Ex-PBOC Official Wakes Up From The Acid Trip: "U.S. Treasury Market Is A Giant Ponzi Scheme"
Submitted by Tyler Durden on 04/11/2011 09:31 -0400
After years of being the primary supplier of funding to the US credit-money shell game, one more ex-PBoC member wakes up from the "great normalization" acid trip, and in a Caixin editorial says what virtually everyone now understands all too well: the Treasury market is one "giant Ponzi scheme." Oh, and it wasn't obvious when China was the biggest holder of debt for years (until the Fed became the biggest monetizer of US Treasuries late in 2010)? Sounds like a rather serious case of buyers remorse is creeping into the buying mindset of America's formerly primary enabler. The $64 trillion question now, as always, is whether China, whose holdings have been flat for a year will follow in Pimco's footsteps and actually commence selling longer-dated paper. If so, and with QE3 now expected to end even if temporarily, the aftermath will not be what Congress wants to see.
From Market Watch:
A former adviser to China's central bank said on Monday that China should have retreated from the U.S. government-bond market and instead allowed the yuan to appreciate more freely, warning that U.S. sovereign debt was akin to a giant Ponzi scheme, according to a newswire report that cited an editorial on Caixin Media Group's website. Yu Yongding, a former member of the People's Bank of China monetary-policy committee and now a member of a state-run policy group, said allowing appreciation of the yuan against the U.S. dollar under a free-floating currency regime would have reduced China's need to acquire U.S. Treasuries. He likened the U.S. Treasury market to a "giant Ponzi scheme," arguing that Federal Reserve buying of Treasuries has artificially kept bond prices high, but that they would eventually fall to levels which reflected fundamentals of the U.S. economy.
Monday, April 11, 2011
Liberal Media Refuses To Cover George Soros New World Order
Right now, there are only two groups that have written about George Soros New World Order event in New Hampshire that is taking place today. NTEB and Fox News. This is very odd when you consider that the giants of world politics and finance will be at these meetings, and Nancy Pelosi is the Keynote speaker. Just a tad odd, wouldn’t you say, that none of the main stream media are covering it in any way? So it would appear that there is a conspiracy among the various outlets to allow Soros’ meetings to take place unreported.
The first gathering in Bretton Woods, N.H., is an economic conference Soros once described as “a grand bargain that rearranges the entire financial order.” In October 2009, Soros committed $50 million to the Institute for New Economic Thinking (INET). A week later, the glib lefty investor wrote a column calling for a new Bretton Woods event, to recreate the one that helped design the post-WWII economy. Only he wants this one to knock America down a peg or three.
The announced speakers include a lot of prominent lefties, globalists and economists on the board of the organization he has throwing the event – more than two-thirds of the overall total have ties to Soros. To underscore their connection to history, INET is hosting the conference at the Mount Washington Resort, the very same hotel that held the first gathering.
INET Executive Robert Johnson defended his event in a March 31 interview with Lou Dobbs. Johnson, a former managing director at Soros Fund Management, who is on the Board of Directors for the Soros-funded Economic Policy Institute, avoided saying “Soros” despite Dobbs mentioning Johnson’s boss several times. In his last response, he tried to rationalize the Soros connection, by saying “I have a group of funders including George Soros.” With $50 million, Soros alone makes a pretty big group. Of course, Soros will also be speaking in Bretton Woods about “The Emerging Economic and Political Order.” source – Fox News
TY Mary Jane Moore-Wright
The first gathering in Bretton Woods, N.H., is an economic conference Soros once described as “a grand bargain that rearranges the entire financial order.” In October 2009, Soros committed $50 million to the Institute for New Economic Thinking (INET). A week later, the glib lefty investor wrote a column calling for a new Bretton Woods event, to recreate the one that helped design the post-WWII economy. Only he wants this one to knock America down a peg or three.
The announced speakers include a lot of prominent lefties, globalists and economists on the board of the organization he has throwing the event – more than two-thirds of the overall total have ties to Soros. To underscore their connection to history, INET is hosting the conference at the Mount Washington Resort, the very same hotel that held the first gathering.
INET Executive Robert Johnson defended his event in a March 31 interview with Lou Dobbs. Johnson, a former managing director at Soros Fund Management, who is on the Board of Directors for the Soros-funded Economic Policy Institute, avoided saying “Soros” despite Dobbs mentioning Johnson’s boss several times. In his last response, he tried to rationalize the Soros connection, by saying “I have a group of funders including George Soros.” With $50 million, Soros alone makes a pretty big group. Of course, Soros will also be speaking in Bretton Woods about “The Emerging Economic and Political Order.” source – Fox News
TY Mary Jane Moore-Wright
Frontrunning: April 11
Frontrunning: April 11
Submitted by Tyler Durden on 04/11/2011 07:51 -0400
•Obama Push to Seize Budget Initiative (FT)
•China gives all clear on bond issuance bubble: Government Boosts the Bond Markets (China Daily)
•You mean they can't use 200% debt financing? Nasdaq OMX Needs Shareholders to Embrace Rejected Bid (Bloomberg)
•Complacent Europe Must Realise Spain Will be Next (FT)
•Japan's seismic nerve center (Japan Times)
•Kan’s DPJ Suffers Election Setback One Month After Japan Quake (Bloomberg)
•Edano Says Japan Doesn't Need BOJ to Help Fund Post-Quake Disaster Relief (Bloomberg)
•State Prosecutor Summons Mubarak (FT)
•US Doubts Air Power Can Turn Libyan Tide (FT)
Submitted by Tyler Durden on 04/11/2011 07:51 -0400
•Obama Push to Seize Budget Initiative (FT)
•China gives all clear on bond issuance bubble: Government Boosts the Bond Markets (China Daily)
•You mean they can't use 200% debt financing? Nasdaq OMX Needs Shareholders to Embrace Rejected Bid (Bloomberg)
•Complacent Europe Must Realise Spain Will be Next (FT)
•Japan's seismic nerve center (Japan Times)
•Kan’s DPJ Suffers Election Setback One Month After Japan Quake (Bloomberg)
•Edano Says Japan Doesn't Need BOJ to Help Fund Post-Quake Disaster Relief (Bloomberg)
•State Prosecutor Summons Mubarak (FT)
•US Doubts Air Power Can Turn Libyan Tide (FT)
China Lashes Out At US "Hypocrisy", Blasts US Human Rights "Double Standard" In Pursuing "World Hegemony"
In what can only be described as a stunning deterioration in foreign relations between the world's two superpowers, following Friday's release by the US State Department of the annual report on human rights, which expressed sharp criticism of the human rights records of China, North Korea, Cuba and Belarus, among others, China decided it has had enough. Less than 48 hours later, it has lashed back at the US with a report that is making headlines at every government controlled, and otherwise, media in mainland China, which makes a mockery of the US double standard when it comes to human rights, and exposes US "hypocrisy" which China (rightly many would claim) asserts is merely a pretext for continued US attempts at world "hegemony". As Xinhua reports on its front page, "The Human Rights Record of the United States in 2010 was released by the Information Office of China's State Council, or cabinet, in response to the Country Reports on Human Rights Practices for 2010 issued by the U.S. Department of State on April. The U.S. reports are "full of distortions and accusations of the human rights situation in more than 190 countries and regions including China. However, the United States turned a blind eye to its own terrible human rights situation and seldom mentioned it," China's report said." The war of words hits a new all time record: "The United States has taken human rights as "a political instrument to defame other nations' image and seek its own strategic interests," the report said. While illustrating a dismal record of the United States on its own human rights, China's report said the United States could not be justified to pose as the world's "human rights justice." "However, it released the Country Reports on Human Rights Practices year after year to accuse and blame other countries for their human rights practices," the report said. These moves fully expose the United States' hypocrisy by exercising double standards on human rights and its malicious design to pursue hegemony under the pretext of human rights, it said. The report advised the U.S. government to "take concrete actions to improve its own human rights conditions, check and rectify its acts in the human rights field, and stop the hegemonistic deeds of using human rights issues to interfere in other countries' internal affairs." While that last sentence may not be an explicit warning for the US to shut the hell up and focus on its own dirty laundry, or else, it sure does sound like one.
VIOLATION OF CITIZENS' RIGHTS
In the United States, the violation of citizens' civil and political rights by the government is severe, said the report.
Citizen's privacy has been undermined. More than 6,600 travelers had been subject to electronic device searches between October 1, 2008 and June 2, 2010, nearly half of them American citizens, said the report, citing figures released by the American Civil Liberties Union (ACLU) in September 2010.
The report said abuse of violence and torturing suspects to get confession is serious in the U.S. law enforcement, and "wrongful conviction occurred quite often."
While advocating Internet freedom, the U.S. in fact imposes fairly strict restriction on cyberspace, said the report.
The United States applies double standards on Internet freedom by requesting unrestricted "Internet freedom" in other countries, which becomes an important diplomatic tool for the U.S. to impose pressure and seek hegemony, and imposing strict restriction within its own territory, the report said.
The U.S. regards itself as "the beacon of democracy." However, its democracy is largely based on money, the report said.
According to media report in 2010, U.S. House and Senate candidates shattered fundraising records for a midterm election, taking in more than 1.5 billion U.S. dollars as of October 24. The midterm election, held in November 2010, finally cost 3.98 billion U.S. dollars, the most expensive in the U.S. history.
HIGHEST INCIDENCE OF VIOLENT CRIMES
One out of every five people is a victim of a crime in the United States every year, said the report.
The United States reports the world' s highest incidence of violent crimes, and its people's lives, properties and personal security are not duly protected, the report said.
In 2009, an estimated 4.3 million violent crimes, 15.6 million property crimes and 133,000 personal thefts were committed against U.S. residents aged 12 or older, and the violent crime rate was 17.1 victimizations per 1,000 persons, said the report, quoting figures from the U.S. Department of Justice.
The United States also ranks first in the world in terms of the number of privately-owned guns and had high incidence of gun-related crimes, said the report, noting that the United States exercised lax control on the already rampant gun ownership.
Some 90 million people own an estimated 200 million guns in the United States, which has a population of about 300 million, the report said citing figures from the public media.
Statistics showed there were 12,000 gun murders a year in the United States, the report said.
The report also said that the frequent campus shootings in colleges in the United States came to the spotlight in recent years.
RACIAL DISCRIMINATION DEEP-SEATED
"Racial discrimination, deep-seated in the United States, has permeated every aspect of social life," said the report.
Minority groups confront discrimination in their employment and occupation. The black people are treated unfairly or excluded in promotion, welfare and employment, the report quoted U.S media reports as saying.
It is reported that one-third of black people confronted discrimination at work, against which only one-sixteenth of the black people would lodge a complaint.
The New York Times reported on September 23, 2010 that by the end of September 30, 2009, Muslim workers had filed a record 803 claims of complaints over employment discrimination, up 20 percent from the previous year.
The report said U.S. minority groups have high unemployment rate, and do not enjoy the same political status as white people.
Poverty proportion for U.S. minorities is high in the United States. The poverty proportion of the black was 25.8 percent in 2009, and those of Hispanic origin and Asian were 25.3 percent and 12.5 percent respectively, much higher than that of the non-Hispanic white at 9.4 percent, said the report, citing U.S. media figures.
The report also said that U.S. minority groups face obvious inequality in education, and the health care for African-American people is worrisome.
Racial discrimination is evident in the law enforcement and judicial systems, racial hate crimes are frequent, and immigrants' rights and interests are not guaranteed, said the report.
RIGHTS OF WOMEN, CHILDREN IS BOTHERING
Gender discrimination against women widely exists in the United States, and women in the country often experience sexual assault and violence.
Statistics showed that some 20 million women are rape victims in the country, some one fifth female students on campus are victims of sexual assault, and nearly 3,000 female soldiers were sexually assaulted in fiscal year 2008, up nine percent from the year before.
Women are also victims of domestic violence in the United States, said the report, as some 1.3 million people fall victim to domestic violence every year, with women accounting for 92 percent.
Many children in the U.S. live in poverty and their physical and mental health is not ensured as nearly one in four children struggles with hunger, according to the report.
The report also pointed out that violence against children is very severe in the country, citing figures from the official website of Love Our Children USA that every year, over three million children are victims of violence reportedly and the actual number is three times greater.
More than 93,000 children are currently incarcerated in the United States, and between 75 and 93 percent of children have experienced at least one traumatic experience, including sexual abuse and neglect, the report said.
According to the report, pornographic content is rampant on the Internet and severely harms American children as seven in 10 children have accidentally accessed pornography on the Internet and one in three has done so intentionally.
INTERNATIONAL HUMAN RIGHTS VIOLATIONS
The United States has a notorious record of international human rights violations, said the report.
The U.S.-led wars in Iraq and Afghanistan have caused huge civilian casualties.
Figures from the WikiLeaks website revealed up to 285,000 war casualties in Iraq from March 2003 through the end of 2009, with 63 percent of the 109,000 people killed in the Iraq war being civilians.
"The U.S. military actions in Afghanistan and other regions have also brought tremendous casualties to local people," said the report.
The report cited the notorious case on a "kill team" formed by five soldiers from the 5th Stryker Combat Brigade, 2nd Infantry Division of the U.S. forces in Afghanistan. The team had committed at least three murders, where they randomly targeted and killed Afghan civilians, and dismembered the corpses and hoarded the human bones.
In addition, the U.S.-led North Atlantic Treaty Organization troops had caused 535 Afghan civilian deaths and injuries in 2009. Among them 113 civilians were shot and killed, an increase of 43 percent over 2008, the report quoted McClatchy Newspapers as saying.
PRISONER ABUSE SCANDALS
The United States have been holding individuals captured under the pretext of the "war on terror" and abusing detainees with various methods, according to the report.
The U.S. Central Intelligence Agency (CIA) established secret detention facilities to interrogate so-called "high-value detainees," said the report, citing a document submitted to the United Nations Human Rights Council in May 2010.
According to the document, the CIA had taken custody of 94 detainees, and had employed "enhanced techniques" to varying degrees, including stress positions, extreme temperature changes, sleep deprivation and "waterboarding" in the interrogation of 28 of those detainees.
VIOLATION OF CITIZENS' RIGHTS
In the United States, the violation of citizens' civil and political rights by the government is severe, said the report.
Citizen's privacy has been undermined. More than 6,600 travelers had been subject to electronic device searches between October 1, 2008 and June 2, 2010, nearly half of them American citizens, said the report, citing figures released by the American Civil Liberties Union (ACLU) in September 2010.
The report said abuse of violence and torturing suspects to get confession is serious in the U.S. law enforcement, and "wrongful conviction occurred quite often."
While advocating Internet freedom, the U.S. in fact imposes fairly strict restriction on cyberspace, said the report.
The United States applies double standards on Internet freedom by requesting unrestricted "Internet freedom" in other countries, which becomes an important diplomatic tool for the U.S. to impose pressure and seek hegemony, and imposing strict restriction within its own territory, the report said.
The U.S. regards itself as "the beacon of democracy." However, its democracy is largely based on money, the report said.
