Monday, October 27, 2008

Have We Been Stampeded into the Panic of 2008? by Kirk W. Tofte

 
LewRockwell.com  



 
   
   
  Click the following to access the sent link:
   
 
Have We Been Stampeded into the Panic of 2008? by Kirk W. Tofte*
     
 
 
  SAVE THIS link FORWARD THIS link



http://www.lewrockwell.com/tofte/tofte16.html

IMF may need to "print money" as crisis spreads

IMF may need to "print money" as crisis spreads

The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

IMF's work in countries such as Turkey is only just beginning
IMF's work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF's work in the great arc of countries from the Baltic states to Turkey is only just beginning.

"When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds," he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

"Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We're in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is," he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA' bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

"The IMF can in theory create liquidity like a central bank," said an informed source. "There are a lot of ideas kicking around."

For now, Eastern Europe is the epicentre of the crisis. Lars Christensen, a strategist at Danske Bank, said the lighting speed and size of Ukraine's bail-out suggest the IMF is worried about the geo-strategic risk in the Black Sea region, as well as the imminent risk a financial pandemic. "The IMF clearly fears a domino effect in Eastern Europe where a collapse in one country automatically leads to a collapse in another," he said.

Mr Christensen said investor sentiment towards the region has reached the point of revulsion. The Budapest bourse plunged 10pc yesterday despite the proximity of an IMF deal Meanwhile, Standard & Poor's issued a blitz of fresh warnings, downgrading Romania's debt to junk status, and axing the ratings Poland, Latvia, Lithuania, and Croatia.

The agency said Romania was "vulnerable to a sudden-stop scenario where capital inflows dry up or even reverese", leaving the country unable to cover a current account deficit of 14pc of GDP.

Romania's central bank has taken drastic steps to defend the leu, squeezing liquidity so violently that overnight rates shot up to 900pc. But there are growing doubts whether this sort of shock therapy can obscure the fact that economic booms are now turning to bust across the region.

Merrill Lynch has advised to clients to take "short" positions against the leu. "The fundamental picture suggests that Romania may face a currency crisis in the near term, similar to what Hungary has gone through over the last week," it said. The bank also warned that Turkey and the Philippines are vulnerable.

Hungary was forced to raise interest rates last week by 3 percentage points to 11.5pc to defend its currency peg in Europe's Exchange Rate Mechanism. Even Denmark has had to tighten by a half point, raising fears that every country on the fringes of the eurozone will have resort to a deflationary squeeze.

The root problem is that Eastern Europe and Russia have together borrowed $1,600bn from foreign banks in euros and dollars to fund their catch-up growth spurt over the last five years, according to data from the Bank for International Settlements. These loans are now coming due at an alarming pace. Even rock-solid companies are having trouble rolling over debts.

Mr Schering said Turkey was likely to join the queue for bail-outs very soon. "Their external liabilities have reached $186bn, and a lot of this is short-term debt that has to be rolled over in coming months," he said.

Turkey's prime minister Recep Tayyip Erdogan said over the weekend that his country would not "darken its future by bowing to the wishes of the IMF", but it is unclear how long Ankara can maintain its defiant stand as capital flight drains reserves.

Pakistan - now facing imminent bankruptcy - has also raised political hackles, balking at IMF demands for deep cuts in military spending as a condition for a standby loan. Diplomats say it is unlikely that the West will let the nuclear-armed Islamic state slip into chaos.


Show us the Gold! Demand a physical audit of Ft. Knox NOW!
End the Fed! Website:
http://www.EndTheFed.US
End the Fed Blog:
http://www.EndTheFed.blogspot.com
End the Fed! Organizers Meetup:
http://www.RonPaul.Meetup.com/186
End the Fed! Facebook Group:
http://apps.new.facebook.com/causes/121483
Cool END THE FED! and Liberty Themed T-shirts and Stuff:
http://www.endthefed.us/order.html
 
 

New World Economic Order Meeting in DC November 15th

Back to Bretton Woods
European leaders invoke historic conference to fix financial system

By William L. Watts, MarketWatch
Last update: 6:52 p.m. EDT Oct. 24, 2008

L
ONDON (MarketWatch) -- Forget Davos. As world leaders attempt to pick up the pieces left by the most terrifying financial crisis since the Depression, it may be time for a New Hampshire mountain resort town to reclaim the spotlight.

French President Nicolas Sarkozy and British Prime Minister Gordon Brown have sounded calls for a revisit of the 1944 Bretton Woods conference that laid the groundwork for much of the postwar financial world order.

President Bush earlier this week acquiesced to calls by Sarkozy and European Union officials, setting a Nov. 15 summit of leaders from the Group of 20 leading industrial and developing nations to be held at the National Building Museum in Washington.

While they won't be meeting at the New Hampshire resort town that gave the Bretton Woods system its name, European leaders hope the gathering will get the ball rolling on a number of potentially major reforms.

"The U.S. really is the epicenter of the crisis, so the Europeans may think they're on the moral high ground and try to lead the process of reform," said economist Morris Goldstein, a senior fellow at the Peterson Institute for International Economics in Washington. "We'll have to see how this turns out."
Sarkozy was the first to make a call for a new "Bretton Woods."

