saveyourassetsfirst3 |
- Freeport-McMoRan Copper And Gold Is Moving Up
- Thursday Options Recap
- Commodity ETFs' Tax Considerations
- Blythe Masters Speaks
- What is the value of an Olympic gold medal?
- JP Morgan’s Blythe Masters on CNBC
- 7 Observations About The Yen
- Ron Hera: Metal Heads – Stay Cool
- Bundesbank Refuses Germany's Gold Questions
- Pollock: Stratfor Parallel – Both Late and Incomplete
- New Script Calls For More U.S. Quantitative Easing
- Criminal Neglect and Corruption at the CFTC
- The Bullish Case for Silver
- Gold Collapse … the Bubble Is Pricked?
- Silver’s Trend & the Death of Technical Analysis
- With Gold Prices Falling, We’ll Take the Odds
- Silver Institute Releases Annual Jeweler Survey
- Keiser Report: Angel Dust for Ponzi-Addicts
- China's ‘profound influence' on the world gold market
- 2012 Macbook Redesign On Its Way To Apple Stores
- Fighting Over the American Home: Handcuffs versus Hope and Change
- Got Gold Report - Special Email Update for April 4, 2012
- Weak Hands Sell but Rogers says 'I Will Buy More' Gold
- Buying Gold in Financial Repression
- Finance as Wealth Transfer Mechanism: An Interview with James Galbraith
- On Playing Politics With Crude Oil Using USA Sanctions
- Sinclair: Don't Buy The Gold Cartel's Con
- Is now the time to buy gold and silver?
- Peter Schiff talks with Chris Waltzek
- David Morgan talks with Ellis Martin
| Freeport-McMoRan Copper And Gold Is Moving Up Posted: 05 Apr 2012 06:45 AM PDT By John Mylant: Freeport-McMoRan Copper & Gold Inc (FCX) has done well raising the dividend above 2.6%, this could make the investment a bit more attractive to investors. Recently, the stock has been on a down turn, peaking at 47 in early February and dropping since then to its present position at around 38. March appears to have been a month of building a foundation. When we last wrote about Freeport, there was a concern about the impact of Indonesian Government laws on the mines there. In a recap, this is what we learned:
With this in mind, Morgan Stanley still believed Freemont would divest its 9.36% hold on the mine. And this divestment could Complete Story » | |
| Posted: 05 Apr 2012 06:29 AM PDT By Frederic Ruffy: SentimentTrading is mixed and activity is slowing ahead of the three-day weekend. The tone of trading remained cautious early-Thursday following two days of losses across global equity markets and after the Labor Department said that jobless claims decreased by 6,000 to 357K last week. Economists were looking for a decline of 8,000 and the modest miss comes ahead of key jobs data tomorrow morning. Although financial markets are closed in observance of Good Friday, the Labor Department will release the report tomorrow morning. Meanwhile, crude oil has added $1.71 to $103.18 and gold is also attempting to recapture recent losses as well. The yellow metal is up $17.4 to $1631.50. With forty-five minutes left to traded, the Dow Jones Industrial Average is down another 31 points. However, the tech-heavy NASDAQ gained 7. CBOE Volatility Index (.VIX) ticked .52 higher to 16.96. Trading in the options market is slowing ahead Complete Story » | |
| Commodity ETFs' Tax Considerations Posted: 05 Apr 2012 06:22 AM PDT By Tom Lydon: Exchange traded funds provide the average retail investor with the opportunity to easily access the commodities space. As the April 15 tax deadline approaches, investors should take the time to look over some tax consequences associated with commodity funds to Complete Story » | |
| Posted: 05 Apr 2012 06:02 AM PDT
from ZeroHedge.com: n an article that is about three years overdue, "JPMorgan's practices bring scrutiny" the FT finally takes aim at that other "vampire squid", JP Morgan, which technically is incorrect: because if Goldman is a nimble and aggressive creature, with infinite tentacles in every governmental office, and unencumbered by massive liabilities, JPMorgan is just as connected, but unlike Goldman, it is a behemoth in every other possible capacity, and with its trillion in deposits, matched by tens of billions in bad loans, is a true Bank Holding Company. As such 'Jabba the Hutt' would be a far more appropriate allegory to describe the the firm, whose reach, scope and scale lead the FT to classify it as "Three times a pallbearer, never a corpse." Keep on reading @ ZeroHedge.com | |
| What is the value of an Olympic gold medal? Posted: 05 Apr 2012 05:54 AM PDT
from media.economist.com: The gold medals that will be awarded in London this year will be the biggest and heaviest handed out at any summer Olympics. At 400 grams (14 ounces) they will be 17 times heavier than at the 1912 Olympics in Stockholm. On the other hand, the 1912 games were the last one where gold medals were made entirely of gold. Now they consist mainly of silver with a thin coat of gold—6 grams is the minimum requirement. The London medal will have a gold content of only about 1.5%, and at current prices will be worth $706. Calculations by The Economist find that this is much more than the "podium value" of any previous gold medal (based on estimates of the composition of medals and bullion prices at the time, adjusted for inflation). This is partly because gold and silver prices are now historically high and partly because this year's medal is so much heavier, even though the extra weight is silver rather than gold. For the first time, the silver in this year's "gold" medal is actually worth more than its gold content. Moreover, if the metal content of earlier medals is valued at today's bullion prices, the London gold is worth only just over half of those handed out in 1912. Keep on reading @ media.economist.com | |
| JP Morgan’s Blythe Masters on CNBC Posted: 05 Apr 2012 05:54 AM PDT JP Morgan's Head of Global Commodities, Blythe Masters, answers questions from CNBC's Sharon Epperson at the University of Colorado, Denver, on the occasion of JPM's gift of $5 million to help fund a Center for Commodities. Ms. Masters is the person some conspiracy-minded blogs have loved to hate. They have unfairly vilified her to a kind of cult witch status, but she acquits herself fairly well in this all too brief interview. Masters points out our oft repeated contention that JPM's positions in the futures markets are only one side of a trade and much or most of that trade is on behalf of clients. Therefore it is simplistic and inaccurate of people to presume they know what JPM's net position is by looking solely at their futures positioning. Most likely the bullion bank itself is never very far from net flat any particular commodity. Much more in the video below.
In response to the question about manipulation of the metals markets: Blythe Masters: "That's a great question. You're right, there's been a tremendous amount of speculation particularly in the blogosphere on this topic. I think the challenge is it represents a misunderstanding as the nature of our business. As I mentioned earlier, our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk management objectives. "The challenge is that commentators don't see that. So to give you a specific example, we store significant amount of commodities, for example, silver, on behalf of customers. We operate vaults in New York City, Singapore and in London. And often when customers have that metal stored in our facilities, they hedge it on a forward basis through JP Morgan who in turn hedges itself in the commodity markets. If you see only the hedges and our activity in the futures market, but you aren't aware of the underlying client position that we're hedging, (it) would suggest inaccurately that we're running a large directional position. "In fact that's not the case at all. We have offsetting positions. We have no stake in whether prices rise or decline. Rather we're running a flat, relatively matched book." Sharon Epperson: "So what is commonly out there is that JP Morgan is manipulating the metals market - from what you're outlining that is not possible because of the different side of the business that you're in part of …?" Ms. Masters: "That's right, it's (running a one-directional book and manipulating the market) is not part of our business model. It would be wrong and we don't do it." Source: CNBC | |
| Posted: 05 Apr 2012 05:45 AM PDT By Marc Chandler: 1. The yen was the weakest of the major currencies in Q1, losing about 7.2% against the dollar. There was a clear shift in both speculative and portfolio flows. The net speculative position in the IMM futures shows a swing from near the largest long position in a decade to the largest net short position since the onset of the financial crisis. In terms of portfolio flows, Japanese investors have stepped up their purchases of foreign assets compared to a year ago, while foreign investors have been net sellers of Japanese stocks and bonds in the first 13 weeks of the year, but were net buyers in the same year ago period. This does not include the fact in the last week in March, foreign investors sold JPY3.48 trillion worth of Japanese bills, which is the most since the time series began in 2005. The sale of the bills could Complete Story » | |
| Ron Hera: Metal Heads – Stay Cool Posted: 05 Apr 2012 05:35 AM PDT Ron Hera has been sitting back, watching the carnage in the precious metals markets, looking for newly emerging bargains.
