Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Fri 02.26.2010
Greek PM says economic crisis confirmed worst fears Dina Kyriakidou ATHENS (Reuters) - Prime Minister George Papandreou on Friday vowed to ignore the political costs and take drastic measures to pull Greece out of a debt crisis threatening the stability of the euro zone. Speaking to parliament after a visit by EU economic inspectors, Papandreou said Greece did not want other countries to pay for its debts but expected solidarity from its European peers as it struggled with worse than expected fiscal problems. "Unfortunately, history has fully confirmed our worst fears," he said. "Our duty today is to forget about political costs and only think about the survival of our country ... Past policies make it necessary to proceed to brutal changes." . . . .
"There is only one dilemma: Will we let the country go bankrupt or will we react? Will we let the speculators strangle us, or will we take our fate in our own hands?" Papandreou said. . . . .
EU peers and markets were shocked when Papandreou's socialists revealed after last October's election that the previous government had understated its budget deficit by half. . . .
Fed Examines Greek Bank Debt The Senate warms to the Fed as a bank regulator. CNBC's Steve Liesman has the details on Bernanke's thoughts on credit default swaps.
Bank CEO: New wave of failures is possible by Russ Wiles - The Arizona Republic In a couple of years, Americans will look back on the tough economy with a sigh of relief. But, in the meantime, they'd better make sure their bank deposits are protected. Richard Davis, top executive at U.S. Bancorp, told members of the Economic Club of Phoenix on Thursday that he expects the economy will tread water for a few quarters before turning more decisively upward next year. But, in coming months, he warned that a possible new wave of bank failures could be more painful than what has transpired so far, in the sense that government regulators might have trouble finding white knights for some weak players. With most recent bank failures, regulators have managed to find healthy banks to acquire troubled banks, creating a fairly seamless transition for customers, employees and others.
TPG head says FDIC buyout curbs boost failures By Ned Barnett CHAPEL HILL, N.C., (Reuters) - David Bonderman, co-founder of giant private equity firm TPG, said on Thursday that regulators are accelerating bank failures by limiting private equity's ability to buy into and reorganize struggling banks. The Federal Deposit Insurance Corp, concerned about equity funds exploiting the depressed assets of troubled banks by quickly selling them off, has limited the percentage of ownership and control by outside investors. . . . "The FDIC has taken the view that they are terrified of private equity guys -- or anybody else for that matter -- getting control of a financial institution," he said.
Clinton compares Iran showdown to Cuban missile crisis AFP - Breitbart US Secretary of State Hillary Clinton on Thursday compared the showdown with Iran over its nuclear program to the Cuban missile crisis in 1962, which brought the world to the brink of nuclear war.Clinton told lawmakers that "we are engaged in very intensive diplomacy," saying it is similar to what president John F. Kennedy did when he forced the Soviet Union to withdraw missiles it had deployed in Cuba, near US shores.
Iran and Syria put on show of unity in alliance Clinton finds 'troubling' Ian Black, guardian.co.uk Ahmadinejad and Assad accuse the Americans of trying to dominate Middle East Iran and Syria put on a show of defiant unity today, scorning US efforts to break up their alliance and warning Israel not to risk attacking either of them. Mahmoud Ahmadinejad, the Iranian president, flew to Damascus for talks with Bashar al-Assad days after the US appointed an ambassador to Syria after a five-year gap – a move seen by some as the start of a diplomatic thaw. "The Americans want to dominate the region but they feel Iran and Syria are preventing that," Ahmadinejad said during a press conference with Assad.
How the Fed Lost Control of Monetary Policy Dr. Jeffrey Lewis - SilverBearCafe.com While investors contemplate the recent increase in the Federal Reserve Discount rate, astute investors realize this arbitrary figure means nothing in regards to fighting inflation or decreasing the money supply. Although the Federal Discount rate may have made an impact in 2008, its impact on the market was lost after the Fed expanded the balance sheet to buy illiquid assets in late 2008 through 2009.
Euro in danger as the Greek crisis deepens and Merkel admits currency is at risk By MAIL Online -- Greece's debt crisis has plunged the euro into a ‘ difficult situation’, the German Chancellor Angela Merkel admitted last night, prompting fresh fears about the collapse of the single currency. In the gravest sign yet of the international threat posed by Greece’s crippled economy, Mrs Merkel warned for the first time that the eurozone faces a ‘ dangerous’ period. The beleaguered euro initially fell in the wake of her comments and fresh speculation that Greece’s international credit rating may be downgraded.
The Coming Euro Collapse - Euro Crisis BBC Special
The Coming Euro Collapse - Euro Crisis BBC Special Part 2
WILL THE UNITED STATES DEFAULT ON ITS DEBT? PragmaticvCapitalist Barney Frank: “Do you think there is any realistic prospect of America defaulting on its debt in the foreseeable future?” Bernanke: “Not unless Congress decides not to pay which I don’t anticipate….”
