Gold World News Flash |
- Not Quite 3 For 3 As BNP Outlines Rapid Deleveraging While Moodys Maintains Review
- Credit Agricole, Expectedly, Joins SocGen On The Moody's Downgrade Path
- SO IT BEGINS: SOCGEN DEBT, DEPOSIT RATINGS CUT BY ONE NOTCH TO Aa3 BY MOODY'S, OUTLOOK NEGATIVE
- Jefferies Describes The Endgame: Europe Is Finished
- Jim Rickards - Monetary System Will Go Gold Soon
- Market Snapshot - Reaction To Wen's Ultimatum
- Gold Seeker Closing Report: Gold and Silver Gain While Dollar Drops
- Resort to SDRs for next bailouts will spur rush to gold, Rickards says
- Guest Post: The Coming Currency Crisis
- Jim's Mailbox
- Gold Price Closed Today at $1,826.80 up $16.90 or 0.9%
- Poverty In America: A Special Report
- A Little Help?
- Silver Update 9/9/11 ABC
- Gold and Silver Withstand Continual Attacks / Greece Default Imminent
- Gold 1980: 'Deja Vu'?
- “Europe In State Of Financial Collapse”
- The Unpunctured Cycle
- Gold 1980: “Deja Vu”?
- Social Security’s Accelerated Demise
- Amid Market Turmoil, Gold Stocks Find Heavy Accumulation
- Running Out Of Time
- SP500 Relative to Europe is Raising Red Flags for Bulls
- Tiger's Robertson "Europe In State Of Financial Collapse"
- Tiger's Robertson "Europe In State Of Financial Collapse"
- NYSE Short Interest Soars To Highest Since July 2009; Is An Epic Squeeze Forming In Bank Of America Shares?
- U.S. Economy Won?t Collapse Any Time Soon ? Here?s 5 Reasons Why
- Gold Daily and Silver Weekly Charts
- The Great Beard’s Next Step
- BoomBust BNP Paribas? This Article Is A Hard Hitting Piece That EVERY MSM Outlet Needs To Pick Up On, IMMEDIATELY!
| Not Quite 3 For 3 As BNP Outlines Rapid Deleveraging While Moodys Maintains Review Posted: 13 Sep 2011 05:41 PM PDT
It seems at the first whiff of downgrades from Moody's, BNP were forced into action announcing a series of asset disposals as Moody's announces no downgrade but maintains review for downgrade... Some Bloomberg headlines before the Moody's text had the smell of anticipatory ratings action:
Moody's maintains review for downgrade on BNP Paribas' Aa2 long-term Further to the review initiated on 15 June 2011 Paris, September 14, 2011 -- Moody's Investors Service has announced an In the meantime, the rating agency has concluded that (i) BNPP's profitability and capital base currently provide an adequate (ii) its long-term debt and deposit ratings are appropriately positioned However, Moody's announced that it will extend its review for downgrade The review is unlikely to lead to a downgrade in the long-term ratings of The Prime-1 short-term ratings have been affirmed. Moody's will publish separate press releases on other institutions RATINGS RATIONALE In its press release of 15 June 2011, Moody's announced a review of the Moody's has concluded that BNPP has a sufficient level of profitability However, during the review, Moody's concerns about the structural Limited Impact Of Greek And Other Peripheral Sovereign Exposures On Since the start of the review for downgrade, BNPP, along with many other BNPP still has very large exposures to the peripheral European countries' In its review, and in the context of a stress test covering BNPP's global As a result, Moody's considers BNPP to be sufficiently profitable and CONTINUED REVIEW OF BFSR TO FOCUS ON FUNDING PROFILE As noted above, BNPP's wholesale funding, the majority of which is Moody's notes that BNPP has substantial holdings of central bank eligible Moody's expects BNPP to continue to enhance the amount and quality of its LONG-TERM DEBT AND DEPOSIT RATINGS REMAIN ON REVIEW FOR POSSIBLE DOWNGRADE Moody's regards France as a high support country, in which BNPP plays a Moody's assesses the probability of systemic support for BNPP in the event SUBORDINATED OBLIGATIONS AND HYBRID SECURITIES The ratings on BNPP's dated subordinated obligations are notched off the The ratings on the bank's hybrid obligations are notched off BNPP's KEY RATING FACTORS FOR OTHER ENTITIES AFFECTED BY THIS RATING ANNOUNCEMENT For LaSer Cofinoga, rated C- / Baa1 / A1, on review for possible PREVIOUS RATING ACTION AND METHODOLOGIES Please see the ratings tab on the issuer/entity page on Moodys.com for The methodologies used in these ratings were Bank Financial Strength SOURCES (1) Source: unaudited interim financial statements (2) Source: unaudited 2nd quarter financial results (3) Source: company press release and audited 2010 financial statements (4) Source: audited 2010 financial statements
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| Credit Agricole, Expectedly, Joins SocGen On The Moody's Downgrade Path Posted: 13 Sep 2011 05:26 PM PDT
...as expected from the previous post. Now, BNP downgrade a matter of seconds. Moody's downgrades long-term ratings to Aa2 on Greek exposures, ratings Further to the review initiated on 15 June, 2011 Paris, September 14, 2011 -- Moody's Investors Service has announced: (i) A downgrade of the Bank Financial Strength Rating (BFSR) of Credit (ii) A downgrade of the long-term debt and deposit ratings by one notch Moody's believes these ratings are more consistent with the bank's At the same time, Moody's announced that CASA's C BFSR and Aa2 long-term The review is unlikely to lead to a downgrade in the long-term ratings of The Prime-1 short-term ratings have been affirmed. Meanwhile, the Aa3 long-term debt and deposit ratings on Credit Agricole Moody's will publish separate press releases on other institutions RATINGS RATIONALE In its press release of 15 June, 2011, Moody's announced a review of the Moody's has concluded that although GCA has considerable capital However, during the review, Moody's concerns about the structural Greek Exposures Material Issue For Risk Profile Since the start of the review for downgrade, GCA, along with many other GCA's banking and trading book exposures to government bonds issued by Loss assumptions for private sector credit were based upon those In Moody's view, CASA's exposures to the risks arising from the The Adjusted BCA reflect the group's very strong domestic retail banking CONTINUED REVIEW OF BFSR TO FOCUS ON FUNDING PROFILE In addition to the concerns noted above, GCA's wholesale funding, the Moody's notes that GCA has substantial holdings of central bank eligible Moody's expects GCA to continue to enhance the amount and quality of its LONG-TERM DEBT AND DEPOSIT RATINGS REMAIN ON REVIEW FOR POSSIBLE DOWNGRADE Under its Joint-Default Analysis (JDA) methodology, Moody's assigns two Moody's regards France as a high support country, and GCA plays a major KEY RATING SENSITIVITIES Given the current review for potential downgrade on CASA's BFSR and - a reconsideration of the bank's funding and liquidity profile within - a prolongation or intensification of challenges to refinancing - increased sovereign risk in the euro area - a deterioration in GCA's overall risk profile as a result of risk - a resurgence of volatility within capital markets activities; - a deterioration in our assessment of the intra-group support - a lowering of our assessment of the probability of systemic support The review is unlikely to lead to a downgrade in CASA's long-term ratings CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK (CACIB) As noted, Moody's Aa3 long-term debt and deposit ratings on CACIB remain SUBORDINATED OBLIGATIONS AND HYBRID SECURITIES The ratings on the dated subordinated obligations are notched off the The ratings on the bank's hybrid obligations are notched off the Adjusted KEY RATING FACTORS AND SENSITIVITIES FOR OTHER ENTITIES AFFECTED BY THIS For all other entities affected by this rating announcement, please refer METHODOLOGIES The methodologies used in these ratings were Bank Financial Strength SOURCES (1) Source: unaudited interim financial statements (2) Source: unaudited interim financial statements (3) Source: unaudited interim financial statements (4) Source: Emporiki unaudited interim financial statements (5) Source: unaudited company presentation (6) Source: audited 2010 financial statements
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| SO IT BEGINS: SOCGEN DEBT, DEPOSIT RATINGS CUT BY ONE NOTCH TO Aa3 BY MOODY'S, OUTLOOK NEGATIVE Posted: 13 Sep 2011 05:10 PM PDT
Ladies and gents, it starts. Credit Agricole and BNP downgrades imminent. Moody's downgrades long-term ratings to Aa3 on normalised systemic support, Outlook negative, BFSR remains on review to consider impact of funding challenges on credit profile
But fear not. In the immortal words of Freddie Mercury...
