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• Mr. Hu Goes to Washington
• Gold and Silvers Daily Review for January 17th, 2011
• Bullishness From COT and the Physical Market for Silver
• Is the Gold Bull Market Over?
• We’ll Soon Know Gold’s Intentions
• 7 Stages of the EU Panic Cycle: Understanding and Profiting
• The Gold Wave Patterns remain Bearish and SP 500 near the top
• Sell Gold, Buy Silver
• The last man standing in a monetary crisis
• Three ETFs to Watch This Week: QQQQ, IAI, QCLN
• 14 Options Forecasts for Post-Earnings Moves This Week
• GEAB N°51 ist angekommen! Die umfassende weltweite Krise – 2011: Das Jahr, das keine Gnade kennt / An der Gabelung von drei Wegen in das weltweite Chaos
• JPMorgan: This industrial metal is beginning to trade like gold and silver
• How Americans Lost Their Right To Own Gold And Became Criminals in the Process
• Why you should open a Chinese bank account immediately
• The 20 shocking financial records set last year
• Richard Russell on the most important investing rule today
• Are Gold Pool Accounts Safe?
• How Bad The Economy Will Get
• Crude Oil Sells On Rising Dollar
• The Lost Gold Bars Of Camp McKinney
• ECB : Purchase of 0.62 tons oz of Gold last week following the Estonian integration into the Euro
• Silver ETF (SLV) Bar List Analysis COMEX Deliverability
• The Story of Gold Money Past, Present and Future
• Dollar Deception : how banks secretly create money
• Exporting Revolution
• MONEY Misses the Mark
• Illinois is No Peter Pan
• Long Shadows Cast Over Useconomy
• Is JPM Covering Up a Naked Silver Short Held By China As a Claim Against the Yanks?
• Silver Going Mainstream in 2011
• Weekender: The Age of Cyberwar is Here
• Le système monétaire international est un 'produit du passé' pour la Chine

Mr. Hu Goes to Washington Posted: 17 Jan 2011 05:57 AM PST Tim Iacono submits: Chinese President Hu Jintao will hop on a plane tomorrow and arrive in Washington on Wednesday to talk to U.S. President Barack Obama about a number of issues, most of which will, in some way or another, be related to the value of the yuan. After making a barrage of announcements in recent weeks about further liberalizing trading in the Chinese currency, small steps on the road to it becoming freely convertible sometime this decade (maybe), the tightly controlled yuan reached a new all-time high against the dollar last week as it often does prior to Chinese officials meeting with important heads of state who, almost unanimously, think the currency is undervalued. Complete Story »

Gold and Silvers Daily Review for January 17th, 2011 Posted: 17 Jan 2011 05:42 AM PST

Bullishness From COT and the Physical Market for Silver Posted: 17 Jan 2011 03:54 AM PST Despite a relatively stable silver price, The COT structure continues to change for the better. Though the following information ends on 1/11/2011, the bullish structural changes continue to occur, setting the stage for much higher prices in the future. Though I’m not a technician / market timer, the COT report and the supply-demand fundamentals point towards higher prices in the near term. Of course, I may be wrong with this opinion and we could certainly see more downside pressure before the next breakout, but the changes in the futures market, as well as constraints in the physical market continue to make me think the next big move will be to the upside. Recently, John Embry of Sprott Asset Management was being interviewed on King World News, where he made a very telling comment regarding the tightness in the physical market. In more or less words he described the physical constraint not just as tight, but very tight-- and he would know, as his company began a physical silver trust which is still waiting for all the silver to be delivered to the warehouse over two and a half months later. Complete Story »

Is the Gold Bull Market Over? Posted: 17 Jan 2011 03:35 AM PST Michael Albert submits: While large-cap equities had an abysmal decade of performance between 2000-2010 because of the internet boom and bust being following by the housing boom and bust, gold has done extremely well, advancing each year. Bull markets, of course, do not last forever. Often times, one can tell when a bull market may be nearing its end based on popular crowd sentiment. For example, back in the late '90s, the world was full of people, from taxi drivers to stock analysts alike, who were talking about some hot internet stock they were “sure” was going to make big money. The same pattern followed the real estate boom, in which everyday people without the proper finances suddenly were making a boatload of money leveraging to buy a 2nd, 3rd, and 4th piece of property. Reality TV shows such as "Flip This House" embodied popular sentiment at the time. The show came out in 2005, and was a hit. Interestingly, the show's timing suggested the end was near for housing and real estate stocks. Take a look below at the price ratio of the S&P Homebuilding Index (XHB) to the S&P 500 (IVV). Complete Story »

We’ll Soon Know Gold’s Intentions Posted: 17 Jan 2011 03:32 AM PST

7 Stages of the EU Panic Cycle: Understanding and Profiting Posted: 17 Jan 2011 03:26 AM PST Cliff Wachtel submits: As I wrote in my weekly preview post, Key Market Drivers January 17-21, Trading Ramifications, EU Spring Meltdown , the EU sovereign debt and banking crisis remains the primary driver of risk appetite and market moves outside of direct intervention by the Fed and other central banks. Thus, no matter what assets you trade, it’s critical to understand how the EU Panic Cycle (hence, EPC) works and thus be able to recognize if we’re moving towards a period of greater calm or fear. Complete Story »

The Gold Wave Patterns remain Bearish and SP 500 near the top Posted: 17 Jan 2011 03:17 AM PST

Sell Gold, Buy Silver Posted: 17 Jan 2011 01:45 AM PST The best part of the article is the 60 comments at the end, be sure you read them. The sheeple are not happy to be told to buy silver. http://finance.yahoo.com/banking-bud...old-buy-silver

The last man standing in a monetary crisis Posted: 17 Jan 2011 12:42 AM PST The author admits that the magazine tried to persuade readers to dump gold last year at this time. That was a costly mistake. Gold went up nearly 30%. But it just shows how hard it is to get the top of a bubble market.

Three ETFs to Watch This Week: QQQQ, IAI, QCLN Posted: 17 Jan 2011 12:35 AM PST Michael Johnston submits: By Stoyan Bojinov Equities across the globe rose higher for the most part last week, with Portugal’s bond sale easing debt worries, and upbeat earnings reports sending the S&P 500 to new multi-month highs. Meanwhile, gold took a tumble as the conservative safe-haven lost its luster despite continued weakness in the dollar. Treasurys marched upwards on Friday, after the latest December CPI data showed a 0.50% rise in consumer prices, leading many to believe that inflation would not appear for quite some time. Complete Story »

14 Options Forecasts for Post-Earnings Moves This Week Posted: 17 Jan 2011 12:14 AM PST The Strategist submits: This week, the following major companies will be reporting earnings prior to January options expiration: Tuesday: Citigroup (C), Apple (AAPL) Wednesday: Goldman Sachs (GS), eBay (EBAY), F5 Networks (FFIV), Wells Fargo (WFC), US Bancorp (USB) Thursday: Freeport McMoran (FCX), Morgan Stanley (MS), Google (GOOG), Johnson Controls (JCI) Friday: General Electric (GE), Bank of America (BAC), Schlumberger (SLB) To predict how these stocks will move post-earnings announcement, we look at the options market, and more specifically at the nearest expiration month calls and puts that are "at-the-money". In other words, we look at the price of the call and put of the front month expiring options with a strike price closest to the current stock price. Complete Story »