According to media report in 2010, U.S. House and Senate candidates shattered fundraising records for a midterm election, taking in more than 1.5 billion U.S. dollars as of October 24. The midterm election, held in November 2010, finally cost 3.98 billion U.S. dollars, the most expensive in the U.S. history.
HIGHEST INCIDENCE OF VIOLENT CRIMES
One out of every five people is a victim of a crime in the United States every year, said the report.
The United States reports the world' s highest incidence of violent crimes, and its people's lives, properties and personal security are not duly protected, the report said.
In 2009, an estimated 4.3 million violent crimes, 15.6 million property crimes and 133,000 personal thefts were committed against U.S. residents aged 12 or older, and the violent crime rate was 17.1 victimizations per 1,000 persons, said the report, quoting figures from the U.S. Department of Justice.
The United States also ranks first in the world in terms of the number of privately-owned guns and had high incidence of gun-related crimes, said the report, noting that the United States exercised lax control on the already rampant gun ownership.
Some 90 million people own an estimated 200 million guns in the United States, which has a population of about 300 million, the report said citing figures from the public media.
Statistics showed there were 12,000 gun murders a year in the United States, the report said.
The report also said that the frequent campus shootings in colleges in the United States came to the spotlight in recent years.
RACIAL DISCRIMINATION DEEP-SEATED
"Racial discrimination, deep-seated in the United States, has permeated every aspect of social life," said the report.
Minority groups confront discrimination in their employment and occupation. The black people are treated unfairly or excluded in promotion, welfare and employment, the report quoted U.S media reports as saying.
It is reported that one-third of black people confronted discrimination at work, against which only one-sixteenth of the black people would lodge a complaint.
The New York Times reported on September 23, 2010 that by the end of September 30, 2009, Muslim workers had filed a record 803 claims of complaints over employment discrimination, up 20 percent from the previous year.
The report said U.S. minority groups have high unemployment rate, and do not enjoy the same political status as white people.
Poverty proportion for U.S. minorities is high in the United States. The poverty proportion of the black was 25.8 percent in 2009, and those of Hispanic origin and Asian were 25.3 percent and 12.5 percent respectively, much higher than that of the non-Hispanic white at 9.4 percent, said the report, citing U.S. media figures.
The report also said that U.S. minority groups face obvious inequality in education, and the health care for African-American people is worrisome.
Racial discrimination is evident in the law enforcement and judicial systems, racial hate crimes are frequent, and immigrants' rights and interests are not guaranteed, said the report.
RIGHTS OF WOMEN, CHILDREN IS BOTHERING
Gender discrimination against women widely exists in the United States, and women in the country often experience sexual assault and violence.
Statistics showed that some 20 million women are rape victims in the country, some one fifth female students on campus are victims of sexual assault, and nearly 3,000 female soldiers were sexually assaulted in fiscal year 2008, up nine percent from the year before.
Women are also victims of domestic violence in the United States, said the report, as some 1.3 million people fall victim to domestic violence every year, with women accounting for 92 percent.
Many children in the U.S. live in poverty and their physical and mental health is not ensured as nearly one in four children struggles with hunger, according to the report.
The report also pointed out that violence against children is very severe in the country, citing figures from the official website of Love Our Children USA that every year, over three million children are victims of violence reportedly and the actual number is three times greater.
More than 93,000 children are currently incarcerated in the United States, and between 75 and 93 percent of children have experienced at least one traumatic experience, including sexual abuse and neglect, the report said.
According to the report, pornographic content is rampant on the Internet and severely harms American children as seven in 10 children have accidentally accessed pornography on the Internet and one in three has done so intentionally.
INTERNATIONAL HUMAN RIGHTS VIOLATIONS
The United States has a notorious record of international human rights violations, said the report.
The U.S.-led wars in Iraq and Afghanistan have caused huge civilian casualties.
Figures from the WikiLeaks website revealed up to 285,000 war casualties in Iraq from March 2003 through the end of 2009, with 63 percent of the 109,000 people killed in the Iraq war being civilians.
"The U.S. military actions in Afghanistan and other regions have also brought tremendous casualties to local people," said the report.
The report cited the notorious case on a "kill team" formed by five soldiers from the 5th Stryker Combat Brigade, 2nd Infantry Division of the U.S. forces in Afghanistan. The team had committed at least three murders, where they randomly targeted and killed Afghan civilians, and dismembered the corpses and hoarded the human bones.
In addition, the U.S.-led North Atlantic Treaty Organization troops had caused 535 Afghan civilian deaths and injuries in 2009. Among them 113 civilians were shot and killed, an increase of 43 percent over 2008, the report quoted McClatchy Newspapers as saying.
PRISONER ABUSE SCANDALS
The United States have been holding individuals captured under the pretext of the "war on terror" and abusing detainees with various methods, according to the report.
The U.S. Central Intelligence Agency (CIA) established secret detention facilities to interrogate so-called "high-value detainees," said the report, citing a document submitted to the United Nations Human Rights Council in May 2010.
According to the document, the CIA had taken custody of 94 detainees, and had employed "enhanced techniques" to varying degrees, including stress positions, extreme temperature changes, sleep deprivation and "waterboarding" in the interrogation of 28 of those detainees.
Friday, April 8, 2011
Highest and Lowest Unemployment Rates
Comment: Francis Soyer
Take a look at these "reported" rates coming from (AP). To get the real number multiply these numbers below by 2.
(AP) -- Unemployment rates fell in more than three-quarters of the nation's 372 largest metro areas in February, a sign that recent hiring gains have been widespread and not limited to a few healthy regions.
Below are the cities with the highest and lowest unemployment rates. Figures are in percentages.
Best and Worst Metro areas
Highest unemployment rates Feb. 2011
1.El Centro, Calif. 26.9
2.Yuma, Ariz. 21.5
3.Merced, Calif. 21.3
4.Yuba City, Calif. 21.3
5.Fresno, Calif. 18.2
6.Modesto, Calif. 18.1
7.Visalia-Porterville, Calif. 18.1
8.Hanford-Corcoran, Calif. 18.0
9.Stockton, Calif. 17.6
10.Ocean City, N.J. 17.0
Lowest unemployment rates Feb. 2011
1.Lincoln, Neb. 4.2
2.Bismarck, N.D. 4.6
3.Ames, Iowa 4.7
4.Iowa City, Iowa 4.7
5.Fargo, N.D. 4.7
6.Burlington, Vt. 4.8
7.Midland, Texas 4.8
8.Honolulu, Hawaii 5.2
9.Portsmouth, N.H. 5.2
10.Charlottesville, Va. 5.3
Take a look at these "reported" rates coming from (AP). To get the real number multiply these numbers below by 2.
(AP) -- Unemployment rates fell in more than three-quarters of the nation's 372 largest metro areas in February, a sign that recent hiring gains have been widespread and not limited to a few healthy regions.
Below are the cities with the highest and lowest unemployment rates. Figures are in percentages.
Best and Worst Metro areas
Highest unemployment rates Feb. 2011
1.El Centro, Calif. 26.9
2.Yuma, Ariz. 21.5
3.Merced, Calif. 21.3
4.Yuba City, Calif. 21.3
5.Fresno, Calif. 18.2
6.Modesto, Calif. 18.1
7.Visalia-Porterville, Calif. 18.1
8.Hanford-Corcoran, Calif. 18.0
9.Stockton, Calif. 17.6
10.Ocean City, N.J. 17.0
Lowest unemployment rates Feb. 2011
1.Lincoln, Neb. 4.2
2.Bismarck, N.D. 4.6
3.Ames, Iowa 4.7
4.Iowa City, Iowa 4.7
5.Fargo, N.D. 4.7
6.Burlington, Vt. 4.8
7.Midland, Texas 4.8
8.Honolulu, Hawaii 5.2
9.Portsmouth, N.H. 5.2
10.Charlottesville, Va. 5.3
Financial_System_Designed_To_Self_Destruct
As each day passes the US dollar loses prestige and its status as a world reserve currency. Washington and Wall Street pay little attention to its slide and the changes a lower dollar and loss of reserve status will bring. Once the dollar is dethroned Americans will have to learn to live on the edges of the economic and financial world. Those of you who have not read G. Edward Griffins’ “Creature from Jekyll Island” should. It tells you why the Federal Reserve was created and why the Federal Reserve was created and what its function is. It also shows you why except for Wall Street, banking and selected elitist corporations why the system was designed to self-destruct. If you read economic and financial history you will discover why such economic and financial destruction takes place repeatedly and that more often than not does not happen due to incompetence, war or error, but it is planned that way. What has happened to the dollar since Bretton Woods and the planned removal of gold backing from the dollar is an example of deliberate destruction and in that process the destruction of the greatest nation in history. In that process of 97 years the wealthy and connected have become wealthier and powerful and have become even more so. They truly expect to exit this maelstrom and war as the leaders of the future. We have news for them. The power of talk radio and the Internet stretches worldwide and the world now understands what they are up too, and they are not going to be successful in their efforts to bring about world government. The collapse of the dollar is but one aspect in the change planned in the shift in world power.
Silver Shorts Getting Slapped Around...
Submitted by: Francis Soyer 4/8/11 06:55
As the government shutdown approaches notice what happens with precious metals and the dollar. As one economist put it, (Martin Armstrong) is an issue of the ECM (Economic Confidence Model). Not to be confused with consumer confidence or investor confidence which are two completely seperate issues. The ECM model is directly related to confidence in governmental systems. This is why precious metals will continue to rise and rise sharply over the next 18 months with little or no pullbacks of any consequence. By my own work it is not unreasonable to expect Silver at $300 and Gold at $3,000 to $5,000 3 being the low end and 5 upper.
The key issue being that world governments and their stability are directly linked to world central banking. World central banking and their continued monetary value dilution do nothing but erode the ECM model. It erodes that model in that the stimulus intended to spark growth simply gets absorbed into the banking system however never reaches the general economy in the form of loans to spark economic growth. I think very few economists of any salt would disagree that the system is broken and badly so.
Hence why precious metals and also commodities in general will continue to rise in dollar / eur / Yen etc. in that it takes more of them to have the same purchasing power as in the past because their value continues to fall as central banking prints more of them out of thin air. For more on this concept please visit Armstrong Economics at http://armstrongeconomics.com/
He just got out of prison so no posts as of recently but he did some brilliant work while serving time. :)
Thursday, April 7, 2011
Forget The Budget, The Real Nightmare Begins Next Month And The Sakes Are 100x as High
A point that needs to be made: This fight over whether to shut down the government for a few days is chicken-scratch.
It's low-stakes poker compared to the fight over the debt ceiling, which must be resolved by May 8, in just over a month.
Several GOPers have already said they won't raise it without some "significant" concessions from The White House on the future of spending, and whatever good will John Boehner has to burn up in getting a budget passed will be taken directly from the appetite the GOP had in raising the debt ceiling.
The consequences are way more severe, potentially, than the shutdown of government. At the most extreme, it could lead to default. And if you figure that the market goes into a tizzy at the suggestion of, say, Greece defaulting, then the impact of the US should be easy to comprehend.
There's no doubt that Boehner doesn't want a disastrous outcome, but his challenge is in getting his more radical compatriots to come along with him.
So enjoy the theater of what we're seeing now. It's just the opening band.
Read more: http://www.businessinsider.com/the-debt-ceiling-debate-2011-4#ixzz1IsAxIIQP
It's low-stakes poker compared to the fight over the debt ceiling, which must be resolved by May 8, in just over a month.
Several GOPers have already said they won't raise it without some "significant" concessions from The White House on the future of spending, and whatever good will John Boehner has to burn up in getting a budget passed will be taken directly from the appetite the GOP had in raising the debt ceiling.
The consequences are way more severe, potentially, than the shutdown of government. At the most extreme, it could lead to default. And if you figure that the market goes into a tizzy at the suggestion of, say, Greece defaulting, then the impact of the US should be easy to comprehend.
There's no doubt that Boehner doesn't want a disastrous outcome, but his challenge is in getting his more radical compatriots to come along with him.
So enjoy the theater of what we're seeing now. It's just the opening band.
Read more: http://www.businessinsider.com/the-debt-ceiling-debate-2011-4#ixzz1IsAxIIQP
Confirmation on Israel War Threat
Submitted by: Francis Soyer
4/7/11
In response the the headline just posted on Zero Hedge that a Netanyahu Spokesman made an announcement that all out war could begin as early as tonight within Gaza I have gotten confirmation from Al Jazeera that "Violence erupts across Gaza Border"
http://english.aljazeera.net/news/middleeast/2011/04/20114713475225620.html
This is a very serious development and has the potentional if this does in fact occur to crush equity indices. Hence defensive trading advised.
Netanyahu Spokesman Says War May Break Out Between Israel And Gaza As Early As Tonight
Just to make the clusterflock complete the following news from BBC Newsfile crosses the tape: "The Ma'an News Agency website in Arabic at 1631 gmt on 7 April posts the following "urgent" caption: "[Ofir] Gendelman [spokesman for the office of Israeli Prime Minister Binyamin Netanyahu] Tells Ma'an: I do not rule out the possibility that Israel will wage war on Gaza tonight." Or, more metaphorically, the proverbial flame in a fireworks store. Surely this last straw will send the S&P limit [up
down] until someone has the brilliant idea that Bernanke can print his way out of that one as well.
More as we see it.
down] until someone has the brilliant idea that Bernanke can print his way out of that one as well.
More as we see it.
Tuesday, April 5, 2011
Geithner warns U.S. to hit debt ceiling by May 16
(Reuters) - The United States will hit the legal limit on its ability to borrow no later than May 16, Treasury Secretary Timothy Geithner said on Monday, ramping up pressure on Congress to act to avoid a debt default.
"The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations," Geithner said in a letter to congressional leaders.
"Default by the United States is unthinkable."
Previously, the Treasury had forecast that the $14.3 trillion statutory debt limit would be reached between April 15 and May 31. As of Friday, Treasury borrowing stood just $95 billion from the ceiling.
Some Republican lawmakers have sought to use the need to raise the debt limit as a lever to pressure the Obama administration into agreeing on large-scale budget cuts.
The debt-limit showdown comes as Congress struggles to complete a spending package that would keep the government operating beyond Friday.
Republicans are seeking to use that bill to enact deep spending cuts and lawmakers are focusing on a proposal to trim this year's budget by $33 billion, a relatively small amount compared with a projected $1.4 trillion deficit.
Geithner said a failure to raise the debt ceiling in a timely way would push interest rates higher and spark "a financial crisis potentially more severe than the crisis from which we are only starting to recover."
Both Geithner and Federal Reserve Chairman Ben Bernanke have said a failure to raise the ceiling could have "catastrophic consequences."
BUYING TIME
As the government nears the debt ceiling, the Treasury has authority to take certain extraordinary measures to postpone the date the United States would default on its obligations.
However, those actions would be exhausted after about eight weeks and there would be "no headroom" to borrow after July 8, Geithner said.
Some lawmakers have called for legislation to force the Treasury to first pay interest on U.S. bonds before other obligations, such as unemployment benefits and Social Security and Medicare payments, as a way to stave off a debt default.
They have also asked Treasury whether financial assets such as the country's gold reserves or the government's portfolio of student loans could be sold to avoid raising the debt ceiling.
