Harvey Organ 2-17-11

Massive Riots in Many Arab countries/silver explodes/

 

 

 

Got Gold and Silver?

Guest Post: Bottleneck Or Supply Deficit?

Submitted by Tyler Durden on 02/17/2011 17:15 -0500

There have been numerous reports of bullion shortages in many parts around the world, along with rising premiums. And the two explanations – we’re running out of gold! and, it’s just a manufacturing bottleneck – are at odds with one another. So, who’s right? Yes, there is a bottleneck. But with this recent spike in demand, it appears some mints still aren’t equipped to keep up. Are we nearing a tipping point where in spite of the increased efficiency and preparedness, requests from buyers will outweigh available supply? Imagine demand continuing to accelerate, and you can see where this might be headed. I think this is the side of the equation to watch. Andy Schectman of bullion dealer Miles Franklin told me last summer that, “Based on what I know, it’s my opinion that if 5% of this country put 5% of their money into gold, there would be nothing left tomorrow morning.”

 

 

 

Wisconsin Democrats Boycott Anti-Union Vote By Fleeing State

Submitted by Tyler Durden on 02/17/2011 15:21 -0500

The farce over the Wisconsin anti-union vote has just passed into the surreal. According to the AP, democrat lawmakers, who are firmly opposed to voting on the bill which is said to already have majority support, and who have been boycotting the vote by being absent from the state capitol, have now escalated and patriotically left the state. The reason is that while the vote can not take place without at least one Democrat being present, the police had been sent out earlier, with orders to sequester the democrats. The democrat response: run away. As the AP reports: "Senate Republicans can't vote on the bill unless at least one Democrat is present. Police could be dispatched to retrieve them, but it was unclear if they would have the authority to cross state lines." So to all who were expecting the latest iteration of members of the executive class to run away (with or without gold) to come from Africa or the Middle East, will be disappointed: it was in America's very own back yard.

 

 

As Fed Creates Russell 2000-Based "Wealth Effect", It Tells Banks To Prepare For 11% Unemployment Stress Test

 

A "Drowning" Portugal To Seek Bailout By April

 

What Is Wrong With This Chart?

Submitted by Tyler Durden on 02/17/2011 18:40 -0500

Spot the 3 differences...

 

 

 

 

Jim Sinclair’s Commentary
What more of a downgrade do you need than both Russia and China turning net sellers?

Downgrades loom for US states By Nicole Bullock in New York
Published: February 17 2011 05:01 | Last updated: February 17 2011 05:01
Cash-strapped US states and cities face the prospect of downgrades after Fitch Ratings changed the way it analyses their burgeoning pension bills.
In a report published on Thursday, Fitch warns the new approach could lead to “limited negative rating action”, particularly for local governments with big wage bills. The changes to the way it assesses pension liabilities come amid growing concern over the scale of municipal debt problems and the effect on state and city finances of generous, unfunded public sector pension schemes that will run for many years. Sharp falls in equities and other risky assets during the financial crisis reduced the funding levels of nearly all these pension plans, increasing the pressure on states and local governments when they have even less cash because of dwindling tax revenues to make up the shortfall. Revenues have tumbled while spending has been rising.
“The key questions are whether states and local governments are funding their pensions, how much it is taking up of their general fund and concern about the crowding out of spending for other needs,” said Laura Porter at Fitch.
The rating agency, which used data from 2009, said there was cause for near-term concern about “a number of” pension plans and pointed to the “considerable pressure that these obligations will place on many government budgets”. The greatest risk would come at the local level since labour-related costs were a higher percentage of local government budgets, Fitch said.
In Miami, Florida, a quarter of the city’s operating budget pays for pensions. Among states, Illinois stands out for setting aside 12 per cent of its budget for its chronically underfunded pension.
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In The News Today

Posted: Feb 17 2011     By: Jim Sinclair      Post Edited: February 17, 2011 at 1:14 am
Filed under: In The News





Jim Sinclair’s Commentary
The gold equation revolves around debt.
Federal deficit on track for a record this fiscal year

Government debt to exceed U.S. economy By Stephen Dinan
12:16 p.m., Monday, February 14, 2011
President Obama‘s budget, released Monday, was conceived as a blueprint for future spending, but it also paints the bleakest picture yet of the current fiscal year, which is on track for a record federal deficit and will see the government’s overall debt surpass the size of the total U.S. economy.
Mr. Obama‘s budget projects that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30, the end of the fiscal year. That would be 102.6 percent of GDP — the first time since World War II that dubious figure has been reached.
And the budget projects the government will run a deficit of $1.645 trillion this year, topping 2009’s previous record by more than $230 billion. By contrast, 2007’s deficit was just $160 billion altogether.
Still, amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.
In one often-cited study, economists Carmen Reinhart and Ken Rogoffhave argued that when a nation’s gross debt passes 90 percent it hinders overall economic growth. The government measures debt several ways. Debt held by the public includes the money borrowed from Social Security’s trust fund.
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Jim Sinclair’s Commentary
Did you get you satellite phone yet with international web connection?


