Monday, October 5, 2009

Tug Of War

U.S. September Job Cuts Exceeded Forecasts; Unemployment Rose

Oct. 3 (Bloomberg) -- U.S. job losses unexpectedly accelerated last month and the unemployment rate reached the highest level since 1983, signaling any recovery in consumer spending and economic growth will be slow to develop.

The Labor Department figures prompted President Barack Obama to say he’s working to “explore any and all additional measures” to spur growth, and underscored forecasts for the Federal Reserve to keep its benchmark interest rate near zero through next year.

“This has the potential to put a big stop sign on the road to economic recovery,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The harder jobs are to get, the harder and longer this road to recovery is going to be.”

Payrolls dropped by 263,000 in September, exceeding the median forecast in Bloomberg’s survey, with losses extending from cash-strapped state and local governments to retailers to builders, yesterday’s report showed. The jobless rate rose to 9.8 percent from 9.7 percent in August, while working hours matched a record low.

The Standard & Poor’s 500 Index closed down 0.5 percent at 1,025.21 in New York trading, losing 1.8 percent for the week. Ten-year Treasury yields rose to 3.22 percent late yesterday from 3.18 percent the prior day. The dollar sank 0.2 percent to 1.4576 per euro at 5:30 p.m. New York time.

Obama called yesterday’s report a “sobering reminder that progress comes in fits and starts” in remarks at the White House after returning from Copenhagen, where he made an unsuccessful bid for Chicago to host the 2016 Olympic Games.

What in the hell is The Obama doing running around the World trying to "win" the 2016 Olympics for Chicago? Aren't there a few bigger issues here in America he should be attending to instead of looking for ways to spend MORE money the country DOESN'T have? This is leadership? Sure, if you're looking to be lead over a cliff!

Why did Rio get the games? Many believe it's because the women there are better looking. No, Rio got the games for the same reason China got last years games. Brazil is going to be a nation of major global influence in the future, it's really that simple. The BRIC nations are for real. Brazil, Russia, India, and China shall soon rule the World from all four corners as the USA looks in from the outside as a wanting banana Republic. Sad, but true folks.

Steady As A Rock
Warren Bevan
The incredible resilience the metals are showing caused the oft cited
commercials to begin to run for cover. For gold they increased long futures
contract by 4,585 and reduced short contracts by 7,791 as gold retraced below
$1,000 late in the week of September 22 to 25. Will they have continued to
cover shorts this past week is a question we will not know the answer to until
next Friday.

In silver the commercials increased long futures contracts by 810 and
increased shorts by 561. For both gold and silver the commercials remain very
short on balance and seem to be starting to run for cover. This will take them
months to do at this rate. They are seeing the strength and are not happy
about it. It’s going to be a very interesting October and November this year.
Stay tuned for what should be the most explosive rally in gold and silver, bull to
date, coming to a trading screen near you very soon.,%202009%20pdf.pdf

The Precious Metals are in the process of completing retests of major breakouts in price last month. Every effort will be made by the Crime Syndicate influencing these markets to stop or slow their inevitable rise from occurring. They will fail miserably. A white night, perhaps China [possibly Russia] appears to be lurking just below $1000 in the Gold market. Both are simply looking to protect the value of the Dollars in their currency reserves. And send a message to the Criminals that have taken over the US Government, "The jig is up fellas."

The New Definition Of The Dollar
By: Jim Sinclair
It is very important that the new definition of what the US currency is now be fully understood.

The US dollar is now under the pressure of the Carry Trade as well as all other factors.

The cost of US dollar simplified is a means between the Libor rate and the shorter term US treasury rates. The size of available funds is quite enormous according to your financial status. As an example, what limit would there be for a Goldman Sachs or JP Morgan?

The operation increases the amount of dollars in transactional supply. Transactional funds are funds in the marketplace versus (as an example) funds being hoarded by US banks now.

