Archive for August, 2009

Larry Summers’ dubious connections

Monday, August 31st, 2009

Full scoop here. As if Larry’s Jabba the Hut-type of charm weren’t enough, this article brings out but one of his seedy connections.

“By Mark Ames

summers-sleeping

The best way to understand Larry Summers, the man who’s shaping America’s economy from his director’s chair at the National Economic Council, is to meet the people he hangs out with. Once you get to know Larry Summers’ crowd, nothing he does–no matter how twisted (like Larry’s suggestion to move all First World toxic waste to Africa) or deranged (Larry’s theory that women can’t do math)– will surprise you. Whereas the famous “Six Degrees Of Separation” gives the false impression that it’s a small world and we all pretty much know each other, this “One Degree of Separation” will prove how totally alien Larry Summers and his crowd really are from the rest of us. (more…)

Henry Paulson interview in Vanity Fair

Monday, August 31st, 2009

Full story here from Vanity Fair. Personally, I felt it was too much of a softball piece, but here is data straight from the horse’s mouth, so to speak. The lengthy text is sectioned with these headers in bold:

Reluctant Nominee
“If I Could Have Had a do-over…”
“Foam on the Runway”
A “Bazooka in My Pocket”
“I Think There Will Be Big Changes”

“Paulson knew that the Obama administration was bound to face continuing criticism as it dispensed the second $350 billion in funds from the tarp program. He said he thought it was all too possible that the system would need more than that. This was in January, and Paulson knew his words would not become public for many months. “I’d never say it publicly right now,” he told me. “In my judgment, $350 billion is not enough.”

I asked Paulson what sort of new paradigm might emerge in the financial system. “There’s always a tendency to over-react—or to take what’s happening at any one point in time and then look at a trend and get an extreme result that doesn’t happen. I can think of times over the last 10 years when it was all the mega-banks that were going to inherit the world. Then it was, you know, private equity and hedge funds. So I think there will be big changes, but I think the changes we’re going to see are going to have to do much more with the shape of the regulatory system, the regulatory powers that are acquired, the financial architecture globally and domestically.”

Henry Paulson arrived in Washington hoping to find the sliver of daylight that might help his party redeem itself, and to help a president who he hoped might yet do good things. He came to believe that in the face of turmoil the biggest mistake that economic policymakers could make was to do too little. Some of his furious fellow Republicans came to believe he did too much—as do some furious critics on the left, though for different reasons. Paulson himself is relieved just to have gotten us through the night.”

Are we facing a banking crisis?

Monday, August 31st, 2009

Full story here from Market Oracle. If you want my short-version answer, that’d be “Yes”.

Summary

The markets appear to be anticipating a banking crisis.

If confidence is lost in the commercial banking system, the following is a reasonable outcome:

  • There will be a rush to invest “cash” money (previously held in banks) into treasury bonds backed by the government as opposed to the FDIC
  • The gold price will explode upwards
  • The US Dollar will not move inversely to the gold price. More likely, it will also rise, albeit less violently as the “safest” and “most liquid” treasury markets are denominated in US$.

When read together, the long term charts of all three investment categories are in fact pointing to the increasing probability that confidence in the integrity of the commercial banking system has been eroding. (more…)

Fed is accelerating the monetization of debt

Monday, August 31st, 2009

Full story here from Bob Chapman. This beats the dull old mental mush being dished out at the mainstream news outlets.

“Bob Chapman writes: The public option for Obama insurance coverage has been described as just a sliver of the overall proposal. Universal coverage directly by government was not an essential element says Health & Human Services. Of course it was. The program is in retreat and the only way the Democrats can get passage of any kind is to re-craft a toothless passage and ram it through in a party line vote.

The public is enraged at what the liberals and socialists have tried to foist on them. Worse yet, the administration has submitted to Wall Street and the insurance giants, which they intended to do from before the beginning. Just look at the line up of campaign contributors. The same goes for the euthanasia section. This could well have been a loss leader to get the rest of this monstrosity passed. The exercise will cost the President and Congress dearly as their approval ratings sink to 41% and 12% respectively. November of 2010 will be the time of reckoning.

We remind you that presidents do not make presidential policies. They are made by the bureaucratic types, who receive their marching orders from the Illuminists above them. This is why you had the seamless transition from the neocon administration to the current one now in power. Team A replaced Team B from the Council on Foreign Relations, Trilateralists and Bilderbergers. Nothing really changed. (more…)

Who does Ben Bernanke really work for?

Friday, August 28th, 2009

Full story here from Market Oracle.

“There is a bit of debate going round as to whether traders should be anticipating the demise of the epic 2009 market rally… washing their hands of the nutty action entirely… or jumping back in, jack-be-nimble style, to catch a piece of the last hurrah.

Different traders will come to different conclusions, of course. It takes all kinds to make a market. Just two quick observations and we’ll move along.

First, there is a reason they call it “greater fool theory.” And second, trends have life spans – just like people.

