saveyourassetsfirst3 |
- Range Resources Coporation Valuations: More Hot Air Than Natural Gas
- Most Gold For The Buck - Gold Reserves Of Major Gold Miners
- Crime of the Millennium
- Apple Dividend, Last Call
- NovaGold: Putting My Money Where My Mouth Is On This Gold Miner
- Silver: Impartial Insights
- Why Junior Gold Stocks Are Still the Place to Be: Edward Karr
- Market Optimistic on Central Bank Intervention
- Euro to Beat Dollar? Draghis Genius
- U.S. Intelligence Suspected of Killing CFTC Silver Manipulation Case Against JP Morgan
- Financial Times Says CFTC to Drop Silver Investigation: Bart Chilton Has a Few Things to Say About That
- Gold 'Popular Again' but Market 'Lacking Conviction'
- Copper, Crude Oil Aiming Higher on Risk Sentiment
- Series of Small Bull Rallies
- More support for CFTC Commissioner Chilton's work against market manipulation
- CFTC's Chilton contradicts Financial Times report on silver probe
- What a surprise: FT says CFTC to drop silver investigation
- Gold Trove Found at Israel Castle Reveals Crusaders’ Forex Moves
- Peter Brimelow: Gold fizzles -- or gold fixed?
- Is a Strong Dollar Trouble for Gold? - Casey Research
- Links 8/7/12
- Where Are the Feds? NY Banking Superintendent: Standard Chartered a “Rogue Institution,” Made $250 Billion of Illegal Transfers With Iran
- Is Draghi’s EuroRescue Plan Coming Unglued?
- In Thrall to the Iron Fist
- The Hypothesis That Investors Are Missing
- Ignoring the Effects of 40 Years of Money Printing
| Range Resources Coporation Valuations: More Hot Air Than Natural Gas Posted: 07 Aug 2012 12:12 PM PDT By Stocks & Shares: Range Resources Corporation (RRC) is a United States-focused natural gas company which recently traded at astronomical price-to-earnings multiples over 200. It is an awesome company whose earnings cumulative average growth rate is expected to top 20%. Unfortunately, even this prodigious growth just doesn't justify its valuation multiples. When compared to its peers, it is readily apparent that investors should stay away from RRC shares at current price levels, even after considering growth projections. Computing Future Valuations from Growth Projections Regardless of how shiny a stock is, investors should never buy a stock because the company is fancy, disruptive, or because it is fun to read about. Media coverage, drama, the next big thing, and other distractors cannot justify paying one dollar for fifty cents. Instead, investors should be focused on growing the value of their assets through purchasing stocks for less than what they are worth. A poor company trading Complete Story » | ||||||||||||
| Most Gold For The Buck - Gold Reserves Of Major Gold Miners Posted: 07 Aug 2012 12:07 PM PDT By Which major gold miner offers investors the most bang for their buck? Well, that depends on which metric you use to measure value, but one metric I like to look at is miner's proven & probable gold reserves in relation to its market capitalization. This statistic offers investors a quick glance at how much the market is valuing each ounce of gold on a miner's mineral reserve report. To make comparisons amongst gold miners more relevant, we're only going to focus on Proven and Probable gold reserves, as inferred, indicated, and measured reserves may not even exist. So which gold miners offer the best value in terms of reserves? Let's find out. 1. Barrick Gold Corporation (ABX)
With Barrick Gold being valued at $234.10 per OZ of gold in reserves, the company certainly Complete Story » | ||||||||||||
| Posted: 07 Aug 2012 11:53 AM PDT As few people in our societies even know, all of the world's governments have (foolishly) granted exclusive monopolies for the printing of all the world's currencies (our "money") to a cabal of privately-owned corporations called "central banks" – given that name because it is a cabal exclusively owned/operated by bankers. Understand that the monopoly to print money is nothing less than a license for economic rape. These private banks lend us all the paper that they print out of thin air (at zero cost to themselves). The result is that after roughly 100 years of this economic rape we have (collectively) paid these banks $trillions in "interest" for nothing, and currently owe them $10's of trillions for nothing. History's single greatest act of legal theft. Indeed, these bankers have stolen such unimaginably huge sums of wealth from our societies that the Thieves now voluntarily return most of the additional amounts they steal each year. There are two reasons for this act of pseudo-remorse. To begin with, with the Little People drowning in debt individually, and with our nations drowning in debts collectively; the Thieves were/are worried that their Victims might actually notice them sitting on top of their mountains of (stolen) money. However the second reason – the real reason – is that the countless $trillions that these central banks have stolen from us are literally just the tip of the iceberg during their reign of legal-crime. This private cabal of central banks has not only been given monopolies to print money out of thin air for their own benefit, but thanks to the abominable euphemism which they call "fractional-reserve banking"; they are allowed to delegate their License to Steal to other private banks. Specifically, for each dollar that the central bankers lend to their other banker-friends (at zero/near-zero interest rates); these private banks are allowed to print ten more dollars out of thin air, and lend them to the Little People (at higher rates of interest). Thus the central banks don't mind returning most of the additional money which they steal each year, since their own thievery only represents 10% of the total banker-plundering of the wealth of all economies. What is the inevitable result of a capitalist system where every new dollar that is used to fuel the economy is lent into existence? Debt Slavery: the ultimate goal of every (paper) fiat currency system. There is now somewhere in excess of $200 trillion in debt sloshing around the global economy, most of that debt being totally fraudulent, in that it is interest paid to bankers (literally) for nothing. Somewhere around 25% of every dollar earned by all of our Western economies is now paid to these banker-parasites as interest on their fraudulent debts. The bankers would like to steal even more, but already all of our economies are teetering on the verge of bankruptcy. Greece was already forced to default, and the U.S. (the world's largest Deadbeat Debtor) is only able to ward-off debt-default by fraudulently maintaining its own interest rate at zero percent. Put another way, if U.S. interest rates had ever reached the same level as those which were inflicted on Greece by Wall Street's economic terrorists; the U.S. would have defaulted even faster than Greece. It would have required the U.S. government to quadruple tax revenues just to pay the interest on its own (fraudulent) debt. Having enslaved us all with debt thanks to being granted their License to Steal, history's greatest thieves are also