saveyourassetsfirst3 |
- As the Euro Tumbles, Spaniards Look to Gold
- Broad Markets, Big Money, Harmful Drugs - Pluristem Takes On The Blockbusters
- 2012 Commodity ETF Launches: Winners and Losers
- Silver Price Forecast: The Great Silver Chart
- ECB: decrease of oz739,26 in gold and gold receivables
- Silver at a Multi-Month High
- Silver at Multi-Month High
- Mike Niehusers Gold Investing Lessons from Banking School
- Return Of The Gold Standard
- Gold In Euros Touches New Record High At EUR 1,360.23 Per Ounce
- Chinese Take Away & Precious Metals Markets
- Gold in Euros Hits Record High at €1,360.23/oz.
- The silver streak has only just begun
- Precious Metals 'Set to Benefit' If Fed Begins QE3
- Power of Powerless Supports a Raging Silver Bull
- Links 9/10/12
- Gold and Silver Market morning, September 10 2012
- Silver Update: Inflation Adjusted Silver 9/.9.12
- Greg Mannarino talks with Greg Hunter
- Harley Schlanger talks with SGT
- Why the GOP Is Talking About the Gold Standard
- Links for 2012-09-09 [del.icio.us]
- Waiting on Beijing
- USA Worse Off in a “Better Than” Economy
- Gold is about understanding the events that got us here and how they will unfold
- Did Eisenhower Loot the Nazi Gold & Treasures for his Bankster Handlers?
| As the Euro Tumbles, Spaniards Look to Gold Posted: 10 Sep 2012 12:25 PM PDT Because the next several months may prove critical to the future of the euro system, the ECB has charted a course for devaluation. This is a critical window of opportunity for Spaniards to learn how to safeguard their wealth. |
| Broad Markets, Big Money, Harmful Drugs - Pluristem Takes On The Blockbusters Posted: 10 Sep 2012 11:50 AM PDT By Ray Dirks: I have always praised the potential of Pluristem's (PSTI) unique PLX cell therapy to take over the dysfunctional drugs sold by Big Pharma, many of them blockbusters that crowd the medical spaces that Pluristem is in, giving patients disappointing, if not harmful or lethal results. PLX cells use a natural material, the placenta, they are safe and effective, aren't a life-long commitment from the patient like pills taken daily, don't require painful and extensive intravenous therapy, and costs are lower. Patients resume their lifestyles after treatment instead of getting sicker. Pluristem's platform technology is more valuable than the offerings of drug companies many multiples its size. The markets it plans to enter command high price tags. Experts believe that Targeted drugs and personalized medicines are could to be the alternative to the billion-dollar-plus blockbusters, and that the decline of mass-market drugs has come the rise of "orphan blockbusters" In this Complete Story » |
| 2012 Commodity ETF Launches: Winners and Losers Posted: 10 Sep 2012 10:46 AM PDT By CommodityHQ: By Jared Cummans The ETF world cracked commodity investing wide open. It used to be that commodity exposure was left for active traders and hedgers who had the know-how and time to play the futures market, leaving the little guys out to dry. Now, investors have the ability to invest in anything from physical gold, to leveraged copper all through an ETF ticker. As 2012 has progressed, we have seen a fair amount of new commodity products hit the market. Below, we list the commodity products that have emerged from the pack, and those who are still struggling to stay afloat. WinnersThe winners are quantified by either a healthy jump in assets, or trading volume that ensures a fund will be around for some time to come.
