***
Silver (and Gold) remain range bound.
Technically, we are still in a ‘coiled spring COT setup’ – with the bullion banks positioned for higher prices and speculators betting on downside momentum.
***
THE WORLD
The unraveling continues…
Scandal At The IMF: Senior Economist Resigns, Says “Ashamed To Have Had Any Association With Fund At All”
The rats everywhere are now jumping furiously off the titanic, but few had taken the time to write a letter explaining in detail just how cracked and broken the hull really was. This has now changed, with the departure of Peter Doyle, formerly a division chief in the IMF’s European Department responsible for non-crisis countries and currently an adviser to the Fund. Not content with quietly slinking off the scandal ridden organization which has become the butt of all jokes in the international community, where humor about Lagarde’s Louis Vuitton panhandling bag is as pervasive as punchlines about just how incompetent the organization is at actually doing its duty, Doyle has penned the following scathing letter which tears down every myth about the IMF: from its impartiality, to the selection process of its head, to its effectiveness. The letter also contains the following gem: “After twenty years of service, I am ashamed to have had any association with the Fund at all.” Pretty much says it all. This is a scandal in the making, and one which may shake to the core the credibility of the IMF in the context of international organization.
Resignation = Prosecution?
HSBC Executive Resigns at Senate Money Laundering Hearing
Bagley was among at least six HSBC executives who testified before the Senate’s Permanent Subcommittee on Investigations today after the panel released a 335-page report describing a decade of compliance failures by Europe’s biggest bank. London-based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report. “As I have thought about the structural transformation of the bank’s compliance function, I recommended to the group tha tnow is the appropriate time for me and for the bank for someone new to serve as the head of group compliance,” Bagley said. “I have agreed to work with the bank’s senior management towards an orderly transition of this important role.”
MUST read.
Trade-Off: Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse.
This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.
It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and largescale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling. Read more here.
More LIBOR fallout…
Deutsche Bank Turns Sides, Becomes Rat For The Liebor Prosecution
Escalation. The inevitable collapse of the Prisoner’s Dilemma that kept the LIBOR contributors together is occurring rapidly. After Barclays’ forced admission and initial fine, the ‘he-who-defects-first-wins’ strategy has been trumped by Deutsche Bank as they turn all ‘Donnie Brasco’ on their oligopolistic peers. As Reuters reports this morning “The bank last year obtained the status of being a witness for the prosecution in the EU and in Switzerland,” and “as a result of that, the bank could get a lighter penalty if a punishment is imposed,” though of course this does not mean they are admitting guilt (sigh). Under the leniency programs of the EU, companies may get total immunity from fines or a reduction of fines which the anti-trust authorities would have otherwise imposed on them if they hand over evidence on anti-competitive agreements or those involved in a concerted practice. How quickly the worm turns when trust leaves the system – the warning the rest of the Liebor contributors – be afraid, be very afraid.
Reactionary policy leads to more consolidation = greater vulnerability.
The Euro Crisis Has Led to More Power for Commission President Barroso
When José Manuel Barroso launches into one of his notorious PowerPoint presentations in the conference hall of the European Council building in Brussels, the mood among European Union leaders present quickly begins to resemble that of an endless vacation slide show in someone’s living room. While grandpa waxes lyrical over his photos of Alpine wildflowers, the rest of the family reaches for snacks and hopes the show will soon end. With each new slide that the Commission president pulls up on table monitors, his enthusiasm for the achievements and initiatives of his own organization grows, while the 27 heads of state and government resign themselves to their fate. The most recent Brussels summit was no different. EU leaders leaned back into their chairs, confident that Barroso’s presentation would not prove particularly demanding.
And this is where we are headed. Not if the German’s can help it.
IMF: eurozone in critical danger, ECB should launch QE
“The euro area crisis has reached a new and critical stage. Despite major policy actions, financial markets in parts of the region remain under acute stress, raising questions about the viability of the monetary union itself,” the IMF said. The fund added that the independent ECB, which is legally forbidden to finance governments, could be given full lender-of-last-resort functions, to help break the vicious circle of highly indebted governments borrowing from banks, which in turn become vulnerable due to the risk associated with the bonds.
