Showing posts with label Financial Crisis. Show all posts
Showing posts with label Financial Crisis. Show all posts
Sunday, November 25, 2012
Friday, November 16, 2012
Ron Paul Farewell Speech
...IT'S NOW THE LAW OF THE LAND THAT THE MILITARY CAN ARREST AMERICAN CITIZENS, HOLD THEM INDEFINITELY WITHOUT CHARGES OR TRIAL.
...WE NEED AN INTELLECTUAL AWAKENING.
WITHOUT AN INTELLECTUAL AWAKENING, THE TURNING POINT WILL BE DRIVEN BY ECONOMIC LAW, A CRISIS WILL BRING THE CURRENT OUT-OF-CONTROL SYSTEM TO ITS KNEES.
IF IT'S NOT ACCEPTED THAT BIG GOVERNMENT FIAT MONEY, IGNORING LIBERTY, CENTRAL ECONOMIC PLANNING, WELFARISM AND WARFARISM CAUSED OUR CRISIS, WE WILL EXPECT A CONTINUOUS MARCH TOWARD COMPARPTISM AND FASCISM WITH EVEN MORE LOSS OF OUR LIBERTIES...
Wednesday, February 8, 2012
Diminishment of Sovereignty and More Fed Manipulation
The International Forecaster
On Friday from the Bilderberg conclave at Davos, appointed European
Central Bank President, Mario Draghi proclaimed that Europe had averted
financial disaster and cited the improvement in euro zone markets in
recent weeks. He said it was the ECB’s duty to guard against deflation
as well as inflation. The fact of the matter is that he and his friends
at the Fed arranged a currency swap of $1 trillion of which the ECB
dispersed $660 billion to 523 EU banks, at 1% interest for three years.
He also cut interest rates twice and extended loans for 1 to 3 years.
Mr. Draghi could be expected to take the easy Anglo-American way out.
He is fully Illuminati trained and that is where his orders emanate
from.
He continued about how the conclusion of a fiscal pact, the ESM, the European Stabilization Mechanism, where budgets and fiscal spending policies would be determined by unelected, Treasury appointees, who have been officially immunized by the EU government. Mr. Draghi makes no note of these qualifications and forgets to let us know that in this new ESM pact all the nations lose their sovereignty.
As yet, after a month, there is no evidence that the funds had reached the real economy. The banks that just received the funds at 1% interest have been depositing them at ¼% interest with the ECB. They have not lent to each other because bankers say they do not trust each other. What a sad state of affairs. In addition to the above the ECB now accepts loan collateral of much lower quality than previously was approved. As you can see there were a lot of facts Mr. Draghi deliberately left out.
Now the banks have to use these funds to refund old and new debt and lend to keep the economies afloat. They also have to play their parts in keeping the six problem nations afloat.
Concerning the subject of Greece we were told last Friday a deal would be announced but nothing has happened as yet. The outlook is grim and the fundamentals are terrible. We won’t rehash Greece, because we have been over it so many times. We will wait to see what this week brings.
The Portuguese economy is falling deeper into austerity. Bank lending has fallen by the most on record. It fell $6.5 in December the biggest monthly decline since December 197, when the ECB began collecting data. Portugal, if they’ like to recover, should be using the LTRO funds to make loans to small and medium sized companies.
The Kiel Institute for the World Economy says Portugal would have to have a budget surplus of 11% of GDP annually. If they had 2% growth, which is a tall order, it would need a 56% haircut on its debt to get back on a sustainable path to recovery.
Gold finally out of that early on mess, finally had a good month, up just under 10%. That is the best January since 1980. We remember January 1980 well – it was the final month of the gold rally. Oddly enough the shares topped out in June with gold trading at $680 to $720. We would like to say that the 3 gold and silver suppressions of this past 2011 and 2012 has pointed out in stark relief that the US government has been very actively manipulating gold and silver prices, legally, since 1980. We mention this because short-term charts are terribly distorted and for us you cannot use them. The advocates are out again with their charts and believe we hope they are right. As usual as they have been, they will be wrong. They’ll soon call for reversal and as they do gold and silver will go higher.
After having loaned the ECB $1 trillion they now tell us we’ll receive QE 3. In fractional banking that could be $10 to $20 trillion. Any substantial part of those funds are used and monetized you’ll see some stunning inflation.
Election is in view and employment is not improving. The Fed has pledged that it is prepared to provide for further monetary accommodation. Inflation is headed higher, not lower. All that money and credit will influence inflation. Yes, the EU, US and UK economies will be flat this year and probably slightly higher. What we are doing with QE 3 and other types of stimulus is just extending the game.
If everything is fine why did the US Mint sell 114,500 ounces of American Gold Eagles with still two days left in January to accommodate buyers? Maybe the total will be 145,000, the largest sale in 1-1/2 years. It’s because people do not trust their economies and their governments that is why and they are buying gold and silver coins to protect themselves. They only have to look at the Republican Presidential primaries where votes are stolen by computer, dead people vote and Ron Paul doesn’t get a chance to state his case. Our government is a criminal syndicate. All those American gold and silver buyers know this, and that is why they want gold and silver coins, not fiat dollars.
Finally we are starting to see money managers, hedge funds, and others getting more bullish on gold. This should lead to short covering in gold and silver and the shares.
Here we have QE 3 in the works as we predicted months ago. We said it would consist of the Fed buying the banks garbage so they have cash to follow the Fed’s orders. Those orders will be to buy Treasuries, Agencies and to make loans to small and medium companies. Before the Fed bought $1.4 trillion of this paper, mostly MBS and CDO’s. We never found out what the Fed paid for previous purchases and we won’t this time either. This is another gift the Fed, or should we say taxpayer gives the to the banks. What we are seeing in Europe and again shortly here is another stuffing of the system with money and credit. The Fed is headed down the road of no return and they know exactly what they are doing. That is playing money and credit creation to the bitter end. Historically no central bank has had the power to do this. If played out to the end we have to expect hyperinflationary depression, which will end in a deflationary depressionary collapse. This will destroy the value of the US dollar and its purchasing power. The entire system will probably collapse to a great extent including perhaps 60% of commerce, 40% to 50% unemployment, and the end of the financial system and resorting to bartering, the social support system and government. They will all collapse, so you had better prepare for it. All this will be expedited if Ron Paul is not elected our next president. If he were to be elected he could short-circuit many programs and policies that are destroying our nation.
The moves by the elitist Fed via the ECB to cover-up the monetary and financial chaos in Europe and in the US via QE 3 is in part political. Political in France and toward the next elections. France is a nightmare for the elitists and obviously those in power want Obama returned. He having done everything asked of him.
Bob Chapman - Discount Gold & Silver Trading - 27 Jan 2012
http://www.youtube.com/watch?v=bMHIq0KIq4A&feature=email
Interview 457 – The International Forecaster with Bob Chapman
http://www.corbettreport.com/interview-457-the-international-forecaster-with-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29
Bob Chapman - Financial Survival - January 30, 2012
http://www.youtube.com/watch?v=UCy_OUyd5Ts&feature=email
Bob Chapman - Oracle Broadcasting - Jan. 28, 2012
http://www.youtube.com/watch?v=1QgKm67sjt0&feature=email
Bob Chapman - USAprepares Radio Show - Jan. 31, 2012 – Vincent Finelli
http://www.youtube.com/watch?v=nAL4u0o5xCk&feature=email
As we predicted last fall that QE 3 will come in the form of another bank bailout. This time it will be the clearing of toxic bonds from the banks’ books, which was done by buying $1.4 trillion in these bonds previously. We expect $800 billion to $1.3 trillion this time around. The disbursement of these funds should last 12 to 18 months. These moves were in part responsible for our change in GDP for the US this year from minus 1-1/2% to 2% to plus 1-1/2% to 2%.
In the latest out of Europe, Germany is pushing Greece to relinquish control over its budget policies to a euro zone “budget commissioner,” who would be able to veto domestic fiscal decisions, similar to the powers they want to grant to the ESM.
German logic is if further funds are not dispersed, Greece cannot threaten its members with default, but will have to accept outside fiscal control with funs. The game being paid by Germany is dangerous and could lead to immediate default. In addition any deal made in February by the PASOK government is subject to change in two months by a new election victor and party in charge. The German position is dumb and ultimately won’t work.
The Greeks are not going to like or accept the German demands. There will be demonstrations and the new policies may go nowhere. From the Greek side, when you have lost almost everything there is little more to lose. Unfortunately, we predicted all this but few were listening.
After putting the present regime in power 25 years ago in Iran the US has had nothing but problems, the latest and most important has been the sale of oil in currencies other than the US dollar. Asked many times, Iran refuses to comply. This is the main reason the US and Europe are so aggressive in pursuing Iran. Underneath it all it is all about petrodollars. This is why Iraq was destroyed and Libya as well. The US could not tolerate Iraq selling oil in euros. Anyone who steps out of line gets zapped, no matter who it is. At the IMF a year ago director Dominique Strauss-Kahn called for a different currency to, a new world currency, to end the dominance of the dollar. As a result he was set up in a hotel in NYC for rape. We immediately pointed out this was a bag job and so it was, but it got him out of his IMF job, he couldn’t run for the French presidency and they destroyed his reputation. This shows you how far and even further the US Illuminists will go to protect their oil monopoly and fixed oil payments in US dollars only. Strauss-Kahn is a top Illuminist and they still destroyed him. If the dollar becomes only one of many currencies in which oil is sold, the dollar will then collapse. For the US, the barn door has closed, but the farm animals are already loose.
At Davos this past week the US Secretary of the Treasury, Timothy Geithner, urged the euro zone to boost its cache of bailout cash and protect Italy and Spain against the threat of a market rout. At the same time the new IMF leader Christine Lagarde urged Greece and its creditors to agree on cutting debt burdens.
