Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Tues 06.30.2009
World Globalization of the Banking & Regulatory Structure BASEL, SWITZERLAND -The power base of the world has shifted…it is no longer in London, New York City, Washington D. C., or Tokyo. Neither is it in Beijing or Moscow. It is Basel, Switzerland. In 1930, the Bank for International Settlements-BIS was set up as a result of the Young Plan which was named after the man who presided over the Allied Reparation Committee, Owen D Young. Basel was chosen as its location because everyone could get on a train from anywhere in Europe to attend its meetings. When you walk out of the main train station, the BIS is within easy walking distance of one block. A modern 18 story high building belies the power it extends globally. There is nothing about the building that calls anyone's attention to it other than the plaque near the glass front doors that basically says it is private property. The world's power brokers walk to the BIS without fanfare and are set apart from the citizenry by their business suit and ID pass.
Beijing Formalizes Call for New Reserve Currency China's central bank reiterated its call for the creation of a new international currency that could replace currencies such as the dollar in countries' official reserves. In its annual report on financial stability, issued Friday, the People's Bank of China said the country will push reform of the international currency system to make it more diversified and reasonable. While it didn't specifically target the U.S. currency, it said it aims to reduce over-reliance on the current reserve currencies, of which the dollar is the biggest.
Better Listen What China Has to Say Shocked by the fact that lamestream media and Twitter are all about Michael Jackson's death from what appears to be a drug overdose, I enjoy being the spoiler for a world that seemingly does not know how to set its priorities anymore. While 33 of the 42 commercial media I regularly read headline with Jacko, it is Chinese media that published the truly important news of the day. Here's the executive version of Chinese economic news picked from the English language People's Daily Online.
Economic analysis Larry Levin, of Secretsoftraders.com and CNBC's Steve Liesman and Rick Santelli share their analysis or recent economic data.
Will Gold Beat The Summer Doldrums This Year? Summer is not traditionally a good time for gold prices but this year could be the first exception in this bull market. Much depends on how stock markets fare from here. If there is a sharp correction then that would rally the dollar and take gold prices down, at least for a month or two.
This Summer May Prove Hot for Gold Prices Despite the Seasonal Tendencies I am often asked at this time whether it is a good idea to be in the precious metals market during the summer period known as the Summer Doldrums, in which demand for gold dries up temporarily while farmers in India plant crops and wait for the Monsoon rains. When they harvest in the early September, demand for gold picks up again as they are anxious to convert their profits into gold. After looking at the seasonal effects on gold one might think it prudent to wait through the summer in hopes of entering the market at lower prices. However, after considering important fundamental factors such as the increase in the money supply, it is clear that it is not a good idea to wait until summer's end to enter a market that rather sooner than later is heading higher. Naturally, there will be pullbacks along the way, but the potential cost of being completely out of the market is too steep.
Debtors Revolt in the Offing - Check Local Listings A debtors revolt is coming and, ironically, the dozen or so Too Big Too Fail (TBTF), systemically important financial institutions which control the bulk of about a trillion dollars of unsecured credit card lending, and which so generously received and in many cases still show on their balance sheets copious amounts of taxpayer capital borrowed from China, are now enacting the very policies which will be the cause of said revolt.
Inflation We will start with the most significant, the most pernicious and the most misunderstood of all the methods of economic fraud that are being directed against you: inflation. To most of us, inflation means a rise in the average level of all prices for goods and services. It is not an increase in one price or in some prices but an increase in the average of all prices. Without question, inflation is the most deadly of economic evils. It knows no geographical boundaries. It respects neither sex, nor race, nor creed, nor state of health or wealth.
Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity We have all heard that the U.S. economy cannot go the way of Argentina in 2001 when foreign investors expressed lost confidence in the government and refused to roll over maturing short-term government bonds. Money fled the country as foreign currency reserves dwindled. A balance of payments crisis facilitated by investor panic led to the very outcome investor’s feared: the world’s largest ever sovereign bond default, a collapsing currency, and hyperinflation.
