Jim Sinclair,
In the words of your father’s trading partner, the late legendary trader Jesse Livermore…
"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!"
CIGA "The Gordon"
Reality Check
Roger Wiegand
More Debt-Strapped US Cities Could Be Facing Bankruptcy
The possibility of a bankruptcy filing by Harrisburg, Pa., the state capital, looms large these days—and it could be the first in a series, say some Wall Street traders.
Dollar Primed for Collapse by End June: Charts
Gold at $36,000 Not as Ridiculous as It Sounds?
Dear Comrades In Golden Arms,
Whatever OTC derivatives do not do to the investment banks, litigation will. Litigation is both civil and criminal. No civil suit based on derivatives can ever go to judgment by jury because it will be a stone cold loser. Even a bench trial would present significant risk to the defendant. OTC derivatives are the basic problem about which nothing has been done and nothing will be done. That secures the final end which is gold as the only standard, measure and storehouse of value functioning as a medium exchange. By definition that is what money is. Gold is the only money that can be trusted as debt is being added to debt in a ridiculous plan to cure a problem. The fiat system is cooked, and there is simply no good paper currency. The face of this world is about to change. Sir Richard Russell is correct. Please protect yourselves because you must. I can point you in the right direction. It is you who must take action.
Lehman Sues JPMorgan to Recover Billions of Dollars (Update1)By Linda Sandler and David McLaughlin May 26 (Bloomberg) --
Lehman Brothers Holdings Inc. sued JPMorgan Chase & Co. to recover tens of billions of dollars in "lost value," accusing the bank of precipitating its downfall and preventing it from winding down in an orderly fashion. JPMorgan, which was Lehman's main short-term lender before its September 2008 bankruptcy, helped cause the failure by demanding more collateral as credit markets tightened during the financial crisis, Lehman said in a complaint filed today in U.S. Bankruptcy Court in New York. The lawsuit follows a report by Lehman examiner Anton Valukas, who said in March that Lehman might have grounds for suing JPMorgan and other banks. "On the brink of LBHI's bankruptcy, JPMorgan leveraged its life and death power as the brokerage firm's primary clearing bank to force LBHI into a series of one-sided agreements and to siphon billions of dollars in critically needed assets," Lehman said in the complaint. Lehman didn't specify in the complaint an amount for the losses it is claiming as a result of JPMorgan's actions. "The lawsuit is ill conceived and the costly litigation will cause a further drain on the limited resources available to the Lehman bankruptcy estate," Joe Evangelisti, a JPMorgan spokesman said. More...
Is Gold the Next Bubble?- Wall Street Journal
US Home Prices Drop for 6th Straight Month- Washington Post
How US Banks Hide Their Risk Exposure- Wall Street Journal
Study: Western Banks May Need $1.5T in Fresh Capital- Bloomberg
Europe Mobilizes against Deficits- Sydney Morning Herald
Moody's Reiterates US Gov't Risks Downgrade- Bloomberg
What Debt? Pols on Spending Spree
As national debt crosses $13T mark, Congress is looking for a way to spend about $300B more before Memorial Day
Don't Doubt Bernanke's Ability to Create Inflation
With the Dow Jones now down 11% nominally from its high last month, NIA has been getting hundreds of emails and phone calls asking if there is any way we could be wrong about the threat of hyperinflation in the U.S. and if indeed deflation is the real problem we need to be worried about. The names Nouriel Roubini, Robert Prechter, and Harry Dent get mentioned to us a lot, with many NIA members asking why these so-called "experts" believe deflation is in our future.
Roubini, Prechter and Dent have been wrong about the overwhelming majority of their economic forecasts over the past decade. When it comes to their latest predictions about deflation, they will actually be right to some extent. We will see deflation in some assets like stocks and Real Estate, but only when priced in terms of real money - gold and silver. In terms of dollars, prices for pretty much all goods and services are guaranteed to rise dramatically over the next few years. Creating inflation is the only thing in the world Federal Reserve Chairman Ben Bernanke knows how to do and is good at.
During the past week, the mainstream media has shifted from saying we are experiencing an "economy recovery" to now saying we are at risk of a "double dip recession". Nothing fundamentally has changed in our economy. The fact is, the U.S. economy has been in a recession since mid-2000. All government reported positive GDP growth since mid-2000 has been due to nothing but inflation. Our economy should have experienced a depression in 2001 and an even greater one in 2008, but the depression has been temporarily avoided at the expense of an inevitable Hyperinflationary Great Depression down the road.
NIA believes it is impossible for the U.S. to experience price deflation when the Federal Reserve has held interest rates at 0% for the past 17 months. Sure, there will probably be a second wave of mortgage defaults that could cause another round of forced liquidations on Wall Street, but during any future period of forced liquidations, we doubt the U.S. dollar will still be looked at as the "safe haven" it was in 2008/2009. Gold and silver will soon be looked at as the only real safe havens because they are the only assets that provide protection from both a deteriorating economy and massive inflation. Precious metals will decouple from the Dow Jones and we will begin to see gold and silver rise at the same time as the stock market falls.
Bernanke was questioned yesterday following a speech at the Bank of Japan about whether a 4% inflation target would be better than the Fed's current inflation target of 2%. Bernanke responded that "it would be a very risky transition" if the Fed changed their inflation target, claiming that U.S. inflation expectations are currently "very stable". (NIA estimates the real rate of U.S. price inflation is already north of 5%.)
Unfortunately, no policymaker in the world is smart enough to accurately control the rate of price inflation through the manipulation of interest rates, and certainly not Bernanke. It's mind-boggling to us how the mainstream media could believe anything Bernanke says about inflation after how wrong he has been about everything else. Maybe the press has already forgotten that it was Bernanke who in July of 2005 said, "it's a pretty unlikely possibility" that home prices will decline across the country, "house prices will slow, maybe stabilize but I don't think it's going to drive the economy too far from its full employment path". We are 100% sure that Bernanke will be proven wrong again when it comes to inflation.
The U.S. Dollar Index has rallied from 75 to 87 since December and is approaching its high from March of 2009 of 89. This has given Bernanke the cover to keep interest rates at a record low 0%, but NIA believes Bernanke is misreading these economic signals. When the U.S. Dollar Index reached its high last year of 89, gold was only $900 per ounce. Today, gold is approximately $1,200 per ounce. The fact that gold has held up so strong despite a rapidly rising U.S. Dollar Index, proves that our financial system is getting ready to overdose on excess liquidity. The U.S. Dollar Index has rallied only because it is heavily weighted against the Euro. The Euro is now overdue for a huge bounce, which we believe will send the U.S. dollar crashing while sending gold to new record highs.
It's not good for us to pay too much attention to short-term volatility in the financial markets. Short-term "noise" often causes investors to second guess what they know is true. In our new documentary 'Meltup' (which has now surpassed 441,000 views in 10 days) we said, "If stocks were to see a nominal decline one last time, we will likely see Bernanke shoot up his largest ever dose of quantitative easing, which could turn the current Meltup into hyperinflation."
We are seeing signs of this coming true already. Washington is now calling for another stimulus. Larry Summers, senior economic adviser to President Obama, has asked Congress to begin drafting a new stimulus bill in an attempt to prevent a "double dip recession". The proposed size of this new stimulus is so far only $200 billion, much smaller than the last $787 billion stimulus bill. However, we are sure Congress will increase the size of it, especially if stocks continue their nominal decline. The new stimulus bill will likely coincide with trillions of dollars in additional quantitative easing by the Federal Reserve.
Please continue to spread the word about NIA by telling your friends and family to subscribe for free at: http://click.icptrack.com/icp/relay.php?r=1038007411&msgid=1969920&act=GP8Q&c=422754&destination=http%3A%2F%2Finflation.us
Wednesday, May 26, 2010
Tuesday, May 25, 2010
One false move in Europe could set off global chain reaction
Nouriel Roubini: "We are still in the middle of this crisis and there is more trouble ahead of us"
I Would Urge Anyone To Buy A Farm
posted by Blogger at Jim Rogers Blog - 11 hours ago
I would urge anyone to buy a farm. Farming has been a horrible business for 30 years, so there's fewer farmers and supply is under duress. At the same time all of Asia is becoming more prosperous, so you h...
Zero Hedge has best fanfare for Sprott gold trust's plan to buy 6 more tonnes
Greece - What Just Happened
Howard Katz
Why Gold Is a Sure Long-Term Bet
Porter Stansberry
Doug Groh: Holding Gold
Gold Report
Gold rush set to resume
Gold RUSH: U.S. gold and silver sales are soaring
Tuesday, May 25, 2010Text Size:
From Commodity Online:Gold and silver bullion sales at the United States Mint have reached record levels in May 2010. With about a week left to go, more than 200,000 ounces of gold and more than 3 million ounces of silver have already been sold to the Mint's authorized purchaser network, Coinupdate.com reported.Authorized purchasers are able to buy bullion coins directly from the United States Mint. They subsequently resell the coins to other coin dealers, bullion dealers, or the public, and facilitate a two-way market for the coins.For the month to date, the Mint has recorded sales of...Read full article...
New rules might not stop next financial crisis; After Senate debate, passage, many loopholes exist in regulations. At issue are those uncontrolled derivatives--finally being recognized asa threat by the mainstream media.
Global Markets Now Infected with Europe Fear
On the lighter side, comes this comedy clip from Australia: Clarke and Dawes ask the million dollar questions.
Rising Home Sales Likely to Cool Despite Low Rates
Regulators Probe Firms' Roles in Stock Plunge
Weiss Ratings: 20 More Giant Banks Still Vulnerable
Obama Adviser Calls for New ‘Mini-Stimulus’- Financial Times
Private Pay Shrinks to Historic Lows; Welfare Up- USA Today
US Cities Face Deepening Fiscal Problems- Reuters
Greeks Queue to Buy Gold Sovereigns- The Australian
CA Democrats Propose Nearly $5B in New Taxes- CNBC
Nouriel Roubini: "We are still in the middle of this crisis and there is more trouble ahead of us"
I Would Urge Anyone To Buy A Farm
posted by Blogger at Jim Rogers Blog - 11 hours ago
I would urge anyone to buy a farm. Farming has been a horrible business for 30 years, so there's fewer farmers and supply is under duress. At the same time all of Asia is becoming more prosperous, so you h...
Zero Hedge has best fanfare for Sprott gold trust's plan to buy 6 more tonnes
Greece - What Just Happened
Howard Katz
Why Gold Is a Sure Long-Term Bet
Porter Stansberry
Doug Groh: Holding Gold
Gold Report
Gold rush set to resume
Gold RUSH: U.S. gold and silver sales are soaring
Tuesday, May 25, 2010Text Size:
From Commodity Online:Gold and silver bullion sales at the United States Mint have reached record levels in May 2010. With about a week left to go, more than 200,000 ounces of gold and more than 3 million ounces of silver have already been sold to the Mint's authorized purchaser network, Coinupdate.com reported.Authorized purchasers are able to buy bullion coins directly from the United States Mint. They subsequently resell the coins to other coin dealers, bullion dealers, or the public, and facilitate a two-way market for the coins.For the month to date, the Mint has recorded sales of...Read full article...
New rules might not stop next financial crisis; After Senate debate, passage, many loopholes exist in regulations. At issue are those uncontrolled derivatives--finally being recognized asa threat by the mainstream media.
