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• Four Chinese IPOs For the Trading Radar
• new info on cftc position limits
• Four Bullish Mining Stocks
• Gold and Silver Firm Ahead of EU Summit on Debt Crisis
• Silver price up as JP Morgan cuts short position and backwardisation rules
• Gov't HORROR: Federal agents could secretly be watching your every move
• Must-read interview with gold investment legend John Hathaway
• Alasdair Macleod: Are the central banks running a fractional gold system?
• Methodical Exploration as a hint for mining investors : Aurelian Resources’ Fruta del Norte
• Coin Auction Results - Physical Bringing WAAAYYYY over spot last weekend
• CFTC Open Meeting On Speculative Position Limits is Today
• Massive Selling of US Currency Lies Ahead
• Interview with CFTC commissioner Bart Chilton
• "In-Laws and Outlaws" by CFTC Commissioner Bart Chilton
• Interesting Graph From Reader Bill Downey
• Chopper Ben Has A Big Fiat Hammer And Keeps Hunting QE Nails
• Trading Comments, 16 December 2010 (posted 09h45 CET):
• Sprott says SLV has physical?
• Moody’s ‘Threat’ Sends Gold, Silver Reeling
• The Inverse Dollar Relationship, SPX and Fear
• The U.S. Dollar: Too Big to Fail?
• Gold & Silver Slip Further, “Headline-Led” as Euro Falls on Debt Warning
• If You Build It They Will Buy It
• No Admitting Defeat: Fed to Fight Failure With More Stimulus
• Outing Ben Bernanke
• Quiet Riots
• Bond prices continue to collapse/muni bonds fall/another gold and silver raid.
• JPM Getting Smaller in Silver
• India, Indeed
• State Street Can Afford Gold ETF Fee War For a While
• The One Reason You Have to Own Gold & Silver
• Gold Drops to Two-Week Low on Yields
• Has the U.S. Treasury Implosion Begun?
• That Rush Into Gold/Silver You Hear Is Not Coming From The U.S.
• Mining Stocks Finally Appear to Have Resumed Their Upward Trend
• Gold Seeker Closing Report: Gold and Silver Fall Over 1%
• CHINESE TAKE-OUT (OF USECONOMY)
• The Albatross that Happens Upon Hapless Homeowners
• The NEXT Silver/Gold Rocket
• GEAB N°50 est disponible ! Crise Systémique Globale : Second Semestre 2011 – Contexte européen et catalyseur US - Explosion de la bulle des dettes publiques occidentales
• Empty Trucks Symbolize Clueless Canadian Government

Four Chinese IPOs For the Trading Radar Posted: 16 Dec 2010 02:44 AM PST It's a good time to be a growing media company in China…  Or more accurately, it's a good time to be an investment banker with Chinese media companies as clients. Over the past two weeks, there have been four significant Chinese media IPOs listed on US exchanges.  Two of them are off to an incredible start.  The other two look like complete duds from the moment they began trading. The Chinese media and entertainment industry is at an interesting juncture.  On the bullish side of the argument, there is an incredible ongoing population shift in which many rural citizens are moving to large cities to find work and a better life.  As the standard of living increases for the country as a whole, demand for information and entertainment will likely continue to grow. While the population trends are largely bullish for this industry, we have been largely bearish on China securities as the country grapples with widespread inflation and potentially overheated growth dynamics.  If China's economic growth begins to stall, it will have an effect on the entire global economy.  We're already seeing cracks in bullish trends which have previously been inspired by China domestic growth. So with this turbulent background, let's take a look at the newest IPOs and begin to develop a trading plan for opportunities that may arise… Youku.com Inc. (YOKU) Youku.com is the market leader when it comes to Chinese internet video.  You could consider this company the "Netflix of China" as the company is in the same industry – and also enjoys a tremendous growth trajectory.  By September of this year, Youku has grown its traffic to an estimated 203 million unique visitors per month and traffic continues to increase. The company has built a substantial library of content with 2,200 movies, 1,250 Television titles, and about 231,000 hours of "professionally produced" video content.   Of course, the company is limited in what content can be distributed because of Chinese censorship laws, but the heavy traffic shows that Youku content is at least competitive and appealing to viewers. While Netflix receives most of its revenue from subscription fees, Youku currently generates the majority of its revenue through advertising.  The company currently has about 340 advertising relationships (up from 230 last year) and has seen revenues increase steadily over the last several quarters. Management has noted the goal of "diversifying revenue streams" which could imply that the company is considering moving towards the subscription model sometime soon.  Since Youku is still operating at a loss, it is important for the company to find additional revenue streams to leverage its viewer-ship and begin to show shareholders a profit. The YOKU IPO was peddled primarily by Goldman Sachs who (along with a couple of secondary underwriters) pulled down a cool $14.2 million for getting the deal done.  The company itself received roughly $187 million which it intends to use to build out its infrastructure and potentially license new content. Traders were very excited to get their hands on this China growth company.  The deal originally priced at $12.80 per share, but by the close of the first day of trading, shares had reached $33.44.  A stock that can generate a 161% return in the first day is certainly worth keeping on the radar from a trading perspective.  The action is beginning to cool down a bit, and it would be healthy for YOKU to consolidate its gains a bit from here. From an investing standpoint, I wouldn't get anywhere close to owning YOKU.  The company continues to post losses quarter after quarter, and with the premium price after the IPO, one has to look very far down the road to justify the price. But from a trading perspective, YOKU looks very interesting.  The stock is obviously white hot right now and will likely cool its heels.  But if we begin to see an optimistic attitude for Emerging Market media stocks in the next few weeks, YOKU will likely be one of the "go-to" names for institutional investors. Since there are only a limited number of shares available (and demand could be robust) nimble traders could pick up shares after a consolidation with a tight stop and a clear path for speculative gains. Oh, and once the quiet period is over you can bet your last dollar that GS will issue a positive research report.  There's a good chance they recommend this stock to all of their buddies as well – part of the new issue politics on Wall Street. E-Commerce China Dangdang Inc. (DANG) If YOKU is the "Netflix of China," then you could consider Dangdang to be the Amazon.com equivalent… The company has its roots as the largest book retailer in China (primarily an online business) and boasts of an active customer base near 6 million people.  Similar to Amazon, Dangdang has expanded its product offering to include a wide array of consumer-related items, and is seeing revenue trends move sharply higher. In 2009, the company realized revenue of $217.9 million.  So far 2010 has shown tremendous growth with revenue (just through the third quarter) hitting $324.8 million.  For the first three quarters, this represents a 55.6% year-over-year gain and investors will be actively awaiting holiday sales figures. The IPO transaction was jointly managed by Credit Suisse and Morgan Stanley, and shares were priced at $16.00.  The company received about $197 million after underwriting discounts and expects to use the capital for growth opportunities.  I usually get a bit nervous when a company issues shares and essentially gives itself a blank check to "pursue growth opportunities." Similar to YOKU, Dangdang doesn't look like a great investment.  The stock immediately shot up to $29.91 in its first day of trading – good for an 87% return.  The company is turning a small profit, but there are still so many uncertainties when it comes to long-term growth.  Investors are paying a premium price to own this E-commerce company, and if China's economic struggles hit the consumer hard – future growth could be severely crimped. With that said, there is a lot of optimism surrounding this stock, and it will be an excellent trading vehicle for periods where the LOLO (long-only-leveraged-outright) managers decide to bid up China assets. The stock has begun consolidating its tremendous first week of trading, and may very well slide for a few weeks.  I'll be keeping my eye on the pattern – and on general China sentiment.  If and when we get a relief rally, DANG could be a great counterbalance position to our largely bearish China exposure. Bona Film Group Ltd. (BONA) The BONA IPO has turned out to be a major disappointment.  Shares were jointly issued by Merrill Lynch (AKA - Bank of America) and JP Morgan Chase.  With these two underwriters, I would not be surprised if the majority of shares were placed with retail holders… Imagine getting a call from your friendly neighborhood broker telling you he has a few hundred shares of a hot Chinese IPO! The stock priced at $8.50 and never saw the light of day.  By the close of the first day of trading the shares had dropped to $6.60 (I'm pretty sure that's an unlucky Chinese number) and IPO buyers were trapped. Bona is the largest privately owned film distributor in China which really doesn't mean much in an industry that is dominated by government-sponsored media companies.  The company gets a large portion of its revenue from a small number of "hit" movie titles each year – and of course there is no guarantee that the company will continue to luck out and have the rights to blockbuster movies. Management plans to use the $89.3 million raised in the transaction for future acquisitions.  These could be business acquisitions (think movie-theater chains) as well as content acquisitions.  Given the competition with government distributors, and the censorship issues in China – I'm leery of this business model despite the profitability.  It appears traders are largely in agreement here as the stock price has shown little evidence of support. There's no guarantee that we will have an opportunity to trade BONA – but I'm watching for two things to occur here. Volume must remain robust.  There's nothing worse than getting trapped in an illiquid position (long or short).  BONA could continue to be actively traded, but busted IPOs also have a habit of becoming illiquid after the first few weeks.  My minimum threshold is about $1 million in daily dollar volume (share volume times price) but for a new stock like this I would like to see a good bit more. Underwriter Support.  If BAC and JPM put their heads together and try to beef up the stock price, it will make for a better trading environment.  Now just to note, I'm not proposing we trade WITH these guys, but rather wait for them to support it and THEN roll out our short positions. Shorting BONA closer to the $8.50 IPO price would be a great risk/reward opportunity.  We could use a stop a bit above the IPO price while understanding that the majority of trapped IPO buyers will use this opportunity to exit their positions.  Shorting between $8.00 and $8.50 with the expectation of a crater could set us up to capture a swift 20% profit with tight risk controls. SKY-Mobi Ltd. (MOBI) Similar to BONA, the Sky-Mobi deal was busted from the minute it started trading.  The company operates the largest mobile application store in China – allowing users to purchase and download applications such as handheld games and productivity apps. The overall business is exciting.  After all, China's population growth and increasing standard of living means a tsunami of new potential customers are coming online.  But similar to the dot-com days of the United States, investors appear to be "paying for eyeballs" in what is currently a loss-leading business. Sky-Mobi will receive about $42 million from the IPO transaction of which $20 million will be used to expand and improve its online store, $5 million will be used for marketing, and the rest for "general corporate purposes" – again, you gotta love the blank-check concept… The company's revenues continue to grow – giving investors some hope of eventually cashing in on some profits.  But MOBI continues to report losses with pro-forma EPS losses of $0.30 cents each in the December (09) and March quarters, and a loss of $0.12 cents each in the two most recent quarters. Shares were offered to IPO investors at $8.00 but never crossed above $7.00 per share in exchange trading.  This is another instance where I am looking for 1) volume to stay robust, and 2) the underwriters to support the stock.  If that happens, MOBI could be another bearish China play – with a good bit of volatility, an attractive risk/reward trading environment, and substantial potential profits.

new info on cftc position limits Posted: 16 Dec 2010 02:30 AM PST http://www.reuters.com/article/idUSTRE6BF2RI20101216 The U.S. Commodity Futures Trading Commission on Thursday unveiled its eighth set in a series of rules as it works to take oversight of the $600 trillion over-the-counter derivatives market. The CFTC used the meeting to propose its long-awaited plan to limit speculative positions held by commodity traders. Here are details of what was proposed: POSITION LIMITS PROPOSAL Establish limits on positions in physical commodity futures contracts as well as swaps that are economically equivalent to those contracts. Comment period: 60 days * Limits to be placed on 28 core physical-delivery contracts and their "economically equivalent" derivatives. * Commodities covered include gold, silver, copper, platinum, palladium, crude oil, natural gas, heating oil, and gasoline, corn, rice, soybeans, wheat, live cattle, lean hogs, milk, cocoa, coffee, orange juice, sugar, and cotton. FIRST PHASE * Initial transitional phase would focus on spot-month, with limits based on deliverable supply and levels determined by exchanges: * Limits set at 25 percent of deliverable supply for a given commodity, with a conditional spot-month limit of five times that amount for entities with positions exclusively in cash-settled contracts. SECOND PHASE * Second phase would focus on non-spot-month position limits and spot-month position limits based on commission's determination of deliverable supply: * Non-spot-month position limits would be 10 percent of open interest in that contract below the first 25,000 contracts and 2.5 percent thereafter. * These limits would consist of aggregate single-month and all-months-combined limits that would apply across classes, as well as single-month and all-months-combined position limits separately for futures and swaps. * Annually, the spot month limits may affect at most 70 traders in agricultural contracts, 6 traders in base metals contracts, 8 traders in precious metals contracts, and 40 traders in referenced energy contracts. * The all-months-combined and single-month position limits may affect approximately 80 traders in agricultural contracts, 25 traders in base metals contracts, 20 traders in precious metals contracts and 10 traders in energy contracts. ECONOMICALLY EQUIVALENT * A swap may be economically equivalent to a futures contract if the price of the swap refers to a covered futures contract settlement price or if priced on the same commodity delivered at the same, or a similar location, as that of a covered contract. PURPOSE * Limits are aimed at combating excessive speculation and manipulation while ensuring sufficient market liquidity and efficient price discovery.

Four Bullish Mining Stocks Posted: 16 Dec 2010 01:51 AM PST Marc Chaikin submits: We have heard this story before…in a struggling economy gripped with fear and uncertainty, investors run to the safe haven, Gold, for protection. The age old debate over Gold as an investment remains unsolved; however, what we know today is that investors are flocking towards Gold for safety and in turn driving the price of gold upwards. With that in mind, we screened our database of 5000 stocks looking for large cap mining companies (gold, silver, copper, coal, etc) with a very bullish rating, consistently beating analyst earnings estimates and with strong short and intermediate term price patterns. In short low risk, high reward. Complete Story »

Gold and Silver Firm Ahead of EU Summit on Debt Crisis Posted: 16 Dec 2010 01:38 AM PST gold.ie

Silver price up as JP Morgan cuts short position and backwardisation rules Posted: 15 Dec 2010 11:56 PM PST Silver market experts have long pointed to the massive short position held by several major banks as the prime reason for the metal being underpriced and the only commodity still trading below its all-time high of thirty years ago.

