Why bankruptcy could be good for America

Perversely, I agree with this author.

http://www.ft.com/cms/s/0/a8486284-fee9-11de-a677-00144feab49a.html?nclick_check=1

A history of France--and hyperinflation

http://dollarcollapse.com/articles/hyperinflation-history-la-terreur/

Open letter to the CFTC

The Commodity Futures Trading Commission (CFTC) is holding an open hearing this Thursday, January 14 to deliberate and possibly vote on position limits for commodity futures markets, specifically the COMEX. Enforcing hard position limits prevents a few powerful entities from cornering the market on a commodity, and reduces the effectiveness of price suppression schemes. In other words, large commercial traders like bullion banks and hedge funds won't be able to rig markets, as the playing field is kept even. Rigged markets are destructive because market participants eventually exit and never return.

In an apt analogy, if investors in 401K savings accounts knew the mutual fund markets were rigged and investors were losing money due to surreptitious gaming by insiders, those retail investors would no longer invest their savings in said mutual funds. Likewise, Ponzi scheme fraudsters like Bernie Madoff discourage all investors due to lack of transparency and oversight by regulatory bodies like the Securities and Exchange Commission (SEC).

The CFTC has a similar role--only they monitor the futures and derivatives markets. It's time they stopped turning a blind eye to the price manipulation endemic in the precious metals and energy exchanges.

Dear Sirs,

It is outrageous that JPMorgan is allowed to be short 40% of the COMEX silver market and 30% of world production. There should be hard position limits in the precious metals markets, just like position limits should be enforced in other commodities, including the energy complex. This prevents price manipulation by a few concentrated positions, and sheds transparency in markets. Exemptions should be closely scrutinized, and naked shorting outlawed.

If we are to have free markets with true price discovery, we need to enforce position limits in all markets. Otherwise, the market is rigged to the benefit of a few, and destruction of the majority. In that scenario, eventually the market shrinks, as participants exit.

The current Administration gained office with a message of change and transparency...and the end of corruption and deceit. Please do your part in enforcing position limits in all commodity exchanges--including precious metals.

It is much better to choose to do the right thing, then to have it forced upon you. The price manipulation of certain commodities has temporary effect, but the true supply/demand dynamics of any commodity will eventually come to fruition. It will be by stampede if the market-rigging tactics are allowed to continue. Naked short sellers will be exposed when demand for physical delivery is unmet.

The ball is firmly in your court. Thank you.

Traffic ticket

Record fines in Europe for traffic violations.

Europe slapping rich with massive traffic fines
By FRANK JORDANS

The Associated Press
Sunday, January 10, 2010; 11:30 AM

GENEVA -- European countries are increasingly pegging speeding fines to income as a way to punish wealthy scofflaws who would otherwise ignore tickets.

Advocates say a $290,000 (euro203,180.83) speeding ticket slapped on a millionaire Ferrari driver in Switzerland was a fair and well-deserved example of the trend.

Germany, France, Austria and the Nordic countries also issue punishments based on a person's wealth. In Germany the maximum fine can be as much as $16 million compared to only $1 million in Switzerland. Only Finland regularly hands out similarly hefty fines to speeding drivers, with the current record believed to be a euro170,000 (then about $190,000) ticket in 2004.

The Swiss court appeared to set a world record when it levied the fine in November on a man identified in the Swiss media only as "Roland S." Judges in the eastern canton of St. Gallen described him as a "traffic thug" in their verdict, which only recently came to light.

"As far as we're concerned this is very good," Sabine Jurisch, a road safety campaigner with the Swiss group Road Cross.

Here are the true unemployment numbers

December, 2009 Unemployment

The US Bureau of Labor Statistics (BLS) official unemployment rate is 10.0%.

The BLS also tracks marginally attached and part-timers (underemployed), bringing the unemployment rate to 17.3%.

Shadowstats.com accounts for discouraged workers who have given up looking for a job, bringing the unemployment figure to 21.9%.