What we see here is a request for more funds. The Fed just did a swap, a loan, for $1 trillion for the ECB in behalf of 523 EU banks. Obviously it wasn’t enough and obviously they would rather borrow from the ECB and the Fed rather than go the fractional route. We will see more money spilled but never really enough.
While these events ran paramount on Friday night, while most everybody was enjoying themselves, Fitch cut Italy’s rating 2 notches to A minus. Joining the group n being downgraded we saw the same medicine applied to Spain, Belgium, Slovenia and Cyprus.
Last week the Dow fell 0.5%, S&P was little changed, the Russell 2000 gained 1.8% and the Nasdaq 100 rose 1.0%. Cyclicals rose 0.8%; utilities were unchanged; transports gained 1.2%; consumers fell 0.4%; banks fell 1.4% and broker/dealers fell 3.0%; high tech rose 0.3%; semis fell 0.2%; Internets fell 0.3% and biotechs rose 5.4%. Gold bullion rose $72.00, the HUI Gold Index rose 9.4% and the USDX fell 1.6%.
Two-year T-bills fell 3 bps to 0.21%, as 10-year notes fell 13 bps to 1.89%. German 10-year bunds rose again.
The Freddie Mac 30-year fixed rate mortgage rates rose 10 bps to 3.98%; the 15’s rose 7 bps to 3.24%. The one-year ARM’s were unchanged at 2.74% and 30-year fixed rate jumbos were down 4 bps to 4.46%.
Fed credit expanded $1.5 billion to $2,905 trillion, which is up 20.1% yoy. Fed foreign holdings at Treasuries and Agencies rose $14.4 billion to $3.406 trillion. Custody holdings for foreign central banks rose $55 billion yoy, or 1.6%.
M2, narrow, money supply rose $8.0 billion to a record $9.763 trillion. That is up 10.2% yoy.
Total money market fund assets fell $14.7 billion to $2.679 trillion.
Commercial paper rose $3.4 billion to $971 billion. That is down $17 billion from a year ago, or 1.7%.
A "gold rush" swept through China during the week-long Lunar New Year holiday this year, with demand for precious metals and jewelry surging since the Year of the Dragon began.
Sales of gold, silver and jewelry rose 57.6 percent during the week-long holiday at Caibai, one of Beijing's best-known gold retailers, according to data released by the Ministry of Commerce (MOC) on Saturday.
Other jewelry stores across the country also saw sales boom during the period, with customers favoring New Year-themed gold bars, gold ingots and other types of Dragon-themed jewelries.
"Long treasured by Chinese, gold is no longer owned only by a privileged few, but has become a new investment channel open to all," said Guan Qiang, assistant manager at Caibai.
The Spring Festival gives people a chance to preserve and present gold as gifts, offering hopes that it will increase in value and not be impacted by inflation, Guan said.
During the week-long holiday, which lasted from January 22 to 28, the sales volume in Caibai and Guohua, another of Beijing's top gold retailers, reached about 600 million yuan ($95.28 million).
The figure showed a 49.7-percent increase over that of last year's Spring Festival, said a report released by the Beijing Municipal Commission of Commerce.
Caibai began selling gold bars as investment items during the 2008 Beijing Olympic Games, but the trend of buying gold or silver bars during the Spring Festival has really taken off in the past two years, Guan said.
For Guan and his colleagues, the Spring Festival rush was an exciting but exhausting experience, as customers flooded the store and surprised clerks with their purchasing enthusiasm.
"With customers crowding and rushing in, we did not even have time to eat and drink," said a sales clerk at the gold bar counter surnamed Li.
She said each shop assistant had received hundreds of customers per day and wrote several times more orders than on ordinary days.
"You can hardly even see the gold bars, necklaces and pendants in the display case. People seem crazy about gold, snatching it up more like a 'cheap cabbage' than such a precious metal," said Beijing resident Miao Miao.
"You have to quickly decide whether to make a purchase, or it will be taken away by others."
Miao was shopping for a pair of gold bracelets to give to her granddaughter as a gift for the New Year.
"When my daughter was born in 1984, we had no means or savings to buy her one as a keepsake. We can finally realize this dream by sending it to her daughter," Miao said.
However, Chinese do not value gold only in only sentimental terms. The precious metal is also expected to maintain or increase its value, as evidenced by the surging investment demand seen around the country, insiders have said.
"To most Chinese, gold is more convenient to cash in than other investment instruments. Despite common investment risks, the price of gold is clear and easy to judge," said Guan.
Compared to unpredictable investments, such as those in the stock market or housing sector, gold is cherished more by Chinese for its increasing value as an asset as well as the unlikelihood that it will be affected by inflation, Guan said.
China is expected to overtake India as the world's top gold consumer in the next few years. Strong demand for investments in gold and jewelry will have driven China's total gold demand to 750 metric tons in 2011, according to the World Gold Council.
Despite the record-high price of gold, the demand for investments in gold and jewelry has continued to soar, with the market expected to reach about 955.2 metric tons by 2020, thanks to a growing middle class and a more affluent society, said Binghai, director of the Shanghai Gold & Jewelry Trade Association.
The NY Fed’s Index of Coincident Economic Indicators shows how putrid the economic ‘bounce’ is for New Jersey. NYC, due to the trillions poured into Wall Street bounced well but is now rolling over. The bounce of NYC obviously helped NY State, but that bounce was modest and is also rolling over.
US Q4 GDP increased 0.7%, 2.8% annualized; 3% was expected. However, consumption increased only 2%. Inventory growth contributed 2 percent points to the 2.8% growth! Real final sales rose 0.8%.
The Commerce Department greatly boosted GDP by lowering the GDP deflator to only 0.39% from Q3’s 2.56%. This created 2.16% more GDP q/q…Using CPI to deflate GDP would have produced negative GDP.
The absurdly low GDP Deflator also greatly overstates income, which increased only 0.8%...Government spending declined 4.6% in Q4 and 2.1% for 2011 due to massive defense cuts. This is the biggest decline since 1971…Part of the surge in inventory could be inflation.
Consumer Metric Institute: If the highly positive swing in the inventory number is real, it is certainly not sustainable and when combined with actual consumer spending the numbers themselves would be prima facie evidence that manufacturers over-corrected in anticipation of huge holiday spending. Such an over-correction should lead to reversals in the coming quarters. On the other hand, if the swing is an artifact of firming commodity prices it is just a further indication that the headline number is hopelessly noisy subject to erratic phantom movements as the BEA's "deflaters" struggle to track pricing changes.
And lastly, the volatility of the inventory parts of the BEA's equation continue to distort the headline number enough to render it useless as a source of genuine economic information. In the best of times the inventory data provided by the BEA is late and incomplete, but it is necessitated by the need within the BEA's equations to reconcile the production based manufacturing portions of their equation to the consumption based consumer portions. Because of that it is both partly plugged (at least in the monthly and quarterly updates) and highly susceptible to fluctuations in pricing levels.
In short, this report is disturbing because of how the headline number masks real and troubling weakness in the more substantive details
The PCE number was the most-understated and worthless, regularly-followed inflation number the Fed could come up with, shy of the “core” PCE deflator, net of food and energy, which Mr. Bernanke traditionally has been fond of touting.
GDP for 2011 increased only 1.7%. US Debt increased almost 9% in 2011; the Fed’s balance sheet increased over 20%. $1.22 Trillion of US Treasury debt and QE2.0 and Operation Twist II produced about $260B of GDP.
How many times can this occur before an implosion occurs?
Employment in Alabama has surged since July 2011; however this has caused great controversy.
Alabama's unemployment rate has dropped more than any of its bordering states according to the U.S. Bureau of Labor Statistics. According to the data, Alabama's unemployment has dropped by 1.9% since July 2011 when the rate reached its high for the year at 10% unemployment…
The legislature passed a handful of measures that were touted as ways to recruit industry to Alabama.
They included tax incentives for companies to relocate to Alabama and a law aimed at cracking down on illegal immigration which was sold as an economic development bill… [Bill passed in June]
[Fed officials and other solons are complicit]
The amount of money the federal government hands out in direct payments to individuals steadily increased over the past four decades, but shot up under Obama, climbing by almost $600 billion a 32% increase in his first three years…
According to the Census Bureau 49% now live in homes where at least one person gets a federal benefit — Social Security, workers comp, unemployment, subsidized housing, and the like. That's up from 44% the year before Obama took office, and way up from 1983, when fewer than a third were government beneficiaries…
This year, more than 46 million (15% of all Americans) will get food stamps. That's 45% higher than when Obama took office, and twice as high as the average for the previous 40 years…
The number of people on Social Security disability has steadily climbed since the 1970s, thanks mainly to easier eligibility rules. But their numbers jumped 10% in Obama's first two years in office, according to the Social Security Administration. That sharp rise was due largely to meager job prospects since the recession ended in 2009…
The government's role in health care has grown over the past decades, with 45% of all health spending now coming from the federal government, up from 32% in 1990…
In just nine years, entitlement spending is on track to eat up 61% of the federal budget, according to the CBO. And unless these programs are cut back, they will soon consume all federal taxes, one CBO budget scenario predicts…
Due to the Fed, several commodities are surging despite universal forecasts of global economic decline.
Cattle prices are at an all-time high due to the lowest herd count in 50 years (due to grain prices last year).
Orange juice hit an all-time high (Looking good, Billy Ray!)…Cash corn is trading at premium in January for the first time since 1975 (due to tight supplies)…Gasoline futures hit an all-time high for January.
As we keep asserting, if the Fed were to implement QE 3.0, the inflation surge could be much worse than the inflation surge that accompanied QE 2.0, which killed economic growth and fomented global revolt.
In Honolulu… there’s a four-bedroom home priced at $785,000 that has views of the sun setting over the Pacific Ocean. The beaches of Waikiki are 15 minutes away. Starting this month, the property is available to buyers with a subprime credit score, limited cash reserves and a 3.5% down payment using a loan backed by the Federal Housing Administration. Without the agency, a buyer would need a 20% down payment and an unblemished financial history for a jumbo mortgage… The agency increased the size of mortgages it’s willing to insure to as high as $793,750 in Hawaii and $729,750 in the costly real estate markets of states including California, Florida, and Virginia.
