Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Thursday 12.20.2012
Is There a Best Way to Return to a Gold Standard?
BY TERRY COXON - FinancialSense.com
Many of us see hair-curling rates of price inflation not too far down the road. Today inflation is hardly noticeable. But what's coming will be so painful and so disruptive that soaring prices will become the voting public's number-one complaint. How will the politicians respond?
They will be responding to an audience for whom the idea of fiat money (even with a picture of a dead president on every bill) has been discredited. The obvious alternative to fiat money will be a return to a gold standard, and it's hard to imagine what competing proposals might get in the way. In such an environment, being pro-gold will be politically smart. Championing the idea of re-linking the dollar to gold would serve any politician nicely as an I-dare-you-to-disagree challenge to his competitors. And supporting such a proposal would be a convenient way for politicians to distance themselves from the mistakes of the past.
Gold prices dip sharply; but TDS still sees $2,000 Gold in 2013
NEW YORK (Commodity Online): Global gold prices ended sharply lower on the Comex division of the New York Mercantile Exchange and reached a fresh three and half month low on Tuesday, but TD Securities still believes prices will reach new record high in 2013.
The most active February gold contract on the Comex division of the New York Mercantile Exchange last traded down $29.20 an ounce at $1,688.80. Spot gold was last quoted down $30.10 at $1,668.50. The gold market started to sell off in late-morning trading right about the time that U.S. House Speaker Boehner mentioned a "Plan B" on the fiscal cliff negotiations.
Confiscation of Gold - Then What? Part 2
BY JULIAN PHILLIPS - FinancialSense.com
There you sit with gold as a key investment. You did not want to trust the banks or gold ETF's or the derivatives market with your gold investments, despite the prospect of short-term gains. You want your gold for financial security in the face of economic collapse, or to supplement your needs, if hard times destroyed your other security. To make sure you were secure, you registered your gold in your name.
One of the questions you should contemplate is, "Is there really a danger of gold being confiscated?" We believe that there is. This is part of what we said in Part I of the series:
Morgan Stanley Redeems Paulson Investments:
Explanation For Recent Gold Liquidation?
by Tyler Durden - ZeroHedge.com
In key news that may well be the missing puzzle piece to explain some of the very odd market moves in the past week, we just learned courtesy of CNBC, that Morgan Stanley's Wealth platform unit has finally, after months and months of considerations, pulled the plug on the fund that for the second year in a row is one of the three worst performing in the weekly HSBC report and is now redeeming. That in itself is not unexpected. What however is notable is that MS withdrawing hundreds of millions in feeder capital may well explain why gold has seen such a dramatic dislocation in the past week. Recall that at Paulson & Co, gold is not simply an investment - the bulk of direct gold investments at the once legendary investor are in the form of (largely underperforming) gold mining stocks - but an actual investment class. In other words, instead of being denominated in USD, investors are actually denominated in (paper) gold, with a fixed conversion into GLD at inception. This means that upon liquidation of gold-denominated shares, any gold-denominated shares, he has no choice but to sell GLD, and by virtue of this being the most liquid paper instrument in the PM space, gold. Does the massive gold dislocation in the chart below now make more sense especially since Paulson was aware of MS' intentions days in advance and traded, or in this case liquidated, appropriately)?
John Williams: We're Going to be in a New Recession in 2013
John Williams of Shadowstats.com has long contended the Fed is really just using the weak economy to continue to prop up the banking system. Williams says, "If the Fed wasn't doing what it's doing . . . I'd presume you'd be on the road to a banking system collapse. The banking system is still in trouble." Williams warns the "open-ended" printing of $85 billion a month ". . . will be part of what will eventually become hyperinflation." And if there is no deal on the so-called "fiscal cliff," then Williams expects "heavy selling pressure on the U.S. dollar."