Let’s get this straight. The United States government CANNOT default on its obligations without some sort of mental lapse from Congress (the trade here, short sovereign US CDS every time it spikes). The government is the sole supplier of the sovereign currency. The government has a monopoly on money & carries NO foreign currency denominated debt. If they have fiscal problems they simply print more. They press a button on a computer and magic money appears in an account. That’s literally how it works. The US government is not a household or a state. They are not Greece who does not print their own currency. It’s ENTIRELY different.
FDIC to test principal reduction for underwater borrowers By Renae Merle - Washington Post The Federal Deposit Insurance Corp. is developing a program to test whether cutting the mortgage balances of distressed borrowers who owe significantly more than their homes are worth is an effective method for saving homeowners from foreclosure. The program would be aimed at a growing population of homeowners who are underwater on their loans, estimated at more than 20 percent of borrowers, or 11 million homeowners. Economists consider these borrowers among the most vulnerable to foreclosure, and some industry officials worry that more of them will simply walk away from their mortgages, or "strategically default," rather than spend a decade or more trying to regain positive equity.
Why inflation is virtually guaranteed By Terry Coxon in The Casey Report: There are two ways for a commercial bank to get into trouble. One is to take in money from depositors and put it into loans that don’t get repaid, or into investments that lose value. The second is to take in money through checking accounts and short-term CDs and put it into fixed-rate, long-term loans. Even if the long-term loans get repaid, the cost of holding on to the short-term deposits can crush a bank if interest rates rise enough. The bank must pay more and more to keep the deposits from leaving, even though the earnings on the bank’s long-term loans are frozen. The Federal Reserve has embraced both dangers. Most of what it has bought is high-risk paper (the mortgage-backed securities), which means it faces the risk of loss from defaults. And most of its investments, including the Treasury securities, are fixed-rate, long-term paper, which means that, even without defaults, the income they produce is frozen.
Why Bob Prechter Is Wrong on Deflation: Ben Bernanke "Wants Inflation" After a year of "reflation" in the economy and financial markets, the tide seems to be turning on the whole inflation vs. deflation debate. Recent data on U.S. durable goods, consumer confidence and new homes sales, along with uncertainty over European sovereign debt speak to the deflationary cycle Robert Prechter says is already upon. On Thursday, renewed concerns about Greece's credit rating and the future of the EU gave the dollar a boost, with commodities and equities suffering as a result. Broadly speaking, the market action seems to justify Prechter's warning. Not so fast, says Peter Boockvar, equity strategist at Miller Tabak, who believes inflation remains a bigger long-term threat to the market and U.S. economy.
Fed's Bullard says inflation expectations trump all Mark Felsenthal - Reuters TEXARKANA, Texas (Reuters) - The Federal Reserve is watching increases in inflation expectations carefully and would act if there was a spike, a senior Fed official said on Thursday. "If inflation expectations went up sharply, that would trump all other concerns and the Fed would take action," St. Louis Federal Reserve Bank President James Bullard said in response to questions after a speech to a business group. Market indexes of inflation expectations, while lower in the last few weeks, had risen over the past year, said Bullard, a voter this year on the Fed's policy-setting panel who is generally ranked as an anti-inflation hawk.
The Bank of the Fed is Closed…Forever By: Robert Singer - MarketOracle.co.uk In an effort to explain our escalating financial crisis, an American Nightmare (an Environmental Dream), the pundits are focusing their angst on the 44th POTUS, who might very well go down as the single most inept president in all of American history. Barack Obama is not inept, greedy or stupid and he isn’t one of “us”. . . . . The decision to have Obama preside over the greatest financial calamity since the Great Depression was made five years ago; the November election was a formality. (Why Joseph Biden will be the Next Vice President of the United States) . . . . However, the policies at the Federal Reserve have changed…inexplicably, monumentally and historically: As of October 2008, the men behind the Federal Reserve, all connected to the House of Rothschild, are no longer giving up what’s left of their real wealth so the middle class can live the American Dream, a nightmare for the planet.
Clinton says U.S. deficit now a security issue By Andrew Quinn WASHINGTON (Reuters) - Secretary of State Hillary Clinton on Thursday said "outrageous" advice from former Federal Reserve Chairman Alan Greenspan helped create record U.S. budget deficits that put national security at risk. Appearing before congressional panels to defend the State Department's $52.8 billion budget request for 2011, Clinton said the massive U.S. foreign debt had sapped U.S. strength around the world. "It breaks my heart that 10 years ago we had a balanced budget, that we were on the way of paying down the debt of the United States of America," Clinton said.
