Greg Hunter’s USAWatchdog.com
Dear CIGAs,
I, and many others, have said when it comes to the economy, nothing has been fixed. I thought Federal Reserve Chief Ben Bernanke underscored that fact when he spoke yesterday in Washington D.C. for the Joint Economic Committee. Mr. Bernanke said in prepared remarks, “There have been some positive developments: The functioning of financial markets and the banking system in the United States has improved significantly.” Of course, there was not a word about the recent credit downgrades for three big U.S. banks. I also don’t see how the banks are in so much better shape with many of their stock prices tumbling. Bernanke also admitted, “Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped.” (Click here to read the complete text from Bernanke’s prepared remarks.) Maybe that’s why the Fed recently froze a key interest rate at near 0% for at least the next two years.
Bernanke is still saying that lethargic growth of the economy is due to “temporary factors.” And, yet, he also told the Congressional Committee the so-called economic recovery “is close to faltering.” I don’t see how these kinds of back and forth contradictions are not the sign of a Fed Chief with a clear view of the economy, let alone with a plan to fix it. The fact is the Fed’s lax regulations, easy money policies and massive bailouts are a big part of why the economy is in the shape it is in. To be fair, it is not all Bernanke’s fault. First of all, Alan Greenspan was no “maestro.” The last Fed Chief who could call himself that was Paul Volcker. He raised interest rates to the moon to kill inflation, and Wall Street hated him for it. In the years leading up to Mr. Bernanke’s appointment, Greenspan was quick with his own bailouts and never saw a regulation he couldn’t bend or cut. It was Greenspan that pushed to get rid of Glass-Steagall, and from that point in 1999, it was all downhill.
Congress was basically taken over by Wall Street years ago, and instead of statesmen, all we have now are mostly bagmen. Nobody has the spine or political will to do what is necessary to right the ship of state. Congress cannot agree on anything resembling a financial plan to get America back on track. Congress is so divided that it has flirted with shutting down the government several times—this year. Now, the so-called “super committee” is supposed to cut $1.5 trillion from federal deficits by the end of next month. (By the way, this is not really a cut; it just slows the growth of government spending.) Yesterday, Bernanke warned Congress about this “crucial objective” by saying, “The federal budget is clearly not on a sustainable path at present. The Joint Select Committee on Deficit Reduction, formed as part of the Budget Control Act, is charged with achieving $1.5 trillion in additional deficit reduction over the next 10 years on top of the spending caps enacted this summer. Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability.”
More…
Steve Jobs has passed away, may he rest in peace
Our recent discussion on the four potential catalysts for a 'crash landing' in China seems to have been quite prescient as Markit Economics reports tonight that HSBC Hong Kong's PMI experience another month of deteriorating operating conditions as demand contracted further and the consensus outlook became increasingly downbeat. On the heals of JPMorgan's earlier downgrade of global growth to only 1.7% annualized for the next three quarters and HSBC's cutting of Asia Ex-Japan GDP growth expectations, citing Europe's financial stress as already taking a toll on growth and the US economy remaining 'decidely lackluster', things appear to be weakening rapidly as mainland China growth was insufficient to overcome domestic declines. Output fell at the fastest rate in just under two-and-a-half years.
Dear CIGAs,
I, and many others, have said when it comes to the economy, nothing has been fixed. I thought Federal Reserve Chief Ben Bernanke underscored that fact when he spoke yesterday in Washington D.C. for the Joint Economic Committee. Mr. Bernanke said in prepared remarks, “There have been some positive developments: The functioning of financial markets and the banking system in the United States has improved significantly.” Of course, there was not a word about the recent credit downgrades for three big U.S. banks. I also don’t see how the banks are in so much better shape with many of their stock prices tumbling. Bernanke also admitted, “Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped.” (Click here to read the complete text from Bernanke’s prepared remarks.) Maybe that’s why the Fed recently froze a key interest rate at near 0% for at least the next two years.
Bernanke is still saying that lethargic growth of the economy is due to “temporary factors.” And, yet, he also told the Congressional Committee the so-called economic recovery “is close to faltering.” I don’t see how these kinds of back and forth contradictions are not the sign of a Fed Chief with a clear view of the economy, let alone with a plan to fix it. The fact is the Fed’s lax regulations, easy money policies and massive bailouts are a big part of why the economy is in the shape it is in. To be fair, it is not all Bernanke’s fault. First of all, Alan Greenspan was no “maestro.” The last Fed Chief who could call himself that was Paul Volcker. He raised interest rates to the moon to kill inflation, and Wall Street hated him for it. In the years leading up to Mr. Bernanke’s appointment, Greenspan was quick with his own bailouts and never saw a regulation he couldn’t bend or cut. It was Greenspan that pushed to get rid of Glass-Steagall, and from that point in 1999, it was all downhill.