From KerryLutz.com: Much more @ KerryLutz.com or @ 347.460.LUTZ | |
| Bundesbank Refuses Germany's Gold Questions Posted: 05 Apr 2012 05:31 AM PDT
from gata.org: On April 3 I wrote the following inquiry to the Press Office of Deutsche Bundesbank, Germany's central bank. "Dear Ladies and Gentlemen: "My name is Lars Schall. I am a freelance journalist for finance. May I ask you to help in a matter in which the Bank of England, the U.S. Treasury, the U.S. Exchange Stabilization Fund, the Board of Governors of the Federal Reserve, and the New York Federal Reserve were not cooperative in any way? Keep on reading @ gata.org | |
| Pollock: Stratfor Parallel – Both Late and Incomplete Posted: 05 Apr 2012 05:25 AM PDT A recent article from Stratfor (Part of the Intelligence Industrial Complex) mimics, on an incomplete basis, my talking points of the last few years. Stratfor goes short of making the link between US Military Projection, Oil, and the Reserve Currency. The concept of a breakdown crisis does not come into their narrow analysis because they are US centric as they are funded by US corporations and people within our government. People see in the rear view mirror and out of the front window of the car, but I am seeing future events by looking out on the far horizon of both present and past. I mention radiation in Tokyo and whether or not you would raise your kids in a radioactive waste zone? This is a key question to ask as it confirms the decline of the US Empire. Are you able to make the leap from talking about gold, which will be under threat from lawlessness, to the life and death of your children. I am the only source who has measured and estimated the human cost of this crisis in life support. I wonder who will copy my next. from wepollock: ~TVR | |
| New Script Calls For More U.S. Quantitative Easing Posted: 05 Apr 2012 04:55 AM PDT B.S. Bernanke has been in a quandary, ever since the Federal Reserve's "QE II" was universally castigated as a reckless (and selfish) escapade by the U.S., aimed at doing nothing more than propping up the value of the "financial assets" of the Wall Street crime syndicate. Bernanke never understood that criticism, since all of the money-printing done by the Federal Reserve is for the specific intent of propping-up the value of Wall Street's financial assets. How else do you stop Ponzi-schemes from imploding? Be that as it may, the one thing which B.S. Bernanke did understand is that there was little tolerance (and certainly no appetite) in the global community for more U.S. quantitative easing. To understand this requires actually taking a moment to define quantitative easing, since though the mainstream media uses the term a million times a month, they never explain it. "Quantitative easing" is nothing but a 21st century euphemism to replace a 20th century euphemism: "monetizing debt". Those with any understanding of language realize that euphemisms are expressions we create when we want to (more or less) lie about a subject – because telling the plain truth is too unpalatable. In this case, quantitative easing (aka "monetizing debt") is nothing more than printing money out of thin air to (pretend to) pay one's bills. This brings us to the multi-trillion dollar Ponzi-scheme known as the Western financial system. To illustrate how far Western finances have deteriorated requires providing some historical context. Following Canada's previous, disastrous experiment with the Conservative Party (during the last half of the 1980's, and early 1990's); the reckless fiscal incompetence of the Mulroney regime had saddled Canada with one of the highest debt-to-GDP ratios in the entire Western world. Peaking at 70%, Canada's indebtedness was regarded internationally as nothing less than an economic crisis. The Liberal government which inherited Mulroney's mess, engineered a remarkable fiscal turn-around – going from record deficits to a budget surplus in little more than two years – and produced a decade of surpluses after that. Today, with a new Conservative Prime Minister at the helm, all those years of surplus have been squandered and once again Canada's debt-level has hit a new record high of 83% of GDP, while once again Canada is saddled with record deficits. Yet instead of being labeled as a poster-child for fiscal irresponsibility as it was in the 1990's, today it is hailed as a paragon of fiscal prudence – because most of the rest of the West is even more obviously (i.e. hopelessly) insolvent. Not only are the individual debts of most of these Western debtors totally unsustainable, but collectively there are no "buyers" for the vast majority of their debts. So the only way that the West's Ponzi debt-markets can be kept from immediately imploding is for it to keep conjuring larger and larger quantities of (worthless) paper out of thin air, and then using their own paper to buy-up their own debt. As I've written in the past, there is an obvious personal analogy to the Western financial system: 'kiting cheques'. This is where some deadbeat writes someone a bad cheque, and then to "cover" that bad cheque he writes another (even bigger) bad cheque. And then to cover the second bad cheque he writes a third, and so on. It makes absolutely no difference, in principle, whether that scrap of bad paper is called a "cheque" or an "IOU" or a "U.S. dollar". Creating one piece of un-backed paper to "cover" the obligation of another un-backed piece of paper is cheque-kiting (or a Ponzi-scheme – take your pick). It is nothing more than the most desperate of measures to temporarily delay bankruptcy. That is what is meant by "monetizing debt", and now "quantitative easing": a desperation measure to temporarily ward-off bankruptcy. | |
| Criminal Neglect and Corruption at the CFTC Posted: 05 Apr 2012 04:44 AM PDT By Bix Weir: OPEN LETTER TO THE CFTC April 5, 2012 Commodities Futures Trading Commission 3 Lafayette Center 1155 21st St. NW Washington, DC 50581 Re: Flawed Investigations and Breaking The Law ATTENTION CFTC COMMISSIONERS AND STAFF: I have written the CFTC many letters attempting to explain the obvious ongoing manipulation in the silver market because you clearly could not figure this out on your own. In each one of these letters I laid out the case of who was doing it, how they were doing it and why as well as a way to fix the situation. Yesterday the CFTC announced it has fined JP Morgan $20M for "Unlawfully handling Customer Segregated Funds"... CFTC Orders JPMorgan Chase Bank, N.A. to Pay a $20 Million Civil Monetary Penalty to Settle CFTC Charges of Unlawfully Handling Customer Segregated Funds http://www.cftc.gov/PressRoom/PressReleases/pr6225-12 This letter was intended to be a congratulatory letter to the CFTC for FINALLY going after JP Morgan but upon reading the order again I have changed my position. Here's why... "CFTC order finds that from at least November 2006 to September 2008..." "As of November 17, 2006, JPMorgan included LBI's customer segregated funds in its calculation of LBI's net free equity, even though these funds belonged to LBI's customers, not to LBI, the order also finds." "...on September 15, 2008, Lehman Brothers Holding, Inc. filed for bankruptcy. Two days later, LBI requested that JPMorgan release LBI's customers' segregated funds. JPMorgan improperly declined the request" ARE YOU KIDDING ME?! The CFTC has sat on this obvious illegal activity for over 4 years without doing anything about it?! WHAT WERE YOU DOING FOR FOUR YEARS?! In the meantime the customers of MF Global had their lives destroyed by the very actions that JP Morgan had taken years earlier! Who really deserves the blame - the criminals or the regulators who didn't do their jobs? SHAME ON YOU FOR BEING COMPLETELY INCOMPETENT! No, this is beyond incompetence...this is criminal neglect by the CFTC and you should all be sent to jail for colluding in the corruption! Read your own summary paragraph in the press release... "The laws applying to customer segregated accounts impose critical restrictions on how financial institutions can treat customer funds, and prohibit these institutions from standing in the way of immediate withdrawal," said David Meister, the Director of the CFTC's Division of Enforcement. "As should be crystal clear, these laws must be strictly observed at all times, whether the markets are calm or in crisis." That "AS SHOULD BE CRYSTAL CLEAR" comment incriminates your behavior. It IS crystal clear but the CFTC purposefully decided to delay this enforcement action for four years! The MF Global debacle was not only avoidable it was a direct result of the CFTC's decision not to ENFORCE any laws related to large, "too big to fail", banking interests. As a matter of fact, an ex-Director of the CFTC Enforcement Division, Dennis Klejna, was the principle approver of the transfer of segregated customer funds from MF Global to JP Morgan. And the icing on the corrupt cake is that he had already been found "guilty without pleading guilt" in an almost identical fraud at REFCO! JP Morgan Lawyer Exposes Corruption at JPM, MF Global & the CFTC http://www.roadtoroota.com/public/855.cfm So what now? The CFTC has clearly demonstrated that there will be no regulations enforced against large banks in the United States. All there is at the CFTC are incompetent bureaucrats that shuffle behind their bankster bosses creating new laws and rules after the fact and never to be enforced. The next debacle is going to be in the Silver Market. WE ALL WARNED YOU YEARS AGO! Go ahead and shut your eyes, ears and mouths to the silver manipulation but YOU will be shown as fools once again. Our Founding Fathers are rolling in their graves. Signed...One Disgusted Citizen - Bix Weir VIA EMAIL TO: ggensler@cftc.gov; bchilton@cftc.gov; mwetjen@cftc.gov; somalia@cftc.gov; jsommers@cftc.gov; jriley@cftc.gov; dberkovitz@cftc.gov; hhardman@cftc.gov; rshilts@cftc.gov; vmcgonagle@cftc.gov; pcela@cftc.gov; ssherrod@cftc.gov; dmeister@cftc.gov www.RoadtoRoota.com http://www.silverbearcafe.com/privat.../criminal.html | |