GEAB N°51 ist angekommen! Die umfassende weltweite Krise – 2011: Das Jahr, das keine Gnade kennt / An der Gabelung von drei Wegen in das weltweite Chaos Posted: 16 Jan 2011 11:48 PM PST - Pressemitteilung des GEAB vom 17. Januar 2011 - Mit dieser 51. Ausgabe des GEAB feiert der Global Anticipation Bulletin seinen fünften Geburtstag. Im Januar 2006 schrieb LEAP in der ersten Ausgabe des GEAB, dass wir am Beginn einer Epoche von vier bis sieben Jahren stünden, die vom Sturz der Dollarmauer geprägt wäre. Als geschichtliches Ereignis wäre dies so schwerwiegend wie der Fall der Berliner Mauer, der das Ende des Ostblocks und der Sowjetunion einleitete. Heute, in dieser 51. Ausgabe des GEAB, die unsere 32 Vorhersagen für das Jahr 2011 enthält, werden wir darlegen, warum wir glauben, dass 2011 das Jahr sein wird, in dem die Weichen für den Fall der Dollarmauer gestellt werden. Dieser Prozess dürfte sich über einen Zeitraum von drei Jahren hinziehen, also bis 2013 gehen. Dieses Jahr wird ein schlimmes Jahr werden, weil nun die Welt von Gestern untergeht (1). Seit September 2008 ist allen klar, dass diese Krise in der Tat umfassend und global ist. Dennoch haben sich die USA und in ihrem Windschatten ihre westlichen Verbündeten damit zufrieden gegeben, an den Symptomen herumzudoktern und die Risse des Systems zu übertünchen. So blieb verborgen, wie weitgehend die Ursachen der Krise die Grundlagen des gegenwärtigen internationalen Systems zerstört haben. 2011 wird nach unserer Auffassung das Jahr sein, in dem die staatlichen Maßnahmen, die nur die oberflächlichen Folgen der Krise beheben konnten, ihre Wirkung verlieren. Dann wird die Krise wieder ihre volle Kraft entfalten können, und offensichtlich werden, wie weit der Zerfall der Welt – und öffentlichen Ordnung in den letzten Jahren fortschreiten konnte (2). Daher gehen wir gehen davon aus, dass 2011 geprägt sein wird von einer Reihe brutaler Schocks, die die unzureichenden Schutzmechanismen gegen die Krise, die seit 2008 eingerichtet wurden (3), zerschlagen werden. Diese Schocks werden nach und nach die Fundamente wegbrechen, auf denen seit Jahren die Dollarmauer ruht. Nur die Länder, Gebietskörperschaften, Organisationen und Privatpersonen, die in den letzten drei Jahren die Schlussfolgerungen aus der Krise gezogen haben und die Konzeptionen, Ziele, Werte und Gewohnheiten der Welt von Gestern abgelegt haben, werden dieses Jahr unbeschadet überstehen. Die anderen werden in einer Abfolge von finanziellen, währungspolitischen, wirtschaftlichen, politischen und sozialen Problemen, mit denen das Jahr 2011 uns konfrontieren wird, beträchtlichen Schaden erleiden. Da wir also davon ausgehen, dass 2011 insgesamt das chaotischste Jahr seit 2006, dem Jahr, in dem wir unsere Arbeiten über die Krise begannen, sein wird, haben wir uns für diese 51. Ausgabe auf unsere 32 Vorhersagen für das Jahr 2011 konzentriert, in die diesmal auch unsere Empfehlungen, wie man sich am besten gegen die Folgen der uns bevorstehenden Schocks wappnen kann, eingearbeitet sind. Diese Ausgabe des GEAB bietet damit sozusagen eine Wegbeschreibung durch die finanziellen, währungspolitischen, politischen wirtschaftlichen und sozialen Schocks der nächsten zwölf Monate. Unsere Auffassung von 2011 als das schrecklichste Jahr seit des Beginns unserer Arbeiten zur Antizipation der umfassenden Krise gründet sich auf die Annahme, dass in diesem Jahr die Welt vor einer Weggabelung steht, von der drei Wege abgehen, die aber alle in das weltweite Chaos führen. Statt die Ursachen der Krise zu beheben, hat die internationale Gemeinschaft seit 2008 mit Bankenrettung und Konjunkturplänen nichts anderes gemacht, als Anlauf zu nehmen, um nun mit vollem Schwung in das Chaos springen zu können. Ein machtloses internationales System Den ersten Weg, den die Krise nehmen kann, um die Welt in Chaos zu stürzen, ist das Auftreten eines brutalen, unvorhersehbaren Schocks. Das internationale System ist inzwischen in einem so jämmerlichen Zustand, dass es in jeder Art von Katastrophe größeren Ausmaßes zusammenbrechen kann (4). Wer dies für eine übertriebene Aussage hält, sollte einfach den Blick nach Haiti wenden, wo die internationale Gemeinschaft seit nunmehr einem Jahr sich unfähig zeigt, dem Land effizient beim Wiederaufbau zu helfen (5); oder in die USA, wo die USA in sechs Jahren seit dem Wirbelsturm Katrina unfähig waren, die Stadt wieder aufzubauen. Dafur, Elfenbeinküste, Israel und Palästina – nirgendwo kann die internationale Gemeinschaft dauerhafte Lösungen durchsetzen. Die Nato kann die Taliban nicht besiegen, der VN-Sicherheitsrat die Korea- und Irankrise nicht lösen. Der Westen vermag nicht, den Libanon zu stabilisieren, der G20 nicht, die weltweite Krise zu lösen, in der sich zu den finanziellen und wirtschaftlichen Problemen auch noch die unzureichende Ernährungssicherheit gesellt hat. Wo immer auch die Ursachen einer Katastrophe liegen, ob im Klima oder bei den Menschen, das internationale System ist ohnmächtig, die Probleme zu lösen oder wenigstens die Folgen zu mindern. Seit zumindest der Mitte des ersten Jahrzehnts dieses Jahrhunderts bieten die Staaten, die sich als wichtige Akteure auf der Weltbühne fühlen, also in erster Linie die USA mit ihren westlichen Verbündeten, statt wirksamer Politik, die die Lebenswirklichkeit verändert, nur Kommunikation und Lippenbekenntnisse. Die Staaten haben die Hoffnung aufgegeben, ihr Schicksal noch bestimmen zu können. Die Regierungen hoffen nur noch, dass der nächste Kelch der Krise an ihnen vorübergehen werde, dass die nächste Katastrophe ein anderes Land ereile. Aber inzwischen hat die Krise die Zahl der möglichen Katastrophen so erhöht, dass die Staaten genauso gut auch russisches Roulette spielen könnten. Nach unserer Auffassung ist die ganze Welt auf dem Weg, die neue Version russischen Roulettes (6), die Version 2011, zu spielen, nämlich amerikanisches Roulette: Gleiche Regeln, nur statt einer Kugel fünf in der Trommel. Der Preisanstieg für Rohstoffe (Lebensmittel, Energie usw. (7)) weckt unweigerlich Erinnerungen an 2008 (8). Auch damals, im Vorfeld des Zusammenbruchs von Lehman Brothers und der Wall street, schossen die Rohstoffpreise durch die Decke. Und die Gründe für den Preisanstieg heute sind dieselben wie 2008: Die Flucht aus reinen Finanzwerten und Devisen in „konkrete" Anlagen. Gestern flohen die großen Investoren und Fonds aus den Hypothekenkrediten und überhaupt allen Anlagen, die vom Dollar abhingen. Heute flüchten sie wiederum aus den Finanzwerten, aber auch aus Staatsanleihen und anderen öffentlichen Schulden. Zwischen Frühjahr und Herbst 2011 ist mit der Explosion von vier Blasen zu rechnen: Der Blase der Staatsanleihen (9), der öffentlichen Schulden (10), der Bankbilanzen (11) und der Immobilienmärkte in den USA, China, Großbritannien, Spanien wie überhaupt der Gewerbeimmobilienmarkt (12). Dies alles wird sich vor dem Hintergrund massiver Währungskriege abspielen (13). Angesichts des amerikanischen, britischen und japanischen Quantitative Easing und der Konjunkturprogramme, die diese Länder sowie auch China und Europa aufgelegt haben, kann Inflation nicht ausbleiben. Dies wird einer der Faktoren sein, die die Welt im Jahr 2011 erschüttern werden (14). Wir werden in dieser Ausgabe des GEAB noch näher darauf eingehen. Aber wie man an den Ereignissen in Tunesien (15) sehen kann, führen globale Gegebenheiten wie insbes. die Lebensmittel –und Energiepreise national zu massiven sozialen und politischen Schocks (16). Und sehr bezeichnend ist auch, dass die großen Schutzmächte des tunesischen Regimes, nämlich Frankreich, Italien und die USA unfähig waren, den Zusammenbruch eines „befreundeten" Regimes zu verhindern (17). Die Machtlosigkeit der großen geopolitischen Akteure Der Machtverfall der bisher so mächtigen geopolitischen Akteure ist der zweite Weg, den die Krise einschlagen kann, um 2011 die Welt ins Chaos zu stürzen. Man kann ja die mächtigsten Mitglieder der G20 in zwei Gruppen einteilen, deren einziger gemeinsamer Punkt darin besteht, dass beide nicht in der Lage sind, die Ereignisse in entscheidender Weise zu beeinflussen. Auf der einen Seite gibt es den „Westen" der Nachkriegszeit, der in dieser Form nicht mehr lange bestehen wird. Für die USA wird das Jahr 2011 den Beweis erbringen, dass ihre Führungsrolle in der Welt Vergangenheit ist (vgl. weiter unten in dieser Ausgabe). Dennoch versuchen sie verzweifelt, das internationale System in seiner Form vom Beginn des neuen Jahrhunderts zu erhalten. Das ist auch verständlich, waren sie doch damals die einzige Supermacht in einer unipolaren Welt. Und Euroland ist dabei, in die Rolle eines Quasi-Staates (18) hineinzuwachsen. Es ist mit diesem Umbruch und seinem Hineinwachsen in die Rolle eines „global players" (19) ausreichend beschäftigt, so dass ihm keine Energie übrig bleibt oder es auch nur eine Vision entwerfen könnte, um auf die weltweiten Ereignisse Einfluss zu nehmen (20). Auf der anderen Seite findet man die BRIC mit den beiden treibenden Kräften China und Russland, die sich allerdings noch als unfähig erweisen, die Führung zumindest eines Teils des internationalen Systems zu übernehmen. Sie beschränken ihre Aktivität zurzeit darauf, die noch verbleibenden Reste der Fundamente der Welt von Gestern diskret zu untergraben (21). Damit ist die Ohnmacht im internationalen System allgegenwärtig (22). Das erhöht natürlich das Risiko, dass wesentliche Schocks sich ereignen und dass die Folgen dieser Schocks schlimmer sind als es sonst notwendig wäre, weil nicht gemeinsam gegengesteuert werden kann. Die Welt von 2008 wurde von dem gewaltigen Schock der Finanzkrise überrascht. Aber damals konnte das System noch besser reagieren. Denn es besaß noch eine unangefochtene Führungsnation (23). 