Marc Faber & Jim Rogers On Our "Clueless, Ignorant, Dangerous" Leaders

While the discussions between these two legends varied from Phat Phong nightlife to Dow 30,000, and from China bullishness to AAPL bearishness, it was the conversation about the actions of Bernanke, and more importantly our political leaders that summed up perfectly the dreadful reality in which we find ourselves. The punchline: "It is very dangerous to have ignorant people believing that they know something."

Explaining Hyperinflation

The fact that naturally scarce currencies like gold do not hyperinflate — even in times of extreme economic stress — suggests that the underlying mechanism here is of an extreme exogenous event causing a severe drop in productivity. Governments then run the printing presses attempting to smooth over such problems — for instance in the Weimar Republic when workers in the occupied Ruhr region went on a general strike and the Weimar government continued to print money in order to pay them. While hyperinflation can in theory arise either out of either ?Q or ?M, government has no reason to inject a hyper-inflationary volume of money into an economy that still has access to global exports, that still produces sufficient levels of energy and agriculture to support its population, and that still has a functional infrastructure.  This means that the indicators for imminent hyperinflation are not economic so much as they are geopolitical — wars, trade breakdowns, energy crises, socio-political collapse, collapse in production, collapse in agriculture. While all such catastrophes have preexisting economic causes, a bad economic situation will not deteriorate into full-collapse and hyperinflation without a severe intervening physical breakdown.

 

ZNGA Zingered

UPDATE: ZNGA re-opened -13%, now -16%
That foundation of social media monetization has just announced a cut to its outlook and plenty more. The stock is currently halted but its proxy FB is being sold after-hours...

• *ZYNGA SEES YR BOOKING $1.085B TO $1.100B, SAW $1.15B-$1.225B
• *ZYNGA 3Q PRELIM EST. $286.4M, SAW $300M-$305M,       :ZNGA US
• *ZYNGA SEES YR ADJ EBITDA $147M-$162M, SAW $180M-$250M :ZNGA US
• *ZYNGA 3Q PERLIM ADJ. BREAKEVEN-LOSS 1C; SAW BREAKEVEN
• *ZYNGA CITES REDUCED EXPECTATIONS FOR `THE VILLE,' OTHERS
• *ZYNGA SEES CHARGE ON INTANGIBLE ASSETS ACQUIRED ON OMGPOP

Who couldanode? Securitizing synthetic farms and paying huge premia for acquisitional growth wouldn't pay off? Is OMGPOP accepted as collateral at the ECB yet?

How Goldman Calculates Its 100,000 NFP Forecast For Tomorrow

There was a time, long ago, when economic data mattered, and when Goldman's NFP forecast was considered one of the best on the street due to the proximity of The Pound and Pence to both 85 Broad and 33 Liberty. Then Goldman went to 200 West, central planning took over, and Bizarro world was the result, where a huge NFP beat would mean a collapse in the stock market once the prospect of QEternity actually ending returns. In other words, Goldman lost its touch. Yet their insight can still be valuable. Which is why below we present the argumentation that Goldman's Sven Jari Stehn uses to expect a BLS payroll number of 100,000 tomorrow, translating into an 8.1% unemployment rate.

Iran Arrests Gang-Of-16 'Currency Manipulators'

A gang of 16 shady individuals have been arrested by Iranian officials for allegedly smuggling currencies outside the banking network in order to increase the value of foreign currencies and to disturb the public. As CNN reports, amid the protests in the clip below, Iran says the 16 unidentified individuals "had used an atmosphere of psychological war created by the enemy" and colluded with "certain domestic and foreign groups" to exacerbate conditions. One of the accused, allegedly, had $300mm going through a bank account and "will be dealt with soon." Those arrested "were the main players in the recent fluctuations in the foreign currency market," the Tehran Judiciary said in a statement as the public panics over a 60% drop in its currency's purchasing power in the last few weeks. Of course, a 99% drop in the USD's purchasing power is acceptable to the US public since it has been achieved over a century or so...