Freddie Mac Bets Against American Homeowners.
But the trades, uncovered for the first time in an investigation by ProPublica and NPR, give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.
“We were actually shocked they did this,” says Scott Simon…the head of the giant bond fund PIMCO’s mortgage-backed securities team…“It seemed so out of line with their mission.The trades put them squarely against the homeowner, he says.
CBO has released a study comparing the wages and benefits of private sector and federal non-military workers. The study uses statistical techniques to make comparisons with adjustments for education level, experience, and other factors.
Here are the overall results:
- The wages of federal workers are 2 percent higher than similar private-sector workers, on average.
- The benefits of federal workers are 48 percent higher than similar private-sector workers, on average.
- The total compensation (wages plus benefits) of federal workers is 16 percent higher than similar private-sector workers, on average…
The percentage of safe assets to total assets in the US economy has been roughly the same since 1952, at about 33 per cent…The stability of demand for safe assets has held during a time in which the assets of the financial sector as a percentage of all assets in the economy have climbed from 25 to 40 per cent, with most of the growth in total assets being financed through debt rather than equity…
Since the relevant topic is how to prevent a run in the shadow banking system, we’re primarily talking about debt here specifically, the debt eligible to be used as collateral in repo and short-term secured lending markets…
Gorton and Metrick have previously argued that the panic wasn’t caused directly by the revelation that subprime-related ABS values were plummeting; this had already happened earlier than 2007. The problem was that the lack of transparency in repo markets meant that investors had no way of distinguishing between repo borrowers whose collateral was subprime-related and those whose collateral was relatively safer. So they started raising haircuts, from zero in most cases, indiscriminately across all
repo counterparties. The run was on and so was the credit crunch…
The core problem is that there is no such thing as a safe asset, as the world has so painfully learned.
”Safe asset” is just a phrase that describes assets perceived to be safe enough. But we can never completely eliminate the possibility that an asset will go from safe enough to not safe enough.
US personal income increased 0.5% in December; but 23% of income growth was due to personal transfer payments. Spending was flat. Savings surged 4% - in December!!! This does not compute!
Illinois’ unpaid bills may more than triple to $34.8 billion by 2017 unless lawmakers and Democratic.
Governor Pat Quinn immediately bring Medicaid and pension spending under control, said a research group. The “potentially paralyzing” backlog, projected to reach $9.2 billion when this fiscal year ends June 30, would be fueled by an “unsustainable” increase in Medicaid spending, according to the Civic Federation, which calls itself a nonpartisan government research organization
House Republicans are proposing to spend about $260 billion over the next 4 1/2 years on transportation programs, as well as substantially increase the size of trucks permitted on highways, according to a draft bill being introduced this week… [Bribing the constituents with more goodies from borrowed money]
Residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the U.S. housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from November 2010 after decreasing 3.4 percent in the year ended in October, the group said today in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg News survey.
Another wave of foreclosures threatens to keep the pressure on prices and delay recovery in the industry that precipitated the last recession, underscoring the Federal Reserve’s view that housing “remains depressed.” More stability in real-estate values may be needed to persuade Americans to take advantage of record-low mortgage rates.
“We’ve seen home prices take a turn for the worse after showing some signs of a bottom, and we do think that there is more downside from here,” said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York, who correctly forecast the price decline. “If you get stronger jobs and wage growth, it’ll go far in alleviating some of the pipeline foreclosures that have yet to happen.
Consumer confidence unexpectedly dropped in January and a gauge of business activity fell, underscoring forecasts that the U.S. economy will cool after expanding at the fastest pace since the second quarter 2010.
The New York-based Conference Board’s confidence index decreased to 61.1, lower than the most pessimistic forecast in a Bloomberg News survey of economists, from a revised 64.8 reading the prior month. The Institute for Supply Management-Chicago Inc. said its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth.
Employers aren’t hiring fast enough to drive bigger gains in wages and consumer spending, while higher gasoline prices are cutting into household budgets. Another report today showed home prices fell more than forecast in November, eroding the wealth of families as they seek to rebuild savings.
“This quarter will be a bit slower,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who had the lowest sentiment estimate. “Consumer confidence appears to have leveled off, as job growth isn’t quite as good and gasoline prices have moved back up.”
Business activity in the U.S. cooled in January as orders and employment slowed, indicating last quarter’s pickup in growth will not be sustained into 2012.
The Institute for Supply Management-Chicago Inc. said today its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63, according to the median of 57 estimates in a Bloomberg survey.
Three consecutive readings exceeding 60 are still the strongest since early 2011, signaling manufacturing remains a mainstay of the expansion even as the world’s largest economy decelerates. Nonetheless, the risk of a recession in Europe prompted by its debt crisis and slower growth in some emerging markets pose a risk to export growth.
Business activity in the U.S. Midwest grew more slowly than expected in January, according to the Institute for Supply Management-Chicago's index of Midwest business activity.
"January's Chicago PMI reading of 60.2 compares to 62.2 in December and a market consensus of 63.0, but remains quite healthy," said David Sloan, an economist with IFR Economics.
"Firmer data from other surveys appear to be catching up with the Chicago PMI," he added. "Internals were generally somewhat softer with the exception of a rise in delivery times."
Maurice “Hank” Greenberg, the former CEO of American International Group Inc. (AIG), and the company he runs, Starr International Co. (Starr), have sued the U.S. Government for the alleged unconstitutional federal takeover of AIG in 2008, according to Reuters.
The lawsuit seeks $25 billion in damages and alleges violations of the Fifth Amendment, which says private property can’t be taken for “public use, without just compensation.” Moreover, Starr accuses the U.S. Treasury Department and Federal Reserve Bank of New York of wrongly seizing control of AIG and using it as a vehicle to funnel tens of billions of dollars to AIG’s trading partners, and also alleges that the AIG bailout was done as “a vehicle to covertly funnel billions of dollars to other preferred financial institutions including Goldman Sachs.”
“The government’s actions were ostensibly designed to protect the United States economy and rescue the country’s financial system,” the complaint asserts.
The complaint adds that, “[a]lthough this might be a laudable goal, as a matter of basic law, the ends could not and did not justify the unlawful means employed. The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency.”
The $25 billion estimate reflects what Starr calls the value of the government’s stake on January 14, 2011, when it swapped AIG preferred stock for 562.9 million common shares. AIG was once the world’s largest insurer by market value.
The federal claims case is Starr International Co. v. United States, No. 11-779(Fed. Cl. filed Nov. 21, 2011). The Federal Reserve case is Starr International Co. v. Federal Reserve Bank of New York, No. 11-8422 (S.D.N.Y. filed Nov. 21, 2011)
JPMorgan Chase & Co. was sued by Germany’s largest cooperative lender for allegedly making false and misleading statements in connection with the sale of residential mortgage-backed securities.
DZ Bank AG sued yesterday in New York State Supreme Courtin Manhattan, saying it bought about $85 million of the securities from JPMorgan based on offering materials that misrepresented the underwriting standards used to issue the underlying loans.
"Plaintiff did not know the true facts regarding defendants’ misrepresentations and omissions in the offering materials, and justifiably relied on those misrepresentations and omissions," Frankfurt-based DZ Bank said in the complaint. The German lender is seeking $85 million in damages.
Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.
Tasha Pelio, a spokeswoman for New York-based JPMorgan, declined to immediately comment on the lawsuit.
The case is Deutsche Zentral-Genossenschaftsbank AG v. JPMorgan Chase & Co, 650293/2012, New York State Supreme Court(Manhattan).
An excerpt from Bob Chapman's weekly publication.
He continued about how the conclusion of a fiscal pact, the ESM, the European Stabilization Mechanism, where budgets and fiscal spending policies would be determined by unelected, Treasury appointees, who have been officially immunized by the EU government. Mr. Draghi makes no note of these qualifications and forgets to let us know that in this new ESM pact all the nations lose their sovereignty.
As yet, after a month, there is no evidence that the funds had reached the real economy. The banks that just received the funds at 1% interest have been depositing them at ¼% interest with the ECB. They have not lent to each other because bankers say they do not trust each other. What a sad state of affairs. In addition to the above the ECB now accepts loan collateral of much lower quality than previously was approved. As you can see there were a lot of facts Mr. Draghi deliberately left out.
Now the banks have to use these funds to refund old and new debt and lend to keep the economies afloat. They also have to play their parts in keeping the six problem nations afloat.
Concerning the subject of Greece we were told last Friday a deal would be announced but nothing has happened as yet. The outlook is grim and the fundamentals are terrible. We won’t rehash Greece, because we have been over it so many times. We will wait to see what this week brings.
The Portuguese economy is falling deeper into austerity. Bank lending has fallen by the most on record. It fell $6.5 in December the biggest monthly decline since December 197, when the ECB began collecting data. Portugal, if they’ like to recover, should be using the LTRO funds to make loans to small and medium sized companies.
The Kiel Institute for the World Economy says Portugal would have to have a budget surplus of 11% of GDP annually. If they had 2% growth, which is a tall order, it would need a 56% haircut on its debt to get back on a sustainable path to recovery.
Gold finally out of that early on mess, finally had a good month, up just under 10%. That is the best January since 1980. We remember January 1980 well – it was the final month of the gold rally. Oddly enough the shares topped out in June with gold trading at $680 to $720. We would like to say that the 3 gold and silver suppressions of this past 2011 and 2012 has pointed out in stark relief that the US government has been very actively manipulating gold and silver prices, legally, since 1980. We mention this because short-term charts are terribly distorted and for us you cannot use them. The advocates are out again with their charts and believe we hope they are right. As usual as they have been, they will be wrong. They’ll soon call for reversal and as they do gold and silver will go higher.
