Wednesday, April 28, 2010

Deaf, Dumb, And Blind

Perhaps it is just the cynic in me, but I find it a bit "odd" that the S&P debt rating agency that downgraded Greece and Portugal's debt yesterday did so mid morning in the USA when the "debt crisis" is on the other side of the Atlantic Ocean. One is left to wonder if this PIIGS debt downgrade was "timed" to coincide with a huge debt auction by the US Treasury this week, and used to force demand for it up via the inevitable rush to the safe-haven of US Government debt.

Hey, it's just an observation, but shouldn't a downgrade of debt in the Euro zone be announced while the European markets were wide open, instead of just as they were about to close? Considering how this debt downgrade would positively affect those large US banks that have "bet against" Greek debt, the timing of the downgrade announcement makes perfect sense. Toss in the US Treasury debt auction of a record $129 BILLION this WEEK, and it makes even more sense.

The effects of this debt downgrade, by New York based S&P, were as obvious as they were predictable. The equities markets tanked, and the bond market soared. A perfect storm to support the Treasury's bond auctions was created by this debt downgrade. Call me a cynic, yes I am, but the timing of this announcement was no mere coincidence.

Goldman Sachs is up on Capitol Hill getting bashed over the head by Senator Levin and his investigations committee, and the S&P ratings agency [no doubt in the pocket of Goldman Sachs] downgrades European debt [which Goldman Sachs has bet heavily against]. The stock markets [reputedly rigged by Goldman Sachs] go into free fall, and the US Treasury Markets [of which Goldman Sachs is a primary dealer] soar...

The whole day smelled of dead fish. This is until the Gold market suddenly roared to life in response to the debt downgrade and the fear that erupted in the equity markets. It was quite remarkable to witness, particularly on Options Expiration Day. The CRIMEX was left with the smell of napalm in the air as their efforts to beat the Gold market down below $1150 at the open went up in smoke as Gold rose throughout the afternoon into the $1170s. Stunning!

Unfortunately for the tiny Silver market, the CRIMEX goons were able to prey on the white metals industrial demand and beat it down and cap it in an effort to squash the options holders. Their efforts failed for the most part, as Silver was able to close over the key 18 handle. If you ever need proof at how small and easily manipulated the Silver market is, today was the day.

In the Euro, Swiss franc, and the UK pound, Gold and Silver hit new all-time highs yesterday. This is very significant, and will put a floor under Dollar based prices of Gold and Silver. Remarkably, to many yesterday, Gold's rise in the face of a fast rising Dollar was shocking. It should not have been. The Dollar may be, presently, the least ugly of the currency sisters, but it is no safe-haven...nor are it's debt related assets. Gold is quickly becoming the "currency of choice" in the global markets. The Gold cartel's ability to "control" the price of Gold, and Silver, is quickly dissipating. Upon the not too distant announcement of debt downgrades to California's state debt, or it's bankruptcy, the US Dollar will shrivel, and the cap on Gold will be extinguished.

I fully expect the sh*t to hit the fan in the US debt markets by July of this year.

Every effort will be mustered by the CRIMEX goons here to halt Golds ascent. The barometer of TRUTH must not be allowed to burst.

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
-Alan Greenspan, 1966 - “Gold and Economic Freedom” Originally published in “The Objectivist,” a newsletter service of Ayn Rand.

ECB may have to turn to 'nuclear option' to prevent Southern European debt collapse
By Ambrose Evans-Pritchard
Greece’s fortunes were dealt yet another blow as Standard & Poor’s slashed its credit rating to junk status - BB+ - the first time that has happened to a euro member since the single currency was created, pushing yields on 10-year Greek bonds up to a record 9.73pc.

The credit-rating agency also cut Portugal’s sovereign debt ratings by two notches to A-, as the swirling storm hit the country with full-force.

“We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.

“The ECB has been side-lined in the Greek crisis so far but do you allow a bond crash in your region if you are the lender-of-last resort? They may have to act as contagion spreads to larger countries such as Italy. We started to see the first glimpse of that today.”

Mr Cailloux said the ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.

This is prohibited in normal times under the EU Treaties but the bank can buy a wide range of assets under its “structural operations” mandate in times of systemic crisis, theoretically in unlimited quantities.

Mr Cailloux added: “This feels like the banking crisis in late 2008 post-Lehman, though it has not yet spread to other asset classes. The ECB will have to act it if does.”

I hope many of you had the opportunity to watch yesterday's Goldman Sach's inquisition on Capitol Hill. If there's a more arrogant bunch of "financiers" on the planet, please inform me of them. "Conflict of interest" is not in these monkeys vocabulary, nor is the concept of an honest answer. Though all swore to tell the whole truth, obfuscation and stonewalling seemed to be their preferred definition of "the truth". Deaf, dumb, and blind, these banksters "doing God's work" insisted they have done no wrong, swindled nobody, and merely provide for the needs of their "customers". Uh..., whatever.

Goldman Sachs should by hung before the world as the poster children of what is wrong with Wall Street today. Their best interests a greed, and your interests as a customer are irrelevant. May they soon go down in flames.

If you are interested in catching up on yesterdays Goldman inquisition follow the links below from C-span. Bring some popcorn:

Goldman CEO: "Clients shouldn't care what our views are"
Goldman Sachs CEO Lloyd Blankfein told a Senate panel that there was no conflict of interest in their dealings involving mortgage-securities and that they had no obligation to tell clients about their business practices. Yesterday, the Senate Governmental Affairs Subcommittee asked current and former executives about their duty to clients and the ethics of betting against the housing market, despite also selling mortgage-linked securities.
Panel 1: Opening Statements Panel 1: Q & A Panel 2 Panel 3

I don't want to discuss it. For an ultra quick peek at the Deaf, Dumb, and Blind executives at Goldman Sachs, this brief video montage is priceless, Delay, Delay, Delay: Goldman Sachs' Time-Wasting Strategy .

The single most watched highlight of the Goldman inquisition is most likely this clip of Sen. Carl Levin beating one of the Goldman monkeys over the head with one of his "sh*tty" securities:

Video: Sen. Carl Levin beats up Goldman Sachs, drops the S-bomb
Michigan Sen. Carl Levin beat the crap out of a former Goldman Sachs Mortgages Department head this week in one of the more entertaining political exchanges to ever air on CSPAN.

With words, of course. The most colorful of which I can't publish here. But wouldn't you know it -- the good Sen. Levin was merely quoting a Goldman Sachs e-mail.

One poor Daniel Sparks probably really wishes he never got.

For an excellent written summation of the Goldman Sacks inquisition, the Wahington Post summed it up most eloquently:

Two planets collide for three hearings on Goldman
By Steven Pearlstein
It was as if people from different planets had finally come together in the Dirksen Senate Office Building for Tuesday's big hearing on Goldman Sachs and its role in fomenting the financial crisis.
From Planet Washington were the members of the Senate's Permanent Subcommittee on Investigations, aging and slightly rumpled politicians of varying sophistication who had spent several months tutoring themselves about the fine points of synthetic CDOs and who only wanted the aliens before them to acknowledge how much havoc they had wreaked on the markets and the economy.

Their questions sounded more like speeches, their speeches more like questions, as they waved around copies of some of the tens of thousands of revealing documents and e-mails subpoenaed by the committee staff.

Sitting opposite were four brilliant young men from Planet Wall Street, each impeccably tailored in dark suits, white shirts and subtly colored ties, and each sporting that one-day growth of facial hair that holds some mysterious attraction to females in Lower Manhattan. Tutored by Goldman's army of lawyers, the four responded to each question with a question -- "What paragraph are you referring to?" "Do you mean the firm as a whole or just our group?" -- or with a parry suggesting that the question was based on false premises or a misunderstanding of how things worked.

The Fab Four made clear that there was no such thing as a bad deal or a crappy security, only mispriced risks. Nor were there winners and losers, only willing buyers and sellers. Concepts such as fairness, loyalty, shame and greed simply had no meaning on Planet Wall Street.

Finally, after five frustrating hours of talking past each other, everyone simply gave up. A new, slightly older and more accommodating panel of Goldman aliens was ushered in, followed finally by the firm's chief executive. The results were largely the same: The issues were never really joined, the conflicting viewpoints never resolved, the full story never told.

Much of the hearing focused on how Goldman went from having billions of dollars of exposure to the subprime mortgage market in the first half of 2006 to posting big profits from the implosion in that same market by the second half of 2007.

The more benign way to look at this dramatic rebound is that it speaks to Goldman's knack for anticipating the market and its willingness to break from the Wall Street herd. Many of us may be jealous of Goldman's success or suspicious of exactly how it came, but surely we are all better off than if Goldman had remained long on mortgages, tumbled into insolvency and required a big taxpayer bailout.

On the other hand, Tuesday's hearing highlighted two big fallacies in much of the current thinking about financial markets.

The first misconception is that having the ability to hedge positions on everything from copper prices to asset-backed securities is unquestionably good for the markets and the economy. Certainly it's useful if farmers can lock the price of their harvest before they plant their seeds, or if pension funds protect themselves from sudden increases or decreases in interest rates.

But as we learned from Tuesday's hearing, the ease with which a firm like Goldman can hedge against losses from esoteric financial instruments can make an investment bank rather sloppy about the securities it underwrites and distributes, or for which it serves as market maker. Indeed, that seems to be exactly what happened at Goldman, according to the documentary evidence uncovered by Sen. Carl Levin and his subcommittee staff.

Although Goldman analysts and traders had private doubts about the quality of the subprime mortgages coming out of lenders such as Washington Mutual and New Century Financial, the bank was more than willing to underwrite and make markets in securities based on those mortgages. Without the ability to hedge so easily and cheaply, Goldman and other investment banks might have been more careful about the securities they created and traded, and buyers would have been more careful about the ones they bought.

The other big fallacy is that investment banks that underwrite securities are actually standing behind them. What we learned on Tuesday is that when Goldman Sachs lends its good name to a new offering and sends its vaunted sales force out to peddle it to some teachers' retirement fund in Omaha or a savings bank in Bavaria, it doesn't actually mean that Goldman thinks people should buy it.

In fact, there's a good possibility that Goldman knows it's a dog, or suspects that the market is about to tank, and has already lined up a big customer who wants to short the entire issue. And as Goldman sees it, the firm has no legal or ethical obligation to inform those buyers of its views or its conflicting interests.

