The Truth Gets Out Eventually"
Some look at today's FaceBook IPO flop, the ongoing market rout, and the situation in Europe with disenchantment and disappointment. We, on the other hand, view it with hope: because more than anything, the events of the past few days show that the truth is getting out - the truth that capital markets simply can not exist under the authoritarian rule of central planners, the truth that the stock market is a casino in which the best one can hope for a quick flip, and finally the truth that our entire socio-economic regime, whose existence has been predicated by borrowing from the uncreated wealth of the future, and where accumulated debt could be wiped out at the flip of a switch if things go wrong in the process obliterating the welfare of billions (of less than 1%ers), is one big lie.


The Facebook IPO: The Last Great Wall Street Party

The Facebook IPO is kind of like a graduation party - everybody comes together for one huge blowout to celebrate the end of an era before going their separate ways.  Unfortunately, most people on Wall Street do not understand how bittersweet this moment really is.  A tremendous amount of pain is ahead for Wall Street in the next few years, and we will probably never see anything like the Facebook IPO ever again. But the Facebook IPO sure has been fun to watch.  Facebook is one of the largest companies to ever go public in the United States.  According to CNN, 247 million shares of Facebook exchanged hands in the first 45 minutes of trading.  The Facebook IPO was nearly ten times larger than any other Internet IPO in history, and the amount of money being made by some people on this deal is absolutely amazing.  For example, it is being reported that Bono will make more money on the Facebook IPO than he has from being part of the band U2 for the past 30 years.  Sadly, this euphoria is not going to last for long.  The next wave of the global financial collapse is rapidly approaching, and once it strikes there will not be much for anyone on Wall Street to be smiling about at all.

Eric Sprott - Governments Frightened of Panic Liquidation Event

 
Today billionaire Eric Sprott told King World News that governments are desperately trying to avoid a “Liquidation Event.”  Sprott, who is Chairman of Sprott Asset Management, also warned the the market is liquidating, “irrespective of whether the powers that be want it or not.”  Here is what Sprott had to say about the unfolding crisis:  “Something has to be done because it’s totally out of control these days.  I mean you can’t have bank runs (like we’re seeing).  The one thing the powers that be, the central banks and the governments, have tried to do is to avoid what I call a ‘Liquidation Event.’”



5/18/2012

Paper gold & silver Ponzi exposed - Technical analysis
Anyone watching the gold and silver market understands that something is not right. An objective look at the fundamentals suggests that there seems to be no substance behind the recent downwards move.
Author: Brett Heath
There has been a constant debate over the years on what drives the price of gold and silver. Obviously we have the fundamentals that have put the metals in a bull market for the last 10 years. The powers that be have total control over money, as they set the price for capital via manipulating the interest rates. So it is not a stretch that they would be concerned with a rising gold price because gold is a threat to how the current fiat regime functions on a day-to-day basis.Without Mr. Bernanke able to step in and buy US treasury bills, where would interest rates be? How would we fund our deficits?
These are just some of the reasons why it is important for the elites to pay attention to the price of gold and silver. Knowing this, the powers that be have instructed their banking arms JPMorgan, HSBC, Goldman Sachs and the like, to create paper derivatives to help manage the price.

Fears of ’08 Credit Meltdown Impacting Markets

 
With fears building concerning another ‘08 credit meltdown, today King World News interviewed the #1 oil analyst in the world, Mike Rothman, to get his take on what is happening.  Rothman is the Founder of Cornerstone Analytics and he has been rated #1 for Independent Energy Research by Institutional Magazine since 2006.  Rothman consults directly with governments and has attended every OPEC Meeting since 1986.  Here is what Rothman had to say about the current situation:  “Essentially, with all of the concerns about the world either falling into recession or being in a recession, you still have Brent oil at triple digit levels.  That’s a testimony that oil balances are actually quite tight.  There’s a problem getting supply.”

The Physical Gold Market – From the Weak to the Strong

By Greg Canavan
We left off yesterday wondering why the market had turned on gold recently - the supposed "safe haven" metal. But we woke up this morning and saw things had turned again...gold surged 2% overnight as the US markets sank around 1.5%.
No doubt this type of price action will confound many investors...especially those who sold in a panic in the last few weeks. The recent sell-off amongst the gold stocks is up there with 2008 for severity.
In a clear example of how the emotional decisions of investors send price diverging from value, gold stocks have plummeted while the Aussie dollar gold price, which, along with production, determines revenue, is only slightly lower.
The gold price certainly does move in mysterious ways. Today our task is to try and work out why. To do so, we need to look into the mysterious world of the London gold market

Forbes: A Return to Gold and Capitalism

5/17/2012

How The U.S. Dollar Will Be Replaced
Brandon Smith

After being immersed in the world of alternative economic analysis for several years, it sometimes becomes easy to forget that most people do not track forex markets, or debt to GDP ratio, or true unemployment, or hunch over IMF white-papers highlighting subsections which expose the trappings of the globalist ideology. Sometimes, you just assume the average person knows what the heck you are talking about. This is, of course, a mistake. However, it is a mistake that is borne from the inadequacy of our age and our culture, and is not necessarily a product of weak character, either of the analyst, or the casual reader.





Gold Tells The Truth

John Maynard Keynes, Charlie Munger and Warren Buffett all said or implied that gold was a barbarous relic. But what’s the barbarous relic? The precious metal that shows prices without a veneer of manipulation, or the paper currency that smudges the true state of supply and demand through money printing, thus misleading markets and society? Charlie Munger says gold is not for civilised people, but in reality gold may be the most civilised currency of all — because it allows civilised people to purchase insurance against the risk of civilisation failing.


