Alan Greenspan Admits America Is A Crony Capitalist System

Submitted by Tyler Durden on 09/07/2010 12:44 -0500

We are not sure what is more amusing: the Masetro's unwitting (and quite correct) observation that America is now nothing but a crony capitalist country, or his attempt to back out of what he said that so perfectly captures the essence of the failed corporatocracy currently raging in America. In the following exchange from a DemocracyNow interview, Greenspan is forced to respond to his quote from Age Of Turbulence on the definition of crony capitalism: "When a government's leaders or businesses routinely seek out private sector individuals or business, and in exchange for political support bestow favors on them, the society is said to be in the grip of crony capitalism. The favors generally take the form of monopoly access to certain markets, preferred access to sales of government assets, and special access to those in power." Greenspan's pathetic excuse is that while crony capitalism is a "dominant force" in some other regimes, it is "not the dominant force in this country." Perhaps all those who are fighting with the virtual monopoly granted to certain players, such as Goldman in fixed income trading, and Pimco in government bonds, would beg to differ. So yes, according to the Greenspan definition America is now nothing more than a crony capitalist society, which will only get worse as more and more power it granted to those who are believed to be able to ramp various asset classes, and thus the market in general, higher, because as Greenspan himself pointed out, nothing is as important a "driver" to the economy as the stock market: "if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here". In the administration's pursuit of Dow 36,000 to prove that all is well, America has given up on its core constitutional tenets, and is now nothing better than a dictatorial regime in some far-eastern backwater country.

 

 Guest Post: Dangerous Economic Misconceptions

Submitted by Tyler Durden on 09/07/2010 09:54 -0500

In some fields of research, dishonesty and misconceptions can cost lives. In economics, dishonesty and misconceptions can cost MILLIONS of lives. Mainstream financial analysts (and the MSM in general) have lost all sense of responsibility for what they do, and thus, continue to put our society at risk and continue to lose vaster portions of their audience year after year. The problem is that the vacuum left behind by this mass exodus from the MSM has not yet been correctly filled with principled alternative news providers. We are growing everyday, but the information void is still ever present, and the memory hole continues to be exploited by global bankers. Some people don’t know where to turn, and have instead given up on looking for the truth altogether. My only option has been to continue drilling away at the root points of disinformation, along with many other uncompromised researchers, and hope that consistency and perseverance win the day by accumulation and attrition. With that strategy in mind, we will now examine the instabilities behind our current recession/depression. We will then follow by deconstructing the most prominent economic misconceptions surrounding them (often perpetuated by the MSM), along with those misconceptions you will probably hear in the near future… - Giordano Bruno



 Just remember this....
The Nightmare German Inflation
from a NEWS & VIEWS SPECIAL REPORT

"The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value."

 

Matterhorn Asset Management Sets Three Gold Price Targets: $6,000 – $7,000 – $10,000

Submitted by Tyler Durden on 09/07/2010 07:29 -0500
A few preliminary facts on gold from Matterhorn Asset Management:

• It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualised.
• It is a fact that the US dollar has declined 80% in value against gold since 1999.
• It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
• It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
• It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.

As to how Matterhorn gets to its 3 gold price targets of $6,000, $7,000, $10,000 read inside...



Goldman's Take On Obama's Flurry Of Fiscal Micro-Stimulus Programs: Complete Dud

 

When Ignorance Is Bliss, The Recession Is Truly A Depression

 

Domino #2, Ireland, Set To Topple?

 

Tim Backshall On Europe: "Default Now Or Default Later" As EuroStat Complains That Greece Is Still Withholding Critical Data

 

Goldman Flow Now Selling EUR Outright, Advises Leveraged Accounts Are Caught Wrong Way In EUR Collapse

 

Thunder Road Report On The Imminent Surge In Silver, And Much More

 

Dodging the Rising Cost of Food

By: Richard Daughty, The Mogambo Guru - 8 September, 2010 I was surprised when Mike Burk of Alpha Investment Management wrote that “Some of the NYSE breadth indicators look pretty good, but that is from strength in fixed income which makes up about half of the issues traded on the NYSE. Fixed income looks like a bubble.” Full Story

Mike Pento Kicked Off CNBC For Telling Truth, As Dumb Money Manager Says "Nothing Is In A Bubble When People Want To Buy It"

 

Guest Post: Why Paul Krugman Is An Imbecile—or a Fraud

 

 

United States faces hyperinflation along with massive recession - the runaway prices of food, energy, softs, and metals accompanied with endless job losses
 

Here's an article that blames you... if things blow up...very sad indeed...
Five Doomsday Scenarios for the U.S. Economy


The Economic Insane Asylum


Depression Next Down Leg Unfolding, The Financial and Economic Crisis No Spin Zone


Is the U.S. Selling Gold Reserves?

By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch - 6 September, 2010 We always have to remember that the Chinese are inscrutable. The Chinese government is very careful not to say any more than is necessary on anything. It’s also very useful to have people, supposedly close to government makes statements that may appear to be government policy. Many of the statements come from people helping to lay a smokescreen for the true picture, or to get a reaction, like tossing a stone into a bush to see what flies out. Full Story

How to Own Physical and Paper Gold as Trend Continues Towards $1,500


Well worth reading...Learn something...
Dr. Gary North: Conservatives are Semi-Communists




Mainstream Media Depression and Deflation Propaganda


Gold at $1,250, Silver Nears $20



Inflation Mega-Trend Long-Term Growth Spiral Continues to Drive Stock Market Trend

Trying To Push The Problem Out To The Future, And Printing Money Will Not Work

posted by Blogger at Jim Rogers Blog - 7 hours ago

In America, Bernanke just says we'll print more money, we'll spend more money, even though the United States is now the largest debtor nation in the history of the world. The things that have worked in th...

All The Monetary Policies In The US Create Mis-Allocation Of Capital And Unintended Consequences

posted by Blogger at Marc Faber Blog - 7 hours ago

The US Federal Reserve and central banks around the world of continue money printing and the devaluation of their currencies. It is a fallacy to believe that easy money and the purchase of treasuries will ...