Gov't HORROR: Federal agents could secretly be watching your every move Posted: 15 Dec 2010 11:37 PM PST From Sovereign Man: Do you remember the good old days when it used to be illegal for governments to spy on their citizens? I don't either… But I'm told it used to be illegal. Oh how times have changed. The British government went out of control years ago... One report from the BBC in 2009 showed that an average of 1,500 petitions are submitted – every day – to conduct surveillance on UK citizens. In the latest (publicized) perversion of government power, federal agents are now ordering real-time tracking of credit card transactions, travel information – pretty much anything right down to what brand of peanut butter you buy, and all without judicial or citizen oversight. Known as 'hotwatch orders,' government agents are able to write their own administrative subpoenas to surveil U.S. citizens. They request the records of phone companies, Internet service providers, video rentals, and even frequent flier/customer loyalty programs at airlines and grocery stores. Without court oversight... Read full article... More government horror: Gov't HORROR: IRS to begin tracking gold and silver coin purchases Tax horror: These states will have the highest tax burdens under Obama's new plan Gov't HORROR: "The U.S. is rapidly losing its position as the world's superpower and wealth aggregator"

Must-read interview with gold investment legend John Hathaway Posted: 15 Dec 2010 11:32 PM PST From an interview in Casey's BIG GOLD with John Hathaway, Tocqueville Gold Fund: When John Hathaway spoke at the Casey’s Gold and Resource Summit in October, many in the audience came away feeling like they were listening to Doug Casey, with his contrarian views, bold statements, and laying much of the blame for our current problems at the feet of government. Read what John, a seasoned investment pro and manager of the famously successful $1.4 billion Tocqueville Gold Fund, has to say about gold, precious metals stocks, and the future of the U.S. dollar. Jeff Clark: John, give us your big-picture perspective on why you're investing in gold. John Hathaway: We launched the Tocqueville Gold Fund (TGLDX) in 1998 when it was a very contrarian idea. I always like to say it was the "Rodney Dangerfield" of investments at the time because a lot of people laughed at us and we didn’t get much respect. It was essentially a very contrarian investment theme, and we did it at a time when the markets were going nuts for dot-com stocks, which we thought was absolute lunacy. Our thesis is basically related to the lack of faith that institutions, investors, and citizens have in paper money. That shift in opinion has come in fits and starts but is the core reason gold has risen to the extent it has. And until you have a significant restoration in terms of confidence in paper money, gold should do very well. Jeff: Some are calling gold a bubble. John: Many people – I'd say most people – are... Read full article... More on gold: There's a stealth trend developing in gold Top commodity analyst: Gold to beat silver now The long-awaited gold mania may be starting... in China

Alasdair Macleod: Are the central banks running a fractional gold system? Posted: 15 Dec 2010 11:00 PM PST GATA

Methodical Exploration as a hint for mining investors : Aurelian Resources’ Fruta del Norte Posted: 15 Dec 2010 10:21 PM PST Nevada Gold investor

Coin Auction Results - Physical Bringing WAAAYYYY over spot last weekend Posted: 15 Dec 2010 10:18 PM PST I attended an estate auction last weekend 12/11/2010 in Knoxville, TN that was hosted by Furrow Auction Company which contained many bullion and other coins. I was hoping to snag a few good deals, but the other bidders were having none of it. These coins went for well over spot. I will post below the pages from my brochure and apologize in advance for the difficulty in reading. At the time I did not plan to list these prices here, but I thought there may be some of you here interested in how much PM's are selling for at auction. Remember also that you must add 10% to the prices listed to obtain the actual price these folks were paying for physical PM's. Some page 2-3 highlights ... 1995 W 10th Ann Eagle Set .... $4250 1/10 oz gold Eagles .... $150-$180 (most $160) Some page 4-5 highlights ... 1/4 oz gold Eagles .... $390 1/2 oz gold Eagle .... $725-$790 1 oz gold Eagle .... $1400-$1600 1882 20 dollar gold .... $2150 other date 20 dollar gold .... $1700-$1750 4 piece gold set .... $3,000 Some page 8-9 highlights .... 1995 W 1 oz ASE ... $2000 various date ASE ... $120 #5 ASE in box ... $225-$250 #20 ASE in mint tubes ... $900 #20 morgans ... $550 #20 slabbed Morgans ... $1000 #20 slabbed ASE $800, #11 $550, #15 $900 #17 ASE ... $600 #35 morgans .... $875, #21 or #20 or #19 morgans $550, #22 peace/morgans $550 A few highlughts from page 10-11 #17 ASE in collector book ... $800 #3 $5 silver notes ... $85 #25 $1 silver notes ... $60 $500 federal reserve note ... $1000 8 lbs 6 oz junk silver quarters ... $2750 4 lbs 14 oz junk silver dimes ... $1560 #38 eisenhower dollars ... $110 If you look at the prices on both silver (junk or bullion) and gold you can see line for line that the prices paid are all well over spot. When the 10% buyers premium is added I began to wonder how they could pay so much. I did much better at Powell Auction earlier in the year when I got Gold Maples for $975 + 10% and AGE's for $975 + 10%. At the time I was thing "heck if I can buy at just a few dollars more than India was buying 200 tonnes at, I had better get all I can". And I did ... and I am so glad I did now.

CFTC Open Meeting On Speculative Position Limits is Today Posted: 15 Dec 2010 08:51 PM PST CFTC now admits it will miss the deadline on position limits. 32 consecutive weeks of outflows from mutual funds.  Massive selling of U.S. currency lies ahead. Swiss banks are resisting metal deliveries. A must read GATA release... and much more. ¤ Yesterday in Gold and Silver The gold price was pretty steady in Wednesday trading in the Far East... but starting at 1:00 p.m. Hong Kong time, gold got sold off about ten bucks going into the morning gold fix in London around 10:30 a.m.GMT...5:30 a.m. in New York.  Gold then rose back to almost unchanged by 8:00 a.m. in New York, before rolling over and heading lower for the rest of the Wednesday trading day.  The gold price closed virtually on its low of the day... which was $1,377.80 spot] Silver's price path was very similar to gold's on Wednesday... except far more volatile price wise... with the highs and lows pretty much corresponding with what happened to the gold price.  Silver's low price tick of the day [$28.70 spot] came minutes after 4:00 p.m. in electronic trading in New York. One thing that I've noticed since the close of Comex trading at 1:30 p.m. on Tuesday... and the cut-off for tomorrow's Commitment of Traders report... is the selling pressure that both metals have come under once the very thinly-traded electronic market starts in New York.  This was particularly evident in the silver price for both Tuesday and Wednesday... and looks very similar to the selling pattern that developed in electronic trading on Tuesday, December 7th... the 'day of infamy'. Of course there's nothing going on in silver's supply/demand cycle that would account for the 60 cent drop in the silver price between precisely 2:00 p.m. and 4:00 p.m. yesterday.  The bullion banks just pulled what few bids they had... and forced what few sellers there were, to sell out at progressively lower price points that the bullion banks themselves set.  This is as criminal as you can get... and blatant price manipulation... and no one in a position to do anything about it either lifts a finger, or asks a question. The world's reserve currency gained a bit over 45 basis points between the Far East open and 11:00 a.m. in London... then gave virtually all of that gain back by 8:00 a.m. in New York, two hours later.  However, at that precise 8:00 a.m. time... just like on Tuesday... a dollar rally materialized out of nowhere... and, by precisely 3:00 p.m. Eastern time, the dollar was up the better part of 80 basis points before trading sideways for the rest of the New York session.  Free markets work in such mysterious ways. Despite the dollar's big gain during the New York trading session yesterday, both gold and silver didn't fall by very much as the dollar rally unfolded.  As a matter of fact, in the two hour stretch between 8:40 a.m. and 10:40 a.m. Eastern time, both metals were in a rally mode before they rolled over... and very reluctantly headed south. All things considered, the gold shares put in a decent performance early in the trading day... but the sell-off grew more pronounced once gold came under selling pressure in the electronic market starting at 2:00 p.m. Eastern time.  But, it could have been a lot worse... with the HUI finishing down 1.85%... but not quite on its low of the day.  Most silver stocks did not do well yesterday... which is not surprising, considering the price action between 2:00 and 4:00 p.m. Eastern. Wednesday's CME Delivery Report showed that 170 gold and 6 silver contracts were posted for delivery on Friday.  The link to the 'action' is here. The GLD ETF reported a smallish withdrawal of 19,526 ounces yesterday... and there was no report from SLV. The U.S. Mint reported selling another 7,500 ounces of gold eagles yesterday... but nothing in silver eagles.  Month-to-date, gold eagles sales total 43,000 ounces and silver eagles sales are sitting at 1,422,000. The Comex-approved depositories showed a withdrawal of 300,758 ounces of silver on Tuesday... all of it coming out of Scotia Mocatta. Sponsor Advertisement The day in 2011 that will change your life - overnight Economic prognosticator Porter Stansberry is making his biggest prediction yet. This has nothing to do with the stock market... but these events could change your life in a dramatic way, literally overnight. Warning: This video contains controversial material, and may be offensive to some audiences. See the full video posted here. ¤ Critical Reads Subscribe Retail Investors Celebrate 32 Consecutive Weeks Of Equity Outflows By Pulling Money Out Of Taxable Bond Funds As Well My first offering today is from reader 'David in California'.  It's a zerohedge.com piece headlined "Retail Investors Celebrate 32 Consecutive Weeks Of Equity Outflows By Pulling Money Out Of Taxable Bond Funds As Well".  It's obvious that no one is believing all that happy talk out there, despite what the equity markets are doing.  It's one long paragraph along with a couple of nifty graphs... and the link is here. View full GSD edition Retail Sales Rise 0.8% On Expectations Of 0.6%, Down From 1.7%, Ex-Autos Up 1.2% Here's a story that I borrowed from yesterday's King Report.  It's about all the b.s. 'happy talk' I was referring to in the previous story.  Zero Hedge said this about it on Tuesday... "And the comedy continues. After Best Buy makes it clear that not even liquidation level prices are enough to draw consumers in, the Department of Truth is out with its latest attempt to make Americans believe that even with $10 billion in November credit card and other revolving debt declining $10 billion from October, and home equity loans outstanding falling another $2.6 billion, coupled with a drop in average hourly wages, retail sales actually picked up by 0.8%, better than expectations of 0.6%".  The short zerohedge.com story bears the headline "Retail Sales Rise 0.8% On Expectations Of 0.6%, Down From 1.7%, Ex-Autos Up 1.2%"... and the link is here. View full GSD edition Massive Selling of US Currency Lies Ahead Eric King over at King World News sent me the following blog yesterday.  It's headlined "Massive Selling of US Currency Lies Ahead".  It's by John Williams of shadowstats.com fame.  It's a very worthwhile read, especially if you're down in the dumps about what's happening to both gold and silver in the very short term... and the graph is terrific as well.  The link is here. View full GSD edition Safe sales soar as worried bank customers keep money at home Here's a story out of the Irish Independent newspaper in Dublin.  The headline reads "Safe sales soar as worried bank customers keep money at home".  Another reason for the increased use of home security safes is a growing fear of burglaries because of the recession.  I thank reader U.D. for the story... and the link is here. View full GSD edition Tackling the Debt Crisis: Protests in Europe Ahead of Euro Summit Reader Roy Stephens provides our next read of the day.  It was posted yesterday over at the German website spiegel.de.  The headline reads "Tackling the Debt Crisis: Protests in Europe Ahead of Euro Summit".  North America readers certainly aren't seeing any of this in the main stream media, so you want to find out what's happening elsewhere, you have to go overseas.  The link to the story is here. View full GSD edition Interview with CFTC commissioner Bart Chilton I have three stories about the CFTC's plans for commodity position limits.  The first is an interview with CFTC commissioner Bart Chilton on Canada's Business News Network yesterday afternoon on this very subject.  Silver position limits figure prominently.  The interview runs a few seconds over five minutes... and it's worth watching.  The link is here.  I thank Florida reader Donna Badach for sharing it with us. View full GSD edition "In-Laws and Outlaws" by CFTC Commissioner Bart Chilton Silver analyst Ted Butler is responsible for your next read of the day.  It was speech headlined "In-Laws and Outlaws" by CFTC Commissioner Bart Chilton given to the Americans for Financial Reform.  It's not a long read... but it's the contents of the third-from-last paragraph that you will find the most interesting.  Chilton states "For example, I think the idea of 5,000 crude contracts, which Delta Airlines has suggested, and 1,500 silver contracts which hundreds of individuals have suggested are levels we should ask questions about as part of our proposal."  It's obvious that Ted Butler's idea [that a lot of us wrote to the CFTC about] not only had merit... but had an obvious impact as well.  The link to the entire speech is here. View full GSD edition CFTC admits will miss deadline on position limits Then this Reuters article appeared yesterday afternoon bearing the headline "CFTC admits will miss deadline on position limits".  Chairman Gary Gensler admitted that he won't have the final rule in mid-January... and the CFTC plans to phase in limits starting with the spot month.  It's a short read... and the link is here. View full GSD edition Interesting Graph From Reader Bill Downey Besides the above, I have a reasonable number of gold and silver related items for you today.  The first is a very Interesting Graph From Reader Bill Downey over at GoldTrends.net... and here's what he had to say about it.  "Here's a chart of SLV using Equivolume.  The fatter the bar... the greater the volume.  And look at that volume ! Have the big boyz hedged themselves?  WHAT could spurt that type of volume???  In a normal market, this would favor a top... but with silver, I'm just not sure.  Regardless, it appears that something's up." Click here to enlarge. View full GSD edition Massive Selling of US Currency Lies Ahead Posted: 15 Dec 2010 08:51 PM PST Link:  Massive Selling of US Currency Lies Ahead Image:  Eric King over at King World News sent me the following blog yesterday.  It's headlined "Massive Selling of US Currency Lies Ahead".  It's by John Williams of shadowstats.com fame.  It's a very worthwhile read, especially if you're down in the dumps about what's happening to both gold and silver in the very short term... and the graph is terrific as well.  The link is here.