Max Keiser on Inside Story - Greek Debt Crisis - (1/2)
Max Keiser on Inside Story - Greek Debt Crisis - (2/2) Exposing co-mingling of IMF, Goldman Sachs and other Wall Street firms
US senator warns of ‘financial meltdown’ risk By Edward Luce in Washington The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire. In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt. “We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”
Bernanke Says Deficit Action Is Key By SUDEEP REDDY - WSJ Fed chairman says investors' continued faith in U.S. economy could fade quickly without signs that Congress is crafting plans to align federal expenditures and revenue Federal Reserve Chairman Ben Bernanke faced a barrage of questions about the risks of a rising federal deficit as he delivered his semiannual economic report to Congress this week. Mr. Bernanke's repeated response during a pair of hearings was that markets haven't lost faith in the U.S. economy yet. But he said the situation could change quickly without a credible plan from lawmakers to bring projected government spending in line with tax revenue.
Goldman Sachs faces Fed inquiry over Greek debt By James Quinn - Telegraph Goldman Sachs' role in masking Greece's real debt burden is to be investigated by the US Federal Reserve and the Securities and Exchange Commission (SEC). Ben Bernanke, chairman of the central bank, confirmed that Goldman and a number of other unnamed banks are the subject of two examinations. Mr Bernanke, who stopped short of saying an official inquiry had been launched by either regulator, warned that using derivative "instruments in a way that potentially destabilises a company or a country is counterproductive." The revelations, which came as ratings agencies Standard & Poor's and Moody's warned that they may downgrade the Hellenic nation's sovereign debt within a month, only serve to increase the already intense glare on the Wall Street investment bank over its involvement with the Greek government.
Fed to Examine If Wall Street Is Betting On Default by Greece By: CNBC.com with Reuters and AP The Federal Reserve will look into a report that several Wall Street firms, including Goldman Sachs, have been betting on a default by Greece on its sovereign debt, Fed Chairman Ben Bernanke told the Senate Banking Committee on Thursday. "We are looking into a number of questions related to Goldman Sachs and other companies in their derivatives arrangements with Greece,'' Bernanke said in response to a question for Senate banking Committee Chairman Chris Dodd. Bernanke said the Securities and Exchange Commission was also "interested'' in the issue.
This is one of the biggest Wall Street frauds ever... By Porter Stansberry in the S&A Digest: One of the best lessons I've learned over my career as an investment analyst is the myth of excellent management or "great execution" is really just that – a myth. When I see companies in troubled industries reporting quarter after quarter of great results, while all of their peers are getting killed, I know a fraud is going on. I remember in the early 2000s, WorldCom kept reporting profits when all of the other long-distance carriers were getting killed. I knew it couldn't last. And it didn't. WorldCom's accounting was revealed to be a fraud – the company was counting its network access costs as capital expenses. Once the real numbers came out, the company collapsed in what was the largest bankruptcy in American history at that point.
Fed probing Goldman's role in Greece, Bernanke says By Greg Robb, MarketWatch Bernanke said the investigation included other companies. "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Bernanke said in testimony before the Senate Banking Committee. The European Union has demanded that the Greek government provide details of how it used currency swaps and other instruments. Greece in 2001 borrowed billions, with the aid of Goldman Sachs in a deal hidden from public view because it was treated as a currency trade rather than a loan.
Fed Examines Swaps Deals by Goldman and Others By LUCA DI LEO AND SUSANNE CRAIG - WSJ Federal Reserve Chairman Ben Bernanke said the central bank is examining controversial derivatives transactions that Goldman Sachs Group Inc. and other banks made with Greece. "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Mr. Bernanke told the Senate Banking Committee on Thursday. The Securities and Exchange Commission also is exploring the matter, he said.
US will suffer its own Greek crisis By Bill Fleckenstein - MSN Money Though the spotlight is now on Europe's financial difficulties, a recent move by China could signal the start of a similar, but much bigger, funding squeeze in America. If there were a gold medal awarded to a sovereign entity with the largest financial problems, Greece might be in the unhappy position of claiming the title. But outsized media attention notwithstanding, bigger catastrophes than Greece lie ahead. Greece is merely one of many sovereign entities that have lived beyond their means for a long time. At some point, we in America will suffer the consequences of having the world focus on our imbalances. Besides size, the major difference (for the time being) is that Greece no longer has its own printing press -- nor do any other countries that use the euro. That is the real problem, at least so far as the euro goes.
Bob Chapman on The Power Hour with Joyce Riley 1/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 2/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 3/4: Insolvency in Europe shows our future
Bob Chapman on The Power Hour with Joyce Riley 4/4: Insolvency in Europe shows our future
Germany debt chief hints at Greek rescue By Ambrose Evans-Pritchard - Telegraph The head of Germany's debt agency has warned that Greek withdrawal from the euro would have calamitous effects and destroy Europe's monetary union, a prospect that leaves Berlin with little choice other backing an EU rescue plan."If one member of the eurozone were to step out for any reason, this would be a collapse of the entire system," said Carl Heinz Daube, director of the Finanzagentur. "It would mean that after ten years, the euro experiment has ended." Mr Daube said a range of options are "under discussion" for a possible assistance for Greece but confessed that the issue is a very hot potato in Germany. "It is very hard to clarify to a man on the street why one country should step in to help another country," he told the Euromoney bond congress in London.