There was a time when issuers would pay a premium to have Goldman Sachs underwrite their securities, just as there was a time when investors would pay a premium to buy into a Goldman-sponsored offering.

Today, Goldman has fully monetized the value of its reputation, and anyone who pays such a premium is a fool.

My final thoughts?

Did they uncover any "crimes"? Not really, but they'd make you think twice about dong business with these crooks. I don't think Goldman's golden boys did much to prop up the public perception of them, but then 98% of the public didn't even watch it.

Did you see the people in the audience dressed in prison stripes with Goldman executives names on them holding pink signs that said "SHAME" on them? That was the high point of the whole proceedings...LOL!

What interested me is how the Senators looked past the FACT that there was, at the time, a demand for the "junk" CDOs and MBSs. This goes back to the mantra that "interest rates were kept too low for too long". Groups of investors were looking for higher yields on fixed income assets, subprime offered it and had a good record of returns...up until the bubble burst.

Really, the whole financial crisis was brought about because the "old fashioned" way of "earning income" on fixed assets...compounding interest...was extinct because of the [Fed sponsored] too low interest rates. The too low rates forced investors AND savers into riskier investment vehicles, seeking better returns on their money. I was getting .5% interest on my savings account when I emptied it and bought Silver at $6.35 an ounce in 2005. The nations pension funds chose mortgage backed securities...DOINK!

But the point is...a nation's "wealth" comes from it's "savings". A river of "savings" was diverted by Wall Street, with the aid of Government sponsored low interest rates, into assets that were far to risky for "fixed income" investors seeking higher yields than the "savings rate" offered. What, and who, really should be investigated is JPMorgan. They are behind the biggest bond scam in the history of finance. With JPMorgan's help, the government has artificially kept interest rates low. JPMorgan's derivatives book is over $50 TRILLION, and the majority of it is bond derivatives. JPMorgan's left hand has been buying bonds from it's right hand for the last 10-12 years to give the illusion of demand for US Treasuries...forcing/propping up bond prices up and yields down. When that bubble bursts, and the bond market is The Mother Of ALL Bubbles, the Depression that Obama has so proudly "averted" will be upon us.

Monday, April 26, 2010

Fulfilling Prophecy

Gold and Silver performed admirably today in the face of tomorrows CRIMEX options expiration day. Gold largely held in check by the misguided bid under the Dollar on further Euro weakness, was resilient nonetheless in an environment that has been historically violent for the Chalice of TRUTH. Silver closed higher on the day, and outperformed Gold once again in the face of a gargantuan short position on the CRIMEX.

Roughly 190 million ounces of Silver remained short going into today's CRIMEX circus. With only 50 million ounces in the warehouse, the CRIMEX Silver shorts are in for a very rude awakening if just 20% of these shorts come through options expiration seeking delivery next month. And in light of the difficulty in meeting the demand for 25 million ounces of Silver in the March contract, May being a Silver delivery period, could result in some stellar fireworks on the CRIMEX next month. The CRIMEX goons have until the end of April to fill the March delivery demands. Many suspect that the 18 million ounces of Silver withdrawn from the SLV ETF since February 26th were used to cover the demand shortfall in March Silver.

25 million ounces of Gold remained short as the CRIMEX opened the doors today. The CRIMEX dealers only possessed around 2.5 million ounces in their now cavernous warehouse. May is not a delivery month for Gold, but open interest in the April contract stood at 1.4 million ounces going into options expiration. Options holders that hold through expiration are given contracts for Gold deliverable in June. The CRIMEX is in severe shortfall when it comes to potential demand for their goods.

Harvey Organ in his blog, Harvey Organ's - The Daily Gold, explains the significance of each trading day at the end of a delivery month:

4 days prior to the end of a comex month two things happen:

a. the front month goes off the board
b. the options expire at 4 pm .

Thus on April 26.2010 which is 4 days prior to expiry of the silver front month of May, all options expire for silver and these long holders are given silver contracts.
In gold, all options exercised stand for gold itself. Generally, these guys stand and wait for metal at the conclusion of the actual delivery month in the metal that they hold.
(In gold options these guys wait until June)

Even though the contract goes off the board, the front month can still trade as bankers try to goad the buyers of metal to roll or settle in cash so as to not supply the metal.

On the day prior to the end of the trading month, the long holders pluck their cash to pay for the entire amount of metal that they wish to purchase.
This is termed first day notice. The shorts get to see how many physical oz they must delivery.

On the last day of the month, the comex bankers issue delivery notices to the longs as long as they have verifiable bar numbers and exact weight of the bars, and thus starts the delivery process.

Deliveries then begin in earnest on the first day of the month. The cartel bankers have until the end of the month to deliver all metals standing.

In days of past folklore (3 years ago) most metals were served on the first few days as why would the sellers wish to pay insurance costs and storage fees
for the entire month? Once a delivery slip/notice is issued, costs are transferred to the buyers.

Now we see most of the delivery notices are given at the end of the month
and we are witnessing much shenanigans to deliver the said metal.

This is a brief understanding for the delivery process. Print this out for future reference as I always refer to it.

In light of revelations concerning leverage used in the Precious Metals markets at last months CFTC hearing, first notice this month could be quite threatening to the goons at the CRIMEX. Delivery demands that exceed warehouse stocks could potentially light a fire under these markets. The goons "claim" there is no "physical" shortage of either Gold or Silver. They may soon be forced to put up metal, or shut down their nefarious game of musical ingots.

We were greeted this morning by yet another volley of "Greek Debt Fears" boosting the Dollar, and pressuring Gold. This has become about as regular as the rising sun since early this year. Greece has finally asked to be bailed out, and this should quickly extinguish this smokescreen that has kept the Dollars glaring fundamental flaws hidden from view.

The REAL story as it pertains to the US Dollar is China and it's currency the Yuan, NOT THE FALL OF THE EURO. The Yuan's revaluation upwards remains stealthily imminent, and will have a profound effect on the US Dollar and the American economy.

The Fall of the Euro

What is happening in the world is that the various national paper currencies are all losing value, at greater or lesser rates, The solution is to be in gold. Gold is a real good, and no matter how rapidly a nation depreciates its currency, gold will retain its real value.

Unfortunately, even most traders in the financial markets cannot recognize that 2 + 2 = 4. 2010 has been an unusual year for gold. Instead of the previous autumn’s rally carrying into the winter or spring, it has been cut short and turned into a sideways move. Most interesting, even though gold has only been moving sideways an awful lot of gold bugs seen to think that it is going down. Boy are they in for a surprise.

All you need to do is to follow the daily news and you have the answer. A protest by the Greek demonstrators leads to a fall in the euro (in fear of what has just happened, a decision by the Europeans to print money to bail out Greece). This makes the U.S. dollar go up against the euro. So far, so good. But a rise in the dollar is then misinterpreted as a reason to sell gold. The printing of euros may cause the euro to decline against the dollar, but there is no way that it can cause the dollar to rise against gold. Neither is the dollar going up in any real sense. The various national currencies are all pieces of ballast being thrown out of a balloon. They are all declining, some faster than others, but none of them is going up. And the traders who think that the dollar is going up in any real sense are living in a fantasy world.

It is this fantasy which has interrupted the normal early year advance here in 2010. But we can be confident of a return to reality. That is a nice thing about markets. They can be thrown off their true value in the short term by any minor event. But then they resume their basic trend toward their true value. In fact, gold has been going up since Feb. 5 (although so many people keep trying to convince themselves that it is going down). This is disturbing the normal seasonal pattern and is one of the difficulties with which the astute speculator must deal in the short run.

The two basic forces on the gold market today are: 1) the 10 year bullish uptrend. It must always be kept in mind that the trend is your friend, and a large uptrend will telegraph its end by a dramatic bearish pattern (which so far has not appeared); 2) the gap of Feb. 5, 2010 between the point to which gold did pull back ($1050) and the point to which it normally would have pulled back ($1,000). Both of these are powerful bullish forces, and any interpretation of the markets has to take them into account.

Dollar Devaluation, Phase Two
by Larry Edelson
Why all this bullish action in the markets?

Is it really that the U.S. and global economy are picking back up? Or, is it some other
mysterious force at work?

Yes, there’s no doubt that there’s some bottom-bouncing going on in the U.S. economy. But that’s all it is, bottom-bouncing.

On the other side of the world, there are indeed explosive growth areas, namely China and India.
But there’s much more going on in the markets today. There’s another force driving many markets higher that almost no one understands.

What’s happening right now in the markets is a major turning point in the dollar and the world’s monetary system.

First, despite the massive debt problems in Portugal, Italy, Greece and Spain … despite the problems in Europe — the U.S. dollar’s rally against the euro has been feeble at best, and now, the dollar is turning back down in the foreign exchange markets.

Second, Singapore has just revalued its currency higher against the dollar, for the first time ever.

How does a country like Singapore push the value of its currency higher against the dollar?

Simple. It starts selling its U.S. dollar reserves and buying up more of its own currency.

Third, President Obama, Treasury Secretary Geithner, and most definitely, Fed Chairman Ben Bernanke — have all been pressuring China to push its currency higher. Which is the same thing as saying the dollar needs to go lower.

And that means that huge portions of China’s 2.4 trillion stash of U.S. dollars will soon have to be sold to boost the value of the yuan.

Phase Two of the Dollar Devaluation is Here

Consider the following …

In 1947, the official national debt was $247 billion. Each U.S. dollar was worth 1/35th of an ounce of gold.

In 1973, the official national debt was $469 billion. It then took $43.25 to buy an ounce of gold. Or put another way, the dollar was worth 1/43.25th of an ounce of gold.

In 1980, the national debt was $930 billion. The price of gold reached $850 an ounce. In other words, the dollar was worth 1/850th of an ounce of gold.

Today, our official national debt is a whopping $12.78 trillion. That’s …

Thirteen times greater than it was in 1980.

Twenty-seven times larger than our 1973 national debt.