2011 ist dies nicht mehr der Fall. Es gibt keine unangefochtene Führungsnation mehr, und das System ist machtlos geworden, wie wir soeben ausgeführt haben. Die Lage wird noch weiter dadurch verschärft, dass in vielen Staaten der Ausbruch sozialer Unruhen und schwerer wirtschaftlicher Krisen drohen. Gesellschaften am Rand eines sozialen und wirtschaftlichen Zusammenbruchs Dies ist insbes. der Fall in den USA und in Europa, wo die Folgen von drei Jahren Krise sich in wirtschaftlichen und sozialen Belangen massiv bemerkbar machen. Das führt natürlich auch zu politischen Folgen. Die amerikanischen Privathaushalte, von denen Abermillionen heute insolvent sind, schwanken zwischen geduldig ertragener Armut (24) und Wut gegen das System. Die Europäer, die um sich herum wahrnehmen, wie die Arbeitslosigkeit zunimmt, während gleichzeitig der Sozialstaat zerstört wird (25), beginnen allmählich, sich dagegen zu wehren, dass ihnen die Kosten für die Krise auferlegt werden, und machen sich auf die Suche nach den Schuldigen (Banken, Euro, Regierungsparteien). Aber auch in den Schwellenländern häuft die Krise gesellschaftlichen Sprengstoff an. In China stoßen Maßnahmen zur Eindämmung der Finanzblasen auf den Widerstand derjenigen, die endlich einen gewissen Wohlstand erreichen oder den bestehenden noch weiter mehren möchten. Auch muss die chinesische Wirtschaft Arbeit für Abermillionen Wanderarbeiter zur Verfügung stellen, wenn es nicht zu sozialen Unruhen kommen soll. In Russland ist das niedrige Sozialhilfeniveau mit dem sagenhaften Reichtum der Oberklasse und Oligarchen nur schwer zu vereinbaren. Genau das Selbe gilt für Algerien, wo Unruhen bereits ausgebrochen sind. Ob in Brasilien, Türkei oder Indien, überall führen die schnellen Umbrüche zu Aufständen, Unruhen, Attentaten. Die Vermögensschere ist inzwischen fast überall auf der Welt so weit geöffnet, dass soziale Unruhen drohen. All diese Staaten beginnen 2011 das Jahr mit einem gesteigerten Risiko von schweren Spannungen und der Gefahr von sozialen und wirtschaftlichen Brüchen. Viele Staaten sind zu wahren politischen Pulverfässer geworden. Dass sich 2011 drei Wege ins Chaos gabeln, macht aus den kommenden Monaten das Jahr, das keine Gnade kennt. Keine Gnade wird es für die Staaten und Städte kennen, die nicht die Schlussfolgerungen aus den drei Jahren Krise ziehen wollten und glaubten, nach einigen kosmetischen Veränderungen das Leben und die Wirtschaft wie gehabt fortführen zu können, ohne die Ursachen der Krise zu bekämpfen. Es wird auch keine Gnade für die Unternehmen und Staaten (26) kennen, die glaubten, die wenigen Aufhellungen am Horizont des Jahres 2010 wären die Vorboten eines ewigen Sommers für die Weltwirtschaft. Und sie wird keine Gnade für die Investoren kennen, die immer noch nicht verstehen wollen, dass die Anlagearten der Welt von Gestern wie Wertpapiere und Devisen nicht die Anlagearten vor Morgen sein können; auf jeden Fall nicht für die nächsten Jahre. Geschichte ist ja nicht heimtückisch. In der Regel warnt sie, bevor sie die Welt von Gestern untergehen lässt. Diesmal gab sie die Warnung 2008 aus. Nach unserer Auffassung wird sie 2011 die Welt von Gestern untergehen lassen. Nur diejenigen, die sich entsprechend auf die neuen Bedingungen vorbereitet haben, werden bestehen. Die anderen werden ins Chaos stürzen. ---------- Noten: (1) Wie wir die Nachkriegsordnung inzwischen nennen. (2) Die kürzlich erfolgte Entscheidung des US-Arbeitsministerium, Langzeitarbeitslose bis fünf Jahre noch in der Statistik zu führen, während sie bisher schon nach zwei Jahren herausfielen, zeigt, dass die Krise in eine neue Phase eingetreten ist, in der das, was vor der Krise noch üblich war, nicht einfach fortgeschrieben werden kann. Übrigens hat die US-Regierung diese Entscheidung damit gerechtfertigt, dass die Langzeitarbeitslosigkeit wie nie zuvor angestiegen sei. Quelle: The Hill, 28/12/2010 (3) Diese Maßnahmen, ob währungspolitisch, finanziell, wirtschaftlich, haushälterisch oder außenpolitisch, sind nunmehr eng miteinander verwoben. Deshalb werden sie auch in einer Abfolge der Schocks gemeinsam zerbrechen. (4) Quelle: The Independent, 13/01/2011 (5) Es ist sogar noch schlimmer, denn erst durch die internationale Hilfe konnte die Cholera, die tausende Tote verursacht hat, auf der Insel ausbrechen. (6) Übrigens hat Timothy Geithner, der US-Finanzminister, der nicht gerade für überschäumende Phantasie bekannt ist, soeben erklärt, dass « die amerikanische Regierung sich gezwungen sehen könnte, erneut ungewöhnliche Maßnahmen zu ergreifen." Er bezog sich dabei auf die Bankenrettung 2008. Quelle: MarketWatch, 13/01/2011 (7) Übrigens sind Indien und der Iran dabei, sich einen Mechanismus für den Tausch von Gold gegen Öl einzurichten. Damit soll eine Versorgungsunterbrechung verhindert werden. Quelle: Times of India, 08/01/2011 (8) Der FAO-Index für Lebensmittelpreise hat im Januar 2011 seinen bisherigen Rekord von 215 im Mai 2008 mit nunmehr 215 übertroffen. (9) Die Banken an der Wall Street stoßen zurzeit mit großer Eile und wie noch nie zuvor seit 2004 ihre US-Staatsanleihen ab. Offiziell geben sie als Begründung an, die „hervorragende Erholung der US-Wirtschaft rechtfertige nicht mehr eine konservative Anlage in US-Staatsanleihen". Natürlich können Sie das glauben, wenn Sie wollen. Dieser Journalist bei Bloomberg in einem Artikel vom 10/01/2011 tut es ja auch. (10) Euroland bereitet sich in großen Schritten ja schon darauf vor, wie wir es in der 50. Ausgabe des GEAB beschrieben, die Investoren bei einer Refinanzierung staatlicher Schulden angesichts eines drohenden Staatsbankrotts mit einem Abschlag mit in die Haftung zu nehmen. Inzwischen verschlechtert sich auch die Situation für amerikanische und japanische Staatsanleihen. Quellen: Bloomberg, 07/01/2011; Telegraph, 05/01/2011 (11) Wir gehen davon aus, dass im Allgemeinen die Bilanzen der großen internationalen Banken zumindest 50% Scheinwerte verzeichnen, die im Laufe des Jahres um 20 bis 40% wertberichtigt werden müssen, da die Welt wieder in die Rezession gerät, die Sparpakete wirken, Kredite an Verbraucher, Unternehmen, Gemeinden und Städte sowie Staaten platzen, Währungskriege ausbrechen und die Immobilienpreise weiter einbrechen. Quelle: Forbes, 12/01/2011 (12) Jeder dieser Immobilienmärkte wird 2011 noch sehr starken Preiskorrekturen ausgesetzt sein. Chinas Immobilienmarkt, an dem die Preise bisher noch nicht gefallen waren, wird natürlich besonders hohe Abschläge hinnehmen müssen. (13) Die japanische Wirtschaft ist übrigens eines der ersten Opfer dieser Währungskriege. Inzwischen geben in einer Umfrage der Kyodo News 76% der Chefs der 110 größten japanischen Unternehmen an, dass nach ihrer Auffassung wegen des Kursanstiegs des Yen sich die Lage der japanischen Wirtschaft verschlechtern werde. Quelle: JapanTimes, 04/01/2011 (14) Hier einige aussagekräftige Beispiele, die der immer sehr lesenswerte John Rubino zusammengestellt hat. Quelle: DollarCollapse, 08/01/2011 (15) Nur zur Erinnerung, in der 48. Ausgabe des GEAB vom 15. 10.2010 hatten wir Tunesien in die Gruppe mit hohem Risiko für 2011 eingestuft. (16) Es kann auch kein Zweifel daran bestehen, dass das tunesische Beispiel zu einer Reihe von Neubewertungen in den Rating Agenturen und bei den « Experten in internationalen Beziehungen » führen wird, die wie immer im Vorfeld mal wieder nichts bemerkt hatten. Es zeigt weiterhin, dass die Satellitenstaaten des Westens im Allgemeinen und der USA im Besonderen den Schocks der folgenden Jahre in besonderem Maßen ausgesetzt sein werden. Und es bestätigt, was wir immer wieder schreiben: In einer Krise beschleunigen sich die geschichtlichen Abläufe. Das Regime von Ben Ali bestand 23 Jahre; es brach in nur wenigen Wochen zusammen. Wenn ein Regime oder eine Situation nicht mehr in die Zeit passt, geschehen Veränderungen mit beeindruckender Geschwindigkeit. Und alle arabischen pro-westlichen Regimes passen nunmehr, nach den Ereignissen in Tunesien, nicht mehr in die Zeit. (17) Es kann ebenfalls kein Zweifel daran bestehen, dass die Ohnmacht der westlichen Schutzmächte in Rabat, Kairo, Amman und Riad usw. sehr wohl beobachtet und analysiert wird. (18) Wir kommen darauf noch im Detail zu sprechen. Aber die Chinesen jedenfalls haben es schon richtig erkannt. Quelle: Xinhua, 02/01/2011 (19) Allmählich erkennen die Europäer, dass auch die Ereignisse in Peking, Moskau, Brasilia, New Delhi usw. auf ihr Leben bedeutenden Einfluss nehmen. Die Welt ist größer als nur Washington. Quellen: La Tribune, 05/01/2011; Libération, 24/12/2010; El Pais, 05/01/2011 (20) Die ganze Energie Japans wird für Versuche aufgebraucht, der Anziehungskraft Chinas zu widerstehen. Die anderen Länder des Westens sind strukturell nicht in der Lage, wesentlichen Einfluss auf die Zeitläufte zu nehmen. (21) Der Platz des Dollars im internationalen System gehört zu diesen Resten an Fundamenten, die die BRIC mit Nachdruck und systematisch zerstören. (22) Was die Defizite anbelangt, sind die USA beispielhaft. Geredet wird zwar anders, aber geändert hat sich mit der Krise nichts. Das Defizit wächst weiter exponentiell. Selbst der IWF schlägt inzwischen Alarm. Quelle: Reuters, 08/01/2011 (23) Selbst das Wall Street Journal vom 12/01/2011, das sich die Sorgen, die auf dem Forum in Davos geäußert wurden,

