Tuesday, May 31, 2011
Counting the Cost - Glencore: Taking over the world?
We look at the world's biggest listed commodities trader and its controversial start to public life.
John Whitehead - US is a police state
"What stands between us and an authoritarian state is the Constitution," says Rutherford Institute President John Whitehead. Unfortunately Whitehead says the government is bypassing the Constitution, particularly the 4th Amendment, thanks to the Patriot Act. As activists are arrested and fear spreads across America, Whitehead says we are watching the US transform into a police state in front of our very eyes.
Great Chinese drought continuing
In China for the past two weeks the big story has been drought in the Yangtze River region, now being called the country's worst in 50 years.
CIA Warns Of A Greek Military Coup, Rebellion, If Austerity Intensifies
From Zero Hedge:Turkish daily Hurriyet, which paraphrases German Bild, which in turn references a CIA report, warns that Greece could face a military coup if the "tough austerity measures and the dire situation" escalate any further. On the other hand, one can avoid this belabored hypertextual chain and simply look at what happens practically every day on Syntagma square where yet again we are witnessing record numbers of people protest against what everyone now realizes is a dead end regime (luckily, in a peaceful manner, for now).
More Captain Obviousness (thank you Grant Williams) from Hurriyet: "According to the CIA report, ongoing street protests in crisis-hit Greece could turn into escalated violence and a rebellion and the Greek government could lose control, said Bild. The newspaper said the CIA report talks of a possible military coup if the situation becomes more serious and uncontrolled." Luckily, following last year's Athens mob-inspired flash crash, and 2011's MENA revolutions, the market is rather desensitized to this sort of thing, and nothing short of fat-finger driven invasion of Greece by Turkey, in its humanitarian bid to reestablish the Ottoman Empire 2.0, could dent the /ES or EURUSD by more than 0.01%.......read on
Ex-CIA man claims Barack 'doesn't have a clue'
From the UK Telegraph:David Cameron and Barack Obama ''don't have a clue'' about dealing with the war on terror, a former senior member of the CIA has claimed.
Speaking at The Daily Telegraph-sponsored Hay Festival, Michael Scheuer said western politicians had to accept that the conflict in the Middle East was caused by US foreign policy.
Mr Scheuer, the former head of the CIA's Osama bin Laden unit said that the terrorist and organisations such as al-Qaeda were fighting a war against US imperialism rather than a war on western culture.
''American politicians, and I'm afraid listening to Mr Cameron this week, there's not a clue about what's going down in the western world,'' he told the festival.
''They can't cope with the fact that it's nothing to do with the way we live. It doesn't have anything to do with elections or democracy or liberty.
''We are being attacked in the west and we will continue to be attacked in the west as long as we are in Afghanistan, as long as we support the Israelis, as long as we protect the Saudi police state."......read on
Monday, May 30, 2011
War on RT
The New York Times, NPR and broadcasters across the country are attacking RT for embracing a not-so-mainstream approach to broadcasting the news. Lauren Lyster fires back at allegations about the legitimacy of RT and their guests.
First Amendment Crushed
Several people have been forcibly arrested in Washington for dancing at the Thomas Jefferson Memorial. Among those held were RT America presenter Adam Kokesh, who talked to us live from Washington.
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The Greek Panic has started
From Mish:
Only a few steps separating from Friday to yesterday's mass panic! From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday's day.
It is significant that Thursday and Friday, banking sources estimate that rose around 1.5 billion euros in total! According to the same month in May estimated the outflow estimated at least 4 billion from 2 billion in April.
The majority of depositors rushed to withdraw for pensioners and small savers and amounts ranging from 2-3000 lifted until 10 -15 000 euros. Motivation in most cases it was the fear that led the country into bankruptcy, deposits frozen even temporarily left without cash, or even lose their savings.
Politicians do not seem to fully understand the risks posed by a widespread panic, not only for the stability of the banking system but for the economy and the country.
Only a few steps separating from Friday to yesterday's mass panic! From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday's day.
It is significant that Thursday and Friday, banking sources estimate that rose around 1.5 billion euros in total! According to the same month in May estimated the outflow estimated at least 4 billion from 2 billion in April.
The majority of depositors rushed to withdraw for pensioners and small savers and amounts ranging from 2-3000 lifted until 10 -15 000 euros. Motivation in most cases it was the fear that led the country into bankruptcy, deposits frozen even temporarily left without cash, or even lose their savings.
Politicians do not seem to fully understand the risks posed by a widespread panic, not only for the stability of the banking system but for the economy and the country.
The Carry Trade
For those who have heard of the term "The Carry Trade" but were not sure what it meant, bloomberg gives a quick run down in the video below. It explains some of the reasons the Aussie dollar broke parity with the US$ and kept on rising.
click on the pic to go thru to the video
Forex trading Robots
If trading equities with automated High Frequency Trading algorithms wasn't dangerous enough (remember the "flash crash") they are now moving in to the Forex space. So now you can automate the crash of a whole country's currency instead of just one stock, so much more fun, non?
What George Soros would have given for one of these platforms in the good ol' days when he broke the British Pound.
What George Soros would have given for one of these platforms in the good ol' days when he broke the British Pound.
Marc Faber Sees Risk of `Technical Recession' in China
I wish to echo what Marc says in regards to a boom at the big end of town. I visited Bangkok, Thailand in Dec 2010 and went to dinner with some of the movers 'n shakers at a high end nightclub. The car park mainly consisted of AMG Mercs, M3 BMWs and high end Porsches.
by Bloomberg on May 26, 2011 May 25
Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the outlook for China's economy. Faber also discusses the U.S. economy and budget deficit, and his investment strategy. He speaks with Carol Massar on Bloomberg Television's "Street Smart."
by Bloomberg on May 26, 2011 May 25
Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the outlook for China's economy. Faber also discusses the U.S. economy and budget deficit, and his investment strategy. He speaks with Carol Massar on Bloomberg Television's "Street Smart."
click on the photo of Marc Faber to go thru to the inteview
How gold could reach $13,644 an ounce and silver $853?
From ArabianMoney.net:Doyen of the gold bugs Jim Sinclair has set readers of his popular website a challenge to come up with the price per ounce that gold will reach if the precious metal is fully monetized. He says the correct answer is $13,644.
