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Monday, February 27, 2012

Gold World News Flash

Gold World News Flash

Is silver rounding out a weekly cup/H pattern?

Posted: 26 Feb 2012 07:18 PM PST

Lets take a closer look at the weekly silver chart, and what it means for momos still caring about the...


Military Keynesianism Can’t Work … Because WWII Was Different from Current Wars

Posted: 26 Feb 2012 06:25 PM PST

World War II Was Different

“Military Keynesians” – people who think that war is good for the economy – base their theory on the idea that World War 2 pulled us out of the Great Depression.

I have exhaustively demonstrated that this is a myth: war is not good for the economy.

But even if WWII were good for the economy, things are completely different today.

World War II Employed Armies … Not Drones

Wikipedia points out:

Some critics, and even some supporters, contend that in the modern world, these policies are no longer viable for developed countries because military strength is now built on high-technology professional armies, and the military is thus no longer viable as a source of employment of last resort for uneducated young people.

Given that America fights its current wars with drones and smart bombs, it “employs” far fewer men then during WWII. It is a different world.

The Marshall Plan, Special Trade Provisions and Other Unique Circumstances Made WWII Different

Steven Hill noted yesterday:

Krugman has written, “Deficit spending created an economic boom – and the boom laid the foundation for long-run prosperity.”

 

But this viewpoint ignores a fairly obvious counterpoint. The United States emerged from World War II as the world’s conqueror, with virtually every economic competitor destroyed. Suddenly, America was the big boy on the block, leader of the Pax Americana, and our industries enjoyed numerous competitive advantages over international rivals. The dollar, suddenly, was the dominant global currency, and that granted Americans cheap money and influence that spurred unprecedented economic growth.

 

In addition, we then launched the ambitious Marshall Plan, which not only rebuilt our former adversaries, but also created international markets for US producers. One of the Marshall Plan’s conditions was that nations receiving funding were required to give American exporters preferred access to their emerging markets. The years of the Marshall Plan, from 1948 to 1952, saw one of the fastest periods of growth in European history, with industrial production increasing by 35 percent and agricultural production substantially surpassing prewar levels. American businesses, especially those specializing in manufactured goods and raw materials, benefited greatly from these fast-emerging markets. Any massive stimulus plan today would not benefit from those same advantages.

 

Krugman has rejected this critique, writing, “Trade was a minor factor in the American economy both before and immediately after the war, with imports and exports a much smaller share of gross domestic product than they are now.” Krugman admits that there was an increase in trade for a few years in the late 1940s due to the effects of the Marshall Plan, which allowed ruined economies to buy more from the United States, but it’s impact “was temporary,” he says.

 

But Krugman’s response is unconvincing. Here is a simple thought experiment to illustrate why. Imagine if America had lost World War II and not emerged as the dominant power. Does anyone seriously believe that all of that wartime stimulus money would have resulted in anywhere near the post-war boom that the United States experienced? Krugman is underestimating the impact of being the world’s conqueror, and the financial, economic and psychological advantages that conveys.

 

Certainly, a large dose of fiscal stimulus right now would spur an increase in aggregate demand, but without a surging export sector, that would probably result in more government jobs (and perhaps more than a few “bridges to nowhere”) than private-sector jobs. There’s no guarantee it would boost private-sector growth, since America’s struggling export and manufacturing base still would face stiff competition from many upstart international rivals, with none of the advantages enjoyed by US exporters in the aftermath of World War II. The world today, and America’s position in it, are far, far different from what they were in 1945.

 

***

 

In short, the world is decidedly multipolar now, and even if it was possible to pass a massive stimulus plan through the US Congress, there’s simply no guarantee that it would have an equivalent positive impact without the favorable conditions that existed after the Second World War.

Optimism – More Than Keynesian Stimulus – Got Us Out of the Depression

Economist Robert Higgs – who has studied the effect of World War II on the economy in great detail – argues that it was optimism, rather than stimulus spending, which got us out of the depression:

Which brings us to what may be the most important factor of all: the performance of the war economy, despite its command-and-control character, broke the back of the pessimistic expectations almost everybody had come to hold during the seemingly endless Depression. In the long decade of the 1930s, especially its latter half, many people had come to believe that the economic machine was irreparably broken. The frenetic activity of war production—never mind that it was just a lot of guns and ammunition—dispelled the hopelessness. People began to think: if we can produce all these planes, ships, and bombs, we can also turn out prodigious quantities of cars and refrigerators.

 

***

 

To sum up, World War II got the economy out of the Great Depression, but not in the manner described by the orthodox story. The war itself did not get the economy out of the Depression. The economy produced neither a “carnival of consumption” nor an investment boom, however successfully it overwhelmed the nation’s enemies with bombs, shells, and bullets. But certain events of the war years—the buildup of financial wealth and especially the transformation of expectations—justify an interpretation that views the war as an event that recreated the possibility of genuine economic recovery. As the war ended, real prosperity returned.

America’s performance in World War 2 made the U.S. a superpower. The fact that we defeated the Nazis, Mussolini and imperial Japan made us proud.

But now we’ve been a superpower for more than half a century. Indeed, we’ve been the sole superpower for more than 20 years … since the fall of the Soviet Union.

There is no way that Americans can be proud that we’ve become a superpower for the first time. Indeed, Americans are now terrified of losing our superpower status to China and coalitions of nations.

