Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.
Wednesday 01.18.2012
Gold is the most favoured asset in 2012:
Nomura investor poll
Bullion Vault
A Survey of investors carried out by Japanese investment bank Nomura has found Buying Gold to be this year's number one investment choice.
The poll found that 19.5% of the 164 investors said they would Buy Gold and hold it to the end of the year. The next favourite assets were stocks and developed market investment grade corporate bonds, into which around 13% of respondents said they would invest money.
Central banks increase gold lending First rise in a decade amid dollar liquidity squeeze
By Jack Farchy in London - FT.com
Central banks increased the amount of gold they lent for the first time in a decade in 2011, as they used their bullion reserves to help commercial banks raise US dollars.
Although central banks hold one-sixth of all the gold ever mined in their reserves, their activities in the bullion market are opaque, with not a single institution revealing its day-to-day operations. In addition to holding gold for their reserves, some central banks also trade the metal, lending it on the open market in order to obtain a yield.
Silver: How Iran can easily triple prices
and make you filthy rich
NEW YORK (Commodity Online): If the first year of the Iraq War of 2003 offers up some clues to the potential move in the Silver price following an invasion of its neighbour Iran, then grab as much of the white metal as you can and enjoy the ride. This ride could be for the record books
On the officially day of the U.S. invasion of Iraq on Mar. 20, 2003, silver traded at the lowly price of approximately $4.35. On the first anniversary of the invasion, the silver price reached nearly $8.00, for an 83 percent return (see graph, below).
But an attack on Iran could make an 83 percent return seem minuscule.
Why silver is better than gold?
By Ron Meyers
Warren Buffet once talked about how extraterrestrials who were watching earth would be thoroughly confused about how we handle gold. First, we dig the this yellow metal up out of the earth, melt it into shapes, and then lock it back under underground and guard it with machine guns! It largely makes no practical sense, and provides no real value to the world.
Interestingly, that's not at all the situation with silver, which is an industrial commodity. An industrial commodity is something that is used for the production of real goods in the world. In other words, it has more value than just sitting in a locked vault underground.
What the Next Decade Holds for Commodities
BY FRANK HOLMES - FinancialSense.com
What a decade! A rapidly urbanizing global population driven by tremendous growth in emerging markets has sent commodities on quite a run over the past 10 years. If you annualized the returns since 2002, you find that all 14 commodities are in positive territory.
A precious metal was the best performer but it’s probably not the one you were thinking of. With an impressive 20 percent annualized return, silver is king of the commodity space over the past decade with gold (19 percent annualized) and copper (18 percent annualized) following closely behind.
Back With a Vengeance: The EU Debt Crisis
By Arnold Ahlert - PatriotPost.us
On Friday the 13th, ratings agency Standard & Poor's (S&P) downgraded the credit status of nine European nations. The ratings of Cyprus, Italy, Portugal and Spain were lowered by two notches while Austria, France, Malta, Slovakia and Slovenia were lowered by one. Italy's rate cut from A to BBB+ reflects the second S&P downgrade since September 19th, and Portugal's debt has now reached "junk" status. "Today's rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone," said S&P in a written statement.
Handful of questions remain on EU fiscal treaty
BY HONOR MAHONY - EUObserver.com
BRUSSELS - Finance ministers will next week tackle the thorny little details still to be agreed before EU countries can bless a new pact on fiscal discipline.
A fourth draft of the slim document - meant to copperfasten budgetary prudence in the EU - is to be circulated on Thursday (19 January), but most of the outstanding issues have been left for finance ministers to sort out in the hope the pact will be ready in time for an end-of-the-month EU summit.
S&P warns that Greece will default very soon
NEW YORK (Commodity Online): Standard&Poor's believes that the Greek default is very imminent. The S&P had last week downgraded 9 Eurozone nations including France, Spain and Italy. In fact, Italy's credit rating was downgraded from A to BBB+
In an interview with Bloomberg, Moritz Kraemer of S&P says that the ratings agency expects Greece to default "very shorty"
Hungary faces ruin as EU loses patience The European Commission has launched legal action against Hungary's Fidesz government for violations of European Union treaty law and erosion of democracy, marking a dramatic escalation in the war of words with the EU's enfant terrible.
