Thursday, May 29, 2008
I have made every effort, over the past 10 weeks, to counsel all whose eyes gaze upon this script, that owning Gold and Silver during this upheaval in the World Financial System is both prudent and wise. Owning the Precious Metals is not for the feint of heart. You need nerves of steel and a really nice pillow. The Precious Metals are the "ride of a lifetime". If you didn't like roller coasters as a kid, this may be a ride to avoid. The highs on this ride can be pretty high, the lows deep and frightening. Huge profits and harrowing losses. And for those with the convictions to white knuckle the ride to its destination, the personal satisfaction of knowing that you have conquered both greed and fear. Because it will be those brave enough to endure the "ride" that will find themselves on top as all the naysayers look up from far below.
Today was not as low as many may fear or believe. The declines over the past three days will, when looking back, represent one of the greatest fake outs in the history of Bull Markets. This is a classic Bear Trap being set on the boobs that man the soon to be terminal black boxes that have disrupted this Secular Gold Bull Market one too many times now. These program traders are about to receive a strong dose of the truth and it is going to leave their little black boxes in smoking ruins.
Today, once again, US Government statisticians dished up another heaping helping of Bull Shit for the delusional wizards of Wall Street to swallow whole. And it tasted so good, they asked for another giving new meaning to "shit eatin' grin".
Today's GDP number was pure Bull Shit refined and derived with the aid of the Bull Shit inflation numbers consumers have been laughing at for months. The US Government will stop at nothing in their deceptions used in a vain effort to convince Americans that nothing is wrong with the economy, and that "things just aren't as bad as they seem". Is that a chours of "Bull Shit" that I hear rising from the streets of America? Listen closely, I think it is...
US logs better but still weak growth; far from being out of the woods
In fact, a closer look behind the 0.9 percent increase in the gross domestic product during the January-to-March period revealed much caution on the part of consumers who have been clobbered by the housing, credit and financial debacles.
"What emerges is a picture of an economy that's gasping for air," said Bernard Baumohl, managing director of the Economic Outlook Group.
When exports and business' inventories are removed and imports are added in, economic activity actually contracted at a 0.1 percent pace in the first quarter, the worst showing in more than 16 years. That figure underscores consumers' disinclination to spend vigorously.
News Release: Gross Domestic Product (GDP) and Corporate Profits
There is one simple fact about "growth" in the US Economy: 70% of it comes from the American consumer. There is also one simple fact about GDP: it is a backwards looking statistic. "Growth", real or contrived, in Q1 2008 is all water under the bridge. Q1 GDP says little to nothing about growth in the current quarter or future quarters. The bottom line is that the Fed and the US Government are desperate in their efforts to keep the "recession tag" from being hung on the US Economy. Everybody and their uncle knows the US Economy is in a recession, the problem is nobody wants to admit it.
Americans are addicted to credit. From the halls of Congress, to the lowest Joe on the street, "buying on credit" IS OUR WAY OF LIFE. Without credit there is no "economic boom" the past 25 years. Credit is now disappearing for many Americans, and their way of life with it. And the US Economy is going down the drain with the American consumer. SEVENTY PERCENT of US GDP comes from the American consumer, the rest from what industry remains and government spending. Credit for Americans, American businesses, and soon the American Government is evaporating like the lakes in the drought parched South Eastern US. Without credit, there is no growth in America any more. The addicts are going Cold Turkey, and the withdrawals are not going to be pretty.
Oil falls after Energy Department says surprise drop in supplies due to temporary factors
NEW YORK (AP) -- Oil prices fell sharply Thursday after the Energy Department reported unexpected declines in crude oil supplies last week but said the drop was due to temporary delays in unloading oil tankers along the Gulf Coast.
In its weekly inventory report, the department's Energy Information Administration said crude oil inventories fell 8.8 million barrels last week, while gasoline supplies fell 3.2 million barrels. Analysts surveyed by energy research firm Platts had expected slight increases in supplies of both.
