Gold World News Flash |
- Greek Debt Crisis--The Preview of What is to Come 5-6-10
- Where Next for Gold?
- Gold, Silver & SP500 Trading Charts & Video
- China Slams on the Real Estate Brakes: Time to Buy FXI?
- The Gold Rally in Perspective
- The Ratings Agency Scam Continues
- Bear Market Race Week 135: Bull & Bear Markets Review
- Daily Dispatch: Weekend Edition - May 16, 2010
- Got Gold Report – COMEX Large Commercials Break Ranks
- PImPCO States The Obvious
- Jim?s Mailbox
- In The News Today
- Got Gold Report – COMEX Large Commercials Break Ranks
- Gold, Silver and SP500 Trading Charts and Video
- Midnight Run To Cover
- Palm's WebOS, Intellectual Property Touched off a Bidding War
- Dysfunctional Markets
- Guest Post: James Madison On Quantitative Easing
- Stock Markets were Down Friday in Europe
- James Galbraith On Economic Theory As A Disgraced Profession
- On Contagion
- Paper currencies 'on last legs,' Tocqueville's Hathaway tells King World News
- Paper currencies 'on last legs,' Tocqueville's Hathaway tells King World News
- Meltup
- My Interview with MMNews, Germany
- This Week's Precious Metals Commentary
- Reindexing The Unemployment Rate By America's Population Growth Yields Some Ugly Results
- The Markets Around the Presidential Election Cycle
- Are the Highest Dividend Yield Stocks the Best Investments?
- UK Resumes No Fly Zone Beginning 1 AM GMT Due To Volcanic Ash: Heathrow And Gatwick Closed
- International Forecaster May 2010 (#5) – Gold, Silver, Economy + More
- Trichet, Euro bailout bought time that’s all, nothing more
- U.S. Banks Illegally Hide Write-downs
- Last Opportunity for US Mint Products, Includes 2009 Silver Proof Set
- Silver Prices Soar 11% in London, 4.2% in New York
- Central banks have lost their battle against gold, Sprott tells King World News
- SmartKnowledgeU’s J.S. Kim concurs with GATA
- Gene Arensberg: Comex large commercials break ranks
- What’s Ahead for Platinum and Palladium?
- Jim's Mailbox
- With Local Gold Inventories Depleted, Panicking German Dealers Stage Run On Krugerrands
- Futures charts; May 17th
- It’s the EU’s Crisis now, but the US Could be Next
| Greek Debt Crisis--The Preview of What is to Come 5-6-10 Posted: 16 May 2010 06:14 PM PDT Click full screen for best reading experience. ...
|
| Posted: 16 May 2010 06:14 PM PDT So far in 2010, all eyes in the gold market have been looking up at $1225 wondering whether gold get back to that all time high? Now that question has been answered yet another arises, where next for gold? Our answer to that question is that we believe this rally still has gas in the tank to run higher. Gold didn’t break its resistance at $1225 just to climb another $24 or 1.95% to $1249. There must be more in this move. Considering the chart above, gold appears overbought and prime for a drop. The relative strength index is at 72.68 and above the 70 level which would normally be a sell for us. Although we always load up heavily on gold when the RSI is on or below 30, we never sell when the RSI hits 70 during major rallies. Why? Well, simply because when gold decides to go on a run it generally disobeys the RSI overbought reading as it simply continues higher. A textbook case of this is during that run to $1225 in late 2009, the RSI was well...
|
| Gold, Silver & SP500 Trading Charts & Video Posted: 16 May 2010 06:14 PM PDT Last week was amazing for both gold and index traders as gold surged higher and the SP500 tested a key resistance then fell 4% in our favor. The past couple weeks with the mini market crash and Euro issues making the market extra volatile both gold and the broad market (SP500) index has been wild. The added volatility makes trading more difficult because price patterns become less predictable and price movements are much larger increasing risk for traders. Below are the charts & videos of what to look for in the coming days… GLD – Gold ETF Trading Gold continues to trend higher at an accelerated rate. Friday we saw gold pullback and test a key support level then bounced to close in the middle of the days trading range. As you can see the trend line support has become very steep and once the trend line support is broken I figure there will be a sharp drop to digest the recent rally. SLV – Silver ETF Trading Silver popped and tested a...
|
| China Slams on the Real Estate Brakes: Time to Buy FXI? Posted: 16 May 2010 06:14 PM PDT The following graphic from the 5-Min. Forecast shows how China's real estate market has collapsed. The reductions in sales volumes shown occurred in 1 month. Note: Sales volumes have collapsed. There are no reports yet that prices hace declined. Recently China has experienced a real estate boom, with monthly price increases as high as 12%. The government has taken actions to short circuit a bubble, such as: [LIST] [*]requiring much larger down payments [*]banning lending for third homes [/LIST] These new requirements were implemented in the middle of last month. Sales over the entire month dropped by the amounts shown. The implication is that after the new requirements were imposed sales may have fallen close to zero. The 5-Min. Forecast suggests that the absence of real estate investment as an easy option for individual investors in China, money may start coming back to the stock market. Using the China ETF FXI, Shanghai has twice flirted with primary bear mar...
|
| Posted: 16 May 2010 06:14 PM PDT Gluskin Sheff is attributed with the data for the following chart of the day from Joe Weisenthal and Kamelia Angelova at Business Insider Clusterstock. The most obvious comparison has been left off the chart – the huge gold bubble of the 1970s. From $34.95 on January 19, 1970 to $850 on January 21, 1980, the yellow metal soared 2332%. A graph with the first gold bubble included is shown below. The gains above are overstated in real terms because inflation, which has been variable, has not been taken into account. When adjusted for inflation, the real gains in both gold bull markets are a little more than half of the nominal gains. The real price of gold, expressed in 2009 dollars, is plotted in the following graph: It is obvious that the current gold rally has a long way to go to equal the gold bubble of the 1970s. In real terms, the price of gold must more than double to equal the January, 1980 peak. In nominal future dollars the equivalent price coul...
|
| The Ratings Agency Scam Continues Posted: 16 May 2010 06:14 PM PDT Market Ticker - Karl Denninger View original article May 16, 2010 08:56 AM And we wonder why we get all the ratings we pay for? [INDENT]May 14 (Bloomberg) -- Standard & Poor's cut to junk the ratings on certain securities, backed by U.S. mortgage bonds, that it granted AAA grades when they were created last year by Credit Suisse Group, Jefferies Group Inc. and Royal Bank of Scotland Group Plc. The reductions were among downgrades to 308 classes of so- called re-remics, or re-securitizations, created from 2005 through 2009, the New York-based ratings company said today in a statement. About $150 million of the debt issued last year, as recently as July, with top rankings were lowered below investment grades, according to data compiled by Bloomberg. [/INDENT]These "re-remics", or re-rolled securitizations, were something at the time I described as an outright scam: [INDENT]This so-called "resecuritizations" are just another turn at the same old scam - trying to convince people...
|
| Bear Market Race Week 135: Bull & Bear Markets Review Posted: 16 May 2010 06:14 PM PDT The 1929 & 2007 Bear Market Race to The Bottom Week 135 of 149 Bull & Bear Markets Review The Guild of Mad Science COMEX Gold Charts Mark J. Lundeen [EMAIL="mlundeen2@Comcast.net"]mlundeen2@Comcast.net[/EMAIL] 14 May 2010 Color Key to text below Boiler Plate in Blue Grey New Weekly Commentary in Black Below is my BEV chart for the Bear Race. The DJIA was up 239 Points in Wk 135, and my only recommendation is that people should run away as fast as their legs can carry them! The Stock Market’s internals are crumbling. Rising Volatility, NYSE 70% A-D Days coming one after another, Mr Bear is taking a Monkey Wrench to the Stock Market. Who knows what tomorrow will bring. I sure don’t. But there is such a thing as situational awareness. In the past two weeks, there have been many changes not seen since Autumn of 2008. That is not good. So just because you’re an investor, it doesn’t mean you have to be in the Stock Market all of...
|
| Daily Dispatch: Weekend Edition - May 16, 2010 Posted: 16 May 2010 06:14 PM PDT May 15, 2010 | www.CaseyResearch.com Weekend Edition The End of the Gold Bull Market Dear Reader, In communicating with a financial advisor friend of mine this morning, the topic of cash and gold stocks came up. Which got me thinking about a few things I’d like to share with you. To change things up a bit, I’ll interview… myself. Q. With gold and gold stocks on a tear, does Casey Research still recommend holding 1/3rd of a portfolio in cash? A. The answer depends, of course, on what country you are currently sitting in. Were I sitting in the eurozone, I would have already moved much of my safe harbor cash into the “resource” currencies such as Canada and Norway… i.e. countries that are rich in the natural resources that the world needs and will always need. If my derrière was resting in a seat planted on U.S. soil, as it is, and I didn’t plan on doing any significant overseas spendin...
|
| Got Gold Report – COMEX Large Commercials Break Ranks Posted: 16 May 2010 06:14 PM PDT By: Gene Arensberg Swap dealers cover some shorts in gold. Bullion banks seen as “sellers of last resort.” Some of the most important data we gather and analyze each week is buried deep inside tedious lists of numbers. These data, compiled by seldom-thanked dedicated public servants and distributed via the Web to anyone with a computer, can be an astonishing wealth of information for traders and analysts – if they know what to look for. Taking that data, following it and producing meaningful graphs is part of what we do here at Got Gold Report. Once in a while something extraordinary jumps out at us and this is one of those times. The following may be tedious to follow for some, but we hope we have made the fascinating and potentially exciting divergence we just discovered come to life for you in the graphs as it has for us in the data. Hopefully it turns tedious into interesting. In the traditional Commitments of Traders Reports (COT) i...
|
| Posted: 16 May 2010 06:14 PM PDT Market Ticker - Karl Denninger View original article May 16, 2010 08:05 AM Note well folks: This is called "duh", or "the second time nobody should be surprised." [INDENT]Ramin Toloui, a senior portfolio manager at Pimco, said the European Central Bank's decision to buy government debt could be backfiring. Instead of encouraging private investors to keep their government debt, the programme might be leading to more sales, he said. "The risk is that investors are using the ECB as a vehicle to exit their positions," he said. [/INDENT]I'm puzzled by such a comment, and why he would call this "a risk". After all, PIMpCO bought up agency debt (MBS) and Treasuries here in the US in front of The Fed doing the same thing, then sold into the bid. Why would anyone expect any different reaction this time around? If this is "backfiring", then what did PIMpCO expect out of this "policy"? The entire point of the ECB's "intervention" was to allow the banks (in particular) who had ir...
|
| Posted: 16 May 2010 06:14 PM PDT View the original post at jsmineset.com... May 15, 2010 07:15 PM Greetings Jim, The Gold Currency Index weekly chart closed at another all-time high yesterday, and the rally continues to strengthen as technical indicators such as momentum and oscillators trend higher. Gold in US dollars also moved up to a new all-time high, confirming the long-term breakout that occurred last week. Best, CIGA Erik Prometheus Market Insight [URL]http://www.prometheusmi.com[/URL] ...
|
| Posted: 16 May 2010 06:14 PM PDT View the original post at jsmineset.com... May 15, 2010 07:20 PM Jim Sinclair’s Commentary Four so far this week. Bank Closing Information – May 14, 2010 These links contain useful information for the customers and vendors of these closed banks. Midwest Bank & Trust Company, Elmwood Park, IL Southwest Community Bank, Springfield, MO New Liberty Bank, Plymouth, MI Satilla Community Bank, St. Marys, GA [URL]http://www.fdic.gov/[/URL] Jim Sinclair’s Commentary The risk is not the euro. It is whatever the target of the CDS OTC derivative gang is at any time. This statement only complicates the situation and assists the problems of the euro. Volcker Sees Euro 'Disintegration' Risk From Greece (Update1) By Simon Clark May 14 (Bloomberg) — Former Federal Reserve Chairman Paul Volcker said he's concerned that the euro area may break up after the Greek fiscal crisis that sparked an unprecedented bailout by the region's member...
|
| Got Gold Report – COMEX Large Commercials Break Ranks Posted: 16 May 2010 06:06 PM PDT To conclude this first section of this special Got Gold Report for gold futures, we think that it is now apparent that at least on the COMEX bourse in New York, the very largest of the paper gold sellers – the exemption-using bullion banks among them - have now become more isolated as "the sellers of last resort" for gold futures.
|
| Gold, Silver and SP500 Trading Charts and Video Posted: 16 May 2010 05:35 PM PDT
|
| Posted: 16 May 2010 04:37 PM PDT
It is early in the Asian morning session and the mood is decidedly like that in late September, early October of 2008, when every day felt like it could be liquidity's last. And while we have long discussed that the "liquidity"situation in equities is laughable, with May 6th confirming our concerns, tonight we are seeing, for the first time, the evaporation of liquidity from the FX market, where tight bid/ask spreads are needed for proper market functioning. The EURUSD and EURJPY as well as various cable pairs are plunging, taking out massive 10 pip steps lower with every block, something unseen since the Lehman collapse. Furthermore, with funds anticipating something, anything out of Europe this weekend after the major move down in the euro last week, and the disappointing silence out of both Brussels and Luxembourg, the EUR will likely test the next support of 1.18.