Would Some Big Banks Profit From a Greek Debt Default? By PETER COHAN - DailyFinance.com Greece is in financial trouble -- and that's creating winners and losers. The losers are the Greek people, who are suffering from the government's austerity measures so Greece can show a more balanced budget -- and perhaps get bailed out by wealthier EU members. Holders of Greek debt could also suffer if Greece defaults. That is, unless you happen to be a big bank or other institutional investor who has bought a credit default swap to offset any loss incurred should Greece actually default on its sovereign debt. But Goldman Sachs Group (GS) -- which has used such credit insurance to bet against Greek debt and earlier helped mask Greece's debt problems -- could come out as a winner. And that has caught the eye of Fed Chairman Ben Bernanke.
Greece: A Game of 'Chicken' with the ECB? By Natascha Gewaltig - BusinessWeek.com Some traders think the country could force the ECB to soften its stance on austerity measures and possible financial aid by delaying a bond sale, says Action Economics If Moody's Investors Service follows other rating agencies in downgrading Greece's debt, the nation could be in the position that its government debt may no longer be eligible as collateral in European Central Bank refinancing operations. Moody's warned on Feb.25 that "if in a few months it appears there are significant deviations from the plan [to reduce Greece's deficit], then it is pretty likely that we would adjust the rating accordingly." Such a departure could lead to a cut of "a couple of notches" from its current A2 designation.
New Century Bank must raise $30M, review senior executives By: Lorene Yue - Crain's ChicagoBusiness.com Federal and state regulators are ordering New Century Bank of Chicago to shore up its capital by more than $30 million, as they question whether senior executives are able to manage the institution. The consent order between New Century Bank, the Federal Deposit Insurance Corp. and the Illinois Department of Financial and Professional Regulation was issued Feb. 17 and released Wednesday. It gives New Century two months to hire an independent firm to conduct a broad analysis of the institution's senior executive office "for the purpose of providing qualified management for the bank." The study will evaluate current management's experience and pay, and help determine how many senior officers are needed to manage the bank.
Senators Urge U.S. Action on Chinese Currency Manipulation By COREY BOLES - WSJ WASHINGTON—A bipartisan group of senators urged the Obama administration to act urgently to investigate allegations the Chinese government is keeping its currency artificially low, saying a failure to do so is manifestly harming U.S. manufactures. In a letter sent to Commerce Secretary Gary Locke Thursday, the group of 15 senators, including six Republicans, said there are serious concerns about the department's failure to conclude that China's currency manipulation is in fact a "countervailable subsidy" to its domestic exporters. "In the face of China's actions to subsidize its exports at the expense of U.S. manufacturers and workers, the Department needs to act," the lawmakers said in the letter.
Gold bounces back from 2-week low By Deborah Levine, MarketWatch Gold futures ended higher for the first day in the past four on Thursday, after being in negative territory, as revived concerns about Greece's ability to address its financing problems boosted the U.S. dollar versus the euro. The greenback gave back some of those gains as the day wore on, helping gold turn higher as an alternative investment.
Subtle Signs Gold’s Correction Is Over By: Rick Ackerman, GoldSeek.com The technical evidence was subtle, but gold appeared to have its best day in months on Thursday. The night before, we had told subscribers to brace for a new wave of selling that would bring the April Comex contract down to at least $1073, exactly $23 below the previous day’s settlement price. When the dust had settled, however, the futures had fallen no lower than $1088 – off a mere $8 from the previous day’s close. Moreover, the reversal from the day’s lows was swift and decisive, leaving April Gold at $1108 by day’s end, $20 off the lows. Most encouraging of all, however, was that the bounce came precisely from a “Hidden Pivot midpoint,” and that it ultimately blew past two resistance peaks on the hourly chart without pausing for breath
Gold rises 1 percent on report China to buy IMF gold Barani Krishnan - Reuters Gold rose 1 percent on Thursday, rebounding from two-week lows and snapping three days of declines as investors scrambled to cover short positions after a report that China will buy IMF-auctioned bullion. Spot gold, which reflects the price of bullion, was bid at $1,105.55 an ounce by 2:50 p.m. EST (1950 GMT), up from $1,097.25 in New York late on Wednesday. In the futures market, U.S. gold for delivery in April settled up $11.30 at $1,108.50 an ounce on the COMEX metals division of the New York Mercantile Exchange.