But the EIA also offered a rare explanatory note on the Gulf Coast tanker problems. Gulf ports have closed many times in recent months due to fog, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
The ONLY fog is between the ears of US Government statisticians. Here before you now is one gargantuan pile of pure 100% Bull Shit. "...a rare explanatory note...", just when you thought you'd heard everything.
In Washington, meanwhile, the Commodity Futures Trading Commission revealed that it is six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation. The CFTC also announced a handful of initiatives designed to increase transparency of the energy futures markets.
The commission said it started the probe in December and was publicizing the investigation "because of today's unprecedented market conditions."
Disclosure of the investigation may have contributed to oil's declines, analysts said.
You can rest comfortably knowing that there is unlikely a similar probe by the blind CFTC into "price manipulations" in the Gold and Silver markets. What a joke! Anything to try and steer people away from the truth. Any first year economics student, or produce clerk for that matter, knows that the price of Oil is skyrocketing because the US Dollar is backed by nothing more than 100% BULL SHIT. The mere suggestion that Oil prices are declining because demand is falling in the US is BULL SHIT as well. It's a bigger World today than it was just 10 years ago. The competition for the World's resources is becoming fierce. The monster we fight today in higher Oil prices was created unconstitutionally by the US Congress in 1913. That monster is the US Federal Reserve. And if there needs to be an investigation of anything in this country, it is this criminal entity that is robbing Americans of their wealth every minute of the day. And that monster may soon be on life support...
Fed to keep making bank loans available to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve announced Thursday that it will make a fresh batch of short-term cash loans available to squeezed banks as part of an ongoing effort to ease stressed credit markets.
The Fed said it will conduct three auctions in June, with each one making $75 billion available in short-term cash loans. Banks can bid for a slice of the available funds. It would mark the latest round in a program that the Fed launched in December to help banks overcome credit problems so they will keep lending to customers.
The new round of auctions will be conducted on June 2, June 16 and June 30.
The smooth flow of credit is the economy's lifeblood. It enables people to finance big-ticket purchases, such as homes and cars, and helps businesses expand operations and hire workers.
Wanting to avert a broader panic that could endanger the entire U.S. financial system, the Fed has taken a number of extraordinary actions to provide relief. In its broadest extension of lending authority since the 1930s, the central bank agreed to temporarily let investment firms obtain emergency loans directly from the Fed, a privilege that only commercial banks had been granted.
The central bank is expected to focus more on these and other efforts to help banks and investment firms overcome any credit problems as it winds down an aggressive rate-cutting campaign that started last September.
But isn't the credit crisis over? Only for the naive and those that sure wish it was. The credit crisis is FAR from over and may soon be about to explode and destroy the US Economy for the next two generations. Few realize or understand what the Fed has undertaken and given away with these loan/auctions they are promoting every other week since December. The Fed has pushed this country to the brink of complete economic collapse, and nobody wants to tell the story, or expose the truth. Fortunately Gary North does, and he has done so with the following insightful and alarming essay. Why has big financial media ignored this story?
Bernanke's Nightmare Chart
by Gary North
The Federal Reserve System on December 17 began a unique experiment: debt swaps with large commercial banks. The FED is now swapping at face value highly marketable U.S. Treasury securities in exchange for discounted mortgages. Nothing like this has ever been attempted before. It represents an innovation in central bank policy. It is called the Term Auction Facility (TAF). The initial offer was for $20 billion in swaps.
The rate charged is about 2%. This is why the FED has cut the FedFunds rate to 2% – not to stimulate the economy directly but to make available TAF loans at low rates.
Here is how the game is played. The borrowing banks can place the borrowed Treasury debt on their books at close to face value. This looks as though the banks are meeting their capital requirements.
What is really going on? Deception on a massive scale – a fully legal deception that the U.S. government's bank auditors understand and go along with.
With this as background, let us consider the words of the Federal Reserve System as of May 2.
In addition, the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets.
Deciphering the FedSpeak, we learn that the FED is swapping U.S. Treasury securities for packages of loans on just about anything. I suppose this could include cars, if the FOMC decides the asset meets its wider standards.
