If the Fed pursues another round of quantitative easing, the Canadian dollar may be the big winner. The loonie has tended to perform fairly well following previous QE episodes, according to Barclays strategist Paul Robinson.
An all-out war has broken out between Citigroup CEO Vikram Pandit and a prominent securities analyst who is saying that the big bank may be cooking the books by inflating its earnings through an accounting gimmick, FOX Business Network has learned.
He disagrees that that there's a bubble brewing in the gold market right now, although he doesn't rule that out in the future.
"I expect there to be hysteria in the precious metals markets in 5 to 10 years. Right now, very few people own gold, and I can hardly call something a bubble when very few people own it," he said.
A report showed confidence climbed more than expected in August, giving traders some hope that the slowdown in the economy might be finding a bottom.
Rumors about the standing of various Chinese officials are likely to continue in the future and proliferate widely and rapidly across China’s vast pool of internet users,” Stratfor continues. “This is due to the uncertainties and potential disturbances relating to the mixture of increasing economic challenges, fierce debates about appropriate policy responses and China’s future path, and the upcoming leadership transition in 2012, in which the fifth generation of Chinese leaders will take power.”
The city of Miami is so broke it's forcing employees to take pay cuts, even though they're under contract.
Mayor Tomas Regalado said he's never seen a financial mess like this before, and his options are grim.
“It's either that or we layoff 1,000 employees or we raise taxes to the max, and we're not raising taxes to the max,” the mayor said.
Americans are spending a little more this summer, but hardly enough to rejuvenate the weakening economy.
What is needed is a bigger boost in salaries and more jobs. Economists don't see either coming this year, which is why the economy is likely to limp along.
Rumors have circulated in China that People’s Bank of China (PBC) Gov. Zhou Xiaochuan may have left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBC, including Zhou. Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou’s defection have spread around China intensively, and Zhou’s name has been blocked from Internet search engines in China.
STRATFOR has received no confirmation of the rumor, and reports by state-run Chinese media appeared to send strong indications that Zhou is in no trouble at the moment. However, the release of this rumor and its dispersion throughout the public is significant, particularly as the Communist Party of China (CPC) is preparing for a leadership transition in 2012.
OUR national debate about fiscal policy has become skewed, with far too much focus on the deficit and far too little on unemployment. There is too much worry about the size of government, and too little appreciation for how stimulus spending has helped stabilize the economy and how more of the right kind of government spending could boost job creation and economic growth.
But what was missed was Bernanke's low-key plea for help - from the government.
"This list of concerns makes clear that a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector. Central bankers alone cannot solve the world's economic problems."
China's draconian export curbs on rare earth minerals needed by the rest of the world for frontier technologies is escalating into a serious diplomatic and trade clash with the United States and other leading powers.
The Bank of Japan is holding an emergency meeting Monday as political pressure mounts for the central bank to ease monetary policy in the face of a surging yen.
In a statement on its website, the bank said the meeting is scheduled for 9 a.m. in Tokyo (0000 GMT; 8 p.m. EDT Sunday). The bank had been expected to convene Sept. 6 at a scheduled two-day policy board meeting.
The news sent Japanese stocks soaring. The Nikkei 225 stock average finished the morning session up 3.1 percent at 9,265.39.
There seems to be a single constant in the financial world, and those who play. There are few if any perma-anythings, with most chasing the bull, or chasing the bear as a bear-bull in the moment. It looks like the last of the Perma for Life people are dying off as the last of the generation that endured the Great Depression find their rest in the soil.
The generation who made roads in the dirt, flew paper airplanes, and dreamed the impossible dream are now gray haired, and either broke or millionaires. There is little ground in between the extremes that was once a maxim 20-60-20 rich/middle class/poor. What seems to exist today is a younger generation with no imagination, incapable of taking a block of wood and shoving it around the dirt pile in dreams of logging trucks, and crawler tractors. Lost are the majority who created art, and music in its natural form. There are no lifelong collectors of anything, only a headlong rush from contemporary to abstract, and back in hyper-realism. Value is now replaced with greed, and get it now before the color fades. Bringing a face to this reality was a conversation with a PhD, retired, from NASA, who spoke to me about the fear in NASA that the upcoming generation’s imagination has been lulled to sleep by fast TV, fast girls, and constant bombardment of stimulation instead of self-generated creativity.
