well dear reader I am back. Due to having been busy lately I did not have the time to post although there was a lot of news worthy to be mentioned. Well there was a lot going on indeed. On one side the banksters got what they asked for, as for example a change of the FASB rule combined with some more goodies. On the other side we got delivered on an ongoing basis a lot of (supposedly) good news in order to make us believe that we are out of the bottom (who or what entity might be that interested to make us feel good again?). Furthermore we had the G-20 meeting with, in my opinion, no real valuable solutions at all (apart from the old same that was reason why we are in this mess). Well, finger pointing at some so called tax havens, while conveniently forgetting that some of the important members themselves are major tax havens, is not really a solution. The world economy is not yet saved after this meeting but I must admit that they had their small victories, although just for a couple of days. One of the victories was that with their announcement that the IMF will sell their gold reserves (I doubt that they have really any) they were able to put downside pressure on gold. Is that a fact to be worried from a gold investor point of view? I would say no because what they are talking about is a sale of gold already approved last year. They just come out with the same old story, whenever they desperately want the gold price to be lower. Anyway, PM Brown who was the advocate for these supposed sales together with the IMF are both world champions at selling at the lowest points in history. So if history is an indicator we should from now on see higher prices..
Following what Enrico Orlandini has to say about this topic.
There is a lot of talk about the IMF selling their gold and that would put downward pressure on the price. I believe two things with respect to IMF/central bank gold sales: the amounts they are going to sell are already priced into the market and they have a lot less gold on their books than they currently show. How can that be? Simply put present accounting practices allow the IMF to show leased gold as gold in their possession. I believe that the IMF and central banks have leased out a significant percentage of the gold they show on their books in an effort to suppress the gold price. Personally I would like nothing better than to see the IMF and the central banks sell every last ounce in their possession, but it won’t happen. This is an effort to talk the price down because they know they can’t really sell what they don’t possess.
And another opinion about the same topic
So the G-20 is asking the IMF for a proposal to sell Gold. I have a hard time believing this propaganda at face value. Gordon Brown has been asking the IMF to sell Gold since $300. The fact that the IMF would show up at the G-20 without a proposal to sell Gold is hard to believe. What makes more sense to me is they do not have access to the physical Gold they claim to have.
First let's go to last weeks overview
The S&P500 rose 3.3% (down 6.7% y-t-d), and the Dow increased 3.1% (down 8.6%). The broader market was much stronger. The S&P400 Mid-Caps surged 5.1% (down 2.6%), and the small cap Russell 2000 jumped 6.3% (down 6.7%). The Morgan Stanley Retail index rose 7.6%, increasing y-t-d gains to a noteworthy 18.6%. The Morgan Stanley Cyclicals jumped 8.3% (down 8.7%), and the Morgan Stanley Consumer index gained 2.5% (down 6.4%). The Transports gained 7.2% (down 15.8%), and the Utilities increased 1.7% (down 10.5%). The Nasdaq100 jumped 5.2%, increasing y-t-d gains to 8.6%. The Morgan Stanley High Tech index surged 7.4% (up 16.4%), the Semiconductors rose 4.6% (up 18.3%), and the InteractiveWeek Internet index jumped 7.9% (up 21.9%). The Biotechs declined 3.9% (down 3.5%). The Broker/Dealers rose 5.3% (up 8.9%), and the Banks rallied 5.6% (down 30.5%). With Bullion dropping $31, the HUI Gold index sank 5.5% (up 1.7%
market manipulation
Well dear reader there is no doubt the market in general terms is manipulated. Precious metals to the downside while equity markets, bonds and other investments to the upside. Following some information about manipulation.
Gold Price Manipulation More Blatant
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=6323
must read
http://www.marketforceanalysis.com/index_assets/PIRATES%20OF%20THE%20COMEX.pdf
and some more
Securities lawyer Avery Goodman, writing today at Seeking Alpha, notes the coincidence of huge gold offtake at the Comex and a sudden huge sale of gold by the European Central Bank. He adds that evidence of gold market manipulation is so great that the authorities should start investigating it. But of course the manipulation is DONE by the authorities, so the investigation will have to be done by the financial press. (It would be nice if someone invented such a press soon.) Goodman's analysis is headlined "Did the ECB Save Comex from Gold Default?" and you can find it at Seeking Alpha here:
http://seekingalpha.com/article/129128-did-the-ecb-save-comex-from-gold-...?