And nearly FIFTY-TWO TIMES larger than our national debt in 1947.
So simple math tells you the following …

If gold were to match the growth in national debt since 1947, it would have to trade at $1,820 an ounce (gold’s price of $35 in 1947 times 52 = $1,820)

If gold were to match the growth in national debt since 1980, it would have to trade at $11,050 an ounce (gold’s price of $850 in 1980 times 13 = $11,050)

It’s hardly surprising when you look at those numbers that gold has much more to go on the upside. Even more so when you consider that the debt figures above do not include another approximately $122 trillion of unfunded liabilities.

To Peg or Not to Peg?
By: Peter Schiff, Euro Pacific Capital, Inc.
The effect of current Chinese currency policy (which, despite Beijing's protests to the contrary, is manipulation pure and simple) is to make the U.S. dollar more valuable and the yuan less valuable. As a result, the benefits of manipulation accrue to Americans, not the Chinese. We get pay raises; they get pay cuts. Americans use their stronger dollars to buy products they would otherwise not have been able to afford. On the flip side, the Chinese people do without products that they otherwise would have been able to afford had their government not transferred their purchasing power to us.

The same effect is experienced with interest rates. In order to manipulate the dollar's value higher, the Chinese government has gobbled up more than $1 trillion of them.The Chinese then loan the dollars back to the U.S. through purchases of government and mortgage-backed debt, which reduces the cost of servicing our massive liabilities.

By the same token, if China were to stop manipulating the dollar higher, it would remove the props currently supporting our dysfunctional economy. American interest rates and consumer prices would soar, and our economy would collapse. Meanwhile, China would experience the opposite effect. Chinese consumer prices would fall, immediately raising living standards for average Chinese workers, whose higher real wages would finally allow them to fully enjoy the fruits of their labor.

What strikes me as particularly dangerous is that no one, not even the Chinese, appear to understand these fundamental dynamics. All of the Shanghainese with whom I spoke last week were unaware that a stronger yuan would be in their own best interest. The way most people see it, a stronger currency is a bullet that China must be prepared to take in order to save the rest of the world from further pain.

And so we watch the strange spectacle of China stubbornly resisting actions from which it will immediately and substantially benefit. In reality, an appreciating yuan is the bitter medicine Americans must swallow if our sick economy is every to regain its health.

When Beijing finally comes to it senses, the transition will be unavoidably disruptive. For China, the long-term growth would far outweigh the short-term shock. America, however, would face a much less certain outcome. There is no question that, for Americans, the immediate effects would be very painful, with the gains only developing with time and prudent decision-making. Still, that does not mean we should resist the process, for the longer it is delayed, the more severe the pain and the longer the road back to prosperity.

Given this reality, why are our political leaders so adamant that China effectively pull the rug out from under our economy? Are they really that clueless? Perhaps they are - or perhaps they are a bit more devious. Perhaps they are using reverse psychology. Maybe they feel that the best way to get the Chinese to maintain the peg is to demand that they remove it. Historically, the Chinese have always resisted outside interference.

Financial reform was on the lips of EVERY talking head today as the Democrats remain determined to jam another piece of bad legislation down the country's throat. This "financial reform" is anything but reform. It is 1300 pages of nonsense aimed directly at perpetuating the fraud that Wall Street and Washington have become.

Gerald Celente, Obama's Financial Reforms Just a Show[MUST SEE VIDEO]

Wall Street regulation is the hot topic today; President Barack Obama gave a speech to the finance industry encouraging them to join him in reforming Wall Street. Gerald Celente says that there is a huge problem with Obamas Financial Reform bill because the same people that got us into this economic mess are the ones advising Obama.

America’s Economic Recovery Is a Rotten Sham
By: Justice_Litle

Maybe we're just fulfilling the old prophecy:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship."

Sunday, April 25, 2010


Reports of Our Recovery Are Greatly Exaggerated
By John Browne
From all outward appearances, it seems that a grim chapter in U.S. economic history has come to an end. Newsweek magazine declares that "America is Back," government statistics indicate revival, and our stock market has put in a rally for the record books (by rate of ascent, not highs - we are still more than 25% below the 2007 peak).

And yet, despite massive federal stimuli and subsidies, American unemployment clings stubbornly to the 10 per cent level, with the "underemployment" rate closer to 20 per cent. The IMF does not appear to buy into Washington's optimism; it projects a "double dip" contraction by the second half of this year. With so much conflicting sentiment, it is difficult for investors to know whether the cup is half-empty or half-full.

Fed Chairman Ben Bernanke says the economy is stable. Many people believe him. But, at the same time as he advertises economic recovery, Bernanke tells us that short-term Fed rates will be kept at zero "for an extended period." Why would he risk runaway inflation by holding interest rates down if the economy were truly rebounding?

Furthermore, despite creating and spending these trillions of new dollars, the Fed continues to resist heavy Congressional pressure to show the public where the money has gone. Rumor has it that some of the money went to institutions outside America. In today's world, can we trust the central bank?

Government pronouncements and the Wall Street media have been castigating Greece for prolific spending and false accounting. Other nations such as Ireland, Spain and Portugal are considered pending dangers to the international monetary system. The fact is that, based on deficit to GDP ratios, the UK (12.6%) lies third behind Iceland (15.7%) and Greece (12.7%)! The United States (10.6%) lies sixth behind Ireland (12.2%) and Spain (11.4%)! The risk of an international meltdown is no longer restricted to banks. It now threatens entire nations, including the great powers. The price of gold reflects just a part of this risk.

Unfortunately, the economic position of the United States and the member states of the European Union, excluding Germany, is not as healthy as our media and politicians would have us believe. The danger is even greater when measured against the relative security and economic success of China, India, Brazil, Australia, Canada and New Zealand (BIC-CAN). In such countries, economic growth and financial responsibility are real. At home, I'm afraid the reports of our recovery are greatly exaggerated.

Fraud, It’s Much Bigger Than Goldman Sachs
By Greg Hunter,
If you think this was the only shady deal dreamed up by Wall Street banks, you have another thing coming. All of the big banks have been selling securities called derivatives for at least two decades. Derivatives are usually bundles of debt. There are derivatives for mortgages, car loans, credit cards, student loans and all types of government debt, to name a few. Derivatives are complex, but when it comes right down to it, you can sum them all up as debt bets.

Derivatives are a $600 trillion market according to the Bank of International Settlements. (Some say the BIS estimate of the derivatives market is actually more than $1,000 trillion!) And here is the best part–derivatives are totally unregulated. That means there are no standards, no guarantees and no public markets. With no public market, there is no real way to price this kind of Wall Street alchemy. You just have to trust the person selling the “security.” Take the Goldman fraud case, for example. If there was a public market, Goldman would have never been able to pack crap loans into a security and sell them. The regulation and guarantees would not have allowed it. After all, regulations, guarantees and a public market make selling derivatives a lot less profitable. That’s why Wall Street has been fighting regulation of the derivatives market for years.

Now, amplify this kind of Wild West market with all the big Wall Street banks and you get something so huge and so packed with junk that you have to suspend accounting rules to keep the system solvent. That is what you have today.

Without unregulated derivatives, we would not have had the financial meltdown, mortgage giants Fannie Mae and Freddie Mac would not have failed, and we would not have problems with Greek debt and other sovereign debt. How can this $600 trillion dollar market be unwound? So far, taxpayers and investors around the world have been picking up the tab. Now it may be Wall Street’s turn to pony up some dough. Don’t be surprised if some of them get taken down by their own toxic financial waste.’s-much-bigger-than-goldman-sachs/

Speaking from the sidelines of the World MoneyShow in Hong Kong, Gloom, Boom & Doom Report mastermind, Dr. Marc Faber, told CNBC:

“I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others,” he remarked, adding, “they’re like an angel. But [the SEC] targeted Goldman as it stands as a symbol of Wall Street.”

Besides, Dr. Faber says, it’s all just an excuse for the Fed to print more money.

“Obama has lost the trust of the people,” he explained further to Kitco. “His approval rating is worse than Bush’s at this stage in the presidency. When people are dissatisfied in a democracy – you go after a minority to target – in the case of America, you go after Goldman Sachs, because it is the symbol of Wall Street and excessive money creation – and there is also a tone of anti-Semitism there.

“Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street.”

He added, “Mr. Obama will do everything he can to get re-elected and that may involve some very bad decisions. He is like a roman emperor; he just gives out bread to the mob and produces games and circuses.”

Overall, Faber holds little hope for financial reform in the US. “The US should have less regulation and not more regulation – that is the origin and cause of the crisis.”

All The President's Men (With Ties To Controversial Goldman Sachs)
While President Obama assails the culture of greed and recklessness practiced by the men of Goldman Sachs, his administration is infested with them. The White House can no more disown Government Sachs than Da Boss in chief can disown Chicago politics.
Obama headed to Wall Street Thursday to demand "financial regulatory reform" — just as the U.S. Securities and Exchange Commission has filed civil suit against Goldman Sachs for mortgage-related fraud.

Question the timing?

Darn tootin'.

There are no coincidences in the perpetually orchestrated Age of O.

Everyone from disgraced former New York Attorney General Eliot Spitzer to analysts at the Brookings Institution and Barclays Capital to the GOP leadership and Rush Limbaugh has noted the reeking political opportunism in the air.

As the New York Post reported Tuesday, the Democratic National Committee immediately bought sponsored Internet ads on Google that direct Web surfers who type in "Goldman Sachs SEC" to Obama's fundraising site. "It's time to hold the big banks accountable," the money-grubbing DNC message bellows.

But just like his crony capitalist predecessor George W. Bush, Obama has relied on Goldman Sachs and Wall Street power brokers to engineer massive government intervention to "rescue" failing businesses with the tax dollars of ordinary Americans.

Strange coincidence that just as "financial reform" comes to a boil on Capitol Hill, a fraud case against Goldman Sachs is announced in an effort to enlist the public's support? Yeah, ...right. Unless this "fraud case" goes nuclear, and morphs into a criminal case with Lord Blankfein doing a perp walk, this "fraud case" will never amount to much of anything more than the token gesture, meant to quell the public's Wall Street outrage, than it presently is. This administration grows more pathetic by the day.

Need more proof? New regulation is NOT what the financial system needs...ENFORCEMENT of regulations on the books ALREADY is what it needs. That, and the Glass-Stegall Act [] needs to be reinstated IMMEDIATELY. The following links to video of the nation's TOUGHEST bank regulator are MUST SEE, and succinctly expose the fraud that is Wall Street today.