Why The Next Inflation Surge Is Closer Than You Might Think

Larry Edelson:  Right now, I remain bearish most commodity markets. The reason being, they have simply not fulfilled a short-term cyclical test of support. So, more downside is possible in gold (NYSEARCA:GLD), silver (NYSEARCA:SLV), oil (NYSEARCA:USO) and an assortment of other commodities.
But there’s also no doubt in my mind that another inflationary surge is right around the corner. One that may be coming even sooner than I had expected.
For one thing, nearly $4 trillion of printed money is sloshing around the global banking system. Money printed by the U.S. Federal Reserve … by the European Central Bank … by the Bank of Japan … and by the Bank of England.
That money is mainly still in commercial banks’ coffers. It was designed to bail them out. And that it did.
But because loan demand is still soft, the banks aren’t lending. They soon will, and that money — $4 trillion worth — is likely to run rampant through the global economy.
I know. The Federal Reserve and the other central banks are largely following Ben Bernanke’s lead — and they all believe that when the time comes, they can reel that excess liquidity back in, and prevent it from running rampant through the global economy. Thereby snuffing out the next inflation surge.

Fear & Panic are the Banking Cartel’s Weapons V. the Gold & Silver Bull. Patience and Logic are the Best Defense.

Currently, there is massive negativity surrounding gold and silver and in particular, gold and silver mining stocks. At times like this, when gold and silver have taken a fairly brutal hit in a condensed period of time thanks to low daily trading volumes both in PM futures and PM stock markets that make it very easy for the banking cartel to manipulate them, it can be difficult not to sell out of everything and run for the hills if one allows emotions to dictate one’s decisions (always a bad move). Especially at a time when fundamentals mean virtually nothing and speculators like JP Morgan and Goldman Sachs are constantly rigging markets and gaming the system through their High Frequency Trading (HFT) programs, it is difficult not to become emotional with your investment decisions. Thus it is important to take a step back from the here and now, and to look at the big picture to re-gain a better grasp of where asset prices will be heading in the future and to re-establish the proper perspective with which to evaluate your decisions. At various times this year, based upon global risk factors and fundamentals, when gold and silver should have been rising, both of these precious metals were falling, and sometimes dramatically. Other times, when risk factors of global banks were elevated and financial stocks should have been falling, they instead, were rising in price.

5/16/2012

Put Your Money Where Your Mouth Is
By Peter Grandich

When we last visited this price area on gold in December 2011, I challenged the loud-mouthed gold bears to wager $1 million dollars on gold hitting $2,000 before $1,000. I offered the world’s worst gold forecaster and the “Tokyo Rose” of the gold market to double that bet, but instead he/she did his/her usual “duck and cover” dribble (Jon, the public knows how bad your track record is no matter how much a few in the media make you think your past forecasts were forgotten).
Since then, an avalanche of bearish forecasters have hit the gold market (including one that comes and goes with his gold is only worth $800 or usually half the going price) and many former bulls have gone into hiding and/or are hedging their forecasts so not to look like they are ardent bulls anymore.

Why We Are Going To See Bank Runs Happening All Over Europe

Michael Snyder: The bank runs that we are watching right now in Greece (NYSEARCA:GREK) are shocking, but they are only just the beginning.  Since May 6th, nearly one billion dollars has been withdrawn from Greek banks.  For a small nation like Greece, that is an absolutely catastrophic number.  At this point, the entire Greek banking system is in danger of collapsing.  If you had money in a Greek bank, why wouldn’t you pull it out?  If Greece leaves the euro, all euros in Greek banks will likely be converted to drachmas, and the value of those drachmas will almost certainly decline dramatically.  In fact, it has been estimated that Greek citizens could see the value of their bank accounts decline by up to 50 percent if Greece leaves the euro.  So if you had money in a Greek bank, it would only make sense to withdraw it and move it to another country as quickly as possible.  And as the eurozone begins to unravel, this is a scenario that we are going to see play out in country after country.

Why Greece Can’t Afford to Stay in the Euro

Sometime in the next few weeks we're going to find out if Greece can afford to stay in the euro. We're also going to find out if Spain and Italy can afford to leave the euro. Access to credit markets is the key issue. The stigma of default will lock a country out of capital markets. If you don't have a plan to replace your currency and then devalue it, you're doomed. We'll return to this subject at the end of today's Daily Reckoning.
But first, the crisis in Greece didn't come to a head over night but it can't be far away. Rival political parties have been unable to form a government. New elections are scheduled for the second week in June. The financial has definitely become political. The people have run out of patience with unsound money and the world built on it.
All that said, the Greeks managed to make a €430 million payment to hold-out creditors last night. Nearly 97% of Greek creditors agreed to the restructuring of the country's debt in March. That wiped off over €100 billion in Greek debt and resulted in 70% losses for some of the bondholders who accepted the deal. Not all of them did.


A Greek exit's impact on gold
For David Levenstein, even though gold's long-term trend remains intact, the short-term damage so far inflicted suggests gold may trade to between $1525/oz to $1500/oz before prices rebound.
Author: David Levenstein
Unless I misunderstood the various speeches of most of the Eurozone financial leaders a few months ago, I am sure that they were absolutely emphatic that Greece would not exit from the euro. Now, it looks almost certain that Greece will exit the single currency. But, hang on a second, there are now talks that Greece should not depart from the euro and should abide by the latest austerity plans. Yes, the circus is back in town. Once again, EU finance ministers are meeting.  As these star performers continue to debate the Greek crisis in a saga that has now gone on for more than two years, the fact remains that the European monetary union in its current form is filled with problems and practically everything these politicians tell the public is a lie. Greece is doomed and according to the newspaper Imerisia citing "reliable information," the level of funds in Greece's state coffers has fallen below 1.5 billion euros ($1.9 billion). If the state doesn't receive predicted revenue for the rest of this month, it will find it difficult to pay for social services, pensions and public-sector wages, the newspaper said.