Spanish Borrowing Costs Surge, Reviving Worries About Euro Zone
In a stark reminder that Spain’s financial crisis is far from resolved, the government in Madrid had to pay more to raise medium-term financing Thursday, while the yield on its longer-term debt crept back above the 7 percent level that, many analysts fear, could eventually lead to a full-scale bailout.
Europe Ends In A Sea Of Red
Spain’s broad equity index suffered its second largest single-day drop in almost 4 years and Italy also tumbled almost 5% as everything European was sold hard. EuroStoxx (the broad Dow equivalent) is down almost 3% as EURUSD dropped to two year lows, EURJPY to 12 year lows. AAA safe havens were massively bid with Germany, Denmark, and Switzerland all to new low (negative) rate closes. Core equity markets did suffer though with Germany down 2% but it was the periphery that saw the damage in credit-land with Spain 10Y closing at 7.27%, 610bps over Bunds (and 5Y CDS over 605bps). Spanish spreads are +130bps from post-Summit (and pre-Summit) and Italy +78bps, but it is the front-end of the curve that is most worrisome – Spain’s 2Y is 132bps wider in the last week. Europe’s VIX exploded by over 4 vols to 24% today and once again looks decidedly high relative to US VIX.
“Time Wounds All Heels”
History will likely characterize the current transition as a sudden jolt.
Indeed for most, the biggest risk is that the great unraveling of complex society will come without warning.
Yet watching it all unfold in real time may actually seem worse than having things blow up at once.
Acknowledging where things could be headed can be an unpleasant endeavor to say the least.
The hope is that enough will realize before it’s too late that there are ways of preventing worst case scenarios.
But perhaps hope is only fear gone bad.
Indeed, all that we have left is the spirit and reality of preparation and prevention.
Hiding from the reality will only serve to shield us from all that we have before us — which for most of you- is immeasurable wealth, when we take the time to reflect. – JL
DOMESTIC
It seemed like tech was back. Maybe it’s just social media.
Challenger: Tech Job Cuts Highest in Three Years in First Half -
Planned layoffs at technology firms reached their highest level in three years in the first half of the year, inflated by expected cuts that will affect about 30,000 workers at Hewlett-Packard Co. (HPQ), according to outplacement consulting firm Challenger, Gray & Christmas Inc. Technology firms, including those in computer, electronics, and telecommunications, announced a total of 51,529 job cuts in the first half of 2012, up from the 14,308 cuts announced during the same period a year ago and the largest midyear total since 2009.
Just wait for gasoline prices to creep back into the calculation…
Retail Purchases in U.S. Unexpectedly Decrease 0.5%
The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales.Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May. The retail figures prompted economists at Morgan Stanley,Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70percent of the economy, curbing sales at retailers such as Target Corp. (TGT) and Macy’s Inc. (M) “Weak spending growth and weak employment are reinforcing gone another in a disconcerting negative feedback loop,” said Jay Feldman, a director of U.S. economics at Credit Suisse in New York, who cut his tracking estimate for second-quarter economic growth to 1.6 percent from 2 percent. Stocks trimmed losses as a rally in crude oil prices boosted shares of energy producers. The Standard & Poor’s 500Index fell 0.2 percent to 1,353.64 at the close in New York. The yield on the 10-year Treasury note slid to 1.47 percent from1.49 percent late on July 13.
This will not be pretty. And who says there is no political support for more monetary easing? To not ‘do something’ for the waves of new retirees would be an easy way of committing political suicide.