JPMorgan: This industrial metal is beginning to trade like gold and silver Posted: 16 Jan 2011 11:42 PM PST From Bloomberg: The world refined copper market is expected to have a 500,000-metric-ton to 600,000-ton deficit in 2011, even with a significantly weaker demand scenario, according to JPMorgan Securities Ltd. Disruptions last year seemed to have wiped out most of mine supply growth, metals strategist Michael Jansen told a conference in Shanghai. "As demand further recovers into 2011, supply-side issues will become more influential," he said. Copper for delivery in three months in London advanced to a record of $9,754 a metric ton on Jan. 4 after rising 30 percent last year as the improving global economy and rising investment demand for commodities prompted buying. The International Copper Study Group is expecting a 435,000-ton global deficit in the refined metal this year. While current prices are sufficient to encourage brownfield and greenfield developments, longstanding issues, including capital availability, relative merit of projects, resource nationalism, and geotechnical issues, remain key impediments for supply increase, said Jansen. "Copper is also increasingly being seen as scarce and is in many ways adopting some store of value attributes normally associated with precious metals," he said in his presentation. Jansen said his current forecast for the average London cash price is $9,713 a ton this year. In slides shown earlier at the conference he had predicted $9,000 a ton. Copper closed 0.4 percent higher at $9,650 a ton yesterday on the London Metal Exchange. --Helen Sun. Editors: Richard Dobson, Neil Western. To contact the Bloomberg News staff on this story: Helen Sun in Shanghai at hsun30@bloomberg.net. To contact the editor responsible for this story: James Poole at jpool4@bloomberg.net. More on copper: Credit Suisse: $10,000 copper is coming Copper could be headed for a major correction Veteran metals trader: Copper headed for a wipeout

