View the original post at jsmineset.com... June 19, 2010 07:19 PM Jim Sinclair’s Commentary With a little help from their friends, who do you think bought the last Greek bond offer and this week’s Spanish offering? The answer is the "bailout money" and very little other. ECB must buy ‘hundred of billions’ of bonds to tame Europe’s debt crisis Fitch Ratings has warned that it may take massive asset purchases by the European Central Bank to prevent Europe’s sovereign debt crisis escalating out of control. By Ambrose Evans-Pritchard Published: 8:19PM BST 17 Jun 2010 Brian Coulton, the agency’s head of sovereign ratings, said German members of the ECB appeared to be blocking the sort of muscular intervention in southern European bond markets needed to restore the shattered confidence of investors. "There has been an unwillingness to follow through, and markets are going to want to see the ECB’s money. It will require hun...
Pricewise, gold didn't do a lot on Friday until Hong Kong closed for the weekend. Then a rally began in London that really gathered some upside momentum about 45 minutes before New York opened. There was a minor peak around $1,260 spot shortly before 9:00 a.m. Eastern time... and then gold got sold off a hair going into the London p.m. gold fix at 3:00 p.m. London time... 10:00 a.m. in New York. Once the 'fix was in'... gold worked its way quietly higher until it's absolute peak price of the day [$1,263.50 spot] around 12:15 p.m. Eastern. The gold price then got sold off exactly $8 from that high price... and it closed New York electronic trading at $1,256.50 spot... up $11.30 from Thursday's close. This was a new record high closing price for gold. According to the LBMA website, the London silver fix is around noon local time... 7:00 a.m. in New York. The silver price was comatose on Friday up until what might have been an early silver fix short...
By Frank Holmes, CEO and chief investment officer, U.S. Global Investors The New York Times dedicated a chunk of last Sunday’s paper to gold as a mainstream investment. In other words, gold is now legit -- no longer can it be dismissed as the asset of choice for fringe types with a cellar full of canned goods and a stash of bullion buried in the backyard. And to illustrate just how far gold has moved into the American mainstream, the paper goes bipartisan by holding up investor George Soros on the left and commentator Glenn Beck on the right as examples of the newly converted. Now there’s an old saying that the time to sell an investment is when it’s finally “discovered” by the popular media, but that may not be good advice for gold in today’s environment. This week spot gold and gold futures hit all-time highs as the latest government reports cast doubts on the economic recovery. In its story, the Times points out many of the ...
The dog that isn’t barking in capital markets is the volatility of the gold price. Despite gold’s move up to a new record, gold’s historical volatility is around 18%, compared to over 30% for the S&P 500. If gold and stock prices both embody systemic risk, why should their volatility diverge so much?
GLD Implied and Historical Volatility (click to enlarge)
June has been heating up for life sciences companies replenishing their coffers. Only three weeks after announcing positive mid-stage data on its endometriosis-related pain therapeutic elagolix, Neurocrine Biosciences (NBIX) lined up a partner in Abbott Laboratories (ABT) to help develop and commercialize the compound. Elagolix is a novel, first-in-class oral gonadotropin-releasing hormone (GnRH) antagonist that ultimately reduces circulating sex hormone levels.
Under the terms of their agreement, potentially worth up to $575 million for Neurocrine, Abbott will get exclusive worldwide rights to elagolix and all next-generation GnRH antagonists for women's and men's health. In return, Abbott will pay Neurocrine $75 million upfront and will fund all ongoing development activities. Neurocrine will be eligible to receive up to $500 million in additional payments based on the achievement of certain development, regulatory and commercial milestones, funding for certain internal collaboration expenses, and royalty payments on any future product sales.
Abbott is a natural partner for elagolix as it already markets Lupron, a GnRH analogue for endometriosis that brings in about $800 million a year in revenue. “Extensive preclinical and clinical experience with elagolix suggests this drug could be an important advance for women with endometriosis and uterine fibroids, highly prevalent conditions where there is a need for new treatments,” says John Leonard, senior vice president, pharmaceuticals, research and development, Abbott. “This agreement enhances Abbott's late stage pipeline, with the potential for additional compounds in earlier stage development.”
In the same week, Neurocrine Biosciences signed a worldwide collaboration agreement with Boehringer Ingelheim to research and develop small molecule GPR119 agonists for the treatment of type 2 diabetes and other indications. The companies will work together to identify and advance candidates into pre-clinical development and Boehringer Ingelheim will be responsible for the global development and commercialization of potential GPR119 agonist products resulting from the collaboration.
Neurocrine Biosciences will receive $10 million upfront, research funding to support discovery efforts and will be eligible to receive up to $225 million in milestone payments based on the achievement of development, regulatory and commercial goals as well as royalty payments on any future product sales.
“Combining Boehringer Ingelheim's research and development expertise in metabolic disorders with Neurocrine's unique capabilities in small molecule discovery for GPCRs provides a strong platform for development of new therapies for type 2 diabetes,” says Dimitri E. Grigoriadis, vice president of research at Neurocrine, in a statement.
Redwood City, California-based OncoMed Pharmaceuticals lined up Bayer Schering Pharma (BYERF.PK) as a strategic partner to develop anti-cancer stem cell therapeutics targeting the Wnt signaling pathway. Bayer and OncoMed will share technology and know-how to discover and develop small molecule inhibitors of the pathway. Bayer will pay OncoMed $40 million upfront and will have the option to exclusively license and take over development of up to five antibody and protein therapeutic product candidates arising from the partnership at any point up to the completion of phase 1 testing. The collaboration includes OncoMed’s lead Wnt pathway antibody, which is intended to enter clinical testing in 2011.
OncoMed will also be eligible for milestone payments for each candidate Bayer licenses based on its successful development through late stage clinical trials and regulatory approval of up to $387.5 million for each biotherapeutic and $112 million for each small molecule. OncoMed will receive royalties on sales of commercialized products and may co-develop biologic therapeutics with Bayer.
“The development of anti-cancer stem cell therapeutics together with OncoMed is a highly innovative approach with the potential to perfectly complement our oncology portfolio,” says Andreas Busch, Bayer’s head of global drug discovery and a member of the Board. “Anti-cancer stem cell research could turn out as one of the missing pieces in today's cancer therapy.”
Venture capital fundraising reached fever pitch as venture capitalists, private equity firms, and companies poured over $400 million into private companies during the week. Castlight Health raised $60 million in series C funding, one of the top venture rounds of 2010. New investors Morgan Stanley Investment Management, The Wellcome Trust, U.S. Venture Partners, and Cleveland Clinic joined existing investors Maverick Capital, Oak Investment Partners and Venrock to fund Castlight’s commercial rollout of its system that empowers consumers with information to effectively navigate the health care system.
San Francisco-based Castlight works with companies to provide employees an individual level view of their health care benefits and costs through a web-based service so they are aware of out-of-pocket costs, alerted about cost saving opportunities, and offered additional information about physicians and procedures.
“The drive toward patient responsibility in health care combined with the complete lack of information to support that transition has landed Castlight Health in the middle of the perfect storm,” says Bryan Roberts, partner at Venrock and co-founder of Castlight Health. “The company is empowering individuals to take control of their healthcare expenses – something that has eluded this country to date. This is a huge market, with extraordinary and palpable customer demand.”
Molecular diagnostics maker Gen-Probe (GPRO) made a $50 million strategic investment in Menlo Park, California-based genomic sequencing company Pacific Biosciences, and is part of a larger series F private round of financing. In addition to the investment, the companies will work together to explore co-development of new integrated clinical diagnostics systems based on Pacific Biosciences' disruptive technology platform for the real-time detection of biological events at single molecule resolution and Gen-Probe's expertise in diagnostics.
Pacific Biosciences' SMRT DNA sequencing enables the observation of natural DNA synthesis by a DNA polymerase as it occurs. The approach is based on eavesdropping on a single DNA polymerase molecule working in a continuous, progessive manner.
Gen-Probe and Pacific Biosciences will initially collaborate on an exclusive basis for up to 30 months, with the goal of developing a longer-term, preferred business relationship aimed toward improving the diagnosis of human diseases.
Portland, Oregon-based Home Dialysis Plus, a developer of home hemodialysis devices for patients suffering from end-stage renal disease, secured a $50 million equity commitment from private equity firm Warburg Pincus. The commitment will allow the company to further the development of a portable dialysis system that is intended to allow patients to experience the benefits of frequent dialysis, a treatment regime that more closely simulates natural kidney processes and has been shown to improve patients’ quality of life.
Princeton, New Jersey-based Agile Therapeutics scored $45 million in series B preferred stock financing co-led by Investor Growth Capital and Care Capital, with strong participation from ProQuest Investments. Kaiser Permanente Ventures and Novitas Capital also joined the financing round. The funding will allow Agile to complete late-stage clinical development and file for marketing approval for its lead contraceptive patch, AG200-15, and to advance Agile’s second contraceptive patch, AG1000, into mid-stage clinical development. Agile’s patches are being developed to provide women with a convenient and easy-to-use alternative to their current means of contraception.
Cambridge, Massachusetts-based FoldRx Pharmaceuticals closed a $29 million financing to advance tafamidis, a disease modifying therapy for TTR amyloid polyneuropathy, a progressive and life-threatening genetic neurodegenerative disease that affects thousands of patients worldwide, to market. New investors Novo Ventures and Morgenthaler Ventures join existing investors Healthcare Ventures, Fidelity Biosciences, TPG Biotechnology, Alta Partners, and Novartis Venture Funds in the financing.
Vancouver, British Columbia-based Aquinox Pharmaceuticals secured $25 million in a series B financing led by Ventures West Capital with participation by new investor Pfizer Venture Investments and existing investors Johnson & Johnson Development, Baker Brothers Investments, and BC Advantage Funds. Proceeds will allow Aquinox to advance its lead candidate, a first-in-class small molecule allosteric modulator, for the treatment of inflammatory disease and cancer.