The much more critical for American stocks EURJPY pair is also getting trounced as "risk off" is now on.
And with realized vol exploding to weekly changes not seen in over one year, last week's rumors of massive carnage as the key FX desks are becoming ever louder. We would not be surprised if tomorrow we discover that a liquidity crisis has struck at some major hedge funds and prop desks. Surely, the implosion of a TBTF FX desk would only make the Volcker case that much stronger.
It appears that tonight the LBMA is too busy with putting out other fires than to worry about a surging gold. At last check it was back on its way to retest $1,250. So the very same conditions that pushed gold higher today, were responsible for it plunging on Friday... The intervention (and lack thereof) is just getting far too blatant.
As for index futures, we won't bother you with those as we expect the Liberty 33 night shift to take over around 3 am and to make a spirited attempt at a green open. However, for now everything is solidly 1%+ down. So much for that 1,000 point/limit up bounce on the European "bailout."
|
| Palm's WebOS, Intellectual Property Touched off a Bidding War Posted: 16 May 2010 04:31 PM PDT  Larry Dignan (ZDNet) submits: Hewlett-Packard (HPQ) landed Palm (PALM) by raising its bid following interest from other suitors after intellectual property and a potential licensing arrangement for the WebOS. The proxy statement, which sparked a good bit of discussion, provides an interesting read on how HP landed Palm. Simply put, HP almost fell short of acquiring Palm. Palm’s outlines the process to sell itself and the role of “Company C,” an unnamed outfit that was in the running until the HP deal was actually announced. Complete Story »
|
| Posted: 16 May 2010 03:55 PM PDT Dysfunctional Markets by Doug Noland May 14, 2010 For the week, the S&P500 rallied 2.2% (up 1.8% y-t-d), and the Dow gained 2.3% (up 1.8%). The S&P 400 Mid-Caps jumped 4.3% (up 8.6%), and the small cap Russell 2000 recovered 6.3% (up 11.0%). The Morgan Stanley Cyclicals jumped 4.4% (up 7.0%), and the Transports gained 4.4% (up 9.5%). The Morgan Stanley Consumer index rose 1.8% (up 3.4%), and the Utilities gained 2.4% (down 3.9%). The Banks jumped 3.1% (up 24.7%), and the Broker/Dealers increased 1.5% (down 1.8%). The Nasdaq100 increased 3.1% (up 2.5%), and the Morgan Stanley High Tech index gained 2.1% (down 2.1%). The Semiconductors rose 2.1% (down 1.7%). The InteractiveWeek Internet index jumped 4.5% (up 4.1%). The Biotechs rallied 3.7%, increasing 2010 gains to 15.3%. With bullion jumping $22, the HUI gold index surged 7.9% (up 13.4%). One-month Treasury bill rates ended the week at 14 bps and three-month bills closed at 14 bps. Two-year government yields declined 3 bps to 0.72%. Five-year T-note yields fell 3 bps to 2.10%. Ten-year yields increased 3 bps to 3.46%. Long bond yields rose 6 bps to 4.34%. Benchmark Fannie MBS yields declined 7 bps to 4.20%. The spread between 10-year Treasury and benchmark MBS yields narrowed 10 bps to 74 bps. Agency 10-yr debt spreads declined 3 bps to 44 bps. The implied yield on December 2010 eurodollar futures declined 4 bps to 0.855%. The 10-year dollar swap spread declined 1.25 to 3.5. The 30-year swap spread increased 2.25 to negative 18.5. Corporate bond spreads were mixed. An index of investment grade bond spreads narrowed 15 to 103 bps. An index of junk bond spreads widened 27 to 516 bps. Debt issuance remained slow. Investment grade issuers included Enterprise Products $2.0bn, Morgan Stanley $1.75bn, Citigroup $1.5bn, CVS Caremark $1.0bn, Kinder Morgan $1.0bn, Burlington Northern $750 million, XCEL Energy $550 million, PNC Funding $500 million, Pearson Funding $350 million, Cigna $300 million, FPL Group $250 million, and San Diego G&E $250 million. May 14 – Bloomberg (Shiyin Chen): "High-yield bond funds posted the largest outflows in five years and emerging-market equity funds had a second straight week of redemptions as Europe's sovereign- debt crisis dented demand for riskier assets, EPFR Global said." Junk issuers included Mylan $1.25bn, MCE Finance $600 million, Omnicare $400 million, Wireco Worldgroup $275 million and Kratos $225 million. I saw no converts issued. International dollar debt sales included Inter-American Development Bank $1.0bn, Metinvest $500 million, Kazatomprom $500 million, and Renhe Commercial $300 million. U.K. 10-year gilt yields declined 6 bps to 3.75%, while German bund yields rose 6 bps to 2.86%. Greek bond yields collapsed 470 bps to 7.70%, and 10-year Portuguese yields dropped 163 bps to 4.63%. The German DAX equities index rallied 6.0% (up 1.7% y-t-d). Japanese 10-year "JGB" yields rose 3 bps to 1.30%. The Nikkei 225 recovered 0.9% (down 0.8%). Emerging markets recovered some of last week's decline. For the week, Brazil's Bovespa equities index gained 0.9% (down 7.5%), and Mexico's Bolsa rose 1.0% (down 1.0%). Russia's RTS equities index gained 4.8% (down 0.6%). India's Sensex equities index gained 1.3% (down 2.7%). China's Shanghai Exchange added 0.3% (down 17.7%). Brazil's benchmark dollar bond yields dropped 17 bps to 4.83%, and Mexico's benchmark bond yields sank 43 bps to 4.78%. Freddie Mac 30-year fixed mortgage rates dropped 7 bps last week to 4.93% (up 7bps y-o-y). Fifteen-year fixed rates fell 6 bps to 4.30% (down 22bps y-o-y). One-year ARMs declined 5 bps to 4.02% (down 69bps y-o-y). Bankrate's survey of jumbo mortgage borrowing costs had 30-yr fixed jumbo rates down 15 bps to 5.63% (down 64bps y-o-y). Federal Reserve Credit dipped $1.2bn last week to $2.310 TN. Fed Credit was up $90.3bn y-t-d (11.1% annualized) and $193.7bn, or 9.2%, from a year ago. Elsewhere, Fed Foreign Holdings of Treasury, Agency Debt this past week (ended 5/12) declined $11.8bn to $3.064 TN. "Custody holdings" have increased $108bn y-t-d (10.0% annualized), with a one-year rise of $380bn, or 14.2%. M2 (narrow) "money" supply was up $34.3bn to $8.504 TN (week of 5/3). Narrow "money" has declined $8.1bn y-t-d. Over the past year, M2 grew 1.4%. For the week, Currency added $0.8bn, and Demand & Checkable Deposits surged $40.7bn. Savings Deposits declined $4.0bn, and Small Denominated Deposits fell $5.0bn. Retail Money Fund assets added $1.9bn. Total Money Market Fund assets (from Invest Co Inst) jumped $24.2bn to $2.878 TN, the first rise since February. In the first 19 weeks of the year, money fund assets have dropped $416bn, with a one-year decline of $912bn, or 24.1%. Total Commercial Paper outstanding added $0.9bn last week to $1.103 TN. CP has declined 67$bn, or 15.7% annualized, year-to-date, and was down $195bn from a year ago (15%). International reserve assets (excluding gold) - as tallied by Bloomberg's Alex Tanzi – were up $1.297 TN y-o-y, or 19.4%, to a record $7.986 TN. Global Credit Market Watch: May 12 – Bloomberg (Tim Catts and Pierre Paulden): "Europe's sovereign debt crisis is punishing corporate borrowers, with bond issuance tumbling as investors doubt a $1 trillion bailout plan will be enough to bolster confidence in government finances for the region. Borrowers worldwide have sold $15 billion of corporate debt this month, a 62% decline from the same period in April and 83% less than the average for the past year… The extra yield investors demand to own corporate debt instead of government bonds soared last week to the highest in more than four months… 'This is a fix and not a resolution,' said Jason Brady, a managing director at Thornburg Investment Management… 'Investors have seen volatility and that makes it harder to get excited about longer-dated assets paying a fixed return.'" May 11 – International Herald Tribune (Andrew E. Kramer): "As the financial markets try to absorb news of a rescue package for Greece and other teetering euro-zone countries, some bankers and economists see parallels to Russia's meltdown in 1998. A decade ago Russia was walking in the same shoes as Greece is today, striving to restore confidence in government bonds by seeking a huge loan from the International Monetary Fund and other lenders. Then, as now, the debt crisis was roiling global financial markets. And big hopes were pinned on a bailout — one that in Russia's case did not work. 'Greece creates a remarkable sense of déjà vu,' Roland Nash, the head of research for Renaissance Capital, an investment bank in Moscow, wrote…" May 11 – Finanacial Times (David Oakley and Ralph Atkins): "Investors on Tuesday warned that the European Central Bank would have to introduce quantitative easing to stave off the worst crisis in the eurozone since it was launched 11 years ago. The ECB has resisted following the Bank of England and the US Federal Reserve in expanding the money supply by buying government bonds because it fears that it could stoke inflation. Although eurozone central banks bought eurozone government bonds this week for the first time as part of the international rescue plan, this is not QE as the ECB is funding this by selling German bunds or using commercial bank deposits." May 11- New York Times (Landon Thomas Jr. and Jack Ewing): "Like the giant financial bailout announced by the United States in 2008, the sweeping rescue package announced by Europe eased fears of a market collapse but left a big question: will it work long term? Stung by criticism that it was slow and weak, the European Union surpassed expectations in arranging a nearly $1 trillion financial commitment for its ailing members over the weekend and paved the way for the European Central Bank to begin purchases of European debt on Monday... The premium that investors had been demanding to buy Greek bonds plunged… And as details crystallized of the package's main component — a promise by the European Union's member states to back 440 billion euros, or $560 billion, in new loans to bail out European economies — the wisdom of solving a debt crisis by taking on more debt was challenged by some analysts. 'Lending more money to already overborrowed governments does not solve their problems,' Carl Weinberg, chief economist of High Frequency Economics…said…" May 12 – Bloomberg (Tim Catts and Pierre Paulden): "Europe's sovereign debt crisis is punishing corporate borrowers, with bond issuance tumbling as investors doubt a $1 trillion bailout plan will be enough to bolster confidence in government finances for the region. Borrowers worldwide have sold $15 billion of corporate debt this month, a 62% decline from the same period in April and 83% less than the average for the past year…" May 14 – Wall Street Journal (Ianthe Jeanne Dugan): "Federal regulators and state officials are examining Wall Street's role in trading derivatives that essentially bet the municipal bonds they sold would go bust. The Securities and Exchange Commission has launched a preliminary inquiry into banks' trades of municipal credit-default swaps that allow investors to short-sell, or bet against, municipal bonds… The probe is exploring potential conflicts of interest by banks that sell municipal bonds and then poise themselves to profit if those bonds fail, these people said. A main thrust of their investigation is whether firms use their own money to bet against the bonds they sell and, if so, whether that activity is properly disclosed to bond buyers." May 14 – Bloomberg (Christine Harper): "Goldman Sachs… is ceasing proprietary trading in one type of structured debt… A group of traders who were focused on making bets on collateralized loan obligations with the New York-based firm's own money are now handling trades for clients…" May 12 – Bloomberg (Takahiko Hyuga and Finbarr Flynn): "Morgan Stanley Chief Executive Officer James Gorman denied allegations the U.S. bank misled investors about mortgage derivatives it sold them. The firm is being probed by U.S. prosecutors over whether the bank misled clients when it sold them collateralized debt obligations as its own traders bet that the value of the securities would drop… Wall Street firms are facing unprecedented scrutiny from lawmakers and prosecutors over whether they missold CDOs linked to the subprime mortgages that caused the credit crisis." Global Government Finance Bubble Watch: May 12 – Bloomberg (Abigail Moses and John Glover): "The cost of saving the world from financial meltdown has been bloated by 'hyperinflation' since Long Term Capital Management LP's rescue in 1998… rising price of bailouts since the $3.5 billion pledged to hedge fund LTCM after it was crushed by Russia's default, and the almost $1 trillion committed to halt the European Union's sovereign debt crisis this week. It cost just $29 billion to sooth markets in March 2008 when Bear Stearns Cos. was taken over, and $700 billion for the Federal Reserve to save the banking system with the Troubled Asset Relief Program in October that year. 