Complete Story » |
| Silver Price Forecast: The Great Silver Chart Posted: 10 Sep 2012 10:31 AM PDT If the two patterns indicated continue their similarity, it would be reasonable to expect the final top of the current pattern to at least go higher than $140 as a minimum. |
| ECB: decrease of oz739,26 in gold and gold receivables Posted: 10 Sep 2012 08:58 AM PDT |
| Posted: 10 Sep 2012 08:39 AM PDT The price of silver reached a five-month high this past week as investor interest seems to have been rekindled in both gold and silver as belief in financial markets increases that the latest round of monetary easing from the Federal Reserve – QE3 – will soon be on its way. |
| Posted: 10 Sep 2012 07:57 AM PDT The price of silver reached a 5-month high this past week as investor interest seems to have been rekindled in both gold and silver as belief in financial markets increases that the latest round of monetary easing from the Federal Reserve – QE3 – will soon be on its way. Many investors had largely stayed away from silver in recent months after some had got caught up in its volatility. Silver had touched a 30-year high in April 2011 before plunging 35 percent in a few short weeks. Now the volatility is back – but on the upside – as prices have climbed more than 20 percent in less than a month. The gains have outpaced that of gold which rose roughly 10 percent during the same time frame. Importantly for investors, the ratio between the two precious metals has moved about 10 percent in silver's favor since mid-August. This is the first time silver has outperformed gold since the start of 2012. For non-futures investors, the two precious metals can easily be tracked through the use of exchange traded funds (ETFs). The most liquid ETFs for the two precious metals are the iShares Silver Trust (NYSE Arca: SLV) and the SPDR Gold Shares (NYSE Arca: GLD) respectively.  Silver Bullion Spot Price  Gold Bullion Spot Price You can take a look at my long term outlook analysis from last week here: http://www.thetechnicaltraders.com/gold-standard-to-be-reinstated-through-the-back-door/ Some may wonder why has silver outperformed gold in the past several weeks? The answer goes deeper than just confidence that QE3 is coming soon, but it is still rather a simple one. The sharp rally in silver was fueled largely by short-covering. That is, some investors (hedge funds, etc.) had made rather large bets that silver would continue falling and were caught off-guard by its recent rise. According to data from the Commodities Futures Trading Commission, the silver market during the week of August 27-31 saw the largest amount of short-covering since May 2011. At the same time. Bloomberg reported that hedge funds were the least bullish on silver in almost four years. It is unknown for how long silver will outperform gold. But even some long-term fundamental investors such as legendary commodities investor Jim Rogers has said that he believes silver right now is a better investment than gold. He points to the fact that historically gold has been worth about 12 to 15 times what silver is worth, but that recently it has been worth roughly 50 times silver's value. Silver is also the only major commodity not to have reached a new all-time high in the decade-long commodity bull market and is still cheaper than it was 32 years ago. So it may be worth a look. But since silver is so volatile, wait for a downward spike before initiating or adding to a long position. If you would like to get my weekly analysis on precious metals |
| Mike Niehusers Gold Investing Lessons from Banking School Posted: 10 Sep 2012 07:40 AM PDT |
| Posted: 10 Sep 2012 07:38 AM PDT Andy Hoffman |
| Gold In Euros Touches New Record High At EUR 1,360.23 Per Ounce Posted: 10 Sep 2012 07:32 AM PDT gold.ie |
| Chinese Take Away & Precious Metals Markets Posted: 10 Sep 2012 06:37 AM PDT The new trading week opened with mixed showings in the precious metals' complex. Spot gold fell about $5 to the $1,730 bid area, while spot silver eased by 13 cents to near $33.55 per ounce. Platinum advanced $5 to $1,593 and palladium gained an equal amount, to touch $657. |
| Gold in Euros Hits Record High at €1,360.23/oz. Posted: 10 Sep 2012 05:26 AM PDT Gold has risen to new record highs in euro terms overnight in Asia. Significant consolidation has been seen in the last year between €1,200/oz. and the previous record high at €1,359.01/oz. This record high was seen almost exactly a year ago on Sept. 9, 2011. |
| The silver streak has only just begun Posted: 10 Sep 2012 05:16 AM PDT Goldmoney |
| Precious Metals 'Set to Benefit' If Fed Begins QE3 Posted: 10 Sep 2012 04:55 AM PDT The gold price drifted lower to $1,730 per ounce Monday morning in London, $10 below Friday's six-month high, while stock markets were broadly flat and US Treasuries fell. The silver price fell below $33.50 per ounce – around 20 cents below last week's close. |
| Power of Powerless Supports a Raging Silver Bull Posted: 10 Sep 2012 04:25 AM PDT In a tiny market such as silver, where a few big players typically dominate and manipulate global price discovery, being invisible may be the real and only power held by those who would one day choose to buy or continue to accumulate precious metals. |
| Posted: 10 Sep 2012 03:55 AM PDT If the Mars rover finds water, it could be H2 … uh oh! LA Times. Contamination. Why an AIDS Vaccine Has Been So Difficult to Develop Science Daily Popular Antibiotics May Carry Serious Side Effects Times With No Contract Deal by Deadline in Chicago, Teachers Will Strike Times Hong Kong's pro-democracy leader steps down AL Jazeera Carry Trade Loss 2.8% as Dollar Fails to Weaken on Fed Bloomberg EU banks face ringfence on trading assets FT (furzy mouse) What's behind the rise in Greek warrants John Dizard, Financial Times (SW) Merkel accused of being 'female Don Corleone' Independent Fed Stuck at Zero Into 2015 Seen in Swaps, QE Odds Reach 99% Bloomberg US government to cut AIG stake to below half of bailed-out insurer's stock in $18 billion sale WaPo Securitization Shouldn't Be the Government's Business Amar Bhide, Bloomberg Spoilsport Banking Regulators Ruin Another Derivative That Was Too Beautiful To Live Dealbreaker Ship Magnate Uses Gut in $11 Billion Bet Worst Since '70s Ending Bloomberg Bargain bosses: American chief executives are not overpaid Economist Iraq blasts kill 100 as fugitive VP gets death sentence Reuters Afghan prison Bagram to be handed back by US BBC Remembering the First 9/11 Aljazeera (nathan) Obama feels the squeeze – now call security: President gets bear hugged off his feet by fan on same day he reveals Romney's health care will cost retirees $60k more Daily Mail. Media tailwind. Party Like It's 1984 Harpers More of region's small banks boosting profits and loans Orlando Sentinel Long-term unemployment easing, as many accept lower pay Bloomberg. The new normal. Jobless to be drafted in to clear burnt land El Pais Debt Default, the End of the World and Timothy Geithner's Thoughts Dean Baker, CEPR It is IMPOSSIBLE for the US to default!!! Forbes The Art of Demanding Jacobin Magazine Anonymous: behind the masks of the cyber insurgents Guardian Polls and Occupy FDL The Primacy of Politics FDL (CB) Testosterone marketing frenzy draws skepticism AP Dog treadmill sales brisk as pets shape up Detroit Free Press Essay: 21st Century Gestures Clip Art Collection City of Sound. Odd. Diary London Review of Books The world's No. 1 jumbo jet languishes, looking for a savior Seattle Times * * * Mission elapsed time: T + 3 and counting* "What's the point to callin shots? This cue ain't straight in line Cueball's made of styrofoam And no one's got the time" –Grateful Dead, Mississippi Half-Step Uptown Toodleloo Occupy. Celebrities: "[Jay Z's] criticism of the political protests seems particularly striking considering he briefly sold t-shirts that played on the cause's name but didn't donate anything back to the organizers." DNCon. Police state: "When the city of Charlotte passed a new 'extraordinary events' ordinance for the DNCon, police were given new power to stop and search. The ordinance was rarely applied to protesters, some of whom were allowed to march wearing bandanas covering their faces and helmets — actions and items that were banned under the ordinance." RNCon. Meta: "BREAKING: @BarackObama's 'This seat's taken' Tweet was the most Retweeted Tweet of the RNCon." AZ. Indicator: " So many cats and kittens have been turned in for adoption, the Arizona Humane Society is now waiving all adoption fees for cats." CA. Homeless: "[Joan Burke of Loaves & Fishes] estimated that 1,000 people sleep outside in Sacramento every night, about 200 of them in the vicinity of the American River." … Reform: "The [Think Long] committee [here] expresses great admiration for 'decisive and unified leadership' in China." CT. Libertarian Party: "The CT Secretary of State has indicated that the Libertarian statewide petition has enough valid signatures. The petition puts [Gary Johnson] on the ballot." FL. Mass incarceration: " FL health and disability administrators have been systematically dumping sick and disabled children — some of them babies — in nursing homes designed to care for elders, in violation of the youngsters' civil rights, the U.S. Justice Department says." … The Bill Clinton: "Former president Bill Clinton is scheduled to speak Tuesday, Sept. 11 at Florida International University, according to Obama For America." … The Obama: "Yet the [Kissimmee] crowd was worked up, often roaring, sometimes pounding seats, sometimes drowning out his public address system as Obama made the case for a regulated economic recovery versus a free-market economic recovery." … The Obama: "If Obama's speech Saturday in Kissimmee had the rowdiness of a pep rally, the Melbourne event had the passion of a church revival, with audience members often shouting everything but "Amens!" as the president spoke, and Obama sometimes responding back" GA. Turnout: "So far, there's little evidence black voter turnout will be as big as in 2008." IL. Diane Ravitch: "I will be wearing red in solidarity with the Chicago Teachers Union tomorrow, in support of whatever decision they make." IN. Horror:"A parasite commonly referred to as the 'brain-eating amoeba' infected a man teaching his daughter to swim in a southwestern Indiana lake, killing him within weeks." From autopsy, yet to be confirmed by CDC. … DIY: "The 17 members of Bloominglabs pay $40 a month to rent a commercial space on Bloomington, [IN']s west side, and store and share their tools and equipment in the workspace." First mainstream mention of Arduino I've seen. ME. Catfood Commission: " Federal debt commission co-chairman Erskine Bowles told a Portland audience Sunday that independent U.S. Senate candidate and former ME Gov. Angus King would bring to Congress the political will to cut spending and close tax loopholes in order to reduce the national deficit." MI. Charters: "[W]ith the proliferation of new charters this fall because the cap was lifted (30 new schools, the most since 1999) we're seeing low-performing operators expand aggressively." MO. Akin: "A Sept. 25 deadline looms. That's the last day Akin can petition MO courts to remove his name from the ballot – and comply with the near-universal calls from party leaders who think his comments have made unwinnable a seat they need for an easier path to a Senate majority." MT. Climate: "[M]ost of MT is under a red flag warning that cautions of the potential for explosive fire growth through Tuesday evening." OH. Climate? "Growingbear populations in PA and WV are pushing young male [black bears] into OH. [S]ightings have jumped from only about 30 in 1998 to 150 a year ago." … Voting: "Ds, for now, have exactly what they want. An unelected federal judge — not the elected, R-run General Assembly — has control of a key facet of presidential voting in OH: In-person absentee voting the weekend before Election Day, when a significant number of black Ohioans prefer to vote." TX.Mass incarceration: "[T]his biennium's corrections budget was an eye-popping 274% higher than it would have been if spending had increased in tandem with inflation and population growth." …. Corruption "A court-martial due to start in the case against a Texas Air Force basic training instructor accused in a sex scandal at [Lackland Air Force Base] was delayed without explanation Wednesday." … Sustainability:"Residents of [Elgin] are invited to take part in an innovative planning effort to help shape the future of Elgin. The Sustainable Places Project [here] will be hosting a public visioning workshop on Monday." VA. UVa, putsch: Handy interactive timeline in The University of Virginia Magazine. Still no why. … Senate, Kaine v. Allen: "Still: The race [between Tim Kaine and George Allen] is so tight it resembles the 2000 FL recount, where the margin of error was greater than the margin of victory." WI. Geography: "A Democrat cannot win the state by winning Madison and Milwaukee, and losing Milwaukee suburbs and Green Bay, Wausau, Eau Claire and Chippewa Falls," [Charles Franklin, director of the Marquette Law School Poll] said. "When WI Ds have won statewide, they've won those areas." The economy. Better off? "Since December 2007, American median household income has fallen by almost 8 percent. At the same time, 93% of the gains from the economic recovery have gone to those with incomes in the top 1 percent." … Sh*t happens: "[AUSTAN GOOLSBEE:] We have been plugging along at modest growth because we're coming out of the worst financial crisis in our lifetimes. That's what happens.'" Shrug (and by contrast). Outside baseball. Gambling: "Thank God for Intrade, which finally extends the benefits of campaign gambling, which the wealthy have enjoyed for so long, to the little guy." … Food: "Proposals to impose deep cuts on the $75bn US food stamp programme could eat into profits at food companies that rely on low-income customers stocking up on snacks and drinks. " Not to mention High Fructose Corn Syrup. The trail. Conventions: "From the podium and thus for the network television audience, they allowed the Rs to focus on their intended referendum and the Ds to focus on the demonization [hmm] of those Rs." … Swing states Keynesianism: "While most of the debate nationally still revolves around why the economy remains so pathetic, there are several pivotal states — OH, FL, NV, VA — where things are slowly turning around. In these states, the real issue may not be who deserves blame for economic ruin but rather who deserves credit for a rebound, and what really causes jobs to come back after they've been lost." … Trojan horse: "The legacy of Wisconsin, as [Van] Jones appears to see it: to catalyze Obama 2012 house parties." … Divided government: "There is surging optimism among Ds that the party will hold the Senate." Grand Bargain™-brand Catfood watch. Only Obama can go to China: "[OBAMA: ]So I'm, you know, more than happy to work with the Republicans. …I'm also going, by the way*, to make some adjustments to Medicare and Medicaid that would strengthen the programs" [* a tell]. Cf. here and here." ] "[PLOUFFE: ] And I do think one of the messages that is going to come through in this election is the American people want us to compromise and they want a balanced approach. " Yes, the Ds really are running to secure a mandate to cut Medicare. Robama vs. Obamney watch. Krugman: "The inexorable logic of the situation, then, leads to a three-legged stool of community rating + mandate + subsidies = ObamaRomneycare." Which would be why you should vote for.. vote for… Apathy: "On Saturday Nancy Pelosi denied reports that she once pressed the mute button while the president was on the line. Most Americans would probably have pleaded guilty whichever candidate was on the other end." The Romney. Legalization: "I asked Congressman Ryan: "In CO we have medical marijuana. Under a Romney Ryan ticket, what happens?"RYAN:'It's up to Coloradans to decide'" (a welcome change). … Tax returns: "In a full page ad this morning in the Washington Post, on page 20 across from the op-ed pages, Hustler offers $1 million in cash for information on Mr. Romney's "unreleased tax returns and/or details of his offshore assets, bank accounts and business partnerships." The Obama. Money: "Prominent D fundraisers say they will make overtures to wealthy supporters such as David Geffen, the billionaire music and media investor, Haim Saban, the part-owner of Univision Communications, and Oprah Winfrey [to raise up to $150m]." … Jobs, Lynn Sweet: "The 96,000 jobs created are drops in a big bucket. There were about 12.5 million unemployed Americans in August, which the Labor Department said was about the same as in July." … Polls: "Weekend polls where Obama is gaining include Gallup, Reuters/Ipsos, and Rasmussen. The differences between the two candidates are small here — single digits — but the trend at this point is in Obama's direction." … Polls, Nate Silver: "But there is also the possibility of Obama holding as much as an eight- to nine-point lead over Mr. Romney in the polls once they fully reflect post-convention data. His polls seem to have been about that strong since Mr. Clinton's speech, at least." … The worker's friend: "Vice President Joe Biden got caught in a stunning photo with a female biker sitting on his lap." "Caught," my sweet Aunt Fanny. You couldn't buy coverage like this. * Slogan of the day: "Everything within The Romney, nothing outside The Romney." * * * Antidote du jour:
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| Gold and Silver Market morning, September 10 2012 Posted: 10 Sep 2012 03:00 AM PDT |
| Silver Update: Inflation Adjusted Silver 9/.9.12 Posted: 10 Sep 2012 02:48 AM PDT brotherjohnf: Silver Update 9/9/12 Inflation Adjusted Silver ~TVR |
| Greg Mannarino talks with Greg Hunter Posted: 10 Sep 2012 02:44 AM PDT Greg Mannarino says, "I believe there is going to be a consolidation of power just like there was after the crash of 2008." Mannarino is a former Bear Stearns floor trader who recently released a new book titled "The Politics of Money." from usawatchdog: He's a fan of anything tangible, and that includes physical gold and silver. For anyone who does not hold physical assets, Mannarino says, "People are going to be slaughtered who are not ready for this." Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Greg Mannarino. ~TVR |
| Harley Schlanger talks with SGT Posted: 10 Sep 2012 02:42 AM PDT Harley Schlanger calls in from Austria where he is attending high level meetings on behalf of LarouchePAC. In this portion of the interview I explain exactly WHY we invite Harley on to share his views – then we move on to the suicidal policies of the EU and Mario Draghi, which Harley calls extremely "hyper-inflationary". Harley also warns that Greece is very close to a DEFAULT which will trigger a dominoe-like collapse. A Complete Continuation of the COLLAPSE in the EU If Draghi Isn't Stopped & Obama is Re-elected = HYPERINFLATION ~TVR |
| Why the GOP Is Talking About the Gold Standard Posted: 10 Sep 2012 12:09 AM PDT If Republicans win Election 2012 and their commission does indeed study a return to the gold standard, that's as far as the talk will go. The findings will likely resemble those by the Reagan Gold Commission in 1982. |
| Links for 2012-09-09 [del.icio.us] Posted: 10 Sep 2012 12:00 AM PDT
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| Posted: 09 Sep 2012 11:22 PM PDT It's a tough day if you're a supporter of the North Melbourne Kangaroos. Our beloved Roo boys got belted by the formidable West Coast Eagles yesterday. The season is over. But life goes on, and there is always next year. And at least we don't have Hu Jintao's job. Come to think of it, Hu won't have his job for much longer either. China's outgoing President is probably grateful for that, given the magnitude (and impossibility) of the job facing China's central planners. In fact, the generational change in the leadership of the Chinese Communist Party (CCP) is probably contributing to some of the mixed signals coming out of China. Nobody knows yet what the incoming members of the Politburo's Standing Committee will do. What we do know is that China announced about $150 billion of new spending last week. The spending includes 60 new (and some previously announced) projects. The National Reform and Development Commission (NDRC), China's central planning body, announced a bevy of agriculture, energy, railway and road projects. China's long-term aim is to build at least 7,000 kilometres of rail and subway lines. Australian investors would be keenly interested anytime China opens its wallet. The 4 trillion Yuan stimulus in 2009 was around 6% of GDP, and lit a fire under iron ore and coal prices. It kept Australia's terms of trade near a 140-year high and supported the Aussie dollar. It wasn't bad for stocks either. The most recent plans announced by Hu amount to around 2% of Chinese GDP. Will that be enough to give the ASX/200 a boost today? Enough to break out of the resistance at 4350 Murray has flagged in Slipstream Trader? The index closed at 4325 on Friday, so we'll know soon enough. In the meantime, Hu's weekend announcement gave bears reason to cavort. Before the APEC meeting in Vladivostok, Hu said the following to a business conference:
The world economy today is recovering slowly, and there are still some destabilising factors and uncertainties. The underlying impact of the international financial crisis is far from over...We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability. Nothing like setting yourself a task. He may as well have added: cure cancer, walk on the moon, send a manned spacecraft to Mars, and create limitless cheap energy from table top cold fusion in a jar. China has a difficult challenge. The challenge is that any stimulus spending is going to reinflate the property bubble. That bubble has deflated slowly for the last six months. But if China lowers reserve requirement ratios at banks, or simply spends more money, it could leak into house prices. In fact, sales of residential floor space were up 13.3% year-over-year in August, according to the Wall Street Journal. That kind of inflation is socially destabilising, which is the exact opposite of what the CCP wants. When the government spends money (fiscal policy) it can more or less use it like a fire hose, targeting spending in specific industries. But when you manipulate the price of credit (monetary policy) you can't really control where the money goes. And it almost never goes where you expect it. This is how bubbles are born. China's official statistics bureau reported on Friday that consumer price inflation is only around 2% per year. It's almost certainly higher than this. And in the event, it's higher than 1.8% reported last time. Food prices were up 3.4%. Food prices up, producer prices down, quandary present and correct! The real root of the problem is, well, the whole model that puts politics before profits. You can't allocate scarce resources, capital, and labour to meet purely political goals. Not only is it unfree, in philosophical terms, it suppresses the natural price signals that tell producers what to produce based on what people want and need. This is precisely the point Greg made in China's Bust. An article in today's FT reports that 574 Chinese companies had negative cash flow from operating activities in the June quarter, according to data from S&P Capital IQ. It's hard to run a business if you have more money going out than coming in. The only way to do it is to borrow money. Data from Mike Werner of Bernstein Research in Hong Kong shows that non-performing loans at China's banks are up just 1% in the first half of the year. No crisis yet, right? Maybe. Werner reports that over-due loans, as reported by the banks, are up 29%. Extend and pretend, baby! When you don't have enough cash to make interest payments on your debt, you obviously have a problem. China's borrowers have a big problem. But like any sizeable debt outstanding, the borrower's problem quickly becomes the lender's problems. China's banks have a problem. The original problem is that local government borrowers were given loans for projects that may never deliver cash flows sufficient to repay the original loan, much less pay the interest on it. But ignoring that problem for a second, you can push it out in time restructuring the terms of the loan. You accept smaller payments and delay the maturity of the loan for a few years. All of this is perfectly legal and incredibly opaque. Not recognising a loss is the key for any bank sitting on a pile of bad loans and hoping to stay in business. But there are at least two obvious consequences when a central government uses its banks as a tool for political policy. First, foreign investors tend to withdraw money the less transparent bank balance sheets get. Remember, foreign direct investment in China was down 8.7% year-over-year, according to China's Ministry of Commerce. You wouldn't want to have more money locked up in Chinese assets if it was possible those assets were going to be revalued...a lot lower. The second obvious consequence to using the banks as a political tool is that the banks become less effective tools. A bank can extend and pretend about asset quality as much as it likes. But the larger the pile of non-performing loans gets, the harder it is for the bank to extend new credit. New credit is exactly what's required for any large new infrastructure plans. The banks may simply not be in the position to loan as much money to local governments as they did in 2009. Looking at all this evidence, you'd think Australia's Reserve Bank would want to own more gold and not more Yuan. Of course on cue, some people are encouraging the accumulation of Yuan, or Chinese government debt, as an asset for the Reserve Bank. Because that has worked so well for buyers of government debt all over the world. Maybe the RBA should do what Jim Rickards suggested in our recent Strategy Session up in Sydney. What did he suggest? Buy gold! If you're a government and you want a seat at the table and the next remaking of the global monetary order, you have to ante up in real money. Speaking of real money, our friend Dr David Evans from GoldNerds will be speaking on the yellow metal at an event in Sydney on Wednesday. It's late notice, but David and Jordan Eliseo from LJ Financial will be speaking on the global debt crisis and the 'golden opportunity.' Tickets cost $30 but Jordan tells me the first six DR readers who register are in for free. Contact him at info@ljfinancial.com.au. We have no affiliation with either group and receive no money for mentioning the event or from your registration. But knowing David, it's an event you'll enjoy if you're new to gold and trying to put the whole story together. Regards, Dan Denning From the Archives... The ECB's Outright Monetary Madness 07-09-2012 - Greg Canavan Who Knows What's Going on in China's Centrally Planned Economy? The Australian Dollar is Not the Euro 05-09-2012 - Dan Denning 04-09-2012 - Dan Denning Why a Monarchy Beats Modern Democracy 03-09-2012 - Bill Bonner Similar Posts:
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| USA Worse Off in a “Better Than” Economy Posted: 09 Sep 2012 11:22 PM PDT Last week we examined Bernanke's dishonesty; today we'll examine his insanity. If the definition of "insanity" is, as Albert Einstein asserted, "doing the same thing over and over and expecting a different result," Federal Reserve Chairman Ben Bernanke is insane. And if he is insane, he deserves our pity, rather than our scorn. Therefore, your editors here at The Daily Reckoning pity the Federal Reserve Chairman...poor ol' "Crazy Ben." They also pity the rest of the folks on the Federal Open Market Committee who repeatedly endorse Crazy Ben's failing tactics. After several years of pursuing "non-traditional policy tools," as Chairman Bernanke described them in his speech at Jackson Hole, the US economy continues to exhibit a non-traditional lethargy. Nevertheless, Crazy Ben credits his non-traditional — we call them "wacky" — tools for making the economy stronger than it would otherwise have been. And if the economy doesn't improve soon, Ben promises to do more of what hasn't worked. In simple English, Bernanke's non-traditional policy tools consist of manipulating and/or "communicating" his intention to do so. [Other tools include clandestine market manipulations that do not make their way into the minutes of FOMC meetings or the transcript of Jackson Hole addresses]. "Now, with several years of experience with non-traditional policies both in the United States and in other advanced economies," the Chairman explained at Jackson Hole, "we know more about how such policies work. "It seems clear, based on this experience, that such policies can be effective, and that, in their absence, the 2007-09 recession would have been deeper and the current recovery would have been slower than has actually occurred..." The Chairman even goes so far as to put hard numbers on the "better than" economy he claims to have produced. "Model simulations conducted at the Federal Reserve generally find that the [Fed's] securities purchase programs have provided significant help for the economy," Bernanke asserted. "For example, a study using the Board's FRB/US model of the economy found that, as of 2012, the first two rounds of LSAPs [large-scale asset purchases] may have raised the level of output by almost 3 percent and increased private payroll employment by more than 2 million jobs, relative to what otherwise would have occurred." (Hmmm...that's interesting because model simulations here at The Daily Reckoning found that the Fed's activities during the crisis raised the earnings of Goldman Sachs by infinity percent, while also increasing the compensation of Goldman's CEO, Lloyd Blankfein, by more than $200 million.) So there you have it; the US economy is better by three percentage points of growth and by 2 million jobs, thanks to the fact that Bernanke printed $2 trillion and used the funds to purchase distressed bonds from Wall Street banks. Even if we were to accept Bernanke's guesses as Gospel, the results would be pathetic. In round numbers, Bernanke printed up dollars equivalent to about 15% of GDP and, therefore, enabled the nation's GDP to grow by 3%. That's called a "bad trade." Here's a "model simulation" to consider: What would have happened to the economy if Bernanke had taken those $2 trillion he printed up and mailed the money to every household in America, instead of funneling it to Wall Street banks? Under this simulation, each American household would have received a check for about $17,507. Just maybe, a $17,500 windfall per household would have produced something better than a 3% bounce in GDP. But that's not what happened. Instead, the Chairman squandered all that cash buying the distressed bonds the Wall Street banks couldn't sell to anyone else. This "policy tool" was not capricious, mind you. Bernanke explained that his non-traditional tools were all "guided by general principals and some insightful academic work." Still not convinced? Let's take a look at the "better than" economy Ben Bernanke has produced and see what it looks like... 1) On average, every cohort of working-age Americans is worse off today than it was in 2009, which is roughly when Bernanke began firing up his non-traditional policy tools. Median incomes are down in every age group from 25 to 64. Even so, Bernanke says working-age Americans are better off than they would have been.  2) The nation's (official) unemployment rate can't seem to break below 8%. Further, the total number of employed Americans today is still below what it was at the end of 2008, even though the size of the American workforce has continued to grow during that timeframe. Even Bernanke admits that the nation's employment growth is "far from satisfactory." Nevertheless, the Chairman says the unemployment rate would have been even worse without the help he provided. 3) Over in the manufacturing sector, the ISM Index of manufacturing activity in the US has been slumping for 19 months, and has achieved zero net improvement during the last four years. The Chairman says that's a better result than what would have been. 4) Many of America's leading companies are reporting poor profitability...and forecasting more of the same. McDonald's recently announced its worst quarterly sales in two years. Priceline, PepsiCo and Procter & Gamble all announced similarly downbeat results. "Bad news to be sure," Bernanke would probably say, "but be happy you didn't see what would have happened." Maybe so. But who's to say what's "better than"? As the Chairman himself admits, "While there is substantial evidence that the Federal Reserve's asset purchases have lowered longer-term yields and eased broader financial conditions, obtaining precise estimates of the effects of these operations on the broader economy is inherently difficult, as the counterfactual — how the economy would have performed in the absence of the Federal Reserve's actions — cannot be directly observed." In other words, unborn statistics tell no tales. The only thing we know for certain is that the Fed's balance sheet is MUCH larger than it would otherwise have been...and that the economy is still stuck in neutral.  As the nearby chart illustrates, the Federal Reserve's balance sheet has more than tripled during the last four years. And yet, during that identical timeframe, the ISM Manufacturing Index has achieved zero net growth. Intriguingly, despite the Fed's multi-trillion- dollar hyperactivity and market manipulations, US manufacturing activity is not performing any better than manufacturing activity in Europe and China. In fact, all three are tracking each other very closely. So just maybe, the economy would be much better off today if the Chairmen had spent the last four years playing golf, instead of overtly and covertly manipulating the financial markets. Just maybe the time has come to draft a simple "Thank you" note to the Chairman.
Dear Ben, Unfortunately, Crazy Ben has no intention of taking a vacation. To the contrary, he continuously promises to do more of the same stuff that may or may not be helpful or harmful. As only the Chairman could put it, "[B]oth the benefits and costs of non-traditional monetary policies are uncertain; in all likelihood, they will also vary over time...[Therefore], taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability." In other words, "We have no idea if what we are doing is helpful or harmful, but we promise to do more of it if conditions worsen." If this is the cure, should we try the disease for a while? Regards, Eric Fry for The Daily Reckoning Australia From the Archives... The ECB's Outright Monetary Madness 07-09-2012 - Greg Canavan Who Knows What's Going on in China's Centrally Planned Economy? 06-09-2012 - Greg Canavan The Australian Dollar is Not the Euro 05-09-2012 - Dan Denning 04-09-2012 - Dan Denning Why a Monarchy Beats Modern Democracy 03-09-2012 - Bill Bonner Similar Posts:
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