DEALS FOR THE WEEK ENDING JUNE 18, 2010
Global Venture Financings
Company
Location
Amount Raised ($M)
Principal Focus
Aquinox Pharmaceuticals
Vancouver, BC, Canada
$25.00
Inflammatory; cancer
Andromeda Biotech
Yavne, Israel
$17.50
Type 1 diabetes
Gliknik
Baltimore, MD
n/a
Cancer; autoimmune
Galera Therapeutics
St Louis, MO
n/a
Cancer side effects
IRX Therapeutics
New York, NY
$8.00
Cancer vaccines
BioScale
Cambridge, MA
$25.00
Protein analytics
Agile Therapeutics
Princeton, NJ
$45.00
Women's health
FoldRx Pharmaceuticals
Cambridge, MA
$29.00
Neurology therapeutics
Akebia Therapeutics
Cincinnati, OH
$5.00
Vascular; anemia
FerroKin BioSciences
San Francisco, CA
$12.00
Iron overload
Predictive Biosciences
Lexington, MA
$25.00
Cancer diagnostics
Home Dialysis Plus
Portland, OR
$50.00
Dialysis devices
Exogenesis
Billerica, MA
$3.70
Tools/Technology
Rib-X Pharmaceuticals
New Haven, CT
$5.50
Antibiotics
Pacific Biosciences
Menlo Park, CA
$50.00
Genomics
Corridor Pharmaceuticals
West Conshohocken, PA
$15.00
Vascular therapetuics
Ncontract Surgical
Morrisville, NC
$3.00
Cardiovascular medical devices
Cardiovascular Simulation
Mountain View, CA
$10.00
Medical software
Virobay
Menlo Park, CA
$10.00
Antivirals
Daktari Diagnostics
Cambridge, MA
$3.70
HIV diagnostics
Boston Biomedical
Norwood, MA
$2.00
Cancer therapeutics
Access Scientific
San Diego, CA
$2.60
Vascular medical devices
Cylene Pharmaceuticals
San Diego, CA
$6.10
Cancer therapeutics
Ridge Diagnostics
San Diego, CA
$0.58
Neurology diagnostics
Castlight Health
San Francisco, CA
$60.00
Consumer digital health
TOTAL RAISED US
$371.18
TOTAL RAISED NON-US
$42.50
Grants
Company
Funding/Contracting Agency
Amount ($M)
Principal Focus
Enerkem (Canada)
Climate Change and Emissions Management
$1.80
Renewable fuels
Daktari Diagnostics
Bill and Melinda Gates Foundation
$0.60
HIV diagnostics
INEOS (United Kingdom)
United Kingdom Department for Energy and Climate Change
The lead story at the Wall Street Journal Friday was an absurd diatbribe from none other than the U.S. central banker who has been wrong about just about everything over the last 25 years. Alan Greenspan has officially joined the legion of deficit terrorists and flat earth economists who believe the U.S. is on the verge of imminent collapse at the hands of the bond vigilantes.
Alan Greenspan has been more than discredited over the course of the last 10 years. This is a man who helped deregulate the financial sector while also believing that he controls every twist and turn in the U.S. economy via his interest rate press releases. Of course, the last 18 months have proven the monetarists terribly wrong. The Enron banking system has also proven that deregulation substantially contributed to our current predicament. But don’t take it from me. The man himself admitted in 2008 that his models were “flawed”:
The US economy has probably begun a lasting recovery, but the outlook has become more uncertain in recent weeks.... [T]he recovery still faces risks, from the premature withdrawal of federal spending aimed at stimulating the US economy to a financial meltdown in Europe to increased tensions in Korea.... [A]fter expressing confidence that European policy makers would contain the government debt crisis and avoid another global financial crisis, he added that the assessment was "my best guess, and I could be wrong." Or, when asked if the nation had achieved a self-sustaining recovery, Summers responded, "I think that’s the right presumption and my expectation. I wouldn’t be foolish enough to be certain."
In the week ahead all eyes will be focused on the FOMC monetary policy meeting as traders look for confirmation that, in light of a weak jobs and housing markets, muted inflationary pressures, and the EU debt crisis, the Fed may continue to keep interest rates low for an “extended period”.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to.
American Enterprise Institute President Arthur C. Brooks might be an emerging leader of the intellectual side of the Tea Party movement (Cf. the emotional side). He raises an interesting point I have been hearing a lot lately by people in states with massive public pension liabilities: “The disparity [between public and private sector benefits] is so large and so unfair, a day of reckoning is coming.”
When I was recently visiting family in New Jersey, all they could discuss was their animosity toward police officers retiring in their 40&rime;s with full pensions, teachers receiving 4% a year raises despite the economic recession, and politicians who keep signing contracts for more unsustainable and unfundable public sector compensation programs. Given the anger coupled with their very reasonable insights, I could easily see how this issue will reach an ugly head.
Thus, I don’t think this is a public versus private sector issue as much as an issue of people incorrectly believing that 1) there are guarantees in capitalism, and 2) taxpayers can sustain irrational retirement benefits for public sector retirees.
There are NO Guarantees in Capitalism
I repeat: there are no guarantees in capitalism. If the US is to recreate one of the greatest economies in the world, we must end the practice of aiding businesses and programs which would otherwise go bankrupt without government subsidy. Once guarantees are offered to a privileged group of people, a society ends up in the current tit-for-tat gameplay currently reaching elevated heights in the US.
Of course, there must be exceptions for certain programs which provide legitimate social value for the statistically small percentage of people who genuinely need it. But insofar as guaranteeing survival in the private marketplace or irrational retirement benefits in the public sector, the government must end these practices now before we follow the same path as ancient Rome.
The death spiral is as such:
First, public sector employees see private sector companies receiving generous taxpayer aid for all types of unfair reasons. Then, the private sector sees public workers retiring after 15-20 years with full pensions at insane rates based on trickery (e.g., padded time sheets with unnecessary overtime), paid-up medical with zero to infinitesimal worker contributions, and other outrageous benefits which seem like they were added to the public budgets during a real life trip through Tim Burton’s Alice in Wonderland.
After that, the private sector lashes back because there’s no justice in using tax dollars to provide one set of workers with a better standard of living than another set of equally deserving workers. This game goes back and forth until the parents step in and quash the childish nonsense.
Taxpayers Cannot Sustain Irrational Public Sector Benefits
In addition to getting back to Adam Smith’s authentic version of capitalism — not crony capitalism or corporate socialism — the public sector must recognize that 1 + 1 = 2. Therefore, public budgets must be based on realistic tax burdens. No one I know debates whether we need teachers or police officers. However, they do question whether a 40-year old police officer really needs so much tax payer support as to have a Hummer, live in the wealthiest neighborhood in town, etc.
Moreover, there is a major problem with military officers marrying friends simply so the tax payer will send benefits to the new “spouses”. Anyone who has spent any time around the military knows there is a huge cancer of scams such as this being perpetrated against the taxpayers. Rather than nickel and dime our nation’s protectors, let’s take care of the honest ones more generously while rooting out those who are stealing from the system.
While I share many concerns raised in this article, let me also present the flip side of this capitalistic view of retirement benefits that you will never see in mainstream media.
"Europe's Financial Class War Against Labor, Industry and Government" with Dr. Michael Hudson. Economic crisis in Europe created by predatory lending; European Central Bank stranglehold on the Eurozone; the Euro; foreign banks decimate Greece's social structure; Marx's industrial capital versus fictitious capital; Latvia as a model for the rest of Europe; Hudson's financial and fiscal plan for Latvia; the Cold War and its ruinous effect on progressive economic thought.
Take the time to listen to Michael Hudson below. There are few people in this world who understand the new financial class war more than him. I don't agree with everything he says, but his analysis is devastatingly brilliant. An absolute must listen interview.
We're into new all time highs in gold, inflation non-adjusted. Still the move does not have the momentum (strength) behind it to give us all that enthusiasm one might want to give to the move. Go with the flow but watch out should the flow stop. Read More...
Goldman's macroeconomists led by Jan Hatzius have launched a new tool, the US-MAP, also known as a Macro-data Assessment Platform, whose purposes will be to track up/downside macroeconomic "surprises" relative to expectations. As lately we have had nothing but downside surprises, yet the market keeps ploughing higher for some computerized reason, this would be a useful tool to keep track of just how overoptimistic the economic consensus is. Yet as usual, Goldman introduces a fudge factor in the way it grades the importance of specific economic data: for example according to Goldman's relevance matrix, such lagging and manipulated data as the Conference Board Confidence Index is given the same weight as the ISM Services and the ADP report, and greater weight than Initial Claims, New, Existing and Pending Home Sales, the Empire Index, Industrial Production, Core PPI , the Trade Balance, Housing Starts and, stunningly, actual Consumer Spending. How this makes any sense, we don't know - then again we did not win the Wall Street All Star Economic Prize last year, so address your queries to Jan. Yet even with all this doctoring, Hatzius is forced to admit: "A visual check of US-MAP readings for the data released thus far in June confirms the predominance of downside surprises." In other words, it is about time economists start factoring in a double dip instead of continuing to live in the land of unicorns, endless stimulus and pixie dust. The game of "the data beat expectations" is now over. Now what?
Below is a chart of Goldman's incident and cumulative downside surprise readings:
As for the doctoring of the data, here is how Goldman explains its multidimension matrix for assigning data relevancy:
The key insight of GS-MAP is to recognize that most questions about economic reports turn on one of two issues: (1) how important, or relevant, is the indicator being reported, and (2) how surprising is the outcome in the particular report that has just been issued? For the rating systems that have been introduced thus far, GS-MAP works like this:
A relevance score is assigned to each indicator, based on its correlation to real GDP growth in the associated country or region. For simplicity, the score runs from 0 to 5, with 5 identifying variables with the highest growth correlations. It does not change from one month to the next.
A surprise score measures the extent to which the outcome of a particular report exceeds or falls short of expectations. It is based on the difference between the reported figure and the "consensus" expectation. Again, the score runs from 0 to 5 in absolute value, providing a total range of -5 to +5.
A composite GS-MAP score is then calculated as the product of the relevance and surprise scores and presented as a gauge of the overall importance of the data that have just been released. However, the two components are also reported; thus, the full GS-MAP reading for an "extreme" downside surprise in an indicator of "medium" relevance would be -15 (3,-5).
For US-MAP, we will follow the same general approach of assigning relevance and surprise scores for 28 indicators of economic activity and inflation, but with two important changes:
1. The relevance score will be based on market impact rather than on growth correlations. Specifically, we have updated and expanded the analysis used in the February 2007 revamping of the Goldman Sachs Surprise Index (GSSI), in which we estimated the effect of a normalized deviation from the median forecast (as reported by Bloomberg) on intraday movements in the yield on 2-year Treasury notes. The update adds more than three years of data to the estimates derived at that time; the expansion adds 12 new variables to the 16 already included in the GSSI. (We have yet to change weights in the GSSI, pending decisions on which of the new indicators exert effects large enough to warrant inclusion and which of the old ones might be dropped.)