Will she won't she? - China's gold dance Author: Lawrence Williams - MineWeb.com First the rumours are that China won't buy the IMF gold, then there are equally strong rumours that it will. If China or India, the other rumoured buyer, don't cough up does it really matter? No sooner had most Western pundits come to the conclusion that China was unlikely to buy the IMF's remaining 191.3 tonnes of gold for sale, with reports in China Daily lending support to this interpretation of Chinese buying policy, than the Russians in the form of Pravda published an article saying that China was in talks with the IMF to relieve that august body of this bullion which is obviously burning a hole in its pockets. The Pravda report quoted the FinMarket news agency as saying that Chinese officials have confirmed the nation will buy the IMF gold - this immediately follows reports from other Chinese officials that it won't buy the IMF gold. Naturally the gold price has been bouncing up and down like a yoyo. Either the Chinese are having a huge laugh at the expense of gullible Western - and other Asian - investors, or there are groups of gold bulls and bears out there busy placing stories in the media to suit their particular investment policies.
Is China jumping to grab 191 tonnes of IMF gold? By Jon Nadler - CommodityOnline.com Bullion prices fell by nearly a further 1% below their afternoon New York closing levels during overnight Asian trading, as buyers became scarce amid the worsening Greek credit situation and the US dollar’s rise to the 81 mark on the trade-weighted index. A sobering set of remarks by Fed chief Ben Bernanke on his first day of testimony before the HFSC on Wednesday added to concerns regarding the progress of the US economic recovery. Apparently, more remain worried about “de” rather than “in” when it comes to “flation” at the present time.
China May Buy More Gold; $1,100 An Ounce Appears To Be Support Level Robert Lenzner - Forbes A report that China's central bank will buy another $7 billion of gold bullion from the IMF, which has been periodically raising funds by the sale of its precious metals reserves, has been touted as helping to put a floor under the price of gold at around $1,100 an ounce Wednesday. Several days ago, billionaire investor George Soros disclosed he had more than doubled his position in gold bullion, making him one of the largest hedge fund holders of gold along with John Paulson and others.The IMF sold roughly the same amount to India last year. The tiny island nation of Mauritius and Sri Lanka also added gold to their reserves.
Will India buy IMF gold again? NEW DELHI (Commodity Online): Will India do it again? That is the question being asked by investors and bullion market analysts now. After India’s surprise buying of 200 tonnes of IMF gold in November last year, now several news agency reports said that India is another potential candidate to buy more gold from the International Monetary Fund when it begins selling 191.3 tonnes of the precious metal. The uncertain outlook for two of the world’s major reserve currencies — the dollar and euro — provides a spur for central banks, including the Reserve Bank of India, to buy gold.
Gold, the IMF, and Dirty Jokes by Jeff Clark - FinancialSense.com How many IMF officials does it take to change a light bulb? As you probably read, the International Monetary Fund announced they would proceed with selling the remaining 191.3 tonnes of gold from the 403.3 tonnes planned. The money is to be used for lending to poor countries. Lending implies the money will be repaid, which, in the case of the IMF, is a joke that isn’t funny. But that’s a topic for another day. The IMF stated that sales will be conducted in the open market, which is interesting because until now, gold has only been made available to central banks. While the IMF remains open to central banks buying some of the gold, sales will be conducted “in a phased manner over time” to avoid disruptions to the open market.
Gold: A picture tells a thousand words Author: Rhona O'Connell - MineWeb.com The net long dollar position on Inter continental exchange is 150 times the six-year average; CME Euro is heavily oversold As gold appears to be marking time amidst an array of uncertainties, it is probably quicker for the reader to look at a series of pictures than to be presented with screeds of text. Essentially gold's superficially lack-lustre performance in the middle of February can be lain at the feet of questions over future economic policies for the world's largest industrial countries, including interpretation of Dr Bernanke's latest statements, the moves within China and the latest concerns over Europe, notably the likelihood of a downgrade of Greece's debt.
Gold's 2010 Outlook Australasian Investment Review The outlook for gold looks promising in 2010, according to the World Gold Council and will be underpinned by investment demand. This confident forecast came from the WGC, despite an 11% fall in demand for the metal in 2009, owing to weaker industrial and jewellery demand. For that we can blame the recession, the lingering impact of the credit crunch and the soaring price of the metal which charged back through $US1000 an ounce around last September and went on to top $US1200 an ounce.
At Least Greenspan Told the Truth Once Peter Souleles B. Com. LLB. - SilverBearCafe.com "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." - Alan Greenspan In view of the above statement by Alan Greenspan, I call upon every politician, journalist, banker and economist to explain their words and their actions in defending and extending the lies created out of fiat money, quantitative easing and credit creation. Greenspan's statement has never been addressed by the abovementioned gentlemen and never will be. They do not have the integrity to admit the truth and possibly lack the intellect to understand it as well. Jon Nadler over at Kitco recently quoted the journalist David Frum to the tune of 600 words as to why it would not be possible to go back to the gold standard and how the gold standard has caused more recessions than the fiat system.
