries that the fiscal problems in Greece and other European countries will grow and spread, some investors have reacted by buying up what appear to be risky assets and shunning more-conservative investments. The biggest beneficiaries of the shift have been central and eastern European markets, though the strategy extends to other emerging markets. The argument is that Greece will have little impact on global economic growth but it might force central bankers to keep interest rates low, making these investments attractive.
Debt Deals Haunt Europe By CHARLES FORELLE AND SUSANNE CRAIG - WSJ Investors Re-Examine Complex Financial Maneuvers Used to Hide Borrowings Concerns that Greece and other struggling European nations may not be able to repay their debts are focusing investor attention on another big worry: Economies across the Continent have used complex financial transactions—sometimes in secret—to hide the true size of their debts and deficits. Investors long turned a blind eye to European governments' aggressive bookkeeping, aimed at meeting the euro zone's fiscal ceilings. Countries using the euro currency have a rich history of exotic maneuvers aimed at meeting rules requiring members to cap debt levels at 60% of their gross domestic product and their annual budget deficits to no more than 3%. Despite criticism, European leaders deemed many of these moves acceptable as they sought the long-planned currency union.
Euro Worst to Come as Greece Hammerlocks ECB on Interest Rates By Liz Capo McCormick and Oliver Biggadike Feb. 22 (Bloomberg) -- Derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece. Short-term rates for borrowing in euros in the forwards market are the cheapest relative to loans in dollars since September. The 50 percent collapse in that spread this month signals investors are betting the European Central Bank will keep its benchmark at a record low, sacrificing euro strength to prevent deficit-cutting by debt-laden economies in the region from stymieing growth.
Greece's Painful Choice By Natascha Gewaltig - Forbes It can't devalue its currency. The rest of Europe isn't wild about a bailout. What can Greece do? Action Economics suggests taking a page out of Germany's early 1990s playbook The European Union failed to give Greece a bailout after policy meetings this week—and yields on Greek government debt are rising again as markets remain concerned about the sustainability of the nation's finances. Critics blame the European Monetary Union (EMU)—the foundation of the euro—as the main reason behind Greece's current problems. Simply put, Greece's membership in EMU leaves it unable to employ a classic "quick fix"—a unilateral currency devaluation.
Asia Leads the Global End to Cheap Money By BETTINA WASSENER - NY Times HONG KONG — The U.S. Federal Reserve has just kick-started its cautious exit from unprecedented emergency lending measures — but the process has been going on for months in the Asia-Pacific region, underscoring the two-speed path of the global recovery. Countries from Australia to China have been leading the global march away from easy credit as their economies rebound strongly, while Europe and the United States are still trying to find a solid footing. “The historic shift in the center of economic gravity to the Asian region is continuing, and if anything it has been highlighted by the different performances during the crisis and initial recovery,” Glenn Stevens, the governor of Australia’s central bank, told legislators in Canberra on Friday.
The Chinese Are Selling Treasuries – So What Are They Buying? BY MARTIN HUTCHINSON, Contributing Editor, Money Morning -- In the monthly U.S. Treasury report this week, it was announced that China had sold $34.2 billion of Treasuries in December (or allowed short-term ones to run off), making Japan once again the largest holder of U.S. Treasuries. The battle between China and Japan for the title of largest holder of this dubious asset is not very interesting. What's more interesting is the question of where China is instead opting to invest. After all, $34.2 billion is a fair chunk of change, and China's overall reserves are growing - not shrinking - and now total $2.4 trillion.
Peter Schiff on CNBC 19 Feb 2010
Central Banks Are On the Defensive By: Gary North - GoldSeek All over the Western world, central banks are under pressure from their governments to inflate. Governments are not satisfied with short-term interest rates at historic lows, such as a federal funds rate of 0% to 0.25% in the United States. Politicians want rapid economic growth, and they are convinced that this is possible after a major recession only with more fiat money. In short, they have accurately understood the message of their college-level textbooks. This is what textbooks have been saying for over 50 years. This is the new, improved Keynesianism. Keynes focused on the need for large government deficits and increased government spending, not monetary inflation. The new Keynesianism wants large government deficits and lots of fiat money.
Fed's rate move is all symbol, no substance Jay Hancock - Baltimore Sun Markets are responding to yesterday's surprise move by the Federal Reserve to raise the "discount rate." The dollar is gaining strength; stocks are down overseas; journalists are saying this is the beginning of the end of the cheap money that the Fed has been mainlining since late 2008. I would put a contrarian spin on it. Hardly anybody uses the Fed's discount window, which is intended to provide emergency capital to member banks. The decision to raise the discount borrowing rate to 0.75 percent means absolutely nothing in the mechanics of finance. The Fed's main instrument is the overnight rate, which banks charge each other for overnight lending. Banks who need extra capital almost always get it from each other, not the discount window. And the Fed shows few signs of raising the overnight rate.
Corruption at Federal Reserve Bank Ignored by News Media By Jim Kouri, CPP - CHCH America’s banking industry is aiding and abetting lawbreakers and there appears to be no one in Washington, D.C. interested in conducting an investigation into this corruption. While the mainstream news media are hard at work covering the Democrats striving to achieve their dream of taking control of Americans’ health care, the Federal Reserve Bank continues working with the Mexican government to make it easier for illegal aliens to export US money to their homeland. The Fed is currently devising several programs that will extend banking services to illegal aliens, and most of this money transfer scheme was created under the radar with few—if any—political figures are discussing the subject.
Rate hike, Obama in Las Vegas
Bank of England, ECB to Maintain Exit Plan After Fed By Emma Ross-Thomas Feb. 19 (Bloomberg) -- The Federal Reserve’s decision to raise its discount rate shows that the global recovery is on track and other central banks can afford to keep withdrawing emergency measures, former policy makers and economists said. “It’s another minor step in a long march towards normalization,” said former Bank of England official Charles Goodhart in a telephone interview. “The Fed has already moved some way to reducing credit easing, as has the ECB, as has the Bank of England.”
Buying Belly-Up Banks With FDIC Backing By Ben Steverman - Forbes As the Federal Deposit Insurance Corporation helps healthy banks acquire failed banks, investors guess which is next. Competition raises risks In the banking industry these days, failure can be good news. Being taken over by the Federal Deposit Insurance Corporation, or FDIC, is never good for a failed bank. It can be excellent news for the bank chosen by the FDIC to acquire its prey. In November, East West Bancorp (EWBC) in Pasadena, Calif., won the bidding to take over failed San Francisco-based United Commercial Bank, its $9.9 billion in assets, and $6.5 billion in deposits. Over the next five days, East West's stock jumped 55.7%.
Paul: Faith in the Fed?
Bailout Anger Undermines Geithner By DEBORAH SOLOMON - WSJ WASHINGTON— Timothy Geithner's role in calming the financial crisis landed him the coveted job of Treasury secretary last year. That same résumé is now dogging him. In his next test, Mr. Geithner will find out this week how lawmakers are treating one of his main goals—revamping the nation's financial regulations—when Senate Banking Committee Chairman Chris Dodd unveils his new bill. In Washington, where perception can take on the status of fact, the political woes facing Mr. Geithner are diminishing his authority.
GM's chief gets $9 million By Annalyn Censky NEW YORK (CNNMoney.com) -- General Motors chairman and chief executive, Ed Whitacre, Jr. will receive a compensation package worth $9 million, the automaker said Friday. In a filing with the Securities and Exchange Commission, GM said Whitacre gets $1.7 million in cash, $5.3 million in stock payable over three years starting in 2012, and $2 million in restricted stock as part of the company's long-term incentive plan.
Civilization's Wrecking Crew by J. R. Nyquist Joseph Schumpeter once explained that many Marxists and Keynesians never read a line of Marx or Keynes. According to Thomas Sowell, "They have gotten their ideas second- or third-hand from the intelligentsia." One might say that Marxism and Keynesianism bear a resemblance to disease. If Bubonic plague is carried by flea-infested rats, Marxism and Keynesianism are carried by intellectuals. In the first instance, we are dealing with dangerous bacteria; in the second instance, we are dealing with dangerous ideas.
States short $1 trillion to fund retiree benefits By Tami Luhby NEW YORK (CNNMoney.com) -- Just as they are contending with massive gaps in their operating budgets, states and localities must also deal with a $1 trillion deficit in public employees' retirement benefits' funds, a new report found. The shortfall amounts to more than $8,800 for every household in the nation, according to the Pew Center on the States, which published its findings Thursday.
In D.C., more evidence that commercial real estate headed for foreclosure crisis By V. Dion Haynes - Washington Post -- A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington. The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
Obama's $1.5 billion financing plan would help struggling homeowners in 5 states By Michael D. Shear and Renae Merle - Washington Post -- LAS VEGAS -- President Obama unveiled a $1.5 billion program to aid the states hardest hit by the foreclosure crisis, a small but targeted effort to address a housing problem that continues to resist government solutions. The program, which administration officials called an "innovation fund," is modest in size and reach and comes as the administration's chief foreclosure-prevention program faces criticism for not doing more to help borrowers.
Frustrated Owner Bulldozes Home Ahead Of Foreclosure Man Says Actions Intended To Send Message To Banks MOSCOW, Ohio -- Like many people, Terry Hoskins has had troubles with his bank. But his solution to foreclosure might be unique. Hoskins said he's been in a struggle with RiverHills Bank over his Clermont County home for nearly a decade, a struggle that was coming to an end as the bank began foreclosure proceedings on his $350,000 home. "When I see I owe $160,000 on a home valued at $350,000, and someone decides they want to take it – no, I wasn't going to stand for that, so I took it down," Hoskins said.
Frustrated Home Owner Bulldozes Home ahead of Foreclosure
Late FHA loans spike 62% - but it's not as bad as it sounds By Les Christie NEW YORK (CNNMoney.com) -- The recent spike in the number of delinquent Federal Housing Administration-insured loans has some people worried that taxpayers will eventually have to bail the agency out. Seriously delinquent FHA loans, those 90 days or more late, jumped 62.1% in the past year to 558,944, or 9.4% of FHA loans, as of the end of January, according to agency statistics released on Friday.
Health official warns of double-digit spike in health insurance premiums By Ricardo Alonso-Zaldivar, Associated Press -- WASHINGTON — Consumers are facing budget-busting increases in medical insurance premiums, Health and Human Services Secretary Kathleen Sebelius said Thursday, releasing a report the Obama administration hopes will tap public outrage and help revive its stalled health care overhaul. People buying their own insurance in at least six states have been facing pressure from insurers to raise rates by as much 56%, the report said. Officials said the problem is likely to be more widespread, but data from individual insurers in different states is difficult to obtain. "We think it shines a light on the urgency for health reform," Sebelius told reporters.
Obama to propose limits on insurance rates By RICARDO ALONSO-ZALDIVAR - Forbes WASHINGTON AP -- President Barack Obama will propose giving federal authorities the power to limit rate hikes by health insurance companies - part of a new health care overhaul plan he will unveil Monday in a last-ditch bid to salvage his signature issue. The proposal would give the federal Health and Human Services Department - in conjunction with state authorities - the power to deny egregious premium increases, roll them back, or demand rebates for consumers, said a White House official, speaking on condition of anonymity because details have not yet been officially released.
Medicaid enrollment rises nationwide, analysis finds By Amy Goldstein - Washington Post The recession has fueled the greatest influx of Americans onto Medicaid since the earliest days of the public insurance program for the poor, according to new findings that show caseloads have surged in every state. More than 3 million people joined Medicaid in the year that ended in June, the data released Thursday show. That pushed enrollment to a record 46.8 million, exacerbating the financial strains on already burdened states and complicating the federal politics of health care. The analysis by the Kaiser Family Foundation, a health policy and research organization, found that in three-fifths of the jurisdictions, including Maryland and the District, people rushed into the safety net for health coverage at more than twice the rate as the year before.
No country for old women Sadhbh Walshe - guardian.co.uk Older women are one of the most vulnerable demographic groups in the US, and the recession is not helping their plight I had lunch a while ago with some elderly ladies at a senior centre in Manhattan. Their lively conversation and bawdy personalities made it feel like an episode of the Golden Girls. But as I listened to them bemoan the cost of the meal ($2 a piece) and watched as they stood in line for the take home goody bag, which contained little more than bread and milk, it became apparent that the reality of the golden years for these women is vastly different than their fictional counterparts.
Paul Volcker Says Mortgage Market Will 'Have To Be Reconstructed' Shahien Nasiripour - HuffPost -- Former Federal Reserve Chairman Paul Volcker said the nation's home mortgage market is in trouble and will have to be "reconstructed." "It's totally dependent, heavily dependent on government participation," Volcker said Friday in an interview with Bloomberg Television. "It shouldn't be that way. That's going to have to be reconstructed." The federal government was responsible for up to 95 percent of all new home mortgages in the fourth quarter of 2009, said Guy Cecala, publisher of Inside Mortgage Finance, a leading industry publication.
Volcker Favors Increasing Retirement Age `Gradually'
Fairfax faces choice: Raise taxes to fund teacher pensions, or tame local spending By: Mark Tapscott - Washington Examiner -- Fairfax County officials are about to run head-on into the same public sector pension funding crisis that is spreading across the entire country, as detailed by the Pew Center on the States' recent report about the "trillion-dollar funding gap." The issue is being drawn with razor-sharpness in Fairfax in the choice now facing local school board officials: They can either ask the Fairfax County Board of Supervisors to raise taxes to fund lavish teacher pensions and other retirement benefits properly, or they can reduce current teacher and administrator salaries by eight percent and use the money saved instead.
Watch out for new credit card traps By David Elli NEW YORK (CNNMoney.com) -- If you haven't heard, big changes are soon coming for the credit card business. The CARD Act, which was signed into law last May, will finally go into effect Monday, meaning big changes for the millions of card-carrying Americans across the country. Among other things, it will eliminate some of the more egregious practices of the past like so-called "double-cycle billing", arbitrary rate increases and hefty fees for exceeding your credit limit.
Are the Rich Getting Richer? The Data Say Yes By CHARLES HUGH SMITH - Daily Finance As DailyFinance recently reported, a new study found that the recession's blows have fallen most heavily on lower-wage households. The study's subtitle says it all: "A Truly Great Depression Among the Nation's Low Income Workers Amidst Full Employment Among the Most Affluent." On the opposite end of the spectrum, a new analysis of Internal Revenue Service data shows that over the last two decades, the wealthiest households in America experienced exploding income even as their tax burdens fell dramatically. And the recession has barely touched these lucky few.
Boeing to lay off 1,020 Portland Business Journal Boeing issued 60-day layoff notices Friday to 1,020 employees. Most of the affected employees work in information technology as part of Boeing’s Engineering, Operations & Technology unit in Washington state and California, a Boeing official said. Their last day of work will be in April, with about half the layoffs occurring in Washington.
THE NEW POOR By PETER S. GOODMAN - NY Times Millions of Unemployed Face Years Without Jobs BUENA PARK, Calif. — Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits. Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.
Fast-food breakfast sales decline as fewer head to work By Ylan Q. Mui - Washington Post The nation's high unemployment rate has thrown millions of people out of work, scared shoppers away from stores and threatened the economic recovery. Now it's taking a bite out of breakfast. Breakfast sales had grown at a ravenous pace during the boom years as busy workers scarfed down sausage biscuits on the way to the office, fueling a $57 billion business and accounting for as much as a quarter of sales at some fast-food chains. Chains opened earlier and expanded their morning menus to accommodate the traffic as lunch and dinner sales flatlined.
Governors brace for more budget chaos By Liz Sidoti - Washington Times WASHINGTON (AP) -- On the recession's front lines, governors are struggling to chart the road ahead for states staggered by unrelenting joblessness and cut-to-the-bone budgets even as Washington reports signs of economic growth. "The worst probably is yet to come," warned Gov. Jim Douglas, R-Vt., chairman of the National Governors Association, at the group's meeting Saturday. He called the situation "fairly poor" in most states, adding that it "doesn't look too good."
The next Ron Paul?
To jeers and cheers, Ron Paul wins straw poll at CPAC By Ralph Z. Hallow - Washington Times WASHINGTON -- Texas Rep. Ron Paul won the 2012 presidential straw poll of conservative activists at the Saturday windup of the 37th annual Conservative Political Action Conference in Washington. The announcement of Mr. Paul's win was greeted with a mixture of loud jeers and equally loud cheers, illustrating the fragility -- despite the conference's three days of emphasized unity -- of the coalition of economic, foreign policy and traditional values conservatives on which the Republican party relies for electoral success.
Larry Kudlow: Tea Party Power to Solve the Debt Problem By: Larry Kudlow - Washington Examiner The New York Times ran a front-page story this week called "Party Gridlock in Washington Feeds New Fear of a Debt Crisis." As usual, they got it wrong. Instead, the headline should have read, "After Scott Brown's Astonishing Senate Win in Massachusetts, New Political Gridlock in Washington Could Spell the End of the Liberal Crack-Up We Have Witnessed over the Past Year." In fact, gridlock in Washington is good, since it will stop the assault of big government until the end of the year, when Congress could be overturned by independents, Tea Partiers, Republicans and probably some Democrats, as well. Just take a look at the high spirits at the CPAC convention, where Tea Partiers are reinvigorating conservatives and Republicans.
Ron Paul CPAC 2010 (1/3): Stop the Wars, End the Fed, Regain our Liberties!
Ron Paul CPAC 2010 (2/3): Stop the Wars, End the Fed, Regain our Liberties!
Ron Paul CPAC 2010 (3/3): Stop the Wars, End the Fed, Regain our Liberties!
Glenn Beck to Republican Party: Repent LA Times Reporting from Washington - Talk show host Glenn Beck poked and prodded the Republican hierarchy Saturday night in a raucous address to conservatives, comparing the party to an alcoholic who hasn't hit bottom and to golfer Tiger Woods before his public repentance. Calling himself a recovering alcoholic, Beck said he believes in the concept of redemption but that he doesn't think the GOP has taken the first step to achieving it.
Biden seeks end to all U.S. nukes By Bill Gertz - Washington Times Sees strong defense with new capabilities The Obama administration will move ahead with Senate ratification of a treaty banning nuclear tests that was voted down by Republicans more than a decade ago, Vice President Joseph R. Biden, Jr. said Thursday. In a speech setting out the administration's arms-control agenda, Mr. Biden also said the United States will continue to pursue President Obama's call for the elimination of all U.S. nuclear arms, but defended spending $7 billion in the coming year to repair an aging arsenal.
Dalai Lama Issue: Jim Rogers on China-US collision course The Dalai Lama is in Washington DC ahead of a meeting with U.S. president Barack Obama. China has already warned the talks will affect relations with America. Recently tension's escalated between the two countries following trade rows and a fallout over proposed U.S. arms sales to Taiwan. For more insight on the issue, RT talks to author and financial commentator Jim Rogers.
NATO neglect lets Taliban build 35% more strength By Rowan Scarborough - Washington Times Troops face resilient foe in Afghan south The Taliban has reaped a recruiting bonanza the past two years, capitalizing on NATO's stagnant posture in southern Afghanistan by increasing fighter ranks by 35 percent, U.S. officials say. The increase is one reason NATO forces, in an ongoing offensive, are meeting strong resistance as they fight town by town to gain control of the Taliban stronghold in the city of Kandahar and in Marjah in neighboring Helmand province.
Impending Explosion: U.S. Intensifies Threats To Russia And Iran BY RICK ROZOFF - Australia.to Washington and its NATO allies launched two of the three major wars in the world over the past eleven years in March - against Yugoslavia in 1999 and against Iraq in 2003. The war drums are being pounded anew and the world may be headed for a catastrophe far worse than those in Yugoslavia, Afghanistan and Iraq. The United States, separately and through the military bloc it controls, the North Atlantic Treaty Organization, is accelerating military deployments and provocations throughout Eurasia and the Middle East. Embroiled with fellow NATO members in the largest-scale military offensive of the joint war in Afghanistan launched eight years ago last October and well on the way to both extending and replicating the Afghan aggression in the Horn of Africa and the Arabian Peninsula [1], Washington and its allies are also taunting and threatening Russia as well as surrounding Iran with military forces and hardware preparatory to a potential attack on that nation.
China buys some time in Pyongyang By Donald Kirk - Asia Times SEOUL - North Korea seems to be playing the China card for all it's worth - in multi-billions in aid and investment - to overcome United Nations sanctions and pressure for Pyongyang to get rid of its nuclear program. A report in South Korea about China investing US$10 billion in North Korea's dilapidated economy has analysts worrying that such a deal could negate the impact of promises of that much money in energy aid as a reward for North Korea giving up its nukes.
General Petraeus Says U.S. Losses in Afghanistan to Be ‘Tough’ By Alison Vekshin Feb. 21 (Bloomberg) -- General David Petraeus, the top U.S. commander in the Middle East and Central Asia, said U.S. losses in Afghanistan will be “tough” and the U.S. presence there is necessary to prevent terrorist attacks. These types of military offensives “are hard, and they’re hard all the time,” Petraeus, 57, said today in an interview on NBC’s “Meet the Press” program.
Iran launches guided-missile destroyer Jamaran From the deck of the new ship, Supreme Leader Ayatollah Ali Khamenei criticizes the United States' military presence in the Gulf. TEHRAN - AP, Iran - From the deck of Iran's new guided-missile destroyer, Supreme Leader Ayatollah Ali Khamenei criticized the United States' military presence in the Gulf Friday and said Washington was trying to frighten Iran's Arab neighbors so it could sell them weapons. Khamenei made the comments after being given a tour of the destroyer Jamaran, which was launched at a Gulf port Friday. State television, which broadcast the event, said the warship was the country's first domestically built destroyer and a major technological leap for Iran's naval industries.
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In Surprise Move, Fed Signals Pivot to Normal Policy By Sewell Chan - NY Times WASHINGTON — Taking a step to normalize lending after holding interest rates to extraordinary lows for more than a year to prop up the financial system, the Federal Reserve on Thursday raised the interest rate it charges on short-term loans to banks. While the central bank had signaled its intentions to take such a step, the timing was a surprise. The announcement was made after the stock market had closed in a carefully worded statement that emphasized that the Fed was not yet ready to begin a broad tightening of credit that would affect businesses and consumers as they struggle to recover from the economic crisis.
Fed Statement: Hikes Discount Rate after market close Release Date: February 18, 2010 For release at 4:30 p.m. EDT The Federal Reserve Board on Thursday announced that in light of continued improvement in financial market conditions it had unanimously approved several modifications to the terms of its discount window lending programs.
Rate Rise Stirs Questions By Jon Hilsenrath - WSJ Fed Raises Cost of Emergency Loans to Banks, Spurring Talk of Tighter Credit -- The Federal Reserve raised an interest rate it charges banks for emergency loans, and emphasized that a broader tightening of credit for consumers and businesses is still at least several months away. But the late-afternoon increase in the discount rate didn't have the muted impact Fed officials hoped for. Stock futures and bond prices fell, and the dollar rose against the euro. "The Fed can talk all day about how the discount rate hike is technical and not a policy move, but the market sees it as a shot across the bow," Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi, said in a note to clients.
Induced inflation feared as way to cut debt By Patrice Hill - Washington Times Some see it as lesser evil for economy As the White House tried one more time Thursday to galvanize support from a recalcitrant Congress for a deficit commission to tackle the nation's dangerously bloated debt, fears are growing that the United States will once again resort to printing money and ginning up inflation to resolve its debt problem. While accelerating the printing presses could do irreversible damage to the dollar's international reputation and the U.S. economy, history suggests that this is the way Washington will go to avoid the political pain of having to raise taxes and cut spending on popular programs such as Social Security, defense and Medicare.
The VAT Commission Desperately seeking cover for tax increases on the middle class. WSJ - A couple of trillion dollars in new deficit spending later, President Obama yesterday signed an executive order creating a Bipartisan National Commission on Fiscal Responsibility and Reform. Yes, that's really what he called it. And you wonder why Americans are cynical about politics? Having proposed peacetime records for spending as a share of the economy—more than 25% of GDP this year and next—Mr. Obama now promises to make "the tough choices necessary to solve our fiscal problems." And what might those choices be? "Everything's on the table. That's how this thing's going to work," Mr. Obama said. By "everything," Mr. Obama means in particular tax increases. The President vowed in 2008 that he wouldn't raise taxes on anyone earning less than $250,000 a year, but that's looking to be as forlorn a hope as peace in Palestine.
In D.C., more evidence that commercial real estate headed for foreclosure crisis By V. Dion Haynes - Washington Post -- A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington. The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.
FDIC Opens A Massive New Office Near Chicago Just To Handle The Coming Tidal Wave Of Midwest Bank Closings They Are Expecting The Economic Collapse Blog -- Is the Midwest about to see a massive wave of bank closings? That is apparently what the FDIC is expecting. The FDIC is opening up a massive new satellite office in the Chicago area that will be dedicated to managing receiverships and liquidating assets from failed Midwest banks. This new facility will occupy 7 floors in an 11 floor building. The office space that the FDIC is leasing is well over 100,000 square feet and will employ approximately 500 temporary employees and contractors. This is a huge expenditure by the FDIC. So will there really be so many bank failures over the next couple of years in the Midwest that a 100,000 square foot facility is required to deal with it? Apparently someone at the FDIC thinks so. But this is not the first time the FDIC has done something like this.
Indymac Slap in our Face [original video] You won't believe the sweetheart deal that the Indymac boys were given by the FDIC.
The Indymac Slap in our Face Thanks to the boys at www.thinkbigworkmall.com, this is the perfect example of how banks have a license to steal and why our currently elected government officials can't be trusted.
LET'S FIGHT BACK TOGETHER! INDYMAC BANK Complaint by Freeindeed I am also losing my home to One West. But I have decided to fight back! This is a letter that I posted on congress.org. Please visit my soap box alert at http://www.congress.org/soapbox/alert/14417451 and where it says Take action now put in your zip code. It will automatically take you to where you can write a letter to your official in your state. Please DO IT!!! One West is not going to give you a loan modification! Don't let them fool you! Fighting Back! American Homeowners United For Justice
Is The FDIC Killing Indymac OneWest Bank Short Sales? By Robert G. Hertzog - Active Rain Blog As some of you may already know, I specialize in helping homeowners avoid foreclosure through the use of short sales. Recently, I dealt with a very interesting case involving Indymac/OneWest Bank, that I felt needed to be brought to the attention of all American taxpayers. Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure. For the life of me, I couldn't figure out why they were doing this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could there possibly be for them to proceed to foreclosure?
FDIC Responds To IndyMac/OneWest Video Alleging Sheila Bair Transferred Billions In Taxpayer Funds To Paulson & Co., And Others by Tyler Durden - Zero Hedge -- A few days ago we posted "The Great Highway Robbery Continues: How the FDIC is Legally Transferring Billions in Taxpayer Money to Hedge Funds" which presented a clip by Think Big Work Small, highlighting what was seemingly a grand scheme to defraud taxpayers with the FDIC's complicity. Today, the FDIC strikes back, issuing a Press Release claiming the video contains "blatantly false claims", "perpetrates other falsehoods" and has "no credibility." The counterargument which is supposed to render all allegations of impropriety false: "OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets" and that "in order to be paid through loss share, OneWest must have adhered to HAMP." Unfortunately, reading between the lines of the response indicates that not only are the falsehoods actually truehoods, but the video is still, sorry Shila, quite credible.
The Great Highway Robbery Continues: by Tyler Durden - Zero Hedge How The FDIC Is Legally Transferring Billions In Taxpayer Money To Hedge Funds It is not a secret to anyone who has been closely following the FDIC's quasi criminal bank takeover practices over the past year, that acquirors of failed banks end up receiving a massive and risk-free gift in the form of taxpayer benefits via the FDIC when it comes to funding losses on a given bank acquisition. Should there be a short sale resulting in a loss to the full principal (not the cost basis mind you)? Not to worry, Sheila Bair is there to hand out taxpayer money to the hedge funds/banks owning the newly transferred assets. A recent example of this was the glaring insider trading which preceded the acquisition of failed AmTrust Bank by New York Community Bancorp, in which both NYB and those who bought calls in advance of information being made public, made massive illegal profits.
Inside Look: The Failure of IndyMac
Inside Look: Paulson Urges Approval for Fannie and Freddie Funds - July 2008
Fed Raises Discount Rate by Quarter-Point to 0.75% By Craig Torres Feb. 18 (Bloomberg) -- The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs. “These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”
Fed hikes discount rate but not tightening policy Emily Kaiser WASHINGTON (Reuters) - The U.S. Federal Reserve on Thursday made its first interest rate move since December 2008, hiking an emergency lending rate it charges banks, but insisted borrowing costs would not rise for consumers or companies. The Fed cast its decision to raise the discount rate to 0.75 percent from 0.5 percent as a response to improved financial market conditions that warrant less of a helping hand from the U.S. central bank. It went to pains to draw a distinction between the discount rate and the federal funds interbank lending rate, its main monetary policy tool, which remains unchanged near zero percent to help sustain a fragile U.S. economic recovery.
Managing Perceptions: Fed Raises Discount Rate After the Close JESSE'S CAFÉ AMÉRICAIN "The last duty of a central banker is to tell the public the truth." Alan Blinder, former Vice Chairman of the Federal Reserve In a largely symbolic move, the Fed raised the Discount Rate after the bell by 25 basis points to .75%. As you know, the Discount Rate is the interest rate that the Fed charges banks who borrow from them short term on an emergency basis. This is the shaping of perception by the Fed. It does not raise rates for the consumer or businesses, and does not affect the rates and guarantees in the many Fed and Treasury programs which are still supporting the commercial banks.
The Fed Raises Its Discount Rate in a First Tightening Move By DAN BURROWS - Daily Finance Stock-index futures fell sharply late Thursday after the Federal Reserve announced it's raising the discount rate it charges on loans to banks. The dollar rallied sharply, and the euro touched a nine-month low on the move, which market participants interpret as signaling the beginning of the end of the central bank's extraordinary stimulus measures. The Fed raised the discount rate to 0.75% from 0.5% in order to encourage banks to tap money markets rather than the central bank for short-term loans.
Fed Move May Signal End to Easy Bank Profits By GRAHAM BOWLEY and ERIC DASH - NY Times Federal Reserve to Wall Street: The days of easy money — and, just maybe, easy profits — are numbered. News on Thursday that the Fed would raise the interest rate that it charges banks for temporary loans was seen by lenders as a sign that their long, profitable period of ultralow rates was coming to an end. The move suggested that policy makers believed the nation’s banks had healed enough to withdraw some of the extraordinary support that Washington put in place during the financial crisis. And, while all those bailouts stabilized the banking industry, it was low rates from the Fed that helped propel banks’ rapid recover.
Gold May Advance to $1,400 in 12 Months By Nicholas Larkin Feb. 18 (Bloomberg) -- Gold may climb to about $1,400 an ounce in the next 12 months, according to technical analysis by Chartered Market Technician Daniel Bruno, who advises banks and hedge funds. The attached chart shows gold is trading above a trend line that starts from the metal’s low in January last year. A climb to $1,419 an ounce would equate to a 150 percent projection of bullion’s rally from January 2009 to its record in December, according to a series of numbers known as the Fibonacci sequence.
IMF Gold Sale Announcement Causes Temporary Dip in Prices Tim Iacono - Seeking Alpha Well, it looks as though the gold price is now recovering nicely from the announcement yesterday by the IMF (International Monetary Fund) that they intend to sell another 191 tonnes of gold bullion on the open market. A graphic depiction of the damage that was done yesterday is shown below from this item at the International Business Times, but, since this chart was created last night, the gold price has risen smartly back up to almost $1,120 an ounce.
Coming IMF sale fails to halt gold Beth Ye and agencies - The Standard HK The International Monetary Fund will soon begin open-market sales of 191.3 tonnes of gold to raise revenue for lending. Gold prices fell 1.13 percent yesterday after the IMF announcement, but managed to recover later in the day. In early afternoon trade in London, the precious metal stood at US$1,109.80 (HK$8,656.44) an ounce.
Asian central banks tagged as potential buyers for 191.3 tonnes of IMF gold Lesley Wroughton and Lewa Pardomuan The International Monetary Fund says it will soon begin a planned sale of a remaining 191.3 tonnes of gold to raise funds for lending operations SINGAPORE/WASHINGTON (REUTERS) - The International Monetary Fund said it would soon begin a planned sale of a remaining 191.3 tonnes of gold to raise new resources for lending, with traders saying it may seek buyers among Asian central banks. But a drop of 1 percent in gold prices after Wednesday's news showed the market still cautious about future IMF sales -- nearly four months after India's purchase of 200 tonnes boosted the country's gold holdings to the 10th largest among central banks.
Gold: Down on IMF Sales, Up on Inflation Daryl Montgomery - Seeking Alpha Two pieces of news are affecting gold's price currently. First, the IMF just announced that it will soon begin phased sales of 191.3 metric tons of gold, which pressured the market causing a sudden sharp sell off. Shortly thereafter, the U.S. released the PPI, the Producer Price Index, for January and there was a very inflationary 1.4% rise from December. This caused gold to rally sharply. While the longer-term direction for gold is unquestionably up, the shorter-term picture is murkier.
The Case for More Inflation Michael Shulman - Seeking alpha . . . . There are several things that have to happen to kick off and sustain inflation, the primary equation being too much money chasing too few goods. There are derivatives of this simple equation: cost-push inflation where there is a monopoly over a vital good or service, such as oil - and the cost to everyone rises and becomes embedded in other goods and services, pushing up their cost and igniting generalized inflation. But at the end of the day, it was too much money willing to buy oil given the limited supply of oil in the world, so you end up at the beginning -- too much money chasing too few goods.
U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion The Onion -- WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct. What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.
Jan. wholesale prices jump 1.4 percent By Martin Crutsinger AP via Washington Times U.S. wholesale prices shot up at double the expected pace in January, propelled higher by big increases in energy costs. The surprisingly large jump was viewed as a temporary blip and not the start of inflation problems, however. The Labor Department said Thursday that wholesale prices rose 1.4 percent last month, reflecting higher costs for gasoline and other energy products. Private economists had expected a 0.7 percent increase.
Producer Prices in U.S. Increase More Than Forecast By Timothy R. Homan Feb. 18 (Bloomberg) -- Wholesale prices in the U.S. accelerated more than anticipated in January, led by a jump in the costs of energy, light trucks and pharmaceuticals. The 1.4 percent rise in prices paid to factories, farmers and other producers followed a 0.4 percent increase in December, according to figures from the Labor Department in Washington. Excluding food and fuel, so-called core prices rose 0.3 percent, exceeding the median forecast in a Bloomberg News survey.
Bob Prechter Points Out The Many Signs Of Deflation by Nico Isaac, Financial Sense Yes, You Heard Us Right Everywhere you look, the mainstream financial experts are pinning on their "WIN 2" buttons in a show of solidarity against what they see as the number one threat to the U.S. economy: Whip Inflation Now. There's just one problem: They're primed to fight the wrong enemy. Fact is, despite ten rate cuts by the Federal Reserve Board to record low levels plus $13 trillion (and counting) in government bailout money over the past three years -- the Demand For and Availability Of credit is plunging. Without a borrower or lender, the massive supply of debt LOSES value, bringing down every exposed investment like one long, toppling row of dominoes.
Bank Profits Ready to Tumble, Stocks to Fall: Whitney By: Jeff Cox - CNBC.com The US banking system will lose 30 percent more than consensus estimates as shrinking loan portfolios squeeze profits, analyst Meredith Whitney told CNBC. While increased governmental regulations will restrict the industry somewhat, Whitney said that the decline of up to 20 percent in lending portfolios will enact far more damage on bank balance sheets. "Your good borrowers don't want to borrow, and your bad borrowers you're trying to kick out of the system," she said. "So on average lending portfolios are down 4 to 20 percent and we think they're going to be down another 10 to 15 percent for all the big banks this year."
Bernanke Is Asked for Fed’s AIG Documents by Issa By Hugh Son Feb. 18 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke has been asked by a Republican lawmaker to turn over documents related to the decision to rescue insurer American International Group Inc. The Federal Reserve should deliver the records by March 2, according to a letter dated yesterday from Representative Darrell Issa of California, ranking member of the House Oversight and Government Reform Committee. Bernanke last month invited the Government Accountability Office to conduct a “full review” of the central bank’s actions tied to the bailout that swelled to $182.3 billion.
Lewis Knew of Legal Decision By Dan Fitzpatrick - WSJ Testimony Shows Ex-BofA Chief Was Briefed on Not Disclosing Growing Losses Former Bank of America Corp. Chief Executive Kenneth D. Lewis told the Securities and Exchange Commission that he was briefed twice about legal decisions not to disclose ballooning losses at Merrill Lynch & Co. before shareholders approved the securities firm's takeover, according to a court filing. The filing, an October 2009 deposition of Mr. Lewis by the SEC, was made in U.S. District Court in New York as part of a judge's review of the proposed $150 million settlement that would end a lawsuit filed against the Charlotte, N.C., bank by the SEC over the handling of Merrill's losses.
Is all this "exit strategy" talk warranted? by Tim Iacono - Financial Sense Boy, for a group of policymakers at the nation's central bank who, in a best case scenario, are going to just sit on their hands for at least the rest of the year, there sure has been a lot of talk about an "exit strategy". That is, how the Federal Reserve plans to withdrawal the trillions of dollars in asset purchases, emergency lending facilities, and liquidity measures that have been undertaken over the last year that purportedly saved us from another Great Depression.
Jim Rogers on the Federal Reserve (CNBC)
Dodd to Unveil Financial Overhaul Bill Next Week By Alison Vekshin Feb. 18 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd will unveil his plan to overhaul U.S. financial regulations next week, advancing measures sought by the Obama administration after months of negotiations with Republicans. Dodd, a Connecticut Democrat who is crafting the bill with Republican Senator Bob Corker of Tennessee, will hold a committee meeting in the first week of March to weigh changes to the plan, his spokeswoman Kirstin Brost said today in an e-mail.
Senate Republicans Said to Draft Alternative Financial Overhaul By Alison Vekshin Feb. 18 (Bloomberg) -- Senate Republicans led by Richard Shelby are drafting an alternative to financial-regulation legislation that Senator Christopher Dodd is developing after bipartisan talks collapsed this month, two Shelby aides said. Shelby’s plan will likely aim to create a consumer protection unit within a new bank regulator instead of the standalone agency sought by Dodd and President Barack Obama, said the aides, who requested anonymity because the talks are private. It would shield taxpayers from costs of unwinding systemically important failed financial firms, the aides said.
The Dangers of Monetary Reform Mises Daily: by Kaj Grussner Austrians have long called for a reform of the monetary system. The current, Fed-driven, fiat-money system is on the verge of collapse. But however bad the current system is, a new system won't necessarily be better. Many libertarians would favor a return to the gold standard, while others would be content with simply repealing legal-tender laws and allowing competition in currencies. However, even in a great collapse like the one looming now, these reforms may still seem too extreme to the general public. This is especially true if they have an alternative that seems reasonable and gives total control over the monetary system to the state. One such alternative is the 100-percent-reserve solution advocated by Stephen Zarlenga, director of the American Monetary Institute, and author of the book "The Lost Science of Money."
BILL WOULD BAN FEDERAL CURRENCY IN SC By Adam Fogle Palmetto Scoop PITTS INTRODUCES LEGISLATION TO REPLACE PAPER MONEY WITH GOLD, SILVER COINS -- South Carolina will no longer recognize U.S. currency as legal tender, if State Rep. Mike Pitts has his way. Pitts, a fourth-term Republican from Laurens, introduced legislation earlier this month that would ban what he calls "the unconstitutional substitution of Federal Reserve Notes for silver and gold coin" in South Carolina. If the bill were to become law, South Carolina would no longer accept or use anything other than silver and gold coins as a form of payment for any debt, meaning paper money would be out in the Palmetto State.
South Carolina Lawmaker Seeks to Ban Federal Currency Posted by Brian Montopoli CBS News South Carolina Rep. Mike Pitts has introduced legislation that would mandate that gold and silver coins replace federal currency as legal tender in his state. As the Palmetto Scoop first reported, Pitts, a Republican, introduced legislation this month banning "the unconstitutional substitution of Federal Reserve Notes for silver and gold coin" in South Carolina. In an interview, Pitts told Hotsheet that he believes that "if the federal government continues to spend money at the rate it's spending money, and if it continues to print money at the rate it's printing money, our economic system is going to collapse."
South Carolina Congressman Hates Your Money Author: Matt Sussman - Technorati The best things in life are free. For example, South Carolina state representative Mike Pitts introducing a bill that would recognize only gold and silver coins as legal tender. Money: that's not what he wants. The Palmetto Scoop found this curious bill currently being distributed in the SC House of Reps based on Pitts' belief that all those paper rectangles in your wallet are unconstitutional. Illegal. Morally reprehensible, honestly. Pitts' bill was introduced back on February 2 but was clearly ripped from the headlines thanks to some spotlight-hungry groundhogs.
How Banks Are "Crowding Out" the U.S. Rebound BY MARTIN HUTCHINSON, Money Morning When U.S. President Barack Obama unveiled the $787 billion "stimulus" bill of extra spending and modest tax cuts last year, it became clear that the U.S. budget deficit was going to eclipse the 10% of gross domestic product (GDP) level for at least one year (and, as we now know, probably three years). On those grounds, I opposed the "stimulus" - a position that was a lot less popular then than it has since become. However, as I'll show you below, it now looks as if I was right - and the implications for the U.S. economy are highly worrisome.
‘Game of Chicken’ With Greece May Hurt Recovery By Peter Woodifield Feb. 19 (Bloomberg) -- The European Union risks repeating Japan’s mistakes of the 1990s as it helps Greece tackle the region’s biggest budget deficit, said Jeremy Beckwith, chief investment officer of Kleinwort Benson. “Greece and the European Union is the world’s biggest game of chicken” since the Cuban missile crisis in 1962, Beckwith said in an interview at the wealth manager’s Edinburgh office. “It’s an effective tightening of policy that we were not expecting a few weeks ago. It’s quite worrying.”
Greece Turns the Euro into a “Carry Trade” Currency By Gary Dorsch, Global Money Trends via GoldSeek Last year’s parabolic rallies in copper, gold, Brazilian and Russian stocks, and the Australian dollar, are running out of steam. Suddenly, there are eerie reminiscences of scarier days gone-by. Volatility has returned to the money markets, amid worries about a possible “double-dip” recession for the world economy, capital flight from European sovereign debt markets, monetary tightening in Australia, China, and India, and the President Obama’s backing for the “Volcker rule,” – which calls for a clamp-down on the speculative trading binges of the Wall Street Oligarchs.
Ron Paul: Are US Taxpayers Bailing Out Greece?
Greece Broke the Rules James Turk - Kitco “There are rules, and these rules need to be adhered to." This quote could easily have been made by Sir Isaac Newton 300 hundred years ago explaining how financial discipline would be imposed by his then new invention, the classical Gold Standard. But no, these are the words of German Chancellor Angela Merkel uttered just yesterday. In effect, they precisely state how the Greek crisis should be solved. Greece broke the rules. The Greek government borrowed too much. It spent too much. Because it broke the rules, it is not worthy to be included in the eurozone. So Greece should be expelled. Doing so would re-affirm the reliability of the euro and indeed, make credible the promise of every European government before joining the eurozone that it would follow the rules.
Desperate Times and Desperate Measures By: Adam Brochert - Gold Seek Things are going to continue to get darker economically. Nothing has been solved but massive currency debasement has already occurred to try to stem the tide. The reason is simple. I forget where I stole this chart from and if anyone knows who is making this chart and keeps regularly updating it, please let me know so I can check their site periodically: . . . . New debt is now a drag on the economy rather than a boost. This is a bizarre concept. Piling more debt on top of the old, rickety, sky-high debt pile currently in the economy now actually makes things worse. This is a deflationary trap that will require new approaches to stoke up true inflation in the economy.
US credit conditions: Hoard mentality The Economist A recent Bloomberg article notes that American commercial banks are hoarding record amounts of cash in relation to corporate loans. A steady decline in the ratio of cash to business loans—from around 60% in the 1970s to a low of 20% in late 2008—has reversed sharply over the past year. According to Federal Reserve data, banks hoarded an all-time high of 98 cents in cash for every dollar of existing corporate loans during the week of January 13th. The latest reading, for the week of February 3rd, stands at 95 cents.
U.S. state pension funds have $1 trillion shortfall: Pew WASHINGTON (Reuters) - U.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, and their financial problems are quickly mounting, according to a report released by the Pew Center on the States on Thursday. Illinois is in the worst shape, with only 54 percent of its pension obligations funded, according to the report, which looked at fiscal year 2008. Because the analysis did not encompass the final six months of calendar year 2008 -- most states' fiscal year's end during the summer -- it does not include the market downturn that devastated many funds' investment portfolios.
10 percent reportedly late on mortgages BY ROGER SHOWLEY, UNION-TRIBUNE County figure up from 6.2 percent year earlier Nearly 10 percent of San Diego County homeowners with mortgages are at least two months late on their payments and are likely to default and fall into foreclosure, a sampling of area credit records shows. According to Chicago-based Trans-Union, a credit and information management company, a record 9.9 percent of mortgage holders in the county were 60 days or more delinquent in the fourth quarter of last year. That’s up from 6.2 percent a year earlier and 1.5 percent, the historic average, at the beginning of 2007.
Why Homeowners 'Walk Away' From Their Mortgages By: Mark Koba - CNBC Wayne Bryant and his wife have just stopped paying the mortgage on their home in northern California, even though they can afford to pay. The reason? Because, Bryant says, the value of the house is less than what they owe. "We are 45-50 percent under water," claims the 61-year-old Bryant, who works in airport management. "At this point we are 20 years away from being even. We're walking away because it's a good business decision."
Bleak Economy Pushing Health Insurers to Raise Rates, Analysts Say By REED ABELSON - NY Times Health insurers lately seem more afraid of Wall Street than of Washington. The nation’s insurers have come under sharp attack by the Obama administration for seeking seemingly staggering rate increases on policies they sell to individuals. The health and human services secretary, Kathleen Sebelius, recently pounced on WellPoint’s Anthem Blue Cross unit for wanting to raise premiums as much as 39 percent in California, and on Thursday she issued a scathing report detailing double-digit increases sought by other insurers last year and so far this year.
Jobless Claims Rose Unexpectedly Last Week By Martin Crutsinger & Daniel Wagner Job market improvement may be slowing, data show Washington (AP) - The job market isn't improving as fast as some analysts had expected. That was the message Thursday in a government report that the number of people filing first-time claims for unemployment benefits rose unexpectedly last week. Jobless claims rose by 31,000 to a seasonally adjusted 473,000.
General Motors fighting back against bill to help Colorado dealers Denver Business Journal - by Ed Sealover General Motors is launching a $60,000 print and radio ad campaign Friday against a bill going through the Colorado Legislature that would allow ousted dealers to recover their franchises and their most recent improvement costs more easily. After learning of the plan, sponsors and supporters of the bill lashed out against the “arrogance” of a company bailed out by taxpayers that’s spending government funds to campaign against local dealers.
The Credit Card Trap: How U.S. Credit Card Companies Are Sucking The Financial Life Out Of The American Consumer The Economic Collapse Blog There have been very few things more damaging to American consumers over the past couple of decades than credit card debt. Easy credit has enabled many of us to live absolutely fabulous lifestyles, but outrageously high interest rates, ridiculous penalties and predatory fees have sucked the financial life out of millions of American families. It is very easy to blame the rapidly exploding debt of the U.S. government for the economic collapse that we are now experiencing, but the truth is that tens of millions of Americans have created their own personal economic disasters by overusing credit cards. The temptation of easy credit has been too much for millions of Americans to resist, but now all of that easy credit is proving to be incredibly difficult to pay back, and massive debt problems are literally tearing many American families apart. It is hard to underestimate how devastating credit card debt can be to a family.
States short $1 trillion to fund retiree benefits By Tami Luhby NEW YORK (CNNMoney.com) -- Just as they are contending with massive gaps in their operating budgets, states and localities must also deal with a $1 trillion deficit in public employees' retirement benefits' funds, a new report found. The shortfall amounts to more than $8,800 for every household in the nation, according to the Pew Center on the States, which published its findings Thursday.
L.A. City Council orders 3,000 more job cuts By Phil Willon and Maeve Reston - LA Times To help address the city's budget crisis -- and after the threat of a credit downgrade -- the council tells agencies to act by July 1. The move is on top of 1,000 cuts already in the works. Under the threat of a credit rating downgrade, the Los Angeles City Council on Thursday instructed agency heads to eliminate 3,000 additional city jobs before July 1 "by any means necessary, including layoffs." The reduction -- aimed in part at wresting further concessions from the city's labor unions -- would be on top of 1,000 job cuts already in the works.
Rep. M. A. Pitts Discusses Resolution Reaffirming States' Rights South Carolina Representative Michael Pitts discusses why he proposed H. 3509, a concurrent resolution that reaffirms South Carolina's belief in states' rights.
Conservative manifesto is call to action, say signers By Stephen Dinan - Washington Times Leaders of major conservative groups on Wednesday signed a manifesto vowing to push the country to return to constitutional principles, saying they've grown tired of having to accept government expansion at the hands of liberals. "It's our turn. We've had about enough of you. We're going to take you on, and it's time to defeat you," said Mark Levin, a talk-radio host and president of the Landmark Legal Foundation.
'Tea party' activists change dynamic at CPAC By Stephen Dinan and Ralph Z. Hallow - Washington Times Republicans pressed to earn loyalty of conservative group Amid a euphoria unimaginable just a year ago, activists Thursday at the largest conservative gathering in the country plotted how to ride the "tea party" wave to sweeping Republican victories in this year's elections - and to force the GOP to govern as conservatives after the vote.
Judge Napolitano: Tea Parties Should Coopt GOP, Not Other Way Around 2/16/10
2/16/10 Lew Rockwell on Freedom Watch: Tea Party's Dilemma
AUSTIN PLANE ATTACK: TEA PARTY TERRORISM? Truth Dig Authorities are still investigating why Joe Stack of Texas flew his small airplane into the Austin offices of the IRS, but based on early reports and a tirade the attacker posted on the Internet, it had something to do with taxes, big government, corporate crime and bailouts. Some of what Stack wrote in his online screed actually sounds quite reasonable. For instance, “in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind.” That’s a bit extreme, but the basic sentiment is shared by many Americans. According to Gallup, 78 percent of Americans disapprove of the job Congress is doing.
Small Plane Crashes Into Building AUSTIN, Texas (AP) -- A low-flying small plane crashed into an office building that houses the Internal Revenue Service in Texas on Thursday, and officials said they were investigating whether it was an intentional act by the pilot. The U.S. law enforcement officials said authorities were trying to determine if the pilot intentionally targeted the IRS. They spoke on condition of anonymity because the investigation is continuing. Assistant Austin Fire Chief Harry Evans said at least one person was missing and two people were taken to a hospital. Their conditions and identities were not immediately known.
Official: Plane crash pilot left anti-tax note By Jim Vertuno AP via Washington Times AUSTIN, Texas (AP) -- A software engineer furious with the Internal Revenue Service launched a suicide attack on the agency Thursday by crashing his small plane into an office building containing nearly 200 IRS employees, setting off a raging fire that sent workers fleeing for their lives. At least one person in the building was missing. The FBI tentatively identified the pilot as Joseph Stack. A federal law official said investigators were looking at a long anti-government screed and farewell note that he apparently posted on the Web earlier in the day as an explanation for what he was about to do.
Witnesses react to plane crash
Two Chinese Schools Said to Be Tied to Online Attacks By JOHN MARKOFF and DAVID BARBOZA - NY Times SAN FRANCISCO — A series of online attacks on Google and dozens of other American corporations have been traced to computers at two educational institutions in China, including one with close ties to the Chinese military, say people involved in the investigation. They also said the attacks, aimed at stealing trade secrets and computer codes and capturing e-mail of Chinese human rights activists, may have begun as early as April, months earlier than previously believed. Google announced on Jan. 12 that it and other companies had been subjected to sophisticated attacks that probably came from China.
Area Radio Stations go Music Free Thursday Morning Press Release: Wausau To raise awareness about a new proposed tax they say will destroy the industry, five area radio station will go music-free Thursday morning. Five of Central Wisconsin's most-listened-to radio station will stop playing music between 8am and 10am on Thursday, Feb. 18, to raise awareness about a music performance tax that's being considered in Congress. The Music Performance Tax would force radio stations to pay record labels for the music they broadcast. In this difficult economy, a new tax would cripple the local radio stations and force dramatic changes in what listeners hear. The live music-free broadcast will originate from the Midwest Communications Broadcast Centre at 557 Scott Street. There will also be a live broadcast from outside the Rib Mountain Municipal Center, where Rep. David Obey ( D-Wausau) will be meeting with local officials. Congressman Obey supports the new tax on radio broadcasters.
WordPress.com crashes, downs major blogs San Francisco Business Times - by Patrick Hoge WordPress.com, the fast growing hosting service for millions of blogs, including TechCrunch and GigaOm, crashed for 110 minutes Thursday afternoon. The outage affected 10.2 million blogs, blogged Matt Mullenwag, founder and CEO of San Francisco-based Automattic, the company that runs WordPress. It was the company's worst outage in four years, he wrote. "We are still gathering details, but it appears an unscheduled change to a core router by one of our datacenter providers messed up our network in a way we haven’t experienced before, and broke the site," Mullenwag wrote. "It also broke all the mechanisms for failover between our locations in San Antonio and Chicago. All of your data was safe and secure, we just couldn’t serve it."
eBay and PayPal To Be Translated into Russian Pravda.ru The world’s largest online auction, eBay, finally comes to Russia. The Russian division of the auction is to start working on March 16. As a result, all Russian users of eBay will be able to buy and sell their goods on the Internet easily. In addition, they will be able to enjoy all advantages of PayPal payment system. eBay’s key competitor on the Russian market, Molotok.ru, says that it is not afraid of possible competition. Experts say, though, that the Russian auction will have no chances in the fight with the online giant: eBay’s choice of goods and the quality of provided services is much better.