So a war today cannot have the same effect of creating optimism that WWII did.*

We’ve Got Much More Debt Now Than at the Beginning of WWII

U.S. debt at the beginning of World War 2 was actually much lower than it is today on a debt-to-gdp basis … even after all of Roosevelt’s New Deal programs. Here is a chart taken from Office of Management and Budget data (via Talking Points Memo):

debtgdp Military Keynesianism Cant Work ... Because WWII Was Different Because WWII Was Different from Current Wars

While people can debate how much debt the U.S. economy can handle, the fact is that there was a lot more breathing room before WWII than today.  Put another way, the stimulus of WWII had more of an effect, because it was acting on a lower debt load to start with.

If This Was Like WWII, It Would Have Worked By Now

I noted last year:

We’ve been in Iraq for years longer than WWII. We’ve been involved in 7 or 8 wars in the last decade. And yet we’re still in a depression. (And see this).

 

If [things were the same as in WWII], don’t you think things would have improved by now?

 

Indeed, the Iraq war alone could end up costing more than World War II. And given the other wars we’ve been involved in this decade, I believe that the total price tag for the so-called “War on Terror” will definitely support that of the “Greatest War”.

In fact, it is well known that the longer wars last, the worse they are for the economy.    The 11 years we’ve been fighting in Afghanistan are almost 3 times longer than the the 4 years we spent fighting  WWII.   And leaked reports say that we’re not very close to victory in Afghanistan.   Therefore, the entire “war on terror” (or whatever we’re calling it these days) is much worse for our economy than the much shorter engagement of WWII.

* In addition, most Americans think that the Iraq war was a mistake and the Afghan war is “not worth it” anymore, whereas virtually all Americans thought that WWII had to be fought and won.  As such, there is much less of a boost from pride and optimism about our future.

Silver/Gold Ratio Breaks Below 50:1

Posted: 26 Feb 2012 05:16 PM PST

from Silver Doctors:

Silver is up .10 from Friday's NY close to $35.62, continuing to hold all of last week's impressive gains. The big news tonight is the silver/gold ratio, which as just broken below 50:1 for the first time in months.

With gold currently trading in Asia at $1775.90 and silver at $35.62, the silver/gold ratio has fallen to 49.86: 1.

If gold and silver are successful at breaking significant resistance in the next few weeks at $36 and $1800, look for this ratio to again tighten significantly over the coming months as silver continues to out-perform gold.

Read More @ silverdoctors.com

What Is the 'Spot Price' of Gold and Silver?

Posted: 26 Feb 2012 03:35 PM PST

Top 5 Declining Business Industries

Posted: 26 Feb 2012 03:12 PM PST

Previously, NuWire analyzed the Top 5 Business Trends that may positively impact some businesses' potential for profit. Other businesses, however, will struggle to adapt to the trends that are driving a larger economic transition; typically, these are businesses that are adversely affected by factors such as the predominance of the Internet, the weakening of the U.S. dollar or the poor state of the housing market.

NuWire identified and explored five business industries that appear to be on the decline. Entrepreneurs should consider the downward trends inherent in these industries and perhaps choose to invest their time and money in more promising endeavors.

Print media

Paper is quickly going out of fashion. It's expensive and it kills trees—two big taboos for the modern consumer. Furthermore, the Internet, a faster and more convenient platform, is quickly becoming the preferred method for gathering information that would traditionally be captured in print media. Only one in fifty Americans got the news regularly from the internet in 1996; a decade later, nearly one in three Americans regularly received news online, according to the Pew Research Center. Read more....


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Grant Williams:Indian Households Own 18,000 Tons Of Gold

Posted: 26 Feb 2012 03:07 PM PST

There are a couple of very interesting video's on zerohedge by Grant Williams on building the case for gold. He provides a chart at the end of the second video that show that good would need to be valued at over $9000 to match the US's money supply. ( the same logic that set the price at $35/oz at Bretton woods). One of the final charts is also very insightful, the biggest holder of gold is actually Indian households with 18,000 tons! Or more than all EU central banks and the US.

See full article here.

Gold Finishes Up 2.93% for the Week, Silver Up 29% Since 1/1/2012

Posted: 26 Feb 2012 02:43 PM PST

Gold Finishes Up 2.93% for the Week, Silver Up...

[[ This is a content summary only. Visit my website http://goldbasics.blogspot.com for full Content ]]


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Greece isn't only one that can't service its debt, Davies tells Martenson

Posted: 26 Feb 2012 01:55 PM PST

9:55p ET Sunday, February 26, 2012

Dear Friend of GATA and Gold:

Details and timing will vary, Hinde Capital CEO Ben Davies tells market analyst Chris Martenson in an interview this week, but most of the rest of the West isn't any more able to service its debt than Greece is, and so credit and currency crackups won't end with that little country. You can listen to the interview at Martenson's Internet site here:

http://www.chrismartenson.com/blog/ben-davies-greece-just-preview-whats-...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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Prophecy Coal (TSX: PCY) Wins Positive Feasibility Study
for the 600-MW Chandgana Power Plant in Mongolia

Company Press Release
January 17, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Coal Corp. (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has received a positive feasibility study for the company's 600-megawatt Chandgana Mine-Mouth Power Project in central Mongolia. The report was independently prepared by Ralf Thomsen, project manager at Steag, a German firm specializing in the planning, financing, construction, and operation of highly efficient thermal power plants for fossil fuels.

The study covers technical specifications, deployment, and financial analysis of a 4x150-mw thermal power plant to be built adjacent to Prophecy's Chandgana Tal coal deposit, which contains 140 million tonnes of measured coal. Last year the power plant received a construction license and the coal deposit received a mining license. Engineering, procurement, and construction management selection and project financing discussion have begun and are expected to be concluded this year.

