Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Thursday 01.24.2013
Germans think gold is money… Central Banks Repatriate Gold:
How Will This Affect Investors?
By Bernice Napach - Finance.Yahoo.com
Gold is rebounding. News that the Bank of Japan set a 2% inflation target and is buying 13 trillion yen worth of assets ($146 billion) rallied gold prices Tuesday, to near a one-month high of $1,697.80 set last week.
That's not surprising since gold, more than any other commodity, rises and falls along with changing government policies globally.
Davos leaders uneasy over glut of easy money
By Paul Taylor
DAVOS, Switzerland | Tue Jan 22, 2013 12:57pm EST
(Reuters) - The world is awash in easy money, with consequences that are starting to worry some central bankers and business leaders at the DavosWorld Economic Forum (WEF), though so far inflation fears seem overdone.
With developed world government finances constrained by huge debts and deficits, central banks have pumped trillions of dollars into the system to try to revive sluggish economies, combat deflation and prop up weak banks.
The Unloved Dollar Standard
By Ronald McKinnon - Project-Syndicate.org
PALO ALTO – Since World War II's end, the US dollar has been used to invoice most global trade, serving as the intermediary currency for clearing international payments among banks and dominating official foreign-exchange reserves. This arrangement has often been criticized, but is there any viable alternative?
The problem for post-WWII Europe, mired in depression and inflation, was that it lacked foreign reserves, which meant that trade carried a high opportunity cost. To facilitate trade without requiring payment after each transaction, the Organization for European Economic Cooperation created the European Payments Union in 1950. Supported by a dollar-denominated line of credit, the EPU's 15 Western European member states established exact dollar exchange-rate parities as a prelude to anchoring their domestic price levels and removing all currency restrictions on intra-European trade. This formed the keystone of the hugely successful European Recovery Program (the Marshall Plan), through which the US helped to rebuild Europe's economies.
"We're going to kill the dollar" The Fed's Plan B
by MIKE WHITNEY - CounterPunch.org
"How do you solve a problem when you're running a 10% fiscal budget deficit? You are not going to get growth without private sector credit demand. The government's idea right now is that we're going to export our way out of this, and when I asked a senior member of the Obama administration last week how are we going to grow exports if we will not allow nominal wage deflation? He said, "We're going to kill the dollar." Kyle Bass interview.
House approves debt-limit extension,
presses Senate to pass budget
By Pete Kasperowicz - TheHill.com
The House on Wednesday approved a bill extending the nation's debt limit, raising pressure on the Senate to pass its first budget in nearly four years.
The House approved the No Budget, No Pay Act, which also includes a measure withholding senators' pay until they complete that work, in a 285-144 vote.
Among Republicans, 33 voted against it to protest the absence of specific spending cuts alongside suspending the nation's borrowing limit. But they were more than offset by the 86 Democrats who voted for the measure.
Senate Dems to move budget through committee
for first time in four years
By Erik Wasson - TheHill.com
Senate Democrats on Wednesday said they will move a budget resolution through the Budget Committee and onto the Senate floor for the first time in four years.
Senate Budget Committee Chairwoman Patty Murray (D-Wash.) said the decision had nothing to do with the House's debt-ceiling bill, which would withhold senators' pay if they failed to pass a budget by April 15. The "no budget, no pay" bill is scheduled for a vote on Wednesday.
"No Budget No Pay" Passes the House,
Minus 33 Republican Votes
By David Weigel - Salon.com
It's a statement of just how driven the current House GOP conference is that the vote for "No Budget, No Pay," the some-strings-attached debt limit hike, was treated like a landslide. Only 33 Republicans opposed it. Had Democrats withheld their votes, as they did on "Plan B" and other Boehner-saving measures, the bill would have gone down. But 86 of them voted with Boehner (68 more than needed) and the bill passed.
Deficits Ain't Debt
by Bruce Krasting - ZeroHedge.com
Lots of talk about "deficits" of late. I'm not sure what a deficit really means. Consider the Clinton years. The economy was good, there were no wars or disasters, the deficits were small, there were a few years where there was a budget surplus. - Aaaah - The debt exploded during those "good" years. The cumulative deficit for the Clinton years was only $327Billion, but the debt rose by $1.56 Trillion (475% more debt than deficits).
