saveyourassetsfirst3

---

• These 7 Charts Show Underlying Future Strength of U.S. Dollar
• The U.S. Dollar: Too Big to Fail?
• Surplus/Deficit Projections For Each PM
• Silver/Gold Ratio Reversion 4
• Global Macro Notes: China’s Biggest Export — Deflation
• Friday FX Brief: Euro Gains Vanish as Moody's Reminds About Euro-Chasm
• Handicapping European Endgame Scenarios
• Margin requirements RAISED again by the CME ! ......includes Ag, Cu, Pd
• Gold Supported in 2011 by Concerns About Currencies and Government Bonds
• Gold guru Turk: $1,800 gold coming very soon
• Big coin show coming up
• Wall Street Breakfast: Must-Know News
• The Bribery of the Welfare State
• Year-End Review Of Key Points
• OCC Derivatives Graph
• Silver at $40 Will Be Best Metals Performer in 2011
• Gold or stocks: What to hold during the Great Correction
• Nepal's precious metals traders say silver shortage is worst
• An hour with Jim Rickards and the once and future money
• U.S. Commodity Regulator Delays Speculation Caps Plan
• The Battle for ETF Assets Wages on Among Big 3
• Trading Comments, 17 December 2010 (posted 09h15 CET):
• How to read the COT Report and Price Manipulation
• The One Reason you Have to Own Gold & Silver
• The Dollar Threads a Needle
• Gold "Will Set New Highs" in 2011 on Low US Rates, Euro Debt & Chinese Inflation
• Tipping Point: 25 Signs That The Coming Financial Collapse Is Now Closer Than Ever
• EM Vendor Financing
• Bullish Indicators Not Bullish Enough to Indicate Recovery
• The Price of Confidence
• CFTC delays vote on position limits/cme raise margins on silver/manipulation continues/massive exodus of silver from the comex warehouses.
• Gold and the Economy: Don’t Be Fooled
• Moribund Money Morticians
• Struggle for the Republican Soul
• Silver Bucks Profit-Taking Decline in Gold
• Laughing at Fiscal Absurdity
• Gold Seeker Closing Report: Gold and Silver Fall Over 1% More
• allocated pm dealer caught with no metal
• GEAB N°50 is available! Global systemic crisis: Second half of 2011 - European context and US catalyst - Explosion of the Western public debt bubble

These 7 Charts Show Underlying Future Strength of U.S. Dollar Posted: 17 Dec 2010 04:39 AM PST Despite all of the mania surrounding the dollar in recent months history suggests that the Fed's last adventure in quantitative easing will not have a draconian outcome on the dollar as many analysts and pundits predict! Words: 952

The U.S. Dollar: Too Big to Fail? Posted: 17 Dec 2010 04:39 AM PST Those in the U.S. power structure know what the plan is if the U.S. dollar should fail. They are not admitting publically that there is even the remotest chance that it could happen but, rest assured, there is a plan. There is always a plan. To paraphrase Franklin Roosevelt, nothing happens by chance in government, so don't be caught up in such a 'surprise' event - whatever it may be and whenever it occurs. Words: 1345

Surplus/Deficit Projections For Each PM Posted: 17 Dec 2010 03:36 AM PST Does anyone know where I can go to find supply surplus/deficit projection information for each PM for researching purposes? It would be nice to find a site that shows projections a couple years out. What is the most reliable source for this? I found this article but am looking for more detailed analysis with hard numbers (they only give projections for Palladium in the full article): http://www.vancouversun.com/business...845/story.html Quote: LONDON - Gold is set to build on this year's hefty gains in 2011 as uncertainty over the stability of the global financial system boosts its safe-haven allure, but other precious metals may offer investors a higher return. Autocatalyst metals platinum and palladium, which have both recorded a stellar year in 2010, could be set to outstrip gains in gold if the economic recovery gains traction, analysts say. Quote: But there is a note of caution on silver, another star performer this year. The metal has benefited both from its role as a cheaper proxy for gold and as an industrial metal in its own right, but it may be vulnerable to a correction. Investment in silver has been reflected in substantial gains in exchange-traded fund holdings this year — the largest silver-backed ETF, New York's iShares Silver Trust, has seen inflows of nearly 1,400 tonnes so far this year, a 15% rise in total holdings. But its underlying fundamentals are less supportive than those of the platinum group metals, and its investor base may be more fickle that that of gold, analysts said. "Silver is the only precious metal where there is a steady increase in mine supply, particularly from Latin America," said HSBC analyst James Steel. "There are several giant mines that have finally gotten going, and they will contribute to supply. That isn't the same case with the PGMs or with gold."

Silver/Gold Ratio Reversion 4 Posted: 17 Dec 2010 03:18 AM PST Silver has been a rock-star in recent months, rocketing higher to dazzling gains. After such a blistering near-vertical ascent, technicians understandably fear this metal has become wildly overbought. Nevertheless, an alternative perspective on silver's recent levels counters its extreme technicals. Compared to gold, its primary driver, silver actually looks reasonably-priced today.

Global Macro Notes: China’s Biggest Export — Deflation Posted: 17 Dec 2010 02:29 AM PST Quick, off the top of your head: What is China's biggest export? Gym socks? iPods? Wal-Mart knick-knacks? Neo-colonial African infrastructure (e.g. bridges and ports in Congo)? We'll hypothesize here that China's biggest export is deflation. Consider — during the boom-boom Bretton Woods II years, everyone talked about "the China price." As in, "if you can't beat the China price" for some manufactured good, you didn't really have a chance of competing. China's low-wage army and all-encompassing state-run utilization of resources exported the "China price" all over the world, lowering not just the cost of finished goods, but the wages of Western world workers to boot. Consider this excerpt from a recent NYT piece, ostensibly about wind power but actually about something else: TIANJIN, China — Judging by the din at its factory here one recent day, the Spanish company Gamesa may seem to be a thriving player in the Chinese wind energy industry it helped create. But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China's lucrative business means playing by strict house rules that are often stacked in Beijing's favor. Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market. But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa's market share now is only 3 percent. With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader. The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world's dominant, low-cost suppliers. Deflation, baby. The big "D" in full effect. One has to wonder — how long will Western companies follow this pattern: Get lured into China by the promise of massive markets. "Give away the store" in a cut-throat intellectual property environment. Get eaten alive by competitors fed and nourished with Western know-how. Not a call to protectionism here, just an observation. China is a deflationary force. In some cases that's a good thing. We all benefit from falling price trends in technology, for example — especially given the tendency for technology to improve as it gets cheaper. But the flip side of this will prove to be persistent long-run pressure on Western wages, and a general inability to relieve that pressure in most cases. The "China price" — and later the Indonesia price and the Bangladesh price etc. — ain't going away. Vendor Financing, Capex and So On Now hold on, the devil's advocates say. It's not all deflationary. China has contributed to inflation too — in some ways massively. That's a fair observation, as based on the following: The "vendor finance" aspect of mercantilism and Bretton Woods II. Prior to the global financial crisis — remember that quaint world? — part of the reason the leverage and finance orgy got so wild is because long-term interest rates stayed persistently low. This was the "conundrum" Greenspan famously referred to. And why did that conundrum exist? Because the major "vendor financer" players — foremost China, secondarily the big oil exporters — were happy to constantly recycle their $USD flows back into long-term treasuries, perpetuating the binge-and-boom cycle. The commodities / infrastructure / capex boom. You know this angle — China the ravenous dragon. China the great consumer of every commodity in sight. China the facilitator of ports and bridges and mines and highways being built in Africa and Australia and all corners of Asia, all linked to the needs of an upcoming superpower. The Beijing Put. You've heard of the Greenspan Put… then we got the Bernanke Put… and now we can start pondering the Beijing Put. Namely, China has such a massive stash of currency reserves, it can go in and throw cash at Greece or Ireland or whomever it chooses to keep the global party going. (Note recent loud overtures from China on investing in Greece, and Portugal's request that China buy its bonds.) All of those are reasons to paint China as an inflationary force. Except, of course, from the "crack-up boom" perspective in which inflationary juice now begets deflationary pain later. To wit, China can pump stuff up, but it can't keep stuff from blowing up: The aftermath of the Bretton Woods II orgy, in large part greased by mercantilist UST purchases, was a massive deflationary bust. If bears like Jim Chanos, Hugh Hendry and Vitaly Katsenelson are right, the gray swan of China's infrastructure ponzi scheme will end in a deflationary bust. To the degree that rising food and energy prices act as a regressive tax on consumer discretionary income, even China's commodity buys have a deflationary twist. As Forbes' columnist Robert Lenzner has noted, "If China blows up, so will every other market." The overheated dragon as global bust catalyst extraordinaire. It's that last bit — the threat of China implosion, or least equity market implosion — that has our attention now. Consider tidbits like this (via Bloomberg): Chinese consumers are more concerned about rising prices than at any time in the past decade, underscoring the pressure on policy makers to step up efforts to counter inflation running at a two-year high. A price satisfaction index fell to 13.8 this quarter, the lowest level since data began in the fourth quarter of 1999, the central bank said on its website today. Authorities have held off on adding to October's interest- rate increase, instead ratcheting up banks' reserve requirements and using tools such as sales of food reserves to tackle inflation. The Commerce Ministry said today it will "closely monitor" prices over the next quarter, especially during holiday periods, and keep releasing stores of pork and sugar. Out of Control? The relevant question is whether it is too late… whether rampant inflation in China has already gotten out of control. Recall that China played "Santa Claus to the world" in 2009 with its massive $586 billion stimulus package, rammed down the throats of the banks via state-ordered lending. Now the inflationary reckoning approaches. Talk of "closely monitoring" the situation at this late date sounds laughably quaint — on par with Homer Simpson "closely monitoring" his station dials as the Springfield Nuclear Reactor threatens to blow. Of course, some say "never short a country with two trillion in reserves." But in-country China watcher Michael Pettis neatly demolished that argument earlier this year: China's foreign reserves are certainly huge. They add up to an amount equal to about 5-6 % of global gross domestic product. But they are not unprecedented. Twice before in history a country has, under similar circumstances, run up foreign reserves of the same magnitude. The first time occurred in the late 1920s when, after a decade of record-beating trade and capital account surpluses, the United States had accumulated what John Maynard Keynes worriedly described as "all the bullion in the world". At the time, total reserves accumulated by the US were more than 5-6% of global GDP. My back-of-the-envelope calculations suggest that this was probably the greatest hoard of central bank reserves ever accumulated as a share of global GDP, but please check before you accept this claim. The second time occurred in the late 1980s, when it was Japan's turn to combine huge trade surpluses, along with more moderate surpluses on the capital account, to accumulate a stockpile of foreign reserves only a little less than the equivalent of 5-6% of global GDP. By the late 1980s, Japan's accumulation of reserves drew the sort of same breathless description – much of it incorrect, of course – that China's does today. Needless to say, and in sharp rebuttal to Friedman, both previous cases turned out badly for long investors and brilliantly for anyone dumb enough to have gone short. We Mercenaries were "dumb enough to go short" China (via FXI) in a semi-bluff reversal play on November 12th, and have built on our exposure since then. (All trades time-stamped both in real capital and the Live Feed archives.) As of this writing, China's charts emphatically say "down." In addition to pyramiding FXI, we have rounded out our bearish Asia exposure with vehicles such as FMCN, PGJ, and EWH. It seems others share at least a modest concern that, in spite of Beijing's love for Keynesian style ramp-up, the threat of populist backlash against rising cost-of-living pressures can no longer be ignored. And if the dragon really gets its "big D" implosion on, look out below… JS