Construction is planned to start in April 2013, with the first 150-mw unit being commissioned in October 2015 and subsequent units to start in April 2016, October 2016, and April 2017. With proper maintenance the project will have 30 years of commercial operation.

For the complete statement from the company, including maps and charts, please visit:

http://www.prophecycoal.com/news_2011_jan17_prophecy_receives_power_plan...


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Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf

Guest Post: Extend And Pretend Coming To An End

Posted: 26 Feb 2012 01:34 PM PST

Submitted by Jim Quinn of The Burning Platform,

 

The real world revolves around cash flow. Families across the land understand this basic concept. Cash flows in from wages, investments and these days from the government. Cash flows out for food, gasoline, utilities, cable, cell phones, real estate taxes, income taxes, payroll taxes, clothing, mortgage payments, car payments, insurance payments, medical bills, auto repairs, home repairs, appliances, electronic gadgets, education, alcohol (necessary in this economy) and a countless other everyday expenses. If the outflow exceeds the inflow a family may be able to fund the deficit with credit cards for awhile, but ultimately running a cash flow deficit will result in debt default and loss of your home and assets. Ask the millions of Americans that have experienced this exact outcome since 2008 if you believe this is only a theoretical exercise. The Federal government, Federal Reserve, Wall Street banks, regulatory agencies and commercial real estate debtors have colluded since 2008 to pretend cash flow doesn’t matter. Their plan has been to “extend and pretend”, praying for an economic recovery that would save them from their greedy and foolish risk taking during the 2003 – 2007 Caligula-like debauchery.

I wrote an article called Extend and Pretend is Wall Street’s Friend about one year ago where I detailed what I saw as the moneyed interest’s master plan to pretend that hundreds of billions in debt would be repaid, despite the fact that declining developer cash flow and plunging real estate prices would make that impossible. Here are a couple pertinent snippets from that article:

“A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history.

Part two of the master cover-up plan has been the extending of commercial real estate loans and pretending that they will eventually be repaid. In late 2009 it was clear to the Federal Reserve and the Treasury that the $1.2 trillion in commercial loans maturing between 2010 and 2013 would cause thousands of bank failures if the existing regulations were enforced. The Treasury stepped to the plate first. New rules at the IRS weren’t directly related to banking, but allowed commercial loans that were part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without triggering tax penalties for investors.

The Federal Reserve, which is tasked with making sure banks loans are properly valued, instructed banks throughout the country to “extend and pretend” or “amend and pretend,” in which the bank gives a borrower more time to repay a loan. Banks were “encouraged” to modify loans to help cash strapped borrowers. The hope was that by amending the terms to enable the borrower to avoid a refinancing that would have been impossible, the lender would ultimately be able to collect the balance due on the loan. Ben and his boys also pushed banks to do “troubled debt restructurings.” Such restructurings involved modifying an existing loan by changing the terms or breaking the loan into pieces. Bank, thrift and credit-union regulators very quietly gave lenders flexibility in how they classified distressed commercial mortgages. Banks were able to slice distressed loans into performing and non-performing loans, and institutions were able to magically reduce the total reserves set aside for non-performing loans.

If a mall developer has 40% of their mall vacant and the cash flow from the mall is insufficient to service the loan, the bank would normally need to set aside reserves for the entire loan. Under the new guidelines they could carve the loan into two pieces, with 60% that is covered by cash flow as a good loan and the 40% without sufficient cash flow would be classified as non-performing. The truth is that billions in commercial loans are in distress right now because tenants are dropping like flies. Rather than writing down the loans, banks are extending the terms of the debt with more interest reserves included so they can continue to classify the loans as “performing.” The reality is that the values of the property behind these loans have fallen 43%. Banks are extending loans that they would never make now, because borrowers are already grossly upside-down.”

Master Plan Malfunction

You have to admire the resourcefulness of the vested interests in disguising disaster and pretending that time will alleviate the consequences of their insatiable greed, blatant criminality and foolish risk taking. Extending bad loans and pretending they will be repaid does not create the cash flow necessary to actually pay the interest and principal on the debt. The chart below reveals the truth of what happened between 2005 and 2008 in the commercial real estate market. There was an epic feeding frenzy of overbuilding shopping centers, malls, office space, industrial space and apartments. During the sane 1980’s and 1990’s, commercial real estate loan issuance stayed consistently in the $500 billion to $700 billion range. The internet boom led to a surge to $1.1 trillion in 2000, with the resultant pullback to $900 billion by 2004. But thanks to easy Al and helicopter Ben, the bubble was re-inflated with easy money and zero regulatory oversight. Commercial real estate loan issuance skyrocketed to $1.6 trillion per year by 2008. Bankers sure have a knack for doing the exact opposite of what they should be doing at the exact wrong time. They doled out a couple trillion of loans to delusional developers at peak prices just prior to a historic financial cataclysm.

The difference between bad retail mortgage loans and bad commercial loans is about 25 years. Commercial real estate loans usually have five to seven year maturities. This meant that an avalanche of loans began maturing in 2010 and will not peak until 2013. With $1.2 trillion of loans coming due between 2010 and 2013, disaster for the Wall Street Too Big To Fail banks awaited if the properties were valued honestly. A perfect storm of declining property values and plunging cash flows for developers should have resulted in enormous losses for Wall Street banks and their shareholders, resulting in executives losing not only their obscene bonuses but even their jobs. Imagine the horror for the .01%.

The fact is that commercial property prices are currently 42% below the 2007 – 2008 peak. The slight increase in the national index is solely due to strong demand for apartments, as millions of Americans have been kicked out of their homes by Wall Street bankers using fraudulent loan documentation to foreclose on them. The national index has recently resumed its fall. Industrial and retail properties are leading the descent in prices according to Moodys. The master plan of extend and pretend was implemented in 2009 and three years later commercial real estate prices are 10% lower, after the official end of the recession.