After having loaned the ECB $1 trillion they now tell us we’ll receive QE 3. In fractional banking that could be $10 to $20 trillion. Any substantial part of those funds are used and monetized you’ll see some stunning inflation.
Election is in view and employment is not improving. The Fed has pledged that it is prepared to provide for further monetary accommodation. Inflation is headed higher, not lower. All that money and credit will influence inflation. Yes, the EU, US and UK economies will be flat this year and probably slightly higher. What we are doing with QE 3 and other types of stimulus is just extending the game.
If everything is fine why did the US Mint sell 114,500 ounces of American Gold Eagles with still two days left in January to accommodate buyers? Maybe the total will be 145,000, the largest sale in 1-1/2 years. It’s because people do not trust their economies and their governments that is why and they are buying gold and silver coins to protect themselves. They only have to look at the Republican Presidential primaries where votes are stolen by computer, dead people vote and Ron Paul doesn’t get a chance to state his case. Our government is a criminal syndicate. All those American gold and silver buyers know this, and that is why they want gold and silver coins, not fiat dollars.
Finally we are starting to see money managers, hedge funds, and others getting more bullish on gold. This should lead to short covering in gold and silver and the shares.
Here we have QE 3 in the works as we predicted months ago. We said it would consist of the Fed buying the banks garbage so they have cash to follow the Fed’s orders. Those orders will be to buy Treasuries, Agencies and to make loans to small and medium companies. Before the Fed bought $1.4 trillion of this paper, mostly MBS and CDO’s. We never found out what the Fed paid for previous purchases and we won’t this time either. This is another gift the Fed, or should we say taxpayer gives the to the banks. What we are seeing in Europe and again shortly here is another stuffing of the system with money and credit. The Fed is headed down the road of no return and they know exactly what they are doing. That is playing money and credit creation to the bitter end. Historically no central bank has had the power to do this. If played out to the end we have to expect hyperinflationary depression, which will end in a deflationary depressionary collapse. This will destroy the value of the US dollar and its purchasing power. The entire system will probably collapse to a great extent including perhaps 60% of commerce, 40% to 50% unemployment, and the end of the financial system and resorting to bartering, the social support system and government. They will all collapse, so you had better prepare for it. All this will be expedited if Ron Paul is not elected our next president. If he were to be elected he could short-circuit many programs and policies that are destroying our nation.
The moves by the elitist Fed via the ECB to cover-up the monetary and financial chaos in Europe and in the US via QE 3 is in part political. Political in France and toward the next elections. France is a nightmare for the elitists and obviously those in power want Obama returned. He having done everything asked of him.
Bob Chapman - Discount Gold & Silver Trading - 27 Jan 2012
http://www.youtube.com/watch?v=bMHIq0KIq4A&feature=email
Interview 457 – The International Forecaster with Bob Chapman
http://www.corbettreport.com/interview-457-the-international-forecaster-with-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29
Bob Chapman - Financial Survival - January 30, 2012
http://www.youtube.com/watch?v=UCy_OUyd5Ts&feature=email
Bob Chapman - Oracle Broadcasting - Jan. 28, 2012
http://www.youtube.com/watch?v=1QgKm67sjt0&feature=email
Bob Chapman - USAprepares Radio Show - Jan. 31, 2012 – Vincent Finelli
http://www.youtube.com/watch?v=nAL4u0o5xCk&feature=email
As we predicted last fall that QE 3 will come in the form of another bank bailout. This time it will be the clearing of toxic bonds from the banks’ books, which was done by buying $1.4 trillion in these bonds previously. We expect $800 billion to $1.3 trillion this time around. The disbursement of these funds should last 12 to 18 months. These moves were in part responsible for our change in GDP for the US this year from minus 1-1/2% to 2% to plus 1-1/2% to 2%.
In the latest out of Europe, Germany is pushing Greece to relinquish control over its budget policies to a euro zone “budget commissioner,” who would be able to veto domestic fiscal decisions, similar to the powers they want to grant to the ESM.
German logic is if further funds are not dispersed, Greece cannot threaten its members with default, but will have to accept outside fiscal control with funs. The game being paid by Germany is dangerous and could lead to immediate default. In addition any deal made in February by the PASOK government is subject to change in two months by a new election victor and party in charge. The German position is dumb and ultimately won’t work.
The Greeks are not going to like or accept the German demands. There will be demonstrations and the new policies may go nowhere. From the Greek side, when you have lost almost everything there is little more to lose. Unfortunately, we predicted all this but few were listening.
After putting the present regime in power 25 years ago in Iran the US has had nothing but problems, the latest and most important has been the sale of oil in currencies other than the US dollar. Asked many times, Iran refuses to comply. This is the main reason the US and Europe are so aggressive in pursuing Iran. Underneath it all it is all about petrodollars. This is why Iraq was destroyed and Libya as well. The US could not tolerate Iraq selling oil in euros. Anyone who steps out of line gets zapped, no matter who it is. At the IMF a year ago director Dominique Strauss-Kahn called for a different currency to, a new world currency, to end the dominance of the dollar. As a result he was set up in a hotel in NYC for rape. We immediately pointed out this was a bag job and so it was, but it got him out of his IMF job, he couldn’t run for the French presidency and they destroyed his reputation. This shows you how far and even further the US Illuminists will go to protect their oil monopoly and fixed oil payments in US dollars only. Strauss-Kahn is a top Illuminist and they still destroyed him. If the dollar becomes only one of many currencies in which oil is sold, the dollar will then collapse. For the US, the barn door has closed, but the farm animals are already loose.
At Davos this past week the US Secretary of the Treasury, Timothy Geithner, urged the euro zone to boost its cache of bailout cash and protect Italy and Spain against the threat of a market rout. At the same time the new IMF leader Christine Lagarde urged Greece and its creditors to agree on cutting debt burdens.
What we see here is a request for more funds. The Fed just did a swap, a loan, for $1 trillion for the ECB in behalf of 523 EU banks. Obviously it wasn’t enough and obviously they would rather borrow from the ECB and the Fed rather than go the fractional route. We will see more money spilled but never really enough.
While these events ran paramount on Friday night, while most everybody was enjoying themselves, Fitch cut Italy’s rating 2 notches to A minus. Joining the group n being downgraded we saw the same medicine applied to Spain, Belgium, Slovenia and Cyprus.
Last week the Dow fell 0.5%, S&P was little changed, the Russell 2000 gained 1.8% and the Nasdaq 100 rose 1.0%. Cyclicals rose 0.8%; utilities were unchanged; transports gained 1.2%; consumers fell 0.4%; banks fell 1.4% and broker/dealers fell 3.0%; high tech rose 0.3%; semis fell 0.2%; Internets fell 0.3% and biotechs rose 5.4%. Gold bullion rose $72.00, the HUI Gold Index rose 9.4% and the USDX fell 1.6%.
Two-year T-bills fell 3 bps to 0.21%, as 10-year notes fell 13 bps to 1.89%. German 10-year bunds rose again.
The Freddie Mac 30-year fixed rate mortgage rates rose 10 bps to 3.98%; the 15’s rose 7 bps to 3.24%. The one-year ARM’s were unchanged at 2.74% and 30-year fixed rate jumbos were down 4 bps to 4.46%.
Fed credit expanded $1.5 billion to $2,905 trillion, which is up 20.1% yoy. Fed foreign holdings at Treasuries and Agencies rose $14.4 billion to $3.406 trillion. Custody holdings for foreign central banks rose $55 billion yoy, or 1.6%.
M2, narrow, money supply rose $8.0 billion to a record $9.763 trillion. That is up 10.2% yoy.
Total money market fund assets fell $14.7 billion to $2.679 trillion.
Commercial paper rose $3.4 billion to $971 billion. That is down $17 billion from a year ago, or 1.7%.
A "gold rush" swept through China during the week-long Lunar New Year holiday this year, with demand for precious metals and jewelry surging since the Year of the Dragon began.
Sales of gold, silver and jewelry rose 57.6 percent during the week-long holiday at Caibai, one of Beijing's best-known gold retailers, according to data released by the Ministry of Commerce (MOC) on Saturday.
Other jewelry stores across the country also saw sales boom during the period, with customers favoring New Year-themed gold bars, gold ingots and other types of Dragon-themed jewelries.
"Long treasured by Chinese, gold is no longer owned only by a privileged few, but has become a new investment channel open to all," said Guan Qiang, assistant manager at Caibai.
The Spring Festival gives people a chance to preserve and present gold as gifts, offering hopes that it will increase in value and not be impacted by inflation, Guan said.
During the week-long holiday, which lasted from January 22 to 28, the sales volume in Caibai and Guohua, another of Beijing's top gold retailers, reached about 600 million yuan ($95.28 million).
The figure showed a 49.7-percent increase over that of last year's Spring Festival, said a report released by the Beijing Municipal Commission of Commerce.
Caibai began selling gold bars as investment items during the 2008 Beijing Olympic Games, but the trend of buying gold or silver bars during the Spring Festival has really taken off in the past two years, Guan said.
For Guan and his colleagues, the Spring Festival rush was an exciting but exhausting experience, as customers flooded the store and surprised clerks with their purchasing enthusiasm.
"With customers crowding and rushing in, we did not even have time to eat and drink," said a sales clerk at the gold bar counter surnamed Li.
She said each shop assistant had received hundreds of customers per day and wrote several times more orders than on ordinary days.
"You can hardly even see the gold bars, necklaces and pendants in the display case. People seem crazy about gold, snatching it up more like a 'cheap cabbage' than such a precious metal," said Beijing resident Miao Miao.
"You have to quickly decide whether to make a purchase, or it will be taken away by others."
Miao was shopping for a pair of gold bracelets to give to her granddaughter as a gift for the New Year.
"When my daughter was born in 1984, we had no means or savings to buy her one as a keepsake. We can finally realize this dream by sending it to her daughter," Miao said.