Last week, he told the European Parliament that the talks must aim to "overhaul capitalism," not by "questioning the idea of a market economy" but by implementing certain principles, including subjecting all financial institutions to regulation, ensuring bonuses don't provide incentives for undue risks and re-thinking the monetary system.

Not to be outdone, Brown, in an Oct. 17 op-ed in the Washington Post, also called for a "new Bretton Woods."

The same "sort of visionary internationalism is needed to resolve the crises and challenges of a different age. And the greatest of global challenges demands of us the boldest global cooperation," he wrote.

Brown declared the old postwar financial institutions "out of date" and in need of rebuilding to deal with a "wholly new era in which there is global, not national, competition and open, not closed economies." He reiterated calls for cross-border supervision of financial institutions, shared global accounting standards, "more responsible" executive pay and a role for international institutions to serve as an early-warning system.

T
he original Bretton Woods
C
onvinced that economic hardship had led to the rise of fascism, the Allies called the Bretton Woods conference in an attempt to address the causes of the Great Depression. The primary focus, economists say, was to come up with a currency system less rigid than the gold standard while providing similar stability. As part of the effort, the conference laid the foundations for the International Monetary Fund and the World Bank.

The resulting system remained in place until 1971, when the Nixon administration removed the dollar's peg to gold and allowed the greenback to float -- effectively putting an end to the fixed-rate system.

Some economists find references to Bretton Woods curious.

"Bretton Woods was about exchange-rate management and setting up facilities for country-to-country lending under duress, and that actually hasn't worked bad in this crisis," said Roger Kubarych, chief U.S. economist at UniCredit MIB and a senior fellow at the Council on Foreign Relations.

"It's mainly a banking crisis. It's not a currency crisis," Goldstein agreed.

While some emerging economies, such as Iceland and Hungary, have seen runs on their currencies, "there's been no run on the dollar, there's been no run on the major currencies," he said. Chances of a major move back toward fixed exchange rates appear quite unlikely.

But Simon Derrick, chief currency strategist at Bank of New York Mellon in London, thinks the references to Bretton Woods may point, in part, to a desire to rein in recent volatility in foreign exchange markets.

Derrick also noted that European Central Bank President Jean-Claude Trichet warned in a news conference following this month's meeting of Group of Seven finance ministers and central bankers that authorities viewed excess volatility as a problem, even though no mention of currencies was made in the G7's official communique.
"It does seem to me there's evidence to suggest that Europe's very much focused on this idea of the need for perhaps a rather more controlled currency regime than currently is the case," he said.

That doesn't mean a return to a fixed-rate regime, he said. But authorities could make the case for a move back towards more active intervention in currency markets to rein in volatility, a feature of markets well into the 1990s.

After all, the British pound has seen a record daily drops against the U.S. dollar this week and other currency pairs are also showing huge swings.

Extreme volatility "clearly has the potential to do a huge amount of damage to investors, to people who aren't properly hedged, to people who are trying to forecast budgets. That extreme volatility contains the threat of feeding back into ... asset markets," he said.

N
o one-day fix
R
egardless, leaders aren't likely to come out of the one-day affair with anything resembling a broad plan to overhaul the world financial system. While the summit may get the ball rolling, there are a lot of very complex details that need to be ironed out. Leaders may schedule more meetings, but the nuts and bolts of any structural overhaul will be ironed out by technocrats, not presidents and prime ministers, experts said.

Moreover, the Nov. 15 conference comes shortly after the U.S. presidential election, leaving the Bush administration little leeway for serious negotiations. The White House has said it will seek "input" from the president-elect.

"I'm not sure I expect a lot out of this first meeting. I expect mostly principles and expressions of determination and cooperation," Goldstein said.

"Not all bad, I think - and much better also that they do it at the G-20 level than the G-8 level because the emerging economies have a big stake in the crisis."

W
illiam L. Watts is a reporter for MarketWatch in London.


G-7 Fails to Halt Yen's Gain After Saying Its Moves `Excessive'

The Group of Seven industrialized nations failed to halt the yen's advance
to near a 13-year high against the dollar after expressing concern about the
currency's ``excessive volatility.''

The G-7 made an unscheduled statement after a request from Japan, Finance
Minister Shoichi Nakagawa said in Tokyo today, adding that his government
was ready to act if needed. The G-7 fell short of pledging concerted action
to halt the yen's gain.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aO0q9YQhax84

Asian Stocks Tumble for Fourth Day; Philippines Index Loses 12%

Asian stocks tumbled for a fourth day, led by the Philippines, on concern
government measures will fail to support growth and prevent more emerging
market economies from seeking bailouts from the International Monetary Fund.


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=awfpS2yX1S2Y

Yen Rises as Carry Trades Pared on Global Recession Concern

The yen climbed for a fifth day against the dollar as the risk of a global
recession and an extended slump in the world's stock markets prompted
investors to slash carry trades.


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=ay6Bx1UekaOs

Sarkozy Summons De Gaulle's Statist, Anti-U.S. Spirit

Since the era of Charles de Gaulle, France has rebelled against the
American-style capitalism that put a ``Made in U.S.A.'' stamp on the world
economy.

Now, as convulsions on Wall Street shake the global financial system, French
President Nicolas Sarkozy is seizing the opportunity to remake the
free-enterprise model along more state-managed Gaullist lines.

