Alasdair Macleod: Catch 22 for the Fed

Submitted by cpowell on Sun, 2011-06-05 17:48. Section: Daily Dispatches

10:45a ET Sunday, June 5, 2011
Dear Friend of GATA and Gold:
Economist and former banker Alasdair Macleod, writing at GoldMoney, says that with the U.S. economy weakening, the Federal Reserve's options for reflating it and financing the U.S. government's debt are narrowing. MacLeod, who will speak at GATA's conference in London in August (http://www.gatagoldrush.com/), writes:

 

Biggest Protest In Athens Under Way As Tens Of Thousands Ask "Where Did Our Money Go", Demand No More Austerity (Now With WiFi Access)

After 12 consecutive days of protests, the biggest gathering in Athens' parliamentary Syntagma square is currently underway. The FT reports: "Thousands of Greeks protested outside parliament on Sunday against a fresh austerity package agreed in return for the country’s second bail-out in 13 months by the European Union and International Monetary Fund. “Thieves, thieves….Where did our money go?” the protestors shouted, blowing whistles and waving Greek flags as riot police thickened ranks around the parliament building on Syntagma square in the centre of the capital...Frustration over the socialist government’s half-hearted reform effort has united diverse activists –from unemployed graduates to environmentalists and pensioners – under the umbrella of the new movement. George Papaconstantinou, finance minister, is due to unveil on Monday a €6.4bn emergency package of tax increases and cuts in allowances aimed at putting this year’s budget back on track....“What went wrong? We need answers right now,” said Rovertos, a volunteer computer technician helping provide wi-fi services at the protest camp. “The government promised there wouldn’t be any more tough measures but they’re about to announce new taxes and thousands of job cuts,” said Stefanos, a retired civil servant sitting outside a tent." What went wrong is that Greece is in the process of being colonized by the global banker certal. But with summer season in swing, and most Greeks hitting the beach, we doubt many will notice until it is too late. As for those who may have noticed, below is a webstream of the biggest protest before the Greek parliament in 2011. It is sure to provide some entertainment for when the EUR opens up in 3 hours, if not much else.

Housing Prices Have Already Fallen More than During the Great Depression ... How Much Lower Will They Go? 

 

 

 

Don Coxe On Everything From The Markets Rolling Over, To Persistent Food Inflation, To The Coming US Sovereign Debt Crunch

Submitted by Tyler Durden on 06/05/2011 13:52 -0400

There is a plethora of original insight in Don Coxe (BMO Capital Makets) among them observations on sovereign risk moving from east to west, state finances (or lack thereof), the ongoing correction in financial stocks which portends nothing good for the equity investors, the ongoing violence in MENA, why this inflationary spike in food may last far longer than previous ones, and naturally, some very spot on thoughts on gold, which conclude with: "The only gold bubble likely to burst is the bubbling ridicule of gold."

 

Jacob Hornberger on Libertarian Law, Religion and the Growing US Police State

Sunday, June 05, 2011 – with Anthony Wile

Jacob G. Hornberger The Daily Bell is pleased to publish an exclusive interview with Jacob G. Hornberger (left).
Introduction: Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at The Foundation for Economic Education (FEE) in Irvington-on-Hudson, New York, publisher of Ideas on Liberty. In 1989, Mr. Hornberger founded The Future of Freedom Foundation. He is a regular writer for The Foundation's publication, Freedom Daily.
A brief synopsis:
Daily Bell: We think the Internet like the Gutenberg Press before it is creating a new Renaissance and new Reformation – Internet Reformation, if you will? Response?
Jacob Hornberger: It certainly is providing people with the means to circumvent the long-established mainstream media outlets, which is a great thing.
Daily Bell: Many believe that a New World Order is being created by an elite group of banking families residing in the City of London. Conspiracy theory?
Read More  

Anthony Wile: Bacteria Hysteria Fanned by WHO Propaganda Machine

Sunday, June 05, 2011 – by Russia Today

Anthony Wile / RT

Russia Today's Bill Dodd interviews Anthony Wile, the founder and chief editor of thedailybell.com, who believes the hysteria about the bacteria behind the food poisoning is artificially created by the mass media – which he calls "the WHO's propaganda machine."
"I do not believe we have enough information at this time to be able to determine whether or not this is going to be a real serious outbreak here that is going to cause serious human casualties. But certainly the mainstream media are having their normal run at trumpeting this to be another grand hysteric situation," he said.
And the main aim for them, he says, is to drive more people into believing that organizations like WHO are there to do something to solve the problem.
"I would not expect them to do anything more than continue trumpeting these headlines in a way which will cause more and more hysteria, because what they are going to do is [to] level society with more rules and more regulations," Wile added.

Watch Video
We look forward to hearing your feedback on today's Daily Bell.

21 Dead, 2,000 Infected: E-Coli Infection Swamps German Hospitals

Submitted by Tyler Durden on 06/05/2011 12:07 -0400

Even as the insolvent EU scolded Russia for daring to ban imports of raw vegetables from EU countries 3 days ago releasing the following statement, "The European Commission protested to the Russian Federation this afternoon against the Russian ban imposed earlier today on all EU vegetable exports to Russia, and requested the immediate withdrawal of the measure" there is no chance that Russia will comply (adding insult to insolvency), following the latest report from Reuters that "German hospitals are struggling to cope with the flood of E.coli victims, Health Minister Daniel Bahr said on Sunday, as the death toll rose to 21 with more than 2,000 people infected across Europe....Hospitals in the northern port of Hamburg, epicenter of the outbreak that began three weeks ago, have been moving out patients with less serious illnesses to handle the surge of people stricken by a rare, highly toxic strain of the bacteria." Needless to say, this is good news for the Keynesians out there: in addition to earthquakes, volcanoes, rain, snow, floods, droughts, tsunamis and nuclear power plant explosions, worthless economists will now have viruses to blame for "one-time, non-recurring" misses to their latest set of expectations.

