Infowars.com
February 22, 2010
URL to article: http://www.infowars.com/ron-paul-suspend-the-income-tax-for-3-4-years/
Copenhagen’s Hidden Agenda: The Multibillion Trade in Carbon Derivatives
Washington’s Blog
December 8, 2009
As I have previously shown, speculative derivatives (especially credit default swaps) are a primary cause of the economic crisis.
And I have pointed out that (1) the giant banks will make a killing on carbon trading, (2) while the leading scientist crusading against global warming says it won’t work, and (3) there is a very high probability of massive fraud and insider trading in the carbon trading markets.
Now, Bloomberg notes that the carbon trading scheme will be centered around derivatives:
The banks are preparing to do with carbon what they’ve done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They’re also ready to sell carbon-related financial products to outside investors.
[Blythe] Masters says banks must be allowed to lead the way if a mandatory carbon-trading system is going to help save the planet at the lowest possible cost. And derivatives related to carbon must be part of the mix, she says. Derivatives are securities whose value is derived from the value of an underlying commodity — in this case, CO2 and other greenhouse gases…
Who is Blythe Masters?
She is the JP Morgan employee who invented credit default swaps, and is now heading JPM’s carbon trading efforts. As Bloomberg notes (this and all remaining quotes are from the above-linked Bloomberg article):
Masters, 40, oversees the New York bank’s environmental businesses as the firm’s global head of commodities…
As a young London banker in the early 1990s, Masters was part of JPMorgan’s team developing ideas for transferring risk to third parties. She went on to manage credit risk for JPMorgan’s investment bank.
Among the credit derivatives that grew from the bank’s early efforts was the credit-default swap.
- A d v e r t i s e m e n t
Some in congress are fighting against carbon derivatives:
“People are going to be cutting up carbon futures, and we’ll be in trouble,” says Maria Cantwell, a Democratic senator from Washington state. “You can’t stay ahead of the next tool they’re going to create.”
Cantwell, 51, proposed in November that U.S. state governments be given the right to ban unregulated financial products. “The derivatives market has done so much damage to our economy and is nothing more than a very-high-stakes casino — except that casinos have to abide by regulations,” she wrote in a press release…
However, Congress may cave in to industry pressure to let carbon derivatives trade over-the-counter:
The House cap-and-trade bill bans OTC derivatives, requiring that all carbon trading be done on exchanges…The bankers say such a ban would be a mistake…The banks and companies may get their way on carbon derivatives in separate legislation now being worked out in Congress…
Financial experts are also opposed to cap and trade:
Even George Soros, the billionaire hedge fund operator, says money managers would find ways to manipulate cap-and-trade markets. “The system can be gamed,” Soros, 79, remarked at a London School of Economics seminar in July. “That’s why financial types like me like it — because there are financial opportunities”…
Hedge fund manager Michael Masters, founder of Masters Capital Management LLC, based in St. Croix, U.S. Virgin Islands [and unrelated to Blythe Masters] says speculators will end up controlling U.S. carbon prices, and their participation could trigger the same type of boom-and-bust cycles that have buffeted other commodities…
The hedge fund manager says that banks will attempt to inflate the carbon market by recruiting investors from hedge funds and pension funds.
“Wall Street is going to sell it as an investment product to people that have nothing to do with carbon,” he says. “Then suddenly investment managers are dominating the asset class, and nothing is related to actual supply and demand. We have seen this movie before.”
Indeed, as I have previously pointed out, many environmentalists are opposed to cap and trade as well. For example:
Michelle Chan, a senior policy analyst in San Francisco for Friends of the Earth, isn’t convinced.
“Should we really create a new $2 trillion market when we haven’t yet finished the job of revamping and testing new financial regulation?” she asks. Chan says that, given their recent history, the banks’ ability to turn climate change into a new commodities market should be curbed…
“What we have just been woken up to in the credit crisis — to a jarring and shocking degree — is what happens in the real world,” she says…
Friends of the Earth’s Chan is working hard to prevent the banks from adding carbon to their repertoire. She titled a March FOE report “Subprime Carbon?” In testimony on Capitol Hill, she warned, “Wall Street won’t just be brokering in plain carbon derivatives — they’ll get creative.”
Yes, they’ll get “creative”, and we have seen this movie before …an inadequately-regulated carbon derivatives boom will destabilize the economy and lead to another crash.
URL to article: http://www.infowars.com/copenhagens-hidden-agenda-the-multibillion-trade-in-carbon-derivatives/
Bernanke the Dollar-Destroyer and the Coming Stock Market Crash
Bob Chapman
The International Forecaster
September 21, 2009
To borrow from an old joke about politicians, we ask our subscribers if they know how to tell when Helicopter Ben Bernanke, the current Fed Head, is lying. Answer: Whenever his lips are moving. Now we hear from the Dollar-Destroyer that our recession has technically ended (heaven forbid that we should call our current Fed-caused calamity a depression, which is what it has been since Obama took office) . So we guess that we should take his word for it, seeing that every call he has made during his short tenure as Chairman of the Federal Reserve Board has been 100% wrong.