Greece Sees €4 Billion (2%) In Deposit Outflows In July

 

Cause and Effect

By: Howard S. Katz - 6 September, 2010 Fanaticism has been defined as the policy of repeating the same actions while expecting a different result. If that is the case, then we live in a society of fanatics, and it is absolutely essential to know this if one is to succeed in the financial markets. Full Story

Sole European Bank Needs $60 Million USD And Comes Crawling To ECB, Confirming USD-Libor Funding Process Impaired

 

Venezuela introduces Cuba-like food card. I'm sure the people in Venezuela, will be just as happy with them as the Cubans and North Koreans...

 

Asia Will Drive Agriculture Commodities Higher

posted by Blogger at Jim Rogers Blog - 1 hour ago

There`s 3 billion people in Asia and most of them have not had a very good standard of living in the past 200 years. That is changing and changing very rapidly. They are going to eat more, they are going t...

 

 

"...investing in the stock market is a loser’s game. Just to get back to its 1999 level in real, inflation-adjusted terms, the Dow would have to hit 13,460." - Gerald Celente

Will Greece Exit the Eurozone?


US Departments of Labor and Treasury Schedule Hearing on Confiscation of Private Retirement Accounts.

In September Europe Must Issue Double The August Government Debt 

 

Exclusive: The Paulson Portfolio Post-Mortem (In Which We Learn That The Maestro Himself Is Advising J.P. On Future Gold Prices)

Why The Fourth Branch Of The US Government Needs To Be Abolished, And Why "Authority" Should Never Be Trusted

Government Economic Leaders Surprised that Real World Isn't Responding to their Magic Pixie Dust

Dagong sounds the gong on U.S. debt; China's credit rater downgrades America's economic future.

This year, US public debt could reach end game.

FDIC Holding Banking System By a Thread

Dizzy and Confused? Hunker Down!

UN calls meeting on food price concerns

Jim Sinclair’s Commentary
Am I dreaming? I recall less than two weeks ago the Case Shiller Index reporting that housing prices were improving.

Sellers Cut Prices on 50% of Homes By Sheree R Curry
Sep 3rd 2010
Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price.
List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time.
Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively.
"Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much," says Leslie Tyler, vice president of marketing for ZipRealty. "What we are seeing now is that the trends are reversing."
With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers’ attitudes.
More…



Jim Sinclair’s Commentary
At this time these are both silver and gold coins.
It is a modest start, but a good one. The Wall Street Journal wrote a front page story on this. They kindly labelled us cultists and monetary cranks.
What else did you expect?
 
Islamic gold dinar gains ground in Malaysia: official
KUALA LUMPUR, Sept 4, 2010 (AFP) – Malaysians are embracing gold dinars which were introduced last month by the northern state of Kelantan to promote usage of Islamic currency as an alternative to paper money, an official said Saturday.
The gold coins and silver dirhams were introduced in early August by the Islamic opposition party PAS which rules Kelantan state to coincide with the start of the Muslim holy fasting month of Ramadan.
Umar Ibrahim Vadillo, chief executive officer with Kelantan Golden Trade, said the first batch of gold and silver coins worth two million ringgit (625,000 dollars) had been sold out in less than a month.
"There is enormous response in Malaysia. Their reaction is unbelievable," he told reporters.
"In Kelantan, businesses including garage owners and taxi drivers are using the gold and silver coins."
Civil servants in Kelantan are paid up to 25 percent of their salary in dinars and dirhams if they wish.
More…

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Jim’s Mailbox

Posted: Sep 05 2010     By: Jim Sinclair      Post Edited: September 5, 2010 at 3:06 pm
Filed under: Jim's Mailbox
Eric,
It looks like what I had anticipated many years ago is occurring NOW!
The gold industry itself, the least knowledgeable of the gold price mechanism, has woken up to the fact that for every million ounces a junior has there is more than $1 billion in value less cost of production. The guys who dig gold out of the ground are nitwits when it comes to the price of their product. Did they not lose billions betting against themselves on short of gold OTC derivatives?
Regards,
Jim

Goldcorp to buy Andean Resources for $3.42B CIGA Eric
Competition to acquire ounces in the ground will drive up the price of junior resource companies with good managements, properties, and locations. Fear of ownership will transition into fear of missing the next big move as merger and acquisitions, driven by lots a money chasing dwindling solid opportunities, will drive gold stocks higher in the coming months and years.
Canada’s Goldcorp Inc. said Friday it has agreed to buy Andean Resources Ltd. for about 3.6 billion Canadian dollars (US$3.42 billion), trumping a rival bid from Eldorado Gold Corp.
Source: finance.yahoo.com
More…

Economists: Gloom and Doom Ahead, Especially in US


 More than 400 US Banks Will Fail: Roubini


Recent Problems in the Dutch Pension Sector


International Forecaster September 2010 (#2) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster - 6 September, 2010 In a futile attempt to keep the economic and financial system afloat, QE2 is underway. It began in early June as banks changed the rules for awarding loans. There efforts over the past few months have only met with moderate success. Banks had cut back lending by some 25% over the past 16 months mainly to small and medium-sized companies. Full Story

Reality Economics

By: Llewellyn H. Rockwell, Jr. - 6 September, 2010 As a culture, we like our reality on television, but seem to oppose it in economics. For more than two years now, and even longer depending on your dating scheme, the federal government has waged war on the reality of the incredible Fed-fueled bubble that developed in housing with spillover effects on the rest of economic life. Full Story

How Gold-As-Money Can Prevent Mob Rule

By: Richard Daughty, The Mogambo Guru - 6 September, 2010 Ellen Kelleher, writing for The Financial Times, opens her article with how Baird & Co., in their warehouses in London, purify gold by heating it to molten form to make “medallions, bars, and rings,” which sounds like a lot of heavy, hot, back-breaking, dangerous work to me, as if the word “work” was not bad enough by itself with the terrifying adjectives. Full Story

Robert Wiedemer: With Head in the Clouds, Fed Ignores Inflation Mountain At the annual Federal Reserve conference in Jackson Hole, Wyo., Fed Chairman Ben Bernnanke essentially said that he will do whatever it takes to keep the economy from declining. Since the main power Mr. Bernanke has is to print money, most people read his comments to mean that he will print money as necessary to keep down unemployment and encourage higher economic growth . . . get the full story, click here.

