Greek leader considers action against US banks

What goes around, comes around.

Greek Prime Minister George Papandreou declared he is not ruling out taking legal action against U.S. investment banks for their role in creating the spiraling Greek debt crisis.

Source: finance.yahoo.com

GM wants more subprime buyers; will lender agree?

Government motors (GM) wants to sell more cars, but to do so it needs to generate more high risk loans. Deja Vu anyone?

If your credit isn't good, General Motors Co. still wants to sell you a car.

The problem is, it can't. At least not in big numbers. That's why the automaker wants more control over its lending again.

GM's top North American executive Mark Reuss, under pressure to quickly sell more cars and boost GM's value as it gets ready to sell stock to the public, said a shortage of subprime lending is holding back sales in the U.S.

Source: finance.yahoo.com

Subtle Hints

We as Americans tend expect big things - big screen TVs, cars, and even hair. We are impressed by “shock and awe” economics and financial interpretations. This approach, however, tends to miss subtle changes – better described as hints that presage shifts in capital flows. Shock and awe, similar to sex, certainly sells, but it is the interpretation of subtlety that is the domain of money.

This rise in gold and silver prices, normally met will intense selling from "connected" players, saw unexpected buying and short covering. Not a lot, but any deviated is a change from the normal "control" of the market.

COT Money Flow Table:

Dangers of Paper Gold

Good short video.

The dangers of ETF gold are discussed at the 5:50 mark. The legal language of the prospectus hints of a game of musical chairs.

The Economy & Your Portfolio:


Source: cnbc.com

Gold Stock Leadership

The gold stocks continue to show strength relative to S&P 500 despite Friday's stock market decline. This out performance illustrates the broadening participation within the gold sector.

Expect the Amex Gold Bugs to S&P 500 highs to be challenged soon and gold stocks to continue to lead the stock market rally.

Amex Gold Bug Index to S&P 500 Ratio:

COT Analysis

Turn off the chatter and misdirection emanating from F-TV and follow the leveraged money flows.

There's lot of interesting money flow setups. Fear and uncertainty from the market turmoil will likely muffle their message. Money is repositioning for the resumption of the risk trade.

As stocks decline, connected money fades it with significant inflows. This is a bullish setup.

Nasdaq:


As treasuries advance, connected money fades it with significant outflows. This is a bearish setup.

US Treasury Bonds:

Bailout Nation

Everything will be bailed out, every state will be bailed out, all sovereign debt will be bailed out as quantitative easing goes to infinity. Gold will trade on this leg at $1650 - minimum and more than likely much more.

Jim

Obama Administration Backs $23B Bill to Save Teacher Jobs:

The Obama administration came out Thursday in support of emergency education funding legislation that would provide $23 billion to preserve teacher jobs in the face of massive impending layoffs across the country.

In the movie Toy Story, Buzz Lightyear's classic line before he attempts to take flight was "to infinite and beyond." I can't help but hear this line in Tim Allen's voice echo inside my head when see the endless queue of stimulus, bailouts, and subsidy programs, or what is commonly referred to as quantitative easing (QE).

I am no advocate of the harsh discipline imposed by the capital markets, but the policy of infinite QE is no free lunch. Devaluation, despite the appearance of an immediate solution, carries severe consequences in terms of standard of livings that will affect multiple generations. Compounding the problem is the reality that once the bailout path has been chosen, it’s becomes politically impossible to seek another route.

As Jim says, gold will seek $1650, but this will not be its final destination. The longer and farther we walk down the bailout path, the higher the price will go.

Gold, London P.M. Fixed:


Silver, London P.M. Fixed:


Source: abcnews.go.com