Wednesday, January 12, 2011
Uh Oh! Cat is out of the Bag of Gold and Silver and Yes it is OK to smile if you Own Them
Fed Governor Hoenig shocked many observers yesterday when he stated, “The gold standard is a very legitimate monetary system...We're not going to have fewer crises necessarily. You will have a longer period of price stability or price level stability, but I don't know that you'll have lower unemployment, I don't know that you'll have fewer bank failures.” King World News immediately interviewed Jim Rickards who has worked with both the Fed & US Treasury, and who also has a background in national defense as well as consulting with government directorates around the world.
“What Hoenig has done, as Robert Zoellick did before him, is to legitimize the debate. This is not the last word on gold and there is a long way to go both intellectually and mechanically before we get to a gold standard. What is important is that the discussion is now out of the shadows and in the main arena and it will take on a life of its own from here with participation from many sides. Hoening may have lost his vote on FOMC but he has not lost his voice.”
With regards to the battle lines, how do you think Fed Chairman Bernanke will feel about this?
“Hoenig and Zoellick are not stalking horses for Bernanke and the Board of Governors. An honest debate about a gold standard is the last thing Bernanke wants. However, because of speeches like Hoenig's and the new prominence of Ron Paul in the Congress, this debate is now taking off whether Bernanke likes it or not and he will not be able to contain it.
The battle lines are being drawn between honest gold backed money and fiat money. The G20, IMF, central banks and most academic economists are on the side of fiat money and the citizens, certain honest intellectuals and a few economists are on the side of gold. Let the games begin.
Hoenig is right that even with a gold standard there will continue to be business cycles with occasional periods of higher unemployment and bank failures. But it's not as if fiat money has avoided those calamities. From the severe recessions in the 1970's and 1980's, the sovereign debt crisis of the early 1980's, the stock market crash of 1987, the recession of 1989-1990, the bond market crash of 1994, the LTCM collapse of 1998, the tech bubble crash of 2000 and the Panic of 2008 it's not as if it's all been smooth sailing under fiat money.
It's hard to see how gold could do worse and history says it will do much better. One need only look at inflation, unemployment and economic growth in the period 1870-1914 versus 1971-2010 to see the clear beneifts of gold which seems to produce both consistent growth and low inflation notwithstanding occasional business cycle volatility.”
You can still have variations due to tightness in supplies, but it is proven that there is tremendous stability in pricing when you are on a gold standard. We had food riots in 2008 from Haiti to Bangladesh to Egypt over the soaring costs of basic foods. Food costs have now eclipsed 2008. It seems it is not only morally the right thing to do, being on a gold standard, but also the humane thing to do as far as providing price stability?
“Good question. Commodities are not just the playthings of speculators or mere industrial inputs. In many cases, commodities are actually food and their price volatility represents the difference between a steady diet or starvation for billions of people. If a gold standard contributes to lower volatility in food prices and fewer price related supply disruptions that's a social good over and above any economic good that is created.”
How do we get there Jim?
“Well, as I've said before, there's more to a gold standard than just snapping your fingers and wishing it to be so. It will require a lot of study, a lot of planning and a lot of technical work to execute. One clear implication is that given the amount of money printing in recent years, a much higher price of gold is required to create an equilibrium between the current money supply and the amount of official gold available to support it.
Estimates of that higher price can vary over a wide range depending on what definition of "money" you use and what gold to paper ratios you require. My own analysis indicates a range of between $5,000 to $11,000 per ounce of gold; of course, some estimates are much higher.”
There is the easy way and there is the other path which could very well involve social disorder, violence and failure of the current monetary system. A gold standard is coming to the United States, and the US can do this willingly, or “kicking and screaming” as Jim Rickards has said in the past. Let’s hope we choose the easy path
Palin accuses media of 'blood libel' in Giffords shooting aftermath
Submitted by: Iseedeadpeople
1/12/11
In a vain attempt to redirect attention from her recent toxic rhetoric that in many opinion probably contributed to this senseless act of violence in Arizona. The same woman who has no problem using the media to telegraph that she openly supports the assassination of people like wiki leak’s Julian Assange is at the mouth piece again and suddenly and by some miracle she is now an all peace loving delicate flower who goes on to say:
"But, especially within hours of a tragedy unfolding, journalists and pundits should not manufacture a blood libel that serves only to incite the very hatred and violence they purport to condemn," she wrote. "That is reprehensible."
