Gold Drops After Geithner Says Currencies `In Alignment,' Boosting Dollar
By Wendy Pugh
Gold declined after U.S. Treasury Secretary Timothy F. Geithner said that the major currencies are “roughly in alignment,” boosting the dollar and curbing demand for the precious metal as a haven.
Bullion for immediate delivery fell as much as 0.4 percent to $1,341.05 an ounce, before trading at $1,342.82 at 2:53 p.m. in Seoul. The metal gained for the past five weeks, touching a record $1,387.35 on Oct. 14, on speculation that the Federal Reserve may ease monetary policy further, hurting the dollar.
“After a period of weakness the dollar seems to be staging some sort of a minor recovery,” said Gavin Wendt, senior resource analyst at MineLife Pty in Sydney. Shifts in the U.S. currency are the “main driver of the gold price,” Wendt said.
The greenback rose as much as 0.6 percent against a basket of six currencies today. Geithner’s comments were reported in the Wall Street Journal, which cited an interview. Bullion tends to move inversely to the dollar.
“Geithner’s comments are giving a knee-jerk boost for the dollar,” said Takashi Kudo, general manager of market information service at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. in Tokyo.
Group of 20 finance ministers and central bankers meet in South Korea on Oct. 22-23 for talks on how to keep the global recovery on track amid concern that countries may be vying with each other to weaken their currencies. Geithner said that he’ll use the meeting to help “rebalance” the world economy to be less reliant on U.S. consumers, according to the Journal’s report.
http://finance.yahoo.com/news/Gold-Drops-After-Geithner-bloomberg-767753105.html?x=0&sec=topStories&pos=7&asset=&ccode=
Tax Cheat Timmy Geithner has ZERO credibility. He opens his mouth and sh*t falls out. Currencies are in alignment? Because Timmy Geithner says so? I guess that means the Chinese Yuan is fine where it is then, eh Timmy? What a load of crap. The weak hands are still in Gold and getting flushed as I type...good riddance to you all! If you are looking for a reason to sell, you will always find one...Little Timmy Geithner running off at the mouth is hardly a reason to sell your Gold...and it is even less of a reason to buy US Dollars. Please note that the Japanese Yen REMAINS at a 15 year high, despite Timmy's babbling...this will all be over by the end of the G20 blame fest tonight and tomorrow.
And let's not forget the foreclosure fraud, even if the banks and the US government wish you would...
This note from Jim Sinclair says it all:
Dear Comrades In Golden Arms,
The weakness that the shorts on the Comex have taken advantage of is the many comments, almost every day, by highly placed people around the world stating that the Fed is making a huge error by utilizing QE.
The dollar today has not rallied enough to account for the gold price decline. The 30Year Treasury Bills indicate that economic news is not a factor.
What you need to focus on is the fact that the Federal Reserve has no other option but to go with QE to infinity.
QE never ended, it only became camouflaged through the methods it was utilized such as guaranteeing everything in sight.
What the market anticipates is more on the down low commentary by the Fed concerning QE. Remember that the Fed sees things within the US financial system that even other governments cannot such as the real risk of the rollover of securitized mortgage debt OTC derivative instruments.
You are witnessing the beginning of a period in the gold price that will be marked by totally outrageous volatility. I have told you many times I have no doubt whatsoever about gold trading at $1650.
Historically I have done well with price objectives on gold. I will do well this time around. If I had any concern it would be that I am much too conservative in my objectives.
Bert Seligman had a great lesson to teach when he said "The weak succumb, the strong survive."
From me personally to you, stand strong!
Regards,
Jim
Gold is on sale... I fully expect the Asians and Indians to take full advantage of these sale prices tonight.
Fed's Bullard: Any easing may be in $100B steps- Reuters
Fannie and Freddie may need another $215B: FHFA- Reuters
The Dollar is strengthening? LOOOOOOOOOOOOOOOOOOOOOOOL
Thursday, October 21, 2010
Wednesday, October 20, 2010
Forclosure Fraud: It's Worse Than You Think
The only thing surprising in today's Precious Metals bounce back was how small it was relative to the drubbing the Dollar took. Today the Dollar gave back virtually all of it's misbegotten gains from yesterday, yet Gold only reclaimed 1/3 of it's losses...Silver only a few cents.
Are Precious Metals investors and traders that afraid of the bullion cartel? And if so, why?
Jim Sinclair said it best late yesterday:
"Those that sold gold today based on a dollar rally are fools being foolish. TA this time around will bury the many."
I told you yesterday the Timmy [Pinocchio] Geithner is full of sh*t:
Geithner Weak Dollar Seen as U.S. Recovery Route Versus BRICs
By Ian Katz and Simon Kennedy
For U.S. Treasury Secretary Timothy F. Geithner, a weaker dollar may now be in the national interest.
The dollar has dropped more than 7 percent since Aug. 27, when Chairman Ben S. Bernanke signaled the Federal Reserve is prepared to ease monetary policy. Where once such a decline may have been met with resistance from the U.S., Geithner may now be tolerating it as a way of bolstering the recovery.
Companies from Costco Wholesale Corp. to Deere & Co. have credited the weaker dollar for giving their earnings a boost, and the currency’s slide has helped propel the Dow Jones Industrial Average above 11,000 for the first time since May. Higher stock prices in turn are bolstering consumer and business confidence. The danger is that the decline gets out of hand, fueling increases in the cost of living over the long term and prompting investors to avoid U.S debt.
“In an era where deflation pressures appear to be the greatest risk, growth is below trend and the U.S. wants to boost exports, why would they not want” a weaker dollar, Jim O’Neill, chairman of Goldman Sachs Asset Management in London, said in an interview. “The answer is when it becomes a problem for financial markets. Until then it’s a straightforward strategy.”
A weaker dollar can help the economy by making U.S. products less expensive in overseas markets and by boosting the overseas earnings of U.S. companies in dollar terms. As the cost of imports rises, American consumers switch to U.S.-made goods, and domestic producers face less competition from abroad.
“The dollar is going to go down,” Martin Feldstein, a Harvard University professor who was chief economic adviser to President Ronald Reagan, said Oct. 7 in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene. “It will cause Americans to shift from imported goods into domestic services. All of that will strengthen the economy.”
Companies in the S&P 500 that get more than half of their revenue internationally have returned about 5.1 percentage points more than those whose sales comes mostly from the U.S. since the start of September, according to data compiled by Bloomberg.
A weaker dollar is “a positive for equities as long as it’s not viewed as a collapse of the dollar,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion.
Matt McCormick, portfolio manager at Cincinnati-based Bahl & Gaynor Inc., which manages $2.9 billion, said the dollar’s weakness is benefiting companies he owns with “significant” overseas revenue, including McDonald’s Corp., Procter & Gamble Co., Intel Corp. and Qualcomm Inc.
“A low dollar will be with us for longer than most people expect,” he said.
http://www.bloomberg.com/news/2010-10-19/geithner-weak-dollar-policy-seen-as-path-to-recovery-in-contest-with-brics.html
Yesterday's meager boost in Chinese interest rates was today seen for what it was...a bad sign for the US Dollar. It was in no shape or form a positive for the national toilet paper. And Geithner's empty vote of confidence in the Dollar was an even bigger joke than I made of it.
And as I suggested, yesterday was a strong buying opportunity in the Precious Metals. However, unless and until Gold prices jump resistance near 1363, traders must remain cautious on the bull side. Volatility remains explosive, though recent precedence suggests we may see another new high in Gold very shortly. The mushrooming "forclosuregate" story should see to that.
Forclosuregate is no imaginary threat to the financial system. IT IS THE BEGINNING OF THE END OF THE FINANCIAL SYSTEM. Containment is paramount as we head into the elections on November 2. Unfortunately for the government, this story has gone viral, and containment is now virtually impossible. The government's worst fears have been exposed as the butterfly bandage on this sucking chest wound, formally known as the "subprime crisis", is peeled back to reveal the true depths of it's threat to the financial system.
If you can find the time, it would be well spent perusing these stories regarding"foreclosuregate":
The Second Leg Down of America’s Death Spiral
By Gonzalo Lira
I swear to God Almighty: Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing.
Last Friday, Bank of America announced that it was suspending all foreclosure proceedings, presumably until further notice. Other banks have already suspended foreclosures in a whole truckload of states. A nationwide moratorium on foreclosures might soon happen—which would be a big deal: Global Financial Crisis, Part II—Longer, Wider and Uncut.
“It’s oozing from where?”
“Man, you guys are fucked.”
But the mainstream media—surprise-surprise—has downplayed the whole shebang. They’re throwing terms out there into the ether, but devoid of context or explanation: “Robo-signings”, “foreclosure mills”, forged signatures, “double booking”, MERS—it’s confusing as all get-out.
So the mainstream media just mentions it casually—“and in other news tonight . . .”—like it’s no big deal: A couple-three lines, lots of complicated, unfamiliar terms, an attitude like it’s a brouhaha over paperwork of all things!—and then zappo-presto-change-o!: They’re showing video footage of a cute koala nursing in the arms of a San Diego zookeeper.
But even the koalas know that something awful is heading America’s way. Smart little critters, they’re heading for the treetops, to get away from this mess.
So what the hell is going on with the God forsaken mortgage mess in the United States?
It’s got a lot of bells and whistles, but it’s basically quite simple: It’s all about the fucking Mortgage Backed Securities (MBS). Again.
http://gonzalolira.blogspot.com/2010/10/second-leg-down-of-americas-death.html
TIME TO BREAK UP THE TOO-BIG-TO-FAIL BANKS?[MUST READ]
by Ellen Brown
Looming losses from the mortgage scandal dubbed “foreclosuregate” may qualify as the sort of systemic risk that, under the new financial reform bill, warrants the breakup of the too-big-to-fail banks. The Kanjorski amendment allows federal regulators to pre-emptively break up large financial institutions that—for any reason—pose a threat to U.S. financial or economic stability.
Although downplayed by most media accounts and popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits.