The deficit is a component of the debt. But it is not the only driver of debt. The following chart is the difference between the reported deficit, and the increase in debt going back to 2000.
Has The Debt Jubilee Already Started?
BY JOHN RUBINO - FinancialSense.com
There are three fairly radical ideas floating around the monetary policy world right now. The first is economist Ellen Brown's belief that governments should stop borrowing money and simply create the currency they need, thus bypassing central banks and government bond markets. The second is Australian economist Steve Keen's debt jubilee, in which governments give newly-created money to individuals with which to pay back their debts, in the process resetting the system with lower leverage. The third is that trillion dollar platinum coin thing, where Washington just conjures that much money out of thin air and uses it to evade statutory debt limits — which looks like an ad hoc mash-up of the first two ideas.
Take the money and run... Withdrawn: $114 Billion From Big U.S. Banks
By Nick Summers - Businessweek.com
More than $114 billion exited the biggest U.S. banks this month, and nobody's quite sure why.
The Federal Reserve releases data on the assets and liabilities of commercial banks every Friday. The most current figures, covering the first full week of 2013, show the largest one-week withdrawals since the Sept. 11, 2001, attacks. Even when seasonally adjusted, the level drops to $52.8 billion—still the third-highest amount on record, and one for which bank experts and analysts were reluctant to give a definitive explanation.
Oldest Bank In The World Plunges, Halted
As Chairman Resigns In Aftermath Of Latest Derivatives Fiasco
by Tyler Durden - ZeroHedge.com
Last week, following documentation from Deutsche Bank (and Nomura), it became clear that Italy's Monte Paschi (BMPS) bank (the oldest in the world) has engaged in derivatives with the German and Japanese banks in order to save itself during the financial crisis. The derivatives, according to Bloomberg, were done off-market and allowed the booking of large upfront gains which covered losses optically that the bank faced as European liquidity dried up completely - the offsetting 'losses' are now coming due. Today, amid growing outcry over the 'deal', the former head of BMPS has resigned. Bloomberg reports that Giuseppe Mussari, now Italy's top banking lobbyist, was the Chairman of BMPS during the derivative deal period. BMPS shares were halted after plunging dramatically as investors are still unclear of the extent of losses it faces on derivatives. If that was not enough chicanery, there is a twist in that none other than Mario Draghi, as Director of the Bank of Italy, would have had to vet Mussari (and his banks' regulated books) during this period - as BMPS accumulated what is obviously undocumented derivatives positions to intentionally obscure losses. Once again, years later, it seems the truth comes out - and of course we would expect no-one to go to jail - and the lying in Europe (then and now) continues unabated - as the reality of financial system health remains hidden from view.
The Tangled Relationship Between Wealth & Money And why we're focusing on the wrong economic 'fixes'
by John Michael Greer - PeakProsperity.com
….Money is a system of abstract tokens that complex societies use to manage the distribution of goods and services, and that's all it is. Money can consist of lumps of precious metal, pieces of paper decorated with the faces of dead politicians, digits in computer memory, or any number of other things, up to and including the sheer make-believe that underlies derivatives and the like. Important differences separate these various forms of money, depending on the ease or lack of same with which they can be manufactured, but everything that counts as money has one thing in common – it has only one of the two kinds of economic value.
Art Cashin On The Only Sane Voice At The Fed
by Tyler Durden -ZeroHedge.com
We have discussed Dallas Fed's Richard Fisher's money-where-his-mouth-is perspective on the world before and the (sadly) non-voting member is among UBS' Art Cashin's most respected and candid of the FOMC. A glance through the transcripts that Art highlights below should both make readers sick at the constant pollyanna-ish nature of Fisher's comrades and perhaps more confident that his insights will be listened to more astutely 'the next time' as he noted at the time "No amount of rewriting of history will exonerate us". Once again, after reading these transcripts, do we really believe that central bankers are omnipotent? or incompetent?
