Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 02.26.2010
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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Fri 02.19.2010
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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Wed 02.17.2010
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
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