There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.
Federal regulators now have the tools to take control and set things right. The Wall Street giants escaped the Volcker Rule, which would have limited their size, and the Brown-Kaufman amendment, which would have broken up the largest six banks outright; but the financial reform bill has us covered. The Kanjorski amendment—which slipped past lobbyists largely unnoticed—allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability.
http://www.webofdebt.com/articles/breakup_banks.php
"This Is Criminal": Foreclosure Process "Rife with Fraud," Barry Ritholtz Says
"The whole chain of the foreclosure process is rife with lies, with false affidavits, false testimony -- with fraud," Ritholtz says. "This is criminal and these people need to go to jail."
Unlike some observers, who believe banks only appear guilty of what The WSJ editorial page called "sloppy work," Ritholtz says problems in the foreclosure process go far beyond mere technicalities.
"This is more about forgetting to dot an ‘i' and cross a ‘t'," he says. "This is a systemic approach to foreclosure where the rule of law completely trampled on and property rights have been totally ignored."
While some expert fret the impact a foreclosure moratorium will have on the housing market and/or bank balance sheets, Ritholtz says something far more fundamental is at stake.
"This is about property rights," he says. "This is about very sacred rights...and the respect for the rule of law" - or the lack thereof.
http://finance.yahoo.com/tech-ticker/%22this-is-criminal%22-foreclosure-process-%22rife-with-fraud%22-barry-ritholtz-says-535513.html?tickers=JPM,WFC,BAC,PNC,MET,XHB,FNM
Foreclosuregate - NOT simply "lost" paperwork!
By Karl Denninger
http://www.youtube.com/watch?v=yXrkubSA2SA&feature=player_embedded
FRAUDCLOSURE WILL DESTROY PENSION FUNDS 10-12-2010
Say goodbye to your Pension Funds for me, will ya!
There are no "lost notes" ladies and gentlemen.
Either: * The Trustee never got the notes, in which case he filed this certification and in doing so committed fraud upon the MBS investors, OR * The Trustee has the notes and doesn't want to produce them because there is something in there that could lead to the foreclosure being dismissed (E.g. TILA violations) or the Trustee being sued (e.g. he took the note even though it violated their representations and warranties relating to loan quality), in which case the fraud is upon the court in the instant case.
Pick one, but either way someone has been defrauded.
It is literally impossible for it to be otherwise.
When will the damn media and prosecutors start STOMPING on this crap?
http://www.youtube.com/watch?v=8YlWiPveOaE&feature=related
Armageddon: What Democrats Are Hiding & Why They Are Really Scared
In June, a conversation took place in a hotel restaurant in Washington. As a latecomer to the conversation, it was easy to pick up that the topic that was the $165 billion union pension bailout bill introduced by Sen. Bob Casey [D-PA] in March.
Upon introductions, one of the individuals stated, “this is Armageddon.”
When asked for clarification, the person explained about the accounting rules developed to shore up underfunded union pensions and the dates when those union companies affected would have to assume their liabilities had the DC crowd (in particular, the Democrats and the unions) in a panic.
Yesterday, the Washington Examiner’s Mark Hemingway gave a good breakdown of how bad it could get for Democrats and their union bosses:
On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans. Unless FASB is persuaded otherwise, the rule takes effect Dec. 15.
There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total liability.
Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four companies.
What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked analysts last year when it disclosed its multiemployer pension liabilities more than doubled in a year to $1.2 billion.
[snip]
FASB’s new rule could effectively wipe out the paper worth of many companies, especially in the trucking and construction industries. Once banks and creditors are aware of these staggering pension liabilities, it will make it nearly impossible for union businesses to get loans, credit lines or bonding.
The effects of having to meet reality will almost certainly cause a significant drop in stock prices for those companies affected and, as a result, may cause a large ripple effect throughout the rest of the economy. In those cases where the liabilities exceed the value of the unionized companies, it is entirely possible many of those companies will go out of business, laying off tens of thousands of employees, and further causing a drop in economic activity.
http://www.redstate.com/laborunionreport/2010/10/19/armageddon-what-democrats-are-hiding-why-they-are-really-scared/
These are just a few stories and presentations that represent the "truth" about forclosuregate.
[I slipped in the last story about labor union pension bailouts because it is a significant story that is not getting the attention it deserves...and pension funds are going to get whacked by forclosuregate.]
To really understand the depths of the problem for the banks, consider their insolvency is about to be exposed because of their own errors. If the New York Fed is looking for a payback on bad mortgage derivatives, consider that the Federal Reserve may be the most insovent bank of them all. And who bails out the Fed?
Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages
Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.
A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.
Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.
“We now are in a position where we have to start a clock ticking,” Patrick, who is based in Houston, said today in a telephone interview.
If the issues aren’t fixed within 60 days, BNY Mellon should declare Countrywide in default on its servicing contracts, Patrick said.
http://www.bloomberg.com/news/2010-10-19/pimco-new-york-fed-said-to-seek-bank-of-america-repurchase-of-mortgages.html
Do you believe that Bank Of America has $47 BILLION to buyback those mortgage derivatives?
Bank Of America is the next Enron.
Continue to buy the Precious Metals dips in price at support.
Are Precious Metals investors and traders that afraid of the bullion cartel? And if so, why?
Jim Sinclair said it best late yesterday:
"Those that sold gold today based on a dollar rally are fools being foolish. TA this time around will bury the many."
I told you yesterday the Timmy [Pinocchio] Geithner is full of sh*t:
Geithner Weak Dollar Seen as U.S. Recovery Route Versus BRICs
By Ian Katz and Simon Kennedy
For U.S. Treasury Secretary Timothy F. Geithner, a weaker dollar may now be in the national interest.
The dollar has dropped more than 7 percent since Aug. 27, when Chairman Ben S. Bernanke signaled the Federal Reserve is prepared to ease monetary policy. Where once such a decline may have been met with resistance from the U.S., Geithner may now be tolerating it as a way of bolstering the recovery.
Companies from Costco Wholesale Corp. to Deere & Co. have credited the weaker dollar for giving their earnings a boost, and the currency’s slide has helped propel the Dow Jones Industrial Average above 11,000 for the first time since May. Higher stock prices in turn are bolstering consumer and business confidence. The danger is that the decline gets out of hand, fueling increases in the cost of living over the long term and prompting investors to avoid U.S debt.
“In an era where deflation pressures appear to be the greatest risk, growth is below trend and the U.S. wants to boost exports, why would they not want” a weaker dollar, Jim O’Neill, chairman of Goldman Sachs Asset Management in London, said in an interview. “The answer is when it becomes a problem for financial markets. Until then it’s a straightforward strategy.”
A weaker dollar can help the economy by making U.S. products less expensive in overseas markets and by boosting the overseas earnings of U.S. companies in dollar terms. As the cost of imports rises, American consumers switch to U.S.-made goods, and domestic producers face less competition from abroad.
“The dollar is going to go down,” Martin Feldstein, a Harvard University professor who was chief economic adviser to President Ronald Reagan, said Oct. 7 in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene. “It will cause Americans to shift from imported goods into domestic services. All of that will strengthen the economy.”
Companies in the S&P 500 that get more than half of their revenue internationally have returned about 5.1 percentage points more than those whose sales comes mostly from the U.S. since the start of September, according to data compiled by Bloomberg.
A weaker dollar is “a positive for equities as long as it’s not viewed as a collapse of the dollar,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion.
Matt McCormick, portfolio manager at Cincinnati-based Bahl & Gaynor Inc., which manages $2.9 billion, said the dollar’s weakness is benefiting companies he owns with “significant” overseas revenue, including McDonald’s Corp., Procter & Gamble Co., Intel Corp. and Qualcomm Inc.
“A low dollar will be with us for longer than most people expect,” he said.
http://www.bloomberg.com/news/2010-10-19/geithner-weak-dollar-policy-seen-as-path-to-recovery-in-contest-with-brics.html
Yesterday's meager boost in Chinese interest rates was today seen for what it was...a bad sign for the US Dollar. It was in no shape or form a positive for the national toilet paper. And Geithner's empty vote of confidence in the Dollar was an even bigger joke than I made of it.
And as I suggested, yesterday was a strong buying opportunity in the Precious Metals. However, unless and until Gold prices jump resistance near 1363, traders must remain cautious on the bull side. Volatility remains explosive, though recent precedence suggests we may see another new high in Gold very shortly. The mushrooming "forclosuregate" story should see to that.
Forclosuregate is no imaginary threat to the financial system. IT IS THE BEGINNING OF THE END OF THE FINANCIAL SYSTEM. Containment is paramount as we head into the elections on November 2. Unfortunately for the government, this story has gone viral, and containment is now virtually impossible. The government's worst fears have been exposed as the butterfly bandage on this sucking chest wound, formally known as the "subprime crisis", is peeled back to reveal the true depths of it's threat to the financial system.
If you can find the time, it would be well spent perusing these stories regarding"foreclosuregate":
The Second Leg Down of America’s Death Spiral
By Gonzalo Lira
I swear to God Almighty: Mortgage Backed Securities are America’s Herpes—the gift that keeps on oozing.
Last Friday, Bank of America announced that it was suspending all foreclosure proceedings, presumably until further notice. Other banks have already suspended foreclosures in a whole truckload of states. A nationwide moratorium on foreclosures might soon happen—which would be a big deal: Global Financial Crisis, Part II—Longer, Wider and Uncut.
“It’s oozing from where?”
“Man, you guys are fucked.”
But the mainstream media—surprise-surprise—has downplayed the whole shebang. They’re throwing terms out there into the ether, but devoid of context or explanation: “Robo-signings”, “foreclosure mills”, forged signatures, “double booking”, MERS—it’s confusing as all get-out.
So the mainstream media just mentions it casually—“and in other news tonight . . .”—like it’s no big deal: A couple-three lines, lots of complicated, unfamiliar terms, an attitude like it’s a brouhaha over paperwork of all things!—and then zappo-presto-change-o!: They’re showing video footage of a cute koala nursing in the arms of a San Diego zookeeper.