Friday FX Brief: Euro Gains Vanish as Moody's Reminds About Euro-Chasm Posted: 17 Dec 2010 02:10 AM PST Andrew Wilkinson submits: In a sign of just how thin markets are becoming as traders wind down for the holiday season, the euro surged by more than a cent on the day against the dollar before fickle traders abandoned their positions, allowing the euro to lurch into the red. Earlier hopes for something more meaningful than an amendment to the wording of a key European treaty have vanished, leaving investors with a sense that events in the future are far from clear. The loser is the single European currency unit. Euro – The initial optimism to the news breaking from Brussels was taken to be positive for the euro. As the main banker to financially insolvent nations, German voters have kept up pressure on its government to commit no further cash to the bailout plans. Chancellor Angela Merkel also knows that legal challenges at home will be made should she fail to toe the line outside her country. The Lisbon Treaty was amended to state that help could be triggered by struggling nations, but that bondholders may face losses in the process. The euro jumped to $1.3359 while an IFO confidence survey caused more buying. The German business climate index and an index of future expectations rose to the highest since German unification in 1991. Both were predicted to ease back from a string of strong readings. The euro bulls appeared vindicated before Moody’s reminded us that a strengthening German economy contrasts sharply with health in Europe’s nether regions. The ratings agency slashed five notches from its rating of Ireland, causing something of a reality check for the euro, which has subsequently slumped lower on the day at $1.3246. Complete Story »

Handicapping European Endgame Scenarios Posted: 17 Dec 2010 02:06 AM PST Marc Chandler submits: The European financial crisis is of historic proportions and remains unresolved as the year draws to a close. The resolution remains elusive, but there seems to be a finite number of ways that the situation will ultimately be resolved. Let’s consider them. Scenario I: Country Leaving Monetary Union (3%) Many observers suggest that the only solution of the debt crisis is for a troubled country to leave the union, introducing a new, devalued currency. We would attribute a very slight chance of this taking place. A robust cost/benefit analysis would reveal the high costs and uncertain benefits of such a course. Sovereign and bank debt would still be denominated in euros. This would force a default. Whatever competitive advantage is gained by currency depreciation would be offset by substantially higher inflation. Interest rates would rise dramatically, contributing further to a severe economic contraction. The political and economic elite would be discredited. It is not immediately clear whether such a country would be allowed to remain in the European Community after leaving the monetary union and defaulting. If it were to leave the EC, lost sovereignty might be regained, but it could only by a pyrrhic victory as the monetary policy and the business cycle of the EC members would limit the degrees of policy freedom. To the extent that sovereignty is recouped, the departing member may find it is increasingly marginalized in Europe and in the world. Some observers suggest that rather than a debtor leaving, maybe Germany would. German tax payers, we are told, no longer want to pay for their Greek neighbors to retire early, or for their Irish neighbors to have an incredibly low corporate tax, or for other neighbors to continue with ill-thought-out policies that produced a housing market bubble in Spain, or lack of competitiveness as is the case in Portugal (where private sector debt has grown to nearly three times GDP). Suggestions that Germany should (or may) leave the monetary union misunderstand the raison d’etre of EMU in the first place. It was not really about maximizing economic outcomes. From its inception, it was an economic solution to a political problem. The issue was determining under what conditions Europe could allow Germany to be reunited after the Berlin Wall fell. Germany had to be Europeanized; the uber-Deutschemark would have to be shared with Europe. The Bundesbank’s anti-inflation credibility (and low interest rates) would also be shared with Europe. Many observers underestimate the political will for EMU to be sustained. It embodies the trans-generational vision of a united Europe. The political spectrum may be significantly wider in Europe than in the U.S., but the political elites seem to agree that there simply is no alternative. What Benjamin Franklin told 13 colonies more than 230 years ago applies to the 16 countries in EMU today: Hang together, or hang separately. Scenario II: Substantially Faster Growth (2%) One way to lighten the debt burden is for the highly indebted countries to grow substantially faster. This seems to be the American answer, but it does not resonate in Europe. The European answer is to tighten fiscal policy. This, coupled with an over-valued currency (around 7% by the OECD’s measure and its 10-year moving average, and 23% by the Big Mac comparisons) and the withdrawal of ECB’s liquidity provisions, makes for poor growth prospects. Underneath the debt problems lies a competitive problem for most eurozone countries. Germany has been the major beneficiary of EMU, and after a painful restructuring of its economy it has done a remarkable job keeping unit-labor costs nearly flat over the past decade. Few countries (outside of the United States) have come close to matching Germany’s feat. Scenario III: Internal Devaluation/Deflation (7%) Traditionally the weaker countries in Europe, including France, regain competitiveness by devaluing their currencies against the German mark. The European monetary union effectively blocks this route. With external devaluation not an option, countries may regain competitiveness through what some economists call an internal devaluation. This is to cut prices for goods, services and labor. This is a very painful process and, politically and socially, an expensive path. There is a limit on peoples’ willingness to sacrifice to service debt, especially if it is largely in the hands of foreign investors, as is the case for countries like Greece and Portugal. Even if one does not accept Keynes’ insights regarding the benefits of counter-cyclical fiscal policy, surely we can recognize his terribly relevant insight in his critique of the Treaty of Versailles that ended World War I. Keynes argued in The Economic Consequences of Peace that “the bleeding of Germany” would not produce the kind of results the victors hoped for. In fact, the reparation of 269 bln gold marks (roughly the equivalent of 100,000 tons of gold) and interest was finally paid off two months ago, according to the BBC. The elites in the periphery of Europe, with relatively weak governments, are mostly reluctant to take this path. Prices in most peripheral countries should fall relative to Germany. Yet even with a monetary policy setting that arguably is too easy for Germany, its inflation is less than the periphery except Ireland. CPI yoy Nov Ireland 0.6% Complete Story »

Margin requirements RAISED again by the CME ! ......includes Ag, Cu, Pd Posted: 17 Dec 2010 01:39 AM PST CME Raises Silver, Copper, Palladium Margins GoldAlert- 7 minutes ago CME Group announced another series of margin requirement increases for several commodity futures contracts, including silver, copper and palladium, effective after the close of business on Friday. CME Group, owner of the New York Mercantile Exchange and the COMEX, also announced margin requirement changes for several other markets, including natural-gas index swap futures, Treasury note and bond futures, and federal-funds futures. In its press release the CME group stated that the changes were made as a part of "normal review of market volatility to ensure adequate collateral coverage." The initial margin requirement for silver was raised to $10,463 from $9,788 for speculators, and the margin for hedgers and the maintenance margin for speculative accounts was increased to $7,750 from $7,250. The initial speculative margin in Comex copper was raised to $6,413 from $5,400, and the margin for hedgers and the maintenance margin for speculators were increased to $4,750 from $4,000. For the primary Nymex palladium contract, the initial margin requirement for speculators was increased to $5,500 from $4,950, and the margin for hedgers and maintenance margin for speculators was raised to $5,000 from $4,500. http://www.goldalert.com/2010/12/cme...adium-margins/ **What a bunch of 'tards..........I can't effin believe this nonsense. :thumpdown: :reddy: ~AD~

Gold Supported in 2011 by Concerns About Currencies and Government Bonds Posted: 17 Dec 2010 01:32 AM PST gold.ie

Gold guru Turk: $1,800 gold coming very soon Posted: 17 Dec 2010 12:17 AM PST From Mineweb: Speaking on a Mineweb podcast this week, precious metals guru and Gold Money founder James Turk, reiterated his forecast of a US$1,800 gold price in the near future. True, it hasn't come about by the end of this year. But he feels it is only a matter of time and is confident that it will happen sooner rather than later. Now he reckons it should do so during the first quarter of next year as he notes that this is normally a strong period for gold and that there are a lot of fundamentals working in gold's favour at the moment which will drive it there. He still also feels that it is possible that gold could still hit $1,500 by the end of this year in the short trading time available before the year-end. On the fundamentals affecting the price at the moment, Turk points to the burgeoning demand from... Read full article... More on gold: There's a stealth trend developing in gold The No. 1 reason you must own gold and silver now Must-read interview with gold investment legend John Hathaway

Big coin show coming up Posted: 16 Dec 2010 11:01 PM PST Not sure this is the correct forum, but I wanted to let people know that there is a big coin show coming to Tampa January 6 - January 9, 2011. Bullion, too. http://www.funtopics.com/Fun_Show/FUNshow.html