Consider these words: "The wider pool of collateral should promote improved financing conditions in a broader range of financial markets." Let me translate.
The wider pool of eligible capital for swaps will allow banks to convince government auditors – wink, wink – that the assets on the banks' books need not be marked to market with a discount. Therefore, the banks will not have to call in loans in order to bring their loan-to-capital ratios back into line with regulations.
HOW LONG CAN THE GAME GO ON?
It can go on for as long as the Federal Reserve System has U.S. Treasury debt to swap. As Hamlet said, "There's the rub."
In November, 2007, two weeks before the first TAF auction was held, the Federal Reserve System held about $800 billion in Treasury debt. As of May 1, it held $539 billion. "May day! May day!"
The Federal Reserve's "creative financing" to bail out banks that have invested in creatively financed mortgages has a limit. The limit is its portfolio of Treasury debt.
It took from 1914 until November 2007 for the Federal Reserve to accumulate $800 billion worth of Treasury debt. It has take from December 17 to the end of April for the FED to divest itself of $260 billion of this portfolio, a decrease of one-third. In its place, it has placed AAA- rated mortgages.
At the current swap rate, the Federal Reserve System will be out of Treasury debt in December of 2008. But by adding car loans to the list of eligible paper, the FED has guaranteed that this rate will accelerate.
Please take the time to read the entire essay at the the link above as I have paraphrased from it to get the point across. And that point is that the Fed has risked it's own destruction [not to mention the destruction of the US Economy] by implementing this "cash for trash" swap program. That, and the fact that they are now culpable in fostering bank fraud. The severity of the actions the Fed are now engaged in are beyond shocking. The whole concept is predicated on this plethora of virtually worthless credit backed securities regaining their value in the near term and being returned to the banks as sound investments. Ain't gonna happen. Rising interest rates in the long bonds will destroy that pipe dream.
Doing the quick math exposes how close the Fed is to running out of Treasury debt to swap for this trash so as to perpetuate the bank fraud that Wall Street has brazenly accepted as "the end of the credit crisis". From December 2007 through April 2008 the Fed had swapped out $260 BILLION of it's $800 BILLION Treasury debt kitty. Two more auctions in May at $75 Billion each raised the total swapped out at the end of May 2008 to $410 Billion. Now add three more $75 BILLION auctions in June and the Fed will have exhausted $635 BILLION of its $800 BILLION in Treasury debt reserves. Almost 80% of the Fed's Treasury debt that it took 93 years to accumulate will have evaporated in SIX MONTHS! Pfft, gone!
As the Federal Reserve blows thru its assets to perpetuate a collosal bank fraud, the US Congress sits silent on the sidelines oblivious to the economic madness destroying this country's future for possibly the next two generations. The credit crisis is certain to sink this country. The leadership vaccum in Washington will see to it that it remains sunk.
Tuesday, May 27, 2008
Oil Falls More Than $3 as Record Prices Curb U.S. Fuel Demand
May 27 (Bloomberg) -- Crude oil fell more than $3 a barrel in New York, the biggest decline since April, on signs that U.S. fuel consumption is dropping because of a slowing economy and record energy prices.
``There's trepidation at these price levels,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. ``High energy prices are having a substantial impact on the economy and potentially on demand.''
``After failing to break through $135 decisively last week, it appears we've put a resistance line there,'' Flynn said.
"Signs" that US fuel consumption is dropping? Signs? So what if it is dropping. I'm pretty certain the Chinese will be more than happy to pick up the slack and use what we don't. When are the anal-ysts going to wake up to the FACT that the world economy and energy consumption no longer revolves around the US.
Resistance in Oil prices at $135? I guess the same could be said about $115, $120, $125, and $130. All numbers that have fallen by the wayside as Oil relentlessly climbs higher. Yes, Oil is ripe for a correction, but just because it is doesn't mean that it will. And so what if it does. Are you going to tell me that Oil at $108 is going to help the US avert a recession? If so I have but one answer for you. BULLSHIT!