Emboldened by the U.S. pursuit of a European-style bailout, Sarkozy has
packed his wish list for an upcoming international summit with calls for
everything from stiffer bank supervision and limits on executive pay to
state aid for hand-picked industries. While the moment is in his favor,
history is working against him: throughout the postwar era, French attempts
to subdue globalization and come up with an exportable economic model have
misfired.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aEUjmkEmRU8o

Sunday, October 26, 2008

`Biggest Bubble of Them All' Is Globalization: Chart of the Day

Oct. 24 (Bloomberg) -- The 90 percent tumble in the global benchmark for
commodity shipping costs since May exceeded the Dow Jones Industrial
Average's plunge during the Great Depression, signaling globalization is
``the biggest bubble of them all,'' Bespoke Investment Group LLC said.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=asRq2L_zxsS0

Asia, Europe Leaders Urge More Finance Rules Before Bush Summit

Asian and European leaders called for an overhaul of World War II-era
banking rules, lending support to French President Nicolas Sarkozy as he
pushes the U.S. to embrace greater supervision of global financial markets.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a5B.ffRG4SDc

Here comes the New World Economic Order...the "Big Meeting" will come very
shortly after Obama is installed as "President" and he will cave into the
demands of the International Bankers, right on cue.

IMF, Ukraine Reach Agreement on $16.5 Billion Loan

The International Monetary Fund reached agreement with Ukraine on a $16.5
billion loan to help support the nation's financial system as turmoil in
global credit markets and recession concerns sweep eastern Europe.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aMdLVmsn22jM

Ukraine, Iceland, Argentina, Pakistan, Hungary...USA? Entire nations are
going bankrupt and being "bailed out" or rather bought out by the
International Fed.

Saturday, October 25, 2008

WSJ.com - U.S. Mulls Widening Bailout to Insurers

 
WSJ.com  
Powered by  
 * Please note, the sender's email address has not been verified.
   
 
Where will it end? In the name of "safety and security", the fascist---truly the essence of the the word is at play here--merger between Corporations and Government continues unabated and unopposed. The Financial Oligarchy is the government, the Government is the Financial Oligarchy. And the USA is no longer the country the Founders bequeathed to us!

 
   
   
  Click the following to access the sent link:
   
 
WSJ.com - U.S. Mulls Widening Bailout to Insurers* This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.
     
 
 
  SAVE THIS link FORWARD THIS link
 
 
   
Get your EMAIL THIS Browser Button and use it to email content from any Web site. Click here for more information.
   
   
  *This article can also be accessed if you copy and paste the entire address below into your web browser.
http://online.wsj.com/wsjgate?subURI=%2Farticle%2FSB122487244838367321-email.html&nonsubURI=%2Farticle_email%2FSB122487244838367321-lMyQjAxMDI4MjI0NTgyNzUyWj.html

Thursday, October 23, 2008

Pakistani officials in Dubai seeking emergency IMF aid

Pakistani officials are in Dubai to seek a multibillion dollar rescue
package from the International Monetary Fund in order to avoid bankruptcy.

http://www.telegraph.co.uk/news/worldnews/asia/pakistan/3234591/Pakistani-of
ficials-in-Dubai-seeking-emergency-IMF-aid.html

Wednesday, October 22, 2008

Argentina seizes pension funds to pay debts. Who's next?

<http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/10/21/argentina_seizes_pension_funds_to_pay_debts_whos_next>  

Posted By: Ambrose Evans-Pritchard <http://blogs.telegraph.co.uk/ambrose_evans-pritchard>  at Oct 21, 2008 at 18:40:55 [General <http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/cat/general> ]
 
Here is a warning to us all. The Argentine state is taking control of the country's privately-managed pension funds in a drastic move to raise cash.
 <http://blogs.telegraph.co.uk/ambrose_evans-pritchard/gallery/view_gallery.one?pid=40666617>
Should we worry about our pensions?

It is a foretaste of what may happen across the world as governments discover that tax revenue, and discover that the bond markets are unwilling to plug the gap. The G7 states are already acquiring an unhealthy taste for the arbitrary seizure of private property, I notice.

Here is a link from La Nacion <http://www.lanacion.com.ar/nota.asp?nota_id=1061645> and another from El Pais <http://www.elpais.com/articulo/economia/Gobierno/argentino/suprimira/sistema/privado/pensiones/elpepueco/20081021elpepueco_1/Tes>  for Spanish speakers:

So, over $29bn of Argentine civic savings are to be used as a funding kitty for the populist antics of President Cristina Kirchner. This has been dressed up as an anti-corruption and efficiency move. Aren't they always?

Argentine sovereign debt was trading at 29 cents on the dollar today, pushing the yield to 25pc. Tempted?

Credit Default Swaps on Argentine bonds reached 2,900. Do we have a Latin Iceland on our hands, but with 100 times the population? Or several, Pakistan, Ukraine, Hungary? ...... Switzerland? Australia? Britain?

The funds being targeted are known as AFJPs or retirement accounts, but how long will it now be before Mrs Kirchner cracks down on the entire $97bn pool of private pensions? There are a lot of much-needed hard currency assets in those portfolios.