ZIRP Strikes Again: Pension Under-Funding For S&P 500 Companies Hits Record
The public pension and retirement ‘schemes’ are in considerable trouble and now, according to a recent S&P study, private companies are at record levels of pension under-funding. Fiscal 2011 shows that the under-funded level for S&P 500 companies’ defined pensions reached an epic $354.7 billion – an increase of over $100 billion from 2010 and surpassing the 2008 record of $308.4 billion – and OPEB under-funding reached $223.4 billion. An aggregate $578 billion or 29.5% underfunding or the $1.96 trillion in obligations is increasing as the rates of return are reduced thanks to yet more unintended consequences of the Fed’s ZIRP and perhaps most worrying is there comment that “The American dream of a golden retirement for baby boomers is quickly dissipating; plans have been reduced and the burden shifted with future retirees needing to save more for their retirement. For many baby-boomers it may already be too late to safely build-up assets, outside of working longer or living more frugally in retirement.”
99 weeks leading to disability. This is our social safety net.
US set to lose 2 million jobs
The Pentagon will see massive cuts over the next decade to adjust the ever-expanding US deficit. A new study reveals, however, that the immediate impact of those adjustments could cost 2 million Americans their jobs in the next year alone.The Aerospace Industries Association released the findings of a report on Tuesday that suggest that the automatic cuts in federal spending slated to kick in on January 2 have the potential of being far more damaging than imagined.
The dominoes are falling. Those who leave first, leave best.
City of Compton may declare bankruptcy by September: officials
The City of Compton, a city of 93,000 people located on the outskirts of Los Angeles, must decide by September 1 whether to seek bankruptcy, according to its two most senior financial officials. Such a move would see it join a growing number of deficit-hobbled California cities that have used the filing to restructure onerous debt loads.
Justice is slow.
Ex-JPMorgan Banker Admits Role in Municipal Bid-Rigging Scheme
Alexander Wright, 45, pleaded guilty in Manhattan federal court to one count of conspiracy to commit wire fraud for manipulating the bidding process for a June 2002 contract. The contract was tied to a $31 million bond offering for a New Jersey state healthcare facility. The plea is the latest in a broad government investigation of the $3.7 trillion U.S. municipal bond market that has focused on rooting out schemes to fix prices and rig bids on bond transactions.
Manipulation of California energy market gives consumers a jolt
The next time your electricity bill prompts you to curse your local utility, here’s another target where you should direct your anger: JPMorgan Chase & Co., which has manipulated the California energy market for its own profit and at a cost to residents and businesses in the state that could be $100 million, $200 million or much more.That’s the accusation leveled by the California Independent System Operator, which has jurisdiction over 80% of the state’s electrical transmission. The ISO, a nonprofit corporation controlled by the state government, estimates that JPMorgan may have gamed the state’s power market for $57 million in improper payments over six months in 2010 and 2011.
Had enough yet?
Loan defaults drain $37 billion from 401(k)s each year
A large number of Americans are borrowing against their 401(k)s and having a hard time paying the loans back. Defaults on 401(k) loans are draining retirement savings by as much as $37 billion a year, according to a study conducted by Robert Litan, a researcher at the Brookings Institution and Hal Singer, managing director of financial analysis firm Navigant Economics.
Post Office Might Miss Retirees’ Payment
While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency’s money problems are only growing worse.The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn’t likely, as the House prepares to leave for its August recess.
Feeding Frenzy Seen If Wall Street Sues Itself Over Libor
Wall Street, grappling with mountingregulatory probes and investor claims over alleged interest-ratemanipulation, may face yet another formidable foe: Itself. Goldman Sachs Group Inc. (GS) (GS) and Morgan Stanley (MS) (MS) are amongfinancial firms that may bring lawsuits against their biggestrivals as regulators on three continents examine whether otherbanks manipulated the London interbank offered rate, known asLibor, said Bradley Hintz, an analyst with Sanford C. Bernstein& Co. Even if Goldman Sachs and Morgan Stanley forgo claims ontheir own behalf, they oversee money-market funds that may berequired to pursue restitution for injured clients, he said.
Here they come — after the trillions of dollars – just sitting there ‘doing nothing’.