But even the koalas know that something awful is heading America’s way. Smart little critters, they’re heading for the treetops, to get away from this mess.
So what the hell is going on with the God forsaken mortgage mess in the United States?
It’s got a lot of bells and whistles, but it’s basically quite simple: It’s all about the fucking Mortgage Backed Securities (MBS). Again.
http://gonzalolira.blogspot.com/2010/10/second-leg-down-of-americas-death.html
TIME TO BREAK UP THE TOO-BIG-TO-FAIL BANKS?[MUST READ]
by Ellen Brown
Looming losses from the mortgage scandal dubbed “foreclosuregate” may qualify as the sort of systemic risk that, under the new financial reform bill, warrants the breakup of the too-big-to-fail banks. The Kanjorski amendment allows federal regulators to pre-emptively break up large financial institutions that—for any reason—pose a threat to U.S. financial or economic stability.
Although downplayed by most media accounts and popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits.
There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.
Federal regulators now have the tools to take control and set things right. The Wall Street giants escaped the Volcker Rule, which would have limited their size, and the Brown-Kaufman amendment, which would have broken up the largest six banks outright; but the financial reform bill has us covered. The Kanjorski amendment—which slipped past lobbyists largely unnoticed—allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability.
http://www.webofdebt.com/articles/breakup_banks.php
"This Is Criminal": Foreclosure Process "Rife with Fraud," Barry Ritholtz Says
"The whole chain of the foreclosure process is rife with lies, with false affidavits, false testimony -- with fraud," Ritholtz says. "This is criminal and these people need to go to jail."
Unlike some observers, who believe banks only appear guilty of what The WSJ editorial page called "sloppy work," Ritholtz says problems in the foreclosure process go far beyond mere technicalities.
"This is more about forgetting to dot an ‘i' and cross a ‘t'," he says. "This is a systemic approach to foreclosure where the rule of law completely trampled on and property rights have been totally ignored."
While some expert fret the impact a foreclosure moratorium will have on the housing market and/or bank balance sheets, Ritholtz says something far more fundamental is at stake.
"This is about property rights," he says. "This is about very sacred rights...and the respect for the rule of law" - or the lack thereof.
http://finance.yahoo.com/tech-ticker/%22this-is-criminal%22-foreclosure-process-%22rife-with-fraud%22-barry-ritholtz-says-535513.html?tickers=JPM,WFC,BAC,PNC,MET,XHB,FNM
Foreclosuregate - NOT simply "lost" paperwork!
By Karl Denninger
http://www.youtube.com/watch?v=yXrkubSA2SA&feature=player_embedded
FRAUDCLOSURE WILL DESTROY PENSION FUNDS 10-12-2010
Say goodbye to your Pension Funds for me, will ya!
There are no "lost notes" ladies and gentlemen.
Either: * The Trustee never got the notes, in which case he filed this certification and in doing so committed fraud upon the MBS investors, OR * The Trustee has the notes and doesn't want to produce them because there is something in there that could lead to the foreclosure being dismissed (E.g. TILA violations) or the Trustee being sued (e.g. he took the note even though it violated their representations and warranties relating to loan quality), in which case the fraud is upon the court in the instant case.
Pick one, but either way someone has been defrauded.
It is literally impossible for it to be otherwise.
When will the damn media and prosecutors start STOMPING on this crap?
http://www.youtube.com/watch?v=8YlWiPveOaE&feature=related
Armageddon: What Democrats Are Hiding & Why They Are Really Scared
In June, a conversation took place in a hotel restaurant in Washington. As a latecomer to the conversation, it was easy to pick up that the topic that was the $165 billion union pension bailout bill introduced by Sen. Bob Casey [D-PA] in March.
Upon introductions, one of the individuals stated, “this is Armageddon.”
When asked for clarification, the person explained about the accounting rules developed to shore up underfunded union pensions and the dates when those union companies affected would have to assume their liabilities had the DC crowd (in particular, the Democrats and the unions) in a panic.
Yesterday, the Washington Examiner’s Mark Hemingway gave a good breakdown of how bad it could get for Democrats and their union bosses:
On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans. Unless FASB is persuaded otherwise, the rule takes effect Dec. 15.
There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total liability.
Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four companies.
What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked analysts last year when it disclosed its multiemployer pension liabilities more than doubled in a year to $1.2 billion.
[snip]
FASB’s new rule could effectively wipe out the paper worth of many companies, especially in the trucking and construction industries. Once banks and creditors are aware of these staggering pension liabilities, it will make it nearly impossible for union businesses to get loans, credit lines or bonding.
The effects of having to meet reality will almost certainly cause a significant drop in stock prices for those companies affected and, as a result, may cause a large ripple effect throughout the rest of the economy. In those cases where the liabilities exceed the value of the unionized companies, it is entirely possible many of those companies will go out of business, laying off tens of thousands of employees, and further causing a drop in economic activity.
http://www.redstate.com/laborunionreport/2010/10/19/armageddon-what-democrats-are-hiding-why-they-are-really-scared/
These are just a few stories and presentations that represent the "truth" about forclosuregate.
[I slipped in the last story about labor union pension bailouts because it is a significant story that is not getting the attention it deserves...and pension funds are going to get whacked by forclosuregate.]
To really understand the depths of the problem for the banks, consider their insolvency is about to be exposed because of their own errors. If the New York Fed is looking for a payback on bad mortgage derivatives, consider that the Federal Reserve may be the most insovent bank of them all. And who bails out the Fed?
Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages
Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.
A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.
Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.
“We now are in a position where we have to start a clock ticking,” Patrick, who is based in Houston, said today in a telephone interview.
If the issues aren’t fixed within 60 days, BNY Mellon should declare Countrywide in default on its servicing contracts, Patrick said.
http://www.bloomberg.com/news/2010-10-19/pimco-new-york-fed-said-to-seek-bank-of-america-repurchase-of-mortgages.html
Do you believe that Bank Of America has $47 BILLION to buyback those mortgage derivatives?
Bank Of America is the next Enron.
Continue to buy the Precious Metals dips in price at support.
Tuesday, October 19, 2010
You Can't Have Your Cake And Eat It Too.
"Maybe the Fed can fool some of the people some of the time, but it can’t fool all of the people all of the time. In the process, policy makers may end up fooling themselves that they can create expectations of a little more inflation without delivering a lot of the real thing."
-Caroline Baum
In a speech at a Boston Fed conference last Friday, Bumbling Ben Bernanke made every effort to convince those in attendance that he could control inflation just by moving his lips. Yes, moving his lips. Seriously.
In his speech Bernanke spoke of "inflation expectations", suggesting that by containing "expectations" the fed has kept inflation "under control":
The public's expectations for inflation also importantly influence inflation dynamics. Indicators of longer-term inflation expectations have generally been stable in the wake of the financial crisis. For example, in the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters, the median projection for the annual average inflation rate for personal consumption expenditures over the next 10 years has remained close to 2 percent. Surveys of households likewise show that longer-term inflation expectations have been relatively stable. In the financial markets, measures of inflation compensation at longer horizons (computed from the spread between yields on nominal and inflation-indexed Treasury securities) have moved down, on net, this year but remain within their historical ranges. With long-run inflation expectations stable and with substantial resource slack continuing to restrain cost pressures, it seems likely that inflation trends will remain subdued for some time.
Bernanke then concluded later in his speech that through "communication" he believed the fed could not only further lower interest rates, but keep a lid on inflation just the same:
Central bank communication provides additional means of increasing the degree of policy accommodation when short-term nominal interest rates are near zero. For example, FOMC postmeeting statements have included forward policy guidance since December 2008, and the most recent statements have reflected the FOMC's anticipation that exceptionally low levels of the federal funds rate are likely to be warranted "for an extended period," contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language of the statement in some way that indicates that the Committee expects to keep the target for the federal funds rate low for longer than markets expect. Such a change would presumably lower longer-term rates by an amount related to the revision in policy expectations. A potential drawback of using the FOMC's statement in this way is that, at least without a more comprehensive framework in place, it may be difficult to convey the Committee's policy intentions with sufficient precision and conditionality. The Committee will continue to actively review its communications strategy with the goal of providing as much clarity as possible about its outlook, policy objectives, and policy strategies.
Full-Text: Ben Bernanke's speech at Federal Reserve Bank of Boston, Oct. 15, 2010
http://www.ibtimes.com/articles/72361/20101015/fed-bernanke-speech-policy.htm
What is this guy smoking? He clearly recognizes that expectations for QE2 have accelerated. He comes out and attempts to back pedal those expectations because it's obvious that the effects of these expectations and the actual move to QE2 will have, and is having, severe negative consequences for the US Dollar. Bernanke hopes that by opening his mouth he can slow the descent of the Dollar.
You can't have your cake and eat it to.
Yesterday afternoon, Bumbling Ben's partner in crime, Timmy [Pinocchio] Geithner proclaimed, once again, that the US fully supports a "strong Dollar policy". In the context of Bernanke's plans to inflate the money supply, this comment by our tax cheat treasury secretary seemed a bit disingenuous. In the context of his cries for an upwards revaluation of the Chinese Yuan, this comment sounded utterly ridiculous.
Geithner: U.S. will not engage in dollar devaluation
"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," Geithner added. "It is not a viable, feasible strategy and we will not engage in it."
Geithner broke his silence on the dollar's slide in recent weeks as the Federal Reserve considers more monetary easing. In response to audience questions from the Commonwealth Club of California, he said the United States needed to "work hard to preserve confidence in the strong dollar."
Asked if the dollar would lose its status as the world's reserve currency, the Treasury chief said, "not in our lifetime."
The U.S. Treasury chief also reiterated his views that he believes China will continue to lift the value of its yuan currency to aid the rebalancing of its economy away from exports and toward domestic growth.
Asked how much higher China should allow the yuan to rise, Geithner said: "Higher."