'We haven't had any kind of normal inflation in the last decade, but we've had hyperinflation in writedowns and the magnitude of bailouts,' said Jim Reid, head of fundamental strategy at Deutsche Bank… 'You have to do more to get a similar effect every time.'" May 12 – Bloomberg (David Mildenberg and Dawn Kopecki): "Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Street's revival. Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter… 'The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,' said Christopher Whalen, managing director… Institutional Risk Analytics. 'It's a transfer from savers to banks.' Currency Watch: The dollar index jumped 2.1% this week to 86.249 (up 10.8% y-t-d). For the week on the upside, the South Korean won increased 2.2%, the Mexican peso 2.1%, the Brazilian real 2.0%, the South African rand 1.3%, the Canadian dollar 1.1%, and the Singapore dollar 0.6%. For the week on the downside, the euro declined 3.1%, the Danish krone 3.0%, the Swiss franc 2.2%, the British pound 1.8%, the Swedish krona 1.35, the New Zealand dollar 1.1%, the Japanese yen 0.9%, the Norwegian krone 0.3%, and the Australian dollar 0.2%. Commodities Watch: May 12 – Bloomberg (Stuart Wallace): "There has been a 'significant' surge in sales of gold coins and bars, particularly in Germany, Ross Norman, one of the founders of TheBullionDesk.com, said… 'The last time we saw this level of grass-roots activity was in October 2008 when the economy was on the brink and the retail gold buying community effectively drained gold from the market," the former bullion dealer said in the report." May 10 – Financial Times (Jack Farchy): "Silk ties and handkerchiefs are forecast to rise in price after the cost of silk jumped to its highest level in at least 15 years as rapid industrialisation in China, the world's largest supplier, robs the sector of valuable farmland. The price of silk cocoons… has doubled since the start of 2009…" The CRB index declined another 1.1% (down 8.8% y-t-d). The Goldman Sachs Commodities Index (GSCI) slipped 0.4% (down 4.4% y-t-d). Spot Gold jumped 1.8% to $1,230 (up 12.1% y-t-d). Silver surged 4.6% to $19.30 (up 14.6% y-t-d). June Crude sank $3.18 to $71.93 (down 9.4% y-t-d). June Gasoline 0.6% (up 4% y-t-d), and June Natural Gas jumped 7.7% (down 22% y-t-d). July Copper declined 0.8% (down 7% y-t-d). May Wheat sank 7.3% (down 14% y-t-d), and May Corn declined 2.2% (down 14% y-t-d). China Bubble Watch: May 11 – Wall Street Journal Asia: "The direction of China's economy is set. The question troubling investors is whether policy makers have set their course, too. With consumer-price inflation rising to 2.8% in April, real interest rates have moved farther into negative territory… More inflation is in the pipeline. The producer-price index rose 6.8% year-to-year in April, up from 5.9% in March. Higher manufacturing costs should eventually feed through to consumers. The latest housing-market data adds to fears of overheating, with prices up 12.8% year-to-year across 70 of China's larger cities. New bank lending was up, too, with $113.3 billion more loans pumped into the economy in April -- back to around the average monthly level during 2009's credit bonanza. Against this backdrop, Beijing's tightening measures to date are inadequate." May 13 – Bloomberg (Peter Woodifield): "China is set to overtake Japan as the largest Asia-Pacific commercial real estate market next year following a surge in values, according to property adviser DTZ Holdings Plc." India Watch: May 13 – Bloomberg (Unni Krishnan): "India's food inflation rate climbed… An index measuring wholesale prices of agriculture products… rose 16.44% in the week ended May 1 from a year earlier…" May 12 – Bloomberg (Kartik Goyal): "India's industrial production grew more than 10% for a sixth straight month, adding to inflation pressures even as Europe's debt crisis threatens to undermine the global economic recovery. Asia Bubble Watch: May 12 – Bloomberg (David Yong): "Asian interest-rate swaps show traders are betting central banks will be less aggressive in raising borrowing costs because of the European Union's sovereign-debt crisis. 'The euro crisis has hurt market confidence and liquidity,' Matthew Huang, an interest-rate strategist… at Barclays Capital Plc, said… 'If liquidity freezes up, Asian policy makers will likely choose to leave monetary conditions looser for longer.'" May 10 – Wall Street Journal Asia (Alex Frangos): "The European bailout plan could be too much medicine for an overheating Asia. Before the Greece crisis intensified last week, policy makers in China and elsewhere in Asia said too much growth and an abundance of capital inflows were pushing real-estate and other asset prices dangerously high. While Asian markets welcomed the 750 billion euro ($955 billion) bailout plan, economists and analysts warned that the rescue package could end up bringing even more capital to Asian markets… Loose monetary policy in Europe and the U.S. has already helped to inflate assets prices in Asia, especially for emerging-market bonds and real estate." May 12 – Bloomberg (Eunkyung Seo): "South Korea's unemployment rate declined in April for a third straight month… The jobless rate fell to 3.7% from 3.8% in March… 'Jobs market conditions are improving on the economic recovery,' Lee Sang Jae, an economist at Hyundai Securities... said… 'But there remains some weakness, supporting policy makers' views that the economy isn't strong enough to endure higher borrowing costs.'" May 13 – Bloomberg (Shamim Adam and Manirajan Ramasamy): "Malaysia's economy grew at the fastest pace in at least 10 years last quarter… Gross domestic product increased 10.1% in the three months ended March 31 from a year earlier…" Latin America Bubble Watch: May 12 – Bloomberg (Jens Erik Gould): "Mexico's industrial production rose the most in almost four years in March on surging demand for exports to the U.S. Output climbed 7.6% from a year earlier…" May 12 – Bloomberg (Fabiola Moura and Drew Benson): "Argentine Economy Minister Amado Boudou said last week's jump in bond yields may prompt the government to shelve plans to sell as much as $1 billion of bonds, its first international offer since defaulting in 2001." Unbalanced Global Economy Watch: May 10 – Bloomberg (Bob Willis and Thomas R. Keene): "The fallout from the European debt crisis raises the risk of a 'double dip' recession for the global economy, said Stephen Roach, chairman of Morgan Stanley Asia Ltd. 'When you have a vulnerable post-crisis economic recovery and crises reverberating in the aftermath of that, you have some very serious risks to the global business cycle,' Roach said… 'This concept of the global double dip which no one wants to talk about… is alive and well.'" May 12 – Bloomberg (Svenja O'Donnell): "U.K. unemployment climbed to a 16- year high in the first quarter, underlining the fragility of the recovery as Conservative David Cameron begins his premiership." May 12 – Bloomberg (Simone Meier): "Europe's economy expanded at a faster pace than economists forecast in the first quarter as a global recovery boosted exports… Gross domestic product in the 16 euro nations rose 0.2% from the fourth quarter…" May 12 – Bloomberg (Christian Vits): "Germany's economy unexpectedly grew in the first three months of the year as rising exports and company investment outweighed the effects of the cold winter. Gross domestic product… rose 0.2%..." May 12 – Bloomberg (Maria Levitov): "Russia faces a 'massive' capital influx as investors look for alternatives to Europe's crisis- ridden debt markets, said Mikhail Dmitriev, president of the Center for Strategic Development. That's putting pressure on Russian policy makers to implement capital controls soon to stem the flows and avoid ruble volatility, Dmitriev, whose think tank conducts research for the government, said in an interview… 'The government is unarmed against the distortions that may result from massive capital inflows,' said Dmitriev, who is also a former First Deputy Economy Minister. 'Russia's balance of payments and internal macroeconomic stability would undoubtedly be at risk.'" May 14 – Bloomberg (Paul Abelsky): "Russia's economy expanded for the first time since 2008… Gross domestic product rose an annual 2.9% in the first quarter after contracting 3.8% in the last three months of 2009…" May 13 – Bloomberg (Jacob Greber): "Australia's job growth accelerated in April, propelled by full-time employment… The unemployment rate held at 5.4%." May 13 – Bloomberg (Tracy Withers): "New Zealand's manufacturing industry expanded at the fastest pace in more than five years in April amid rising production and orders." U.S. Bubble Economy Watch: May 12 – Bloomberg (Shobhana Chandra): "The trade deficit in the U.S. widened in March to the highest level in more than a year as imports climbed faster than exports, adding to evidence of the global recovery from the worst recession in the post-World War II era. The gap grew 2.5% to $40.4 billion…" May 13 – Bloomberg (Ryan J. Donmoyer): "White House budget director Peter Orszag predicted Congress would approve higher taxes on managers of private equity firms, real estate funds and other investment partnerships in the coming weeks. Orszag, speaking yesterday…" May 10 – Bloomberg (Terrence Dopp): "New Jersey's Democratic lawmakers plan to introduce legislation to resurrect an income-tax surcharge on residents who earn $1 million a year or more…" Derivatives Watch: May 11 – Bloomberg (Phil Mattingly): "The Federal Deposit Insurance Corp. advanced a proposal aimed at overhauling part of the $4 trillion asset-backed securities market and introduced a rule that would require the biggest U.S. banks to submit 'funeral plans' to handle their possible collapse… 'Now is the time to put some prudent controls in place to make sure we don't get into some of the problems we saw in the past,' Bair said… Real Estate Watch: May 13 – Bloomberg Dan Levy): "U.S. home repossessions rose to a record level in April while foreclosure filings dropped in a sign mortgage lenders are working off a backlog of seized properties, according to RealtyTrac… 'Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,' Rick Sharga, RealtyTrac's executive vice president, said… A record 92,432 bank repossessions were reported in April, up 45% from a year earlier…" Central Bank Watch: May 13 – DPA: "The European Central Bank (ECB) on Thursday defended its decision to intervene in European bond markets, rejecting claims that this threatened the bank's independence. 'These measures are designed not to affect the monetary policy stance,' the ECB wrote in its monthly report of its decision to buy debt from troubled eurozone members. ECB chief economist Juergen Stark said this was a 'temporary emergency measure,' to which there was no alternative after the euro currency had come under attack. Stark said the bank was not responding to political pressures… 'The credibility of the ECB does not just hinge on the question whether or not we buy government securities, but whether we fulfill our central task, which is ensuring price stability,' Stark said. The economist said there was no doubt that 'an attack' on individual eurozone countries was being carried out by "anonymous market sources.'" May 10 – Bloomberg (Mayumi Otsuma): "Central banks from the U.S., Japan and Europe will participate in temporary U.S. dollar swap agreements amid heightened tension in global financial markets, the Bank of Japan said. 'In response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe' the central banks
|
| Guest Post: James Madison On Quantitative Easing Posted: 16 May 2010 03:45 PM PDT
James Madison on Quantitative Easing By JM This isn’t a “call to action”. Nor is it a brow-beating for those who care about the political institutions of this country. It is just an indication that when a national/global economy toilet-bowls there are neither easy nor satisfying answers. The powers that be are going to do what is necessary to prolong their survival. This is applies very generally. You can see this in the source materials of democracy, the original material. When it comes to the framing minds of the United States of America, you can keep that ideologue Jefferson. The real genius was James Madison: pragmatic and driven by strategic reasoning married to direct observation. The whole structure of governance depends on his notion of checks and balances. He also had some things to say about monetary policy in extreme circumstances.
