Monday, November 8, 2010

"Throwing money out of a helicopter doesn't do any good."

I returned this morning from a 5-day trip to Orlando, Florida to celebrate my 50th birthday with my family. What a blast!

I return with one overwhelming observation: If there is indeed a world economic crisis, you'd never know by walking around the theme parks in Orlando. There was no lack of patrons at any of the four Disney Parks, Universal, or Sea World.

The weak US Dollar is a boon for foreign travelers. The European Union was very well represented at all the parks, as was Australia. South America was represented by many visitors from Brazil, and quite a large number of Asians were spotted in the parks also.

Americans still find the cash for a pilgrimage to this entertainment mecca in Orlando, Florida, they outnumbered the tourists from overseas by a wide margin. But it is far, far cheaper for a visitor from Germany to visit the Magic Kingdom than it is for the locals.

It cost $82 for one adult to visit JUST the Magic Kingdom for ONE DAY. Our friendly visitor from Germany will pay just 59 Euros and change for the thrill of having their picture taken with Mickey Mouse.

Weakness in the US Dollar has put America on sale for the rest of the World...and it is only going to get cheaper.

When I last posted we were watching the dust settle on the US mid-term elections, and the Fed's QE2 announcement. The dust settled quickly as by mid-morning Thursday last, the Precious Metals were exploding in price as confidence in the Fed and the US Dollar began to evaporate globally:

Germany's Finance Minister Wolfgang Schauble: "It doesn't add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank's printing presses, artificially lower the value of the dollar." (Der Spiegel)

Brazil's Finance Minister Guido Mantega: "It is doubtful the Fed decision will produce any results. Throwing money out of a helicopter doesn't do any good." (WSJ)

Japan's Finance Minister Yoshihiko Noda: "I believe that it is necessary for us to watch developments regarding the U.S.'s economic conditions and monetary policy closely." (WSJ)

China knocks US plan to pump money into system
By Christopher Bodeen
BEIJING (AP) -- The U.S. Federal Reserve's move to pump hundreds of billions of dollars into the financial system will bring greater volatility to markets worldwide, a Chinese official said Monday.

The step will create new waves of cash sloshing in and out of countries in search of short-term profits, vice finance minister Zhu Guangyao told reporters at a news conference to discuss the Group of 20 meeting of major advanced and developing nations in Seoul, South Korea later this week.

The U.S. decision "does not recognize, as a country that issues one of the world's major reserve currencies, its obligation to stabilize capital markets," Zhu said, referring to the global use of the dollar as the currency in which nations store the bulk of their foreign reserves.

"Nor does it take into consideration the impact of this excessive fluidity on the financial markets of emerging countries," he said.

The Feds Biggest Fear
By Greg Hunter’s
Last week’s decision by the Fed to start another round of Quantitative Easing was met with only one dissenting vote by the Federal Open Market Committee. That does not mean everybody in the rest of the world thinks this is a good idea. Any country holding dollars is faced with a decrease in buying power. Some of the most powerful members of the G-20 are highly critical of the Fed’s money printing. Germany, Brazil and China all made negative comments about the Fed’s latest round of QE in a Bloomberg article over the weekend. It reported, “It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said. Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.”

Still, Fed Chief Bernanke is unwavering in the decision to print money to revive the economy. The same Bloomberg article quoted Mr. Bernanke, “Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States . . . A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.” The rest of the world is clearly not buying the idea that the Fed is saving the world economy. So what would make the Fed so defiant in the face of such global criticism? I think the Fed is really worried about mortgage interest rates and declining home prices.

Bernanke Defends Bond Purchases, Predicts Stronger Growth
By Steve Matthews and Timothy R. Homan
Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.

“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said yesterday in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”

“We are showing insufficient stimulus,” Bernanke said yesterday in his remarks, mostly in response to questions. Asset purchases have “the goal of reducing interest rates, providing more stimulus to the economy and, we hope, creating a faster recovery and an inflation rate consistent with long-run stability,” Bernanke said to students.

An acceleration of U.S. economic growth would support the value of the U.S. dollar, Bernanke said.

“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said yesterday. “That is where the fundamentals come from. We are aware the dollar plays a special role in the global economy.”

Bernanke said additional easing will help the Fed achieve its two mandates set by Congress for ensuring full employment and stable prices.

“The unemployment rate, if at all, is coming down very, very slowly,” Bernanke told students at Jacksonville University. “Inflation is very, very low, probably below the level that is healthy for the economy in the longer term.”

Asked by a student if “skyrocketing” commodities prices may threaten his inflation outlook, Bernanke said rising commodities prices are “the one exception” to a broad reduction in inflationary pressures. Overall, excess slack in the economy will make it difficult for producers to push through higher prices to consumers, he said.

“Emerging markets are growing quite quickly,” Bernanke said. “Demand for those commodities is pretty strong. That is going to be a contributor to inflation in the U.S. because it will affect gas prices, for example, and so on.”

Asked by a student about rising gold prices and concerns over inflation, Bernanke said the Fed wouldn’t sacrifice price stability in an attempt to boost growth.

