saveyourassetsfirst3 |
- Recommendations - Fighting humidity/moisture in a safe
- 3 ETFs To Watch This Week: IYZ, SMH, XLV
- Funds Will Pile into Gold after Missing the Rally
- Top Three 'Penny-Land' Biotech Stock Picks
- Gold Touches Six-Week High as Technicals “Turning More Bullish”, Banking Sector Negotiators “Hopeful” for Agreement on Greek Debt
- Currency Wars - Iran Banned From Trading Gold and Silver
- Intervention in Libya was largely about gold, Rickards tells Future Money Trends
- Bob Chapman - If Ron Paul is not Elected kiss it goodbye
- One secret document was responsible for China's economic revolution
- End 2012 – Neo-protectionism establishes itself as the new paradigm of world trade
- A huge rally could be starting where you least expect it
- Gold and silver prices regaining altitude on stimulus rumours
- Gold Up 7.1% This Year- So Far
- Silver bulls' confidence growing
- Gold & Silver Market Morning, January 23, 2012
- India Imposes a 2% Import Tax on Gold
- Fin 2012 - Le néo-protectionnisme s’impose comme le nouveau paradigme du commerce mondial
- Silver’s Surge
- Gold Manipulation Series (19 parts)
- Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”
- Survivor Bias and TBTF Tyranny
- Why Isnt Illinois A Bigger Story Than Greece?
- Gingrich calls for new Gold Commission
- Jan 22, 1980 : The day the Gold Bull market stopped
- Talk of Recovery is Orwellian in its Deception.
- Japans Finest Hour
- Exposing Silver Mythology, Part I
- How a Deficit in Capitalism Helped Engender the Financial Crisis
- How Australia’s Terms of Trade is Riding the Dragon
- If The U.S. Government Keeps Spending Money Like This We Are Doomed And If The U.S. Government Stops Spending Money Like This We Are Doomed
| Recommendations - Fighting humidity/moisture in a safe Posted: 23 Jan 2012 04:49 AM PST Anyone have any recommendations for keeping the humidity down in a safe? I imagine the best way is to have the safe itself in a controlled environment, but for now that is not an option for me. I've been looking at something as simple as silica gel packets (can get expensive over time) to mini-dehumidifiers that you either plug in (where I'm leaning now) or bake in the oven (seems costly to occupy the oven for 2+ hours) to "renew" them. Anyone have person experience or advice they can give? Thanks in advance, Jerry | ||||||||||||||||||||
| 3 ETFs To Watch This Week: IYZ, SMH, XLV Posted: 23 Jan 2012 04:02 AM PST By Jarred Cummans: This week will watch earnings season continue in full stride as a number of bellwether firms are set to announce their most recent fiscal quarter's statements. Last week saw some mixed results, with companies like Citigroup (C) and Google (GOOG) missing, while others like Wells Fargo (WFC), IBM, and Intel (INTC) were able to lift markets. In fact, the S&P 500 was able to break through the 1,300 barrier for the first time since August of last year, sparking some much needed investor confidence. Many are also happy to see the focus come off Europe for a while and keep the U.S. in headlines, especially because our last few profitable earnings seasons have been largely overshadowed by international affairs. With the coming week packed full of data, we outline three ETFs to keep an eye on as big earnings are released [see also Earnings Spotlight: Freeport McMoRan Copper & Gold Complete Story » | ||||||||||||||||||||
| Funds Will Pile into Gold after Missing the Rally Posted: 23 Jan 2012 03:45 AM PST Expect a year of sovereign defaults. | ||||||||||||||||||||
| Top Three 'Penny-Land' Biotech Stock Picks Posted: 23 Jan 2012 03:31 AM PST By James Stocklasar Thomas Jr.: 2011 was not a very good year for the vast majority of low penny-land biotechs. Looking back, I still wish I rolled a good portion on Questcor (QCOR) and Spectrum (SPPI). I also add Pharmacyclics (PCYC) and ImmunoGen (IMGN) that rebounded in the second half of 2011. They all remain excellent biotech stocks. But these are not in the price range of my focus: biotechs stocks at least below $5/share if not in the $1-3/share price range. I would go lower, but SA prefers its writers not cover below $1/share stocks; I abide and respect that policy as those sub-dollar stocks are very volatile and many good investors have been hurt by a flippant pen. #3 Zalicus Inc. (ZLCS) Call me mushy, but my 2011 #1 pick, while it hit a rough patch in late summer, has come back with a vengeance since December. Its drug candidates Z160 and Z944 Complete Story » | ||||||||||||||||||||
| Posted: 23 Jan 2012 02:09 AM PST Monday 23 January 2012, 08:30 EST Gold Touches Six-Week High as Technicals "Turning More Bullish", Banking Sector Negotiators "Hopeful" for Agreement on Greek Debt THE U.S. DOLLAR cost to buy gold hit a six-week high of $1677 an ounce Monday morning in London, as stock markets, commodities and the Euro all pushed higher and US Treasury bond prices dipped. "Near term technical have turned more bullish [for gold]," says the latest technical analysis from Scotia Mocatta, though it sees "psychological resistance looming at $1700." The price of buying gold in Euros however fell to €41375 (€1287 per ounce) – down slightly on Friday's close – as European finance ministers met to discuss Greek debt and a proposal to relax banking rules. The difference between long contracts to buy gold and short contracts held by noncommercial gold futures and options traders on New York's Comex exchange – the so-called speculative net long – rose for the second week running in the week ended last Tuesday, according to the latest data from the Commodity Futures Trading Commission. There was no change last week however in the volume of gold held to back shares in the SPDR Gold Trust (ticker: GLD), the world's largest gold ETF. Silver meantime hit $32.82 per ounce Monday morning – 1.8% above Friday's close. "Growing investor confidence is evident in [silver] ETF positioning," reports Standard Bank commodities strategist Marc Ground this morning, citing ETF purchases of 341.8 tonnes in the past week. One London broker reported Friday that the Sprott Physical Silver Trust (ticker: PSLV) bought around 311 tonnes of silver last week. Shares in New York-listed PSLV meantime gapped lower at the start of Wednesday morning's trade, opening 9.4% down on the previous day's close – a result of "the instantaneous premium evaporation in PSLV," says Gene Arensberg of GotGoldReport, which had previously warned its readers that the shares' premium to PSLV's net asset value could disappear "at the drop of a hat." "Ouch for the faithful PSLV buyers," says Arensberg, "and shame upon the managers of PSLV for allowing the premium to get so out of whack to the upside." Eurozone finance ministers meantime met in Brussels on Monday, where they were expected to discuss the terms of Greek debt restructuring, with negotiations in Athens over recent days having failed to produce a deal. "I remain quite hopeful [of reaching agreement]," Charles Dallara, managing director of the Institute of International Finance – which is negotiating on behalf of banks that hold Greek debt – said Sunday. The IIF made an offer on Friday to accept voluntary private sector involvement that would amount to losses on Greek bonds of around 65-70%, according to press reports. Dallara described it as "the maximum offer consistent with a voluntary PSI deal". A sticking point is the size of the coupon on new bonds that will be swapped for existing ones. Both sides were thought to be close to agreeing an annual rate of between 4% and 4.5%, newswire Bloomberg reported. Germany and the International Monetary Fund, however, want to see this cut to 3%, according to the New York Times, citing officials involved in the talks. "I believe that the private sector can accept a lower coupon than the 4% average, but the question then is: will the PSI still be on a voluntary basis?" one senior Greek banker told newswire Reuters. Any deal that is not voluntary risks triggering payments on credit default swaps – which payout in the event of default. Failure to agree debt restructuring meanwhile also risks jeopardizing Greece's second bailout – without which it will be unable to pay €14.5 billion of maturing bonds on March 20. Also at today's Brussels meeting, German finance minister Wolfgang Schaeuble, along with his French opposite number Francois Baroin, will call for relaxation of banking rules, according to the Financial Times. The pair will ask for elements of Basel III – the regulations on how much capital banks must hold, due to come into force in 2015 – to be loosened for banks that own insurance companies, such as French banks Societe Generale and Credit Agricole. They also propose a three-year delay for the deadline on disclosing leverage ratios – in contrast to UK regulators, who have called for disclosure ahead of schedule. Baroin meantime has confirmed that France's proposed financial transaction tax – one of the issues that led to British prime minister David Cameron walking out of European Union talks in December – will not apply to government bonds. The US Federal Reserve meantime could make the historic move of announcing a specific inflation target when it gives its interest rate decision on Wednesday, Reuters reports. Also in the US, Newt Gingrich – who last week said the United States should consider returning to the gold standard – won South Carolina's Republican presidential primary on Saturday. One of his opponents, Mitt Romney, has subsequently bowed to calls to release his tax returns. China has seen a "New Year's rush" to buy gold to mark the Year of the Dragon, which begins today, the FT reports. "Some customers just walk in and buy a bunch of 100g gold bars all at once," it quotes one manager at Chines bank ICBC. "People like to give them away…companies come in too to buy gold bars for presents." Ben Traynor Gold value calculator | Buy gold online at live prices Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. (c) BullionVault 2011 Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
