Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Mon 06.22.2009
We The People Stimulus Package Bob Basso author of "Common Sense" plays the role of Thomas Paine to ignite the fire of change in America. Patriotism and Pride for America lead Thomas Paine to help take back America!
World economy headed for another crash The world economy will face a crisis in the next two years even bigger than the downturn currently buffeting the global financial system, a respected US forecaster warned Monday. Author Harry S. Dent, who predicted Japan's slide into recession in the 1990s and the present slump, dismissed claims the worst was over for the world economy and that"green shoots" were emerging from the fiscal firestorm. Dent said the baby-boomer generation was set to cut back on spending, sending the share and property markets into downward spirals that would dwarf the recent recovery.
IMF Gold Sale: WGC welcomes US approval The World Gold Council (WGC), the apex global body on gold, has welcomed the US Congress approval to the gold sale plan from the International Monetary Fund (IMF). Last week, the US House of Representatives approved an agreement to allow US members of the IMF board to agree the proposed $13 billion sale of 400 tonnes of IMF gold to shore up its finances.
If History Repeats, Gold Will Surge Soon After the recent turn of events that closed the door on a new high for the price of gold this spring (summer arrives this weekend), attention turns to a very encouraging historical pattern that has developed during the current decade - surges late in the odd-numbered years of 2001, 2003, 2005, and 2007 leading to much higher levels after the snow melts. Will the 2009-2010 period produce a similar result? We'll find out soon enough.
Gold Market Update Gold broke down and went into decline, as predicted in the last update posted early this month. At that time our maximum downside target was the strong support in the $880 area, but now there are strong signs that the decline has either run its course, or is close to having done so, and that a breakout to new highs may be close at hand.
Pushing on a String Back in 1973, gold standard advocate John Exter made a phrase famous in hard-money circles: "Pushing on a string." Exter argued that prices of all assets except gold (he ignored silver) would someday collapse because of the pyramiding of debt. Banks would eventually cease to lend, out of fear of default. That would cause the default. The FED would inflate the monetary base, he said, but this would not reverse the price decline. The commercial banks would not lend. The FED would therefore push on a string. Its attempt to inflate would fail. Exter had been a central banker (Sri Lanka) and a senior officer at Citibank. He was the first deflation predictor in the hard-money movement. He was soon joined by C. Vern Myers.
Gold as an Investment, Deflation / Inflation Wrap Up Your author is a big fan of the precious metals, both gold and silver. I have dropped enough pixels with my ideas on the "why" that I will not rerun all that now. I wanted to clarify any misconceptions of ideas any may have about my stance on the metals. I am not and have never implied or stated that anyone should run out and convert all of their wealth to gold. I think gold needs to be a part of any portfolio. As a fan of the metals, gold and silver make up about 20% of my investment capital and about 5% of my entire net worth. So in no way am I an all or nothing kind of thinker on this.
Golden Shoots: How Gold price is consolidating No green shoots. There are no green shoots. Every single piece of economic and market news we observe confirms our view that the current optimism in the world economy is purely based on sentiment and not on facts. The current corrective rallies in world stock markets were forecast by us in our January Newsletter. Corrective rallies create false optimism and hope. This is what we are seeing currently.
Illegal gold mining thriving in S Africa JOHANNESBURG: With the gold prices soaring, South Africa is facing a serious problem of illegal mining. The country has been facing the issue for years but the rise in prices of the yellow metal has caused a surge in illegal mining also. Following several deaths during illegal mining in Welkom, the Parliament's select committee on economic development visited gold producer Harmony's Eland shaft.
Is this the death of the dollar? After two smugglers were stopped last week with what at first appeared to be $134 billion in US state bonds, the tension and paranoia surrounding the fate of the dollar hit a new high. Border guards in Chiasso see plenty of smugglers and plenty of false-bottomed suitcases, but no one in the town, which straddles the Italian-Swiss frontier, had ever seen anything like this. Trussed up in front of the police in the train station were two Japanese men, and beside them a suitcase with a booty unlike any other. Concealed at the bottom of the bag were some rather incredible sheets of paper. The documents were apparently dollar-denominated US government bonds with a face value of a staggering $134 billion.
Dollar vulnerable as countries diversify The U.S. dollar, whose leading role in world currency markets has faced increasing questions, will remain under pressure for years as more countries diversify their reserve holdings, top analysts and strategists said this week. Still, no other currency appears ready to take over the dollar's dominant role in foreign exchange markets in the foreseeable future, which will likely prevent any precipitous fall in the greenback, the analysts and strategists said at the Reuters Investment Outlook Summit in New York.