William Black Tells The Truth On Lehman's Failure: "A Story In Large Part Of Fraud"[VIDEO]
Lehman’s failure is a story in large part of fraud. And it is fraud that begins at the absolute latest in 2001, and that is with their subprime and liars’ loan operations.

Lehman was the leading purveyor of liars’ loans in the world. For most of this decade, studies of liars’ loans show incidence of fraud of 90%. Lehmans sold this to the world, with reps and warranties that there were no such frauds. If you want to know why we have a global crisis, in large part it is before you. But it hasn’t been discussed today, amazingly.

Financial institution leaders are not engaged in risk when they engage in liars’ loans — liars’ loans will cause a failure. They lose money. The only way to make money is to deceive others by selling bad paper, and that will eventually lead to liability and failure as well.

When people cheat you cannot as a regulator continue business as usual. They go into a different category and you must act completely differently as a regulator. What we’ve gotten instead are sad excuses.

Veteran regulator William K. Black, who says that Wall Street is already breaking the current rules[VIDEO]
BILL MOYERS: The F word?

WILLIAM K. BLACK The F word's fraud in this. And it's the word that explains why we have these recurrent, intensifying crisis.
BILL MOYERS: How is that? What do you mean when you say fraud is at the center of it?

WILLIAM K. BLACK Well, first, when you deregulate or never regulate, mortgage bankers were never regulated, you effectively have decriminalized that industry, because only the regulators can serve as the sherpas, that the FBI and the prosecutors need to be able to understand and prosecute these kind of complex frauds. They can do one or two or maybe three on their own, but when an entire industry is beset by wide scale fraud, you have to have the regulators. And the regulators were the problem. They became a self-fulfilling prophecy of failure, because they, President Bush appointed people who hated regulation. I call them the anti-regulators. And that's what they were.

This is the unvarnished truth: US Government sponsored fraud has destroyed our financial system. The regulators charged with enforcing the regulations either turned a blind eye, or were watching porn:

SEC staffers watched porn as economy crashed The Associated Press

Senior SEC staffers spent hours at work looking at porn websites Los Angeles Times

Sen. Chris Dodd and his Democratic Senate cronies are not interested in fixing our broken financial system, they are determined to perpetuate it by giving the hacks that destroyed it even more power to commit and hide Wall Street fraud.

Obama vs. Wall Street: It's All Politics
President Obama rode into Manhattan today threatening to slay the dragon of Wall Street greed. As usual, theatrics were uppermost. He spoke at the Cooper Union where Abraham Lincoln famously argued against slavery and exhorted his colleagues to work together to resolve their differences, doing “nothing through passion and ill temper.” Would that Mr. Obama’s quest was as laudable or clearheaded. Instead, the president comes to Wall Street demanding passage of a 1,300 page financial reform bill that will almost certainly not prevent another financial meltdown, but that further clogs the regulatory gutters and that might boost the president’s approval ratings.

Think about this: taxpayers are currently funding a Financial Crisis Inquiry Commission, a bipartisan committee formed last year to investigate the causes of the financial meltdown. It is holding hearings, investigating the actions of financial execs and generally rooting around trying to find out what went wrong. Presumably, the effort is aimed at preventing a reoccurrence. The report from this group is due December 15. Wouldn’t it make sense to see what the committee’s finding are before pushing through a massive overhaul of our financial regulations?

No-- it’s all about politics.

And FRAUD. There is fraud from one end of Wall Street to the other. There is fraud from Washington Wall Street and back again. With Goldman Sachs insiders now ensconced throughout the US Government, laws are being changed to empower the criminals from Wall Street that have effectively stolen the government from the people, and trampled the US Constitution in the process. The Democrats are silent on the $994,795 in Goldman Sachs campaign cash that Obama received, while demanding Republicans cough theirs up. Both party's are complicit in the sell-out to Wall Street. Both party's should be purged at the polls this fall, and the criminals they work with to steal the wealth of our nation should be run out of Washington with one way tickets to the nearest federal penitentiary.

What do both parties have in common? Wall Street
WASHINGTON -- Although painting Republicans as pawns of Wall Street is a cornerstone of the Democratic strategy to overhaul financial regulation, financial interests have given campaign money generously to both political parties for years.

"No one party has any firm hold on righteousness here," said David Levinthal, a spokesman for the Center for Responsive Politics, which tracks donations.

In the past two election cycles, when Democrats controlled Congress, the Democrats benefited most. So far in the 2010 cycle, the finance/insurance/real estate sector has given $65.2 million, or 56 percent of its contributions, to Democrats. Republicans have received $51.7 million.

People and political committees affiliated with securities and investment banking interests have been particularly kind to Democrats, giving them $21.7 million, or 63 percent of their donations so far.

Commercial banks, though, prefer Republicans; they've given GOP hopefuls $4.7 million so far, or 54 percent of their total.

According to the Sunlight Foundation, an independent research group, lobbyists with connections to the financial sector have hosted 10 fundraisers this year for members of the Senate Banking and Agriculture committees - six for Democrats and four for Republicans. The two panels wrote different parts of the financial overhaul bill.

The Senate is expected to begin consideration of the financial overhaul bill on Monday.

Several factors go into who gets money, including who needs it and who's on key committees. Securities and investment banking interests, for instance, gave more to Republicans in the 1996 to 2004 cycles, when the GOP controlled Congress.

In recent days, critics and journalists have been asking lawmakers to return certain funds, notably those from Goldman Sachs. Most lawmakers find the suggestion ridiculous.

By Ellen Brown
While the SEC is busy investigating Goldman Sachs, it might want to look into another Goldman-dominated fraud: computerized front running using high-frequency trading programs.

Market commentators are fond of talking about “free market capitalism,” but according to Wall Street commentator Max Keiser, it is no more. It has morphed into what his TV co-host Stacy Herbert calls “rigged market capitalism”: all markets today are subject to manipulation for private gain.

Keiser isn’t just speculating about this. He claims to have invented one of the most widely used programs for doing the rigging. Not that that’s what he meant to invent. His patented program was designed to take the manipulation out of markets. It would do this by matching buyers with sellers automatically, eliminating “front running” – brokers buying or selling ahead of large orders coming in from their clients. The computer program was intended to remove the conflict of interest that exists when brokers who match buyers with sellers are also selling from their own accounts. But the program fell into the wrong hands and became the prototype for automated trading programs that actually facilitate front running.

Also called High Frequency Trading (HFT) or “black box trading,” automated program trading uses high-speed computers governed by complex algorithms (instructions to the computer) to analyze data and transact orders in massive quantities at very high speeds. Like the poker player peeking in a mirror to see his opponent’s cards, HFT allows the program trader to peek at major incoming orders and jump in front of them to skim profits off the top. And these large institutional orders are our money -- our pension funds, mutual funds, and 401Ks.

When “market making” (matching buyers with sellers) was done strictly by human brokers on the floor of the stock exchange, manipulations and front running were considered an acceptable (if morally dubious) price to pay for continuously “liquid” markets. But front running by computer, using complex trading programs, is an entirely different species of fraud. A minor flaw in the system has morphed into a monster. Keiser maintains that computerized front running with HFT has become the principal business of Wall Street and the primary force driving most of the volume on exchanges, contributing not only to a large portion of trading profits but to the manipulation of markets for economic and political ends.

It should be obvious by now that there is no recovery, just financial markets rigged to give the illusion of a recovery. This illusion is essential for the government to keep the public's confidence. This confidence, however, appears to be waning with the recent Pew Research poll revealing that 78% of Americans do not trust their government. And most loathe the US Congress. A token accusation of fraud by Goldman Sachs from the SEC will do little to boost the public's confidence in their government. Much to the dismay of the Oracle Of Orwell, this distrust of the government is likely to intesify as the fraud behind this "recovery" is revealed for what it is: the BIGGEST FINANCIAL SWINDLE in world history.

By Addison Wiggin
Brace yourself for what's about to go down as the BIGGEST FINANCIAL SWINDLE in world history, engineered by none other than Wall Street and Washington, D.C.

How does their scam work? It's a crafty "triple-swindle" just clever enough that most Americans won't even see it happen... until it's too late.

The short of it is, every three days, these flim-flam artists use this strategy to secretly suck wealth out of your savings account.

Nobody's immune.

Call it a fraud. Call it a swindle.

A hoax, a hoodwink, even a bamboozle...

Whatever you do, let's just be clear...

Every word you've heard so far about today's "recovery" is worse than just a big LIE... it's a cover-up for what's easily the largest, most devious wealth swindle of all time.

How does this "swindle" work?

In short, it's a government-backed shell game that cheats you in three separate ways...

First, this "triple-swindle" starts when bureaucrats prop up their fake "recovery" with tax-funded bailouts and huge "cash advances" from foreign lenders...

Second, it goes deeper — as our Fed secretly funnels billions of dollars to foreign lenders then borrows it back again just to keep the scam from collapsing...

And finally, the "swindle" goes public, as Washington openly BUYS BACK their own debt using hundreds of billions more that they called out of thin air.

The government calls these "Scheduled U.S. Treasury Securities Auctions"... you might know them better as "bond auctions"... but either way, they're essentially swap meets for debt.

Mutual funds and pension funds, state governments, Wall Street banks, foreign central banks — they're the buyers. And the seller is our Treasury, who essentially gives away shares of your future savings... in exchange for huge cash loans, redeemable today.

This is the cash our government uses to prop up the fake "recovery" with stimulus and bailouts and "cash for clunkers"... but it's also cash you and your grandchildren will have to pay back down the line... out of the personal savings you thought you were setting aside.

I ask you, how long do you think someone can pile up "cash advances" before a creditor comes and asks for his money... or threatens to cancel the credit line?

Not long at all.

When lenders threaten to expose our "sham recovery" by not showing up with cash to lend... the bond auctions I told you about threaten to fail. At least once this year, that's already happened.

Even one more failed bond auction could signal to the rest of the world that the gig is up... that the U.S. is done for and that it's time to bring the lend-borrow cycle to an end.

With the bailouts and this fake "recovery" already looking like it will cost $23.7 trillion before it's all said and done, you can bet the Fed and the Treasury don't want to let any more failed bond auctions show up in the headlines.