Argentina's central banker

Didn't Federal Reserve Chairman Ben Bernanke and Time's Man of the Year attend Harvard?

http://www.zerohedge.com/article/argentina-central-bank-mutiny-costs-local-bernanke-equivalent-his-job-criminal-charges

Lies, lies, and more statistics

When is Obama's chief economist Christina Romer going to start telling the truth on the economy and employment? It's been one year of persistent lies every time she opens her mouth. How stupid does she think we are?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNoUcQ818CqE&pos=4

“We are getting closer to stability in employment. The next step is to finally start adding jobs,” Christina Romer, the head of the White House Council of Economic Advisers, said yesterday on ABC News’s “This Week” program. “I think we are on the path of steady progress.”

Really? The "path of steady progress"? How does she come up with these inane conclusions?

The Department of Labor’s latest unemployment report, which showed an unexpected loss of 85,000 jobs in December, was “somewhat of a setback,” Romer said, “but they are still part of this trend of greatly moderating job losses.”

This was unexpected? By whom?

As one way to pay for the changes, the Senate would impose a 40 percent tax on employer-provided insurance plans that exceed $8,500 for individuals and $23,000 for families...

Great--raise taxes on employers--that should help with reducing unemployment...

“We simply have to put in place rules of the road so that this system doesn’t bring this economy to the edge of collapse like it did a year or so ago,” she said.

Anybody care to wager we won't have another financial collapse?

Government jobs

"Why don't we just put everyone in the United States on the federal government payroll and call it a day?"

counters Rep. Jerry Lewis, R-Calif.

Chart courtesy of Tim Iacono

Hawaii is so broke...

they can't afford to have an election for one of their Congressional seats.

http://www.msnbc.msn.com/id/34782085/ns/us_news/

Venezuela devalues currency

This is what happens when a currency is devalued.

http://www.reuters.com/article/idUSN096521320100109

Hint: currency debasement is occurring worldwide by sovereign governments, including the US. It's done by either market forces or by government mandate--or both. Either way, consumer purchasing power and wealth is destroyed, even as debts are deflated.

How Harvard blew up

Lawrence Summers, former Harvard President and now Obama's lead economic adviser, almost drove Harvard's enormous endowment fund into insolvency by placing wrong-way bets on interest rate swaps. Now he's doing it again with our government finances.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aHQ2Xh55jI.Q

The Ascent of Money--or Hooey?

http://www.goldensextant.com/commentary36.html#anchor5833

Gold price suppression about to end?

Too many buyers are stepping up on the dip in gold prices to render gold suppression schemes successful. The tide has turned.

http://news.goldseek.com/GoldForecaster/1263002400.php

Ron Paul on auditing the Fed

http://www.forbes.com/2010/01/07/gold-standard-fed-audit-intelligent-investing-ron-paul.html

So, we should never be afraid of competition. If gold is not good money, then nobody will deal with it. But I'm on the side of history with this one because paper money has never worked. It eventually goes to zero and people quit using it. But gold has survived for many, many centuries.

- Ron Paul, 1/8/10 Forbes interview

Government debt default

The American Enterprise Institute for Public Policy Research recently published a study that indicated that “by all relevant debt indicators, the U.S. fiscal scenario will soon approximate the economic scenario for countries on the verge of a sovereign debt default.” - David Einhorn, Greenlight Capital

Biggest boondoggle of them all

The Biggest Financial Deception of the Decade

Jeff Clark, Editor, Casey’s Gold & Resource Report

Enron? Bear Stearns? Bernie Madoff? They’re all big stories about big losses and have hurt a lot of employees and investors. But none come close to getting my vote for the decade’s most dastardly deception...

First came Enron, with $65.5 billion in assets, going belly-up and becoming the largest bankruptcy in U.S. history at that time. Chairman Kenneth Lay said that Enron's decision to file bankruptcy would “stabilize the company,” but over the next five years the company was completely liquidated. The stock went from a high of $84.63 in December 2000 to a whopping 26¢ one year later.

And what had we been told by the media? Fortune magazine dubbed Enron “America's Most Innovative Company” for six consecutive years. A well-intentioned friend wanted to give me a gift subscription to the magazine for Christmas; I choked on my cocktail and luckily he assumed my drink was too strong. In the end, you can thank Enron for bringing us the Sarbanes-Oxley Act of 2002, a ghastly financial reporting regulation for which compliance is grossly expensive, and – stop the presses! – hasn’t prevented similar repeats.