Mr Sinclair explains his thinking: ‘Because gold is held by many central banks, once as a reserve currency but now as an inventory currency, it functions as a swing asset to balance the International Balance sheet of the US. Central banks are sellers of dollars but still hold, by default, large dollar inventories......read on
Steve Keen: Will there be a double dip in the USA?
Interesting video from Steve Keen, a controversial Australian economist, whom I had the pleasure of meeting at conference dinner several months ago.
Bill Murphy - why GATA believes the gold and silver markets are being manipulated
In this video, Bill Murphy, chairman of the Gold Anti-Trust Action Committee (GATA), discusses why GATA was formed and some of its recent activities. Murphy also discusses why GATA believes the gold and silver markets are being manipulated.
Murphy also talks about the problems afflicting the world economy – and in particular, the US economy – and examines what the prospects are for gold and silver returning to some countries as official currencies.
Sunday, May 29, 2011
See the violence inherent in the system - HELP! HELP! I'm being repressed!
click on the image of Jefferson to read the words etched on the wall behind him, then read the rest of this post.WTF? US Park Police tear up the 1st amendment in front of the Thomas Jefferson Memorial, simply disgusting.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances
Monty Python and the Holy Grail summed it up nicely:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances
Monty Python and the Holy Grail summed it up nicely:
KING ARTHUR: Shut up! Will you shut up!
DENNIS: Ah, now we see the violence inherent in the system.
KING ARTHUR: Shut up!
DENNIS: Oh! Come and see the violence inherent in the system! HELP! HELP! I'm being repressed!
KING ARTHUR: Bloody peasant!
DENNIS: Ah, now we see the violence inherent in the system.
KING ARTHUR: Shut up!
DENNIS: Oh! Come and see the violence inherent in the system! HELP! HELP! I'm being repressed!
KING ARTHUR: Bloody peasant!
Jim Rogers hammers a BBC git
A must watch interview with the guru Jim Rogers and some pathetic Pommie git from the BBC trying to deny the Asia growth story. Jim knocks him down to the canvas time after time, as the git tries to pretend Brittan is still Great and the USA can be a creditor again...lol
As the Asia Highway 1 shows above, Asia is on the road to somewhere, where the USA & UK are merely financial potholes.
What happens when Anonymous gets a bank?
http://bigthink.com/ideas/38488
The same people who brought you Wikileaks are back, and this time, they’ve created a virtual currency called Bitcoin that could destabilize the entire global financial system. Bitcoin is an open-source virtual currency generated by a computer algorithm that is completely beyond the reach of financial intermediaries, central banks and national tax collectors. Bitcoins could be used to purchase anything, at any time, from anyone in the world, in a transaction process that it is almost completely frictionless. Yes, that’s right, the hacktivists now have a virtual currency that’s untraceable, unhackable, and completely Anonymous.
And that’s where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he’s ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency. If you think there’s a shadow banking system now, wait a few more months. The political part is that, unlike other virtual currencies like Facebook Credits (used to buy virtual sock puppets for your friends), Bitcoins are globally transferrable across borders, making them the perfect instrument to finance any cause or any activity — even if it’s banned by a sovereign government.
You don’t need a banking or trading account to buy and trade Bitcoins – all you need is a laptop. They’re like bearer bonds combined with the uber-privacy of a Swiss bank account, mixed together with a hacker secret sauce that stores them as 1′s and 0′s on your computer. They’re “regulated” (to use the term lightly) by distributed computers around the world. Most significantly, Bitcoins can not be frozen or blocked or taxed or seized.
The Arab Awakening - The people want...
"The people want the fall of the regime" is the shared slogan of the Arab uprisings. In this episode an array of characters from across the region explain what they want and what they expect for the future.
Google unveils the 'mobile wallet'
Google has unveiled new technology which could change the way consumers shop. The so-called "mobile wallet" may mean one less thing to carry when you go to the store - but there are concerns over security of the new system. Kristen Saloomey reports.
Frost Over the World - Reflections on Netanyahu's speech to Congress
Dan Gillerman, a former Israeli ambassador to the UN, and Munib al-Masri, a Palestinian prime ministerial candidate, talk about Binyamin Netanyahu's speech to the US Congress and the impact it will have on the peace process.
Saturday, May 28, 2011
Green Shoots, Exit Strategy, No QE3
By Jim Willie:
It is not clear whether the American financial community has the ability to observe and conclude that the US Federal Reserve is adrift and relies upon deception as policy in revealing its directions. Its position is to hold steady, inflate to oblivion, support financial markets in heavy volume secretly, and lie about leaving its trapped policy corner.
The USFed is a propaganda machine that deals with ruses as a substitute for transparent policy discussion in the public forum. Two years ago the ruse disseminated widely was the Green Shoots of an economic recovery that had no basis at all. The scorched earth showed more evidence of ruin than fresh business creation, at a time when the grotesque insolvency was spreading like a disease throughout the entire US financial system.
On one hand the USFed was busy operating numerous credit and liquidity facilities in order to prevent systemic seizure, busily redeeming the Wall Street toxic bonds at the highest possible prices. On the other hand they were talking about Green Shoots, as insolvency spread across the big banks to the household equity. They lost their credibility in the process. They have lost it completely after two full years of 0% rates, the ultimate in central bank shame. The Jackass dismissed the Green Shoots ploy quickly, regularly, and correctly, as whatever little shoots were present probably the handiwork of ant colonies or termite hills, mistaking green insect feces, or even some toxic green runoff from a nearby financial office of a corporation.
One year ago the ruse disseminated widely was the Exit Strategy from the 0% monetary corner that had no basis at all. The USFed was well aware that 0% as an official rate was untenable, dangerous, and would produce different maladies. They promoted a phony story of a Jobless Recovery, an utter contradiction and bad joke played upon the American workers. To make the cost of money free encourages speculation in the most general systemic sense. The primary gold market fuel is the price of money being far below the current price inflation rate. Anyone who believes the CPI is actually 2% to 3% is braindead. Even USGovt statistics list the numerous categories with strong price increases, yet the overall CPI is lower than all components. Power to adjustments.