history's greatest hypocrites. Whenever one of our (subservient) governments has the audacity to actually suggest taking a closer look at the bankers' Theft Monopoly; the Thieves look down their noses, point their fingers at us, and accuse of us "threatening their independence." Yes, there is no one who places a higher price on his own freedom than the Slave Master. What about our independence? The latest example of this supreme hypocrisy comes from (surprise, surprises) Benjamin Shalom Bernanke. Feeling especially pleased with himself after his two-day love-fest with the banker sycophants of the U.S. Congress; B.S. Bernanke chose that moment to launch yet another attack at Rep. Ron Paul – and his "Audit the Fed" bill. Bernanke's specific accusation? As paraphrased by the Corporate Media, Bernanke whined that "the ability to review monetary policy decisions…could compromise central bank independence." This is by no means a new argument. Indeed, it is the Big Lie which the banker-thieves have hid behind for a hundred years – since it has never had a shred of validity. The Big Lie is based on the artificial/arbitrary distinction of all economic policies as being either "fiscal policy" (the realm of government) or "monetary policy" (the realm of private bankers). The obvious fiction here in attempting to create some invisible wall between the two groups of policy-makers is that there is only one economy. | ||||||||||||
| Posted: 07 Aug 2012 11:46 AM PDT By Trading Apple (AAPL) around the ex-dividend date can incredibly confusing. It is the ex-dividend date that determines which investor, the buyer or seller, receives the dividend. Ex-dividend dates are used to make sure dividend checks go to the right people. Below is a chart of the ex-dividend date and record date:
The Ex-Dividend date is the most important date in dividend investing. Ex-Dividend is the day on which all shares purchased and sold no longer come with deserved-to-be-paid guarantees on the declared dividend. Apple shareholders must own a stock before the ex-dividend date in order to receive the next scheduled dividend. Buying Apple Stock If you were to buy a stock before the ex-dividend date, no matter if in pre-market trading, regular trading or after-hours trading, Complete Story » | ||||||||||||
| NovaGold: Putting My Money Where My Mouth Is On This Gold Miner Posted: 07 Aug 2012 11:42 AM PDT By In a recent article I posed the question "Is NovaGold A Long-Term Buy At These Levels?" Today I put my money where my mouth is, and initiated a position in NovaGold (NG), as I have been bullish on the stock and on the gold miners in general. Why did NG sell off so hard? We all know by now that NG had been selling off in recent months with all of the other gold miners, [see any of the major gold miner indexes, (GDX), (GDXJ), (NUGT), etc.] given that the price of gold has been under pressure due to a stronger dollar and potential deflation risks. The largest gold ETF (GLD) is just about flat for the year. But then the announcement came after Barrick Gold's (ABX) poor quarter, with respect to the Donlin Gold Project, and NG was taken out back and shot. For me, the selling was overdone, Complete Story » | ||||||||||||
| Posted: 07 Aug 2012 09:57 AM PDT V: Big D provides sound sensible opinion for the Ag stacker. The Real Conspiracy… It's not to hold prices down. from daytradeshow: Part One Part Two ~TVR ~TVR | ||||||||||||
| Why Junior Gold Stocks Are Still the Place to Be: Edward Karr Posted: 07 Aug 2012 09:13 AM PDT | ||||||||||||
| Market Optimistic on Central Bank Intervention Posted: 07 Aug 2012 09:03 AM PDT gold.ie | ||||||||||||
| Euro to Beat Dollar? Draghis Genius Posted: 07 Aug 2012 08:58 AM PDT Merk Fund | ||||||||||||
| U.S. Intelligence Suspected of Killing CFTC Silver Manipulation Case Against JP Morgan Posted: 07 Aug 2012 07:34 AM PDT
from beaconequity.com: "Four-year silver probe set to be dropped," FT titles its piece Monday regarding the JP Morgan silver manipulation scandal. According to FT: A four-year investigation into the possible manipulation of the the silver market looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case, according to three people familiar with the situation. . . In 2010, Bart Chilton, a CFTC commissioner, said that he believed there had been "fraudulent efforts" to "deviously control" the silver price. But after taking advice from two external consultancies, the first of which found irregularities on certain trading dates that it believed deserved more analysis, CFTC staff do not have sufficient evidence to bring a case, according to the people familiar with the situation. Keep on reading @ beaconequity.com | ||||||||||||
| Posted: 07 Aug 2012 07:26 AM PDT
from caseyresearch.com: Yesterday in Gold and Silver Net volume was shocking light yesterday…around 85,000 shares…and on the basis of that, I wouldn't read much of anything into Monday's gold price action. Gold closed at $1,611.60 spot…up a whole $8.00. [...] The silver price action was a bit more interesting, but only just. The rally de jour started just before the Comex open…and ended the moment that the price got above the $28 spot mark…and it made several attempt to break through that price barrier after that, but could not. Then it got sold off a bit into the electronic close. Keep on reading @ caseyresearch.com | ||||||||||||
| Gold 'Popular Again' but Market 'Lacking Conviction' Posted: 07 Aug 2012 05:09 AM PDT The spot market cost of buying gold climbed to $1,616 an ounce Tuesday morning in London, its highest level so far this week, as commodity prices and stocks markets generally edged higher. | ||||||||||||
| Copper, Crude Oil Aiming Higher on Risk Sentiment Posted: 07 Aug 2012 04:53 AM PDT Commodities are on the upswing amid a broad-based advance in risk appetite. Growth-geared crude oil and copper prices are following European shares higher while gold and silver find de-facto support in ebbing haven demand for the US dollar. | ||||||||||||
| Posted: 07 Aug 2012 03:26 AM PDT Below is my look at the technicals with commentary as of August 2nd. Dow Jones Industrial Average: Closed at 12,878.88 -92.18 after a busy day, with the markets down even more, earlier in the session. Central banker non-news was the culprit today with many thinking the lack of any encouragement from the ECB in Europe could indeed cause more selling. Volume was normal and momentum, while mildly up, appeared weaker. The chart pattern shows a protracted struggle since the beginning of this year. There is a very wide and sloppy bearish head and shoulders that began last February. The four highest tops all quit buying near 13,250 resistance. After the month of May, price sold down to 12,000 support. We see a series of small bull rallies all resisting at 13,000. At this time last year, the Dow dropped from 12,500 to 10,500 from August through September. Our last current price is above all moving averages with support on the 20-day at 12,842.34. While we do not expect a -2,000 point drop this month like last year, it could happen. However, we might see a