In Madison’s case, he was referring to the “redemption” of a paper certificate to gold. As I understand it, money at the time was a bearer bond that didn’t accrue interest. Upon maturity it could be redeemed as a claim on gold or silver. Many such currencies circulated in Virginia in Madison’s time. Mid-1700s excavations and documentation indicate that just about any currency was accepted in colonial Yorktown: 1615 sixpence Bermuda “Hog” money, 1762 Mexico silver reales, 1762 Dublin half-pennies, 1722 Ireland Coppers, 1764 Prussian “Frederick the Great” silver thalers. Today the concept is more general… redemption of a paper certificate for goods and services with instantaneous maturity.
Queasing was a necessary step according to James Madison, and the best on tap was hope for better days. True, it was a wartime situation, in the context of an emerging economy. But the Tories would say that was no excuse, no stopping thieves.
If the Federal Reserve and the duly elected stooges of the United States abuse the iron law of credit, then they simply will not much longer have creditors to abuse.
One more quote.
Use whatever information you have to protect, hedge, and profit. Keep your head down and be unobtrusive in how you do it. Pickpockets, duly elected or otherwise, get into your wallet. Play even the James Madisons of the world like fools. He’d be proud. James Madison’s full essay can be read here.
|
| Stock Markets were Down Friday in Europe Posted: 16 May 2010 01:44 PM PDT Here we go again. Stock markets were down Friday in Europe and the Americas. The culprit was renewed anxiety that Europe cannot get its house in order. Indeed, it's looking very much like a house divided in Euroland, which leaves the adopted child of the Union—little baby Euro—in grave danger. Will the authorities come to take him away? Or will he run away on his own, never to be seen again? If the Euro were a child, it would be important to tell him that it's not his fault that his parents are bickering. They were never in love to begin with. The monetary marriage of convenience always allowed for fiscal infidelity in the separate States of Europe. The currency itself was well kept and stewarded by some of its parents, and flamboyantly pimped out to finance generous (but unaffordable) social agendas by other parents. And here we are with "extreme tensions" in the family according to European Central Banker Jean-Claude Trichet. He told Germany's Der Spiegel magazine that, "In the market, there is always a danger of contagion like the contagion we saw among the private institutions in 2008." The contagion this time is among nation states like Greece, Portugal, Spain, Italy and others with large (and growing) public debt-to-GDP ratios. For one, with the threat of more protests by trade unions in Greece and Spain, markets are not convinced austerity moves announced governments will actually happen. But even worse, what if they do? Austerity measures will lead to lower European GDP growth in the short-term. That's what happens when you liquidate bad debts. But lower growth and government tax taking makes it even more expensive to service debt (especially when interest rates are rising). Damned if you do. Damned if you don't. Overall debt to GDP levels on the Continent are high. But the three highest annual deficit-to-GDP numbers are not on the Continent at all. The International Monetary Fund predicts that the U.S. will have a deficit-to-GDP ratio of 11% this year. The U.K. will come in second at 11.4% and Ireland first at 12.2%. Why, then, if spending seems even more out of control in those countries, is the crisis hitting southern Europe first? Well, as Bill mentions below, Ireland had a smaller debt problem to begin with and has already begin cutting back. It's effectively had its crash. The main difference between the U.S, U.K and the rest of the Europe is obvious. There are central banks in London and Washington that can print money. They can monetise debt (print money to support government or other bonds). They CAN inflate away with monetary policies in ways national governments in Greece and Spain cannot. So what will you get? You will either get a more federalised Europe with a truly common monetary policy and a fiscal regime that binds. Or you will get dis-intgetration. As long as all this is playing out, equity markets are going to be under pressure. One big reason is that credit markets are again under pressure. And when credit to the corporate world stops flowing you again find out who is the most leveraged and vulnerable. Free-flowing credit is the first casualty of a loss of confidence in monetary authorities. Bloomberg reports that, "Concerns have spilled into the market for commercial paper, debt used by companies and banks for their short-term operating needs. Rates on 90-day paper are more than double the upper band of the federal funds rate, about twice the average in the five years before credit markets seized up in mid-2007." By the way, remember last week when we looked at the deterioration in credit spreads? It was Aussie financials at the top of the list on that particular day, for a variety of reasons. But check out last Friday's data. The top five largest increased in spreads are an intriguing mix. You have a European defence conglomerate. You have Portugal. You have in Italian bank. You have a health insurance company. And you have AMBAC. AMBAC? Hmm. AMBAC. And what does it do? According to its website, "Ambac's principal operating subsidiary, Ambac Assurance Corporation, is a guarantor of public finance and structured finance obligations." Today's extra credit question, then, is this: if the cost of insuring AMBAC's bonds against default is widening, and AMBAC's business is selling insurance against default in public sector debt, what does that say about AMBAC's business and the chance of sovereign debt default. Please submit your answers to dr@dailyreckoning.com.au and as always, show your work for extra credit. Seen on a bumper sticker of a caravan this morning on Fitzroy Street: "Property and hard work will make your fortune" and "Wealth for Toil." Hmm. Wealth for toil? We've heard it enough times to know it's a line from the Australian national anthem. We're just wondering if it should be removed now, what with the introduction of the Resource Rent Tax. Finally, we reported last week on the evidence of falling real estate prices in Beijing. But what about Shanghai? A friend who's moved there recently said the city is bustling with tourists and business people there for the much-anticipated expo. The city is gleaming and shiny and industrious. According to this article in the U.K. Times online, "Some economists dare to say the Expo may be a symbol both of China's economic might and of flaws in its system. According to Fan Yongming of Shanghai's prestigious Fudan University, the Expo has accounted for half of the city's fixed asset investment over the past eight years. Nobody is sure what will take its place." You know our take on what's going on. But if you haven't seen it yet, have a look here. Similar Posts:
|
| James Galbraith On Economic Theory As A Disgraced Profession Posted: 16 May 2010 01:15 PM PDT
James K. Galbraith: Why the 'Experts' Failed to See How Financial Fraud Collapsed the Economy The following is the text of a James K. Galbraith's written statement to members of the Senate Judiciary Committee delivered this May. Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.
|
| Posted: 16 May 2010 01:10 PM PDT
In my neck of the woods when you need some stonework done you hire Ecuadorians. They know their cement and have a good eye for laying up stone. They also work weekends. Not more than one in fifty of these workers are here legally. I had an interesting discussion with the mason I use. He is 30. Been here for six years. Works six days a week. Some years ago he put a nest egg together of $20k. He used that money as a down payment on a two-bedroom apartment back in Quito, that cost him $80k. He got a dollar mortgage on the $60k balance and rented the apartment to a government worker for $400 a month. The rental makes him net cash flow positive on a monthly basis. A smart investment for a guy looking to go back home someday. But he has a problem lurking. He is at risk to contagion. I doubt that he understands that. But he does know he has a big FX risk in front of him. His words:
Some background. Ecuador dollarized its economy in 2000. This step brings immediate benefits to the country involved. It has the impact of reducing inflation, it increases the countries ability to borrow from external creditors and the predictability of a stable currency helped encourage domestic investment/growth. Ecuador is in that sense a bit like Greece. It tied its currency to a horse that at first dragged it ahead, but ultimately the reality of a weak economy tied too closely to a strong one leads to a blow up. Ecuador is already a pariah in the international financial community. They have defaulted on their debt twice in the last decade. Most recently in December of 2008 when they stopped payment on $3.8 billion of bonds. in June of 2009 they bought in most of the debt for pennies on the dollar. At the time I was surprised, Ecuador had reserves in the bank. There was no economic need for the default. This was about politics:
So where does a country go when it is need of some money and it has been shut out normal channels of lending? Iran and China of course. This has not been a smooth ride either. Consider these headlines over the past few months. It does not look like China is such a “willing” lender after all.
It would seem that President Correa has a short memory, or a big need for some “fast cash”. Less than a month later the talks with the Chinese were back on:
If Ecuador can’t find the money it needs from the Chinese they can turn to Iran. At least that’s what this headline suggests: But the Iran money might be all talk. An existing line of credit appears to be untapped. I found the following errata on the subject from the Economist to be oddly written. More curious is that a link to this retraction is widely featured on the web site of the Central Bank Of Ecuador.
As near as I can tell Ecuador has few friends. They appear to be shooting themselves in the foot. This kind of stuff gets you in the global doghouse fast:
FATF has identified Ecuador as having strategic deficiencies. Ecuador has not delivered a clear high-level political commitment to address these deficiencies. Ecuador should address these deficiencies, including by: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets. Short-term issues are stacking up against Ecuador. They are dependant on oil exports for cash. The annualized drop in value of the oil exports was $1.5B in just the past two weeks. There is another deadline coming up. This one could prove important. It is my understanding that there is a May 31 deadline for the repatriation of dollar assets by a number of Ecuadorian banks. We’ll see if that happens. The numbers; GDP: $108b, Current Account 2009: deficit $1b, Budget deficit (2009): $2b. Ugh. Does it matter if Ecuador goes turtle? No. Most of the damage has been done. I doubt that a blow up in Ecuador would make the papers. Their $108b annual GDP is about the same at Utah or Arkansas. But in the unstable world that we live in the wings of this butterfly could still cause high winds elsewhere. That is the nature of contagion. My mason has a plan should there be a monetary change in Ecuador:
How does this fit into the “Big Picture”?