Is the resource boom over? A resounding No!
Speaking at the New York Hard Assets Investment Conference this week, respected analyst Adrian Day gave the reasons for his belief that the recent resource boom is still far from over.
Author: Lawrence Williams
Not surprisingly - given metal price performance at the time - the audience at the New York Hard Assets Investment Conference was a little depressed. With gold heading down to the low $1500s - the lowest for several months and, of course, junior mining stocks, which is the sector most of the audience would be there to hear about, having been particularly hard hit.
What the audience really wanted advice on was addressed in one of the earlier keynote presentations by Adrian Day.  Is the resource boom over? was the title of his talk and he prefaced it with an immediate No!    In particular he made some very salient points about global copper production and the copper market itself.  He pointed out that the shortest full copper price cycle in recent history was 17 years, while the current copper cycle only started in 2001 - so if this is the end of the current resource boom this would be the shortest such cycle in over 200 years by a very long margin - which he did not see as likely.


Central Banks may buy 700 tons of gold bullion in 2012: Michael Lombardi

NEW YORK(Commodity Online): The central banks of the world is expected to purchase 700 tons of gold bullion in 2012, if the current rate of buying continues at this pace, says Michael Lombardi, lead contributor for financial newsletter Profit Confidential.The banks have accumulated up to 440 tons of gold in 2011, at a rate of 37 tons a month. Moreover, they purchased about 57.9 tons of gold bullion in the month of March 2012, reveals Lombardi.The central banks has taken advantage of the situation of the lower prices of gold bullion to buy significant amounts of the metal, says Michael Lombardi in his new article 'Half of World Gold Production Being Bought by Central Banks', published in Profit Confidential.

5/15/2012

Bank Runs Hit Greece
Stocks faded in the final hour of trading Tuesday to finish lower after a transcript from the Greek meeting showed deposits leaving the nation's banking system and after the Greece's leaders failed to agree on a coalition government.
The S&P 500 closed at 3-month lows, while the Dow logged its ninth loss in the last 10 sessions. Major averages are on pace for their biggest monthly losses since last September.
According to a transcript, Greek depositors recently withdrew 700 million euros from the nation's local banks, said President Karolos Papoulias, though the exact timing of the transfer was unclear.
"I think people need to prepare for the eventual removal of Greece from the EU and investors are getting ahead of that before they're forced to," said Matthew McCormick, vice president and portfolio manager at Bahl & Gaynor Investment Counsel on CNBC's "Closing Bell." "It's a political market and an event-driven market."

The All-Important Question
David Galland, Managing Director
For pretty much everyone, no matter where they are located in the economic strata, few if any questions are more germane to making plans for the future than whether the US and other major global economies are in recovery.
Getting the answer to that question right is of special importance to investors and businesses.
Stating the obvious, if the broader economy really is in recovery, then investors would be well served by investing in the equities of solid companies positioned to take advantage. Similarly, those very same solid companies would be rewarded by increasing their productive capacity through investments in the plants and people necessary to meeting growing demand.


We are at a major bottom in gold and gold shares - Bob Moriarty
Bob Moriaty provides a contrarian's guide to volatile markets and the reasons why he is looking at junior miners now.
Author: Sally Lowder
Trotting the globe in his unrelenting quest for investing opportunities, Bob Moriarty had just completed a 21,000-mile travel-a-thon when he picked up the phone for this exclusive interview with The Gold Report. He liked a lot of what he saw and found plenty of bargains along the way. Ever the contrarian, he is picking up stocks when everyone else is dumping them; he plans to cash in when the mass of sellers morphs into a mass of buyers and drives prices up.
The Gold Report: We're hearing many people these days warning that it's not a good time for investing in junior mining stocks. The TSX Venture Exchange has been experiencing some of its lowest volumes in six to nine months. What do you believe investors should do this summer?

Gold miners will need prices at $3,000 in 5 years - WGC
World Gold Council CEO, Aram Shishmanian, says miners currently need a gold price of $1,300 to survive, but reckons if the trend continues in the next five years, it will need to be at least $3,000 for them to stay in business.

LIMA (REUTERS) -
Sharp increases in mining costs mean gold will need to reach $3,000 an ounce in five years for the industry to stay profitable, World Gold Council chief executive Aram Shishmanian said on Monday.
Miners currently needed a gold price of $1,300 to survive, Shishmanian said, but faced steep rises in mining costs, along with the cost of dividends and host nation taxes.
"If this continues for the next five years the gold price needs to be at least $3,000 just to stay in the business," he said. However, he was optimistic sustained demand would drive prices higher over the long term.

Ned Schmidt: Long Term Gold Bull Still Intact

Ned Schmidt suggests the Long Term Gold Bull is Still Intact however they’re may be Short Term Bear and Summer Doldrums Dead Ahead.
 From Jim Puplava and Financial Sense:
Ned Schmidt CFA, Publisher of The Value View Gold Report joins Jim this week to discuss the gold market. He sees the long term bull market still intact, but short-term weakness and volatility this summer. Ned believes you should calmly begin to identify what you want to own, and before the end of the summer, pull the trigger. In addition, when Jim Cramer says it’s time to dump gold, that’s the signal to start buying.

Putting Faith in Holding Physical Metals: Eric Sprott
New York Hard Assets Investment Conference 2012 Online Preview
By Philip Burgert
Long-time investor Eric Sprott, the chairman of Sprott Inc., chief excecutive officer, chief investment officer and senior portfolio manager for Sprott Assett Management LP and chairman of Sprott Money Ltd., stirred up a lot of interest he when issued a “Call to Action” to silver producers to limit sales until prices increased and put their convert their cash reserves to physical silver. He’s still pushing that argument, as Resource Investor found when we interviewed Sprott for Futures magazine recently.
Resource Investor: How would you characterize your relationship and that of Sprott Asset Management to the futures industry and futures trading?

Who Is Crashing The System?

 
With continued volatility in many of the key global markets, 40 year veteran, Robert Fitzwilson wrote this exclusive piece for King World News.  Fitzwilson is founder of The Portola Group, one of the premier boutique firms in the United States.  Here are Fitzwilson’s observations:  “We know that the world’s debt-based, fiat money system can only be revived and sustained by the combination of more debt creation and consumption.  We have arrived at a critical point in history.”