Global Markets Now Infected with Europe Fear
On the lighter side, comes this comedy clip from Australia: Clarke and Dawes ask the million dollar questions.
Rising Home Sales Likely to Cool Despite Low Rates
Regulators Probe Firms' Roles in Stock Plunge
Weiss Ratings: 20 More Giant Banks Still Vulnerable
Obama Adviser Calls for New ‘Mini-Stimulus’- Financial Times
Private Pay Shrinks to Historic Lows; Welfare Up- USA Today
US Cities Face Deepening Fiscal Problems- Reuters
Greeks Queue to Buy Gold Sovereigns- The Australian
CA Democrats Propose Nearly $5B in New Taxes- CNBC
Monday, May 24, 2010
YOUR ALMOST OUT OF TIME...tick..tick..tick
Mark Twain once said, "If you don't read the newspaper, you're uninformed.
If you read the newspaper, you're mis-informed."
Dear Comrades In Golden Arms,
The power of the derivative manufacturers is clearly stronger than the combined power of world central banks. The mockery made of the $1 trillion Shock and Awe of the euro rescue package is telling. The public relations that Monday had to be approved by the architects of what is now a joke. The real story is that the credit default swaps derivative dealers are stronger than all central banks put together. Soon markets will see this and rush to the side of the stronger which are the currency shorts of the Western world. Gold will be purchased for a very long time to come as currencies will offer no storehouse of value. The central banks have publicly lost the battle and no cover will serve to keep this realization away from international money. The euro pulled back almost, but not quite, to the base line of the flat bottom triangle and is now looking at $1.10 support. The size of the fortunes which are being made by the attacking forces boggles the imagination. Those that will make the largest profit in gold are just the same forces now attacking Western world currencies. You must stop being driven crazy by watching the day to day action of gold which is destined only to become increasingly volatile. Good gold shares in any category of production will at one point outperform gold 5 to 1. The end of confidence in the fiat money system is behind us. From here on it is structure after structure that is going to fall. The power of the derivative manufacturers is clearly stronger than the combined power of world central banks.
Respectfully,
Jim Sinclair
Everything is being manipulated by the government, investment exec complains
Jim Sinclair’s Commentary
We are in a major leg in gold that will take us to $1650 and above.
The Gold Council (mouthpiece and transparent beard spokesman for the majors) still needs to learn that gold is money, not jewellery, and has the price potential of multi thousand dollars per ounce.
Speculators Grab Gold Faster Than Mines Can Produce It By Nicholas Larkin, Claudia Carpenter and Millie Munshi – May 24, 2010
Speculators are buying gold faster than the world’s biggest producers can mine it as analysts forecast a 27 percent rally that may extend the longest run of annual gains since at least 1920.
Exchange-traded products backed by bullion added 41.7 metric tons in the week to May 14, the most in 14 months, data from UBS AG show. China, Australia and the 15 other largest mining nations averaged weekly output of 41.6 tons last year, researcher GFMS Ltd. estimates. Even though prices have fallen 5.1 percent to $1,185.30 from a record $1,249.40 an ounce May 14, the median in a Bloomberg survey of 23 traders, analysts and investors shows it will reach $1,500 by the end of the year.
Buying accelerated as the MSCI World Index of 23 developed nations’ stocks tumbled as much as 16 percent since mid-April and the euro weakened to a four-year low against the dollar. Holders of ETPs, including George Soros and John Paulson, accumulated a record 1,938 tons by May 21, eclipsing all but four of the biggest central-bank holdings.
“You could see gold go up another $1,000,” said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. in San Antonio and in 2006 correctly predicted that gold would reach $700 within two years. “All of the turmoil and problems we’ve seen in Europe is just another reminder that there’s a lot of value in gold as a safe haven.”
The risk to gold bulls lies in economic growth, which should buoy the prospects of metals linked to industrial demand, such as copper and silver. The world economy will expand 4.2 percent this year, the International Monetary Fund said April 21, raising its January projection from 3.9 percent.
More…
In The News Today Posted: May 24 2010 By: Jim Sinclair Post Edited: May 24, 2010 at 3:13 pm
Filed under: In The News
Jim Sinclair’s Commentary
It is not what is reported here, but the use of EU credit default derivatives that brought about the dive in the euro.
With CDS pounding and the Libor rising the bear play on the euro is successful. This mechanism will turn on all Western world currencies within 12 months, one by one. As CIGA Eric notes, this will turn money towards Gold.
Euro’s fall deals new hit to risk appetite By Jamie Chisholm, Global Markets Commentator Published: May 24 2010 08:34 Last updated: May 24 2010 16:38
Monday 16:35 BST. Another sharp drop in the euro is curtailing risk appetite, as traders again fret about the fragility of the eurozone economy.
The FTSE All-World equity index is down 0.3 per cent, while the dollar and US Treasuries are higher on haven flows.
Wall Street’s S&P 500 is off 0.5 per cent, despite some supportive home sales data.
The global session had begun in a more positive mood as some traders speculated that the regulatory and fiscal-funk induced flight from risky assets over recent days may have been overdone.
The S&P 500 fell 4 per cent last week to a three-month low, measures of volatility jumped and high-yielding, growth-focused currencies such as the Australian dollar were battered as investors worried about the damaging impact of austerity measures required to tackle nations’ huge budget deficits.
Wall Street’s late 1.5 per cent bounce on Friday also initially helped sentiment on Monday. So did a sharp rebound in Chinese stocks after hopes were raised that Beijing’s moves to damp property market speculation would not be as heavy-handed as feared, and would therefore not crimp broader economic growth too severely.
More…
The Best Place To Have Your Money
posted by Blogger at Jim Rogers Blog - 18 minutes ago
“The best place to have your money is in either sound currencies or real assets. For my money, real assets are a better place to be because, throughout history, when governments have started printing a lot...
Double Dip Recession Now Guaranteed?
US Leading Indicators Drop in Sign Recovery to Cool- Sydney Morning Herald
Defaults on US Apartment-Building Loans Set Record- Bloomberg
Gold Bulls Dig In for Big Rally- The Australian
PIMCO: US, Greece, Spain in Debt "Ring of Fire"- Bloomberg
Fannie, Freddie Fix Is Federal Hot Potato- Wall Street
Stealth IRS Changes Mean Millions of New Tax Forms- CNN Money
UK Begins Budget Cuts with $8.3 Bln Slice- MarketWatch
Hu Stresses Willingness to Reform Yuan- MarketWatch
S Korea, China, Japan Building Free Trade Area- Sydney Mroning Herald
Jim Sinclair’s Commentary
If the financial bill contained no significant controls, if not elimination of the OTC derivative market, it is hollow and meaningless.
Wall St. money floods D.C. in finance bill fight Lobbyists, who have spent $1.7 billion in 10 years, seek payback By Eric Lichtblau and Edward Wyatt updated 5:06 a.m. ET, Sun., May 23, 2010
WASHINGTON – Last Wednesday, Representative David Scott, Democrat of Georgia, mingled with insurance and financial executives and other supporters at a lunchtime fund-raiser in his honor at a chic Washington wine bar before rushing out to cast a House vote.
Nearby, supporters of Representative Michael E. Capuano, Democrat of Massachusetts, gathered that evening at a Capitol Hill town house for a $1,000-a-head fund-raiser. Just as that was wrapping up, Representative Peter T. King, Republican of New York, was feted by campaign donors at nearby Nationals Park at a game against the Mets.
It was just another day in the nonstop fund-raising cycle for members of the House Financial Services Committee, which has become a magnet for money from Wall Street and other deep-pocketed contributors, especially as Congress moves to finalize the most sweeping new financial regulations in seven decades.
More…
If you read the newspaper, you're mis-informed."
Dear Comrades In Golden Arms,
The power of the derivative manufacturers is clearly stronger than the combined power of world central banks. The mockery made of the $1 trillion Shock and Awe of the euro rescue package is telling. The public relations that Monday had to be approved by the architects of what is now a joke. The real story is that the credit default swaps derivative dealers are stronger than all central banks put together. Soon markets will see this and rush to the side of the stronger which are the currency shorts of the Western world. Gold will be purchased for a very long time to come as currencies will offer no storehouse of value. The central banks have publicly lost the battle and no cover will serve to keep this realization away from international money. The euro pulled back almost, but not quite, to the base line of the flat bottom triangle and is now looking at $1.10 support. The size of the fortunes which are being made by the attacking forces boggles the imagination. Those that will make the largest profit in gold are just the same forces now attacking Western world currencies. You must stop being driven crazy by watching the day to day action of gold which is destined only to become increasingly volatile. Good gold shares in any category of production will at one point outperform gold 5 to 1. The end of confidence in the fiat money system is behind us. From here on it is structure after structure that is going to fall. The power of the derivative manufacturers is clearly stronger than the combined power of world central banks.
Respectfully,
Jim Sinclair
Everything is being manipulated by the government, investment exec complains
Jim Sinclair’s Commentary
We are in a major leg in gold that will take us to $1650 and above.
The Gold Council (mouthpiece and transparent beard spokesman for the majors) still needs to learn that gold is money, not jewellery, and has the price potential of multi thousand dollars per ounce.
Speculators Grab Gold Faster Than Mines Can Produce It By Nicholas Larkin, Claudia Carpenter and Millie Munshi – May 24, 2010
Speculators are buying gold faster than the world’s biggest producers can mine it as analysts forecast a 27 percent rally that may extend the longest run of annual gains since at least 1920.
Exchange-traded products backed by bullion added 41.7 metric tons in the week to May 14, the most in 14 months, data from UBS AG show. China, Australia and the 15 other largest mining nations averaged weekly output of 41.6 tons last year, researcher GFMS Ltd. estimates. Even though prices have fallen 5.1 percent to $1,185.30 from a record $1,249.40 an ounce May 14, the median in a Bloomberg survey of 23 traders, analysts and investors shows it will reach $1,500 by the end of the year.
Buying accelerated as the MSCI World Index of 23 developed nations’ stocks tumbled as much as 16 percent since mid-April and the euro weakened to a four-year low against the dollar. Holders of ETPs, including George Soros and John Paulson, accumulated a record 1,938 tons by May 21, eclipsing all but four of the biggest central-bank holdings.
“You could see gold go up another $1,000,” said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. in San Antonio and in 2006 correctly predicted that gold would reach $700 within two years. “All of the turmoil and problems we’ve seen in Europe is just another reminder that there’s a lot of value in gold as a safe haven.”
The risk to gold bulls lies in economic growth, which should buoy the prospects of metals linked to industrial demand, such as copper and silver. The world economy will expand 4.2 percent this year, the International Monetary Fund said April 21, raising its January projection from 3.9 percent.
More…
In The News Today Posted: May 24 2010 By: Jim Sinclair Post Edited: May 24, 2010 at 3:13 pm
Filed under: In The News
Jim Sinclair’s Commentary
It is not what is reported here, but the use of EU credit default derivatives that brought about the dive in the euro.
With CDS pounding and the Libor rising the bear play on the euro is successful. This mechanism will turn on all Western world currencies within 12 months, one by one. As CIGA Eric notes, this will turn money towards Gold.