Treasury has rejected the proposals as unworkable.
"The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations," Geithner said in a letter to congressional leaders.
"Default by the United States is unthinkable."
Previously, the Treasury had forecast that the $14.3 trillion statutory debt limit would be reached between April 15 and May 31. As of Friday, Treasury borrowing stood just $95 billion from the ceiling.
Some Republican lawmakers have sought to use the need to raise the debt limit as a lever to pressure the Obama administration into agreeing on large-scale budget cuts.
The debt-limit showdown comes as Congress struggles to complete a spending package that would keep the government operating beyond Friday.
Republicans are seeking to use that bill to enact deep spending cuts and lawmakers are focusing on a proposal to trim this year's budget by $33 billion, a relatively small amount compared with a projected $1.4 trillion deficit.
Geithner said a failure to raise the debt ceiling in a timely way would push interest rates higher and spark "a financial crisis potentially more severe than the crisis from which we are only starting to recover."
Both Geithner and Federal Reserve Chairman Ben Bernanke have said a failure to raise the ceiling could have "catastrophic consequences."
BUYING TIME
As the government nears the debt ceiling, the Treasury has authority to take certain extraordinary measures to postpone the date the United States would default on its obligations.
However, those actions would be exhausted after about eight weeks and there would be "no headroom" to borrow after July 8, Geithner said.
Some lawmakers have called for legislation to force the Treasury to first pay interest on U.S. bonds before other obligations, such as unemployment benefits and Social Security and Medicare payments, as a way to stave off a debt default.
They have also asked Treasury whether financial assets such as the country's gold reserves or the government's portfolio of student loans could be sold to avoid raising the debt ceiling.
Treasury has rejected the proposals as unworkable.
Soros advises Obama to use forceful measures to override the will of the people
By Ed Lasky for American Thinker
George Soros funds the Center for American Progress, which has been characterized as Barack Obama’s Ideas Factory. John Podesta, its head, led the transition team when Barack Obama became President. The Center has also become a hiring hall for the Obama team, filling its positions with former employees (among these was controversial Van Jones — who now is back at the Center).
Apparently, George Soros and his Center are upset that the American people placed a roadblock in their plans when we rose up and painted the nation red. The Center now is providing a blueprint of ways Barack Obama can do an end run around the people’s will by resorting to methods that will strike many of us as being improper-to say the least. Relying on executive orders, interpretation of regulations, rule -making and the like they are collectively a recipe for even more power being assumed by President Obama.
From Tuesday’s Politico Playbook:
[The] Center for American Progress today is releasing a report, “Power of the President,” proposing 30 executive actions the president can take to advance progressive change in the areas of energy, the economy, health care, education, foreign policy, and national security. “The following authorities can be used to ensure progress on key issues facing the country today: Executive orders, Rulemaking, Agency management, Convening and creating public-private partnerships , Commanding the armed forces, Diplomacy.
The New York Times fleshes out these proposals with some suggestions about policy changes across the board. The ideology of George Soros shines through the Center’s report as it justifies this forceful approach to circumvent Congress when it states that:
[The] legislative battles that Mr. Obama waged during his first two years – notably on health care and financial regulatory reform – have created a weariness among the general public with the process of making laws. And it hints it has not helped Mr. Obama politically in the process.
In other words, when Congress passed a variety of laws Americans became dismayed by the horse-trading and bribes that were resorted to by Democrats to impose these policies on us. Instead of compromise and listening to the American people, Soros counsels that more forceful measures should be used to override the will of the American people.
And this is the man the Democratic Party has as their sugar daddy and who various Democratic leaders over the years have defended and praised (for example, as shown by this letter from 11 Democratic lawmakers).
He is certainly a dictatorial daddy.
George Soros funds the Center for American Progress, which has been characterized as Barack Obama’s Ideas Factory. John Podesta, its head, led the transition team when Barack Obama became President. The Center has also become a hiring hall for the Obama team, filling its positions with former employees (among these was controversial Van Jones — who now is back at the Center).
Apparently, George Soros and his Center are upset that the American people placed a roadblock in their plans when we rose up and painted the nation red. The Center now is providing a blueprint of ways Barack Obama can do an end run around the people’s will by resorting to methods that will strike many of us as being improper-to say the least. Relying on executive orders, interpretation of regulations, rule -making and the like they are collectively a recipe for even more power being assumed by President Obama.
From Tuesday’s Politico Playbook:
[The] Center for American Progress today is releasing a report, “Power of the President,” proposing 30 executive actions the president can take to advance progressive change in the areas of energy, the economy, health care, education, foreign policy, and national security. “The following authorities can be used to ensure progress on key issues facing the country today: Executive orders, Rulemaking, Agency management, Convening and creating public-private partnerships , Commanding the armed forces, Diplomacy.
The New York Times fleshes out these proposals with some suggestions about policy changes across the board. The ideology of George Soros shines through the Center’s report as it justifies this forceful approach to circumvent Congress when it states that:
[The] legislative battles that Mr. Obama waged during his first two years – notably on health care and financial regulatory reform – have created a weariness among the general public with the process of making laws. And it hints it has not helped Mr. Obama politically in the process.
In other words, when Congress passed a variety of laws Americans became dismayed by the horse-trading and bribes that were resorted to by Democrats to impose these policies on us. Instead of compromise and listening to the American people, Soros counsels that more forceful measures should be used to override the will of the American people.
And this is the man the Democratic Party has as their sugar daddy and who various Democratic leaders over the years have defended and praised (for example, as shown by this letter from 11 Democratic lawmakers).
He is certainly a dictatorial daddy.
Sprott Physical Gold Trust Announces Follow On, Will Sequester Another $300 Million In Physical; PSLV Next?
It's a good thing that unlike the silver market, which continues to be in backwardation (see chart), the gold market is fully supplied. Otherwise the just released news from Sprott Asset Management that his Physical Gold Trust (PHYS) is pursuing a $300 million follow on would finally send gold breaking out to $2,000, where it will be sooner or later anyway. Amusingly, contrary to various other blogs' expectations that Sprott is top ticking the market with selling shareholder shelf statements, Sprott is doing just the opposite: "certain funds managed by Sprott Asset Management LP, have agreed to purchase no less than $115 million of Units in this Offering." So yeah, no top tick here. Still, the news that Sprott is about to mop up another $300 million in physical gold from the market will likely send gold quite higher. It appears to have already had an impact on silver, which jumped by $20 cents to another 31 year high on the news, as the market now likely expects a follow on offering in PSLV as well imminently.
TORONTO, ONTARIO--(Marketwire - 04/04/11) - Sprott Physical Gold Trust (the "Trust") (TSX:PHY.U - News)(NYSE:PHYS - News), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, announced today that it has launched a follow-on offering of transferable, redeemable units of the Trust ("Units") in an aggregate amount of up to $340 million at a price of $12.54 per unit (the "Offering"). Certain lead investors, including certain funds managed by Sprott Asset Management LP, have agreed to purchase no less than $115 million of Units in this Offering.
The Trust will use the net proceeds of this Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to this Offering. Under the trust agreement governing the Trust, the net proceeds of the Offering per unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the offering.
The Units are listed on the NYSE Arca and the Toronto Stock Exchange under the symbols "PHYS" and "PHY.U", respectively. The Offering will be made simultaneously in the United States and Canada by Morgan Stanley and RBC Capital Markets.
The press releaseTORONTO, ONTARIO--(Marketwire - 04/04/11) - Sprott Physical Gold Trust (the "Trust") (TSX:PHY.U - News)(NYSE:PHYS - News), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, announced today that it has launched a follow-on offering of transferable, redeemable units of the Trust ("Units") in an aggregate amount of up to $340 million at a price of $12.54 per unit (the "Offering"). Certain lead investors, including certain funds managed by Sprott Asset Management LP, have agreed to purchase no less than $115 million of Units in this Offering.
The Trust will use the net proceeds of this Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to this Offering. Under the trust agreement governing the Trust, the net proceeds of the Offering per unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the offering.
The Units are listed on the NYSE Arca and the Toronto Stock Exchange under the symbols "PHYS" and "PHY.U", respectively. The Offering will be made simultaneously in the United States and Canada by Morgan Stanley and RBC Capital Markets.
Saudi Oil Minister Says Crude To Hit $300 If Turmoil Spreads To Saudi
Saudi Arabia Goes M.A.D.:
Saudi Oil Minister Says Crude To Hit $300 If Turmoil Spreads To Saudi
Submitted by Tyler Durden on 04/05/2011 08:45 -0400
The strategy of Mutual Assured Destruction has worked so well in the "developed" world (thank you Hank Paulson, Tim Jeethner, Clearinghouse Association et al), it is time to see it in application in the "developing." In an attempt to preempt US doubts about intervening (on the proper side) in the case of escalations in Saudi Arabia (and with the possibility of Yemen becoming a potential Al Qaeda hotbed rising by the hour, this is non-trivial) the former Saudi oil minister Sheikh Zaki Yamani told Reuters on Tuesday that "Oil prices could leap to $200 to $300 a barrel if Saudi Arabia is hit by serious political unrest." We are confident he was merely talking in a very, very hypothetical scenario. After all why scaremonger in a world in which everything is under control?
From Reuters:
"If something happens in Saudi Arabia it will go to $200 to $300," he said.
"I don't expect this for the time being, but who would have expected Tunisia?" he added.
Asked whether the United States was likely to succeed in cutting its dependence on Saudi oil, he said: "From the 1950s, American presidents have been saying this."
U.S. President Barack Obama last week proposed to cut oil imports by a third over 10 years.
Than again with math Ph.D.'s continuing to (front) run US stock markets, and unable to make the mathematical leap between $108 oil and a 4% full year GDP forecast by Goldman (soon to be cut to 1.5%), we are confident $300 oil will have no material impact on stocks, until such time as the Globex hikes margin requirements on the ES which will be the catalyst for the next market crash.
Saudi Oil Minister Says Crude To Hit $300 If Turmoil Spreads To Saudi
Submitted by Tyler Durden on 04/05/2011 08:45 -0400
The strategy of Mutual Assured Destruction has worked so well in the "developed" world (thank you Hank Paulson, Tim Jeethner, Clearinghouse Association et al), it is time to see it in application in the "developing." In an attempt to preempt US doubts about intervening (on the proper side) in the case of escalations in Saudi Arabia (and with the possibility of Yemen becoming a potential Al Qaeda hotbed rising by the hour, this is non-trivial) the former Saudi oil minister Sheikh Zaki Yamani told Reuters on Tuesday that "Oil prices could leap to $200 to $300 a barrel if Saudi Arabia is hit by serious political unrest." We are confident he was merely talking in a very, very hypothetical scenario. After all why scaremonger in a world in which everything is under control?
From Reuters:
"If something happens in Saudi Arabia it will go to $200 to $300," he said.
"I don't expect this for the time being, but who would have expected Tunisia?" he added.
Asked whether the United States was likely to succeed in cutting its dependence on Saudi oil, he said: "From the 1950s, American presidents have been saying this."
U.S. President Barack Obama last week proposed to cut oil imports by a third over 10 years.
Than again with math Ph.D.'s continuing to (front) run US stock markets, and unable to make the mathematical leap between $108 oil and a 4% full year GDP forecast by Goldman (soon to be cut to 1.5%), we are confident $300 oil will have no material impact on stocks, until such time as the Globex hikes margin requirements on the ES which will be the catalyst for the next market crash.
Monday, April 4, 2011
Frontrunning: April 4
Frontrunning: April 4
Submitted by Tyler Durden on 04/04/2011 07:51 -0400
•Goldman lowers Q1 GDP, sees rest of year outlook as "messy: (Zero Hedge)
•GOP Aim: Cut $4 Trillion (WSJ)
•Trichet Seen Burying Ailing Nations With Interest-Rate Rise (BusinessWeek)
•ECB criticised over expected rate rise (FT)
•Important for China arbs: BOC HK Cuts Yuan Deposit Interest Rate (Bloomberg)
•In Tripoli, Growing Murmurs Of Dissent (WSJ)
•Inflation Surge May Cause Hike in Won, Rates (Korea JoongAng)
•Us Foreign Policy "Shocker": U.S. Shifts to Seek Removal of Yemen’s Leader, an Ally (NYT)
•Next Problem for Oil: Nigerian Elections (WSJ)
•Geithner Says Strict Policy on Currency Hurts China (NYT)
•China closes half the nation's dairies (Telegraph)
•Ireland to Push for Better Bailout Terms (WSJ)
Submitted by Tyler Durden on 04/04/2011 07:51 -0400
•Goldman lowers Q1 GDP, sees rest of year outlook as "messy: (Zero Hedge)
•GOP Aim: Cut $4 Trillion (WSJ)
•Trichet Seen Burying Ailing Nations With Interest-Rate Rise (BusinessWeek)
•ECB criticised over expected rate rise (FT)
•Important for China arbs: BOC HK Cuts Yuan Deposit Interest Rate (Bloomberg)
•In Tripoli, Growing Murmurs Of Dissent (WSJ)
•Inflation Surge May Cause Hike in Won, Rates (Korea JoongAng)
•Us Foreign Policy "Shocker": U.S. Shifts to Seek Removal of Yemen’s Leader, an Ally (NYT)
•Next Problem for Oil: Nigerian Elections (WSJ)
•Geithner Says Strict Policy on Currency Hurts China (NYT)
•China closes half the nation's dairies (Telegraph)
•Ireland to Push for Better Bailout Terms (WSJ)
Ron Paul on Legal Tender Laws, Coin Shortages, Interest Rates, Municipal Bonds, the Gold Standard
Ron Paul on Legal Tender Laws, Coin Shortages, Interest Rates, Municipal Bonds, the Gold Standard
Commodity Online News has an interesting article regarding a new bill introduced by Ron Paul to repeal legal tender laws, an investigation of the coin shortage, and Paul's positions on interest rates and a return to the gold standard.
Ron Paul to probe US Mint Coin shortage
Rep. Ron Paul, R-Texas, has one question for the U.S. Mint: why is there a coin shortage? He is aiming to get to the bottom of this during a scheduled April 7 hearing of his U.S. House Subcommittee on Domestic Monetary Policy to examine the bullion programs at the U.S. Mint.
“We are going to try and find out what the Mint has done so they can give us a better answer as to why there is a shortage. Why can’t they keep the supply of coins up?” said the congressman in an exclusive interview with Kitco News.
Part of the problem lies in manufacturing the blanks, said Paul. The blank planchets are not made at the Mint, which hasn't had the production capacity for this stage of the minting process since the budget cuts of 1981.
“Looks like we don’t even get (all) blank coins made in the U.S. – there is a contract with a foreign company, which makes no sense at all,” said the congressman.
Free Competition in Currency Act of 2011
In March, Paul introduced H.R. 1098, the Free Competition in Currency Act of 2011, which would repeal legal tender laws in order to prohibit taxation on gold, silver, platinum, palladium and rhodium bullion. The bill has been referred to the House Committees on Financial Services, Ways and Means, and Judiciary.
A staunch critic of the Federal Reserve, Paul said that instead of arguing his case for the Fed to close down tomorrow, he’s arguing the fact it should not hold a monopoly. “They have a monopoly on a type of money that isn’t even constitutional,” he said.
