$10 TRILLION Liquidity Injection Coming? Credit Suisse Hunkers Down Ahead Of The European Endgame
When yesterday we presented the
view from CLSA's Chris Wood that the February 29 LTRO could be €1
Trillion (compared to under €500 billion for the December 21 iteration),
we snickered, although we knew quite well that the market response, in
stocks and gold, today would be precisely as has transpired. However,
after reading the report by Credit Suisse's William Porter, we no
longer assign a trivial probability to some ridiculous amount hitting
the headlines early in the morning on February 29. Why? Because from
this moment on, the market will no longer be preoccupied with a €1
trillion LTRO number as the potential headline, one which in itself
would be sufficient to send the Euro tumbling, the USD surging, and
provoking an immediate in kind response from the Fed. Instead, the new
'possible' number is just a "little" higher, which intuitively would
make sense. After all both S&P and now Fitch expect
Greece to default on March 20 (just to have the event somewhat "priced
in"). Which means that in an attempt to front-run the unprecedented
liquidity scramble that will certainly result as nobody has any
idea what would happen should Greece default in an orderly fashion,
let alone disorderly, the only buffer is having cash. Lots of it. A
shock and awe liquidity firewall that will leave everyone stunned. How
much. According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, €10 TRILLION!The Great Silver Market Myth
You Can't Fool Mother Nature For Long: Financial Markets
We can also shed light on the difference between a real free market and a simulacrum of a "free market" by asking: does anyone seriously believe the stock market would be higher if all market intervention and manipulation by the Central State and Central Bank (and their proxies) ceased? We can extend this by asking: what if public companies were banned from issuing "beat by a penny" pro forma earnings and other accounting tricks? What if the "shadow banking system" was outlawed, and all assets and liabilities were transparent? Does anyone seriously believe the fragile financial system that depends on shadow banking for its dodges and profits would survive transparency and marked-to-market accounting? Americans have no real experience of free, transparent financial markets or of rigorously transparent accounting by their Central State, the Federal Reserve, public corporations or the financial sector. They have been presented facsimiles of accurate statistics and accounting, and simulacra of transparent markets. When those participants' faith in the Status Quo's fairness and transparency declines below a critical threshold, then they withdraw or limit their participation, and the system enters a self-reinforcing death spiral.The U.S. Should Be A Triple-B Or Junk Bond
Admin at Marc Faber Blog - 2 hours ago
The U.S. should not be a triple-A-minus but a triple-B or junk bond when
you really analyze the unfunded liabilities that will come due in future. -
*in CNBC.com*
*Related, ProShares UltraShort 20+ Year Treasuries ETF (TBT), iShares
Barclays 20+ Yr Treasury Bond ETF (TLT)*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Economic Deterioration Or Increased Debt Monetization?
Eric De Groot at Eric De Groot - 2 hours ago
The mass downgrade of European nations reminds us all that the monster
called the sovereign debt crisis has not be slain. While centralized
governments "drastically" slash their staff and critical office supplies
such as computers and staplers in an effort to balance the budget, their
actions are ignored as meaningless by global capital flows. There is no
plan whatsoever to reduce or payoff...
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GFMS reports substantial offtake of Gold by Central Banks
Trader Dan at Trader Dan's Market Views - 2 hours ago
Dow Jones news is carrying a report this morning from GFMS (formerly Gold
Fields Mineral Services)detailing the amount of gold purchased last year by
the world's Central Banks. It was indeed a formidable number.
The net purchases of the yellow metal came in near 430 tons, a more than
5-fold increase on the previous year. It was also the highest level
recorded since 1964.
To give you a sense of the significance of these purchases - the amount of
NET purchases by Central Banks in 2010 was a mere 77 tons!
Surprising to me was the fact that Mexico was the largest buyer as far as
the of... more »
by David Schectman, MilesFranklin.com:
In a recent Rant, Andy Hoffman wrote a few sentences that were not respectful to car dealers. I would like to make it clear that this was not a blanket indictment of the industry, but rather a commentary based on a recent personal bad experience he had. Some of our favorite clients are car dealers, and Andy was NOT talking about any of you. Andy writes what Andy wants to write and we do not edit his commentary. So the apology is mine, and is directed to anyone whose feelings were ruffled. If you feel offended, please don’t – unless you were the salesman that Andy had the bad experience with.
Jim Willie is one of the top, if not “the” top writer in our industry. His small essay in today’s daily should be on your “not to be missed” list. Hubert Moolman uses “Fractal” technical analysis to paint a bright future for gold.
2012 should turn out to be one for the history books, but you may miss it entirely if you listen to the mainstream media. Of course, you can always spend half an hour a day reading my daily – and I assure you, you will miss nothing that is important (to your financial health).
Read More @ MilesFranklin.com
In a recent Rant, Andy Hoffman wrote a few sentences that were not respectful to car dealers. I would like to make it clear that this was not a blanket indictment of the industry, but rather a commentary based on a recent personal bad experience he had. Some of our favorite clients are car dealers, and Andy was NOT talking about any of you. Andy writes what Andy wants to write and we do not edit his commentary. So the apology is mine, and is directed to anyone whose feelings were ruffled. If you feel offended, please don’t – unless you were the salesman that Andy had the bad experience with.
Jim Willie is one of the top, if not “the” top writer in our industry. His small essay in today’s daily should be on your “not to be missed” list. Hubert Moolman uses “Fractal” technical analysis to paint a bright future for gold.
2012 should turn out to be one for the history books, but you may miss it entirely if you listen to the mainstream media. Of course, you can always spend half an hour a day reading my daily – and I assure you, you will miss nothing that is important (to your financial health).
Read More @ MilesFranklin.com
from King World News:
With
many global investors still concerned about the price of gold and
silver, today King World News interviewed the “London Trader” to get his
take on these markets. The source stated, “We’ve still got a very, very
compressed spring because the shorts are still trying to defend their
positions, their naked short positions in both the gold and silver
markets. As an example, in the silver market, you saw that type of
activity in the silver ETF (SLV). Shorts borrowed another 3 million
ounces to cover immediate delivery concerns. There are 25 million
ounces now borrowed from SLV. It is getting worse and worse for them.”
The London Trader continues: Read More @ KingWorldNews.com
With
many global investors still concerned about the price of gold and
silver, today King World News interviewed the “London Trader” to get his
take on these markets. The source stated, “We’ve still got a very, very
compressed spring because the shorts are still trying to defend their
positions, their naked short positions in both the gold and silver
markets. As an example, in the silver market, you saw that type of
activity in the silver ETF (SLV). Shorts borrowed another 3 million
ounces to cover immediate delivery concerns. There are 25 million
ounces now borrowed from SLV. It is getting worse and worse for them.”The London Trader continues: Read More @ KingWorldNews.com
Jim Sinclair’s Commentary
Even though QE impacts savings negatively, it has to come because of
what has already happened to saving as a result of QE 1 and 2,
unemployment, too much credit and the recession that doesn’t want to go
away.
I know that sounds like a Gordian Knot, but trust me, it is true.
"QE to infinity in Euroland and North America starts with a vengeance in 2012.
Insight: Recovery at risk as Americans raid savings By Jilian Mincer and Jonathan Spicer
Posted 2012/01/17 at 12:13 am EST
NEW YORK, Jan. 17, 2012 (Reuters) — More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.
In an ominous sign for America’s economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.
Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.
American households "have been spending recently in a way that did not seem in line with income growth. So somehow they’ve been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.
"If they saw future income and employment increasing strongly then that would be reasonable. But I don’t see that. So I’ve been puzzled by this," he said.
More…
Clearing houses: the next casualty of the crisis? By Luke Jeffs
LONDON | Mon Jan 16, 2012 8:30am EST
Jan 16 (Reuters) – Clearing houses — the plumbers of high finance — could become the next casualties of the crisis as regulators insist that banks run their riskiest and private trades through them.
At the moment banks conduct over-the-counter trades between themselves: one to one dealings often involving multimillion-euro bets on differences in interest or other rates, the scale and complexity of which can be difficult to track.
But with the financial crisis still raging and banks, hedge funds and governments alike faced with unforeseen levels of debt, regulators are now forcing this shadowy, $600-trillion industry into the light.
The question being asked by industry insiders is whether the clearing houses, also known as central counterparties (CCPs), are any more secure.
"What happens if they go bust? I can tell you the simple answer: mayhem. As bad as, conceivably worse than, the failure of large and complex banks," Paul Tucker, deputy governor of the Bank of England, said in October.
More…
Jim Sinclair’s Commentary
From there to where is the question as China must support the euro
moderately. This is not a huge deal, but it is the beginning of a
facility.
The end game is approaching as swaps become beards for the necessary action taken and to be taken.
January 17, 2012 – People’s Bank of China, Dubai and the UAE Central Bank have signed bilateral currency swap agreements, aimed at strengthening bilateral financial cooperation and promote bilateral trade and investment and jointly safeguard regional financial stability.
The 35 billion yuan swap / 200 million dirhams, is valid for three years and may be extended by mutual agreement.
More…
Hi Jim,
Any luck on finding a broker who will do direct registration in the name of the custodian and taxable account?
CIGA Travis
Dear CIGA Travis,
I have received emails from multiple CIGAs telling me that they have been successful with this issue. I do not save emails as a practice.
If any CIGAs pass along the brokers name to me, I will see you get it.
Sincerely,
Jim
Dear Jim,
You warned us. The foolish do nothing and deserve what they get!
Big Tatanka
Dear Big Tatanka,
I am so upset. Practically nobody is doing anything to protect themselves, yet I know people who, as of now, lost everything at MS, their life hard won and huge successful trading work in commodities and securities!
Regards,
Jim (aka Little Tatanka)
IIROC accuses Barrett of exposing customers to ‘immense risk’ John Greenwood Jan 17, 2012 – 9:41 AM ET
Canada’s investment industry watchdog is accusing a small Toronto commodities brokerage of manipulating client accounts and issuing false statements as part of what it alleges is an “elaborate trade allocation scheme” that went undetected for years and that now leaves customers “at immense risk of harm.”
Barret Capital Management has experienced “a pervasive failure of its operating procedures,” according to the Investment Industry Regulatory Organization of Canada (IIROC), which is seeking the immediate cancellation of its brokerage licence at a hearing in Toronto on Tuesday.
According to its website, Barret offers trading for primarily retail customers across a host of metals, minerals and agricultural products. One of its main focuses is a precious metals service where clients are able to buy physical gold or silver bars suitable for RRSPs.
More…
Dear Eric,
Greham’s Economic Law does exist. Good money pushes out bad money.
I will add "From the smallest coin to the largest bill to bonds of the offender."
It is coming in 2012.
This is just one of the many reasons the gold market’s full valuation point is far, far away.
Jim
Currency Devaluation No Pocket Change CIGA Eric
Kevin reminds us all that changing composition and shrinking circulations of smaller denomination coins more often than not unrecognized symptoms of rampant currency devaluation across the globe.
Composition of loonies and toonies will be switched to a steel core from nickel
Thought you might find this interesting…
montrealgazette.com
Kevin
Headline: Canada to mint cheaper steel coins
OTTAWA — Canada’s mint will soon unveil one-dollar and two-dollar coins made from brass-plated steel, replacing more expensive nickel cores, the government said Friday.
An explanation in the official Canada Gazette said the traditional use in coinage of high cost alloys at volatile market rates has driven up production costs for governments around the world.
"In many countries, the intrinsic metal value of the coins are greater than their face value, leading to coin hoarding activities that reduces the efficiency of the monetary system," it said.
The new coins will be slightly lighter, Can$16 million (US$16 million) cheaper to produce and ship, and harder to counterfeit.
However, the change will cost coin-operated industries up to $40 million to recalibrate vending machines to recognize the new coinage.
The mining sector will also be hit as global nickel demand falls by about 539 metric tonnes per year, or 0.05 percent.
Source: google.com
Headline: Cent, Nickel, and $1 Coins Chart Uncertain Future
During the 2011 fiscal year, losses from producing and distributing the cent and nickel reached $116.7 million, as the unit cost for each rose to more than twice the face value. The US Mint’s Acting Chief Financial Officer David Motl indicated that demand from Federal Reserve Banks for these two denominations is expected to increase in the near future.
Meanwhile, the US Mint’s most profitable denomination was the $1 coin, which generated $382.8 million in seigniorage. On December 13, 2011, Vice President Biden and Treasury Secretary Geithner announced the suspension of production of Presidential Dollars for circulation. The coins will still be minted in limited quantities needed to fulfill demand from collectors, but undoubtedly production will experience a sharp decline.
Source: coinupdate.com
More…Dear Eric,
There is choice whatsoever. QE or not is pure MOPE. QE will happen to infinity, both in the USA and Euroland.
The Greeks will exit the Euro as China’s price for moderate assistance. The US would like to hold off until June, but that is politically very risky without an Iranian War.
Bernanke is reluctant but will not desert the sitting administration.
Regards,
Jim
Economic Deterioration Or Increased Debt Monetization? CIGA Eric
The mass downgrade of European nations reminds us all that the monster called the sovereign debt crisis has not be slain. While centralized governments "drastically" slash their staff and critical office supplies such as computers and staplers in an effort to balance the budget, their actions are ignored as meaningless by global capital flows. There is no plan whatsoever to reduce or payoff existing debt. S&P’s recent downgrade of France and several other European nations only reiterates the cautionary message coming from the gold market.
As debt repayment continues to consume an increasing portion of GDP, the choice will be economic deterioration or increased debt monetization by 2013. The slow decay in the countertrend reaction in the "Jim’s formula" (see chart 1) suggests decision time is fast approaching.
Chart 1: US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed
Silver recent upside breakout of its intermediate down trendline favors the increased debt monetization outcome.
Chart 2: Silver ETF
More…
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