My description has been that the USFed is stuck in the 0% policy corner. The corner has been described since the start of 2009 when it was instituted. If the USFed raises rates, they torpedo the housing market left as derelict adrift at sea, listing badly, taking on more water, weighed down by the inventory burden. Given that the USEconomy was so dependent upon housing for three or four years, and that dependence has turned to deep vulnerability, they cannot hike interest rates and exit the policy corner without sending home prices into a fast acceleration downward. They will bottom out 20% to 30% below construction costs.
Worse, a rate hike would trigger a credit derivative series of explosions from the Interest Rate Swaps. These queer devices hold down long-term rates far below the prevailing price inflation level. That is why the USFed Chairman Bernanke insists of an undying focus of the inflation expectations, the USTreasury Bond yields and TIPS yields (both of which they purchase in monetization operations). They control them using IRSwaps. If the USFed holds steady, as they must, they generate significant rising costs for everything from food to energy to metals to cotton. Even scraps (paper, metal, plastics) are rising in price. Even the toys sector must contend with fast rising prices in time for the Christmas season. See the Li & Fund effect, also called Foxconn in China. They also make i-Pods. The current path lifts the cost structure to such a level that both businesses and households are experiencing a pinch.
The fast collapse of the Philly Fed index is testament to the pinch. Shelves at major retail chains are experiencing a slow decline in volume. It is called the profit squeeze. Business profit margins are shrinking, even as household discretionary spending funds are shrinking. The Jackass dismissed the Exit Strategy ploy quickly, regularly, and correctly, as the monetary policy corner was described consistently and clearly. It was a bluff, but a very bad one. It served as a litmus test to divide the financial analysts into two camps, the dumkopfs and the sage. The dumb analysts fell for it, based upon an idealistic belief that the 0% policy should end and the recovery was happening slowly. The savvy analysts did not fall for it, since the consequences of ending the 0% rate would be like suffocating your children in the middle of the night.
THE BIG RUSE & THE BIG BIND
The USFed is caught in a gigantic bind, cannot raise rates, and must endure the global price inflation problem that festers on the cost side of the equation. They busily deny their role in producing price inflation from debt monetization coupled with 0% rates. They lost more credibility in the process. They are the object of global anger and ridicule. They must hope that the eventual rate hike will keep the speculative juices from overflowing. Gold & Silver do not rest, as they brush aside such a plain ruse of a threatened rate hike. The sovereign bond situation in the entire Western World (with Japan adopted into the fold) is horrendous and worsening. The government deficits are out of control. Few analysts prefer to point out how the foundation for the global monetary system is supported by the gaggle of crippled sovereign bonds. To be sure, the Southern Europe debt is in a ruined state. But the debt of the United States is no better and the same for England, when viewed as annual debt ratio to total budget, when viewed as cumulative debt ratio to GDP (economic size). The graph below shows those two dimensions, and how the United States and United Kingdom are positioned among Spain, Ireland, and Greece, apart from the mass of nations. In the full year since this graph was produced, the US debt situation has grown worse. The reckless socialists seem prudent.
The extended PIIGS pen of nations, fully ruined and recognized widely as ruined, do not have the tools to prevent rising bond yields. They uniformly rise versus the German Bund benchmark. Their differentiation actually permits the Euro currency to trade more freely, even to rise. The Chinese were responsible for much of the Euro rise from 130 to 150, as they dumped USTBonds in favor of discounted PIGS debt, later to be converted into shopping malls, commercial buildings, and factories. Somehow, that factor did not appear on the US news networks. The USGovt has tools, wondrous electronic tools, which enable them at zero cost to fight off the barbarians at the gate. It is the Printing Pre$$. Unfortunately, its backfire is a powerful rising cost structure that has shown visibly in the high food & gasoline costs. So hardly at zero cost!!
A year ago, the USFed folded like a cheap lawn chair. Instead of exiting their 0% corner, and implementing the advertised Exit Strategy, they went one step deeper down the rathole. That was exactly the Jackass forecast, QE to follow 0% stuck. They combined the ZIRP with the QE. They added the debt monetization scourge of Quantitative Easing to the already reckless no cost money of the Zero Interest Rate Policy. So they doused the national economy with gasoline only to see it lit into flames, while cutting the legs off the burning victim trying to escape.
PURE QE3 DECEPTION
The current ruse disseminated widely is the End of QE2 and no continuation of Quantitative Easing (aka debt monetization). The ruse has no basis at all in reality. The USFed would have to find buyers for the USTreasury Bonds. They have been buying 75% to 80% of USTBonds since the end of 2010. They have been supporting the US housing market by purchasing mortgage bonds. In other words, they have been preventing the more complete implosion of the mortgage market. It is one thing for the USTBond to go No Bid. The USFed has the direct responsibility to cover that up quickly and proclaim every USTreasury auction a rip-roaring success with great 2.3 bid to cover ratio. But it is another matter altogether to permit the mortgage rates to fly upward from lack of bids. If mortgage rates move to 7% or the adjustable ARM mortgages reset 3% to 4% higher suddenly, then housing prices will descend by another 10% to 15% quickly, as in with lightning speed.
Of course the USFed will have a QE3. Of course the USFed will continue QE programs. Of course the USFed will keep the funny money flowing into every type of bond market except the Municipal Bonds. The munis are not part of Wall Street and the syndicate that sprawls to cover the USGovt itself. So as the states and municipalities go further into a ruinous condition, events work within their grand plan to consolidate power in New York City, whose satellite in WashingtonDC was captured on a somber September day in 2001. The agenda for munis is so simple. They wish to kill the worker pensions, so that government workers have none, just like the general population. No home equity, no upward labor mobility, no union power, no pensions, a perfect world for the elite domination. Of course the USFed will keep pumping money into the stock market. With all the flash trading, still over 70% of all NYSE trade volume, with all the hardly hidden activity to support stocks by the Working Group for Financial Markets (aka Plunge Protection Team), the vulnerable stock market would dive like a cement rock. Perhaps the USFed wants to see the S&P500 and Dow Industrial stock indexes take a frightening dive. That would produce buyers of USTBonds, a point that the financial networks consistently fail to notice as motive for withdrawal of liquidity funds. The USFed can generate a USTBond rally easily, simply by stopping the stock support that so often lifts the stock indexes in the nick of time for late afternoon rallies, and johnny on the spot before early morning setbacks render too much damage.