| Posted: 05 Apr 2012 02:30 AM PDT
from silverseek.com: After the big move in 2011 was summarily 'dealt with', which sent the precious metal's price down from a peak of $46.82 on April 24th down to a low of $26.05 by September 25th, many silver bulls have found themselves reviewing their perhaps picture of the metal's future prospects. Reduced concerns about another round of quantitative easing by the U.S. Federal Reserve Bank have also diminished silver's luster for some would-be mainstream investors, especially in the short term. Nevertheless, a strong bullish case can still be made for continuing to hold the white metal over a longer term period, which would encompass the next three to five years, on a relatively straightforward basis of how supply and demand factors should ultimately impact silver's price. These factors will be discussed in greater detail below. Demand for Silver Continues to Arise From Four Main Sources Keep on reading @ silverseek.com | |
| Gold Collapse … the Bubble Is Pricked? Posted: 05 Apr 2012 02:28 AM PDT
from thedailybell.com: Gold prices plunge overnight – is the rush over? … Has the gold boom come to an end? The price of gold, which has climbed for years like a blood pressure reading for anxious investors, plunged overnight to its lowest level in three months. Gold fell almost $US58 to $1,614 per ounce. It has declined 15 per cent since September, when it hit a peak of $1,907. It had more than doubled from the financial crisis three years earlier. The decline on Wednesday came on an ugly day in the stock market. The Dow Jones industrial average lost 125 points a day that last year probably would have caused fearful investors to buy gold as a protective investment. "It's difficult to forecast, but I think the gold bull market is over," said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed. – New Zealand Herald News Keep on reading @ thedailybell.com | |
| Silver’s Trend & the Death of Technical Analysis Posted: 05 Apr 2012 02:26 AM PDT
from silverseek.com: The death of technical analysis has arrived.What took place in the markets (especially in the precious metals) on April 3rd & 4th proves this in spades.There were several calls made prior to the takedown, by some very well known individuals in the precious metal field, that became NULL & VOID when either bottoms or chart patterns failed. I am not going to name names, but I would imagine those who have been following the gold and silver markets for quite some time, know who I am talking about.That being said, I don't blame them one bit.Trying to make short term calls based on technical analysis presently has become nearly impossible when the markets are constantly manipulated.I think it is time that we all just realize a monkey throwing a dart at a trend line on a wall is just as useful as short term technical analysis. Keep on reading @ silverseek.com | |
| With Gold Prices Falling, We’ll Take the Odds Posted: 05 Apr 2012 02:24 AM PDT
from rickackerman.com: Gold came down hard for a second straight day yesterday, but for all the wrong reasons. That's why Rick's Picks subscribers were ready to seize the opportunity with distress bids in two popular gold mining vehicles. One of them, GDX, the Gold Miners ETF, fell to within 14 cents of a 46.15 target that had been disseminated to subscribers a month ago when the price was in the high $50s. So far, the recommendation is looking like a winner: by day's end, with GDX settled at 46.71, the paper position was 68 cents in-the-black. The other recommendation involved GDXJ, an ETF comprised of smaller mining companies. This vehicle plummeted yesterday to a 22.74 target that had been promoted to our subscribers as a "back-up-the-truck" number when the stock was trading closer to $25. And although GDXJ fell yesterday a bit lower than we'd forecast, hitting 22.39 intraday, the bounce into day's end brought it back to a high of 22.85 and a settlement just two cents below that. Give it a little rest overnight, and we expect GDXJ to bolt from the gate on Thursday, the last trading day of this holiday-shortened week. Even so, we've instructed traders to place protective stops not far below where they got long in order to minimize exposure if GDX and GDXJ relapse to new lows. Keep on reading @ rickackerman.com | |
| Silver Institute Releases Annual Jeweler Survey Posted: 05 Apr 2012 02:22 AM PDT
from silverseek.com: The Silver Promotion Service of the Washington D.C. based Silver Institute recently released the third in its annual series of surveys of silver jewelry sales performed by Nielsen/National Jeweler. For the participants in the survey, silver jewelry sales made up 37% of retailer unit volume and 27% of dollar volume, on average. The silver organization's 3rd Annual Silver Jewelry Sales Survey showed that silver jewelry sales grew overall in 2011, with 77% of surveyed jewelry retailers reporting that their 2011 silver jewelry sales increased and 27% experienced an increase of more than 25%. In addition, the survey results showed that silver jewelry held its retail margins especially well during the Holiday Season of 2011. In particular, 53% of retailers surveyed saying that silver jewelry had the best maintained margin for that crucial year-end retailing period. Keep on reading @ silverseek.com | |
| Keiser Report: Angel Dust for Ponzi-Addicts Posted: 05 Apr 2012 02:21 AM PDT In this episode, Max Keiser and co-host, Stacy Herbert, discuss Ben Bernanke's 'happy dust' and Angela Merkel's 'red lines' cause ire in BRICS trade partners. In the second half of the show Max talks to Jim Rickards about a BRICS currency, gold and the fog of currency war. from RussiaToday: ~TVR | |
| China's ‘profound influence' on the world gold market Posted: 05 Apr 2012 01:01 AM PDT China's 'profound influence' on the world gold market Analysis of the Chinese gold market suggests not only that the country's gold production and consumption are both far higher than figures suggest, but also that this gold will not find its way back on to the global marketplace Author: Jeffrey Nichols Posted: Thursday , 05 Apr 2012 NEW YORK - Having just returned from another visit to China, where I had the opportunity to talk with a number of "insiders" in the Chinese gold community, I am more convinced than ever that the country will continue to have a profound influence on the world market and future price for years to come. Growth in aggregate demand from jewelry buyers, private investors, and the People's Bank of China will continue to outpace growth in total supply from mine production and secondary sources. With both domestic supply and demand relatively price inelastic, the market will require a growing stream of imports, imports that will be available only at higher prices. Slower economic growth - even a "hard landing" with GDP growth well below the official target of 7.5 percent this year - would not likely dent private-sector gold demand. Instead, an economic slowdown much below the official target would raise unemployment, prompt unrest among job-seekers, depress equity prices, and cause anxious investors to buy more gold. In the unlikely event that China goes down this economic path, we should expect the central bank to respond quickly with more stimulative - and gold friendly - policies. Visiting China, one has the feeling that they are doing a better job managing the macro economy - smoothing the business cycle and containing inflation - than are policymakers in the United States or any of the other older industrial nations. Measures to lower food inflation, increase wages, curtail real estate investment, promote public works, manage gradual currency appreciation, and even encourage gold investment as an alternative to real estate or equities seem likely to produce a softer, shorter landing. Moreover, China (unlike the United States, Western Europe, or Japan) is still in the early stages of a secular economic expansion that will soften the blow from the short-term cyclical downturn now unfolding. Looking beyond the slow-growth scenario now unfolding, jewelry and investment demand will likely enjoy continued robust growth over the years ahead, reflecting the rising incomes, a growing middle class, and a wealthy elite with deep pockets and ostentatious spending habits. Longer term, as it prospers and its share of global income and wealth continues to increase, China will demand a growing share of the world's above-ground stock of gold for jewelry, for investment, and for additions to central bank reserves. CATCHING UP Private gold investment was banned in China and the local market was tightly controlled for more than five decades following the Communist Party victory and ascension to power in 1949. Ever since the legalization of private