All we can do is to do things to try to hasten the day

 

 

Portugal Votes In Symbolic Ouster Of Failed Government, As IMF Is Now In Charge
Submitted by Tyler Durden on 06/05/2011 11:28 -0400

Today, in a much anticipated outcome, Portugal will vote to replace the caretaker Prime Minister Jose Socrates with opposition center-right Social Democrat Pedro Passos Coelho. Alas this is largely a symbolic vote as the new guy is just a continuation of the policies of the old guy: "Passos Coelho, who cast his vote at a polling station in Amadora on the outskirts of Lisbon, where reporters by far outnumbered voters, said Portugal had to stick to the bailout terms to regain market confidence and return to growth." Even the young people understand this: "Ricardo, a voter in his late 20s, expressed a common view that any new government just has to march to the beat of the lenders' drum. "I think the election won't bring anything new because it's the IMF in charge of the country now ... Any party that gets to the government will just have to follow IMF rules, " he said." Spot on. And we wonder how long before Mohamed El-Erian, or some other actual thinker, has an op-ed discussing the pitfalls of what we have now trademarked as "The Congress of Berlin 2.0: the scramble for Europe."

Open Interest Reveals Yet Another Layer Within The Footprint of Control

posted by Eric De Groot at Eric De Groot - 58 minutes ago

Alonzo, Training Day Source: hark.com A sharp increase is paper supply, short positions in excess of deliverable metal, has been used to cap demand surges since 2001. Once a paper operation breaks the shor...

 

 

 

 

China Car Sales Tumble For Second Month In A Row, As Goldman Sees Spike In China Inflation To Multi-Year Highs

Submitted by Tyler Durden on 06/05/2011 10:57 -0400

More bad news for China's stagflating economy: according to an industry group, China automobile sales dropped for the second month in a row in May, pointing to slowing demand after Beijing stopped offering incentives and introduced new limits on car purchases earlier this year. "Vehicle sales in China shed 13.95 percent on-month to 1.19 million last month, the China Association of Automobile Manufacturers (CAAM) said. It was a 29.74 percent increase compared to the same month last year. Auto output fell 14.36 percent from a month earlier to about 1.31 million units in May. The industry group attributed the continued decline in May sales to the end of the tax breaks and incentive policies in the country. The Chinese government ended tax breaks for purchases of small cars at the end of 2010 and reimposed a 10 percent tax at the beginning of this year. The tax breaks, introduced in 2009 to buoy domestic demand amid the economic slowdown, had boosted China's auto market and helped it overtake the United States as the world's largest in 2009 and 2010." This is yet another piece of bad news for GM, for whom China has recently become the dominant market (even as it stuff US dealers with record amount of inventory), and since the company has been unable to take advantage of the supply disruptions that have crippled Japanese car makers, expect to see GM stock take its current post-IPO low stock price even lower. "Wang Qingtao, analyst at China's Sealand Securities Co., expected the downward trend in the Chinese auto industry would likely continue for a while, saying "the market fundamentals are not likely to change drastically." And in the meantime, Goldman now anticipates China's May inflation to hit 5.5% Y/Y, the highest such increase in years, and the Stagflationary economy continues overheating, this time due to surging food prices as a result of the record drought previously discussed. 

 

 

 

 

 

PBS Hacker LulzSec Takes On Archnemesis FBI, Defaces FBI-Affiliate Website In Protest Against NATO And Obama

Submitted by Tyler Durden on 06/05/2011 00:25 -0400

Even as the hacker collective known as Operation Empire State Rebellion, which back in March threatened to bring "peaceful revolution to America, and will engage in civil disobedience until Bernanke steps down" and has since largely fallen off the scene, presumably surprised by Bernanke complete lack of fazing, another hacker group, LulzSec, best known for recent hacking into PBS, has just taken the first step toward pissing off none other than its archnemesis the FBI, by defacing and taking control of an FBI affiliate website. From IBTimes: "In an apparent protest against the NATO and Obama administration, the LulzSec group announced the breach of FBI  affiliate website, the Atlanta chapter of Infragard. The group raised claims that they have taken “complete control” over the website and has “defaced it”. They also announced that the data including passwords obtained from infragardatlanta.org would prove useful for them to hack into other FBI affiliates, since a lot of users tend to reuse their passwords even though the practice is generally unappreciated by FBI." So while OP_ESR continues to engage in emptry rhetoric and summons the population to one after another attempt at uprising (Apparently June 14th is the latest D-Day), LulzSec, which is also speculated to be behind the historic ongoing hacks of the various Sony networks, is taking cyber-matters into its own hands. We wonder however whether this escalation of cyberwarfare against the US by the US will necessitate a declaration of war by Obama against the US. Admittedly, that would be a Keynesian wet dream: think of the record boost to GDP if Geithner literally nukes the west and eastern seaboards, only to rebuild them again...

Things That Make You Go Hmmm - "Is It Safe?"

Submitted by Tyler Durden on 06/04/2011 19:55 -0400
But for a bailout of sorts, one of the most villainous performances in cinematic history would never have made it to the silver screen. Producer Robert Evans was set upon getting Laurence Olivier to play the part of Dr. Christian Szell in the movie adaptation of William Goldman’s book, Marathon Man. However, because Olivier at the time was riddled with cancer, he was uninsurable so Paramount refused to use im. In desperation, Evans called his friends Merle Oberon and David Niven to arrange a meeting with the House of Lords (the upper body of the UK’s parliament). There, he urged them to put pressure on Lloyds of London to insure Britain’s greatest living actor. The ploy succeeded and a frail Olivier started working on the film. In the end, not only did he net an Oscar nomination for Best Supporting Actor, but his cancer also went into remission. Olivier lived on for another 13 years. The iconic scene in Marathon Man that, to this day has me squirming in my chair whenever I see it, involves Dr. Szell using particularly nasty dentistry techniques to torture poor Dustin Hoffman’s character, ‘Babe’, in order to establish whether the security of the stash of diamonds Szell has hidden has been compromised. Babe, however, genuinely has no idea what Szell is talking about. As Babe’s fear mounts, he tries giving Szell any and every answer to avoid the pain he is clearly about to face. He tells him ‘it’ is safe. He tells him ‘it’ is in grave danger - anything he thinks Szell wants to hear - but, unfortunately, Babe’s pain is inevitable and it is dispensed without compassion or humanity. Such is the way of the world. 

