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Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.

Wed 11.26.2008

PTG will be CLOSED tomorrow & Friday for the holiday weekend.
We'll be back on Monday, Dec 1st, with a new radio show and a new NEWS format to keep everyone up to date with breaking news throughout the day, every day.

Wishing you and your's
a very Happy Thanksgiving from all of us at PTG.

Max Keiser: US Bank Nationalization
Wholesale U.S. banking industry nationalization, Opium Wars, China and South Korea and Treasury Bonds and the collapse of Dubai and GCC countries

Russian analyst predicts decline and breakup of U.S.
A leading Russian political analyst has said the economic turmoil in the United States has confirmed his long-held view that the country is heading for collapse, and will divide into separate parts. Professor Igor Panarin said in an interview with the respected daily Izvestia published on Monday: "The dollar is not secured by anything. The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded $2 trillion. Now it is more than 11 trillion. This is a pyramid that can only collapse." The paper said Panarin's dire predictions for the U.S. economy, initially made at an international conference in Australia 10 years ago at a time when the economy appeared strong, have been given more credence by this year's events.

FDIC adds 54 more banks to its 'problem list'
Rise in troubled institutions another sign of problems in bank sector
The Federal Deposit Insurance Corp. said Tuesday the list of banks it considers to be in trouble shot up nearly 50 percent to 171 during the third quarter — yet another sign of escalating problems among the institutions controlling Americans' deposits. The 171 banks on the FDIC's "problem list" encompass only about 2 percent of the nearly 8,500 FDIC-insured institutions. Still, the increase from 117 in the second quarter is sharp, and the current tally is the highest since late 1995.

Problem banks: What you need to know
The FDIC is keeping close tabs on 171 banks. Here are answers to common questions about how the agency IDs troubled banks.
With the number of troubled banks on the rise, many Americans are wondering whether their bank is safe. The bottom line: the vast majority of banks are in good shape, and when banks do fail, customers rarely lose money because most deposits are insured. Beginning in October, the FDIC began insuring interest-bearing accounts up to $250,000 (the previous limit was $100,000) and has issued unlimited guarantees on non-interest-bearing accounts as part of the government's financial rescue initiatives.

Why gold soars as financial crisis deepens?
Only twice in the past 20 years has the price of gold jumped at least $50 in one day - on Sept. 17, 2008, and last Friday. In both instances, the price of gold reached $800, though it did not reach that level until after the Comex closed last Friday. Gold set all-time highest price records in several currencies including the British pound, Indian rupee, South African rand, and Australian dollar. Readers of this column should not be surprised by this sharp increase; as of the morning of Nov. 24 gold is up to over $825. A few weeks ago, I pointed out several upcoming near-term events where it would be likely that those manipulating gold prices downward would probably make their moves. The last of those events, the expiration of the December gold and silver options contracts, occurred last Thursday.

Max Keiser thoughts on Obama's economic team
Max Keiser's appearance on Aljazeera English on November 24, 2008 as Obama announces his economics team including Tim Geithner and Larry Summers. Max discusses whether Obama can do anything to rescue the financial system that has already had $7 trillion showered on it. And whether or not the Chinese will continue to finance America's increasing debt needs.

NovaGold Dangerously Close to Broke
For NovaGold Resources Inc. investors, the expected happened on Monday, when the company said it is one step away from being unable to meet its financial obligations. Shares in NovaGold have fallen more than 75% to C$0.53 in late morning trading. NovaGold said it received a cash call related to its Galore Creek partnership for about C$1.9-million due today, and does not intend to make the payment. It does, however, intend to make a payment related to a cash call for its Donlin Creek project of approximately $3.9 million due on or about November 27, 2008.

Rogers Says Dollar to Be 'Devalued,' Buys Commodities
The U.S. dollar will be "devalued" as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore. "They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term," said Rogers. The ICE's Dollar Index has gained 19 percent since Rogers said in an interview on April 27 he expected a dollar rally "about now."

Mike Schneider interview with Jim Rogers P1

Mike Schneider interview with Jim Rogers P2

Mike Schneider interview with Jim Rogers P3

Mike Schneider interview with Jim Rogers P4

Mike Schneider interview with Jim Rogers P5

Gold's Role Reversal
Gold has staged a spectacular rally over the past few days and there are a few important things to note:
1. The precious metal bounced after dipping below $700
2. On Thursday gold strengthened alongside the dollar. Friday then saw a massive jump with follow through buying today.
3.Gold's role has reversed from safehaven focus to dollar focus - it has been rallying along with the market.
Role Reversal
As the crisis unfolded, it was common to see gold strengthening alongside weakening equities - now we are seeing the opposite. Why? Well simply because we are not rallying on fundamentals but rather the prospect of government bailouts. In other words, the markets are only being supported through inflation. Another inflationary development over the weekend saw several OPEC members calling for massive production cuts to support the price of oil - another positive for gold. All of this has led to a massive rally in gold.

PRECIOUS METALS: Price Disparity Equals Opportunity
Based on trading activity and reports, the following markets are setting up for potential trading opportunities. There is currently a large disparity between the price of physical metals and the price of precious metals futures contracts at the commodity exchanges. The difference is substantial. On Friday, November 21st, Monex was selling a one-ounce Silver Eagle coin for $14.14 and Northwest Territorial Mint was selling that same one-ounce Silver Eagle coin priced for $14.44. On Ebay, Silver Eagles were selling from $15.50 to as much as an incredible $25.00! Yet that very same day, silver for delivery in December closed at $9.48 an ounce on the Comex futures exchange. So why do the bullion dealers have silver coins priced at a premium of 50% over the spot futures market and online auction stores like Ebay have premiums as much as 64% to 164% over the spot futures market? It all comes down to the simple laws of Supply and Demand.

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Faber on TARP: 'the best option is to do nothing'
Faber recommends buying physical gold; sees dollar going down; says capital spending will collapse next year.

Gold and Silver Hold Recent Gains as Fed Tries To
Solve Problems Created By Leverage With… More Leverage
. . . . $800 billion more is being committed with $600 billion going towards mortgage backed securities and debt from Fannie and Freddie and $200 billion going towards holders of securities backed by consumer debt. $20 billion from the Treasury Department’s $700 billion TARP will back that lending and will result in leverage of 10 to 1. As former St. Louis Fed president William Poole noted in an interview with Bloomberg Television: "Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk." Another day, another chunk of toxic debt transferred to the taxpayer from the failing companies who invested in it in the first place. "The Fed will be adding reserves to its balance sheet, which has already grown by $1.3 trillion this year as a result of the program."

GOLD - PUTTING THE PIECES OF THE PUZZLE TOGETHER
There are a number of recent developments, fundamental factors, and technical indicators that suggest a large move higher in the price of gold. These developments, factors, and indicators can be seen as pieces of a puzzle and together provide guidance. A number of pieces of the puzzle are presented below. The first piece of the puzzle has to do with the gold carry trade. This is a method that central banks use to get their gold bullion out of reserves and into the market. Central banks use bullion banks (BB) to lease their gold bullion out. These bullion banks include Barclays, Goldman Sachs, JP Morgan, Bank of America, UBS, and Citibank. The central banks loan gold bullion to the bullion banks typically at a rate called the GOFO (Gold Forward) rate.

Gold vs. Oil: Gold Is Winning
Real-time Inflation Indicator (per annum): 7.8%
It's hard to find winners in today's market, especially if you don't want to use margin. You pretty much have to write off futures unless you're willing to plunk down the total contract value up front. Even a mini gold contract would set you back about $24,000. . . . investors wanting precious metals deliveries are buying through futures . . . There are exchange-traded funds, notes and grantor trusts, but gains in the commodities-based products have largely been limited to a handful of short, or inverse, trackers recently.

The gold price over Thanksgiving
For years now, the Thanksgiving holiday in the U.S. has been a very favorable two-day period for the gold price as shown below - this year is not likely to be an exception. While anything could happen later this week, a number of conditions have developed that would favor a higher gold price by the weekend, perhaps much higher.

After Citigroup, is Bank of America next?
A government rescue plan has eased investors' concerns about Citigroup Inc, but mines lurking in the balance sheets of rivals including Bank of America Corp could still tempt short-sellers. Bank of America, the No 3 US bank by assets, has loaded up on mortgages as the world's largest economy wrestles with the worst housing market since the Great Depression. The Charlotte, North Carolina-based bank further heightened its exposure to home loans by acquiring Countrywide Financial Corp, the largest US independent mortgage lender and agreeing to buy Merrill Lynch & Co, which owns the world's largest retail brokerage.

Has the Fed Mortgaged Its Own Future?
IF THE FEDERAL RESERVE BANK WERE A COMMERCIAL LENDER, it would be a candidate for receivership, based on its capital ratios. Bank examiners generally view any lender with a ratio below 2% to be dangerously undercapitalized. The Fed's current capital ratio, or capital as a percentage of assets, is 1.9%. The Fed has provided so many loans and emergency credits -- to banks, brokers, money funds and foreign countries -- that its balance sheet, viewed one way, is as leveraged as any hedge fund's: Its consolidated assets amount to 53 times capital. Only 11 months ago, its leverage on this basis was a more modest 25 times, and its capital ratio 4%. A caveat: Many of the loans are self-liquidating facilities that will disappear in a few months if the financial crisis eases.

Fed Commits $800 Billion More to Unfreeze Lending
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion. The central bank will purchase as much as $600 billion of debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington.

Government Stimulus Programs Not Always the Hoped-For Panacea
The British government this week unveiled a stimulus plan that will boost that country’s budget deficit to $181 billion (118 billion pounds), the equivalent of 8.0% of gross domestic product (GDP). U.S. President-elect Barack Obama’s stimulus plan, when combined with the recession, may raise the U.S. federal deficit to $1.2 trillion, or 8.0% of U.S. GDP. This raises the question: If it’s so easy to stimulate an economy, why don’t we do it all the time? Don’t such large deficits cause problems?

First Audit Said to Cite Some Snags With Bailout
The first operational audit of the $700 billion financial rescue plan, to be delivered to Congress next Tuesday, is expected to be critical of the Treasury Department’s failure to set up ways to track how its bailout money is being used in the marketplace, according to people briefed on a draft of the report. The audit, done by the Government Accountability Office, is also likely to call for tighter controls over the conflicts of interest that are arising as financial specialists, institutions and law firms are hired for Treasury work that could later aid their private-sector clients, said these people, who would speak only on condition of anonymity because the briefings were confidential.

Fed Risks 'Spitting in the Wind' With New Aid Pledges
The Federal Reserve's new $800 billion effort to combat the financial crisis is designed to make credit more accessible to shaken consumers who aren't sure they want more debt. Households and lenders may not respond much because of the wealth destruction from plunging property and stock values, and the deepening economic slump, economists say. That means banks may end up returning the Fed's new liquidity through deposits at the central bank.

Britons blame U.S. for the credit crisis
More than a third of Britons blame the U.S. for the financial crisis and economic downturn, according to a survey, and three-quarters say they have little or no faith in banks. The research, by advertising agency McCann Erickson, found almost 40 percent of people blamed the U.S. for the credit crisis, with 27 percent saying U.S. banks were responsible and 10 percent pointing the finger at the outgoing U.S. government. Only 18 percent blamed Prime Minister Gordon Brown, who has repeatedly referred to the financial turmoil as having started in the U.S.

Where's the money coming from?

Fed, in major shift, floods system with cash
With short-term rates nearing zero, 'Helicopter Ben' tries new approach
The latest move by the Treasury and Federal Reserve to inject another $800 billion into the financial system opens yet another chapter in the government's continually evolving response to the financial crisis. But Tuesday's announcement reflects a policy that has been evolving behind the scenes at the Federal Reserve for months with little fanfare. Add one more acronym to the alphabet soup of financial rescue programs: zero interest rate policy, or ZIRP. But ZIRP is not just another bailout program. ZIRP represents a major shift in the Fed's monetary policy now that the central bank has all but run out of room to lower interest rates to spur lending and revive the economy.

Inflation is No Cure for a Recession
There are some in our government who claim that we face a possible depression if we do not engage in a massive amount of deficit spending and money printing to resurrect the economy. The prescription is intended to cure the credit crisis by forcing banks to step up their lending practices. In their inability to accept or understand the cause of our current crisis in the first place, however, we face increasing odds of a depression as our fearless leaders fight this recession with yet more of the disease itself: inflation.

Another Brick in the Wall: the GDP, Gold and Silver
Real-time Inflation Indicator (per annum): 8.0%
The value of the goods and services cranked out in the United States - the nation's gross domestic product [GDP] - decreased at an annual rate of 0.5% in the third quarter of 2008. Preliminary estimates made last month called for a 0.3% downturn after real GDP increased 2.8% in the second quarter. Consumers continue to wield a strong influence upon the U.S. economy as most of the weakness in GDP was traced to a downturn in personal consumption expenditure [PCE]. In the third quarter, PCE tumbled 3.7% after rising 1.2% in the second quarter.

Fed adds $800bn to boost borrowing
The US Federal Reserve on Tuesday escalated its efforts to revive the financial system, pledging $800bn to bolster markets for loans to homebuyers, consumers, students and small businesses. The planned intervention in consumer lending markets had a dramatic impact on interest rates for mortgage-backed securities, which fell to their lowest levels since January after having remained stubbornly high despite Fed interest rate cuts.

Mortgage Rates Fall as U.S. Expands Rescue $$
Government Vows $800 Billion for Credit Markets in Fresh Salvo on Recession; Could Aid Students, Car Buyers, Small Businesses U.S. officials pledged to pump another $800 billion into ailing credit markets, much of it directly from the Federal Reserve -- a move that makes the nation's central bank a lender to almost every corner of American life. The Fed, whose traditional lending role has been to make emergency loans to banks, plans to purchase in coming months up to $600 billion of debt issued or backed by Fannie Mae, Freddie Mac, Ginnie Mae and Federal Home Loan Banks, all mortgage-finance businesses with close ties to the government.

Paulson gives revival plan hard sell
The main salesman for the US administration’s efforts to deal with the financial crisis described the Federal Reserve plan to commit a further $800bn of taxpayers’ funds to another attempt to revive credit markets as a “great investment”. Stepping up before the cameras at a Washington press conference on Tuesday, Hank Paulson, Treasury secretary and chief proponent of the Bush administration’s dizzying range of responses to the crisis, argued that the liquidity injection was necessary to nudge conditions closer to normal in the markets and restore lending to ordinary consumers at realistic rates. Daunted by the huge price tag of a programme put into place without Congressional debate, neither the markets nor Capitol Hill was immediately convinced.

Paulson ScumBites: This is a hard sell!

Paulson ScumBites:
The authorities we got from Congress is what we needed! (TO DO WHAT???)

Paulson ScumBites:
Treasury Working on Foreclosures every Day! What a LIE!

11/25 Paulson 2/5: Consumer Credit what about MAIN STREET?

11/25 Paulson 3/5 "Remember $200 Bn is a starting point!"

11/25 Paulson 4/5 "We now have the tools to stabilize system" Heard this before?"

11/25 Paulson 5/5 "Congress Naïve to think one BILL be enough" Man disappears behind curtain!

Treasury considered plan to bust Citi shorts
US regulators considered a proposal to buy Citigroup shares in the secondary market before deciding on a plan to buttress the bank with $20 billion in fresh capital and $306 billion in guarantees for distressed assets, people involved in the talks said. Under the plan revealed on Sunday, the Treasury will invest $20 billion in preferred shares in Citi -- in addition to the $25 billion it has already put into the group. However, regulators briefly considered investing as much as $30 billion in Citi -- including $15 billion in preferred shares and $15 billion in common stock to be bought in the secondary market, participants in the talks said. By buying Citi common stock in the open market, regulators could have increased pressure on investors who sold Citi shares short -- selling borrowed shares in the hopes of buying them back to profit from a fall in the price. The Hong Kong Monetary Authority employed a similar strategy during the Asian financial crisis.

Obama Chides Auto Makers in Fresh Blow $$
The federal government sent Detroit packing last week, saying the Big Three auto makers had to establish their financial viability before any bailout, but it moved quickly over the weekend to give Citigroup Inc. $20 billion and promised as much as $275 billion more. On Monday, President-elect Barack Obama offered his own rebuke of the auto makers' stuck-in-the-mud approach to restructuring. "Taxpayers can't be expected to pony up more money for an auto industry that has been resistant to change," Mr. Obama said at a news conference in Chicago. "And I was surprised that they did not have a better-thought-out proposal when they arrived in Congress....I think that the auto industry needs to present us with some clarity in terms of the dollar figures that they're talking about."

DENNIS KUCINICH (NOT BARACK OBAMA) GRILLS NEEL KASHKARI ON BAILOUT SCAM

Problem’ banks stoke fears over FDIC fund
The list of “problem” banks grew by almost 50 per cent in the third quarter, the Federal Deposit Insurance Corporation reported on Tuesday, stoking fears that further bank failures could put the agency’s insurance fund under severe pressure. Sheila Bair, FDIC chairman, suggested more failures were likely in spite of government support for the banking industry. While the US Treasury’s capital purchase programme would bolster bank capital levels and revive lending, she said the scheme was not intended to help banks that were not “viable”, such as those on the problem list.

Citi rescue raises questions over strategy
With this week’s government rescue, Citigroup has been established as “too big to fail”. With its collapse a few days before, Downey Financial, a far smaller California lender, established that it was not. But while markets cheered the government’s rescue of Citi, the latest federal intervention into the US banking system has raised an additional question: what other banks are too big to fail, and how will investors know?

More bailouts besides Citi needed

Citigroup Rescue Charts New Course for Bank Bailouts
The U.S. government’s emergency rescue of Citigroup Inc. offers a new model for bank bailouts: explicitly insuring against losses on toxic assets, with taxpayers footing the bill. The Citigroup plan extends the federal commitment beyond the previous framework of capital injections from the Treasury and credit from the Federal Reserve. Now, the U.S. is a partner in the performance of $306 billion in real-estate loans and securities, sharing losses beyond $29 billion on what are likely to be some of Citigroup’s worst holdings.

Citigroup's $306 Billion Rescue Fueled by Pizza From Domino's
The deal to rescue the world's best- known bank was pieced together by regulators over Domino's pizza in near-empty offices one block from the White House. Citigroup Inc., whose operations in more than 100 countries range from mortgages to microfinance, received a government rescue package to protect the bank from losses on $306 billion of toxic assets. The agreement, meant to stabilize the company after the value of its stock plunged 60 percent last week, boosted the shares 58 percent in New York Stock Exchange composite trading yesterday.

U.S. Stocks Retreat as Data Points to Deepening Recession
U.S. stocks fell, snapping a three- day advance for the Standard & Poor’s 500 Index, after orders for durable goods shrank twice as much as forecast and consumer spending declined the most since 2001. Caterpillar Inc. and General Electric Co. lost more than 2 percent after the government reported a 6.2 decrease in bookings of goods meant to last several years. Disney Co. and Harley- Davidson Inc. declined on a Commerce Department showing purchases shrank by 1 percent last month. Deere & Co. retreated 9.7 percent as higher costs for materials eroded profit, while Tiffany & Co. slumped as much as 11 percent after lowering its earnings forecast. Europe’s benchmark index lost 2 percent.

Are Insurers next in line?
Life insurers seek aid to stabilize investments
Life insurance companies, nervous over massive investment losses that could ultimately threaten their viability, are hoping they are next in line to get a piece of the U.S. financial bailout. They argue federal funds could stabilize their trillions in investments and warn that any failure of a life insurer could dry up a key source of corporate financing. But U.S. officials are not convinced.

Dollar Falls On Discouraging Economic Data
The dollar fell against the major currencies Tuesday as new data showed that American consumers curbed their spending at a rate unseen in 28 years, while a survey showed German consumer confidence improving slightly despite the wider economic gloom.

Former Clinton Treasury Secretary Turned Obama
Adviser Was Paid Tens of Millions by Bailed-Out Citigroup
Robert Rubin, a key economic advisor to President-elect Barack Obama who served as Treasury secretary in the Clinton Administration, has been one of the highest paid executives at the now twice bailed-out financial giant Citigroup. Rubin, who has been associated with the bank since 1999, served as its interim chairman from November to December 2007. Rubin’s role has been described as an advisor to the company’s top executives. “It’s a little like visiting Yoda, you go and get a dose of wisdom,” Citigroup co-head of global investment banking Raymond J. McGuire told the Times. McGuire, who is one of Obama’s bundlers – the fundraising titans responsible for bankrolling Obama’s presidential campaign – is a member with Rubin on Citigroup’s Senior Leadership Committee.

Economy shrinks at fastest pace in seven years
The U.S. economy contracted at its fastest pace in seven years in the third quarter as consumer spending plunged to a 28-year low, data showed on Tuesday, raising the specter of a deeper recession. Separate reports showed U.S. home prices continued their downward spiral, with the cost of single-family homes plunging by a record 17.4 percent in September from a year earlier. The data painted a dismal picture of the troubled economy and backed views the Federal Reserve could push benchmark lending rates to an unprecedented zero percent by early 2009.

Pimco, Franklin GM Debt Value May Fall 75% in Aid Bid
General Motors Corp. may ask unsecured debt holders Franklin Resources Inc. and Pimco Advisors LP to accept as much as two-thirds less than the face value of their bonds as the automaker cuts debt in a bid to win U.S. government aid. GM bonds trade for 13 to 22 cents on the dollar and the company may only offer a slight premium over that, estimated Pete Hastings, a fixed income analyst at Morgan Keegan & Co. in Memphis. GM needs to pare its debt below the current $43 billion even if it gets the $12 billion in government loans sought, people familiar with the matter said earlier this week.

Cost of gasoline falls to 2004 levels; oil tumbles
Crude settles at $50 amid fears of a long U.S. recession
Oil prices fell nearly 7 percent Tuesday and gasoline prices fell to levels not seen since 2004 as a raft of lousy news about the economy, housing and the consumer state of mind suggested the U.S. is headed toward the worst recession in decades. The government reported that the nation’s gross domestic product in the United States shrank 0.5 percent in the third quarter, which was worse than expected. It was the worst showing since the economy contracted 1.4 percent in the third quarter of 2001, during the last recession.

U.S. Durable Orders Fall Twice as Much as Forecast
Orders for U.S. durable goods fell twice as much as forecast in October as the credit freeze deepened and sales tumbled. The 6.2 percent drop in bookings of goods meant to last several years was the biggest in two years and followed a revised 0.2 percent decrease in September, the Commerce Department reported today in Washington. A separate report from Commerce showed consumer spending fell by the most since the 2001 recession.

Home Prices Continue to Drop $$
D.R. Horton Reports Wider Loss
Home prices continued to fall as the economic downturn deepened in September, according to the S&P/Case-Shiller home-price indexes and the Federal Housing Finance Agency home price index. "The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals," Case-Shiller index committee chairman David Blitzer said. For the third quarter, the Case-Shiller national index posted a 16.6% decline in home prices from a year earlier, worse than the 15.1% drop posted in the second quarter.

Home Prices for 20 U.S. Cities Decline Most on Record
House prices in 20 U.S. cities declined in the year ended in September at the fastest pace on record as rising foreclosures pushed down property values. The S&P/Case-Shiller home-price index dropped 17.4 percent in September from a year earlier, more than forecast, after a 16.6 percent decline in August. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

Outlook Grows More Dire for Housing Market
The financial shocks of September and October appeared to dash any hopes for a quick recovery in the housing market, where the precipitous declines in sales and prices — the problems at the heart of the current credit crisis — have only worsened. Home loans, already scarce by normal standards, dried up as the impact of the Lehman Brothers collapse spiraled through the credit market. Buyers who had begun to wade back into the market were spooked by the turmoil, reversing recent improvements. Of the sales that did go through in October, nearly half were the result of a sale after a foreclosure.

Existing-Home Sales Fall Even Amid Lower Prices
Sales of existing homes in the U.S. fell in October as the faltering economy kept buyers on the sidelines even as prices dropped by the most since records began. Home resales declined by 3.1% to a 4.98 million annual rate from a 5.14 million annual pace during September, the National Association of Realtors said Monday. "Many potential home buyers appear to have withdrawn from the market due to the stock-market collapse and deteriorating economic conditions," NAR economist Lawrence Yun said. Some sales of existing homes were linked to foreclosures.

Great Engine of China Slows
he Ma’anshan Iron and Steel Company recently opened a giant $3 billion steel mill on the outskirts of this city. The mill, which covers one and a half square miles and has its own power plant and shipping port, was built to help meet China's seemingly insatiable appetite for growth. But during what should have been a peak production period two weeks ago, it was silent. Rolls of coiled steel sat near the end of a long assembly line as a few helmeted workers lounged about, playing with their mobile phones.

China Postpones European Summit
China has postponed an annual summit with the European Union originally scheduled for next Monday, the Europeans said in a statement on Wednesday. The Chinese were evidently angered by a new visit to several European countries by the Tibetan spiritual leader, the Dalai Lama. “The European Union, which set ambitious aims for the 11th European Union-China summit, takes note and regrets this decision by China,” the statement said. According to the Europeans, the Chinese “said their decision was due to the fact that the Dalai Lama will at the same time undertake a new visit in several countries of the union and will meet on this occasion heads of state and government.”

Russia Has Contacted Obama Aides to Pursue Iran Nuclear Deal
Russian officials are in contact with the incoming Obama administration, urging it to normalize relations with Iran and reach an agreement over its disputed nuclear program. Russia is hoping that “the new administration understands that there is no alternative to the political process and dialogue at all levels,” Deputy Foreign Minister Sergei Ryabkov said today in an interview with Bloomberg Television in Moscow. Asked if Obama would have to normalize ties with Iran to reach a nuclear agreement, he replied: “Yes, absolutely.”

Regime Uncertainty
Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War
The Great Depression is one of the most studied topics in American economic history, and one about which scholars remain in serious disagreement. Perhaps the topic is too big, and its study would be more fruitful if it were broken down into subtopics. Thus, one might consider separately the causes of the Great Contraction, the unparalleled macro-economic collapse between 1929 and 1933; the Great Duration, the twelve successive years during which the economy operated substantially below its capacity to produce; and the Great Escape, generally understood to have been brought about, directly or indirectly, by American participation in World

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Tues 11.25.2008

Deflation, Monetary Velocity, and Why Gold's a Buy
Today I want to talk about the concept of monetary velocity. Let’s start with some background. In Wednesday’s Taipan Daily we noted that short-term interest rates have fallen to multi-year lows. The flip side of falling interest rates is rising bond prices. When bond prices rise, interest rates fall and vice versa. This means investors and traders have an impact on interest rates through their buying and selling decisions. When investors pile into bonds, for example, they push bond prices up – and interest rates down.

Meltdown: The Gold Carry Trade dies
With yields on government debt at unprecedented lows, it is no longer profitable to borrow gold and exchange it for risk free securities. A gold carry trade has been in effect for over 10 years. Central banks, with hoards of gold, would lease the yellow metal to investors at a paltry 3% per annum. These investors would borrow the gold from the bank and sell it on the open market.

Crucial Gold Test Awaits at $877
After turning in a sizzling performance in recent days, gold faces a crucial test not far above. The precise number to watch is 877.70, an important “Hidden Pivot” resistance that lies exactly $57.30 above yesterday’s Comex settlement price for the December contract. Although 877.70 is our minimum expectation for the near-term, the pivot could also stop the rally cold. On the other hand, if the futures should get past it – and, better yet, do so with relative ease -- that would suggest more strength is coming, perhaps the booster stage of a decisive thrust past $1000.

Gold surges amid deflation concern; silver, platinum rebound
Gold was the biggest gainer, followed by silver, among 19 commodities on the Reuters/Jefferies CRB Index. As recessions grip the U.S., Japan and parts of Europe, central banks may be forced to lower interest rates and pump more liquidity into the financial system, devaluing their currencies, analysts said. ""Hard assets for hard times,"" said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ""Even with all the money central banks have thrown at the financial system, it's not enough to stop systemic risk. People are looking for something that's going to go up, and that's gold.""

'Crisis Only Just Beginning': Right About the Crash, Peter Schiff Sees More Pain Ahead
There's a popular YouTube clip called "Peter Schiff Was Right" that shows the president of Euro Pacific Capital engaged in on-air debates with financial luminaries such as Art Laffer and Ben Stein, circa 2006-07. The clips show the wisdom of Schiff's dire forecasts — and, judging from the dismissive reactions, just how far he was outside the mainstream. Ben Stein publicly apologized to Schiff in a New York Times column, but Laffer refuses to admit defeat, recently telling Bill Maher his economic forecasts have a statute of limitations of just nine months.

Peter Schiff Was Right 2006 - 2007

Dow ends up nearly 400 after bailout of Citigroup
Dow ends up nearly 400 after government's bailout of Citigroup lifts some worries about banks The government's latest bailout of a big financial company -- this time, Citigroup Inc. -- sent Wall Street soaring Monday for the second straight session as investors bet that the worst of the financial industry's problems might finally be over. The Dow Jones industrials soared nearly 400 points, while all the major indexes jumped more than 4.5 percent. The surge gave the market its first two-day advance since the end of October and the Dow its biggest two-day percentage gain since October 1987, the month of the Black Monday crash. The Dow's 891-point rise over the two sessions also wiped out the 872-point plunge it suffered over the course of Wednesday and Thursday, when investors were anguishing over the fate of Citigroup and financial companies in general, and over the future of the nation's automakers.

Bush: More Bank Bailouts Like Citi May Be Ahead
President Bush said there may be more government rescues of financial institutions like the $20 billion bailout late Sunday of Citigroup. "We have made these kind of decisions in the past," Bush said. "We made one last night and if need be, we will make these kind of decisions to safeguard our financial system in the future." Bush spoke outside the Treasury Department after consulting with Secretary Henry Paulson on the economy, the financial crisis and the government's rescue package for Citigroup.

Citibank Is The Third Largest Holder of Derivatives.
Do You Know Who Number 1 and 2 Are?
Citibank was the biggest, and was considered one of the most stable, banks a little while ago. But its derivatives exposure killed it. However, Citibank was only the third largest holder of derivatives as of June. Who were number 1 and 2? JP Morgan holds around three times more derivatives than Citigroup. And Bank of America is number 2.

That Money Isn't Leaving the Vault
So goes the old saw about bankers: they loan you an umbrella when the sun is shining, only to ask for it back when it rains. But with our economy and markets in a world of hurt, the nation's banks were supposed to stow their self-interest and help start lending again. When the Troubled Asset Relief Program of the Treasury Department handed over $125 billion in taxpayer money to nine banks a month ago, they were supposed to lend to small businesses, home buyers and other worthy borrowers to keep the economy's gears in motion. At the time, the Federal Reserve Board and three bank regulatory agencies said: “The agencies expect all banking organizations to fulfill their fundamental role in the economy as intermediaries of credit to businesses, consumers, and other creditworthy borrowers." Alas, that admonition wasn't accompanied by any real requirements to lend. When the Treasury gave taxpayer billions to the banks, it attached no strings. So is it any surprise that lending is tight?

Another Crisis, Another Guarantee
Guarantees that could not be honored thrust the world financial system into its worst crisis since the Great Depression. Will a guarantee by the United States government finally restore confidence in the American financial system? Only a week after Treasury Secretary Henry M. Paulson Jr. said that the government bailouts had stabilized the most important financial institutions, plunging stock prices forced the government to step in again, both to make another direct investment and to guarantee that losses would be contained from $306 billion in possibly toxic assets on Citigroup’s balance sheet.

Citigroup Is Saved for Now, but Long-Term Anxiety Grows
One bailout was not enough for Citigroup. And it may not be enough for other big banks. While Citigroup’s second multibillion-dollar rescue from Washington hit Wall Street like a shot of adrenaline on Monday, many analysts worried that the jolt would soon wear off. Citigroup has been stabilized, but the outlook for the financial industry as a whole is bleak. With the red ink deepening, other banks may eventually turn to the government to soak up some of their losses. Taxpayers could end up guaranteeing hundreds of billions of dollars of banks’ toxic assets. Indeed, Treasury Secretary Henry M. Paulson Jr. is expected to announce a new plan on Tuesday to bolster the consumer-finance market.

Bush Says He's Prepared for More Financial-Rescues
President George W. Bush today said he is prepared to make other financial-rescue moves like the one to help Citigroup Inc. and that he'll work closely with President -elect Barack Obama on all major moves to shore up the U.S. economy. "We have made these kinds of decisions in the past, made one last night, and if need be we're going to make these kinds of decisions to safeguard our financial system in the future," Bush said after meeting with Treasury Secretary Henry Paulson.

Paulson May Ask for Remaining $350 Billion of TARP
Treasury Secretary Henry Paulson, less than a week after indicating he would let the Obama administration decide how to use the second half of the $700 billion financial fund, is considering asking for the money. Paulson may ask Congress for the remaining $350 billion from the Troubled Asset Relief Program as he puts together plans to boost consumer credit. Treasury and Federal Reserve officials are working on an effort to buttress the market for securities backed by auto, student and credit-card loans, Paulson said last week. He’s also assembling an office to address mortgage foreclosures.

President-elect to step up spending
Barack Obama on Monday set out his plans to step up, rather than pull back, government spending in the wake of the financial crisis, underscoring a big shift in the US economic debate in just a few weeks. The record-breaking economic stimulus advocated by the president-elect over the past few days is expected to include investments in health care, education and energy, as well as tax cuts and infrastructure spending, a package whose cost some Democrats have estimated at $700bn and which includes a number of long-standing Democratic commitments. "Not only do I want the stimulus package to deal with the immediate crisis, I want it also to lay the groundwork for long-term sustained economic growth," Mr Obama said at his appearance before the press in Chicago on Monday.

Roasting G-20 Weenies on a Golden Spit
The recent G-20 meeting in Washington, D.C. is where the world's 20 biggest and/or most important economies got together to change the world's economic architecture, with everybody promising to spend like maniacs right now, but to one day act honorably and adhere to some future agreement that really isn't worth the paper it will be written on. The problem is that since 1944 the United States had promised to act responsibly and hold the value of the dollar constant, controlling the money supply, and thus preventing inflation and runaway booms like the gold standard did, so that all the other countries could take the easy way out and merely use the dollar as their "gold" reserves against which they could value their own currencies, instead of hassling with all that metal back and forth. As for our adherence to the Bretton Woods agreement, hahahaha! That's why everybody is so angry with us; we are all freaking doomed!

Goldman to sell $2 billion in FDIC-backed bonds
Goldman Sachs plans to sell at least $2 billion of new debt that will be guaranteed by the Federal Deposit Insurance Corp, with pricing expected Tuesday, according to a market source familiar with the sale. The debt will mature no later than June 30, 2012, the source said. Goldman Sachs is the sole bookrunner, while Citigroup and Morgan Stanley are joint leads, the source said. The debt is guaranteed under the FDIC's Temporary Liquidity Guarantee Program, and investors are watching the deal as a test case for demand under the new program.