Clearly, a sudden recognized slide in all things financial within the controlled US arenas would create perfect political cover for the USFed to announce QE3. The objections lodged from global creditors would be shouted down on the USCongress floors, on the New York Stock Exchange floor, in the big US bank board rooms, and the mutual fund chart rooms. The households would be torn in two opposite directions. They citizens want support for their stock accounts that include pension funds. But they do not want even higher costs for food, energy, and everything they purchase in retail centers. Strangely, perversely, the US stock market indexes are inversely correlated to the USDollar. The currency must resume its decline in order to lift the US stock market. Obviously, the S&P500 index rise is offset by lower US$ purchasing power, but the dynamic is ignored as much as possible. The correlation seems about minus 60% to 65% in a rough eye view.
The USFed will next spread fear from financial market powerful downdrafts. They will assure stock market declines. They will invite public response to lost mutual fund and pension funds (both managed and personal). They will work to shake the masses down to the point that the USCongress begs them to return to a strong powerful QE3. They will urge the USFed to make the QE3 even broader, to include Municipal Bonds. The big US banks will push the USFed to cover their mortgage bonds that are exposed to Put-Backs. The defrauded bond investors have won a skein of court cases. The story is so old that the US press does not cover court rulings against the devious MERS device. So the banks are losing from the bond table and losing from the foreclosure table. The US Federal Court in Texas found that MERS failed to address the issue of the legal effect of an assignment executed by unauthorized signers. The court also rebuked MERS, noting that the signing officer had no such authority, something that MERS should know. The court pointed out far more than mere negligence by MERS. Over 20,000 robo-signers were busy in the foreclosure process. They were not properly authorized. See the Naked Capitalism article (CLICK HERE). Home foreclosures are being reversed by the courts. Bonds are being ordered for putback to the Wall Street issuers. Exposure to the big US banks is huge, like well over $1 trillion. The USFed will be asked to lap up the toxic swill on court room floors.
GLOBAL QE
The very same factors that forced the emergency G-7 meeting to cap the Japanese Yen currency rise have returned. A high Yen exchange rate renders their vast supply industry as unprofitable, imposing great strain. Expect another emergency meeting, which in my view should be described as a Global Quantitative Easing (Global QE) since the major central banks will coordinate their actions to buy the vast tranches of USTreasury Bonds that Japan needs to sell. The large Japanese financial institutions must close their finance gaps and avoid price inflation. Doing so without asset sales would cause a pure unfiltered inflationary effect. They do not want additional woes in addition to what grotesque strain has already come. The exercise will be repeated, as the Jackass forecasted a month ago. My forecast is for a secret G-7 Meeting to agree to USTBond purchases to push down the Yen currency, but without any publicity, zero press coverage, all in total secrecy. It is a development factor far bigger than any QE conducted solely by the USFed. Since coordinated the world over, call it Global QE. Look for some distortion of purpose for any suddenly convened meeting of finance ministers. They might call it coordinated global monetary planning, or cooperation with emerging economies, or adjustments to global trade settlements, or some such deception. It is just another side to the Competing Currency Wars. The underlying force behind the rising Yen is their industrial slowdown, the arrival of a trade deficit, and the urgent need to finance reconstruction costs by foreign asset sales without causing price inflation. My analysis has called it the Global QE initiative, a factor far bigger than any QE conducted by the USFed.
Insurance companies will play a surprisingly large role. They face mammoth claims from damaged buildings and stalled factories. The large Japanese financial institutions must close their finance gaps and avoid price inflation from pure monetary inflation. Foreign asset sale is the key. Their deficit is growing, industry faltering, electricity supply spotty, supply chain unreliable, and US bond sales rising. The reconstruction is underway. The financial markets still need help. Their economy faces an unprecedented slowdown more accurately called a general coordinated breakdown. As the nation must pay for its reconstruction, expect big waves of bond sales to match big stimulus and monetization. Foreign asset sales will be the compromise made politically. Although palatable, they will cause the JapYen currency to rise further, enough to sound alarms and cause even more profit squeeze.
The Japanese Economy is enduring the biggest collapse in modern history. Let's see if its cities can avoid cracks and rising tides. Their trade deficits are assured, my forecast. However, this time around a paradox of trade deficits and reconstruction costs will conspire to LIFT the Japanese Yen currency. Their government wants to limit stimulus and associated deficits and bond issuance that would lift interest rates. Their ministry officials want more debt monetization to inflate the problem away. The Bank of Japan wants to hold the line with no more purchase of debt. The utilities are forcing rolling electrical blackouts in order to avoid higher prices for electricity. Their carmakers have registered staggering declines in output. Their industrial sector is reeling. The solution most politically appealing will turn out to be not the hyper inflation from debt monetization, BUT RATHER SALES OF FOREIGN ASSETS. The sale of USTreasury Bonds is most politically acceptable, with a national disaster offering strong cover for justification. Their sale will be brisk in heavy volume, all in time. The rising JapYen currency will force the Global QE, as purchase of USTBonds that Japan sells will join the USTBonds sold by the USDept Treasury. An extravaganza of debt monetization will go global. Why no analysts discuss this is beyond the reach of Jackass comprehension. Probably blind spots, corporate directives, preoccupation with the sovereign debts, attention to the USGovt debt limit, and a new foreign war every few months. To be sure, plenty of distraction out there.
THREAT OF USGOVT DEBT DEFAULT
The cynic among us might have suspected that a mission directive for the Obama Admin was to force spending increases, to avoid entitlement benefit cuts, and to generally lead the nation into a worse insolvency condition so that the USDollar declines dangerously and a USGovt debt default is assured. The nation could start over. The elite plans could be implemented on a global level. To be sure, the Republicans object and block any and all new tax increases that would supposedly raise revenues. They would be counter-productive anyway, since higher tax rates result in lower tax revenues, something the legislators and economists have failed to comprehend for four decades. To be sure, the Democrats object and block any and all limitations to entitlement spending like Social Security, Medicare, and USGovt pensions. Any reductions would close the deficit a little, but more like a pittance. To be sure, the security agencies and bankers object and block any and all attempts to curtail the wars to seize crude oil and establish the vertical integration of contraband. Their purpose is considered sacred, while their costs are covered by taxpayers, but their profits are solely for the syndicate. The defense contractors are exemplary employers too, with high paying jobs but no trickle down effect on the product side.