Federal Regulators Close 3 Small Banks Federal regulators closed three small banks on Friday, bringing the number of bank failures to 40 so far this year. The largest of the banks closed on Friday was the Cooperative Bank of Wilmington, N.C., with $970 million in assets and $774 million in deposits, the Federal Deposit Insurance Corporation said. The failure is expected to cost the F.D.I.C. deposit insurance fund an estimated $217 million. First Bank of Troy, N.C., will purchase all the deposits, except about $57 million in brokered deposits. The F.D.I.C. said it would pay the brokers directly. The Cooperative Bank's 24 branches will reopen on Monday as branches of First Bank.
Hyperinflation Could Hit US In 5-10 Years says Marc Faber
Don't believe the hyperinflation hype - dare to make cuts London asset managers 36 South are launching a "hyperinflation fund" for those convinced that money-printing by central banks around the world must lead to Weimar or Zimbabwe soon enough. Flush from last year's 234pc rise in their Black Swan Fund, they are betting that quantitative easing and war-time deficits have sown the seeds of inflation reaching "10pc, 15pc, 20pc, or more". They capture the mood of the times, but are they right? We know that the Fed's balance sheet has exploded (to $2.07 trillion), but that is only half the story. Data from the St Louis Fed shows that the "monetary multiplier" has collapsed from a decade-average of 1.6 to the depths of 0.893. The "velocity" of money has slowed to a crawl.
Why Inflation Isn't the Danger SOME people with hypersensitive sniffers say the whiff of future inflation is in the air. What's that, you say? Aren't we experiencing deflation right now? The answer is yes. But, apparently, for those who are sufficiently hawkish, the recent activities of the Federal Reserve conjure up visions of inflation. The central bank is holding the Fed funds rate at nearly zero and has created a mountain of bank reserves to fight the financial crisis. Yes, these moves are unusual, but these are unusual times. Concluding that the Fed is leading us into inflation assumes a degree of incompetence that I simply don't buy. Let me explain.
Back in the U.S.S.A. by Peter Schiff Harry Browne, the former Libertarian Party candidate for president, used to say: "the government is great at breaking your leg, handing you a crutch, and saying 'You see, without me you couldn't walk.'" That maxim is clearly illustrated by the financial industry regulatory reforms proposed this week by the Obama Administration.
Tracking the $700 Billion Bailout The government has provided money to hundreds of banks and a handful of insurers and automakers as part of the $700 billion Troubled Asset Relief Program. Some small firms have repaid the government, and many big banks have announced they intend to return the money.
Treasury's Got Bill Gross on Speed Dial Every day, Bill Gross, the world's most successful bond fund manager, withdraws into a conference room at lunchtime with his lieutenants to discuss his firm's investments. The blinds are drawn to keep out the sunshine, and he forbids any fiddling with BlackBerrys or cellphones. He wants everyone disconnected from the outside world and focused on what matters most to him: mining riches for his clients at Pimco, the swiftly growing money management firm.
Fed unlikely to try new aids for economy, for now With the recession easing, Federal Reserve policymakers are unlikely to launch any major new efforts to revive the economy when they meet this week. Instead, Fed Chairman Ben Bernanke and his colleagues, wary of overdoing the stimulus medicine and fanning inflation later, are expected to stand pat, economists say. The Fed has taken unprecedented steps to try to lift the country out of recession. They include a bold effort announced in March to plow $1.2 trillion into the economy in an attempt to lower interest rates and spur more spending by Americans.
pt1/2 Gerald Celente on Max Keiser's on The Edge
Corporate Lenders Fight Back Against Fed Power-Grab One of the first big battles over the Obama administration's proposals to remake the regulations governing the financial sector looks to be over industrial loan-companies. Several executives of the ILCs said that they are lobbying Congress to defeat a proposal by the Obama administration that would force them to convert to bank-holding companies and be subject to regulation by the Federal Reserve, the Wall Street Journal reports.
The Ending of America's Financial-Military Empire The city of Yekaterinburg, Russia's largest east of the Urals, may become known not only as the end of the road for the tsars but of American hegemony too; as the place not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground. Challenging America is the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the so-called BRIC nations --Brazil, Russia, India and China.
