Traders Are Dumping Stocks and Buying Gold and Silver

From CNBC:

Gold and silver have outperformed the S&P 500 by 8 percentage points over the past month as traders choose precious metals over stocks to stash cash.

The move is fueled by a number of worries: The European Union is planning its second Greek bailout, the Federal Reserve is angling to keep interest rates low while the second round of quantitative easing runs out—and global economic growth is slowing.

“Gold is more valuable at this juncture as the flight to quality accelerates,” said Stephen Weiss of Short Hills Capital. “Global equity indices will all be in decline as multiple growth engines sputter: US, China, Eurozone and Japan. Only place is commodities, and specifically gold, because that is where perceived safety and momentum will be.”....read on

Fiat cash is now dangerous to your physical as well as financial health

Forget the TSA and their cude body scanners, meet the future - full body and personal affects scanners (see article below). Please take note of the paragraph: "Anyone whose behaviour raised concern - such as a passenger buying a one way ticket in cash - would go through a different channel which would also feature a full body scanner" - yes how dare anyone buy something for cash - Irradiate! Irradiate!

Makes me think about the large numbers of frequent air travelers in Australia, some do the Sydney<-->Melbourne or Sydney<-->Canberra trip up to 4 times a week. So that would be 8 full body x-rays each week for 48 weeks a year for a total of 384, or more than 1 per day.

Of the comments to the article I thought this one summed up the situation the best:

Until they discover being x-rays that many times give you cancer or something. A leading U.S. expert on the biological effects of X-radiation is Dr. John Gofman, Professor Emeritus of Molecular and Cell Biology, University of California, Berkeley. Dr. Gofman’s exhaustive research leads him to conclude that there is NO SAFE DOSE-LEVEL of ionizing radiation. His studies indicate that radiation from medical diagnostics and treatment is a causal co-factor in 50 percent of America’s cancers and 60 percent of our ischemic (blood flow blockage) heart disease.

From the UK Telegraph:

The 21 feet long smart tunnel combines all existing and imminent security technology in one place and would slash the time passengers wait at airports. Passengers would simply walk the length of the tunnel while they are scanned.

It would prevent the frustration many passengers feel when they have to partially undress at a security gate.

A version is expected to be trialled within 18 months and could be rolled out at major airports within five years. British authorities are known to be keen to use the next generation of airport security scanners as soon as possible.

Currently the aviation industry allows 30 seconds for passengers to pass through the existing security system.

But this time only allows for walking through the detector, removing shoes and belts, placing metal objects in a separate container and producing liquids for inspection.

It does not take into account the time passengers spend putting gathering their belongings afterwards, nor the time they have to queue before reaching the metal detector in the first place.

This can take around 10 minutes at the most efficient airports which now includes Heathrow’s Terminal 5.

It is hoped that the waiting time would also be cut as a result of the quicker screening process.

A prototype of the new technology was unveiled in Singapore yesterday by the International Air Transport Association (IATA), which represents the world’s major airlines.

It features screening methods which are either already commonplace at airports - such as body scanners - and those which are expected to be introduced soon, including liquid detectors.

The IATA system would divide passengers into three categories, who would initially be identified by an iris-recognition system before entering the arches.

So-called “known travellers” who have been pre-screened would only face an x-ray, metal and liquid detector.

“Normal travellers” would also have their shoes scanned automatically and pass through an explosive trace detector.

Anyone whose behaviour raised concern - such as a passenger buying a one way ticket in cash - would go through a different channel which would also feature a full body scanner.....read on

Decline and fall of the American empire

From the Guardian:

America clocked up a record last week. The latest drop in house prices meant that the cost of real estate has fallen by 33% since the peak – even bigger than the 31% slide seen when John Steinbeck was writing The Grapes of Wrath.

Unemployment has not returned to Great Depression levels but at 9.1% (or have returned to depression levels of 22% if you refer to the shadowstats graph at the bottom of this blog) of the workforce it is still at levels that will have nerves jangling in the White House. The last president to be re-elected with unemployment above 7.2% was Franklin Delano Roosevelt.

The US is a country with serious problems. Getting on for one in six depend on government food stamps to ensure they have enough to eat. The budget, which was in surplus little more than a decade ago, now has a deficit of Greek-style proportions. There is policy paralysis in Washington.

The assumption is that the problems can be easily solved because the US is the biggest economy on the planet, the only country with global military reach, the lucky possessor of the world's reserve currency, and a nation with a proud record of re-inventing itself once in every generation or so.

