FMX Connect Debunks The Reverse Psychology In Goldman's "Buy Gold" Recommendation
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.
Wednesday, March 23, 2011
Tuesday, March 22, 2011
Time Out!
Submitted by: Francis Soyer
Yes, the flow of news, data, war death and suffering day in day out from uncle Satan is more than enough to make ones blood boil. Hence Francis is posting one for an attitude adjustment.
Is It Time To Short Every Single Global Hunter "Buy" Recommendation?
A week ago when we summarized the most recent round of inbound humiliation by one alleged bucket shop known as Global Hunter Securities, which basically has a buy recommendation on every single reverse merger ever to come to the US, even the acknowledged frauds such as in that particular case CCME, we said:"Oh well - at least we can be certain next week's non seasonally adjusted initial claims number will be at a minimum one (The Seasonally Adjusted can well be negative - it is from the BLS after all)." We were referring of course to the imminent termination of the sellside analyst covering CCME Ping Luo. You can therefore pardon our lack of astonishment when we read, literally minutes ago, the following release from Global Hunter: "We are discontinuing coverage of the following companies: AMCN,CCME, CHLN, CRTP, CVVT, HRBN, and SDTH. We are discontinuing coverage of these companies due to the departure of our analyst and due to a shift in our resources to other areas in the China space." Well, since we predicted the former, it was more or less expected, but we wonder what "other areas" in the China space has Global Hunter morphed to: will they soon be covering an as yet untought of pyramid scheme with a Turbo Buy? Or do by other areas do they actually mean perform due diligence instead of stamping everything that promises a coverage fee with a Buy rating. Which brings us to the topic of this post. Since Gobal Hunter's advisory reputation is smoldering in the sewer, we believe it is time to voice our own unsolicited advice, and tell readers to short every single company on Global Hunter's buy list. If today's example of DEER is any indication, the profit will be at least 20% in the span of a few weeks.
As readers know, we already discussed today's unexpected "discovery" by the analyst community that DEER (NASDAQ: FRAUD) is the latest stock to likely meet its reverse-merged maker in the purgatory of Over The Counter/Pink Sheet bulletin boards, where bid ask spreads are greater than the price of the actual stock. Yet as the chart below shows, we wonder just what magical demarcation line existed at precisely $11 for over 7 months! The flatline manipulation where there was a magical bid at all costs at $11 is beyond question. Of course, now that the stock has plunged below it, it is game over, as the next support is in the $8.00 range, following which the stock is taking the bullet train straight to zero.
We are curious if the porn-addicted securities regulator will actually move a finger to explain this chart which even a blind, mute and deaf monkey would recognize the inherent manipulated price floor in the name (until it breaks of course).
What we are not curious about, is the opinion that Global Hunter had on the name as recently as March 14, with a Buy recommendation and an $18 price target, this time by another analyst, Joe Giamichael - alas Joe may be joining Ping on the seasonally unadjusted initial claims line very soom. The gist is pretty much along the lines of what one would expect from any other alleged bucket shop.
As readers know, we already discussed today's unexpected "discovery" by the analyst community that DEER (NASDAQ: FRAUD) is the latest stock to likely meet its reverse-merged maker in the purgatory of Over The Counter/Pink Sheet bulletin boards, where bid ask spreads are greater than the price of the actual stock. Yet as the chart below shows, we wonder just what magical demarcation line existed at precisely $11 for over 7 months! The flatline manipulation where there was a magical bid at all costs at $11 is beyond question. Of course, now that the stock has plunged below it, it is game over, as the next support is in the $8.00 range, following which the stock is taking the bullet train straight to zero.
We are curious if the porn-addicted securities regulator will actually move a finger to explain this chart which even a blind, mute and deaf monkey would recognize the inherent manipulated price floor in the name (until it breaks of course).
What we are not curious about, is the opinion that Global Hunter had on the name as recently as March 14, with a Buy recommendation and an $18 price target, this time by another analyst, Joe Giamichael - alas Joe may be joining Ping on the seasonally unadjusted initial claims line very soom. The gist is pretty much along the lines of what one would expect from any other alleged bucket shop.
Charles Nenner- DJIA at 500, Major Wars
I would presume Libya is the appetizer to Nenner’s major conflict thesis. Well it seems that this recent incursion proves that over extension is another strategy on the table for the US military. In 2003, we saw the Bush administration maneuver directly into a pincer move against itself—as they opened a second front for extremists to engage the military in Iraq. It’s clear that either military or political philosophy is not Washington’s strong suit or the objective is not a quick resolution.
I am starting to believe there’s a lot more to Nenner’s arguments, especially the brooding deflationary crisis. This is not to say by any means that the dollar is a safe haven. That is because we have been in the deflationary spiral now for quite some time, primarily in terms of real wages.
The reality is that the dollar has become a dysfunctional currency. At the street level we are seeing smaller and smaller amounts of dollars chasing goods, which is in complete contrast to what we are witnessing in global capital markets.
Quantitative easing may have been part of the solution to the deflationary crisis-- had it been allocated towards stimulating industrial growth; however, money was instead diverted directly into equities, commodities and emerging where large returns on investment seem much more likely, at least for medium to short term profits.
Several factors emanating out of the two-tier economy should lead to another DJIA meltdown. Firstly, the successive rounds of misallocated quantitative easing schemes should become progressively less effective and ultimately, politically untenable. This will translate into an inability of the FED to buoy values of US securities. The second tier economy—essentially the US working class—will be forced to successively decrease their demand of good and services, as a result of the deflationary pressures brought on from the lack of credit, liquidity, and productive capacity.
Nevertheless, I still believe precious metals will continue to serve as the best hedges against the political, economic, and ecological disasters we are now witnessing.
I am starting to believe there’s a lot more to Nenner’s arguments, especially the brooding deflationary crisis. This is not to say by any means that the dollar is a safe haven. That is because we have been in the deflationary spiral now for quite some time, primarily in terms of real wages.
The reality is that the dollar has become a dysfunctional currency. At the street level we are seeing smaller and smaller amounts of dollars chasing goods, which is in complete contrast to what we are witnessing in global capital markets.
Quantitative easing may have been part of the solution to the deflationary crisis-- had it been allocated towards stimulating industrial growth; however, money was instead diverted directly into equities, commodities and emerging where large returns on investment seem much more likely, at least for medium to short term profits.
Several factors emanating out of the two-tier economy should lead to another DJIA meltdown. Firstly, the successive rounds of misallocated quantitative easing schemes should become progressively less effective and ultimately, politically untenable. This will translate into an inability of the FED to buoy values of US securities. The second tier economy—essentially the US working class—will be forced to successively decrease their demand of good and services, as a result of the deflationary pressures brought on from the lack of credit, liquidity, and productive capacity.
Nevertheless, I still believe precious metals will continue to serve as the best hedges against the political, economic, and ecological disasters we are now witnessing.
Friday, March 18, 2011
"Gold Set To Rally" - Goldman Expects Gold To Promptly Rise To $1,480
Comment by: Francis Soyer 03/18/11
While this piece from the SAC should make gold longs feel giddy one should also take a note of caution. Goldman and the other large sell side firms in terms of research and their proprietary trading patterns act IN THEIR OWN SELF INTERESTS. That said what then does this recommendation mean and how should a speculator react if one knows the above? Most likely that we as of now have reached an intermediate term low. A rise to $1,480 is a piddly squat move from here with gold trading at $1,404 this morning. Which means this recomendation that they are pimping this morning should make gold investors want to start selling in here so Goldman can buy in preparation for the next massive leg up well beyond $1,480. As mentioned in the report below their thesis is pointed at unrest in the middle east and Japan etc. The real issue at hand is that confidence in Governments is deteriorating and THAT is when Gold appreciates. This deterioration is ongoing and unstoppable. Why? Because we all know that our world governments will fail because they have blown themselves up borrowing money that will never be able to be paid back. Its called DEFAULT and it is maybe a few months away at this point.
"Gold Set To Rally" - Goldman Expects Gold To Promptly Rise To $1,480
Submitted by Tyler Durden on 03/18/2011 07:43 -0400
As we are experiencing a furious regime change, the sellside positional updates are coming fast and furious. The latest major recommendation change comes again from Goldman which has just reiterated its belief gold will reach its 3 month target of $1,480 shortly. Of course, after a Cramer recommendation to buy the metal, this is the only call for a higher gold price that should be of great concern to everyone. From Goldman: "We expect gold prices to rally toward our 3-month price target of $1480/toz, and continue to recommend a long gold trade. While the protests and threat to oil supplies in the Middle East and North Africa drove COMEX gold prices to a new record high of $1437/toz on March 2, the events in Japan have paradoxically sent gold prices back below $1400/toz despite the ongoing decline in US 10-year TIPS yields. Given the decline in US real interest rates, we see the recent retracement in gold prices as offering a good buying opportunity, and maintain our long gold trading recommendation as we expect gold to rally to our 3-month price target of $1480/toz."
Oil Heading North off UN Decision to Bomb Lybia
There Goes Oil
Submitted by Tyler Durden on 03/17/2011 19:08 -0400
An hour ago we said: "Watch for the reaction in crude following the vote passage, and especially following Bloomberg headlines that France has launched an all out attack." Well the attack is still pending, but the oil reaction is here (and nobody could have seen it coming). WTI just passed $103. Demand destruction or no demand destruction, here we come. And just imagine what happens when Japan is fully back on line again (in about a year at which point the US will be between QE 4 and 5).
Submitted by Tyler Durden on 03/17/2011 19:08 -0400
An hour ago we said: "Watch for the reaction in crude following the vote passage, and especially following Bloomberg headlines that France has launched an all out attack." Well the attack is still pending, but the oil reaction is here (and nobody could have seen it coming). WTI just passed $103. Demand destruction or no demand destruction, here we come. And just imagine what happens when Japan is fully back on line again (in about a year at which point the US will be between QE 4 and 5).
Wednesday, March 16, 2011
Head of FDIC Stepping Down and some of her parting comments and warnings
Sheila says goodbye to the ABA
Submitted by Bruce Krasting on 03/16/2011 13:09 -0400
I have gone both ways with Sheila Bair. I have criticized some of what she has done and applauded others. She gave a speech to the America Bankers Association today. She summed things up pretty well. Early on in the presentation she made this significant remark:
This may be my last opportunity to speak with you before the end of my term in June.
Read this to mean that she is out. This is a big job that requires a transition period. A new FDIC head has to be named soon. Given the politics of this position and the daggers being bandied about in D.C. I think this has to come by 4/30. Just six weeks away. Should be interesting.
Given that this was her last opportunity to address all the big bankers in one room it was a good time for Sheila to beat up on the audience:
I would like to propose to you a radical-sounding notion. And it is that increasing the size and profitability of the financial services industry is not – and should not be – the main goal of our national economic policy.
Apparently this woke the audience up. Guys were choking on their bagels. This must have also gotten the coffee cups rattling:
My reading of recent polling data on how the public views banks also speaks to the need for a different approach from your industry. In April 2010, a Pew Research poll found that just 22 percent of respondents rated banks and other financial institutions as having “a positive effect on the way things are going in this country.”
This was lower than the ratings they gave to Congress, the federal government, big business, labor unions, and the entertainment industry.
She warned the banks:
What is important for you to recognize is that this type of reputation risk will eventually have implications for your bottom line and the confidence of your investors and customers.
All this is old news to Zero Hedge readers. But it's a pretty big deal when the outgoing head of the FDIC says it.
Notes:
(I) We have not seen the last of Ms. Bair. I don’t think she is a presidential candidate, but she would make a good VP. Her name is on this list. She might be our next Treasury Secretary. I’m "ABT" (anyone but Tim). She could also run the Fed. Bernanke has erred with QE2. He will take heat for the inflation that is brewing. It just might be that he goes back to Princeton in a year. Her name is definitely on that list.
(II) I finally got around to dumping my accounts with the big banks. I am now with a Community Bank. They do everything the big slobs do. They don’t have branches on every corner. Who cares? Community Banks are now lending. The big guys are not. Their deposit rates are better. Plus you get to say “screw you” to a Morg, a Citi or a BoA.
Submitted by Bruce Krasting on 03/16/2011 13:09 -0400
I have gone both ways with Sheila Bair. I have criticized some of what she has done and applauded others. She gave a speech to the America Bankers Association today. She summed things up pretty well. Early on in the presentation she made this significant remark:
This may be my last opportunity to speak with you before the end of my term in June.
Read this to mean that she is out. This is a big job that requires a transition period. A new FDIC head has to be named soon. Given the politics of this position and the daggers being bandied about in D.C. I think this has to come by 4/30. Just six weeks away. Should be interesting.
Given that this was her last opportunity to address all the big bankers in one room it was a good time for Sheila to beat up on the audience:
I would like to propose to you a radical-sounding notion. And it is that increasing the size and profitability of the financial services industry is not – and should not be – the main goal of our national economic policy.
Apparently this woke the audience up. Guys were choking on their bagels. This must have also gotten the coffee cups rattling:
My reading of recent polling data on how the public views banks also speaks to the need for a different approach from your industry. In April 2010, a Pew Research poll found that just 22 percent of respondents rated banks and other financial institutions as having “a positive effect on the way things are going in this country.”
This was lower than the ratings they gave to Congress, the federal government, big business, labor unions, and the entertainment industry.
She warned the banks:
What is important for you to recognize is that this type of reputation risk will eventually have implications for your bottom line and the confidence of your investors and customers.
All this is old news to Zero Hedge readers. But it's a pretty big deal when the outgoing head of the FDIC says it.
Notes:
(I) We have not seen the last of Ms. Bair. I don’t think she is a presidential candidate, but she would make a good VP. Her name is on this list. She might be our next Treasury Secretary. I’m "ABT" (anyone but Tim). She could also run the Fed. Bernanke has erred with QE2. He will take heat for the inflation that is brewing. It just might be that he goes back to Princeton in a year. Her name is definitely on that list.
(II) I finally got around to dumping my accounts with the big banks. I am now with a Community Bank. They do everything the big slobs do. They don’t have branches on every corner. Who cares? Community Banks are now lending. The big guys are not. Their deposit rates are better. Plus you get to say “screw you” to a Morg, a Citi or a BoA.
Energy chairman warns US headed toward 1970s-style crisis
Energy chairman warns US headed toward 1970s-style crisis
By Michael O'Brien - 03/14/11 09:02 AM ET
The U.S. could be heading toward an energy crisis of a type unseen since the 1970s, the chairman of the House's Energy panel said.
Rep. Fred Upton (R-Mich.), the chairman of the House Energy and Commerce Committee, warned of elevated prices for gas and other energy sources along the lines of what the U.S. experienced under President Carter.
Asked by the conservative website Newsmax if energy prices were heading toward a '70s-style crisis, Upton said: "Well, we are.
"Who knows where this is going to stop? How long is this turmoil going to last?"
Video of the interview was posted over the weekend.
Upton echoed GOP criticism of President Obama, whom the Michigan Republican blamed for not allowing permits for additional energy exploration, which Upton said would help bring down prices.
The GOP chairman's words are part of a new barrage by Republicans against Obama over the increased price of energy, especially gasoline, in recent weeks. Speaker John Boehner (R-Ohio) led House Republicans in a push against the White House's energy policies last week, and GOP presidential candidates have also joined in the fun; Mississippi Gov. Haley Barbour (R) has been a frequent critic of Obama's energy policies, and will level more criticism in a speech Monday in the president's hometown of Chicago.