By Ambrose Evans-Pritchard - Telegraph.co.uk
Hungary's defiant premier Viktor Orbán has no hope of securing vital funding from the EU and the International Monetary Fund until the dispute is resolved, leaving him a stark choice of either bowing to EU demands or letting his country slide into bankruptcy.
Yields on Hungary's two-year debt jumped to 9.17pc on Tuesday, an unsustainable level for an economy in recession with public debt of near 80pc of GDP. Hungary's debt was cut to junk status by rating agencies last week.
EU commission starts legal action against Hungary
BY NIKOLAJ NIELSEN - EUObserver.com
BRUSSELS - The European Commission has launched legal action against Hungary over its new constitution, amid fears that its right-wing leader has too much control of judges and the central bank.
Speaking to journalists in Strasbourg, EU commission chief Jose Manuel Barroso said on Tuesday (17 January) that the independence of the central bank, the national data protection authority and the early retirement age of judges as outlined in the constitution do not conform to EU standards.
Fitch says Greece to default, believes will be orderly
(Reuters) - Rating agency Fitch said on Tuesday that Greece would default on its debt, although it said that such a default was likely to take place in an orderly manner.
"It is going to happen. Greece is insolvent so it will default," Edward Parker, Managing Director for Fitch's Sovereign and Supranational Group in Europe, the Middle East and Africa told Reuters on the sidelines of a conference in the Swedish capital.
"So in that sense it shouldn't be a surprise to anyone."
Greek haircut is necessary evil, EU commissioner says
BY VALENTINA POP - EUObserver.com
BRUSSELS - The EU may have been wrong in asking private investors to write off Greek debt but it is too late to change track now, EU competition commissioner Joaquin Almunia has said.
The Spanish economist made the remarks at a debate hosted by the European Policy Centre, a Brussels-based think tank, on Monday (16 January) - two days before Greek negotiators were supposed to fly to Washington to restart talks on the so-called 'haircut.'
Greek debt talks to resume Wednesday in Athens
By Renee Maltezou
(Reuters) - International creditors said on Tuesday they are coming back to the negotiating table with Greece to resume talks that broke down last week on a debt swap plan crucial to Athens' chances of avoiding a messy bankruptcy.
Debt-choked Greece needs a deal with private bondholders very soon on how much financial pain they are willing to bear to persuade the EU and IMF to extend a new bailout and keep the state afloat when a big bond redemption comes due in late March.
Vulture Funds Profit Off Greek Misery
by NICK DEARDEN - CounterPunch.0rg
The hamstrung negotiations over a new Greek bail-out recommence tomorrow with little sign of resolution. As the Greek economy suffers from rapidly rising unemployment and debt levels, and its people experience rises in rates of suicide, murder and HIV, big profits still stand to be made or lost. The financial sector which has destroyed Greek democracy continues to hold the country down as it demands rich pickings.
The European Union has told Greece that another bail-out will only go ahead if Greece can persuade private sector holders of Greek debt to accept a voluntary reduction in their claims on the country. They are looking to a 50% reduction, although the International Monetary Fund has suggested – correctly – that even this will not be nearly enough this late in the game.
Portugal moves into default territory
By David Oakley
Portugal is trading in default territory after investors offloaded the country’s bonds this week amid rising fears of contagion. Worries are mounting that the private sector and Greece will fail to agree a restructuring package for Athens' debt.
Many investors were also forced to sell Portuguese bonds after Standard & Poor’s downgraded the country to junk on Friday. Other funds sold Portuguese debt after Lisbon was removed from Citigroup’s European Bond Index, which these investors track, because of its fall to junk status.
Final Battle for the Euro Will Be Fought on Italy’s Shores
BY EDWARD ALTMAN PHD - FinancialSense.com
For over two years, we have witnessed the economic demise of certain European countries. This soon led to the financial community systematically assessing the health of several peripheral southern European countries, followed by tumbling investment grade ratings and spikes in required rates of return on the government debt of these sovereigns. As the European Central Bank continues to dole out rescue packages, many are now looking for the next country to suffer a financial attack and wondering if the euro will even survive.
When, oh when, will Europe face the truth? Countries with a triple-A credit rating are becoming an endangered species.