Euro’s fall deals new hit to risk appetite By Jamie Chisholm, Global Markets Commentator Published: May 24 2010 08:34 Last updated: May 24 2010 16:38
Monday 16:35 BST. Another sharp drop in the euro is curtailing risk appetite, as traders again fret about the fragility of the eurozone economy.
The FTSE All-World equity index is down 0.3 per cent, while the dollar and US Treasuries are higher on haven flows.
Wall Street’s S&P 500 is off 0.5 per cent, despite some supportive home sales data.
The global session had begun in a more positive mood as some traders speculated that the regulatory and fiscal-funk induced flight from risky assets over recent days may have been overdone.
The S&P 500 fell 4 per cent last week to a three-month low, measures of volatility jumped and high-yielding, growth-focused currencies such as the Australian dollar were battered as investors worried about the damaging impact of austerity measures required to tackle nations’ huge budget deficits.
Wall Street’s late 1.5 per cent bounce on Friday also initially helped sentiment on Monday. So did a sharp rebound in Chinese stocks after hopes were raised that Beijing’s moves to damp property market speculation would not be as heavy-handed as feared, and would therefore not crimp broader economic growth too severely.
More…
Too Big to Fail Means Too Big to Exist Posted: May 24 2010 By: Greg Hunter Post Edited: May 24, 2010 at 2:42 pm
Filed under: Greg Hunter, USAWatchdog.com
Dear CIGAs,
Both the House of Representatives and the Senate have passed their versions of financial reform legislation. Now, the process of reconciliation takes place between both bodies of Congress to iron out a final bill the President can sign into law. There is plenty in the bill such as new consumer protection, increased power given to regulators to prevent systemic risk, and new powers to oversee the $600 trillion derivatives market. These are just a few of the highlights, and there is no telling what will actually end up in the final bill. (The derivatives problem alone can kill the U.S. economy. I wrote about this in a post called “Can The Financial System Really Be Fixed? Some Say No.”)
“Too big to fail”
The most important issues that could cause another financial crisis are not covered in the pending legislation. The biggest problem is the enormous size of the institutions being regulated. “Too big to fail” means they are simply too big, and shrinking them is not on the table. Last month, Senator Sherrod Brown (D-Ohio) explained the size problem this way: “Fifteen years ago, the assets of the six largest banks in this country totaled 17 percent of GDP. The assets of the six largest banks in the United States today total 63 percent of GDP, and that’s too (big)–we’ve got to deal with risk to be sure, but we’ve got to deal with the size of these banks, because if one of these banks is in serious trouble, it will have such a ripple effect on the whole economy.”
After the Senate passed its version of financial reform, Representative Alan Grayson said, “Too big to fail means too big to exist. We have to systematically dismantle the institution that caused the systemic risk to the economy and that, for sure, the Senate bill does not do.” I don’t see any way we are going to see a breakup of the banks. There are some amendments that will force banks to spin off risky trading operations. The banks are against any trading restrictions or spin-offs. So, getting that into a final bill is going to be tough. I don’t think the big banks will get appreciably smaller until after the next meltdown, and one is coming sooner than later.
Big institutions take big risks.
There was a time when banks were not allowed to take on too much leverage. The max was about 10 or 12 times capital. During the Bush Administration, the caps on leverage were unlocked and banks took on insane amounts of risk. During the last financial crisis, it was not uncommon for banks to be leveraged 40 times capital (sometimes even higher!) The pending financial reform legislation doesn’t really address limits on leverage. To be fair, President Bill Clinton signed into law the Gramm-Leach-Bliley Act (GLBA) in 1999. That legislation repealed the Depression era laws of the Glass-Steagall Act and allowed banks to have unlimited growth and take on much more risk. Without GLBA, also know as the Financial Services Modernization Act, the banks would have never grown “too big to fail.”
Fannie and Freddie
Neither the House nor Senate bills address failed mortgage giants Fannie Mae or Freddie Mac. The government took over these two institutions in 2008. They have a combined taxpayer liability of more than $6 trillion! There is not a mention of reform or how we are going to budget for this slow motion train wreck. I guess if Congress just ignores a problem, it doesn’t exist or it will vanish all on its own. Omitting this from financial reform legislation is too stupid to be stupid.
The Fed gets more power!
Finally, the big winner in all of this is the Federal Reserve. The regulator who stood by and watched as the financial system spun out of control is going to be rewarded by getting more power! These are the same people who fought regulation of the derivatives market and pushed for repeal of the Glass-Steagall Act. The Fed will likely get authority to oversee a new consumer protection division for businesses such as mortgages and credit cards. Also, the Fed will supervise the biggest and most complex financial companies. This is like the proverbial fox guarding the hen house. The pending legislation may force an audit of the central bank, but I wouldn’t count on any meaningful look at the secret deals of the Federal Reserve. I hope I am wrong.
Congressman Grayson recently summed up the importance of financial reform by saying, “We have a basic choice we have to make. Do we want a government of the people, by the people and for the people, or of Wall Street, by Wall Street and for Wall Street? It is disturbing how much this government is by Wall Street and, therefore, you end up with bills that are for Wall Street.”
Dear Friend of GATA and Gold:
TheStreet.com's Alix Steel today mentions GATA and our friend, market analyst Peter Grandich, in commentary headlined "Top 5 Reasons Gold Prices Move," and you can find it at TheStreet.com here:
http://www.thestreet.com/story/10760375/1/top-5-reasons-gold-prices-move.html
Societies Go From Dictatorship To Oligarchy, To Democracy, To Chaos And Back To Dictatorship.
posted by Blogger at Jim Rogers Blog - 7 hours ago
Plato said in The Republic that the way societies revolve is they go from dictatorship to oligarchy, to democracy, to chaos and back to dictatorship. China is in the early stages of oligarchy. And, America...
The Best Place To Have Your Money
posted by Blogger at Jim Rogers Blog - 18 minutes ago
“The best place to have your money is in either sound currencies or real assets. For my money, real assets are a better place to be because, throughout history, when governments have started printing a lot...
Double Dip Recession Now Guaranteed?
US Leading Indicators Drop in Sign Recovery to Cool- Sydney Morning Herald
Defaults on US Apartment-Building Loans Set Record- Bloomberg
Gold Bulls Dig In for Big Rally- The Australian
PIMCO: US, Greece, Spain in Debt "Ring of Fire"- Bloomberg
Fannie, Freddie Fix Is Federal Hot Potato- Wall Street
Stealth IRS Changes Mean Millions of New Tax Forms- CNN Money
UK Begins Budget Cuts with $8.3 Bln Slice- MarketWatch
Hu Stresses Willingness to Reform Yuan- MarketWatch
S Korea, China, Japan Building Free Trade Area- Sydney Mroning Herald
Jim Sinclair’s Commentary
If the financial bill contained no significant controls, if not elimination of the OTC derivative market, it is hollow and meaningless.
Wall St. money floods D.C. in finance bill fight Lobbyists, who have spent $1.7 billion in 10 years, seek payback By Eric Lichtblau and Edward Wyatt updated 5:06 a.m. ET, Sun., May 23, 2010
WASHINGTON – Last Wednesday, Representative David Scott, Democrat of Georgia, mingled with insurance and financial executives and other supporters at a lunchtime fund-raiser in his honor at a chic Washington wine bar before rushing out to cast a House vote.
Nearby, supporters of Representative Michael E. Capuano, Democrat of Massachusetts, gathered that evening at a Capitol Hill town house for a $1,000-a-head fund-raiser. Just as that was wrapping up, Representative Peter T. King, Republican of New York, was feted by campaign donors at nearby Nationals Park at a game against the Mets.
It was just another day in the nonstop fund-raising cycle for members of the House Financial Services Committee, which has become a magnet for money from Wall Street and other deep-pocketed contributors, especially as Congress moves to finalize the most sweeping new financial regulations in seven decades.
More…
Sunday, May 23, 2010
Describing the current economic crisis and why no nation can print its way into prosperity: “If debt and money printing equaled prosperity then Zimbabwe would be the richest country.” - Marc Faber, as quoted by Andrew Mellon of Breitbart's Big Government blog.
Merryn Somerset Webb: The only currency that can't be printed on a whim
PIMCO's Gross: Markets exhibiting "flight to liquidity". Mass inflation is coming soon, folks. Transition out of dollars and into tangibles now, while it is still affordable!
Leading US Indicator Drops Unexpectedly
Worldwide Stocks Fall for Sixth Straight Day
Jobless Claims Rise By Largest Amount in Three Months
Behind the European Drama Lies a Global Crisis
Mish: Meredith Whitney Sees Bleak Second Half in Stock Market, Small Business Credit Crunch, Double Dip in Housing, Says European Banks in Worse Shape
FDIC: Problem banks at 775. "A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corporation's list of 'problem' institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets."
Whatever Germany does, the euro as we know it is dead
Two Charts Central Bankers Don't Want You To See
posted by Eric De Groot at Eric De Groot - 1 hour ago
Devaluation has always been the "unofficial" official policy used to mitigate the economic and social effects of excessive debt burdens. Devaluation can push up nominal (fiat) stock prices across the globe...
Merryn Somerset Webb: The only currency that can't be printed on a whim
PIMCO's Gross: Markets exhibiting "flight to liquidity". Mass inflation is coming soon, folks. Transition out of dollars and into tangibles now, while it is still affordable!
Leading US Indicator Drops Unexpectedly
Worldwide Stocks Fall for Sixth Straight Day
Jobless Claims Rise By Largest Amount in Three Months
Behind the European Drama Lies a Global Crisis
Mish: Meredith Whitney Sees Bleak Second Half in Stock Market, Small Business Credit Crunch, Double Dip in Housing, Says European Banks in Worse Shape
FDIC: Problem banks at 775. "A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corporation's list of 'problem' institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets."
Whatever Germany does, the euro as we know it is dead
Two Charts Central Bankers Don't Want You To See
posted by Eric De Groot at Eric De Groot - 1 hour ago
Devaluation has always been the "unofficial" official policy used to mitigate the economic and social effects of excessive debt burdens. Devaluation can push up nominal (fiat) stock prices across the globe...
This is all they can afford to close...FDIC is Broke...
Regulators Shut Small Minnesota Bank
Saturday, May 22, 2010
THE U.S. NATIONAL DEBT WILL HIT 13 TRILLION DOLLARS THIS WEEK...
Have you heard the audio from the S&P pits during the recent flash
crash? here it is. It still gives me chills for the duration every
time I listen to it. This is what it sounds like when investors loose 1 TRILLION DOLLARS in 8 minutes... it looks like this 1,000,000,000,000 yes thats 12 zero's...
This will be happening alot more often very soon. The ONLY way to protect yourself and family is to own physical precious metals as insurance...
A billionaire goes all-in on gold
Richard Russell, the editor of The Dow Theory Letter: You Won’t Recognize America by the End of the Year. Here are a couple of quotes: “Do your friends a favor… Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country.” ... “Just as for years I asked, cajoled, insisted, threatened, demanded, that my subscribers buy gold, I am now insisting, demanding, begging my subscribers to get out of stocks… and get into cash or gold (bullion if possible).”
Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woe.
