goldmap

Siduko, Anyone? - 2/29/12

 

.

"We already have QE3 … Get out the Federal Reserve’s balance sheet. You’ll see that they’ve been pumping up – you can see unadjusted M2 is going through the roof. Look at their balance sheet. … All sorts of assets are suddenly appearing on their balance sheet. Where did they come from? They didn’t come from the Tooth Fairy; they came because they’re in there buying in the market as fast as they can. There IS QE3 already. They don’t call it that but it’s there." -- Jim Rogers, 2/23/12

 

.

.

Dear All,

.

As the Bundestag debated the propriety of imposing the funding of the Greek bailout du jour (130 billion Euros) upon the German people, Finance Minister Wolfgang Schauble was photographed playing a covert game of Sudoku (metaphors resisted):

.

PHOTO: Bild Magazine

.

Those determining Greece's fate are acting solely on behalf of banks that are up to their eyeballs in that government's debt. Under last week's announcement of yet another "rescue" deal, the country, which cannot service its existing debt is being forced to borrow an additional $130 billion Euro that will never be repaid. Yields on 1-year Greek debt are roughly 750% (not a misprint). The Greek economy is in accelerating decline with half of young Greek youths out of work. No sane person would throw good money after bad under such circumstances yet the political elitists are performing their role exactly as expected, seeing to it that the bank losses are socialized and continuing to move the ultimate recognition of the disaster a few weeks or months down the road until the next kick.

.

.

The "firewall" that the European Central Bank is talking about building to insulate Europe from the Greek fallout is code for massive currency printing. There exists no capital with which to build it.

.

Let us not forget that Goldman Sachs was at the center of the shenanigans when the Euro was formed, propping up Greece's balance sheet with its derivative product line in order to "assist" the country in its qualification for entry into the monetary union. The formation of the Euro in the late 90's was a fee-generation bonanza for Goldman and others; with governments dressing-up their balance sheets for entry into the Union, the bankers were kids in a candy store. Buying off Greek government officials was a financial lap-dance; the politicians came like files to manure. The current president of the European Central Bank is a former vice-chairman and managing director of Goldman Sachs International. Nothing changes.

.

.

I haven't seen one major publication pick up on what the Financial Times has reported: FT: US taxpayers to subsidize 40bn housing settlement

"However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter."

 

The only thing more criminal than the ineptitude of the financial press in reporting on the MF Global collapse were the activities of the firm's former CEO, Jon Corzine. If the press deployed 2% of the energy it devoted to the death of singer/diva-person Whitney Houston (which came as quite a surprise to me -- I had thought she was already dead) there might be a chance that this key Obama fundraiser would be prosecuted. Janet Tavakoli sees it similarly: MF Global: Crime, Comedy and the Cover-Up

"MF Global CEO Jon Corzine, a former head of Goldman Sachs, signed off on statements that said his internal controls were adequate. After Enron, the Sarbanes Oxley Act was meant to assure Americans that officers that signed such statements would be held accountable for their accuracy...Federal law enforcement is trying to get away with saying no crime has been committed, because there was no direct criminal intent. Proving intent is very difficult. Here's something that isn't at all difficult to prove. Jon Corzine should have a big problem under Sarbanes Oxley."

 .

Too bad -- he could have been reading this blog the past few years: Obama: 'A lot of us didn't understand how bad it was going to get.'

.

.

More college bubble fallout -- CNBC: Student Loan Crisis Busts Retirement Savings

.

.

The lunch police...The nanny state is in full force: State agent inspects preschooler's homemade lunch sack -- Child forced to eat "healthy" cafeteria food (chicken nuggets) instead

"The girl’s turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the agent who was inspecting all lunch boxes in her More at Four classroom that day"

 

.

Happy belated Presidents Day!...Here's a 2010 clip of Ralph Nader interviewing Judge Andrew Napolitano about his book "Lies the Government Told You" in which Napolitano addresses the real Abraham Lincoln:

"He [Lincoln] was the most tyrannical, most disingenuous, least faithful to the constitution president we've had in American history."

.

Actually, I think Napolitano may understate the case. The effect of recycled fokelore through government school curriculum (with plenty of spillover to private ones as well) is considerable. Lincoln was a callous bastard who is credited with ending slavery, something he cared little about. But he has a nice statue so we must perpetuate the myth.

.

.

Please take the time to read this superb piece by QB Management's Lee Quaintance and Paul Brodsky, which includes both Mayer Amschel Rothschild's famous1838 comment on the power of central bankers and those made by Nathan Rothschild (who controlled the Bank of England) before the House of Commons Secret Committee in 1819: An Adult Approach - 1 (Investing in a Vulgar Age)

.

.

The trend...

.

Yahoo: Vietnam battles 'gold fever' as price soars

.

The Pension Benefit Guarantee Corporation is a disaster (i.e. mega-bailout) in the making: Politico: Feds fret over underfunded corporate pensions

.

.

Regarding gold and silver...

.

.

