Here Comes "Going Postal" The Sequel: US Postal Service To Cut 120,000 Jobs To Avoid Bankruptcy
That the US postal service is on the verge of bankruptcy is well-known by now and was discussed by Zero Hedge long before it became mainstream news. Furthermore, as we previously noted, the key sticking point in cost reduction negotiations is the labor force compensation (80% of all costs), which is paid an average of $41.15 an hour, and which is over 60% unionized. As of today, we finally welcome the USPS to reality which has announced that, in an attempt to avoid bankruptcy, it is now seeking to reduce its total overhead by 20%, or a whopping 120,000 workers (a number which would amount to roughly an increase of 0.1% in the national unemployment rate). Ah yes, but this is prohibited by existing union contracts. Furthermore, WaPo writes that "SPS also wants to withdraw its employees from the health and retirement plans that cover federal staffers and create its own benefit programs for postal employees." Good luck trying to convince a labor union that cutting an ungodly amount of jobs is for the greater good. Alas, what happened in Greece (and what is about to happen in Italy) will be nothing compared to what will happen when the entire post office goes, well, postal.What To Do As Gold Reaches $1752.50
Dear CIGAs,
Now that we have reached $1752.20 gold, what should you do?
Stay firm in your disciplines. During this entire market chasing
strength in gold has proven dangerous more often than not. Angels should
be looked at for the mad trader as areas to lighten, not double up. You
can win this game with a ruler, but you will have to stay up 24 hours a
day. We have not had a blow off top in gold but there has been epic
short covering in world markets. That type of action weakens short term
markets. The best buys now are identified by a simple ruler with more
complex firming internals.
The holder of the right position that shows the patience of
Seligman and Livermore always take the greatest prize. Gold has made no
meaningful top, but volatility has only one way to go and that is up.
Our respected colleague Alf Fields would agree that traders better have
karma on their side, but the gold market is nowhere near full valuation.
Be careful traders but stand strong those of us who have hedged against
the insolvable problems of the entire Western World. Your successful
protection is my reward greater than money, greater than matter. See you
in the morning.
1. Those holding gold to hedge the systemic risks of the Western Financial world simply stay in your position.
2. Traders lighten up your positions as gold approaches the next two Angels.
3. No market fails to have reactions at some point.
4. Reactions in this market will be deep, but brief when they occur.
5. The undervaluation of good gold shares has passed manic.
6. Utilization of some of your gold profits into good gold shares is pure logic.
Respectfully,
Jim Sinclair’s Commentary
Now here is some new news. The problem is where this article originated.
U.S. debt crisis to bring questions to dollar’s long-term status: Standard Chartered chief economist
by Zhang Yuenan
LONDON, Aug. 11 (Xinhua) – The U.S. debt crisis will bring more questions to the longer-term outlook of the U.S. dollar, Standard Chartered chief economist Gerard Lyons told Xinhua in an interview.
Although its current status as a reserve currency would not be changed immediately after the U.S. debt crisis, but the dollar “looks vulnerable,” said Lyons, adding that “worries about the longer-term outlook for the U.S. economy do raise long term questions about its currency.”
Meanwhile, the global context of the crisis, a shift in the balance of power from the west to the east, also raised questions about the dollar, Lyons said.
Rating agency Standard & Poor’s downgraded the U.S. credit rating from AAA to AA+ last Friday, the first time in history for the country to lose its top-grade rating.
Lyons, however, criticized S&P’s downgrade as “a wrong decision at a wrong time for wrong reasons.”
“The U.S. will pay its debt.” Lyons said.
Lyons took the latest U.S. debt crisis as a continuation of the crisis from three to four years ago. As a result, he expected the U.S. Federal Reserve to continue with its intervention policies for the past several years, including keeping interest rates low, providing liquidity and probably a third round of quantitative easing.
More…
Jim Sinclair’s Commentary
It is all the same, British, French, Italian or US. There might be an exception on a relative basis.
The Canadians never caught the real madness of OTC derivatives. Regardless, here is your guarantee to QE to Infinity.
British banks ordered to disclose debt exposure amid contagion fears
Turmoil on Europe’s markets continues, as bank shares suffer rollercoaster ride
By Sean Farrell
Friday, 12 August 2011
The Financial Services Authority (FSA) has stepped up scrutiny of UK banks’ exposures to foreign government debt as fears of European sovereign debt contagion sent markets into a renewed frenzy yesterday.
The City watchdog is in talks with Britain’s banks and their auditors to ensure consistent disclosure of their sovereign holdings according to the standards of the recent European stress tests in their year-end results.
As fears over which banks could be hit by downgrades of sovereign bonds continue to rattle markets, the FSA has also upped its day-to-day monitoring of UK lenders’ exposures.
An FSA spokeswoman said: “We have been holding discussions with the banks and their auditors in relation to their sovereign exposures. What we are looking for is greater consistency and disclosures across firms to give the market clear information.”
Yesterday marked another round of turmoil for Europe’s banks as fears about exposures to debt-stretched economies made investors question their ability to fund in the market.
More…
Jim Sinclair’s Commentary
Let see, Yuan in 10 years or dollar in 10 years? Safe havens change with time.
China’s Yuan Strengthens Beyond 6.40 Per Dollar for First Time Since 1993
By Fion Li – Aug 11, 2011 2:17 AM MT
The yuan strengthened beyond 6.4 per dollar for the first time in 17 years, supported by the Federal Reserve’s pledge to keep interest rates at a record low and signs China will use currency gains to help rein in inflation.
