The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
To return to the utility point, Mr Bogni argues all utilities need in-built redundancy and careful balancing. Without that margin of safety in electricity, for example, the lights may constantly go off. Redundancy and balancing are, he adds, exactly what the promoters of Basel II removed from the financial system with broad political support. Banks became badly overleveraged as a result.
Now we have Basel II and a Half and sundry other things. Absent much tougher competition policy, perhaps the best that can be said is that the attempt to clip the wings of the banking behemoths is so modest that the law of unintended consequences may be equally modest in its impact.
Larry Summers, director of the US president’s National Economic Council, usually eats at his White House desk or sitting around a nearby table with other members of the economic team. But today, for Lunch with the FT, Summers’ aides have persuaded him to walk down the stairs to the Ward Room, a windowless alcove near the White House mess. The dark-wood panelling and nautically themed paintings are meant to evoke a naval officer’s dining room but these grace notes are muted by the plastic cutlery, paper plates and drinks sipped straight from their plastic bottles.
Fitch Ratings is paying close attention to French plans for a “special national bond” to raise up to €80bn for projects outside the normal budget.
While there is no immediate threat to France’s elite `AAA’ rating, the agency said concerns may mount if the country fails to map out a clear path towards fiscal discipline over the next year or so.
For more than 20 years, the CFTC has turned a blind eye and a deaf ear to the problem of legitimate position limits in silver. Apparently, that has changed. The new Chairman appears to be interested in the public’s opinion on this issue. It’s time for you to speak up. It’s time to be specific. The issue is position limits, not the budget deficit, not the dollar, not his previous employment at Goldman Sachs. He is doing what he should be doing and as such, deserves to be treated with respect. Ask him and the other commissioners to reduce the position limits in silver to between 1000 to 1500 contracts, or please explain why that limit is not appropriate. Ask him to do away with the phony exemptions granted to a few big shorts or make transparent the reason why they are short. Make it s
A few weeks ago, I warned against the risk of future long term interest rates hikes and future U.S. dollar depreciation following the decisions by the U.S. Treasury and by the Fed to flood the markets with trillions of dollars of new Treasury bond issues and with newly printed money. The undertow is coming even faster than I thought. Only when the markets expect relative economic stagnation and a lasting deflationary environment will long term interest rates taper off.
Brace yourself and hold on to your britches. There is a rough economic decade ahead.
For Russian President Dmitry Medvedev, the monetary future is now. At his closing press conference, Medvedev held up a golden coin bearing the words “united future world currency,” which he said was minted in Belgium and handed to G-8 attendees.
“Even the mints” are thinking about a post-dollar world, Medvedev said. The test coin “means they’re getting ready.”
That headline figure conceals some startling regional discrepancies. Colorado is reckoned to be through the worst. In New York, though, the pain has barely started. Prices there are projected to decline by another 30 per cent or so. Taken as a whole, these projections imply that about 25m households in America end up in negative equity.
This projection is gloomier than those made by the US government and many large US banks. But the 25m number is currently being echoed by other investment groups, such as Pimco. If it turns out to be correct, it raises two crucial questions. One is the degree to which the western banking system could face a secondary round of real estate losses (particularly as these analysts are even more alarmed about the commercial property outlook than the residentia
California’s fiscal crisis is in danger of becoming a serious headache, not just for the state and its feuding politicians in Sacramento, but for the entire nation.
In public, federal government officials talk about California’s problems as if they were ringfenced – a crisis for the state but with few national ramifications. They know the slightest whiff of federal intervention would take away the incentive for California’s politicians to agree on tough spending cuts and tax increases.
The state of the states
California is not the only state facing dire financial straits, as our interactive graphic shows in a coast-to-coast analysis of their budgets.
Most importantly, if Howe is right, this crisis is far from over. In fact, when I asked him where we are today on a scale from 1 to 10 -- with 10 representing as bad as the crisis will get -- he replied that we are at either 2 or 3. In other words, the worst is very much yet to come. And, per above, he expects this period of turmoil to take 20 years to play out. Thus, if nothing else, you may want to continue approaching matters of personal finance cautiously.