The president addressed the increasing energy prices in a Friday news conference, in which he renewed calls for lawmakers to work on energy reforms, including encouraging more efficient technology and some increased energy production. Obama also suggested he would be willing to tap the Strategic Petroleum Reserves to provide relief from prices if they get too high.
He also shot back at Republican critics, who have suggested Obama is purposefully keeping prices high.
"[A]ny notion that my administration has shut down oil production might make for a good political sound bite, but it doesn’t match up with reality," Obama said.
By Michael O'Brien - 03/14/11 09:02 AM ET
The U.S. could be heading toward an energy crisis of a type unseen since the 1970s, the chairman of the House's Energy panel said.
Rep. Fred Upton (R-Mich.), the chairman of the House Energy and Commerce Committee, warned of elevated prices for gas and other energy sources along the lines of what the U.S. experienced under President Carter.
Asked by the conservative website Newsmax if energy prices were heading toward a '70s-style crisis, Upton said: "Well, we are.
"Who knows where this is going to stop? How long is this turmoil going to last?"
Video of the interview was posted over the weekend.
Upton echoed GOP criticism of President Obama, whom the Michigan Republican blamed for not allowing permits for additional energy exploration, which Upton said would help bring down prices.
The GOP chairman's words are part of a new barrage by Republicans against Obama over the increased price of energy, especially gasoline, in recent weeks. Speaker John Boehner (R-Ohio) led House Republicans in a push against the White House's energy policies last week, and GOP presidential candidates have also joined in the fun; Mississippi Gov. Haley Barbour (R) has been a frequent critic of Obama's energy policies, and will level more criticism in a speech Monday in the president's hometown of Chicago.
The president addressed the increasing energy prices in a Friday news conference, in which he renewed calls for lawmakers to work on energy reforms, including encouraging more efficient technology and some increased energy production. Obama also suggested he would be willing to tap the Strategic Petroleum Reserves to provide relief from prices if they get too high.
He also shot back at Republican critics, who have suggested Obama is purposefully keeping prices high.
"[A]ny notion that my administration has shut down oil production might make for a good political sound bite, but it doesn’t match up with reality," Obama said.
Tuesday, March 15, 2011
Bahrain imposes state of emergency
Submitted by: Francis Soyer
The story below is a precurser to what will be a complete shit show that will end badly in Saudi Arabia and WILL send oil to $200-$225 per barrel. To protect purchasing power at the pump Francis is taking a 5% to 10% portfolio position in DBO. At the same time he is also taking a 5% to 10% portfolio position in PSLV to offset the ongoing demise of the USD which is headed to zero over the next 16 to 18 months. Sending love, light and thoughts of peace to the citizens of Bahrain, Mauritania, Afghanistan, Yemen, Cote d'Ivoire, Mali, Eritrea, Libya, Egypt, Pakistan, Haiti, Central African Republic, Niger, Nepal and Sudan. The above countries all experiencing states of protest and revolt.
Middle East
Bahrain imposes state of emergency
Two killed and many wounded in violent clashes as king authorises "all necessary measures to protect safety of country".
Last Modified: 15 Mar 2011 16:57 GMT
The king of Bahrain has declared a state of emergency for three months on the island following weeks of anti-government protests, as deadly clashes continued across the country.
An order by the king "authorised the commander of Bahrain's defence forces to take all necessary measures to protect the safety of the country and its citizens," a statement read out on television on Tuesday said.
The development comes a day after Saudi-led military forces arrived to support the government, which is facing pressure from the Shia majority to implement reforms.
Al Jazeera's correspondent in the capital, Manama, who we are not naming for security reasons, said the declaration of a state of emergency appeared to have been deliberated upon for some time now.
"The last few days Manama has effectively been shut down. So there was a sense that something was going to happen. Then yesterday we had the GCC troops come in," he said.
"I'm standing now in and amongst a demonstration. There are tens of thousands of people streaming past me to the Saudi embassy. There is a great sense of change here."
Renewed clashes
Our correspondent said there was not a visible presence of Saudi troops on the streets in his area, but clashes between protesters and Bahraini security forces continued elsewhere.
He confirmed reports that at least two people were killed in the Shia suburb of Sitra outside of Manama in fighting there on Tuesday.
Abdullah Al Hubaaishi, a Bahraini who was making his way to the protest camp at Pearl Roundabout in Manama, told Al Jazeera that there were many wounded protesters on the streets in Sitra.
"Most of them have been shot," he said. "Those people started attacking the villages and the towns. If there is anybody in the road they will shoot them. If there is nobody in the road they will enter the houses."
Request for assistance
Hundreds of Saudi-led troops entered Bahrain on Monday to help protect government facilities there amid an escalation in the protests against the government.
Local television broadcast images of troops in armoured cars entering the Gulf state via the 26km causeway that connects the kingdom to Saudi Arabia.
The arrival of the troops followed a request to members of the Gulf Co-Operation Council (GCC) from Bahrain.
The United Arab Emirates also sent about 500 police to Bahrain, according to Abdullah bin Zayed Al-Nahyan, the Emirati foreign minister. Qatar, meanwhile, did not rule out the possibility of its troops joining the force.
Sheikh Hamad bin Jassim bin Jabr Al-Thani, the Qatari prime minister and foreign minister, told Al Jazeera: "There are common responsibilities and obligations within the GCC countries.
"The arrival of Saudi and UAE troops in Bahrain is in line with a GCC defence agreement that calls for all members to oblige when needed and to fully co-operate.
"We are committed to adhering to the GCC agreement. At the moment we have peacekeeping troops. We don't have a full force there, but this is up for discussion."
International concern
The US, which counts both Bahrain and Saudi Arabia among its allies, has called for restraint, but has refrained from saying whether it supports the move to deploy troops.
"We urge our GCC (Gulf Co-operation Council) partners to show restraint and respect the rights of the people of Bahrain, and to act in a way that supports dialogue instead of undermining it," Tommy Vietor, the White House spokesman, said on Monday.
Americans are being advised to avoid travelling to the island, which is home to US warships that patrol the Gulf.
Iran, meanwhile, has warned against "foreign interferences".
"The peaceful demonstrations in Bahrain are among the domestic issues of this country, and creating an atmosphere of fear and using other countries' military forces to oppress these demands is not the solution," Hossein Amir Abdollahian, an official from the Iranian foreign ministry, was reported by Iran's semi-official Fars news agency as saying.
Provocation to protesters
Abdel al-Mowada, the deputy chairman of Bahrain's parliament, told Al Jazeera that it was not clear how the Saudi force would be deployed but denied the troops would become a provocation to protesters.
"It is not a lack of security forces in Bahrain, it is a showing of solidarity among the GCC," he told Al Jazeera.
"I don't know if they are going to be in the streets or save certain areas ... [but protesters] blocking the roads are no good for anyone, we should talk.
"The government is willing to get together and make the changes needed, but when the situation is like this, you cannot talk."
The Saudi troops arrived less than 24 hours after Bahraini police clashed with demonstrators in one of the most violent confrontations since troops killed seven protesters last month.
Opposition groups, including Wefaq, the country's largest Shia movement, have spoken out against the use of foreign troops.
"We consider the entry of any soldier or military machinery into the Kingdom of Bahrain's air, sea or land territories a blatant occupation," Wefaq said in a statement.
Bahrain Gets Added to the Official Travel Warning List at U.S. State Department
Submitted by: Francis Soyer
It is now official. Bahrain as of end of day yesterday is on the travel warning list as issued by the State Department. This is not a good sign of things to come as if the world does not have enough problems...
Travel Warning
U.S. DEPARTMENT OF STATE
Bureau of Consular Affairs
March 14, 2011
The U.S. Department of State warns U.S. citizens of the potential for ongoing political and civil unrest in Bahrain. We urge U.S. citizens to defer travel to Bahrain at this time. U.S. citizens currently in Bahrain should consider departing. On March 14, 2011, the Department of State authorized the voluntary departure from Bahrain of eligible family members of U.S. Embassy staff. This Travel Warning replaces the Travel Alert dated February 18, 2011.
Bahrain has experienced a breakdown in law and order in various areas of the country over the last few weeks. Demonstrations have degenerated into violent clashes between police and protesters on several occasions, resulting in injuries. There also have been multiple reports of sectarian groups patrolling areas throughout Bahrain and establishing unofficial vehicle checkpoints. On March 14, 2011, foreign military elements entered Bahrain. Spontaneous demonstrations and violence can be expected throughout the country. There is no indication that U.S. citizens are being threatened or targeted.
While demonstrations have not been directed toward Westerners, U.S. citizens are urged to remain alert to local security developments and to be vigilant regarding their personal security. The U.S. Department of State strongly urges U.S. citizens to avoid all demonstrations, as even peaceful ones can quickly become unruly and a foreigner could become a target of harassment or worse.
The U.S. Embassy in Manama can be reached at (973) 1724-2700; the after-hours emergency number is (973) 1724-2957; the fax number is (973) 1725-6242. Demonstration Notices can be found on the Embassy’s website. U.S. citizens requiring emergency consular assistance may contact the Department via our website by going to the “Middle East and North Africa Situation” site.
U.S. citizens in Bahrain are encouraged to enroll in the Smart Traveler Enrollment Program (STEP). U.S. citizens without internet access may enroll directly at the U.S. Embassy. By enrolling, U.S. citizens make it easier for the Embassy to contact them in case of emergency.
Stratfor On Japan, the Persian Gulf and Energy
Stratfor On Japan, the Persian Gulf and Energy
Submitted by Tyler Durden on 03/15/2011 15:43 -0400
From Stratfor
Japan, the Persian Gulf and Energy
By George Friedman
Over the past week, everything seemed to converge on energy. The unrest in the Persian Gulf raised the specter of the disruption of oil supplies to the rest of the world, and an earthquake in Japan knocked out a string of nuclear reactors with potentially devastating effect. Japan depends on nuclear energy and it depends on the Persian Gulf, which is where it gets most of its oil. It was, therefore, a profoundly bad week for Japan, not only because of the extensive damage and human suffering but also because Japan was being shown that it can’t readily escape the realities of geography.
Japan is the world’s third-largest economy, a bit behind China now. It is also the third-largest industrial economy, behind only the United States and China. Japan’s problem is that its enormous industrial plant is built in a country almost totally devoid of mineral resources. It must import virtually all of the metals and energy that it uses to manufacture industrial products. It maintains stockpiles, but should those stockpiles be depleted and no new imports arrive, Japan stops being an industrial power.
The Geography of Oil
There are multiple sources for many of the metals Japan imports, so that if supplies stop flowing from one place it can get them from other places. The geography of oil is more limited. In order to access the amount of oil Japan needs, the only place to get it is the Persian Gulf. There are other places to get some of what Japan needs, but it cannot do without the Persian Gulf for its oil.
This past week, we saw that this was a potentially vulnerable source. The unrest that swept the western littoral of the Arabian Peninsula and the ongoing tension between the Saudis and Iranians, as well as the tension between Iran and the United States, raised the possibility of disruptions. The geography of the Persian Gulf is extraordinary. It is a narrow body of water opening into a narrow channel through the Strait of Hormuz. Any diminution of the flow from any source in the region, let alone the complete closure of the Strait of Hormuz, would have profound implications for the global economy.
For Japan it could mean more than higher prices. It could mean being unable to secure the amount of oil needed at any price. The movement of tankers, the limits on port facilities and long-term contracts that commit oil to other places could make it impossible for Japan to physically secure the oil it needs to run its industrial plant. On an extended basis, this would draw down reserves and constrain Japan’s economy dramatically. And, obviously, when the world’s third-largest industrial plant drastically slows, the impact on the global supply chain is both dramatic and complex.
In 1973, the Arab countries imposed an oil embargo on the world. Japan, entirely dependent on imported oil, was hit not only by high prices but also by the fact that it could not obtain enough fuel to keep going. While the embargo lasted only five months, the oil shock, as the Japanese called it, threatened Japan’s industrial capability and shocked it into remembering its vulnerability. Japan relied on the United States to guarantee its oil supplies. The realization that the United States couldn’t guarantee those supplies created a political crisis parallel to the economic one. It is one reason the Japanese are hypersensitive to events in the Persian Gulf and to the security of the supply lines running out of the region.
Regardless of other supplies, Japan will always import nearly 100 percent of its oil from other countries. If it cuts its consumption by 90 percent, it still imports nearly 100 percent of its oil. And to the extent that the Japanese economy requires oil — which it does — it is highly vulnerable to events in the Persian Gulf.
It is to mitigate the risk of oil dependency — which cannot be eliminated altogether by any means — that Japan employs two alternative fuels: It is the world’s largest importer of seaborne coal, and it has become the third-largest producer of electricity from nuclear reactors, ranking after the United States and France in total amount produced. One-third of its electricity production comes from nuclear power plants. Nuclear power was critical to both Japan’s industrial and national security strategy. It did not make Japan self-sufficient, since it needed to import coal and nuclear fuel, but access to these resources made it dependent on countries like Australia, which does not have choke points like Hormuz.
It is in this context that we need to understand the Japanese prime minister’s statement that Japan was facing its worst crisis since World War II. First, the earthquake and the resulting damage to several of Japan’s nuclear reactors created a long-term regional energy shortage in Japan that, along with the other damage caused by the earthquake, would certainly affect the economy. But the events in the Persian Gulf also raised the 1973 nightmare scenario for the Japanese. Depending how events evolved, the Japanese pipeline from the Persian Gulf could be threatened in a way that it had not been since 1973. Combined with the failure of several nuclear reactors, the Japanese economy is at risk.
The comparison with World War II was apt since it also began, in a way, with an energy crisis. The Japanese had invaded China, and after the fall of the Netherlands (which controlled today’s Indonesia) and France (which controlled Indochina), Japan was concerned about agreements with France and the Netherlands continuing to be honored. Indochina supplied Japan with tin and rubber, among other raw materials. The Netherlands East Indies supplied oil. When the Japanese invaded Indochina, the United States both cut off oil shipments from the United States and started buying up oil from the Netherlands East Indies to keep Japan from getting it. The Japanese were faced with the collapse of their economy or war with the United States. They chose Pearl Harbor.
Today’s situation is in no way comparable to what happened in 1941 except for the core geopolitical reality. Japan is dependent on imports of raw materials and particularly oil. Anything that interferes with the flow of oil creates a crisis in Japan. Anything that risks a cutoff makes Japan uneasy. Add an earthquake destroying part of its energy-producing plant and you force Japan into a profound internal crisis. However, it is essential to understand what energy has meant to Japan historically — miscalculation about it led to national disaster and access to it remains Japan’s psychological as well as physical pivot.
Japan’s Nuclear Safety Net
Japan is still struggling with the consequences of its economic meltdown in the early 1990s. Rapid growth with low rates of return on capital created a massive financial crisis. Rather than allow a recession to force a wave of bankruptcies and unemployment, the Japanese sought to maintain their tradition of lifetime employment. To do that Japan had to keep interest rates extremely low and accept little or no economic growth. It achieved its goal, relatively low unemployment, but at the cost of a large debt burden and a long-term sluggish economy.