How Americans Lost Their Right To Own Gold And Became Criminals in the Process Posted: 16 Jan 2011 11:30 PM PST

Why you should open a Chinese bank account immediately Posted: 16 Jan 2011 11:27 PM PST From The Daily Crux: Last week we alerted you that the Bank of China has now made it extremely easy for Americans to open yuan-denominated banks account here in the U.S. Today we're passing on a piece that explains why opening an account of your own could be one of the best financial decisions you make this year. Besides the obvious advantage of diversifying some of your assets outside of the U.S. and the dollar, the undervalued yuan also offers the chance for significant capital appreciation... something you can't get at U.S. banks. Read full article... More on saving money: The three best ways to hide valuables in your home... The unbelievable new way Americans can escape the dollar An unusual way to hedge against inflation and higher gas prices

The 20 shocking financial records set last year Posted: 16 Jan 2011 11:27 PM PST From The Economic Collapse: 2010 was quite a year, wasn't it? It will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline. The number of foreclosure filings set a new record, the number of home repossessions set a new record, the number of bankruptcies went up again, the number of Americans that became so discouraged that they simply quit looking for work reached a new all-time high and the number of Americans on food stamps kept setting a brand new record every single month. Meanwhile, U.S. government debt reached record highs, state government debt reached record highs and local government debt reached record highs. What a mess! In fact, even many of the "good" economic records that were set during 2010 were indications of underlying economic weakness. For example, the price of gold set an all-time record during 2010, but one of the primary reasons for the increase in the price of gold was that... Read full article... More on the economy: Why the world is financially doomed in four simple charts Must-see video reveals the real costs of U.S. central planning Warning: This key measure of economic health is dangerously close to new lows

Richard Russell on the most important investing rule today Posted: 16 Jan 2011 11:26 PM PST From Pragmatic Capitalism: I think this pretty much sums up the way a great deal of investors currently feel about the stock market. Although I can’t say that I entirely agree (I think there are swings worth taking here and there), I am certainly not one to argue with the great Richard Russell: "Perhaps Lord Keynes' wisest admonition was when he said, "The market can stay irrational longer than you can stay solvent." Let's take the current situation. The dollar is under attack, housing is still sick. unemployment remains a chronic problem, stocks are rising on a sea of liquidity. Iran and North Korea both have nuclear capabilities and are both "wildly unstable." With this background, a stock market that is rising might easily be termed “irrational.” I’m not the only analyst who considers a rising market in this area as "irrational." My strategy, in view of what I just wrote, is to... Read full article... More from Richard Russell: The one chart that scares Richard Russell Richard Russell: Forget everything you've heard about a gold bubble Richard Russell: Everything you need to know about gold in three sentences

Are Gold Pool Accounts Safe? Posted: 16 Jan 2011 11:00 PM PST

How Bad The Economy Will Get Posted: 16 Jan 2011 10:28 PM PST A post from The Economic Collapse deals with how bad things will get. Today, millions of American families are extremely stressed out because they are working as hard as they can and yet they find at the end of the month they still haven't been able to pay all of the bills.  Unfortunately, things are [...]

Crude Oil Sells On Rising Dollar Posted: 16 Jan 2011 08:14 PM PST Producers Prefer $80 Not $90 Oil. "Saudi Aramco Cuts Most February, 2011, Oil Prices And Increases Super Light to Asia." "Saudi Aramco, the world's largest state-owned oil company, cut official selling prices for all of its crude grades for customers in the U.S., Europe and the Mediterranean for February and raised some light oils (sold) to Asia." "The formula price for Arab Super Light crude, a grade sold only to customers in Asia, increased the most, rising $1.15 a barrel to $6.40 above the average of Oman and Dubai grades, the two Gulf benchmarks used by traders in Asia, the company said in an e-mailed statement today." "Aramco, the world's largest crude exporter, set the price formula for its Light and Medium crudes for February loadings for U.S. buyers at -20 cents lower than last month, according to the statement. Light crude will sell at +5 cents a barrel over the Argus Sour Crude Index for U.S. buyers." "Crude oil for February delivery rose +8% on the New York Mercantile Exchange during December to $91.38 a barrel. Saudi Oil Minister Ali al-Naimi said November 1 that crude-importing countries are happy with prices at between $70 and $90 a barrel, a broader range than the $70-to-$80 spread that he said on March 30 was "as close to perfect as possible." -Anthony DiPaola Dubai Bloomberg.net Crude oil February, 2011 futures are $88.70 at noon on Friday, January 7, 2011. This posting includes an audio/video/photo media file: Download Now

The Lost Gold Bars Of Camp McKinney Posted: 16 Jan 2011 05:00 PM PST

ECB : Purchase of 0.62 tons oz of Gold last week following the Estonian integration into the Euro Posted: 16 Jan 2011 05:00 PM PST

Silver ETF (SLV) Bar List Analysis COMEX Deliverability Posted: 16 Jan 2011 04:30 PM PST

The Story of Gold Money Past, Present and Future Posted: 16 Jan 2011 04:30 PM PST

Dollar Deception : how banks secretly create money Posted: 16 Jan 2011 04:30 PM PST

Exporting Revolution Posted: 16 Jan 2011 11:23 AM PST --If there's one lesson to have learned over the weekend it is this: inflation can lead to revolution. That may be putting it simply. But the task of today's Daily Reckoning is to show that the love of bad money is the root of all politically-destabilising price increases in the developing world. --That doesn't exactly roll of the tongue. But it may explain why Tunisian President Zine al-Abidine Ben Ali is watching the events on the streets of Tunis from a hotel in Saudi Arabia. The Tunisian President fled the country after his efforts to placate protestors failed. --There are certainly other political factors at play. But rising food prices are a factor. Businessweek reports, "On Thursday night he [Ben Ali] went on television to promise not to run for re-election in 2014 and slashed prices on key foods such as sugar, bread and milk. A day later he declared the state of emergency, dissolving the government and promising new legislative elections within six months." --None of that worked. And now he's gone. But rising food prices are not. And for that Tunisians can thank, at least in part, Ben Bernanke's policy of Quantitative Easing. The Bernanke Fed has in effect exported commodity inflation in its relentless drive to weaken the dollar (and force China to revalue its currency). --As we mentioned to Australian Wealth Gameplan readers last week, to the extent that there's a global food crisis, it's really a global crisis in paper money driving up the price of real things. That doesn't mean it isn't a real crisis. It's just important to understand that the origin of these political and social events is fundamentally unsound money. --Of course there IS a non-monetary factor too. Flooding, drought, and lower-than-expected crop yields have put the global food supply chain under pressure. In a world of just-in-time-inventory management and $100 oil, the supply chain is proving more fragile than hungry people might like. --It becomes a political event in those parts of the world where food represents a large portion of discretionary income. World Bank President Robert Zoellick told the Financial Times, "With food accounting for a large and volatile share of tight family budgets in the poorest countries, rising prices are re-emerging as a threat to global growth and social stability." --Does a weak dollar really lead to higher food prices? Well, yes. The dollar is falling in value relative to tangible goods. But you have to keep in mind that rising commodity prices are also driven by countries with appreciating currencies using their newfound purchasing power to purchase scarce natural resources. Buy 'em while you can, before they go up in price again. --If the weak U.S. dollar keeps undermining political stability in the developing world because of rising food and oil prices, then the developing world will have another reason to hate America. To be fair, maybe the Bernanke Fed is trying to protect American jobs by driving Chinese labour costs higher. --But that's probably not how the rest of the world will see U.S. currency policy. They'll probably see it as a tool for producing involuntary regime change in countries where food and fuel prices are out of control. The Arab world can probably keep oil prices low in OPEC member countries. But do you reckon they're a bit nervous about what's happening in Tunisia? --One country that's not nervous is China. It's gaining more confidence, in fact. Yes, China is worried about inflation too. On Friday, the People's Bank of China announced it would raise reserve ration requirements at banks by 50 basis points, effective January 20th. China is trying to prevent excess liquidity from driving prices out of control (house prices, food prices, stock prices). --In fact, China's President Hu Jintao understands perfectly that too many dollars are bad for everyone. China included. In written answers to questions posed by the Wall Street Journal and Washington Post, Hu wrote, "The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level." --It's too late for that. But Hu knows that too. He added that, "The current international currency system is the product of the past." That has a faint resonance with the famous quotation from John Maynard Keynes that the gold standard was, "a barbarous relic." --The problem with the gold standard is it imposed fiscal discipline on the 20th century Warfare/Welfare State. It had to go. The problem with the current global fiat dollar standard is it unleashes political and social mayhem. It has to go to. --But what will replace it? China hopes to internationalise its currency so it will become a new global reserve currency. But it was hoping to do so by about 2015, when the IMF is scheduled to re-weight the currencies that make up its special drawing rights (SDRs).  In with the Yuan, down with the dollar! --By our reckoning, 2015 is about four years from now. And that's a long time to tolerate/endure higher oil, energy, and food prices. These well-laid plans may not be good enough. In the meantime, investors can speculate on higher commodity prices. But if high prices lead to increased political instability, even that will be a risky bet. Similar Posts: Exporting Economic Growth Will Synchronized Rate Cuts Solve International Financial System Problems? Bastille Day: The French Revolution Didn't Change Much Fed Vice Donald Kohn Urges Emerging Markets to Drop the Dollar Peg Paying Attention to the Risk from Deleveraging in Commercial Real Estate