"You can't know how far it should go. What you know now is that it's significantly undervalued which I think they acknowledge and it's better for them and of course very important for us that it move. And I think it's going to continue to move," Geithner said.
http://www.reuters.com/article/idUSTRE69H4VO20101018
Timmy, you stupid !#*&%! On Friday your Fed chairman said that "all things being equal, there appeared to be a case for further debasing of the Dollar. How do the Fed's intentions support a strong Dollar. And excuse me Timmy, for pointing out that demanding China revalue their currency higher is grossly negative for the US Dollar. A rising Yuan will severely impact the value of the US Dollar, and likely lead to the bubble in the treasury markets bursting. Of course that possibility is why the Fed has announced that they will be buying treasuries...somebody has to buy all the treasuries the Chinese will be selling [or NOT buying]. If the Chinese are going to raise the Yuan, they will have to stop selling Yuan and buying Dollars to purchase US Treasuries.
Tim Geithner, you are absolutely, 100%, full of sh*t when you tout a "strong Dollar".
Bernanke: Fed wrestles with size of aid program
Jeannine Aversa
WASHINGTON (AP) -- The Federal Reserve is prepared to take further steps to rejuvenate the economy by buying Treasury bonds but is wrestling with how big the program should be, Chairman Ben Bernanke said Friday.
Bernanke also indicated that Fed policymakers are trying to craft a plan to lift inflation from super-low levels. He made his remarks in a speech at a Fed conference in Boston.
Bernanke said the Fed must both weigh the risks of a Treasury-buying program and determine how the debt purchases should be paced. The Fed's bond purchases would be intended to lower long-term interest rates to stimulate buying and spending and help lower unemployment.
Those Treasury purchases would inject many more dollars into the financial system. And that poses a longer-term risk: High inflation.
http://finance.yahoo.com/news/Bernanke-Fed-wrestles-with-apf-1957305524.html?x=0&sec=topStories&pos=2&asset=&ccode=
This notion that Bernanke is unsure of "how big" his QE2 should be is pure poppycock. The headline, and Bernanke's ambivalence through out his speech Friday, are nothing more than smoke intended to slow the fall of the Dollar and the rise of Precious Metals and commodities.
This mornings "air-pocket" in the Precious Metals can be attributed to this Bernanke blah-blah. Likely currency interventions behind the scenes to "support" the Dollar also contributed to some profit taking in the Precious Metals and those short the Dollar.
Of note is the Central Bank of Brazil's meeting today and tomorrow. Particularly in light of their announcement to skip this weeks G20 finance ministers meeting because of "currency issues". This is noteworthy as Brazil is one of the four BRIC nations [Brasil, Russia, India, China] seeking reform of the world's reserve currency.
Brazil's Mantega will not attend G20 due to FX issues
BRASILIA, Oct 18 (Reuters) - Brazil's top economic officials will not be attending meetings of Group of 20 finance ministers and central bank governors in South Korea this week, the finance ministry and central bank press offices said on Monday.
Finance Minister Guido Mantega canceled his trip because of currency issues, the press office confirmed, adding that he had just come back from an international trip and would be accompanying President Luiz Inacio Lula da Silva to the Group of 20 leaders meeting next month.
Reuters reported on Friday that Mantega would not be attending the meeting and would unveil new currency measures aimed at containing a rapid rise in the real BRBY this week.
Central Bank President Henrique Meirelles will also not be attending the G20 this week because the bank holds its monetary policy meeting on Tuesday and Wednesday, the press office of the central bank said.
http://www.reuters.com/article/idUSN1822416420101018
These air-pockets in the Precious Metals are much easier to stomach when they are expected, are they not? They also make for excellent buying opportunities.
-Caroline Baum
In a speech at a Boston Fed conference last Friday, Bumbling Ben Bernanke made every effort to convince those in attendance that he could control inflation just by moving his lips. Yes, moving his lips. Seriously.
In his speech Bernanke spoke of "inflation expectations", suggesting that by containing "expectations" the fed has kept inflation "under control":
The public's expectations for inflation also importantly influence inflation dynamics. Indicators of longer-term inflation expectations have generally been stable in the wake of the financial crisis. For example, in the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters, the median projection for the annual average inflation rate for personal consumption expenditures over the next 10 years has remained close to 2 percent. Surveys of households likewise show that longer-term inflation expectations have been relatively stable. In the financial markets, measures of inflation compensation at longer horizons (computed from the spread between yields on nominal and inflation-indexed Treasury securities) have moved down, on net, this year but remain within their historical ranges. With long-run inflation expectations stable and with substantial resource slack continuing to restrain cost pressures, it seems likely that inflation trends will remain subdued for some time.
Bernanke then concluded later in his speech that through "communication" he believed the fed could not only further lower interest rates, but keep a lid on inflation just the same:
Central bank communication provides additional means of increasing the degree of policy accommodation when short-term nominal interest rates are near zero. For example, FOMC postmeeting statements have included forward policy guidance since December 2008, and the most recent statements have reflected the FOMC's anticipation that exceptionally low levels of the federal funds rate are likely to be warranted "for an extended period," contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language of the statement in some way that indicates that the Committee expects to keep the target for the federal funds rate low for longer than markets expect. Such a change would presumably lower longer-term rates by an amount related to the revision in policy expectations. A potential drawback of using the FOMC's statement in this way is that, at least without a more comprehensive framework in place, it may be difficult to convey the Committee's policy intentions with sufficient precision and conditionality. The Committee will continue to actively review its communications strategy with the goal of providing as much clarity as possible about its outlook, policy objectives, and policy strategies.
Full-Text: Ben Bernanke's speech at Federal Reserve Bank of Boston, Oct. 15, 2010
http://www.ibtimes.com/articles/72361/20101015/fed-bernanke-speech-policy.htm
What is this guy smoking? He clearly recognizes that expectations for QE2 have accelerated. He comes out and attempts to back pedal those expectations because it's obvious that the effects of these expectations and the actual move to QE2 will have, and is having, severe negative consequences for the US Dollar. Bernanke hopes that by opening his mouth he can slow the descent of the Dollar.
You can't have your cake and eat it to.
Yesterday afternoon, Bumbling Ben's partner in crime, Timmy [Pinocchio] Geithner proclaimed, once again, that the US fully supports a "strong Dollar policy". In the context of Bernanke's plans to inflate the money supply, this comment by our tax cheat treasury secretary seemed a bit disingenuous. In the context of his cries for an upwards revaluation of the Chinese Yuan, this comment sounded utterly ridiculous.
Geithner: U.S. will not engage in dollar devaluation
"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," Geithner added. "It is not a viable, feasible strategy and we will not engage in it."
Geithner broke his silence on the dollar's slide in recent weeks as the Federal Reserve considers more monetary easing. In response to audience questions from the Commonwealth Club of California, he said the United States needed to "work hard to preserve confidence in the strong dollar."
Asked if the dollar would lose its status as the world's reserve currency, the Treasury chief said, "not in our lifetime."
The U.S. Treasury chief also reiterated his views that he believes China will continue to lift the value of its yuan currency to aid the rebalancing of its economy away from exports and toward domestic growth.
Asked how much higher China should allow the yuan to rise, Geithner said: "Higher."
"You can't know how far it should go. What you know now is that it's significantly undervalued which I think they acknowledge and it's better for them and of course very important for us that it move. And I think it's going to continue to move," Geithner said.
http://www.reuters.com/article/idUSTRE69H4VO20101018
Timmy, you stupid !#*&%! On Friday your Fed chairman said that "all things being equal, there appeared to be a case for further debasing of the Dollar. How do the Fed's intentions support a strong Dollar. And excuse me Timmy, for pointing out that demanding China revalue their currency higher is grossly negative for the US Dollar. A rising Yuan will severely impact the value of the US Dollar, and likely lead to the bubble in the treasury markets bursting. Of course that possibility is why the Fed has announced that they will be buying treasuries...somebody has to buy all the treasuries the Chinese will be selling [or NOT buying]. If the Chinese are going to raise the Yuan, they will have to stop selling Yuan and buying Dollars to purchase US Treasuries.
Tim Geithner, you are absolutely, 100%, full of sh*t when you tout a "strong Dollar".
Bernanke: Fed wrestles with size of aid program
Jeannine Aversa
WASHINGTON (AP) -- The Federal Reserve is prepared to take further steps to rejuvenate the economy by buying Treasury bonds but is wrestling with how big the program should be, Chairman Ben Bernanke said Friday.
Bernanke also indicated that Fed policymakers are trying to craft a plan to lift inflation from super-low levels. He made his remarks in a speech at a Fed conference in Boston.
Bernanke said the Fed must both weigh the risks of a Treasury-buying program and determine how the debt purchases should be paced. The Fed's bond purchases would be intended to lower long-term interest rates to stimulate buying and spending and help lower unemployment.
Those Treasury purchases would inject many more dollars into the financial system. And that poses a longer-term risk: High inflation.
http://finance.yahoo.com/news/Bernanke-Fed-wrestles-with-apf-1957305524.html?x=0&sec=topStories&pos=2&asset=&ccode=
This notion that Bernanke is unsure of "how big" his QE2 should be is pure poppycock. The headline, and Bernanke's ambivalence through out his speech Friday, are nothing more than smoke intended to slow the fall of the Dollar and the rise of Precious Metals and commodities.
This mornings "air-pocket" in the Precious Metals can be attributed to this Bernanke blah-blah. Likely currency interventions behind the scenes to "support" the Dollar also contributed to some profit taking in the Precious Metals and those short the Dollar.
Of note is the Central Bank of Brazil's meeting today and tomorrow. Particularly in light of their announcement to skip this weeks G20 finance ministers meeting because of "currency issues". This is noteworthy as Brazil is one of the four BRIC nations [Brasil, Russia, India, China] seeking reform of the world's reserve currency.