To a more direct point. Even the supposed perma-bears of today run helterskelter, seeking profit and gain first in that, and then in this, with no long-living devotion to any belief. Most current Bears do not care about fundamentals and history. None seem to care whether or not they are playing in a AntLion hole from which they will never escape. The greed of gaining the last drop of blood from the dying carcass of both bears and bulls is foremost on the heart of the young and younger. No person not directly from a Great Depression family is prepared for what will come. That means that unless your parents where born no later than 1920, you cannot have any basis to form an understanding for the potential pain of a real collapse. There are a few foreigners who understand, but I read nothing of what they may have to say.
‘They Won’t Let It Happen’
It can never happen…Bernanke will not let it happen…the Government is not going to . . .. they will take care of us…I’ll make so much in the crash it will not matter. . . I’ll be OK. Please add your own reassurance to the list, as there are many more excuses offered by temp-bearbulls. The pessimist rarely makes the big killing in the stock market like a tempbull will. Someone who experienced the Great Depression does not act like today’s tempbull. There is one great difference between the Great Depression and today where The People are concerned. Nearly everyone in 1920 knew how to take care of him or herself. They knew meat came from a cow, and milk did not come from a bottle. And yet today, the young cannot imagine a milk bottle delivered to the door by the milkman. Nor have they ever imagined a family coming together to butcher a steer and can the meat because there was no freezer.
I see no imagination in the pages, blogs, and opinions written by financial wizards, or the wizard bulls who are smarter than a non-emotional chartist who knows the pendulum slows, stops, and slowly speeds up to strike down everything past dead center. There is only one thing that cannot be taken from someone, and that is knowledge. And even here, I have seen hypothermia take my mind, my strength, and my soul into a black pit of nothingness. The majority of bulls and bears today have never experienced hypothermia. Nor have the wishy-washy bears seen $1 million on the books that they will never eat, that they cannot turn into warmth or food.
A Rosy Filter
I guess that unless one has seen the valuelessness of gold while you shiver your way into darkness, there just isn’t a perspective to create a reality. This is why I spoke of imagination and NASA as I wrote. The generation born into the Sixties has not experienced loss in any form. That generation is without understanding, or imagination to see through a mental filter created by pain and loss as past generations have. The 1960s filter of democracy is a rosy filter of much, more, and always more. Even in the annals of bear-market writers there exists temp-bearbulls looking to ride the next wave for an hour or a day.
Is it time for the Super Depression ? Probably, because the majority who have lived through that kind of pain are all dead and gone. Will the greedy temp-bearbulls get trampled? Yes ! But not before they see the millions they’ve won by trading correctly fail to provide them with anything of value. And what of us hard-currency nuts? You tell me! But Steve, you say: there are so many suffering without jobs today. True enough. But in 1934, there wasn’t any unemployment in the place where my dad pulled a crosscut saw for $1.00 pre thousand, part-time. (That’s about 50 cents a day, since there was someone on the other end of the saw). There weren’t any government handouts in Sutherland, where the mill ran one day a week, or one day a month, and where the women rejoiced in their diary: “The men worked today!” The more bears who think they are going to make a killing on the crash, the nearer we are to that crash.
I think Mr. Market is going to suck the blood out of nearly everyone — but especially from Bears who think Mr. Market is their friend in crushing the Bulls. Imagine “Value” and imagine what value really is in its most basic sense. I’d tell you what value is, but you either know, or will not listen to this ol’ radical gloom-and-doomer.
Dear Eric:
This thing is going unwind so fast that other than we here at Mineset & HSLM, no one will believe it.
Jim
Budget cuts are forcing police around the country to stop responding to fraud, burglary and theft calls as officers focus limited resources on violent crime, USA Today.
As the hospital shuts down various departments, it will lay off its 1,000 employees, a hospital spokeswoman said. A spokeswoman for 1199 SEIU United Healthcare Workers East, which represents 900 workers, said they had been told positions would be "phased out."