Interview with CFTC commissioner Bart Chilton Posted: 15 Dec 2010 08:51 PM PST Link:  Interview with CFTC commissioner Bart Chilton Image:  I have three stories about the CFTC's plans for commodity position limits.  The first is an interview with CFTC commissioner Bart Chilton on Canada's Business News Network yesterday afternoon on this very subject.  Silver position limits figure prominently.  The interview runs a few seconds over five minutes... and it's worth watching.  The link is here.  I thank Florida reader Donna Badach for sharing it with us.

"In-Laws and Outlaws" by CFTC Commissioner Bart Chilton Posted: 15 Dec 2010 08:51 PM PST Link:  "In-Laws and Outlaws" by CFTC Commissioner Bart Chilton Image:  Silver analyst Ted Butler is responsible for your next read of the day.  It was speech headlined "In-Laws and Outlaws" by CFTC Commissioner Bart Chilton given to the Americans for Financial Reform.  It's not a long read... read more

Interesting Graph From Reader Bill Downey Posted: 15 Dec 2010 08:51 PM PST Image:  Besides the above, I have a reasonable number of gold and silver related items for you today.  The first is a very Interesting Graph From Reader Bill Downey over at GoldTrends.net... and here's what he had to say about it.  "Here's a chart of SLV using Equivolume.  The fatter the bar... the greater the volume.  And look at that volume ! Have the big boyz hedged themselves?  WHAT could spurt that type of volume???  In a normal market, this would favor a top... read more

Chopper Ben Has A Big Fiat Hammer And Keeps Hunting QE Nails Posted: 15 Dec 2010 08:38 PM PST Nobody Can Stop Ben Bernanke. Now QE3 is Under Discussion. We reported some weeks ago Benny would keep dumping QE paper at the rate of $500 Billion per quarter. We're not certain how much he was able to off-load this quarter but you can be sure he'll   print $1,500B in the next three quarters until a bond market implosion next September or sooner. Pardon the expression but Europe gets nailed first with national credit failures. The old story says if you give a nut a big hammer he'll continue hunting for nails to whack. This is a perfect definition of Benny Bernanke and his Federal Reserve gang allied with the international banking cartel. Central bankers have discovered that despite using outlaw derivatives, the TARP safety net and follow-on multiple bank and U.S. Treasury robberies they will not be prosecuted-they are literally home free. The fix is in and their porous cover has worked despite consumer, public and media howling alleging their crimes. However, now comes Congressman Ron Paul. These boys are now standing in broad daylight with Bernanke's latest admission he stole billions from the Federal Reserve loaning it to US corporations and even to foreign banks to recapitalize during and after the 2008 credit disaster!  He did not ask permission, he had no authority and he hid these evil deeds from everyone. He should be fired, prosecuted and jailed for the largest theft in history. Instead, congress and their counterparts throughout the world continue to provide cover and keep the QE game in play. Cheer up! It's getting a lot worse in 2011. Gold goes higher. Nationalization Of The Entire World. While the IMF's power is not what it once was, they still have the push to jump in and toss  more cash on Euroland's flaming credit pile. Nothing is working according to their plans.  While they keep digging at a more furious pace throwing fiat dirt on a forest fire of crashing  credit, the flames go ever higher. At this point it's obvious the USA banking cabal and that of Euroland, the largest collective economic gang in the world, are determined to sink Western Europe and North America together in one fatal jump off Mount Bernanke. This posting includes an audio/video/photo media file: Download Now

Trading Comments, 16 December 2010 (posted 09h45 CET): Posted: 15 Dec 2010 06:45 PM PST Both gold and silver re-tested support. This andlsquo;backing and filling' is positive. I continue to expect that both precious metals will move higher toward the end of the

Sprott says SLV has physical? Posted: 15 Dec 2010 05:30 PM PST

Moody’s ‘Threat’ Sends Gold, Silver Reeling Posted: 15 Dec 2010 05:13 PM PST

The Inverse Dollar Relationship, SPX and Fear Posted: 15 Dec 2010 05:12 PM PST So far this week we have been seeing fear creep in the equities market. This Wednesday we started to see fear (green indicator) reach a level which tells me to start looking for the market to bottoming. I do follow a few other charts and indicators which warn me of a possible trend reversal (high probability setup) before it takes place but the US Dollar and selling volume are key. As we all know, when the market is trying to top and roll over it tends to be more of a process than a couple day event. It's this lengthy topping process which has a lot of choppy price action which sucks traders into a position much to early or shakes you out of the position before the market does what you anticipated. On the flip side, bottoming is more of an event because it tends to happen after a strong wave of panic selling. Fear is the most powerful force in the market (other than the Fed/Manipulators.. but that's another topic). That being said, when you know what to look for in bottoms you can generally see the market starting to bottom and prepare for it. The charts below of the US Dollar Index and the SPY clearly show the inverse relationship they have. Right now it seems everything is directly connected with the dollar… it has been like that for most if the year… I will note that its not normally this clear. Anyways, the dollar is currently trading at resistance which means there is a good chance it will turn back down. So if the dollar drops, then it should boost the SPY (equities market) and put in a bottom for stocks. Looking at the lower chart of the SPY etf you can see that recent prices have dropped down to a support zone. The important thing to note here is how selling volume is ramping up. This to me means more traders are getting worried and are cutting their losses or locking in gains before it gets worse. We typically see panic selling enter the market near the end of pullbacks. Just like in a bull market where the retail trader (John Doe) is the last to buy before the market falls, it's the same but flipped in a down trend. The retail trader is the last to panic and sell out of their position before the market bounces/rallies. Currently the equities market looks to be showing signs that a bottom is nearing. Over the next session or two the rest of this equation should come to light as a tradable bottom or to start playing the down side of the market, only time will tell… If you would like to learn more and get my trading alerts along with my pre-market morning videos so you know what to look for in the coming session I recommend taking up a subscription with my ETF trading newsletter here: www.TheGoldAndOilGuy.com Chris Vermeulen

The U.S. Dollar: Too Big to Fail? Posted: 15 Dec 2010 04:47 PM PST

Gold & Silver Slip Further, “Headline-Led” as Euro Falls on Debt Warning Posted: 15 Dec 2010 04:28 PM PST

If You Build It They Will Buy It Posted: 15 Dec 2010 11:51 AM PST --Inflation in China is up 5.1% from a year ago, according to official statistics. But Zhang Ping of China's National Development and Reform Commission (NDRC) reckons she'll be right. Of course he didn't put it that way. But we've learned this week that Chinese officials think they can live with a little inflation, as long as it doesn't cause a little revolution. --In fact, despite the fastest rise in consumer prices in 28-years—especially food and fuel, the NDRC raised China's official inflation target/limit for 2011 from 3% to 4%. Instead of dialling back the rate of investment and loan growth—both of which would be bearish for commodity exports—the Chinese appear to be kicking it up a notch, or at least keeping it at the same notch. --China set a quote of 7,500 billion (US$1.1 trillion) in new loans in 2010 after a $1 trillion blow out in 2009. That would quota will be met and likely exceeded. Next year's quota is the same size. And it prompts an obvious question: where the heck is all that money going? --Why does the question matter? It tells you if China is building too many factories, bridges, roads, and office buildings...or just enough factories, bridges, roads and office buildings. And THAT tells you whether Australia's record terms of trade and booming mineral and metal exports to China are something you can bank on for the next ten years, or something that could smack you in the face. --So where is the money going? The most often repeated line about China is the fitting out of the country—its infrastructure—is what's driving metals-intensive demand for Aussie resources. But by definition, fixed assets can include factories and real estate too. So is China building the backbone for its transportation network of the next 100 years? Or is something else going on? --To try and get an answer to this question, you can read a copy of this report at the Reserve Bank of Australia website. It has a refreshingly simple title for a central bank research paper. It's called "Sources of Chinese Demand for Resource Commodities" by Mr. Ivan Roberts. What we'd consider the key chart in the report is below. More factories, fewer bridges --What does the chart tell you? --Infrastructure has declined as a percentage of total fixed asset investment from over 50% at the turn of the century to just over 30% now. Manufacturing—China's export engine—has caught up. Of course if total fixed asset investment has been climbing, then infrastructure investment's decline could be more in percentage terms than real terms. But let's assume for the moment that China's fixed asset boom is being driven equally by infrastructure and manufacturing, with a growing real estate boom. What does that mean? --Well for starters it means a huge boom in demand for steel making materials, especially iron ore and coking coal. Mr. Roberts explains: Iron ore, aluminium ores, base metal ores and coal account for more than half of China's non-oil resource imports. Chinese consumption of imported iron ore and coking coal is driven by steel production in China. China's existing deposits of iron ore have low iron content by international standards, and the majority of iron ore reserves are located inland in the north and west of China, which makes transportation to the steel mills in the more industrialised coastal areas costly. In addition, in 2008, more than 90 per cent of China' crude steel was produced using blast furnaces and basic oxygen converters (the highest proportion in the world), which tend to rely on coking coal and iron ore, while comparatively little use was made of electric arc furnaces utilising a mix of steel scrap and other iron inputs. Thus the steel industry depends heavily on imported raw materials, with around half of China's total iron ore supply (adjusted for differences in iron content) sourced from overseas. --Australia is such a big partner because the average iron content in Pilbara ore, according to the US Geological survey, is 60%. By comparison, the average iron content in Chinese ore is just 33%. --You can see why China would like Australia's higher-content iron ore. But the real issue is whether the demand for that ore is driven by a global credit bubble. Why global? China is building factories to export metals-intensive durable goods to the rest of the world. But large parts of the rest of the world (mainly America) have been buying those goods on credit and are now broke. --Has China built an army of factories for an army of customers who are about to lay down their credit cards and surrender to the forces of debt deflation? --Hold that thought. The second aspect of the global credit bubble is the creation of a local real estate boom. To keep its currency cheap, China must essentially match the Fed's policy, printing money which pours into local lending and consumer prices. But aside from food and fuel, the real boom has been in real estate. --If China's booming metals demand is just another aspect of the global credit bubble, Australian investors should be duly warned that what happened in 2008 (a big crash in resource stocks and commodity prices) could happen again. Does Roberts think that could happen? His conclusions are below, with emphasis added by your editor: This paper provides evidence that China's manufacturing exports have been a significant driver of its demand for resource commodities. Data on Chinese investment indicate that manufacturing was the strongest driver of growth in Chinese investment prior to the recent global financial crisis. Analysis of input/output tables shows that, over the past decade or so, the manufacturing sector (which accounts for most of China's exports) has been more important than construction as a direct consumer of resources and intermediate metal products. Accounting for indirect linkages between industries, it is found that manufacturing has been at least as important as construction as a source of demand for metal products...This implies that China's resource demand is influenced by developments in the rest of the world. Consistent with the resource-intensive nature of much investment, the results also indicate – in China and elsewhere – a significant role for investment as a source of resource demand. This is in line with previous literature highlighting a dual role for investment and exports as drivers of demand for resource commodities. However, it appears that, over recent decades, a sizeable proportion of China's investment can be traced to the growth of its domestic and export-oriented manufacturing operations. Thus, while much of China's demand for resource commodities over this period has been driven by investment, it appears that this investment has in turn been sensitive to global influences. --Got all that? --To summarise: China's factory build-out has driven its metals demand. In turn, the factory build-out—and the huge boom in domestic investment—is based on an expectation that the rest of the world will keep on buying what China's making. Pretty straightforward, isn't it? --But if big chunks of the rest of the world are dialling back consumption and entering their own private ages of austerity, who will buy what China makes? "If you build it, he will come," was a line from one of our favourite movies, "Field of Dreams."  But what if you build it and no one can afford to buy it? Isn't that just another giant misallocation of resources with its roots in a credit bubble? Hmm. Dan Denning For The Daily Reckoning Australia Similar Posts: Chinese Steel Price to Rise in Wake of Coal and Iron Price Hike ABARE Explains How Much Australia Can Make from Selling Silver, Iron Ore and Coal Australian Iron Ore Shares on China's Menu BHP Billiton (ASX: BHP) to Report Second Half Results Today Red Bear Rising: Russia's Resource Based Geopolitical Strategy