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| Jefferies Describes The Endgame: Europe Is Finished Posted: 13 Sep 2011 04:34 PM PDT
The most scathing report describing in exquisite detail the coming financial apocalypse in Europe comes not from some fringe blogger or soundbite striving politician, but from perpetual bulge bracket wannabe, Jefferies and specifically its chief market strategist David Zervos. "The bottom line is that it looks like a Lehman like event is about to be unleashed on Europe WITHOUT an effective TARP like structure fully in place. Now maybe, just maybe, they can do what the US did and build one on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system - with many WAMUs, Wachovias, AIGs and IndyMacs along the way. The road map for Europe is still 2008 in the US, with the end game a country by country socialization of their commercial banks. The fact is that the Germans are NOT going to pay for pan European structure to recap French and Italian banks - even though it is probably a more cost effective solution for both the German banks and taxpayers....Expect a massive policy response in Europe and a move towards financial market nationlaization that will make the US experience look like a walk in the park. " Must read for anyone who wants a glimpse of the endgame. Oh, good luck China. You'll need it. Full Report: In most ways the excess borrowing by, and lending to, European sovereign nations was no different than it was to US sub prime households. In both cases loans were made to folks that never had the means to pay them back. And these loans were made in the first place because regulatory arbitrage allowed stealth leverage of the lending on the balance sheets of financial institutions for many years. This levered lending generated short term spikes in both bank profits and most importantly executive compensation - however, the days of excess spread collection and big commercial bank bonuses are now long gone. We are only left with the long term social costs associated with this malevolent behavior. While there are obvious similarities in the two debtors, there is one VERY important difference - that is concentration. What do I mean by that? Well specifically, there are only a handful of insolvent sovereign European borrowers, while there are millions of bankrupt subprime households. This has been THE key factor in understanding how the differing policy responses to the two debt crisis have evolved. In the case of US mortgage borrowers, there was no easy way to construct a government bailout for millions of individual households - there was too much dispersion and heterogeneity. Instead the defaults ran quickly through the system in 2008 - forcing insolvency, deleveraging and eventually a systemic shutdown of the financial system. As the regulators FINALLY woke up to the gravity of the situation in October, they reacted with a wholesale socialization of the commercial banking system - TLGP wrapped bank debt and TARP injected equity capital. From then on it has been a long hard road to recovery, and the scars from this excessive lending are still firmly entrenched in both household and banking sector balance sheets. Even three years later, we are trying to construct some form of household debt service burden relief (ie refi.gov) in order to find a way to put the economy on a sustainable track to recovery. And of course Dodd-Frank and the FHFA are trying to make sure the money center commercial banks both pay for their past sins and are never allowed to sin this way again! More on that below, but first let's contrast this with the European debt crisis evolution. In Europe, the subprime borrowers were sovereign nations. As the markets came to grips with this reality, countries were continuously shut out from the private sector capital markets. The regulators and politicians of course never fully understood the gravity of the situation and continuously fought market repricing through liquidity adds and then piecemeal bailouts. In many ways the US regulators dragged their feet as well, but they were forced into "getting it" when the uncontrolled default ripped the banks apart. Thus far the Europeans have been able to stave off default because there were only 3 borrowers to prop up - Portugal, Ireland and Greece. The Europeans were able to do something the Americans were not - that is "buy time" for their banking system. And why could they do this - because of the concentrated nature of the lending. In Europe, there were only 3 large subprime borrowers (at least so far), so it was easy to front them their unsustainable payments - for a while. But time is running out. Of couse, the lenders (ie the banks) have always been dead men walking! At the moment, the European policy makers – after much market prodding - have finally come to grips with the gravity of their situation. And having seen the US bailout movie, they know all too well what happens when a default of this caliber rips through the financial system. The reason the EFSF was created in the first place was so that there could be some form of a European TARP when the piper finally had to be paid and the defaults were let loose. Certainly many had hoped the EFSF could be set up as a US style TARPing mechanism (like our friend Chrissy Lagarde suggests). The problem of course is that there are 17 Nancy Pelosis and 17 Hank Paulsons in the negotiation process. And while the Germans are likely to approve an expanded TARP like structure on 29-Sep, it increasingly looks like it may be too little too late. The departure of Stark, the German court ruling on future bailouts/Eurobonds, the statements by the German economy minister and the latest German political polls all suggest that Germany is NOT interested a full scale TARPing and TLPGing process across Europe. They somehow think they will be better off with each country going at it alone. The bottom line is that it looks like a Lehman like event is about to be unleashed on Europe WITHOUT an effective TARP like structure fully in place. Now maybe, just maybe, they can do what the US did and build one on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system - with many WAMUs, Wachovias, AIGs and IndyMacs along the way. The road map for Europe is still 2008 in the US, with the end game a country by country socialization of their commercial banks. The fact is that the Germans are NOT going to pay for pan European structure to recap French and Italian banks - even though it is probably a more cost effective solution for both the German banks and taxpayers. Where the losses WILL occur is at the ECB, where the Germans are on the hook for the largest percentage of the damage. And these will not just be SMP losses and portfolio losses. It will also be repo losses associated with failed NON-GERMAN banks. Of course in the PIG nations, the ability to create a TARP is a non-starter - they cannot raise any euro funding. The most likely scenario for these countries is full bank nationalization followed by exit and currency reintroduction. Bring on the Drachma TARP!! The losses to the remaining union members from repo and sovereign debt write downs at the ECB will be massive (this is likely the primary reason why Stark left). It will require significant increases in public sector debt and tax collection for remaining members. And for the Germans this will probably be a more costly path. Nonetheless, politics are the driver not economics. There is a reason why German CDS is 90bps and USA CDS is 50bps – Bunds are not a safe haven in this world – and there is no place in Europe that will be immune from this dislocation. Expect a massive policy response in Europe and a move towards financial market nationlaization that will make the US experience look like a walk in the park. Picking winners and losers will be VERY HARD but let's look at a few weak spots –SocGen 12b in market cap (-70% this year) with assets of 1.13 trillion BNP 31b in market cap (-55% this year) with assets of 2 trillion Unicredito 13b in market cap (-70% this year) with assets of 1 trillion Intesa 14b in market cap (-70% this year) with assets of 700b Compare this with the USA where we have - JPM 125b in market cap with assets of 2.1 trillion BAC 70b in market cap with assets of 2.2 trillion Importantly, France GDP is only 2 trillion and in bank balance sheets are some 400% of that number. The banks are dead men walking with massive leverage to both home country income as well as assets. The governments are about to take charge and Europe as a whole is about to embark on a sloppy financial market socialization process that has been held back for nearly 2 years by 3 bailouts. The weak links will not be able to raise enough Euros/wipe out enough private sector equity to get this done, so there will be EMU members that need to exit and use a reintroduced currency for this process. We put a Greek drachma on the front cover of our Global Fixed Income Monthly 20 months ago for a reason.
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| Jim Rickards - Monetary System Will Go Gold Soon Posted: 13 Sep 2011 04:15 PM PDT  With gold and silver continuing to consolidate the recent gains, today King World News interviewed KWN Resident Expert Jim Rickards, Senior Managing Director at Tangent Capital Markets, to get his take his take on where gold is headed. When asked about what he is watching right now Rickards stated, "With the G20 coming up, Eric, I think they are going to dust off the SDR solution. The next time there is a major global financial crisis the Fed is not going to be able to bail out the world because they are out of bullets, but the IMF and the G20 will be able to print these SDR's."
This posting includes an audio/video/photo media file: Download Now |
| Market Snapshot - Reaction To Wen's Ultimatum Posted: 13 Sep 2011 04:11 PM PDT
An hour after Chinese Premier Wen Jiabao dropped all pretense of working together for the greater good, markets around the world are reacting more notably than many would have expected. With most talking heads still clinging to the line about 'helping the Europeans' and missing the quid-pro-quo of it all that we so clearly intimated from his speech, expectations of a risk-on 'we-are-all-saved' reaction have been dashed on a beach of the-trade-wars-have-begun. ES is -13pts from the day session close (and almost 20pts from intraday highs), having taken out intraday swing support levels around 1154.