However, Chinese do not value gold only in only sentimental terms. The precious metal is also expected to maintain or increase its value, as evidenced by the surging investment demand seen around the country, insiders have said.
"To most Chinese, gold is more convenient to cash in than other investment instruments. Despite common investment risks, the price of gold is clear and easy to judge," said Guan.
Compared to unpredictable investments, such as those in the stock market or housing sector, gold is cherished more by Chinese for its increasing value as an asset as well as the unlikelihood that it will be affected by inflation, Guan said.
China is expected to overtake India as the world's top gold consumer in the next few years. Strong demand for investments in gold and jewelry will have driven China's total gold demand to 750 metric tons in 2011, according to the World Gold Council.
Despite the record-high price of gold, the demand for investments in gold and jewelry has continued to soar, with the market expected to reach about 955.2 metric tons by 2020, thanks to a growing middle class and a more affluent society, said Binghai, director of the Shanghai Gold & Jewelry Trade Association.
The NY Fed’s Index of Coincident Economic Indicators shows how putrid the economic ‘bounce’ is for New Jersey. NYC, due to the trillions poured into Wall Street bounced well but is now rolling over. The bounce of NYC obviously helped NY State, but that bounce was modest and is also rolling over.
US Q4 GDP increased 0.7%, 2.8% annualized; 3% was expected. However, consumption increased only 2%. Inventory growth contributed 2 percent points to the 2.8% growth! Real final sales rose 0.8%.
The Commerce Department greatly boosted GDP by lowering the GDP deflator to only 0.39% from Q3’s 2.56%. This created 2.16% more GDP q/q…Using CPI to deflate GDP would have produced negative GDP.
The absurdly low GDP Deflator also greatly overstates income, which increased only 0.8%...Government spending declined 4.6% in Q4 and 2.1% for 2011 due to massive defense cuts. This is the biggest decline since 1971…Part of the surge in inventory could be inflation.
Consumer Metric Institute: If the highly positive swing in the inventory number is real, it is certainly not sustainable and when combined with actual consumer spending the numbers themselves would be prima facie evidence that manufacturers over-corrected in anticipation of huge holiday spending. Such an over-correction should lead to reversals in the coming quarters. On the other hand, if the swing is an artifact of firming commodity prices it is just a further indication that the headline number is hopelessly noisy subject to erratic phantom movements as the BEA's "deflaters" struggle to track pricing changes.
And lastly, the volatility of the inventory parts of the BEA's equation continue to distort the headline number enough to render it useless as a source of genuine economic information. In the best of times the inventory data provided by the BEA is late and incomplete, but it is necessitated by the need within the BEA's equations to reconcile the production based manufacturing portions of their equation to the consumption based consumer portions. Because of that it is both partly plugged (at least in the monthly and quarterly updates) and highly susceptible to fluctuations in pricing levels.
In short, this report is disturbing because of how the headline number masks real and troubling weakness in the more substantive details
The PCE number was the most-understated and worthless, regularly-followed inflation number the Fed could come up with, shy of the “core” PCE deflator, net of food and energy, which Mr. Bernanke traditionally has been fond of touting.
GDP for 2011 increased only 1.7%. US Debt increased almost 9% in 2011; the Fed’s balance sheet increased over 20%. $1.22 Trillion of US Treasury debt and QE2.0 and Operation Twist II produced about $260B of GDP.
How many times can this occur before an implosion occurs?
Employment in Alabama has surged since July 2011; however this has caused great controversy.
Alabama's unemployment rate has dropped more than any of its bordering states according to the U.S. Bureau of Labor Statistics. According to the data, Alabama's unemployment has dropped by 1.9% since July 2011 when the rate reached its high for the year at 10% unemployment…
The legislature passed a handful of measures that were touted as ways to recruit industry to Alabama.
They included tax incentives for companies to relocate to Alabama and a law aimed at cracking down on illegal immigration which was sold as an economic development bill… [Bill passed in June]
[Fed officials and other solons are complicit]
The amount of money the federal government hands out in direct payments to individuals steadily increased over the past four decades, but shot up under Obama, climbing by almost $600 billion a 32% increase in his first three years…
According to the Census Bureau 49% now live in homes where at least one person gets a federal benefit — Social Security, workers comp, unemployment, subsidized housing, and the like. That's up from 44% the year before Obama took office, and way up from 1983, when fewer than a third were government beneficiaries…
This year, more than 46 million (15% of all Americans) will get food stamps. That's 45% higher than when Obama took office, and twice as high as the average for the previous 40 years…
The number of people on Social Security disability has steadily climbed since the 1970s, thanks mainly to easier eligibility rules. But their numbers jumped 10% in Obama's first two years in office, according to the Social Security Administration. That sharp rise was due largely to meager job prospects since the recession ended in 2009…
The government's role in health care has grown over the past decades, with 45% of all health spending now coming from the federal government, up from 32% in 1990…
In just nine years, entitlement spending is on track to eat up 61% of the federal budget, according to the CBO. And unless these programs are cut back, they will soon consume all federal taxes, one CBO budget scenario predicts…
Due to the Fed, several commodities are surging despite universal forecasts of global economic decline.
Cattle prices are at an all-time high due to the lowest herd count in 50 years (due to grain prices last year).
Orange juice hit an all-time high (Looking good, Billy Ray!)…Cash corn is trading at premium in January for the first time since 1975 (due to tight supplies)…Gasoline futures hit an all-time high for January.
As we keep asserting, if the Fed were to implement QE 3.0, the inflation surge could be much worse than the inflation surge that accompanied QE 2.0, which killed economic growth and fomented global revolt.
In Honolulu… there’s a four-bedroom home priced at $785,000 that has views of the sun setting over the Pacific Ocean. The beaches of Waikiki are 15 minutes away. Starting this month, the property is available to buyers with a subprime credit score, limited cash reserves and a 3.5% down payment using a loan backed by the Federal Housing Administration. Without the agency, a buyer would need a 20% down payment and an unblemished financial history for a jumbo mortgage… The agency increased the size of mortgages it’s willing to insure to as high as $793,750 in Hawaii and $729,750 in the costly real estate markets of states including California, Florida, and Virginia.
Freddie Mac Bets Against American Homeowners.
But the trades, uncovered for the first time in an investigation by ProPublica and NPR, give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.
“We were actually shocked they did this,” says Scott Simon…the head of the giant bond fund PIMCO’s mortgage-backed securities team…“It seemed so out of line with their mission.The trades put them squarely against the homeowner, he says.
CBO has released a study comparing the wages and benefits of private sector and federal non-military workers. The study uses statistical techniques to make comparisons with adjustments for education level, experience, and other factors.
Here are the overall results:
- The wages of federal workers are 2 percent higher than similar private-sector workers, on average.
- The benefits of federal workers are 48 percent higher than similar private-sector workers, on average.
- The total compensation (wages plus benefits) of federal workers is 16 percent higher than similar private-sector workers, on average…
The percentage of safe assets to total assets in the US economy has been roughly the same since 1952, at about 33 per cent…The stability of demand for safe assets has held during a time in which the assets of the financial sector as a percentage of all assets in the economy have climbed from 25 to 40 per cent, with most of the growth in total assets being financed through debt rather than equity…
Since the relevant topic is how to prevent a run in the shadow banking system, we’re primarily talking about debt here specifically, the debt eligible to be used as collateral in repo and short-term secured lending markets…
Gorton and Metrick have previously argued that the panic wasn’t caused directly by the revelation that subprime-related ABS values were plummeting; this had already happened earlier than 2007. The problem was that the lack of transparency in repo markets meant that investors had no way of distinguishing between repo borrowers whose collateral was subprime-related and those whose collateral was relatively safer. So they started raising haircuts, from zero in most cases, indiscriminately across all
repo counterparties. The run was on and so was the credit crunch…
The core problem is that there is no such thing as a safe asset, as the world has so painfully learned.
”Safe asset” is just a phrase that describes assets perceived to be safe enough. But we can never completely eliminate the possibility that an asset will go from safe enough to not safe enough.
US personal income increased 0.5% in December; but 23% of income growth was due to personal transfer payments. Spending was flat. Savings surged 4% - in December!!! This does not compute!
Illinois’ unpaid bills may more than triple to $34.8 billion by 2017 unless lawmakers and Democratic.
Governor Pat Quinn immediately bring Medicaid and pension spending under control, said a research group. The “potentially paralyzing” backlog, projected to reach $9.2 billion when this fiscal year ends June 30, would be fueled by an “unsustainable” increase in Medicaid spending, according to the Civic Federation, which calls itself a nonpartisan government research organization
House Republicans are proposing to spend about $260 billion over the next 4 1/2 years on transportation programs, as well as substantially increase the size of trucks permitted on highways, according to a draft bill being introduced this week… [Bribing the constituents with more goodies from borrowed money]
Residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the U.S. housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from November 2010 after decreasing 3.4 percent in the year ended in October, the group said today in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg News survey.
Another wave of foreclosures threatens to keep the pressure on prices and delay recovery in the industry that precipitated the last recession, underscoring the Federal Reserve’s view that housing “remains depressed.” More stability in real-estate values may be needed to persuade Americans to take advantage of record-low mortgage rates.
“We’ve seen home prices take a turn for the worse after showing some signs of a bottom, and we do think that there is more downside from here,” said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York, who correctly forecast the price decline. “If you get stronger jobs and wage growth, it’ll go far in alleviating some of the pipeline foreclosures that have yet to happen.
Consumer confidence unexpectedly dropped in January and a gauge of business activity fell, underscoring forecasts that the U.S. economy will cool after expanding at the fastest pace since the second quarter 2010.
The New York-based Conference Board’s confidence index decreased to 61.1, lower than the most pessimistic forecast in a Bloomberg News survey of economists, from a revised 64.8 reading the prior month. The Institute for Supply Management-Chicago Inc. said its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth.