And now for our #1 BULLSHIT detection of the day. The whack job done on Gold and Silver over at the NY COMEX. Western government can cry all they want to about "speculators" running up the price of Oil, but the real crimes being committed in the futures markets are in the Precious Metals pits in New York. Not only was today's take down in Gold and Silver completely unwarranted, it was blatantly contrived. And I wouldn't be surprised to find out that the drop in Oil prices was contrived by futures traders in New York today as well. All at the behest of the US Government and their stooges at Goldman Sachs. The 10-minute Gold chart posted above will show you that the hit on Gold began exactly the moment the NY COMEX opened for trading this morning. The Precious Metals were relatively firm all through yesterday's holiday and overnight in Asia and Europe.
As sad as the take down was, particularly in Silver, it wouldn't surprise me if we closed the week up in the Precious Metals. If nothing else, it is another great buying opportunity! The US Dollar is going nowhere fast. The only question left to answer now is which will get to the basement first: The Dollar or the Dow?
Monday, May 26, 2008
By hook and by crook the US Dollar became the "reserve currency" of the world as the US and the Saudis in 1973 declared the US Dollar the single barter for Oil. In exchange for a lifetime of military support, the Saudi Kingdom agreed to accept ONLY US Dollars for their Oil. To keep things simple, other Oil exporting nation's soon began accepting ONLY US Dollars for their Oil. This action then created a "demand for US Dollars". The US Government had effectively switched the Dollars backing from Gold to Oil.
As the years passed, this new, and growing, demand for US Dollars allowed the Federal Reserve to begin and perpetuate a monetary inflation unrivaled in the history of mankind. This monetary inflation is soon to reach it's zenith. Soon to be followed by the complete destruction of the US Dollar as a currency, the destruction of the US Economy. and the destruction of a standard of living we have taken for granted for the past two generations.
Much debate has recently swirled within the "mighty G7" nations that it is the "speculators" in the futures markets that are causing the accelerating rise in the price of Oil. In the West, particularly in the US, it's is always somebody else's fault. Nobody ever wants to, or will, stand up and take responsibility for their actions. It is always easier to blame somebody else. This is why we have so many lawyers in our society today. "Then I'll sue!", should be this nations motto. With so many lawyers in our government today, it is little wonder that we continually play the "blame game" when it comes to rising Energy and Food prices. How naive these fools are. How foolish we, as a nation are, to elect these ambulance chasers to be our leaders. Hey, "ya get what ya pay for." Only a collection of US Government lawmakers could come up with such a ridiculous idea as this to pander to the voting public:
US House votes to sue Opec
The US House of Representatives has approved legislation that would allow the nation to bring a lawsuit against Opec for conspiring to keep oil prices up, a move reflecting the rising tensions between energy producing and consuming nations.
“Opec’s concerted manipulation of world oil marketplaces calls for more than begging for help,” said Robert Scott, the Democrat representative from Virginia, during the House debate. “It calls for full anti-trust enforcement.”
Folks, it just can't get any more pathetic than that. Well, it probably can, and probably will, but to even suggest that they can "sue OPEC" and change things, makes one question strongly the leadership of our nation. If this is the best these clowns in Washington can come up with to solve runaway Oil prices, we must then resign ourselves to the fact that things are probably going to get a whole lot worse before they get and better. A WHOLE LOT WORSE!
I am of the opinion that Oil's rampant rise today is a direct result of it's affiliation with the US Dollar over the past 35 plus years. One of the Fed's biggest regrets during the 1970's inflation crisis was that they did not suppress the price of Gold. Today the Fed and it's sister central banks in the G7 work overtime to halt and/or slow the rise in Gold prices. They can do this by dumping their reserves on the market place. By all estimates, Gold should be more than double where it is today just to have kept up with inflation. Strangely it is not...because of the central bank suppression. Oil on the other hand, is not "held in reserves" by central banks, and cannot be "dumped" on the market in an effort to suppress the price. This is why we so often hear about US officials begging the Saudis to pump more Oil.