It seems all three camps are dedicated to a path that results in debt strain, creditor revolt, and eventual default. Recall the Jackass forecast in September 2008, of a USTreasury debt default in the next two to three years. The time has finally come to deal with such a threat. The argument that the USDept Treasury together with the US Federal Reserve could avoid such a default outcome is being tested. For almost a full year, the USFed has been monetizing mountains of USGovt debt and much of the USAgency Mortgage debt. The effects have been noticed palpably at a global level. The blame has been attributed by nations across the world, and directed squarely at the USFed and USGovt for profligate spending, enormous deficits, and a hyper inflation reaction. All parties involved in the budget deliberations, the debt limit discussions, and the protection of interests are willing to test the default button option. The denials go so far as to describe a less than onerous outcome where much of the interest payments would continue, and much of the agency functions would continue. Strangely, the soldiers pay checks might be scrubbed. If a default occurs, traps doors and greased chutes would open to lead the nation on a fast track to the Third World. To begin with, liquidity would be harmed to such an extent that the Saudis would probably not accept USDollars for crude oil.
David Stockman served as the Budget Director in the Reagan Admin. He had some choice words in summary. He said, "The real problem is the de-facto policy of both parties is default. When the Republicans say no tax increases, they are saying we want the US government to default. Because there is not enough political will in this country to solve the problem even halfway on spending cuts. When the Democrats say you cannot touch Social Security, when you have Obama sponsoring a war budget for defense that is even bigger than Bush, then I say the policy of the White House is default as well. That is the question that really needs to be understood better and appraised by the bond market. Both parties are advocating default even as they point the finger at each other."
GLOBAL FACTORS
The global monetary war has mushroomed. Greece is set to default on its debt, the signs all loud & clear. Spain is ready to be bailed out, its economy sliding backwards fast. The impact of a default in Europe is magnificent and all horrendous. Banks will fail. The motive for continued band-aid bailouts that only buy time and fix nothing have been to enable banks to redeem their debt, just like in the United States. Bond holders have been protected. Dominique Strauss-Kahn urged Irish Govt bond holders to take a significant haircut loss, his final sin. The first sin was the promotion of the SDR from the Intl Monetary Fund, whose basket of currencies would be used in global bank reserves. His second sin was the introductory concept of an SDR-based debt instrument, as in a global bond. To supplant the USDollar and USTBond is cause for removal, with bond holder losses the icing on the prison cake. The European kettle is ready to boil over again, with nothing fixed. The wild card is the Credit Default Swaps, those curious devices that lurk within hidden banking systems. A Greek Govt default would set events in motion, and likely reveal the profound fraud and insolvency of European banks. The kicker could be the contagion to the British and American banks. The Western banks are all interwoven in a grand incest.
A recent twist is the higher wages paid to Chinese workers almost uniformly. They will become stronger consumers, but their corporate exporters will pass along higher prices to the US retail chains. Finally, after thirty years, the USEconomy will import price inflation from Asia. The new Shanghai silver futures contracts are most likely not welcome to the COMEX and its Wall Street overseers. The common practice of ambushing the Gold & Silver prices overnight or immediately after hours in the late afternoon might soon come to an end. The Shanghai hours are 8pm to 11am eastern US time zone. Sense the opposition. Given the strong Chinese consumer price inflation and corresponding citizen response in coin and bar purchase, the opposition is gaining strength. The Asians love gold as much as the Americans are ignorant of it.
The population has reacted with continued Gold & Silver coin purchase. The central banks outside the Western sphere of influence have reacted with Gold bullion accumulation in reserves, far more than publicly announced. Mexico not only purchased almost 100 metric tons of gold recently, but their CB governors voted unanimously to install silver as money itself. The investment community has reacted with legitimate exchange traded funds like the Sprott Fund. The contrast of a Sprott premium in price versus the negative premium in the GLD and SLV should highlight their absence of required metal in inventory in stark contrast to the ample inventory in the Sprott funds, but most analysts have yet to figure out the premium issue at all. The biggest and most tainted ETFunds are working toward their own climax, surely with cash redemption amidst lawsuits. They cannot offer their inventory and shares to the COMEX as part of the great game, without eventual consequence. When the premium on GLD and SLV hits minus 10%, perhaps some will awaken. Usually vault fees, insurance costs, security costs, transport costs, and management results in actual totals that must be covered within the price paid for the shares. But not with this pair of polluted funds joined to the cartel.
ONLY CHANGE WITH SILVER IS PRICE
The silver speculation is just another deceptive story. The Open Interest fell gradually all through the Silver price rise toward the $50 level. After such a bone crushing silver ambush, the net positions for non-commercials, substracting shorts from longs, showed relative tranquility with no big decline at all in their positions, thus still a bullish commitment. They have fewer positions, but the game is still very much on. Hedge funds do show the lowest net long silver position since February 2010, but still a solid position. Evidence lies inside the Commitment of Traders Report, discussed in more detail in the May Hat Trick Letter. The Managed Money (like hedge funds, commodity trading accounts) still have a strong bullish position. They profited from the rise as they reduced positions, and were not wounded by the rise!! Then take the little guys. The Small Trader ledger item recorded the largest pure short position since August, with 18,605 contracts short silver on 26 April 2011, when silver had a $45.45 price. The smaller players were actually net short, and collected a hefty profit, a story not told by the lapdog US press. Conclude that many of the small guys, the good guys, were correctly positioned for the harsh smackdown on silver in the first week of May. The small speculators profited from decline!! They and the fund managers will be back, bigger than before, bolder than ever, motivated with fervor, with their ears taped back ready for more blood. It seems abundantly clear that the major driving force behind this current silver market has been actual demand for physical silver metal.