And Richard Russell
"As the sheer amount of Federal Reserve Notes multiplies, gold should normally rise. Yet, someone or some group is putting pressure on gold. Hmm, come to think of it, the last thing the Fed wants is surging gold, a signal to the world that the dollar is being devalued. Ah, the things that go on behind our backs."
And another opinion although it happened a couple of days ago, the information is still interesting
"Dennis Slothower of Stealth Stocks Daily explicitly cited Wednesday's last-hour rescue rally as cause for caution.
He wrote: "The intervention we are seeing in the markets right now is blatant and strong -- apparently hoping to convince J.Q. Public that the train is leaving the station. There is a strong and concerted effort by the Fed, the administration and their cooperatives to paint this tape higher and higher, without any pull back."
See:
http://www.marketwatch.com/news/story/Rally-convinces -some-not-all/story.aspx?guid=%7B7778E1E7%2D 7376%2D4C0A%2D94E0%2D934873370A97%7D
Gold
Following a very interesting Video: 80 X MORE PAPER GOLD THAN PHYSICAL IN EXISTENCE
http://www.youtube.com/watch?v=hfZF4baOPro
In 6000 years of recorded human history gold has been desirable as a “collectable” and it still is today. This is truly amazing. There were no postage stamps, muscle cars, first edition books, fine wines, fine arts 6000 years ago. But there was gold. And 6000 years later man still lusts after this “collectable”. It is the most durable collectable ever. It is the collectable of all collectables because it has universal appeal to almost everyone on the planet and has been for all of history. It doesn’t need an expert to assess it. It is so dense at 19.3 times the density of water, and it is so malleable that even an amateur can recognize its distinctive feel in the hand. It is extremely difficult to make convincing imitations…lead is only half the density and is the wrong color.
Gold is very scarce. There are only 140,000 tons above ground which is all the gold ever mined. It is not consumed so all the gold ever mined is still in existence somewhere. That is equal to ¾ ounce per person on earth, or as is popular these days, just enough to fill two Olympic size swimming pools.
The following from Russell is definitely a MUST READ!!!
Richard Russell:
I've written in the past that if you want to make 'BIG' money in the market, you have to take an over-sized position and be dead right on the trend. The last time I did that was in late-1958. I was very bullish on the market at that time. It was during a severe recession, but the stock Averages were singing an entirely different tune. I was so bullish that I wrote a bullish article for Barron's -- that was my first Dow Theory article for Barron's, and that article put me in business (December 1958). At the time I had invested ALL my money in various stocks, everything from Texaco to Sparton to Avco to Baldwin Lima. The market turned up in December and never stopped climbing. Breadth was terrific, there was a huge short interest that was getting killed, and I was on margin up to my ears. Whenever I had "extra money" in my margin account I bought more stock. I did extremely well on that fateful ride, and I never again had the nerve to take that large a position -- until now.
I started building my gold position in 1999. At the time gold was flat on its fanny well below 300 -- what few gold mining shares were still alive were selling under $5. I wrote at the time that many gold shares were so cheap that you could buy them as if they were perpetual warrants.
My gold position now is comparable to my market position back in 1958. My gold position represents maybe 30% of my total worth. Why have I done this again?
For the following reasons.
(1) I believe gold is in a major or primary bull market. I believe the gold bull market is currently in its second phase. This is the phase where sophisticated and seasoned investors and the funds enter the market. I don't believe the public is in the gold market to any extent. They are interested and watching the action, but they do not have the nerve to buy gold. In fact, the public doesn't know how to buy gold, although ads are now appearing telling them of the "wonders" of gold and how they can buy the coins (at huge premiums over spot gold).
(2) If there is only one bull market in progress, it will attract broad new coverage and attention -- just as Thursday's $70 rise in gold did.
(3) I believe the bear market in stocks will continue erratically and the deflationary trends will persist. This will drive Fed Chairman Bernanke up the wall, and I think he will stop at nothing (including massive printing of dollars) in his effort to halt deflation. The real story will be as I've been saying for years --
"INFLATE OF DIE."
This will serve to feed the gold bull market.
I'm in no hurry. Gold will ultimately fully express itself. The gold bull market, like all bull markets, will do its best to shake us off its back. The gold bull market wants to go up without us. The gold bull market will roar when least expected, after it's worn out many of its followers.
I watch most of the gold indices and averages, including GDX, the gold miners' index (NYSE). This important index has rallied to a critical level -- 37 on the P&F chart. A rise to one box higher, to the 38 box, would represent a bullish breakout with a P&F "count" to 52. If GDX breaks out, it will be a bullish signal for bullion.