"A state takeover of pensions creates all kinds of doubts and throws into relief the extreme financing needs of the government next year," said Jorge Alberti, from ElAccionista.com

Needless to say, the Kirchner government (part II) is unable to raise any money on the global markets at a tolerable price.

Investors have already been burned by her stealth default on Argentina's index linked bonds. This was achieved by sacking the head of the statistics office and rigging the inflation data (by 20pc annually, or so.)

Frankly, I am a little surprised that Argentina's 2001 default - the biggest in history - was not a severe enough burning in itself for investors. But political risk seems to be a blind spot for some asset managers. And then there was the great agro-boom of 2005-2007 so all was forgiven, until commodities went into free-fall in May.

President Kirchner has been eyeing the pension pool for some time. Last year she pushed through new rules forcing them to invest more money inside the country - always a warning signal.

My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital - whether they want it or not - and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted - or eliminated - with little due process if that is required to serve the collective welfare. This is a slippery slope. I hope Paulson, Darling, and Lagarde tread with great care. I do not expect Steinbruck to tread with any care.

The Merval index of stocks in Buenos Aires is down 12.6pc as I write. Telecom Argentina took it badly (-25pc), so did Grupo Financiero Galicia (-13pc) and Banco Frances (-20pc).

Foreign sellers?

Protesters link mortgage lenders to broader economic crisis

"MarketWatch Email A Friend Logo"

Protesters link mortgage lenders to broader economic crisis


Last Update: 4:02 PM ET Oct 22, 2008

If you blinked, you might have thought you were watching a scene from the 2006 "Borat" movie: Mortgage executives gathered in a large room are caught off-guard by disturbances in the audience, making for moments of uncomfortable silence. ...Read the rest of the story

Most E-mailed
14 reasons Main Street loses while Wall Street sinks democracy
The difference between panic and capitulation
Correction in commercial real estate has only just begun
Bear trap: the other side of the trade
Dollar soars vs. euro, pound as risk aversion rises; yen gains
U.S. stocks hammered, fueled by worries of global slowdown
Hungary hikes rates as emerging Europe worries grow
A checklist for signs of a market recovery
Mortgage rates, late to the credit thaw, look set to soften
'Barbarians at the Gate,' still relevant 20 years later
Questions? Click here to contact us.
You were sent this article because your friend requested that it be sent to you.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
Copyright © 2008 MarketWatch, Inc. All rights reserved.
By using this site, you agree to the Terms of Service and Privacy Policy (updated 6/26/07).

MarketWatch - Attn: Customer Service, 201 California St., San Francisco, CA 94111

Emerging-Market Bonds, Currencies, Stocks Tumble on Argentina

Bond market crisis beginning with foreign markets...watch for news on DUBAI
soon...California will be next...


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aoyTfdAPk0Sc

SFGate: Governor considers special session on deficit

Watch the news on the California deficit carefully...the failure of state and local governments will be the next phase in the meltdown...

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/10/22/BA1913LRLM.DTL
---------------------------------------------------------------------
Wednesday, October 22, 2008 (SF Chronicle)
Governor considers special session on deficit
Matthew Yi, Chronicle Sacramento Bureau


(10-22) 04:00 PDT Sacramento --
Gov. Arnold Schwarzenegger will likely call a special legislative session
in November to solve California's ongoing budget woes caused by continuing
economic challenges and deteriorating revenues, his spokesman said
Tuesday.
The move would mean the current group of lawmakers would convene even
though dozens of them, facing term limits, will be leaving office Nov. 30,
when the legislative session officially ends.
"The sooner we take action, the more money we could save," said Aaron
McLear, Schwarzenegger's spokesman.
Schwarzenegger said Tuesday that the state may need a more immediate
fiscal fix.
"We don't want to wait until the new year to fix some of the problems that
we can fix now," he said during a news conference in Southern California
to announce a deal between the California State University system and
SunEdison, a Maryland firm, to install solar panels on college campuses.
The state's finances have been the biggest challenge for Schwarzenegger
and the Legislature this year. The housing market meltdown and the
sluggish economy resulted in less property, corporate and sales taxes for
state coffers, causing a nearly $17 billion gap in the current fiscal
year's budget.
The governor and lawmakers were able to agree on a budget deal to close
the gap, but only after a record-setting impasse that ended when
Schwarzenegger signed the spending plan on Sept. 23, 85 days late.
But within weeks of the budget enactment, state officials warned that tax
receipts are coming in even lower than expected and that California's
revenue could be down by at least $3 billion. And with the more recent
problems on Wall Street and the crisis in worldwide credit markets, the
Golden State's finances are not expected to improve anytime soon.
In order for Schwarzenegger to call a special session, he would have to
first define just how big the deficit is and propose solutions for the
lawmakers to consider.
McLear said the governor's finance staff is gathering data and believes
pertinent information would be ready well before Dec. 1.
While lawmakers agreed on the need for a special session to tackle the
state's budget crisis, at least one questioned whether it's possible to
have one before the end of November.
"To readjust the budget based on one quarter's results when we haven't
even seen Christmas, I'm not sure if we'll have enough information to know
what the scope of the problem is," said Sen. Denise Moreno Ducheny, D-San
Diego, chairwoman of the Senate Budget committee.
Then there is the question of whether Congress will deliver a federal
economic stimulus package either late this year or in early 2009, and how
that could potentially affect California's finances, Ducheny said.
"I understand people's sense of urgency, but we shouldn't be doing
something for the sake of doing something without all of the facts," she
said. Also, if lawmakers can't agree on solutions by the end of November,
the session simply expires and the governor would have to call a new one
with a new class of lawmakers, Ducheny said.
But Schwarzenegger argued Tuesday that there are things he and the
Legislature can tackle quickly, such as new legislation to help homeowners
facing foreclosure keep their homes and immediately dispensing billions of
dollars of voter-approved bond funds for infrastructure projects.
"And I think a special session will be a great tool to getting those
things done," he said.