Commercial Real Estate – the Next Shoe to Drop
The residential real estate sector is in shambles and, some economists say, will not recover until the end of 2010, at the earliest. Now it looks like commercial real estate may be the next block to fall in our "Jenga economy." On November 19, bonds and stocks backed by commercial real estate loans plummeted on investors’ fears the struggling U.S. economy might lead to a wave of defaults. Big real estate companies suffered big losses: shares of Simon Property Group, the top U.S. mall operator, declined 13%; Boston Properties Inc., owner of skyscrapers and office buildings in key U.S. markets, fell 12.1%

Bank Industry Analysts Fall Prey to the Shrinkage
The analysts who make buy and sell recommendations about Wall Street banks have had a front row seat to the financial turmoil. But now, some of the analysts who covered the carnage are starting to fall victim to it. Goldman Sachs, Citigroup and Bank of America have recently dismissed analysts who covered some of their competitors. The analysts were particularly prominent within the industry because they were often quoted in news stories and invited to meetings with bank executives. They were the voices who questioned executives on earnings calls, and they were often the ones who cast most doubt on their field. Now they join a growing pool of bankers and traders losing their jobs just before bonus time.

US house prices suffer record fall
The price of previously owned homes in the US fell in October by the biggest amount in at least 40 years and the volume of sales also dropped, in a sign of the still mounting problems in the housing market. The median price of existing homes fell by 11.3 per cent in October to $183,300 (€142,100, £121,200) compared with a year before, the National Association of Realtors reported yesterday – the largest annual drop since records began in 1968. The slump in prices is partly driven by a large number of distressed sales of homes or sales out of foreclosure, which typically sell at a much lower price. Sharply falling prices will contribute to deteriorating consumer confidence and spending as the shoppers head into what is widely expected to be a dismal holiday season for retailers.

U.S. Consumer Confidence to Remain at All-Time Low
Economists aren't expecting any improvement in the Conference Board's November survey of U.S. consumer confidence, after it plunged far beyond expectations to hit an all-time low in October. Last month's index fell from 61.4 to 38.0, a level well below the previous all-time low of 47.3. The report indicated that consumers were hit severely by the latest phase of the credit crunch, which caused net job losses in excess of 200k for both September and October. Many economists believe the economy could contract by 4.0% in the fourth quarter, following a relatively modest 0.3% decline in Q3.

U.S. October Home Resales Fall; Price Drop Is Record
Home resales in the U.S. dropped in October and prices fell by the most on record, signaling a deepening housing recession going into 2009. Purchases of existing homes declined 3.1 percent last month to an annual rate of 4.98 million units, the National Association of Realtors said today in Washington. The median price fell 11.3 percent to $183,300 from a year earlier, the largest year-over-year decrease since records started in 1968.

U.S. Stocks Rise After Citigroup Gets Government Loan Backing
U.S. stocks climbed for a second day after the government said it will guarantee $306 billion of troubled Citigroup Inc. assets and Democratic lawmakers pledged to pass an economic stimulus package by January. Citigroup, which lost more than 60 percent of its market value last week, rebounded 63 percent after the Treasury Department also agreed to inject $20 billion into the bank. JPMorgan Chase & Co. added 12 percent and Bank of America Corp. jumped 17 percent as the guarantee eased concern that a flight of depositors might destabilize Citigroup, which has $2 trillion of assets. Alcoa Inc. and Microsoft Corp. climbed more than 4.4 percent on speculation a new stimulus will spur economic growth.

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit
The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago. The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

A Bridge Too Far
Despite recent evidence to the contrary, the global economy is not headed back to the Stone Age. It is also doubtful that China is preparing a new Cultural Revolution to ship hundreds of millions of city dwellers back to work the land, and to get over dreams of new cars and refrigerators. On the contrary, the developing world may pause in its development, but it won’t stop and it won’t settle for the limited dreams of earlier generations. While the ongoing global economic crisis will be very painful, it also may buy a few more precious years before the effects of Peak Oil begin to hit home with a vengeance.

ADJUSTING TO PEAK OIL
Future shock
Like it or not, the world is moving rapidly to absolute peaks in the capacity to find, prove and extract ever more oil and gas. The oil peak will arrive well before the gas peak. The time needed to reach the maximum possible production rate for 'all liquids', that is including deep offshore oil, heavy oils, and tarsand or bitumin based 'synthetic' oil, as well as cheaper-produced ‘conventional’ crude, is probably less than 4 years from 2007. The extact time required will depend more on how world and regional oil demand profiles evolve, the intensity of global economic growth and recession, and spare capacity of oil exporter countries, than net additions to world oil production capacity which have fallen to average rates far behind annual demand growth.

Automakers Forced to Pay 85- to 95-Percent
of Wages to Union Members Who Are Not Working
The Big Three automakers are forced to pay 85- to 95-percent of union wages and benefits to members of the United Auto Workers union who aren’t working – even if their plants have been closed. Industry analysts say union labor agreements that obligate the Big Three to pay millions of dollars to workers who are no longer working are a major reason why the automakers are in trouble – a problem that no short-term bailout can fix.

Struggling GM Terminates Multi-Million-Dollar Endorsement Deal with Tiger Woods
GM Ends 9-year Endorsement Deal with Tiger Woods General Motors is bailing out on Tiger Woods. Woods, a global icon in sports with his 14 major championships, has been carrying the Buick logo on his golf bag for the last nine years and still had one year left on his contract. But General Motors Corp. was looking to cut costs and hoard cash while trying to survive the worst sales downturn in a quarter-century. And it said Monday the world's No. 1 golfer wanted more time for himself, especially with a second child on the way

Will "Black Friday" be Just a "Black" Friday
for Retailers as the Holiday Shopping Season Begins?
As Thanksgiving approaches, the American people should be thankful for the declining gasoline prices that help enable many of them to afford holiday travel this year. Speaking of the holiday, after the traditional bird has been devoured, one additional time honored tradition remains – shopping. The Friday after Thanksgiving, known as “Black Friday,” represents the official start of the holiday shopping season. Historically, it is the day that retailers moved out of the "red" (losses) and into the "black" (profits). Unfortunately, this year’s retail projections remain bleak and Nov. 28, 2008 may be known as "Black" Friday.

Hannity to Go It Alone, Without Colmes
"Hannity & Colmes"” the longest-running program on the Fox News Channel, will soon be without Colmes. Alan Colmes, 58, the liberal half of the 9 p.m. show, will leave his daily hosting duties at the end of the year, the network announced Monday. While the network remained quiet about its plans for the political debate program, two people close to the network said that Sean Hannity, 46, Mr. Colmes’s conservative counterpart for the last 12 years, would become the sole host of the hour. The people requested anonymity while speaking about private deliberations.

Bush grants pardons to 14, but no big names
President George W. Bush on Monday granted 14 pardons and commuted two sentences but there were no high-profile names on a list released by the Justice Department. The pardons were given for offenses ranging from distribution of marijuana to unauthorized use of a registered pesticide, a Justice Department statement said. Under the U.S. Constitution, the president can grant pardons and shorten sentences. Former media baron Conrad Black is among the high-profile offenders who have requested clemency before Bush leaves office on January 20, according to Canadian media reports.

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Mon 11.24.2008

Hyper-Inflation To Push Gold To Double
Aaron Smith, MD of Superfund Singapore predicts gold to easily double next year. Jim Rogers, Robin Griffiths and Jurg Kiener hold the same view as global central banks' insistence on printing their way out of economic turmoil is setting the stage for a hyperinflationary holocaust, a knock-on effect of which will be gold's acceleration towards $2,000, as demand for precious metals outstrips supply.

Gold Pressure Near Breaking Point
The demand pressure slowly yet consistently building over the last year has created some remarkable pressure to the upside on the price of gold. With recent announcements by Iran that their foreign reserve holdings are being converted to gold, and the record purchase of $3.5 billion by unidentified Saudi Arabians over a two week period, it seems remarkable that gold continues range-bound trading in the low 700’s. Recent coverage of the gold market by mainstream financial stations such as CNBC and Fox News indicate that the discrepancy between the COMEX spot price and the average price for gold bars and coins (US$900+ on Ebay, for example) is starting to make even the most stalwart feeble-minded news anchors see what two plus two equals.

Is Gold Regaining Its Luster?
On Thursday’s CNBC's Fast Money show, guest investor Peter Schiff was on with his current market predictions. Two years ago, Schiff was dead on when he said that we were in a huge credit bubble which would be followed by a financial crisis and a “major, major recession.” Hello! Very few listened to him then, and although nobody's right all of the time, I thought that it might behoove me to listen to him now. So, what are his current recommendations? He says to get out of the dollar 'cause it's going to “fall like a stone”, buy the dips in commodities, and start investing in international equities. He also predicted gold is going to go through the roof in the next couple of years, possibly hitting the $2000 an ounce mark. Yikes!

Opportunities Abound in Gold and International Assets
Holy smokes, this has been quite a week. I think Wednesday and Thursday took a couple of years off my life expectancy (and my net worth). Friday was the polar opposite, but the most exciting development was in the price of gold and silver - not only that gold hit $800 and silver soared 8%, but that they broke through pronounced resistance levels. Gold started showing its contrarian intentions on Thursday, a day that oil fell below $50 and commodity stock were pulverized. Friday saw companies like AngloGold Ashanti (AU) stun investors with a 43% upside move. Goldfields (GFI) moved up 37% and Sandridge Energy (SD) moved up a whopping 36%. This is all in one session.

In Deflation, Gold Will Rise!
What deflation really does to an economy!
Deflation is a particularly pernicious economic condition. It is far worse than inflation. Prices decline in deflation. The impact of this is that a person with cash sees the buying power of that cash increase, whereas the owner of assets with declining values sees the cash value of those assets decline. This is the superficial picture. As bankers and business owners are well aware, it takes a long time to establish and grow a business, but something a little as a shortage of immediate cash [it could be a relatively small amount of working capital] or its availability, is all it takes to destroy all that hard work. It’s terrific business for a bank to take over such a business, if the business can’t raise cash [and the banks can control that availability] then continue to do business and get it for a throw away price.

Gold is Experiencing Record Demand: So Why Have Prices Fallen?
Having spawned the worst market for stocks since the Great Depression, the global financial crisis is forcing investors to re-examine a number of long-held beliefs. Gold bugs, for instance, have been left to wonder just how gold prices could backpedal in the face of all-time-record demand. Gold demand did increase – in fact, by a record 45% from the second quarter to the third. Retail demand was the primary catalyst, spiking 121% to 232 tons. And because of it, bullion dealers reported shortages in bars and coins, according to the World Gold Council, a gold-mining-industry association.

China and Iran Switch to Gold - Will U.S. Investors?
Gold rallied sharply Thursday, and is rallying again at the time of this writing on Friday -- it's now broken above the significant resistance range of 740-750, and is currently testing the $800 level. While the technical outlook on the daily chart still looks a bit bearish for gold, some major fundamental news of late suggests the bull market may be ready to resume.
Consider:

Iran recently switched to gold reserves.
China is massively increasing its gold reserves.
Perth mint, one of the most prominent gold mints in Australia, has suspended orders.
Prominent investment strategist John Embry has warned that December delivery contracts of gold may fail -- this would expose gold scarcity and send prices upwards.

Silver's Extremes: When Is the Right Time to Get In?
I don’t think silver watchers need to be reminded of what has happened to the metal in the last 8 months. The only answer they are looking for is to when we will see a bottom to this carnage. As I look at my 14 member silver stock index, it has dropped from a high of 8.69 on the 3rd March 2008 to a new low of 1.31 as of last Thursday. That is a drop of 85% - cataclysmic by any standard of investing. Subscribers who followed my lead and exited all silver stocks positions on 31st March were spared this unnecessary suffering.

Bernanke: I underestimated housing problem
Tells magazine that he was wrong in forecasting subprime mortgage issues Federal Reserve Chairman Ben Bernanke acknowledges he was wrong in believing that there would be limited fallout to financial markets from risky mortgages that soured after the housing market's collapse. "I and others were mistaken early on in saying that the subprime crisis would be contained," Bernanke said in an article in the Dec. 1 issue of The New Yorker magazine. "The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict," he said in the piece titled "Anatomy of a Meltdown."

Roubini predicts further 20-25% drop in stocks

The Austrians Were Right
Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face. That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place. Except for a rare few, Members of Congress are unaware of Austrian Free Market economics. For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics. If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.

The Dirty Secret of the Financial Crisis: Our Banking System's Broken
No more free money from Washington. No more masters of the universe. No more business as usual. Time for a banking holiday. Henry Paulson's $700 billion plan to save the world is dead or dying, but the bailout was not killed by his arrogance or his grossly misleading claims about what the public's money would buy. The plan collapsed because it didn't work. The Treasury secretary has launched a PR offensive to revive his falling influence. Too late. The Democrats should be equally embarrassed. In September their leaders in Congress rushed to embrace the Paulson solution, no hard questions asked. They now claim they were duped. Paulson's squad at Treasury pumped $250 billion into the largest banks, buying their stock at inflated prices on the assumption it would persuade investors to step forward with their capital too. Instead, savvy financial players realized Paulson was spitting into a high wind, trying to save a system with stout talk.

Finance…the American Way
Jim Sinclair of jsmineset.com had a link to the essay "Before Saving the US" at ChinaStakes.com, written by a guy named Xiang Songzuo, which starts out, "The nature of the current global financial crisis is the biggest debt crisis in America's history", which is certainly not news. Then the article gets right in our American faces and keeps hammering at us: "Statistics show that America's internal and external debt exceeds $60 trillion, over 400% of the country's annual GDP of a bit over $14 trillion. Of that total, family debt (including mortgages), financial and non-financial firms' debt, and municipal and national debt come to about $15 trillion, $17 trillion, $22 trillion, $3.5 trillion, and $11 trillion, respectively, though it is hard to tell how these debts have been split up among foreign governments, financial firms, companies, and individuals." Naturally, as a proud American, I take the aggressive approach and sneer, saying, "So? Tell us something that we don't know! Hahaha!"

Recession’s Grip Forces U.S. to Flood World With More Dollars
The world needs more dollars. The United States is preparing to provide them. In an all-out assault on capitalism’s worst crisis since the Great Depression, the U.S. is taking on the role of both lender and borrower of last resort for the global economy. The Federal Reserve, which has already pumped out hundreds of billions of dollars, might formally adopt a policy of flooding the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, may tap global capital markets for even more to finance a fiscal stimulus package of as much as $700 billion and provide additional bailout money for banks.

Ron Paul on possibility of the dollar no longer being the reserve currency of the world

Bring back the link between gold and the dollar
The events of September 2008 – the nationalisation of Fannie Mae, Freddie Mac and AIG; the disappearance of the investment banking industry in the US; and the Bush administration’s $700bn bailout to save what is left of Anglo-American capitalism – demonstrate that the 37-year experiment with fiat money and floating exchange rates has failed catastrophically. When Richard Nixon destroyed the Bretton Woods International Monetary System in 1971 by closing the “gold window” at the Treasury, he severed the last link between dollars and gold. What followed was a spiralling proliferation of increasingly spurious credit instruments denominated in a debased currency. The most glaring and lethal example of this madness has been the growth of the unregulated derivatives market, which has ballooned in size to $600,000bn, the equivalent of almost $100,000 per person on Earth.

The Truth About Bailouts
As the Federal bailout bonanza prepares to spread beyond the mortgage and financial sectors to fill Detroit's depleted coffers, few economic or policy analysts have spared a thought for the destitution of the U.S. government itself. Put simply, our government doesn't have enough spare cash to bailout a lemonade stand let alone a bloated and failing industry that is losing tens of billions of dollars per month. Washington can only offer funds that it has borrowed from abroad or printed. Unfortunately, the nation is in the grips of a delusion that money derived from these sources has the power to heal. But history has clearly shown that borrowed or printed money only has the power to destroy. The argument that energizes the pro-Detroit camp is that the government should extend the same courtesy to the rank and file auto workers that it lavished upon the fat cats of Wall Street. While two wrongs certainly do not make a right, the fact remains that the Wall Street firms are still floundering despite the bailouts. What's worse, the money spent was either printed or borrowed from abroad. Both options are destructive to America.

FDIC OKs backing for bank debt, deposits
FDIC approves program to guarantee banks' debt, deposits as part of financial rescue The FDIC will guarantee up to $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. The directors of the Federal Deposit Insurance Corp. voted Friday to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending. The FDIC will provide temporary insurance for loans between banks -- except for those for 30 days or less -- guaranteeing the new debt in the event of payment default by the borrowing bank. The FDIC also will guarantee deposits in non-interest-bearing "transaction" accounts by removing the current $250,000 insurance limit on them through the end of next year. That could add as much as $500 billion to FDIC-backed deposits.

The New Deal Didn’t Always Work, Either
MANY people are looking back to the Great Depression and the New Deal for answers to our problems. But while we can learn important lessons from this period, they’re not always the ones taught in school. The traditional story is that President Franklin D. Roosevelt rescued capitalism by resorting to extensive government intervention; the truth is that Roosevelt changed course from year to year, trying a mix of policies, some good and some bad. It’s worth sorting through this grab bag now, to evaluate whether any of these policies might be helpful.

10/28/08 Peter Schiff predicts doomed economy under Obama

Worst bear market since 1930s dashes hopes
As this week dawned, many in international markets thought that they might have a respite until Christmas. With stocks having fallen so fast, there were even hopes of what traders call a “bear market rally” before markets had the chance to take stock once more in the new year. By the end of the week, the S&P 500 of US stocks, the world’s most widely followed index, had crashed to its lowest in 11 years. Its fall since the peak in October last year is now more than 50 per cent and during the week it overtook the total percentage falls it suffered after the dotcom bust of 2000 and the oil crisis of 1973. It is now, without question, the worst bear market since the 1930s. Meanwhile, the cost of insuring against credit defaults for a range of companies in both Europe and North America shot to new highs, unseen even since the credit crisis began in July of last year.

Three banks in California, Georgia fail
Regulators close down two California thrifts and Community Bank of Loganville, Ga., raising the toll in the financial crisis to 22 banks. Three more banks - two in California and one in Georgia - failed Friday, bringing to 22 the number of institutions forced to close in the wake of the financial crisis. The Federal Deposit Insurance Corp. said the banking operations of Downey Savings and Loan Association of Newport Beach, Calif., and PFF Bank & Trust of Downey, Calif., were acquired by U.S. Bank of Minneapolis.

Regulators grease bank sales
Treasury Department issues new type of charter to increase the number of borrowers available to bail out failed banks. Federal regulators on Friday issued their first approval of a new kind of bank charter intended to increase the "pool of potential buyers" of failed banks. The Treasury Department's Office of the Comptroller of the Currency said the new charter is intended for private investors interested in bidding on troubled banks that have been taken over by the Federal Deposit Insurance Corp. Under the new mechanism, regulators grant preliminary approval of a national bank charter to an investor group, which is then able to bid on failed banks. Regulators must then grant final approval if the FDIC approves the bid, the OCC said.

Two California thrifts shut down
Failures of Downey Savings and PFF Bank & Trust raise financial crisis bank toll to 22. Federal regulators have shut down two big thrifts based in California, saying they fell victim to the acute distress in the housing market in that state. The failures Friday of Downey Savings and Loan Association, based in Newport Beach, and PFF Bank & Trust of Pomona brought the number of U.S. bank failures this year to 22.

Citigroup Gets Government Guarantees on $306 Billion of Assets
Citigroup Inc. will have more than $300 billion of troubled mortgages and other assets guaranteed by the U.S. government under a federal plan to stabilize the lender after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend.

Government unveils plan to rescue Citigroup
Government unveils plan to rescue Citigroup, including taking $20 billion stake in the firm The government unveiled a bold plan Sunday to rescue troubled Citigroup, including taking a $20 billion stake in the firm as well as guaranteeing hundreds of billions of dollars in risky assets. The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy. The sweeping plan is geared to stemming a crisis of confidence in the company, whose stocks has been hammered in the past week on worries about its financial health.

U.S. Agrees to Rescue Struggling Citigroup $$
Plan Injects $20 Billion in Fresh Capital, Guarantees $306 Billion in Toxic Assets The federal government agreed Sunday night to rescue Citigroup Inc. by helping to absorb potentially hundreds of billions of dollars in losses on toxic assets on its balance sheet and injecting fresh capital into the troubled financial giant. The agreement marks a new phase in government efforts to stabilize U.S. banks and securities firms. After injecting nearly $300 billion of capital into financial institutions, federal officials now appear to be willing to help shoulder bad assets, on a targeted basis, from specific institutions.

U.S. Treasury says to put money into Citigroup
The U.S. Treasury Department announced late on Sunday it was investing $20 billion in struggling Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) as one of a series of actions to help the beleaguered bank and it will take preferred shares in it. In a late-night announcement after a weekend of talks about what to do to help Citigroup, Treasury also said it and the Federal Deposit Insurance Corp. will provide protection against losses in a pool of about $306-billion worth of loans and securities on Citigroup's balance sheet. Treasury said the U.S. Federal Reserve stood ready to backstop any additional risk in the asset pool through an offer of a non-recourse loan.

Bailed-Out Citigroup Paid Bill Clinton $700,000--For Words, Just Words
The struggling financial giant Citigroup, which recently received $25 billion in federal bailout dollars, paid former President Bill Clinton a total of $700,000 for four speeches he delivered on the company’s behalf between 2004 and 2007, according to U.S. Senate financial disclosure statements filed by Sen. Hillary Clinton (D.-N.Y.) Sen. Clinton’s latest financial disclosure form, filed on June 28, 2008, reported the former president’s honoraria for 2007. Senate financial disclosures forms for 2008 will not be filed until next year. Citigroup’s stock has plummeted nearly 40 percent this week.

White House says unaware of any Citigroup rescue talks
White House spokeswoman Dana Perino said on Sunday she knew of no talks going on between banking giant Citigroup and the federal government for financial aid. Speaking to reporters traveling with President George W. Bush, who is returning to Washington after attending the Asia-Pacific summit in Peru, Perino declined to comment on whether the president supported a federal rescue package for Citigroup.

FDIC Helps Banks Sell Bonds With Stronger Guarantee
The U.S. Federal Deposit Insurance Corp. strengthened the guarantee on bank bonds today, clearing the way for financial institutions to access markets with the “full faith and credit” of the U.S. government. The FDIC will provide the guarantee on senior unsecured bank debt, ensuring creditors get a timely payment of principal and interest in the event of a default. Banks had said bond investors would reject the debt because the original guarantee wasn’t strong enough to put the bonds on par with other government or government-backed securities. The FDIC excluded from the program any loans with maturities of less than 30 days.

Marc Faber: Strong rebound in next 3 months - P1

Marc Faber: Strong rebound in next 3 months - P2

Awaiting Reaction to 3rd Try at Bailout
Will the third time be the charm? Regulators produced two sweeping plans to bail out banks in the last couple of months. And both times, stocks bounced up but dropped quickly because investors remained skeptical. The latest plan under discussion, which emerged Sunday night, involves the government’s backstopping a portfolio of assets for Citigroup, the financial conglomerate whose stock lost more than half of its value last week. Shares in other banks, like JPMorgan Chase and Bank of America, also lost significant ground.

GM Said to Seek Cut in Debt, New Union Rules to Win U.S. Aid
General Motors Corp., in danger of running out of cash this year, will seek to negotiate a cut in debt levels and new union work rules to help boost its chances of winning federal loans, people familiar with the plan said. The largest U.S. automaker also may ask to delay a $7 billion payment to a union retiree health fund, drop more brands and rework an accord with GMAC LLC to prove it can survive and repay the government, said the people, who asked not to be named because the details haven’t been presented to Congress.

Fed Has More Ammunition After Firing Rate-Cut Bullets $$
The Federal Reserve is at an inflection point.
The Fed already has pushed its main lever for influencing economic activity -- short-term interest rates -- about as far as it can, yet more help is needed as conditions continue to deteriorate. At 1%, the central bank's target for the federal-funds rate -- an overnight bank-lending rate -- has been reduced from 5.25% over little more than a year. This means Fed officials are likely to bless the fiscal-stimulus plan taking shape among President-elect Barack Obama's advisers. Yet the Fed itself isn't out of ammunition, either, with officials considering new lending facilities, more action on the federal-funds rate and purchases of long-term debt such as Treasury bonds or Fannie Mae and Freddie Mac debt to bolster markets and the economy.

Bush Believes G-20 Will Set Principles for 21st Century Financial System
In what will likely be the final major initiative of his administration, President Bush announced a framework by the nation’s 20 leading economies to ease the global financial crisis. “One of the key achievements was to establish certain principles and take certain actions for adapting our financial systems to the realities of the 21st Century,” Bush said in an address regarding the Summit on Financial Markets and the World Economy.

Rubinomics Recalculated
It is testament to former Treasury Secretary Robert E. Rubin’s star power among many Democrats that as President-elect Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape. The president-elect’s choices for his top economic advisers — Timothy F. Geithner as Treasury secretary, Lawrence H. Summers as senior White House economics adviser and Peter R. Orszag as budget director — are past protégés of Mr. Rubin, who held two of those jobs under President Bill Clinton. Even the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin’s chief of staff in the Treasury Department who followed him to Citigroup, and James P. Rubin, Mr. Rubin’s son.

Global crisis can be overcome in 18 months
Pacific Rim powers say financial crisis can be overcome in 18 months, but provide few details Pacific Rim nations assured the world Sunday that the global financial crisis can be quelled in 18 months, but provided few details of how they expect that to happen -- or how their governments can help. The 21 economies, which represent more than half of the world's productive power, also pledged during a two-day summit not to erect new protectionist barriers for the next year, and to jump-start stalled World Trade Organization talks. The main accomplishment of the Asia-Pacific Economic Cooperation forum was a widening of support for the Washington Declaration made last weekend by major economies that pledged to maintain free trade despite pressures to protect domestic industries.

US seeks 300 billion dollars from Gulf states
The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait's daily Al-Seyassah reported Thursday. Quoting "highly informed" sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.

3-Oil firms to store crude on ships as oil tanks
Oil companies plan to store millions of barrels of crude at sea as they wait for demand to pick up and prices to rise. So far oil companies have booked ships capable of holding up to 10 million barrels, brokers have said, more than the daily output of top exporter Saudi Arabia. On Thursday U.S. oil trader Koch and Royal Dutch Shell were the latest to confirm bookings of additional Very Large Crude Carriers, brokers said.

Treasury Traders Paid to Borrow as Fed Examines Repos
Owners of Treasuries may soon get paid to borrow as the U.S. tries to break a logjam in the $7 trillion-a-day repurchase market. Treasuries are in such high demand that investors are lending cash for next to nothing to obtain the securities as collateral through so-called repos, which dealers use to finance their holdings. The problem is many parties involved in repos aren’t delivering the bonds because there is no penalty for not doing so, causing “fails” to exceed $5 trillion, according to the Federal Reserve Bank of New York. Now, an industry group is trying to fix the mess, which New York Fed Executive Vice President William Dudley said could cause the U.S. borrowing rates to rise if not rectified. The Treasury Market Practices Group wants to impose a “penalty” on failed trades, a move that may result in borrowers who put their Treasuries up as collateral for loans effectively receiving 2 percent interest.

Obama Will Get Stimulus Bill First Day, Democrats Say
Congress will send President-elect Barack Obama an economic stimulus package the day he takes office Jan. 20, two Democratic lawmakers said today. Senator Charles Schumer of New York said on ABC’s “This Week” program that the package will be between $500 billion and $700 billion. House Majority Leader Steny Hoyer, of Maryland, said on “Fox News Sunday” that he believed the Inauguration Day goal would be met, but he declined to put a price tag on the bill. "I think Congress will work with the president elect starting now and will have a major stimulus package on his desk by Inauguration Day," Schumer said. "I think it has to be deep. My view it has to be between five and $700 billion."

Consumer-Spending Report Is a Glimpse of Pain to Come $$
Economic output for the year's final quarter is likely to be starkly weak, dragged down by the biggest decline of consumer spending in at least a quarter-century. The extent of the damage won't be clear until late January, when the government releases fourth-quarter gross domestic product. But Wednesday's report on consumer spending in October -- the first month of the quarter -- will offer some insight, and it won't be pretty. Personal outlays, which include total consumer spending plus interest and transfer payments, are expected to fall as much as 1%, the most since a 1.2% drop in September 2001 in the aftermath of the terrorist attacks in New York and Washington.

Big Three’s Troubles May Touch Financial Sector
To the long list of troubles plaguing the financial industry, add three big ones — make that Big Three ones. The foundering Detroit automakers owe more than $100 billion to their bankers and bondholders, and Wall Street is starting to wonder how much of that will be paid back. With Congress balking at a rescue for the auto industry, and Chrysler and General Motors warning that they could face bankruptcy without one, investors are worrying about financial companies’ exposure to the Big Three, as well as to automotive suppliers and dealers.

President Bush: 'Economic turmoil'
Not so long ago, Bush said, fundamentals of the economy seemed strong. President Bush has gone to Peru. But Bush, making his last scheduled trip abroad as president, has not gotten away from the economic crisis that has beset his nation and many others near the close of his presidency. "Thanks for letting me come by,'' Bush said today in Lima, in that characteristically familiar way the retiring president has of greeting fellow world leaders. But there was nothing casual about the president's remarks to the assembled leaders of 20 other nations at the Asia Pacific Economic Cooperation summit. The annual summit for Pacific-rim nations convenes at a time when even the fastest growing economies in the world, such as China's, are suffering from a global slowdown in business.

Obama expands stimulus plan
Barack Obama signaled this morning that he will push for a bigger economic stimulus package than he previously discussed, pledging to create 2.5 million jobs in the effort to combat what he called a "crisis of historic proportions." Obama said he would offer a two-year stimulus proposal instead of the expected one-year one, calling it "a plan big enough to meet the challenges we face." "These aren't just steps to pull ourselves out of this immediate crisis," Obama said in his weekly radio address, "these are the long-term investments in our economic future that have been ignored for far too long."

Obama already in bully pulpit
"It is time to act. As the next president of the United States, I will."
That's how President-elect Barack Obama ends his weekly address today, a short speech in which he says that he has asked his economic team to draft a plan that would create 2.5 million jobs by the start of 2011 in an effort to give lift to an economy that has stalled. This address indicates a subtle shift in Obama's strategy. Until now, his team has stuck with the "we only have one president at a time" theme. But in this address, made with Obama sitting in front of a presidential backdrop that has much more of an Oval Office feel than the setting he used earlier this week, Obama says he's pleased Congress acted to pass the extension to unemployment insurance.

America in Free Fall
Congress might adjourn without acting on the deepening economic crisis, leaving Obama to inherit the catastrophe.
Free fall. The U.S. has lost private sector jobs for 10 straight months. One quarter of all businesses in the U.S. plan to cut payroll over the next year. Retail sales fell in October by the largest monthly drop on record. Auto sales have collapsed, driving the auto companies towards the precipice. Unemployment is up to 6.1 percent, with most analysts predicting it will soar past 8 percent over the next year. (That translates into unemployment among young minority men at rates of 50 percent or more). States are now facing $100 billion in deficits in operating budgets for the next fiscal year. Twelve million homes are "under water," worth less than their mortgages. The U.S. has joined Germany and Japan in what is becoming a global recession.

Inflation .... deflation .... hyper-inflation!

Inflation .... deflation .... hyper-inflation! Pt2

Inflation .... deflation .... hyper-inflation! Pt3

Falling prices raise worries about deflation
Sustained trend could create headwind for growth, problem for markets After years of punishing increases in the cost of energy, consumers are rejoicing these days at the sharp drop in prices at the pump. Not only that, but prices are dropping for clothing, transportation and housing, according to the government's latest report on consumer prices. With money tight, the price declines are a welcome relief. But be careful what you wish for. If price declines continue and become more widespread, there’s a risk the downward trend could feed on itself in a spiral that can take on a ruinous momentum. It’s called deflation. And some economists are warning the threat is increasing.

The World is Coming to an End
And it might even have a happy ending
I don’t have to tell you how awful things are. People all over the world are frightened. Many are panicking. Most are confused and don’t know where to turn for guidance or help with their money and their future. Since January 1, 2008, stockholders of U.S. corporations have suffered about $8 trillion in losses, as their holdings declined in value from $20 trillion to $12 trillion. Homeowners will soon see their equity down by as much as $8 trillion, and those losses are likely to increase. The currency markets have been in turmoil as the carry trades unwind viciously and in a most terrifying manner. Hedge funds ( that turned out to not even understand the meaning of the word “hedging”) are going out of business and liquidating like there is no tomorrow. They cannot survive with returns they have—some in excess of minus 50%. That’s a very huge ouch.

North Korea vows to go ahead with border closure
North Korea on Monday said that it would go ahead with its threat to effectively close its land border with the South, including expelling South Korean managers from an industrial site just inside its border, from December 1. The reclusive state first warned nearly two weeks ago it would end traffic across the heavily armed border with its wealthy neighbor but this is the first time it has given details of the action it would take.

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Fri 11.21.2008

Wall Street rally [FRIDAY] on news of Geithner for Treasury
Stocks rallied late on Friday after multiple news reports that New York Federal Reserve President Timothy Geithner will be nominated as President-elect Barack Obama's Treasury secretary.

Geithner to Be Nominated as Treasury Secretary
President-elect Barack Obama plans to announce his economic team on Monday as part of an effort to reassure markets and will name New York Fed President Tim Geithner his nominee for Treasury Secretary, NBC News has learned. Geithner was a U.S. Treasury Department official under both Bob Rubin and Larry Summers and has been with Treasury since 1988. Geithner's nomination is anticipated barring last-minute changes, NBC reported. Geithner has helped current Treasury Secretary Hank Paulson and his team manage the ongoing Wall Street bailout.

Gold Rises on Speculation Interest Rates to Fall; Silver Drops
Gold climbed for a second straight day on speculation the Federal Reserve will lower interest rates to stimulate the U.S. economy, boosting the appeal of the precious metal as an alternative asset. The yield on two-year Treasury notes dropped below 1 percent for the first time ever on bets the Fed will cut its benchmark rate next month. Gold reached a record $1,033.90 an ounce on March 17, after the Fed slashed rates 2.25 percentage points in four months.

11/20/2008 Peter Schiff On Fast Money -
"The Man Who Called The Collapse"

The Gnomes of Zurich Will Have Their Revenge
The “Gnomes of Zurich” was originally an insult, dreamed up by a British politician named Harold Wilson to disparage Swiss Bankers. Mr. Wilson didn’t like the fact that the “gnomes” were gunning against the British Pound in the 1960s. As it turns out, the gnomes were gunning against the U.S. dollar too – and one of the ways they did it was by buying gold.

Surprising Call for Return to the Gold Standard
The last page of the Wall Street Journal Opinion section once again contained a gem of a "sound money" editorial on Monday - another well reasoned critique of the current monetary order, this one penned by none other than a former vice president of the Federal Reserve Bank of Dallas, Gerald P. Driscoll.

Bernanke May Find Deflation Is Back as Fed Concern
Five years after Federal Reserve Chairman Ben S. Bernanke helped stamp out the risk of deflation, the threat is returning as the financial crisis and a worsening economic slump pull inflation lower. Fed policy makers now predict the U.S. economy will contract until the middle of next year, according to minutes of their Oct. 28-29 meeting released yesterday in Washington. Government figures showed that consumer prices excluding food and fuel costs fell for the first time since 1982 last month.