Surely you’re joking, Mr. Bernanke!!! Apparently, we are just supposed to ignore our tanking dollar, rising unemployment, ever-weakening consumer spending (which only accounts for 70% of our GDP), a moribund real estate market, trillions in losses lying dormant in the zombie bank mark-to-model scam, not to mention all the off-the-books losses in derivatives pawned off on bank customers after Glass-Steagall was repealed as well as a glowing, smoking Quadrillion Dollar Derivative Death Star waiting to go supernova to the tune of tens of trillions in losses that will vaporize the entire world banking system thanks to the total deregulation of OTC derivatives courtesy of the Commodities Futures Modernization Act. Then there are the ongoing multi-trillion dollar money siphons in Iraq and Afghanistan, thousands of banks, including all the “anointed” legacy banks, that are buried in derivatives and about to fail, a bankrupt Social Security System, a totally naked FDIC, a Fed printing trillions of dollars out of thin air, in secret, without any accountability, and future multi-trillion dollar budget deficits being incurred to keep a totally comatose economy on artificial, taxpayer-sponsored life support. If that sounds like the end of a recession to the people on planet earth, then beam us up Scotty, we’re on a planet full of psychopaths suffering from hallucinations and delusions of grandeur. Oh, and Scotty, make sure you remember to beam our gold and silver up with us. We’re certainly going to need it the next time we come back to Planet Earth for an exploratory visit to see if the collective, ongoing phantasmagoric, mushroom-induced hallucinations of its inhabitants have finally run their course.
Note that open interest for the USDX, after rising to a little over 41,000, which is above average, has suddenly collapsed to below 34,000 as of 9/16/09. The dollar is no longer being defended because the Illuminist cabal plans to take the stock markets up to a blow off interim top around Dow 10,000 to 10,500 with a final short-covering rally either this week, or perhaps the middle of next month, as general stock market options expire. They will then attempt to orchestrate a major stock market correction, which is now long expected and long overdue, just as gold and silver really start to take off.
The only question is, how long and how high will they try to take the stock markets before the long awaited correction is allowed to occur as the PPT withdraws its support. The answer, as usual, will be determined by the gold and silver markets, and the strength of their now ongoing rallies. If the rallies in gold and silver get out of hand as hundreds of millions of Chinese and Indians jump on the gold and silver bandwagons while China reneges on its losses in OTC gold and silver shorts, you can count on a major stock market correction immediately. Another tip off will be a large jump in open interest for USDX futures contracts again, this time probably to well above the 50,000 level. This will be the dollar’s and treasury’s last hurrah as the Illuminati will be immediately forced to recommence the stock rally or face the defeat of any and all of their proposed legislation on Goldman Sachs’ “cap and trade” scam, on the Obama-Kennedy-Kavorkian Euthanasia Plan and on the military expenditures for Afghanistan. After citizens watch their pensions and mutual funds nose-dive toward oblivion for a second time, they will immediately decide that they can’t afford to spend another penny. Crashing stock markets beyond a 50% correction would thoroughly discredit Obama’s Stimulus Pork Plan and would also put crushing pressure on the Fed. Unless the stock markets recover quickly, the sheople will scream for the Fed’s blood and the Audit the Fed bill will become a foregone conclusion.
A stock market crash will make people downright venomous toward this cabal of middle class pauper-makers. The Illuminati are now caught between a rock and hard place. If they don’t crash the stock markets, the tanking dollar and treasuries will be toast and gold and silver will rip them a new one and expose their mishandling of our money supply and our economy. If they crash the stock markets to put an obstruction in the path of gold and silver, they risk political annihilation, legislative suicide and an audit of the Fed, which will be followed by a hue and cry for its termination when everyone finds out how thoroughly they have been screwed for the past 95+ years. Their options are weak and few. All they can do is play the obstructionist with bogus delay tactics, but in the end they will get buried.
If they fail to take gold and silver down low enough to cover, a distinct possibility, the cartel’s shorts will get vaporized, and gold and silver will go on a moon-shot. They are now fighting the combined populations of China, India, Japan, the Middle East, Southeast Asia, Germany and most of Western Europe, as well as the governments of Germany, China (especially the region of Hong Kong) and the Gulf Cooperation Council countries, whose gold they have stolen, leased or encumbered. These nations, who foolishly entrusted their bullion to the US Illuminist cabal, have been left exposed as sitting ducks for a hyperinflationary supernova. These countries are hopping mad about this, and all they have on their minds now is self-preservation and vengeance. Due to the ongoing financial debacles and bailouts going on globally, and the profligate policies of central banks worldwide that are causing fiat currencies everywhere to lose ground against gold, people will be looking to precious metals for an alternative to paper assets denominated in fiat currencies.
We would highly suggest that Buck-Busting Ben Bernanke and the twelve Presidents of the regional Federal Reserve Banks make arrangements for the international banking cabal’s version of The Last Supper. We hear through the grapevine that an “Upper Room” is available in the US Capitol Building. You can bet Ben will be running for his helicopter before the crucifixion gets under way! Obama and the twelve members of the Federal Open Market Committee can then do a repeat performance (but without Ben who will be long gone in his helicopter). You can bet Obama will be headed for Air Force One for a one-way trip to Kenya, or Indonesia, or wherever the heck he really comes from! Where is the Border Patrol and ICE when you need them to remove an illegal alien!?
Friday September 18th is the day our government will no longer guarantee money market funds. In anticipation of this event professionals have been moving funds out of these vehicles; some 15% over the past month. What the administration, and particularly the Treasury want to do is try to get those funds directly into Treasuries and into banks. From our point of view neither are safe, nor are credit unions. Those funds should move into gold and silver related assets and for those who must have currency liquidity, those funds should go into Canadian and Swiss Treasuries to profit from the continued fall in the US dollar. You must get your money out of banks, US government debt and anything connected with the US stock and bond markets. The exception being gold and silver shares. All major American banks, which hold 70% of deposits, are broke and so is the FDIC. You have no insurance unless you are willing to accept $0.30 on the dollar. You must be out of all these vehicles. The money market funds are loaded with suspect corporate debt never mind Treasury debt. We recommended Swiss and Canadian Treasuries some time ago. The dollar has fallen and all these thousands of investors have made money. Get out of money market funds. Already 1/3rd of these funds have had their NAV’s below a dollar since 7/07. They are still holding some very risky paper. Almost 40% is in CD’s of foreign banks, 10% in short-term corporate paper and over 12% in medium-term corporate paper. About 68% is in taxable non-government funds. You will see a great decline in money market fund assets as holders foolishly transfer the funds into FDIC-insured accounts, CD’s and Treasury instruments of one form or another. The only real safe place to go is to gold and silver related assets and if you must Canadian and Swiss Treasuries.