Brazil's Mantega will not attend G20 due to FX issues
BRASILIA, Oct 18 (Reuters) - Brazil's top economic officials will not be attending meetings of Group of 20 finance ministers and central bank governors in South Korea this week, the finance ministry and central bank press offices said on Monday.
Finance Minister Guido Mantega canceled his trip because of currency issues, the press office confirmed, adding that he had just come back from an international trip and would be accompanying President Luiz Inacio Lula da Silva to the Group of 20 leaders meeting next month.
Reuters reported on Friday that Mantega would not be attending the meeting and would unveil new currency measures aimed at containing a rapid rise in the real BRBY this week.
Central Bank President Henrique Meirelles will also not be attending the G20 this week because the bank holds its monetary policy meeting on Tuesday and Wednesday, the press office of the central bank said.
http://www.reuters.com/article/idUSN1822416420101018
These air-pockets in the Precious Metals are much easier to stomach when they are expected, are they not? They also make for excellent buying opportunities.
Step up to the plate when these opportunities present themselves. Bernanke and Geithner can blather all they want, the fact is the US must have a lower Dollar if they are to prevent an outright default on their treasury debt.
China is acutely aware of this fact, and has not been shy about calling the US on the carpet in this regard:
U.S. is currency war's "tomb maker" -China economist
Oct 14 (Reuters) - The United States fired the first shot in the currency war and the rest of the world must be on guard for its deliberate strategy to devalue the dollar, a Chinese economist said in an official newspaper on Thursday.
In a front-page commentary in the overseas edition of the People's Daily, Li Xiangyang described the United States as the conflict's "first maker of tomb figures", a Chinese idiom that means someone who creates a bad precedent.
Li, head of the Asia department at the Chinese Academy of Social Sciences, a top government think tank, said continued intervention in currency markets by developed economies would deal a blow to global economic recovery.
Chinese leaders have warned before that loose monetary policies in the United States pose a serious challenge for emerging markets, but rarely in such strident language, a window onto the rising anger in Beijing.
"The dollar's depreciation may appear to be market-driven. In reality, it is a depreciation coloured by very strong, deliberate actions," Li said in the paper, which serves as the chief mouthpiece of China's ruling Communist Party.
http://www.reuters.com/article/idUSTOE69D04120101014
China: US has “Clearly a Double Standard” on Exchange Rates
By Rocky Vega, for The Daily Reckoning
10/19/10 Stockholm, Sweden – It sounds hard to believe, but apparently China has detected a US “double standard,” whereby the US is demanding China strengthen its renminbi currency while itself intentionally weakening the dollar through money printing. These days, China is almost getting a little too good at calling it like it sees it.
According to the AFP:
“The criticism of US monetary policy and its weakening dollar comes as Washington maintains pressure on Beijing over its yuan exchange rate, which US lawmakers claim is grossly undervalued and causing global trade imbalances.
“US policies of ‘printing money’ and holding interest rates near zero were the main cause of the currency dispute, said a commentary by the Xinhua news agency, carried Monday in the central bank-backed Financial News. ‘In the eyes of some American politicians it is entirely reasonable to print money and keep the dollar exchange rate low, but it is illegal for other countries to protect their economic and financial security by pushing down exchange rates,’ it said.
“‘This is clearly a double standard.’”
OK, granted, it sounds a bit like a double standard. However, at least the US is standing firm in its stance, as opposed to equivocating on the position.
“For the second time this year, the Treasury Department is withholding a semiannual report that labels other countries as ‘currency manipulators.’ The report was due Friday, but with the midterm elections coming up, and a G-20 summit a few days after that and the Treasury sec’y only now recovering from the tantrum he threw last week, they decided to punt.
“‘Had we named China as a currency manipulator,’ one Treasury official anonymously explained it to the Swoop, a foreign policy insider website, ‘we would have angered the Chinese; had we not done so, we would have angered American voters. Other than delay, it was a no-win.’”
Double standards and something akin to a spaghetti spine on the whole currency manipulation matter. These are not sounding like the best of days. You can read more details in the AFP’s coverage of how, according to China, the US has ‘double standards’ in the ongoing currency dispute.
http://dailyreckoning.com/china-us-has-clearly-a-double-standard-on-exchange-rates/
Do you really think the Fed can stop the fall of the US Dollar?
THIS JUST IN:
China surprises with first rate rise since 2007- Reuters
BEIJING (Reuters) - China's central bank surprised on Tuesday with its first increase of interest rates in nearly three years, a move that reflects concern about resurgent asset prices and could mark the start of a more aggressive phase of monetary tightening in the world's fastest-growing major economy.
Wednesday, October 13, 2010
Stupid Is, As Stupid Does
Gold today surprised everyone and no one. After yesterday's non-event and FED minutes reading, Gold resumed it's now relentless march higher.
It was amusing yesterday morning listening to and reading all the blah-blah prior to the release of the Fed minutes. You'd think Moses was about to come down from the mountain. As if what was in these "notes" was any secret. The Fed has to inflate the money supply or die. It's that simple. Either the Fed buys the Treasury's debt or the country defaults on it. Gold knows this and is reacting accordingly. Toss in the mushrooming "forclosuregate" story, and Gold is the "go to" asset without a doubt.
After a brief pennant consolidation on the chart, Gold broke higher last evening at 1352. Moving through 1365 this morning, Gold left the station for the next $100 journey higher to 1450. Silver broke in tandem and roared higher today, clearing 24 in after hours trading this afternoon. Stunning performances.
Those looking to short these Precious Metals markets should look for a new vocation. It's suicide in this environment. Either be in the market, or out of it. The short side is not worth the risk. However, as we said last week, the markets are moving into a much more volatile arena up here, and "air pockets" in the markets are to be expected...trying to time these pockets is a fools game. Taking a little money off the table if you are a trader long the market is wise, but the risk now is that you will be out of the markets when they make their moves higher. The dip/air pockets are going to be relatively shallow, and not worth trying to catch on the down side here. If you must trade, keep 1/3 of your funds in the market long at all times, and trade with the rest.
A $1450s target in Gold translates into a $26s target for Silver. At this time it might be safe to say that Silver is "off the chain"...hang on for the ride. However, I would not be surprised to see a pause here in Silver at around $24.15-25 as Gold nears 1380. But a run to the next round numbers at $25 and $1400 would not shock me either. Crazy, I know.
News flash: Fed declares it MUST create inflation!
by Larry Edelson
In yesterday’s release of its September Federal Open Market Committee minutes, the Fed officially announced that …
“Unless … underlying inflation moved back toward a level consistent with the Committee’s mandate, they would consider
it appropriate to take action soon.”
The Fed is considering “… possible steps to affect inflation expectations” and “targeting a path for the level of nominal GDP.”
That’s Fed-speak for a MANDATE TO CREATE INFLATION — with lots more money printing, and many more purchases of Treasury bonds, mortgage bonds, corporate bonds, commercial paper, even possibly equities or real estate!
No wonder the dollar is crashing toward new,
all-time lows against ALL major currencies!
Instantly after the Fed’s meeting notes were released, the dollar started plunging again — to fresh record lows against the Swiss franc … to nearly a new 15-year low against the Japanese yen … and another record low against the Australian dollar.
The dollar even fell to a 13-year low against the Thai baht!
Indeed, right now, as I pen this update …
The dollar is a mere THREE-TENTHS of ONE PERCENT away from making all-time RECORD lows against ALL major currencies!
http://www.uncommonwisdomdaily.com/news-flash-fed-declares-it-must-create-inflation-10271?FIELD9=1
The long and short of what's happening with silver
By Chris Mack
Things appear to have changed in silver trading with the bullion banks nearing a position where they may have lost control of the markets.
THEN
During the bull market in silver that began in 2001, a pattern of trading similar to the "Martingale Betting Strategy" emerged in which 8 trading institutions sold short increasingly larger amounts of contracts into rallies until their sales volumes overwhelmed the market into a freefall. After the freefall they then repurchased those short positions at a profit and the rally process began again. This process of taking money from precious metals investors has been well documented by analysts such as Ted Butler, David Morgan, and others. The strategy was so successful that some futures traders began to front run the banks on their own using tactics such as the COT report and other sentiment indicators. As a result of their actions it has been argued that these large short positions have suppressed the price of silver by a multiple of itself. This may be proven sooner than many expected.
RECENTLY
Over the last 6 weeks all was going according to plan. Silver rallied and the commercial banks shorted an ever larger amount of contracts as the open interest swelled to the point at which most silver analysts were expecting a correction. In the last 2 weeks silver rose by nearly $2 dollars and most were expecting to see an even larger commercial short position reflected in the COT report. Instead, the commercials actually covered 2297 contracts, and bought an additional 989 long contracts during the week of September 28th to October 5th when the price of silver rose by $1. The covering was down at what appeared to be a short term top to many.
THE NEAR FUTURE
While it can be speculated on how short covering could impact the market, a short squeeze could feed upon itself as it attracts capital. In five trading days of buying a net 3,286 contracts the price of silver rose by $1. However the commercial banks are still a net 62,127 contracts short so at that linear rate it would take them 94 trading days to cover with a silver price of roughly $117. The resulting losses would be around $15 billion. Of course markets aren't linear and after the second or third week of covering traders would begin to purposefully front run and squeeze the commercial shorts so it is unlikely that the positions could be covered that low or if at all.
CONCLUSION
Unfortunately, those of you who were hoping for a correction to accumulate more silver may not get it here as a price reset may be on the horizon.
http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=112791&sn=Detail&pid=32
Should U.S. say it's selling gold before world learns it's long gone?
CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.
Dear Friend of GATA and Gold:
Today's Financial Times carries an essay by former Federal Reserve economist and former assistant U.S. Treasury Secretary Edwin M. Truman headlined "America Should Open Its Vaults and Sell Gold." For years Truman has been turning up at the center of the gold price suppression scheme, but GATA and its supporters might agree with him in principle on this one, insofar as getting central banks out of the gold business is the first step toward a free market in gold.