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| Currency Wars - Iran Banned From Trading Gold and Silver Posted: 23 Jan 2012 01:39 AM PST | ||||||||||||||||||||
| Intervention in Libya was largely about gold, Rickards tells Future Money Trends Posted: 23 Jan 2012 01:13 AM PST | ||||||||||||||||||||
| Bob Chapman - If Ron Paul is not Elected kiss it goodbye Posted: 23 Jan 2012 12:08 AM PST Bob Chapman - Liberty Talk Radio - January 20, 2011 : Gold and Silver will go... [[ This is a content summary only. Visit my blog http://www.bobchapman.blogspot.com for the full Story ]] This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||
| One secret document was responsible for China's economic revolution Posted: 22 Jan 2012 11:58 PM PST From Carpe Diem: For this great NPR story, I thank John Chilton, who writes by e-mail that it's "Just like the story of the Pilgrims whose economy was transformed when they gave up collectivism and the communal approach to farming." It's a great story with economic lessons in private property rights, competition, entrepreneurship, and the triumph of the individual over the state. Here are some excerpts: In 1978, the farmers in a small Chinese village called Xiaogang gathered in a mud hut to sign a secret contract. They thought it might get them executed. Instead, it wound up transforming China's economy in ways that are still reverberating today. The contract was so risky — and such a big deal — because it was created at the height of communism in China. Everyone worked on the village's collective farm; there was no personal property. "Back then, even one straw belonged to the group," says Yen Jingchang, who was a farmer in Xiaogang in 1978. "No one owned anything." In theory, the government would... Read full article... More on China: China just sent a frightening warning to the U.S. This China gold story could literally change your life The U.S. is at war with this nation... But most Americans have no idea | ||||||||||||||||||||
| End 2012 – Neo-protectionism establishes itself as the new paradigm of world trade Posted: 22 Jan 2012 11:58 PM PST - Excerpt GEAB N°57 (Sept. 16, 2011) -  Analysis published in GEAB 4 months ago: Because of the simultaneity of the global economy (1) relapsing into recession and key political events affecting the world's major economies (2), we anticipate a sharp rise in protectionism from the end of 2012. In its initial phase, it will mainly take the form of various non-tariff barriers, more discreet than traditional customs duties, but it will, de facto, cause the most important change in the terms of world trade since the signing of the GATT (General Agreement on Tariffs and Trade, the WTO 's predecessor) in 1947. Neo-protectionism: A protectionism that won't give its name and will assume a modern guise Initially, these protectionist measures will attempt to formally abide by the various multilateral treaties and other WTO provisions (at least to buy time via contentious appeals with ad hoc bodies), because each player will continue in parallel to try and increase its exports. Indeed, export-oriented countries like Germany and China, as well as most emerging nations, won't take the risk of encouraging their buyers to erect their own tariff barriers.  This trend will obviously privilege zones benefitting from free trade (trading blocs). The end of 2012 will, therefore, be a milestone in the emergence of trading blocs (Euroland-EU Russian, Turkish and Mediterranean strategic partners / China-Japan-ASEAN / Latin America / North America, ...) which can either be the pillars of a new global governance in economic and trade terms, or the foundation for future belligerents in a zero-sum global conflict over the next decade (3). Finally, other countries like the United States are committed to free trade agreements (4) (even if they are of little weight in the medium term) and are now too dependent on the rest of the world (5) to allow itself the benefit of very visible protectionist measures; if only because they are de-industrialized to such an extent that they cannot, in the medium term, compensate for imports. This is, moreover, one of the elements that explains the repeated failure of policies to boost US employment (6). Protectionism will therefore take other forms (7). There is, in fact, a whole range of more subtle measures which we describe below. Moreover, following the crisis in 2008, calls by the G20 not to give in to protectionism have certainly paid off, but only for two years. Without a sign of improvement in the economy, an increase in protective measures has been a sensitive subject recently: many countries now have more or less visible measures of protection in force (and / or making the adoption of such measures easier as the European Union has done in recent months (8)). The first of these, which will have a major impact, is currency exchange rates. It is of course not always chosen (9) but can be influenced. It is a powerful protectionist tool which allows the price of exports to be lowered and raise that of imports. For example, despite their talk of a "strong dollar", the United States adapts to a lower dollar, even encourage its fall (a QE2 side effect). China also benefits since its peg to the dollar allows it to keep an undervalued Yuan. Similarly, in the UK there is hardly a voice in favour of revaluing the pound ... Finally, without being too Machiavellian, our team has already stressed that the only good thing to come out of the media hysteria over the Greek question for Euroland leaders is, undoubtedly, to avoid what has happened to the Swiss franc (and which put Euroland on the lookout in 2008), namely a dangerous assessment for the real economy. Export subsidies also benefit domestic products abroad. For example, one obviously thinks of European and American subsidies to farmers, but also in China on some products (10). More subtle, limits on exports of commodities (raw materials, food) resemble protectionism: an increase in the price of the product on the international market by reducing supply, simultaneously with a lowering of the product's price in the domestic market via widespread supply, giving a strong advantage to the national product domestically. Export limits are in vogue: recently Russia announced limits on its oil exports (11) and a cessation of grain exports (12), China on its oil (13) and rare earths (14) (95% of World production), etc… There is still bias in the awarding of state contracts. The most significant recent case is the Airbus / Boeing "match" to supply the US Air Force tanker (15); in France, the request to Air France to buy Airbus and not Boeing planes (16); increasing the national preference share in state procurement in Algeria (17), Buy American Act (18), etc… Finally, stringent environmental and health standards can disqualify some imports of lower quality, as well as discouraging administrative restrictions for the importation of products. There is no shortage of examples, be it restrictions on the marketing of GMCs by some European countries, raw milk cheeses in the United States, beef containing hormones (European Union), cars which pollute, etc.. Here we have it, the whole range of measures has been laid out and only asks to be expanded further. The four factors that will make protectionism the new "paradigm" from the end of 2012 We can analyze the reasons for the rise in protectionism via four areas: the critics of the dominant free trade talks, the consequences of excessive public debt, the volatility of currency markets and the end of the dollar's reign. Criticism of free trade: Protectionism is no longer a taboo subject in the circles of power whilst it was impossible to mention it only two years ago; it has now become relatively common in the mainstream (19) press and on the internet (20). The debate invites himself in politics: in Euroland one thinks of a return to the discussions on the need for industrial policies, strategic sectors, ... (21); in the United States of the Tea Party movement; in Europe, the rise in strength of the extreme right especially those who advocate these ideas (22), etc… And public opinion is sensitive: the question, "are free trade agreements good for the United States?" A US survey in October 2010 gives 44% against versus 35% in favor (a big development: it was 32% and 43% respectively in November 2009) (23); in France, the result of a March 2011 (24) survey is given below:  We can identify two reasons for this criticism of free trade: first, the real or perceived responsibility of free trade in the crisis (or at least the failure of free trade to resolve the crisis) and secondly, by rising unemployment and inequality, despite neo-liberal promises (see charts below) and the deterioration of social conditions and of the environment.   Finally, concern for protection of the environment (evidenced by the power of the Greens in Germany, for example) will push for the relocation of production, especially agriculture, and to higher environmental standards. We are thus witnessing a reassessment of the dominant ideology, illustrated for example by the disappearance of the WTO from the debate (see chart below) (25).  