Cameron Calls for Referendum on Europe
U.K. Prime Minister David Cameron said he will seek a mandate to renegotiate Britain's relationship with the European Union at the next election in 2015 and will then call a referendum on membership of the EU in 2017 if he wins. Heard on the Street's Simon Nixon explains
David Cameron's Euro-Nemesis
By Peter Sutherland - Project-Syndicate.org
LONDON – Unlike some in Britain's Conservative Party, Prime Minister David Cameron has not previously given the impression of being obsessed with Europe. He demonstrated no enthusiasm for the European Union, but he appeared clearly less exercised by its supposed iniquities than many Tories are.
This view of Cameron's position is now difficult to sustain. His long-gestating speech on Europe, although containing elements that many might share, also sows the seeds for a prolonged and acrimonious debate – and not just in Britain. Conservatives in the House of Commons (and in the wider party) want to be reassured that their leader shares their antagonism for the entire European integration process. They have not forgotten or pardoned his "treachery" in refusing to hold a referendum on the Lisbon Treaty, signed by his predecessor, Gordon Brown. With his speech, that reassurance may now have been given.
Merkel hints at European deal for Cameron Angela Merkel has said she is prepared to consider renegotiating Britain's membership of the EU in the wake of David Cameron's landmark speech pledging an in-out referendum by 2017.
By Robert Winnett - Telegraph.co.uk
The Prime Minister wants to negotiate the return of some powers from Brussels to Britain, possibly within a new treaty.
The revised relationship would then be the subject of a referendum in which Mr Cameron would campaign for Britain to remain a member — if the Conservatives win the next election.
The Untouchables:
How the Obama administration
protected Wall Street from prosecutions A new PBS Frontline report examines a profound
failure of justice that should be causing serious social unrest
By Glenn Greenwald - Guardian.co.uk
PBS' Frontline program on Tuesday night broadcast a new one-hour report on one of the greatest and most shameful failings of the Obama administration: the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering. What this program particularly demonstrated was that the Obama justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable.
Goldman Sachs Not Liable for Failed $580 Million Deal
By Janelle Lawrence - Bloomberg.com
Goldman Sachs Group Inc. (GS) won a $580 million negligence suit over its role as adviser to speech- recognition pioneer Dragon Systems Inc. in a doomed merger, one of its biggest victories in a string of claims by dissatisfied clients since the financial crisis.
A federal jury in Boston today rejected the claims of Dragon's founders Jim and Janet Baker and two other shareholders that Goldman Sachs failed to properly vet Belgium-based Lernout & Hauspie Speech Products NV. The all-stock deal in June 2000 was rendered worthless months later when the fraud at Lernout & Hauspie was exposed and the company filed for bankruptcy.
Goldman Sachs Made $400 Million
Betting On Food Prices In 2012
While Hundreds Of Millions Starved
By Michael Snyder - TheEconomicCollapseBlog.com
Why does it seem like wherever there is human suffering, some giant bank is making money off of it? According to a new report from the World Development Movement, Goldman Sachs made about 400 million dollars betting on food prices last year. Overall, 2012 was quite a banner year for Goldman Sachs. As I reported in a previous article, revenues for Goldman increased by about 30 percent in 2012 and the price of Goldman stock has risen by more than 40 percent over the past 12 months. It is estimated that the average banker at Goldman brought in a pay and bonus package of approximately $396,500 for 2012. So without a doubt, Goldman Sachs is swimming in money right now. But what is the price for all of this "success"? Many claim that the rampant speculation on food prices by the big banks has dramatically increased the global price of food and has caused the suffering of hundreds of millions of poor families around the planet to become much worse. At this point, global food prices are more than twice as high as they were back in 2003. Approximately 2 billion people on the planet spend at least half of their incomes on food, and close to a billion people regularly do not have enough food to eat. Is it moral for Goldman Sachs and other big banks such as Barclays and Morgan Stanley to make hundreds of millions of dollars betting on the price of food if that is going to drive up global food prices and make it harder for poor families all over the world to feed themselves?
Keiser Report: Threshold of Tyranny Passed
(E396, ft. Alex Jones)
In this episode, Max Keiser and Stacy Herbert discuss the closing of the American mind as intellectual troublemakers like Aaron Swartz are locked up for decades rather than set free to innovate. They look at the two tier justice system in which these intellectual troublemakers are persecuted while political benefactors on Wall Street are allowed to commit an endless array of financial crimes without any fear of prosecution. In the second half of the show, Max Keiser talks to Alex Jones about his appearance on Piers Morgan's show on CNN. They also discuss the targeting of activists and the role of new media taking on the dinosaurs of media.