Money-Market Funds, Peregrine, Volcker Rule: Compliance
The Federal Reserve Bank of New Yorksaid money-market fund investors should be prohibited from withdrawing all their assets at once as a way to make the$2.5 trillion industry “safer and more fair.” Money funds should set aside a portion of every investor’sbalance as a “minimum balance at risk” that could only bewithdrawn with a 30-day notice, the New York Fed’s staff saidyesterday in a report. The provision would reduce systemic riskand protect small investors who don’t pull out of a troubledfund quickly, according to the report.
INFLATION/CURRENCY WARS
This has the potential to become ugly, not so much for the loss of primary production, but for the affect of higher prices and uncertainty on the trade mechanisms that underlie distribution.
Worst-in-Generation Drought Dims U.S. Farm Economy Hopes
A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops and rural economies and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the past three years as the country struggled to recover from the recession. “It might be a $50 billion event for the economy as it blends into everything over the next four quarters,” said Michael Swanson, agricultural economist at Wells Fargo & Co. (WFC) in Minneapolis, the largest commercial agriculture lender.“Instead of retreating from record highs, food prices will advance.”
Can you say special drawing rights (SDR’s) waiting in the wings –and now this political announcement from the bank of banks.
World’s Most Prestigious Financial Agency – Called the “Central Banks’ Central Bank” – Slams U.S. Economic Policy
he central banks’ central bank, the Bank of International Settlements or “BIS” – which is the world’s most prestigious mainstream financial body – has slammed the policy of America’s economic leaders.This is especially dramatic given that the banks own the Federal Reserve, and that the Federal Reserve and other central banks – in turn – own BIS. In other words, BIS is criticizing one of its main owners.
Separation of church and state. Separation of politics and monetary policy.
Bernanke Delivers Bleak Assessment of U.S. Economy
Federal Reserve Chairman Ben Bernanke delivered a bleak assessment of the U.S. economy to lawmakers on Tuesday, citing a slowdown in economic activity this year and a stubbornly high rate of unemployment. Mr. Bernanke provided no new direct clues as to whether the central bank would take fresh steps to support the fragile economic recovery, though he struck a more negative tone in describing the U.S. economic outlook in testimony prepared for the Senate Banking Committee. “The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year,” Mr. Bernanke said in testimony prepared for his semi-annual appearance before the committee.Recent data suggest that real gross domestic product growth increased at a 2% pace in the first quarter of this year and will grow at an even slower rate in the second quarter, he said. Mr. Bernanke noted that Fed officials at last month’s policy meeting based their decisions on their expectation that real GDP would grow between 1.9% and 2.4% this year.
This is the game changer. Always has been, always will be. Food and energy go hand in hand.
Record cereal prices stoke fears of global food crisis
Record cereal prices are prompting fears of escalating food costs around the world and drawing comparisons with the 2007-08 crisis, when food riots broke out across the globe.While the UK is drowning in rain, the US has suffered one of the worst droughts in more than half a century, withering the country’s corn crop. The US is crucial to global food markets as the world’s largest exporter of corn, soya beans and wheat, accounting for one in every three tonnes of the grains traded on the global market.Forecasts are showing no sign of an end to the drought, with corn prices hitting a record high of $8.16 (£5.19) a bushel on Thursday, while soya beans hit a high of $17.17.
PM’s
We’ll be covering this from a silver perspective as well.
Gold`s role in a deflationary environment
Gold has a history as a hedge against inflation, or more precisely, inflationary expectations, but what is not often considered is its role in a deflationary environment.Since the United States Treasury closed the gold window in August 1971, the world’s major economies have been almost continuously in an inflationary environment.The year-on-year change in the consumer price index (CPI) in the U.S. has been negative in just eight months since August 1971 and all eight of these were in one consecutive period from March to October 2009. In Germany, just 12 months fit the criterion, of which eleven were in 1986-1987.
And who says gold is not useful?