Trend mileage can vary widely, of course. But this is true of people too. Statistically speaking, a Japanese woman has far better odds of reaching 85 than a Russian man does of reaching 65.

Point being, when your humble editor looks at this market rally from a trading perspective, he does not see a bright-eyed Japanese grandmother puttering around in her garden. Instead he sees a 64-year-old Vladivostok dock worker… an ashen-faced, barrel-chested man with a heaving cough, a clogged aorta, and a mean addiction to Stolichnaya vodka and Sobranie cigarettes. [ed.--sounds like a lot of my relatives] (more…)

US bank enemies at the gate

Friday, August 28th, 2009

Full story here from Golden Jackass. I never get tired of giggling at that moniker.

Don’t wait for anyone else to hand you prosperity. Get it yourself by using ShadowTraders.

“While all manner of attention remains transfixed inside the United States on a remedy and recovery of its bank sector, once again Americans make dangerous assumptions. They tend to assume that the US Federal Reserve near 0% interest rates, Quantitative Easing (aka exploding Printing Pre$$ output), endless liquidity facilities (e.g. TALF), TARP funds (aka Wall Street slush fund), Stress Tests (rigged), bank stock sales (aided by FASB accounting fraud), bank carry trades (exploiting low short-term & higher long-term rates), and the passage of time can revive the US banking industry. They tend domestically to overlook the gradually worsening insolvency condition. Banks are bracing for a new wave of commercial mortgage losses, of prime Option ARMortgage losses, and credit card losses. The delinquency rate of prime Option ARMs is now higher than subprime home loans!! (more…)

Bailed out banks threaten systemic collapse if Fed discloses info

Friday, August 28th, 2009

Full story here from Zero Hedge. Sorry, I was lazy on posting the last couple of days (but this isn’t my only job, you know). Seems that the banks worry that if you knew they were broke, you wouldn’t have confidence in them. You un-American, evil-mongering anarchists you!!!

“And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg’s lawsuit is allowed to proceed unchallenged, let alone if any of the “Audit The Fed” measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo. (more…)

Tobin Tax speculation creates flurry of criticism

Friday, August 28th, 2009

Full story here from Zero Hedge. Apparently it’s not enough to have your hedge fund taxed at 15% (rather than up to 39% for average schmucks), but any transaction tax or fee on nine- and ten-digit incomes is too much to bear. Oh well, a million dollar greasing of the palms of crooked pols will be cheaper in the end.

“A new page in the fight between HFTs and everyone else was turned recently, after Adair Turner, Chairman of Britain’s Financial Services Authority, said that he would consider the implementation of a “Tobin tax” on banking transactions. As a reminder, James Tobin introduced the idea of the Tobin tax in 1971, as a tax on cross-border currency trade, which at its core was meant to moderate short-term speculation in currency trading. Its latest incarnation, however, would strike at the heart of the speculative bubble that has gripped global markets. (more…)

Why money is collapsing and why central banks need adult supervision

Tuesday, August 25th, 2009

Full story here from Ellen Brown, author of Web of Debt. This is from an interview at The Daily Bell.

Daily Bell: Are you a free-market economist or something else?

Brown: I believe in free markets, but I don’t believe we have them today. Virtually every market now is manipulated and controlled. We lost our free markets when we gave away the power to create money to a private banking elite. They got their power through sleight of hand, and it can be reversed only by reversing the sleight of hand. Ironically, to get back our free markets, we need some government intervention. The economy has been captured by thieves, and we need some rules and regulations to put the genie back in the bottle.

Daily Bell: What’s wrong with a gold or silver monetary system?

Brown: To answer that question properly will take more than a few sentences, but I’ll try to be succinct. There are three ways a precious metal system could be set up: (1) a “gold-backed” fiat currency, of the sort we had until 1933 domestically and until 1971 internationally; (2) 100% gold coins, as Ed Griffin recommends; or (3) gold, silver and anything else trading freely with dollars, as recommended by Ron Paul. (more…)

Monetization of US Treasurys in isolation

Friday, August 21st, 2009

The latest from Jim Willie. If the dollar were an airplane, this would be the part where you would be hearing a “Woop! Woop! Pull up! Pull up!”, but since Tiny Tim and Zimbabwe Ben are at the controls, they’re just pushing the nose down and going full throttle.

“Every few months a chart comes along that needs almost no follow-on paragraphs to make the point of the issue. The chart provided by CIGA Eric covers several important types of US$-based bonds, their inflow and outflow, and the aggregate GrandNet. The financial data is publicly available from the USGovt TIC Reports. The messages are clear. Inflows of foreign funds are dwindling. In the case of USAgency Mortgage Bonds and USCorp Bonds, the nation is witnessing something unprecedented, the net outflow of funds. This is outright rejection. This chart exposes the isolation problem of the USDollar in the bond world, clearly the most important market beneath the currency market. The printing press is the last option. (more…)