Separating disinformation and emotion from fact and intellect is among the most challenging components of investment analysis. The constant barrage of headlines, information-age media opinion, talking heads, false government statistics and real-time price obsession compounds the effort like never before. Few can do it. One of the best is Eric De Groot, whose erudite commentary is as good as it gets. He recently offered the following: Buy Gold Stock Weakness, Says The Market and Are the Gold Shares Following Gold?

.

Warren Buffet made some disparaging remarks about gold in Berkshire Hathaway's annual shareholder letter. Actually he's been making such comments for at least 10 years. An investor who followed Buffet's sentiment and bought a share of Berkshire Hathaway's stock a decade ago would today be able to buy 4 of those same shares had she invested that amount in physical gold instead. Had she invested in the goldmap Index of precious metals companies she could now buy 10.4 BRK shares. This trend is going to accelerate.

.

As the next phase of the precious metals bull market unfolds, economists and Wall Street analysts are today nearly as clueless about precious metals as they were a decade ago, before the initial phase commenced. They are curious about gold and at the same time dismissive of it, still unable to grasp the seismic shift that is decimating stock portfolios in real (gold) terms. All day long on the business channels which pass along headlines of phony government reports, the chatter is about Apple's stock price or the direction of the Dow for the next 15 minutes. Then there is the nail-biting prattle anticipating QE3 (or not?) which unbeknown to these lollipops has already occurred under their noses (see Jim Rogers' quote at top). In fact the entire facade of the Fed's quantitative easing programs being done in phases is a smokescreen for continuous stealth swaps and other liquidity drops, not to mention its zero-bound interest rate policy. As the infrastructure of the financial system is imploding the stock jockeys are old generals continuing to battle the only market they've ever known. As the Dow is again touching 13,000, few seem to notice that since the Dow was last at that level the price of gold has nearly doubled.

.

The most dynamic financial asset over the coming years will continue to be gold, potentially outdone only by silver. Expect money to continue to flow out of debasing paper into just about anything else -- stocks, real estate, artwork. The Fed needs to force money velocity higher and it will succeed, pushing the dollar prices of all these things up. The rate of acceleration in the dollar price of gold and silver however will continue to trump all of the foregoing. It has been this way throughout history during periods of acute currency debasement and geopolitical upheaval and absolutely nothing is different this time except that the debasement is today international. Gold, the most liquid repository of paper currency flight is the only money without a flag, government managers and debasement risk.

.

Today, the last day of the month saw another (yawn) coordinated central bank takedown of paper gold and silver. In congressional testimony the Fed chairman took the opportunity to talk down the need for QE3, notwithstanding it being a fait accompli. Nevertheless, the rise in both metals thus-far this year (11% for gold; 23% for silver) is a small appetizer in the next course in this bull market. Gold and silver equities, particularly smaller and mid-cap companies with proven ounces will explode in price.

.

My best,

.

Jeff

Firing the Unemployed - 2/12/12

 

"If you spend a little time with these numbers you will know that they are being made up."-- Former Reagan budget director David Stockman, 2/5/12, commenting on the Bureau of Labor Statistics' employment report.

 

Dear All,

On Thursday evening, February 2nd, as the pencil-pushers at the Bureau of Labor Statistics put the finishing touches on the theoretically modeled fictional labor report they would release the following morning, a mass of unemployed Americans were theoretically summoned to a hastily called meeting at the U.S. Department of Labor's headquarters on Washington's Constitution Avenue. Funneling into a basement level meeting room they were largely silent as they sought seats. The vast majority was forced to stand; there were 1.2 million of them. A representative from the BLS took a microphone and spoke. 

"Good evening. Thank you for coming on such short notice. I'll get right to the point. We've got a Labor Report due out tomorrow and we've had to make some tough decisions.  I know how difficult the past number of months have been and that you've been diligently looking for work for quite a while now. But this isn't working out and we need to make a change in the headcount. So we're letting you go. You're no longer unemployed."

As discussed here often (most recently Discarded Denominators -- 12/4/11) the U.S. Department of Labor drastically overstates the percentage of the country's employed workers by simply reducing the stated size of the U.S. labor force. True to form, it produced a report on February 3rd that "beat" unemployment rate expectations by notably (which is not to ignore the other BLS fantasy modeling techniques) simply removing 1.2 million people from the labor force in one month.  By so doing the government was able to cosmetically shrink the visible rate of unemployment in January, although the labor force participation rate (the ratio between the labor force and the population) dropped in January to a new 30 year low of 63.7%. Zerohedge neatly sums it up: Explaining Yesterday's Seasonally Adjusted Nonfarm Payroll "Beat"

"What is very notable is that in January, absent BLS smoothing calculation, which are nowhere in the labor force, but solely in the mind of a few BLS employees, the real economy lost 2,689,000 jobs, while net of the adjustment, it actually gained 243,000 jobs: a delta of 2,932,000 jobs based solely on statistical assumptions in an excel spreadsheet!"

Shadowstats' John Williams in fact calculates that the rate of unemployment actually moved higher in January to 22.5% from 22.4% in December.