Climate Change Head Resigns John Vidal - guardian.co.uk Yvo de Boer, head of the UN's climate change body for the last four years, has unexpectedly resigned in a move which could further set back global negotiations. In a telephone interview given to Associated Press, the veteran UN diplomat said he was announcing his retirement to allow the UN secretary-general, Ban Ki-moon, to find a successor well before November, when 192 countries meet in Mexico to conclude fraught climate talks. He will leave officially in July.Copenhagen outcome was unrelated to decision.
LEE: Confronting Beijing's new bipolar reality By John Lee - Washington Times Hubris and domestic insecurity both on display Several years before his historic visit to China in 1972, Richard Nix -on articulated what was to become the contemporary rationale behind America's policy of engagement toward China: Taking the long view, we simply cannot afford to leave China forever outside the family of nations - there to nurture its fantasies, cherish its hates and threaten its neighbors. Fast forward four decades, and the received wisdom is that it is better for America to see a strong and confident China striding the world than a weak and insecure one.
Dalai Lama Issue: Jim Rogers on China-US collision course The Dalai Lama is in Washington DC ahead of a meeting with U.S. president Barack Obama. China has already warned the talks will affect relations with America. Recently tension's escalated between the two countries following trade rows and a fallout over proposed U.S. arms sales to Taiwan
Obama-Dalai Lama meeting 'closed press' By Joseph Curl POLITICAL THEATER - Washington Times The last time His Holiness the 14th Dalai Lama of Tibet came to Washington, President Obama refused to meet with him, worried that he would anger China before a planned Beijing summit with President Hu Jintao. But on Thursday, the president finally met with his fellow Nobel Peace Prize laureate. Only not in the Oval Office. And not in public. The brief meeting in the basement Map Room was "closed press," and the White House barred still photographers from capturing the historic moment.
Dubai police call on Interpol to help arrest Mossad head Julian Borger, Mark Tran - guardian.co.uk Interpol should help arrest the head of Mossad if Israel's spy agency was responsible for the killing of a Hamas commander in Dubai, the emirate's police chief said today. In comments to be aired on Dubai TV, Lieutenant General Dahi Khalfan Tamim called for Interpol to issue "a red notice against the head of Mossad ... as a killer in case Mossad is proved to be behind the crime, which is likely now".
Hamas official accused of helping Mossad hit squad Ian Black, Paul Lewis, Kate Connolly - guardian.co.uk A key security operative of the Palestinian Islamist movement Hamas was under arrest in Syria tonight on suspicion of having helped an alleged Israeli hit squad identify Mahmoud al-Mabhouh before he was assassinated in Dubai, the Guardian has learned. Palestinian sources in the Gulf confirmed Nahro Massoud, a Hamas security official, was in detention and under interrogation in Damascus in connection with the 19 January killing, which is now widely assumed to have been mounted by Israel's Mossad secret intelligence service.
Iran Enriches Nuclear Fuel, Says IAEA By DAVID CRAWFORD And JONATHAN WEISMAN - WSJ The United Nations' nuclear watchdog said it has information suggesting Iran may be working to build a nuclear warhead, an assessment that could escalate the U.S. and other Western governments' confrontation with Iran over its nuclear activities. The International Atomic Energy Agency, a Vienna-based U.N. body, said in a confidential report Thursday that Iran has impeded agency efforts to establish the true purpose of Tehran's nuclear program.
Webster Tarpley on Alex Jones Tv 1/5: Establishment Will Blackmail Obama Into Attacking Iran
Webster Tarpley on Alex Jones Tv 2/5: Establishment Will Blackmail Obama Into Attacking Iran
Webster Tarpley on Alex Jones Tv 3/5: Establishment Will Blackmail Obama Into Attacking Iran
Webster Tarpley on Alex Jones Tv 4/5: Establishment Will Blackmail Obama Into Attacking Iran
Webster Tarpley on Alex Jones Tv 5/5: Establishment Will Blackmail Obama Into Attacking Iran
Greece, America and Money: The Federal Reserve's dealings with foreign countries
Muni Threat: Cities Weigh Chapter 9 By IANTHE JEANNE DUGAN And KRIS MAHER - WSJ Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9. The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.
Fed thinking of selling debt to withdraw stimulus Pedro da Costa and Mark Felsenthal - Reuters Several Federal Reserve policy makers want to begin selling securities relatively soon to cut back the U.S. central bank's massive help to the financial system as the economy finds a footing, the Fed said on Wednesday. Minutes of the Fed's latest policy meeting in January suggested officials remain positive about the economy's prospects even as they worry about the impact of an elevated unemployment rate, which they see holding near the current 9.7 percent through 2010. To combat the worst recession and financial crisis since the 1930s, the U.S. central bank has cut benchmark interest rates to near zero and bought more than $1.5 trillion in government and mortgage bonds to pump money into the economy.
We're "Absolutely" Headed for Another Crisis Without Reform, Economist Stiglitz Says More than a year after the global credit crisis, what's changed? Not much, says our guest, Nobel Prize-winning economist Joseph Stiglitz. "In many ways, things are worse now than they were before," says Stiglitz. As outlined in his new book, "Freefall: America, Free Markets, and the Sinking of the World Economy," Stiglitz argues we're headed for another financial disaster without meaningful reform.
Fed says has been reinvesting maturing Treasuries NEW YORK (Reuters) - The Federal Reserve has been reinvesting proceeds of maturing Treasuries by acquiring new issues, the U.S. central bank said on Wednesday. "The (Fed's open market) Desk had continued to reinvest the proceeds of maturing Treasury securities by acquiring newly auctioned Treasury securities issued on the same day its existing holdings matured," the minutes to the Fed's January meeting said. "Participants agreed that the Desk should continue this practice for now, but the Committee would consider further its policy for redeeming or reinvesting maturing Treasury securities."
US bank lending falls at fastest rate in history By Ambrose Evans-Pritchard - Telegraph Bank lending in the US has contracted so far this year at the fastest rate in recorded history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus. David Rosenberg from Gluskin Sheff said lending has fallen by over $100bn (£63.8bn) since January, plummeting at an annual rate of 16pc. "Since the credit crisis began, $740bn of bank credit has evaporated. This is a record 10pc decline," he said. Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. "The shrinking in banking sector balance sheets renders any talk of an exit strategy premature," he said.
Europe's PIGS Gorging on Free Euros as ECB Bankrolls the Incontinent Subcontinent By: Gary_North via Market Oracle . . . . The European Central Bank now faces its moment of truth: how to finance the European Union's rumored bailout of Greece. Why was the bailout agreed to – assuming that the details can be worked out? Because of the threat to the commercial banks of Northern Europe. A default would have busted some big banks all over Europe. The issue did not turn on the issue of whether to help the national treasuries of the profligate PIIGS: Portugal, Italy, Ireland, Greece, and Spain. The European Central Bank does not answer to, or have any concern for, the elected governments of the PIIG nations. It answers to, and has a great deal of concern for, the large commercial banks of Northern Europe. That is to say, it is a central bank. It feathers the nests of large commercial banks under its jurisdiction.
CHINA FLEXES FINANCIAL MUSCLE TruthDig News that China sold $34 billion in U.S. government bonds at the end of last year has raised the fears of analysts, some of whom think that the move—which involved less than 5 percent of the overall amount of bonds held by China—is meant to signal a loss of confidence in U.S. economic policy.
China sells $34.2bn of US treasury bonds Tania Branigan and Heather Stewart - guardian.co.uk Analysts fear Beijing's move may suggest a loss of faith in American government's economic policy China sold $34bn (£21.5bn) worth of US government bonds in December, raising fears that ?Beijing is using its financial ?muscle to signal that it has lost confidence in American economic policy. US treasury figures for the period ending in December 2009 show that, following the sale, China is no longer the largest overseas holder of US treasury bonds. Beijing ended the year sitting on $755.4bn worth of US government debt, compared to Japan's $768.8bn.
Chinese Whispers in Treasury Market By ANDREW PEAPLE - WSJ As China's current-account surplus cooled last year, did its ardor for U.S. Treasurys? That is the headline story from the latest data on foreign ownership of U.S. government debt. Mainland China's holdings fell to $755.4 billion at the end of December from a peak of $801.5 billion last May. The country also shifted into longer-dated Treasurys. Japan is, on paper, again the largest foreign holder of U.S. government debt.
Gold - It's Still a Safe Haven John Diplacido, oil trader and president at Energex says he remains long on gold as it is probably the world's only healthy currency left. He also speaks on IMF's planned gold sale with guest host Simon Rutherford of Nortthward Capital and CNBC's Amanda Drury and Sri Jegarajah.
Gold continues to gain on Greece concerns FXstreet.com (Sydney) – Gold climbed to 4-week high in New York on continued speculations that further budget deficits will result in greater demand for the metal. Investors are moving away from the euro and into gold and it is possible that both gold and the dollar may trend together.
Gold-backed currency in New World Order By Jim Roache I believe the discipline of Economics has a fatal flaw - it assumes a degree of rationality of which our specie is devoid. It also assumes you can reason with power - you cannot. Finally, and fatally, it has failed to integrate globalization into any of its fundamental schools of thought. All the rational argument in the world will not convince those in power (by wealth, social position or politics) to act rationally because 1. it would not be in their interest to do so 2. because that minority, elite, rich, powerful, many sociopaths and/or - already know the rational positions of the various schools, and they have made it their business to circumvent them or bend them to serve their own purposes, and 3. they hold the rest of us in complete and utter contempt - expressed in private often using terminology that is shocking, demeaning and exasperating to the listener.
Gold falls sharply in Asia on IMF gold sale SINGAPORE (Commodity Online) : Gold fell sharply in Asian trade Thursday mainly on IMF’s announcement to sell 191.3 metric tons of gold on the open market rather than to central banks. Spot gold was seen trading at $1100.78 an ounce, down 0.5 percent from Wednesday’s close of $1106 an ounce. It had hit a peak of $1,126.85 an ounce on Wednesday ahead of the IMF statement, its highest since Jan. 20.
IMF to Start Open-Market Sales of Its Gold ‘Shortly’ By Sandrine Rastello Feb. 17 (Bloomberg) -- The International Monetary Fund, which set out in September to sell about 13 percent of its gold reserves, said it will “shortly” expand sales to the open market after central banks bought 212 metric tons in private deals. “In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time,” the Washington-based IMF said in an e-mailed statement today.
International Monetary Fund to sell another 191 tons of gold By Michael Kitchen, MarketWatch The International Monetary Fund said Wednesday that it plans to sell 191.3 tons of gold, likely on the open market, pushing spot prices and gold-miner shares lower. The value of the planned sales would be worth about $6.19 billion at current prices, according to CNBC. The sales would follow the unloading of 212 tons of IMF gold to central banks, part of a gold-sale program approved by the IMF's executive board in September of last year. The latest planned sales would complete the IMF's program to reduce its holdings of the precious metal by about one-eighth.
Marc Faber: Commodities and Emerging Markets Marc Faber, managing director of Marc Faber Ltd and Barron's Roundtable member, anticipates meaningful market correction in 2010. Mining and agriculture will be top performers within commodity sector.
Gold Strength Due to Risk of International Monetary Crisis By: GoldCore via Market Oracle Gold rose another 3% in US trading yesterday to finish the day at $1,119.35/oz. It has since moved upwards to as high as $1,123.50/oz Asian trading so far this morning. Gold is currently trading at $1,118.00/oz and in Euro and GBP terms, gold is trading at €815/oz and £711/oz respectively. Technically gold is looking healthier again and has broken above the 50 day and 100 day moving averages and trend line resistance identified (see Chart). While the fear that gripped markets last week regarding a European sovereign default have abated, warnings regarding the long term viability of the multi currency union, long dismissed, are now being taking more seriously. The crisis in the Eurozone and the recent sharp fall in the Euro show clearly why a small allocation to gold remains important
The Aden Sisters: Outlook for Gold by Steven Halpern - BloggingStocks . . . . "Remember, gold rises during economic uncertainty. In the early 1930s, for example, during the Great Depression, President Roosevelt raised the price of gold almost 70% from $20.65 to situation. It needs a weaker dollar to compete and stimulus measures must continue, which are both ultimately bullish for gold. "This is one important reason why we do not think gold or commodities are in a bubble. We believe they are rising within a mega trend that could last several more years, perhaps a decade.
George Soros buys gold despite dubbing it 'ultimate bubble' By James Quinn - Telegraph George Soros doubled his investment in the world's largest gold fund – just weeks before claiming investing in the precious metal is now the "ultimate bubble". Mr Soros – a legend in investing circles for his $10bn (£6.37bn) bet against the pound in 1992 which forced sterling out of the European exchange rate mechanism – increased his stake in the SPDR Gold Trust in the last quarter of 2009. Regulatory filings show that his $8.8bn investment vehicle, Soros Fund Management, raised its stake in exchange-traded fund SPDR by 3.7m shares to 6.2m shares in the three months ending December 31, 2009.
Soros More Than Doubled His Gold Position in 4Q '09 JESSE'S CAFÉ AMÉRICAIN Regulatory filings disclose that Soros more than doubled the gold position in his Soros Fund Management LLC at the end of 2009. There is a lag in official reporting in regulatory filings, so he *could* have sold his entire position before he called gold 'a bubble' at Davos last month. Then again, he might not have. In which case what would that make him? We will have to wait for the next round of filings to see.
The euro's plunge shows why you should hold gold By Dominic Frisby - Money Week It's quite astonishing how quickly sentiment can change. In early December, the euro was trading at all-time highs against the US dollar, somewhere north of $1.50. Across the continent, be it in Rome, Frankfurt or Paris, US nationals were seen to wince each time they reached into their wallets. Meanwhile German exporters grumbled about their lack of competitiveness.
US Dollar: The Unsafe Safe Haven By Joel Bowman - The Daily Reckoning Stocks in, dollar out. That was the mood in the markets yesterday. One half we can understand. The other has us flabbergasted. That investors would sell the dollar seems like a no brainer. That they would buy stocks seems like a got-no-brainer. So, what gives? First, the comprehensible: The greenback slipped about half a percent during yesterday’s trading. The papers attributed the selloff to allayed fears over Greece’s implosion and stronger economic data out of the States. For the sake of illustration, let’s pretend that Greece really is back to beach parties and ouzo-fueled debt orgies and that what passes for government “data” in the US is actually tenable (rather large concessions, you’ll surely agree). Why would people take the news as a signal to sell the dollar?
BlueGold’s Jen Says China May Revalue Yuan By 5% Next Month By Anchalee Worrachate Feb. 18 (Bloomberg) -- China may let its currency appreciate by 5 percent as early as next month to prevent economic growth from stoking inflation, according to Stephen Jen of BlueGold Capital Management LLP. Policy makers may also raise interest rates this year to cool an economy that expanded by 10.7 percent in the fourth quarter, the fastest increase in two years, Jen said in an interview this week. The central bank last week ordered lenders to boost the amount of cash they must put aside as reserves for the second time this year in an attempt to curb growth in loans.
Thinking the unthinkable about the euro Dan Roberts - Guardian UK No one knows what would happen if a country tried to pull out of the single currency because it hasn't happened before Conspiracy theorists are having a field day with the question of what might happen to Greece's membership of the euro should its financial woes continue. British hedge fund manager Hugh Hendry has been touring BBC studios in recent days recounting a tale of German bank customers rejecting euro notes with Southern European serial numbers for fear that these might be withdrawn from circulation.
Complete Crisis Coordination By: Jim Willie CB The subprime debt issue of 2007 blossomed into a global credit crisis. Likewise, the Dubai sovereign debt issue will blossom into a global sovereign debt crisis in similar pathogenesis. The start and end points are located in the Untied States and Untied Kingdom. With the global climax come disruption, restructure, and chaos. The subprime mortgage problem was grossly under-estimated. The Hat Trick Letter called it the beginning of an absolute bond contagion, a global credit market collapse correctly forecasted. Central bankers, led by the clueless USFed Chairman Bernanke, minimized the degree and depth of the credit crisis, and made every conceivable wrong forecast. His reward was reappointment, since his service to the syndicate has been steadfast, loyal, and inventive. Every phase of global finance has entered a crisis mode, as the financial structures are coordinated, linked in complete fashion by the tightening noose using a US$ brand of rope.
The Consequences of Economic Terrorism are Poverty and Mass Unemployment By: Global_Research via Market Oracle -- Yes, of course, we all have very strong differences of opinion on many issues. However, like our Founding Fathers before us, we must put aside our differences and unite to fight a common enemy. It has now become evident to a critical mass that the Republican and Democratic parties, along with all three branches of our government, have been bought off by a well-organized Economic Elite who are tactically destroying our way of life. The harsh truth is that 99% of the US population no longer has political representation. The US economy, government and tax system is now blatantly rigged against us.
Agreement Near on Regulating Banking Risks By SEWELL CHAN - NY Times WASHINGTON — The Senate and the Obama administration are nearing agreement on forming a council of regulators, led by the Treasury secretary, to identify systemic risk to the nation’s financial system, officials said Wednesday. The issue is one of the most fundamental in the contentious effort to overhaul regulation after the financial crisis, and addresses one of the primary lessons of the near debacle: that no one had been assigned to ensure the stability of the system as a whole and detect the kinds of excessive risk-taking and imbalances that could rock an entire economy.
‘Size Matters’ as EU Weighs Up Greek Rescue Bill By Frances Robinson Feb. 17 (Bloomberg) -- Europe may need to stump up as much as 320 billion euros ($441 billion) if it decides to bail out Greece because it would open the door to rescuing other countries in financial distress, according to BNP Paribas. “To come up with a bailout plan that would be reasonably certain of success, it would have to cover all the most likely candidates, and it would have to be big,” said Paul Mortimer- Lee, global head of market economics at BNP in London. “Size matters when you are trying to scare off speculators and to comfort nervy bondholders.”
Goldman Sachs, Greece Didn’t Disclose Swap Contract By Elisa Martinuzzi Feb. 17 (Bloomberg) -- Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg. The New York-based firm helped Greece raise $1 billion of off-balance-sheet funding in 2002 through the swap, which European Union regulators said they knew nothing about until recent days.
It’s Greek to Goldman Sachs By Robert Scheer - TruthDig “What is this Goldman Sachs and why has it caused us so much grief?” is a question they must be asking in even the most remote of Greek villages, as they are throughout much of this economically troubled world. The Greek financial scandal in which Goldman Sachs stands accused of selling dubious derivatives that concealed enormous government debt has sent the Greek economy and European markets into a tailspin. But that’s just part of a made-in-the-USA banking hustle that has haunted folks at home and abroad.
Is the Recession Over Yet? The Fed Seems to Think So By DAN BURROWS - Daily Finance Anyone waiting on official word proclaiming the end of this lousy, stinking recession would do well to find a comfortable seat. It turns out the signals -- and there are a lot of them -- are contradictory. Besides, a recession isn't officially over until the National Bureau of Economic Research says so, and they can take a very long time to decide.
Bernanke Admits Truth About Money, it’s Just Scraps of Paper By Rocky Vega - The Daily Reckoning The Onion has just released the defining story of the 21st century… money is in fact nothing more than worthless scraps of paper. The realization came about at a recent Bernanke testimony before Congress. According to the Onion: “What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world’s largest economy.
Paper Hangers By: John Browne At a time when more and more offices are going paperless, governments in most of the developed world are doing the opposite. Finance ministers from Washington to London, Tokyo, Madrid, and, most pointedly, Athens, are attempting to paper over gaping financial chasms in the global economy by issuing ever greater quantities of currency and debt. But paper can only stretch so far. The key problem facing the western world is the 80-year decline in central banking discipline. In truth, these banks have become little more than the private piggy banks of their parent governments. Often furtively, central banks have "bought" ever larger amounts of government debt, which has allowed a consequence-deferred spending spree. The result has been decades of apparent economic growth and prosperity.
STIMULUS: ONE YEAR LATER TruthDig Some say it was too modest, others feel it was about $800 billion overboard. In any event, the American Recovery and Reinvestment Act is a year old, and, according to ProPublica, still has a few hundred billion dollars’ worth of stimulation left in the tank. Check out ProPublica’s mega-stimulus coverage page, which has handy tools for monitoring stimulus spending. ProPublica: The White House is marking today’s anniversary with a stimulus progress report [2] (PDF), which claims the Recovery Act has created or saved 2 million jobs; extended unemployment benefits for almost 20 million Americans; and cut taxes for more than 95 percent of working families. The administration says that by the end of last month, the combination of tax cuts and obligated funds came to a total of $453 billion.
Unhappy Stimulus Anniversary
Obama Praises the Stimulus for Preventing "a Second Depression" By DAN BURROWS - Daily Finance President Barack Obama vigorously defended his administration's $787 billion stimulus package on its one-year anniversary Wednesday. The president said the initiative has saved or created at least 2 million jobs and blunted the impact of the worst recession since at least World War II. "One year later, it is largely thanks to the recovery act that a second depression is no longer a possibility," Obama said.
China in a dilemma as home prices soar James Pomfret and Lee Chyen Yee SHENZHEN, China (Reuters) - In the hard, exhaust-choked reality of his days trawling Longhua's clogged roads, taxi driver Zhang Bo's ambition to buy a small flat for his young family has slipped out of reach for now. Like many Chinese who covet real estate as a symbol of stability and social stature, Zhang is dismayed at the alarming climb of apartment prices in his adopted city of Shenzhen in southern China. "People can't afford new flats anymore," said Zhang, 28, who drives a taxi to make ends meet after his small electronics factory went belly-up during the financial downturn last year.
Fannie, Freddie Housing Goals May Exclude Subprime By Theo Francis - Business Week Feb. 17 (Bloomberg) -- Fannie Mae and Freddie Mac would no longer be able to rely on subprime mortgages to meet their government-mandated goals for helping lower-income Americans obtain home loans, according to proposed regulations. The rules offered by the Federal Housing Finance Agency would restrict the companies from using private-label bonds backed by Alt-A and subprime mortgages, or commercial mortgage- backed securities, to meet affordable-housing targets.
Short sales grow as a cheaper alternative to foreclosure By Alejandro Lazo - LA Times Banks' resistance to the tricky transactions is softening as the number of distressed properties increases. Nineteen months ago, the recession took Bob Walker's job. Then, creditors lined up to take the three-bedroom hilltop home that the computer consultant shared with his wife, Stephanie, a playwright still looking for her first break. Avoiding the stigma and financial fallout of foreclosure became an obsession for the Walkers. They talked to the banks, found multiple jobs, put their Silver Lake house on the market and tried to stitch together a plan to repay their debts. Finally, they turned to a short sale, chronicled in a popular blog: Love in the Time of Foreclosure.
Zillow: West’s homeowners more pessimistic about value Denver Business Journal Western homeowners’ confidence that their homes are retaining value went from “highly optimistic” in 2009’s third quarter to “pessimistic” in last year’s final quarter, according to a Zillow Inc. report. Colorado is in Zillow’s western region, but so are states such as Arizona, Nevada and California, whose housing markets have been hit a lot harder than this state’s. States rounding out the area include Alaska, Arizona, Hawaii, Idaho, Montana, New Mexico, Oregon, Utah, Washington and Wyoming.
California, other states face problem of growing pension liabilities By Marc Lifsher - LA Times State governments can help ease a $1-trillion shortfall by reducing future benefits, requiring greater employee contributions and raising retirement ages, a Pew report says. Reporting from Sacramento - California has plenty of company when it comes to not being able to pay its growing public pension costs, a Washington think tank says in a report to be released Thursday. Coming up with the money to pay for future obligations is expected to burden state and local governments and school districts with huge retirement costs that could translate into higher taxes and fewer basic services for the next generation of taxpayers.
US states face $1,000bn retirement gap By Nicole Bullock in New York - FT US states face a funding gap of at least $1,000bn for the retirement benefits they have promised teachers, firefighters and other public sector employees, threatening already strained budgets, according to research released on Thursday. The Pew Center on the States found that, at the end of fiscal year 2008, states and localities had set aside $2,350bn to pay for pension, healthcare and other non-pension benefits, such as life assurance, that were estimated to cost $3,350bn.
FDA Invades Non-Commercial Amish Farm in PA NICFA / Food Freedom - Deborah Stockton Kinzers, PA – At 9:40 a.m. Thursday, February 4, only a few miles from the scene of the Nickel Mines Amish massacre of 2006, another drama against the Amish began as agents of the U.S. Food and Drug Administration (FDA) came onto the property of Amish farmer Dan Allgyer, without permission, claiming to be conducting an investigation. Agents Joshua Schafer and Deborah Haney, from the Delaware FDA office, drove past Allgyer’s “No Trespassing” signs and up his driveway almost to his barn, where Allgyer happened to be outside. Allgyer approached the car, the agents got out and Allgyer asked them why they were there. They produced a piece of paper, asked Allgyer if he was Dan Allgyer, which Allgyer confirmed, asked him his middle initial and phone number, entered the information on the paper, told Allgyer they were there to do an inspection and started reading the paper to him, saying it gave them jurisdiction to be there.
Brick by brick, American business loses edge By Jeffrey Anderson THE WASHINGTON TIMES Army chooses German firm Since its founding in 1912, Summitville Tiles has been a proud family company with a legacy of service to the government. F.H. "Pete" Johnson, the company's founder and a World War I veteran, stood proudly by the company's motto, "American Made, American Owned" - and true to his word, Summitville tiles cover the roof of the White House and the floors of Washington, D.C., Metro stations.
U.S. Cracks Down on ‘Contractors’ as a Tax Dodge By STEVEN GREENHOUSE - NY Times Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors. President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years. More than two dozen states also have stepped up enforcement, often by enacting stricter penalties for misclassifying workers. Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.
Monetary Inflation and the 32-Cent Gallon of Gas By The Mogambo Guru - The Daily Reckoning I got an email from Junior Mogambo Ranger (JMR) Steve, who writes about “a quickie from the show Pawn Stars”, which startled me into Instant Mogambo Alert (IMA) because I thought he said, “a quickie from the show Porn Stars”. Alas, it was not, and it was, as the name implies, a TV show about the things that happen in a pawn shop where people who are desperately in need of a little money bring in stuff as collateral for a loan. “A guy brings in,” Steve says, “an old gas pump from the 1960s. The price per gallon is 32 cents. I go to coinflation.com, and the metal in 32 cents from that time is worth $2.87 now. That’s pretty close to the price of gas per gallon today!!”
American Airlines union seeks first step toward strike By David Koenig AP via Washington Times DALLAS -- The union representing ground workers at American Airlines wants to take a big step toward a strike against the nation's second-largest airline. The Transport Workers Union said Wednesday it will ask federal mediators to let the employees walk away from contract talks if there is no deal by March 8. If federal mediators agree, it could start the countdown toward a strike this spring. The president or Congress can block strikes, which have become very rare in the airline industry.
The red-hot scam unravels By Wesley Pruden - Washington Times You can fool some of the people some of the time, as Abraham Lincoln observed, and you even can fool all the people some of the time. But you can't fool all the people all the time. Al Gore and his friends got so excited about points one and especially point two that they forgot point three. Not everybody is on to the global-warming scam, not yet, but all the people — or enough of them — are getting there. "Global warming," or even "climate change" as Al's marketing men now insist that it be called, is becoming the stuff of jests and jokes. Sen. James M. Inhofe of Oklahoma, a Republican, built an igloo of that hot stuff that buried Washington last week on the Capitol lawn and dubbed it "Al Gore's new home."
Nevada Tea Party Bolts the GOP and Glenn Beck by Jane Hamsher - FireDog Lake The Tea Party is evidently cutting its ties with the GOP in Nevada and pitching its own political tent. Certainly the best news Harry Reid has had all year:"Sun columnist Jon Ralston is reporting that the Tea Party has qualified as a third party in Nevada and will have a candidate in the Senate race to battle for the seat held by Majority Leader Harry Reid. The party has filed a Certificate of Existence but needs to get 1 percent of the electorate to vote for its candidate in November to permanently qualify, according to the report. Ralston reported that Jon Ashjian will be the Tea Party’s U.S. Senate candidate on the November ballot. Ashjian still must declare his candidacy." Reid might actually have a chance if a Tea Party candidate can split the vote on the right, where Reid is currently down 10 points to most of his Republican opponents.
SA@TAC - Interview with Tom Woods 2/16/10 Part 1
SA@TAC - Interview with Tom Woods 2/16/10
Rubio takes 'tea,' but says movement is no party By Ralph Z. Hallow - Washington Times Marco Rubio, a rising star in conservative Republican circles, said he sees the exploding "tea party" movement as a political energy source to be tapped, not a political party to be led. Mr. Rubio's underdog race for the Senate against Gov. Charlie Crist in Florida's Republican primary has become a rallying point for conservatives nationwide. He has been called the potential first "tea party senator," but he's quick to note that the anti-big-government movement is a symbol of mounting voter frustration with the records of both major parties in Washington.
Environmental Advocates Are Cooling on Obama By JOHN M. BRODER - NYTimes WASHINGTON — There has been no more reliable cheerleader for President Obama’s energy and climate change policies than Daniel J. Weiss of the left-leaning Center for American Progress. But Mr. Obama’s recent enthusiasm for nuclear power, including his budget proposal to triple federal loan guarantees for new nuclear reactors to $54 billion, was too much for Mr. Weiss.
After Dubai hit, Israelis question Mossad methods Dan Williams JERUSALEM (Reuters) - The quiet assassination of a Hamas commander gets unexpectedly messy. Exposed and forced to atone before angry allies, Israeli Prime Minister Benjamin Netanyahu orders the spymaster responsible to fall on his sword. That was in 1997, when the Mossad director resigned after his men botched the poisoning of Khaled Meshaal in Jordan. Now premier a second time, Netanyahu faces a similar crisis over the death of another Hamas figure, Mahmoud al-Mabhouh, in Dubai. Israel's official silence on the January 20 killing has been outpaced, in the popular imagination, by UAE police footage of the suspected assassins and revelations some of them had copied the European passports of actual immigrants to the Jewish state.
Obama risks China's wrath to meet Dalai Lama Ewen MacAskill, The Guardian Tibetan leader's visit to the US threatens to further damage shaky relationship with Beijing Barack Obama is to go ahead with talks with the Dalai Lama at the White House today and risk inflicting more damage on the already strained relations between the US and China. The Tibetan leader flew into Washington from India yesterday for the start of a 10-day US tour, which coincides with serious rows over the proposed US sale of military equipment to Taiwan and the US-China trade imbalance.
Obama’s Nuclear Option By Amy Goodman - TruthDig President Barack Obama is going nuclear. He announced the initial $8 billion in loan guarantees for construction of the first new nuclear power plants in the United States in close to three decades. Obama is making good on a campaign pledge, like his promises to escalate the war in Afghanistan and to unilaterally attack in Pakistan. And like his “Af-Pak” war strategy, Obama’s publicly financed resuscitation of the nuclear power industry in the U.S. is bound to fail, another taxpayer bailout waiting to happen.
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Coming Soon: 5 Million More Foreclosures By Barry Ritholtz - The Big Picture Studies keep showing what we have known for a long time: Fighting foreclosures is a futile — and counter-productive — use of resources. New studies by John Burns Real Estate Consulting and Standard & Poor’s Financial Services conclude that loan mod efforts only serve to delay the inevitable, resulting in future foreclosures. The credit bubble allowed home buyers to get in over their heads, to buy more house than they could afford. Once prices came down and the refi pipeline closed down, it was game over for many of these buyers.
New wave of foreclosures by end of 2010 is feared By Jim Puzzanghera and Don Lee - LA Times About 4 million U.S. homeowners are 90 days or more delinquent on their loans or in foreclosure proceedings, Moody's Economy.com says. A federal loan modification program is helping a relative few. Reporting from Washington - Experts fear that a new wave of foreclosures will hit this year as prolonged unemployment makes it difficult for millions of homeowners to pay their mortgages -- and many of them aren't likely to get much help from a federal program aimed at keeping them in their houses. Banks participating in the Home Affordable Modification Program, announced a year ago this week by President Obama, have been slow to turn temporarily reduced mortgage payments into permanent ones. "The overarching sense is that the mortgage modification process has not worked that well," said Bert Ely, an independent banking consultant.
Gold Jumps Most Since November on Demand for Alternative Assets By Pham-Duy Nguyen and Nicholas Larkin -- Feb. 16 (Bloomberg) -- Gold rose the most in more than three months on speculation that Greek debt concerns will spur demand for the metal as an alternative to holding currency. European finance ministers pressured Greece to rein in budget deficits and refused to say how they would rescue the nation if it can’t contain its debt. Gold rose to a record $1,227.50 an ounce last year as central banks in the U.S., the U.K. and European Union kept lending rates low to revive growth.
Foreign Demand for US Treasurys Takes Record Fall AP via CNBC The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion. The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits. The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009. The big drop in China's holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.
Foreign Demand for U.S. Debt Plunges as China Dumps Treasurys By DAN BURROWS - Daily Finance The global appetite for U.S. financial assets slowed markedly in December, and demand for federal debt fell by a record amount as China dumped more than $34 billion in American IOUs, the Treasury Department said Tuesday. If demand for U.S. debt continues to wane, it could get more expensive for the U.S. to fund its record deficits because it would have to offer higher interest rates to entice buyers.
US 'Creative Accounting' Could Repeat Greek Tragedy: CEO By: Brooke Sopelsa CNBC.com The US could end up with the same problems as debt-laden Greece if it does not get its spending under control and deal with its structural deficit, David Walker, president and CEO of the Peter G. Peterson Foundation, told CNBC. Walker, whose foundation advocates fiscal responsibility, said part of the problem is the US's engagement in "creative accounting practices," similar to those that helped Greece's debt crisis erupt.
David Walker's comments on possible Crisis of Confidence:
Fed Wants Banks' Loan-Level Data to Prevent Meltdown Repeat By Carrie Bay - DSNews Federal Reserve Board Governor Daniel Tarullo urged lawmakers Friday to craft reform legislation that would give regulators the authority to collect a broader range of data from lenders, including details of their loans and securities. It's insight the governor says is needed to accurately assess large financial firms' risk and ward off another crisis where the collapse of any one institution sends the system into a tailspin - as was the case when Lehman Brothers went under in 2008.
US banks take hit to clear home loan books By Suzanne Kapne FT Big US banks including Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are moving to clear their books of troubled mortgages by embracing “short sales”, in which homeowners settle debts by selling their properties for less than the mortgage value. Short sales are expected to climb sharply this year as home values continue to fall in some parts of the US, leaving many borrowers owing more on their mortgages than their homes are worth.
Credit markets flash hottest warning signal since crisis By Ambrose Evans-Pritchard - Telegraph European credit markets are flashing the most serious warnings signs in a year as the yields on risker bonds rise sharply and a string of companies cancel share flotations, raising fears that the recovery may falter in coming months. Jitters over Chinese credit tightening and default risks in Greece and Dubai are causing bond vigilantes to batten down the hatches across the world, bringing the most dramatic credit rally for a century to a shuddering halt. The Markit iTraxx Crossover index measuring yields on lower-grade debt has jumped by almost 130 basis points since mid-January to 514, while the main index of investment grade bonds has jumped by a third to 93. "This is the biggest move since the financial crisis in early 2009, said Gavan Nolan, Markit's credit analyst.
Greece loses EU voting power in blow to sovereignty By Ambrose Evans-Pritchard - Telegraph The European Union has shown its righteous wrath by stripping Greece of its vote at a crucial meeting next month, the worst humiliation ever suffered by an EU member state. The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty. While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty.
European Union Sets Deadline for Greece to Make Cuts AP via NY Times BRUSSELS - European finance ministers gave the Greece government on Tuesday just a month to show it is making drastic budget cuts in a bid to calm markets and stop Athen's debt crisis from spreading to other countries. The continent's top economy official also said he would investigate Greece's use of complex finance deals to mask debt in previous years. Ministers from the 27-nation block said in a statement that Greece must show by March 16 that it is on track to cut its deficit by a hefty 4 percent of gross domestic product - from a staggering 12.7 percent of gross domestic product to 8.7 percent this year, and that it will bring it under a 3 percent limit by 2012.
Iranian president warns against tougher sanctions Tehran, Iran (CNN) -- Iranian President Mahmoud Ahmadinejad warned the United States and other nations Tuesday not to impose tougher sanctions in reaction to the Islamic country's nuclear ambitions. Iran already faces U.N. sanctions and the five permanent Security Council members -- the United States, Britain, Russia, China and France, all of which have veto power -- have been engaged along with Germany in discussions about possible further measures. "It's high time for some people to open their eyes and adapt themselves to real changes that are under way," Ahmadinejad said at a news conference in Tehran.
Gold scores new all-time high against Euros By Dan Norcini - Commodity Online This morning gold scored a new all-time high when priced in terms of Euros at the PM London Fix. The situation in Greece, as well as the smoke coming out of Italy, Spain and Portugal, has European investors rightly worried over the stability of the Euro. If you were an investor who had labored over a lifetime to secure an inheritance for your children and were witnessing the cracks appearing in the foundation underlying the Euro, would it not be eminently sensible to seek out a safe haven to protect at least a portion of that wealth? That is precisely what is occurring and why gold is soaring into new highs in Euro terms.
Gold in Euros is about to go parabolic by Jordan Roy-Byrne - Financial Sense How can we tell if a market is about to go parabolic? Trendlines are one way. Another way is to look at the length of corrections. How long is it taking the market to correct? Are the corrections becoming shorter and shorter? In the case of Gold/Euro, we see a market that is ready to go parabolic. The market has had four major corrections and each one has been shorter then the last. See the chart below.
Gold surges on sustained demand, silver firms up India Times MUMBAI: Gold prices shot up further at the bullion market here on Tuesday on renewed demand from stockists and speculators triggered by a steep rise in European markets. Moving in tandem with gold prices, silver too firmed up due to higher off-take from industrial units. The rising trend was also boosted by strong local buying interest amidst seasonal demand.
Gold Heads Higher as Economy Weakens and Dollar Continues to Fall By Paco Ahlgren - The Bottom Violation -- What is the best harbinger of inflation and the increase in prices that follows? You guessed it: gold. Markets are smart, and like it or not, gold has a much longer history than the U.S. dollar. When gold is moving higher, it should be like flashing red lights cutting through the black of night: something is amiss in the world of economics and finance. Yes, I know - cranking jaws like George Soros are simply thrilled to scream the word "bubble" at any microphone within ten feet. Hey George, I know you broke the pound sterling and all that, but you're old and senile. Further, Karl Popper would be appalled by how you've misrepresented his philosophy and scotch-taped yourself to his coattails. But all that aside, please consider the following:
Gold Rises to New Record Nominal Euro High Gold built on last week's gains and rose nearly 1% yesterday, closing at $1,099.50/oz and gold also rose in other major currencies. Gold has risen in Asian trading and again in early European trade and is currently trading at $1,113.20/oz and in euro and GBP terms €816/oz and £710/oz respectively. As expected the crisis in the Eurozone has seen gold surge in Euro terms to new record (nominal) highs over €817/oz - thus surpassing the previous record high seen in December 2009 at €813/oz.
Gold outperforms during market meltdown By Kishori Krishnan - Commodity Online The Emperor is naked. The debt of the US government is turning out to be in fact irredeemable. And gold is poised to break out. Remember, gold outperforms in a crisis. The inconspicuous beginnings of irredeemable debt have blossomed into a colossal edifice in the United States, a fantastic debt tower that is soon set to keel over. And to top it all President Barack Obama on Saturday further raised the debt ceiling.
Digging for opportunities in gold By Katie Benner (Fortune Magazine) -- Having lived through bubbles in technology stocks and real estate, many investors have grown nervous lately about gold. Its price quadrupled in the past decade to a record $1,227 an ounce in December, before falling back near $1,100. Hedge fund legend George Soros, for example, recently warned that "the ultimate asset bubble is gold." Others, by contrast, cling to it as the ultimate safe haven in a period of wrenching economic uncertainty.
Speculators pump money into gold market By Jon Nadler - Commodity Online Gold prices broke above the $1100 mark and rose to a two-week high as overnight trading got underway in Asia, giving rise to short-covering purchases that only accelerated once the $1106 resistance area was also taken out. The yellow metal reached a high at very near another resistance point –that of $1118.50 per ounce. Other commodities – mainly oil and copper-advanced as well, as speculators funneled money into the sector on currency weakness. That said, technical analysts see black gold as eventually falling back towards $73 soon, as it has been unable to pierce overhead resistance at the $76 level.
Gold & the New World Order Jim Roache - 321Gold I believe the discipline of Economics has a fatal flaw - it assumes a degree of rationality of which our specie is devoid. It also assumes you can reason with power - you cannot. Finally, and fatally, it has failed to integrate globalization into any of its fundamental schools of thought. All the rational argument in the world will not convince those in power (by wealth, social position or politics) to act rationally because 1. it would not be in their interest to do so 2. because that minority, elite, rich, powerful, many sociopaths and/or - already know the rational positions of the various schools, and they have made it their business to circumvent them or bend them to serve their own purposes, and 3. they hold the rest of us in complete and utter contempt - expressed in private often using terminology that is shocking, demeaning and exasperating to the listener.
Gold rallies nearly $30, well clear of $1,100 By Polya Lesova & Nick Godt, MarketWatch Bigger percentage gains seen in silver, copper contracts Gold futures jumped nearly $30 an ounce to join a broad-based rally for commodity prices Tuesday as concern over Greece's fiscal situation dissipated, allowing for the dollar to fall and increasing the precious metal's appeal as an investment.
Go For The Gold by Warren Bevan - Financial Sense . . . . Chinese new year is now upon us and that will mean subdued eastern demand. Nearly everything shuts down over there while the populous enjoys some well deserved time off, but it seems Indian buying has picked up recently to pick up the slack. We are soon heading into a seasonally strong period for gold which will coincide nicely with the end of the Chinese New Year.
Monetary Inflation and the Fed’s Exit Strategy Steve Saville - 321Gold . . . . We have always been confident in the collective ability of the US Government and the Fed to perpetuate the inflation of the US money supply. The only question in our minds has been: how far will they be willing to go? The answer we have always come up with is that they will at least go as far as they can without causing interest rates to rocket upward. They may not go any further than that because monetary inflation becomes counterproductive -- from the perspective of a policymaker -- once the point is reached where interest rates are in a steep upward trend due to speculators anticipating the effects on the currency's purchasing power of future money-supply growth.
Dollar Loses Ground Against Rivals By BRADLEY DAVIS - WSJ NEW YORK -- The dollar weakened against most of its major competitors Tuesday, as improved investor sentiment sent global stock markets and commodities higher, leading investors away from the low-yielding dollar. Higher-yielding, commodity-backed currencies, such as the Australian and New Zealand dollars, were the biggest beneficiaries of the improved sentiment, both increasing nearly 1% against the U.S. dollar in early New York trading.
With U.S. Debt Rising, Why Is the Dollar Stronger? By PETER COHAN Daily Finance The standard explanations for what moves currency markets are lame. With the U.S. deficit forecast to hit $1.54 trillion in 2010 and the national debt at $12.3 trillion, why would anyone want to own the dollar? Yet somehow, the greenback has risen to an eight-month high relative to the euro. If it persists, that stronger dollar will alter the global economic and investment climate.
Bomb Explodes At J. P. Morgan Offices in Athens Jesse's Cafe Americain A bomb was detonated outside the JP Morgan offices in Athens, Greece. No one is reported injured at this time. A warning was called in prior to the explosion allowing police to cordon the area. This is somewhat remniscent of the bombing of the J.P. Morgan headquarters on Wall Street in 1920, presumably by anarchists. The marks and pitted holes on the JPM building remained to the modern day. I saw them myself some years ago.
Treasuries Gain After Hoenig Says U.S. Must Reduce Spending By Cordell Eddings and Susanne Walker Feb. 16 (Bloomberg) -- Treasuries rose after Federal Reserve Bank of Kansas City President Thomas Hoenig said the U.S. must take steps to reduce spending and increase revenue so the central bank isn’t pressured to fund the deficit. Yields climbed earlier as global stocks gained and demand for Treasuries as a refuge eased after a Greek official said the nation is ahead of its deficit-reduction targets and will not require any bailout from the European Union. The difference in yield between 2- and 10-year notes widened to as much as 2.89 percentage points, 1 basis point less than the record high reached Jan. 11.
Fed carries losses from Bear portfolio By Henny Sender - FT The US Federal Reserve is sitting on significant paper losses on the real estate assets it acquired in the Bear Stearns rescue, with much of the red ink coming from debt used to back some of the most high-profile buy-out deals of the bubble years. Among the debts weighing on the central bank’s portfolio are those used in financing the acquisitions of Hilton Hotels, which is being restructured, and hotel operator Extended Stay, which is in bankruptcy, people familiar with the matter say.
Is the Fed's Zero Interest Rate Policy Driving Global Deflation? The Institutional Risk Analyst One of the more intriguing aspects of the financial crisis has been the inability or refusal of the Federal Reserve Board to take aggressive policy steps to help the real economy and, in particular, break the asset deflation which is dragging down incomes and employment across the country - and the world. The same balance sheet deflation that is costing jobs in Detroit is also driving economic contraction in Shenzhen. While the Fed's staff in Washington and most other residents of the Capital City believe that asset deflation and the resulting financial crisis is nearing an end, we beg to differ.
Stimulus spending: $32 billion per month By Tami Luhby NEW YORK (CNNMoney.com) -- The pace of stimulus spending should pick up in coming months, according to administration officials. The federal government expects to distribute $32 billion in Recovery Act funds per month, up from an average $27 billion a month over the past year, according to Vice President Joe Biden, who will release his annual stimulus progress report on Wednesday.
Fed Chooses to Exit through Eye of Needle by Michael Pento - Financial Sense Ben Bernanke is making sure the Fed’s exit strategy goes as easily as a camel can pass through the eye of a needle. Instead of choosing to just sell assets and unwind the amount of securities it holds, the Fed chairman is seeking to be creative once again—as he was in the buildup of its balance sheet--and increase the amount of interest it pays on excess reserves. He said this in a prepared statement for the House Financial Services Committee that was released on Wednesday, “It is possible that the Federal Reserve could for a time use the interest rate paid on reserves, in combination with targets for reserve quantities, as a guide to its policy stance, while simultaneously monitoring a range of market rates.”
Obama to create debt commission Thursday By Ed Henry, CNN President Obama will sign an executive order Thursday to set up a bipartisan fiscal commission to weigh proposals to rein in the soaring federal debt, according to a White House official. The official, who requested anonymity because the President has not made the announcement yet, said the co-chairs of the commission will be Democrat Erskine Bowles, former White House chief of staff for Bill Clinton, and Alan Simpson, former Republican Senator from Wyoming. It'll be officially titled the National Commission on Fiscal Responsibility and Reform.
Obama deploys Cabinet to defend stimulus By: PHILIP ELLIOTT - Associated Press WASHINGTON - President Barack Obama, defending his economic stimulus plan on its first anniversary, is dispatching his Cabinet across the country to try to calm an anxious public as Democrats head into potentially devastating midterm elections. A weeklong push to highlight the stimulus program's first year was starting with a Tuesday trip by Vice President Joe Biden to hard-hit Saginaw, Mich., to tour a small business, a jobs training program and a solar factory that all received Recovery Act dollars. The vice president, who has led the administration's efforts to implement the stimulus plan, is expected to again push Congress to pass a jobs bill to help some of the 8.4 million people who have lost their jobs since this recession began.
All Roads Lead to Goldman Sachs by Rob Kirby - - Financial Sense Once upon a time, Goldman Sachs shunned publicity. During the period from 1930 to 1969, Sydney Weinberg ran Goldman Sachs where he developed a staunch corporate cultural aversion to publicity. During the 1970s, a tandem of John Weinberg and John Whitehead assumed the reigns of leadership at Goldman Sachs. Whitehead left the company in 1984 to enter public life. John Weinberg carried on in the same vein as his father Sydney – shunning publicity – to the point where he hired a man to keep his name and his firm's out of the press.
Treasury's quiet war By Jennifer Liberto WASHINGTON (CNNMoney.com) -- You probably know the Treasury Department as the agency that brought you the bank bailout, the AIG rescue and, of course, the IRS. But Treasury is also one of the key players in the war on terrorism and smack in the middle of nearly every major international conflict in which the United States is involved. The office is also playing an increasingly critical role at the center of U.S. foreign policy strategy in Korea, Iran, Afghanistan and throughout the Middle East.
Google Bans DVD Critical Of Obama Administration Paul Joseph Watson - Prison Planet.com Search Engine Giant Censors Alex Jones Material For "Advocating Against a Protected Group" Google has sensationally banned all sales through its shopping merchant of a DVD critical of the Obama administration under the terms of its program policy which bars any material deemed to be "advocating against a protected group". Apparently, Google considers the government to be a "protected group," and immune from criticism. Radio talk show host Alex Jones' Google merchant account has been completely disabled after the search engine giant sent an email claiming the products listed promoted violence, and refused to link to them on the Infowars Yahoo shopping cart.
ACORN funder confimed to head Corporation for National and Community Service By: Mark Hemingway - Washington Examiner Democrats just can't stay away from ACORN. Even as scandal piles on top of scandal, they continue to embrace the organization. The latest is that the Senate just confirmed Patrick Corvington as chief executive of the Corporation for National and Community Service. Corvington and ACORN have quite the history as Matthew Vaum notes: Corvington was a senior official at the left-wing Annie E. Casey Foundation of Baltimore, Md., which granted funding to ACORN and other radical groups during his tenure. If Corvington didn't share the views of the foundation, which promotes racial disharmony and opposes placing juveniles charged with crimes in pretrial detention, he almost certainly couldn't have gotten a job there.
Kansas negotiators agree on 5 percent cut in pay for elected officials, judges Associated Press - Washington Examiner TOPEKA, KAN. - Kansas House and Senate negotiators have agreed on details of a temporary 5 percent pay cut for elected officials, judges and certain other state officials. The deal struck Monday resolves the two chambers' differences on a bill revising the state budget for the fiscal year that ends June 30. The pay cuts would extend through mid-June and save the state about $1 million. The House version included the salary cuts, which also apply to legislators, Cabinet secretaries and other top state managers.
A Roadmap for killing Social Security By Michael Hiltzik - LA Times Like a zombie tromping through a Hollywood gorefest, the idea of privatizing Social Security still walks among us. The last promoter of the idea that people should personally invest their Social Security assets in the stock market was President George W. Bush, in 2001. With the dot-com crash still ringing in people's memories, the idea died in 2005. The market hasn't yet recovered from its most recent crash, but the monster unaccountably is back on its feet. This time it comes dressed up as part of the "Roadmap for America’s Future" recently unfurled by Rep. Paul D. Ryan (R-Wis.), the ranking GOP member of the House Budget Committee.
Capital One Defaults Rise, Sees High Levels Ahead Reuters via CNBC Capital One Financial's U.S. credit-card defaults rose in January, in a sign that consumers continue to remain under stress, it said in a regulatory filing. Capital One said the annualized net charge -off rate -debts the company believes it will never collect - for U.S. credit cards rose to 10.41 percent in January from 10.14 percent in December. Accounts at least 30 days delinquent - an indicator of future loan losses-were up marginally to 5.80 percent from 5.78 percent.
Tough times at Office Depot By Suzanne Kapner (Fortune Magazine) -- In the midst of a recession that has hit business and consumer spending especially hard, it may not be so surprising that retailer Office Depot is having a rough go of things: The No. 2 office-supplies chain lost money in each of the past five quarters and is expected to lose $96 million this year. But the company, based in Boca Raton, Fla., is facing troubles that go deeper than reduced demand for paper and pens: namely, an investigation by the SEC that's in the final stages of settlement and a fresh round of probes into whether the company overcharged government customers.
Homebuilders Rise on a Shaky Foundation By David Bogoslaw - Business Week A battered sector has reasonable hopes for 2010, but government policy may be the key Unlike much of the market, most of the homebuilder stocks have continued to rally this year, albeit bumpily, despite renewed concerns about the pace of economic recovery amid fear of contagion from the European sovereign debt morass. The rally is primarily due to the stronger-than-expected earnings that many of the companies have reported this season, which is giving investors some hope that these stocks will be good bets in 2010.
U.S. looks to reluctant foreign investors to help fund the housing market By Howard Schneider - Washington Post As the U.S. housing market boomed in the past decade and fueled a bull market in mortgage investments, Norway's government-owned fund went along for the ride -- and the fall. After that fund recorded its worst-ever year in 2008, managers cited investments backed by U.S. mortgages as a key culprit and began to cut back.
Obama pledges $8 billion for new nuclear reactors By Jim Tankersley and Michael Muskal - LA Times The move represents a new federal commitment to the low-carbon-emitting, but highly controversial, sector long championed by Republicans. Environmentalists voice concern Reporting from Los Angeles and Washington - Seeking common ground with Republicans on energy and climate issues, President Obama on Tuesday pledged $8 billion in loan guarantees needed to build the first U.S. nuclear reactors in nearly three decades. The move, along with a tripling of nuclear loan guarantees in the president's budget, represents a new federal commitment to the low-carbon-emitting, but highly controversial, nuclear power sector long championed by the GOP.