---RICHARD RUSSELL
Telegraph's Ambrose Evans-Pritchard interviewed on gold
http://www.telegraph.co.uk/finance/financevideo/?bcpid=3469233001&bclid=1315742414&bctid=14812960001
FASB Rule
Well dear reader the show must go on. As I mentioned several times, the big banks are in deep problems and are in fact already bankrupt, clinically dead but kept on life support with ongoing injections of liquidity. Well as mentioned at the beginning of this post, the government is trying whatever they can to keep these banks alive. One of the live support measures is the change of the FASB Rule. The change will help the financial institutions to show us a much better picture than the mess they have to face.
New Rule Would Allow Banks To Choose Values Of Their Assets March 26, 2009 12:00 PM
The Financial Accounting Standards Board quietly buckled to banking-industry pressure last week and proposed new accounting practices that would allow banks to value assets at a higher price than they could currently be sold for.
Banks have long demanded the "mark-to-market" accounting rule change, arguing that it’s unfair to require them to mark toxic assets down to current market prices because the very market for those assets is frozen.
The move marks a shift for Robert Herz, head of the FASB, who recently told a panel of lawmakers that the harshest critics of mark-to-market accounting practices have been the very same banks that have gone under when regulators would not let them adjust their accounting. Herz and other regulators have been under intense congressional pressure to reform the rules.
"I will tell you that I get calls and visits from some of those institutions that are now in government hands, about two weeks before they get taken over, trying to get the accounting changed," he said. "Clearly some of the most vocal opponents of fair value and mark-to-market have been some of those institutions that ultimately failed and have had to have billions of taxpayer dollars put into them."
House Speaker Nancy Pelosi (D-Calif.) said that she’s been consulting with former Federal Reserve Chairman Paul Volcker regarding the reform.
"I’ve talked to Mr. Volcker about this, who knows a great deal about it. And I think caution is important in it, but I think attention is necessary," said Pelosi in a brief interview with the Huffington Post.
She said that she’s following the issue closely. "I think it has to be done with care. But we have to pay some attention to it because the current system is not working," she said. "It’s the whole thing: If you mark it too low, what’s the price?"
http://www.huffingtonpost.com/2009/03/26/new-rule-would-allow-bank_n_179489.html
Following an opinion about the change
It was announced today that the banks could value their worthless assets as they determine best. Now let’s take a step back and recall that this whole crisis began when banks developed mathematical models to value assets for which there were no liquid markets. Of course they priced these worthless assets higher each month and as a result reported fabulous earnings. Fraudulent but fabulous! As a result of the deception, the US has printed some US $12 trillion to cover gaping holes in companies like AIG and Citigroup. Now the solution to the problem is precisely what caused the problem in the first place? I don’t think so. Let’s try not to forget that there is no market for these securities but Congress seems content to pretend that the crisis will simply fade away. Again, I don’t think so. I should add that this is the opposite approach used with the automakers that are being forced to write off benefits to their employees
G20 Meeting
G-20 Must Freeze The $1.5 Quadrillion Derivatives Bubble As The First Step To World Economic Recovery By Webster Tarpley 3-22-9
(Highlights from the article)
"That cause is unquestionably the $1.5 quadrillion derivatives bubble. Derivatives have provoked the downfall of Bear Stearns, Countrywide, Northern Rock, Lehman Brothers, AIG, Merrill Lynch, and Wachovia, and most other institutions which have succumbed. Derivatives have made J.P. Morgan Chase, Bank of America, Citibank, Wells Fargo, Bank of New York Mellon, Deutsche Bank, Société Générale, Barclays, RBS, and money center banks of the world into Zombie Banks."
"Krugman is right: "zombie ideas" rule Obama’s Washington. The Fed’s TALF amounts to subsidies for securitization, meaning more derivatives. The derivatives bailout was pioneered by Gordon Brown, Alistair Darling, and Mervyn King in the case of Northern Rock. These efforts are doomed to costly futility. The $1.5 quadrillion derivatives bubble is comparable to the black holes of astrophysics, those artifacts of gravity collapse which will irresistably suck in all matter that comes near them. It compares to a world GDP of a mere $55 trillion, itself a figure inflated by financial speculation."