The USD is rallying as EUR lost 1.37 and 1.3650 quite quickly and JPY crosses are falling - most notably KRWJPY, ZARJPY, NZDJPY, and AUDJPY for now.
Chart: Bloomberg
Risk-assets broadly are being sold as is evident by the significantly weak reaction from the risk-basket CONTEXT indicating further weakness in ES may be to come overnight (unless of course more rumors miraculously appear).
TSYs are rallying, 2s10s30s dropping, and as the USD strengthens so Oil (<$90), Copper (<$395), Gold (<$1840), and Silver (<$41) are all losing ground. All-in-all, not exactly what the doctor ordered but we are less than surprised by the gamesmanship given the world's placing of the Chinese on a pedestal.
UPDATE: Just for good measure, its not just the Western world selling off, in the reverse psychological reacharound that is a wholly un-decoupled world, KOSPI is down more than 3%
Chart: Bloomberg And a plethora of schizophrenic quotes abound from the Chinese, including but not limited to:
and finally this:
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| Gold Seeker Closing Report: Gold and Silver Gain While Dollar Drops Posted: 13 Sep 2011 04:00 PM PDT Gold reversed overnight gains and fell to as low as $1795.45 by a little after 4AM EST, but it then rallied back higher in London and New York and ended with a gain of 0.91%. Silver fell to as low as $40.023 by a little after 7AM, but it then climbed to as high as $41.181 by early afternoon in New York and ended with a gain of 2.42%.
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| Resort to SDRs for next bailouts will spur rush to gold, Rickards says Posted: 13 Sep 2011 03:31 PM PDT 11:32p ET Tuesday, September 11, 2011 Dear Friend of GATA and Gold: Geopolitical analyst James G. Rickards, who spoke at GATA's Gold Rush 2011 conference in London last month, tonight tells King World News that the major Western industrial powers are likely to start resorting to the "Special Drawing Rights" of the International Monetary Fund for the cash needed for the next round of bailouts. And when that happens, Rickards says, "the game really is over. It will be very transparent that we're just replacing one kind of paper money with another kind of paper money and that is going to accelerate the rush to gold." If Rickards says it, ordinarily it's a lock, but let's add one contigency. As long as prospective purchasers of gold are content to leave their metal in the custody of bullion banks like HSBC and J.P. MorganChase, forfeiting their metal to the Western central bank fractional-reserve gold banking system, where their metal is turned against them, then infinite amounts of imaginary gold, paper gold and gold derivatives, will be able to keep suppressing the gold price indefinitely. Russia has known this since at least 2004: China has known this since at least 2008 or 2009: http://www.gata.org/node/10380 http://www.gata.org/node/10416 Venezuela seems to have figured it out this year: http://www.gata.org/node/10281 http://www.gata.org/node/10286 And even Goldman Sachs, formerly a participant in the scheme, is now heavily hinting about it: http://www.gata.org/node/10408 But the Western financial news media resolutely refuse to get near the issue, though GATA has handed the documentation to many of their top journalists and has patiently explained it to some of them. (At least one such journalist was courteous enough to be a little apologetic in walking away from it the other day.) If the Western central banking system and its agents can keep creating paper gold as easily as they can create SDRs, Western financial journalism may have many more years of noting smugly, without expressing the slightest curiosity, that gold isn't keeping up with inflation. The conclusion will be a matter of the readiness of any of the Eastern powers to pull the plug on the scheme when they decide that they have adequately hedged their exposure to the currencies of the gold price-suppressing Western powers. An excerpt from the King World News interview with Rickards is headlined "Monetary System Will Go Gold Soon" and you can find it here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/14_Ji... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Lewis E. Lehrman on How to Solve the U.S. Debt Problem Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program. Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust. Lehrman says: Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust." To read more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata Join GATA here: Toronto Resource Investment Conference http://cambridgehouse.com/conference-details/toronto-resource-investment... The Silver Summit http://cambridgehouse.com/conference-details/the-silver-summit-2011/48 New Orleans Investment Conference http://www.neworleansconference.com/ Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: ADVERTISEMENT Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Company Press Release, October 27, 2010 VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include: -- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres. -- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres. -- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre. Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest." For the company's full press release, please visit: http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
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| Guest Post: The Coming Currency Crisis Posted: 13 Sep 2011 03:27 PM PDT Submitted by Bud Conrad of Casey Research, first published in the July 2006 International Speculator, and worth a reread for anyone who has not seen it previously. The Coming Currency Crisis Poor Ben Bernanke. The greatest financial train wreck in history is going to happen on his watch, and it will be mostly his predecessor's doing. But not the work of Alan Greenspan alone. The Washington elite and their compulsively clever counterparts around the world have set the US (and global) economy up for a currency crisis of gargantuan proportions. When? Soon. To explain why this seems inevitable and unavoidable, let's look at the data. First, there are the deficits. They're big, and they're three. Deficit 1 – The Government'sThe lamest deficit excuse, a story left over from the 20th century, is that government can use borrowed money to stimulate the economy. It can't. While it's true that government can spend borrowed money to encourage particular favored activities (the ones with the right political connections), the borrowing dampens the rest of the economy by depriving it of capital. What's worse is that the favored activities are usually of the wasteful, rat-hole variety: wars; regulatory agencies; fatter subsidies for uneconomic farming; more complex Medicare programs; and bigger budgets for public schools that don't teach and for colleges that teach whining. Meanwhile, commercial projects that add real wealth get cut off from the capital they need or have to bear the added costs that come from the government competing for investor funds. And so the government is left with more debt to pay and a smaller economy for its tax collectors to feed on. It's not rocket science. Arithmetic is the same for a government as for the guy driving a Mercedes on a Volkswagen budget: Spending more than you make, let alone more than you will likely ever make, leads to ruin. The only difference is that it takes governments longer to get there. And if we're not there yet, we are getting very close. The US government has run up a truly horrific debt of $8.2 trillion. That's $28,000 for every man, woman, and child in America. By itself, the debt would be a serious but not catastrophic problem for the economy. But unfortunately, it is not a stand-alone problem. It feeds other problems, including – among others – inflation. Debt and InflationJust how is the government's budget deficit inflationary? The answer is partly political and partly economic. The political part is simple. Government debt makes inflation attractive for politicians. Inflation is a slow-motion default – a default on the installment plan – that reduces the real burden of servicing the debt and leaves more resources for the politicians to play with. Inflation is especially attractive for them when the debt is owed to foreigners, who don't get a vote. Politicians bemoaning inflation, those responsible at any rate, cry on the outside while laughing on the inside. The economic part is more complex. Because the deficit handicaps all the industries that aren't being bottle-fed by government spending, much of the economy will tend to languish – which is a signal for the Federal Reserve to expand the money supply. It is the increase in the money supply that directly causes inflation. And there's a second chapter. The government finances its budget deficit by selling IOUs. In the case of the US, the IOUs are primarily short term, especially US Treasury bills. From an investor's point of view, the T-bills are an interest-earning substitute for cash. So a government deficit decreases the demand for dollars themselves – and that reduction becomes a second, independent source of price inflation. If the US were alone in the world, that would be the end of the story. All the T-bills (and T-bonds) would be sold to people in the US, so that the government deficit would be offset by private saving. The deficit would give the economy nothing worse than a low-grade fever – chronic but unspectacular inflation accompanied by a stunted growth rate. But the US isn't alone in the world, and it isn't just another country, so there is more to the story. It is the US's singular role in the world economy that will turn US deficits into global economic disaster. The world functions on a dollar standard and has done so since the end of World War II. The USD is accepted as cash in most countries. Many millions of foreigners rely on it as a second currency and use it as a store of value. And the US dollar is the world's de facto reserve currency: It is used by central banks to back their local currencies. The volume of dollars and dollar-denominated assets accumulated by foreigners during the reign of the dollar standard is staggering and without historical precedent. Any move away from the dollar would be… well, problematic. Deficit 2 – The Public'sAmericans used to be savers. Not any more. Chart 1 shows a stark picture. As recently as 1990, Americans on average saved about 7% of their income (which allowed them to buy up much of the debt the government was issuing). But the savings rate fell over the 15 years that followed, hitting zero in 2005. Unlike in China, where the average savings rate is said to be 20% (some unofficial reports have it as high as 40%), or even in some European countries where it is reported at 10%, the savings rate in America is now negative.