 

 

 

 

 

20 Facts About US Inequality That Everyone Should Know (With An Update On The Uber-Wealthy And Global Wealth Inequality)

Courtesy of the Stanford Center for the Study of Poverty and Inequality, we bring you the "20 facts about US Inequality that Everyone Should Know". For everything one has always wanted to know about wage inequality, CEO pay, homelessness, education wage premium, gender pay gaps, occupational sex segregation, racial gaps in education, racial discrimination, child poverty, residential segregation, health insurance, inter and intragenerational income mobility, bad jobs, discouraged workers, wealth inequality, labor market deregulation, job losses, immigrants and inequality and productivity and real income, this is the definitive resource. 

 

 

 

 

 

Advice every novice investor should read immediately
"It could mean the difference between comfort and misery somewhere down the road..."   

 

 

 

 

Ten questions every silver investor should be able to answer
"If you're concerned about the recent selloff, you may find the following very compelling..."  

 

 

 

 

 

Fed Lawyer Alvarez: “The Federal Reserve Does NOT Own Any Gold at All”

Thats right. The Fed owns NO gold. Zero, zip, ziltch.

For those of you who did not watch yesterday’s monetary policy hearing in the house of representatives, you most likely missed this bombshell exchange between Federal Reserve lawyer Scott Alvarez and committee chairman Dr. Ron Paul. My jaw literally dropped when I heard the Fed’s general counsel declare that the Federal Reserve owns no gold.




When Faith In U.S. Dollars And U.S. Debt Is Dead The Game Is Over -- And That Day Is Closer Than You Might Think.

Bank Of America's Ethan Harris Explains The Birth Death Adjustment

Submitted by Tyler Durden on 06/04/2011 18:16 -0400

Yesterday Zero Hedge pointed out that in addition to the 54,000 NFP number missing every single economist estimate, another very troubling statistic was that the BLS added some 206,000 "jobs" courtesy of its monthly birth/death adjustment: numbers which tend to be added on a monthly basis and then subtracted (especially during periods of economic contraction) in one annual benchmark revision which is largely ignored by everyone. In fact, as Peter Tchir pointed out, over the past 4 months, the NFP has added 752k jobs, of which 610k have been birth death jobs. B/D has added 271K jobs YTD in 2011, 510K in 2010, 585K in 2009, 825K in 2008, 883K in 2007, 1002K in 2006, etc, in in the last decade has never once subtracted from the full year tally, which would subsequently be revised lower. You get the picture. Well, yesterday, Bloomberg's Tom Keene sat down with Bank of America chief economist Ethan Harris, who just like every other Wall Street economist has been clueless on the direction of the economy in 2011, and asked him to explain just what the B/D model is, why it exists, and whether it represent data manipulation. The relevant segment begins just over 5 minutes into the clip below. 

 

 

 

 

 

Why the Greatest Depression of All Time Has Begun 




How Gold Could Reach $13,644 An Ounce And Silver $843 An Ounce 



International Forecaster June 2011 (#2) - Gold, Silver, Economy + More
By: Bob Chapman, The International Forecaster


Bank of America Gets Pad Locked After Homeowner Forecloses On It.  



More Job Seekers Give Up, Reducing Unemployment 



Pinched By Gas, Shoppers Pull Back Elsewhere 



Stocks Post Fifth Straight Week of Losses  



The Dangers of Fukushima Are Worse and Longer-lived Than We Think 

On "China Dumps US Bonds" Attempts At Clickbaiting

Submitted by Tyler Durden on 06/04/2011 15:10 -0400

In the aftermath of last week's disclosure to preempt the massive hoax story sourced by one "Sorcha Faal" involving a whole lot of false allegations pertaining to DSK, Russia and gold, all of it based not one single, sourcable fact, we have now been inundated with emails directing us to a story which has appeared in CNS News (and the fact that it was carried by Drudge Report does make it any easier), titled "China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills." Once again, while most readers will see right through this superficial attempt at clickbaiting, for the benefit of everyone else, we would like to briefly respond to how this article would look like when one actually looks at the facts.

In The News Today

June 4, 2011, at 11:10 am
by Jim Sinclair 

Jim Sinclair’s Commentary

Only cowards trade their supposed safety in exchange for their freedom.

Live free or die slowly.

Senators sound alarm over Patriot Act extension By Ken Dilanian Washington Bureau
June 2, 2011, 6:43 a.m.
When two senators warned that the Patriot Act is being interpreted in a secret way that would alarm Americans if they knew the details, civil liberties activists could only speculate about what they meant.
The activists’ fear: that the government is using the anti-terrorism law to collect vast troves of personal information, including cellphone records, on Americans who have no link to terrorism.
Congress voted overwhelmingly last week to reauthorize key provisions of the Patriot Act for four more years. President Obama signed it from France by authorizing the use of an autopen.
The Senate debate on the law featured an unusual dissent by two senators who serve on the Intelligence Committee.
Sens. Ron Wyden of Oregon and Mark Udall of Colorado, both Democrats, proclaimed that the Patriot Act’s surveillance powers are being used far more expansively than most Americans realize. But they can’t disclose what they know, they said, because the documents that detail how the Obama administration implements the act are classified. As members of the Intelligence Committee, Wyden and Udall are privy to secret briefings.
More…




From Pioneers to Pansies.

'Financial repression' of negative rates is likely Fed policy for decade, Rickards says

 

 

20 Facts About US Inequality That Everyone Should Know (With An Update On The Uber-Wealthy And Global Wealth Inequality)

Submitted by Tyler Durden on 06/04/2011 16:10 -0400

Courtesy of the Stanford Center for the Study of Poverty and Inequality, we bring you the "20 facts about US Inequality that Everyone Should Know". For everything one has always wanted to know about wage inequality, CEO pay, homelessness, education wage premium, gender pay gaps, occupational sex segregation, racial gaps in education, racial discrimination, child poverty, residential segregation, health insurance, inter and intragenerational income mobility, bad jobs, discouraged workers, wealth inequality, labor market deregulation, job losses, immigrants and inequality and productivity and real income, this is the definitive resource. 