The Japanese were beginning to struggle with the question of what would come after a generation of economic stagnation and full employment. They had clearly not yet defined a path, although there was some recognition that a generation’s economic reality could not sustain itself. The changes that Japan would face were going to be wrenching, and even under the best of circumstances, they would be politically difficult to manage. Suddenly, Japan is not facing the best of circumstances.
It is not yet clear how devastating the nuclear-reactor damage will prove to be, but the situation appears to be worsening. What is clear is that the potential crisis in the Persian Gulf, the loss of nuclear reactors and the rising radiation levels will undermine the confidence of the Japanese. Beyond the human toll, these reactors were Japan’s hedge against an unpredictable world. They gave it control of a substantial amount of its energy production. Even if the Japanese still had to import coal and oil, there at least a part of their energy structure was largely under their own control and secure. Japan’s nuclear power sector seemed invulnerable, which no other part of its energy infrastructure was. For Japan, a country that went to war with the United States over energy in 1941 and was devastated as a result, this was no small thing. Japan had a safety net.
The safety net was psychological as much as anything. The destruction of a series of nuclear reactors not only creates energy shortages and fear of radiation; it also drives home the profound and very real vulnerability underlying all of Japan’s success. Japan does not control the source of its oil, it does not control the sea lanes over which coal and other minerals travel, and it cannot be certain that its nuclear reactors will not suddenly be destroyed. To the extent that economics and politics are psychological, this is a huge blow. Japan lives in constant danger, both from nature and from geopolitics. What the earthquake drove home was just how profound and how dangerous Japan’s world is. It is difficult to imagine another industrial economy as inherently insecure as Japan’s. The earthquake will impose many economic constraints on Japan that will significantly complicate its emergence from its post-boom economy, but one important question is the impact on the political system. Since World War II, Japan has coped with its vulnerability by avoiding international entanglements and relying on its relationship with the United States. It sometimes wondered whether the United States, with its sometimes-unpredictable military operations, was more of a danger than a guarantor, but its policy remained intact.
It is not the loss of the reactors that will shake Japan the most but the loss of the certainty that the reactors were their path to some degree of safety, along with the added burden on the economy. The question is how the political system will respond. In dealing with the Persian Gulf, will Japan continue to follow the American lead or will it decide to take a greater degree of control and follow its own path? The likelihood is that a shaken self-confidence will make Japan more cautious and even more vulnerable. But it is interesting to look at Japanese history and realize that sometimes, and not always predictably, Japan takes insecurity as a goad to self-assertion.
This was no ordinary earthquake in magnitude or in the potential impact on Japan’s view of the world. The earthquake shook a lot of pieces loose, not the least of which were in the Japanese psyche. Japan has tried to convince itself that it had provided a measure of security with nuclear plants and an alliance with the United States. Given the earthquake and situation in the Persian Gulf, recalculation is in order. But Japan is a country that has avoided recalculation for a long time. The question now is whether the extraordinary vulnerability exposed by the quake will be powerful enough to shake Japan into recalculating its long-standing political system.
This report is republished with permission of STRATFOR
Submitted by Tyler Durden on 03/15/2011 15:43 -0400
From Stratfor
Japan, the Persian Gulf and Energy
By George Friedman
Over the past week, everything seemed to converge on energy. The unrest in the Persian Gulf raised the specter of the disruption of oil supplies to the rest of the world, and an earthquake in Japan knocked out a string of nuclear reactors with potentially devastating effect. Japan depends on nuclear energy and it depends on the Persian Gulf, which is where it gets most of its oil. It was, therefore, a profoundly bad week for Japan, not only because of the extensive damage and human suffering but also because Japan was being shown that it can’t readily escape the realities of geography.
Japan is the world’s third-largest economy, a bit behind China now. It is also the third-largest industrial economy, behind only the United States and China. Japan’s problem is that its enormous industrial plant is built in a country almost totally devoid of mineral resources. It must import virtually all of the metals and energy that it uses to manufacture industrial products. It maintains stockpiles, but should those stockpiles be depleted and no new imports arrive, Japan stops being an industrial power.
The Geography of Oil
There are multiple sources for many of the metals Japan imports, so that if supplies stop flowing from one place it can get them from other places. The geography of oil is more limited. In order to access the amount of oil Japan needs, the only place to get it is the Persian Gulf. There are other places to get some of what Japan needs, but it cannot do without the Persian Gulf for its oil.
This past week, we saw that this was a potentially vulnerable source. The unrest that swept the western littoral of the Arabian Peninsula and the ongoing tension between the Saudis and Iranians, as well as the tension between Iran and the United States, raised the possibility of disruptions. The geography of the Persian Gulf is extraordinary. It is a narrow body of water opening into a narrow channel through the Strait of Hormuz. Any diminution of the flow from any source in the region, let alone the complete closure of the Strait of Hormuz, would have profound implications for the global economy.
For Japan it could mean more than higher prices. It could mean being unable to secure the amount of oil needed at any price. The movement of tankers, the limits on port facilities and long-term contracts that commit oil to other places could make it impossible for Japan to physically secure the oil it needs to run its industrial plant. On an extended basis, this would draw down reserves and constrain Japan’s economy dramatically. And, obviously, when the world’s third-largest industrial plant drastically slows, the impact on the global supply chain is both dramatic and complex.
In 1973, the Arab countries imposed an oil embargo on the world. Japan, entirely dependent on imported oil, was hit not only by high prices but also by the fact that it could not obtain enough fuel to keep going. While the embargo lasted only five months, the oil shock, as the Japanese called it, threatened Japan’s industrial capability and shocked it into remembering its vulnerability. Japan relied on the United States to guarantee its oil supplies. The realization that the United States couldn’t guarantee those supplies created a political crisis parallel to the economic one. It is one reason the Japanese are hypersensitive to events in the Persian Gulf and to the security of the supply lines running out of the region.
Regardless of other supplies, Japan will always import nearly 100 percent of its oil from other countries. If it cuts its consumption by 90 percent, it still imports nearly 100 percent of its oil. And to the extent that the Japanese economy requires oil — which it does — it is highly vulnerable to events in the Persian Gulf.
It is to mitigate the risk of oil dependency — which cannot be eliminated altogether by any means — that Japan employs two alternative fuels: It is the world’s largest importer of seaborne coal, and it has become the third-largest producer of electricity from nuclear reactors, ranking after the United States and France in total amount produced. One-third of its electricity production comes from nuclear power plants. Nuclear power was critical to both Japan’s industrial and national security strategy. It did not make Japan self-sufficient, since it needed to import coal and nuclear fuel, but access to these resources made it dependent on countries like Australia, which does not have choke points like Hormuz.
It is in this context that we need to understand the Japanese prime minister’s statement that Japan was facing its worst crisis since World War II. First, the earthquake and the resulting damage to several of Japan’s nuclear reactors created a long-term regional energy shortage in Japan that, along with the other damage caused by the earthquake, would certainly affect the economy. But the events in the Persian Gulf also raised the 1973 nightmare scenario for the Japanese. Depending how events evolved, the Japanese pipeline from the Persian Gulf could be threatened in a way that it had not been since 1973. Combined with the failure of several nuclear reactors, the Japanese economy is at risk.
The comparison with World War II was apt since it also began, in a way, with an energy crisis. The Japanese had invaded China, and after the fall of the Netherlands (which controlled today’s Indonesia) and France (which controlled Indochina), Japan was concerned about agreements with France and the Netherlands continuing to be honored. Indochina supplied Japan with tin and rubber, among other raw materials. The Netherlands East Indies supplied oil. When the Japanese invaded Indochina, the United States both cut off oil shipments from the United States and started buying up oil from the Netherlands East Indies to keep Japan from getting it. The Japanese were faced with the collapse of their economy or war with the United States. They chose Pearl Harbor.
Today’s situation is in no way comparable to what happened in 1941 except for the core geopolitical reality. Japan is dependent on imports of raw materials and particularly oil. Anything that interferes with the flow of oil creates a crisis in Japan. Anything that risks a cutoff makes Japan uneasy. Add an earthquake destroying part of its energy-producing plant and you force Japan into a profound internal crisis. However, it is essential to understand what energy has meant to Japan historically — miscalculation about it led to national disaster and access to it remains Japan’s psychological as well as physical pivot.
Japan’s Nuclear Safety Net
Japan is still struggling with the consequences of its economic meltdown in the early 1990s. Rapid growth with low rates of return on capital created a massive financial crisis. Rather than allow a recession to force a wave of bankruptcies and unemployment, the Japanese sought to maintain their tradition of lifetime employment. To do that Japan had to keep interest rates extremely low and accept little or no economic growth. It achieved its goal, relatively low unemployment, but at the cost of a large debt burden and a long-term sluggish economy.
The Japanese were beginning to struggle with the question of what would come after a generation of economic stagnation and full employment. They had clearly not yet defined a path, although there was some recognition that a generation’s economic reality could not sustain itself. The changes that Japan would face were going to be wrenching, and even under the best of circumstances, they would be politically difficult to manage. Suddenly, Japan is not facing the best of circumstances.
It is not yet clear how devastating the nuclear-reactor damage will prove to be, but the situation appears to be worsening. What is clear is that the potential crisis in the Persian Gulf, the loss of nuclear reactors and the rising radiation levels will undermine the confidence of the Japanese. Beyond the human toll, these reactors were Japan’s hedge against an unpredictable world. They gave it control of a substantial amount of its energy production. Even if the Japanese still had to import coal and oil, there at least a part of their energy structure was largely under their own control and secure. Japan’s nuclear power sector seemed invulnerable, which no other part of its energy infrastructure was. For Japan, a country that went to war with the United States over energy in 1941 and was devastated as a result, this was no small thing. Japan had a safety net.
The safety net was psychological as much as anything. The destruction of a series of nuclear reactors not only creates energy shortages and fear of radiation; it also drives home the profound and very real vulnerability underlying all of Japan’s success. Japan does not control the source of its oil, it does not control the sea lanes over which coal and other minerals travel, and it cannot be certain that its nuclear reactors will not suddenly be destroyed. To the extent that economics and politics are psychological, this is a huge blow. Japan lives in constant danger, both from nature and from geopolitics. What the earthquake drove home was just how profound and how dangerous Japan’s world is. It is difficult to imagine another industrial economy as inherently insecure as Japan’s. The earthquake will impose many economic constraints on Japan that will significantly complicate its emergence from its post-boom economy, but one important question is the impact on the political system. Since World War II, Japan has coped with its vulnerability by avoiding international entanglements and relying on its relationship with the United States. It sometimes wondered whether the United States, with its sometimes-unpredictable military operations, was more of a danger than a guarantor, but its policy remained intact.
It is not the loss of the reactors that will shake Japan the most but the loss of the certainty that the reactors were their path to some degree of safety, along with the added burden on the economy. The question is how the political system will respond. In dealing with the Persian Gulf, will Japan continue to follow the American lead or will it decide to take a greater degree of control and follow its own path? The likelihood is that a shaken self-confidence will make Japan more cautious and even more vulnerable. But it is interesting to look at Japanese history and realize that sometimes, and not always predictably, Japan takes insecurity as a goad to self-assertion.
This was no ordinary earthquake in magnitude or in the potential impact on Japan’s view of the world. The earthquake shook a lot of pieces loose, not the least of which were in the Japanese psyche. Japan has tried to convince itself that it had provided a measure of security with nuclear plants and an alliance with the United States. Given the earthquake and situation in the Persian Gulf, recalculation is in order. But Japan is a country that has avoided recalculation for a long time. The question now is whether the extraordinary vulnerability exposed by the quake will be powerful enough to shake Japan into recalculating its long-standing political system.
This report is republished with permission of STRATFOR
Monday, March 14, 2011
Thursday, March 3, 2011
Frontrunning: March 3
Frontrunning: March 3
Submitted by Tyler Durden on 03/03/2011 08:06 -0500
•Why the Dollar's Reign Is Near an End (WSJ)
•Take a bow Hatzius: John Taylor takes apart Goldman's economic "achemists and quacks" (Bloomberg) - This is what happens when you sellout to the propaganda machine
•William Cohan joins the tinfoil hat brigade - A Conspiracy With a Silver Lining (NYT)
•Gaddafi strikes oil areas, Arabs weigh peace plan (Reuters)
•No criminal charges ever: Officials Disagree on Penalties for Mortgage Mess (NYT)
•Bernanke Sees 200,000 Hit to Jobs from Budget Cuts (Reuters)
•It's Taps For the Still Weakening Dollar (RCM)
•Asia Moves to Shore Up Strategic Oil Reserves (FT)
•Beijing home sales slump in February (China Daily)
•ECB Set to Deliver Inflation Warning (WSJ)
•Obama "outraged" by attack in Germany (Reuters)
•Europe Must Plan a Reform, Not a Pact (FT)
•Merkel names ally as new defence minister (FT)
•Congress Approves Temporary Budget Bill, Avoids Shutdown (BusinessWeek)
•Gross Says Treasury Yields Too Low as Fed Approaches End of Asset Buying (Bloomberg)
•Mukherjee Signals Higher Oil May Spur India Subsidy, Risk Deficit-Cut Plan (Bloomberg)
European economic highlights:
•Euro-Zone PMI Composite for February 58.2 - lower than expected. Consensus 58.4. Previous 58.4.
•Euro-Zone PMI Services for February 56.8 - lower than expected. Consensus 57.2. Previous 57.2.
•Euro-Zone GDP for Q4 0.3% q/q 2.0% y/y – in line with expectations. Consensus 0.3% q/q 2.0% y/y. Previous 0.3% q/q 2.0% y/y.
•Euro-Zone Retail Sales for January 0.4% m/m 0.7% y/y - higher than expected. Consensus 0.3% m/m 0.0% y/y. Previous -0.6% m/m -0.9% y/y.
•Germany Retail Sales for January 1.4% m/m 2.6% y/y - higher than expected. Consensus 0.5% m/m 1.7% y/y. Previous -0.3% m/m -1.3% y/y.
•Germany PMI Services for February 58.6 - lower than expected. Consensus 59.5. Previous 59.5.
•France PMI Services for February 59.7 - lower than expected. Consensus 60.8. Previous 60.8.
•Italy PMI Services for February 53.1 - higher than expected. Consensus 51.1. Previous 49.9.
•Italy PPI for January 1.1% m/m 5.2% y/y - higher than expected. Consensus 0.9% m/m 4.6% y/y. Previous 0.6% m/m 4.6% y/y.
•UK PMI Services 52.6 - lower than expected. Consensus 53.7. Previous 54.5.
•ECB Announces Interest Rates. Consensus 1.00%. Previous 1.00%.
Submitted by Tyler Durden on 03/03/2011 08:06 -0500
•Why the Dollar's Reign Is Near an End (WSJ)
•Take a bow Hatzius: John Taylor takes apart Goldman's economic "achemists and quacks" (Bloomberg) - This is what happens when you sellout to the propaganda machine
•William Cohan joins the tinfoil hat brigade - A Conspiracy With a Silver Lining (NYT)
•Gaddafi strikes oil areas, Arabs weigh peace plan (Reuters)
•No criminal charges ever: Officials Disagree on Penalties for Mortgage Mess (NYT)
•Bernanke Sees 200,000 Hit to Jobs from Budget Cuts (Reuters)
•It's Taps For the Still Weakening Dollar (RCM)
•Asia Moves to Shore Up Strategic Oil Reserves (FT)
•Beijing home sales slump in February (China Daily)
•ECB Set to Deliver Inflation Warning (WSJ)
•Obama "outraged" by attack in Germany (Reuters)
•Europe Must Plan a Reform, Not a Pact (FT)
•Merkel names ally as new defence minister (FT)
•Congress Approves Temporary Budget Bill, Avoids Shutdown (BusinessWeek)
•Gross Says Treasury Yields Too Low as Fed Approaches End of Asset Buying (Bloomberg)
•Mukherjee Signals Higher Oil May Spur India Subsidy, Risk Deficit-Cut Plan (Bloomberg)
European economic highlights:
•Euro-Zone PMI Composite for February 58.2 - lower than expected. Consensus 58.4. Previous 58.4.