But of course Sarah it is o.k. to send your message via of the same media to millions that it is ok to assassinate people like Julian Assange.
What is more disturbing is that instead of shutting up and allowing the family members of those slain to grieve found it appropriate to use this disgusting incident in Arizona where six people were killed including a nine year old girl, to get her media swagger rolling for her 2010 campaign.
As if the deep disappointment of John McCain’s vice presidential selection from those of his party were not more pronounced, here is another rambling that I am sure have McCain and other GOP members puking in their waste baskets in embarrassment for ever had having any association with Sarah Palin.
The third-ranking House Democrat, Assistant Democratic Leader James Clyburn (D-S.C.) responded on Wednesday to Palin, saying: "You know, Sarah Palin just can't seem to get it, on any front. I think she's an attractive person, she is articulate. But I think intellectually, she seems not to be able to understand what's going on here."
Ronald Reagan's budget director - David Stockman - pulls no punches in a must-read interview with Raw Story:
We are now at a historical inflection point at which the time has arrived for a classic post-war demobilization of the entire military establishment," David Stockman said in an exclusive interview.
"The Cold War is long over," he continued. "The wars of occupation are almost over and were complete failures -- Afghanistan and Iraq. The American empire is done. There are no real seriously armed enemies left in the world that can possibly justify an $800 billion national defense and security establishment, including Homeland Security."
Short of that, he suggested, the United States has "reached the point of no return" with its artificial creation of wealth, and will eventually face a sharp economic decline.
***
This is a profound disappointment that there's not even a debate -- a serious debate about dramatic change in our imperialist foreign policy and war-making establishment in this administration -- allegedly the most left-wing administration that we've had in modern time."
"I don't have much hope that what needs to be done will be done until it's finally forced on us by a world bond market crisis, which will happen sooner or later," Stockman added.
***
That's why we're just at the beginning of solving this massive financial collapse we had in 2008 and not in the process of healthy recovery as some of the pals in the White House or on Capitol Hill or on Wall Street would have you believe."
SEC Obtains Emergency Asset Freeze Against Hedge Fund Manager for Fraudulent Misuse of Fund Assets
FOR IMMEDIATE RELEASE
2011-3
Washington, D.C., Jan. 7, 2011 — The Securities and Exchange Commission has charged a Greensboro, N.C.-based investment adviser firm and its owner with defrauding investors in two hedge funds by secretly diverting millions of dollars to themselves through various self-dealing transactions.The SEC obtained an emergency court order late yesterday freezing the assets of SJK Investment Management LLC and its CEO Stanley Kowalewski, alleging that they raised more than $65 million since summer 2009 through marketing two hedge funds to various investors including pension funds, school endowments, hospitals and non-profit foundations. However, unbeknownst to these investors, Kowalewski placed $16.5 million of their money in an undisclosed, wholly-controlled, new fund that he created, and then misused it in a number of ways. For example, he purchased a vacation home for approximately $3.9 million. He also sold his personal home to the fund for nearly $1 million more than the price he paid for it, and then continued to live in the house essentially rent-free.
"Kowalewski treated these funds like his own personal bank account and siphoned off millions of dollars that his clients entrusted to him," said William P. Hicks, Associate Regional Director of Enforcement in the SEC's Atlanta Regional Office. "He breached his responsibilities as an investment adviser in the worst manner possible."
According to the SEC's complaint filed yesterday in federal court in Atlanta, SJK and Kowalewski began diverting investor money in August 2009 — almost immediately after receiving the first investor proceeds — to pay their personal and business overhead expenses under the pretense that they were "start-up" expenses for the funds.
The SEC alleges that SJK and Kowalewski never advised investors of the existence of the third fund, much less their complete control over it, the large amounts "invested" into it, or the existence and nature of their self-dealing transactions and misuses of investor money. To further perpetuate the scheme, Kowalewski and SJK sent fraudulent monthly account statements to investors showing substantial and positive — but illusory — investment returns.
According to the SEC's complaint, among other transactions, Kowalewski sold his personal home to the fund in February 2010 for $2.8 million, almost $1 million more than its 2006 purchase price. Kowalewski used approximately $3.9 million of investor money in May 2010 to buy his vacation house on Pawley's Island, S.C. In October 2010, SJK took $4 million of investor money in the form of a purported "administration fee" and "salary draw." Throughout last year, Kowalewski used investor money to pay personal expenses and SJK's rent and other overhead, in stark contrast to how he represented those monies would be used.