U.S. "fiscal cliff" talks turn sour, Obama threatens veto
By Matt Spetalnick and Mark Felsenthal
WASHINGTON | Wed Dec 19, 2012 8:25pm EST
(Reuters) - Talks to avoid a U.S. fiscal crisis stalled on Wednesday as President Barack Obama accused opponents of holding a personal grudge against him while the top Republican negotiator called the president "irrational."
As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.
Fitch Says U.S. Debt Downgrade Possible
By Paul Ausick - 247WallSt.com
In its latest review of sovereign debt, Fitch Ratings warns that continuing weakness in the developed economies and the threat that the U.S. will tumble over the fiscal cliff are having a negative effect on global sovereign credit quality. The impact is also spilling over into emerging market debt, which are exposed to the weakness in developed nations' economies.
What Causes Hyperinflations
And Why We Have Not Seen One Yet
by Martin Sibileau - ZeroHedge.com
What causes hyperinflations? The answer is: Quasi-fiscal deficits (A quasi-fiscal deficit is the deficit of a central bank)! Why have we not seen hyperinflation yet? Because we have not had quasi-fiscal deficits! Essentially, hyperinflation is the ultimate and most expensive bailout of a broken banking system, which every holder of the currency is forced to pay for in a losing proposition, for it inevitably ends in its final destruction. Hyperinflation is the vomit of economic systems: Just like any other vomit, it's a very good thing, because we can all finally feel better. We have puked the rotten stuff out of the system.
Watching Your Money Disappear
BY DETLEV S SCHLICHTER - FinancialSense.com
….The money itself may not in fact disappear (although some of it probably will) but money's value will disappear, moneys purchasing power. This will not be the result of an act of magic but will simply be the consequence of our monetary arrangements and the established course of policy. Future historians will be surprised that anybody could have seriously contemplated a different and much happier outcome for today's system of unconstrained fiat money production.
Should Central Banks Target Employment?
By Kemal Derviş - Project-Syndicate.org
WASHINGTON, DC – On December 12, US Federal Reserve Chairman Ben Bernanke announced that the Fed will keep interest rates at close to zero until the unemployment rate falls to 6.5%, provided inflation expectations remain subdued. While the Fed's governing statutes, unlike those of the European Central Bank, explicitly include a mandate to support employment, the announcement marked the first time that the Fed tied its interest-rate policy to a numerical employment target. It is a welcome breakthrough, and one that should be emulated by others – not least the ECB.
Do We Have Another Bubble On Our Hands?
By Michael Sivy - TIME.com
More than two years ago, economists started talking about a bubble in Treasury bonds that would eventually burst, just as the dot.com bubble and the housing bubble had. If that happens, the prices of long-term bonds could fall by 10% to 20%. So far, that bond bust hasn't materialized. But one of the characteristics of bubbles is that they often go on longer than anyone expects. What is most troubling now is that the problem is spreading beyond Treasuries. Excessive borrowing and ultra-low interest rates are now distorting all the debt markets. As a result, there is no longer just one bubble – there are many.
World Bank fears fresh credit bubble in China on hot money flows China and Asia's tigers are roaring back to life and risk a fresh credit booms unless they can choke inflows of hot money, the World Bank has warned.
By Ambrose Evans-Pritchard - Telegraph.co.uk
The Far East has shaken off the deep downturn earlier this year and looks poised to drive a fresh cycle of global growth in 2013. "China appears to have bottomed out," said the Bank in its regional report.
Asia's powerhouse economy will rebound with 8.4pc growth next year as credit stimulus and an infrastructure blitz by local governments gain traction, with knock-on effects through East Asia. The region as a whole will grow by 7.9pc, with Myanmar at last starting to catch up as undertakes "formidable reforms".
UBS Libor Traders Face Criminal Charges for 'Getting Rich'
Bloomberg News - MoneyNews.com
UBS AG's $1.5 billion fine for rigging global interest rates expands the scandal to include bribery of brokers and U.S. criminal charges against two former traders.