Quack Economists and the Fraud of GDP Bill Bonner Now... about that 'recovery'... It's true that there are some signs of "stabilization." The unemployment rate is not getting badder as fast as it was a few months ago. And house prices seem to have stopped falling – for the moment. It's also true that the economy managed to register positive 'growth' in the last quarter... mostly thanks to government spending and inventory restocking. The trouble is, all of these things are consistent with a depression - especially a depression that the feds are fighting every inch of the way. In the 1930s, there were several years of growth... and there were great years for the stock market too. Then, things fell apart again. The nation ended the '30s not one penny richer than it had been when it began them.
Sovereign Debt Follies Bob Hoye - Institutional Advisors "It Has Taught Us Nothing" Another episode of sovereign defaults seems to be well under way, which prompts the question about just how bad can it get? The above quotation is from a 1933 study of that example of government defaults and as the writer notes, it was preceded by a "new borrowing orgy". The word "new" is important because the literature often includes the description "new financial era". The first one, the South Sea Bubble, culminated in June 1720 and it has essentially been the model for five subsequent ones, including the example that completed in 2007.
Over-Arching Sovereign Debt Crisis Jim Willie, CB. - SilverBearCafe.com Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The issue is rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigner must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of containment incites laughter. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last.
CNBC'S FAST MONEY ACKNOWLEDGES THE PLUNGE PROTECTION TEAM After Denying The Existence of Plunge Protection Team (aka Presidents Working Group on Financial Markets) - back in 2008, the CNBC network has finally come to grips and stop lying to the public. Today they are fully acknowledging the Plunge Protection Team and Cheering them on stating that the PPT will step in and rescue the stock market. This is what happens to the DOW when OTC Derivatives are in control.
Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity By Aki Ito and Jason Clenfield Feb. 24 (Bloomberg) -- Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks. Following banking crises, “we usually see a bunch of sovereign defaults, say in a few years,” Rogoff, a former chief economist at the International Monetary Fund, said at a forum in Tokyo yesterday. “I predict we will again.” The U.S. is likely to tighten monetary policy before cutting government spending, sending “shockwaves” through financial markets, Rogoff said in an interview after the speech. Fiscal policy won’t be curbed until soaring bond yields trigger “very painful” tax increases and spending cuts, he said.
Geithner's Gotta Go By MIKE WHITNEY How Goldman Sachs and AIG Got Top Dollar for Worthless Assets Would it be wrong to take out a $1,000,000 policy on your wife and then put strychnine in her double-tall nonfat mocha?Not if you are Goldman Sachs it wouldn't. In fact--according to an article on today's Bloomberg News--that's exactly what they did. They slapped together $17.2 billion in garbage CDOs and then insured the hell out of them with credit default swaps (CDS) issued by AIG. As soon as the CDS blew up, G-Sax collected 100 cents on the dollar for their ingenuity. (G Sax received $14B altogether)
Bernanke Defends Fed’s Ability to Supervise Banks By SEWELL CHAN - NY Times WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, urged Congress on Thursday not to strip the central bank of its power to regulate banks, warning that to do so would be a “grave mistake.” Mr. Bernanke said the Fed would gladly surrender the authority it used in 2008 to arrange the sale of Bear Stearns and bailouts of Citigroup and the American International Group. But he said the Fed was uniquely positioned to provide “strong, consolidated supervision” of the biggest financial companies.
Obama May Prohibit Home-Loan Foreclosures Without HAMP Review By Dawn Kopecki Feb. 25 (Bloomberg) -- The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.
Jobless Claims Unexpectedly Rise By JOSEPH LAZZARO - Dailyfinance.com Another setback on the employment front, as jobless claims unexpectedly jumped for the second straight week, this time rising 22,000 to 496,000 for the week ending February 20, the U.S. Labor Department announced Thursday. Economists surveyed by Bloomberg News had expected jobless claims to total 460,000. Meanwhile, the four-week moving average increased 6,000 to 473,750, while continuing claims rose 6,000 to 4.617 million. A year ago, initial jobless claims totaled 656,000, the four-week moving average was at 632,500, and continuing claims totaled 5.065 million.
Educating the Masses Linda Brady Traynham - SilverBearCafe.com If you were in charge of the educational system, what would you do and why? Mull that one over while I tell you how I would go about it, and I’ll make it easier by stipulating grandly that price is no object. Snicker. Will people never stop falling for my sucker bets? Very seldom does money expended on education equal excellence of outcome, as Washington, D. C., has been demonstrating for decades. No doubt you remember that Hillary Clinton had a free hand revamping the schools of Arkansas, resulting in a national rating of dead last, so we can conclude that lawyers aren’t necessary either.
Doctors threaten Medicare backlash By Parija Kavilanz - CNN Money With a 21% cut to Medicare reimbursement rates set to take effect Monday, the nation's largest physician organization has informed its members about their options -- which include shutting off practices to new Medicare patients. "To our physicians, we are providing information on their Medicare participation options, including how to remove themselves from the Medicare program," said James Rohack, president of the American Medical Association, whose more than 250,000 members include doctors, medical students and faculty members.