Economist Marc Faber Interview - Part 1
Surviving Hyperinflation: An Update In the early 1980s, Harry E. Figgie, Jr. (the founder of Figgie International, Inc.) became concerned that the United States' government was following the same destructive path that lead countries such as Argentina, Bolivia, and Brazil into hyperinflationary economic collapse. In the 1980s, each of these South American countries were running massive annual deficits, were accumulating unmanageable national debts, and each respectively had a central bank creating money, out of thin air, at a reckless pace. In looking at the frighteningly similar profligate behavior, on the part of the U.S. Government, Mr. Figgie became concerned that hyperinflation could emerge in the United States as well.
Hyper-Deflation on the Streets of Paris Scarcely a block from our office in Paris is a monetary phenomenon that has escaped the financial press. In one of the highest-cost economies in the world, you can buy a woman's shirt for 2 euros. A dress? Four euros. A man's jacket can be had for the price of a cup of coffee. The shop is tended by Chinese merchants…apparently dodging France's employment laws by only hiring family members. The merchandise, too, dodges high rents by squatting the sidewalk, under improvised blue awnings.
Apples and Inflation Last week on CNBC's "The Kudlow Report" there was a thrilling debate over inflation between Alan Blinder and Arthur Laffer. Mr. Laffer (former member of Reagan's Economic Policy Advisory Board) encapsulated his position that we need to fear the return of inflation by simply stating that "…if you have a huge increase the supply of apples, the price of apples falls." While Mr. Blinder (former Vice Chairman of the Board of Governors of the Federal Reserve System) responded by stating, "If people suddenly want to hoard apples and the apple suppliers provide a lot of apples, you're not going to have inflation of apple prices."
Silver lining During the worst financial meltdown we have ever witnessed many investors expected gold and other precious metals to skyrocket to levels never seen before. In fact throughout the Lehman's debacle the price of gold actually fizzled like a Hong Kong typhoon and year on year January 2008 to December 2008 made very little gain. If gold was going to do anything short of spectacular we would have expected it to happen during the course of the last quarter of 2008. Yet some are still expecting gold to break through to highs once more in the future. They may be right, but our belief is they could be waiting for quite some time.
Economist Marc Faber Interview - Part 2
West 'must see through radical overhaul of banks' Regulators and governments across the West must not lose their resolve to see through a radical overhaul of banks and financial supervision, the world's top central bankers have warned, echoing a tough weekend message from Lord Mandelson, the Business Secretary. In its annual report, the Bank for International Settlements (BIS), regarded as the "central bankers' central bank", which is coordinating debate over a long-term shake-up of the financial system, highlighted "the risk that officials will fail to finish their repair task".
It's Time To Yank the Shroud Off the Fed Ron Paul's Audit Bill Is Gathering Steam! He may have faded from the national political scene a year ago, after his dark-horse presidential run came to naught, but Rep. Ron Paul's influence is still being felt in campaigns and policy debates across the country. Indeed, the latest legislative priority of the libertarian Texas Republican - auditing the Federal Reserve - has gained support in unlikely quarters. Paul's legislation, popularly known as the "Audit the Fed" bill, has drawn 244 cosponsors, ranging from Ohio's John A. Boehner, the conservative Republican floor leader, to Michigan's John Conyers Jr., the liberal Democratic chairman of the Judiciary Committee. Some Democrats have even picked up on Paul's rhetoric. "It's time to yank the shroud off the Fed and shine some light on these events," New York Democrat Edolphus Towns, chairman of the Oversight and Government Reform Committee, said at a hearing last week about the shotgun marriage between Bank of America and Merrill Lynch last fall to stave off the latter's collapse.
The Time Has Come Well people, we are here. I am here. Gold is here. But the question, dear reader, is... are you here? Gold is going to turn and punch through the $1000 barrier like it was not there. The U.S. dollar is going to drop like a stone. And yet, the vast majority of people are walking around in a daze. When I talk to ordinary Americans, they tell me that things are bad. This is their way of agreeing with the consensus media position of last fall which confuses falling prices with economic bad and buys the whole media line of that time.
Bernanke on the Great Depression A major result of last year's credit storm is a lingering sense of dread and foreboding among investors. Many are waiting for the proverbial "other shoe to drop" as the memories of last year's crisis, and its attendant economic effects, are still fresh in mind. Until recently it was unthinkable to mainstream economists and pundits that an event as devastating as the Great Depression could occur in the U.S. The financial events of the past two years have altered their thinking, however, and now the "D-word" is bandied about in the news with the same liberality the word recession used to be.