Thus, with the Dollar effectively backed by Oil the past 35 years, it should come as a surprise to no one this seemingly out of control rise in the price of Oil over the past 12 months. The 70's are being replayed again at the dawn of the 21st century, only this time Oil is playing the role of Gold. As the value of the US Dollar plummets with each new pile of them dumped into the market place by the US Treasury and the Federal Reserve, Oil has no choice but to rise in price.
The "speculators" are only taking advantage of the situation the US Government created and perpetuated over the past 35 years, and simply "profiting " from the exposure of the lie that is the US Dollar. The speculators are not the cause of the rising price of Oil. It is foolish to even suggest it. These speculators are nothing more than vultures circling the soon dead carcass of the US Dollar.
How and/or when will Gold benefit from these "exorbitant" Oil prices? Gold is historically cheap relative to Oil right now. Gold at a very minimum should be double today's price relative to today's Oil prices. A likely scenario may unfold as we move into summer and Oil prices "correct". Money will move from Oil into Gold [and Silver] as the Oil trade unwinds. However, because rising inflation is baked into the next several quarters, falling Oil prices may not necessarily lead to falling Gold prices. Very soon, and quicker than many believe, Gold is about to pick up the torch in the Inflation Hedge Sweepstakes. It's a lot easier to buy Gold as an inflation hedge than it is to buy barrels of Oil. A lot easier to store as well. The next leg up in this secular Gold Bull market should prove to be spectacular as "investors" flock to the Precious Metals as an Inflation Tsunami washes over the US.
It’s not an Oil Crisis it’s a Dollar Crisis
By: Peter Schiff, Euro Pacific Capital, Inc.
In their search for explanations as to why oil has surged past $130 per barrel, Washington, Wall Street, and the financial media are as clueless as cavemen after a freak summer snow storm. Despite the head scratching, the blame game is nevertheless in full force. Speculators and big oil companies are being trotted out as scapegoats, and increased margin requirements and taxes on windfall profits and futures trading have been mentioned as appropriate sanctions. It should be clear that this is pure farce, and that no one understands what is actually happening.
The reality is that after years of reckless consumption and dollar debasement, Americans are now being priced out of markets over which they formerly held unchallenged title. As more affluent foreigners consume more of the resources and products they previously supplied to us, Americans are being forced to cut back. The rising dollar-based price of gasoline is simply an illustration of this global trend.
How to Fix Everything
by Adrian Ash
Speculating in the commodity markets is a bad thing, a very bad thing indeed. Congress ought to do all it can to protect the public interest – starting with its own re-election.
The Committee therefore recommends closing the US commodity futures market, and imposing sanctions on any foreign state that doesn't do the same, to prevent speculative funds simply moving elsewhere
This policy – undertaken for the good of the international community – will thereby force speculators back into more socially beneficial activities, such as trading those subprime-mortgage backed bonds now stuck on the balance sheets of New York investment banks.
Fixing that crisis is what both the economic stimulus package and the Federal Reserve's cash-for-crap liquidity injections are intended to achieve. Sub-zero real rates of interest should in no way be allowed to encourage or fund trading outside socially "good" speculations like residential real estate.
Germany in call for ban on oil speculation
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
In the long run, any scheme to ban futures trading would be extremely hard to enforce as the markets would tend to move offshore. Hedge funds are probably not the culprit in any case.
Oil markets are likely to shrug off the moves as political posturing, instead focusing on Norway’s suspension of crude output at three platforms, cutting supply by 138,000 barrels a day.
The news comes as Lloyd’s Marine Intelligence reported Opec oil shipments fell by 1m barrels per day in the four weeks to May 4, confirming suspicions that the market has been chronically short of supply.