Next came WorldCom filing for bankruptcy in 2002, their assets of $103.9 billion dwarfing Enron’s. “We will use this time under reorganization to regain our financial health and focus, while operating with the highest integrity,” assured CEO John Sidgmore. Was his eggnog spiked? Today, WorldCom stock certificates have been spotted as doilies under pancake house coffee mugs signifying it’s decaf.

Tyco, Adelphia, Peregrine Systems… it’s a crowded field around this time. But their stories of fraud and greed and mismanagement get boring after awhile. Just watch the closing credits from the movie Fun with Dick and Jane and you’ll see what I mean.

Bear Stearns set us all up for the Big Meltdown of 2008. It was B.S. (no, I mean Bear Stearns) that pioneered the asset-backed securities markets, and we all know how that turned out. Later we learned that as losses mounted in 2006 and 2007, the company was actually adding to its exposure of mortgage-backed assets, gearing itself up to 35:1. With net equity of $11.1 billion supporting $395 billion in assets, B.S. carried more leverage than a streetwalker’s push-up bra.

And during it all, Bear Stearns was recognized as the “Most Admired” securities firm in a survey by Fortune magazine (there’s that Lower Manhattan tabloid darling again). Frequent sightings of company executives on country club fairways assured the public that all was well. And CEO Alan Schwartz told us there was “no liquidity crisis for the firm” and insisted he “had the numbers to back it up.” His company was sold four days later to JPMorgan Chase at $10 per share, a 92% loss from its $133.20 high. Perhaps his numbers were prepared by ex-Arthur Andersen employees.

Lehman Brothers, the 158-year-old investment bank, was next and still today holds the title as the largest bankruptcy in U.S. history. L.B. succumbed to 2007’s Word of the Year, “subprime,” and its $600 billion in assets all went poof! In just the first half of 2008, before the meltdown, Lehman’s stock slid 73%.

And what did CEO Dick Fuld tell us in April of that year? “I will hurt the shorts, and that is my goal.”He must have been referring to the attire of his tennis club buddies, because the ones who actually got hurt were numerous other banks, money market funds, institutions, hedge funds, REITs, brokers, private and public trusts, foundations, government agencies, foreign governments, employees, and investors.

Moving on to the largest U.S. government bailout recipient by far, AIG’s troubles spawned my favorite placard of the decade: seen outside their Manhattan offices stood a sign that simply read, “Jump!” Maybe its creator heard what I did from AIG’s financial products head Joseph Cassano: “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these [credit default swap] transactions.”

He must have substituted his prescription eyewear with those giant New Year’s Eve glasses, because the government sunk $180 billion into the company and it still had to be split up and the assets sold to the highest bidder. I’m sure that his non-flippant comment had nothing to do with him making CNN’s “Ten Most Wanted Culprits” list in 2008.

GM, with $91 billion in assets, filed for bankruptcy in the summer of 2009 and is now largely owned by the U.S. and Canadian governments (i.e., taxpayers). The $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. But don’t despair: the government is pouring another $30 billion into GM to fund “reorganization operations.”

GM shares? Bye-bye. For 83 years GM had been a member of the prestigious 30 Dow Industrial stocks. It managed to survive the Great Depression but not this decade’s Greater Depression. Yet chairman Ed Whitacre had insisted, “I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks.” I wonder what he thinks now that the stock is named “Motors Liquidation,” trades only on the pink sheets, and sells for about 50¢?

Topping off our list is the infamous Bernie Made-off (er, Madoff), who scammed $65 billion over 20 years from unsuspecting institutions and wealthy investors. But don’t be too upset, because the number is probably half that amount. Hey, the alleged size of the losses comes from his own ledger book, and should we really trust his balance sheet? Dubbed the largest Ponzi scheme ever, I beg to disagree, as you’re about to see...

By now you are probably wondering... what’s bigger than all these? He’s covered the major frauds and scams of the past decade – what could possibly be left?

To quote my favorite sleuth, Hercule Poirot, “When all the facts are laid before me, the solution becomes inevitable.”

Here are a few clues…

Federal Reserve Chairman Ben Bernanke said on July 16, 2008, that Fannie Mae and Freddie Mac are “adequately capitalized” and “in no danger of failing.” Then-Secretary Treasurer Henry Paulson declared on August 10, 2008, “We have no plans to insert money into either of those two institutions.”