Little Growth Means Big Trouble

Hyperinflation vs. Inflation: Understand the Difference

www.silver-coin-investor.com

Hyperinflation and inflation may share the same root, but they're two entirely different trees.  While many assume that hyperinflation is just inflation's oversized cousin, there is much more to hyperinflation than most are aware.

The Basics of Inflation

Investors, traders, and average Joes alike should all have a firm understanding of inflation through rudimentary economics studies.  Inflation is nothing more than an increase in the money supply that leads to changes in aggregated demand and ultimately higher prices for goods.  Increases in prices during inflation are certain, and they tend to happen over a period of years or decades, rather than months or days. 

Most commonly, inflation does not appear until eighteen months after monetary policy adjustments, as businesses rework prices to increase their market share of the aggregate demand for products.

The Basics of Hyperinflation

Hyperinflation shares some links with inflation in that the value of the currency is decreased, but at a much faster rate.  In a hyperinflationary scenario, decreases in the value of money result from two conditions: perpetual increases in the total money supply and a decrease in confidence in the currency.  The latter is the 800 pound gorilla in the room. 

When a population loses faith in a currency, it does so quickly, like all bubbles do when they eventually pop.  As we saw in the Weimar Republic, Reichsmarks fell in value by two-thirds in under a month, and by the next month, they had lost another two-thirds.  In just two months, purchasing power plunged by more than 88%.  You would have to be a fool to think the depreciation stopped there. 

Businesses lost so much faith in the currency that they posted higher and higher prices as a way to turn customers away.  Why sell today when the currency will be worthless tomorrow?  All told, in just over six months in 1922, the Reichsmark plunged more than 99%.  After two years, at the end of 1923, the Reichsmark was worth 1/15,000,000 of its 1922 value.

Hyperinflation Looms

For the Fed and the US economy, you really do reap what you sow.  The seeds of hyperinflation have been planted wide and deep, and nothing short of a perfect storm of monetary policy and fiscal policy reductions can stem the tide.  If history is any indication, the US dollar will follow in the footsteps of every fiat currency before it, losing piece by piece every year until finally all confidence is lost.

As to when hyperinflation begins, it is anyone's best guess.  However, we can be sure that it will happen quickly and without warning.  The best hedge still exists in gold and silver, with silver being the best alternative to paper money when the dollar eventually meets its demise.  Its ease of use, anonymity, and the wide array of different denominations, including one ounce rounds, pre-1964 silver dimes, and large bars, make it a perfect crisis currency.  Stock up because today's $19 per ounce price for physical silver will look like a going out of business sale when the dollar does “go out of business.”

Dr. Jeff Lewis

 

"Pending Home Sales Reconfirm The Housing Market is Crashing".  The article is a must read... and the graph is a stunner... and the link is here.

The second real estate-related story will bring a smile to your face, dear reader.  It appears that JPMorgan's top guy is having some trouble selling his chicken shack in the Windy City.  The headline reads "Jamie Dimon Slashes His Chicago Mansion Down To Half Price".  There's a nice slide show of the place as well... and you can check it all out here.



"China fears depreciation of $2.45 trillion of reserves still heavy in dollars".  This piece is definitely worth your time... and the link is here. 



"EU austerity policies risk civil war in Greece, warns top German economist Dr Sinn".  This rather short piece is a must read... and the link is here. 


"Islamic gold dinar gains ground in Malaysia: official".  Umar Ibrahim Vadillo, chief executive officer with Kelantan Golden Trade, said the first batch of gold and silver coins worth two million ringgit (625,000 dollars) had been sold out in less than a month.  "There is enormous response in Malaysia. Their reaction is unbelievable," he told reporters.  The link is here.

Obama Must Create 230,000 Jobs A Month Until The End Of His Second Term For Return To Breakeven - Charting The New "7 Year Itch" Normal

 

Unemployment Rate Rises to 9.6%. That is the official figure from the BLS. But the really telling number is for under-employment. That is buried down in line U-6 in Table A-15. Alternative measures of labor underutilization. And again, that is the official figure. A 2004 article suggested that the real world numbers are probably substantially higher. (Somehow I doubt that this under-reporting has been rectified.)

 

Fears Growing Over Global Food Supply


Bernanke: Shut down banks if they threaten system 120 Days to Go Until the Largest Tax Hikes in History. 


Global Collapse of the Fiat Money System: Too-Big-To-Fail Global Banks Will Collapse Between Now and First Quarter 2011


Complete List of Bank Failures


Where The Banks are Failing


Investors Bracing for Dreaded "September Effect"

Société Générale tells clients how to prepare for 'global collapse' 

Forbes: Bernanke Out Of Bullets But Not Bombs: Federal Reserve's ability to buy assets and spark inflation is unlimited.



Zero Hedge: A Termite-Riddled House: Treasury Bonds


Buried down in the fine print of the New York Times we read that the FDIC is $15.2 billion in the hole. But gee, who's counting, and who cares, when Uncle Sugar can create unlimited money out of thin air?


The Daily Bell asks: Bank Run 2011? (Thanks to Shawn S. for the link.)


Bank run in Afghanistan: Karzai urges Afghans not to panic as bank withdrawals accelerate


The US Economy is Not Getting "Better" -- It's Dying!


Gold Rallying to $1,500 as Soros' Bubble Inflates


Stock Investors Brace for Another Ugly September


Cash-poor Local Governments Ditching Public Hospitals


FDIC's At-Risk Bank List Grows


It's Impossible to "Get By" in the US.

Trader Dan Interviewed On King World News

September 4th, 2010

Dear CIGAs,
Eric King of KingWorldNews.com has interviewed our very own Trader Dan Norcini on the Commitment of Traders report and the Gold market as a whole. Click the link below, scroll down and click the “Listen To MP3” button on the left.
Click here to visit KingWorldNews.com and listen to the interview…

 

Continuous Commodity Index Chart From Trader Dan

September 4th, 2010

Dear CIGAs,
Click chart to enlarge today’s CCI chart in PDF format with commentary from Trader Dan Norcini

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If you hold paper Gold (ETF) read this...