Repressing the Depression by Printing More Money says Harvard Professor Pt 1

Repressing the Depression by Printing More Money says Harvard Professor Pt 2

Deflation, American Style: Even Gold Not Immune to Downward Spiral
Less than six months after inflation fears gripped the nation, deflationary warning signs, or at least news reports about deflation, are seemingly everywhere. Deflation is defined as a persistent decline in general price levels, typically accompanied by a severe contraction in employment and economic output. It's premature to declare deflation has arrived, if only because it's too soon to call this action "persistent." John Roque, managing director and technical analyst at Natixis Bleichroeder, still believes inflation is a bigger threat because of the government's rampant borrowing and spending.

Beware Seasonal Reversals in FX Markets
Although currencies ended up adopting their usual path of following the swings in risk appetite, it's worth explaining Wednesday's earlier spikes in EUR/USD and GBP/USD. The moves were a result of broad dollar selling (also seen in a $25 rally jump in gold) on reports that Iran was pushing ahead with its nuclear program. The International Atomic Energy Agency stated an increasing build up of enriched uranium stockpiles, which could be converted into weapons-grade material. Despite the Iran element of the dollar decline, caution is urged of renewed selling waves in the greenback vs. all majors except the yen, as seasonal reversals in FX markets usually emerge in the last five to six weeks of the year, paring the flows prevailing in Sept.-Oct

Gold Market Price Points to Watch
For those like myself who remain strongly bearish on the US dollar, gold is an appealing buy, and a key indicator of the dollar's health. With that in mind, let's look at a few charts to help us identify key price points that gold and currency traders should watch and base decisions off. The chart below is a weekly chart of gold. Note the moving averages are bearish, and that the market has been consolidating for the past four weeks, albeit on relatively low trading volume.

Wachovia Securities won't broker precious metals anymore
Wachovia Securities this month alerted its brokers and clients that it no longer would purchase precious metals for brokerage accounts, only shares in precious metals exchange-traded funds. In an explanation given to its brokers, Wachovia said the precious metals markets "are illiquid with wide bid/ask spreads and minimal transparency." Wachovia's letter informing clients of this change is appended, along with an elaboration given to the firm's brokers. This implies that real metal is awfully hard to get these days, and maybe that some brokerages would prefer that their clients not get it.

Richard Russell says it again: Fed is suppressing gold
Question -- Russell, I see December gold is up 12.80 this morning before the opening. But gold has been up every morning by $10-$15, yet it closes up only $2 or $3 if it's up at all. What's going on?
Answer -- I have to think that one way or another gold is being manipulated by certain sources. What group would least want to see gold heading higher? My immediate answer is the Fed. The Fed is now exploding the money supply. This would ordinarily foment inflation. Surging gold is a red flag that the public understands. The Fed is doing everything it can to hide the fact that it is devaluing the dollar via its current massive production of dollars.

Gold Demand Sets Another New Record
Everyone loves a bargain and the currently suppressed paper price of gold is providing one of the greatest deals in recent memory. Our own Mike Kosares likened the present opportunity to buying gold around $300 per ounce early in the decade. The World Gold Council reported yesterday that gold demand in Q3-08 reached an all-time quarterly record of $32 bln. This is a 45% increase over the previous record, which was set in Q2-08. Retail investors are scrambling to acquire physical gold as a means to protect their wealth amid ever-rising concerns about the current financial crisis. Demand for bars and coins rose to 232 tonnes in Q3, a 121% increase over the same period last year.

Gold prices move higher, other commodities fall
Gold prices rise as investors look for safe-haven investment; other commodities fall Gold prices moved higher Thursday as volatility in the stock market pushed some investors toward the traditionally "safe-haven" investment. But other commodities, including energy and agriculture futures, tumbled as investors were hit with a barrage of dour economic news. Investors have been fleeing both stocks and commodities on fears of a severe and protracted economic slump. As a result, commodities have been mirroring the movement of the stock market. On Thursday, the Dow Jones industrial average fell 445 points, or 5.6 percent, while the Standard & Poor's 500 index dropped 6.7 percent to the 752 level, below the closing low logged on Oct. 9, 2002.

China to increase gold reserves to diversify risks
China's central bank is considering hiking increasing gold reserves nearly seven-fold to spread risks in its huge foreign exchange holdings, state media reported on Wednesday. Beijing is mulling a move to increase its reserves to 4,000 tonnes from the current 600 tonnes. It did not provide further details.

"Facing something not faced since Depression.
No functioning banks - only Congress"
House Financial Services Committee - Barney Frank / Jeffrey Sachs - Columbia
Sachs: "Please do this before we turn a recession into a depression. That's my request. You know, it's for all of us. There's nobody that will not be affected. And this idea, let markets work when there are no markets, is the idea of how Lehman Brothers triggered the biggest worldwide crisis in a generation. Don't do it again with this industry. Two in a row, we're really into depression."

Citigroup, other banks in new trouble
S&P 500 at 11-year low; short selling continues
The deepening downturn in the economy created new trouble for Citigroup and other big banks and sent stocks into another tailspin Thursday, with one major stock index falling to its lowest level in 11 years. Citigroup shares lost more than a quarter of their value to $4.68 despite a major new investment promised by a Saudi Arabian prince, putting the giant New York bank that was once the country's largest at the top of a list of candidates that might have to be rescued by the government's $700 billion bailout fund. Citigroup has already received a $25 billion cash infusion from the fund.

Treasury to prop up money market fund
The Treasury Department on Thursday said it is prepared to buy assets from a troubled money market mutual fund, part of an effort to prevent further disruptions to already fragile financial markets. The department has agreed to be a buyer of last resort to assist in the liquidation of the Reserve Fund's U.S. Government Fund due to "unique and extraordinary circumstances."

Washington Is Paralyzed—Wall Street Gets the Shakes
Wall Street isn't feeling much love from Washington these days.
With the lame-duck Congress and the Bush administration unable to agree on any action to boost the economy or ease the financial crisis, the markets have nosedived. The Dow Jones Industrial Average alone has plunged 2,000 points since Election Day. "It can't get much worse," says Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. "We're discounting they're going to rise to the rescue." Analysts say the problem goes well beyond the normal lame-duck government issues. "They are working against confidence building," says David Resler, chief economist at Nomura International. "We're in a world where we need to deliver."

Citigroup shares leap on reports of firm's sale
Citigroup board said to be weighing options including possible sale; shares climb
Shares of Citigroup Inc. climbed in premarket trading Friday, as the financial giant was said to be looking at selling off pieces of itself -- or the entire company -- to help rebuild investor confidence. The New York-based bank is scheduled to hold a board meeting Friday to discuss whether to sell all or part of itself, the Wall Street Journal reported. The report comes as Citigroup is also said to be a bidder for Chevy Chase Bank, a Maryland-based lender with $11.4 billion in deposits and 292 branches - a deal that could be in jeopardy because of Citigroup's sinking stock price.

End The Fed
End Wall St Bankster Rule
End The Derivatives Depression
The November 22 End the Fed rallies raise a vital issue: it is past time to abolish the unconstitutional, illegal, and failed institution known as the Federal Reserve System, the privately owned central bank which has been looting and wrecking the US economy for almost a hundred years. We must end a system where unelected, unaccountable cliques of bankers and financiers loyal to names like Morgan, Rockefeller, and Mellon set interest rates and money supply behind closed doors, leading to deindustrialization, mass impoverishment, and a world economic and financial depression of incalculable severity. The Fed helped cause the crash of 1929, did nothing to stop the banking panic of 1932-33, and is the main cause of the $1.5 QUADRILLION derivatives crisis which is devastating the world. The Federal Reserve System is Wall Street's murder weapon against the United States, and the Fed must be stopped.

Breakdown of the Global Monetary System by summer 2009
The G20-meeting held in Washington on November 14/15, 2008, is in its essence a historical indicator that the Western - above all Anglo-Saxon - monopoly on global economic and financial governance, is coming to an end. Nevertheless, according to LEAP/E2020, this meeting also clearly demonstrated that this kind of summits is doomed to inefficiency because they concentrate on curing the symptoms (banks’ and hedge funds’ financial difficulties, derivative markets’ explosion, financial and currency markets’ dramatic volatility, ...) rather than the fundamental root of the current crisis, i.e. the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system. Without a complete overhaul of the system inherited from 1944 by summer 2009, the failing of the current system and that of the United States at the center, will lead the whole planet to an unprecedented economic, social, political and strategic instability, and more specifically to a breakdown of the global monetary system by summer 2009.

Fed's cash injections risk eclipsing main interest rate
The Federal Reserve's efforts to rescue the U.S. from financial collapse risks the eclipse of the central bank's benchmark interest rate as the most important signal of monetary policy. Record injections of liquidity have driven the overnight lending rate between banks to less than half the 1 percent target set by officials last month. The gap is shifting investors' focus toward the amount of money in the banking system as a better gauge of Fed intentions. The Fed's failure to meet its target risks pricing billions of dollars in short-term debt at interest rates lower than the Federal Open Market Committee intends. It also makes it harder for traders to bet on the central bank's future course of monetary policy.

Bush Hands Over Reins of U.S. Economy to EU
The results of the G-20 economic summit amount to nothing less than the seamless integration of the United States into the European economy. In one month of legislation and one diplomatic meeting, the United States has unilaterally abdicated all the gains for the concept of free markets won by the Reagan administration and surrendered, in total, to the Western European model of socialism, stagnation, and excessive government regulation.

Fannie Mae, Freddie Mac halting foreclosures
Fannie, Freddie to halt foreclosures while evaluating borrowers for loan assistance program Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures for about 16,000 households during the holiday season. The two companies said Thursday that they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program announced last week. Fannie Mae said about 10,000 households would be affected, while Freddie Mac said the changes would affect about 6,000 borrowers who are facing foreclosure. The change does not apply to vacant homes.

Fed Res lent 7 Times amount of money than Treasury has Spent!
Brooke Gladstone
Bloomberg News editor in chief Matt Winkler
Podcast on why Bloomberg News had to file a Freedom of Information suit to get details from the Federal Reserve on why they are lending so much money.

Stocks tumble for second day; Treasurys surge
Stocks plunged for a second straight day Thursday, falling to levels not seen in at least five years, as financial and energy stocks tumbled while demand for the safety of government debt spiked. Wall Street saw the most intense selling late in the session after hopes faded that lawmakers would quickly assemble an aid package for U.S. automakers, and as the Standard & Poor's 500 index broke through lows established in 2002. That breach of a key technical threshold sent a shudder through the market and touched off further selling.

Stocks Slump As Signs Point To Harder Times
Key Indicators Suggest Deep Recession
Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim. The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

Stock Market Crashes, This One Will Be Worse
This is where the comparisons will end. This one will be worse. Far worse. How much worse? Nobody honestly knows. The Japanese had the most similar experience when their credit and asset price bubbles burst sending their equity prices down 80% from peak to trough. Their financial firms imploded and became 'zombie' banks kept alive by the Bank of Japan. The economy stagnated for over ten years in what became known as the 'Lost Decade'. No amount of stimulus helped.

10 Significant Signs why this will be the worst Recession since World War II.
It is now official that the largest economies in the world are tipping into a synchronized recession. Japan and the Eurozone both are now in recessions. This is significant not only because these industrialized zones make up a large portion of the world’s GDP but they signify that systemically we are grouped together in the same boat. It is rather apparent that the U.S. economy is now in a full-blown recession. Citigroup today announced that it will be cutting more than 50,000 of its workforce, the second biggest job cut announcement in history. The only larger job cut announcement in history came from IBM in 1993 with a total of 60,000 employees.

Paulson: crisis happens once or twice in 100 years
Paulson says financial crisis rare event; warns against too-strict regulation to avoid repeat Treasury Secretary Henry Paulson called the financial crisis now plaguing the world economy a "once or twice" in a 100 years event, even as he warned Thursday against imposing too-strict regulations to prevent a repeat calamity. Paulson's remarks follow pledges by world leaders attending last week's emergency economic summit to begin an overhaul of the world's financial regulatory system. With the next summit slated for the spring, the work on fleshing out details for the Herculean task will fall to the incoming administration of President-elect Barack Obama and his new Treasury secretary.

After Wall St. Rescue, Bush Changes Course on Intervention
After pledging more than $1 trillion to rescue financial markets, President Bush has fought against a series of proposals for additional bailouts by Democrats and emphasized the benefits of free markets. The White House, joined by Republicans on Capitol Hill, has derailed a second economic stimulus plan, fought a Democratic proposal to spend $25 billion to bolster Detroit automakers and continues to press for approval of a trio of stalled trade deals. Bush also persuaded foreign leaders to commit to free-trade principles during a global economic summit in Washington last weekend and will attempt the same at a meeting of Pacific Rim nations in Peru this weekend.

JPMorgan cuts 3000 investment banking jobs
JPMorgan Chase & Co is cutting 10 percent of its investment banking staff -- about 3,000 jobs -- as the economic slowdown starts to bite into its earnings, people familiar with the situation said on Thursday. JPMorgan shares slid as much as 18 percent as one analyst said the cuts could reflect greater-than-expected weakness at the bank, long seen as one of the industry's few stalwarts through the credit crisis.

Bank of New York Mellon to cut 1,800 jobs
The Bank of New York Mellon Corp said it will cut its worldwide work force by 4 per cent, or about 1,800 jobs, blaming the weak global economy. It's the latest in a string of banks to announce layoffs. "It has become clear that we need to take additional steps beyond our merger synergies to reduce expenses, given the current weakness in the global economy," Chairman and Chief Executive Robert P Kelly said yesterday.

Goldman's Gold Standard Is Less Golden $$
Shares Drop Gains Over Nearly a Decade; Executives See Millions in Paper Losses
It's a lost decade for Goldman Sachs Group Inc. On Thursday, shares of the 139-year-old bank, the most admired on Wall Street, fell below the $53 price when they were first sold to the public. At $52 a share, Goldman stock has fallen 76% since the beginning of the year and now is valued 1.9% lower than the day of its original pricing on May 3, 1999. The 2008 stock-market selloff has left no company untouched -- not even Goldman, which made shrewd bets against bad mortgage bonds during 2007. But mounting questions about its business model, future profitability and the overall economy have battered Goldman's stock, which peaked at $250 in October 2007.

The evil of the US dollar
Imagine a large building full of about 50 people in a remote area, not accessible to other human beings. Each person would need to have his basic needs - food, clothing, shelter and so forth, met. In doing so, each person would have to develop skills to go about earning his livelihood to support his needs. But it would be nonsensical for every person to develop each skill that is needed to survive. What would happen in reality is that each person would develop a few key skills and use these as his source of living; for example one person may specialize in growing crops and rearing animals, whist another may specialize in plumbing and carpentry.

Treasury's Bailouts Are Getting Us Chumped
I usually don't enjoy watching congressional hearings. They are often packed with blustering, long-winded, self-serving speeches that are nap-inducing. But a recent hearing before the domestic policy subcommittee of the House Oversight and Government Reform Committee was riveting. In part, it was because of remarks by Rep. Elijah E. Cummings (D-Md.). The subject of the hearing was whether the Treasury Department was using bailout funds to increase foreclosure prevention, as Congress intended. . . . Corporate America is playing us like chumps. Treasury Secretary Henry M. Paulson Jr. and the folks he's assembled to try to get us out of the economic tempest are being played like chumps.

How are you measuring success of lending from TARP?

Congress extends jobless benefits, stocks sink
Jarred by new jobless alarms, Congress raced to approve legislation Thursday to keep unemployment checks flowing through the December holidays and into the new year for a million or more laid-off Americans whose benefits are running out. The economic picture was only getting worse, if Wall Street was any indication. The Dow Jones industrials dropped more than 400 points for a second straight day, reaching the lowest level in more than five years, and the Standard & Poor's 500 index fell below lows established six years ago.

With oil at $50, can $30 barrels be far away?
An increasingly dismal outlook for the global economy has sent crude oil prices into a tailspin, and there appears to be little the Organization of Petroleum Exporting Countries can do but slow the fall. In the most bizarre market since the oil shock of the 1970s, crude shot to a record $147 (U.S.) a barrel just four months ago and has since collapsed, hitting less than $50 Thursday. Some forecasters foresee oil at $30 a barrel. Crude prices fell nearly 10 per cent to a low of $48.50 a barrel on the New York Mercantile Exchange Thursday, levels not seen for more than three years. The price for light, sweet crude closed at $49.62, the lowest closing price since January, 2007.

The Great Toyota-GM Canoe Race
Toyota and GM decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. BUT on the big day, the Japanese won by a mile. The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing. So American management hired a consulting company referred to them by the US Government and paid them a large amount of money for a second opinion.

As Support for Auto Aid Stalls, Efforts Shift to GOP Loan Plan
Congressional allies of the auto industry were rushing late yesterday to put together a bipartisan aid package for faltering Detroit car companies, but lawmakers said they may leave town today without taking action. Senate Democrats abandoned plans to take $25 billion from the $700 billion financial rescue program enacted last month, acknowledging that they did not have enough votes. Detroit's advocates quickly turned their attention to a Republican proposal to keep the car companies afloat.

Congress Ponders Veto Power over Auto Company Policy
A federal veto on corporate policy, no dividends, and a cap on salaries and bonuses as part of an automaker-bailout are all okay with some senators.

Wal-Mart to purchase wind power in Texas
Retail giant Wal-Mart Stores Inc. (NYSE:WMT) said it would buy 226 million kilowatt hours of wind power per year for use in 360 stores in Texas. The company said it would pay "traditional" rates for the power, which is expected to provide 15 percent of its electric needs in Texas, The Dallas Morning News reported Thursday. In effect, Wal-Mart will be purchasing renewable energy credits, as it is impossible to separate the electricity from the wind farm from other electricity once it joins the established power grid.

A Different Banking Crisis in Need of Fresh Capital $$
As the nation's financial crisis spread earlier this fall, several thousand people pressed forward in a line to make a withdrawal from a bank in suburban San Diego. The line stretched out the building, up the street and past the fire station. They walked away with boxes filled not with money but vegetables, fruit, pasta and juice.
It was a run on a food bank.
As the economy sours, the nation's food banks are struggling to feed a surge of Americans worried about finding their next meal. The challenge remains great even in the face of significant infusions of assistance from corporate America. On Wednesday, Wal-Mart Stores Inc. began offering food banks food from its stores nationwide and also boosted its cash contributions, while Wells Fargo & Co. is expected to announce Thursday an increase of its donations to food programs. The two companies expand a list of recent high-profile cash donors to food programs, including Kraft Foods Inc., Ford Motor Co., Newman's Own Inc. and billionaire Kirk Kerkorian's philanthropic foundation.

Obama set to pick Clinton to lead at State
Napolitano likely for Cabinet
President-elect Barack Obama is on track to pick former rival Sen. Hillary Rodham Clinton as his secretary of state while signaling that immigration will be a homeland security priority by considering Arizona Gov. Janet Napolitano for that post in his Cabinet. An Obama transition aide said the president-elect has been engaging in "good, substantive" conversations with Mrs. Clinton, who is expected to be named to the post of America's top diplomat after Thanksgiving.

Financial Job Losses May Double to 350,000 by 2009
The bloodletting in the financial- services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009, said Brian Sullivan, chief executive officer of search firm CTPartners. Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, said Sullivan, whose firm has worked with Citigroup Inc. and JPMorgan Chase & Co. Banks, brokerages and funds have eliminated about 170,000 positions worldwide.

Bank of New York Mellon to cut 1,800 jobs
Last month, the bank reported that third-quarter profit tumbled 53% on securities losses and a big charge to shore up funds hurt by the bankruptcy of Lehman Brothers.The Bank of New York Mellon Corp. said Thursday it will cut its worldwide work force by 4%, or about 1,800 jobs, blaming the weak global economy. It's the latest in a string of banks to announce layoffs. "It has become clear that we need to take additional steps beyond our merger synergies to reduce expenses, given the current weakness in the global economy," Chief Executive Robert P. Kelly said Thursday. The bank said attrition would reduce the number of layoffs. It has 43,000 employees worldwide. BNY Mellon was formed last year by the combination of Bank of New York and Mellon Financial Corp. It operates in 34 countries, providing financial services for institutions, corporations and wealthy individuals, and has $1.1 trillion in assets under management.

China all at sea off Africa
China has for the past several years confounded observers, and even critics, by treading lightly on Africa's political terrain, even as it steps all over the continent's increasingly prized economic resources. But recent hijackings of Chinese ships by Somali pirates show it is just as vulnerable to events on the continent as its competitors. Many had marveled at the Asian giant's ability to stay aloof of the central geopolitical issues of the day - Zimbabwe, Darfur, Eastern Congo, Baidoa etc - while maintaining a strong grip on its economic interests across these various regions, mostly in the volatile natural resources sectors.

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Thurs 11.20.2008

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." --- Thomas Jefferson 1802

DOES GOLD HAVE REAL VALUE?
Where are gold prices headed?
So what has Thomas Jefferson got to do with the price of gold? ..... read on...... Gold stirs a great debate in the investment world: At one end are those who believe it is a useless relic with no investment value. At the other end are those who "religiously" believe it is the only real money. Warren Buffet has an amazing way with words: "Gold gets dug out of the ground in Africa, or some place. Then we melt it down dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."1 The insanity of gold's role as money probably can't be articulated any better than that. On the other hand, J.P. Morgan simply stated "Gold is money and nothing else."2 Both speakers understand the nature of money....one is alive today, one is an historical figure. Will modern advancements make gold useless or will history return gold to its historic role as money?

Banker Manipulation Of Gold And Silver Prices Further Exposed
Commodities experts are in agreement that the price of gold and silver is being manipulated by bankers and government officials in order to halt a mass abandonment of paper currencies and the debt based economy. The New York Post today carries a column by John Crudele declaring that there is a global run on gold coins and that demand is not being met by government mints.

Reflation Challenge & Gold
A major challenge looms large on the immediate horizon. The USEconomy must be reflated in order to avoid collapse. Debts have become a crippling factor. Liquidation of speculative trades coincides with economic retreat, and hedge funds are under attack by their creditors (largely Wall Street firms) while major companies shed workers by the tens of thousands. When asked about economic prospects, a standard answer lately of mine has been to observe important signals not of recession but of potential disintegration. Almost all of the economic data, almost all of the Fed regional reports, almost all of the consumer sentiment indexes, almost all of the jobs data, almost all of the housing foreclosure data, is negative. The most dangerous and disgusting aspect of the current rescue initiatives is that almost all Dept Treasury and USFed actions are not revealed via any disclosure at all, nothing. Despite demands for transparency, nothing is shared on detail. Corruption and fraud usually thrive in such an environment.

Jim Rogers has gold coins in his pocket

The Six Biggest Myths about Gold
Gold. People either love it or hate it. There aren’t many who feel ambivalent toward it. Unfortunately, gold is deeply misunderstood by investors, and that misunderstanding is hurting their portfolio returns. Many in the investment community trot out the old myths about gold: that it is a bad investment; that it is very risky; that it is not a good inflation hedge. But is there anything behind these assertions? If investors take the time to examine the facts, these commonly held beliefs simply do not stand up to scrutiny. It is precisely because these myths have become so prevalent that gold is still undervalued. Once the general public realizes these beliefs are not valid, the price of gold will be much higher.

Jim Rogers 2

The Great Deception As Gold Hit All Time Highs
Amazingly, while gold and other commodity related stocks continued to be sold off to levels that are at deep discounts to their intrinsic value in October, gold continued to break to new all time highs in most major currencies. On October 9th and 10th gold recorded new all time highs in many currencies including the Euro, the Australian Dollar, British Sterling, the Indian Rupee, the Russian Ruble, the South African Rand and many others. The Dow Jones Industrial Average Stock also recorded a multi decade low in terms of gold. Investors are getting a very much skewed view of gold’s performance if they are viewing it in terms of the US Dollar or Yen.

The Dollar Trap Part II: Mutually Assured Financial Destruction
The current structure of the Bretton Woods agreement with the US dollar as the dominant reserve currency is not sustainable unless the rest of the world is willing to accept a form of neo-colonialism. The developed nations are holding approximately 70% of their reserves in US dollars. The rest of the world knows it must find an acceptable substitute for the dollar as the reserve currency. The US does not wish to change the status quo for several reasons. First, it provides an automatic funding mechanism for incredibly large budget deficits that would collapse without this mechanism as they are now unsustainable. Additionally, the US economy has become badly distorted with an outsized financial sector as a percent of GDP created to manage this artificial reserve construct. Change will be painful for all. Yet change must and will come, even as the US resists that change and uses a type of Mutually Assured Financial Destruction policy to maintain its hegemony.

Jim Rogers 3

GOLD IN THE LOW $600s?
Of late, I have read a number of analysts, Jim Rogers even, who have expressed the view that gold could dip to the mid- to low $600 level. Could happen, but I think not. Already, buyers of physical gold are finding anything near $700 to be cheap and so are helping to build a floor under the monetary metal. On that topic, a friend sent this item along last week…

Panicked investors send gold demand up 56%
Demand for gold smashed the previous record in the three months between July and September as fearful investors switched funds from the stock market and savings into ingots and coins, often storing them at home as their trust in banks fell. New figures from the World Gold Council (WGC) show that investment demand for gold rose 56 per cent to 382.1 tonnes for the third quarter as investors sought safe havens away from the stock market turbulence.

1800-Point Plunge Coming for Dow?
If the Dow Industrials fail to hold above 7995, we’re projecting a whopping 1800 points more downside over the near term, to at least 6195. The target comes from a forecast that went out to subscribers on October 22, when the blue chip average was trading above 8500. At the time, we projected downside to at least 7995, a Hidden Pivot “midpoint” associated with the lower target at 6195. According to the Hidden Pivot Method, a decisive breach of the midpoint implies that the target itself will be reached, as it was yesterday. Moreover, if support comes precisely at the midpoint, its subsequent breach would imply that the lower target is likely to be reached with equal precision.

Jim Rogers 4

China Tops Japan in U.S. Debt Holdings
Beijing Gains Sway Over U.S. Economy
China passed Japan to become the U.S. government's largest foreign creditor in September, the Treasury Department announced yesterday, reflecting the dramatic expansion of Beijing's economic influence over the American economy. China's new status -- it now owns nearly $1 out of every $10 in U.S. public debt -- means Washington will be increasingly forced to rely on Beijing as it seeks to raise money to cover the cost of a $700 billion bailout. China, in fact, may be the government's largest creditor, period. The Treasury does not keep records on domestic bond holders. But analysts said China's holdings are so vast that the existence of a larger stakeholder in the United States now seems unlikely.

China Plays a Better Long Term Hand
As Peter Schiff and I have long warned, America's reliance on borrowing and consumption to fuel economic activity would result in the wholesale destruction of national wealth. Until recently, the dissipation was largely invisible to most consumers. However, the ongoing plunge in real estate and equity prices and newly released statistics concerning retail sales, consumer confidence and employment have now made it plain to most Americans that their own wealth has been seriously, and perhaps permanently, degraded. In response, they are now hoarding cash and reevaluating their spending habits.

In times of crisis, new global giants still look to US
America still dominates the business of managing the world's finances despite the wealth accumulation of emerging markets
The cataclysmic events on Wall Street have shelved, probably for some time to come, two fashionable topics of macroeconomic debate. The first has been over not merely whether, but how fast, economic power would shift from the United States to the “new wealth-creators” - China and, down the line, India, Brazil and even resource-rich Russia and aspiring financial market newcomers, such as Dubai.

The Art of Deception – Hank Paulson Speaks
The key problems that we face are all expressions of the fact that our monetary system is based on debt, and this enforces an exceptionally short-term investing and planning horizon, along with the need for continuous exponential expansion. Thus our primary ailment today is a failure of our money system. Practically everything else that we read about today – bank failures, foreclosures, rapidly depleting resources, etc – are merely symptoms of this failure.

The Never-Ending Bailout and the End of American Economic Dominance
Our political leadership—folks like President George W. Bush, Treasury Secretary Henry Paulson, Rep. Barney Frank, D-Mass., Sen. John McCain, R-Ariz., and President-elect Barack Obama—told us that the government would save us. They said that the economic crisis was so dire, so grim, that we needed to allow the government to spend our money to bail out Wall Street. They stated that Paulson, with full authority and no oversight, would be able to right the ship.

America’s Future Foreign Policy Is Already Here
What not to expect with the change in the United States' presidential administration. Barack Obama said on the campaign trail that he wasn’t afraid to talk with America’s enemies. Now those enemies want to hold him to his word. Shortly after Mr. Obama was elected, Mahmoud Ahmadinejad offered congratulations. The Iranian president said he hoped for the beginning of a new, more open relationship between the two countries—one predicated, of course, on the acknowledgment and acceptance of Iranian power.

Treasury Secretary Can’t Really Define ‘Financial Institution’
What is the definition of a financial institution under the Troubled Assets Relief Program (TARP), Treasury Secretary Henry Paulson was asked on Tuesday. He couldn’t give a specific answer. Rep. Jeb Hensarling (R-Tex.), a member of the House Financial Services Committee, told Paulson he recently read about a group of plumbing contractors who were applying for TARP funds. They wanted to use the money to refurbish foreclosed properties, and they made the case that doing so qualified them as a financial institution.

Jobless claims jump unexpectedly to 16-year high
Jobless claims jump unexpectedly to 16-year high as labor market weakens rapidly New claims for unemployment benefits jumped last week to a 16-year high, the Labor Department said Thursday, providing more evidence of a rapidly weakening job market expected to get even worse next year. The government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That's much higher than Wall Street economists' expectations of 505,000, according to a survey by Thomson Reuters. That is also the highest level of claims since July 1992, the department said, when the U.S. economy was coming out of a recession.

Bank fears over home loan aid
Government-backed efforts to make it easier for homeowners to avoid foreclosure by modifying their mortgages could further depress the value of mortgage-backed securities and force banks to take more writedowns, industry executives say. Prices for securities in the $11,000bn market for residential mortgage debt had already taken a big hit last week when the US Treasury decided against using its $700bn troubled asset relief programme (Tarp) to buy toxic assets.

Saudi prince increasing stake in Citigroup
Saudi Prince Alwaleed, who currently holds less than a 4% stake in Citi, has been buying shares of the company, believing they are undervalued. Saudi Prince Alwaleed bin Talal says he plans to increase his stake in Citigroup to 5%. Prince Alwaleed, who currently holds less than a 4% stake, has been buying shares of Citi believing they are undervalued and that the Manhattan-based bank has been taking necessary steps to improve its operations amid the ongoing credit crisis.

GMAC files for bank status
The money-losing finance company GMAC said on Thursday it has filed to become a bank, and its bonds surged as it joined the growing list of lenders making such a move in a bid to secure U.S. Treasury funds. Detroit-based GMAC said its application for funds from the government's $700 billion Troubled Asset Relief Program is conditional on it changing its status to a bank holding company. The company, which had previously said it was contemplating becoming a bank, did not disclose how much it might seek from the government.

Dow Closes Below 8000, Hits 5-Year Low
Stocks plummeted yesterday, sending the Dow Jones industrial average to a five-year low after poor economic data was compounded by gloomy pronouncements by the Federal Reserve. The Dow fell 427.47 points, or 5.07 percent, to finish the session at 7997.28, closing below 8000 for the first time since 2003, a technical barrier that dashed investors' hopes that the worst of the market sell-offs were finished. The Standard & Poor's 500-stock index also hit a five-year low, falling 52.54 points, or 6.12 percent, to 806.58.

HDFC Avoids Subprime Folly With $30,000 Mortgages, Strict Rules
Housing Development Finance Corp., India's biggest mortgage provider, has dodged the bad loans that plagued banks in the U.S. and Europe and plans to increase lending more than 20 percent this fiscal year, said Managing Director Keki Mistry. Tighter guidelines than at U.S. lenders means Indian mortgage companies aren't as vulnerable in a slowing economy, Mistry said in an interview in Mumbai yesterday.

Stocks Slump As Signs Point To Harder Times
Key Indicators Suggest Deep Recession
Businesses cut prices at a record rate and builders started fewer new homes last month than anytime on record, according to new government data, as the outlook for the economy continues to dim. The data helped spur another terrible day for the stock market, as did a projection of more hard times ahead by leaders of the Federal Reserve. A serious recession now appears all but assured.

Credit Markets Fall to Records as Confidence in Economy Wanes
Credit markets from commercial mortgages to junk bonds fell to record lows as concerns grew that the slowing economy would overwhelm government efforts to stem the worst financial crisis since the Great Depression. The average yield on high-yield, high-risk debt rose beyond 20 percent for the first time in two decades. Top-rated securities backed by subprime and commercial mortgages fell and loan prices declined as U.S. automakers lobbied Congress for government aid to stave off bankruptcy.

Senator Richard Shelby: Let Big 3 go Chapter 11

Automakers Press High-Stakes Plea for Aid
Senators Greet CEOs' Request With Skepticism
The chieftains of Detroit's Big Three automakers made a desperate appeal to skeptical lawmakers yesterday for $25 billion in emergency loans to forestall the possible collapse of the domestic auto industry, offering to cut their own salaries in exchange for government aid. But the chances were looking increasingly bleak that Congress would quickly approve a lifeline to help the firms survive some of the most devastating economic conditions since Henry Ford founded the Ford Motor Co. in 1903.

GM shares drop as bailout hopes dim
Shares of General Motors Corp fell more than 8 percent to hit a new 66-year low on Thursday as the prospects dimmed that lawmakers would reach a compromise on a proposed $25 billion bailout for U.S. automakers before Congress adjourns this week. Without a deal this week, any bailout is likely to have to wait until the new Obama administration takes over in January, by the time GM has warned it would run desperately short of its minimum cash needs.

Auto Chiefs Fail to Get Bailout Aid
The chief executives of Detroit’s Big Three automakers departed Washington empty-handed on Wednesday night after two days of pleading for a financial lifeline on Capitol Hill. As the public hearings and intense behind-the-scenes negotiations appeared to come to naught, the Senate majority leader, Harry Reid of Nevada, went to the floor seeking to bring up the Democrats’ plan to provide $25 billion in aid from the $700 billion financial bailout program. The Republicans objected, effectively killing the plan.

Before the Bust, These CEOs Took Money Off the Table $$
The credit bubble has burst. The economy is tanking. Investors in the U.S. stock market have lost more than $9 trillion since its peak a year ago. But in industries at the center of the crisis, plenty of top officials managed to emerge with substantial fortunes. Fifteen corporate chieftains of large home-building and financial-services firms each reaped more than $100 million in cash compensation and proceeds from stock sales during the past five years, according to a Wall Street Journal analysis. Four of those executives, including the heads of Lehman Brothers Holdings Inc. and Bear Stearns Cos., ran companies that have filed for bankruptcy protection or seen their share prices fall more than 90% from their peak.

U.S. Economy: Consumer Prices Fall, Raising Deflation Danger
The cost of living in the U.S. fell by the most on record and construction began on the fewest homes ever last month, evidence the economy is in the worst recession in at least a quarter century. The consumer price index plunged 1 percent last month, the most since records began in 1947, the Labor Department said in Washington. Commerce Department figures showed housing starts tumbled to an annual rate of 791,000, indicating the industry’s contraction may extend into a fourth year.