•Euro-Zone PMI Services for February 56.8 - lower than expected. Consensus 57.2. Previous 57.2.
•Euro-Zone GDP for Q4 0.3% q/q 2.0% y/y – in line with expectations. Consensus 0.3% q/q 2.0% y/y. Previous 0.3% q/q 2.0% y/y.
•Euro-Zone Retail Sales for January 0.4% m/m 0.7% y/y - higher than expected. Consensus 0.3% m/m 0.0% y/y. Previous -0.6% m/m -0.9% y/y.
•Germany Retail Sales for January 1.4% m/m 2.6% y/y - higher than expected. Consensus 0.5% m/m 1.7% y/y. Previous -0.3% m/m -1.3% y/y.
•Germany PMI Services for February 58.6 - lower than expected. Consensus 59.5. Previous 59.5.
•France PMI Services for February 59.7 - lower than expected. Consensus 60.8. Previous 60.8.
•Italy PMI Services for February 53.1 - higher than expected. Consensus 51.1. Previous 49.9.
•Italy PPI for January 1.1% m/m 5.2% y/y - higher than expected. Consensus 0.9% m/m 4.6% y/y. Previous 0.6% m/m 4.6% y/y.
•UK PMI Services 52.6 - lower than expected. Consensus 53.7. Previous 54.5.
•ECB Announces Interest Rates. Consensus 1.00%. Previous 1.00%.
Texaco dumped 18b gallons of toxicwaste and 17m gallons oil into Amazon waterways
(CNN) -- A judge in Ecuador this week awarded $8.64 billion to Ecuadorian residents of the Amazon who had sued Chevron for years of crude oil pollution, but both sides said Tuesday they will appeal the verdict.
Chevron charges the verdict against them is the "product of fraud," and the plaintiffs say the size of the award is too small in comparison to what would be needed to do a real cleanup.
Luis Yanza, speaking for the residents' group the Assembly of those Affected by Chevron, said at a news conference that the ruling was "historic" and a "collective victory." However, he said, "Eight billion dollars doesn't represent a significant amount to repair the environmental damages."
The judgment against Chevron is the latest in 18 years of litigation between the Amazon residents and Texaco, which was later purchased by Chevron. It was decided in a courtroom in the Amazon by Judge Nicolas Zambrano.
For its part, Chevron said it will also appeal.
"The Ecuadorian court's judgment is illegitimate and unenforceable," said Chevron, in a press release Monday. "It is the product of fraud and is contrary to the legitimate scientific evidence."
Both sides have until Friday to file their appeals.
Despite the pending appeal, one of the local leaders, Humberto Piaguaje, called the judgment a victory for the population that lives in the oil-producing area in northern Ecuador.
"The judge did justice and has seen reality," he said. "We know that this is only one part of our fight and we will continue until there is justice and the damage is healed. The world should know that what happened in the Amazon and our fight for life, for justice."
The case, Aguinda v. ChevronTexaco, was originally filed in New York in 1993 on behalf of 30,000 inhabitants of Ecuador's Amazon region. The suit was eventually transferred to the Ecuadorian court and Ecuadorian jurisdiction.
The lawsuit alleges that Texaco used a variety of substandard production practices in Ecuador that resulted in pollution that decimated several indigenous groups in the area, according to a fact sheet provided by the Amazon Defense Coalition.
According to the group, Chevron has admitted that Texaco dumped more than 18 billion gallons of toxic waste into Amazon waterways, abandoned more than 900 waste pits, burned millions of cubic meters of gases with no controls and spilled more than 17 million gallons of oil due to pipeline ruptures.
Cancer and other health problems were reported at higher rates in the area, the group says.
Chevron charges the verdict against them is the "product of fraud," and the plaintiffs say the size of the award is too small in comparison to what would be needed to do a real cleanup.
Luis Yanza, speaking for the residents' group the Assembly of those Affected by Chevron, said at a news conference that the ruling was "historic" and a "collective victory." However, he said, "Eight billion dollars doesn't represent a significant amount to repair the environmental damages."
The judgment against Chevron is the latest in 18 years of litigation between the Amazon residents and Texaco, which was later purchased by Chevron. It was decided in a courtroom in the Amazon by Judge Nicolas Zambrano.
For its part, Chevron said it will also appeal.
"The Ecuadorian court's judgment is illegitimate and unenforceable," said Chevron, in a press release Monday. "It is the product of fraud and is contrary to the legitimate scientific evidence."
Both sides have until Friday to file their appeals.
Despite the pending appeal, one of the local leaders, Humberto Piaguaje, called the judgment a victory for the population that lives in the oil-producing area in northern Ecuador.
"The judge did justice and has seen reality," he said. "We know that this is only one part of our fight and we will continue until there is justice and the damage is healed. The world should know that what happened in the Amazon and our fight for life, for justice."
The case, Aguinda v. ChevronTexaco, was originally filed in New York in 1993 on behalf of 30,000 inhabitants of Ecuador's Amazon region. The suit was eventually transferred to the Ecuadorian court and Ecuadorian jurisdiction.
The lawsuit alleges that Texaco used a variety of substandard production practices in Ecuador that resulted in pollution that decimated several indigenous groups in the area, according to a fact sheet provided by the Amazon Defense Coalition.
According to the group, Chevron has admitted that Texaco dumped more than 18 billion gallons of toxic waste into Amazon waterways, abandoned more than 900 waste pits, burned millions of cubic meters of gases with no controls and spilled more than 17 million gallons of oil due to pipeline ruptures.
Cancer and other health problems were reported at higher rates in the area, the group says.
Chavez: U.S. distorting situation in Libya ‘to justify an invasion’
Chavez: U.S. distorting situation in Libya ‘to justify an invasion’
Catherine E. Shoichet,
CNN
March 2, 2011
Venezuelan President Hugo Chavez claims U.S. criticism of Libyan leader Moammar Gadhafi has a clear aim: military invasion.
“Let’s not get carried away by the drums of war, because the United States, I am sure that they are exaggerating and distorting things to justify an invasion,” Chavez said Monday, according to Venezuelan state media.
At a Monday meeting of the U.N. Human Rights Council in Geneva, Switzerland, U.S. Secretary of State Hillary Clinton said the United States was exploring “all possible options,” and that “nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.”
Asked at a news conference Monday whether the United States planned an imminent military response in Libya, Clinton said, “No.”
Speaking Monday in the Venezuelan capital, Caracas, Chavez proposed sending an international committee to Libya to mediate and help develop a peaceful solution to unrest in the North African country.
"Instead of sending Marines and tanks and planes, why don't we send a goodwill commission to try to help so that they do not continue killing in Libya? They are our brothers," he said in a speech televised on the government-run network.
Chavez and Gadhafi have a close relationship, having bonded partly over shared opposition to U.S. global influence.
At a lavish Tripoli celebration commemorating 40 years of Gadhafi's leadership in 2009, the two leaders sat side by side during a two-hour military parade. That same year, a new football stadium in Benghazi, Libya, was named after the Venezuelan leader.
As rumors swirled about Gadhafi and his whereabouts last week, some suggested that he may be en route to Venezuela. Those reports proved to be false; the Libyan leader later spoke publicly in Tripoli.
But the close ties between the two leaders remain strong. On Monday, Chavez said Gadhafi "has been my friend and our friend for a long time" in remarks broadcast on Venezuelan state television.
"We must be cautious. We know what our policy is: We do not support invasions or massacres or anything, no matter who does it. But there is no doubt that, regarding Libya, a campaign of lies is being woven -- the same that has been woven about Venezuela for a long time," he said.
The U.N. Security Council over the weekend voted for tough restrictions and possible war crimes charges against the Libyan regime.
The Security Council measures -- which include an arms embargo, an asset freeze and travel bans for Gadhafi and members of his family and associates -- also referred the situation unfolding in Libya to the International Criminal Court.
White House press secretary Jay Carney said Monday that the U.S. government was considering the possibility of imposing a no-fly zone over Libya.
"Col. Gadhafi and those around him must be held accountable for these acts, which violate international legal obligations and common decency. Through their actions, they have lost the legitimacy to govern," Clinton said Monday.
"And the people of Libya have made themselves clear: It is time for Gadhafi to go, now, without further violence or delay."
Catherine E. Shoichet,
CNN
March 2, 2011
Venezuelan President Hugo Chavez claims U.S. criticism of Libyan leader Moammar Gadhafi has a clear aim: military invasion.
“Let’s not get carried away by the drums of war, because the United States, I am sure that they are exaggerating and distorting things to justify an invasion,” Chavez said Monday, according to Venezuelan state media.
At a Monday meeting of the U.N. Human Rights Council in Geneva, Switzerland, U.S. Secretary of State Hillary Clinton said the United States was exploring “all possible options,” and that “nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.”
Asked at a news conference Monday whether the United States planned an imminent military response in Libya, Clinton said, “No.”
Speaking Monday in the Venezuelan capital, Caracas, Chavez proposed sending an international committee to Libya to mediate and help develop a peaceful solution to unrest in the North African country.
"Instead of sending Marines and tanks and planes, why don't we send a goodwill commission to try to help so that they do not continue killing in Libya? They are our brothers," he said in a speech televised on the government-run network.
Chavez and Gadhafi have a close relationship, having bonded partly over shared opposition to U.S. global influence.
At a lavish Tripoli celebration commemorating 40 years of Gadhafi's leadership in 2009, the two leaders sat side by side during a two-hour military parade. That same year, a new football stadium in Benghazi, Libya, was named after the Venezuelan leader.
As rumors swirled about Gadhafi and his whereabouts last week, some suggested that he may be en route to Venezuela. Those reports proved to be false; the Libyan leader later spoke publicly in Tripoli.
But the close ties between the two leaders remain strong. On Monday, Chavez said Gadhafi "has been my friend and our friend for a long time" in remarks broadcast on Venezuelan state television.
"We must be cautious. We know what our policy is: We do not support invasions or massacres or anything, no matter who does it. But there is no doubt that, regarding Libya, a campaign of lies is being woven -- the same that has been woven about Venezuela for a long time," he said.
The U.N. Security Council over the weekend voted for tough restrictions and possible war crimes charges against the Libyan regime.
The Security Council measures -- which include an arms embargo, an asset freeze and travel bans for Gadhafi and members of his family and associates -- also referred the situation unfolding in Libya to the International Criminal Court.
White House press secretary Jay Carney said Monday that the U.S. government was considering the possibility of imposing a no-fly zone over Libya.
"Col. Gadhafi and those around him must be held accountable for these acts, which violate international legal obligations and common decency. Through their actions, they have lost the legitimacy to govern," Clinton said Monday.
"And the people of Libya have made themselves clear: It is time for Gadhafi to go, now, without further violence or delay."
US Mint is cutting back on allocations of American Silver Eagles
Bill Haynes, President of CMI Gold & Silver, one of the largest dealers in the United States informed King World News today that the US Mint is cutting back on allocations of American Silver Eagles and this is resulting in higher premiums. Haynes told KWN in a phone interview, “Today the US Mint notified its eleven authorized purchasers that their allotments are being reduced and as a result the authorized purchasers increased their premiums to the dealers.”
Bill Haynes continues:
“Eric, the Mint sold about 10 million ounces of American Silver Eagles so far this year, 6.4 million in January and about half that in February. The Mint had no problem producing those record quantities, but now the US Mint is cutting allocations to its authorized distributors. There is a glitch somewhere but we just don’t know what it is.”
King World News also contacted the US Mint today to get a direct comment from them regarding a story that they had suspended production of Silver Amercan Eagles. As it turns out this information which was taken off of the US Mint’s website is over a year old. In a telephone interview with King World News Michael White of the US Mint stated, “This language was on our web site over a year ago when we did not produce American Eagle Silver Uncirculated Coins. The site will be updated shortly.”
We will have to wait and see what the update is from the US Mint, but we do know that Bill Haynes, a veteran of nearly four decades in the gold and silver business has confirmed a reduction in allotments of Silver American Eagles and an increase in premiums.
Bill Haynes continues:
“Eric, the Mint sold about 10 million ounces of American Silver Eagles so far this year, 6.4 million in January and about half that in February. The Mint had no problem producing those record quantities, but now the US Mint is cutting allocations to its authorized distributors. There is a glitch somewhere but we just don’t know what it is.”
King World News also contacted the US Mint today to get a direct comment from them regarding a story that they had suspended production of Silver Amercan Eagles. As it turns out this information which was taken off of the US Mint’s website is over a year old. In a telephone interview with King World News Michael White of the US Mint stated, “This language was on our web site over a year ago when we did not produce American Eagle Silver Uncirculated Coins. The site will be updated shortly.”
We will have to wait and see what the update is from the US Mint, but we do know that Bill Haynes, a veteran of nearly four decades in the gold and silver business has confirmed a reduction in allotments of Silver American Eagles and an increase in premiums.
Ron Paul: Fall of the Federal Empire
Ron Paul: Fall of the Federal Empire
7 hours ago - FOXBusiness 8:43
1083 views
Congressman Ron Paul, (R-Texas), on Bernanke?s testimony on the Hill and what the future will be for the Arabs in the Middle East.
http://finance.yahoo.com/video/economy-18773128/ron-paul-fall-of-the-federal-empire-24394905
7 hours ago - FOXBusiness 8:43
1083 views
Congressman Ron Paul, (R-Texas), on Bernanke?s testimony on the Hill and what the future will be for the Arabs in the Middle East.
http://finance.yahoo.com/video/economy-18773128/ron-paul-fall-of-the-federal-empire-24394905
Board Member of Goldman Sachs and Procter & Gamble Charged in Insider Trading Scheme
Board Member of Goldman Sachs and Procter & Gamble Charged in Insider Trading Scheme
FOR IMMEDIATE RELEASE
2011-53
Washington, D.C., March 1, 2011 – The Securities and Exchange Commission today announced insider trading charges against a Westport, Conn.-based business consultant who has served on the boards of directors at Goldman Sachs and Procter & Gamble for illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.
The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam.
FOR IMMEDIATE RELEASE
2011-53
Washington, D.C., March 1, 2011 – The Securities and Exchange Commission today announced insider trading charges against a Westport, Conn.-based business consultant who has served on the boards of directors at Goldman Sachs and Procter & Gamble for illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.
The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam.
Gates: Libyan no-fly zone would mean widespread air strikes
Gates: Libyan no-fly zone would mean widespread air strikes
By John T. Bennett - 03/02/11 02:41 PM ET
Defense Secretary Robert Gates on Wednesday said the U.S. military could establish a no-fly zone over Libya, but he cautioned that doing so would first require widespread air strikes across that nation.