The Carry Trade is initiated and then covered by borrowing and shorting the US dollar to guard against downside risk of the basic long.

Carry operations are generally not short term in their outlook.

By borrowing the currency of carry and shorting it the risk is contained by buying the higher yielding currency instrument. If that currency risk is covered, a classic transaction is made.

The Carry Trade is in many cases far from classic, and are used to fund higher risk transactions.

Either way it puts supply into the US dollar transactional market and defined, active and strong trade interest to hold down the value of the carry currency, now the US dollar.

The Carry Trade generally puts a multi-year and extremely bearish factor on the currency selected by the carry traders as the carry currency.

A waning of Green shoots and the growing transparency of MOPE as illusionary encourages the Carry Trade. This nullifies the propaganda that a lower equity market or slow business recover to no business recovery is good for the dollar as a flight to safety.

I am sorry to say, but a US depression would be Christmas for a dollar Carry Trader.

The US dollar controls the price of gold, so therefore the more pressure on the downside of the US dollar, the more upside pressure on gold.

Since the Carry Trade is usually far from classic and seeks to fund higher risk transactions than the classic form, the inviting conclusion is the Carry Trade will now be long gold.

The count of days will not be far off the mark, if off the mark at all.

One thing is for certain: The US dollar is very far from a SAFEHAVEN under its new definition as the Carry Currency of choice..

The Non Safe Haven US Dollar
Jim Sinclair
The US dollar is NOT a safe haven. It is actually one of the most dangerous places to be.

Let’s stop and think about this scenario:

There are mechanics to all things including consideration of the US dollar as a safe haven. Right now that consideration is a knee jerk reaction of glib provincial talking heads who have not considered the process inherent in that definition.

1. US Equities are sold and risk positions closed by US entities. US investors, traders and rank speculators put their funds in short term US Treasuries as they close their positions. What is the net effect on the US dollar? Absolutely nothing at all as no dollars are being sold into the international dollar market. No dollars are being purchased in the international dollar market either. Short rates will move lower on that demand. Nothing in that equation exists to bolster the US dollar.

2. International investors including US traders (in non dollar items) and rank speculators close US and international positions, putting their funds into dollar US Treasury instruments. In that case dollar instruments would be purchased. On balance dollars would be acquired with an upward influence on the US dollar.

However things have changed in the last year:

1. The Carry Trade has targeted the US dollar as the Carry Currency of choice because of the historic low Libor rate and the recognition that, at all costs, increasing rates on the dollar will be leaned against. US rates MUST STAY LOW because of the signs indicating a failure of the US economic recovery. The Carry Trade is no joke. the Carry Trade for the currency of choice is a serious value case of Swine Flu and is very long term.

2. The IMF, the World Bank, the United Nations, China and Russia, as well as many others have all panned the dollar. What makes you think that US Treasury instruments are the only short term treasury instrument investors can buy? Thoughts like that and statements of dollar safe havens from any source, no matter who they are, reflect a PROVINCIALISM all Americans have a hard time with or an unwillingness to think the process out.

Friday was quite interesting as the dollar safe haven was not there on the employment figures.

Believing in the US dollar as a safe haven now could well be a sucker ’s wager.

World Bank President Sees Dollar’s Status Diminishing
The United States should expect the dollar’s status as the world’s primary reserve currency to diminish, according to World Bank President Robert Zoellick. He said that as the roles of the euro and Chinese renminbi continue to expand, the dollar will continue to lose its position as the favored world currency.

“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” Zoellick said on September 28 in a speech at the School for Advanced International Studies at Johns Hopkins University.

Mr. Zoellick said that while the dollar will likely remain a major currency, there will increasingly be other options.

“There is every reason to believe,” he said, “that the euro’s acceptability could grow. The influence of the euro will depend in part upon the competitiveness of European Union countries in future years …. But Euro financing offers a respectable alternative if the dollar is weak.