Part one of the “extend and pretend” plan has failed. Part two anticipated escalating developer cash flows as the economy recuperated, Americans resumed spending like drunken sailors and retailers began to rake in profits at record levels again. Reality has interfered with their desperate last ditch gamble. Office vacancies remain at 17.3%, close to 20 year highs, as 12.3 million square feet of new space came to market in 2011. Vacancies are higher today than they were at the end of the recession in December 2009. The recovery in cash flow has failed to materialize for commercial developers. Strip mall vacancies at 11% remain stuck at 20 year highs. Regional mall vacancies at 9.2% linger near all-time highs. Vacancies remain elevated, with no sign of decreasing. Despite these figures, an additional 4.9 million square feet of new retail space was opened in 2011. The folly of this continued expansion will be revealed as bricks and mortar retailers are forced to close thousands of stores in the next five years.

It is clear the plan put into place three years ago has failed. Extending and pretending doesn’t service the debt. Only cash flow can service debt.

Now What?

Extending and pretending that hundreds of millions in commercial loans were payable for the last three years is now colliding with a myriad of other factors to create a perfect storm in 2012 and 2013. The extension of maturities has now set up a far more catastrophic scenario as described by Chris Macke, senior real estate strategist at CoStar Group:

“As banks and property owners continue to partake in loan extensions amid a softening economy, commercial banks continue to “delay and pray” that property values will rise. Many loans are piled up and concentrated in this year, and at the same time, the economy is slowing. This dilemma has resulted in the widening of what is commonly termed the “loan maturity cliff,” which is attributed to the so called extend-and-pretend loans. During the market downturn, lenders extended the maturity dates of loans with properties that had current values below their balances. Instead, however the practice has resulted in a race for property values to try to catch up with the loan maturity dates.”

The Federal Reserve, Wall Street banks, Mortgage Bankers Association and the rest of the confederates of collusion will continue the Big Lie for as long as possible. They point to declining commercial default rates as proof of improvement. The chart below details the 4th quarter default rates for real estate loans over the last six years. Default rates in the 4th quarter of 2009 peaked for all real estate loan types. Still, today’s default rate is 450% higher than the rate in 2006. A critical thinker might ask how commercial default rates could fall from 8.75% to 6.12% when commercial vacancies have increased and commercial property values have fallen. It’s amazing how low default rates can fall when a bank doesn’t require payments or collateral to back up the loan and can utilize accounting gimmicks to avoid write-offs.

 

Real estate loans

All

Booked in domestic offices

Residential 

Commercial 

Farmland

2011:4

8.22

9.86

6.12

3.26

2010:4

9.07

10.11

7.98

3.61

2009:4

9.55

10.45

8.75

3.43

2008:4

6.03

6.64

5.49

2.28

2007:4

2.90

3.07

2.75

1.51

2006:4

1.70

1.95

1.32

1.41

The reality as detailed by honest analysts is much different than the numbers presented by Ben Bernanke and his banker cronies. A recent article from the Urban Land Institute provides some insight into the current state of the market:

 Ann Hambly, who previously ran the commercial servicing departments at Prudential, Bank of New York, Nomura, and Bank of America said a wave of defaults is coming in commercial mortgage–backed securities (CMBS). And Carl Steck, a principal in MountainSeed Appraisal Management, an Atlanta-based firm that deals in the commercial real estate space, said property values are still falling.

Noting that CMBS investors booked $6 billion in real losses in 2011 and have already taken on $2 billion more in losses so far this year, Hambly told reporters in a private briefing that “it’s going to take a miracle” for many borrowers to refinance their deals when they come due between now and 2017.

Carl Steck said that lenders who are taking over the portfolios of failed institutions are finding that the values of the loans “are coming in a lot lower than they ever thought they would.” And as a result, he thinks a “fire sale” of commercial loans is just over the horizon. 

Analysts expect 2012 to be a record-setting year for commercial real estate defaults. Last week delinquencies for office and retail loans hit their highest-ever levels, according to Fitch Ratings. The value of all delinquent commercial loans is now $57.7 billion, according to Trepp, LLC. If you think the criminal Wall Street banks limited their robo-signing fraud to just poor homeowners, you would be mistaken. The fraud uncovered in the commercial lending orbit will dwarf the residential swindle. Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States. In the cases studied by Harbinger, the problems are because banks accepted the work of land surveyors who “have committed actual and/or constructive fraud by knowingly failing to conduct accurate boundary surveys and/or failing to file the statutorily required documentation in public records.”

The Wall Street geniuses bundled commercial real estate mortgages and re-sold them as securities around the world. The suckers holding those securities, already staggering from the overabundance of empty office space, will be devastated if it turns out they have no claim to the properties. They will rightly sue the lenders for falsely representing the properties. Mortgage holders in these cases may also turn to their title insurance to cover any losses. It is unknown if the title insurance companies have the wherewithal to withstand enormous claims on costly commercial properties. It looks like that light at the end of the tunnel is bullet train headed our way.

One of the fingers in the dyke of the “extend and pretend” dam has been removed by the FASB. The new leak threatens to turn into a gusher.