No Admitting Defeat: Fed to Fight Failure With More Stimulus Posted: 15 Dec 2010 11:50 AM PST "Shoot, if you must, this old gray head, But spare your country's flag," she said. A shade of sadness, a blush of shame, Over the face of the leader came; The nobler nature within him stirred To life at that woman's deed and word: "Who touches a hair of yon gray head Dies like a dog! March on!" he said. - John Greenleaf Whittier, "Barbara Frietchie" It's the Ides of December, if December has ides. Some months do. Some don't. Yesterday, we drove up to Frederick, Maryland. It is the site of the encounter - fictional - between Stonewall Jackson and an old woman. More on that, below... But you're probably wondering what the Fed's FOMC did yesterday, aren't you? You're not? Well, good for you. You must have a life. Or a brain. Those of us who are condemned to follow such things found out that the Fed is standing pat. You can imagine how that stirred our blood. We had barely slept wondering what the Fed would do. We had worn out the carpet, pacing back and forth. And now we discover that the Fed will do nothing! The "recovery" is too weak to raise rates, said the Fed. And the economy may need more stimulus, it added; so it will stick with its plan to buy $600 billion worth of US government debt. You'll remember that the Fed purchases were supposed to drive down long-term interest rates so that mortgage borrowing and capital investment increased. But instead of falling, long-term rates went up. On the surface of it, you might think the Fed chief would lower his head...and admit that his QE plan is a colossal failure. Since March '09, he has committed an amount equal to more than an entire year's output of the US economy to his QE initiatives. With so much of the nation's treasure lost, you'd think he'd offer to slit his wrists...or at least resign. But that would just go to show that you've never studied modern macroeconomics. If you spent a few more years in school, maybe you too could begin to see that up is really down and black is actually white. The Fed's actions will multiply the US monetary base by 4. Is it any wonder investors are getting suspicious of US dollar- denominated paper? In theory, the Fed's purchases of Treasury debt are absurd. In practice, they have backfired. So, the Fed will do more of them. Makes sense, right? The US bond market could be signaling that it is headed the way of Greece, Ireland, and Lehman Bros. Who wants an IOU from someone who can't pay it back? Once the selling begins, it is hard to stop. Interest rates go up, increasing the cost of financing for the debtor. Pretty soon, he can no longer fund his on-going expenses or make the payments on his debt. He is forced into bankruptcy. Meanwhile, the latest numbers from Robert Shiller tell us that the US stock market is 33% overvalued. Our guess is that stocks will go down much more than that number implies. Markets tend to overshoot in both directions. And the latest news from China tells us the Middle Kingdom could blow up at any time. Nearly half the GDP is spent on capital improvements (usually things that involve concrete and steel). It's breathtaking to see it. But there's no way you can make that many capital investment decisions without making some colossal blunders. And from Europe comes a bleak and foreboding assessment: European banks have five times as much government debt as they did 3 years ago...and even US banks have nearly $350 billion worth of debt from Europe's wave-washed periphery. Investors are selling off Spanish bonds; another chapter in the debt crisis could be at hand. Dear reader, you are faced with a grave and dangerous situation. In front of you is the Valley of Death for investors. America's stock market could crash at any moment. Its bonds are slipping. Its homes are sinking. China could collapse into a heap. Europe could come unglued. Trade could fall off a cliff. Interest rates could rise everywhere. Another great depression could be coming soon. And yet, CEOs are optimistic, says one report. Investors are overwhelmingly bullish, says another. And your captains are telling you to "charge ahead!" Our advice: Take cover! And more thoughts... It snowed last night. Not much, just enough to make it pretty. This is supposed to be the "bleak midwinter." But it's not very bleak. Holiday lights are up on many houses in the neighborhood. Shops are hung with festive lights. Occasionally, we hear Bing Crosby singing "White Christmas." We drove up to Frederick, MD for lunch. What a charming little town. Colonial era brick houses. Coffee shops. Restaurants. This was the town that Whittier made famous. He recalled something that never happened. An old woman, Barbara Fritchie, was said to have stood in the middle of the street waving a Union flag, stopping the advance of the Southern troops. Stonewall Jackson halted his troops and gave his order. The story was a lie. It never happened. But lies carry more weight than the truth, especially in wartime. People prefer lies. They're simpler. And more flattering. Sure, the US is fighting terrorism in Iraq and Afghanistan. Sure, the Fed is stimulating a recovery. Sure, the banks had to be bailed out, or something awful would have happened. Sure, if the federal government doesn't spend $1.3 trillion it doesn't have our quality of life will decline. Sure, the schools make us educated. The hospitals and doctors make us healthy. The army, courts and police make us free and safe. This is the first time in 15 years that we've been back in the US at Christmastime. All that time, our farmhouse was rented out. It's a pleasure to have it back. On weekends, your editor happily cuts down trees and fixes fences. Or he paints bedrooms and repairs roofs. He was painting a metal barn roof a couple of weeks ago. The roof had a decent slant to it, but the rusty metal gave him something to grip onto. So he felt reasonably safe, even though he was three stories in the air. All was well until he foolishly stepped onto the part he had just painted. His foot slipped. He fell down...and slid down the roof...catching himself on a nail head just before going off the edge. "Are you all right?" asked Edward, who was working on the ground. "Yeah...no problem..." All week long, we work in front of a computer screen. It is largely an imaginary, abstract world - of GDP growth and stimulus theories - a world of lies and legerdemain. On the weekends, it is a pleasure to be back in the real world of hammers and shovels...chainsaws and backhoes. And now the cold air bites hard when we go outside. Thirty-five degrees is probably almost tropical to Dear Readers who live in Minnesota or Alberta. But it is Antarctica to us. After so much claptrap, humbug and balderdash...we - a poor scribbler, a "literary" economist, a moralist and finger-wagger - how we like the cold air upon our skin, the rumble of the chainsaw...its hot smoke in our face...the chips spraying out...snow on the ground... ...anything real! Anything that isn't vain and hollow...empty words...or busybodies' delusions...! Regards, Bill Bonner. for The Daily Reckoning Australia Similar Posts: A Nice House With No Mortgage Fed Announced it Would Buy up to $300 Billion in Treasury Bonds Fed Gives Financial System No Doc Loan Willem Buiter Attacks Fed Policy Counting the Census

Outing Ben Bernanke Posted: 15 Dec 2010 11:49 AM PST Deception in the financial markets is not always costly, but it is rarely remunerative. Investors cannot afford to ignore this tendency. Recent disclosures from the Federal Reserve reveal that honesty was one of the earliest casualties of the 2008 financial crisis. These disclosures contain a number of juicy tidbits, like the fact that Goldman Sachs received tens of billions of dollars in direct and indirect succor from the Fed. Thanks to these spectacularly large taxpayer-funded bailouts, Goldman was able to continue "doing God's Work" - as CEO Lloyd Blankfein infamously remarked - like the work of producing billion-dollar trading profits without ever suffering a single day of losses. Thanks to the Fed's massive, undisclosed assistance, Goldman Sachs managed to project an image of financial well-being, even while accessing tens of billions of dollars of direct assistance from the Federal Reserve. By repaying its TARP loan, for example, Goldman wriggled out from under the nettlesome compensation limits imposed by TARP, while also conveying an image of financial strength. But this "strength" was illusory. Goldman repaid the TARP loans with funds it procured days earlier from the Federal Reserve. Then, over the ensuing months, Goldman recapitalized its balance sheet by selling tens of billions of dollars of mortgage-backed securities to the Fed. And the public never knew anything about these activities until two weeks ago, when the Fed was forced to reveal them. In a free-market economy, certain precepts seem fundamental...and essential: 1) Taxpayers have a right to know who's spending their money. 2) Dollar-holders have a right to know who's debasing their money. 3) Investors have a right to know who's cheating them out of their money...by hiding the truth. All three camps have a very large and legitimate bone to pick with the Fed's secret bailouts of 2008 and 2009. But let's consider only the case of the deceived investor... Secret bailouts do not merely benefit recipients; they also deceive investors into mistaking fantasy for fact. Such deceptions often punish honest investors, like the honest investors who sold short the shares of insolvent financial institutions early in 2009. Some of these investors had done enough homework to understand that no private-market remedy could ride to the rescue of certain financial firms. Therefore, these investors sold short the shares of certain ailing institutions and waited for nature to take its course. But the course that nature would take would be shockingly unnatural. We now know why. The Federal Reserve altered the course of nature, and did so without telling anyone. Many of the investors who sold short ailing financial firms in 2009 were alert to the possibility that bailouts by the Federal Reserve could change the calculus. In other words, the Fed could make the bearish case less bearish...at least temporarily. Therefore, many of these investors studied the Federal Reserve's disclosures, as well as corporate press releases, in order to quantify the Fed's influence. Based on all available public disclosures, the story remained fairly grim into the spring of 2009. Accordingly, the short interest - i.e., number of shares sold short - on Goldman Sachs common stock hit a record 16.3 million shares on May 15, 2009 - about 3.3% of the public float. But over the ensuing six months, Goldman's stock soared more than 30% - producing roughly $500 million in losses for those investors who had sold short its stock. Not surprisingly, the total short interest during that timeframe plummeted to less than 6 million shares, as short-sellers closed out their losing positions. Was it just bad luck? Or was something more nefarious at work here? Let the reader decide. But before deciding, let the reader carefully examine the chart below, while also carefully considering a selection of public announcements from Goldman Sachs during this timeframe. Based upon contemporaneous public disclosures, Goldman Sachs was "forced" by the Federal Reserve to accept a $10 billion loan from the TARP facility in October 2008. But Goldman's top officers repeatedly - and very publically - bristled under the compensation limits the TARP loan imposed. Therefore, as early as February 5, 2009, Goldman's chief financial officer, David Viniar, remarked, "Operating our business without the government capital would be an easier thing to do. We'd be under less scrutiny..." And on February 11, 2009, CEO Blankfein magnanimously remarked, "We look forward to paying back the government's investment so that money can be used elsewhere to support our economy." But at that exact moment, we now know, Goldman was operating its business with at least $25 billion of undisclosed "government capital." In April, 2009, The Wall Street Journal observed, "Goldman Sachs group Inc., frustrated at federally mandated pay caps, has been plotting for months to get out from under the government's thumb... Goldman's managers have a big incentive to escape the state's clutches. Last year, 953 Goldman employees - nearly one in 30 - were paid in excess of $1 million apiece... But tight federal restrictions connected to the financial-sector bailout have severely crimp the Wall Street firm's ability to offer such lavish pay this year." On May 7, 2009, a Goldman press release states: "We are pleased that the Federal Reserve's Supervisory Capital Assessment Program has been completed... With respect to Goldman Sachs, the tests determined that the firm does not require further capital... We will soon repay the government's investment from the TARP's Capital Purchase Program." On June 17, 2009, Goldman finally got its wish, thanks to some timely, undisclosed assistance from the Federal Reserve. Goldman repaid its $10 billion TARP loan. But just six days before this announcement, Goldman sold $11 billion of MBS to the Fed. In other words, Goldman "repaid" the Treasury by secretly selling illiquid assets to the Fed. One month later, Goldman's CEO Lloyd Blankfein beamed, "We are grateful for the government efforts and are pleased that [the monies we repaid] can be used by the government to revitalize the economy, a priority in which we all have a common stake." As it turns out, the government continued to "revitalize" that small sliver of the economy known as Goldman Sachs. During the three months following Goldman's re-payment of its $10 billion TARP loan, the Fed purchased $27 billion of MBS from Goldman. In all, the Fed would purchase more than $100 billion of MBS from Goldman during the 12 months that followed Goldman's TARP re-payment. Did private investors not have the right to know that the Federal Reserve was secretly recapitalizing Goldman's balance sheet during this period? Did they not deserve to know that the Fed's MBS buying was producing Goldman's "perfect" trading record during this timeframe? Yes, would seem to be the obvious answer. "There's a saying in poker: If you don't know who the patsy is at the table, it's you," observes Henry Blodget, the once and again stock market analyst, "Next time you feel like bellying up to the Wall Street poker table, therefore, ask yourself again who the sucker is." To be continued... Regards, Eric J. Fry, for The Daily Reckoning Australia Editor's Notes: Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling. Similar Posts: Meredith Whitney and the Buy Recommendation on Goldman Sachs Ben Bernanke "Respectfully Disagreed" With Angela Merkel Warren Buffett is Buying Four Percent of Goldman Sachs America Hates Goldman Sachs Government Sachs

Quiet Riots Posted: 15 Dec 2010 11:26 AM PST Mercenary Links Roundup for Wednesday, Dec 15th (below the jump). 12-15 Wednesday BP Sued by Obama Administration Over Worst Oil Spill – Bloomberg Reeling from riots, Italy faces uncertainty Anti-Austerity Protest in Greece Turns Violent – NYTimes.com 1,000 detained in Russia to prevent ethnic clashes – Yahoo! News In Maintaining Support for the Euro, Who Speaks for Europe? – NYT Nic Lenoir On Why The Euro Is About To Crash And Burn Mohamed El-Erian On Germany's Lose-Lose Position | zero hedge German MPs clash on future of eurozone Moody's warns it may downgrade Spain's debt Ireland Backs Bailout as Moody's Warns on Spain – NYTimes.com China Again Big Buyer of Treasurys – WSJ.com How the bond market could get crazier – Street Sweep Euro spurned in favour of Swiss franc Dollar Pulls Back, But Effects Appear 'Transitory in Nature' Ruble-Renminbi Trading to Start in Russia – NYTimes.com Traders on Run for the Money – WSJ.com No More Bears for Emerging Markets Unsettles Investors Shunning Conformity David Einhorn Predicting Another Crisis Like the Great Recession China Consumers Signal Deepest Inflation Concern Since 1999 in PBOC Survey Chinese Shelter Operator Is Accused of Selling Laborers – NYTimes.com U.S. Economy: Industrial Production Rises, Inflation Slows – Bloomberg Production data points to sustained recovery | Reuters Inflation Still Muted; Factory Output Grows – WSJ.com Senate Passes $858 Billion Tax-Cut Compromise Measure – Bloomberg Senate Approves Tax-Cut Extension – WSJ.com Obama Says `Progress' Made in Meeting With CEOs – Bloomberg U.N. Reports 'Considerable Slowdown' in Wage Growth – NYTimes.com Goldman Execs to Get $111 Million in 2007, 2009 Bonuses – Bloomberg Wall St bonuses may top last year as profits soar | Reuters Bank of America delays mortgage investor action | Reuters Bank of America in Mortgage Setttlement Talks – WSJ.com Big Oil Sells Assets at Record $49 Billion Pace as China Inflates Prices Economy Vulnerable to Rare Earth Shortages, Report Says – NYTimes.com Sugar Mills in India Allowed to Ship 500,000 Tons as Output Exceeds Demand U.K. Retail Sales Soar – WSJ.com A Chinese Automaker Secures a Foothold in Europe – NYTimes.com Color E-Readers Open Way for Picture Books – NYTimes.com Twitter financing values company at $3.7 billion | Reuters Tech Supply Chain Exposes Limits of Trade Metrics – WSJ.com Chavez seeks power to rule by decree for 1 year – Yahoo! News Fifa boss tells gay fans: 'Don't have sex at Qatar World Cup' ~

Bond prices continue to collapse/muni bonds fall/another gold and silver raid. Posted: 15 Dec 2010 11:21 AM PST

JPM Getting Smaller in Silver Posted: 15 Dec 2010 10:00 AM PST It is extraordinary to see the price of silver rise materially as the open interest is falling. It is even more so for that to occur over a period of more than one or two weeks

India, Indeed Posted: 15 Dec 2010 10:00 AM PST Gold prices meandered within a fairly tight range overnight as fewer buyers or sellers were visible on the scene in the absence of substantial market news and with an emergent trend to square books and head away from trading desks.