“If it’s ordered, we can do it,” Gates told the House Appropriations's Defense subcommittee.
But establishing control of Libyan air space would “start with attacks to destroy” Libyan air defense systems. That kind of assault would require more U.S. military aircraft than “you would find on a single aircraft carrier.”
With so many fighter jets involved in other conflicts, the needed additional jets would have to be redeployed.
Gates told the panel that U.S. military involvement in Libya would require Congress to approve a use-of-force measure.
Adm. Michael Mullen, Joint Chiefs chairman, reiterated on Wednesday that U.S. security officials have still been unable to confirm that Libyan military jets fired on opposition members.
White House press secretary Jay Carney and Secretary of State Hillary Clinton in separate appearances on Wednesday said all options remain on the table.
The White House on Wednesday insisted that there were no inconsistencies in administration policy when it comes to the no-fly zone.
"The fact that the no-fly zone idea is complex does not mean it's not on the table," Carney said. "We have not ruled any options out."
This story was posted at 11:42 a.m. and updated at 2:41 p.m.
By John T. Bennett - 03/02/11 02:41 PM ET
Defense Secretary Robert Gates on Wednesday said the U.S. military could establish a no-fly zone over Libya, but he cautioned that doing so would first require widespread air strikes across that nation.
“If it’s ordered, we can do it,” Gates told the House Appropriations's Defense subcommittee.
But establishing control of Libyan air space would “start with attacks to destroy” Libyan air defense systems. That kind of assault would require more U.S. military aircraft than “you would find on a single aircraft carrier.”
With so many fighter jets involved in other conflicts, the needed additional jets would have to be redeployed.
Gates told the panel that U.S. military involvement in Libya would require Congress to approve a use-of-force measure.
Adm. Michael Mullen, Joint Chiefs chairman, reiterated on Wednesday that U.S. security officials have still been unable to confirm that Libyan military jets fired on opposition members.
White House press secretary Jay Carney and Secretary of State Hillary Clinton in separate appearances on Wednesday said all options remain on the table.
The White House on Wednesday insisted that there were no inconsistencies in administration policy when it comes to the no-fly zone.
"The fact that the no-fly zone idea is complex does not mean it's not on the table," Carney said. "We have not ruled any options out."
This story was posted at 11:42 a.m. and updated at 2:41 p.m.
China "Attacks The Dollar"
China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency StatusSubmitted by Tyler Durden on 03/02/2011 20:24 -0500
In a surprising turn of events, today's biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People's Bank of China. Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily." To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.
A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.
And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel "China Attacked the Dollar" (google translated):
The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars. Beijing shakes America's claim to represent the key currency - with serious consequences for the U.S..
The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.
This will respond to the growing importance of the yuan as a global reserve currency. "The market demand for cross-border use of the yuan rises," said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.
Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.
Currently, the People's Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People's Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur - and not on supply and demand-based exchange rate.
Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.
The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.
In a surprising turn of events, today's biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People's Bank of China. Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily." To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.
A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.
And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel "China Attacked the Dollar" (google translated):
The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars. Beijing shakes America's claim to represent the key currency - with serious consequences for the U.S..
The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.
This will respond to the growing importance of the yuan as a global reserve currency. "The market demand for cross-border use of the yuan rises," said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.
Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.
Currently, the People's Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People's Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur - and not on supply and demand-based exchange rate.
Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.
The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.
Tuesday, March 1, 2011
Muslim Brotherhood Plans Day of Rage for March 3rd in D.C.
Feb 21,2011
Whether or not Muslim extremists Anjem Choudary, Abu Izzadeen and Sayful Islam will actually be able to pull it off or not remains to be seen. However, the trio are planning to stand on American soil in front of the White House on March 3 and proclaim a “call to arms” in which they will , “call for Sharia law to be established across the U.S.,” according to the Daily Mail on Sunday.
Anjem Choudary is the same extremist who has insisted that the Islamic flag will one day fly over the White House. He also said that he anticipates that thousands will turnout. Whether that is a bunch of psychological warfare or there has truly been some focused organizing going on behind the scenes will eventually become evident.
Meanwhile, the AP has reported that Moammar Gadhafi has declared that if Libya ends up in a civil war, that there will be oil wells in Libya that go up in flames.
To make matters even more interesting, Haaretz reported on Sunday that Iranian warships have made it through the Suez Canal while Al Jazeera reports that Egypt is denying the claim.
If a crowd ends up being drawn to the White House on March 3, it’s possible that the U.S. government will be in shut-down mode anyway given the fact that Reuters reported on Sunday that there has been some talk of a government shutdown if lawmakers can’t agree on a budget. It was also noted that the government is only funded through March 4. One can’t help but wonder if America would have Sharia law thrust upon it if the Republicans were to leave the state like the Democrats did in Wisconsin.
It would seem that Brigitte Gabriel’s warning about the attempt of Muslim Extremists to force an Islamic government into power in the United States is beginning to manifest. The Arab Christian is the founder and president of ACT! for America and has written a bestselling book entitled They Must Be Stopped: Why We Must Defeat Radical Islam and How We Can Do It. She told One News Now earlier this month that, “I actually dedicate a chapter to the Muslim Brotherhood's project for North America -- not only to what they have done in the Middle East and their goals of bringing back an Islamic government totalitarian regime worldwide, but their plan to the United States as well.”
She also stated that, “We not only have the fox watching the hen house; we have the fox inside the hen house right now," she notes. "This is why Obama is being wishy-washy on what's happening in Egypt, because the Obama administration right now is basically taking advice on Middle East policy from the Muslim Brotherhood front organizations in America."
It will certainly be interesting to see just how all the convenient crises brewing in DC will be taken advantage of in the coming days.
Whether or not Muslim extremists Anjem Choudary, Abu Izzadeen and Sayful Islam will actually be able to pull it off or not remains to be seen. However, the trio are planning to stand on American soil in front of the White House on March 3 and proclaim a “call to arms” in which they will , “call for Sharia law to be established across the U.S.,” according to the Daily Mail on Sunday.
Anjem Choudary is the same extremist who has insisted that the Islamic flag will one day fly over the White House. He also said that he anticipates that thousands will turnout. Whether that is a bunch of psychological warfare or there has truly been some focused organizing going on behind the scenes will eventually become evident.
Meanwhile, the AP has reported that Moammar Gadhafi has declared that if Libya ends up in a civil war, that there will be oil wells in Libya that go up in flames.
To make matters even more interesting, Haaretz reported on Sunday that Iranian warships have made it through the Suez Canal while Al Jazeera reports that Egypt is denying the claim.
If a crowd ends up being drawn to the White House on March 3, it’s possible that the U.S. government will be in shut-down mode anyway given the fact that Reuters reported on Sunday that there has been some talk of a government shutdown if lawmakers can’t agree on a budget. It was also noted that the government is only funded through March 4. One can’t help but wonder if America would have Sharia law thrust upon it if the Republicans were to leave the state like the Democrats did in Wisconsin.
It would seem that Brigitte Gabriel’s warning about the attempt of Muslim Extremists to force an Islamic government into power in the United States is beginning to manifest. The Arab Christian is the founder and president of ACT! for America and has written a bestselling book entitled They Must Be Stopped: Why We Must Defeat Radical Islam and How We Can Do It. She told One News Now earlier this month that, “I actually dedicate a chapter to the Muslim Brotherhood's project for North America -- not only to what they have done in the Middle East and their goals of bringing back an Islamic government totalitarian regime worldwide, but their plan to the United States as well.”
She also stated that, “We not only have the fox watching the hen house; we have the fox inside the hen house right now," she notes. "This is why Obama is being wishy-washy on what's happening in Egypt, because the Obama administration right now is basically taking advice on Middle East policy from the Muslim Brotherhood front organizations in America."
It will certainly be interesting to see just how all the convenient crises brewing in DC will be taken advantage of in the coming days.
U.S. stock index futures pared gains on Tuesday as crude oil prices advanced.
LATEST NEWS
Stock futures pare gains as crude oil rises
NEW YORK (Reuters) - U.S. stock index futures pared gains on Tuesday as crude oil prices advanced.
Full Article
Bernanke to tread cautiously before Congress
March 01, 2011 02:36 AM ET
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke will likely remain skeptical about the strength of the economic recovery in testimony on Tuesday, despite recent data pointing to improvement, signaling the central bank is unlikely to cut short its $600 billion stimulus plan.
Full Article
February auto sales seen up but oil risk looms
March 01, 2011 03:48 AM ET
DETROIT (Reuters) - U.S. auto sales are expected to show a gain of about 20 percent from the still-depressed levels of a year earlier in February, but the recent rise in oil prices could slow or even derail the industry's recovery, analysts and industry executives say.
Full Article
Morgan Stanley hit by China-based hackers: report
March 01, 2011 07:17 AM ET
NEW YORK (Reuters) - Morgan Stanley experienced a "very sensitive" break-in to its network by the same China-based hackers who attacked Google Inc's computers more than a year ago, Bloomberg reported, citing leaked emails from an Internet security company.
Full Article
World factory input costs rising sharply
March 01, 2011 06:21 AM ET
LONDON/BEIJING (Reuters) - Factory input costs leapt across the globe in February, the latest sign of rising inflationary pressures, while euro zone manufacturing grew at its fastest in nearly 10 years, surveys showed on Tuesday.
Full Article
US TOP NEWS
Gaddafi deploys forces as world raises Libya pressure
March 01, 2011 07:40 AM ET
TRIPOLI (Reuters) - Libyan leader Muammar Gaddafi despatched forces to a western border area on Tuesday in defiance of Western military and economic pressure, stirring fears that the bloodiest Arab revolt may grow more violent.
Full Article
Wisconsin governor gives Democrats ultimatum
March 01, 2011 07:11 AM ET
MADISON, Wisc. (Reuters) - Republican Governor Scott Walker on Monday gave absent Democratic lawmakers an ultimatum to return to Wisconsin within 24 hours and vote on a proposal to reduce the power of public sector unions or the state would miss out on a huge debt restructuring.
Full Article
Blackstone buys Centro's U.S. malls for $9.4 billion
March 01, 2011 12:35 AM ET
SYDNEY (Reuters) - Private equity firm Blackstone Group LP has bought nearly 600 U.S. shopping malls from Australia's debt-laden Centro Properties for $9.4 billion in one of the biggest global property deals since the credit crisis.
Full Article
Government shutdown unlikely, but budget battle remains
February 28, 2011 06:32 PM ET
WASHINGTON (Reuters) - A deal to avert a government shutdown took shape in Congress on Monday, but the short-term spending measure would do nothing to resolve the bitter debate over federal spending.
Full Article
Lawmakers question Medicare payment contractors
March 01, 2011 12:13 AM ET
WASHINGTON (Reuters) - Democratic senators on Tuesday expressed concern that companies hired to help pay and oversee medical claims under the Medicare health insurance program may have costly conflicts of interest.
Full Article
Stock futures pare gains as crude oil rises
NEW YORK (Reuters) - U.S. stock index futures pared gains on Tuesday as crude oil prices advanced.
Full Article
Bernanke to tread cautiously before Congress
March 01, 2011 02:36 AM ET
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke will likely remain skeptical about the strength of the economic recovery in testimony on Tuesday, despite recent data pointing to improvement, signaling the central bank is unlikely to cut short its $600 billion stimulus plan.
Full Article
February auto sales seen up but oil risk looms
March 01, 2011 03:48 AM ET
DETROIT (Reuters) - U.S. auto sales are expected to show a gain of about 20 percent from the still-depressed levels of a year earlier in February, but the recent rise in oil prices could slow or even derail the industry's recovery, analysts and industry executives say.
Full Article
Morgan Stanley hit by China-based hackers: report
March 01, 2011 07:17 AM ET
NEW YORK (Reuters) - Morgan Stanley experienced a "very sensitive" break-in to its network by the same China-based hackers who attacked Google Inc's computers more than a year ago, Bloomberg reported, citing leaked emails from an Internet security company.
Full Article
World factory input costs rising sharply
March 01, 2011 06:21 AM ET
LONDON/BEIJING (Reuters) - Factory input costs leapt across the globe in February, the latest sign of rising inflationary pressures, while euro zone manufacturing grew at its fastest in nearly 10 years, surveys showed on Tuesday.
Full Article
US TOP NEWS
Gaddafi deploys forces as world raises Libya pressure
March 01, 2011 07:40 AM ET
TRIPOLI (Reuters) - Libyan leader Muammar Gaddafi despatched forces to a western border area on Tuesday in defiance of Western military and economic pressure, stirring fears that the bloodiest Arab revolt may grow more violent.
Full Article
Wisconsin governor gives Democrats ultimatum
March 01, 2011 07:11 AM ET
MADISON, Wisc. (Reuters) - Republican Governor Scott Walker on Monday gave absent Democratic lawmakers an ultimatum to return to Wisconsin within 24 hours and vote on a proposal to reduce the power of public sector unions or the state would miss out on a huge debt restructuring.
Full Article
Blackstone buys Centro's U.S. malls for $9.4 billion
March 01, 2011 12:35 AM ET
SYDNEY (Reuters) - Private equity firm Blackstone Group LP has bought nearly 600 U.S. shopping malls from Australia's debt-laden Centro Properties for $9.4 billion in one of the biggest global property deals since the credit crisis.
Full Article
Government shutdown unlikely, but budget battle remains
February 28, 2011 06:32 PM ET
WASHINGTON (Reuters) - A deal to avert a government shutdown took shape in Congress on Monday, but the short-term spending measure would do nothing to resolve the bitter debate over federal spending.
Full Article
Lawmakers question Medicare payment contractors
March 01, 2011 12:13 AM ET
WASHINGTON (Reuters) - Democratic senators on Tuesday expressed concern that companies hired to help pay and oversee medical claims under the Medicare health insurance program may have costly conflicts of interest.
Full Article
Silver Hits Fresh Post Hunt Brother High Of $34.43 On News Saudi Has Sent Tanks To Bahrain
Silver Hits Fresh Post Hunt Brother High Of $34.43 On News Saudi Has Sent Tanks To Bahrain
Submitted by Tyler Durden on 03/01/2011 07:12 -0500
Middle East Newspaper Saudi Arabia
If RIA Novosti's update on the Middle East escalation is correct, the Middle East's worst kept secret, that Saudi Arabia would interfere militarily in Bahrain before the country fell, has just been confirmed. From RIA: "Saudi Arabia has sent dozens of tanks to Bahrain, where anti-government protests continue for about two weeks, Egypt's Al-Masry Al-Youm newspaper said on Tuesday. Eyewitnesses reported seeing "15 tank carriers carrying two tanks each heading towards Bahrain" along the 25-km King Fahd causeway, which links the small island nation of Bahrain to Saudi Arabia." And while nobody expects the DXY to do much if anything on this news, now that the dollar is irrelevant in the FX realm, the same can not be said about silver. Silver just hit $34.43 minutes ago, the highest print in the last 31 years.
More from RIA:
Protestors are mainly Shiites account for about 70% of the Bahraini population, but have long complained of discrimination and other abuses by the Sunni Khalifa dynasty that has ruled the tiny Gulf nation for more than two centuries.
In the worst unrest in the kingdom since the 1990s, a wave of protests swept across Bahrain in the past weeks. At least six people were killed and hundreds injured in clashes with police.