Public debt: This reassessment will weigh on the many changes of government in 2012 (especially in Euroland and the United States). Employment and industrial policy will be at the heart of debates with high unemployment rates everywhere: re-industrialization and protection of the labor market will be important themes. Europe prepares (26), in the United States, the opposition Democrats / Republicans (27) promise a good fight, the subject of relations with China will not fail to introduce itself (28). The excessive debt of all the developed countries should further add to protectionism for two reasons: - a need to rebalance the accounts that will result in measures to preventing capital flight. Financial conditions no longer allow the practice of tax dumping, it will be necessary to protect oneself (so it will be a matter of fiscal protection) - we are living in an era of "every man for himself" as shown in the competition between countries to capture global savings. In fact, we have recently witnessed the adoption of legislation on the sly in Europe (29) and the United States (30) allowing the pursuit of a more protectionist policy. Finally, the developed countries are realizing that the most modern production capacity is now in China, that the talk of "China manufactures basic goods and us advanced products" was a farce because China is already taking its first steps (even more) in aerospace, aviation, high-speed trains, computers, luxury cars, etc.. The theme of re-industrialization and, to execute it, protectionism, has a bright future ahead of it. Currency market volatility: When movements in exchange rates between currencies are as large as they currently are, it is clear that having the same currency as one's client provides a much more stable outlook (one knows in advance how much one will be paid) ... Yet trade infinitely prefers stability (is not price stability the objective of the ECB?). Thus, since currency turmoil is far from over, multinational companies (despite their initial reluctance) and trade in general will focus within the integrated economic zones, especially the Eurozone which has a common currency, the Asian zone where the Yuan is growing and the North-American zone in dollars (31). Dollar reappraisal: The status of the dollar is being increasingly challenged and this process will accelerate because the United States is unable to reduce its debt (or even agree on the procedure) and to revive its economy. On the one hand, this should result in a 30% drop in the dollar against other major currencies (see previous GEAB issues) and, on the other hand, the use of other currencies to pay for more and more international trade (32). The dollar's devaluation will act as a "suffered protectionism" in favour of US exports. Will this devaluation allow the revival of US industry? The answer is negative for at least three reasons: - as shown in the chart on exports, it plays a limited role in the economy, especially since a number of them do not meet the environmental or health standards of advanced countries (for example, vehicles which are not energy efficient and GMC agriculture or hormones) - the dollar will still be too expensive relative to the Yuan or the Mexican peso: US products will still not be competitive enough - oil prices, driven by consumption in emerging countries, will quickly regain or exceed current levels after declining due to the world economy's relapse: with a weak dollar, it will weigh very heavily on the US economy (33). Add to that the end of the dollar's status as an international reserve currency undermines the ability of the United States to freely to consume imported goods, as well as their ability to borrow. Therefore, the springs for growth must therefore be found internally. This country has always been able to handle economic patriotism; that will cause its leaders to adopt the protectionist measures seen above in an attempt to revive the economy. What will the reaction of other countries? In the face of favoured US exports and fettered imports, they will soon adopt protectionist measures themselves. This should take place in late 2012 following the economy's relapse and the political changes in 2012. However, it should be borne in mind that the generation of our leaders (even those arriving in 2012) is strongly influenced by free trade and will maintain the illusion of a rejection of protectionism in their speeches, especially just after the economy's relapse. The emergence of the era of neo-protectionism will, from 2013, accelerate the current geopolitical turmoil Certain economic zones like the European Union and the United States are quite withdrawn in commercial terms: the sum of exports + imports represents only 16% of GDP for the EU and 17% for the USA (34). In addition, both areas are highly integrated with common currencies. They will, of course, be the major players in this development because they will be able to support it and want to impose it. The EU, however, will want to keep good relations with Russia (for gas and oil) and more generally with the BRICS, which will lead to "tailor-made" protectionism. However, for the BRICS (which is a network and not an integrated region, much less a bloc), this development will undoubtedly result in strong internal tensions because they are not, at this stage, an area sufficiently linked to be able to adopt joint protectionist measures. They must accelerate the implementation of free trade treaties between them in a strategy of South-South (35) cooperation, but which can only, in the short / medium term, remain complementary to their trade with Europe on one side and the United States on the other. From 2012/2013, the interest of the BRICS will undoubtedly be, via the G20 or bi-multilateral summits (such as a Euro-BRICS summit (36)), to ensure it avoids a situation of inter- bloc conflict, and at least negotiate successful agreements with each of the two major integrated regions.  Japan cannot stay out of China's sphere, whilst the United Kingdom will see its position become increasingly uncomfortable between the United States which withdraws to North America and a Euroland which integrates on the Continent. Last but not least, in a world that is breaking up into integrated regions or blocs, there is an activity that quickly becomes secondary: that of a major global financial centre. Whilst on the contrary a demand for effective regional financial centers is rapidly emerging. Another piece of bad news for Wall Street and the City, foreshadowing the huge upcoming new layoffs in New York and London. --------- Notes: (1) The recent estimates of all the organizations monitoring the global economy all point in the same direction, namely strong downward revisions to growth estimates of just a few months ago for the second half of 2011 and 2012. The rebound of the Western financial crisis in an explosive context of uncontrolled public debt, Euroland slowly delivering its economic governance and complete political paralysis in the United States set against a backdrop of recessionary relapse ... create a really dramatic situation in terms of international trade. Sources: Le Monde, 09/12/2011; Financial Times, 09/01/2011; CNBC, 08/26/2011. (2) Presidential and/or parliamentary elections in the United States, France, Spain, Italy, probably in Germany (see GEAB No. 49 ), Russia, and a change of political leadership in China. (3) See the two scenarios 2010-2020 in Franck Biancheri's book « The World Crisis – The path to the World Afterwards ". (4) Especially NAFTA with Canada and Mexico: a third of their exports and a quarter of their imports. (5) Especially China, through its US debt holdings and because it represents 19% of US imports. Beyond official pronouncements that minimize the US deficit vis-à-vis China (since, at $ 270 billion, it represents only 2% of GDP), one can indulge in a little rough calculation: the average income of the 50 million poorest households (almost half of households) is about $20,000 / year. If we deduct housing expenses (including rent or loan), food, transportation and health, we can conclude that there is less than $ 8 000 per year of spending per household, $400 billion for these 50 million households, compared with $360 billion of imports from China (which must be at least $500 billion for the US margins with retailers margins and various taxes). In other words, half of U.S. households depend on these imports. By way of illustration, one-third of Americans shop at Walmart (a discount supermarket) where over 70% of manufactured goods come from China. Source: China Daily, 11/29/2004 and Wikipedia (6) And it's not President Obama's recent proposal which will change anything because it doesn't address any structural issue and it will in any case reduced to next to nothing in the context of a quasi-civil war between US political institutions. (7) However, it can't be excluded that customs duties reappear in the medium term (2 or 3 years) because it is the logical consequence of an increase in more "discreet" protectionist measures leading to a weakening in free-trade talks and a shift in ideology. (8) Source: Sidley Austin, 02/28/2011 (9) One cannot really talk of protectionism if there is an unwanted fall in the exchange rate. (10) Paper, for example. Source: ChineObservateurs.com, 05/15/2011 (11) Source: Les Échos, 05/03/2011 (12) From 08/15/2010 to 07/01/2011. Source: Le Monde, 08/15/2010 (13) Source: Le Figaro, 05/13/2011 (14) Source: New-York Times, 10/19/2010 (15) See, for example Le Point, 02/25/2011 (16) Source: Le Point, 06/12/2011 (17) Source: allAfrica.com, 07/19/2010 (18) See Wikipedia (19) For example: ten or so articles in Le Monde since June (« It will be necessary to return to certain forms of protectionism »), Paul Krugman in the New York Times dated 01/06/2009 criticizes free-trade, etc. (20) For example the new site Pour un protectionnisme européen, in Germany www.protektionismus.de, in the US sites for finding « made in the US » (for example. A huge rally could be starting where you least expect it Posted: 22 Jan 2012 11:51 PM PST From All Star Charts: They keep on piling into this trade. I've never seen anything like it. This marks the fourth week in a row that net short positions against the euro have reached a new record. Last week, I wrote a post titled, "10 Things I hate about you: Euro Edition." I mentioned that I couldn't think of a single person who thought the euro was going higher against the dollar. It remains true. And sure, I look at charts all day and I see all the data. But with this one, it's not even about that. I open my eyes, I talk to people, the negative sentiment is all around us. It's obvious that the street hates the euro. And this is how a monster trade is born. The squeeze could be on. According to a report from... Read full article... More trading ideas: Trader alert: Some fantastic trades could be setting up now The key earnings reports you should be watching next week Fantastic chart reveals the world's most expensive and inexpensive currencies today | ||||||||||||||||||||