Which is why they've taken their "swindle" to a whole new level... by deciding not to just to fake the "success" of the recovery... but to fake the success of the bond auctions that are supposed to pay for it!


By transferring billions of dollars to our lenders... then paying them interest while we borrow back our own cash! See, for this scam to keep working, it has to look like foreigners still crave our debt.

So the Fed hits a few keystrokes... prints out billions of dollars... then uses a clever buyback strategy to stuff those billions into one of our foreign lenders accounts... so they can keep on pretending they want to buy more of our debt.

What's the strategy the Fed uses to make these huge cash transfers?

It works almost like a money laundering scam. We write the foreign government for big chunks of bad "agency debt" — like bonds sold by failed agencies Fannie Mae and Freddie Mac — then they write us a check, using the cash we just gave them, to buy more of the Treasury's bonds.

Just so long as our government can pretend the buyers still show up.

With the U.S. borrowing up to $100 billion through these bond auctions per week... and another bond auction happening, on average, every three days... that's a lot of opportunity for the Fed to "launder" money in the way I just described.

So far, the Fed has already used this backdoor cash swap strategy to snap up over $640 billion in toxic assets from our foreign lenders... with the implied promise they'll show up at the next bond auction and throw some of that cash back our way.

When that happens, you take a beating twice over — first as all that printed money weakens even more of your saved-up purchasing power... and second, because our Treasury now has to pay interest on the money it borrowed back!

Dimwit finance? You bet.

Banks May Not Be Lending, But They Are Buying Treasurys
Though banks continue to be hesitant to lend to consumers, they have stepped into the market for Treasurys that help finance the government's burgeoning debt.

With credit conditions still tight and Congress likely to clamp down on risk in the financial industry, banks are turning toward the safety of government debt, helping keep interest rates low but still not providing credit to consumers.

"Not only has lending been tight but demand for loans has been pretty small," says Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. "The Treasury market offers banks an attractive alternative."

Surprisingly strong Treasury auctions in March had help from banks, which normally stay away from such events.

Banks snapped up $5.7 billion of the total $34 billion auctioned in 10-year notes and 30-year bonds, providing demand for auctions that many analysts thought would flop. The auctions occurred as inflation fears began to grow and amid signs that investor appetite for the massive supply of government debt was beginning to wane.

At the same time, bank credit fell 5.1 percent in the month and loans and leases dropped 6.4 percent, according to the Federal Reserve.

"The pattern suggests that banks have been starting to put their large cash balances to work, but is not an indication that bank balance sheets as a whole have started to grow," Deutsche Bank said in a research note.

The suggestion is that banks are using Treasurys as a way to get some return on their money that they might otherwise reap from making loans.

That banks would get so involved with long-dated securities came as additional surprise since they aren't usually such active participants at auctions and generally buy mostly short-dated notes. Under normal circumstances banks don't have much interest in keeping long-term rates low as that could compress the yield curve and cut into the profits they could make on lending.

Yet combined with their purchase of agency-backed debt such as mortgages and student loans, banks bought a total of $40 billion from the Treasury in March, according to analysts at Deutsche Bank.

But there's also another less-obvious reason banks could be stepping in to the Treasury market: A type of tacit quid pro quo with the Federal Reserve to keep short-term rates low by helping the government finance its debt through Treasury auctions.

Art Cashin, director of floor operations at UBS, noted after the 30-year auction suspicions among traders about who was doing the buying. In remarks to CNBC, he spoke of "all manner of conspiracy theories floating around. Is the Fed putting on a fake moustache and a raincoat and coming in as an indirect buyer?"

While there's disagreement among analysts whether the actions are part of an explicit pact between the two sides, some suspect a gentleman's agreement in which both sides benefit.

"Banks are stealing money from the public, giving consumers zero percent interest on deposits, and instead of turning over risk to the over-indebted consumers, they're loaning money to the government," says Michael Pento, chief economist at Delta Global Advisors in Parsippany, N.J. "I'm sure it's at the behest of (Fed Chairman) Ben Bernanke-we're going to keep rates low but you must facilitate the Treasury auctions going off smoothly.";_ylt=Av_ZWmelBewK5JvpnG9rIme7YWsA;_ylu=X3oDMTE1bW1ka2VyBHBvcwM2BHNlYwN0b3BTdG9yaWVzBHNsawNiYW5rc21heW5vdGI-?x=0&sec=topStories&pos=4&asset=&ccode

In short...

How the Banks Print Their Money
By: Adrian Ash, BullionVault
...borrowing short and lending long has been a regular license to print money. No matter whether the banks bleed tax-payers or private savers for the ink. And never mind that those two fast-whitening corpses are one and the same.

"In effect," gasps one commentator, "American taxpayers are now subsidizing the profits of Wall Street." He puts the profit at "200 basis points and up."

"The easiest and most profitable risk-adjusted trade for the banks," swoons
another, "is to borrow billions from the Fed...and then to lend the money back to the US Treasury. The imbedded profit – of some 2.5 percentage points – is an outright and ongoing gift from American taxpayers to Wall Street."

But where's the shock? American and British taxpayers have long subsidized Wall Street and the City. Progressively more so over the last 25 years, sure. Without any payback since 1981, in fact. And spectacularly so during the
last 3 recessions, too. Just check out those peaks above!

But 'twas ever so, at least since "Big Bang" in the mid-1980s. Nothing much in this scam is new. Banks print money, quite literally and despite the monopoly that the Fed and Bank of England apparently hold. Only the pace of production has picked up as the number of forgers has shrunk, leaving a small but swollen cartel of banks running the racket. And to keep the cops off their back, they've got tax-payers hostage, and will keep them tied up, for as long as "saving the banks" – instead of just letting them fail – remains the approved political fix.

What if the savers make a run for the door?

Treasury to sell $129 bln in notes, bonds, TIPS
WASHINGTON (MarketWatch) -- The Treasury Department said it plans to sell $129 billion in notes and bonds next week. The U.S. government said it will auction $44 billion in 2-year notes, $42 billion in 5-year notes, and $32 billion in 7-year notes. These amounts are unchanged from last month's auctions. Treasury also said it will auction $11 billion in 5-year Treasury Inflation Protected Securities, also know as TIPS. This is $3 billion more than the last 5-year TIP auction.

Do you still believe the recovery is real? Do you still believe there is legitimate demand for US Government debt? The American financial system is the proverbial "house of cards". One fraud props up another, and then another, and so on, and so on. The barometer of this fraud is the Gold market. It is the number one reason the US Government and the bullion banks have gone to the "edge of the earth" with an elaborate and cocky fraud leveraged to the tune of 100 to one in an effort to stifle Gold. When the Gold market breaks these shackles of fraud, the house of cards will fall swiftly, and America will cease to be a financial and military superpower. The entire balance of the world will shift eastward, as the west crumbles into the depths of the Depression that the Oracle Of Orwell had assured the public had been averted.

After an unusual break from their bi-weekly debt scam, the Treasury will open the auction cupboard again this week, and the Fed will refire their printing presses. $129 BILLION of new treasury Debt are scheduled to be sold this week. Yes, shocking...

Also this week we will witness a Fed interest rate meeting confirming their zero interest rate policy will continue. Options expiration in the Precious Metal futures markets. And our first look at 1st quarter GDP numbers for the phoney American recovery. Gold is sure to be beat on repeatedly this week to assure the TRUTH about the fraud that is America remains silenced. But for how much longer?

Tuesday, April 20, 2010

Simply Irresistible

"If you overstate your assets and understate your debt you used to go to the clink. Now it is called a Jobless Recovery."
-Jim Sinclair

New Signs that Home Prices May Be Stabilizing
A new sign that home prices may be stabilizing-fewer sellers are slashing prices while their homes are on the market.

Twenty percent of sellers slashed prices by an average 10 percent in April, and while that may sound like a lot, it's a good deal less than the 27 percent who did so in April of 2009, all according to real estate website

Granted, sellers still slashed a collective $23 billion dollars from their original expectations, but at least the numbers are headed in the right direction.

"Market stabilization is helping to define fair market value, and this helps agents and consumer price better," says Trulia's Ken Shuman.;_ylt=AqGEmARAIo75D6KLamN5JKS7YWsA;_ylu=X3oDMTE1YnYwa3ByBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawNzaWduc3Nob3dob20-?x=0&sec=topStories&pos=1&asset=&ccode=

I'm sorry, I couldn't resist. "New Signs" in the headlines! This report may be the most pathetic "stretch of the imagination" yet where "signs" are concerned. Considering that this story is sourced out of CNBC, it is no wonder. If the housing market has gotten so bad that the financial news media has to stoop this low on the "less bad scale", maybe hopelessness is just around the corner.

But, hey! Today, we are going to take a look at what I believe, with 100% conviction I might add, is the investment opportunity of a lifetime. Silver. Yes, even at today's prices Silver remains THE INVESTMENT OPPORTUNITY OF A LIFETIME.

Silver is on the cusp of a price explosion right here, right now, today. Investment demand is about to overtake industrial demand and "physical" supply is insufficient now to cover both sides of this supply/demand equation.

By Theodore Butler
A number of recent events have converged that hold the potential to launch the price of silver upward in the near future. It is important that positions be established before, and not after, a big price rise. The public hearing held by the CFTC on March 25 created widespread attention to silver and position limits and the short side concentration. Scams of this type are harder to maintain under widespread scrutiny. The manipulators and regulators have clearly been put on notice. This creates a decidedly inhospitable environment for additional short selling. Without aggressive new paper short selling, the price should fly.

Recent data from the Commitment of Traders Report (COT) suggests that the largest COMEX silver and gold short, JPMorgan, is not increasing its short positions on the impressive price rally from the beginning of February. The COMEX silver manipulation has always been about concentration on the short side. Without it, the price of silver would have been much higher. This is always the litmus test for manipulation; what would the price be if a big concentrated position didn’t exist? In silver, we may be about to learn the answer to that question. It does not matter much if the other commercials sell, if JPMorgan refrains from selling because JPMorgan is the controlling entity in silver. There is no law against selling short, nor should there be. This is quite different, however, from short selling in an overtly concentrated and dominating manner.