The Morality of the Financial Monetary System is Really What is Broken
Week's unemployment claims jump to 471,000
The true amount is 1 QUADRILLION 144 TRILLION DOLLARS worth of toxic waste...thats 1,144,000,000,000,000
Ticking Time Bomb: $600 Trillion in Derivatives at Risk
Next Year's Federal Budget Sinking in Deep Red Ink
Reforming Fannie and Freddie Will Slam Home Prices
The run on Gold and Silver has begun...Hope your ready...
Germany's 'Desperate' Short Ban Triggers Capital Flight to Switzerland
This is very temporary I can assure you...
Fading of Inflation Helps Buyers and Borrowers
Food Price Inflation to Spur Zombie Takeover
Your money is backed ONLY by the full faith and credit of the U.S. Government...
Now can you explain
1. exactly who it is that has any faith in the U.S. Government? not me...
2. exactly what credit does the U.S. Government have left besides the ability to print as much money as they want, backed by nothing???
FDIC Insurance Fund Still $20 Billion in the Hole Posted: May 21 2010 By: Greg Hunter Post Edited: May 21, 2010 at 1:04 pm
Filed under: USAWatchdog.com
Dear CIGAs,
While the stock market was beginning its 376 point plunge yesterday, the Federal Deposit Insurance Corporation was quietly putting the best face it could on a banking system in serious trouble. In a press release to update the status of the insurance fund, the big positive headline was, “FDIC-Insured Institutions Earned $18 Billion in the First Quarter of 2010–Net Income Highest in Two Years.” FDIC Chairman Sheila C. Bair said, “There are encouraging signs in the first-quarter numbers . . . Industry earnings are up. More banks reported higher earnings, and fewer lost money.” (Click here for the complete FDIC press release.)
I can appreciate Chairman Bair’s positive attitude, but “encouraging signs” do not mean we have turned the corner and brighter days are ahead. The Deposit Insurance Fund, or DIF, has a negative balance of -$20.7 billion. That is just a $200 million improvement from the all time record deficit of -$20.9 billion at the end of 2009. I don’t see how these numbers are “encouraging.”
I talked with FDIC spokesman David Barr yesterday about the shortfall in the DIF. He said, “The FDIC is not broke.” It has an additional “$63 billion in cash.” He told me there is about $46 billion in three years of prepaid deposit insurance premiums and an additional $17 billion in cash for a grand total of $63 billion in “liquid resources” to close insolvent banks. Let me get this straight–nearly 75% of the FDIC’s bailout money is from fees collected up front. What happens when the FDIC burns through that? Will they collect another 3 years of fees?
Barr told me the FDIC is expecting to spend “$40 billion” closing troubled banks in the next 12 months. He said, “It could be less and it could be more.” Simple math says it will be more, way more. There have already been 72 failed banks so far this year. According to Barr, at the same time last year, there were only 33 failed banks. In 2009, there were 140 total banks closed. Bar freely admitted, “The pace (of bank closings) is greater this year.” Barr expects more banks to fail in 2010 than 2009, but he would not give a number. He said, “We don’t provide numbers because to us it’s not the numbers, it’s the cost.” The latest list of “problem” banks from the FDIC now stands at 775. 73 banks were added to the list since the end of 2009. That is nearly a 10% increase in less than 5 months.
Reggie Middleton is an investor and analyst who owns BoomBustBlog.com. He was one of the earliest to warn of the impending downfall of Lehman Brothers and Bear Stearns. Middleton told me, “If the FDIC had more money and manpower, it would be closing a lot more banks.” Middleton also said, “Many of America’s 8,000 banks are insolvent or close to it because of mark to market accounting.” Because of accounting rule changes, banks are allowed to value toxic assets for whatever they think they are worth, not what they actually are worth. Some call this “mark to fantasy accounting.” Middleton warns, “There is more risk now (in the banking system) than during the Lehman crisis because the pool of banks is smaller.”
When I look at residential and commercial real estate, I see no “encouraging signs.” I see frightening headlines like the one that came out just this week that says, “One in 7 U.S. homeowners paying late or in foreclosure.” (Click here for the full story) Commercial real estate doesn’t look any better. Some experts are forecasting $1 trillion in CRE losses before the banking crisis is finished. The FDIC is acting more like the Resolution Trust Corporation of the early 90’s than a deposit insurance fund. Let’s hope it does not run out of money anytime soon.
More…
The Housing “Recovery” Is Just Another Government Subsidy, Says Whalen
Make sure you watch the video's in this article...
May 22, 2010 www.CaseyResearch.com
Weekend Edition
The Problems with Politibonics
Dear Reader,
While not the most awkward moment in my life, it certainly ranked right up there.
It happened at a supermarket checkout counter in Louisiana when a clerk asked me a question. While I know that she thought we were both speaking the same language – English – for the life of me, I had no idea what she was saying.
“Huejago wuanddab pwnwanr err psistic?”
“What?”
“Huejago wuanddab pwnwanr err psistic?”
“I’m sorry, I didn’t quite get it – could you try again?”
“Huejago wuanddab pwnwanr err psistic?”
“I’m really sorry,” I said in what I suspect was a plaintive voice. “My ears must be clogged, but I just don’t understand what you’re saying. One more time?”
“Huejago wuanddab pwnwanr err psistic?” she responded, her face tense. Then, clearly angry and frustrated, she held up a plastic bag in one hand and a paper bag in the other. The proverbial dime dropped.
“Ah, paper or plastic!” I said with an exhalation of deep relief.
“Dwats I bena sayn, huejago wuanddab pwnwanr err psistic?!”
Per the signature line of Cool Hand Luke, what we had been having was “a failure to communicate.” The situation in Louisiana came about because of a culturally motivated derivation of English that, in this instance, had the clerk speaking the vernacular referred to by some as Ebonics, effectively creating an entirely one-sided exchange. To wit, she could understand what I was saying, but I had no chance of understanding her, absent the aforementioned props.
I am sure that similar incidents occur between the English and the Scots – among many others around the globe – same language but inaccessible to one party to the exchange.
Today the global economy is suffering a far larger problem than paper or plastic, due, in no small part, to a misunderstanding of what is otherwise perceived to be a common language – the language of economics.
Whether through ignorance or deliberate obfuscation, what one person says when discussing the economy and investment markets and what another hears is far too often unintelligible or simply misunderstood in the extreme.
Case in point, here in the U.S., the government and its supporters tout that the all-important housing sector is in recovery mode. Many Americans will mistakenly view that news as they might a light switch: One day the housing market is weakening; then, with the flip of a switch, it is recovering.
However, a deeper analysis of the numbers reveals that the government is not only thickly gilding the lily but actually using a derivation of the term “recovery” that, when actually understood, should be something entirely different.
Perhaps I haven’t had enough coffee today, but I feel like what I just wrote might be a bit obtuse, so I’ll try to get the point across through the medium of video.
To that end, click the link below for a brief but clear interview with Chris Whalen during which he explains that what is being passed off as a housing recovery – evidenced by stats such as housing starts – is actually just an extension of massive government subsidies. Subsidies that now extend to actually paying builders to build homes for a market that has no demand.
Thus, instead of saying “recovery,” the government’s language would be far more accurate and far less misleading were it to say something more along the lines of, “additional deficit spending is adding to the massive overhang of unwanted houses on the market.”
No small difference. For the video click here.
As I don’t need to tell you, this is important because business owners or investors, on hearing of the recovery, are likely to make decisions based on a misunderstanding of the stats that could result in serious losses down the road.
In the case just mentioned, the public might think, “Happy days are here again,” and be tempted to buy stocks or even buy a house they have had their eye on. Yet, someone with a different, and more accurate, interpretation of the situation might sell stocks and buy gold, knowing that in time all this government propping-up won’t be able to resolve the housing crisis and that the deficit spending is almost certain to morph into a serious inflation.
The problem goes much, much deeper than that. Thanks to a state-run education system that has been steadily dumbed down to make the tenured teachers look good, a majority of the populace is now stunningly ignorant as to even the most basic principles of how economies and markets work.
I’m almost reluctant to share this next bit of audio with you, because I am not a big fan of talk radio personalities, and because the caller is such a soft target. But as it helps make the point, I will share it nonetheless. You have to listen to this entire exchange to believe that anyone can be so ignorant of even the basics. Here’s the link.
The significance of mass misconceptions about the most fundamental of economic principles is that they allow the politicians, the Fed, the Treasury, and the large financial institutions to engage in all manner of sleight of hand to further their own agendas.
For example, politicians have been energetic in spouting misinformation about the causes of the current crisis, with thinly veiled fingers pointing in the direction of society’s money-makers. By doing so, they give themselves license to selectively raise taxes and layer on populist legislation that is seen to be for the “public good” – all the while attempting to avoid blame for their own considerable role in all of this.
But, stepping back from the one-sided babble, an individual with a correct understanding of the language of economics will know that creating class warfare, raising taxes, and adding regulation runs completely contrary to the requirements of a robust economy.
There is good news in all of this.
Namely that individuals with the wherewithal to invest some of their time in learning how things actually work in the real economy – a group that includes you, dear reader – are five steps ahead of the crowd.
Simply, the time you spend reading more informed views – views that might be termed contrarian to the Politibonics spoken by the nation’s leadership – should pay big dividends as the crisis continues. There will be days when you feel like the proverbial one-eyed person in the land of the blind – or even as awkward as I felt when trying to communicate with the store clerk – but you should take that as a sign that you are on the right track. The minute you start accepting the conventional wisdom as personified by the talking heads on MSNBC, you can be sure you are about to step off a cliff.
In the interest of promoting a wider understanding of what’s really going on in the world, I am going to share a video that many of you have forwarded to me.
It’s from something called the National Inflation Association, and it’s competently done. I have to admit that I wish whoever produced it had thought to include Casey Research, as we were well ahead of virtually all of the presenters in anticipating this crisis and preparing our readers for it, but that’s okay – we’re just happy to see the word getting out.
Here’s the video, titled Meltup.
Next up, our own Bud Conrad explains the LIBOR-OIS spread, for those of you unfamiliar with this particularly useful indicator.
crash? here it is. It still gives me chills for the duration every
time I listen to it. This is what it sounds like when investors loose 1 TRILLION DOLLARS in 8 minutes... it looks like this 1,000,000,000,000 yes thats 12 zero's...
This will be happening alot more often very soon. The ONLY way to protect yourself and family is to own physical precious metals as insurance...
A billionaire goes all-in on gold
Richard Russell, the editor of The Dow Theory Letter: You Won’t Recognize America by the End of the Year. Here are a couple of quotes: “Do your friends a favor… Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country.” ... “Just as for years I asked, cajoled, insisted, threatened, demanded, that my subscribers buy gold, I am now insisting, demanding, begging my subscribers to get out of stocks… and get into cash or gold (bullion if possible).”
Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woe.
The Morality of the Financial Monetary System is Really What is Broken
Week's unemployment claims jump to 471,000
The true amount is 1 QUADRILLION 144 TRILLION DOLLARS worth of toxic waste...thats 1,144,000,000,000,000
Ticking Time Bomb: $600 Trillion in Derivatives at Risk
Next Year's Federal Budget Sinking in Deep Red Ink
Reforming Fannie and Freddie Will Slam Home Prices
The run on Gold and Silver has begun...Hope your ready...
Germany's 'Desperate' Short Ban Triggers Capital Flight to Switzerland
This is very temporary I can assure you...