gold investment and the gradual liberalization of the market beginning in 2002, China's appetite for gold has been growing steadily year after year - reflecting both pent-up demand and rising prosperity. The government's continuing liberalization of the domestic market, its support for new channels of distribution, its orderly regulation of spot and futures markets, and its encouragement of private gold investment have contributed to the country's rise to prominence in the world of gold. In recent years, China's central bank, the People's Bank of China, has also been a significant buyer. Three years ago - in April 2009 - the PBOC revealed it had bought some 454 tons of gold over the preceding six years, an average of about 75 tons per year. Since then there has been no hard evidence of additional buying . . . but my guess is that the PBOC continues to buy regularly from domestic mine production and scrap refinery output - perhaps as much as 50 to 100 tons or more per year. For its part, the PBOC not long ago said it will "seek diversification in the management of reserve assets," possibly signaling their intention to accumulate gold without actually saying so. As a result of China's sizable appetite for gold, it has become a powerful driving force in the world gold market - and its influence on the future price of gold is likely to grow in the next few years reflecting demographics, economic growth and rising personal incomes, episodes of worrisome inflation, the continuing development of the domestic gold-market infrastructure, and, importantly, continuing central bank reserve diversification. CHINA'S GOLD STATISTICS For several years now I have expressed the view that China's actual annual gold-mine production, jewelry consumption and investment, imports, and central bank accumulation have each been running considerably higher than generally believed or publicly acknowledged - see my December 2009 speech to the annual China Gold and Silver Summit. To begin with, China's total gold supply from domestic mine production and other sources is probably much higher than reported or discussed by analysts and observers of the Chinese gold scene. Actual gold-mine production - and supplies from other sources - could easily be close to 400 tons and possibly much more. Here's why: My understanding is that the mine-production numbers from the China Gold Association (CGA) include mine output by their members only - but not non-members such as many small, rudimentary, unofficial mines operating in the "underground economy." The CGA data also excludes production from mines owned and operated by the military as well as by-product output from the country's copper, silver, and other metal-mining activities. Also missing from the CGA reports are the very significant quantities of gold contained in copper and precious-metals bearing concentrates imported from abroad but processed by Chinese smelters and refiners. In addition to these unreported sources of supply, many analysts and commentators seem to forget about secondary supply - that is metal returning to the market from the recycling of old jewelry, investment bars, and industrial scrap. This alone could easily contribute 30 to 40 tons - and quite possibly much more - to total annual supply in the Chinese gold market. Next, what else can we say about China's gold imports? Western analysts estimate China's total gold imports last year were around 490 tons - but there is little mention of "illegal" imports - that is gold smuggled into China. We know smuggling is quite significant in some countries - Vietnam and India, for example. We can only imagine how many tons of gold in the form of tael bars, wafers, coins, investment-grade jewelry, etc. is carried into China each year by travelers and professional smugglers. What about net central bank purchases and total official reserves held by the People's Bank of China? Don't expect an announcement of their buying program anytime soon. After all, an announcement could boost the yellow metal's price and raise the PBOC's acquisition costs. Nevertheless, it is reasonable to conclude that the Chinese government may be squirreling away perhaps 50 to 100 tons a year into accounts that will eventually be included in the country's reported official reserve figures - and one day in the future we should not be surprised to see an announcement that actual official gold reserves are considerably higher. WHAT GOES IN, WON'T COME OUT Continuing Chinese gold accumulation has important long-term significance that is not generally acknowledged by many gold analysts and market pundits. Simply put, China's private- and official-sector gold purchases are unlikely to be sold back to the world market any time soon, certainly not for many years to come and not even at much higher prices. Not only are gold exports from China illegal - but many, if not most, Chinese savers and investors buy gold with no intention of selling sometime in the future just because prices rise, inflation subsides, equity prices tumble, or any of the other drivers that might typically trigger sales by Western investors. For the Chinese, these are long-term, quasi-permanent holdings - removed from available supply or what I call "free float" available to satisfy future physical demand in the world gold market. Jeffrey Nichols is Managing Director of American Precious Metals Advisors and Senior Economic Advisor to Rosland Capital. The above article appear also on Nichols' own website www.nicholsongold.com http://www.mineweb.com/mineweb/view/...ail&id=110649 | |
| 2012 Macbook Redesign On Its Way To Apple Stores Posted: 05 Apr 2012 12:53 AM PDT VNote: Why is this here you ask? Cuz, I'm all over it. from allvoices.com: A completely redesigned 2012 Macbook Pro appears to be set for mass production in April, giving further support to reports that change is on its way to Apple Stores. The first of the 2012 Macbook Pro redesigns is reported to be the 15-inch model, which will be shedding its optical drive and taking on the trimmer form of the sleek Macbook Air. Since it's introduction in 2008, the Macbook Air has grown in popularity and now makes up approximately on-third of Apple notebook sales. But the Macbook Pro remains the Apple laptop best seller, which may be why the new Air-like model will keep its "Macbook Pro" name tag. The production dates for the 2012 Macbook Pro redesign coincides with the release dates of the next generation of i7 Intel Ivy Bridge processors, set for the end of April. The i5 chips are scheduled for a market date in June. Apple is set to "start mass producing a 15-inch MacBook Pro in mid-April with initial monthly shipments of 200,000 units. The company will then mass produce a 13-inch model in June with initial monthly shipments of 300,000-400,000 units," according to Digitimes. With an upgrade to Ivy Bridge, expect the Macbook Pro to see a 10 to 15% processing speed boost, and a considerably better display with the new integrated Intel 4000 graphics. Add the likely addition of a Retina display similar to the new iPad, and the 2012 Macbook Pro moves up to a new level. Top that off with a 128GB or 256GB solid state hard drive and the new 15-inch Macbook Pro might just be the dream machine of the next generation of light and powerful Ultrabook style laptops. Keep on reading @ allvoices.com | |
| Fighting Over the American Home: Handcuffs versus Hope and Change Posted: 05 Apr 2012 12:00 AM PDT Matt Stoller is a fellow at the Roosevelt Institute. You can follow him on twitter at http://www.twitter.com/matthewstoller Over the past four years, we've watched as public officials pushed financial and legal power to the large banks – the latest episode in this saga was the mortgage settlement between state officials, Federal regulators, and the banks themselves. But there is also an undercurrent of resistance to this, resistance which could be growing stronger over time. So what comes after the mortgage settlement? Will there be yet another multi-billion dollar transfer of wealth from taxpayers to banks in the near future? If I'm reading the tea leaves correctly, I suspect the answer is, yes. This time, it will flow through Fannie and Freddie, government entities that are responsible for trillions of dollars of mortgages. There's been a deeply bitter fight over this giant pot of money, centering around Federal Housing Finance Agency (FHFA) acting head Ed DeMarco. DeMarco controls Fannie and Freddie, and so far, he has refused to write down principal for homeowners on GSE controlled mortgages. But Treasury has been attempting to get DeMarco to change his mind, using the prospect of simply paying off Fannie and Freddie with bailout funds. Housing finance isn't just a question of money, it involves the deep fabric of America – the home, savings, the rule law and the meaning of property, and the very space of the nation. It's also a question of politics, and realigning interest groups that had been allies or opponents. With that in mind, it's worth looking at how the last few years of bailouts and foreclosures have clarified factions in our politics. There are two schools of thought on fixing the housing market. The first is the Tim Geithner school, which we'll call the "hope and change" school. Hope and changers, who occupy most elite positions in the administration, in banks, at the Fed, in the economics establishment in Congress, at