Opposition threatens to hold more protests and a nationwide strike if the government refuses to resign.
And a confirming report from Press TV:
Pro-democracy protests in Bahrain have shown no sign of decline after almost two weeks. The protesters are demanding the resignation of the government, constitutional reforms and the king's abdication.
Witnesses said that the causeway was blocked as "15 tank carriers carrying two tanks each were heading towards Bahrain," Egypt's al-Masry al-Youm daily reported in its latest edition.
Given the popular protests in the Persian Gulf kingdom, the transfer of the military hardware from Saudi Arabia to Bahrain seems highly unusual, commuters traveling along the 25-km causeway said.
The development follows a decision by the Bahraini military on Saturday to withdraw their vehicles out of the capital's Pearl Square after a deadly police attack on protesters, a condition the opposition had set to begin talks.
The arrival of tanks from Saudi Arabia also occurs on the eve of yet another scheduled pro-democracy rally on Tuesday organized by the Bahraini opposition and protesters in Manama's flashpoint Pearl Square.
Massive protests in Bahrain, which hosts the US Navy's Fifth Fleet in the region, have shown no sign of a decline after almost two weeks.
The protesters are demanding the resignation of the government, constitutional reforms and the king's abdication.
Fears of Saudi intervention in the ongoing Bahraini uprising first came to the fore last week when unconfirmed reports emerged on Wednesday.
Submitted by Tyler Durden on 03/01/2011 07:12 -0500
Middle East Newspaper Saudi Arabia
If RIA Novosti's update on the Middle East escalation is correct, the Middle East's worst kept secret, that Saudi Arabia would interfere militarily in Bahrain before the country fell, has just been confirmed. From RIA: "Saudi Arabia has sent dozens of tanks to Bahrain, where anti-government protests continue for about two weeks, Egypt's Al-Masry Al-Youm newspaper said on Tuesday. Eyewitnesses reported seeing "15 tank carriers carrying two tanks each heading towards Bahrain" along the 25-km King Fahd causeway, which links the small island nation of Bahrain to Saudi Arabia." And while nobody expects the DXY to do much if anything on this news, now that the dollar is irrelevant in the FX realm, the same can not be said about silver. Silver just hit $34.43 minutes ago, the highest print in the last 31 years.
More from RIA:
Protestors are mainly Shiites account for about 70% of the Bahraini population, but have long complained of discrimination and other abuses by the Sunni Khalifa dynasty that has ruled the tiny Gulf nation for more than two centuries.
In the worst unrest in the kingdom since the 1990s, a wave of protests swept across Bahrain in the past weeks. At least six people were killed and hundreds injured in clashes with police.
Opposition threatens to hold more protests and a nationwide strike if the government refuses to resign.
And a confirming report from Press TV:
Pro-democracy protests in Bahrain have shown no sign of decline after almost two weeks. The protesters are demanding the resignation of the government, constitutional reforms and the king's abdication.
Witnesses said that the causeway was blocked as "15 tank carriers carrying two tanks each were heading towards Bahrain," Egypt's al-Masry al-Youm daily reported in its latest edition.
Given the popular protests in the Persian Gulf kingdom, the transfer of the military hardware from Saudi Arabia to Bahrain seems highly unusual, commuters traveling along the 25-km causeway said.
The development follows a decision by the Bahraini military on Saturday to withdraw their vehicles out of the capital's Pearl Square after a deadly police attack on protesters, a condition the opposition had set to begin talks.
The arrival of tanks from Saudi Arabia also occurs on the eve of yet another scheduled pro-democracy rally on Tuesday organized by the Bahraini opposition and protesters in Manama's flashpoint Pearl Square.
Massive protests in Bahrain, which hosts the US Navy's Fifth Fleet in the region, have shown no sign of a decline after almost two weeks.
The protesters are demanding the resignation of the government, constitutional reforms and the king's abdication.
Fears of Saudi intervention in the ongoing Bahraini uprising first came to the fore last week when unconfirmed reports emerged on Wednesday.
Monday, February 28, 2011
Mish's Global Economic Trend Analysis
Mish's Global Economic Trend Analysis
______________________________________
• Arab World Embraces Israeli’s YouTube "Zenga Zenga" Spoof of Qaddafi Rant; Two Versions, With and Without Dancers
• China Cracks Down on Mid-East Style Protests With Water Canons; Police Blanket Shanghai, Beijing; Internet Search for "Egypt" and "Tunisia" Blocked
• Libyan Rebels Tighten Ring Around Tripoli; Oman Sultan Reshuffles Cabinet After Protests
• Massive Rout in Irish Elections; Collision Course with the EU; Default the Best Option for Ireland
Arab World Embraces Israeli’s YouTube "Zenga Zenga" Spoof of Qaddafi Rant; Two Versions, With and Without Dancers
Posted: 27 Feb 2011 04:27 PM PST
The New York Times reports Arab World Embraces Israeli’s YouTube Spoof of Qaddafi Rant.
A satirical YouTube clip mocking Col. Muammar el-Qaddafi’s megalomania is fast becoming a popular token of the Libya uprising across Middle East. And in an added affront to Colonel Qaddafi, it was created by an Israeli living in Tel Aviv.
Noy Alooshe, 31, an Israeli journalist, musician and Internet buff, said he saw Colonel Qaddafi’s televised speech last Tuesday in which the Libyan leader vowed to hunt down protesters “inch by inch, house by house, home by home, alleyway by alleyway,” and immediately identified it as a “classic hit.”
“He was dressed strangely, and he raised his arms” like at a trance party, Mr. Alooshe said in a telephone interview on Sunday. Then there were Colonel Qaddafi’s words with their natural beat.
Mr. Alooshe spent a few hours at the computer, using Auto-Tune pitch corrector technology to set the speech to the music of “Hey Baby,” a 2010 electro hip-hop song by American rapper Pitbull, featuring another artist, T-Pain. He titled it “Zenga-Zenga,” echoing Col. Qaddafi’s repetition of the word zanqa, Arabic for alleyway.
Mr. Alooshe said he was a little worried that if the Libyan leader survived, he could send one of his sons after him. But he said it was “also very exciting to be making waves in the Arab world as an Israeli.”
As one surfer wrote in an Arabic talkback early Sunday, “What’s the problem if he’s an Israeli? The video is still funny.” He signed off with the international cyber-laugh, “Hahaha.”
Two Versions, With and Without Dancers
original smash hit with dancers
Zenga Zenga Original Link: http://www.youtube.com/watch?v=cBY-0n4esNY
revised version without dancers
Zenga Zenga Revised Link: http://www.youtube.com/watch?v=6GcUutnU2gk
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
______________________________________
• Arab World Embraces Israeli’s YouTube "Zenga Zenga" Spoof of Qaddafi Rant; Two Versions, With and Without Dancers
• China Cracks Down on Mid-East Style Protests With Water Canons; Police Blanket Shanghai, Beijing; Internet Search for "Egypt" and "Tunisia" Blocked
• Libyan Rebels Tighten Ring Around Tripoli; Oman Sultan Reshuffles Cabinet After Protests
• Massive Rout in Irish Elections; Collision Course with the EU; Default the Best Option for Ireland
Arab World Embraces Israeli’s YouTube "Zenga Zenga" Spoof of Qaddafi Rant; Two Versions, With and Without Dancers
Posted: 27 Feb 2011 04:27 PM PST
The New York Times reports Arab World Embraces Israeli’s YouTube Spoof of Qaddafi Rant.
A satirical YouTube clip mocking Col. Muammar el-Qaddafi’s megalomania is fast becoming a popular token of the Libya uprising across Middle East. And in an added affront to Colonel Qaddafi, it was created by an Israeli living in Tel Aviv.
Noy Alooshe, 31, an Israeli journalist, musician and Internet buff, said he saw Colonel Qaddafi’s televised speech last Tuesday in which the Libyan leader vowed to hunt down protesters “inch by inch, house by house, home by home, alleyway by alleyway,” and immediately identified it as a “classic hit.”
“He was dressed strangely, and he raised his arms” like at a trance party, Mr. Alooshe said in a telephone interview on Sunday. Then there were Colonel Qaddafi’s words with their natural beat.
Mr. Alooshe spent a few hours at the computer, using Auto-Tune pitch corrector technology to set the speech to the music of “Hey Baby,” a 2010 electro hip-hop song by American rapper Pitbull, featuring another artist, T-Pain. He titled it “Zenga-Zenga,” echoing Col. Qaddafi’s repetition of the word zanqa, Arabic for alleyway.
Mr. Alooshe said he was a little worried that if the Libyan leader survived, he could send one of his sons after him. But he said it was “also very exciting to be making waves in the Arab world as an Israeli.”
As one surfer wrote in an Arabic talkback early Sunday, “What’s the problem if he’s an Israeli? The video is still funny.” He signed off with the international cyber-laugh, “Hahaha.”
Two Versions, With and Without Dancers
original smash hit with dancers
Zenga Zenga Original Link: http://www.youtube.com/watch?v=cBY-0n4esNY
revised version without dancers
Zenga Zenga Revised Link: http://www.youtube.com/watch?v=6GcUutnU2gk
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
A Higher Percentage of Americans Believed in King George During the Revolutionary War than Believe in Congress Today
A Higher Percentage of Americans Believed in King George During the Revolutionary War than Believe in Congress Today
Submitted by George Washington on 02/27/2011 15:57 -0500
Washington’s Blog
Influential Harvard and Stanford law professor Lawrence Lessig noted in a must-watch speech last week that polls show that only 11% of the American people have confidence in Congress.
He notes that more people believed in King George at the time of the Revolutionary War than believe in congress today.
He's right.
Historians have estimated that between 15 and 20% of the white population of the colonies were Loyalists
Watch:
Submitted by George Washington on 02/27/2011 15:57 -0500
Washington’s Blog
Influential Harvard and Stanford law professor Lawrence Lessig noted in a must-watch speech last week that polls show that only 11% of the American people have confidence in Congress.
He notes that more people believed in King George at the time of the Revolutionary War than believe in congress today.
He's right.
Historians have estimated that between 15 and 20% of the white population of the colonies were Loyalists
Watch:
Feb 25 (Reuters) - Regulators closed one bank in the U.S. on Friday, bringing to 23 the total number of bank failures in 2011
Feb 25 (Reuters) - Regulators closed one bank in the U.S. on Friday, bringing to 23 the total number of bank failures in 2011
In 2010 157 banks failed following 140 failures in 2009.
The bulk of the failures increasingly have been smaller institutions, those with less than $1 billion in assets, as large banks have recovered more quickly from the 2007-2009 financial crisis.
The FDIC announced the closure on Friday of Valley Community Bank, St. Charles, Illinois, which had about $123.8 million in assets and $124.2 million in deposits as of December 31. First State Bank, Mendota, Illinois will assume the deposits and has agreed to purchase essentially all of the assets.
Banks that failed in 2010 had total assets of $92 billion, compared with $169.7 billion the previous year.
FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.
In the FDIC's most recent quarterly report, released on Feb. 23, the agency said the number of banks on the "problem list" grew to 884 from 860.
Most of these institutions will not fail but the list provides an indication of how many banks are struggling.
Earlier this week, however, Bair said the outlook for the industry as a whole is improving including for small institutions.
In its quarterly update, the FDIC reported that banks had combined earnings of $21.7 billion in the fourth quarter of 2010, marking their fourth profitable quarter in a row.
But statistics showed lending continued to contract, down 0.2 percent or $13.6 billion for the quarter, and Bair warned it would have to pick up for the industry to take the next step in its recovery from the 2007-2009 financial crisis.
Washington Mutual, which had $307 billion in assets when it was seized in September 2008, remains the largest bank to fail during the financial crisis. (Reporting by Richard Cowan; Editing by Carol Bishopric)
In 2010 157 banks failed following 140 failures in 2009.
The bulk of the failures increasingly have been smaller institutions, those with less than $1 billion in assets, as large banks have recovered more quickly from the 2007-2009 financial crisis.
The FDIC announced the closure on Friday of Valley Community Bank, St. Charles, Illinois, which had about $123.8 million in assets and $124.2 million in deposits as of December 31. First State Bank, Mendota, Illinois will assume the deposits and has agreed to purchase essentially all of the assets.
Banks that failed in 2010 had total assets of $92 billion, compared with $169.7 billion the previous year.
FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.
In the FDIC's most recent quarterly report, released on Feb. 23, the agency said the number of banks on the "problem list" grew to 884 from 860.
Most of these institutions will not fail but the list provides an indication of how many banks are struggling.
Earlier this week, however, Bair said the outlook for the industry as a whole is improving including for small institutions.
In its quarterly update, the FDIC reported that banks had combined earnings of $21.7 billion in the fourth quarter of 2010, marking their fourth profitable quarter in a row.
But statistics showed lending continued to contract, down 0.2 percent or $13.6 billion for the quarter, and Bair warned it would have to pick up for the industry to take the next step in its recovery from the 2007-2009 financial crisis.
Washington Mutual, which had $307 billion in assets when it was seized in September 2008, remains the largest bank to fail during the financial crisis. (Reporting by Richard Cowan; Editing by Carol Bishopric)
Marc Faber: "I Think We Are All Doomed"
Marc Faber: "I Think We Are All Doomed"
Submitted by Tyler Durden on 02/27/2011 14:31 -0500
All who enjoy hearing a meaty Marc Faber fire and brimstone sermon, that cuts through the bullshit, will be happy to know that the Gloom, Boom and Doom author conducted a 40 minute interview with the McAlvany Financial Group, which covers all the usual suspects: gold, silver, precious and industrial metals, the "crack up boom", the future of the Ponzi and capital markets in general and much more. Of course, it wouldn't be a Faber interview without the requisite soundbite: "I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it." Of course, on a long enough timeline...
Key extract from the Faber speech:
I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.
For the investor, the question is: How do I navigate through this complete disaster that is going to unfold? And I think if you look at different asset classes – real estate, equities, bonds, cash, precious metals – I suppose that you have to be diversified. I think real estate in the U.S. may go down another 10% or so, or even 15%, but I am always telling people, if you can buy the piece of land or the house you like, what do you actually care if it does down another 10%? If everything I bought in my life had only gone down 10-15%, I would be very rich, because a lot of things became worthless, especially loans to friends, and bonds, and so forth.
Look at the history, for example, of Germany, for the last 100 years. They had World War I. They had the hyper-inflation in World War II. The bond-holders got wiped out three times. If you owned Siemens, and you still own Siemens today, it was not a fantastic investment, but at least you still have something. You were not wiped out. I think that in equities you will be better off because you have an ownership in a company, than by being the lenders to companies, and the lenders, especially, to governments.
Faber on the key distinction between nominal and real, which nobody on CNBC seems to grasp yet, why gold now is cheaper than it was in 1999, and on the Dow and gold reaching parity.
In a money-printing environment, it is very difficult to know what is actually cheap and what is expensive. Is the price of wheat high, or is it low? Inflation-adjusted, it is extremely low. In nominal terms, it is relatively high. I believe that, in March 2009 when the S&P was at 666, the market was actually much cheaper than is generally perceived, because of the money-printing, and I do not anticipate that we will see 666 on the S&P again, in nominal terms.