Congress was basically taken over by Wall Street years ago, and instead of statesmen, all we have now are mostly bagmen. Nobody has the spine or political will to do what is necessary to right the ship of state. Congress cannot agree on anything resembling a financial plan to get America back on track. Congress is so divided that it has flirted with shutting down the government several times—this year. Now, the so-called “super committee” is supposed to cut $1.5 trillion from federal deficits by the end of next month. (By the way, this is not really a cut; it just slows the growth of government spending.) Yesterday, Bernanke warned Congress about this “crucial objective” by saying, “The federal budget is clearly not on a sustainable path at present. The Joint Select Committee on Deficit Reduction, formed as part of the Budget Control Act, is charged with achieving $1.5 trillion in additional deficit reduction over the next 10 years on top of the spending caps enacted this summer. Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability.”
More…
Steve Jobs Has Passed Away (1955-2011)
Steve Jobs has passed away, may he rest in peace
Hong Kong Private Sector Health In Worst Shape Since May 2009
Our recent discussion on the four potential catalysts for a 'crash landing' in China seems to have been quite prescient as Markit Economics reports tonight that HSBC Hong Kong's PMI experience another month of deteriorating operating conditions as demand contracted further and the consensus outlook became increasingly downbeat. On the heals of JPMorgan's earlier downgrade of global growth to only 1.7% annualized for the next three quarters and HSBC's cutting of Asia Ex-Japan GDP growth expectations, citing Europe's financial stress as already taking a toll on growth and the US economy remaining 'decidely lackluster', things appear to be weakening rapidly as mainland China growth was insufficient to overcome domestic declines. Output fell at the fastest rate in just under two-and-a-half years.
Is Morgan Stanley's Biggest Asset Their Debt?
Update: For those curious to learn more about this phenomenon, here is ZeroHedge's first take on this paradox from April 2009!Stocks added to their rally today when Gasparino leaked news that MS was going to have a "solid" quarter and they were going to beat GS. Morgan Stanley has $187 billion of public debt according to Bloomberg. Just eyeballing it, the average maturity looks close to 4 years, but let's be conservative and assume it is 3 years. So MS 3 year bonds widened by over 300 bps during the quarter. 3 year MS CDS widened by 380 bps (from 113 to 493), so the move in bonds actually outperformed the move in CDS. Is MS planning on taking a massive gain on marking their own bonds? There were stories of MS buying back their own bonds - a great move if they though they were cheap, but a critical move if they were planning on taking a gain and didn't want to have to give it back in the future if their credit spreads tightened. Goldman has slightly less debt at $178 billion, but the spread widened far less. Is this why the MS CEO is so confident they will have a good quarter and beat GS? I honestly hope not. If the CEO of MS is playing accounting games (totally legal, but stupid) on their own spreads and thinks the markets will respect that, than I am very nervous about what is going on there.
Le Figaro Discloses France Has Prepared An Emergency "Just In Case" Nationalization Plan For "2 Or 3" Banks
There are three phrases the market never wants to hear. Ever. They are "contingency", "just in case", and "only." Alas, it just got all three of them in an article just released by French Le Figaro which,
per Bloomberg, has disclosed that "France has been working for a
number of days on a plan that would allow the state to take a stake in
the country’s financial institutions if needed, Le Figaro reports,
citing a source. The plan, the article continues, is being prepared
“just in case” it’s needed and only 2 or 3 banks may be affected under
plan." So, let's get this straight: France has scrambled to put
together a nationalization plan to bail out just "2 or 3" banks, "if
needed"... Uhhh, all we can say to this is, LEEEEEEEROOYYYYYYY JENKINS. Although
the person we would most love to hear say it, is the person who until
two months ago was the French minister of finance and currently head of
the world's most irrelevant and disorganized organization.Buy Them Cheap...and Stack em Deep...BTFD...
US Mint Sells Nearly 3/4 MILLION SILVER EAGLES 1st Day of October!
from SilverDoctors by The DocYesterday 10/3, the US Mint sold a whopping 737,000 Silver Eagle 1 oz coins in a single day!
To put this number in perspective, in Dec of 2010 with silver in the mid $20's, the US Mint sold a total of 1,772,000 Silver Eagles FOR THE ENTIRE MONTH OF DECEMBER! Yesterday, on 10/3, with the spot price of silver approximately $31/oz, the US Mint sold 737k Eagles, or 42% of sales for ALL of December 2010!
Sales totals for September are now in as well, at a massive 4,460,500 ounces for the month, the highest monthly sales total since January 2011 (during a massive take-down...seeing the connection here) by nearly 50%!!
If the yesterday's sales pace is continued throughout the rest of 2011 (not to mention the increase we would see with any further sell-off), the US Mint Silver Eagle sales would be nearly 50 Million ounces for the LAST QUARTER OF 2011!
In 2010, the US Mint sold a record 34.662 Million Silver Eagle 1 oz coins
US Mint Bullion Sales: Silver Eagles Reach Record 6,422,000 [Troy Ounces]
U.S. "close to faltering," Fed ready to act: Bernanke .
IMF official retracts statement on bond purchases.
Morgan Tries to Quell Rumors About Its Holdings
Think Occupy Wall St. is a phase? You don't get it
The Bear Market Is Made in the U.S.A.
New York State Senators Say We've Got Too Much Free Speech; Introduce Bill To Fix That
Dear CIGAs,
This event has had little, yet precious, media coverage so far.
Its persistence seems to be gaining attention. It is a predictable
sign of the times. It makes a hobby farm in the country wise from many
angles.
Unions endorse, will join Occupy Wall Street protests By Jason Kessler and Michael Martinez, CNN
updated 10:23 AM EST, Wed October 5, 2011
New York (CNN) — As the Occupy Wall Street protesters rally for a third week, social media sites such as Twitter seem to be spurring similar protests in other cities.
A Twitter account called Occupy Boston mentions a citywide college walkout there Wednesday.
Meanwhile, the Massachusetts Nurses Association says hundreds of the city’s nurses will rally with the Occupy Boston protesters on Wednesday. The association says the protest will be part of the opening day activities for a national nursing convention in Boston.
In New York, several unions endorsed the Occupy Wall Street movement and plan to join the protesters’ street theater Wednesday, labor leaders said.
"It’s really simple. These young people on Wall Street are giving voice to many of the problems that working people in America have been confronting over the last several years," said Larry Hanley, international president of the Amalgamated Transit Union, which has 20,000 members in the New York area.
"These young people are speaking for the vast majority of Americans who are frustrated by the bankers and brokers who have profited on the backs of hard-working people," Hanley added in a statement. "While we battle it out day after day, month after month, the millionaires and billionaires on Wall Street sit by — untouched — and lecture us on the level of our sacrifice."
Transport Workers Union Local 100 spokesman Jim Gannon said the Occupy Wall Street movement, which denounces social inequities in the financial system and draws inspiration from the Arab Spring revolutions in Africa and the Middle East, has advanced issues that unions typically support.
More…
Another QE(n) Blast Is Coming
CIGA Eric
Announced layoffs began their upward turn in September 2011. The markets have been sending the message of decaying economic growth for months. Unfortunately, not many beyond the confines of Insights and CIGA community recognized it until now.
The short-term smashing of gold, silver, and various safe havens are designed to shake investment discipline and clear passengers from the secular bull market train. While paper operations can be painful over the short-term, they do provide excellent entry points for those that understand the power of the secular bull.
Challenger, Grey, and Christmas Announced Layoffs (ALO) And YOY Change
Headline: Announced U.S. Job Cuts Rise 212% From Year Ago, Challenger Says
Oct. 5 (Bloomberg) — U.S. employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. and in the military.
Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements.
While the bulk of firings are not “directly related” to economic weakness, they “could definitely be a sign of more cuts to come,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Bank of America is not the only bank still struggling in the wake of the housing collapse, and the military cutbacks are probably just the tip of the iceberg when it comes to federal spending cuts.”
Source: businessweek.com
Hello Mr. De Groot,
Regarding to Bernanke "listening to the message of the market," I believe that the Fed has desired and programmed this environment; lower commodities, perhaps even orchestrating downward pressure on silver and gold (with a further increase in gold/silver margins requirement EVEN AFTER the recent plunger was underway, among others….for good measure, of course) as a set up for the next round of QE+. All to create a more fertile political environment for it and to silence the anti-stimuli Tea Party types with some more bad market action and negative jobs pain. I noted the increased flow of negative news coming out of the cooperative financial press, as well. Certainly not the usual cheerleading. Just saw a report from Challenger…"September biggest layoffs in years.." QE will be just what the doctor (Bernanke) ordered!
Best regards an thank you for your insights,
Stephan
More…
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