Who Really Calls The Shots In Europe

Hint: It's not the "sovereigns." The chart below (an update of a chart we showed some years ago: not unexpectedly, Dexia no longer made the cut) shows the ratio of the biggest European and American bank assets to domicile nation GDP. The red line is the 50% assets/GDP breakeven. It is safe to say that if a bank's "assets" whether marked to myth, unicorns, or markets (sadly nobody has done the latter in the past 3 years) represents at least half of a domicile nation's GDP, the bank is obviously Too Humongous To Fail, and when it comes to leverage it is its unelected executive committee which calls the real shots for not only the host country, but any monetary union it may be part of. This is how 20 or so corner offices hijacked Europe. The ironic observation is that for all the complaints about the TBTF phenomenon in the US (banks in red), it is Europe where the TBTF spectacle will truly unfurl once the central banks finally lose control, and the giant unwind begins.

Obama Reelection Odds Vs The S&P

Not much to say here. Hopefully, for the bulls' sake, the Obama reelection odds (which really are Bernanke, and thus QEternity, termination odds) are not a leading indicator to the market. Either that, or the recent spike in Obama's ratings was merely a bubble which got preemptively popped even without 5 consecutive CME margin hikes on the Obama InTrade contract.

 

Gold rises to $1794. Silver breaks 35.00 to end up at $35.04/Iran enters hyperinflation/Open revolt in France/Greeks take to the streets to riot austerity/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 1 hour ago

Gold closed up today by a rather large $16.80 to finish the comex session at $1794.10.  Silver broke the 35 dollar barrier finishing the session at $35.04.  Resistance levels have no been broken and the two key areas that lie ahead are very big: gold:  1800.00 silver:  $36.00 The bankers showed up early today trying to bash gold and silver down.  At one point in the day, silver hit its low of

 

I Have A Lot Of Cash At The Moment

Admin at Marc Faber Blog - 2 hours ago

I have a lot of cash at the moment, because on this rally since April I have been lightening up on positions. - *in CNBC * *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

 

Gold Daily and Silver Weekly Charts

SP 500 and NDX Futures Daily Charts

Simon Johnson: Money, Power, and the Rule of Law

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Got Milk?

As corn prices have rolled over and even the World Bank worries over the impact of financial crises and food prices, we present with little comment, one of the more staple sustenances - now trading at record high prices... transitory we presume?

Wholesale Gasoline Shortage In California Causes Gas Stations To Shut Down: Hoarding Next?

"The squeeze is on, and people are doing desperate things," is how one independent described the situation in California. As Bloomberg reports, a shortage of supply along with drastically higher wholesale prices of gasoline has caused 'mom-and-pop' gas stations to close down as their margins are destroyed.

• *VALERO SAYS SUPPLY IN CALIFORNIA HAS TIGHTENED
• *VALERO SAYS IT HAS TEMPORARILY HALTED SPOT SALES IN CALIFORNIA

The problem is likely a short-term one, according to some, thanks to the temporary shutdown of local refineries (after Chevron's Richmond refinery fire) and maintenance but it is clear that even a short-term blip in wholesale prices (whether driven by local supply or global geopolitics) causes pain as it would appear we are close to 'inelastic' levels of demand.

Oil & Stocks Win As Bonds, USD, & AAPL Lose

Threaky Thursday. Oil perfectly round-tripped its plunge from yesterday (ending back above $91.50) as Treasury yields caught 'up' to equity strength on the week. USD weakness was a one-way street of straight-line trend from 0500ET in EUR today - until the Fed minutes broke something. Gold and stocks continue their synchronized lift - though gold is still the clear winner post QEternity. Trannies outperformed again but the day-session in the Dow and the S&P were largely treading water - after the factory-order-driven stop run surge this morning. Meanwhile, all those front-running winners in MBS land have seemingly started to unwind - as mortgage spreads have retraced post-QEternity gains quite significantly (which is likely what helped Treasury yields higher today - though the convergence to risk also helped). The ubiquitous 3ET AAPL ramp was modestly front-run and epically failed as the stock-that-shall-not-be-named closed red with a $666 handle once again with some major volume at the close. VIX was solidly banged lower right at the close (coinciding with AAPL's high volume action) to end at 14.55 (down 0.88vols) in line with the S&P.