Too Big to Fail, or Too Big to Handle? "No one should assume that the government will step in to bail them out if their firm fails." That's Timothy F. Geithner, the Treasury secretary, talking tough with lawmakers last week as he promoted the government's remake of the financial regulatory framework. Talk is cheap, however. And the notion that the plan shows a new aversion to bailouts is not at all supported by its chapter and verse. In fact, there's precious little in the 88-page document about how the government will eliminate systemic risks posed by financial firms that aren't allowed to fail because they're simply too big or to interconnected to other important economic players here and abroad.
Obama Blueprint Deepens Federal Role in Markets Plan to Overhaul Financial Regulation Focuses on Consumer Protection, Risk The Obama administration last night detailed a series of proposals to involve the government more deeply in private markets, from helping to steer borrowers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to curb the kinds of reckless risk-taking that sparked the economic crisis.
pt2/2 Gerald Celente on Max Keiser's on The Edge
Jobless rate rises in nearly all states Forty-eight states and the District of Columbia post unemployment rates rise in May, while only one state - Nebraska - registers a decrease. Forty-eight states and the District of Columbia recorded unemployment rate increases in May, the government reported Friday. One state registered a rate decrease, and one state had no rate change. Several states and regions posted their highest unemployment rate since the report debuted in 1976. Over the year, jobless rates were higher in all 50 states and the District of Columbia. Michigan once again led the nation with a 14.1% jobless rate, up from 12.9% a month earlier, followed again by Oregon at 12.4%, up from 12% in April. Thirteen states have rates above 10%.
How the bailout bashed the banks They were rescued from a crisis of their own making, but the political thrashing has left bad blood between business and government. An inside look at the trouble with TARP. Washington's most dramatic foray into the nation's financial sector since the Great Depression began on Oct. 13 with a misnamed acronym, an unwitting tribe of CEOs, and a confused staff of Treasury officials. It was a foreshadowing of the misadventure to come. "I don't even know who the 9 companies are. Do you?" Michele Davis, assistant secretary for public affairs, wrote in an e-mail sent at 7:15 a.m. on that history-making Monday. "No clue," Treasury chief of staff Jim Wilkinson responded. "Let me get the list."
Fed plans repo markets revamp Concern over repurchase system stability The US Federal Reserve is considering dramatic changes to the giant repurchase - or repo - markets where banks around the world raise overnight dollar loans. The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say. The Fed's deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year.
ECB's Trichet says no room for more debt There is no room for governments that have borrowed billions to fight the economic crisis to accumulate more debt, European Central Bank President Jean-Claude Trichet said on Sunday. "There is a moment where you can't spend anymore and you can't accumulate any more debt. I think we are at that moment," Trichet told Europe 1 radio. He said the massive injection of funds into the economy through government stimulus packages had been the appropriate response to the economic crisis but he said states would have to bring public finances back under control as soon as possible.
Worse than subprime? Other mortgages imploding slowly Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump. The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.
And Now for Something Entirely Different: Divided We Stand What would California look like broken in three? Or a Republic of New England? With the federal government reaching for ever more power, redrawing the map is enticing. Remember that classic Beatles riff of the 1960s: "You say you want a revolution?" Imagine this instead: a devolution. Picture an America that is run not, as now, by a top-heavy Washington autocracy but, in freewheeling style, by an assemblage of largely autonomous regional republics reflecting the eclectic economic and cultural character of the society.
Cap And Trade Will Cost Households Just $175 Annually Cap and trade legislation will cost $175 annually for the average household, or just .2% of after-tax income, says the Congressional Budget Office. On Friday, the CBO released a report assessing cap and trade costs to households. It analyzed the cost of the program in 2020. At that point the legislation would be eight years old, so the economy should have adjusted to changes presented by the legislation. The CBO assumed a $28 price for a carbon credit. In 2020, 17% of the emissions would be sold and 83% given away.
California's credit rating in jeopardy Moody's Investor Service says the state's already low credit rating could tumble toward 'junk' if a $24 billion budget gap isn't closed. California, which is struggling to close a $24.3 billion budget gap, faces the prospect of a "multi-notch" downgrade in its credit rating if the state's legislature fails to act quickly to produce a budget, Moody's Investors Service warned Friday. Moody's decision to place California's general obligation debt on alert for a possible "multi-notch" downgrade stunned state officials. The state's current A2 credit rating is Moody's sixth-highest investment grade and makes California the lowest rated of the 50 states.