“We would use no force, nobody has to use gold and silver coins,” said Paul. Rather, he said the Fed does use force. “They are a cartel and they make us use Federal Reserve notes,” he said.
Gold Standard
A common assumption is that Paul is calling for a return to a gold standard. He clarified, saying he is not so inflexible. “I wouldn’t be overly rigid and say, ‘you must have a gold standard, you must go back to what we had.’ Our gold standard was imperfect, even though it worked better than the paper standard,” he said.
Lawmakers in several states, including Tennessee, Virginia, New Hampshire and South Carolina, have introduced bills to look into minting their own currencies in the event of a complete breakdown of the U.S. Federal Reserve. In Georgia, a bill to make the state only use gold and silver is in committee.
Utah has received the most media attention on this subject as the House and Senate have passed HB317, which would recognize gold and silver coins as legal tender and exempt them from certain state tax liability.
“Governments over the many, many centuries have always demanded monopoly control over money. Even when gold and silver were principally used in the economies, they still wanted monopolies,” Paul said.
Hence, he is not confident that any Utah law would be allowed to stand. “Well, they are going to fight it tooth and nail. They are not going to go along with this even though we have the law and Constitution on our side and it should appeal to all Americans to have competition.”
Interest Rate Hikes and Municipal Bond Defaults
Regarding U.S. interest rate hikes, Paul said they are going to be gradual and steady but they are indeed coming. “The next big shoe to fall will be interest rates going up on municipal bonds -- that means a lot of these bonds will start defaulting,” he said.
There is more in the article including a discussion on another run for president. I hope he does run even though he has little chance of winning.
His issues are important ones and they merit adoption. The first step, however, is more awareness, and his running for president would do just that.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Commodity Online News has an interesting article regarding a new bill introduced by Ron Paul to repeal legal tender laws, an investigation of the coin shortage, and Paul's positions on interest rates and a return to the gold standard.
Ron Paul to probe US Mint Coin shortage
Rep. Ron Paul, R-Texas, has one question for the U.S. Mint: why is there a coin shortage? He is aiming to get to the bottom of this during a scheduled April 7 hearing of his U.S. House Subcommittee on Domestic Monetary Policy to examine the bullion programs at the U.S. Mint.
“We are going to try and find out what the Mint has done so they can give us a better answer as to why there is a shortage. Why can’t they keep the supply of coins up?” said the congressman in an exclusive interview with Kitco News.
Part of the problem lies in manufacturing the blanks, said Paul. The blank planchets are not made at the Mint, which hasn't had the production capacity for this stage of the minting process since the budget cuts of 1981.
“Looks like we don’t even get (all) blank coins made in the U.S. – there is a contract with a foreign company, which makes no sense at all,” said the congressman.
Free Competition in Currency Act of 2011
In March, Paul introduced H.R. 1098, the Free Competition in Currency Act of 2011, which would repeal legal tender laws in order to prohibit taxation on gold, silver, platinum, palladium and rhodium bullion. The bill has been referred to the House Committees on Financial Services, Ways and Means, and Judiciary.
A staunch critic of the Federal Reserve, Paul said that instead of arguing his case for the Fed to close down tomorrow, he’s arguing the fact it should not hold a monopoly. “They have a monopoly on a type of money that isn’t even constitutional,” he said.
“We would use no force, nobody has to use gold and silver coins,” said Paul. Rather, he said the Fed does use force. “They are a cartel and they make us use Federal Reserve notes,” he said.
Gold Standard
A common assumption is that Paul is calling for a return to a gold standard. He clarified, saying he is not so inflexible. “I wouldn’t be overly rigid and say, ‘you must have a gold standard, you must go back to what we had.’ Our gold standard was imperfect, even though it worked better than the paper standard,” he said.
Lawmakers in several states, including Tennessee, Virginia, New Hampshire and South Carolina, have introduced bills to look into minting their own currencies in the event of a complete breakdown of the U.S. Federal Reserve. In Georgia, a bill to make the state only use gold and silver is in committee.
Utah has received the most media attention on this subject as the House and Senate have passed HB317, which would recognize gold and silver coins as legal tender and exempt them from certain state tax liability.
“Governments over the many, many centuries have always demanded monopoly control over money. Even when gold and silver were principally used in the economies, they still wanted monopolies,” Paul said.
Hence, he is not confident that any Utah law would be allowed to stand. “Well, they are going to fight it tooth and nail. They are not going to go along with this even though we have the law and Constitution on our side and it should appeal to all Americans to have competition.”
Interest Rate Hikes and Municipal Bond Defaults
Regarding U.S. interest rate hikes, Paul said they are going to be gradual and steady but they are indeed coming. “The next big shoe to fall will be interest rates going up on municipal bonds -- that means a lot of these bonds will start defaulting,” he said.
There is more in the article including a discussion on another run for president. I hope he does run even though he has little chance of winning.
His issues are important ones and they merit adoption. The first step, however, is more awareness, and his running for president would do just that.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Friday, April 1, 2011
From Recession to Expansion: A Policymaker’s Perspective" - More Hawkishness From Philly Fed's Plosser
Comment: Francis Soyer 04/01/11
And this below is confirmation that the Folks at the Fed are Brain Dead. Just dont get it..... Wow
From Recession to Expansion: A Policymaker’s Perspective" - More Hawkishness From Philly Fed's Plosser
Submitted by Tyler Durden on 04/01/2011 08:16 -0400
Some highlights from the just released Philly Fed president's speech, bringing yet more hawkishness into the equation:
•Says stronger rebound in economy, inflation may require aggressive policy action
•Must not be too sanguine in believing time to tighten is long way off
•Recovery will continue at a moderate pace
•US economy growing 3.5% annually this year and next
•Prospects in labour markets have improved in recent months
•Expects inflation to be about 2% over the course of 2011... so not the 8.3% which is the accurate number? Odd.
And this below is confirmation that the Folks at the Fed are Brain Dead. Just dont get it..... Wow
From Recession to Expansion: A Policymaker’s Perspective" - More Hawkishness From Philly Fed's Plosser
Submitted by Tyler Durden on 04/01/2011 08:16 -0400
Some highlights from the just released Philly Fed president's speech, bringing yet more hawkishness into the equation:
•Says stronger rebound in economy, inflation may require aggressive policy action
•Must not be too sanguine in believing time to tighten is long way off
•Recovery will continue at a moderate pace
•US economy growing 3.5% annually this year and next
•Prospects in labour markets have improved in recent months
•Expects inflation to be about 2% over the course of 2011... so not the 8.3% which is the accurate number? Odd.
JPMorgan's Dimon Warns of Regulatory 'Nail' in Coffin
Submitted by: Francis Soyer
04/01/11
Francis is posting this one because the pattern with the banking system before the rabbit gets pulled out of the hat so to speak is usually telegraphed in advance. In this case Dimon is speaking not so much about the Frank Dodd regulations which may look good on paper but in real terms are toothless proposed regulations is talking more to the point on the implementation of BASEL III. BASEL III is the new banking reserve requirements as dictated by the BIS (Bank for International Settlements) the hub of central banking power. This testimony by Dimon is basically a telegraph so that when the global finanicial system collapse occurs and IT WILL over the next 20 months basically he gets his get out of jail free card for being able to say I told you so....
Published: Thursday, 31 Mar 2011
1:50 AM ET By: Tom Braithwaite, Financial Times
Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks.”
Regulators are negotiating international capital standards for the biggest banks but the chief executive of JP Morgan Chase [JPM 46.10 -0.35 (-0.75%) ] said setting the new requirements too high, or allowing overseas banks to calculate their asset base differently, could disadvantage US banks and was already stifling economic growth.
“If you want to set it so high that no big bank ever goes bankrupt... I think that would greatly diminish growth,” he told a US Chamber of Commerce conference.
Too large a disparity in capital requirements between Europe and the US would mean “you’re pretty much putting the nail in our coffin for big American banks,” he said.
Urging regulators to make a quick decision, he said the uncertainty meant banks were already restricting their lending, nervous of the “anger and the shrillness – and Switzerland says it’s got to be 19 percent and people in the UK say it’s got to be 15 percent.”
“If you think that’s helping growth, it’s not,” Mr. Dimon said, adding that a 7 percent capital ratio would be adequate.
Mr. Dimon’s comments come as Wall Street executives and Republican members of Congress are starting to attack regulation as anger at the financial industry subsides.
On Tuesday, Alan Greenspan, the former Federal Reserve chairman, wrote in the Financial Times that the Dodd-Frank financial reforms risked creating “the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971”.
Spencer Bachus, the Republican chairman of the House financial services committee, has said that regulators are there to “serve” the banks and warned the Treasury not to hurt Goldman Sachs’ [GS 158.60 -0.47 (-0.3%) ] shareholders when it writes new rules implementing Dodd-Frank. Restrictions on debit card fees charged to retailers are also coming under attack in Congress.
Thursday, March 31, 2011
Wal-Mart US CEO To America: "Prepare For Serious Inflation"
To those who think that buying food in the corner deli is becoming a luxury, we have five words: you ain't seen nuthin' yet. U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday talking to USA Today. And if Wal-Mart which is at the very bottom of commoditized consumer retail, and at the very peak of avoiding reexporting of US inflation by way of China is concerned, it may be time to panic, or at least cancel those plane tickets to Zimbabwe, which is soon coming to us.
Don’t Believe the Chart, the US Dollar is Dropping Like a Stone
I want to take a moment to address the US Dollar’s collapse.
The US Dollar which most investors follow is the US Dollar index. This represents the US Dollar’s value against a basket of major currencies: the Euro, Japanese Yen, etc.
Think about that for a moment: the way we measure the US Dollar’s value is against a collection of other un-backed paper currencies all issued by over-indebted, bankrupt nations.
In other words, its nonsense.
Case in point, the Euro comprises over 50% of the US Dollar index. What’s the Euro? A currency backed by a loose group of bankrupt nations with maybe two solvent members in the bunch. Greece has already asked for an extension on its bailout repayments (like they’re ever going to repay anything), Spain is bankrupt, ditto for Ireland, Italy, Portugal, and others.
As for the more solvent European members (Germany and maybe France) their political leaders are getting crushed in the elections because NOBODY who actually works for a living (or has a working brain) wants in on the Euro.
So in Europe we’ve got one perhaps two solvent countries that are supposed to bailout 5+ insolvent ones (like that’s even possible). And the solvent countries are comprised of people who want no part of the Euro.
Man, now that’s what I call a real currency.
In simple terms, to claim the Euro is a viable currency is pure insanity. And yet, this “currency” comprises 50% of the US Dollar index (not as though the Yen or US Dollar are worthwhile either).
My point in all of this is that measuring the greenback using the Euro is insane. 100% totally insane. Which is why claiming the US Dollar is not collapsing is BS. If you actually go outside the US (which 99% of commentators don’t) you’ll find that the US Dollar is worth much less than the Dollar index is telling you.
I was recently on a trip to South America looking at real estate. While there I was told repeatedly by developers that they didn’t want to sign a contract in US Dollars. Instead they wanted to do it in the local currency. This has NEVER happened before during my trips abroad (even as recently as 2009).
When I pushed for having contracts based in Dollars, the price went up EVERY week.
The reason? The US Dollar is falling in relation to the local currency on a daily basis.
So here are local businessmen, (not economists or analysts), people who actually work for a living, refusing to accept US Dollars during business transactions.
That alone should tell you just where the US Dollar stands on the international stage.
In plain terms, the US Dollar crisis is already underway. If you ignore the stupid headlines and pay attention to the real world you can already see it. Prices of goods are EXPLODING higher. It’s being hidden because retailers are downsizing the size of their packages OR packing less goods in the same space (look inside any cereal box or other dry good and you’ll find that at best it’s 75% full).
So if you think things are fine because the US Dollar chart shows we still have a few lines of support, you’re being mislead. The US Dollar is worth far, far less than the chart shows you. So if you want to prepare yourself for a currency crisis you need to move now.
On that note, if you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.
Prepare Now!
Graham Summers
The US Dollar which most investors follow is the US Dollar index. This represents the US Dollar’s value against a basket of major currencies: the Euro, Japanese Yen, etc.
Think about that for a moment: the way we measure the US Dollar’s value is against a collection of other un-backed paper currencies all issued by over-indebted, bankrupt nations.
In other words, its nonsense.
Case in point, the Euro comprises over 50% of the US Dollar index. What’s the Euro? A currency backed by a loose group of bankrupt nations with maybe two solvent members in the bunch. Greece has already asked for an extension on its bailout repayments (like they’re ever going to repay anything), Spain is bankrupt, ditto for Ireland, Italy, Portugal, and others.
As for the more solvent European members (Germany and maybe France) their political leaders are getting crushed in the elections because NOBODY who actually works for a living (or has a working brain) wants in on the Euro.
So in Europe we’ve got one perhaps two solvent countries that are supposed to bailout 5+ insolvent ones (like that’s even possible). And the solvent countries are comprised of people who want no part of the Euro.
Man, now that’s what I call a real currency.
In simple terms, to claim the Euro is a viable currency is pure insanity. And yet, this “currency” comprises 50% of the US Dollar index (not as though the Yen or US Dollar are worthwhile either).
My point in all of this is that measuring the greenback using the Euro is insane. 100% totally insane. Which is why claiming the US Dollar is not collapsing is BS. If you actually go outside the US (which 99% of commentators don’t) you’ll find that the US Dollar is worth much less than the Dollar index is telling you.
I was recently on a trip to South America looking at real estate. While there I was told repeatedly by developers that they didn’t want to sign a contract in US Dollars. Instead they wanted to do it in the local currency. This has NEVER happened before during my trips abroad (even as recently as 2009).
When I pushed for having contracts based in Dollars, the price went up EVERY week.
The reason? The US Dollar is falling in relation to the local currency on a daily basis.
So here are local businessmen, (not economists or analysts), people who actually work for a living, refusing to accept US Dollars during business transactions.
That alone should tell you just where the US Dollar stands on the international stage.
In plain terms, the US Dollar crisis is already underway. If you ignore the stupid headlines and pay attention to the real world you can already see it. Prices of goods are EXPLODING higher. It’s being hidden because retailers are downsizing the size of their packages OR packing less goods in the same space (look inside any cereal box or other dry good and you’ll find that at best it’s 75% full).
So if you think things are fine because the US Dollar chart shows we still have a few lines of support, you’re being mislead. The US Dollar is worth far, far less than the chart shows you. So if you want to prepare yourself for a currency crisis you need to move now.
On that note, if you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.
I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).
Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.
Prepare Now!
Graham Summers
Silver Set For All Time Record Quarterly Close - Gold To Silver Ratio On Way To 17 To 1 As Per 1980?
From GoldCore
Silver Set For All Time Record Quarterly Close - Gold To Silver Ratio On Way To 17 To 1 As Per 1980?
Gold and silver have consolidated on yesterday’s gains as inflation, geopolitical and eurozone debt concerns support. Silver has risen above its 31 year record closing price of yesterday and looks set to target new record nominal intraday highs above $38.16/oz.