In other words, they are going to print so much money that the S&P could be at, perhaps, 2000, but in real terms, it could be down below the lows of March 6, 2009. Maybe in gold terms, we could one day reach a ratio of Dow Jones to gold of 1-to-1, as we were in 1980. In other words, the Dow could be perhaps at 10,000 or 12,000, and gold could be at the same level.
That is why I am advising people to accumulate gold. Can gold have a correction? Yes, there has been a little bit too much euphoria about gold, and we may have a correction, but I do not think we are in a bubble in the price of gold. In fact, I could make a case that gold, at this level of $1400 an ounce, is cheaper than in 1999, when I look at the unfunded liability growth of the U.S., at the credit growth of the U.S., and at the household growth, and at the money printing, and at all the wealth creation that happens in China and Russia.
Submitted by Tyler Durden on 02/27/2011 14:31 -0500
All who enjoy hearing a meaty Marc Faber fire and brimstone sermon, that cuts through the bullshit, will be happy to know that the Gloom, Boom and Doom author conducted a 40 minute interview with the McAlvany Financial Group, which covers all the usual suspects: gold, silver, precious and industrial metals, the "crack up boom", the future of the Ponzi and capital markets in general and much more. Of course, it wouldn't be a Faber interview without the requisite soundbite: "I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it." Of course, on a long enough timeline...
Key extract from the Faber speech:
I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.
For the investor, the question is: How do I navigate through this complete disaster that is going to unfold? And I think if you look at different asset classes – real estate, equities, bonds, cash, precious metals – I suppose that you have to be diversified. I think real estate in the U.S. may go down another 10% or so, or even 15%, but I am always telling people, if you can buy the piece of land or the house you like, what do you actually care if it does down another 10%? If everything I bought in my life had only gone down 10-15%, I would be very rich, because a lot of things became worthless, especially loans to friends, and bonds, and so forth.
Look at the history, for example, of Germany, for the last 100 years. They had World War I. They had the hyper-inflation in World War II. The bond-holders got wiped out three times. If you owned Siemens, and you still own Siemens today, it was not a fantastic investment, but at least you still have something. You were not wiped out. I think that in equities you will be better off because you have an ownership in a company, than by being the lenders to companies, and the lenders, especially, to governments.
Faber on the key distinction between nominal and real, which nobody on CNBC seems to grasp yet, why gold now is cheaper than it was in 1999, and on the Dow and gold reaching parity.
In a money-printing environment, it is very difficult to know what is actually cheap and what is expensive. Is the price of wheat high, or is it low? Inflation-adjusted, it is extremely low. In nominal terms, it is relatively high. I believe that, in March 2009 when the S&P was at 666, the market was actually much cheaper than is generally perceived, because of the money-printing, and I do not anticipate that we will see 666 on the S&P again, in nominal terms.
In other words, they are going to print so much money that the S&P could be at, perhaps, 2000, but in real terms, it could be down below the lows of March 6, 2009. Maybe in gold terms, we could one day reach a ratio of Dow Jones to gold of 1-to-1, as we were in 1980. In other words, the Dow could be perhaps at 10,000 or 12,000, and gold could be at the same level.
That is why I am advising people to accumulate gold. Can gold have a correction? Yes, there has been a little bit too much euphoria about gold, and we may have a correction, but I do not think we are in a bubble in the price of gold. In fact, I could make a case that gold, at this level of $1400 an ounce, is cheaper than in 1999, when I look at the unfunded liability growth of the U.S., at the credit growth of the U.S., and at the household growth, and at the money printing, and at all the wealth creation that happens in China and Russia.
Friday, February 25, 2011
Frontrunning: February 25 new
Frontrunning: February 25 new
Submitted by Tyler Durden on 02/25/2011 08:11 -0500
•Irish Voters Set to Take Revenge on Ruling Party (FT, Bloomberg)
•Saudi youth call for protest in solidarity with Libyan uprising (Monsters and Critics)
•Wisconsin Assembly approves plan to curb unions (Reuters)
•Special report on Glencore: The biggest company you never heard of (Reuters)... actually that would be the DTCC
•US Warns Extreme Food Prices Will Stay (FT)
•Gotta love Bloomberg headlines: Fannie Mae, Freddie Mac Seek $3.1 Billion Amid Improved Earnings (Bloomberg)
•More completely expected criminal fraud out of Citigroup: What Vikram Pandit Knew, and When He Knew It (Bloomberg)
•CFTC, SEC halt criminal investigations, blame lack of money (WSJ)
•Sentance Says BOE Must Tighten Now to Prevent Tough Moves Later (Bloomberg)
•House Republicans Move to End U.S. Foreclosure Aid Criticized as Harmful (Bloomberg)
Submitted by Tyler Durden on 02/25/2011 08:11 -0500
•Irish Voters Set to Take Revenge on Ruling Party (FT, Bloomberg)
•Saudi youth call for protest in solidarity with Libyan uprising (Monsters and Critics)
•Wisconsin Assembly approves plan to curb unions (Reuters)
•Special report on Glencore: The biggest company you never heard of (Reuters)... actually that would be the DTCC
•US Warns Extreme Food Prices Will Stay (FT)
•Gotta love Bloomberg headlines: Fannie Mae, Freddie Mac Seek $3.1 Billion Amid Improved Earnings (Bloomberg)
•More completely expected criminal fraud out of Citigroup: What Vikram Pandit Knew, and When He Knew It (Bloomberg)
•CFTC, SEC halt criminal investigations, blame lack of money (WSJ)
•Sentance Says BOE Must Tighten Now to Prevent Tough Moves Later (Bloomberg)
•House Republicans Move to End U.S. Foreclosure Aid Criticized as Harmful (Bloomberg)
Thursday, February 24, 2011
Straight from the Horses Mouth Folks, USA is headed to the same situation as Greece, Ireland, Etc.
Submitted by: Francis Soyer
2/24/11
Hope can be a dangerous thing. I have noticed that when talking to now retired Baby Boomers when talking about the economy there seems to be a disconnect with reality. A belief that inspite of some minor issues in relation to current events that all is well and that our country the USA would never fall victim to such scenairos we see play out day in day out of the likes of Ireland, Greece, Spain, Portugal etc.
This hearing and testimony occured last month. I can not recall if this event attracted any media attention or not, from the looks of the guy to the left and rear of Ron Paul who looks like he may be suffering from a minor case of down syndrome and the abundance of empty chairs I am assuming the hearing attracted little to no main stream media attention. But if you pay close attention to the testimony the message is clear. The USA is next on the chopping block for the Global banking system and we are in for some major changes.
2/24/11
Hope can be a dangerous thing. I have noticed that when talking to now retired Baby Boomers when talking about the economy there seems to be a disconnect with reality. A belief that inspite of some minor issues in relation to current events that all is well and that our country the USA would never fall victim to such scenairos we see play out day in day out of the likes of Ireland, Greece, Spain, Portugal etc.
This hearing and testimony occured last month. I can not recall if this event attracted any media attention or not, from the looks of the guy to the left and rear of Ron Paul who looks like he may be suffering from a minor case of down syndrome and the abundance of empty chairs I am assuming the hearing attracted little to no main stream media attention. But if you pay close attention to the testimony the message is clear. The USA is next on the chopping block for the Global banking system and we are in for some major changes.
Gaddafi's Private Plane, Reportedly Loaded With Gold, Ready To Leave For Zimbabwe As Early As Tomorrow
Gaddafi's Private Plane, Reportedly Loaded With Gold, Ready To Leave For Zimbabwe As Early As Tomorrow
Submitted by Tyler Durden on 02/24/2011 09:38 -0500
Activist Shareholder
The latest news from the ABC.net.au should come as no surprise to those who know all too well that one can't eat gold: "Gaddafi own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe." Yet there is speculation that instead of pulling a Ben Ali, Gaddafi may pull a Hitler: "Earlier, one of Mr Gaddafi's former ministers predicted the Libyan leader will follow in Adolf Hitler's footsteps and commit suicide rather than give up power. Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile. "Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide," Mr Abdeljalil told Swedish media." In either case, we are skeptical that much of Libya's oil infrastructure will survive the binary outcome. As a reminder, Libya had 143.8 tonnes of gold (or Tungsten as the case may be) as of December 31, per the WGC.
More from ABC:
There are reports of gun battles taking place between forces loyal to Mr Gaddafi and his opponents in the town of Zawiyah, 50 kilometres west of Tripoli.
Mr Gaddafi no longer controls much of the east around Benghazi, where there are reports residents have jailed those they say are mercenaries and set up committees to run the city.
London-based Libyan political activist, Guma el-Gamaty, has told the ABC's Lateline that "quite reliable sources" believe Mr Gaddafi is readying to flee his country.
"Gaddifi's own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe," he said.
"We think this could happen very shortly because the Security Council is threatening to impose a no-fly zone and we think that Gaddafi will try to escape before this no-fly zone is imposed, possibly by tomorrow.
"So this is the most serious story we've heard today. It's very indicative of the fact that Gaddafi is totally isolated, surrounded more or less and is probably in a state of mind where he's just concentrating and thinking about how to escape and run away and stay alive."
A noble end?
Earlier, one of Mr Gaddafi's former ministers predicted the Libyan leader will follow in Adolf Hitler's footsteps and commit suicide rather than give up power.
Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile.
"Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide," Mr Abdeljalil told Swedish media.
Hitler committed suicide in his bunker in Berlin in April 1945 as he witnessed the disintegration of his Nazi empire.
Mr Mr el-Gamaty says that is "a small possibility".
"We believe that probably Gaddafi doesn't really have the courage to kill himself. We think he still have this grandiose idea that he will go to Africa and rally all the Africans," he said.
"Remember he has the title of the "King of Kings" of Africa, so he thinks he can still go to Africa and rally all the Africans around him and come back to Libya and take it over again.
"But, who knows? That is also a possibility. But whether he flees, whether he kills himself, whether he gets arrested, I think he is doomed and I think his end is very imminent."
Submitted by Tyler Durden on 02/24/2011 09:38 -0500
Activist Shareholder
The latest news from the ABC.net.au should come as no surprise to those who know all too well that one can't eat gold: "Gaddafi own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe." Yet there is speculation that instead of pulling a Ben Ali, Gaddafi may pull a Hitler: "Earlier, one of Mr Gaddafi's former ministers predicted the Libyan leader will follow in Adolf Hitler's footsteps and commit suicide rather than give up power. Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile. "Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide," Mr Abdeljalil told Swedish media." In either case, we are skeptical that much of Libya's oil infrastructure will survive the binary outcome. As a reminder, Libya had 143.8 tonnes of gold (or Tungsten as the case may be) as of December 31, per the WGC.
More from ABC:
There are reports of gun battles taking place between forces loyal to Mr Gaddafi and his opponents in the town of Zawiyah, 50 kilometres west of Tripoli.
Mr Gaddafi no longer controls much of the east around Benghazi, where there are reports residents have jailed those they say are mercenaries and set up committees to run the city.
London-based Libyan political activist, Guma el-Gamaty, has told the ABC's Lateline that "quite reliable sources" believe Mr Gaddafi is readying to flee his country.
"Gaddifi's own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe," he said.
"We think this could happen very shortly because the Security Council is threatening to impose a no-fly zone and we think that Gaddafi will try to escape before this no-fly zone is imposed, possibly by tomorrow.
"So this is the most serious story we've heard today. It's very indicative of the fact that Gaddafi is totally isolated, surrounded more or less and is probably in a state of mind where he's just concentrating and thinking about how to escape and run away and stay alive."
A noble end?
Earlier, one of Mr Gaddafi's former ministers predicted the Libyan leader will follow in Adolf Hitler's footsteps and commit suicide rather than give up power.
Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile.
"Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide," Mr Abdeljalil told Swedish media.
Hitler committed suicide in his bunker in Berlin in April 1945 as he witnessed the disintegration of his Nazi empire.
Mr Mr el-Gamaty says that is "a small possibility".
"We believe that probably Gaddafi doesn't really have the courage to kill himself. We think he still have this grandiose idea that he will go to Africa and rally all the Africans," he said.
"Remember he has the title of the "King of Kings" of Africa, so he thinks he can still go to Africa and rally all the Africans around him and come back to Libya and take it over again.
"But, who knows? That is also a possibility. But whether he flees, whether he kills himself, whether he gets arrested, I think he is doomed and I think his end is very imminent."
Virginia State Legislature can see where things are headed with the dollar, Silver and Gold
Submitted by: Francis Soyer
2/24/11
Hats of to the Virginia State Legislature for seeing down the road a bit. For all those who think Gold and Silver hype is just a bunch of paranoid bunk, put this in your pipe and smoke it. If the State Legislature is taking this seriously so should you. Good luck using cash to buy groceries or gas when the shit hits the fan which based on this bill and its ominous language is not too far down the road.
HOUSE JOINT RESOLUTION NO. 557
Offered January 12, 2011
Prefiled January 5, 2011
Establishing a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System. Report.
----------
Patron-- Marshall, R.G.