The Conventional Wisdom
About Government Health Care Spending Is Wrong
By Derek Thompson - TheAtlantic.com
This sentence is a pithy summary of the centrist conventional wisdom about taxes, spending, debt, and health care:
"The political impasse facing the U.S. arises from one simple reality: Americans want an increasing government contribution to health care, but don't want to pay for it."
That's James Hamilton, an economic professor at the University of California, San Diego, at his excellent Econbrowser blog. It's an utterly reasonable-sounding judgment that can lead you to the wrong conclusion. Health care isn't just a government spending problem. It's an everybody's-spending problem.
The Real Reason for the Decline of American Unions
By Kris Warner - Bloomberg.com
Today, the Bureau of Labor Statistics released its annual summary of unionization in the U.S. It reports that in 2012, the union-membership rate of wage and salary workers was 11.3 percent, compared with 11.8 percent in 2011. The trend has been downward for some time: Fifty years ago, the figure was almost 30 percent.
It's conventional wisdom that the post-industrial workforce doesn't want to be unionized. Butsurvey data show that workers' desire to join unions has been growing since the 1980s, and a majority of nonunion workers would now vote for union representation if given the opportunity. So if workers want unions, why is unionization falling?
The Unexpected Boom in US Oil Production
By Robert Rapier - OilPrice.com
A few years ago, I made the observation that the best thing that could happen to mitigate against some of the potentially severe consequences of peak oil was for oil prices to rise, and remain high in the years before oil production peaked. That would have the effect of encouraging conservation, as people adapted to a world in which oil is no longer cheap. High oil prices would also incentivize oil production, which would have the effect of preventing steep declines in global oil production — which some had predicted would lead to severe economic crisis or possibly economic collapse.
We have certainly seen both conservation and increased oil production, but I have been really surprised by some of the details of how it has happened.
Can OPEC Maintain High Oil Prices into the Future?
By Joao Peixe - OilPrice.com
OPEC is probably the single most powerful organisation in the oil industry, able to influence the price of oil to help its member states; however a review by Bassam Fattouh and Lavan Mahadeva of the Oxford Institute for Energy Studies suggests that whilst OPEC is able to influence prices in the short term, it has less success over the long term.
That leaves the question as to whether OPEC will be able to maintain oil prices of around $110 a barrel for the coming decade or so? The answer … unlikely.
Obama Once Again Delays Keystone XL Decision
By Charles Kennedy - OilPrice.com
In an ever increasing show of cowardice President Barack Obama has once again avoided making any decision about the fate of the Keystone XL pipeline, instead deciding to delay his verdict until later in the year.
Obama has always promoted himself as a strong supporter of action against climate change and therefore this decision is seen as a ley test as to his real commitment to the environment; however, he is stalling through fear of angering the powerful supporters of the project, now claiming that climate change is in fact just one of a host of priorities that he had promised to address during his second term.
US State Department delays Keystone pipeline decision
By Timothy Gardner and Andrew Quinn - Trust.org
WASHINGTON, Jan 22 (Reuters) - The Obama administration has delayed a decision on TransCanada Corp's rerouted Keystone XL oil pipeline until after March, even though Nebraska's governor on Tuesday approved a plan for part of the line running through his state.
"We don't anticipate being able to conclude our own review before the end of the first quarter of this year," said Victoria Nuland, a spokeswoman at the State Department, which had previously said it would make a decision by that deadline.
Report Estimates Battle Against Climate Change
will Cost $700 Billion a Year
By Joao Peixe - OilPrice.com
A new report written by the Green Growth Action Alliance in conjunction with the World Economic Forum (WEF), has estimated that around $700 billion a year must be invested in a variety of low carbon projects around the world in order to prevent climate change and secure the development of the green economy.
The vast sum of capital required will be invested in clean energy infrastructure, sustainable and low carbon transport, and energy efficiency improvements for buildings, all with the aim of limiting the global average temperature increase to less than two degrees above pre-industrial levels.