Wall Street Breakfast: Must-Know News Posted: 16 Dec 2010 10:05 PM PST FDA delays approval of AstraZeneca heart drug. Shares of AstraZeneca (AZN) are coming under pressure this morning after the FDA further delayed the potential approval of Brilinta, the firm's heart drug, and asked for additional analysis of data from a study done on the drug. Some analysts believe the request for additional analysis will delay final approval of the drug by at least six months, and "may also start to raise uncertainties about the potential scale of the product’s likely commercial success." Premarket: AZN -5.1% (7:00 ET). Massey mulls its options. Massey Energy (MEE) is reportedly exploring various strategic options, including selling itself or taking over rival International Coal Group (ICO). Sources said Massey's discussions with International Coal from earlier this year resumed again at the beginning of December after a brief lull, and that the Massey board is also considering the continued interest of rival Alpha Natural Resources (ANR) and at least two other coal mining companies in buying Massey. Premarket: ICO +5.4% (7:00 ET). MetroPCS may buy TerreStar assets. MetroPCS (PCS) is said to be in talks to buy more than $1B of assets from bankrupt satellite operator TerreStar (TSTRQ.PK), though sources caution that other parties are also interested and no offers have been made yet. MetroPCS is looking to acquire more spectrum as it upgrades its network for high-speed data services. Total, Suncor ink oil sands deal. Total (TOT) said it would spend C$1.75B ($1.8B) to partner with Suncor (SU) in Canada's oil sands, including three projects in Alberta. Foreign companies have shown growing interest in Alberta's oil sands, which are seen as the largest potential source of crude outside Saudi Arabia. Four arrests in insider trading probe. The FBI arrested four people yesterday as part of the government's widening insider trading probe, including three technology company executives and a salesman for an expert network firm. The four are being charged with revealing secrets about Apple's (AAPL) iPhone and other technology products to hedge funds looking for a trading edge. Authorities said a fifth person, a former Dell (DELL) employees, had already pleaded guilty on Dec. 10 to charges he had provided inside information about the company. Blackstone to restructure debt. Blackstone (BX) has reportedly reached a deal to restructure around $7B of the remaining debt tied to its 2007 purchase of Sam Zell's Equity Office Properties Trust. Sources said the maturity of the debt will likely be extended to 2014 from 2012, Blackstone will pay down 10% of the debt, and the interest rate on the remaining debt will increase by one percentage point. It would be Blackstone's second major restructuring this year as credit markets thaw. Card issuers reel from debit fee proposal. Card issuers were unhappily surprised yesterday after the Federal Reserve released a proposal that would cap the fee that banks and other debit card issuers charge to retailers at $0.12 per transaction. The swipe fees currently average around 1% of each transaction cost, and the $0.12 cap is significantly lower than what many card issuers had expected. If the proposal is approved, it will wipe out most of an estimated $15B in annual revenue. In yesterday's trading, V -12.7%, MA -10.3%, AXP -3.4%, DFS -3.1%. FDA to curb usage of Roche's Avastin. The FDA confirmed plans to withdraw authorization to sell Roche's (RHHBY.PK) Avastin for metastatic breast cancer, based on four new studies suggesting the pricey drug doesn't actually help patients with the disease. At $5.8B in sales, Avastin is not only Roche's best product, but also the global leader in cancer drugs, and the decision could shave $1B off of Roche's annual sales. Roche said it plans to appeal. Oracle, RIM post upside surprises. Both Oracle (ORCL) and Research In Motion (RIMM) beat expectations when they reported quarterly earnings yesterday (see details below), providing further evidence that tech spending is on the rebound. Oracle, which has been steadily expanding via acquisitions, saw quarterly profit jump 28% on a 47% increase in revenue, and sees sales in the current quarter increasing 32-36%. RIM posted a 45% jump in earnings and a sixth consecutive quarter of record phone shipments, though investors continue to worry about an erosion of RIM's marketshare by competitors like Apple (AAPL). Premarket: ORCL +4.1%, RIMM +0.9%. Moody's downgrades Ireland. Moody's slashed Ireland's credit rating by five notches, to Baa1 from Aa2. Analysts had expected the downgrade, but were surprised by the severity of it. Moody's also warned further downgrades could follow if Ireland fails to stabilize its debt situation. Fitch downgraded Ireland three notches last week, to BBB+. Geithner defends TARP. Testifying before the TARP oversight panel yesterday, Geithner defended TARP as "one of the most effective crisis response programs ever implemented," and said he believes the final cost to taxpayers is likely to total even less than the current $25B estimate. Geithner also said Ally Financial, the former GMAC, will sell shares to the public sooner than expected. Tax bill goes to the White House. The House of Representatives voted 277-148 to approve an $858B bill that grants a two-year extension to all Bush-era tax cuts. The bill now goes to the White House where President Obama will sign it into law. The tax-cut deal, along with rosier retail sales, has prompted some economists to raise their outlook for 2011 GDP growth. Earnings: Thursday After Close Accenture (ACN): FQ1 EPS of $0.81 beats by $0.06. Revenue of $6.1B vs. $5.7B. Shares +0.7% AH. (PR, earnings call transcript) Oracle (ORCL): FQ2 EPS of $0.51 beats by $0.05. Revenue of $8.6B (+46.5%) vs. $8.3B. Shares +3.7% AH. (PR, earnings call transcript) Research In Motion (RIMM): Q3 EPS of $1.74 beats by $0.09. Revenue of $5.5B (+18.9%) vs. $5.4B. Shares -2.6% AH. (PR, earnings call transcript) Take-Two Interactive Software (TTWO): FQ4 EPS of $0.67 beats by $0.36. Revenue of $374M (+32%) vs. $325M. Shares +6.2% AH. (PR) Today's Markets In Asia, Japan -0.1% to 10304. Hong Kong +0.2% to 22715. China -0.1% to 2894. India +1.1% to 19865. In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt -0.1%. Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq -0.15%. Crude -0.25% to $87.48. Gold +0.1% to $1372.20. Friday's Economic Calendar 10:00 Leading Indicators 10:30 ECRI Leading Index The SA Currents team contributed to this post. Complete Story »

The Bribery of the Welfare State Posted: 16 Dec 2010 09:00 PM PST Colorado Gold

Year-End Review Of Key Points Posted: 16 Dec 2010 08:35 PM PST Bonds are the key to the entire global system. Iceland has refused to pay the European banks for their games and so far it seems to be working. Now that this cat is out of the bag, we think more of the little ones like Greece, and perhaps Ireland and Portugal will decide to stiff the bankers. (Written before Irish bailout approval). Gold & Silver Posted New Highs on December 7, 2010. We had strong technical resistance at $1424.50 for gold futures and $30.18 for March silver futures. Highs today were $1,432.50 for gold and $30.75 for silver. In the larger intermediate picture we need to research new data but are comfortable with $1,448.50 gold (shorter term) and $33.74 for silver. In after-hours futures trading, silver has firmed and is rising. Gold has supported at $1,407. As We Reported, Euroland Could Crumble. "The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict. In a speech this morning, (11-16-10) EU President Herman Van Rompuy warned that if Europe's leaders mishandle the current crisis and allow the Eurozone to break-up, they will destroy the European Union itself." "We're in a survival crisis. We all have to work together in order to survive within the Eurozone, because if we don't survive within the Eurozone we will not survive (in) the European Union," he said. "Well, well. This theme is all too familiar to readers of The Daily Telegraph, but it comes as something of a shock to hear such a confession after all these years from Europe's president. He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back-it-up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly." -Ambrose Evans-Pritchard Daily Telegraph Media Wishing-Hoping For Recovery as an almost constant presence is a signal there is no recovery and that the global system is basically on fire with no fire department. Central bankers acting as the controlling interest are the lead fire chiefs and have found there is no material effect from their furtive efforts. QE1 didn't work and QE2 won't either. Worse than that, the Euroland membership is falling apart at an accelerating pace beginning with the weakest moving toward the strongest. The next phase of larger and crazier QE's in several numbers, spells the end. This is not going to happen over night, but the world's fictional money machine is smashed with no chance of repairs. The wounded ship is sinking and all these credit market psychos can do is to delay it for awhile. It cannot be stopped. With almost instant world-wide communications on the internet and a wider view of political and economic thought being expressed, the unvarnished truth cannot be hidden. The next and quite critical event is the forthcoming bankruptcy of California and potentially five other states like IIlinois and New York. Build America Bond Program, which is just a federal repayment guarantee on some states' bonds is headed for expiration. This arrives as the states' needs-demands are the greatest for new credit. In our view, this is the last large credit lifeline for America's states. -(Ed). "Congressional Republicans appear to be quietly but methodically executing a plan that would avoid a federal bailout of spendthrift states and cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011." "If the Build America Bond Program expires at the end of this year, long-term tax-exempt bonds could lose their latest pillar of support. Parts of me want to be proved right about the significance of this development. I am one of those who think there is too much debt creation at the governmental level. Well, it just got more difficult for Munis to borrow. By itself, that will curb debt creation. There is another part of me that is saying "gulp". By definition, you do not see a black swan in advance. I did not see this at all. I don't count, but the market does. If you follow markets you have to have a screen for Muni pricing. As this sort's out over the next 60 to 90 days the Muni-market might drive the global markets." "I'm thinking to myself, how could they have blundered on this? They extend the Bush cuts for everyone. They tack on another $120 Billion of deficit spending with a cut in SS taxes. And, (then) they throw in another year of unemployment checks. They threw the sink at the economy (to cover) the deficit, but they failed to pass BABs? If there is a hiccup that takes a big state out of the market for a spell it will trump the economic benefits of all the new deficit spending. It might do it a few times over." (Editor: In our view, that would be California now taking in $44 million per day in federal aid). This posting includes an audio/video/photo media file: Download Now

OCC Derivatives Graph Posted: 16 Dec 2010 08:34 PM PST Image:  While on the subject of JPMorgan and HSBC USA... here's a nifty graph that Nick Laird over at sharelynx.com sent me.  It shows that U.S. Banks control $145.1 billion of gold and precious metals derivatives as reported by the OCC's [Office of the Comptroller of the Currency] latest derivatives report.  Basically JPMorgan and HSBC are the derivatives market in precious metals in the U.S.A.  Their respective Comex futures short positions in both silver and gold reflect their derivatives positions almost exactly. read more

Silver at $40 Will Be Best Metals Performer in 2011 Posted: 16 Dec 2010 08:34 PM PST Link:  Silver at $40 Will Be Best Metals Performer in 2011 Image:  My remaining stories are all precious metals related in one form or another.  The first is a silver story from Bloomberg that's courtesy of reader Scott Pluschau.  I love the headline, which reads "Silver at $40 Will Be Best Metals Performer in 2011".  The question that's crossing my mind right now is... how much higher than $40 will silver be at the end of next year?  The link is here.