Oil Nears $76 on Weaker Dollar By DAVID BIRD NEW YORK-Crude oil prices rose, spurred by a weaker dollar and renewed tension over Iran's nuclear ambitions. As U.S. traders returned to their desks after the Presidents Day holiday on Monday, light sweet crude oil for March delivery on the New York Mercantile Exchange was recently up $1.62 a barrel, or about 2.2%, at $75.75. March heating oil was 3.77 cents higher at $1.9566 a gallon, while March reformulated gasoline blendstock was 3.75 cents higher, at $1.9670 a gallon.
Ford lays off 900 workers at Mustang plant due to slow sales By Dee-Ann Durbin, Associated Press DETROIT — Ford Motor said Tuesday that it plans to cut 900 workers at the Michigan plant that makes the Mustang, after slow sales last year due to the tough economy and competition from the new Chevrolet Camaro. Ford will reduce shifts from two to one in July at the AutoAlliance International plant in Flat Rock, Mich. The plant, which is jointly owned with Mazda Motor , also makes the Mazda6 midsize sedan. The plant employs nearly 2,300 people. Most of the layoffs will be hourly manufacturing workers, but some salaried staff also will be cut, Ford spokeswoman Marcey Evans said.
Toyota hit by new surge of reported fatalities in vehicles By Brady Dennis - Washington Post Federal officials have received a flurry of new complaints in recent weeks about deaths linked to sudden acceleration in Toyota vehicles, bringing the total number of alleged fatalities to 34 since 2000, according to government data. Between 2000 and 2009, the National Highway Traffic Safety Administration received complaints alleging 21 deaths attributable to sudden acceleration in Toyota vehicles. Since Jan. 27, federal officials have received complaints alleging an additional 13 fatalities linked to the same issue in Toyota vehicles between 2005 and 2010.
6 failed car companies Tesla Motors became the first electric car company to file for an IPO this January and could be the first U.S. automaker to go public since Ford in 1956. But auto startups have not fared well in the U.S., and Tesla has yet to turn a profit. Here are six that eventually stalled out.
Obama to announce loan guarantee to build US 1st nuclear plant in decades By: The Associated Press via CNBC WASHINGTON - President Barack Obama will announce a guarantee of $8.3 billion (euro6.1 billion) in loans for the first new U.S. nuclear power plant in nearly three decades, underscoring the administration's efforts to reduce dependence on foreign oil.
Obama Administration Shuts Down Oldest Gun Show in Central Texas Kurt Nimmo - Infowars.com The BATF engaged in mafia tactics in running a criminal conspiracy to shut down a gun show in Austin Texas, the Alex Jones Show heard Monday, direct from the man embroiled at the center of the Obama administration’s latest savage attack on the second amendment. Following the staged arrest of a man by the Austin Police — subsequently released without charge — the BATF pressured lease holders HEB to shut down the oldest gun show in central Texas.
Climategate U-turn as scientist at centre of row admits: There has been no global warming since 1995 By Jonathan Petre - Mail Online The academic at the centre of the 'Climategate' affair, whose raw data is crucial to the theory of climate change, has admitted that he has trouble 'keeping track' of the information. Colleagues say that the reason Professor Phil Jones has refused Freedom of Information requests is that he may have actually lost the relevant papers. Professor Jones told the BBC yesterday there was truth in the observations of colleagues that he lacked organisational skills, that his office was swamped with piles of paper and that his record keeping is 'not as good as it should be'. The data is crucial to the famous 'hockey stick graph' used by climate change advocates to support the theory. Professor Jones also conceded the possibility that the world was warmer in medieval times than now - suggesting global warming may not be a man-made phenomenon. And he said that for the past 15 years there has been no 'statistically significant' warming.
Secret Joint Raid Captures Taliban's Top Commander By MARK MAZZETTI and DEXTER FILKINS - NY Times WASHINGTON - The Taliban's top military commander was captured several days ago in Karachi, Pakistan, in a secret joint operation by Pakistani and American intelligence forces, according to American government officials. The commander, Mullah Abdul Ghani Baradar, is an Afghan described by American officials as the most significant Taliban figure to be detained since the American-led war in Afghanistan started more than eight years ago. He ranks second in influence only to Mullah Muhammad Omar, the Taliban's founder and a close associate of Osama bin Laden before the Sept. 11 attacks.
As Clinton Presses Allies, Sharp Words Traded With Iran By MARK LANDLER and ALAN COWELL - NY Times JIDDA, Saudi Arabia - Locked in a sharpening confrontation with Iran over its nuclear program , Secretary of State Hillary Rodham Clinton reiterated concerns about Tehran's intentions on Tuesday, suggesting that evidence pointed to Iran seeking nuclear weapons. Speaking in Jidda as she prepared to end a three-day regional visit, Mrs. Clinton said that it would create "quite dangerous" problems if Iran acquired a nuclear weapon, potentially setting off a nuclear arms race.
29% Say U.S. Should Go It Alone Against Iran Rassmussen Reports With China still blocking UN efforts to impose meaningful sanctions on Iran, 29% of U.S. voters now think the United States should talk action alone against the rogue Islamic nation. But a new Rasmussen Reports national telephone survey shows that nearly half of voters (49%) disagree and oppose unilateral U.S. action against Iran. Twenty-two percent (22%) are not sure. In December, 67% of voters said the United Nations has not been aggressive enough in response to Iran's nuclear.
Biden to visit Israel soon BY HERB KEINON AND AP US vice president expected within a month, apparently to discuss Iran. Vice President Joe Biden is expected in Israel within a month for meetings coming fast on the heels of US military chief Adm. Michael Mullen's visit here on Sunday, in what appears to be an indication of unprecedented cooperation on the Iranian nuclear issue
Jordan calls for time frame to realize two-state solution People's Daily [China] Jordan's Foreign Minister Nasser Judeh on Thursday emphasized the urgency to set a specific time frame to fulfill the two-state solution, which leads to the creation of an independent Palestinian state. During talks with Mark Otti, the European Union (EU)'s envoy to the Middle East, Judeh said it is important to intensify regional and international efforts to restart the stalled Palestinian- Israeli peace talks, the state-run Petra new agency reported. These negotiations should be in line with relevant international resolutions and the Arab Peace Initiative, adopted by the Arab leaders in their summit in Beirut in 2002, he said.
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Tues 02.16.2010
What People Want By David Walker - Daily Reckoning 02/15/10 New York, New York – President Obama has to maneuver his way through a lot of constituencies, including Democratic senators and congress members, his own staff, and special-interest groups. Underneath it all, he may actually be a fiscal reformer. If he enacts major fiscal reforms, he will have one indispensable constituency on his side: public opinion. Ask the American people, and they will tell you overwhelmingly that our sustained fiscal health is fundamentally important. In fact, we at the Peterson Foundation did ask them. The foundation commissioned a rigorous national poll by Hart Research Associates and Public Opinion Strategies in late March 2009. We wanted to see whether the recent hard times had made people more likely to accept reforms. And the answer was yes.
Dollar Up as Europe Reels By Tom Lauricella, Dave Kansas, Andrew Batson - WSJ Currency Gains After Euro-Zone Debt Woes Upend Bearish Forecasts for Greenback A dramatic turn in sentiment in favor of the dollar and against the euro continued Monday, with lingering fears of a possible European debt crisis pushing the greenback to its highest point in nine months. Among investors, the question a few months ago wasn't whether the U.S. dollar would decline in value, but rather how far and how fast. The currency's surge is throwing a monkey wrench into the plans of corporations and investors who were betting on a weak dollar.
Cracks in the BRICs? By LIAM DENNING - WSJ As all else has crumbled, the BRICs have come through the crisis looking relatively solid. Yet clear differences have opened up among the fast-growing emerging-market quartet consisting of Brazil, Russia, India and China. Two members under the spotlight are Brazil and China. Emerging markets fund manager Mark Mobius was quoted recently as saying the Latin American giant's economy was "more sustainable" than that of the Asian powerhouse, mainly due to Brazil's self-sufficiency in major commodities.
China will soon revalue the yuan Nation must slow economy down, deal with inflation threat, analyst says NEW YORK Reuters - China could be about to allow its currency to strengthen by as much as 5 percent to slow down the country's fast-growing economy, Goldman Sachs' chief economist was quoted as saying on Sunday. "I have a strong opinion that they're close to moving the exchange rate," Jim O'Neill told Bloomberg. "Something's brewing. It could happen anytime."
China 'to allow' yuan to rise By James Quinn - Telegraph UK China could be on the verge of letting the yuan appreciate in order to attempt to put a brake on growth, a leading economist has said, in a move that has spread concern in international currency markets. Jim O'Neill, Goldman Sachs' chief economist, believes that "something's brewing" in China that could lead to a major policy shift in the country's stance on its own currency. To date, the Beijing authorities have opposed widespread calls – including from US President Barack Obama and Tim Geithner, the US Treasury Secretary – to allow the yuan to strengthen. Beijing has dismissed suggestions that its artificial position creates an unfair playing field for the country's exports.
China v world as a trade war comes closer Irwin Stelze - Times Online “WHEN some foreign nation restrains ... the importation of some of our manufactures ... revenge naturally dictates retaliation.” It sounds like some trade-union protectionist, but actually this was written by Adam Smith in his Wealth of Nations, the bible of free traders. And once restrictions are installed, “freedom of trade should be restored only by slow gradations” to avoid throwing lots of people out of work. Smith, of course, saw retaliation as a means of forcing a trading partner to end its restrictions in a process of mutual disarmament. Now, that process is played out in the World Trade Organisation and against a background of mounting Sino-US geopolitical rivalry.
Forget the Fed. Watch China instead By Chris Isidore NEW YORK (CNNMoney.com) -- The central bank of greatest concern to investors and U.S. businesses right now isn't the Federal Reserve. It's the People's Bank of China. The Chinese central bank tightened credit Friday by requiring banks in China to increase their reserves for the second time this year. The move once again rattled markets around the globe. By contrast, the exit strategy that Federal Reserve chairman Ben Bernanke laid out Wednesday detailing how he expected the Fed to start tightening credit in the U.S. caused barely a ripple.
Greece use of derivatives puts more pressure on euro Gráinne Gilmore - Times Online The euro slid close to a nine-month low against the dollar yesterday as investors became increasingly nervous over reports that Greece used derivatives to disguise the size of its debts before joining the single currency. As eurozone ministers met in Brussels last night for talks over the Greek debt crisis, ahead of the Eurogroup meeting of finance ministers from across the European Union today, the EU asked Greek authorities to explain suggestions that they had used derivatives trades with American investment banks to allow them to meet the stringent criteria for joining the euro in 2001.
Greek drama playing out on Wall Street Some traders comparing nation's debt crisis to Lehman Brothers bankruptcy NEW YORK Reuters - Stocks could struggle to make headway this week if a meeting of European finance ministers fails to reassure markets that they can contain Greece's debt problems. Greece's financing problems have focused investors' attention on the growing mountain of public debt as cash-strapped governments around the world spend their way out of recession. The fear is Greece's problems could spread, hurting financial markets.
EU orders Greece to cut deeper By Ambrose-Evans-Pritchard - Telegraph UK Brussels has given Greece two weeks to answer allegations that it used complex derivatives earlier this decade to mask its public debt, and called for even tougher austerity measures to bring its budget deficit under control. The escalating demands came as Greek finance minister George Papaconstantinou bared his soul in Brussels, confessing that public finances were out of control. "We are trying to change the course of the Titanic, it cannot be done in a day," he said. Ollie Rehn, the EU's economics commissioner, said Greece must brace itself for yet more retrenchment, despite the risk of pushing Greek society to snapping point. "There is a clear case for additional measures," he said.
Greek Bailout Increasingly Unpopular in Germany By NICHOLAS KULISH - NY Times BERLIN — As European finance ministers refused Monday to name specific measures to rescue Greece and the Continent’s common currency, opposition grew among Germans to bailing out what they call spendthrifts to the south after years of belt-tightening by workers at home. The fiscal crisis, shaking the Greek government while driving down the value of the euro, is forcing taxpayers and voters across Europe to confront the fact that their fortunes are tied together more closely than their politicians confessed in the late 1990s, in the rush to create the common currency over public objections.
Europe's Four Little PIGS: A Greek Tragedy Just as the world seemed to be unshackling itself from the bonds of the Great Financial Crisis, the markets are now confronted with the potential for yet another one – this time Europe is ground zero. Specifically, it is a group of countries known as the PIGS (Portugal, Ireland, Greece and Spain). The magnitude of the crisis has left the euro damaged. Recall, only a few months ago investors were seemingly unanimous in expressing their disdain for the US dollar.
Greece, Dubai and the Threat of Sovereign Collapse By Joel Bowman - Daily Reckoning The Day of Reckoning is postponed, but not canceled. Markets in the US are closed today. Americans celebrate President’s Day, on which Bill offers some musings below. Trading across much of Asia is closed, too. Investors in China, Taiwan, Hong Kong, Singapore and Malaysia look to the heavens for guidance, wondering what the Lunar New Year will bring. Elsewhere in Asia, investors took stock of more earthly goings on…and hit the “sell” button. Indexes fell in Bombay, Tokyo, Sydney and across the Middle East. People are worried about the Greeks and the Dubai Emiratis. Both sovereigns are deep in debt. Both suffer crises of solvency…and both seek to delay their own Day of Reckoning, when debts must be repaid and promises met.
Kiss That V-Shaped Recovery Good-Bye: The U.S. "Worse Than Greece," Says Economistby Peter Gorenstein - Tech Ticker -- There's been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery. There's the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession. Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter.
How the U.S. can avoid the Greek problem By Jeanne Sahadi NEW YORK (CNNMoney.com) -- Call it the Case of the Missing Commission. The bipartisan panel that President Obama has promised would tackle the nation's long-term debt problems is nowhere in sight yet. The delay in getting the commission up and running is due in great part to partisan jockeying from both sides of the aisle and continued uncertainty about whether current Republican lawmakers will agree to take part.
Gold extends gains in Asia SINGAPORE (Commodity Online) : Gold prices extended gains in Asian trade Tuesday as investors await EU measures to rescue debt-laden Greece. Spot gold was seen trading at $1105. 31 an ounce at 11.30 a.m while April delivery was at $1107.32 an ounce at the same time in electronic trading in New York’s Comex.
Gold May Rebound, Advance Toward $1,161: Technical Analysis By Nicholas Larkin Feb. 15 (Bloomberg) -- Gold’s drop from its December record may precede a rebound toward $1,161 an ounce, according to technical analysis by Citigroup Inc. The attached chart shows gold is nearing trend resistance at $1,104 an ounce. Gains above that level would constitute a “bullish break” and might signal a further climb toward the January high of $1,161, according to Citigroup. “The price action down from the high in December looks corrective, and we believe the market is at risk of turning back up again over the coming days and weeks,” Citigroup technical analysts led by Tom Fitzpatrick in New York wrote today in a report.
Gold outperforms during market meltdown By Kishori Krishnan - Commodity Online The Emperor is naked. The debt of the US government is turning out to be in fact irredeemable. And gold is poised to break out. Remember, gold outperforms in a crisis. The inconspicuous beginnings of irredeemable debt have blossomed into a colossal edifice in the United States, a fantastic debt tower that is soon set to keel over. And to top it all President Barack Obama on Saturday further raised the debt ceiling.
A Retrospective Look at U.S. 'Gold Reserves' Jeff Nielson - Silver Bear Cafe In discussing the "gold reserves" of the U.S. government, the first point to make is that the only way in which this topic can be discussed is from a retrospective viewpoint. The reason for this is that while the U.S. government claims to have the largest reserves of gold in the world (supposedly over 8,000 tons) it has not allowed anyone to see this 'gold' in over 50 years.
Gold History Repeats Itself By Hubert Moolman - Gold Seek The gold price reached an all time high of $1226 on 3 December 2009. It has since retreated to $1044 on 5 Feb 2010. I believe this to be the bottom of this retreat, and you will understand why after reading the rest of this article. Since the high of $1226, gold has actually formed a familiar pattern (fractal). Fractals are best explained visually and therefore I include the pattern gold has formed since 3 December 2009 below:
Parade asks, "Should the U.S. sell its gold?" It is fascinating just to see a story like this in a publication like Parade Magazine, asking what should be done with the nation's stash of seemingly useless gold bars, but, the fact that an overwhelming majority of readers think the metal is still relevant is a surprising bonus. The U.S. has the world’s largest gold reserve—more than 8000 metric tons. That’s far more than Germany’s, which comes in second with 3400. At current prices, our reserve is worth an estimated $288 billion. Since the U.S. government could certainly use the funds, why not sell this valuable commodity? Does our country need to keep all of that gold?
Digging for opportunities in gold By Katie Benner (Fortune Magazine) -- Having lived through bubbles in technology stocks and real estate, many investors have grown nervous lately about gold. Its price quadrupled in the past decade to a record $1,227 an ounce in December, before falling back near $1,100. Hedge fund legend George Soros, for example, recently warned that "the ultimate asset bubble is gold." Others, by contrast, cling to it as the ultimate safe haven in a period of wrenching economic uncertainty.
Brace Yourself For A Big Gold Shortage The Mad Hedge Fund Trader - Business Insider Brace yourself for the impending gold shortage. Gold shortage? Yup. With the launch of a flurry of dedicated gold ETF's last year, total ETF holdings of the barbaric relic, now exceed total world production. South Africa suffered its steepest decline in gold production since 1901, falling 14%, to a mere 232tons. It now ranks only third in global production of the yellow metal, after China and the US. Severe electricity rationing, a shortage of skilled workers,and more stringent mine safety regulations have been blamed.
Good for Stocks, Better for Gold: Bernanke's "Stuck at Zero," Michael Pento Saysby Peter Gorenstein - Tech Ticker -- Once again, Beijing's efforts to cool their red hot economy are causing a sell-off on Wall Street. For the second time in a month, China said it would require banks to increase reserve levels thereby curtailing lending. The news quickly killed Thursday's one-day rally and once again raised concerns the recent market sell-off is in its early stages. "The global economy is slowing," says Michael Pento, chief market strategist with Delta Global Advisors, pointing to stagnant commodity prices. "That's why I think, we're having a double-dip recession here in the United States and a slowdown, unlike what the IMF predicts, a slowdown in global GDP."
Gold Nanoparticles Stop Cancer from Reproducing Taking gold nanoparticles to the cancer cell and hitting them with a laser has been shown to be a promising tool in fighting cancer, but what about cancers that occur in places where a laser light can't reach? Scientists at the Georgia Institute of Technology have shown that by directing gold nanoparticles into the nuclei of cancer cells, they can not only prevent them from multiplying, but can kill them where they lurk. The research appeared as a communication in the February 10 edition of the Journal of the American Chemical Society.
Saudi Central Banker Confirms U.S. Dollar Is on Its Deathbed J.S. Kim - Seeking Alpha In Hong Kong, Mohammed al-Jasser, the head of the Saudi Arabian Monetary Authority, affirmed that the US dollar’s role as the world’s reserve currency is coming to an end when he stated: “The dollar is still preeminent in its role as a reserve currency.” We should recall former US Federal Reserve Chairman Alan Blinder’s statement, “The last duty of a central banker is to tell the public the truth” (PBS Nightly Business Report, 1994) and thus be astute enough to realize that the often hollow words of Central Bankers serve as a contrary indicator of the truth.
Monetary Inflation and the Fed’s Exit Strategy By: Steve Saville - Gold Seek Inflation Update The following monthly chart compares the year-over-year (YOY) growth rates of True Money Supply (TMS - the blue line) and M2 (the red line). As at the end of January the TMS yearly rate of change was down a few percent from its high, but was still well into double digits and in the top quartile of its 10-year range. The M2 rate of change, however, was at a 10-year low. As explained in previous commentaries, the large divergence over the past year between these two monetary aggregates is primarily due to declines in the NON-monetary components of M2 (the main non-monetary components of M2 being money-market funds and time deposits).
The Expanding Industry of US Government By Bill Bonner - Daily Reckoning No lobbyist left behind! That’s the new motto of the whole Washington establishment. Every spending bill has something in it for everybody. Today is a holiday in America. It’s “Presidents Day,” a day set aside for Americans to honor those who rule over them. Most Americans think of Washington, Lincoln and Roosevelt…but here at The Daily Reckoning we honor America’s truly great presidents – William Henry Harrison, Chester Arthur and Warren Harding – those who didn’t make things worse.
Is the Bond Market Screaming Inflation Uh oh... Did anyone catch the 30 year bond auction yesterday? If not, take a look (warning, this is not for the faint of heart): [see chart] Folks this is ugly. A bid to cover of 2.36 is god awful. Anything below a 2.0 BTC is considered to be a failed auction. We came real damn close to seeing one yesterday. The 28% participation by the indirect bidders (FCB's) was also not a good sign. The world's appetite for our debt continues to deteriorate. CNBC's Rick Santelli gave this auction a big fat "F". So what does this tell us?
EU Finance Ministers to Resist Obama Plans for Banking Overhaul By Meera Louis and Jurjen van de Pol -- Feb. 15 (Bloomberg) -- European Union finance ministers are uniting to oppose President Barack Obama’s proposal to limit banks’ size and risk-taking, saying his plan may run counter to EU policy, according to a draft document. Their position, which they will ratify at a two-day meeting starting today, comes after Obama last month urged the adoption of the so-called “Volcker rule,” named for former Federal Reserve Chairman Paul Volcker. The plan would bar commercial banks from owning hedge funds and limit how much they can trade for their own account.
Secession as a Solution to the Washington Debt Threat By Ron Holland - Whiskey & Gunpowder Frédéric Bastiat must have been looking toward the future of the United States today when he said, “When plunder has become a way of life for a group of people living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it.” I fear the federal government will plunder much of our private wealth, retirement plans and personal savings through hyperinflation, financial controls and confiscatory tax rates all in the name of protecting the public from a future debt crisis unless the states can secede from the Union and the crushing Washington debt load.
No Easy Way Back For U.S. Economy By: Rick Ackerman - Gold Seek We'll need to find our way back by producing services and goods that yield a comparative advantage for U.S. labor globally. That advantage would exist today if, since World War II, we had saved and invested most of our capital rather than consumed it and borrowed heavily to live beyond our means. With Japanese levels of savings and investment, U.S. manufacture of steel, cars, clothing and such would be competitive with the most efficient producers in Asia and Latin America, much as our ability to grow and process corn -- a business that has received huge investment -- has remained competitive with the lowest-cost producers in the world.
Billions for Bankers - Debts for the People Sheldon Emry - Silver Bear Cafe "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." - Thomas Jefferson This compilation provides a overview of central banking, the Federal Reserve and the specific steps that the Globalists have used to thwart the United States Constitution for the purpose of redistributing the wealth of our country. Introduction, Prologue and 19 chapters
Investors are anxious as economic fixes unwind By Adam Shell, USA TODAY NEW YORK — In a perverse financial twist of fate, many of the tailwinds that powered the stock market to a 70% gain from the March low have morphed into headwinds that have stalled the rally. When the economy and financial markets were in free fall, global central banks and governments took drastic steps to fix the problem, using record-low interest rates and trillions in stimulus money. The goal of stabilizing the financial situation worked wonders, bringing markets back from the brink of collapse.
Individual insurance rates soar 15% or more in at least 3 states By Linda A. Johnson, Associated Press TRENTON, N.J. — Consumers in at least three states who buy their own health insurance are getting hit with premium increases of 15% or more. Anthem Blue Cross, a subsidiary of WellPoint, has been under fire for a week from regulators and politicians for notifying some of its 800,000 individual policyholders in California that it plans to raise rates by up to 39% March 1. The Anthem Blue Cross plan in Maine is asking for increases of about 24% this year. Last year, they raised rates 32%.
Commercial mortgage failures threaten system By Ronald D. Orol, MarketWatch Losses may range between $200 billion and $300 billion WASHINGTON (MarketWatch) -- Over the next few years, a wave of commercial real-estate loan failures could threaten America's financial system, and in the worst case scenario, hundreds of additional community and midsize banks could face insolvency, a congressional watchdog group said Thursday. According to a report by the Congressional Oversight Panel, a watchdog group for a $700 billion bank-bailout package, about $1.4 trillion in commercial real-estate loans will reach the end of their terms between 2010 and 2014, of which nearly half are now under water (that is, the borrower owes more than the underlying property is currently worth).
Mortgage rates poised to jump as Fed cuts funds Carolyn Said, SF Chronicle The Federal Reserve is poised to turn off a major money spigot that has helped sustain the ailing real estate sector, as an extraordinary program under which the Fed has pumped $1.25 trillion into the mortgage market is slated to end March 31. "Housing has been on government life support, and without it the crash would have been much more severe," said Mark Zandi, chief economist with Moody's Economy.com in Pennsylvania. "This spring and summer as those policy efforts unwind, we most likely will see mortgage rates move higher and more house-price declines."
Temp hiring no longer seen as sign of recovery Economic uncertainty helping foster corporate culture of part-time workers WASHINGTON AP - It's not the signal it used to be. When employers hire temporary staff after a recession, it's long been seen as a sign they'll soon hire permanent workers. Not these days. Companies have hired more temps for four straight months. Yet they remain reluctant to make permanent hires because of doubts about the recovery's durability.
Big California deficit looms despite revenue boost Silicon Valley / San Jose Business Journal January revenue came in about $1.2 billion higher than projected in California but the state still faces difficult decisions to balance the budget. The uptick marked the third time in the past four months that the revenue number has come in higher than projected. This has some projecting that between $2 billion and $5 billion may be lopped off of the expected $20 billion deficit through June 2011.
Denver-area commercial real estate sales down in 2009, except in retail segment Denver Business Journal - by Paula Moore -- Of all major commercial real estate property types — office, industrial, retail and apartment — only metro Denver’s retail segment had higher investment sales in 2009 than 2008, according to data from LoopNet Inc. Some $555 million of shopping centers, strip centers and malls sold last year, led by the sale of a majority interest in one of metro Denver’s largest malls — FlatIrons Crossing mall in Broomfield — for $347.3 million in August. Private equity firm GI Partners LLP acquired 75 percent interest in the 1.4-million-square-foot property from Macerich Co.
More stories of the Bend real estate bubble by Tim Iacono An article by Andrew Moore in the local paper - The Bend Bulletin - details what sure looks like a Ponzi Scheme to forensic accountants who are now poring over the records of the defunct Summit 1031 Exchange trying to figure out how a company that was supposed to be investing 1031 exchange money in safe, liquid investments could have lost $14 million. There's lots of background material at the Bulletin, including introductions of all the principles, accusations, red flags, and general confusion that appeared in the bankruptcy trustee's report, where the story is picked up below.
Six Banks Sued by Federal Home Loan Bank of Seattle By Brittany Dunn - DSNews In an effort to recoup more than $2 billion paid for certificates backed by faulty mortgages, Federal Home Loan Bank of Seattle, one of 12 Federal Home Loan Banks in the United States, has sued six banks, according to a recent article on Nypost.com. Bank of America, the Countrywide unit of Bank of America, Barclays, Deutsche Bank, Morgan Stanley, and UBS are being sued by Federal Home Loan for allegedly making misleading statements about their asset-backed securities and the credit quality of the mortgage loans that backed these securities. Six complaints detailing these claims were filed in state courts in Seattle in December and were transferred to federal court starting January 22, 2010, the article said.
Home Loan Bank Sues Wall Street Firms By NICK TIMIRAOS - WSJ The Federal Home Loan Bank of Seattle has launched a series of lawsuits against Wall Street banks, seeking to force them to buy back souring mortgage-backed securities. In 11 separate lawsuits filed in late December in King County Superior Court in Washington, the Seattle bank alleges that it was misled by underwriters about the quality of $4 billion of securities it purchased as investments at the height of the housing boom.
The Year in Foreclosures Last week offered some sobering news on the housing market: Even with broad government support for housing, data from the National Association of Realtors showed that the median price of single-family homes continued to decline in 2009. RealtyTrac, an online marketer of foreclosed properties, said foreclosure filings rose by 15 percent in January compared with a year ago.
An Insiders View of the Real Estate Train Wreck David Galland - Silver Bear Cafe The first time I spoke with real estate entrepreneur Andy Miller was in late 2007, when I asked him to serve on the faculty of a Casey Research Summit. And there was no one in the nation I wanted more than Andy to address the critical topic of real estate. My interest in Andy was due to the fact that he has been singularly successful in pretty much all aspects of the real estate market, including financing and developing large projects - such as shopping centers, apartment communities, office buildings, and warehouses - from one end of the country to the other. His expertise has also allowed him to build an impressive business providing assistance to large financial institutions that need help in dealing with problem commercial real estate loans. As you might suspect, business is booming.
Is the FDIC Bullish On Commercial Real Estate? For all you vulture investors expecting a repeat of the RTC fire sales of commercial real estate of the early ‘90s don’t get your hopes up. Home builder Lennar’s recent purchase of $3.05 billion of land and unfinished housing developments from troubled banks with government financing shows that the Federal Deposit Insurance Corp. isn’t selling at rock-bottom prices.
High Lumber Prices Threaten Housing Market By LIAM PLEVEN, LESTER ALDRICH - WSJ The long-ailing U.S. housing market is facing a new headwind—a jump in the cost of lumber. Lumber prices have climbed 32% on the futures market this year, a sudden and unexpected surge that could raise construction costs or force builders to swallow an added expense. "That's the last thing we need right now," Stephen Melman, director of economic services at the National Association of Home Builders, said of the recent price hike.
The $555,000 Student-Loan Burden By MARY PILON - WSJ As Default Rates on Borrowing for Higher Education Rise, Some Borrowers See No Way Out; 'This Is Just Outrageous Now' When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000. It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency. "Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."
Dumped! Brand names fight to stay in stores By Parija Kavilanz NEW YORK (CNNMoney.com) -- Don't be shocked if you can't find your favorite salad dressing or mouthwash on your next trip to Wal-Mart. Large retailers -- including Wal-Mart, the world's biggest -- are wrestling with having too many types of brand-name products. At the same time, shoppers are buying less and looking for bargains. So unless a particular brand is a top seller in its category, it's getting knocked off the shelf -- and sometimes getting replaced by a cheaper store brand.
Investors Recruit Terminally Ill to Outwit Insurers on Annuities By MARK MAREMONT And LESLIE SCISM -- PROVIDENCE, R.I.—"Terminal Illness? $2,000 in CASH, Immediately Available." That was the promise of an advertisement that appeared regularly in 2007 and 2008 in the Rhode Island Catholic, the official newspaper of the local diocese. The money, the ad said, was coming from a "compassionate organization" that wanted to provide "financial assistance" for those near death. In reality, the ad was a recruiting pitch for a plan hatched by a prominent Rhode Island estate-planning lawyer, who believed he had discovered a way to use an investment product sold by insurance companies to make no-risk bets on the stock market. He recruited dozens of terminally ill people to, in effect, serve as paid fronts for purchases of the product, variable annuities. The lawyer and other investors put tens of millions of dollars into the policies, hoping to reap a profit when the recruits died.
Bayh Decides Against Re-election Bid By BERNIE BECKER, JEFF ZELENY - NY Times Senator Evan Bayh, the Indiana Democrat, said today that he would not seek a third term in Congress, a move that gives Republicans yet another opportunity to pick up a Senate seat and gives Democrats some fresh anxiety about whether they are losing the party’s center. The decision, which he announced at an afternoon press conference, came as a surprise to Democrats in his state who had already started working on his campaign. Mr. Bayh, 54, made his decision even after entreaties by President Obama and White House aides, including the chief of staff, Rahm Emanuel, who urged him to run.
Gary Shilling: Higher Government Pay Will "Likely Lead to a Tax Revolt" by Peter Gorenstein - Tech Ticker -- 14.8 million Americans are currently out of work and looking for a job, according to a report released today by the Bureaus of Labor Statistics. Even if you do have a job, wages have not increased substantially over the last ten years, with one exception: government workers. Thanks to generous health-care benefits and pensions, it pays - more than ever - to work in the public sector. Economist Gary Shilling fears dubious consequences if state and local workers continue to make more money and at the same time governments raise taxes and cut services.
SANDPOINT, Idaho — Pam Stout has not always lived in fear of her government. She remembers her years working in federal housing programs, watching government lift struggling families with job training and education. She beams at the memory of helping a Vietnamese woman get into junior college. But all that was before the Great Recession and the bank bailouts, before Barack Obama took the White House by promising sweeping change on multiple fronts, before her son lost his job and his house. Mrs. Stout said she awoke to see Washington as a threat, a place where crisis is manipulated — even manufactured — by both parties to grab power.
The Forgotten Miracle on Ice By ALLEN BARRA - WSJ Team USA faces off with Switzerland today in the first round of the men's hockey competition at the Vancouver Winter Olympics. And as sports fans settle in to watch, they'll undoubtedly recall the "Miracle on Ice" in the 1980 Lake Placid games, when a group of young Americans surprised the world and brought home the gold. Far fewer will remember the first miracle on ice 20 years earlier. At the 1960 Squaw Valley Games, a group of unknown Americans went undefeated, beating the highly favored Russians and then the Canadians and Czechs to win the gold.
India Worries as China Builds Ports in South Asia By VIKAS BAJAJ - NY Times HAMBANTOTA, Sri Lanka — For years, ships from other countries, laden with oil, machinery, clothes and cargo, sped past this small town near India as part of the world’s brisk trade with China. Now, China is investing millions to turn this fishing hamlet into a booming new port, furthering an ambitious trading strategy in South Asia that is reshaping the region and forcing India to rethink relations with its neighbors.
Clinton Raises U.S. Concerns of Military Power in Iran By MARK LANDLER - NY Times DOHA, Qatar — Secretary of State Hillary Rodham Clinton said on Monday that the United States feared Iran was drifting toward a military dictatorship, with the Islamic Revolutionary Guards Corps seizing control of large swaths of Iran’s political, military, and economic establishment. “That is how we see it,” Mrs. Clinton said in a televised town hall meeting of students at the Doha campus of Carnegie Mellon University. “We see that the government in Iran, the supreme leader, the president, the Parliament, is being supplanted and that Iran is moving towards a military dictatorship.”
Clinton: Iran becoming military dictatorship By Robert Burns ASSOCIATED PRESS DOHA, Qatar -- U.S. Secretary of State Hillary Rodham Clinton said Monday that Iran is becoming a military dictatorship, a new U.S. accusation in the midst of rising tensions with Iran over its nuclear ambitions and crackdown on anti-government protesters. Speaking to Arab students at Carnegie Mellon University's Doha campus, Mrs. Clinton said Iran's Revolutionary Guard Corps appears to have gained so much power that it effectively is supplanting the government.
Why investors love gold and hate paper currencies By Puru Saxena - Commodity Online Let’s face it, the government-bond market in the West is a gigantic Ponzi scheme. Most governments in the ‘developed’ world are drowning in debt, they are running mind-boggling budget deficits and printing money like there is no tomorrow. Furthermore, under the guise of quantitative easing, their central banks are buying their own newly issued debt!
Is gold beginning to break with the dollar again? Lawrence Williams - Mineweb Gold has been recovering a little despite continuing dollar strength against the Euro and some other currencies. The U.S. dollar has had a reasonably strong week - at least against many other currencies, notably the Euro which has been hit by economic mayhem in Greece and worries about the rest of the PIGS countries which, in addition to Greece, constitute Portugal, Ireland and Spain. This is not to mention some of the recent East European members of the Euro club which may be in even more difficulty. All these are running huge deficits and their plight could, some feel, lead to the destruction of the Euro. While this is unlikely, the stronger Euro nations, notably Germany and France, seem to be decidedly lukewarm in bailing out their less fortunate cousins in the Euro zone.
Gold price will not collapse: Marc Faber Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said the governments of every developed economy will eventually default on their sovereign debts, so the one thing he will never do in his life is 'sell my gold.' Potential defaulter include the US, the UK and Western Europe. Speaking to CNBC in a live interview via telephone, Faber said: "In the developed world we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due." "These unfunded liabilities are so huge that eventually these governments will all have to print money before they default," he added.
2/10/10 Marc Faber on CNBC
China keen to exchange dollars for gold By Justice Litle Abstract: To the degree that the gold price falls (and the dollar rises), we are witnessing a giant geopolitical chess game in progress. As you have no doubt heard, Beijing is sitting on something like $2 trillion in excess reserves. It’s actually more than that. According to Michael Pettit, a noted in-country China watcher, the figure is “pretty close to $3 trillion” depending on how you account for it.
Will silver outperform gold in 2010? by Clif Droke - Financial Sense In a recent issue of Barron’s addressed the question of silver possibly having another outperformance in the coming year. The article asks, “Will the poor man’s gold shine in 2010?” The opinion piece (“Gold Isn’t All That Glitters,” by Allen Sykora) drew attention to the other white metals, platinum and palladium, and made a case for a strong recovery in global demand for these metals along with silver in the year ahead. The forecast for a good year for the white metals is predicated on strong continued overseas demand for the metals for industrial applications and depends largely on the global market recovery that began last year continuing in 2010. The market action of the last few weeks has already called this assumption into question somewhat and much depends on an improvement in the intermediate-term internal momentum pattern for silver. The article serves more as a warning against the dangers of linear extrapolation than a call for a raging non-stop bull market.
Goldman’s O’Neill Says ‘Something Brewing’ in China on Currency By Simon Kennedy Feb. 15 (Bloomberg) -- Goldman Sachs Group Inc. Chief Economist Jim O’Neill said China may be poised to let its currency strengthen as much as 5 percent to slow the world’s fastest growing major economy. “I have a strong opinion that they’re close to moving the exchange rate,” O’Neill said in a telephone interview from London after China’s central bank told lenders on Feb. 12 to set aside larger reserves. “Something’s brewing. It could happen anytime.”
Gain from The Looming Armageddon by DeepCaster LLC - Financial Sense “China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets… BNP Paribas said the move has major implications for global risk assets. ‘The message from Beijing is that we don't like this environment,’ said Hans Redeker, the bank's currency chief.
When will America Collapse?
EU Finance Ministers to Resist Obama Plans for Banking Overhaul By Meera Louis and Jurjen van de Pol -- Feb. 15 (Bloomberg) -- European Union finance ministers are uniting to oppose President Barack Obama’s proposal to limit banks’ size and risk-taking, saying his plan may run counter to EU policy, according to a draft document. Their position, which they will ratify at a two-day meeting starting today, comes after Obama last month urged the adoption of the so-called “Volcker rule,” named for former Federal Reserve Chairman Paul Volcker. The plan would bar commercial banks from owning hedge funds and limit how much they can trade for their own account.
Collapse of the euro is 'inevitable': By SAM FLEMING, TIM SHIPMAN - DailyMail Online Bailing out the Greek economy futile, says FRENCH banking chief The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday. Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone bloc. The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a 'double-dip' recession in the embattled zone.
Can anyone fix the euro puzzle? Telegraph UK A crisis-strewn week has left the single currency on the edge of a precipice, write Edmund Conway and Bruno Waterfield The summit started as it meant to go on – in chaos, confusion and unintended farce. The big moment – the heads of state meeting which is supposed to be the centrepiece of every European summit – was scheduled to begin at 10am in the wood-panelled Bibliothèque Solvay in Brussels' European quarter, but as the hour approached, it became clear that nothing was doing. As more time passed, it became clear that something was wrong. Eventually, Herman van Rompuy – the new European president, in charge of his first big set-piece – explained that a snowstorm had held up a number of the participants. The meeting would be delayed by two hours.
Fear Takes the Wheel by Peter Schiff - Financial Sense Over the past three or four years a strange phenomenon has developed in the global investment markets. With some exceptions, many asset classes, in particular domestic and foreign equities, commodities, and foreign currencies have tended to move in the same direction on a day to day basis. The mega-correlation has lasted so long that most now take it for granted. This leaves investors with relatively simple choices: when to get in to the market in general and when to park assets in cash and U.S. Treasuries.
Germany growls as Greece balks at immolation By Ambrose Evans-Pritchard - Telegraph UK The EU has issued a political pledge to rescue Greece – and by precedent, all Club Med – without first securing a mandate from the parliaments of creditor nations. Holland's Tweede Kamer has passed a motion backed by all parties prohibiting the use of Dutch taxpayer money to bail out Greece, either through bilateral aid or EU bodies. "Not one cent for Greece," was the headline in Trouw. The right-wing PVV proposed "chucking Greece out of EU altogether".
Germans say euro zone may have to expel Greece Madeline Chambers BERLIN (Reuters) - A majority of Germans want debt-ridden Greece to be thrown out of the euro zone if necessary and more than two-thirds oppose handing Athens billions of euros in credit, a poll published on Sunday showed. Vocal opposition to aid for Greece from members of Chancellor Angela Merkel's coalition also grew at the weekend with several senior politicians expressing skepticism, especially as Germany's own recovery is fragile.
Howard Davidowitz: WE ARE GOING NOWHERE!!!
Between Dire And Disastrous John Mauldin - Business Insider The news is somewhat "All Greece, All the Time," but most of the pieces miss the more critical elements, and in today's letter we will look at what I think those are, as well as at the important point that Greece is a precursor of a new era of sovereign risk. Plus, we glance at a few rather silly recent comments from economists. It will make for a very interesting discussion.
Most Germans want Greece thrown out of euro By Edmund Conway - TELEGRAPH UK The scale of public resistance throughout Europe to a potential Greek bail-out has become clear as it emerged that the majority of Germans think the Mediterranean nation should be thrown out of the euro if its problems deepen. A poll for popular newspaper Bild am Sonntag found that 53pc of Germans wanted Greece to be expelled from the euro if necessary in the coming months. Two-thirds were adamantly against German money being put towards a bail-out of the troubled country, the paper also found.
Wall Street Helped Cover Up Greek Debts, Fueling Crisis By: Louise Story, Landon Thomas Jr.,Nelson D. Schwartz - NY Times Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. s worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
EU toughens stance on Greek bailout Helena Smith Athens - guardian.co.uk Greece's embattled government will come under added pressure tomorrow to enforce even tougher austerity measures to combat the country's debt at a meeting of EU finance ministers expected to focus solely on the crisis. Athens' ruling socialists are bracing themselves for fresh demands to beef up the belt-tightening policies they have been forced to announce, with further spending cuts and tax rises.
Gerald Celente on the Annual economic report Russia today 12 Feb 2010
Greece's debt crisis, China's bank curbs: By: IEVA M. AUGSTUMS - Associated Press What other surprises might rattle the market? CHARLOTTE, N.C. — Investors may wish they had a crystal ball. Stocks have been in flux over the past few weeks as surprises kept coming from overseas. Greece's debt crisis, similar troubles in Portugal, and China's latest moves to slow down its economy have kept investors guessing. At least the news is becoming less shocking. The Dow Jones industrial average recovered most of its losses Friday to end down 45 points following China's decision to force its banks to boost their reserves again. The Dow managed a weekly gain of about 1 percent — its first after four weeks of losses.
The next market headwinds after Greece By Andrew Mickey - Commodity Online The last few weeks have not been good for the markets. If you’ve enjoyed the recent rally and, like we’ve urged, stopped arguing with the market and just rode it out for all its worth, you’ve been caught up a little in this correction. The downturn was inevitable. We all knew it was going to come. And we wanted to prepare ourselves for the cost of riding out the rally.
Treasuries Gain on China’s Bank Move, Europe’s Stall in Growth By Cordell Eddings and Susanne Walker Feb. 12 (Bloomberg) -- Treasuries climbed, with 10-year notes gaining for the first time in four days, as China’s move to slow its economic growth and data that showed Europe’s recovery almost stalled burnished the haven appeal of U.S. debt. Two-year note yields fell the most in a week as the People’s Bank of China said it will boost reserve requirements on banks 50 basis points on Feb. 25 and investors speculated European Union efforts to help Greece tackle its budget deficit may be insufficient. The cost to protect against a default by Dubai rose to the highest since state-controlled holding company Dubai World said in November it wanted to delay debt repayments
China Dumps US Asset Backeds and Corporates By David Goldman Dollar-denominated risk assets, including asset-backed securities and corporates, are no longer wanted at the State Administration of Foreign Exchange (SAFE), nor at China’s large commercial banks. The Chinese government has ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee. This already has been communicated to American securities dealers, according to market participants with direct knowledge of the events.
Canada’s Dollar Falls as China Cools Lending, Deterring Risk By Allison Bennett and Chris Fournier Feb. 12 (Bloomberg) -- Canada’s dollar fell from almost a three-week high as China raised reserve requirements, discouraging demand for currencies related to economic growth. “There’s a little bit of risk off,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia, Canada’s third-largest lender. China’s decision to slow lending has “a lot to do with it,” he said.
Harry Dent Forecasts Stock Market Crash End of February By: Peter Coope - gold Seek The celebrated demographics forecaster Harry S. Dent Jr forecasts a stock market crash by the end of February in his New York Times Bestseller ‘The Great Depression Ahead: How to prosper in the debt crisis of 2010-12?. From around 10,000 today he has two scenarios for the Dow Jones in 2010: one, a fall to 3,300-4,600 in a broad crash also taking down real estate and commodities, including gold and oil; second, for the Dow to go even lower to 2,200-3,500.
The Coming Obama Retirement Trap Has Started! by Ron Holland - Lew Rockwell Mandatory IRAs just proposed by Obama Administration on 1/25/10 is the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market! Read the veiled report in Business Week.
Mandatory IRAs May Burden Small Employers By Margaret Collins and Alexis Leondis Jan. 25 (Bloomberg) -- U.S. President Barack Obama’s effort to increase retirement savings by requiring all businesses to offer automatic IRA accounts may face opposition from small companies, says a Washington-based trade group. Obama said the plan, part of a tax package aimed at middle- income Americans proposed today, would let employees automatically enroll in direct-deposit retirement accounts and expand matching tax credits. The administration hasn’t released a cost estimate.
2/11/10 Marc Faber Discusses Global Financial Markets on Bloomberg
Time running out for Dubai to pull itself out of danger, says Lord Mandelson By Edmund Conway - TELEGRAPH Time is running out for Dubai to restructure its debt and pull itself out of economic danger, Lord Mandelson has warned. In a visit to the Gulf emirate, the Business Secretary urged its leaders, and the managers of stricken group Dubai World, to come up with details of how investors in its troubled units will be treated, or face further investment exodus. However, the company – effectively a state offshoot – has not yet provided any details on an offer, according to a spokesman, adding that it wanted to give creditors time to digest Dubai World's business
Volcker says must let big financial firms fail WASHINGTON (Reuters) - Large financial institutions that engage in speculative activities for profit should be allowed to fail if they get in trouble, White House advisor Paul Volcker said on Sunday. "If a big non-bank institution gets in trouble and threatens the whole system, there ought to be some authority that can step in, take over that organization and liquidate it or merge it -- not save it," Volcker said on CNN. "It's called euthanasia, not a rescue."
Solvency and Liquidity - Two Different Numbers by Bruce Krasting - Zero Hedge I wrote an article recently and quoted a CIA report on Spain’s External Debt as being $2.4 Trillion. A reader commented that I was full of crap and spreading false information. The reader made clear that the external debt of Spain was $1.25T (Euro 900b). The following graph from the Bank of Spain was sent to me to prove the point.
Trouble at the Fed Mises Daily: by Antony P. Mueller In line with the basic rule that few things are more helpful to a political career than catastrophic failure, Ben Bernanke was confirmed by Senate vote for four more years as chairman of the US Federal Reserve System (the Fed) on January 28, 2010. In persistent denial that it was ample liquidity in the first place that caused the present dire economic situation, the head of the Fed holds the view that "too little inflation" has been the true threat all along. Fear of deflation is Ben Bernanke's recurrent nightmare. In fact, his deflation worries form the basis of the so-called Bernanke doctrine, which says that the cure is monetary expansion and, consequently, holding interest rates as low as possible.
Lenders more willing to own bankrupt firms By Tom Hal - IBTimes WILMINGTON - U.S. lenders are becoming increasingly willing to take over bankrupt borrowers --- a significant shift from last year, when companies like Chrysler and Eddie Bauer were pushed to a quick sale. The change reflects a more stable economy, rising asset prices and fewer bankruptcies involving companies that have simply run out of money. "A year ago there was no turning around of anything. It was get whatever cash you can get out," said Jerry Mozian, of the turnaround management firm Tatum. He said banks now see little value in forcing a sale.
Blackwater accused of defrauding US government Ewen MacAskill in Washington - guardian.co.uk Private security firm accused of charging US government for payments to prostitute The troubled American private security company Blackwater faced fresh controversy today when two former employees accused it of defrauding the US government for years, including billing for a Filipina prostitute on its payroll in Afghanistan. According to Melan Davis, a former employee, Blackwater listed the woman for payment under the "morale welfare recreation" category. The company, which allegedly employed her in Kabul, billed the government for her plane tickets and monthly salary, Davis said.
Read his lips: Obama backs off on middle class tax hike ban By: Julie Mason - Washington Examiner The White House brushed off questions about President Obama's new, "agnostic" stance on middle class tax increases, signaling a potential reversal on a key campaign promise. "The president is just not going to get in the game of prejudging the outcome of a commission that, one hasn't been set up and hasn't met," said White House press secretary Robert Gibbs.
Robin Hood Tax
Barofsky's warning: We're all on welfare now By: DAVID FREDDOSO - Washington Examiner When Inspector General Neil Barofsky, testified before Congress late last month, he received ample coverage for highlighting the incompetence of Treasury Secretary Tim Geithner in his work bailing out AIG. Barofsky's outspokenness on the failures of the Troubled Asset Relief Program he oversees and the increased risk it has created, has won him praise from politicians in both parties.
States to Senate: Send more federal aid By Tami Luhby - CNN Money NEW YORK (CNNMoney.com) -- States are looking to the federal government for more help balancing their budgets, but the Senate is not heeding their call. Federal aid to the states was among the top priorities in an early Senate job creation bill, as well as in a $154 billion measure passed by the House in December. But it has fallen off the list as Senate Democrats look to craft legislation that will attract bipartisan support.
Desolate malls, empty offices may come soon Report: Defaults on commercial real estate loans a looming economic crisis WASHINGTON AP - Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says. Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government's efforts to stabilize the financial system.
Home Affordability: Prices Are Still 40% Higher Than 'Normal' By CHARLES HUGH SMITH - Daily Finance According to the old truism, the only arbiter of price is what a buyer is willing to pay. But when it comes to the biggest purchase and investment in most people's lives -- a home -- there's another time-tested way to reckon fair value: the home's cost divided by the buyer's income. This ratio is a broad measure of home affordability. Of course there are innumerable variables in the pricing of specific homes: location ("The three most important factors are location, location and location," as the old joke goes), home loan interest rates, the availability of mortgages, the "animal spirits" of a rising economy, and so on.
Rise in Home-Based Businesses Tests Neighborliness By JENNIFER LEVITZ - WSJ Local Officials Search for Ways to Support Economically Squeezed Entrepreneurs While Keeping Noise, Traffic in Check The recession is causing a growing number of people to venture into home businesses, a boost for the economy but a nuisance for neighbors. As jobless people trade their desks for kitchen tables, or as businesses reduce costs by giving up commercial storefronts, cities and states are grappling with problems caused by a rise in home businesses such as traffic and noise. Officials say they want to encourage people make a living at home but also keep these serenity busters at bay.
US CENSUS . . .
Encounter in a Small Town by Claire Wolfe - Backwoods Home ACT I, SCENE I A restaurant reminiscent of the Hog Trough Grill & Feed. It is mid-afternoon and only two tables are occupied. A MAN and WOMAN enter and seat themselves at a booth toward the back. Immediately, they notice a one-foot tall, brightly colored, three-sided CARD. There is one on every table. From the lack of ketchup stains, wrinkles, and fingerprints, the enormous cards appear to be newly placed. The woman plucks the card from their table. WOMAN (READING): United States Census 2010. It’s SAFE! It’s EASY! It’s IMPORTANT! It’s used to allocate more than $400 billion of federal funding to programs such as …
Why cities aren't hitting panic button -- yet By Colin Bar NEW YORK (Fortune) -- Cities and other municipalities are in a world of budgetary hurt. Is a wave of bankruptcies on the way? The odds are against it, given the rules that restrict who can file for protection from creditors under Chapter 9 of the federal bankruptcy code. States, for instance, can't file, while in many cities, towns and other government bodies can seek bankruptcy only in limited circumstances.
Economic Warnings from an Elderly 3rd Grader By: Richard Daughty - Gold Seek I was leisurely looking out of the periscope of the Mogambo Bunker Of Paranoid Fear (MBOPF), using it not as an aiming device with which to direct a devastating firepower at enemies both real and/or imagined, but to look in pity at the faces of all the people passing by, and muttering disrespectful things to myself about each one, like, “Enjoy that new car, fatso! You are doomed because of the inflation in prices that will follow the Fed’s irresponsible creation of excess money and credit, and soon food will be so expensive that you will grow thin enough to look good driving such a nice car, assuming that you can still afford to drive a car!” and, “With that hat on, you look as stupid as you act, which is pretty stupid when you look at the morons you stupidly elect to Congress, but I can tell by looking at you that you are not buying gold, silver and oil when your own government is acting so desperately bizarre and allowing the Federal Reserve to create so much money and credit, because if you were, you would have a hunched-over, paranoid look haunting your face as you feverishly stumble along, shadow to shadow, under the weight of the guns you are carrying under your coat and in your purse!”
GOP responds to Obama's Health Care Summit invite: No Thanks? By: Susan Ferrechio - Washington Examiner House Minority Leader John Boehner, R-Ohio, issued a statement late Saturday in response to President Obama's Friday invite to a bipartisan Health Care Summit at the White House. Boehner and other Republican leaders are complaining that the event is simply political gamesmanship and that Obama is planning to have a health care deal finalized before anyone even sits down at the meeting, which is scheduled to take place on Feb. 25.