It's the second acute-care hospital to fold in New York City in less than two months. St. Vincent's Hospital, the last Catholic hospital in the city, closed in April and filed for bankruptcy. online.wsj.com
The number of individual investors who have a bullish outlook on the stock market for the next six months plunged to 21 percent, from 30 percent last week, according to a widely followed sentiment survey.
What's more, this is the lowest weekly reading from the American Association of Individual Investors since a March 2009 level of 19 percent, which occurred just before the S&P 500 collapsed to a 12-year low of 676.
Federal Reserve Chairman Ben Bernanke said Friday that the Fed will consider making another large-scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare.
A little more than two months ago, banking analyst Meredith Whitney said on CNBC, “Unequivocally, I see a double-dip in housing. There’s no doubt about it . . . prices are going down again.”
U.S. economic growth likely was much weaker than initially thought between April and June, hurt by surging imports and as rebuilding of business inventories softened, a government report is expected to show on Friday.
Gross domestic product now is estimated to have grown at a 1.4 percent annual rate during the second quarter, rather than the 2.4 percent estimated in the government's first reading last month, according to a Reuters survey.
Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.
A number of the world’s biggest banks have launched international roadshows promoting the use of the renminbi to corporate customers instead of the dollar for trade deals with China.
That's the test facing Fed Chairman Ben Bernanke as he addresses a conference Friday in Jackson Hole, Wyo. Without any easy options left, Bernanke must try to prevent another recession by persuading people and businesses to feel confident enough about the future to spend more today.
Sun on the Beach owners Gil and Kent Black started the discount out of frustration over the seemingly endless price increases credit card companies impose for processing credit transactions.
"It was 80 percent credit cards before we started, but it's now about 50/50," said Kent Black. "Non-locals still tend to pay with credit cards, but we've seen a marked increase in cash payments from the local customers."
Illinois Teachers' Retirement System, Springfield, plans to sell $3 billion in investments, or about 10% of its $33.1 billion in assets, in the current fiscal year to pay pension benefits, according to Dave Urbanek, public information officer.
Orders for durable goods in the U.S. increased less than forecast in July and sales of new homes unexpectedly dropped, increasing the risk of a renewed recession in the world’s largest economy.
Bookings for goods made to last at least three years rose 0.3 percent, figures from the Commerce Department showed today in Washington. Excluding transportation equipment, demand fell by the most in more than a year. Purchases of new dwellings fell 12 percent to an annual pace of 276,000, the weakest since data began in 1963, figures from the same agency showed.
“Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote.
While the ratio remains above June 2009 swing low, today’s technical suggest that another wave of currency debasement lurks just around the corner.
The economic recovery appears to be stalling as companies cut back last month on their investments in equipment and machines and Americans bought new homes at the weakest pace in decades.
Investors queasy over whether there's anything that can be done to boost the flagging US economy could get a trillion-dollar answer this week from the Federal Reserve.
When officials from the central bank emerge from this week's Jackson Hole, Wyo., retreat, they will likely disclose the latest in the arsenal of so-called "quantitative easing" measures.
Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.
Bob
Today the weak economic data is causing dollar selling, because it's becoming crystal clear to folks, as ForexLive notes, that quantitative easing II is now a done deal. No more baby steps or holding the balance sheet steady. There's no excuse for the Fed Board of Governors to be have an unclear picture of the economy's direction anymore.
0.2... Fat, drunk and stupid is no way to go through life, son.
Words like total collapse and dying tends to be associated with the "selling of fear". This label, in turn, can lead to instant discredit or laughable denial.
Sales of U.S. previously owned homes plunged 27 percent in July, twice as much as forecast, evidence foreclosures and limited job growth are depressing the market.
Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. Demand for single-family houses dropped to a 15- year low and the number of homes on the market swelled
The markets are reacting to a Wall Street Journal article by the new FED fair-haired minion, Jon Hilsenrath, and the great dissonance that took place at the last FOMC meeting. Our readers know that we have been very critical of the FED and its reliance on models that, on a good day, are so badly flawed.