Dems worry that health plan lacks votes A Republican senator seeking a bipartisan health care deal spoke Sunday of lowering expectations while one of President Obama's Democratic allies questioned whether the White House had the votes necessary for a such a costly and comprehensive plan during a recession. Mr. Obama's proposal to provide health care coverage for some 50 million Americans who lack it has become a contentious point for a Democratic-controlled House and Senate struggling to reach a consensus Mr. Obama desperately wants.
Upward tick in gas prices may be coming to an end Run-up in gasoline prices appears to be over, but could Iranian strife send prices higher? After rising nearly every day for the past two months and climbing 67 percent so far this year, it looks like gasoline prices may be ready to take a break. Gas prices were up for a 54th straight day Sunday, by 0.1 cents, to a new national average of $2.693 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. The recent run-up exceeds anything that oil analysts say they have seen since the 1970s. But the streak should end Monday or Tuesday, Tom Kloza, publisher and chief oil analyst for OPIS, said Sunday.
'Cash for clunkers' coming soon Congress approves a measure to subsidize car purchases - consumers can get as much as $4,500 to trade in old cars. Vehicles bought after July 1 eligible A $1 billion Washington program to give vouchers to consumers who replace junky cars with fuel-efficient models is likely to ramp up very soon. Congress passed the "cash for clunkers" measure late Thursday night as part of the $106 billion war spending bill. President Barack Obama plans to sign the bill into law. "We are gratified that the Congress delivered on this administration priority, and President Obama looks forward to signing it into law," according to an administration statement. [Gov Web site with details: http://www.cars.gov]
Cracking the 'Great Firewall' of China's Web censorship Hacking Past China's Web Censors If an Internet user in China searches for the word "persecution," he or she is likely to come up with a link to a blank screen that says "page cannot be displayed." The same is true of searches for "Tibetan independence," "democracy movements" or stranger sounding terms such as "oriental red space time" code for an anti-censorship video made secretly by reporters at China's state TV station. It's a reflection of the stifling, bizarre and sometimes dangerous world of Internet censorship in China. The communist government in Beijing is intensifying its efforts to control what its citizens can read and discuss online as political tensions rise ahead of this summer's Olympic Game
U.S. Destroyer Shadows North Korean Ship A North Korean cargo ship shadowed by a United States Navy destroyer was reportedly steaming toward Myanmar on Sunday, posing what could be the first test of how far the United States and its allies will go under a new United Nations resolution to stop the North's military shipments. The United States began tracking the 2,000-ton freighter Kang Nam after it left Nampo, a port near Pyongyang, North Korea, on Wednesday. Pentagon officials have said they suspect the ship of carrying prohibited materials, but have declined to say where it may be headed. North Korea has said it would consider interception an "act of war" and act accordingly.
Confidential memo reveals US plan to provoke an invasion of Iraq A confidential record of a meeting between President Bush and Tony Blair before the invasion of Iraq, outlining their intention to go to war without a second United Nations resolution, will be an explosive issue for the official inquiry into the UK's role in toppling Saddam Hussein. The memo, written on 31 January 2003, almost two months before the invasion and seen by the Observer, confirms that as the two men became increasingly aware UN inspectors would fail to find weapons of mass destruction (WMD) they had to contemplate alternative scenarios that might trigger a second resolution legitimising military action.
Senator: Obama 'timid, passive' over Iran Republican senators criticized President Obama on Sunday for not taking a tougher public stand in support of Iranians protesting the outcome of the country's contested presidential election, with one saying the president had been "timid and passive." As thousands of Iranians flooded city streets in the past week to demonstrate for a new election, Republicans have been turning up the heat on Mr. Obama. The president has sought to send a measured message to the Iranian leadership, with which he still hopes to open a dialogue over its nuclear program.
Congress votes to stand by Iran protesters Congress one-upped President Obama with a tough response to Iran's elections Friday as both chambers voted overwhelmingly to decry Tehran's clampdown on protesters challenging the victory of President Mahmoud Ahmadinejad. Republicans pushed the resolution after criticizing Mr. Obama's comments on the situation as tepid, arguing that the U.S. should express solidarity for supporters of Mr. Ahmadinejad's challenger, Mir Hossein Mousavi, who is accusing the hard-line government of rigging the election.
Obama: U.S. prepared for any N. Korean threat President Obama said the United States is "prepared for any contingencies" involving North Korea -- including the regime's reported threat to launch a long-range missile toward Hawaii. Japanese media have reported the North Koreans appear to be preparing for a long-range test near July 4. Defense Secretary Robert M. Gates has ordered additional protections for Hawaii in case a missile is launched over the Pacific Ocean.
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