The Road to Financial Ruin: We Have to Spend Money Now
When just about all economists agree, should we rejoice or be scared? During the Weimar Republic, economists at the Reichsbank argued that printing money to finance a war was "exogenous" to the economy and thus not inflationary. Hyperinflation in the ensuing years proved them wrong. We tend to think we are so much smarter today. Economists know how to run regression models; in the absence of a historic precedent, some economists know how to draw shifting supply and demand curves. But common sense seems to be missing in the toolbox of all but a few.

Economic data cast pall over Wall Street
More bleak economic data and fears that Washington could reject the car industry’s pleas for a bail-out pushed Wall Street stocks lower on Wednesday, although trading was once again volatile as investors scoured for bargains amid the glut of downbeat news. The cost of living in the US plunged 1 per cent last month, according to the Labor Department, twice as large as forecast and the most since records began in 1947. So-called core prices, which exclude food and energy, unexpectedly fell for the first time in more than 25 years. Investors feared that although they might afford hard-pressed consumers some relief, the falling prices could further dent corporate earnings.

Citi Agrees to Acquire SIV Assets for $17.4 Billion
Citigroup Inc., the fifth-biggest U.S. bank by market value, agreed to acquire $17.4 billion of assets held by structured investment vehicles advised by the company. Citigroup said today in a statement that the value fell from $21.5 billion as of Sept. 30, reflecting market declines of $1.1 billion and $3 billion in debt that matured or was sold. SIVs, which Citigroup invented in 1988, emerged 15 months ago as one of the first major strains in credit markets rocked by record high foreclosures on subprime mortgages. Citigroup, the biggest manager of the funds, has reduced the assets of its SIVs from $87 billion in August 2007.

Disclosure Demands for Credit Swaps Said to Increase
U.S. regulators may require banks and insurers to disclose data about all credit-default swap trades to a central registry to boost transparency in the $47 trillion market, a person with knowledge of the talks said. The Federal Reserve Bank of New York and the U.S. Securities and Exchange Commission want information about credit-default swaps that don't meet standard terms to be disclosed to a warehouse that would record all trades, said the person, who declined to be identified because the discussions are private. The rules would offer details about the types of contracts that almost drove American International Group Inc. into bankruptcy

GOP congressman: 'It is not your money'
Michigan lawmaker trying to help Detroit makes stunning statement about tax dollars A Republican congressman seeking a $25 billion bailout of the troubled U.S. auto industry made a stunning statement about taxpayer funds to benefit Detroit, claiming, "It is not your money." Rep. Joe Knollenberg, R-Mich., made the remark during a discussion with Fox News anchor Neil Cavuto yesterday as the pair debated sending billions of federal dollars to prop up the Big Three carmakers.

Cavuto: Congressman Joe Knollenberg . . . . its not your money!

Oil prices at near 22-month low
Crude and gasoline inventories rise in the latest week, according to government reports.
Oil prices fell to a nearly 22-month low Wednesday after a government report showed a bigger-than-expected rise in crude inventories, reinforcing concerns that demand for petroleum products is waning. U.S. crude for December delivery fell 77 cents to $53.62 a barrel. The last time prices were this low was January 2007. Just before the report, the contract - which expires Thursday - was up 63 cents at $55.02.

Oil dives below $50 as investor confidence sinks
Oil plunged below $50 a barrel on Thursday, deepening losses over the previous four sessions as battered financial markets reflected ever lower confidence in the world economy and evidence mounted of falling fuel demand. U.S. crude fell $3.71, to $49.91 a barrel by 9:02 a.m. EST, the weakest level since January 2007. London Brent crude shed $3.10 to $48.62 a barrel. As economic slowdown has destroyed fuel demand, oil companies plan to store millions of barrels of oil in the hope economics will improve.

Oil falls below $54 to lowest point since Jan. 2007
Oil prices slipped further Wednesday, dipping below $54 on fears of global economic weakness that have sent crude down more than 60% in four months. But analysts suggested that prices might be bottoming out as they moved closer to the psychologically significant $50 mark. Light, sweet crude for December delivery was down 60 cents at $53.79 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract Tuesday fell 56 cents to settle at $54.39, the lowest since January 2007.

Federal Reserve Cuts Economic Forecast, Hints at Rate Cuts
The Federal Reserve is increasingly concerned with stalling economic growth and the prospect of deflation. Minutes from the Fed’s October meetings, at which the central bank lowered interest rates by a half percentage point, reveal Fed Chairman Ben Bernanke and his colleagues don’t expect the economy to recover until mid-2009. The minutes were seen by many economists as a hint of more interest rate cuts or further interventions.

The Ramifications of Bankruptcy at GM, Ford, and Chrysler
Much is being made in the press about the financial problems at GM, Ford, and Chrysler. For a number of years, the US automakers were the backbone of the US economy, providing jobs and products that were part of the rise of the middle class not just in this country, but abroad. A car was looked upon as a status symbol and along with the national highway system allowed Americans the freedom to travel and a symbol of wealth and stature.

Boeing cuts 800 Kansas jobs
Airplane maker Boeing Co. says it plans to cut about 800 positions at a facility in Wichita, Kan., next year. The Chicago-based company says the reductions are a result of some programs ending and a delay in a U.S. Air Force tanker replacement program. The layoffs will affect managers, as well as salaried and hourly workers. Boeing says it will deliver 60-day layoff notices to about 76 employees on Friday. The rest of the layoffs will continue throughout next year.

Fear and Loathing in La Jolla
A FEW days ago, I spoke to a large gathering of investors in the San Diego suburb of La Jolla, and was startled by the audience’s furious anger at the powers that be. The Wall Street-Treasury-Federal Reserve axis is hated, loathed and feared by these people, who were, as far as I could tell, largely Republicans, almost all well to do - or formerly well to do. They are in a state of extreme agitation about how the current mismanagement of our financial system has played havoc with their own personal financial situation. In fact, they are among the angriest upper- and middle-class people I have ever seen. And the most frightened and worried. (In a way, they are now feeling the way ordinary workers have been feeling for years.)

GE moves to cut up to $2bn in costs at finance arm
General Electric is to shrink GE Capital, its finance arm, in a move that could lead to $2bn in cost cuts, the sale of $90bn in highly leveraged assets and thousands of redundancies among its 75,000 employees. Under plans announced on Tuesday, GE Capital will create a separate US banking unit charged with gathering retail deposits mainly via the internet. GE has more than doubled its deposits from $20bn to $43bn this year in an effort to reduce its funding costs and lessen its reliance on short-term debt. The shake-up at GE Capital, which takes effect next year, comes after the division has been hit by credit-related writedowns and its exposure to the ailing US consumer.

Loan Prices Fall as Funds Forced to Sell, Default Risk Rises
Prices of high-risk, high-yield loans fell as funds were forced to sell debt and expectations rose that more companies would default as rising unemployment drags down the economy. The price of the average actively traded leveraged loan fell 2.6 cents to 71.2 cents on the dollar since Nov. 13, according to Standard & Poor's LCD. Prices have slumped 4.4 cents since Nov. 4, reversing a rally of more than 8 cents on the dollar since the all-time low last month.

BASF cutbacks will affect 20,000 staff
BASF, the world’s largest chemicals company, on Wednesday said it would reduce the working hours of one-fifth of its workforce, or 20,000 employees, and cut production at 180 plants until January, after carmakers and other customers “significantly” cut orders in past weeks. Jürgen Hambrecht, chief executive, warned the German company was “preparing for tough times” as he gave a profit warning for this year and said it was difficult to foresee how 2009 would develop as customers were hit by economic woes.

Movements to Silence Pastors and Reinstate the Fairness Doctrine
Mr. William J. Federer, a Missourian, is one of the most cheerful people I have met. Despite this, Bill Federer’s writing always has a serious message. His latest book is entitled Endangered Speeches. In it he traces the effort during the 20th Century to assure that preachers were not involved in the political process. Federer points out that prior to 1913 preachers never gave the Internal Revenue Service or their 501(c)(3) tax-exempt status a thought because there was no mechanism which applied to them and from 1913 until 1954 most preachers simply ignored IRS, as there was no reason for them to be concerned.

The Legal Responsibility of Adult Children to Care for Indigent Parents
Currently, 30 states have filial responsibility statutes that establish a duty for adult children to care for their indigent elderly parents. When enforced, the statutes can require the adult child to reimburse state programs or institutions that have cared for the indigent parent with either a one-time contribution or installment payments. Today, there is no uniform federal filial responsibility statute, and indeed, it may be difficult to enact one; but if even a few states began to more systematically enforce their laws, their action could help reduce the explosive growth of Medicaid’s long-term care benefit.

Western Navies May Get Tougher on Piracy After Tanker Seizure
The seizure of a Saudi oil supertanker by Somali pirates may push Western navies to step up their actions against hijackers, military experts said. The North Atlantic Treaty Organization is reassessing its operations in the region and may adopt a tougher stance toward the pirates. The navies of India, Russia, Britain and Germany have all battled pirate vessels in the Gulf of Aden in the last 10 days alone. "This hijacking could really change the picture and we could see much more proactive rules of engagement," said Hans Tino Hansen, managing director of Risk Intelligence, a maritime security consultant based in Vedbaek, Denmark. "The whole focus on the problem has exploded."

Iran Said to Have Nuclear Fuel for One Weapon
Iran has now produced roughly enough nuclear material to make, with added purification, a single atom bomb, according to nuclear experts analyzing the latest report from global atomic inspectors. The figures detailing Iran’s progress were contained in a routine update on Wednesday from the International Atomic Energy Agency, which has been conducting inspections of the country’s main nuclear plant at Natanz. The report concluded that as of early this month, Iran had made 630 kilograms, or about 1,390 pounds, of low-enriched uranium.

Barak Urges U.S. to Focus Less on China, Russia, More on Iran
Israeli Defense Minister Ehud Barak said the U.S. and Europe should put aside differences with China and Russia over human rights and missile-defense issues to focus on working together to stop Iran from developing nuclear weapons. "The triad of nuclear proliferation, radical Muslim terror, and rogue states, epitomized in the Iran case, can be defeated only through a paradigm shift in international relationships," Barak said in an interview at the Defense Ministry in Tel Aviv late yesterday.

Sarkozy's fiscal meeting raises diplomatic hackles
President Nicolas Sarkozy of France left the summit meeting on the financial crisis here last weekend in a triumphal mood, declaring that it had tamed the animal spirits of American capitalism. Then he went home and announced that he would hold his own summit meeting in a few weeks in Paris — on the same topic. That has raised hackles in diplomatic circles, not just because the meeting appears to compete with a planned gathering of 20 world leaders next April. Sarkozy's aggressive statements have put American officials on edge, with some saying that he seemed determined to turn the global crisis into a referendum on the ills of untrammeled capitalism.

Russia Suffers Plunging Reserves as Ruble Struggles
Russia's foreign-exchange reserves are draining fast and may take almost a decade of economic stability with them. Russia's international reserves, the third-biggest after China's and Japan's, have fallen $122.7 billion, or 21 percent, since Aug. 8 as the central bank tried to shore up the ruble. At the same time, President Dmitry Medvedev, 43, has pledged more than $200 billion of tax cuts, loans and other measures to maintain economic growth, threatened by plummeting oil prices and investor flight.

Russia's Response to the Economic Crisis
The United States of America is headed for a “crisis of its existence.” These were the words of a Soviet diplomat, speaking anonymously to Pravda in late July. A few days prior to this statement, at a meeting of Russian ambassadors convened by President Dmitry Medvedev, Moscow launched a new diplomatic offensive to push the United States out of Europe. A war between Russia and Georgia would provide the catalyst. Europe’s attention would be galvanized. Special negotiations between Moscow and Berlin, Moscow and Paris, Moscow and Rome, could move forward, and new security arrangements announced for the whole of Europe. The United States would be depicted as an irritant in otherwise good relations between Russia and Berlin. In the process, Washington would be gradually isolated.

Talks Continue as Bill Clinton Is Said to Accept Terms of Obama Team
Former President Bill Clinton has agreed to all of the conditions sought by President-elect Barack Obama’s transition team to eliminate potential conflicts of interest if Senator Hillary Rodham Clinton becomes secretary of state, people close to the Clintons said Wednesday. Mr. Clinton accepted several restrictions on his business and philanthropic activities to remove any obstacle to his wife’s nomination if the cabinet job is formally offered and accepted, said the associates, who insisted that they not be identified because they were disclosing confidential negotiations. “I’ll do whatever they want,” Mr. Clinton said Wednesday at a public appearance.

Obama picks Daschle, Napolitano for Cabinet posts
President-elect Barack Obama's top choice for secretary of homeland security is Arizona Gov. Janet Napolitano, multiple Democratic sources close to the transition told CNN on condition of anonymity. One source said he believed the final decision depends on the vetting of the Democratic governor, much like the selection of Eric Holder for attorney general. Also, multiple Democratic sources say billionaire Chicago businesswoman Penny Pritzker is Obama's choice for commerce secretary.

Obama insulted by al Qaeda leader
IntelCenter, a counterterrorism organization, has just released a transcript of the latest message from al Qaeda's number two man, Ayman al-Zawahari, in which Zawahiri cites the words of Malcolm X to insult President-elect Barack Obama as a "house negro." By way of background, Malcolm X, the famous, black nationalist leader of the 1960s, told a parable drawn from American slavery of the "house negro" who "loved the master more than the master loved himself" and the "field negro" who hated the master. You get the picture.

Qaeda greets Obama victory with an insult
In Al Qaeda's first response to the American election, Osama bin Laden's top deputy condemned President-elect Barack Obama as a "house Negro" who will continue a campaign against Islam begun by President George W. Bush. Appealing to the "weak and oppressed" around the world, Ayman al Zawahiri sought in a video to dampen enthusiasm for Obama's election around the globe by saying that the "new face" of America only masked a "heart full of hate."

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Wed 11.19.2008

KHNC FUNDRAISER - Call 1-800-205-6245
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Eric & Joe will match your donation pledges during fundraiser, penny for penny.

Why Gold Is Down, But You Can't Get Your Hands on Any
At first glance, it appears as if the gold bugs, those bullish on gold, have been stepped on this year. Spot gold is down nearly 30% from its peak of $1033 an ounce set earlier in the year. But a two tiered market has developed where speculators have been badly burned trading gold futures, while some investors holding actual physical gold have not only managed to keep their shirts, but have held on to gains for the year. Dealers and analysts are calling it an “upside down” market where physical gold, including coins and bars, are in short supply and far more expensive than the price quoted on New York Mercantile Exchange’s COMEX division.

Surprising Call for Return to the Gold Standard
The last page of the Wall Street Journal Opinion section once again contained a gem of a "sound money" editorial on Monday - another well reasoned critique of the current monetary order, this one penned by none other than a former vice president of the Federal Reserve Bank of Dallas, Gerald P. Driscoll. Recall that Judy Shelton contributed a great piece for that page last Friday.With a title of To Prevent Bubbles, Restrain the Fed, you have a pretty good idea where it's headed, but to hear a former Fed vice president suggest the reinstatement of a gold standard is quite remarkable indeed.

Ron Paul Questions Bernanke at House Financial Services Committee - Tuesday 11.18.2008
Fiat Dollar Reserve System Dead; New World reserve currency

Trillions down and still bailing
A hodgepodge collection of efforts has put us all on the hook for piles of money, and what do we have to show for it? A still-terrible market and a recession. Unfortunately, despite some 12 financing facilities created by the Treasury and the Fed, massive interest rate cuts and various bailouts, the government has little to show for its attempts to dictate where markets should trade. The Fed's own balance sheet has exploded from roughly $900 billion worth of debt in August to around $2 trillion as of last week. Knowledgeable sources expect that to reach $3 trillion by the end of the year.

Volcker issues dire warning on slump
Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasise after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration as it struggles to restore confidence. "What this crisis reveals is a broken financial system like no other in my lifetime," he told a conference at Lombard Street Research in London. "Normal monetary policy is not able to get money flowing. The trouble is that, even with all this [government] protection, the market is not moving again. The only other time we have seen the US economy drop as suddenly as this was when the Carter administration imposed credit controls, which was artificial."

US economy chiefs say policies bear fruit
The cost of insuring top quality US companies against default hit a record high on Tuesday even as Hank Paulson and Ben Bernanke told Congress that their radical policy actions to ease the credit crisis were starting to bear fruit. "We have turned the corner in terms of stabilising the system and preventing collapse," said Mr Paulson, Treasury secretary. He called for patience, saying: "There is a lot of work that still needs to be done in terms of recovery of the financial system."

Bernanke: Credit markets strained

Inflation or deflation?
There is a considerable argument between commentators as to whether, apart from a pretty painful recession, the US economy is in for a bout of inflation or deflation. Both sides have apparently cogent arguments, and maintain their positions with considerable vigor. Robert Samuelson, having recently published a book The Great Inflation that suggested another burst of inflation was inevitable, has now produced an op-ed in the Washington Post warning of the rapidly approaching dangers of deflation - such are the dangers of publishing schedules! Having in the past suggested that inflation was inevitable, I thought it worth looking at the deflationist case.

Deflation: why it is dangerous
Economists warned today that the UK economy is likely to suffer from deflation next year, after the latest official data showed inflation was slowing sharply. Deflation is when prices fall year-on-year – a phenomenon that has affected the electrical goods market for a long time. Each year, televisions get bigger, thinner and cheaper. So why is this a problem? Cheaper products, be they gadgets, cashmere jumpers or utility bills, are excellent news for consumers, especially when they have suffered from a relentless squeeze on their standard of living over the last two years. A short burst of deflation is, indeed, a good thing. It makes everyone feel a little bit richer. But this is only true if prices fall for a short time. A prolonged period of deflation can have a pernicious affect on an economy and was one of the main causes of the Great Depression of the early 1930s and of the damage wreaked on Japan's economy in the early 1990s.

U.S. lawmakers press for direct aid to homeowners
Top U.S. financial regulators faced new calls Tuesday from lawmakers to aim more of the government's huge financial relief package at programs that would directly help homeowners escape foreclosure. At a hearing Tuesday of the House of Representatives' Committee on Financial Services, several members expressed dismay at the prospect of a continuing or even accelerating avalanche of foreclosures, despite the commitment of hundreds of billions of dollars to the broad bailout program being put into effect by the administration of President George W. Bush. Later in the day, the Senate Banking Committee was scheduled to hear from the auto industry, which is also seeking a government bailout.

Paulson: TARP targets financial firms

Paulson considering home loan aid
The Bush administration has not ruled out using money from a $700bn bail-out fund to back home loan modifications, Hank Paulson said on Tuesday. The US Treasury secretary came under intense pressure from Democrats in Congress to take this step.

Holes In TARP Hurting Market Confidence
"Slush fund" ... "banana republic" ... "Keystone Kops."
That's how some observers are describing the government's effort to stabilize the financial system, including its centerpiece rescue mechanism, known as the TARP. Hatched hastily about two months ago, the TARP (Troubled Asset Relief Program) was conceived to stabilize financial markets and restore investor confidence. But now it is looking so amorphous and vulnerable to political trade winds, that it is has become almost a constant of uncertainty.

Dave Walker Testifies Before House Budget Committee

Lawmakers press Paulson on bailout plan changes
Lawmakers press Paulson on bailout strategy changes; Democrats push for mortgage, autos relief Faced with exasperated lawmakers upset by shifts in bailout strategy, Treasury Secretary Henry Paulson launched a spirited defense Tuesday of his handling of the $700 billion program and expressed fresh reservations about tapping the pool for mortgage guarantees to relieve skyrocketing home foreclosures. Members of the House Financial Services Committee grilled Paulson for not doing enough to help distressed homeowners and for failing to force banks that get some of the bailout money to specifically use it to bolster lending to customers, one of the prime reasons behind the rescue package.

TARP criticized on the Hill

Obama's New Deal
For years, economic contrarians have been predicting financial disaster for the U.S. economy. And for years, famous mainstream economists and CNBC analysts have been assuring everyone that Federal Reserve was managing the new economy effectively, and that this new and astonishingly productive economy meant that economic laws of the past were outdated. Paul Krugman, the New York Times columnist who was recently awarded the Nobel Prize for economics, was one of the few honorable exceptions among the big names in the field, as his 1999 book, "The Return of Depression Economics," was more prescient than most in noting "depression economics - the kinds of problems that characterized much of the world economy in the 1930s, but have not been seen since - has staged a stunning comeback."

Should We Worry About Deflation?
There is now worldwide worrying about price deflation again. After all, real estate prices have sunk, stock prices have hit the ditch, the price of oil has the sheiks concerned, and even Las Vegas hotel room rates have plunged. Sounds like all good news for those of us who buy things, at the same time being a bit of a bummer for heavily indebted sellers.

Why are foreclosures increasing?
Bernanke Opening 'U.S. Borrowing Still Far From Normal'

U.S. CEOs urge at least $300 billion fiscal stimulus
Chief executives of leading U.S. companies called for a fiscal stimulus package worth at least $300 billion and urged president-elect Barack Obama to swiftly name his economic team. Dozens of chief executives met at the Wall Street Journal CEO Council event in Washington D.C. to identify what they think should be priorities for the Obama administration and the new Congress. Wachovia Corp's Robert Steel and pension fund TIAA-CREF CEO Roger Ferguson were among those calling for a fiscal stimulus package to encourage consumer spending in the short term.

U.S. Mint Makes Drastic Cuts to Its Collector Gold and Platinum Coin Offerings
Yesterday the United States Mint announced some sweeping cuts to the number of products that it will offer to coin collectors. The deepest cuts take place in the US Mint’s offerings of collectible versions of gold and platinum bullion coins. Most people know about the US Mint’s bullion coin offerings. American Eagle coins composed of gold, silver, and platinum are sold to the public through a network of authorized bullion dealers. In recent years, American Buffalo Gold coins were added to the lineup. These coins are bought and sold primarily as a means of investing in precious metals.

Eight more banks
At least eight more banks announced their participation in the Treasury Department's share purchase program in the past two days, adding roughly $1.48 billion to the total amount of taxpayer money to be invested in the institutions.

Blind leading the one-eyed
My worst fears about the weekend gathering in Washington of world leaders to discuss the financial crisis were realized overnight when the statement after their meeting was released. It contained a host of generic fluff and very little mention of the specific actions required to tackle the gargantuan economic problems of today. The statement accompanying the meeting, held under the Group of 20 (G-20) banner, could have been put together by a bunch of first-year economics students. It probably was, but that's not what worries me about the initiative. In the opening part of the statement, the following section seemed positive: "Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction."

When Inflation Comes a-Knockin'
Mike Shedlock of globaleconomicanalysis.blogspot.com writes that I - and people like me, who are expecting inflation - are a bunch of idiots, which is unfortunately true about me, and I am grateful that my Natural Mogambo Stupidity (NMS) is his only complaint about me. I only wish that others were equally restrained in their criticism, as there is apparently no end to either my personal shortcomings or their delight in pointing them out. He writes, thankfully not mentioning me by name, "You would think that inflationistas would have caught on. But they haven't. Nor will they. And articles about shrinking day care, collapsing retail sales, rising unemployment, record foreclosures, massive credit card defaults, bankrupt insurers, collapsing auto sales, sinking commercial real estate, plunging commodity prices, and dozens of other things will not change their minds either, including an implosion in China."

How This Recession Could Change the World
The falling price of oil, China’s stimulus plan, and a developing U.S. bond market massacre. Say goodbye to America’s high standard of living. Your gas tank has probably noticed the return to lower prices. It is easier to keep it full at only $2.07 a gallon. That is a welcomed respite: More money in your pocket, more frequent trips to the grocery store, less guilt about driving the family suv. That’s great. But did you know that lower oil prices may set events in motion that will have a much bigger impact on your wallet than a few dollars off at the tank? There is an unexpected side effect of today’s breathe-easier gas prices — and it is a big one.

The formerly middle class
At the beginning of every recession, there are people who see the downturn as an occasion for moral revival: Americans will learn to live without material extravagances. They'll simplify their lives. They'll rediscover what really matters: home, friends and family. But recessions are about more than material deprivation. They're also about fear and diminished expectations. The cultural consequences of recessions are rarely uplifting.

You've double size of Fed Res in 1 YR! WAKE UP!

Big 3 carmakers beg for $25 billion as aid stalls
Big 3 automakers beg Congress for $25 billion, talk of national economic peril as aid stalls
Detroit's Big Three automakers pleaded with a reluctant Congress Tuesday for a $25 billion lifeline to save the once-proud titans of U.S. industry, pointedly warning of a national economic catastrophe should they collapse. Millions of layoffs would follow their demise, they said, as damaging effects rippled across an already-faltering economy. But the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans.

US home construction sinks to new record low
Construction of US homes falls 4.5 pct to record low in October as builders cut back Construction of new homes plunged 4.5 percent last month to the lowest level on government records dating back to 1959, as U.S. builders slashed production while Wall Street nosedived. Building permits, a barometer of future activity, also plummeted to a new record low pace. The embattled housing industry, which enjoyed a five-year boom, is now on pace to construct the fewest new homes and apartments since the end of World War II.

Consumer prices drop record 1 percent in October
Consumer prices drop by largest amount in past 61 years as energy prices see record plunge
Consumer prices plunged by the largest amount in the past 61 years in October as gasoline pump prices dropped by a record amount. The Labor Department said Wednesday that consumer prices fell by 1 percent last month, the biggest one-month decline on records that go back to February 1947. The drop was twice as large as the 0.5 percent decline analysts expected. In other economic news, the Commerce Department reported that construction of new homes and apartments fell by 4.5 percent in October to an annual rate of 791,000 units. That was the slowest construction pace on records going back to 1959 and underscored that housing remains caught in a severe slump.

Wholesale prices plunge, easing inflation concerns
Wholesale prices fall by record amount in October, easing inflation concerns Wholesale prices in October experienced the biggest one-month drop on records that go back more than 60 years, illustrating the impact falling energy prices and fears of a prolonged recession can have on inflation. Wholesale prices dropped by a record 2.8 percent last month, reflecting the fact that energy prices decreased by the largest amount in 22 years. After spending most of the year worrying about surging costs for energy, food and other commodities, analysts found it remarkable that prices could reverse so quickly.

Buying Banks for Insurance
Jim Cramer sees the positive in insurance companies buying banks to access TARP funds.

Life Insurers Seek Money in the Banks
Life insurance companies are snapping up small savings and loans in a bid to make themselves eligible for big government bailout dollars, but the effort is fraught with complications. Lincoln National, Genworth Financial and Aegon this week joined Hartford Financial Services in making deals for S&Ls. The deals and the insurers' accompanying applications to become thrift holding companies are aimed at helping the companies qualify for money through the Troubled Assets Relief Program, or TARP, which is investing $250 billion in preferred equity stakes of banks and thrifts. TARP's purpose was to shore up confidence in the banking system by providing the government's backing and to hopefully inspire the institutions to begin lending again.

Automakers say if they go, millions of jobs will vanish
When the heads of General Motors, Chrysler and Ford Motor and their major union go to Capitol Hill on Tuesday, they will try to convince lawmakers that if the Big Three automakers go under, the fragile U.S. economy will be dealt a blow far costlier than the $25 billion in aid the companies want. There's no question the automakers are in dire straits. Without federal aid, or a sales rebound that no one is forecasting soon, at least one of them could have to file for bankruptcy protection. GM has said it's just a quarter or two away from running out of cash. It told dealers it will delay their reimbursement for rebates and incentives due next week, a sign cash flow problems are deepening.

Ford sells 20% stake in Mazda for $538 million; keeps 13%
Cash-needy Ford Motor (F) is selling about two-thirds of its 33.4% controlling stake in Mazda Motor for about $538 million. Ford will keep about 13%, while Mazda will buy about 6.9% of its shares from Ford for up to $185 million, it said. About 20 Mazda partners will buy 13%. Mazda is not disclosing the names, but the group was carefully assembled, said Keiichi Wakabayashi, general manager of corporate communication of Mazda, parent of Mazda USA. "The move was discussed deeply within Mazda."

Unsold Foreign Cars Hogging Space at a California Port
Gleaming new Mercedes cars roll one by one out of a huge container ship here and onto a pier. Ordinarily the cars would be loaded on trucks within hours, destined for dealerships around the country. But these are not ordinary times. For now, the port itself is the destination. Unwelcome by dealers and buyers, thousands of cars worth tens of millions of dollars are being warehoused on increasingly crowded port property.

Labor's Killing the Cars
CNBC's Dylan Ratigan, host of 'Fast Money' and 'Closing Bell,' tells Debra Borchardt that an auto survival plan can't work without addressing unsustainable labor contracts.

Advantage of Corporate Bankruptcy Is Dwindling
Harsh as it is, a bankruptcy filing has always offered a glimmer of hope for a business hobbled by debt or a downturn. A company could slim down, negotiate manageable payments to workers and suppliers and keep going, preserving jobs. But the credit crisis has trampled on that dream. More companies that file for bankruptcy protection are shutting down, lawyers say, because they cannot obtain enough financing to operate while they reorganize.

Goldman, Morgan Stanley Squeeze Exchanges With New Platforms
Goldman Sachs Group Inc., Morgan Stanley and investment banks in Europe are using the early success of new trading platforms they have backed to push exchange fees lower. Goldman and Morgan Stanley, whose profit in the first three quarters is down 44 percent from last year, and brokers at firms such as Merrill Lynch & Co. and Citigroup Inc. have demanded European exchanges cut trading tariffs. The companies have won new clout by backing alternate trading platforms such as Chi-X Europe Ltd. and Turquoise and by urging rival bourses to set up shop in Europe.

AMR, UAL Struggle to Sell Idle Jets as Market Slides
American Airlines, United Airlines and Continental Airlines Inc., stung by fuel costs and a drop in traffic, face a new challenge: what to do with planes valued at $2 billion now idled or set to be grounded through 2009. With virtually no U.S. buyers for the 276 mostly older, less-efficient jets, the carriers are shopping the aircraft in emerging markets such as Russia while prices tumble and frozen debt markets damp sales, analysts and marketers say.

Obama Again Turns to Clinton Aides, Eyeing Holder for Justice
President-elect Barack Obama repeatedly is turning to the Clinton administration for his Cabinet and staff, the latest example coming yesterday when Eric Holder emerged as the leading candidate for attorney general. Holder, who served as former President Bill Clinton's deputy attorney general, is undergoing a formal check of his background by Obama's transition team and hasn't yet been formally offered the job, according to three Democrats familiar with the transition.

Chavez threatens to imprison opposition leader ahead of local elections
Venezuelan President Hugo Chavez is threatening to imprison a popular opposition leader, roll tanks into the streets and use force to defend the results of Sunday's state and local elections. During a fiery speech to supporters Tuesday, Chavez threatened to shut down any television stations that broadcast early election results, and said he has ordered secret police "to keep a close eye on" ," Manuel Rosales, the opposition governor of Zulia state.

'IAF is ready for Iran's nuclear sites'
Israeli Air Force Says Ready to Attack Iran
"We are ready to do whatever is demanded of us" in order to stop Iran from getting a nuclear weapon, IAF commander Maj. -Gen. Ido Nehushtan told German magazine Der Spiegel in an interview published Tuesday. Nehushtan told the magazine that whether a military strike is eventually decided upon is a political question and not an issue of Israel's military capabilities. A strike against Iran's nuclear facilities "is a political decision," the IAF commander said, "but if I understand it correctly, all options are on the table… The Air Force is a very robust and flexible force. We are ready to do whatever is demanded of us." When asked by the paper whether the Israeli military was able to destroy Iran's nuclear facilities, which are spread around the country and partly located underground, Nehushtan said, "Please understand that I do not want to get into details. I can only say this: It is not a technical or logistical question."

Japan economists call for 'Obama bonds'
Japanese economists, increasingly concerned that the United States might seek to pay its enormous and growing debt obligations in a weakened US dollar, are looking to the possibility of US Treasuries being issued in yen. The US government needs to borrow at least US$1 trillion in the coming year, excluding the US Treasury's $700 billion plan to bail out the financial and other industries, said Kazuo Mizuno, chief economist in Tokyo at Mitsubishi UFJ Securities Co, a unit of Japan's largest publicly traded lender by assets. That amount is likely to grow as the US government continues to rescue failed parts of the economy and has to raise more debt - that is, issue government bonds, or Treasuries - to fund such rescues.

Asian Stocks Fall for Third Day; Financial Companies Lead Drop
Asian stocks fell for a third day, led by financial companies and commodity producers, as Mitsubishi UFJ Financial Group Inc. posted lower profit, South Korean bankruptcies rose and Oz Minerals Ltd. said earnings may decline. Mitsubishi UFJ, Japan's biggest bank, declined 6.6 percent after reporting lower net income as bad-loan costs rose. Babcock & Brown Ltd., the worst performing stock on the MSCI Pacific Index this year, lost 19 percent in Sydney after saying it will accelerate jobs cuts to avoid defaulting on debt. KB Financial Group Inc. paced declines in South Korea after corporate failures rose to a three-year high. Oz Minerals tumbled 19 percent after saying a drop in metal prices may reduce full-year profit.

Asia held hostage on the high seas
It has been centuries since armed robbery on the high seas has taken on the dramatic geopolitical dimensions it has today. But piracy is back, and the brazen recent successes of Somali buccaneers has shocked governments and navies, and thrown oil companies and ship owners into panic. As this week's hijacking of a Saudi oil supertanker shows, the risk of pillage and plunder is getting worse, and leaders from Japan to South Korea to Hong Kong and India want action to protect their trade routes.

China Passes Japan as Biggest U.S. Treasuries Holder
China surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries, as foreign investors sought the relative safety of government debt as stocks plunged 9.1 percent that month. Total net purchases of long-term equities, notes and bonds increased a net $66.2 billion in September from $21 billion the previous month, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $143.4 billion, compared with net buying of $21.4 billion the month before.

China's Hu launches free trade talks in Costa Rica
Chinese President Hu Jintao began a Latin America tour with the launch of free trade talks with Costa Rica on Monday, just over a year after the country gave up six decades of ties with Taiwan. Hu's stopover was the highest-level visit by a Chinese official to Costa Rica and came as China expands its diplomacy and investment on the whole continent, with an eye on natural resources and developing markets for manufactured goods and even weapons. Hu arrived in San Jose Sunday, from a G20 summit in Washington, and headed Monday for his second visit to communist ally Cuba, before attending an Asia-Pacific summit in Peru on November 22.

Message from David Walker
Dave Walker, president and CEO of the Peter G. Peterson Foundation, sends a message to all Americans about how to educate our elected officials - and ourselves - about fiscal responsibility. Visit http://www.pgpf.org to learn more.

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Tues 11.18.2008

30 reasons for Great Depression 2 by 2011
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:

Financial Crisis Tab Already In The Trillions
Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track. CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved. Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

GOVERNMENTS CAN'T HANDLE GLOBAL RUN ON GOLD COINS
THERE'S a worldwide run on gold coins. Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders. A spokesperson for the US Mint tells me that gold coins in this country, for the past month, "are being allocated because of an increased demand."

The dollar is a flawed, maybe even doomed currency
FT: It's a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to get further out of the dollar. Have you made a further exit from the dollar?
JR: Not yet, no. And the reason I haven't is because we're in a period of forced liquidation of everything. We've had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they're all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I'll get to sell at higher prices. I don't know whether I'll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering.