Colleague Simone Wapler compared government debt to government gold. The US has gold worth about $241 billion, she reports. Its official national debt is $11.5 trillion. That gives it a debt/gold ratio of 48 – meaning, the feds have 48 times as much debt as gold.
Britain is even worse. Prime Minister, then Chancellor, Gordon Brown sold much of England’s gold at the worse possible moment – about 10 years ago. This leaves the island with only $9 billion worth of gold compared to $1,274 billion of government debt – a ratio of 1 to 139. But Japan is the worst of all. It has $23 billion worth of gold and $7.3 trillion of government debt, for a ratio of 1 to 323. (Of course, Japan has vast holdings of dollars too!)
What nation has the best gold/debt ratio? Switzerland. It has onl
A fourth lesson is that gold is shifting back from a sovereign reserve asset central banks were inclined to underplay to one of growing, strategic interest. This shift is logical; gold remains the world's primary financial asset that is no one's liability. In the past few months, China has reported a rise in its official gold holdings of 15m troy ounces (about 450 tonnes), more than the amount sold by the UK, Spain and the European Central Bank combined in the previous six years. Despite this massive addition, China's gold allocation has risen from less than 1 per cent to only 1.6 per cent, a fraction of the amount commonly found in Europe and the US. With China holding 20 per cent of total international currency reserves, where it goes, other
Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials.
Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression.
“China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”
China has launched its highest-profile criticism of the dominant role of the US dollar as a global reserve currency at a meeting of the world's biggest economies, the FT said. Dai Bingguo, Chinese state councillor, was unequivocal in calling for the world to diversify the reserve currency system and aim at relatively stable exchange rates among leading currencies. Analysts said Mr Dai’s comments - which follow earlier statements by the People's Bank of China in March - appeared mostly political in nature.
In late April, a Chinese sovereign wealth fund, the State Administration of Foreign Exchange, announced that China had purchased 454 metric tons of gold over the past six years. Officials indicated that this increase was accomplished by tapping domestic mine supply and refining scrap gold. As China reported gold production of 282 t last year, the reserves have absorbed about 25% of this output since 2003.
China now has the fifth largest official gold reserve, 1,054 metric tons, surpassing Switzerland. While this was a 76% jump in gold holdings, the yellow metal is still only 1.6% of China’s foreign reserves. Just to reach the global average of 10.5%, China would have to grow its gold hoard to nearly 7,000 t.
Public announcement Special Summer 2009 GEAB N°36 (June 17, 2009)
As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer.
At this stage of the global systemic crisis’ process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months) (1). On the contrary, because the origins of the crisis remain unaddressed, we estimate that the summer 2009 will be marked by the co
When I last wrote about Goldman Sachs in late March the most politically-connected and luckiest firm on Wall Street was in the middle of rigging the stock market -- again.
"Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs," is the way I put it in that March 28 column.
Well, a lot has changed in just the past few weeks. And I'd like to put it all together for you, and for the rest of the media should it choose to follow what is shaping up to be the most incredible financial story ever.
Back in March I noted that the rally occurring in the stock market had the indisputable fingerprints of Goldman all over it. There were numbers to back it up.
An amendment based on Congressman Ron Paul’s House bill to audit the Federal Reserves was blocked by the Senate this week on procedural grounds.
Speaking on the Senate floor, Republican Senator Jim DeMint and supporter of an audit said, "allowing the Fed to operate our nation's monetary system in almost complete secrecy leads to abuse, inflation and a lower quality of life."
Charles Ortel, managing director with Newport Value Partners, an independent research firm, agrees. "Transparency is the key to any market," he says, noting the Fed doesn't mark-to-market its assets, much of it now consisting of the worst toxic debt Wall Street had to offer.
In truth, the Fed doesn't work in complete secrecy - they do release a weekly update wh
Worried about a harrowing, inflation-ridden future, Scott Van Steyn has found the answer in a batch of glittering one-ounce gold coins. In fact, they make up a large chunk of the physician’s assets.