This departure from other applications of GS-MAP reflects three considerations that we believe are unique to how financial markets process US economic data. First, the data are more extensive than for most other countries, and many market participants are reasonably familiar with how the data fit together. Hence, the information content of a relevance score based on correlations with real GDP growth is much lower for the United States than it is for other countries. In fact, this familiarity is such that US reports often have a much larger impact on trading in foreign markets than do the reports on local economic activity.
Second, a large body of data has developed on the outcomes of many US economic reports compared to expectations. Thus, it is possible to estimate the relative importance of these reports based on how surprises have affected markets in the past. This provides a more natural link between the two dimensions of US-MAP and, we think, a more appropriate measure of relevance.
The difference between relevance as measured by market impact and relevance as measured by the (concurrent) correlation with GDP growth is not trivial, as shown in Exhibit 1. Over the past ten years or so, the correlation between the two is only 0.22, indicating that markets trade on more than what indicators say about economic growth.
Thus the third reason: simple growth correlations yield results that sometimes are at odds with impressions of relevance that are admittedly more intuitive but nonetheless valid in our view. The most glaring of these is that inflation indicators often exhibit low correlations with real GDP growth, yet they are quite relevant to the markets. The core CPI illustrates the point as it has been virtually uncorrelated with real GDP growth over the past decade. At the other end of the spectrum, a score based on growth correlations would put the Empire index of manufacturing conditions in New York State at the top of the list. While we are prepared to accept the verdict that this indicator is a better proxy for real GDP growth than we may have realized, it is nonetheless hard to believe that it outranks payrolls, the ISM index, and retail sales (and everything else) in relevance.
2. We may make judgmental adjustments to the surprise score. This could be more controversial than our modification of the relevance score, as it introduces the possibility of ad hoc intervention. However, there are times when a large surprise is due to factors of dubious significance and other times when a result close to expectations masks other data of importance; this is particularly a risk when reports are large and complex. The labor market report, with the potential for a contrary move in the high-profile jobless rate, is the best example of this. In such situations, we see it as our job to inform clients of inconsistencies, which we already do in our written commentary. And since this is the case, we should do likewise in the surprise score of US-MAP.
Last Friday's retail sales report for May shows the need for this flexibility. The median forecast for sales of goods other than autos was for a 0.1% increase, but a 1.1% decline was reported. The difference was more than 2 standard deviations. However, this surprise was mostly due to a tax related correction in the building materials component, which in any event is discarded by the Commerce Department when it calculates personal spending. Under these circumstances, it would not make sense to stick with a high surprise score. Likewise, the Philadelphia Fed index for June fell sharply, but the detail in this report did not support such a large move. Although examples like this abound, we intend to be sparing in making adjustments, especially large ones. It is also worth noting that "unlike our market-oriented change in how the relevance score is determined" judgmental adjustments to the surprise score will convey more information about economic significance, at least as we see it, than about market significance.
And here is how the two-dimensional matrix of the various economic measurements would look like in real life. Remember: the greater the relevance, the more important it is.
At this point it probably makes sense to recall that wonderfull essay "Understanding Poetry" by Dr. J. Evans Pritchard, Ph.D., quoted in Dead Poet's Society.
'Understanding Poetry,' by Dr. J. Evans Pritchard, Ph.D.
To fully understand poetry, we must first be fluent with its meter, rhyme and figures of speech, then ask two questions: 1) How artfully has the objective of the poem been rendered and 2) How important is that objective? Question 1 rates the poem's perfection; question 2 rates its importance. And once these questions have been answered, determining the poem's greatness becomes a relatively simple matter.
If the poem's score for perfection is plotted on the horizontal of a graph and its importance is plotted on the vertical, then calculating the total area of the poem yields the measure of its greatness.
A sonnet by Byron might score high on the vertical but only average on the horizontal. A Shakespearean sonnet, on the other hand, would score high both horizontally and vertically, yielding a massive total area, thereby revealing the poem to be truly great. As you proceed through the poetry in this book, practice this rating method. As your ability to evaluate poems in this matter grows, so will, so will your enjoyment and understanding of poetry.
Dr. J. Hatzius, Ph.D. has merely taken this essay and converted it into one entitled "Understanding and Mitigating Downside Economic Surprises." Next up: writing the most persuasive haiku to describe the plunge in NFPs.
We wonder how long before the snake oil is put away and the economist community realizes that absent another multi-trillions fiscal and monetary stimulus package, the double dip (or the accelerating in the slide, depending on how one views these things) is unavoidable. June was the first month in which the cumulative negative surprises came far worse than expectations (not like stocks care of course). And if you thought June was bad, wait until July, August, September, October, etc, etc. and so forth until we eventually hit 2020 when US Debt (pro forma for all off balance sheet insanity) to GDP will be a four digit number.
Russian President Dmitry Medvedev has been in the news a lot lately talking about currency issues and the future of BP ahead of next week's G20 meeting. In the process, he's starting to make anyone who didn't know any better think that he's actually running the country. Below, the folks at the Wall Street Journal talk about Medvedev's big week ahead.
To dampen the fun being had by the younger WSJ crowd on what looks to have been a giddy, half-staffed Friday morning in Manhattan when this video was taped, David Wessel is brought in at about the six minute mark to talk about the impact of lower consumer prices on corporate profits and everyone's favorite summer topic – de-flation.
Florida has no homes for sale – only mansions, estates, compounds, retreats and "palatial homes"...
"You can get wood. You can get brick. You can get stucco. Boy, can you get stucco." - Groucho Marx
In FLORIDA'S LAND BOOM of the 1920s, promoter Carl G. Fisher hired a huge, lighted billboard in Times Square in New York, writes Bill Bonner in his Daily Reckoning.
It advertised that "It's June in Miami", a claim that was fraudulent 11/12ths of the year. Even in June, it was just too bad.
South Florida is now entering its fourth year of a property slump. Places sell for about half of what they brought three years ago. The retail building across the street is half empty. Signs are everywhere: "Office for rent...Ocean front lot for sale...Commercial space available." Here in Delray Beach, the sun is shining. The grass is growing. Waves caress the shore. But our hotel is nearly empty. Many restaurants on Atlantic Avenue are closed. The streets are so quiet the city seems like a ghost town. Then again, it's so hot and sweaty, even the ghosts wilt.
But the ghosts still talk:
"There was nothing languorous about the atmosphere of tropical Miami during that memorable summer and autumn of 1925," wrote Frederick Lewis Allen in 1931.
"The whole city had become one frenzied real-estate exchange. There were said to be 2,000 real-estate offices and 25,000 agents marketing house-lots or acreage...the city fathers had been forced to pass an ordinance forbidding the sale of property in the street, or even the showing of a map, to prevent inordinate traffic congestion."
The boom of the 1920s came to an end in 1926. Henry S.Villard reported what he saw two years later:
"Dead subdivisions line the highway, their pompous names half- obliterated on crumbling stucco gates. Lonely white-way lights stand guard over miles of cement side-walks, where grass and palmetto take the place of homes that were to be...Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death."
For three years, Florida's property market died, even as the rest of the nation danced the charleston. It did not recover until after WWII, almost 20 years later.
And now, it is out of season once more in Florida. It may never be high season again.
There are no houses for sale here in Florida. They have all been replaced by mansions, estates, compounds, retreats, and most importantly, by 'homes'. A house is a tangible thing; its paint peels, its roof leaks, its a/c needs to be replaced. But a 'home' is an agreeable abstraction, and great is the local realtor's distaste for tangibility.
We find, for example, a "spectacular Palm Beach Estate Home," with a separate 2-bedroom oxymoron – a "guest home". It must be a house for guests who refuse to go home. Or perhaps a home for people who refuse to be guests.
Look for a home in the country, and you'll probably find one with a "dog home" in the back yard.
"This palatial home features over 20,000 square feet of living area," says a current listing. "Built with entertaining in mind, this home features 9 bars, 2 walk-in wine coolers, 3 outside grilling areas, a 75' pool surrounded by a 400' marble dock and patio...summer kitchen with complete with outdoor fireplace...no detail has been overlooked."
Well, maybe one detail. Who would want to pay $11.5 million for a jumped-up mock-Tuscan relic from the bubble era?
Even in the best of circumstances, a major property bust can take decades to fix. In Japan, property collapsed after the stock market bubble popped in '89. All around it, the world economy kept bubbling away. But Japanese property sank to the bottom anyway. Twenty years later, prices are still down as much as 80%.
The Hoover administration helpfully turned its back, neither causing the bubble of the '20s nor attempting to repair it. This week, Sheila Blair, chairwoman of the Federal Deposit Insurance Corporation, admitted that the feds now are more involved. Too bad, again. Like Florida in June, government support is not always what it pretends to be.
"For 25 years federal policy has been primarily focused on promoting homeownership and promoting the availability of credit to home buyers," Ms. Bair said. She mentioned some of the many subsidies home buyers get, including the home mortgage interest deduction and the ability to deduct property taxes. She mentioned Fannie Mae and Freddie Mac too. Along with the other federal subsidies, the two agencies largely financed America's real estate bubble. Now, with their help it could be a long time before the market recovers. Maybe forever.
Fannie and Freddie stand behind $5.5 trillion worth of mortgages. More than $1 trillion of them were written during the height of the 2005-06 bubble. Those houses, many of them in Florida, are probably underwater now – worth less than the value of their mortgages. Most will go into default...leaving Fannie and Freddie, and indirectly the taxpayers, on the hook. The foreclosed properties will cause properties to sink deeper. And by the time the inventory is finally worked off, circumstances may have changed.
Buyers may look to Cuba, Nicaragua or the moon for their retirement havens...leaving Florida to the ghosts forever. Buying gold today? Start with a free gram, vaulted securely in Zurich, Switzerland at Bullion Vault now...
THE DISPARITY between gold and Gold Mining stocks has shaken quite a few investors, writes Julian Phillips of the Gold Forecaster.
Based on past market moves, they'd expected share prices to move roughly in line with the Gold Price in the belief that holding Gold Mining shares would produce the same if not greater gains. But with miners underperforming the metal, it's time to look at the 'why'.
First, and most importantly, what is a Gold Mining share? This is the most important question investors must ask, when deciding what to invest in, in the gold world. We have to recognize that a gold share is not gold. It is a share in a corporation that is involved with unearthing gold. But there is no guarantee that the Gold Price being earned is going to feed through to the investor.
The Gold Mining company – in terms of corporate risk – is no different to any other corporation. The risks involve employees, Directors, Unions, resources, production, cash flows, Dividend policies, to name some of the risks.
Now add to that market conditions (bull or bear markets), liquidity of shares in the market (which may have nothing to do with the quality of the corporation), and also price earnings ratios.