Does China Plan To Establish "China Cities"
And "Special Economic Zones" All Over America?
By Michael Snyder - TheEconomicCollapseBlog.com
What in the world is China up to? Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America. In some cases, China appears to be attempting to purchase entire communities in one fell swoop. So why is this happening? Is this some form of "economic colonization" that is taking place? Some have speculated that China may be intending to establish "special economic zones" inside the United States modeled after the very successful Chinese city of Shenzhen. Back in the 1970s, Shenzhen was just a very small fishing village, but now it is a sprawling metropolis of over 14 million people. Initially, these "special economic zones" were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria and establishing special economic zones in those nations. So could such a thing actually happen in America?
How the Vatican built a secret property empire
using Mussolini's millions
Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland
By David Leigh, Jean François Tanda and Jessica Benhamou - The Guardian
Few passing London tourists would ever guess that the premises of Bulgari, the upmarket jewellers in New Bond Street, had anything to do with the pope. Nor indeed the nearby headquarters of the wealthy investment bank Altium Capital, on the corner of St James's Square and Pall Mall.
But these office blocks in one of London's most expensive districts are part of a surprising secret commercial property empire owned by theVatican.
Donald Trump Exploring Improbable Ways
He Might Buy the New York Times
By Joe Hagan - NYMag.com
Donald Trump has spent a lot of time in the last year trying to make news, first with his birther obsession, and more recently demanding comedian Bill Maher pay him $5 million. (Maher offered the sum for proof Trump wasn't the "spawn of his mother having sex with an orangutan." Trump released his own birth certificate and threatened to sue Maher for the money.)
Now Trump is exploring ways to make news in a more literal way: by acquiring the New York Times. According to sources familiar with the situation, Trump has engaged in more than one meeting to discuss how he might buy the Grey Lady. Details of Trump's strategy remain scant. And it seems unlikely, to say the least, that the Sulzberger family, which controls the company's voting shares, would welcome his offer.
Let elderly people 'hurry up and die', says Japanese minister Taro Aso says he would refuse end-of-life care and would 'feel bad' knowing treatment was paid for by government
By Justin McCurry in Tokyo - Guardian.co.uk
Japan's new government is barely a month old, and already one of its most senior members has insulted tens of millions of voters by suggesting that the elderly are an unnecessary drain on the country's finances.
Taro Aso, the finance minister, said on Monday that the elderly should be allowed to "hurry up and die" to relieve pressure on the state to pay for their medical care.
How to Give the U.S. Ultrafast Internet
By Susan Crawford - Bloomberg.com
Julius Genachowski, chairman of the Federal Communications Commission, made an important speech last week calling for at least one "gigabit city" in all 50 states by 2015. For the U.S. to maintain its leadership in innovation, he said, a critical mass of communities must have networks capable of ultrahigh Internet-access speeds.
The U.S. lags far behind Japan, South Korea, Sweden, Australia and many other developed countries that have made ultrafast networks a priority. Unless we act, new ideas for using such networks will come from those countries -- not the U.S. As Genachowski said, "Ensuring the U.S. has a strategic bandwidth advantage -- ultrafast, high-capacity, ubiquitous broadband -- is critical to our global competitiveness."
Print-to-Order Service Helps 3-D Designer
Revive Forgotten Figurines
BY JOSEPH FLAHERTY - Wired.com
Toy designer Wayne Losey's articulating, snap-to-build ModiBots are an example of how 3-D printing can bring life to products and toys that didn't have the commercial success needed to keep them on store shelves.
Some toys are destined for the trash bin (hello, Rock Lords), but for the playthings that are unfairly granted a short run in the stores, 3-D printers can add a new chapter to their story. ModiBots is the exact definition of this, an evolution of a toy design that had unfulfilled promise after a short-lived launch.
House Democrats propose opening gun makers to civil liability
By Pete Kasperowicz - TheHill.com
House Democrats on Tuesday proposed legislation that would ease current law to allow people to file civil law suits against gun manufacturers and others in the industry when they act irresponsibly.