State Street Can Afford Gold ETF Fee War For a While Posted: 15 Dec 2010 10:00 AM PST Much has been made of this week's surge of buying in BlackRock's iShares Gold Trust. As of Tuesday, iShares reported the addition of 27 million new shares along with 264 thousand ounces taking total net asset value to $5.2 billion.

The One Reason You Have to Own Gold & Silver Posted: 15 Dec 2010 10:00 AM PST Analysts and pundits provide various reasons for the bull market in gold. There is one reason which stands apart and will drive precious metals to amazing heights. It is the impending sovereign debt default of the west, led by the great USA.

Gold Drops to Two-Week Low on Yields Posted: 15 Dec 2010 10:00 AM PST Gold fell $15.43, or 1.1%, to $1,380.82, the lowest settle since the end of November. We can either point to the sharp 1.1% rally in the US dollar or the continued advance in Treasury yields as the catalyst.

Has the U.S. Treasury Implosion Begun? Posted: 15 Dec 2010 08:18 AM PST I've been consistently warning that U.S.government bonds will eventually implode. Using history as a guide, I know that when the sell-off in bonds begins, it will be very swift. The magnitude of panics are inversely correlated to the degree in which investors are deluded. Some of the most ignorant comments I've ever heard have been on the bearish side for gold; hence panic buying should be pretty substantial. As for bonds, take a look at the dramatic spike in 10-year treasury yields since Helicopter Ben decided to embark on QE2. As I've been saying, deflationists just don't get it. In my opinion, it is likely that the early stages of the bond bubble collapse have begun. Although U.S. government bonds are a disaster waiting to happen, it would be irresponsible of me to not give you some perspective here. Yields have spiked nearly 50% in about a month. To put it plainly, it is not necessarily the best time to open up short positions on bonds. If I had no position whatsoever, I would wait for some kind of partial retracement to go short. In fact, if I absolutely had to take a stance, I would probably favor going long bonds now. However, all bets are off if we spike above 4% on the 10-year. This will be the market's message that the debt crisis is spiraling out of control.; it would be the equivalent of gold breaking out above $1030 last year, never to look back again. The recent sell-off in bonds has been sharp and swift, as I always warned it would be. I've been trying to explain that the buyers of bonds are speculators barely distinguishable from the speculators who brought the housing bubble to a crescendo. These investors are attempting to front run the Fed. Believe me, these are not "hold to maturity" investors. So many people make the argument that as long as investors hold to maturity, U.S.  bonds will do just fine. Assumptions like these are what blow up models time and time again. Garbage in, garbage out. Capital seeks preservation. Foreign holders of our debt will have no qualms about selling our debt and loading up on the short end of the curve. This totally changes the dynamic of our debt crisis, making Ponzi scheme financing that much more difficult. If you have a $14 trillion economy and, let's say, $500 billion in debt, a 50% spike in yields is manageable. But let's say you have a $14 trillion economy and $14 trillion in debt. At this point, the increase in debt servicing costs is equivalent to the entire budget deficit of previous years. Wake up and smell the roses folks, debt operates geometrically. Capital is taking on a "wait and see" approach as most markets correct. This makes sense because many markets, including stocks and commodities, were in overbought territory. Markets are still trying to find some footing here, so it would be wise to take smaller positions until further notice. The short U.S. government bond trade will eventually be one that the biggest investors in the world will take in size. We are not there yet, eventually we will see some epic moves in bonds. Make no mistake about it: gold will be the prime beneficiary of such a move. Source: Has the U.S. Treasury Implosion Begun?

That Rush Into Gold/Silver You Hear Is Not Coming From The U.S. Posted: 15 Dec 2010 08:16 AM PST The gold rush mania that drives the price of gold to unbelievable price levels may well come from a global stampede into the world's oldest currency that leaves the American hoi polloi left holding worthless U.S. monopoly paper and little else. The best part about the action the in metals is that CNBC/Wall St. Journal/et al have the average American convinced that gold is in a bubble. Ironically, the classic signs of an investment bubble are nowhere to be found – the biggest signal being that gold/silver is only held/being purchased by easily less than 5% of the mass investment community. Contrast this with the internet/tech bubble when large mutual funds were heavily overweighted in the sector, Americans were stampeding like cattle into these funds and every day CNBC was promoting the whole sector. In fact, I recall vividly in 1999 that all Maria Bartiromo had to do was mention the name of an internet stock and it would spike heavily in volumn and rapidly in price. That phenomenon will eventually occur in the mining stock sector, but certainly not any time soon. Outside of the type of investors who read blogs like my mine, why don't you go out and ask randomly if any of your friends know the name of more than maybe 1 or 2 junior mining companies. The real gold rush is occurring in Europe – mostly Germany – and in the eastern hemispere countries. China in that last year changed its laws to allow its citizens to buy silver and has put in programs which encourage the growing middle class to invest in and accumulate gold/silver. India has historically been the largest buyer of gold. Now they are not only continuing aggressively to accumulate gold at these price levels but they are also now voraciously accumulating silver. That is the "poor man's gold" income and substitution law of economics. The inflation that the U.S. has been "exporting" to China is now starting to show up in food prices over there.  Clusterstock.com posted this chart this morning: Food inflation is ramping up quickly in China.  Same with India.  This will trigger an even more aggressive push into gold/silver by the Chinese and Indians.  We're seeing evidence of that every day.  Eventually that food inflation is going to hit the U.S.  I don't know if anyone noticed, but the Governor of Florida has declared a state of emergency with the orange crop because of the weather:  LINK.  This situation will affect all of Florida's crop production.  Prices are going higher.  Eventually this reality will sink in and more investors in this country will start to look at gold and silver, only at higher prices.  My view is that silver will continue to outperform gold because of the "poor man's gold"/income and substitution effect as people here eventually scramble to move into precious metals. And finally, I believe recent action in the metals is highly related to the situation with the Swiss banks, in which several anectdotes have surfaced about investors having problems getting their Swiss bank to deliver gold and silver that they were safekeeping there.  One particular individual had $40 million in gold bars he wanted and it took him a month plus the threat of legal action before he received his bars.  Another investor with $500k of silver bars is still trying to get his metal delivered and the Swiss bank involved is lobbying hard to convince him to take cash instead.  If these banks were actually keeping the metal on hand like they are paid to do, they should be able to have the bars delivered within a week.  Not in this country of course, but globally precious metals investors are looking at these stories and deciding to get their metal out of the banking system. The knowledge that paper claims on gold/silver outnumber the actual amount of physical gold and silver available to be delivered by insane multiples is finally being widely circulated and those who understand this situation are going to ask for the delivery of their metal.  In other words, in my view, there is a scramble going on internationally for investors to take delivery of gold/silver and this is part of why we are seeing the metals trade inexorably higher.  This could get very interesting… Source: That Rush Into Gold/Silver You Hear Is Not Coming From The U.S.

Mining Stocks Finally Appear to Have Resumed Their Upward Trend Posted: 15 Dec 2010 07:16 AM PST   In our previous essay we've covered the situation on the gold market, however since rallies (and declines) often correspond to the rallies (and declines) in the mining stocks, this time we will focus on the latter and check if we can spot any divergences or confirmations. Let's begin with looking at the very-long-term XAU Index (proxy for gold- and silver mining stocks) chart (charts courtesy of http://stockcharts.com) The above chart shows a decisive move above previous highs, which means that the uptrend has finally been resumed. The post-breakout correction is barely visible so but a move down to the 210 level would be both normal and healthy at this time. This breather could very well precede yet another rally and unless this 210 level does not hold, the medium-term sentiment for the mining stocks remains bullish. Let's take a look at the GDX chart for more short-term details The GDX ETF chart shows a pause in the recent decline. In our recent Market Alert we mentioned that we have been looking for a low volume move to the upside. It seemed as though this was a good possibility at the time and would provide Subscribers with an excellent opportunity to short the market. No upturn has been seen however (the 0.38% move up is more of a pause) and therefore, implications of the volume analysis are not meaningful. The chance to short did not arise yet. Support levels, which will likely hold on the downside, are at 60 and the 57-58 range. Either of these levels could become the next local bottom for the GDX ETF and a rally from there is quite possible. Let's not forget that there's more to the mining stock sector than just the big senior gold and silver producing companies – there are also juniors. In the previous essay, we've mentioned volume spikes for the GDX:SPY ratio and their implications for the short term. The volume spikes are significant not only in the relative performance of the senior sector, but that is the case also with juniors.   The GDXJ:SPY is a ratio between a proxy for the juniors and a proxy for the general stock market. The GDXJ ETF is the junior counterpart of the well-known GDX ETF, and its performance relative to other stocks quantifies the part of the performance of junior sector (small-cap, small-volume, early-stage companies) that can be attributed to individual investors' perception of the market. Most institutional investors are not involved in this market due to company size, monetary constraints, and other regulations. The buying pressures, therefore, lie mostly on individual investors who are naturally more emotional most of the time (!). It is likely that this ratio is very much an emotional barometer of individual gold and silver investors. Since the general stock market drives the prices of these small cap companies, the ratio is calculated by dividing by the SPY. This isolates the influences of other stocks. If the ratio rises, the indication is that investor's sentiment is high. This, in turn, allows us to analyze moments when the optimism is excessive in order to take the opposite position as it means that the current move will soon end. In this case, it means that everyone, who wanted to enter the market, is already in it and there is nobody left to support further rallies – new capital needs to enter the market if the price was to rise. Yes, the GDXJ:SPY ratio take the individual investors into account only, and the gold market is driven by many other entities, but – once you take into account the fact that the public enters the market mostly at the end of a given move – it occurs that it doesn't really matter. While the sentiment is not extremely high in absolute terms (we don't see much gold-related headlines in the major financial portals), on a relative basis we see an upswing confirmed by volume. This could be viewed as a bearish factor. Namely, volume levels were extremely high last week. This is important to note because in the past, high volume levels such as this have been an indication that downtrends have not yet completed. Speaking of juniors, we would like to take this opportunity to comment on this sector in general. Our SP Junior Long-Term Indicator has been moving slowly higher since July 6th (except a single day downswing which was so insignificant that we specifically advised to ignore it). As of today we did not see a sell signal (suggesting switching from junior stocks to senior stocks) in the form of a decline in the indicator. The above indicator suggests switching from big senior gold/silver producers to juniors if it is below the lower dashed line and starts to rise, and it suggests switching from juniors to seniors if it is above the upper dashed line and starts to decline. It was designed to catch the major moves, not the short-term ones. Please note that juniors (GDXJ ETF) moved over 60% higher since July 6th, while seniors (here: GDX ETF) moved up by only 25% since that time. Consequently, this indicator alone generated substantial value for those who took it into account while making their investment-related decisions. Right now it is above the upper dashed line, but it did not start to decline visibly. Consequently, holding juniors still appears a good way to go. The situation could change in case of a plunge on the general stock market – as you may see in the correlation matrix, main stock indices are one of the main drivers of the junior prices. Summing up, the ratios point to an overall weakness at this time in the mining stocks and consequently in gold and silver. This confirms our analysis from the previous essay – namely, that the situation remains mixed, with a slight bearish bias. To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time. Thank you for reading. Have a great and profitable week! P. Radomski Editor www.SunshineProfits.com * * * * * Interested in increasing your profits in the PM sector? Want to know which stocks to buy? Would you like to improve your risk/reward ratio? 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Gold Seeker Closing Report: Gold and Silver Fall Over 1% Posted: 15 Dec 2010 07:13 AM PST Gold chopped its way lower throughout most of world trade and ended near its early morning New York low of $1383.99 with a loss of 1.32%. Silver fell to as low as $28.881 in London before it climbed back higher in New York, but it still ended with a loss of 1.72%.