“Moreover, China is moving toward gradual internationalization of its currency. China is making it easier for trading partners to do business in renminbi—for example, through currency swaps.”

Beijing issued sovereign bonds in renminbi to offshore investors for the first time this month.

In another step toward expanding the role of the renminbi, Chinese officials recently announced that foreign companies are now allowed to list their stocks in China.

As the world removes its confidence from the American economy and invests it in other economies, the American economy will be upended. The U.S. is facing an economic calamity far worse than the stock market crash of 1929; the scale of this financial crisis will be unprecedented.

Mr. Zoellick can see the colossal shift looming on the horizon. “The one thing we can be sure about,” he said in his speech, “is that another upheaval will happen in your lifetimes.”

Fed chief warns greenback's global status at risk
Global reserves shift away from U.S. dollar ; now at lowest level since 1995
Barrie McKenna
Washington — Globe and Mail
Even Ben Bernanke acknowledges that the United States doesn't have an unalienable right to be the custodian of the world's reserve currency.

The U.S. Federal Reserve chief reassured members of Congress Thursday that the dollar's status isn't in immediate danger, but he warned that the situation could change if the country doesn't carefully manage its economic affairs, including reining in its $1.6-trillion (U.S.) deficit.

“If we don't get our macroeconomic house in order, that will put the dollar in danger, and … the most critical element there is long-term fiscal stability,” Mr. Bernanke told the House of Representatives banking committee.

Holding the world's reserve currency means that the Fed essentially conducts monetary policy for everyone else. This puts tremendous power in the hands of the Fed, whose only official mandate is to keep U.S. growth and prices in balance. The catch is that the right economic policies for the United States may not be appropriate for other parts of the world.

There has been much debate of late on the use of the greenback as a reserve currency given the financial crisis and the weakness in the dollar and America's fiscal deterioration.

China, the world's largest holder of reserves with roughly $2-trillion worth, as well as Russia have made noises this year about shifting away from the dollar. Earlier this year, Chinese Premier Wen Jiabao suggested replacing the dollar with a basket of currencies overseen by the International Monetary Fund (IMF).

Mr. Bernanke was drawn into a debate stoked this week by World Bank president Robert Zoellick, who warned that there “will increasingly be other options to the dollar.” Mr. Zoellick, a former top Bush administration official, said the rapid ascent of China and India is reshaping the global economic order “before our eyes,” and so the United States shouldn't take its currency's status for granted.

G-7 finance ministers warn recovery 'fragile'
ISTANBUL (AP) -- Finance ministers from the Group of Seven rich countries warned the recovery remains "fragile" and tried to talk up the U.S. dollar amid fears it could fall farther and disrupt the global economy.

The officials said in their closing statement after meeting Saturday in Istanbul that decisive moves by governments had improved conditions for the world economy and financial markets.

But they warned against "complacency" since growth prospects remained "fragile" and unemployment continues to rise. Figures on Friday showed the U.S. economy shedding more jobs than expected in September, with unemployment at a 26-year high of 9.8 percent.

They agreed it was too soon to withdraw the stimulus measures such as government deficit spending and rock-bottom interest rates that have helped re-start growth.

U.S. Treasury Secretary Timothy Geithner said the United States will unwind the "extraordinary" policy measures it has taken only when conditions stabilize and growth strengthens.

"Planning for an eventual exit is the responsible and necessary thing to do, but we are not yet in the position where it would be prudent to withdraw fiscal and monetary policy support," Geithner said.

"Exit will not be like flipping a switch," he added.

Fragile recovery? This has to be the understatement of 2009. This G7 statement assures the World of only ONE thing. More money will be printed in the near term, and inflation will be massive in the long term.

Geithner and Bernanke have been spewing this "exit" claptrap for weeks now. All predicated on "confirmation" of a recovery. Guys, what if the recovery never comes? What if the recovery is 10 years down the road? What if the recovery is a generation away?