----------
Referred to Committee on Rules
----------
WHEREAS, the Supreme Court of the United States has ruled in In re Rahrer, 140 U.S. 545, 554 (1891), that “the police power” of a State “is a power originally and always belonging to the States, not surrendered by them to the general government, nor directly restrained by the Constitution of the United States, and essentially exclusive”; and
WHEREAS, the Supreme Court of the United States has ruled in Beer Company v. Massachusetts, 97 U.S. 25, 33 (1877), that the police power of the States “extend[s] to the protection of the lives, health, and property of the[ir] citizens, and to the preservation of good order”; and
WHEREAS, the protection of the lives, health, and property of Virginia’s citizens, and the preservation of good order in the Commonwealth, depend upon the maintenance of both an adequate system of governmental finance and a sound and robust private economy; and
WHEREAS, an adequate system of governmental finance and a sound and robust private economy cannot be maintained in the absence of a sound currency; and
WHEREAS, the present monetary and banking systems of the United States, centered around the Federal Reserve System, have come under ever-increasing strain during the last several years, and will be exposed to ever-increasing and predictably debilitating strain in the years to come; and
WHEREAS, many widely recognized experts predict the inevitable destruction of the Federal Reserve System’s currency through hyperinflation in the foreseeable future; and
WHEREAS, in the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System, for which the Commonwealth is not prepared, the Commonwealth’s governmental finances and Virginia’s private economy will be thrown into chaos, with gravely detrimental effects upon the lives, health, and property of Virginia’s citizens, and with consequences fatal to the preservation of good order throughout the Commonwealth; and
WHEREAS, Virginia can avoid or at least mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System only through the timely adoption of an alternative sound currency that the Commonwealth’s government and citizens may employ without delay in the event of the destruction of the Federal Reserve System’s currency; and
WHEREAS, “legal tender” denotes a currency that must be accepted in payment of a debt denominated in United States “dollars” if the parties have not stipulated that some alternative currency is to be used as their medium of payment or are not otherwise required to use such alternative currency; and
WHEREAS, the Federal Reserve System’s currency has been designated “legal tender” under color of Title 31, United States Code, Section 5103; and
WHEREAS, under Title 12, United States Code, § 411 and Title 31, United States Code, § 5118(b) and (c), the Federal Reserve System’s currency is not redeemable in gold or silver coin or the equivalent in bullion; and
WHEREAS, that the Federal Reserve System’s currency is not redeemable in gold or silver coin or the equivalent in bullion is being identified by more and more experts as a, if not the, major reason for the ever-increasing instability of the Federal Reserve System; and
WHEREAS, all gold and silver coins of the United States are designated “legal tender” under the aegis of Title 31, United States Code, §§ 5103 and 5112(h), and must be so designated perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of the Constitution of the United States; and
WHEREAS, pursuant to Article I, Section 10, Clause 1 of and the Tenth Amendment to the Constitution of the United States, each State must make gold and silver coin a Tender in Payment of Debts; and
WHEREAS, the Supreme Court of the United States in Lane County v. Oregon, 74 U.S. (7 Wallace) 71, 76-78 (1869), and Hagar v. Reclamation District No. 108, 111 U.S. 701, 706 (1884), has ruled that the States may adopt whatever currency they desire for the purposes of performing their sovereign governmental functions, even to the extent of adopting gold and silver coin for those purposes while refusing to employ a currency not redeemable in gold or silver coin that Congress has designated “legal tender”; and
WHEREAS, “the police power” being the primary sovereign governmental function of every State, under Lane County and Hagar every State may adopt its own currency, consisting of gold or silver, or both, whenever necessary and proper to facilitate exercises of that power in aid of the general welfare of the State and its citizens; and
WHEREAS, under the aegis of Title 31, United States Code, § 5118(d)(2), and perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of, and the Ninth and Tenth Amendments to, the Constitution of the United States, Americans may employ whatever currency they choose to stipulate as the medium for payment of their private debts, including gold or silver, or both, to the exclusion of a currency not redeemable in gold or silver that Congress may have designated “legal tender”; and
WHEREAS, under the aegis of Title 31, United States Code, § 5118(d)(2), and perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of, and the Ninth and Tenth Amendments to, the Constitution of the United States, the citizens of Virginia may choose to employ as the medium for payment of their private debts whatever alternative currency, consisting of gold or silver, or both, that the Commonwealth may adopt in the exercise of “the police power”; and
WHEREAS, in light of the possible instability of the Federal Reserve System, proposals for states and their citizens to adopt an alternative currency consisting of gold or silver, or both, are receiving increasing attention throughout the United States, as evidenced by bills that have been or are being introduced in the legislatures of the States of Georgia, Indiana, Montana, New Hampshire, and South Carolina; and
WHEREAS, various systems of alternative currency employing gold or silver, or both, in the form of coin or its equivalent in bullion have already proved themselves in the free market, and could either be employed by the Commonwealth directly or be used as models for a new system created by the Commonwealth to meet Virginia’s unique needs; and
WHEREAS, the adoption of an alternative currency consisting of gold or silver, or both, would not destabilize the present monetary and banking systems, the Commonwealth’s governmental finances, or Virginia’s private economy, because it would not compel or commit the Commonwealth or her citizens to employ such alternative currency to the exclusion of the Federal Reserve System’s currency immediately, but would merely make the alternative currency available, and enable it to be used in competition with and preference to the Federal Reserve System’s currency, to the degree that the need for such use became apparent; and
WHEREAS, the United States Congress, the U.S. Department of the Treasury, and the Federal Reserve System have taken and are preparing to take no action to provide the United States with an alternative to the Federal Reserve System’s currency, in the likely event that the latter would be destroyed through hyperinflation; and
WHEREAS, because legislators in Virginia know or should know all of these facts; and because the General Assembly has the authority, the ability, and the duty to take timely action to deal with this situation without first seeking the approval of or assistance from Congress or any other state; and because the Constitution of Virginia provides, “That all power is vested in, and consequently derived from, the people, that magistrates are their trustees and servants, and at all times amenable to them”—for these reasons, the citizens of the Commonwealth will properly conclude that the members of the General Assembly will be primarily responsible if the Commonwealth is found to be without an alternative currency when the Federal Reserve System’s currency collapses in hyperinflation, or some other related economic calamity supervenes; now, therefore, be it
RESOLVED by the House of Delegates, the Senate concurring, That a joint subcommittee be appointed to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System.
The joint subcommittee shall consist of eight legislative members who shall be appointed as follows: five members of the House of Delegates to be appointed by the Speaker of the House of Delegates in accordance with the principles of proportional representation contained in the Rules of the House of Delegates and three members of the Senate to be appointed by the Senate Committee on Rules. The joint subcommittee shall elect a chairman and vice-chairman from among its membership.
In conducting its study, the joint subcommittee shall call or hear from such witnesses and take such other evidence as it deems appropriate and shall consider recommendations for legislation, with respect to the need, means, and schedule for establishing such an alternative currency.
Administrative staff support shall be provided by the Office of the Clerk of the House of Delegates. Legal, research, policy analysis, and other services as requested by the joint subcommittee shall be provided by the Division of Legislative Services. Technical assistance shall be provided by the Treasurer of the Commonwealth of Virginia and the Bureau of Financial Institutions of the State Corporation Commission. All other agencies of the Commonwealth shall provide assistance to the joint subcommittee for this study, upon request.
The joint subcommittee shall be limited to six meetings for the 2011 interim, and the direct costs of this study shall not exceed $12,000 without approval as set out in this resolution. Approval for unbudgeted nonmember-related expenses shall require the written authorization of the chairman of the joint subcommittee and the respective Clerk. If a companion joint resolution of the other chamber is agreed to, written authorization of both Clerks shall be required.
No recommendation of the joint subcommittee shall be adopted if a majority of the House members or a majority of the Senate members appointed to the joint subcommittee (i) vote against the recommendation and (ii) vote for the recommendation to fail notwithstanding the majority vote of the joint subcommittee.
The joint subcommittee shall complete its meetings by November 30, 2011, and the chairman shall submit to the Division of Legislative Automated Systems an executive summary of its findings and recommendations no later than the first day of the 2012 Regular Session of the General Assembly. The executive summary shall state that the joint subcommittee intends to submit to the General Assembly and the Governor a report of its findings and recommendations for publication as a House or Senate document and shall specify the date by which the report shall be submitted. The executive summary and the report shall be submitted as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents and reports, and shall be posted on the General Assembly’s website.
Implementation of this resolution is subject to subsequent approval and certification by the Joint Rules Committee. The Committee may approve or disapprove expenditures for this study, extend or delay the period for the conduct of the study, or authorize additional meetings during the 2011 interim.
2/24/11
Hats of to the Virginia State Legislature for seeing down the road a bit. For all those who think Gold and Silver hype is just a bunch of paranoid bunk, put this in your pipe and smoke it. If the State Legislature is taking this seriously so should you. Good luck using cash to buy groceries or gas when the shit hits the fan which based on this bill and its ominous language is not too far down the road.
HOUSE JOINT RESOLUTION NO. 557
Offered January 12, 2011
Prefiled January 5, 2011
Establishing a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System. Report.
----------
Patron-- Marshall, R.G.
----------
Referred to Committee on Rules
----------
WHEREAS, the Supreme Court of the United States has ruled in In re Rahrer, 140 U.S. 545, 554 (1891), that “the police power” of a State “is a power originally and always belonging to the States, not surrendered by them to the general government, nor directly restrained by the Constitution of the United States, and essentially exclusive”; and
WHEREAS, the Supreme Court of the United States has ruled in Beer Company v. Massachusetts, 97 U.S. 25, 33 (1877), that the police power of the States “extend[s] to the protection of the lives, health, and property of the[ir] citizens, and to the preservation of good order”; and
WHEREAS, the protection of the lives, health, and property of Virginia’s citizens, and the preservation of good order in the Commonwealth, depend upon the maintenance of both an adequate system of governmental finance and a sound and robust private economy; and
WHEREAS, an adequate system of governmental finance and a sound and robust private economy cannot be maintained in the absence of a sound currency; and
WHEREAS, the present monetary and banking systems of the United States, centered around the Federal Reserve System, have come under ever-increasing strain during the last several years, and will be exposed to ever-increasing and predictably debilitating strain in the years to come; and
WHEREAS, many widely recognized experts predict the inevitable destruction of the Federal Reserve System’s currency through hyperinflation in the foreseeable future; and
WHEREAS, in the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System, for which the Commonwealth is not prepared, the Commonwealth’s governmental finances and Virginia’s private economy will be thrown into chaos, with gravely detrimental effects upon the lives, health, and property of Virginia’s citizens, and with consequences fatal to the preservation of good order throughout the Commonwealth; and
WHEREAS, Virginia can avoid or at least mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System only through the timely adoption of an alternative sound currency that the Commonwealth’s government and citizens may employ without delay in the event of the destruction of the Federal Reserve System’s currency; and
WHEREAS, “legal tender” denotes a currency that must be accepted in payment of a debt denominated in United States “dollars” if the parties have not stipulated that some alternative currency is to be used as their medium of payment or are not otherwise required to use such alternative currency; and
WHEREAS, the Federal Reserve System’s currency has been designated “legal tender” under color of Title 31, United States Code, Section 5103; and
WHEREAS, under Title 12, United States Code, § 411 and Title 31, United States Code, § 5118(b) and (c), the Federal Reserve System’s currency is not redeemable in gold or silver coin or the equivalent in bullion; and
WHEREAS, that the Federal Reserve System’s currency is not redeemable in gold or silver coin or the equivalent in bullion is being identified by more and more experts as a, if not the, major reason for the ever-increasing instability of the Federal Reserve System; and
WHEREAS, all gold and silver coins of the United States are designated “legal tender” under the aegis of Title 31, United States Code, §§ 5103 and 5112(h), and must be so designated perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of the Constitution of the United States; and
WHEREAS, pursuant to Article I, Section 10, Clause 1 of and the Tenth Amendment to the Constitution of the United States, each State must make gold and silver coin a Tender in Payment of Debts; and
WHEREAS, the Supreme Court of the United States in Lane County v. Oregon, 74 U.S. (7 Wallace) 71, 76-78 (1869), and Hagar v. Reclamation District No. 108, 111 U.S. 701, 706 (1884), has ruled that the States may adopt whatever currency they desire for the purposes of performing their sovereign governmental functions, even to the extent of adopting gold and silver coin for those purposes while refusing to employ a currency not redeemable in gold or silver coin that Congress has designated “legal tender”; and
WHEREAS, “the police power” being the primary sovereign governmental function of every State, under Lane County and Hagar every State may adopt its own currency, consisting of gold or silver, or both, whenever necessary and proper to facilitate exercises of that power in aid of the general welfare of the State and its citizens; and
WHEREAS, under the aegis of Title 31, United States Code, § 5118(d)(2), and perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of, and the Ninth and Tenth Amendments to, the Constitution of the United States, Americans may employ whatever currency they choose to stipulate as the medium for payment of their private debts, including gold or silver, or both, to the exclusion of a currency not redeemable in gold or silver that Congress may have designated “legal tender”; and
WHEREAS, under the aegis of Title 31, United States Code, § 5118(d)(2), and perforce of Article I, Section 8, Clause 5 and Article I, Section 10, Clause 1 of, and the Ninth and Tenth Amendments to, the Constitution of the United States, the citizens of Virginia may choose to employ as the medium for payment of their private debts whatever alternative currency, consisting of gold or silver, or both, that the Commonwealth may adopt in the exercise of “the police power”; and
WHEREAS, in light of the possible instability of the Federal Reserve System, proposals for states and their citizens to adopt an alternative currency consisting of gold or silver, or both, are receiving increasing attention throughout the United States, as evidenced by bills that have been or are being introduced in the legislatures of the States of Georgia, Indiana, Montana, New Hampshire, and South Carolina; and
WHEREAS, various systems of alternative currency employing gold or silver, or both, in the form of coin or its equivalent in bullion have already proved themselves in the free market, and could either be employed by the Commonwealth directly or be used as models for a new system created by the Commonwealth to meet Virginia’s unique needs; and
WHEREAS, the adoption of an alternative currency consisting of gold or silver, or both, would not destabilize the present monetary and banking systems, the Commonwealth’s governmental finances, or Virginia’s private economy, because it would not compel or commit the Commonwealth or her citizens to employ such alternative currency to the exclusion of the Federal Reserve System’s currency immediately, but would merely make the alternative currency available, and enable it to be used in competition with and preference to the Federal Reserve System’s currency, to the degree that the need for such use became apparent; and
WHEREAS, the United States Congress, the U.S. Department of the Treasury, and the Federal Reserve System have taken and are preparing to take no action to provide the United States with an alternative to the Federal Reserve System’s currency, in the likely event that the latter would be destroyed through hyperinflation; and
WHEREAS, because legislators in Virginia know or should know all of these facts; and because the General Assembly has the authority, the ability, and the duty to take timely action to deal with this situation without first seeking the approval of or assistance from Congress or any other state; and because the Constitution of Virginia provides, “That all power is vested in, and consequently derived from, the people, that magistrates are their trustees and servants, and at all times amenable to them”—for these reasons, the citizens of the Commonwealth will properly conclude that the members of the General Assembly will be primarily responsible if the Commonwealth is found to be without an alternative currency when the Federal Reserve System’s currency collapses in hyperinflation, or some other related economic calamity supervenes; now, therefore, be it
RESOLVED by the House of Delegates, the Senate concurring, That a joint subcommittee be appointed to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System.
The joint subcommittee shall consist of eight legislative members who shall be appointed as follows: five members of the House of Delegates to be appointed by the Speaker of the House of Delegates in accordance with the principles of proportional representation contained in the Rules of the House of Delegates and three members of the Senate to be appointed by the Senate Committee on Rules. The joint subcommittee shall elect a chairman and vice-chairman from among its membership.
In conducting its study, the joint subcommittee shall call or hear from such witnesses and take such other evidence as it deems appropriate and shall consider recommendations for legislation, with respect to the need, means, and schedule for establishing such an alternative currency.
Administrative staff support shall be provided by the Office of the Clerk of the House of Delegates. Legal, research, policy analysis, and other services as requested by the joint subcommittee shall be provided by the Division of Legislative Services. Technical assistance shall be provided by the Treasurer of the Commonwealth of Virginia and the Bureau of Financial Institutions of the State Corporation Commission. All other agencies of the Commonwealth shall provide assistance to the joint subcommittee for this study, upon request.
The joint subcommittee shall be limited to six meetings for the 2011 interim, and the direct costs of this study shall not exceed $12,000 without approval as set out in this resolution. Approval for unbudgeted nonmember-related expenses shall require the written authorization of the chairman of the joint subcommittee and the respective Clerk. If a companion joint resolution of the other chamber is agreed to, written authorization of both Clerks shall be required.
No recommendation of the joint subcommittee shall be adopted if a majority of the House members or a majority of the Senate members appointed to the joint subcommittee (i) vote against the recommendation and (ii) vote for the recommendation to fail notwithstanding the majority vote of the joint subcommittee.
The joint subcommittee shall complete its meetings by November 30, 2011, and the chairman shall submit to the Division of Legislative Automated Systems an executive summary of its findings and recommendations no later than the first day of the 2012 Regular Session of the General Assembly. The executive summary shall state that the joint subcommittee intends to submit to the General Assembly and the Governor a report of its findings and recommendations for publication as a House or Senate document and shall specify the date by which the report shall be submitted. The executive summary and the report shall be submitted as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents and reports, and shall be posted on the General Assembly’s website.
Implementation of this resolution is subject to subsequent approval and certification by the Joint Rules Committee. The Committee may approve or disapprove expenditures for this study, extend or delay the period for the conduct of the study, or authorize additional meetings during the 2011 interim.
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