CHINESE TAKE-OUT (OF USECONOMY) Posted: 15 Dec 2010 07:03 AM PST The Chinese really must think the American strategy and behavior to be braindead and self-destructive. The US helped them assemble a manufacturing industry, replaced US income with debt, and finally faces the Grim Reaper in a national episode of systemic failure. The US leadership is as stupid and mindless as the population is driven by compulsive consumption over the cliff, as the nation faces ruin. The Jackass warning has been for five years that the Chinese experiment would end in tragedy, and that when a preponderance of USTreasury debt is owned by foreigners, especially a single foreign nation, the Untied States will lose its sovereignty. It is worse. It lost its vitality entirely. With its financial engineering backfire, the nation is broken from a sequence of repeated asset bubbles & busts. With its wartime economy, the nation seeks new enemies and prefers exports of weapons to productive goods. The nation is like a Sherman Tank sinking in a sea of quicksand with credit cards as banners flown, all overdrawn and canceled. The globe has come full circle from a century ago. The export of opium by Britain to China back then, the US monopoly on narcotics nowadays. Uncle Sam prefers selling contraband to legitimate industry. A spectacular sequence of events has taken place with respect to China and the United States in the past decade. The disastrous outcome was extremely visible long ago to the competent economists. This article cannot fully discuss and analyze the entire sequence, which in my view took the USEconomy from imbalanced, debilitated, and on the verge of ruin in ten years to chronic insolvency, accelerated breakdown, and systemic failure today. The official policy toward China by the USGovt on bilateral trade highlights the incredibly stupid and irresponsible nature of American leadership, especially in economic and financial matters. Let this piece serve as an outline of ruinous self-destructive policy, resulting in a climax failure in the Untied States. At the doorstep to a much darker poorer place, with countless traits associated with the Third World, the US as a nation with its USGovt and Wall Street compromised leadership refuse to admit grotesque errors. They do what they usually do, create more money to toss at half-baked solutions, and create a new enemy to lay blame on foreigners. This time though, the Chinese object of criticism, rebuke, hostility, and retaliation is the largest USTreasury creditor. The counter-attack from Beijing after an amateurish display of ignorance and tantrums seems directed at purchases of Gold & Silver, along with developing a stranglehold on the commodity supply chain. The financial managers in China have found inventive ways to discharge vast amounts of USTreasury Bonds. Their challenge includes finding secure worthwhile investment locations for the over $20 billion in bilateral trade surplus they build each month with the US, a formidable challenge indeed. MOST FAVORED NATION TICKET The rationale for the Clinton Admin to grant a Most Favored Nation status to China in its closing months in 1999 was a mystery to me. To be sure, the gesture went a long way toward developing detente with the slumbering giant. But it awakened the Middle Kingdom after two centuries of quiet, marred by a half century of harsh communism. Without question, some big promises were made in bilateral agreements. My suspicion is that the USGovt sought a lock on a new large scale creditor to purchase USTreasury debt securities, regardless of the consequences. Perhaps the USGovt sought a bagholder both either USTBonds or USAgency Mortgage Bonds, or both. With Japan and South Korea as neighbors, China would surely not resort to purchasing US weaponry. Given the coincident timing with the handover of Hong Kong from the British at the end of its 99-year lease, one must suspect that China might have promised not to transform HK into an economic prison camp shrouded in communist rules that would render it a wasteland, if the US and UK would only promise to assist the Asian giant with technology transfer, industrial support, and massive business investment. China probably promised some big bait of cheap imports to the USEconomy, the grand US achilles heel. The US was well along its pattern of consuming itself to death. Witness the retail emphasis within its economy, its crippling reliance upon debt, its junk food preferences, and its obesity. The China might have laid a great trap, and the US took it. Maybe the entire deal was well planned, a leftover of Mao Tse Tung days when he was a member of the Skull & Bones group. The Most Favored Nation status was the ticket that opened the door, a New Open Door policy, for investment, lower cost in production, and the general awakening of the sleeping giant. What followed was a natural course of events to unseat the Untied States, converting it into a hopeless debtor with neither the prospect nor the means to repay its debt. Enter the new age of China, all perhaps the plan, the ever patient giant. The parallel to the destruction was a course taken by former USFed Chairman Greenspan. He guided the nation through the avenue to financial engineering and consequent implosion brilliantly, offering ideological justification, legislative obfuscation, and near the end, a nearly total abdication. He was a tremendous mesmerizing high priest. Greenspan's second paycheck from his Swiss masters is consistent with working an agenda toward the demise of the American Empire. INVESTMENT PARTNER The first active stage between the United States and China was as investment partners. Rough figures of Western corporation (US, Canada, Europe) investment were $23 billion for the years 2001, 2002, and 2003. It was probably more. The Chinese industrial base expanded to the point that 60% of all Chinese trade surplus originated from Western corporations new to the scene. Yet the US leaders complained about the big surplus gathered, being part of its process. Worse, the Chinese factories often were equipped with the next generation Japanese machinery, like in machine tools, automation, and fabrication. A few years later, the German machinery entered the factory floors to some extent. US corporations saw an opportunity to tap the cheaper Chinese labor, and did so. The consensus opinion was that China could not be ignored for another century, so include them, partner with them, bring them into the fold. China quickly became the centerpiece to the globalization movement. One must wonder if the Western economist corps was so clueless as to be ignorant of the downside effects. China would draw countless jobs from the US and Europe. China would accumulate reserves rapidly. China would own foreign debt securities well beyond a critical mass. When the Hat Trick Letter started in 2004, my warning was constant and consistent, that China would eventually became a rival then a trade war opponent. The differential in labor costs would lead to a gigantic arbitrage that ended up at a breaking point, with extreme conflict at the end chapter. We are there. It will be a miracle to avoid a hot war. THE LOW COST SOLUTION The people of the United States no longer hear about the famed Low Cost Solution bandied about in 2002 and 2003 endlessly. It was supposedly a good thing, to reduce the cost of home electronics and housewares. For a idiot consumer society, that is a good thing supposedly. For a wise nation, it is a prescription for disaster. That was how the Jackass saw it. The solution of a lower production cost had a flip side, with staggering consequences that would put the US as a nation on a collision course with the Third World abyss. Simply stated, China's gain would be America's loss. The new jobs created in China to enable the lower cost in producing exports to the US consumer, hellbent on consuming his entire house in home equity, hellbent on consuming his entire future in order to live for today. The result would be assuredly lost jobs in America. It was obvious to all except the clueless cast of hack US economists. They proclaimed that the lower costs of production would enable cheaper imports into the USEconomy, a new wave of spawned growth with ripple effects in benefit, wider distribution from this vast Asian pool, more retail jobs, and a new American growth spurt. What utter nonsense! But they continue to ply their trade. Quickly the jobs vanished from the USEconomic scene. Home appliances took much of the news headlines. The drain of jobs spread to Japan, as its robust economy began to feel the impact. In time the majority of consumer items like cell phones and home stereos were built in China for export to Japan. The labor arbitrage in globalization spares no advanced economy, which must operate under a higher cost structure. Follow washing machines, dryers, dishwashers, stoves, and more, came housewares and hardware items. The crowning blow was the announcement that Wal-Mart had 160 Chinese manufacturing sites in place. Sam Walton would not approve, as his motto was Made In America. The die was cast. Then came the problems of quality and reliability. Food imports from China had gradually earned a tarnished reputation of recycling chicken from reject sources and even roadkill for fresh caramel color and quick export to the US grocery shelves. The home building industry saw problems with drywall quality, even carpet chemicals. The SARS epidemic eclipsed the news headlines though, usurping attention. The same type of software reliability problems seen in the 1990 decade from India were experienced from Chinese exports. The greatest impact in the early stages of the Chinese industrial experiment were the loss of US jobs in favor of growth in China the loss of income from value added tangible industry in the USEconomy the rise of home equity debt from US households the US dependence upon asset bubbles for economic growth the growth of income in China the growth of the bilateral trade deficit with China the growth of the mammoth FOREX reserves in Chinese Sovereign Wealth Funds the increasing share of Chinese ownership of USTreasury Bonds the increasing share of Chinese ownership of USAgency Mortgage Bonds reduced quality and reliability of imported products to the USEconomy strain for the macro economic impact to the USDollar and Chinese Yuan strain for the macro economic impact to the USGovt debt and USTreasury Bond resentment in the US for jobs stolen by China blocked large firm acquisitions (see Unocal, BHP Billiton, 3Com) new areas of friction (e.g. bank rules, security rules like Google) a fast rise in tariffs and protectionism ALARMING FOREX RESERVES For US-based economists not to foresee a simple direct consequence of fast rising, alarming levels of FX reserves being accumulated by China, the American economists showed their true stripes as short-sighted and incompetent. The Jackass siren call was that eventually the Chinese holdings of USTreasury Bond debt would grow so great that US sovereignty would be challenged, compromised, then lost. The concept never entered the corrupted thought chambers of US economists and the cranium cavities. The challenge became so great within China for managing such huge sums of money, each and every month, that they created several Sovereign Wealth Funds. The Arab nations developed the concept, as did South Korea and Singapore, but the Chinese saw such funds flourish. When they collectively tipped the $1 trillion mark a few years ago, the news captured global attention. Nowadays, the Chinese total reserves from diverse accounts totals $2.65 trillion, a center of great power. Heck, that is almost as much money as has been stolen by past US presidents, and stolen by US defense contractors, which happens to be about $1.5 trillion from Fannie Mae and $2.2 trillion from the Pentagon misappropriations. One must love the verbiage, as misappropriation sounds better than stolen. And that does not even address the $2.3 trillion in counterfeit USTBonds sold (over and above issuance) into the market by JPMorgan Chase, whose evidence was in the Building #7 at the World Trade Center, turned into a heap with pervasive thermite residue. In recent months, the US-China bilateral trade deficit has remained over $20 billion per month in stubborn fashion. The labor arbitrage is a dynamic that will not go away. Chinese labor, as the Jackass wrote in 2005, could rise by 50% and still be far below the US wage scale. In order to cement their grip on trade, and assure a reliable supply line, which keeps firm their surplus revenue stream and economic vitality, the Chinese embarked on a fortification strategy. They bought the Long Beach California port facility. They bought much of the Vancouver port facilities. They bought much of the Mexican port facilities. In the last year, they expanded to building the primary Brazilian port facility. Call it a stranglehold of deep water ports. The major challenge for China with gargantuan reserves and fast growing new entries into reserves is the management of them. They have major challenges in investing all that money. Well actually, it is not money, but rather credits acknowledged to contain value in recognized purchase power. The Chinese have been engaged in extremely brisk investment plans to secure energy supply, metal & mineral supply, and on the other side to secure markets to sell their finished goods. Instead of weapon sales, they typically promise to build community centers, schools, hospitals, marketplaces, railroads, and port facilities. Of course in the process, they ignore local dictatorships. They have made great inroads in West Africa, a region the US ignores except for Nigeria, where the common practice is to use muscle and bribery it seems. See the ex-VP Cheney case. China has made great inroads in the Persian Gulf and in Turkey, opening up Middle East markets and African markets. SCAPEGOAT FOR US WRECKAGE As the disaster unfolds from a mindless self-destructive pathway toward the climax in consumerism coupled with labor market abandonment, the USGovt has followed its usual pattern of blaming the trade partner. China has been labeled a currency manipulator, a thief of jobs, everything but the old heartless yellow scourge. Save that label for last. The USGovt, with its recent Wall Street masters, has been deeply involved in wrecking the integrity of most every financial market it touches. The USTreasury Bond market has a scad of naked shorts, failures to deliver, and leverage from Interest Rate Swap contracts that help to maintain the high value and low rates. The USGovt keeps the Consumer Price Index under wraps, preventing an unwanted rise from appearing. In the 2000-2007 period, the rising home price component was carefully removed from the CPI. It featured the home equivalent rent component instead, a tame moribund figure. After 2007, the stat rats decided to include the home price component again, since it is falling. Now the CPI features a home price item that consists of 25% of the index incredibly. Then the USDept Treasury assures that enough Treasury Investment Protected Securities are bought by the USFed, so that the early warning system on price inflation is cooled by a bathtub of cold water at all times. Then the USGovt uses suppression of the gold price in order to keep the USDollar elevated. The currency stabilization funds are commonly recognized mainstays of USGovt financial management. In fact such stabilization funds have about 20 to 30 hidden agencies busily defending the USDollar value, our freedom, and our way of life. During all this market manipulation, the USGovt has angered its creditors to the extreme. So the USGovt reveals its many currency manipulator sides. A scribe would be negligent not to mention the Shadow Banking System that is the province of the US banking industry, fully supported by the USFed and the USDept Treasury. The hidden banking network has the unique feature of profiting from other nations as their financial structure heave from the great stress, and decline into a wrecking field. Keep in mind they include vast import of fraudulent bonds from the US issuers. The shadowy system used to boast $1400 trillion in credit derivatives and other nuclear sewage, now perhaps only $1000 trillion in a celebrated deleverage initiative. Try not to laugh. These instruments go a long way to manipulate the value of USTBonds, the USDollar, and the entire usury costs of the US universe of corrupted value. The USGovt finally has complained about Chinese Yuan currency manipulation so much and for so long, not to mention with such shrill vacant thought, that the world has isolated the US on the global stage. Take the South Korean G-20 Meeting a month ago. The US was given lip service as appetizer hors d'oeuvres, and a cold shoulder at the dinner table. Nobody followed the US lead, nobody. It was the most shameful G-8 or G-20 Meeting in Untied States history. The finance ministers took their cues from the Chinese delegation. The crowning climax to duplicity has taken shape in the last year. Early in 2010, the professor occupying the USFed Chairman post repeatedly mentioned his plan for an Exit Plan from the 0% rate corner. The Jackass dismissed such nonsensical propaganda, along with equally lunatic delusional notions like Green Shoots of USEconomic recovery. If Bernanke were graded like a graduate school student for accountability on forecasts, analysis, and white papers, he would fail quickly and exit the program (a very different exit strategy). As the distress to the USEconomy and US financial system became acute in 2010, the USGovt blamed China for more currency manipulation. It became a tired old song with little or no meaning, more like a blunt stick to beat the Chinese investment partner from 2002, to pummel the creditor. How quickly we forgot our trade partner, our source of Low Cost Solutions!! The climax came with admission that the USFed would embark on Quantitative Easing #2, a correct Jackass forecast cited all through the first six months of 2010. The USFed would print money, buy USTBond debt, flood the bond market with liquidity, and directly manipulate the USDollar currency in the process. The debt monetization in 2009 and 2010 was much bigger than the exposed QE1. The USDollar has been in downtrend ever since. Gold has been in powerful uptrend. The duplicity comes from the USGovt continuation of charges that the Chinese Govt manipulates its Yuan currency. The DC spin has no other message. To be sure, China keeps a loosely managed peg to the USDollar, never to permit too fast a rise. But the USGovt by comparison is the undisputed world champion of currency manipulation, debt production, market undermine, statistical distortion, and bank ruin. See the Flash Trading in the stock market. CURRENCY WAR & TRADE WAR The Competing Currency War has ramped up, heated up, and agitated every single major and secondary nation in the global economy. The primary detonation trigger for the currency war was QE1, the printing of $1.4 trillion of phony money by the venerable USDept Treasury, blessed and managed by the august USFed, and subsequent purchase of two gaggles of USTBonds and one gaggle of USAgency Mortgage Bonds. The world watched in horror, as the USGovt gradually lost its buyer base in Treasury Bond auctions. The totally lost USFed under the myopic stewardship of Professor Bernanke, the great student of Great Depression revisionist history, pounded the podiums about an Exit Strategy once again. Except this time after the nutty home buyer tax credit expired, the USEconomy slid further into recession. The lies told and reports published on price inflation, which rages higher at 8% according to Shadow Govt Statistics competent analysis, permit a 5% to 6% lie to be built into the GDP calculations. If price inflation is not really 2% to 3% as reported, then the GDP growth is not 3% as reported, but actually minus 2% to minus 3% instead. If simple annual GDP is compared to annual GDP from a year ago, then the GDP is running at a 7% recession. This revelation is astounding!! So the USGovt refuses to effectively stimulate the USEconomy, since beholden to Wall Street for $trillion welfare programs. The USGovt conducts revolving door sessions on home loan modification, offering much sweeter incentives to the foreclosure mills run by the FDIC for the big banks. And the USFed admitted in August and September that the QE2 project would be unleashed. The engine for the global Competing Currency War is clearly the United States, where the asset bubbles were engrained in policy, where the multi-$trillion bond fraud originated for global export, where the criminal prosecution is nowhere, where the multi-$trillion monetary press is hard at work. The response from global trade partners is shock and horror, followed by hasty actions. The central banks around the world are busily responding to rising currencies. The December Hat Trick Letter gold report shows evidence in the TIC Report on USTBond holdings by major nations. Some nations are reducing US$ exposure by USTBond sales. Other nations are quickly buying up USTBonds to prevent a fast rise in their native currencies. Other nations are part of the hidden US-UK network that conceals their vast USTBond purchases, all of which are denied by Bernanke before the USCongress. Why would the United Kingdom be so busy if not part of the illicit game of currency ruin in a desperate survival initiative? The United Kingdom, despite being locked in an intractable downward spiral with insolvent banks, wrecked home equity, and horrendous national deficits, has somehow seen fit to increase its USTBond holdings by more than triple, from $126.8 billion in September 2009 to $459.1 billion. And China is a currency manipulator!! The Competing Currency War has a long way to go. Healthier nations with a brisk export trade must be careful not to suffocate under a strengthening currency, as the USDollar steers itself down into the devaluation morass. The brain trust of the Wall Street and London pedigree know full well that the game is over, the fiat USDollar is trash, and that the Paradigm Shift features a power handoff to China and the East from the insolvent West, whose flagship in the US & UK is preoccupied by war. The Competing Currency War is utterly fascinating, since it can be pre-written according to a tight script. Japan is buying USTBonds to prevent a fast rise in the Yen currency, which has already done harm to their export trade. The emerging nations are being flooded with speculative funds chasing higher bond yields, proceed funds from commodity sales, and much more. They will be harmed by rising native currencies. See Brazil for example, which has instituted new rules and taxes on incoming speculative money flow. They have a food price inflation problem, which is not from speculation, but rather from in my non-expert opinion a result of three decades of cutting and burning the Amazon Rain Forest. Their rain patterns have changed radically. The real big battlegrounds are between the US & China and among nations within the European Union. The Europeans cannot continue with the fractured common Euro currency more longer, especially with defaulting sovereign bonds underneath them. Its Euro Bonds are so different, that arbitrage pulls apart the Euro at a time when the sovereign debt structure is falli