Research: Gold and Tea Outperform Chemo in Fighting Cancer
When examining the body of research on alternative cancer treatment methods and substances, it is quite easy to find a multitude of research highlighting the anti-cancer effects of many ‘super’ substances such as ginger and turmeric.The latest research on the subject shines a light on just how powerful the combination of gold and tea can be in conquering cancer, and even the mainstream media is reporting on the amazing results.While the process ignores countless other peer-reviewed alternatives and even adds a radioactive quality to gold nanoparticles, it still manages to heavily outperform chemotherapy.
This was a big announcement. I wonder how this can spun any other way than ultimately ‘bullish’, and another indication that China is slowly preparing (however fruitless) for a reserve currency transition.
China set to lift ban on interbank gold trading further boosting demand
China is preparing to launch direct interbank gold trading – a banned activity at present – at the end of August as part of a broader set of banking reforms.China represents about a quarter of global demand for the precious metal and allowing the country’s banks to trade gold should boost investment demand further.FT.com (sub required) reports “the new trading channel for banks is likely to increase trading volumes, but it is too soon to tell how big its impact will be on overall bullion demand”.Hong Kong customs data showed gold imports into China from Hong Kong were 76 tonnes for the month of May, a whopping six-fold increase on last year. In November imports were running at over 100 tonnes.
Not too bad for undersea storage…Stories like this rekindle the debate over how much silver is left above ground. As a quick review — we have 2 general categories: Bullion form (somewhat like above) and that which has been sequestered in a variety of different forms – ranging from jewelry to the glue that holds connects the sensor to the body of your (old?) digital camera. Obviously some of it easy and cheaper to come by than a lot of it.
50 tons of silver lost during war salvaged
Nearly 50 tons of silver lost during the Second World War when a British merchant vessel sank three miles below the Atlantic has been brought back to the surface, it was announced yesterday.An American salvage company has spent six weeks recovering the bullion from the cargo holds of the SS Gairsoppa, a 126 metre-long cargo ship sunk by a German U-boat in February 1941 with the loss of more than 80 crew, most of them from the Indian sub-continent.Odyssey Marine, which recently lost a legal dispute with the Spanish government over nearly 600,000 coins recovered from a colonial-era wreck, said the recovered silver, worth about £24m, represented only 20 per cent of the bars that may remain on the British ship.
Interesting perspective on a confusing topic.
LIBOR Scandal And Its Effects On Gold And Silver Lease Rates
Following the LIBOR scandal, we need to take a look at gold and silver lease rates, because lease rates are calculated as LIBOR – GOFO (London Interbank Offered Rate – Gold Forward Offered rate).The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. GOFO is the interest we need to pay if we swap gold for U.S. dollars. Whenever GOFO goes down (or gold lease rates go up), it means people are craving to get their hands on gold. At the same time, when LIBOR goes up (or gold lease rates go up), it basically means the same: higher gold prices to come.
I know how you will answer this question…
Allocated Bullion Storage: Do You Really Own The Bullion?
Worldwide economic uncertainty has created a growing interest in precious metals as a way to preserve wealth. Today, global risks for investors include currency devaluation, sovereign debt defaults, bond market collapses, and stock market losses, all underpinned by ever-increasing government debt. For protection from impending economic Armageddon, investors are turning in increasing numbers to the traditional safe haven of precious metals. Unfortunately, many today don’t know how to purchase or store bullion, and consequently may find themselves as vulnerable to financial collapse as those who didn’t purchase any bullion at all.
COMMENTARY
The first two come from ‘those who ought to know’ — Paul Craig Roberts and David Stockman.