Guest Post: The Final Form of Human Government

As Donne reminds us, No man is an island, at least if he attains to the order, the harmony – that “pleasing combination of the elements” – for which he naturally yearns. Alone against the elements, man is as nothing, scratching out an existence unfit for his kind and indeed destructive of it, selfless because, in having no others with whom to associate, no true self exists. But in that convivium – that “living together” – a self emerges, or at least the reflection of a self, into which he gazes and through which he begins not only to act but to act human, the goal of which is always the satisfaction of the acting man’s desires. And that, as we have said, is the source and sustenance of the social enterprise... 

 

Berlin Conference 2.0: Russia To Bail Out Hyperinflationary Belarus As Colonization Scramble Heats Up

Submitted by Tyler Durden on 06/04/2011 13:01 -0400

Who said that only Germany is allowed to annex Greece (and soon Ireland and Portugal)? (and if Der Spiegel has anything to say about it, again, Bailout #2 is far from certain... more on that shortly). In a surprising move, Russia has decided to remind everyone just how irrelevant the IMF is now that Russia and China run the "sovereign rescue" show, and that it too can play the imperialist game just as well as the Troica. Following the recent hyperdevaluation of the Belarus Ruble as discussed on Zero Hedge, and the country's collapse into a hyperinflationary hell, Reuters has just reported that Putin, that "White Knight" of former USSR imperialist dominance, has decided to "bailout" Belarus. From Reuters: "Cash-strapped Belarus will receive a three-year $3 billion loan from a Russia-led regional bailout fund as it seeks to stabilize its economy, Prime Minister Vladimir Putin's spokesman Dmitry Peskov said on Saturday. The former Soviet republic on Friday unveiled a series of measures to end the crisis, including a vow to cut its budget deficit in half, after its currency lost 36 percent of its value in May and inflation reached 20.2 percent." It is unclear just how many billions in funds will need to be derived from forced "privatization" of Belarus assets for the benefit of the old KGB guard, or what the interest rate on the rescue loans will be. What is more than clear is that as more and more countries fall into the toxic debt spiral, their neighbors who actually have capital and/or natural resources (ergo the irrelevance of the IMF), will "bail them out" only to remind the world that colonization is what it has always been truly about. Berlin Conference ver 2.0 -  here we come.

Spiegel Reports Greek Bailout #2 To Surpass €100 Billion

Submitted by Tyler Durden on 06/04/2011 13:45 -0400

It's the weekend, which means another Spiegel hit piece over the solvency and stability of the Eurozone is overdue. Sure enough, the publication comes through admirably with "New Greek aid to cost more than one hundred billion euros." As a reminder, until as recently as 24 hours ago it was expected that the bailout would be at most €80 billion, with half coming from Greek privatization efforts. Naturally, this means that even more money will be transferred from taxpayer pockets to bank capital deficiency accounts. Next up: Greek bailouts 3, 4, 5, by which point Goldman will have hopefully achieved its life long ambition of opening a Goldman Sachs-branded ATM at the main entrance to the Acropolis, which GS will have LBOed using discount window capital.

Weekly Chartology, Or What To Do When You Are Dead Wrong And Every Economic Release Disappoints Relative To Consensus

Submitted by Tyler Durden on 06/04/2011 10:59 -0400

Goldman's David Kostin is out with his latest chartpack which is as always chock full of pretty pictures, and the usual set of Monday morning quarterbacked recommendations. Just as it was Zero Hedge who first called Goldman's BS out in December of 2010 on their economic "fundamental shift" resurgence call, so it was ZH again first who suggested the QE Unwind compression trade, "Utilities and Consumer Staples as the long led in a compression trade, while shorting Industrials and Consumer Discretionary." Sure enough here comes Goldman observing "The rotation away from Cyclicals (Financials, Industrials, Materials) and into Defensive sectors (Health Care, Utilities, Consumer Staples, Telecom) continues to follow closely the historical trading pattern typically exhibited when the ISM index is declining from a peak back to 50" following a week in which  "every US economic data release disappointed relative to consensus expectations. ISM manufacturing index (53.5 actual vs. median consensus expectation of 57.1), consumer confidence (60.8 vs. 66.6), nonfarm payrolls (54,000 vs. 165,000), and unemployment rate (9.1% vs. 8.9%) all posted negative surprises and pushed the cumulative 22-day rolling US MAP (macro data assessment) score to its lowest level since  the beginning of our data in 2001. Domestic vehicle sales (9.2 million vs. 9.7) and home prices as measured by S&P/Case-Shiller index also disappointed." Perhaps it is time to launch the REDI Zero soft dollar machine: if Goldman makes billions and is dead wrong all the time, we would be trillioniares...So naturally, here's Goldman, pitching the high "Sharpe Ratio" basket, or back to defensives. Of course, anyone who listened to use almost three weeks ago already has this on.

HFT Stock Manipulation Caught On Tape

Submitted by Tyler Durden on 06/04/2011 11:54 -0400

It doesn't get any more blatant than this. Once again, courtesy of Nanex we present to our incompetent regulators prima facie evidence of what is outright tape painting via what is an apparent HFT algo trying either to front run an order, to test for the presence of other predatory algos, and in general to take advantage of Reg NMS only protecting displayed liquidity over non-displayed (a topic we discussed two years ago). In the example below, which shows unique trades in the stock of XEL.PR.G, in the span of 30 seconds, 430 shares are bought up on the way up from $90.5 to $102.25, and then sold off once again in another 10 seconds, hitting all bids as soon as they appeared. Now this is not some HFT-darling which trades millions of shares per day (and sees blasts of tens of millions of quote stuffing packets in hours) and thus will likely be ignored by the general population... until it does hit some stock that people do care about. Naturally the implication is that, as Nanex points out, if all stocks traded/quoted at this frequency, even the the SEC could figure this out in a few weeks, after assembling a multi-discipilanary team of course. Is it any wonder that virtually nobody trades on open exchanges anymore (yes, most trading, or what's left of it has shifted to Sigma X and other dark pools) where the only survival tactic for such legacy monsters as the NYSE and Nasdaq is to laterally buy up as many of their peers as they can now that organic growth no longer exists: gotta love a world in which there are 83 different ATS venues, all of which permit some permutation of millions of stock manipulation strategies.