See Jim Rogers' interview on the dollar

A return to the Bretton Woods international gold standard is inevitable
Thirty-seven years ago the world’s economies started on the circular track back to Bretton Woods. We will sooner or later be back where we started, with international transactions guided by a fixed gold price. The official output of the G-20 Summit is 3366 words, including 61 instances of the word "should" as in "Financial institutions must also bear their responsibility for the turmoil and should do their part to overcome it including by recognizing losses" and "Incentives should be aligned to avoid excessive risk-taking" and "Regulators should enhance their coordination and cooperation across all segments of financial markets" to cite only the first three. The entire rambling tract says in sum, "We met. We talked. We agreed that serious challenges to the world economy and financial markets exist but are not so serious as to compel us to do anything about them. There is so little urgency that we decided not to meet again until the spring of 2009 to talk about the crisis more."

Soros-Funded Democratic Idea Factory Becomes Obama Policy Font
Three blocks from the White House, on the 10th floor of a sleek glass building, young workers pound at computers, with giant flat-screen TVs overhead. It has the look and feel of a high-tech startup. In many ways it is. The product is ideas. Thanks in part to funding from benefactors such as billionaire George Soros, the Center for American Progress has become in just five years an intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the new Obama administration.

Paulson Clashes With Democrats on Using Bailout for Homeowners
Treasury Secretary Henry Paulson rejected using the government’s financial-rescue program as a "panacea" for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners. "The rescue package was not intended to be an economic stimulus or an economic recovery package," Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and "is not a panacea for all our economic difficulties."

Obama May Delay Nafta Overhaul, in Victory for Caterpillar, GE
Barack Obama, who threatened during the presidential campaign to withdraw from the North American Free Trade Agreement unless he could renegotiate it, may delay reworking the accord as he focuses on the U.S. economic crisis. After he becomes president in January, Obama will order a study on the world’s largest trade agreement, then seek longer- term negotiations with Mexico and Canada on how to change it, according to three advisers, who spoke on condition that they not be identified. A delay would be a victory for companies such as Caterpillar Inc., General Electric Co. and Citigroup Inc., which have tried to head off protectionism in the U.S.

Home Prices Tumble in 80 Percent of U.S. Cities
Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country. The median price of a U.S. home fell 9 percent from a year earlier and sales of properties with mortgages in default accounted for at least a third of all transactions, the Chicago- based National Association of Realtors said today. Prices fell in 120 U.S. metropolitan areas, rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979.

$6.6 Trillion in Mortgages Were Wrapped into Mortgage-Backed Securities at Heart of Financial Crisis
The total value of the U.S. mortgages that have been incorporated into mortgage-backed securities, the financial instruments at the heart of the financial crisis, is $6.6 trillion, according to the Federal Reserve – a sum that dwarfs the $700 billion originally requested by the Treasury Department for the bailout. Mortgage-backed securities account for 59 percent of the entire home-mortgage market, currently valued at $11.2 trillion

It’s Not an Auto Bailout, It’s a Union Payoff
When America battled for economic supremacy against Taiwan, Japan, Germany and others, many of us adopted a patriotic battle cry. “Buy American!” we exclaimed, and many of us did. In 2008 we are still buying American, but that phrase has taken on a whole new meaning. We don’t just buy TVs, or soap or cars from U.S. companies. We now buy the companies themselves, and the many of our so-called “leaders” in Washington want us to buy even more.

Union Workers at Big Three Automakers Average $73 an Hour
Economists in Michigan, the long-time home of the auto industry, say they don’t support the proposed multi-billion dollar bailout of Big Three automakers Chrysler, GM and Ford. One reason why, they say, is the ultra-high labor costs for union workers employed by the Big Three. It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perr

Incoming Members of 111th Congress Say No to Automaker Bailout
Congressmen-elect who were visiting the Capitol for freshman orientation on Monday told CNSNews.com that they do not think a $25-billion bailout of the auto industry is a good idea. Two of the congressmen-elect said if Congress provides a financial rescue package to the Big Three automakers – General Motors, Chrysler and Ford – both management and unions must be expected to make sacrifices in terms of compensation.

Cash-Strapped Companies Grow to Record, Moody's Says
The number of companies at risk of running out of cash reached the highest level since 2002 in October as job losses and tightening credit weakened consumer spending, according to Moody's Investors Service. The percentage of companies with an SGL-4 rating, Moody's lowest level of liquidity rating, rose to 14 percent last month from 12.6 percent in September, the highest since the index was designed in 2002, analysts led by John Puchalla wrote in a report released today.

US sees early switch to new accounting rules
US companies could be producing accounts under international rules in little more than a year, according to detailed plans produced by the Securities and Exchange Commission. Companies meeting strict criteria could be allowed to “early adopt” by publishing their 2009 accounts under international financial reporting standards, meaning investors will be facing up to the new accounting language from early in 2010. Early adopting groups are likely to include some household names. The changes are part of a long-awaited “road map” by the SEC that lays out the rule changes the switch would require and the milestones to be met before the regulators commit to the change.

Pirates Briefly Rattle Oil Market
Do pirates have the ability to move oil markets?
If only for a few hours, it seems that they can. Oil futures spiked Monday morning just as news broke that Somali pirates had nabbed a Saudi Aramco-owned super tanker named Sirius Star off the coast of Kenya. The huge ship can carry up to 2 million barrels of oil. Just before 9 a.m., oil futures stood at $56 a barrel. By 10 a.m., they rose $3 to nearly $59. But the price effect — if there was one — was short-lived. By noon, oil prices were back to their now-familiar downward slide and were trading in negative territory.

G-20's Financial-Market Regulation Proposals May Limit Profit
Leaders of the world’s biggest developed and emerging nations put banks and investors on notice they will need to keep more capital and reveal more about their holdings, signaling the industry may emerge from the current crisis with less potential for profit. President George W. Bush and his counterparts from the Group of 20 blamed a looming global recession on imprudent investors who "sought higher yields without an adequate appreciation of the risks." Supervisors who failed to address the dangers building in markets were also at fault, the group said in its statement after meeting Nov. 15 in Washington.

Summit gets mixed grades
This weekend's Washington summit on tackling the world financial crisis did little to dent a looming economic slowdown but offered developing countries such as China and India an important larger role, European and Asian observers said Monday. Markets in Asia and Europe seemed skeptical about the results of the closely watched Group of 20 meeting in Washington, with major stock indexes mixed Monday on both continents — one sign that investors may have low expectations about its impact.

Paulson Says Markets to Remain Stressed for 'Months'
Treasury Secretary Henry Paulson said markets may be under stress for "months'' and two of President-elect Barack Obama's top economic advisers agreed that further steps are needed to shore up the economy. "There will be stress in the capital markets for a number of months,'"Paulson said at a panel discussion in Washington. He was joined at the conference by Clinton administration Treasury chiefs Robert Rubin and Lawrence Summers.

Obama-Pelosi Stimulus May Fail to Reignite Economy
President-elect Barack Obama and House Speaker Nancy Pelosi may throw as much as half a trillion dollars worth of stimulus at the economy -- and have little or no growth to show for it. The forces arrayed against recovery, including the credit contraction and cutbacks by consumers, are so powerful that they may overwhelm the record sums of spending and tax cuts being discussed in Washington. The only consolation, economists say, is that without the stimulus, things would be even worse.

Roubini's Latest "Why Things Are Hopeless" List Hits New Record, 20 Items!
I have not made a formal tally of Roubini's various lists of why the economy is going (and will continue to go) to hell in a handbasket, but recent sightings suggest his typical list is eight to twelve reasons. However, in his latest missive, on the subject of why the consumer is toast, Roubini outdoes himself and comes up with twenty reasons. Oh, sorry, AT LEAST twenty reasons. I also don't think I've ever read Roubini say his tally of woes was less than comprehensive. In case you are new to this line of discussion, "falling consumption" in the absence of big time government countermeasures, equals "memorably bad downturn."

Marc Faber on the economy, stocks and the bailout - 1

Marc Faber on the economy, stocks and the bailout - 2

America Taking the 2 Steps Which Lead to Bankruptcy
Companies go bankrupt when they:
(1) Borrow more than they should; and
(2) Have to pay their creditors more and more interest to loan them money.
Borrowing Too Much Everyone knows that the U.S. has borrowed too much. As of a year ago, the financial obligations of the U.S. were some $56 trillion dollars. That number has gone way up since then.

For Fed's Geithner, Rescue Ties Cut Both Ways
Federal Reserve Bank of New York President Timothy Geithner, a candidate to be the next Treasury secretary, has been one of the U.S.'s top firemen during the financial crisis -- and that presents a dilemma for President-elect Barack Obama. Picking Mr. Geithner, 47 years old, would give the new administration someone with a deep, personal experience of handling the crisis. He was central to the government-backed sale of Bear Stearns Cos. in March, the talks before the failure of Lehman Brothers Holdings Inc. in September, and the rescue of American International Group Inc. days later. For some, that also may be grounds for criticism.

The "In God We Trust" Dollar
How close did America come to economic Armageddon in the last half of September? “The nation is gripped by the worst financial crisis since the Great Depression,” the New York Times wrote September 20. “Before Thursday night, when the treasury secretary, the Federal Reserve chairman and leaders on Capitol Hill proclaimed their intentions to take over bad debts, the prognosis for the American financial system was sliding from grim toward potentially apocalyptic” (emphasis mine throughout). A former vice chairman of the board of governors of the Federal Reserve said, "It looked like we might be falling into the abyss."

Sharia Finance: Last Gasp of a Doomed American Economy
Forget forced Islamic compliance and the risk of extortion; America may not be able to survive without sharia money. Over the next year, the U.S. government will need to borrow somewhere in the neighborhood of $1 trillion, the most ever by far. Estimates go as high as $2 trillion, depending on how quickly the economy cools and how fast tax revenues fall. The simple question most of America has not asked is this: Where is the money going to come from? The federal government already knows the answer to that question, and it has implications Americans are not ready for but will soon be faced with.
America is going cap in hand to Middle East oil exporters. What government officials are not telling you is this: Islamic money comes with strings attached. Yes, sharia law “stipulates that money must not be used for a purpose incompatible with Islam”. America will increasingly have to comply with sharia law, and what that entails isn’t pretty.

Yellowstone Club Members Revolt Over Bankruptcy
Members of the Yellowstone Club for the ultrarich are opposing another loan to the financially-troubled Montana resort and demanding to know what happened to $463 million in club dues and past loans. The revolt against the exclusive club's management – by a group claiming to represent more than 100 of its 340 members – comes amid proceedings in the club's bankruptcy case. New court documents show its debts total at least $399 million, or $56 million more than previously estimated. It has assets of $599 million.

Goldman Targeted by Investor Complaints of Naked Short-Selling
Investors in the $591 billion high- yield, high-risk loan market are accusing Goldman Sachs Group Inc. of naked short selling to profit from record price declines. At least two fund managers complained verbally to officials of the Loan Syndications and Trading Association, saying they believe Goldman helped drive down prices by using the technique, according to people with knowledge of the objections. New York- based Goldman is acting against its clients by trying to profit at their expense, the investors said.

The Six Unknowns That Are Roiling the Stock Market
After weeks of mad volatility, even long-time market observers are baffled by what's ahead for stocks. The general future is too uncertain. The stock market's behavior is downright strange lately. Professionals with decades of market experience scratch their heads as the market falls to its lowest point of the year, then surges almost 7% in an afternoon—all for no apparent reason. What's hanging over the stock market these days is uncertainty. In an environment where few know what's next, investors are skittish, corporate executives are cautious, and government officials are trying anything and everything to stabilize the situation.

German Demands Increase While G-20 Dallies
German demands grow more strident as the world dallies on a plan to fix the global economy. "A new world economic order is developing that is more dynamic and more inclusive than any we have yet seen," said Dominique Strauss-Kahn, managing director of the International Monetary Fund, in the wake of the G-20 economic summit convened in Washington over the weekend. Russian President Dimitry Medvedev said the G-20 summit would become a step toward the establishment of a new global financial system. European Commission President José Manuel Barroso told a post-summit news conference: "I was very happy with the results of the summit … it has laid the foundation for the future"

Why bother on the mortgage?
If you don't, it's getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay. Last week, the government announced a program that will substantially lower payments for many homeowners who have little or no equity, but only if they are at least 90 days delinquent.

Health insurers push for cheaper individual policies
One plan would chop premiums by a third; small businesses could see costs increase. Momentum is building for reforming New York’s troubled individual insurance market as a way to help people who have lost their jobs in the economic upheaval. That market, for people who don’t get coverage through employers or other groups, has virtually collapsed in recent years as premium costs have risen to unaffordable levels.

Reality Check in Obamaland
While America dreams on in Obamaland, reality is about to strike at the G-20 summit in Washington this week. America is no longer in the box seat when it comes to dictating policy to the world. That the United States is still by far the largest single national economy in the world, possessing the mightiest military force and dominance in space-age technology, is a given. That American national debt is preposterous both in its size and the nation’s inability to control it is the matter of daily headlines. That the U.S. is to blame for the global financial crisis is increasingly being declared as such by leaders in the world’s greatest single trading combine, the European Union, especially within Germany. That reality, and its consequences, will be vocalized, very stridently, by nations gloating over America’s demise this week at the G-20 summit in Washington commencing Saturday.

EU-Russia Summit Signals Warming Relations
Europe follows Germany’s lead in dealing with Russia.
Russia and the European Union agreed to resume partnership and cooperation talks at a half-day summit on Friday, signaling a thaw in tensions that have existed between the two powers since the Georgia war in August. TheTrumpet.com has closely monitored Germany’s relationship with Russia in the wake of Moscow’s invasion of Georgia. Berlin’s reaction to Russia’s assault on Georgia was significant for a number of reasons, including the fact that rather than drive a wedge between Russia and Germany, the event appeared to strengthen the Russo-German relationship.

Clout Has Plunged for Automakers and Union, Too
When the leaders of the three Detroit auto companies and the United Automobile Workers union travel to Washington to make their case for a federal bailout, they will be flying into stiff headwinds of public opinion. Thus far, much of the commentary in Washington, in the pages of major newspapers and on the Web, has been against providing financial support for the companies, which they will say they desperately need in hearings beginning on Tuesday.

Aid prospects darken for desperate US carmakers
Auto bailout prospects darken as GOP, Democrats clash; automakers say they're desperate Prospects dimmed on Monday for the $25 billion bailout that U.S. automakers say they desperately need to get through a bleak and dangerous December. Though all sides agree that Detroit's Big Three carmakers are in peril, battered by the economic meltdown that has choked their sales and frozen loans, the White House and congressional Democrats are headed for stalemate over how much government money should go toward helping them.

Echoes of 1979 in the Detroit Bailout Debate
As Congress contemplates what kind of bailout to give the American auto industry — or indeed, whether to give one at all — during its lame-duck session beginning today, the Chrysler Loan Guarantee Act of 1979 is sure to be on lawmakers’ minds. In the late 1970’s, crises in the Middle East had sent fuel prices soaring, and Chrysler was sinking under the weight of a gas-guzzling fleet of models. To stave off bankruptcy, the company received $1.5 billion in loan guarantees from Congress. But as The Detroit Free Press noted this morning, the money came with lots of strings attached

White House rebuffs criticism of its auto-aid plan
White House says it supports financial aid for auto industry, but not from $700B bailout plan With Congress returning Monday to deal with an auto industry in dire financial straits, the Bush White House stressed that it supports help, but not at the expense of the $700 billion Wall Street rescue program. With the Senate ready to start work on assistance to the industry, press secretary Dana Perino issued a statement saying the administration "does not want U.S. automakers to fail." She complained that reporting on the White House's statements on this issue has involved "attempts to shorthand the administration's position."

Citigroup to shed another 53,000 jobs
Citigroup to shed about 53,000 more jobs, bringing total work force reduction to 20 percent Citigroup Inc. is shedding approximately 53,000 more employees in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt. The New York-based bank, which has already reduced its assets by about 20 percent since the first quarter of the year, also plans to trim expenses by 19 percent in 2009 from third-quarter levels, to $50 billion. The plans, posted on the company's Web site, were discussed by CEO Vikram Pandit at the company's town hall meeting in New York Monday with employees.

Dallas Mavericks owner Cuban charged with insider trading
Entrepreneur Mark Cuban, owner of the National Basketball Association's Dallas Mavericks, was charged Monday by the Securities and Exchange Commission with insider trading. According to the SEC, Cuban sold 600,000 shares of Internet search company Mamma.com in June 2004 using non-public information. Cuban is accused of calling his broker and instructing him to sell all of his stock from the Mamma.com after receiving confidential information from the company. The SEC said Cuban knew the stock price was about to fall.

Game beware: it's the return of the poacher
As times get harder in Britain's cities, armed gangs are heading for the countryside – and stealing deer, salmon and rabbits to feed a burgeoning black market in food. Once, the poacher was a man with big pockets in his raincoat sneaking on to an aristocrat's land to steal game for his family pot. Now he is likely to be part of a gang from town, in it for hard cash, rampaging through the countryside with guns, crossbows or snares. Police in rural areas across Britain are reporting a dramatic increase in poaching, as the rise in food prices and the reality of recession increases the temptation to deal in stolen venison, salmon, or rarer meat and fish.

Hijacked Oil Tanker Anchored Off `Pirate Stronghold'
A Saudi Arabian supertanker filled with 2 million barrels of crude oil was hijacked off east Africa and is now anchored close to the Somalian coast, the U.S. Navy and its owner said. Pirates directed the Sirius Star, the largest merchant ship ever seized, to the Eyl coastal area to the north of Somalia, navy spokesman Lieutenant Nate Christensen said by phone from Bahrain today. Saudi Arabia's state-owned shipping line, Vela International Marine Ltd., said it created negotiation teams to free the vessel and its crew of 25.

I.O.U.S.A.: Byte-Sized - The 30 Minute Version

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Mon 11.17.2008

Gold at $14,172 an ounce?
There are those who have been arguing vociferously for some years now that the world will be better off under a gold standard. These people may or may not be correct, but we need to understand the implications of what a gold standard will bring with it. Some years ago, the Bank Credit Analyst published a chart of the actual gold price relative to the theoretical gold price as derived from the USA's "Net Liquid Liabilities".

Max Keiser talks about the g20 meeting, Hank Paulson and fraudulent bonds. 16 Nov 2008

Max Keiser talks about the G20 meeting, EU in recession, gold backed currencies, Putin and China. 14 Nov 2008

Governments Reflate and Gold Will Rise!
A long and deep recession, possibly a depression is being forecast across a broad front. But the real picture is different. Governments and central banks are not only committed to doing all in their power to resurrect growth and give their different economies ‘traction’ but have begun the vigorous implementation of reflation. They will do “whatever it takes” to get growth and confidence re-established globally. In essence, the crisis appeared quickly and devastatingly out of greedy lending by banks loaning to uncreditworthy individuals on a broad front. It has to be rectified just as quickly because banks control the lifeblood of liquidity in the economy and they will place their financial health well before that of the broad economy and their customers.

Gold rush
The mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold, a person familiar with the situation told The Standard. Beijing is considering changing its asset allocations during the financial tsunami in order to build up gold reserves "in a big way," the source said. China's fears about the long-term viability of parking most of its reserves in US government bonds were triggered by Treasury Secretary Henry Paulson's US$700 billion (HK$5.46 trillion) bailout plan, which may make the US budget deficit balloon to well over US$1 trillion this fiscal year.

Gold Rush 21 Video - Part 1 of 3

Gold Rush 21 Video - Part 2 of 3

Gold Rush 21 Video - Part 3 of 3

'Gold has historically performed. Will trade at $1650'
Let today be your answer to the many question concerning whether gold will ever rise again. The answer is it will to $1200 and then onward to $1650. I suspect that we could soon have a financial/felony experience that could land on the dollar like a piece of lead. I suspect that the instant the USDX breaks its present up-trend line from .72 to about .89, it will look like the dollar stepped into an elevator door and found no elevator there.

What does the $3.5bn Saudi gold rush in two weeks mean?
The revelation on this blog, actually sourced from what appears to be a reliable story in the Gulf News, the leading regional newspaper, that Saudi Arabia has spent a total of $3.5 billion on gold over the past two weeks has naturally attracted huge worldwide interest. I can not verify the source but all I can say is that this has the hallmarks of a genuine story, based on my 25 years in financial journalism. First, it was buried on an inside page and the amount was given in UAE currency later in the story - hardly the action of somebody looking to manipulate the gold price, more an indication that the sub-editors did not understand the importance of this story.

Iran switches reserves to gold
Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July. Iran, the world's fourth-largest oil producer, is under U.N. and U.S. sanctions over its disputed nuclear programme and is now also facing declining revenue from its oil exports after crude prices tumbled. "With the plans of the presidency...the country's money reserves were changed into gold so that we wouldn't be faced with many problems in the future," presidential adviser Mojtaba Samareh-Hashemi was quoted as saying by business daily Poul.

Gold business still booming in China despite downturn

Richard Russell thinks gold is manipulated
I've never been a big fan of the "gold is being manipulated" thesis. However, I'm now giving the manipulation thesis second thoughts. Most of the world's central banks are now in the process of fighting recession and deflation. This requires government spending and the production of enormous quantities of new fiat money. The last thing the central banks want is for the public to realize what they are doing. Normally, surging gold would be the signal for the public to ask questions -- rising gold is a red flag for the fiat money creators.

'Gold production in South Africa will never recover'
A senior figure a MacQuarie First South Securities has says that gold production in South Africa will only stay flat in the next one or two years, if it recovers at all. Official data from Statistics South Africa revealed this week that gold output in the country plummeted by 17.7 per cent during September on a year-on-year basis. Now Dave Hall, a top gold analyst at the firm - which has one of the largest equities research and sales teams dedicated to the Asia Pacific region - has explained that the situation may improve, but that would mean no increase or decrease in production.

Gold is undergoing a critical third test
It took many years of study and analysis - and untold hours of staring at market fractal patterns - before I had one of those special "eureka" moments about the way markets behave at critical reversal points. Although it's easy to lose sight of this, the main goal of any speculative endeavor is to figure out the point with the maximum potential return on capital, combined with the minimum potential risk to that capital. In my opinion, the point where there is the highest reward, with the lowest risk, is the third test of an important reversal level.

Credit Markets and the Price of Gold
This week saw a fundamental shift in Paulson's approach to restoring the proper functioning of the credit markets. I have been arguing for some time that the credit being pumped into the market is not finding its way into the system. The way that this plays out has direct implications for the price of gold.

Dr. Paul on the Global Financial Summitt
Dollar standard is coming to an end; no need to join the new system.

Bretton Woods gold/dollar peg unlikely at G20
Gold surged on Friday as world leaders gathered to battle the economic crisis, amid talk of a new Bretton Woods agreement to shore up the financial system, but calls to revisit the gold standard are unlikely. The gold standard, a monetary system of fixed exchange rates in terms of gold, had been the cornerstone of Bretton Woods, which created the International Monetary Fund and the World Bank, until President Richard Nixon took the U.S. dollar off the standard in 1971.

G-20 to Back Stimulus, Smooth Over Regulation Split
World leaders meeting in Washington today are moving to shore up the deteriorating world economy, while papering over differences on additional regulation of financial markets. Members of the Group of 20 will endorse steps already underway to fight a global recession by pursuing active monetary and fiscal policies and propose ways to bolster the role of the International Monetary Fund, French officials told reporters on condition they not be named.

G-20 declaration on financial crisis
World leaders spell out a series of steps for regulation, monetary and fiscal policy aimed at stabilizing markets. A group of nearly two dozen world leaders on Saturday reached agreement on a wide-ranging set of proposals to better regulate financial markets. Their goal is over the next several months to put rules and early-detection systems in place to head off another financial crisis like the one currently damaging economies worldwide.

Max Keiser about G20 and the (worthless) US Dollar 15 Nov 2008
Afshin Rattansi talks to Max Keiser about the dollar as world leaders lean to it being removed as the world's reserve currency. And the implications for social unrest in the U.S. and signs of failures to come in an Obama administration

G20 marks a shift in economic power
Nothing is harder than to determine the historic significance of events when they are happening. Yet the meeting of the heads of governments of the Group of 20 in Washington at the weekend looks as historic as the crisis it responds to. It might even prove the one bright light in the gathering darkness. While the G20 contains countries of small significance, it does include all important advanced and emerging countries. The fact that this group could meet and commit itself to a substantial agenda and another meeting in April 2009 shows belated recognition of the shift in the balance of economic power.

Brown claims G20 success as world leaders agree tax and interest rate cuts
Gordon Brown claimed that world leaders have agreed a "route map to global economic recovery" at the conclusion of the G20 summit in Washington yesterday. The leaders of the world’s 20 leading economies promised to instruct their ministers to seek a new Doha trade deal by the end of the year and to co-ordinate interest rate and tax cuts to soften the severity of the global recession. They also agreed new international regulations of banks to be finalised at a second summit, possibly in the UK, in March next year. The communiqué released at the end of the Washington summit said that more action was needed to address the "serious challenges to the world economy and financial markets."

G-20 mostly avoids the thornier questions
Leaders of the Group of 20 nations headed back to their home countries Sunday to continue work on reviving their economies, leaving no clear direction for the thornier questions of overhauling financial regulation that President-elect Barack Obama of the United States will have to address. While the group put on a strong united front during its summit meeting here Saturday in the face of a global crisis, members delayed any top-level decisions, including far-reaching but hotly debated proposals on overhauling financial regulation, until the 101st day of the incoming Obama administration.

French minister Christine LaGarde on the G20 meeting

G-20 Calls for 'Broad' Policy Action as Major Economies Weaken
World leaders agreed more must be done to shore up the global economy and improve regulation of financial markets, leaving details on how to do that to individual countries. In a statement released after five hours of meetings in Washington, leaders of the Group of 20 nations called for a "broader policy response" to the possibility of a deep recession, but said nations should act "as deemed appropriate to domestic conditions."

Europeans satisfied with action plan
The Washington summit was cursed by the hype that had been attached to it in advance by European leaders. It was never likely to be the Bretton Woods II envisaged by Gordon Brown, prime minister, nor the moment to refound capitalism, predicted by Nicolas Sarkozy, French president. As US president George W. Bush observed at the end of the summit, "a meeting is not going to solve the world’s problems". Nevertheless, European delegations streaming out to Andrews Air Force base on Saturday night remained satisfied with the work done and the detailed action plan to carry forward to the next G20 summit in April.

Summit opens door to wide reforms
The Group of 20 summit opened the door to what could be extensive reform of global financial regulation in a relatively tight timeframe – but only if the new US administration is willing to play ball. Priority areas include efforts to strengthen the credit derivatives market, review financial sector pay schemes, create colleges of national supervisors to monitor global banks and improve guidance for valuation of illiquid securities.

G20 leaders pledge action
World leaders grappling with the worst financial crisis since the Great Depression of the 1930s nave pledged to deliver a concrete plan to ward off recession and prevent future meltdowns.

Summit to begin a process of regulatory overhaul
Bush vows concrete plan at White House dinner
Leaders close to agreement on summit text
Emerging markets warn it is dangerous to delay

But prospects for joint action on growth, let alone a major overhaul of the world financial system, looked slim with host President George Bush resisting bold moves before leaving office in two months and president-elect Barack Obama absent.

Second G20 summit planned for London
World leaders pledged yesterday to cut taxes and boost government spending to drag their economies out of recession, and to begin work on a new system for regulating the battered global financial system. The heads of 20 countries, meeting in Washington, endorsed a series of broad goals to fend off future economic calamities and to revive economic growth. They are expected to reconvene in London in April, with the incoming US President, Barack Obama, to decide on longer-term measures. “We must lay the foundation for reform to help ensure that a global crisis, such as this one, does not happen again,” the leaders said in a joint communiqué issued after the conclusion of the G20’s emergency two-day economic summit.

UN sees inequalities hobbling Chinese economic growth
Chinese growth prospects are getting clouded by a gap between rich and poor that is deterring consumption and dragging down productivity, according to a report released Sunday. The UN-sponsored "China Human Development Report" was issued a day after President Hu Jintao said at a summit meeting in Washington that his country's continued growth was its "important contribution" to steadying the global economy.

G-20 Leaders Tighten Grip on Banks $$
After Weekend Summit, Economists Say Emphasis on Lending Restrictions Threatens a Quick Recovery After a weekend of emergency financial diplomacy, the question now is whether the world's biggest economic powers, in their haste to prevent a future crisis, may inadvertently worsen the current one. At an unprecedented summit, the Group of 20 leaders ordered a regulatory crackdown on the kind of high-risk lending and investment that has led the world into a financial mess unseen since the Great Depression. But some economists worry that the plan may backfire at a time when the global economy needs more lending, not less.

Saudis spurn chance to help IMF
Saudi Arabia at the weekend resisted international pressure to copy Japan’s example and give the International Monetary Fund additional funds to bail out ailing economies. It has opted instead to focus on domestic expenditures amid complaints from Saudi commentators that the west was attempting to “steal” the oil exporter’s wealth. A Japanese spokesman said Tokyo was not disappointed by the failure so far of countries such as China and Saudi Arabia to replicate last week’s Japanese offer of $100bn in emergency funds for the IMF. "We will keep suggesting this but we did not expect something this time," he said.

A Quiet Windfall For U.S. Banks
With Attention on Bailout Debate, Treasury Made Change to Tax Policy The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention. But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

Paulson Credit-Card Bailout Draws Growing Criticism
Treasury Secretary Henry Paulson's latest plan for the $700 billion bailout fund has many economists responding like Seinfeld's Soup Nazi, "Next!" They say the idea of using funds approved by Congress in early October to stimulate credit card and auto lending is ill advised and unnecessary. "I don't think providing more leverage to consumers is best for our economy in the long-term," says Adam Lerrick, who is a visiting scholar the conservative-leaning Washington-based think tank American Enterprise Institute. "The consensus is that consumers have borrowed too much over the past 10 years, so I don't get why putting them further into debt is the answer."

The Bailout Plan: Did Bernanke Panic?
I have been going over and over the events of the week beginning September 15, 2008, and I continue to come up with one basic conclusion: the reaction of Fed Chairman Ben Bernanke to the existing financial market strains was somewhat precipitous. A good start to understanding the time-line for that week is the article that appeared in the November 10 Wall Street Journal: "Paulson, Bernanke strained for consensus in Bailout." The article begins “Federal Reserve Chairman Ben Bernanke reached the end of his rope on Wednesday afternoon, September 17."

Judge Andrew Napolitano: BAILOUT Flip Flop Unconstitutional!

Cancel the 'blank check'
He criticizes Henry Paulson for changing the $700 billion bailout plan. U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation's financial system and should take back what is left of the $700 billion "blank check" it gave the Bush administration. "It is just outrageous that the American people don't know that Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone," the Oklahoma Republican told the Tulsa World. "It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing."

JP Morgan could axe thousands of jobs: report
JP Morgan, the US investment bank, is drawing up plans to axe thousands of jobs across its worldwide operations, reports The Sunday Telegraph. The paper cites people close to the company, who say that it has started consulting on job cuts and they were likely to be on a comparable scale to those of rivals.

Citigroup to cut 10 percent of jobs
Citigroup Inc plans to shed about 10 percent of its global workforce, a person familiar with the matter said Friday, as the bank tries to return to profitability and faces mounting criticism of Chief Executive Vikram Pandit. The cuts could result in a loss of roughly 35,000 jobs, based on the bank's reported 352,000-person workforce as of Sept 30. The cuts will be on top of the 23,000 jobs Citigroup has already slashed this year.

Banks Keep Lending, but That Isn't Easing the Crisis
All around Washington, policy makers are scrambling to figure out how to get banks lending again. Lawmakers have criticized banks for not using new federal money to make loans and have threatened to place conditions on additional money. Regulators last week sent out a directive, encouraging banks not to hold back on lending. But there's a flaw in that logic. Banks actually are lending at record levels. Their commercial and industrial loans, at $1.6 trillion in early November, were up 15% from a year earlier and grew at a 25% annual rate during the past three months, according to weekly Federal Reserve data. Home-equity loans, at $578 billion, were up 21% from a year ago and grew at a 48% annual rate in three months.

Watch Peter Schiff: It Pays to Be Contrarian
I have admired and followed Peter Schiff’s work over the years. Although contrarian at times, his market analysis is very solid and insightful and can be accessed through Hillbent.com or directly at Peter’s website. Being bearish is almost akin to high treason in America’s financial industry and media. Some of my money manager peers discredited me for having a 65% cash allocation from January 2008 and later increasing it to 90% on September 17th, 2008 and missing the two biggest moves of the market that followed the $700 billion bailout plan announced by Treasury Secretary Henry Paulson.

The Humpty Dumpty Economy
Before the current economic crisis became apparent to all, the most popular fable used to describe America’s uncanny economic resiliency was the story of Goldilocks. It was argued that our economy was skipping down a sunny path of moderate growth, low inflation and rising asset prices. However, a much better parable for our economy over the last decade would have been the story of Humpty Dumpty: a bloated, fragile shell perched on the top of a dangerously high stone wall. This week, all the government’s horses and all of its men scrambled to put Humpty Dumpty back together again.

Peter Schiff Was Right 2006 - 2007

Peter Schiff 12Nov08 - The dollar will soon collapse

Credit insurers face huge rise in premiums
With more suppliers set to claim for bad debts, the cost of reinsuring risk could soar by over 10 per cent
Credit insurers face having to pay big increases in reinsurance premiums in the coming months as the effects of the credit crunch worsen. Ahead of the so-called renewals season, brokers are predicting that the leading credit insurers, which seek to offload some risks to reinsurers via markets such as Lloyd's of London, will face premium hikes of more than 10 per cent.

China's SAIC May Pass Combined Value of GM, Ford
China's largest automaker, SAIC Motor Corp., is poised to surpass the combined market value of General Motors Corp. and Ford Motor Co., as Detroit's two largest automakers seek a bailout from the U.S. government. GM, the largest overseas vehicle maker in China, makes cars including Buicks in the country with SAIC. The companies are also partners in a van and light-truck manufacturing venture.

Obama Calls for Aid to U.S. Auto Industry, With Conditions
President-elect Barack Obama said the government needs to provide help to U.S. automakers on condition that management, labor and lenders come up with a plan to make the industry "sustainable." "For the auto industry to completely collapse would be a disaster in this kind of environment -- not just for individual families but the repercussions across the economy would be dire," Obama said in an interview broadcast this evening on CBS News's "60 Minutes." Government aid could come in the form of a "bridge loan," he suggested.

Insurers pull cover from GM and Ford suppliers
Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers, which have removed cover from their suppliers. The withdrawal of credit insurance - which covers suppliers against the risk of the car companies' failing - has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.

GM workers plead for emergency bailout
A bankruptct filing by General Motors would be the beginning of the end of the US-owned car industry, the president of the United Autoworkers union has predicted. Ron Gettelfinger joined the chorus of industry players pleading for government loans to stave off the collapse of General Motors and its peers, as Congress begins consideration this week of an emergency cash infusion. "We're on a cliff here," Mr Gettelfinger told reporters on a conference call yesterday. "We need to get this bridge loan and we need it in this lame-duck session" of the Congress, he said. "Would you buy a car from a bankrupt automaker? We don't see bankruptcy as a viable option."