Fading of Inflation Helps Buyers and Borrowers
Food Price Inflation to Spur Zombie Takeover
Your money is backed ONLY by the full faith and credit of the U.S. Government...
Now can you explain
1. exactly who it is that has any faith in the U.S. Government? not me...
2. exactly what credit does the U.S. Government have left besides the ability to print as much money as they want, backed by nothing???
FDIC Insurance Fund Still $20 Billion in the Hole Posted: May 21 2010 By: Greg Hunter Post Edited: May 21, 2010 at 1:04 pm
Filed under: USAWatchdog.com
Dear CIGAs,
While the stock market was beginning its 376 point plunge yesterday, the Federal Deposit Insurance Corporation was quietly putting the best face it could on a banking system in serious trouble. In a press release to update the status of the insurance fund, the big positive headline was, “FDIC-Insured Institutions Earned $18 Billion in the First Quarter of 2010–Net Income Highest in Two Years.” FDIC Chairman Sheila C. Bair said, “There are encouraging signs in the first-quarter numbers . . . Industry earnings are up. More banks reported higher earnings, and fewer lost money.” (Click here for the complete FDIC press release.)
I can appreciate Chairman Bair’s positive attitude, but “encouraging signs” do not mean we have turned the corner and brighter days are ahead. The Deposit Insurance Fund, or DIF, has a negative balance of -$20.7 billion. That is just a $200 million improvement from the all time record deficit of -$20.9 billion at the end of 2009. I don’t see how these numbers are “encouraging.”
I talked with FDIC spokesman David Barr yesterday about the shortfall in the DIF. He said, “The FDIC is not broke.” It has an additional “$63 billion in cash.” He told me there is about $46 billion in three years of prepaid deposit insurance premiums and an additional $17 billion in cash for a grand total of $63 billion in “liquid resources” to close insolvent banks. Let me get this straight–nearly 75% of the FDIC’s bailout money is from fees collected up front. What happens when the FDIC burns through that? Will they collect another 3 years of fees?
Barr told me the FDIC is expecting to spend “$40 billion” closing troubled banks in the next 12 months. He said, “It could be less and it could be more.” Simple math says it will be more, way more. There have already been 72 failed banks so far this year. According to Barr, at the same time last year, there were only 33 failed banks. In 2009, there were 140 total banks closed. Bar freely admitted, “The pace (of bank closings) is greater this year.” Barr expects more banks to fail in 2010 than 2009, but he would not give a number. He said, “We don’t provide numbers because to us it’s not the numbers, it’s the cost.” The latest list of “problem” banks from the FDIC now stands at 775. 73 banks were added to the list since the end of 2009. That is nearly a 10% increase in less than 5 months.
Reggie Middleton is an investor and analyst who owns BoomBustBlog.com. He was one of the earliest to warn of the impending downfall of Lehman Brothers and Bear Stearns. Middleton told me, “If the FDIC had more money and manpower, it would be closing a lot more banks.” Middleton also said, “Many of America’s 8,000 banks are insolvent or close to it because of mark to market accounting.” Because of accounting rule changes, banks are allowed to value toxic assets for whatever they think they are worth, not what they actually are worth. Some call this “mark to fantasy accounting.” Middleton warns, “There is more risk now (in the banking system) than during the Lehman crisis because the pool of banks is smaller.”
When I look at residential and commercial real estate, I see no “encouraging signs.” I see frightening headlines like the one that came out just this week that says, “One in 7 U.S. homeowners paying late or in foreclosure.” (Click here for the full story) Commercial real estate doesn’t look any better. Some experts are forecasting $1 trillion in CRE losses before the banking crisis is finished. The FDIC is acting more like the Resolution Trust Corporation of the early 90’s than a deposit insurance fund. Let’s hope it does not run out of money anytime soon.
More…
The Housing “Recovery” Is Just Another Government Subsidy, Says Whalen
Make sure you watch the video's in this article...
May 22, 2010 www.CaseyResearch.com
Weekend Edition
The Problems with Politibonics
Dear Reader,
While not the most awkward moment in my life, it certainly ranked right up there.
It happened at a supermarket checkout counter in Louisiana when a clerk asked me a question. While I know that she thought we were both speaking the same language – English – for the life of me, I had no idea what she was saying.
“Huejago wuanddab pwnwanr err psistic?”
“What?”
“Huejago wuanddab pwnwanr err psistic?”
“I’m sorry, I didn’t quite get it – could you try again?”
“Huejago wuanddab pwnwanr err psistic?”
“I’m really sorry,” I said in what I suspect was a plaintive voice. “My ears must be clogged, but I just don’t understand what you’re saying. One more time?”
“Huejago wuanddab pwnwanr err psistic?” she responded, her face tense. Then, clearly angry and frustrated, she held up a plastic bag in one hand and a paper bag in the other. The proverbial dime dropped.
“Ah, paper or plastic!” I said with an exhalation of deep relief.
“Dwats I bena sayn, huejago wuanddab pwnwanr err psistic?!”
Per the signature line of Cool Hand Luke, what we had been having was “a failure to communicate.” The situation in Louisiana came about because of a culturally motivated derivation of English that, in this instance, had the clerk speaking the vernacular referred to by some as Ebonics, effectively creating an entirely one-sided exchange. To wit, she could understand what I was saying, but I had no chance of understanding her, absent the aforementioned props.
I am sure that similar incidents occur between the English and the Scots – among many others around the globe – same language but inaccessible to one party to the exchange.
Today the global economy is suffering a far larger problem than paper or plastic, due, in no small part, to a misunderstanding of what is otherwise perceived to be a common language – the language of economics.
Whether through ignorance or deliberate obfuscation, what one person says when discussing the economy and investment markets and what another hears is far too often unintelligible or simply misunderstood in the extreme.
Case in point, here in the U.S., the government and its supporters tout that the all-important housing sector is in recovery mode. Many Americans will mistakenly view that news as they might a light switch: One day the housing market is weakening; then, with the flip of a switch, it is recovering.
However, a deeper analysis of the numbers reveals that the government is not only thickly gilding the lily but actually using a derivation of the term “recovery” that, when actually understood, should be something entirely different.
Perhaps I haven’t had enough coffee today, but I feel like what I just wrote might be a bit obtuse, so I’ll try to get the point across through the medium of video.
To that end, click the link below for a brief but clear interview with Chris Whalen during which he explains that what is being passed off as a housing recovery – evidenced by stats such as housing starts – is actually just an extension of massive government subsidies. Subsidies that now extend to actually paying builders to build homes for a market that has no demand.
Thus, instead of saying “recovery,” the government’s language would be far more accurate and far less misleading were it to say something more along the lines of, “additional deficit spending is adding to the massive overhang of unwanted houses on the market.”
No small difference. For the video click here.
As I don’t need to tell you, this is important because business owners or investors, on hearing of the recovery, are likely to make decisions based on a misunderstanding of the stats that could result in serious losses down the road.
In the case just mentioned, the public might think, “Happy days are here again,” and be tempted to buy stocks or even buy a house they have had their eye on. Yet, someone with a different, and more accurate, interpretation of the situation might sell stocks and buy gold, knowing that in time all this government propping-up won’t be able to resolve the housing crisis and that the deficit spending is almost certain to morph into a serious inflation.
The problem goes much, much deeper than that. Thanks to a state-run education system that has been steadily dumbed down to make the tenured teachers look good, a majority of the populace is now stunningly ignorant as to even the most basic principles of how economies and markets work.
I’m almost reluctant to share this next bit of audio with you, because I am not a big fan of talk radio personalities, and because the caller is such a soft target. But as it helps make the point, I will share it nonetheless. You have to listen to this entire exchange to believe that anyone can be so ignorant of even the basics. Here’s the link.
The significance of mass misconceptions about the most fundamental of economic principles is that they allow the politicians, the Fed, the Treasury, and the large financial institutions to engage in all manner of sleight of hand to further their own agendas.
For example, politicians have been energetic in spouting misinformation about the causes of the current crisis, with thinly veiled fingers pointing in the direction of society’s money-makers. By doing so, they give themselves license to selectively raise taxes and layer on populist legislation that is seen to be for the “public good” – all the while attempting to avoid blame for their own considerable role in all of this.
But, stepping back from the one-sided babble, an individual with a correct understanding of the language of economics will know that creating class warfare, raising taxes, and adding regulation runs completely contrary to the requirements of a robust economy.
There is good news in all of this.
Namely that individuals with the wherewithal to invest some of their time in learning how things actually work in the real economy – a group that includes you, dear reader – are five steps ahead of the crowd.
Simply, the time you spend reading more informed views – views that might be termed contrarian to the Politibonics spoken by the nation’s leadership – should pay big dividends as the crisis continues. There will be days when you feel like the proverbial one-eyed person in the land of the blind – or even as awkward as I felt when trying to communicate with the store clerk – but you should take that as a sign that you are on the right track. The minute you start accepting the conventional wisdom as personified by the talking heads on MSNBC, you can be sure you are about to step off a cliff.
In the interest of promoting a wider understanding of what’s really going on in the world, I am going to share a video that many of you have forwarded to me.
It’s from something called the National Inflation Association, and it’s competently done. I have to admit that I wish whoever produced it had thought to include Casey Research, as we were well ahead of virtually all of the presenters in anticipating this crisis and preparing our readers for it, but that’s okay – we’re just happy to see the word getting out.
Here’s the video, titled Meltup.
Next up, our own Bud Conrad explains the LIBOR-OIS spread, for those of you unfamiliar with this particularly useful indicator.
Friday, May 21, 2010
The following is a link to a funny (But true) video on the current crisis in the eurozone. Well worth a view and passing along. Click here to watch.
Fears of Great Depression Mark II- Daily Telegraph
Sweden Seen As "Safe Harbor" from Euro Debt Woes- Bloomberg
With Local Gold Inventories Depleted, Panicking German Dealers Stage Run an Krugerrands
J.S. Kim: 10 gold charts they don't want you to see
UK Posts Record April Budget Deficit- Bloomberg
US Corporate Bond Sales Slide on Contagion Concern- Bloomberg
Developing Economy Banks Move to Switzerland- Swiss Info
Spanish Workers Take to the Streets- Sydney Morning Herald
Padded Pensions Add to New York Fiscal Woes- NY Times
Jim Rogers: Even More Currency, Market Turmoil on the Way
Moody's Sovereign Debt Head to Quit Moody's
Pfizer Axing Eight Factories, 6,000 Jobs
Dozens Storm D.C. Bank Branches
Shadow Inventory Sales for Years to Come
The Closers: How the pros shut down a failing bank
Fears of Great Depression Mark II- Daily Telegraph
Sweden Seen As "Safe Harbor" from Euro Debt Woes- Bloomberg
With Local Gold Inventories Depleted, Panicking German Dealers Stage Run an Krugerrands
J.S. Kim: 10 gold charts they don't want you to see
UK Posts Record April Budget Deficit- Bloomberg
US Corporate Bond Sales Slide on Contagion Concern- Bloomberg
Developing Economy Banks Move to Switzerland- Swiss Info
Spanish Workers Take to the Streets- Sydney Morning Herald
Padded Pensions Add to New York Fiscal Woes- NY Times
Jim Rogers: Even More Currency, Market Turmoil on the Way
Moody's Sovereign Debt Head to Quit Moody's
Pfizer Axing Eight Factories, 6,000 Jobs
Dozens Storm D.C. Bank Branches
Shadow Inventory Sales for Years to Come
The Closers: How the pros shut down a failing bank
Thursday, May 20, 2010
Ten US Cities in Free Fall- Financial Post
Dow Crashes About Three Percent as Euro Drops, Jobless Claims Rise
Stocks Dive, Dow Off 376 on World Economic Worries
In The News Today Posted: May 20 2010 By: Jim Sinclair Post Edited: May 20, 2010 at 6:24 pm
Filed under: In The News
Thoughts For The Day
1. Gold is going to $1650 and higher.
2. We have seen this so many times since gold was at $248 and every time it was meaningless.
3. If you are trading gold on spec margins you are part of the problem.
4. If you are trading gold on spec margin admit you are not a trader but instead someone with a gambling addiction.
5. Those gold shares that performed well in the recent rally will be the leaders in the next and certainly to come rally.