| Gold and silver prices regaining altitude on stimulus rumours Posted: 22 Jan 2012 11:30 PM PST After recording decent gains at the end of last week, gold and silver prices have continued rallying higher in trading this morning, as hedge funds "risk" appetite increases, and more are ... | ||||||||||||||||||||
| Gold Up 7.1% This Year- So Far Posted: 22 Jan 2012 11:29 PM PST Investors moving slowing into Gold as a Safe Haen | ||||||||||||||||||||
| Silver bulls' confidence growing Posted: 22 Jan 2012 10:30 PM PST In response to the general positive trend at the global markets, the Indian futures markets has recorded significant gains in the silver price. At the Mumbai Multi Commodity Exchange, silver futures ... | ||||||||||||||||||||
| Gold & Silver Market Morning, January 23, 2012 Posted: 22 Jan 2012 09:00 PM PST | ||||||||||||||||||||
| India Imposes a 2% Import Tax on Gold Posted: 22 Jan 2012 08:55 PM PST | ||||||||||||||||||||
| Fin 2012 - Le néo-protectionnisme s’impose comme le nouveau paradigme du commerce mondial Posted: 22 Jan 2012 08:52 PM PST - Extrait GEAB N°57 (15 septembre 2010) -  Analyse parue dans le GEAB il y a 5 mois : Du fait de la simultanéité de la rechute en récession de l'économie mondiale (1) et des échéances politiques majeures affectant les principales puissances économiques de la planète (2), nous anticipons une montée brutale du protectionnisme à partir de fin 2012. Dans sa période initiale, il prendra principalement la forme de barrières non tarifaires diverses, plus discrètes que des droits de douane classiques ; mais il entraînera de facto le plus important bouleversement des conditions du commerce mondial depuis la signature des accords du GATT (General Agreement on Tariffs and Trade, ancêtre de l'OMC en 1947. Le néo-protectionnisme : Un protectionnisme qui ne dira pas son nom et prendra des habits modernes Dans un premier temps, ces mesures protectionnistes tenteront de respecter formellement les divers traités multilatéraux et autres clauses de l'OMC (au moins pour gagner du temps via les recours litigieux auprès des organismes ad hoc), car chaque acteur continuera parallèlement à essayer d'accroître ses exportations. En effet, les pays tournés vers l'exportation comme l'Allemagne et la Chine, mais aussi comme la plupart des pays émergents, ne prendront pas le risque d'inciter leurs acheteurs à adopter eux-mêmes des barrières tarifaires.  Cette tendance se fera bien entendu au profit de zones privilégiées de libre-échanges (blocs commerciaux). La fin 2012 marquera donc une étape-clé dans l'émergence des blocs commerciaux (Euroland-UE-partenaires stratégiques russe, turcs et méditerranéens / Chine-Japon-ASEAN / Amérique latine / Amérique du Nord, …) qui pourront être soit les piliers d'une nouvelle gouvernance mondiale en matière économique et commerciale, soit les bases de futurs belligérants dans un conflit planétaire à somme nulle au cours de la prochaine décennie (3). Enfin, d'autres pays comme les États-Unis sont engagés dans des accords de libre-échange (4) (même s'ils sont de peu de poids à moyen terme) et sont actuellement trop dépendants du reste du monde (5) pour se permettre des mesures protectionnistes très visibles. Ne serait-ce que parce qu'ils sont désindustrialisés à un tel point qu'il leur est impossible à moyen terme de pallier les importations. C'est d'ailleurs l'un des éléments qui explique les échecs répétés des politiques de relance de l'emploi US (6). Le protectionnisme prendra donc d'autres formes (7). Il existe en effet toute une panoplie de mesures plus discrètes que nous détaillons ci-dessous. D'ailleurs, suite à la crise en 2008, les appels du G20 à ne pas céder au protectionnisme ont certes porté leurs fruits, mais pendant deux ans seulement. Sans signe d'amélioration de l'économie, une hausse des mesures de protection a été sensible ces derniers temps : beaucoup de pays appliquent désormais des mesures plus ou moins visibles de protection (et/ou rendent plus simple l'adoption de telles mesures comme l'a fait ces derniers mois l'Union européenne (8)). La première d'entre elles, qui aura un impact majeur, est le taux de change entre monnaies. Il n'est bien sûr pas toujours choisi (9) mais peut être influencé. C'est un puissant levier protectionniste qui permet d'abaisser le prix des exportations et d'élever celui des importations. Par exemple, malgré leurs discours sur un « dollar fort », les États-Unis s'accommodent d'un dollar bas, voire encouragent sa baisse (effet secondaire du QE2). La Chine y trouve aussi son compte puisque son peg sur le dollar lui permet de garder un yuan sous-évalué. De même, au Royaume-Uni on n'entend guère de voix pour réévaluer la livre... Enfin, sans machiavélisme excessif, notre équipe a déjà souligné que pour les dirigeants de l'Euroland la seule bonne chose dans l'hystérie médiatique sur la question grecque est indiscutablement qu'elle permet d'éviter ce qui est arrivé au Franc suisse (et qui guettait l'Euroland en 2008), à savoir une appréciation dangereuse pour l'économie réelle. Les subventions à l'exportation permettent aussi d'avantager les produits nationaux à l'international. À titre d'exemple, on pense évidemment aux subventions européennes et américaines aux agriculteurs, mais aussi en Chine sur certains produits (10). Plus subtiles, les limites à l'exportation sur des produits de base (matières premières, denrées alimentaires) s'apparentent à du protectionnisme : hausse du prix du produit sur le marché international par la baisse de l'offre, et simultanément baisse du prix du produit sur le marché national par abondance d'offre, ce qui donne un fort avantage au produit national à l'intérieur du pays. Les limites à l'exportation sont à la mode : récemment, la Russie annonçait des limites sur l'exportation de son pétrole (11) et l'arrêt de ses exportations de céréales (12), la Chine sur son pétrole (13) et ses terres rares (14) (95% de la production mondiale), etc… Il y a encore la préférence nationale lors de l'attribution des marchés publics. L'affaire récente la plus marquante est le « match » Airbus/Boeing pour fournir les ravitailleurs à l'armée US (15) ; en France, la demande faite à Air France d'acheter des avions Airbus et non Boeing (16) ; augmentation de la part de préférence nationale dans les marchés publics en Algérie (17) ; Buy American Act (18), etc… Enfin, les normes environnementales et sanitaires exigeantes permettent de disqualifier une partie des importations de moindre qualité, de même que les contraintes administratives décourageantes pour l'importation de produits. Les exemples ne manquent pas, que ce soit les restrictions à la commercialisation d'OGM par certains pays européens, de fromages au lait cru aux États-Unis, du bœuf aux hormones (Union Européenne), de voitures polluantes, etc… On le voit, la panoplie de mesures est fournie et ne demande qu'à s'élargir encore plus. Les quatre facteurs qui vont faire du protectionnisme le nouveau « paradigme » dès la fin 2012 Nous pouvons analyser les raisons de la montée du protectionnisme via quatre axes : les critiques du discours dominant libre-échangiste, les conséquences de l'endettement public démesuré, la volatilité du marché des devises et la fin du règne dollar. La critique du libre-échange : Le protectionnisme n'est plus un sujet tabou dans les cercles de pouvoir alors qu'il était impossible d'en parler il y a seulement deux ans ; c'est maintenant devenu relativement courant dans les journaux mainstream (19° et sur internet (20). Le débat s'invite en politique : on pense dans l'Euroland au retour de discours sur la nécessité de politiques industrielles, de secteurs stratégiques, … (21) ; aux États-Unis au mouvement Tea-Party ; en Europe, la montée en puissance des extrêmes droites surtout qui prônent ces idées (22), etc… Et l'opinion publique y est sensible : à la question « les accords de libre-échange sont-ils une bonne chose pour les États-Unis ? », un sondage US d'octobre 2010 donne 44% de non contre 35% de oui (en forte évolution : 32% et 43% respectivement en novembre 2009) (23) ; en France, le résultat d'un sondage de mars 2011 (24) est donné ci-dessous :  On peut identifier deux raisons à cette critique du libre-échange : d'une part, la responsabilité réelle ou supposée du libre-échange dans la crise (ou au moins l'échec du libre-échange à résoudre la crise) et d'autre part la progression du chômage et des inégalités malgré les promesses néo-libérales (voir figure ci-dessous) et la détérioration des conditions sociales et de l'environnement.   Enfin, le souci de protection de l'environnement (en témoigne le poids des Verts en Allemagne, par exemple) poussera à la relocalisation de la production, notamment agricole, et à des normes environnementales plus exigeantes. On assiste ainsi à une remise en question de l'idéologie dominante, illustrée par exemple par la disparition de l'OMC du débat (voir la figure ci-dessous) (25).  