‘Poor man’s gold’ is set for a record nominal quarterly close which will be bullish technically and set silver up to target psychological resistance at $40/oz and then the nominal high of $50.35/oz . Silver’s record quarterly close was $32.20/oz on December 31st, 1979.
While silver is up 22 percent this year and is heading for a ninth straight quarterly advance, its fundamentals remain very sound. With gold above its nominal record of 1980, poor man’s gold continues to be seen as offering better value. To the masses in India, China and Asia, silver is the cheap alternative to gold and an attractive store of value and hedge against inflation and debasement of paper currencies.
Increasing global investment and industrial demand in the very small and finite silver bullion market is a recipe for higher prices. Thus, as we have long asserted the gold silver ratio is likely to revert to its long term average of 16 to 1.
A return to a ratio of 16 to 1 is likely due to basic supply and demand and the geological fact that there are 16 parts of silver for every one part of gold in the earth’s crust.
The fact that a huge amount of silver has been used in industrial applications and consumer items since the industrial revolution of the 19th century makes a return to the 16 to 1 ratio likely in the long term.
$40/oz silver may offer psychological resistance and could see profit taking but those buying silver are strong hands who rightly believe that silver will very likely reach its 1980 nominal high of $50.35/oz. Real silver bulls believe that silver may reach its inflation adjusted high of $150/oz (see Financial Times Infographic below).
A tiny minority of retail investors have begun to look at silver but it remains largely the preserve of the smart money, a very small amount of hard money advocates in the U.S. and of store of value buyers in Asia. Much of the price gains seen recently may be due to banks closing out some of their massive concentrated short positions which are being investigated by the Commodity Futures Trading Commission (CFTC).
Marc Faber, publisher of the Gloom, Boom & Doom report, said investors should have from 10 to 20 percent of their portfolio in gold as an inflation hedge.
“I want to buy more gold,” said Faber in an interview in Mexico City today. “Each time that I see Mr. Bernanke, and each time Mr. Tim Geithner opens his mouth, I feel like buying more gold and silver.”
Federal Reserve Chairman Ben S. Bernanke kept plans to buy $600 billion of Treasuries through June. Bernanke said last month the U.S. needs faster employment growth for a sufficient time before policy makers can be assured the economic recovery has taken hold. Meanwhile the bank will seek to hold borrowing costs “exceptionally low.”
Under current U.S. monetary policy “gold will go up substantially,” Faber said. “I own gold as an insurance policy, because I think the whole system will collapse one day.”
(Bloomberg) -- Bolivia Protesters Halt Operations at San Cristobal Silver Mine
Sumitomo Corp.’s silver, zinc and lead mine in Bolivia has been halted since last week by a strike, the mining ministry said. Workers at the San Cristobal mine are demanding better health care, a government official, who can’t be named because of ministry policy, said today by telephone.
Sumitomo’s San Cristobal, in southwestern Bolivia’s mineral-rich region of Potosi, is the world’s third-largest silver mine and the sixth-biggest zinc mine.
(Bloomberg) -- Gold Heads for 10th Quarterly Gain on Investment Haven Demand
Gold headed for a 10th straight quarterly rise, the longest in three decades, as turmoil in the Middle East, fighting in Libya and Japan’s nuclear crisis increased demand for an investment haven. Bullion for immediate delivery advanced 0.3 percent to $1,427.13 an ounce at 5:28 p.m. in Melbourne, taking the quarterly gain to 0.5 percent. The June-delivery contract in New York rose 0.3 percent to $1,428.50, heading for a 0.5 percent quarterly rise.
“There is a lot of uncertainty around the globe in terms of political events,” David Lennox, a Sydney-based resource analyst at Fat Prophets, said by phone today. Fighting could escalate in Libya, while there is uncertainty surrounding Bahrain and the nuclear crisis in Japan, he said.
Gold reached a record $1,447.82 an ounce on March 24 amid tension in northern Africa and the Middle East and after a March 11 earthquake and tsunami in Japan killed thousands and caused radiation to leak from a nuclear plant. Libyan rebels were forced to retreat this week by troops loyal to Muammar Qaddafi after earlier advances were helped by U.S.-led air strikes.
“We are now starting to see that the air strikes may not be completely effective against Qaddafi, and that’s going to raise the next bar,” Lennox said.
Gold advanced for nine consecutive quarters through Dec. 31, 2010, partly because investors bought the metal as a hedge against dollar and euro weakness. Gains were limited this quarter on signs the U.S. economy is improving, boosting investor appetite for higher-yielding assets like stocks.
‘Upward Advance’
“In nominal terms it has been a pretty steady upward advance, but it has come off a period prior to 2000 where we basically had 20 years of flat gold prices,” Ben Westmore, an analyst at National Australia Bank Ltd. in Melbourne, said today.
Companies in the U.S. added 201,000 workers in March, a sign the labor market may be strengthening, according to figures from ADP Employer Services yesterday. Employment increased by a revised 208,000 in February, said the report, which is based on payrolls.
Economists project a Labor Department report tomorrow will show the jobless rate held at 8.9 percent. It has fallen by 0.9 percentage point over the last three months, the biggest decline since 1983.
The Standard & Poor’s 500 index rose 0.7 percent yesterday and is up 5.6 percent this quarter. “Buoyant equities and a positive U.S. ADP employment report removed some of the safe-haven premium” in the gold market, Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note today.
Silver for immediate delivery climbed 0.4 percent to $37.62 an ounce, heading for a 22 percent rise this quarter, the ninth straight quarterly gain. The metal has more than doubled in the past year and reached a 31-year high of $38.165 on March 24. Immediate-delivery platinum was little changed at $1,773.90an ounce and palladium gained 0.7 percent to $758.75 an ounce.
(Bloomberg) -- Six Arrested in Bundesbank Euro Coin-Forgery Scam, Prosecutors Say
Six people were arrested in a probe over 29 metric tons of forged euro coins that were cashed in at the Bundesbank, German prosecutors said.
The suspects received 1-euro and 2-euro coins from workshops in China where destroyed coins were remade, Doris Moeller-Scheu, a spokeswoman for Frankfurt prosecutors, said in an e-mailed statement today. No employees of Germany’s central bank are suspected of wrongdoing.
The Bundesbank is the only central bank in Europe that exchanges damaged coins without charging a fee, according to Moeller-Scheu. The money must be returned in bags that hold 1,000 euros worth of coins.
“The Bundesbank controls the value mainly by weighing, and does occasional visual sample test,” Moeller-Scheu said. “Then the money value is transferred to an account of the presenter or he can withdraw it from a Bundesbank account.”
Four suspects are of Chinese descent, according to the statement. They were helped by flight attendants who transported the coins in their hand luggage, for which no weigh limit applies, Moeller-Scheu said.
Lufthansa was informed that some individual employees are being investigated, Deutsche Lufthansa AG spokesman Peter Schneckenleitner said in an interview. He said the company wouldn’t comment on prosecutors’ probes.
The 29 metric tons of coins were imported between 2007 and 2010, representing a nominal value of 6 million euros, Moeller- Scheu said.
Silver Set For All Time Record Quarterly Close - Gold To Silver Ratio On Way To 17 To 1 As Per 1980?
Gold and silver have consolidated on yesterday’s gains as inflation, geopolitical and eurozone debt concerns support. Silver has risen above its 31 year record closing price of yesterday and looks set to target new record nominal intraday highs above $38.16/oz.
‘Poor man’s gold’ is set for a record nominal quarterly close which will be bullish technically and set silver up to target psychological resistance at $40/oz and then the nominal high of $50.35/oz . Silver’s record quarterly close was $32.20/oz on December 31st, 1979.
While silver is up 22 percent this year and is heading for a ninth straight quarterly advance, its fundamentals remain very sound. With gold above its nominal record of 1980, poor man’s gold continues to be seen as offering better value. To the masses in India, China and Asia, silver is the cheap alternative to gold and an attractive store of value and hedge against inflation and debasement of paper currencies.
Increasing global investment and industrial demand in the very small and finite silver bullion market is a recipe for higher prices. Thus, as we have long asserted the gold silver ratio is likely to revert to its long term average of 16 to 1.
A return to a ratio of 16 to 1 is likely due to basic supply and demand and the geological fact that there are 16 parts of silver for every one part of gold in the earth’s crust.
The fact that a huge amount of silver has been used in industrial applications and consumer items since the industrial revolution of the 19th century makes a return to the 16 to 1 ratio likely in the long term.
$40/oz silver may offer psychological resistance and could see profit taking but those buying silver are strong hands who rightly believe that silver will very likely reach its 1980 nominal high of $50.35/oz. Real silver bulls believe that silver may reach its inflation adjusted high of $150/oz (see Financial Times Infographic below).
A tiny minority of retail investors have begun to look at silver but it remains largely the preserve of the smart money, a very small amount of hard money advocates in the U.S. and of store of value buyers in Asia. Much of the price gains seen recently may be due to banks closing out some of their massive concentrated short positions which are being investigated by the Commodity Futures Trading Commission (CFTC).
NEWS
(Bloomberg) -- Faber Says Investors Should Hold Gold Amid U.S. Monetary Policy Marc Faber, publisher of the Gloom, Boom & Doom report, said investors should have from 10 to 20 percent of their portfolio in gold as an inflation hedge.
“I want to buy more gold,” said Faber in an interview in Mexico City today. “Each time that I see Mr. Bernanke, and each time Mr. Tim Geithner opens his mouth, I feel like buying more gold and silver.”
Federal Reserve Chairman Ben S. Bernanke kept plans to buy $600 billion of Treasuries through June. Bernanke said last month the U.S. needs faster employment growth for a sufficient time before policy makers can be assured the economic recovery has taken hold. Meanwhile the bank will seek to hold borrowing costs “exceptionally low.”
Under current U.S. monetary policy “gold will go up substantially,” Faber said. “I own gold as an insurance policy, because I think the whole system will collapse one day.”
(Bloomberg) -- Bolivia Protesters Halt Operations at San Cristobal Silver Mine
Sumitomo Corp.’s silver, zinc and lead mine in Bolivia has been halted since last week by a strike, the mining ministry said. Workers at the San Cristobal mine are demanding better health care, a government official, who can’t be named because of ministry policy, said today by telephone.
Sumitomo’s San Cristobal, in southwestern Bolivia’s mineral-rich region of Potosi, is the world’s third-largest silver mine and the sixth-biggest zinc mine.
(Bloomberg) -- Gold Heads for 10th Quarterly Gain on Investment Haven Demand
Gold headed for a 10th straight quarterly rise, the longest in three decades, as turmoil in the Middle East, fighting in Libya and Japan’s nuclear crisis increased demand for an investment haven. Bullion for immediate delivery advanced 0.3 percent to $1,427.13 an ounce at 5:28 p.m. in Melbourne, taking the quarterly gain to 0.5 percent. The June-delivery contract in New York rose 0.3 percent to $1,428.50, heading for a 0.5 percent quarterly rise.
“There is a lot of uncertainty around the globe in terms of political events,” David Lennox, a Sydney-based resource analyst at Fat Prophets, said by phone today. Fighting could escalate in Libya, while there is uncertainty surrounding Bahrain and the nuclear crisis in Japan, he said.
Gold reached a record $1,447.82 an ounce on March 24 amid tension in northern Africa and the Middle East and after a March 11 earthquake and tsunami in Japan killed thousands and caused radiation to leak from a nuclear plant. Libyan rebels were forced to retreat this week by troops loyal to Muammar Qaddafi after earlier advances were helped by U.S.-led air strikes.
“We are now starting to see that the air strikes may not be completely effective against Qaddafi, and that’s going to raise the next bar,” Lennox said.
Gold advanced for nine consecutive quarters through Dec. 31, 2010, partly because investors bought the metal as a hedge against dollar and euro weakness. Gains were limited this quarter on signs the U.S. economy is improving, boosting investor appetite for higher-yielding assets like stocks.
‘Upward Advance’
“In nominal terms it has been a pretty steady upward advance, but it has come off a period prior to 2000 where we basically had 20 years of flat gold prices,” Ben Westmore, an analyst at National Australia Bank Ltd. in Melbourne, said today.
Companies in the U.S. added 201,000 workers in March, a sign the labor market may be strengthening, according to figures from ADP Employer Services yesterday. Employment increased by a revised 208,000 in February, said the report, which is based on payrolls.
Economists project a Labor Department report tomorrow will show the jobless rate held at 8.9 percent. It has fallen by 0.9 percentage point over the last three months, the biggest decline since 1983.
The Standard & Poor’s 500 index rose 0.7 percent yesterday and is up 5.6 percent this quarter. “Buoyant equities and a positive U.S. ADP employment report removed some of the safe-haven premium” in the gold market, Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note today.
Silver for immediate delivery climbed 0.4 percent to $37.62 an ounce, heading for a 22 percent rise this quarter, the ninth straight quarterly gain. The metal has more than doubled in the past year and reached a 31-year high of $38.165 on March 24. Immediate-delivery platinum was little changed at $1,773.90an ounce and palladium gained 0.7 percent to $758.75 an ounce.
(Bloomberg) -- Six Arrested in Bundesbank Euro Coin-Forgery Scam, Prosecutors Say
Six people were arrested in a probe over 29 metric tons of forged euro coins that were cashed in at the Bundesbank, German prosecutors said.
The suspects received 1-euro and 2-euro coins from workshops in China where destroyed coins were remade, Doris Moeller-Scheu, a spokeswoman for Frankfurt prosecutors, said in an e-mailed statement today. No employees of Germany’s central bank are suspected of wrongdoing.
The Bundesbank is the only central bank in Europe that exchanges damaged coins without charging a fee, according to Moeller-Scheu. The money must be returned in bags that hold 1,000 euros worth of coins.
“The Bundesbank controls the value mainly by weighing, and does occasional visual sample test,” Moeller-Scheu said. “Then the money value is transferred to an account of the presenter or he can withdraw it from a Bundesbank account.”
Four suspects are of Chinese descent, according to the statement. They were helped by flight attendants who transported the coins in their hand luggage, for which no weigh limit applies, Moeller-Scheu said.
Lufthansa was informed that some individual employees are being investigated, Deutsche Lufthansa AG spokesman Peter Schneckenleitner said in an interview. He said the company wouldn’t comment on prosecutors’ probes.
The 29 metric tons of coins were imported between 2007 and 2010, representing a nominal value of 6 million euros, Moeller- Scheu said.
San Francisco Mint to strike silver bullion
To join West Point Mint in striking American Eagles
By Paul Gilkes-Coin World Staff
March 28, 2011 8:00 a.m.
Article first published in 2011-04-11, News section of Coin World
Because of the continued unprecedented demand for American Eagle silver bullion coins and an increased numismatic production load at the West Point Mint, some American Eagle production is being shifted to the San Francisco Mint.
Tom Jurkowsky, director of the U.S. Mint’s Office of Public Information, confirmed March 23 that trial strikes are currently being produced at the San Francisco Mint, with full-scale, temporary production to begin sometime in May.
The trial strikes are being produced to ensure that the quality of the American Eagle silver bullion coins struck at the San Francisco Mint replicate the quality of those produced at the West Point Mint, according to Jurkowsky.