 

Andy Miller, cofounder of Miller Frishman Group, and one of the few analysts who saw the real estate crash coming two years before it surprised Bernanke and the CNBC cheerleaders sees a flood of defaults on the horizon. In a recent interview with The Casey Report Miller details a dramatic turn for the worse in the commercial real estate market he has witnessed in the last few months. His company deals with distressed commercial real estate. This segment of his business was booming in 2009 and into the middle of 2010. Then magically, there was no more distress as the “extend and pretend” plan was implemented by the governing powers. The distressed market dried up completely until November 2011. Miller describes what happened next:

“All of a sudden, right after Thanksgiving in 2011, the floodgates opened again. In the last six weeks we probably picked up seven or eight receiverships – and we’re now seeing some really big-ticket properties with major loans on them that have gone into distress, and they’re all sharing some characteristics in common. In 2008 and 2009, these borrowers were put on a workout or had a forbearance agreement put into place with their lenders. In 2009, their lenders were thinking, “Let’s do a two- or three-year workout with these guys. I’m sure by 2012 this market is going to get a lot better.” Well, 2012 is here now, and guess what? It’s not any better. In fact I would argue that it’s still deteriorating.”

Why the sudden surge in distressed properties coming to market in late 2011? It seems the FASB finally decided to grow a pair of balls after being neutered by Bernanke and Geithner in 2009 regarding mark to market accounting. They issued an Accounting Standards Update (ASU) that went into effect for all periods after June 15, 2011called Clarifications to Accounting for Troubled Debt Restructurings by Creditors. Essentially, if a lender is involved in a troubled debt restructuring with a debtor, including a forbearance agreement or a workout, the property MUST be marked to market. Andy Miller understands this is the beginning of the end for “extend and pretend”:

“I believe it’s a huge deal because it means you don’t have carte blanche anymore to kick the can down the road. After all, kicking the can down the road was a way to avoid taking a big hit to your capital. Well, you can’t do that anymore. It forces you to cut through the optical illusions by writing this asset to its fair market value.”

Ben Bernanke and the Wall Street banks are running out tricks in their bag of deception. Wall Street banks created billions in profits by using accounting entries to reduce their loan loss reserves. They’ve delayed mortgage foreclosures for two years to avoid taking the losses on their loan portfolios. They’ve pretended their commercial loan portfolios aren’t worth 50% less than their current carrying value. Bernanke has stuffed his Federal Reserve balance sheet with billions in worthless commercial mortgage backed securities. The Illusion of Recovery is being revealed as nothing more than a two bit magician’s trick. In the end it always comes back to cash flow. The debt cannot be serviced and must be written off. Thinking the American consumer will ride to the rescue is a delusional flight of the imagination.

Apocalypse Now – The Future of Retailers & Mall Owners

 

When I moved to my suburban community in 1995 there were two thriving shopping centers within three miles of my home and a dozen within a ten mile radius. Seventeen years later the population has increased dramatically in this area, and these two shopping centers are in their final death throes. The shopping center closest to my house has a vacant Genuardi grocery store(local chain bought out and destroyed by Safeway), vacant Blockbuster, vacant Sears Hardware, vacant Donatos restaurant, vacant book store, and soon to be vacant Pizza Pub. It’s now anchored by a near bankrupt R


Wyoming House Advances Doomsday Bill

Posted: 26 Feb 2012 01:32 PM PST

By Jeremy Pelzer

Cheyenne — State representatives on Friday advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States.

House Bill 85 passed on first reading by a voice vote. It would create a state-run government [...]


James Turk: No reprieve for Greece from debtor's prison

Posted: 26 Feb 2012 01:29 PM PST

9:30p ET Sunday, February 26, 2012

Dear Friend of GATA and Gold:

GoldMoney founder, Free Gold Money Report editor, and GATA consultant James Turk writes today about the conquest of Greece by the European bankers, taking over the country without a fight from its craven politicians, who ignored the brave example of Iceland, which chose national sovereignty over slavery. Turk's commentary is titled "No Reprieve for Greece from Debtor's Prison" and it's posted at the Free Gold Money Report Internet site here:

http://www.fgmr.com/no-reprieve-for-greece-from-debtors-prison.html

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


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At the moment the public is showing little interest in Double Eagle U.S. $20 gold coins, so the price premiums above the intrinsic melt values (.9675 ounce of gold in each coin) are historically low. The ratio of price to bullion content for these coins has been 2:1 but today it is only about 1.25:1.

This is a real opportunity. So give us a call or e-mail and we will be glad to discuss the potential of these coins and how to use a ratio strategy to increase your gold ounces without money out of pocket.

In the January edition of his Early Warning Report, Richard Maybury writes: "As they are inherently in very limited supply, I believe that high-quality numismatics will become tulips, eventually rising a thousand percent or more in real terms, when money velocity goes into mid-second stage. In late stage, who knows -- 2,000 percent? 3,000?"

All inquiries will receive without charge (while supplies last) our latest book, "The Inflation Deception," as well as our newsletter "Real Money Perspectives."

-- Tim Murphy, trmurphy@swissamerica.com

-- Fred Goldstein, figoldstein@swissamerica.com

Telephone: 1-800-289-2646

Swiss America Trading Corp., 15018 North Tatum Blvd., Phoenix, AZ 85032


Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


ADVERTISEMENT

Free Month Subscription to Market Force Analysis for GATA Supporters

Market Force Analysis is a unique, patent-pending approach to commodity market analysis. An algorithm has been developed to extract supply and demand weightings from futures market data. The difference between supply and demand is the market imbalance that is called "market force," so named because it is what drives price. It brings clarity to past market action and predicts market trends. Because it is derived from accurate futures market data it is not subject to the errors inherent in macro-level estimates of supply and demand.