Auto executives in spotlight as U.S. weighs bailout
U.S. automakers should consider executive shake-ups if it would ensure congressional backing for a bailout supporters say is needed to prevent industry collapse, an architect of the effort said on Sunday. The statement by Carl Levin of Michigan underscored the difficulty Democrats are having in finalizing a rescue plan of up to $25 billion and securing majority support in the Senate, which plans to begin debate on the matter on Monday.

Obama says aiding economy trumps budget deficit
The United States government should not worry about deficits over the next two years while spending money to jumpstart the ailing economy, President-elect Barack Obama said in a television interview that aired on Sunday. Obama, a Democrat who takes over from President George W. Bush, a Republican, on January 20, said consensus had emerged between economists in both major U.S. political parties that expensive measures were necessary to avoid a deep recession.

Supplier woes put auto industry in danger
Regardless of bailout, auto supplier failures could cause industry's `house of cards' to fall The financial woes of U.S. automakers have grabbed Washington's attention, but similar problems at auto suppliers have the potential to set off a cataclysmic chain of events in the industry if key parts makers run out of cash and fail. As with the automakers, auto suppliers' sales have tumbled this year because of the steep drop in demand for new vehicles. That has forced suppliers to burn through their cash reserves and slash their costs to stay in business, said Craig Fitzgerald, an automotive analyst with Southfield, Mich.-based Plante & Moran PLLP, which advises about 400 small and midsize auto suppliers.

Financial overhaul added to Obama's to-do list
Obama's long to-do list now includes helping oversee overhaul of financial regulatory system Barack Obama isn't president yet, but his must-do list just got longer. The newest addition to the lengthy list of tasks after taking office: helping oversee the overhaul of the world's financial regulatory system. That is one of the assignments to the president-elect from current global leaders after their weekend summit, where they pledged action to avoid a repeat of the financial mess that has caused worldwide economic chaos.

Showdown looming in Congress over automaker rescue
Postelection session of Congress this week to decide fate of quick rescue for automakers
Hardline opponents of an auto industry bailout branded the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress. The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the aid for General Motors Corp., Ford Motor Co. and Chrysler LLC have offered to reduce the size of the rescue to win backing in Congress.

Mayor Daley: Prepare For Mass Layoffs
CEOs Tell Mayor They Plan Huge Layoffs In November, December The warning is out – Mayor Richard M. Daley says a parade of corporate chief executives have told him huge layoffs are planned around the city and will carry into next year. As CBS 2's Joanie Lum reports, when Daley made the announcement, workers around the city felt a chill, and they are wondering who will be laid off next. The news is especially alarming because the discussion concerns not just city jobs, but the private sector. Thus, it seems the City That Works is about to become the city that gets laid off.

The party's over
The idea of paper money having a vague intrinsic value can be highlighted in the age-old story of the two brothers who owned equal shares in a pub. Whenever one wanted a pint of beer, he would pay the other a dollar, who would then pay him back for his own draw of beer. Pursued ad nauseum, this meant that the same dollar could account for unlimited quantities of beer; provided of course neither brother ever used it to buy something other than beer from his sibling. More importantly, the game could continue until the brewery sent its chap around to collect money for all the beer that had been drunk by the brothers. As a general rule, the brewery would have wanted to get paid a little more than one solitary dollar for the whole keg of beer.

In bad economy, boat owners abandon their vessels
From Southern California to Maine, the foundering economy, high fuel prices and poor fishing have driven boat owners to abandon perhaps thousands of vessels on the waterfront, where they are beginning to break up and sink, leaking oil and other pollutants. Boats have long been a barometer of consumer confidence, disposable income and the overall state of the economy. Now, marina and harbor officials are reporting a sudden increase in the past year in the number of deserted pleasure boats and working vessels.

Facing Deficits, States Get Out Sharper Knives
Two short months ago lawmakers in California struggled to close a $15 billion hole in the state budget. It was among the biggest deficits in state history. Now the state faces an additional $11 billion shortfall and may be unable to pay its bills this spring. The astonishing decline in revenues is without modern precedent here, but California is hardly alone. A majority of states — many with budgets already full of deep cuts and dependent on raiding rainy-day funds or tax increases — are scrambling to find ways to get through the rest of the year without hacking apart vital services or raising taxes.

The Autos and Mentality That Ruined Detroit
The global financial crisis is suffocating the Detroit automakers, but the problems at General Motors, Ford, and Chrysler have been festering for years—even when the mighty "Big Three" were earning billions. Aging factories, inflexible unions, arrogant executives and shoddy quality have all damaged Detroit. Now, with panicky consumers fleeing showrooms, catastrophe looms: Without a dubious federal bailout, all three automakers face the prospect of bankruptcy. There will be plenty of business-school case studies analyzing all the automakers' wrong turns. But, as they say in the industry, it all comes down to product. So here are ten cars that help explain the demise of Detroit:

If Detroit falters, foreign automakers could soften the blow
The failure of the Big Three U.S. automakers, or any one of them, would put a huge initial dent in American manufacturing, but in time foreign car companies would pick up the slack, mainly by stepping up production in their U.S. plants. The Big Three - General Motors, Ford Motor and Chrysler - are still the titular leaders. But they make fewer than half the new vehicles sold in the United States. If one or two were to fail in the current crisis, the big foreign makers are established enough, many experts say, to take control of the industry and its vast supplier network, perhaps more quickly than is widely understood.

Seeking Aid, Automakers Have a Friend in the U.A.W.
When Ron Gettelfinger, president of the United Automobile Workers union, appears this week at Congressional hearings to help make the case for the Detroit automakers getting emergency federal aid, he wants lawmakers to know what he believes is at stake. "It wouldn't be just one company failing here," Mr. Gettelfinger said in an interview. "It would be all three going down." He might as well add the U.A.W. The union’s membership at General Motors, Ford Motor Company and Chrysler has been nearly halved to 139,000 workers in the past three years, and it continues to shrink with every new plant closing.

A Second Crisis in Detroit: Failing Suppliers?
The financial woes of U.S. automakers have grabbed Washington's attention, but similar problems at auto suppliers have the potential to set off a cataclysmic chain of events in the industry if key parts makers run out of cash and fail. As with the automakers, auto suppliers' sales have tumbled this year because of the steep drop in demand for new vehicles. That has forced suppliers to burn through their cash reserves and slash their costs to stay in business, said Craig Fitzgerald, an automotive analyst with Southfield, Mich.-based Plante & Moran PLLP, which advises about 400 small and midsize auto suppliers.

Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012
Trend forecaster, renowned for being accurate in the past, says that America will cease to be a developed nation within 4 years, crisis will be "worse than the great depression. Forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente Predicts Revolution 11/10/08

Downturn Drags More Consumers Into Bankruptcy
The economy’s deep troubles are pushing a growing number of already struggling consumers into bankruptcy, often with far more debt than those who filed in previous downturns. Plummeting home values, dwindling incomes and the near disappearance of credit have proved a potent mixture. While all the usual reasons that distressed borrowers seek bankruptcy — job loss, medical bills, divorce — play significant roles, new economic forces are changing the calculus of who can ride out the tough times and who cannot. The number of personal bankruptcy filings jumped nearly 8 percent in October from September, after marching steadily upward for the last two years. . .

Could Colleges Go Out of Business?
For 15 years, Cascade College in Portland, Ore., struggled to find the fuels that any college needs: students to pay tuition, and donors to help build an endowment. Then came the global economic meltdown, and suddenly that struggle became an impossibility. Late last month, the small Christian college with just 280 students and $4 million in debt announced it would have to shut down at the end of the current academic year.

Condi Rice praises Obama's election as 'a good thing'
'I think the time comes … for new people and new ideas'
Speaking in Houston last night, Secretary of State Condoleezza Rice made comments contrary to the opinions of many fellow Republicans, including praises for the election of Democratic President-elect Barack Obama. "Change is a good thing," Rice said on the campus of Rice University. "I think the time comes when it is time for new people and new ideas." Her comments also touched on the issue of Obama's race. "[For] a girl like me who grew up in segregated Birmingham, Alabama, to now elect an African-American president is an extraordinary matter," Rice declared, "and it says to the world that differences can be overcome and in a world in which different is still a license to kill; that is an awfully important message."

'Constitutional crisis' looming over Obama's birth location
Alan Keyes lawsuit warns America may see 'usurper' in Oval Office The California secretary of state should refuse to allow the state's 55 Electoral College votes to be cast in the 2008 presidential election until President-elect Barack Obama verifies his eligibility to hold the office, alleges a California court petition filed on behalf of former presidential candidate Alan Keyes and others. The legal action today is just the latest is a series of challenges, some of which have gone as high as the U.S. Supreme Court, over the issue of Obama's status as a "natural-born citizen," a requirement set by the U.S. Constitution.

Obama to fund forced abortions
De-funded during the Bush Administration, US money for the UN Population Fund that supports China's policy of coercive abortion will flow again during the Obama Administrations, say supporters. Supporters of the United Nations Population Fund (UNFPA) are confident that President-elect Barack Obama will reverse the Bush administration’s 2002 decision to stop the $40 million it received in U.S. funding. The policy was instated because of UNFPA’s support for China’s one-child policy, which includes coercive abortion practices.

Obama will waste no time pursuing Middle East peace
Former United States President Jimmy Carter said in an interview with CNN this week he expected President-elect Barack Obama to waste no time pursuing Middle East peace talks once he takes office.

Emanuel video for mandatory induction into a civilian "force." . . for ALL Americans

Testing times as China’s economy turns inward
China’s double-digit growth rate over the past five years has led the rest of the world to believe that it can carry on expanding at similar levels for years to come. Certainly, few believe Chinese growth will moderate dramatically and fewer still think it will go into reverse. But, there again, no mainstream analyst or commentator foretold the demise of Bear Stearns or the collapse of Lehman Brothers. Evidence that China just may be set for a year of more sluggish growth than consensus estimates came to light at the start of the month. Two surveys of the manufacturing sector both showed a sharp decline.

Japan joins Europe in recession; G20 fails to cheer
Japan sank into recession in the third quarter, even before it felt the full force of the financial crisis, and world leaders at a weekend summit gave investors little hope they could rescue the global economy. With the euro zone also in recession, the U.S. economy shrinking in the third quarter and China slowing sharply, markets shrugged off pledges to stimulate growth from leaders of the Group of 20 nations.

Japan’s Economy Is in Recession
Japan, the world’s second-largest economy, has officially slipped into recession, hurt by weak export growth and steep cuts in corporate spending amid the worsening global slowdown. Japan’s gross domestic product shrank at an annual rate of 0.4 percent from July to September after declining a revised 3.7 percent in the previous quarter, the government said Monday. It was the first time since 2001 that Japan’s economy has contracted for two consecutive quarters, the definition of a recession.

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Fri 11.14.2008

Dr. Paul on the Global Financial Summitt
Dollar standard is coming to an end; no need to join the new system.

Max Keiser about G20 and the (worthless) US Dollar
Afshin Rattansi talks to Max Keiser about the dollar as world leaders lean to it being removed as the world's reserve currency. And the implications for social unrest in the U.S. and signs of failures to come in an Obama administration

Max Keiser talks about the G20 meeting, EU in recession, gold backed currencies, Putin and China.

Gold to Break to Upside, Dollar to Collapse
When GOFO goes negative (which will likely happen tomorrow or early next week), then gold will be in backwardation, something that last happened after the Washington Agreement was announced in 1999 and there was a mad dash for physical gold by shorts. . . . . Unlike other commodities, gold very rarely goes into backwardation, and only when 1) the market fears a collapse in the currency, and/or 2) the market is worried about counterparties making good on their promise to deliver gold (which was briefly the case in 1999, when the Washington Agreement was announced and shorts were squeezed).
This tells us not only that gold is about to erupt to the upside, but also that the market smells the endgame for the dollar fast approaching too.
There's no way around the fact that the dollar will collapse. Either it falls because the Fed begins to monetize and rapidly inflate (which has always been my assumption), or because the asset-price deflation continues and the US government is forced into default.

Dollar's Days Numbered, Buy Commodities: Jim Rogers
Commodities are one of the only viable investment opportunities left and are set to rebound as demand problems take hold, while the outlook for the dollar is bleak, famed investor Jim Rogers said Friday. The dollar's days as the world's reserve currency are numbered, Rogers said at the World Money Show conference in London. The greenback faces serious devaluation as spiraling national debt and a worsening economic crisis undermine it, he said. America's growing debt problem is "out of control" and Federal Reserve Chief Ben Bernanke's strategy of printing money is a "terrible policy," he said.

Gold May Spike to $2000 in Medium Term
Gold can easily go up to $1500-$2000 in the medium-term, says Johann Santer, MD at Superfund Financial Hong Kong. As such, he tells CNBC's Martin Soong that gold at $710 is a good entry point.

Analysts Predict Hyper-Inflation To Push Gold To $2000, Oil to $300 Within Months
Investors warn liquidation of assets and deflation is temporary calm before the storm Economic experts have predicted that rampant inflation caused by government stimulus packages will soon take hold of the economy and force precious commodity prices to all time highs. Johann Santer, MD at Superfund Financial Hong Kong told CNBC that he expects to see gold climb from its current position at $710 to a whopping $1500-$2000 an ounce within the next three months.

Britons are rushing to buy Gold!
New data from London-based online gold brokerage BullionVault has confirmed that Britons are rushing to buy gold as they lose faith in traditional savings accounts, the Evening Standard reported. The UK economy is currently sliding towards a recession with the property market in decline and the government issuing a host of taxpayer-funded bank bailouts. The result is that confidence in the banking system is at rock-bottom and investors are looking for a safer haven for their money, which is where BullionVault comes in.

Why China wants to beat America in Gold reserves
How does the gold reserves in the United States get compared with that of China? The question is important in the wake of China's fears about the long-term viability of parking most of its reserves in US government bonds after Treasury Secretary Henry Paulson's US$700 billion (HK$5.46 trillion) bailout plan. According to a report published in The Standard, Hongkong, the Chinese mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold. The newspaper, quoting official sources, said China is considering changing its asset allocations during the financial tsunami in order to build up gold reserves "in a big way."

South African gold output falls by 17%
South African gold output fell 17.7 percent in volume terms, while overall mineral production was down 3.5 percent in September compared to the same month in the previous year, official statistics said on Thursday.

Aussie miner reports major gold find in Thailand
Australia’s miner giant Kingsgate Consolidated on Thursday said it has made a major new gold discovery in Thailand. The discovery, to be known as Chokdee, was been made in the central Thai gold belt, 20 kilometres north of Kingsgate's existing Chatree gold mine north or Bangkok. Sydney-based Kingsgate said a large gold-in-soil geochemical anomaly, covering approximately 30 square kilometres, surrounds the area of the discovery.

Aid to Fannie, Freddie May Top Expectations
Firms' Health Has Worsened During Crisis
The first of the Bush administration's major financial takeovers, the seizure of Fannie Mae and Freddie Mac, is poised to get more expensive and some analysts are warning that it may ultimately cost more than the government has suggested. Mounting troubles in the financial and housing markets have further undermined the health of the companies in the months since the government seized them in September, making it likely the Treasury will be required to pump billions of dollars into the mortgage-finance giants. Though not a cent has been spent, some analysts are warning the tab could exceed the $200 billion that the government set aside for capital infusions into the two companies.

Freddie seeks gov't aid after $25.3B loss
Freddie Mac seeking $13.8B in government aid after posting 3rd-quarter loss of $25.3 billion
Freddie Mac is asking for an initial injection of $13.8 billion in government aid after posting a massive quarterly loss. The mortgage finance company is making the first request to tap the $200 billion promised by the Treasury Department to keep it and sibling company Fannie Mae afloat after the two were seized by federal regulators more than two months ago. Freddie Mac said it expects to receive the money by Nov. 29. The McLean, Va.-based company posted a loss Friday of $25.3 billion, or $19.44 per share, for the third quarter. The results compare with a loss of $1.2 billion, or $2.07 a share, in the year-ago period. Analysts were looking for a loss of 89 cents per share for the latest quarter, according to Thomson Reuters. The loss was mainly due to a $14.3 billion charge to reduce the value of tax assets, but also was driven by $9.1 billion in writedowns on mortgage securities, and $6 billion in credit losses due to soaring mortgage delinquency rates and foreclosures.

U.S. Shifts Focus in Credit Bailout to the Consumer
The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers. But with a little more than two months left before President Bush leaves office, Treasury Secretary Henry M. Paulson Jr. is hoping to put in place a major new lending program that would be run by the Federal Reserve and aimed at unlocking the frozen consumer credit market. The program, still in the planning stages, would for the first time use bailout funds specifically to help consumers instead of banks, savings and loans and Wall Street firms.

Bernanke leaves door open to another rate cut
Bernanke leaves door open to another rate cut, warns markets remain under 'severe strain' Warning that financial markets remain under "severe strain," Federal Reserve Chairman Ben Bernanke pledged Friday to work closely with other central banks to fix global financial problems and left open the door to a fresh interest rate cut to help brace the sinking U.S. economy. "The continuing volatility of markets and recent indicators of economic performance confirm that challenges remain," Bernanke told a central banking conference in Frankfurt, Germany. "For this reason, policymakers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant."

Credit Crisis or a Collapsing Ponzi Scheme?
The Two Trillion Dollar Black Hole
Purge your mind for a moment about everything you’ve heard and read in the last decade about investing on Wall Street and think about the following business model: You take your hard earned retirement savings to a Wall Street firm and they tell you that as long as you “stay invested for the long haul” you can expect double digit annual returns. You never really know what your money is invested in because it’s pooled with other investors and comes with incomprehensible but legal looking prospectuses. The heads of these Wall Street firms have been taking massive payouts for themselves, ranging from $160 million to $1 billion per CEO over a number of years. As long as new money keeps flooding in from newfangled accounts called 401(k)s, Roth IRAs, 529 plans for education savings, and hedge funds (each carrying ever greater restrictions for withdrawing your money and ever greater opacity) everything appears fine on the surface. And then, suddenly, you learn that many of these Wall Street firms don’t have any assets that anybody wants to buy. Because these firms are both managing your money as well as having their own shares constitute a large percentage of your pooled investments, your funds begin to plummet as confidence drains from the scheme.

Looking for a Volker to Fight the Next Economic Battle
When your house is burning, there is no sense fretting over painting the fence. With the U.S. economy mired in what will likely be a recession of historic proportions—and an outright depression in some industries—it would be foolish to get too worked up over future inflation concerns. Oracle-of-the-moment Nouriel Roubini, in his Forbes.com column, forecast the following for next year: "The advanced economies will face stag-deflation (stagnation/recession and deflation) rather than stagflation, as the slack in goods, labor and commodity markets will lead advanced economies’ inflation rates to become below 1% by 2009."

Ex-Hitler youth's warning to America
'Every day brings this nation closer to Nazi-style totalitarian abyss' Because it has abandoned moral absolutes and its historic Christian faith, the U.S. is moving closer to a Nazi-style totalitarianism, warns a former German member of the Hitler Youth in a new book. "Every day brings this nation closer to a Nazi-style totalitarian abyss," writes Hilmar von Campe, now a U.S. citizen, and author of "Defeating the Totalitarian Lie: A Former Hitler Youth Warns America." Von Campe has founded the national Institute for Truth and Freedom to fight for a return to constitutional government in the U.S. – a key, he believes, to keeping America free. "I lived the Nazi nightmare, and, as the old saying goes, 'A man with an experience is never at the mercy of a man with an argument,'" writes von Campe.

Saudi Arabia buys $3.5bn of gold in two weeks
There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources. Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: 'Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present'.

Buying Binge Slams to Halt
Just as one crisis of confidence may be ending, another may be coming. The panic on Wall Street has eased in the last few weeks, and banks have become somewhat more willing to make loans. But in those same few weeks, American households appear to have fallen into their own defensive crouch. Suddenly, our consumer society is doing a lot less consuming. The numbers are pretty incredible. Sales of new vehicles have dropped 32 percent in the third quarter. Consumer spending appears likely to fall next year for the first time since 1980 and perhaps by the largest amount since 1942.

The US Dollar Has Got To Go
It is clear that the United States has relied on a continuous cycle of debt growth to fuel its economy. The engine of the US economy has been the US consumer, and consumer debt had to expand at a rate that far outpaced negligible consumer income growth in order for the US economy to continue to "grow." Expanding the amount of money and credit is easy under a fiat system when your currency is the world’s reserve currency. The US has, for years, been able to create new money out of thin air at will, with no meaningful monetary penalty extracted by its trading partners.

The Current State of the U.S. Economy and the Fed’s Response
(With Reference to Irrational Exuberance and Virgil’s Aeneid)
Richard W. Fisher - Remarks before the Texas Cattle Feeders Association
I am a little uncomfortable speaking to cattlemen. It is true that we have a family ranch in East Texas—a few thousand acres straddling the Titus and Franklin county lines. We don’t run a feed yard, but we did run up to 600 mother cows in our pastures until it finally dawned on us that cows graze on dollar bills. We never made a profit from those animals and now simply lease our grazing land to others. So I admit to knowing slim to none about cattle. We do own a couple dozen Longhorns, however. For the past few years, we have bred them with a pure, red Simmental bull that weighs in at over a ton and have covered our costs by selling the offspring. Our bull’s name used to be Mr. T. In honor of Alan Greenspan, I had Mr. T re-registered as Irrational Exuberance.

FED COVERS UP FINANCIAL CRISIS
Our "adversary" media have been extremely deferential toward those promoting the looting of the American taxpayers during the ongoing economic and financial crisis. However, Bloomberg News should be congratulated for filing suit against the Federal Reserve in an effort to disclose the securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks such as Goldman Sachs. "The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry," said Matthew Winkler, the editor-in-chief of Bloomberg News.

History Is Clear
More fiat money won’t solve this crisis; a return to sounder money will It is often said "there are no atheists in a foxhole." The other week, as world financial markets melted down, CNBC go-to wise man Art Cashen put a market spin on that familiar line drolly saying, "there are no libertarians in a market crash." The crusty Cashen is certainly right for the most part. Plenty of financial talking heads who argue for free markets and smaller government on a daily basis suddenly screamed that government must intervene to "save capitalism." Of course, the idea that government must print multiple blizzards worth of money to save a system where individuals and businesses trade with each other unfettered makes as much sense as presidents who claim that war must be waged to "protect the peace."

Communist Party hails role of labor unions in Obama win
Socialist activist pledges 'no let down' in helping White House bring 'change we need' The official magazine of the Communist Party USA has lauded the important role of labor unions in electing Sen. Barack Obama, and quotes socialist-aligned labor leaders hoping the unions can work with the president-elect to enact policies related to jobs, retirement security and health care reform. In a separate article, the Communist Party's Political Affairs magazine quotes a prominent socialist activist and longtime Obama friend petitioning the president-elect to push through a "single payer" health care system, or socialized universal medicine. In an article titled, "Special Interest or Class Consciousness? How Labor Put Obama in the White House," Political Affairs reports on polling data released earlier this week revealing the extent of union support for Obama.

Is America in a permanent decline?
The dollar is plunging. Detroit's car dominance is history. London claims to be outfinancing Wall Street. So maybe it's time to ask whether the era of US dominance is over for good. Forbes magazine's annual list of the world's richest people is eagerly anticipated as a barometer of wealth and power. And each year the mighty U.S., whose economy is often described as the envy of the world, has dominated the rankings. Until now, that is. In its most recent survey, the Forbes billionaire list changed dramatically: The United States made only four appearances in the top 20, compared with 10 names two years ago. India, by contrast, posted an astonishing four in the top 10, twice as many as the U.S. While America still leads the overall list, Russia, the new nation of raging capitalism, ranked second. Its 87 billionaires

The incredible plunging dollar
Long considered the bedrock of global finance, the US currency is now foundering -- a shift that for Americans means pricey European hotel rooms, $50 gas fill-ups and a bad case of the greenback blues. The plummeting value of the U.S. dollar has made stark headlines over the past year as politicians and economists have debated the causes and consequences of the once-mighty greenback's fall from grace. But the full impact of the sliding dollar didn't come home for Gregg Buchbinder, the chief executive of Emeco, a Pennsylvania manufacturer of high-end design furniture, until he made a business trip to Milan, Italy, this year.

Doubts cast on rescue of Detroit
Chris Dodd, chairman of the Senate banking committee, on Thursday cast doubt on the prospects for legislation to rescue the US car industry, saying there did not appear to be sufficient Republican support for a measure that would provide General Motors, Chrysler and Ford with an extra $25bn in ?emergency funding. “Right now, I don’t think there are the votes,” said Mr Dodd, adding he was “not inclined” to move ahead with the bill without bipartisan agreement. “There are some political considerations to be made,” he said. Nancy Pelosi, the Democratic speaker of the House, this week instructed staffers on the financial services committee to draft legislation to provide the emergency cash through the $700bn financial rescue package.

Chances Dwindle on Bailout Plan for Automakers
The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic Congressional leaders conceded that they would face potentially insurmountable Republican opposition during a lame-duck session next week. At the same time, hope among many Democrats on Capitol Hill for an aggressive economic stimulus measure all but evaporated. Democratic leaders have been calling for a package that would include help for the auto companies as well as new spending on public works projects, an extension of jobless benefits, increased food stamps and aid to states for rising Medicaid expenses.

End of the road for US automakers?
When times were good, Detroit's Big Three minted cash with big gas guzzlers and protested fuel-efficiency mandates. Now gas prices are soaring, customers are turning their backs and efforts to retool may be too little, too late. The news from Detroit just gets grimmer. With gas prices soaring, sales of fuel-guzzling SUVs and trucks are plummeting. The Big Three that once ruled the industry -- General Motors, Ford and Chrysler -- are cutting costs, shuttering plants and laying off workers. GM's share price is hovering near its lowest point in half a century; the company announced a whopping $15.5 billion loss in the second quarter of 2008. But at GM's Advanced Design Center in Warren, Mich., Bob Boniface is surprisingly optimistic about the future as he shows off a clay mockup of the company's Chevy Volt, a mass-market, electrically propelled vehicle that his crew is developing. "Business as usual just doesn't work for us and our customers anymore," says Boniface, design director for the Volt. "Our natural resources are limited, so we have to stay ahead of the technological curve."

Treasury Redefines Its Rescue Program
Plan to Buy Distressed Assets Is Abandoned In Favor of Aid to Loosen Consumer Credit Treasury Secretary Henry M. Paulson Jr. announced a series of moves yesterday that redefine the federal government's $700 billion rescue plan for the financial industry in order to tackle what he called a dire situation in the consumer credit markets. In recasting the program, the Treasury no longer plans to buy troubled assets from financial firms, the idea initially presented to the country, but instead will offer aid to banks and other firms that issue student, auto and credit card loans in part by jump-starting the market that provides financing for these companies. "This market . . . has for all practical purposes ground to a halt," Paulson said at a news briefing.

Ron Paul Says Bailout Law Is Morally Wrong
CNSNews.com asked Ron Paul whether forcing taxpayers to bailout deadbeat mortgage holders was just or unjust.

House panel discusses hedge funds
A U.S. House committee Thursday reviewed hedge funds, which the panel's chair called "virtually unregulated." Because they aren't required to report on their holdings, leverage or strategies, "hedge funds are virtually unregulated," said Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform. "Regulators aren't even certain how many hedge funds exist or how much money they control." That segment of the financial industry is "growing rapidly," Waxman said, adding he was concerned that hedge funds, as other financial sectors, could collapse.

Bush defends U.S.-style free enterprise ahead of summit
President George W. Bush fervently defended U.S.-style free enterprise Thursday as the cure for the world's financial chaos, not the cause. He warned foreign leaders ahead of a weekend summit not to crush global growth with restrictive new rules. "We must recognize that government intervention is not a cure-all," Bush said from Wall Street, setting his own tone for the two-day meeting that begins Friday in Washington seeking solutions to the economic crisis that has spread around the world. "Our aim should not be more government," he told the business executives. "It should be smarter government."

Signs of turmoil grow as G20 looms
Evidence of global economic turmoil mounted on Thursday as leaders of the G-20 group of nations began to arrive in Washington for this weekend’s summit. Germany plunged into recession after a steeper-than-expected 0.5 per cent fall in economic activity in the third quarter, new data showed. In the US, the government said the number of workers filing new claims for unemployment benefits rose last week to 516,000, its highest level since 2001. Meanwhile, China revealed that its industrial growth hit a seven-year low.

Sarkozy Pushes for Abandonment of Dollar as World Reserve Currency
French President Nicolas Sarkozy said on Thursday ahead of the G20 meeting of world leaders: "I am leaving tomorrow for Washington to explain that the dollar cannot claim to be the only currency in the world..., that what was true in 1945 can no longer be true today". There have been many previous indications that the dollar would not remain the world's reserve currency for long. But this is a dramatic statement by a close American ally.

The G-20’s Secret Debt Solution
If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks ... think again. Behind the scenes, a far more fundamental fix is being discussed - the possible revaluation of gold and the birth of an entirely new monetary system. I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend. Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.

G20 Summit Preview
Peter Barnes, David Buik, Bgc Partners, and University of Toronto Professor John Kirton discuss what to expect from the G20 Summit.

Bergsten on the G20 Summit
Former Assistant Treasury Secretary Fre Bergsten discusses what resolutions are needed from the G20 Summit

Paulson Credibility Takes Another Hit With Rescue-Plan Reversal
Henry Paulson became Treasury secretary 28 months ago, when he was at the top of the financial world: Wall Street's best-paid chief executive officer, capping his career with a high-profile sojourn in public service. Today, two months before he leaves office, Paulson is a reduced figure, damaged by the financial-market meltdown that happened on his watch and by the government's struggles to respond to it.

Media Should Demand Paulson's Head
Media cheerleading for the $700-billion Wall Street bailout—labeled by House Republican Leader John Boehner a “mud sandwich”—may have come to an end. It was big news on the three network newscasts on Wednesday night that Treasury Secretary Henry Paulson basically admitted that the plan hasn’t worked, and that he has changed his mind about what is required to save the U.S. financial system… Paulson, former CEO of Goldman Sachs, is not only rich; he is supposed to be smart. Our media were surprised by his turnaround. Some are now questioning his credibility and competence. They should go further and demand his resignation.

Banks Say Plan to Guarantee Their Debt is Flawed, Ask For a Better Deal
In the wake of the Treasury Department foisting equity infusions onto nine banks, not all of which wanted or needed them, the industry has decided to get in front of these initiatives. The latest bright idea. of guarantees of bank debt, gets a thumbs down from the intended beneficiaries. But sadly, it isn't the general concept they object to, but the particular version on the table. Predictably, they want to pay less and get more. One wonders if the government bond guarantee program was designed with intent so as not to be used, but be ready in sketch form to be sweetened if conditions deteriorated further (note this plan is under the aegis of the FDIC, and Shiela Bair appears to be straightforward, but the concept was likely cooked up at the Treasury and the details negotiated with the FDIC).

SHOW ME THE BAILOUT MONEY
Walt Schmidt of FTN Financial discusses the bailout

Fed's Plosser Sees Weaker Growth in Q4 than in Q3
Speaking at the Economic Club of Pittsburgh, Philadelphia Fed President Charles Plosser (voter) said U.S. GDP should contract somewhat more sharply in Q4 than in Q3, and that growth will likely weaken in the first half of 2009. "Recent data - including the monthly data on housing, auto sales, consumer spending, and industrial production - have all pointed to a significant weakening of the economy," said Plosser in his opening remarks. "What's more, the stress in financial markets has now become global, weakening the prospects for growth among many of our trading partners. Since our economy has benefited substantially from strong exports over the past two years, the prospect of a global slowdown further contributes to a weaker outlook for the U.S. economy going forward."

The High Priests of the Bubble Economy
Those following the meeting of Barack Obama's economic advisory committee could not have been very reassured by the presence of Robert Rubin and Larry Summers, both former Treasury secretaries in the Clinton administration. Along with former Federal Reserve Board chairman Alan Greenspan, Rubin and Summers compose the high priesthood of the bubble economy. Their policy of one-sided financial deregulation is responsible for the current economic catastrophe.

Yen Rises as Global Recession Looms Before G-20 Leaders Meet
The yen rose, heading for weekly gains against the dollar and the euro, on speculation a prolonged global recession will prompt investors to pare holdings of higher-yielding assets funded in Japan. Japan's currency also climbed this week against the Australian and New Zealand dollars on speculation a Group of 20 nations summit will fail to reach a consensus on how to tackle the global financial crisis. The euro and the pound headed for weekly declines on speculation central banks in Europe and the U.K. will lower interest rates as growth slumps.

Inflated Credentials Surface in Executive Suite $$
Inflated academic credentials in the nation's executive suites may be more common than generally thought. A survey of 358 senior executives and directors at 53 publicly traded companies has turned up at least seven instances of claims that individuals had academic degrees they don't have. In some cases, the slip-ups don't appear to have been intentional, and may have been caused by misunderstandings. Among the executives whose credentials don't check out: Dennis Workman, chief technical officer at Trimble Navigation Ltd., a big maker of global-positioning-system devices; and James DeHoniesto, until Wednesday the chief information officer at Cabot Microelectronics Corp., a supplier of chemicals and pads used to polish microchips.

MGM Mirage CEO to Resign Amid Questions About MBA $$
MGM Mirage Chairman and Chief Executive J. Terrence Lanni, one of the gambling industry's most powerful figures, announced late Thursday he would step down from his executive posts. Mr. Lanni, who is to leave Nov. 30, said his resignation was for personal reasons. The resignation was announced publicly, however, on a day when Mr. Lanni found himself in a dispute with his alma mater over his academic credentials after questions were raised by The Wall Street Journal. Mr. Lanni said, "I must stress that this issue has nothing to do with my decision." The executive, who for years has been MGM Mirage majority shareholder Kirk Kerkorian's top man in Las Vegas, will remain on the company's board. Mr. Lanni recommended that Jim Murren, the company's chief operating officer, take the reins as CEO. The company's board still must vote to approve Mr. Murren.

ARE YOU BEING HAD?
Barry Minkow of the Fraud Discovery Institute discusses how certain executives are "fudging" their resumes.

CalPERS' housing portfolio loses 35% in a year
The country's largest public pension fund suffers a paper loss of $3.3 billion for the year ended June 30. An analysis says the loss was amplified by loans taken to ramp up the investments. Reporting from Sacramento -- The value of residential real estate investments owned by the country's largest public pension fund has plummeted 35% -- a paper loss of $3.3 billion for current workers, retirees and their state and local government employers. The California Public Employees' Retirement System reported Wednesday that in the year ended June 30 its real estate portfolio declined to $6.08 billion from $9.36 billion, based on 461 independent appraisals of its investments in 288,000 housing units across the country.

BANKS TANK ON HANK'S RESCUE DO-OVER
Wall Street's remaining banks tumbled to new lows yesterday and helped drag down world markets after Uncle Sam blocked rescue billions from disappearing into banking's bottomless balance sheets. Citigroup, Goldman Sachs, Bank of America and American Express were among financial stocks pounded to new yearly lows following Treasury Secretary Hank Paulson's sudden switch of $350 billion in rescue money away from buying financial institutions' toxic mortgage assets. Instead, the billions are going into propping up consumer credit.