L'endettement public : Cette remise en question pèsera sur les nombreux renouvellements de gouvernements en 2012 (notamment dans l'Euroland et aux États-Unis). L'emploi et la politique industrielle seront au cœur des débats avec des taux de chômage partout élevés : ré-industrialisation et protection du marché du travail seront des thèmes importants. L'Europe se prépare (26) ; aux États-Unis, l'opposition démocrates/républicains (27) promet une belle bataille à laquelle le sujet des relations avec la Chine ne manquera pas de s'inviter (28). L'endettement démesuré de tous les pays développés devrait ajouter encore au protectionnisme pour deux raisons : 1. un besoin de rééquilibrer les comptes qui se traduira par des mesures évitant la fuite des capitaux. L'état des finances ne permettant plus de pratiquer un dumping fiscal, il faudra s'en protéger (il s'agira donc d'un protectionnisme fiscal) 2. l'ère est au « chacun pour soi » comme on peut le voir dans la compétition entre les pays pour accaparer l'épargne mondiale. De fait, on a assisté ces derniers temps à l'adoption en catimini de lois en Europe (29) et aux États-Unis (30) permettant de pratiquer une politique plus protectionniste. Enfin, les pays développés se rendent compte que les capacités de production les plus modernes sont maintenant en Chine, que le discours « la Chine fabrique les produits de base et nous les produits évolués » était une farce puisque la Chine fait déjà ses débuts (voir plus) dans l'aérospatiale, l'aviation, les trains à grande vitesse, l'informatique, les voitures haut de gamme, etc… Le thème de la ré-industrialisation et, pour ce faire, du protectionnisme, a de beaux jours devant lui. La volatilité du marché des devises : Quand les variations des taux de change entre monnaies sont aussi importantes qu'actuellement, il est évident que disposer de la même monnaie que son client apporte des perspectives beaucoup plus stables (on sait à l'avance combien on sera payé). Or le commerce préfère infiniment la stabilité ; la stabilité des prix n'est-elle pas l'objectif de la BCE ? Ainsi, puisque les turbulences sur les devises sont loin d'être terminées, les multinationales (malgré leurs réticences initiales) et le commerce en général vont se recentrer à l'intérieur des zones économiques intégrées, notamment la zone euro qui dispose d'une monnaie commune, la zone asiatique où le yuan se développe et la zone nord-américaine en dollar (31). La remise en question du dollar : Le statut du dollar est de plus en plus remis en cause et ce processus va s'accélérer du fait que les États-Unis sont incapables de résorber leur dette (ou même de se mettre d'accord sur la procédure) et de relancer leur économie. Cela devrait entraîner d'une part une baisse de 30% du dollar par rapport aux autres grandes devises (cf GEAB précédents), et d'autre part l'utilisation d'autres devises pour payer de plus en plus d'échanges internationaux (32). La dévaluation du dollar jouera comme un protectionnisme « subi » en faveur des exportations américaines. Cette dévaluation permettra-t-elle de relancer l'industrie US ? La réponse est négative pour au moins trois raisons : 1. comme on le voit à la figure concernant les exportations, celles-ci jouent un rôle restreint au sein de l'économie du pays, d'autant qu'un certain nombre d'entre elles ne correspondent pas aux critères environnementaux ou sanitaires des pays avancés (par exemple les véhicules consommant trop et l'agriculture OGM ou aux hormones) 2. le dollar sera toujours trop cher par rapport au yuan ou au peso mexicain : les produits américains ne seront jamais assez compétitifs 3. le prix du pétrole, tiré par la consommation des pays émergents, retrouvera ou dépassera rapidement les niveaux actuels après une baisse due à la rechute de l'économie mondiale : avec un dollar faible, il va peser très lourd dans l'économie américaine (33) Ajoutons à cela que la fin du statut du dollar comme monnaie de réserve internationale compromet la capacité des États-Unis à consommer gratuitement des produits importés, de même que leur capacité à s'endetter. Il faudra donc trouver en interne les ressorts de la croissance. Ce pays ayant toujours su manier le patriotisme économique, cela conduira les dirigeants à adopter les mesures protectionnistes vues ci-dessus pour tenter de relancer l'économie. Quelle sera la réaction des autres pays ? Face à des exportations US avantagées et des importations entravées, ils ne tarderont pas à adopter eux-mêmes des mesures protectionnistes. Tout cela devrait avoir lieu fin 2012 suite à la rechute de l'économie et aux renouvellements politiques de 2012. Il faut toutefois avoir à l'esprit que la génération de nos dirigeants (même ceux qui viendront en 2012) est fortement imprégnée par le libre-échange et maintiendra l'illusion dans ses discours d'un rejet du protectionnisme, notamment juste après la rechute de l'économie. L'émergence de l'ère du néo-protectionnisme va accélérer dès 2013 le bouleversement géopolitique en cours Certaines zones économiques comme l'Union Européenne et les États-Unis sont assez repliées sur elles-mêmes en termes commerciaux : la somme exportations+importations représente seulement 16% du PIB pour l'UE et 17% pour les USA (34). De plus, ces deux zones sont fortement intégrées avec des monnaies communes. Ce seront bien sûr des acteurs majeurs de cette évolution car ils pourront le supporter et voudront l'imposer. L'UE voudra cependant garder de bonnes relations avec la Russie (pour le gaz et le pétrole) et plus généralement avec les BRICS, ce qui mènera à du protectionnisme « sur mesure ». Cependant pour les BRICS (qui sont un réseau et non pas une région intégrée et encore moins un bloc), cette évolution se traduira indéniablement par de fortes tensions internes puisqu'ils ne constituent pas à ce stade une zone suffisamment cohérente pour pouvoir adopter des mesures protectionnistes communes. Ils devront accélérer la mise en place de traités de libre-échange entre eux dans une stratégie de coopération Sud-Sud (35), mais qui ne pourra à court/moyen terme que rester complémentaire de leurs échanges avec d'un côté l'Europe et de l'autre les Etats-Unis. Dès 2012/2013, l'intérêt des BRICS sera sans aucun doute, via le G20 ou via des sommets bi-multilatéraux (comme un sommet Euro-BRICS (36)), de veiller à éviter une situation de conflits inter-blocs, et au minimum de négocier des accords fructueux avec chacune des deux grandes régions intégrées.  Le Japon ne pourra pas résister à l'orbite chinoise, tandis que le Royaume-Uni verra sa position devenir de plus en plus inconfortable entre des Etats-Unis qui se referment sur l'Amérique du Nord et un Euroland qui s'intègre au niveau continental. Last but not least, dans un monde qui se fracture en régions intégrées, voire en blocs, il y a une activité qui devient très rapidement secondaire : celle de grand centre financier mondial. Alors qu'au contraire une demande de centres financiers régionaux efficaces émerge rapidement. Une autre mauvaise nouvelle pour Wall Street et la City qui préfigure de prochains nouveaux licenciements massifs à New York et Londres. ----------- Notes: (1) Les récentes prévisions de l'ensemble des organismes de suivi de l'économie mondiale pointent tous dans la même direction, à savoir de fortes révisions à la baisse des estimations de croissance d'il y a seulement quelques mois pour le second semestre 2011 et 2012. Le rebond de la crise financière occidentale dans un contexte explosif de dettes publiques non maîtrisées, d'un Euroland accouchant avec lenteur de sa gouvernance économique et de la paralysie politique complète aux Etats-Unis sur fond de rechute récessionniste… créent une situation proprement dramatique en matière de commerce international. Sources : Le Monde, 12/09/2011 ; Financial Times, 01/09/2011 ; CNBC, 26/08/2011 (2) Elections présidentielles et/ou législatives aux Etats-Unis, en France, en Espagne, en Italie, probablement en Allemagne (voir GEAB N°49, en Russie et changement de direction politique en Chine. (3) Voir les deux scénarii 2010-2020 dans le livre de Franck Biancheri « Crise mondiale : en route pour le monde d'après ». (4) Notamment l'ALENA avec le Canada et le Mexique : le tiers de leurs exportations et le quart de leurs importations. (5) Notamment de la Chine par la dette US qu'elle détient et car elle représente 19% des importations US. Au-delà des discours officiels qui minimisent le déficit US vis-à-vis de la Chine (puisque, à 270 milliards de $, il représente seulement 2% du PIB), on peut se livrer à un petit calcul approximatif : la moyenne des revenus des 50 millions de ménages les plus pauvres (près de la moitié des ménages) est environ 20.000$/an. Si l'on retranche les dépenses de logement (dont le loyer ou l'emprunt), de nourriture, de transport et de santé, on peut considérer qu'il reste moins de 8.000$ de dépenses par an par ménage, soit 400 milliards de $ pour ces 50 millions de ménages, à comparer avec les 360 milliards d'importations en provenance de Chine (qui doivent représenter au moins 500 milliards aux US avec les marges des commerçants et les taxes diverses). En d'autres termes, la moitié des ménages américains dépendent de ces importations. À titre d'illustration, le tiers des américains fait ses courses à Walmart (supermarché à bas prix) dont plus de 70% des produits manufacturés proviennent de Chine. Source : China Daily ; Wikipedia (6) Et ce n'est pas la récente proposition du président Obama qui y changera quelque chose puisqu'elle n'aborde aucune question structurelle et qu'elle sera de toute façon réduite à peu de choses dans le contexte de quasi guerre civile des institutions politiques US. (7) Cependant il n'est pas exclu que des droits de douane réapparaissent à moyen terme (2 ou 3 ans) car il s'agit de la conséquence logique d'une multiplication de mesures protectionnistes plus « discrètes » qui mènent à un affaiblissement du discours libre-échangiste et à un changement d'idéologie. (8) Source : Sidley Austin, 28/02/2011 (9) On ne peut pas vraiment parler de protectionnisme si le taux de change baisse sans que ce soit voulu. (10) Par exemple le papier. Source : ChineObservateurs.com, 15/05/2011 (11) Source : Posted: 22 Jan 2012 08:50 PM PST Precious Metals Stock Review | ||||||||||||||||||||