Barack Obama health care summit descends into bickering By Toby Harnden - Telegraph It did not take long for the bipartisan health care summit to degenerate into the kind of bickering and points-scoring that has created a crescendo of anger about the conduct of politics in Washington. President Barack Obama preached that the White House health care summit should not be "political theatre where we're just playing to the camera" or about trading "respective talking points". Then he reminded his 2008 opponent John McCain: "We're not campaigning any more. The election is over." The barely concealed message was: "I won and you lost, buddy." When Mitch McConnell, the Senate Minority Leader, grumbled that Democrats had talked for 52 minutes and Republicans just 24, Mr Obama shot back: "I'm the President. I didn't count my time."
New Tack Pays Few Dividends for White House By JONATHAN WEISMAN - WSJ President Barack Obama's decision to unveil his own health-care plan Monday signals a sharp tactical shift. After a year marked by extensive congressional consultation — and little progress—the White House is rolling out policy decisions fully formed after closely held internal deliberations. Mr. Obama faced criticism in the past for espousing broad policy goals and leaving Congress to work out the details. Many Democrats openly called on him to provide more leadership. But the recent shift toward more assertiveness has irked Republicans and Democrats alike, failed to bridge political differences and even threatens initiatives ranging from the 9/11 terror trials to financial regulation.
Obama listens at health summit, but mostly hears himself By Joseph Curl POLITICAL THEATER - Washington Times President Obama pledged to "listen" at the outset of his much-ballyhooed bipartisan health care summit on Thursday. Turns out he meant he'd be listening to his own voice. By the end of the televised event, Mr. Obama had spoken for 119 minutes - nine minutes more than the 110 minutes consumed by 17 Republicans. The 21 Democratic lawmakers used 114 minutes, giving the president and his supporters a whopping 233 minutes, according to a "talk clock" kept by GOP aides.
California subpoenas big health insurers' financial records By Duke Helfand and Marc Lifsher - LA Times Prosecutors are seeking documents from Anthem, Aetna, Cigna, Blue Shield, Kaiser, Health Net and PacifiCare in a probe of whether they raised rates illegally and denied payment of legitimate claims. Reporting from Sacramento and Los Angeles - The California state attorney general's office said Thursday that it had subpoenaed financial records of California's seven largest health insurance companies as part of an investigation into whether they illegally raised customer premiums and denied payment of legitimate claims.
Lew Rockwell and Chris Manion on Freedom Watch 2/22/10: Goldwater Conservatism
* * * * * Beware of McCain's Freedom-Destroying Dietary Supplement Regulatory Bill by Ann Shibler - JBS.org . . . . Senator John McCain (R-Ariz.) wants this same FDA, with its dismal safety record, to regulate dietary supplements. The Dietary Supplement Safety Act (DSSA), S. 3002 (text of this bill posted on Senator McCain's website), that McCain has introduced with one cosponsor, would repeal key provisions of the Dietary Supplement Health and Education Act (DSHEA) to “more effectively regulate dietary supplements that may pose safety risks unknown to consumers.”
Under attack by the DSSA is the once-protected field of supplements, as they have always been considered food. Potencies would have to be reduced to comply with what appears to be a plan modeled after the European Food Safety Authority. A new list of “Accepted Dietary Ingredients” would be “prepared, published, and maintained by the Secretary,” in the future. That’s a bit like being handed a blank check and told to fill it out later as one wishes. It could certainly be used to severely limit access to, and even production of, hundreds of life-sustaining and essential mineral, herb, and vitamin products.
Depression Causes a Shift in Economic Models By Bill Bonner - The Daily Reckoning This afternoon, your editor’s aging aunt called from Pennsylvania. “This economy has been very hard on my family,” she explained. “I’ve got two sons-in-law…and they’re both laid off from their jobs.” “What do they do?” we wondered. “One drives a truck for a steel producer. The other is in construction. There’s just not much work, I guess.” Nope. And that’s why, despite all the recovery talk, real people are turning real gloomy. Consumer confidence just registered its lowest reading since 1983. People don’t have jobs…and they’re beginning to worry that it could be a long time before they work again. Mortgage demand just fell to its lowest point in 13 years. State tax receipts are still falling – for the 5th quarter in a row. And the number of problem banks just rose 27%.
License to Kill? Intelligence Chief Says U.S. Can Take Out American Terrorists By JASON RYAN - ABC News Director of National Intelligence Says Intelligence Community Can Target Citizens Presenting a Terrorist Threat The director of national intelligence affirmed rather bluntly today that the U.S. intelligence community has authority to target American citizens for assassination if they present a direct terrorist threat to the United States. "We take direct actions against terrorists in the intelligence community; if & we think that direct action will involve killing an American, we get specific permission to do that," Director of National Intelligence Dennis Blair told the House Intelligence Committee. Rep. Peter Hoekstra D-Mich., addressed the issue at today's hearing. "The targeting of Americans -- it's a very sensitive issue, but again there's been more information in the public domain than what has been shared with this committee," he said.