Many of the commercials in COMEX silver are actually long silver futures contracts. These traders are those I call the raptors. Since the raptors are long, they have every right to sell if they choose. In fact, they have sold almost 5000 contracts from the price bottom of Feb 5, leaving them with 16,000 contracts net long. Aside from JPMorgan, there appears to be roughly 7 other commercial traders net short COMEX silver, the 2 thru 8 largest short traders. These traders have sold additional silver contracts short on the price rally from Feb 5, to the tune of 7,000 additional contracts. During this time, JPMorgan appears to have bought back almost 3000 contracts. This is a distinct change of pattern for JPMorgan.

Back in September 2009, on a several dollar price rally to $17.50, I reported that JPMorgan was essentially the sole short seller of silver, to the tune of 10,000 to 12,000 contracts. This was clearly manipulative behavior that ultimately led to the price lows of early February. This time, JPMorgan’s behavior is very different. Not only have they not sold on this rally, they have bought back short contracts. This time, the 2 thru 8 commercial traders have been the big new short sellers. As of the most recent COT, these commercial sellers now hold their largest short position since July 2008. My guess is that these commercial short sellers do not realize that JPMorgan may be exiting its concentrated and controlling silver short position, and are putting themselves in grave danger by selling more. Whereas, in hindsight, there was perhaps no real chance JPMorgan could be over run if it were increasing its silver short position, these secondary commercial short sellers may not have JPM’s market muscle and could more easily be overrun. Time will tell.

Less obvious, but even more important have been developments in the physical silver market. A full-blown silver shortage will make a mockery of rational price projections and additional paper short maneuvers. No entity can contain prices during a commodity shortage. A true commodity shortage is always a material problem, not a money problem. Only more of the specific material, not cash, can ease the lack of sufficient supply. And there are no visible government silver inventories at the ready to douse the fire of a physical shortage. In a shortage, the price becomes secondary to timely delivery of a physical material. Yes, there are private holdings of silver bullion and some percentage of those holdings will be available at a higher price. But only the silver owners will decide at what price their holdings are sold.

An eventual silver shortage has always been the lynch pin of my silver analysis. An actual physical shortage is the necessary result of a downward price manipulation. The only question is the timing of such an outcome. For silver, the timing has been longer and more difficult to pinpoint due to the large amount of world inventories accumulated over hundreds of years. Since most of this accumulated silver inventory was previously in the unreported category, it was nearly impossible to determine the total amount or at which prices this inventory was available to the market. As long as material from the unreported category of silver inventory flowed easily to market, any shortage was held at bay. But now there are signs suggesting the silver wolf may be at the door.

Recent withdrawals from the big silver ETF, SLV, continue to suggest there is little available silver bullion remaining in the unreported category of silver inventories. The 9.5 million ounce total withdrawal from the SLV over the past five or six weeks has come on a strong price rally in silver, something out of kilter with usual behavior. Normally investors sell on weakening prices and buy on increasing prices. Thus, the withdrawal of metal from the SLV during a period of price gains suggests the withdrawals are not related to investor liquidation. Instead, the most plausible explanation is that the silver was needed someplace else. Indeed, the SLV metal withdrawals coincided with inflows into the COMEX-approved warehouses and other ETFs. Since it would be less noticeable to deliver silver from unreported inventories the switching from reported to other reported inventories could mean there is no great quantity of silver remaining in the unreported category. If true, this could set off shockwaves in silver. A fight could develop over reported inventories.

Other signs point to this possibility as well. For one, there has been frantic movement, in and out, from the COMEX warehouses. This always suggests tightness of supply to me. Since it would be a lot cheaper and easier to deliver metal already stored in these warehouses, rather than bring new material in, this strongly suggests the silver already held in COMEX warehouses is very tightly-held and not available for sale. Why go to the bother and expense of bringing in new stuff, if you can just deliver the stuff already there? Also, for the past month, JPMorgan has been the predominant deliverer, in its proprietary trading account, of COMEX silver. This may indicate they are very interested in closing out as many short positions as possible. Certainly, JPMorgan can’t be comfortable with all the recent attention they have been receiving as the big silver manipulator. Their silence to this notoriety (as well as their absence from the CFTC hearing) is telling.

Finally, demand for silver has been super-strong. Recent U.S. Mint data indicate a blistering pace of US Silver Eagle sales. For the first three months of this year, the Mint has sold over 9 million ounces of Silver Eagles, more than the full year total in 15 years of the 25 year history of the program. Current production and sales of Silver Eagles is equal to total U.S. mine production, (U.S. is the world’s eighth largest producer). Even after last year’s record sale of almost 29 million U.S. Eagles, the pace of monthly sales this year is 25% greater this year. Contrast that to the sale of U.S. gold Eagles, where the monthly average this year is 24% behind last year’s monthly average. Clearly, demand for silver is very strong.

This combination of strong investment demand and clues that available metal may be limited points to a clash between supply and demand. These are the essential ingredients of a physical shortage. While silver is a manipulated market and you must always be prepared for artificial sell-offs, the price force exerted in a real shortage is something few of us have ever experienced. This is definitely a time to buy and hold.

Silver/Gold Ratio Reversion 3[MUST READ]
Adam Hamilton, Zeal Intelligence LLC, Zeal LLC
Silver’s recent rallying action is starting to catch traders’ attention. Since the end of its latest correction in early February, this white metal has surged 23% higher. It has well outperformed gold, which only climbed 9% over this same 9-week span. And based on silver’s strong historical relationship with gold, odds are today’s silver rally is only beginning. Silver’s gains should accelerate in the months ahead.

The primary reason is silver remains seriously undervalued relative to gold. While it sounds strange to apply valuation concepts across metals, in the case of silver and gold it is very appropriate. The gold action utterly dominates silver traders’ sentiment and hence silver price action. When gold rallies, they get excited and aggressively buy silver. And when gold sells off, they get scared and swiftly dump silver.

Over the decades as silver traders watched gold for silver-trading cues, naturally silver’s behavior converged to mimic gold’s ever more closely. This became a self-fulfilling prophecy. The more that silver traders watched gold and followed its lead, the closer tactical silver action mirrored gold’s. This led even more silver traders to monitor gold and elevated this yellow metal to the dominant driver of silver sentiment.

Silver’s ironclad relationship with gold is easily quantifiable through the Silver/Gold Ratio. The SGR simply divides the silver price by the gold price and charts the result over time. Thanks to late 2008’s epic stock panic, the SGR today is still way out of whack compared to historical precedent. While silver has already recovered greatly relative to the gold price, it still remains nowhere close to rectifying the panic-driven gap.

This persistent-yet-gradually-closing valuation anomaly of silver relative to gold continues to create excellent opportunities for silver traders. As silver continues to normalize with prevailing gold prices, its price will rise driving all silver-related investments including silver stocks much higher.

Is Silver Ready to Surge?
by Sean Brodrick
Main Street may know something that Wall Street’s chattering class doesn’t know. Because while Wall Street always seems to give silver short shrift, mom-and-pop investors are buying silver at a furious pace.

Here’s what I mean: The U.S. Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in the first quarter of this year, the highest amount since the coin made its debut in 1986.

I think that we may be seeing the start of something big in silver

Supply Squeeze. The 2009 numbers aren’t in yet, but in 2008, silver saw its demand decrease by 0.9% to 832.6 million ounces. In fact, both the price and demand for silver have been trending higher for the past 10 years. It’s also good to remember that the average bull market in commodities lasts around 17 years.

Silver miners couldn’t meet demand in 2008 — only about 657 million ounces came out of the ground — a gap of 175 million ounces. So, the world relied on recycling to fill the gap.

Industrial Demand for Silver. Silver is a precious metal, but it’s also an industrial metal — used in everything from flat-screen TVs to zinc-lithium batteries. The industrial uses for silver keep growing and growing. Silver is not only beautiful, it’s malleable, it’s the best conductor for electricity and heat of all metals, it’s reflective, and it’s even an anti-bacterial agent. It’s a chemical catalyst, and approximately 700 tons of silver are consumed every year in the production of plastics.

New industrial uses for silver come along all the time. For example, one new source of silver demand comes from the electronics industry and the use of silver in photovoltaic applications for solar energy panels.

What’s more, silver’s industrial status means that 50% of global production is consumed — used up, never to be seen again — every year.

Silver is trying to break out now. Maybe it will head lower. But if it can break out to the upside the next stop should be its old high at $21.44. And if that overhead resistance shatters, we could see $25 silver pretty shortly after that.

This may sound like pie in the sky, especially because silver is up 21% from its low this year on February 8th, and up a whopping 103% from its low back in November 2008.

But take a longer-term view. The historical ratio of the price of gold to silver is 16 to 1. Moving closer to that would give us a silver price of around $70 an ounce! I’m not saying we’re going there. I’m saying there’s no reason we can’t.

Silver Short Squeeze: Once in a Lifetime Opportunity
By Jason Hamlin
Silver has been performing very strongly over the past month, has broken through previous resistance and continues to move higher despite the large concentrated short position by commercial traders (JPM and HSBC) on the Comex. There are signs that an increasing number of hedge funds and individual investors are demanding delivery of physical silver as the dangers of unallocated paper promises become more widely understood. So far this month, 453 silver contracts have been delivered on the Comex or 2.3 million ounces. There is a similar story with the ETF SLV in which nearly 15 million ounces of silver have been withdrawn since late February.

These funds and investors seem to be following the lead of Greenlight Capital, which shifted their gold position from GLD to physical gold during July of 2009. Passport Capital has also signaled their intention to take physical delivery in its $1.2 billion Global Strategy hedge fund rather than owning the ETF GLD. When funds with this amount of capital begin to shift into a relatively small precious metals market that is overly leveraged by naked shorts, the potential for an explosive short squeeze increases significantly.

Given the massive leverage (as high as 100-1) used by the banks that are naked shorting silver with paper contracts on the Comex, speculation has increased that a group of wealthy investors, Asian traders or funds may look to exploit this long-running manipulation scheme. This would be accomplished by demanding a huge quantity of the physical metal be delivered all at once, thus forcing the naked shorts to scramble to come up with the metal that is known to be in short supply. The short squeeze would then send the silver price blasting dramatically higher. I won’t go off the deep end and give this outcome a high probability, but it is certainly higher than it was just a few months ago and prior to the widespread manipulation exposure given by CFTC whistleblower Andrew Maguire, GATA and most recently the New York Post.