Of course these days free markets are the last thing that Western central banks want, central banking's main objective lately being to prevent any markets from occurring anywhere. So Truman's objective here may be quite different from what it seems.
That is, Truman may be floating an idea for the cover story needed to conceal the disappearance of the U.S. gold reserve.
http://www.gata.org/node/9150
America should open its vaults and sell gold
By Edwin Truman
Gold is back in the news. Its price is soaring in what some analysts say is a reflection of a weak economy and a lack of confidence in government policies. Naturally, investors are looking at a new sure thing in the expectation that prices will continue upward. My advice to the US government, however, is that this may be the best time – to sell. Doing so would help President Barack Obama and Congress reduce indebtedness, at little cost.
It is an article of faith in bullion markets that the US will be the last country to dispose of its gold stock. For 30 years it has had a no-net-sales policy for reasons ranging from resistance by US gold-producing interests to concerns about the international monetary system. That assumption may remain plausible. Yet the administration has an obligation to re-examine its policy.
The market price of gold has risen for more than a decade propelled by low interest rates, the hype of the bullion dealers (holding large inventories) and no doubt the normal amount of fraud and misinformation accompanying asset price bubbles. The Financial Times has reported that the precious metals industry expects the price to increase by a further 11 per cent over the next year.
Meanwhile, the US Treasury holds 261.5m fine troy ounces of gold. The government has been sitting on it since the Great Depression, receiving no return. At the current market price of $1,300 per ounce, the US gold stock is worth $340bn. The Treasury secretary, with the approval of the president, has the power to sell (and buy) gold on terms that the secretary considers most beneficial to the public interest. Revenues from sales must be used to reduce the national debt.
If the US were to sell its entire gold stock at the current market price, it would reduce the gross government debt by 2¼ per cent of gross domestic product. (US net government debt would decline by essentially the same amount because the US gold stock, listed as an asset on the balance sheet, is valued at only $42.22 an ounce.) Based on the average interest cost from 2005 to 2008, this reduction in debt would trim the budget deficit by $15bn annually. Thus, the Obama administration would be doing something about the US fiscal debt and deficit without reducing near-term support for the ailing economy.
This proposal has other benefits too. First, the US would be obeying the maxim to buy low and sell high. Second, it would be performing a socially useful function. Demand for gold exceeds normal production, driving up the price. To the extent that the gold craze is being fed by concern (rational or irrational) about government policies, public welfare would be enhanced by giving citizens something tangible to hang around their necks or place in safe deposit boxes. Third, if the price is a bubble, as seems likely, the sooner it is burst the better for the average investor.
Some people point to possible costs. Aside from political pressures from those who want to protect the value of their holdings, above or below ground, two principal arguments are made against US gold sales. The first is that they would disrupt the market. But the US can be cautious in its sales, avoiding disruption of the sales programmes of other countries, as it has in the past. There is little risk. In recent years, sales under the Central Bank Gold Agreement have dwindled, and some other central banks are buying gold. (The US is not a party to the agreement.) Also the International Monetary Fund has completed more than three-quarters of its own planned sales of 403.3 metric tons.
Another counter argument is that the US should hold on to its stock in anticipation of a return – by itself alone or with other nations – to a monetary system based on gold. But returning to the gold standard would reinstate a system associated with unstable prices, wages, output and employment. It has not existed for a century; and will not make a comeback. Official discussions of the reform of the international monetary system do not include any advocates of a return to gold, and the IMF articles of agreement prohibit it. The sooner thoughts of such a return are laid to rest, the better. A related argument is to keep the US gold stock as a “rainy day” precaution. But after the recent economic and financial crisis and with the prospect of misery for several more years, how much more rain must pour before the US acts?
http://www.ft.com/cms/s/0/2bbd4dbe-d5fe-11df-94dc-00144feabdc0.html
Jim Sinclair - Great Impetus to the Bullish Side of the Market
Eric King, KingWorldNews.com
With news coming today out of the Financial Times and Edwin Truman that the US should sell its gold reserves, I thought it important for King World News to interview the legendary Jim Sinclair to get his reaction. There are certain times in this business where the great ones are needed to comment on a story. True to his form, Sinclair broke this situation down in a way that no other could....
October 12, 2010
Jim Sinclair:
“The important thing is to remember that if you get two back to back bullish articles in the Financial Times, you are going to get a reaction.”
“As long as the FT gets some outspoken maniac to defile gold, it is going orders of magnitude higher. All of us in the gold community hope he gets interviewed once a week.”
“God help us if we ever got three back to back bullish articles in the Financial Times, it would probably finish us off.”
“The FT has been the absolute best indicator for gold, and once again it has given great impetus to the bullish side of the market.”
Jim’s father was Bert Seligman. Bert was business partners with legendary trader Jesse Livermore. Bert and Jesse were arguably the two greatest traders in history. Having worked closely with his father for so many years, Jim wound up becoming famous for his own trading acumen. Jim even called the precise high of the gold market in 1980 with deadly precision.
With that being said, Sinclair had these final comments for professionals who trade the gold market, “Traders should buy FT bearish and sell FT bullish. May they ever keep up their reputation.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/12_Jim_Sinclair_-_Great_Impetus_to_the_Bullish_Side_of_the_Market.html
Jim Rickards - Last Gasp of the Fiat Money Regime[MUST READ]
Eric King, KingWorldNews.com
In yesterday’s FT piece from Edwin Truman, he suggested America sell all of its gold, and listed reasons as to why gold was in a bubble. King World News reached out to Jim Rickards to get his thoughts, after yesterday speaking with the legendary Jim Sinclair regarding the same subject. Jim Rickards put together this piece exclusively for the KWN blog which deconstructs the arguments in the FT article from Edwin Truman with remarkable precision.
October 13, 2010
A Message to Garcia
By James G. Rickards
October 13 (King World News) - One of the most famous and widely published essays of all time was A Message to Garcia by E. Hubbard. Written in 1899, it recounts the effort of the President of the United States to reach out to a foreign insurgent who was incommunicado. For this mission impossible, the President relied on U.S. Army Lieutenant Andrew S. Rowan who delivered the message against enormous odds but without hesitation and with complete loyalty and devotion to duty.
Lt. Rowan, meet Ted Truman.
Today’s FT carries a column entitled “America should open its vaults and sell gold” by Edwin “Ted” Truman of the Peterson Institute. Truman’s thesis, in a nutshell, is that the gold price is a bubble and the U.S. Treasury should take advantage of this by selling “high” and using the proceeds to reduce the national debt by about 2.25% of GDP. Furthermore, the interest savings on the debt reduction would amount to about $15 billion annually thus helping reduce our deficit even more. And the appeal of Truman’s idea goes even further because the gold sales would give anxious citizens, “…something to hang around their necks…” How thoughtful.
The intellectual flaws in Truman’s piece are too numerous to review in detail but here are a few highlights: He says that the price action in gold is driven by the “…hype of the bullion dealers (holding large inventories)…” Really? My wholesale bullion dealer constantly complains about shortages and occasionally puts his best customers on allocation because he’s short of supply. Truman also says that the market is accompanied by “…the normal amount of fraud and misinformation accompanying asset price bubbles…”. Apart from a few sleazy coin dealers, the only fraud and misinformation I’ve seen comes from the Treasury and the Fed who refuse to allow a proper audit of official holdings and who cover-up and deny their gold discussions held at BIS and other nearly impenetrable venues. More to the point, the price action does not reveal a bubble in gold, it shows the collapse of the paper dollar. The issue here is understanding the importance of the numerarie or unit of account. If you make the dollar the numerarie, and think in terms of “dollars per ounce” then the price action may look to some like a bubble. But if you make gold the numerarie and think about how many ounces your get for a single dollar (now about 0.00075; was 0.00400 in 1999) you can see that the real problem is the dollar is rapidly shrinking to a vanishing point.
Truman’s idea that gold sales and debt reduction would reduce U.S. interest expense by $15 billion per year is the kind of nonsense one gets from static, linear analysis. In dynamic, nonlinear analysis, such gold sales would so undermine confidence in the dollar as to cause a skyrocketing of interest rates and an explosion of the U.S. deficit easily submerging the savings that Truman posits. Truman says that the gold standard was associated with “…unstable, prices, output and employment…”. If by unstable, he means cyclical, yes that’s true (and necessary) but gold was also associated with some of the longest and strongest periods of sustained real growth in U.S. history from 1865 to 1912 until gold’s function was derailed by the creation of the Fed in 1913. Truman says the U.S. “…has been sitting on [gold] since the Great Depression, receiving no return…” Actually, gold went from $20.67 per ounce to $1,350 per ounce in that time period; seems like a 6,500% return to me.
Truman says that the gold standard “…has not existed for a century…”. This is highly revealing. In fact, the U.S. went off domestic gold convertibility 76 years ago, within living memory to many, and only went off international gold convertibility 39 years ago. But if Truman dates the end of the gold standard not from 1971 or 1933 but from the creation of the Fed in 1913 then he’s right; it has been a century. That tells you something about how establishment intellectuals like Truman view the real purpose of the Fed regardless of the existence of any formal systemic role for gold. Nevertheless, gold is not quite the musty relic Truman would like it to be although it is true that an entire generation of finance scholars have come of age since 1971 with no formal analytic training in gold.
We could go on but you get the point. No amount of analysis will reach the right conclusion if you get the paradigm wrong. Truman’s paradigm is anchored in a perpetually sound fiat dollar and he is intellectually unable to see the world any other way. Sadly, he’s not alone.
This leads me to Truman’s most revealing remark of all. He writes, “Official discussions of the reform of the international monetary system do not include any advocates of a return to gold…” (emphasis added). The problem with this observation is that he is almost certainly right. And this is scary. I have maintained for some time that the return to gold is inevitable and the only issue is whether it would happen through a rigorous and studied process led by the United States or by a chaotic process in which the United States is caught off guard to its disadvantage. Learning from an insider like Truman that none of the power elite are thinking seriously about gold increases the odds that the dollar dénouement will be chaotic not orderly.