The Honorable Timothy C. Batten, Sr., U.S. District Judge for the Northern District of Georgia granted the SEC's request for an emergency asset freeze, temporary restraining order, and other remedies against Kowalewski and SJK Investment Management. In addition to the emergency relief for investors, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest, financial penalties, and a financial industry bar against Kowalewski.
The SEC's complaint alleges that Kowalewski violated Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, Section 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.
Matthew F. McNamara and Michael J. Cates of the SEC's Atlanta Regional Office conducted the investigation following an examination of SJK conducted by H. Dandridge Campbell, Michael L. Foster, Jamey A. Jones, John Sherrick, Satyan Singh, and Gina Bailey. The SEC's litigation effort will be led by M. Graham Loomis and Paul Kim. The SEC's investigation is ongoing.
# # #
For more information about this enforcement action, contact:Rhea Kemble Dignam
Regional Director, SEC's Atlanta Regional Office
(404) 842-7610
William P. Hicks
Associate Regional Director, SEC's Atlanta Regional Office
(404) 842-7675
http://www.sec.gov/news/press/2011/2011-3.htm
Frontrunning: January 12
- Home price drops exceed Great Depression (Reuters)
- The Fed Oracle Speaks: Fed Officials Signal Intent to Back Bond Buys (Jon Hilsenrath)
- Sanders Says Bernanke Ducks Request for Details on Fed Loans (Bloomberg)
- Clarium Slumps 90% From Peak After Thiel Hedge Fund Has Third Losing Year (Bloomberg)
- EU Weighs Boosting Bailout Fund (WSJ)
- Lisbon Succeeds with Debt Auction (FT)
- Credit Suisse Plans Market for Long-Term Investors (BusinessWeek)
- UK Insurers Attacks Europe’s Bank ‘Bail-In’ Plans (FT)
- World's ATMs Pump Billions Into Wrong Places (Bloomberg)
- Rethinking the Public-Pension Punching Bag (BusinessWeek)
Bill Clinton Interview
From: Ron
When asked what he thought about foreign affairs, Clinton replied, "I don't know, I never had one."
The Clinton revised judicial oath: "I solemnly swear to tell the truth as I know it, the whole truth as I believe it to be, and nothing but what I think you need to know."
When asked what he thought about foreign affairs, Clinton replied, "I don't know, I never had one."
The Clinton revised judicial oath: "I solemnly swear to tell the truth as I know it, the whole truth as I believe it to be, and nothing but what I think you need to know."
114 Times More Insider Selling Than Buying In First Week Of 2011
114 Times More Insider Selling Than Buying In First Week Of 2011
After insiders closed off 2010 with just 19x more selling than buying, they have greeted 2011 with a ratio of selling to buying of 114x, a decent pick up in dumping. Specifically there were 4 purchases in the first week of 2011 in S&P 500 names, for a total of $2.5 million in notional. This was offset by $290 million in sales, in 86 transactions. The only notable purchase in the last week was in ATI, which has continued to see insider buying for the past month. The selling side is far more interesting, and here we can see ongoing dumping of Google, MCK, Qualcomm, Ford, HP, Carnival, CSX, and so forth. Luckily for the PDs and the Fed, the retail hot grenade lemmings are finally stepping in, because it was unclear how much longer the HFTs could keep the market from crashing again.
Source: Bloomberg
Full Catastrophe Banking in 2011
With a $4.7 trillion bailout under their belts and no harm done to their billion-dollar bonuses, don't expect Wall Street bankers to be chastened by the 2008 financial crisis. Below we list eight things to watch out for in 2011 that threaten to rock the financial system and undermine any recovery.
1) The Demise of Bank of America WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the troubled Bank of America (BofA). BofA is already under the gun, defending itself from multiple lawsuits demanding that the bank buy back billions worth of toxic mortgages it peddled to investors. The firm is also at the heart of the robo-signing scandal, having wrongfully kicked many American families to the curb. If Assange has emails showing that Countrywide or BofA knew they were recklessly abandoning underwriting standards and/or peddling toxic dreck to investors, the damage to the firm could be irreparable.
2) Robo-signers Wreaking Havoc With lawsuits abounding, new types of fraud in the foreclosure process are being uncovered daily, including accounting fraud, fake attorneys, destroyed promissory notes and false notarization. The crisis not only calls into question the legality of untold foreclosures, it also calls into question the value of trillions of dollars worth of mortgage-backed securities held by banks, pension funds, federal, state and local governments. The only government report on the topic by the feisty Congressional Oversight Panel for the TARP acknowledges that "it is possible that 'robo-signing' may have concealed deeper problems in the mortgage market that could potentially threaten financial stability."