Treasuries Head for Steepest First-Half Loss in Three Decades Treasuries headed for their steepest first-half loss in at least three decades as government and Federal Reserve efforts to combat the U.S. economic recession take hold. Government securities were little changed today before an industry report that economists said will show U.S. consumer confidence rose to a nine-month high in June. The biggest gain in U.S. corporate bonds on record and a rally in stocks globally cut demand for the relative safety of government debt as investors sought higher-yielding assets.
Bank Of America/Merrill Lynch: How Did Private Deal Turn Into Public Bailout II? Part 1
Rising national debt raises prospects of eventual inflation Inflation is as dead as the Wicked Witch of the West in a waterfall. The consumer price index has actually fallen 1.3% in the past 12 months. So why is everyone so worried about soaring prices? In a word: debt. The government owes the world $11.4 trillion - $37,000 for every person in the U.S. In the next fiscal year, the government will add $1.8 trillion to the deficit.
Paulson to tell his side of Merrill deal Former Treasury Secretary has agreed to talk to a House panel about his part in last September's Bank of America-Merrill Lynch merger. Former Treasury Secretary Henry Paulson will return to Capitol Hill later this month to testify before lawmakers investigating the government's role in last fall's Bank of America acquisition of troubled Merrill Lynch. The House Committee on Oversight and Government Reform Committee said Monday that Paulson would appear on July 16. It would mark his first appearance before Congress since he left office in January.
Paulson Finally To Face Music On Govt. Role In Bank of America-Merrill Merger The House Oversight Committee has been like a dog with a bone with last year's $50 billion merger between Bank of America and troubled brokerage Merrill Lynch. The committee -- specifically, GOP members led by Rep. Darrell Issa (R-Calif.) -- believes that not only did Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson force Bank of America chief executive Ken Lewis into going through with the merger, even as he was getting cold feet, they believe Bernanke's Fed covered up the strong-arming.
States Can Investigate National Banks, Justices Rule The Supreme Court paved the way on Monday for states to enforce fair-lending laws and other consumer protection measures against the nation's biggest banks, striking down a rule that limited such powers to federal banking regulators. The court concluded that rules issued by federal banking regulators under the National Bank Act - a law passed in 1864 - could not block, or pre-empt, efforts by the states to enforce their laws. The case began with letters sent in 2005 by the New York attorney general at the time, Eliot Spitzer, to several national banks, including Citigroup, JPMorgan Chase and Wells Fargo, inquiring about their lending practices to minority customers.
BIS Sees Risk Central Banks Will Raise Interest Rates Too Late The Bank for International Settlements said there's a risk central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation. History shows that policy makers "have a tendency to be late, tightening financial conditions slowly for fear of doing it prematurely or too severely," the BIS, which oversees central banks, said in its annual report published today in Basel, Switzerland. "Because their current expansionary actions were prompted by a nearly catastrophic crisis, central bankers' fears of reversing too quickly are likely to be particularly intense, increasing the risk that they will tighten too late."
George Soros Talking about Jim Rogers and Warren Buffett 11 June In China
Banks on tighter leash after High Court ruling The U.S. Supreme Court decision to let states enforce their consumer protection laws against federally chartered banks will give regulators greater power to police lending abuses in an industry already under intense pressure to reform. Monday's 5-4 ruling striking down a rule by the U.S. Office of the Comptroller of the Currency barring state oversight is likely to fuel critics who believe lending abuse has driven millions of people into financial distress, whether through mortgages, credit cards or other forms of consumer credit.
Spitzer says chance to probe banks was lost Former New York Governor Eliot Spitzer hailed the Supreme Court's decision on Monday that allows the state's mortgage lending probe, one initiated by Spitzer in 2005, to finally proceed after a protracted legal battle with federal regulators. Yet the former attorney general laments the lost opportunity regulators had to question and possibly halt subprime mortgage activities that ultimately caused massive damage to banks and the economy.
Dollar Rises as China Says Currency May Dominate Global Trade The dollar rose after China said the U.S. currency may keep dominating global trade and ruled out any "sudden" changes to its foreign-exchange reserves. The dollar gained versus the Australian dollar, yen and Swiss franc after Guan Tao, deputy head of the international payment department at the State Administration of Foreign Exchange, wrote in Chinamoney Magazine that the greenback may maintain its status as the world's reserve currency. The yen fell against the New Zealand dollar after a Japanese report showed retail sales slid for a ninth month in May, reducing the currency's appeal as a refuge.
