Sunday, April 5, 2009


Dark Cloud Over U.S. Jobless Data
Though labor data are considered lagging economic figures, they're closely examined for their insight into consumer behavior.Friday's report indicates the U.S. labor market is still in crisis and a recovery is far off.

The Labor Department also revised the January payrolls figure to -741,000, from 655,000 jobs lost, while February was left unchanged at 651,000. (See "The Depressing Truth About America's Economy.") A toxic mix of falling home prices and frozen credit soured bets on Wall Street.

Looking beyond the official 8.5% unemployment figure, Peter Morici, a professor at the University of Maryland, argued that when factoring in "discouraged" adults who have left the labor force and part-time workers who would prefer to work full time, the real unemployment rate is closer to 17.0%.

A small niggling little detail was also left out of Fridays non-farm payrolls report: The BLS Net Birth/Death adjustment added 114,000 payrolls to March’s data and the Unemployment Rate rose to a new 25-year high. This is the number the government "adds" to the number of jobs lost, so they can make them look better than they appear. That's called rigging the data... Ah, the US Government, standing for truth and justice the world over. Pathetic.

Financial Rescue Nears GDP as Pledges Top $12.8 Trillion
March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

I.M.F. gold sales
For the I.M.F. gold sales to take place [and they have been expected for well over a year now] Congress must first agree to them. Second, the purpose of the sales were originally to shore up the I.M.F. Balance Sheet. The $750 billion injection from the G-20 removes that need now. Aid to the poorest nations replaces that. Gold sales at current prices would achieve proceeds of $116.5 billion. The sales, if approved, could take place over a few years if dropped into the 'open' gold market. This is less that the Central Bank Gold Agreement 'ceiling' at the moment. If sold by auction China and or Russia would be happy to snap up this amount. As Russia is already buying around 5 tonnes a month at the moment, they would love to get 400 tonnes even in one shot as they have pledged to increase their gold reserves to 10% from the current 3% of their reserves.

So in conclusion, I.M.F. gold sales will either have no impact on the gold price [even when they eventually take place] or if another central bank buys will act as a positive factor in the gold market.”

- Julian D.W. Phillips,

G20 - Lies, damned lies and Gordon Brown lies
Gordon Brown has really surpassed himself in creative alchemy. He has turned $100 billion of G20 new commitments into $5 trillion of air!

Gordon Brown has really surpassed himself in creative alchemy. He has turned $100 billion of G20 new commitments into $5 trillion of air!

Take $100 billion of committed new money, add $500 billion of already committed money, add non-committed but discussed amounts of $500 billion and you present a headline lie of $1.1. trillion. But it gets worse, Gordon Brown then claims the largest fiscal stimulus in history of $5 trillion. This is another lie. The $5 trillion contains no new funds but only the IMF’s estimate of the rise in the G20’s government borrowings between 2008 and 2010.

Poor Benjamin Disraeli is turning in his grave when he hears these lies. (The phrase,”lies damned lies and statistics” originates from the former UK prime minister).

As we predicted in our last Commentary, the G20 meeting did not reach any concrete agreements but focused on concocted headline figures. Even if the headline figure of $1.1 trillion had been real, it is a drop in the ocean in relation to the real requirements. The US has already spent or committed $13, trillion which is virtually equal to 2009 GDP. In relation to a world GDP of $50 trillion, the figure of $1.1 trillion is totally insignificant.

More importantly the G20 reached no agreement on what should be their only priority, namely toxic financial assets and derivatives. This is a $1 quadrillion problem , with potential losses of tens of trillions of dollars. The reason why this was not discussed is of course that there is no solution except for printing unlimited amounts of money.

Investors beware - physical gold is your only protection.

Humpty-Dumpty Fiat Sat on the Wall….You Know the Rest!
By Rob Kirby
Explanation: Fiat currencies are all lent into existence - but only in a manner that provides for re-payment of principal, not interest. Thus fiat systems require that the money supply grow – at a minimum rate known as “usury” or interest, in order to pay back the earlier loans plus the interest.

In effect, fiat money or in the vernacular, the US dollar (but really all fiat currencies) is "THE BIGEST PONZI GAME" on the planet. As Martenson points out; the geometric growth curve eventually results in a parabolic "up" phase no matter how low the growth rate is – the only determinant before this outcome results is - TIME.

The premeditated financial fraud and economic tom-foolery we’ve witnessed in recent years; rigging of the price of strategic commodities particularly gold, falsification of inflation data together with obscene amounts of interest rate derivatives to provide cover for engineered lower interest rates in the bond market have only bought time – delaying the point in time when we reach the inflection point where money growth goes PARABOLIC.

Ladies and gentlemen, our TIME is UP!

Ladies and gentlemen, the learned Central Bankers KNOW that historically, fiat currencies have a life span of around 40 years, maximum. The U.S. closed the gold window in 1971 – 38 years ago. This is why the dollar is long in the tooth. This is why all of the king’s horses and all the king’s men – ultimately, will not be able to put the humpty-dumpty-Dollar back together again.

Federal Reserve ENGINEERED credit contractions like we are currently experiencing will continue to inflict great pain on humanity and in the end, this will at BEST – buy time, meager as it may be.

That's why you want to be a “learner” instead of “learned” – and own gold [and silver]. Their value as money and a store of wealth will always represent the same or similar quantity of human labor to extract it from the ground, which is really all that money is or was ever meant to be, and this is why it is called precious.

Analysts see little impact on US banks from mark-to-market rule
April 3 (Reuters) - Analysts see accounting rulemakers' move to allow more flexibility in valuing toxic assets as a small positive for U.S. banks, even as markets around the world greeted the news with much optimism.