The currency rose 0.37 percent to close at 6.3945 in Shanghai, its biggest jump in nine months, according to the China Foreign Exchange Trade System. It touched 6.3895, the strongest level since the country unified official and market exchange rates at the end of 1993. The central bank’s reference rate was boosted 0.27 percent to 6.3991.
The International Monetary Fund said last month a stronger yuan would help stabilize the global economy, as well as aid government efforts to tame inflation and rebalance the nation’s growth toward domestic demand and away from exports. Data this week showed record overseas sales helped drive China’s trade surplus to a two-year high in July and consumer prices rose the most in three years.
“The inflation and trade data, together with the Fed’s policy to maintain extremely low interest rates, have fueled faster appreciation,” said Banny Lam, an economist at CCB International Securities in Hong Kong. “Strong economic growth, supported by the latest export figures, also provides investors with confidence to buy the yuan in these turbulent times.”
U.S. Criticism
The yuan is the sole gainer this month among Asia’s 10 most-used currencies excluding the yen, having advanced 0.7 percent versus the dollar as a Standard & Poor’s downgrade of the U.S. credit rating and a rout in global equities prompted investors to pull back from riskier assets. The MSCI Emerging Markets Index of shares dropped 14 percent since July.
More…
US Default Scare Leads To Biggest Weekly Surge In Non-Seasonally Adjusted M2 In History
Submitted by Tyler Durden on 08/12/2011 - 00:23
About a month ago we penned a post to refute some misconceptions about a material spike in M2, which led such luminaries as Andy Lees and Art Cashin to get confused that this may be an indication that either the government was forcing money into the population with the end of QE2, or that this was actually a confirmation that QE was working. It was neither. As we explained it was a combination of the Treasury general account on the Fed's balance sheet soaring (from a balance sheet standpoint), and due to the repeal of Regulation Q (from an actual flow perspective), that led to the move. Sure enough, in the 3 weeks following, M2 dropped to very much unremarkable weekly change levels. Until the week of August 1, or the week in which the specter of a US bankruptcy came to life, and in which the market took its first notable leg down. In that week, the broadest publicly released monetary aggregated - the M2 - soared to an all time high $9.5 trillion, or a $159 billion weekly change. This make it the third largest weekly spike in history After the Lehman bankruptcy and September 11. Then again, this data includes the traditional seasonal fudge adjustments by the Fed. A look at the non-seasonally adjusted time series indicates that last week's spike in M2, primarily in demand and savings deposits at commercial banks, was the highest on record! Sure enough, the bulk of this cash ended up in America's largest depository institution, Bank of America. And yes, this was in the week prior to the massive market rout. Yet as the charts show, following every massive inflow of money into demand deposits and savings accounts, it goes right back out the next week. Which is why we wonder: is Bank of America, so flush with cash a week ago courtesy of the debt ceiling fiasco, suddenly cashless, as investors follow up with the kneejerk withdrawal of capital from the depositor bank due to worries of bank runs and other less quantifiable reasons? Does this explain why, in addition to the fact that the bank's sale of its China Construction Bank stake is not going well, BAC may soon be forced to enter the capital markets to raise equity capital, just as we have been predicting all along?
Guest Post: If You Are Wondering Where We Are….
The Fed has helped print a new kind of currency, currency being a means of exchange that in and of itself offers no return whatsoever. This new kind of currency used to be referred to as notes and bonds. Please be mindful of this change if you plan on using the tired old phrase, “A man’s word is his bond”. Remember to replace “word” with “money”, and you’ll be okay, at least until 2013. Money is freely available to those who don’t need it and don’t deserve it. For everyone else there’s 29.99% Mastercard and Visa.Letter To Mary Schapiro Demanding An Explanation For Millions Of Stub Quote Rule Violations
Dear Mrs. Schapiro,We would like to thank the SEC for implementing the Stub Quote Rule in December of 2010. While stub quoting did not cause the Flash Crash of May 6th 2010, it was a contributing factor and we welcome the stub quote ban.
However, after studying four recent trading days, we have a question. Is there any intention of enforcing the stub quote rule? If so, can you please tell us when?
SEC To Investigate Trades Based On S&P Downgrade Inside Information
While the president makes yet more speeches about how the time to leave the past behind us is now (while newly scapegoating Europe for the economic catastrophe), the sniping war against S&P continues, only this time with a twist. According to the FT, the SEC has asked the rating agency to disclose who at the company knew about the downgrade, "as part of a preliminary look into potential insider trading." The funny thing is that while the answer will be everyone, even in that case the SEC will end up doing nothing as it always 'does' (pun intended), and the whole process is nothing but a sham to humiliate the rating agency. "The inquiry was made by the SEC’s examination staff, which has oversight of credit rating firms, one person familiar with the matter said. The exam staff can make referrals to the SEC’s enforcement division if it believes any laws have been violated, but the inquiry might not result in a referral....Proving someone leaked information about the downgrade, or traded ahead of it, could be challenging. Many traders anticipated the downgrade and bets could occur across numerous securities or currencies without inside information. In a traditional insider trading case, there is often a more predictable correlation between a company’s stock price and a particular development." Of course the next question is what is the null hypothesis: that leakees would buy or sell bonds based on the info? Because the natural response would be to dump treasuries even as the real outcome was a plunge in equities and a scramble to safe one-ply paper. So is PIMCO about to be charged with insder trading for having sold 10 Years even though in reality the spread tightened by a record 60 bps in the following week?- "It is very sad that no one donates a dime. I find this site great! I have donated.
Cheers, Tim"
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