The 2011 production will be the first time in more than a decade that American Eagle silver bullion coins will be produced at both the West Point and the San Francisco Mints. American Eagle silver bullion coins were produced at both facilities from 1989 through 2000 inclusive. All American Eagle silver bullion coin production was moved strictly to the West Point Mint in 2001.
The bullion coins do not bear the Mint mark of the facility where the coins were struck.
The San Francisco Mint’s inclusion in American Eagle silver bullion coin production in 2011 is necessary in part because Mint officials anticipate sales in 2011 being from 28 percent to nearly 43 percent higher than the record 2010 sales of 34,662,500 silver bullion coins. Other contributing factors to the decision are production, at the West Point Mint, of Proof versions of both the 2011 U.S. Army and 2011 Medal of Honor gold $5 half eagles, and of up to 2 million National September 11th Memorial and Museum 1-ounce, .999 fine silver medals authorized under Public Law 111-221.
“Demand for silver bullion remains at unprecedented levels,” Jurkowsky said.
“If it continues at the rate we have seen over the last two months, it could reach a level of between 45 million and 50 million coins in calendar year 2011. The Mint at West Point has done a fantastic job in meeting demand over the last several years and as we made plans for calendar 2011 production, we saw that the legislation in effect for 2011 added additional products to the West Point portfolio (the 9/11 Medal and both the Army and Medal of Honor commemorative coins),” Jurkowsky said.
“So our plan was to see how silver demand played out in the first quarter of calendar year 2011, knowing that we had press capacity available at San Francisco if needed.”
Because the San Francisco Mint is completing its production of coins for 2011 sets containing Proof coins, “there is a window of opportunity to have San Francisco produce some silver bullion before 2012 production begins in late summer 2011, so we are conducting silver bullion trial strikes at San Francisco now,” Jurkowsky said. “Production would include using the same dies, the same methods and same packaging [as used at the West Point Mint]. We do not expect a visible difference between the two coins.
Jurkowsky continued: “If still warranted, we plan to begin production of up to a few hundred thousand per week in San Francisco in late May to early June, running through the summer. Our authorized purchasers have expressed interest in [picking up the coins at a San Francisco location], but the overall allocation methodology will be done weekly and include West Point volumes in the weekly allocation calculation.
“There are several logistical issues to resolve before any final decisions are made to pursue this initiative.
“Simply stepping back, we feel that exploring use of another facility is good management and may be another way to better meet the needs of our customers,” he said. ■
By Paul Gilkes-Coin World Staff
March 28, 2011 8:00 a.m.
Article first published in 2011-04-11, News section of Coin World
Because of the continued unprecedented demand for American Eagle silver bullion coins and an increased numismatic production load at the West Point Mint, some American Eagle production is being shifted to the San Francisco Mint.
Tom Jurkowsky, director of the U.S. Mint’s Office of Public Information, confirmed March 23 that trial strikes are currently being produced at the San Francisco Mint, with full-scale, temporary production to begin sometime in May.
The trial strikes are being produced to ensure that the quality of the American Eagle silver bullion coins struck at the San Francisco Mint replicate the quality of those produced at the West Point Mint, according to Jurkowsky.
The 2011 production will be the first time in more than a decade that American Eagle silver bullion coins will be produced at both the West Point and the San Francisco Mints. American Eagle silver bullion coins were produced at both facilities from 1989 through 2000 inclusive. All American Eagle silver bullion coin production was moved strictly to the West Point Mint in 2001.
The bullion coins do not bear the Mint mark of the facility where the coins were struck.
The San Francisco Mint’s inclusion in American Eagle silver bullion coin production in 2011 is necessary in part because Mint officials anticipate sales in 2011 being from 28 percent to nearly 43 percent higher than the record 2010 sales of 34,662,500 silver bullion coins. Other contributing factors to the decision are production, at the West Point Mint, of Proof versions of both the 2011 U.S. Army and 2011 Medal of Honor gold $5 half eagles, and of up to 2 million National September 11th Memorial and Museum 1-ounce, .999 fine silver medals authorized under Public Law 111-221.
“Demand for silver bullion remains at unprecedented levels,” Jurkowsky said.
“If it continues at the rate we have seen over the last two months, it could reach a level of between 45 million and 50 million coins in calendar year 2011. The Mint at West Point has done a fantastic job in meeting demand over the last several years and as we made plans for calendar 2011 production, we saw that the legislation in effect for 2011 added additional products to the West Point portfolio (the 9/11 Medal and both the Army and Medal of Honor commemorative coins),” Jurkowsky said.
“So our plan was to see how silver demand played out in the first quarter of calendar year 2011, knowing that we had press capacity available at San Francisco if needed.”
Because the San Francisco Mint is completing its production of coins for 2011 sets containing Proof coins, “there is a window of opportunity to have San Francisco produce some silver bullion before 2012 production begins in late summer 2011, so we are conducting silver bullion trial strikes at San Francisco now,” Jurkowsky said. “Production would include using the same dies, the same methods and same packaging [as used at the West Point Mint]. We do not expect a visible difference between the two coins.
Jurkowsky continued: “If still warranted, we plan to begin production of up to a few hundred thousand per week in San Francisco in late May to early June, running through the summer. Our authorized purchasers have expressed interest in [picking up the coins at a San Francisco location], but the overall allocation methodology will be done weekly and include West Point volumes in the weekly allocation calculation.
“There are several logistical issues to resolve before any final decisions are made to pursue this initiative.
“Simply stepping back, we feel that exploring use of another facility is good management and may be another way to better meet the needs of our customers,” he said. ■
Wednesday, March 30, 2011
A Look at Europe and the Collapse of the EU by Nigel Farage
Submitted by: Francis Soyer 3/30/11
Hats off to Nigel Farage for exposing the REAL EU agenda and two key players responsible for the shite show with Portugal, Spain etc.
GOP bill would halt US operations in Libya until Congress acts
GOP bill would halt US operations in Libya until Congress acts
By Mike Lillis - 03/29/11 01:57 PM ET
Two House Republicans introduced legislation Tuesday to force an end to U.S. military operations in Libya unless Congress explicitly authorizes them.
Reps. Timothy Johnson (Ill.) and Justin Amash (Mich.), a freshman, say America's role in the international effort backing Libyan rebels against strongman Moammar Gadhafi is unconstitutional without Congress’s stamp of approval.
Their bill — dubbed the Restoring Essential constitutional Constraints for Libyan Action Involving the Military Act, or RECLAIM — would cut off all funding related to the Pentagon's intervention in the embattled North African country.
Last week, Johnson explained his criticism of President Obama’s decision to enter the conflict.
“Constitutionally, it is indisputable that Congress must be consulted prior to an act of war unless there is an imminent threat against this country. The president has not done so," Johnson said. “Our country has no business enmeshing itself in another country’s civil unrest. We were not attacked. Our national security interests are not at stake.”
Neither Johnson’s nor Amash’s office immediately returned requests for comment.
By Mike Lillis - 03/29/11 01:57 PM ET
Two House Republicans introduced legislation Tuesday to force an end to U.S. military operations in Libya unless Congress explicitly authorizes them.
Reps. Timothy Johnson (Ill.) and Justin Amash (Mich.), a freshman, say America's role in the international effort backing Libyan rebels against strongman Moammar Gadhafi is unconstitutional without Congress’s stamp of approval.
Their bill — dubbed the Restoring Essential constitutional Constraints for Libyan Action Involving the Military Act, or RECLAIM — would cut off all funding related to the Pentagon's intervention in the embattled North African country.
Last week, Johnson explained his criticism of President Obama’s decision to enter the conflict.
“Constitutionally, it is indisputable that Congress must be consulted prior to an act of war unless there is an imminent threat against this country. The president has not done so," Johnson said. “Our country has no business enmeshing itself in another country’s civil unrest. We were not attacked. Our national security interests are not at stake.”
Neither Johnson’s nor Amash’s office immediately returned requests for comment.
Tuesday, March 29, 2011
Today | Nationwide Call-In Day to the Attorneys General
Today, on March 29, we have the opportunity of a lifetime to save millions from losing their homes and hold accountable the big banks that caused this crisis.
Right now, the 50 state Attorneys General are in critical negotiations with the big banks. The outcome of these negotiations could mean the difference between millions of struggling homeowners finally getting the help they need from their lenders, or the big banks continuing with business as usual, foreclosing on families needlessly.
Bank of America, Wells Fargo, JPMorgan Chase, and other big banks could easily walk away scott-free, if thousands of us don’t call our Attorneys General tomorrow.
Read 5 reasons to call your Attorney General today
The time is now to collectively fight back. We can work together to demand that the big banks are held accountable for their crimes.
Your Attorney General needs to make a choice - either side with YOU and be a hero to homeowners and communities by going toe-to-toe with the big banks, OR side with the big banks and let them continue to devastate our communities.
It’s time to demand that our Attorneys General deliver nothing less than a strong settlement against the big banks. Make the call!
Thanks for all that you do,
PICO National Network
Alliance for a Just Society
National People's Action
IAF Southeast
Alliance of Californians for Community Empowerment
STATE AG NAME PHONE
Alabama Luther Strange (334) 242-7300
Alaska John J. Burns (907) 465-3600
Arizona Tom Horne (602) 542-4266
Arkansas Dustin McDaniel (800) 482-8982
California Kamala Harris 510-622-4500
916-323-8270 (main comment voicemail)
Colorado John Suthers 303-866-4500
Connecticut George Jepsen (860) 808-5318
Delaware Beau Biden (302) 577-8338
District of Columbia Irvin Nathan (Acting) (202) 727-3400
Florida Pam Bondi (850) 414-3300
Georgia Sam Olens (404) 656-3300
Hawaii Mark Bennett (808) 586-1500
Idaho Lawrence Wasden (208) 334-2400
Illinois Lisa Madigan (312) 814-3000
Indiana Greg Zoeller (317) 232-6201
Iowa Tom Miller (515) 281-5164
Kansas Derek Schmidt (785) 296-2215
Kentucky Jack Conway (502) 696-5300
Louisiana James “Buddy” Caldwell (225) 326-6000
Maine William Schneider (207) 626-8800
Maryland Douglas F. Gansler (410) 576-6300
Massachusetts Martha Coakley (617) 727-2200
Michigan Bill Schuette (517) 373-1110
Minnesota Lori Swanson (651) 296-3353
Mississippi Jim Hood (601) 359-3680
Missouri Chris Koster (573) 751-3321
Montana Steve Bullock (406) 444-2026
Nebraska Jon Bruning (402) 471-2682
Nevada Catherine Cortez Mastro (775) 684-1100
New Hampshire Michael Delaney (603) 271-3658
New Jersey Paula T. Dow (609) 292-8740
New Mexico Gary King (505) 827-6000
New York Eric Schneiderman (518) 474-7330
North Carolina Roy Cooper (919) 716-6400
North Dakota Wayne Stenehjem (701) 328-2210
Ohio Mike DeWine (614) 466-4320
Oklahoma Scott Pruitt (405) 521-3921
Oregon John Kroger (503) 378-4400
Pennsylvania William H. Ryan, Jr. (Acting) (717) 787-3391
Rhode Island Peter Kilmartin (401) 274-4400
South Carolina Alan Wilson (803) 734-3970
South Dakota Marty Jackley (605) 773-3215
Tennessee Robert E. Cooper Jr. 615-741-3491
Texas Greg Abbott (512) 463-2100
Utah Mark Shurtleff (801) 538-9600
Vermont William Sorrell (802) 828-3173
Virginia Ken Cuccinelli (804) 786-2071
Washington Rob McKenna (360) 753-6200
West Virginia Darrel V. McGraw (304) 558-2021
Wisconsin J.B. Van Hollen (608) 266-1221
Wyoming Bruce A. Salzburg (307) 777-7841
Right now, the 50 state Attorneys General are in critical negotiations with the big banks. The outcome of these negotiations could mean the difference between millions of struggling homeowners finally getting the help they need from their lenders, or the big banks continuing with business as usual, foreclosing on families needlessly.
Bank of America, Wells Fargo, JPMorgan Chase, and other big banks could easily walk away scott-free, if thousands of us don’t call our Attorneys General tomorrow.
Read 5 reasons to call your Attorney General today
The time is now to collectively fight back. We can work together to demand that the big banks are held accountable for their crimes.
Your Attorney General needs to make a choice - either side with YOU and be a hero to homeowners and communities by going toe-to-toe with the big banks, OR side with the big banks and let them continue to devastate our communities.
It’s time to demand that our Attorneys General deliver nothing less than a strong settlement against the big banks. Make the call!
Thanks for all that you do,
PICO National Network
Alliance for a Just Society
National People's Action
IAF Southeast
Alliance of Californians for Community Empowerment
STATE AG NAME PHONE
Alabama Luther Strange (334) 242-7300
Alaska John J. Burns (907) 465-3600
Arizona Tom Horne (602) 542-4266
Arkansas Dustin McDaniel (800) 482-8982
California Kamala Harris 510-622-4500
916-323-8270 (main comment voicemail)
Colorado John Suthers 303-866-4500
Connecticut George Jepsen (860) 808-5318
Delaware Beau Biden (302) 577-8338
District of Columbia Irvin Nathan (Acting) (202) 727-3400
Florida Pam Bondi (850) 414-3300
Georgia Sam Olens (404) 656-3300
Hawaii Mark Bennett (808) 586-1500
Idaho Lawrence Wasden (208) 334-2400
Illinois Lisa Madigan (312) 814-3000
Indiana Greg Zoeller (317) 232-6201
Iowa Tom Miller (515) 281-5164
Kansas Derek Schmidt (785) 296-2215
Kentucky Jack Conway (502) 696-5300
Louisiana James “Buddy” Caldwell (225) 326-6000
Maine William Schneider (207) 626-8800
Maryland Douglas F. Gansler (410) 576-6300
Massachusetts Martha Coakley (617) 727-2200
Michigan Bill Schuette (517) 373-1110
Minnesota Lori Swanson (651) 296-3353
Mississippi Jim Hood (601) 359-3680
Missouri Chris Koster (573) 751-3321
Montana Steve Bullock (406) 444-2026
Nebraska Jon Bruning (402) 471-2682
Nevada Catherine Cortez Mastro (775) 684-1100
New Hampshire Michael Delaney (603) 271-3658
New Jersey Paula T. Dow (609) 292-8740
New Mexico Gary King (505) 827-6000
New York Eric Schneiderman (518) 474-7330
North Carolina Roy Cooper (919) 716-6400
North Dakota Wayne Stenehjem (701) 328-2210
Ohio Mike DeWine (614) 466-4320
Oklahoma Scott Pruitt (405) 521-3921
Oregon John Kroger (503) 378-4400
Pennsylvania William H. Ryan, Jr. (Acting) (717) 787-3391
Rhode Island Peter Kilmartin (401) 274-4400
South Carolina Alan Wilson (803) 734-3970
South Dakota Marty Jackley (605) 773-3215
Tennessee Robert E. Cooper Jr. 615-741-3491
Texas Greg Abbott (512) 463-2100
Utah Mark Shurtleff (801) 538-9600
Vermont William Sorrell (802) 828-3173
Virginia Ken Cuccinelli (804) 786-2071
Washington Rob McKenna (360) 753-6200
West Virginia Darrel V. McGraw (304) 558-2021
Wisconsin J.B. Van Hollen (608) 266-1221
Wyoming Bruce A. Salzburg (307) 777-7841
David Rosenberg On QE3 ETA
As we wave goodbye to David Rosenberg, with his last free Breakfast with Dave issue coming out today, we present his most recent free thoughts on QE3.