Bags of 90 percent silver U.S. coins with face value of $1,000 have taken on new popularity, said Greencastle, Ind., dealer Julian Jarvis at the American Numismatic Association convention in Boston in Aug. 11.
This has pushed the price up beyond melt value, an unusual event, Jarvis explained.
The “real” deficit - including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget - is actually $202 trillion, the professor and author calculates; or 15 times the “official" numbers.
Germany's deficit rose sharply to 3.5 percent of economic output in the first half of 2010, putting it on track to break EU budget rules due to the costs of the global economic and financial crisis, official data showed Tuesday.
The U.S. housing market is dying. You will only hear hints of this on the mainstream news and from the politicians in Washington D.C., but as statistic after statistic continues to roll in, the reality of what is happening is becoming very difficult to deny.
Up until the end of April, the giant tax credit that the U.S. government was bribing home buyers with helped stabilize the real estate market, but now that the tax credit has expired the decline of the U.S. housing market has resumed.
Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.
Flight to SafetyInvestors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.
Eric,
I’m not a sophisticated market follower. But some of the recent noise from commentators predicting Dow Jones crash to 1,000 caught my attention. Seems to me, the chances of Dow to 1,000 are as likely as a gallon of gas going to $1.00 or a loaf of bread to 75 cents or a candy bar to 25 cents etc etc. For that matter, a barrel of crude oil would need to go to $30 etc. I agree with the devaluation concept. The “Dow to 1,000” guys seem real foolish. Now I’m thinking that gold is simply the last thing to catch up and rise due to devaluation of $USD. Everything else over the past 25 years has gone up in price, gold a once-hated relic is just the last thing to catch up and it probably has more to go. Dow will gyrate in a range. Just my random thoughts.
Great job with your website. I appreciate your views.
The Federal Deposit Insurance Corp. took over ShoreBank, with $2.16 billion in assets and $1.54 billion in deposits. Urban Partnership Bank, the newly chartered financial institution, agreed to assume ShoreBank's deposits and nearly all its assets.
The FDIC also seized seven other banks Friday, bringing to 118 the number of U.S. bank failures this year amid the recession and mounting loan defaults.
Manipulative selling of gold on the daily London PM fix has failed to suppress the gold price since April 2009, when China announced that it surreptitiously had accumulated a large gold reserve over the previous five years, GATA board member Adrian Douglas disclosed today in a statistical study. Since then, Douglas finds, ever-increasing dumping of gold in London by central banks and their bullion bank agents has been having less and less effect on the gold price. He concludes that the second "London Gold Pool" -- a clandestine one, unlike the first -- is imminently facing a collapse identical to the collapse of the first as physical gold demand overwhelms the ability or the desire of the market riggers to provide the necessary metal.
He said recently, “I could not have stated it any clearer than Jim Sinclair at jsmineset.com: People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.” (Click here for The Market Oracle story in its entirety.)
The study of 116 U.S. retirement plans for teachers and government workers showed that as of June 30, 2009, they had $1.89 trillion in assets to cover $3.15 trillion in liabilities, Rauh said. The research used the typical fund’s assumption that investments will earn about 8 percent annually. That is a gap of $1.26 trillion -- more than double the shortfall of a year earlier, according to a study by the Pew Center on the States.
“There is no magic bullet as far as policy changes are concerned,” Rauh wrote in the paper. “Ultimately taxpayers will have to come up with sums of this magnitude. If unfunded liabilities continue to grow the bailouts could be even larger.”
Connecticut this autumn probably would have just a little more cash than it needs to pay a week's expenses unless it issues $520 million of debt, according to the state treasurer.
A 22-mile-long invisible mist of oil is meandering far below the surface of the Gulf of Mexico, where it will probably loiter for months or more, scientists reported Thursday in the first conclusive evidence of an underwater plume from the BP spill.
The most worrisome part is the slow pace at which the oil is breaking down in the cold, 40-degree water, making it a long-lasting but unseen threat to vulnerable marine life, experts said.