On the bright side, gold shares have the ability to perform better that gold itself for the good ones have a better profit capacity than the Gold Price (through profit margins) than gold itself. The income to a Gold Mining company accrues by the quarter or longer, so it is reliant on the average Gold Price over the period, for its income. And there is no doubt that a carefully chosen mining share that performs well in a 'bear' market does outperform the Gold Price over time and can be a better investment than gold itself.
It has so many more aspects than shares in a mining company.
It is considered as the real money in many parts of the world.
It is considered as an important reserve asset by central banks.
It is unprintable.
It is a 'counter' to the risks inherent in currencies.
It is money, 'in extremis'.
But imagine Gold Investing from a professional fund manager's point of view. There you are, wanting to invest in gold. You look at the different options in front of you. Your task is to maximize total return on capital employed. But, you have to achieve this minimizing risk, as far as possible in the present investment climate. Unfortunately, the risk-reward ratio in today's investment climate is far higher than seen before 2007.
So now you look at Gold Bullion and gold shares. What points do you factor in? The first is that it is not one or the other, but can be both. Factors you would look at would include:
In the eighties, the Gold Price shot ahead of gold shares when it flew to its peak at around $850, leaving the solid gold shares far behind. Is today a similar scene?
If not you would likely look at the biggest most solid Gold Mining shares out there, after all, they won't go bust easily? But are they likely to live up to the growth expectations of companies whose growth of production is rapid. As it is the majors are currently struggling to replace waning current production.
A company that is expected to grow income, irrespective of the Gold Price, promises to perform far better than a major.
As it is the risks in all markets are high, so you may well balance this against an expectation of a higher return. Good juniors Gold Mining shares would likely fall into this category, such as the kind we focus on at Gold Forecaster. There is no doubt about it, such shares would warrant the increased risk.
Of course, Buying Gold itself would remove a tremendous degree of risk, as opposed to Gold Mining shares, in extreme times. Many investors in the past turned to the biggest and most solid gold shares to reduce risk, saying they won't go bust, but that's not what you look for as an investor, surely? So you would measure one of these reliable but underperforming big gold shares against gold itself? After all, holding gold for the same period as one of these would give a similar return, would it not? This is because a gold share should, over that time, reflect the average of the Gold Price over the same period? In this case, gold itself would offer less risk and over time be a better investment, on a risk-reward measure.
But big investors go for gold itself, for far more than its profit potential today. When you consider that gold will rise in value as times get worse, whereas corporate risks rise dramatically in such times (see mid-2007 to date), then gold's additional qualities take it into a category of its own, way ahead of most equities. That's why central banks hold it and that's why very big investors hold it.
So, will shares catch up to the Gold Price? The answer to such questions is never as easy as we would like, because the world is never simple. In fact, there are a series of answers:
In extreme times investors shy away from equities, so gold shares would not keep up with a rising Gold Price.
In inflationary times equities in general do rise, as does the Gold Price. In such a scene, gold shares will rise and perhaps outperform the Gold Price.
When deflation is hammering values, gold will rise but investor capacities are reduced, taking most equities down with them, including exerting a restraint on gold shares.
Should an environment exist that precipitate a government confiscation of gold, then international Gold Prices will rise, but Gold Price in that country will not. Should gold mines in that country have to receive a government 'Fixed" Gold Price, then those gold share will underperform international Gold Prices. Post 1933, this is what happened in the USA.
So there is a place for both, in different economic scenes at different times. But one should require a good performance from good gold shares that will do well in bad times too.
It has been far too long since we've heard from Michael J. Kosares, proprietor of Centennial Precious Metals in Denver and host of its USAGold.com Internet site, but having recharged his batteries he has begun posting an occasional newsletter, "USAGold News, Commentary, and Analysis." The June edition begins with evidence that the dollar gold price has fallen so far behind the real rate of inflation that its inflation-adjusted price should be above $7,500. That gold has not kept pace with inflation and price increases in other tangibles in recent decades is generally acknowledged. To figure this out it is necessary only to contemplate central bank gold dishoarding, leasing, and the diversion of gold demand away from real metal and into futures contracts and similar derivatives. Kosares' letter is headlined "The TRUE Inflation-Adjusted Price of Gold" and you can find it at USAGold here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
ADVERTISEMENT
Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource
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:
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:
Here's a quote from David Rockefeller 1991 Baden-Baden Germany "We're grateful to The Washington Post, The New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world government"
US MARKETS
Our usurping, non-citizen, ex-CIA, Islamo-fascist, Illuminist, puppet-dictator President, aka "the Joker," has done virtually nothing, as instructed by our Shadow Government, to stem the flow of oil into the Gulf of Mexico, courtesy of the BP Illuminist sabotage of not only the rig that was destroyed, but, in effect, of the entire US off-shore oil industry. Daily, on literally a 24/7 basis, we are assaulted by images of oil gushing out of a pipe a mile deep in the ocean, as well as gruesome images of all the devastated sea, land and air creatures covered in oil, in order to indelibly print these images into the minds of the US public, all with the help of the fane-stream media outlets, which are all of course owned and controlled by the Illuminati. The objective is to kill off-shore drilling in the US, to control the supply of US domestic oil, to punish the Joker's political enemies, to destroy the economy of the Bible Belt where resistance to socialism and fascism is the most firm, and to provide another excuse for an oil spike which will in part be used to explain the upcoming destruction of our economy, and of the world economy, as the Illuminati implement their plans to bring forth a one world corporatist, fascist government of feudality that would make even George Orwell queasy. The President's response to the oil spill, and that of BP, have been virtually non-existent, despite many doable fixes, and those doable fixes would include the fixes which could not be implemented due to a total and intentional lack of preparation for just such a disaster, which lack of preparation was of course allowed by the Illuminist marionettes in our environmental regulatory agencies in charge of off-shore drilling who are in bed with big oil. This lack of response should not come as a surprise, as it is obvious that they were told to delay the implementation of any real solutions, and to deceive and obfuscate the truth about the extent of the oil leak and its potential for destruction, as instructed by their handlers in the Shadow Governments of the world, mainly Rockefeller and Kissinger for the Joker, and Rothschild, Zbig and the Black Nobility (especially the British royal family) for the BP executives, all in a coordinated, conspiratorial effort.
And no wonder. About 30% of our domestic oil production comes from the Gulf of Mexico. In addition, you might note that we have a multi-billion barrel, mega-oil field off the coast of Gull Island, Alaska, where an immense underwater oil field, far larger than any of the oil fields in Saudi Arabia, will now lay dormant for the foreseeable future. This BP disaster is really just another evil, twisted and deceitful Illuminist machination intended to, among other things, control our supply of domestic oil, without which our already floundering economy cannot function. This is how they intend to take us into a so-called "peak oil" situation, forcing oil prices to skyrocket so that people will give up the freedom of their cars for public transportation, and to reverse the population flow by forcing people out of suburbia into urban centers where they can be more easily controlled. This is a longer term purpose of the Illuminati, which they will implement after they have impoverished the world with their upcoming economic takedown-catastrophe to establish their one-world fascist state. They will use so-called "peak oil," and what we could term "peak food," as their final blow to bring you to your knees so you will beg for their one-world police state, or so they think. The concept of "peak oil" as the outgrowth of oil becoming more difficult and expensive to extract is a total fraud. There are tens of billions of barrels of cost-effective oil awaiting extraction around the globe, much of it within the US (i.e. Gull Island in Alaska and the Baaken in North Dakota and Montana to name but a few), but none of these huge oil reserves are being exploited sufficiently if at all, with the idea being to create the appearance that we have entered into a "peak oil" situation. The difficulty and expense of extraction is a deceitful excuse being given to cover up what is really happening to cause so-called oil "shortages."
The real cause of these "shortages" is the ongoing suppression of oil extraction from many known mega-sources of cost-effective foreign and domestic oil by withholding investment into exploiting these mega-fields and by creating environmental disasters to steer the people away from either promoting the exploitation of these mega-fields (i.e. the BP disaster), or by steering them away from promoting cleaner and more cost-effective sources of energy (i.e. the Three Mile Island Disaster, yet another Illuminist sabotage special). You might note that the Three Mile Island disaster was said to be caused by a design flaw. Yet this project had twin-reactors with identical designs, and the remaining reactor has operated flawlessly for over 30 years. We also have to wonder if Chernobyl was not a refilled Illuminist prescription for suppression of nuclear power. You might also note that France operates almost exclusively on nuclear power. And they know what to do with their waste. It is called "reprocessing" of nuclear fuel. So the next time you hear one of your Congress Critters wailing and complaining about the economic and environmental cost of creating some nonsensical nuclear waste storage facility in a mountain somewhere, you should laugh in his/her face. We also note that all the environmental Nazis are funded by big oil and the Illuminist tax-exempt foundations. They protest whatever they are told to protest by the Illuminati, such as nuclear power, or off-shore drilling, or exploitation of natural resources no matter how reasonable the terms. Anything to control the supply of resources with the ultimate objective being to enslave the public to Illuminist interests.
The Illuminati also buy out all patents for more energy efficient machines regardless of the type of energy being utilized, or threaten the inventors until they cave in or are assassinated. Stanley Meyer figured out how to run a car on hydrogen released by breaking ordinary water down into its elemental components of hydrogen and oxygen using oscillations of current that produced harmonic vibrations in water molecules, causing them to "shatter" like a glass broken by Ella Fitzgerald hitting just the right note. This was done using extremely low voltage and current, unlike electrolysis which requires high voltage and current, and in this manner, energy was released in a very efficient and cost-effective manner. Mr. Meyer is unfortunately no longer with us, as he was poisoned in a local restaurant after being continually accused of fraud by his many Illuminist tormenters both inside and outside your "beloved" government. His prototype car that ran on water only, and all of his notes and experimental data, suddenly disappeared from his home as your government and big oil, at the behest of the Illuminati, completed the illegal theft and suppression of his ideas. His brother has attempted to duplicate Stan's experiments, but is in fear of his life and reticent to speak about his findings for obvious reasons.