A Warning To The Tea Party Nation By Chuck Baldwin - CHCH As far as grassroots activism goes, the surge in Tea Parties across America is one of the more encouraging developments to recently take place. It reminds me of the “Conservative Revolution” of 1994, when the GOP reclaimed both the US Senate and House of Representatives. At that time, it had been over 40 years since the Republican Party controlled both the US House and Senate. And, between the two, the House victories were the most significant.
Clinton, in Mideast, Says Evidence Grows of Iran’s Nuclear Plan By Indira A.R. Lakshmanan -- Feb. 15 (Bloomberg) -- U.S. Secretary of State Hillary Clinton, shoring up support in the Middle East for a hard line against Iran, said “evidence is accumulating” of that nation’s intention to produce nuclear weapons. The world has “little choice but to impose greater costs” on Iran to force it to rein in its nuclear program, Clinton said last night in remarks to the U.S.-Islamic World Forum in Doha, Qatar. She said the U.S. is working with allies “to prepare and implement new measures to convince Iran” to reconsider.
Glenn Beck- February 12, 2010 (Part 1/4)
Glenn Beck- February 12, 2010 (Part 2/4)
Glenn Beck- February 12, 2010 (Part 3/4)
Glenn Beck- February 12, 2010 (Part 4/4)- Andrew Breitbart
Commercial Real Estate's Coming $1.4 Trillion Crisis By LITA EPSTEIN - Daily Finance In a report released Thursday, the Congressional Oversight Panel sounded the alarm bell about a potential crisis involving $1.4 trillion in commercial real estate loans that will come due between now and 2014. The panel warns that the "financial crisis will not end" because of the "potential impact that breakdown in those markets could have on local communities, small businesses, and individuals." It is feared that when these loans come due, companies will be unable to repay or refinance them because of deteriorating conditions in the commercial real estate market. Most of these loans were made at the top of the real estate bubble in 2007 and have lost as much as 40% of their value. Nearly half are underwater -- the properties are worth less than balance of their loans.
Commercial Real Estate Losses and the Risk to Financial Stability Yves Smith - Naked Capitalism The February report from the Congressional Oversight Panel makes for sobering reading. It forecasts $200 to $300 billion in losses coming from commercial real estate loans, and notes these were not considered in the famed stress tests, since that process looked only through 2010, when the losses from CRE will peak later.
Smaller banks at risk if commercial real estate falters By Paul Wiseman, USA TODAY A blizzard of commercial real estate defaults could bury hundreds of community banks, a congressional watchdog reports Thursday. The Congressional Oversight Panel, created to oversee the government's bailout fund, is warning that losses on commercial real estate loans could reach $300 billion, potentially wiping out "hundreds more community and midsize banks" and drying up the credit needed to restore the economy to health.
Congressional Oversight Panel Executive Summary FEBRUARY OVERSIGHT REPORT* Over the next few years, a wave of commercial real estate loan failures could threaten America's already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation's mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.
Niall Ferguson On Sovereign Debt
See 3-part interview below - Niall Ferguson & Charlie Rose focuses on rise of China
Plausible Sovereign Debt Default On A Global Scale By: Dian L Chu - Market Oracle In a CNBC interview on Feb. 10, Marc Faber of Gloom, Boom & Doom Report went out on a limb by stating that he is not buying any sovereign debt or bonds, because ALL governments will eventually default, including the United States. Faber believes some countries like Singapore may fare better due to very little or no debt and large reserves; however, most of the developed world will be severely effected by Greece, bailout or not. In the near term, Faber is relatively optimistic about stocks, but still thinks precious metals will have better returns. Meanwhile, Jon Levy with Eurasia Group, though sharing an equally gloomy view, does not share the same dire prediction. Levy believes it will be a “long and drawn-out” adjusting process different from country to country.
Just How Ugly Is The Sovereign Default Truth? How Self Delusions Prevent Recognition Of Reality Zero Hedge When psychologists evaluate human behavior, one of the most prevalent observations regarding any activity is the all too often flawed basis of perceived versus realistic outcomes that dictates our every action. As imperfect creatures, we tend to construct theories that conform with our worldview, which are subsequently reinforced by our confidence (or lack thereof) in the future. This is true in any discipline: finance, politics, gambling, mating, etc. There is hardly a better example of this than the very basis of modern economic theory where assumptions about the validity of fiat currencies determine the actions of central banks, which in turn spill over into every aspect of modern society. Yet what if the very basis of core assumptions is wrong?
Euro Falls for Third Day on Concern Greece Measures Not Enough By Ron Harui -- Feb. 12 (Bloomberg) -- The euro fell for a third day against the yen and the dollar on concern the European Union will fail to take sufficient measures to help Greece tackle its fiscal deficit, damping demand for assets in the region. The 16-nation currency approached a one-week low versus the greenback after the EU stopped short of offering concrete steps to help Greece following a summit in Brussels yesterday. The yen strengthened against all of its 16 major counterparts on speculation Japanese investors are increasing repatriation of overseas earnings before an estimated $48 billion of U.S. Treasuries mature next week.
A Greek crisis is coming to America By Niall Ferguson - FT It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.
How Greek Problems Will Slam US Shores By Rocky Vega - Daily reckoning 02/11/10 Stockholm, Sweden – As this week’s headlines have been blaring, the financial calamity entangling Greece is spreading throughout the western world, and slowly but surely across the Atlantic. The European Monetary Union continues to weigh its limited options. It’s taking into consideration the weak mechanisms currently in place to aid in Greece’s debt problems, and also its duty to protect the integrity of the euro. Having recently experienced our own financial crisis right within US borders, and under the not-so-watchful eye of legislators and regulators, it’s tough not to feel a bit of schadenfreude now that the tables seem to have turned. But, have they really? Is there any way the US can stand to benefit from the crisis abroad?
CNBC Anchors Freak Out After Marc Faber Says US Will Default It's hard for Marc Faber to top himself, since he maintains such a cataclysmic outlook. Still, in today's discussion about Greece and general sovereign risks, we were very entertained by the reaction of the Power Lunch crew when Faber delivered the bad news that the US will one day, just like the others, default on its debt. Listen right at the 2:15 mark.
Europe Commits to Action on Greek Debt By Stephen Castle - NY Times BRUSSELS — European leaders promised Thursday to safeguard their common currency, the euro, by aiding Greece during its debt crisis. But they offered no immediate assistance to the Greek government and remained silent on how they would respond if investors remain jittery about Greece and other nations with weak economies that use the euro.
EU leaders offer Greece support, but no money BRUSSELS (AP) — European Union leaders on Thursday offered Greece moral support but no money to help it weather a debt crisis — vague assurances that didn't calm the market fear that has shaken the entire EU and undermined the shared euro currency. The 16 countries that use the euro said only that they "will take determined and coordinated action, if needed, to safeguard financial stability in the euro as a whole." But no money or loan guarantees were put on the table in the statement from a larger EU summit meeting in Brussels.
Greek Debt Crisis: Overstating the Obvious By Addison Wiggin - Daily Reckoning 02/11/10 Baltimore, Maryland – Alas, the markets will worry about housing on another day… Today, they’re still feverish with the swine flu. The smallest of the PIGS – Greece – is still a cause for concern…and hallucinations. The Dow and S&P shot up 1.5% yesterday, their best day in more than a month, on rumor that the EU was assembling a debt bailout for the Greeks. “Greece is not a critical weight-bearing pillar of the euro house of cards,” counters our Alan Knuckman, advising resource traders on how to process concern over the PIGS. “It must be noted that Greek GDP is rather small – when compared with individual US states, it sizes up between No. 13 Massachusetts and No. 12 Michigan.
European Leaders Deploy ‘Bazooka’ to Stamp Out Attack on Greece By Simon Kennedy and James G. Neuger - Bloomberg Feb. 12 (Bloomberg) -- European leaders closed ranks to defend Greece from the punishment of investors in a pledge of support that may soon be tested. German Chancellor Angela Merkel and her counterparts yesterday pledged “determined and coordinated action” to support Greece’s efforts to regain control of its finances. They stopped short of providing taxpayers’ money or diluting their own demands for the country to cut the European Union’s biggest budget deficit.
Will markets call EU bluff on Greek rescue? By Ambrose Evans-Pritchard - Telegraph Greek bail-out accord lacks substance and finance's poker players may soon call its bluff. The white smoke has at last emerged from the Bibliotheque Solvay in Brussels, but global markets do not like its odour. The Greek rescue plan agreed by EU leaders after a week of leaks is strangely thin, raising suspicions that Germany, Holland and the creditor states of Northern Europe still cannot agree on the terms of any bail-out. The euro tumbled 1pc to a nine-month low of $1.36 against the dollar and Club Med debt yields jumped as investors read the summit text, searching in vain for details of debt guarantees or bilateral loans, or guidance on an EU eurobond. All they found was an expression of "political will".
Angela Merkel dashes Greek hopes of rescue bid Ian Traynor - guardian.co.uk German chancellor refuses to rescue Greece's ailing economy amid Berlin's domestic austerity Angela Merkel, the German chancellor, mounted stiff resistance tonight to any swift bailout of Greece, as a rift opened up between European capitals over how best to tackle the risks posed to the euro. Despite a show of Franco-German unity on the crisis and the first statement from EU leaders pledging to safeguard the currency's stability, hopes on the markets of a German-led rescue plan to shore up Greece's critical public finances were dashed by Merkel, who repeatedly emphasised that Athens would need to put its own house in order and brushed aside all questions of financial support.
Euro currency crumbling? part1 (09Feb10)
EU pledge on Greece fails to calm fears Ben Hall, Tony Barber and David Oakley - FT A pledge by the European Union to stand by crisis-hit Greece punctured hopes in the financial markets yesterday of a swift rescue and raised fears of renewed selling. Efforts by Nicolas Sarkozy and Angela Merkel, the French and German leaders, to paper over differences between Berlin and Paris on how to deal with the Greek debt crisis led to a summit statement in Brussels that stopped short of providing immediate support for Athens.
‘PIGS’ in Rescue Lipstick Are Uglier Than Default by Mark Gilbert Feb. 11 (Bloomberg) -- “The worst possible signal which we could send out is one calling for outside help,” Greek Finance Minister George Papaconstantinou told Bloomberg Television this week. He may be the only policy maker in the European Union who understands how disastrous a bailout would be. A rescue would scream to the world that Greece’s financial hole is too deep for it to get out unaided -- just as the Federal Reserve’s decision to supply $29 billion of guarantees so that Bear Stearns Cos. could survive by selling itself to JPMorgan Chase & Co. was a red flag about the cannibalism erupting in the credit-crunched banking industry.
Not quite a bailout David Gow - guardian.co.uk The EU may promise 'determined and co-ordinated' actions to help Greece, but the markets remain sceptical Financial markets are said to demand certainty but at heart love creating unsolvable problems – they live for crises, there's profit in them. The outcome of the EU informal summit on the Greek financial crisis still leaves plenty of room for speculation after the billions that have been wagered in recent days on outcomes as various as a Greek government default on its huge debt, a default contagion spreading to elsewhere in southern Europe and even the break-up of the eurozone itself.
Greece Deal Opens Door for More Bailouts: Economist By: Robin Knight CNBC Assistant Web Producer European Union leaders set a precedent by bailing out Greece and other euro zone countries such as Portugal would have a strong case for tapping the region for funds if they needed to, Erik Nielsen, chief European economist at Goldman Sachs, told CNBC.com Thursday. "If I was the Portuguese finance minister needing this one day, I would think I have a strong case," Nielsen said. Now that EU leaders agreed to effectively backstop Greece's debt, they would struggle to say no to other euro-zone economies in the same difficult situation, he said.
Credit Default Swaps and the Greece Debacle
Tragedy in Greece By Bill Baker - Daily Reckoning 02/11/10 Baltimore, Maryland – Similar to events at the early stages of the sub-prime crisis, the financial predicament of Greece is likely to blow over soon, especially once the unannounced details of the accord reached early today are acted upon. What was once a cradle of civilization now accounts for only 2.6% of European Union output, and the rest of the continent simply can’t let its financial system implode just yet.
Better Greece than Iceland Dan Roberts - guardian.co.uk Eurozone member states are in a better position to resist market speculation than those standing alone Europe has been standing at a proverbial crossroads longer than bluesman Robert Johnson, but today truly forces a decision on the union. EU leaders in Brussels face a crucial choice: do they spend billions rescuing Greece from the brink of financial collapse, or do they opt for the Lehman Brothers option and let a national debt default serve as this year's lesson to investors and irresponsible governments.
Bailout of Greece and the End of the Euro Currency By: Philipp Bagus - Mises The euro has been sliding against the US dollar for weeks. Concerns about the public finances of eurozone countries Portugal, Ireland, Greece, and Spain, the so-called "PIGS," have emerged in financial markets. Greece is facing the severest crisis, with its 10-year bond yield approaching 7%. The Greek government estimates its budget deficit at 12.7% of GDP in 2009. Gross government debts amount to 113% of its GDP. If the interest rate Greece has to pay for its debts keeps rising, the country may have to default on its obligations.
Euro currency crumbling? part2 (09Feb10)
Gold hits one-week high on fears over currencies Frank Tang and Jan Harvey NEW YORK/LONDON (Reuters) - Gold rose above $1,090 an ounce on Thursday as investors turned to the metal as a hedge against currency volatilities after news that European governments agreed in principle to support heavily indebted Greece. Bullion was boosted by choppy currency trade as the euro traded in a wide range from $1.38 to $1.35 due to investor disappointment with the lack of details regarding the EU deal to resolve fiscal problems in Greece.
Gold Bull Market – Stage 2 By Addison Wiggin - Daily Reckoning 2/11/10 Baltimore, Maryland – Don’t be scared off by last week’s sell-off in gold, says Byron King. “What got sold? Do you really think that people parted with their Gold Eagles, Maple Leafs and Krugerrands? Did YOU sell YOUR gold? Do you think that the Chinese sold gold from their national vaults? “No, last week people sold paper, not real goods. Sure, it felt like a sell-off to your portfolio, when gold miners declined. But beware thinking that we’re about to experience the Great Reversal in values for precious metals.
Gold "Neutral" Pending Greek Rescue; Link with Risk-Appetite Strengthens By: Adrian Ash - GoldSeek THE PRICE OF WHOLESALE gold bullion held in its tightest range for more than three months in Asia and London on Thursday, treading water as currency traders awaited details of a European rescue deal for Greece. "There is an agreement on the Greek situation," announced the European Union's unelected president Herman van Rompuy to reporters today. Apparently led by German chancellor Merkel, the as-yet-unstated deal was brokered with European Commission chief Barroso, French president Sarkozy, Greek premier Papandreou, and European Central Bank chief Jean-Claude Trichet.
Dubai Proposes Gold Coins As Legal Tender In The UAE By: Peter Cooper - GoldSeek The Dubai Multi Commodities Centre has proposed that the UAE Central Bank issue gold coins that will be legal currency for the first time in the modern history of the Middle East. In September 2007 the DMCC minted the first ever UAE commemorative gold coin featuring the Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum (see above). The proposed design for the new currency has the President of the UAE, His Highness Sheikh Khalifa bin Zayed on one side and the world’s tallest building, the Burj Khalifa on the obverse.
Bernanke, Geithner, and Mr. Market all say Buy Gold Now By: Q1_Publishing - Market Oracle . . . . Secretary Geithner: Words that Will Live in Infamy Over the weekend on ABC’s Sunday political show This Week, the Treasury Secretary took to the airwaves once again with plenty of focus-grouped phrases to attempt to help create the image of how worse the economy would be without the stimulus, bailouts, etc. It didn’t take long for Geithner to get off script though. Nearly halfway through the interview he started looking ahead into the future and making some bold guarantees. The following exchange reveals a lot of how the current administration views the massive and growing fiscal deficits and its ability to continue issuing bonds: Jake Tapper: Is the United States going to lose its triple-A government bond rating? And what happens when the credit markets are no longer willing to buy U.S. debt? Secretary Geithner: Absolutely not. And that will never happen to this country… If history is any evidence, when a government representative completely rules out something from happening, it’s pretty much a sure bet it’s only a matter time until it does happen.
The Approaching US Dollar Reserve Currency Crisis Jesse's Cafe Americain "US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941." No matter how they wrap it, spin it, try to hide it, we have seen an epic expansion in the US monetary base not seen since 1932. This monetary expansion has not yet reached into the broader money supply figures because it is not reaching the public, despite the chant from the "Yes We Can" Kid. Bernanke has most of that liquidity bottled up in the banks collecting an easy riskless spread, with some of it chasing beta in the speculative markets.
Devaluing Currencies May Not Be Such a Great Economic Cure After All Yves Smith - Naked Capitalism -- Reader Swedish Lex points out an important implication of a recent VoxEU post on the Nordic economic model and how it fared in the crisis: The Nordic countries – Denmark, Finland, Iceland, Norway and Sweden – are champions of free trade and open markets… The Nordics have all had different monetary regimes since the euro. Given their similarity in other respects, a comparison of Finland and Sweden is especially interesting. It is almost a laboratory experiment. Sweden has a floating exchange rate and an independent central bank geared to price stability, while Finland is part of the Eurozone. Who has made the better choice?
Jim Rogers Interview - Capitalism Not Allowed to Work - 1 of 2 2010 and 2011 will be worse than 2008
Jim Rogers Interview - Capitalism Not Allowed to Work - 2 of 2 social unrest and violence in US; more governments will topple
Depression 2010 - Western Fiat-Money Finished? The Daily Bell Sometimes the global economy is down, and sometimes up. Free-Market Analysis: Is the Western world struggling through a bad patch? Our argument, voiced with various levels of clarity at various times, is that the West is currently living through a failure of fiat money - specifically a failure of the global anchor currency: the greenback. The dollar is on its way out not because people want it to be necessarily (though some do) but simply because it is failing as a fiat currency. Central bank fiat currencies always fail. China had a number of fiat episodes and the populace was so scarred that fiat money was reportedly even banned in the 1800s. Here's a bit of history on China's melancholy brushes with unbacked paper money:
Goldman’s Contagion Warning Is Greek to Markets by William Pesek Feb. 12 (Bloomberg) -- If anyone could use a few days in the Sydney summer sun, it’s Jean-Claude Trichet. It was not to be. Pressing business this week yanked the European Central Bank governor back to the Brussels winter. Few in Sydney begrudge Trichet for bolting from a Reserve Bank of Australia symposium. Not with Greece on the brink and the creditworthiness of Portugal and Spain in question. Trichet’s early departure highlighted the contrast between the plight of Western economies and the enviable state of Asian ones. It’s also a reminder that Asia can’t be complacent as a new phase of the global financial crisis looms.
Ponzi Scheme GoldSeek Let’s face it, the government-bond market in the West is a gigantic Ponzi scheme. Most governments in the ‘developed’ world are drowning in debt, they are running mind-boggling budget deficits and printing money like there is no tomorrow. Furthermore, under the guise of quantitative easing, their central banks are buying their own newly issued debt! It is our contention that similar to Mr. Madoff’s hedge fund, the sovereign debt markets in the West have now become gigantic scams. Only this time around, the players have changed and the sums involved are significantly larger.
Solution to the Washington Debt Crisis Threat By: Ron Holland - Market Oracle Frédéric Bastiat must have been looking toward the future of the United States today when he said, "When plunder has become a way of life for a group of people living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it." I fear the federal government will plunder much of our private wealth, retirement plans and personal savings through hyperinflation, financial controls and confiscatory tax rates all in the name of protecting the public from a future debt crisis unless the states can secede from the Union and the crushing Washington debt load.
Talk Is Cheap: Bernanke's "Exit" Blocked by Grim Economic Realities There was a lot of ballyhoo over Ben Bernanke's exit strategy testimony on Wednesday. Less than 24 hours later, it's clear why the Fed is in no rush to hit the brakes and why talking about pulling in stimulus will be a lot easier than actually doing it:
Failed 30-Year Auction Closes Rough Week; Treasurys Fall By: CNBC.com with wires An anemic government auction of 30-year bonds closed out a weak round of debt sales with low demand on the far end of the debt yield curve. The $25 billion auction fetched a whopping 4.72 percent high yield on weak demand, reflected in a 2.36 bid-to-cover ratio that compares demand for each dollar auctioned. The average is about 2.50.
French feminist warns green movement forcing women to stay at home By Henry Samuel in Paris - Telegraph Elisabeth Badinter, a leading French feminist, has warned the green movement is threatening decades of improvements in gender equality by forcing women to give up their jobs and become earth mothers. Mrs Badinter claims a "holy reactionary alliance" of green politicians, breast-feeding militants, "back to nature" feminists and child psychologists is turning Frenchwomen into slaves to green "fads" like re-usable nappies and organic food. In her new book, Conflit, la Femme et la Mere (Conflict, the Woman and the Mother), Mrs Badinter contends that this politically correct cabal is burdening mothers with intolerable guilt unless they stay at home and breast-feed for as long as possible.
W.L. Gore gets financing for $130M complex in Phoenix Phoenix Business Journal - by Angela Gonzales W.L. Gore & Associates Inc. plans to build a $130 million manufacturing facility in Phoenix that initially will employ 500 people and potentially 1,000 at build-out. The project is part of an expansion of the Newark company’s medical products division in Flagstaff. The construction project is expected to employ an additional 1,800 workers. During the first phase, two 113,000-square-foot facilities will be built on a 40-acre site. The first phase is being built with $130 million in Industrial Development Authority Bonds, to be expended over 18 to 24 month of construction.
N.J. Gov. Christie Freezes Spending TRENTON (CBS) With State's Budget In 'Shambles,' New Governor Slices Into School Surpluses, NJ Transit Subsidies; Dems Furious The snow isn't the only thing that's causing a chill in the Garden State. Calling New Jersey's budget a "shambles," Gov. Chris Christie announced Thursday he is immediately freezing all state spending. Saying New Jersey is on the verge of bankruptcy, Christie declared a fiscal emergency, announcing drastic cuts. Among them, aid to school districts that have excess surpluses. "Today we are going to act swiftly to fix problems too long ignored. Today I begin to do what I promised the people of New Jersey I would do," Christie said.
Foreclosures Fall in January, but Still Higher than a Year Ago By Jonathan Berr - Daily Finance The good news about real estate is coming in dribs and drabs, camouflaged by an ongoing flow of bad news. According to RealtyTrac, U.S. foreclosure filings fell 10% in January from December, but they remained 15% higher than a year earlier. That means that one in every 409 U.S. housing units received a foreclosure filing in January, which is still quite high. The figures did not surprise some experts. "January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January," said James J. Saccacio, chief executive officer of RealtyTrac, in a press release. "If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works."
U.S. Foreclosure Filings Top 300,000 for 11th Month By Dan Levy Feb. 11 (Bloomberg) -- U.S. foreclosure filings rose 15 percent in January from a year earlier and exceeded 300,000 for the 11th consecutive month as modification programs failed to keep delinquent borrowers in their homes, RealtyTrac Inc. said. A total of 315,716 properties received a notice of default, auction or bank seizure last month, or one in 409 households, the Irvine, California-based seller of default data said today in a statement. Filings fell 10 percent from December.
Citi Announces Pilot Program to Avoid Foreclosures By Lita Epstein - Daily Finance Citigroup has announced a pilot program called the Citi Foreclosure Alternatives Program that will allow CitiMortgage borrowers to avoid foreclosure and remain in their homes for six months, as long as they agree to sign over the deeds to their properties. At the end of the six months, Citi will aid the borrowers with relocation. This expanded deed-in-lieu-of-foreclosure program will be available as a pilot in Texas, Florida, Illinois, Michigan, New Jersey and Ohio beginning Feb. 12.
Citi to let distressed homeowners stay for 6 months By Alan Zibel, AP Real Estate Writer WASHINGTON — Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property. Citi said Thursday it is launching the pilot program, dubbed "Foreclosure Alternatives," this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.
Citi Ups Incentives for Borrowers to Give Back Homes, Nicely By James R. Hagert - WSJ Mortgage lenders are trying to arrange smoother departures for distressed homeowners who can’t be saved by loan modifications — and discourage them from trashing the homes on their way out. CitiMortgage, a unit of Citgroup Inc., announced Wednesday a pilot project that will let some delinquent borrowers remain in their homes without making mortgage payments for six months if they voluntarily transfer ownership to the bank. Over the past two years, millions of foreclosures have been delayed by state and federal programs requiring lenders to try to keep borrowers in their homes by easing their monthly payments. But the moment of truth is approaching for hundreds of thousands of households that sought help under the Obama administration’s Home Affordable Modification Program, or HAMP, launched a year ago, as well as borrowers who have sought help through other programs.
Life after denial CNN Money President Obama's foreclosure-prevention program was touted as helping nearly 4 million people. 5 families talk about what happens when that help doesn't come. After six months in a trial mortgage modification, Bert Carvajal got the bad news in early December. Not only was he rejected for permanent assistance under President Obama's foreclosure rescue program, he was also ineligible for any modification offered by his servicer, JPMorgan Chase. Carvajal realized he needed help after seeing the overtime from his job as a construction project manager in the Miami-Dade school district dry up.
White House report bleak on jobs front By Kara Rowland - Washington Times The White House said Thursday that unemployment will remain high for the near future and could climb back above the current 9.7 percent rate even as employers start hiring again. The administration's annual report to Congress reaffirms the bleak forecast that accompanied President Obama's fiscal 2011 budget, as well as its description of the George W. Bush administration's role in ballooning the federal deficit.
Ron Paul talks Tea Party with Maddow 02/09/2010
Aging Boomers Could Spell Big Trouble for Walmart By: Ken Gronbach - CNBC Walmart is a Baby Boomer consumer-based business. As Boomers' paychecks grew over the years, so did Walmart's profits. Now, the retailer is facing a daunting challenge and haunting question: As Boomer demand falls and Boomer consumption declines, will WalMart's sales move in the same direction? Let's take a look from 30,000 feet. A January 28, 2010 New York Times headline reads: "Walmart Makes Organizational Moves to Raise Efficiency." Back at its analyst meeting in October 2009, Mike Duke, Walmart's new chief executive, said the company is determined to become more efficient and cut costs, allowing it to offer lower prices to increase sales.
QUIZ: Boomer$! Test Your Smarts The Baby Boomer generation, born between 1946 and 1964, is the most economically powerful population in U.S. history. Boomers came to symbolize change. They inspired change. They forced change. They embraced change. Politically, socially, culturally.
ACORN and other leftist groups eligible for up to nearly $4 billion By anathhartmann - Washington Times To add to the list of outrageous earmarks in Obama's fiscal 2011 budget, it appears left-wing activist groups including ACORN, the embezzlement-prone, voter-registration-fraud-plagued community organizing group, are eligible to receive up to $3.99 billion in taxpayer-backed slush money. The funds would come indirectly from the Community Development Block Grant, one of the Department of Housing and Urban Development's longest-running programs. The grant money goes to state and local governments. ACORN and other groups can apply for part of it directly from a local municipality in which an arm of their group is active.
Low oil prices: A tool to control Iran By Steve Hargreaves NEW YORK (CNNMoney.com) -- A desire to bring Iran to the bargaining table over its nuclear program could keep oil prices low worldwide for the next several months. Some analysts say Saudi Arabia, which has taken millions of barrels a day off world oil markets in response to falling demand, may open the taps if oil prices get too high. The Saudi's don't want high oil prices to hurt any global economic rebound. But they also don't want Iran, a rival in the region that has a nuclear program many say is designed to make weapons, to benefit from high oil prices.
NATO’s Role In The Military Encirclement Of Iran By: Rick_Rozoff - Market Oracle Following on the heels of identifying himself as the “Commander-in-Chief of a nation in the midst of two wars” and moreover the head of state of no less than “the world’s sole military superpower” [1] while being presented with what is still curiously called the Nobel Peace Prize, U.S. President Barack Obama in his first State of the Union address on January 27 asserted “the international community is more united, and the Islamic Republic of Iran is more isolated” and threatened: “As Iran’s leaders continue to ignore their obligations, there should be no doubt: They…will face growing consequences. That is a promise.”
EU Will Fail Upwards Until it Really Fails The Daily Bell Having failed, the EU must acquire more powers. Free-Market Analysis: The European Union, like Frankenstein's monster, is not about to die again - or not if its leaders can help it. Every crisis, every mis-step, every unworkable solution only provides those running the EU with additional reasons why the EU should obtain more power. It is a classic case of failing upward, and a cynical one as there is ample evidence that those who founded the EU always expected that serial crises would present themselves as an opportunity to create an ever-closer union.
Iran claims new success in uranium enrichment By Ali Akbar Dareini and Nasser Karimi AP TEHRAN -- President Mahmoud Ahmadinejad claimed Thursday that Iran has produced its first batch of uranium enriched to a higher level, saying his country will not be bullied by the West into curtailing its nuclear program a day after the United States imposed new sanctions.
Iranian regime uses anniversary crowds and crackdown to muzzle opposition Ian Black - guardian.co.uk -- Huge rallies hear country now 'a nuclear state' while Green movement is dealt a blow as protests are muted Mahmoud Ahmadinejad struck a defiant note today as Iran's Islamic regime celebrated the anniversary of the 1979 revolution with a major security clampdown and huge official rallies that dealt a grave blow to supporters of the opposition Green movement. The Iranian president told a crowd of hundreds of thousands in Tehran's Azadi (Freedom) square that Iran was now a nuclear state, having produced its first batch of uranium enriched to a higher level than before. The announcement will fuel fears that the country is getting closer to building a nuclear weapon in defiance of international demands, although Ahmadinejad flatly denied this.
Treasury Dept. sanctions four firms for ties to Iran's arms programs By Glenn Kessler - Washington Post The Treasury Department on Wednesday slapped sanctions on four construction-related companies that it said serve as fronts for the growing business interests of Iran's Islamic Revolutionary Guard Corps, which is heavily involved in Tehran's nuclear and missile programs. The move represents stepped-up enforcement of existing sanctions on Iran as the Obama administration prepares to push for tougher and broader punitive measures by the U.N. Security Council, the European Union and a coalition of major trading partners in an effort to force Iran to negotiate seriously on its nuclear ambitions.
Obama to meet with Dalai Lama next week By ASSOCIATED PRESS WASHINGTON (AP) -- President Barack Obama will meet with the Dalai Lama at the White House next week. The long-anticipated meeting set for Feb. 18 is likely to enflame tensions between China and the United States. China accuses the Dalai Lama of pushing for Tibetan independence and believes that shunning the exiled Tibetan monk should be a basic principle of international relations.
Mandarine Chinese Immersion programs have been around for a while in US education . . . . Why do the words indoctrination, brainwashing, capitulation, and acquiescence, come to mind?
Local charter school to offer Mandarin program By AMEENA SCHELLING - Daily Princetonian This September, some local grade schoolers will be learning more than the basics on their first day of class when the Princeton International Academy Charter School (PIACS) opens its doors — and debuts its Mandarin Chinese immersion program — to 170 students. In addition to its language program, the school will follow an International Baccalaureate curriculum, co-founder Parker Block explained. He said that these two “elements” made PIACS distinct and were “not offered by any other school district, public or private.” Block explained that the school’s mission is to provide students with “the kinds of skills that children would need when they went out in the world in the 21st century.” “One of these was the ability to compete effectively on a global level, a skill which children are lacking,” he said.
Mandarin Chinese immersion programs: Character building By PATRICE RELERFORD, Star Tribune Last update: February 22, 2008 - 8:53 PM Last summer, Barbara Odom of Chanhassen looked at her daughter and considered two possibilities for the girl's first days in a Mandarin Chinese kindergarten class. One, Gabbi would love language immersion and "soak up Mandarin like a sponge." Or two, she would be confused and come to tears because her teacher spoke only Chinese. Today, Gabbi, 6, loves her teacher, sings Mandarin songs "all the time," mixes Mandarin words and phrases with English, and eavesdrops on strangers at Target.
The Pioneer Valley Chinese Immersion Charter School (PVCICS) prepares K- 8th grade students for academic and personal success through rigorous study and instruction aligned with the state and federal government standards, augmented with Chinese language and culture. PVCICS's goals are to graduate students with excellent scholarship, high proficiency in Mandarin Chinese and English, plus sensitivity to multiple cultures. PVCICS serves the Pioneer Valley region.
New Chinese immersion programs in the Twin Cities by Laura McCallum, Minnesota Public Radio September 11, 2007 More Minnesota students are taking Chinese this year. The number of schools offering Chinese language classes has grown to about two dozen, in response to rising demand from parents. This year, two suburban school districts began offering a more intensive Chinese language instruction, with immersion programs in elementary schools. Hopkins, Minn. — At XinXing Academy in Hopkins, kindergarten students spend their entire school day immersed in Mandarin Chinese. That means they don't hear one word of English from their teacher.
China Boot Camp Blog - December 30, 2009 - Part II
Underestimating China By Adm. James A. Lyons - Washington Times Focusing on pirates and fishermen is a formula for disaster On a recent visit to Australia, Secretary of the Navy Ray Mabus downplayed the threat posed by China's rapid modernization of its military forces, highlighted in Australia's 2009 Defense White Paper. With no discernable threat, China's unprecedented force modernization program has grown at a double-digit rate for the past 10 years. Though China professes that the modernization of its military forces threatens no one and is only for defensive purposes, it is classic Chinese subterfuge. Every new weapons system it has acquired or developed is designed specifically to target or intimidate U.S. military forces. For example, China's development of an anti-ship ballistic missile is designed to target U.S. aircraft carriers - not some commercial container ship. It has purchased from Russia the Supersonic SS-N-22 Sunburn anti-ship cruise missile, which was designed specifically to strike our Aegis cruisers and destroyers. It has tripled to 36 the number of surface combatants carrying anti-ship cruise missiles.
***** Niall Ferguson Interview - Global Economic Growth Shifting East - 1 of 3 - Limits of leverage have been reached; American consumer is not bouncing back; global re-balancing & US dollar devaluation:
Niall Ferguson Interview - Global Economic Growth Shifting East - 2 of 3 - US is on an unsustainable debt path with unfunded liabilities; things can turn ugly, quickly
Niall Ferguson Interview - Global Economic Growth Shifting East - 3 of 3 - Default on US debt is not a scenario we can rule out; defaults on Medicare and Social Security; do we accommodate Chnina's rise in power or do we try to balance it?
China to push aside Japan as No. 2 economy By Chris Isidore NEW YORK (CNNMoney.com) -- China is likely to soon overtake Japan to become the world's second largest economy, a milestone that will only fuel growing fears about the economic might of the world's largest country. China's economy grew by 8.7% in 2009, even in the face of a global economic slowdown. Japan, which will report its full-year numbers on Feb. 14, is expected to slip behind China due to the steep decline in its economy in the first half of last year.
China threatens world health by unleashing waves of superbugs By Peter Foster in Beijing - Telegraph China's reckless use of antibiotics in the health system and agricultural production is unleashing an explosion of drug resistant superbugs that endanger global health, according to leading scientists. Chinese doctors routinely hand out multiple doses of antibiotics for simple maladies like the sore throats and the country's farmers excessive dependence on the drugs has tainted the food chain. Studies in China show a "frightening" increase in antibiotic-resistant bacteria such as staphylococcus aureus bacteria, also know as MRSA . There are warnings that new strains of antibiotic-resistant bugs will spread quickly through international air travel and international food sourcing.
Chinese police admit enormous number of spies By Malcolm Moore in Shanghai - Telegraph A Chinese police chief has said he uses more than 12,000 spies to inform on a remote county of just 400,000 people, an admission that lays bare the enormous scale of China's surveillance network. Liu Xingchen, the 56-year-old assistant to the head of Kailu County, a farming region in Inner Mongolia, said his vast network of informants meant he could be "very sensitive" to any signs of dissent and protest. In an interview with Xinhua, the government-run news agency, Mr Liu described how he was able to "quickly and accurately discover all sorts of information that might destabilise society".
Stayaway shuts down Greece Strike against debt measures AP - Times LIVE A Strike by civil servants shut schools and grounded flights across Greece as unions challenged cutbacks aimed at ending a government debt crisis that has shaken the entire European Union. Air-traffic controllers, customs and tax officials, hospital doctors and school teachers walked off the job for 24 hours to protest against sweeping government spending cuts that will freeze salaries and new hiring, cut bonuses and stipends and increase the average retirement age by two years to 63. The strike left state hospitals manned only by emergency staff and disrupted national rail travel. "It's a war against workers and we will answer with war, with constant struggles until this policy is overturned," said Christos Katsiotis, a representative of a communist party-affiliated union.
Greek Deal Stirs Moral Hazard Concerns By Tom Lauricella - WSJ Any Deal by European Officials to Guarantee the Debt of Greece and Other Troubled Nations Might Keep the Crisis From Worsening, but It Raises Another Big Problem: Moral Hazard. Any deal by European officials to guarantee the debt of Greece and other troubled nations might keep the crisis from worsening, but it raises another big problem: moral hazard. The concern is that by rescuing a country that for years flouted fiscal discipline, the European Union would be encouraging such behavior rather than discouraging it. One of the strengths of the euro was the idea that when a country joined the European Union it was a one-way trip that came with strict fiscal responsibilities. A loan-backstop program could change that perception. The moral hazard problem "is real," says John Taylor, chief investment officer at currency managers FX Concepts. "Any rescue has to be nasty enough that nobody wants to be in a position to be rescued."
German Bailout of Greece, PIIGS Would Herald Shift of E.U. Power To Germany By: STRATFOR - Market Oracle The situation in Europe is dire. After years of profligate spending, Greece is becoming overwhelmed. Barring some sort of large-scale bailout program, a Greek debt default at this point is highly likely. At this moment, European Central Bank liquidity efforts are probably the only thing holding back such a default. But these are a stopgap measure that can hold only until more important economies manage to find their feet. And Europe’s problems extend beyond Greece. Fundamentals are so poor across the board that any number of eurozone states quickly could follow Greece down.
Germany, Forced to Buoy Greece, Rues Euro Shift By Nicholas Kulish - NY Times BERLIN — As Europe edges toward emergency guarantees to stem market panic over one of the most profligate members of the euro bloc, the country that the region turns to for leadership, Germany, is suffering from growing doubts about the European experiment it long championed. Reluctant German leaders now find themselves forced to help Greece remain solvent, or risk watching markets attack one weak member after the next, from Portugal to Spain to Italy, threatening the stability of the euro, the European currency Germany fought so hard to create.
The Inflationary Economic Depression, PIIGS Propaganda Drives Scared Money Into the Dollar By: Bob_Chapman - Market Oracle -- The inflationary depression still dominates and probably will continue to do so. In time the stimulus will fail to work and the world will slip into total insolvency and deflationary depression. The old M3 is about 3%, but we still have $23.7 trillion floating around. Not only is the US bankrupt, but also so is the rest of the world. It is now only a question of when the dominos will fall. It looks like the first wave in the collapse of the bear market rally is underway. Bonds will follow with higher interest rates and eventually commodities will be hit. Only gold and silver will survive, as the bankers and Wall Street complete their destruction of the world economy.
Southern Europe Debt Crisis, Economies Teetering in the Brink of New Recession By: Gary North - Market Oracle The euro is the focus of attention these days. This is because of a fiscal crisis in Greece, and looming crises in Portugal and Spain. Italy could follow. What is the problem? Greece is running a huge deficit in the range of 12.7% of its Gross Domestic Product. The investment world regards a deficit of this magnitude as unsustainable. There are rumors of default. Spain is running a deficit of 11.4% of its GDP. This is considered a threat to the nation's financial structure. There are rumors of default.
Euro Trashed? by John Browne - Financial Sense The European experiment with a trans-sovereign currency is facing its first acid test. The flashpoint today is Greece, which looks set to default on its debt barring some outside intervention. While many commentators have been squawking about the immediate crisis as if it were the end of life on Earth, I would like to zoom out and discuss the history and longer-term outlook for the euro and its parent, the European Union. The launch of the euro was a major milestone in the sixty year process of European federalization. Economic considerations have always led the charge, from a normalization of tariffs to a free-trade area to a customs union. Still, the launch of a pan-European fiat currency and central bank without a unified political apparatus behind it was always considered a risky move.
China orders retreat from risky assets By Ambrose Evans-Pritchard - Telegraph China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets. A Communist Party directive leaked to the Chinese-language edition of the Asia Times said dollar reserves should be limited to US Treasuries or agency mortgage debt such as Freddie Mac that enjoys Washington's implicit backing. BNP Paribas said the move has major implications for global risk assets. "The message from Beijing is that we don't like this environment," said Hans Redeker, the bank's currency chief.
Trade deficit, Greece, jobs bill, Fed
Despite recent setback gold fundamentals suggests $1,500 price this year Author: Lawrence Williams - MineWeb -- Gold guru Jeff Nichols remains confident that the yellow metal will return to a rising path and still predicts a price of $1,500 or higher before the end of the current year and that it will move higher still in the years ahead. Nichols has remained bullish on gold through its recent trials and tribulations, and his analyses carry some weight, although he is pretty much in the gold bug camp, at least for the time being. Because of his medium to long term views on the gold price pattern, Nichols considers the recent falls offer an excellent opportunity to ‘buy insurance against the very real possibility of future stock and bond market declines, accelerating inflation, a shrinking dollar and turmoil in U.S. and world financial markets.'
Gold retreats on Bernanke comments, Greece worries Frank Tang and Jan Harvey NEW YORK/LONDON (Reuters) - Gold prices slipped on Wednesday as Federal Reserve Chairman Ben Bernanke's comments about stimulus pullback dimmed the outlook of the nascent economic recovery, denting bullion's investment appeal. Uncertainty over a possible bailout of debt-stricken Greece also prompted bullion investors to take profits. Gold had rallied $20 in the two previous sessions on easing fiscal worries in some euro zone countries, and after China's biggest sovereign wealth fund disclosed it held a stake in gold exchange-traded funds and some top gold producers.
Ever thought of Gold and Silver confiscation? By Dr Jeffrey Lewis - Commodity Online The history of confiscation of precious metals is well documented, with literally tons of gold and silver ripped from the hands of ordinary Americans during the financially tumultuous years of the Great Depression. However, history books and academic research rarely shine light into the confiscation of silver and rather focus on gold, even though both were made illegal for a total of 40 years. In this article, we'll examine the history of confiscation and shed light on the possible future confiscation of silver from investors.
The "Y-shaped" downturn - A Greater Depression? A more severe crisis is already "Baked in the Cake" by Michael Hampton - Financial Sense My opinion is that a Depression is already "baked in the cake", and we will soon be "eating the cooking". The best we can hope for is to delay the inevitable, and/or to make a very severe recession or depression as quick and painless as possible. Recent actions by political leadership and monetary authorities in the US and the UK have delayed the most severe part of the recession. But the cost has been high, and the eventual downturn may be worse than if they had taken different actions or simply done nothing.
Gerald Celente believes that the depression is global by Mac Slavo - Lew Rockwell Chinese Depression: Will Its Massive Foreign Reserve Hoard Save the Country's Economy? As the United States and Europe deal with economic contraction resulting from excessive credit expansion that many believe has lead to another Great Depression, China’s future remains hazy. Some argue that China has replaced the US as the global engine of growth because of increased internal consumption, export capacity and massive reserves. And for these reasons, China will avoid the same fate as the US and Europe. Not everyone is convinced, however.
Confused? So are the markets By Bill Fleckenstein - MSN Money Unusually strong crosscurrents are creating chaos in markets all over. We need to step back to sort out what's happening with stocks, bonds, currencies and gold. Spending a week away with no TV or newspapers and only limited Internet access, as I did recently, gave me lots of time to think about the present investing environment, where there is mass confusion in all markets. Unusually strong crosscurrents make it difficult to ferret out what participants are thinking or anticipating. However, I'll take a stab at it by reviewing various markets -- stocks, bonds, currencies and gold -- and considering whether my expectations need to be adjusted. First, though, a look at the innards of those crosscurrents.
Wall Street Wants a Refund By Robert Scheer - Truth Dig “Buyer’s remorse” is the way Sen. John Cornyn, the Senate Republicans’ fundraiser, gleefully refers to Wall Street moguls’ current disenchantment with the U.S. president they thought they had bought. They didn’t like it when Barack Obama, after a year of throwing trillions of American taxpayer dollars into the bailout sinkhole, dared remark that he had hoped there might be some return for ordinary folks trying to save their jobs and homes. Not just huge bonuses for the folks the president dared refer to as “fat cats.”
Take this bank and shove it By David Ellis NEW YORK (CNNMoney.com) -- When Abel Collins decided to end his three-year banking relationship with Bank of America earlier this year, he simply wanted to make a statement. The 31-year old Rhode Island-resident said he never had a problem with BofA specifically. But he switched from the nation's biggest bank to a local credit union to protest what was happening in the financial sector more broadly, namely that banks had become "too big to fail" and Washington wasn't doing enough about it.
Bernanke Says Discount Rate May Rise 'Before Long' By Scott Lanman and Craig Torres Feb. 10 (Bloomberg) -- The Federal Reserve may raise the discount rate "before long" as part of the "normalization" of Fed lending, a move that won't signal any change in the outlook for monetary policy, Chairman Ben S. Bernanke said. Bernanke repeated the Federal Open Market Committee statement that low rates are warranted "for an extended period" in testimony prepared for the House Financial Services Committee. The Fed may also temporarily replace the federal funds rate as a policy guide with interest it pays on banks' deposits should fed funds become a "less reliable indicator than usual," Bernanke said.
Bernanke: No exit yet Colin Barr NEW YORK (Fortune) -- Ben Bernanke has a handy tool belt, but don't expect to see him sporting it until next year. The Federal Reserve chairman on Wednesday spelled out how he plans to mop up all the money the central bank has spilled into the economy to douse a financial conflagration. He presented the plan in written testimony for a congressional hearing that was snowed out.
Keiser Report 15: Markets! Finance! Scandal!
Ben Bernanke considers raising discount rate as first step in exit plan By James Quinn, US Business Editor - Telegraph The US Federal Reserve may consider raising the rate at which banks can borrow money "before long" in the first sign of a return to a more normal policy track by the world's largest central bank. Ben Bernanke, Fed chairman, said the move would not lead to tighter financial conditions for consumers and businesses, as the "US economy continues to require the support of highly accommodative monetary policies,' but should be viewed as "further normalisation of the Federal Reserve's lending facilities." However, an increase to the 0.5pc discount rate – which is charged on direct loans to commercial banks – would raise the cost of bank liquidity and fire the starting-gun on the Fed's tightening of monetary policy over the long-term.
Bernanke says trial reserve drains may launch exit Mark Felsenthal WASHINGTON (Reuters) - The Federal Reserve could begin pulling back its unprecedented stimulus for the U.S. economy by first removing some cash from the financial system and then raising interest rates, Fed Chairman Ben Bernanke said on Wednesday. The U.S. central bank has pumped more than $1 trillion into the economy after it slashed benchmark rates to near zero to combat the worst financial crisis since the Great Depression. While the economy has grown for the past two quarters, unemployment is at a lofty 9.7 percent. In his most detailed description to date of how the Fed aims to dismantle the extensive emergency support facilities it put in place during the crisis, Bernanke made clear the Fed's thinking on its exit strategy had advanced even though the time for tightening monetary policy was still some ways away.
Geithner says financial system healing, needs work Corbett B. Daly WASHINGTON (Reuters) - The financial system averted a meltdown but it is not yet back up to full strength, Treasury Secretary Timothy Geithner said on Wednesday. "The financial system is healing, but still damaged, and we have a lot of repair work still ahead," Geithner said in a statement accompanying a summary of the administration's efforts to stabilize financial markets over the past year.
Nouriel Roubini Discusses Outlook for U.S. Stock Market
Trade gap widens in Dec to $40.2 billion Doug Palmer WASHINGTON (Reuters) - A big jump in oil imports swelled the U.S. December trade deficit to $40.2 billion, an unexpected widening that suggested U.S. economic growth was not quite as strong as initially thought in the fourth quarter. The Commerce Department's report on Wednesday, showing a 10.4 percent jump in the trade gap, came as both U.S. exports and imports recorded large gains for the month. The bigger-than-expected deficit will "shave a couple of tenths off" the U.S. government's estimate the economy grew at a 5.7 percent annual rate during October to December, said Nigel Gault, chief U.S. economist at IHS Global Insight.
2011 Budget the “Perfect Plan for Catastrophe” By Rocky Vega - Daily Reckoning 02/10/10 Stockholm, Sweden – Arthur Laffer, former head of the Office of Management and Budget, has decided that President Obama’s 2011 budget “is the perfect plan for catastrophe.” Laffer has a variety of policy recommendations he presents in an interview released today, and some of his more interesting thoughts include the three we’ve transcribed below: On unfunded liabilities: [including civil service and military retirement and medical benefits, Medicare, Medicaid, and the Pension Benefit Guaranty Corporation] What you’ve got to do is go through all of these programs very, very carefully and make sure you eliminate those things that are pushing these programs into huge unfunded liabilities. America cannot afford any of these programs. The estimates on the unfunded liabilities are somewhere in the $100+ trillion range and when you realize our GDP is only $14 trillion, and when you realize total federal tax receipts are only $2.2 trillion, when you have unfunded liabilities of over $100 trillion you realize you’ve got a real disaster on hand.
The Terror-Industrial Complex By Chris Hedges - Truth Dig The conviction of the Pakistani neuroscientist Aafia Siddiqui in New York last week of trying to kill American military officers and FBI agents illustrates that the greatest danger to our security comes not from al-Qaida but the thousands of shadowy mercenaries, kidnappers, killers and torturers our government employs around the globe. The bizarre story surrounding Siddiqui, 37, who received an undergraduate degree from MIT and a doctorate in neuroscience from Brandeis University, often defies belief. Siddiqui, who could spend 50 years in prison on seven charges when she is sentenced in May, was by her own account abducted in 2003 from her hometown of Karachi, Pakistan, with her three children—two of whom remain missing—and spirited to a secret U.S. prison where she was allegedly tortured and mistreated for five years. The American government has no comment, either about the alleged clandestine detention or the missing children.
Ron Paul on Stimulus
U.S. consumer confidence falls in February NEW YORK (Reuters) - U.S. consumer confidence fell in February to near a level seen at the beginning of the recession, as high unemployment and some stock market weakness sapped January's optimism, a research group said on Tuesday. Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index fell to 46.8 in February from 48.8 in January. Readings above 50 indicate optimism, while those below 50 point to pessimism. The index is now 1.7 points below its 12-month average of 48.5 and just 2.4 points above its reading of 44.4 in December 2007, when the recession began.
'No Labor Market Recession For America's Affluent,' Low-Wage Workers Hit Hardest Ryan McCarthy - Huffington Post It's truly been a tale of two unemployment crises. Though the national unemployment rate dipped slightly in January to 9.7 percent, a new study suggests that not only have low-income workers been the hardest hit by the jobs crisis -- but, shockingly, there has been "no labor market recession for America's affluent."
Motorola Weighs New Plan to Break Up By Jeffrey McCracken, Dana Cimilluca - WSJ Motorola Inc. is close to rolling out a new plan that it hopes will revive a long-suffering effort to separate the company's main business units, according to people familiar with the matter. In recent days the Schaumburg, Ill., company has moved toward reversing a months-old strategy of selling off the largest of its three divisions, which makes set-top boxes and wireless-networking gear, these people said.
Dark clouds hang over U.S. small businesses WASHINGTON (Reuters) - The outlook of small business owners remained bleak at the start of the new year, according to a survey released on Tuesday by the National Federation of Independent Business. "Small business owners entered 2010 the same way they left 2009 -- depressed," the group said, noting its Small Business Optimism Index reading for January was still below the 90 mark, the dividing line between positive and negative outlooks.
Financing troubles loom for commercial real estate By Elaine Walker - Miami Herald The commercial real estate industry still faces challenges this year. Financing is at the heart of the potential problems as delinquencies are expected to rise. While the real estate industry in South Florida and across the country may be showing some glimmers of hope, there still is likely to be more pain in 2010 -- particularly when it comes to commercial real estate financing. That was the consensus Tuesday from a variety of local and national industry leaders gathered for the Urban Land Institute's South Florida Economic & Development Outlook.
Freddie Mac Will Buy Out 120-Day Delinquent Mortgages by Diana Golobay - HousingWire Government-sponsored mortgage securitizer Freddie Mac said today it will buy “substantially all” mortgages delinquent by at least 120 days from the company’s related fixed-rate and adjustable-rate mortgage (FRM and ARM) Participation Certificate (PC) securities. Freddie said the loan purchases will show up in the PC factor report published after March 4, 2010. The corresponding principal payments on affected PCs will pass through to FRM and ARM PC holders on March 15 and April 15, respectively.
Defaults on FHA Mortgages Pass 9 Percent by Jon Prior - HousingWire The default rate in the single-family FHA portfolio reached 9.12% in Q409, climbing from 6.82% in Q408, according to the Federal Housing Administration December monthly report. The total number of FHA-insured single-family mortgages in default reached 531,671 in Q409, a 66% increase from 319,741 in Q408. In that same period, modifications on FHA-backed loans increased 54% to 23,973 in Q409. At the American Securitization Forum, Margaret Burns, director of single-family development for FHA said the 2009 portfolio is “solid,” and reiterated the FHA is not taking huge losses that eat into the reserve account.
One in five US mortgages "underwater" in Q4 -Zillow By Julie Haviv NEW YORK, Feb 10 (Reuters) - One of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter, a trend that poses a serious threat to the U.S. housing market's recovery, real estate website Zillow.com said on Wednesday. Homeowners with "underwater" mortgages are more prone to defaults and foreclosures. They typically do not qualify for refinancings and are unable to sell their homes because they would need to cough up cash at closing time to pay off their mortgage.