- A d v e r t i s e m e n t
Commercial paper rose $16.1 billion; asset backed CP rose $18.1 billion versus $6.2 billion the previous week. ABCP outstanding was $501.5 billion versus $483.5 billion the prior week. Unsecured financial CP issuance fell $9.7 billion versus $6.2 billion.
Capital from foreign sources was $612 billion in 2007 and $675 billion in 2008. This year in May it was -$54.6 billion; -$57 billion in June, -$56.8 in July and -$97.5 billion in August.
Capital is leaving at an accelerating rate. This means interest rates should be raised. The Fed is monetizing and in all likelihood that will increase and that will lead to a currency crisis. The Fed has said it will ease quantitative easing, but if it does the stock and bond market will fall. If they increase there will be a currency crisis. There is now no question the dollar is being sacrificed. The idea is to allow it to fall incrementally and as slowly as possible.
We have continued to state the Amero will not replace the dollar and that it is and has been a false issue. The dollar will be replaced by another dollar in either 2010, 2011 or 2012. As we explained in early May when the dollar was 89.5 on the USDX, that this was the top. Next stop by the end of October would be 71.18, or at least by yearend. After that comes 40 to 55 and then an official devaluation and default; as all currencies and debt would be dealt with at a special meeting involving all countries.
Debt in the banking system is going to be absorbed by the Fed. Almost all major banks are bankrupt. That is why you do not want to have much money in banks and no CD’s; cash value life policies or annuities. Next year we will witness a second round of debt write offs and a crisis in the derivative market. If the Fed doesn’t monetize the debt the system will collapse, but then again there may be no Fed if HR1207 becomes law. Every problem would then lie in the lap of the Treasury. The American financial system is unsustainable and our foreign wars and occupations will come to a close in 2010 or 2011. The cost will no longer be sustainable. The US stock and bond markets will fall and you will not want to own any US government obligations. It could be that the role-played by the Fed, if the Fed is replaced, could in part be played by Goldman Sachs and JP Morgan Chase. Due to the Fed’s absorption of bad assets it could be that the Fed will self-destruct in the process of being legislatively being eliminated. Recovery of the US economy would then depend economically on tariffs on goods and services to bring manufacturing back to America.
A CBS News blogger named Declan McCullagh seized on the documents, which CEI obtained through a Freedom of Information Act request, and said: “The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.” He added: “At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year.”
The Bank Implode-o-meter: Wells Fargo’s Commercial Portfolio is a ticking time bomb.
In order to sort through the disaster that is Wells Fargo’s commercial loan portfolio, the bank has hired help from outside experts to pour over the books… and they are shocked with what they are seeing. Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank, Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few years of its existence that it underwrote loans with shoddy standards and paid off traders to take them off their books.
According to sources currently working out these loans at Wells Fargo and confirmed by Dan Alpert of Westwood Capital, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds. Should the junior tranches eventually default, then the bank is on the hook.
For the past 14 years, the gap between the two measures has grown persistently, with operating earnings topping GAAP earnings by an average of $2.47 a share per quarter.
When using a 10-year trailing average of earnings to erase cyclical gyrations, operating earnings are nearly 24% higher than GAAP earnings, the highest ever.
It isn’t clear why the difference has grown so wide. One inescapable conclusion is that, since 1995, either by happy accident or accounting shenanigans, one-time losses have grown more quickly than one- time gains, elevating the operating earnings that Wall Street watches.
The investment implications are many. For one thing, two earnings measures produce two market valuations. The S&P 500 trades at 21 times the past 10 years’ GAAP earnings and 17 times operating earnings. Neither is exactly cheap, but one is much pricier than the other.
Japan urges talks on US military base Japan considers revision of a deal with the US to relocate a military base to be a top diplomatic priority, Tokyo’s newly appointed foreign minister has told the Financial Times, waving aside concerns that reopening the agreement could undermine the alliance between the countries.
The declaration by Katsuya Okada, a senior member of Japan’s ruling Democratic Party (DPJ), highlights the international implications of the party’s determination to set a more independent diplomatic agenda. GQ excerpts Speech-Less: Tales of a White House Survivor by ex-Bush speechwriter Matt Latimer:
We wrote speeches nearly every time the stock market flipped. Meanwhile, the White House seemed to have ceded all of its authority on economic matters to the secretive secretary of the treasury…(In the weeks that followed, Paulson changed his spending priorities two or three times. Incredibly, he’d been given the power to do with that money virtually anything he pleased. All thanks to a president who didn’t understand his proposal and a Congress that didn’t stop to think….)
Chris had just come from a secret meeting in the Oval Office, and without so much as a hello he announced: “Well, the economy is about to completely collapse.”
You mean the stock market?” I asked.
“No, I mean the entire U.S. economy,” he replied. As in, capitalism. As in, hide your money in your mattress.