Jason is the “Managing Director of Exchange Traded Gold (ETG), the World
Gold Council's global initiative designed to promote and develop the gold
Exchange Traded Fund (ETF) and Exchange Traded Commodity (ETC) market.”
Jason states at the end of the interview when asked what he holds that; “I
have some physical (gold) and I also own some gold mining shares”.
Well after that interview where he touts the fully backed allocated state of
the GLD ETF shares, you’d suspect he meant GLD shares when he said
“physical”.
Thanks to the GATA ladies and gentlemen, who don’t miss much, for
pointing me in the right direction.
Jason does not hold GLD shares. He own the real physical gold, the kind I
say every single week you must hold. Trade the GLD ETF, and own the real
deal.
Neither Jason, nor any other officer or director of the World Gold Council
(WGC) nor the GLD ETF itself OWN ANY SHARES IN THE ETF!
Would you invest in a company where NOT A SINGLE employee owns a
single share of the company?
Neither would I.
Think about it, but that shouldn’t take long. Then run out and buy more
physical metals!
Billionaire Thomas Kaplan is investing heavily in Gold as well as select
miners. I’ve said it before and will say it again. Follow the money!
Well, it’s really storming hard here now and it’s just a matter of time until
the power goes out so I’m going to take a nice drive out to the beach and see
what this thing is all about.
Enjoy your long weekend. It’s the calm before the storm, so to speak.
Warren Bevan

In my free, nearly weekly newsletter I include many links and charts which
cannot always be viewed through sites which publish my work. If you are
having difficulties viewing them please sign up in the left margin for free at
http://www.preciousmetalstockreview.com/

U.S. Government Prepares for 'Crisis


The U.S. Path to Collapse

  
New York Sun: As dollar diminishes, why shouldn't gold be audited?


The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions.



Harrisburg, Pennsylvania defaulting on its bonds. 




Russian Panic Buying Fuels Food Price Speculation


Mozambique Police Fire At Crowds Protesting Prices


Fed Officials Discussed Further Stimulus Steps


World Markets Fall Again on Economic Fears


July Unemployment Up in About Half of US Cities


US Markets Suffer Worst August in Almost a Decade

In The News Today

Posted: Sep 03 2010     By: Jim Sinclair      Post Edited: September 3, 2010 at 4:55 pm
Filed under: In The News

Thought For The Day
The accounting for trading departments would also reflect the error account and markdown of positions.
It is reasonable then to assume that the mark up of OTC derivatives due to the FASB’s capitulation would also be accounted for there. These mark ups then would be reflected as trading profits even though they are purely accounting profits.
As such, the closing down of proprietary trading departments may well reflect recent modest or negative performance in actual trading aside from paper mark ups of OTC derivatives.

Jim Sinclair’s Commentary
The OTC derivative market is alive and kicking with no meaningful changes whatsoever.
If it is free of clearing house requirements in any major financial center, it is free everywhere.

Brussels set to give way on OTC derivatives By Jeremy Grant in London and Nikki Tait in Brussels
Published: September 1 2010 18:59 | Last updated: September 1 2010 18:59
European companies look set for a victory in their efforts to persuade regulators not to force them to use clearing houses for over-the-counter derivatives trades after the European Commission proposed that they be given exemptions from sweeping regulation to clamp down on such markets.
The move, contained in a draft regulation, comes after months of lobbying by large industrial companies like Siemens, Eon, Lufthansa and Rolls-Royce. They argued that forcing them to process their OTC derivatives trades through clearing houses would cause a huge drain on cash, possibly hurting European economic growth prospects.
Brussels is two weeks away from finalising its version of regulations in the Dodd-Frank Act agreed by the US Congress in June that clamp down on the OTC derivatives markets, parts of which were blamed for exacerbating the 2008 financial crisis.
They would force more OTC derivatives to be traded on exchanges and electronic trading platforms, and push them through clearing houses to safeguard the financial system against the fallout from a catastrophic default, such as the failure of Lehman Brothers.
A clearing house stands between two parties to a trade, ensuring completion even if one party defaults.
More…

 

Jim Sinclair’s Commentary
John sheds light on today’s economic figures. This is a must have (by subscription) resource.
- August Unemployment: U.3 = 9.6%, U.6 = 16.7%, SGS = 22.0% 
- August Payrolls Fall 54,000, Gain 60,000 Ex-Census Workers 
- Better-Than-Expected Payroll Changes Were Not Statistically Meaningful
"No. 321: August Employment and Unemployment"
http://www.shadowstats.com/



Jim Sinclair’s Commentary
The least publicized economic figure today.

Construction Spending in U.S. Fell Twice as Much as Forecast September 2nd, 2010
By Shobhana Chandra
Sept. 1 (Bloomberg) — Construction spending in July fell twice as much as forecast, led by a slump in homebuilding that will depress U.S. economic growth.
The 1 percent drop brought spending to $805.2 billion, the lowest level in a decade, after a revised 0.8 percent drop in June that wiped out a previously estimated gain, Commerce Department figures showed today in Washington. Spending on federal government projects fell by the most in a year.
Builders are facing a slump in demand following the end of a homebuyer tax credit, even with mortgage rates at a record low, while mounting foreclosures will add to the inventory and further restrain prices. Government construction spending is also likely to stay weak as stimulus-linked outlays wane and state budgets shrink.
“Housing is fairly weak and construction related to the stimulus is fading,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “Some commercial projects may have been delayed as businesses are uncertain about the outlook.”
Construction spending was down 11 percent in the year ended in July.
More…



Jim Sinclair’s Commentary
Like the first few banks to go broke, the increasing amount of significant cities seeking bankruptcy protection is going to grow and grow.
The most important question not answered here is WHAT chapter of the Bankruptcy Act did Harrisburg file under?