housing nonprofits like the Center for Responsible Lending, in regulatory agencies, believe that the housing market will come back when the economy returns. Foreclosure problems may be tragic, or overblown, or not, but ultimately are incidental to fundamentals, like matching housing supply to demand or increasing employment through boosts in aggregate demand. Warren Buffett is probably the most famous member of this school. The second is the "law and order" or "handcuffs" school, which has (loosely) as members people like former FDIC chief Sheila Bair, former SIGTARP Neil Barofsky, iconoclastic investors such as Bill Frey, foreclosure fraud defense attorneys, Congressional actors like Maxine Waters, criminologists like Bill Black and various securitization experts and bloggers. The handcuffs believes that law and order is not incidental to the breakdown of the housing market, but is central to it. Obviously these aren't fast and hard divisions, they just represent the two major frames of thought around the housing crisis. It's not a partisan breakdown – most people in both parties are part of the Hope and Change crowd, but a chunk of the left isn't, and there are a few right-wingers like Chris Whalen and various right-wing investors who are outraged at the abrogation of property rights. The handcuffs crowd sees accounting fraud and bank servicer abuses as driving a perverse incentive structure. There are significant incentive problems in the servicer model, with servicers having incentives to foreclose rather than modify or write down principal, even when that would make sense for the investor and the homeowner. There are suspicions of widespread fraud in the foreclosure process, such as fee harvesting, excess servicing charges, and misrepresentations to investors about what the trust actually holds. This is all leading to enormous pain for homeowners, and losses for investors. Accounting fraud, according to the handcuffs crowd, is a major impediment to fixing the housing market. The generic logic is as follows. If regulators forced banks to write down mortgages on their books to their real world value, banks would lose a lot of money. Right now, if a borrower has a $100,000 mortgage, the bank is going to do anything it can to keep that loan on the books at $100,000. That debtor might only realistically be able to pay $70,000, and the house might only be worth $50,000 in foreclosure. But if the bank can keep that loan on the books at $100,000 for a few years, whether that loan is performing or not, whether that home is unoccupied and the copper wire is being stripped or not, the bank will. According to the handcuffs school, this gap between accounting fiction and reality on the ground is causing needless foreclosures and massive blight across the country. Were banks required to write the loan down to, say, $60,000, then the bank would be perfectly willing to do a work-out with the homeowner at $70,000. The homeowner would be current, the bank wouldn't have to foreclose, and value would be preserved all around. Executives, though, would show lower profits due to the accounting loss, and banks might have to retain more capital or do a capital raise. But the deflationary spiral, where foreclosures drive housing values down which causes more foreclosures, would end. The hope and change crowd thinks this line of thought is foolish. To them, accounting fraud, or rather, regulatory forbearance as the case may be, is a useful tool to ward off chaos. They take the previous history of banking crises as their guide (as Vern McKinley details in his book Financing Failure). In the early 1980s, major American money center banks were insolvent, due to the recycling of petro-dollars to South American countries who couldn't pay them back. Citigroup, for instance, made substantial loans to developing countries all around the world, and in a highly inflationary and low growth environment, these countries effectively defaulted. Rather than being taken over (and despite plans by the New York Fed to nationalize the banking system), these banks were allowed to earn their way out of the hole. They were undercapitalized, but that capital hole was gradually filled by profits over the next few years. The hope and changers believe that this is what is happening with the big bank servicers – the housing market will eventually come back, as the extra houses built during the boom are sopped up by new household formation. That's Warren Buffett's famous "hormones" will fix the housing crisis argument. Buffett is of course highly conflicted, owning stakes in Wells, Moody's, Bank of America, and profiting mightily from TARP directly through his position in Goldman and indirectly through his other positions. Many of the hope and changers are so conflicted, but this doesn't mean that there isn't a policy logic behind their ideas. To these people, restructuring the banks, or even forcing them to take write-downs, is a pointless political conflict with a powerful and important constituency. Geithner famously represented this view when he talked about "air in the marks" in Lehman's book, as detailed in the Valukas Bankruptcy Report. On a moral level, the hope and changers basically believe in the foundational myths of Wall Street, as described by Karen Ho in her ethnographic analysis of the investment banking industry Liquidated. This myth is that people on Wall Street are the best of the best, and naturally deserve to be in charge of capital allocation because of their smarts and willingness to take charge. These two schools tangle, repeatedly, and the hope and changers routinely win. From the Housing and Economic Recovery Act (HERA) nationalizing Fannie and Freddie to TARP to killing judicial modification of mortgages in bankruptcy (ie. a write-down of debt) to HAMP to Dodd-Frank to the mortgage settlement, the hope and changers push their agenda of regulatory and legal forbearance for the banks. Katie Porter documented, as early as the spring of 2008, that these banks break the law to foreclose on homeowners, and most of the regulatory agencies, particularly the Fed and the OCC, help them do so. No one has been punished for these violations, except the victims. Still, the courts are full of litigation from investors and homeowners are getting savvier about fighting foreclosures. Moreover, the banks aren't necessarily earning their way out of the hole as quickly as they need to be, considering they are attempting to reduce capital levels through dividends, bonuses, and buybacks. And they are being stymied by the housing market itself, which hasn't yet come back. Banks have swollen inventories of properties in the foreclosure pipeline, which will depress prices when/if they come on the market. There's also the chain of title problem, where people are leery of purchasing homes out of foreclosure for fear that they will not have clean title to the property. There are many proposed "solutions" to housing market woes, from the hope and changers. They all boil down to, well, buying time and distracting the public until the housing market recovers naturally. Some might call it PR, others might call it "confidence". The most recently proposed plan is the purchase of properties in bulk by private equity investors, who will then hire management companies to rent them out. It probably isn't a very smart strategy – PE firms will end up with a difficult low margin business and clouded title on their properties. Over the course of a few years, these firms will plan to exit the business with a modest profit, but this can only happen if the housing recovery actually happens and if they can scale the property management business. Moreover, most suburbs just aren't built to be particularly profitable rental prospects, and it's not going to be easy to buy the right mix of properties to manage with tangled ownership of these homes by various trusts. It's not to say rentals can't be profitable given the right rental price, but it's unclear if it's possible to get that necessary revenue. Besides, given the lack of law enforcement in the mortgage market, high value foreclosed properties are probably being bought up by connected local real estate insiders. Another proposed strategy is the "fire DeMarco" line of attack. This strategy is about getting rid of FHFA acting head Ed DeMarco, or forcing him to pillage Fannie and Freddie to write down principal. Largely the pressure for this attack is coming from the administration (through groups like Obama White House alumni Van Jones's Rebuild the Dream and various administration aesthetically leftwing surrogates) and ex-Goldman Sachs executive William Dudley of the New York Fed, who are trying to force write-downs of debt without damaging the bank servicers. The intended outcome of this strategy is to get Fannie and Freddie, who are exposed to a few trillion dollars of first mortgages, to write down debt on homeowners. This will saddle the taxpayer with losses, which is probably illegal according to the FHFA's mandate to maximize assets for taxpayers. It will help certain homeowners by reducing negative equity, (while possibly slapping them with a big tax bill). It will also aid the big banks, because these banks have over $300 billion of home equity lines of credit and second mortgages on their books, loans that probably won't be paid off unless the first mortgage is reduced. Right