"The derivatives are the black holes of financial engineering, and can easily consume all the physical wealth and all the money in the world, and still be bankrupt. Gordon Brown’s demand of $500 billion for the IMF is enough to bankrupt several nations, but pitifully inadequate to deal with the derivatives. They can only be dealt with by re-regulation — a quick freeze, leading to extinction and permanent illegality. We reject Brown’s IMF world derivatives dictatorship."
"Derivatives pose the question of fictitious capital — financial instruments created outside of the realm of production, and which destroy production. In 1931-2, fictitious capital appeared as tens of billions of dollars of reparations imposed on Germany, plus the war debts owed byBritain and France to the United States. These debts strangled world production and world trade. Bankers and statesmen tried desperately to maintain these debt structures. But US President Herbert Hoover proposed the Hoover Moratorium of 1931-1932, a temporary freeze on all these payments. The Lausanne Conference of June 1932 was the last chance to wipe out the debt permanently. But the Lausanne Conference failed to act decisively, and passed the buck. By the end of 1932, there was near-universal default on reparations and war debts anyway. And by January 1933, Hitler had seized power. We urge the London G-20 to defend world civilization against derivatives. It is time to lift the crushing weight of derivatives from the backs of humanity before the world economy and the major nations collapse into irreversible chaos and war, as seen during the 1930s."
http://www.rense.com/general85/g20.htm
more on the same topic
http://krugman.blogs.nytimes.com/2009/03/21/de
from Jim Sinclair www,jsmineset.com
Is it a new well planned State initiative or a leap in the dark?
Do values hide in the details?
What kind of business model will the banks have on the day after Toxic Assets?
How many banks will there be in 2011?
As it appears now the Treasury will provide up to $150 billion with the Fed lending $850 billion to finance the purchase of defunct OTC derivatives on the books of the largest Fed member banks and primary US Treasury dealers.
In plain language, either the Fed or private money will step into the shoes of the banks from which these binding contracts of the specific performance contracts called toxic assets are purchased.
The mode of purchase by private money (because the Fed finances the transaction) is best understood as buying a call.
The entire transaction then stands on a premise of recovery in the underlying values.
If the underlying values do not recover, which the odds sustain, then the Fed as the lender will also be the owner of these defunct and unlikely to recover so called toxic assets.
The plan succeeds in keeping the one trillion off the Fed balance sheet for now and shows it as a performing loan in good standing. In that transformation lies today’s alchemy.
The money, one trillion dollars, does enter the system once again accruing not to the bank’s ability to loan, but to the counter party of the OTC derivative.
This initiative is a leap into the dark because it does not necessarily provide funds to the banks from which the toxic assets come. The reason for that is the taking on of a specific performance contract obligation in which the funds paid migrate to the counter party. The funds and the specific performance contract are incontrovertibly attached.
The slimmed down banks may be faced with a lack of business, as there is no guarantee even if they could lend that the economy would be at that level to make lending a profitable enterprise. The banks, pray to God, are out of the OTC derivative business.
What will the banks do to make money? What is their new business plan the day after toxic assets? The answer to that is merge until there will be less than 10 major banks by 2011.
This is the creation of another one trillion as a massive subsidy to the private but fat cat Wall Street banksters.
One result can be counted on - hyperinflation.
In gold I am sure that nothing will change as the average trader buys strength and then sells weakness, endlessly making fools of themselves. It will be this way to $1650 and beyond.
Well dear reader what is going to happen to the other 600 and something trillion of derivatives?
Geithner
following article is a must read
Geithner’s Dirty Little Secret By F. William Engdahl, 30 March 2009
US Treasury Secretary Tim Geithner has unveiled his long-awaited plan to put the US banking system back in order. In doing so, he has refused to tell the ‘dirty little secret’ of the present financial crisis. By refusing to do so, he is trying to save de facto bankrupt US banks that threaten to bring the entire global system down in a new more devastating phase of wealth destruction.
http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Geithner_Secret/geithner_secret.html
Toxic asset mountain looms over Treasury plan PPIP may need to at least double in size to tackle troubled loans, securities By Alistair Barr, MarketWatch Last update: 5:29 p.m. EDT March 23, 2009
SAN FRANCISCO (MarketWatch) — The Treasury Department’s latest plan to stabilize the financial system targets a formidable mountain of troubled loans and mortgage securities from the real estate boom earlier this decade. Some experts said Monday that more money may be needed to complete the arduous climb.