What is the cost to America for these two million people? Most of them are not legal. The flap of the wings brings more contagion. Some of our pals with Ecuadorian President, Rafael Correa.   
|
| Paper currencies 'on last legs,' Tocqueville's Hathaway tells King World News Posted: 16 May 2010 01:07 PM PDT 9p ET Sunday, May 16, 2010 Dear Friend of GATA and Gold: "The world of paper currencies is on its last legs," Tocqueville Funds portfolio manager John Hathaway told Eric King of King World News last week in a 10-minute interview. Hathaway predicted that there will be a scramble to acquire the better junior gold-mining companies. He also said gold has much catching up to do with the recent growth in financial instruments. You can listen to the interview at the King World News Internet site here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/15_J... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot: The conference will explore the dangers and opportunities in today's bullion markets and the need for investors to diversify bullion holdings outside of bullion banking and commodities markets. Speakers will include David Morgan of Silver-Investor.com, Gold Anti-Trust Action Committee Chairman Bill Murphy, and Duncan Cameron and Philip Judge of Anglo Far-East Bullion Co. The earliest conference attendees on Saturday will be able to schedule one-on-one interviews for personal consultation with Anglo-Far East's experts on Sunday. To learn more about and register for the Anglo Far-East Bullion conference, please visit: http://www.anglofareast.com/seminar-registration/
|
| Paper currencies 'on last legs,' Tocqueville's Hathaway tells King World News Posted: 16 May 2010 01:07 PM PDT 9p ET Sunday, May 16, 2010 Dear Friend of GATA and Gold: "The world of paper currencies is on its last legs," Tocqueville Funds portfolio manager John Hathaway told Eric King of King World News last week in a 10-minute interview. Hathaway predicted that there will be a scramble to acquire the better junior gold-mining companies. He also said gold has much catching up to do with the recent growth in financial instruments. You can listen to the interview at the King World News Internet site here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/15_J... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Prophecy to Become Coal Producer This Year Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen. For Prophecy's complete press release about its production plans, please visit: http://www.prophecyresource.com/news_2010_may11.php Join GATA here: World Resource Investment Conference * * * Support GATA by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Coming Friday-Sunday, June 11-13, at the Dallas-Fort Worth Airport Marriot: The conference will explore the dangers and opportunities in today's bullion markets and the need for investors to diversify bullion holdings outside of bullion banking and commodities markets. Speakers will include David Morgan of Silver-Investor.com, Gold Anti-Trust Action Committee Chairman Bill Murphy, and Duncan Cameron and Philip Judge of Anglo Far-East Bullion Co. The earliest conference attendees on Saturday will be able to schedule one-on-one interviews for personal consultation with Anglo-Far East's experts on Sunday. To learn more about and register for the Anglo Far-East Bullion conference, please visit: http://www.anglofareast.com/seminar-registration/
|
| Posted: 16 May 2010 12:55 PM PDT This hour-long video from the National Inflation Association should be familiar ground for most readers of this blog. It features all the well known pundits – Marc Faber, Peter Schiff, Gerald Celente, etc. – and serves as a good primer on the subject of the coming inflation. Favorite line as of about the 40 minute mark: "Federal Reserve Chairman Ben Bernanke is just like a heroin addict, only his drug is quantitative easing."
|
| My Interview with MMNews, Germany Posted: 16 May 2010 12:41 PM PDT
Lars Schall of MMNews Germany has recently interviewed many outspoken critics of the inner workings of our global financial system including former Federal Housing Commissioner and Solari Inc. President Catherine Austin Fitts and Associate Professor of Economics and Law at the University of Missouri, Kansas City (UMKC) William K. Black. Below is my recent interview with Mr. Schall.
"We Don't Need Central Banks," By Lars Schall Mr. Kim, in your point of view our current fiat money system does not only belong to the root causes for the financial/economic crisis we’re going through, but also that it is fraudulent per se. Why so?
Well, the reason I believe it’s fraudulent is because our current money system is a system that creates money as debt. If we had no debts in our global monetary system, no money could exist. That’s a fairly ludicrous concept if you think about it. It’s also a system in which central banks are allowed to print money – and when I say “print money” I use this term very loosely, because the predominant amount of money today is created as digital debits and credits. So when we think of fiat money, most people think of paper money, but in reality most paper money doesn’t even exist. It’s just digital credits credited from central bank to regional banks to commercial banks and then to the various creditors and debtors in the system. So there’s virtually zero labour that’s being performed and banks charge consumers interest on this absence of labour. Centuries ago, we used to call that usury and fraud. Today we just accept it as the way the system works.
Do you believe that a gold standard could have worked given the real economic growth?
I don’t see why not. The arguments against a gold standard are mostly propelled by bankers that want the status quo and fraud to continue. There’s nothing about a gold standard that would hold back economic growth. In my opinion a gold standard would keep money honest. If we look at some of the most prominent central bankers in the past, for example, Alan Greenspan – he said a gold standard would set interest rates in the economy on its own at a proper rate and regulate economic growth to contribute to steady growth without the boom-and-bust cycles that we experience every few years. I definitely believe that it could work.
Is actual the “fraudulent monetary system” the problem or rather the “fraudulent money men”?
That’s a very interesting question and I’ve heard arguments on both sides. There are people who say it doesn’t matter if money is sound or unsound if criminals run the system as they do today. I disagree with that. Under a sound monetary system, people will ultimately control the value of money. With the unsound system, that we have today, “the money masters”, “the money men” or whatever you want to call them, they control the value of money.
For example if people look to Bretton Woods and say that it is an example of the gold standard not working, that’s simply not true. Under Bretton Woods, a true gold standard never existed. That’s what happened: the bankers were basically lying to the people about maintaining a true gold standard. France called the US bankers’ bluff in not maintaining the gold standard and that’s why it fell apart. So this is an instance where we had a relatively sound monetary system and even though the bankers were committing fraudulent practices under this system, the people ultimately were still able to control the value of money. That’s why President Nixon had to close the gold window – because the people were forcing the bankers to lose money when they committed fraud. And that’s why the financial oligarchs do not want a sound monetary system because they lose control over the value of money.
Why do you think that central banks do “more harm than good”?http://www.mmnews.de/index.php/english-news/5555-we-dont-need-central-banks - _edn1
Because they prevent free-markets from operating. What they do is that they set interest rates at either artificially too high or artificially too low rates, to create booms or busts. In reality, a boom is not really a boom, but it’s a distortion of free-market prices above and beyond what the free-market would set. And then they create the busts which are not really busts, but just collapses of distorted prices returning to their free-market equilibrium.
Central banks create these booms and busts in part because commercial banks profit from them. The Goldman Sachses, the JP Morgans of the world, they make tremendous amounts of money on the upside and downside of the boom-bust cycles they help create. That’s why I say Central Banks do more harm than good. If they would just get out of the way and let free-markets operate, then the free-markets would set the interest rates. We don’t need central banks.
But the reason why the majority of people think that the absence of Central Banks would lead to chaos is because we’ve been taught this lie by bankers for hundreds of years. Did economies not function before we had Central Banks? Of course they did, and they would function with more stability without them.
What was/is the Federal Reserve’s contribution to this crisis?
I think everything, although of course the media and the Federal Reserve always state that they did not contribute to this crisis at all. But I think that the Federal Reserve – not just by itself, though it is the most powerful central bank of the world – but I would say that central banks contributed to this crisis.
In America in particular, the Federal Reserve helped to destroy the Glass-Steagall regulations. It was Alan Greenspan, who catered to the agents of JPMorgan, Goldman Sachs, Citigroup, and the behemoths of the banking world and allowed the creation of all kinds of financial derivative products that were not well understood. In the process, he destroyed almost all of the regulations that protected the consumer.
And in fact, Citigroup, which was the merger of the Traveler Group and Citicorp, was created before the entity was even legal. If you investigate how that happened, you will find out that Citigroup CEO Sandy Weill basically had access to a direct line to Alan Greenspan and he was assured that legislation would pass that would make Citigroup legal even as Sandy formed this new company during a time it was not. The Federal Reserve always says: “We protect the people.” But the whole creation of Citigroup is much more an act of Fascism than that of a Democracy or a Republic.
Are you supporting the House Resolution 1207 Federal Reserve Transparency Act of 2009?
One hundred per cent I support it, but I have extreme reservations of the potency of the final iteration of the bill if and when it finally passes. The bill still has to pass through the Senate as Senate bill 64, and Senate is much more closely aligned with bankers than the House of Representatives. It’s in the Senate where a lot of it will be destroyed. I would hope that it get passed in its original format but I have grave reservations that it will.
Do you believe that the current legislative initiative by President Obama and the Democrats are enough to prevent future crises? Or is it just the same as with the Audit the Fed bill?
Yes, I think it’s the same. It’s lip service. I mean, when you look at Obama’s cabinet, it is even more Wall Street than Bush’s. Almost everyone that occupies his cabinet and his Economic Advisory Council are from the highest echelons of Wall Street. In my opinion, when you look at history, when has government ever produced any real change? Real change, in my estimation, always comes from individuals like Gandhi, Nelson Mandela and Aung Sang Suu Kyi, but a government will always revert back to what it knows best, which is corruption. Corruption is the natural state of equilibrium for all governments. If we believe otherwise, we are not being cynical, but we are being self-delusional.
If the choice was yours, what would you do in order to prevent a deflationary collapse?
Actually, I don’t think that we’ll have a deflationary collapse. We’ll have deflation in the short-term when markets crash and derivative contracts have to be settled at their true market value, but long-term I believe that we’ll have severe inflation.
In the short-term we’ll probably experience the worst of both worlds, meaning devaluing currency and devaluing assets.If you look at what happened in the Weimar Republic, at the very beginning of this crisis in Germany, the top economists were arguing that a deflationary collapse was going to be the outcome of Germany’s economic policies. But eventually hyper-inflation arose.
If you look at the bailouts that Central Banks passed in response to the market crash on Thursday, May 6, you had almost a trillion euros pledged to the EU. I think that central banks have already shown the world that their plan is to devalue all major world currencies into oblivion. You can have a short-term deflationary collapse, but I think eventually a very significant inflation and much higher interest rates are in our future.
One part of the fraudulent environment in which finance / economics have to operate is since the Executive Order 12631 of March 18, 1988 the “Working Group on Financial Markets” a.k.a. the Plunge Protection Team (PPT).http://www.mmnews.de/index.php/english-news/5555-we-dont-need-central-banks - _edn2 This order says that the main task of the PPT is to stabilize the financial markets – but not in a way that is obvious for everyone. Is the modus operandi of the PPT in general a kind of modified version of Adam Smith’s “invisible hand”, Mr. Kim?
To my understanding the “invisible hand” always implied free-markets and that there were these invisible forces that would basically set the equilibrium between supply and demand for various goods and services by helping to set interest rates. However, as long as we have central banks, we cannot have free-markets. So in the absence of free-markets, I don’t believe we can have an “invisible hand.” To say that the PPT works as this “invisible hand” is only correct in the sense of the word “invisible” – that we don’t see its workings. But the PPT is manipulating supply and demand for various goods and services. The PPT, in fact, is un-American and against the very principles of a Republic in that it prevents the existence of free-markets.
You noted in an article from January 25, 2010 the following: “Almost 100% of the gains in the US stock market since September 14th have been manufactured in after-hours trading with enormous purchase of market futures. Strong circumstantial evidence points to this large buyer’s identity as the Plunge Protection Team.”http://www.mmnews.de/index.php/english-news/5555-we-dont-need-central-banks - _edn3
I have asked investment manager Marshall Auerback (RAB Capital Plc) if he agrees on that observation. He replied:
“I certainly agree that the market has been subject to some very odd trading activity and that there is a lot of circumstantial evidence to suggest official manipulation.”http://www.mmnews.de/index.php/english-news/5555-we-dont-need-central-banks - _edn4
My question for you: how do this “circumstantial evidence” look like? |
| This Week's Precious Metals Commentary Posted: 16 May 2010 12:18 PM PDT [Following are excerpts from the current issue of the Weekend Update at Iacono Research.] Strong demand for an alternative to paper money after the European debt crisis again took a turn for the worse and leaders from both the European Union and central bank announced a $1 trillion bailout package saw the gold price surge in euro terms and go on the make new all-time highs when measured in U.S. dollars at $1,249 an ounce.
What has astonished many investors lately is that, while the gold price is understandably rising sharply against the euro, it is also moving higher against the U.S. dollar, something that many pundits thought to be unlikely given the historical relationship between the trade-weighted dollar and gold (an idea that I've railed against for some time now because there is no fundamental reason for the inverse relationship to exist). It would seem that either investors are losing confidence in all paper money or they figure that Europe's troubles will eventually cross the Atlantic and are bidding prices higher in advance of that. While gold priced in euros is surging, it is also quite clear that in U.S. dollar terms the "breakout from a wedge pattern" has indeed occurred, something that I've been writing about for months now. This is again shown in red in the one-year chart below and it now seems to be just a question of how high prices will go from here.
Recall that, normally, once a new all-time high is achieved for any asset, upward technical resistance vanishes since there are no historical points to compare to and prices tend to run higher in short order. This was the case last fall when the old high of about $1,025 an ounce was taken out only to see the gold price surge another $200. As shown below, there is still another 15 or 20 percent to go for the current rally to become comparable to the last two – that would put the gold price at over $1,400.