We have to hit a bottom before a recovery can begin. We have not hit the bottom yet. "less bad", "slowing decent", "better than expected", and "signs of growth" do not signal a bottom. This type of nonsense only encourages "hope" that the bottom is in. And as we've said many times before, the bottom comes when all hope is lost...not before and not until.

Nothing the US Government is doing, or has done, is going to "change" a damn thing. Job number one for this administration is to do anything and everything to boost and maintain the confidence of the American people. And what do the first three letters of confidence spell?


Go to the head of the class. Sadly, much like the Romans as their Empire fell, the American Public will be the last to learn that their "way of life" has been destroyed, and will not be coming back. Run for cover the day that realization sweeps the nation. All hell will break loose then.

U.S. Financial System Systemic Failure Approaches
By: Jim_Willie_CB
It is my contention that the US financial structures broke without any remote potential for repair and revival in the summer of 2007. The symptoms became obvious in the summer of 2008 to the slower observers with visible shock waves bathed in crisis. The reactions from shock waves have come since the autumn months of 2008. The system has broken, but the syndicate in control wishes to keep the music going, keep the machinery turning, keep the money flowing, so that they can continue the massive rackets, bury the frauds & counterfeit, cover their tracks, process the bad paper into USGovt coffers, continue to corner the printing press operations, continue to con the USCongress into granting more funds for Goldman Sachs to dictate dispensation secretly, and to continue the endless war whose rivers of blood are matched only by rivers of redirected private contractor fraudulent payments.

Nobody seeks justice and prosecution for over $1 trillion in mortgage bond fraud. Nobody seeks to remove Goldman Sachs and JPMorgan from control posts at the USDept Treasury and USFed respectively. Nobody seeks even to locate the missing $50 billion from the Iraq Reconstruction Fund, or to announce the known location of the stolen $100 billion from the Madoff Ponzi Scheme (it aint $50B and they know its exact hiding place). Foreigners have been very busy since the autumn 2008, as they dismantle the levers, knock down the pillars, block the escape routes, yank the collateral from the paper marketplaces, and otherwise thwart the US-UK schemes.

To claim that the system can be put on proper stable footing is lunatic. To expect that the nation can be recalibrated so as to return to the Good Ole Days of US global dominance and leadership is lunatic. To urge that the economic signposts, megaphones, and billboards be once again guided by policies best described as Bubbly Economic Mythology is lunatic. Yet delusional Americans actually believe the dominant ship at sea can lead as flagship, when it has taken on more water than the Titanic. Since the autumn months of 2008, marred by the Lehman Brothers failure, marred by the Fannie Mae adoption, marred by the AIG adoption, punctuated by a shameful 0% interest rate policy (ZIRP) and a green light for limitless money creation (QE), the United States has lost any semblance of leadership. Instead, its leadership has earned scorn, criticism, and disrespect. The last people on the globe to comprehend the American condition of failure, corruption, and military aggression seem to be the Americans themselves, who live within the USDome of Perception. They suffer from perhaps the worst education levels in the industrialized world, coupled with a co-opted national news media network, clouded by the grandest drugstore medication in history. Debate stirs on whether the US actually controls its own news media. The US does not cover the global Paradigm Shift underway that will change its landscape radically.

The clearest conclusions center on almost nothing put on a sustainable viable course for the nation. Amplification and widened breadth of all that failed cannot serve as the core for revival or recovery, let alone stability. Yet such policies seem the only ones our hapless bank leaders are able to execute. It is a dog returning to gobble his vomit. It is akin to managers urging their worst workers to intensify their efforts, and to join the ranks of management. These Keynesians cannot admit that the central bank franchise model has failed, not to be resurrected. In my view, the debates, the foundations, and the reactions scream two major messages. 1) The system is out of control, with the drivers ramming down the accelerator for even more of everything that failed, for a locomotive within a monetary system based upon illegitimate money. 2) The USGovt finances are heading toward a recognized failure, identified by both a banking system bankrupt seizure and a USTreasury default.