The Equal Access to Justice for Victims of Gun Violence Act, from Rep. Adam Schiff (D-Calif.), would amend the Protection of Lawful Commerce in Arms Act (PLCAA). According to Schiff, that 2005 law gives gun manufacturers, distributors and gun dealers immunity from most civil negligence and product liability actions.
Schiff said his bill is needed to allow suits to go forward when these entities are found to be negligent, or for product liability issues.
NRA's LaPierre: Obama making 'mockery' of nation's freedoms
By Meghashyam Mali - TheHill.com
National Rifle Association (NRA) CEO Wayne LaPierre on Tuesday offered a sharp critique of President Obama's second inaugural address, warning that his agenda threatened to make a "mockery" of the nation's constitutional freedoms.
In a speech in Reno, Nev., which the nation's most prominent gun-rights lobby billed as a "major response" to the president's address, LaPierre pressed his attack on Obama's push for stricter gun laws in the aftermath of last month's deadly Newtown, Conn., mass shooting.
Hillary Clinton issues forceful defence
over handling of Benghazi attack Angry senators accuse secretary of state of incompetence but Clinton insists she did not withhold information from US public
By Chris McGreal - Guardian.co.uk
Hillary Clinton faced accusations of incompetence, evasion and obfuscation by angry Senators at a hearing into the deaths of the US ambassador to Libya and three other Americans in Benghazi last year.
Although the US secretary of state was roundly praised for her "extraordinary" work as she prepares to leave office, she came under strong criticism over her handling of the attack on the US consulate in Benghazi on September 11.
Hillary Clinton Rebuts GOP Charges During Libya Testimony
Secretary of State Hillary Clinton offered an unwavering defense Wednesday of the Obama administration's response to the 2012 assaults on U.S. government posts in Benghazi, Libya.
Clinton shows emotion and flashes of anger
in Benghazi testimony
By Julian Pecquet - TheHill.com
Secretary of State Hillary Clinton showed emotion and flashes of anger on Wednesday as she delivered long-awaited testimony on the terrorist attack that killed four Americans in Benghazi, Libya.
Making one of her final appearances as the nation's top diplomat, Clinton sparred with Senate Republicans who accused the administration of misleading the public about the chain of events that preceded the Sept. 11 killings.
Rand Paul To Hillary Clinton: I Would Have Fired You
During Secretary of State Hillary Clinton's Congressional testimony regarding what she knew about the attack on an American consulate in Benghazi last year, Sen. Rand Paul (R-KY) took the opportunity of his question to bluntly attack Clinton's negligence in the months preceding the attack. Paul thanked Clinton for taking culpability for "the worst tragedy since 9/11," but noted that, if he had been President of the United States at the time of the attack and had learned that Clinton failed to read some key diplomatic cables before that event, he would have relieved her of her post.
Hillary Clinton's Finest Hour and a Half
By Margaret Carlson - Bloomberg.com
Today's long-awaited congressional hearings on the attack of the U.S. mission in Benghazi,Libya, were the second time in my many years covering Hillary Clinton that I saw her cry. The first time, at a coffee shop in New Hampshire in January 2008, she wept for herself, worn down to a nub by a losing presidential campaign.
This time her tears were for others as she talked about standing beside the president at Andrews Air Force Base when the flag-draped coffins of the Americans killed in Libya were returned.
Cuba's mystery fiber-optic Internet cable stirs to life
By Marc Frank
HAVANA | Tue Jan 22, 2013 5:26pm EST
(Reuters) - An undersea fiber-optic cable that promises to bring Cuban Internet and phone communications into the 21st Century stirred to life this week, two years after it was laid betweenVenezuela and the Caribbean island.
Financed by the Venezuelan government, the ALBA-1 cable under the Caribbean was laid with much fanfare in 2010 and connected to Cuba in February 2011. Since then it has been dormant and the government silent as to why.
Panetta Said to Be Ending U.S. Combat Ban for Women
By Tony Capaccio & David Lerman - Bloomberg.com
The U.S. Defense Department plans to lift its ban on women serving in direct combat roles, opening hundreds of thousands of military jobs to them for the first time.
Defense Secretary Leon Panetta made the decision on the recommendation of the military's Joint Chiefs of Staff, according to a defense official, who asked not to be identified in advance of a planned announcement.