Tom Alexander William Hayes and Roger Darin were charged with conspiracy in a criminal complaint unsealed Wednesday, the U.S. Justice Department said. Hayes also was charged with wire fraud and a price-fixing violation for activity with another bank aimed at manipulating the London Interbank Offered Rate, the department said.
Developing Economies' Long-Term Financing Shortfall
By Mahmoud Mohieldin - Project-Syndicate.org
WASHINGTON, DC – Since the global financial crisis, "banking" has practically become a swear word. But, while banks undoubtedly have the capacity to inflict serious damage on economies and livelihoods, a well-run financial system can offer significant benefits. A growing body of evidence, highlighted in the World Bank Group's recent Global Financial Development Report,shows that financial institutions and markets have a profound influence on economic development, poverty alleviation, and the stability of economies worldwide, and that a pragmatic assessment of the state's role in finance is warranted.
Models Behaving Badly
By Robert Skidelsky - Project-Syndicate.org
LONDON – "Why did no one see the crisis coming?" Queen Elizabeth II asked economists during a visit to the London School of Economics at the end of 2008. Four years later, the repeated failure of economic forecasters to predict the depth and duration of the slump would have elicited a similar question from the queen: Why the overestimate of recovery?
Consider the facts. In its 2011 forecast, the International Monetary Fund predicted that the European economy would grow by 2.1% in 2012. In fact, it looks certain to shrink this year by 0.2%. In the United Kingdom, the 2010 forecast of the Office for Budget Responsibility (OBR) projected 2.6% growth in 2011 and 2.8% growth in 2012; in fact, the UK economy grew by 0.9% in 2011 and will flat-line in 2012. The OECD's latest forecast for eurozone GDP in 2012 is 2.3% lower than its projection in 2010.
Uncle Sam Books 50% Loss As Government Motors
Buys Back 200MM Shares From Tim Geithner
Submitted by Tyler Durden - ZeroHedge.com
A few days after divesting its stake in the firm that started it all, AIG, and at a profit at that (ignoring that the risk has merely been onboarded by the Fed whose DV01 is now $2+ billion as a result), the US Treasury continues to divest of all its bailout stake, this time proceeding to GM, where the channel stuffing firm just announced it would buyback 200MM shares from the US government at a price of $27.50. More importantly, the "Treasury said it intends to sell its other remaining 300.1 million shares through various means in an orderly fashion within the next 12-15 months, subject to market conditions. Treasury intends to begin its disposition of those 300.1 million common shares as soon as January 2013 pursuant to a pre-arranged written trading plan. The manner, amount, and timing of the sales under the plan are dependent upon a number of factors." Assuming a price in the $27.50 range, this implies a nearly 50% loss on the government's breakeven price of $54. So much for the "profit" spin. One hopes all those Union votes were well worth the now booked $40+ billion cost to all taxpayers.
GM to buy stake from Treasury; government may lose billions
By Ben Klayman
Wed Dec 19, 2012 4:07pm EST
(Reuters) - The U.S. Treasury plans to sell its stake in General Motors Co (GM.N) over the coming year, all but assuring a multibillion-dollar loss in a move that will end the automaker's "Government Motors" era.
Treasury's plan - a two-step process that includes a $5.5 billion stock sale to GM - is part of a broader push to wind down the controversial financial bailout under the Troubled Asset Relief (TARP) program. TARP was created by former president George W. Bush to prevent the collapse of the U.S. banking industry during the 2007-2009 financial crisis.
GM to produce next-generation Camaro in Michigan
By Allison Martell
Wed Dec 19, 2012 3:32pm EST
(Reuters) - General Motors Co (GM.N) will produce the next generation of Chevrolet Camaro in Lansing, Michigan, not at the plant in Oshawa, Ontario, where it currently assembles the sports car, the company said on Wednesday.
While the move is a fresh setback for workers at GM's Oshawa operation, where employment has dwindled over the last decade, it's a win for Michigan's hard-hit auto sector.