Harrisburg, Pa., defaulting on its bonds By Aaron Smith, CNNMoney.com staff writer
September 2, 2010: 11:22 AM ET
NEW YORK (CNNMoney.com) — The capital city Pennsylvania is broke and will be skipping this month’s multi-million dollar bond payment.
On Sept. 15, Harrisburg, Pa., was scheduled to make a $3.29 million payment on the bonds it issued to build a trash plant. But, the cash-strapped city doesn’t have the dough.
"The city’s budget is in deficit," said Chuck Ardo, spokesman for Harrisburg Mayor Linda Thompson. "We’re looking for ways to trim the budget just to keep services going."
"Now the chickens have come home to roost," the mayor said in a statement released Wednesday.
In May, Moody’s knocked the rating on its general-obligation bonds three notches to B2 — five steps below investment grade. To put that into perspective: Moody’s rating on Greece’s government debt sits at A3 — still investment grade.
"It’s a warning to holders of bonds issued by financially stressed state and local governments," said John Lonski, chief economist for Moody’s Investors Services. "Credit crisis is still with us."
More…



Jim Sinclair’s Commentary
This take has significant merit regarding bailouts assuming the run on this bank continues.
They would, however, be significantly back door.

Kabul Bank Woes Spur Call For Another U.S. Treasury Bailout
Something of a bank run appears to be underway in Afghanistan as scared depositors pull their money out of Kabul Bank, or try to.
The withdrawals by Kabul Bank depositors was triggered by news that two top bank officials left the institution earlier this week as corruption allegations swirled around the bank.
The two officials were reportedly involved in unauthorized investments involving about $160 million in Dubai real estate, according to a big shareholder in the bank, Mahmoud Karzai, the older brother of Afghan President Hamid Karzai.
Mahmoud is making a suggestion that is likely to gain very little traction in Washington: he’s calling for the U.S. to bail out Kabul Bank.
An excerpt from the Washington Post which has been closely tracking the Kabul Bank story:
Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks, too. He said Kabul Bank is "stable and has money" but cannot withstand a stampede by panicked depositors.
More…

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Jim’s Mailbox

Posted: Sep 03 2010     By: Jim Sinclair      Post Edited: September 3, 2010 at 4:54 pm
Filed under: Jim's Mailbox
Jim,
There is no way for the spinmeisters to spin this.
CIGA UD

Dear CIGA UD,
It is not even amazing anymore in how the media handles economic statistics. Everything is MOPEd away.
Regards,
Jim

Pending Home Sales Reconfirm The Housing Market is Crashing Michael David White | Sep. 3, 2010, 9:30 AM
Record low levels of demand continue to haunt the U.S. housing market with July pending home sales re-confirming previous crash-level readings.

More…



Gloves About To Come Off For Gold Stocks CIGA Eric
Individual gold stocks and gold stock indices are beginning to break out of long-term consolidations without much attention. The heavily followed Amex gold bug index sits above important resistance at 479.35. The gloves will come off quickly over price once the computers and hedgies start buying en mass after technical confirmation. The setup of "three taps and out" is nearly complete.
Amex Gold Bug Index (HUI):
More…

Why Market Is Now More Certain Than Ever That Greece Will Default, And A European Funding Update

Video: "I Prefer Silver Over Gold"

posted by Blogger at Jim Rogers Blog - 7 hours ago

Related ETFs: iShares Silver Trust (ETF) (SLV) , SPDR Gold Trust (ETF) (GLD), Market Vectors Gold Miners ETF (GDX) Jim Rogers is an author, financial commentator and successful international in...


Economic Soft Patch Will Be Met With Further Stimulus and Liquidity

Why Lessons From The First Great Depression Mean The Next Four Months Will Be Very Painful For Stockholders

Gold & Investement in Failure 

Jim Sinclair’s Commentary
Of course the ECB will remain in crisis mode. Bernanke has confirmed the same, therefore making illustration #2 below confirmed.
Illustration #2 had to be confirmed to get to illustration #3

ECB Keeps Key Interest Rate at 1%, May Maintain Crisis Mode By Christian Vits – Sep 2, 2010 4:45 AM PT Thu Sep 02 11:45:38 GMT 2010
The European Central Bank kept interest rates at a record low today and President Jean-Claude Trichet may signal the bank will stay in crisis mode into next year.
The ECB’s Governing Council set the benchmark lending rate at 1 percent for a 17th month, as predicted by all 57 economists in a Bloomberg News survey. Policy makers are also likely to extend emergency lending measures for banks into 2011 as the risk of a renewed U.S. recession threatens the euro region’s economic rebound, economists said. Trichet holds a press conference at 2:30 p.m. in Frankfurt.
“The ECB would like to end its extraordinary measures relatively soon but the situation is still too fragile to return to the exit path before year-end,” said Juergen Michels, chief euro-area economist at Citigroup Inc. in London. The euro was at $1.2828 shortly before the rate decision.
While the ECB will probably raise its growth forecasts today after Europe’s economy expanded at the fastest pace in four years in the second quarter, the sovereign debt crisis and a U.S. slowdown pose risks to the outlook. Council member Axel Weber said in an Aug. 19 interview that the ECB should help banks through end-of-year liquidity tensions before determining early next year when to withdraw emergency measures.
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Jim Sinclair’s Commentary
The difference between now and the 1930s is the problems is NOT simply one country or republic, but rather the entire Western World financial system.
Armstrong has made the point that trends and cycles in history repeat, but never in the exact same form.
The form here is the most dangerous of all economic history, including the fall of Rome.

International Monetary Fund Warns G7 on Debt Published: Thursday, 2 Sep 2010 | 3:34 AM ET
By: Sewell Chan
The world’s most developed economies, which have been racking up spending since the mid-1960s, face record levels of debt as a result of the 2008-9 financial crisis and have little room for maneuver, the International Monetary Fund warned on Wednesday.
Despite the stark warning and the prospect that the wealthiest nations face years of belt-tightening, the fund also said that the risk of default by heavily indebted European countries like Greece, Ireland and Portugal had been significantly overestimated.
In three new research papers, the fund’s economists offered stern admonitions while cautioning against an overreaction.
That mix of messages was reflected in one paper on the long-term trends in the public finances of the Group of 7 economies.
The authors, Carlo Cottarelli, director of fiscal affairs, and Andrea Schaechter, a senior economist, concluded that public debt had served for decades as “the ultimate shock absorber — rising in bad times but not declining much in good times.”
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Jim Sinclair’s Commentary
Countries do NOT default, they reschedule debt. The currency is what defaults.