Silver Technicals 2
Adam Hamilton, Zeal Intelligence LLC
If you’re a pure silver trader, you should take comfort that silver is basing high for its next major upleg. Now since silver follows gold, and gold’s seasonals are very unfavorable in summer, we may have to wait until autumn for the next major gold and silver uplegs. Both of the past two uplegs started in Augusts of their respective years. But if there was ever a summer for gold to buck seasonal trends, 2008 is it. The coming inflation scare is going to be the worst seen since the 1970s, great for gold investment demand.
The International Forecaster - Bob Chapman
Note that the rollover of gold futures contracts will be completed next week. The initial tally on April 30 had June contracts of open interest at 248,355 and August at 47,406. As of Thursday, those numbers stood at 163,127 and 143,608, respectively, meaning that June contracts of open interest have decreased by 85,228 contracts while August contracts of open interest have increased by 96,202 contracts. That means that the rally still has legs, and that after the current rally peaks next week based on short-covering, there will be a short period of consolidation after which gold and silver are up, up and away! This rally has legs. The correction is over and those who are waiting for the usual summer slump are going to get a very big surprise. Wait until you see what happens in July when the seasonal adjustments that have artificially lowered official CPI and PPI are removed and all the suppressed inflation flows back into official numbers. Gold and silver are headed for the moon, so don't miss out on the coming rally. Take your position now and sit back and watch the precious metals go to town.
Tuesday, May 20, 2008
Monday, May 19, 2008
Index: Weak economy may dodge a recession
NEW YORK (AP) -- Gas prices are high, food's more expensive and the job market's cold, but the U.S. may still avoid a recession.
That was the message Monday from a private business group whose index of leading economic indicators defied expectations and inched higher in April.
The New York-based Conference Board said its forecast of future economic activity rose 0.1 percent in April, matching a 0.1 percent increase in March. Economists had expected a 0.1 decrease in April.
The index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.
"These data certainly reflect a weak economy but not one in recession," said Ken Goldstein, labor economist at The Conference Board. The small increases in March and April, which followed five months of decline, could be a signal the economy may not weaken further, he said.
Six of ten leading indicators the Conference Board measures rose in April, including stock prices, interest rate spreads and housing permits. Those increases more than offset the sharp declines in average weekly hours worked and consumer spending.
Yeah right... "...its forecast of future economic activity rose 0.1 percent in April..." 0.1%? Do these geniuses even have an inkling of how PUNY 0.1% is? 0.1% is ONE TENTH OF ONE PERCENT. IT IS A FRACTION OF 1%. IT IS 1/10! If 0.1% was any smaller it would be zero! Given a margin of error, 0.1% could just as easily be MINUS 0.1%. And these economic geniuses have the nerve to suggest that the economy "may not weaken further"? Yeah, and the price of gasoline dropped in April. Give me a freaking break!
Have these knuckleheads at The Conference Board [nice name by the way] checked the price of Oil lately? Oil closed at an ALL TIME high today ABOVE $127 a barrel. A snowball has a better chance of doubling in size in hell than the economy has of not weakening in the months ahead. What ever credibility The Conference Board [what a stupid name] had previously, it all evaporated with this ridiculous assertion this morning. 0.1%! LOOOOOOOOOOOOOOOOOL!
Just what is this Index of leading Indicators anyways. [Besides wishful thinking.] For the answers to that we go the to answer masters at Wikipedia:
The Index of Leading Indicators is an American economic index intended to estimate future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion. The single index value composed from these ten variables has generally proved capable of predicting recessions over the past 50 years. Those who have an activist view believe in discretionary monetary and fiscal policy. They believe that the index of leading indicators can provide an early warning system so that policymakers can shift toward macroeconomic stimulus when the index fails.
One problem with the index of leading indicators is that the time lag between the signal of a recession and the actual recession has varied widely. Also, on a few occasions, the index of leading indicators has fallen, and no recession occurred. That is, the index has given a few false alarms. Hence, policymakers must react carefully to the changes in the index.