The Real Libor Scandal
According to news reports, UK banks fixed the London interbank borrowing rate (Libor) with the complicity of the Bank of England (UK central bank) at a low rate in order to obtain a cheap borrowing cost. The way this scandal is playing out is that the banks benefitted from borrowing at these low rates. Whereas this is true, it also strikes us as simplistic and as a diversion from the deeper, darker scandal. Banks are not the only beneficiaries of lower Libor rates. Debtors (and investors) whose floating or variable rate loans are pegged in some way to Libor also benefit. One could argue that by fixing the rate low, the banks were cheating themselves out of interest income, because the effect of the low Libor rate is to lower the interest rate on customer loans, such as variable rate mortgages that banks possess in their portfolios. But the banks did not fix the Libor rate with their customers in mind. Instead, the fixed Libor rate enabled them to improve their balance sheets, as well as help to perpetuate the regime of low interest rates. The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.
OMB’s Stockman: “We’re At The Fiscal Endgame”
To those on the hill and elsewhere who suggest this growing ‘fiscal cliff’ and ‘debt ceiling’ crisis will all get solved, former Office of Management and Budget (OMB) Director David Stockman tells Bloomberg TV that “they will punt, punt, punt and kick the can with partial solutions driven by eleventh hour crisis-based extensions that will go on for the whole of the next term!” When asked whether this economy will be mired in the doldrums, he rather ominously states “it will be worse, because we will be in recession” and notes that when the lame ducks re-look at the budget numbers with a realistic recession (instead of the current assumption of no recession within 12 years) it will be far worse and in a political environment where ‘we cannot possibly raise taxes – and we cannot possibly cut spending’. With a 78% disapproval rating for the ‘do nothing’ Congress, Stockman is surprised that 16% somehow approve – approve of what? His warning is that unlike in past periods, today “we are completely paralyzed, there is an ideological divide on taxes and entitlement like we’ve never had before” and while he realizes that “the debt problem doesn’t become a debt problem until the market suddenly have a wake up call and realize that if the Fed doesn’t keep printing, it’s game over.”
Jim Rickards (with Video embedded)…
Bernanke Ready to “Throw in the Towel on Inflation”
Monday’s weak retail sales data provides more evidence of the economy’s sluggish state, raising the stakes for Fed chairman Ben Bernanke’s Congressional testimony this week.The slowing economy — and what Bernanke plans to do about it — will top the agenda during the chairman’s appearance before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. (Bernanke is also likely to face questions about the fiscal cliff and the brewing LIBOR scandal, among other topics.)At issue is whether Bernanke will tip his hand about prospects for another round of quantitative easing (a.k.a. QE3) or some other form of policy easing. While Bernanke is unlikely to provide any specifics on the plan of action, he’s almost certain to reiterate the Fed’s prior pledge to “take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
Something about “radical gold bugs” I find tiresome…
Radical gold bugs vindicated?
First, a proprietary purr. Let the record show that MarketWatch’s Mark Hulbert wrote before Friday’s bounce: “Someday, gold will wake up from its dreary, listless state and take off. “And, if contrarian analysis is right, that day will come sooner rather than later.” ( See July 13 column ) Hulbert reported that the average reading over the last four months of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended gold market exposure of a subset of short-term gold timers tracked by the Hulbert Financial Digest, was minus 3.3%. He noted: “You have to go back as far as 1991 to find another four-month period in which the average HGNSI reading was this negative. Gold at that time was trading around $360 per ounce — or around $1,200 an ounce lower than where it stands today.”
Interesting turn for Mr. Gold. Certainly making waves in the precious metals community. Over the years of debating first the existence, then the how, and finally the reasons why precious metals prices are manipulated, eventually the miners are brought into the fold. How can they stand by when their very existence is threatened? The short answer is that they are trapped – held hostage by the very (bullion) banks who represent the only sellers in this space.
A Call For An International Real Investors Spring
This is a call to litigation and high tech communication arms. This is a call for a communication revolution of 2012 with the same commitment that existed in 1775. This is a call for an explosion in litigation against those that destroy for profit using dastardly means. The ends do not justify the means in the investment world even though it is the mantra of the devils that hide as financial and corporate personalities. Unless our markets are cleaned up of criminals there can be no sustained economic recovery. As long as the uptick rule is not enforced the Western world economic system is in the control of demons.This revolution is not armed but it should be violent in its constant complaint and litigation of every organization, writer, paper, and personality that is stealing from us. Do no let up.