Keiser Report: Monetized Genocide (E381)
In this episode, Max Keiser and Stacy Herbert look at central banking monkeys performing cannonballs into the global dark pools, the backlash against quantitative easing and the Queen ticking orf the Bank of England. In the second half, Max Keiser talks to economist Sandeep Jaitly of FeketeResearch.com about silver backwardation and a monetary path that will throw us *all* into such poverty that none of us will be able satisfy our ends.
Pew Survey: 55% of Americans
Have Received Major Entitlements
By Dan Weil - MoneyNews.com
A 55 percent majority of American citizens have received payments from the biggest government entitlement programs at some point in their lives, according to a new Pew Research Center survey of 2,511 adults.
Those programs include unemployment compensation, Social Security, Medicare, food stamps, Medicaid and welfare.
If veterans benefits and college loans and grants are included, the total rises to more than 70 percent.
IRS: Two-thirds of returns could face delay without 'cliff' deal
By Bernie Becker - TheHill.com
Perhaps two-thirds of tax returns could be delayed next year unless Washington reaches a "fiscal cliff" deal, the IRS told congressional tax writers on Wednesday.
Steven Miller, the acting IRS commissioner, told the lawmakers that 80 million to 100 million returns would not be filed on time in 2013 if lawmakers fail to pass legislation ensuring that the Alternative Minimum Tax does not expand to more middle-class families.
That's because, Miller said, the tax-collecting agency has assumed that Congress would act, and would need to make "significant programming changes" if it does not.
Reality economics
A review of Norbert Häring and Niall Douglas, Economists and the Powerful (London: Anthem Press, 2012).
By Michael Hudson
"Whom the gods would destroy, they first make mad." And if they would destroy economies, they first create a wealthy class on top, and let human nature do the rest. The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, power elites lock in their position in ways that exclude and injure those below. Turning government into an oligarchy, the wealthy indebt and shift the tax burden onto the less powerful.
It is an ancient tale. The Greeks got matters right in seeing how power leads to hubris, bringing about its own downfall. Hubris is the addiction to wealth and power, an arrogant over-reaching that involves injury to others. By impoverishing economies it destroys the source of profits, interest, capital gains, and even recovery of the original savings and debt principal.
Postal employees stole millions in federal checks
Georgia supervisor, coworker and four others cashed 1,300 U.S. Treasury checks before authorities caught them. More than 171 Postal workers arrested in 2012
BY PHILLIP SWARTS - WashingtonGuardian.com
Neither snow nor rain nor heat nor gloom of night could stop these postal employees from stealing checks.
The former supervisor at an Atlanta mail distribution facility, a coworker and four others pled guilty this month to stealing $3 million in U.S. Treasury checks, including veterans benefits, tax refunds and Social Security checks. By the time authorities figured out the scheme, the small theft ring had stolen or cashed 1,300 federal checks, officials said.
20 Signs That The U.S. Poverty Explosion
Is Hitting Children And Young People The Hardest
By Michael Snyder - TheEconomicCollapseBlog.com
The mainstream media continues to insist that the economy is "getting better", but the poverty numbers for children and young people just continue to explode. For example, did you know that the poverty rate for families with a head of household under the age of 30 is a whopping 37 percent? Children and young people sure didn't cause our recent economic downturn, but they sure are getting hit the hardest by it. According to the U.S. Department of Education, for the first time ever more than a million U.S. public school students are homeless. That seems like an impossible number, but it is actually true. How in the world could the "wealthiest nation on earth" get to the point where more than a million children can't count on a warm bed to sleep in at night? Sadly, a huge number of American children can't count on a warm dinner either. About a fourth of them are enrolled in the food stamp program. What do you do if you are a parent in that kind of situation? How do you explain to your kids that you can't afford a nice home like everybody else has or that you can't afford to go to the grocery store and buy them some dinner?