Learn more here:

https://marketforceanalysis.com/About_MFA.html

Market Force Analysis focuses on short-term (15 days) and medium-term price predictions to help both short-term traders and long-term investors understand market moves and benefit from the generated prediction of prices. To read subscriber comments that show how much the service is appreciated, visit:

https://marketforceanalysis.com/Testimonials.html

The MFA service has been pioneered by market analyst and Gold Anti-Trust Action board member and researcher Adrian Douglas.

The Market Force Analysis premium service provides:

-- A bi-weekly report.

-- Access to the MFA hot list of junior mining stocks derived from analysis of more than 800 mining stocks. The MFA hot list consistently outperforms well-known mining share indices like the HUI, GDX, and GDXJ.

-- E-mail alerts about actionable trades.

-- E-mail updates with important information.

To obtain your 1-month free trial subscription to the Market Force Analysis letter, e-mail info@marketforceanalysis.com and put "MFA Free Trial" in the subject field.

Grant Williams On The Simplicity Of Owning Gold

Posted: 26 Feb 2012 11:22 AM PST

As we enter a week in which the expectations are high for yet another large expansion of central bank balance sheets, and ever more extreme monetary policy (thanks to the LTRO 2), we thought it appropos to listen to Grant Williams, of the famous "Things That Make You Go Hhhhm" newsletter, explain in its simplest terms, why it is still a good time to own gold. In two excellent and succinct presentations, Williams discusses the 'simplicity' of investing through the last four decades but ends by focusing specifically on the rotation to Gold at the start of the last decade (2000) and why the reason for rotating out of the precious metal has not occurred yet. Seeing the world of Gold as a battle between Too Much and Not Enough (and drawing on global supply, demand, and holdings flow) Williams lays out the reasons for owning gold, and how to know when to cover - as he narrows the five reasons to reconsider Buffett-and-Roubini's Barbarous Relic down to one simple rule - Central Bank Monetary Policy Changes.

Simplicity 1 - An introduction to investing by Simplicitly over the past forty years and making one big decision through each decade - ending with a focus on the current position in Gold and Central bank largesse writ large...

 

Simplicity 2 - Williams expands specifically on Gold - with key insights on owndership, supply, demand shifts, demographics, and central bank behavior with a succinct summation of reasons to own and reasons to exit that should help many deal with the ebbs and flows.

Key Events In The Week Ahead - US Growth Focus And Oil Price Trends

Posted: 26 Feb 2012 10:46 AM PST

Last week saw dramatic dispersion among the major FX pairs as global and local influences caused significant moves in most of the key crosses. Goldman takes a look back at the key drivers of that volatility and then focuses on the week ahead as the EU Summit at the latter end is the main event risk while ongoing macro developments will be focused on the incessant rise in Crude oil prices and whether we start seeing knock-on impacts in the real economy.

 

 

Goldman Sachs: What Matters in FX This Week : FX Week Ahead: Focus On US Growth Data And Oil Price Trends

It has been a big week for FX; a number of global and local influences have caused significant moves in key crosses and mostly in G10 space. First, the EUR rallied on a trade weighted basis; stretched short EUR positions unwound as progress was made on the Greece PSI and as the market took relief in the avoidance of a more disorderly outcome in the Euro-area. Interestingly the EUR rally happened even despite rangebound performance for risky assets and lack of strong directionality in other dollar crosses (such as $/LATAM or $/NJA). The key event to watch in the week ahead in terms of Euro-area tensions will be the EU summit on Thursday and Friday where the final details of the next Greece assistance package will be discussed.

Second, the JPY continued to depreciate sharply, extending the move that began with the BOJ's latest balance sheet expansion operation and the shift to an inflation target. As Fiona Lake recently argued, although the shift in JPY fits fundamentally with a convergence towards fair value, the timing of the move is tricky and we have been reluctant to follow the shift particularly in the absence of an analogous move in US front end rates.

That said, the main macro development last week, the ongoing rise in Brent crude oil prices to the highest USD denominated level since last spring (and the highest EUR denominated level ever), was conducive to a shift higher in both in EUR/$ as well as in $/JPY. Our commodity strategy team has been highlighting that the run up in Brent prices over the past month has been driven primarily by a recovery in global growth expectations and hence was in line with our broader views. However, in the past couple of weeks fears of supply disruptions due to Middle East tensions has likely contributed to the increase to over $124/bbl as well. Our relevant top trade hit our target and we recommended clients to close the long July 2012 Brent position. However, we still expect to see Brent crude oil prices to rise to $127.50/bbl on a 12-month horizon, and see the risk to this forecast as increasingly skewed to the upside. For now, however, we expect the better opportunity for a long position in crude oil lies in being long WTI crude oil, and we have recommended a long September 2012 WTI position to take advantage of our anticipated narrowing of the WTI-Brent spread following the reversal of the Seaway pipeline to flow crude oil from the oversupplied US midcontinent to the US Gulf Coast in June.

What this means for FX is 1) currencies like NOK and RUB tend to experience the most positive Terms of Trade shock, while JPY and KRW the most negative one and 2) reserve recirculation dynamics imply EUR/$ buying flows from large commodity producing FX targeting countries.

Finally, more dovish than anticipated BOE minutes led to GBP weakness which we think can extend. Policy expectations in the UK, combined with EUR dynamics and developments in oil prices are bound to lead GBP/NOK lower; hence our new trading recommendation last week.

For the week ahead we will be watching US data closely. Risky assets will need to see the improvement in growth dynamics extend in order for the rally to gain fresh momentum. ISM will be the key release to watch but durable goods and consumer confidence will also be important.

Monday, 27th February

US Pending Home Sales (Jan): Consensus expects 1.0%mom after a 3.5% fall in December.

Israel Monetary Policy Meeting : We and consensus expect no change from 2.50%.