Gold or stocks: What to hold during the Great Correction Posted: 16 Dec 2010 08:34 PM PST Link:  Gold or stocks: What to hold during the Great Correction Image:  The next article is from The Christian Science Monitor of all places... and it's a repost of a gold article by Bill Bonner over at dailyreckoning.com.  The headline reads "Gold or stocks: What to hold during the Great Correction".  I thank reader Kevan Crozier for providing the story... and the link is here.

Nepal's precious metals traders say silver shortage is worst Posted: 16 Dec 2010 08:34 PM PST Link:  Nepal's precious metals traders say silver shortage is worst Image:  The following news story out of Nepal showed up as a GATA release yesterday.  Chris Powell's headline reads "Nepal's precious metals traders say silver shortage is worst".  It's a very short piece... and well worth your time... and the link is here.

An hour with Jim Rickards and the once and future money Posted: 16 Dec 2010 08:34 PM PST Link:  An hour with Jim Rickards and the once and future money Image:  Lastly, is this GATA release that contains your big must watch/listen of the day. Market intelligence analyst James G. Rickards of research firm Omnis Inc. made a long presentation to the "Rethinking the Future International Security Environment" conference held Dec. 7th in Washington by the Applied Physics Laboratory of Johns Hopkins University.  Rickards told the Johns Hopkins conference that he considers gold to be the secret economic weapon of the U.S. read more

U.S. Commodity Regulator Delays Speculation Caps Plan Posted: 16 Dec 2010 08:34 PM PST Link:  U.S. Commodity Regulator Delays Speculation Caps Plan Image:  Well, the CFTC's meeting on Thursday ended suddenly with the main issues not really resolved.  I listened to a Bloomberg interview with CFTC Chairman Gary Gensler... and I got the distinct impression that the meeting was ended because the silver position limit issue had reached an impasse.  A rock had come up against a very hard place... read more

The Battle for ETF Assets Wages on Among Big 3 Posted: 16 Dec 2010 07:25 PM PST Tom Lydon submits: At the center of the fast-growing ETF industry is a heated battle for asset dominance. Morningstar’s recent ETF asset flow report for November shows that 2010 has been Vanguard’s year. Vanguard has collected roughly 40 cents out of every dollar in net inflows that U.S.-listed ETFs have seen so far this year, according to the report. Complete Story »

Trading Comments, 17 December 2010 (posted 09h15 CET): Posted: 16 Dec 2010 06:00 PM PST The precious metals against tested support, and this time dug deeper into it than I was expecting. Re-testing of support is not a reason to turn bearish. It is just an indication that gold

How to read the COT Report and Price Manipulation Posted: 16 Dec 2010 04:56 PM PST Gold Forecaster

The One Reason you Have to Own Gold & Silver Posted: 16 Dec 2010 04:54 PM PST

The Dollar Threads a Needle Posted: 16 Dec 2010 04:51 PM PST

Gold "Will Set New Highs" in 2011 on Low US Rates, Euro Debt & Chinese Inflation Posted: 16 Dec 2010 04:31 PM PST

Tipping Point: 25 Signs That The Coming Financial Collapse Is Now Closer Than Ever Posted: 16 Dec 2010 12:12 PM PST The financial collapse that so many of us have been anticipating is seemingly closer then ever.  Over the past several weeks, there have been a host of ominous signs for the U.S. economy.  Yields on U.S. Treasuries have moved up rapidly and Moody's is publicly warning that it may have to cut the rating on U.S. government debt soon.  Mortgage rates are also moving up aggressively.  The euro and the U.S. dollar both look incredibly shaky.  Jobs continue to be shipped out of the United States at a blistering pace as our politicians stand by and do nothing.  Confidence in U.S. government debt around the globe continues to decline.  State and local governments that are drowning in debt across the United States are savagely cutting back on even essential social services and are coming up with increasingly "creative" ways of getting more money out of all of us.  Meanwhile, tremor after tremor continues to strike the world financial system.  So does this mean that we have almost reached a tipping point?  Is the world on the verge of a major financial collapse? Let's hope not, but with each passing week the financial news just seems to get eve worse.  Not only is U.S. government debt spinning wildly toward a breaking point, but many U.S. states (such as California) are in such horrific financial condition that they are beginning to resemble banana republics. But it is not just the United States that is in trouble.  Nightmarish debt problems in Greece, Spain, Portugal, Ireland, Italy, Belgium and several other European nations threaten to crash the euro at any time.  In fact, many economists are now openly debating which will collapse first - the euro or the U.S. dollar. Sadly, this is the inevitable result of constructing a global financial system on debt.  All debt bubbles eventually collapse.  Currently we are living in the biggest debt bubble in the history of the world, and when this one bursts it is going to be a disaster of truly historic proportions. So will we reach a tipping point soon?  Well, the following are 25 signs that the financial collapse is rapidly getting closer.... #1 The official U.S. unemployment rate has not been beneath 9 percent since April 2009. #2 According to the U.S. Census Bureau, there are currently 6.3 million vacant homes in the United States that are either for sale or for rent. #3 It is being projected that the U.S. trade deficit with China could hit 270 billion dollars for the entire year of 2010. #4 Back in 2000, 7.2 percent of blue collar workers were either unemployed or underemployed.  Today that figure is up to 19.5 percent. #5 The Chinese government has accumulated approximately $2.65 trillion in total foreign exchange reserves.  They have drained this wealth from the economies of other nations (such as the United States) and instead of reinvesting all of it they are just sitting on much of it.  This is creating tremendous imbalances in the global economy. #6 Since the year 2000, we have lost 10% of our middle class jobs.  In the year 2000 there were approximately 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs. #7 The United States now employs about the same number of people in manufacturing as it did back in 1940.  Considering the fact that we had 132 million people living in this country in 1940 and that we have well over 300 million people living in this country today, that is a very sobering statistic. #8 According to CoreLogic, U.S. housing prices have now declined for three months in a row. #9 The average rate on a 30 year fixed rate mortgage soared 11 basis points just this past week.  As mortgage rates continue to push higher it is going to make it even more difficult for American families to afford homes. #10 22.5 percent of all residential mortgages in the United States were in negative equity as of the end of the third quarter of 2010. #11 The U.S. monetary base has more than doubled since the beginning of the most recent recession. #12 U.S. Treasury yields have been rising steadily during the 4th quarter of 2010 and recently hit a six-month high. #13 Incoming governor Jerry Brown is scrambling to find $29 billion more to cut from the California state budget.  The following quote from Brown about the desperate condition of California state finances is not going to do much to inspire confidence in California's financial situation around the globe.... "We've been living in fantasy land. It is much worse than I thought. I'm shocked." #14 24.3 percent of the residents of El Centro, California are currently unemployed. #15 The average home in Merced, California has declined in value by 63 percent over the past four years. #16 Detroit Mayor Dave Bing has come up with a new way to save money.  He wants to cut 20 percent of Detroit off from essential social services such as road repairs, police patrols, functioning street lights and garbage collection. #17 The second most dangerous city in the United States - Camden, New Jersey - is about to lay off about half its police in a desperate attempt to save money. #18 In 2010, 55 percent of Americans between the ages of 60 and 64 were in the labor market.  Ten years ago, that number was just 47 percent.  More older Americans than ever find that they have to keep working just to survive. #19 Back in 1998, the United States had 25 percent of the world's high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China's share had soared to 20 percent. #20 The U.S. government budget deficit increased to a whopping $150.4 billion last month, which represented the biggest November budget deficit on record. #21 The U.S. government is somehow going to have to roll over existing debt and finance new debt that is equivalent to 27.8 percent of GDP in 2011. #22 The United States had been the leading consumer of energy on the globe for about 100 years, but this past summer China took over the number one spot. #23 According to an absolutely stunning new poll, 40 percent of all U.S. doctors plan to bail out of the profession over the next three years. #24 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer.  Today, there are over 6 million Americans that have been unemployed for half a year or longer. #25 All over the United States, local governments have begun instituting "police response fees".  For example, New York Mayor Michael Bloomberg has come up with a plan under which a fee of $365 would be charged if police are called to respond to an automobile accident where no injuries are involved.  If there are injuries as a result of the crash that is going to cost extra.