JPM Chase Chairman, Jamie Dimon, the Whale Man, and Glass-Steagall
By Nomi Prins

It was fitting that while President Obama and his Hollywood apostles broke fundraising records at a sumptuous $40,000 per plate dinner at George Clooney’s place, word of JPM Chase’s ‘mistake’ rippled through the news. Not long ago, Dimon’s name was batted about to become Treasury Secretary. But as lines are drawn and pundits take sides in the Jamie Dimon ego deflation saga – or, as I see it - why big banks should be made smaller and then, broken up into commercial vs. speculative components ala Glass Steagall – it’s important to look beyond the size of the $2 billion dollar (and counting) beached whale of a trading loss.

5/14/2010

What History Tells Us About A Possible Greek Exit
A number of hours per week for me are spent reading through various pieces of sell-side & independent economic and macro research.  The merits of such a practice can be debated, but it no question provides me a “consensus” view of current economic views.   Over the last week or two the sell-side has increasingly raised the likelihood of a Greek exit from the Euro.  Take for instance:
JP Morgan raised the odds of a Greek exit to 30-50%.  
“The fear scenario is as follows…massive capital flight in anticipation of exit force capital controls in Greece, and new IOUs to pay public workers which starts the process to a new currency; capital flight from rest of periphery. If periphery countries then impose capital controls, the monetary union is effectively dead, as one country’s euros are then not the same as another country’s euros.
We have already seen capital flight within the EU.  As Richard Koo stated this week, “…Spain has a private sector that is deleveraging in spite of near-zero interest rates.  But the resulting savings surplus has not remained within the country.  Instead it has fled to Germany, causing Spanish yields to rise and forcing the Government into austerity.”  The average observer can see this in action with Bund yields plummeting to ~1.50% as of Friday.

Richard Russell - The Next Sure Thing

 
With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, warned his readers to “be out of all stocks.”  Here is what Russell had to say:  “Between the years 2007 and 2009, we experienced the first part of a vicious bear market.  The violence and rapidity of the losses in that bear market were shocking to most people.  In fact, I'd say that the retail public was so shocked and wounded by the 2007 to 2009 bear market that they have stayed out of the stock market ever since.”

Gold Prices and Gold Miners Are Closing In On A Major Bottom
J.W. Jones: Members of my service as well as long time readers know that I do a lot of analysis based on the past. I am constantly looking at long-term historical price charts and data. As a trader, I am always looking for an edge.
Obviously the keys to long-term success involve proper position sizing, risk management mechanisms, and ultimately leveraging probability. Professional traders are masters of these tenets. These characteristics are what separate successful traders from average traders over the long haul.
Sometimes through my rigorous analysis I come across price charts and oscillators that help put together a picture that helps shape my view of the marketplace. The past few months have been some of the most difficult market conditions that I have seen in some time.The “wall of worries” permeates the financial landscape as risk at present seems unprecedented. The list of macroeconomic concerns ranges from the European sovereign debt crisis to escalation of military action in the Middle East.
I could probably write an entire article about the various risks that plague global financial markets at present, but I try to focus on the positive in any situation. Right now remaining optimistic is a daily battle amid the constant barrage of depressed economic data. Instead of focusing on all of the various risks, I focus on finding opportunities where probabilities are favorable based primarily on historical price data, cycle analysis, and tape reading.

How euro money printing is going to drive up gold and silver prices
Peter Cooper

Those investors panicking now and selling their gold and silver will feel as sick as dogs when they see what happens next to prices. For after a bleak patch lasting at most a couple of months the eurozone authorities will start their money printing presses rolling and hey what is the one money that they can never print?
We saw the start of the European Central Bank’s money printing with the announcement of the $1.3 trillion LTRO program last Christmas. It worked and rallied markets for a few months, rather less than QE2 from the Fed. And that is the dynamic of money printing.
Money printing consequences
It works just fine in the initial stages and surprises everybody to the upside. But over time the upside will become shorter and the amounts that have to be pumped into the system will become bigger and bigger, and so will the impact on precious metal prices.
The eurozone politicians and bureaucrats are weak-minded committee men and women. They see money printing as the only easy option to avoid a major recession. Fine in theory but ultimately this will be disastrous in practice. Money will be devalued and it is happening right now in front of our eyes.

5/13/2012

Jamie Dimon's SNAFU: JPMorgan's Other Derivatives' Losses
By Janet Tavakoli

In an August 2010 commentary about JPMorgan's losses in coal trades I wrote: "The commodities division isn't the only area in which JPMorgan is vulnerable. Credit derivatives, interest rate derivatives, and currency trading are vulnerable to leveraged hidden bets. Ambitious managers strive to pump speculative earnings from zero to hero."

At issue is corporate governance at JPMorgan and the ability of its CEO, Jamie Dimon, to manage its risk. It's reasonable to ask whether any CEO can manage the risks of a bank this size, but the questions surrounding Jamie Dimon's management are more targeted than that. The problem Jamie Dimon has is that JPMorgan lost control in multiple areas. Each time a new problem becomes public, it is revealed that management controls weren't adequate in the first place.

Don’t Be Seduced, Why Summer Will Be Disastrous for Markets

 
Today Michael Pento told KWN why “this summer is going to be disastrous for equity prices.”  Pento, of Pento Portfolio Strategies, also stated he believes JP Morgan, the Fed and gold are headed for a major showdown.  But first, when asked about the JP Morgan debacle, Pento responded, “I blame the Fed, like I do for much of the world’s ailments.  The Fed buys a bond from JP Morgan, yielding say 2% on the  10-Year, and then they expect the bank, JP Morgan, to accept 25 basis points from the Federal Reserve.  Now, they have to beat earnings by a penny, so what do they do?”


5/12/2012

America's Looming Default Crisis
House Republicans just reneged on the debt-ceiling deal, making a default in 2013 almost inevitable.
Something terrible happened in Congress yesterday—and nobody seemed to notice. House Republicans voted to take money away from programs meant to help poor people and give it to the military instead. That’s not my idea of wise policy, but that’s what was terrible about it. The problem is that the vote constitutes a collective Republican welching on the agreement that was reached last spring to raise the statutory debt ceiling and avoid national default. Yesterday’s vote doesn’t undo the deal or cause any immediate problems, but by so speedily backing out of their agreement, the Republicans have done something much worse—made it impossible for anyone to negotiate with them in the future, because it’s clear they cannot be trusted to keep the promises they made.