All of this adds up to what could be a once-in-a-lifetime opportunity to generate massive returns in a short time period. If you are not already invested in silver, you just might miss the ride.

From Ed Steer’s Gold & Silver Daily
On Friday, April 17th
Since February 26th... 16.7 million ounces of silver have been withdrawn in ten consecutive tranches. That's 5% of SLV's silver removed by 'authorized participants'... almost ten days of world silver production. What entity [or entities] needed silver that badly, or in such a hurry... and how tight must the supply line be if they have to resort to getting it from SLV? I can tell you this, dear reader, if the silver users who have withdrawn this metal from SLV had to source it from the Comex... I can absolutely guarantee that the price of silver would not be $18.50 spot right now!

On Wednesday, April 21st
...the U.S. Mint had some sales to report. They showed that another 10,000 one-ounce gold eagles and another 609,000 silver eagles were sold. That brings gold eagle sales up to 43,500 for the month... and silver eagles are up to 1,756,000. Silver eagle sales are outselling gold eagles by about 40-1. You can never own too many silver eagles, dear reader.

And that goes for Canada's silver maple leaf as well.

...the Royal Canadian Mint produced 9,727,592 silver maple leafs last year. And that, dear reader, is an absolutely stunning number! It blows the old record right out of the water by many millions. She also went on to say that the mint also produced 569,000 one ounce silver coins in support of the 2010 Winter Olympic Games held in Vancouver earlier this year. There were also hundreds of thousands of other silver coins the mint produced in various levels of silver purity. So Canada has done its part in taking silver off the market.

Monday, April 19, 2010

Has America Reached The Tipping Point?

Despite the usual CRIMEX hyjinx, Gold opened the week basically where it finished last week: undervalued and foolishly sold into the Goldman Fraud Excuse. Goldman Sachs and criminal associates do not hold enough Gold between them to give the "fear" that they "may have to sell gold positions to raise funds to buy a get out of jail card" any credibility. The notion is absurd. In two more days the "revelation" that Goldman Sachs was involved in Wall Street fraud will be what it has always been, an open secret.

Gold investors have been handed a gift of sale prices on the Precious Metals. Silver investors will be greatly rewarded for buying this forced dip in the metals markets. Oil prices will resume their march higher as the realization that gasoline supply is being pressured. All as the US Dollar, once again, resumes it's tumble from it's spindly perch atop a crippled Euro.

The Comex and The Fractional Bullion System
Dave Kranzler, The Golden Truth
As of the most recent COT report, which shows open interest, long and short positions for speculators and commercials (primarily bullion banks), the total net short position for the bullion banks in gold was 244,900 contracts and in silver 51,700 contracts. This translates into 24.9 million ounces of gold and 258.5 million ounces of silver. Here's the problem, as of today, April 15, the total amount of gold reported by the Comex that is available to be delivered, the "registered" inventory, was 2.4 million ounces. In other words, the total paper short position of the bullion banks in gold was more than 10 times the amount of gold available to be delivered. Similarly in silver, the amount of registered silver was 48.9 million ounces. The bullion banks are short 5.3 times the amount of silver available. No other futures-traded commodity, in the history of the earth, has ever had this kind of imbalance between the paper-traded open interest and the amount of the underlying amount of the physical commodity that could be delivered.The key to this scheme is that for each delivery month, a small percentage of the long position, relative to open interest and relative to the short positions, actually stands for delivery. That being the case, the CFTC and the powers that be at the Comex look the other way with regard to the absurd amount of paper gold and silver sold short in relation to the amount of underlying physical gold and silver that can be delivered. It's a complete "fractional" bullion banking system. But what will happen if some large investors - or sovereign funds or foreign Central Banks - decide to take long positions in gold in silver with the intent to take delivery? I expect that eventually this will happen and we'll see the Comex-equivalent of a catastrophic bank run.

Another interesting event has been occuring with SLV. Since February 26 thru today, 16.7 million ounces of silver has been removed from the SLV trust. At first glance, this might not seem unusual. However, a quick perusal of the data over the last two years (data history is available on the SLV website), reveals that this is an unusually large amount of silver to be withdrawn over a 6 week period. What makes it even more unusual is that since Feb 26, the price of silver has risen from $16.46 to $18.41 - nearly 12%. Typically, drops in the gold and silver held in GLD and SLV correlate with price declines and market sell-offs.

We can only speculate about what is going on. However, I would like to point out that JP Morgan is by far the predominant holder of the massive silver short position on the Comex. They are also the custodian (i.e. the keeper of the silver) for SLV. And to add one more layer of intrigue, over the past couple weeks, there has been an unusually large amount of silver which has moved in and out of the Comex warehouses. That data can be tracked here: LINK.

Now, if the financial news media is serious about chasing a fraud story, perhaps some real "investigative reporting" of the CRIMEX, JPMorgan and the SLF Silver ETF would be appropriate. I won't hold my breath.

Is The Cartel Failing? What Next?
Yes, The Fed-led Cartel is under increasing pressure.

Not only is The private for-profit Fed still furiously battling behind the scenes (for a result favorable to them – e.g. No ‘Audit the Fed’ Bill) on the Financial “Reform” Bill still in process in Congress. (See Deepcaster’s “Surmounting The Armageddon Scenario & Cartel ‘End Game’” (02/26/2010) in the ‘Articles by Deepcaster’ Cache at But also Mainstream Financial Media reports are increasingly both damning and revealing. For example:

- A Metals Trader in London claimed his colleague at JP Morgan bragged of their ability to knock down the Silver price at will (Motley Fool/Barker) and his testimony was submitted to the CFTC
- and there was a “liberal” Media report that Gold and Silver Prices are being suppressed (Huffington Post / Lewis)

- and a report that a “Silver Short Squeeze could be imminent” (National Inflation Association / Paul)

- And now the New York Post article

Will The Cartel be unwilling or unable to effect any more significant sustained Takedowns due to the increasing “Sunlight” and increasing Buying of Physical Precious Metals?

Consider that in spite of all the aforementioned, The Cartel still remains Potent. Today’s (April 16, 2010) $25 Takedown shows they can still create a “One Day Takedown Story”.

And we should not fail to recall the fact that The Cartel generated $50 down days for Gold in early December, 2009 and early February, 2010 -- still strong evidence that The Cartel can still affect the Precious Metal prices (albeit with increasing difficulty).

But can they sustain a Takedown for a month, or even a week? We are increasingly skeptical.

And, given their Increasing Media Exposure, do they Dare even attempt to implement another Major Sustained Takedown, say to the $800 to $850/oz level as we earlier forecast?

Last week we wrote, “For us the price performance in the next few days or very few weeks will provide the Answer. A convincing Breakout over the previous nominal high – that is a breakout into at least the upper $1200s/oz for Gold would suffice.

But subsequent events have caused us to conclude that other recent events (e.g. Media Exposure) also support being less concerned about sustained takedowns.

Most Salient, exposure of The Cartel has continued to widen from the New York Post story to quite wide and negative Mainstream Media Coverage. And Goldman Sachs, widely regarded as a leading member of The Cartel has just been accused of Civil Fraud by the SEC for failing to disclose a Conflict of Interest in mortgage securities.

Even the normally Devoutly Mainstream has posted a story: “Gold Trader: Fed Keeping Gold Prices Low” (April 12, 2010).

And well-connected Newsletter writer Dennis Gartman – no friend of “Gold Bugs” -- has recently recommended going long Gold.

But most telling regarding the issue of Cartel Potency are two New Developments:

1. Open interest totals on all Gold contracts shot up from 467,000 on March 30 to 521,000 on April 8. This means the Cartel has met paper Demand with paper Supply. But one wonders how many delivery demands will be made and how many deliveries will actually be made. Reportedly, a major Wall Street Firm recently defaulted on delivery of January mini-Silver Contracts!

2. The Allegation that the London Bullion Market Association has only 1/100 the Physical Gold that they claim they do, is being circulated among the World’s largest Purchasers (or at least they believed they were the world’s largest purchasers of Physical). If the allegations are true they may own only paper promises. This should lead to greatly intensified demands for actual physical.

We conclude that the aforementioned developments, considered together, will tend to put a higher floor under Precious Metals prices, notwithstanding any Cartel Takedown attempts. And of course the Precious Metals’ Upside Potential is enormous.

Consequently, we change our long-standing view that The Cartel would/could take down the price of paper Gold to the $800-850/oz level.

Given recent Media exposure (of e.g. the Allegation that mere paper promises were being sold via the LBMA, not physical Gold), approach to the $800s level would attract too much attention, consequent buying, and especially, consequent demands for delivery of Physical. Therefore, a

Takedown into the low $800s is now highly unlikely.

The Price of Gold Backed FX Reserves
Currently, the IMF figures that Central Banks have 970M oz. of gold and $8,463B worth of FX reserves. 100% cover equates to a price of $8,720.

Gold and Silver Bull Market Phase 2, The Tipping Point is Upon Us!
This tipping point corresponds to the beginning of the second phase of the current bull market in gold and silver. In almost any bull market throughout history, the second phase of the cycle, when the public really becomes aware a bull market is occurring, is the longest phase in duration and also the phase when the greatest gains are made.

Never before in history have all the world's currencies been fiat currencies at the same time. Remember fiat currencies are established by government decree and have no intrinsic value.

Because every currency in the world is a fiat currency, there is no place to run to protect your wealth against government confiscation by continuing to print more and more currency—nowhere to run, except to gold and silver.

The 21st Century Bank Run[exceptional reading]
Now I am aware of some relatively new and modern monetary theories that claim our system is no longer a fractional reserve system at all. Fine, but let's at least agree on some truths. Ever since gold was removed from the modern banking system and "bank credit money" system, the system has operated such that "private bank credit money" is a derivative of fractionally reserved "central bank credit money". CB credit money being the monetary base, physical cash plus reserves held at the Fed.

Whether or not the actual fraction is controlled or regulated is irrelevant to the fact that a fraction exists. It may not be 10%. It may not even be 1%. It may not even have the least bit of constraining function anymore. But there does exist, at any given time, a fraction at which "commercial bank liabilities" circulating in the economy relate to base money or Central Bank liabilities. And it is these Central Bank liabilities that settle imbalances between private banks when clearing their circulating liabilities, the role previously held by gold.