For your weekend reading pleasure...

Guest Post: On The Ethics Of Mortgage Loan Default

Submitted by Tyler Durden on 06/04/2011 12:39 -0400

Is it ethical for the American homeowner whose mortgage has been securitized to default, even If they are not financially distressed? First, consider it is unlikely that marketable, fee simple, insurable title can be obtained as a result of fulfilling the obligations of the related promissory note. On the contrary the titles to some 60 million homes in America are badly clouded. Secondly, encouraging investment in an asset class that has been artificially inflated, then deliberately destroying the price of the asset, as part of a separate profit making scheme is unethical, and any agreement based on this type of fraud is grounds to consider the original debt instrument used in the agreement null and void. Fortunately these grounds are unnecessary, as increasingly US courts are ruling that these mortgages are already invalid for numerous other reasons.

The REAL Flight to Quality Trade (It Ain’t Dollars)

Posted by: Phoenix Capital Research

Post date: 06/04/2011 - 12:26

While the whole world seems to have turned against Gold in the last month, I’d like to note that this latest pullback in the precious metals’ space has given us an extraordinary opportunity to load up on premium quality inflation hedges at bargain basement prices. It’s also told us the following...

For your weekend reading pleasure...

1] Pushing for a return to the gold standard - L.A. Times

2] If India and Pakistan Come to Nuclear Blows, Blame U.S. - Bloomberg

3] U.S. wealthy exit Swiss bank accounts: study - Chicago Tribune

4] Questioned by Paul, Fed denies any interest in gold - GATA

5] Ron Paul dismisses speaker's debt cut demand - Bloomberg/GATA

6] ?Seasonal Gold Price Trends Favor Summer Purchases - USAGold

7] $8,000 gold & $400 silver - James Turk

8] The Road to Hyperinflation - James Turk

9] Libyan rebels broke despite pile of gold - AP/Yahoo

10] The counter-revolution club - Asia Times

11] The U.S. Postal Service Nears Collapse - Bloomberg/Businessweek

12] Interview with Chris Whalen - King World News

13] Interview with Jim Rickards - King World News

Economy falling over a cliff

Harvey Organ, Saturday, June 4, 2011

Economy falling over a cliff

Richard Russell: Gold will be "the last man standing"
"During hyper-inflation or deadening deflation, when 'all is lost,' gold holds its attraction..." 





Far and away, this is why the euro can't be saved
"The people of Europe want an exit from this sinking ship..."  




 

Goldman Dodges a Libyan Bullet - A MUST READ

Goldman invested $1.5 billion for the Libyan sovereign wealth fund in 2008, according to a report in The Wall Street Journal. It lost 98 percent of the money.

In an effort to placate outraged Libyan officials, Goldman executives attempted to sell preferred shares of the firm to Libya.

And this is where the feeling of relief comes in.

“The last thing we need right now would be headlines reading ‘Vampire Squid Profits Funding Libyan Dictator,’” one senior Goldman investment banker told NetNet. [We agreed not to identify him, because bankers are not really supposed to talk to reporters, except under very limited and controlled circumstances.]

The United States has been bombing Libya for months—and Gadaffi is back on the list of official villains.

I'll bet you a fair amount of coin that Rolling Stone magazine's Matt Taibbi must have laughed hysterically when he read this piece...and you should too.and the link to this must read story is here.

American Eagle silver sales so far in 2011 best in 25 years

With sales of no less than 3.65 million ounces of new American Eagle silver coins in May, silver coin sales by the U.S. Mint are reported to be at their highest ever from U.S. Mint data going back to 1986. Indeed May sales were even 30% higher than April's 2.819 million ounces, which in itself was the best ever April on record. This brings the total sale of American Eagle silver coins to 18.9 million ounces so far this year. Last year's sales over the same period amounted to 15.2 million ounces.

This is a short piece posted over at the mineweb.com yesterday..The link is here.

Remembering the Nickel Default of 2006

In August 2006, Ted Butler observed the London Metal Exchange default (excerpts below). As we get closer to the inevitable fall of the Crimex, it seems proper to recall how the nickel default of 2006 went down.

The investment world witnessed an event that has only occurred rarely in the past. I am referring to the extraordinary developments in the nickel market on the London Metals Exchange (LME), the largest base metals exchange in the world. Due to an unprecedented scarcity of metal, the LME was forced to revise the delivery terms of its nickel contracts.

Default is a simple word. Any time you unilaterally violate or negate the terms and conditions of any legal contract, that contract is in default. Period.

Moreover, a simple analysis of the situation reveals that the LME is aligning itself with the interests of the naked shorts in nickel, as common sense should tell you that no long holder asked the exchange to suspend the delivery obligation of the shorts.

This is a must read article...as is silver analyst Ted Butler's original 2006 essay entitled "First Nickel, Then Silver". and the link to both is here.

Jim Sinclair commentary


Gold’s Summer Doldrums Normally See Weakness but Fundamentals Could Lead to Surge International Business Times
Commentators such as John Embry, James Turk and Jim Sinclair who have called the market right for some time say that the extraordinary macroeconomic, monetary and geopolitical risk in the world today could see gold and silver bullion prices surge this …
More…




Jim Sinclair’s Commentary

Here is the latest from John Williams’ ShadowStats.com.

- Softer Employment Picture Reflected Minor Catch Up In Distorted Data � Much Weaker Data Loom Despite Ongoing Reporting Quality Issues
- Annual Growth in May Payrolls Slowed Anew
- May Unemployment Rates: 9.1% (U.3), 15.8% (U.6), 22.3% (SGS)
- Broad Money Supply Growth Jumps Again
"No. 371: May Employment and Unemployment"
http://www.shadowstats.com





Jim Sinclair’s Commentary

An act of war? An act of stupidity? A switch transaction?

Libya’s Goldman Dalliance Ends in Losses, Acrimony MAY 31, 2011
BY MARGARET COKER AND LIZ RAPPAPORT
In early 2008, Libya’s sovereign-wealth fund controlled by Col. Moammar Gadhafi gave $1.3 billion to Goldman Sachs Group to sink into a currency bet and other complicated trades. The investments lost 98% of their value, internal Goldman documents show.
What happened next may be one of the most peculiar footnotes to the global financial crisis. In an effort to make up for the losses, Goldman offered Libya the chance to become one of its biggest shareholders, according to documents and people familiar with the matter.
Negotiations between Goldman and the Libyan Investment Authority stretched on for months during the summer …
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Jim Sinclair’s Commentary

This will put extreme pressure on Saudi Arabia, helping Iran’s interest.
This is NOT spontaneous democracy. It is intrigue at the highest level.

Bahrain police open fire at protesters in capital Jun 3, 9:27 AM (ET)
By BARBARA SURK
DUBAI, United Arab Emirates (AP) – Bahraini police fired tear gas and rubber bullets at protesters marching toward the landmark Pearl Square in the country’s capital Friday, two days after authorities lifted emergency rule.
The downtown square was the focus of weeks of Shiite-led protests against Sunni rulers earlier this year. Witnesses in the tiny island kingdom said there were no immediate reports of casualties among the hundreds of opposition supporters who again took their grievances to the streets.
The country’s security force moved against the protesters shortly before Formula One’s governing body deemed the kingdom safe enough to host the Bahrain Grand Prix in October.
The annual F1 race has been Bahrain’s most profitable international event since 2004, when the island nation became the first Arab country to stage the Grand Prix. Bahrain organizers insisted they are ready to host the race this year despite the deadly crackdown. The season-opening March auto race was postponed because of political unrest.
The Bahraini government lifted emergency rule Wednesday.
Tanks and soldiers left the heart of capital, but authorities warned they were not easing pressure on anti-government protesters. Opposition groups have called supporters to return to the streets, the first such appeal since the military overran the protesters’ encampment at Pearl Square after martial law was imposed in mid-March.
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Jim Sinclair’s Commentary

More debilitating records being set.

U.S. runs up massive trade deficits with China, Mexico, Japan and Germany by G. Scott Thomas
Friday, June 3, 2011, 1:00am EDT
The United States ran up a trade deficit of more than $10 billion with four different countries. And it took just three months to do it.
America’s balance of trade with China, Mexico, Japan and Germany plummeted more than $10 billion into the red during the first quarter of 2011, according to new figures from the U.S. Bureau of Economic Analysis.
The worst imbalance is with China. American companies exported $26 billion of goods to China in January, February and March. But American consumers purchased more than $86 billion of imported Chinese goods during the same three-month span.
The resulting U.S. trade deficit with China: $60.20 billion in the first quarter alone.
The next-largest American deficits for the quarter were $16.33 billion with Mexico, $16.28 billion with Japan, $11.00 billion with Germany and $9.63 billion with Canada.
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Hyperinflation or depression, Embry tells King World News

 

Questioned by Paul, Fed denies any interest in gold

 

Paul dismisses speaker's debt cut demand

 

Investing in Precious Metals: Investors Sticking to the Physical

Fed Stimulus Leads to Stagflation
By: John Browne, Senior Market Strategist at Euro Pacific Capital




COT Gold, Silver and US Dollar Index Report - June 3, 2011
By: GoldSeek.com








Pricing Gold in Deflation
By: Adrian Ash, BullionVault




Can You Pass the 2011 Silver Quiz?
By: Jeff Clark, BIG GOLD








The Brittle Financial American Middle Class

The Collapse In EUR Spec Longs Ends As Dollar Short Covering Has A Little More To Go

Submitted by Tyler Durden on 06/03/2011 16:08 -0400

As we predicted last week, the tide has turned in the futures market, where after 4 weeks of steep declines, the net EUR non-commercial specs have finally posted a pick up. And considering they are delayed by about 700 pips, after the pair has surged since May 23, expect what will likely be the biggest surge in net long EUR exposure next week. In the week ended May 31, there were 21,970 net longs, compared to 19.129 in the week prior, and 99,516 on May 3, when the EURUSD was flirting with the 1.50 mark. We expect a pick up of at least 30-40k contracts in the next week as all latecomer shorts promptly cover. Elsewhere, the short covering spree in the USD continues but not for long: look for the most recent net long exposure of 4,787 to promptly flip and go negative once again as more and more begin anticipating another Monetary Easing episode. And out east, the net JPY exposure went bearish fror the first time sine May 3, with net exposure dropping from 8,006 contracts to -1,648. The technicals at this point indicate a break of recent EURUSD resistance in the 1.50 area is very much possible. 

 

 

 

 

 

CME Saves The Best For Friday 6 PM Last, Lowers Treasury Bond Margins

Submitted by Tyler Durden on 06/03/2011 18:12 -0400

Just in case the broad speculator public did not get the message earlier this week after the CME lowered ES margins, just in time for the market to sell off and send realized vol surging (while of course ignoring plunging vol in gold, silver and all other commodities), the CME has completed the "paint by Rahmian numbers" puzzle, and has made clear which other asset class has the investment "go ahead" by the administration. As of a few minutes ago, the initial and outright margins for 10Y and 30 Y Treasury Bond Futures, 10 Year On The Runs, 7 Year Interest Rate Swaps and LT US Treasury Bond Futures were all lowered by up to 19%. Good thing the move comes 4 weeks before the end of QE 2. Were it to just precede, or, gasp, coincide with June 30, one may get ideas that this is not quote unquote risk management, such as that expressly not exhibited by the CME's refusal to hike ES margins following their cut, but is nothing but another glaringly obvious means of directing speculative capital into preferred asset classes.

Guest Post: Two Clear Warning Signs In The Credit Markets

Submitted by Tyler Durden on 06/03/2011 20:25 -0400

Credit markets have been performing well all year. The returns, while not outstanding have been incredibly consistent. There has been an eerie calm to the market. Most people are bullish on corporate credit - even those who don't like the overall yields argue that the spreads are attractive. That may be true, but two leading indicators of potential trouble in the credit market have popped onto my radar screen 

 

 

 

 

 

Attention Marxists: Labor's Share Of National Income Drops To Lowest In History

Submitted by Tyler Durden on 06/03/2011 18:03 -0400

Probably the most imprtant secular trend in recent employment data, one that has a far greater impact on the macroeconomic themes than Birth/Death and seasonal adjustment manipulated month to month shifts in the employment pool per either the household or establishment surveys, is the labor share of national income. In a 2004 paper from the St. Louis Fed, the authors make the following statement: "The allocation of national income between workers and the owners of capital is considered one of the more remarkably stable relationships in the  U.S. economy. As a general rule of thumb, economists often cite labor’s share of income to be about two-thirds of national income—although the exact figure is sensitive to the specific data used to calculate the ratio. Over time, this ratio has shown no clear tendency to rise or fall." It would be wonderful if this was true, and thus if the US population really had a stable distribution of income between laborers and capital owners. Alas it is dead wrong. In fact, as the latest note from David Rosenberg points out, the "labor share of national income has fallen to its lower level in modern history - down to 57.5% in the first quarter from 57.6% in the fourth quarter of last year, 57.8% a year ago, and 59.8% when the recovery began." And here is where the Marxist-Leninist party of the US should pay particular attention: "some recovery it has been - a recovery in which labor's share of the spoils has declined to unprecedented levels."

Arnie Gundersen Interview: The Dangers Of Fukushima Are Worse And Longer-lived Than We Think

Submitted by Tyler Durden on 06/03/2011 16:40 -0400

"I have said it's worse than Chernobyl and I’ll stand by that. There was an enormous amount of radiation given out in the first two to three weeks of the event. And add the wind and blowing in-land. It could very well have brought the nation of Japan to its knees. I mean, there is so much contamination that luckily wound up in the Pacific Ocean as compared to across the nation of Japan - it could have cut Japan in half. But now the winds have turned, so they are heading to the south toward Tokyo and now my concern and my advice to friends that if there is a severe aftershock and the Unit 4 building collapses, leave. We are well beyond where any science has ever gone at that point and nuclear fuel lying on the ground and getting hot is not a condition that anyone has ever analyzed." So cautions Arnie Gundersen, widely-regarded to be the best nuclear analyst covering Japan's Fukushima disaster. The situation on the ground at the crippled reactors remains precarious and at a minimum it will be years before it can be hoped to be truly contained. In the near term, the reactors remain particularly vulnerable to sizable aftershocks, which still have decent probability of occuring. On top of this is a growing threat of 'hot particle' contamination risk to more populated areas as weather patterns shift with the typhoon season and groundwater seepage. 

 

 

 

 

 

U.S. Hyperinflation is Coming Soon...

 

Goldman Slams USD... Again

Submitted by Tyler Durden on 06/03/2011 15:00 -0400

It has been a few weeks since Goldman's FX strategist Tom Stolper made a public appearance. Which is reasonable: after all the EURUSD dipped as low as 1.39 about ten days ago, a level which threatened to stop out Stolper's 1.55 EURUSD target at a loss. Luckily for the GS FX strategist, this is about the time when the G7 decided it was its imperative to once again impair Europe in exchange for sending US stocks higher (i.e., DXY down, RUT up), alas the decision came at a very bad time for the US economy, which was just entering the worst 10 day period of declining growth since last summer. Either way, now that the EURUSD has retraced a massive 630 pips move in the past 10 days, Stolper has once again shown his head, issuing yet another hit piece on the USD. And what a hit piece it is: "...he upcoming balance of payment data will likely show a notable deterioration in the BBoP. Finally, US policymakers seem to be making little or no progress on fiscal consolidation with Moody’s now also warning about the consequences of hitting the debt ceiling in early August. We remain short the USD against the EUR, CNY, MYR, PHP, and now also the NOK." Ok, we get how you feel... But what is the prop desk doing?

This is Just a Warm Up For What’s Coming Our Way

Posted by: Phoenix Capital Research

Post date: 06/03/2011 - 11:04

And so here we are, with austerity measures and higher taxes occurring in Europe because of bankers’ greed and dishonesty. Having realized that their politicians aren’t going to do the right thing, the people are now openly expressing their disgust at the ballot box (Angela Merkel’s party is getting slammed in Germany for supporting the bailouts) and the streets (protests are occurring across Europe). And it’s just a taste of what’s coming to the US.

 

 

 

 

 

Gold as Collateral - Major Step for the Gold Market 

Mutiny On The Acropolis: Greek Protesters Seize Finance Ministry

Submitted by Tyler Durden on 06/03/2011 15:16 -0400

Someone keep an eye on Waddell and Reed at all times. Repeat: all times. Because once they, and the market, and the Troica realize that the passage of Bailout 2 will lead to a revolution, it will get very, very interesting. "Protesters belonging to the left-wing The All-Workers Militant Front (PAME) union unfolded a giant banner from the roof of the finance ministry building on the central Syntagma square, calling for a nationwide strike against the new austerity measures that the government agreed to take in return for the new bailout package. "From dawn today forces of PAME have symbolically occupied the finance ministry, calling on workers to rise, organize their struggle and prevent the government's barbarous and anti-popular measures from passing," the front said, AFP reported." 

 

 

 

 

 

An Agent Of The King In Every Home

Constitutional values cannot defend themselves. They require the people to stand firm, and to never yield. Americans today have yielded far too much already, and at some point very soon, we’re going to have to make the hard choice on what is more important; our general safety and personal comfort, or our freedoms and the freedoms of future generations. Like the American Colonials, we have a system that does not serve our best interests, but the interests of an elite few. We are quickly losing our ability to dictate the terms of our own society, and our own destinies. Sadly, we are not yet presenting the determination that the colonials held in the face of this danger. Today, we are a nation mourning its own demise before it has even occurred. We have turned to reluctant compliance and submission. We are, frankly, whiny and pathetic. This does not have to be. 

 

 

 

 

Watch Obama Explain Why Keynesianism Has Been A Failure

Submitted by Tyler Durden on 06/03/2011 13:24 -0400

Watch the teleprompter advise the president on the correct choice of words at his address to workers at a Fiat, pardon Chrysler Group, Toledo supplier park, during which he will have to explain why both fiscal and monetary policy (read Keynesianism) is now a confirmed failure. But far from Austrian economics finally get the respect it so much deserves, this will merely retrench the current idiotic policies - just read any column by Krugman demand doubling down on stimulus post haste: that's what happens with junkies - it never ends, and in fact the "last" does must always be more and more and more... 

 

 

 

 

Today's Flash Crash: From $6.90 To $0.09 In Two Seconds

Submitted by Tyler Durden on 06/03/2011 12:40 -0400

Thanks to Nanex we once again get a reminder that not only is the economy broken, something which becomes painfully clear each and every time the monetary and fiscal stimulus are about to get yanked, like right now, but that our stock markets continue to be the butt of all algorithmic jokes. Today's punchline: Bitauto Holdings, which traded from $6.90 to $0.09 in two seconds. And lest one thinks this was a fat finger, the total number of trades canceled subsequently by the NYSE and Nasdaq was 22,900 shares. SkyNet strikes again. 

 

 

 

 

Troica Demands Deep Public Sector Cuts, Higher Taxes As Part Of Greek Bailout #2, Or My Big Fat Greek Anschluss

Submitted by Tyler Durden on 06/03/2011 11:37 -0400

So here it is:

• EU, IMF: GREECE NEEDS TO REINVIGORATE STRUCTURAL REFORMS (so, fire more people and generate more GDP with whoever is left?)
• EU, IMF: GREECE WILL REDUCE PUBLIC SECTOR EMPLOYMENT (so, fire even more peple)
• EU, IMF: GREECE TO REDUCE TAX EXEMPTIONS, RAISE PROPERTY TAXES (So, generate more GDP by taxing people more?)
• EU, IMF: `AMBITIOUS' MID-TERM PLAN, WILL MEET 2011-2015 TARGETS (If the targets are all Greek bankruptcy, yes)
• EU, IMF: OVERALL ASSESSMENT GREEK PROGRAM `SIGNIFICANT PROGRESS (uh, where?)
• EU, IMF: GREEK ECONOMY TO STABILISE AT TURN OF YEAR (Idiots)

And now, the people get angry. Expect live webcast from Syntagma square shortly.

It's Official: QE 2 And The Tax Cut Have Been A Failure

Submitted by Tyler Durden on 06/03/2011 11:07 -0400

Well it looks like the rich have taken the tax cuts and used the money to buy 'necessities' at Tiffany's rather than hiring people. Weren't the tax cut extensions necessary for hiring? It really looks like that money went straight to little blue boxes. Does Kraft Mac'n Cheeses still come in dark blue boxes? Maybe we aren't separated into rich and poor, just which shade of blue box you can afford? It is hard to find anything encouraging about the numbers out today. For the past 4 months now, the NFP has added 752k jobs. 610k of those have been birth/death jobs. If you do year to date, it's not as bad since January saw a large negative birth/death adjustment. I am concerned about the validity of the birth/death model. We have gone through such unprecedented changes in the economy I find it hard to believe that the model is calibrated well. I still like being short IYR, SPG, VNO on the back of the move in CMBX. I am digging deeper into corporate credit, but 2 worrying signals are there. Recent new issues seem to be struggling. Even GOOG is wider. The indices are also starting to trade fairly cheap to fair value. This combination is rarely good so selling LQD (on spread basis) and HYG while collecting more details for this analysis. 

 

 

 

 

 

Guest Post: Taking Away The Punchbowl

Submitted by Tyler Durden on 06/03/2011 11:01 -0400

Whenever I unleash a tirade at home about how Federal spending has leaped 40% in three years and how the government is now borrowing 42% of its spending, my wife points out that nobody cares because the deficit doesn't impact them at all. This always stops the tirade in its tracks, because it's so obviously true. As long as the Federal checks keep being issued and everyone gets their 17 "low-cost" meds paid by Medicare, the National Defense State gets unlimited billions to spy on the citizenry and indeed, the entire world, gasoline at $1,000 a gallon flows freely in Afghanistan and other distant corners of the Empire, and Wall Street writes itself billions in bonuses, then nobody cares about the deficit. The only way anyone will feel the deficit is if their share of the Federal swag is trimmed to pay the interest on the ballooning debt. But the Federal Reserve has a solution to that eventuality: keep interest rates (and thus yields on new Federal debt) super-low. At zero interest, $50 trillion in debt costs nothing. Heck, you and I could handle the interest payments on $50 trillion at zero interest. At 1%, the interest is "only" $500 billion a year--no big deal, as we can easily borrow another $500 billion a year, no problem. After all, the bond market hasn't barfed yet and we're already borrowing $1.65 trillion a year, plus hundreds of billions "off-balance sheet" in "supplemental appropriations." 

 

 

 

 

 

"It's Transitory"

Submitted by Tyler Durden on 06/03/2011 13:59 -0400

Anything negative can be called “transitory.” Commodity prices are rising, I am nervous. Don’t worry, it’s transitory. Wait a minute, now the economic statistics are rolling over? Transitory! But Bernank, I don’t have a job and just joined the ranks of record food stamp participation (it is now 44 million people). Quiet sheep, let the adults deal with it. Besides, it’s…well you get it. So the brilliance of it all is that no matter how bad things get, some talking head can come out there and tell you it’s temporary. The term “soft patch” is just a another way of saying it. Not only is it a way to give a downtrodden people hope while they are being robbed, but it also allows for additional time for the Central Bankers to put the final nail in your coffin. All Americans have to do to look at our future is pay attention to what is being done to Greece and Ireland. Greece of course is furthest along the path to becoming a slave colony of the European banks and their puppets at the ECB. They are being told to sell off assets in order to protect the bond values of insolvent banks. This is simply a leveraged buyout of Greece by those that control the distribution channel of money. When EVERYONE is broke, the player that comes out on top is the one that can create the money versus the one that cannot. 

 

 

 

 

 

 

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