The 10 components of the Index include:
1. Average weekly hours worked by manufacturing workers
2. Average number of initial applications for unemployment insurance
3. Number of manufacturers' new orders for consumer goods and materials
4. Speed of delivery of new merchandise to vendors from suppliers
5. Amount of new orders for capital goods unrelated to defense
6. Amount of new building permits for residential buildings
7. The S&P 500 stock index
8. Inflation-adjusted monetary supply (M2)
9. Spread between long and short interest rates (the yield curve)
10. Consumer sentiment
While this index correctly forecasted each of the 7 recessions during the 1959-2001 period it also has forecast 5 recessions that did not occur.
This naturally brings to mind a famous saying by economist Paul Samuelson: "Economists have correctly predicted nine of the last five recessions."
Predictably unpredictable. 0.1%! Cancel the alarm. The economy is saved! Consumer sentiment is at an ALL TIME LOW. How could I ever think the economy might weaken further in the months ahead? The Index of Leading Indicators says it isn't so. I bow before thee... Your offering of hope is immeasurable. So what if Oil is $127 a barrel...
No end in sight to market woes say Trichet, Buffett
LONDON/FRANKFURT (Reuters) - The end to the credit crunch is still not in sight, European Central Bank President, Jean-Claude Trichet and Warren Buffett, the world's most famous stock market investor, warned on Monday.
"These are demanding times, challenging times... It is an ongoing, very significant market correction," Trichet told BBC radio in Britain.
Buffett, whose years of shrewd investing have earnt him a fortune estimated at $62 billion by Forbes magazine and the nickname "the sage of Omaha," struck a similar tone at a news conference in Frankfurt.
"I'll talk about the United States. I don't think the effects of the credit crunch are far from over at all. I think there will be rippling secondary, tertiary effects."
Trichet and Buffett's comments come after U.S. Federal Reserve Chairman Ben Bernanke said last week the healing process from the credit crisis would take some time.
But, but, but...the Index of Leading Indicators has "indicated" that the economy may not weaken further. I saw the headline. It must be true. The Dow was up today. Maybe Mr. Buffet and Mr. Trichet have their facts mixed up. I swear I read at least a dozen times in the past 10 days that the credit crisis is all but over. These guys must be mistaken. I'm going to buy the Dollar just to prove them wrong!
Fed's Direct Loans to Banks Climb to Record Level
May 15 (Bloomberg) -- The Federal Reserve's direct loans of cash to commercial banks climbed to the highest level on record in the past week as money-losing lenders increasingly turn to the central bank for funds.
Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.
Policy makers have increased the attractiveness of direct loans as they seek to alleviate the impact of the credit crunch. Fed Chairman Ben S. Bernanke said two days ago that while markets have improved, they remain ``far from normal,'' adding that the central bank is prepared to increase its twice monthly auctions of funds to banks.
``The Fed is providing an extraordinary amount of liquidity through various mechanisms,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. While ``credit markets are showing signs of improvement'' there is ``a long way to go,'' he said.
"A long way to go". I guess I better not ask Dad again, "Are we there yet?" Geeze, they just told us last week that the credit crisis was over. I'm so confused. We're in a recession, we're not in a recession. The credit crisis is over. The credit crisis is not over.
PEOPLE! THE WORLD FINANCIAL SYSTEM IS F*#!ED UP! IGNORE THIS NOISE. IGNORE THE BLATHERING NONSENSE. IGNORE THE LIES. IGNORE THE WISHFUL THINKING. The bad part of this mess hasn't even shown up at the party yet, and the ugly part hasn't even gotten dressed yet. Call your broker ASAP and buy some Gold and Silver. You'll sleep better at night knowing what few do. THE TRUTH!
This just in:
US to Peg Dollar to Rat's Ass
Fed chairman Ben Bernanke says "We were looking for a new stable pre-set intertemporally constant fixed asset to peg the greenback against, and the rat's ass was it".
The US dollar has been under siege lately due a combination of factors including the sub-prime interest scandal, declining house prices, soaring gold and oil prices and a commitment to fighting wars really far far away for reasons nobody can remember.