Ron Paul to Obama: Don't Assassinate American Citizens!
Blockbuster to Close More Stores After Another Awful Quarter By DAN BURROWS -DailyFinance.com -- Struggling video-rental chain Blockbuster (BBI) posted another dismal earnings report for the fourth quarter -- a period that is usually its strongest because of the holidays. The company -- long under assault from Netflix (NFLX), rental kiosks and online video offerings -- shut down 253 of its U.S. stores in January. It now plans to shutter another 150 or so in April, and additional closures are planned for a total of between 500 and 545 stores in 2010. The latest moves follow Blockbuster's closure of 374 U.S. stores last year, which left it with 3,525 entering 2010.
ANARCHY AT THE DOOR By Sheriff Jim R. Schwiesow, Ret. - NewsWithViews.com FROM TYRANNY TO TYRANNY Contrary to popular belief the revolutionary war was not the result of the colonists’ disaffection with monarchical control, indeed from forty to sixty percent of the population maintained a loyalty to the Crown and thirty-five thousand plus colonists fought on the British side in the war for independence. The fact is that the war was brought about by burdensome taxation and heavy-handed enforcement by a dictatorial and controlling British Monarchy.
Microsoft Wins Right to Kill Vast Spam Network By DOUGLAS MCINTYRE - DailyFinance.com It's a shame that Microsoft (MSFT) had to go to court to shut down a vast network of computers that spread spam and viruses across the Internet. But in a nation of laws, the world's largest software company had not choice. Fortunately, the case was not in the legal system for long. Microsoft filed a suit in federal court on Monday, February 21st that, "targets a botnet identified as Waledac. It accuses 27 unnamed 'John Doe' defendants of violating federal laws against computer crime," according to The Wall Street Journal.
Microsoft Battles Cyber Criminals By NICK WINGFIELD - WSJ Microsoft Corp. launched a novel legal assault to take down a global network of PCs suspected of spreading spam and harmful computer code, adding what the company believes could become a potent weapon in the battle against cyber criminals. But security experts say it isn't yet clear how effective Microsoft's approach will be, while online rights groups warn that the activities of innocent computer users could be inadvertently disrupted.
Caught on Tape: Selling America's Secrets Rare Video Obtained By "60 Minutes" Shows Pentagon Employee Selling Secrets to Chinese Spy (CBS) "60 Minutes" has obtained an FBI videotape showing a Defense Department employee selling secrets to a Chinese spy for cash. The video, which has never been made public before, offers a rare glimpse into the secretive world of espionage and illustrates how China’s spying may now pose the biggest espionage threat to the U.S. "60 Minutes" correspondent Scott Pelley's report will be broadcast this Sunday, Feb. 28, at 7 p.m. ET/PT.
Ron Paul Questions Hillary on $1 Billion London Fortress
Navy intercepts Argentinian warship near British waters Telegraph.co.uk The Royal Navy has intercepted an Argentinian warship near British waters in an apparent escalation of the row over the Falkland Islands. Destroyer HMS York spotted the vessel around ten miles inside the disputed “oil zone” around the South Atlantic islands. The British crew had to radio the Argentinian ship, a smaller corvette named ARA Drummond, to demand that it change its course. Sources told The Sun that the ship made an “innocent navigational blunder” and were embarrassed about the mistake. It is believed that the Drummond was spotted sailing alongside a French fleet before it broke away and headed for the disputed zone. Under international law, the 15 miles of sea surrounding the Falklands are officially British waters.
China is misread by bulls and bears alike By Michael Pettis - FT It is easy to get over?-excited about China. When bulls aren’t predicting near infinite-growth and competing to proclaim earlier and earlier dates by which China’s economy will become the world’s largest, bears are proclaiming the country on the verge of collapse. In the past two months informed consensus seems to have shifted from the former view to the latter. To some extent this represents a welcome dose of reality. In spite of outstanding growth rates in 2009, China nonetheless has serious structural problems that were actually exacerbated by the quality of last year’s growth. Many observers seem now to be waking up to this fact.
China postpones military exchanges with US By Kathrin Hille in Beijing and Daniel Dombey in Beijing - FT China has postponed several high-level military exchanges with the US, in the first tangible sign of retaliation over Washington’s decision to sell $6.4bn in arms to Taiwan. “China has decided to suspend arrangements for some planned mutual visits between the US and the Chinese military,” a Chinese military spokesman said on Thursday. A Pentagon spokesman said the postponed exchanges included a planned trip by General Chen Bingde, China’s chief of the general staff, to the US. A visit to China by Admiral Robert Willard, the head of US Pacific Command, has also been postponed. The spokesman said it was too early to speculate whether other military exchanges would be impacted.
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