California Debt Crisis, Muni Bonds At Real Risk of Default By: Richard_Shaw - Market Oracle California’s finances are a mess. Credit default swap rates put California among the top ten most likely to default among major governments worldwide. If you are a California resident and think California can solve it’s own budget problems, or if you think the US government will bail them out, then you might want to own California municipal bonds for the best fit tax shelter and the higher nominal yield. However, if you doubt either of those, you may be better off owning a national or non-California muni fund, and accept a less tax efficient holding with a somewhat lower nominal yield, but with superior credit quality.
Colorado Senate OKs 9 business tax bills, despite 100% GOP opposition Denver Business Journal - by Ed Sealover The Colorado Senate gave final approval to all nine bills in Gov. Bill Ritter’s tax-exemption package that it took up Wednesday, putting most just one step from the governor’s desk. The bills suspend or eliminate various tax breaks that benefit business. The voting took nearly seven hours, as Republicans and Democrats rehashed arguments from the past week. Republicans called the bills unconstitutional tax hikes and said they will lead to mass layoffs, while Democrats said the $118 million in additional revenue that the changes will bring will help close a $1.3 billion shortfall in next year’s budget and preserve state services.
What Has 'The Union' Ever Done for Colorado? by Mark R. Crovelli - Lew Rockwell The main argument trotted out by defenders of giant, super-armed governments is that such states offer vital protection to the peoples they claim to protect. Thus, according to this argument, the gigantic war machine stationed in Washington D.C. (or, more accurately, in Afghanistan, Iraq, Cuba, Japan, etc.) stands as an indispensable bulwark against imminent foreign invasion that keeps the individual people living under its umbrella safe from attack from, inter alia, the German Kaiser, the Japanese, the Germans again, the Soviets, the "terrorists," Iraq, Iran, etc. Now, it may be excusable for the egotistical governing class in Washington D.C. to indulge themselves with this twaddle, but for Coloradoans there is no excuse.
Google's Ultra-Fast Broadband Plan Puts U.S. ISPs on Notice By Sam Gustin - Daily Finance Google's plan to build a ultra-fast fiber-optic broadband network for as many as 500,000 U.S. customers is an ambitious shot across the bow of incumbent Internet service providers. The plan, which the company will roll out as a test in several U.S. cities, is designed to nudge both the federal government and ISPs to ramp up U.S. broadband speeds. The search giant also hopes the scheme will serve as a test for what it calls next-generation Internet services.
Aftershocks Reported In Illinois Earthquake (On New Madrid Fault Zone) A 5.2-magnitude earthquake centered near this southern Illinois town struck before dawn Friday, shaking things up from Nebraska to Atlanta but doing little damage and seriously hurting no one. It was the kind of temblor that might be ignored in earthquake-savvy California. But the quake rattled nerves across the Midwest as it rocked skyscrapers in Chicago, 230 miles north of here, and sent people scrambling for their TV sets in Milwaukee, Cincinnati and Louisville, Ky., where bricks toppled to the pavement. ''We thought it (the house) was falling on us, we really did,'' said 85-year-old Anna Mae Williams, who was shaken awake at 4:37 a.m. in tiny West Salem, six miles from the epicenter. Dozens of aftershocks followed, including one with a magnitude of 4.6.
UK businesses threaten to pull out of China over protectionism By Malcolm Moore in Shanghai and Peter Foster in Beijing - Telegraph -- Senior business leaders complained in interviews with The Daily Telegraph that they were operating in the worst conditions they had seen for decades. Faced with regulations that are often impossible to meet and a climate of overwhelming protectionism, many said they are now openly considering whether to leave the world's biggest market. "We are bracing ourselves for departures this year from UK businesses, some of which are starting to question the economics of continuing to do business in China," said one diplomatic source. He added that the insurance and financial services sectors were particularly angry as profits and market share failed to materialise in the face of regulatory obstruction.
Coup in Nigeria Nigeria's deputy takes power AFP - TimesLive Nigeria's Vice President Goodluck Jonathan took office as acting head-of-state after parliament voted to force ailing President Umaru Yar'Adua to hand over until he is well enough to return. Jonathan accepted the post hours after the vote, saying in a speech broadcast nationwide: "The circumstances in which I find myself assuming office today as acting president of our country are uncommon, sober and reflective."
Pakistan Believes Taliban Chief Is Dead By Zahid Hussain - WSJ ISLAMABAD -- A senior Pakistani official said Wednesday there was credible information that Hakimullah Mehsud, head of the Pakistan Taliban, died of wounds inflicted by a U.S. missile strike last month in the first official statement about the fate of the militant leader. Still, the statement stopped short of being sure. "I have credible information that he's dead, but I don't have any confirmation," Rehman Malik, the federal interior minister told reporters in Islamabad as the speculation intensified about whether Mr. Mehsud, 30 years old, was dead.
Pakistan confirms: Taliban chief dead By Riaz Khan ASSOCIATED PRESS Suicide attack on tribal police kills 17 PESHAWAR, Pakistan | The Pakistani government confirmed for the first time Wednesday that the country's Taliban leader died of injuries sustained in a U.S. drone strike in mid-January, setting the stage for a potential succession struggle that could further weaken the group. A suicide bomber attacked a vehicle carrying tribal police near Pakistan's volatile border with Afghanistan on Wednesday, killing 17 people.
Foreign Media Banned In Iran Google Mail Shut Down Tehran - Iran has for the first time banned foreign media from covering Thursday's street marches marking the 31st anniversary of the Islamic revolution, amid opposition plans for anti-government protests. An official co-ordinating the media told AFP that reporters and photographers were allowed to cover only the speech of President Mahmoud Ahmadinejad at the historic Azadi (Freedom) Square in southwestern Tehran, and not the traditional street marches across the city. Every year hundreds of thousands of Iranians participate in marches in Tehran and other cities to mark the toppling of the US-backed shah in 1979.
2 Israeli Navy ships passed through Suez Canal Roee Nahmias - YNetNews Two Israeli missile boats pass through Egypt's Suez Canal en route to Red Sea, according to Arab media reports; Cairo adopts strict security measures to ensure ships' safety. Egyptian sources estimate vessels headed to Persian Gulf Two Israeli missile boats reportedly passed through the Suez Canal Thursday morning, according to Arab media reports over the weekend. Egyptian authorities reportedly adopted strict security measures to ensure the ships' safety. According to the reports, the two Navy ships traveled through the canal en route to the Red Sea.
Throwing Greece a Life-Preserver
Germany Said to Consider Aid for Greece Beyond Loan Guarantees By Brian Parkin and Rainer Buergin -- Feb. 10 (Bloomberg) -- German Finance Minister Wolfgang Schaeuble told lawmakers that options for helping Greece extend beyond loan guarantees as Greek unions struck to protest budget cuts, shutting down the nation's schools, hospitals and flights. European Union rules on aid are more flexible than the German government first thought, according to a lawmaker who attended today's briefing in Berlin and spoke on the condition of anonymity because the discussions were private.
EU to Lay Groundwork for Greek Aid in Drive to Protect Euro By James G. Neuger Feb. 11 (Bloomberg) -- European Union leaders may lay the groundwork today for a precedent-setting aid package for Greece in a bid to shield the euro currency from the wrath of markets. Germany and France set the stage for a Brussels summit by working on options such as loan guarantees as long as Prime Minister George Papandreou overcomes street protests and makes deeper cuts to the EU’s biggest budget deficit.
Tax Evasion Dogs Greece by Sebastian Moffett and Alkman Granitsas Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit. The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate.
EU summit to focus on politics of Greek support-source BRUSSELS, Feb 10 (Reuters) - The European Union summit on Thursday will focus on the political aspects of support for Greece and its debt problems while euro zone finance ministers will discuss the details on Monday, an EU source said. "(The chairman of euro zone finance ministers) Jean-Claude Juncker will debrief the heads of state on the talks he had this afternoon with finance ministers," the EU source said, adding that the teleconference went on for one hour.
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Chinese see U.S. debt as weapon By Bill Gertz Taiwan arms pique military China's military stepped up pressure on the United States on Monday by calling for a government sell-off of U.S. debt securities in retaliation for recent arms sales to Taiwan. A group of senior Chinese military officers also said in state-controlled media interviews that Beijing's leaders should boost defense spending and expand force deployments in the wake of the Pentagon's announcement last month of a new $6.4 million arms package for the island state claimed by Beijing.
China PLA officers urge economic punch against U.S. Chris Buckley BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan. The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.
Greece's economic crisis could signal trouble for its neighbor By Anthony Faiola - Washington Post ATHENS -- Europe scrambled for ways to prop up Greece's crumbling government finances Tuesday, restoring some stability to this unlikely keystone of the global financial system and sending markets higher around the world. But the underlying economic problems facing Greece and some other European countries mean that radical cutbacks to government spending and more social pain are likely to follow as these countries move to avert a sovereign debt crisis, in which nations find themselves unable to pay on their obligations. Reversals of fortunes have come fast and hard, and nowhere more so than Greece.
"World Turned on Its Head": Greek Bailout Rumors Boost U.S. Stocks by Aaron Task - Tech Ticker On again, off again rumors about a bailout of Greece's debt crisis dominated global markets on Tuesday. Global stocks rallied overnight and the Dow jumped Tuesday morning on reports European Central Bank President Jean-Claude Trichet had changed his travel plans to attend a meeting of EU officials on Thursday. Subsequent reports quoted German lawmaker saying a financial rescue plan was in the works. The result was sharply higher prices for stocks and commodities as the euro rebounded from its recent weakness vs. the dollar.
Germany backs Greek bail-out as EU creates 'economic government' By Ambrose Evans-Pritchard -Telegraph -- Germany is preparing to drop its vehement opposition to a rescue package for Greece, fearing that a rapid escalation of the debt crisis in Southern Europe could endanger German banks and damage the euro. Wolfgang Schäuble, Germany's finance minister, has asked officials to prepare a plan in time for a summit of EU leaders on Thursday, according to reports in the German media. The options include either a loan from EU states or some sort of institutional EU response. The news pushed the euro to $1.38 against the dollar, the strongest one-day rally since the single currency began its nose-dive late last year. Yields on Greek 10-year bonds plummeted 36 basis points to 6.39pc in a matter of hours as speculators scrambled to exit overstretched positions, with synchronised moves for Portuguese, Spanish, and Italian bonds.
Deeply in debt, Greece faces a Spartan future By Henry Chu - LA Times Reporting from Athens - Christos Maggelis is nothing but a bit player in the latest Greek drama. Yet somehow, he fumes, he's the one being punished by the gods. Those would be the ruling politicians of this sun-kissed land who, like Hercules and the Augean stables, face a cleanup task of mammoth proportions: getting rid of a toxic mountain of government debt that threatens the financial health of much of Europe.
European economies facing grim times By Laura Pilarski, David M. Dickson THE WASHINGTON TIMES -- As Greece's deficit and debt crises take a big turn for the worse, Zurich economists and bankers agree that several eurozone countries are mired in difficult times with no easy solutions. Already, Greece is in the frying pan and so-called "weak sisters" — Spain, Portugal, Italy and Ireland — are on a potential-disaster list. The main advice is to cut borrowing and get budgets under control. That's no easy task in an outlook that remains uncertain and calls for continuing economic contraction in 2010 for Greece, Spain and Ireland.
Money Supply Data Reveals “New Major Dip” Ahead By Rocky Veg - Daily Reckoning 02/09/10 Stockholm, Sweden – Trillions of dollars have been spent on US stimulus, and like all activities — the good, the bad, and the extremely dubious — it must eventually, necessarily come to an end. This is true if for no other reason than it’s simply too expensive to support. Heck, even the Brits have ended their version of quantitative easing… and so now Bernanke is reviewing US options for doing the same.
Euro Debt Could Boost Gold
Gold climbs towards $1,070/oz as dollar slips LONDON (Reuters) - Gold prices rose in Europe on Tuesday as the dollar weakened versus the euro amid speculation a rescue plan for struggling Greece may be arranged soon, enhancing the precious metal’s appeal as an alternative asset. Spot gold was bid at $1,068.20 an ounce at 1207 GMT, against $1,062.80 late in New York on Monday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $1.80 to $1,067.50 an ounce.
Gold prices will touch or surpass $1,500 in 2010 Jeffrey Nichols - Money Web Gold's long-term fundamentals promise substantial appreciation later this year and beyond. Regardless of the near-term prospects for gold, the long-term fundamentals promise substantial appreciation later this year and beyond. We remain firm in our conviction that gold prices will touch or surpass $1,500 in 2010 - and continue to move higher in subsequent years.
‘Gold is becoming a new de-facto alternate currency’ By Adrian Day - Commodity Online Virtually all markets and asset classes rallied last year, but among the strongest were the resources, continuing to rise on the back of continuing strong demand from China and other emerging economies. Though the broad Dow Jones-UBS Index was up just 19%, individual components were very strong, particularly the base metals, with copper up 139% and others, such as aluminum up, 50%. Oil and gold were also up strongly, while many of the agriculturals lagged, dragging down the index.
Gold Gains as Slumping Dollar Spurs Demand for Precious Metals By Nicholas Larkin and Kim Kyoungwha -- Feb. 9 (Bloomberg) -- Gold prices climbed for a second day as a declining dollar increased demand for bullion as an alternative asset. Silver, platinum and palladium also rose. The dollar fell as much as 0.9 percent against a basket of six major currencies on speculation that European nations will help Greece fix budget problems. Concerns that Greece’s deficit may lead to debt defaults drove the dollar to an eight-month high against the euro last week, while gold slid to a three- month low. Gold usually drops when the greenback advances.
Gold Bounces with Euro, Still Nailed to S&P, as Trichet Hints at Greek Rescue By: Adrian Ash - Gold Seek THE PRICE OF GOLD slipped from its best level in 3 sessions for both US and UK investors on Tuesday in London, easing back as the Euro currency and Eurozone stocks also cut their early gains. Government bonds ticked lower, while US crude oil contracts pushed up towards $73 per barrel. Silver erased a 1.6% rally as New York opened for business, holding unchanged from last week's 5-month closing low. "The pull back is not that great compared to previous corrections," says bullion bank Scotia Mocatta, studying the bullish position of speculative traders in gold futures and options – now 15% smaller from the middle of Jan.
US Sovereign Credit Risk and Inflation By Howard Simons - Minyanville We're going to see a struggle between governments and their creditors play out in 2010. When future economic historians look back on the global credit crisis starting in February 2007 with HSBC’s (HBC) disclosure of subprime mortgage losses in its Household Finance unit and reaching its spectacular climax in September 2008, they'll wonder why someone thought it was a good idea to place bad private debt on the public’s books. The losses had occurred already; they happened during the misallocation of resources during the housing bubble. The bust simply was the accounting. No amount of financial engineering or deal-making by an investment banker turned Treasury Secretary could undo what had been done. Until and unless the losses were recognized, the sooner the better, the markets couldn't clear by placing assets at fire-sale prices into newer and presumably stronger hands.
"Best of a Bad Lot": Dollar Will Soon Be Worth As Much the Euro, Says Gary Shilling by Peter Gorenstein - Tech Ticker -- Late last year, very few investors other than our guest Gary Shilling of A. Gary Shilling & Co. were predicting big things for the U.S. dollar. Guess what? As is often the case when sentiment tilts too far in one direction, the dollar is enjoying a nice rally to end 2009 and start 2010, thanks in part to Euro's problem with Greek debt. Reports of a rescue for Greece is giving the Euro a bounce today versus the dollar. However, Shilling is not about to buy Euros; believing in tough times, investors will continue to flee to the greenback, simply because it's "the best of a bad lot."
Poor US job data good for gold bad for the dollar Frank Holmes - Money Web Dollar's rally appears to be a short-term safe haven move. The US dollar was up last week against the euro out of fear of how debt problems in Greece and elsewhere in Europe will be resolved, and as a result gold had a tough week. The dollar's rally appears to be a short-term safe haven move, rather than a response to improving economic conditions in the US.
Euro - Anchor of Stability? Axel Merk - 321 Gold The world's attention is on the fiscal malaise in Greece and Portugal. Just a few months ago, policy makers told banks to shore up their balance sheets with more sovereign debt. However, policy makers around the world have since raced to spend money in an attempt to reinvigorate their respective economies, leading to record deficits. Now everyone appears surprised that weaker countries are having difficulty financing their largesse. In our assessment, what we see unfolding is a sign of greater instability to come. That said, writing off the euro may be premature; as global dynamics play out, we believe the euro may yet prove to be an anchor of stability.
Bernanke to talk exit, but stay on easy road By Greg Robb, MarketWatch With market participants starting to act like children on a long car trip, asking over and over when is the Federal Reserve going to exit its zero-interest-rate policy, Ben Bernanke looks like he's decided it is time to pull over and explain the road ahead. And while the Fed chairman may talk a lot about exit, he's going to make it clear to the kids that they are going to be in the car for some time to come. "The Fed is a ways away from implementing exit strategies," said Julia Coronado, economist at BNP Paribas.
Another Day, Another Bail-Out By: John Rubino - Gold Seek With a bail-out of Greece apparently immanent and everyone drawing parallels between the PIGS countries and the Wall Street firms that nearly cratered the global economy in 2008, this might be a good time to ask why each year seems to bring a new set of financial basket cases requiring taxpayer cash. The answer, of course, is easy money. When governments create too much credit, borrowing gets easier at the margins and the less intelligent, moral, and wise end up borrowing far more than they would normally be able to. When they inevitably implode, the world gets another chance to behave rationally by letting them go, accepting the resulting short-term pain, and learning the relevant lessons. But beginning in the 1990s with the Mexican and Russian defaults and the self-destruction of Long Term Capital Management, the strong economies have chosen to avoid the pain and bail out the losers.
TARP bailout lives on ... and on, and on By John W. Schoen - msnbc.com Sprawling program continues to find new bailout targets Now that the nation’s biggest banks have returned the money the government provided to keep them from collapsing, readers are wondering if those banks needed the money in the first place. To be sure, the return of the money indicates that the bailout succeeded. Banks are healthy enough to give the money pack, and taxpayers didn’t have to foot the bill for their mistakes. If only that were how the so-called TARP program really worked.
Ron Paul on Stimulus
Stimulus foes see value in seeking cash By Jim McElhatton Pet projects irresistible to GOP lawmakers Sen. Christopher S. Bond regularly railed against President Obama's economic stimulus plan as irresponsible spending that would drive up the national debt. But behind the scenes, the Missouri Republican quietly sought more than $50 million from a federal agency for two projects in his state. Mr. Bond was not alone. More than a dozen Republican lawmakers, while denouncing the stimulus to the media and their constituents, privately sent letters to just one of the federal government's many agencies seeking stimulus money for home-state pork projects.
Dow up 214 on hopes about Greek debt By Stephen Bernard, Tim Paradis - AP NEW YORK -- The Dow Jones Industrial Average climbed back above 10,000 on hopes that the European Union will help Greece manage its growing debt burden. The Dow was up more than 214 points Tuesday after closing below 10,000 on Monday for the first time in three months.
BIS Says Banks Need More Capital to Withstand Shocks By Shamim Adam Feb. 9 (Bloomberg) -- Capital requirements on banks aren’t sufficient to ensure financial stability and lenders should hold enough liquid assets to survive a temporary loss of access to funding, the head of the Bank for International Settlements said. The capacity and incentives to take risks have “clearly overwhelmed” any improvements in risk management, Jaime Caruana wrote in a paper he delivered to a gathering of central bankers in Sydney today. Financial companies alone can’t keep underlying risks in check and will need help from regulators to prevent any system-wide threat, he said.
Recoverygeddon By Neil Charnock - Gold Seek This so called recovery is problematic and now it is slowly entering a new dangerous phase. Bank losses have now been eclipsed as the major issue as sovereign debt emerges in a more sinister manner. This is only part of the problem and it will be overcome in the short term leading to resumed market growth. The real problem is the debt cycle and the emerging sovereign default concerns are showing us the future.
U.S. Losing AAA Is Way to Rein in Pelosi, Reid Commentary by David Reilly Feb. 9 (Bloomberg) -- When it comes to America’s AAA debt rating, we have to ask whether we would be better off without it. That notion is pure heresy, and Treasury Secretary Timothy Geithner was quick this weekend to try and dispel any thought that the U.S. would ever be in for a downgrade. “That will never happen to this country,” Geithner said during an interview with ABC News. The remark came after Moody’s Investors Service last week said the pristine U.S. rating will come under pressure unless something is done about mounting deficits.
Jon Corzine on the Bank Tax
Treasuries Tumble on Prospect European Union Will Assist Greece By Susanne Walker -- Feb. 9 (Bloomberg) -- Treasuries tumbled, pushing yields on 10-year notes up the most this year as European officials said they were considering financial assistance for Greece in return for progress by the country in reducing its budget deficit. U.S. debt fell for the first time in four days as a European Union official said support for Greece will be discussed in coming days. The Treasury sold a record-tying $40 billion in three-year notes at a yield of 1.377 percent, compared with a forecast of 1.36 percent in a Bloomberg News survey of six of the Federal Reserve’s 18 primary dealers.
Davos: The Bomb Shelter Predators and parasites recently gathered in Davos to discuss the mounting problems of their prey. All present agreed the problem needed urgent attention. Historian David Hackett Fisher describes this passing era as the period of Victorian Equilibrium. England’s Victorian Equilibrium, however, was built on banker’s credit, a foundation of sand; and like the story of Cinderella where the carriage turns into a pumpkin at midnight, the banker’s credit has now turned into defaulting debt and the fairy-tale world it built is collapsing.
MetLife Said to Weigh $8 Billion in Stock for AIG By Emre Peker, Zachary R. Mider and Hugh Son Feb. 9 (Bloomberg) -- MetLife Inc. may use stock to pay for more than half of the planned $15 billion purchase of an American International Group Inc. life insurance unit, said three people with knowledge of the matter. MetLife, the biggest U.S. life insurer, plans to pay AIG about $8 billion in stock and the rest in cash for American Life Insurance Co., said the people, who spoke on condition of anonymity because talks are private. Some of the cash may come from a $5 billion bridge loan from banks including JPMorgan Chase & Co., Bank of America Corp., Deutsche Bank AG, and Credit Suisse Group AG, the people said.
Gary Shilling: Higher Government Pay Will "Likely Lead to a Tax Revolt" by Peter Gorenstein - Tech Ticker -- 14.8 million Americans are currently out of work and looking for a job, according to a report released today by the Bureaus of Labor Statistics. Even if you do have a job, wages have not increased substantially over the last ten years, with one exception: government workers. Thanks to generous health-care benefits and pensions, it pays - more than ever - to work in the public sector. Economist Gary Shilling fears dubious consequences if state and local workers continue to make more money and at the same time governments raise taxes and cut services.
Jobs bill cuts payroll tax on new hires By Andrew Taylor and Stephen Ohlemacher - AP Senate measure also extends tax breaks and jobless benefits Senate Democrats circulated a jobs bill Tuesday that's light on new initiatives on boosting hiring and heavy with provisions sought by lobbyists for business groups, doctors and others. The 362-page measure is still in draft form and has not been officially released. It has bipartisan backing, but few new ideas for creating jobs, other than a $10 billion plan to exempt companies from paying the employer's share of Social Security payroll taxes for new hires if they are unemployed and hired this year.
Tax credits, Medicare fix in Senate jobs bill WASHINGTON (Reuters) - Tax breaks for hiring workers and highway funding figure prominently in a jobs-creation bill that is on a possible Senate fast-track, according to lawmakers and a draft of the legislation obtained by Reuters. The bill, likely to be less costly and more bipartisan than the one passed by the House of Representatives, also extends unemployment benefits and postpones a scheduled 20 percent cut in payments to doctors under the Medicare health insurance program for the elderly.
Unemployment taxes slam businesses By Tami Luhby NEW YORK (CNNMoney.com) -- Employers are getting hit with a massive tax hike at a time when they can least afford it. Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies. The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.
How a New Jobless Era Will Transform America by Don Peck HOW SHOULD WE characterize the economic period we have now entered? After nearly two brutal years, the Great Recession appears to be over, at least technically. Yet a return to normalcy seems far off. By some measures, each recession since the 1980s has retreated more slowly than the one before it. In one sense, we never fully recovered from the last one, in 2001: the share of the civilian population with a job never returned to its previous peak before this downturn began, and incomes were stagnant throughout the decade. Still, the weakness that lingered through much of the 2000s shouldn’t be confused with the trauma of the past two years, a trauma that will remain heavy for quite some time.
Senate jobs bill to give some state bonds subsidies WASHINGTON (Reuters) - Under a proposed Senate job creation bill, some state borrowing programs would change to give issuers federal rebates, some so large as to equal 65 percent of debt costs, according to a draft of the legislation obtained by Reuters. The Senate bill would modify the terms of state renewable energy and conservation bonds, included in last year's American Recovery and Reinvestment Act, as well as two school bond programs to resemble the popular Build America Bonds (BABs) program used to create jobs by funding infrastructure programs.
The Wages of Recession: Average 2010 Raises Will Barely Cover Inflation By MATTHEW SCOTT - Daily Finance Salaried employees hoping their 2010 annual raise will provide some relief as they attempt to recover from the worst economic downturn in 80 years are likely to be disappointed: Raises for U.S. workers may barely keep pace with inflation this year. New projections from The Conference Board show that the average company will budget just 2.8% of its salary pool for wage increases, barely exceeding inflation -- the first time in more than two decades that number has fallen below 3%. Furthermore, the business research organization says employers are adjusting their pay scales for all employees downward -- in fact, the 2010 salary structure adjustment for all categories of employees is projected to be 2% or less, far lower than the Conference Board's projected inflation rate of 2.6%.
Homebuyers finding that cash really is king Even in buyers’ market, many can’t close deals as investors snap up homes LOS ANGELES - Melissa Hughett and her husband set out to buy their first home in the best buyer's market in years, confident they would land a deal within a few months. The couple put offers on several homes, but lost them all to rivals who weren't offering more money — just a lot more cash. "Each time somebody came in and put $100,000 down in cash and scooped up the property or they had enough money to pay for the whole property in cash," said Hughett, 30. "It's agonizing."
Zillow: Colorado markets poised for ‘double dip’ in home values Denver Business Journal -- Four Colorado markets — metro Denver, Boulder, Fort Collins and Colorado Springs — are likely to experience further declines in home values in early 2010, even though they’ve seen some improvement, according to Zillow Real Estate Market Reports data. The fourth-quarter 2009 reports, which include nationwide data as well as information for individual markets, were compiled by Zillow Inc. of Seattle. Through Zillow.com, the company provides data about for-sale homes to buyers, sellers, real estate agents and mortgage professionals.
An Insider’s View of the Real Estate Train Wreck By David Galland, The Casey Report The first time I spoke with real estate entrepreneur Andy Miller was in late 2007, when I asked him to serve on the faculty of a Casey Research Summit. As John Mauldin, a former faculty member himself, knows, we’re very selective with our speakers. And there was no one in the nation I wanted more than Andy to address the critical topic of real estate.
Jumbo Mortgage ‘Serious Delinquencies’ Rise to 9.6% By Jody Shenn Feb. 8 (Bloomberg) -- U.S. prime jumbo mortgages at least 60 days late backing securities reached 9.6 percent in January from 9.2 percent in December, the 32nd straight increase for “serious delinquencies,” according to Fitch Ratings. “The trend line for delinquencies indicates the 10 percent level could be reached as early as next month,” Vincent Barberio, a Fitch managing director in New York, said today in a statement. The rate almost tripled in 2009, Fitch said.
Pulte Homes Reports 13th Straight Loss on Writedowns By Brian Louis Feb. 9 (Bloomberg) -- Pulte Homes Inc., the largest U.S. homebuilder, reported its 13th straight quarterly loss as a drop in market value after its purchase of rival Centex Corp. spurred a $563 million impairment charge. The net loss in the fourth quarter narrowed to $116.9 million, or 31 cents a share, from $338.2 million, or $1.33, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The average estimate of eight analysts in a Bloomberg survey was for a loss of 24 cents a share.
Anthem asked to justify rate hike in California By Shaya Tayefe Mohajer - AP LOS ANGELES - In his push to move stalled health care reform, President Barack Obama is appealing to American pocketbooks by calling one health insurer's major rate hike in California a harbinger of rising premiums. Anthem Blue Cross' 30 to 39 percent rate hike in California will affect an unknown number of its 800,000 individual policyholders — the insurer has declined giving specifics. But Obama said the rate hike is a sign of what will happen to many Americans without reform.
McDonald's to Close Hundreds of Outlets in Japan By Jonathan Berr - Daily Finance McDonald's Corp. (MCD) is closing 430 restaurants in Japan, the latest sign of the faltering economy in the Asian country. A 50% owned affiliate will shutter the locations over the next 12 to 18 months in conjunction with the strategic review of the company's real estate portfolio. The world's largest restaurant chain plans to take charges of $40 million to $50 million in the first half of the year. McDonald's Holdings Co. (Japan) has 3,700 stores. "These actions are designed to enhance the customer experience, overall profitability and returns of the market," the company said in a press release.
Honda recalls 379,000 cars for airbag hazard By Julianne Pepitone NEW YORK (CNNMoney.com) -- Honda announced it is expanding a previously announced recall to replace an airbag inflator in an additional 379,000 U.S. vehicles. In a statement posted on its Web site late Tuesday, Honda said the driver's airbag inflators in these certain vehicles may expand with too much pressure, which can cause the inflator casing to break and could result in injury or death.
The Census Scam by Eric Garris - Lew Rockwell San Francisco, 1980. A friend drops by my house. He is a middle-level Democratic Party activist who has been appointed as a middle-level census supervisor. He lights up a joint. As he passes it to me, he explains that he is "working" at that very moment counting people for the census. "I don't understand. I thought the counting was over." He explains that he is doing "spot counts" of people who were not counted in the regular tallies. I ask him how he knows whether someone has already been counted.
'Tea party' movement a flash in the pan? By Merrill Matthews - Washington Times The "tea party" movement has become the most important, yet misunderstood, dynamic driving the American political landscape. Democrats, at least publicly, deride and dismiss the movement, hoping it will go away and leave their House and Senate majorities intact. Republicans think they may benefit from, perhaps even co-opt, the movement and its energy, but some fear it could co-opt the party instead. And the mainstream media, to the extent they even acknowledge the movement exists, think it's a far-right flash in the pan.
Secession Is In the Air by Kirkpatrick Sale - Lew Rockwell I don’t know if you’ve noticed it, but secession is in the air. First of all, a fellow named Bill Miller has started a new website, SecessionNews.com, and it is a Drudge-Report-like compilation of anything connected with secession across the land and around the world. It is an extraordinary endeavor, and it reflects a great deal of talk about, interest in, separatism and independence these days. Miller, a retired computer engineer, has undertaken this, he says, because he has a passionate interest in getting Americans to understand that secession is a legitimate and honorable political strategy. Increasingly, it seems, they’re listening.
Disinformation Tactics: The Methods Used To Keep You In The Dark Posted by sakerfa There was a time, not too long ago (relatively speaking), that governments and the groups of elites that controlled them did not find it necessary to conscript themselves into wars of disinformation. Propaganda was relatively straightforward. The lies were much simpler. The control of information flow was easily directed. In fact, during the early Middle-Ages in most European countries commoners were not even allowed to own a Bible, nor was the Bible allowed to be interpreted from Latin to another language, let alone any other tome that might breed “dangerous ideas”. This was due in large part to the established feudal system and its hierarchy of royals and clergy. Rules were enforced with the threat of property confiscation and execution for anyone who strayed from the rigid socio-political structure. Those who had theological, metaphysical, or scientific information outside of the conventional and scripted collective world view were tortured and slaughtered. The elites kept the information to themselves, and removed its remnants from mainstream recognition, sometimes for centuries before it was rediscovered.
US's strike threat catches China off guard By Peter J Brown The United States plans to unveil later this decade a new conventional "Prompt Global Strike" (C-PGS) system. It will enable the US to instantly carry out a massive conventional attack anywhere in the world in an hour or less. Research and development work by the US Department of Defense (DoD) on C-PGS began almost two decades ago, and this shifted into high gear in 2003. Instead of delivering a nuclear warhead, a new US-based missile and/or some other unmanned delivery vehicle may carry a conventional warhead that is able to destroy a distant target in less than an hour.
Operation Breakfast redux By Pratap Chatterjee - Asia Times . . . . The campaign was called "Operation Breakfast", and while it may sound like the Central Intelligence Agency's present air campaign over Pakistan, it wasn't. You need to turn the clock back to another American war, four decades earlier, to March 18, 1969, to be exact. The target was an area of Cambodia known as the Fish Hook that jutted into South Vietnam, and Operation Breakfast would be but the first of dozens of top secret bombing raids. Later ones were named "Lunch", "Snack" and "Supper" and they went under the collective label "Menu". They were authorized by president Richard Nixon and were meant to destroy a (non-existent) "Bamboo Pentagon", a central headquarters in the Cambodian borderlands where North Vietnamese communists were supposedly orchestrating raids deep into South Vietnam. Like President Barack Obama today, Nixon had come to power promising stability in an age of unrest and with a vague plan to bringing peace to a nation at war.
Germany considers aid to Greece - reports By Julianne Pepitone NEW YORK (CNNMoney.com) -- The German government may offer an aid package to Greece and other debt-ridden European nations in an effort to stave off the default concerns that have stunted global markets, according to reports. The Wall Street Journal, citing unnamed sources, said a loan guarantee plan would be led by Germany but completed along with European Union partners.
Germany Weighing Support for Greece, Lawmakers Say By Brian Parkin and Patrick Donahue Feb. 9 (Bloomberg) -- Germany is considering assistance for Greece after the country’s fiscal woes threatened the stability of the euro and financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said. “We are considering support,” Michael Meister, financial affairs spokesman and deputy parliamentary leader of Merkel’s Christian Democratic Union, said today in a phone interview. “If Greece gets aid, it will only happen under strict conditions and if the Greek government undertakes far-reaching state reforms.”
Obama ratchets up threat of Iranian-nuke sanctions By Nicholas Kralev Russia hints of frustration with noncompliance President Obama vowed on Tuesday to slap "significant" new sanctions on Iran "fairly quickly" for stepping up its nuclear activities, as Russia expressed growing frustration with Tehran and signaled support for more penalties. Mr. Obama's comments, along with similar remarks by other Western leaders, came hours after Iranian state television quoted nuclear agency chief Ali Akbar Salehi as saying that enrichment of uranium to 20 percent purity had started at the Natanz nuclear facility.
Bolton: Military action only way to prevent Iran from getting nukes
Iran, West deceiving each other about nuke program By A. Savyon Memri - Jerusalem Post Iran under the Nuclear Non-Proliferation Treaty advances step by step toward military nuclear status, disguising its intentions all along the way. In a January 31 television interview, President Mahmoud Ahmadinejad announced out of the blue that Iran had agreed to the uranium exchange deal that it had rejected repeatedly since October 2009. This announcement came several days after it was reported that the US was deploying missile defense systems in the Gulf. However, on Sunday, Ahmadinejad announced that Iran would begin to enrich uranium by itself, to a level of 20 percent, and that it had attained laser technology for uranium enrichment.
Iran Tankers Idle as Oil Declines Before OPEC Meeting By Alaric Nightingale Feb. 9 (Bloomberg) -- Iran, OPEC’s second-largest crude producer, has at least three supertankers idling in the Persian Gulf, as oil prices decline five weeks before the group’s next meeting, vessel-tracking data show. The tankers, each bigger than the Chrysler Building, have been almost stationary for at least four weeks, according to data from the ships collected by AIS Live Ltd. The depth of the 2-million-barrel vessels sitting in the water indicates they are loaded. The amount of oil stored may expand because signals from two more idled tankers shows they are partially loaded or empty.
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Tues 02.09.2010
The Census and Despotism by Llewellyn H. Rockwell, Jr. “There went out a decree from Caesar Augustus,” says St. Luke on why Mary and Joseph found themselves in Bethlehem, “that all the world should be taxed.” Joseph had to go to his own city because the tyrannical Roman government was conducting a census. But the information may have been used for more than just taxation. The Roman government’s local ruler later decided he wanted to find the Christ child and kill Him. Did the government make use of census data to find out where the members of the House of David were? We can’t know for sure, although a later Roman despot did. But we can know that Joseph made a huge error in obeying the census takers in the first place. They were up to no good. In fact, another group of religious Jews in Judea decided that they would not comply with the Roman government’s demand to count and tax them. The group was known as the “Zealots” (yes, that’s where the word came from). They saw complying with the census as equivalent to submitting to slavery. Many ended up paying for their principled stand with their lives.
Will Obama Play The War Card? by Patrick J. Buchanan Republicans already counting the seats they will pick up this fall should keep in mind Obama has a big card yet to play. Should the president declare he has gone the last mile for a negotiated end to Iran's nuclear program and impose the "crippling" sanctions he promised in 2008, America would be on an escalator to confrontation that could lead straight to war. And should war come, that would be the end of GOP dreams of adding three-dozen seats in the House and half a dozen in the Senate.
White House Shuns EU Ron Fraser - the Trumpet U.S. foreign policy is becoming increasingly isolationist. The gloss is rapidly fading from the image of the current U.S. administration in the eyes of the European public. Following President Obama's July 2008 euphoric greeting by Berliners, it now appears that Europe's high expectations for a rosy relationship with Washington are rapidly diffusing into extreme disappointment.
Greece? Just a Side Show if the U.K. Defaults Brian Kelly - Gold Seek In our younger years we were quite accomplished at the “Match Game” on Sesame Street – to some we have just hopelessly dated ourselves, to others we hope to have given you a nostalgic boost. Whichever group you find yourself, please indulge us as we revert to times past and play the game once again…
Greece Says Call for Aid Would Send ‘Worst Signal’ By Svenja O’Donnell and David Tweed Feb. 9 (Bloomberg) -- Greek Finance Minister George Papaconstantinou said he can’t call for outside aid as his government struggles to cut the European Union’s largest budget deficit. “The worst possible signal which we could send out is one calling for outside help,” he said in an interview with Bloomberg Television in Athens yesterday. “We will tackle the deficit,” he said, adding that tax revenues in January exceeded forecasts “by some percentage points.”
Two Giant Spanish Banks Could Tumble Hard By James Cullen - Daily Finance Last August, an article I published on DailyFinance highlighted that something seemed amiss with two international banking giants headquartered in Spain: Banco Santander and Banco Bilbao were buying up foreign banks, even as conditions in their home country worsened dramatically. Instead of buckling down to face an inevitable spike in loan losses on existing business, the banks expanded their balance sheets through acquisitions and became more leveraged. But after a string of relatively benign months for equity markets, investors have recently grown skeptical of these two companies and sent shares down sharply. Santander shares have dropped 17% since the end of August, and Banco Bilbao shares are off 26% over the same period.
Global Bear Rally Will Deflate as Japan Leads World in Sovereign Bond Crisis by Ambrose Evans-Pritchard - Lew Rockwell -- Milton Keynes will be vindicated. Lord Keynes will lose some of his new-found gloss. The Krugman doctrine that we should all spend our way back to health by pushing deficits to the brink of a debt spiral – or beyond the brink – will be seen as dangerous. The contraction of M3 money in the US and Europe over the last six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises – the final error that triggered the implosion of Lehman, AIG, and the Western banking system.
China's debt bomb By Arthur Herman - NY Post America's No. 1 creditor holds the ultimate weapon 'He who pays the piper calls the tune": That old saying captures perfectly America's growing dependence on our No. 1 creditor in the world, Communist China. By their carelessness Congress and the Obama administration are steadily handing over control of America's economic and financial future to a handful of Chinese officials and generals in Beijing. Those who think the Chinese won't use that control if they feel they have to are ignoring history -- and the Chinese. The ancient military strategist Sun Tzu said that the best strategy was to render an opponent's army helpless even before the battle began. America may still have the biggest and best military in the world.
Middle-Class Rage Against the Government by Jack D. Douglas - Lew Rockwell The soaring, middle-class rage against government catastrophes, terrorism, and corruptions of all forms is in part due to the immense catastrophes they have seen government and Big Corporations working with government produce in front of their startled eyes over and over again. The Great Financial Crisis is certainly a colossal catastrophe they have seen crashing all around them, Government officials deny everything and try to blame it all on the local real estate guy or gal who worked with you to get a mortgage for your home, But even the terminally ignorant and dumb see that government did not prevent it and intelligent people are perfectly aware the government not only was the prime mover of it all by getting interest rates below zero in real terms and the government is now giving vast piles of their money to the Big Bank Perps, rewarding the corporate perps for the catastrophe they helped to create
Marc Faber on US Bubble, 'worthless' dollar & Gold 'the Savior' Marc Faber, author of Gloom Boom and Doom Report says many Western governments would eventually follow the US 'inevitable' default suit. Outspoken investor and writer Marc Faber doesn't give America much time before it goes bust.
Three major currencies: dollar, euro and gold By Jim Sinclair - Commodity Online New York State spending is out of control. California tried to go off the dollar but the California IOU is a total failure. There are 38 states right behind California and New York, all of which are too big to fail. The debts of the weaker European Union states are under attack by the huge short players. In time every currency will come under attack by the same ever-growing source of wealth.
The recent sell-off in gold could mean the correction is nearly complete. David Levenstein - Mineweb And, as the price of gold approaches the $1,000 we could see some renewed interest by central banks -- JOHANNESBURG - Sometimes markets seem to defy logic. Recently we have seen a "rush to safety" back into the U.S. dollar. But, what is safe about the US dollar when the national debt of the US is approaching 12 trillion, unemployment is at 9.7% and the economy is not booming. Whether or not this makes any sense, the fact remains that we have seen a strong rally in the dollar since the beginning of December 2009 and this has put pressure on the price of gold.
Gold hit hard, but bugs buoyant By Peter Brimelow, MarketWatch Some think gold will benefit after short-term panic runs its course Last Friday's down-$10.20 close at $1,052.80 in New York was the lowest since October 30th. Gold has now completely erased the spectacular November rally which carried it over $1,200. True, gold and gold shares did participate enthusiastically in the peculiar late Friday afternoon rally which brightened the general stock scene. Nyse Arca Gold Bugs and Phlx Gold Silver Index in particular both rose over 5%, far outpacing the general market. No one really knows whether to take this seriously -- gold normally barely trades late on Fridays. The possibility of window dressing is obvious. What next?
The Truth About Gold and Inflation. What Does Gold Hedge Against? Jason Ruspini - GoldSeek "Not inflation", the gold critics will shout, in one of their go-to arguments. This is what we hear from CNBC's Mark Haines at every possible chance: since 1980, gold has not kept up with the CPI and so shouldn't be used as an inflation hedge. The problem with this argument is that if you pick basically any other start date but the one corresponding to gold's 1980 peak, you see something different, even giving CPI a long head start over floating gold:
On Fear, Gold and the Dollar Frank Holmes - Financial Sense The U.S. dollar was up last week against the euro out of fear of how debt problems in Greece and elsewhere in Europe will be resolved, and as a result gold had a tough week. The dollar’s rally appears to be a short-term safe haven move, rather than a response to improving economic conditions in the U.S. In fact, Friday’s report of a net loss of 20,000 jobs in December (the expectation was for a net gain in employment) and that many thousands more would-be workers have given up looking for jobs is evidence that the economy remains somewhat weak.
Gold’s characteristics are superior to currencies Not only does Chris Potter stand by his claim that India's big gold buy late last year was a game-changer, the way he explains it in this exclusive Gold Report, interview, it's a 21st century take on the classic alchemist's quest of old—transforming lead into gold. Nowadays, the alchemists are the central bankers of the world, and they're successfully managing to turn the paper money their countries are producing (their devaluating currencies, that is) into the precious metal. Poof. There's gold in them there rupees, renminbi, pesos, yen, euros and dollars. And even if you're not a central banker, Chris shares some ideas about riding the rising tide in gold prices.
Why central banks are starting to hoard gold Porter Stansberry - Silver Bear Cafe What's the real solution to the constant boom and bust of our credit markets? Simple: a sound currency whose price (interest rates) is set by the demands of the global market, not by any government. Calling our current system "modern" is a misnomer. Our current system is barbaric. It has proven to be a failure every single time in history when it has been tried. Paper money has been used for thousands of years to steal the wealth of the middle class, impose a secret tax on the productive, and swindle, through speculation, the fortunes of those who are honest and hard working. On the other hand, only one monetary system has proven to work, every single time it has been tried – gold. And yet it is the gold system that has been labeled "barbaric" by the politicians who fear it.
For Whom the Gold Bell Tolls by Bill Baker - Conservative Economist Gold began a secular rally at the beginning of this century coincident with the primary top in the financial markets driven by the mania of internet stock investing. That mania attracted capital from around the globe into the United States, setting the dollar's value at a high that is unlikely to be seen again for some time, if ever. Consequently, the financial media has mostly attributed the overall rally in the yellow metal and its daily ups and downs to dollar weakness vis-à-vis other developed nation currencies. Traders have followed suit, betting on this correlation.
The Greatest Money War of All Time By: Martin D Weiss - Market Oracle We are caught in the grips of a great war! It is not a traditional land or sea war with tanks and battleships. Nor is it an anti-terrorist, guerilla war for hearts and minds. Rather, it is war of a third kind - pitting government bureaucrats against millions of investors … and causing massive collateral damage to innocent Americans. Battle by battle, this great war has been escalated - each time with bigger guns deployed by Washington, each time with deadlier attacks striking Wall Street or Main Street … Battle #1 began in Thailand in 1997 when global investors suddenly ran from its currency, dumped its stocks and abandoned its real estate.
A Stern Reality Check for Gold Naysayers by Jordan Roy-Byrne - Financial Sense Needless to say, Thursday was nothing short of an orgasmic day for Gold bears and Dollar bulls. The precious metals complex crumbled along with the Euro, while the greenback was higher. In fact, it was such a bad day that Gold officially lost its safe-haven status, according to CNBC 1. This was also noted by Elliot Wave2 and The Business Insider3 . All proclaimed that Gold was no safe haven. In today’s world, how can you blame them?
Inflation: Ignoring Doesn’t Make it Go Away By: Richard Daught - GoldSeek Being absolutely Frightened Out Of My Mind (FOOMM) about inflation, I am always looking at how much things cost and seeing if there is any inflation, so that the next time somebody tells me that inflation is “tame, benign, absent, nothing to worry about”, I can shake my proof in their stupid little faces and say, “Oh, yeah? Then what do you call this, ya moron?” I bring this up because I recently got a “time to re-subscribe” notice from The Wall Street Journal, which has been, over the years, consistently denying that there is any inflation in anything, and thus suggesting that – with such a benign economic milieu, which keeps interest rates down – you should run out and buy stocks and bonds right away, using, one presumes, the WSJ to keep up with the news.
More Spending is Always the Answer By: Dr. Ron Paul Last week, the House approved another increase in the national debt ceiling. This means the government can borrow $1.9 trillion more to stay afloat and avoid default. It has been little more than a year since the last debt limit increase, and graphs showing the debt limit over time show a steep, almost vertical trend. It is not likely to be very long before this new ceiling is met and the government is back on the brink between default and borrowing us further into oblivion. Congressional leaders and the administration acknowledge that the debt limit will need to be increased again next year. They are crossing their fingers that the forecasts are correct and they will not need another increase sooner, even before the 2010 midterm elections.
Keiser Report 14: Markets! Finance! Scandal! This time Max Keiser and co-host Stacy Herbert look at the scandals behind Hank Paulson's memoir allegations, Hilary Clinton's threats to cut China's energy supply, and Barack Obama's big, big budget. Keiser also talks to former economic hitman John Perkins about whether or not the United States is now being attacked by economic hitmen.
John Thain, Symbol Of Wall St Excess, Back On Top Frank James - NPR John Thain, the controversial former head of Merrill Lynch who helped make that company's acquisition by Bank of America happen but was forced out soon afterwards, has been named chief executive of CIT. Thain became a symbol of Wall Street's excesses because of his demand, later dropped, for a $10 million bonus in 2008 during a time when Merrill was imploding. Then there was his rushing through of about $4 billion in bonuses to Merrill executives before the completion Bank of America's completion of the Merrill acquisition at a time when Merrill was booking huge losses.
First Bank to sell Texas branches to Prosperity Bank St. Louis Business Journal - by Kelsey Volkmann First Banks Inc., the parent company of First Bank, has reached a deal to sell its 19 Texas branches to Prosperity Bank, a subsidiary of Prosperity Bancshares Inc. in Houston, after an earlier deal fell through. Prosperity Bank plans to assume $500 million in deposits associated with First Bank's 19 Texas retail branches, including certain commercial deposit relationships, for a premium of 5.5 percent.
Asia Sails Smoothly Through Debt Waters By VIKAS BAJAJ and KEITH BRADSHER - NY Times MUMBAI, India - While rising government debt is a growing concern in Europe and the United States, Asia's economies remain remarkably resilient, even buoyant, underscoring how economic might is shifting from West to East. China has been repaying some of what little foreign debt it owes, even as economists wonder whether Greece will require an international bailout and ask how long the United States can sustain record budget deficits. "We took a pass on the economic crisis," said Philip S. Carmichael, president of Asian operations at Haier, China's biggest appliance maker.
Fitch Says Prime Jumbo RMBS Near 10% Delinquent by Diana Golobay - HousingWire The performance of US prime jumbo loan performance within residential mortgage-backed securities (RMBS) slipped again in January as serious delinquencies (60+ days past due) rose for the 32nd consecutive month and edged closer to 10%, according to the latest market commentary from Fitch Ratings. Prime jumbo loan delinquencies began to rise in Q207 but accelerated since then. In 2009, the rate of delinquency nearly tripled during the year. The serious delinquencies rose to 9.6% in January from 9.2% in December.
Obama and 'Redistributive Change' Victor Davis Hanson Forget the recession and the "uninsured." Obama has bigger fish to fry. The first seven months of the Obama administration seemingly make no sense. Why squander public approval by running up astronomical deficits in a time of pre-existing staggering national debt? Why polarize opponents after promising bipartisan transcendence? Why create vast new programs when the efficacy of big government is already seen as dubious? But that is exactly the wrong way to look at these first seven months of Obamist policy-making.
Denver company, owner accused of securities violations gets cease-and-desist order DENVER - AP The state securities commissioner has entered a final cease-and-desist order against a Denver-based company and its owner for alleged violations of the Colorado Securities Act. Securities Commissioner Fred Joseph said Monday that American Imaging Solutions Inc. and its principal, John C. Walshe Jr., agreed to the order.
NYSE Technologies Selected to Build Technology Solution for ASEAN Exchange Network NEW YORK--(BUSINESS WIRE)--NYSE Technologies and four leading ASEAN equities exchanges-Bursa Malaysia (BM), the Philippine Stock Exchange (PSE), Singapore Exchange (SGX) and the Stock Exchange of Thailand (SET)-today during the 10th ASEAN Exchanges CEO's Meeting in Manila signed a Letter of Intent that designates NYSE Technologies as the solutions provider for the ASEAN Trading Link. The award marks a significant first step towards the establishment of an integrated ASEAN Capital Market
VAT Trap: The inevitable fix for the deficit By Shawn Tull NEW YORK (Fortune) -- The gigantic deficits the Administration is projecting are appalling, and they provide a chilling look at our future: America is hurtling towards a fiscal trap that is forcing us into the only option we'll have to restore budgetary sanity: A Value-Added Tax. Unfortunately, no one really wants to address it. Nancy Pelosi has spoken admiringly of a VAT, and on the Right, former Arkansas governor Mike Huckabee wants the levy to replace the income tax. But so far, it's mainly a favorite of a cadre of economists at universities and think tanks. White House budget chief Peter Orszag recently dismissed it as an idea that's "popular with academics but not seriously considered by policy makers."
Dow closes below 10,000 on worries about European debt By Stephen Bernard and Tim Paradis, AP Business Writers NEW YORK — The Dow Jones industrial average closed below 10,000 for the first time in three months Monday on nagging concerns about national debt loads in Europe. Shares of big banks pulled the market lower, extending a slump that has led to four straight weekly losses.
No Exit in Sight for U.S. As Fannie, Freddie Flail By Nick Timiraos, James R. Hagerty - WSJ MCLEAN, Va.—When Charles E. Haldeman Jr. became Freddie Mac's chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It's likely to need even more. Freddie's federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn't likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes.
Questions about the coming wave of second mortgage writedowns By Edward Harrison of Credit Writedowns In the lead-up to the credit crisis, I really didn’t write a considerable amount about second mortgages despite my focus on credit writedowns. At that time, I was more focused on writedowns from securitized mortgage paper (and later construction loans and commercial real estate because of the stress these loan types put on regional financials). However, second liens are a very big deal and I believe they will loom that much larger in 2010 because of the rise in strategic defaults in prime and Alt-A categories.
Money pit: When a cheap foreclosure costs much more By Les Christie NEW YORK (CNNMoney.com) -- Dusan Tatomirovic found a steal when he bought a foreclosed condo just north of Monterey, Calif., last April for $130,000. The locale is incredible, just 10 minutes from his office and close to his daughter. The weather is perpetual spring, and the California coast there is gorgeous. Plus, the three-bedroom, one-and-a-half bath had once sold for $380,000.
Judge: Pratt Can't Move Jobs out of US By Stephen Singer AP - ABC News Judge sides with union, says jet engine maker in US can't move out 1,000 jobs out A federal U.S. judge ordered jet engine maker Pratt & Whitney to halt its plans to move 1,000 jobs out of Connecticut and to Japan, Singapore and the state of Georgia. U.S. District Judge Janet C. Hall in Bridgeport issued a permanent injunction, stopping the company's plans to shift the jobs. The judge strongly criticized the subsidiary of United Technologies Corp., saying it evaded the spirit of its union contract requiring it to make every effort to keep the jobs in the state.