“There’s 2,000 years of history to show that gold is the best thing to own during bad inflation,” says Dr. Van Steyn, a 45-year-old orthopedic surgeon in Columbus, Ohio. “People used to laugh at me for buying gold. They don’t anymore.”
More and more investors are acquiring physical gold, or bullion, in the form of small bars the size of iPhones or coins like American Eagles and South African Krugerrands. Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons.
July
16
July
The Economy Is Even Worse Than You Think
Jul 16 2009 Wall Street Journal
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad. The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
Continue Reading
16
July
Banks let off the hook as flawed model is preserved
Jul 16 2009 The Financial Times
To return to the utility point, Mr Bogni argues all utilities need in-built redundancy and careful balancing. Without that margin of safety in electricity, for example, the lights may constantly go off. Redundancy and balancing are, he adds, exactly what the promoters of Basel II removed from the financial system with broad political support. Banks became badly overleveraged as a result. Now we have Basel II and a Half and sundry other things. Absent much tougher competition policy, perhaps the best that can be said is that the attempt to clip the wings of the banking behemoths is so modest that the law of unintended consequences may be equally modest in its impact.
Continue Reading
16
July
Lunch with the FT: Larry Summers
Jul 16 2009 The Financial Times
Larry Summers, director of the US president’s National Economic Council, usually eats at his White House desk or sitting around a nearby table with other members of the economic team. But today, for Lunch with the FT, Summers’ aides have persuaded him to walk down the stairs to the Ward Room, a windowless alcove near the White House mess. The dark-wood panelling and nautically themed paintings are meant to evoke a naval officer’s dining room but these grace notes are muted by the plastic cutlery, paper plates and drinks sipped straight from their plastic bottles.
Continue Reading
15
July
France’s `special bond’ raises doubts over AAA rating
Jul 15 2009 The Telegraph
Fitch Ratings is paying close attention to French plans for a “special national bond” to raise up to €80bn for projects outside the normal budget. While there is no immediate threat to France’s elite `AAA’ rating, the agency said concerns may mount if the country fails to map out a clear path towards fiscal discipline over the next year or so.
Continue Reading
15
July
Ted Butler: CFTC's interest in position limits could end silver rig
Jul 15 2009 SilverSeek
For more than 20 years, the CFTC has turned a blind eye and a deaf ear to the problem of legitimate position limits in silver. Apparently, that has changed. The new Chairman appears to be interested in the public’s opinion on this issue. It’s time for you to speak up. It’s time to be specific. The issue is position limits, not the budget deficit, not the dollar, not his previous employment at Goldman Sachs. He is doing what he should be doing and as such, deserves to be treated with respect. Ask him and the other commissioners to reduce the position limits in silver to between 1000 to 1500 contracts, or please explain why that limit is not appropriate. Ask him to do away with the phony exemptions granted to a few big shorts or make transparent the reason why they are short. Make it s
Continue Reading
15
July
The Great Baby-Boomers Economic Depression of 2007-2017
Jul 15 2009 Market Oracle
A few weeks ago, I warned against the risk of future long term interest rates hikes and future U.S. dollar depreciation following the decisions by the U.S. Treasury and by the Fed to flood the markets with trillions of dollars of new Treasury bond issues and with newly printed money. The undertow is coming even faster than I thought. Only when the markets expect relative economic stagnation and a lasting deflationary environment will long term interest rates taper off. Brace yourself and hold on to your britches. There is a rough economic decade ahead.
Continue Reading
14
July
G-8’s Dominance Faces Challenge From China, India
Jul 14 2009 Bloomberg.com
For Russian President Dmitry Medvedev, the monetary future is now. At his closing press conference, Medvedev held up a golden coin bearing the words “united future world currency,” which he said was minted in Belgium and handed to G-8 attendees. “Even the mints” are thinking about a post-dollar world, Medvedev said. The test coin “means they’re getting ready.”