As Europe’s economic outlook darkens, U.S. risks grow
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON — Most economists don’t expect Europe’s debt problems to sink the sluggish U.S. economic recovery, but clearly Europe has sent new headwinds our way, dragging down U.S. stock prices. If Europe’s crisis continues to deepen, it could cause market chaos globally, threatening our economy and others.
Already, renewed concerns about Europe’s debt woes have triggered another round of volatility in global financial markets. Investors worry that some eurozone governments are unwilling to give their economies the bitter medicine needed to arrest their debt, and that they may eventually default on their debt or seek renegotiation with their lenders.

Rick Rule - This Can Bring Down the Entire Financial System
Today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule, told KWN there is a “mismatch of some amount of money in the $100 billion range between credit default swaps.”  He also said this is similar to what “brought down Long Term Capital Management (LTCM).”  Rule, who is now part of Sprott Asset Management, also discussed gold and the mining shares, but first, here is what he had to say about what is taking place: “Well, I think that frames a big issue.  We’ve been asking our clients to consider the macro question, if the institutional risk-off trade is to the US dollar and US Treasuries, that suggests the institutional investors believe that this rally and recovery in the United States is real.  That’s big news if it’s true.”

The Right’s False Prophet

Leo Strauss and the Conservative Movement in America, Paul Gottfried, Cambridge University Press, 182 pages
By Kenneth B. McIntyre | May 10, 2012
When writing about the work of an academic historian or philosopher—as opposed to a polemicist, a politician, or a popularizer—there is an obvious threshold question with which to begin: is the writer’s work intrinsically interesting or compelling in some way? If this question is answered in the negative, then there is usually no reason to carry on.
The strange case of Leo Strauss, however, proves that there are definite exceptions to this rule. Strauss’s work is almost universally dismissed by philosophers and historians, yet he has attracted a following amongst political theorists (hybrid creatures most often associated with political science departments) and neoconservative political activists. So, while the verdict on the intellectual importance of Strauss’s historico-philosophical work has been that, like Gertrude Stein’s Oakland, there is no there there, the practical influence of Strauss, its manifestation as Straussianism, and Straussianism’s connection with neoconservatism still present themselves as intriguing problems in contemporary American intellectual history.


Is JPM Staring At Another $3 Billion Loss?

There are a lot of moving parts in the Dismal tale of Dimon's demise. The starting point is that Bruno Iksil in the JPMorgan CIO Office, under the premise of hedging the bank's credit portfolio's tail risk had placed various tranche trades (levered credit positions with various risk profiles) in the only liquid tranche market that still exists - CDX Series 9 (an 'orrible portfolio of credits with an initial maturity at the end of 2012). These positions were low cost  (steepeners or equity-mezz) but needed a certain amount of day to day care and maintenance (adjusting hedges and so on). As the market rallied, the positions required increasing amounts of protection be sold to maintain hedges (akin to buying into a rally more and more as it rises). His large size in the market left a mark however that hedge funds tried to fix - that was his index trading was making the index extremely rich (expensive) relative to intrinsics (fair-value). That is where the media picked up the story and as we detail below leads us to today.

Bernanke - Thurs. 5/10/12 in speech at Bank Structure Conference "Banks are in Great Shape, Crisis is over, good liquidity." *Dimon & Blankfein met with Bernanke earlier in week - JPM losses around 18 Billion.

I have information from a "source" that both Dimon and Blankfein met with Bernanke earlier this week.   The same source is saying the real losses for JPM is 5 times at least the amount stated, they have said it is actually around 18 Billion in losses.   This source is real and is connected in financials.  We will eventually see if the source is correct regarding the real loss amount, eventually coming out.

So that means Bernanke knew what was about to go down with JP Morgan from his meeting with Dimon earlier in the week.   But Blankfein (Goldman Sachs) met with Bernanke also. So........... does that mean Goldman Sach is in just as much trouble as JP Morgan and their losses?  

Silver Following JPMorgan Down Overnight, Back Below $29

After struggling to maintain $29 from the Globex open till 10pm EST, silver has gradually sold-off on the Asian market and is back below $29 at $28.80.  We expect silver to test $28-50, and from a technical level, strong support does not emerge until $26, and even more so at silver’s long term uptrend line which is now near $23. 
JPMorgan’s admission tonight that it has lost $2 billion (and according to Zerohedge the losses could rapidly spiral to $20 Billion) on bad derivatives trades could speed up the timing of the end game significantly.

The Situation Could “Easily Get Worse”

Gold ‘Will Go To 3,000 Dollars Per Ounce’ - Rosenberg

Highly respected economist and strategist David Rosenberg has told the Financial Times in a video interview (see below) that gold “will go to $3,000 per ounce before this cycle is over.”Markets are repeating the downturns of 2010 and 2011 and it is time to search for safety, David Rosenberg of Gluskin Sheff tells James Mackintosh, the FT Investment Editor.Rosenberg sees a “very good opportunity in gold” as it has corrected and seems to be “off the radar screen right now”.He sees gold as a currency and says the best way to value gold is in terms of money supply and “currency in circulation.”As the “volume of dollars is going up as we get more quantitative easing” he sees gold at $3,000 per ounce.

U.S. Millionaires Told Go Away as Tax Evasion Rule Looms
By Sanat Vallikappen
Go away, American millionaires.
That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc (HSBA), Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. (DBS) all say they have turned away business.
“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.
“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.