The Albatross that Happens Upon Hapless Homeowners Posted: 15 Dec 2010 07:01 AM PST There are lots of sad stories about how so many people have mortgages larger than their houses are worth, now that their houses have gone down in value with the general decline in housing prices, and more and more people are finding themselves increasingly in this same, sad situation of having to pay a lot of money for something that is not worth it. The question these sad-sack people must answer is, "Continue this madness, or flee?" Oddly enough, this is the same situation facing my wife, who reports that she continuously has to choose between her saying, "I'm leaving you, Mogambo, you hateful, weird, outraged, angry, cheap, gold-bug, armed-to-the-teeth, lunatic bastard who loves gold and silver more than he does his own family!" versus me saying, "Stay here and put up with me, you shrill, screeching, emasculating old shrew who would stupidly spend all our money instead of wisely putting it into gold, silver and oil in a fearful, frantic response to the Federal Reserve creating so unbelievably much money so that the federal government can deficit-spend that selfsame so unbelievably much money, which is not to even mention the wonderful way that 4,500 years of the history of governments acting fiscally and monetarily insane guarantees – guarantees! – Huge Freaking Wealth (HFW) for those owning gold, silver and oil, which is us, of which you get half! Half!" As she says with a heavy sigh, the decision is "a daily struggle," but I am sure that she will stay with the latter as gold and silver respond, as they always do, to the suicidal malfeasance of the Federal Reserve's creating so much new money, and thus gold and silver will continue to rise in price and thus lavish their timeless Make The Big Bucks Blessings (MTBBB) upon us, which is the whole point of investing! Whee! That happy happenstance will almost certainly not, alas, happen to the unhappy hapless homeowners who happen to currently owe more than their houses happen to be worth, or to the people who will soon find themselves in that very same mess, as, according to Zillow.com, it is going to get A Lot Worse From Here (ALWFH). In particular, their news is that "US home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of homebuyer tax credits." Yikes! As to the amount of financial pain suffered already, Bloomberg goes on with the doleful statistic that "This year's estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion"!! The use of the double exclamation point was actually accidental, as my trembling hand had a spasm at the thought of suffering a $9 trillion loss of value. But accidental or not, to the pathetic people who are underwater on their mortgages, it surely merits two exclamation points to indicate the special emphasis of how they ache to break free from the housing albatross around their necks, much as my wife aches to also break free from the allegorical stinking corpse of some huge, rotting, dead bird tied around her neck, every bit of joy squeezed out of her life by my perpetual, rabidly hysterical, year in and year out, paranoid, constant insistence to buy as much gold, silver and oil as possible because the Federal Reserve is creating so much excess money that ruinous inflation is inevitable. The Wall Street Journal does not mention anything about stinking dead birds or ruinous inflation, but does quote CoreLogic, a "real-estate data firm," as reporting that "so-called underwater mortgages fell to 10.8 million at the end of September," and that these total to a full 22.5% of all US homeowners with a mortgage! Yikes! Almost 1-in-4! Yikes, yikes, yikes! As if that is not bad enough, if you are the kind of person who ascribes great significance to things that happen although they never happened before, or they have not happened for a long, long time, then you will be interested to know that, even worse, "homeowner equity is lower by one third and is below 40% for the first time since World War II." First time in 75 years! Yikes again! Of course, this is all too complicated and confusing for me, overwhelming my little pea-brain as to what any of it can possibly mean, even if I was interested in what it means, which I am most assuredly not. I am, instead, in it Only For The Money (OFTM), which is why I follow the classic Mogambo Super Duper Investment Plan (MSDIP), which is to merely buy gold, silver and oil when the Federal Reserve is creating excess money, and especially when the Federal Reserve is creating trillions of dollars in new money per year so that the federal government can borrow and spend trillions of new dollars per year, and doubly especially when each subsequent year means more and more deficit-spending and more and more creation of new money by the Federal Reserve. And the Mogambo Super Duper Investment Plan (MSDIP), which has the motto "Designed by a lazy idiot for lazy idiots!" is so childishly easy that you giggle childishly in delight, "Whee! This investing stuff is easy!" The Mogambo Guru for The Daily Reckoning The Albatross that Happens Upon Hapless Homeowners 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."

The NEXT Silver/Gold Rocket Posted: 15 Dec 2010 04:51 AM PST I wanted to post this excellent picture as my next gold/silver rocket pic, but it's way too big (size/byte-wise). Kinda like the silver and gold price tsunami. :shine: You can see it here ( Hmm...:idea: maybe if we post only links to rocket pics the price won't dump! ) From the wonderful Astronomy Picture of the Day archive: http://antwrp.gsfc.nasa.gov/apod/ap101214.html ( Image courtesy http://launchphotography.com/ ) R.