In reviewing the most recent release from the Ministry of Disinformation, the Bureau of Labor Statistics, Charles Biderman notes that last Friday's happy  unemployment report also flies in the face of real-time daily income tax collection receipts, something almost nobody questions: 

"Remember, most financial journalists and even stock market strategists do nothing more than rewrite government press releases. So do not expect very few others to question the good news"

As Biderman points out, to the extent that the theoretically modeled BLS reports even use hard data, it is many months stale. But then, why use hard real-time hard data when you can concoct modeling propaganda in a laboratory that better suits your political agenda, particularly when hardly anyone questions it?

And then, in the face of the uplifting unemployment report there is this: Challenger: Planned layoffs surge in January 

Contrast BLS stats with others that are not seasonally adjusted,' subject to substitutions or 'birth-death" modeling, to wit:

 

Gee, I dunno....perhaps it's because people don't have jobs? OfTwoMinds: Why Is Gasoline Consumption Tanking?

"Retail gasoline deliveries, already well below 1980 levels, have absolutely fallen off a cliff...Even if you dismiss the recent plunge as an outlier, the declines in retail gasoline deliveries are mind-boggling."

 

Establishing yet again that crime pays, The 5 largest banks have agreed to partly fund a $26 billion settlement that will result in payments to a select group of Americans, some of whom were actual bona fide victims of mortgage fraud.  It is an Obama administration led wrist-slap upon the banking industry from which it receives oodles of campaign cash.  The settlement is another thinly disguised bank bailout and immunity from prosecution deal for bank executives and servicers, dressed up as punitive enforcement using government/taxpayer largess. Bank fraud expert William Black was asked about the pending settlement in an interview Tuesday: "The bad news is that the Obama administration has proven even more disgraceful failures in holding elite criminals accountable than did the Bush administration. "The Obama administration has convicted a few bankers from non-elite banks and it may eventually convict a token elite banker, but it will continue to fail systemically to hold elite bankers accountable for their frauds."

Here is the president in his State of the Union address:

"Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It's time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

We've all paid the price for lenders who sold mortgages to people who couldn't afford them, and buyers who knew they couldn't afford them. That's why we need smart regulations to prevent irresponsible behavior...And I will not go back to the days when Wall Street was allowed to play by its own set of rules."

Nice speech.  Sure, pile on more regulations for ineffective agencies such as the CFTC and SEC to pretend to enforce.  Prosecute criminals? Not so much:  Washington'sBlog: Obama Prosecuting Fewer Financial Crimes Than Under Reagan or Either Bush

  

 

If you've never seen a bank run, here's what one looks like (Source: Credit Suisse):

 

As discussed here previously, narco-finance is one of the structural pillars of the banking system and perhaps its most important private source of liquidity. Who is kidding whom?  The investigation will go nowhere: Former HSBC employee claims evidence of an international $ multi-billion money laundering scheme 

ReutersExclusive - Senate investigating HSBC for money laundering

 

I would add an additional point; in regulated insurance it is unacceptable to insure a party that lacks an insurable interest in the subject asset: OfTwoMinds: Counterfeit Value Derivatives: Follow the Bouncing Ball

 

In a letter to the Wall Street Journal sixteen highly distinguished scientists stated that CO2 (even at 10x the current amount) is beneficial, not harmful, global warming alarmism is motivated by money and power, and that governments fund academics who promote alarmism because it justifies more political control and higher taxes. They point as well to academic intimidation of those who dissent from the party line.

For the melting busybodies... -- TheGuardian: The Himalayas and nearby peaks have lost no ice in past 10 years, study shows

"The discovery has stunned scientists, who had believed that around 50bn tonnes of meltwater were being shed each year and not being replaced by new snowfall."

And in a new book, "Die kalte Sonne" ["The Cold Sun'"] that comes as a huge blow to Europe's climate change movement, one of the fathers of Germany’s modern green movement has changed his view and is now calling global warming a myth and the product of UN's IPCC twisted science to further its political agenda: 

"Vahrenholt’s skepticism started when he was asked to review an IPCC report on renewable energy. He found hundreds of errors. When he pointed them out, IPCC officials simply brushed them aside. Stunned, he asked himself, “Is this the way they approached the climate assessment reports?”

  

The bubble in graduate degrees is an extension of the college bubble: The Law School Bubble           TheIveyFiles: "We should be Ashamed of Ourselves"

"At 50 law schools, 20% of the students are either unemployed, flunked out, or are unknown, yet the ABA and LSAC disavow the use of data to rank law schools.”

  

The trend...

RussiaToday: Chinese 'gold rush': Country diversifying assets

  

On gold and silver...

As the paper prices of both precious metals bide their time the financial system deteriorates daily.  The inevitability of drastic gold and silver re-pricing is a lock -- the fate of the dollar and other paper currencies assures it.  Well managed gold and silver companies with meaningful reserves are simply a slam-dunk.

Block out the noise. Keep your ear to the tracks, not to the pundits.

Jeff