worst case probable low at 12,000. This is an election year and market manipulators will do anything to keep stocks propped-up. Tomorrow's jobs report could be tepid to bad. Should this be the case, selling to 12,750 is probable for Friday's session. A selling day on Friday would then move over into more selling on Monday, barring unforeseen positive news. S&P 500 Index: Closed at 1365.00 -10.32 on normal volume and rising but peaking momentum. This chart appears more aggressively positive than the Dow. We see a pattern of four higher tops in a row on a mild rally beginning in June. There is a channel line convergence at 1400 with the close above all moving averages. This market moves faster than the Dow. Watch the trading action of the S&P 500 and the Nasdaq 100 for markets' leading indicators. The 50-day moving average is nearby at 1352.33. Should the price slip under that number, we would be on our way to another selling event similar to last year. Resistance is 1375 and support is 1361.17 on the 20-day average. Should the tone be one of selling tomorrow on Friday, which we expect, this index would probably slid back to 1350 support, or most likely hold onto the 20-day average support at 1361.00. S&P 100 Index: Closed at 629.43 -4.85 on normal volume and peaking momentum. Price resisted up against two resistance lines at 635-640. So far the momentum is up, but only mildly. There are four supporting moving averages and a channel line nearby. Should the big traders be able to hold the S&P's up for the next two weeks, for the most part, we would expect this market to hold-up with a worst case drop to the 200-day moving average at 600.00-603.16. Last year, the 100 could not hang-on and sold under the 200-day average at this time -100 points from 600 to 500. Fundamentals and the calendar are against much new buying, but do not underestimate the S&P 500 traders helping these markets. Nasdaq 100 Index: Closed at 2625.52 -9.61 on normal volume and flattening momentum. Price is stuck and being squeezed in a longer continuation triangle. The close was above the moving averages, but those three averages, two channel lines and the close are all squeezing together. Sometime this month, price is going to have to breakout either up or down with some power. For now, the June-July pattern is a bear parabolic top. This usually means selling ahead. Expect the Friday session to take down the price from our close to near 2607.75 support on the 20-day moving average. 30-Year Bonds: Closed at 151.93 +1.25 on mildly selling momentum. The Euro currency and related paper had tiny support this week selling back the dollar and the USA bonds. The chart is moving sideways, supported at 151.50, with resistance about one point higher. As we near the fall, bonds and the dollar tend to rise. However, we have to wonder how much higher this market can go since its obviously out of steam and there is a general leveling, or balancing for now in the paper markets. Over the next two trading sessions, the bonds should stay firm above 151.50 support. Gold: Closed at 1590.50 -10.30 on rising momentum with gently higher lows being posted since the end of July. Resistance is 1608 a top go-to magnet number for gold. We were above this to 1618 on the December futures, but price fell back on problems with numerous other markets. Price is now under all moving averages. It is being squeezed between 1585 support and 1599.23 on the 50 day moving average. We were stalled under the 1633 200-day moving average on the futures. Further, we hit the end of the month trading balancing. With gold finishing a tiny C corrective wave up on Friday, we look for a close between 1592.50 and 1608. Next week, this market could begin a new five wave rally. Silver: Closed at 27.17 -0.26 on rising but stalled momentum. The chart pattern has a 2 ½ month wide inverse head and shoulders pattern signaling a rally breakout is just ahead. We could still sell back to hard support at 26.62 before the next rally. A 50% longer view retracement could take silver to 37.85 to 38.48, over the next 2-3 months. Price is under all the moving averages. However, the calendar and the current chart pattern are favoring a bull breakout.Resistance is 28.00 on the 50-day moving average. Expect flat, choppy trading until perhaps the end of next week, or the beginnings of new buying next Thursday or Friday, the 9th or 10th. XAU: Closing at 147.73 -1.38 after posting a bullish very wide double bottom on the important metal to shares ratio. We are still turning lower on that ratio saying we must wait a few more days, however, after that the trend should be solidly higher. Momentum moving averages are crossing over to go higher. The current support is 147.00 and resistance is 150.00. Once we are over the 50-day moving average at 155.00+ we should be well into the next rally. It could take roughly one more week. US Dollar: Closed at 83.32 +0.18 on falling momentum as the Euro recovered from being oversold to 120.00 support. The dollar closed on an up-bar saying it's supported and should move to 83.50 resistance on Friday or, perhaps a touch higher. The recent high was 84.00 where the rising price stalled. Should the price hang around 83.00 plus or minus a few points, we would be producing a bearish head and shoulders top signaling the Euro might mildly improve. Expect choppy trading this month with a larger dollar rally in September as the Euro sinks again on a host of problems on the continent. Crude Oil: Closed at 87.40 -1.25 as this market trades sideways in chop between 84.50 and 88.50. The close was on a down bar. The negative commercial global news is suppressing crude oil prices. The close was under all moving averages, which is bearish. The price of 8844 on the 50-day average is upper resistance. Meanwhile, political theatre and violence is escalating in the Middle East. We can see war on the horizon in that region, which would produce roughly a $10 price premium just on the threat of war.A real war would make energy prices skyrocket. Momentum has peaked, and we see more selling to something lower in the current trading range with support at $86.00-85.00. CRB: Closed at 294.50 -4.73 after a price stall at 300.00 support and resistance. Momentum has peaked and is turning down to sell primarily on toppy grain and energy prices. Today's price fell nearly -5.00 points and closed on a down bar signaling a further drop to the 50-day moving average at 291.10, perhaps on Friday, tomorrow. New resistance is 295.00 and 291-290 is support. Next week, we could see a further drop to 285.00 support on a firm price, before the new rally could begin. -Traderrog   This posting includes an audio/video/photo media file: Download Now | ||||||||||||
| More support for CFTC Commissioner Chilton's work against market manipulation Posted: 07 Aug 2012 03:13 AM PDT  More support for U.S. Commodity Futures Trading Commission member Bart Chilton comes from financial writer Christopher Barker, who observes that suspicion of U.S. government manipulation of the gold and silver markets is growing throughout the world. Barker's commentary is headlined "CFTC Commissioner Bart Chilton Comments on the Silver Investigation". It's posted over at the Motley Fool website...and the link is here. It's definitely worth reading. | ||||||||||||