EM Vendor Financing Posted: 16 Dec 2010 11:13 AM PST --Did you see the story of how a delegation of over 300 hundred Chinese businessmen stitched up over $16 billion in deals with Indian partners during Premier Wen Jiabao's visit this week? It's the emerging market vendor financing arrangement that could power a global binge in hard asset buying! --A lot of the deals were financed with Chinese capital. After all, if it's not going back to America to keep bond yields low so Americans can buy what the Chinese make, it has to go somewhere else like India, so THEY can buy what the Chinese make. But first a word about Australian housing prices, which, despite our repeated warnings, haven't crashed...yet --Maybe they haven't crashed because they're not the over-valued. That's what the International Monetary Fund concluded in a recent research note. An IMF working paper said that Australia's house prices are over-valued by 5-10%. It said Australia's house-price-to-income ratio was about 20% higher than its ten-year average, which apparently equates to an over-valuation of 5-10%. --You can read the whole report for yourself here, if you're a glutton for mind-numbing statistics.  There is some interesting analysis about the relationship between a high terms-of-trade and house prices. But the more conventional numbers like house-price-to-rent and house-price-to-income ratios show that Australia is leading the global bank in unaffordable and overpriced housing. --Given how bad the cricket is going, it's nice to beat the English in something isn't it? That said, the IMF is wrong. Australian houses are over-valued by far more than 5-10%. The IMF is just playing it conservative, not wanting to appear "extremist." But if there's one thing you should have learned from the last few years it's that credit bubbles produce extreme outcomes. The highs are very high. And the lows are lower than you expect. --Mind you, we have no special grip against houses. Owning your own roof seems like the ultimate in financial/physical security. But it's only secure if you can buy it a price that doesn't ruin your finances and put you into perpetual debt. It's hard to believe that Australia will somehow be alone in the world in escaping a deflation in asset prices that were inflated with the global credit boom (especially borrowed money from abroad). --A big "X" factor right now is what's happening to the price of money all over the world. Judging by the action in the ten-year U.S. bond market, the price of money is going up (at least for U.S. borrowers). Now this could be "the bond vigilantes" finally turning on Ben Bernanke. It COULD be the sign of a long march out of the U.S. Treasury market and into, say emerging markets. --But before we get to that conclusion and what it means for Chindia, take a look at the chart below. It's a twenty year chart of the yield on ten year notes. As you know, bond yields move inversely to bond prices. Falling yields have meant rising prices for the last twenty years, which explains the bull market in U.S bonds. U.S. ten-year Yields on the Rise --Even if you're not a chartist, you can see two sharp lows in late 2008 and late 2010. Dare we call it a double bottom? Dare we call it the end of the U.S. bond bubble and the beginning of a great migration of capital out of corrupted and compromised U.S. financial markets? And hey, the yield has crossed the 50-day MA. If the 50-day MA crosses the 200-day, hello bond bear! --What's important about this trend is that it could be the reversal of something that's been going on for the last  thirty years. You can see from the chart below that ten-year yields have been declining since Paul Volcker slayed inflation in the early 1980s with high interest rates. That ended the gold and silver bull market and kicked off a 20-year boom in U.S. equities and bonds. --Is it all ending now for U.S. markets? That is, are they no longer the safest, best place for the world's investors to park their extra savings? Well, the chart below says that what's bad for the U.S. markets is good for the emerging ones, Australia included. There are three lines on the chart. The black line tracks EEM, an exchange traded fund of emerging market stock markets. Australia is the orange line. The U.S. dollar index is the green line. --You can see that the dollar rally that peaked in June was bearish for the All Ordinaries and emerging markets. Capital flew back to America and the greenback. Europe was in crisis (and still is). Parts of Athens were even on fire (and still are). But since then—the recent Ireland-related dollar rally not-withstanding—emerging market stocks have gone up. --Of course the Dow has made a two-year high in the same time, in U.S. dollar terms. But the big question is whether big global savers like China have finally decided there are better places to invest in the world, includingin China. Chinese banks loaned out another US$1.1 trillion this year in the domestic economy. But there's more where that came from. --Which brings us back to India. Is China providing cheap credit to India so Indian firms can buy Chinese goods? And isn't this the same kind of "vendor financing" that characterised China's relationship with America? --The Financial Times reports that, "The wider economic engagement [between China and India] is spearheaded by financing deals between China Development Bank and top Indian companies like Reliance Communications, ICICI Bank, Essar and IDBI Bank. Other financial groups seeking to expand business with India include ICBC and Bank of China." There's more: Among the biggest [of the deals], two Indian companies controlled by billionaire Anil Ambani received just over $3bn in financing commitments from a consortium led by Chinese banks, reports the WSJ. Such generous financing is of course related to other deals such as the one by Ambani's Reliance Power, which in October ordered a whopping $10bn worth of Chinese power generation equipment from Shanghai Electric, all financed by Chinese banks, namely the Export-Import Bank of China and other commercial banks. Ambani's Reliance Communications meanwhile on Wednesday said it had signed a $1.93bn syndicated loan arrangement with China Development Bank and other institutions to refinance short-term debt it took on to build its 3G telephone network. --The FT also reports that the state-owned China Development, which "acts as a key instrument of Beijing's foreign policy has, in recent months, "lent money to a German bank, a South African platinum mine, Romanian wind power projects and Australian mining ports – as well as extending $20bn to Venezuela and $1bn to Angola to secure oil supplies for China." --What does it mean? If the Chinese are worried about a US/dollar bond crash, they're going to be awfully anxious to "Exit the Dollar" in an orderly fashion—before the dollar craters. That could spark a kind of frenzied bidding war for non-dollar assets. And though there are a lot of ways it could play out, we're going to keep it simple and recommend buying gold and silver on the dips. Similar Posts: Oil Price Chart Shows Slight "Correction" in Near Future Geithner Reassures China that America Takes Financial Obligations Seriously Now in Post-bubble Era as Financial Industry Bombs Out Sell Treasuries … Again OPEC Agrees Not to Cut Oil Production Until it Meets in May

Bullish Indicators Not Bullish Enough to Indicate Recovery Posted: 16 Dec 2010 11:12 AM PST We live in the immediate...the urgent...the here and now...with the noise of the headlines and the blustery winds of current opinion... Yesterday, the Dow lost 19 points. Gold lost $18. But nobody cares what happened yesterday. People want to know what is happening right now. When they enter an elevator, they reach for their cellphones and Blackberries and check to see if they have messages...or if something important has happened. Trouble is, when your eyes are bolted to a Blackberry, it's very hard to know where you are. When you are caught in the whirlwind of day-by- day activity, it's very hard to see where you are going. And if you only read the news, it is almost impossible to know what is going on. So, where are we? And where are we going? You wouldn't know it from reading the press or talking to neighbors, but we are still in a funk. We only bring it up because so many people seem to have forgotten. They see double-digit gains in stocks for 2010 and of a "Santa Rally" on Wall Street. They see commodities at record prices and bond yields moving up. They read that retails sales are picking up and that small businessmen are more optimistic. What are they supposed to think? The "recovery" is real, they believe. The economy is getting back in gear. Everything is going to be okay. Heck, unemployment will be down to normal levels - 5% to 6% - within a few years; Ben Bernanke said so himself. And if this assessment were correct, what should an investor do? Well, buy a stock! Or buy a house! Or buy some copper! Buy something. You don't want to sit on cash...not when there are so many good investment opportunities. Get on board before this ship leaves the dock. After all, didn't stock market investors multiply their wealth 14 times by buying in 1982 and holding all the way to 2007? Didn't bonds go up, year after year, for the last 27 years? You might think you are almost always better off fully invested in stocks and bonds. And maybe you are. But that's why it's important to step back and look at what is really going on. This could be one of the times when it is better to hold cash. If bond yields have been going down (prices going up) since 1983, what are the trends that will continue for another 27 years? Or how about stocks? If they went up from '82 to '07, how likely is it that another big bull market is underway? Investors were encouraged recently because small businesses had turned optimistic. Yet the level of optimism is still lower than it was in the last 20 years. Hiring too was said to be picking up. But not in the last two decades have small businesses had fewer openings. The same could be said of other indicators - such as capital investment plans. Small business investment is improving, but it is still way below the prevailing since 1990. Another thing that has been cited as a bullish indicator: retail sales are rising. The November report showed a healthy gain. At the same time, figures for October and September were revised upwards. But if you look beneath the hood you find that consumers were buying necessities at an increased rate. Sales of autos, furniture, building materials and other durables actually fell heavily. What this indicates is what we keep talking about - a "back to basics" mentality, consistent with a period of private sector de-leveraging. Households are saving money too - about 6% of their disposable incomes. They're paying down debt; they're not going on another spending spree. As we pointed out last week, there are reports that consumer credit is expanding. But take out federally-backed credit, and the trend is still definitely down. Wages are rising too - but the percentage of workers getting increases is still only one quarter the level it was 10 years ago. There's also a lot of talk about inflation increasing. Martin Wolf, top economist at The Financial Times maintains that inflation is warming - just as it should. It's a sign that the feds' monetary, fiscal, and unconventional policies are working, he says. But look at the long-term trend. Core inflation is running at 50-year lows. In October, it hit its lowest level ever - that is, since they began keeping track in the 1950s. Housing, too, is still soft in the US. The latest Case-Shiller numbers show prices sinking nationwide. Apart from the '07-'09 crisis years, this is only the second time in the last 22 years that this has happened. It looked like the trend in housing prices had turned positive after bottoming out in 2009. But the most recent figures show housing has gone into a "double dip" with prices falling again. More people are getting food stamps. More people are unemployed. More people are cutting back, rather than expanding, their lifestyles. In short, the long-term trends show a Great Correction - not another boom. And more thoughts... Hey, our old friend Ron Paul is in the news. The New York Times carried an article about him. Astonishingly, it wasn't negative. Yes, it mentioned that Ron was regarded as a "crank." But in context, that didn't seem so bad. "I was with Ron just last week," said colleague Addison Wiggin. "He was just coming up for the chairmanship of the House subcommittee that oversees the Fed. He said he thought he had a 'snowball's chance in Hell' of getting the post. "The last time he was in line for it, the Republican hierarchy blocked him. But that was then. This is now." A few years ago, everyone hated Ron. The left hated him because he wanted to withdraw funding for its pet projects. The right hated him because he wanted to rein in the US military. Now, things have turned around. The left likes Ron because he wants to bring the troops home from Iraq and Afghanistan. The right likes Ron because he is a consistent opponent of deficit spending. The young are fascinated by him. What sort of Congressman votes no on his colleagues' boondoggles? What sort of conservative opposes the Pentagon and calls for an audit of the Fed? What sort of politician sticks to his principles, even when they are out of favor? Most recently, the right-wingers have been howling for Julian Assange's blood. They say he's a "traitor" - despite the fact that as an Australian, he has no loyalty to the US. Sarah Palin says he should be pursued like an Al Qaeda operative (though he has committed no crime, as far as we know). Rep. Peter King asked the Attorney General to name WikiLeaks as a terrorist organization. But good ol' Ron keeps his head and his cool. He praises Assange for revealing the "delusional" nature of US foreign policy. *** Poor Julian. Half the world wants to see him hang. And for what? He published some documents that US and foreign governments would rather keep secret. It may be a crime; politicians can make anything a crime. But since when was that a sin? Even as to the crime, we have our doubts. If publishing is a crime, your editor is in trouble. If publishing "sensitive" documents that make US officials look like fools is a crime, we're all in trouble. Regards, Bill Bonner. for The Daily Reckoning Australia Similar Posts: A Sovereign Debt Crisis Bullish for U.S. Dollar and Bearish for Gold Recovery for the Real Estate Market Abandoned Shopping Malls to Follow Abandoned Houses When People Fear Inflation or a Falling Dollar They Find Refuge in Gold Counting the Census