MONEY Misses the Mark Posted: 16 Jan 2011 10:51 AM PST Nothing much in yesterday's market news...so we turn to a remarkable article that appeared in MONEY magazine, proving that MONEY doesn't know anything about money. (MONEY Magazine) - Can you tell when a boom has turned into a bubble? One clue: When pop culture starts paying attention. The housing bubble, for example, brought both the TV show Flip This House and a rival on another network, Flip That House. So if you own a lot of gold, you might regard a recent episode of Saturday Night Live as your first warning. In the opening skit, Bill Hader as China's President Hu Jintao declares that Glenn Beck was right and that "my government should have bought gold. Unfortunately, all our assets were tied up in US Treasury bills." Back in the real world, gold is trading at about $1,400 an ounce, up from less than $500 five years ago. That's a 23% annualized return, far outstripping the gains on stocks (1.1%) or bonds (6.1%). Fear is driving a lot of the rise. MONEY has a point. But not a good one. When pop culture gets excited about an asset class - tech stocks in '99 or housing and finance in '06 - you know it's late in a roaring party. It's just a matter of time before the neighbors get mad and call the cops. But the MONEY writer missed the point. Pop culture has to take the bubble asset seriously. Not as a joke. The author admits that the magazine tried to persuade readers to dump gold last year at this time. That was a costly mistake. Gold went up nearly 30%. But it just shows how hard it is to get to the top of a bubble market. Yeah, but gold is not in a bubble market. It's in a bear market. It will turn into a bubble market later. So far, almost no one is at the party. Ask your friends, dear readers. Ask your relatives. How many of them own gold? Ask the cab drivers, the insurance salesmen, the auto dealers and the psychiatrists. Ask the readers of MONEY magazine. Do they hold gold? Nope. It may have just completed its 11th year of a bull market, but people have still not caught on. They think there's something weird about gold...something almost unpatriotic. It is as if you didn't trust Ben Bernanke or something. MONEY goes on to tell readers why they shouldn't buy gold now. Reason #1: "Bad economic news may not make you very much money. Good news could crush you." Of course, it depends on what kind of bad news. And how bad. Historically, gold is a refuge against bad news. And we can't think of anything we'd rather have in bad news...unless the news were so darned bad that we'd rather have a farm far out in the country with a cow, a pig, a flock of chickens and an arsenal of weapons. But how about the good news? Yes, gold would go down in a good news environment. The author talks about the '80s and '90s...as if a re-run of those good news years were possible. Oh boy! This fellow must have read Peter Lynch's advice about not paying any attention to macroeconomics; he must have taken it seriously! Poor lump! You can ignore the macro weather forecast, but only when the weather is good. When the hurricanes and tornadoes start to blow, you need to know what's going on so you can nail up the plywood and head for shelter. What is the likelihood of a repeat of the '80s and '90s fair weather? Well, we'd need to begin with the high interest rates of the early Reagan years (they're extremely low now). Then, we'd need low stock prices (they're 1,100% higher now). We'd need relatively high inflation (CPI touched 13% in the early '80s) rather than the 1.1% core CPI we have now. We'd need a monetary base of about $600 billion (rather than the $2.5 trillion Bernanke is building). We need total debt at about 120% of GDP, instead of 400%. And we'd need a Fed that was determined to stop inflation rather than one that was dead set on causing it! And we'd all have to be 30 years younger, too. All things considered, we'd gladly go back to the '80s - if we could do it. But who could possibly believe we could? Only a writer for MONEY magazine. Yes, if things do go back in time to the '80s and '90s, gold will be crushed. That's a chance we will gladly take. His reason # 2 is no better. "Sure, the dollar has problems. But just look at the other guys." We're not sure what that is supposed to mean. The whole planet's monetary system is based on paper currencies, with the dollar at the center of it. Yesterday, the dollar turned down against foreign currencies. But so what? We can't tell you which of these paper currencies will shrivel up and blow away first...but they're all going to do so. How do we know that? Well, in all modesty, we admit that we don't know for sure. We don't know nothin' for sure. But every paper currency ever tried - apart from present company - has always disappeared. And none has ever survived a complete credit cycle. They're okay on the upside. They fall apart on the downside. We're on the downside of the credit cycle now. Or not far from it. The dollar won't survive. And when it begins to limp and cough badly, some investors may go to Chinese yuan or Swiss francs. Most will want to go to real money...the kind you can trust...the kind that never goes away... ..the "last man standing" in a monetary crisis - gold. MONEY has other reasons for telling readers to stay out of gold. They are no better. And at the end of the article, as if the author were not convinced that he had made his case, he tells readers that if they must get into the yellow metal, they should do so with only 1% of their portfolio. And put the money into an option, not into the real stuff. Then, if the bet pays off, the MONEY reader would get a big payday. Wait a minute. Picture the MONEY reader. He's got a $200,000 portfolio. On MONEY's advice, he keeps it fully invested in a balanced portfolio of equities. Then, he takes $2,000 and buys an option on gold. If gold goes up dramatically, his $2,000 option turns into, say, $20,000. But what has happened to the rest of his portfolio? We don't know, but there is a good chance that either his option expires worthless - in which case, he loses his $2,000. Or, if it pays off...and gold is soaring...the rest of his portfolio could register far bigger losses than he recovers from his gold play. Again, MONEY is missing the point. Ordinary people have no business speculating on gold. They should buy the metal as a safety device - to protect themselves from all the dumb policies and speculations of the banks and the Fed itself. The Fed is no longer doing its job. Its reserves are trash - bonds to be paid off by the federal government (which is insolvent) or by underwater homeowners. Since the Fed is derelict, people need to have their own reserves of real money. Gold, in other words. Meanwhile, California is in the same situation as Portugal, Ireland and Spain. It can't print its own money. So, it has to take the austerity route. Here's the latest from Bloomberg: California's Brown Unveils $12.5 Billion in Spending Reductions California Governor Jerry Brown's budget will cut spending by $12.5 billion, including as much as a 10 percent pay reduction for most state employees, aides said. The plan, which Brown is to unveil today, will also raise $12 billion by retaining tax increases due to expire and making other modifications. Some of the revenue will go to cities and counties as part of Brown's plan to transfer spending authority from the state to local governments. Regards, Bill Bonner. for The Daily Reckoning Australia Similar Posts: Feds Want to Increase the Money Supply and Induce People to Spend Money Rule Scrapped: Banks to Value Assets Using Mark-to-Market Dumb Money Eyes Stock Market While Smart Money Watches Economy Apology to Christopher Joye and Rismark International Americans Behind On Mortgage Payments

Illinois is No Peter Pan Posted: 16 Jan 2011 10:50 AM PST "I'll never grow up, never grow up, never grow up, Not me!" - Peter Pan, Lyrics from play "I knew Peter Pan and you're no Peter Pan." - Vice-Presidential candidate Lloyd Bentsen, (sort of), 1988 "Top Illinois Democrats have agreed to push a plan that would temporarily boost income taxes by 75 percent and double cigarette taxes," harked CBS Chicago on January 6, 2011. The proposed plan would increase Illinois' personal income tax rate from 3 percent to 5.75 percent for the next three years. After that, it would drop back to 3.25%. So they say. Illinois is a state in which the legislators have so betrayed the taxpayers that a lifetime on Devil's Island would be too good for them. For instance, the liability of the four state pension plans is calculated at $151 billion or $280 billion, depending on the assumptions used. The $280 billion figure is analytically controversial but deductively compelling given the efforts to deny and confuse bondholders and the public alike respecting the coming collapse of the municipal bond market. Springfield, the capital of Illinois, is a nice town. As state capitals go, it is strikingly uninhabited with a population of 110,000 (and falling, but not as fast as its benefit obligations are rising). Farm country starts about three blocks from the state house. Illinois has more representation in its capital than any other state. The politicians raised pension benefits faster than poker bids in Macau. Presumably, they have boosted their own benefits faster than the state's public servants, who, once they retire, no longer pay one cent for health insurance. Clay ducks would have done better at funding promises than the elected representatives. There are $70 billion of assets to support the $280 billion of pension obligations (See The Liabilities and Risks of State-Sponsored Pension Plans in which Professors Novy-Marx and Rauh lay forth their provocative and engaging argument). Illinois borrows from the bond market each year to pay benefits, a total of $16 billion since 2007. Bondholders have been paid $550 million (on the first $10 billion) for funding this pyramid scheme. In other words: Illinois taxpayers have paid a $550 million late-fee that, if there were justice in this world, would be paid by the Illinois legislators. These legislators - and this is true across the country, not just Illinois - cannot conceive of a time when there will be no buyers of bonds to pay benefits that the politicians failed to fund. By borrowing to meet current payments, the "top Illinois Democrats" have fostered the national charade of limitless taxing authority. State General Obligation (G.O.) bonds are backed by the "full faith and credit" phrase, stamped on their offerings. Wall Street research would have it that a G.O. bondholder can take that phrase to the bank. It is from this precipice that bondholders hang by their fingernails. Goldman Sachs research chips in: "[G]eneral obligation debt is backed by a state or local government's pledge to raise taxes to service that debt if necessary." Barclay's wrote to its California-averse clients that the state is obligated "in good faith to use its taxing power as may be required for the full and prompt payment of debt service." There are four problems here. First, the State of Illinois had accumulated over $5 billion of unpaid bills by the end of 2010. Electricity to the governor's mansion will be cut off if the politicians don't grow up. Second, the authority to raise taxes to meet bond payments often does not work. The most recent instance is the State of Oregon. In early 2010, voters increased tax rates on high earners and businesses to fill a $700 million deficit. Civil servants danced in the streets: "We're absolutely ecstatic," said Hanna Vandering, a physical education teacher from Beaverton and vice president of the statewide teachers union. "What Oregonians said today is they believe in public education and vital services." (The Oregonian, January 26, 2010) On December 16, 2010, the state of Oregon had received one-third less than was expected from windfall tax receipts. Those Oregonians who weren't talking while Hanna Vandering was spouting decided they would rather leave town than contribute to this scandalous love-in between legislators and public unions. Third, the authority and inclination of courts to issue a writ of mandamus (ordering state officials to raise taxes) is not a topic discussed in brokerage firm research. It is hereby suggested to municipal bondholders who are recipients of such reports to ask why this is so. There have been many decisions in which the court concluded it did not have the authority (or inclination: because efforts, such as in Oregon, are generally unsuccessful) to demand tax increases. The decisions are too varied to discuss here. (See, as a start, Tax Increases in Municipal Bankruptcies, Kevin A. Kordana, Virginia Law Review, volume 83, No. 6, pp. 1035-1107.) Readers may recall that states cannot file for bankruptcy. This is true, but an insolvent body that reneges on its obligations to bondholders will sit in the dock. Municipal decisions are the obvious precedents for the courts. Fourth, a Sword of Damocles hovers over all transactions and contracts in the United States today: who still trusts the "full faith" of any government body? And, this is the worst situation of all: politicians who think they can fly. Regards, Frederick J. Sheehan, For Daily Reckoning Australia Editor's Notes: Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession and "The Coming Collapse of the Municipal Bond Market." Similar Posts: Losing Faith in the Zombie-Run Government Son of Subprime Trust Funds Con Fighting the Correction in the Worst Possible Way Government Sponsored Enterprise Debt and Australian Banks, a Ticking Time Bomb?