(Click on image to enlarge)
The debt Americans have been building up isn't just a number that sits on a balance sheet. And it isn't spread evenly through the population and through the economy. It is concentrated in one area, residential real estate. And it is concentrated in an unstable fashion – thanks to the government's efforts to stimulate the economy. After the equities boom faltered and the US economy showed signs of weakening in 2000-2001, the Fed started cutting interest rates and worked its way almost to zero. Americans borrowed and spent as never before. Anyone who didn't own a house borrowed to buy, increasingly with no money down or with interest-only loans. Those who already owned a house borrowed against it to buy furniture, cars, boats, yard-wide televisions, and trips to Hawaii. And the process didn't stop with just one round. Empowered by ultralow mortgage rates, people bid up the prices of existing houses, allowing their owners to draw even more spendable cash at the refinancing window – or to use their equity to bid on an even more expensive house, or even second and third homes, in the process taking on even bigger mortgage commitments and pushing home prices ever higher. So it's not just the US government that is in debt, but also individual Americans who have racked up $8.7 trillion in home mortgages (many with adjustable rates that are now rising) and $2.2 trillion in consumer credit ($36,333 per person). Bub-Bub-Bubbling AlongWe all know there's been a housing bubble. But with interest rates now rising – the Fed has hiked rates without a break in the last 16 FOMC meetings – what comes next? The housing boom is over. Prices have softened in many areas and in others prices are beginning to decline. The reason? Interest rates have risen to a point where mortgages no longer look like free money. The refinancing market, which is a good barometer of how high or how low rates "feel" to the public, shows this in emphatic fashion in Chart 2. Borrowers have gone on strike, and without borrowing, the best the US real estate market can do is to tread water.
(Click on image to enlarge) Yes, the housing boom is over, but the story of the housing boom isn't. The mortgage debt is still there, saying "FEED ME" every month. If interest rates keep going up… 1. Home buyers will cut back on what they are willing to pay, so prices will decline. 2. Homeowners will see their equity shrink and then disappear. Mortgage lenders will swallow huge losses as many home owners default. 3. Homeowners with adjustable-rate mortgages will be squeezed; and 3a. Many will be forced to sell, so prices will decline; and 3b. The rest will cut back on consumer spending in order to keep their houses and so will push the economy toward recession. The Federal Reserve has been letting interest rates rise because it is concerned about the prospect of inflation. But the unraveling of the real estate market, if interest rates keep rising from here, is so automatic, so ugly, and so obvious that the Federal Reserve must know what the consequences will be if they push rates much higher. The Fed might choose to tolerate a little more inflation rather than risk a deep recession. Too bad that's not the only decision they face. Deficit 3 – At the Water's EdgeThe US government is running a chronic deficit, going deeper and deeper into debt. The US public is running a deficit, going deeper and deeper into debt. So where is the credit coming from? The short answer is that it's coming from nearly everyone who isn't an American and isn't dirt poor. The longer answer is that the US has been able to tap into a river of foreign credit by virtue of the third deficit: the trade deficit. Foreigners, in the aggregate, sell about $2 billion per day more of goods and services to Americans than they buy from Americans. The Americans, in the aggregate, make up the difference by selling investments to foreigners, most conspicuously US Treasury bills. Chart 3 illustrates this two-way street and shows how rapidly the traffic has been growing.
(Click on image to enlarge) Why This Can't Go OnIf you have a very good credit rating, you may be carrying credit cards with limits of $10,000, $20,000, or perhaps much more. But however good you may look to lenders, there is a limit to how much they are willing to lend. And however good the US may have looked to lenders in the past, there always were limits to what it could borrow. The difference between then and now is that today the US is straining those limits. Two elements determine how far foreigners will go as lenders to the US. The first is akin to a credit test. The second is a portfolio consideration. It is becoming increasingly difficult for the US to satisfy either of them. Foreigners will accept T-bills and other dollar-denominated IOUs only so long as they believe US borrowers can make good on their debts. The concern is not primarily about explicit defaults. It is about the likelihood of a slow-motion default via inflation. It is a concern about the future value of the dollar. Confidence that the dollar will hold its value is strained with every increase in the US budget deficit (which increases the US government's incentive to inflate) and with every increase in the overall level of US debt to foreigners (which encourages the public's tolerance for inflation). It would take a phenomenally slow person, say, a central banker, to have much faith in Uncle Sam's good credit when the US can't pay its current bills by a very wide margin – and has trouble saying "no" to new spending plans. But even the faith of a central banker must have its limits. Perhaps the central bankers haven't yet seen Chart 4, showing the Government Accounting Office's latest projections of US federal government red ink. Based on straightforward assumptions that (i) regular income tax rates continue; (ii) the alternative minimum tax is adjusted; and (iii) discretionary spending grows with GDP, the projection for spending, and thus the budget deficit, flies off the map. By 2040, the yearly deficit grows from the current 3% of GDP to 40%!
(Click on image to enlarge) The second element in the calculations of foreign lenders is a portfolio consideration. Owning too much of anything is worrisome. So even if the risk of the dollar losing its value were modest (which it no longer is), as foreign holdings of dollar-denominated securities grow, the risk eventually becomes intolerable. Chart 5 shows foreign holdings of US investments. The numbers are enormous. Japan alone has bet over $1 trillion on the dollar's ability to hold its value. That's enough to breed uneasiness in any portfolio manager. And the numbers keep growing because the US keeps importing goods by the boatload and paying with dollar-denominated IOUs. The breaking point is getting closer at a rate of $2 billion per day.
(Click on image to enlarge) Relying on the Kindness of Foreigners… Who Hate Us?The great irony is that the US is counting on foreigners to invest $2 billion per day… at a time when we are not winning many hearts and minds abroad. The counterproductive and unwinnable war in Iraq is just the unhappiest part of the current picture. Among other reasons why hatred for Americans is rising are:
In short, the American global cop, far from harvesting the gratitude of a world made safer, is perceived as a hypocritical and plundering thug – hardly the sort of thing that makes foreigners line up to invest in America. US heavy-handedness abroad and the ill will it inspires are dangerous for many reasons, including their effect on the US dollar. War in Iraq and saber-rattling over Iran are driving the price of the oil and other imports up in the US, which increases the trade deficit, which adds to the pile of dollar-denominated IOUs held by foreigners. And the same belligerence confirms in many Middle-Eastern minds that the US is driven by an anti-Islamic agenda. It gives them a non-financial motive for embracing alternatives to the dollar: the euro, the yen – anything not made in the US. Other foreigners see the belligerence as more evidence that the US government is a reckless spender and heedless of the consequences of its growing debt. When the Drums StopThe foreigners who hold all those dollars are getting restless. Chart 6 below shows recent changes in foreign holdings of US Treasury securities. The pattern is shifting.