U.S. Wage Growth: The Downward Spiral By Chris Farrell - Business Week The outlook for worker pay remains bleak even as the U.S. recovery gathers steam It's not surprising that worker incomes have been under pressure during the Great Recession. Employers typically clamp down on wages when the economy slows, and the latest downturn was the worst since the 1930s. Most workers are well aware that employers aren't exactly going to be handing out huge wage hikes with an official unemployment rate of 9.7% and the government's broadest measure of unemployment, which includes those marginally attached to the workforce and people working part time who would like full-time employment, at 16.5%, according to the Labor Dept.'s January employment report released Feb. 5.
No Job Growth for Small Business Spurs Recovery Doubt By Michael McKee Feb. 8 (Bloomberg) -- Small businesses are becoming the Achilles heel of the U.S. recovery by limiting growth and job creation. Companies with fewer than 500 employees, such as Phoenix Technologies Ltd. and Sonic Corp., helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world’s largest payroll processor.
Frustrated Job Seekers Deciding to Call It Quits By Christopher Leonard AP With hiring still scarce, many frustrated job seekers are deciding to call it quits Many jobless people have reached a conclusion that captures the depth of the unemployment crisis: Looking for a job is a waste of time. Many jobless people have reached a conclusion that captures the depth of the unemployment crisis: Looking for a job is a waste of time.
UPS to furlough 300 pilots Atlanta Business Chronicle United Parcel Service Inc. on Monday announced plans to furlough as many as 300 of its 2,800 pilots as it works to trim $1.4 billion in costs from the shipping business. But UPS also said it will continue negotiations with the pilots' union to avoid or lessen the layoffs. The furloughs would be phased, with the first 170 pilots getting notices in May. Atlanta-based UPS (NYSE: UPS) said it has been in ongoing talks with the Independent Pilots Association for the past year to identify ways to cut operating costs to avoid any pilot furloughs. In June 2009, IPA identified savings through voluntary programs such as pilots taking short- and long-term leaves of absence; military leaves; job sharing; reduction in flight pay guarantees; early retirement, and sick bank contributions. UPS agreed to not furlough any pilots in 2009.
Where the Jobs Are By Henry Lamb - GOP USA Everyone agrees that we should reduce our dependence on foreign oil. Everyone agrees that we need to increase American jobs. Everyone, except perhaps the President and his minions in the majority, agrees that the government cannot afford to subsidize either of these goals. Both of these goals can be achieved quite easily with no government subsidy: drill here; drill now! Congress could open the Arctic National Wildlife Refuge (ANWR) in the twinkling of a Senate vote. This would pave the way to upwards of 10 billion barrels of new crude for America. Paving the road to this new inventory would provide employment for as many as 735,000 people -- at no cost to the government.
Where is 'tea party' heading? Leaves are unclear By Liz Sidoti - Associated Press NASHVILLE, Tenn. (AP) -- The "tea party" activists all agree: Government is too big. Spending is out of control. Individual freedom is at risk. And President Barack Obama's policies are making it all worse. But that's where the consensus ends among the diverse groups of frustrated Americans who count themselves part of this fledgling coalition. "We're afraid and we're fed up and we're angry," says Donna Henton of Blair, Neb. "But where this is going to go, we just don't know."
Did Sarah Palin Kill the Tea Party Movement? By W. James Antle, III - American Spectator A.C. Kleinheider says she did, by turning it into a partisan appendage of the GOP: Sarah Palin didn't give a tea party speech last night. She gave a partisan Republican address. It was a purely political speech designed to position her for a presidential run in 2012 or 2016. Period. She wasn't there to celebrate the organic nature of a movement she had nothing to do with creating. She was there to co-opt the name and claim the brand as hers. And she did.
Colorado Springs Derangement Syndrome By Michelle Malkin . . . . The Denver Post and the Huffington Post both recently attacked our "anti-tax bastion" as a selfish conservative "nirvana" where social services and public jobs are getting cut mercilessly. My friend, neighbor, and City Councilman Sean Paige (who also runs the Colorado blog Local Liberty Online) rebuts the anti-Springs slurs with inconvenient truths: Colorado Springs is suffering through a severe budget crunch. In that, it's no different than most American cities. The source of the problem isn't the fact that we're a bastion of Republicanism, or that we're the birthplace of the Taxpayer's Bill Of Rights (TABOR) or that we're the home town of TABOR author Douglas Bruce. Things are tight because we're a sales tax dependent city in the midst of an economic downturn. It's really that simple. The problem is falling revenue, not TABOR spending limits or the dreaded "ratchet effect."
Will Baby Boomers Bankrupt Social Security? By: Rob Reuteman, Special to CNBC.com As the record federal budget deficit draws increasing scrutiny from Washington to Wall Street to Main Street, deficit hawks may take aim at entitlement programs including Social Security. And, the nearly 80 million Baby Boomers phasing into retirement will set in motion a dynamic that—if not addressed by Congress - could result in the next generation getting fewer benefits. However, despite fears that Boomers will trigger a collapse of Social Security, experts say the system can and will survive for decades and generations to come.
Rash of retirements pushes Social Security to brink By Richard Wolf, USA TODAY WASHINGTON — Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.
Think Government Is Corrupt? You May Face 10 Years In Jail Paul Joseph Watson - Prison Planet.com South Carolina forces "subversives" to register with the authorities or do hard time Subversives who think government is corrupt and should be controlled by the people face 10 years in prison and a $25,000 dollar fine if they fail to register with authorities in South Carolina, in another chilling example of how free speech and dissent is being criminalized in America. The state's "Subversive Activities Registration Act" is now officially on the books and mandates that "Every member of a subversive organization, or an organization subject to foreign control, every foreign agent and every person who advocates, teaches, advises or practices the duty, necessity or propriety of controlling, conducting, seizing or overthrowing the government of the United States … shall register with the Secretary of State."
Read the NC Legislation: Subversive Activities Registration Act TEA PARTY TAKEOVER.... By Steve Benen - WashingtonMonthly The inmates are eyeing new ways to seize control of the asylum. . . . . It's who these folks consider "liberals in Republican clothing" that's perhaps most striking. Today's Republican establishment is, as far as this crowd is concerned, a bunch of sellouts. Just as the Republican Party has become as far-right and stridently ideological as it's ever been, this still-fringe "movement" insists even conservatives aren't conservative enough. We're talking about a well-intentioned, passionate, and deeply confused group of people -- the folks who believe Democrats are "fascists," the president is Hitler, and programs like Social Security and Medicare are socialist, unconstitutional boondoggles that need to be abolished -- who are now intent on dragging an already far-right party over the cliff.
What Murdoch Still Doesn't Get About the Internet By Kevin Keller - Business Week Like most media giants, the boss of News Corp. doesn't grasp that content is now a service, not a product Rupert Murdoch knows who's winning the war between big media and the Internet. Unsurprisingly, it's Rupert Murdoch. "Without content, the ever-larger and flatter screens, the tablets, the e-readers, and the increasingly sophisticated mobile phones would be lifeless," he proclaimed when News Corp. posted unexpectedly strong fiscal 2010 second-quarter earnings. "Devices and platforms are proliferating, but this clever technology is merely an empty vessel without any great content. "
Frightening Taste Of Internet Censorship As Major Free Speech Websites Blocked Paul Joseph Watson - Prison Planet.com An ominous preview of what a government regulated world wide web would look like as Infowars and Prison Planet go dark in New Zealand With influential proponents recently calling for a newly regulated world wide web, we got a preview of how that might look this past weekend after both Infowars.com and Prison Planet.com were completely blocked to many Internet users in New Zealand. The block was only removed early this morning following a raft of complaints after both websites were unavailable on many ISP's since Friday. As the New Zealand based InfoNews website reported yesterday, both of Alex Jones' flagship websites were blocked by ISPs using Asia Netcom for their international internet traffic.
The Draconian Internet Takeover Alex Jones and Webster Tarpley discuss Google's announcement that it will tighten its relationship with the NSA and how this is another leap forward in the agenda to take over and regulate the free Internet under the cover of fighting foreign cyber spies in China and Russia.
Sweetened Soft Drinks Get Connected to Pancreatic Cancer By MELLY ALAZRAKI - Daily Finance Add Coke and Pepsi to the ever-expanding list of foods and drinks that could possibly increase the risk of cancer. A 14-year study of 60,500 Singaporeans found that those who drank two or more soft drinks per week had nearly double the risk of developing pancreatic cancer, a study published in Cancer Epidemiology, Biomarkers & Prevention reveals. Those who drink sugar-sweetened carbonated drinks were 87% likelier to develop pancreatic cancer than those who don't.
U.S. to Form Climate-Change Agency Associated Press WASHINGTON—The Obama administration on Monday proposed a new agency to study and report on the changing climate.Also known as global warming, climate change has drawn widespread concern in recent years as temperatures around the world rise, threatening to harm crops, spread disease, increase sea levels, change storm and drought patterns and cause polar melting.
After Buying Spree, China Owns Stakes in Top U.S. Firms By David Barboza, Keith Bradsher - NY Times SHANGHAI - Flush with cash despite the global economic downturn, China's sovereign wealth fund quietly snapped up more than $9 billion worth of shares last year in some of the biggest American corporations, including Morgan Stanley, Bank of America and Citigroup. Although most of the stakes were small, China Investment Corp., the government's $300 billion investment fund, now owns stock in some of the best-known American brands, including Apple, Coca-Cola, Johnson & Johnson, Motorola and Visa.
Greek Spreads Ease; Portugal Under Pressure By Clare Connaghan - WSJ LONDON-European sovereign CDS spreads were generally tighter Monday, with the cost of insuring Greek and Spanish debt against default falling, although Portugal remained volatile with spreads widening. According to CMA DataVision, Greece's five-year sovereign credit-default swap spreads-a key measure of credit risk-moved back below 4.00 percentage points in early trading Monday to be quoted at 3.97 percentage points. That's around 0.1 percentage point tighter than Friday's close of 4.07 percentage points. That means the annual cost of insuring €10 million ($13.7 million) of Greek government debt against default for five years had fallen €10,000 to €397,000.
Iran anniversary 'punch' will stun West: Khamenei AFP - Breitbart Supreme leader Ayatollah Ali Khamenei said on Monday that Iran is set to deliver a "punch" that will stun world powers during this week's 31st anniversary of the Islamic revolution. "The Iranian nation, with its unity and God's grace, will punch the arrogance (Western powers) on the 22nd of Bahman (February 11) in a way that will leave them stunned," Khamenei, who is also Iran's commander-in-chief, told a gathering of air force personnel. The country's top cleric was marking the occasion when Iran's air force gave its support to revolutionary leader Ayatollah Ruhollah Khomeini, a key event which led to the toppling of the US-backed shah on February 11, 1979.
Russia in stand-by mode over US missile plans in Romania Valentina Pop - EU Observer Moscow is "concerned" and expects "proper explanations" on US plans to deploy anti-ballistic missile defence systems in Romania, but it is still interested in contributing to a "common assessment" of threats with Europe and the US, Russia's envoy to Brussels told this website. "We took note of President Basescu's statement on his agreement to host those elements. This is a serious issue which we'll be analysing when we receive all the details regarding what exact equipment is meant to be deployed there," Mr Chizhov said in a phone interview on Monday (8 February).
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Greek Ouzo crisis escalates into global margin call as confidence ebbs By Ambrose Evans-Pritchard - Telegraph -- For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action. Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity - while admirable in one sense - is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes.
Is Tim Geithner Paying Attention To The Global Economy? By Peter Boone and Simon Johnson - Baseline Scenario In an interview that will air Sunday on ABC, Treasury Secretary Tim Geithner says, ""We have much, much lower risk of (a double-dip recession) today than at any time over the last 12 months or so … We are in an economy that was growing at the rate of almost 6 percent of GDP in the fourth quarter of last year. The most rapid rate in six years. So we are beginning the process of healing.". . . . . . . . But the problems now spreading from Greece to Spain, Portugal, Ireland and even Italy portend major trouble ahead for the US in the second half of this year - particularly because our banks remain in such weak shape.
Europe Risks Another Global Depression By Simon Johnson - Baseline Scenario The entirely pointless G7 meeting this weekend only served to underline the fact that Europe is again entering a serious economic crisis. At the end of the meeting yesterday, Treasury Secretary Tim Geithner told reporters, "I just want to underscore they made it clear to us, they the European authorities, that they will manage this [the Greek debt crisis] with great care."
China and U.S. heading for a cold war? What impact on gold? Author: Lawrence Williams - Mineweb LONDON - Chinese and U.S relations are at a low ebb and continuing to deteriorate fast so it seems and an article in today's Sunday Times in London says many Chinese hawks are promoting a cold war. Indeed things appear to have got so bad that military leaders in China are preparing for the possibility of a limited armed conflict, possibly over Taiwan or Korea, although this seems very unlikely.
China's hawks demand cold war on the US Michael Sheridan - Times Online MORE than half of Chinese people questioned in a poll believe China and America are heading for a new "cold war". The finding came after battles over Taiwan, Tibet, trade, climate change, internet freedom and human rights which have poisoned relations in the three months since President Barack Obama made a fruitless visit to Beijing. According to diplomatic sources, a rancorous postmortem examination is under way inside the US government, led by officials who think the president was badly advised and was made to appear weak.
Dollar will doom, Gold will boom: Jim Sinclair By Jim Sinclair - Commodity Online The Euro is down again today on the sovereign debt concerns focusing on a debt to GDP percentage. The nations presently in focus of this have been quite impolitely nicknamed PIIGS. The PIIGS are Portugal, Italy, Ireland, Greece and Spain. Although this means little to floor traders, Forex speculators of F-TV guess what nation stands directly in the middle of the PIGS on the debt to GDP percentage? Yes, you are right, the USA. . . . So what does this mean for the future? Gold will be elected the currency of choice.
Gold price hinges on money supply Gold price has a positive correlation with money supply growth, according to a new empirical study produced by the World Gold Council, a fact that is extremely pertinent in today's environment of elevated money supply growth. Moreover, money supply growth tends to precede gold price increases by 6 to 9 months.
Inflation in Recent Monetary History Recorded at the Mises Institute Supporters Summit, 31 October 2008; Auburn, Alabama. Joseph Salerno is a senior fellow at Ludwig von Mises Institute, professor of economics at Pace University, and editor of the 'Quarterly Journal of Austrian Economics'.
Are banks creating gold price bubble? By David Lew - Commodity Online Two months after gold posted the historic high price of $1,227 per ounce, bullion investors have been caught in pains of losing money for every ounce of the yellow metal. On Thursday, gold plunged to its biggest one-day loss in 16 months. The yellow metal fell 4.4% in volatile trade, plunging below $1,060 an ounce. . . . . . . . According to Ernst and Young, which employs 144,000 people around the world, gold price will continue to rise in the long-term, reaching as much as $2,500 per ounce within the next two years. "The underlying factors driving up gold prices remain in play and will continue to do so for some time, meaning that the precious metal will remain an attractive proposition. Gold prices will remain high. The world is not out of trouble and inflationary pressures cannot be ignored," the investment bank said.
Why there is golden silence on IMF gold sale By David Lew - Commodity Online It is three months since India's central bank-the Reserve Bank of India (RBI)-bought 200 tonnes of gold from the International Monetary Fund (IMF) for an astronomical price of $1,045 per ounce. India's sudden decision to jump into the fray and purchase the yellow metal from IMF led to a historic surge in gold price.
All Currencies Are Suspect By: Gary - iSockAnalyst A comment on the blog last week got me to wondering. One of our Canadian friends made the comment that he's made nothing off of gold because the Canadian dollar has been strong. I think he was insinuating that the price of gold was only rising in the US and that only because the Fed is destroying the US dollar. . . . . . . . . Every country in the world is printing at a furious rate. No one is innocent.
Ron Paul Warns of Social Unrest and Martial Law
Jilted: The Looming Dollar Disaster Robert Morley - theTrumpet.com The Fed faces a choice: suffocate the economy or destroy the dollar. Foreign lenders head for the door. Most Americans have no idea what is happening to the economy. Many people think America is emerging from a vicious little recession, and will soon be back on the road to prosperity. America always has, so it always will, is the common reasoning. Yet this time, things may turn out very different.
Social Obligations Will Lead Western States to Default Mark Faber: RT - Business -- The United States' top credit rating is at risk, with its triple 'A' status warned it may be downgraded if the economy grows at a slower pace than expected, says ratings agency Moody's. The US is predicted to have a $1.5 trillion deficit in 2010, which could be a real problem for the country's seemingly insatiable appetite for borrowing. Outspoken investor and writer Marc Faber doesn't give America much time before it goes bust.
Goldman's role in AIG collapse By Gretchen Morgenson, Louise Story - NY Times Testy Conflict With Goldman Helped Push A.I.G. to Edge Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months. A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world's biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.
Goldman CEO Blankfein gets $9M stock bonus Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein is getting a $9 million restricted stock bonus for 2009. Like other bank CEOs, he received no bonus in 2008. (AP) - Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein is getting a $9 million stock bonus for 2009. The bank said in a securities filing Friday that Mr. Blankfein will receive more than 58,000 shares of restricted stock. Mr. Blankfein can't cash in the shares for five years. He will receive no cash as part of his bonus.
J.P. Morgan gives Dimon $16M stock bonus After receiving no bonus in 2008, J.P. Morgan Chase & Co. Chief Executive Jamie Dimon is taking home a stock bonus worth nearly $16 million for his leadership role. AP) - J.P. Morgan Chase & Co. Chief Executive Jamie Dimon is getting a stock bonus valued at nearly $16 million for 2009 after steering the big bank through the aftermath of the financial crisis.
US SEC's Schapiro: Considering Short Sale Restrictons in Coming Weeks WASHINGTON (MNI) - The Securities and Exchange Commission will consider proposals to restrict short selling "in coming weeks," Chairman Mary Schapiro said Friday. She added her agency is not done yet with the reform of money market funds, and will examine the benefits of switching to floating net asset values from the current stable regime in particular. In a speech titled "Looking Ahead and Moving Forward" at the "SEC Speaks" event organized by the Practising Law Institute, Schapiro also said the Commission is looking at other possible reforms for the money market fund regulatory framework, echoing recent comments she made at an open meeting dedicated to the topic.
Smashing Myths and Restoring Sound Money
Could Ben Bernanke Be a CEO? By Vedran Vuk, Casey Research Ben Bernanke has got to be laughing it up after being reappointed to another term as Federal Reserve chairman. What else could we expect from the ex-lawyers and lifetime Beltway bandits voting on global monetary policy? As he starts his second term, I'm once again reminded about how supremely unqualified this man is for the job. Prior to becoming Fed chairman, Ben Bernanke basically had zero experience outside academia. His resume only includes three full-time years working for the Federal Reserve and eight months on George W. Bush's Council of Economic Advisors. The other 23 years of his career were spent teaching college.
Geithner: Big deficits 'will never' harm U.S. credit rating Associated Press - The Examiner WASHINGTON - Treasury Secretary Timothy Geithner says the U.S. government "will never" lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.
No double-dip slump but recovery slow: Geithner WASHINGTON (Reuters) - The risk the U.S. economy will slip back into recession is lower now than at any time in the past year, Treasury Secretary Timothy Geithner said on Sunday, while conceding that recovery will be slow and uneven. In an interview on ABC News' "This Week", Geithner said the U.S. economy expanded at nearly a 6 percent annual rate in the fourth quarter of 2009 and said the economy was definitely "healing" after the financial crisis that drove it into recession in late 2007. "This is going to take a while, and it's going to be uneven," Geithner said in an interview taped before leaving for the Canadian Arctic on Friday to attend a meeting of Group of Seven finance ministers and central bankers in Iqaluit, capital of a vast native Inuit territory called Nunavut.
Bankers Visit Members of Congress on an Image-Repair Mission By Jim Kuhnhenn -- Washington (AP) - Chief executives at some of the biggest financial institutions are on a mission to repair their image with Congress and the public, part of a strategy to gain more influence over legislation that would overhaul financial regulations and intrude further into their business.
Nouriel Roubini CNN Money From Davos
Group of 7 Vows to Keep Cash Flowing By Sewell Chan - NY Times Finance ministers from seven of the world's biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments. "We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established," Alistair Darling, Britain's chancellor of the Exchequer, said in Iqaluit, Nunavut, where finance ministers and central bankers from the Group of 7 nations were meeting. The European debt crisis, and its spread from Greece to other countries in the euro zone like Portugal, Spain and Italy, were a focus of the two-day talks.
'Pay option' mortgages could swell foreclosures New wave of defaults likely as risky loans reset to sharply higher payments By John W. Schoen - msnbc.com -- Some time after Sharren McGarry went to work as a mortgage consultant at Wachovia's Stuart, Fla., branch in July 2007, she and her colleagues were directed to market a mortgage called the "Pick A Pay" loan. Sales commissions on the product were double the rates for conventional mortgages, and she was required to make sure nearly half the loans she sold were "Pick A Pay," she said.
The second wave of mortgage defaults and foreclosures will hit the economy this year Bob Chapman - International Forecaster -- As we have been forecasting for the last two years, the second wave of mortgage defaults and foreclosures will hit the economy this year. Not only will we have failure in prime loans and option-arm loans, but we are faced with a new crop of subprime and ALT-A loans put into motion by Fannie Mae, Freddie Mac, Ginnie Mae and FHA. In addition, we find it of great interest that the FHA is changing the rules to purchase homes. That, of course, means less homes will be purchased. The incidence of unemployment may be lessening, but it isn't going away. Those of you who keep your ear to the ground know that real unemployment is 22.5% and in cities like Detroit it is somewhere near 45 to 50 percent. This is the result of free trade, globalization, offshoring and outsourcing.
CFR: When the Fed Stops Monetizing US Sovereign Debt... JESSE'S CAFÉ AMÉRICAIN The people at the Council on Foreign Relations speculate that US interest rates on Treasury debt will be increasing around the end of the first quarter if the Fed discountinues its monetization of mortgage debt. As the Fed has essentially purchased ALL new US Treasury issuance since 2009, that seems to be a reasonable bet. "The Federal Reserve plans to stop buying securities issued by government housing loan agencies Fannie Mae and Freddie Mac by the end of the first quarter.
It Is Now Mathematically Impossible To Pay Off The U.S. National Debt A lot of people are very upset about the rapidly increasing U.S. national debt these days and they are demanding a solution. What they don't realize is that there simply is not a solution under the current U.S. financial system. It is now mathematically impossible for the U.S. government to pay off the U.S. national debt. You see, the truth is that the U.S. government now owes more dollars than actually exist. If the U.S. government went out today and took every single penny from every single American bank, business and taxpayer, they still would not be able to pay off the national debt. And if they did that, obviously American society would stop functioning because nobody would have any money to buy or sell anything. And the U.S. government would still be massively in debt.
More debt, please.
Loans for Green Homes By Bob Tedeschi - NY Times BORROWERS looking to make energy upgrades in their homes that will lower utility bills, along with their environmental impact, may soon find additional options available to them. Fannie Mae, the government-backed company that sets lending standards for mortgages, said that by this summer it would unveil incentives for those who use part of their mortgages for energy-related improvements. And EnergyStar, a joint effort of the Department of Energy and the Environmental Protection Agency, is expected to introduce borrower incentives in New York, after running pilot programs in Colorado, Maine and Pennsylvania.
The Super-Sized Census Boondoggle By Michelle Malkin via CNS News If only the federal government were as responsible with our money as Pepsi is with theirs. The soda giant has been in the Super Bowl ad business for more than two decades. But this year, Pepsi determined it was economically unwise to pay $3 million for a 30-second spot. So, who's foolish enough to pay for Super Bowl gold-plated airtime? You and me and Washington, D.C. The U.S. Census Bureau will squander $2.5 million on a half-minute Super Bowl ad starring D-list celebrity Ed Begley Jr., plus two pre-game blurbs and 12-second "vignettes" featuring Super Bowl anchor James Brown. It's a drop in the census boondoggle bucket (otherwise known as the tax-subsidized National Democratic Future Voter Outreach Drive).
Why Politics Is Stuck in the Middle By Tyler Cowen - NY Times MARKET competition, under the proper circumstances, has the power to make a business better serve its customers. Cellphone companies, for example, compete via cheaper prices, clearer connections and better apps. Political competition, though no less vigorous, is conducted on very different terms - and often ends up stifling innovation instead of encouraging it.
Prepare for the Worst: Ron Paul Presented by Congressman Ron Paul at "The Failure of the Keynesian State," the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 23 January 2010. Includes introductory remarks by Mises Institute president Douglas E. French, and by Institute founder and chairman Llewellyn H. Rockwell, Jr..
Public-sector unions bleed taxpayers By: Michael Barone - The Examiner Growing up in Michigan in the heyday of the United Auto Workers, I long assumed that labor unions were part of the natural order of things. That's no longer clear. Last month the Labor Department reported that private-sector unions lost 834,000 members last year and now represent only 7.2 percent of private-sector employees. That's down from the all-time peak of 36 percent in 1953 and '54. But union membership is still growing in the public sector. Last year 37.4 percent of public-sector employees were union members. That percentage was down near zero in the 1950s. For the first time in history, a majority of union members are government employees.
Retirement Armageddon by Gary North - LewRockwell.com I have just posted a video of my 90-minute seminar: "Retirement Armageddon." It presents the background for a series of nasty surprises. For those of you who don't have time to watch a 90-minute video, let me summarize its implications. The U.S. government has a nasty surprise for tens of millions of retirees: a now-empty piggy bank. Two of them, actually: Social Security and Medicare. Congress will soon have a nasty surprise for voters: a larger deficit than announced to fill these now-empty piggy banks. The Federal Reserve System will also have a nasty surprise for investors: newly created digital money to fill up the empty piggy banks when the Treasury cannot sell any more debt at low interest rates.
Palin, TEA Party, won't 'sit down, shut up' by Mark Silva -Tribune's Washington Bureau 'Absurd' not to consider a candidacy or some other big role, Palin says. Sarah Palin, fresh from an appearance at the TEA Party Convention where she derided President Barack Obama for "the politics of personality,'' insists that the nascent political organization is just fine without a leader. "It's much bigger than any charismatic guy with a TelePrompTer,'' says Palin, who read her speech from a text in Nashville on Saturday night and could hear people in the audience calling, "Run, Sarah, Run.'' "It is the people's movement. It's about the people and I'm proud to be a part of this.'' Yet, she says, "it would be absurd'' for her not to consider playing some leadership role, potentially as a candidate for president.
We borrow money from China?! - Boston, 1773
FBI wants records kept of Web sites visited by Declan McCullagh - CNET WASHINGTON--The FBI is pressing Internet service providers to record which Web sites customers visit and retain those logs for two years, a requirement that law enforcement believes could help it in investigations of child pornography and other serious crimes. FBI Director Robert Mueller supports storing Internet users' "origin and destination information," a bureau attorney said at a federal task force meeting on Thursday. As far back as a 2006 speech, Mueller had called for data retention on the part of Internet providers, and emphasized the point two years later when explicitly asking Congress to enact a law making it mandatory. But it had not been clear before that the FBI was asking companies to begin to keep logs of what Web sites are visited, which few if any currently do.
Cyber attacks a cover for internet-censorship in US
NFL commish plans more international games NFL Commissioner Roger Goodell says he'd like to see the league play more games in London, Mexico and possibly the Far East. (AP) - The NFL is still eyeing a return to Mexico. Arizona and San Francisco played the NFL's first regular-season game outside the United States in Mexico in 2005, followed two years later by a game in London between Miami and the New York Giants.
Turn your office expense reports into toilet paper by Tim Hornyak - CNET If you've ever dreamed of sticking all that paperwork on your desk where the sun don't shine, a Japanese machine can turn it all into toilet paper for you. Appropriately named White Goat, this device designed for the office can take regular letter-size paper or shreds, including that sales report you cursed until you were blue in the face, and transform it into nearly pristine rolls of white tissue. White Goat was developed by Oriental Co., a small shredder maker based in Kiryu City, north of Tokyo, which says it's the first product of its kind in the world.
Office Paper to Toilet Paper - White Goat Paper Recycle
Buy Now, Pay Later (Maybe With Your Allowance) By Randall Stross - NY Times BUSINESSES don't let 13-year-olds pay for purchases with a promise. At least they didn't before last week. A new payment option for anyone without a credit card or a debit card, no matter how young, has just become available. It's initially offered by FooPets and Puzzle Pirates, online game companies that are business partners of Kwedit.com, a start-up based in Mountain View, Calif. Minors as well as adults can buy items in the games with a "Kwedit Promise," which can be paid off later in a number of ways - with a credit or debit card, for example, or with cash sent in a mailer that Kwedit supplies.
Paypal stops India money transfers San Jose Business Journal PayPal, the online payment system owned by eBay Inc., has reportedly stopped allowing personal money transfers to and from India. TechCrunch and Moneylife report that the move has suddenly cut off the preferred payment method of thousands of Indian users, including man IT software coders working for companies in Silicon Valley and elsewhere around the world. Online forums and message boards are being filled with unhappy PayPal users who say that funds requested through PayPal India are being reversed to senders.
Debt crisis unsettles European economy By Anthony Faiola - Washington Post via MSNBC Investor panic threatens to drive up borrowing costs for nations worldwide LONDON - Governments in Athens, Madrid and Lisbon struggled on Friday to quell fears of a looming debt crisis in Europe that is pummeling the euro and rippling across global markets, as authorities vowed to impose fiscal austerity and plug their yawning budget deficits. The problem, however, is that investors don't appear to believe them.
Greece sticks to austerity plan: finance minister ATHENS (Reuters) - Greece will stick to its deficit-cutting plan and the first three months of the year will be crucial for regaining investors and EU confidence, the country's finance minister said in an interview on Sunday. "As far as the budget is concerned, every day is a crucial test for us. The monthly figures we release are scrutinized by the markets and the (EU) Commission, but the first quarter will be certainly crucial," Finance Minister George Papaconstantinou said in an interview published on Greek newspaper Ethnos. "The measures we have already announced will be implemented unswervingly and will pay off," he added.
Is it possible that Israel will join the European Union? Italian Prime Minister Silvio Berlusconi, who was on an official visit to Israel, said Monday that his "greatest desire" is to see Israel join the European Union. He wasn't the first to think of that idea. Javier Solana, the European Union's foreign policy chief said last year that his organization's ties with Israel are stronger than those with candidate country Croatia: "There is no country outside the European continent that has this type of relationship that Israel has with the European Union.
'Israel's obliteration is certain' By JPOST.com Staff Iran's supreme leader vows to "defend Palestinians due to their heartfelt beliefs." Iran's supreme leader Ayatollah Ali Khamenei said on Sunday the destruction of Israel was assured, while pledging to "defend Palestinians due to their heartfelt beliefs." "Israel is going downhill toward decline and fall and God willing its obliteration is certain," Khamenei said during a meeting with Islamic Jihad leader Ramadan Abdullah Shallah, according to the Teheran Times.
Chavez's Socialist Worker Militias Swell to 150,000 in Venezuela By Matt Cover (CNSNews.com) - Venezuela's socialist worker militias have grown to nearly 150,000 members since their formation in 2009. Organized by President Hugo Chavez in May 2009, the "workers' militias" are intended to allow Chavez's political party to assert control over key economic sectors. According to a Jan. 29 report in the Venezuelan El Universal newspaper -- translated by BBC Worldwide Monitoring - the ranks of Chavez's workers militias have swelled to around 150,000 members, most of whom work in "strategic" economic sectors, such as oil, electricity, transportation, and "basic companies."
USA Strongly Determined to Deploy Missiles as Near to Russia as Possible Pravda.ru -- Elements of the US missile defense system are to be put in operation in Romania (a country in Eastern Europe) already in 2015, an official spokesman for the US State Department said. Romania's decision to deploy SM-3 interceptor missiles on its territory was a "first step" in terms of the new anti-missile shield architecture, which would later also include ship-based interceptors in the Black Sea, US State Department spokesman Philip Crowley said. The choice that Romania made, will expand missile defense system in the south of Europe, Interfax reports. In addition, the USA continues negotiations with other countries of Europe - Poland, for example.
Thousands March in Tokyo for an End to U.S. Military Presence The voice of opposition is growing louder. Thousands of angry citizens from across Japan marched through the streets of Tokyo on January 30 to protest the continued U.S. military presence on Okinawa. Cabinet minister Mizuho Fukushima reassured the protesters that she would fight to get the military base off the island. Since the end of the Second World War, the U.S. has maintained a military presence in Japan. At present, there are around 47,000 U.S. soldiers stationed throughout the country, more than half of which are at the Futenma Air Station located on the southern island of Okinawa.
Iran's President Moves Ahead on Uranium Processing By Michael Slackman - NY Times CAIRO - Iran's president, Mahmoud Ahmadinejad, ordered the nation's atomic energy agency on Sunday to begin producing a special form of uranium that can be used to power a medical reactor in Tehran, but that could also move the country much closer to possessing fuel usable in nuclear weapons.
Iran ratchets up atom work despite sanctions threat TEHRAN (Reuters) - Iran's President Mahmoud Ahmadinejad gave instructions on Sunday for the production of higher-grade nuclear reactor fuel, prompting the United States and Germany to threaten carefully targeted new sanctions against Tehran. The head of Iran's Atomic Energy Organization said it would start producing uranium enriched to a level of 20 percent from Tuesday, state television reported. "We will hand over an official letter to the IAEA (International Atomic Energy Agency) tomorrow, informing the agency that we will start making 20 percent enriched fuel from Tuesday," Ali Akbar Salehi told Iran's Arabic-language state television station, al Alam.
US dismisses Iranian claims of nuclear agreement David Batty and agencies - guardian.co.uk Deal to reduce Iran's uranium stockpile in doubt as Tehran accused of stalling for time Western officials have disputed claims by Iran's foreign minister that his country is "approaching a final agreement" in its nuclear programme. Manouchehr Mottaki told a security conference in Munich yesterday that Iran was "serious" about making progress on a deal agreed in principle last October to swap most of its enriched uranium stockpile for fuel rods to use in nuclear power stations. Governments in Europe and the US fear the stockpile could be refined to make nuclear weapons.
Keynesian Predictions vs. American History Presented by Thomas E. Woods, Jr. at "The Failure of the Keynesian State," the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 23 January 2010. Includes introductory remarks by Mises Institute president Douglas E. French.
Breakdown Of The Gold Market By: Jim Willie CB - Market Oracle A great disconnect exists in the gold market between the exchange futures contract price (the paper price) and the gold bullion paid price for transactions (the physical price). The differential in price is growing wider, enough to place tremendous pressure on the gold market itself. Look not to the gold premium paid for purchases, but to high volume purchases in the tens of million$. In mid-December, almost every demand for gold contract delivery was matched by a cash delivery, complete with 25% bonus premium offered. The officials even produced a new ledger item called 'Cash For Delivery' that was necessary to balance their badgered books. It prompted little attention. Some call it a basic bribe. Others call it a technical default. . . . . . . . The true gold price might very soon become unknown, an extremely positive development.
Nuclear missile threats to U.S. mount By Bill Gertz Report warns of Pyongyang's aims North Korea is expected to deploy a nuclear-tipped missile capable of reaching parts of the United States in the next decade, despite two long-range missile flight-test failures, according to the Pentagon's ballistic-missile defense review. The review report, made public this week, concluded that missile threats from several states, including Iran, Syria, China and Russia, are growing "quantitatively and qualitatively," and it outlined Pentagon plans for silo-based and mobile anti-missile systems to counter them.
Massive revision will show recession was even worse By Rex Nutting, MarketWatch More than 8 million jobs lost since 2007, updated Labor data will show Friday On Friday, the government's official data on U.S. employment will be updated to reflect what everyone already feels: In terms of job losses, this has been the worst recession since the end of the World War II more than 60 years ago. Instead of job losses of 7.2 million as currently reported, it'll be more like 8.1 million lost jobs, if the annual benchmark revision of payrolls through March 2009 comes in as had been estimated four months ago by the Bureau of Labor Statistics.
America Is Abdicating Global Leadership by Brad McDonald - theTrumpet Last December, President Obama visited Europe twice within 18 days. His first trip was to Oslo to accept a medallion and a check. The second was to Copenhagen, where he addressed what was by then a melting conference on climate change. This week, the U.S. State Department confirmed that President Obama has canceled his visit to Spain in May for the yearly U.S.-EU summit. This annual meeting has been held since 1991. This is the first time a U.S. president has skipped the summit in 17 years.
See exclusive videoby Robert Morley to better understand the situation in Greece, Portugal, Spain, Italy, Germany, and the EU... The Ramifications of Greece's Economic Crisis The whole credibility of the Euro could be thrown into question and possibly be replaced by a new Deutschmark II currency to pay down sovereign debt. Greece's interest on its debt is escalating at rate of 1.5%/MONTH (Greek debt to GDP ratio is 12.5% which exceed EU limit of 3%)
As Greece's Woes Demonstrate the Fuse Has Been Lit on the Global Debt Bomb By Martin Hutchinson, Money Morning The big story in the international markets so far in the New Year has been the increasing shakiness of a number of countries' government bonds, with Greece right now being the most troubled of all. Since U.S. investors tend to avoid foreign government bonds, many will dismiss this as an irrelevant development.
The Spiraling Debt of Greece and Other PIIGS By Fil Zucchi - Minanville We may be close to a "Lehman/Merrill/AIG kind of September weekend", but with no buyer of last resort. The participation of the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) in the EU structure is suffering a 9.0 earthquake -- these countries are now three to five times above the Maastricht deficit levels and over the last 65 years their populations haven't accepted belt tightening without socio-political unrest. So their choice is either to thumb their nose to the EU and the very essence on which the euro is based or suffer crippling popular strife. And if anyone thinks that Germans and French will go along with using their already depleted coffers to prop up their millennial-old cultural enemies, I have multiple bridges to sell you.
Fears of 'Lehman-style' tsunami as crisis hits Spain and Portugal By Ambrose Evans-Pritchard - Telegraph -- The Greek debt crisis has spread to Spain and Portugal in a dangerous escalation as global markets test whether Europe is willing to shore up monetary union with muscle rather than mere words. Julian Callow from Barclays Capital said the EU may to need to invoke emergency treaty powers under Article 122 to halt the contagion, issuing an EU guarantee for Greek debt. "If not contained, this could result in a `Lehman-style' tsunami spreading across much of the EU." Credit default swaps (CDS) measuring bankruptcy risk on Portuguese debt surged 28 basis points on Thursday to a record 222 on reports that Jose Socrates was about to resign as prime minister after failing to secure enough votes in parliament to carry out austerity measures.
Sovereign debt crisis?
See more articles on Greece, Spain, Portugal, EU, below . . .
Hedge Fund Manager Sprott Sees Gold at $1,500 in 2010 By Rob Delaney Feb. 4 (Bloomberg) -- Eric Sprott, whose Sprott Hedge Fund increased more than fivefold in nine years, said gold may rise to $1,500 an ounce this year and $2,000 within two years as the U.S. government takes measures to counter the credit crunch. “With quantitative easing and the financial problems we have, I suspect that the gold price goes up from here,” Sprott said today in an interview in Toronto, where he announced financial support for Canadian athletes. “If you tell me how much quantitative easing there is, I’ll tell you where the gold price will go, but I have no trouble imagining we get to $1,500 this year and to $2,000 in two years.”
Comex speculators bombing gold By Jim Sinclair Gold is down today because stops got run on the paper gold exchange. That came on the back of a strengthening dollar due to a weaker euro as a mirror effect. Please return to December of 2009 when the impending dollar rally was sold based on a sustainable US economic recovery. That was enough to convince money managers. That demand then triggers the algorithms which fires off huge fund buying for what today is no reason at all.
Gold to hit $2,500: Ernst and Young The price of Buying Gold will continue to rise in the long-term, reaching as much as $2,500 per ounce within the next two years, some analysts believe. Viren Mehta, a financial services expert at Ernst and Young, which employs 144,000 people around the world, is one such analyst. He told Forbes India that the underlying factors driving up Gold Prices remain in play and will continue to do so for some time, meaning that the precious metal will remain an attractive proposition.
Precious Metals: The future of investing By Dr. Jeffrey Lewis - Commodity Online Slowly but surely, the path to the future of investing is being carved. This time, it isn't equities or debt that is leading the charge; it's none other than precious metals. . . . . . . . . The ability of precious metals to protect against inflation, as well as deflation, and everything in between truly shows how versatile and rewarding gold and silver are as investments. Never has the public been so interested in gold and silver coins.
Why gold surges during dollar bear market Fortis Bank Nederland - Commoditiy Online The impact of a stronger dollar Periodic dollar rallies are a salient reminder of two things regarding currency markets: exchange rates are a ratio of one currency to another - the strength of a currency is not just related to its own fundamentals, but that of the currency in which you are measuring it; and most studies have shown they are largely unpredictable, except perhaps in the very long run. Thus we might get a US dollar revival simply because economic conditions in other countries look worse, such as parts of the Euro zone. But there are reasons why the US currency might prosper anyway, such as if the US economy stages a stronger rebound than other economies and there is a hint that US interest rates may rise earlier than the market expects. This is not yet our view; history suggests that US interest rates do not rise until long after a recession has ended.
Gold "In No Man's Land" Ahead of US Jobs Data; Falls vs. Dollar, Steady in Euros By: Adrian Ash - Gold Seek THE PRICE OF GOLD fell further against a rising US Dollar in Asia and London on Thursday, holding steady for Euro and UK investors as global stock markets sagged and crude oil extended yesterday's loss. Silver erased this week's gains-to-date, trading below last Friday's close of $16.24 an ounce. US and German government bonds pushed higher, but UK gilts fell – nudging yields higher – after the Bank of England made no changes to its key interest rates or £200bn quantitative easing program. The European Central Bank surprised no one by keeping its bank-lending rate at 1.0%.
Chinese govt advise gold buying - why? What is their plan?
China Shows Little Patience for U.S. Currency Pressure By Mark Landler - NY Times BEIJING - A senior Chinese official said on Thursday that China would not bow to pressure from the United States to revalue its currency, which President Obama says is kept at an artificially low level to give China an unfair advantage in selling its exports. The official, Ma Zhaoxu, a Foreign Ministry spokesman, said at a regular news conference here that "wrongful accusations and pressure will not help solve this issue."
Treasury Secretary Geithner says China is likely to let currency appreciate By Don Lee - LATimes A revalued yuan would address a long-sought U.S. goal that could help boost American exports and create more jobs. Reporting from Washington - Treasury Secretary Timothy F. Geithner said Thursday that China was likely to let its currency appreciate -- addressing a long-sought U.S. goal that could help boost American exports and create more jobs. Though Geithner didn't specify when he expected Beijing to loosen its grip on the yuan, his statement to the Senate Budget Committee struck an optimistic note against a background of deepening tensions with Beijing, partly over economic policy but also over arms sales to Taiwan and President Obama's plans to meet with the Dalai Lama.
Geithner to press G-7 nations to keep stimulus aid By Martin Crutsinger - Washington Post IQALUIT, Nunavut -- Treasury Secretary Timothy Geithner will press major U.S. allies meeting in this Canadian town this weekend to maintain their stimulative aid to help the global economy rebound from the worst downturn in seven decades. Aides say Geithner will argue that the recovery could falter if governments rely too much, too soon on still-sluggish spending by consumers and businesses. Unemployment rates have hit double digits in the United States and several European countries.
Canadian Dollar Tumbles as Crude Oil Prices, Equities Plunge By Allison Bennett and Chris Fournier -- Feb. 4 (Bloomberg) -- Canada’s dollar dropped the most against the yen in almost a year as an unexpected increase in U.S. jobless claims and Europe’s deficit troubles led to a rout in commodity prices and equities. The loonie fell to the weakest level since November against the U.S. dollar as concern the global economic recovery is losing momentum deterred demand for currencies tied to growth. The two-year government bond’s yield fell the most in more than two weeks before Canadian and U.S. reports tomorrow on payrolls.
Pimco’s Michael Gomez Says ‘Stay Away From the Euro’ By Michael Patterson Feb. 4 (Bloomberg) -- Investors should avoid the euro because the region’s finances hinder its ability to adjust to changes in the global economy, said Pacific Investment Management Co.’s Michael Gomez. “I would want to stay away from the euro, the eurozone and some of the emerging European currencies,” Gomez, co-head of emerging markets at Newport Beach, California-based Pimco, said today at a conference in Moscow. “When you look at the state of balance sheets in Europe, when you look at the state of pegs and quasi-pegs across the region, that hinders the ability for adjustment.”
Peter Schiff, Currency Crisis Imminent (NWO ECONOMICS/ Economic Collapse/USA)
Containing Inflation Via Unlimited Money Creation: The Fed's Strategy By Daniel R. Amerman, CFA - GoldSeek The Federal Reserve was well aware of the severe inflationary dangers when it directly created almost a trillion dollars as part of its separate bailout of Wall Street. If this cash – which exists in highly liquid form right now - escapes into general circulation, the result could be immediate and major inflation that would devastate the value of the dollar and all of our savings. Therefore, even as it created the trillion dollars, the Fed set up a series of barriers to contain the new cash and ultimately return it to the void from whence it came, lest the new cash break out and wreak monetary havoc.
Deficit imperils nation's top credit rating By Patrice Hill Moody's sees urgent need to narrow gap The United States is drawing closer to the kind of debt crisis plaguing some European countries, where a financial emergency forces political leaders to make draconian spending cuts and tax increases to maintain the confidence of international investors. Moody's, a top Wall Street credit agency, brought the U.S. closer to such a point this week by, for the first time, warning that the U.S. could lose its gold-plated AAA credit rating in coming years unless it quickly puts into place plans to curb budget deficits of more than $1 trillion that have the potential to destabilize government finances and the financial markets.
House sends $1.9 trillion debt-limit increase to Obama 'Pay-as-you-go' measure would curb future deficits By Robert Schroeder, MarketWatch The U.S. government would be allowed to go $1.9 trillion deeper into debt under legislation approved in the House of Representatives on Thursday, which boosts the overall debt limit to $14.3 trillion, but also includes a budget-control mechanism known as "pay as you go." The House approved legislation increasing the debt limit on a procedural vote of 217-212, following a tight vote of 60-39 in the Senate last week. It now goes to President Barack Obama for his signature. The "pay-as-you-go" mechanism requires that any increases in spending be offset with cuts elsewhere in federal outlays. The language was attached to curb future deficits, and the debt-limit measure including the pay-as-you-go mechanism was voted on separately. It passed 233 to 187.
Clarence Thomas on Citizens United, Corporate Speech, and the State of the Union Damon W. Root - Reason.com -- Justice Clarence Thomas gave one of his famously frank and entertaining speeches to a law school audience this week in Florida, and as Adam Liptak reports in the New York Times, Thomas offered some choice quotes about the fallout from last month’s landmark free speech decision in Citizens United v. F.E.C.: By a 5-to-4 vote, with Justice Thomas in the majority, the court ruled last month that corporations had a First Amendment right to spend money to support or oppose political candidates. “I found it fascinating that the people who were editorializing against it were The New York Times Company and The Washington Post Company,” Justice Thomas said. “These are corporations.”
Marc Faber Lashes Out – Again by Gwen Robinson - LewRockwell The deepening US debt trap is unnecessary. After his recent and widely disseminated quip on CNBC that “Obama makes Bush look like a genius”, Marc Faber is now offering some insights into how the US can get out of its “debt trap”. In his latest GloomBoomDoom market commentary, the irrepressible pundit concludes that the US has basically two choices: default on obligations or massively monetize US debts and reduce the debt through inflation. “In my opinion,” he declares, “additional massive monetization of debts is the most likely outcome”. And yet, “frantic monetization” lies at the root of the banking system’s ills, in Faber’s view . . .
Faber-World Economy Is Doomed
Faber-World Economy Is Doomed Part II
Obama's $6.3 Trillion Scam Is America's Shame Commentary by Jonathan Weil Feb. 4 (Bloomberg) -- Look through President Barack Obama's proposed 2011 budget, and you'll see a line calling for a $235 million increase in the Justice Department's funding to fight financial fraud. Lucky for them, the people who wrote the budget can't be prosecuted for cooking the government's books. Whether on Wall Street or in Washington, the biggest frauds often are the perfectly legal ones hidden in broad daylight. And in terms of dollars, it would be hard to top the accounting scam that Obama's budget wonks are trying to pull off now.
Taleb Says 'Every Human' Should Short U.S. Treasuries By Michael Patterson and Cordell Eddings Feb. 4 (Bloomberg) -- Nassim Nicholas Taleb, author of "The Black Swan," said "every single human being" should bet U.S. Treasury bonds will decline, citing the policies of Federal Reserve Chairman Ben S. Bernanke and the Obama administration. It's "a no brainer" to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. "Every single human being should have that trade."
Bonds jump on global stock selloff By Julianne Pepitone NEW YORK (CNNMoney.com) -- Bond prices rose Thursday as stocks sold off worldwide amid continued fears over foreign debt problems and an unexpected increase in U.S. jobless claims. What prices are doing: The benchmark 10-year note gained 24/32 to 98-1/32, pushing the yield down to 3.61% from 3.70% late Wednesday. Prices and yields move in opposite directions.
US banks back from the brink but mortgages still a problem Standard & Poor's Rating Services, which is maintaining its negative outlook on the industry, believes that in 2010 the US banking industry will, overall, show pretax profit margins of less than 1%, reflecting a fragile economic recovery, slumping business demand, a moribund housing market, and deteriorating asset quality across various loan categories. "We believe that smaller and regional banks-those most exposed to depressed local economies-will be most likely to succumb eventually to these conditions. Regulators might ultimately nudge many of them into the corporate arms of stronger competitors, as happened to approximately 140 such banks in 2009. But we think it's unlikely that any major bank (with more than $100 billion in assets) will fail this year."
The Financial Crisis Is Not Over By: Paul Craig Roberts - MarketOracle The global crisis is understood as a banking crisis brought on by the mindless deregulation of the U.S. financial arena. Investment banks leveraged assets to highly irresponsible levels, issued questionable financial instruments with fraudulent investment grade ratings, and issued the instruments through direct sales to customers rather than through markets. The crisis was initiated when the U.S. allowed Lehman Brothers to fail, thus threatening money market funds everywhere. The crisis was used by the investment banks, which controlled U.S. economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the Federal Reserve. How much of the crisis was real and how much was hype is not known at this time.
Rewards Abroad By: John Browne - GoldSeek President Obama's State of the Union message only serves to reinforce my forecast that investors will continue to find better returns in markets outside America and in currencies other than the U.S. dollar. Indeed, the reward gap may well increase. Nothing in the President's speech indicated willingness to do the hard work of cutting spending. Rather, he reiterated his commitment to a costly new healthcare entitlement and more spending on make-work programs. Only days later, his budget acknowledged that, even before factoring in the cost of his proposals, the federal government is unlikely to be in surplus for the foreseeable future. In response, Moody's has issued a warning that the United States' triple-A credit rating is not unassailable. In short, the trend set some ten years ago will continue.
Debt fears rattle market By Alexandra Twin NEW YORK (CNNMoney.com) -- Fears about the fallout from a growing debt crisis in Europe dragged on Wall Street Thursday, sending the market to its lowest close in three months, with stocks hit across the board. The Dow Jones industrial average tumbled 268 points, or 2.6%, closing at 10,002.26, its lowest point since Nov. 4. The blue-chip briefly dipped below 10,000 late in the day, falling to that level for the first time since early November.
Ex-BofA chief Lewis charged with fraud By David Ellis NEW YORK (CNNMoney.com) -- New York Attorney General Andrew Cuomo said Thursday it was bringing civil charges against senior Bank of America executives, including former company CEO Ken Lewis, for their role in the company's controversial purchase of Merrill Lynch. Separately, the Securities and Exchange Commission said it had struck a $150 million settlement agreement with BofA over its decision to pay billions of dollars in bonuses to former Merrill employees.
Bank of America E-Mails Show Lehman Was Buy Target By Linda Sandler Feb. 4 (Bloomberg) -- When Bank of America Corp.’s board met to approve the acquisition of an investment bank on Sept. 15, 2008, members thought they were going to buy Lehman Brothers Holdings Inc., not Merrill Lynch & Co., according to New York Attorney General Andrew Cuomo. The bank bought Merrill after examining its books for just 25 hours, Cuomo claimed. Shareholders approved the deal Dec. 5, 2008. The acquisition closed Jan. 1, 2009, after Merrill losses had increased by billions of dollars, a change the bank didn’t disclose before the shareholder vote, Cuomo said.
Four More Years of Ben Bernanke Tim Iacono - Seeking Alpha Ben Shalom Bernanke, Time Magazine's "Person of the Year", was sworn in for another four-year term as Chairman of the Federal Reserve yesterday in a subdued affair that had none of the pomp and circumstance of four years ago. Instead of a crowd that included President Bush, one cabinet member, two former Federal Reserve chairmen, and members of Congress yesterday's ceremony was a staff-only gathering where the only one in attendance who was not on the Fed payroll was Bernanke's wife Anna and the event barely made the news.
Banks concede reform is inevitable By Patrick Jenkins and Brooke Masters Paul Volcker and Barack Obama have either thrown the world into chaos or given the cause of global bank regulation new impetus – it depends on your point of view. But one thing is for certain: the twin US initiatives to derisk banks and tax them according to their size – the Volcker rule and the Obama levy as they have been dubbed – have seized the attention of bankers and regulators around the world. The US last month first made clear that it wanted to exact a levy of 0.15 per cent on any bank balance sheet over $50bn. Then it said that banks should no longer engage in what it felt were riskier practices – investing in hedge funds, private equity or proprietary trading, the archetypal casino-style betting of bank funds for a quick profit.