Employers aren’t hiring fast enough to drive bigger gains in wages and consumer spending, while higher gasoline prices are cutting into household budgets. Another report today showed home prices fell more than forecast in November, eroding the wealth of families as they seek to rebuild savings.
“This quarter will be a bit slower,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, who had the lowest sentiment estimate. “Consumer confidence appears to have leveled off, as job growth isn’t quite as good and gasoline prices have moved back up.”
Business activity in the U.S. cooled in January as orders and employment slowed, indicating last quarter’s pickup in growth will not be sustained into 2012.
The Institute for Supply Management-Chicago Inc. said today its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63, according to the median of 57 estimates in a Bloomberg survey.
Three consecutive readings exceeding 60 are still the strongest since early 2011, signaling manufacturing remains a mainstay of the expansion even as the world’s largest economy decelerates. Nonetheless, the risk of a recession in Europe prompted by its debt crisis and slower growth in some emerging markets pose a risk to export growth.
Business activity in the U.S. Midwest grew more slowly than expected in January, according to the Institute for Supply Management-Chicago's index of Midwest business activity.
"January's Chicago PMI reading of 60.2 compares to 62.2 in December and a market consensus of 63.0, but remains quite healthy," said David Sloan, an economist with IFR Economics.
"Firmer data from other surveys appear to be catching up with the Chicago PMI," he added. "Internals were generally somewhat softer with the exception of a rise in delivery times."
Maurice “Hank” Greenberg, the former CEO of American International Group Inc. (AIG), and the company he runs, Starr International Co. (Starr), have sued the U.S. Government for the alleged unconstitutional federal takeover of AIG in 2008, according to Reuters.
The lawsuit seeks $25 billion in damages and alleges violations of the Fifth Amendment, which says private property can’t be taken for “public use, without just compensation.” Moreover, Starr accuses the U.S. Treasury Department and Federal Reserve Bank of New York of wrongly seizing control of AIG and using it as a vehicle to funnel tens of billions of dollars to AIG’s trading partners, and also alleges that the AIG bailout was done as “a vehicle to covertly funnel billions of dollars to other preferred financial institutions including Goldman Sachs.”
“The government’s actions were ostensibly designed to protect the United States economy and rescue the country’s financial system,” the complaint asserts.
The complaint adds that, “[a]lthough this might be a laudable goal, as a matter of basic law, the ends could not and did not justify the unlawful means employed. The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency.”
The $25 billion estimate reflects what Starr calls the value of the government’s stake on January 14, 2011, when it swapped AIG preferred stock for 562.9 million common shares. AIG was once the world’s largest insurer by market value.
The federal claims case is Starr International Co. v. United States, No. 11-779(Fed. Cl. filed Nov. 21, 2011). The Federal Reserve case is Starr International Co. v. Federal Reserve Bank of New York, No. 11-8422 (S.D.N.Y. filed Nov. 21, 2011)
JPMorgan Chase & Co. was sued by Germany’s largest cooperative lender for allegedly making false and misleading statements in connection with the sale of residential mortgage-backed securities.
DZ Bank AG sued yesterday in New York State Supreme Courtin Manhattan, saying it bought about $85 million of the securities from JPMorgan based on offering materials that misrepresented the underwriting standards used to issue the underlying loans.
"Plaintiff did not know the true facts regarding defendants’ misrepresentations and omissions in the offering materials, and justifiably relied on those misrepresentations and omissions," Frankfurt-based DZ Bank said in the complaint. The German lender is seeking $85 million in damages.
Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.
Tasha Pelio, a spokeswoman for New York-based JPMorgan, declined to immediately comment on the lawsuit.
The case is Deutsche Zentral-Genossenschaftsbank AG v. JPMorgan Chase & Co, 650293/2012, New York State Supreme Court(Manhattan).
Tuesday, February 7, 2012
Sunday, February 5, 2012
Shocking Collapse Of World Economy Warned Is Underway
A grim report just issued by the Finance Ministry that is circulating in the Kremlin today says the United States Clearing House Interbank Payments System (CHIPS) has ground to a virtual halt signaling that a major global economic collapse is currently underway and could very well likely enter into the dreaded “freefall zone.”
Virtually unknown to all but the global financial elite, CHIPS is the main privately held clearing house for large-value transactions in the United States, settling well over $1 trillion a day in around 250,000 interbank payments that together with the Fedwire Funds Service, which is operated by the Federal Reserve Banks, forms the primary US network for large-value domestic and international US dollar payments where it has a market share of around 96%.
The cause underlying the collapse of CHIPS, this report says, is due to the “unprecedented” demand for immediate liquidity relief being sought by the largest banks in the US and EU that are being crushed under of the combined debt of both the United States and Europe said to total near $39 trillion.
Important to note is that what is currently happening is a virtual repeat of the 2008 Financial Crisis that the United States Senate’s Levin–Coburn Report found “was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”
Grimly echoing this Ministry report is the latest data [see chart 2nd photo left, or click on link] from The Baltic Dry Index (BDI) that is a number issued daily by the London-based Baltic Exchange and shows it in freefall dropping 65% in the past 30 days alone, a terrifying amount of loss not seen since the dark days of late 2008.
Not restricted to Baltic Sea countries, the BDI tracks worldwide international shipping prices of various dry bulk cargoes that has collapsed so severely global shipping has all but ceased thus leaving our world’s largest transport ships anchored and empty off the coast of Singapore in what is described as“the biggest and most secretive gathering of ships in maritime history whose numbers are equivalent to the entire British and American navies combined.”
During the 2008 Financial Crisis an outright global economic catastrophe was only averted after the US Federal Reserve secretly gave out to US banks and corporations, and foreign banks everywhere from France to Scotland, over $16 trillion that was only discovered due to an amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act passed by the American Congress that called for their being audited for the first time in their 99-year history.
Note: To place that $16 trillion into perspective, remember that the Gross Domestic Product (GDP) of the United States is only $14.12 trillion, and the entire national debt of theUnited States government spanning its 200+ year history is “only” $14.5 trillion.
Curiously, the aforementioned amendment to the Dodd-Frank law only called only for a one-time audit of any emergency lending facility established by the Federal Reserve since 1 December 2007 and ending with the date of enactment of the law when it was signed by President Obama on 21 July 2010 thus keeping hidden from the American people who is getting their money.
To if anyone in the world, even the powerful US Federal Reserve, has the power to avert this coming catastrophe, this Ministry report warns, it is unlikely due to the cascading collapse of the global derivative market due to the mounting gridlock in liquidity that US billionaire and Obama confidant Warren Buffet warned back in 2003 were “financial weapons of mass destruction.”
Though the word “derivatives” sounds complicated and technical, understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.4 quadrillion.
$1.4 Quadrillion is roughly: -40 TIMES THE WORLD’S STOCK MARKET. -10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET. -23 TIMES WORLD GDP.
Failing to be noticed by the Western peoples about this global economic collapse is that it has been, in all probability, a “planned event” due to occur so as to initiate a New World Order that has long been sought after by the elites, but was condemned by the ancients who warned that the uniting of our world as an economic dictatorship would lead to every human being having to obtain the Mark of The Beast thus bringing this present age to its end.
In a Western world devoid of morality, and lacking the knowledge of the ancients, it is beyond doubt that this coming economic collapse will take them by complete surprise (as the last one did) as they have been trained like dutiful slaves to only adhere to those voices leading them to their doom.
But for those who know the truth, the time is nearing an end for preparing… it will come much sooner than anyone will believe.
February 1, 2012 © EU and US all rights reserved. Permission to use this report in its entirety is granted under the condition it is linked back to its original source at WhatDoesItMean.Com.
Virtually unknown to all but the global financial elite, CHIPS is the main privately held clearing house for large-value transactions in the United States, settling well over $1 trillion a day in around 250,000 interbank payments that together with the Fedwire Funds Service, which is operated by the Federal Reserve Banks, forms the primary US network for large-value domestic and international US dollar payments where it has a market share of around 96%.
The cause underlying the collapse of CHIPS, this report says, is due to the “unprecedented” demand for immediate liquidity relief being sought by the largest banks in the US and EU that are being crushed under of the combined debt of both the United States and Europe said to total near $39 trillion.
Important to note is that what is currently happening is a virtual repeat of the 2008 Financial Crisis that the United States Senate’s Levin–Coburn Report found “was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”
Grimly echoing this Ministry report is the latest data [see chart 2nd photo left, or click on link] from The Baltic Dry Index (BDI) that is a number issued daily by the London-based Baltic Exchange and shows it in freefall dropping 65% in the past 30 days alone, a terrifying amount of loss not seen since the dark days of late 2008.
Not restricted to Baltic Sea countries, the BDI tracks worldwide international shipping prices of various dry bulk cargoes that has collapsed so severely global shipping has all but ceased thus leaving our world’s largest transport ships anchored and empty off the coast of Singapore in what is described as“the biggest and most secretive gathering of ships in maritime history whose numbers are equivalent to the entire British and American navies combined.”
During the 2008 Financial Crisis an outright global economic catastrophe was only averted after the US Federal Reserve secretly gave out to US banks and corporations, and foreign banks everywhere from France to Scotland, over $16 trillion that was only discovered due to an amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act passed by the American Congress that called for their being audited for the first time in their 99-year history.
Note: To place that $16 trillion into perspective, remember that the Gross Domestic Product (GDP) of the United States is only $14.12 trillion, and the entire national debt of theUnited States government spanning its 200+ year history is “only” $14.5 trillion.
Curiously, the aforementioned amendment to the Dodd-Frank law only called only for a one-time audit of any emergency lending facility established by the Federal Reserve since 1 December 2007 and ending with the date of enactment of the law when it was signed by President Obama on 21 July 2010 thus keeping hidden from the American people who is getting their money.