As yet another example of the suppression of innovative ideas, Nicola Tesla was bankrupted, and his Wardencliffe Tower dismantled, by Westinghouse and Morgan when he attempted to bring free (zero point) energy to the people of the world, while Edison, who was willing to play the evil Illuminist game of control via the creation of an energy distribution system composed of money-sucking utilities where the energy would have to be paid for ad infinitum by the public, became immensely wealthy. At one point Tesla had a Pierce Arrow automobile equipped with an electric motor stored near Westinghouse's main plant in Buffalo, New York, that he could run at speeds up to 90 mph with the power source being a box made out of components that you could buy at virtually any electrical supply store of the day for a sum that virtually anyone could have afforded. He simply hooked the box up to a wire connected to the electric motor, and away he went. When the people in Buffalo accused Tesla of witchcraft, he left in disgust, never to return. We give you this little anecdote to show you the extent of the suppression and betrayal not only of Tesla, but of the people of the US and of the world at large. You are a slave to the Illuminists because they have stolen virtually any and all technology, which would have freed the people from want and from financial bondage. Whenever you see anyone in poverty, or hungry, or unclothed, or without shelter, or suffering from some sickness based on malnutrition, rest assured that all that suffering is totally unnecessary, and can be laid at the feet of this megalomaniacal cabal of evil, bloodthirsty, satanic, sadistic psychopaths which we refer to as the Illuminati.
Another strategy utilized is to totally trash the price of oil when wildcatters start moving in to exploit large oil fields (like the Baaken), taking crude oil prices just low enough to bankrupt the wildcatters, who do not have the economies of scale, large cash reserves and low-cost financing which the large oil companies enjoy, and then to immediately drive the price of oil back up to astronomical levels for big profits after the competition has been mostly eliminated.
In addition, we point out that a new oil refinery located within the US has not been built for over 30 years, so even if there were plenty of domestic oil available, the lack of adequate refinery capacity would still limit the supplies of gasoline and other petroleum products, thereby creating a multi-level system for the control of the price and supply of both oil and oil products.
Of course, wars and conflicts, the creation and funding of terrorist situations in countries like Nigeria, as well as oil cartels, weather disasters and the like, round out the system of price and supply controls over the petroleum industry.
Yes, one day, we will reach an oil shortage, and it will be a completely manufactured, totally unnecessary and utterly avoidable shortage. It will be used as one of the final cards played to bring you to your knees so that you will go along with the creation of the Illuminati's New World Order, their "Novus Ordo Seclorum," a New Order of the Ages. Check it out. It's on the back of one of your dollar bills, under the pyramid capped by the all-seeing eye of their god, Osiris-Apollo-Nimrod.
Yes, their god is the "Apollyon" (Apollo) set forth in the Book of Revelation, also called "Abaddon" and "The Destroyer" and "the angel of the bottomless pit." Now you know what the Capital Dome (the Womb of Isis) and the 6666″ tall, 666″ square based Washington Monument (the Phallus of Osiris) are for, namely, for the resurrection of the angel of the bottomless pit (no one knows whether this is meant to be literal or figurative, but either way, you should not like it). This is the "Lost Symbol" of Freemasonry. Is it not strange how the Vatican Dome and imported Egyptian obelisk in Saint Peter's Square (the obelisk is from the City of On in Egypt, which was dedicated to Ra-Osiris-Isis) and the Capital Dome and Washington Monument are laid out in the same fashion? And both of these are laid out in the same manner as the Temple of Amun-Ra at Karnak, with its temple and obelisk, the largest religious structure ever built in the history of the world, where the pharaoh of Egypt was to become the resurrected Horus, or son of Osiris. In case you were unaware of this, you're dealing with demon worshippers here people. This is not a joke. This is a spiritual battle for the souls of men. Make no mistake about it.
This is what your Shadow Government has in store for you in the future. Yes, you are about to experience paganism at its finest (or at its worst, depending on your point of view). Where is the outrage, people of America? Where is the outcry from our Christian right who have been bamboozled into thinking that the all-seeing eye is the God of the Bible? Every structure in Washington screams paganism. Greek and Roman gods are plastered all over our nation's primary political, historical and educational structures, and on our coinage. Our coins say, "In God We Trust," but is it the God, or a god, that is really being referred to? This ambiguity is intentional, and allows the forces of evil to accept that verbiage on US coinage and Federal Reserve Notes. Freedom, and democracy and Christianity have become a front for outright paganism and Satanism, for empire, dictatorship and bondage. We have a rotten underbelly of evil that is consuming our nation like a cancer. The time to stand up and be counted against these satanic influences is now!!!
Now, let's discuss the choice of venue for our latest false flag operation, the BP disaster. Of all the off-shore rigs, why the one in the Gulf of Mexico? Well, 30% of domestic production is a big factor, to be sure, but they could have accomplished their purposes with any deep-water oil rig located off the shores of the US, and with a lot less political fallout for the current Administration and the Jackasses. And if you still doubt that this was sabotage or intentional neglect, which is really the same thing, then we ask how it was that Goldman Sachs somehow managed to sell a big chunk of its BP stock, along with UBS, just before the disaster, which Fabrice Tourre bragged about over the Internet to his girlfriend. Just more Goldman Sachs luck, huh! And then there was the occult-oriented movie called "Knowing" by Summit Entertainment, starring Nicholas Cage, which came out in 2009, which had a news clip showing a burning oil rig in the Gulf of Mexico. Another coincidence? And what about the chair that Mel Gibson's character weighs in the movie "The Patriot," which came out in the year 2000? It weighed 9 lbs., 11 ounces, as in 9/11. Just another fortuitous coincidence? Come on people, get out of denial and into action! Destroy all the incumbents in November after loading up on gold, silver, freeze-dried food, a water filter, a weapon and lots of ammo. The more patriots who prepare, the stronger the resistance to Illuminist machinations will be. Otherwise, we are looking at bloodshed on a scale that will make the French Revolution look like a barroom-brawl. Trust us. You do not want to go into combat unless all other alternatives are exhausted. So be ready! But we digress.
The answer to our question about the venue of our false flag oil spill disaster can be seen if you take a look at a political map for the 2008 election, state by state, with red for Dumbo and blue for Jackass (which together form our one political party, called the Dumb-Ass party, but again we digress). The states that have a coastline bordering the Gulf of Mexico or in any potentially affected areas along the East Coast due to the flow of the Gulfstream, are all in red, with two exceptions, Florida and North Carolina. But even in Florida and North Carolina, when you go county by county, virtually the entire coastline of both Florida and North Carolina are in red as well, with Miami County being a notable exception. So on a county by county basis, you have Texas, Louisiana, Mississippi, Alabama, Georgia and South Carolina showing as virtually all red in their coastal areas with the most notable exceptions being the southern tip of Texas and part of the South Carolina coast, and the coastal areas of Florida and North Carolina being virtually all red, with the notable exception being Miami County and a few small blue blocks in more populous cities along the Florida coast.
This red area is the Bible Belt, which has become heavily Dumbo over the years. Here lies the most anti-big government, anti-socialist, anti-fascist bastions of strength in our nation due to their Judeo-Christian values. The Joker got his revenge, and more importantly to the Illuminati, they struck a virtual death blow to the state economies of the Bible Belt, a bastion of anti-Illuminist citizens who have never forgotten what a powerful central government did to them both during and after the Civil War. Yes, slavery was wrong, but the issue was not addressed in the Constitution, and the Constitution had to be amended by two thirds of the states to make slavery a federal issue. Instead, the southern states were forced into a battle which at its core was about states rights over an overbearing central government. Now every state in the union is faced with this nemesis of an out-of-control, socialistic-fascistic government that thinks your rights flow from the government instead of flowing from your Creator. This is the real issue in question. This is the core of the problem. And now the stupid state governments have been on the Federal tits so long that most will go under without some federal help, just as planned now for many, many decades. They should have been weaned long ago. The legislatures and governors of these states have sold out their citizens to the evil scum in Manhattan and Washington, D.C., aka Goldman Sachs North and South, and to our Shadow Government composed of the Council of 300, the Trilaterals, the Bilderbergers, the members of the Council on Foreign Relations, the Freemasons, the Rosicrucians, the Black Nobility, and the Illuminist influenced tax-exempt trusts and non-governmental organizations (NGO's), among others, which Dr. Stanley Monteith correctly refers to as "The Brotherhood of Darkness."
If the South thinks that Sherman's March to the Sea spread destruction and devastation, they haven't seen anything yet. The oil flowing into the Gulf has been greatly underestimated and the entire Gulf could well become a dead zone, and much of the fresh water supplies could be poisoned by the oil and the clean-up chemicals. Just the food sources alone that have been or will be lost will be devastating. This is step two in the destruction of the economy of the US, step one being the fallout from the various financial fraud debacles on Wall Street which have elevated the rate of unemployment to almost one out of every four American citizens that were previously employed while at the same time inflating us into poverty and destroying the value of our homes, our savings and our pensions with real estate loan fraud, fraud in the creation of various derivatives, stock market crashes and near zero interest rates. Next comes the near total destruction of the bond and housing markets as governments around the world succumb to a juggernaut of debt default, of elevated risk and of much higher interest rates, the nationalization of your pensions and IRA's into the Social Security, Medicaid and Obama-care Ponzi schemes, devaluation of the dollar and the destruction, via the Quadrillion Dollar Derivative Death Star, of the banking system, along with a major war to provide a profitable distraction from your ever-increasing woes, along with a draft to provide the necessary cannon fodder (and for those of you who need it spelled out, that would be the blood of your sons and daughters who will be vainly slaughtered fighting the sons of daughters of other people around the world, so that the evil, satanic scum who run this country and the other Illuminist bastions around the world can make more trillions which they will then use to continue to fund your enslavement and entry into serfdom in their Novus Ordo Seclorum). Only you can stop the bloodbath. Vote against the Illuminati with your gold and silver purchases, and then vote out all of the Illuminist henchmen, better known as "incumbents." You do not want the blood of your sons and daughters to be on your hands. Our brave military people have never failed us, but the people who have sent them into these bitter conflicts have failed our military people every freaking time by letting the Illuminati have their way. Not this time. Over our dead bodies!!! Let that be your mantra!
The members of the European Union, with perhaps the exception of Germany, have now joined the Illuminist legacy banks as members of the walking dead. The European Central Bank and the Fed can do all the bailing they want, but they are using mop buckets to bail out tsunami waves of debt that are crashing over their bow. No one wants to be a slave to the Bank of International Settlements (BIS), the International Monetary Fund (IMF) or the World Bank for the next three to four or more generations, and so all the efforts to resurrect these economies will ultimately be rejected. The PIIGS will go under first, and the rest will follow in short order as their PIIGS bonds get vaporized. Everyone is on to the con-game of the Illuminati, who are trembling with fear over what they have done, desperate for a war to act as a scapegoat for the blame over the financial destruction they have reeked in their ill-considered attempt to create a one world government, and to take some of the heat off of themselves by creating a major distraction where people are more worried about their personal safety and that of their children than they are about their various financial woes.