Artemis On The Volatility Of An Impossible Object

A common theme among many of our insights is the reality that lurks behind the proposed perception of many of our economic, financial, and political leaders' projections. From Spain not needing a bailout to Juncker's lies, from Bernanke's transitory inflation to Dimon's not needing TARP, the list is endless. Artemis Capital, whose insights we have discussed here and here, use the metaphor of the impossible object (e.g. Penrose Triangle or Necker's Cube) to explore the role of perception in modern markets, monetary policy, and risk. In a world where global central banks manipulate the cost of risk, the mechanics of price discovery have disengaged from reality resulting in paradoxical expressions of value that should not exist according to efficient market theory. Fear and safety are now interchangeable in a speculative and high stakes game of perception. The market is no longer an expression of the economy... it is the economy; and common sense says do not trust your common sense.




NEW 4-Mile Long Oil Slick Near BP's Gulf Oil Well

Posted by : George Washington

Post date: 10/04/2012 - 16:57

BP's Macondo Well May Leak for Years

GoldCore’s Mark O’Byrne on the Fake Gold Scandal, Macro Gold, and the Risk On Trade! 

from Capital Account:

Gold hit an 11 month high today, supposedly bolstered by signs that the ECB will keep borrowing costs low and the notion that the central bank stands ready to buy bonds in the secondary market. As long as central banks continue to print and maintain negative real interest rates, should investors consider owning gold? A recent PIMCO report stated the following:
“We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio… Regarding inflation in particular, we feel that the Federal Reserve’s decision to begin a third round of quantitative easing makes gold even more attractive.”
ould this mean investing in gold will become mainstream? We speak to GoldCore founder Mark O’Byrne about the impact of PIMCO’s report. We discuss both the supply side, as well as the demand side of the gold bull run. As far as supply is concerned, what are the fundamentals driving gold higher? And as far as demand is concerned, how important is the macro environment of risk-on, risk-off? Are people using gold to hedge, not against moderate inflation, but against the potential for dislocating deflation or runaway inflation and hyperinflation? Mark O’Byrne will give us his take. He is founder and executive director of GoldCore.
Also last month a gold dealer in Manhattan discovered a certified gold bar was in fact made up of more than 75 percent Tungsten.

Credit rating agencies again downgrade Chicago Public Schools

from The Daily Caller:
The Chicago Tribune reports that Moody’s Investors Service, which had already cut the Chicago Board of Education’s rating once in July, cut it again last week. Moody’s now grades the Chicago Public Schools at A2 with negative outlook.
According to Moody’s, buying a bond issued by the nation’s third-largest school system is now slightly more risky than buying a bond issued by Botswana. As of December 2011, Moody’s rates Botswana at A2 with a stable outlook.
Botswana, a landlocked country of about two million people located in Southern Africa, boasts one of the strongest economies in Africa and one of the fastest growing economies in the world.
On the other hand, according to the Chicago Sun Times, CPS is — in its own words — racked by “an educational and financial crisis after years of revenue losses and misplaced priorities.”
Watch the Video @ TheDailyCaller.com

Gold Headed Higher As It’s The Anti-Printing Trade

from KingWorldNews:

Today Rick Santelli told King World News that “… in the end, the gold trade really is an anti-printing trade, and I would be surprised if the direction of gold doesn’t remain to the upside.” Santelli also warned, “We could be looking at many, many years where the globe is kind of in this retrenchment mode.” Here is what Santelli had to say: “The big thing with the global economy where everything changed was on July 26th, when Mario Draghi, head of the ECB, basically said, ‘I am going to do whatever it takes to save Europe.’ He said it in a very convincing way and the markets believed him.”
Rick Santelli continues @ KingWorldNews.com