Chase Denied Loan Mods for Now Forbidden Reason Homeowners in Limbo by Paul Kiel - ProPublica On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance (PDF). She’d been denied a permanent modification under the federal government’s loan-mod program, Chase said, because “Your hardship is not of a permanent nature.” No other reason was given. For Herron, that was hard to understand. She was working two jobs and her mortgage payment still amounted to more than half of her income. She’d fallen two payments behind. If her money troubles were only temporary, it was news to her.
Million-dollar homes in California suffer further sales drop in 2009 The number sold in the state falls 23.8%, for a fourth year of decline in a row. By Alejandro Lazo - LA Times -- Sales of California homes priced at $1 million or more tumbled for a fourth consecutive year in 2009, according to a report released Thursday. The number of million-dollar-plus homes sold dropped 23.8% to 18,621 in 2009 from 24,436 in 2008, according to San Diego real estate research firm MDA DataQuick. The decline was the result of buyers holding back, a weak mortgage market for big loans and the drop in home prices over the last several years, dragging the value of many houses below the $1-million threshold, DataQuick said.
America - Innovate or Die! by Gordon Long - Safe Haven US innovation is plummeting faster than our Financial Markets did during the 2008 financial crisis! The future of America is presently in peril, not just because of the "banksters' shadowy ways, but because of a sputtering Innovation Engine that has had the fuel "choked off'. It has now gone "critical" and can no longer be left to only the carping of the academic community. The chart to the right from the Financial Times: "China scientists lead world in research growth" is frightening in its implications. It requires an immediate and serious congressional public policy response. Unfortunately most of those on the front lines are skeptical about Washington's ability to either recognize the gravity of the situation or legislate any meaningful and appropriate response.
You Cannot Buy Groceries with Your House By Michael J. Panzner - Financial Armageddon One of the many (dubious) assumptions that Wall Street rocket scientists made before the housing and credit bubbles burst centered on what mortgagors would do if the economy hit a "speed bump" (back then, of course, the conventional wisdom was that severe downturns had been eliminated by expert policymaking, reams of academic research, and the wisdom of the ages). Generally speaking, they believed that homeowners who ran into financial difficulties would behave in the same way that others had before them -- that is, they would make sure the monthly mortgage bill was among the first to be paid.
Borrowers pay credit cards before mortgages by Mathew Padilla - Mortgage Insider TransUnion today said borrowers, especially in California, continue to focus on credit card payments and ignore their mortgages. This is at least the company’s second study showing the same trend. The percentage of consumers current on credit cards and delinquent on mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on credit cards in the first quarter of 2008. That earlier TransUnion study examined data between the third quarter of 2006 and the first quarter of 2008.
Card company results show waning credit card use By Eileen A J Connelly - Business Week Shoppers still reach for plastic at the checkout, but the card they grab most often these days is a debit card, not a credit card. That was spelled out Thursday in MasterCard Inc.'s fourth-quarter results. The payment processor posted a 23-percent profit leap, but its shares were beaten down as the numbers revealed further evidence of the fading use of credit cards, whether by choice or necessity. "People have been utilizing credit, obviously, to a much less extent," MasterCard Chief Financial Officer Martina Hund-Mejean said in an interview.
Jump in service disconnections sparks move by California The Public Utilities Commission votes to order providers to help their nonpaying customers keep the heat and lights on. By Marc Lifsher - LA Times -- Reporting from Sacramento - California regulators, reacting to a dramatic increase in service shut-offs, ordered electric and gas utilities Thursday to make greater efforts to help keep the lights and heat on for non-paying customers, especially those in poorer neighborhoods. Disconnections for low-income customers jumped 28% statewide from September 2008 to August 2009, compared with the previous 12 months, according to an independent arm of the Public Utilities Commission. The Division of Ratepayer Advocates' report speculated that widespread installation of so-called smart meters that allow service to be disconnected remotely may be a factor in the increased cutoffs.
Poof: Another 800,000 jobs disappear By Chris Isidore NEW YORK (CNNMoney.com) -- As bad as the government's jobs readings numbers have been during the Great Recession, we'll soon find out the real situation likely was worse. Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it's expected that the Labor Department's new estimate will be a loss of 8 million jobs.
Battle brews over hourly jobs By Jessica Dickle NEW YORK (CNNMoney.com) -- The next time you're asked if you want fries with that, you may be surprised at who's behind the counter. That's because many out-of-work experienced professionals with no other options are taking jobs, including some hourly-wage positions, that would otherwise go to younger workers with few skills. As a result, the unemployment rate among 16-24-year-olds has soared, peaking at a record high of 19.2% in October.
How to Fix Health Care After Massachusetts By Rep. Dennis Kucinich - TruthDig We should pay careful attention to the message of the Massachusetts election. And that message is to focus on the economy. To make sure that we have jobs programs that can put millions of people back to work. To make sure that we have programs to help those one-out-of-every-three Americans, who is upside down on their mortgages, to save their homes. To make sure we protect people’s investments, their savings and their retirement security. The verdict in Massachusetts was a verdict on the overall economy. But it was also a commentary on how the entire health care debate was flipped upside down by insurance interests who were able to intervene so that the final product that was offered out of the Senate was nothing more than a sell-out to the insurance industry.
Anthem Blue Cross dramatically raising rates for Californians with individual health policies Policyholders are incensed over rate hikes of as much as 39%, which they say come on top of similar increases last year. State insurance regulators say they'll investigate. By Duke Helfand - LA Times -- California's largest for-profit health insurer is moving to dramatically raise rates for customers with individual policies, setting off a furor among policyholders and prompting state insurance regulators to investigate. Anthem Blue Cross is telling many of its approximately 800,000 customers who buy individual coverage -- people not covered by group rates -- that its prices will go up March 1 and may be adjusted "more frequently" than its typical yearly increases. The insurer declined to say how high it is increasing rates. But brokers who sell these policies say they are fielding numerous calls from customers incensed over premium increases of 30% to 39%, saying they come on the heels of similar jumps last year.
Unexpected Rise in U.S. Jobless Claims AP via NY Times WASHINGTON (AP) - The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, the Labor Department said Thursday. And a second report by the Labor Department showed that people with jobs worked harder in the fourth quarter. In the jobless filings report, the agency said that new claims for unemployment insurance rose by 8,000 to a seasonally adjusted 480,000. Wall Street economists had expected a drop to 460,000. The rise is the fourth in the five weeks. Most economists hoped that claims would resume a downward trend that was evident in the fall and early winter.
Does Anyone in Washington Know What Needs to Be Done to Create Jobs? By: Paul L Kasriel - Market Oracle -- This is a question that I often get as I speak to groups around the country. Based on the ADP monthly survey of employment, small- and medium-sized firms (less than 500 employees each) are the fount (or black hole, as of recent months) of jobs in the U.S. economy (see Chart 1).So, rather than asking Washington career politicians what it takes to create more jobs, why don't we poll small businessmen and businesswomen?
Unemployment filings head higher By Blake Ellis NEW YORK (CNNMoney.com) -- The number of Americans filing for initial unemployment insurance rose last week, the government said Thursday. There were 480,000 initial jobless claims filed in the week ended Jan. 30, the Labor Department said in a weekly report. This is the highest level since Dec. 12 and up 8,000 from an upwardly revised 472,000 the previous week. Economists were expecting claims to drop to 455,000, according to a consensus estimate from Briefing.com.
Government-owned GMAC loses $5 billion in 4Q By Dan Strumpf - AP Auto Writer NEW YORK - Home and auto lender GMAC Financial Services said Thursday it lost $5 billion in the last three months of 2009, as losses from its mortgage operations kept the company in the red for another quarter. GMAC, which is owned by the federal government, is still working to sell its troubled home lending business, ResCap. Mortgage operations overall lost more than $4 billion during the quarter, and GMAC $3.3 billion charge related to its efforts to sell the unit.
GMAC Reports Record Loss on Home Mortgage Defaults By Dakin Campbell Feb. 4 (Bloomberg) -- GMAC Inc., the auto and home lender controlled by the U.S. government, posted a record quarterly net loss, driven by the declining value of mortgage assets. The fourth-quarter loss from continuing operations was $3.9 billion, compared with profit of $7.7 billion a year earlier, Detroit-based GMAC said in a statement. GMAC’s net loss was $4.95 billion after writing down mortgage holdings. For the year, GMAC swung to a net loss of $10.3 billion from a $1.87 billion profit.
U.S. Starts Inquiry Into Brake Problems on Prius By Martin Fackler , Hiroko Tabuchi, Micheline Maynard - NY Times TOKYO - Safety regulators in Washington announced Thursday that they would open an investigation into the braking problems of the 2010 Prius hybrid, a few hours after Toyota said there were problems with the car's anti-lock braking system and left open the possibility of a recall.
Prius brakes: Toyota knew, didn't tell you by Peter Valdes-Dapena NEW YORK (CNNMoney.com) -- Toyota has known about brake problems in its popular Prius cars for some time, going so far as to fix it in new production vehicles, but has kept Prius drivers in the dark about the problem until the Japanese government called for an investigation. In the U.S., the National Highway Traffic Safety Administration announced Thursday that it is launching a formal investigation into the Prius brake problems, the first step on the road to a possible recall..
Toyota recalls total 8.1 million vehicles by Peter Valdes-Dapena NEW YORK (CNNMoney.com) -- The total number of vehicles Toyota Motor Corp. has had to recall for gas-pedal related issues now comes to 8.1 million, the carmaker confirmed Thursday. That figure may grow after the National Highway Traffic Safety Administration announced Thursday that it is launching a formal investigation into braking problems in the popular Toyota Prius.
The Tea Party Movement by Siddhartha Mahanta - LewRockwell Ron Paul on what it all means. In 2008, independents frustrated with establishment politics found a hero in Texas Republican Ron Paul. Warning voters about the dangers of an overstretched and overcommitted government, Paul provided today's Tea Partiers with a blueprint for grassroots success. Republicans like Reps. Michele Bachmann of Minnesota and Mike Pence of Indiana, and Kentucky Senate candidate Rand Paul – Ron's son – have embraced the Tea Party movement. NationalJournal.com talked to Ron Paul last week about the energy of today's grassroots movements and the Republican Party's evolving relationship with the Tea Partiers.
Ron Paul son Rand Paul The Tea Party Candidate in 2010 - FOXNews.com with Judge Napolitano
Running for Senate, Rand Paul lights a fire under Kentucky GOP By Jason Horowitz - Washington Post LOUISVILLE -- Rand Paul believes he was born to lead the anti-establishment movement sweeping the GOP. "I would say if there is a candidate who comes from the movement, who has never been a politician," Paul said, "I'm it." While Republicans across the country, from Scott Brown in Massachusetts to Marco Rubio in Florida, have succeeded in tapping into the anger of the "tea party" crowd, Paul, the third son of the anti-tax icon and Texas congressman Ron Paul, is a product of it. The insurgent GOP primary candidate, who wants to succeed retiring Sen. Jim Bunning in Kentucky, is being heralded as the second coming by a constituency long suspicious of government, protective of privacy and assured of America's chosen-people status.
US missionaries charged with child kidnapping in Haiti By Ben Quinn and agencies - guardian.co.uk Ten American missionaries arrested in Haiti for trying to take 33 children out of the country after last month's earthquake have been charged with child kidnapping and criminal association Ten American missionaries arrested in Haiti for trying to take 33 children out of the country after last month's earthquake were charged today with child kidnapping and criminal association. The group, most of whom are members of an Idaho-based church group, were sent back to jail today after a closed court hearing in the Haitian capital, Port-au-Prince. Their lawyer, Edwin Coq, said that the judge had found sufficient evidence to file charges against his clients, who were arrested last Friday at Haiti's border with the Dominican Republic while trying to take the busload of children out of the country without documents or permission.
Dubai discovers new oil field, a first in decades By Adam Schreck DUBAI, United Arab Emirates - Dubai's government, under pressure to repay billions of dollars in debt, said Thursday it has discovered a new offshore oil field - the first such find by the city-state in decades. The media office of the sheikdom's ruler did not provide details such as the size of the field or preliminary estimates of its production capacity, making it impossible to gauge the effect on Dubai's strained budget. An e-mailed statement from the media office announcing the find said the new deposit is located east of the existing Rashid oil field.
Pennsylvania State Capital Mulls Bankruptcy as a Budget Option By Dunstan McNichol Feb. 4 (Bloomberg) -- Harrisburg, the capital of Pennsylvania, will consider Chapter 9 bankruptcy protection along with tax increases and asset sales as options to address $68 million in debt service payments due this year, the chairwoman of a City Council committee said last night. Every option, including tax and fee increases, bankruptcy and a state takeover through Pennsylvania's Act 47 municipal oversight program will be considered, said Susan Brown-Wilson, chairwoman of the Budget and Finance Committee, which began a week of hearings last night to consider a 2010 spending plan.
THE RIGHT'S RESPONSE TO THE LEFT'S RESPONSE TO THE RIGHT.... By Steve Benen - Washington Monthly -- We learned late last week that some prominent Republican officials are in the process of creating something called the American Action Network. Led by luminaries such as Norm Coleman, Jeb Bush, Haley Barbour, and Karl Rove -- some of the same GOP leaders involved in the "rebranding" debacle of last year -- the group was created to ... well, that part was unclear. We were told the American Action Network was poised to get moving, but no one knew why.
G.O.P. Group to Promote Conservative Ideas By Jackie Calmes - NY Times WASHINGTON - A group of prominent Republicans is forming an organization to develop and market conservative ideas, copying a successful Democratic model and hoping to capitalize on the fund-raising and electioneering possibilities opened up by a recent Supreme Court ruling. The organizers, including former Senator Norm Coleman of Minnesota and Douglas Holtz-Eakin, the senior policy adviser to Senator John McCain's presidential campaign, describe their emerging American Action Network as a center-right version of the Center for American Progress, the six-year-old group for progressive policies that was founded by John Podesta, former chief of staff to President Bill Clinton and an informal adviser to President Obama.
Nouriel Roubini in Davos, Crisis not over, Eurozone and others towards disaster & economic collapse
France and Germany to unveil 10-year plan by Valentina Pop EUOBSERVER / BRUSSELS - Angela Merkel and Nicolas Sarkozy on Thursday (4 February) are set to unveil their own economic and political strategy document, the "Franco-German Agenda 2020," in an attempt to put some substance in the widely advertised but not always smoothly working partnership between the EU's two major economies. The plan, including 80 separate measures, ranges from economic and fiscal initiatives to common school books and simpler rules for Franco-German marriages. It is set to be published at the end of a joint ministerial council meeting of the two countries, chaired by both Mr Sarkozy and Ms Merkel in the Elysee palace. The two leaders have in the past disagreed on several issues, especially on economic recovery. Mr Sarkozy supported an EU-wide stimulus package, while Ms Merkel believes this should be done at the national level.
The race is on for Greece before the ECB exits By Gillian Tett Some investors are now betting on European debt defaults A few years ago, Warren Buffett famously observed that it is only when the tide goes out, that you can see who is swimming naked. It is a potent adage now. In recent months there has been much speculation about what might happen when central banks start to implement “exit strategies”. Now we have a few clues. The Bank of England has just announced that it is freezing its quantitative easing programme, spurring debate about the outlook for gilts. However, to my mind, one of the most revealing sagas in relation to the exit strategy debate lies with the drama that has recently developed around the Greek debt world.
Greece facing strict surveillance from Brussels by Andrew Willis EUOBSERVER / BRUSSELS - The European Commission has said it fully supports the Greek government's deficit-cutting plan announced last month, but outlined a strict surveillance programme at the same time to ensure targets are met. The EU executive body also issued Greece with recommendations under the bloc's excessive deficit procedure, and used Article 121 of the Lisbon Treaty for the first time to push for badly needed structural reforms. "We are endorsing the Greek programme, we are giving confidence and supporting the Greek authorities," said outgoing EU economy commissioner Joaquin Almunia, in Brussels on Wednesday (3 February)
Europe Backs Greece, but Hurdles Lie Ahead by: Mark Scott, Business Week Debt-ridden Greece got a bit of a boost on Feb. 3 when the European Commission approved the country's plan to bring its budget deficit problems under control. In 2009, Greece logged Europe's largest deficit, at 12.7% of GDP, but now it aims to lower the figure to just 2.8% by 2012. To meet the target, the country's prime minister, George Papandreou, unveiled ambitious belt-tightening plans on Feb. 2, ranging from a freeze in government workers' pay to tax hikes on gasoline and alcohol.
Europe fears rock global markets By David Oakley, Tony Barber, Ralph Atkins, Aline van Duyn -FT Worldwide flight to dollar and US Treasuries -- Growing fears over the health of Europe’s weakest economies and the outlook for US employment rocked global markets on Thursday, sparking sharp falls in risky assets ranging from equities to oil and gold. The rout sent investors fleeing to the safety of US government debt, boosting the dollar to its highest level against the euro in more than eight months and sending US Treasury prices higher only days after the Obama administration forecast a $1,556bn deficit for 2010.
Trichet Says ECB 'Confident' Greece Can Cut Deficit By Gabi Thesing and Jana Randow Feb. 4 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said he's confident Greece can get its budget deficit under control and signaled officials have no plans to raise their key interest rate from a record low of 1 percent. "We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal" of cutting the deficit below the European Union's limit, Trichet said at a press conference in Frankfurt. Earlier, he said that the ECB's current interest rate is "appropriate."
Spain presents deficit plan to Brussels by Andrew Willis - EUObserver The Spanish government presented its stability programme to the European Commission on Wednesday (3 February), outlining a timetable to rein in an excessive deficit that reached 11.4 percent of gross domestic product last year. Under the plan, Spain will aim to cut its budget deficit to 9.8 per cent of GDP this year, 5.3 per cent of GDP by 2012, and eventually fall in line with EU limits of 3 percent by 2013. Last Friday the Socialist government of Prime Minister Jose Luis Rodriguez Zapatero agreed to some €50 billion worth of savings by 2013. Despite the clawbacks, the stability programme, part of an economic reporting system under EU rules, forecasts Spain's debt-to GDP ratio will continue to rise, reaching 74.3 percent in 2012.
Portugal near political crisis over debt By Peter Wise in Lisbon -FT Portugal moved towards a political crisis on Thursday night as its finance minister appealed to opposition parties not to defeat the minority Socialist government over a regional finance bill that he said would undermine the country’s international credibility. In a televised address, Fernando Teixeira dos Santos said opposition proposals to allow the Portuguese islands of Madeira and the Azores to increase their debt would have “grave consequences for Portugal’s public accounts” and send “the worst possible message” to financial markets.
Nato strategy to look at EU relations, says Albright by Valentina Pop EUOBSERVER / BRUSSELS - Relations between the EU and Nato are to be included in the new strategic concept for the military alliance currently being developed by a group of experts led by former US secretary of state Madeleine Albright. "We need to maximise collaboration with the EU and make more use of political consultation," Ms Albright told MEPs in Brussels during a special hearing on Wednesday (27 January). Ms Albright was the US' foreign policy supremo during 1997-2001 when Nato launched its first military action in the former Yugoslavia. The 72-year old has now been appointed to chair an expert panel tasked to advise Nato secretary general Anders Fogh Ramussen on an updated "strategic concept" for the military alliance.
Dalai Lama to meet Barack Obama as US relations with China worsen By Ewen MacAskill, Tania Branigan - guardian.co.uk President plans tougher line over trade surplus while Beijing refuses to back down over Iran sanctions The sudden deterioration in US-Chinese relations is set to accelerate after the White House confirmed today that Barack Obama will meet the Dalai Lama in Washington later this month in defiance of Beijing. The White House spokesman, Robert Gibbs, did not set a date, but the Dalai Lama's secretary has said he will be in Washington on 17 and 18 February. Beijing claims Tibet is part of China, views the Dalai Lama as a troublemaker and has lobbied firmly against the visit.
Russian Economy Compared to Chinese Toy Pravda.ru The Russian economy has been having dizzy ups and downs during the recent years, which made an author of French Le Figaro newspaper compare it to the yo-yo toy. It had a six-percent growth in 2008 and dropped by 7.9 percent in 2009. The main reason for such a fluctuation is Russia's dependence on raw materials, presumably crude and natural gas. A 20-dollar drop in the price on one barrel of oil triggers a 4-percent reduction for the Russian GDP, Natixis's Francois Theret told the newspaper. A slide in prices on Urals oil from $243 per barrel in July 2008 to $32 in December resulted in the avalanche-like distribution of the economic crisis in Russia during the first half of 2009.
Turkish girl, 16, buried alive for talking to boys By Robert Tait in Istanbul - guardian.co.uk Death reopens debate over 'honour' killings in Turkey, which account for half of all the country's murders Turkish police have recovered the body of a 16-year-old girl they say was buried alive by relatives in an "honour" killing carried out as punishment for talking to boys. The girl, who has been identified only by the initials MM, was found in a sitting position with her hands tied, in a two-metre hole dug under a chicken pen outside her home in Kahta, in the south-eastern province of Adiyaman.
Iran Opposition Leaders Urge Rally on Anniversary By Nazila Fathi - NY Times Throwing up a challenge to the increasingly violent tactics of Iran's ruling elite, the country's two leading opposition figures are urging protesters to defy the government and take to the streets in an antigovernment rally on Feb. 11. The government announced on Tuesday that it would execute nine protesters; two were hanged last week. The prosecutor also asked Wednesday for the death sentence for a 24-year-old protester, having charged him with moharebeh, or waging war against God, for "throwing rocks during protests," the news agency ISNA reported.
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Thurs 02.04.2010
Wall Street tumbles on jobs data, euro zone fears NEW YORK (Reuters) - U.S. stocks slid 2 percent on Thursday after new applications for jobless insurance rose unexpectedly, and basic materials shares sank as a rising U.S. dollar hurt commodity prices The greenback rose against a basket of currencies .DXY as the euro slid to a seven-month low against the dollar on worries over sovereign debt in Greece, Portugal and Spain. Dylan Ratigan: FED GAVE Banks Access to 23.7 TRILLION DOLLARS NOT $700 Billion!
Bernanke opens second term with a warning Tells staff too many in U.S. are out of work and Fed's independence at risk -- WASHINGTON AP - Federal Reserve Chairman Ben Bernanke expressed concerns Wednesday about the economic recovery during a ceremonial swearing-in for another four-year term. In brief remarks to staffers, Bernanke said that while the economy is growing, "far too many people remain unemployed, foreclosures continue at record rates and bank credit continues to contract." One of the Fed's challenges is protecting its independence from congressional meddling, he said.
No help in sight, more homeowners walk away By David Streitfeld - NYTimes About 5.1 million will own a home valued below 75 percent of what is owed In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040. "People like me are beginning to feel like suckers," Mr. Koellmann said. "Why not let it go in default and rent a better place for less?" After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration's loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing.
A Founding Father's Response to Our Current Financial Mess Tim Iacono - Seeking Alpha As the congressional hearings on the role of the Federal Reserve and the Treasury Department in the late-2008 bailout of AIG proceed (live blogging here at the WSJ if you want the short version), perhaps now is a good time to recall the words of Thomas Jefferson: I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Obama Deficit Brings Us Closer to the Brink of National Bankruptcy By Martin Hutchinson, Money Morning -- U.S. President Barack Obama's budget for 2011, presented on Monday, shows a deficit of $1.3 trillion for the fiscal year that ends that September. That shortfall is actually $287 billion more than the Congressional Budget Office (CBO) had projected less than a week earlier, when it had released a budget forecast of its own for that same fiscal year. Granted, we're getting used to seeing budget deficits expand at a pretty quick pace these days. But even by government standards an increase of nearly $290 billion in less than a week is almost too much to bear!
U.S. May Lose 824,000 Jobs as Employment Data Revised Feb. 3 (Bloomberg Multimedia) -- The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time. See why http://www.bloomberg.com/insight/birth-death-model.html
Who Will Be the New Global King of the Hill? By William Pfaff - Truth Dig China and India stopped being part of what was called the "third world" when the "second world," the communist world, disappeared in a shattering of global illusions in 1989. Since then there has been a search to find a new King of the Global Hill. The United States rejoiced for a few years in being the sole superpower, considering it an opportunity to remake the world according to its own advantage.
Gold to hit $1,350 in 2010: Newmont PERTH (Commodity Online): Gold price may go up to $1,350 per ounce in 2010. This opinion came from none other than Newmont Mining Corporation President Richard O'Brien. "We will see continued support for the gold price," O'Brien said at the official opening of the company's Boddington gold mine near Perth. "Gold is a safe currency. No country can dilute the value of gold."
Time to Sell Property and Equities and Buy Gold and Silver By: Peter Cooper - Gold Seek It is fairly easy to understand the obvious link between the greater availability of credit and rising asset prices. But less obvious is the rolling up effect or compounding of relatively small annual gains in value over very long periods of time in a credit boom. In June this correspondent will go for a reunion of alumni in Oxford after almost 30 years of absence. Since then the price of a cup of tea on British Rail is up six-fold. The value of our former family home by a factor of 18.
Daily Noise in Gold & the Euro By: Adrian Ash - Gold Seek "GOLD RETREATS as Dollar gains," says a headline from Dow Jones Newswire. Which makes sense. Because when that isn't happening, "Gold adds to gains as Dollar falls versus Euro," says Reuters. Thus the intuitive Dollar-gold pairing swings now one way or other in the financial pages...gaining here, falling there...but always joined together as the journalist's deadline is heard hurrying near. The "whys" and the "wherefores" of a quick market comment demand it as well. Ask a professional analyst for a 10 or 15-word soundbite, and they'll most often tell you, if not vice versa, that "The Dollar is stronger, keeping precious metals under pressure." Beyond the daily noise, however – and with the single currency unwinding its last eight months' action vs. the Dollar at the end of last week – gold has in fact moved up against both.
Confiscation Through Inflation By Mike Hewitt - Dollar Daze "The Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution." (Thomas Jefferson) The Mission Statement of the Federal Reserve, as stated on their website, is "...to provide the nation with a safer, more flexible, and more stable monetary and financial system." Below is a graphical representation of the fall in value of the U.S. dollar since the Federal Reserve took control of the monetary system. I would like to ask the U.S. Federal Reserve what their definition of the word "stable" is. In the first seven years of providing the nation with a "more stable monetary system", the U.S. dollar lost one-half of its value. Today, the U.S. dollar is worth less than a nickel was in 1913!
Bernanke Takes Oath at Fed, Quietly By Sewell Chan - NY Times Ben S. Bernanke stepped into the imposing two-story marble atrium at the Federal Reserve’s headquarters and took the oath of office from his deputy. The president lauded Mr. Bernanke as “an economist’s economist” who had “earned the respect of the global financial community.” A cabinet secretary, members of Congress and two former Fed chairmen looked on. That was then. This is now. Mr. Bernanke was sworn in Wednesday to a second four-year term as chairman of the central bank in a quiet ceremony that had none of the pomp and praise of four years ago.
Volcker Rules By Robert Scheer - Truth Dig Finally President Barack Obama has come to his senses on financial regulation. His endorsement of what he calls the "Volcker Rule" for once puts him squarely on the side of ordinary Americans as opposed to the banking bandits who have so thoroughly fleeced the public.
Treasury expects to hit debt limit in February By Christopher S. Rugaber - AP Economics Writer WASHINGTON - The Treasury Department said Wednesday it expects to hit the government's debt ceiling by the end of February, putting pressure on Congress to raise the limit from its current level of $12.4 trillion. Treasury said it is working closely with Congress to raise the ceiling. The Senate has approved legislation to increase it by $1.9 trillion to $14.3 trillion. A ceiling that high would equal about $45,000 for every American. The House is expected to vote on the increase Thursday.
Spending Freeze Not Likely Ron Paul - Texas Straight Talk Last week politicians in Washington made a few things clear about how they really feel about the state of the union. First, they are beginning to hear the growing discontent with the size and scope of government and the broken promises that keep piling up. Certain events in Massachusetts recently made that statement loud, clear and unavoidable. In the face of those events, the powers that be made the determination that some populist rhetoric was in order, and the idea of a spending freeze in Washington was proposed, albeit with several caveats. These caveats to the proposed spending freeze ensure that we are not at any real risk of actually doing anything about spending.
Obama Retreats From Goal of Cap-Trade Bill By Elizabeth Williamson - WSJ NASHUA, N.H.-President Barack Obama said for the first time Tuesday that legislation that would require industries to pay for emissions of greenhouse gases may need to be separated from a more popular "green jobs" bill in the Senate, a maneuver that could kill what once had been one of the administration's top policy priorities. Answering a participant in a town-hall meeting in Nashua who asked about green jobs-those connected to renewable energy-and so-called cap-and-trade legislation, Mr. Obama said, "The only thing I would say about it is this: We may be able to separate these things out. And it's possible that that's where the Senate ends up."
Bankers Enter 'Dungeon of Pain' to Cut Stress in Ultimate Fight Clubs By Kristen Haunss -- Feb. 3 (Bloomberg) -- A black eye or row of stitches may grace John Cholish's face when he meets with wealth-management clients at Merrill Lynch & Co. Those injuries occur after Cholish, 26, leaves his midtown Manhattan office and heads for the gym. He spends a couple of hours most evenings at the Renzo Gracie Academy on West 30th Street, kicking, throwing punches and tackling opponents, as they train to compete in mixed martial arts.
Loan repurchases are a $10 billion problem for big banks By Alistair Barr, MarketWatch Bank of America, J.P. Morgan and Wells Fargo vie with insurers, Fannie, Freddie SAN FRANCISCO (MarketWatch) -- Just when they thought the worst of the mortgage crisis was behind them, billions of dollars in bad loans from the debacle may be rising from the dead and creeping back on the balance sheets of the largest U.S. banks. Big lenders including Bank of America, J.P. Morgan Chase and Wells Fargo may be forced to repurchase troubled home loans from insurers and mortgage-finance giants like Freddie Mac that had agreed to take on risks associated with those assets during the real estate boom.
Struggling banks need government help, trade group says By Binyamin Appelbaum, David Cho - Washington Post The head of a major trade group for community banks said Tuesday that the Obama administration's $30 billion program to spur small-business lending would not work unless the government offered money to struggling banks alongside stronger ones. The warning from Camden Fine, president of the Independent Community Bankers of America, highlighted the basic problem that has stymied past government efforts to send aid through the banking system to the broader economy.
Democrats to Unveil Jobs Package Spending Fight Looms By Naftali Bendavid, Greg Hitt - WSJ Senate Democrats are preparing to release a roughly $80 billion jobs program this week, but its prospects are uncertain in a political landscape where voters are angry about unemployment yet fuming about federal spending. Senate leaders are proposing that part of that money come from funds originally allocated to the financial-sector bailout effort, the Troubled Asset Relief Program, or TARP. But top Democrats have decided to slice the jobs initiative into smaller chunks in the face of Republican attacks on big federal economic-stimulus programs.
Solis Seeks Passage of Jobs, Business Plan By Darrell A. Hughes - WSJ WASHINGTON-Labor Secretary Hilda Solis urged lawmakers Wednesday to pass President Barack Obama's small business lending plan that's designed to help spur job growth. "We know that small businesses are often the driver of economic expansion that communities across the country desperately need, and the President's new small business jobs and wages tax credit will reward job creation and the good jobs that pay more," Ms. Solis said. Ms. Solis testified before the House Education and Labor Committee regarding the Labor Department's 2011 fiscal budget proposal and several goals the agency plans to achieve over the next year.
U.S. Economy: Services Expanded Less Than Forecast in January By Bob Willis Feb. 3 (Bloomberg) -- Service industries in the U.S. expanded less than anticipated in January, a sign the recovery will be slow to spread from manufacturing to the rest of the economy. The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, climbed to 50.5 from 49.8 in December, figures from the Tempe, Arizona-based group showed today. Readings above 50 signal growth. Other reports showed firings eased last month.
Pay czar: AIG bonuses are 'outrageous' but legal White House pay czar Kenneth Feinberg says the contracts that obligate American International Group Inc. to pay such large bonuses will expire in March. -- (AP) - Executives in American International Group Inc.'s financial products division are getting $100 million richer, and the White House pay czar calls the bonuses "outrageous." However, Kenneth Feinberg said the payments are contractual obligations entered into years ago. And he pointed out that AIG executives have pledged to repay $39 million out of $45 million in previous bonuses to the U.S. Treasury.
Geithner: Bank fee would recoup AIG bonuses Treasury secretary calls payments by insurer 'deeply irresponsible' WASHINGTON - Reuters -- Treasury Secretary Timothy Geithner on Wednesday said insurer AIG's contracts to pay hundreds of millions of dollars in bonuses were "outrageous" and appealed to Congress to help recoup the payments. Geithner said Congress could help recover the "deeply irresponsible" bonuses by passing an Obama administration proposal to levy fees on large financial firms. "Those contracts were outrageous. They should never have been permitted," Geithner said in testimony to the U.S. House of Representatives Ways and Means Committee.
Obama's Pyramid Schemes Would Make Keynes Happy Commentary by Caroline Baum Feb. 3 (Bloomberg) -- Jobs, jobs, jobs. Meet the new mantra, same as the old mantra. No longer will President Barack Obama be content to cite specious numbers about "jobs saved or created" as a result of last year's $787 billion fiscal stimulus. Now he's proposing $100 billion of new spending to "jumpstart job creation," according to White House Budget Director Peter Orszag. It's part of a $3.8 trillion budget for fiscal 2011, unveiled Monday, that projects a $1.3 trillion deficit next year, following a $1.6 trillion deficit this year.
Judge Andrew Napolitano 1/2: False Flag Event To Save Obama's Presidency Alex welcomes back to the show former New Jersey Superior Court Judge and political and legal analyst for Fox News Channel, Andrew Napolitano. Judge Napolitano is the author of Constitutional Chaos: What Happens When the Government Breaks its Own Laws, The Constitution in Exile: How the Federal Government Has Seized Power by Rewriting the Supreme Law of the Land, and A Nation of Sheep.
House Dems trash Obama's plan for jobs tax credit By Steven Ohlemacher - AP WASHINGTON - Some rank and file Democrats in the House are trashing President Barack Obama's plan to give businesses that add workers a new $5,000 tax credit for each job they create. Democratic Rep. Mike Thompson of California said businesses won't hire new employees unless they have work for them to do. Democratic Rep. Lloyd Doggett of Texas said companies that have struggled to keep workers would lose out while those that got rid of workers could get the credit by replacing them.
Pace of private sector job losses slows US lost 22,000 private sector jobs last month NEW YORK - Reuters -- The pace of job losses in the private sector slowed in January as employers reported the smallest payroll decline in nearly two years while demand for home loans hit a six-week high last week, data showed on Wednesday. A report by ADP Employer Services showed the United States lost 22,000 private sector jobs last month, smaller than the 61,000 jobs lost in December and economists' forecasts for a 30,000 loss in January. December's decline was first reported at 84,000.
Wal-Mart laying off 300 workers at HQ Retail giant calls this the 'last major' step in its streamlining efforts LITTLE ROCK, Ark. - AP --Wal-Mart Stores Inc. announced Wednesday it will lay off 300 people at its headquarters, calling the cut the "last major" step in a yearlong effort to streamline its operations and eliminate duplication. The world's largest retailer, which has 2 million employees, has changed its global sourcing network and cut thousands of employees in U.S. stores. It also cut 700 to 800 headquarters workers in February 2009.
Business bankruptcies rose 7 pct in January NEW YORK (Reuters) - U.S. business bankruptcy filings rose 7 percent in January from a year ago, according to a bankruptcy data provider on Wednesday, as the sluggish economy hurt sales and hindered businesses' ability to refinance heavy debt obligations. Companies from a range of industries including educational publishing group Haights Cross Communications Inc HAIGH.UL, financial company FirstFed Financial Corp and airline Mesa Air Group MESA.O were among the 6,502 companies that filed for bankruptcy protection in January, compared with 6,055 in the same month last year, according to Automated Access to Court Electronic Records (AACER), a database of U.S. bankruptcy statistics used by attorneys and lenders. "(The numbers) indicate that there's going to be more filings in 2010 than in 2009," said Mike Bickford, president of AACER.
Judge fast tracks CIT bankruptcy plan hearing Jonathan Stempel NEW YORK (Reuters) - A U.S. bankruptcy judge set a December 8 hearing to consider approval of CIT Group Inc's CITGQ.PK reorganization plan, aiding the large commercial lender's effort to emerge from bankruptcy by year's end. "We are on a very fast track," Judge Allan Gropper said at a Tuesday hearing in Manhattan bankruptcy court. A quick reorganization is crucial if New York-based CIT expects to retain most of its customers, and remain what its lawyer Gregg Galardi called "a source of strength" for its banking unit, which did not file for bankruptcy protection.
CIT's bankruptcy exit fraught with uncertainty Elinor Comlay NEW YORK (Reuters) - CIT Group Inc is looking for a quick exit from Chapter 11 protection but its long-term survival outside of bankruptcy depends in large part on what regulators will allow it to do with its various businesses. "CIT in general isn't out of the woods yet," said Jeffrey Knopman, principal of Profit Solutions Group Inc, which helps vendors deal with retailers. The bankruptcy financing gives the company a bit of a reprieve, he said, adding, "I think the jury's still out on the longer term." CIT hopes to move some of its best businesses, including vendor financing and factoring, to its bank, where it can fund them with deposits. But regulators may balk at this move.
Uh oh: Turnout in Illinois primary portends disaster for Democrats By: Mark Hemingway My colleague Michael Barone noted this morning that the turnout numbers from last night's Illinois primary look bad for Democrats heading into November. He's not alone in this observation. The Democratic polling firm Public Policy Polling looks at the numbers from last night and they are very concerned by what they see: Based on the current numbers 885,268 voters were cast in the Democratic primary for Senate compared to 736,137 on the Republican side. Those numbers are awfully close to each other for a state that's overwhelmingly Democratic.
Pimco Says California Yields May Revisit 2009 Peak on Deficits By William Selway Feb. 3 (Bloomberg) -- Kenneth Naehu, who invests $2.5 billion for Bel Air Investment Advisors in Los Angeles, sold California bonds late last year as he saw deficits mounting -- and says he's not ready to buy back in yet. Naehu, 43, is among investors including Newport Beach, California-based Pacific Investment Management Co. and Thornburg Investment Management in Santa Fe, New Mexico, forecasting that the state's yields -- which move inversely to prices -- may increase relative to other municipal bonds because of the financial strains. Pimco, the world's biggest fixed-income manager, predicts the yield on 30-year debt may rise above 6 percent, the highest since last summer's fiscal crisis.
Judge Andrew Napolitano 2/2: False Flag Event To Save Obama's Presidency
You lost your house - but you still have to pay By Les Christie NEW YORK (CNNMoney.com) -- As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right? Wrong. Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes. It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Consumers paying credit card over mortgage By Annalyn Censky NEW YORK (CNNMoney.com) -- When faced with a financial crisis, consumers more often are opting to pay their credit-card bills first before turning to their mortgage payments, according to a report released by Trans Union Wednesday. In the past, strapped consumers typically would let their credit cards slide and make sure their mortgages were covered, said Sean Reardon, the study's author and a consultant at the Chicago-based credit bureau. But those priorities flipped in the first quarter of 2008, according to the study, and the trend has been picking up steam.
Rich People Feel More Well Rested By Catherine Rampell - NY Times Rich people are more likely to say they feel well rested than poor people are, according to the Gallup-Healthways Well-Being survey. The results are based on poll data from 2008-9, in which Americans were asked whether they felt well rested “yesterday.” Of all respondents, 70 percent said they did feel well rested, and 29 percent said they did not. . . . . . . . . The lowest-income Americans, adults under age 50, women and people with minor children were most likely to say they did not feel well rested. By contrast, the wealthiest income group (those earning at least $90,000 a year), people without children at home, men and people over age 65 were most likely to say they felt well rested.
Why I'm speaking at Tea Party convention By Sarah Palin Later this week I'll head to Nashville, where I'll have the honor of speaking with members of the Tea Party movement. I look forward to meeting many Americans who share a commitment to limited government, common sense and personal responsibility. This movement is truly a grassroots, organic effort. It's not a top-down organization; it's a ground-up call to action that already has both political parties rethinking the way they do business.
SEIU Fat Cats Are Behind First Lady's Anti-Obesity Campaign By Michelle Malkin - CNS News -- Behind every seemingly good deed in the Obama White House, there's a deep-pocketed, left-wing special interest. Take first lady Michelle Obama's crusade against childhood obesity. Who really benefits from the ostensible push for improved nutrition in the schools? Think purple-as in the purple-shirted army of the Service Employees International Union. Big Labor bigwigs don't care about slimming your kids' waistlines. They care about beefing up their membership rolls and fattening their coffers.
SEIU President Calls Senators 'Terrorists' for Opposing the Card Check Bill By Joe Schoffstall - CNS News -- Andy Stern, president of the Service Employees International Union, took a swipe at Sens. Joe Lieberman (I-Conn.) and Ben Nelson (D-Neb.) Tuesday, calling the senators "terrorists" for their opposition to the card-check bill, which Democrats call the Employee Free Choice Act. "There are a lot of terrorists in the Senate who think we are supposed to negotiate with them when they have their particular needs that they want met," Stern told Bloomberg News. His comments, which appeared in BusinessWeek magazine, apparently were prompted by the senators' reluctance to support the union-sponsored bill.
Apple co-founder Steve Wozniak says his Toyota Prius accelerates on its own by Jessica Guynn - LA Times -- Apple Inc. co-founder Steve "Woz" Wozniak has seen his share of software glitches in the gadgets he has created and in those he collects. But Wozniak said he was surprised several months ago when his 2010 Toyota Prius started accelerating on its own -- to as much as 97 mph -- when he used cruise control to increase the vehicle's speed. He said he had to tap the brakes to stop the car from accelerating.
George Soros is largest shareholder in Petrobras; China gets the oil; US Taxpayers on the hook; Wall Street Journal - August 18, 2009: Obama Underwrites Offshore Drilling Too bad it's not in U.S. waters. You read that headline correctly. Unfortunately, the Obama Administration is financing oil exploration off Brazil. The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.
Toyota probes take a new turn By Ralph Vartabedian and Ken Bensinger - LA Times Investigations are focusing on electronic throttle systems. The potential for electronic defects in Toyota vehicles to cause sudden acceleration came under intensifying scrutiny Tuesday as both federal safety regulators and congressional leaders said they had begun new probes of the issue. Toyota has blamed more than 2,000 reported cases of sudden acceleration in its vehicles over the last decade on floor mats and sticky gas pedals, triggering massive recalls worldwide. The automaker has insisted that it knows of no electronic defect that could cause drivers to lose control of its vehicles.
Toyota shares drop as recall investigation widens Associated Press NEW YORK -- Shares of Toyota dropped Wednesday after the U.S. Transportation Secretary advised owners of the company's recalled cars to stop driving them. Ray LaHood's spoke before a House subcommittee one day after the automaker reported disappointing January sales and an investigation widened into sticky gas pedals that prompted a massive recall.
G3 or WiFi on iPhone, iPod Touch, iPad Skype says new 3G iPhone app coming 'really soon,' will have CD-quality sound -- LA Times -- After the news last week that Apple and AT&T are now allowing VoIP apps to make phone calls over the 3G network, Skype said it's still waiting to release a new 3G-ready version of its software for the iPhone. Today the company offered a few updates on the progress of the app, which it is apparently putting the finishes touches on and which Skype says will be available "really soon." In a YouTube video, David Ponsford, the leader of Skype's iPhone team, said the app would have "CD-quality sound" for calls between Skype users.
Textbook publishers heading to iPad by Lance Whitney - CNET News Publishers aren't wasting any time getting their books onto the new iPad. Publishers Houghton Mifflin Harcourt, Kaplan Publishing, McGraw-Hill Education, and Pearson have signed deals to be among the first to port their textbooks over to Apple's new tablet. Heading to the iPad as well as the iPhone and iPod Touch will be their textbooks, study guides, and test prep manuals. Announced on Wednesday, the agreements were made with ScrollMotion, a company that develops the iPhone e-reader app Iceberg Reader and works with publishers to digitize their books for the mobile market.
End of the Web as we know it, thanks to iPad and others By Julianne Pepitone NEW YORK (CNNMoney.com) -- For many years, the Internet was relatively simple: Everyone surfed the same Web. Fast forward to 2010 and the idea of a one-size-fits-all Web is a quaint memory, thanks to the rise of the iPhone, Kindle, BlackBerry, Droid and of course, the much-hyped iPad. As mobile Internet gadgets multiply, so does device-specific content. For example, popular mobile Twitter app Tweetie is available only on the iPhone, while an official GMail application is only on the Droid. And if you buy an e-book for the Amazon (AMZN, Fortune 500) Kindle, you can't necessarily view it on other e-readers.
CBS sells out of Super Bowl ads With six days left before the Saints play the Colts in the Super Bowl, CBS Corp. says it has sold out of ad space during the broadcast. (AP) - CBS Corp. said it sold out of ads for the Super Bowl on Monday at average prices that are better than last year, with some 30-second spots topping $3 million apiece. CBS said the final spot sold Monday morning, six days before kickoff. That's a few days ahead of schedule. Last year, NBC still had two 30-second spots remaining two days before the game as the economy was mired in a recession, and announced only on the eve of the game that it sold out a total 69 spots.
Based on a True Story TV Movie Portrays Dark Side of Scientology By Martin U. Müller - Spiegel A new German TV movie tells the story of a man whose family life was destroyed after joining the Church of Scientology. The drama, which is based on a true story, was filmed in secret to prevent the organization taking legal action against the project. Heiner von Rönn could reel off a sobering list of the people and things he has lost to Scientology. They include thousands of euros, 10 years of his life, his former wife, and both his children.
Bill Clinton to coordinate Haiti aid efforts By Patrick Worsnip - Reuters The United Nations on Wednesday assigned former U.S. President Bill Clinton, now U.N. special envoy to Haiti, to coordinate international relief efforts in the earthquake-devastated country. Clinton will seek to organize a mass of aid initiatives and offers that have poured in since the magnitude 7.0 earthquake killed up to 200,000 Haitians and made up to 1 million homeless on January 12, U.N. officials said. Three weeks after the quake, a huge U.S.-led international relief operation has been struggling to help survivors. The United Nations, whose mission chief in Haiti and nearly 100 other staff were killed, has admitted early aid efforts were disorganized but says the situation is improving daily.
Intelligence officials say al-Qaeda will try to attack U.S. in next 6 months By Joby Warrick - Washington Post -- The Obama administration's top intelligence officials on Tuesday described it as "certain" that al-Qaeda or its allies will try to attack the United States in the next six months, and they called for new flexibility in how U.S. officials detain and question terrorist suspects. The officials, testifying before the Senate intelligence committee, also warned of increased risk of cyber-attacks in the coming months, saying that the recent China-based hacking of Google's computers was both a "wake-up call" and a forerunner to future strikes aimed at businesses or intended to cause economic disruption.
Pakistanis have a list of gripes against the U.S. By Alex Rodriguez - LATimes Is she a victim of the U.S. or is she 'Terror Mom'? Aafia Siddiqui is awaiting a verdict after her trial in the U.S. on attempted murder charges. Many in Pakistan consider her a hero and a victim of persecution. Reporting from Islamabad, Pakistan - Depending on which side of the globe you call home, she's either Lady Al Qaeda or the incarnation of America's persecution of Muslims. Aafia Siddiqui, 37, a neuroscientist and mother of three, was once branded by the U.S. as the most wanted woman in the world, an Al Qaeda facilitator who posed a "clear and present danger to the U.S.," then-U.S. Atty. Gen. John Ashcroft told reporters in 2004.
E.U. Warns of Tough Supervision of Greece's Budget By Stephen Castle - NY Times BRUSSELS - Greece won breathing space Wednesday in its battle to stave off financial ruin as the European Commission endorsed plans to bring its public finances under control, though it warned that the country's progress back from the brink faced unprecedented monitoring by Brussels. The statement from the European Commission appeared to calm some of the anxiety in the financial markets, although analysts noted the risk that Athens' austerity package could be derailed by domestic opposition.
EU to monitor Greek debt measures The European Union has approved Greek efforts aimed at reducing its public deficit of 12.7 per cent, which has weighed the common currency of the euro down. Athens has pledged a number of austerity measures, including a public salary freeze, a higher retirement age for men and a hike in petrol prices to get its finances back in order. But the EU has said it will place Greece under economic scrutiny to ensure the country sticks to its measures.
European Union Puts Greece under Financial Surveillance Spiegel -- Debt-ridden Greece has come under increased pressure to implement tough austerity measures after the European Union announced plans to closely monitor the country's efforts to cut its enormous budget deficit. The new wave of belt-tightening could spark more protests by workers. Pressure on Greece to get its public finances into shape increased Wednesday as the European Union announced unusually strict measures against the country. The European Commission, the EU's executive body, is to put Greece under closer monitoring than any euro-zone country has ever been subjected to and also criticized Athens for faulty reporting of statistics.
Italy Seizes Bank of America, Dexia Assets Amid Probe By Elisa Martinuzzi Feb. 3 (Bloomberg) -- Italy's financial police are seizing 73.3 million euros ($102 million) of assets from Bank of America Corp. and a unit of Dexia SA as part of a probe into an alleged derivatives fraud in the region of Apulia. Police are investigating losses on derivatives linked to the sale of 870 million euros of bonds sold by the regional government in 2003 and 2004, according to an e-mail from the prosecutor's office in Bari today. The banks misled the municipality, located in the heel of Italy, on the economic advantages of the transaction and concealed their fees, the prosecutor said.
Spanish leader to visit US amid summit flap By Melissa Eddy - The Associated Press WASHINGTON -- President Barack Obama's decision not to participate in an annual summit with European Union leaders is feeding doubts about whether Washington views Europe as a strong player on the international stage. The president's decision was announced days before Spanish Prime Minister Jose Luis Rodriguez Zapatero, who was to host the summit in Madrid, arrives Wednesday on a two-day visit to Washington. Zapatero, whose nation now holds the EU's rotating presidency, was not scheduled to meet with Obama but may have a chance to speak with him at Thursday's annual National Prayer Breakfast, where the Spanish prime minister was to give a Bible reading.
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David Walker (1/25/10) Comeback America: Turning the Country Around and Restoring Fiscal Responsibility David Walker, President, CEO, Peter G. Peterson Foundation; Former Comptroller General of the U.S.; Author, Comeback America: Turning the Country Around and Restoring Fiscal Responsibility One of Americas foremost independent financial experts, former comptroller general of the U.S. and head of the U.S. Government Accountability Office from 1998-2008, Walker will discuss a range of compelling ideas, including how to control spending, save Social Security, dramatically alter our health-care system, reform our tax system and re-engineer the base of the federal government all taking into account the Obama administrations efforts to-date to do the same. He will address a range of policies and operational and political reforms needed to ensure that Americas future will be better than its past.
Our Q&A with David Walker The deficit and debt are rising as political issues. But what are we supposed to do about them? Points turned to David Walker, author of "Comeback America," for ideas. Walker, who spoke Friday in Dallas to the National Center for Policy Analysis, is in a position to have them. The former U.S. comptroller general now heads the Peter G. Peterson Foundation, which has held town halls to educate Americans about these issues.
TOO BIG TO FAIL? DON'T COUNT ON IT, SAYS DAVID WALKER The deficit and debt are rising as political issues. But what are we supposed to do about them? David Walker, author of "Comeback America," spoke Friday in Dallas to the National Center for Policy Analysis. The former U.S. comptroller general now heads the Peter G. Peterson Foundation, which has held town halls to educate Americans about these issues. Walker presents grim statistics in his book, including that by 2030, Americans could face higher tax rates than Europe because of our debt. That's not far away. What should we do?
According to Walker, we should separate the short-term deficit from the structural one.
Our current deficit is caused by the recession, various bailouts, two wars, several tax cuts and recent increases in federal spending.
It will remain high for a couple of years and may rise in order to stimulate the economy and create jobs.
The deficit we should worry about is our large and growing structural one, he says:
We need a fiscal commission that recommends budget controls, reforms in Social Security, Medicare and Medicaid, our tax system and various other changes.
But a presidential commission won't have as much power as a statutory once since Congress won't have to vote on its recommendations.
Terrorist attack 'certain' in months By Eli Lake Intelligence leaders warn Senate panel The five senior leaders of the U.S. intelligence community told a Senate panel Tuesday they are "certain" that terrorists will attempt another attack on the United States in the next three to six months. The warning came during the annual threat briefing to Congress in response to questions from Sen. Dianne Feinstein, California Democrat and chairman of the Senate Select Committee on Intelligence, who asked, "What is the likelihood of another terrorist-attempted attack on the U.S. homeland in the next three to six months? High or low?"
Obama Threatens China and Iran, Another U.S. War? By: Shamus_Cooke - Market Oracle The possibility of yet another U.S. war became more real last week, when the Obama administration sharply confronted both China and Iran. The first aggressive act was performed by Obama's Secretary of State, Hillary Clinton, who "warned" China that it must support serious economic sanctions against Iran (an act of war). Clinton said: "China will be under a lot of pressure to recognize the destabilizing effect that a nuclear-armed Iran would have, from which they receive a significant percentage of their oil supply." The implication here is that China will be cut off from a major energy source if they do not support U.S. foreign policy - this, too, would equal an act of war.