Rome Didn't Fall in a Day
by Chris Sullivan

Back in the '70s, I used to expect the government to suffer a financial collapse at which time it would have to quit doing most of the things it's doing because it would run out of money. That isn't what has happened. Instead of cutting spending it has printed more money and tried to increase taxes on various things.
Like many things historical, there's a precedent for this. There's a proverbial saying that "Rome wasn't built in a day," but it didn't collapse in a day either. Probably most of the Romans who lived as the Empire was collapsing didn't realize that was what was happening, but plenty of them realized they weren't living in the good old days.
One such person was a man named Salvian, sometimes called Salvian the Presbyter. He wrote a treatise that is called in English The Governance Of God or De gubernatione Dei in Latin*. Its original title was On The Present Judgment and it is well worth reading to see how things played out then and probably always will. His purpose was to show that the then current problems were caused by moral collapse, excessive taxation and a greedy and conniving landed class, not an abandonment of the old pagan religion. Julian the Apostate who had made the opposite argument 70 or so years before, had tried to re-institute paganism and even tried to rebuild the Temple in Jerusalem, presumably because it wasn't Christian and he liked practices such as animal sacrifice, but his efforts ended when he was killed in a war with the Persians after a short reign.

"Europe Has Started The Endgame" And Biderman Says "The US Is Next"
Charles Biderman (CEO of TrimTabs) is not shocked that "Europeans who have been getting something for nothing, want to continue getting something for nothing" as they chant that Austerity is evil. Charles provides context for the revolt that the Europeans find themselves fulfilling as he looks back at how they/we got here. Briefly covering the key aspects of the last 25 years, of why and how various parabolic growths (be it stocks, real estate, the internet, or debt) have led us to believe we "deserve something for nothing"; he vehemently argues that the European mess will not resolve itself until the fundamental belief that we all deserve to be taken care of from cradle-to-grave dissolves. In one of his best rants, the BLS-belittler explains how Europe has started the endgame and why the end of this year could well see the US move front-and-center in the crisis.  Harsh but fair, in a little under 4 minutes, summarizes all that is wrong with societal values and suggests catalysts for next steps - dismal next steps.

Turd Ferguson: Cartel Attempting to Transfer Manipulative Short Position to Speculators

Our friend Turd Ferguson of TFMetalsReport (which is a regular read for The Doc) has written an excellent lengthy analysis today on a topic we have discussed several times over the past 6 months:
the fact that the bullion banks cartel (allegedly JPMorgan, HSBC, et al) have been continually working towards extricating themselves from their massively naked short positions since the first week of May 2011, when a near commercial failure put the fear of God into ‘god’s workers’.
Turd is looking for more pain short term (possibly as low as long term support at $22) as the cartel attempts to flatten their silver books, and hand off their naked short silver hot potato to the speculators who are chasing the price weakness, but once the cartel has extricated itself from its naked short silver positions, like Eric Sprott, Turd is looking for a massive silver rally later in 2012.


5/09/2012

Silver Forecasters Bullish as Funds Retreat From Slump
By Nicholas Larkin
At a time when hedge funds are reducing bullish silver bets by the most in two years, analysts predict a rally as manufacturing expands from China to the U.S., boosting demand for the precious metal most used in industry.
Money managers cut wagers by 68 percent in two months as futures tumbled 22 percent, Commodity Futures Trading Commission data show. Prices will rally to average $35.40 an ounce in the fourth quarter, the third-highest on record, according to the median of 11 analyst estimates compiled by Bloomberg. Shares of Fresnillo Plc, the largest producer, will rise 25 percent in the next 12 months, based on the average of seven forecasts.

Silver, the most volatile metal tracked by Bloomberg, rose more than twice as much as gold this year on mounting confidence the global economy will skirt another recession. China’s factory output gained for a fifth month in April and U.S. manufacturing grew at the fastest pace in a year. Industrial demand from solar panels to batteries to film accounts for about 53 percent of consumption, the Washington-based Silver Institute estimates.

The Golden Rule Reinterpreted
by Peter Schiff
In an April speech in Berlin, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank (the German central bank), offered a startlingly frank assessment of the current problems in Europe. Although his comments were meant to apply to the tensions and imbalances that exist between the northern and southern tier of the 17-member eurozone, they shed inadvertent light on the broader global economy.
Rebuffing calls that Germany do more to support the faltering southern economies, Dr. Dombret said:
...Exchange rate movements are usually an important channel through which unsustainable current account positions are corrected....In a monetary union, however, this is obviously no longer an option. Spain no longer has a peseta to devalue; Germany no longer has a deutsche mark to revalue. Other things must therefore give instead: prices, wages, employment and output.

US Austerity in the Face of a 'Fiscal Cliff'
by Bill Bonner
The financial news yesterday was dominated by alarming reports from Europe.
“Backlash,” said The Financial Times…referring to an “anti-austerity wave” that washed over Europe in weekend voting.

If the FT doesn’t mind mixing metaphors, we don’t either. But our metaphors are a bit different. What has happened is not a backlash but a wake-up call. It comes as voters realize that the placebo medicine – phony, half-hearted austerity measures peddled by the Euro elite – don’t work. They want an elixir with more of a kick to it. That’s why the leftists are gaining so much ground.In Greece, support for leftwing parties has trebled since the last elections. But what do you expect? The typical family has lost almost a third of its real income since the recession (which continues) began. Youth unemployment is at 50%. Young Greeks fear being a ‘lost generation’ that must emigrate in order to find jobs.
In France, Francois Hollande promises to be reasonable. But he won the election by attacking Sarkozy’s austerity moves. He won’t make Sarkozy’s mistake. Instead, he’ll go after the rich with a top marginal tax rate of 75%…and promise ‘growth,’ not ‘austerity.’

Biden gives Israel the green light on Iran in speech to rabbinical convention
Speaking to an international assembly of 1,600 conservative rabbis in Atlanta  today, self-proclaimed Zionist Joe Biden said that Israel still had time to attack Iran if it so chooses.
 
"The window has not closed in terms of the Israelis if they choose to act on their own militarily," the Vice President told the congregation.  "I would not contract out my security to anybody, even a loyal, loyal, loyal friend like the United States."
This is not the first time Biden has made such a comment.  During an appearance on the ABC's "This Week," Biden told George Stephanopoulos, “Look, we cannot dictate to another sovereign nation what they can and cannot do when they make a determination — if they make a determination — that they’re existentially threatened and their survival is threatened by another country.”  Biden comments were immediately walked back by the Obama campaign.