The Secretary of the Treasury, Hank Paulson, had sketched out a dire scenario. And Chris said we’d have to write a speech for the president announcing his “bold” plan to deal with the crisis. (The president loved the word bold.) The plan… Basically, it could be summed up as: Give me hundreds of billions of taxpayer dollars and then trust me to do the right thing…In some cases, in fact, Secretary Paulson wanted to pay more than the securities were likely worth in order to put more money into the markets as soon as possible. This was not how the president’s proposal had been advertised to the public or the Congress. It wasn’t that the president didn’t understand what his administration wanted to do. It was that the treasury secretary didn’t seem to know, changed his mind, had misled the president, or some combination of the three.
When White House press secretary Dana Perino was told that 77 percent of the country thought we were on the wrong track, she said what I was thinking: “Who on earth is in the other 23 percent?” I knew who they were—the same people supporting the John McCain campaign. Me? I figured there was no way in hell any Republican would vote for that guy. John McCain, the temperamental media darling, had spent most of the past eight years running against the Republican Party and the president—Republicans on Capitol Hill and at the White House hated him. Choosing John McCain as our standard-bearer would be the height of self-delusion.
He [Bush] paused for a minute. I could see him thinking maybe he shouldn’t say it, but he couldn’t resist. “If bullshit was currency,” he said straight-faced, “Joe Biden would be a billionaire.” Everyone in the room burst out laughing.
The latest propaganda on quantitative easing and reining it in reaches us. Evidentially the G-20 meeting in Pittsburgh later this month will put together a roadmap outlining how to reverse previous stimulation of world economics. If that happens the world financial structure will collapse. They know that just as well as we do. The IMF wants the G-20 to coordinate the unwinding of these efforts. Of course, the players all know inflation is on the way and they want to make people think they are going to do something about it. Even the Fed says it is ending quantitative easing at the end of the fiscal year on 9/31/09. We know that cannot be true with the Treasury issuing $2 trillion in bonds in this coming fiscal year.
URL to article: http://www.infowars.com/bernanke-the-dollar-destroyer-and-the-coming-stock-market-crash/
The Global Credit Crunch Is Not Receding, It Is Intensifying
Zero Hedge
September 18, 2009
- A d v e r t i s e m e n t
Granted, you wouldn’t know it if you followed the stock market melt up as the wild rush to eek out any and all P&L before tax loss selling season hits (assuming there even is one this year), but read on. If nothing else, SocGen’s Albert Edwards, unlike many others, has stuck to his convictions.
The reasoning behind the acceleration of the credit crunch is simple and needs to be reemphasised. The unwinding of the grotesque debt excesses of the last decade have only just begun (see chart below)! Rapid expansion of government debt and QE will not and cannot prevent the revulsion that is now underway (the Fed publishes the Q2 update of the debt data today, Thursday.
In addition, banks are retrenching their loan books as policy makers force higher capital requirements. In all probability this process would occur irrespective of government involvement as banks inevitably act pro-cyclically, exacerbating both boom and bust. But as we repeatedly highlight, one of the lessons from Japan is not to mistakenly believe that banks are the problem. Similarly a healthy, recapitalised banking sector is not the solution. As Japan experienced before, it is de-leveraging that is the problem and retrenchment takes many years, rendering the economy extremely vulnerable to rapid relapses back into recession when any reverse or pause in extreme stimulus occurs. The Great Moderation relied on the debt super-cycle which is dead and buried.
URL to article: http://www.infowars.com/the-global-credit-crunch-is-not-receding-it-is-intensifying/
Congress Considers Raising Debt Ceiling Again to Borrow from Bankers
CNN
September 18, 2009
Congress has raised the debt ceiling four times in the past two years and will probably have to do it again in the next month.
With the government borrowing record amounts of money, the nation’s current debt ceiling of $12.1 trillion will be pierced soon.
That ceiling is the cap on how much the country allows itself to have in debt. In credit card parlance, the ceiling is the U.S. credit limit. At the end of August, U.S. debt totaled $11.8 trillion. That’s roughly $349 billion shy of the statutory limit.
The ceiling is meant to serve as a brake on spending because lawmakers would have to think very seriously before they breach the limit and take a very difficult political vote to do so. In reality, lawmakers really don’t have a choice but to raise the ceiling and they know it.
URL to article: http://www.infowars.com/congress-considers-raising-debt-ceiling-again-to-borrow-from-bankers/
Why Obama Isn’t Breaking Up the Insolvent Banks
Washington’s Blog
September 15, 2009
Top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion.
There is no logical reason not to break them up.
So why isn’t the Obama administration doing so?
For all of the wrong reasons:
• Nobel prize winning economist Joseph Stiglitz said yesterday that the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action
• Economic historian Niall Ferguson asks:
Guess which institutions are among the biggest lobbyists and campaign-finance contributors? Surprise! None other than the TBTFs [too big to fails].
• Manhattan Institute senior fellow Nicole Gelinas agrees:
The too-big-to-fail financial industry has been good to elected officials and former elected officials of both parties over its 25-year life span
• Investment analyst and financial writer Yves Smith says:
Major financial players [have gained] control over the all-important over-the-counter debt markets…
It is pretty hard to regulate someone who has a knife at your throat.
• William K. Black – the senior regulator during the S&L crisis, and an Associate Professor of both Economics and Law at the University of Missouri – says:
There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .
Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well. There have been no prosecutions of the chief executives of the large nonprime lenders that would expose the “epidemic” of fraudulent mortgage lending that drove the crisis. There has been no accountability…
The Obama administration and Fed Chairman Ben Bernanke have refused to investigate the nature and causes of the crisis. And the administration selected Timothy Geithner, who with then Treasury Secretary Paulson bungled the bailout of A.I.G. and other favored “too big to fail” institutions, to head up Treasury.
Now Lawrence Summers, head of the White House National Economic Council, and Mr. Geithner argue that no fundamental change in finance is needed. They want to recreate a secondary market in the subprime mortgages that caused trillions of dollars of losses.
Traditional neo-classical economic theory, particularly “modern finance theory,” has been proven false but economists have failed to replace it. No fundamental reform can be passed when the proponents are pretending that there really is no crisis or need for change.
• Harvard professor of government Jeffry A. Frieden says:
Regulatory agencies are often sympathetic to the industries they regulate. This pattern is so well known among scholars that it has a name: “regulatory capture.” This effect can be due to the political influence of the industry on its regulators; or to the fact that the regulators spend so much time with their charges that they come to accept their world view; or to the prospect of lucrative private-sector jobs when regulators retire or resign.
• Economic consultant Edward Harrison agrees:
Regulating Wall Street has become difficult in large part because of regulatory capture.
URL to article: http://www.infowars.com/why-obama-isnt-breaking-up-the-insolvent-banks/
More Financial Bubbles Ahead?
Bob Chapman
The International Forecaster
September 14, 2009
Almost all important, pertinent data reflects continued weakness in the economy, especially retail sales and unemployment.
There are small signs of inflation in spite of bogus government figures. In the flight to quality we see stronger gold, silver and commodities despite heavy market manipulation by the government.
After more then two years of government and Fed intervention in the economy, only banks, Wall Street and insurance companies have been bailed out. The first part of the Stimulus package was unsuccessful, because the funds were not spent, they were used to eliminate debt. We do not think the next stimulus wave will be any more successful. The economy should now move sideways for a year with slight GDP gains and a slowing in job losses. There will be no dramatic changes unless banks start lending in a bigger way or there is another $2 trillion stimulus package.
Interest rates have moved slightly lower as the Fed’s intervention drives bonds up and yields lower. That will end early next year as demands for funds from both the private sector and government increases. Global capital has not expanded to meet those needs. Fed monetization of $500 billion is what foreign central banks are using to buy our Treasuries. Eventually the adverse effects of excess money and credit creation and budget deficits will take their toll. Commodity prices are already reflecting a flight to quality and gold and silver are attempting to make new highs. Wall Street and Washington tell us there is no inflation. If that were so why would gold and silver be acting in such a manner? The answer is flight to quality. There are no solid currencies left in the world to compete with gold, the only real money. This past week government repulsed breakout attempts by both gold and silver, but no matter what they do they will be eventually overwhelmed as more and more gold and silver will become the destination for hot money. The hedge against prolonged recession is in place and will be augmented soon by growing inflation. A double barreled dynamic.
We currently have bubbles in both the stock market and Treasury market, both created by the Fed. Any reappearance of inflation will very negatively affect both markets. When these markets break, which they eventually must, you will again see horror among investors and many more bankruptcies. The increase of M3 by 14% for ten years has to be worked out of the system and it will be. Destabilizing is on its way. Just be patient. This depression in many respects is already worse than the 1930s and it will continue to deteriorate. There is no chance we will see sound money anytime soon. We are a minimum of ten years away from any kind of recovery and probably much more.
The Treasury has a 10-year auction with bid to cover of 2.77% to 1, which is very good. The question is were the buyers acting for the Fed?
Our president has asked the Senate to raise the short-term federal debt limit to $12.1 trillion.
For fiscal year 2009 the Harvard endowment lost 27% and Yale lost 30%.
—
For centuries and 50 years ago when we began this journey through life, the most important investment criterion was to preserve wealth, and it still is. Due to bouts of inflation the investment attitudes have changed somewhat. Some, even college endowments and pension funds have been playing the leverage game and not very successfully. The investment horizon is now measured monthly not over a span of years. As a result, results are not plus in double digits, but minus, as you can see from last year’s results. Even the mighty Swiss succumbed to using 70 times deposits. Even today after two years of market downside, the US and Europeans are still holding leverage of 45 times deposits, which is insanity.
Due to the terrible damage done to the financial system for years wealth preservation is first and foremost in investment. The dollar is crashing, the market and bonds are overpriced, even commodities have peaked after a major rally, banks are failing and fear abounds.
You say you’d like to sleep at night and not have to worry about your wealth; well there is a way to accomplish that. Buy gold and silver related assets. After ten years gold has finally broken out over $1,000 an ounce, a signal that phase 2 of 3 or 4 phases has begun. Gold could reach anywhere from $1,200 to $1,700 an ounce before the year is over. If you buy gold and silver coins or bullion, take delivery and store them in your safe at home. At this stage of the gold and silver bull market anchor your portfolio with 3 or 4 of the strongest producing mining companies and exploration shares. In the 1977 to 1981 period some of the leveraged speculative shares went from $0.35 to $55.00 and that could well happen again. In today’s markets this is how you preserve your wealth.
Get out of the stock and bond markets except for gold and silver shares. Terminate cash value life insurance policies and annuities; they invest in the stock market. Although mutual life companies have to invest in bonds. If you have to have some of your assets in cash, own treasuries from Canada, Switzerland or Norway. We are embarking on one of the most unusual times in investing history. Only 10 to 15 percent of investors will participate, the rest will lose 60 to 90 percent of their assets, their wealth. Don’t you be one of those losers. Don’t forget the elitists cannot print gold and gold is debt free. For 6,000 years it has been the only real currency. Gold and silver’s fundamentals are overwhelming. The supply is limited and production is falling and will continue to fall for years to come. Governmental and central bank debt is increasing exponentially and that is destroying the value of all currencies versus gold. Major nations are now aggressive major gold buyers. Gold and silver are going higher. Do not miss the opportunity to protect your wealth and perhaps to become very wealthy.
Our estimate of real unemployment, U6 minus the Birth/Death ratio, is 21% or 30 million people unemployed or employed part-time. If you include dependents that affects some 100 of 300 million Americans. In part as a result, yoy there has been 126,000 bankruptcies up 34%. That 9.7% unemployment just doesn’t tell the entire story. We continue to see energy and commodity inflation, which translates into higher prices, which are aggravated by lower wages. About a year from now, in the absence of further stimulus or increased bank lending, unemployment will rise to over 30%. That will lead to major economic, financial and social problems the likes of which no modern economy has ever seen. Residential and commercial real estate have 20 to 30 percent downside left depending on the market region and 25%, soon to be 50%, of US mortgages are currently underwater and 50% of mortgages will be in negative equity within a year. That is when Americans will finally realize their country is bankrupt. The FDIC and mortgage lenders are broke along with 50% of the population. Over the next three years between 3,200 and 4,200 banks will go under and the Fed will create $23 to $60 trillion to bail out the mess. Either that or your savings deposits will go up in smoke. We have $1.3 quadrillion in derivatives to be settled. If only 5% fail the financial system collapses. Banks are still leveraged 5 times deposits and carrying massive losses on their books.
Despite the government gobblygook initial jobless claims have worsened.
Foreclosure filings in August stayed near July’s record highs. Filings fell 1% mom and were up 18% yoy. One in every 357 US households with homes got a foreclosure filing in august.
Commercial paper expanded for a 4th straight week for the first time since December. CP rose $11.3 billion to $1.174 trillion outstanding. ABS CP out rose $6.2 billion after rising by $19.5 billion the prior week. Unsecured financial issuance rose by $6.2 billion after falling $11.3 billion the previous week.
The government sold $12 billion worth of 30-year bonds. The bid-to-cover was 2.82 to 1, above the average of 2.38 over the last four reopenings. Foreigners bought 46.4% of the sale, above the average of 40.9%.
Many the times we went to the Tavern on the Green, a very high-class restaurant in NYC. On Thursday they filed bankruptcy.
If Bernanke increases the Fed’s debt monetization scheme of $300B that is scheduled to end in October, the Chinese and Mr. Market will be very unhappy. The dollar will tank further; gold, oil and commodities should surge. This action should actually force bonds lower.
If Bernanke refrains from further debt monetization, US dealers will be holding the bag and the short-term outlook for bonds would be negative.
Bernanke will soon be forced to choose between saving the dollar and bonds or stocks.
An Associated Press-GfK poll says that public disapproval of President Barack Obama’s handling of health care has jumped to 52 percent. The same survey shows that 49 percent now disapprove of his overall performance as president. In July, just 42 percent disapproved of how he was handling his job.
The number of people crossing the northern and southern land borders into the USA has dropped sharply since a passport requirement began June 1.
Businesses in tourism-dependent border communities blame the policy for making a bad year worse.
At Martin’s Fantasy Island, an amusement park in Grand Island, N.Y., about 10 minutes from the Canadian border, “our Canadian business is way off,” spokesman Mike McGuire says. Nearly one-third fewer Canadian families of four have come for discounted “Canadian Wednesdays” compared with last year, he says. He blames the recession, a soggy summer and the passport rule.
Household incomes decreased in 2008, the first full year of the recession, and the poverty rate rose to the highest since 1997, government data showed.
The median household income fell 3.6 percent to $50,303, snapping three years of increases, the Census Bureau said today in its annual report on incomes, poverty and health insurance. The poverty rate climbed to 13.2 percent from 12.5 percent. The number of people living in poverty rose to 39.8 million last year, an increase of 2.6 million from 2007.
The U.S. trade deficit widened in July and imports gained by a record 4.7 percent, signaling a revival of commerce as the global recession eased.
The gap between imports and exports grew 16 percent, the most in more than a decade, to $32 billion from a revised $27.5 billion in June that was larger than previously estimated, the Commerce Department said today in Washington. In another sign the U.S. slump may be ending, a Labor Department report showed jobless claims last week fell to the lowest level since July.
Imports outpaced a 2.2 percent gain in exports as businesses replenished stockpiles of goods including pharmaceuticals, toys and televisions in anticipation of rising consumer demand, while automakers boosted purchases of parts and machinery. The export gain reflected renewed demand for U.S.-made goods among trade partners such as Mexico and Japan.
“Credibly” privatizing Fannie Mae and Freddie Mac, the mortgage-finance companies seized by U.S. regulators last year, may be too difficult given the precedent set by the Treasury Department’s financial assistance, according to a Government Accountability Office analysis.
“The financial markets likely would continue to perceive that the federal government would provide substantial financial support to the enterprises, if privatized as largely intact entities, in a financial emergency,” the GAO said in a report today from Washington. “Consequently, such privatized entities may continue to derive financial benefits, such as lowered borrowing costs, resulting from the markets’ perceptions.”
The Treasury today reiterated that the government intends to make recommendations on Fannie Mae and Freddie Mac next year. The companies, which own or guarantee about $5.4 trillion of U.S. residential debt and have accounted for about 70 percent of all new home loans this year, would need a “potentially lengthy transition” given their size, the GAO said.
The number of Americans filing first-time claims for jobless benefits dropped last week to the lowest level since July, a sign the labor market is deteriorating at a slower pace.
Applications fell by 26,000 to 550,000 in the week ended Sept. 5, lower than economists forecast, from a revised 576,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance declined to the lowest level since April.