Some of you know exactly what I'm talking about and others, I'm sure, are a little bit lost at this point. But don't pause if you are lost. It will make sense in a moment.

Physical gold, like physical dollars within the "private bank credit money" system, is also fractionally reserved within the gold banking system... what we like to call "paper gold". This in and of itself is not necessarily bad or dangerous. But there is still disagreement as to whether this "paper gold" system is fractional at 100:1... or at 10:1.

You see, when a Bullion Bank issues new paper gold, what we like to call a "naked short", it is constraining itself by making sure it has at least 10% reserves, according to Mr. Christian, in case someone decides to take delivery. Now in the case of a commercial bank, 10% reserves of physical cash may not be such a problem during a modern bank run because new cash can be printed relatively quickly. But with gold this is not the case. So even at 10% reserves, any bank run on the Bullion Banks would be a disaster.

But the real problem comes from what these Bullion Banks consider reserves. You and I obviously realize that the only reserves that will suffice in a bank run are actual physical pieces of gold. But these banks are presently relying on certain "paper gold" items as their "physical reserves".

During the CFTC hearing Mr. Christian admitted that the CPM group uses the term "physical" in a very loose way. That "physical" actually means paper claims and physical combined. So these Bullion Banks are holding paper liabilities from other Bullion Banks and mining operations and calling them "physical reserves". Very circular, don't you think?

So under this loose definition of "physical gold", perhaps Mr. Christian was not lying. Perhaps the banks do constrain their naked shorting with at least 10% paper longs from "credible sources". And if so, I would guess that those credible sources also have 10% "reserves" behind their paper. And so on, and so forth.

Well, I hope you can clearly see the problem here. When the bank run finally begins people and entities will want real physical gold, not paper longs, or liabilities from credible sources.

It all comes down to gold, the actual physical stuff. That's what the people wanted during the bank runs of the 1930's. It is what brought down the London Gold Pool. It is what forced the closing of the Nixon gold window. And it will be what people want this time too. That's the real bank run... to actual physical gold in your own possession.

Bernanke Scolds Congress/Keeps Bailouts Details Secret
By Greg Hunter,
Earlier this [last] week , Fed Chief Ben Bernanke told Congress to basically raise taxes and cut the federal budget. The inference was, if Congress doesn’t get its financial house in order, it will be their fault if the economy tanks. Here is how Bernanke actually said it, “. . . Maintaining the confidence of the public and the financial markets requires policy makers more decisively to put the budget on a sustainable fiscal balance.”

Bernanke also said the federal debt “. . .is already expected to be greater than 70%” of Gross Domestic Product, “. . . at the end of 2012.” And if that is not bad enough, Bernanke said that by 2020, “. . .federal debt would balloon to more than 100% of GDP,” provided taxes are not raised and budgets are not cut. The mainstream media gave this story a great big yawn; but don’t kid yourself, what Bernanke said was a powerful, ominous warning.

All I can say is Ben Bernanke has a huge set of cojones. He is scolding Congress to keep taxes up and spending down to help pay for the gigantic bailout of Wall Street Banks. Meanwhile, the Federal Reserve is fighting tooth and nail to keep from revealing its secret bailout of the same banks during the financial meltdown in 2008!

The Fed was sued by financial news network Bloomberg two years ago. Bloomberg wants the Fed to reveal which banks received $2 trillion in bailout money and why. Bloomberg won the case and the Fed appealed. Bloomberg, also, won the appeal in March 2010! The precedent setting case would force the Fed to reveal the details of secret bank bailouts–including $500 billion given to foreign financial firms!!

In a Bloomberg story earlier this week, lawyers representing the Federal Reserve (which is made up in part by big U.S. banks) said, “U.S. commercial banks will take their fight against disclosure of Federal Reserve (documents) in 2008 to the Supreme Court if necessary . . .” Lawyers representing the Fed say they are worried that if details of trillions of dollars in bailouts are revealed, it could cause another financial meltdown. General Council for the Fed, Paul Saltzman, says, “Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks.” This is another story, with dire implications, the mainstream media is ignoring. (Click here for the complete Bloomberg story)

So, if the secret slimy deals of the Fed are revealed, people will lose confidence in the banks and want their money? If that is the case, and I think it is, we Americans need to know why the Fed printed up at least $2 trillion and handed it out to their banking syndicate.

I think what Bernanke is really saying is, “America get your finances in order and pay for this Wall Street bailout while we (the Fed) continue to bailout our banking buddies in secret.” (My quote) This will all be paid for eventually, one way or another, by U.S. taxpayers. We should at least find out if we got our money’s worth.

Fed Shouldn’t Reveal Crisis Loans, Banks Vow to Tell High Court
April 14 (Bloomberg) -- The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”

Just to give you an idea of the power and arrogance of the Fed, this past week saw a gain of $421.8 billion of outstanding loans and leases. The Fed is secret so they do not have to tell us what is going on. Who received the loans and leases and what was the collateral received for such loans? Our suspicion is that Greece is being bailed out by the Fed or institutions in Europe holding Greek debt are being bailed out. This is the sort of thing that has to be stopped. We know the Fed posts their financials, but many things the Fed is involved in are not posted. We still await an execution of an appeal judgment by the Federal District Court regarding who received $112.4 billion in loans directed secretly through AIG and what collateral was received against such loans. The Fed still refuses to respond. -The International Forcaster

Where is $421.8 bn that went out of Fed Reserve?
By Dr Jeffrey Lewis
The St. Louis Federal Reserve Bank, which documents the inner workings and balance sheets at the nation's central bank, just released new research and data suggesting that the Federal Reserve lent $421.8 billion – with no one knowing exactly where it went.

Where’s the Money?
Each week, the St. Louis Fed releases data regarding the Federal Reserve's activity and public balance sheets. In ordinary times, this data is usually largely ignored, as the mainstream media has little interest in probing into the “small” $5-10 billion changes in the Total Loans and Leases of Commercial Banks. The week of March 24-31 was different, however, as the Federal Reserve made $421.8 billion in new loans, more than it made in the week following the Fed's big moves to combat the financial crisis in 2008!

Is the Fed Bailing out Greece?
Economists are all but left in the dark on the actual operations behind the scenes, and they have minimal data to investigate other than what the Federal Reserve is willing to release to the public. However, the timeliness of this most recent surge in lending activity suggests that the Federal Reserve may be taking a hand in bailing out foreign nations, or Greece in particular, by shoveling funds through commercial banks.

This wouldn't be the first time a bank was used to bail out foreign debtors. AIG, the leading recipient of TARP funds, was used as a gateway to transfer US taxpayer funds to foreign banks owed money. Of course, the ailing insurance company virtually collapsed nonetheless, but long after the funds were delivered from the US Treasury to foreign institutions.

Pull the Alarms!
Rarely are large monetary policy decisions made without an explanation from the Federal Reserve, and even more rarely are they conducted in just one week. To put the recent lending in perspective, $421.8 billion is more than the total increases in lending throughout 2005. There has never in the history of the Federal Reserve been such a massive increase in total lending. And never should anyone expect that lending of this magnitude would be done without any explanation. To put it simply, there is big money moving, and no one knows where it's going, for better or for worse.

Timing is Everything
The huge jump in lending comes just days after the Federal Reserve ends its operations to buy agency and other US debt, and just a few weeks after the looming European debt crisis emerges. Clearly, the timing couldn't be any more interesting, as the Federal Reserve is either indirectly financing international bailouts or continuing to expand the money supply without any prior knowledge.

Gold and Silver Set to Soar
Either explanation for the gross increase in the money supply is a boon for precious metals, which have experienced an even more impressive month as manipulation comes to light. If the Federal Reserve is acting to bail out foreign nations, or to buy up Treasuries or other Agency debt, it should be clear that inflation is sure to run rampant. Head for the hills – unprecedented monetary policy is taking place without any authorization, explanation, or (from what we can tell) causation.$421-8-bn-that-went-out-of-Fed-Reserve-27410-3-1.html

Did The Fed Just (Surreptitiously) Bail Out Europe?[chart]
Posted by Karl Denninger
No, not just Greece - all of Europe. Without Congressional authorization or notice, of course.


Poll: 78 percent don't trust big government
WASHINGTON - Can you trust Washington?

Nearly 80 percent of Americans say they can't and they have little faith that the massive federal bureaucracy can solve the nation's ills, according to a survey from the Pew Research Center that shows public confidence in the federal government at one of the lowest points in a half-century.

The poll released Sunday illustrates the ominous situation facing President Barack Obama and the Democratic Party as they struggle to maintain their comfortable congressional majorities in this fall's elections. Midterm prospects are typically tough for the party in power. Add a toxic environment like this and lots of incumbent Democrats could be out of work.

The survey found that just 22 percent of those questioned say they can trust Washington almost always or most of the time and just 19 percent say they are basically content with it. Nearly half say the government negatively effects their daily lives, a sentiment that's grown over the past dozen years.

"Trust in government rarely gets this low," said Andrew Kohut, director of the nonpartisan center that conducted the survey. "Some of it's backlash against Obama. But there are a lot of other things going on."

And, he added: "Politics has poisoned the well."

The survey found that Obama's policies were partly to blame for a rise in distrustful, anti-government views. In his first year in office, the president orchestrated a government takeover of Detroit automakers, secured a $787 billion stimulus package and pushed to overhaul the health care system.

But the poll also identified a combination of factors that contributed to the electorate's hostility: the recession that Obama inherited from President George W. Bush; a dispirited public; and anger with Congress and politicians of all political leanings.

"I want an honest government. This isn't an honest government. It hasn't been for some time," said self-described independent David Willms, 54, of Sarasota, Fla. He faulted the White House and Congress under both parties.

In the short term, the deepening distrust is politically troubling for Obama and Democrats. Analysts say out-of-power Republicans could well benefit from the bitterness toward Washington come November, even though voters blame them, too, for partisan gridlock that hinders progress.

In a democracy built on the notion that citizens have a voice and a right to exercise it, the long-term consequences could prove to be simply unhealthy — or truly debilitating. Distrust could lead people to refuse to vote or get involved in their own communities. Apathy could set in, or worse — violence.