Continue Reading
14
July
Financial Times Insight: US property market central to economy
Jul 14 2009 The Financial Times
That headline figure conceals some startling regional discrepancies. Colorado is reckoned to be through the worst. In New York, though, the pain has barely started. Prices there are projected to decline by another 30 per cent or so. Taken as a whole, these projections imply that about 25m households in America end up in negative equity. This projection is gloomier than those made by the US government and many large US banks. But the 25m number is currently being echoed by other investment groups, such as Pimco. If it turns out to be correct, it raises two crucial questions. One is the degree to which the western banking system could face a secondary round of real estate losses (particularly as these analysts are even more alarmed about the commercial property outlook than the residentia
Continue Reading
14
July
California ills could give US headache
Jul 14 2009 The Financial Times
California’s fiscal crisis is in danger of becoming a serious headache, not just for the state and its feuding politicians in Sacramento, but for the entire nation. In public, federal government officials talk about California’s problems as if they were ringfenced – a crisis for the state but with few national ramifications. They know the slightest whiff of federal intervention would take away the incentive for California’s politicians to agree on tough spending cuts and tax increases. The state of the states California is not the only state facing dire financial straits, as our interactive graphic shows in a coast-to-coast analysis of their budgets.
Continue Reading
13
July
A 20-Year Bear Market?
Jul 13 2009 GoldSeek
Most importantly, if Howe is right, this crisis is far from over. In fact, when I asked him where we are today on a scale from 1 to 10 -- with 10 representing as bad as the crisis will get -- he replied that we are at either 2 or 3. In other words, the worst is very much yet to come. And, per above, he expects this period of turmoil to take 20 years to play out. Thus, if nothing else, you may want to continue approaching matters of personal finance cautiously.
Continue Reading
13
July
What if the US Had to Pay its Debt in Gold?
Jul 13 2009 The Right Side
Colleague Simone Wapler compared government debt to government gold. The US has gold worth about $241 billion, she reports. Its official national debt is $11.5 trillion. That gives it a debt/gold ratio of 48 – meaning, the feds have 48 times as much debt as gold. Britain is even worse. Prime Minister, then Chancellor, Gordon Brown sold much of England’s gold at the worse possible moment – about 10 years ago. This leaves the island with only $9 billion worth of gold compared to $1,274 billion of government debt – a ratio of 1 to 139. But Japan is the worst of all. It has $23 billion worth of gold and $7.3 trillion of government debt, for a ratio of 1 to 323. (Of course, Japan has vast holdings of dollars too!) What nation has the best gold/debt ratio? Switzerland. It has onl
Continue Reading
10
July
Central Bankers Return to Gold and Dollars
Jul 10 2009 The Financial Times
Article by Terrence Keeley
A fourth lesson is that gold is shifting back from a sovereign reserve asset central banks were inclined to underplay to one of growing, strategic interest. This shift is logical; gold remains the world's primary financial asset that is no one's liability. In the past few months, China has reported a rise in its official gold holdings of 15m troy ounces (about 450 tonnes), more than the amount sold by the UK, Spain and the European Central Bank combined in the previous six years. Despite this massive addition, China's gold allocation has risen from less than 1 per cent to only 1.6 per cent, a fraction of the amount commonly found in Europe and the US. With China holding 20 per cent of total international currency reserves, where it goes, other
Continue Reading
10
July
This $17 Trillion Divorce Won’t Be a Pretty One: William Pesek
Jul 10 2009 Bloomberg.com
Article by John Pesek
Returning from China last month, U.S. Congressman Mark Kirk had a bearish take on a high-level visit by American officials. Treasury Secretary Timothy Geithner claimed the U.S.’s biggest creditor voiced great confidence in its debt. Kirk, an Illinois Republican, came back with the opposite impression. “China is beginning to cancel Congress’s credit card,” he told Fox News on June 10. It “doesn’t want to lend much more money to the United States and especially is worried about the Fed’s policy of printing money to buy new debt.”