All this is true and more. US universities are superb, attracting the best brains from around the world. It is a country that pushes the frontiers of technology. So, it may be that the US is about to emerge stronger than ever from the long nightmare of the sub-prime mortgage crisis. The strong financial position of American companies could unleash a wave of new investment over the next couple of years.

Let me put an alternative hypothesis. America in 2011 is Rome in 200AD or Britain on the eve of the first world war: an empire at the zenith of its power but with cracks beginning to show.

The experience of both Rome and Britain suggests that it is hard to stop the rot once it has set in, so here are the a few of the warning signs of trouble ahead: military overstretch, a widening gulf between rich and poor, a hollowed-out economy, citizens using debt to live beyond their means, and once-effective policies no longer working. The high levels of violent crime, epidemic of obesity, addiction to pornography and excessive use of energy may be telling us something: the US is in an advanced state of cultural decadence.......read on

Janet Tavakoli: "Greater Global Risk Now Than At Time Of LTCM"

Janet Tavakoli, from Letters to the Editor, Financial Times

Greater Global Risk Now Than At Time Of LTCM

Sir, The Financial Services Authority claims that hedge fund gearing has decreased (report, May 2) and the Federal Reserve Bank of New York suggests that there is no close correlation between hedge fund returns making the current situation less alarming than in the past (May 3). I believe it was Winston Churchill who said we must alert somnolent authority to novel dangers; but in this matter authority seems complacent, and the dangers are not novel.

The FSA produced numbers from a partial survey of hedge funds and discussed "average" leverage, thus highlighting the well known flaw of averages. If a swimming pool's average depth is four feet, but the deep end of the pool is eight feet, non-swimmers are presented with unacceptable risk. The average would suggest non-swimmers can safely use the pool, but a drowning man finds out the hard way that the average doesn't contain information descriptive of the risk.

The NY Fed uses data to examine volatility and correlations, both of which are not of much use in a crisis when correlations deviate from historical measures and even approach one. Indeed even today, one should consider that hedge fund returns are anything but independent. Hedge funds are often called "alternative" assets, but they have not created new asset classes. Hedge funds invest in the global markets along with other investors, albeit hedge funds may be more creative, more illiquid and may employ more leverage.

"Tavakoli's law" states that if some hedge funds' returns soar above market averages, then others must crash and burn. If one accepts that passive investors are indexed and reap average market returns, then active investors that reap extraordinary returns above the market average are offset by active investors who experience extraordinary losses in aggregate.

The current situation may indeed be different from that presented by Long Term Capital Management, but it may be even more alarming, not less alarming. Due to the use of structured products and derivatives, hedge funds can take on hidden leverage above and beyond that which can be explained by polling prime brokers. Furthermore, illiquid structured products will experience a classic collateral crash when hedge funds try to liquidate these assets to meet margin calls or collateral "cures".

Since 2000, assets invested in hedge funds have more than tripled to around $1,500bn. While on average leverage may appear manageable, some hedge funds - Amaranth to cite a recent example - employ high degrees of leverage. A potential source of a "great unwind" arises from a trigger event affecting highly leveraged hedge funds, and another potential source is systemic risk that effects a larger cohort of hedge funds.

Many hedge funds are not highly leveraged, and they will weather the storm. But the explosion of hedge fund investments in illiquid assets combined with leverage currently pose a greater risk to the global financial markets than we experienced at the time of the LTCM debacle.

Keiser Report: Selling Kidney for iPad

by RussiaToday on Jun 7, 2011

This week Max Keiser and co-host, Stacy Herbert, present a special episode to enlighten a baffled Wall Street. They discuss selling kidneys for iPads, Saudi Arabia's planned nuclear reactors and oil traders threatening their competition with kidnapping.

Japan nuclear update - 3 nuclear reactors melted down after quake

Tokyo (CNN) -- Japan's Fukushima Daiichi nuclear power plant experienced full meltdowns at three reactors in the wake of an earthquake and tsunami in March, the country's Nuclear Emergency Response Headquarters said Monday.

The nuclear group's new evaluation, released Monday, goes further than previous statements in describing the extent of the damage caused by an earthquake and tsunami on March 11.

The announcement will not change plans for how to stabilize the Fukushima Daiichi plant, the agency said.

Reactors 1, 2 and 3 experienced a full meltdown, it said.

The plant's owner, Tokyo Electric Power Co., admitted last month that nuclear fuel rods in reactors 2 and 3 probably melted during the first week of the nuclear crisis.