3) MERS Madness
In addition to outright fraud, numerous state Supreme Courts have questioned the legal standing of the Mortgage Electronic Registration or "MERS" system. MERS is listed as the mortgagee for 60% of U.S. mortgages. It is an electronic clearinghouse created by industry to bypass the property registration system developed in precolonial days to ensure that the King could not easily rob the subjects of their land. Wall Street turned to MERS to speed securitizations (and now foreclosures), but its legal standing is now in doubt and its shoddy processing of documents has major ramifications for the securitization process as well. Look for a rotten "MERS fix" in the new Congress. Let's hope it gives consumer advocates some leverage to demand justice for Americans being robbed by the new Kings on Wall Street.
4) Flash Crash Calamity The "flash crash" of May 2010 rattled the markets and caused a stunning 700 point drop in the Dow within minutes. Regulators think they know what occurred, but they are moving too slowly to put the brakes on hair-trigger trading. Seventy percent of Wall Street trades take place in milliseconds, so it is no surprise that mini-flash crashes are becoming a constant. With traders now gearing up to trade on raw news feeds and Twitter, we can anticipate even more volatility. A small financial transaction tax targeting high-volume, high-speed trades is long overdue. It would throw sand in the roulette wheel and raise much needed revenue for the federal government.
5) Bigger Behemoth Banks The Federal Reserve is planning to "stress test" the big banks again. The same 19 banks that underwent the first stress tests in 2009 will be tested again, but this time the Fed says it won't release the results. Why not? Banks with toxic mortgages and mortgage-backed securities on their books and concomitant legal exposure to "put back" law suits are being kept afloat by accounting tricks, TARP and Fed loans. Honest stress tests of still weak financial institutions may well result in sales and buyouts that will further consolidate the already concentrated banking industry and create larger and more unwieldy "too big to fail" behemoths -- backed by the guarantee of the American taxpayer.
6) Foreclosure Tsunami Housing foreclosures may top nine million in 2011 and [[Goldman Sachs]] predicts the number will reach 12 million in the next few years. The result will be another significant drop in home prices in 2011 and even more families underwater. Civilized nations see the forcible migration of a city the size of New York as an economic and humanitarian catastrophe, but not the United States. The Obama administration and Congress have callously refused to take meaningful action to aid families facing foreclosure even in the face of widespread predatory lending and rampant foreclosure fraud. The only hope now for millions of American families is aggressive action by the 50 state Attorneys General who are actively investigating foreclosure fraud. Whether they have the guts to wrestle a settlement out of the big banks that slows the foreclosure machine and offers families meaningful options has yet to be seen.
7) Bankrupt Cities and States Meredith Whitney, a research analyst who correctly predicted the credit crunch, is now warning that over 100 American cities could go bust next year. She anticipates billions worth of municipal bond defaults and warns: "next to housing this is the single most important issue in the U.S. and certainly the biggest threat to the U.S. economy." States are also in dire straits. The economic shock of mass unemployment on top of years of population decline, deindustrialization and the like have left cities unable to meet their obligations to taxpayers and retirees. With the austerity nuts in charge of the House, it may take a bankruptcy of a major player to prod an appropriate federal response to this looming disaster.
8) Gas Prices above $4.00 The price of energy and other commodities shifted into high gear in late August when the Federal Reserve Chairman decided to stimulate the economy with quantitative easing. Speculators quickly began bidding up the value of asset classes like crude oil, metals and food commodities. In December, the Commodities Futures Trading Commission failed to apply position limits to these commodities, delaying rules that would crack down on speculators and aid consumers who are already seeing big price hikes at the pump. Without swift action, skyrocketing gas prices will further tank an already stalled economy.
As we hope for the best in 2011, let's prepare for the worst. The big banks are sure to deliver.
1) The Demise of Bank of America WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the troubled Bank of America (BofA). BofA is already under the gun, defending itself from multiple lawsuits demanding that the bank buy back billions worth of toxic mortgages it peddled to investors. The firm is also at the heart of the robo-signing scandal, having wrongfully kicked many American families to the curb. If Assange has emails showing that Countrywide or BofA knew they were recklessly abandoning underwriting standards and/or peddling toxic dreck to investors, the damage to the firm could be irreparable.