Also Interesting: ECB Asmussen Speech

Tuesday, 28th February

US Durable Goods Orders (Jan): Consensus expects -1.0% mom after 3.0% mom in December.

US Consumer Confidence (Feb): Consensus expects a rise to 63.0 from 61.1 in January.

Hungary Monetary Policy Meeting: We and consensus expect the base-rate to be unchanged at 7.00%

Also Interesting: South Africa Q4 GDP, Philippines Jan exports, Japan retail sales

Wednesday, 29th February

India 2011 Q4 GDP: We expect 6.5%yoy vs consensus of 6.3% yoy after 6.9% yoy in Q3.

Sweden Q4 GDP: We expect 2.8% yoy growth down from 4.6% yoy in Q3 2011.

Euro area CPI (Jan): For core CPI, consensus expects 1.7%yoy after 1.6% yoy in December.

Bernanke Speech (semi annual testimony)

Also Interesting: Fed Beige Book, US GDP Q4 (2nd), Australia/Germany Retail Sales (Jan), South Korea/Japan Jan IP, Thailand Jan Exports, UK Feb Consumer confidence, Switzerland KOF

Thursday, 1st March

South Korea Exports (Feb): Consensus expects 13.7% yoy after -7.0% yoy in January.

China PMI Manufacturing (Feb): Consensus expects 50.8 up from 50.5 in January.

Germany Flash CPI (Feb): Consensus expects 2.2% yoy after 2.1% yoy in January.

US ISM/Global PMI: For ISM, consensus expects a reading of 54.5 in February up from 54.1 in January.

US Personal Income (Jan): Consensus expects 0.4% mom, the same as in December.

Switzerland GDP (Q4): We expect 0.3% yoy vs consensus of 1.0% yoy, down from 1.3% yoy in Q3 2011.

Philippines Central Bank Meeting: We expect the policy rate to be unchanged. Consensus expects a cut of 25bps to 4.00% down from 4.25%.

Russia CB Meeting: We expect no change in the policy rate.

EU Summit begins

Also interesting: Brazil Exports, South Korea/Indonesia/Thailand CPI, Poland Q4 GDP

Friday, 2nd March

Canada GDP (Q4): We expect 2.1% yoy up from 2.0% in Q3 2011.

EU Summit ends

And a tabular summary from SocGen:

Dan Norcini: Strong weekly close in Gold

Posted: 26 Feb 2012 09:16 AM PST

What this would be telling us fundamentally is that gold is now convinced beyond all shadow of a doubt that the near world-wide currency debauchment...


Wyoming Prepares Doomsday Contingency Plans “In the Event of a Complete Economic or Political ...

Posted: 26 Feb 2012 07:57 AM PST

disruptions in food and energy supplies to a complete meltdown of the federal government.The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed.


The ECB Gone Wild; Living in Interesting Times

Posted: 26 Feb 2012 07:41 AM PST

The historically hawkish European Central Bank (ECB) has the single mandate of ensuring price stability in the European Union. In the face of the rapidly unfolding debt deflation collapse of the European banking system in December 2011, the ECB shocked global financial markets with the December surprise of $645 billion in long-term refinancing operations (LTRO). The program provided three-year loans to strapped banks. The ECB on a lending binge to over 500 banks qualifies as interesting times by any standard.


Pento - The Mystery Behind Rising Gold & Oil Prices Solved

Posted: 26 Feb 2012 05:45 AM PST

Today Michael Pento told King World News that investors are fleeing out of fiat paper and into gold and energy. Pento, who founded Pento Portfolio Strategies, also said rising oil prices will further damage an already weak global economy. Pento had this to say about the situation: "Everything I've been worried about regarding the fallout of global central bankers' love affair with inflation is coming to fruition. Investors across the globe are once again dealing with the fact that the cost of filling up their gas tank is eating a significant portion of their discretionary purchases. The price of a barrel of oil has soared to near $110 a barrel, just as it always has done when the Fed has gone on one of their counterfeiting sprees."


This posting includes an audio/video/photo media file: Download Now

Silver price rises twice as fast as gold as the eurozone floods with money

Posted: 26 Feb 2012 04:00 AM PST

Gold and silver prices really got the wind behind them last week and reaped the benefit of the Greek bailout deal as ArabianMoney suggested was likely (click here). Gold got to $1,780 and silver close to $36 with weekly gains of three and six per cent respectively.


Wyoming Prepares Doomsday Contingency Plans “In the Event of a Complete Economic or Political Collapse in the United States”

Posted: 26 Feb 2012 01:52 AM PST

by Mac Slavo, SHTFPlan.com:


Three million Americans, often ridiculed by family, friends and mainstream media for their paranoia, aren't the only ones preparing for the potentiality of catastrophe resulting from natural or man-made causes. Recent legislation in Wyoming would open the door to studies into the possibility of far-from-equilibrium situations and SHTF preparedness plans that include alternate currencies in the event of a dollar collapse, redundant food distribution networks, preserving utility infrastructures, as well as raising and maintaining a well regulated militia if the situation calls for it.

House Bill 85 passed on first reading by a voice vote. It would create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.

Read More @ SHTFPlan.com

G-20 aims to assemble $2 trillion European bailout deal

Posted: 26 Feb 2012 01:06 AM PST

By Dave Graham and Tetsushi Kajimoto
Reuters
Sunday, February 26, 2012

http://www.reuters.com/article/2012/02/26/us-g-idUSTRE81N1L620120226

MEXICO CITY -- The world's leading economies worked on Sunday to line up a deal in April on a second global rescue package worth nearly $2 trillion to stop the euro-zone sovereign debt crisis from spreading and putting at risk the tentative recovery.

