Obama Phone: Gov to Spend $2.4 Billion On Millions of Free Phones In 2012

by Mac Slavo, SHTFPlan.com:

One of the complaints about the U.S. Constitution recently, being as outdated as it is, is that it fails to guarantee certain unalienable rights such as free medical care, housing , food, and of course, the right to bear cell phones. And, although the founders failed to specifically cite social programs as a necessary element for promoting the general welfare, the living nature of our founding document has been interpreted by political and legal scholars alike to allow for the seizure of assets by force from one group of people in order to redistribute those assets in a fair and responsible manner to those less fortunate.
As such, if you’re one of the 100 million Americans living below or at the edge of the poverty line, you’ll be happy to know that you more than likely qualify for a free cellular phone, also known as the Obama Phone, from the US government:
Read More @ SHTFPlan.com

The Rush to Commodities… David Morgan on Fox Business

Gold Continuing to Fail at $1750

Trader Dan at Trader Dan's Market Views - 42 minutes ago

Gold has now spiked through the $1750 level several times since the end of last month but has not been able to CLOSE THROUGH this level. Until it does, the market will not be able to start a new leg higher in the uptrend. Generally speaking, markets tend to pause at resistance levels until they can gather enough of a spark to take them strongly through those or they retreat and consolidate leading to some basing action. During the latter, some of the shorter term oriented bulls will liquidate longs out of frustration or out of a desire to cash in some profits and bank them. That se... more »

 

 

CME Group LOWERING margin requirements for Gold and Silver Contracts

Trader Dan at Trader Dan's Market Views - 51 minutes ago

Current Initial New Initial Current Maintenance New Maintenance GOLD $11,475 $8,500 $10,125 $7,500 SILVER $24,975 $18,500 $21,600 $16,000 more »

 

 

Gold Daily and Silver Weekly Charts - More of the Same

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SP 500 and NDX Futures Daily Charts - Winding Up for a Move - VIX

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Wall Street Takes "Nuclear" Option In Fighting New CFTC Regulations

Dave in Denver at The Golden Truth - 6 hours ago

Who do you think will win this battle? The ink is barely dry on Dodd-Frank - and the volumes of associated bureaucratic multi-hundred page "handbooks" are just now rolling off the Government's other printing press LINK - and already Wall Street is employing the highest level of influence and firing lethal legal weapons in order to protect its "family" and its license to steal. (You think I'm kidding about the mushrooming bureaucratic paper being generated? Here's an excerpt from that link, which everyone should read: Dodd-Frank isn’t all rule-making in order to act the legislat... more »

 

 

QE 3 Is A Global Policy

Eric De Groot at Eric De Groot - 6 hours ago

While US headlines focus on mortgage settlement, yet another questionable policy that rewards recklessness over prudent behavior (see video below), the public likely misses another round of global Q3. It's not surprising that major buyers such as the Chinese have quietly placed a floor under gold. The Chinese understand that if liquidity is removed, real world money flows as depicted by the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

FOMC impact on the Yen

Trader Dan at Trader Dan's Market Views - 6 hours ago

Note the following chart of the Japanese Yen and you can see the points at which the Bank of Japan intervened into the Foreign Exchange markets to knock it down and lower its value for the sake of their export market. One would be hard pressed to find a reason for the Yen to rally when the Japanese economy is so weak and its official interest rate environment is about as low as that of the US. Still, the Yen has rallied on "Safe Haven" trades. Whenever traders were feeling risk averse, they would buy the Yen on the crosses along with the Dollar and sell everything else. To put a sto... more » 

Schaeuble Blesses Gaspar: German FinMin Promises To Rescue Portugal

UPDATE: Ironic timing...*VENIZELOS SAYS GREECE FACES CHOICE OF STAYING IN EURO OR NOT and *GREEK DEBT SUSTAINABILITY NO WAY NEAR 120%, DE JAGER SAYS
In an incredibly candid 'informal' discussion caught on video by Portugal's TVi24 television crew, German finance minister Wolfgang Schaeuble gives Portuguese finance minister Vitor Gaspar 'the nod' that after the Greek deal is done, Germany will relax the conditions of the financial assistance program for Portugal. While the soundtrack is a little flaky, it is clear that the German finmin notes they must remain resolute in their conditions against Greece in order to maintain the appearance of 'seriousness' with the fellow members of the Greek parliament and more importantly the people of Germany. It would appear that once they have flexed their muscles against the Greeks (think Lehman?) then (and only then) can (and will) they 'help' the Portuguese. Perhaps the hard default is the way they expect this to play out with the assumption they can post-hoc avoid contagion in some manner but nevertheless, Samaras' comments this afternoon on growth and a focus away from austerity do not sit in any way complementary to Schaeuble's comments in this candid-camera moment.
Portuguese TV is having a field day with the clip as they note: Vítor Gaspar was "looking like a student trying to impress the teacher," was how the commentator saw the episode. Adding, the minister "did everything but say that not only is doing everything right as even very fond of the austerity policy."