Between $75 billion and $100 billion of Treasury money will be funneled into the so-called Public-Private Investment Program, or PPIP. Private investors will buy troubled assets alongside the Treasury and will get access to government loans and guarantees, generating $500 billion to purchase toxic assets. It could be expanded to $1 trillion later, Treasury said Monday. S
"Purchasing $1 trillion in toxic assets won’t be enough to solve the banking system’s problems; the program probably needs to be at least twice as large," said Mark Zandi, chief economist at Moody’s Economy.com.
The first half of the plan focuses on loans sitting on bank balance sheets. U.S. banks may be holding as much as $2.5 trillion of toxic assets that haven’t been written down yet, Zandi estimated.
"To cover losses on these assets, the government will ultimately need an additional $300 billion to $400 billion," he added. "The up to $100 billion that officials plan to commit now is a good start, but they will eventually have to ask Congress for more."
The other part of Treasury’s plan targets mainly non-agency residential mortgage-backed securities (those issued by private firms rather than government agencies like Fannie Mae and Freddie Mac) and commercial mortgage-backed securities.
The Legacy Securities Program, as it is known, will incorporate the Federal Reserve’s Term Asset-Backed Securities Loan Facility, or TALF. Investors will get TALF loans to help them buy non-agency residential MBS that were originally rated AAA. Commercial MBS and other asset-backed securities still rated AAA will also be eligible, Treasury said.
Well the following information I found on www.lemetropolecafe.com after the announcement from the treasury a couple of days ago.
To all; beyond stupid is all I can say about the Fed's announcement today! They are going to spend (read print) $1 trillion, to inject into the economy and buy Treasury bonds, can you say HYPERINFLATION! As a side note, CNBC reported "massive" call buying in long term Treasuries early today, can you say INSIDER TRADING! So I guess we are now all saved, again, for the umteenth time.
Treasury yields have immediately cratered about 1/2% in the 10 and 30 year Treasuries, this knee jerk reaction will soon be seen as nothing but a reaction by a bunch of jerks. So the Fed will expand it's balance sheet by another 50% and investors want to buy fixed income securities? They are buying bonds with lower yields when the Fed says they will create more Dollars to buy Treasury bonds that promise to pay in these same over issued Dollars? I don't get it. Well actually I do, and I think anyone buying bonds now will get it shortly, you know where. Mr. (I'm a student of the depression) Bernanke has thrown in the towel and is hyperinflating in plain sight, this will not work and will not stand when the G-20 meets in 2 weeks.
This is panic by the Fed, plain and simple. It is also the admission of failure, failure of all the past plans to unthaw the credit crunch. If you watched Gold today, you saw it down $30 plus Dollars until the Fed announcement, it is now up $30+. If you had any questions as to whether Gold was manipulated or not, today's action should do it for you. Gold had no reason to be down hard except for the fact that it was necessary to "retard" it so a $60 rally would look like a $30 rally, HOW PATHETIC!!! If you had any lingering questions about owning Gold, they should be completely gone as the Fed "rang the bell" today, WE WILL DESTROY THE CURRENCY TO SAVE THE BANKING SYSTEM! No ifs, ands, or buts, this is textbook hyperinflation.
Economy
“$50 trillion in global wealth has been erased over the last 18 months,” Larry Summers estimated during a speech at the Brookings Institution over the weekend.
“This includes $7 trillion in U.S. stock market wealth which has vanished, and $6 trillion in housing wealth that has been destroyed. Inevitably, this has led to declining demand, with GDP and employment now shrinking at among the most rapid rates since the Second World War."
Surely, even Summers knows this wealth never existed, ’cept on paper. All that remains is the debts incurred by borrowing against these “assets.”
I hope, dear reader, that your assets are not part of it. Well as you can guess, my comment to this information is, that holding gold one would even have increased its wealth.
AIG, Larry Summers and the Politics of Deflection
http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/AIG/aig.html
must read
Martin Weiss
http://www.cnbc.com/id/15840232/?video=1065487779&play=1
Why the Meltdown Should Have Surprised No One
http://blog.mises.org/archives/009620.asp
Deficits as far as the eye can see
The U.S. budget deficit will climb up to $1.8 trillion in 2009, the Congressional Budget Office reported on Friday -- an easy record in dollar terms and the highest deficit to GDP ratio since World War II.
Over 13% of the U.S.’ total economic output will be consumed by government this year.
To put that into perspective, membership in the EU requires each of the 25 countries to keep their budgets deficits below 3% of GDP. Most currency traders get nervous about the health of currency over when the sponsoring country’s deficit surpassed 5%.