By Jeremy Warner - Telegraph.co.uk
Before the crisis, most advanced economies boasted this top-notch stamp of external approval. Erroneously, as we now know, there were also thousands of structured products similarly beatified by the rating agencies.
Many of the structured products quickly became junk in the credit crunch, and with last week's French downgrade, the number of top-rated countries has shrunk to just 14.
Of the four eurozone members that still belong to this exclusive club of apparently "risk-free" debtors, three are on negative watch.
Expect Recession in 2012
BY JOHN MAULDIN - FinancialSense.com
The "Quarterly Review and Outlook" from Hoisington Investment Management is one of the most significant pieces that crosses my desk – I try and drop everything else as soon as possible. This quarter's is no exception. The authors, Dr. Lacy Hunt and Van Hoisington, get right down to brass tacks with their opening sentence: "As the U.S. economy enters 2012, the gross government debt-to-GDP ratio stands near 100%." They cite an influential 2010 historical study of high-debt-level economies around the world, by Professors Kenneth Rogoff and Carmen Reinhart, that concluded that when a country's gross government debt rises above 90% of GDP, "median growth rates fall by one percent, and average growth falls considerably more."
Citigroup latest Wall Street bank to disappoint as profits fall 11% Revenue at US's third largest bank fell as the European debt crisis took its toll, investment banking slumped and growth in lending slowed
By Dominic Rushe in New York - Guardian.co.uk
Citigroup reported an 11% drop in fourth-quarter profits on Tuesday, well below analysts' forecasts, becoming the latest Wall Street bank to post disappointing results.
Revenue at the US's third largest bank fell 7% as the Eurozone debt crisis took its toll on trading, investment banking slumped and growth in lending slowed.
The world according to Goldman Sachs Ahead of the Davos summit, Goldman Sachs president Gary Cohn talks to The Sunday Telegraph about the outlook for Europe, the US economy and whether 2012 holds any rays of hope.
By Kamal Ahmed - Telegraph.co.uk
For the headquarters of one of the biggest banks in the world, the outside of 200 West Street is deliberately anonymous. Outside, guards patrol in the freezing air and the pavement bollards, masquerading as decorative street furniture, are the type of urban landscaping designed to prevent a terrorist attack. If any reminder were needed, from the upper floors there are views of the reflecting pools that mark Ground Zero.
Ron Paul On The Dylan Ratigan Show
About Debt Ceiling & The Fed
Is China Really Funding the US Debt?
By Barry Ritholtz - Ritholtz.com
I keep hearing people erroneously claim that China is funding US deficit spending. It seems that every eejitwith a fundamental misunderstanding of mathematics (and access to Xtranormal‘s animated talking bears) has been pushing this concept.
It turns out to be only partially true — and by partially, I mean 7.5% true. But that means the statement is 92.5% false.
Decentralization Is The Only Plausible Economic Solution Left
Brandon Smith - Alt-Market.com
When I first began the process of launching the Alternative Market Project, the idea and scope were rooted in analytical papers I had written years before on aspects of centralization versus decentralization, and globalization versus localization. Back then, I saw these conflicting economic systems as mutually generative. That is to say, the further we as a society are pushed towards collectivist or feudalist economic structures, the more we naturally or unconsciously gravitate towards independent and open markets. The problem today is that independent markets have been artificially and quite deliberately removed from the public view. As I have said in the past, centralization is a powerful tool for elitists, because it allows them to remove all choice from a system until the only options left to the people are those that the establishment desires. Though we deeply long for free and vibrant trade unhindered by corporate oligarchy, we are told that such a thing does not exist, and that we must make due with the corrupt ramshackle economy we have been given. I say, this is simply not so…
Half of U.S. Households Took Government Benefits in 2010 Is this statistic a watershed mark of our decline into socialism, a totally reasonable outcome from the Great Recession, or, somehow, both things at the same time?
By Derek Thompson - TheAtlantic.com
A record-high 49% of the population lived in a household receiving some type of government benefit in the second quarter of 2010, according to Census data reported by the Wall Street Journal. Most of this group received so-called "means tested" benefits like food stamps, subsidized housing or Medicaid. Many are also benefiting from unemployment insurance spending, which has quadrupled since the downturn.