(Click on image to enlarge) It is striking that, in keeping with its official statements, Japan (the largest foreign holder of US Treasuries) has indeed begun lightening its load of American paper. This is not an "if" or a "maybe," but a real and very significant shift… happening now. Other changes are happening, not major dollar dumping yet, but rumbling. Look at the UK bar – it has more than made up for Japan's negative number in recent months. That's interesting in and of itself – why the UK? The UK, like Luxembourg and the Cayman Islands, two other major sources of US debt buying, is a financial way station for international transactions – particularly from the Middle East. We suspect that the spike in UK purchases reflects a desire by investors in the Middle East to avoid dealing directly with the US – Arabs with a lot of oil money who don't want their US-based assets exposed to rising anti-Muslim sentiment, for example – but who are not yet ready to dump the dollar altogether. It's an important sign. It indicates a shift in the attitude of the most sophisticated elements of the Muslim world away from thinking of the US as a financial safe haven. And there's more. Consider this statement from Mr. Yu Yongding, an official of the People's Bank of China: Regarding the need for China to reduce its holdings of US dollar reserves: Firstly, in the first stage we must reduce accumulation, then later we should reduce our reserves… [China and Asian countries] don't need that large an amount, more than $2 trillion, of foreign exchange reserves… Then, all East Asian countries have tremendous foreign exchange reserves and they all want to get rid of them, but if you do this then you cause competitive devaluation, not of their own currencies, but of the US dollar. So we should do this in an orderly fashion. If Asian countries moved too fast, everyone would lose… It would be utterly unfortunate if Japan sells a proportion [of their reserves] that causes problems. Then China panics and China sells a proportion – it would be very damaging. Mr. Yu articulates the anxiety shared by other central banks: a desire to unload excess, overvalued dollars that is checked by the fear of triggering a cascading fall in the dollar. They won't tolerate life in this box forever. All it will take is for one central bank's governing body to get spooked, to decide that it had better get out of the dollar before everyone else does. The stampede will be unstoppable, and the dollar's foreign exchange value will tumble. Where will all that money go? The euro? The yuan? The ruble? The one thing that seems certain to us is that a significant fraction will go into gold, not only as an investment but as a means of wealth protection. Just a few days ago, Mr. Yu was quoted in the press saying: "We need to use some of the reserves to buy other assets such as gold and strategic resources such as oil." We don't know which central bank will be the first to tiptoe toward the exit or when it will try. The process may already have begun. But we do know that important changes are already taking place among US trading partners. The US government's daydream of spending its way to prosperity may not last the year. The End of the Dollar StandardCentral banks won't be the only players. The millions of people around the world who use the dollar as their second currency will join in. And for most of them, "the dollar" doesn't mean Treasury bills, it means $20 bills, $50 bills, and $100 bills. The collapse in the foreign-exchange value of the dollar sparked by foreign central banks unloading their excess holdings will undermine everyone's confidence in the dollar's usefulness as a store of value. Private foreign investors will flee the dollar, further reducing its foreign-exchange value. And most of that privately held cash will flow back to the US as more fuel for price inflation. The dollar standard will be dead. The consequences will be of historic proportions. How "historic"? As you can see in Chart 7, if the world's central banks backed their currencies with gold, it would send the price up (in current dollar equivalents) to many thousands of dollars per ounce – easily $5,000 or more. |
| Posted: 13 Sep 2011 03:19 PM PDT Dear Mr. Sinclair, You are the shepherd of thousands of CIGA's. My compliments for that. You have my deepest respect. What do you think of the following post? If you find it interesting feel free to share it with our other CIGA.s. Kind regards, CIGA Willem Weytjens www.profitimes.com Gold 1980: "Deja Vu"? Have you Continue reading Jim's Mailbox
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| Gold Price Closed Today at $1,826.80 up $16.90 or 0.9% Posted: 13 Sep 2011 02:56 PM PDT Gold Price Close Today : 1,826.80 Change : 16.90 or 0.9% Silver Price Close Today : 41.12 Change : .96 or 2.3% Platinum Price Close Today : 1,813.50 Change : 4.10 or 0.2% Palladium Price Close Today : 727.00 Change : 16.75 or 2.3% Gold Silver Ratio Today : 44.43 Change : -0.64 or 0.99% Dow Industrial : 11,105.85 Change : 44.73 or 0.4% US Dollar Index : 77.11 Change : -0.04 or -0.1% Important Note: Franklin Sanders is on vacation until the 19th of September. Franklin's parting commentary can be viewed here : http://silver-and-gold-prices.goldprice.org/2011/09/gold-and-silver-prices-today-proved.html 
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| Poverty In America: A Special Report Posted: 13 Sep 2011 02:04 PM PDT from The Economic Collapse Blog:
Read More @ TheEconomicCollapseBlog.com
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| Posted: 13 Sep 2011 02:00 PM PDT by Turd Ferguson, TFMetalsReport.com:
Take a look at this hourly chart: Read More @ TFMetalsReport.com
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| Posted: 13 Sep 2011 01:40 PM PDT By BrotherJohnF Filed under: austerity measures, BrotherJohnF, china china, commodity futures contracts, commodity futures trading, commodity trades, Corrupt government, Economic crisis, European banks, european market turmoil, federal reserve chairman ben bernanke, federal reserve system, fiat currency, gold bullion, gold currency, gold price, Gold price manipulation, market crash, price of gold, Recession, SEC Chairwoman, Silver coins, [...] 
This posting includes an audio/video/photo media file: Download Now |
| Gold and Silver Withstand Continual Attacks / Greece Default Imminent Posted: 13 Sep 2011 01:32 PM PDT by Harvey Organ: Good evening Ladies and Gentlemen: Gold closed today up by $16.90 to $1826.80. Silver had an even better day climbing by $1.13 to $41.29. The bankers showed up at the usual time knocking gold and silver down but like an Duracell battery it refused to buckle under as gold/silver reversed course to end up at its zenith today. Let us head over to the comex and see some strange developments. The total gold comex open interest fell by only 1087 contracts with a reading tonight of 517,071. I promised you yesterday that very few leaves will fall and certainly with a drop of $46.00 in gold yesterday one would have expected many speculators to pitch their long contracts. This did not happen as the OI dropped marginally to 517,071 from 518,158. The options expiry month of September saw its OI rise from 256 to 292 for a gain of 36 contracts. Generally one would expect the OI to contract to nothing as we near the expiration of those options exercised for metal. Mysteriously we are seeing the opposite effect as the OI is rising. Thus the bankers are raiding the comex inventory for badly needed inventory, probably in the physical gold/silver starved region of London, England. Read More @ HarveyOrgan.Blogspot.com
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| Posted: 13 Sep 2011 11:05 AM PDT Have you ever experienced a 'Deja Vu' feeling? Well, if you have never experienced one, maybe after reading this post you will. Read More...
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| “Europe In State Of Financial Collapse” Posted: 13 Sep 2011 11:01 AM PDT from ZeroHedge:
In a moment of clarity, Tiger's Julian Robertson educates the money-honey on just how bad things are. Robertson started by trumpeting how bad macro is everywhere, moved on to Europe being in a 'state of financial collapse', likes shorting weak European currencies (Hungarian Forint) and warns of the possibility of a rapid rise in interest rates in the US. He is positive on NOK, thinks Canada is a 'very well run country', is a buyer of US large cap tech (citing GOOG and AAPL specifically), and sees Visa/Mastercard growing at 20%+ per year for some time. The full interview is embedded below, and while some is group-think, he is very clear on where he sees risk and return potential in the world.
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| Posted: 13 Sep 2011 10:24 AM PDT Unlike a lot of analysts I am not a jack-of-all-trades. I focus on the two major stocks indexes, the Dow and the S&P, and I focus on gold. I follow silver, commodities, bonds and currencies but only as they relate ... Read More...
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| Posted: 13 Sep 2011 10:04 AM PDT Have you ever experienced a “Deja Vu” feeling? Well, if you have never experienced one, maybe after reading this post you will. Let’s start with a technical chart of Gold. These days, gold is holding up strongly, and is only $80 below its all-time high. If this continues, we might consolidate for a couple of weeks, to work off the overbought condition of the MACD indicator. chart: Prorealtime Now have a look at the following chart: chart: Prorealtime The chart above is the gold price in 1970, right before it more than doubled 2 months later. Don’t they look very similar? To show you, I will now place one chart on top of the other one: chart: Prorealtime Well, since Gold is acting very much like in the seventies, let’s see what happened after… Based on this chart, Gold could consolidate until mid-late October, and then Double again in the weeks/months following. As of late, the shares of mining companies have been lagging...
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| Social Security’s Accelerated Demise Posted: 13 Sep 2011 09:50 AM PDT Dave Gonigam – September 13, 2011
Whatever the case, we're hearing a lot of carping these days about Social Security. To wit, you'll need these two basic assertions to get a grip on today's episode of The 5…
Let's begin.