The reaction of the gold community and various bloggers to Truman’s op-ed was swift and predictable. He was ridiculed as espousing the “dumbest idea we have ever heard” by zerohedge.com. Others were simply incredulous and assumed that Truman must have wandered onto the FT op-ed pages after decades alone on a deserted island. While I might not disagree with zerohedge, there is one problem with this response. Ted Truman is not a nobody. He’s one of the most seasoned, experienced and highly respected international monetary experts in the world. His academic, government, scholarly and think-tank credentials are nonpareil. He speaks to finance ministers, sovereign wealth funds, IMF officials, and Wall Street CEO’s on a daily basis. Importantly, he was a staff economist to the FOMC. I have personally worked with many of his colleagues at the Peterson Institute on matters relating to international finance and national security and they are uniformly of the highest intellectual calibre and operate with a truly warm and collegial demeanor.
And that is the point. Ted Truman is not a fringe figure or a minor intellectual; he is a giant in the field. He is not just close to the establishment. He is the establishment. An op-ed by Truman appearing one day after the IMF semi-annual meeting ended with no effective solutions on the currency wars is no coincidence. It is a metaphorical Message to Garcia, to the gold insurgents, from the President and the powers that be. It is price suppression without having to engage in actual sales. It is a warning to gold bugs that they may get crushed. It is meant to induce fear into those newly interested in gold that it’s a rough game with no holds barred. It is a show of bravado by the fiat money crowd. But it is also a sign of desperation; the last gasp of the ancien régime of fiat money. If a smart guy like Ted Truman is reduced to the old canard about gold being good only for hanging around your neck, then what else is there to say? The intellectual opponents of gold are now as exhausted as the mines.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/13_Jim_Rickards_-_Last_Gasp_of_the_Fiat_Money_Regime.html
Yale Ph.D., And Former Fed Member Tells Obama To Pull A "Gordon Brown" And Sell All Of America's Gold
by Tyler Durden
Edwin Truman, a senior fellow in the Peterson Institute, who is of course a former Fed member, and of course a Yale Ph.D., writes in the FT, suggesting the brilliant idea that it is high time for the US to sell its gold. In other words do precisely what Gordon Brown did a few thousand percent ago, and now has to defend against allegations he did so merely to protect the LBMA cartel which was on the verge of being margin called into oblivion. And even if one ignores the fact for a minute that there has not "really" been an audit of the US gold holdings in who knows how long, who is to say that Goldman, of all people, may not be right and gold will be at $1,700 in a year? Or Dylan Grice for that matter, and it will be about 10 times higher. One thing is certain: converting real hard asset value into paper to patch up 2.25% of government debt as a % of GDP is easily the dumbest idea we have ever heard. Especially, since as we disclosed yesterday, the Fed will have to force Congress to increase its deficit, and thus debt funding needs, simply so that there are enough Treasuries for the Fed to monetize. We hope Mr. Truman is in the contention for next year's economic and peace Nobel prizes, because with articles such as this he has certainly proven he belongs to that unique category of brilliant economists that only Princeton, Yale and Harvard can produce.
http://www.zerohedge.com/article/yale-phd-and-former-fed-member-tells-obama-pull-gordon-brown-and-sell-all-americas-gold
Tuesday, October 12, 2010
Global Currencies Give The US Dollar The One Finger Salute
The Precious Metals appear again today to "be at rest' awaiting the next catalyst to drive them ever higher. The inability of these markets to follow through higher on their opening gaps in Asia Sunday night would seem to indicate that uncertainty is the prevailing sentiment at this time.
With dip buyers in abundance, and shorts below the markets happy to get out at less of a loss on the dips resulting from this bout of uncertainty, the Precious metals look content to consolidate their recent gains here. This of course would be preferable to the bulls in the market instead of a "correction" in price.
It should be noted, regarding a "correction", that the "relative prices" of Gold and Silver are very low at this time, and do NOT warrant a significant correction at this time. Relative prices reference correcelations between their 50 and 200 day moving averages. For instance, Silver usually "corrects" in price when it's 50 day moving average is 25% or more above its 200 day moving average. Today, Silver's 50 day moving average is just 5% above its 200 day moving average. Gold's is only 2%.
Adam Hamilton has done a great deal of research on this measurement metric. You can learn a lot by reading his past essay's on the subject. You can start by reading this essay posted by him one year ago: Relativity Trading
At this hour the US Dollar is probing 15 year lows vs the Yen. The Chinese Yuan is down on news that the banks are determined to fight inflation. This must thrill Little Timmy Geithner and his cronies in Congress desperate to see China raise the value of the Yuan. Of course, as the Fed prints more money, they export inflation around the globe. The Chinese are within their rights to fight it, and give the US Treasury the finger in the process.
China raises bank reserve ratio for some banks
SHANGHAI — China's central bank has ordered six lenders to temporarily increase the amount of money they must keep in reserve to rein in lending and combat rising inflation, state media said Tuesday.
The People's Bank of China on Monday hiked the reserve requirement ratio for the six lenders by 50 basis points to 17.5 percent for two months, the China Securities Journal said, citing unnamed sources.
The six banks include the four major state-owned lenders -- Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China, the report said.
The other two lenders are China Merchants Bank and China Minsheng Banking Corp, it said.
It is the fourth time this year that China has raised banks' reserve requirement ratio and comes after new lending in September "significantly exceeded regulators' expectation", an unnamed source was quoted as saying.
The move is also in response to rising inflation, the source said, which rose at the fastest pace in nearly two years in August, as severe floods and unusually hot weather destroyed crops, driving up food prices.
http://www.google.com/hostednews/afp/article/ALeqM5hF4tGBIAquWyleR39nZI-F85oHow?docId=CNG.3af003c84a71aeca2db44ba857bb01cc.431
Finance leaders fail to resolve currency dispute
By MARTIN CRUTSINGER and HARRY DUNPHY
WASHINGTON – Global finance leaders failed Saturday to resolve deep differences that threaten the outbreak of a full-blown currency war.
Various nations are seeking to devalue their currencies as a way to boost exports and jobs during hard economic times. The concern is that such efforts could trigger a repeat of the trade wars that contributed to the Great Depression of the 1930s as country after country raises projectionist barriers to imported goods.
The International Monetary Fund wrapped up two days of talks with a communique that pledged to "deepen" its work in the area of currency movements, including conducting studies on the issue.
World Bank President Robert Zoellick said the rising economic tensions reflected a weak global recovery.
"A lack of growth accompanied by high unemployment is having consequences," Zoellick told reporters at a news conference concluding the IMF-World Bank meetings. "There is a danger that countries will turn inward and, as a result, international cooperation falters. This could be dangerous."
The communique essentially papered-over sharp differences on currency policies between China and the United States.
http://news.yahoo.com/s/ap/20101009/ap_on_bi_ge/us_global_finance;_ylt=AprgaCy05DhVdF5d624R0QKs0NUE;_ylu=X3oDMTNoMDJtNDBqBGFzc2V0A2FwLzIwMTAxMDA5L3VzX2dsb2JhbF9maW5hbmNlBGNjb2RlA21vc3Rwb3B1bGFyBGNwb3MDMgRwb3MDNwRwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDZmluYW5jZWxlYWRl
IMF Fails, Gold Shines as Currency Wars to Continue
Eric King, KingWorldNews.com
The IMF was unable to stem the tide of competitive currency devaluations over the weekend. As a result, governments and central banks around the world still have the green light to continue with their money printing orgy. Some of the citizens of these various regions and countries have recently been acting as their own central banks by purchasing gold as insurance against the currency wars. As fears escalate, the question now becomes, when will the people of this world once again have a stable system of currency?
Here is a new piece exclusively for the King World News blog from Ben Davies, CEO of Hinde Capital which sums up the situation nicely:
October 10, 2010
IMF At The Epicenter Of Currency Earthquake
By Ben Davies, CEO of Hinde Capital
October 10 (King World News) - Henry Hazlitt was the modern literary agent of libertarianism. At the advent of Bretton Woods he stood alone in his New York Times editorials condemning the monstrosity, as he termed it, that was the IMF. He considered this entity no different to the Federal Reserve Bank. Another organization espousing the values of economic growth and price stability. In reality, they were both merely agents for the propagation of money to aid and abet the continuation of the flawed policies and practices of a country. In the case of the IMF they called on loans from member countries to 'bail out' bankrupt nations globally. The IMF prolonged the inevitable misery and didn't address the issues that got the country into difficulties in the first place.
Emergent nations once patronized by IMF bailouts and inappropriate 'conditional love' have put two fingers up. I can almost hear the BRIC nations silent mutterings, "Why should we 'flex' our currencies to assist the developing nations who so highmindedly leered over us in troubled times passed and revelled in our misery."
Bretton Woods was possible due to the economic strength of US. The Plaza Accord was permitted because it was in the best interest of the US. The Louvre Accord which tried to arrest the efforts of the Plaza Accord of two years earlier, ironically, was permitted because it was in the best interest of the US.
The US and developed nations no longer wield power anymore. " IMF who? " the BRIC’s cry. Right now the emergent nations are more content to say "our currency, your problem". Unfortunately the West, particularly the US have returned the favour, "our bonds, your problem" and so the stalemate will prevail.
Unfortunately as each day passes, the friction of the global monetary fault lines grow stronger. These fault lines will release their energy in the largest world monetary earthquake known to man, as we witness the inevitable demise of the fiat currency system - as all such systems have failed before, leaving not one survivor.
As currency wars escalate, it is wise for individuals to have a presence outside of the system by owning gold.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/10_IMF_Fails,_Gold_Shines_as_Currency_Wars_to_Continue.html
Currency wars are necessary if all else fails
By Ambrose Evans-Pritchard
The overwhelming fact of the global currency system is that America needs a much weaker dollar to bring its economy back into kilter and avoid slow ruin, yet the rest of the world cannot easily handle the consequences of such a wrenching adjustment. There is not enough demand to go around.