| Gold Manipulation Series (19 parts) Posted: 22 Jan 2012 08:26 PM PST
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| Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement” Posted: 22 Jan 2012 06:25 PM PST Obama's latest housing market chicanery should come as no surprise. As we discuss below, he will use the State of the Union address to announce a mortgage "settlement" by Federal regulators, and at least some state attorneys general. It's yet another gambit designed to generate a campaign talking point while making the underlying problem worse. The president seems to labor under the misapprehension that crimes by members of the elite must be swept under the rug because prosecuting them would destablize the system. What he misses is that we are well past the point where coverups will work, and they may even blow up before the November elections. If nothing else, his settlement pact has a non-trivial Constitutional problem which the Republicans, if they are smart, will use to undermine the deal and discredit the Administration. To add insult to injury, Obama is apparently going to present his belated Christmas present to the banking industry as a boon to ordinary citizens. He refused to appoint a real middle class advocate, Elizabeth Warren, to the Consumer Financial Protection Bureau, but he's not above stealing her talking points. We and other commentators have discussed how the mortgage settlement negotiations nominally led by Iowa attorney general Tom Miller had descended into farce. Almost nothing the Miller camp said was believable. They were presented as "attorney general" discussions when the Administration was pulling the strings. They've described a deal as weeks away for over a year. They kept claiming that they had undertaken investigations when not a single subpoena was issued by the AGs still involved in the negotiations. They've argued from the get go that a pact will be good for homeowners when the deal reached by under-resourced Nevada attorney general Catherine Cortez Masto with a single servicer, Saxon, resulted in a payout that is 10 to 20 times what the Administration is calling a victory. And that assumes that the banks will live up to their side of the deal when past settlements of servicing abuses have shown that they don't. The administration has finally woken up to the fact that the housing mess is almost certain to get worse before it gets better, and Obama must therefore be armed with better propaganda. The Miller-led talks have become a bit of an embarrassment and needed to be put out of their misery. So Team Obama and Federal banking regulators have agreed on terms and as we discussed last Friday, are upping the pressure on state attorneys general to fall into line. As reported by Shahien Nasiripour of the Financial Times:
The story did not outline terms, but previous leaks have indicated that the bulk of the supposed settlement would come not in actual monies paid by the banks (the cash portion has been rumored at under $5 billion) but in credits given for mortgage modifications for principal modifications. There are numerous reasons why that stinks. The biggest is that servicers will be able to count modifying first mortgages that were securitized toward the total. Since one of the cardinal rules of finance is to use other people's money rather than your own, this provision virtually guarantees that investor-owned mortgages will be the ones to be restructured. Why is this a bad idea? The banks are NOT required to write down the second mortgages that they have on their books. This reverses the contractual hierarchy that junior lienholders take losses before senior lenders. So this deal amounts to a transfer from pension funds and other fixed income investors to the banks, at the Administration's instigation. Another reason the modification provision is poorly structured is that the banks are given a dollar target to hit. That means they will focus on modifying the biggest mortgages. So help will go to a comparatively small number of grossly overhoused borrowers, no doubt reinforcing the "profligate borrower" meme. But those criticisms assume two other things: that the program is actually implemented. The experience with past consent decrees in the mortgage space is that the servicers get a legal get out of jail free card, a release, and do not hold up their end of the deal. Similarly, we've seen bank executives swear in front of Congress in late 2010 that they had stopped robosigning, which turned out to be a brazen lie. So here, odds favor that servicers will pretty much do nothing except perhaps be given credit for mortgage modifications they would have made anyhow. There are two clever features of the deal, but neither look intended to benefit ordinary citizens. One is that the deal throws some funding at chronically cash stressed mortgage counselors. They are thus certain to voice approval of the pact. The other is (per the FT story) the deal's "most favored nations clause" is designed to reduce the bargaining leverage of any AGs that go their own way. It means that any servicer will have the incentive to fight hard against giving any state a better deal because it will automagically trigger improved terms across the states that signed on to the Federal deal. But this may have interesting perverse effects, since banks that refuse to settle with breakaway AGs will ultimately have damages awarded by a court. That means longer and most costly fights by the states, but in most cases, ultimately bigger awards (frankly, the fact set is so bad that all the state AGs need to do is focus on fairly conservative legal theories to have good odds of scoring big wins). Dave Dayen seemed to think that the AG rebellion was likely to stay firm, given how few of the Democrats were going to Chicago on Monday for an arm-twisting meeting with HUD head Shaun Donovan and an unnamed emissary from the Department of Justice. I would not be so certain. With states so budget starved, I don't see how anyone can justify sending a live body to Chicago when a phone briefing would work just as well. More important, the most favored nation clause is nasty, and may nudge some fence-sitters over the line. And I have also been told that Donovan was on the Hill late last week pressuring Congressmen to support the deal. Since this is a regulatory measure that does not require Congressional approval, this move is meant to deprive dissenting state AGs from any support in local media from sympathetic Congressmen. For instance, 31 California representatives wrote the Justice Department, the Federal Reserve and the Office of the Comptroller of the Currency calling on them to "investigate possible violations of law or regulations by financial institutions in their handling of delinquent mortgages, mortgage modifications and foreclosures." Clearly they could be expected to support California attorney general Kamala Harris' withdrawal of the deal. Donovon is trying to get them and like minded solons speaking from the Obama script. But the Administration's scheme may not be playing out according to script. Senator Sherrod Brown sent a letter last week to associate attorney general Thomas Perelli, Donovan, the CFPB's Richard Cordray and Tom Miller criticizing the settlement pact. It could have been written by Naked Capitalism readers. Key section:
Now while Republicans may relish the specter of Democrats infighting, the fact is no one is going to want to be seen to be undermining the leader of the party in an election year. So that will put a damper on how aggressive the opponents will be. And media outlets have been amplifying Obama's efforts to take credit for gravity. For instance, the Administration is touting the fall in foreclosures as an indicator of success when their policies have ranged from do nothing to disasters like HAMP. The fall in foreclosures is actually a sign of failure, as banks are attenuating the process more and more, in some cases due to their inability to come up with necessary documentation, in others out of a desire to wring even more fees out of investors (when a borrower can't pay, the bank's fees come first out of the eventual sale of the house). Either a Gingrich nomination or Romney getting too dented during Republican primary fights increase the odds of what heretofore seemed impossible: an Obama win in November. So if the Republicans were smart, they'd take advantage of a serious weakness in this deal: that it violates the 5th Amendment takings clause. I am told by Bill Frey of Greenwich Financial that a servicer safe harbor provision in HAMP, which was supposed to shield servicers from investor lawsuits over mortgage modifications, was passed by both the House and Senate but was removed in reconciliation because that provision would have run afoul of the 5th Amendment. This settlement is intended to have servicers engage in even more aggressive mortgage modifications and would thus seem to have precisely the same Constitutional problem. As I urged last week, please call your state attorney general and tell them you think taking from your pension to enrich banks for abusing homeowners is a lousy idea and they should therefore refuse to sign on to the settlement. You can find their phone numbers here. Please call today if you haven't already. Thanks!