GEAB N°50 est disponible ! Crise Systémique Globale : Second Semestre 2011 – Contexte européen et catalyseur US - Explosion de la bulle des dettes publiques occidentales Posted: 15 Dec 2010 02:39 AM PST - Communiqué public GEAB N°50 (15 décembre 2010) - Le second semestre 2011 marquera le moment où l'ensemble des opérateurs financiers de la planète va finalement comprendre que l'Occident ne remboursera pas une partie importante des prêts réalisés au cours des deux dernières décennies. Pour LEAP/E2020, c'est en effet vers Octobre 2011, du fait du plongeon d'un grand nombre de villes et d'états américains dans des situations financières inextricables suite à la fin du financement fédéral de leurs déficits, tandis que l'Europe fera face à un besoin très important de refinancement de ses dettes (1), que cette situation explosive se dévoilera dans toute son ampleur. L'amplification médiatique de la crise européenne en matière de dettes souveraines des pays périphériques de l'Euroland aura créé le contexte porteur pour une telle explosion dont le marché américain des « Munis » (2) vient d'ailleurs de donner un avant-goût en Novembre 2010 (comme anticipé par notre équipe dès Juin dernier dans le GEAB N°46 avec un mini-crash qui a vu s'envoler en fumée tous les gains de l'année en quelques jours. Cette fois-ci ce krach (y compris la faillite du réassureur monoline Ambac (3)) a pu se dérouler en toute discrétion (4) puisque la machine médiatique anglo-saxonne (5) a réussi à focaliser l'attention mondiale sur un nouvel épisode de la sitcom fantaisiste « La fin de l'Euro ou le remake monétaire de la grippe H1N1 » (6). Pourtant la simultanéité des chocs aux Etats-Unis et en Europe constitue une configuration très inquiétante, comparable selon notre équipe au choc « Bear Stearn » qui précéda de huit mois la faillite de Lehman Brothers et l'effondrement de Wall Street en Septembre 2008. Mais les lecteurs du GEAB savent bien que les chocs importants font rarement la une des médias plusieurs mois à l'avance, alors que les fausses alertes en sont coutumières (7) ! Dans ce numéro 50 du GEAB, nous anticipons donc l'évolution de ce choc terminal des dettes publiques occidentales (en particulier des dettes américaines et européennes) ainsi que les moyens pour s'en prémunir. Par ailleurs, nous analysons les conséquences structurellement très importantes des révélations de Wikileaks sur l'influence internationale des Etats-Unis ainsi que leur interaction avec les conséquences globales du Quantitative Easing II programmé par la Réserve fédérale US. Ce numéro de Décembre du GEAB est bien entendu l'occasion d'évaluer la pertinence de nos anticipations pour 2010, avec cette année un taux de succès de 78%. Nous développons également des conseils stratégiques pour l'Euroland (8) et les Etats-Unis. Et nous publions l'index GEAB-$ qui permettra désormais chaque mois de suivre synthétiquement l'évolution du Dollar US par rapport aux principales devises mondiales (9). Dans ce communiqué public du GEAB N°50, nous avons choisi de présenter un extrait de l'anticipation sur l'explosion de la bulle des dettes publiques occidentales. Ainsi, la crise de l'endettement public occidental s'accentue très rapidement sous la pression de quatre contraintes de plus en plus fortes : . l'absence de reprise économique aux Etats-Unis qui étrangle l'ensemble des collectivités publiques (y compris l'état fédéral (10)) habituées ces dernières décennies à un endettement aisé et à des recettes fiscales importantes (11) . l'affaiblissement structurel accéléré des Etats-Unis tant en matière monétaire, financière que diplomatique (12) qui réduit leur aptitude à attirer l'épargne mondiale (13) . le tarissement mondial des sources de financement à bon marché qui précipite la crise de surendettement des pays périphériques européens (de l'Euroland comme la Grèce, l'Irlande, le Portugal l'Espagne, … et aussi du Royaume-Uni (14)) et commence à toucher les pays-clés (USA, Allemagne, Japon (15)) dans un contexte de refinancement très important des dettes européennes en 2011 . la transformation de l'Euroland comme nouveau « souverain » qui élabore progressivement de nouvelles règles du jeu pour les dettes publiques du continent. Ces quatre contraintes génèrent des phénomènes et des réactions variables selon les régions/pays. Le contexte européen : le chemin du laxisme à la rigueur sera en partie payé par les investisseurs Du coté européen, on assiste ainsi à la transformation laborieuse, mais finalement incroyablement rapide, de la zone Euro en une sorte d'entité semi-étatique, l'Euroland. Le côté laborieux du processus ne tient pas uniquement à la faible qualité du personnel politique concerné (16) comme le martèlent à longueur d'interviews les « ancêtres » comme Helmut Schmidt, Valéry Giscard d'Estaing ou Jacques Delors. Eux-mêmes n'ayant jamais eu à faire face à une crise historique de cette ampleur, un peu de modestie leur ferait du bien. Ce côté laborieux vient également du fait que les évolutions en cours dans la zone Euro sont d'une ampleur politique gigantesque (17) et qu'elles sont effectuées sans aucun mandat politique démocratique : cette situation tétanise les dirigeants européens qui du coup passent leur temps à nier qu'ils sont bien en train de faire ce qu'ils font, à savoir, bâtir une sorte d'entité politique qui va se doter de composantes économiques, sociales, fiscales, … (18) Elus avant que la crise n'éclate, ils ne savent pas que leurs électeurs (et du même coup les acteurs économiques et financiers) se satisferaient dans leur majorité d'une explication sur le cours des décisions prévues (19). Car la plupart des grandes décisions à venir sont déjà identifiables, comme nous l'analysons dans ce numéro du GEAB. Enfin, il tient au fait que les actions de ces mêmes dirigeants sont disséquées et manipulées par les principaux médias spécialisés dans les questions économiques et financières, dont aucun n'appartient à la zone Euro, et qui tous au contraire sont ancrées dans la zone $/£ où le renforcement de l'Euro est considéré comme une catastrophe. Ces mêmes médias contribuent très directement à brouiller encore plus le processus en cours dans l'Euroland (20). Cependant, on peut constater que cette influence néfaste diminue puisque, entre la « crise grecque » et la « crise irlandaise », la volatilité induite sur la valeur de l'Euro s'est affaiblie. Pour notre équipe, au printemps 2011 elle deviendra un phénomène négligeable. Il ne restera donc plus que la question de la qualité du personnel politique de l'Euroland qui sera profondément renouvelé à partir de 2012 (21) ; et, plus fondamental, le problème considérable de la légitimité démocratique des formidables avancées en matière d'intégration européenne (22). Mais d'une certaine manière, on peut dire que d'ici 2012/2013, l'Euroland aura bien mis en place les mécanismes qui lui auront permis de résister au choc de la crise, même s'il lui faudra légitimer a posteriori leur existence (23). En la matière, ce qui va contribuer à accélérer l'explosion de la bulle des dettes publiques occidentales, et qui interviendra de manière concomitante pour son catalyseur US, est la compréhension par les opérateurs financiers de ce qui se cache derrière le débat des « Eurobligations » (ou E-Bonds) (24) dont on commence à parler depuis quelques semaines (25). C'est à partir de la fin 2011 (au plus tard) que le fond de ce débat va commencer à être dévoilé dans le cadre de la préparation de la pérennisation du Fonds Européen de Stabilisation Financière (26). Or, ce qui apparaîtra brusquement pour la majorité des investisseurs qui spéculent actuellement sur les taux exorbitants des dettes grecques, irlandaises, etc …, c'est que la solidarité de l'Euroland ne s'étendra pas jusqu'à eux, notamment quand se poseront les cas de l'Espagne, de l'Italie ou de la Belgique, quoiqu'en disent les dirigeants européens aujourd'hui (27). En bref, selon LEAP/E2020 il faut s'attendre à une immense opération d'échanges de dettes souveraines (sur fond de crise globale en matière de dettes publiques) qui verra offrir des Eurobligations garanties par l'Euroland à des taux très bas contre des titres nationaux à taux élevés avec une décote de 30% à 50% puisque, entre temps, la situation de l'ensemble du marché des dettes publiques occidentales se sera dégradée. Les dirigeants de l'Euroland nouvellement élus (28) (après 2012) seront démocratiquement très légitimes à réaliser une telle opération dont les grandes banques (y compris européennes (29)) seront les premières victimes. Il est fort probable que quelques créanciers souverains privilégiés comme la Chine, la Russie, les pays pétroliers, … se verront proposer des traitements préférentiels. Ils ne s'en plaindront pas puisque l'opération aura notamment pour conséquence de garantir leurs importants avoirs en Euros. ------------- IMPORTANT : Les versions anglaise et allemande du livre de Franck Biancheri « Crise mondiale : En route pour le monde d'après – Europe et monde dans la décennie 2010-2020 » sont désormais disponibles. Vous pouvez les commander directement sur le site des éditions Anticipolis (www.anticipolis.eu). ---------- Notes: (1) Plus de 1.500 milliards € par an en 2011 et 2012, en incluant bien entendu le Royaume-Uni. (2) C'est le marché des bons municipaux US (les « Munis ») qui sert à financer les infrastructures locales de transport, de santé, d'éducation, d'assainissement, … Il pèse près de 2.800 milliards USD. (3) Source : Reuters, 08/11/2010 (4) Dans un article du 20/11/2010, SafeHaven d'ailleurs ouvertement de l' « omerta » des grands médias financiers sur le sujet. (5) Le Financial Times a par exemple recommencé depuis un mois à consacrer deux ou trois articles par jour en une de son site à la soi-disant « crise de l'Euro » ainsi qu'à manipuler les informations comme les déclarations des dirigeants allemands, afin de créer artificiellement des sentiments d'inquiétude. Enfin, même certains médias français commencent à se rendre compte de la formidable machine d'Agitprop qu'est devenue le Financial Times comme le prouve ce récent article de Jean Quatremer du journal Libération. (6) A titre de comparaison, aucun investisseur n'a perdu d'argent dans les « épisodes grecs et irlandais » de la « crise de l'Euro », alors qu'ils sont des dizaines de milliers à avoir perdu des sommes très importantes dans le récent crash des Munis US … pourtant les médias parlent du premier et pas du second. (7) Comme déjà analysé dans les GEAB précédents, LEAP/E2020 tient à rappeler que le discours sur la « crise de l'Euro » est du même ordre que celui sur l'épidémie de grippe H1N1 il y a un an, à savoir une vaste opération de manipulation d'opinions publiques destinée à servir deux objectifs : d'une part, détourner l'attention des opinions publiques de problèmes plus graves (avec H1N1, c'était la crise elle-même et ses conséquences socio-économiques ; avec l'Euro, c'est tout simplement pour détourner l'attention de la situation aux Etats-Unis et au Royaume-Uni) ; d'autre part, servir les buts d'opérateurs très intéressés à créer cette situation de crainte (pour H1N1 c'était les laboratoires pharmaceutiques et autres prestataires connexes ; pour l'Euro, ce sont les opérateurs financiers qui gagnent des fortunes en spéculant sur les dettes publiques des pays concernés (Grèce, Irlande, …). Mais tout comme la crise de la grippe H1N1 s'est terminée en mascarade avec des gouvernements empêtrés dans des stocks monstrueux de vaccins et de masques sans plus de valeur, la soi-disant crise de l'Euro va se finir avec des opérateurs qui devront convertir à vil prix leurs bons si « rentables » tandis que ce sont leurs Dollars qui continueront à se dévaluer. L'été 2010 a pourtant déjà montré la direction des évènements. Source : Bloomberg, 18/11/2010 (8) Conformément à la méthodologie d'anticipation politique, notre équipe a bien entendu examiné depuis plusieurs années la possibilité que l'Euro disparaisse ou s'effondre. Sa conclusion est sans appel car nous n'avons identifié qu'une seule configuration où une telle évolution serait réalisable : il faudrait qu'au moins deux Etats importants de la zone Euro soient dirigés par des forces politiques souhaitant renouer avec les conflits intra-européens. Cette option a, selon notre équipe, une probabilité égale à zéro pour les deux prochaines décennies (notre durée maximale d'anticipation en matière politique). Donc, exit ce scénario, même si cela rend triste certains nostalgiques du Deutsche Mark, du Franc … , certains économistes qui croient que la réalité prête la moindre attention aux théories économiques, et certains Anglo-Saxons qui ne peuvent imaginer sans douleur un continent européen qui trace son chemin économique et financier sans eux. Même Mervyn King, le patron de la Banque d'Angleterre, croit à une intégration accélérée de la zone Euro sous l'effet de la crise, d'après Wikileaks qui relate ses conversations avec des diplomates américains (source : Telegraph, 06/12/2010). Notre travail, pour ce qui est de l'Euro, se concentre donc sur l'anticipation du laborieux parcours d'adaptation de la zone Euro à son nouveau statut d'Euroland, dans le contexte de la crise systémique globale. Au passage, il est utile de noter que cette débauche de critiques et analyses que prodiguent pour l'essentiel les médias américains et surtout britanniques a une utilité indéniable pour les responsables de l'Euroland : elle éclaire tous les recoins du chemin de la zone Euro, condition sine qua non pour éviter les écueils. C'est paradoxal, mais c'est un avantage dont ne bénéficient ni les dirigeants britanniques, ni les dirigeants américains … sauf quand ils lisent GEAB. (9) Et non pas par rapport à des devises « sur mesure » comme c'est le cas pour le Dollar Index. (10) Le New York Times a mis en ligne un jeu très instructif intitulé « Vous réglez le problème budgétaire » qui permet à chaque internaute de tenter de rétablir l'état des finances publiques fédérales en fonction de ses priorités socio-économiques et politiques. N'hésitez pas à vous placer dans la peau d'un décideur de Washington et vous constaterez que seule la volonté politique manque pour régler le problème. Source : New York Times, 11/2010 (11) Sources : CNBC, 26/11/2010 ; Le Temps, 10/12/2010 ; USAToday, 30/11/2010 ; New York Times, 04/12/2010 (12) Les Etats-Unis finançant leurs déficits par une ponction quotidienne énorme de l'épargne mondiale disponible, la crédibilité et l'efficacité diplomatique du pays sont donc deux paramètres essentiels pour sa survie financière. Or les récentes révélations de Wikileaks sont très dommageables à la crédibilité du Département d'Etat, tandis que le récent échec complet des nouvelles négociations Israël-Palestine illustre une inefficacité croissante de la diplomatie américaine, déjà bien sensible lors du dernier G20 de Séoul. Voir analyse plus détaillée dans ce GEAB N°50. Sources : Spiegel, 08/12/2010 ; YahooNews, 07/12/2010 ; YahooNews, 08/12/2010 (13) Même les responsables chinois estiment que la situation fiscale américaine est nettement pire que celle de l'Euroland. Source : Reuters, 08/12/2010 (14) Islande, Irlande … Royaume-Uni, Etats-Unis, c'était la suite infernale de l'insolvabilité souveraine qu'avait anticipée LEAP/E2020 il y a plus de deux ans. Le processus suit son cours à une vitesse plus lente que nous l'avions prévue mais l'année 2011 risque de s'avérer une année de « rattrapage ». Le Royaume-Uni tente actuellement de se sauver au prix d'une formidable amputation socio-économique dont les violences étudiantes, y compris contre la famille royale (phénomène rarissime), témoignent de l'impopularité. Mais l'ampleur de son endettement, son isolement financier et le sauvetage par l'Etat de ses bombes bancaires (comme l'a fait l'Irlande) rendent cette fuite en avant très périlleuse, socialement, économiquement et financièrement. Quant aux Etats-Unis, leurs dirigeants semblent tout faire (en « ne faisant rien ») pour s'assurer que 2011 soit vraiment l'année de la « Chute du Mur Dollar » comme l'avait anticipé LEAP/E2020 en Janvier 2006. (15) Comme le souligne Liam Halligan dans le Telegraph du 11/12/2010, cette évolution des taux ne présage rien de bon pour la dette US et traduit ce que l'équipe de LEAP/E2020 a anticipé il y a plus de deux ans déjà : nous atteignons le moment de vérité où l'épargne mondiale disponible ne suffit plus à satisfaire les besoins de l'Occident, et en particulier le besoin gargantuesque des Etats-Unis. (16) Elément souligné depuis plus de quatre ans par l'équipe du GEAB. (17) Fonds Européen de Stabilisation Financière, réglementation des hedge funds, limitation drastique des bonus bancaires, réglementation stricte des agences de notation, surveillance budgétaire, prochain renforcement de l'ensemble de la régulation financière du marché intérieur européen, première agence de notation de l'Euroland, … Sources : European Voice, 26/10/2010 ; Deutsche Welle, 05/11/2010 ; Reuters, 13/07/2010 ; ABBL, 08/12/2010 ; BaFin, 16/11/2010 (18) Wolfgang Schauble, le ministre des Finances allemand est pour l'instant le seul homme politique à oser clairement annoncer la couleur dans sa récente interview au magazine populaire Bild, dans laquelle il indique que, d'ici dix ans, les pays de l'Euroland auront réalisé une véritable intégration politique. Karl Lamers, son collègue en charge des affaires européennes au sein de la CDU identifie quant à lui la crise à une chance pour l'Europe et pour l'Allemagne, tout comme d'ailleurs la trop rare voix américaine de Rex Nutting dans le Wall Street Journal du 08/12/2010. Côté technocrate,

Empty Trucks Symbolize Clueless Canadian Government Posted: 15 Dec 2010 02:33 AM PST The economic policy of Canada's current, Conservative government can be summed-up succinctly, spraying around vast sums of money in an aimless manner and racking up huge deficits – while idly sitting back and waiting for the U.S. economy to recover. It simply boggles the mind to contemplate the various degrees of this idiocy. Consider this: cargo trucks busily stream back and forth across the U.S. border. Full trucks from the U.S. head north, while empty trucks from Canada head south. Our Prime Minister – the self-described "economist" – has staked Canada's entire economic future on a U.S. economic recovery. And as anyone who has not been brainwashed by the U.S. propaganda-machine realizes there is no "U.S. economic recovery". Making this situation much, much worse, the Conservatives have shown they are willing to engage in any and every form of self-sabotage of their own nation – merely to try to salvage a dying trade relationship. To subsidize the "cargo" of the empty trucks heading south, Bank of Canada Governor Mark Carney (yet another Goldman Sachs Stooge) has been doing everything possible to destroy Canada's currency with his near-0% interest rates and anti-Loonie rhetoric – so that the "cargo" in these empty trucks will be more affordable for Americans. As regular readers understand, under the best of circumstances destroying one's currency to (attempt to) stimulate trade is a losing equation, where the loss in the average standard of living (which is automatically caused by this declining purchasing-power) always outweighs any minimal improvement in foreign trade. However, to engage in this form of self-sabotage in order to subsidize the shipment of nothing represents criminal stupidity. At the same time, Canadians just heard that our traitorous Prime Minister is eagerly trying to throw away Canadian sovereignty – by negotiating a "perimeter security deal", where the U.S. would permanently dictate to Canadians any and all domestic policies, simply by the U.S. classifying it as a "matter of security". As Canadians read about the American animosity to invasive airport body-scanners, and even more invasive pat-downs every time they want to fly somewhere, all that Stephen Harper could think to himself is "I want to do this to Canadians, too." And what is the supposed "justification" for this massive give-away of sovereignty? To quote the Globe&Mail, it is "a deal designed to ensure the vital trade flow between Canada and its largest trading partner is not choked-off by the aggressive U.S. security bureaucracy." That's right, our Prime Minister is throwing away our sovereignty so that the empty trucks heading south can reach their U.S. destinations sooner, load-up with American-made goods – and then cross the Canadian border more quickly. We're throwing away our sovereignty to help to promote the U.S. trade surplus with Canada. That's not a misprint. Canada, which has perennially enjoyed a multi-billion dollar trade surplus with the U.S. has lost that entire surplus (despite sabotaging its own currency), and is now pointlessly throwing away our independence in a move that primarily benefits U.S. exports to Canada.

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