now, these banks seem to be pretending that these loans are worth at least 93 cents on the dollar (that's BofA's number), and regulators at the Fed, the OCC, and the FDIC are allowing them to go along with these inaccurate numbers as part of the overall multi-year forbearance strategy. There isn't great public data on second mortgages and home equity lines of credit. As just one example, the Government Accountability Office blamed a bad data system run by Lender Processing Services for Treasury's failed second lien modification program. The handcuffs crowd generally believes that these second liens are causing massive distortions in the market, because they are kept on the books at excessively high values. Rep. Brad Miller calls this the "bezzle" (a term first coined by John Kenneth Galbraith), describing in February, 2009 how second mortgages were systematically overvalued by financial institutions as a form of embezzlement. They perceive pressure by the New York Fed's William Dudley and the Obama White House as attempts to aid the big bank servicers by helping them increase the value of their second lien books, or simple PR antics to ward off blame for the housing crisis by blaming DeMarco. DeMarco isn't blameless at all – Fannie and Freddie are still giving charitable donations, overpaying their executives, committing routine foreclose fraud, etc. Dave Dayen is worth reading on this. Yet, the pressure to put pressure on DeMarco to force write-downs is intense – someone is feeding ProPublica plausible-sounding inaccurate stories, which the organization continues to publish and proudly stand behind even when proved wrong. These stories tend to portray DeMarco as the man holding back the recovery. It is this fight, pitting the hope and changers against the handcuffs or law and order crowd, that is the essential dynamic in the housing finance mess. Certain individuals flip between the two – New York Attorney General Eric Schneiderman stalled the mortgage settlement for a year or so, before joining the administration's side. And the terrain changes constantly, with new legal and political avenues opening and closing all the time. But this is why it's not an obvious or easily described fight. Many seemingly virtuous groups, like, say, the Center for Responsible Lending, take the side of the big banks, because they believe that it isn't possible to win against the power of Wall Street, and thus carving out a few rights for homeowners in a rigged market is the best one can do. They want to "help" homeowners, and believe that if the banks get forbearance they will be able to get billions in relief. PICO, a faith-based group, was obsessed with making HAMP work, because its leaders recognized that some homeowners saw reduced payments through that program. Much of the liberal establishment aligns with the hope and change crowd for different reasons, namely a mixture of Wall Street foundation funding, intentional ignorance and groupthink on the core questions at hand, and simple loyalty to the President. Similarly, many of the handcuff crowd doesn't seem like they are interested in helping ordinary people. I have spent time with several right-wing investors who are somewhat obsessed with "strategic defaulters". That said, these investors do want to write down debt on homeowners for self-interest reasons, which is actually a very powerful incentive. They just want bank servicers to comply with the law and they want second liens written down as well, so that their wealth doesn't get eaten by the big banks. Many of them are idealistic from the capital markets perspective, and point out that there will be no private mortgage market in a few years, that it will simply all be government-supplied credit. They fear, rightly, the day when whether you can get a mortgage will be subject entirely to political whims. Ironically, these people are most closely aligned with foreclosure fraud fighters like Lisa Epstein and Lynn Symoniak and foreclosure defense attorneys like Max Gardner, people who got their start fighting against illegal foreclosures but have become experts on securitization. Helping people is their business, and they are very good at it. In a future post, I'll go into what I've found around second liens. There isn't great data, but there's enough to suggest that the Office of the Comptroller of the Currency should be far more aggressive on write-downs than it has been.
| |
| Got Gold Report - Special Email Update for April 4, 2012 Posted: 04 Apr 2012 11:36 PM PDT
To continue reading, please log in or click here to subscribe to a Got Gold Report Membership. | |
| Weak Hands Sell but Rogers says 'I Will Buy More' Gold Posted: 04 Apr 2012 11:35 PM PDT Gold ticked higher in Asia prior to further slight gains in Europe. Gold dropped to its lowest level since January but remains higher on the year. It is poised for its first lower weekly close since mid-March adding to the poor technical picture. | |
| Buying Gold in Financial Repression Posted: 04 Apr 2012 10:02 PM PDT Suddenly financial repression is everywhere. Apparently there's no escaping it. The forced imposition of real losses on savers, aimed at cutting the real value of government and banking debt, financial repression has become a hot topic for analysts and hacks alike. | |
| Finance as Wealth Transfer Mechanism: An Interview with James Galbraith Posted: 04 Apr 2012 09:55 PM PDT James Kenneth Galbraith is currently a professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. He is also a Senior Scholar with the Levy Economics Institute of Bard College. His latest book is 'Inequality and Instability: A Study of the World Economy Just Before the Great Crisis' (also available on Kindle). Interview conducted by Philip Pilkington. Philip Pilkington: Let's start with the obvious question that the book raises. Namely, why studies on inequality have, until this point, been so poor. You point out in the book that the studies that have been done have been competently researched but that they simply don't have access to the correct types of data etc. Could you talk a little about this (without getting too technical, of course) and maybe speculate a little about why this important issue has been sidetracked by the economic profession? Jamie Galbraith: I have great respect for the many researchers around the world who have conducted income surveys over many decades, and also for those at the World Bank and elsewhere who have tried to assemble this work into useful data sets. But there are two major problems. The first is that surveys are relatively scarce, especially in poorer countries; in many countries they are available only for a few widely-scattered years. The second is that the concept – what is being measured – can vary widely from place to place and from time to time. For instance, some surveys measure the inequality of incomes; others the inequality of spending. In some cases the measures are for households; in others they are for individuals. And so forth. The result is that when these very disparate measures are brought together, the data are sparse and very noisy, it is very hard to find clear patterns, and in quite a few cases apparent comparisons between countries just don't make sense. This prompted us to look for other types of economic information that could be used to fill in gaps and improve the quality of the measures. What we found, is that there is quite a lot of raw information that can be useful for this purpose, so we set about collecting it and making calculations. Our approach has its own limitations – which I'm careful to describe. But it does fill in many gaps and it does reveal clear patterns, both through time and across countries. So it permits us to use our inequality measures as a new source of insight into how the world economy is bound together, especially by the far-reaching forces of global finance. PP: You mention that surveys are scarce. From the book I get the impression that this is bit of a dark corner in the economics profession. Why do you think this is the case? JG: Two reasons primarily. One is that surveys are expensive. The other is that for many years there wasn't that much interest in economic inequality among economists; growth, development, trade and finance were all more fashionable fields. More recently there has been an explosion of interest in inequality — but it's too late to go back and take surveys for past years, let alone past decades. So the challenge for us was to find other types of data, which could fill in some of the missing information. PP: As pretty much everyone knows by now, inequality has been rising in most advanced countries in the past few decades. One of the interesting points you make in the book is that you don't believe rising inequality in many advanced countries could have been turned to electoral advantage. Could you please explain how you came to this conclusion? JG: Inequality rose almost everywhere – both in the advanced countries and in the rest of the world – very sharply from 1980 to 2000. After that, the global picture becomes less clear, since lower interest rates, rising commodity prices and political change improved the picture in many places, including especially Latin America. We have strong evidence of declining inequality in parts of Latin America after 2001. The book includes a chapter on the relationship between inequality and electoral