The Price of Confidence Posted: 16 Dec 2010 11:12 AM PST During the height of the credit crisis of 2008-9, the Federal Reserve and Treasury launched so many different lending programs and bailout facilities that it was hard to keep track of them all. Each program or facility used a distinct acronym to represent its particular portion of Bernanke's Bailout Buffet. Thus, for example, the Commercial Paper Funding Facility became simply the "CPFF." But the Fed also served up bailout facilities known as the TARP, TOP, TAF, TSLF, TALF, PDCF, AMBSPP, etc. At the end of the day, this "alphabet soup" of lending programs contained distinctions without a difference. On the receiving side of every acronym you would find a Wall Street banker with a hat in his hand. For ease of accounting, the Fed could have simply merged all the programs together into one giant WSBBF (Wall Street Banker Bailout Facility). But politics prevented that option. So instead, the Fed created lots of different programs and facilities with essentially identical mandates. And if you're curious about the volume of lending they conducted, or about any other component of the Fed's balance sheet, you can find the information right here...or at least most of the information. A friend of The Daily Reckoning recently discovered a curious error on the Federal Reserve's own Web site. By way of background, our anonymous source is neither a professional economist nor a professional investor. In fact, he's not even an amateur economist or investor. He's just a guy with an eye for detail. One month ago, our source noticed an apparent error on the website of the Cleveland Fed. Specifically, he observed that the "Detailed View" of the Fed's balance sheet did not match the "Summary View." So he emailed a responsible party at the Fed to gain clarification and/or elucidation. The email stream proceeded as follows [the names have been removed to protect both the innocent and the guilty]: Dear "Fed Employee," I hope you can spare a moment to answer a question. As you probably know, this web page has gotten quite a bit of attention: http://www.clevelandfed.org/research/data/credit_easing/index.cfm But it seems to me that the Summary View and the Details View don't match up. Specifically, I think the Details View omits Long Term Treasury Purchases. Once those are added in, the Details View exactly matches the Summary View. Am I right? And if so, is the discrepancy inadvertent, or is there a reason for it? Just trying to understand the context of the recently-announced QE2! Thanks in advance for any light you can shed. Sincerely, "Mr. Curious" The Fed employee promptly replied: Dear "Mr. Curious," You are correct that the Detailed View does omit Long-Term Treasury Purchases. The discrepancy is inadvertent. If you follow the link to the article in the Detailed and the Summary View, you'll see that we had initially posted these charts in between the announcement of the Agency Debt and Agency MBS purchases and the announcement of the Treasury purchases. It seems as if we just forgot to add those new purchases into the Detailed View. Thank you for pointing out our omission, and we'll work on getting that fixed. I'd also like to note that we are currently in the process of reorganizing the web page. Hopefully we'll have the new page up by the end of November, and that should clear some issues up with recent announcements on reinvestment strategy, QE2 and the AIG exit plan. Sincerely, Fed Employee After receiving this response, our anonymous source observed matter-of- factly, "So the situation [on the Fed's balance sheet] is actually a little worse than [the Detailed View] graph suggested. Without the long-term Treasurys, the balance sheet appears to have peaked in Dec 08 and since then to have wound down significantly. With the long-term Treasurys - not so much." Today, more than a month after this exchange between our source and the Fed employee, the identical error remains on the Cleveland Fed's website - a situation that seems all the more remarkable in light of the fact that the missing component of the Fed's "Detailed View" is the exact component that is expanding so conspicuously under Bernanke's QE2 campaign. If this little oversight causes a bit of consternation, get over it. "Oversights," half-truths and story-telling have become as integral to the modern American economy as railroads and assembly lines were to the American economy of the mid-20th century. In fact, half-truths and story-telling are the staples of our "confidence-based" economy. If Americans are confident, they spend, according to the prevailing economic theory of our day. And if Americans spend, the economy grows. Therefore, any statement or activity that inspires confidence is constructive for economic growth...even if the statements be false and the activities be covert and preferential. Maybe this characterization of modern American capitalism is cynical. But we beg to differ. We think it is cynical to tolerate deception - especially institutionalized deception - purely for the sake of a short-term economic objective. We think it is destructive to look the other way while the Fed and the Treasury escort a few handpicked corporations past the red velvet ropes of capitalistic competition. What has now emerged in America is a perverse form of privateering. Under the 18th and 19th century versions of privateering, governments would license private firms to plunder enemy ships for profit - profits that the privateers and the governments would share. Today, the privateering continues. But the process has been turned on its ear. Now it is we, the taxpayers, who are plundered by the government - the spoils of which it lavishes upon a select group of privileged corporations. If the "new privateers" fail, the government (i.e. taxpayers) absorbs the loss. But if the privateers succeed, they split the booty with no one but themselves. "This is called private profits and socialized risk," observed hedge fund manager, David Einhorn, during a presentation to the Grant's Investment Conference in April, 2008. "Heads, I win. Tails, you lose. It is a reverse-Robin Hood system." But the new privateering does not only rely on socialized risks, it also relies on socialized ignorance. Two weeks ago, a provision in the new Dodd-Frank financial reform law dragged some of the Fed's dirty little secrets out into the light of full public disclosure. Thanks to these new revelations, the Fed finally disclosed what many of us had already suspected - that a lot of America's biggest financial firms repaid small sums of fully disclosed federal assistance during 2009, while simultaneously accessing very large sums of undisclosed federal assistance. These "secret bailouts" did not merely socialize risks in order to confer rewards to a few; they also socialized ignorance in order to confer valuable inside information to a few. These two processes operated hand-in-hand throughout the crisis. The insider-cognoscenti made billions while the rest of us patsies wrote the checks. Without mass ignorance, government agencies have a tough time doing "what's best for us." In other words, plundering an informed populace is much more difficult than plundering an uninformed one. 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: Attention Dr. Ken Henry: Government Could Make Employee Voluntary Contributions Compulsory What Evil Sends Investors Running to the Protection of Gold? Consumer Confidence is at its Lowest Point Since 1980 The Price of Oil is in a Bubble The Price of Oil Explained by 'Astrology'

CFTC delays vote on position limits/cme raise margins on silver/manipulation continues/massive exodus of silver from the comex warehouses. Posted: 16 Dec 2010 10:14 AM PST

Gold and the Economy: Don’t Be Fooled Posted: 16 Dec 2010 10:00 AM PST Despite last week's news and knee-jerk gold-price retreat, economic trends and prospects in the United States, Europe, and China will actually support rising prices in the year ahead.

Moribund Money Morticians Posted: 16 Dec 2010 10:00 AM PST After having fallen to two-week lows in the wake of dollar strength and near-year-end profit-booking, gold prices managed to stabilize and even stage a modest comeback overnight.

Struggle for the Republican Soul Posted: 16 Dec 2010 10:00 AM PST Change may come to America - and even Europe - via the ballot box, but it's not going to be easy and it may even be fairly messy. Here's a question: With the American electorate absolutely punishing the Democrats and their big-spending ways, why was Congress last night on the verge of passing yet ANOTHER trillion-dollar plus spending package? The Democrats lost 60 seats in the House to the Republicans, and you would think both parties would have gotten the message

Silver Bucks Profit-Taking Decline in Gold Posted: 16 Dec 2010 10:00 AM PST Gold prices are now $60 below the all-time highs set earlier this month. Silver bucked the move in gold to eke out an $0.09, or 0.3%, gain to settle at $28.88 on Thursday.