For Israel, Iran attack back on table
Prime Minister Benjamin Netanyahu's political maneuvering over the past week strengthens his position on an attack
By Noga Tarnopolsky, GlobalPost
Israel's Prime Minister Benjamin Netanyahu delivers a speech to his Likud party members during the party convention in Tel Aviv, Israel, Sunday, May 6, 2012. (AP Photo/Ariel Schalit) (Credit: AP)
This article originally appeared on GlobalPost.
JERUSALEM — Israeli Prime Minister Benjamin Netanyahu’s frenetic politicking over the last week appears aimed at one thing: strengthening his ability to take on Iran.
Only days after announcing the surprise dissolution of his government and early elections, on Tuesday Netanyahu presented his compatriots with a second shocker: He cancelled elections and announced a strengthened parliamentary coalition, bolstered by unification with the opposition Kadima party.This new union means Netanyahu will control more than 90 seats in Israel’s 120-seat parliament, known as the Knesset. The new majority is unprecedented in modern times. Former army chief of staff and Kadima’s newly-elected leader, Shaul Mofaz, will join as deputy prime minister. The center-right Kadima party adds heft to Netanyahu’s mandate at a time of urgently polemical debate in Israel over Iran’s nuclear program.




5/08/2012

China’s Gold Imports Jump as Country May Become Biggest User

Mainland China’s gold imports from Hong Kong surged more than sixfold in the first quarter, adding to signs that the country may displace India as the world’s largest consumer of the precious metal on an annual basis.
Imports from Hong Kong were 135,529 kilograms (135.53 metric tons) between January and March, from 19,729 kilograms in the year-earlier period, according to data from the Census and Statistics Department of the Hong Kong government. Shipments in March rose 59 percent from February, yesterday’s data showed.

Turkey Exports “Massive Quantities Of Gold” to Iran and Arab Spring Nations
Gold edged lower on Tuesday despite the weaker euro and stock markets after furious citizens in Greece and France voted against austerity measures.  Gold prices are being supported by bargain hunters who continue to buy dips around the lower end of the metal's recent range between $1,620/oz and $1,680/oz.
The elections in France and Greece create added political uncertainty to an already extremely uncertain financial and political situation and this is likely to weigh on the euro. Euro gold remains firm around the EUR 1,250/oz level where it has been consolidating since mid March – in a range between €1,228/oz and €1,276/oz.
Gold has been trading between $1,620 and $1,680 for about a month. It is supported by the very uncertain macroeconomic and monetary environment but recent price weakness has made some buyers – especially more speculative buyers in western markets hesitant.Gold’s long term trend towards higher prices remains intact (see Sharelynx chart below).
Gold’s support is coming from store of wealth buyers including central banks and the increasingly important Middle East and Far East Asian and Chinese buyers.
Mainland China’s gold imports from Hong Kong surged a huge six fold in the first quarter when prices were between $1,550/oz and $1,800/oz and this demand is supportive of prices at these levels.
China is set to displace India as the world’s largest consumer of gold in the coming months.

Fleckenstein - Stock Market to Tank, Buffett’s Ego & Gold

With continued uncertainty surrounding global markets, today King World News interviewed Bill Fleckenstein, President of Fleckenstein Capital, to get his take on the situation.  Fleckenstein told KWN that despite the volatility, “stocks are going down.”  He also predicted continued collapse in Europe and railed on Warren Buffett and Charlie Munger.  Here is what Fleckenstein had to say:  “I mean, look, they’ve figured out how to skin the paper money machine pretty well.  They’ve benefitted greatly by government bailouts.  Buffett’s gotten himself upside down and sideways in various different financial entities, and they’ve worked out okay in the end.”

Why is Charlie Munger So Angry at Gold?
By Dan Denning
Charlie Munger, Warren Buffett's partner in crime at Berkshire Hathaway, told CNBC earlier this week,

'I think gold is a great thing to sew into your garments if you're a Jewish family in Vienna in 1939, but I think civilised people don't buy gold. They invest in productive businesses.'The easiest way to dismiss this statement is to say that maybe it's 1939 again and maybe this time we're all Jewish. But we don't wish to dismiss the statement. We wish to 'unpack it' in the words of our tutors at St John's College in Santa Fe, New Mexico. To 'unpack it' we need to focus on two key words in Charlie's statement: 'productive' and 'civilised.'

John Williams: Hyperinflation On Track For 2014

Jim welcomes back John Williams from Shadow Government Statistics. John believes the real unemployment rate is 22%, not 8.1%, which is why it still feels like a recession.
from Jim Puplava and Financial Sense:
Jim welcomes back John Williams from Shadow Government Statistics. John believes the real unemployment rate is 22%, not 8.1%, which is why it still feels like a recession. He also calculates the CPI at 6%, not 2.8%, and explains how the government manipulates the rate of inflation. Lastly, John believes the US is still on track for hyperinflation in 2014 as we near the coming fiscal cliff.

US Home Owners Implicates Obama and Big Banks in Massive Global Laundering Scheme
A new lawsuit, which is bordering on the unbelievable, implicates the Obama administration and some of the world’s largest banks in the largest international money laundering case in history.
This global money laundering network was allegedly formed during the Obama administration and helped banks rob U.S. home owners through offshore affiliates in infamous tax havens and money laundering hubs like the Cayman Island, Isle of Man, Luxembourg and Malaysia.
A press release published by Marketwatch (a website owned by the Wall Street Journal) via Marketwire on April 23, 2012, by America’s Spire Law Group, revealed that a mass tort action on behalf of home owners across the United States has been filed in the Supreme Court of New York, County of Kings.The release states that the suit implicates every major bank servicer and their subsidiaries, as well as the Obama administration which allegedly was privately ratifying the formation of shell corporations in violation of not only the USA PATRIOT Act, but also State and Federal law as well.