outcomes in the United States. The US is interesting because what is relevant for presidential electoral outcomes – thanks to the Electoral College – is inequality within states. Getting good measures of inequality within states was a very interesting challenge, all by itself. What we found is that when you look at inequality in that way, you find that higher inequality is associated with lower voter turnout. But it's also true that states with more inequality of a very particular type, namely states that tend to have a lot of geographical stratification between the rich and the poor, tend toward the Democratic Party. And states for which this is less true tend Republican. There is very striking evidence for the 2000 election: you can practically predict which way a state went in that election by the measure we developed, right down to the tie vote in Florida. We conclude two things: first that higher inequality inside a state is associated with policies that discourage voting by the relatively poor, and second that when the rich and poor tend to live in separate local political jurisdictions (which is more common in big states like California and New York) the rich don't interfere with the poor as much as they do when both are voting in the same places. Anyone who lives (as I do) in the American South will, I think, not find this surprising. It's very much consistent with, for instance, the history of the Voting Rights Act. PP: And how then did you conclude that the left could not have turned the rising inequality into electoral victory over the past few decades? JG: That's a question with an ironic answer, at least for the US. A rise in inequality – while it lasts – can and often does appear to be a moment of prosperity. We saw our largest rise in income inequality under a Democratic President, Bill Clinton. Why? Because he presided over a stock market and information-technology boom. And of course the beginnings of that boom helped win him re-election in 1996. So you might say that rising inequality did help produce electoral victory for 'the left' – or what passes for 'left' in this country, at least on that occasion. But not in the way most people imagine. The problem is that expansions of this type cannot and do not last. PP: If I understand correctly you also found that nations have very little control over their own levels of inequality. How did you come to this conclusion? JG: A nation's level of inequality has a lot to do with its underlying economic structure and level of development: agrarian, industrial, or high-technology. But we also found, in examining the movement of inequality in the world economy over 40 years, that there was a very strong common pattern. This suggests that *changes* in inequality have a common source. Looking at the major turning points, which were in 1971-3, 1981 and 2000, a leading candidate for that source emerges: the changes in the world financial system. Until 1971, the world's economies were largely stabilized under the Bretton Woods system. After 1973, there was a widespread commodities-and-debt boom that tended to reduce inequality in developing countries. After 1980, high interest rates and the debt crisis raised inequality almost everywhere. And finally in 2000 there was a peak; after that interest rates fell, commodity prices recovered, and inequalities around the world tended to ease. In the face of these global pressures, it's possible for some countries with very stable policies and strong institutions to resist for a time: for example Denmark does not show rising inequality in our data. Or a country may be insulated from global shocks, as China and India were from the debt crisis in the 1980s (but not in the 1990s). But these cases are very few. In most cases the global forces dominate the picture. PP: Right, so finance tears away any protective veils the nation-state tries to use to maintain equality and stability. Are you then implying that finance, or at least finance when it grows to a certain level and gains a certain amount of power, becomes a redistributive mechanism? JG: Of course. PP: But finance is supposed to channel investment. What shift takes place that causes it to act in such a strange manner? JG: I suppose that is what they say. In reality, whether banks distribute resources from lenders to borrowers or back from borrowers to lenders depends on the terms of the loan. In the high-interest-rate environment of the 1980s and 1990s, the redistribution vastly favoured the lenders, which is to say, the wealthy. This is not surprising. My father once coined a "Galbraith's Law," which held that, as a rule, "people with money to lend have more money than people who do not have money to lend." PP: Mainstream economics doesn't deal much with income distribution, why do you think this is? JG: For many years the study of income distribution held no interest for economists, in part because the distribution seemed to be stable or becoming more equal over time. That changed in the 1980s. And beginning in the early 1990s, the mainstream did get into the act, with many papers offering up the hypothesis that inequality was driven by technology and the demand for skill. This was called "skill-biased technological change" and it became the standard explanation for rising inequality in mainstream circles. I wrote one of the earliest critiques of this, in a book called "Created Unequal" that was published in 1998. Since then, numerous applied economists have also broken ranks on this interpretation, although some continue to promote it. PP: What was your interpretation of this rise in inequality? JG: As my title back in 1998 suggested, it was "created." I did a lot of original data work, creating new time series measures, which enabled me to show exactly when pay inequality rose during this period. It was clear that what we measure as *pay* inequality was very closely related to unemployment and to involuntary part-time at the low end of the pay scale. That's not the entire story but it's the biggest piece of it. Inequality of *incomes* in the US is different, because measured incomes (reported on tax forms) include money made from capital gains, stock options, and the payout from venture capital investments, all of which are highly concentrated in a relatively few places, companies and people. When you look at income inequality, it's clear that the major driver is the movement of the stock market, especially the NASDAQ. But that's capital- asset valuations; it's not "demand for skill." I've often said it's actually redundant to measure income inequality in the US. You can watch it go by on cable TV, on the stock ticker. PP: I'm pretty sure that mainstream macroeconomics doesn't pay much attention to income distribution, but it seems probable that income distribution would have important macroeconomic effects. Do you think that income distribution has macroeconomic effects? If so, what do you think are the most important? JG: The evidence is pretty clear that a very bad income distribution leads to economic instability; that is to panic, slump and collapse. The reason is that the bad distribution emerges from growth driven too much by private credit: from too much debt taken on by the middle and lower strata, ending in crisis. That is what we observed in the US stock market euphoria that peaked in 1929. That is what we observed in the housing finance disaster that peaked in 2007. But one can also say that the reverse is true: the income distribution is driven by macroeconomic forces. The act of extending credit – a macroeconomic force – generates fees and capital gains and other incomes that accrue, largely, to the top strata. You can see this very plainly in US data, but also in most other countries we've looked at, from Brazil to China. In sectoral data, it shows up in the fact that rising inequality is closely associated with relative gains by the financial sector. One of things Inequality and Instability shows is that there is a common pattern in the movement of inequality around the world. A very clear pattern. It isn't just an American phenomenon. That suggests that there must be a common global force behind it. And that would have to be a macroeconomic force, by definition. I'm hoping to get this point across to economists, as well as to the wider public. It should have an effect on how they conduct research into inequality, dislodging them from their fixations on such matters as education and training and even immigration and trade. Such local and country-specific forces cannot be working in such a powerful common way, all across the globe, as we observe. Of course, the wider public is much more open to evidence and to common sense, than are my professional colleagues – for the most part. PP: So, if we accept that most inequality is generated through the finance sector, how do solve this problem? From what you say it appears that the entire economy is structured around this inequality. It seems that in order for policymakers to attack this they would have to target multiple points of the architecture simultaneously. Where would you start? JG: In Argentina and Brazil, as I show in the book, inequality started to decline almost immediately once the financiers were knocked off their thrones. In Brazil the share of income passing through the financial sector was extraordinarily large, but over the course of twelve years