IMF ponders the improbable: Will U.S. default? By Howard Schneider
Will the U.S. government ever default?
It’s not a pleasant thought for anyone holding some of the roughly $9 trillion in U.S. government bonds and notes currently in public hands – or for anyone hoping the global economy can stay on an even keel.
But the economists at the International Monetary Fund are paid to ponder the improbable, and in papers published on Wednesday fund staff examined where the U.S. and other developed countries fit on a continuum between easy living and disaster.
We’re farther along than you might think.
Using a concept known as "fiscal space" – basically how much latitude a country has to borrow before markets will shut off the spigot by demanding unsustainable interest rates – the IMF staff drew a bright red line through five nations it considers to be running out of room: Greece, Iceland, Italy, Japan and Portugal. Of the 23 developed nations it analyzed, four others, including the U.S., received a yellow caution flag.
Does it mean default is imminent or inevitable? Hardly – and in companion articles the fund discussed the steps being taken to control public debt, and broadly discounted the chance of an outright sovereign default among any of the advanced countries.
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Jim Sinclair’s Commentary
The author of this article is in harm’s way. He should contact Greg Hunter to find out what problems a reporter can have when he tells the truth.
This is another reason why the community and all its commentators should give Greg Hunter their full and unwavering support.

Widespread U.S. hiring not begun: ADP’s Prakken Wed Sep 1, 2010 9:05am EDT
NEW YORK (Reuters) – Widespread hiring at U.S. companies has not begun as businesses remain worried about uncertainty over the future of the economy, Macroeconomic Advisers LLC chairman Joel Prakken said on Wednesday.
Prakken was speaking to a teleconference of journalists after the ADP Employer Services report on private sector employment, which his firm jointly developed. The report showed private employers unexpectedly cut 10,000 jobs last month.
Prakken said he expects Friday’s U.S. nonfarm payrolls report to be solidly in negative territory, hurt in part by the continuing evaporation of Census jobs.
Prakken said that while Wednesday’s figure was disappointing, it was not particularly surprising given other recent economic data that has suggested a slowing recovery.
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Jim Sinclair’s Commentary
The cause is simple. It is OTC derivative fraud that managed to make a disaster out of a normal four year economic contraction. That is the SOLE REASON.
There was no intervention at the cause and the OTC derivative market continues to grow.
The financial Pepto-Bismol did only one thing: make the Banksters richer than even they ever dreamed of.

Romer serves dismal for lunch. Pepto-Bismol for dessert? By Dana Milbank
Thursday, September 2, 2010
Lunch at the National Press Club on Wednesday caused some serious indigestion.
It wasn’t the food; it was the entertainment. Christina Romer, chairman of President Obama’s Council of Economic Advisers, was giving what was billed as her "valedictory" before she returns to teach at Berkeley, and she used the swan song to establish four points, each more unnerving than the last:
She had no idea how bad the economic collapse would be. She still doesn’t understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn’t have much of an idea about how to fix things.
What she did have was a binder full of scary descriptions and warnings, offered with a perma-smile and singsong delivery: "Terrible recession. . . . Incredibly searing. . . . Dramatically below trend. . . . Suffering terribly. . . . Risk of making high unemployment permanent. . . . Economic nightmare."
Anybody want dessert?
At week’s end, Romer will leave the council chairmanship after what surely has been the most dismal tenure anybody in that post has had: a loss of nearly 4 million jobs in a year and a half. That’s not Romer’s fault; the financial collapse occurred before she, and Obama, took office. But she was the president’s top economist during a time when the administration consistently underestimated the depth of the economy’s troubles – miscalculations that have caused Americans to lose faith in the president and the Democrats.
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Jim Sinclair’s Commentary
Except for the demonic Banksters, this will be four out of four before 2012.

POLL: Unemployment Affects Three Out Of Four Americans First Posted: 09- 1-10 12:35 PM
Nearly three out of four Americans have been directly affected by the recession, either because they have been unemployed or know someone who has lost their job, according to a new survey.
The report, prepared by Rutgers professors Carl Van Horn and Cliff Zukin, find that 73% of Americans have either been unemployed themselves (14%) or saw an immediate family member (12%), another member of their family (30%) or a close friend (17%) lose a job.
The survey also finds profound pessimism about where the economy is headed. More than half of Americans say they believe the downturn reflects a "lasting economic change" (56%) rather than a "temporary economic downturn" (43%). Large majorities believe that the economy will remain in recession or worse a year from now.
"After suffering through the worst economic disaster most have ever experienced," Van Horn said in a statement, "American workers have diminished expectations about America’s economic future and do not have much faith that the nation’s political leaders can move the country forward."
Asked about the causes of joblessness, the survey respondents mentioned three above all: global economic competition, illegal immigration and Wall Street bankers.
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Jim Sinclair’s Commentary
This is a great development which we should all hope gets traction because an audit of conditions and presence would be a major moon launch on the bullish side for the price of gold.
The key to the audit must be deliverable condition.

Fox News takes Kitco’s Ron Paul gold audit story national Submitted by cpowell on Thu, 2010-09-02 01:29
9:40p ET Wednesday, September 1, 2010

Dear Friend of GATA and Gold:
Congratulations to Kitco News and its reporter Daniela Cambone for having broken last week what this week Fox News made into a national story, the call by U.S. Rep. Ron Paul, R-Texas, for a serious audit of U.S. gold reserves. The Fox News story, broadcast and posted today and appended here, is notable for two reasons apart from calling attention to the audit issue.
First, the Fox News story quotes Paul as remarking that the audit should determine not only the simple presence of gold in the U.S. government’s vaults at Fort Knox, Kentucky, and elsewhere but also "whether any of it has been obligated."
That is, Paul is fully aware of the Federal Reserve’s involvement in gold swaps with foreign banks, an admission made by Fed Governor Kevin M. Warsh a year ago in the course of GATA’s litigation against the Fed under the Freedom of Information Act, even as Warsh insisted that the Fed’s gold swap arrangements must remain secret:
http://www.gata.org/files/GATAFedResponse-09-17-2009.pdf
And second, the Fox News story is notable for the refusal of the Treasury Department to comment about the gold audit issue: "Representatives from the Treasury Department and U.S. Mint did not respond to requests for comment on Paul’s proposal."
Imagine what would happen if mainstream financial news organizations began to put detailed, coherent questions to the Fed and Treasury Department about the disposition of the U.S. gold reserve, the gold swap arrangements, and the overwhelming if obscure public record of Fed, Treasury, and other U.S. government agency interest in suppressing the gold price:
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Global Collapse of the Fiat Money System: Too Big To Fail Global Banks Will Collapse Between Now and First Quarter 2011 


The Fed's Liquidity Trap: The American and world economies are in a deliberate state of slow collapse


Jim Sinclair’s Commentary

This is a serious and revealing article, full of fact, that should be reviewed by all interested in gold.

Gold & Silver Market Suppression Failures Flash Buy Signal, Part 2 August 31, 2010
Robert Kientz

In Part 1 of this 5-part series, we discussed two agreements that Central Banks used to suppress the price of gold in the marketplace. Please read Part I before proceeding with this article.
So do the Central Banks still have gold?
A nice quote from the GATA article regarding availability of Canadian central bank gold:
When I published my essay "When Irish Eyes are Smiling: the story of Brian Mulroney and Canada’s gold," the good folks at the Bank of Canada told me that there had been no physical gold in the bank vaults for years. To quote my essay directly:
"They advised me (early in 2002) that Canada does not really own this gold at all (at the time we were supposed to have about 40 tonnes). What was left of it had been leased out to various bullion banks years ago …and yes, it (was) being accounted for as requested by International Monetary Fund accounting rules regarding leased gold. Canada’s gold cupboard is bare … not a 400-oz. good-delivery bar in sight."
What about the US gold stocks?
In a book written by Chris Weber and summarized on Lew Rockwell’s site, we noted that in the one audit of Fort Knox:
The shocking admission Ft Knox holds very little good delivery gold was made to Mr. Durell by the chief official of the General Accounting Office (GAO).
By February 1975 Saxbe was Ambassador to India, so Durell communicated his displeasure through his local Virginia congressman.
As a result of this, the GAO sent four men to Durell’s Virginia farm to try to convince him of the validity of their accounting practices. In charge was Hyman Krieger, the GAO’s Washington regional manager.
More…

Titan Capital Joins Black Swan's Taleb in Raising Bets on Crash

 

posted by Eric De Groot at Eric De Groot - 7 hours ago

The Final Pillar of the Gold price at $1650 is US government long bonds Jim. Jim, In US dollar terms, yes, the US government long bond market is the final pillar to fall. Five Golden Pillars: All chart...

IMF sells 16.85 tons, Russia buys 16.2 tons in July

 

Jim Sinclair’s Commentary
The Soros bubble is comical when you look at all the circumstances over which it occurred.
$1500 seems a convenient number to the quoted parties but the real number is $1650 and higher.

Gold Rallying to $1,500 as Soros’s Bubble Inflates By Nicholas Larkin – Aug 31, 2010 9:28 AM ET
Investors are accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
Analysts raised their 2011 forecasts more than for any other precious metal the past two months, predicting a 10th annual advance, data compiled by Bloomberg show. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record $1,266.50 reached June 21. Holdings through bullion-backed exchange-traded products are already at more than 2,075 metric tons, within 0.1 percent of the all-time high.
“Either a swift economic recovery or further dismal economic performance should bring new buyers into the market,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt who was the most accurate forecaster in the first quarter and expects the metal to rise as high as $1,400 next year. “A stronger economy would create more jewelry demand. If the economy stays weak or gets worse, then investors will be looking for a safe haven.”
Investors added to their gold holdings through ETPs for three consecutive weeks, reflecting demand for assets typically favored in times of financial stress. Two-year Treasury yields fell to a record low of 0.4542 percent on Aug. 24 and the yen reached a 15-year high against the dollar the same day. Pacific Investment Management Co., Deutsche Bank AG and Citigroup Inc. have announced or are offering funds or traded instruments designed to guard against sudden market declines.
Swiss Reserves
Buyers accumulated almost 278 tons of gold in 2010 across 10 ETPs tracked by Bloomberg, worth $10.4 billion at this year’s average price. Total holdings are almost twice Switzerland’s official reserves of 1,040 tons, data compiled by the World Gold Council show. ETP holdings reached a record 2,078 tons July 19, data compiled by Bloomberg show.
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UN: Global food prices highest in 2 years

posted by Eric De Groot at Eric De Groot - 1 hour ago

International food prices have risen to their highest level in two years, fueled in part by a drought in Russia that lifted the cost of wheat, a U.N. agency said Wednesday. Rising global food prices ar...

The Most Fiscally Irresponsible Government in U.S. History.


Problem bank list climbs to 829


Struggling Cities Shut Firehouses in Budget Crises


Mish: 10 Leading Retailers Close Stores; Exodus of Small Retailers Amidst Signs of "Free Rent"


Blockbuster to File for Bankruptcy in September


Bernanke Says Economy Remains Vulnerable


Record 1-in-6 Getting Government Aid


Jobs Data to Show Severity of Economic Malaise. Wells Fargo: 'Our view is that the recovery is petering out, not sliding into a double dip'

Obama: No Magic Bullet for Struggling Economy


More Million-Dollar Homes Falling to Foreclosure


HUD: No Decision on Reviving Homebuyer Tax Credit


You'll pay 6 to 7% more this weekend for your steak and hamburger.


JP Morgan: Food Prices Are Actually Rising, It's Just That Retailers Haven't Passed It On...


"A wayfaring man, traveling in the desert, met a woman standing along and terribly dejected. He inquired of her. "Who art thou?" "My name is Truth " she replied. "and for what cause, " he asked, "have you left the city, to dwell alone here in the wilderness?" She made answer, "Because in former times, falsehood was with few, but is now with all men, whether you would hear or speak." - The Fables of Aesop, Henry Altemus Company, 1899

John Williams of ShadowStats Says Economic Data Will Get Much Worse.

CHART OF THE WEEK

In the past ten years alone, the US dollar, the Canadian dollar, the UK pound and the euro have collectively fallen 70 percent in value if measured in real (currency-debased) terms. In other words, when they are priced in terms of gold. www.bmgbullion.com/document/682

 

Bernanke: Fed Will Take "Unconventional Measures" If Needed. "...the Fed will consider making another large-scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare."

 

Michael Pento Says Fed Will Buy Stocks And Real Estate In Its Next Attempt To Create Inflation

 

Ron Paul questions whether there's gold at Fort Knox, New York Fed. To clarify, part of his concern is that physical gold may indeed be stored there, but that it might actually belong to other parties!


Government Set to Confirm What Many Feel: Economy at a Standstill



Snapshot of an Economy About to Get a Lot Bleaker



Fed Seeks Delay of Bank Data Release



Democrats Face Economic Facts: Updraft Unlikely




Click either chart to enlarge this month’s action in Gold in PDF format with commentary from Trader Dan Norcini

 
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In The News Today

Posted: Aug 31 2010     By: Jim Sinclair      Post Edited: August 31, 2010 at 5:06 pm
Filed under: In The News
Dear CIGAs,
Even the dead are now homeless.





Jim Sinclair’s Commentary
The Consumer Confidence Index is a survey of economic statistics that is dicey at best.
Consumer confidence rose more than forecast in August. Specifically, the Conference Board’s confidence index increased to 53.5 from a five-month low of 51 in July; beating the Street’s estimate of 50.7. (From Bloomberg.com)


Jim Sinclair’s Commentary
Case-Shiller, your nose is growing.

The S&P/Case-Shiller home-price index for June increased 4.2% from June 2009. (From Bloomberg.com)

Jim Sinclair’s Commentary
Debka is rumored (unconfirmed) to be influenced by Massad.
Regardless, this development is telling.

US to sell Israel massive military fuel stocks worth $2 bn DEBKAfile Exclusive Report August 28, 2010, 12:53 PM (GMT+02:00)
On Aug. 6, the US Defense Security Cooperation Agency, DSCA, informed Congress of the sale to Israel of 60 million gallons of unleaded gasoline, 284 million gallons of JP-8 aviation jet fuel and 100 million gallons of diesel fuel at an estimated cost of two billion dollars. The date is significant, DEBKAfile’s intelligence sources find.  Ten days earlier, the Japanese tanker M.Star was attacked in Omani waters of the Strait of Hormuz with 200,000 tons of oil.
Although American experts who examined the vessel, they never attributed the damage to sabotage by Iran or al Qaeda, despite the latter’s claim of responsibility on Aug. 4 While Washington did its best to sweep the incident under the rug, Saudi intelligence were worried enough about the threat inching dangerously close to the Gulf’s oil exporting lifeline to launch an independent investigation of the incident.
Their investigators discovered it was staged by a Saudi terrorist who operates out of Iran under the orders of the Revolutionary Guards. To Riyadh, the episode looked like a blunt warning from Tehran to Washington and its allies about the consequences – not just of a direct strike against Iran’s nuclear facilities, but the possibility of sanctions upsetting the equilibrium of the Islamic regime.
Blockage of the Strait of Hormuz would cut off Israel’s primary source of fuel. Therefore, our sources report, a series of accords, some of them secret, have been transacted to back up America’s standing commitment to keep Israel supplied with its energy needs in the event of armed conflict or crisis on world fuel markets.
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Jim Sinclair’s Commentary
One thing is for sure. Regardless of whether the rumors are true about the Chinese central banker, you can be sure the people who run the Chinese central bank will not buy many more US Treasuries.
Yes, this statement speaks to the Chinese rating of US Treasury investments, a definite downgrade that Moody’s and Standard and Poors dare not make.

Japan debt safer than U.S. debt: China economist By Simon Rabinovitch and Aileen Wang
Posted 2010/08/11 at 7:42 am EDT
BEIJING, Aug. 11, 2010 (Reuters) — China has been buying record amounts of Japanese government debt because it is less risky than U.S. debt, at least in the short term, a Chinese government economist said on Wednesday.
Investing in Japanese bonds is safer because so much of the country’s debt is held domestically, and the yen is on course to strengthen further, said Zhang Ming, an economist with the Chinese Academy of Social Sciences, a top government think-tank.
"Even though the difference in yields is big, China has been abandoning U.S. debt and picking up Japanese debt. This definitely shows that it believes the risks of U.S. debt far exceed those of Japanese debt," Zhang said in a report issued by his research institute.
The report was issued a day after the Federal Reserve said it would buy more U.S. government debt in a form of mild quantitative easing to counter economic weakness.
Top Chinese leaders have previously registered their concerns about lax U.S. fiscal policies eroding the value of their investments in the United States.
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Jim Sinclair’s Commentary
I wonder if he just figured this out.
This has been true since they planted the buttonwood tree.

Hedge Fund Manager Dan Loeb: "The Whole System Is Rigged" Posted Aug 31, 2010 12:48pm EDT by Courtney Comstock
Provided by the Business Insider, August 31, 2010:
Apparently everyone’s forwarding around the powerful message in hedge fund manager Dan Loeb’s most recent letter to investors.
The message, from the number of chunks of quotes Dealbook pulls out of Loeb’s letter is: I don’t trust the government to do what’s best for the economy, so I’m pulling out of companies that could be impacted by public policy.
Third Point’s most recent investment strategy reflects Loeb’s belief that banks, healthcare, and for-profit education companies are "overly exposed to unpredictable government regulation."
In the startling conclusion, Loeb says:
“It is easy to see why so many people have concluded that the entire system is rigged.”
Here are the quote chunks we pulled from Dealbook’s analysis of the letter. Key points are bolded:
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