Bernanke surprised many by reverting from a fiat currency to one based on fungible assets. It seems that when the subject was brought up with the president Mr. Bush was reluctant to maintain a Fiat Currency while GM an Ford are not doing so well, "It just doesn't seem like the American thing to do."
Reverting back to the gold standard was not an option as the price of gold has increased as investors have flocked to it with the decline in the dollar. Pegging the dollar to it now would be disastrous. Defending the huge amounts of gold required in one location whether it's Fort Knox or elsewhere would simply be an open invitation for George Clooney and Brad Pitt to develop a devilishly clever plan to clean out the place and make US marines look foolish in the process. "I don't think we have a game plan to defend ourselves from those slick movie stars" admits Bernanke.
"The beauty of the rat's ass is that it is safely distributed in the streets and sewers of most cities. It is mobile, capable of evasive maneuvers, can defend itself when under attack on its own and right now its value is about as low as it can get.""The dollar can only go up from here." Bernanke announced smugly.
Sunday, May 18, 2008
- Ty Andros
Let us look, briefly at the oil market. When the US invaded Iraq, we were told that $10 oil was right around the corner. Then, as the war went from triumph to tribulation…the oil price rose. Still, the war’s backers believed they had done good. Higher oil prices couldn’t last, they said. The National Review said oil was a “bubble” in ’04, when it was at $50 a barrel. Then, Steve Forbes said it was a “bubble” at $70 a barrel in ’05. Now…a Goldman expert says it will go to $200 a barrel.
Thursday, May 15, 2008
NEW YORK (AP) -- Wall Street advanced Wednesday after a better-than-expected report on consumer prices tempered some of the market's concerns about inflation.
US Labor Dept apparatchiks said consumer prices rose a smaller than expected 0.2% in April, tamed by energy prices, which were unchanged last month. Utilizing an obscure “seasonal adjustment,” Labor figured that gasoline prices actually fell 2% in April, which doesn’t reflect the reality of what consumers were paying at the pump. Furthermore, the IMF’s global food price index rose 43% over the last 12-months, but the US consumer price index for food is only 5.1% higher.
Wall Street cheered the tame inflation rate, reckoning it gives the Federal Reserve more time to peg the fed funds rate at 2%, to jig-up the stock market with massive money injections. But the folks who aren’t fooled by the government’s propaganda on inflation are the American people, whose dollars buy less with each passing month. The inflation tax is the great thief of the middle class.
For the 12-months through April, prices for US imports were 15.4% higher. Yet Wall Street economists massaged the data, and explained that wholesalers and retailers are absorbing the higher costs out of reluctance to increasing prices and driving away customers. Should we trust the inflation statistics conjured-up by government apparatchiks, or rather, place greater faith in the depreciating dollars and cents that flow through the commodity markets each business-day?
Death to the Dollar...
Euro Zone inflation eases somewhat in April, yet well above the 2.0% Y/Y (FXstreet.com)Thu, May 15 2008, 09:12 GMT
EU Advanced Gross Domestic Product s.a. up 0.7% in 1Q; 2.2% up y-o-y (FXstreet.com)Thu, May 15 2008, 09:01 GMT
The dollar wilted against the euro this morning as the single currency soared on news that Germany, Europe's largest economy, had posted its highest quarterly GDP in 12 years.
To see all of this mornings early bird economic data, please follow this link to the FXstreet.com Economic Calendar: http://www.fxstreet.com/fundamental/economic-calendar/ Click on the orange exclamation points to get the news stories for each data point.
Tuesday, May 13, 2008
Monday, May 12, 2008
Thomson Financial News -
Thomson Financial News -
Soon, as credit card delinquencies rise and losses on pools of securitized credit card debt mount, those supplying the credit will finally get wise to the fact they will never get their money back. As a result the market for such debt will dry up even more quickly than did the market for subprime mortgages. Cards will therefore be much harder to come by and will have much lower limits then they do today. Limited to only the cash in their wallets, Americans will finally be forced to dramatically curtail their spending, and the recession will finally gather serious momentum.