Hong Kong Banks 'Killing Themselves' in Mortgage War Hong Kong high school teacher Chris Poon's dream of buying his first apartment was dashed in December when banks refused to fund more than 50 percent of the HK$3.5 million ($450,000) purchase. Poon, 33, tried again in May and got a loan covering 70 percent of the price for the 700-square-foot (65-square-meter) apartment in Hong Kong's Sai Wan Ho district from BOC Hong Kong (Holdings) Ltd. The mortgage rate was 2.25 percent, down from the 3.5 percent that Poon was discussing with lenders last year.
Madoff Is Sentenced to 150 Years for Ponzi Scheme For one brief moment on Monday morning, Bernard L. Madoff stood up in a federal courtroom in Manhattan and turned to face the people who lost their life savings to his huge Ponzi scheme. "I'm sorry," he told them. "I know that doesn't help you." What did help some of the victims - if anything could - was the sentence Mr. Madoff received minutes later: 150 years in prison for operating one of the largest frauds in Wall Street history, an operation that ensnared millionaires, private foundations, a Nobel Prize laureate and hundreds of small investors who lost their life savings to an investment guru they had trusted completely.
AND NOW, A WORD FROM THE ECONOMY HERSELF
A Recipe for Economic Destruction Those whom the gods wish to destroy they first make mad is an ancient saying that Obama seems intent on confirming with his energy bill. It has been estimated that if implemented this bill will added $9 trillion to energy costs by 2050. And the bad news does not stop there. Critics point out that the these costs will be felt throughout the US economy, particularly in the production of goods and services. However, Americans will not have to wait until 2050 for a severe energy crisis to strike.
Basic Premises by Charley Reese What follows are a few of the basic premises on which I base my thinking. You might or might not agree with them, but may I suggest that you make a list of your own basic premises. It will help you clarify your thinking.
Government is inherently incompetent, and no matter what task it is assigned, it will do it in the most expensive and inefficient way possible.
The American government is corrupt from top to bottom.
If you rely on the mass media to inform you about your community, state and nation, you will, with rare exceptions, be woefully ignorant of what is really going on.
The universal franchise is a bad idea. The notion that the destiny of the nation should be put in the hands of ignoramuses, parasites, boobs, party hacks and idiots is absurd on its face.
Public education in America is a failure and is so flawed it cannot be reformed.
Not much has changed in the past 5,000 years of human history.
Social Security Will Go Bankrupt by 2037 Four Years Earlier Than Projected The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives. Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.
Government Bails Out General Electric "But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE...Public records show that GE Capital, the company's massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government's actions have been "powerful and helpful" to the company." That fact that public money is being used to support General Electric, through their GE Credit group which chartered two small Utah banks raises several issues.
Housing in Peril as Obama Fails to Get Breakthrough Driving through Riverside, California, Bruce Norris pointed to a half-dozen empty houses with "For Sale" signs stuck in untended lawns that he said investors might buy if banks would just extend some credit. "People today look at us as the enemy," said Norris, 57, head of Riverside-based Norris Group, which purchases and renovates homes to rent or sell. "That's a big problem for housing because if we can't get the financing we need, a lot of these properties are going to sit vacant."
WHERE CREDIT IS DUE song parody from versusplus.com about CREDIT CARDS & THE CRISIS
U.S. "mass layoffs" at RECORD high Large-scale lay-offs in the U.S. (defined as lay-offs of 50 or greater at one time) hit the highest level since this statistic was created in 1995, according to an article from CNN. This is yet another indication that the U.S. economy is plummeting downward - with absolutely no signs of stability, let alone a "recovery". Up to this point, the U.S. government has been very successful in duping market sheep (i.e. the "experts") through publishing totally fraudulent monthly jobs reports. With the U.S. economy losing roughly 2 million jobs each month (see "U.S. economy to lose 20 MILLION jobs this year"), the government claimed that less than 400,000 jobs were lost in May.