►Both Fannie and Freddie were nationalized 28 days later, on September 8, 2008.

Ben Bernanke claimed on February 28, 2008, “Among the largest banks, the capital ratios remain good and I don’t expect any serious problems of that sort among the large, internationally active banks...” Henry Paulson added on July 20, 2008, that “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

►Since the recession started in December, 2008, 144 banks have failed.

Paulson informed us on April 20, 2007, that “All the signs I look at show the housing market is at or near the bottom.”

►The number of foreclosures skyrocketed shortly thereafter and will now any day surpass those during the Great Depression.

Ben Bernanke announced on June 20, 2007, that “[The subprime fallout] will not affect the economy overall.”

►Less than one year later, the stock market crashed, losing 53% of its value, and is still down 25% despite one of the biggest bounces in history.

Those in charge of our country’s finances not only failed to see the crises developing and then bungled the handling of the recovery, they’ve deliberately misled us about what they’re doing to our currency. In spite of emphatic promises, flowery speeches, pat-on-the-back assurances, and continual reassurances, here’s what they’ve actually done to the dollar:

* Since September 1, 2008, the monetary base has ballooned from $908 billion to $2.0 trillion. The current monetary base is now equal to bailing out General Motors 23 times.

* Bailout funds in 2008 and 2009 total $8.1 trillion. That’s almost 78 WorldComs. It’s over 123 Enrons.

* U.S. debt has risen sharply, from $6.2 trillion in 2002 to $12.1 trillion today. That’s over $39,000 per citizen.

* David Walker, the comptroller general of the Government Accountability Office from 1998-2008, warned that the U.S. is on the hook for $60 trillion in unfunded liabilities. Independent analysts peg the figure at near twice that. Whatever the number, it is incomprehensibly large. The only way we will meet these liabilities is to print the money and inflate them away.

We’re bailing out corporations that should fail, making financial promises we can’t keep, and adding layers of debt we can’t possibly repay. And the real killer is, if we don’t have the cash, we just print it. It is, by any reasonable account, the “blunder that will plunder” the next several generations. It is changing America permanently, and the problems will persist long after you and I are laid to rest.

Bottom line: after all the bailout programs, housing initiatives, rescue efforts, stimulus schemes, bank takeovers, wars, unemployment benefit extensions, and numerous other promises, the biggest financial deception of the decade is what the U.S. government is doing to the dollar. Nothing else even comes close.

This reckless activity has spooked our foreign creditors, weakened our global standing, diluted our currency, is punishing savers and retirees, and ultimately sets us up for a level of inflation this country has never seen before.

Yet, what is the guardian of our economy and money telling us now?

“Will the Federal Reserve's actions to combat the crisis lead to higher inflation down the road? The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so. In the near term, elevated unemployment and stable inflation expectations should keep inflation subdued, and indeed, inflation could move lower from here.” (Ben Bernanke, December 7, 2009).

This is pure rubbish. If inflation could be controlled by just thinking stable inflation thoughts, then Ben should be able to grow a full head of hair by just thinking scalp follicle thoughts. This is so ridiculous, it’s insulting.

Government actions make a mockery of their words; what they say and what they do are diametrically opposed. It’s clear that inflation is not a question of if, but when.

Any level-headed individual has to conclude that there will be a steady – and likely accelerating – decline in the dollar’s purchasing power. It’s inevitable.

The great masses don’t quite understand it yet, but they will. There will be no escape from the cold, hard slap in the face the citizens will receive when higher levels of inflation arrive. And when it does, it will make a mockery of any opposing viewpoint.

So the question before you is simple: Will you be a prepared survivor for what lies ahead, despite what our government leaders tell us, or will you be a complacent victim of the biggest financial deception of the decade?

For me, there’s only one solution. Don’t kid yourself into thinking a man-made asset will protect your purchasing power. This is the time to be overweight gold and silver. I advise letting them serve their purpose for you.

US is broke

Are there anymore skeptical Polyanna's who don't believe the US government is on the brink of bankruptcy? Read this tidbit on the national debt and the ability to fund it.

http://www.zerohedge.com/article/us-avoids-technical-default-three-days

What's a billion?