We are going to be on the receiving end of another false-flag attack, perhaps in the US, perhaps against our troops stationed abroad. But rest assured, it is coming. It could perhaps be a cyber attack against our power infrastructure with a return address in Iran. Or a suitcase nuke, or a chemical or biological weapons attack, or tensions between Israel and Iran, or between North and South Korea, that boil over into other venues. Is Obama really anti-Israel, or is he creating plausible deniability to separate us from Israel in a go-it-alone attack on Iran that we will manage to become involved in by a false-flag attack against American troops with a false Iranian return address. After all, Obama's chief of staff is Rahm Emanuel, a duel citizen of Israel and the US, and we have a bunch of carrier convoys en route to the Middle East. Of course, that does not mean that Rahm is pro-Israel, as we only know that he is pro-Illuminist and might think nothing of sacrificing Israel on the alter of world government. You have to look at all the angles. We don't know the circumstances they have chosen, but rest assured that they will try to get you riled up for war as they did with 9/11 and all the other false-flag attacks they have used to start all the other wars and conflicts we fought in the twentieth and twenty-first centuries. This is a given. So expect it, question it, and do not allow them to drag you kicking and screaming into another pointless war. We have to put an end to this endless cycle of wars for profit, for empire, for power consolidation and for distraction of the public from their domestic woes. Note how gold explodes whenever the euro takes a dive. Those of you who think that the euro is going much lower in the near future had better think again. The explosion of gold whenever the euro goes down will alone give the Illuminati powerful reasons to support the euro, as will the potential for a devastating trade imbalance that will aggravate the US debt problem from a balance of payments perspective. Gold is now rising with the dollar because it is now competing with the dollar for safe-haven money, even when the stock markets are tanking. Gold will win this battle eventually once it is clear that the US economy is going to go under, and that event is not far off. Silver may catch up with gold based on the ridiculous gold to silver ratio alone, but could suffer if the stock market starts to tank, since the combined attack from J P Morgan Chase and the ensuing downward expectation for commodities demand
Many Asian countries have strong affinity for gold, with Vietnam apparently at the top of the list. On a per-capita-income basis, Vietnam consumes twice as much gold as India and 10 times that of China.
Vietnam's gold market has blossomed in response to a lack of confidence in the country's currency, according to a story in yesterday's Financial Times. Since the beginning of 2009, the Vietnamese dong has lost 11 percent of its official value, while gold has risen roughly 42 percent in U.S. dollar terms.
This has spurred many Vietnamese banks to seek out more gold. Last year, as the world climbed out of a crisis, Vietnamese banks paid 3 percentage points more in interest to those making deposits in gold than deposits in dollars.
A key quote from the story: "Demand [for gold] is still growing because people don't believe in any other channel of investment."
Vietnam (population 86 million) has seen rapid economic growth in recent years. Its per-capita income of $1,050 last year was nearly fivefold higher than it was in the mid 1990s, and in Hanoi, the income level is closing in on $2,000 per person, according to government figures.
Net retail gold investment in Vietnam reached 14.1 metric tons (543,000 ounces) during the first quarter of 2010, up 36 percent year over year, according to the World Gold Council. Add to that a 20 percent increase in gold jewelry demand, and you see a steadily growing gold market.
Those figures don't reflect the amount of gold that isn't tracked or deposited in banks. A Vietnam-based economist estimates that some $30 billion worth of "street gold"—almost a third of the country's GDP—is held outside of the banking system.
In absolute terms, the Vietnamese gold market may pale in comparison to China and India, but its strong cultural connection and history with gold should keep the country's gold market an active one regardless of price.
P.S. You can visit my blog, Frank Talk, for more daily commentary.
[Editor's Note: Frank Holmes will be offering insight like the above, and more, at July's Agora Financial Investment Symposium, along with Marc Faber, Bill Bonner, and Doug Casey and many others. You can register for the event here.]
How Vietnam Consumes 10x More Gold Than China 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."
Silver prices surged for a second consecutive week, capping a 10.9% gain in New York and a more modest 5.7% increase in London since June 4. In weekly increases, the metal was just below the rallying levels of last week. U.S. silver jumped 5.2% as compared to the 5.4% increase during the prior week. [...]
The 2010 Boy Scouts of America Centennial Proof Silver Dollar sold out Friday afternoon, with the United States Mint asking potential buyers to join a waiting list.
This procedure is normal for the U.S. Mint and has been utilized on past sell outs, like when the Boy Scouts Uncirculated Silver Dollars reached the same status on April 26, 2010.
Those joining the standby list will be sent the proof commemorative on a first-come, first-served basis, and only if a previous order is: canceled, returned or affected by a processing issue such as an expired credit card.
Jeff Nielson of Bullion Bulls Canada examines the greatly diminished volume of official gold sales — falling from 500 tonnes annually via the European central banks to only about 150 tonnes remaining to be sold by the International Monetary Fund — and concludes that a major revaluation of gold is likely. Nielson's commentary is headlined "The Real Truth about the IMF's Gold Sale" and you can find it at Bullion Bulls Canada here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
ADVERTISEMENT
Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource
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:
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:
Odds favor a big move up in silver, metals market analyst Ted Butler tells Eric King of King World News in their weekly interview. While the latest commitment of traders reports in gold and silver on the New York Commodity Exchange are slightly less bullish, Butler said, it may be best to ignore them, given background developments in the markets. Rapid turnover in Comex silver inventories suggests a very tight silver market, Butler adds, making him very excited and encouraged about silver's prospects. Butler also expresses dismay that the U.S. Commodity Futures Trading Commission lately has been so silent about its supposed review of the precious metals markets. You can find the interview at the King World News Internet site here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
* * *
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:
ST. PETERSBURG, Russia — Russian President Dmitry Medvedev on Friday said he hosted talks with Chinese leaders about turning the yuan into a convertible reserve currency, part of a broader goal to move international reserves assets into emerging-markets currencies and away from the dollar.
Mr. Medvedev, speaking with Wall Street chiefs at an economic forum here, also outlined steps to boost foreign investment, including a cut in the capital-gains tax and overdue financial reforms, but investors said numerous barriers still obstruct Russian investment.
Mr. Medvedev said that a year ago at a meeting of the Shanghai Cooperation Union in the Urals Mountains city of Ekaterinburg, he discussed plans for boosting the international status of the Chinese currency, which is currently tightly controlled by the government. On Friday, the president also named the Indian rupee and Russia's ruble among the potential new reserve currencies. China and Russia have two of the three biggest stores of international reserves.
"The future will show the correctness of our predictions, and I think the future of the world financial system is in the use of different reserve currencies and the creation of a multicurrency portfolio," Mr. Medvedev said.
"Three to five years ago any discussion of this seemed like a fantasy that may never come true," he said. "Now we're discussing it in absolute seriousness with a number of countries, including our American partners, who are perhaps least interested in other currencies replacing the dollar."
The growing economic clout of Russia, China, and India means it makes some sense for their currencies to form a greater share of global reserves, said Neil Mellor, currencies analyst at the Bank of New York Mellon in London, adding that it will be a "very, very long-term shift."
China will probably move cautiously toward making its currency convertible because doing so completely would allow unrestricted access to domestic securities.
In recent years Russia opened its ruble and bond markets only to see the currency face a painful devaluation in late 2008 and early 2009 after commodity prices fell. The central bank still acts to control the ruble's volatility as Russia faces alternate bouts of speculative capital, attracted by relatively high interest rates and oil-price gains, and sharp selloffs amid global risk aversion.
Besides boosting Russia's clout abroad, Mr. Medvedev said he will eliminate taxes on certain long-term direct investments in Russia and clear the way by the end of the year for a central securities depository, which would allow large investors concerned about trading and holding stocks and bonds to invest locally in Moscow for the first time. The depository would also serve as a public registry for shares. On Friday the lower level of parliament gave preliminary approval to legislation that would allow authorities for the first time to pursue prosecution of insider trading.
"Russia needs a real investment boom," Mr. Medvedev said. His chief economic aide has said that in the absence of rising commodity prices, Russia requires foreign investment to boost annual economic growth above 5% annually, a level other major emerging-markets including Brazil, India, and China are seeing this year.
Still, some investors are inured to the influence of friendly rhetoric repeated by the Kremlin this week against the backdrop of the annual St. Petersburg International Economic Forum, attended this year by Citigroup Inc.'s Vikram Pandit, J.P. Morgan Chase & Co.'s James Dimon, and Morgan Stanley's John Mack.
"Russia has been toying around with the idea of a central depository for about 20 years," said John T. Connor, portfolio manager of the Third Millennium Russia Fund. "They have a theoretical grasp of what they'd like to do, but the rubber hasn't hit the road."
Mr. Medvedev, widely seen as more investor friendly than his Kremlin predecessor, Prime Minister Vladimir Putin, is probably seeking to "improve market infrastructure after its failings in 2008," said Mattias Westman, chief executive of Prosperity Capital, which manages Norway's oil investments in Russia. "The timing is uncertain, but they usually keep explicit promises."
In fact, the tax cuts Mr. Medvedev mentioned may not even be needed, said Renaissance Capital founder Stephen Jennings, who expects to see renewed foreign investment in emerging markets this year "anyway."
Russia attracted only $5.8 billion in foreign direct investment in the first quarter of 2010, the slowest start to a year since 2006. Last year's $38.7 billion of foreign direct investment was only about half of that in 2008, according to central-bank data.
Yet the number of direct-investment projects climbed to 170 last year from 143 in 2008, according to Ernst & Young. Meanwhile, Russia-focused investment funds saw $1.9 billion of inflows — more than Brazil, India, or China — in the first half of 2010, according to Emerging Portfolio Fund Research.
* * *
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:
Fears that American, British and other governments intend to inflate their way off the rocks of excessive debt prompted record inflows into gold this week.
By Ian Cowie
Published: 7:35AM BST 20 May 2010
Now some fund managers claim the price could more than double to $3,000 (£2,080) per ounce within five years.
Heavily indebted governments throughout the developed world are struggling to fill deficits of black-hole dimensions in public finances by imposing spending cuts and tax rises. Both are expected in Britain's emergency Budget on June 22 and neither will be popular.
But keeping interest rates lower than inflation and letting the currency take the strain is another way to reduce the real value of debt. You can see why politicians may feel that is the "least worst" option.
Stealthily robbing savers by eroding the purchasing power of money is less likely to cause riots in the streets than spending cuts, because inflation tends to hit older people hardest while unemployment hits the young.