The Worst Economic Recovery Since The Great Depression
By Peter Ferrara - Forbes.com
The record of President Obama’s first three years in office is in, and nothing that happens now can go back and change that. What that record shows is that President Obama, with his throwback, old-fashioned, 1970s Keynesian economics, has put America through the worst recovery from a recession since the Great Depression.
Saving the American Safety Net
by GERALD SCORSE - CounterPunch.org
If raising the retirement age can save Social Security, the nation owes huge thanks to Ronald Reagan and Alan Greenspan. They raised it a generation ago, and retiring at 65 with full benefits is now history.
The rise to 66, where it is today—and a scheduled rise to 67—were buried in plain sight in the Social Security overhaul of 1983. President Reagan had set up a commission, chaired by Greenspan, to put the system on sound fiscal footing. Almost unthinkable in today’s Washington, the panel became a model of bi-partisanship. Its report formed the core of a bill that Congress approved overwhelmingly.
What Does One Jobless Youth Cost Taxpayers?
$14,000 a Year With 6.7 million American youth out of work and out of school, the country faces a fiscal time bomb, according to a new report
By Jordan Weissmann - TheAtlantic.com
America's youth are suffering their worst employment drought since World War II. It doesn't take a great leap of the imagination to understand why this is a crisis. The young and jobless earn less later in life. They lose the chance to build crucial career skills. They rely on government support. They're more likely to commit crimes.
And according to a new report, the worst off are sapping roughly $40,000 a year from the economy while costing the government $14,000 in taxes.
Jerry Yang resigns from Yahoo Jerry Yang, Yahoo's co-founder, has stepped down from his position on the company's board after 16 years
By Charles Arthur, technology editor - Guardian.co.uk
The end of an internet era has come with the resignation of Jerry Yang, the 43-year-old co-founder of Yahoo, from his position on the company's board after 16 years.
Yang's reign as chief executive, between June 2007 and January 2009, included the disastrous decision – from Yahoo shareholders' point of view – to reject a $44.6bn (£29.1bn) takeover offer from Microsoft in February 2008, which priced the company at a 50% premium on its share price at the time.
LIQUID SILVER USED TO PRINT ELECTRONIC CIRCUITS
Analysis by Jesse Emspak - Discovery.com
Printing electronics just got a boost from the University of Illinois, where the latest in electric inks has been made from silver.
Jennifer Lewis, a professor of materials science and engineering, and graduate student S. Brett Walker described the new ink in the Journal of the American Chemical Society. Most inks for printing electronics have metallic particles in them. This ink is all liquid -- a solution of silver and ammonia. When printed, the liquid evaporates, leaving a trail of conductive material.
The idea of free trade only works in the academic world (Part1) An alternative vision of trade in the 21st century
RICHARD SMITH - FNA
The topic ‘International Trade – New Challenges’ was of one of the panels at the World Leather Congress recently held in Rio de Janeiro on November 9th 2011. What was interesting was that the subject of “trade” had come up during the World Footwear Congress held at the same venue two days earlier. In a nutshell there was no agreement on trade – free or fair - between presenters representing developed and developing nations.
The idea of free trade only works in the academic world (Part 2) An alternative vision of trade in the 21st century
RICHARD SMITH - FNA
International Trade has to be taken out of its traditional vacuum and linked directly to manufacturing procedures – and by this I mean that trade has to be linked to sustainable or environmental manufacturing.
Trade is ubiquitous and for this reason it is already implicitly linked to environmental concerns. Toxic financial products have endangered the global financial system and we must not allow toxic consumer goods to do the same to the global environment. With the world population expected to reach 9.3 billion by 2050 sustainable practices will become even more important since, without a healthy environment living creatures, including man, will not be able to survive longer term.
Keiser Report: Economics of Suicide (E237)
Europe’s Airbus tops U.S-based Boeing
with top sales total of ‘11
By Tim Devaney-The Washington Times
In a battle of aerospace giants, Europe’s Airbus bested Chicago-based Boeing in 2011 with more sales, as the two rivals continue to dominate the industry.