Fiscal year 2010 could be even worse. “CBO's estimates of the deficits under the president's budget are higher each year than those estimated by the administration -- by $93 billion for 2009 and by about $2.3 trillion for the 2010-2019 period.”
The CBO estimates that should all of the current policies be carried out, we will produce a deficit of over $9.3 trillion over the next decade. Far as we know, that doesn’t include any of the money getting sucked into the black hole at the Federal Reserve.
“The practical implications of this is bankruptcy for the United States,” Sen. Judd Gregg said over the weekend in response to the CBO estimates. “There's no other way around it. If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued.”
Fed to Buy $1 Trillion in Securities to Aid Economy By EDMUND L. ANDREWS Published: March 18, 2009
WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.
“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the Fed said, adding that it would “employ all available tools to promote economic recovery and to preserve price stability.”
As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.
Indeed, the immediate effect on the bond markets was striking, with prices rising and yields dropping sharply on the news. The yield on the 30-year Treasury bond, about 3.75 percent before the announcement, fell quickly to 3.4 percent and remained volatile. At the same time, the dollar plunged about 3 percent against other major currencies.
Stocks moved higher on the Fed action. The Dow Jones industrial average was down about 50 points before the 2:15 p.m. announcement, but within an hour it was up 120 points for the day
John Williams
Broad Money Supply Growth Slows in February, Suggesting Intensifying Systemic-Solvency Issues
The worst elements to date of the systemic-solvency and economic crises may be about to unfold. Such is suggested not only by the accelerating economic freefall, but also by a sharp slowing in broad money growth. The latter element suggests an intensifying crisis in the U.S. financial system that could lead to a rapid and near-term monetization of U.S. Treasury debt by the Federal Reserve. Despite any near-term market volatility and systemic instabilities, the long-range outlook for much higher U.S. inflation and a much weaker U.S. dollar remains in place.
Based on slightly more than three weeks (out of four) of reported data, the Shadow Government Statistics Ongoing M3 Measure for February 2009 suggests annual broad money growth slowed to roughly 9.9%, from 12.0%
Dear reader the above is just a short exert from Williams last alert. In order to get the full information, subscribe to www.shadowstats.com
Banks and Banksters
WSJ: AIG's Tax Shelter Business Was 'Even Bigger' Than Their CDOs; IRS Calls At Least One Of Them A 'Sham'
The Feds are closing in on a criminal fraud case against Joseph Cassano, reports ABC News, which tracked down the former AIG Financial Products czar wearing blue spandex and a sheepish expression outside his home in London. And before you wonder why a Brooklyn College educated swaps dealer with a name like Joe Cassano lives in London again, the answer is probably "taxes" -- and decimating taxes, it may not shock you to know, is fast emerging as the cornerstone of the AIG business model.
http://crooksandliars.com/susie-madrak/wsj-aigs-tax-shelter-business-was-eve
Goldman Sachs, Welfare Queen
Daniel Gross Mar 19, 2009 | Updated: 8:46 p.m. ET Mar 19, 2009 While it was singed in the credit meltdown, Goldman Sachs, the alpha male of Wall Street, has emerged as a survivor. The cover of last week's Barron's heralded the resurrection of Goldman and Morgan Stanley—"the sole standouts," as Andrew Bary called them. The company's shares have rallied back above $100, and its market capitalization is nearly $47 billion. Goldman's emergence from the wreckage could be seen as yet another glorious chapter for the firm. Charles Ellis, in his book about Goldman, The Partnership, lionized the firm as the only company "with such strengths that it operates with almost no external constraints in virtually any financial market it chooses, on the terms it chooses, on the scale it chooses, when it chooses, and with the partners it chooses." For the paperback, Ellis might want to add the following proviso: so long as the government is willing to give it billions of dollars.
http://www.newsweek.com/id/190111
GE Capital Says Funding Is Adequate, Profit Expected
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahsq5e_4L6.A&refer=home
Five biggest U.S. banks are 'dead men walking'
WASHINGTON -- America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.
Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank, and J.P. Morgan Chase reported that their "current" net loss risks from derivatives -- insurance-like bets tied to a loan or other underlying asset -- surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.