By itself, that looks like an unsustainable trend. But the actual number of workers supporting each recipient is even lower — 1.75. CNS News, a conservative website, broke down the Labor Department data to exclude government workers from the ratio. Makes sense: Government workers draw their paychecks, ultimately, from the revenue taken in taxes from private-sector workers. Thus, if you exclude the 18.1 million full-time government workers, that leaves 111.7 million full-time private-sector workers supporting 53.4 million Social Security recipients. That's a ratio of 1 3/4 workers to 1 collector of benefits.
By a circuitous route, Patrick points us to a new National Review Online piece by Stanley Kurtz — who takes note of a pivotal 1995 article by Robert Shapiro, then serving as an aide to Bill Clinton, warning the Democratic Leadership Council about the long-term effects of Social Security spending. "Shapiro's 1995 article," Kurtz says, "complains that Social Security, as currently structured, is crowding out funding for young children, who suffer poverty at twice the rates of the elderly. Shapiro … calls on Americans to 'end our long collective silence about the character and problems of Social Security.'" "The first section heading in Shapiro's piece reads 'National Ponzi Scheme.' There, Shapiro recalls [Paul] Samuelson's 1967 Ponzi comparison and suggests that, given today's demographics, Social Security is 'fiscally unsustainable' without major restructuring." Even Paul Samuelson, author of the iconic textbook that's misled generations of economics students, called Social Security a Ponzi scheme — 44 years ago.
"If the current promises to retired people are to be kept," wrote Patrick earlier this summer, "far more resources must be transferred to older people, who are going to live significantly longer. "Even a relatively small one-time increase in life spans, such as a year, would be catastrophic to the budget. In fact, I think the increase will be a lot more than a single year." "A lot more." The companies leading the way in these biotech breakthroughs, we suspect, will create vast new fortunes for early investors. To say Patrick is enthusiastic by recent developments would be an understatement, as any attendee to Vancouver this year can attest.
For now, the idea is to put it to work in hospitals first. "Hospitals today are stuck using an obsolete glucose monitoring technology," says Patrick. "Nurses manually take blood samples, wasting hours of their time and resources every day. A needle-free technology that would wirelessly inform hospital staff of patients' blood sugars is desperately needed." Once proven in hospitals, the technology could be rolled out to diabetes patients for everyday use. No more needles and swabs. It won't take long for this idea to play out: "Clinical studies for devices are usually much quicker than drug trials," says Patrick, "which can run years before side effects can be ruled out."
It goes by the name "glycoscience." Now a tiny company that essentially "owns the field," in Patrick's words, is joining forces with the University of Michigan for a research project that could one day knock out most cancers. Here's what scientists understand so far: Complex carbohydrates — think whole grains, fruits and vegetables — contain compounds that that hold the potential to shield your cells from cancer. What they're setting out to accomplish now is this: transforming those complex carbohydrates into a drug that can not only protect your cells from cancer, but knock out cells that have already turned cancerous. "It's difficult for me to envision a path," says Patrick, "wherein this technology does not come to play a major role in most cancer treatments. I truly hope that you don't wait to invest in this technology until after it begins."
"It is nearly unbelievable," Mr. Cox says, "that a natural alkaloid found in tomatoes, tobacco and bell peppers is better at controlling chronic inflammation than Celebrex, Voltarol, ibuprofen or aspirin." But that's what research from Florida's Roskamp Institute turns up. The alkaloid Patrick refers to suppresses inflammation nearly three times as well as aspirin, and nearly four times as well as Celebrex. And because inflammation is behind most of the diseases of aging, this same substance — on sale now — has the potential to forestall the onset of those diseases. Cancer, heart disease, autoimmune disorders… the list is nearly endless. No wonder Patrick calls this "the last stock you'll ever need." You might call it a "cornerstone" stock. It's what you buy when it's just a radar blip. Then you forget about it… while it grows and matures into a huge wealth engine. Apple, for example. Yahoo. Cisco. Market history is littered with stocks that — with a little patience — could've turned just pennies on the dollar into huge fortunes. The problem is true opportunities for "cornerstone" stocks don't come around very often. When they do, you have to pounce. Not only could this be "the last stock you ever need," it could be a "cornerstone" to a decades-long run of massive portfolio growth for you… a true portfolio-saver if ever there was one. Pie in the sky… especially in this market? No. In this market, it just means you can get in for even fewer pennies on the dollar compared with your long-term potential. Patrick's presentation is available for your review from now through midnight tomorrow. So they is not much time remaining to let him make the case. Begin here:
There was talk yesterday the Chinese would step forward to buy Italian bonds. But for now, it's just talk, and an Italian bond auction today got a lukewarm response. Still, the major European indexes all closed up 1.5-2%.
The broad CRB index, after bottoming at 316 on Aug. 9, sits at 334 today. That's the key level our resource trader Alan Knuckman eyes, because it's the halfway point between the 2008 highs and the 2009 lows.
The International Sugar Organization forecasts persistent prices between 23-28 cents a pound as China and Indonesia step up their imports and draw down a global surplus. Like most commodities, sugar took a hit in early August, but has recovered smartly since:  A 5-cent move might not seem like much… but for readers of Alan Knuckman's Resource Trader Alert, it's made summertime extra sweet. After recommending a position in early June, he urged readers to sell half for a 100% gain two weeks later. Today, they were filled on the rest of the position for a total gain of 364%. Just goes to show… Alan's approach can make you money no matter what's going on in Congress or at the Fed. You can be on board for his next trade by following this link:
 After a casual Internet search, we've determined this picture dates to October 2009. Presumably, the little girl has given up her pacifier, and maybe even her dollhouse… but her debt has ballooned to $47,145, according to the U.S. National Debt Clock website. Ouch… 23% in two years.
"It's the old 'got you coming and going' scheme." The 5: "At the end of the day," Lifetime Income Report's Jim Nelson wrote to readers last Friday, "isn't this exactly why programs like Social Security are failing? Why are we only accelerating their demise? Maybe that's the plan all along…"
"If my monthly stipend from Social Security disappeared, my nest egg would also disappear very quickly." "So tell everyone to get off the 'cut Social Security bandwagon.' There are those of us out there who have paid our dues and still need the government support we paid for. Where did we go wrong? I was a Certified Financial Planner the last five years of my working life and did everything I could to keep me and my clients' portfolios 'up.'" "Yes, I made a mistake — and have paid for it. But for my personal life — I began working in 1963 and paid the max into Social Security every year. And yes, I invested every year. But it didn't turn out well. So why should I not expect the government to support me in response to the money I paid them for over for over 40 years?" The 5: It's not about what's fair, it's about what's reality. And the reality is the money's been spent. The money you put into the "trust fund"? As our friend David Walker quips, "You can't trust it, and it isn't funded." Congress has raided the trust fund every year for more than 40 years to pay its other bills.
"As animal shelters were opened at county fairgrounds (with sizeable ready-to-go stables and similar setups) and volunteers were pouring in from all over Texas — at their own expense, mind you — FEMA rolled in, ordered them to leave, to get out of the way because, of course, 'We're from the government, we're here to help.'" "The excuse given by FEMA was that the 'local governments hadn't requested their help.'" "No! They didn't!" "Local officials were too busy trying to save lives, house those whose homes went up in flames or evacuate those who were potentially in harm's way, not to mention trying to find enough water sources to fight fires! And in Texas, offering one's help to friends without asking first is still considered an acceptable social convention." "In the meantime, the fires continued to be fanned by winds off of a tropical storm, and when the firefighters were forced to pull back, they took off." "Fortunately for Texans, used to taking care of ourselves, most of the self-paid volunteers stayed nearby, and when a civilian group literally ordered FEMA to get the h*** out of the way, the volunteers went to work, many of the fires were stabilized, people and animal shelters were manned (volunteers) pretty quickly, and while the situation is still dangerous, it got a lot less so once the government got out of the way." "How many billions are devoted to FEMA cruises, high-end hotel rooms for their red-tape jockeys and who knows what else? Lots. They had one of those going on as a workshop on how to deal with things like Texas Task Force 1 who step in to actually DO something. Texas burns while FEMA cruises and fiddles." "By the way, my business partner's son is a master's degree full-time student and volunteer firefighter. According to him, FEMA was their biggest impediment on one 150-acre fire. Once FEMA got out of the way, they had the fire tapped out in a few hours." "Too bad, it could have been kept to less than 15 acres had the extra volunteers been allowed to join in early on." The 5: Amen. Cheers, Dave Gonigam P.S. "I couldn't do this six months ago," said Patrick Cox as he raised his right arm above his head before the crowd during our Symposium in Vancouver last July. "I couldn't lift something from a shelf; I couldn't hug my daughter with my right arm." Doctors said surgery was the only solution. Then he started taking the "nutraceutical" he's so enthusiastic about. It's been available to the public for two weeks now… and early returns for its maker are more than promising. But it's nothing compared with what the firm's CEO has planned next. You can learn about it right here… but only through midnight tomorrow.