Kill Switch’ Internet bill alarms privacy experts By Jon Swartz, USA TODAY
SAN FRANCISCO — A raging debate over new legislation, and its impact on the Internet, has tongues wagging and fingers pointing from Silicon Valley to Washington, D.C.
Just as the Egyptian government recently forced the Internet to go dark, U.S. officials could flip the switch if the Protecting Cyberspace as a National Asset legislation becomes law, say its critics.
Proponents of the bill, which is expected to be reintroduced in the current session of Congress, dismiss the detractors as ill-informed — even naive.
The ominously nicknamed Kill Switch bill is sure to be a flashpoint of discussion at the RSA Conference, the nation’s largest gathering of computer-security experts that takes place here this week.
The bill — crafted by Sens. Joseph Lieberman, I-Conn.;Susan Collins, R-Maine; and Tom Carper, D-Del. — aims to defend the economic infrastructure from a cyberterrorist attack. But it has free-speech advocates and privacy experts howling over the prospect of a government agency quelling the communication of hundreds of millions of people.
"This is all about control, an attempt to control every aspect of our existence," says Christopher Feudo, a cybersecurity expert who is chairman of SecurityFusion Solutions. "I consider it an attack on our personal right of free speech. Look what recently occurred in Egypt."
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Jim Sinclair’s Commentary
This is why QE must go to infinity.
When your major buyers turn sellers, the Federal Reserve Bank becomes the only buyer for your debt.

China and Russia sell US Treasuries By Michael Mackenzie in New York
Published: February 15 2011 19:06 | Last updated: February 15 2011 21:43
China has sold billions of dollars in US Treasury bills for the second month in a row, even as strong buying from other foreign investors countered Beijing’s move to reduce its holdings.
A Treasury report on Tuesday showed net foreign demand for long-term US securities, including bonds and equities, was $41.8bn in December, versus $64.5bn in November. Monthly net Treasury International Capital flows rose to $48.2bn in December, up from $35.6bn in November and $17.2bn in October. The rise was driven by private investors, while official accounts, or foreign central banks, sold US assets for the second successive month.
Foreign private investor demand for US long-dated government debt remained solid in December and US Treasuries with maturities of more than a year recorded inflows of $55bn. But, short-term bills suffered a $37bn fall, after November’s $32bn drop.
Alan Ruskin, strategist at Deutsche Bank, said the mixed flows reflected foreign interest in longer-term Treasuries as yields rose. China, for example, bought $5bn of bonds and notes in December, but sold $9bn of Treasury bills. “The negative take for the bond market is that China reduced its overall Treasury holdings, but they have increased their exposure to US interest rates by buying longer-term Treasuries,” said David Ader, strategist at CRT Capital. “It is an important distinction.”
Russia also pared its Treasury holdings for the second month, down to $106bn from $122bn.
But the UK continued to drive demand for Treasuries with a rise to $541bn, up from $512bn in November and $208bn in January last year. That increase, according to analysts, reflected the UK’s status as a financial centre where Treasuries are bought by investors who are not domiciled in the country.
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Jim Sinclair’s Commentary
The Armstrong Reaction is starting to be significantly challenged.

China gold demand growing at "explosive" pace: ICBC By Fayen Wong
SHANGHAI | Wed Feb 16, 2011 5:20am EST
SHANGHAI (Reuters) – Demand in China for physical gold and gold-related investments is growing at an "explosive" pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, said an Industrial and Commercial Bank of China (ICBC) executive.
ICBC (1398.HK)(601398.SS), the world’s largest bank by market value, sold about 7 tonnes of physical gold in January this year, nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank’s precious metals department on Wednesday.
"We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation," Zhou told Reuters.
"There is also frantic demand for non-physical gold investments. We issued 1 billion yuan worth of gold-price-linked term deposits in 2010, but we managed to sell the same amount over just a few days in January this year," Zhou said, adding that such deposits would easily exceed 5 billion yuan ($759 million) this year.
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Jim Sinclair’s Commentary
And so it starts in the US. Of course the mining state legislators are going to go wild.

The world’s premier mining and mining investment website Obama Administration calls for 5% royalty on gross proceeds of mines – POLITICAL ECONOMY Author: Dorothy Kosich
Posted:  Wednesday , 16 Feb 2011
President Obama’s Fiscal Year 2012 proposed budget calls for charging a 5% royalty on the gross proceeds of hardrock minerals mined on public lands including silver, gold and copper.
The President is proposing a number of new royalties and fees on both hardrock and coal mining, along with reductions on oil and gas subsidies,  which he says will save the country $3 billion over the next 10 years.
The Office of Management and Budget (OMB) said the President’s budget "provides a better return to taxpayers from mineral development."
"A number of recent studies by the Government Accountability Office and DOI’s Inspector General have found that taxpayers could earn a better return through more rigorous oversight and policy changes, such as charging appropriate fees and reforming how royalties are set," the OMB said.
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