Electricity demand is forecast to fall 3.3% this year as a slump in industrial consumption continues to weigh on sales, the government said Wednesday.
In its monthly Short-Term Energy Outlook, the Energy Information Administration said it expects demand to improve in the second-half of the year as residential consumption begins to recover. After seeing a 4.4% decline in the first half of the year, the EIA expects demand to be down only 2.3% during the second half of 2009. As for 2010, the agency sees demand growing 1.2%. The EIA last month had projected a 2.7% drop in demand for 2009 and a 0.8% increase in 2010.
The agency continues to see residential power prices rising this year, but again curbed its estimates. The EIA now is forecasting a 2.5% increase this year driven by rate increases in the first half of the year. The agency significantly cut its outlook for power prices for next year, now seeing a decline of 2.1% amid a sharp drop in natural gas prices. Last month, the EIA estimated a price increase of around 4.2% this year and 2.6% in 2010.
National chain-store sales rose 0.2% in the first week of September versus the previous month, according to Redbook Research’s latest indicator of national retail sales released Tuesday.
The rise in the index compared with a targeted 0.3% drop and came as sales picked up heading into Labor Day.
The Johnson Redbook Index also showed seasonally adjusted sales in the period were down 2.4% from September 2008 and compared with a targeted 2.9% fall. The latest numbers are starkly different because they don’t include Wal-Mart Stores Inc. (WMT), which earlier this year stopped giving monthly same-store-sales figures.
Redbook said, “Shoppers responded positively to various Labor Day sales and promotions. Discount stores reported strength in categories such as children’s clothing, shoes and lower margin back-to-school supplies. Discount stores also registered strong food sales ahead of the long weekend.”
The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index rose 0.6% in the week ended Saturday from its level a week before on a seasonally adjusted, comparable-store basis.
On a year-on-year basis, retailers saw sales decrease 0.1% in the latest week, with the decline moderating from recent weeks.
Application volume was up an unadjusted 64.5% for the week ended Sept. 4 compared with the same week in 2008, according to the Washington-based MBA’s latest weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.
Week-to-week filings fell a seasonally adjusted 2.2% in the week ended August 28.
Refinancing applications were up 22.5% last week from the prior week before — the biggest jump since mid-March. And applications for mortgages to buy homes were up a seasonally adjusted 9.5% — the largest such gain since early April.
The four-week moving average for all mortgages was up 7% on a seasonally adjusted basis, the MBA said.
Refinancings made up 59.8% of all applications last week, up from 56.5% the previous week, while adjustable-rate mortgages accounted for 5.8%, up from 5.6%.
The average rate on 30-year fixed-rate mortgages was 5.02% last week, down from 5.15% the week before. Fifteen-year fixed-rate mortgages averaged 4.45%, down from 4.57% the previous week, with one-year ARMs averaging 6.69%, down from 6.71%.
To obtain the rates, the 30-year fixed-rate mortgage required an average 1.23 points, the 15-year fixed-rate mortgage required an average 1.13 points and the 1-year ARM required an average 0.19 point. A point is 1% of the total mortgage amount, charged as prepaid interest.
Nevada has replaced Tennessee as the state with the most bankruptcies, as filings continue to stack up nationally.
From January to August, national bankruptcy filings reached 954,911, up from 703,732 in the same period of 2008, according to Automated Access to Court Electronic Records. In August, filings were up 22% compared with August 2008.
It is likely that filings will total 1.45 million this year, says Robert Lawless, professor of law at the University of Illinois.
The default rate on commercial mortgages held by U.S. banks will rise to 5.4 percent in 2011, the highest since at least 1992, as banks anticipate more losses amid falling rents, according to Real Estate Econometrics LLC.
The property research firm increased its projected default rates for 2009 to 2011 amid declining occupancies and incomes at hotels, shopping malls and office buildings.
Defaults will rise to 4.2 percent this year and 5.3 percent next year before peaking at 5.4 percent in 2011, the New York- based firm said. Previously, it estimated rates of 4.1 percent this year, 5.2 percent next year and 5.3 percent in 2011.
“The higher default rate reflects a larger number of loans moving from delinquency to non-accrual status,” said Sam Chandan, president and chief economist of Real Estate Econometrics, in a statement. Loans moved to non-accrual status signify the bank doesn’t expect to be paid back in full.
The default rate more than doubled in the second quarter. Loans that were 90 days or more past due climbed to 2.88 percent of outstanding balances from 1.18 percent a year earlier, according to the firm.
Commercial mortgages labeled as “non-accrual” more than doubled last quarter to $27.76 billion, according to Real Estate Econometrics. Balances for delinquent loans, those that were 30 to 89 days past due, fell.
“This shift corresponds with banks working to identify and mitigate losses associated with problem loans earlier in the delinquency period and an increase in the share of delinquent loans that will require modification or foreclosure,” Chandan said.
The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors . and Chrysler late last year is unlikely to be repaid.
“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”
The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10% of Chrysler and 61% of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year.
The number of open jobs fell 50% over the past two years to a seasonally adjusted 2.4 million in July, the lowest in the brief history of the data, the Labor Department reported Wednesday.
The job opening rate fell to a record-low 1.8% in July.
Job openings track the demand for labor, the flip side of the unemployment rate, which measures the supply of labor.
In July, there were 6.05 unemployed people for every job opening, according to the most recent data on labor turnover. In December 2007, when the recession began, there were 1.72 unemployed people for every job opening.
The number of workers hired in July was little changed at 4.06 million, while the number of workers separated from their jobs was little changed at 4.29 million. The hires rate rose to 3.1%, while the separations rate remained at a series-low 3.3%.