A. A billion seconds ago it was 1959.

B. A billion minutes ago, the year was 1 A.D.

C. A billion hours ago our ancestors were living in the Stone Age.

D. A billion days ago no-one walked on the earth on two feet.

E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.

What's a trillion? Don't ask.

Obama's brother-in-law isn't doing that well either

Craig Robinson, President Obama's brother-in-law, is having a tough first year as Oregon State head basketball coach. They lost to Seattle University 99 - 48. Seattle U. is no basketball powerhouse--they just moved up to Div. 1 basketball recently, and possess a 7 - 9 record.

http://rivals.yahoo.com/ncaa/basketball/recap?gid=201001060450

It's probably safe to say the honeymoon period is over for both.

When to sell gold

Richard Russell on selling gold:

Question -- Russell, you've been bending our ears about buying gold ever since the year 2000. Out with it, at what point or at what level do I sell my gold or silver?

Answer -- An excellent and important question. The answer (and this may not surprise you) is that you NEVER sell your gold or silver. These precious metals are an integral part of your estate and net wealth. I don't care what the current price of gold is, gold represents unencumbered wealth.

Let me give you an example from the rich man's standpoint. The rich man accumulates and holds ten thousand ounces of gold. At one point (such as today) his gold holdings are worth $12 million dollars. He's still rich.

Then gold declines to a price of $700 an ounce during a crushing world deflation. Bankruptcies rule, and the price of anything and everything with debt against it has collapsed. At this point the rich man is holding $7 million worth of gold. The fellow is still very rich. Next comes a run-away inflation and gold climbs to $2500 an ounce. Here the fellow owns $25 million dollars worth of gold. Now he's almost embarrassingly rich, at least in relation to his neighbors.

You see the point. In holding ten thousand ounces of gold, this fellow is always rich, but let's call it shades of rich depending on the economy. So the rich man isn't trying to 'beat" or "out-trade" the gold market. He holds his gold as an eternal store of wealth though good times and bad.

Non-performing loans

Non-performing loans is banker-speak for bad loans. And when bad loans soar, it's an indication that the economy isn't doing so well (understatement of the year)...which means banks aren't doing well, either.

Buyer beware

Since tungsten has the same density as gold, some counterfeit gold bars and coins have been minted. Caveat emptor.

http://www.tungsten-alloy.com/en/alloy11.htm

Hee Haw

Barton Biggs recommends moving to the country, buying some seed, growing your own food, and buying some ammo. Barton Biggs is not a wild-eyed survivalist, but he's starting to sound like one. He has an impressive track record for financial forecasts as a former Morgan Stanley chief economist.

http://www.gurufocus.com/news.php?id=79027

China cornering the market on rare earth elements

Warning: adult language!



Put this in the "unintended consequences of the anthropogenic global warming hoax" bin. There is no doubt we should diversify away from petro-fueled middle eastern countries for our energy sources--for national security and economic reasons. But the transition should be orderly and measured. Because if the carbon-reducing extremist crowd has their way, the US will be plundered into the abyss.

Green technologies actually require natural resource elements that must be mined--tons of it, in fact. They are unfamiliar to most, except for those who can recite from the Periodic Table of the Elements. Rare earth elements (REE) like Neodymium, Lanthanum, Terbium, and Dysprosium are used in diverse applications as solar, wind, and eletric car batteries. The problem is China controls 97% of the world's supply of these REE.

http://www.independent.co.uk/news/world/asia/concern-as-china-clamps-down-on-rare-earth-exports-1855387.html

So while China may outwardly reject carbon credit proposals, which aim to punish violators of carbon-emission thresholds (the "polluters"), they have hedged themselves by ensuring they control the components necessary for enabling green technologies.

"This is chess, it ain't checkers!"

Another Fed head fake

After declaring the end of quantitative easing (i.e., money printing) late in 2009, we see the Fed has done a 180 degree turn and left the door open for further stimulative easing. Plans to end purchases of US Treasury bonds were revealed late last year, as well as the planned termination of agency mortgage-backed securities purchases in March, 2010. Now the Fed is doing an about-face--in case the housing market and economy doesn't recover as planned.

http://www.reuters.com/article/idUSN0530695520100105?type=marketsNews

Quantitative easing to infinity sure sounds like a recipe for inflation.