The nation cannot come to grips with the bold stark notion that foreigners control our fate, from their revolt against the USDollar as a global reserve currency, from their revolt in supplying additional credit to the USGovt and USEconomy. The reaction so far to crisis has been to rely more heavily upon the Printing Pre$$, to monetize the debts, and to conceal such operations, all while permitting syndicates to operate with impunity. The revolving doors spin freely that fill job posts at the USDept Treasury, Wall Street firms, USGovt regulatory bodies, and key foundations, warranting charges of incest at best and corruption at worst. Things are out of control!

Inflation - Thank Your Government
By R. D. Bradshaw
My take is that while inflation helped the incumbent politicians to be re-elected and the plutocratic bankers (who understood the inflation game, how it is played and how it was destined to continue for years) to make absolute fortunes (unimaginable wealth, per Volcker), many others lost their futures in this game of using the printing presses and debt to create wealth.

Who was hurt? Man, don’t you get it? Almost everybody in society paid a terrible price. Almost all working people who worked weekly to get a paycheck found increasingly that their paychecks were always too little to take care of their needs. True, the politicians allowed minimum wage increases to many and step increases to government employees. But these bribes and payoffs were always inadequate to meet the demands of living and existing for most people.

That’s the primary reason why women with husbands and families had to quit taking care of their husbands, homes and children and go out into the workplace to find employment. Money manipulations and inflation by the Rothschild Cabal drove them from their homes.

There are actually people who believe that all women should be in the work force and away from their homes, children and families (even beyond those lacking husbands/families and/or those who must work to survive). Of course, the women’s feminist movement has supported that concept. But there are people who have awaken to understand that a child needs its mother and not some stranger at a day care center or be out on the open streets where pedophiles often roam to completely destroy children and their future.

Before WWII and the Rothschild war for profits, most American women were in the home taking care of their families. With the WWII push for women to work in defense plants and the continuing pressures of the family to make ends meet in a highly inflationary society, women had to leave their children and homes to enter the workplace. Now, we see the results.

The Hippie movement of the 1960s was a reaction of young people to this sick trend of society. Now, we have run away children (and pedophile kidnappings) and the homeless all over the streets. And why? Man, don’t you get it? The monetary inflation scheme of the Rothschild Cabal, pushed into reality in the 1930s by Rosenfeldt/Roosevelt, did it.

Frankly, I remember the pre-1941 days. And believe me; the American people have changed profoundly from those days until today. We are simply different people with different values and different attitudes. And why? The stupid irresponsible inflation practices of this nation, which started in earnest in the 1930s, have acted to help change the American people; and will act eventually to destroy this nation.

The deterioration of morality and values in America has brought catastrophic results to the American people. Yet, almost no one today has the foggiest notion of what is going on and has gone on to create the mess the nation is in today.

But there is still one more, sickening, pathetic reality of inflation which almost no one knows about or wants to discuss. Before FDR, people had to save money/gold for their own individual retirements and futures when they were old and grey and could not work. Saving for the future was an important part of life.

There was virtually no welfare in those days (beyond a few county poor farms/homes). People provided for themselves. Saving for the future was a virtue and something that children were taught to respect and appreciate. Well, inflation killed it all (because inflation is inherently contrary to saving money). And with the manipulation of interest rates down, only an idiot will try to save money in a local bank savings account today.

So FDR and his team of inflationists voted in Social Security with the concept that the worker would pay taxes and receive back his insurance proceeds when he was old and grey. Well, too bad, but the snakes running things have screwed the people here with inflation. Then the crooked politicians responded by making COLA. But the Cabal snakes were not to be outdone. They then screwed the people by manipulating inflation statistics to keep COLA payments down. Now, those on Social Security find that they become more and more below the poverty line each year.

Will we ever learn before it’s too late? I don’t think so.

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