Laughing at Fiscal Absurdity Posted: 16 Dec 2010 09:00 AM PST I was cowering inside the Mogambo Bunker Of Fear (MBOF) in preparation for the release of the news from the Federal Reserve about how much credit those treacherous bastards created last week, expecting it to be a Big Whopping Bunch (BWB) since they have already announced that they were going to create an astounding $600 billion in the next six months as part of their shameful new Quantitative Easing 2 crap, which comes to $100 billion per month as part of their shameful Quantitative Easing 2 crap, which comes to $25 billion per week as part of their shameful Quantitative Easing 2 crap. This $25 billion a week is, again, $100 billion per month, which is, again, $600 billion in six months, which is a huge $1.2 trillion per year, which is a massive $6 trillion in only 5 years, all in an economy with a GDP measuring a measly $14 trillion! I cleverly extrapolate all of this not to show off my skills with mathematics, which are impressive only in the way I misunderstand and misuse them to get a wrong answer most of the time, but to help you understand why you should be screaming your guts out – sounding like an angry, wounded, rabid wolf going, "AoooooOOOOoooo!" – in fear of the ruinous, catastrophic inflation in prices that all this new money will cause. So I was shocked to see, and glad that I had double-locked the bunker's doors, that the Federal Reserve created a whopping $33.9 billion in new credit last week! And, as we knew it would, used the money, like common counterfeiters, conmen and cheap swindlers pulling the old switcheroo, to buy $30.1 billion in US government securities! Monetizing the debt, and at a rate faster than needed to spend a massive $1.2 trillion per year! Gaaahhhh!! Okay, I admit that I threw all those extraneous exclamation points in there for the cheap effect, as the sorry fact is that this foul monetization of government debt is almost nothing new: The damnable Federal Reserve has over the years, already monetized a gigantic $2.07 trillion in US government debt, and increased the reserves in the banks to a massive $1.05 trillion! Hahahaha! I see by the puzzled expression on many faces out there about why I would be laughing at such ruinous monetary insanity that promises inflation Out The Wazoo (OTW), and especially with a laugh that has such undertones of anger and outrage, not to mention containing more than just a tinge of scorn, not unlike, perhaps, the fabled Mogambo Laugh Of Anger, Outrage And Scorn (MLOAOAS), but with more outright hostility. The answer is that confused laughter at topsy-turvy unreality is the appropriate response to the style of humor found in any classic example of Theater of the Absurd, sort of like an episode of the old Bennie Hill television show, but without any hint of humor, bathroom jokes, farting, or scantily-clad beauties shamelessly prancing around in high heels with that unmistakable "I want you, Mogambo! Observe the way I gratuitously hump, bump and grind through this scene, thus proving my unquenchable passion for you!" look on their adorable faces. Hence, we get a Theater of the Absurd with a weird, Kafkaesque nightmare of gigantic governments, where spending by local, state and federal government is fully half of GDP, become frantic when confronted with the inevitable bankruptcy and total ruination due to their stupid fiscal policies, which were only possible in the first place because the evil Federal Reserve created the money that made it possible! So, perhaps instead of watching the Theater of the Absurd, we should be watching the History Channel to see the Immortal Lessons Of History (ILOH), one of which is the, you know, ordinary collapse of the economy that has always happened at the end-stage of a country, on a strict gold standard, continuously borrowing itself into the bankruptcy of massive, crushing, un-payable debts because of corruption by the banks and banking system. Another ILOH is the inflationary collapse that always happened at the end-stage of a country, using a 100% fiat currency, borrowing itself into the bankruptcy of massive, crushing, un-payable debts, and then trying to create more fiat money to buy itself out of the debt by creating more debt, creating more and more money, driving prices of consumer staples to astronomical levels, everything bursting into flames as street riots spontaneously erupt, everything being swept away in the angry onslaught of hordes of starving, desperate people. Now you know why I laugh, as it is Theater of the Absurd in real life! And although the reality is that We're Freaking Doomed (WFD), even at this looming horror I can laugh because a third ILOH is the best one of all: Gold and silver always reign supreme in a land of fiat money! And with buying gold and silver so easy to do ("Here's my money, give me my metal!"), and with such a guarantee of monstrously outsized capital gains as the buying power of the dollar is lost due to over-creation of money, all that's left to do is gleefully, gratefully gloat, "Whee! This investing stuff is easy!" The Mogambo Guru for The Daily Reckoning Laughing at Fiscal Absurdity 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."

Gold Seeker Closing Report: Gold and Silver Fall Over 1% More Posted: 16 Dec 2010 07:15 AM PST Gold remained near unchanged in Asia and London before it fell almost 2% in early New York trade to as low as $1361.07 by about 10AM EST, but it then rallied back higher in the last few hours of trade and ended with a loss of just 1.08%. Silver fell to as low as $28.322 before it also rallied back higher, but it still ended with a loss of 1.47%.

allocated pm dealer caught with no metal Posted: 16 Dec 2010 06:35 AM PST http://www.mondovisione.com/index.cf...etail&id=95032 The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil complaint against defendants Ryan A. Nassbridges of Laguna Niguel, Calif., and American Bullion Exchange ABEX, Corp. (ABEX Corp) and American Bullion Exchange, LLC (ABEX LLC), both of Irvine, Calif., charging them with fraudulent solicitation and misappropriation in connection with a precious metals futures and options fraud. The CFTC complaint, filed on December 8, 2010, alleges that the defendants solicited approximately $5.5 million from at least 80 customers to invest in precious metals, including gold, palladium, platinum, silver bullion and gold and silver coins (collectively, bullion and coins). In soliciting participants, the defendants allegedly fraudulently represented that (1) they would only invest participants' funds in bullion and coins, (2) participants' funds would be maintained in segregated accounts, (3) defendants' investments were insured against loss, (4) defendants would use stop-loss orders to protect participants from any loss of their principal and (5) Ryan Nassbridges was registered with the CFTC. Contrary to the represented investment strategy, defendants allegedly used a significant portion of participants' funds to trade commodity futures and options, including gold and silver futures, and sustained overall trading losses of approximately $2.2 million. However, the defendants allegedly never disclosed to participants that they would trade commodity futures and options and were sustaining significant trading losses. Defendants also never disclosed the risks of trading commodity futures and options, according to the complaint. Defendants allegedly misappropriated millions of dollars of participants' funds to pay personal expenses and to pay earlier investors purported profits with more recent participants' funds, as is typical of a Ponzi scheme. Nassbridges also allegedly used misappropriated participant funds to pay approximately $586,100 in mortgage payments, approximately $305,000 in credit card payments, approximately $90,100 in car payments and more than $157,700 in cash withdrawals, according to the complaint. Nassbridges' wife and other companies Nassbridges controlled named as relief defendants Nassbridges' wife, Bita Nassbridges, and other companies he controlled are named as relief defendants for allegedly receiving funds as a result of the defendants' fraudulent conduct and have no legitimate entitlement to those funds. The CFTC complaint further alleges that Nassbridges tried to conceal his fraud by giving misleading and false testimony. The CFTC's complaint seeks civil monetary penalties, trading and registration bans against the defendants and disgorgement of ill-gotten gains from the relief defendants. The CFTC Division of Enforcement staff members responsible for this case are Kevin S. Webb, Michelle S. Bougas, Heather Johnson, James H. Holl III, Gretchen L. Lowe and Phyllis J. Cela.