“Let me be very clear: We are absolutely committed to keeping inflation low and stable,” he said. “We have the tools to unwind and tighten policy at the appropriate time. We will honor both sides of our dual mandate.”

Ben Bernanke is a desperate man that is full of sh*t folks. His tools consist of BS spread evenly on sliced bread. The Bernanke Fed's plan for Americans is to force feed them a sh*t sandwich. It becomes more clear by the day that Bernanke's plan to get growth out of the economy is to force business and consumers to spend their savings to stay ahead of rising prices to give the world an "illusion" of a growing economy in America. Bumbling Ben is making a huge gamble that he can buffalo not only Americans, but citizens of the world, that inflation is "good for the economy" and that without it their can be no growth.

In essence Ben is confirming the lie that has been the American economy for the past 40 years: A steadily growing money supply leads to higher prices which lead to higher sales receipts and in turn the ILLUSION of growth. By hiding behind the "supposed" "dual mandates" of the Fed, stable prices and low unemployment, Ben makes the excuse that higher rates of inflation are good. This is pure unadulterated hogwash. The man should be jailed for high treason, along with his tax cheat pal Timmy Geithner.

Beware The Fed Tide
By: John BrowneSenior Market Strategist, Euro Pacific Capital, Inc.
This week, desperation became palpable at the Fed. In both the formulaic statement that accompanied its FOMC policy decision and Chairman Ben Bernanke's unusual (and clumsy) Washington Post op-ed follow up, the guardians of our currency expressed grave disappointment at the slow pace of US economic recovery and emphasized the continued threat of deflation. The Fed is now pledging to defeat this recession using any monetary means necessary. Unfortunately, their embrace threatens to smother our economy.

Despite its paternalistic rhetoric, the Fed really has just a few simple goals: allow for the perpetual expansion of the federal deficit, push up stock prices to create the illusion of wealth, and stimulate consumer spending. To do this, the Fed will hold interest rates near zero for the foreseeable future, and will buy some $600 billion of US Treasury debt by April of next year. Per capita, the commitment to quantitative easing comes to almost $2,000 per American. What's more, if this program fails to pull the economy out of recession, the Fed stands ready to up the ante. This amounts to little more than gambling; but instead of using their own accounts, the central bankers are wagering the nation's savings.

What the Fed is doing, essentially, is forcing consumers to spend their cash hoardings. Until the economic and financial policies of the government change dramatically, those who are tempted to invest their savings within the United States risk increasing regime uncertainty. So, much of our domestic capital is flowing into hard assets and overseas markets.

This will do nothing to help the festering wounds underlying the US economy.

The Precious Metals are loving this admission of fraud by Banana Ben's Fed. They have responded by exploding in price as we have long believed they eventually would. The US Dollar is going to pay a high price for this man and his banks treason. As the World, followed by US citizens, continue to lose confidence in Bumbling Ben and the US Dollar, the precious Metals will accelerate to heights unimaginable going forward. The Silver markets are on the verge of a calamitous detonation as we type.

From Harvey Organ this evening via his Daily Gold And Silver Report :

In silver we witnessed a huge 129 notices sent down for options exercised. This represents 645,000 oz of silver. The total number of silver notices sent down so far total 569 or 2,845,000 oz of silver. There are still 41 notices that still remain to be served for a total of 205,000 oz.

Thus the total number of silver oz standing in this non delivery month of November is as follows:

2,845,000 oz (already served upon) + 205,000 oz (to be served) = 3,050,000 oz (this number is rising)

Our banking cartel are getting quite nervous when they see over 3 million oz standing in a non delivery month. Can you imagine what is going to happen in December?

The shorts in Silver not only have their backs to the wall, and their butts in a sling...but their balls are in a vicelock, and about to be squeezed into oblivion. I don't care how well funded these bullion banks might be, they can not continue, and they can not be allowed to continue to sell unbacked Silver futures contracts into the markets to meet overwhelming demand. The Day Of Reckoning is close at hand.

Gene Arensberg analyzes the big banks in silver futures
Dear Friend of GATA and Gold (and Silver):

Gene Arensberg of the Got Gold Report today published a detailed analysis of the U.S. silver futures market and concluded that the two biggest commercial traders are so big that they indeed are likely manipulating the market at strategic moments, even as he doubts that they are "naked short" silver. Rather, Arensberg thinks the commercial traders that are short in the U.S. futures market are hedged in some way, with "offsetting corresponding net long derivatives in other markets or inventory, or future production/cash flows, or hedging more complex financial derivatives, or perhaps hedging something we have not thought of."

Of course hedging with derivatives might be a form a naked shorting, depending on the derivatives and their issuer. Maybe all this will be illuminated by the recent class-action lawsuits filed in U.S. District Court for the Southern District of New York accusing J.P. Morgan Chase and HSBC of manipulating the silver market.

Arensberg's analysis is titled "U.S. Banks in Silver Futures" and you can find it at the Got Gold Report's Internet site here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Ambac Financial Group Files for Chapter 11 Bankruptcy- Bloomberg

Fed official raises doubts over $600B aid program- AP

Crude oil increases to 25-month high - Bloomberg

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