Weighed against the non-existent technical resistance is the fact that seasonal factors will soon work against higher precious metals prices, so, my guess is that we'll either see another $100 or $200 move up over the next few weeks or the rally might fade in early June. What has been most interesting to watch in recent weeks has been the reaction of precious metals prices to developing news stories both in Europe and in the U.S. When the Dow Jones Industrial Average plunged almost 1,000 points on May 6th, the gold price surged, an indication that it truly is functioning as a short-term safe haven investment as opposed to how it reacted in late-2008. As for silver, it is fascinating to watch its volatility, plunging $1.00 an ounce on May 4th and then making that dollar back on May 7th, the day after equity markets tumbled. Both have year-to-date percentage gains in the low teens – far better than most other asset classes – but they have come to that point in very different ways. I've not listened to it yet, but, there is more on the subject of gold price manipulation at Financial Sense Online where CPM Group's Jeff Christian debates GATA's Bill Murphy with Jim Puplava serving as the moderator. For paid subscribers, there is more discussion on gold related investments in both the Company Updates and For Discussion sections in this week's update. ———————————- Also in the current issue of the Weekend Update this week:
———————————- To learn more about investing in natural resources, see this description at Iacono Research. 
To begin a subscription, click here.
|
| Reindexing The Unemployment Rate By America's Population Growth Yields Some Ugly Results Posted: 16 May 2010 11:19 AM PDT
One of the more peculiar phenomena in the current Great Recession has been the persistent drop in the Civilian Labor Force Participation Rate, after averaging around 66.5% for the past 20 years, in the past 18 months it has plunged, and despite a marginal improvement over the past several months, is still at 65.2%. This is counterintuitive when one analyzes the data side by side with the overall civilian population in the United States. An indexed chart, using the January 2000 level as a baseline demonstrates that while the US population has been climbing at a fairly steady arithmetic growth rate, the civilian labor force, which should track the changes in the actual population, has been behaving in an erratic pattern, having more to do with BLS data interpretation and the nuances of the business cycle than demographics. Which is why when reindexing data for nominal changes in the US rate of population growth, yields some troubling variations from the just disclosed 9.9% unemployment rate. Basing the adjustment to the unemployment rate on nothing but a statistical regression to the growth of America over the past ten years, would yield an unemployment rate of 12.7%. More troubling is that the underemployment rate would be a number far higher than the 17.1% disclosed for April. According to our calculations, a reading closer to 22% would be more appropriate to represent the level of real joblessness in the US. A number, which is higher than the corresponding metric in austerity-ridden Spain. First, we demonstrate the labor force participation rate. The most recent disclosed reading of 65.2% is materially different from the 20 year average of 66.4%.
Of course, the US population isn't static. It grows constantly, and according to the BLS, the Civilian Noninstitutional Population has increased from 211.4 million in January 2000, to 237.3 million in April 2010. This is a 12.3% change, which is nearly 50% compared to the change in the Civilian Labor Force, which has increased from 142.2 million to 154.7 million, or an 8.7% change. Showing this graphically yields the following chart: an indexed comparison of these two very interlinked series demonstrates that while the civilian population has grown in a pretty much straight line, the same can not be said for the Civilian Labor force. Of course, for the US economy to be able to sustain the influx in the population without forming any surplus aberrations, these two lines have to be matched as close together as possible. To be sure, one can make the argument that as society has gotten more efficient, the need for the labor force has declined. The problem with that is that there is an increasingly larger buffer of perpetually unemployed people who will be a drag on the social safety net of America, where there is no free lunch, even in the massive field of government spending. Alternatively, many of these people work in the shadow economy where they pay exactly zero taxes.
Using the above data, and knowing the indexed differential between where the labor force probably is based on the growth of the US population, and what the BLS would like us to believe the Labor Force Participation rate is (as low as possible to keep the actual unemployment number as low as possible as well), we can determine that the real unemployment rate, using an expanded Labor Force, and thus a larger pool of unemployed people, yields an unemployment rate (U-3) of 12.7%. This is about 28.6% larger than the officially reported 9.9%.
And where the discrepancy gets really scary, is when the U-6 underemployment or "real" unemployment rate is comparably reindexed. Instead of the reported 17.1%, we obtain a number that would put even double-dip Spain to shame. Real "real" unemployment is 22% of the civilian labor force, or a whopping 34 million people who are "unemployed, marginally attached, plus total employed part time for economic reasons." This excludes the roughly 80 million people who are not part of the labor force to begin with.
One last parting thought, or as the case may be, chart, is the distribution by weekly duration of unemployment buckets within the unemployed universe. As the chart below shows, out of the 15.3 million unemployed (U-3 definition), the average duration of unemployment has shot up to 33 weeks. The number of people who are unemployed for 27 weeks or more has hit a stunning 45.9%. At this rate, more than half of the unemployed pool will have been out of a job for more than half a year in a month or two. The skills that these workers lose due to inactivity is massive, and represents a tremendous hit to total US productivity. And, unfortunately, as the chart below shows, there are no signs that any moderation for the ever-increasing length of average unemployment is anywhere in sight.
The reason why unemployment is and will be the scourge of the propaganda machine, is that while banks may provide mortgages to individuals with below average incomes and other potential black marks, this time around, having a job will be necessary. If we are right, and if indeed almost 30-some million people have at best recourse to the occasional temp worker paycheck, this will wreak havoc with the first derivative for the US "tail wags dog" economy where housing, and untenable and enslaving housing debt more specifically, is the critical support pillar of the ponzi scheme. Without an improvement in unemployment metrics, there can be no general economic, or sustainable market, improvement, period.
|
| The Markets Around the Presidential Election Cycle Posted: 16 May 2010 10:27 AM PDT David I. Templeton submits: I have noted in the past that the market tends to follow a pattern around the presidential election cycle. It is believed tougher economic policy is followed early in the presidential election period if necessary. The hope is the economy will recover in time to re elect the party that is in power. If the market follows this same pattern, a sideways trend may be the norm until the 4th quarter of this year with a stronger advance in the pre-election year period. Complete Story »
|
| Are the Highest Dividend Yield Stocks the Best Investments? Posted: 16 May 2010 10:23 AM PDT Chuck Carnevale submits: Retirement Income As our population ages, more and more investors are focusing on retirement. With retirement comes a greater emphasis on investing for income and less emphasis on growth. However with the prospects for inflation looming in our futures, growth of income remains a serious and necessary investor consideration. Complete Story »
|
| UK Resumes No Fly Zone Beginning 1 AM GMT Due To Volcanic Ash: Heathrow And Gatwick Closed Posted: 16 May 2010 10:21 AM PDT
From BBC
In an attempt to soothe nerves, a Manchester Airport official said "There is absolutely no official suggestion or prediction that the prolonged, continent-wide airspace restrictions experienced in April are about to occur again." We wish we could share the optimism - something tells us the Iceland revenge only going to get worse.
|
| International Forecaster May 2010 (#5) – Gold, Silver, Economy + More Posted: 16 May 2010 10:08 AM PDT By Bob Chapman, The International Forecaster US MARKETS What do you get when you cross a Dumbo with a Jackass? Answer: You get a dumb-ass, overweight US politician with a sterile mind who executes every order that comes from our Shadow Government like some sort of mindless automaton. In fact, we no longer have even a bogus two-party system with Dumbos and Jackasses. We note that there was never a dime's bit of difference between the two parties in any case (ask Herbert Hoover), but that is even more true today than it was during Hoover's administration, as the one world agenda, which both parties subscribe to, moves forward with lighting speed. Since we really only have one party now, we thought that we should take this opportunity to dub it the "Dumb-ass" party, seeing as how this party is now hell-bent on destroying our country, and themselves with it. If we are now starting to sound like the Mogambo Guru, so be it. Case in Point: The Obama-Dodd-Frank Frankenstein Fed Big Bankster Bailout Bill (hereinafter referred to as the ODFFFBBBB). We thought that we would give credit for this toxic legislation to the three people most involved in sponsoring this bill who also happen to be three of the highest paid politicians in terms of their bankster-gangster campaign contributions. So we have Obama, the usurping, Islamo-fascist, non-citizen President known as "The Joker," Dodd, the whipping boy, gopher and yes-man for Wall Street who has never seen a bill that favored big bankster-gansters that he didn't like, and Frank, the perverted ringleader of a homosexual prostitution ring, who compete's with Dodd for the post of top Wall Street whipping boy. What a motley crew (with no offense intended to the heavy metal band "Motley Crew," who are paragons of virtue compared to this group of miscreants). So, the Dumb-ass party calls the ODFFFBBBB the much-needed financial reform that Main Street has been yearning for in the aftermath of the ongoing financial criminality being used to economically destroy not only our country, but also countries around the world, in order to pave the way for a one world Orwellian police state of feudality. Obviously, nothing could be further from the truth. There was nothing wrong with the old system up until Glass-Steagall was removed and the Commodity Futures Modernization Act implemented. Even after G-S was repealed and the CFMA passed (thanks Bill Clinton, Alan Greenspan, Robert Rubin and Larry Summers), there were still plenty of rules and regulations that very well could have prevented many of the current ongoing financial debacles. The problem was that no one used them. That is because they were instructed not to by our Shadow Government. So instead, our so-called regulators sat around watching porn as Rome burned. And if any of the states started to investigate due to the complete inaction of the federal regulators, their investigators ended up in a "honey pot" scandal like former NY Governor Elliot Spitzer, or were threatened with such, or were bought off. The penultimate example of inaction was, of course, the Madoff Ponzi scheme, which, despite numerous warnings, continued to be uninvestigated or under-investigated as the New York Fed wire-transferred Madoff's investor's funds to Israel to help fund Illuminist off-shore retirement accounts. The losses were bogus, and the books were kept in a shambles, to obfuscate what was really a direct theft of funds by various Illuminist operatives with connections to Israel. You'll find many of these miscreants smoking cigars on the beach at Tel-Aviv after our country finally implodes and civil unrest ensues. But the inaction on Madoff was just the tip of the iceberg. You had the subprime debacle where politicians, borrowers, appraisers, ratings agencies, loan originators, investment bankers, brokers, Fed-heads and lawyers all lied through their teeth to keep the fraud going while regulators picked their noses. Then there were the astonishingly fraudulent activities that led to the municipal bond and municipal bond insurer meltdowns, the AIG debacle, the Lehman Brothers debacle, the Bear Stearns debacle, the LTCM and Enron debacles, and on, and on, and on. There were plenty of statutes, rules and regulations that could have been, and should have been, used to stop these ongoing frauds. But the underlings made sure they did nothing as ordered. If they had attempted to do otherwise, they might lose their cushy job where they were paid big bucks to watch porn all day. Why would any Illuminist henchman-miscreant pass up on that opportunity? If our regulators did anything, it was the opposite of regulation, namely, they engaged in the whitewashing of criminal activity with totally bogus investigations, diminutive fines and no jail time, ever, for any Illuminists. The system was never really broken, although weakened by the repeal of G-S and the passage of CFMA. The regulatory system does not therefore have to be fixed except to undo the repeal of G-S and to implement the regulation of OTC derivatives which were deregulated by the CFMA. Instead, the fix being suggested by the ODFFFBBBB is, in reality, even more toxic than the current system has become due to the complete lack of action by our regulatory authorities. This legislation is intended to create a Fearsome Frankenstein Fed, elevating it from a mere parasitical ghoul to a murdering, infamous monster, when it was the Fed that led the charge for deregulation. The fox will now guard the henhouse, and make the rules besides? Surely, you're joking, Mr. Obama, Mr. Dodd and Mr. Frank. What is broken is not the system, but the morality of the people who run it. The system is owned by the Illuminati. If we don't oust the Illuminati by buying gold and silver by the truckload and by ousting all the incumbents and their ingrained corruption, the system will never be fixed, but will become ever more corrupt so that Illuminist cronyism and power consolidation can continue unabated until we are in bondage to a financial juggernaut which we have termed the Fearsome Frankenstein Fed. We note that G-S, which we have used to denote Glass-Steagall, is also used sometimes to refer to the investment banking firm turned bank holding company, Goldman Sachs, aka the Vampire Squid. We find this rather interesting as these two name pairs with the same initials represent philosophies that could not possibly be more contrasting and opposite. Let's take a look at the members of the new proposed Financial Stability Oversight Council (the FSOC). First, we have the Secretary of the Treasury (meaning the latest implant from the Fed or Goldman