Again and again. LIBOR comes across as some great scandal. Yet, the debate is framed in a way that gives culpability for what the FED does as it’s legal mandate.
Simon Johnson: The Federal Reserve and the Libor Scandal
The recommendations accurately summarized the problems with procedures surrounding the construction of Libor – the most important reference interest rate in the world – and proposed some sensible alternative approaches.This New York Fed memo stands out as a model of clear thinking about the deep governance problems that allowed Libor to become rigged. At the same time, the timing and content of the memo raises troubling questions regarding the Fed’s own involvement in the Libor scandal – both then and now.
The first of two from Charles Hugh Smith via ZeroHedge. The problem of course is the huge of people who are depending on the value of their homes to provide for the golden years. Sadly, this will provide the political will for more monetary (printing) intervention.
Guest Post: What’s So Bad About Deflation?
Perhaps all the assumptions about inflation being good and deflation being bad miss the key question: cui bono (to whose benefit?)One of the most widely accepted truisms of our time is that deflation is bad: bad for debtors, bad for the indebted government, and therefore bad for the economy.What all this overlooks is how wonderful mild deflation is for those who owe no debt but who own the debt and the income streams that flow from debt. What the “deflation is bad” argument ignores is who controls the financial and political systems, and what set of conditions benefits them.The entire Survival+ critique is based on one simple but revealing question: cui bono–to whose benefit?
Indirect reminder of of why ounces matter more than numis value.
Gold ‘Divine’ As Chinese Sell Wine
It seems the end of cheap money bulging out the Chinese wazoo have put the kibosh on the decade-long rally in the price of fine wine. Confirming what we initially noted back in November, it appears that we have a clear winner in the ‘best wealth-preservation investment’ game as Gold has gone on to dominate fine-wine (and equities) in the last year. As Bloomberg’s chart-of-the-day points out, the rapid rise in wine prices – on the back of Chinese demand for French reds – came to an abrupt halt when the PBOC started to put the inflation brakes on – and as is clear – wine is now tracking the Shanghai Composite almost perfectly (down) as the ‘asset grab’ phase ends. While ironically, wine is (apparently) illiquid – according to Hao Hong of Bocom, the outperformance of Gold in the short- and long-term reminds us of the Monty Python line as Chinese investors appear to have been promised ‘all the gold they could eat’, since, of course, man cannot live on iPads alone.
Don’t get me wrong. I am certain that the precious metals, at the very least – will retain purchasing power, but I’ve become immune to short term prediction. We shall see Mr. Turk.
James Turk: Summer Doldrums Over
With volatility in global markets, today King World News interviewed James Turk out of Europe. Turk told KWN, “The financial, monetary and economic conditions are so bad … that everything will spin out of control.” He also warned, “There is a new factor at work that is about to light a fire under the precious metals that few people recognize – food inflation.” He went on to say, “We can expect a rally from here that will take our breath away.” Here is what Turk had to say about what is happening: “The sentiment indicators for gold and silver have been exceptionally low for weeks now, Eric, which is understandable given their lackluster performance during this period, as well as the downright discouraging performance of the mining shares.” © 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged. July 16, 2012
As much as I appreciated the idealism, I have a hard time seeing how anything but the most urgent preparation will ‘rescue’ us from the destructive path we are on.
Where Is The Line For Revolution?
The subject of revolution is a touchy one. It’s not a word that should be thrown around lightly, and when it is uttered at all, it elicits a chaotic jumble of opinions and debates from know-it-alls the world over. The “R” word has been persona non grata for quite some time in America, and until recently, was met with jeers and knee-jerk belligerence. However, let’s face it; today, the idea is not so far fetched. We have a global banking system that is feeding like a tapeworm in the stagnant guts of our economy. We suffer an election system so fraudulent BOTH sides of the political spectrum now represent a hyper-rich minority while the rest of us are simply expected to play along and enjoy the illusion of choice. We have a judicial body that has gone out of its way to whittle down our civil liberties and to marginalize our Constitution as some kind of “outdated relic”. We have an executive branch that issues special orders like monarchical edicts every month, each new order even more invasive and oppressive than the last. And, we have an establishment system that now believes it has the right to surveil the citizenry en masse and on the slightest whim without any consideration for 4th Amendment protections.