The Truth Alone Will Not Set You Free The ability of the corporate state to pacify the country by extending credit and providing cheap manufactured goods to the masses is gone. The pernicious idea that democracy lies in the choice between competing brands and the freedom to accumulate vast sums of personal wealth at the expense of others has collapsed. The conflation of freedom with the free market has been exposed as a sham. The travails of the poor are rapidly becoming the travails of the middle class, especially as unemployment insurance runs out and people get a taste of Bill Clinton's draconian welfare reform. And class warfare, once buried under the happy illusion that we were all going to enter an age of prosperity with unfettered capitalism, is returning with a vengeance.
Lawmakers Face Pressure to Resolve U.S. Health Issues Lawmakers working to overhaul the U.S. health-care system face a pressure-filled July after leaving town this week without resolving the biggest questions dividing Democrats and Republicans. When lawmakers return on July 6 after a weeklong recess, the push will be on to overcome differences over issues ranging from whether to set up a new government entity to compete with private insurers to how much to tax the most generous employer- provided insurance plans to generate revenue.
White House Announces New Lighting Standards Aiming to keep the focus on climate change legislation, President Barack Obama put a plug in for administration efforts to make lamps and lighting equipment use less energy. "I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and businesses," the president said, standing alongside Energy Secretary Steven Chu at the White House.
Deficit forces California to issue IOUs California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red. Once the US's richest state, California now has the dubious distinction of having the worst credit rating in the country. It is facing a budget deficit of $24bn (€17bn, £14.5bn) yet Arnold Schwarzenegger, its governor, and the state assembly cannot agree on a budget that would address the shortfall.
General Motors Seeks Approval to Sell Itself General Motors is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a "New GM" in a plan to reinvigorate the automaker under U.S. government ownership. GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration's autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a "New GM" and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury.
Chevrolet races to meet demand for 2010 Camaro General Motors says it's struggling to meet demand for its new 2010 Chevrolet Camaro, with some buyers paying $500 to $2,500 more than the sticker price. The Camaro is creating enough buzz to play a key role in GM's turnaround. It is drawing showroom traffic - every dealer got at least one initially to build interest - while GM is in Chapter 11 bankruptcy protection.
Obama Opposes Trade Sanctions in Climate Bill President Obama on Sunday praised the energy bill passed by the House late last week as an "extraordinary first step," but he spoke out against a provision that would impose trade penalties on countries that do not accept limits on global warming pollution. "At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade," Mr. Obama said, "I think we have to be very careful about sending any protectionist signals out there." He added, "I think there may be other ways of doing it than with a tariff approach."
Ron Paul on Cap and Trade
Warren Buffett Slams "Cap and Trade" as a Regressive Tax on All Americans
Where government ships radiation, infectious waste Public exposed as contagious medical trash routinely trucked across America's highways Contaminated needles and scalpels, bloodied bandages, body parts, unused prescription drugs, soiled hospital garments, radioactive waste and refuse tainted with infectious disease: These are only a few items that may be discarded on a curbside, abandoned in a nearby lake or piled in a dumpster headed for the local landfill. Some say Americans are simply oblivious to the imminent risk of major hazards and contagions spreading throughout their communities at any given time.
Honduran army stands firm as US condemns coup Latin America unites as riot police turn on protesters The United States States stood alongside governments across Latin America voicing support for President Manuel Zelaya of Honduras one day after he was ousted and dispatched in his pyjamas to exile. After a few hours in Costa Rica, Mr Zelaya flew late on Sunday aboard a jet provided by President Hugo Chavez of Venezuela to the Nicaraguan capital, Managua. He remained there yesterday with Mr Chavez and other leftist leaders from the region. Meanwhile, the Organisation of American States (OAS), said it would recognise no other government in Honduras but that of Mr Zelaya.
China, Brazil reported planning currency trade deal The central bank governors of China and Brazil have agreed in principle to allow trade between the two countries to be settled in their respective currencies, reports said Sunday. People's Bank of China Gov. Zhou Xiaochuan and Banco Central do Brazil President Henrique Meirelles met on the sidelines of the Bank for International Settlement's annual general meeting in Basel and said they would study how to implement the plan, the reports said. The move would bypass the U.S. dollar, to settle trade invoices in Chinese yuan and Brazilian reals.
Peter Schiff on Glen Beck - Cap and Trade Bill Is A Giant Tax on Productivity
Warren Buffett Slams "Cap and Trade" as a Regressive Tax on All Americans
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