GEAB N°50 is available! Global systemic crisis: Second half of 2011 - European context and US catalyst - Explosion of the Western public debt bubble Posted: 16 Dec 2010 04:28 AM PST - Public announcement GEAB N°50 (December 16, 2010) The second half of 2011 will mark the point in time when all the world's financial operators will finally understand that the West will not repay in full a significant portion of the loans advanced over the last two decades. For LEAP/E2020 it is, in effect, around October 2011, due to the plunge of a large number of US cities and states into an inextricable financial situation following the end of the federal funding of their deficits, whilst Europe will face a very significant debt refinancing requirement (1), that this explosive situation will be fully revealed. Media escalation of the European crisis regarding sovereign debt of Euroland's peripheral countries will have created the favourable context for such an explosion, of which the US "Muni" (2) market incidentally has just given a foretaste in November 2010 (as our team anticipated last June in GEAB No. 46 with a mini-crash that saw all the year's gains go up in smoke in a few days. This time this crash (including the failure of the monoline reinsurer Ambac (3)) took place discreetly (4) since the Anglo-Saxon media machine (5) succeeded in focusing world attention on a further episode of the fantasy sitcom "The end of the Euro, or the financial remake of Swine fever" (6). Yet the contemporaneous shocks in the United States and Europe make for a very disturbing set-up comparable, according to our team, to the "Bear Stearn" crash which preceded Lehman Brothers' bankruptcy and the collapse of Wall Street in September 2008 by eight months. But the GEAB readers know very well that major crashes rarely make headlines in the media several months in advance, so false alarms are customary (7)! In this GEAB issue, we therefore anticipate the progression of the terminal crash of Western public debt (in particular US and European debt) as well as ways to protect oneself. Furthermore, we analyze the very important structural consequences of the Wikileaks revelations on the United States' international influence as well as their interaction with the global consequences of the US Federal Reserve's QE II programme. This GEAB December issue is, of course, the opportunity to assess the validity of our anticipations for 2010, with a of 78% success rate for the year. We also develop strategic advice for Euroland (8) and the United States. And we publish the GEAB-$ index that will now allow us to synthetically follow the progress of US Dollar against major world currencies every month (9). In this issue, we have chosen to present an excerpt of the forecast on the explosion of the Western public debt bubble. Thus, the Western public debt crisis is growing very rapidly under the pressure of four increasingly strong limitations: . the absence of economic recovery in the United States which strangles all public bodies (including the federal state (10)) accustomed to an easy flow of debt and significant tax revenues in recent decades (11) . the accelerated structural weakening of the United States in monetary, financial as well as diplomatic (12) affairs which reduces their ability to attract world savings (13) . the global drying up of sources of cheap finance, which precipitates the crisis of excessive debt in Europe's peripheral countries (in Euroland like Greece, Ireland, Portugal, Spain, ... and the United Kingdom as well (14)) and is starting to touch key countries (USA, Germany, Japan) (15) in a context of very large European debt refinancing in 2011 . the transformation of Euroland into a new "sovereign" that gradually develops new rules for the continent's public debts. These four constraints generate varying phenomena and reactions in different regions / countries. The European context: the price of the path from laxity to austerity will be partly paid for by investors From the European side, we have thus witnessed the difficult, but ultimately incredibly fast, transformation of the Eurozone into a sort of semi-state entity, Euroland. The delays in the process weren't only due to the poor quality of the political individuals concerned (16) as the interviews of the "forerunners" such as Helmut Schmidt, Valéry Giscard d'Estaing or Jacques Delors hammered on at length. They themselves never having had to face a historic crisis of this magnitude, a little modesty would have done them good. These delays are equally due to the fact that current developments in the Eurozone are on a huge political scale (17) and conducted without any democratic political mandate: this situation paralyzes the European leaders who consequently spend their time denying that they are really doing what they do, i.e. namely, building a kind of political entity with its own economic, social and fiscal constituent parts, .... (18) Elected before the crisis erupted, they do not know that their voters (and the economic and financial players at the same time) would be largely satisfied with an explanation about the decisions being planned (19). Because most of major decisions to come are already identifiable, as we analyze in this issue. Finally, it is a fact that the actions of these same leaders are dissected and manipulated by the main media specializing in economic and financial issues, none of which belong to the Eurozone, and all of which are, on the contrary, entrenched in the $ / £ zone where the strengthening of the euro is considered a disaster. This same media very directly contributes to blur the process underway in Euroland (20) even more. However, we can see that this adverse effect decreases because between the "Greek crisis" and the "Irish crisis", the resulting Euro exchange rate volatility has weakened. For our team, in spring 2011, it will become an insignificant event. This only leaves, therefore, the issue of the quality of Euroland's political personnel which will be profoundly changed beginning in 2012 (21) and, more fundamentally, the significant problem of the democratic legitimacy of the tremendous advances in European integration (22). But in a certain fashion, we can say that by 2012/2013, Euroland will have really established mechanisms which will have allowed it to withstand the shock of the crisis, even if it's necessary to legitimize their existence retrospectively (23). In this regard, what will help accelerate the bursting of the Western public debt bubble, and what will occur concomitantly for its US catalyst, is the understanding by financial operators of what lies behind the "Eurobligations" (or E-Bonds) (24) debate which has begun to be talked about in recent weeks (25). It is from late 2011 (at the latest) that the merits of this debate will begin to be unveiled within the framework of the preparation for the permanent European Financial Stabilisation Fund (26). Although, what will suddenly appear for the majority of investors who currently speculate on the exorbitant rates of Greek, Irish,... debt is that Euroland solidarity will not extend to them, especially when the case of Spain, Italy or Belgium will start being posed, whatever European leaders say today (27). In short, according to LEAP/E2020, we should expect a huge operation of sovereign debt transactions (amid a government debt global crisis) which will offer Euroland guaranteed Eurobligations at very low rates in exchange of national securities at high interest rates with a 30% to 50% discount since, in the meantime, the situation of the entire Western public debt market will have deteriorated. Democratically speaking, the newly elected Euroland leaders (28) (after 2012) will be fully authorized to effect such an operation, of which the major banks (including European ones (29)) will be the first victims. It is highly likely that some privileged sovereign creditors like China, Russia, the oil producing countries,... will be offered preferential treatment. They will not complain since the undertaking will result in their sizeable assets in Euros being guaranteed. ------------- The English and German versions of Franck Biancheri's book "The World Crisis: The Path to the World afterwards – Europe and the World in the 2010-2020 Decade" are now available. They can be ordered directly from the publishers, Anticipolis Editions (www.anticipolis.eu). --------- Notes: (1) Worth more than € 1,500 billion per year in 2011 and 2012, including of course the United Kingdom. (2) The US municipal bond market ("Munis is used to fund the local transportation, health, education and sanitation infrastructure, ... It's worth nearly 2,800 billion USD. (3) Source : Reuters, 11/08/2010 (4) In a 11/20/2010 article Safehaven indeed openly expressed surprise over the "silence" of the major financial media on the issue. (5) The Financial Times, for example, has for the last month, begun to publish two or three articles per day on its website's homepage on the so-called "Euro crisis" and to manipulate news, such as the statements of German leaders, to artificially create feelings of anxiety. Finally, even some of the French media are beginning to realize what an incredible political propaganda machine the Financial Times has become, as this recent article by Jean Quatremer in the Libération shows. (6) By way of comparison, no investor has lost money in the "Greek and Irish episodes" of the "Euro crisis", whilst tens of thousands have lost considerable sums in the recent US Muni crash... yet the media covers the first and not the second. (7) LEAP/E2020 would like to remind readers of previous GEAB analyses that the discussion over the "Euro crisis" is of the same order as the Swine fever outbreak a year ago, namely a large-scale manipulation of public opinion to serve two purposes: first, to divert public attention from more serious problems (with Swine fever it was the crisis itself and its socio-economic consequences; with the Euro it is simply to divert attention from the situation in the United States and the United Kingdom), and secondly, to serve the goals of players with a major interest in creating this situation of fear (as regards Swine fever it was pharmaceutical laboratories and other related service providers; as regards the Euro, financial players are earning a fortune by speculating on the public debt of the countries concerned (Greece, Ireland, ...)). But just as the Swine fever crisis ended in a masquerade with governments stuck with colossal stockpiles of now worthless vaccines and masks, the so-called Euro crisis is going to end up with players who will have to redeem their so "profitable" bonds for next to nothing whilst their dollars will continue to fall in value. The summer of 2010 has already shown, however, the direction of events. Source: Bloomberg, 11/18/2010 (8) Following the methodology of political anticipation, in the past years our team has, of course, looked at the possibility that the Euro might disappear or collapse. Its conclusion is cut and dried because we have identified only one set-up where such a development would be feasible: at least two major Eurozone states must be headed by political forces wishing to revive intra-European conflicts. According to our team, this prospect has zero probability of taking place in the next two decades (our maximum anticipation span in political matters). So, exit this scenario, even if it makes some with nostalgia for the Deutschmark and Franc sad..., some economists who believe that reality pays little attention to economic theories, and some Anglo-Saxons who cannot imagine, without pain, a European continent which carves out its economic and financial path without them. According to Wikileaks even Mervyn King, head of the Bank of England, believes in an accelerated integration in the Eurozone as a result of the crisis, which recounts his conversations with US diplomats (source: Telegraph, 12/06/2010). Our work on the Euro therefore focuses on the anticipation of the Eurozone's laborious journey in adapting to its new status as Euroland in the context of the global systemic crisis. Incidentally, it is worth noting that this orgy of criticism and analysis that essentially the US and especially British media lavish has an undeniable value for Euroland leaders: it throws light on all the obstacles laid along the Eurozone path, a sine qua non for avoiding pitfalls. It's paradoxical, but it's an advantage not enjoyed by British or US leaders ... except when they read the GEAB. (9) And not in relation to "made to measure" currencies as is the case for the Dollar Index. (10) The New York Times has posted a very informative game called "You solve the budget problem" on its website which allows each player to try and restore the state of federal public finances according to its socio-economic priorities and policies. Feel free to put yourself in the shoes of a Washington decision maker in and you will see that only political will is lacking to solve the problem. Source: New York Times, 11/2010 (11) Sources: CNBC, 11/26/2010; Le Temps, 12/10/2010; USAToday, 11/30/2010; New York Times, 12/04/2010 (12) The United States funds its deficits by a huge daily grab of available global savings. The country's diplomatic credibility and effectiveness are therefore two essential features for its financial survival. But Wikileaks' recent revelations are very damaging to the credibility of the State Department, whilst the recent complete failure of the new Israeli-Palestinian negotiations illustrates a growing ineffectiveness of US diplomacy, already very sensitive at the last G20 in Seoul. See the more detailed analysis in this issue. Sources: Spiegel, 12/08/2010; YahooNews, 12/07/2010; YahooNews, 12/08/2010 (13) Even Chinese officials consider that the US fiscal situation is markedly worse than Euroland's. Source: Reuters, 12/08/2010 (14) Iceland, Ireland ... the United Kingdom, the United States, was the accursed follow-on of sovereign insolvency that LEAP/E2020 anticipated more than two years ago. Events are moving slower than we expected, but 2011 risks proving to be a "catch up" year. The United Kingdom is currently trying to save itself at the cost of huge and drastic socio-economic cuts of which student violence, including that against the Royal Family (a rare event), testifies to their unpopularity. But the size of its debt, its financial isolation and the State rescue of its banking debacles (as did Ireland) makes this headlong rush very dangerous, socially, economically and financially. As for the United States, their leaders seem to do everything (by "doing nothing") to ensure that 2011 is truly the year of the "Fall of the Dollar Wall" as LEAP/E2020 anticipated in January 2006. (15) As Liam Halligan pointed out in The Telegraph of 12/11/2010, this development on interest rates does not bode well for US debt, expressing what LEAP/E2020 anticipated over two years ago now: we are reaching the moment of truth when available global savings are insufficient to meet the needs of the West, particularly the gargantuan need of the United States. (16) A factor emphasized by the GEAB team for over four years. (17) European Financial Stabilization Fund, hedge fund regulation, strict limits on bank bonuses, strict regulation of rating agencies, budget monitoring, next reinforcement of the whole of the European internal market financial regulation, first Euroland rating agency, … Sources: European Voice, 10/26/2010; Deutsche Welle, 11/05/2010; Reuters, 07/13/2010; ABBL, 12/08/2010; BaFin, 11/16/2010 (18) Wolfgang Schauble, the German Finance Minister, is currently the only politician who dared to clearly show his colours in his recent interview with Bild magazine, in which he states that during the next ten years, Euroland countries will have accomplished a genuine political integration. Karl Lamers, his colleague in charge of European affairs at the core of the CDU, identifies the crisis as an opportunity for Europe and Germany, as wel as as the too rarely heard American voice of Rex Nutting in the Wall Street Journal of 12/08/2010. On the technocratic side, the ECB President, Jean-Claude Trichet, called for a "budgetary federation" in Euroland. Sources: EUObserver, 12/13/2010; DeutschlandFunk , 12/09/2010; EUObserver, 12/01/2010 (19) For over a decade, public opinion in the Euroland countries has been, in effect, much more "integrationist" than their élite. Thus, rejection of the draft European Constitution in 2005 in France and the Netherlands would not have happened without some "pro-Europeans" voting "No", rejecting a draft that they considered too timid, politically, democratically and socially. (20) European leaders are like the tortoise in the Jean de La Fontaine fable "The Hare and the Tortoise" ... but the race would be described by hares! (21) By the way, the Eurozone's future political leaders would be well advised to practice, as quickly as possible, how to manage Euroland through two interactive games, Economia and Inflation Island, that the European Central Bank has made available to the public. (22) As LEAP/E2020 has repeated for nearly two years, European austerity is politically viable only if accompanied by unquestionable social and fiscal equity and the implementation of major democratic and social projects throughout Euroland. It is here that the real medium to long term weakness of the Eurozone can be fou

You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 20 West Kinzie, Chicago IL USA 60610