The European planemaker drew 1,419 new orders and made 534 deliveries, compared withBoeing’s 805 new orders and 477 deliveries. Both companies had record years.
New space-arms control initiative draws concern Critics say military activities will be compromised
By Bill Gertz - Special to The Washington Times
The Obama administration is launching a new space arms-control initiative that critics say will lead to restrictions on U.S. military activities in space, a key U.S. strategic war-fighting advantage.
Secretary of State Hillary Rodham Clinton is expected to announce the initiative as early as Tuesday. The plan will be built on work contained in a European Union draft code of conduct for space that the Pentagon and State Departmenthave criticized as too restrictive.
Edible Microchips, Biometric Identity Systems
And Mind Reading Computers
EndOfTheAmericanDream.com
As technology continues to advance at an exponential rate, will we someday find ourselves living in a "scientific dictatorship" where virtually everything that we do, say and think is monitored and controlled by technology? To many of you that may sound like a wild assertion, but just keep reading. Our world is changing faster than ever before, and scientists have some absolutely wild things planned for our future. As you read this, they are feverishly developing edible microchips, cutting edge biometric identity systems, and mind reading computers. Many futurists envision a world where someday nearly all humans are embedded with microchips and have thousands of tiny nanobots living inside of them. The idea is that we can "take control of our own evolution" and use technology to "improve" humanity. But very few of those futurists address the potential downsides. The truth is that all of this technology could one day be used by a totalitarian government to establish a dystopian nightmare where nobody has any liberties and freedoms whatsoever.
Web Piracy Bill Faces Fiercer Fight Media Companies Lose Ground as White House Sides With Internet Firms; Wikipedia Plans Protest
By AMY SCHATZ - WSJ.com
WASHINGTON—Supporters of controversial antipiracy legislation face a struggle to regain momentum after the White House sided with irate Internet companies and users over the weekend and complained that the proposal could hurt innocent companies and undermine cybersecurity.
On Saturday, the White House outlined its opposition to two similar bills pending in the House and Senate that would crack down on the sale of pirated American movies, music and other goods on foreign-based websites. The bills would require Internet companies to hobble access to foreign pirate websites, bar search engines from linking to them and prevent U.S. companies from placing ads on them.
Time for a Royalty System for Aggregators?
As the demand for digital news -- via aggregation -- continues to increase, the supply is decreasing. Maybe we should charge companies that aggregate content to reinvigorate the industry.
By Peter Osnos - TheAtlantic.com
After years of reeling from the impact of Internet-based competition on revenues, major news organizations are embarked on a variety of initiatives they hope (or better yet, expect) will finally recoup some of what has been lost. For anyone in the field, there is a growing vocabulary for strategists to master: paywalls, metering, micropayments, and mobile subscriptions, among others. With so much energy and enterprise devoted to reversing the downward spiral, there is a reasonable chance that 2012 could mark the start of a turnaround for some companies.
Recovery at risk as Americans raid savings
By Jilian Mincer and Jonathan Spicer
(Reuters) - More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.
In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.
Kraft Foods to Cut 1,600 Jobs
Ahead of Plan to Split in Two
David Welch - Bloomberg.com
Jan. 17 (Bloomberg) -- Kraft Foods Inc., the food company planning to split in two this year, said it would eliminate 1,600 jobs and reported preliminary profit for 2011 that trailed some analysts’ estimates.
The job cuts will take place in North America through this year and about 40 percent are a result of reorganizing U.S. sales, the Northfield, Illinois-based company said today in a statement. About 40 percent of the cuts will come from corporate staff and 20 percent are vacancies that will remain unfilled, the company said.
The sordid details of the employment market – Before recession hit 5,000,000 job openings were available while today there are 3,000,000. 1,000,000 Americans have completely quit looking for work and average duration of unemployment is 40 weeks, twice the amount of the 1980s recession.
MyBudget360.com
There is a growing disconnect in America as the middle class is hollowed out. Many Americans hear talks of a recovery that is now going on three years but look at their tight monthly budgets and wonder what recovery is being discussed. The median household income is roughly $50,000 and with rising food, healthcare, energy, and college costsmany are left with little each month once the basics are paid for. And that is the core of the issue. The typical American family is seeing their paycheck devoured by items that are used on a daily basis. The employment situation is tenuous at best. We still have a peak in discouraged workers. Roughly 1,000,000 Americans have simply stopped looking for work since the recession hit. These are people willing and able to work but have given up in the current economy. We are adding jobs and many are in the lower paying service sectors. What is meant by a recovery?