2) Robo-signers Wreaking Havoc With lawsuits abounding, new types of fraud in the foreclosure process are being uncovered daily, including accounting fraud, fake attorneys, destroyed promissory notes and false notarization. The crisis not only calls into question the legality of untold foreclosures, it also calls into question the value of trillions of dollars worth of mortgage-backed securities held by banks, pension funds, federal, state and local governments. The only government report on the topic by the feisty Congressional Oversight Panel for the TARP acknowledges that "it is possible that 'robo-signing' may have concealed deeper problems in the mortgage market that could potentially threaten financial stability."
3) MERS Madness
In addition to outright fraud, numerous state Supreme Courts have questioned the legal standing of the Mortgage Electronic Registration or "MERS" system. MERS is listed as the mortgagee for 60% of U.S. mortgages. It is an electronic clearinghouse created by industry to bypass the property registration system developed in precolonial days to ensure that the King could not easily rob the subjects of their land. Wall Street turned to MERS to speed securitizations (and now foreclosures), but its legal standing is now in doubt and its shoddy processing of documents has major ramifications for the securitization process as well. Look for a rotten "MERS fix" in the new Congress. Let's hope it gives consumer advocates some leverage to demand justice for Americans being robbed by the new Kings on Wall Street.
4) Flash Crash Calamity The "flash crash" of May 2010 rattled the markets and caused a stunning 700 point drop in the Dow within minutes. Regulators think they know what occurred, but they are moving too slowly to put the brakes on hair-trigger trading. Seventy percent of Wall Street trades take place in milliseconds, so it is no surprise that mini-flash crashes are becoming a constant. With traders now gearing up to trade on raw news feeds and Twitter, we can anticipate even more volatility. A small financial transaction tax targeting high-volume, high-speed trades is long overdue. It would throw sand in the roulette wheel and raise much needed revenue for the federal government.
5) Bigger Behemoth Banks The Federal Reserve is planning to "stress test" the big banks again. The same 19 banks that underwent the first stress tests in 2009 will be tested again, but this time the Fed says it won't release the results. Why not? Banks with toxic mortgages and mortgage-backed securities on their books and concomitant legal exposure to "put back" law suits are being kept afloat by accounting tricks, TARP and Fed loans. Honest stress tests of still weak financial institutions may well result in sales and buyouts that will further consolidate the already concentrated banking industry and create larger and more unwieldy "too big to fail" behemoths -- backed by the guarantee of the American taxpayer.
6) Foreclosure Tsunami Housing foreclosures may top nine million in 2011 and [[Goldman Sachs]] predicts the number will reach 12 million in the next few years. The result will be another significant drop in home prices in 2011 and even more families underwater. Civilized nations see the forcible migration of a city the size of New York as an economic and humanitarian catastrophe, but not the United States. The Obama administration and Congress have callously refused to take meaningful action to aid families facing foreclosure even in the face of widespread predatory lending and rampant foreclosure fraud. The only hope now for millions of American families is aggressive action by the 50 state Attorneys General who are actively investigating foreclosure fraud. Whether they have the guts to wrestle a settlement out of the big banks that slows the foreclosure machine and offers families meaningful options has yet to be seen.
7) Bankrupt Cities and States Meredith Whitney, a research analyst who correctly predicted the credit crunch, is now warning that over 100 American cities could go bust next year. She anticipates billions worth of municipal bond defaults and warns: "next to housing this is the single most important issue in the U.S. and certainly the biggest threat to the U.S. economy." States are also in dire straits. The economic shock of mass unemployment on top of years of population decline, deindustrialization and the like have left cities unable to meet their obligations to taxpayers and retirees. With the austerity nuts in charge of the House, it may take a bankruptcy of a major player to prod an appropriate federal response to this looming disaster.
8) Gas Prices above $4.00 The price of energy and other commodities shifted into high gear in late August when the Federal Reserve Chairman decided to stimulate the economy with quantitative easing. Speculators quickly began bidding up the value of asset classes like crude oil, metals and food commodities. In December, the Commodities Futures Trading Commission failed to apply position limits to these commodities, delaying rules that would crack down on speculators and aid consumers who are already seeing big price hikes at the pump. Without swift action, skyrocketing gas prices will further tank an already stalled economy.
As we hope for the best in 2011, let's prepare for the worst. The big banks are sure to deliver.
Subscribe to:
Posts (Atom)