E-mail Matthew Yi at myi@sfchronicle.com. ----------------------------------------------------------------------
Copyright 2008 SF Chronicle

Attention: To All Gold Investors




To holders of gold, gold bugs and hard money enthusiasts:

Your belief in gold as money and gold as an investment in times of economic crisis is about to be severely tested.  Gold will soon collapse from $750 to $600 in a short span of time.  This is both somewhat normal action within a bull market and also a result of extreme market manipulation by the money masters who rule our world.

This phase is know as “capitulation”.  Many former believers in the gold bull will throw in the towel as gold breaks down beneath its most recent low around $740.00 per ounce.  They will come to the conclusion that they were wrong about gold and will take their profits or losses and cash out.  They will rush down to their local coin and bullion dealer and see what they can get for their stash.  I wouldn't recommend being one of them.

Although gold coins and bullion are actually scarce and difficult to obtain in the real world at this time, the electronic market (known as COMEX) is highly manipulated.  It is not a free market.   Therefore the deep pockets can sell short the gold market electronically to drive the price down.  Their goal is to drive all gold holders out of the market and scoop up all the physical gold for themselves.  When gold does bottom in the $600-550 zone sometime in the next month, most holders of gold will have sold out, clearing the decks for a rapid reversal.  The resulting surge will happen so fast that most will not react fast enough to get back on the bull and will be left holding rapidly depreciating dollars as the hyperinflationary stage sets in.

This is a brief characterization of the situation and not an in depth exploration of the many forces that are producing this situation.  Would that I had the time to explain this in detail.  But here are a few charts which will  illustrate my point if you are adept at interpreting them.

Could I be wrong?  Sure.  Gold COULD bottom right here and rebound sharply, particularly since the US dollar is due for a major selloff, which would be bullish for gold.  However, the damage to the gold bull market is real and in general markets under these conditions need a full clearing of the decks and a total shaking out of the weak hands for the bull to resume its uptrend.

Your Friend in Freedom,

Steven Vincent

End the Fed! Website:
http://www.EndTheFed.US
End the Fed Blog:
http://www.EndTheFed.blogspot.com
End the Fed! Organizing Sites:
Meetup: http://www.RonPaul.Meetup.com/186
Restore the Republic: http://www.RestoreTheRepublic.net
Ning: http://endthefedusa.ning.com
Facebook: http://apps.new.facebook.com/causes/121483
Cool END THE FED! and Liberty Themed T-shirts and Stuff:
http://www.endthefed.us/order.html
http://www.cafepress.com/RonPaulBook
Ron Paul’s Campaign for Liberty:
http://www.CampaignforLiberty.com

Sunday, October 19, 2008

U.S. deficit rises, and consensus is to let it grow

 
U.S. deficit rises, and consensus is to let it grow  

<http://www.iht.com/articles/2008/10/20/business/20cost.php>

By Louis Uchitelle and Robert Pear
Monday, October 20, 2008


Like water rushing over a river's banks, the U.S. government's rapidly mounting expenses are overwhelming the federal budget and increasing an already swollen deficit.

The bank bailout, in the latest big outlay, could cost $250 billion in just the next few weeks, and a newly proposed stimulus package would have $150 billion or more flowing from Washington before the next president takes office in January.

Adding to the damage is that tax revenues fall as the economy weakens; this is likely just as the government needs hundreds of billions of dollars to repair the financial system. The nation's wars are growing more costly, as fighting spreads in Afghanistan. And a declining economy swells outlays for unemployment insurance, food stamps and other federal aid.

But the extra spending, a sore point in normal times, has been widely accepted on both sides of the political aisle as necessary to salvage the banking system and avert another Great Depression.

"Right now would not be the time to balance the budget," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan Washington group that normally pushes the opposite message.

Confronted with a hugely expensive economic crisis, Democratic and Republican lawmakers alike have elected to pay the bill mainly by borrowing money rather than cutting spending or raising taxes. But while the borrowing is relatively inexpensive for the government in a weak economy, the cost will become a bigger burden as growth returns and interest rates rise.