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| Survivor Bias and TBTF Tyranny Posted: 22 Jan 2012 05:57 PM PST London Banker "has been a central banker and securities markets regulator during a varied and interesting career in global financial markets" and is a very credible commentator IMO. From his latest: "Perhaps gold is being used as collateral for margin and cash liquidity, sold by counterparties to bring the price lower, leading to margin calls for even more. A crisis arising from a major default (Greece, Portugal, a huge bank) would force the price lower still, when the collateral would be exercised on default. Following on, the price might rocket again to enable the conspirators to seize outsize profits. Just a scenario, mind you! (Although, I note that Lehman's counterparties reported record profits through much of 2009.) What is left of the global markets becomes a game of engineered survivor bias. Only those operating outside the law and with unlimited regulatory forbearance can win while the rest of us lose." Some may remember my comments on FOFOA blog about how "Bullion banks are like spiders in the center of a web. They can feel the twitching of the flies in the web and determine the mood of the market better than anyone else and often in advance of others." London Banker again: "Their top down view of clients' trading and custody portfolios and cash positions and flows puts them in a position to exercise tyranny. They can game their clients, taking advantage of superior information, credit and liquidity to ramp or crash targeted markets as needed to precipitate a crisis." In other words, it is not just about avoiding debt (or its variant, leverage/derivatives) but also avoiding having most of your positions and trading with one bank. Reading this stuff makes me comfortable that the Perth Mint will be one of the few left standing after all this is over. We don't engage in speculative trading/risk taking and the AAA rating means we don't have to beg and put up collateral with banks to be able to do the covering trades and other transactions necessary to keep the business running. In the coming flight from risk, it won't just be about moving to cash (and hopefully many moving to precious metals), but it will also be about a flight to riskless/conservative counterparties. The problem for those looking to store precious metals is that at that point the Perth Mint is likely to run out of capacity - both in physical storage and also insurance (as we fully insure - few others do). All that will be left then is personal storage, which won't be a problem for those with small holdings. But for those with multi-million dollar holdings it will be tough as there aren't many non-bank fully insured custodians. The lesson is to prepare now, which I'm sure all my readers have, as it is going to get nasty.  | ||||||||||||||||||||
| Why Isnt Illinois A Bigger Story Than Greece? Posted: 22 Jan 2012 05:20 PM PST Dollar Collapse | ||||||||||||||||||||
| Gingrich calls for new Gold Commission Posted: 22 Jan 2012 05:00 PM PST | ||||||||||||||||||||
| Jan 22, 1980 : The day the Gold Bull market stopped Posted: 22 Jan 2012 04:45 PM PST Time Magazine | ||||||||||||||||||||
| Talk of Recovery is Orwellian in its Deception. Posted: 22 Jan 2012 04:04 PM PST "Talk of a recovery is Orwellian in its deception." So says Jim Willie in his lengthy piece dealing with the collapse of the US and probably the rest of the civilized world. Mr. Willie is bold in his predictions/assertions, a style that has characterized his writing. To be sure, he is often early and sometimes [...] | ||||||||||||||||||||
| Posted: 22 Jan 2012 04:00 PM PST Gold University | ||||||||||||||||||||
| Exposing Silver Mythology, Part I Posted: 22 Jan 2012 03:12 PM PST Advanced economic analysis involves high-level mathematics at least as complex as the realms of physics or engineering, accompanied by equally convoluted jargon. As a result, it is virtually incomprehensible to the ordinary person. Conversely, the basic principles of economics are very straightforward. Indeed they could be summarized as little more than a combination of common sense and simple arithmetic. As a result, fundamental economic analysis is highly accessible to the ordinary person – because of its relative simplicity. What then are we to make of the fact that the self-described (mainstream) "experts" on the silver market; the quasi-official sources for data on the silver market; and the primary regulator of the silver market all regularly and consistently demonstrate complete ignorance of even the most elementary of economic principles? Are we to attribute this to gross incompetence, inherent bias, or an intentional attempt to deceive? I will leave it up to readers to reach their own conclusions. This piece will simply lay out the positions of these individuals and entities (past and present), lay out what little reliable data is available to us; and then apply the simple, common sense principles of economics to this data. It will focus on the three most basic aspects of any market: supply, demand, and inventories. First, however, I will refer readers to some previous, elementary economic analysis. As I established with simple numbers (and logic), in any market shorting always "consumes" while investing always "conserves". In other words, in any market which is dominated by shorting we will see a substantial increase in consumption, and (over time) a radical decline in inventories/stockpiles. On the other hand, in any market dominated by investors (who are invariably mis-labeled as "speculators"), we will see consumption decline and inventories swell – due to the rising prices generated by increased investor-buying. Meanwhile, the entities/individuals mentioned previously do not merely regularly engage in analysis which is wildly erroneous, but in many cases is totally perverse. It is with respect to this last point where it becomes more difficult to ascribe this behavior to mere incompetence and rather more likely that there is some degree of malice involved. In order to show how the inaccuracy of this analysis is not only extreme but consistent, I will refer primarily to the most up-to-date opinions on the silver market today; along with an "open letter" from the CFTC from 2004, and the GFMS "World Silver Survey 2003" – which primarily covers developments in the silver market during 2002, one decade ago. Readers must first understand that there are two ways of characterizing "supply and demand". It can be described as current orders versus total stocks, or it can be described in terms of production versus consumption. It is the latter definition which is exclusively taught in our educational institutions, and for a very good reason: it is only by examining supply and demand in terms of production versus consumption where we can obtain any useful information about the future direction of any market. Conversely, the mainstream "experts", the CFTC, and the quasi-official record-keepers for the silver market never use the latter definition. Instead, they always use the much less useful former characterization – and then reach one absurd conclusion after another through relying upon this inherently flawed data. Why is production versus consumption the only valid basis for analyzing supply and demand? Obviously the entire purpose of analyzing any market is to determine whether it is in balance, or whether it is out of balance – either through over-supply or excess demand (in order to correctly price the market). Examining production versus consumption data instantly provides us with the answer to that question. Noted silver researcher Ted Butler has concluded that the silver market has been out of balance (in the form of excess demand) for more than fifty years, with total global stockpiles of silver declining by well in excess of 80% over that period. More recently, data supplied by the other quasi-official source of data for the silver market (the CME Group) shows that silver inventories plummeted by approximately 90% just from 1990 through 2005 – during which time the price of silver fell to a 600-year low (in real dollars). | ||||||||||||||||||||
| How a Deficit in Capitalism Helped Engender the Financial Crisis Posted: 22 Jan 2012 02:56 PM PST Reckoning today from Los Angeles, California... Getting it wrong at the Financial Times… The Financial Times continues its series on "Capitalism in Crisis." We're getting a little tired of it. We were hoping at least one of the writers might tell us what the crisis was. Instead, we've gotten a variety of opinions; none offering much light on the nature of the crisis and several offering more darkness about how to make it worse. In yesterday's instalment, for example, we discover that in 2008, "leaders of rich and rising nations sidestepped their differences to avert a worldwide slump." Really? If the writer had any appreciation for capitalism at all he'd know that the politicians did no such thing. Instead, they sidestepped their differences to prevent capitalism from doing its job. In 2008, after the fall of the House of Lehman, capitalism was aiming its wrecking balls at the House of BAC, the House of Deutschebank, the House of Goldman...and many others. But the feds stepped in and stopped the wrecking balls in mid-air. The process of price discovery halted. Instead of allowing capitalism to fix the problem, the feds made it worse. They gave more money to the very institutions and managers who had proved they couldn't be trusted with it. We don't want to rehearse the whole sequence of events that got us to where we are. But it's important to understand what happened. The FT writers - along with practically every financial journalist, economist and 2-bit big mouth - get the whole story wrong. They seem to think that Lehman Bros. was a failure of capitalism. Symptomatic, they say, of a larger failure, which almost all believe came from a lack of effective regulation. "Too much capitalism..." is how one sage put it. "The big lesson from all this is the extent to which globalised capitalism has outstripped the ability of governments to manage it," says the FT. Manage it? They must be dreaming. If the guys who ran Lehman Bros. couldn't manage their own business, how were a group of bureaucrats going to do so? On the evidence, the feds had even less idea of what was going on than the 'capitalists' themselves. (About which, more below...) The real problem was not too much capitalism. Instead, there was too little, especially when we needed it in 2008. The financial industry had been corrupted by government. Federal subsidies to the homebuilding industry...along with artificially low interest rates from the Fed...created a bubble in the economy and a frenzy on Wall Street. The financial industry became obsessed with fast profits. Bank managers learned that they could earn fees by making loans; who cared about collecting them? Also, most Wall Street firms had ceased to be genuinely capitalistic. The benefits and the control were no longer in the hands of real capitalists, but in the hands of the managers. Over the last ten years, for example, the owners of financial industry stocks have made zero. Not a penny. But the managers - employees - have gotten rich. Goldman Sachs alone transferred $125 billion of shareholders' money to its labour force over the same period that the shareholders themselves made nothing. This left the employees with nice pads in the Hamptons, but it left the shareholders will little in real value. Today, many major banks have equity of less than 2% of their assets. That means, if their holdings of government debt - for example - go down 2%, they are broke. And it leaves them vulnerable to the next crisis....just as they were to the last. When the crisis came in 2008, there was not enough equity - real shareholder value - to prevent bankruptcy. This was not a crisis of real capitalism. It was a problem of geriatric capitalism...a simple problem that real capitalism knew how to fix. Left to do its work, these banks would have gone out of business...as they should have. Collapsing banks would have meant the collapse of many other things too. Greek debt, for example. The banks' holdings would have been subject to fire-sale prices...driving down their own prices...and putting Greece and other major debtors into bankruptcy too. This, of course, is just what the feds wanted to avoid. Today, more than 3 years later, they're still trying to avoid it. That's the drama we follow in Europe almost every day. But far from illustrating 'capitalism in crisis,' it shows the crisis caused by the fixers themselves. Now they've got banks that would be bankrupt...if Mr. Market were allowed to fully express himself. The bankrupt banks are kept in business by governments, who should be bankrupt too. And since Mr. Market is sidelined...he can't solve the real problem. The bankrupt institutions stay in business...shifting more and more real resources to zombie institutions run by incompetent, but highly paid, managers. This leaves the illusion of repairing things to the managers themselves and their fixer friends in government. The FT gives a claptrap solution: "...extend and refurbish the multilateral order to make economic integration with great global governance." We're not sure what that means. But we know it is a mistake. People may not know what capitalism is, but they know they don't like it. A poll by Globescan found that support for capitalism has fallen by 20 percentage points in the last ten years. A few years ago too, Mitt Romney's success at Bain Capital would have been a plus on the campaign trail. Now it is something he needs to explain and defend. The poll found higher levels of support for capitalism in China, Brazil and Germany too. Here is Qin Xiao, a businessman from China who has experienced state planning in a direct and personal way. In the 1960s, he was exiled to the countryside of Inner Mongolia to be "re-educated." The purpose of the re-education was to help him learn that "government was the saviour of the poor and free enterprise was evil." Instead, what he learned...and observed since...was that the free enterprise system works. A planned economy doesn't. His advice to China: "An economy now dominated by the government needs to become one led by the market...the government must scrap procedures for approving economic and market activities...it must stop interfering with market prices and transactions..." What gives? Are these emerging market thinkers naïve? Nope. We don't think so. Here at The Daily Reckoning, we expected them to be pro-free market. Why? Because people are neither bad nor good, smart nor stupid. They are subject to influence. They will favour market systems when market systems are making them rich. US capitalism - fettered by zombies...managed by incompetents... regulated by bureaucrats - no longer makes people rich. It has cut the real hourly wage of a non-high school grad by 47% over the last 32 years. No wonder Americans don't like it. In the emerging world, on the other hand, real wages double every ten years or so. They like capitalism. They want to practice it. Regards, Bill Bonner | ||||||||||||||||||||