Gerald Celente - National Intel Report - December 18, 2012
Gerald talks on Trend Forecasting and how the government is using the Newtown shootings as a way to implement gun control, the way the media has portrayed the shootings and information that is not being discussed on the shootings.
We've Nationalized the Home Mortgage Market. Now What?
By Jesse Eisinger - ProPublica.com
At the height of the 2008 financial crisis, the country heatedly debated whether to nationalize the failing banking system. Both the George W. Bush and Barack Obama administrations rejected that path as excessive government intrusion into the marketplace.
Yet since then, with little planning and paltry public discussion, the government has almost completely taken over the American home mortgage market. Banks and other for-profit financial services companies lend money to homeowners, but without the guarantees and other support the government provides, the housing market would barely be functioning now.
US Oil Production Increases
by Largest Amount since Records Began
By Charles Kennedy - OilPrice.com
Seven years ago George W. Bush declared that, "America is addicted to oil, much of which is imported from unstable parts of the world."
That statement is certainly not true now. Eager to make the most of consistently high oil prices, oil companies have set up 1,432 rigs this year in the US, the most since records began in 1987. According to the Department of Energy this has led the US to increase its oil production capacity by 766,000 barrels a day, to a total volume of 6.41 million barrels a day, the highest level in 15 years and the largest increase in production since the first well was drilled back in 1859. Petroleum imports have fallen by 38 percent, now accounting for 41 percent, down from 60 percent, and proof that the US is moving closer to energy independence.
He Says He Wants Us to Change How might that be?
By AARON GOLDSTEIN - Spectator.org
I have no doubt that the people who assembled at Newtown High School found comfort in President Obama's words on Sunday night.
But make no mistake (as Obama is so fond of saying). The President didn't only come to Newtown to pay his respects to those who were gunned down at Sandy Hook Elementary last Friday morning. He also came to lecture the nation and to save us from ourselves:
This is our first task — caring for our children. It's our first job. If we don't get that right, we don't get anything right. That's how, as a society, we will be judged.
The Bullying Left Exploits Sandy Hook
By Ben Shapiro - PatriotPost.us
The horror of the massacre of innocents at the Sandy Hook Elementary School in Newtown, Conn. struck at the fabric of the American tapestry. Virtually every American has spent the last few days in a haze -- shocked at the nature of evil, confused and frustrated by the inability to prevent such an atrocity, fearful at the possibility of such a monstrous occurrence repeating itself.
It is only natural in such times to discuss what we can do differently to prevent such things from happening. Nobody wants to see dead children, grieving parents or bullet-riddled schools. Nobody. We may disagree about what the proper solutions are, but we all want solutions.
Is Wall Street Abandoning Gun Manufacturers?
By Christopher Matthews - Time.com
There have been clear signs this week that after the tragedy in Newtown, Conn., the balance of power in the debate over gun control is shifting. Pro-gun Democrats with stellar ratings from the NRA like West Virginia Senator Joe Manchin and Viriginia Senator Mark Warner came out in favor of increasing federal restrictions on gun ownership, while Republicans like Iowa Senator Charles Grassley and ten-term Republican Representative Jack Kingston of Georgia both agreed that Congress should at least consider tightening gun control as part of a broader effort to curb gun violence, according to the Associated Press.
Wal-Mart Stores Sell Out Of Guns
by Tyler Durden - ZeroHedge.com
Yesterday, when we described the unprecedented surge in gun sales in the aftermath of the Newtown massacre, we said that "what is most ironic, is that it is precisely the fear of forced, unilateral rejection, by either or all three branches of government, of the original constitution and its various amendments that has Americans scrambling into gun stores. And thus the closed loop nature of the problem: by threatening to take away America's guns, the government is only exacerbating a problem that is steeped in 200+ years of history and is engrained deep in American psychology." It took about 24 hours to demonstrate just how counterproductive government intervention always is: as of this moment, Bloomberg reports, Wal-Mart, the biggest retailer in the US and the world, has stores in at least five states where guns are now completely out of stock.