To if anyone in the world, even the powerful US Federal Reserve, has the power to avert this coming catastrophe, this Ministry report warns, it is unlikely due to the cascading collapse of the global derivative market due to the mounting gridlock in liquidity that US billionaire and Obama confidant Warren Buffet warned back in 2003 were “financial weapons of mass destruction.”
Though the word “derivatives” sounds complicated and technical, understanding them is really not that hard. A derivative is essentially a fancy way of saying that a bet has been made. Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever seen before. Estimates of the notional value of the worldwide derivatives market go from $600 trillion all the way up to $1.4 quadrillion.
$1.4 Quadrillion is roughly: -40 TIMES THE WORLD’S STOCK MARKET. -10 TIMES the value of EVERY STOCK & EVERY BOND ON THE PLANET. -23 TIMES WORLD GDP.
Failing to be noticed by the Western peoples about this global economic collapse is that it has been, in all probability, a “planned event” due to occur so as to initiate a New World Order that has long been sought after by the elites, but was condemned by the ancients who warned that the uniting of our world as an economic dictatorship would lead to every human being having to obtain the Mark of The Beast thus bringing this present age to its end.
In a Western world devoid of morality, and lacking the knowledge of the ancients, it is beyond doubt that this coming economic collapse will take them by complete surprise (as the last one did) as they have been trained like dutiful slaves to only adhere to those voices leading them to their doom.
But for those who know the truth, the time is nearing an end for preparing… it will come much sooner than anyone will believe.
February 1, 2012 © EU and US all rights reserved. Permission to use this report in its entirety is granted under the condition it is linked back to its original source at WhatDoesItMean.Com.
Tuesday, January 24, 2012
Thursday, January 12, 2012
Friday, January 6, 2012
Wednesday, November 30, 2011
Britain’s Foreign Office Prepares For Riots In Europe; Sees Euro Collapse “When, Not If”
Zero Hedge: As every major developed economy hits Bass’s Keynesian Endgame, the status quo is set to change dramatically. Nowhere is this climax playing out louder than in Europe and the implicit solution of Germany-uber-alles (while seemingly inevitable though nevertheless lengthy in execution) is likely to not sit well with many of the EMU nations. To wit, The Telegraph today reports that Britain’s Foreign Office is advising its overseas embassies to draw up plans to help expats should the collapse of the Euro turn explosive. Almost incredibly, a senior minister has revealed that Britain is now planning on the basis that a euro collapse is matter of time.
The Telegraph: Prepare for riots in euro collapse, Foreign Office warns
British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain.
As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.
Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.
The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.
A senior minister has now revealed the extent of the Government’s concern, saying thatBritain is now planning on the basis that a euro collapse is now just a matter of time.
“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.
Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.
Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses.
Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash.
Fuelling the fears of financial markets for the euro, reports in Madrid yesterday suggested that the new Popular Party government could seek a bail-out from either the European Union rescue fund or the International Monetary Fund.
There are also growing fears for Italy, whose new government was forced to pay record interest rates on new bonds issued yesterday.
The yield on new six-month loans was 6.5 per cent, nearly double last month’s rate. And the yield on outstanding two-year loans was 7.8 per cent, well above the level considered unsustainable.
Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default.
The Italian government yesterday said that in talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Prime Minister Mario Monti had agreed that an Italian collapse “would inevitably be the end of the euro.”
The EU treaties that created the euro and set its membership rules contain no provision for members to leave, meaning any break-up would be disorderly and potentially chaotic.
If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse.
Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit.
The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.
Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.
Analysts at UBS, an investment bank earlier this year warned that the most extremeconsequences of a break-up include risks to basic property rights and the threat of civil disorder.
“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.
Friday, November 25, 2011
Tuesday, November 22, 2011
Bob Chapman on the MF Global scandal
Bob Chapman on the MF Global debacle : Bob Chapman reveals that he is getting over a thousand emails a day regarding what happened to Gerald Celente with MF Global , commodity account is done by contracts , the contract is not worth the paper it is written on says bob Chapman , and the reason for that is that COMEX likes to screw everybody it's as simple as that he added , and the CME which owns the COMEX likes to do the same thing , and they change the rules all the time , and so you have no protection in the commodity market whatsoever and anybody in there should know that ... I have told people for years never to use margins under any circumstances , well some people do and unfortunatly sometimes they'll regret it .....
Goldman Sachs Conquers Europe
The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic.
This is the most remarkable thing of all: a giant leap forward for,
or perhaps even the successful culmination of, the Goldman Sachs
Project.
It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons.
Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.
Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”
This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.
Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies.
With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro.
Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.
Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank.
Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.
The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time.
Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.”
When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.
It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.
“My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.”
So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default.
When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.
The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse.
Shared illusions, perhaps? Who would dare test it?
Source.
It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons.
Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.
Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”
This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.
Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies.
With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro.
Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.
Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank.
Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.
The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time.
Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.”
When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.
It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.
“My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.”
So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default.
When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.
The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse.
Shared illusions, perhaps? Who would dare test it?
Source.
Tuesday, November 8, 2011
Friday, November 4, 2011
Friday, October 21, 2011
Saturday, October 8, 2011
Federal Reserve Audit Exposes Major Securities Fraud and the Embezzlement of $16 Trillion
By Trevor Lyman
Audit The Fed Phone Bomb
An audit of the Federal Reserve has revealed that the privately owned Federal Reserve secretly doled out more than $16 trillion in zero interest loans to some of the largest financial institutions and corporations in the United States and throughout the world. The non-partisan, investigative arm of Congress also determined that the Fed acted illegally. In fact, according to the report, the Fed provided conflict of interest waivers to its employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans. The report is evidence that reveals major securities fraud in the embezzlement of $16 trillion by the Federal Reserve.
$16 trillion is 10 times more than what the U.S. Congress authorized and Bush ($700 billion) and Obama ( $787 billion) signed off on. The Federal Reserve was only authorized by Congress to use $1.487 trillion in federal tax dollars in bailouts. The Federal Reserve embezzled another $14.5 trillion.
The Congressional report determined that the Fed secretly hide most of the embezzled money into their own banks. The rest the Fed unilaterally transfered trillions of dollars to foreign banks and corporations from South Korea to Scotland. Foreign banks and corporations which the Federal Reserve bankers had a personal financial interest or stake in.
The report reveals that the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in federal money from the Fed – conflict of interest. Moreover, JP Morgan Chase served as one of the clearing banks (money laundering banks) for the Fed’s emergency loans programs (aka – embezzlement schemes).
Continue Reading…
Trevor Lyman is a liberty activist who helped to create political campaign concepts as moneybombs and blimp advertising. One of the organizers of the original Tea Party Money Bomb (2007) to support 2008 Republican Presidential Candidate Ron Paul, in one of the largest online political fundraisers. He continues his grassroots campaigns with the creation of Audit The Fed Phone Bomb and the Marijuana Phone Bomb. Mr Lyman is the founder and Chief Operations Officer of Break The Matrix.
Tuesday, October 4, 2011
Fed Plans to Identify “Key Bloggers” and Monitor Billions of Conversations
By Trevor Lyman
Audit The Fed Phone Bomb
The Federal Reserve plans to identify “Key Bloggers” and monitor billions of conversations about the Fed on Facebook, Twitter, forums and blogs.
The Federal Reserve wants to know what you are saying about it. In fact, the Federal Reserve has announced plans to identify “key bloggers” and to monitor “billions of conversations” about the Fed on Facebook, Twitter, forums and blogs. This is yet another sign that the alternative media is having a dramatic impact.
As first reported on Zero Hedge, the Federal Reserve Bank of New York has issued a “Request for Proposal” to suppliers who may be interested in participating in the development of a “Sentiment Analysis And Social Media Monitoring Solution”.
In other words, the Federal Reserve wants to develop a highly sophisticated system that will gather everything that you and I say about the Federal Reserve on the Internet and that will analyze what our feelings about the Fed are. Obviously, any “positive” feelings about the Fed would not be a problem. What they really want to do is to gather information on everyone that views the Federal Reserve negatively. It is unclear how they plan to use this information once they have it, but considering how many alternative media sources have been shut down lately, this is obviously a very troubling sign.
Continue Reading…
Trevor Lyman is a liberty activist who helped to create political campaign concepts as moneybombs and blimp advertising. One of the organizers of the original Tea Party Money Bomb (2007) to support 2008 Republican Presidential Candidate Ron Paul, in one of the largest online political fundraisers. He continues his grassroots campaigns with the creation of Audit The Fed Phone Bomb and the Marijuana Phone Bomb. Mr Lyman is the founder and Chief Operations Officer of Break The Matrix.
Audit The Fed Phone Bomb
The Federal Reserve plans to identify “Key Bloggers” and monitor billions of conversations about the Fed on Facebook, Twitter, forums and blogs.
The Federal Reserve wants to know what you are saying about it. In fact, the Federal Reserve has announced plans to identify “key bloggers” and to monitor “billions of conversations” about the Fed on Facebook, Twitter, forums and blogs. This is yet another sign that the alternative media is having a dramatic impact.
As first reported on Zero Hedge, the Federal Reserve Bank of New York has issued a “Request for Proposal” to suppliers who may be interested in participating in the development of a “Sentiment Analysis And Social Media Monitoring Solution”.
In other words, the Federal Reserve wants to develop a highly sophisticated system that will gather everything that you and I say about the Federal Reserve on the Internet and that will analyze what our feelings about the Fed are. Obviously, any “positive” feelings about the Fed would not be a problem. What they really want to do is to gather information on everyone that views the Federal Reserve negatively. It is unclear how they plan to use this information once they have it, but considering how many alternative media sources have been shut down lately, this is obviously a very troubling sign.