| How Australia’s Terms of Trade is Riding the Dragon Posted: 22 Jan 2012 02:55 PM PST One of the best indications of how good Australia has had it in the last 10 years is its terms of trade. Roughly speaking, the terms of trade tell you how much Australia gets for what it sells abroad and how much it pays for what it imports. The higher the figure, the bigger the difference. We start off with this topic for the week because the terms of trade fell in the fourth quarter for the first time since 2010. Export prices fell 1.5%, according to the Australian Bureau of Statistics. This was mostly due to a 4.5% fall in coal and iron ore prices. Meanwhile, import prices rose 2.5%, thanks to higher oil and energy prices. To put this in perspective you have to understand how good times have been. Export prices - mostly because of record iron ore and coal prices - have delivered a huge wave of income to Australian commodity companies. Import prices, especially manufactured goods, have fallen because of the global boom in capacity and production. You can see below that today's terms of trade boom exceeds anything Australia has seen in previous booms. The wool booms in the 1920s and the 1950s - both war related - helped Australia ride the sheep's back to prosperity. This time, Australia is riding the Dragon's back to prosperity. And the dragon is made of iron and steel and zinc and copper and breathes fire made from coal.  Now we don't mean to make a mountain out of a molehill. A one-month slow down in a long-term trend is an anomaly, not a trend. But you can see how central China has become to Australia's prosperity. Both aspects of the terms of trade - the export of iron ore and coal to China and the import of cheap manufactured goods from China - have been positively influenced to produce a record level. This is what the Reserve Bank of Australia (RBA) calls a "positive" terms of trade shock. It's one of three types of "shocks" academic research has identified. According to the RBA's report (emphasis added is ours):
Three stylised terms of trade shocks are identified: a world demand shock, a commodity-market specific shock, and a globalisation shock. A positive world demand shock is associated with a pick-up in global economic activity and an increase in export and import prices. A positive commodity-market specific shock increases export prices without a corresponding pick-up in global economic activity. World output definitely expanded in the last 10 years. That tends to happen when China's economy grows by around 8% a year for 10 years in a row. This was a kind of "demand" shock, which caught global commodity producers off guard. They'd spent 20 years not investing in much new productive capacity. And suddenly demand exploded. This is also the "globalisation shock" the RBA paper mentions. The globalisation of manufacturing has reduced the price of manufactured goods while boosting the demand for raw materials. If you can name a country that's benefitted from this more than Australia, we'll bake you a cake. But the question we're wrestling with is how to separate the "globalisation shock" from the decline of the US dollar and the global credit boom. China's rise - and therefore Australia's good fortune - are directly related to Americans living above their means on credit. Americans - including the US government - have been able to do this because of the global dollar standard; a currency system that permits America to run up debts in a currency it can also print. The whole world got in on the credit bubble. The result, you'd imagine, is an artificial level of consumer demand. And you'd further expect that demand to fall as the world deleverages. Overcapacity + falling demand = slower corporate profit growth and lower stock prices. What's more, the flip side of the boom in Chinese manufacturing capacity is the structural loss of manufacturing jobs in America and the Western world. Millions of middle-class workers have lost high-wage jobs that may be very hard to get back. You'd expect that to be bearish for consumer demand as well. You'd expect a lot of things. But you never can tell what the world will bring you. This is why we've set aside two whole days in March to discuss the subject . The "After America" conference is currently on sale right now to those who previously expressed interest in advanced notification. If we don't sell out by Friday, we'll let you know more about the show in Sydney and how to sign up. Dan Denning | ||||||||||||||||||||
| Posted: 22 Jan 2012 02:10 PM PST 
If there was a Hollywood movie where some crooks successfully stole 150 million dollars, what would you think of those crooks? Would you have admiration for them? Would you be disgusted with them? Would you feel like your intelligence was insulted because nobody could ever steal 150 million dollars and get away with it? Well, right now the federal government is stealing approximately 150 million dollars from our children and our grandchildren every single hour. That's right - the U.S. government is borrowing an astounding 150 million dollars an hour that our children and our grandchildren will be expected to deal with. It is a theft so vast that it is almost unimaginable. So what should be done? A lot of people out there think that our problems would be solved if the government would just quit borrowing so much money. Well, it is just not that simple. Look at Greece. They were forced by the EU and the IMF to dramatically reduce government spending. But when Greece reduced government spending, that caused the economy to shrink rapidly and it caused tax receipts to go down more than expected. So Greek budget deficits were even larger than anticipated and so Greece was forced to cut spending even more. But that created even more economic problems. A recent article by John Mauldin described the nightmarish effect that this cycle has had on Greece....
This is what happens when a country that has been spending far beyond its means is forced to dramatically cut back. Those that are convinced that balancing the federal budget in the United States will be relatively painless should take a close look at what is happening in Greece. As I have written about previously, the Greek economy has been plunged into a 21st century "Great Depression". In Greece, 20 percent of all retail stores have already shut down, the unemployment rate for those under the age of 24 is sitting at 39 percent, and one third of the entire nation is living in poverty. And this is only just the beginning for Greece. Things are going to get even worse. Unfortunately, many believe that the United States is destined to experience far worse pain than Greece is currently experiencing. For example, Peter Schiff insists that the United States is in worse financial shape than Europe at this point. Just check out this video.... Anyone that attempts to downplay the U.S. debt problem is making a serious mistake. Yes, we are still able to borrow trillions of dollars for next to nothing, but that is going to come to an end. Remember all of those "suckers" that signed up for mortgages at "teaser rates" that later got jacked up dramatically? Of course you do. So what happened to them? When the rates went up many of them ended up losing everything. Well, we have gotten ourselves into the exact same kind of a position. All of this cheap money has enabled us to live very nicely for now, but when the cheap money ends the nightmare will begin. Right now, our debt is growing much, much faster than our economy is. Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period. What would your household finances look like if your total debt grew by 61 percent next year but your income only grew by 4 percent? When I was a little boy, the U.S. national debt was considered to be a huge national crisis. Politicians from both major political parties were promising that they would fix things. But what has happened since then? Well, when Ronald Reagan took office the U.S. national debt was less than 1 trillion dollars. Today, the U.S. national debt is over 15.2 trillion dollars. During 2011, the federal government went into more debt than the U.S. government accumulated from the time that George Washington became president to the time that Ronald Reagan became president. That may be hard to believe, but it is true. During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars. That is utter insanity, and yet most Americans have become convinced that this is "normal" and that there is nothing to worry about. It is hard to grasp how much money a trillion dollars is. If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars. That is how much money a trillion dollars is. And things look even worse when you look at the balance sheet of the U.S. government. The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars. Those liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding. But it is not just the federal government that has been living a fantasy. The chart posted below shows the growth of total debt in America over the past several decades. Consumers, businesses and government officials have been on a debt binge that is absolutely unprecedented....
The scary thing is that even with all of this borrowed money, our economy is still in the dumps. So what in the world is it going to look like when the debt bubble totally bursts? Even with all of this "borrowed prosperity", anger at the government is rapidly growing. A recent Gallup poll found that "satisfaction with government" in the United States is now at an all-time record low of 29 percent. So how angry will the American people be when all of this "borrowed prosperity" disappears? When this whole thing comes tumbling down, a lot of people are going to blame our problems on "capitalism". In fact, it is already happening. Just check out what the founder of the World Economic Forum is saying....
But capitalism is not the problem. Capitalism has produced the greatest eras of prosperity that the world has ever seen. No, the real problem is our debt-based financial system that is managed and run by the central banks of the world. You see, debt-based central banking is not capitalism. But way too many people equate the two. A lot of people cannot even imagine this, but theoretically you could have capitalism without any debt whatsoever. But what we have today is a financial system that has debt as the very foundation. And such a system is inevitably going to fail someday. As I have written about so many times before, the Federal Reserve is at the very heart of our economic problems here in the United States. The Federal Reserve was designed to be a perpetual debt machine. And it has performed that task very well. The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created. So yes, even though things seem somewhat "stable" for the moment, there are all kinds of reasons to be concerned about the viability of our economy and our financial system in the years ahead. The other day, I was quoted in a Reuters article about our coming economic problems....
Of course the Reuters reporter did not even bother to spell my name correctly, but at least he got the quote right. A great economic storm is coming. Don't let this false prosperity and this "calm before the storm" fool you. We are living in the greatest debt bubble the world has ever seen, and no matter how it plays out there is going to be a massive amount of pain. You might want to get yourself and your family prepared for that.
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