The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.
http://news.yahoo.com/s/mcclatchy/20090309/pl_mcclatchy/3184724
"We don't need any more money"
http://www.calculatedriskblog.com/2009/03/ci ti-and-bofa-no-more-capital-needed.html
So say the BofA and Citi CEO's. When is the last time we heard that statement? In fact, about a week before the Citi's first capital taxpayer infusion, Vik Pandit was in the media saying Citi didn't have any liquidity problems. Fannie and Freddie made that proclamation when the Govt put into to place their life-support loan facility. They've both tapped it twice now, with Freddie asking for another $30 billion earlier this week. Bear and Lehman both adamantly proclaimed about a week before each collapsed that their liquidity was fine.
Plan of Attack:
1) Start by having the President tell the investing public to buy stocks because they are cheap.
2) Slam the gold and silver markets using the traditional COMEX paper rigging operation to hide the truth about the condition of the US Dollar and the fact that the world is quickly running out of both physical metals.
3) Have CEO's of major banks such as Citigroup and JP Morgan announce that they had a great first two months (excluding losses in mortgage portfolios, credit card portfolios, credit default swaps and other toxic derivatives)
4) Have the Plunge Protection Team flood the markets with stock buy orders to flush the shorts and brings along the perma Bulls like lemmings.
5) Float rumors of ending mark-to-market accounting and re-instating the uptick rule to fry the short traders.
6) Have GM announce that they don't need the extra $2B in March (ooo, so all their problems are cured... for 3 weeks at least!)
7) Have the Muppets on financial TV programs proclaim that the bottom is in and it's safe to go back in the investing water.
8) Introduce a restrictive US mining law that would destroy all hard rock mining operations in the US so the banking cabal can cover their naked mining share shorts..
9) Downgrade GE to AA+ and declare "it's a good thing" giving them a "Stable" outlook and goose their share price so no one thinks there's anything wrong..."No problems here".
10) Do anything and everything you can except NEVER show the true fragile state of the monetary system with over a QUADRILLION DOLLARS in derivatives that have yet to be resolved (...in fact they are growing exponentially!)
EXPECTED RESULT: Buy a few more weeks/months before the complete collapse of the global monetary system.
Equity
Well dear reader I’d like to come back to my remarks about DJI in my last post.
Well dear reader it seems like my timing has been just great. But wait. Is it really so? Well to be honest to me this past days look rather as another sucker’s rally. In fact I do believe that we will see an important really within this bear market but to me it seems that it is not yet so. I still can see a solid wall of worry built for stocks to climb. Without buyers it will be difficult to maintain this small rally. Let’s see. As always, I might of course be wrong.
1. Reflections on the latest dead cat bounce or bear market sucker’s rally
Nouriel Roubini | Mar 14, 2009
It is déjà vu all over again. We have already seen this Groundhog Day movie at least six times over and over again in the last year or so: the market starts to rally – this time around about 8% in a week - and the chorus of optimists starts to say that this is the bottom of the economic and financial crisis and that we are at the beginning of a sustained stock market rally that signals the true end of this bear market.
Even before the latest bear market rally started last week I wrote the following on March 2nd:
Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.
Good news factory
Following a comment from Bill Murphy from www.lemetropolecafe.com
There was concern from some quarters the Obama Administration has felt some heat about being too negative … that it’s refreshing candor about the state of US financial affairs was undermining efforts for recovery because it was scaring the public … with the effect the public was paring back out of fear and sending us into bunkers. Therefore, rookie President Obama is orchestrating a new approach.
In addition to Obama’s comments on buying stocks, Fed chairman Bernanke is going on 60 Minutes Sunday, a highly unusual move to begin with and unprecedented three days before a Fed meeting (next Wednesday). All of a sudden "the generals" of America’s most established corporations were brought back from the dead to pronounce to America that suddenly all is going well. We have seen the top dogs of Citigroup and Bank of America visibly pronounce they are making money. JP Morgan’s Jamie Dimon, gave his own pep talk. Other banks have come out and stated they want to send their "Tarp" money back. Even GM says it doesn’t need the $2 billion it just requested, due to cost saving measures.
There is more, but suffice it so say, all of this seems too pat. A wave of the magic wand and the crisis is under control? Time will tell on that score, but it seems highly suspect to me.
USD
(from Williams)
The strength seen in the broad dollar measures in the year since the Bear Stearns crisis has involved several factors, none of which normally should survive long-term. Beyond the systemic liquidity demand for dollars and the early (and likely ongoing intermittent) central bank interventions, there has been some flight to safety (quality) in the U.S. dollar and U.S. Treasuries, as well has a broad market hype that circumstances are much better in the United States than elsewhere.