It had already said fuel rods at the heart of reactor No. 1 melted almost completely in the first 16 hours after the disaster struck. The remnants of that core are now sitting in the bottom of the reactor pressure vessel at the heart of the unit and that vessel is now believed to be leaking.....read on

The Global Debt Crisis: How We Got in It and How to Get Out

by: Ellen Brown, Truthout

Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008. Public services are being slashed and public assets are being sold off in a futile attempt to balance budgets that can't be balanced because the money supply itself has shrunk. Governments usually get the blame for excessive spending, but governments did not initiate the crisis. The collapse was in the banking system and in the credit that it is responsible for creating and sustaining.

Contrary to popular belief, most of our money today is not created by governments. It is created by private banks as loans. The private system of money creation has grown so powerful over the centuries that it has come to dominate governments globally. The system, however, contains the seeds of its own destruction. The source of its power is also a fatal design flaw.....read on

Precious Metals and Currency Dilution

From Bullion Bulls of Canada:

As we saw recently during the May take-down of the gold and silver markets, not only was there a large cast of buffoons referring to the silver market (in particular) as a “bubble”, but an even greater number were asserting that at the least there had been a “top” in these markets. It is really difficult to envision a conclusion which demonstrates more fundamental stupidity.

When I head to the supermarket to do my grocery shopping, the same loaf of “premium” bread which I could purchase for about $2/loaf three years ago today costs me roughly $4 today. Obviously since it is the same loaf of bread, there can be no argument that I’m getting a “better” loaf of bread for twice the price. Instead, it is unequivocal that the purchasing power of the paper in my wallet has fallen by half in just three years.

I could come up with numerous other examples of items with such massive “price increases” (i.e. equivalent collapses in purchasing power) – especially with respect to food items. This broad-based explosion in prices totally rebuts any possible argument that particular items are “getting expensive”. The only exception to that would be with respect to goods where there are now acute shortages. In those cases however, prices have tended to explode by an even greater amount.

What this translates to is that the rampant inflation which has already sparked rioting (and revolution) in many poorer nations is totally a phenomenon of out-of-control currency dilution, which is the same thing as saying out-of-control money-printing. Yet we observe the inability of practically the entire body of “experts” to understand the concept (and effects) of currency dilution, despite the fact that these same individuals have no problem understanding the concept of “dilution” when it is applied to the share structure of a corporation.

Should the experts in our markets spot a company which is printing-up new shares at an excessive rate, these analysts will tell you to dump that stock faster than you can hit the “sell” button on your trading platform. And they won’t hesitate to tell you that only a “fool” would hang onto a company which is undermining shareholder value in that manner. Yet when these same experts watch Ben Bernanke running the Federal Reserve’s printing-press “white hot” year after year after year, at any given time roughly half of these clowns will be advising people to “buy dollars”.

The argument these esteemed financial advisors will use when they “recommend” that people increase their exposure to this rapidly-disintegrating paper is that “other currencies” (i.e. other paper) is supposedly even worse. Putting aside the fact that no paper is currently more worthless than the U.S. dollar, let us assume that the U.S. dollar would “win” a least-ugly contest. What does that imply?

With the same media talking-heads claiming that most European nations are near bankruptcy and Japan’s economy is in ruins, claiming the U.S. dollar is slightly less worthless than its “peers” is hardly an endorsement. Indeed, it is like watching two people being dropped out of an airplane on identical platforms – except that one platform was dropped a millisecond later than the other. And then the person perched on the slightly higher platform says to the person on the slightly lower platform “climb up here and save yourself.”

Gold May Gain on Growth Outlook, European Debt, Survey Shows

From Bloomberg:

Gold may gain on speculation signs of slowing growth means the Federal Reserve won’t start tightening monetary policy soon and as Europe’s debt crisis boosts demand for a protection of wealth, a survey found.

Fifteen of 17 traders, investors and analysts surveyed by Bloomberg, or 88 percent, said bullion will rise next week. One predicted lower prices and one was neutral. Gold for August delivery was down 1.1 percent for this week at $1,520.60 an ounce by 11:31 a.m. yesterday on the Comex in New York. It reached a record of $1,577.40 on May 2.

Manufacturing in China, Europe and the U.S. slowed in May and a private report this week showing slower-than-forecast growth in jobs spurred concern that today’s Labor Department employment data will trail estimates. The Fed plans to complete a $600 billion bond purchase program, a second round of so- called quantitative easing, this month and keep interest rates “exceptionally low” for an “extended period.”

“The possibility of QE3 due to the slowing U.S. economy may propel gold to a new record,” said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “The fundamentals are as sound as ever.”

Bullion climbed to an all-time high in British pounds this week and a record in euros last week as the euro region struggles to contain its sovereign debt crisis. European Central Bank President Jean-Claude Trichet said governments should consider setting up a regional finance ministry.....read on

A Global Mafia Cartel