6. If you are speculating in gold shares you are part of the problem.
7. Spec in Google, not gold shares, where you cannot do damage.
Jim Sinclair’s Commentary
They simply will not stop so they contribute daily to the real reason behind the problem
The West is toast.
Brokers selling synthetic derivatives to PMS clients Mehul Shah / Mumbai May 21, 2010, 0:20 IST
Regulators concerned as no specific rules govern these products.
Some leading brokerages are selling complex derivatives products to their portfolio management service (PMS) clients in the garb of structured notes, taking advantage of the ambiguity in rules governing such products, according to officials familiar with the matter.
Derivatives are supposed to be sold subject to various riders, unlike structured notes. The products in question, say officials, are far more akin to the former than the latter.
Typically, these brokerages are buying synthetic derivatives products on behalf of their wealthy customers from non-banking financial companies (NBFCs) owned by foreign banks.
At present, there are no specific rules in India governing equity-linked structured products sold by brokerages to their PMS clients. This, officials say, is the main reason behind mis-selling of these complex derivatives products.
“Brokers don’t even disclose the agreement signed between them and NBFCs to clients, taking advantage of regulatory loopholes,” said an official on condition of anonymity.
More…
From Russia With Gloves…and Why You Should Be Buying Gold Now!
While catching my breath after a tough workout, I was chatting with Hans. Hans is a German who recently changed residence from Monaco in favor of Uruguay. He lives most of the year in Uruguay but still spends two or there months at his home in the Greek Isles. He has lived part time in Greece for nearly 15 years and the two of us have been calling for calamity and violence since Greece´s debt woes first started to become public knowledge. I was asserting my opinion that in the near future the Euro will reach parity with the US dollar. Hans was expressing his firm belief that the Greeks would throw out their government long before they would bend to the will of Brussels or Berlin, when Polako piped up, ¨Let me tell you one thing. However bad you think it will be, it will be much worse and last much longer¨. Polako then went on to discuss the currency crises he has witnessed first hand. Poland, Argentina, Uruguay and Brazil. Everyone, he explained, even the most pessimistic underestimated how far and how fast a currency can drop once people lose confidence. First it starts with the bankers then it spreads to the people. ¨Once grandma starts bartering for borscht the money is in a whirlpool of death¨ explained the former French Foreign Legion heavyweight champ.
Polako then explained how the best way to preserve purchasing power is to buy ¨real things¨. He said gold is the best if you are rich but if not cigarettes, coffee, tea even roofing shingles are a good way to stay out of the death spiral. Hans agreed and as a savvy international investor with the best paid advisers in Switzerland and Monaco at his disposal, he has been buying gold and gold shares. Naturally, we at Without Borders agree. We have been expecting and profiting from the coming currency and sovereign debt crisis for many months. What is most encouraging is that the man on the street is just starting to take notice. That means the biggest profits are still on the horizon. The average European is taking notice and Americans should because the debt crisis express is heading their way. There is less and less time to prepare for the coming catastrophe. We are glad we own gold and gold companies and we are shifting more of our portfolio into the best quality companies that explore for and own natural resource deposits.
If you read my Blog, then this is no surprise but expected...
US Jobless Rate "Unexpectedly" Increases- Bloomberg
Commercial Property Values Drop as Rebound Stalls- BusinessWeek
Unfunded State Pensions Will Be Federal Issue- Financial Times
Soros Sees No Bottom to World Financial Collapse
The EU is as Doomed as Its Currency
Greece May Have to Quit Eurozone Warns Former Head of Germany's Central Bank
Time to buy your riot gear...
UK Police Body Warns of Riots and Unrest- Financial Times
Fund Managers See Gold Price Doubling to $3K- Daily Telegraph
One financial doomsday scenario.
A surprise jump in UK inflation to 5.3 per cent means that not a single savings account on the market offers an interest rate higher than the cost of living.
Arab world grapples with pending food shortage, and Rising U.S. Corn Exports May Increase Prices
Dow Crashes About Three Percent as Euro Drops, Jobless Claims Rise
Stocks Dive, Dow Off 376 on World Economic Worries
In The News Today Posted: May 20 2010 By: Jim Sinclair Post Edited: May 20, 2010 at 6:24 pm
Filed under: In The News
Thoughts For The Day
1. Gold is going to $1650 and higher.
2. We have seen this so many times since gold was at $248 and every time it was meaningless.
3. If you are trading gold on spec margins you are part of the problem.
4. If you are trading gold on spec margin admit you are not a trader but instead someone with a gambling addiction.
5. Those gold shares that performed well in the recent rally will be the leaders in the next and certainly to come rally.
6. If you are speculating in gold shares you are part of the problem.
7. Spec in Google, not gold shares, where you cannot do damage.
Jim Sinclair’s Commentary
They simply will not stop so they contribute daily to the real reason behind the problem
The West is toast.
Brokers selling synthetic derivatives to PMS clients Mehul Shah / Mumbai May 21, 2010, 0:20 IST
Regulators concerned as no specific rules govern these products.
Some leading brokerages are selling complex derivatives products to their portfolio management service (PMS) clients in the garb of structured notes, taking advantage of the ambiguity in rules governing such products, according to officials familiar with the matter.
Derivatives are supposed to be sold subject to various riders, unlike structured notes. The products in question, say officials, are far more akin to the former than the latter.
Typically, these brokerages are buying synthetic derivatives products on behalf of their wealthy customers from non-banking financial companies (NBFCs) owned by foreign banks.
At present, there are no specific rules in India governing equity-linked structured products sold by brokerages to their PMS clients. This, officials say, is the main reason behind mis-selling of these complex derivatives products.
“Brokers don’t even disclose the agreement signed between them and NBFCs to clients, taking advantage of regulatory loopholes,” said an official on condition of anonymity.
More…
From Russia With Gloves…and Why You Should Be Buying Gold Now!
While catching my breath after a tough workout, I was chatting with Hans. Hans is a German who recently changed residence from Monaco in favor of Uruguay. He lives most of the year in Uruguay but still spends two or there months at his home in the Greek Isles. He has lived part time in Greece for nearly 15 years and the two of us have been calling for calamity and violence since Greece´s debt woes first started to become public knowledge. I was asserting my opinion that in the near future the Euro will reach parity with the US dollar. Hans was expressing his firm belief that the Greeks would throw out their government long before they would bend to the will of Brussels or Berlin, when Polako piped up, ¨Let me tell you one thing. However bad you think it will be, it will be much worse and last much longer¨. Polako then went on to discuss the currency crises he has witnessed first hand. Poland, Argentina, Uruguay and Brazil. Everyone, he explained, even the most pessimistic underestimated how far and how fast a currency can drop once people lose confidence. First it starts with the bankers then it spreads to the people. ¨Once grandma starts bartering for borscht the money is in a whirlpool of death¨ explained the former French Foreign Legion heavyweight champ.
Polako then explained how the best way to preserve purchasing power is to buy ¨real things¨. He said gold is the best if you are rich but if not cigarettes, coffee, tea even roofing shingles are a good way to stay out of the death spiral. Hans agreed and as a savvy international investor with the best paid advisers in Switzerland and Monaco at his disposal, he has been buying gold and gold shares. Naturally, we at Without Borders agree. We have been expecting and profiting from the coming currency and sovereign debt crisis for many months. What is most encouraging is that the man on the street is just starting to take notice. That means the biggest profits are still on the horizon. The average European is taking notice and Americans should because the debt crisis express is heading their way. There is less and less time to prepare for the coming catastrophe. We are glad we own gold and gold companies and we are shifting more of our portfolio into the best quality companies that explore for and own natural resource deposits.
If you read my Blog, then this is no surprise but expected...
US Jobless Rate "Unexpectedly" Increases- Bloomberg
Commercial Property Values Drop as Rebound Stalls- BusinessWeek
Unfunded State Pensions Will Be Federal Issue- Financial Times
Soros Sees No Bottom to World Financial Collapse
The EU is as Doomed as Its Currency
Greece May Have to Quit Eurozone Warns Former Head of Germany's Central Bank
Time to buy your riot gear...
UK Police Body Warns of Riots and Unrest- Financial Times
Fund Managers See Gold Price Doubling to $3K- Daily Telegraph
One financial doomsday scenario.
A surprise jump in UK inflation to 5.3 per cent means that not a single savings account on the market offers an interest rate higher than the cost of living.
Arab world grapples with pending food shortage, and Rising U.S. Corn Exports May Increase Prices
Wednesday, May 19, 2010
Jim Sinclair’s Commentary
I firmly believe the Fed (via swaps) financed the ECB for today’s intervention in the euro under the assumption that if they did not, a second move down 1000 points would occur.
This action guarantees "QE to Infinity." Gold is going to and above $1650
QE to Infinity and Endless Cookie Jar
posted by Eric De Groot at Eric De Groot - 52 minutes ago
Centralized control views the capital markets as a cookie jar. No one will notice if we take just one more cookie. Markets are enticed by these cookies via leverage over the short-term, but capital flows a...
The Next Time America Has a Recession...
posted by Blogger at Jim Rogers Blog - 1 hour ago
''Next time we have a slowdown, or a recession. America has shot its wad. Ben Bernanke can't keep printing money - the world is going to run out of trees at the rate he's printing money.'' in Sydney Morni...
Euro Intervention Would Buy ‘Time But Little Else,’ Barrow Says
posted by Eric De Groot at Eric De Groot - 5 hours ago
The capital markets (gold, equity, bonds) follow time, and Barrow is right, they are running out of it. Equities cycle low March 06 2009 Important Dates Hz Date ---- ------- 17.2 - 08/10/10 25.8 - 04/29/...
Stocks to Tumble Another 20%, Cash the Safest Place: Roubini
Stocks are likely to continue their aggressive decline and shed another 20 percent as the world economy weakens, economist Nouriel Roubini told CNBC.
Financial Reforms Are Just 'Cosmetic'
Sarkozy threatened to withdraw France from the euro unless Germany vowed to back Greece
posted by Eric De Groot at Eric De Groot - 5 hours ago
They must work together, or this mess will metathesize with alarming speed. When intervention goes political, there will be mistakes. French president Nicolas Sarkozy threatened to pull out of the euro if ...
China to US: Put Your Fiscal House in Order
With China facing criticism for its de facto dollar peg, Assistant Finance Minister Zhu Guangyao shifted attention to Beijing's worries about U.S. policies, especially its soaring budget deficit.
Jim Sinclair’s Commentary
Main Street is in the hands of a roulette wheel and it is not going to stop.
The Western world is toast and there is no way out of the clutches of financiers that own Washington.
China is the shining example of how to stop white collar crime – make it a capital offense.
Proposal Would Rid Finance Bill of Derivatives Measure By DAMIAN PALETTA And GREG HITT
WASHINGTON—The head of the Senate Banking Committee proposed diluting a controversial provision in the Senate’s financial regulation overhaul bill that would ban banks from trading derivatives.
The move set up a fight on the Senate floor just days before a vote on the bill is expected to take place.
Sen. Christopher Dodd’s proposal puts the Connecticut Democrat at odds with Senate Agriculture Committee Chairman Blanche Lincoln (D., Ark.), who wants to force banks to spin off their derivatives trading operations into affiliates. She said Tuesday she would "fight efforts to weaken" her provision.
Mr. Dodd’s new proposal would suspend any ban for two years and give the Treasury Secretary the ability to kill the ban altogether. The banking industry has opposed the original provision to halt the trading, but its response to Mr. Dodd’s proposal was also negative. Bank officials say the two-year window, during which the future shape of trading would be left in doubt, would cast a chilling affect on the derivatives business and give foreign banks a competitive advantage over U.S. banks.
Derivatives are complex financial instruments often used to hedge risk against events such as fluctuations in interest rates or energy prices. Many lawmakers argue that bad speculative bets by banks on derivatives exacerbated the financial crisis in 2008, and that therefore the derivatives business needs closer regulation.
More…
Jim Sinclair’s Commentary
Adding debt to debt is what got the Western world in the pickle we are in.
Sarkozy is stepping into Merkel’s place to see the euro lower.
This article might have made a typo because the euro problem is not in 2016, it is more likely on or before 2011.6
Sarkozy threatened to withdraw France from the euro unless Germany vowed to back Greece By PETER ALLEN and SIMON DUKE Last updated at 9:41 AM on 15th May 2010
French president Nicolas Sarkozy threatened to pull out of the euro if Germany did not agree to bail out crsisi-hit Greece.
The revelation revived fears over the future of the single currency, sending the euro to an 19-month low against the dollar yesterday.
Mr Sarkozy made his ultimatum at a meeting of EU leaders in Brussels last Friday to discuss the mounting eurozone debt crisis, according to reports in the Spanish press.
He apparently demanded ‘a compromise from everyone to support Greece, otherwise France will have to reconsider its position on the euro’.
A Spanish politician at the meeting, quoted by the respected Spanish daily paper El Pais, said: ‘Sarkozy went so far as to bang his fist on the table and threaten to leave the euro.’
Sarkozy, who is of Greek ancestry on his mother’s side, added: ‘If at a time like this, with everything that is happening, Europe is not capable of a united response, then the euro makes no sense.’
More…
Illinois Doesn't Pay Bills; Crisis Pushes Businesses to Edge of Bankruptcy
Germans lead gold rush frenzy
GM wants more subprime buyers; will lender agree?
Detroit, Michigan: Landscapers find workers choosing jobless pay
Lloyd's of London Warns of "Perfect Storm" Threat to Insurers
Markets Plunge as Merkel Delivers Euro Warning and Bans Short Selling
Congress Blocks Indiscriminate IMF Aid to Europe
Stocks Slide After Investors Focus on Europe Woes
One in Seven US Homeowners Paying Late or in Foreclosure
I firmly believe the Fed (via swaps) financed the ECB for today’s intervention in the euro under the assumption that if they did not, a second move down 1000 points would occur.
This action guarantees "QE to Infinity." Gold is going to and above $1650
QE to Infinity and Endless Cookie Jar
posted by Eric De Groot at Eric De Groot - 52 minutes ago
Centralized control views the capital markets as a cookie jar. No one will notice if we take just one more cookie. Markets are enticed by these cookies via leverage over the short-term, but capital flows a...
The Next Time America Has a Recession...
posted by Blogger at Jim Rogers Blog - 1 hour ago
''Next time we have a slowdown, or a recession. America has shot its wad. Ben Bernanke can't keep printing money - the world is going to run out of trees at the rate he's printing money.'' in Sydney Morni...
Euro Intervention Would Buy ‘Time But Little Else,’ Barrow Says
posted by Eric De Groot at Eric De Groot - 5 hours ago
The capital markets (gold, equity, bonds) follow time, and Barrow is right, they are running out of it. Equities cycle low March 06 2009 Important Dates Hz Date ---- ------- 17.2 - 08/10/10 25.8 - 04/29/...
Stocks to Tumble Another 20%, Cash the Safest Place: Roubini
Stocks are likely to continue their aggressive decline and shed another 20 percent as the world economy weakens, economist Nouriel Roubini told CNBC.
Financial Reforms Are Just 'Cosmetic'
Sarkozy threatened to withdraw France from the euro unless Germany vowed to back Greece
posted by Eric De Groot at Eric De Groot - 5 hours ago
They must work together, or this mess will metathesize with alarming speed. When intervention goes political, there will be mistakes. French president Nicolas Sarkozy threatened to pull out of the euro if ...
China to US: Put Your Fiscal House in Order
With China facing criticism for its de facto dollar peg, Assistant Finance Minister Zhu Guangyao shifted attention to Beijing's worries about U.S. policies, especially its soaring budget deficit.
Jim Sinclair’s Commentary
Main Street is in the hands of a roulette wheel and it is not going to stop.
The Western world is toast and there is no way out of the clutches of financiers that own Washington.
China is the shining example of how to stop white collar crime – make it a capital offense.
Proposal Would Rid Finance Bill of Derivatives Measure By DAMIAN PALETTA And GREG HITT
WASHINGTON—The head of the Senate Banking Committee proposed diluting a controversial provision in the Senate’s financial regulation overhaul bill that would ban banks from trading derivatives.
The move set up a fight on the Senate floor just days before a vote on the bill is expected to take place.
Sen. Christopher Dodd’s proposal puts the Connecticut Democrat at odds with Senate Agriculture Committee Chairman Blanche Lincoln (D., Ark.), who wants to force banks to spin off their derivatives trading operations into affiliates. She said Tuesday she would "fight efforts to weaken" her provision.
Mr. Dodd’s new proposal would suspend any ban for two years and give the Treasury Secretary the ability to kill the ban altogether. The banking industry has opposed the original provision to halt the trading, but its response to Mr. Dodd’s proposal was also negative. Bank officials say the two-year window, during which the future shape of trading would be left in doubt, would cast a chilling affect on the derivatives business and give foreign banks a competitive advantage over U.S. banks.
Derivatives are complex financial instruments often used to hedge risk against events such as fluctuations in interest rates or energy prices. Many lawmakers argue that bad speculative bets by banks on derivatives exacerbated the financial crisis in 2008, and that therefore the derivatives business needs closer regulation.
More…
Jim Sinclair’s Commentary
Adding debt to debt is what got the Western world in the pickle we are in.
Sarkozy is stepping into Merkel’s place to see the euro lower.
This article might have made a typo because the euro problem is not in 2016, it is more likely on or before 2011.6
Sarkozy threatened to withdraw France from the euro unless Germany vowed to back Greece By PETER ALLEN and SIMON DUKE Last updated at 9:41 AM on 15th May 2010
French president Nicolas Sarkozy threatened to pull out of the euro if Germany did not agree to bail out crsisi-hit Greece.
The revelation revived fears over the future of the single currency, sending the euro to an 19-month low against the dollar yesterday.
Mr Sarkozy made his ultimatum at a meeting of EU leaders in Brussels last Friday to discuss the mounting eurozone debt crisis, according to reports in the Spanish press.
He apparently demanded ‘a compromise from everyone to support Greece, otherwise France will have to reconsider its position on the euro’.
A Spanish politician at the meeting, quoted by the respected Spanish daily paper El Pais, said: ‘Sarkozy went so far as to bang his fist on the table and threaten to leave the euro.’
Sarkozy, who is of Greek ancestry on his mother’s side, added: ‘If at a time like this, with everything that is happening, Europe is not capable of a united response, then the euro makes no sense.’
More…
Illinois Doesn't Pay Bills; Crisis Pushes Businesses to Edge of Bankruptcy
Germans lead gold rush frenzy
GM wants more subprime buyers; will lender agree?
Detroit, Michigan: Landscapers find workers choosing jobless pay
Lloyd's of London Warns of "Perfect Storm" Threat to Insurers
Markets Plunge as Merkel Delivers Euro Warning and Bans Short Selling
Congress Blocks Indiscriminate IMF Aid to Europe
Stocks Slide After Investors Focus on Europe Woes
One in Seven US Homeowners Paying Late or in Foreclosure
Volcker: Time Is Running Out for US- Bloomberg
Senate Rejects Bill to Prevent State Bailouts- BusinessWeek
Mortgage Delinquencies, Foreclosures Break Records- Associated Press
Europe Debt Woes Continue to Batter US Markets- USA Today
UK Inflation Hits 5.3%; Bank Accounts Give No Return- Daily Telegraph
-->
Trader Dan’s Mailbox Posted: May 19 2010 By: Dan Norcini Post Edited: May 19, 2010 at 3:47 pm
Filed under: Trader Dan Norcini
Hi Dan,
I hope you are well. I am simply writing you today to vent.
I own gold. It is insurance. It affords me peace of mind. But I’m also a speculator. I own futures options and mining shares. As of today, I quit.
I’ve been a licensed rep for my entire adult life, almost 20 years. I have never, ever witnessed, on a daily basis, a market that is so blatantly manipulated as gold on the Comex. Furthermore, the manipulation takes place so publicly in the clear light of day, agents of the Fed and the Treasury act to systematically blunt all natural market forces. This happens in America, for the love of Pete!! Additionally, willing accomplices in the financial media carry the water for the criminal manipulators with their daily cause-and-effect market musings to the uninformed masses who fail to recognize the obvious verbal contradictions from one report to the next.
- 5/11-14: Euro collapse. Buy Gold. (while Goldman and JPM sell theirs to dupe algos and hedgies).
- 5/17-18: Euro collapse. Sell Gold. (while Goldman and JPM sell more to paint the tape and create "resistance").
Yes, I suppose it is time to quit trying to profit from gold. As Jim consistently maintains, gold is insurance, period. It is not a trading vehicle.
For the sake of my sanity, I’m taking his advice.
CIGA Craig
Hello Craig,
Trading any rigged market is almost impossible unless you become a one minute bar chart oriented trader and go with the flow on any given day. The problem becomes that you are then trading purely as a technician and attempting to compete with the algorithm and high frequency trading crowd which own the playing field. You can take a few points out of the market doing that but you are then basically a scalper.
I personally do not trade any market based solely on technical indicators because I never made any money doing that my entire career and figure there is no point in trying to start now!
The only way to trade gold in my opinion is to buy it on weakness and sell it on strength. You can make money if you do that. You understand the reason why gold will move higher have not changed and that the selling by the banks is merely a gimmick that is used to flush out the spec longs who buy the market while it is making all time highs.
Wait for the specs to get flushed, watch for signs of a bottom and then buy it with a definite risk level that you are comfortable with.
Again, this is HUGELY different than holding gold as insurance against the depredations of the banking scum and their pals in the monetary sector. That is your insurance and you do not trade it – you accumulate it on bouts of weakness and can then thank the damn fools who are throwing theirs away at the bottom of a price reaction.
Gold is becoming the currency of last resort and that it not going to change because a Central Bank floods a system with liquidity and makes money available. The effects of this compounded increase in the amount of money in the system are going to be felt in an inflationary outbreak down the road. You will be glad you own the metal then.
I personally think that the more the price riggers jack with the system and play games in the paper market, the higher the price is eventually going to go. The harder you press down on a spring to compress it, the more fiercely it uncoils.
Nearly any astute investor OUTSIDE this country now knows that the paper Gold market is being rigged by the US government and its pals at the bullion banks. They are using that to their advantage as the short sighted fools of the West cede any economic advantage to the rising powerhouses of the East. Whoever owns the gold will rule the world. It really is that simple.
There really is something about gold that people can understand who are watching their currencies implode. No amount of bullion bank chicanery and official sector theft is going to change that. Gold is real money and always will be in the minds of the public, even though a war against it has been waged for three decades in the West.
Best to you, Trader Dan
Senate Rejects Bill to Prevent State Bailouts- BusinessWeek
Mortgage Delinquencies, Foreclosures Break Records- Associated Press
Europe Debt Woes Continue to Batter US Markets- USA Today
UK Inflation Hits 5.3%; Bank Accounts Give No Return- Daily Telegraph
-->
Trader Dan’s Mailbox Posted: May 19 2010 By: Dan Norcini Post Edited: May 19, 2010 at 3:47 pm
Filed under: Trader Dan Norcini
Hi Dan,
I hope you are well. I am simply writing you today to vent.
I own gold. It is insurance. It affords me peace of mind. But I’m also a speculator. I own futures options and mining shares. As of today, I quit.
I’ve been a licensed rep for my entire adult life, almost 20 years. I have never, ever witnessed, on a daily basis, a market that is so blatantly manipulated as gold on the Comex. Furthermore, the manipulation takes place so publicly in the clear light of day, agents of the Fed and the Treasury act to systematically blunt all natural market forces. This happens in America, for the love of Pete!! Additionally, willing accomplices in the financial media carry the water for the criminal manipulators with their daily cause-and-effect market musings to the uninformed masses who fail to recognize the obvious verbal contradictions from one report to the next.
- 5/11-14: Euro collapse. Buy Gold. (while Goldman and JPM sell theirs to dupe algos and hedgies).
- 5/17-18: Euro collapse. Sell Gold. (while Goldman and JPM sell more to paint the tape and create "resistance").
Yes, I suppose it is time to quit trying to profit from gold. As Jim consistently maintains, gold is insurance, period. It is not a trading vehicle.
For the sake of my sanity, I’m taking his advice.
CIGA Craig
Hello Craig,
Trading any rigged market is almost impossible unless you become a one minute bar chart oriented trader and go with the flow on any given day. The problem becomes that you are then trading purely as a technician and attempting to compete with the algorithm and high frequency trading crowd which own the playing field. You can take a few points out of the market doing that but you are then basically a scalper.
I personally do not trade any market based solely on technical indicators because I never made any money doing that my entire career and figure there is no point in trying to start now!
The only way to trade gold in my opinion is to buy it on weakness and sell it on strength. You can make money if you do that. You understand the reason why gold will move higher have not changed and that the selling by the banks is merely a gimmick that is used to flush out the spec longs who buy the market while it is making all time highs.
Wait for the specs to get flushed, watch for signs of a bottom and then buy it with a definite risk level that you are comfortable with.
Again, this is HUGELY different than holding gold as insurance against the depredations of the banking scum and their pals in the monetary sector. That is your insurance and you do not trade it – you accumulate it on bouts of weakness and can then thank the damn fools who are throwing theirs away at the bottom of a price reaction.
Gold is becoming the currency of last resort and that it not going to change because a Central Bank floods a system with liquidity and makes money available. The effects of this compounded increase in the amount of money in the system are going to be felt in an inflationary outbreak down the road. You will be glad you own the metal then.
I personally think that the more the price riggers jack with the system and play games in the paper market, the higher the price is eventually going to go. The harder you press down on a spring to compress it, the more fiercely it uncoils.
Nearly any astute investor OUTSIDE this country now knows that the paper Gold market is being rigged by the US government and its pals at the bullion banks. They are using that to their advantage as the short sighted fools of the West cede any economic advantage to the rising powerhouses of the East. Whoever owns the gold will rule the world. It really is that simple.
There really is something about gold that people can understand who are watching their currencies implode. No amount of bullion bank chicanery and official sector theft is going to change that. Gold is real money and always will be in the minds of the public, even though a war against it has been waged for three decades in the West.
Best to you, Trader Dan
Tuesday, May 18, 2010
First Gold, Now Europe Running Out of Silver
I told you ...Get off your arse and buy now before it's too late...As I write this it's on sale...
Karl Marx Is Probably Dancing Somewhere
posted by Blogger at Jim Rogers Blog - 2 hours ago
Karl Marx is probably dancing somewhere. Because, in America right now, the government owns the automobile industry, the insurance industry, the mortgage industry and the banking industry. The government s...
Very Likely That The Rally Has Come To An End
posted by Blogger at Marc Faber Blog - 7 hours ago
It is very likely that the rally, which originated in March 2009, has come to an end and that a correction of 20 to 30 percent from the recent highs will follow. in GBD Marc Faber is an international inv...
Europe's Debt Crisis Shows Risks for US: Volcker
Europe's debt crisis shows the risks for the United States if it does not get its budget deficits under control, former Federal Reserve Chairman Paul Volcker said on Tuesday.
Financial Reforms 'Cosmetic,' Won't Prevent Crises: Roubini
Current efforts to reform financial regulation are “cosmetic” and won’t prevent another crisis, economist Nouriel Roubini said Tuesday.
Tea Party Favorite Wins in Ky.
Pennsylvania Sen. Arlen (TRAITOR) Specter was FORCED into retirement
Tuesday with a stunning come-from-behind victory in the the Democratic primary.
NIA is pleased to announce that it has relaunched its charts page. NIA's new charts page contains more than five times as many charts as its old charts page and more detailed descriptions of the significance of each chart.
These charts rarely get shown by the mainstream media because they illustrate the devastating effects of inflation and how the U.S. economic recovery is phony. We believe these are the most important charts in the world for you to review and fully understand.
NIA's new improved charts page is now live at: http://inflation.us/charts.html
Dear Jim,
I know you have a deep respect for Chairman Volcker.
It surprises me that he would make a public statement concerning the euro that was akin to pouring gas on the fire.
Sincerely, CIGA Arlen
Dear Arlen,
Volcker would seek any advantage he could for the benefit of the US.
You must remember that his activities in the 80s totally slammed both South America and Africa when he ran overnight money to above 20% and 10 year to 14 7/8%. The developing nations all imploded based on what the Chairman deduced as an action in the best interest of the USA.
It very well might be seen as in the best interest of the USA to not have a euro to compete with.
Volcker has already stated that the present problem is the Sum of All Fears that can be cured only by doing politically impossible things. I do not believe he holds out much hope for that.
Exacerbating the euro problem might just speed this crisis along.
Regards, Jim
Dear CIGAs,
The euro below $1.20 would strongly suggest Chairman Volcker is right on the subject.
The euro below $1.10 would confirm that Volcker is correct.
Presently there is key support at $1.2150.
The euro today traded as high as 1.2448 and dropped below $1.2150 trading now at $1.2202. That is outrageous activity for a major currency
There is no central bank nor is there any intervention that can stand against the tool of credit default derivative swaps.
Gold is you’re only safe harbor.
German Ban on Risky Bets Seen Backfiring
Greek Lessons for USA
Here's Another $23 Billion Bailout That You May Have Missed This Week.
How Is The US Economy Supposed to Succeed When Our Politicians and the Big Banks are Making Billions of Dollars Betting Against It?
Bankers Jailed, Sued as Iceland Seeks Culprits for Crisis
US Posts 19th Straight Monthly Budget Deficit
Does this sound famillar? Dow Theorist Richard Russell: Sell Everything Liquid, You Won't Recognize America By The End Of The Year
Stocks Slide After Euro Falls to New Four-Year Low
What they don't know is that the dollar is NO safehaven...ONLY PHYSICAL GOLD AND SILVER...but you already knew that...Global Investors Flock to US Debt at Record Speed
latest news from England: Parents of under-fives face 'nanny state' home inspections to keep children safe
I told you ...Get off your arse and buy now before it's too late...As I write this it's on sale...
Karl Marx Is Probably Dancing Somewhere
posted by Blogger at Jim Rogers Blog - 2 hours ago
Karl Marx is probably dancing somewhere. Because, in America right now, the government owns the automobile industry, the insurance industry, the mortgage industry and the banking industry. The government s...
Very Likely That The Rally Has Come To An End
posted by Blogger at Marc Faber Blog - 7 hours ago
It is very likely that the rally, which originated in March 2009, has come to an end and that a correction of 20 to 30 percent from the recent highs will follow. in GBD Marc Faber is an international inv...
Europe's Debt Crisis Shows Risks for US: Volcker
Europe's debt crisis shows the risks for the United States if it does not get its budget deficits under control, former Federal Reserve Chairman Paul Volcker said on Tuesday.
Financial Reforms 'Cosmetic,' Won't Prevent Crises: Roubini
Current efforts to reform financial regulation are “cosmetic” and won’t prevent another crisis, economist Nouriel Roubini said Tuesday.
Tea Party Favorite Wins in Ky.
Pennsylvania Sen. Arlen (TRAITOR) Specter was FORCED into retirement
Tuesday with a stunning come-from-behind victory in the the Democratic primary.
NIA is pleased to announce that it has relaunched its charts page. NIA's new charts page contains more than five times as many charts as its old charts page and more detailed descriptions of the significance of each chart.
These charts rarely get shown by the mainstream media because they illustrate the devastating effects of inflation and how the U.S. economic recovery is phony. We believe these are the most important charts in the world for you to review and fully understand.
NIA's new improved charts page is now live at: http://inflation.us/charts.html
Dear Jim,
I know you have a deep respect for Chairman Volcker.
It surprises me that he would make a public statement concerning the euro that was akin to pouring gas on the fire.
Sincerely, CIGA Arlen
Dear Arlen,
Volcker would seek any advantage he could for the benefit of the US.
You must remember that his activities in the 80s totally slammed both South America and Africa when he ran overnight money to above 20% and 10 year to 14 7/8%. The developing nations all imploded based on what the Chairman deduced as an action in the best interest of the USA.
It very well might be seen as in the best interest of the USA to not have a euro to compete with.
Volcker has already stated that the present problem is the Sum of All Fears that can be cured only by doing politically impossible things. I do not believe he holds out much hope for that.
Exacerbating the euro problem might just speed this crisis along.
Regards, Jim
Dear CIGAs,
The euro below $1.20 would strongly suggest Chairman Volcker is right on the subject.
The euro below $1.10 would confirm that Volcker is correct.
Presently there is key support at $1.2150.
The euro today traded as high as 1.2448 and dropped below $1.2150 trading now at $1.2202. That is outrageous activity for a major currency
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