Why Can't Obama Bring Wall Street to Justice?
Despite his populist posturing, the president has failed to pin a single top finance exec on criminal charges since the economic collapse. Are the banks too big to jail—or is Washington’s revolving door at to blame? Peter J. Boyer and Peter Schweizer investigate:

No one went to jail, so why is Wall Street so mad?
Not prosecuting any of the parties responsible for the recession has just served to embolden them
By Alex Pareene
In Newsweek, Peter Boyer and Peter Schweizer explore the question of President Obama’s Justice Department’s failure to press any major criminal charges against Wall Street. We learn, distressingly, that “finance-fraud prosecutions by the Department of Justice are at 20-year lows.” Ex-Countrywide whistle-blower Eileen Foster, to name one prominent critic of the Justice Department’s inaction, is still urging the Justice Department to do something about her former colleagues, but to no avail. What’s holding them back?


5/07/2012

Home Owners Across the Nation Sue All Bank Servicers and Their Offshore Havens; Spire Law Officially Announces Filing of Landmark Lawsuit

Largest International Money Laundering Network in History Formed During Obama Administration; U.S. Banks' Theft of Home Owners' Money Laundered Through Cayman Islands, Isle of Man and Numerous Offshore-Based Affiliates

Donald Luskin: The 2013 Fiscal Cliff Could Crush Stocks
Do the math on dividend taxes. Yields lower, stock prices lower—maybe by 30%.
By DONALD L. LUSKIN
Why doesn't the stock market, that most sensitive of economic barometers, seem to care that the U.S. economy faces a "fiscal cliff" at year-end? On Dec. 31, trillions of dollars in tax cuts will expire, trillions more in new tax hikes under ObamaCare will kick in, and a trillion in automatic spending cuts will begin. Yet stock prices are the highest in four years.
Maybe with the date still far away, the fiscal cliff just doesn't seem real. It's certainly being treated that way on both sides of the political divide. On the left, economists claim with a straight face that even huge tax hikes don't matter—a top tax rate as high as 70%, they claim, would have no chilling effects on top earners' incentives. On the right, they just as solemnly claim even a small rise in the top rate for high earners from today's 35% to the 39.6% scheduled for after year-end will bring about economic ruin.

NBC News’ top hagiographer
The role of Brian Williams is to glorify political and military leaders, but he really outdid himself last night
By Glenn Greenwald
Whatever one’s position is on the killing of Osama bin Laden — and I’ve always argued that there is a range of reasonable views — there are many journalistically important questions and significant disparities that still need serious examination (with all due respect (i.e., none) to John Kerry’s dictate that we all “shut up and move on”). For one, as both Mother Jones’ Mark Follman and my former Salon colleague Justin Elliott have extensively documented, there are — due to multiple conflicting White House claims — numerous unanswered questions about what really happened on the raid.

 

First of Bin Laden Letters Reveal Fissures in US Assassination Rationale
Charles E. Carlson
We have witnessed a strange and ghoulish celebration of the first anniversary of the secret execution and disposal of all physical remains of Osama bin Laden.  Consider for a moment what you are not seeing on CBS, Fox News, or CNN.

First, we can not know what Bin Laden looked like because we have been deprived of all images taken at the execution.  So far most of the news stories paste in old photos of a young, vital healthy, man, nothing like what a sick and aged Bin Laden would have looked like.  Our leaders had an image to kill.  We can be quite sure the Navy Seals were sent to assassinate an old and possibly decrepit man with an incurable health problem.  Indeed, but that is, if we believe these now dribbled out writings, released by our own military establishment, there is no way to know if Bin Laden was even present at his execution.  Fox News has gone so far as to show a healthy photo of someone else. * 

There Are 100 Million Working Age Americans That Do Not Have Jobs

The unemployment crisis in America is much worse than you are being told.  Did you know that there are 100 million working age Americans that do not get up in the morning and go to work?  No wonder why it seems like there are so many people that do not have jobs!  According to the federal government, there are 12.6 million working age Americans that are considered to be "officially" unemployed, but there are another 87.8 million working age Americans that are not working either.  The federal government considers those Americans to be "not in the labor force" so they are not included in the unemployment rate.  In fact, this is one of the key ways that the government manipulates the unemployment numbers.

Class Warfare Is Being Used To Divide America - And It Is Working

At a time when America desperately needs to come together, we are becoming more divided than ever.  The mainstream media and most of our politicians love to pit us against one another in dozens of different ways, and right now class warfare has become one of their favorite tools for getting us to hate one another.  If you are struggling in this economy, you are being told that "the wealthy" are the cause of your problems.  If you have money, you are being told that the poor hate you and want to tax you into oblivion.  Class warfare has already become a dominant theme in the 2012 race for the White House, and there will certainly be endless speeches given along these lines by politicians from both major political parties all the way up to election day.  Class warfare will be used by both sides as a way to divide America and get votes.  And the frightening thing is that it is clearly working.  There is more hatred between the poor and the wealthy in America today than at any other time that I can remember.  But hating people because of how much money they have or don't have is not going to solve anything.  Instead, it is just going to cause more problems.

Opinion: Gold and silver - Crazy to give up now?
Dudley Pierce Baker sees the current malaise in the precious metals markets as presenting a major buying opportunity for gold and silver investors - most particularly in bullion.
Author: Dudley Pierce Baker
We suspect that many precious metals investors are saying, "We don't want to play anymore!" and our reply is, "You want to quit right now, right at the bottom of this cycle? You must be crazy - crazy with a capital C!" True, this is a very challenging market environment for resource shares, but we know what the ultimate outcome will be: higher share prices. The only question is "when" and our opinion is that we are very close in time (within days or a week or two at most) of being able to say that the lows are behind us. Let me explain.
Unfortunately, most resource investors, especially those new to this sector, are greatly disillusioned, have little staying power and are just scared to death. Who can blame them? They have spent all of their psychological capital and the theme of the day for them is, "How low can they go?"


5/04/2012