| CFTC's Chilton contradicts Financial Times report on silver probe Posted: 07 Aug 2012 03:13 AM PDT  Silver Doctors today quotes U.S. Commodity Futures Trading Commission member Bart Chilton as criticizing yesterday's Financial Times story reporting the end of the commission's investigation of the silver market. The FT report, Chilton is quoted as saying, is "premature" and "inaccurate." And Chilton today repeats his belief that there have been improprieties in both the silver and gold markets. The extensive commentary by Chris Powell, plus the link to the silverdoctors.com story is embedded in this GATA release...and I consider it a must read. The link is here. | ||||||||||||
| What a surprise: FT says CFTC to drop silver investigation Posted: 07 Aug 2012 03:13 AM PDT  A four-year investigation into the possible manipulation of the silver market looks increasingly likely to be dropped after US regulators failed to find enough evidence to support a legal case, according to three people familiar with the situation. The Commodity Futures Trading Commission announced that it was investigating "complaints of misconduct in the silver market" in September 2008, following a barrage of allegations of manipulation from a group of precious metals investors. In 2010, Bart Chilton, a CFTC commissioner, said that he believed there had been "fraudulent efforts" to "deviously control" the silver price. | ||||||||||||
| Gold Trove Found at Israel Castle Reveals Crusaders’ Forex Moves Posted: 07 Aug 2012 03:13 AM PDT  Gold coins discovered last month in an ancient crusader castle that lies in what is now Israel provide surprising information on how economic transactions were made about 1,000 years ago. "The scientific value is unprecedented," Oren Tal, director of the excavation and chairman of Tel Aviv University's Department of Archaeology and Ancient Near Eastern Cultures, said in an e-mailed statement. Crusaders "were not afraid to use older coins to complete large transactions and run large- scale businesses," he added. The hoard, which contains mostly dinars dating back to the Fatimid Period that predated the crusaders, was discovered in an excavation of the Arsur castle, also known as Apollonia. | ||||||||||||
| Peter Brimelow: Gold fizzles -- or gold fixed? Posted: 07 Aug 2012 03:13 AM PDT  But gold fizzled even before it became clear that the Fed and the ECB were not going to make reflationary, gold-stimulating moves. Measured by the active December CME contract floor close, the metal lost 0.54% on the week, while the NYSE Arca Gold Bugs Index was down 1.07%. To be sure, this involved a considerable recovery from the alarming lows of mid-week. But the damage done was still very severe. The thoughtful website The Golden Truth published an essay on Friday titled "Chart Porn: Value Play Of The Decade," featuring a chart from 1984 comparing the PHLX Gold/Silver Index against gold. Gold shares have fallen to a new low: 2012 has been ghastly. From the peak in 1996, the ratio is down 70%. | ||||||||||||
| Is a Strong Dollar Trouble for Gold? - Casey Research Posted: 07 Aug 2012 03:13 AM PDT  This was the headline to Monday's edition of Casey's Daily Dispatch. The commentary by Vedran Vuk includes some interesting graphs...and it's worth reading if you have the time. The link is here. | ||||||||||||
| Posted: 07 Aug 2012 02:21 AM PDT What is a proof? mathbabe Putting a price on the rivers and rain diminishes us all Guardian (John L) Tepco Weighed Using Firearms To Avoid Fukushima Explosion Bloomberg Nick Skelton: gold medal rider defies age and broken bones Telegraph Is not joining Facebook a sign you're a psychopath? Some employers and psychologists say staying away from social media is 'suspicious' Daily Mail. So people under 35 are required to be exhibitionists as a condition of employment? Hospital Chain Inquiry Cited Unnecessary Cardiac Work New York Times How a charity oversells mammography BMJ and BMJ OpEd Says Komen Ads False MedPageToday(furzy mouse). Regular readers have seen me rant periodically on what a crappy test mammograms are. A manual exam by someone who regularly feels boobs for cancer is better at catching dangerous cancers early than a mammogram. But you will never hear that from an MD in the US. Neil Heywood trial: Bo Xilai's wife has 'confessed' to killing British businessman Telegraph Asia Buyers Snap Up Australian Hotels As Mining Boom Fills Rooms Bloomberg (Joe Costello). Shades of Japan, circa 1988, except they went for golf courses and resorts. Are Chinese profit warnings signalling a bottom? MacroBusiness Germany and Italy near blows over euro Telegraph Spain Proves that Austerity can never "Ensure" a Balanced Budget Bill Black, New Economic Perspectives Standard Chartered Bank accused of scheming with Iran to hide transactions Guardian. As in $250 billion. Standard Chartered Faces N.Y. Suspension Over Iran Deals Bloomberg. Note the bank contends that only $14 million in transactions were out of compliance. This is gonna be interesting. Trading venues ready for CDS turf war IFRAsia (furzy mouse) Curiouser and Curiouser: Bart Chilton Informs the Press About the 'Erroneous Report' on Silver Jesse Parents of U.S. Olympic swimmer Ryan Lochte face foreclosure USA Today Vacant Detroit becomes dumping ground for the dead Associated Press (furzy mouse) Why the Administration Won't Fire Ed DeMarco, Cont' David Dayen, Firedoglake Leeson: Rogue trader culture is more rife than ever Independent Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading Wired (furzy mouse) NY neighbors turn out to mark passing of 30-year-old Honda Civic AutoBlog (YY). Be sure to watch the procession video. Antidote du jour (furzy mouse):
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| Posted: 07 Aug 2012 01:54 AM PDT The New York Superintendent of Financial Services dropped a bombshell today, filing an order against Britain's Standard Chartered Bank. It charges the bank with having engaged in at least $250 billion of illegal transactions with Iranian banks, including its central bank, from 2001 to 2010, and of engaging in similar schemes with Libya, Myanmar and Sudan (those investigations are in progress). It threatens SCB with the loss of its New York banking license and termination of access to dollar clearing services. The latter alone is as huge deal. You are not a real international bank unless you have dollar clearing. Sumitomo Bank looked at giving up its US banking license in 1985 when it was examining deal structures for making an investment in Goldman, and ascertained that giving up access to Fedwire would cost it over $100 million a year and considerably weaken its position in Japan. SCB is certain to be a much more active dollar player than Sumitomo was and the volume of international transactions has grown hugely since then. SCB squealed like a stuck pig, claiming that only $14 million of transactions were out of compliance. But the bank has nowhere to go. The NY Superintendent, Benjamin Lawsky, has made his determination. The only thing open for discussion is what sort of punishment he is going to impose. The bank must