Each country is doing so for understandable reasons: Japan to avoid a deflationary crisis, China to hold together a political order that is more fragile than it looks. In both these cases they are trapped because they clung too long to a mercantilist export strategy, failing to wean themselves off American demand when the going was good.
Yet this is an intolerable situation for the US. It should be no surprise that Washington has begun to retaliate in earnest, and not just by passing the Reform for Fair Trade Act in the House (not yet the Senate), clearing the way for punitive tariffs against currency manipulators.
The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8054066/Currency-wars-are-necessary-if-all-else-fails.html
Currency Rift With China Exposes Shifting Clout
WASHINGTON — At a private dinner on Friday at the Canadian Embassy, finance officials from seven world economic powers focused on the most vexing international economic problem facing the Obama administration.
Over seared scallops and beef tenderloin, Treasury Secretary Timothy F. Geithner urged his counterparts from Europe, Canada and Japan to help persuade China to let its currency, the renminbi, rise in value — a crucial element in redressing the trade imbalances that are threatening recovery around the world.
But the next afternoon, the annual meetings of the International Monetary Fund ended with a tepid statement that made only fleeting and indirect references to the simmering currency tensions.
The divergence between the mounting anxieties over Chinese policy and the cautious official response was a striking display of the difficulty of securing international economic cooperation, two years after the financial crisis began.
Above all, officials say, the crisis has shifted influence from the richest powers toward Asia and Latin America, whose economies have weathered the recession much better than those of the United States, Europe and Japan.
“We have come to the end of a model where seven advanced economies can make decisions for the world without the emerging countries,” said one European official involved in the weekend talks. “Like it or not, we simply have to accept it.”
http://www.nytimes.com/2010/10/11/business/economy/11currency.html?_r=1
The demise of the dollar
By Robert Fisk
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
With dip buyers in abundance, and shorts below the markets happy to get out at less of a loss on the dips resulting from this bout of uncertainty, the Precious metals look content to consolidate their recent gains here. This of course would be preferable to the bulls in the market instead of a "correction" in price.
It should be noted, regarding a "correction", that the "relative prices" of Gold and Silver are very low at this time, and do NOT warrant a significant correction at this time. Relative prices reference correcelations between their 50 and 200 day moving averages. For instance, Silver usually "corrects" in price when it's 50 day moving average is 25% or more above its 200 day moving average. Today, Silver's 50 day moving average is just 5% above its 200 day moving average. Gold's is only 2%.
Adam Hamilton has done a great deal of research on this measurement metric. You can learn a lot by reading his past essay's on the subject. You can start by reading this essay posted by him one year ago: Relativity Trading
At this hour the US Dollar is probing 15 year lows vs the Yen. The Chinese Yuan is down on news that the banks are determined to fight inflation. This must thrill Little Timmy Geithner and his cronies in Congress desperate to see China raise the value of the Yuan. Of course, as the Fed prints more money, they export inflation around the globe. The Chinese are within their rights to fight it, and give the US Treasury the finger in the process.
China raises bank reserve ratio for some banks
SHANGHAI — China's central bank has ordered six lenders to temporarily increase the amount of money they must keep in reserve to rein in lending and combat rising inflation, state media said Tuesday.
The People's Bank of China on Monday hiked the reserve requirement ratio for the six lenders by 50 basis points to 17.5 percent for two months, the China Securities Journal said, citing unnamed sources.
The six banks include the four major state-owned lenders -- Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China, the report said.
The other two lenders are China Merchants Bank and China Minsheng Banking Corp, it said.
It is the fourth time this year that China has raised banks' reserve requirement ratio and comes after new lending in September "significantly exceeded regulators' expectation", an unnamed source was quoted as saying.
The move is also in response to rising inflation, the source said, which rose at the fastest pace in nearly two years in August, as severe floods and unusually hot weather destroyed crops, driving up food prices.
http://www.google.com/hostednews/afp/article/ALeqM5hF4tGBIAquWyleR39nZI-F85oHow?docId=CNG.3af003c84a71aeca2db44ba857bb01cc.431
Finance leaders fail to resolve currency dispute
By MARTIN CRUTSINGER and HARRY DUNPHY
WASHINGTON – Global finance leaders failed Saturday to resolve deep differences that threaten the outbreak of a full-blown currency war.
Various nations are seeking to devalue their currencies as a way to boost exports and jobs during hard economic times. The concern is that such efforts could trigger a repeat of the trade wars that contributed to the Great Depression of the 1930s as country after country raises projectionist barriers to imported goods.
The International Monetary Fund wrapped up two days of talks with a communique that pledged to "deepen" its work in the area of currency movements, including conducting studies on the issue.
World Bank President Robert Zoellick said the rising economic tensions reflected a weak global recovery.
"A lack of growth accompanied by high unemployment is having consequences," Zoellick told reporters at a news conference concluding the IMF-World Bank meetings. "There is a danger that countries will turn inward and, as a result, international cooperation falters. This could be dangerous."
The communique essentially papered-over sharp differences on currency policies between China and the United States.
http://news.yahoo.com/s/ap/20101009/ap_on_bi_ge/us_global_finance;_ylt=AprgaCy05DhVdF5d624R0QKs0NUE;_ylu=X3oDMTNoMDJtNDBqBGFzc2V0A2FwLzIwMTAxMDA5L3VzX2dsb2JhbF9maW5hbmNlBGNjb2RlA21vc3Rwb3B1bGFyBGNwb3MDMgRwb3MDNwRwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDZmluYW5jZWxlYWRl
IMF Fails, Gold Shines as Currency Wars to Continue
Eric King, KingWorldNews.com
The IMF was unable to stem the tide of competitive currency devaluations over the weekend. As a result, governments and central banks around the world still have the green light to continue with their money printing orgy. Some of the citizens of these various regions and countries have recently been acting as their own central banks by purchasing gold as insurance against the currency wars. As fears escalate, the question now becomes, when will the people of this world once again have a stable system of currency?
Here is a new piece exclusively for the King World News blog from Ben Davies, CEO of Hinde Capital which sums up the situation nicely:
October 10, 2010
IMF At The Epicenter Of Currency Earthquake
By Ben Davies, CEO of Hinde Capital
October 10 (King World News) - Henry Hazlitt was the modern literary agent of libertarianism. At the advent of Bretton Woods he stood alone in his New York Times editorials condemning the monstrosity, as he termed it, that was the IMF. He considered this entity no different to the Federal Reserve Bank. Another organization espousing the values of economic growth and price stability. In reality, they were both merely agents for the propagation of money to aid and abet the continuation of the flawed policies and practices of a country. In the case of the IMF they called on loans from member countries to 'bail out' bankrupt nations globally. The IMF prolonged the inevitable misery and didn't address the issues that got the country into difficulties in the first place.
Emergent nations once patronized by IMF bailouts and inappropriate 'conditional love' have put two fingers up. I can almost hear the BRIC nations silent mutterings, "Why should we 'flex' our currencies to assist the developing nations who so highmindedly leered over us in troubled times passed and revelled in our misery."
Bretton Woods was possible due to the economic strength of US. The Plaza Accord was permitted because it was in the best interest of the US. The Louvre Accord which tried to arrest the efforts of the Plaza Accord of two years earlier, ironically, was permitted because it was in the best interest of the US.
The US and developed nations no longer wield power anymore. " IMF who? " the BRIC’s cry. Right now the emergent nations are more content to say "our currency, your problem". Unfortunately the West, particularly the US have returned the favour, "our bonds, your problem" and so the stalemate will prevail.
Unfortunately as each day passes, the friction of the global monetary fault lines grow stronger. These fault lines will release their energy in the largest world monetary earthquake known to man, as we witness the inevitable demise of the fiat currency system - as all such systems have failed before, leaving not one survivor.
As currency wars escalate, it is wise for individuals to have a presence outside of the system by owning gold.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/10_IMF_Fails,_Gold_Shines_as_Currency_Wars_to_Continue.html
Currency wars are necessary if all else fails
By Ambrose Evans-Pritchard
The overwhelming fact of the global currency system is that America needs a much weaker dollar to bring its economy back into kilter and avoid slow ruin, yet the rest of the world cannot easily handle the consequences of such a wrenching adjustment. There is not enough demand to go around.
Each country is doing so for understandable reasons: Japan to avoid a deflationary crisis, China to hold together a political order that is more fragile than it looks. In both these cases they are trapped because they clung too long to a mercantilist export strategy, failing to wean themselves off American demand when the going was good.
Yet this is an intolerable situation for the US. It should be no surprise that Washington has begun to retaliate in earnest, and not just by passing the Reform for Fair Trade Act in the House (not yet the Senate), clearing the way for punitive tariffs against currency manipulators.
The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8054066/Currency-wars-are-necessary-if-all-else-fails.html
Currency Rift With China Exposes Shifting Clout
WASHINGTON — At a private dinner on Friday at the Canadian Embassy, finance officials from seven world economic powers focused on the most vexing international economic problem facing the Obama administration.
Over seared scallops and beef tenderloin, Treasury Secretary Timothy F. Geithner urged his counterparts from Europe, Canada and Japan to help persuade China to let its currency, the renminbi, rise in value — a crucial element in redressing the trade imbalances that are threatening recovery around the world.
But the next afternoon, the annual meetings of the International Monetary Fund ended with a tepid statement that made only fleeting and indirect references to the simmering currency tensions.
The divergence between the mounting anxieties over Chinese policy and the cautious official response was a striking display of the difficulty of securing international economic cooperation, two years after the financial crisis began.
Above all, officials say, the crisis has shifted influence from the richest powers toward Asia and Latin America, whose economies have weathered the recession much better than those of the United States, Europe and Japan.
“We have come to the end of a model where seven advanced economies can make decisions for the world without the emerging countries,” said one European official involved in the weekend talks. “Like it or not, we simply have to accept it.”
http://www.nytimes.com/2010/10/11/business/economy/11currency.html?_r=1
The demise of the dollar
By Robert Fisk
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
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