Governments can devalue their own currencies, but it is harder for them to make more gold. That fact helped prompt record inflows of $484m (£336m) into gold exchange-traded commodities this week, while gold trading volumes
peaked at $2.1bn (£1.45bn).
However, the precious metal is not a one-way bet and it slipped back below $1,200 (£830) on Thursday as some investors took profits amid anxiety about an unsustainable bubble in the gold price.
Graham French, manager of the M & G Global Basics Fund, was undeterred. He said: "In a scenario of rising sovereign risk, where government finances are hugely overstretched and central banks have been systematically devaluing paper money, gold's value as a safe haven and a stable physical currency can only increase over the medium term.
"Against this backdrop, the gold price could go much higher than these already elevated levels. It wouldn't be too far fetched to see it rising above $2,000, or even up to $3,000."
Mr French's strategy is based on the belief that things that emerging markets sell will fall in price over the next five years, while things that emerging markets buy will rise in price.
The explanation is that demand from the heavily indebted developed world may remain subdued, while demand from largely debt-free consumers in emerging markets will rise.
Rupert Robinson, chief executive of Schroders Private Bank, said: "Gold is setting record highs in almost every currency, despite headwinds including a strong dollar and monetary tightening in India and China, the main end markets for gold. Today's economic environment makes gold a must in any client portfolio.
"Interest rates are at historically low levels; central banks are bailing out the system; we have seen a huge amount of quantitative easing; currencies being debased and governments around the world are short of
money.
Nothing goes up in a straight line, indeed there are signs that gold may be becoming over-owned and too fashionable in the short term, but I think that over the long term gold is a good asset to hang on to. It could easily reach $2,000 per ounce within the next five years," Mr Robinson said.
Richard Davis, of BlackRock's Natural Resources team, added: "Gold always does well in times of uncertainty, and this week is no exception. Lingering concerns over the Greek bail-out, uncertainty over global economic growth, and an inconclusive election result in Britain have all created nervousness in stock markets, and risk-averse investors are looking to gold as a store of value.
The fact that gold bullion is a real asset, which does not depend for its value on any company or government, makes it compelling as a 'safe haven' investment. Gold bullion is particularly popular in Asia and the Middle East and investors in these regions have continued to pile money into the asset class.
"It is worth noting that, adjusted for inflation, gold is still some way
off its all-time high of $850 per ounce in 1980, equivalent to more than $2,200 in today's terms."
Adrian Ash, of BullionVault.com, said: "Inflation alone is not the driver. It's real interest rates that matter, because if cash is beating inflation, no one needs gold. Whereas when cash loses value, year after year – and if the major productive alternatives, such as bonds, shares and property, also fail investors as well – then gold really comes into its own.
"Cash is being actively devalued – and not just in Britain; the Eurozone
crisis is only the latest prime mover. Underlying the decade-long upturn in gold is a repeated attack on the virtue of savings," Mr Ash said.
Gold's fundamental appeal remains that it is a store of value that is largely immune to government intervention.
Mr French observed: "The great Irish dramatist George Bernard Shaw said:
'You have to choose between trusting the natural stability of gold or the natural stability and intelligence of members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.' I have to say, I'm with Bernard Shaw on this."
NEW YORK (The Street) — Gold prices hit a new record high Friday as investors fled into gold as a safe-haven asset.
Gold for August delivery was popping $12.70 to $1,261.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,262 and as low as $1,243.10. The U.S. dollar index was slipping 0.07% to $85.62 while the euro rose slightly to $1.238 versus the dollar. The spot gold price Friday was adding more than $14, according to Kitco's gold index.
Gold prices were conquering new highs after settling at a record high Thursday of $1,248 an ounce. Fridays in the summer typically lead to more volatility in gold as volume thins and traders have been opting for cash and gold over other assets to protect themselves against a weekend where anything can happen. Friday could be especially volatile with quadruple witching forcing traders to repurchase or sell their options contracts before they expire.
Investors will continue to put Spain in the spotlight Friday as International Monetary Fund managing director, Dominique Strauss-Kahn, is set to pay Spain's prime minister a "visit," which has fueled speculation that Spain will have to tap the IMF and European Union for a bailout as its credit markets dry up. Spain's recent successful bond sale however cheered gold investors who were reassured that the IMF or ECB would not be forced to sell gold to raise cash to help EU nations.
The EU reportedly will release the findings from the bank stress tests. Any more negative headline news from the eurozone could squash the euro's recent rally and most likely prompt another flight to safety into gold.
Summer months typically are hard on gold prices as physical demand wanes from key consumers like China and India. Gold bugs usually have to wait for India's fall wedding and festival season for higher prices. Some analysts think that if gold can hold up and continue to settle higher during the summer that a violent move higher will follow.
"That's when you're going to see the shorts throw in the towel, people add on, and that's when we'll get that $1,400, $1,500, $1,600 an ounce," says Scott Redler, chief strategic officer for T3Live.com.
Over the short term, analysts expect the battle between profit-takers and gold-buyers to heat up. "We expect investors will continue to view dips as a buying opportunity," says James Moore, analyst at theBullionDesk.com in his daily metals report. In the meantime momentum buying supporting exploding gold prices.
June 18 (Bloomberg) — Gold futures rose to a record $1,260.90 an ounce on demand for a haven amid Europe's fiscal woes and dimming prospects for the U.S. economy.
The metal has climbed 15 percent this year, outperforming equities and bonds, while the euro has slumped 14 percent. A majority of Greeks believe the country may go bankrupt, an opinion poll showed. Spain faces 24.7 billion euros of maturing debt in July and may need to use a European Union financial lifeline.
"The problems over in Europe are just as pernicious over here in the U.S.," said Michael Pento, the chief economist at Delta Global Advisors Inc. "You can't trust sovereign debt and sovereign currency. Gold is the only real honest money that we have."
Gold futures for August delivery rose $9.30, or 0.7 percent, to $1,258 at 10:06 a.m. on the Comex in New York. The previous record was $1,254.40 on June 8. This month, the metal reached all-time highs in euros, U.K. pounds and Swiss francs.
Gold for immediate delivery reached a record $1,259.68 today.
Yesterday, reports showed U.S. jobless claims rose unexpectedly and manufacturing in the Philadelphia region missed forecasts by analysts.
"People are looking at the euro as a wake-up call and they're skeptical of a U.S. recovery," said Adam Klopfenstein, a senior market strategist at Lind-Waldock, a broker in Chicago. "The big fear is that there are going to be other governments who are going to have sovereign-debt risks. People are clamoring to get into gold."
$1,600 Forecast
Gold may reach $1,400 this year and rise as high as $1,600 in 2011 should the Federal Reserve be forced to keep interest rates at a record low to stimulate the economy, Pento of Delta Global said.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 1.83 metric tons to a record 1,307.96 tons yesterday.
China should increase its holdings of precious metals and oil, Yin Zhongqing, the vice chairman of the finance committee of the National People's Congress, said today at a conference in Shanghai. Gold accounts for 1.6 percent of China's reserves, according to the World Gold Council.
"If we come to understand that gold is now a truly reservable asset, we can understand how it can be that bonds can rally on deflation news and gold can do the same," said Dennis Gartman, an economist and the editor of the Suffolk, Virginia- based Gartman Letter. "Precious metals are no longer driven by fears of inflation, but by the notion that precious metals are currencies."
Silver futures for July delivery rose 27.4 cents, or 1.5 percent, to $19.05 an ounce on the Comex.
Platinum futures for July delivery climbed $1.60, or 0.1 percent, to $1,573.60 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery gained $2.90, or 0.6 percent, to $484.15 an ounce.
Approximately $12.9 billion of rated debt securities affected
New York, June 18, 2010 -- Moody's Investors Service downgraded Anadarko Petroleum Corporation's and its guaranteed subsidiaries' (Anadarko) long-term debt rating to Ba1 from Baa3 and placed the long-term ratings under review for further possible downgrade. Moody's also assigned a Ba1 Corporate Family Rating.
Moody's action reflects the considerable uncertainty around Anadarko's potential 25% share of the cleanup costs and the associated financial liabilities and fines stemming from the April 20 Deepwater Horizon rig explosion and subsequent oil spill in the Gulf of Mexico. Moody's expects the consequences of the spill will negatively impact Anadarko's credit profile over the medium term, reflecting BP's continued inability to stop the leak, the increasing revisions in the magnitude of the spill, and mounting claims.
Moody's anticipates Anadarko, as BP's partner in the well, will meet its responsibilities through some allocation of some portion of the liability from the accident. Moody's believes the ongoing uncontrolled flow from the well will result in higher containment and clean-up costs than initially expected, as well as potential further increases in litigation costs and fines in view of the widespread damage caused to the economies of the coastal regions affected by the oil spill.
The review for downgrade reflects the considerable uncertainty relating to the size of future financial liabilities facing Anadarko. At this time it is not known how much of the continuing accruing costs will be offset by contractual rights or will have to be met by the company, and to what extent this will impact its financial and liquidity profiles. Anadarko's financial position has recently benefited from robust operating results and cash flow generation, which provides some cushion against the potential financial impact of the incident; albeit management may have to take additional actions to ensure the company has adequate flexibility.
Anadarko holds insurance to cover the first $178 million of its share of clean-up costs and another $1.6 billion is available from the Federal Oil Spill Liability Trust Fund. Additionally, the company has approximately $3.5 billion of cash on hand, $1.3 billion of available revolving credit, and no debt due through the rest of 2010. Over the next two years, debt due totals $707 million in 2011, and $170 million in 2012. In addition, the company has other levers which it could use, including re-allocating capital spending, selling assets, delaying other spending, and the farm-out of assets, as necessary.
To date in 2010 Anadarko has experienced robust growth from production. While the US Government-mandated moratorium on deepwater drilling is likely to affect the company's near-term capital plans, near-term production growth should not be affected as it can potentially shift exploration and development plans to other parts of the world for the next two-to-three year horizon.
The last rating action on Anadarko was June 4, 2010, at which time Moody's changed the company's outlook to negative from stable.
The principal methodology used in rating Anadarko was Moody's Global Independent Exploration and Production Industry rating methodology published in December 2008. The methodology is available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Anadarko Petroleum Corporation, a large independent exploration and production company, is headquartered in The Woodlands, Texas
It may seem that Moody's assumption that APC will "meet its responsibilities" may have been a little short sighted. With APC taking a book straight out of the European bailout negotiations handbook, and blasting BP as responsible for everything gone horribly wrong in the world, additionally threatening to sue BP, perhaps Barclays jumped the gun a little too early with its bump of APC and the $76 price target.