The beauty of the silver decline is that when it reverses, there is no technical resistance of significance back to the $50 level. However, due to the shock effect, the climb will be slower than a sudden technical mirror image reversal. The precious metals investors should hope for a slow steady relentless painful nasty stubborn awesome devastating rise in price that doles out excruciating pain to the cartel, permits once again for the less enlightened doubters to cover their wrong short positions in a chronic manner. The story in the Silver chart has four weeks and four different stories. The first week of May had the powerful decline, the result of hitting the Hunt nominal target, Soros putting out his deceptive story of selling that which he called a bubble for a full year, the COMEX raising the margin requirement five times in quick succession, the USFed putting out its deceptive story about ending debt monetization and maybe hiking rates (gotta be dumb as a post to believe), the USEconomy demanding less in commodities. The second week showed a strong clear Doji Star, which epitomizes a move to stability. The Silver price found its footing and stood still, encouraging many investors to re-enter the market. The third week was less clear except to technical chart readers. It featured a strong clear Bull Hammer identified by an open and close at the high for the week, with price movement lower during the week. The hint was given on Monday of this week for a rebound. The US$ DX index was rising a little, as the Euro currency was sliding lower, like over 100 basis points for the day. Gold & Silver ignored it. Gold rose a little, while Silver was even at $35. Today, Silver is pushing $38 per ounce, and Gold is rising too. No resistance ahead!!
Yet the Mississippi flood waters will crimp supply lines just when the US financial dons wish to push down the entire commodity price structure, including Gold & Silver. Neither precious metal is a commodity though, since they are money. Tell the central banks of the world and the major sovereign wealth funds that Gold & Silver are commodities when they are shifting reserve assets away from the US$-based bonds and toward Gold & Silver. They are money, and the USGovt with their Wall Street handlers wishes the world not to regard them as money. The experiment in paper fiat money since 1971 is coming to an end, a conclusion racked with toxic spew, great hardship, and threats to wealth.
One should constantly remember that no solution to the financial crisis has been installed, nothing fixed, no big banks liquidated, no end to monetary inflation, no end to outsized USGovt deficits, no end to secretive subterranean support of stocks and bonds, no revival of the housing market, no discharge of big bank home inventory, no return of US industry from Asia, no interruption to the endless costly wars, no end to money laundering of narco funds to Wall Street banks, no end to the propaganda obediently pumped out by the US press & media networks, and no change of Goldman Sachs running the USGovt finance ministry. Expect no change in anything that you believe in. Expect no change to the 0% policy (ZIRP) with no change to the heavy monetary inflation (QE), as the path to ruin is set, and the policy of Inflate to Infinity cannot be stopped. Gold will not stop until it surpasses at least $5000 to $7000 in price. Silver will not stop until it surpasses at least $150 to $200 in price. Such forecasts invite mockery, but in two years they will seem prescient.
The ruin of money is the momentum play. The elite are fully invested in the current system, and are fully willing to put more money into reinforcements to preserve their wealth, power, and position. The global financial system is coming apart at the seams, and the financial guardians in charge from the syndicate cannot any longer hold it together. The Gold & Silver prices are the hint of lost control. Expect breathtaking grand upward moves in price in the next several months. It will be fun to watch the dim bulbs explain their positions after their wrong viewpoints have been so well covered by the financial rags. They will surely squirm, guys like Soros. Some will gloat, guys like Sprott. Few are aware, but the events in the first week of May are what a COMEX default looks like, in its preliminary phase!!! JPMorgan could not meet the schedule of May silver deliveries, that simple. In time, the distance between paper Gold & Silver and physical Gold & Silver will be great. Then the COMEX shuts down, unless they act as a Cash & Carry exchange. Doubtful!
NEW HAT TRICK LETTER REPORT
The Hat Trick Letter made a key change in the May reports. Since most every major systemic failure forecast recorded, explained, and repeated since 2004 has come true, and the USEconomy is in deterioration with a squeeze underway, and the US financial system is insolvent, and the US Housing market also suffers widespread negative equity (28.4% of homes), no great need or interest is served in delineating the home foreclosure statistics, the personal bankruptcies, bloated bank hidden inventory of unsold homes, the wrecked mortgage bond market, the jobless claims that cannot revive, or the banker games to conceal the reason why they lend little. Items do appear in the Introduction sections. Instead, the Macro Economic Report for the Hat Trick Letter has given way to the Global Money War Report for full discussion and analysis of the Competing Currency Wars, the debt soaked tattered sovereign bonds, the crumbling monetary system, the discredited central banks, and the acceptance of hyper monetary inflation as a solution. The Gold & Currency Report will continue, which covers the details at the ground level with many stories on investment demand, on exchange traded fund frauds (good and bad), on certain economic stories in beleaguered nations like Japan and Spain, like threats of default in nations like Greece, soon to be followed by other PIIGS nations, and details on the Chinese Economy.
So the Hat Trick Letter has adapted with a higher level gold report to cover the monetary war in progress, and a lower level gold report to cover the global reaction geared toward survival. That survival is assured by investment in Gold & Silver. The ugly irony is that the major financial news networks comprehend little if anything about the motives and principal factors behind the powerful precious metals bull market. They only focus on inflation (which they deny as part of the propaganda machine) and geopolitical tensions (which are valid but secondary). They overlook that the global monetary system is in ruins and the central banks have morphed into hyper inflation nuclear reactors, with the cost of money at zero acting like a foot stuck on the accelerator. They do not properly assess the monetary system ruin, nor the bank insolvency ruin.
Dr. Stephen Leeb on Silver and Resource Shortages
Dr. Stephen Leeb, my favourite investment analyst when it comes to silver and resources discusses coming the resource shortages and the strategic nature of silver with Eric King of King World News.....listen here
For those who are not familiar with Stephen Leeb I highly recommend this post in which he is interviewed on Forbes TV, still my favourite silver video of all time.....watch here
US SWAT times shoots dead both the 2nd & 4th Amendments
In 2008 and 2010, the Supreme Court issued two Second Amendment decisions. In District of Columbia v. Heller (2008), the Court ruled that the Second Amendment protects an individual's right to possess a firearm, unconnected to service in a militia[1][2] and to use that arm for traditionally lawful purposes, such as self-defense within the home.
Fourth Amendment – Protection from unreasonable search and seizure.
From the Daily Mail:
A U.S. Marine who was killed when he was gunned down in his home near Tucson, Arizona, never fired on the SWAT team that stormed his house firing 70 times in a hail of bullets, a report has revealed.