and three presidencies, it has gradually been reduced, making room for expanded public services, improved social conditions and reduced inequality. In the United States, the government has the power to bring the financial sector under control. It should use that power. Our problem is that the financial sector controls those parts of the government that set policy for finance. The banks are leading funders for presidential campaigns. The leading personnel in the Treasury and other financial agencies come from the banks, and if they do a good job (from the banks' point of view), they can be confident that a lucrative sinecure awaits them, back at the banks, later on. This provides a very strong disciplinary effect on their conduct in office. So – where to start? I'd *start* by breaking that link between the banking sector and the public sector. One practical way would be to create a truly independent, effective and well-financed financial crimes enforcement unit, beyond the control of the political appointees at the Department of Justice, Treasury and the captive regulatory agencies. Also restore mark-to-market accounting and place the full control of audits and stress tests in hands that do not have an obvious conflict of interest viz. the results. PP: People in the US – especially due to the Occupy movement – are becoming increasingly concerned about campaign financing by, among other groups, the banks. This seems to be the tie between the two sectors that ensures nothing gets done about Big Finance. I understand that you've spent some time around policy circles and the like. Maybe you could say something about this, the effect it has on regulation and policymaking and the potential to do something about it? JG: I was on the staff of the House Banking Committee in the second half of the 1970s. At that time, the Committee hearing room in the Rayburn Building had just two rows of desks for members. Today there are four rows, and barely space for a table of witnesses, let alone anyone else. In other words, the size of the Committee has about doubled. Why is this? Because the leadership in the House uses that committee as a fund-raising magnet, especially for Members who might be a little bit vulnerable. Once a Member has a spot on the banking committee, money problems go away. And one can hold practically any position on other issues that may be convenient — liberal, conservative, the banks don't care. All you have to do is be friendly to bankers. This is a formula for locking down the Congress. As I said, with the executive branch, it's a bit different; while campaign financing is a significant question, so too is the actual staffing of the government, which is controlled by bankers; people come in from the banks and go back to the banks. It's not a secret, for instance, that Robert Rubin's protégés took a very large share of the top policy positions on economics and finance in the Obama administration — from Larry Summers on down. It's not a secret that Peter Orszag, the first director of OMB under Obama, took a well-paid position at Citigroup on leaving the White House. I have no simple formula for dealing with this, beyond what I keep repeating: 1) enforce the laws against financial fraud and 2) downsize the financial sector as a matter of public policy. PP: You note that things have gotten better with regards inequality and instability in many parts of Latin America after their financial crises. Yet, such has not been the case in the US post-2008. Are you optimistic about the future? JG: According to our most recent measures, using county-level data, income inequality in the US did fall after 2008 and then rose again – tracking the stock market as I found in the book. For lower-income workers, for older workers and for homeowners, the bottom fell out in the crisis and it has not been repaired. The grip of see-no-evil economics has been broken in many parts of the world, and especially in South America. But in the US and in Europe, especially in Northern Europe and in the UK, it remains very strong. This means that our two continents have actually less open debate, and so fewer political options, than is now the case in many other places. We have seen, though, that severe events do have a way of opening up peoples' eyes and minds, and so there is always hope. I don't rely on hope, though. My friend William K. Black, the criminologist, likes to quote William of Orange: it is not necessary to hope in order to persevere.
| |
| On Playing Politics With Crude Oil Using USA Sanctions Posted: 04 Apr 2012 09:53 PM PDT Crude oil markets are more liquid (pardon the pun) than most would recognize. Tankers regularly leave port with a load and a destination often changed while en-route to delivery. Oil can be shipped to and from Iran any where and under numerous ships with foreign registrations. I think the restrictions on Iran, while they seem to be a good idea to force them to comply with the current nuclear problem, are just whistling in the wind. Any oil customer for Iran can buy their oil through intermediaries as this is all about politics. In my view, the goading of Iran on this subject is just a pre-nup dance before WW III begins in the Middle East. As in the old saw: Manufacture a crisis and then get into a dust up of your creation; that's what's coming in my view. $5 is gasoline next. –Editor Tilting at windmills, playing solar games and trying to foist other stupid ideas on the world wastes taxpayer money, and time, and crushes economies as energy prices rise to the sky. This is deliberate as Energy Secretary Mr. Chu, says. He prefers $10 gasoline and America on its economic knees to promote this crap. "Oil prices may increase by as much as +30 percent because of a European embargo on Iranian oil set to take effect in July, Christine Lagarde, managing director of the International Monetary Fund said in New Delhi today. Any sudden price increase will hurt global growth, IMF director said. "Obama administration has decided to grant an exemption from new U.S. sanctions to 10 European Union nations and Japan, because the nations have demonstrated "significant reductions"(Joke) this year in their Iran petroleum purchases. Senator Bob Menendez, a New Jersey Democrat and co-author of a law enacted December 31 that will sanction banks in countries that don't reduce their Iranian oil purchases through Iran's central bank, said Secretary of State Hillary Clinton called him today to inform him of the decision. A drop in oil prices accelerated after equities decreased in New York. The S&P's 500 Index fell as much as- 0.9%. The Standard & Poor's GSCI Index of 24 raw materials decreased as much as -1.8%, led by lead and silver." Societe Generale raised its forecast for Brent oil prices in 2012 by +15% to $127 a barrel as spare capacity in the Organization of Petroleum Exporting Countries shrinks…" Mark Shenk 3-20-12 Bloomberg.net         This posting includes an audio/video/photo media file: Download Now | |
| Sinclair: Don't Buy The Gold Cartel's Con Posted: 04 Apr 2012 09:39 PM PDT
from jsmineset.com: Not one pro, not even Yra who is close to the establishment, believes that the action of all markets were a true price interpretation of the FOMC notes yesterday. Today and yesterday was the product of five gold banks showing the market who in their opinion is boss. It was aimed directly at the confidence in gold. These gold bank traders are legends, who are the present rulers of the universe, owners of Washington and answer to no one, even to a God. Well, in their mind they are at least. I really think ego has overcome the profit motive in the last two days. This changes nothing as to where gold is going in 2012 and beyond. It just makes trading impossible and charts useless, leaving only international fundamentals that will not be MOPEd away to make the final determination of the gold price. It coils the spring in the market even tighter than physics will allow, making the break out to the upside when it comes something to behold. Keep on reading @ jsmineset.com | |
| Is now the time to buy gold and silver? Posted: 04 Apr 2012 09:36 PM PDT
from goldsilver.com: Is right now the time to buy gold and silver? If you have been a regular reader you know the answer to that question is a resounding yes—especially so given the deliberately manufactured uncertainty coming out of the Federal Reserve. We first showed what is taking place right now On March 19th in chart form (below), commenting, "The history is cyclical, showing markets sell off just prior to the end of printing." And once the printing begins, markets take off like addicts on Federal Reserve prescribed dope. Keep on reading @ goldsilver.com | |
| Peter Schiff talks with Chris Waltzek Posted: 04 Apr 2012 09:29 PM PDT
About Gold Seek Radio: More interviews @ radio.goldseek.com | |
| David Morgan talks with Ellis Martin Posted: 04 Apr 2012 09:24 PM PDT Ellis Martin again visits with David Morgan to discuss the gold and silver sell-off precipitated this week. Free market forces are challenged by a possibly orchestrated test of gold. It happened over a month ago and it's on again this week. Listen to this fascinating interview with The Silver Guru. http://www.ellismartinreport.com. http://www.silver-investor.com contact: martinreports@gmail.com from opportunityshow: ~TVR |
| You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment