Lieborgate: Here Come The Arrests
For over four years, virtually everyone in the finance industry knew that Libor was manipulated. The stench of manipulation rose to the very top and thanks to a document release of formerly confidential information, we now know for a fact that even the Fed was in on it - recall that as part of production, the Fed provided a transcript of an April 2008 phone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest LIBOR." And yet without any tangible, black on white evidence, there was no catalyst for pursuing legal action. That all changed when in a desperate attempt to protect its ass, Barclays decided to rat out everyone by settling with regulators, and "turn state" producing e-mail based evidence, most of it quite visual (after all what is more tangible to the common man that evil bankers sipping on Bollinger), which essentially threw years of quiet cartel cooperation under the bus. As a result, regulators, enforcers, and legal authorities, many of whom were in on this manipulation from the beginning, no longer had an excuse to not pursue civil and criminal charges against perpetrators, who until recently were footing the tabs at various gentlemen's venues and ultra expensive restaurants. And while the imminent waterfall of civil prosecution will force bank litigation reserves to go through the roof, here comes, with a very long delay, the criminal charges. As Reuters reports, here come the arrests.
Greece's Tsipras Calls For 'Drachmatization' Instead Of TROIKA "Longer Rope To Hang Ourselves"
EURUSD
is down over 50 pips from Friday's close, about to test a 1.20 handle
for the first time in over 25 months, as headlines pour from the
beleaguered disunion. The AP reports of the German vice-chancellor's "more than skeptical" view that Greece can fulfill its obligations; after which "there can be no further payments"
seemingly confirms our earlier note on the IMF's reluctance (and
dismisses any hope that the IMF's call for more ECB 'assistance' will go
unheeded. More worrisome is the Athens News story on Alexis Tsipras (leader of the Greek Syriza party) forecasting that the government will "soon present a return to a national currency (drachma) as a national success."
He went on to state rather honestly for a politician that any payment
extension (of the already re-negotiated TROIKA deal) is "essentially a
longer rope with which to hang ourselves." The elite-perpetuating
status-quo-sustaining unreality is summed up perfectly as he notes the Greek finance minister is the definition of a finance minister that the TROIKA would have chosen. Germany's Roesler adds a little fuel to the conflagration by adding that "for many experts,... a Greek exit from the eurozone has long since lost its horror."
EURUSD
is down over 50 pips from Friday's close, about to test a 1.20 handle
for the first time in over 25 months, as headlines pour from the
beleaguered disunion. The AP reports of the German vice-chancellor's "more than skeptical" view that Greece can fulfill its obligations; after which "there can be no further payments"
seemingly confirms our earlier note on the IMF's reluctance (and
dismisses any hope that the IMF's call for more ECB 'assistance' will go
unheeded. More worrisome is the Athens News story on Alexis Tsipras (leader of the Greek Syriza party) forecasting that the government will "soon present a return to a national currency (drachma) as a national success."
He went on to state rather honestly for a politician that any payment
extension (of the already re-negotiated TROIKA deal) is "essentially a
longer rope with which to hang ourselves." The elite-perpetuating
status-quo-sustaining unreality is summed up perfectly as he notes the Greek finance minister is the definition of a finance minister that the TROIKA would have chosen. Germany's Roesler adds a little fuel to the conflagration by adding that "for many experts,... a Greek exit from the eurozone has long since lost its horror."Global QE Is Coming: Let the Gold Mania Begin!
by Chris Puplava, Financial Sense:
In my last article I commented on Japan’s coming debt time bomb (Massive Japanese Debt Monetization is Coming, Yen to be Devalued),
in which I made the case that Japan had a tremendous amount of their
debt maturing over the next three years and that the Bank of Japan was
likely to monetize much of it and weaken the Yen as a result. Since then
I’ve dug a bit deeper and taken a look at the top 10 debtor
nations of the world to see if they too had a large portion of their
total outstanding debt maturing in the near future. What I found
startled me: Nearly 50% of the total outstanding debt of the world’s top 10 debtor nations needs to be rolled over by the end of 2015.
While fears over a European contagion and a hard landing in China have driven investors into sovereign debt like the U.S. and Japan, how long can this continue and will investor demand for sovereign debt be able to soak up the total supply over the next few years? It is my belief that global central banks will be the buyers of last resort and will be monetizing the debt in massive quantities over the next two and half years. This may perhaps be the catalyst leading to the mania phase for gold as investors all over the world attempt to protect themselves from global quantitative easing and global currency debasement.
The Top 10 Debtor Nations
While the world is currently focused on Spain and Italy as seen by 5-year credit default swap insurance north of 500 basis points (costs $500K annually to protect $10M worth of debt from default), the picture for the other countries that make up the top 10 debtor nations in the world is not much brighter.
Read More @ Financial Sense.com
After being sucked into the general commodities correction, silver has
been relentlessly drifting lower since late February. But this weakness
has forced the white metal down to a very bullish place technically.
Silver is now quite undervalued compared to prevailing gold prices, its
primary driver. Thus it has great potential to rally mightily in the
coming months to regain much lost ground relative to gold.
Silver is a fascinating commodity that has won a fanatical following among traders. It is extremely volatile, with big spikes or plunges always possible. This makes it irresistibly alluring to speculators, who alternately pile in to ignite huge rallies before running for the exits to spawn near-crashes. The perpetual back-and-forth struggle between greed and fear is the essence of speculation, and silver embodies it.
But what drives these winds of sentiment that buffet silver around? Gold. Silver traders constantly look to the yellow metal’s fortunes to figure out whether they should buy or sell the white metal. While there are rare and short-lived exceptions, the vast majority of the time silver only rallies significantly when gold is strong and only sells off materially when gold is weak. Gold is the key to silver’s price action.
Read More @ zealllc.com
The
latest details on the Spanish financial sector bailout continue to
remind us not to underestimate politicians’ readiness to undermine
whatever is left of a free market capitalist system. Instead of adopting
Economist Juan Ramón Rallo' (as we discussed here), who has suggested a “bail-in” formula
to effectively restructure and recapitalize the financial sector in a
more transparent and fair manner - which would teach the resulting bank
owners to learn the lesson of the dangers involved in placing
politicians and ballet dancers on banks’ boards; the actual plan is to cleanse the Spanish banking sector of its toxic assets by means of transferring them into “bad banks” has a new twist: instead
of reflecting such assets’ real market value, the idea is to impose a
markup (based on an estimated “long-term value”) to minimize losses. In contrast to Rallo’s “bail-in” proposal, the current Spanish banking sector reform is aimed at bailing out and protecting those who have benefited from the practices which caused the problem in the first place: the political class, inefficient regulators, as well as private companies close to the establishment.
It appears that following the resignation letter fiasco from Friday, the venerable IMF is trying to regain some level of credibility in the world. In a note obtained by SPIEGEL, senior
IMF officials patience has clearly come to an end and has decided
that, with Greece likely to go bust by September, it is no longer willing to provide additional Greek aid
(we assume in light of the push-backs on the promised cuts that the aid
was based upon). Pointing to this now being a euro-zone problem, their
cessation of Greek aid is even more critical since both Holland and
Finland pledged support because the IMF was involved.
August 20th marks an important short-term hurdle as Greece is required
to pay back EUR3.8bn to the ECB - and with collateral being withdrawn,
we wonder how long before the ECB pulls the plug entirely - even on
Greek T-Bills. Whether this is sabre-rattling before the delayed TROIKA
visit or the IMF (and the rest of the TROIKA) indeed deciding enough is enough and realizing finally that more debt (or even maturity extensions) does not solve the problem of too much debt - only default will do that!
Even as Europe has become an utterly dysfunctional experiment in everything relating to modern economics and monetary theory, it has one redeeming feature: it has proven that the Defection regime under Game Theory is 100% correct. It says that once the defections from an unstable Nash equilibrium begin, there is no stopping until the entire system collapses under its own weight. This is precisely what has happened in Spain, where first Catalunya, then Valencia on Friday, and now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone."
In my last article I commented on Japan’s coming debt time bomb (Massive Japanese Debt Monetization is Coming, Yen to be Devalued),
in which I made the case that Japan had a tremendous amount of their
debt maturing over the next three years and that the Bank of Japan was
likely to monetize much of it and weaken the Yen as a result. Since then
I’ve dug a bit deeper and taken a look at the top 10 debtor
nations of the world to see if they too had a large portion of their
total outstanding debt maturing in the near future. What I found
startled me: Nearly 50% of the total outstanding debt of the world’s top 10 debtor nations needs to be rolled over by the end of 2015.While fears over a European contagion and a hard landing in China have driven investors into sovereign debt like the U.S. and Japan, how long can this continue and will investor demand for sovereign debt be able to soak up the total supply over the next few years? It is my belief that global central banks will be the buyers of last resort and will be monetizing the debt in massive quantities over the next two and half years. This may perhaps be the catalyst leading to the mania phase for gold as investors all over the world attempt to protect themselves from global quantitative easing and global currency debasement.
The Top 10 Debtor Nations
While the world is currently focused on Spain and Italy as seen by 5-year credit default swap insurance north of 500 basis points (costs $500K annually to protect $10M worth of debt from default), the picture for the other countries that make up the top 10 debtor nations in the world is not much brighter.
Read More @ Financial Sense.com
from Adam Hamilton, Zeal Speculation and Investment:
After being sucked into the general commodities correction, silver has
been relentlessly drifting lower since late February. But this weakness
has forced the white metal down to a very bullish place technically.
Silver is now quite undervalued compared to prevailing gold prices, its
primary driver. Thus it has great potential to rally mightily in the
coming months to regain much lost ground relative to gold.Silver is a fascinating commodity that has won a fanatical following among traders. It is extremely volatile, with big spikes or plunges always possible. This makes it irresistibly alluring to speculators, who alternately pile in to ignite huge rallies before running for the exits to spawn near-crashes. The perpetual back-and-forth struggle between greed and fear is the essence of speculation, and silver embodies it.
But what drives these winds of sentiment that buffet silver around? Gold. Silver traders constantly look to the yellow metal’s fortunes to figure out whether they should buy or sell the white metal. While there are rare and short-lived exceptions, the vast majority of the time silver only rallies significantly when gold is strong and only sells off materially when gold is weak. Gold is the key to silver’s price action.
Read More @ zealllc.com
Spain's Banking Reform Is A Bailout Of The Status Quo
The
latest details on the Spanish financial sector bailout continue to
remind us not to underestimate politicians’ readiness to undermine
whatever is left of a free market capitalist system. Instead of adopting
Economist Juan Ramón Rallo' (as we discussed here), who has suggested a “bail-in” formula
to effectively restructure and recapitalize the financial sector in a
more transparent and fair manner - which would teach the resulting bank
owners to learn the lesson of the dangers involved in placing
politicians and ballet dancers on banks’ boards; the actual plan is to cleanse the Spanish banking sector of its toxic assets by means of transferring them into “bad banks” has a new twist: instead
of reflecting such assets’ real market value, the idea is to impose a
markup (based on an estimated “long-term value”) to minimize losses. In contrast to Rallo’s “bail-in” proposal, the current Spanish banking sector reform is aimed at bailing out and protecting those who have benefited from the practices which caused the problem in the first place: the political class, inefficient regulators, as well as private companies close to the establishment.No More Mr. Nice Guy As IMF Set To Kick Out Greece
It appears that following the resignation letter fiasco from Friday, the venerable IMF is trying to regain some level of credibility in the world. In a note obtained by SPIEGEL, senior
IMF officials patience has clearly come to an end and has decided
that, with Greece likely to go bust by September, it is no longer willing to provide additional Greek aid
(we assume in light of the push-backs on the promised cuts that the aid
was based upon). Pointing to this now being a euro-zone problem, their
cessation of Greek aid is even more critical since both Holland and
Finland pledged support because the IMF was involved.
August 20th marks an important short-term hurdle as Greece is required
to pay back EUR3.8bn to the ECB - and with collateral being withdrawn,
we wonder how long before the ECB pulls the plug entirely - even on
Greek T-Bills. Whether this is sabre-rattling before the delayed TROIKA
visit or the IMF (and the rest of the TROIKA) indeed deciding enough is enough and realizing finally that more debt (or even maturity extensions) does not solve the problem of too much debt - only default will do that!Floodgates Open As Four More Spanish Regions Seek Bailout; German Nürburgring Faces Bankruptcy
Even as Europe has become an utterly dysfunctional experiment in everything relating to modern economics and monetary theory, it has one redeeming feature: it has proven that the Defection regime under Game Theory is 100% correct. It says that once the defections from an unstable Nash equilibrium begin, there is no stopping until the entire system collapses under its own weight. This is precisely what has happened in Spain, where first Catalunya, then Valencia on Friday, and now virtually everyone else is set to demand a bailout. From Bloomberg: The Balearic Islands and Catalonia are among six Spanish regions that may ask for aid from the central government after Valencia sought a bailout, El Pais reported. Castilla-La-Mancha, Murcia, the Canary Islands and possibly Andalusia are also having difficulty funding themselves and some of these regions are studying plans to tap the recently created emergency-loan fund that Valencia said it would use yesterday, the newspaper said, without citing anyone."
[Ed. Note: The caller says the shooter had help entering through the back of the theater, and the CNN anchor is more concerned about "what part of the movie was playing" when the shooting began. Whether this massacre was a false flag operation or not, you will be told to give up your future rights of self protection, via international UN treaty.]
from FederalJacktube6:
by Anthony Wile, The Daily Bell:
The Daily Bell is pleased to present this exclusive interview with Axel Merk (left).
Introduction: Axel Merk, President & CIO of Merk Investments, LLC, is an expert on the global economy, hard money, macro trends and international investing. He is considered the authority on currencies and has been named the “Currency Guru” by Morningstar. His insight and expertise have allowed him to foresee major economic developments: As early as 2003, he pinpointed the macro trend of US dollar volatility while warning about the building of the credit bubble. In 2005, Axel Merk positioned his clients to move out of real estate and protect them against a faltering U.S. dollar by investing in hard currencies and gold. In early 2007, he wisely cautioned that volatility would surge, causing a painful global credit contraction affecting all asset classes. He is a regular guest on CNBC, FoxBusiness, Bloomberg TV and frequent contributor to the Wall Street Journal, Financial Times, Barron’s and other financial publications around the world.
Daily Bell: Tell us about Merk Funds. How much does it manage and in what capacities?
Axel Merk: Merk Funds manages over $600 million in four mutual funds; we invest in four currencies, international fixed income securities and gold. We try to give investors managed currency risk in a variety of forms, seeking to profit from a rise in currencies. One of our products is what we call non-directional, which is more tactical in nature.
Daily Bell: As early as 2003 you identified the building of the credit bubble. How was that possible? You use Austrian economics?
Read More @ TheDailyBell.com
The Daily Bell is pleased to present this exclusive interview with Axel Merk (left).Introduction: Axel Merk, President & CIO of Merk Investments, LLC, is an expert on the global economy, hard money, macro trends and international investing. He is considered the authority on currencies and has been named the “Currency Guru” by Morningstar. His insight and expertise have allowed him to foresee major economic developments: As early as 2003, he pinpointed the macro trend of US dollar volatility while warning about the building of the credit bubble. In 2005, Axel Merk positioned his clients to move out of real estate and protect them against a faltering U.S. dollar by investing in hard currencies and gold. In early 2007, he wisely cautioned that volatility would surge, causing a painful global credit contraction affecting all asset classes. He is a regular guest on CNBC, FoxBusiness, Bloomberg TV and frequent contributor to the Wall Street Journal, Financial Times, Barron’s and other financial publications around the world.
Daily Bell: Tell us about Merk Funds. How much does it manage and in what capacities?
Axel Merk: Merk Funds manages over $600 million in four mutual funds; we invest in four currencies, international fixed income securities and gold. We try to give investors managed currency risk in a variety of forms, seeking to profit from a rise in currencies. One of our products is what we call non-directional, which is more tactical in nature.
Daily Bell: As early as 2003 you identified the building of the credit bubble. How was that possible? You use Austrian economics?
Read More @ TheDailyBell.com
Revolution Is Evolution
All organic structures can be modelled using evolutionary theory and governance, politics and economics, which involve the cooperation of millions of human beings are no exception. Because everyone is more familiar with evolutionary theory being used to model changes in the natural world, we’ll start by looking at examples in the natural world where revolution occurs as part of the process of evolution, demonstrating that revolution is not an artificial human construct but actually quite normal under particular circumstances. Revolution occurs in the natural world when a lifeform becomes extinct because the environment it depends on for survival changes at a faster rate than it can evolve. This can happen in two ways, either the environment is subject to sudden change, as in the case of the dinosaurs or, far more commonly, the environment changes gradually and the lifeform finds itself increasingly ill-adapted before becoming extinct. Because each lifeform has a relationship with other lifeforms there is a knock on effect.
The Boat of Irresponsiblity Has Many Passengers
Eric De Groot at Eric De Groot - 6 hours ago
Governments preach austerity, discipline, and imply irresponsibility as the
cause of the growing debt problem. The headings suggest that regulation
designed to save the public from themselves, a combination of more and
better, is the answer to prevent the next crisis. Amid the flurry of
election-year finger pointing, few seem to recognize that governments, the
ultimate regulators, stand shoulder...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Mother Nature Doesn't Care
Eric De Groot at Eric De Groot - 7 hours ago
The dust bowl or dirty thirties ran from 1930 to 1940 (chart 1). Chart 1:
Spot Commodity Prices: CRB Spot Index (1947 - Present); 16-Raw Industrial
Spot Price (1935-1947); Great Britain Wholesale Price of All Commodities
(1885-1935) and Trend Z Scores If a comparison 2008-2020 and 1930 to 1942,
specifically 2012 and 1934, both agriculturally and economically, doesn't
raise the...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Mailbox
Eric De Groot at Eric De Groot - 17 hours ago
Denny, Managing confidence is almost as difficult as timing the markets
according to public statements. Regards, Eric Hi Eric, When I read your
comment this morning about the Fed not acting until the next crisis what
went through my head was: "if they wait, they will have no affect and will
lose total control of any outcomes" I think Sinclair has the correct
idea...it is coming...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]The Cost Of Government Regulation: $1.75 Trillion
In their Ten Thousand Commandments 2012 report which was released in June, the CEI estimates the cost of US government regulation at $US 1.75 TRILLION. That is just under half (48 percent) of the budget of the federal government. It is almost ten times the total of all corporate taxes collected and almost double the total collected from individual income taxes. It is also one-third higher than the total of all pre-tax corporate profits. It is the hidden cost of doing business in an interventionist economy. The fact that the cost of complying with these regulations is substantially higher than the total of corporate profits is a stark illustration of the end result of economic intervention. That end result is capital consumption.The Eminent Domain Mortgage Heist
And you can restructure all you like, but many underwater homeowners with a serious income shortfall will still not be able to pay their mortgages. Who carries the can? If the mortgage has been sold on then the loss will be on the new owner. In reality this is far more likely to be the taxpayer. Simply, the taxpayer may well end up carrying the can for a whole lot of bust mortgages. What Taibbi — who usually has a very good sense of moral hazard — and MRP effectively seem to be considering is not only the continuation and expansion of Kelo, but also potentially the transfer of liability from bust irresponsible lenders to the taxpayer. While this is sure to enrich the bureaucracy and well-connected insiders — and admittedly, while it may help some underwater homeowners — it seems incredibly risky for the taxpayer. While debt-forgiveness is one way out of the debt trap, we should be careful and recognise that many so-called debt-forgiveness schemes may instead be dressed-up scams and frauds that end up enriching special interests while putting the taxpayer deeper into a hole.Adam Smith On Conceit, Central Planning, And Disorderly Society
Perhaps
it is worth a reminder that, while every effort by the
Central-Banker-In-Chief and his political play-things to proclaim
free-market omnipotence in stark contrast to the wholesale manipulation
of any and every market and macro-economic lever possible, Adam Smith
some 250 years ago pointed out the inevitable unintended consequences of
such grand conceit. As the [central planner] seems to "imagine
that he can arrange the different members of a great society with as
much ease as the hand arranges the different pieces upon a chess-board", the end result is that "society must be at all times in the highest degree of disorder."Forget Corn, Is Soy Poised For Lift-Off?
By
now everyone is aware of the silver-like surge in corn prices over the
past month, driven by the recognition that what is quickly becoming
the most severe drought in US history is here to stay indefinitely
longer as elusive rainfall remains just that. As can been seen on the
chart below, corn prices have risen by 54% since mid-June. What may come
as a surprise is that another critical commodity - Soybeans - has only
risen by half as much, or just 28% in the past month. Why "only"?
Because as the following two charts from Morgan Stanley show, the
fundamental picture for soybeans may be just as bad if not worse as
corn, which would mean there is far more price upside in soy in the
coming days, especially if strategies based on prayer, for either
central bank intervention or rain, remain unasnwered.Economic Countdown To The Olympics 4: Would The Euro Be A Winning Team?
With just a few days left until the pre-opening soccer games begin in the UK, we continue our five part series (Part 1, Part 2, Part 3) on the intersection between markets and the Olympics by considering whether an integrated Europe would have performed relatively better - i.e. would 2+2>4 - and what are the factors. Goldman's analysis of the pros and cons of 'integrating' their Olympic teams is extremely apropos
the current deteriorating (yet desperately dreaming of improving)
coordination of these 17 disparate nations. The answer, of course, is
that there are some benefits from this medal 'integration' in specific
cases but since German reunification, their medal performance has
deteriorated - even in the team events where aggregating talent pools
should have its greatest gains. In a 'zero-sum' context such as competing for Olympic medals, Germany's gains must come at the expense of other countries - and rather notably there are few French medal winners before or after an 'integration. Sounds familiar?
from RussiaToday:
by Tony Cartalucci, Activist Post
“The Free Syrian Army ruined our lives,” reports BBC in their article, “Syria crisis: Iraqis flee ‘sectarian violence’ in Damascus.”
Refugees returning to Iraq from Syria inundated a BBC reporter with
accounts of why they’ve fled, citing sectarian violence perpetrated by
the Western backed, armed, and funded
so-called “Free Syrian Army” (FSA). Accounts reaffirm that indeed
foreign fighters are amongst the FSA’s ranks, including Iraqi sectarian
extremists serving as commanders.
Christians in Syria have been particularly hit hard by what is being described as “ethnic cleansing,” not by Syrian security forces, but by NATO-backed death squads under the banner of the “Free Syrian Army.” The LA Times has been quietly reporting on the tragedy of Syria’s minorities at the hands of the Syrian rebels for months – and indicates that wider genocide will take place, just as it is now in Libya, should Syria’s government collapse under foreign pressure.
Read More @ Activist Post
from TrendsJournal:
“The Free Syrian Army ruined our lives,” reports BBC in their article, “Syria crisis: Iraqis flee ‘sectarian violence’ in Damascus.”
Refugees returning to Iraq from Syria inundated a BBC reporter with
accounts of why they’ve fled, citing sectarian violence perpetrated by
the Western backed, armed, and funded
so-called “Free Syrian Army” (FSA). Accounts reaffirm that indeed
foreign fighters are amongst the FSA’s ranks, including Iraqi sectarian
extremists serving as commanders. Christians in Syria have been particularly hit hard by what is being described as “ethnic cleansing,” not by Syrian security forces, but by NATO-backed death squads under the banner of the “Free Syrian Army.” The LA Times has been quietly reporting on the tragedy of Syria’s minorities at the hands of the Syrian rebels for months – and indicates that wider genocide will take place, just as it is now in Libya, should Syria’s government collapse under foreign pressure.
Read More @ Activist Post
from TrendsJournal:
by Matt Taibbi, Rolling Stone:
Something very interesting is happening.
There’s been so much corruption on Wall Street in recent years, and the federal government has appeared to be so deeply complicit in many of the problems, that many people have experienced something very like despair over the question of what to do about it all.
But there’s something brewing that looks like it might be a blueprint to effectively take on the financial services industry: a plan to allow local governments to take on the problem of neighborhoods blighted by toxic home loans and foreclosures through the use of eminent domain. I can’t speak for how well the program will work, but it’s certaily been effective in scaring the hell out of Wall Street.
Under the proposal, towns would essentially be seizing and condemning the man-made mess resulting from the housing bubble. Cooked up by a small group of businessmen and ex-venture capitalists, the audacious idea falls under the category of “That’s so crazy, it just might work!” One of the plan’s originators described it to me as a “four-bank pool shot.”
Read More @ RollingStone.com
Something very interesting is happening.There’s been so much corruption on Wall Street in recent years, and the federal government has appeared to be so deeply complicit in many of the problems, that many people have experienced something very like despair over the question of what to do about it all.
But there’s something brewing that looks like it might be a blueprint to effectively take on the financial services industry: a plan to allow local governments to take on the problem of neighborhoods blighted by toxic home loans and foreclosures through the use of eminent domain. I can’t speak for how well the program will work, but it’s certaily been effective in scaring the hell out of Wall Street.
Under the proposal, towns would essentially be seizing and condemning the man-made mess resulting from the housing bubble. Cooked up by a small group of businessmen and ex-venture capitalists, the audacious idea falls under the category of “That’s so crazy, it just might work!” One of the plan’s originators described it to me as a “four-bank pool shot.”
Read More @ RollingStone.com
by John Rubino, DollarCollapse.com:
When investors decide to close out their riskier positions and move
into “cash”, they don’t actually go to the bank and get a stack of
twenties. Most just sell their stocks and let their broker sweep the
proceeds into a money market fund
which, they assume, is the same thing as cash because it holds
high-quality short-term commercial paper that almost never defaults.
That pleasant assumption breaks down as soon as you look at a typical money market fund’s holdings and see that it owns, among other disturbing things, a lot of European bank debt.
But at least you can get your money out with a mouse click, right?
Well, maybe not. Apparently the Fed, cognizant of the potential weakness of the money fund system, is considering withdrawal limits:
Read More @ DollarCollapse.com
When investors decide to close out their riskier positions and move
into “cash”, they don’t actually go to the bank and get a stack of
twenties. Most just sell their stocks and let their broker sweep the
proceeds into a money market fund
which, they assume, is the same thing as cash because it holds
high-quality short-term commercial paper that almost never defaults.That pleasant assumption breaks down as soon as you look at a typical money market fund’s holdings and see that it owns, among other disturbing things, a lot of European bank debt.
But at least you can get your money out with a mouse click, right?
Well, maybe not. Apparently the Fed, cognizant of the potential weakness of the money fund system, is considering withdrawal limits:
Read More @ DollarCollapse.com
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We The Sheeplez... is intended to reflect
excellence in effort and content. Donations will help maintain this goal
and defray the operational costs. Paypal, a leading provider of secure
online money transfers, will handle the donations. Thank you for your
contribution.
By Bill Bonner, Daily Reckoning.com.au:
Yesterday, we were talking about the only question worth discussing since 2008 — who takes the loss?
Actually, there are several variants of the question…but they all end up in the same place. Mistakes were made; somebody is gonna pay. Who?
Economists are not stupid. Especially those who win Nobel Prizes. They test well. They go to good schools. They can usually do higher math.
Math is important to modern economics. It makes it look like science. So, if you review almost any PhD thesis in economics over the last 20 years, you are bound to find numbers. Lots of numbers. You might find dozens of 9s…or hundreds of 5s…or maybe thousands of 0s.
You’ll also find symbols. Greek symbols. And symbols from the mathematician’s trade. These symbols mean something. So do the numbers.
And you can use these meanings to tease out even more confections. Complex. Sophisticated. Precise. Impressive.
And generally not worth a damn.
Read More @ DailyReckoning.com.au
Egon von Greyerz told King World News, “The world is simply
drowning in debt.” Greyerz, who is founder and managing partner at
Matterhorn Asset Management out of Switzerland, also said, “This is why
it is guaranteed that governments will print money,” and that “Prices of
hard assets will go into the stratosphere.”
But first, here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “Spanish rates have broken back above the 7% level once again, but in reality we know that many European countries will never be able to repay these debts. You now have a total worldwide debt of around $150 trillion. If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion.”
Greyerz continues @ KingWorldNews.com
The Boat of Irresponsibility Has Many Passengers CIGA Eric
Governments preach austerity, discipline, and imply irresponsibility as the cause of the growing debt problem. The headings suggest that regulation designed to save the public from themselves, a combination of more and better, is the answer to prevent the next crisis. Amid the flurry of election-year finger pointing, few seem to recognize that governments, the ultimate regulators, stand shoulder to shoulder with the public on the boat of fiscal/financial irresponsibility (chart). This is why the public has begun to ask ‘who’s going to regulate the regulators’ with increasing frequency.
Chart: Federal Debt Held by Foreign & International Investors (FDHBFIN) and the Equilibrium Price (FDHBFIN/OZ)
Headline: Student loan defaults mimic subprime woes, study shows
Borrowers who took out private student loans in the run-up to the financial crisis are facing higher levels of default, reflecting the risky lending practices at the time, the Obama administration said in a new report. The Department of Education and the Consumer Financial Protection Bureau said private lenders have since cleaned up some of the worst activities, but lawmakers should still work to improve the private loan market and enhance protections for students. "Borrowers who took out loans at the height of the boom are still suffering from those excesses," CFPB Director Richard Cordray said. Student loans fall into two main categories: Loans directly from the government and those offered by banks and other private financial companies. The report focused on private student loans, which spiked from $5 billion in loans originated in 2001 to more than $20 billion in 2008. After the financial crisis, as lending standards tightened, the market shrank to $6 billion in 2011. The report said students taking out private loans may not have fully understood the loans they chose and may have unnecessarily been subjected to more expensive terms. The two agencies said they were required by the Dodd-Frank financial oversight law to study the private student loan market and determine if gaps existed in consumer protection.
Source: bottomline.msnbc.msn.com
More…
Mother Nature Doesn’t Care CIGA Eric
The dust bowl or dirty thirties ran from 1930 to 1940 (chart 1).
Chart 1: Spot Commodity Prices: CRB Spot Index (1947 – Present); 16-Raw Industrial Spot Price (1935-1947); Great Britain Wholesale Price of All Commodities (1885-1935) and Trend Z Scores
If a comparison 2008-2020 and 1930 to 1942, specifically 2012 and 1934, both agriculturally and economically, doesn’t raise the hairs of concern, nothing will (chart 2).
Chart 2: Drought’s Footprint:
Mother nature don’t care if humans are battling a sovereign debt crisis or not. Natural cycles show no mercy for the unprepared and election-year illusions. If commodity prices surge due to contraction in supply, be absolutely certain consumption-driven GDP will take a hit.
Headline: Widespread Drought Is Likely to Worsen
The latest outlook released by the National Weather Service on Thursday forecasts increasingly dry conditions over much of the nation’s breadbasket, a development that could lead to higher food prices and shipping costs as well as reduced revenues in areas that count on summer tourism. About the only relief in sight was tropical activity in the Gulf of Mexico and the Southeast that could bring rain to parts of the South.
The unsettling prospects come at a time of growing uncertainty for the country’s economy. With evidence mounting of a slowdown in the economic recovery, this new blow from the weather is particularly ill-timed.
Already some farmers are watching their cash crops burn to the point of no return. Others have been cutting their corn early to use for feed, a much less profitable venture.
“It really is a crisis. I don’t think we’ve ever seen anything like this in my lifetime,” Gov. Pat Quinn of Illinois said after touring ravaged farms in the southern part of the state.
The government has declared one-third of the nation’s counties — 1,297 of them across 29 states — federal disaster areas as a result of the drought, which will allow farmers to apply for low-interest loans to get them through the disappointing growing season.
Source: nytimes.com
More…
Jim Sinclair’s Commentary
Greece now in "Great Depression", PM says
ATHENS (Reuters) – Greece is in a "Great Depression" similar to the American one in the 1930s, the country’s Prime Minister Antonis Samaras told former U.S. President Bill Clinton on Sunday.
Samaras was speaking two days before a team of Greece’s international lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default.
Athens wants to soften the terms of a 130-billion euro bailout agreed last March with the European Union and the International Monetary Fund, to soften their impact on an economy going through its worst post-war recession.
By the end of this year Greek GDP is expected to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6 percent in the first quarter.
"You had the Great Depression in the United States," Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen. "This is exactly what we’re going through in Greece – it’s our version of the Great Depression."
Athens must reduce its budget deficit below 3 percent of GDP by the end of 2014, from 9.3 percent of GDP in 2011 – requiring almost another 12 billion euros in cuts and higher taxes on top of the 17 billion successive governments have cut from the budget shortfall.
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Jim Sinclair’s Commentary
China to formally garrison disputed South China Sea Sun Jul 22, 2012 12:54pm GMT
BEIJING, July 22 (Reuters) – China’s powerful Central Military Commission has approved the formal establishment of a military garrison for the disputed South China Sea, state media said on Sunday, in a move which could further boost tensions in already fractious region.
China has a substantial military presence in the South China Sea and the move is essentially a further assertion of its sovereignty claims after it last month upped the administrative status of the seas to the level of a city, which it calls Sansha.
The official Xinhua news agency said the Sansha garrison would be responsible for "national defense mobilisation … guarding the city and supporting local emergency rescue and disaster relief" and "carrying out military missions".
It provided no further details.
Sansha city is based on what is known in English as Woody Island, part of the Paracel Islands also claimed by Vietnam and Taiwan. China took full control of the Paracels in 1974 after a naval showdown with Vietnam.
Though Sansha’s permanent population is no more than a few thousand, mostly fishermen, its administrative responsibility covers China’s vast claims in the South China Sea and its myriad mostly uninhabited atolls and reefs.
More…
Jim Sinclair’s Commentary
LIBOR scandal: What is it and why you should care
One bank caught trying to rig an interest rate may be tip of an iceberg. With an estimated $300 trillion in loans or derivative contracts around the world pegged to the interest rate, the scandal is again shaking faith in major international banking centers like Wall Street and London City. By Mark Trumbull, / Staff writer / July 20, 2012
The latest banking fraud is centered in Britain, where the financial firm Barclays will pay half a billion dollars in fines for efforts to manipulate a benchmark interest rate. Other banks must have been involved, though, and the full range of the scandal has yet to emerge. Here’s a quick look at what is known and why it matters.
What is LIBOR?
LIBOR stands for London Interbank Offered Rate. It’s supposed to measure the average interest rate that banks charge when they lend to each other. LIBOR is also used as a foundation for other rates (such as the reset of adjustable rate mortgages) and a reference point for complex financial derivatives.
By one measure, some $300 trillion in loans or derivative contracts are pegged to LIBOR. That’s 20 times the size of one year’s economic output in the United States.
The LIBOR rates are determined by major banks. The banks report interest-rate estimates to the British Bankers Association, and the firm Thomson Reuters averages them to provide daily LIBOR numbers. The catch: The banks provide the numbers on an honor system. That’s different from gathering data on observable transactions.
Who manipulated it, and how?
So far, Barclays is Exhibit A: Its chief executive officer has stepped down, and the firm will pay $453 million in fines to settle charges of LIBOR manipulation dating back as far as 2005. More banks will probably be implicated.
More…
Jim Sinclair’s Commentary
Five this weekend now.
Bank Closing Information
July 20, 2012
These links contain useful information for the customers and vendors.
Second Federal Savings and Loan Association of Chicago, Chicago, IL
Heartland Bank, Leawood, KS
First Cherokee State Bank, Woodstock, GA
Georgia Trust Bank, Buford, GA
The Royal Palm Bank of Florida, Naples, FL
http://www.fdic.gov/
Jim Sinclair’s Commentary
Jim Sinclair’s Commentary
U.S. Admits Surveillance Violated Constitution At Least Once By Spencer Ackerman
July 20, 2012 | 4:30 pm
The head of the U.S. government’s vast spying apparatus has conceded that recent surveillance efforts on at least one occasion violated the Constitutional prohibitions on unlawful search and seizure.
The admission comes in a letter from the Office of the Director of National Intelligence declassifying statements that a top U.S. Senator wished to make public in order to call attention to the government’s 2008 expansion of its key surveillance law.
“On at least one occasion,” the intelligence shop has approved Sen. Ron Wyden (D-Ore.) to say, the Foreign Intelligence Surveillance Court found that “minimization procedures” used by the government while it was collecting intelligence were “unreasonable under the Fourth Amendment.” Minimization refers to how long the government may retain the surveillance data it collects. The Fourth Amendment to the Constitution is supposed to guarantee our rights against unreasonable searches.
Wyden does not specify how extensive this “unreasonable” surveillance was; when it occurred; or how many Americans were affected by it.
In the letter, acquired by Danger Room (.pdf), Wyden asserts a serious federal sidestep of a major section of the Foreign Intelligence Surveillance Act.
More…
Jim Sinclair’s Commentary
Has drought put the U.S. food supply at risk?
One third of the nation’s counties are affected by the largest dry spell since 1956, which will likely raise the prices of dairy, grain, produce, and meat posted on July 20, 2012, at 6:54 AM
Agriculture Secretary Tom Vilsack had some ominous words for the American public on Wednesday, saying that the severe drought affecting more than half of the country could put the United States’ food supply at risk by causing crops to spoil and food prices to spike. Vilsack says it’s "the most serious situation" in about 25 years, adding that "if I had a rain prayer or rain dance I could do, I would do it." Here’s what you should know about the economic impact the drought will have on the grocery aisle:
How bad is the drought?
Vilsack says that 1,297 counties across the nation have been designated drought disaster areas, or roughly one third overall. It’s a "drought of historic proportions," says Reuters. And the footprint of the dry spell is only widening: An additional 39 counties were added to the list on Wednesday, making the overall drought disaster area the largest since 1956. There’s no telling yet how much the current drought will cost the U.S. economically; the drought of 1988, which caused forest fires and devastated farmers, is the costliest on record.
Why is it so bad?
Weather conditions for the season actually started off strong, says Vilsack, and "farmers got in the field early." But it seemed just as farmers were preparing to harvest, the drought began to severely hamper their abilities to yield good crops. The drought has come "at a very difficult and painful time," Vilsack says.
More…
Jim Sinclair’s Commentary
Exclusive: Labor Dept looking into JPMorgan stable value fund By Jessica Toonkel
NEW YORK | Sat Jul 21, 2012 12:44am EDT
(Reuters) – The U.S. Department of Labor is looking into whether JPMorgan Chase & Co violated its fiduciary duty under the Employee Retirement Income Security Act in connection with one of its stable value funds.
Stable value funds are used in 80 percent of 401(k) self-directed retirement plans and are meant to be the most conservative choice for employees – liquid and backed by insurance.
But, the $1.8 billion JPMorgan Stable Asset Income Fund has had as much as 13 percent of its assets invested in private mortgage debt underwritten and rated by the bank itself. It has reduced that to just under 4 percent, as of June 30, according to a spokesperson.
Many employers with 401(k) plans were unaware of the private mortgage component of the fund until after the 2008 market crash, according to retirement plan consultants who worked with companies that held the portfolios.
Over the past several weeks, the Labor Department has been examining whether the New York-based bank breached its fiduciary responsibilities under ERISA, according to two people with direct knowledge of the situation who declined to be named because of the sensitivity around discussing potential investigations.
More…
Jim Sinclair’s Commentary
Libor fraud exposes Wall Street’s rotten core By Elizabeth Warren, Published: July 19
Elizabeth Warren chaired the TARP Congressional Oversight Panel from 2008 to 2010. She is the Democratic nominee for a U.S. Senate seat in Massachusetts.
The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system.
The London interbank offered rate is a benchmark for a range of interest rates, and the misdeeds making headlines have to do with how those rates are set. If insiders can manipulate the basic measurement of a loan — the interest rate — there is rot at the core of the financial system.
When Wall Street is left to its own devices.
The British financial giant Barclays has admitted to manipulating the rate from 2005 to at least 2009. When the bank made a bet on the direction in which interest rates would turn, the Barclays employees who submit data for calculating interest rates would fake their numbers to help Barclays traders win the bet. Day after day, year after year, bet after bet, Barclays made money by fixing bets for its own traders.
We don’t know who else was fixing bets. Other big banks, including some of the largest in the United States, are under investigation. Barclays doesn’t appear to have acted alone, and it is clear that its fixes weren’t secret deals by rogue traders. Traders put requests to manipulate the rates in writing and even joked about delivering champagne to those who helped them.
More…
Jim Sinclair’s Commentary
IMF economist accuses Fund of suppressing information By Lesley Wroughton
WASHINGTON | Sat Jul 21, 2012 12:34am EDT
(Reuters) – A veteran economist at the International Monetary Fund has accused the global lender of suppressing information on difficulties in dealing with the global financial meltdown and euro zone crisis.
In a resignation letter to the IMF’s board and senior staff, dated June 18, Peter Doyle said the IMF’s failures in issuing timely warnings for both the 2007-2009 global financial crisis and the euro zone crisis were a "failing in the first order" and "are, if anything, becoming more deeply entrenched."
His letter, a copy of which was seen by Reuters, has brought to light simmering tensions within the IMF over the Fund’s credibility, which many worry is threatened by its role in the euro zone crisis.
IMF insiders, who asked not to be identified, told Reuters the concerns are that the Fund has over-stretched by lending to Europe without exercising the same level of independence it would normally apply in bailouts to emerging economies.
Doyle, a division chief for Sweden, Denmark and Israel in the IMF’s European Department when he resigned, also accused the Fund’s leadership of being "tainted" by a selection process which always ensures that a European is at the helm.
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Jim Sinclair’s Commentary
California Proposes Tax On Driving
GPS devices would record mileage and charge drivers accordingly Posted: Jul 19, 2012
By: Michael Zak | AOL Autos
A California transportation agency recently proposed what could become the most unpopular tax of all time: A tax for simply driving your car.
The Metropolitan Transportation Commission of San Francisco is behind the idea and has said that the tax would work by installing GPS units into cars to track the miles that they travel. The vehicle owners would then be charged accordingly, with low-income drivers exempted.
The hope is that a VMT (vehicle miles traveled) tax would cut down on pollution and traffic congestion, while raising funds for things like road construction and surface repair.
Randy Rentschler, spokesman for the MTC, said that the group knew the proposal could be a longshot and could take a long time to implement. Theoretically, it could take up to a decade before the plan would be rolled out in full force.
"I don’t want to say it’s pie in the sky. A VMT charge is really an option for the future to be looked at and considered," he said.
More…
Yesterday, we were talking about the only question worth discussing since 2008 — who takes the loss?Actually, there are several variants of the question…but they all end up in the same place. Mistakes were made; somebody is gonna pay. Who?
Economists are not stupid. Especially those who win Nobel Prizes. They test well. They go to good schools. They can usually do higher math.
Math is important to modern economics. It makes it look like science. So, if you review almost any PhD thesis in economics over the last 20 years, you are bound to find numbers. Lots of numbers. You might find dozens of 9s…or hundreds of 5s…or maybe thousands of 0s.
You’ll also find symbols. Greek symbols. And symbols from the mathematician’s trade. These symbols mean something. So do the numbers.
And you can use these meanings to tease out even more confections. Complex. Sophisticated. Precise. Impressive.
And generally not worth a damn.
Read More @ DailyReckoning.com.au
from laroucheyouth:
A wave of terror arose in three different parts of the globe in the last 72 hours, an operation that could lead to a global thermonuclear showdown. The context is the faction fight that has erupted in the U.K. where leading individuals have decided to end the present system in favor of Glass Steagall.
A wave of terror arose in three different parts of the globe in the last 72 hours, an operation that could lead to a global thermonuclear showdown. The context is the faction fight that has erupted in the U.K. where leading individuals have decided to end the present system in favor of Glass Steagall.
[Ed. Note:
Article goes on to shamelessly site other suspect, potentially false
flag shooting rampages. False flag terror and a complicit mainstream
media will be utilized to destroy the 2nd Amendment - our last bastion
of defense against a tyrannical government.]
Blood on hands of Obama, Mitt and NRA! Condolences are empty words – what actions are you gonna take?
from Editorial Board, NY Daily News:
The police chief in Aurora, Colo., said he is confident that massacre gunman James Holmes acted alone. The police chief was dead wrong.
Standing at Holmes’ side as he unleashed an AR-15 assault rifle and a shotgun and a handgun was Wayne LaPierre, political enforcer of the National Rifle Association.
Standing at Holmes’ side as he sprayed bullets and buckshot into a crowded movie theater were Barack Obama and Mitt Romney, a President and a would-be President, who have bowed to the NRA’s dictates and who responded to the slaughter Friday with revolting, useless treacle …
… With all due respect, the presidential takeaway should have been a drive for strengthened gun control, if only for the assault weapons ban. In righteous anger, Obama should have confronted the NRA’s political might regardless of polls that show a strong sentiment against restoring the prohibition.
So, too, Romney, who was no less saccharine than Obama in discussing Aurora and is no less craven on gun control. As governor of Massachusetts, he signed a state assault weapons ban and defended tough anti-gun statutes. Then, as a presidential candidate, he joined the NRA and has since professed fealty to the group’s positions.
Through their inaction and their silence, Obama and Romney have fallen into line with all those who enabled Holmes to take hold of that AR-15 and will enable others to do so in the future unless America’s political leaders develop the courage to fight to save lives.
Read More @ NYDailyNews.com
Blood on hands of Obama, Mitt and NRA! Condolences are empty words – what actions are you gonna take?
from Editorial Board, NY Daily News:
The police chief in Aurora, Colo., said he is confident that massacre gunman James Holmes acted alone. The police chief was dead wrong.Standing at Holmes’ side as he unleashed an AR-15 assault rifle and a shotgun and a handgun was Wayne LaPierre, political enforcer of the National Rifle Association.
Standing at Holmes’ side as he sprayed bullets and buckshot into a crowded movie theater were Barack Obama and Mitt Romney, a President and a would-be President, who have bowed to the NRA’s dictates and who responded to the slaughter Friday with revolting, useless treacle …
… With all due respect, the presidential takeaway should have been a drive for strengthened gun control, if only for the assault weapons ban. In righteous anger, Obama should have confronted the NRA’s political might regardless of polls that show a strong sentiment against restoring the prohibition.
So, too, Romney, who was no less saccharine than Obama in discussing Aurora and is no less craven on gun control. As governor of Massachusetts, he signed a state assault weapons ban and defended tough anti-gun statutes. Then, as a presidential candidate, he joined the NRA and has since professed fealty to the group’s positions.
Through their inaction and their silence, Obama and Romney have fallen into line with all those who enabled Holmes to take hold of that AR-15 and will enable others to do so in the future unless America’s political leaders develop the courage to fight to save lives.