The revelation came as dramatic footage of the shooting was released, showing the armed team pounding down the door of Jose Guerena's home and opening fire.
The father-of-two, who had served twice in Iraq, died on May 5 after the SWAT team descended on his home believing it was one of four houses associated with a drug smuggling operation.
Reyna Ortiz, 29, a relative of the family, told reporters: 'She saw a man pointing at her with a gun. She yelled, "Don't shoot! I have a baby!"'
Ms Guerena alleges that she thought it was a criminal assault, since two members of her sister-in-law's family, Cynthia and Manny Orozco, had been killed last year in their Tucson home.
Ms Guerena said she shouted for her husband, who told her to take young Joel and hide in a closet.
After the shooting, Ms Guerena says she emerged from the closet. 'They came into the house to get me,' she told ABC reporters.
She told a 9-11 operator: 'They were... going to shoot me. And I put my kid in front of me', according to ABC.....read in full
Fourth Amendment – Protection from unreasonable search and seizure.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
From the Daily Mail:
A U.S. Marine who was killed when he was gunned down in his home near Tucson, Arizona, never fired on the SWAT team that stormed his house firing 70 times in a hail of bullets, a report has revealed.
The revelation came as dramatic footage of the shooting was released, showing the armed team pounding down the door of Jose Guerena's home and opening fire.
The father-of-two, who had served twice in Iraq, died on May 5 after the SWAT team descended on his home believing it was one of four houses associated with a drug smuggling operation.
Reyna Ortiz, 29, a relative of the family, told reporters: 'She saw a man pointing at her with a gun. She yelled, "Don't shoot! I have a baby!"'
Ms Guerena alleges that she thought it was a criminal assault, since two members of her sister-in-law's family, Cynthia and Manny Orozco, had been killed last year in their Tucson home.
Ms Guerena said she shouted for her husband, who told her to take young Joel and hide in a closet.
After the shooting, Ms Guerena says she emerged from the closet. 'They came into the house to get me,' she told ABC reporters.
She told a 9-11 operator: 'They were... going to shoot me. And I put my kid in front of me', according to ABC.....read in full
John Embry discusses the action in the Gold & Silver markets
John Embry of Sprott Asset Management discusses the action in the Gold & Silver markets with Eric King of King World News.....listen here
Gerald Celente - On Spain, Revolutions & the Global Ponzi Scheme
One of Gerald's most timely and insightful discussions to date, if you have never listened to Gerald before please make sure to take a few minutes and listen this interview with Eric King of King World News.....listen here
Spain looses the plot
As mentioned on this blog before out of the PIIGS - Greece, Eire and Portugal are mere two-bit warm up acts. It is Spain which is the headline act with maybe a Latin duet with Italy towards the end of the show.
From the videos below it seems Spain is beating itself up over the fact that some pasty Pommies can no longer afford to escape their miserable little island for a few weeks year and thaw out in Spain. Although with approx 50% youth and over 20% general unemployment levels there isn't much else to do, as Gerald Celente is off to quip "When the people have nothing to loose, they loose it"
From the videos below it seems Spain is beating itself up over the fact that some pasty Pommies can no longer afford to escape their miserable little island for a few weeks year and thaw out in Spain. Although with approx 50% youth and over 20% general unemployment levels there isn't much else to do, as Gerald Celente is off to quip "When the people have nothing to loose, they loose it"
Friday, May 27, 2011
Weekend Chillout
With the silver price consolidating over the week in the $36 - $37/oz range I hope you got all you wanted a few weeks ago when it was $32 - $33, I know I didn't, as I think barring another 2008 cliff dive we will not likely see that range again.
In recognition of this situation what else could I choose for this weekend's chillout except "Want", by the stunningly beautiful Australian singer Natalie Imbruglia.
In recognition of this situation what else could I choose for this weekend's chillout except "Want", by the stunningly beautiful Australian singer Natalie Imbruglia.
Click on the photo of Natalie to go thru to the music video on youtube
What differentiates investment in more explosive silver from gold?
Author: Julian PhillipsThe silver market is still reeling from its fall from $50 to $34 over a very short time. The move was driven by at least one investor selling around 1,000 tonnes of silver over a two week period. Silver had climbed quickly from around $25. The charts supported a rise to $29, but as silver went higher, it climbed out of technical range into new territory. All the time thereafter it was vulnerable to a selloff back to support around that level.
Many felt it could easily fall to $20 before recovering, but it bounced off $32 and has been consolidating above $34 since then. The selling then stopped and buying started, but the consolidation at this level indicates that the market has to get used to these prices for a while before they establish a ‘floor' that permits cautious buyers to re-enter the market again.
Investors must ask themselves...
Ø Should silver be considered as financial security, like gold?
Ø Will it ever reach that status of being a monetary metal, in the eyes of central banks and global investors?
Ø Some may feel that the biggest question mark hangs over its volatility in the future. Can the silver market be manipulated, as the large US banks have done in the recent past?
Ø Can the silver market be cornered, as the Hunt brothers from Texas once tried to do?.......read on
US Commodity Regulation - A Failed Mission?
By Ted Butler:In my latest dispatch to subscribers, I tried to describe the favorable set up for higher prices present in silver and other metals markets. That favorable set up may be in the process of unfolding. This set up was created, particularly in silver, as a result of the engineered takedown we just experienced. Having already discussed what may develop from this point, I would like to vent a bit about what just occurred.
It still amazes me that so few seem to be outraged by what transpired in the silver market starting on Sunday, May 1. That night, silver plunged sharply, by $6 an ounce (or 13%) in minutes, setting the stage for a one-week price decline of 30%. Simply stated, a 30% decline in one week in any commodity market is a very big deal, especially when there was no supply/demand news to account for it. More outrageous is that the primary regulators of the silver market, the CFTC and the CME group, have not publicly commented on the big market plunge in silver.
Let me see if I can put this plunge and the lack of comment by the primary regulators into some perspective. Try to imagine a tragic commercial plane crash with no comment from the Federal Aviation Administration or the National Transportation Safety Board for three weeks. Or a case of tampering with a common cold remedy (Tylenol) that resulted in public harm that the Federal Drug Administration refused to comment on. Or a stock market crash of 30% in a week that drew no comment from the Securities & Exchange Commission or the New York Stock Exchange. Such occurrences and no comment from the primary regulators would be unimaginable. Yet this just occurred in the silver market.