Wisconsin governor facing recall
after workers collect 1m petition signatures Republican Scott Walker could be forced to defend his seat in a special election after workers objected to his union-busting measures
AP - Guardian.co.uk
Opponents of Wisconsin's Republican governor Scott Walker, who championed a law last year curbing the rights of public sector unions, have submitted what they say is enough signatures to force a special election to try to remove him from office.
Arab Justice for Arab Violence
Aryeh Neier - Project-Syndicate.org
NEW YORK – For months now, it has been clear that no peaceful, even satisfactory, resolution of the conflict in Syria is possible without external intervention. Paradoxically, too many Syrian civilians have been tortured, wounded, and killed to stop the demonstrations seeking the ouster of President Bashar al-Assad. The victims’ families, friends, and neighbors simply will not accept the Assad regime’s continuation in any form. So what will happen?
Blind Man’s Bluff in the Middle East
by BARRY LANDO - CounterPunch.org
In a perilous spiral of assassinations, threats and counter-threats, the leaders of Washington, Jerusalem and Tehran keep ratcheting the tension. What is most alarming about the situation, is that the principle players and their advisors are engaged in an incredibly dangerous three-way game of blind mans buff.
None of them expresses a real understanding of the others: of their motives, their concerns, nor their likely reactions. That’s true even with Israel and the United States: though the U.S. risks being sucked into any conflict between Israel and Iran, the Obama administration is currently forced to guess what its supposed Israeli allies are planning.
USA goes on rampage over Iran's Latin American ambitions
Pravda.ru
Last week, Iranian President Mahmoud Ahmadinejad made a week-long tour of Latin America. The Iranian leader visited Venezuela, Nicaragua, Cuba and Ecuador.
Ahmadinejad does not have many friends in the world. All of them, except for Syria, are in Latin America. Suffice it to say that it was his fifth visit to the region since 2007. Iran's friendship with ALBA states (the bloc incudes the above-mentioned countries) is based on common anti-American views and the fund of $200 billion, which was established to struggle against the American imperialism.
USA goes on rampage over Iran's Latin American ambitions
Pravda.ru
Last week, Iranian President Mahmoud Ahmadinejad made a week-long tour of Latin America. The Iranian leader visited Venezuela, Nicaragua, Cuba and Ecuador.
Ahmadinejad does not have many friends in the world. All of them, except for Syria, are in Latin America. Suffice it to say that it was his fifth visit to the region since 2007. Iran's friendship with ALBA states (the bloc incudes the above-mentioned countries) is based on common anti-American views and the fund of $200 billion, which was established to struggle against the American imperialism.
China: A country where no one is secure All classes of people suffer when population deprived of opportunity
By Guo Yuhua - MarketWatch.com
BEIJING ( Caixin Online ) — What is the most common feeling in China today? I think many people would say disappointment. This feeling comes from the insufficient improvement in their lives that people are achieving amid rapid economic growth. It also comes from the contrast between the degree to which individual social status is rising and the idea of the "rise of a great and powerful nation."
One phenomenon is a good example of such disappointment: A group of young college graduates "escaping and returning" to Beijing, Shanghai and Guangzhou.
China's Dilemma on Iran Is the threat of an Israeli air strike leading Beijing to consider other sources of energy?
By Max Fisher - TheAtlantic.com
Chinese Prime Minister Wen Jiabao is on a six-day trip to three of the Middle East's major oil producers: Saudi Arabia, Qatar, and the United Arab Emirates. All three are close U.S. allies; a Chinese Prime Minister has not visited Saudi Arabia in two decades. But the biggest news here may be the Middle Eastern energy exporter he isn't visiting: Iran, China's third-greatest source of oil. There's no reason to believe that the China-Iran relationship is ending, but this is another indication that China's interest in dealing with Iran may be waning. If that happens, it would do wonders for America's containment strategy, and Washington might have Israel -- and perhaps Tehran itself -- to thank.
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