CME Cuts Gold, Silver, Platinum And Copper Margins

It has been so long since the CME cut gold and silver margins that frankly we are a little bit stunned... In an extended announcement, which saw outright margins for virtually every commodity get cut, the CME just lowered Initial and Maintenance margins of gold (by 12%) and silver (13%), to $7500 maintenance for GC and $16000 maintenance for SI. Did the paper bull trap season just open? And how long before these are re-hiked by 15%, 20% or more? For now, however, this is certainly near-term bullish.

Is It The Weather, Stupid? David Rosenberg On What "April In January" Means For Seasonal Adjustments

Remember last year when the tiniest snowfall was reason for everyone and their grandmother to miss every possible estimate, always blaming it on the weather? Or rainfall in the spring? Or warm weather during the summer? Oddly enough one never hears about the opposite: the beneficial, and one-time, impact to trendline due to countertrend weather, such as the fact that we just had April weather in January. Granted, nobody in the programmed MSM will touch this topic, which is why we go to the most trustworthy filter of real economic data - David Rosenberg. "...Be careful in assessing the seasonally adjusted data when January weather feels like April. It was four to five degrees warmer than usual and the third fewest snowflakes to hit the ground in the past 50 years. On top of that, let's not lose sight of what real GDP did in Q4 — considerably below consensus view from last summer and sub-1% at an annual rate once inventories are stripped out. The only variable preventing real GDP from stagnating completely was the fact the price deflator collapsed to just 0.4% at an annual rate. If it had averaged to what it was in the previous three quarters, real GDP growth would have come in close to a 0.7% annual rate. Strip out the inventory build-up and real sales would have contracted at a 1.3% annual rate and recession would be dripping off everybody's tongue right now."

Calm Before The Storm? Credit Plunges As VIX Futures Jump Most In 2 Months

Credit markets are continuing the trend of the last couple of days with this afternoon seeing their underperformance accelerating. Major underperformance this week in investment grade and high yield credit markets relative to stocks (and as we noted this morning, we are also seeing financial credit in Europe notably underperforming) as Maiden Lane II assets are sold and high yield issuance peaks (and liquidity dries up). Adding to the concerns, VIX futures saw their biggest 2-day jump in over two months despite equity's modest rally. On a day when Pisani tells us there was much to rejoice about, stocks managed only negligible gains (even with broad risk assets in risk-on mode, TSY yields up, FX carry up, Oil up) and while stocks are limping higher now (aside from AAPL of course) with financials underperforming, perhaps this week of notably higher average trade size in equity futures is the calm before the real storm gets going - as credit and vol seems to be hinting at.

A Very Different Take On The "Iran Barters Gold For Food" Story

Much has been made of today's Reuters story how "Iran turns to barter for food as sanctions cripple imports" in which we learn that "Iran is turning to barter - offering gold bullion in overseas vaults or tankerloads of oil - in return for food", and whose purpose no doubt is to demonstrate just how crippled the Iranian economy is as a result of the ongoing US embargo. Incidentally this story is 100% the opposite of the Debka-spun groundless disinformation from a few weeks ago that India was preparing to pay for Iran's oil in gold (they got the asset right, but the flow of funds direction hopelessly wrong). While there is certainly truth to the fact that the US is actively seeking to destabilize the local government, we wonder why? After all as the opportunity cost for the existing regime to do something drastic gets ever lower as the popular resentment rises, leaving the local administration with few options but to engage either the US or Israel. Unless of course, this is the ultimate goal. Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system. Perhaps regular readers will recall that back in July, we wrote an article titled "China And Iran To Bypass Dollar, Plan Oil Barter System." Specifically, we wrote that "according to the FT, China has decided to commence a barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant." Seen in this light the fact that Iran is actually proceeding with a barter system, something that had been in the works for quite a while, actually puts the Reuters story in a totally different light: instead of one predicting the imminent demise of the Iranian economy, the conclusion is inverted, and underscores the culmination of what may have been an extended barter preparation period, has finally gone from beta to (pardon the pun) gold, and Iran is now successfully engaging in global trade without the use of the historical reserve currency.

Is The Foreclosure Settlement A Shadow Bailout For Broke California

Just over a week ago we highlighted the desperate plight of cash-strapped California. With a $3.3bn short-term 'hole', they were looking for cash-management solutions under every rock and hard place they could find. Today we hear that California joins the Obama bank foreclosure settlement enabling $18bn of bank-funded cash (implicitly via Federal Reserve/Government coffers) can flow to the left coast. Los Angeles alone will receive $4bn which while eventually wending its way down to the consumer (to be spent and implicitly spurring further economic activity or perhaps more likely to pay down other debt in this balance sheet recessionary environment), as Bloomberg asks, "Why should a taxpayer in Houston or Wichita bail out irresponsible California homeowners, banks and the state’s public employees’ retirement fund?" To add to California's 'aid', BofA has become the first bank to sign up for the 'Keep your Home' program where Federal dollars are given to banks to encourage them to reduce mortgage balances on struggling (over-levered and perhaps once greedy) California homeowners. Certainly it is a happy coincidence that perhaps a short-term cash crisis could be band-aided in the Golden State by this well-timed joining of California to the settlement.

Guest Post: Self-Interest And The Pathology Of Power: The Corruption Of America Part 2

The Power Elites' time-honored strategy to protect their own wealth and grip on power has three components: one is to pursue a strategy of pervasive, ceaseless propaganda to persuade the productive classes that the system is sound, fair and working for them; the second is to fund diversionary "bread and circuses" for the potentially troublesome lower classes, and the third is to harden the fiefdoms of power and wealth into an aristocracy that is impervious to the protests of debt-serfs and laborers below. In addition to "the system is working for you" social control myth, the wealth/power aristocracy also invokes various fear-based social control myths: external enemies are threatening us all, so ignore your debt-serfdom and powerlessness, etc. In the ideal Power Elite scenario, a theocracy combines faith and State: not only is it illegal to resist the Aristocracy, you will suffer eternal damnation for even thinking about it. Ask yourself this: how much influence do you as a citizen, voter and taxpayer have over the Federal Reserve? If we're honest, we must confess that the Federal Reserve is as remote to us as any branch of the North Korean government: we have zero influence over it, and the same can be said of our elected representatives. This is the definition of an aristocracy, oligarchy (a power structure in which power is held by a small number of people), kleptocracy, etc.

Is A Greek Uncontrollable Default Inevitable?

It seems our discussions on sovereign litigation 'arbitrage' and blocking stakes among foreign-law Greek bondholders is gathering some consensus among the smarter sell-side research shops. In a note today, recognizing the differences between Greek international-law bonds, Credit Suisse applies their rigorous game theory perspective to the EUR18bn of foreign-law bond holders and the implications on the PSI negotiations. As we have pointed out, and has been successfully traded in  the last few weeks, they expect foreign-law bonds to trade at a premium to Greek-law government bonds (just as we also noted we see increasingly in Portuguese bond dispersion) not just for blocking stake possibilities but also as better hedge-protected CDS positions. CS points out that if CACs were introduced into Greek law bonds, this blocking stake in foreign-law bonds will create a much higher chance of a hard default credit event and while UK law bonds won't be protected from a hard default they will at least have CDS trigger protection. Finally, the hope of creating a true Prisoner's Dilemma (where standing alone/holding-out singularly is a sub-optimal strategy) fails dismally as each participant is aware that others (blocking stake foreign-law bond holders) will for sure not participate. Adding to this threat is the current low stress environment, set up by the ECB and its LTRO, which could encourage more 'aggressive' behavior by any player in the game creating higher chances of a hard default by Greece as Troika-deal confidence increases the bargaining power for heavier haircuts and thus - fewer willing participants. What a mess!

Money, Money, Everywhere

FX Concepts' John Taylor is out with today's slam dunk de-noisification of all that is irrelevant with the following summary of what is really going on as the world's central banks embark on the latest and hopefully final attempt to reliquify everything. All we can add to Taylor's analysis, especially in light of today's incremental easing in ECB collateral requirements, is that the biggest beneficiary by far of what in a few months will be another multi-trillion balance sheet expansion, is and continues to be hard, non-dilutable, i.e., real, money. Because as fiat currency loses all relevance in a world in which it is printed on a daily basis by the central banks, whether or not we end up with a Weimar scenario, the cash thrown out by the even profitable companies will be increasingly more meaningless. Yet the take home message is that banks will never, ever stop diluting existing money. They simply can't as the past few months have so vividly demonstrated.

The Biggest Obstacle: Record Shadow Housing Inventory, And How Obama May Have Just Popped The Consumer Spending Bubble

While today's foreclosure settlement deal is by some accounts expected to help the housing market, as the foreclosure pipeline is once again unclogged, it is unclear what this will actually do for price discovery and clearing levels when one considers the already untenable shadow housing inventory, which can be summarized simply as follows - excess supply. It is this overhang that has to clear before there is any hope for incremental demand interest. And since mortgage rates are already at record low levels, and only an MBS QE could do much to stimulate even lower rates (which has its own set of adverse consequences), it is now obvious that from a purely psychological standpoint as long as people expect rates to decline in the future, they will not commit to a new home loan today. What makes it even worse is that the excess inventory has to be literally burned to the ground for regular market clearing to resume. Unfortunately, as the following chart from JPM shows very vividly, the burning will have a long way to go: the most recent shadow housing inventory is now at an all time high. Think today's action will do anything to help the housing market? Think again - if anything it will simply see the number of foreclosed properties explode. Rather, what it will do, is finally redirect discretionary spending from all the squatters who have lived mortgage free in their houses for years back into mandatory spending such as rent and mortgage bills. For those unclear, recall this post quantifying the benefit of the squatter economy (i.e., non paid rental/mortgage payments going into discretionary spending) - kiss that $50 billion inflow into GDP goodbye. Paradoxically, by trying to fix housing, Obama may have just popped the consumer discretionary bubble, of which the biggest beneficiary is that one certain fruit-shaped company...

Germany Throws Ball Back In Greece's Court As Schauble Says Deal Insufficient

As we predicted, Germany is a no go. The AP reports:

• German FinMin: Greek deal on spending cuts appears to not yet fulfill bailout conditions

And now ball is back in the Greek court where politicians are starting to drop like flies on the "merely insufficient" deal.

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