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| Amid Market Turmoil, Gold Stocks Find Heavy Accumulation Posted: 13 Sep 2011 09:36 AM PDT The collapse of 2008 remains fresh in mind. And yes, while collapse is the most overused word in the financial markets (next to bubble), 2008 was indeed a collapse for everything. Our beloved gold stock sector plunged roughly 70% in only three months. This collapse hangs in the back of the psyche each time global trouble intensifies and the gold stocks selloff. In the last week or so I’ve received many emails from subscribers who are worried about a Euro crash and a potential repeat of 2008. Let me explain why there is absolutely no need to worry if you own the gold stocks. First, crashes and big declines don’t happen frequently. The fact is, a crash and recession pave the way for a new advance and recovery. There has to be a long buildup of new excesses before the next major decline. Sure markets can correct 20-30% but after a big bust there is much flat-lining. For example, Japan’s economic growth for much of the past 20 years has flat-lined. We’...
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| Posted: 13 Sep 2011 09:32 AM PDT STOCK MARKET REPORT September 13, 2011 "People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome." --- George Orwell Unlike a lot of analysts I am not a jack-of-all-trades. I focus on the two major stocks indexes, the Dow and the S & P, and I focus on gold. I follow silver, commodities, bonds and currencies but only as they relate or influence these two stock indexes and gold. That's it, and it's more than enough to keep me busy and up late into the night. In particular I think the stock market is shaping up for a very long and cold winter. The media continues to hype stocks claiming that they're cheap and earnings are great. In reality that is a half-truth due to the fact a number of companies are allowed to grossly inflate the value of bad assets kept on their books and they are cutting expenses (jobs) to the bone. Even with the unfair advantage of balance ...
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| SP500 Relative to Europe is Raising Red Flags for Bulls Posted: 13 Sep 2011 09:23 AM PDT The charts of the U.S. and Germany align well with our concerns relative to a possible deflationary signal given by the U.S. Dollar Index last week. As mentioned in our recent look at the U.S. dollar, we continue to watch the ... Read More...
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| Tiger's Robertson "Europe In State Of Financial Collapse" Posted: 13 Sep 2011 09:10 AM PDT In a moment of clarity, Tiger's Julian Robertson educates the money-honey on just how bad things are. Robertson started by trumpeting how bad macro is everywhere, moved on to Europe being in a 'state of financial collapse', likes shorting weak European currencies (Hungarian Forint) and warns of the possibility of a rapid rise in interest rates in the US. He is positive on NOK, thinks Canada is a 'very well run country', is a buyer of US large cap tech (citing GOOG and AAPL specifically), and sees Visa/Mastercard growing at 20%+ per year for some time. The full interview is embedded below, and while some is group-think, he is very clear on where he sees risk and return potential in the world. Bad (from Bloomberg):
Neutral:
Good:
And for those looking to participate in Julian's FX trade views - here is HUFNOK:
Chart: BBG
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| Tiger's Robertson "Europe In State Of Financial Collapse" Posted: 13 Sep 2011 09:10 AM PDT
In a moment of clarity, Tiger's Julian Robertson educates the money-honey on just how bad things are. Robertson started by trumpeting how bad macro is everywhere, moved on to Europe being in a 'state of financial collapse', likes shorting weak European currencies (Hungarian Forint) and warns of the possibility of a rapid rise in interest rates in the US. He is positive on NOK, thinks Canada is a 'very well run country', is a buyer of US large cap tech (citing GOOG and AAPL specifically), and sees Visa/Mastercard growing at 20%+ per year for some time. The full interview is embedded below, and while some is group-think, he is very clear on where he sees risk and return potential in the world. Bad:
Neutral:
Good:
And for those looking to participate in Julian's FX trade views - here is HUFNOK:
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| Posted: 13 Sep 2011 08:55 AM PDT While two weeks ago the notable feature in the NYSE short interest update was that it had grown by a whopping 1 billion shares, or the most in over two years, this week's highlighted feature is that in the second half of August evil "speculators" did not relent in their negative bias, and brought the total NYSE Group short interest to a two year high or 14.9 billion shares, a 484 million share increase from the prior week, and the highest since July 2009 when the market still was unaware that central planning was the name of the game, and being short actually meant taking on the Chief Printing Officer head on (and fewer still realized that being long gold was the only effective way to "fight the Fed"). And just like last week when we speculated that we can "expect some even more furious short covering sprees to send the S&P much higher on an intraday basis" courtesy of this massive short interest overhang (which will without doubt be used by stock custodians to create a rally if and when needed, just like back in March of 2009, by making recalling shorts in every name), the probability of a massive "face off" rally grows as more and more join the ranks of those believing that the US capital market still plays by the rules. Newsflash: it does not. And anyone trading stocks, on either the long or short side, is guaranteed to lose.
And as an added bonus, we have added the short interest in Bank Of America. Doomed company and stock? Absolutely. But is it overdue for another massive ripfest before it's lights out. Guaranteed!
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| U.S. Economy Won?t Collapse Any Time Soon ? Here?s 5 Reasons Why Posted: 13 Sep 2011 08:50 AM PDT A*good way to think about*our country’s*economy*is to think of the U.S. like a boxer. We were knocked flat on our back in 2008 and have since struggled to one knee but have never got back to our feet. [As such,]*those conversations that imply we might be on the verge of falling down again are rather pointless…With this much slack in the economy, it's unlikely that any economic downturn from here will be substantial. Does that mean I think the U.S. economy can't contract from here? No, but I would be very surprised if we were to experience another blow similar to the 2008 recession where real GDP fell 5%. [Let me explain.] Words: 538 So says Cullen Roche ([url]www.pragcap.com[/url])**in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([* ]), abridged (…) and*reformatted*below**for the sake of clarity and brevity to ensure a fast and easy read. The author's views and conclusions are unaltered and no personal comment...
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| Gold Daily and Silver Weekly Charts Posted: 13 Sep 2011 08:44 AM PDT |
| Posted: 13 Sep 2011 08:42 AM PDT Synopsis: Speculation is rife surrounding the Federal Reserve's upcoming meeting. Doug Hornig adds his thoughts to the mix… and in the process points out that the one thing that should be done, almost certainly won't. Dear Reader, I'll keep the intro short today, but I want to remind everyone of our free online event tomorrow, The American Debt Crisis. I've been waiting for the event for so long that it even snuck up on me. From our team, Doug Casey, David Galland, Olivier Garret, Bud Conrad, and Terry Coxon will be speaking. They'll be joined by guests Michael Maloney, John Mauldin, and Lew Rockwell. If you haven't already signed up, now is the time to do so at the link above. Next, Doug Hornig will give us his take on Bernanke's next possible move. There are a few options on the table and none of them spell good news for us.