SCB is also up for a license revocation hearing and needs to "demonstrate" why it should not be suspended from clearing dollar transactions in the interim. Having poised a sword of Damocles over the bank's head, I would expect Lawsky to demand a lot to make this go away, ideally including some executives' heads as proof the bank was turning over a new leaf (the filing notes that any money damages are to be determined). The flip side is Lawsky may come under pressure precisely because he has shown up the Treasury, Fed, and DoJ. This is a Spitzer-level move from an unexpected source. Bear in mind, the facts presented are far worse than the Libor price fixing that led to the departure of Barclays' chairman, CEO, and president. Lawsky has evidence that this scheme was devised at the senior levels of the bank, while the Barclays Libor actions took place at comparatively low levels (although it is hard to believe there was not knowledge at executive levels prior to the October 2008 conversations between the Bank of England's Paul Tucker and Bob Diamond). The filing is riveting reading. In very simple terms, SCB altered ("repaired") wire transfer information so as to omit the fact that Iranian banks were involved. By way of background, "U-turns" were a permitted transaction with Iranian banks and individuals, when the recipient and sender of the wire were both non-US, non-Iranian banks (although they might represent an Iranian party). The compliance requirements were stringent; funds were to be frozen if a transfer request did not have enough information to determine whether or not it was with a sanctioned party. But that was no deterrent to SCB:
A footnote to this section quotes an e-mail from the general counsel to the compliance manager on precisely how the wire instructions are to be doctored. And Deloitte Touche is depicted of being critical to this scheme:
If Lawsky indeed has the goods on Deloitte, this is the sort of thing which ought to put it out of business, except all of the Big Four accounting firms have "too big" or more accurately, "too few" to fail status. The filing recounts how eager SBC was to get the business in 2001 for acting as recipient bank for the proceeds of Iran's dollar based oil sales, roughly $500 million a day. This required SBC to deal directly with a sanctioned bank and was seen as attractive in its own right and as providing an entre to other Iranian, as in sanctioned, banks. The Iranians emphasized they wanted the transcations processed quickly (code for they did not want to run the risk of having funds seized) and asked for SCB to pay funds in advance of receipts, up to $200 million a day! To put it mildly, this level of financial exposure would motivate SCB to make sure the arrangement was not uncovered. Even though SCB ascertained that its New York branch would have to be fully appraised of transaction/customer information to be in compliance with the law, it instead provided false details in the SWIFT data fields. And this procedure, and the fact that it was done on behalf of Iranian banks, was commemorated in SCB operating manuals. . By 2003, SCB's outside counsel for the US was hectoring the bank for failing to comply with the law and the spirit of OFAC; London staff shrugged it off, regarding the secrecy as necessary since they wanted to keep the business. And as SCB's competitors heeded warnings like this and exited the Iran business, SCB happily filled the void. I strongly suggest you read the actual filing; it details the additional ruses the bank engaged in over the years, all with the supervision and approval of senior legal and business officers. And the piece de resistance is the role played by Deloitte. In 2003, SCB was sanctioned by the New York Fed and the New York banking superintendent for serious lapses in filing suspicious activity reports and customer due diligence. As part of the settlement, SCB had to hire an independent monitor. That monitor, Deloitte, instead decided it was much better off aiding SCB in figuring out how to evade the rules:
The filing contains even more salacious detail on the extent of the flouting of the law and the misrepresentations to regulators. But it also appears that Lawsky has end run, as in embarrassed, the Treasury and the New York Fed. As part of its defense, SCB contends it was already cooperating with Federal regulators:
The agencies in question are "DFS, the Department of Justice, the Office of Foreign Assets Control, the Federal Reserve Group of New York and the District Attorney of New York." Bloomberg points out that the current management team has long tenures in the bank, meaning they will deservedly be in the cross hairs. And Peter Rudegeair at Reuters tells us they've been horribly sanctimonious too. The lack of action by everyone ex the lowly New York banking supervisor is mighty troubling. The evidence presented in Lawsky's filing is compelling; he clearly has not gone off half cocked. Why has he pressed forward and announced this on his own? The Treasury Department's Office of Terrorism and Financial Intelligence has supposedly been all over terrorist finance; the consultants to that effort typically have very high level security clearances and top level access (one colleague who worked on this effort in the Paulson Treasury could get the former ECB chief Trichet on the phone). For them not to have pursued it anywhere as aggressively as a vastly less well resourced state banking regulator, particularly when Iran is now the designated Foreign Enemy #1, does not pass the smell test. At a minimum, this lack of sufficient inquisitiveness on behalf of the Feds would the bank snookered them by being terribly forthcoming (as in it was responding only to specific inquiries, and then as narrowly as possible). But it raises the more troubling specter that Federal regulators (oh, and the US Department of Justice) wanted to keep this all quiet so as not to lead to embarrassing headlines. Although there is nothing in the filing to point to failure to act by the New York Fed, which was presumably the lead party in the 2003 sanctions against SCB (indeed, it says specifically that SCB deceived Federal regulators), the flip side is there would be only downside to Lawsky in doing anything that would make Fed or Treasury think he was trying to make then look bad. There was a huge furor in the UK over who among the banking regulators knew what when on the Libor scandal. If our Congresscritters are at all worth their salt, they ought to be putting Geithner and the relevant folks at the New York Fed under the hot lights. We'll see soon enough how the Fed and Treasury play this. If they don't launch parallel actions pronto, it will be a damning sign as to where they think their, and perhaps most importantly, Geithner's, interests lie.