"The market's reaction to the Financial Accounting Standards Board (FASB) mark-to-market vote is completely overblown, and the benefits from these changes will have very little impact on financial institutions' accounting practices," analyst Paul Miller at Friedman, Billings, Ramsey wrote in a note to clients.

Morgan Stanley analysts view the new FASB rules as a small positive for large-cap banks as this may reduce the volatility of future earnings and the potential declines in regulatory capital.

However, analysts at both Morgan Stanley and Friedman said banks were unlikely to categorize their assets as "level 3," which denote securities whose values are based entirely on management estimates, from "level 2," where estimates are created based on market prices and inputs.

"Even if companies did move a substantial amount of assets to level 3, we believe that the market would discount any material write-up in asset values," Friedman's Miller said.
In addition, Miller noted that the fundamentals of these banks had not changed as credit deterioration will continue regardless of any mark-to-market accounting rules.

Summers’s $2.7 Million in Speech Fees Included Banks
April 3 (Bloomberg) -- Lawrence Summers, director of President Barack Obama’s National Economic Council, earned more than $2.7 million in speaking fees from companies such as Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc. that later received taxpayer funds in the economic bailout.

The hedge fund D.E. Shaw & Co. also paid Summers more than $5 million in salary and other compensation in the past 16 months, according to a financial disclosure form released by the White House today. Summers served as a managing director at the New York-based firm until December, according to the report.

Summers, a Treasury secretary under former President Bill Clinton, spoke to Citigroup, Goldman and Lehman Brothers Holdings Inc. audiences twice last year. Lehman, which went bankrupt in September, paid Summers $67,500 for an engagement on July 30, the filing showed.

The question that flummoxed Barack Obama
Barack Obama, the World's Greatest Orator (TM all news organizations), didn't exactly cover himself in glory when the BBC's political editor Nick Robinson asked him a question about who was to blame for the financial crisis. Normally word perfect, Obama ummed, ahed and waffled for the best part of two and a half minutes. Here, John Crace decodes what he was really thinking ...

Nick Robinson: "A question for you both, if I may. The prime minister has repeatedly blamed the United States of America for causing this crisis. France and Germany both blame Britain and America for causing this crisis. Who is right? And isn't the debate about that at the heart of the debate about what to do now?" Brown immediately swivels to leave Obama in pole position. There is a four-second delay before Obama starts speaking [THANKS FOR NOTHING, GORDY BABY. REMIND ME TO HANG YOU OUT TO DRY ONE DAY.] Barack Obama: "I, I, would say that, er ... pause [I HAVEN'T A CLUE] ... if you look at ... pause [WHO IS THIS NICK ROBINSON JERK?] ... the, the sources of this crisis ... pause [JUST KEEP GOING, BUDDY] ... the United States certainly has some accounting to do with respect to . . . pause [I'M IN WAY TOO DEEP HERE] ... a regulatory system that was inadequate to the massive changes that have taken place in the global financial system ... pause, close eyes [THIS IS GOING TO GO DOWN LIKE A CROCK OF SHIT BACK HOME. HELP]. I think what is also true is that ... pause [I WANT NICK ROBINSON TO DISAPPEAR] ... here in Great Britain ... pause [S--T, GORDY'S THE HOST, DON'T LAND HIM IN IT] ... here in continental Europe ... pause [DAMN IT, BLAME EVERYONE.] ... around the world. We were seeing the same mismatch between the regulatory regimes that were in place and er ... pause [I'VE LOST MY TRAIN OF THOUGHT AGAIN] ... the highly integrated, er, global capital markets that have emerged ... pause [I'M REALLY WINGING IT NOW]. So at this point, I'm less interested in ... pause [YOU] ... identifying blame than fixing the problem. I think we've taken some very aggressive steps in the United States to do so, not just responding to the immediate crisis, ensuring banks are adequately capitalized, er, dealing with the enormous, er ... pause [WHY DIDN'T I QUIT WHILE I WAS AHEAD?] ... drop-off in demand and contraction that has taken place. More importantly, for the long term, making sure that we've got a set of, er, er, regulations that are up to the task, er, and that includes, er, a number that will be discussed at this summit. I think there's a lot of convergence between all the parties involved about the need, for example, to focus not on the legal form that a particular financial product takes or the institution it emerges from, but rather what's the risk involved, what's the function of this product and how do we regulate that adequately, much more effective coordination, er, between countries so we can, er, anticipate the risks that are involved there. Dealing with the, er, problem of derivatives markets, making sure we have set up systems, er, that can reduce some of the risks there. So, I actually think ... pause [FANTASTIC. I'VE LOST EVERYONE, INCLUDING MYSELF] ... there's enormous consensus that has emerged in terms of what we need to do now and, er ... pause [I'M OUTTA HERE. TIME FOR THE USUAL CLOSING BOLLOCKS] ... I'm a great believer in looking forwards than looking backwards. - UK Guardian

Dominant Social Theme: He's not always the greatest.

Free-Market Analysis: There is virtual Obama-mania in the media throughout the Western world following the G20 summit. The most enthusiasm seems to come from Britain where much discussion has been generated following Michelle Obama's touching of the Queen. (She put her arm around the diminutive monarch.) In the meantime, Western leaders have been praising President Obama himself, with the Russian leader calling Obama his comrade and the French President, Nicolas Sarkozy exclaiming that Obama is someone he can do business with.

But despite the great impact that Obama has had on world leaders, the reality of what has been accomplished and Obama's own personal understanding of what is actually going on remains suspect. He is a very young man for the world stage, with a Harvard law education that apparently doesn't equip one to understand real economics and it is increasingly understandable why he travels everywhere with a teleprompter.