Earlier this month, top federal officials declared the oil in the spill was mostly "gone," and it is gone in the sense you can't see it. But the chemical ingredients of the oil persist more than a half-mile beneath the surface, researchers found.
New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.
Even deep discounts on everyday items don't seem to be enough to get Walmart shoppers to bite these days, and other chains are worried Americans won't be in the mood to spend in the months ahead, which are critical for those companies...But with the economy slowing once again and consumer confidence falling, they expect less out of the rest of the year, and they already have to push harder to get shoppers to buy.
China more than doubled South Korean debt holdings this year, spurring the notes’ longest rally in more than three years, as policy makers shifted part of the world’s largest foreign-exchange reserves out of dollars.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009downturn seem like a walk in the park.
Now as the largest holders of MBSs next to the FED, he is openly calling for outight government control of the mortgage market because Gross doesn’t believe there is room for the private sector. Yes, he is correct if the mortgage market reverts to NINJA loans and other zero-down types of nonsense.
Mortgage applications leaped last week as rock-bottom rates lifted demand for home refinancing loans to its highest level in 15 months, the Mortgage Bankers Association said on Wednesday.
Home loan refinancing puts extra cash into consumers' hands that can be used to pay off existing debt or funnel into the economy through purchases. By lowering a monthly mortgage payment it may also help some homeowners avoid default and foreclosure.
VELOCITY is always the key for as it declines due to people then hoarding money you get DEFLATION. When people are afraid the money will become worthless (paper or debased coinage), they spend it faster before it depreciates and that creates HYPERINFLATION at the other extreme.
Martin Armstrong, Staring into the Abyss
The control lever of velocity is confidence. Does confidence reside in the public -those that issue the money and debt, or private sector? Velocity, the speed at which people spend money before it depreciates, tends to increase as confidence in the public sector erodes.
The location and direction of confidence, or capital flows between the public and private sector, is ilustrated by long-term high-grade corporates to government bonds ratio trend.
Confidence is shift from the public to private sector. This will drive capital flows in ways not expected by the investment public.
Housing starts rose but to a much weaker rate than expected in July, while permits for future home construction fell to their lowest level in more than a year, according to a government report on Tuesday that pointed to a weak housing market.
Japan's government will consider further stimulus steps, potentially making it the first developed country to turn to additional fiscal spending since the global crisis, as a strengthening yen threatens its faltering recovery.
Hinde says precious metals ETFs “should not be owned by serious professional investors” and in a highly provocative paper argues that double counting of gold holdings is “endemic” in the global financial system.
China, whose $2.45 trillion in foreign-exchange reserves are the world’s largest, is turning bullish on Europe and Japan at the expense of the U.S.
The nation has been buying “quite a lot” of European bonds, said Yu Yongding, a former adviser to the People’s Bank of China who was part of a foreign-policy advisory committee that visited France, Spain and Germany from June 20 to July 2. Japan’s Ministry of Finance said Aug. 9 that China bought 1.73 trillion yen ($20.1 billion) more Japanese debt than it sold in the first half of 2010, the fastest pace of purchases in at least five years.
That's like saying I am bullish on the Titanic relative to Lusitania. Armstrong correctly suggests that Europe, the nations in banning together to create the Euro, indeed eliminated one avenue of default - currency depreciation by inflation. In other words, Europe has transformed itself into the position of the States in the USA. Countries like Greece that cannot devalue their currency have no other solution but to cut spending in the form of government jobs or withdraw from the Euro zone.
As Jim reminds us, everything is lining as an illustration of Currency Induced Cost Push inflation, i.e. our future.
Source: bloomberg.com
Source: martinarmstrong.org
China was a net seller of U.S. Treasurys for a second straight month in June, while overall inflows into long-term U.S. assets continued, the Treasury Department said Monday.
U.S. companies issued risky "junk" bonds at a record clip this week, taking advantage of keen investor appetite for returns amid declining interest rates and tepid stock markets.
The borrowing binge comes as the Federal Reserve keeps interest rates near zero and yields on U.S. government debt are near record lows. Those low rates have spread across a variety of markets, making it cheaper for companies with low credit ratings to borrow from investors.