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| Is Draghi’s EuroRescue Plan Coming Unglued? Posted: 07 Aug 2012 01:47 AM PDT No sooner had some astute Euro commentators noted that Draghi might have found a path through the Euro mess to keep it patched up long enough for to impose austerity on the periphery and drive all of Europe into a lovely depression, various elements of his plan look as if they were coming unglued. First, careful readings of the German press suggest, as we had warned, that the commitments he has gotten to bond buying, both from German pols and from northern central banks ex the Bundesbank, are qualified: only near term maturities (less than two years) and only in limited amounts ("limited" has not been translated into a particular number, it appears). Yet the media seems to think quite the reverse, that Draghi is going to engage in unlimited bond buying. A representative quote from the Financial Times:
Um, no. It appears that anything like that would lead to a revolt by the northern bloc. Absent a September 2008 level meltdown, it does not look like they will give the ECB what it wants quickly or easily. Second, as the FT piece (and other sources) point out, Spain is now playing coy about asking for funds (the drill is the about-to-be-subject nation has to ask for a rescue, then agree to a Memorandum of Understanding which sets forth the details of the fiscal tortures that will be inflicted on it). Per the FT:
Ironically, Draghi may be a victim of his own success in jawboning. He's driven down short term yields enough that Spain feels less anxious about access to markets, plus its next bond sale isn't until October. But Italy has already said (effectively) that it won't ask for funds before Spain. Now up to a point, that was exactly what Draghi wanted, to keep everything on hold until at least Sept. 12, when the treaty allowing the establishment of the ESM will presumably be signed by the German president, German constitutional court willing. But too much complacency on the part of Spain and Italy is not seen as desirable by the Eurocrats. Just as a mere ten days ago, reports that German Finance minister Schaeuble had approved ECB bond-buying was followed by a denials, so to do reports that German politicians are moving towards supporting bond buying seem to be less conclusive than the initial news reports suggested. Per Ambrose Evans-Pritchard of the Telegraph:
It also did not help that the Berlusconi paper Il Giornale put a photo of Merkel waving in a way that looks a bit like a Nazi salute with the headline, "Fourth Reich" on its front page. Yanis Varofakis, correctly recognizing that there is no "unlimited" ECB bond buying program in the wings, explains why the widely heralded Draghi plan won't deliver the goods even if the other hoped-for device for extending the firepower of the rescue facilities, that of giving the ESM a banking license, is put in effect:
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| Posted: 07 Aug 2012 12:26 AM PDT Is there anything uglier in life than someone who admires and lusts for power? Well, there might be. Hairless cats are rather ugly. But when it comes to human beings, fawning over centralised authority is about as repulsive as it comes. More on Paul Keating in a moment. But first we should mention a cause for concern. There was not much consensus at the Vancouver conference about anything. Yet nearly everyone pointed out that bonds appeared to be in a bubble. You could almost call it a consensus. A consensus on anything is really just a lack of imagination. In markets, when everyone agrees on something, everyone is usually wrong. Another way of looking at it is that if everyone is on the same side of the trade, you should probably be on the other side. But is this the case today with bonds? Government bond yields in Europe's northern core (Germany, Denmark, and Switzerland) have dipped into negative real yields recently. That sounds complicated. What it really means is that once you've adjusted for inflation, short-term government bonds aren't paying a real yield. Why would you loan your money to a government for the privilege of losing a fixed amount of yield? Why settle for getting back 98 cents for every dollar you lend? The only world in which that makes sense is a dangerous financial world. In a dangerous financial world, investors value liquidity and the perception of safety more than the chance to make money. Conclusion: we live in a dangerous financial world. But does putting your money in government bonds make you any safer? Well, government bonds are at the core of the world's financial system. They are considered - rightly or wrongly - the best collateral in the banking system. Governments can always raise taxes to make interest payments on bonds, or print money to pay them off. Until recently, the default risk was low. When you look at the chart below, it's hard to believe that bonds are NOT in a bubble. Ten-year yields on US government debt are below two percent. But quite clearly - because they're not at zero yet - they can go lower. And if the US Federal Reserve intends to suppress interest rates by any means necessary for the next few years, you could see more people flee from the periphery of the world's financial system to its corrupt and rotten core. Yields could go lower still.  For investors, it would be unwise to underestimate the creativity of the powers that be when trying to keep the game going. 'Extend and pretend' is all about pretending the collateral in the banking system (especially government bonds) is good collateral. The goal, from the insider point of view, is to prevent another Lehman Brother's collapse at all costs. But that goal - preventing the unintended consequences of a major default of bankruptcy in the financial system - is increasingly at odds with democracy. Just ask Italian Prime Minister Mario Monti. Warning of the 'psychological dissolution' of Europe because of tensions over debt and the Euro, Monti said last week, 'If governments allow themselves to be entirely bound to the decisions of their parliament, without protecting their own freedom to act, a breakup of Europe would be a more probable outcome than deeper integration.' Well there you have it. Democracy - the accountability of elected governments to the people that elect them - stands directly in the way of deeper political and economic integration in Europe. You couldn't get a clearer example of how undemocratic and anti-liberty the European project is. Unfortunately, elites everywhere are in love with the idea of an all-powerful State that's not accountable to the people. In Monti's world, governments have, and must protect, their own interests, even at the expense of the governed (peasants, serfs, little people, useful idiots). Monti's world is Obama's world, and Paul Keating's world too. For example in America, the US Senate turned down new legislation that requires