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| Posted: 13 Sep 2011 08:40 AM PDT This post, in and of itself, should demonstrate to the entire Sell Side of Wall Street, the MSM/pop media outlets and all who may follow them that BoomBustBlog forensic research and analysis is simply superior to much of what is significantly overpaid for in terms of investment advice and opinion. Even more, what's ironic is that as I type this, the ZeroHedge newsticker flashes "Because The First Amendment Does Not Reach Across The Atlantic..." The idiocy just hit record highs:
What next: the AMF dispatches black choppers to round up all those trop-beaucoup criminal bloggers? Hmmm... Speaking of bloggers... Well, I don't consider myself to be the average blogger with a wordpress account. I come to the table with a full place setting of analytics. For those who don't embrace this new medium of dynamic, chaos theory embracing, distributed method of knowledge dissemination, all I can say is... Let's dance! Bloomberg reports: BNP Paribas, SocGen Rebound After Rejecting Money-Market Funding Concerns and Company Bond Risk Falls From Two-Year High as French Banks Reject Concerns
BNP Paribas SA, France's biggest bank, and Societe Generale (GLE)SA rebounded in Paris trading after rejecting concerns over their access to funding. BNP Paribas, which plunged as much as 12 percent, closed 7.2 percent higher, the biggest gain in more than a year. Societe Generale, which slid as much 8.1 percent, jumped almost 15 percent after Chief Executive Officer Frederic Oudea said in an interview with Bloomberg Television in New York that the bank's exposure to European sovereign debt was "manageable" and that it could do without access to U.S. money-market funds. "For our bank, the exposure to sovereign debt is low, absolutely manageable," Oudea said. "We have plenty of buffers of liquidity and we are adjusting to the reduction in the money- market fund exposure." The two banks dropped more than 10 percent yesterday on a possible ratings cut by Moody's Investors Service because of their holdings in Greece. French lenders top the list of Greek creditors with $56.7 billion in overall exposure to private and public debt, according to a June report by the Basel, Switzerland-based Bank for International Settlements. Repeat quote, " Chief Executive Officer Frederic Oudea said in an interview with Bloomberg Television in New York that the bank's exposure to European sovereign debt was "manageable" and that it could do without access to U.S. money-market funds."For our bank, the exposure to sovereign debt is low, absolutely manageable," Oudea said. "We have plenty of buffers of liquidity and we are adjusting to the reduction in the money- market fund exposure."" Okay, let's dance! Keep in mind as you read the balance of this post and the inevitable attempt at trying to disparage my opinion, I am the very same guy that publcily and quite accurately predicted (in detail) the:
Bear Stearns/Lehman Deja vu?Yesterday, in my post 'As The French Bank Runs....", I queried of the sell side, "What the hell took you so long to come to these rather astute observations, dude?" Well, in continuing my crusade of truth against the potential insolvency of French banks, I reference the WSJ article titlled "BNP Paribas Denies Funding Problem" PARIS—BNP Paribas SA on Tuesday denied it is facing a dollar-liquidity problem, as reported in an opinion column in The Wall Street Journal. BNP Paribas said it is fully able to obtain U.S. dollar funding in the "normal course of business," either directly or through swaps. In a column published in The Wall Street Journal Tuesday, Nicolas Lecaussin, director of development at France's Institute for Economic and Fiscal Research, cited an unidentified BNP executive saying the bank "can no longer borrow dollars." A Wall Street Journal representative wasn't immediately available to comment. BNP Paribas said its has abundant euro short-term funding and has a net dollar short-term funding with maturity shorter than a year worth €60 billion. The bank has €135 billion in "unencumbered assets after haircuts" that are eligible to central banks. The bank also said it is using foreign-exchange swaps to more than offset the recent reduction and "shortening" of funding from U.S. money market funds. French banks, in particular BNP Paribas and Société Générale SA, have been hurt by a perception that they face difficulties in tapping short-term funding in the U.S., as money-market funds cut their exposure to the banks amid fears about potential contagion from the Greek and broader European sovereign debt crisis. Shares of BNP Paribas were down 8.3% at €23.97 recently, the biggest loser on the Paris stock exchange, where the benchmark index was down 1.8%. SocGen was down 3%." Hey, Big Wall Street Bank Execs Always Tell the Truth When They're in Trouble, RIIIIGHT???? Here's more of Alan Schwartz lying on TV in March of 2008 Like I said above, it's not as if upper management of these Wall Street banks would ever mislead us, RIGHT???? Erin Callan, CFO of Lehman Brothers Lying giving an interview on TV in March andagain in June of 2008. Even if the big Wall Street banks would lie to us, we have expert analysts at hot shot, white shoe firms such as Goldman Sachs, who of course not only are "Doing God's Work" but also happen to be the smartest of the smart and the "bestest" of the best, RIIIGHT!!!??? Below we have both Erin from Lehman AND Goldman lyingon TV in a single screen shot. Ain't a picture worth a thousand words???
We even had the inscrutable Meredith Whitney say "To suggest that Lehman Brothers is going out of business is a real stretch!" (She OBVIOUSLY DOESN'T READ THE BOOMBUST) as well as Erin Callan, the CFO of this big Wall Street bank on TV lying interviewing again... But that damn blogger guy Reggie Middleton put his "put parade"short combo on Lehman right about that time, and had all of these additional negative things to say... Lehman stock, rumors and anti-rumors that support the rumors Friday, March 28th, 2008 It appears that I should have dug deeper into Lehman! So, does BNP have a funding problem, or is it at risk of the same?BoomBustBlog subscribers know full well the answer to this question. I'm also going to be unusually generous this morning being that our prime French bank run candidate has approached my "crisis" scenario valuation band. So, as to answer the question as to BNP, let's reference The WSJ article excerpted above quotes BNP management as saying: "The bank has €135 billion in "unencumbered assets after haircuts" that are eligible to central banks." OK, I'll bite. Excactly how did BNP get to this €135 billion figure? Was it by using Lehman math? Methinks so, as clearly delineated in my resarch report on the very first page:
The following two pages of this report go on to reveal the games being played to potentially come up with a figure such as the 135 billion quoted above. Boys and girls, I |
America is getting poorer. The U.S. government has just released a bunch of new statistics about poverty in America, and once again this year the news is not good. According to a special report from the U.S. Census Bureau, 46.2 million Americans are now living in poverty. The number of those living in poverty in America has grown by 2.6 million in just the last 12 months, and that is the 
I don't know about you but ole Turd had a good day. It looked a little dicey at 7:00 am but the PMs ended up with some stellar performance. Anyone willing to trust in The Turd this morning is already up quite a bit of fiat. That makes me smile. But today is in the books and all that matters now is tomorrow and the next day and the next day…Where do we go from here? Let's start with gold as the chart is quite compelling.
Maybe it's the campaign season. Maybe it's the president's promise to cut payroll taxes even as Social Security nears insolvency. Or maybe it's just the 
There were 42 workers supporting each Social Security recipient at the end of World War II. Today, there are only three.
"Policy wonks on both sides of the aisle," Patrick writes, "have known about the unsustainability of Social Security for a long time."
Social Security has been a terminal patient… for a long time. Now "recent biotech breakthroughs," Patrick Cox goes on," are in the process of radically increasing healthy life spans. This makes the Social Security model even less viable."
Imagine diabetics being able to monitor their blood sugar without drawing blood. That's the promise of a new device that's now under clinical tests.
"The science of carbohydrates as drugs," says Patrick," pivoting to another mind-bending concept, "is practically brand-new."
Meanwhile, Patrick sees only good things for the company whose promising "nutraceutical" has been on the market for two weeks now.
Unlike yesterday, European markets are shrugging off the latest scare from the PIIGS countries.
The euro itself is up slightly, to $1.369. Thus, the dollar index, weighted 57% to the euro, is down slightly — hanging on to 77 by a thread.
U.S. stocks are flat today, after yesterday's big move down that turned into a big move up by the close. For the moment, the Dow remains above 11,000.
Gold, after taking another beating yesterday — but never falling below $1,800 — is recovering to $1,827. Silver is up to $40.83.
The commodity complex is holding its own of late, despite the overall downdraft in stocks.
Sugar prices remain near recent highs of 30 cents a pound — far above the 10-year average of 13 cents.
We don't usually pass along chain emails… but the photo in this one that hit our inbox today got our attention:
"Regarding the comment about reduced withholding for Social Security," a reader writes in reply to another reader, "I smell two rats:
"Although I have a modest nest egg," adds another, "most of my monthly 'income' comes from Social Security. I have been retired for over 16 years. And yes, I paid in the max over my 40 years of work. When I say that I don't want Social Security 'cut,' it's very, very personal."
"FEMA rolled into several smallish towns in Texas last week while the wildfires were raging," says a reader account of the Texas wildfires we were discussing last week, "but being fought by volunteer firemen from local, nearby and even faraway towns.
Bank Run Liquidity Candidate Forensic Opinion
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