Read More @ NYDailyNews.com
from KingWorldNews:
Egon von Greyerz told King World News, “The world is simply
drowning in debt.” Greyerz, who is founder and managing partner at
Matterhorn Asset Management out of Switzerland, also said, “This is why
it is guaranteed that governments will print money,” and that “Prices of
hard assets will go into the stratosphere.” But first, here is what Greyerz had to say about the ongoing financial crisis and where we are headed: “Spanish rates have broken back above the 7% level once again, but in reality we know that many European countries will never be able to repay these debts. You now have a total worldwide debt of around $150 trillion. If you add to that contingent liabilities, unfunded liabilities, pension funds, etc., you are talking about $500 trillion.”
Greyerz continues @ KingWorldNews.com
The Boat of Irresponsibility Has Many Passengers CIGA Eric
Governments preach austerity, discipline, and imply irresponsibility as the cause of the growing debt problem. The headings suggest that regulation designed to save the public from themselves, a combination of more and better, is the answer to prevent the next crisis. Amid the flurry of election-year finger pointing, few seem to recognize that governments, the ultimate regulators, stand shoulder to shoulder with the public on the boat of fiscal/financial irresponsibility (chart). This is why the public has begun to ask ‘who’s going to regulate the regulators’ with increasing frequency.
Chart: Federal Debt Held by Foreign & International Investors (FDHBFIN) and the Equilibrium Price (FDHBFIN/OZ)
Headline: Student loan defaults mimic subprime woes, study shows
Borrowers who took out private student loans in the run-up to the financial crisis are facing higher levels of default, reflecting the risky lending practices at the time, the Obama administration said in a new report. The Department of Education and the Consumer Financial Protection Bureau said private lenders have since cleaned up some of the worst activities, but lawmakers should still work to improve the private loan market and enhance protections for students. "Borrowers who took out loans at the height of the boom are still suffering from those excesses," CFPB Director Richard Cordray said. Student loans fall into two main categories: Loans directly from the government and those offered by banks and other private financial companies. The report focused on private student loans, which spiked from $5 billion in loans originated in 2001 to more than $20 billion in 2008. After the financial crisis, as lending standards tightened, the market shrank to $6 billion in 2011. The report said students taking out private loans may not have fully understood the loans they chose and may have unnecessarily been subjected to more expensive terms. The two agencies said they were required by the Dodd-Frank financial oversight law to study the private student loan market and determine if gaps existed in consumer protection.
Source: bottomline.msnbc.msn.com
More…
Mother Nature Doesn’t Care CIGA Eric
The dust bowl or dirty thirties ran from 1930 to 1940 (chart 1).
Chart 1: Spot Commodity Prices: CRB Spot Index (1947 – Present); 16-Raw Industrial Spot Price (1935-1947); Great Britain Wholesale Price of All Commodities (1885-1935) and Trend Z Scores
If a comparison 2008-2020 and 1930 to 1942, specifically 2012 and 1934, both agriculturally and economically, doesn’t raise the hairs of concern, nothing will (chart 2).
Chart 2: Drought’s Footprint:
Mother nature don’t care if humans are battling a sovereign debt crisis or not. Natural cycles show no mercy for the unprepared and election-year illusions. If commodity prices surge due to contraction in supply, be absolutely certain consumption-driven GDP will take a hit.
Headline: Widespread Drought Is Likely to Worsen
The latest outlook released by the National Weather Service on Thursday forecasts increasingly dry conditions over much of the nation’s breadbasket, a development that could lead to higher food prices and shipping costs as well as reduced revenues in areas that count on summer tourism. About the only relief in sight was tropical activity in the Gulf of Mexico and the Southeast that could bring rain to parts of the South.
The unsettling prospects come at a time of growing uncertainty for the country’s economy. With evidence mounting of a slowdown in the economic recovery, this new blow from the weather is particularly ill-timed.
Already some farmers are watching their cash crops burn to the point of no return. Others have been cutting their corn early to use for feed, a much less profitable venture.
“It really is a crisis. I don’t think we’ve ever seen anything like this in my lifetime,” Gov. Pat Quinn of Illinois said after touring ravaged farms in the southern part of the state.
The government has declared one-third of the nation’s counties — 1,297 of them across 29 states — federal disaster areas as a result of the drought, which will allow farmers to apply for low-interest loans to get them through the disappointing growing season.
Source: nytimes.com
More…
Jim Sinclair’s Commentary
Greece will not be alone for long.
Greece now in "Great Depression", PM says
ATHENS (Reuters) – Greece is in a "Great Depression" similar to the American one in the 1930s, the country’s Prime Minister Antonis Samaras told former U.S. President Bill Clinton on Sunday.
Samaras was speaking two days before a team of Greece’s international lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default.
Athens wants to soften the terms of a 130-billion euro bailout agreed last March with the European Union and the International Monetary Fund, to soften their impact on an economy going through its worst post-war recession.
By the end of this year Greek GDP is expected to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6 percent in the first quarter.
"You had the Great Depression in the United States," Samaras told Clinton, who was visiting Greece as part of a delegation of Greek-American businessmen. "This is exactly what we’re going through in Greece – it’s our version of the Great Depression."
Athens must reduce its budget deficit below 3 percent of GDP by the end of 2014, from 9.3 percent of GDP in 2011 – requiring almost another 12 billion euros in cuts and higher taxes on top of the 17 billion successive governments have cut from the budget shortfall.
More…
Jim Sinclair’s Commentary
This is all about oil.
China to formally garrison disputed South China Sea Sun Jul 22, 2012 12:54pm GMT
BEIJING, July 22 (Reuters) – China’s powerful Central Military Commission has approved the formal establishment of a military garrison for the disputed South China Sea, state media said on Sunday, in a move which could further boost tensions in already fractious region.
China has a substantial military presence in the South China Sea and the move is essentially a further assertion of its sovereignty claims after it last month upped the administrative status of the seas to the level of a city, which it calls Sansha.
The official Xinhua news agency said the Sansha garrison would be responsible for "national defense mobilisation … guarding the city and supporting local emergency rescue and disaster relief" and "carrying out military missions".
It provided no further details.
Sansha city is based on what is known in English as Woody Island, part of the Paracel Islands also claimed by Vietnam and Taiwan. China took full control of the Paracels in 1974 after a naval showdown with Vietnam.
Though Sansha’s permanent population is no more than a few thousand, mostly fishermen, its administrative responsibility covers China’s vast claims in the South China Sea and its myriad mostly uninhabited atolls and reefs.
More…
Jim Sinclair’s Commentary
Here is more information on the LIBOR scandal and why it is significant to you.
LIBOR scandal: What is it and why you should care
One bank caught trying to rig an interest rate may be tip of an iceberg. With an estimated $300 trillion in loans or derivative contracts around the world pegged to the interest rate, the scandal is again shaking faith in major international banking centers like Wall Street and London City. By Mark Trumbull, / Staff writer / July 20, 2012
The latest banking fraud is centered in Britain, where the financial firm Barclays will pay half a billion dollars in fines for efforts to manipulate a benchmark interest rate. Other banks must have been involved, though, and the full range of the scandal has yet to emerge. Here’s a quick look at what is known and why it matters.
What is LIBOR?
LIBOR stands for London Interbank Offered Rate. It’s supposed to measure the average interest rate that banks charge when they lend to each other. LIBOR is also used as a foundation for other rates (such as the reset of adjustable rate mortgages) and a reference point for complex financial derivatives.
By one measure, some $300 trillion in loans or derivative contracts are pegged to LIBOR. That’s 20 times the size of one year’s economic output in the United States.
The LIBOR rates are determined by major banks. The banks report interest-rate estimates to the British Bankers Association, and the firm Thomson Reuters averages them to provide daily LIBOR numbers. The catch: The banks provide the numbers on an honor system. That’s different from gathering data on observable transactions.
Who manipulated it, and how?
So far, Barclays is Exhibit A: Its chief executive officer has stepped down, and the firm will pay $453 million in fines to settle charges of LIBOR manipulation dating back as far as 2005. More banks will probably be implicated.