Charles Hugh Smith attempting to makes sense of it all…
We’ve Decoupled, Alright – From Reality
Forget decoupling from Europe–we’ve been decoupled from reality since 2008.Have we decoupled from the global slowdown? Doubtful. Have we decoupled from reality? Undoubtedly–and have been since 2008. One key attribute of reality is feedback: actions have consequences, and various forces reinforce or resist each other in a dynamic interplay of positive and negative feedback.Another key attribute of reality is risk. Risk is as ever-present as gravity, and it cannot be eliminated; it can only be shared or transferred.When you overwhelm feedback with massive interventions that mask risk, you decouple from reality. With feedback suppressed and risk hidden, the system’s resilience and resourcefulness both atrophy. Participants start making decisions not on risk assessment and feedback from reality but on the results of the intervention.Pharmaceutical intervention offers an apt medical analogy. Various risk factors such as high blood pressure and high levels of LDL cholesterol have been correlated with increased risk of heart disease. Medications can lower these metrics, and so these interventions are now ubiquitous.Sometimes these result from genetic propensities, but other times they are consequences (feedback) of an unhealthy lifestyle: obesity, poor diet, lack of fitness, etc. If we suppress a single feedback from a spectrum of health-related feedbacks and consequences, have we restored health or simply masked the risk of an unhealthy lifestyle?
Chris Powell of GATA responds to the LW…
MineWeb’s Lawrence Williams: It would be surprising if gold market wasn’t manipulated
But mere musing is no substitute for journalism. As GATA has compiled and published much official documentation of central bank manipulation of the gold market –http://www.gata.org/taxonomy/term/21 — – the question is really just how far the manipulation extends, and manipulation can be confirmed, reconfirmed, and explored by any news organization willing to put some specific questions about gold to central banks. Indeed, yesterday your secretary/treasurer was contacted by someone who identified himself as a writer for Seeking Alpha undertaking an essay meant to be critical of GATA and asking a dozen questions about GATA and its work. Your secretary/treasurer answered them cordially enough but added that the writer might perform a better service in regard to gold market manipulation if he could put even half as many questions to central banks themselves, as they have far more information about gold than GATA does, even as they refuse to provide much of it. Your secretary/treasurer offered to supply the writer with questions that most likely would elicit from central banks some very telling refusals to answer. We’ll see if he’s interested. But for the moment it seems that journalists find GATA far more accessible and accountable than central banks. Even the most respected financial journalists seem to assume that the unaccountability of central banks is to be taken for granted.
AUDIO/VISUAL
In no particular order…
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First up, another rant from Nigel Farage. Always entertaining and satisfying to see thoughts like his expressed in forums at this level.
Here’s a quick review of the role of government and politics in an economy.
Next up, Jim Rogers discussing precious metals, the dollar, and the likelihood of another round of monetary policy.
Jim Rickards shares his view on monetary policy matters.
Santelli, in a classic debate with Liesman — Hard to believe Santelli is still on the mainstream.
Ron Paul Interview
Ron Paul
Peter Schiff
Schiff: Gold Likely To Reach $5,000/Ounce
Peter Schiff
From Wikipedia:
“Confidence is generally described as a state of being certain either that a hypothesis or prediction is correct or that a chosen course of action is the best or most effective”.
How long will confidence last given the following:
Li(e)bor
Madoff
Sanford
MF Global
PFG
Robosigning
$16 Trillion lent out all over the world by the Federal reserve in secret
Mark to market
Selling derivatives to sovereign states and municipalities
Blatantly managed government statistics
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