The Commodity Futures Trading Commission (CFTC) holds that its primary mission is to protect the public from fraud, abuse and manipulation. Yet the public has just been subjected to fraud, abuse and manipulation in silver by virtue of the one-week 30% intentional price plunge and the Commission has not lifted a finger to protect the public. Or even to comment on it. How deep of a silver market plunge would it take for the agency to comment – 50% or 90%?
I realize that silver had climbed in price sharply before its sudden plunge, rising by more than $20 per ounce from the end of January to a high of $49 by the end of April. That climb took three months. Almost $15 of that gain was wiped out in one week. I know that the popular version of what caused the price surge was irrational speculative buying which created a bubble in price that burst. But I also know that the actual data directly contradicts the popular version. CFTC data in the Commitment of Traders Report (COT) indicate speculative selling into the price peak, accompanied by commercial buying (short-covering). Granted, the intentional price smash generated further speculative selling, but that doesn’t change the fact that speculative buying did not cause the silver run up.
By remaining quiet on the matter, the CFTC is aiding and abetting the manipulation and the dissemination of false market information. This is as contrary to commodity law as is possible. In light of the highly unusual circumstances that surrounded the sudden decline in silver (on no fundamental developments) the Commission’s silence creates the impression among many that it may be complicit in the decline. No good purpose is served by the impression that the CFTC is ineffective, or worse, in its most basic mission of protecting the public. Unfortunately, this impression has been nurtured by a regular pattern of apparent neglect of the public’s interest by the Commission.
The public has notified the Commission on numerous occasions and in great numbers concerning some very specific issues in the silver market, namely, position limits and the concentration on the short side in COMEX futures. The only reaction from the Commission comes in personal comments by Commissioner Bart Chilton. While Chilton is to be commended for his acknowledgement of the importance of these matters, it is not right that the Commission stays silent on an official basis. I certainly admit to my own role in pressing the Commission for answers to straightforward questions and in suggesting solutions for consideration. And that role included encouraging others to press the Commission as well. Those that have contacted the CFTC know that these are serious issues that deserved to be fully aired. Yet, with the exception of Commissioner Chilton, the agency has avoided responding to the public on all matters related to silver. This is not the correct way to serve the public.
Away from the Commission, the silence on the part of the CME Group, owner of the COMEX, is equally outrageous. The latest intentional silver takedown began with the blatant early Sunday evening assassination of the price. The killing took place on the CME-run Globex electronic trading system, executed by exchange insiders. It was this electronic system that provided the means and opportunity and documented trading trail of the crime. The motive has always been the buying back of an uneconomic short position after first creating distress selling through manipulative dirty tricks. The well-timed margin increases by the CME amounted to piling on and adding icing to the crooked cake.
Between the CFTC (which I still consider incompetent, rather than duplicitous) and the CME (which I have always considered an ongoing criminal enterprise), you would think there would be enough silver silence to go around. But there’s more. It has been two and a half years since I publicly indentified and accused JPMorgan as being the big concentrated silver short and chief manipulator. JPM has managed to close out much of its short position (at great loss) but still while bullying the market. Yet, in all that time JPMorgan has never uttered a word about being accused of the most serious market crime possible. This despite countless law suits alleging the same silver manipulation some six months ago. I know that allegations and legal findings can be two very different things, but I never thought an entity like JPMorgan (or the CME) would ever remain silent in the face of repetitive and specific allegations.
Lastly, the largest money manager in the world, BlackRock, has joined the silver soul mates of silence in not responding to allegations of negligence. In allowing the short position in shares of their big silver ETF, SLV, to balloon to the equivalent of more than 36 million ounces just before the price smash, BlackRock played a key role in enabling the 30% price plunge. BlackRock knew, or should have known, that there was no real metal backing up the shorted shares and that served as a key silver price depressant. As I do with JPMorgan and the CME, I make sure the highest officials at BlackRock are aware of my allegations.
At the very least, the CFTC, JPMorgan, the CME Group and now BlackRock, are at the very top of the regulatory and financial food chain. As such, they are not some 90-pound defenseless weaklings. By law, these entities must behave in an appropriate manner. I don’t believe that any of these entities have been behaving appropriately when it comes to protecting the public interest in matters related to silver. I know this is maddeningly frustrating to objective observers. What can you do about it?
There is only one answer. You must contact your elected officials. This is something that I have been neglectful in emphasizing, as a subscriber recently reminded me. Before you conclude that this will be a fruitless endeavor, please allow me to recall an incident that would suggest otherwise. Back in 2008, a reader of my articles took the time (at no suggestion from me) to write to his local congressman about my findings of concentration in the August 2008 Bank Participation Report. In turn, this congressman wrote to the CFTC about my allegations. As a result of the CFTC responding to the representative, it was revealed that JPMorgan was the big short in COMEX silver. That is what enabled me to discover the identity of the big silver short. If that reader didn’t take it on himself to write in the first place, I wouldn’t have been able to draw a bead on JPMorgan and much of the progress towards ending the silver manipulation over the past two years would not have occurred.
The stakes here are far higher. We have just witnessed the most blatant act of manipulation in the history of the silver market with the take down that commenced on Sunday evening, May 1. Everyone involved who should have prevented this manipulation and protected the public failed to do so. Everyone involved who should have explained what took place afterward have failed to do so. This is unacceptable in a lawful society. The only remedy is to force these entities, namely, the CFTC and the CME Group, to do what they are required to do.
Everyone has someone that they must answer to. The CFTC and the CME Group must answer to Congress. Congress, in turn, must answer to those who elect them to office. That’s you. Ask your elected officials to press the CFTC and the CME to do what they must do – end this silver manipulation. You don’t have to put yourself in jeopardy by making any allegations, as I’ve already done that for you. The allegations are contained in this article and other articles I have written. Ask you senator and congressman to press the CFTC and the CME to address the allegations. Send them this article. I promise you that it won’t do any harm and may do a great deal of good. I also promise you that these are serious matters in which you won’t be wasting anyone’s time.
Ted Butler
For subscription info please go to www.butlerresearch.com
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