Long Shadows Cast Over Useconomy Posted: 16 Jan 2011 10:36 AM PST Numerous are the threats to the USEconomy and US financial structures. Many are hidden threats, subtle challenges to undermine increasingly fragile support systems, planks, and cables that hold the system together. The year 2011 will be when the system breaks in open visible fashion, when the explanations that justify it sound silly and baseless, when the entire bond world endures major crashes. All thing financial are inter-related. Recall that in summer 2007, the professor occupying the US Federal Reserve claimed the subprime mortgage crisis was isolated. The Jackass countered with a claim that the bond market was suffering a crisis in absolute terms, where all bond markets were on the verge of fracture, perhaps globally. In year 2008 the banking system in the Western world broke, fatally and irreparably in my view. In 2009, the solutions, the treatment, the official programs were all exaggerated for their effectiveness while banker welfare became a fixture. Neglect of the people on Main Street became policy. In 2010, the system revealed it is still broken. The global monetary system after all rests atop the sovereign bond market. This year, it must fight off a collapse. Many are the hidden points of vulnerability. Gold & Silver will continue to be the great beneficiaries. BOND OUTFLOWS Huge outflows have struck from US-based bond funds, while the outflows continue for stock funds since may 2010. Even the flagship pimco bond fund saw net redemptions. The public is stepping aside as the usfed does its destructive work. No end is in sight for the stock fund outflows. A public boycott seems firmly in place. The new event is the largest bond fund outflow in almost 30 months. The Investment Company Institute reported that in the week ended December 15th, another massive outflow took place from domestic stock funds. It was the 33rd week in a row, amounting to an exit of $2.4 billion. Worse, taxable and municipal bonds saw a nasty shocker of $8.62 billion in outflows, which included another record $4.9 billion in muni bond outflows. Bond mutual funds had the biggest client withdrawals in more than two years, as a flight from fixed income investments has accelerated. The withdrawals were the largest since mid-October 2008, when investors pulled out $17.6 billion from bond funds. The US bond fund retreat showed acceleration signs, since the rise was from $1.66 billion the week before, according to the ICI report. So outflows are in progress for both US stocks and US bonds!! Year to date, investors have yanked $100 billion in funds from US-focused equity mutual funds, offset by a smaller $16 billion in comparable inflows into equity strategies via ETFunds. The $250 billion PIMCO Total Return Fund, managed by Bill Gross, had its first net withdrawals in two years in November as investors pulled $1.9 billion, according to Morningstar. The public has grown jaded by stories of flash trading smears of the stock market, insider trading scandals, and incessant internal reports of stock support from the Working Group for Financial Markets. They sense stock prices are heavily manipulated and not a reflection of true value. They might on a wider basis believe that most US financial markets are either in ruins or corrupted. The vast record outflows accompany a rise in the S&P500 stock index, which is a clear signal of USGovt prop programs in a corrupt market. Ridiculous illogical and ludicrous interpretations continue to be disseminated about the USEconomy in recovery. The false story has become a billboard message of deception. We are told that investors are retreating from bond funds after signs of an economic recovery and a stock market rally, which have lifted interest rates broadly. The reality is something quite different. The selloff in USTreasurys happened exactly after the US Federal Reserve in November offered specific details on its pledge to purchase $600 billion in bond assets to revive the sluggish USEconomy. The 10-year USTreasury yields lie in the 3.2% to 3.4% range, much higher than the 2.49% in the first week of November. The bond market contradiction to the USFed monetization plan is without precedent in US bond market history, a grandiose insult. The QE2 team is buying $100 billion in USTBonds per month, taking up the slack, without producing any decline in bond yields. The USFed is running a dangerous desperate gambit. Attempts to hold together the ustreasury market during its QE2 strongarm episode are underway. Obviously the USFed is the USTreasury market, with outsized USTBond purchases as part of its QE2 program. An approved posse of market specialists is buying hundreds of $billions of USTreasury securities on the open market. They are filling a vacuum. They are offsetting global creditors in abandonment. They bought in 2011 a full 75% of all USGovt debt issuance, just like Banana Republics!! They must keep the interest rates low. They must prevent a credit derivative blowup event. The USFed is fast losing all credibility, exhausting its power, testing its limits, fighting off demands for independent audits. The QE2 team seeks the best price available. However, due the fully advertised initiative and the heavy volume, is destined to pay a premium price. They have tipped their hand, as they buy $100 billion per month in USTreasurys. It is not possible to be a known buyer with a schedule and agenda, and execute favorable prices. An unexpected backfire occurred on the way to the QE2 launch. Bond yields fell sharply between August and November as the markets anticipated the new program. Bond yields have defiantly risen since details on QE2 were formally announced in November, delivering losses to the frontrunners in the autumn months. Too much doubt was left lingering on the volume of the program, and furthermore, whether a QE3 would launch. Bernanke actually hinted of a third launch, foolishly. The states need several hundred $billion, another monetization object. GOLD & SILVER PREPARE FOR ANOTHER BREAKOUT A major consolidation is taking place in the Gold price. A near total disconnect has occurred between the physical Gold & Silver markets and the control strings from the paper futures market held by the maestros. Grotesque shortages exist in silver. Difficulties in gold delivery are commonplace. The central banks and Bank For Intl Settlements scramble to keep gold & silver supplied to the exchanges, in order to avert openly visible defaults. A strong uptrend with rising moving averages is evident in Gold. The breakout in October has been consolidating for three full months, while Europe experiences its open sores of sovereign debt distress. Its price will soon encounter the uptrend lines for likely ignition. When a European aid package is assembled, whether of substance or not, merely if it seems credible, the Euro currency will rebound and the Gold bull will resume. In year 2011, the global monetary system will fracture in visible fashion. Its broken debt foundation will be the proximal cause. Gold is widely regarded as a reserve asset, no longer a stodgy secure asset for Arab sheiks. The dirtiest little secret might be that private Wall Street firm accounts own vast Gold bullion accounts, while their corporate banking entities in South Manhattan own the short futures positions, soon to be dumped on the USGovt in formal fashion. The greatest propulsion force to the Gold price is obviously the USFed and its grandiose QE2 initiative. Their purchase of $100 billion in USTBonds per month signifies that they are the USTreasury Bond market. PIMCO is worried sick about the unbridled monetization. The USFed monetized 75% of USGovt debt in 2011. When the USFed is done with QE2, they will argue for a QE3, probably to cover state debt shortfalls. The precedent has been set. The global currency war is in full swing. Simply put, the Gold price will rise when China is prepared to pay a higher price, after exhausting supply at lower prices. The greatest offender in currency manipulation and currency undermine is the United States. It is essential that the USGovt continue to make accusations against foreign central bankers, in order to deflect attention. The problem is QE2, and the likelihood of a followup QE3. The USGovt is without permission forcing a debt writedown on foreign USTreasury creditors by installing inflation engines. See the commodity prices, led by food & energy. The USFed and USDept Treasury will proclaim victory by mid-summer, as price inflation begins to rage much hotter. They will call it economic growth. Check import price inflation from the last three months of 2011. Import prices rose 3.7% during that brief time. Not just emerging economies like China and Brazil are contending with price inflation. The US does too, but it calls it growth, since its economic trackers are much more accomplished decepticons. When job losses mount in the second half of 2011, the lies will be unmasked. The USFed is the greatest destoyer of working capital in the history of the world. Their balance sheet is negative $1 trillion and growing worse, their highly appropriate report card. Their wretched financial condition matches their decaying reputation. They are the buyer of worthless toxic bonds, the buyer of last resort. The housing market will NOT recover to bail them out. USGOVT BUDGET BATTLES Budget battles are sure to reveal the true fascist motives of those in power. The people will be denied while the war machine is preserved, guns & bombs over bread & butter, big banks over households. In fact, the defense budgets will not be reduced. Rather, defense contractors will be forced to eat cost overruns without volume cutbacks in weapon units at all. The war is sacred, the signature mark of the fascist state. The USGovt seems to have suddenly found religion in reducing the budget and its deeply engrained deficit. It is more superficial than from the heart with conviction. The new wave is all about perceptions. To be sure, some in the USCongress are worried sick and scared pale over the prospects of a structural $trillion deficit. A decade ago such a deficit magnitude would be considered a telltale signature of a Banana Republic nation sliding toward the Third World perilously. The budget battle with the new USCongress will be extremely revealing of the priorities for the Syndicate in full control of the USGovt and press networks. The budget process will in my view continue to place the war as a sacred priority not to be touched, not to be altered, not to be disrupted. In rough terms, the USGovt budget contains components 20.0% Defense, 21.0% Social Security & Medicare, and 14.0% Safety Net System. In my view, the budget cuts will come exclusively from the people and their homes and work centers, their pensions, their Social Security & Medicare. Tax deduction removals and phaseouts will be a centerpiece. The war machine has given stress to the defense contractors, who will be expected to absorb cost overruns in weapons programs, according to recent Pentagon pronouncements. Enormous costs are involved with the war machine support. The base military budget is $536 billion. The extended budget for the wars adds another $170 billion in supplemental spending, which officials prefer to call Overseas Contingency Operations since it sounds more sophisticated. The total sum, over $700 billion per year, is the sacred cost of the USMilitary. It includes hundreds of overseas bases, lavish embassies, and endless weapon systems, of types conventional, nuclear, and drones. The United States spends as much on annual military investment as the rest of the world combined, according to the Stockholm Intl Peace Research Institute. One must wonder if the wars are to produce enemies. The United States maintains troops at more than 560 bases and other sites abroad. The outsized yawning Defense spending is a primary cause for USGovt insolvency. It has a staggering deficit impact on the budget and the negative international image of the nation. Watch the unfolding events as the USGovt and USCongress grapple with spending cuts. They will avoid Pentagon and defense budget cuts with fierce opposition. This is a key part of the Fascist Business Model, as sacred as Wall Street largesse. Harken back to the 1950 decade, during the post-WW2 glow. President Dwight Eisenhower once said, "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed." The words from Ike fell on deaf ears. Not until the last decade have his words rung shrill. He never met the current crowd in control, but he could see a path to their evolution, which he called the Military Industrial Complex. No disrespect is meant to soldiers who have sacrificed. One must wonder for what cause their sacrifice has been, and toward what outsized profits to defense and service contractors, even Syndicate bank accounts. Talk has already begun, that "out of respect for our fighting soldiers and veterans" who have served in active duty, the defense budget will be spared of cuts. Watch the priorities be revealed as the battle unfolds over the budget. In my view, the potential for defense cuts and huge savings is great but it will not be tapped. Instead the people will be asked to expect less aid, to rely upon less, to eat less, to expect less federal help, and endure poverty more. SHADOW HOME INVENTORY The standard inventory of homes comes from brokers and multilists. The hidden inventory of homes adds another 50% to 80% to the working supply, half of that from pending seizures, half from bank owned units festering on their balance sheets. Home prices cannot rise in such a deeply distressed climate. The unofficial shadow inventory is another one million homes. Any economist who overlooks the hidden supply of homes is a hack. The housing market cannot recovery for another two years, until it works off the hidden inventory. The problem is that the ongoing home foreclosures results in more bank seizures, and a steady source of renewed hidden inventory. Housing is a crippled market, one that acts like a gigantic millstone around the USEconomy. Housing prices will descend further in 2011, as the shadow inventory acts with powerful forces upon the Supply & Demand equation. It still applies despite any messianic proclamations from banking high priests or Wall Street marketing agents. The mainstream has finally begun to grasp the wreckage and ruin, but not that the housing sector will cause a systemic failure for the nation. It is most assuredly coming. The contradictions and shallow work of Roubini are worth a pass. His work has been ridiculed in the past by the Jackass, like a few months ago when he expected the gold market to turn down. Instead, it rose another 10% to 15% in a string of breakouts. Yet he is still revered, and sought as a guest on the financial networks. Nouriel Roubini offers some obvious commentary, followed by contradictory nonsense about a USEconomic recovery. His inconsistency earns him a 'C Minus' grade in his own class. The professor is a fool once again. Roubini acknowledges that the housing market is in a double dip, as prices can only go down. He brought attention to what he called below trend economic growth as baseline, but also two negative factors specific to the housing market. The first factor is the expiration of federal home buyer tax credits for first-time home buyers. The housing prices have been falling every month since the tax credit expired last May. He correctly identified the stolen demand from the future to take advantage of the home buyer credit. So he makes an obvious point. The second factor putting downward pressure on home prices is the ongoing chaos with mortgage documentation, and the related temporary moratorium by banks for mortgage foreclosure proceedings. The suspension appears to be ending. Aware of an imminent flood of housing supply, Roubini said "There has been an effective moratorium on foreclosures. The shadow inventory of not-yet-foreclosed homes, due to the moratorium, will surge in the next year. Supply will increase, demand will drop." Obvious points, enough to force a USEconomic recession without a remote chance otherwise. Roubini remains a shallow economist without strong basis for his opinions, even plain contradictions. He does not expect a double dip recession, since he believes the USGovt kool-aid on doctored statistics. The dull blade Roubini said, "The rest of the economy is recovering. Most of the numbers are consistent with a growth rate of 2.7%, still below trend. So unemployment will likely remain above 9%. The EuroZone shock, long-term structural deficits, and state & local governments operating near bankruptcy are other ominous economic signs on the horizon. The 12 million households are already in negative equity and 8 million more have an Loan-to-Value between 95% and 100%. Thus even a 5% fall in home price will push an extra 8 million in negative equity with risk of millions walking away from their home, i.e. jingle mail." Without realization, he undermines his own assessment of slow USEconomic growth, and provides ample justification for a worse recession than already is in progress. His housing market observations contradict his economic outlook. He does not realize (or admit) that price inflation is running at over 7% right here, right now. Therefore the GDP estimates are all way high, exaggerated by 5% or more. The USEconomy is mired in a deep recession. Sadly, Roubini is a victim of the establishment, which ordered him to compromise his work in order to continue to occupy an important post. See the CNBC article. The Great Roubini is awakening to the disaster in housing, but he does not yet grasp how it will result in a systemic USEconomic failure. He begins with a slow growth scenario, then cannot justify it, even to contradict it while discussing relevant factors. He will be one of the first shoddy economists to claim the USEconomy is in recovery, as price inflation accelerates, which will incorrectly be labeled it growth. My theory is simple. If the entire USEconomy depended upon the housing boom to expand from 2003 to 2007, then it will be capable of collapsing the same structures given the extreme vulnerability to debt. The vicious cycle will be powerful, unstoppable, and deadly. It has been game over since the September 2008 events when the US banking system collapsed and died, led by Lehman Brothers, Fannie Mae, and AIG. The weight of the continuing housing market decline, combined with strangulation in the banks with toxic debt paper and a surplus of home inventory, is easily sufficient to cause a systemic failure to the entire USEconomy. The big banks are stuck in mud at the cemetery gate. That failure is in progress with momentum. Guys like Roubini and Krugman will be the last to realize the collapse. They are celebrated cheerleaders within the system, compromised souls. LABOR MARKET STEP-DOWN The economic step-down is a hidden powerful effect in the de-industrialization of America. The job growth is not a sufficient condition for the USEconomy recovery. People are taking lesser jobs, with huge declines in income. Fewer opportunities exist, while survival demands tough decisions. The endless USEconomic recession has an ugly trademark. People are taking steep pay cuts, enduring lasting reductions in wages. People are taking jobs far below their skill levels. Between 2007 and 2009, more than half the full-time workers who lost jobs (held for at least three years) and found new jobs later reported wage declines, according to the USDept Labor. The detail is 36% of them reported the new job paid 20% less than the previous lost job. An effect rarely seen in recessions since the Great Depression, wages have taken a sharp and swift decline for a significant slice of the labor market. THIS IS A THIRD WORLD HARBINGER. It is worse for many others. The unemployment rolls include 14.5 million people, even 6.4 million stuck jobless for more than six months. A key part of earnings losses, according to the survey, is that workers skills acquired over the last two decades that are fast becoming outdated and obsolete. Then instead of gaining new skills for a higher paying job, they often settle for a lower wage and stop their job hunts, unable to benefit from training. Lack of retraining programs is a huge dropped ball by the USGovt, whose economists cannot find their hind parts with their hands. Research shows that children of displaced workers also suffer in a domino effect. Even those fortunate to remain on the same jobs have seen wage cuts. Many assume more duties too. RETAIL LEADERS ON THE ROPES Howard Davidowitz screams his case on the broad retail distress, with details. He warns of huge unresolved problems with commercial property loans, with great stress for landlords. A Paradigm Shift is underway, for smaller footprint shopping centers, as the United States footprint is double anything reasonable. The consumer model is fast breaking down. Davidowitz does not mince words, as he destroyed the illusion of a USEconomic recovery, pointing out absolutely no consumer renaissance. During a recent Bloomberg interview, retail expert Howard Davidowitz shattered the consensus klapptrapp, with quality content and logical thought. He said, "I am not surprised by the strength of retail sales, because I knew that 30% of consumers are responsible for retail sales, and these 30% did much better because of the performance of capital markets. I do not think it is indicative of anything going forward. I do not think the economy is going to get any better. If you look at our fiscal and monetary policy, we went two trillion dollars in the hole last year. Two trillion, to produce this, and unemployment went up to 9.8%! We have spent two trillion dollars. We are printing money. We are going bananas. Our the balance sheet, we have $2.6 trillion on there, and for what? Look at government securities, and mortgage backed securities. If interest rates go up a point Bernanke's bankrupt. Everything he has bought is underwater. All the mortgage bonds are underwater, the whole country is underwater. Does anyone see the issue now with why rising interest rates, aside from predicting a supposed recovery, may also, courtesy of its [greatly increased wrecked bond investments], actually predicts the insolvency of the Federal Reserve?" His comments are not a breath of fresh air, strewn with honesty. Davidowitz provided several key observations on the supposed retail renaissance. Wal-Mart makes for 10% of US retail sales, has 150 million customers, and its stock it is down six consecutive quarters, not a good sign. Sears is the largest department store in America, but their stock is in terrible shape. Best Buy suffered a huge earnings miss. The financial loss recorded by ToysRUs increased last quarter. Supermarket chain A&P recently filed for bankruptcy. Department store chain Loehmanns just filed for bankruptcy. Charming Shoppes announced plans to close 100 stores. TJMaxx just liquidated AJRight. Davidowitz honed in on Sears for crucifixion. Sears is in the tank, ready to fold its tents in his opinion. Eddie Lampert took over the company recently from his hedge fund position, lacking any conceivable operational experience. He has engrained a policy that departs from price competition. He has not invested in capital equipment upgrades. He has sold his best stores. His online investment has not succeeded. The corporation is gutted, heading for the dumpster, then cemetery. If Lampert were smart, he would sell the company to a greater fool. A joke has surfaced, that A&P might merge with Stop & Shop, with a new corporate name of Stop & Pee, which would open enormous marketing potential. In addition to dissecting the collapse of Sears, analyst Davidowitz observed what should be a loud glaring alarm signal for guys like Ackman and all those who are betting on the resurgence of the US mall storefront with vehicles like General Growth. The bulk of retail store traffic is moving online, where incidentally the only jobs created are those of packagers and quality control line people either in China or in some warehouse in Texas, California, or Florida. Davidowitz said, "Online sales have to lead you to question