More…
Jim Sinclair’s Commentary
Five this weekend now.
Bank Closing Information
July 20, 2012
These links contain useful information for the customers and vendors.
Second Federal Savings and Loan Association of Chicago, Chicago, IL
Heartland Bank, Leawood, KS
First Cherokee State Bank, Woodstock, GA
Georgia Trust Bank, Buford, GA
The Royal Palm Bank of Florida, Naples, FL
http://www.fdic.gov/
Jim Sinclair’s Commentary
Retirees and pensioners take heed. Your supposed voice is doing
nothing for you, and your end before its natural date is certain.
Jim Sinclair’s Commentary
But mommy I only smoked one, and I did not inhale!
U.S. Admits Surveillance Violated Constitution At Least Once By Spencer Ackerman
July 20, 2012 | 4:30 pm
The head of the U.S. government’s vast spying apparatus has conceded that recent surveillance efforts on at least one occasion violated the Constitutional prohibitions on unlawful search and seizure.
The admission comes in a letter from the Office of the Director of National Intelligence declassifying statements that a top U.S. Senator wished to make public in order to call attention to the government’s 2008 expansion of its key surveillance law.
“On at least one occasion,” the intelligence shop has approved Sen. Ron Wyden (D-Ore.) to say, the Foreign Intelligence Surveillance Court found that “minimization procedures” used by the government while it was collecting intelligence were “unreasonable under the Fourth Amendment.” Minimization refers to how long the government may retain the surveillance data it collects. The Fourth Amendment to the Constitution is supposed to guarantee our rights against unreasonable searches.
Wyden does not specify how extensive this “unreasonable” surveillance was; when it occurred; or how many Americans were affected by it.
In the letter, acquired by Danger Room (.pdf), Wyden asserts a serious federal sidestep of a major section of the Foreign Intelligence Surveillance Act.
More…
Jim Sinclair’s Commentary
The Federal Reserve, the appointed gate keeper of US inflation, must
think not. It was even a subject important enough for the Chairman to
air on two public presentations this week.
Has drought put the U.S. food supply at risk?
One third of the nation’s counties are affected by the largest dry spell since 1956, which will likely raise the prices of dairy, grain, produce, and meat posted on July 20, 2012, at 6:54 AM
Agriculture Secretary Tom Vilsack had some ominous words for the American public on Wednesday, saying that the severe drought affecting more than half of the country could put the United States’ food supply at risk by causing crops to spoil and food prices to spike. Vilsack says it’s "the most serious situation" in about 25 years, adding that "if I had a rain prayer or rain dance I could do, I would do it." Here’s what you should know about the economic impact the drought will have on the grocery aisle:
How bad is the drought?
Vilsack says that 1,297 counties across the nation have been designated drought disaster areas, or roughly one third overall. It’s a "drought of historic proportions," says Reuters. And the footprint of the dry spell is only widening: An additional 39 counties were added to the list on Wednesday, making the overall drought disaster area the largest since 1956. There’s no telling yet how much the current drought will cost the U.S. economically; the drought of 1988, which caused forest fires and devastated farmers, is the costliest on record.
Why is it so bad?
Weather conditions for the season actually started off strong, says Vilsack, and "farmers got in the field early." But it seemed just as farmers were preparing to harvest, the drought began to severely hamper their abilities to yield good crops. The drought has come "at a very difficult and painful time," Vilsack says.
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Jim Sinclair’s Commentary
One out of 1000s.
Exclusive: Labor Dept looking into JPMorgan stable value fund By Jessica Toonkel
NEW YORK | Sat Jul 21, 2012 12:44am EDT
(Reuters) – The U.S. Department of Labor is looking into whether JPMorgan Chase & Co violated its fiduciary duty under the Employee Retirement Income Security Act in connection with one of its stable value funds.
Stable value funds are used in 80 percent of 401(k) self-directed retirement plans and are meant to be the most conservative choice for employees – liquid and backed by insurance.
But, the $1.8 billion JPMorgan Stable Asset Income Fund has had as much as 13 percent of its assets invested in private mortgage debt underwritten and rated by the bank itself. It has reduced that to just under 4 percent, as of June 30, according to a spokesperson.
Many employers with 401(k) plans were unaware of the private mortgage component of the fund until after the 2008 market crash, according to retirement plan consultants who worked with companies that held the portfolios.
Over the past several weeks, the Labor Department has been examining whether the New York-based bank breached its fiduciary responsibilities under ERISA, according to two people with direct knowledge of the situation who declined to be named because of the sensitivity around discussing potential investigations.
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Jim Sinclair’s Commentary
This is a revelation to whom?
Libor fraud exposes Wall Street’s rotten core By Elizabeth Warren, Published: July 19
Elizabeth Warren chaired the TARP Congressional Oversight Panel from 2008 to 2010. She is the Democratic nominee for a U.S. Senate seat in Massachusetts.
The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system.
The London interbank offered rate is a benchmark for a range of interest rates, and the misdeeds making headlines have to do with how those rates are set. If insiders can manipulate the basic measurement of a loan — the interest rate — there is rot at the core of the financial system.
When Wall Street is left to its own devices.
The British financial giant Barclays has admitted to manipulating the rate from 2005 to at least 2009. When the bank made a bet on the direction in which interest rates would turn, the Barclays employees who submit data for calculating interest rates would fake their numbers to help Barclays traders win the bet. Day after day, year after year, bet after bet, Barclays made money by fixing bets for its own traders.
We don’t know who else was fixing bets. Other big banks, including some of the largest in the United States, are under investigation. Barclays doesn’t appear to have acted alone, and it is clear that its fixes weren’t secret deals by rogue traders. Traders put requests to manipulate the rates in writing and even joked about delivering champagne to those who helped them.
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Jim Sinclair’s Commentary
Why not? Every other financial institution and central bank does regularly.
IMF economist accuses Fund of suppressing information By Lesley Wroughton
WASHINGTON | Sat Jul 21, 2012 12:34am EDT
(Reuters) – A veteran economist at the International Monetary Fund has accused the global lender of suppressing information on difficulties in dealing with the global financial meltdown and euro zone crisis.
In a resignation letter to the IMF’s board and senior staff, dated June 18, Peter Doyle said the IMF’s failures in issuing timely warnings for both the 2007-2009 global financial crisis and the euro zone crisis were a "failing in the first order" and "are, if anything, becoming more deeply entrenched."
His letter, a copy of which was seen by Reuters, has brought to light simmering tensions within the IMF over the Fund’s credibility, which many worry is threatened by its role in the euro zone crisis.
IMF insiders, who asked not to be identified, told Reuters the concerns are that the Fund has over-stretched by lending to Europe without exercising the same level of independence it would normally apply in bailouts to emerging economies.
Doyle, a division chief for Sweden, Denmark and Israel in the IMF’s European Department when he resigned, also accused the Fund’s leadership of being "tainted" by a selection process which always ensures that a European is at the helm.
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Jim Sinclair’s Commentary
This is for real. Where do we find these geniuses we elect to office?
California Proposes Tax On Driving
GPS devices would record mileage and charge drivers accordingly Posted: Jul 19, 2012
By: Michael Zak | AOL Autos
A California transportation agency recently proposed what could become the most unpopular tax of all time: A tax for simply driving your car.
The Metropolitan Transportation Commission of San Francisco is behind the idea and has said that the tax would work by installing GPS units into cars to track the miles that they travel. The vehicle owners would then be charged accordingly, with low-income drivers exempted.
The hope is that a VMT (vehicle miles traveled) tax would cut down on pollution and traffic congestion, while raising funds for things like road construction and surface repair.
Randy Rentschler, spokesman for the MTC, said that the group knew the proposal could be a longshot and could take a long time to implement. Theoretically, it could take up to a decade before the plan would be rolled out in full force.
"I don’t want to say it’s pie in the sky. A VMT charge is really an option for the future to be looked at and considered," he said.
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online money transfers, will handle the donations. Thank you for your
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