Continue Reading
10
July
China attacks dollar’s dominance
Jul 10 2009 The Financial Times
FT Aplhaville entry by Stacy-Marie Ishmael
China has launched its highest-profile criticism of the dominant role of the US dollar as a global reserve currency at a meeting of the world's biggest economies, the FT said. Dai Bingguo, Chinese state councillor, was unequivocal in calling for the world to diversify the reserve currency system and aim at relatively stable exchange rates among leading currencies. Analysts said Mr Dai’s comments - which follow earlier statements by the People's Bank of China in March - appeared mostly political in nature.
Continue Reading
10
July
Gold, the U.S. dollar, and the Chinese yuan
Jul 10 2009 Market Oracle
Article by Jennifer Barry
In late April, a Chinese sovereign wealth fund, the State Administration of Foreign Exchange, announced that China had purchased 454 metric tons of gold over the past six years. Officials indicated that this increase was accomplished by tapping domestic mine supply and refining scrap gold. As China reported gold production of 282 t last year, the reserves have absorbed about 25% of this output since 2003.
China now has the fifth largest official gold reserve, 1,054 metric tons, surpassing Switzerland. While this was a 76% jump in gold holdings, the yellow metal is still only 1.6% of China’s foreign reserves. Just to reach the global average of 10.5%, China would have to grow its gold hoard to nearly 7,000 t.
This announcem
Continue Reading
10
July
Global systemic crisis in summer 2009
Jul 10 2009 European Laboratory of Political Anticipation
Public announcement Special Summer 2009 GEAB N°36 (June 17, 2009)
As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer. At this stage of the global systemic crisis’ process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months) (1). On the contrary, because the origins of the crisis remain unaddressed, we estimate that the summer 2009 will be marked by the co
Continue Reading
10
July
John Crudele: Influence is in the bag for 'Government Sachs'
Jul 10 2009 The New York Post
Article by John Crudele
When I last wrote about Goldman Sachs in late March the most politically-connected and luckiest firm on Wall Street was in the middle of rigging the stock market -- again.
"Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs," is the way I put it in that March 28 column.
Well, a lot has changed in just the past few weeks. And I'd like to put it all together for you, and for the rest of the media should it choose to follow what is shaping up to be the most incredible financial story ever.
Back in March I noted that the rally occurring in the stock market had the indisputable fingerprints of Goldman all over it. There were numbers to back it up.
Despite the fact that re
Continue Reading
9
July
Smart money has little confidence in the future of the U.S. and is buying gold
Jul 09 2009 Yahoo News
An amendment based on Congressman Ron Paul’s House bill to audit the Federal Reserves was blocked by the Senate this week on procedural grounds.
Speaking on the Senate floor, Republican Senator Jim DeMint and supporter of an audit said, "allowing the Fed to operate our nation's monetary system in almost complete secrecy leads to abuse, inflation and a lower quality of life."
Charles Ortel, managing director with Newport Value Partners, an independent research firm, agrees. "Transparency is the key to any market," he says, noting the Fed doesn't mark-to-market its assets, much of it now consisting of the worst toxic debt Wall Street had to offer.
In truth, the Fed doesn't work in complete secrecy - they do release a weekly update wh
Continue Reading
9
July
Paul says Fed audit bill means to expose gold price manipulation
Jul 09 2009 Youtube
Continue Reading
9
July
Catching The Gold Bug – Investors Turn to Gold
Jul 09 2009 Wall Street Journal
Worried about a harrowing, inflation-ridden future, Scott Van Steyn has found the answer in a batch of glittering one-ounce gold coins. In fact, they make up a large chunk of the physician’s assets.
“There’s 2,000 years of history to show that gold is the best thing to own during bad inflation,” says Dr. Van Steyn, a 45-year-old orthopedic surgeon in Columbus, Ohio. “People used to laugh at me for buying gold. They don’t anymore.”
More and more investors are acquiring physical gold, or bullion, in the form of small bars the size of iPhones or coins like American Eagles and South African Krugerrands. Individuals’ bullion purchases almost doubled last year, amid apocalyptic panic over the financial system, to 862 metric tons.
Continue Reading