Is JPM Covering Up a Naked Silver Short Held By China As a Claim Against the Yanks? Posted: 16 Jan 2011 07:47 AM PST

Silver Going Mainstream in 2011 Posted: 16 Jan 2011 07:29 AM PST

Weekender: The Age of Cyberwar is Here Posted: 16 Jan 2011 05:31 AM PST There's a war out there, old friend. A world war. And it's not about whose got the most bullets. It's about who controls the information. What we see and hear, how we work, what we think… it's all about the information! ~ Sneakers One of the most fascinating (and perhaps most overlooked) stories of 2010 was that of Stuxnet, the mysterious computer virus that jammed up Iran's nuclear enrichment program. This was no ordinary virus, as The Economist describes: According to Symantec, a computer-security company, the worm performs an inventory of the systems it is running on, looking specifically for "frequency converter drives" made by two firms, one Iranian and the other Finnish, running at speeds between 807 Hz and 1210 Hz. (These high frequencies correspond to the rotation speeds of centrifuges; America tightly controls the export of frequency converter drives able to operate at frequencies above 600 Hz.) If it finds the right configuration, Stuxnet sabotages it by making subtle changes to the speeds of the centrifuges over several weeks, while displaying normal readings to cover its tracks. That is not all. Ralph Langner, a German researcher, says Stuxnet has a "second warhead". It targets a different industrial-control system that just happens to be used at Bushehr, Iran's much-delayed nuclear-power station, replaying previously recorded normal readings as it causes havoc. Mr Langner likens its complexity to "the arrival of an F-35 fighter jet on a World War I battlefield." Disrupting key processes… creating false readings… covering its own tracks… this thing is like a trojan horse mayhem capsule filled with nanobot super-hackers. Welcome to 21st century warfare… The New York Times sheds further light on Stuxnet with a longform reporting piece, Israel Tests on Worm Called Crucial In Iran Nuclear Delay: The Dimona complex in the Negev desert is famous as the heavily guarded heart of Israel's never-acknowledged nuclear arms program, where neat rows of factories make atomic fuel for the arsenal. Over the past two years, according to intelligence and military experts familiar with its operations, Dimona has taken on a new, equally secret role — as a critical testing ground in a joint American and Israeli effort to undermine Iran's efforts to make a bomb of its own. Behind Dimona's barbed wire, the experts say, Israel has spun nuclear centrifuges virtually identical to Iran's at Natanz, where Iranian scientists are struggling to enrich uranium. They say Dimona tested the effectiveness of the Stuxnet computer worm, a destructive program that appears to have wiped out roughly a fifth of Iran's nuclear centrifuges and helped delay, though not destroy, Tehran's ability to make its first nuclear arms. "To check out the worm, you have to know the machines," said an American expert on nuclear intelligence. "The reason the worm has been effective is that the Israelis tried it out." Though American and Israeli officials refuse to talk publicly about what goes on at Dimona, the operations there, as well as related efforts in the United States, are among the newest and strongest clues suggesting that the virus was designed as an American-Israeli project to sabotage the Iranian program. Wow. Four questions come to mind in light of all this: When does the next James Bond movie come out? What kind of accelerated technological arms race is being kicked off here? What happens to the cloud and the much vaunted digital future? And what are the potential investment implications? Digital 007 First on the James Bond stuff — Stuxnet is a real-life example of what might be dreamed up by an evil genius supervillain. (Except in this case the "good guys" came up with it first.) Think about the frightening implications for the concept behind the Stuxnet virus: Not just a specifically designed tool for jamming Iranian centrifuges, but rather a new prototype for "disrupt, deceive and destroy" technology that can be aimed like a guided missile at any sufficiently complex (and thus vulnerable) computer-monitored system. Think how much of our lives, both financial and physical, are regulated and enabled by sprawlingly intricate software programs and monitoring systems. Then think of the disruption capability embedded in trojan horse hacker programs that tell the operator "everything is fine" even as real processes are going haywire. Electrical power grids that quietly cycle up until they blow. Water and sewage systems that use the wrong chemical concentrations and jam up completely. Financial software metrics that report one level of transaction flow while actually implementing another. Bank accounts going haywire, value-at-risk calculations of multi-billion-dollar hedge funds being tampered with, trillions of dollars in credit card transactions or interbank cash flows being compromised, and so on. And to some extent this is all fair game, because once again the "good guys" (said with a hint of irony) started it. Stuxnet might not qualify as the first full-on "cyberwar" attack. The 2007 cyberattacks on Estonia might lay claim to that. But this is definitely a new level of escalation — one in which two powerful governments, in collaboration with at least one multinational corporation (Siemens), conceived and executed a cyberattack on an enemy government, in an openly recognized (if not openly acknowledged) way. It now seems abundantly clear, to any political or military leader with half an imagination, that the next round of superviruses won't be created by bong-smoking Linux enthusiasts or bored sixteen-year-old wunderkinds. No, we've upgraded now. Starting with Stuxnet, the superviruses of the future are being created in collaboration with governments — sometimes multiple governments — and the private sector. Vulnerable Clouds Take the implications one step further. Stuxnet was used as a proxy for real bombs — a bloodless alternative means for Israel to delay, if not halt outright, Iran's nuclear program. Rather than send fighter planes, as they did with Operation Opera in 1981, they sent a virus instead. But with the high-tech virus conscripted for international warfare, how long before various parties recognize the value in waging economic warfare? Back up for a moment and look at how 21st century terrorism is evolving. The terrorists may have realized something in the aftermath of the airport security nightmare and the homeland security backlash. They don't have to physically blow things up to achieve their goals. They can simply jam up the system instead. The Pentagon will probably find a way to protect its supercomputers. But what about the municipal fire and water departments of countless mid-sized American cities? What about bridge and port operators? What about the endless network of power grids, security systems, and so on that enable our economy to function smoothly? If Iran and a couple other black hats got together and brought down a major bank's back office tomorrow — or shut down the New York Stock Exchange — what would we say? What would they say? Would they be apologetic if caught? Or would they give some version of "Too bad, you guys did it to us. Tit for tat…" And in terms of financial terrorism, what about "cloud" themed enterprises with tens of billions in market value: Facebook, Google, VMWare, Rackspace, Amazon.com, and so on? Are we deluded in thinking we can just waltz on out into the cloud, all our personal information ready to be intercepted… or disrupted or distributed… or worse? Investment Implications It's probably too early to pull concrete investment themes from all this. But there are certainly some intriguing trains of thought forming. Here are some rough ideas possibly worthy of discussion: Cyberwar will "break out" as a big story. No one is really paying attention right now. Stuxnet made ripples at the time, but it didn't make waves. At some point that will change — perhaps when a disruptive attack of major proportions is successfully executed on a western country. The "cloud" is more vulnerable than we think. Up til now, primary objections to the cloud have been oriented towards privacy. People who don't like Facebook, for example, tend to think of Mark Zuckerberg as the potential enemy. They haven't thought about the possibility that the enemy is a third party looking to disrupt, deceive and destroy, with government-funded tools to do so. That realization could scare a lot of people — and negatively impact market valuations. Physical warfare is becoming an anachronism. We are moving away from traditional "bombs and bullets" warfare towards something else entirely. We can see this in the manner that Israel (with America's help) successfully hobbled Iran. They used computers instead of bombs. So at one end of the spectrum warfare is becoming digital. At the other end it's about "shock and awe" — nuclear bombs, biological retaliation, and so on. It may also be that, as "weapons of mass destruction" become truly mass destructive, a willingness to use them recedes — which in turn favors the rise of digital and economic warfare as a more palatable proxy. Cybersecurity firms have a bright future ahead. It isn't clear who will be the big winnners from a shift towards "cyberwar," but it isn't hard to picture a sea-change in investor psychology unfolding. At some point the "new cloud" could be the guys protecting the old cloud. Right now there is still a lot of complacency and relaxed comfort in respect to digital communications. We worry about privacy, but mostly in a superficial way. If that shifts to genuine fear and concern, we could even see overshoot — a full-blown investment bubble developing in next-gen security companies.

Le système monétaire international est un 'produit du passé' pour la Chine Posted: 15 Jan 2011 09:10 AM PST Les critiques de Hun Jintao visent particulièrement le dollar... Le président chinois Hu Jintao a qualifié l'organisation actuelle du système monétaire international de «produit du passé», dans des réponses écrites à des questions publiées dimanche dans la presse américaine. «Le système monétaire international actuel est un produit du passé», écrit Hu Jintao dans ces réponses publiées par le Wall Street Journal et le Washington Post, notant pour autant qu'il faudra longtemps avant que la monnaie chinoise, le yuan, devienne une monnaie de réserve internationale, au même titre que le dollar, l'euro, le yen ou la livre sterling... Lire

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