In addition, outlays for Medicare and Social Security are expected to balloon as the first baby boomers reach full retirement age in the next three years... more:  http://www.iht.com/articles/2008/10/20/business/20cost.php

 

Putin May Use Credit Squeeze to `Destroy' Oligarchs

Fascism is the marriage of business and the state--Ed.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aR7ZSZbKh0so

ING Gets $13.4 Billion Injection From the Netherlands

ING Gets $13.4 Billion Injection From the Netherlands (Update1)


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=akzUx_KPVMhQ

Trichet Says Banking System Is `On the Path' to Recovery

Trichet Says Banking System Is `On the Path' to Recovery


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a1Ojy7pqBEic

Bush to Host First in Series of Summits on Financial Crisis

Bush to Host First in Series of Summits on Financial Crisis


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=atEt2ELh7cZY

Reuters.com - GM, Chrysler pushing for rapid deal: report

There has been speculation within the industry and among analysts that if Detroit's automakers face failure, they may seek a bailout from the U.S. government along the lines of the recent $700 billion package for the financial sector.  Reuters.com - GM, Chrysler pushing for rapid deal: report     http://www.reuters.com/article/email/idUSTRE49H1IT20081019  This service is not intended to encourage spam. The details provided by your colleague have been used for the sole purpose of facilitating this email communication and have not been retained by Thomson Reuters. Your personal details have not been added to any database or mailing list.  If you would like to receive news articles delivered to your email address, please subscribe at http://www.reuters.com/newsmails

Reuters.com - GM, Chrysler pushing for rapid deal: report


There has been speculation within the industry and among analysts that if Detroit's automakers face failure, they may seek a bailout from the U.S. government along the lines of the recent $700 billion package for the financial sector.  Reuters.com - GM, Chrysler pushing for rapid deal: report     
http://www.reuters.com/article/email/idUSTRE49H1IT20081019

More Paper Confetti to Feed World Hyperinflation

German Parliament approves €500 billion financial bailout
http://www.iht.com/articles/ap/2008/10/17/europe/EU-Germany-Meltdown.php

"...The German plan, worth US$675 billion, was handed to parliament after approval Monday by Merkel's cabinet. it is part of a coordinated European bailout effort in the face of nervous, volatile markets.
Earlier this week, Merkel warned that "the danger for financial market stability has not yet been banished."

"We must, by approving this bill, as quickly as possible create the basis for calming the situation on the markets," she said..."


Friday, October 10, 2008

Ron Paul: A World Central Bank Coming

Ron Paul seems to concur with my conclusion that a World Central Bank is in the offing.

Ron Paul On Restoring Confidence in the Markets


Bailout Protest at the Bank of England, 10 October

 Unfortunately this was organized by Communists.  Let's not all hold identical, impersonal, funded by someone signs on November 22nd, ok?  And let's project a better image as well.  We should be strong and assertive, but not a mob.

LIBOR Set by Men in London, NOT by the Market

The British Banking Association sets the London Interbank Offer Rate, the interest rate that banks charge each other for borrowing. The skyrocketing LIBOR is largely blamed for the current credit crunch which is creating the market crash and bank failures.  It's interesting to note that this key rate is set by fiat by a small group of London banking insiders.  It is NOT set by the market.  It is set by men with an agenda.  It is not unreasonable to question whether the skyrocketing LIBOR and its refusal to come back down is not being purposefully set high to engender the crisis.  Something worth thinking about.

http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=145&a=10202

Key facts about BBA LIBOR


10/08/2007

The BBA LIBOR overnight rate for pounds sterling over the past two days has moved upwards daily:

  • Wednesday 8th August 5.85 per cent
  • Thursday 9th August 6.165 per cent
  • Friday 10th August 6.475 per cent

The Bank of England base rate is currently 5.75 per cent.

3. How Is It Calculated?

The BBA uses Reuters to fix and publish the data daily, usually before 12 noon UK time.

It assembles the interbank borrowing rates from 16 contributor panel banks at 11am, looks at the middle 50 per cent of these rates and uses these to calculate an average, which then becomes that day’s BBA LIBOR rate. This process is followed 150 times to create rates for all 15 maturities (ranging from overnight to 12 months) and all 10 currencies for which a BBA LIBOR rate is quoted.

Our New Dictator Will Address the Nation on Friday

Thursday, October 9, 2008

GM and Ford Near Bankruptcy

Please look at these charts.  GM is now trading at the same price it traded at in 1950.  America's great auto makers will go out of business within the next few months, will be bailed out by the Fed or will be bought out by foreign competitors.  There are over 1 Trillion dollars of credit default derivative bets on GM.  Friends, this crisis is just barely begun.






Municipal Metldown: Massachusetts

Bloomberg did a series of these profiles on local governments in trouble.  They seem to be determined to push the idea that States and municipalities are on the verge of bankruptcy.  Here, Massachusetts is begging the Fed for access to the discount window, just like the banks and corporations.  Something is clearly going on at the state and local government level.  Go to this link to see more in this series:  http://www.clipsyndicate.com/publish/video/714119/credit_crunch_spotlight_massachusetts

Opinion: Total Financial and Economic Meltdown in Progress Now

Total Financial and Economic Meltdown in Progress Now

The night before last I wrote the following with the intention of sending it out to the group.  I changed my mind and did not send it, fearing to be an alarmist.

“World markets are plunging in a panic as the banksters have severed access to credit making investment and speculation impossible.  The Dow futures market is showing a nearly 400 point drop in response to a borderline crash in Asia and Europe tonight.  It appears Morgan Stanley will be the next big bank to go under.  In all likelihood this week will see the biggest stock market crash in history.  Rumors abound that municipalities and States will default on their bonds this week.  California and Massachusetts look like good candidates.  The cessation of many government services and checks could follow.  Iceland and Pakistan are on the verge of bankruptcy.  Wonderful, a nuclear armed Islamic state thrown into chaos.