Even as recently 'demoted' BP CEO Tony Hayward is out and about, enjoying a fine yacht race-filled Saturday (cost of InTrade contract that the CEO leaves by year end, now at 74.9) , the GoM gusher continues spewing up to 120,000 barrels of toxic sludge daily. Below is an informative interactive map from USA Today, disclosing all you need to know about the spill, and why both Texas and the entire Eastern seaboard are likely next to be picking tarballs out of their coastline. In the meantime, BP execs are glued to the Weather Channel, dreading any formation that could even remotely resemble a hurricane-in-waiting (InTrade odds of first Hurricane strike). Should one approach anywhere near the Horizon, all those investors who will buy the Company's unsecured bonds, or even a secured Term Loan of BP, will be wiped out.
Full map after the jump:
For purists, here is the most recent, ultra high res picture of the spill, via MODIS (h/t Justin). Judging by the subsurface blackness enveloping the GoM, it appears Simmons' estimate of oil coverage is pretty much spot on.
In a statement posted on the PBOC's website late last night, the Chinese central bank has announced it will seek a flexible yuan, ending a two-year peg to the dollar. The news comes a week before the G-20 meeting at which the CNY exchange rate was set to be a key issue of debate. On the other hand, as the PBoC noted, With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist." As such, a large initial move is unlikely to occur, and the bulk of the volatility will likely strike at traded CNY forwards.
Full statement:
Further Reform the RMB Exchange Rate Regime and Enhance the RMB Exchange Rate Flexibility
In view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China, the People&cute;s Bank of China has decided to proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility.
Starting from July 21, 2005, China has moved into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Since then, the reform of the RMB exchange rate regime has been making steady progress, producing the anticipated results and playing a positive role.
When the current round of international financial crisis was at its worst, the exchange rate of a number of sovereign currencies to the U.S. dollar depreciated by varying margins. The stability of the RMB exchange rate has played an important role in mitigating the crisis&cute; impact, contributing significantly to Asian and global recovery, and demonstrating China&cute;s efforts in promoting global rebalancing.
The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility.
In further proceeding with reform of the RMB exchange rate regime, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies. The exchange rate floating bands will remain the same as previously announced in the inter-bank foreign exchange market.
Chinas external trade is steadily becoming more balanced. The ratio of current account surplus to GDP, after a notable reduction in 2009, has been declining since the beginning of 2010. With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist. The People&cute;s Bank of China will further enable market to play a fundamental role in resource allocation, promote a more balanced BOP account, maintain the RMB exchange rate basically stable at an adaptive and equilibrium level, and achieve the macroeconomic and financial stability in China.
Submit Date:2010-6-19 19:00:00
Tim Geithner immediately responded to the development: “We welcome China’s decision to increase the flexibility of its exchange rate. Vigorous implementation would make a positive contribution to strong and balanced global growth. We look forward to continuing our work with China in the G-20 and bilaterally to strengthen the recovery.”
The move will likely have substantial negative developments to various sectors of the Chinese economy:
Companies focused on the Chinese market, including Beijing- based computer maker Lenovo Group Ltd. and Shanghai-based China Eastern Airlines Corp., said in March that they would gain from lower import costs and stronger consumer-purchasing power should the yuan appreciate. Textiles makers would stand to lose the most and some would “face bankruptcy” as their profit margins are as low as 3 percent, Zhang Wei, vice chairman of the China Council for the Promotion of International Trade, said in March.
Of course, in a recreation of the aftermath of the US credit bubble, the biggest losers will be private lenders, straddled with trillions in ever more worthless real estate loans, which will suddenly now become an even greater drag, due to a stronger currency. What this means, is that the rolling wave of QE will soon hit China next, after the US and Europe. Which makes sense: China's central bank is not saddled with the same gargantuan amounts of bad debts as the Fed, and soon, the ECB, which makes it a convenient last receptacle of toxic waste in exchange for one last attempt at a global liquidity pump. This will likely buy Keynesianism a little more time. In the meantime, we once again highlight the relationship between the CNY and the Chinese 30 Day Repo Rate. With this number having hit near record highs, courtesy of a recent move lower in the CNY, it only seemed inevitable that China would be forced to unlock its own interbank lending market in whatever way it could.
The question now becomes what will the aftermath of this announcement be? As the FT points out, investors are likely to read into it a little more than prudent:
“The danger is that on Monday morning everyone gets very excited and then end up being disappointed with what happens. There is very little appetite for appreciation, so in the short-term the central bank is likely to be very conservative,” said Stephen Green, an economist at Standard Chartered. “As a result, the US-China relationship could still be very tricky.”
Either way, this is sure to play major havoc with already extremely volatile EUR, CHF, GBP and JPY pairs.
When it comes to the post-crisis world of American finance, there's one thing we can all agree on:
Something's got to give when it comes to ratings agencies.
Over the past decade, we've all witnessed the "big three's" role in the credit crisis. S&P, Moody's and Fitch gave their famous AAA ratings to an array of troubled securities, companies and nations. Not only did they issue the wrong ratings – and correct those ratings far too late – but their dubious business model was put under the spotlight, too… ripe with conflict of interest and suspicious relationships with their Wall Street clients.
Thus, rating agency reform would appear to be a legislative home run…a slow moving softball pitched right into the sweetspot of financial reform.
Well, Congress just effectively whiffed.
Earlier this week, the House and Senate removed the one amendment in the coming financial reform bill that addressed the ratings agencies. In its place – really, you can't make this stuff up – Congress will commission a two-year SEC study. The SEC, apparently not busy enough, will spend the next couple years poking and prodding the agencies and ultimately deliver Congress a report, which will announce whether a conflict of interest really does exist, and the Commission's advice as to how to fix it.
Now, we will admit, the "reform" that this study will replace was a complicated mess. The brainchild of Senator Franken, it was a plan all too typical of Washington: The amendment would have empowered the SEC to set up a new agency with its own fun acronym (the Credit Rating Agency Board, or CRAB) which would in turn give the ratings agencies new sets of hoops to jump through and papers to file. In short, we don't' blame Congress for wanting a different solution.
But a commissioned study by the SEC? C'mon.
What Congress ought to do is act, not create a sub-panel, or a study, or punt this to the next class of congressmen (which is essentially what this study is doing). What's needed is a tough decision – one that will have immediate consequences and send a message to the ratings world: Either get it right, or as Donald Trump would say, "you're fired."
We certainly don't have a monopoly on all the right ideas, but why not start by stripping S&P, Moody's and Fitch of their status as Nationally Recognized Statistical Ratings Organizations? The SEC bestows such a distinction. Basically, the biggest, best, most trusted raters in the world are given the NRSRO seal of approval, which is supposed to assure clients and investors that they're trustworthy. It's one of the central reasons why the "big three" have such a chokehold on the ratings universe. Only seven other firms – in the entire world – hold the distinction.
So, how do you get this SEC blessing? Read their explanation… and try not to snicker:
"The single most important factor in the Commission staff's assessment of NRSRO status is whether the rating agency is 'nationally recognized' in the United States as an issuer of credible and reliable ratings by the predominant users of securities ratings."
Are S&P, Moody's and Fitch not "nationally recognized" fools, at best? Is there a living soul left that would consider their ratings "credible and reliable?" Here are some more SEC standards for the NRSRO privilege:
"The [SEC] staff also reviews the operational capability and reliability of each rating organization. Included within this assessment are… the rating organization's independence from the companies it rates… the rating organization's rating procedures (to determine whether it has systematic procedures designed to produce credible and accurate ratings)…"
Ha!
So, we ask the SEC and Congress: Why not remove the "big three" from this club? In fact, since the credit crisis has proved this NRSRO status to be largely useless, why not abolish the designation all together? It's a rare situation in business legislation that a level playing field isn't a good thing…and this doesn't seem to be one of 'em.
And if it was, in fact, the SEC's own NRSRO system that empowered the big three to make such awful mistakes, what faith should we have that this new study – to be conducted by the SEC – will be of any use?
In the meantime, we can't help but wonder if shares of ratings agencies and their parent companies are a contrarian buy. Both the American free market and legislature has shown the will to reform and revolutionize this sector, but now more than ever, it appears no one will have the stones to do it. Thus, despite being so universally disliked, at this stage it's hard to see the "big three" doing anything else but business as usual.
P.S. As of this writing, ratings agency reform isn't entirely dead in the water. One item in the financial reform bill, 436(g), alters the liability exception currently granted to the raters. In essence, it would allow investors and clients to sue the raters – if the plaintiffs can prove "knowing and reckless" conduct on the raters' behalf.
In medical parlance, that's really addressing a symptom, not the disease. And proving that any of these agencies were willfully out of conduct will be no small feat. We'd also expect Big Three lawyers and lobbyists to make damn sure that, if this provision becomes law, there won't be any claw-back stipulations that would allow plaintiffs to sue for past digressions…like 2005-2008, the biggest ratings folly the world has ever known.
Rating Agency "Reform" Cut to "Study" 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."
GoldMoney founder James Turk, a consultant to GATA, reports today that gold's price rise against major currencies is accelerating. He concludes: "As the sovereign debt crisis deepens and the debasement of national currencies at the hands of central bankers and politicians becomes increasingly recognized, more and more people are starting to understand the true nature of gold. It is not only money, but a better money than any national currency."
Turk's commentary is accompanied by some good charts, is headlined "Gold Sets Another Record," and can be found at the GoldMoney Internet site here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
ADVERTISEMENT
Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource
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:
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:
GoldMoney founder James Turk, a consultant to GATA, reports today that gold's price rise against major currencies is accelerating. He concludes: "As the sovereign debt crisis deepens and the debasement of national currencies at the hands of central bankers and politicians becomes increasingly recognized, more and more people are starting to understand the true nature of gold. It is not only money, but a better money than any national currency."
Turk's commentary is accompanied by some good charts, is headlined "Gold Sets Another Record," and can be found at the GoldMoney Internet site here:
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
ADVERTISEMENT
Prophecy to Become Coal Producer This Year with 1.5 Billion Tonnes of Resource
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:
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:
Visa (V:NYSE) and MasterCard (MA:NYSE) are publically traded slave companies. Any pension fund or savvy investor can invest in debt peonage with just a click of the mouse.
is gaining a head of steam. If the anger continues to spread on both sides, I would agree that our nation’s workers are on a path to war.
The 2010 Boy Scouts of America Centennial Proof Silver Dollar sold out Friday afternoon, with the United States Mint asking potential buyers to join a waiting list.
No comments:
Post a Comment