Germany said it would make a decision some time in March on strengthening Europe's bailout fund, a move other Group of 20 countries say is essential to clear the way for throwing extra funds into the International Monetary Fund.

The two actions are part of the G20's efforts to build up massive international resources by the end of April -- when the group next meets -- and convince financial markets they can stem the euro-zone's deep problems.

... Dispatch continues below ...


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Market Force Analysis is a unique, patent-pending approach to commodity market analysis. An algorithm has been developed to extract supply and demand weightings from futures market data. The difference between supply and demand is the market imbalance that is called "market force," so named because it is what drives price. It brings clarity to past market action and predicts market trends. Because it is derived from accurate futures market data it is not subject to the errors inherent in macro-level estimates of supply and demand.

Learn more here:

https://marketforceanalysis.com/About_MFA.html

Market Force Analysis focuses on short-term (15 days) and medium-term price predictions to help both short-term traders and long-term investors understand market moves and benefit from the generated prediction of prices. To read subscriber comments that show how much the service is appreciated, visit:

https://marketforceanalysis.com/Testimonials.html

The MFA service has been pioneered by market analyst and Gold Anti-Trust Action board member and researcher Adrian Douglas.

The Market Force Analysis premium service provides:

-- A bi-weekly report.

-- Access to the MFA hot list of junior mining stocks derived from analysis of more than 800 mining stocks. The MFA hot list consistently outperforms well-known mining share indices like the HUI, GDX, and GDXJ.

-- E-mail alerts about actionable trades.

-- E-mail updates with important information.

To obtain your 1-month free trial subscription to the Market Force Analysis letter, e-mail info@marketforceanalysis.com and put "MFA Free Trial" in the subject field.


It would mark their boldest effort since 2008, when the G20 mustered $1 trillion to help rescue the world economy.

German Finance Minister Wolfgang Schaeuble said European leaders will tackle the adequacy of the region's firewall during March. The issue will be on the agenda of a European Union summit next week.

"But the month of March goes from March 1 to March 31. It will be reviewed again, also in the light of the developments that have since occurred, whether the stated dimension of the (European bailout) mechanism is enough or not," he told reporters.

Berlin's willingness to discuss the size of Europe's firewall marks an important shift.

Facing political opposition to a second Greek bailout in its parliament, it has balked at enlarging Europe's rescue fund on the grounds that it would undermine efforts to impose fiscal discipline on indebted countries.

The softening of its stance came as Schaeuble said he assumes that the Greek bailout package will win Bundestag support on Monday.

An agreement by Europe to merge its temporary and permanent bailout vehicles would create a $1 trillion war chest and open the door for other G20 countries to meet the IMF's request for $500-$600 billion in new resources, on top of its current $358 billion in funds.

Put together, this would total around $1.95 trillion in firepower.

The G20 has no intention of easing its pressure on Europe by giving it a strong signal now that new IMF money is in the bag. Its communique when two days of ministerial meetings end today will merely state that the world's leading economies will review the resources of the IMF in April without setting a date for a deal, G20 officials said.

But they left no doubt the cash is needed to calm markets and secure economic growth. "To overcome the crisis, you have to get ahead of the curve and have a big enough bazooka," said Olli Rehn, European Commissioner for Economic and Monetary Affairs.

Japan's Finance Minister, Jun Azumi, said his country stood ready to contribute IMF funds once Europe has acted.

"I expect debate on strengthening of the IMF lending capacity will progress on condition that the problem of Europe's debt crisis is put to an end by the G20 meeting in Washington in April," he said.

Finance chiefs in their communique on Sunday will also cite rising oil prices driven by geopolitical risks as a threat to a tentative world recovery that is showing signs of strength, diplomatic sources said.

The price of oil vaulted over $125 a barrel on Friday, the highest level in nearly 10 months on concerns over Iran's nuclear ambitions.

Oil-producing members of the G20 said on Saturday they would take measures to avoid a rise in petroleum prices from hurting the world economy, Italy's deputy economy minister said.

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

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:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


ADVERTISEMENT

A Rare Opportunity with Collectible Gold Coins
Whose Premiums Are Far Below Normal

Sovereign debt problems in the United States as well as Europe will worsen this year. The mainstream financial media may never report about the likely inflationary consequences of bailouts and "quantitative easing," nor are they likely ever to recommend tangible assets for financial protection. But at Swiss America Trading Corp. we believe that it is no longer a luxury to own gold and silver coins but rather a necessity.

At the moment the public is showing little interest in Double Eagle U.S. $20 gold coins, so the price premiums above the intrinsic melt values (.9675 ounce of gold in each coin) are historically low. The ratio of price to bullion content for these coins has been 2:1 but today it is only about 1.25:1.

This is a real opportunity. So give us a call or e-mail and we will be glad to discuss the potential of these coins and how to use a ratio strategy to increase your gold ounces without money out of pocket.

In the January edition of his Early Warning Report, Richard Maybury writes: "As they are inherently in very limited supply, I believe that high-quality numismatics will become tulips, eventually rising a thousand percent or more in real terms, when money velocity goes into mid-second stage. In late stage, who knows -- 2,000 percent? 3,000?"

All inquiries will receive without charge (while supplies last) our latest book, "The Inflation Deception," as well as our newsletter "Real Money Perspectives."

-- Tim Murphy, trmurphy@swissamerica.com

-- Fred Goldstein, figoldstein@swissamerica.com

Telephone: 1-800-289-2646

Swiss America Trading Corp., 15018 North Tatum Blvd., Phoenix, AZ 85032
at

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