private companies to share information with the government regarding 'cybersecurity threats'. Remember, everything is done today to protect you from terrorism, including 'cyber threats'. Now some people may be all in favour of a Chinese-style Internet in America. But the Senate failed to pass the bill (and yes, we know the bill doesn't exactly create a Great Firewall of China...but we'd argue it's in the same spirit...namely an Internet regulated by the Feds). The Legislative branch of the US government respected the wishes of the people. Not so, the Executive Branch. The Hill reports that President Obama may issue an Exceptive Order that would accomplish the bill's purpose. President Obama has taken to using the phrase 'we can't wait' in issuing Executive Orders. He's certainly not the only President to use them. Republican and Democratic presidents alike have used them to by-pass a Congress they failed to persuade in order to change America's laws and law enforcement. Abuse of executive power is a bi-partisan affair in America. In fact, you could say that the love of executive power - or the iron fist of coercion through power instead of consent through persuasion - is a human attribute, although neither an attractive nor desirable one. You see it here in Australia too. In a speech launching Hugh White's book The China Choice, former Aussie Prime Minister Paul Keating appears to have expressed his admiration for the 'scale and quality of the Chinese achievement.' He also seemed to attach the idea that you need freedom to have prosperity. In a swipe at the US, Keating said, 'Even President Obama told us during his visit to our Parliament, that 'prosperity without freedom is just another form of poverty, he said. That remark placed a heavy discount on the success of the Chinese Communist Party in dragging its community from abject poverty.' Was it the hard work of the Chinese Communist Party that dragged the Chinese people from poverty? Or was it the Chinese people? What is it with this admiration for command and control political and economic systems with Australian public figures? We've read similar sentiments from Ross Garnaut and Ken Henry. Maybe we have latent American sensibilities that become offended when we read an Australian tell Australians that we must all accept China's economic rise, even if it means accepting China's authoritarian government. But Keating seems to say as much. He said yesterday:
'All of us in the debate in Australia believe Asia will be a safer and better place with the continued engagement of the US in the region. And with our trade preponderantly in North Asia and the greater part of that with China, there is every reason to support the development of a cooperative structure between the US and China in the Pacific. And this must mean recognising China's prerogatives as a great power and the legitimacy of its government. The Communist Party of China deserves absolutely no credit for the 'moral value and quality of the Chinese achievement.' The Chinese people deserve all the credit. China has grown and prospered because it unlocked the power of human potential. Liberal political orders recognise that it's individual enterprise that creates value and improves the quality of life in a community. Illiberal political orders act as parasites and predators on enterprise and liberty. This is why people in love with power can't help but fawn over illiberal orders. They are invariably impressed with the power of the State to coerce individual behaviour in the service of an elite agenda. But economic liberty and political liberty are two sides of the same coin. We're probably getting ourselves all worked up over nothing, though. The fact that Keating is comfortable telling Australia to turn its back on two centuries of a successful liberal political order based on the rule of law and accept Chinese ascendancy for economic reasons (the iron fist of China was forged with Pilbara ore) is probably like the Treasury bond bubble. It indicates a trend that's ready for a reversal. In fact, at the ground level, the inherent contradictions of an economic system not based on profit and the efficient use of capital are already showing up. Forbes reports that more Chinese companies are reporting losses and profit declines. This is exactly the point Greg Canavan makes in his China Bust report. Still, isn't this an odd time for anyone to defend a liberal political order? After all, it isn't doing so flash now itself. Europe's a mess. And the United States finds itself stuck to a fiscal tar baby from which there's no obvious escape. Should we be throwing stones at China's political system when we are knee deep in the shattered glass of our own? Of course we should! Our job is to throw stones and see what shatters. The Western economic system has failed for the same reason the Chinese system will fail - it's no longer free and liberal. It's based on unsound money and a faulty belief in the power of centralised planning over individual human action. Australia doesn't have to choose between the US and China. It should choose its own system based on sound money, political liberty, free markets, the rule of law, and low taxes. But Australia's own political system - and the love affair all the major parties have with power and authority - is a totally separate subject. For today, we'd warn investors to beware. The bubble in bonds represents a bubble in the belief of the nation State to be a force for moral good in the world. Belief always dies hard. And not before throwing a few haymakers with an iron fist. Make sure you duck. Regards, Dan Denning From the Archives... As Draghi Drags the European Crisis On China's Economy - How the Devil is in the Detail The Greatest Interest Rate Fix featuring... Mario Draghi and Friends What the Credit Boom Left Behind The Australian Economy: A Case Study in Weirdness
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| The Hypothesis That Investors Are Missing Posted: 07 Aug 2012 12:26 AM PDT 'Déj` vu' is a French expression that means... well, you know what it means. For our purposes, we will use it to refer to the slumpy economy... and to the feds' response. We've see it all before. 'Dans la merde' is another French expression... which refers to where you end up when the feds' undertake to fix it. But the Dow shot up 217 points on Friday. Gold went up $18. How to explain it? With Europe on the brink of a blow-up (where it's been for years)... China's economy slowing down dangerously... and much of the rest of the world already in recession you'd expect investors would think twice before buying more stocks. After all, what are stocks? They're shares in real businesses. When those businesses do well, the shareholders should do well. But businesses don't usually do well in a recession. Investors, however, seem to be following a different line of thinking. They are responding to two entirely different hypotheses.