In the past 12 months, hires have fallen 13.9%, while separations are down 12.8%.
Layoffs were little changed in July at 2.3 million, while 1.7 million people quit their job. Layoffs have increased 15% in the past year, while quits are down 32%. In the 12 months ending in July, hires totaled 51.3 million and separations totaled 56.6 million, with a net job loss of 5.3 million.
The federal deficit surged higher into record territory in August, hitting $1.38 trillion with one month left in the budget year.
The Treasury Department says the deficit last month was $111.4 billion, below the $152 billion that economists expected.
Still, the imbalance added to a flood of red ink already accumulated through a severe recession and massive spending needed to stabilize the banking system.
The Obama administration last month trimmed its forecast for this year’s deficit to $1.58 trillion, from an earlier $1.84 trillion. The recovery of the banking system led to the reduced estimate as it meant the administration did not need to get an additional $250 billion in bailout support for banks.
A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based
company said in a statement. One in 357 households received a filing.
“The foreclosure numbers are largely unemployment related,” Davis, a former Federal Reserve Board economist, said in an interview. “As long as 15 million Americans are unemployed, record foreclosures will continue.”
Consumer sentiment improved as of the middle of September.
The Reuters/University of Michigan preliminary consumer sentiment index for September stood at 70.2, from 65.7 in August. It had been expected to stand at 67.5.
The preliminary current conditions index was 71.8, from 66.6, while the expectations index was 69.2, up from 65.0 in August.
The one year inflation expectations index came in at 2.8%, after August’s 2.8%, while the five year inflation expectations index hit 2.8%, versus 2.8% the prior month.
US Aug Import Price Index rises 2.0% MoM and moderates its decline to 15.0% yearly.
Higher crude-oil prices drove import prices up by 2% in August, the fifth increase in the past six months, the Labor Department reported Friday.
Import prices have risen 7.6% so far in 2009 as energy prices have rebounded.
Despite the recent gains, import prices are still down 15% over the past 12 months.
Imported fuel prices rose 9.8% in August, but they’re down 39.6% in the past 12 months. Prices of nonfuel imports into the United States rose 0.4% in August, the largest gain in a year. Nonfuel import prices are down 5.1% in the past year, showing that general deflationary pressures haven’t been confined to energy goods.
Inventories at U.S. wholesalers in July fell to their lowest level in nearly three years, declining for the 11th straight month after sharp drops in furniture and metals stocks, government data showed on Friday,
The Commerce Department said total wholesale inventories dropped 1.4 percent to $387.2 billion, the lowest level since September 2006, after a revised 2.1 percent decline in June, previously reported as a 1.7 percent slump.
Economists polled by Reuters had expected a 1 percent drop in July from June.
Compared to the same period a year ago, inventories fell 12.8 percent.
Companies have been slashing accumulated stockpiles of goods as the economy reels from the worst recession in seven decades. Furniture inventories fell 2.7 percent, while stocks of unsold metal declined 4.4 percent in July.
Wholesale sales rose 0.5 percent in July, the biggest advance since June 2008, after rising by a revised 0.3 percent the previous month. June sales were previously reported as 0.4 percent higher.
That left the inventory-to-sales ratio, a measure of how long it would take to sell stocks at the current sales pace, at 1.23 months’ worth from June’s 1.25 months. (Reporting by Lucia Mutikani; Editing by Neil Stempleman
Commercial-property sales in the U.S. this year are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s.
About $16 billion of office transactions will be completed by year-end, according to data compiled by Real Capital Analytics Inc., a New York research firm that has tracked deals for almost a decade. Real Capital Managing Director Dan Fasulo and Sam Chandan, chief economist of Real Estate Econometrics LLC, said that may be the lowest volume since at least 1991.
There’s no real way to sugarcoat it, Fasulo said in an interview. A slowdown of this magnitude certainly hasn’t occurred since I’ve been in the business.
The budget deficit for August was only $111.40 billion and that is 11 straight months of deficits.
URL to article: http://www.infowars.com/more-financial-bubbles-ahead/
Bankster Bailout Did Nothing to Solve Problem, Crisis Now Worse
Mark Deen and David Tweed
Bloomberg
September 13, 2009
- A d v e r t i s e m e n t
Joseph Stiglitz, the Nobel Prize- winning economist, said the U.S. has failed to fix the underlying problems of its banking system after the credit crunch and the collapse of Lehman Brothers Holdings Inc.
“In the U.S. and many other countries, the too-big-to-fail banks have become even bigger,” Stiglitz said in an interview today in Paris. “The problems are worse than they were in 2007 before the crisis.”
Stiglitz’s views echo those of former Federal Reserve Chairman Paul Volcker, who has advised President Barack Obama’s administration to curtail the size of banks, and Bank of Israel Governor Stanley Fischer, who suggested last month that governments may want to discourage financial institutions from growing “excessively.”
URL to article: http://www.infowars.com/bankster-bailout-did-nothing-to-solve-problem-crisis-now-worse/
The Coming Consequences of Banking Fraud
J. S. Kim
Seeking Alpha
September 11, 2009
The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it’s a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.
URL to article: http://www.infowars.com/the-coming-consequences-of-banking-fraud/
1,000 Banks to Fail In Next Two Years
Natalie Erlich
CNBC
August 27, 2009
CNBC
August 27, 2009
- A d v e r t i s e m e n t
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
“We’ve already lost 81 this year,” he told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They’re smaller companies.”
Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank.
URL to article: http://www.infowars.com/1000-banks-to-fail-in-next-two-years/
PortalScape 