Sachs, in this case Tiny Tim Turbo Tax Geithner), who is also the Chairperson of the Council. Then we have Chairman of the Board of Governors of the Federal Reserve (Buck-Busting Ben, the fox who will watch the henhouse). Next we have the Comptroller of the Currency (John "I love GHW Bush" Dugan, who helped preside over the last culling of the small fry during the S&L Crisis as part of Bush Sr.'s Treasury Department), the Director of the Bureau of Consumer Financial Protection, who will be an Obama appointee (aka "consumer protection czar"), Chairman of the SEC (Mary "Jump Them Goldie Bones" Shapiro), Chairman of the FDIC (Sheila "Let No One Ever Be Held Accountable" Bair, aka Sheila "Let the Large Insolvent Banks Absorb the Small Ones" Bair, aka Sheila "Shotgun Bank Weddings" Bair), Chairman of the CFTC (Gary "Strong Dollar Policy by Gold Suppression" Gensler, aka Gary "Silver Fraud, What Silver Fraud?" Gensler, aka Gary "What Do We Need G-S and OTC Derivative Regulation For Anyway?" Gensler, Director of the Federal Housing Finance Agency (Edward "Hide Those GSE Losses" DeMarco, who will also come to be known as Edward "We Love to Eat Toxic GSE Waste from the Fed" DeMarco). Finally, we have a Presidential Appointee with some insurance expertise ("insurance czar") – hey Obama, how 'bout Hank Greenberg, former Chairman and CEO of AIG – he would be perfect! As you can see, the entire Council is made up of nothing but Illuminist marionettes. Our nefarious Shadow Government wiggles their strings and they do their deceitful little tricks. Every one of them is an Illuminist automaton. So how on earth could you possibly expect these people to in any way improve our financial regulatory structure in a way that is going to benefit Main Street, other than by throwing us a few bones here and there to gain some credibility. Then there is the new concept of the "non-bank financial company." This is how they intend to get all the major financial companies under the tentacles of the Fed. Who decides what a non-financial company is? Why the Fed does, of course, by making up its own regulations for making that determination. And who decides whether any specific non-bank financial company will get to be regulated by the Fed? Why its the Financial Stability Oversight Council, of course, by two thirds vote, which must include the Chairperson's yes vote, meaning former NY Fed President Tiny Tim Turbo Tax Geithner. Since the FSOC, aka Council of Illuminist Automatons, aka the new "CIA," are little more than Illuminist marionettes and the Chairperson is the former President of the NY Fed, well, we guess you get the picture by now. This is how the Fed will gain control over all the major banks, bank holding companies, investment banks, commodity brokers, broker-dealers, insurance companies, hedge funds, pension funds, and licensed lenders. Anyone big enough to threaten the system with a meltdown, especially those who could impact large Illuminist institutions, will be brought under the tentacles of the Fearsome Frankenstein Fed. We also note that the Council of Illuminist Automatons can only make recommendations to the Fed regarding its regulatory oversight, meaning that in the final analysis, the Fed can do whatever it wants to. So now, if you are a threat to the Illuminati, they can regulate you out of existence, or arrange to have you eaten up or absorbed by larger Illuminist institutions. And if you want to be able to play with the big boys in the international financial markets, you had better do as the Fed says, and play by Illuminist rules, or you will be crushed. You either become a member of the Fed Crony Club, or you become a member of the Fed's Bankruptcy Club. The Fed will be able to enforce draconian regulations against institutions that do not play by their rules, while these regulations are never used against any Fed-friendly institutions, who will be able to do as they please just as they did before the Council of Illuminist Automatons was formed. All regulatory agencies will now do as the Fed instructs them, which means doing nothing, except where the Fed wants to crush a non-Illuminist institution. Illuminist institutions will continue to get diminutive fines and zero jail time. So much for financial reform. Then there is the issue of bailouts and institutions that are too-big-to-fail. Illuminist institutions will still get bailouts, and the ODFFFBBBB sets up a 50 billion dollar fund to force the healthy non-Illuminist banks to pay for the losses suffered by the large Illuminist legacy banks on account of their rampant, ongoing financial fraud which these large bankster-gansters are using to destroy the US and world financial systems to make way for the global Orwellian police state envisioned by the New World Order. And only non-Illuminist banks will be deemed too-big-to-fail, except where the Illuminati have to break up one of their own to lend legitimacy and credibility to what they are doing. Yes, they will sometimes use their own as sacrificial lambs to gain credibility in the eyes of the public, as the current dog-and-pony show of regulatory teeth-baring with the Vampire Squid, aka Goldman Sachs, amply demonstrates. In the end, however, remember that the plan is to destroy the world financial system, and many Illuminist banks will be destroyed financially, and be in need of a bailout, including the Fed. Not to worry, because the ODFFFBBBB has a stealth bailout provision. When the FDIC, as principal receiver and liquidator pursuant to the ODFFFBBBB, liquidates a failed institution under the ODFFFBBBB, they can use FDIC funds to pay off claimants in an amount equal to the failed institution's cash and cash equivalents, PLUS 90% OF THE "FAIR VALUE" OF ITS ASSETS that are available to be liquidated to wind down the failed institution. But since all the Illuminist, and many non-Illuminist, institutions alike are marking their assets to model instead of to market, the FDIC will be allowed to overpay the Illuminist claimants of any failed institution just as Tiny Tim Geithner overpaid Goldman Sachs on their AIG insured Lehman bonds. This is just a codification of previous shenanigans! First, the non-Illuminist institutions, banks and non-banks alike, will be forced to fail by the Fed which, pursuant to its new regulatory authority, will force them to mark their assets to market, forcing them into failure (unless they have large Illuminist claimants, in which case other reasons will be used to put the institution under while maintaining mark to model fantasy values so the Illuminist claimants can get paid in full). This will be done so the Illuminist institutions can scarf them up for pennies on the dollar. And if any Illuminist institutions might be negatively affected by any such liquidation, there is a special failsafe provision in the ODFFFBBBB that will allow them to get more than what they would get in straight liquidation as discussed later below. This process of controlled destruction with the Fed acting as a god-like institution with the power to destroy or save any given financial institution is called culling out the small fry or eliminating the competition as was done in the S&L Crisis, yet another contrived Illuminist hit on the non-Illuminist savings and loan institutions. This legislation is also about enabling and empowering the Fed to punish any non-Illuminist bank or non-bank financial company that does things they disapprove of, like making large investments in gold and silver, for instance. Once the small fry have been thoroughly culled, the Fed will decide which Illuminist institutions will survive and which will be allowed to fail to keep the rip-off of taxpayer funds and monster salaries and bonuses going. The surviving Illuminist institutions will be overpaid on their claims against other failing Illuminist institutions based on the government-sanctioned, bogus mark to model accounting, so that taxpayers, via the FDIC, will be left with assets that are worth a small fraction of the money that was used to pay off the Illuminist claimants involved in the liquidation. This is similar to what the Fed plans to do by having the GSE's buy back their toxic GSE waste based on bogus mark to model values to give the taxpayers yet another screwing. Mark to model fantasies are what the Illuminati like to call "fair value" these days. This corrupt process will continue for as long as the Illuminati can keep the system going so that they can keep paying out outrageous salaries and bonuses to Illuminist henchmen courtesy of US taxpayers. When only a few major Illuminist institutions are left standing, these humongous institutions will be destroyed by the Quadrillion Dollar Derivative Death Star as planned in a worldwide economic destruction of the old nation-state economic system, where the Illuminati hope to force governments around the world to step in and create a one world system out of the remnants of the large Illuminist institutions which will all get bailed out under threat of a global depression. These remnants will be combined to form a new global financial system with unlimited diabolical power over all of mankind which the Illuminati plan to use to replace the old nation-state system which they are in the process of destroying as we speak. This "creative destruction," as Alan Greenspan, aka "Mr. Bubbles," likes to call it, is how we will get to the Mark of the Beast scenario from the book of Revelation. As an aside, note the deafening silence in the media and newsletters concerning the Quadrillion Dollar Derivative Death Star. That is because if people truly understood the implications, they would be buying gold and silver by the truckload, along with their related shares, which together comprise your only salvation at this point. If you think a meltdown of the Euro zone electrified the gold market, the public's realization that the Quadrillion Dollar Derivative Death Star is on the verge of imploding would be like a million lightning bolts hitting the gold market all at the same time. In the eyes of investors around the world, gold would become as bright as the ensuing supernova from the gravitational collapse of the Quadrillion Dollar Derivative Death Star. – This was a section from the most recent issue of the International Forecaster. You can read the full 38 page issue by using the information below to subscribe. THE INTERNATIONAL FORECASTER P. O. Box 510518, Punta Gorda, FL 33951-0518 Published and Edited by: Bob Chapman CHECK OUT OUR WEBSITE 1-YEAR $159.95 U.S. Funds US AND CANADIAN SUBSCRIBERS: Make check payable to Robert Chapman (NOTInternational Forecaster), and mail to P.O. Box 510518, Punta Gorda, FL 33951-0518. Please include name, address, telephone number and e-mail address. Or: We accept Visa and MasterCard charges. Provide us with your card number and expiration date. We will charge your card US$159.95 for a one-year subscription. You can email us in two separate emails (1- the Credit Card Number with full name, address and your telephone number and (2- the Expiration date on the card.
NON US OR CANADIANS SUBSCRIBERS: Due to the time that it takes for your mail to arrive to us from a foreign country, we would like for you to email us as above the CC information in two separate emails.
Note: We publish twice a month by surface mail or twice a week by E-mail. bob@intforecaster.com RADIO APPEARANCES: To check out all of our radio appearances click on this link below:
|
| Trichet, Euro bailout bought time that’s all, nothing more Posted: 16 May 2010 09:33 AM PDT By Sol Palha, Tactical Investor Observation more than books and experience more than persons, are the prime educators. Amos Bronson Alcott,1799-1888, American Educator, Social Reformer
There is a need for a quantum leap in the governance of the euro area," European Central Bank (ECB) President Jean-Claude Trichet told Der Spiegel magazine. Echoing his call, ECB Executive Board member Juergen Stark said turbulence in the euro zone would calm down only if member countries reformed their economies and cut their deficits. "We have bought time, nothing more," he said in an interview with the Frankfurter Allgemeine Sonntagszeitung. Euro zone governments agreed a 750 billion euro ($1 trillion) rescue last weekend to end a crisis of confidence in the euro triggered by financial problems in Greece, which had threatened to envelop the region's much bigger economies. "It is not an attack on the euro," he said. "It is clear that it is the primary responsibility of the Europeans to take the appropriate measures in order to counter the present severe tensions which have erupted in Europe." Trichet has long urged euro zone governments to cut budget deficits to stop debt piling up. The failure of the Greek government to take this advice led to a debt crisis that risked spreading to other euro zone countries with similar problems. "There need to be major improvements to prevent bad behaviour, to ensure effective implementation of the recommendations made by 'peers' and to ensure real and effective sanctions in case of breaches." In Zagreb, EU Economic and Monetary Affairs Commissioner Olli Rehn said bailouts had to be harsh to avoid encouraging reckless behaviour by governments. "This mechanism must be made so unattractive that no leader of any (EU) country is voluntarily tempted to resort to this system," Rehn said in a speech. Full story
Exactly, we could not have said it better; if any help is offered (we are against this, but if the measures implemented are harsh enough it might just work) the restrictions should be so painful that it will make others think twice before breaking the rules. So far, all we have is talk; let's see if it turns into action. Now the head of European central bank finally agrees with what we have been saying all along. As we have stated before when bankers make comments that actually make sense one should pay heed to them. We feel that only a severe lesson will be sufficient enough to trigger the other laggards into finally pushing in long term meaningful measures to balance their budgets. Until then they will nod yes but in terms of actions nothing will change; it will be the business as usual. The Euro has already hit one of our targets; when it was trading at or close to new highs we stated that it would trade down to the 120 ranges before putting in a bottom. However, the picture has changed slightly, and it now appears that the Euro could potentially trade down to the 115 ranges. We recommended shorting the Euro Via Euo several times, but at this point in the game, we think it's a bit late to open up new positions, unless the Euro mounts a strong rally over the next few weeks. Disclosure We have positions in EUO
Related Articles Euro; the Worst is yet to come, May 12, 2010 Euro shock and awe bailout, more like shock and shake May 10, 2010 Ulterior motive behind Greek Bailout, May 3, 2010 Roast the PIIGs; End the Euro crisis April 30, 2010 More articles from the Tactical Investor….
|
| U.S. Banks Illegally Hide Write-downs Posted: 16 May 2010 09:32 AM PDT By Jeff Nielson, Bullion Bulls Canada A couple of weeks ago, I checked-in on a site which is my favorite source for U.S. debt information: the "Grandfather Economic Report", published by U.S. economist Michael Hodges. I immediately headed for the section titled "America's Total Debt Report", which is where I have gotten my information on total public and private U.S. debt.