QE3 WILL COME BUT NOT AS EARLY AS MR. MARKET WOULD LIKE
Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that one-third of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation. How on earth will the Fed be able to do anything at all by then if headline inflation is running north of 4% and the other central banks of the world are either snuggling policy or moving in that direction ? unless the central bank really wants to trash the dollar. We are certainly not inflationists and still see deflation in credit, real wages and housing prices.
Since the market will have a heart attack unless QE3 resumes on July 1, we tend to agree. July 2 would be quite a delay and certainly "not as early as Mr. Market would like." In the meantime expect a complete washout in all asset classes with an emphasis on commodities, which will allow the FOMC to push the reset button on inflationary expectations, and announce QE3 the very next day.
QE3 WILL COME BUT NOT AS EARLY AS MR. MARKET WOULD LIKE
Portfolio managers as a group are running their funds overweight equities by an average of 67% relative to their typical benchmarks. And polls show that one-third of them believe QE3 is coming this summer. We already know that this Bernanke-led Fed is willing to be extremely aggressive, but as we saw in 2010, the hurdle is high for quantitative easing. We need (i) signs of a double-dip, (ii) a stock market correction of at least 15%, and (iii) deflation, not inflation. How on earth will the Fed be able to do anything at all by then if headline inflation is running north of 4% and the other central banks of the world are either snuggling policy or moving in that direction ? unless the central bank really wants to trash the dollar. We are certainly not inflationists and still see deflation in credit, real wages and housing prices.
Since the market will have a heart attack unless QE3 resumes on July 1, we tend to agree. July 2 would be quite a delay and certainly "not as early as Mr. Market would like." In the meantime expect a complete washout in all asset classes with an emphasis on commodities, which will allow the FOMC to push the reset button on inflationary expectations, and announce QE3 the very next day.
UTAH GOVERNOR SIGNS GOLD & SILVER LEGAL TENDER BILL!
Utah has now become the first State on our list to actually enact a sound money bill into law.
On Friday, March 25th, Gov. Gary Herbert signed HB 317, the "Utah Legal Tender Act," into law.
The law recognizes gold and silver coins issued by the federal government as legal currency in the state. The coins do not replace the current paper currency, but may be used and accepted voluntarily as an alternative.
The law exempts the sale of gold and silver coins from the state capital gains tax, since you would simply be exchanging one form of legal tender currency for another. It also calls for a committee to study alternative currencies for the State and a means for Utahans to pay their taxes with gold and silver coins.
Gold and silver coins issued by the federal government are already legal tender, of course, and can be used to purchase items and pay debts owed. However, they could only be used at the face value of the coins -- which is ridiculously lower than the value of the precious metal content of the coins. If you were to use them at the actual value of the coins, you would face a capital gains tax on the "profit" you gained over the face value.
If nothing else, this law recognizes the inanity of imposing a tax on exchanging one form of legal tender currency for another. By removing that tax and officially recognizing the legal tender status of the gold and silver coins within the State of Utah, the way is now open for good and services to be priced in both Federal Reserve Notes denominations and Gold & Silver Coins denominations; likewise, banks should now be free to offer their customers accounts denominated in legal tender gold & silver coins, so that consumers will be able to make purchases based on those accounts, using their debit cards, checks, ATM cards, etc. Banks should also easily convert FRNs to Gold & Silver Coins and vice-versa, since they will now be treated as simple currency exchanges.
So... what bank will be the first to jump on board here? Because once that happens, the floodgates will open, and billions of dollars in new banking accounts will pour into Utah banks, from people who want to use sound money that keeps its value, rather than nearly-worthless pieces of paper whose purchasing power continues to plummet.
And you know who'll be one of the first in line!
On Friday, March 25th, Gov. Gary Herbert signed HB 317, the "Utah Legal Tender Act," into law.
The law recognizes gold and silver coins issued by the federal government as legal currency in the state. The coins do not replace the current paper currency, but may be used and accepted voluntarily as an alternative.
The law exempts the sale of gold and silver coins from the state capital gains tax, since you would simply be exchanging one form of legal tender currency for another. It also calls for a committee to study alternative currencies for the State and a means for Utahans to pay their taxes with gold and silver coins.
Gold and silver coins issued by the federal government are already legal tender, of course, and can be used to purchase items and pay debts owed. However, they could only be used at the face value of the coins -- which is ridiculously lower than the value of the precious metal content of the coins. If you were to use them at the actual value of the coins, you would face a capital gains tax on the "profit" you gained over the face value.
If nothing else, this law recognizes the inanity of imposing a tax on exchanging one form of legal tender currency for another. By removing that tax and officially recognizing the legal tender status of the gold and silver coins within the State of Utah, the way is now open for good and services to be priced in both Federal Reserve Notes denominations and Gold & Silver Coins denominations; likewise, banks should now be free to offer their customers accounts denominated in legal tender gold & silver coins, so that consumers will be able to make purchases based on those accounts, using their debit cards, checks, ATM cards, etc. Banks should also easily convert FRNs to Gold & Silver Coins and vice-versa, since they will now be treated as simple currency exchanges.
So... what bank will be the first to jump on board here? Because once that happens, the floodgates will open, and billions of dollars in new banking accounts will pour into Utah banks, from people who want to use sound money that keeps its value, rather than nearly-worthless pieces of paper whose purchasing power continues to plummet.
And you know who'll be one of the first in line!
Same Shite Different Day
Submitted by: Francis Soyer 032911
Yes it is another day of bad news. Bad news that Joboma and crew can order attacks on anyone or anything they so desire with impunity. Card blanch to basically do whatever they want. The economic headlines no better or at least the 33% of it in the case of housing as released in the Case Shiller data. So just another day of....
January Case Shiller Data Atrocious: "At Worst, The Feared Double-Dip Recession May Be Materializing"
Case Shiller data is out, and it is as horrible as ever. The Home Price Index came at 140.86 compared to 142.42 previously. Basically the double dip refuses to stop, and that even despite yesterday's "stunning"(ly irrelevant) pending home sales number.“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."
From the release:
"Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January."
The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In January 2011, the 10-City and 20-City Composites recorded annual returns of -2.0% and -3.1%, respectively. On a monthly basis, the 10-City Composite was down 0.9% and the 20-City Composite fell 1.0% in January versus December 2010. Only San Diego and Washington D.C. posted positive annual growth rates in January 2011. These are the only two cities whose annual rates remained positive throughout 2010. Every other MSA has either moved back into or has always been in negative territory during the recent housing crisis. On a monthly basis, Washington DC was the only market where home prices rose in January, but up only 0.1%. The remaining 19 MSAs and both Composites fell during the month, with 12 of the markets and the 20-City Composite down by at least 1.0% versus December 2010.
“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.
“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.
From the release:
"Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January."
The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In January 2011, the 10-City and 20-City Composites recorded annual returns of -2.0% and -3.1%, respectively. On a monthly basis, the 10-City Composite was down 0.9% and the 20-City Composite fell 1.0% in January versus December 2010. Only San Diego and Washington D.C. posted positive annual growth rates in January 2011. These are the only two cities whose annual rates remained positive throughout 2010. Every other MSA has either moved back into or has always been in negative territory during the recent housing crisis. On a monthly basis, Washington DC was the only market where home prices rose in January, but up only 0.1%. The remaining 19 MSAs and both Composites fell during the month, with 12 of the markets and the 20-City Composite down by at least 1.0% versus December 2010.
“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.
“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.
Monday, March 28, 2011
US Naval Update: CVN 65 Enterprise Abandons Libya, Reinforces CVN 70 Vinson In Straits Of Hormuz
US Naval Update: CVN 65 Enterprise Abandons Libya, Reinforces CVN 70 Vinson In Straits Of Hormuz
Submitted by Tyler Durden on 03/26/2011 20:22 -0400
Wonder why the administration made such a stink of reducing the US airborne presence around Libya, and handing it off to France, Italy, Canada and Turkey? Here's the answer: the CVN65 Enterprise which last week was within striking distance of Libya, has quietly left the Red Sea and is now virtually swimming in the wake of CVN 70 Vinson in the Strait of Hormuz. Because obviously whatever is about to happen in the Persian Gulf will need not one but two aircraft carrier formations. And meanwhile in Japan the Washington is doing all it can to put radiation free miles between itself and Fukushima, even as the Essex, chock full of marines is sitting on the coast waiting for orders.
Submitted by Tyler Durden on 03/26/2011 20:22 -0400
Wonder why the administration made such a stink of reducing the US airborne presence around Libya, and handing it off to France, Italy, Canada and Turkey? Here's the answer: the CVN65 Enterprise which last week was within striking distance of Libya, has quietly left the Red Sea and is now virtually swimming in the wake of CVN 70 Vinson in the Strait of Hormuz. Because obviously whatever is about to happen in the Persian Gulf will need not one but two aircraft carrier formations. And meanwhile in Japan the Washington is doing all it can to put radiation free miles between itself and Fukushima, even as the Essex, chock full of marines is sitting on the coast waiting for orders.
Thursday, March 24, 2011
Why a No Fly Zone Will Not Work in Lybia
Submitted by: Francis Soyer 03/24/11
Here is a news man from Lybia talking about why the U.N. no fly zone will not be successful in bring Gadafi's leadership to an end.
Wednesday, March 23, 2011
Midday Attitude Adjustment
Submitted by: Francis Soyer
And in the face of doom remember that there is beauty created every day in this world. Of course don't expect to see such posted by our media which is always focused on the negative.
Israel Update: War Next?
Israel Update: War Next?
Submitted by Tyler Durden on 03/23/2011 10:35 -0400
•INTERIOR MINISTER ELI ISHAI SAYS SITUATION DETERIORATING
•ISHAI SAYS ISRAEL MAY HAVE TO ACT IF DETERIORATION CONTINUES
•ISHAI LINKS JERUSALEM BOMBING TO ITAMAR STABBING, GAZA VIOLENCE
•ISHAI SPEAKS ON ISRAEL ARMY RADIO
Submitted by Tyler Durden on 03/23/2011 10:35 -0400
•INTERIOR MINISTER ELI ISHAI SAYS SITUATION DETERIORATING
•ISHAI SAYS ISRAEL MAY HAVE TO ACT IF DETERIORATION CONTINUES
•ISHAI LINKS JERUSALEM BOMBING TO ITAMAR STABBING, GAZA VIOLENCE
•ISHAI SPEAKS ON ISRAEL ARMY RADIO
FMX Connect Debunks The Reverse Psychology In Goldman's "Buy Gold" Recommendation
FMX Connect Debunks The Reverse Psychology In Goldman's "Buy Gold" Recommendation
Submitted by Tyler Durden on 03/22/2011 21:46 -0400
April FuturesContangoCRAPExchange Traded FundFisherFluff PieceGoldman SachsGoogleJim CramerLIBORMarket ShareTechnical AnalysisTransparency
Late last week, Zero Hedge pointed out that Goldman Sachs had come out with yet another flip flop piece on gold, having recommended that clients should go long, then short, then long again, pretty much depending on which way the wind blows. We have long been skeptical of Goldman calls on anything, let alone gold, as the firm, just like JPMorgan is very much fundamentally conflicted any time it has a bullish "recommendation" on any precious metal due to the very intimate influence gold and other commodities have on Fed presidents' perception of inflation (and the last thing one would want is for Bernanke's deflation scare tactics to be doubted by more than just Dallas Fed's Fisher, who despite lofty rhetoric has yet to back his words with even one abstaining vote). That said, our skepticism about Goldman's sudden shift in bias has been validated by FMX Connect, which has conducted a forensic analysis of just what Goldman is seeking to achieve with its most recent recommendation. We continue to be far more bullish on any price appreciation prospects for gold, when Goldman (not to mention that other clown on TV), are bearish on gold, than the inverse.
From FMX Connect:
Gold Prices to Hit $1,480: Goldman Advises to buy a Deferred Expiration
We read an interesting sales pitch on the Street.com Friday. Here is an excerpt:
“The investment bank said in a research report Thursday that it expects gold to rally "towards our 3-month price target of $1,480" an ounce. Goldman is recommending investors get long on gold by buying the December 2011 futures contract currently trading at $1,426.10 an ounce.”
To restate:
“Buy Gold. Buy it in a less liquid, wider bid/ask market contract than April GC or GLD and buy it through and/or from us. Buy a contract whose liquidity will also most likely not be there when you need it most whether you are profitable or losing money.”
Forget the bank’s opinion. We ourselves are bullish. But it is commonly agreed among paranoid yet savvy traders that if Goldman is recommending you to buy, it is because they are already long and are maybe looking for an exit strategy for themselves or a client they favor.
No doubt, sometimes you make money getting long when GS says “Buy”. And that is because GS has uncovered a soft spot and the market will overshoot even their inventory overhang being liquidated. Or because their own client told them to buy. Or perhaps you were an early entrant in their “find the bigger fool” race. But sometimes you don’t make money.
Here is what we want to focus on: The recommendation of buying a deferred expiration future when so many more logical choices are available. Warning: lots of derivative talk ahead. We were on a caffeinated roll when we wrote this and didn’t make the time to translate to normal English.
Why the recommendation is Bad or at least not optimal for most people.
The real poker-tell here for us is how the bank is recommending you to get long.
“…get long on gold by buying the December 2011 futures contract…”
Right off the bat the math is wrong. Using the warped logic that recommends buying deferred expiration futures: A three month target of $1480 translates to an August future at the latest. Why would you tell someone to pay more carry cost than necessary? But let’s look at the implications of any deferred future recommendation as a market taker (i.e. lifting offer/ hitting bid client)
Let us now count the ways that this December purchase is both ridiculous, negligent, and possibly the most obvious tell on earth as to what their position actually is.
1. December futures are less continuously liquid than their front month counterpart, currently the April contract. Which means the implicit fee from the bid/ask spread will be bigger on entry into the long position. Is this added premium worth it? NO. Gold is Gold, and the difference in price between April futures and December futures is the opportunity cost of money. Gold today is gold tomorrow plus the cost of how much interest it would be to borrow money to buy the contract. Note we said continuously liquid. There are times when December will be almost as liquid as April (with a wider bid/ask no doubt), but the real hidden hazard is continuity. Translation: “When you NEED to get out, because of the gold market washing out, the stock market washing out, you kids college tuition due, war, peace, pestilence, or whatever…..that exit liquidity will be AWOL relative to the front month’s liquidity.