Casey Summit: How Investors Can Protect Themselves in a Politicized Economy

by The Gold Report, Casey Research:
Right on the heels of the Republican and Democratic National Conventions, the recent Casey Research Summit in Carlsbad, California—cosponsored by SprottGlobal—focused on a timely theme: “Navigating the Politicized Economy.” The somber revelations of the summit contrasted with the buzz of the party conventions. The Gold Report sat down with Louis James, Casey Research’s chief metals and mining investment strategist, Rick Rule, founder and chairman of Sprott Global Resource Investments and chairman of Sprott US Holdings, and Marin Katusa, Casey Research’s chief energy investment strategist, to discuss how investors can position themselves in a politically driven economy.
The Gold Report: Before we get into some of the nitty-gritty from the summit, could you give us a big picture of the troubled economic waters we’ll have to navigate if we want to stay afloat?
Louis James: When we said “Navigating the Politicized Economy,” we weren’t just talking about regulatory burdens but also about the overall response of governments around the world to the crisis that we’ve been calling for many years.
Read More @ CaseyResearch.com

ECB Gold reserves hit 479 billion euros

from, Bullion Street:
Gold and gold receivables held by euro zone central banks rose in value by 45.5 billion euros to 479 billion euros after a quarterly revaluation, the European Central Bank said on Wednesday.
Net foreign exchange reserves in the Eurosystem of central banks fell by 5.8 billion euros to 229.2 billion euros, also reflecting the quarterly revaluation, while the combined balance sheet of the ECBand the 17 national central banks in the euro zone was worth just over 3 trillion euros.
Read More @ BullionStreet.com

Evidence QE3 is Working, and Other Lies

by Bruce Krasting, Bruce Krasting Blog:
A mega fixed income deal for GE:
GE raised $2Bn of three-year money at a very cheap 86Bp and $3Bn of ten-year cash at a rate of 2.73%. The financing produces a blended cost of 1.98% (1.6% after tax) for an average life of 6 years. That’s a hell of a deal for the boys at GE. (Note: as part of the deal GE did a $2B slug of 30 year, this was done to push out the average life of the company’s liabilities.)
GE is a complex company with big bucks going in and out. Therefore it’s not possible to tie this deal as a Source for a specific Use. I’ll do it anyway.
GE pays a quarterly dividend of 17 cents a share. Over the next year, that will come to $5Bn. At today’s closing price of 22.93, GE’s dividend produces a return for investors of 2.98%. In other words, GE just funded it annual dividend with a positive carry. (After-tax debt cost of 1.6% versus the 2.98% dividend.)
Read More @ BruceKrasting.blogspot.com

Fed Policy Is Working — Moral Hazard Is Back

by John Rubino, DollarCollapse.com:
A near-death experience isn’t something one gets over right away. So it’s no surprise that the US leveraged speculating community was a tad more cautious than usual for a while. Real estate investors, for instance, still bought houses, but only on very favorable terms where rental income would clearly exceed expenses. And investment banks still repackaged loans into asset backed securities, but on a very small scale, since there weren’t that many willing/able buyers for exotica that was “toxic” so recently.
This was completely unacceptable to Washington, of course, since the only way an over-indebted economy can “grow” is if speculators can be induced to take unwise risks. So this year we entered the whatever-it-takes phase of the process, where borrowed money became nearly free and permanent, open-ended quantitative easing was promised.
Read More @ DollarCollapse.com

Confidence Game

by Eric Coffin, Gold Seek:
Did we tell you or did we tell you? It’s a bit premature to claim bragging rights but the Junior market has been trading exactly how we hoped it would. Ben Bernanke delivered the early Christmas presents gold bugs were dreaming of and the market tenor looks better than it has for a year.
The operative word is still “better”, not “great”. The increase in volume in the Juniors is gratifying but still not enough. It will take higher volumes still to keep a rally alive through to year end.
In keeping with that note of cautious optimism we are sticking with discovery stories that are already working and later stage stories that were under loved until the gold price took off. A number of these are trading impressively well. So far discoveries and undervalued developers/small producers represent most all of the positive volume. They are riding the wave but the tide has not come in for the rest of the companies in the sector.
Read More @ GoldSeek.com

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