Now, you will look at these two hypotheses and think you have discovered a sure thing, no? A 'can't-lose' proposition, right? Either the economy is doing well. Or it isn't. Either way, stocks are going up! Win... win... right? Wrong! How about a third hypothesis? In this one, the whole world is sliding into recession. Britain and Europe are already there. Japan is almost there. The US is trailing, but not by much. Recession is what should happen. The developed economies are still in a Great Correction. And the effects of massive doses of new credit... cheaper money... and a big increase in the world's money supply (central bank assets have doubled since '08)... are wearing off. Once again, the private sector is trying to correct its mistakes - shucking off bad debt however it can. People are being more careful with their money - which is why sales fall and unemployment rises. Nothing new about this either. And nothing really new about the feds' reaction. Murray Rothbard described the feds' response after the crash of '29:
"If the Federal Reserve had an inflationist attitude during the boom, it was just as ready to try to cure the depression by inflating further. It stepped in immediately to expand credit and bolster shaky financial positions. In an act unprecedented in its history [but repeated after '08] the Federal Reserve moved in during the week of the crash... the final week of October... and in that brief period added almost $300 million to the reserves of the nation's banks. During that week the Federal Reserve doubled its holding of government securities..." Then, as now, the big increase in money supply produced something that looked like a recovery. Rothbard continues:
"By mid-November, the great stock break was over, and the market, falsely stimulated by artificial credit, began to move upwards again." In our current episode, stocks have recovered from their '08-'09 crash. Banks, teetering on the brink of collapse, were saved too - as the feds let it be known that they would do 'whatever it takes' to spare them from the consequences of their own mistakes. And the leaders of the rescue, mainly Ben Bernanke himself, are hailed as heroes... having saved civilisation. The 1930s had its heroes too. The first was Mr Herbert Hoover, who had engineered rescue efforts following the Great Crash. Rothbard:
"President Hoover was proud of his experiment in cheap money and in his speech to the business conference on December 5, he hailed the nation's good fortune in possessing the splendid Federal Reserve System, which had succeeded in saving shaky banks, had restored confidence, and had made capital more abundant by reducing interest rates." We know, however, that heroes of the '30s had not really saved the financial system from a day of reckoning; they merely postponed it... and stretched it out. The crash and depression of '20-'21 was more severe than the current crisis, but it was over within 24 months, during which time the feds made no rescue attempts. The washout after October 1929 probably would have been a short and violent one too. Instead, the feds came to the rescue and turned it into a 20-year period which included a Great Depression and WWII. That's our third hypothesis: déj` vu all over again, with more intervention, but no real recovery. Instead, the day of reckoning will be pushed into the future... and the whole correction process will be turned into a long, painful episode of little growth, high unemployment and periodic financial crises. And here's an additional forecast: Ben Bernanke will not want to re-live the '30s. He will not want that déj`-vu experience. When the US economy is 'dans la merde,' he will give it more cash and credit... so that it is even further 'dans la merde!' Regards, Bill Bonner From the Archives... As Draghi Drags the European Crisis On China's Economy - How the Devil is in the Detail The Greatest Interest Rate Fix featuring... Mario Draghi and Friends What the Credit Boom Left Behind The Australian Economy: A Case Study in Weirdness
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| Ignoring the Effects of 40 Years of Money Printing Posted: 07 Aug 2012 12:25 AM PDT Here's some great news for all of our pot-smoking Daily Reckoning readers! A recently-concluded study by researchers at the University of Alabama at Birmingham determined that one marijuana joint per week for 49 years does no harm to lungs! But even though five decades of pot-smoking causes no meaningful lung damage; it can cause plenty of damage to one's potato chip budget. What's more, a large percentage of the folks participating in this study could no longer recall what a lung was. "It's that marijuana-inhaling thing, right?" one participant responded when pressed to describe a lung's purpose. Kidding. The important take-away here is that 50 years of cannabis inhalation is not necessarily healthy, just because a five-decade pothead is still able to draw smoke through a bong. For the sake of metaphor, we'll call 50 years of pot-smoking a "bad habit." Like most long-term bad habits, the consequences unfold unevenly and sporadically. And often the consequences unfold so slowly that you barely notice them at all. The US Treasury has been printing paper dollars, backed by nothing but paper and ink, for more than 40 years. That's a bad habit. And yet, the greenback is still with us and it is still the reserve currency. So it looks like this particular bad habit has produced no harm. And that is absolutely true, provided you don't mind paying $4.33 for the same Big Mac that cost 50 cents in 1971. That's right, the price of a Big Mac has soared 866% since the year President Nixon severed the dollar's convertibility into gold. Your California editor ate a Big Mac yesterday and it was very good, but not 866% better than the Big Mac he used to eat after his Little League games in 1971. "We live in a technological golden age," asserts Jim Grant, editor of Grant's Interest Rate Observer, "but in a monetary and fiscal Dark Age...Science and technology may hurtle forward, but money and banking race backward." The proof of Grant's assertion: A 1971-vintage dollar has lost an astonishing 88.5% of its value. That's a bad habit. Revoking Constitutional rights is also a bad habit. So is fanning class warfare. So is militarizing local police departments. So is expanding the role of government in the private sector. So is manipulating interest rates in the name of "monetary policy." Incredibly, all of these bad habits are unfolding at the same time. Right now. Right before our eyes. And yet, our national "lung function" feels entirely normal. So does our eyesight and our hearing and every other vital sign. We feel completely healthy...even as we are becoming terminally ill. But these bad habits - these incremental changes for the worse - produce their bad consequences so slowly that almost no one will notice them...until it is too late to prevent them. No one knows, of course, the exact date that "too late" might arrive. But according to the research of Peter Turchin, the US is drawing near to an ominous timeframe. Specifically, Turchin says the United States is approaching a period of violent upheaval. He bases his prediction on a field of study called, "cliodynamics," which identifies significant behavioural patterns in a nation's history. US behaviour, according to Turchin, operates on a 50-year pattern. Turchin did not pull the 50-year number out of the air. He compiled copious historical data about major violent incidents in US history between 1780 and 2010 and concluded that a cycle of violence repeats itself every 50 years in America. "Circa 1870, the North fought the South in the Civil War," livescience.com explains. "Half a century later, around 1920, worker unrest, racial tensions and anti-Communist sentiment caused another nationwide upsurge of violence. Then, 50 years later, the Vietnam War and Civil Rights Movement triggered a third peak in violent political, social and racial conflict. "Why 50-year cycles?" livescience.com asks. "After a period of sustained violence, [Turchin explains], citizens begin to 'yearn for the return of stability and an end to fighting.'...The prevailing social mood swings toward stifling the violence at all costs, and those who directly experienced the civil violence maintain the peace for about a human generation - 20 or 30 years. But the stability doesn't last. Eventually, 'the conflict-scarred generation dies off or retires, and a new cohort arises.'...As a result, periods of intense conflict tend to recur with a period of roughly two generations (40-60 years)." "My model suggests," says Turchin, "that the next [peak in violence] will be worse than the one in 1970 because demographic variables such as wages, standards of living and a number of measures of intra-elite confrontation are all much worse this time...After the last eight years or so, notice how the discourse in our political class has become fragmented. It's really unprecedented for the last 100 years. So basically by all measures, there are social pressures for instability that are much worse than 50 years ago." But there's a silver lining to all this: After the next worse-then- ever peak in civil upheaval, we are supposed to get a 50-year break until the next one. For some folks, that'll mean 50 years of hassle-free pot-smoking. Regards, Eric Fry From the Archives... As Draghi Drags the European Crisis On China's Economy - How the Devil is in the Detail The Greatest Interest Rate Fix featuring... Mario Draghi and Friends What the Credit Boom Left Behind The Australian Economy: A Case Study in Weirdness
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