Restoring trust in the financial system
As the world economy struggles to recover from the worst financial crisis since the Great Depression, we are reminded of the fundamental truth that every financial system depends on trust. Market participants need to believe that the counterparties they deal with will fulfill their obligations. That trust has been severely damaged as our financial institutions have suffered life-threatening, self- inflicted wounds by purchasing over a trillion dollars of complex mortgage-backed securities, secured by dicey loans and financed on the thinnest of margins with short-term debt.

Revenue from bailout bill goes toward debt, says Congressman Barney Frank
Congressman Barney Frank says revenue from the $700 billion bailout package will go toward the national debt not directly to the taxpayers as Senator Obama has suggested.

Conservatism: More Relevant Than Ever
How fitting that, having campaigned on conservative themes throughout the fall, President-elect Barack Obama’s acceptance speech concluded with words that should warm the heart of conservatives everywhere. "This is our time," he said, to "reaffirm that fundamental truth that, out of many, we are one. That while we breathe, we hope. And where we are met with cynicism and doubts and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can." An abiding belief in our country's greatness, tinged with optimism, has long been a cornerstone of conservatism. And Obama’s been tacitly leaning toward conservative ideas since he became the Democratic nominee.

Markets Pricing in 80% Chance of 50 bps Fed Cut as U.S. Jobless Claims Soar
Fed funds futures are pricing in an 80% chance of a 50 bps rate cut for the Dec. 16 FOMC meeting, following an initial jobless claims report in the U.S. that hit a seven-year high. However, the implied probability of a minimum 25bp rate cut remains fully priced in. The U.S. Department of Labor reported 516k first-time claims for unemployment benefits last week compared with the previous 484k level, while continuing claims rose to their highest level since 1983. After the weak employment report, economists from RDQ Economics anticipate a rate cut by the Fed in December.

Obama Pushes for $50 Billion for Automakers, Oversight Czar
President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush's support, people familiar with the matter said. Obama's economic advisers are now convinced that if General Motors Corp. doesn't get a financial lifeline soon, it will have to file for bankruptcy by the end of January. And if the companies don't get almost $50 billion, Obama will be dealing with the issue again by next summer.

Textron, AEP Ask Fed to Buy More Commercial Paper
A group of companies including Textron Inc., Home Depot Inc. and Honda Motor Co. are pressing the Federal Reserve to expand purchases of commercial paper to include them, two people briefed on the matter said. The coalition, which also counts Dow Chemical Co. and Nissan Motor Co. as members, wants the Fed to go beyond top-rated paper and buy debt with the second-highest grade, the people said on condition of anonymity. American Electric Power Co. Chief Financial Officer Holly Koeppel said the group is seeking to add more companies and preparing a letter to outline its case.

Foreclosure of a dream
Let us return to the root of the financial crisis, the US housing market. It is still rotting. Prices in the 20 cities covered by the Case-Schiller index have been falling for almost two years. Data from RealtyTrac released on Thursday shows that in the month of October alone, a quarter of a million US households received foreclosure filings. In Nevada, a state suffering from some of the worst fall-out from the housing boom, there has been one filing for every 11 homes so far this year. Estimates vary, but roughly a quarter of mortgaged homes in the US are worth less than the debt secured against them.

Unemployment Spurs Rise in U.S. Subprime Delinquencies
Rising unemployment is pushing up delinquencies in US subprime mortgages at an “alarming” rate, according to CreditSights. “The latest numbers from our Subprime RMBS sample show a huge jump in delinquencies in the past two months, ” CreditSights says in a new report: Subprime Pool Performance Update: Delinquencies Rocket as Unemployment Rises. All three of the vintages that we track posted their largest one month increases in October and the largest three month increases since March. As the chart shows, delinquencies as a percentage of the remaining balance in 2005 subprime RMBS had even started to fall despite the remaining balances continuing to shrink.

Prosecutors Going after Fraudulent Mortgage Borrowers
While lenders are coming under increased pressure to help borrowers avoid foreclosure, the U.S. Attorney in San Francisco has launched an effort to pursue fraud cases against subprime borrowers who lied on their loan application. “In my way of thinking, it didn’t make any sense for us to excuse any one component of the group that was involved in this phenomenon,” said U.S. Attorney Joseph Russoniello. "So while we obviously have an interest in the predatory lending practices, we’re also finding from our investigators that significant numbers of borrowers submitted falsified applications for a mortgage."

Dennis Kozlowski on corporate greed, Obama, his denied appeal, & Wall Street bailout

How to Solve the Excess Supply in Housing
Allan Meltzer is the latest to develop "a plan to rebuild the housing market." Although I have tremendous respect for Professor Meltzer, we don't think his plan addresses the real problem. He writes, "The main problem in Britain and the U.S. is an excess supply of unsold houses." More accurately, the main problem is an excess supply of housing units of all types. . . . . . . . So what's the solution to the excess supply of housing? Fire would be one solution, but we don't use that too much outside of Detroit. The other solution: a larger population. We add about one percentage point to our population every year, so we'll eventually grow our way out of this problem. But there are no fast solutions.

Rebuilding US housing
No later than the summer of 2007, the consequences of unaffordable mortgage interest costs for US homeowners were becoming evident. As the credit crisis emerged, two approaches to rescue could have been taken. One was to bail out homeowners, reducing foreclosures. The other approach was to bail out lenders. These approaches were not then, and are not now, mutually exclusive. By opting to keep lending institutions intact, officials may have assumed that lenders would be more helpful to borrowers. The stimulus package, intended to forestall recession rather than prevent systemic collapse, amounted to a drop in the bucket of US consumer spending, which drives more than 70 per cent of the nation’s economy. “Rebate” cheques of several hundred dollars were meaningless to property owners losing tens of thousands, or hundreds of thousands of dollars of value in equity as foreclosures undermined prices of surrounding houses. On the whole, US mortgage rates remain resistant to Fed rate cuts and to the reversal of inflationary forces. Falling housing prices remain at the heart of the ongoing credit crisis.

'If General Motors were to lose out, I think Detroit would go under'
In the deserted streets of a city in decline, a burst of graffiti near the once mighty General Motors plant sums up the mood. HELP, a vandal declares in red ink. IT DOESN'T EXIST, answers another, in bright green. You can forgive the people of Sterling Heights their pessimism. Cutbacks at the GM plant that sustains the community are palpable everywhere. Theatres are dark, restaurants empty. Most strikingly of all, petrol stations offer cheap gasoline, but there are few drivers wanting to pump it. Every shoulder here carries a weight of worry for the future of GM, a great American brand name now running on empty. But Dale Baus, 51, is holding on to what passes for hope. The carmaker is facing a possibly terminal cash shortage if it doesn't get some form of loan by Christmas. But Baus is headed for bankruptcy even before then - unless he can find a new job imminently.
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Sun Microsystems to cut up to 6,000 jobs
Sun Microsystems Inc said on Friday it will cut 5,000 to 6,000 jobs, as the economic crisis compounds the company's struggles with depressed demand for its high-end business computers. The job cuts represent 15 to 18 percent of its workforce, and are part of a broader restructuring plan it has undertaken in hopes of saving $700 million to $800 million annually. The Santa Clara, California-based company expects to incur total charges in the range of $500 million to $600 million over the next 12 months in connection with the plan, which also includes realigning its software division. Rich Green, who ran the software division, is leaving the company.

Lower Gas Prices Don’t Make Americans Feel Rich
Drivers are breathing a sigh of relief as gasoline prices plunge across the country. Gas below $1.50 a gallon has appeared in a few places in recent days, and the national average has dropped almost in half since July, to $2.18 a gallon. But even as worry about gas prices fades, it is being replaced by fear about the broader economy. Each 10-cent drop in gasoline prices puts $12 billion a year back in consumers’ pockets. Instead of spending that cash, people are trying to save it or cut their debt, many said in interviews.

More Americans Struggle With Loans, Credit Cards
Delinquencies on U.S. subprime mortgage securities, auto loans and credit cards are soaring as job losses engulf borrowers who had navigated the credit crunch, threatening to worsen the global credit crisis. Subprime mortgage delinquencies rose to a record level in October as rates reset higher and as unemployment increased, research firm CreditSights said.

U.S. Jobless Claims Reach Seven-Year High of 516,000
First-time claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession, as weakening demand led companies to fire more workers. Initial jobless claims increased by 32,000 to a larger- than-forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington. The total number of people on benefit rolls jumped to the highest level since 1983.

Christie's art auction disappoints
Sales at Christie's Post-War and Contemporary Art auction totaled $113.6 million, well under the auction house's estimate of $227 million to $327 million. It was another disappointing night for the art world, as sales at Christie's Post-War and Contemporary Art auction came in far below estimates, capping off a dismal fall season for the art market. The sale totaled $113.6 million, well under its estimate of $227 million to $327 million. Of the 75 works for sale, only 51, or 68% of the lots, found buyers.

Consumers stop shopping, creating pain for retailers, economy
The magnitude of the decline in consumer spending is coming into sharper focus, showing a shift in shoppers' behavior not seen since in decades that's causing a lot of pain for the retail industry and the economy. Best Buy Co., a key shopping destination for the holiday season, slashed its earnings forecast Wednesday and said "seismic" changes in consumer behavior have created "the most difficult climate" it had ever seen. Macy's Inc. swung to a loss in the third quarter and warned that the holiday season would be "a nailbiter." It predicted that same-store sales, or sales at stores opened at least a year, would fall more than 10 percent in November.

LV Sands to cut 11,000 jobs at Macau
MACAU, China -- As reported by AFP: "Up to 11,000 construction workers are to lose their jobs as US gaming giant Las Vegas Sands delays a huge development in gambling haven Macau, the head of Las Vegas Sands Asia said Thursday. "Stephen Weaver told a news conference that until the company could secure additional financing, it had taken the 'conservative' measure of suspending work on the project, leaving the 11,000 workers on the site facing dismissal.

Factories Shut, China Workers Are Suffering
CHANG’AN, China — Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children’s school tuition. Millions of migrant workers formerly employed in Guangdong - the manufacturing hub of China's south - are heading home in the wake of factory shutdowns caused by the global economic slowdown. But the plans of Mr. Wang and thousands of co-workers unraveled at noon on Nov. 1, when the Taiwanese chairman of their ailing shoe factory climbed over a factory wall to flee the country and his debts. That left several American shoe companies with unfilled orders and 2,000 workers without jobs. "He just ran without telling anyone," Mr. Wang said.

Cause for disquiet over Asia’s hyperactive watchdogs
Financial authorities across Asia are lining up to take action in response to losses suffered by retail investors in structured investment products sold by banks. South Korea’s top financial regulator has ordered a bank to compensate an investor for half her losses, ruling that it misled the client into believing that the mutual fund was a deposit product. Authorities in Hong Kong are busy investigating whether local banks mis-sold mini-bonds, or credit-linked securities, guaranteed by Lehman Brothers, which are almost worthless. Goh Chok Tong, the chairman of the Monetary Authority of Singapore, has promised stricter measures for sales of structured products. The hyperactivity is partly a reflection of the questionable sales practices that occurred towards the end of the long bull market. More invidiously, the authorities are reacting to political pressure in order to be seen to be acting. Too many retail investors in Asia have lost their shirts on products they believed were ultra safe, and protest groups have become increasingly vocal. But the swiftness of the regulatory response is unnerving some. It is barely two months since the Lehman collapse and instant retribution against banks – not to mention instant restitution for investors – is neither feasible nor desirable. Authorities must resist the political lynch mob and ensure they have the facts before passing judgment.

SPREADING ISLAM THROUGH CHRISTIAN & PUBLIC SCHOOLS
"Medieval and Early Modern Times captures each student's imagination by starting every chapter with a story." The McDougal-Littell Website

"While seventh-grade textbooks describe Islam in glowing language, they portray Christianity in harsh light.... Islam is featured as a model of interfaith tolerance...." The American Textbook Council, [2]

"When the sacred months are over slay the idolaters wherever you find them.."[3] Qur'an [Sura] 9:5

Our friend Tom enrolled his seventh grade son in a local Christian school this year. But he felt a bit uneasy when he saw the new history text. And as he leafed through the pages of World History: Medieval and Early Modern Times (a standard nationwide textbook), his concern grew. The dramatic images, evocative suggestions and interesting group assignments would probably prevent boredom, but what would his son actually learn? How accurate were the lessons? And most important: What kinds of values would they instill?

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Thurs 11.13.2008

Eric and Joe have been right on target for a long time.
Random sampling of shows from the last two years:

Patriot Radio News Hour - NOVEMBER 15, 2006

Patriot Radio News Hour - JULY 6, 2007

Patriot Radio News Hour - AUGUST 9, 2007

Patriot Radio News Hour - NOVEMBER 15, 2007

Is the United States Bankrupt?
Is the United States bankrupt? Many would scoff at this notion. Others would argue that financial implosion is just around the corner. This paper explores these views from both partial and general equilibrium perspectives. It concludes that countries can go broke, that the United States is going broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal institutions is essential to secure the nation’s economic future. The paper offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system.
--- Federal Reserve Bank of St. Louis Review, July/August 2006, 88(4), pp. 235-49.

The Five Stages of Collapse, Where Are We?
Stage One of the Five Stages of Collapse is Financial Collapse. Take a look at the charts in Really Scary Fed Charts: NOV, US Bankrupt? It would appear that stage one is well under way.

Fed Defies Transparency Aim in Refusal to Disclose (Update1): “The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

“The collateral is not being adequately disclosed, and that's a big problem,” said Dan Fuss, vice chairman of Boston- based Loomis Sayles & Co., where he co-manages $17 billion in bonds. “In a liquid market, this wouldn't matter, but we're not. The market is very nervous and very thin.”

Economic Nuclear Winter
This is a refreshingly blunt and realistic assessment of the global financial situation from China. I don't even think we can blame the evil Black Swan for this... because it really was entirely predictable AND avoidable. Nuclear Winter: “The global financial crisis is far from over, and now a global economic crisis seems to be unfolding. Recent economic data suggests that the global economy is decelerating rapidly. Even though the US Congress reluctantly passed the USD 700 billion Wall Street rescue plan, stock markets are already focusing on the economic downside. Many investors are bearish enough to talk about a “nuclear winter” for the global economy. How bad could it be?

Debt Clock Runs on Borrowed Time
John Stepek of MoneyWeek magazine says, "Federal Reserve chief Ben Bernanke has studied the Depression, they say. He knows what to do." Feeling particularly feisty, I immediately felt the need to burst in with a rude remark ("Hahahaha! What a load of crap, and Bernanke is an idiot!") because if there WERE a way to do something to prevent economic collapse from debt-addled stupidity - which is so timelessly universal that it is almost a cliché - then somebody in all the rest of world history would have thought of it by now; and they have all literally thought of, and done, everything that the brightest people of their day could think of, and nothing has ever worked. Ever. Not once. Ever!

Foreclosures up 25 percent from year ago
U.S. foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac. Foreclosure filings -- default notices, auction sales notices and bank repossessions -- rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac. That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.

China Gets It Right, But Hurts America
The announcement of a massive stimulus package
of almost $600 billion shows that China means business
not just in reviving, but also in rejuvenating its economy.
As both America and China confront the prospect of a global depression, both countries have chosen to fend off potential unrest with liberal government spending. But the Chinese move is bolder and more likely to succeed. The most remarkable aspect of the Chinese stimulus plan is its enormous size. Despite the massive publicity surrounding its formidable growth rate, the Chinese economy is still ‘only’ one-fifth the size of America’s. Relative to its economy, China’s stimulus package would be the equivalent of a $3 trillion package in America. The Bush-Greenspan asset booms were so extreme, and the resulting deleveraging so massive, that government actions in multiples of trillions of dollars are needed to make any meaningful impact in slowing the asset bust. Based on this yardstick we can see that the differences in the Chinese and American approaches could not be more dramatic. The divergence bodes ill for the future.

Gold May Spike to $2000 in Medium Term
Gold can easily go up to $1500-$2000 in the medium-term, says Johann Santer, MD at Superfund Financial Hong Kong. As such, he tells CNBC's Martin. Soon that gold at $710 is a good entry point.

Gold May Exceed $1,000 in Three Years, Morgan Stanley Says
Gold may climb above $1,000 an ounce in 2011 as global mine output drops, mining costs rise and demand increases, Morgan Stanley said. "Mining production actually peaked in 2001 and has since been declining," the bank's commodity research analyst Hussein Allidina said in an interview in Singapore. "When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases."

Gold, Silver, Economy + More
Recently the fane-stream media was asking how our free enterprise system of capitalism could have failed us so utterly. How, they asked, could we have gotten into this disaster if bad investments were properly weeded out in a timely manner by the markets, and were not allowed to accumulate to such devastating levels of toxicity, as they should have been in such a system? These people are either morons, or liars, or both. This is not the failure of a free enterprise system of capitalism because our economy is no longer based on a free enterprise system of capitalism, and has not been for at least two decades. Any pretense of a free enterprise system of capitalism ended when, in the aftermath of the Stock Market Crash of 1987, which crash was orchestrated by the Illuminati during Paul Volcker's term at the helm of the Fed to provide the excuse needed, President Reagan signed an Executive Order forming the President's Working Group on Financial Markets, also known as the Plunge Protection Team, or PPT, which has, ever since, totally and completely dominated and manipulated virtually all markets worldwide on a 24/7 basis. The PPT's authority and mandate are illegally abused on a daily basis.

Gold Investments Market Update - Rollercoaster Markets Continue
The great global deleveraging continues. In a world that has become addicted to debt fuelled growth, the idea that readily available credit may no longer be available, has scared many into facing the truth; credit is not free and should never have been priced as such. Over the past few weeks markets have continue to sell off, outlook for production and consumption are all bearish and thus oil continues its volatile ride losing $2 overnight to its current level of $58 a barrel. (Month to date it is down over 40% in USD terms and more than 62% in euro terms).

JPMorgan CEO Jamie Dimon says
economic recession could be worse than markets crisis
The economy's downturn could end up being worse than the recent crisis in the financial markets, JPMorgan Chase & Co. CEO Jamie Dimon said Wednesday at a banking conference. "We think (the recession) could be deep; we don't know how deep," Dimon said. "We think the economy could be worse than the capital markets crisis." He said the government's actions to pump cash into the financial system have been "powerful medicine" to help fix the dislocated financial markets. But even an eventual normalization in the markets "may not stop us from having a deep recession," Dimon said.

U.S. Slump May Be Longest in Decades as Growth Fell Off 'Cliff'
The U.S. downturn will be the longest in three decades, and the drought in consumer spending may be the worst ever, according to economists surveyed by Bloomberg News. The implosion of credit markets last month will cause the economy to shrink at a 3 percent annual rate in the fourth quarter and decline at a 1.5 percent pace in the first three months of 2009, according to the median estimate of 59 economists surveyed Nov. 3 to Nov. 11. Following last quarter's 0.3 percent drop, the slump would be the longest since 1974-75.

A Recipe for the Next Great Depression
Along with the ascendancy of the Democratic Party to control of the executive and legislative branches of government has come the repetition of the tired, old mantra of an alleged need for a "new New Deal." God help us. The original New Deal unequivocally made the Great Depression much worse, and much longer-lasting, than it would otherwise have been.

Treasury May Bail Out Credit Card, Other Loan Industries, Paulson Says
Treasury Secretary Henry Paulson on Wednesday announced that the federal government no longer plans to buy troubled mortgage-related assets from private banks but will expand the scope of its Troubled Asset Relief Program (TARP) to include non-bank financial and credit institutions. The announcement came the same day it was reported that credit card giant American Express needs $3.5 billion in federal assistance to stay afloat.

Uncle Sam's Credit Line Running Out?
The yield curve and credit-default swaps tell the same story: The U.S. can't borrow trillions without paying a price.
WHAT ONCE WAS UNTHINKABLE has come to pass this year: massive bailouts by the Treasury and the Federal Reserve, with the extension of billions of the taxpayers' and the central bank's credit in so many new and untested schemes that you can't tell your acronyms or abbreviations without a scorecard. Even more unbelievable is that some of the recipients of staggering sums are coming back for a second round. Or that the queue of petitioners grows by the day. But what happens if the requests begin to strain the credit line of the world's most creditworthy borrower, the U.S. government itself? Unthinkable?

Life Insurers Facing Cuts in Ratings
Life insurance companies, hobbled by real estate investments and committed to paying some costly retirement contracts, face more cuts in their credit ratings before the year is up and have little choice but to seek capital in unforgiving markets. Companies have until Friday to apply for federal help under the Troubled Asset Relief Program, or TARP, but only about half of the life insurance industry will even be allowed to apply. The Treasury has said life insurers must be affiliated with banks or thrifts that are regulated at the federal level. Some big state-chartered insurers that are interested, like Hartford Financial Group, appear to be shut out. Two other companies, Lincoln Financial, based in Philadelphia, and Genworth of Richmond, Va., have said they were interested, but would not be eligible.

Healthcare reform gets backing in Congress
Efforts to reform the U.S. healthcare system got a big boost on Wednesday as a powerful Democratic senator unveiled a plan similar to President-elect Barack Obama's and an analysis said the financial crisis could accelerate any efforts, not hinder them. Max Baucus, a Montana Democrat who heads the U.S. Senate Finance Committee, proposed creating a national insurance exchange, similar to Obama's idea, through which millions of uninsured Americans and businesses could get health coverage.

Dow Down 411 on Investor Worries
Shares on Wall Street tumbled more than 4 percent on Wednesday as frightened investors wondered how long the economic slowdown would last, how deep it would cut and whether Washington could do anything to stop the bleeding. Financial markets compounded their early losses in afternoon trading, ending down for a third consecutive day. The Dow Jones industrial average fell 411.30 points, or 4.7 percent, to close at 8,282.66, while the broader Standard & Poor’s 500-stock index lost 46.65 points, or 5.2 percent, to close at 852.30. The index was down nearly 9 percent for the week.

Oil falls to $55 on grim US economic outlook
Oil falls to $55 as bad US economic
news heightens fears of severe recession
Oil prices slid to near $55 a barrel Thursday in Asia as more bad economic news from the U.S. heightened fears of a severe global downturn that will pulverise demand for crude. Light, sweet crude for December delivery was down 81 cents to $55.35 a barrel, after falling as low as $55.03, in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. "There are fears of reduced demand through 2009," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "Market sentiment is extremely bearish. It seems like there's nothing that can stop the bears."

Senate Finance Chairman Calls for Mandatory Health Insurance
The Democratic chairman of the Senate Finance Committee unveiled a health-care reform plan Wednesday that incorporates many of the provisions of President-elect Barack Obama’s plan, but goes one step further -- it would require everyone to eventually buy insurance coverage. Sen. Max Baucus (D-Mont.) proposes that medical insurance cover pre-existing conditions, as Obama’s plan does, and would set up an insurance exchange to help people and businesses find insurance if they need -- but don’t have -- coverage.

Crisis Cogitations
Everyone must be wondering where this "unprecedented global financial crisis", (the World Bank’s words), is heading. What follows, for what they are worth, are my cogitations on this crisis. There is no doubt that the world is dealing with a credit/debt deflation of historic proportions. It is worth spending a little time understanding how such events are precipitated. An economy, as in personal households, corporations and other entities, is financially sound when expenditures are less than incomes. The difference can be saved and invested to produce additional income and capital growth in the future.

"Goldman big winner in government's revised bailout of AIG"
Just as one wonders why the government backed down on a deal that was appropriately punitive to AIG (at worst, it was an orderly liquidation, which would be an acceptable outcome, and if management could sell enough businesses at good prices, they might be left with a rump of a company to operate). And now, the Wall Street Journal backs down from a headline that accurately and pointedly describes who does best out of these inexplicably sweetened terms. Both roads appear to lead to Goldman.

Hedge Funds Lost $100 Billion on Investor Withdrawals
The global hedge fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Man Group Plc were hammered by investor redemptions. Funds fell an average 3.3 percent, based on preliminary figures from the Singapore-based data provider, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. That compares with a 19 percent slide in the MSCI World Index last month.

U.S. Shifts Focus in Credit Bailout to the Consumer
The Treasury Department on Wednesday officially abandoned the original strategy behind its $700 billion effort to rescue the financial system, as administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers. But with a little more than two months left before President Bush leaves office, Treasury Secretary Henry M. Paulson Jr. is hoping to put in place a major new lending program that would be run by the Federal Reserve and aimed at unlocking the frozen consumer credit market.

Fed, FDIC and Treasury Issue Joint Statement on Bank Practices
The Department of the Treasury, the Federal Deposit Insurance Corporation and the Federal Reserve issued a joint statement highlighting recent measures taken to bolster the financial system, and offering recommendations for financial institutions on how to navigate the crisis. "The ongoing financial and economic stress has highlighted the crucial role that prudent bank lending practices play in promoting the nation's economic welfare," reads the press release.

Paulson Abandons Asset-Purchase Plan, Expands Capital Injection Approach
U.S. Treasury Secretary Henry Paulson said the original idea behind the $700 billion rescue package is no longer an effective use of the allocated funds. That approach has been abandoned in favour of the Capital Purchase Plan, which is already directing liquidity into financial firms, he announced Wednesday. Paulson said that when he originally asked for $700 billion to rescue the financial sector by purchasing illiquid assets from financial firms, he considered such an approach "the most effective means of getting credit flowing again." During two weeks of deliberating with Congress, however, market conditions deteriorated "considerably," and he realized that a more timely approach would be necessary.

Paulson Claims 'Broad' Authority for Spending $700 Bill...
When asked if there was any limit on what he could purchase with the $700 billion authorized by the bailout bill, Treasury Secretary Paulson responded that he had "broad" authority.

Treasury Not Planning to Buy Bad Loans, Assets $$
Treasury Considers Private Role in TARP
Secretary Henry Paulson said the Treasury has put a plan to purchase illiquid mortgage-related assets on hold. Meanwhile, the Treasury Department, signaling a new phase in its $700 billion financial-rescue plan, is considering requiring that firms seeking future government money raise private capital in order to qualify for public assistance, according to people familiar with the matter. The move isn't expected to apply to the existing $250 billion capital-purchase program, which is already injecting money into banks. But Treasury is considering attaching such conditions to any of its future capital investments, these people said.

Treasury's Paulson Announces Changes to TARP
Delivering an update to the Troubled Asset Relief Program (TARP), U.S. Treasury Secretary Henry Paulson said that purchasing troubled assets - the original intention of the $700 billion rescue package - is not an effective use of the program. "It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets - our initial focus - would take time to implement and would not be sufficient given the severity of the problem," he said.

Gov't Considers Changes to Mortgage Program
The government may let more borrowers qualify for a $300 billion program designed to let troubled homeowners swap risky loans for more affordable ones, a top Bush administration official said Wednesday. The program, included in a housing bill passed by lawmakers over the summer, was launched Oct. 1. But there are concerns that lenders won't participate because they have to voluntarily reduce the value of a loan and take a loss. "We're concerned that the program - as constructed today - is limiting people's availability," Department of Housing and Urban Development Secretary Steve Preston said in an interview with Associated Press writers and editors.

Paulson backs off asset plan; crisis cures at risk
The U.S. Treasury backed away from using a $700 billion bailout fund to cleanse bank balance sheets of bad mortgage debt, while Europe reported more gloomy economic news, fanning fears of a worldwide recession. Global stock markets fell, with Wall Street down for a third straight day and the tech-heavy Nasdaq closing at a five-year low. The price of oil, which depends on global growth, tumbled 5 percent to just above $56 a barrel.

Treasury's Waffling Rattles Confidence
The Treasury Department is hoping that the third time's the charm in developing its plan to stabilize the financial markets. But the haphazard manner in which the program has been structured has left some wondering whether the folks in charge are equipped to handle the crisis. A brief recap of the Troubled Asset Relief Program's demise: First, Treasury Secretary Henry Paulson suggested buying $700 billion worth of banks' troubled assets. His proposal to Congress was briefly sketched out on three sheets of paper, with few strings attached.

Asia slumps amid bail-out U-turn
Stock markets across Asia have followed the
downward trend set by sharp falls on Wall Street,
as fears grow over the state of the US economy.
The falls came as the US signalled a shift in policy on its $700bn bail-out. US Treasury Secretary Henry Paulson said he would focus on taking stakes in banks rather than buying up the banks' toxic mortgage debts. Meanwhile Germany is expected to announce officially on Thursday it is in recession. The European economic powerhouse is likely to report two quarters of negative growth.

'Rescue' Is Now Out of Control
At the rate Goldman Sachs shares have been falling lately, they could reach our $29 "hula target" by Thanksgiving. Barely a week ago, we predicted a plunge to $29 when GS was trading above $90; yesterday the stock hit $64. At the time, we vowed that if the forecast did not pan out, we’d don a grass skirt and dance the hula in Times Square in the middle of Feburary. So far, and unfortunately for Goldman’s shareholders and partners, we haven’t had much cause for worry.

Treasury Debt Hasn't Lost Much Luster $$
Investors may be trying to shed debt, but they seem perfectly willing to help the U.S. government get ever deeper into hock. On Wednesday, the Treasury Department is auctioning a record $20 billion in new 10-year Treasury notes, headlining a jaw-dropping $183 billion in new government debt for sale this week. So far, despite anxiety about possible trillion-dollar budget deficits, appetite for new government debt has been robust. An auction of new three-year notes on Monday was more than three times oversubscribed. But bond-market vigilantes are getting antsy about the durability of this demand. One of Uncle Sam's best customers, China, recently shouldered its own massive fiscal burden, a $586 billion stimulus package. China owns $541 billion in Treasury debt and may need to sell some of that portfolio, or at least slow its Treasury purchases, to pay its own bills, warns Miller Tabak bond strategist Tony Crescenzi.

Hedge fund billionaires to come out blinking into the spotlight
Five of the US industry's wealthiest are to appear before a
congressional committee, accused of wrecking the economy
Like urban foxes, they dislike the glare of lights and avoid the human gaze. But the stealthiest, wealthiest billionaires in the US hedge fund industry will reluctantly show their faces tomorrow to deny that they have wrecked the global economy. At a hearing of Congress's house oversight committee called by the pugnacious Democrat Henry Waxman, five hedgies with a combined wealth of $29bn (£19bn) will be called to account on the activities of their secretive, high-risk, barely regulated industry. John Paulson, George Soros, Jim Simons, Ken Griffin and Philip Falcone are the cream of a crop of financiers who, to their enemies, are the robber barons of the modern economic order. The world's richest man, Warren Buffett, has dubbed their fees "grotesque". Italy's finance minister has called for the funds to be banned, branding them a "hellish" industry of "absolutely crazy bodies". Germany's former deputy chancellor once compared them to swarms of locusts.

Citic Group to Take Control of Citic Pacific
China's Citic Group will take control of Hong Kong-listed subsidiary Citic Pacific Ltd. under a new loan agreement. In a news release, Citic Pacific said Citic Group will provide it with a $1.5 billion standby loan facility, to be replaced by the issuance of a convertible bond of the same value. This bond will convert into shares at a price of 8 Hong Kong dollars (US$1) per share. On conversion of the convertible bond, Citic Group's shareholding in Citic Pacific will be around 57.6% from the current 29.44%. Citic Pacific said the agreement "provides critical financial support to meet certain liabilities from the exposure to the leveraged foreign exchange contracts."

Lawmakers Debate Pitfalls of Loan Modification
It sounds simple in principle: find troubled homeowners, change their mortgages and help them keep their houses. But behind many mortgages is a complex chain of parties that service mortgages or invest in them through an array of complicated legal agreements. At a hearing of the House Financial Services Committee on Wednesday, legislators concerned about the rising tide of foreclosures encouraged the financial industry to alter the terms of more mortgages to allow people to stay in their homes. They focused on mortgages that had been sold in packages to investors like pension funds, hedge funds and insurance companies.

Currency traders opt for euro-dollar
MANAMA: Middle Eastern foreign currency traders significantly increased their trading in the euro/US dollar currency pair during the third quarter of this year. This is according to the latest figures from dbFX, the online foreign exchange (FX) trading platform from Deutsche Bank, a leading global investment bank. The euro/US dollar currency pair accounted for 58 per cent of all currency volume traded through dbFX in the Middle East during the third quarter of this year. This represents a 70pc increase in trading volumes for the euro/US dollar currency pair when compared to trading volumes in the second quarter of this year.

Failure of auto industry could set off catastrophe
Advocates: Collapse of US auto industry could set off catastrophic chain reaction
Advocates for the nation's automakers are warning that the collapse of the Big Three -- or even just General Motors -- could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue. Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation's largest automakers, which are struggling to survive the steepest economic slide in decades.

G.M.’s Troubles Stir Question of Bankruptcy vs. a Bailout
Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors, which is rapidly running low on cash. But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.

Dems seek auto aid as treasury shifts rescue focus
Democrats seek auto industry bailout as
Paulson says rescue plan won't buy troubled assets
Urgently shifting course, the Bush administration is abandoning the centerpiece of its massive $700 billion economic rescue plan and exploring new ways to shore up not only banks but credit-card, auto-loan and other huge nonbank businesses. Democrats are pressing hard to include a multibillion-dollar bailout for faltering automakers, too -- over administration objections. Unimpressed by any of the talk on Wednesday, Wall Street dove ever lower. "The facts changed and the situation worsened," Treasury Secretary Henry Paulson said at a news briefing, explaining the administration's switch from its original plan to help financial institutions by buying up troubled assets, primarily securities backed by bad home loans.

American Express seeks $3.5B
American Express seeking $3.5 billion
as part of government bailout program
American Express Co. is seeking $3.5 billion in funds under the government's plan to directly invest in financial firms, according to a Wednesday report in The Wall Street Journal citing unnamed sources. Earlier this week, American Express received approval from the Federal Reserve to become a bank holding company, which is a similar structure to traditional commercial banks. The credit card company now has access to financing from the Fed and the ability to grow a large deposit base.

After the credit crunch, the oil crunch:
watchdog warns over falling supplies
The International Energy Agency is to call today for an energy revolution and a "major de-carbonisation" of global fuel sources as the world confronts tighter oil supplies caused by shrinking investment. The energy watchdog is warning for the first time that oil output could pass its peak as power shifts from "super-majors" to national companies controlled by producer states. It highlights a potential oil-supply crunch. The unprecedented wake-up call comes as the European commission says in a report due out tomorrow that while oil fields decline, the balance of supply and demand will become "increasingly tight, possibly critically so".

3 Flat-Screen Makers Plead Guilty to Trying to Keep Prices High
Prices for the flat screens in televisions, personal computers and cellphones have plummeted in recent years — but the decline would have been even faster if it hadn’t been for an international price-fixing cartel, the Justice Department said on Wednesday. Three leading flat-screen producers — LG Display of South Korea, Sharp of Japan and Chunghwa Picture Tubes of Taiwan — pleaded guilty and agreed to pay a total of $585 million in criminal fines for their role in fixing the price of liquid-crystal display panels. LG is paying the most: a $400 million fine, the second-highest criminal fine ever imposed by the Justice Department’s antitrust division. The largest was the $500 million paid in 1999 by F. Hoffmann-La Roche, a Swiss pharmaceutical giant, for leading a price-fixing cartel in vitamin supplements.