US 'holds the power' in ties with China Gordon Chang, who has written extensively on China and North Korea, and is the author of the book The Coming Collapse of China, explains why US-China relations have soured.
China warns US over Dalai Lama By Geoff Dyer, Edward Luce - FT Beijing vows to impose sanctions over Taiwan arms China warned the US on Tuesday that any meeting between President Barack Obama and the Dalai Lama would further damage relations, in the latest sign of the deteriorating political mood between Beijing and Washington. Speaking on the day Beijing restated its pledge to impose sanctions on US companies that sell arms to Taiwan, a senior Chinese official said that meeting the Dalai Lama was not in the interests of the US at a time when it was trying to recover from the financial crisis.
Moody's Warns on Deluge of Debt By MIKE SPECTOR - WSJ Moody's Investors Service warned of sizable refunding requirements for nearly 1,000 companies over the coming years, questioning whether they will be able to refinance more than $800 billion in debt taken on in the middle part of the last decade. The credit-rating firm's annual report on risks faced by weaker companies and their investors found that 995 of the 1,300 companies Moody's rates as "junk" have debts maturing in the next five years. The debts are largely tied to the last decade's leveraged-buyout boom.
A.I.G. Plan for $100 Million Bonus Payout Draws Fire By Mary Williams Walsh, Sewell Chan - NY Times The American International Group has agreed to cut employee bonuses by $20 million and will distribute about $100 million on Wednesday, according to people with knowledge of the negotiations. But the reductions may not be enough to appease the company’s critics, who do not accept the company’s argument that it has to honor contracts from before its government bailout. “A.I.G. has taxpayers over a barrel,” said Senator Charles E. Grassley, an Iowa Republican, in a statement on Tuesday night. “The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”
No Aid or Rebound in Sight More Homeowners Just Walk Away By David Streitfeld - NYTimes In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040. “People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?” After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan modification plan raised the expectations of many but satisfied only a few, a large group of distressed homeowners is wondering the same thing.
Ten Geopolitical and Economic Predictions for 2010 By Minyanville Staff There's a widespread belief that the world has “ducked the strategic bullet” of global economic collapse, but this is merely the delusionary euphoria of the severely wounded patient. Severe structural damage has occurred to the key driver of global economic stability: the United States. Most major economies of Western Europe and Asia, although in plight, have been protected in their fall by a complex web of structures and the fact that they weren't, in many respects, as leveraged as the US. Britain and Japan, however, remain leveraged in their debt-to-asset ratio, to a death-defying degree.
Inside Story - Tensions rise over Taiwan arms deal Beijing has warned of "serious harm" to relations between the two powers, accusing Washington of "arrogance" over plans to sell arms to Taiwan. Does escalating the rhetoric in this dispute threaten to deepen rifts between the world's largest and third-largest economies? Are bilateral relations on the brink and the fates of other countries being held hostage?
'Current rise in dollar, equity fall to help gold, silver' NJ, USA (Commodity Online): The current rise in the U.S. dollar and decline in U.S. stocks might actually strengthen the fundamentals of gold and silver. It is now more likely that Bernanke will continue to hold interest rates at 0% for a longer than expected period of time. Therefore, a rise in the U.S. dollar today could be setting the stage for a crash in the U.S. dollar as soon as late-2010, followed by the onset of hyperinflation, according to National Inflation Association of USA.
Gold Continues Bounce as Risk Play By Matt Whittaker - WSJ NY - Gold futures continued their risk-fueled bounce as concerns about Greek sovereign debt eased and the U.S. dollar faltered. April gold rose $13, or 1.2%, to settle at $1,118 an ounce on the Comex division of the New York Mercantile Exchange. February gold rose $13.10 to $1,117.40.
Gold steady above $1,110/oz, eyes on US data TOKYO, Feb 3 (Reuters) - Gold prices were steady on Wednesday after hitting their highest level in almost two weeks the previous day, with investors cautiously awaiting U.S. jobs data later this week to gauge prospects for the U.S. economy and the dollar.
Gold: fundamentals remain strong, says World Gold Council The World Gold Council said that suggestions of a gold price ‘bubble’ do not take account of gold’s market fundamentals, which remain robust. The World Gold Council said that investor flows, specifically from western markets, have provided a key means of support during the course of the credit crisis as investors sought to diversify their exposures to other assets and protect their wealth against market shocks. It said that these western investor flows have remained resilient even as the global economy has shown signs of recovery. Furthermore it said, evidence suggests that even the more tactical elements active in the gold market are being firmly driven by positive sentiment toward gold’s fundamentals. Further price support was provided by a progressive recovery in jewellery demand after a pressured first quarter.
Gold Price and the Ongoing Inflation Threat Gold had a strong rally the first trading day of February. This rally was significant for two reasons. First, gold hit a significant support level last Friday and needed to bounce at that point if it is going to form a double bottom. Secondly, assets in bull markets should rally the first few trading days of the month. Despite a barrage of press coverage during the last several weeks, the threat of inflation hasn't diminished, nor are the world's governments likely to return to fiscal and monetary responsibility for many years into the future. Gold will continue its long-term rally until that happens.
Higher Highs Coming In Gold! By: Peter Degraaf - Gold Seek The recent peak in gold on December 2nd was interrupted by a pullback that most likely ended with a double bottom on Jan 28th. To help us determine if this pull-back is ready to give way to the next big rally we take a look at all of the pullbacks of 10% or more since the Gold Bull started its run in 2001. There have been 9 such pull-backs, including the one just ending. But first we draw your attention to a very bullish chart. It is the chart that highlights the inverted head and shoulders formation that came to life when gold broke out above the important $1,000.00 level. This breakout portends a target of $1,350.00 minimum, and some would conclude at target at $1,500.00
Silver Is Poised to Rise in The Long Run, But The Short-term Situation Is Complicated By: Przemyslaw Radomski - SilverSeek.com Perhaps you may have heard mentions recently of the Austrian School of Economics versus the Keynesian branch. Maybe you saw televised interviews with Congressman Ron Paul (R-Texas.) He is the Congressman who has been trying for decades to pass a bill that would give Congress the power to audit the Federal Reserve Bank. What was once a ridiculed, marginal proposal recently passed the House and will soon be considered by the Senate. Congressman Paul blames the country’s economic woes on a long-dead economist by the name of John Maynard Keynes, whose present-day adherents, he says, are the ones bringing the country’s economy to the cliff’s edge.
What’s next for the Dollar? by Axel Merk - Financial Sense The Federal Reserve’s Open Market Committee (FOMC) is sticking to its course for phasing out the additional purchases of Mortgage Backed Securities (MBS). Notably however, in its statement released January 27th, reference to an improving housing market was omitted after recent bad news about the sector. The Fed rarely puts much weight on a month’s worth of data, be they good or bad; few have ever accused the Fed of being “ahead of the curve”. Indeed, there was one dissenting vote, Kansas City Fed President Thomas Hoenig, who argued the Fed should no longer commit to “exceptionally low levels of the federal funds rate for an extended period”.
20 reasons Global Debt Time Bomb explodes soon By Paul B. Farrell, MarketWatch Which trigger will ignite the Great Depression II? Retire? You can fugget about it if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms. Yes, 20. And yes, any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W. Bush, Ben Bernanke, Henry Paulson and now President Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas and bailouts.
U.S. Deepening Debt Crisis By: Michael_Hudson - Market Oracle Be Afraid of Bernanke Reappointment If the economy deteriorates in the L-shaped "hockey-stick" rut that many economists forecast, what political price will President Obama and the Democrats pay for having returned the financial keys to the Bush Republican appointees who gave away the store in the first place? Reappointing Federal Reserve Chairman Ben Bernanke may end up injuring not only the economy but also the Democratic Party for years to come. Recognizing this, Republicans made populist points by opposing his reappointment during the Senate confirmation hearings last Thursday, January 27 - the day after Mr. Obama's State of the Union address.
Volcker Looms Larger as Support for Bernanke Strengthens Ties By Rich Miller Feb. 2 (Bloomberg) -- Paul Volcker is enjoying increased influence with the Federal Reserve as well as the Obama administration, central bank records show. Volcker, who headed the Fed from 1979 to 1987, met current chairman Ben S. Bernanke six times in the year through November, the latest month that the Fed has made its records available. In the prior year, the two men only got together once. "Volcker has had very strong views on regulation going way back," said Lyle Gramley, who served as a Fed governor under Volcker and is now a senior economic adviser to New York-based Potomac Research Group. "It would be logical for Bernanke to talk to him about financial reforms" as policy makers wrestled over how to prevent another crisis.
The Bernanke Disaster By Michael Hudson If the economy deteriorates in the L-shaped “hockey-stick” rut that many economists forecast, what political price will President Obama and the Democrats pay for having returned the financial keys to the Bush Republican appointees who gave away the store in the first place? Reappointing Federal Reserve Chairman Ben Bernanke may end up injuring not only the economy but also the Democratic Party for years to come. Recognizing this, Republicans made populist points by opposing his reappointment during the Senate confirmation hearings last Thursday, January 27 – the day after Obama’s State of the Union address.
Banks shouldn't be hedge funds, Volcker tells Senate By Rex Nutting, MarketWatch Federal safety net shouldn't cover speculators, Obama adviser says The federal safety net for commercial banks should protect depositors, not speculators, former Federal Reserve Chairman Paul Volcker told senators on Tuesday, urging them to pass the so-called Volcker Rule that would ban banks from trading for profit and that would restrict the size of the biggest banks. Volcker, now an adviser to President Barack Obama, told the Senate Banking Committee that the banking system must be restructured to prevent a repeat of the bailouts of 2008.
Volcker plea over Wall St shake-up By Tom Braithwaite, Francesco Guerrera - FT Paul Volcker, former Federal Reserve chairman, made a direct pitch to Congress to prevent his proposed ban on banks’ proprietary trading from being diluted or scrapped by skeptical lawmakers. No member of the Senate banking committee voiced outright opposition to the plan – announced by Barack Obama, the president, last month – but there was plenty of criticism from Democrats and Republicans at the manner and lack of detail of the announcement.
Obama banking plan complicates regulatory bill By Jim Kuhnhenn - AP The Obama administration's stepped up demand for tougher restrictions and new taxes on big banks is complicating Senate efforts to write a bipartisan financial regulation overhaul, even drawing a sharp rebuke from a top presidential ally in the Senate. In an unusual reprimand, Senate Banking Committee Chairman Christopher Dodd, D-Conn., chided administration representatives at the end of a hearing Tuesday for injecting ideas late in his negotiations for a sweeping bill.
More new taxes, more new spending By Washington Times Can someone explain how this is change? Over the next decade, President Obama plans on increasing taxes by $1.4 trillion, offset by his planned $300 billion in tax cuts. But his spending splurge will increase so much that Mr. Obama will add $5.1 trillion to the national debt over the next five years and $8.5 trillion over 10 years. This will be on top of the $1.4 trillion deficit we ran last year. At the end of these 10 years, the publicly held national debt will nearly double to $18 trillion. Even Mr. Obama's own estimates put all the other tax-and-spend liberals to shame. And Mr. Obama hasn't even gotten his massive, costly takeover of the health care system and his even more costly cap-and-tax proposal. It is not as if Americans couldn't survive with a smaller amount of government spending - eight years ago, the budget was about half as big as Mr. Obama's proposal.
Dodd Calls Obama Plan Too Grand By Sewell Chan - NYTimes The chairman of the Senate Banking Committee warned on Tuesday that the Obama administration’s new proposals to rein in Wall Street firms ran the risk of derailing months of delicate negotiations over overhauling financial regulations. “It’s not a movable feast,” the chairman, Christopher J. Dodd, told Paul A. Volcker, the former Federal Reserve chairman, who has become an influential outside adviser to President Obama. “It’s adding to the problems of trying to get a bill done,” he said at the end of a hearing on the proposals, after all the other committee members had already left.
Geithner fights budget hawks By Tom Braithwaite, Anna Fifield - FT The Obama administration on Tuesday defended its $3,800bn budget amid fierce criticism from fiscal hawks, with Tim Geithner, the Treasury secretary, saying extra spending was needed to avoid “eroding” the US lead in the world economy. This came as Barack Obama, president, detailed his plan for a new $33bn (£20.6bn. €23.6bn) pot of money for small banks to lend, which he said would help small businesses once again become “the engine of job growth in America”.
The Myth of the Fed's Exit Strategy The Mad Hedge Fund Trader - Silver Bear Cafe The "Exit Strategy" the Fed's Bernanke is contemplating is nothing less than a total, unadulterated myth. This is the fairy tale you read to your young children at night where the government cuts back its spending and the Fed shrinks its lending. The private economy then picks up the slack, and the rest of us live happily ever after. Unfortunately, this time there will be no Prince Charming riding in on a white horse. In 2009, the US ran an unprecedented $1.5 trillion budget deficit, financing the shortfall by issuing Treasury bonds. The Fed happily obliged by soaking up this tsunami of paper, either directly, or indirectly through mortgage purchases.
Senators cool to 'Volcker rule' By Jennifer Liberto (CNNMoney.com) -- The fate of President Obama's latest proposal to rein in banks was thrown into doubt on Tuesday after it got a chilly reception from key lawmakers. The Senate Banking Committee grilled Obama adviser Paul Volcker who has, for months, been championing a proposal to curtail so-called proprietary trading. The aim is to stop big banks from making trades on their own accounts, especially since commercial banks have access to funds back-stopped by the government.
Obama's Budget Has One Small, Missing Piece.... For $6.3 Trillion Dollars by Tyler Durden - Zero Hedge Today, to much fanfare, the administration released its ridiculous $3+ trillion budget (we say + because at that size the one thing certain is that the budget will certainly never hit the target and while we wish it would be lower, we are certain it will end up materially higher), which consists of a "short" 192-page summary section and a 1420 page appendix. We are confident that not one politician will read the whole thing from cover to cover. We won't either. Not because we don't care about what's in it, but because we are much more concerned with what is not included, namely $2.8 Trillion and $1.9 Trillion of MBS guaranteed portfolios at Fannie and Freddie, and an additional $782 billion and $809 billion in company debt outstanding for the two GSEs, respectively. This amounts to a total of $6.3 trillion in liabilities which should be counted toward the budget.
The Collapse of Sovereign Government Bonds The Next Financial Crisis Contagion By: Martin_D_Weiss - Market Oracle The next contagion is beginning to spread around the globe. It is unexpected on Wall Street, misunderstood in Washington - and very dangerous. It could sabotage the plans of the U.S. Treasury, the Federal Reserve, and many of their counterparts overseas. It is … The Collapse of Sovereign Government Bonds This is certainly not the first financial contagion of recent memory: Back in 1997, we witnessed a currency contagion - hatched in Thailand, spreading quickly to the rest of Southeast Asia … smacking Russia in the gut … and sinking a major player in the U.S. derivatives market. Then, 10 years later, came the debt contagion - incubated in a subsector of America's mortgage market … soon infecting nearly all credit instruments … striking Wall Street like a sledgehammer … and mortally wounding the global financial system. Those contagions were bad enough. Now, however, the contagion is beginning at a much higher level, in the most important financial instruments on Earth - long-term bonds issued by sovereign governments. The Saga Begins in Greece
Dangerous Recession Economic Recovery Lessons of 1937 Jonathan M. Finegold Catalan writes: Many economists have already compared the years 1929-1932 to those of 2007-2009, and the current period of recovery to the time period 1933-1939. It was only a matter of time before they began to look for a comparison between the recession of 1937 and a potential "double dip" today.
Secret Banking Cabal Emerges From AIG Shadows by David Reilly (Bloomberg) -- The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week's congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all. Wednesday's hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials. We're talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG's bailout -- deserves further congressional scrutiny.
Tedbits 2010 Outlook by Ty Andros - Financial Sense When Hope Turns to Fear, Part II Currencies, Bombs… er, Bonds and Banks are ALL Rotten to their Core. This is the epicenter of the unfolding financial crisis and inflationary/deflationary depression. The developed world is BANKRUPT and the policies of INSOLVENCY are entrenched in its leaders and citizens in such a way as to make the final destination of financial system destruction UNAVOIDABLE. The “something for nothings” in the developed world are firmly in control of the electoral process and their constituencies continue to grow as the global financial crisis crushes their incomes and future prospects. Taxes are headed far higher, thus transferring capital from the private economies (where jobs and incomes are created and where production exceeds consumption) to the public sector which has no idea what cost-benefit analysis is and consumes much more than it produces.
A Mortally Wounded Private Sector by Michael Pento - Financial Sense President’s 2011 budget proposal was so outrageously egregious that Obama had to hold a special conference on Monday just to spin the news. The scope of the proposed budget for fiscal 2011 is $3.8 trillion. The difference between revenue and expenditures for this fiscal year will leave us with a deficit of $1.6 trillion and, amazingly enough, that shortfall will equal 10.6% of GDP—the highest since WWll and $200 billion more than 2009! Next year’s deficit is slated to post just a $300 billion reduction to $1.3 trillion.
Cloudy Future for Fannie and Freddie By: Charles Duhigg - The New York Times The Great Bailout is mostly over for the banks. But for those troubled behemoths of the nation’s housing bust, Fannie Mae and Freddie Mac, the lifeline from Washington just keeps getting longer. Fifteen months after Fannie and Freddie were effectively nationalized, neither the Obama administration nor Congressional leaders see a quick solution to one of the thorniest problems in American finance: how to fix the twin mortgage giants without choking the flow of credit to homeowners and dealing a blow to a still-fragile housing market.
America's New Housing Crisis Capitals by Francesca Levy - Forbes Real-time listing prices in these areas are dropping, and experts expect them to fall further this year. During the housing bust, while the effects of foreclosures and a crushing recession tore through real estate markets in states like Florida, California and Nevada, the Denver metro seemed insulated from economic harm. It has consistently performed relatively well among the 20 major metropolitan housing markets tracked in the S&P/Case-Shiller Home Price Index, which measures sale prices, and is published with a two-month lag. In its January report, covering the year ending in November, Denver topped those markets with a 0.5% home price increase.
Largest-ever federal payroll to hit 2.15 million By Stephen Dinan - Washington Times The era of big government has returned with a vengeance, in the form of the largest federal work force in modern history. The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that "the era of big government is over" and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force.
Stimulus: Secret sequel in the budget By Tami Luhby CNNMoney.com) -- They're not calling it Stimulus 2, but the Obama administration wants to extend the life of several Recovery Act provisions by building them into the federal budget. The president's $3.8 trillion budget for fiscal 2011, unveiled Monday, calls for giving states more money for Medicaid and infrastructure projects, as well as renewing tax breaks for workers, small businesses and municipalities issuing bonds. It also requests additional funding for Obama's educational reform initiative, Race to the Top.
Obama: $30B to aid small businesses By Kara Rowland - Washington Times Continuing his focus on jobs, President Obama on Tuesday will introduce a plan to take $30 billion from the Wall Street bailout fund to create a new program encouraging community banks to lend to cash-strapped small businesses. The proposal, which Mr. Obama is set to unveil at a town hall event in Nashua, N.H., is the latest in a series of policies aiming to spur job growth by easing the burden of the recession on start-ups and smaller firms. It is sure to draw fire from Republicans on Capitol Hill, who have argued that any leftover money from the Troubled Asset Relief Program should be used to pay down the deficit.
Oversold by Neil Charnoc - Financial Sense A piece of news I expected is now out – an Obama plan to spend more money on stimulus. I have stated this would happen in the past weeks. Will it get passed or not is the question? There will be a battle and the proposals may get changed around however there is one thing for certain the Government will spend. I discussed this with a colleague a few weeks back and we agreed there was no way any government in an election mode would withdraw stimulus. The USA will not be the last as governments struggle to increase employment, growth and popularity during the course of this year.
Home-Ownership Level Falls to 67.3% By Sara Murray, Jeff Bater - WSJ The percentage of Americans who owned their homes fell at the end of 2009 to the lowest point in nearly a decade, a reflection of continuing troubles in the housing market even as the sector showed signs of stabilizing. In one upbeat sign, an index of pending sales of previously owned homes increased 1.0% to 96.6 in December, the National Association of Realtors said Tuesday, suggesting the housing market is steadying after sharp swings caused by the uncertain fate of a government tax credit.
Rising FHA default rate foreshadows a crush of foreclosures By Dina ElBoghdady, Dan Keating - Washington Post The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market's recovery. About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency's figures show.
Swiss Banks Achilles Heel Is Workers Selling Data By Warren Giles (Bloomberg) -- Swiss banks are discovering that the biggest threat to client privacy is their own workers. German Chancellor Angela Merkel said yesterday her government may buy stolen data on Swiss bank accounts as French authorities comb information acquired from an employee of HSBC Holdings Plc's private bank in Geneva. The cases come two years after Germany paid 5 million euros ($7 million) for details filched from LGT Group in neighboring Liechtenstein.
Senate panel mulls campaign-finance rules By Jim Abrams - AP Legislation aims to address fallout from court decision Lawmakers said Tuesday they might counter the recent Supreme Court ruling on campaign money, along with the blizzard of special-interest spending that could result, by making corporations and unions come clean about which campaign ads they are sponsoring and how much they are shelling out.
Next in line for a bailout: Social Security By Allan Sloan NY (Fortune) -- Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system. A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits. Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout.
Colorado Springs cuts into services considered basic by many Michael Booth - Denver Post COLORADO SPRINGS - This tax-averse city is about to learn what it looks and feels like when budget cuts slash services most Americans consider part of the urban fabric. More than a third of the street lights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping fire fighting jobs, a vice team, burglary investigators, beat cops - dozens of police and fire positions will go unfilled. The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter.
Cut all librarians before any cop? by E. J. Montini - The Arizona Republic If these were better days and we were better people, the murder of a police officer in Gilbert wouldn't have anything to do with the job status of librarians in Phoenix. But times are tough. And we are who we are. To deal with a $242 million budget deficit, Phoenix is planning a series of cuts to all types of city services. Transportation. Senior centers. Libraries. As well as police and firefighters. Already the police are fighting back. The Phoenix Law Enforcement Association has sponsored a television spot showing a frightened woman in a darkened house calling 911.
Living in a Powder Keg and Giving Off Sparks FOFOA - Silver Bear Cafe Well, we had quite a week! Obama's State of the Arrogant speech confirmed that we will continue on with more of the same. More big projects, cool new bullet trains, and more big, expensive government. Helicopter Ben was confirmed for another four-year term, sure to be chock full of QE, both overt and covert. And Congress cleared the way for another $1.9tn in deficit spending. Quite a week indeed! It almost seems like there is nothing at all that could stop these guys in Washington. With all the green lights, rainbows and good news, what could possibly go wrong? It is this question that is most important to us savers and investors. What could go wrong? Sometimes history repeats. The rest of the time it just rhymes.
Housing Red Flags Ignored by Elizabeth MacDonald g Red Flags Ignored One of the nation’s biggest mortgage industry players repeatedly warned the Federal Reserve, the Federal Deposit Insurance Corp. and other bank regulators during the housing bubble that the U.S. faced an imminent housing crash. The trade group also mapped out the 15 states which faced "sudden increases in foreclosures" and "a downward spiral," including California, Florida and Nevada. But bank regulators not only ignored the group's warnings, top Fed officials also went on the airwaves to say the economy was "building on a sturdy foundation" and a housing crash was "unlikely."
Urban unemployment grows By Blake Ellis NY (CNNMoney.com) -- The number of U.S. metropolitan areas with jobless rates above 15% increased in December, according to government figures released Tuesday. The Labor Department said 19 of 372 metropolitan areas surveyed posted unemployment rates of at least 15% last month, up from 17 metro areas in November. The metro area figures were not seasonally adjusted.
Toyota's Troubles Deepen Transportation Chief Says Probe Isn't Over; Car Maker Could Face Civil Penalty By Kate Linebaugh, Josh Mitchell, Norihiko Shirouzu - WSJ Toyota Motor Corp.'s quality crisis deepened Tuesday, as U.S. regulators accused the company of dragging its feet on fixing defective gas pedals and threatened civil penalties and further reviews of Toyota products. The move means that Toyota's efforts to address its biggest-ever safety and public-relations mess are far from over. Last week, the administration indicated it had no issues with how Toyota had responded to the sudden-acceleration reports, which led the company to recall about six million vehicles and have been linked to at least five fatalities.
Obama officials present a strategic redefining of Homeland Security's mission By Spencer S. Hsu - Washington Post The Obama administration Monday delivered to Congress the nation's first Quadrennial Homeland Security Review, defining homeland security for the first time as including hazards beyond terrorism, in a strategic document intended to drive long-term budget decisions. Congress mandated the high-level strategic review in 2007, two years after Hurricane Katrina exposed failings in the government's response and four years after the creation of the Department of Homeland Security. The initiative was modeled after the Quadrennial Defense Review, another congressionally mandated effort that directed the Defense Department to reset its strategies and budgets against evolving threats every four years.
Feds claim authority to regulate in-state commerce By Bob Unruh - WND Government cites Constitution in demanding dismissal of gun challenge The federal government is claiming in court documents demanding the dismissal of a gun-law challenge in Montana the authority to regulate in-state commerce under the Constitution's Commerce clause. But the plaintiff in the case says the court needs to review that provision in its amended form – since the 10th Amendment, adopted after the Commerce Clause, can be viewed as modifying the Constitution's provisions regarding the regulation of commerce, specifically granting additional authority to states.
Obama Surrendering Internet to Foreign Powers By: Bradley A. Blakeman - NewsMax Without the ingenuity of America’s brightest minds and the investment of U.S. taxpayer dollars, there would be no Internet, as we now know it today. Now, the Obama administration has moved quietly to cede control of the Web from the United States to foreign powers. Some background: The Internet came into being because of the genius work of Americans Dr.Robert E. Kahn and Dr. Vinton G. Cerf. These men, while working for the Department of Defense in the Defense Advanced Research Projects Agency in the early 1970s, conceived, designed, and implemented the idea of "open-architecture networking."
Prepare to Dodge Risks From Greece, Iran By James Anderson - Minyanville Nassim Nicholas Taleb wrote a book called The Black Swan to explain the existence and occurrence of high-impact, hard-to-predict, and rare events that are beyond normal expectations. My book review can be summed up in two words: Manure happens. I'm not just referring to dairy barns. This was one of those boring Winter weekends -- no football, and too early for important college basketball games. I was reduced to scanning the blog world. I came up with two potential Black Swans, just enough to ruin any happy thoughts you have for February.
China warns Obama not to meet Dalai Lama China has warned that ties with the US would be undermined if US President Barack Obama met the Dalai Lama. There is speculation that Mr Obama will meet the Tibetan spiritual leader in Washington later this month, but no date has been confirmed. Communist Party official Zhu Weiqun said such a meeting would "threaten trust and co-operation" between Beijing and Washington. The dispute is the latest of several strains on the countries' relations.
Brussels backs Greek plan to tackle deficit By Kerin Hope, Ralph Atkins, Tony Barber - FT Barroso says proposal is ‘subject to risks’ Greece has won European support for its plan to pull back from the brink of financial disaster after its prime minister unveiled moves to boost tax revenue and cut public spending. The European Commission said on Tuesday it would endorse Athens’ plan to bring back under control the public sector deficit, which last year reached almost 13 per cent of gross domestic product.
Greece rattled by 'hidden debt' controversy By Ambrose Evans-Pritchard - Telegraph Greek debt markets have come under fresh assault from hot money funds after a commission of experts in Athens told the country's parliament that it had uncovered €40bn (£35bn) of "hidden debts" during an investigation into past manipulation by the financial authorities. Premier George Papandreou said the spike in Greek borrowing costs was "completely unjustified" and lashed out at the rating agencies, which precipitated this crisis by downgrading Greek bonds. "Greece is at the centre of an unprecedented speculative attack: we cannot be at the mercy of creditors. Despite our tragic mistakes, our fate is today defined by rating agencies that bear responsibility for the 'bubble' that led to the global crisis in the first place," he said.
German Companies Pull Out of Iran, Slowly By Judy Dempsey - NY Times BERLIN — German companies, long Iran’s biggest trading partners in Europe, are finding it increasingly difficult to do business there as the United States, Israel and others campaign for tougher U.N. sanctions in response to the country’s nuclear program. Yet even those companies that say they are pulling out — most notably Siemens last week — are likely to take years to wind down operations and wrap up outstanding contracts. Others are simply lowering their profile or finding third countries to do business through, fearing they will lose a lucrative market forever if they abandon it now.
Ahmadinejad backs deal to remove bulk of enriched uranium from Iran By Thomas Erdbrink, Glenn Kessler - Washington Post TEHRAN -- A long-dormant proposal to remove the bulk of Iran's enriched uranium from the Islamic republic appeared to be revived Tuesday as President Mahmoud Ahmadinejad said Iran had "no problem" with a deal initially brokered by the International Atomic Energy Agency. The deal, which Iran formally rejected weeks ago, would swap low-enriched uranium for fuel for a research reactor that produces medical isotopes. "If we allow them to take it, there is no problem," Ahmadinejad said on state TV. "We sign a contract to give 3.5 percent enriched uranium and receive 20 percent enriched ones after four or five months."
Iran dismisses US missile shield as 'puppet show' Matthew Weaver - guardian.co.uk Details emerge of unsuccessful US missile test designed to simulate Iranian attack amid increasingly tense standoff Iran today dismissed the US buildup of a missile shield in the Gulf as a "puppet show" as details emerged of an unsuccessful US missile test designed to simulate an Iranian attack amid a tense standoff between the two countries. The US has sent ships and missiles to the region in what officials said was an attempt to deter an attack by Iran on US allies. Iranian officials criticised the US deployment as unnecessary and unworkable.
US defense envisions multiple conflicts By Matthew Berger - Asia Times A report and budget request from the United States Department of Defense reveal both new and old priorities for President Barack Obama's Pentagon. Strategically, the military recognizes new, non-traditional threats ranging from failed states to cyber-warfare to climate change, but there is little change in the military spending habits of the Obama Pentagon versus that of his predecessor.
Taliban take on the US's surge By Syed Saleem Shahzad - Asia Times ISLAMABAD - At the major international conference on Afghanistan in London last Thursday, Afghan President Hamid Karzai called on the Taliban to take part in a loya jirga (assembly of elders) - as a start to peace talks. The Taliban are widely reported as having responded that first they want all of the more than 110,000 foreign troops in Afghanistan to leave the country by 2011. Asia Times Online, however, has learned from well-connected sources in Afghanistan who have been directly involved in backchannel negotiations with the Taliban that there is an important nuance to the Taliban demand. That is, the United States must put an immediate halt to its plans to send a further 30,000 troops to Afghanistan before withdrawal begins in 2011.
Inside Story - Saving the World in Davos? It has not been a good weekend for bankers as the World Economic Forum in Davos comes to an end. They are now facing the prospect of new, stricter bank regulations. Davos marked its 40th anniversary with the theme "Rethink, Redesign and Rebuild". But exactly how will policy-makers rebuild capitalism? Will the meeting lead to new regulations, and can another global financial crisis be prevented?
U.S., China lock horns BEIJING -- China and the United States were locked yesterday in an escalating row over U.S. arms sales to Taiwan, with Washington rebuffing Chinese protests and insisting the deal promotes stability in the Taiwan Strait. The Pentagon Friday sparked the latest challenge to China-U.S. relations under President Barack Obama when it approved the US$6.4 billion sale of Patriot missiles, Black Hawk helicopters, mine-hunting ships and other weaponry. China responded furiously with a raft of reprisals, saying it would suspend military and security contacts with Washington and impose sanctions on U.S. firms involved in the deal. Beijing warned of “severe harm” to relations.
Iran caught up in China - US spat By Kaveh L Afrasiabi - Asia Times Just days after United States Secretary of State Hillary Clinton used the occasion of a speech in Paris to lecture China on its national security interests and warned Beijing of "economic insecurity and diplomatic isolation" if it did not sign onto new sanctions against Iran, China hit back. On Saturday, Beijing escalated its rhetoric against US arms sales to Taiwan, which it views as part of its territory, by suspending all military exchanges with the US, summoning the American ambassador to Beijing and using Clinton's own language about "long-term implications".
Beijing furious at arms sales to Taiwan US' $6.4b deal with Taiwan puts at risk cooperation with Washington In its toughest response in three decades to US arms sales to Taiwan, Beijing announced over the weekend that it would curtail military exchanges with Washington, and sanction US companies involved, and warned of severe harm to bilateral ties. Though overall relations between the two world powers are unlikely to collapse over the single issue, Chinese experts said, their cooperation on key international matters such as those related to Iran, Afghanistan and the Democratic People's Republic of Korea (DPRK) could be severely impacted.
China media decries U.S.' 'arrogance' on Taiwan BEIJING -- China's state media accused Washington Monday of “arrogance” and “double standards” in going ahead with arms sales to Taiwan, saying Beijing's threat to penalize U.S. companies over the deal was very real. The Pentagon sparked the latest challenge to China-U.S. ties under President Barack Obama when it approved the US$6.4 billion sale to Taiwan of Patriot missiles, Black Hawk helicopters, mine-hunting ships and other weaponry. China responded furiously, saying it would suspend military and security contacts with Washington and impose sanctions on U.S. companies involved in the deal.
Sanctions target US firms For the first time Beijing vowed to censure private companies involved in the arms sales to Taiwan by the United States, a measure seen as concrete by experts and demanded by Chinese netizens for a long time. China said it would impose unspecified sanctions on the companies involved and reduce international cooperation with the US unless it canceled the new arms package. The foreign ministry didn't list the companies involved in its draft statement over the weekend. But Sikorsky, Lockheed-Martin, Raytheon and Boeing, are four companies involved in the latest $6.4 billion sale. All four have so far declined to comment to the press.
Obama losing control of Iran policy By Ali Gharib - Asia Times WASHINGTON - In a surprisingly swift move last Thursday night that could have wide-ranging implications, the United States Senate passed a bill containing broad unilateral sanctions to punish foreign companies that export gasoline to Iran or help expand its domestic refinery capabilities. The voice vote came at the eleventh hour before the chamber recessed so legislators could go home to campaign. The bill cannot come before the president to be signed into law until a conference procedure combines it with a similar house bill, the Iran Refined Petroleum Sanctions Act, passed in October.
Fiscal Stimulus in a Real Depression By Bill Bonner - Daily Reckoning America’s president proposes a tax credit to businesses that take on new employees. We never met a tax cut we didn’t like. This one is no exception. It lowers the cost of labor, making it easier to hire and pay people. So far, so good. But is Mr. Obama proposing to cut government spending also? Not really. He’s pretending that the feds can have their cake and eat it too…that they can forgo the income given up by the tax credit…and yet, still spend it.
Gold steady; eyes U.S. jobs data By Miho Yoshikawa TOKYO (Reuters) - Gold prices held steady near $1,105 an ounce on Tuesday as investors refrained from betting heavily in either direction ahead of a key U.S. jobs report due later this week. Bullion jumped more than 2 percent the previous day after data showed the U.S. manufacturing sector grew in January at a faster rate than expected, suggesting an improving outlook for the economy and inflationary pressures ahead.
Gold Bounces Back As Us Dollar Cools Slightly Against Euro Gold prices improved after slipping below $1,080, after the US Dollar continued its rally, getting support from Friday’s updates on the Q4 US GDP, which rose 5.7% to beat market expectations, and the Chicago PMI (Purchasing Managers Index), which increased to 61.5 from 58.7 in December, signalling higher industrial activity in the Midwest. The greenback eased 0.4% against the euro today, cooling off after the surge and propping up gold, which is seen as an alternative investment to the US currency. The yellow metal’s appeal as an inflation hedge increased last week after the Federal Reserve decided to leave the interest rates at near zero.
Gold may rise for first time in week as dollar spurs demand LONDON -- Gold, little changed in London Monday, may rise for the first time in a week as a pause in the dollar's rally spurs demand for the metal as an alternative investment . The dollar lost as much as 0.4 percent against the euro after earlier gaining to a six-month high. Gold, which typically moves inversely to the greenback, fell 1.1 percent last week, a third consecutive decline, as the dollar climbed 2 percent. “The U.S. currency is the key at the moment,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said Monday in a report. Still, “clear evidence of renewed and persistent physical buying” is needed for prices to rally, he said.
China is Still King of the Gold Hill By Rocky Vega - Daily Reckoning China produced over 300 tons gold in 2009, a new world record in output. Already, for the past three years, China has been the world’s largest producer ahead of South Africa, and now the massive nation is also on the verge of becoming the world’s leading gold consumer. According to Reuters: “China’s gold output jumped 11.34 percent to a record of 313.98 tonnes in 2009, the China Gold Association said on Thursday, securing the country’s position as the world’s largest producer of the yellow metal.
Precious Metals Next Rolling Bubble by Captain Hook, Financial Sense A point I wanted to make clear with respect to our discussion the other day is hyperinflation must be justified in the minds of the doers, having the political will of the people behind them. This is why we will need another round of financial crisis for public consumption, and we know from comments made earlier in the week the set-up is for a possible black swan event in summer, with stocks topping out no later than spring. What’s more, and as you will see below, it should be noted that a top in stocks could come sooner this time, possibly by options expiry this Friday if a blow-off continues, finally snapping the desire of speculators to continue accumulating bearish bets on stock averages in the form of puts.
Gold/Euro - Cup & Handle (continuation pattern) by Gary Tanashian, Financial Sense Aside from what I consider to be bullish fundamentals for gold in all major currencies, even as gold takes a much needed breather in USD, it looks technically compelling in Uncle Buck's chief competition in the toilet paper sweepstakes, the euro. The chart shows a textbook Cup & Handle, complete with the right side high of late November, '09 having exceeded the February, '09 high. I always like to see the right side (most recent) higher then the left (previous high) as this implies momentum and allows for a higher measured target, which in this case would be around 10 if and when the handle breaks consolidation to the upside. I say if because we do not try to predict, but rather show the probabilities. The probabilities, both fundamentally and technically say 'GOLD GOING WELL HIGHER IN EURO'.
Beware Counterfeiters By: Kevin Bambrough & David Franklin Long time readers know that we have written about gold many times over the last ten years, starting with an October 2001 article entitled “All that Glitters is Gold”. We first invested in the precious metal based on the belief that central bank sales were filling a fundamental supply deficit that existed in the gold market. We also wrote that if you believed in gold as a financial instrument you might envision a gold price appreciation of 45% to US$400 per ounce, or even higher, as investors sought to protect their wealth in the ‘bear market’ that followed the 2000 stock meltdown. What a difference nine years have made. In 2010, Central Banks are now close to becoming net buyers of gold while mine output continues to decline. With major indices returning nothing to investors over the last ten years it has been a lost decade for stocks but an excellent decade for gold.
Palladium: The Bullish Case Now Looks Even Stronger Russia's Norilsk Nickel Mine is the world's largest nickel mine, with its by-product, palladium, accounting for 45% of the world’s production. Recent termination of Russian government palladium stockpile sales, due to depletion of the stockpile, is just one of the reasons why palladium has extremely bullish supply/demand fundamentals, and why palladium performed the best among all four precious metals in 2009. Reduction of palladium production from the Norilsk Mine could further restrain the supply, and may prompt major industry users to panic hoard as they did in 2000/2001.
Treasuries Drop as Lawmakers May Dilute ‘Volcker Rule’ on Banks By Wes Goodman -- Feb. 2 (Bloomberg) -- Treasuries fell for a second day on speculation U.S. lawmakers will dilute President Barack Obama’s “Volcker Rule” plan to restrict U.S. financial institutions, easing concern the proposal would crimp the economy. The back-to-back decline comes as Paul Volcker, the former Federal Reserve chairman who has been advocating curbs on the size and trading activities of banks, prepared to testify before a Senate committee on the plan today. Obama’s proposal may be either significantly modified or dropped, DealReporter news service said, citing unidentified lawmakers and staffers.
Big Banks' Risky Trading Should be Curbed: Volcker By: Reuters White House adviser Paul Volcker will urge Congress to curb the risks taken by large banks to help prevent them from being treated as "too big to fail," according to testimony obtained by Reuters on Monday. Detailing a recent proposal known as "the Volcker rule," the former Federal Reserve Chairman will tell lawmakers that commercial banks' proprietary and speculative activities should not be protected by the government. He will also urge international consensus on "appropriate" actions to restrict commercial banks' activities.
US Deflation No Longer a Risk: Fed's Bullard By: Reuters The United States has escaped the danger of a Japanese-style deflationary trap, but it is not yet time to start tightening policy, St. Louis Federal Reserve Bank President James Bullard told the Financial Times. Bullard said in an interview published on Monday that his preoccupation throughout 2009 had been deflation, but the risk had "passed". At a Fed meeting last week, Thomas Hoenig, president of the Kansas City Fed and a rate hawk, argued financial conditions no longer warranted keeping rates exceptionally low for a prolonged period.
Decent Money by Warren Bevan Let’s ponder for a minute. What is money? Looking at an older 1986 copy of The World Book Encyclopedia tells me that money is three things. A medium of exchange. A medium of account. And what I’d like to briefly focus on, a store of wealth. Let’s take a look in our wallets now. Likely there are a few bills, but just as likely there is only a debit, and credit card. We’ll dismiss the credit card since it’s debt, which is NOT money no matter what your told. Looking at your bills you don’t have to think too far back to recall what that $20 could buy then, and now. A pack of cheap gum that only has flavour for five minutes is almost two dollars for crying out loud. So it seems quite simple, without getting into the confusion of the M’s, which are various forms of accounting for money printing, to surmise that the paper dollars do not hold wealth.
The Fed as Giant Counterfeiter Mises Daily: by Robert P. Murphy San Jose State economics professor Jeffrey Rogers Hummel tells all his students that the easiest way to understand the Federal Reserve is to think of it as a giant, legalized counterfeiter. I had always known that the Fed and other central banks were like counterfeiters, but I still thought that the actual mechanics of open-market operations and so forth actually provided some important distinctions.
Bernanke, debt limit, budget deficit, dollar
Repo market to escape planned US bank levy By Michael Mackenzie and Krishna Guha - FT The Obama administration plans to exclude a crucial part of the financial system from a proposed levy on banks’ administration, officials disclosed on Monday. Under the proposed financial crisis responsibility fee, banks would pay a fee of 15 basis points on all liabilities above $50bn (€36bn, £31bn) that are not already subject to an insurance premium paid to the Federal Deposit Insurance Corporation. That placed the $3,800bn US repurchase, or “repo”, market, in which securities are used as collateral for short-term loans, squarely in line for paying the fee.
Banks Gear Up for a Battle U.S. Takes Aim at Proprietary Trading, But Just What is It?; 'the Volcker Rule' By KATE KELLY - WSJ -- The showdown over the future of proprietary trading by U.S. banks is about to begin. One likely fight: defining exactly what proprietary trading is. Wall Street has been hungry for details ever since President Barack Obama proposed curbs last month that would limit the ways banks with insured deposits bet with their own capital. Some answers will emerge Tuesday at a Senate Banking Committee hearing where former Federal Reserve Chairman Paul Volcker is set to testify.
On the Origin of Big Bank Failures By Joel Bowman - Daily Reckoning . . . . One hundred and forty banks bit the dust in 2009…as did the FDIC itself, before it stuck its elongated, purpose-built snout back in to the government funding trough. In total, the assets of these collapsed institutions amounted to some $170 billion. The largest failures by assets were, in order: Colonial Bank ($25 billion), Guarantee Bank ($13 billion), BankUnited ($12.8 billion), AmTrust Bank ($12 billion) and United Commercial Bank ($11.2 billion). That’s pretty impressive. But c’mon! This is a depression. We can do better than that…
Swiss warn UBS bank could collapse Switzerland's justice minister warned in an interview on Sunday that top bank UBS could collapse if sensitive talks with the United States over a high-profile tax fraud investigation fall through. "The actions of UBS in the United States are very problematic. Not just because they are punishable but also because they threaten all of the bank's activities," Eveline Widmer-Schlumpf told Le Matin Dimanche newspaper. "The Swiss economy and the job market would suffer on a major scale if UBS fails as a result of its licence being revoked in the United States," she said.
Obama Proposes $3.8 Trillion Budget Focused on Jobs By Roger Runningen and Brian Faler Feb. 1 (Bloomberg) -- President Barack Obama’s $3.8 trillion fiscal 2011 budget puts an emphasis on job creation with $100 billion in additional stimulus spending, along with higher taxes for the wealthy in an attempt to narrow the deficit. The spending blueprint forecasts this year’s budget shortfall will hit a record $1.6 trillion, following a $1.4 trillion deficit in 2009. The 2011 deficit is predicted to be $1.3 trillion, with deficits remaining above $700 billion for the rest of the decade, according to the projections.
Obama's deficit soars amid job spending By Alister Bull and Jeff Mason WASHINGTON (Reuters) - U.S. President Barack Obama pledged on Monday to halve a record 2010 budget deficit by the end of his first term in office, but made tackling double-digit unemployment his immediate priority with a spending plan that risked public ire and a rough battle in Congress. Criticized by Republicans for raising taxes on wealthy Americans, Obama is under pressure to convince investors and vital creditors like China that he has a credible plan to control the U.S. deficit and debt over time.
Art Cashin: Markets Could Have Multi-Day Rally By: JeeYeon Park - CNBC News Associate Markets started the new month higher, but how long can the trend continue? Art Cashin, director of floor operations at UBS Financial Services, shared his insights. “We’re going to get a little bit of a reflex rally,” Cashin told CNBC. “We survived the weekend—Greece didn’t implode…It is a new month so pension funds and others preload a little money in and get started early in the month, so that will give the bulls a little bit of a bounce," he said. Cashin said the rally could last several days, as the markets were heavily oversold in the last few trading sessions. But it may not have strong underpinnings.
Obama Gives NASA More Money, Cuts Manned Trip to Moon By Alexis Madrigal - Wired The Obama administration has officially decided to end the Constellation mission back to the moon, although the replacement plan faces a tough route through Congress. The new plan, which had been rumored for months, was announced today with the release of the Obama administration’s NASA budget request, which despite the axing of the moon plan delivers a $6 billion funding increase over the next five years. “NASA’s Constellation program — based largely on existing technologies — was begun to realize a vision of returning astronauts back to the Moon by 2020. However, the program was over budget, behind schedule, and lacking in innovation due to a failure to invest in critical new technologies,” the budget summary concluded. “Using a broad range of criteria, an independent review panel determined that even if fully funded, NASA’s program to repeat many of the achievements of the Apollo era, 50 years later, was the least attractive approach to space exploration as compared to potential alternatives.”
Obama unveils $3.8T federal budget blueprint By Lori Montgomery and William Branigin - Washington Post -- The $3.8 trillion budget blueprint President Obama sent to Congress Monday calls for billions of dollars in new spending to combat persistently high unemployment and bolster a battered middle class. But it also would slash funding for hundreds of programs and raise taxes on banks and the wealthy to help rein in soaring budget deficits. "We will continue . . . to do what it takes to create jobs," Obama said Monday. To put people back to work, Obama proposes to spend about $100 billion immediately on a jobs bill that would include tax cuts for small businesses, social-safety-net programs, and aid to state and local governments. To reduce deficits, he would impose new fees on some of the nation's largest banks and permit a range of tax cuts to expire for families earning more than $250,000 a year, in addition to freezing non-security spending for three years.
In $3.8 Trillion Budget, Obama Pivots to Trim Future Deficits By JACKIE CALMES and JEFF ZELENY - NY Times President Obama sent Congress on Monday a proposed budget of $3.8 trillion for the fiscal year 2011, saying that his plan would produce a decade-long reduction in the deficit from $1.6 trillion this year, a shortfall swollen by $100 billion in additional tax cuts and public works spending that he is seeking right away. “We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax money of the American people can be treated like Monopoly money,” Mr. Obama said at the White House.
Obama Seeks $1.9 Trillion Tax Rise on Rich, Business By Ryan J. Donmoyer Feb. 1 (Bloomberg) -- The Obama administration wants to increase taxes on Americans earning more than $200,000 by almost $970 billion over the next decade and take in an additional $400 billion from businesses even as it retooled a proposed crackdown on international tax-avoidance techniques. The budget released today would reinstate 10-year-old income tax rates of 36 percent and 39.6 percent for single Americans earning more than $200,000 and joint filers who make more than $250,000 as part of a broad $1.9 trillion tax increase proposal. It proposes to eliminate preferences for oil and gas companies, life-insurance products, executives of investment partnerships and U.S.-based companies that operate overseas.
Obama’s Nightmare Team by Peter Navarro, Ph.D. - Financial Sense Stock market trend: Market in Correction The U.S. markets are in a major correction. If you see any bubblehead portfolio manager on TV telling you this is a great buying opportunity, know that this man/woman is merely a gambler rather than an intelligent speculator. For the foreseeable future, the market is a roulette wheel. Until the dust clears – that is, until market participants figure out the direction of the economy -- this is a good time to be in cash (and non-cyclicals like biotech).
Wells Fargo Shuns Carry-Trade By Dakin Campbell Braces for Risk of Higher Rates Feb. 1 (Bloomberg) -- Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments. The nation’s fourth-largest bank, whose biggest shareholder is Warren Buffett’s Berkshire Hathaway Inc., reduced investments in mostly fixed-income securities by $34 billion in 2009’s second half, company filings show. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. boosted their holdings by an average of $35.5 billion.
Demand of corporate loans in US falls By Francesco Guerrera and James Politi - FT US banks made it easier for big companies to borrow money for the first time since the crisis, but loan demand fell as corporate America remained worried about the economy, the Federal Reserve said on Monday in its quarterly loan-officers survey. The Fed report underlined banks’ growing desire to lend to companies at a time when politicians are calling on financial institutions to aid the economic recovery by extending credit to companies and consumers.
The economy grew, but were the numbers real? by Anthony Cherniawski - Financial Sense The economy in the U.S. expanded in the fourth quarter at the fastest pace in six years as factories cranked up assembly lines and companies increased investment in equipment and software. The 5.7 percent increase in gross domestic product, which exceeded the median forecast of economists surveyed by Bloomberg News, marked the best performance since the third quarter of 2003, figures from the Commerce Department showed today in Washington. Efforts to rebuild depleted inventories contributed 3.4 percentage points to GDP, the most in two decades. The problem with this calculation is that government spending is included in the calculations and government employees are counted twice! This skews the numbers, especially in a quarter that saw government intervention in the markets and an expansion of government jobs (at the expense of private employers).
Be Careful What Your Bumper Sticker Says By David Kravets - Wired "No More Blood For Oil.” Bumper stickers with that phrase were synonymous with opposition to the Iraq War, during the George W. Bush administration. Simply hosting that message on one’s bumper was cause enough to remove two attendees at Bush’s 2005 speech at the Wings Over the Rockies Museum in Colorado. The White House had a policy of excluding those who did not agree with the president from his public appearances. It’s a policy a federal appeals court is upholding in a decision a dissenting judge decried as “simply astounding.”
Obama Might Not Run in 2012 By John LeBoutillier Although it is way, way too early to even begin to think of 2012, it is possible that President Obama will not choose to run again in 2012. In fact, there is a 30% chance of this. Why? Because he already has planted the seed of possibility that he will simply walk away and not risk a humiliating defeat. Three times in recent interviews he has raised the possibility of “not running again” or, as he told Diane Sawyer this week, being a “good one-term President.” Why would a new President already float the idea that he might just chuck it all? Is it because he is scared of losing in 2012?
Is the Great Recession Over? Depends Who You Ask By PETER COHAN - Daily Finance America's most quoted economist, Mark Zandi, chief economist at Moody's Analytics, has a hot new quote: "The Great Recession is over." Zandi made the pronouncement on CBS News over the weekend. Although some analysts will agree, the economists at the National Bureau of Economic Research (NBER) might offer a different assessment. The NBER defines the beginnings and ends of recessions, and when it called the beginning of the current recession -- which began in December 2007, a date that was finally determined in December of 2008 -- it said that employment was the most important factor in defining the timing of the current slowdown: "The committee determined that the decline in economic activity in 2008 met the standard for a recession . . . . The 1.2 million drop in payroll employment so far this year was the biggest factor in determining the start of the contraction. . ."
For Fannie and Freddie, the Future Looks Cloudy By CHARLES DUHIGG - NY Times The Great Bailout is mostly over for the banks. But for those troubled behemoths of the nation’s housing bust, Fannie Mae and Freddie Mac, the lifeline from Washington just keeps getting longer. Fifteen months after Fannie and Freddie were effectively nationalized, neither the Obama administration nor Congressional leaders see a quick solution to one of the thorniest problems in American finance: how to fix the twin mortgage giants without choking the flow of credit to homeowners and dealing a blow to a still-fragile housing market.
Fed Says Fewer Banks Tightened Standards for Lending By Michael McKee and Joshua Zumbrun Feb. 1 (Bloomberg) -- Fewer banks tightened standards for loans to consumers and companies last quarter, a Federal Reserve report showed, as the economy grew at the fastest pace in six years. Banks continued to tighten the terms of loans they did make, and demand for both business and household loans weakened further over the past three months, the Fed said today in its quarterly survey of senior loan officers. “Commercial banks generally ceased tightening standards on many loan types in the fourth quarter of last year but have yet to unwind the considerable tightening that has occurred over the past two years,” the report said.
For Big Pharma, Is Breaking the Law the Price of Doing Business? By MELLY ALAZRAKI - Daily Finance -- The Food and Drug Administration says it has nearly doubled the number of warnings to drugmakers for questionable promotion since President Obama took office. The agency sent 41 enforcement letters 2009, up from 21 in 2008, Thomas Abrams, head of the FDA's Division of Drug Marketing, Advertising, and Communication (DDMAC), tells Reuters. In January alone, the FDA sent nine letters. But even as the FDA tries to regulate direct-to-consumer advertising of
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