2. If there ever were a short squeeze event like in Silver and spreads went backwardated, guess which contract would benefit? April. So as unlikely as it is to happen, buying December takes the whole homerun from physical delivery issues right off the table. You are actually short optionality on a short squeeze. Guess who is long it? Speaking of Silver: how is it that GS didn’t tell their clients Silver would go backwardated? It was the trade of the year and much easier to see than if the market itself would go up or down. Do you think they missed it? We doubt that. We also doubt they would let you in on it until the trade was exhausted. We know of two hedge funds that didn’t miss it, and they told no one anything on their bet. We found out after the fact. When JPM crushed silver spreads and carried out a prominent futures local out on a $10MM stretcher, were their clients in on that one as well? We wonder if GS was caught on the other side of that disaster. Probably not. They probably benefitted. But by all means buy gold because they think it’s going up. Enjoy the crumbs from a TBTF bank’s best trades. It will also come with one of those neat oval stickers you can put on your Land Rover
3. Try getting out when you have to, upon exit especially in a market washout scenario, Murphy’s law applies. The marketmaker of last resort will be Goldman. And guess what he has on his book as your position being, LONG and WRONG. The exit vig will kill you much more than those low-low commissions promised by your benevolent banker.
Why the Banks may be legitimately recommending this tactic and why that recommendation assumes you are too stupid to understand the risks of getting long another way:
“You may be holding it for a long time and we are trying to save you the rollover cost execution.”
a. Math is math. Rolling over your long every expiration will cost approximately as much money as the complete contango from April to December right now. Add in the “We know you’re a buyer so we’re gonna back off and raise our Dec. ask price because you are a captive client” and you will most likely get crushed. They can’t fade you in April. They have more competitors there.
b. Even if a. is wrong and they are not fading you, and the monthly rollover carry is a tick or 2 more than just buying and holding the December future, we’d rather pay that liquidity premium any day instead of being kept on hold while our broker, banker, AND counterparty susses out our position before making a market in a back month future. Even if you execute the Dec contract for yourself on a screen, who do you think is bidding up the December contract with no fear of anyone selling it to them? They borrow at 0.00% interest. Their staying power is bigger than you and your 18% visa card. And they know you are coming to buy. Its Bayesian probability and asymmetric risk for them. You are toast. Their whole commodity model has de-evolved into a Martingale trade, And Double Zero is the Fed going under.
c. If it were more efficient to buy December futures than to buy April and roll them over, there would be no back month independent marketmakers or arbitrageurs, because there wouldn’t be sufficient edge to support their trading. But yet there are plenty of back month futures marketmakers willing to make a market in something you know infinitely less about than they do. Back month marketmaking is not a public service. Meanwhile, there are hardly any spot month independent marketmakers anymore, because the market is just too tight to make a living unless you are arbing another venue. Natural flow as a result of transparency and technology makes the market now. December, not so much.
Why they may be recommending this tactic with less than your best interests at heart:
1. They could already be long December contracts given to them from producers who hedged production last year. The Bank’s own hedges could be in April and they seek exit liquidity on their December long leg while they unwind their shorter dated leg, which is infinitely more liquid for them.
2. They are long April and are perfectly happy putting on the April/ Dec spread at higher than interest rate differentials. Specifically, 8 month rates will be less than what you pay buying December at a price while April is trading at a lower price. Example: they sell Dec, buy April and collect a cost of carry spread of say, .25% and then trade a bond spread that charges them .15%. Tadaaa, inefficient markets make them money.
3. Because their market share in commodities has shrunk since ETF’s have trumped their own GSCI for retail flow, and they have to make up some “special” reason to buy a December contract in Gold.
4. Maybe they are helping to create exit liquidity for a client they give a shit about, someone like Paulson? Free Abacus with every Dec future?
5. Some other reason our paranoid minds haven’t thought of.
In the one size fits all category, they should be telling you to buy an ETF. No rollover risk, less entry and exit vig and no cost of carry. But they can’t control that transaction can they? Unless of course they expect a paper versus physical delivery issue. In which case you should be long April, not December.
Even if their idea is legitimate and we’re wrong. They should at least describe the risks of buying a deferred expiration contract and not in some fluff piece by shill Jim Cramer’s site.
The irony of a good marketmaker is that his success attracts competitors and his service is then no longer needed. As these banks make less money on tighter bid/ask spreads they seek legislative protection of their franchises, less transparency, restrictions on competition and such. Call it white-collar welfare. Failing that, they seek more and more arcane ways of convincing you to put on a position which could be executed much less expensively. They seek to migrate your positions into the desert of liquidity. Where transparent light rarely shines. This way the bodies are harder to find if it blows up. They are in a war with exchanges as well. Exchange products are trumping bank intellectual capital and salesmanship. And so the banks are trying and succeeding in buying pieces of them now. There is a new wall going up, and it is being constructed by the government around the Exchanges. The banks want to be on the right side of that wall. Even while they rail against the exchange clearing monopolies, they want in. But we digress.
We are Bullish on Gold
Here is what we are telling you at the most basic level: if you are bullish, and haven’t fallen asleep yet reading this; buy the front month contract and use some reliable methodology to generate a stop loss. Be it technical analysis, bank roll management, voodoo, interest rates or whatever. Just have a level to get out if you are wrong.
If you insist on buying a December futures contract, the screen market will be 2 to 3x as wide as the April, and we’re sure higher than the cost of carry. Whatever gets you through the night we guess. Vaya con dios.
If you wish to express your position in options, consider a tight December call spread or a ratio if you are not afraid of margin calls. But learn what we are saying here first. Google it or email us. We’ll respond.
If you want to get fancy, do what the pros do, a covered write. Buy April Gold. Then ask yourself at what price do you want to get out? Goldman says $1480.00. If you agree, sell a December 2011 $1500 call and create a dividend for yourself if the market doesn’t get there. If it does, laugh to the bank. Just make sure you have the capital to handle a margin call, even as you are making profits. Keep your powder dry and don’t put too much in any one idea.
Submitted by Tyler Durden on 03/22/2011 21:46 -0400
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Late last week, Zero Hedge pointed out that Goldman Sachs had come out with yet another flip flop piece on gold, having recommended that clients should go long, then short, then long again, pretty much depending on which way the wind blows. We have long been skeptical of Goldman calls on anything, let alone gold, as the firm, just like JPMorgan is very much fundamentally conflicted any time it has a bullish "recommendation" on any precious metal due to the very intimate influence gold and other commodities have on Fed presidents' perception of inflation (and the last thing one would want is for Bernanke's deflation scare tactics to be doubted by more than just Dallas Fed's Fisher, who despite lofty rhetoric has yet to back his words with even one abstaining vote). That said, our skepticism about Goldman's sudden shift in bias has been validated by FMX Connect, which has conducted a forensic analysis of just what Goldman is seeking to achieve with its most recent recommendation. We continue to be far more bullish on any price appreciation prospects for gold, when Goldman (not to mention that other clown on TV), are bearish on gold, than the inverse.
From FMX Connect:
Gold Prices to Hit $1,480: Goldman Advises to buy a Deferred Expiration
We read an interesting sales pitch on the Street.com Friday. Here is an excerpt:
“The investment bank said in a research report Thursday that it expects gold to rally "towards our 3-month price target of $1,480" an ounce. Goldman is recommending investors get long on gold by buying the December 2011 futures contract currently trading at $1,426.10 an ounce.”
To restate:
“Buy Gold. Buy it in a less liquid, wider bid/ask market contract than April GC or GLD and buy it through and/or from us. Buy a contract whose liquidity will also most likely not be there when you need it most whether you are profitable or losing money.”
Forget the bank’s opinion. We ourselves are bullish. But it is commonly agreed among paranoid yet savvy traders that if Goldman is recommending you to buy, it is because they are already long and are maybe looking for an exit strategy for themselves or a client they favor.
No doubt, sometimes you make money getting long when GS says “Buy”. And that is because GS has uncovered a soft spot and the market will overshoot even their inventory overhang being liquidated. Or because their own client told them to buy. Or perhaps you were an early entrant in their “find the bigger fool” race. But sometimes you don’t make money.
Here is what we want to focus on: The recommendation of buying a deferred expiration future when so many more logical choices are available. Warning: lots of derivative talk ahead. We were on a caffeinated roll when we wrote this and didn’t make the time to translate to normal English.
Why the recommendation is Bad or at least not optimal for most people.
The real poker-tell here for us is how the bank is recommending you to get long.
“…get long on gold by buying the December 2011 futures contract…”
Right off the bat the math is wrong. Using the warped logic that recommends buying deferred expiration futures: A three month target of $1480 translates to an August future at the latest. Why would you tell someone to pay more carry cost than necessary? But let’s look at the implications of any deferred future recommendation as a market taker (i.e. lifting offer/ hitting bid client)
Let us now count the ways that this December purchase is both ridiculous, negligent, and possibly the most obvious tell on earth as to what their position actually is.
1. December futures are less continuously liquid than their front month counterpart, currently the April contract. Which means the implicit fee from the bid/ask spread will be bigger on entry into the long position. Is this added premium worth it? NO. Gold is Gold, and the difference in price between April futures and December futures is the opportunity cost of money. Gold today is gold tomorrow plus the cost of how much interest it would be to borrow money to buy the contract. Note we said continuously liquid. There are times when December will be almost as liquid as April (with a wider bid/ask no doubt), but the real hidden hazard is continuity. Translation: “When you NEED to get out, because of the gold market washing out, the stock market washing out, you kids college tuition due, war, peace, pestilence, or whatever…..that exit liquidity will be AWOL relative to the front month’s liquidity.
2. If there ever were a short squeeze event like in Silver and spreads went backwardated, guess which contract would benefit? April. So as unlikely as it is to happen, buying December takes the whole homerun from physical delivery issues right off the table. You are actually short optionality on a short squeeze. Guess who is long it? Speaking of Silver: how is it that GS didn’t tell their clients Silver would go backwardated? It was the trade of the year and much easier to see than if the market itself would go up or down. Do you think they missed it? We doubt that. We also doubt they would let you in on it until the trade was exhausted. We know of two hedge funds that didn’t miss it, and they told no one anything on their bet. We found out after the fact. When JPM crushed silver spreads and carried out a prominent futures local out on a $10MM stretcher, were their clients in on that one as well? We wonder if GS was caught on the other side of that disaster. Probably not. They probably benefitted. But by all means buy gold because they think it’s going up. Enjoy the crumbs from a TBTF bank’s best trades. It will also come with one of those neat oval stickers you can put on your Land Rover
3. Try getting out when you have to, upon exit especially in a market washout scenario, Murphy’s law applies. The marketmaker of last resort will be Goldman. And guess what he has on his book as your position being, LONG and WRONG. The exit vig will kill you much more than those low-low commissions promised by your benevolent banker.
Why the Banks may be legitimately recommending this tactic and why that recommendation assumes you are too stupid to understand the risks of getting long another way:
“You may be holding it for a long time and we are trying to save you the rollover cost execution.”
a. Math is math. Rolling over your long every expiration will cost approximately as much money as the complete contango from April to December right now. Add in the “We know you’re a buyer so we’re gonna back off and raise our Dec. ask price because you are a captive client” and you will most likely get crushed. They can’t fade you in April. They have more competitors there.
b. Even if a. is wrong and they are not fading you, and the monthly rollover carry is a tick or 2 more than just buying and holding the December future, we’d rather pay that liquidity premium any day instead of being kept on hold while our broker, banker, AND counterparty susses out our position before making a market in a back month future. Even if you execute the Dec contract for yourself on a screen, who do you think is bidding up the December contract with no fear of anyone selling it to them? They borrow at 0.00% interest. Their staying power is bigger than you and your 18% visa card. And they know you are coming to buy. Its Bayesian probability and asymmetric risk for them. You are toast. Their whole commodity model has de-evolved into a Martingale trade, And Double Zero is the Fed going under.
c. If it were more efficient to buy December futures than to buy April and roll them over, there would be no back month independent marketmakers or arbitrageurs, because there wouldn’t be sufficient edge to support their trading. But yet there are plenty of back month futures marketmakers willing to make a market in something you know infinitely less about than they do. Back month marketmaking is not a public service. Meanwhile, there are hardly any spot month independent marketmakers anymore, because the market is just too tight to make a living unless you are arbing another venue. Natural flow as a result of transparency and technology makes the market now. December, not so much.
Why they may be recommending this tactic with less than your best interests at heart:
1. They could already be long December contracts given to them from producers who hedged production last year. The Bank’s own hedges could be in April and they seek exit liquidity on their December long leg while they unwind their shorter dated leg, which is infinitely more liquid for them.
2. They are long April and are perfectly happy putting on the April/ Dec spread at higher than interest rate differentials. Specifically, 8 month rates will be less than what you pay buying December at a price while April is trading at a lower price. Example: they sell Dec, buy April and collect a cost of carry spread of say, .25% and then trade a bond spread that charges them .15%. Tadaaa, inefficient markets make them money.
3. Because their market share in commodities has shrunk since ETF’s have trumped their own GSCI for retail flow, and they have to make up some “special” reason to buy a December contract in Gold.
4. Maybe they are helping to create exit liquidity for a client they give a shit about, someone like Paulson? Free Abacus with every Dec future?
5. Some other reason our paranoid minds haven’t thought of.
In the one size fits all category, they should be telling you to buy an ETF. No rollover risk, less entry and exit vig and no cost of carry. But they can’t control that transaction can they? Unless of course they expect a paper versus physical delivery issue. In which case you should be long April, not December.
Even if their idea is legitimate and we’re wrong. They should at least describe the risks of buying a deferred expiration contract and not in some fluff piece by shill Jim Cramer’s site.
The irony of a good marketmaker is that his success attracts competitors and his service is then no longer needed. As these banks make less money on tighter bid/ask spreads they seek legislative protection of their franchises, less transparency, restrictions on competition and such. Call it white-collar welfare. Failing that, they seek more and more arcane ways of convincing you to put on a position which could be executed much less expensively. They seek to migrate your positions into the desert of liquidity. Where transparent light rarely shines. This way the bodies are harder to find if it blows up. They are in a war with exchanges as well. Exchange products are trumping bank intellectual capital and salesmanship. And so the banks are trying and succeeding in buying pieces of them now. There is a new wall going up, and it is being constructed by the government around the Exchanges. The banks want to be on the right side of that wall. Even while they rail against the exchange clearing monopolies, they want in. But we digress.
We are Bullish on Gold
Here is what we are telling you at the most basic level: if you are bullish, and haven’t fallen asleep yet reading this; buy the front month contract and use some reliable methodology to generate a stop loss. Be it technical analysis, bank roll management, voodoo, interest rates or whatever. Just have a level to get out if you are wrong.
If you insist on buying a December futures contract, the screen market will be 2 to 3x as wide as the April, and we’re sure higher than the cost of carry. Whatever gets you through the night we guess. Vaya con dios.
If you wish to express your position in options, consider a tight December call spread or a ratio if you are not afraid of margin calls. But learn what we are saying here first. Google it or email us. We’ll respond.
If you want to get fancy, do what the pros do, a covered write. Buy April Gold. Then ask yourself at what price do you want to get out? Goldman says $1480.00. If you agree, sell a December 2011 $1500 call and create a dividend for yourself if the market doesn’t get there. If it does, laugh to the bank. Just make sure you have the capital to handle a margin call, even as you are making profits. Keep your powder dry and don’t put too much in any one idea.
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