Continue Reading…
Trevor Lyman is a liberty activist who helped to create political campaign concepts as moneybombs and blimp advertising. One of the organizers of the original Tea Party Money Bomb (2007) to support 2008 Republican Presidential Candidate Ron Paul, in one of the largest online political fundraisers. He continues his grassroots campaigns with the creation of Audit The Fed Phone Bomb and the Marijuana Phone Bomb. Mr Lyman is the founder and Chief Operations Officer of Break The Matrix.
Saturday, September 3, 2011
Fearing An Even Worse Inflationary Depression Ahead
By Bob Chapman
TheInternationalForecaster.com
The debauching of currencies worldwide goes on with great abandon, and of course, leading the pack in the US, UK and Europe. What these countries and others are doing is awakening the hidden forces of inflation and destroying the value of their currencies. In Europe the Germans, over the past six months, have said at the polls they do not want to continue to subsidize the semi-solvent nations of the euro zone and will not participate in Eurobond offerings. Germans are rightly upset with the value of the euro and the illegal purchase of bonds in the market belonging to Italy and Spain.
Since the 1960s credit and money creation has run rampant making a mockery of sound money – a global system dependent on unrestrained credit. Wall Street and the City of London love such an environment in spite of the distortions, because such policies encourage speculation and greater profits.
One must remember that the very brightest have hatched this monetary abomination. They had full knowledge of what the results of their work would eventually lead too. Now these same people are surprised at the results of their looting of the system. Everything seems to be cheap to them and we ask in that context to what? Can they be so naive as to believe government statistics? We do not think so. Thus, what they are doing is being done deliberately. We find it hard to believe that in this environment of instability that somehow stocks and bonds are cheap. If that were so how does one explain gold selling at $1,900.00 an ounce and silver at $50.00?If gold and silver as a reflection to today’s monetary mess are so meaningless to Wall Street, why is it they and their privately owned Federal Reserve, along with the “President’s Working Grouping on Financial Markets” have to manipulate the prices of gold and silver? It is because they reflect a debauched financial system. Just this past week we saw a raid by government and its owners and partners in crime over just a 3-day period, take gold from $1,900 an ounce to $1,700 an ounce. A very dumb way to do things, but nevertheless this is what they did. Exposing what government was up to for all to see. In your face manipulation. Then again desperate people do desperate things. We put out a buy recommendation on Wednesday for Thursday morning when gold entered the $1,700 to $1,725 area. It reached that objective, and as we predicted made a U-turn to finish the week at $1,830.60. That was more than a $100 turnaround. It won’t be long again that gold will be again testing $1,900 and silver $44.00 and then $50.00. These conspirators may believe they are masters of the universe, but they are not.
Few believe that Keynes was a fascist but he was. It is not such a giant step from Fabian Socialism to corporatist fascism. Remember, these were the Wall Street operators who in part financed Adolph Hitler. A recent current reflection shows international reserve holdings up by more than $3 trillion. That is from dollar purchases to keep their US dollar foreign exchange earnings and their own credit creation. It should be noted that US dollar foreign exchange reserves over the past three years fell from 70% to 59%. That is quite a reduction.
In Europe as we have mentioned before, we have the catalyst for the bursting of the global debt bubble, as the six insolvent nations find they cannot find refinancing or financing at a reasonable cost. All we can see is uncertainty and refusal. The solvent nations have had enough. The debt they are funding could render them insolvent as well. These solvents are buying assets that can never be repaid. Austerity is being forced on these hopeless nations, which caused a slowing economy and lower revenues, which is the antithesis of what the economies need. This dooms the economies to failure as their economies are essentially strangled.
Once the dominoes begin to fall the options and derivatives will fall and fail as well and that will bring the whole house of cards down. A great deterioration of debt is taking place worldwide, and continues to be delayed by the creation of money and credit from central banks. Confidence is definitely declining in policies of different countries and their debt accumulation. Politicians and bureaucrats have for the most part bashed away from the problems, which has made the problems worse. It is still more important to them to parade toward world government than to fix these underlying problems. In addition, their incompetence stands out like a beacon. Leadership only does what the financial sector tells them to do. Bond sales to subsidize debt are not the answer. Purging the system is the answer, but that is not the course the financial sector wants to take. The Germans know that. They are familiar with confronting adversity. They also know that Eurobonds are not the solution. They also know that the euro has already been damaged enough. Germany believes the financial situation is out of hand, and getting worse via monetization.
In the US we see the Fed for the past three years lending money to the banks at zero interest rates and then allowing the banks to lend back to the Fed at higher rates, establishing guaranteed profit with no risk and in turn depriving borrowers of loans. Can you imagine the inflation when these funds become monetized? It just so happens that Fed figures now show excess reserves are beginning to leave the Fed. That means money should flow into the economy via new loans. Over June, July and August about $8 billion flowed out. That should end up in more loans. On the other hand the funds are monetized when they are loaned and that adds quickly to inflation. As they say, you cannot have your cake and eat it too. Inflation will start accelerating shortly. This is a way for the Fed, who we believe is orchestrating this, to in stealth get QE 3 underway.
If banks start lending to small and median sized businesses unemployment would not increase and there could be a recovery accompanied by much higher inflation. If that does not work we can expect a major war to bail the elitists out. That in finality would end the American dream.
It is obvious with each passing day that the US, UK and Europe are headed toward financial and economic failure. Many believe it will happen quickly, but it won’t. Government, Wall Street, banking and the Fed have no permanent answers, only containment, at an unacceptable price. These facts are why they cannot stop the rise of gold and silver. Even raising margin requirements hasn’t stopped gold and silver from going higher. It’s become a virtual cash market, which if continued could cause an exodus from the Comex directly into the cash market. Today’s big buyers do not need margin and that has been something new to the market over the past couple of years. The tempo of their buying has picked up as well. When the government, Wall Street and banking drive gold and silver prices down as they have over the past 4 months, all they are doing is giving buyers an opportunity to buy more cheaply. If this isn’t dumb we don’t know what is.
The insiders should have taken the opportunity to purge the system in the early 1990s and the early 2000s, but they were not interested in that and as a result we have what we have today. For the past few years credit has been drying up and the price of homes have fallen depriving the homeowner of extracting equity to use to pay the bills. Credit card credit is still available, but limits have been reduced and interest rates are considerably higher. Americans now know they can no longer easily extract capital from the system, as their assets, their homes, continue to fall in value. They know millions of homes are in foreclosure and millions more are on the way, which means housing recovery is many years away. All of the social palliatives and tax breaks the public has come to rely on only extend the time line. All of the economists and analysts are aware of all this, but they say little or nothing, because if they tell the truth they will be out of a job. This is how the situation is perpetrated. They all know the government, the BIS, the Bank for International Settlements, and the FASB have allowed businesses, particularly the financial sector to carry two sets of books. If you do that you will end up in jail.
Not only does the American public have trouble believing the government and Wall Street, but also business has the same problem. It is not surprising that business has cut back on spending, but a good part of what they do spend is spent in foreign countries. In fact government’s need to borrow has the affect of crowding out corporate borrowers. Look what has recently happened to junk bonds, often there isn’t even a bid. Another aspect is government statistics, something we have been writing about for the life of this publication. There are no coincidences and nothing happens by chance. The US government lies about everything. Just look at the GDP figures. The second quarter was just revised downward form 1.3% to 1%. We projected 1-1/2% nine months ago. There will be another revision next month that should take 1% to 0.8%. These are not previous optimistic estimates, they are downright lies. This has been happening for years. Next months revisions won’t be dealt with for a whole year. In retrospect reports are usually off 5% to 6%. The public can look and guess, but business has to make hard decisions based on these numbers. This same problem applies to unemployment and the Consumer Price Index.
The inflationary depression is still with us and has been for 31 months and it is going to get worse in the month’s ahead. We are again looking at a $1.7 trillion deficit. Revenues did better recently, but they will fade lower in the month’s ahead. The elderly in America face yields of 2% or less for the next two years, or more. QE 3 started in June with the $300 billion rollover of treasury bonds that came due by September. We figure if no stimulus comes from Congress the Fed will have to create and monetize some $2.3 trillion more dollars, which can only mean worse inflation. We called QE 2 and stimulus 2, as well as QE 3 a year ago May. The Fed has not said anything about the $16.1 trillion they lent out, nor why none of it has been paid back. What about the $1.2 trillion that we ladled out to Wall Street and banking? It could be that QE 3 if announced in September could counter a falling stock market, at least temporarily. The timing could be perfect if even by accident. Then again, all markets and currencies are under pressure versus silver and gold. We could see gold shortly at $2,000 to $2,200 with silver at $60 to $70. By March gold could be $3,000 to $3,200 and silver $100.00. This may seem implausible to you, but we have been correct 98% of the time for 22-1/2 years.
Many nations have terrible problems. The euro zone could soon collapse because German citizens refuse to do any more bailouts. Politicians are being blamed for the problems, but that is only partially true. The bankers caused these problems. Both have been irresponsible. The politicians having no problem taking orders from the bankers due to the juicy payoffs. Thus far in August the Sarkozy-Merkel meeting was a farce, other than mentioning a Tobin tax. No one wants to cut spending because the EU economy might collapse. As the Fed and the ECB create trillions out of thin air gold is being again thought of as a world reserve currency. The ECB has violated the EU Treaty by buying billions of dollars of Spanish and Italian bonds. On September 9th or 15th a judicial ruling will come from the Federal Constitutional Court of Germany in Karlsruhe. We will not see the Court produce a political decision to bail the sovereigns and the banks out. We will find out if it is legal for the ECB to bail out member nations. This decision has been blocked out in the media almost totally. When we mention it on radio no one knows what we are talking about. We believe their decision will be that the ECB cannot act unilaterally in buying such debt. That means unless the sovereigns bail out the six problem countries they will be forced into bankruptcy, which three of them should have done already.
September and the final quarter of 2011 is going to be a wild and wooly affair. If you are not yet into gold and silver related assets you had best start getting involved. If you own them buy more. You have no idea how really wild this is going to get.
Subscribe to:
Posts (Atom)
Posts