Intel's shock warning sounds alarm for tech sector
Chip giant Intel Corp cut its fourth-quarter revenue forecast by about 14 percent citing weak demand across the world and in all its products, indicating the economic crisis is set to hurt computer sales in the holiday season and beyond. The shock warning hammered tech shares, which had already tumbled earlier on Wednesday, with Intel plunging 7 percent to a 12-year low and Microsoft Corp falling 2 percent to a 10-1/2 year low.

70,000 jobs may go in fresh banking cull
Financial sector is expected to lose yet more people as the crisis deepens
The front page of the Financial Times makes particularly unpleasant reading today if you work for one of the big Wall Street banks. The Pink'un is predicting another purge of job cuts across the banking sector as worried chief executives face the prospect of a grim 2009. Most at risk are those who work in trading and investment banking, where the near-collapse of takeover activity means there are few deals to finance – and fewer fees to share out. The likes of Citigroup and Goldman Sachs are already making significant cuts, but the FT reports that the US blue chip banks could lose another 70,000 people around the world. As the collapse of Lehman Brothers showed, London is unlikely to escape the damage.

Retailers Feel Pinch of Returns
Shopping at Nordstrom in Miami this month, Maria Kakouris indulged herself with a $200 pair of satin-and-snakeskin pumps. Then came a spasm of buyer’s remorse. “Those shoes — they are still in my car with the receipt,” said Ms. Kakouris, a real estate agent. “I’m thinking, where am I going to wear them?” In less challenging times, Ms. Kakouris might have hung onto the shoes. But now she is more circumspect. “They’re going right back where they came from,” she said. In giving up her splurge, Ms. Kakouris joined a steeply rising number of shoppers who, driven by anxiety over jobs and savings, or an immediate need for cash, are marching back to stores with their purchases.

Millions set for US quake drill
Residents across southern California are set to take part in what organisers say will be America's biggest-ever earthquake drill.
Some five million people will be involved in the exercise, called "The Great Southern California Shake-out". Beginning at 1000 (1800 GMT), it is based on the hypothetical scenario of a magnitude 7.8 earthquake striking the southern San Andreas Fault. Schools, hospitals and businesses are taking part, as well as rescue workers. Organisers say 300 scientists have worked together on the scenario for the drill. The imagined earthquake would, they say, cause 2,000 deaths, 50,000 injuries and $200bn in damage.

China Industrial-Output Growth Is Slowest in 7 Years
China's industrial output grew at a slower pace than any economist forecast in October, stoking concern that the biggest contributor to global growth is running out of steam. Production rose 8.2 percent from a year earlier, the smallest gain in seven years, the statistics bureau said today. That was down from 11.4 percent in September.

Saudi yet to decide on IMF bailout plan
RIYADH: Saudi Arabia will join calls for greater oversight of financial markets at a summit in Washington this weekend but has yet to decide whether it will offer the International Monetary Fund money to deal with the credit crisis. A senior government official said Saudi Arabia would join European and developing nations demanding more scrutiny of the financial system. But he declined to say if the kingdom would hand a cheque over to the IMF at the G20 meeting. Riyadh will "call for better regulations and greater oversight on banks in the West and will demand the IMF plays a bigger role in monitoring industrial nations economies," he said. Saudi Arabia is the IMF's largest Arab shareholder and the only state in the Group of 20, which outgoing US President George W Bush has called to a summit in Washington on Saturday.

Japan may provide $160b to IMF
Japan is ready to offer foreign reserves worth up to 10 trillion yen ($160 billion) to the International Monetary Fund (IMF) if the Washington-based lender needs extra funds to help emerging economies, a Japanese Government source said. Prime Minister Taro Aso will make the proposal at the global financial summit that will take place among leaders of the Group of 20 industrialised and emerging nations starting on Friday in Washington, the source said, confirming a media report. The Nikkei business daily reported in its Thursday edition that Mr Aso would float such a proposal at the summit, but that the Government still needed to discuss how to contribute those funds. For example, selling US Government bonds held by Japan in order to provide the funds in cash would affect US bond yields. Tokyo may therefore consider lending US Government bonds to the IMF, which the institution can then use as collateral to raise funds, the newspaper added.

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Wed 11.12.2008

The Real Story
There is compelling new proof of a silver (and gold) price manipulation.
The evidence connects the investment bank JP Morgan Chase, the dominant force in world commodity trading, the U.S. Commodity Futures Trading Commission (CFTC), the primary commodity regulator, and the U.S. Treasury Department, the arranger of every conceivable bailout.
This week, I received a copy of a letter, dated October 8, sent from the CFTC to a California Congressman, Gary G. Miller. It discussed allegations of a silver market manipulation because of the data in the monthly Bank Participation Report. The data in that report for August showed that one or two U.S. banks held a massive short position in COMEX silver futures of 33,805 contracts, or more than 169 million ounces. This is equal to 25% of annual world mine production, and was up more than five-fold from the prior month’s report. After this position was established, silver prices fell more than 50%, in spite of a widespread shortage in retail forms of investment silver. Never before had there been a such a large concentrated position in any market, including every manipulation case in the CFTC’s history. Concentration and manipulation go hand in hand. You can’t have one without the other

Government Rescue Spending: Clear or Cloudy?
Critics Question Transparency of the Treasury
Dept., Federal Reserve on Rescue Effort Spending
How much will the AIG bailout ultimately cost? What are the banks applying for the government's $250 billion capital purchase plan? Who is the Federal Reserve lending to and how can taxpayers be assured they'll get their money back? After weeks of sometimes frenzied efforts by the federal government to rescue the financial system, and on the heels of the government's latest move -- the announcement of a new $40 billion infusion to the ailing insurance giant American International Group -- critics say there are many questions but few answers about the work performed by the Treasury Department and the Federal Reserve. "The bailout, the Treasury, the Federal Reserve -- it's like a three-card monte game, you don't know where the money's coming from, you don't know who it's going to, and I think the public has every right to be outraged by this," said Bill Allison, a senior fellow at the Sunlight Foundation, a government transparency watchdog group.

USTBond Obelisk & Printing Press
LIQUIDATION & US T-BOND SUPPORT
The two main factors pushing up the US Dollar have been liquidation of speculative trades funded by it, and redemption of credit derivatives paid in it. These are not signs of any inherent investment in the USEconomy itself, but rather its liquidation. Evidence abounds of severe deterioration within the United States, a collapse of confidence, a fall in business investment, ruin in retail demand, an avalanche of job loss, and a spread of corporate breakdown beyond the financial sector. Demands for nationalization have begun outside the financial sector in a wave certain to grow in strength and breadth. The USEconomy faces a risk of not so much recession, as DISINTEGRATION. The distribution channels within the United States are at risk from lack of credit and trust. The overseas shipping channels to the United States are at risk from refused letters of credit. These constitute arterial clots never seen before. Look for export trade also to be harmed soon, as the USDollar exchange rate is silly high, and foreign customers are damaged from export of US bond toxin.

Obama, Bush deny bailout bargaining
Aids for both men say there was no link between bailout, stimulus packages and trade deal. Both the White House and a senior aide to President-elect Obama on Tuesday emphatically denied there had been any attempt on the part of President Bush -- while meeting with Obama on Monday -- to link a federal bailout of the struggling auto industry or a second stimulus package to passage of a Colombia free trade deal. Those two financial packages are favored by many Democrats, including Obama, while the free trade deal remains a top priority for the outgoing administration.

Marc Faber on the economy, stocks and the bailout P1

Marc Faber on the economy, stocks and the bailout P2

Bretton Woods II - A Roadmap
Following calls by European leaders for a "Bretton Woods II", the Bush administration has invited the "G-20" countries to come to Washington with the lofty goal to reform the world financial system. Will the way we do business change November 15? The first Bretton Woods conference, held in 1944, gave birth to the International Monetary Fund (IMF), the World Bank and - albeit with half a century delay - the World Trade Organization. The Bretton Woods conference is best known for firmly anchoring the U.S. dollar as the world's reserve currency. As we will elaborate on below, however, the dollar had to be devalued and taken off the gold standard in 1971 because of market dislocations that are not so different from what we are experiencing today.

We don't want another Bretton Woods
Representatives of some 20 nations are preparing to fly to Washington to erect a new architecture to house the world's financial system - "a new global order" was the description Gordon Brown used in Monday's speech at the Lord Mayor's banquet. To prepare for this meeting of the G20 industrialised and emerging nations, Europe's leaders gathered last week in Brussels and set down the principles they intend to have President Bush sign on to. And - get this - they gave America a 100-day deadline to agree to their plans. "We will be defending a common position, a vision… for reforming our financial system." My guess is that the American hosts are about as intimidated by this show of unity as the West's enemies were by the announcement of the formation of the European army.

G20 set to unite on stimulus
In part, tax cuts or public spending increases appear attractive because interest rates have lost some of their power to boost economies as most of the world’s economies enter recession. More importantly, they are something on which leaders of most advanced and emerging economies agree.

Doha deadlock unlikely to end with D.C. talks
Financial crises focus of session
When President Bush hosts a dinner for the leaders of 20 of the biggest economies in the world Friday, it will mark the seventh anniversary of the start of the Doha round of multilateral trade negotiations. But nobody is expecting a breakthrough in Doha's stalled talks during Saturday's daylong economic summit, which was called to address the worldwide financial and economic crises. The Group of 20 (G-20) leaders convening Friday and Saturday will bring together the key players in the trade talks, including the United States, the European Union, India, China and Brazil. Disagreements over manufacturing tariffs and agricultural trade barriers among these countries caused the Doha trade talks to collapse in Geneva in July.

Critics say new federal mortgage plan not enough
Once again, the government has offered another plan to help troubled homeowners. Once again, critics say it doesn't go far enough. The plan announced Tuesday by federal officials and mortgage giants Fannie Mae and Freddie Mac sounds sweeping in its approach: Borrowers would get reduced interest rates or longer loan terms to make their payments more affordable. But there's a catch. The plan focuses on loans Fannie and Freddie own or guarantee. They are the dominant players in the U.S. mortgage market but represent only 20 percent of delinquent loans.

Goldman Sachs urged bets against California bonds it helped sell
The Wall Street titan's activities could have harmed taxpayers, officials say.
Goldman, Sachs & Co. urged some of its big clients to place investment bets against California bonds this year despite having collected millions of dollars in fees to help the state sell some of those same bonds. The giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California's deepening financial misery. In Sacramento, officials said they were concerned that Goldman's strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers.

Citi, Fannie, Freddie to Halt Some Foreclosures
Mortgage companies Fannie Mae and Freddie Mac and Citigroup Inc. plan to cut home-loan payments for hundreds of thousands of borrowers facing foreclosures, following similar moves by the nation's biggest banks. Fannie Mae and Freddie Mac will reduce principal or interest rates on some loans and extend the terms of others, according to the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September.

New rush to modify home loans raises 'moral hazard' issue
How far would people go to get better terms on their mortgage?
Would some feign financial trouble to qualify for a loan-modification plan? As the government and private lenders face more pressure to aid struggling borrowers in a worsening economy, they’ll inevitably have to deal with the "moral hazard" issue: Could they be encouraging applications for help from people who could otherwise scrape by without assistance? On Tuesday the Treasury announced a new loan-modification effort for mortgages held by Fannie Mae and Freddie Mac, which the government took over in September.

Deadline Nears for Banks as Treasury Program Progresses
Publicly traded banks have until Friday to apply for capital injections from the Treasury Department, and it will take "a few months" for the government to invest all of the $250 billion that was set aside for preferred-stock investments in financial firms, according to the Treasury official overseeing the program. Meanwhile, the department is soliciting bids from firms that want to serve as asset managers for the program. It also plans to expand the newly created Office of Financial Stability, which already has a staff of 40.

Fed Defies Transparency Aim in Refusal to Disclose
The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.

Revised AIG Terms Begin Treasury Transfusions to 'Zombie' Firms
The revised bailout of American International Group Inc. marks a new phase in the government's effort to shore up financial markets: It's the first time cash from the rescue fund Congress created last month has been committed to a failing company. The Federal Reserve, which saved the insurer from collapse two months ago with an $85 billion loan, yesterday reduced that loan and offered lower rates, while the Treasury chipped in $40 billion from its bank-rescue fund to buy preferred shares. The new terms represent a departure for Secretary Henry Paulson, who until now has said he only wants to invest Treasury funds in "healthy" firms.

U.S. to Push Banks to Step Up Lending
Guidelines Would Apply to All Financial
Firms, May Also Address Executive Pay
U.S. officials are finalizing guidelines for financial firms to encourage those that receive federal rescue money to lend more and curb executive compensation, government sources familiar with the matter said yesterday. The Treasury Department plans to spend $250 billion to buy stakes in financial firms as part of its mammoth $700 billion financial rescue program. Lawmakers, however, have complained that institutions that have accepted the government investments have been spending excessive amounts to reward their shareholders and top officers instead of increasing lending.

No. 2 mall operator warns of bankruptcy
General Growth Properties blames
weak retail sales and a credit market freeze.
General Growth Properties Inc., the No. 2 mall operator in the United States, has warned that an ongoing slump in retail sales, combined with the credit market lockdown, has pushed the company to the brink of bankruptcy. Chicago-based General Growth Properties (GGP) said in an SEC filing late Monday that it has $900 million of property secured debt and $58 million of corporate debt that's coming up for renewal by Dec. 1. It also faces another $3.07 billion in debt that matures in 2009.

General Growth Properties risks default
Mall owner General Growth Properties warns of
bankruptcy, solvency woes in tight credit market
General Growth Properties Inc. shares plummeted Tuesday after the mall owner warned it faces solvency trouble and may be forced to file for bankruptcy if it can't refinance or extend nearly $1 billion in debt due next month. The real estate investment trust, which is the nation's second-largest mall owner whose big-name holdings include Chicago's Water Tower Place and Fashion Show in Las Vegas, also disclosed in a regulatory filing late Monday that it may default on certain debt obligations.

Dollar rises on recession fears
Investors seek the safety of U.S. currency as the
global slowdown continues to spark recession fears.
The dollar resumed its climb against other major currencies for a second day in a row Tuesday as recession fears took center stage. The U.S. currency also got a boost against the 15-nation euro on bets that the European Central Bank will have to cut rates again before the year ends.

Citigroup freezes US home repossessions
The US bank Citigroup is halting repossessions for most of its struggling mortgage borrowers in response to pressure for a softer approach in tackling the vast American sub-prime loans crisis. Citi said it was imposing a moratorium on foreclosures for all clients willing to work "in good faith" to restructure mortgages, as long as they have sufficient income to make payments of some sort. The initiative came amid fresh signs of the turmoil gripping the financial sector. Late on Monday, the credit card company American Express revealed it was turning itself into a bank, which makes it eligible for aid under the US government's $700bn bail-out fund. American Express has struggled with a surge in bad debts on customers' cards. The 158-year-old firm said offering high-street bank accounts would "build a larger deposit base to broaden our funding sources".

Homeowners get help renegotiating overdue mortgages
The government and the mortgage industry are launching the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, announced the plan Tuesday along with other government and industry officials, including Hope Now, an alliance of mortgage companies organized by the Bush administration last year.

The Foreclosure Fight Gets Streamlined
Lenders Hope Simpler Loan-Rework System Reaches More Borrowers
As losses from bad loans continue to mount despite more than a year of government and industry focus, some of the giants of the mortgage industry, including Fannie Mae and Freddie Mac, yesterday unveiled another stepped-up effort to keep delinquent borrowers out of foreclosure. Government and lender efforts to stem foreclosures have been stymied by the sheer size of the problem. This program attempts to address that by using a simplified process for determining whether someone is eligible for a new loan. Instead of the standard cumbersome loan modification process, which can include reviewing a borrower's credit report and tax returns, the new plan focuses on the borrower's income and how much he or she can afford to pay. It also creates a formula for determining what a homeowner can afford, eliminating some guesswork.

Obama's Bailout Bunch Brings Us More of the Same
It's hard to believe Barack Obama would even think of calling this change. Take a good look at some of the 17 people our nation's president-elect chose last week for his Transition Economic Advisory Board. And then try saying with a straight face that these are the leaders who should be advising him on how to navigate through the worst financial crisis in modern history.

1929 Stock Market Crash (Part 1)

1929 Stock Market Crash (Part 2)

1929 Stock Market Crash (Part 3)

1929 Stock Market Crash (Part 4)

1929 Stock Market Crash (Part 5)

Even Law Firms Feel Strain of Layoffs and Cutbacks
You know things are bad when even lawyers are getting laid off. In downturns of years past, law firms exploited corporate failures and bitter, protracted lawsuits to keep busy and keep billing. But in this still-unfolding crisis, the embittered and the bankrupt have been relatively slow to appear, at least in court.

Ruble Devaluation Concern Triggers Stock Plunge, Rate Increase
Russia's ruble fell the most in two months as the central bank loosened its defense of the currency amid the country's worst financial crisis since the 1998 devaluation. Bank Rossii widened its range on the ruble against a basket of dollars and euros by 30 kopeks (1 cent) to increase the currency's "flexibility" and lifted its benchmark refinancing rate to 12 percent from 11 percent to arrest outflows, according to separate statements after the stock market closed. The Micex Index plunged 13 percent, the biggest decline worldwide, and won't open tomorrow, spokeswoman Anna Cheryomushkina said.

Bush resists $25bn aid for US carmakers
Hopes of quickly securing $25bn in emergency government support for troubled US carmakers have been caught in a stand-off between the outgoing Bush administration and, on the other side, congressional Democrats and Barack Obama, the president-elect. As bad news about the health of the big three carmakers in Detroit multiplied during the past 10 days, the White House came under pressure to justify its decision to rescue swathes of the financial services industry while ignoring the motor manufacturers.

Here for the holidays: Slow sales and layoffs
A poll of small business owners finds little
optimism that the economy will turn around any time soon.
What's going well for small businesses? Not much, according to The National Federation of Independent Business' monthly Small Business Optimism Index, which fell 5.4 points in October and landed at the third-lowest reading in the history of the survey. "We're mired in a recession," said the NFIB's chief economist, Bill Dunkelberg. Weak sales demand was the most critical issue worrying business owners polled in October. The survey found that many respondents are liquidating inventories, holding back on expansion and laying off employees.

Pelosi backs bailout for auto industry
According to Democratic aides, the speaker
wants legislation passed in a postelection session of
Congress to offer relief to beleaguered car companies.
House Speaker Nancy Pelosi called for "emergency and limited financial assistance" for the battered auto industry on Tuesday, and urged the outgoing Bush administration to join lawmakers in reaching a quick compromise. Five days after dismal financial reports from General Motors Corp. (GM, Fortune 500) and Ford Motor Co. (F, Fortune 500), Pelosi backed legislation to make the automakers eligible for help under the $700 billion bailout measure that cleared Congress in October.

GM Skid Reaches 5th Day as Pelosi Backs Emergency Aid
General Motors Corp. fell for a fifth day in New York trading as House Speaker Nancy Pelosi urged Congress to pass an emergency rescue package for the ailing U.S. auto industry. Lawmakers should take "immediate action" before their new session begins in January, Pelosi, a California Democrat, said today in a statement. Analysts said only federal aid can prevent a collapse for GM, and reorganizing in bankruptcy may not be possible because the credit crunch has dried up financing. "Strategic bankruptcy is not an option for GM," said Mark Oline, a credit analyst with Fitch Inc. in Chicago. "This is an issue of operating or not operating."

U.S. Given A Look at Swiss Bank Accounts
Tax Probe Gets Names Of 70 UBS Clients
The U.S. government has chipped new holes in the secrecy of Swiss bank accounts, obtaining the names of American clients of the banking giant UBS as part of an investigation into the use of foreign banks to evade taxes. In an unusual move, the Swiss have turned over information on about 70 UBS clients for use by Justice Department investigators, a source close to the case said. The Swiss were responding to a Justice Department request for information on Americans who held "undeclared" accounts at UBS in Switzerland -- accounts that they had not revealed to the Internal Revenue Service, the source said.

U.S. announces mortgage affordability plan
Federal officials hope that the simpler, quicker procedure for modifying loans held by Fannie Mae and Freddie Mac will keep struggling homeowners from losing their houses. In an attempt to keep struggling homeowners from losing their houses, federal officials today announced a simpler and quicker procedure for modifying loans held by mortgage giants Fannie Mae and Freddie Mac and expressed hope that it would be adopted by the entire industry. The plan targets people who have missed three or more mortgage payments, live in the home and have not filed for bankruptcy protection.

Retired Auto Workers are "scared to death" about potential industry collapse
Some fear the company is close to collapsing. GM recently reported a $2.5 billion loss, and analysts say the company doesn't have enough cash flow to keep it open past December without a bailout package. There are 4,000 retired auto workers who now call Florida home. Those who live in our area have a monthly union meeting Tuesday, and Monday night the union president tells WINK News he's afraid he won't have good news to share about their future.

Why GM Stalled
These are strange and horrible times for Detroit, even by the standards we've become accustomed to, as the Detroit Three (formerly Big Three) automakers continue to waste away. In the latest twist, General Motors, one of the Three, had been saying privately that Detroit would collapse unless Washington gave it billions of dollars to help it buy Chrysler, the smallest of the Three. But then GM put the deal, supposedly so vital to the future of Detroit, on hold. If you look at the numbers, you can see why. The pitch was that unless GM got to buy Chrysler, the jobs of their combined 145,000 U.S. workers and the futures of their 682,000 retirees and spouses were at risk. What's more, the jobs of millions of workers and retirees at firms that supply goods and services to the U.S. car companies would be at risk, too.

Radioactive Beer Kegs Menace Public, Boost Costs for Recyclers
French authorities made headlines last month when they said as many as 500 sets of radioactive buttons had been installed in elevators around the country. It wasn't an isolated case. Improper disposal of industrial equipment and medical scanners containing radioactive materials is letting nuclear waste trickle into scrap smelters, contaminating consumer goods, threatening the $140 billion trade in recycled metal and spurring the United Nations to call for increased screening.

NO END IN SIGHT (documentary trailer)

The president-elect is not a dove - he is just a much smarter hawk
It'll be hard to demonise the Great Satan led by Barack Hussein Obama. But peaceniks shouldn't assume a kindred spirit
That noise you've been hearing for the past week, the one that began in the United States last Tuesday before spreading throughout the world? That's the sound of a global sigh of relief. It contained a cry of joy too, of course, especially among black Americans and people of colour across the globe, seeing a man who looks like them ascend, at last, to the highest office in the world. But history will record November 4 2008 not only as the day when America elected its first black president, but as the moment when one of the bleakest chapters in the postwar era drew to a close.

Obama Wins, Muslims Divided
Ali ibn Abi-Talib, the seventh-century figure central to Shiite Islam, is said to have predicted when the world will end, columnist Amir Taheri points out. A "tall black man" commanding "the strongest army on earth" will take power "in the west." He will carry "a clear sign" from the third imam, Hussein. Ali says of the tall black man: "Shiites should have no doubt that he is with us." Barack Hussein in Arabic means "the blessing of Hussein." In Persian, Obama translates as "He [is] with us." Thus does the name of the presumptive American president-elect, when combined with his physical attributes and geography, suggest that the End of Times is nigh – precisely what Iranian president Mahmoud Ahmadinejad has been predicting.

Taliban urges Obama to end Bush's foreign policies
Taliban insurgents battling the U.S.-backed Afghan government urged President-elect Barack Obama to change course in U.S. foreign policy and withdraw American troops from both Afghanistan and Iraq, an Internet monitoring service said Tuesday. The message posted on a Web site used by the Taliban claimed Obama's victory "reveals the collective willingness of American people not to continue the current despicable and anti-human wars in Afghanistan and Iraq," SITE Intelligence Group said. The authors claimed that Obama had promised to end Bush's policies pledging to "recover the dwindling American economy and find a niche in the comity of nations."

North Korea Says It Will Cut Off Border Crossings
North Korea's military informed its South Korean counterpart that it will restrict border crossings between the two nations starting Dec. 1, the regime's official Korea Central News Agency reported today. The Korean People's Army said it intends to "strictly restrict and cut off all the overland passages through the Military Demarcation Line," KCNA reported.

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Tues 11.11.2008

US Mint to Slash Future Coin Products, Offers Last Chance Sale
The United States Mint announced on Monday that it will discontinue more than 300 coin and medal products in 2009, to include several bullion coins, and it will conduct a "Last Chance Sale" to clear out out inventory in preparation for its move to a new fulfillment center. The Mint adds that the "Last Chance Sale" will be a limited-time, first come, first serve offer, available online and by phone and without household order limits in place. Sales will include discontinued products that will "never be available again from the United States Mint."

Obama won't attend Washington financial summit
U.S. President-elect Barack Obama will not attend the global financial summit in Washington on Friday and Saturday and will not meet foreign leaders on the sidelines, aides said on Monday. The Bush administration has called the summit of the countries representing the world's leading economies to begin thrashing out a strategy for dealing with the global financial crisis. Obama takes over as U.S. president on January 20.

The Bretton Woods sequel will flop
I blame it all on Dean Acheson. The long-dead American statesman was a big figure at the original Bretton Woods conference in 1944 and later helped invent Nato. Acheson gave his memoirs the modest title Present at the Creation and, in so doing, he inadvertently fed the grandiose fantasies of the leaders of the Group of 20 leading economies who will assemble in Washington next weekend. Perhaps they too can achieve near God-like status by reordering the institutions of the world?

Obama holds off on naming cabinet
Barack Obama will announce no cabinet appointments this week, said an Obama spokesman, deflating expectations the president-elect would send a senior representative to attend George W. Bush’s global financial summit this weekend. Monday’s announcement re inforced the view that Mr Obama, who has so far only named one senior appointment – Rahm Emanuel, the Il linois congressman, to be his chief of staff – will resist pressure to be rushed into early decisions.

Fed Lends $1.1 Trillion, Won't Say to Whom
Since September 14th, when the Federal Reserve relaxed collateral requirements for new lending, it’s doled out over $1.1 trillion to faltering financial institutions. Now, Chairman Ben Bernanke and company won’t say where the money went. Bloomberg reports the Fed is refusing to release details on which banks took out loans, fearing such disclosure would be blood in the water for short sellers and other financial mercenaries. Bloomberg News even went so far as to file a lawsuit on November 7th under the Freedom of Information Act to try to force disclosure.

US is reticent on fate of toxic assets
The US official managing the $700bn financial sector rescue plan on Monday gave no indication of when or whether the government would start purchasing billions of dollars worth of toxic assets that are still lurking within ailing financial institutions. The lack of clarity disappointed market participants, who say government purchases of distressed mortgage securities – the original centrepiece of the $700bn bail-out plan approved by Congress – are essential to thawing credit markets.

Peter Schiff educates Erin Burnett on the value of Gold

Fannie Mae Loses $29 Billion on Write-Downs
Fannie Mae, the giant mortgage finance company, reported a big quarterly loss on Monday and indicated that it could be forced to seek government financing early next year. The company’s results suggested that home prices are far from a bottom and that the government would probably have to pump tens of billions of dollars into Fannie Mae and its sister company Freddie Mac. Regulators took control of the two companies in September and the Treasury Department said it would invest up to $100 billion in each but it had not yet put any money into the companies.

Obama asks Bush to provide help for automakers
The struggling auto industry was thrust into the middle of a political standoff between the White House and Democrats on Monday as President-elect Barack Obama urged President George W. Bush to support immediate emergency aid. Bush indicated at the meeting that he might support some aid and a broader economic stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia, a measure for which Bush has long fought, people familiar with the discussion said.

American Express to Be Bank Holding Company
The Federal Reserve on Monday granted a request by the credit card giant, American Express, to become a bank holding company, giving it access to low-cost financing from the Fed. The Fed said it had approved the application for American Express and a related company, American Express Travel Related Services, to become bank holding companies. The approval represented the latest reshaping of the financial services industry, which is undergoing its worst credit crisis in decades.

Jim Rogers educates another ignorant CNBC anchor!
Jim Rogers, the billionaire investor who ran the Soros fund with fellow billionaire George Soros, debates with Martin, the clueless CNBC anchor about whether we are headed for an inflationary or deflationary environment in the coming years.

Agendas vanish from Obama's transition Web site
Last week, President-elect Barack Obama launched a Web site with detailed information about his plans for technology, Iraq, and health care policies. Now they're gone. The "agenda" Web pages on Change.gov seem to have mysteriously disappeared on Sunday. By Monday morning, they were replaced with a vague statement saying that Obama and running mate Joe Biden have a "comprehensive and detailed agenda" that will "bring about the kind of change America needs," with the individual pages deleted entirely.

Franklin Delano Obama?
Suddenly, everything old is New Deal again. Reagan is out; FDR is in. Still, how much guidance does the Roosevelt era really offer for today's world? The answer is, a lot. But Barack Obama should learn from FDR's failures as well as from his achievements: The truth is that the New Deal wasn't as successful in the short run as it was in the long run. And the reason for FDR's limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.

Financial crisis: more vs. less government. (1 of 4)

Financial crisis: more vs. less government. (2 of 4)

Financial crisis: more vs. less government. (3 of 4)

Financial crisis: more vs. less government. (4 of 4)

US May Lose Its 'AAA' Rating
The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche. "The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

A Town Drowns in Debt as Home Values Plunge
MOUNTAIN HOUSE, Calif. — This town, 59 feet above sea level, is the most underwater community in America. Because of plunging home values, almost 90 percent of homeowners here owe more on their mortgages than their houses are worth, according to figures released Monday. That is the highest percentage in the country. The average homeowner in Mountain House is "underwater," as it is known, by $122,000.

Two Banks - One in Houston, One in Los Angeles - Fail
Two banks -- Franklin Bank of Houston, Texas, and Security Bank of Los Angeles -- were seized by state regulators on Friday and the Federal Deposit Insurance Corp. transferred their deposits transferred to other institutions. For Franklin Bank in Houston, the FDIC entered into a purchase and assumption agreement with Prosperity Bank, El Campo, Texas, to assume all of the deposits of Franklin Bank -- including those that exceeded the deposit-insurance limit.

Citi, Goldman, Too-Big-to-Fails, Need New Rules:
Federal Reserve Chairman Ben Bernanke recently told the Economic Club of New York that the U.S. faces "a very serious too-big-to-fail problem." As Bernanke described it, this means that the insolvency of one large company could threaten the global financial system. "There are too many firms that are, in some sense, systematically critical," he said. He knew this, of course, because the world financial system did collapse, or came pretty close.

Bankrupt Circuit City owes Hewlett-Packard $118 mln
Circuit City Stores Inc. owes Hewlett-Packard Co. more than $118 million, The Wall Street Journal reported on its Web site Monday, citing court papers filed in Circuit City's Chapter 11 bankruptcy filing. The newspaper also said that Circuit City owes nearly $116 million to Samsung Electronics Co. and $60 million to Sony Corp. . A Hewlett-Packard spokeswoman did not comment on whether the company is still shipping merchandise to Circuit City, according to the Journal.

DHL to cut 9,500 jobs at U.S. unit
Deutsche Post, the German mail and logistics group that runs DHL, said Monday that it would cut 9,500 jobs at its U.S. unit as it effectively conceded the American domestic market to its rivals, FedEx and United Parcel Service. The move marks a reversal by Deutsche Post, which had said it was planning to maintain its troubled U.S. operations by turning over its domestic air-cargo service to UPS.

GM Warns GMAC May Fail
General Motors says the troubled mortgage industry and frozen credit markets have raised doubts that the mortgage business of its GMAC financial arm can survive. The automaker said Monday in a filing with the Securities and Exchange Commission that market developments have raised substantial doubt about the viability of Residential Capital LLC.

Jimmy Rogers on a little of everything from economy, inflation, money, to gold

Chinese Stocks May Need More to Lure Investors
China may have more work ahead to revive investors’ confidence in the world’s worst-performing major stock market after unveiling a 4 trillion yuan ($586 billion) stimulus plan. The government’s announcement on Nov. 9 followed three interest-rate cuts in two months and the end of a tax on equity purchases. China’s benchmark CSI 300 Index is still down 66 percent this year, twice the drop of the Dow Jones Industrial Average.

'Israel war on Iran on the radar'
A senior European Union diplomat says the perfect time for Israel to strike Iranian nuclear installations 'is between now and January 20'. "A possible Israeli strike against Iran is not completely off the radar," Turkish paper Hurriyet quoted the diplomat as saying. Israeli Defense Minister Ehud Barak said Friday that Tel Aviv is 'convinced that Iran continues to try to build a nuclear weapon'. "We don't rule out any option. We recommend others don't rule out any option either," added Barak, in regards to Obama's plans for Iran

Ahmadinejad's letter to Obama sparks storm in Iran
President Mahmoud Ahmadinejad received praise from Iranian opposition politicians and withering criticism from its conservatives after he sent Barack Obama a letter last week congratulating him on winning the U.S. presidential race. But in a sign that conservatives fear their attacks might inadvertently strengthen a possible opposition candidate in Iran's own presidential vote in June, their criticism has quickly shifted to early support for Ahmadinejad's re-election.

Warnings from world leaders all within 72 hours
"Australian PM Kevin Rudd - “Nuke strike would
make 9/11 insignificant” and other weird warnings"
"Over the last 72 hours there has been a strange melange of cryptic messages leaked from world political leaders about what could be in store for America over the next few months. These predictions of impending doom come from England, France, Australia and the United States. Biden told the top Democratic donors that a “generated crisis” will develop within six months and Barak Obama will need the help of community leaders to control the population as unpopular decisions are made and Americans resist.

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Mon 11.10.2008

Obama to appoint talk radio's executioner?
Expected FCC transition chief served during 'Fairness Doctrine' days
Democrat Henry Rivera, a former commissioner of the Federal Communications Commission, is expected to head President-elect Barack Obama's FCC transition team, a move that has sparked fear in media circles that the Fairness Doctrine may return to silence conservative talk radio. If reenacted, the "Fairness Doctrine" would require broadcasts over the public airwaves to give equal time to opposing political views. For talk radio, which boomed after the law's repeal in 1987 by building an audience devoted to conservative talk, the law's return would decimate the industry's marketability.

Can Democrats handle the hot seat?
The Republicans weren't willing to pursue major reforms that could have put America on firmer financial ground. If their successors don't either, they will meet the same fate in 4 years. Anytime there's a landslide, political types want to spin it as a mandate for their cause. That was certainly the case with Ronald Reagan, but I don't believe Barack Obama and the Democratic Party have been handed a mandate. Rather, I believe the electoral outcome is a function of economic pain (and overall disgust with George W. Bush and Republicans generically).

Bloomberg Sues Fed to Force Disclosure of Collateral
Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks. The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn't seek money damages.

The never-ending search for gold
I was born on July 22, 1924. In those days, families that could afford it had their babies in a hospital. Those were the days before air conditioning. My mom told me I was born during the hottest New York July she could ever remember. I grew up during the Jazz age; I was seven when the '29 crash hit and changed everything. As a teenager, I grew u

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