My guess is that we could see disruptions in the supply of food within two weeks, with food riots within a month.

If that is the scenario then we may see the suspension of the election and...well I can’t bring myself to say it.

I do not write this casually and I do hope that I am mistaken.  I ask God that I be completely wrong.  But is what the situation appears to be at the moment.

May God Bless us all and keep us safe.”

Today the Dow plunged 600 points (7%) in the final hour of trading.  It should not have done so; it was set up for a rally.  That it has done so is a clear indication that a total market meltdown and financial economic crash is upon us.  The banksters, having enslaved formerly free markets to the cheap, sleazy drug of easy credit have now cut the addict off from its supply.  We are now seeing the retching of withdrawal and the tremors of death of the global economy.

Today’s Headlines

Stocks in U.S. Tumble as Dow Industrials Drop Below 9,000; GM, Exxon Slide
Mutual Fund Withdrawals Jump to Record $72 Billion as Investors Seek Haven
•G
M Shares Fall to Lowest Level Since 1950; S&P May Cut Automaker's Rating
•Le
veraged Loan Index Plummets to Record as Hedge Funds, Banks Sell Assets
•U.S
. Treasury Plans Bank-Stake Purchases Within Weeks to Shore Up Capital
•Icel
and Seizes Kaupthing as Banking Industry Collapses Under Debt Weight
•VIX O
ptions Index Climbs to Record Above 60 as Credit Market Stays Frozen
•Bush W
ill Meet With G-7 Finance Chiefs to Tackle Credit Crisis, Aide Says
Libor Holds Central Banks Hostage as London Rate Freezes Worldwide Lending
Fear Trumps Greed as Market Worries Amplify News, Paralyze World Economy
•Roy
al Bank of Scotland Loses Credibility After Goodwin's ABN Amro Purchase
•Cent
ral Banks Fail to Alleviate `Logjam' in Money Market: Chart of the Day

As I predicted, a global summit is being announced at which the bankster dictators will tell us their plans for remaking the world economy in their image.  Anticipate a new global financial regulatory body (perhaps even a new World Central Bank) and moves in the direction of a World Currency.  Please note that participation in such by the United States is predicated upon RATIFICATION by the Congress.  If the Banker Dictatorship bypasses this requirement, we can take that as further evidence that the Constitution has in effect been suspended and that dictatorship is a concrete reality in America now.

State and Municipal government bankruptcies are likely within the next few weeks.  My guess is that is what the action in the stock market is discounting right now.  If you are in Massachusetts or California and rely upon state assistance, please prepare for disruptions.

Each of us must now decide what this means for us.  You must make concrete preparations now.  We are in an emergency situation, albeit a concocted and engineered crisis.  This is an economic 911 and the measures following it are new versions of the Patriot Act and the Military Commissions Act.

Let’s spring into action and inform the population of what is transpiring.  People need to know:

“America is Now a Dictatorship”
“Oppose the Banker Dictatorship”
“The Financial 911 is a Scam”
“No Emergency Powers for Wannabe Dictators”
“Restore Constitutional Government NOW”
“End the Fed!  Gold is Money!”

These slogan points should now appear on every freeway overpass, stuck on every sign, on flyers and posters.  Thousands and thousands EVERYWHERE.  Take it upon yourself to spring into action.  Take the initiative and be creative.  Build coalitions across the spectrum with others who will resist the Banker Dictatorship.

Here’s a fast, cheap place to get large quantities of stickers: http://www.stickergiant.com/  Take up a collection among your local groups and get stickering!!

Here’s a great place to get t-shirts made...great prices, great service and fast (please tell them Steven Vincent sent you):  http://coastalprintworks.com/

Here’s a great place to get banners made:  http://www.alwayssign.com/

Once again, I pray to God that I am an utter fool and an alarmist.  Please God, let me be completely wrong.  Or if not wrong, let this come to pass with a longer time frame so that good people can be better prepared for the inevitable.  Please watch over us!


Your Friend in Freedom,

Steven Vincent

End the Fed! Website:
http://www.EndTheFed.US
End the Fed Blog:
http://www.EndTheFed.blogspot.com
End the Fed! Organizers Meetup:
http://www.RonPaul.Meetup.com/186
End the Fed! Facebook Group:
http://apps.new.facebook.com/causes/121483
Cool END THE FED! and Liberty Themed T-shirts and Stuff:
http://www.endthefed.us/order.html
http://www.cafepress.com/RonPaulBook
Ron Paul’s Campaign for Liberty:
http://www.CampaignforLiberty.com

Meltdown News for Thursday, November 9th

Gold Prices May Spike

Within the gold complex, there is a disparity between the paper market and the physical market, notes Jurg Kiener, CEO of Swiss Asia Capital. He tells CNBC's Maura Fogarty & Rebecca Meehan that if the paper market collapses, gold prices may double very quickly.

http://www.cnbc.com/id/15840232?video=880574352

 Iceland FSA Takes Over Kaupthing in Banking Meltdown (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aL2emLvgCwb8

 Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aYSYBqZHENF8

 Paulson Signals U.S. May Invest in Banks to Shore Up Confidence

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=au4PnE_L1TCQ


 Iceland Takes Over Kaupthing as Biggest Banks Fail (Update2)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a6s61daCJ2Ko

 Bernanke, Paulson Seek Global Help as Crisis Swamps U.S. Steps

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aayXiKk6ympQ

 Libor Holds Central Banks Hostage as Credit Freezes (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aAm0SVGQnyFU

 Fear Trumps Greed as Market Woes Paralyze Economies (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=ajZg6dFyhnpk

 BlackRock, Pimco Submit Bids to Manage Treasury Bailout Assets

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=adHDI3vPN93c

 RBS's Credibility `Shot to Bits' Since ABN Amro Deal (Update2)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aQ0wsKyepjQY

 Overnight CP Rates Drop on Global Rate Cut, Fed Backstop Plan

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aPM1_vs3UHUQ

 Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aYSYBqZHENF8

 Asia's Stocks, Index Futures Decline on Credit, Demand Concerns

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a9ZCVokTb.SE

 Fear Trumps Greed as Market Woes Paralyze Economies (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=ajZg6dFyhnpk

 IBM Plans Its Biggest Bond Sale With $4 Billion in Offerings

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a.zccD9B_w9g

 U.S. Treasury May Buy Stakes in Banks Within Weeks (Update2)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aSMUGdLwS67k

 Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aKWhtrBRTbwA

 GM Falls to Lowest Since 1950; S&P May Cut Rating (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aUMsMdzmXd_o

 Mutual Fund Withdrawals a Record as Investors Flee (Update1)

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aTB_zifIPxIM

 U.S. Stocks Tumble, Sending Dow Below 9,000; GM, Insurers Slide

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aDRetp2GpqeI

Wednesday, October 8, 2008

The Do-Something Congress by Ron Paul

The Do-Something Congress

 It has not been a good week for the Republic.  It took quite a bit of trampling of the Constitution, but the bailout bill passed, as I suspected it would.

 

The bailout failed the first time it was brought to the House.  Undaunted, the Senate pressed on by attaching the bailout as an amendment to another House passed bill that was pending in the Senate.  The new bailout version had new taxes, so according to the Constitution it should not have originated in the Senate. 

 

The rallying cry heard all over the Hill the past two weeks was that Congress must act.  Our economy is facing a meltdown.  Would this bill fix it?  Nobody could really explain how it would.  In fact, few demonstrated any real understanding of credit markets, of derivatives, of credit default swaps or mortgage-backed securities.  If they did, they would have known better than to vote for this bill.  All they knew was that this administration was saying some frightening things, and asking for a lot of money.  And when has Congress ever been able to come up with a better solution to a problem than to throw more of your money at it?  So that is what Congress did, enacting a financial PATRIOT Act in the process.

 

In its embarrassment at being called a "Do-Nothing Congress" the 110thCongress took decisive action and did SOMETHING.  No matter that it was the wrong thing.  In fact, it wasn't until the Senate had a chance to load it up with even MORE spending, when it was finally inflationary and horrible enough, at $850 billion instead of a mere $700 billion, that it passed – and with a comfortable margin, in spite of constituent calls still coming in overwhelmingly against it.  57 members switched their vote!

 

The market went down anyway.  Our nation is now just that much more in the hole.  You will pay your part of this mess through inflation, and very likely hyperinflation.

 

Sometimes doing nothing is much better than thrashing about aimlessly.  When one is caught in quicksand, for example, or when one doesn't understand economics and finds oneself in the position Congress was in for the past two weeks, with decades of irresponsible monetary policy coming to a head.  Why should we trust the same people who said just a few months ago that the economy was perfectly sound?  The same people who just knew there were weapons of mass destruction?  The same people that crammed the PATRIOT Act down our throats?  Why not consult the people who had the foresight and understanding to see this coming?  They would have recommended such logical actions as repealing the Community Reinvestment Act, which forces banks to make bad loans, or allowing the market to set interest rates instead of the Federal Reserve system.  How about abolishing the Federal Reserve altogether?  There are many things that could have been done, but don’t expect Congress take a course of action that comes from a place of understanding and competence when they could just spend money.

 

This bailout will be the legacy of the 110th "Do-Something" Congress, along with record low approval ratings.  Here's hoping the 111th Congress will be a "Do the Right Thing" Congress, and will focus on repealing and abolishing what is wrong with government instead of reinforcing it.

 

 

Bloomberg news: Barclays, RBS in Debt Double Whammy as Rates Increase (Update4)

Barclays, RBS in Debt Double Whammy as Rates Increase (Update4)


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=abh5PaCjs9pU

Bloomberg news: Iceland Drops Glitnir Purchase; Bank in Receivership (Update1)

Iceland Drops Glitnir Purchase; Bank in Receivership (Update1)


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a9KS9N9H_GLw

Bloomberg news: Morgan Stanley Can Avoid Borrowing Until Summer, Analysts Say

Morgan Stanley Can Avoid Borrowing Until Summer, Analysts Say


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=aTaRXYFw5kRo

Bloomberg news: Yen Rises to 3-Year High on Concern Rate Cuts May Fall Short

Yen Rises to 3-Year High on Concern Rate Cuts May Fall Short


http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=ahr.oHAig2Bk