The liquidity distortions eventually will run their course. The flight-to-safety concept already is beginning to lose its credence, as the rest of the world closely views the collapse of U.S. fiscal discipline that had and has engulfed both the Bush and Obama administrations. As the freefall in U.S. economic activity and the intensified systemic solvency crisis continue to batter U.S. business activity, and consumer and investor confidence, it should be increasingly clear to the global markets that the United States is ground zero for these crises. The greatest impact will be seen in the U.S., irrespective of collateral damages in the rest of the world. Perceptions to the contrary are due largely to some governments and central banks being more open or honest about their problems than are the U.S. government and the Federal Reserve.
The traditional, underlying dollar fundamentals continue to be bleak and are deteriorating. Eventually, the U.S. dollar faces a broad, major sell-off, which also will have significant impact on accelerating the pace of consumer inflation.
And some more from the same source
Broad Outlook Remains Unchanged. The U.S. economy remains in a severe, deepening recession, which likely will attain depression status this year (depression defined by SGS as a peak-to-trough contraction in inflation-adjusted GDP of more than 10%). Recent strength in the U.S. dollar has been due largely to systemic stresses on dollar demand, not to underlying economic fundamentals. In the months ahead, efforts by the Federal Reserve to debase the U.S. dollar likely will take hold, resulting in much-higher inflation and eventual heavy dumping of the dollar and dollar-denominated assets. Such ultimately should evolve into a hyperinflation, with the U.S. dollar and U.S. Treasuries effectively becoming worthless. Over the long haul, the best hedges against this circumstance remain physical gold and assets outside the U.S. dollar, in currencies such as the Swiss franc and the Canadian dollar.
Underlying currency fundamentals for the Swiss franc not only outshine those of the United States, but also those of most of other major currencies. Accordingly, the Swiss franc continues to hold its relative top ranking versus the greenback, euro and pound sterling. Dampening intervention by the SNB likely will have limited lasting impact.
By the way dear reader I think that the Canadian Dollar does look fine at the actual level.
Commodities
"While the 2008 sell - off was much steeper than what happened in the 1970s, it's not out of line with historical experience.
The biggest rally in commodity prices could still be ahead of us.
"If you go back even further and look at the 1929 crash and its aftermath, you get a similar picture. Commodities tanked after the crash. Take corn, for example, which lost nearly 80% of its value from its peak in 1929 to its low in 1932. Yet by '37, corn put in a new high. It was 20% higher than the 1929 peak. Put another way, the price of corn rose fivefold from the bottom - and this during the Great Depression!
"Commodities still have legs, especially with the Fed playing loose with the dollar. The action this past weeks was just a prelude. Expect the world of useful commodities to hold value better than the dollar. Not only the headline - grabbing oil price, but also food prices. The retail price of food rose about 6% last year. Possibly we will see food prices and maybe other commodity prices rise again soon.
Oil
http://www.aspo-usa.com/index.php?option=com_docman&task=cat_view&gid=26&Itemid=66
CERA: Low Oil Prices Putting Supply Growth at Risk
The collapse in oil prices could end up cutting the growth in future oil supply in half from what would have been anticipated during the high price period, according to a new study from Cambridge Energy Research Associates (CERA), an IHS Inc. company. The Long Aftershock concludes that about 7.6 million barrels per day (mbd) out of total potential future net growth of 14.5 mbd from 2009 to 2014 are “at risk.”
http://www.oilvoice.com/n/CERA_Low_Oil_Prices_Putting_Supply_Growth_at_Risk/65be2d2d.aspx
After falling into the high $40s, oil prices closed out the week about where they started, at $52 a barrel. The struggle continues between bad economic news combined with pessimistic economic forecasts vs. investor optimism that the end of the economic downturn is in sight.
http://www.aspousa.org/index.php/2009/04/production-and-prices-10/
Briefs week of April 6, 2009
http://www.aspousa.org/index.php/2009/04/briefs-week-of-april-6-2009/
Food
Don't Expect Lower Prices For Groceries
Commodity prices are sinking, but don't expect it to result in cheap loaves of bread, warns the Wall Street Journal today. Farmers are cutting production, planting fewer crops and producing less dairy, meat, poultry, and soybeans. As a result, the price of food isn't expected to drop in line with commodity price dips.
http://www.businessinsider.com/dont-expect-lower-prices-for-groceries-2009-3
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