Fewer Guns, More Crime It is time to put liberal posturing aside.
By PETER FERRARA - Spectator.org
To President Obama, the word "politics" means anyone who disagrees with him, as in the phrase "It is time to put politics aside." Whenever he says that, he is really saying "It is time to put aside anyone who disagrees with me on this issue."
Our hearts are all still hurting over the mass shooting and murder of 20 innocent small children at the Sandy Hook Elementary School in Newtown, Connecticut. But it was in the same breath as the announcement of the tragedy that President Obama's all politics all the time ideological warriors inserted their politics, seeking to exploit the deaths of these small children for their ideological and political gain. For them, such gain means liquidating even more of the liberties and even constitutional rights of all Americans who had nothing to do with the mass shooting.
2012 Person of the Year: Barack Obama, the President
By Michael Scherer - Time.com
Twenty-seven years after driving from New York City to Chicago in a $2,000 Honda Civic for a job that probably wouldn't amount to much, Barack Obama, in better shape but with grayer hair, stood in the presidential suite on the top floor of the Fairmont Millennium Park hotel as flat screens announced his re-election as President of the United States. The networks called Ohio earlier than predicted, so his aides had to hightail it down the hall to join his family and friends. They encountered a room of high fives and fist pumps, hugs and relief.
The end is near — for Mayan calendar bunk
By Patrick Hruby-The Washington Times
Citizens of the world, exhale. Contrary to a ballyhooed ancient Mayan prophecy that has spawned everything from Chinese doomsday cults to Hollywood special effects extravaganzas to dire warnings that Earth is on a collision course with the mystery world of Nibiru, our planet will not come to an apocalyptic finale Friday.
But the ancient Mayas predicted
Maya apocalypse and Star Wars collide in Guatemalan temple
By Mike McDonald
TIKAL, Guatemala | Tue Dec 18, 2012 3:41pm EST
(Reuters) - At the center of the rebel base where Luke Skywalker took off to destroy the Death Star and save his people from the clutches of Darth Vader, Guatemala is preparing for another momentous event: the end of an age for the Maya.
Deep inside the Guatemalan rainforest stand the ruins of the Maya temples that George Lucas used to film the planet Yavin 4 in the movie "Star Wars," from where Skywalker and his sidekick Han Solo launched their attack on the Galactic Empire's giant space station.
Dec. 21, 2012: Fearful 'end of world' callers flood NASA
By Kate Mather - LATimes.com
If there's one government agency really looking forward to Dec. 22, it's NASA.
The space agency said it has been flooded with calls and emails from people asking about the purported end of the world — which, as the doomsday myth goes, is apparently set to take place on Dec. 21, 2012.
The myth might have originated with the Mayan calendar, but in the age of the Internet and social media, it proliferated online, raising questions and concerns among hundreds of people around the world who have turned to NASA for answers.
Egypt's New Pharaoh
By Chris Hedges - Truthdig.com
When Ayatollah Ruhollah Khomeini returned to Iran after 14 years in exile on Feb. 1, 1979, he set out to destroy the secular opposition forces, including the Communist Party of Iran, which had been instrumental in bringing down the shah. Khomeini's declaration of an Islamic government, supported by referendum, saw him rewrite the constitution, close opposition newspapers and ban opposition groups including the National Democratic Front and the Muslim People's Republican Party. Dissidents who had spent years inside Iran's notoriously brutal prison system under the shah were incarcerated once again by the new regime. Some returned to their cells to be greeted by their old jailers, who had offered their services to the new regime.
Inside the Ring: U.S. warns China on North Korea
By Bill Gertz-The Washington Times
The State Department is pressuring Beijing about its communist ally North Korea following failed efforts to halt the recent rocket launch that proved to be Pyongyang's first successful long-range missile test.
According to a Western intelligence official, the State Department sent a diplomatic protest note to China after the Dec. 12 launch that placed a non-functioning satellite into orbit.