At the end of 2008, U.S. total public/private debts stood at $57 trillion (that does not include any of the federal government's $70 trillion in "unfunded liabilities"). Thus, I was very curious to discover what that total had risen to by the end of 2009. I was utterly flabbergasted to discover the same total for 2009. Let me elaborate.
With U.S. federal debt at over $12 trillion, and total public/private debt at $57 trillion, this implies that the rest of the U.S. economy has been taking on nearly $5 of debt for every $1 dollar of debt taken on by the federal government. This ratio has eased somewhat in recent years – not because the rest of the U.S. economy has been borrowing less, but because the federal government has been borrowing much more.
Even with this reduced ratio, with the U.S. federal government taking on $1.8 trillion of new debt in 2009, I fully expected the new total to soar well above $60 trillion. Keep in mind what the 2009 total directly implies: in order for the total to stay at $57 trillion, this meant that for the rest of the U.S. economy, rather than any new debt being incurred, that $1.8 trillion of debt had been extinguished (on a net basis).
In other words, we know that U.S. state and local governments were taking on huge amounts of debt in 2009. We know that while Wall Street has slashed lending that there is still a considerable amount of "residual" lending taking place. What this means is that for total debt to have stayed the same that a mountain of debt would have had to be extinguished – to negate all this other debt: $1.8 trillion of federal debt, $100's of billions in state/local debt, and (at least) $10's of billions in new private sector debt. That mountain would have totaled well over $2 trillion.
There are only two possible ways to retire debt: to extinguish it through repayment, or to destroy it through default. Given that U.S. default and delinquency rates for all categories of debt are at or near all-time record level, we know that very little U.S. debt is being extinguished through repayment, thus somewhere around $2 trillion of debt was destroyed through default in 2009. More articles from Bullion Bulls Canada….
|
| Last Opportunity for US Mint Products, Includes 2009 Silver Proof Set Posted: 16 May 2010 09:31 AM PDT The United States Mint has published a Last Opportunity section on its online store which provides several order deadlines for 2009-dated products that are about to be replaced.
|
| Silver Prices Soar 11% in London, 4.2% in New York Posted: 16 May 2010 09:31 AM PDT Silver prices rallied this week, pulling away from the declines of the prior week. The metal soared 11% in London and 4.2% in New York.
|
| Central banks have lost their battle against gold, Sprott tells King World News Posted: 16 May 2010 09:30 AM PDT 11:46p ET Saturday, May 15, 2010 Dear Friend of GATA and Gold: Interviewed for 10 minutes today by Eric King of King World News, Sprott Asset Management CEO Eric Sprott remarks that the stock market's recent thousand-point slip signals a bear market ahead; that Europe's trillion-euro bailout couldn't be more gold-friendly; that debt isn't producing much economic growth anymore; that people are looking at gold much differently over the last two months, realizing they have to get some amid the financial lunacy of governments; that central banks have lost their battle against gold; that many gold stocks are very undervalued as gold mining profits rise sharply; and that eventually currencies will be backed by gold again. You can listen to the interview at the King World News Internet site here: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/5/15_E… CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
|
| SmartKnowledgeU’s J.S. Kim concurs with GATA Posted: 16 May 2010 09:30 AM PDT 11:30p ET Saturday, May 15, 2010 Dear Friend of GATA and Gold: In an interview with Lars Schall for MMNews in Germany, SmartKnowledgeU investment firm proprietor J.S. Kim concurs extensively with GATA's complaint of manipulation of the gold market. The interview is headlined "We Don't Need Central Banks" and you can find it at MMNews here: http://www.mmnews.de/index.php/english-news/5555-we-dont-need-central-ba… CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
|
| Gene Arensberg: Comex large commercials break ranks Posted: 16 May 2010 09:30 AM PDT 11:10p ET Saturday, May 15, 2010 Dear Friend of GATA and Gold (and Silver): Gene Arensberg tonight posted the full text of his new Got Gold Report, disclosing that the large commercial dealers have broken ranks in gold, with the usual suspects adding to their short positions but smaller commercials starting to cover. And in silver, Arensberg writes, the largest dealers themselves have begun to cover. Arensberg's GGR is headlined "Comex Large Commercials Break Ranks" and you can find it here: http://treo.typepad.com/got_gold_report/2010/05/comex-large-commercials-… CHRIS POWELL, Secretary/Treasurer * * * Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit:
|
| What’s Ahead for Platinum and Palladium? Posted: 16 May 2010 09:30 AM PDT With the introduction of new exchange traded funds (ETFs) for platinum and palladium in the U.S. at the start of this year, and a similar introduction in Europe more recently, a lot of attention has been turning to the Platinum Group Metal end of the precious metals complex. [PGMs: Platinum, palladium, ruthenium, rhodium, osmium and iridium.] The large uptake in investor demand for the new ETFs took many by surprise, for what have been traditionally more industrious precious metals. While gold took many of the headlines as it broke all time highs during the year, platinum and palladium both set their own records. They were in fact often seen outperforming the yellow metal. This increased appetite for the metals as investment assets, and their strong performance over the past year or so now leads many to ask where they stand on the physical supply and demand side, and what potential is there for further price appreciation for the second half of 2010? To assess both of these factors however, one first has to note some of the fundamental relationships these metals have on both the demand and supply side. The auto industry for example, represents the largest consumer for both platinum and palladium, accounting for almost half of the entire demand during 2009. Both metals are used primarily in auto catalysts, with palladium dominant in gasoline engines and platinum primarily used in diesel engines. Regionally, the majority of diesel driven cars are sold in Europe, while most gasoline driven cars are sold in China and other emerging economies. In addition to auto catalyst demand, platinum sees a significant demand coming from the jewelry sector, and following Chinese platinum jewelry demand more than doubling in 2009, is now just as fundamental and important to platinum prices as the traditional auto industry demand. A new and upcoming factor on the demand side for both of the metals however, are the new ETFs created by the fund manager ETF Securities, which although the holdings represent only around 5% of estimated global demand this year, the amount of platinum and palladium that was bought by the two ETFs every trading day actually exceeded global mining production for the two metals. The less established European ETFs have also seen a similar surge in demand come about for platinum and palladium. They now jointly raise the possibility that, at some stage, investor demand will in fact outstrip the physical. This would lead to a divergence away from the fundamental factors as is often the case in other, highly liquid commodities. On the supply side, South Africa represents the world's largest individual producer of platinum, currently at around 80% of all global production. Russia is the world's largest producer of palladium however, accounting for more than 50% of global production. South Africa comes in second for palladium production.
|
| Posted: 16 May 2010 08:23 AM PDT Jim, Perhaps many intelligent German people studied the history of Weimar hyperinflation that occurred in 1923. The printing presses like those today went out of control sending the price of gold to the stratosphere as paper dollars became useless! CIGA "The Gordon"
Jim, This will not be unfamiliar to you but it will be to many. It is a bit of an insider's look, a confession, on the world of banking gone mad. It is a well done piece and one that many should see – especially those who still trust the system. Regards,
|
| With Local Gold Inventories Depleted, Panicking German Dealers Stage Run On Krugerrands Posted: 16 May 2010 06:40 AM PDT
More from the Financial Times:
In focus are also the big physical and otherwise gold ETFs which have recently received much notoriety over the likeilhood they are hollow ponzi scams which will shut down operations the second there is even a whiff of a gold run on their holdings.
Even if gold is indeed entering a bubble mania phase, the mania in PMs is far less exuberant than in stocks, with the stock market multiples larger than that of gold and silver, and with far greater retail and speculative participation. Should there be an unwind, we expect stock prices to drop more and faster than those of PM products. h/t Slim Beleggen
|
| Posted: 16 May 2010 05:04 AM PDT
Trading has not yet begun; so the charts will remain showing old values until futures market opens up.
Indexes
Energy
Metals
Agricultural commodities
Diversified
Bonds
Currencies
Recommended read: Erich Fromm: "To Have or to Be" Erich Fromm - To Have or to Be (1976)
|
| It’s the EU’s Crisis now, but the US Could be Next Posted: 16 May 2010 05:00 AM PDT The financial crisis that began in housing, and then with banks and insurers, has now moved onto the balance sheets of nations. And, among the fiscally unsound, it's the euro that is suffering the most. It recently hit a 14-month low in dollar terms, and the ongoing uncertainty facing the EU continues to break records for pessimism. According to MarketWatch: "In early February, the cost of insuring against a sovereign default in Western Europe exceeded the price of similar protection against default by North American investment-grade companies. That was the first time this had happened, according to data compiled by Markit from the credit derivatives market. "The move 'symbolizes how credit risk has been transformed from corporate to sovereign risk, as the solution to the financial and economic crisis was government intervention,' Hans Mikkelsen, credit strategist at Bank of America Merrill Lynch, wrote in a note to investors at the time." But it's not just a European problem… "Even though the current epicenter of the crisis is focused on the euro zone, the overall fiscal position of the single currency area is stronger than that of the U.S., the U.K. and Japan, he noted. "'Unless there is a radical change of course by those in charge of fiscal policy in the U.S., Japan and the U.K., these countries' sovereigns too will, sooner (in the case of the U.K.) or later (in the case of Japan and the U.S.) be at risk of being tested by the markets,' Buiter said." In response to these market pressures, Greece, and now Spain and Portugal, have begun austerity programs to rein in government spending and get deficits under control. As Daily Reckoning editorial director Eric Fry recently pointed out in the chart below, the US has similar debt funding requirements as the troubled EU countries… but has yet to start acting like the party's over.
Visit MarketWatch to read more details on the second debt storm. Best, Rocky Vega, It's the EU's Crisis now, but the US Could be Next originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."
|
Heavy inflows to gold ETFs – more than 50 tonnes in the last seven days for the SPDR Gold Shares ETF (NYSE:
Just what Europe needs (where the EURUSD and EURJPY opened earlier at level below the Friday close): more air traffic shut downs due to the unpronounceable Iceland volcano. Beginning 1 AM GMT, so in about an hour, Heathrow and Getwick will be shut down, "with more disruptions likely over coming days" reports the BBC. Virtually all airports in the UK, including Heathrow and Gatwick will be shut down, causing more millions in losses for both commercial aviation and crimping trade in and out of Europe, especially for time-sensitive products. As of yet it is not certain when airports will resume operations. In the meantime if you are flying into Europe with a UK connection over the next 24 hours, you are out of luck.
Last week we noted that several prominent Austrian and German gold dealers had run out of inventory and were no longer transacting with a European population that has suddenly discovered gold religion. As a result, dealers are now focusing procurement efforst outside of Europe, with South Africa receiving the brunt of Europe's panic for physical precious metals. As the FT reports, "At the Rand refinery in South Africa, the phone has not stopped ringing this week." Just imagine what will happen when the gold bug goes airborne and jumps across the Atlantic... 
| You are subscribed to email updates from Gold World News Flash To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment