Gold World News Flash |
- Gold Market Update
- Asian Metals Market Update
- Silver Update 11/11/12 Looping Chinese Silver
- The List has Grown: SWITZERLAND, THE NETHERLANDS, and ECUADOR join Germany in Calls for Audits of their Gold
- Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings
- Green Shoots of a US Recovery?
- Ten Health Ranger predictions about December 2012 and the first half of 2013
- Silver Cleared For Take-Off, January Target: $44
- Guest Post: Is Democracy Possible In A Corrupt Society?
- Jim's Mailbox
- Unintended Consequences Of Bailouts: Greece Gets Slammed
- Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings
- Silver Market Update
- Weekend Report...Gold Versus Everything! (Gold Ratio Chartology)
- Most Gold Miners are Sacrificing Profits for Growth
- Gold Cycles Bulllish Gold Price Forecast 2013
- Richard Russell likes latest gold market action
- JP MORGAN ON THE HOOK FOR BILLIONS IN FRAUD – DOESN'T MENTION IT IN THEIR EARNINGS PRESS RELEASE
- Distribution of Economic Pain From the Financial Crisis
- GOLDIE “ROCKS” & THE THREE BEARS
- Gold-backed bonds offer an alternative to austerity, confirms new white paper
| Posted: 12 Nov 2012 08:10 AM PST We exited our short positions in gold for a modest but useful profit when it broke out of its downtrend towards the end of October. It then broke sharply lower on heavy turnover in a move that looks capitulative, but afterwards turned and rose quite sharply over the past week. So the question now is "has it bottomed?" Although the answer to this question is "Yes, it looks like it has", it also looks like it may back and fill for a little while to complete a base pattern before a sustained advance can get underway.
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| Posted: 12 Nov 2012 12:03 AM PST Last week: Barack Obama has been reelected as US president and the stock markets have fallen thereafter. Gold and silver have risen on safe haven demand. The uncertainties on managing the US fiscal cliff needs to be addressed before the 31st December deadline. In 2011 gold prices rose to from $1480 to $1929 in less than five months on the delay in passing the US budget. If history is to repeat itself then any delay in addressing US fiscal issues then gold prices can rise to $2025 by the end of December or late January.
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| Silver Update 11/11/12 Looping Chinese Silver Posted: 11 Nov 2012 09:23 PM PST from BrotherJohnF:
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| Posted: 11 Nov 2012 09:00 PM PST by Dr. Joseph P. Farrell, Giza Death Star:
The calls for full audits, and in some cases, repatriation, of foreign gold reserves being held by the New York Federal Reserve are growing, as now Switzerland, the Netherlands, and Ecuador have joined Germany in those calls and in Ecuador's case, repatriation, of its gold: German Calls for Gold Repatriation Intensify As Fed Refuses to Allow Inspection Obviously, the Fed's refusal to comply "in the interest of security" is a complete fabrication and obfuscation, what what is Germany going to do? Rush out and tell the world the processes by which the Fed "operates"? Doubtful. As the article correctly observes, the real underlying concern is whether the gold is even there, or, to put it in different terms, has been stolen or re-hypothecated so many times that recovery – even if it is there – would be virtually impossible.
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| Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings Posted: 11 Nov 2012 08:28 PM PST from Zero Hedge:
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| Green Shoots of a US Recovery? Posted: 11 Nov 2012 08:00 PM PST from Gold Money:
Some observers point to house prices, which show signs of having turned the corner. The latest Case-Shiller data shows that house prices rose 8.5% between April and August; and single-family housing starts are up by 43% compared with last year. Rental yields, which have stimulated residential investment, are attractive compared with other alternatives, and average house prices down 30% from 2006 highs are a further incentive for buyers. And this is the key: housing is attractive as an asset on the basis that financial alternatives, bonds and equities, are demonstrably more expensive. Residential property is simply better than other alternatives.
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| Ten Health Ranger predictions about December 2012 and the first half of 2013 Posted: 11 Nov 2012 07:30 PM PST by Mike Adams, Natural News:
Here's what I see unfolding between now and mid-2013 (or before other dates as stated below): Just like he did last year, Obama will use New Year's Eve (or possibly Christmas Eve) to sign another police state executive order
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| Silver Cleared For Take-Off, January Target: $44 Posted: 11 Nov 2012 07:25 PM PST by Morris Hubbartt, Silver Doctors:
Are you are on board?
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| Guest Post: Is Democracy Possible In A Corrupt Society? Posted: 11 Nov 2012 07:01 PM PST Submitted by Charles Hugh-Smith of OfTwoMinds blog, Democracy is for PR purposes only in corrupt neofeudal nations. Correspondent Chris rightly critiqued me for not mentioning democracy (or the lack thereof) in my recent entry on China: Do We Have What It Takes To Get From Here To There? Part 2: China. It is indeed vital to include democracy in any discussion of corruption, for it raises this question: is democracy possible in a corrupt society? We can phrase the question as a corollary: in honor of my new book Why Things Are Falling Apart and What We Can Do About It (print $24) (Kindle $7.95), let's call it WTAFA Corollary #1:
In other words, if the citizenry cannot dislodge a parasitic, predatory financial Aristocracy via elections, then "democracy" is merely a public-relations facade, a simulacra designed to create the illusion that the citizenry "have a voice" when in fact they are debt-serfs in a neofeudal State. When the Status Quo remains the same no matter who gets elected, democracy is a sham. We might profitably look to Japan as an example of a nation which replaced its dysfunctional dominant party via elections to little effect (Do We Have What It Takes To Get From Here To There? Part 1: Japan). We can ask this question of Greece: in a pervasively corrupt neofeudal society, is democracy even possible? Neofeudalism is characterized by a carefully nurtured facade of social mobility and democracy while the actual machinery of governance is corrupted at every level. This corruption may manifest as first-order daily-life corruption such as buying entry to college, bribing officials for licenses, and so on, but the truly serious corruption is the second-order variety that functions behind the closed doors of central banks and financial/political Elites. Here in the U.S., the people elected Barack Obama in 2008 on the implicit promise that the politically dominant financial sector would be limited in some meaningful fashion. Instead, President Obama immediately nixed any meaningful reform. The progressive case against Obama: The president is complicit in creating an increasingly unequal and unjust society.
Here's how a sham democracy works: candidates are duly paraded in front of credulous voters in a "which is better, Bud or Bud Lite?" false-choice marketing blitz, while all the meaningful codifying of Aristocratic rule is directed or purchased by the financial and political Aristocracy (two sides of the same coin). Consider the actions of the Federal Reserve, the dominant financial force in the nation. Though the Fed is nominally under the control of Congress, it is actually like an iceberg: its public pronouncements are the visible 10% above water. The real mass of the Fed’s actions lie beneath the surface, invisible to us mere debt-serf citizens. The Fed’s public mandate, to “promote stable prices, maximum sustainable output and employment,” is solid public relations, of course (we're selflessly focused on the good of the nation, blah blah blah) but it’s also deeply disingenuous, as the Fed’s less PR-pretty agenda is rather transparently to preserve the banking sector’s profits and power at all costs. We can find clues to the Fed’s real goals in its behind-closed-doors actions--the 90% of the iceberg that’s out of public view. On the surface, the Fed increased its balance sheet by about $2 trillion since the 2008 global financial crisis. This electronically created money purchased about $1.1 trillion in mortgage-backed securities (MBS) to support the housing market and $1 trillion in Treasury bonds to keep interest rates low. These two goals--super-low interest rates, a.k.a. zero-interest policy (ZIRP), and supporting assets such as housing and stocks--are the core strategies the Fed is publicly deploying to boost growth and employment. Supporting the banks is not mentioned, for obvious PR reasons. Yet a Government Accountability Office (GAO) audit found the Fed provided $16.1 trillion in “emergency program” loans to global banks from 2007 to 2010, and a Levy Institute study uncovered a total of $29 trillion in Fed support--roughly ten times larger than the Fed’s public programs. (For context, the annual U.S. gross domestic product is about $15 trillion.) This suggests we should take the Fed’s assurances that its policies are all for the public good with a grain of salt roughly the size of the Fed’s headquarters at 20th and Constitution Avenue. Did bailing out the banks truly serve the public good, or did it stymie a much-needed capitalist “creative destruction” of failed financial institutions that have grown so powerful that they are now “too big to fail”? How exactly did enabling the banks to draw upon trillions of dollars of Fed support, safe from public scrutiny, serve the public good? The U.S. Status Quo is also like an iceberg: the visible 10% is what we're reassured "we" control, but the 90% that is completely out of our control is what matters. There is another dynamic in a facsimile democracy: the Tyranny of the Majority. When the Central State issues enough promises to enough people, the majority concludes that supporting the Status Quo, no matter how corrupt, venal, parasitic, unsustainable and dysfunctional it might be, is in their personal interests. Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010): Please read this brief excerpt by James Madison to get a flavor for the Tyranny of the Majority:
The Tyranny of the Majority is the primary topic of the Federalist Number 10, in which Madison tackles the Achilles Heel of democracy: undesirable passions can very easily spread to a majority of the people, which can then enact its will through the nominally democratic government. Put another way: the Power Elites of a nominal democracy can buy the complicity of the majority by showering them with government benefits and entitlements. This document from the Congressional Budget Office (CBO) displays the Effective Tax Rates (CBO) for American households. After including earned-income tax credits, the bottom 60% of households paid less than 1% of all Federal income taxes, and the households between 60% and 80% paid 13%. The top 20% paid 68.7% of all Federal taxes: Income taxes, Social Security and Medicare, excise and corporate taxes. The top 10% of households paid fully 72.7% of all Federal income tax, the top 5% paid 60.7%, and the top 1% paid 38.8%. In essence, this is a vote-buying scheme by the Status Quo: the top 1% control the policies of the State in alliance with the State's own Elites, and together they buy the complicity of the bottom 60% majority. This is the worst of all possible simulacra of democracy. In the Wikipedia entry linked above, Mancur Olson is cited as arguing in The Logic of Collective Action that narrow, well-organized minorities are more likely to assert their interests over those of the majority. In other words, the Financial Aristocracy asserts its interests over the 99% and then buys the complicity of the bottom 60% with largesse paid for by the top 19% of earners. In Who Rules America?, Sociologist G. William Dumhoff draws an important distinction between the net worth held by households in "marketable assets" such as homes and vehicles and "financial wealth." Homes and other tangible assets are, in Dumhoff's words, "not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale." Financial wealth such as stocks, bonds and other securities are liquid and therefore easily converted to cash; these assets are what Dumhoff describes as "non-home wealth" on his website "Wealth, Income, and Power in America." As of 2007, the bottom 80% of American households held a mere 7% of these financial assets, while the top 1% held 42.7% and the top 20% held fully 93%. In a classic "divide and conquer" tactic, the State's Power Elites have sold a slew of new taxes to fund the guaranteed-to-implode "healthcare reform" (a.k.a. increased funding of sickcare cartels) on those earning $250,000 or more. Everyone earning 25% of that sum loudly applauds "sticking it to the rich" (the Tyranny of the Majority in full flower) while failing to note that the truly wealthy--the ones who don't have any earned income because they don't work in salaried jobs, the ones who own roughly half the nation's productive assets--pay nothing but a slice of their unearned income, much of which is protected by various tax breaks. The State is effectively operated as a fiefdom of the Financial Power Elites--and by that I mean the people earning not $300,000, but those earning $30 million or more annually-- that buys the complicity of the lower 60% with enough largesse to keep them supportive of the Status Quo. In this facsimile democracy, citizenship has devolved to advocacy for a larger share of Federal government swag. The U.S. Status Quo rules via the second-order corruption of financial Aristocracy and Tyranny of the Majority. Is Democracy Possible in a Corrupt Society? No, it is not. Our democracy is a PR sham. My new book Why Things Are Falling Apart and What We Can Do About It is now available in print and Kindle editions--20% to 30% discounts this week only. Things are falling apart—that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:
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| Posted: 11 Nov 2012 06:48 PM PST My Dear Extended Family, This comment from Monty is more powerful than the repatriation discussion or any of the popular comments by gold writers. Jim Dear Jim, A little comment on Mr. Zhang from the Peoples Bank . It comes as no surprise that China in the last 12 months from August 2011 through Continue reading Jim's Mailbox
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| Unintended Consequences Of Bailouts: Greece Gets Slammed Posted: 11 Nov 2012 06:20 PM PST Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter Bailouts, particularly those by central banks, have become known for their so-called “unintended consequences”—however intended they might have been. And now, unintended consequences strike again. The ECB’s massive purchases of decomposing Greek debt—an under-the-radar bailout of banks and insurance companies that were holding it—are making the favorite solution to the Greek crisis, namely another deep haircut, legally impossible, said Bundesbank President Jens Weidmann. Weidmann, an outspoken opponent of the ECB’s bond purchasing programs who has likened them to a pact with the devil [Monetary Schizophrenia in Germany], has seen the writing on the wall. “Apparently,” he said during an interview, “the political world has decided to continue financing Greece.” In theory, the next bailout payment of €31.5 billion is contingent on the big report that the Troika—the ever so successful bailout and austerity gang from the ECB, the IMF, and the EU—is putting together. They’ve been working on it since June. No money would be transferred to Greece unless the report would show that Greece is implementing to the last iota the agreed-upon reform program. In practice, Weidmann questioned the independence of the report. Politicians have been dripping with admiration for Greece’s progress and have been expressing their intention to restart the aid flow, though the report isn’t even finished. And he wondered how you could objectively evaluate Greece’s performance in implementing the reform program, “when you’re too afraid of the consequences of a negative judgment?” Political careers might be at stake, even in Germany, as Greece would be cut loose from the bailout pipeline, if the judgment were “negative.” The country would default and possibly walk away from the Eurozone. It would be messy. And it would happen before next year’s election in Germany. Unthinkable. But Weidmann, in staying clear of political ramifications, worried about the Euro System—the ECB and the national central banks—that has become “one of the largest creditors” of Greece during the crisis. One of the solutions to the Greek debacle that has recently been pitched in all corners calls for another haircut, but this time on public-sector creditors, namely the Euro System. It would be a much deeper default. But it would grant debt relief to Greece. Impossible. Weidmann objected to the comparison between the private-sector holders of Greek debt who were arm-twisted earlier this year into accepting a haircut. Banks and insurance companies had originally bought that debt to make a profit, he said, and they had to bear the risks associated with it. But the Euro System bought Greek debt during the crisis in its role as helper. “So the comparison is limping,” he explained. That was just his warm-up for the unintended consequences of the attempted bailout via bond purchases: “The central banks must not cancel Greece’s debt,” he said, because that would be a “direct transfer and would be equal to the prohibited monetary funding of the government.” In other words, if the private sector were still holding this debt, the solution would be another bout of arm-twisting, and another haircut. Greece would have gotten rid of most of its debt. That, Weidmann said, is no longer possible. By extension, it would apply to all other crisis states: once the ECB buys their debt to bail them out, any debt relief through a public-sector haircut is out of the question. Watch out, Spain, he seemed to say. You can’t get rid of your debt once the ECB is holding it. But a haircut wouldn’t resolve the problems anyway, he said. “What good does it do to forgive Athens its debt if in ten years the country is back at the same point where it is today?” No, he said, Greece would have to fundamentally reform itself and become competitive. The Eurozone has bigger problems than Greece: it seeped out that the German Finance Minister Wolfgang Schäuble broached an unprecedented topic with Germany’s Council of Economic Experts. Could they produce a reform concept for the troubled French economy? It revealed a threat that terrorizes the German government. Read..... Germany’s Fear And Desperation Leak Out. And here is an almost regular guy who gets unhooked in Japan. “A funny as hell nonfiction book about wanderlust and traveling abroad,” a reader tweeted. BIG LIKE: CASCADE INTO AN ODYSSEY. Read the first few chapters for free on Amazon.
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| Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings Posted: 11 Nov 2012 05:23 PM PST Anyone who may have been concerned by the slowdown in Chinese gold imports in August, when the country imported "only" 53.5 tons of gold from Hong Kong (down from 75.8 in July), can breathe a sigh of relief. According to the Hong Kong Census Bureau, in September Chinese gross imports soared by 30% reverting to the long-term trendline of 65 tons in gross imports per month, and rising to a total of 69.7 tons. Net imports were 40% less, although that excludes organic Chinese gold mining and recirculation, which is why for all intents and purposes the gross number is the apples to apples one. And using that, Year-To-Date China has now imported a whopping 582 tons of gold, more than the official holdings of India at 558 tons, and which through November has certainly surpassed the holdings of the Netherlands, and make China's gross imports in just 2012 nominally the equivalent of Top 10 largest sovereign holder of gold. This way at least we know where China is recycling all that vast trade surplus, which incidentally in October just printed, goalseeked or not, at the highest level - $32 billion - since January of 2009. Too bad China no longer recycles all those excess reserves into US Treasury paper (as we showed previously here). YTD China gross imports from Hong Kong:
Where does this put China:
And in historical perspective: the recent surge in demand for gold is quite unmistakeable:
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| Posted: 11 Nov 2012 04:40 PM PST Silver hit the downside target given in the Marketwatch article posted on the site on October 16th, and is showing signs of basing, as we can see on its 6-month chart below. Read More...
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| Weekend Report...Gold Versus Everything! (Gold Ratio Chartology) Posted: 11 Nov 2012 04:32 PM PST In this weekend report I would like to look at some ratio charts that compare gold to many different areas of the markets. If gold is going to lead the the charge I would like to see it rally against just about everything. Read More...
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| Most Gold Miners are Sacrificing Profits for Growth Posted: 11 Nov 2012 11:36 AM PST Matt Badiali writes: Hardcore gold and gold-stock investors are a unique breed. They are not like "normal" investors. Most hardcore gold investors see gold (and often silver) as the only real form of money. They expect it to soar when the world falls apart. They fall in love with gold... more so than an investor likes his shares of Google or Microsoft. So when gold and gold stocks fail to live up to bullish expectations, the level of disappointment is very high.
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| Gold Cycles Bulllish Gold Price Forecast 2013 Posted: 11 Nov 2012 11:30 AM PST Financial Tap writes: Gold is off to a flying start in this new Daily Cycle and it’s exactly what we expected and hoped for. If this is the first Daily Cycle, then we should see a consistent and grinding move higher from this point forward. The first Cycle has a habit of relentlessly grinding higher, much to the chagrin of investors who continue to wait for a pullback to buy into this new rally. Investors who missed the ICL will often look at the final ICL price compared to the quick $50 rally of a new cycle and find it difficult to buy. As the Cycle gathers momentum, a sense of panic buying begins to unfold.
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| Richard Russell likes latest gold market action Posted: 11 Nov 2012 10:54 AM PST I can remember as a young man being handed my very first issue of Richard Russell's Dow Theory Letters by a physician friend and client. "Read this," he said. "It will change your viewpoint." In those days, Russell would display a caricature of a bull or bear on the front page of his newsletter, and there prominently so all could clearly see, was the image of a bear. I have always had an appreciation for the written word, and I was immediately struck with Richard Russell's ability to speak directly and frankly — almost like sitting down for a Sunday afternoon chat with a beloved and highly opinionated uncle. Well, Richard Russell, now an octogenarian, has hung on over the years and is still widely-respected in the financial business for what he has to say — not just with the public but among his fellow analysts as well. The "bear" has been part and parcel of the Russell analysis for a good many years now and he constantly promotes gold ownership as a way to counteract all that's wrong with the markets and the monetary system under the management of the serial money printer, Ben Bernanke.
The stock market has not reacted well to President Obama's re-election. The fiscal cliff looms. Earnings are in the disaster zone. There are some latent outlier events lying in wait few people are thinking about, like the potential failure of one or more huge Japanese electronics corporations, that could hammer home all that's wrong with the world economy. We could wake up some morning to another global meltdown and a repeat of the 2008 fiasco — all starting this time in Japan. Zero Hedge reports this morning that Barclay's Barry Knapp sees the S&P at 1325 by year end; Morgan Stanley's Adam Parker, 1167; Goldman's David Kostin, 1250. On Friday, the S&P closed at 1380. In other words, the 2% drop we saw last week is probably not a flash in the pan (to borrow the well-worn gold allusion). We seem to moving to the next level of this disinflationary economy with more shocks in store. (And keep in mind that since 2008 gold has proven itself to be just about the best, if not THE best, disinflation hedge available.) Most of us remember what happened the last time we lined up at the "cliff" in 2011, but for those who are new to gold let me recapitulate: In August of that year, the U.S. credit rating was downgraded the result of Washington's inability to come to terms. Gold was trading in the mid-$1600s. By September, it was trading at its all time high just under $1925 per ounce. Here we are just over a year and an election later, and it is difficult to listen to the eerily familiar bromides about compromise and "doing what's best for the country" without skepticism. It's hard to know what another failure in Washington would do to the financial markets, but we'll lay odds now that it won't be good. Richard Russell tells his subscribers (as reported at King World News) that we live in a world of "insane bubbles" — all created by the Fed's "QE3 to infinity" policy. Meanwhile, says Russell, "the yield on the Dow is 2.56%, far below the classic danger level which is 3.5%. According to the yield cycle, the stock market is in a dangerous bubble. And with bond yields tanking at unbelievable low rates, the bond market is also in a bubble." Like a good many analysts these days, Richard Russell finds redemption in the gold market and follows it religiously. On the action this past week, Russell says: "Gold surprised me with its strength. . . I thought it would take to the end of the year before gold could climb back into the 1700s. But gold rose into the 1700s today. . . Again, the advantage of actually owning the one ounce coins is that you're not tempted to trade them. The hardest thing to do in a bull market is to take a position and then to refrain from trading. When you trade, you're most likely to trade out of the bull market just before the next advance. Gold has one great advantage — you never have to worry about gold going bankrupt. Thus, you can hold actual gold with impunity. The best way to handle actual gold in a bull market is to accumulate –never sell, but just continue to accumulate." As you might guess, we unreservedly concur with the outspoken Mr. Russell in his assessment. I would add to his analysis that if things should move in the direction of the 2008 debacle, the course of action providing the least anxiety is to accumulate ahead of the crowd. By doing so you will avoid the gold market headaches that usually come hand-in-hand with sudden public rushes to gold, i.e., supply bottlenecks and outright production stoppages, rising premiums, inability to make contact with gold trading firms, etc. ___________________ Two interesting quotes I ran into last week: "Chaos. It's fantastic — and profitable." "Our business in the US is a big business that throws off cash and we strip that cash, I just don't want that money lying around. We are certain that inflation isn't going away, so it's smart to be borrowing cheaply and putting it into real assets." - Billionaire Nathan Kirsh (Both quotes) MK
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| Posted: 11 Nov 2012 09:52 AM PST Jamie Dimon is one of the slimiest human beings on the planet and he runs a criminal enterprise. Banks should fear ominous new rulings in Fannie/Freddie MBS casesBy: Alison Frankel 11/9/2012 JPMorgan Chase filed quite a remarkable quarterly report with the Securities and Exchange Commission on Thursday, crammed with far more details about its exposure to litigation and mortgage repurchase demands than the earnings report the bank issued in mid-October. Among the revelations: JPMorgan has reached an agreement in principle to settle two SEC investigations, one involving a single unidentified JPMorgan securitization, the other involving Bear Stearns's crafty (alleged) trick of keeping put-back recoveries from mortgage originators for itself instead of passing them on to investors in mortgage-backed securities trusts. The SEC deal has been long rumored, and though we still don't know any of its terms, the bank's filing confirms it. JPMorgan also disclosed that it is now facing put-back claims, in one form or another, on $140 billion in mortgage-backed notes. Yes, you read that right: $140 billion. That doesn't mean there are $140 billion in claims, but it means that holders of $140 billion in MBS notes have asserted, in litigation or through contractual demands, that the bank must buy back deficient mortgages in their trusts. Given that MBS investors generally claim breach rates in excess of 50 percent, JPMorgan's exposure to mortgage put-backs is tens of billions of dollars. The bank, of course, thinks the put-back demands are meritless and its entire litigation exposure is a trifling matter. The SEC filing's 10-page discussion of the various litigation headaches facing JPMorgan — which include really serious matters, such as the securities class action over its CIO losses, various Libor suits and the Federal Energy Commission's market manipulation case — begins with the brash assertion that the bank's "reasonable possible losses" in all of this litigation (aside from its litigation reserves) range from zero dollars to $6 billion. Zero dollars? I think not. In fact, I'm prepared to say that based on two rulings this week by U.S. District Judge Denise Cote of Manhattan in the Federal Housing Finance Agency's securities fraud litigation against MBS issuers and underwriters, JPMorgan has exceedingly low odds of getting out of the Fannie Mae and Freddie Mac conservator's case — which involves claims on $33 billion in JPMorgan, Bear and Washington Mutual MBS — wit h out a settlement. More importantly, Cote's rulings this week make it clear that the judge, who is overseeing the FHFA's cases against 16 banks that issued or underwrote mortgage-backed securities, does not intend to let any of them out of this litigation. I've already told you that the banks still have a slim chance of wiping out most of the FHFA's claims on timeliness grounds, if the 2nd Circuit Court of Appeals overturns Cote's holding that Congress intended to extend the obscure statute of repose, along with the statute of limitations, when it passed the law that created the FHFA. But unless the banks win a reprieve from the appeals court, it looks like Cote intends to send Fannie and Freddie's claims to a jury. Her rulings this week addressed motions to dismiss by JPMorgan and Merrill Lynch, which are represented by, respectively, Sullivan & Cromwell and Williams & Connolly. (The FHFA is represented in both cases by Quinn Emanuel Urquhart & Sullivan.) In both decisions, Cote dismissed FHFA fraud claims based on the banks' representations of loan-to-value ratios and owner-occupancy rates in the pools of loans underlying the mortgage-backed notes they offered. But otherwise, she said that Fannie and Freddie's conservator could proceed with state and federal securities and fraud claims. Cote's one-two punch against JPMorgan and Merrill rejects just about every substantive argument any of the banks in the FHFA litigation can raise in a dismissal motion — and leaves open the terrifying prospect of rescission and punitive damages against the banks. In the JPMorgan decision, issued Monday, Cote specifically addressed the adequacy of Fannie and Freddie's evidence that the bank knowingly misrepresented underwriting standards on the loans underlying various mortgage-backed notes issued by JPMorgan, Bear and Washington Mutual. Cote pointed to the FHFA complaint's 60-page discussion of deficient underwriting and said they were sufficient to permit the case to proceed. But she also said that the FHFA doesn't have to show underwriting flaws marred each of the mortgage-backed offerings, just that "there was a systematic failure by the defendants in their packaging and sale of RMBS." (MBS geeks should note that in explaining this point, Cote refers to the 2nd Circuit's recent ruling on standing in MBS class actions, which has already hurt JPMorgan in another case.) As she did in her previous ruling denying UBS's motion to dismiss FHFA claims, Cote once again shrugged off arguments that Fannie and Freddie cannot reasonably claim to have relied on JPMorgan's representations because they were the most sophisticated MBS investors in the market. That sophistication, Cote said, didn't give Fannie and Freddie access to the specific information that established deficiencies in the securities they bought. "It is difficult to see how they could help but rely on the representations of defendants, who did have access to those materials," Cote wrote. "And while (Fannie and Freddie) were certainly aware that they were purchasing securitizations backed by subprime loans, neither the amended complaint nor documents integral to it establish that they knew that the loans supporting these particular securitizations were so haphazardly originated as to put in jeopardy even the AAA-rated certificates they purchased." The banks, in other words, are not going to be able to persuade Cote that Fannie and Freddie knew what they were getting when they invested in subprime-backed MBS, so they shouldn't be able to make claims against issuers. Cote said that the banks can try to persuade a jury otherwise. She also said JPMorgan can tell a jury that it didn't knowingly deceive Fannie and Freddie. But you have to regard Cote's references to a jury trial as code for encouraging settlement talks. She's signaling that she's not going to be receptive to bank arguments on summary judgment, and warning that if the case continues, the banks will have to defend their underwriting to a group of ordinary people who aren't likely to be kindly disposed to them. And if that's not enough to scare the banks into settlement talks, consider Cote's findings in Thursday's decision upholding just about all of the FHFA's claims against Merrill Lynch. In particular, Cote refused to rule out the possibility of rescission — which would require Merrill to buy back the FHFA's holdings in Merrill MBS offerings — and punitive damages. Merrill argued that the FHFA waited too long to file claims to demand rescission under the Securities Act and the common law; Cote said there were plenty of legitimate reasons for the FHFA's delay in filing. As for punitive damages, which are based on New York law, Merrill asserted that the FHFA hadn't shown the requisite exceptional misconduct. Cote disagreed, in what has to be considered ominous language for the bank defendants. "FHFA alleges that the defendants acted recklessly by seeking to profit from ever more risky mortgage lending while, at the same time, passing on the risk (and ultimately the losses) associated with these practices to the public via their sale of securities to Fannie Mae and Freddie Mac," Cote said. The judge went on to turn the banks' arguments that Fannie and Freddie's MBS losses were due to a downturn in the housing market completely against the banks. They're not the victims of the housing crisis, she wrote, but (at least according to FHFA) the cause of "the most severe economic downturn this country has experienced since the Great Depression." And yes, she said, "These allegations are sufficient to support the plaintiff's demand for punitive damages." Seems to me that's a pretty clear warning to the banks, which are now facing a trial date in June 2014. JPMorgan's zero-dollar prediction aside, I bet we'll see some FHFA settlements before then. JPMorgan didn't respond to Reuters' request for comment, and a representative of Merrill Lynch parent Bank of Americadeclined comment. (Reporting by Alison Frankel)
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| Distribution of Economic Pain From the Financial Crisis Posted: 11 Nov 2012 09:41 AM PST No wonder the wealthiest ten percent feel so clever, and even perhaps triumphant. The collapse caused by the widespread banking fraud has barely affected them, whereas it wiped out most of the last ten years of growth in the middle class and the poor.
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| GOLDIE “ROCKS” & THE THREE BEARS Posted: 11 Nov 2012 08:50 AM PST By SRSrocco: After a while I just get sick and tired of reading the same garbage coming from so-called precious metal analysts that are intentionally confusing and misleading the would be gold and silver investor. The three bears I am … Continue reading
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| Gold-backed bonds offer an alternative to austerity, confirms new white paper Posted: 11 Nov 2012 02:07 AM PST
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Anyone who may have been concerned by the slowdown in Chinese 
There is growing hope in some quarters that economic recovery is at last under way in the USA. Is this just an election-inspired pick-up in sentiment, now rapidly vanishing, or do we take it more seriously; and if it really is recovery, what are the inflationary consequences?
Obama's re-election has set a number of things in motion behind closed doors that are about to emerge before the Summer of 2013. If anything, Obama's victory has accelerated the timeline of financial collapse that's now a foregone conclusion for the United States of America.
Silver is an ideal metal to accumulate on price weakness. The market is currently oversold. Please note how perfectly the price has pulled back to the green downtrend line, after staging a magnificent breakout! Silver's RSI and CCI indicators are currently flashing strong buy signals. I expect the
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